<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

                        FOR ANNUAL AND TRANSITION REPORTS
                     PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934


[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     For the fiscal year ended March 28, 1998

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     For the transition period from _________________ to ________________

                         Commission File Number 0-26602

                             THE GRAND UNION COMPANY
             (Exact name of registrant as specified in its charter)

             Delaware                                     22-1518276
----------------------------------         ------------------------------------
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
 incorporation or Organization)


 201 Willowbrook Boulevard, Wayne, New Jersey                07470-0966
 --------------------------------------------             ----------------
   (Address of principal executive offices)                  (Zip Code)


Registrant's telephone number, including area code          973-890-6000
                                                          ----------------

Securities registered pursuant to Section 12 (b) of the Act:

   Title of each class               Name of each exchange on which registered
------------------------           ---------------------------------------------

         None
------------------------           ---------------------------------------------


Securities registered                Common Stock, Par Value $0.01
pursuant to Section 12 (g)         ---------------------------------------------
of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such requirements
for the past 90 days. Yes __X__   No ____ .

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

<PAGE>


The aggregate market value of the voting stock held by nonaffiliates of the
registrant as of June 22, 1998 is approximately $1,621,443, based upon the
average of the bid and asked prices of the Common Stock on such date on the
Over-The-Counter market. For the purpose of this calculation, all members of the
Board of Directors and all stockholders with sole or shared voting power over
10% or more of the Company's voting stock are presumed to be affiliates.

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes __X__   No ____ .

As of June 24, 1998 there were issued and outstanding 10,202,018 shares, par
value $0.01 per share, of the registrant's Common Stock.


<PAGE>

     Other than historical information, statements in this report may be deemed
to be forward-looking statements within the meaning of the federal securities
laws. Actual results and the timing of certain events could differ materially
from those projected in the forward-looking statements due to a number of
factors, including those set forth in this report. See "Special Note Concerning
Forward-Looking Statements" in Part II of this report.

PART I

Item 1.  Business

General

     The Grand Union Company, a Delaware corporation ("Grand Union" or the
"Company"), currently operates 222 retail food stores under the "Grand Union"
name in six northeastern states. Through May 20, 1998, Grand Union's Common
Stock was listed on the NASDAQ SmallCap Market under the symbol "GUCO." The
Company's Common Stock is currently eligible for quotation on the
Over-The-Counter Bulletin Board. On June 24, 1998, the Company filed a voluntary
petition for relief under chapter 11, Title 11 of the United States Code, as
amended, with the United States Bankruptcy Court for the District of New Jersey.
(See "Chapter 11 Filing" below).

     As a result of the implementation of several key strategic initiatives,
Grand Union has been able to stabilize its operations in the critical areas of
sales, margins, promotional income and expense levels. These initiatives
included a complete restaffing of senior management positions, organizational
restructuring measures and reconfiguration of the company into three operating
areas. Grand Union is continuing these strategic initiatives, identifying
additional areas for administrative expense reduction and efficiency and
pursuing new marketing and merchandising activities, all of which are designed
to enhance its image as a high-quality, price-conscious operator in the
northeastern retail food industry.

Strategic Initiatives

     In recent years, results in the supermarket industry have suffered from
slow population growth, increasing competitive activity, and changing consumer
shopping and eating patterns. These factors are projected to keep real
supermarket sales growth essentially flat over the next several years.

     Grand Union is in the process of implementing various strategies to meet
its long-term goals for improving financial performance. Grand Union has
determined a key strategy is to focus on the requirements and preferences of
"Today's Customer". This strategy includes identifying and understanding the
ongoing changes in consumer trends, thereby allowing consumer preferences to be
the drivers of change in Grand Union's offerings of services and products. In
addition, Grand Union has determined that to maximize profitability, it should
(i) expand its existing store base, including the development of new stores and
the remodeling of existing units; (ii) implement a program for maximizing
advertising and promotion allowance revenues from the Company's suppliers; and
(iii) perform ongoing evaluation and, when appropriate, modify store locations
that are not adequately contributing.

     Due to an historically overleveraged balance sheet, Grand Union has had
insufficient resources to consistently fund capital expenditures adequately. The
significant reduction in debt, and the attendant reduction in interest expense,
to be effected by the proposed reorganization of the Company, together with the
new proposed exit financing (see "Chapter 11 Filing" below), will provide Grand
Union with substantially improved liquidity, $50 million of which will be
available upon emergence. This substantial reduction of debt and the 
availability of new funds will enable Grand Union to execute a capital 
expenditure program that will enhance the operations, profitability and 
competitiveness of the Company.

     EACH OF THE FOREGOING STRATEGIC INITIATIVES ARE FORWARD-LOOKING AND INVOLVE
RISKS AND UNCERTAINTIES. THERE CAN BE NO ASSURANCE THAT ANY OF THE STRATEGIC
INITIATIVES WILL IMPROVE THE FINANCIAL PERFORMANCE OF THE COMPANY.

Store Formats and Locations; Competition

     Grand Union's store sizes and formats vary depending upon the demographics
and competitive conditions and real estate availability in each location in
which it operates. Grand Union supermarkets offer a wide selection of national
brand and private label grocery and general merchandise products as well as
high-quality perishables and service departments. The

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majority of Grand Union's sales are generated from stores which include
high-margin specialty and service departments. Selected locations feature
in-store cafes and pharmacies. Liquor, beer and wine departments are included in
many locations, subject to the limitations of state and local law. Grand Union's
supermarkets range in size from 7,000 to 64,000 square feet.

     Grand Union currently operates 222 stores in six states, including 123 in
New York, 40 in Vermont, 41 in New Jersey, 13 in Connecticut, 3 in New Hampshire
and 2 in Pennsylvania. On June 25, 1998, the Company re-opened its store in
Bolton Landing, New York.

     The food retailing business is highly competitive. Grand Union competes
with numerous national, regional and local supermarket chains. Grand Union also
competes with convenience stores, stores owned and operated or otherwise
affiliated with large food wholesalers, unaffiliated independent food stores,
warehouse/merchandise clubs, discount drugstore chains and discount general
merchandise chains. Some of Grand Union's competitors have greater financial
resources than Grand Union has and could use those resources to take steps which
would adversely affect Grand Union's competitive position.

     In upstate New York, Grand Union generally operates in small cities and
rural communities. The Company's main competitors are Golub Corporation ("Price
Chopper") and Hannaford Brothers, Inc. ("Hannaford"). Commercial development in
areas north of Albany, New York is limited and constrained by zoning and
environmental restrictions, particularly in areas regulated by the Adirondack
Park Commission. In the more urban Albany area, Price Chopper and Hannaford have
each opened a number of new stores in the last five years, which are generally
larger than the Company's stores.

     In the Mid-Hudson Valley area of New York, the Company's principal
competitors are Big V Supermarkets Inc. (a member of the Wakefern ("ShopRite")
cooperative), Price Chopper, Hannaford and The Great Atlantic & Pacific Tea
Company, Inc. ("A&P"). Continuing weak economic conditions in the Mid-Hudson
Valley have constrained business in recent years. In addition, the Company's
results in this region have also been adversely affected by recent store
openings by competitors.

     In Vermont, Grand Union's principal competitors are Price Chopper and
Hannaford. Zoning and environmental regulations in the state restrict commercial
development (including supermarkets which might be competitors of the Company).

     A number of stores in upstate New York and Vermont are in resort areas.
These generally experience significant increases in sales in the summer months
and in some cases during the winter ski season.

     The Company's stores in downstate New York, Connecticut and New Jersey
serve densely populated communities with demographics particularly well suited
for store formats emphasizing specialty departments. Accordingly, the sales mix
in these stores includes a larger percentage of higher margin perishable items.
In addition, the high population density as well as the geographic concentration
of stores provide substantial economy of scale opportunities.

     In New Jersey, the Company competes primarily against A&P, Pathmark Stores,
Inc. ("Pathmark"), Ahold Supermarkets, Inc. ("Edwards" and "Stop and Shop"),
ShopRite and various supermarkets supplied by the Twin County ("Foodtown")
cooperative.

     In Westchester, Orange, Rockland, Dutchess and Putnam Counties in New York,
the Company generally competes with A&P, Edwards and ShopRite.

     On Long Island, the Company's principal competitors include A&P, Waldbaums
(division of A&P), Pathmark, and King Kullen Grocery Co., Inc.

     Grand Union's main competitors in Fairfield County, Connecticut include
Stop & Shop and A&P.

Distribution and Supply

     The majority of Grand Union's merchandise is distributed to Grand Union
stores by C&S Wholesale Grocers, Inc. ("C&S") pursuant to supply and
distribution agreements. Under the agreements, C&S supplies

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grocery products from its own warehouses, and health and beauty care and general
merchandise products from Grand Union's Montgomery, New York warehouse. Grand
Union also contracts with a third party for frozen food distribution. Management
believes that Grand Union's existing agreements with C&S enhance the Company's
ability to offer consistently fresh and high-quality products to its customers
at favorable prices. Grand Union operates a 20,000 square foot commissary
located in Newburgh, New York, in which high quality cooked meat products,
salads, salad ingredients and soups are prepared for sale in the Company's
delicatessen departments.


Selected Data

     The table below sets forth certain statistical information with respect to
Grand Union retail stores for the past three years.

<TABLE>
<CAPTION>
                                                                    Fiscal        Fiscal        Fiscal
                                                                     1998          1997          1996
                                                                   ----------    ----------    ----------
        <S>                                                         <C>          <C>           <C>

        Number of stores (at end of year)                               222           226           229
        Total selling square feet at end of year (in thousands)       4,353         4,312         4,305
        Average sales per selling square foot per week               $10.07        $10.28        $10.28
</TABLE>

Capital Investment

     The Company's capital spending is directed towards renovating and upgrading
existing Grand Union stores and opening new and replacement stores in existing
marketing areas. Cash capital expenditures for Fiscal 1998 and 1997 were
approximately $40,000,000 and $55,000,000, respectively, excluding capital lease
additions of $22,000,000 and $23,000,000, respectively.

Management Information Systems

     Financial, purchasing and operating system requirements are supported
through a central computer system located in Wayne, New Jersey. As of March 28,
1998, Grand Union utilized scanning systems in 188 stores (representing
approximately 94% of total sales) and intends to continue investing in scanning
and other store systems in the future where economically justified. See Item 7
for a discussion of Year 2000 compliance.

Employees

     As of March 28, 1998, Grand Union had approximately 15,000 employees, of
whom approximately 67% were employed on a part-time basis. Approximately 50% of
Grand Union's employees are covered by 12 collective bargaining agreements with
various local unions.

     On March 7, 1998, the Company entered into a new labor agreement with
United Food and Commercial Workers Local 464A (formerly 489) covering
approximately 161 clerks in 15 of the Company's stores in Westchester, Putnam
and Dutchess counties in New York. That agreement expires in July 2002.
Additionally, in April 1998 the Company reached an agreement with UFCW District
Union Local One covering employees in the Elizabethtown and Port Henry, New York
stores. The Local One agreements expire in September 2000. The Company's other
labor agreements expire between December 1998 and October 2001.

     As of March 28, 1998, all employees covered by collective bargaining
agreements were employed at store locations and in the Company's Montgomery, New
York warehouse.

     The Company believes that its relationship with its employees is generally
satisfactory.

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<PAGE>

Trade Names, Service Marks and Trademarks

     Grand Union owns and actively uses over 20 trade names, service marks and
trademarks (collectively, "Marks"). Among these Marks are "Grand Union"(R), the
symbol of a red dot, "Grand Classics"(R), "Big Gold Top"(R), "Holland Hall"(R),
and "Red Dot Special"(R), all of which are significant to the Company's
business. The Company also has common law rights in, has filed for, or intends
to file for various other Marks.

Common Stock Formerly Traded on NASDAQ SmallCap Market

     On September 19, 1997, the NASDAQ Listing Qualifications Panel determined
that Grand Union's Common Stock no longer qualified for trading on the NASDAQ
National Market and would be transferred to the NASDAQ SmallCap Market. The
transfer to the NASDAQ SmallCap Market was completed as of the close of business
on October 21, 1997. By letter dated February 20, 1998, the NASDAQ Stock Market,
Inc. notified Grand Union that it had failed to satisfy the requirements for
continued listing on the NASDAQ SmallCap Market. Grand Union appealed the
decision regarding continued listing to the NASDAQ Listing Qualifications Panel.
In response to Grand Union's request for continued listing on the NASDAQ
SmallCap Market, the NASDAQ Stock Market, Inc. conducted a hearing upon written
submission on May 14, 1998 to consider Grand Union's request and determined that
continued listing was not warranted. Accordingly, the Common Stock was delisted
from the NASDAQ SmallCap Market effective as of the close of business on May 20,
1998. Since May 21, 1998, the Common Stock is eligible for quotation on the
Over-The-Counter Bulletin Board.

Financial Information about Foreign and Domestic Operations and Export Sales

     Grand Union has no foreign operations or export sales.

Recent History

     Downgrading

     During the week of July 28, 1997, Moody's Investors Service Inc. downgraded
Grand Union's Credit Agreement rating to B-3 from B-2 and lowered the rating on
its Senior Notes to Caa3 from Caa1. The rating action was prompted by Grand
Union's announcement that, due to the shortfall in its operating performance, it
was in default of various financial covenants contained in the Credit Agreement.

     August 1997 Amendment of Credit Agreement
     and Prepetition Negotiations with Secured Banks

     In August 1997, an amendment to the Amended and Restated Credit Agreement 
(the "Credit Agreement"), among Grand Union, Bankers Trust Company, as Agent, 
and the lenders party thereto (the "Secured Banks"), dated as of June 15, 1995, 
as amended, was executed. As amended, the Credit Agreement is comprised of a 
term loan, a revolving credit facility and a supplemental term loan. The term 
loan is in the aggregate principal amount of $104,144,371.

     The revolving credit commitment is for $67,877,649, of which a maximum of
$60,000,000 may be utilized in the form of letters of credit. The commitment
matures on June 15, 2000. In each year, no more than $40,000,000 of the
revolving credit facility may be outstanding in the form of borrowed money
(excluding letter of credit utilization) for any 30-day period between July 15th
and August 31st. As of June 26, 1998, an aggregate of $33,017,649 of letters of
credit were issued and outstanding under the Credit Agreement. Grand Union
incurs a commitment fee of 0.5% per annum on the average unused portion of the
revolving credit facility.

     As part of the August 1997 amendment of the Credit Agreement, Grand Union
obtained the supplemental term loan to enable it, among other things, to make
its required September 1, 1997 interest payment on the Company's 12% Senior
Notes due 2004 (the "Senior Notes"). The supplemental term loan facility is in
an aggregate principal amount of $77,977,980, which matures on March 1, 2003.
The supplemental term loan increased the total amount available under the Credit
Agreement to $250 million. The supplemental term loan has no required
amortization and may be prepaid without penalty on or after August 31, 1998.

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<PAGE>

     The term loan and the revolving credit facility are secured by a lien and
security interest in substantially all of the tangible and intangible assets of
Grand Union, including the shares of its four subsidiaries and mortgages on a
majority of the Company's leaseholds. The supplemental term loan is subordinate
to the term loan and the revolving credit facility. It is secured by the same
lien and security interest that secures the term loan and revolving credit
facility but the rights of the lenders under the supplemental term loan in
respect of such lien and security interest are subordinate to the rights of the
lenders under the term loan and the revolving credit facility.

     The term loan and revolving credit facility of the Credit Agreement bear
interest at the base rate (generally prime) plus 2% or the relevant one-, two-,
three- or six-month Eurodollar rate plus 3.75% (including standard yield
protection provisions). The supplemental term loan bears interest at 15% for the
first year of the loan, increasing by .50% every six months thereafter, payable
semiannually in arrears, plus additional interest accruing at 1% per annum
payable only after the term loan and revolving credit facility have been paid in
full and then only upon payment or prepayment of principal with respect to which
such additional interest has accrued. The term loan requires quarterly principal
payments of $13,018,046 from September 30, 2000 through June 15, 2002.

     The Credit Agreement contains certain restrictions and financial covenants
relating to, among other things, minimum financial performance and limitations
on the incurrence of additional indebtedness, asset sales, dividends, capital
expenditures and prepayment of other indebtedness.

     Notwithstanding the increased commitment provided under the August 1997
amendment to the Credit Agreement, due to a continuing lack of sufficient
liquidity, increasing competition and consolidation, and a shortfall in
operating margins, Grand Union determined that its financial resources would be
insufficient to satisfy the approximately $36 million interest payment due and
payable on March 2, 1998 on the Senior Notes. Grand Union did not make the March
2, 1998 interest payment to holders of the Senior Notes. The failure to make
such interest payment constituted a default under the Indenture governing the
Senior Notes and a cross-default under the Credit Agreement. Accordingly, in
February 1998, Grand Union commenced negotiations with the Secured Banks
regarding obtaining necessary waivers to avoid the consequences of an event of
default under the Credit Agreement and to facilitate the restructuring
contemplated by the Company's proposed plan of reorganization (the "Plan of
Reorganization"). Those negotiations resulted in an agreement by the Secured
Banks to waive certain defaults under the Credit Agreement, subject to the terms
and conditions of such waiver.

     The Company's filing for relief under chapter 11 of the Bankruptcy Code
(see "Chapter 11 Filing" below") constituted a default under the Credit
Agreement and, therefore, the Company is not permitted to make any further
borrowings under the Credit Agreement. The Plan of Reorganization contemplates
debtor-in-possession financing which, upon court approval, will allow the
Company to refinance the term loan and the revolving credit facility under the
Credit Agreement. In addition, upon consummation of the Plan of Reorganization,
the Exit Facility (as defined below) will allow the Company to refinance the
supplemental term loan on or after August 31, 1998.

     Prepetition Negotiations with the Unofficial Noteholder Committee

     The same industry and financial pressures that required Grand Union to
commence negotiations with the Secured Banks also led the Company to commence
negotiations regarding a restructuring of its obligations with the holders of
the Senior Notes. In February and March 1998, eight institutions owning
approximately 48% of the Senior Notes agreed to serve on an unofficial
noteholder committee (the "Unofficial Noteholder Committee") and receive
confidential, non-public information about Grand Union.

     Grand Union participated in extensive negotiations with the Unofficial
Noteholder Committee regarding the terms of a proposed financial restructuring.
During this time, Grand Union failed to make the approximately $36 million
interest payment due and payable on the Senior Notes on March 2, 1998, which
resulted in the occurrence of events of default under the Indenture governing
the Senior Notes and the Credit Agreement. Nevertheless, negotiations between
Grand Union and the Unofficial Noteholder Committee continued, and on March 30,
1998, the parties reached an agreement in principle on the terms of a
restructuring to be effectuated pursuant to a plan of reorganization under
chapter 11 of the Bankruptcy Code. On May 14, 1998, Grand Union, the Unofficial
Noteholder Committee and the holders of the Grand Union's preferred stock
reached an agreement in principle regarding the proposed treatment of the
preferred stock.

     Chapter 11 Filing

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         Pursuant to a Disclosure Statement, dated May 22, 1998 (the "Disclosure
Statement"), Grand Union commenced a prepetition solicitation of votes by the
holders of Senior Notes and preferred stock to accept or reject the Plan of
Reorganization. The Plan of Reorganization generally provides that trade and
business creditors will be unimpaired and will continue to be paid in the
ordinary course of business, so long as shipments are made to the Company under
terms at least equivalent to those in place prior to January 27, 1998. The Plan
of Reorganization further provides that (i) the Company's Senior Notes will be
cancelled and exchanged for all of the reorganized Company's common stock; (ii)
the Company's existing common stock will be cancelled and exchanged for
five-year warrants to purchase approximately 1.5% of the new common stock at an
exercise price of $19.82 per share; (iii) the Company's preferred stock will be
cancelled and exchanged for (a) five-year warrants to purchase approximately
10.5% of the new common stock at an exercise price of $19.82 per share, (b) five
year warrants to purchase approximately 2.5% of the new common stock at an
exercise price of $23.15 per share, and (c) four-year warrants to purchase
approximately 1% of the new common stock at an exercise price of $12.32 per
share; and (iv) the Company's outstanding warrants and stock options will be
cancelled. At the conclusion of the solicitation period, which commenced on May
22, 1998 and ended on June 22, 1998, the Plan of Reorganization had been
accepted by holders of approximately 99% of the Senior Notes in principal amount
and approximately 92% in number of such holders that voted on the Plan of
Reorganization and by all holders of the preferred stock that voted on the Plan
of Reorganization. Holders of approximately 72% in principal amount of the
outstanding Senior Notes voted to accept the Plan of Reorganization. Although
Grand Union believes that the Plan of Reorganization will satisfy all
requirements necessary for confirmation by the Court (as defined below), there
can be no assurance that the Court will reach the same conclusion. Moreover,
there can be no assurance that modifications of the Plan of Reorganization will
not be required for confirmation or that such modifications would not
necessitate the resolicitation of votes.

     On June 24, 1998, the Company filed a voluntary petition for relief (the
"Filing") under chapter 11, Title 11 of the United States Code, as amended
("Chapter 11"), with the United States Bankruptcy Court for the District of New
Jersey (the "Bankruptcy Court"). The Company is in possession of its property
and is maintaining and operating its business as a debtor-in-possession pursuant
to the provisions of Sections 1107 and 1108 of Chapter 11.

     In connection with the Filing, on June 24, 1998, the Company entered into a
$172,022,020 firm underwritten revolving credit agreement (the "DIP Facility")
with Swiss Bank Corporation ("SBC") and Lehman Commercial Paper Inc. ("LCPI"),
as agents for a syndicate of lenders (together, the "DIP Lenders"). The DIP
Facility consists of a revolving credit facility in an aggregate amount of
$172,022,020, inclusive of a $50 million letter of credit facility. Loans under
the DIP Facility will be guaranteed by each of the Company's subsidiaries. The
DIP Facility will mature upon the earlier of (i) October 22, 1998, or (ii) the
effective date of the Plan of Reorganization.

     The proceeds of the DIP Facility will be used (i) to finance the working
capital needs of the Company and its subsidiaries in the ordinary course of
business, (ii) to finance the payment of Chapter 11 expenses, (iii) for general
corporate purposes and (iv) to refinance the revolving credit and term loans and
to replace, backstop or cash collateralize letters of credit outstanding under
the Credit Agreement. The DIP Facility also contains customary affirmative and
negative covenants, including, without limitation, restrictions on indebtedness,
liens, mergers, consolidations, liquidations, dissolutions, sales of assets and
capital expenditures, and, effective 60 days after the Filing, maintenance of
minimum EBITDA/interest and maximum debt/EBITDA ratios.

     The DIP Facility is secured by substantially all of the assets of Grand
Union and its subsidiaries. The interest rate applicable to the DIP Facility
will be equal to, at Grand Union's election, either (i) 1.5% above the higher of
(A) Citibank's prime rate and (B) the federal funds rate plus 0.5%, or (ii) 2.5%
above the rate for eurodollar deposits for one, two or three weeks or one month
(as selected by Grand Union) in the interbank eurodollar market. Grand Union
committed to pay an underwriting fee of $1,100,000 and is required to pay a
$25,000 per month administrative fee. In addition, Grand Union will pay a
commitment fee of 0.5% per annum on the average daily unused portion of the DIP
Facility and a fronting fee of 0.125% on the aggregate undrawn face amount of
outstanding letters of credit. The availability of the DIP Facility is
conditioned, among other things, upon the entry of an order of the Bankruptcy
Court approving the DIP Facility, which is anticipated to occur 15 days after
the Filing.

     On the date the Plan of Reorganization is consummated (the "Consummation
Date"), Grand Union will enter into a new credit facility (the "Exit Facility").
On April 23, 1998, Grand Union received a letter from SBC Warburg Dillon Read
Inc., SBC, Lehman Brothers Inc. and LCPI, pursuant to which SBC and LCPI
(collectively, the "Agent Banks") committed to provide financing to Grand Union
in the aggregate principal amount of $300 million upon consummation of the Plan
of Reorganization.



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<PAGE>

The Agent Banks, as agents for a syndicate of banks, financing institutions and
other entities, including the Agent Banks (collectively, the "New Grand Union
Lenders"), will provide Grand Union with the Exit Facility. The Exit Facility
will be guaranteed by all of Grand Union's subsidiaries.

     The Exit Facility will be comprised of: (i) a $230 million term loan
facility (the "Term Loan") and (ii) a $70 million revolving credit facility (the
"Revolving Credit Facility"). The Term Loan and Revolving Credit Facility will
mature on the fifth anniversary of the Consummation Date. The proceeds of the
Exit Facility will be used to refinance the obligations under the DIP Facility
and the Supplemental Term Loan claims under the Credit Agreement and the excess
portion will be used for the working capital needs of Grand Union and its
subsidiaries, including capital expenditures. Up to $50 million of the Revolving
Credit Facility will be available for the issuance of letters of credit. The
Exit Facility will also contain customary affirmative, financial and negative
covenants, including, without limitation, restrictions on liens, indebtedness
and mergers or consolidations, required maintenance of a minimum ratio of EBITDA
to interest and a maximum ratio of total indebtedness to EBITDA, and a
limitation on the amount of capital expenditures.

     The Exit Facility will be secured by substantially all of the assets of
Grand Union and its subsidiaries. The interest rate applicable to the Term Loan
and the Revolving Credit Facility will be equal to, at Grand Union's election,
either (i) 2% above the higher of (A) the SBC's prime rate and (B) .50% over the
federal funds rate per annum (the "Base Rate"), or (ii) LIBOR plus 3%, in each
case, subject to reduction based on certain performance criteria. Grand Union
will pay a commitment fee calculated at the rate of .50% per annum on the
average daily unused portion of the Revolving Credit Facility. In addition,
Grand Union will pay certain fees, including but not limited to: (i) a fronting
fee equal to .125% per annum of the aggregate undrawn face amount of outstanding
letters of credit; (ii) an administration fee of $75,000 per annum; (iii) a
facility fee; and (iv) a commitment fee of 0.5% on the amount of the commitment
for the period from April 23, 1998 to the Consummation Date.

     The availability of the Exit Facility is conditioned, among other things,
upon the Bankruptcy Court having entered an order confirming the Plan of
Reorganization on or before August 31, 1998. The terms of the Exit Facility were
the product of extensive negotiations and competitive bidding among Grand Union
and the Agents Banks, which resulted in the commitment letter for such exit
facility.

     The 1995 Restructuring

     On January 25, 1995, in connection with a capital restructuring plan
reached with its bank lenders and with members of informal committees of certain
holders of Grand Union notes, Grand Union filed a voluntary petition for relief
under chapter 11 of the Bankruptcy Code in the bankruptcy court for the District
of Delaware. The bankruptcy court confirmed on May 31, 1995 the Second Amended
Chapter 11 Plan of The Grand Union Company, dated as of April 19, 1995, and
Grand Union emerged from chapter 11 on June 15, 1995. Significant provisions of
the 1995 restructuring plan included:

     1.  Treatment of Administrative Claims
         and General Unsecured Claims

     The 1995 restructuring plan provided for the payment in full of all allowed
administrative claims and all allowed general unsecured and priority claims.

     2.  Bank Claims and Execution of Credit Agreement

     The 1995 restructuring plan provided for the payment in full of obligations
under Grand Union's then existing bank credit agreement, including principal and
accrued interest. Concurrently, Grand Union entered into the Credit Agreement,
which provided for a five-year revolving credit facility of $100,000,000 and a
seven-year term loan facility of $104,144,371, secured by a lien on
substantially all of the assets of Grand Union and its subsidiaries.

     3.  Exchange of Senior Notes

     The 1995 restructuring plan cancelled Grand Union's obligations under its
11.375% Senior Notes due 1999 and 11.25% Senior Notes due 2000, representing an
aggregate principal amount of $525,000,000 plus accrued interest, in exchange
for

                                       7
<PAGE>

the issuance of $595,421,000 in aggregate principal amount of 12% Senior
Notes due 2004 and cash payments of $54,922 for fractional interest.

     4.  Cancellation of Subordinated Notes
         and Issuance of Common Stock

     The 1995 restructuring plan also cancelled Grand Union's obligations under
its 12.25% Senior Subordinated Notes due 2002, 12.25% Senior Subordinated Notes
due 2002, Series A and 13% Senior Subordinated Notes due 1998, representing an
aggregate principal amount of $566,150,000, in exchange for an aggregate of
10,000,000 shares of common stock.

     5.  Issuance of Warrants

     The 1995 restructuring plan also provided for the issuance of warrants to
holders of 15% Senior Zero Coupon Notes due 2004 and 16.5% Senior Subordinated
Zero Coupon Notes due 2007, which warrants expire June 15, 2000, to purchase an
aggregate of 900,000 shares of common stock, pursuant to the terms of a
settlement reached among Grand Union, its then indirect parent companies, the
official committee of unsecured creditors of its then parent company, and
certain holders of notes issued by the parent company. The warrants are
comprised of 300,000 Series 1 Warrants to purchase shares of common stock at a
purchase price of $30 per share and 600,000 Series 2 Warrants to purchase shares
of common stock at a purchase price of $42 per share.

     6.  Cancellation of Remaining Long-Term
         Debt and Common Stock Interests

     The 1995 restructuring plan made no provision for the holders of the
remaining long-term debt, redeemable preferred stock, common stock or warrants
to purchase common stock of Grand Union's then direct parent.

Item 2.  Properties

     Grand Union conducts its operations primarily in leased stores and offices.
The following table indicates the location and number of stores as of March 28,
1998.

                                           Number of
       Locations                            Stores
       ---------                           ---------
       New York                              122
       New Jersey                             41
       Vermont                                41
       Connecticut                            13
       New Hampshire                           3
       Pennsylvania                            2
                                             ---
       Total                                 222

     As of March 28, 1998, Grand Union owned 14 and leased 208 of its store
sites pursuant to commercial leases. Management believes no store lease is
individually material to Grand Union. Most store leases contain several renewal
options. Nineteen store leases do not contain renewal options and sixteen will
expire over the next five years and three thereafter. Management anticipates
that it will be able to renegotiate favorable lease terms for most of these
locations, if so desired.

     Grand Union currently operates one distribution center in Montgomery, New
York, which is leased, and a commissary, which is housed in a building owned by
the Company on a ground-leased site in Newburgh, New York. Grand Union's lease
on its distribution center has 31 years remaining, including options. On May 20,
1998, the Company sold a 101,000 square foot warehouse in Waverly, New York,
which was previously vacant.

                                       8
<PAGE>

Item 3.  Legal Proceedings

     Chapter 11 Proceedings. Reference is made to "Item 1 - Business - Recent
History" for information regarding the Company's Chapter 11 proceedings.

     Environmental - Connecticut. Soil and ground water contamination has been
detected at a shopping center owned by Grand Union which is located in
Connecticut. The Company is investigating whether such contamination was caused
by improper disposal of perchloroethylene wastes by a dry cleaner previously
operating at this location or by an off-site source. Grand Union has undertaken,
under approval by the Connecticut Department of Environmental Protection, a
proposal for a remedial investigation designed to identify the sources of such
soil and ground-water contamination and to determine the length, depth and
breadth of the contamination on and off-site. Sampling analyses for the ground
water at the shopping center and for drinking water in private residences
located in the immediately surrounding area confirm that the source of the
on-site contamination, in part, is an off-site shopping center and a gasoline
station located nearby. A Remedial Action and Investigation Report was submitted
to the Connecticut Department of Environmental Protection on May 21, 1993. The
Company has not yet received a response from the Connecticut Department of
Environmental Protection, and is in the process of developing a revised
remediation plan.

     The Company's potential responsibility does not arise from any aspect of
its operation of a supermarket at the shopping center but from the actions of a
former tenant. Any contamination caused on-site by a source located off-site
would be the responsibility of another party. The Company believes that the
current intention of the Connecticut Department of Environmental Protection is
to seek reimbursement of past costs and clean-up costs from some or all of these
other parties. The Company is unable to determine the amount of its potential
liability arising from the on-site contamination, but does not believe, based
upon the results of investigations made to date, that the amount of potential
liability is likely to be materially adverse to the Company's financial
condition. Management presently estimates, based upon investigations made by the
Company's environmental consultant to date, that such liability should not
exceed $1,000,000. Investigations are continuing, and there can be no assurance
that the amount of such liability will not exceed $1,000,000.

     FTC Order. At the time of an acquisition of Grand Union in July 1989, Grand
Union and P&C Foods, then a subsidiary and currently a division of Penn Traffic,
operated stores in some of the same geographic areas in Vermont and upstate New
York. In order to satisfy the concerns of federal antitrust authorities arising
therefrom in connection with the acquisition, prior to consummation thereof MTH
Holdings, Inc. ("MTH Holdings"), which indirectly controlled Grand Union and
Penn Traffic, an affiliate of Miller Tabak Hirsch & Co., a New York Limited
Partnership, and Grand Union entered into an Agreement to Hold Separate with
Salomon Inc. and the Federal Trade Commission ("FTC") and an Agreement
Containing Consent Order (the "Order") with the FTC, which Order was
subsequently modified on February 16, 1996 (collectively, the "FTC Agreements").

     The FTC Agreements required the divestiture by MTH Holdings and/or Grand
Union (including in each case their respective subsidiaries and affiliates) of
sixteen stores located in Vermont and upstate New York. Such divestitures were
completed on July 30, 1990. Thirteen of the sixteen stores divested were P&C
Foods stores and three of the sixteen stores divested were Grand Union stores.
In a related transaction, Grand Union and P&C Foods entered into an operating
agreement (the "Operating Agreement"), pursuant to which Grand Union acquired
the right to operate P&C Foods' thirteen remaining stores in New England under
the Grand Union name until July 2000, for an average annual rent of
approximately $10,700,000 with an option to extend the term of such operation
for an additional five years. Grand Union paid P&C Foods $7,500,000 for an
option to purchase the stores at an amount defined in the Operating Agreement.
Pursuant to the terms of the Operating Agreement, the 1992 Recapitalization
triggered a $15,000,000 prepayment obligation to P&C Foods. The Operating
Agreement was assumed during the 1995 Chapter 11 case and continues in effect.

     The FTC Agreements also provide, among other things, that MTH Holdings and
Grand Union (including in each case their respective subsidiaries and
affiliates) shall not acquire, for a period of ten years, any retail grocery
stores in Vermont and certain specified counties in New York without the prior
notification to, and concurrence of, the FTC.

                                       9
<PAGE>

     Other Proceedings. The Company is also subject to certain other legal
proceedings and claims arising in connection with its business. It is
management's opinion that the ultimate resolution of such legal proceedings and
claims will not have a material adverse effect on the Company's consolidated 
results of operations or its financial position.

Item 4.  Submission of Matters to a Vote of Security Holders

     No matters were submitted to a vote of the Company's securityholders during
the fourth quarter of Fiscal 1998.

PART II

Item 5.  Market for the Registrant's Common Equity and Related Stockholders'
         Matters

     The Common Stock of the Company is eligible for quotation on the
Over-The-Counter Bulletin Board. At the close of business on June 24, 1998,
there were 10,202,018 shares of Common Stock, $0.01 par value outstanding and
entitled to vote. There were approximately 4,000 holders of record as of June
24, 1998.

     The quarterly market value of the Company's stock is discussed in Note 17
to the Consolidated Financial Statements.

     No cash dividends were declared or paid during each of the three fiscal
years ended March 28, 1998. Payment of dividends to holders of Common Stock is
restricted by the Credit Facility and by the terms of the Senior Notes and the
preferred stock.

Item 6.  Selected Financial Data

     As discussed in Item 1, the Company emerged from its 1995 Chapter 11
proceedings effective June 15, 1995 (the "Effective Date"). For financial
reporting purposes, the Company accounted for the consummation of the 1995 plan
of reorganization effective June 17, 1995. In accordance with the American
Institute of Certified Public Accountants Statement of Position 90-7, "Financial
Reporting By Entities In Reorganization Under The Bankruptcy Code," the Company
had applied Fresh-Start Reporting as of the Effective Date which has resulted in
significant changes to the valuation of certain of the Company's assets and
liabilities, and to its stockholders' equity. In connection with the adoption of
Fresh-Start Reporting, a new entity has been deemed created for financial
reporting purposes. The periods prior to the Effective Date have been designated
"Predecessor Company" and the periods subsequent to the Effective Date have been
designated "Successor Company." All information is derived from the consolidated
financial statements of the Company. This information should be read in
conjunction with the historical financial statements of the Company, including
the notes thereto, included elsewhere herein. The financial statements prior to
the Effective Date reflect the accounts of MTH Holdings pushed down to the
accounts of Grand Union. All dollars are in millions, except per share data.

                                       10
<PAGE>

<TABLE>
<CAPTION>

                                                              Successor Company                   Predecessor Company
                                                     -----------------------------------   --------------------------------
                                                      52 Weeks     52 Weeks    41 Weeks    11 Weeks    52 Weeks    52 Weeks
                                                        Ended       Ended        Ended       Ended       Ended       Ended
                                                      March 28,   March 29,    March 30,   June 17,    April 1,    April 2,
                                                        1998         1997        1996      1995(**)      1995        1994
                                                      ---------   ---------    ---------   ---------   --------    --------
<S>                                                   <C>         <C>           <C>        <C>         <C>         <C>

Statement of Operations Data:
  Sales                                               $ 2,266.8   $ 2,312.7    $ 1,819.9   $   487.9   $ 2,391.7   $ 2,477.3
  Gross profit                                            639.5       705.7        569.9       143.8       708.3       731.7
  Operating and administrative expenses                   568.9       582.9        453.7       117.5       571.6       552.5
  Depreciation and amortization                           203.1       188.1        143.8        17.2        87.1        78.6
  Unusual items                                             6.3         9.8         22.0        18.6        27.4         4.5
  Interest expense, net                                   113.8       105.8         79.2        19.8       182.0       183.8
  Loss before income taxes, extraordinary items
   and cumulative effect of accounting change            (252.6)     (180.8)      (128.8)      (29.3)     (159.8)      (87.6)
  Income tax (provision) benefit                          (51.4)       (2.5)        18.9         -           -           -
  Extraordinary gain on debt discharge                      -           -            -         854.8         -           -
  Cumulative effect of accounting change                    -           -            -           -           -          30.3
  Net (loss) income                                      (304.0)     (183.4)      (109.9)      825.5      (159.8)     (118.0)
  Net (loss) applicable to common stock                  (312.4)     (185.4)         -           -           -           -
  Net (loss) per common share (*)                         (31.1)      (18.5)       (11.0)        -           -           -
  Deficiency in earnings available to
   cover fixed charges                                   (252.6)     (180.8)      (128.8)      (29.3)     (159.8)      (87.6)
Balance Sheet Data:
  Total assets                                            892.2     1,071.8      1,178.2         -       1,394.8     1,394.2
  Total debt and capital lease obligations                959.5       888.4        875.1         -       1,614.9     1,532.2
  Redeemable stock                                        113.4        65.0          -           -         174.2       154.7
  Nonredeemable stock and stockholders' equity           (466.6)     (153.2)        44.1         -        (824.3)     (644.8)
    (deficit)
Operating and Other Data:
  Capital expenditures                                $    39.7   $    55.1     $   43.0   $     3.0   $    70.8   $    86.2
  Number of stores at year end                              222         226          229         N/A         231         254

</TABLE>

(*)  Loss per share data is not meaningful for periods prior to the Effective
     Date due to the significant changes in the capital structure of the
     Company.
(**) Balance sheet data is not applicable at this date.

Item 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations

General

     As discussed in Item 1, the Company emerged from its 1995 Chapter 11
proceedings effective June 15, 1995 (the "Effective Date"). For financial
reporting purposes, the Company accounted for the consummation of the 1995 plan
of reorganization effective June 17, 1995. In accordance with the American
Institute of Certified Public Accountants Statement of Position 90-7, "Financial
Reporting By Entities In Reorganization Under The Bankruptcy Code," the Company
had applied Fresh-Start Reporting as of the Effective Date which has resulted in
significant changes to the valuation of certain of the Company's assets and
liabilities, and to its stockholders' equity. In connection with the adoption of
Fresh-Start Reporting, a new entity had been deemed created for financial
reporting purposes. The periods prior to the Effective Date have been designated
"Predecessor Company" and the periods subsequent to the Effective Date have been
designated "Successor Company." For purposes of the discussion of Results of
Operations and Liquidity and Capital Resources, the results of the Predecessor
Company and Successor Company for the 52 weeks ended March 30, 1996, have been
combined.


                                       11
<PAGE>

Results of Operations

     The following table sets forth-certain statement of operations data
reflecting the combination discussed above (all dollars in millions):

<TABLE>
<CAPTION>
                                                                   Fiscal          Fiscal          Fiscal
                                                                    1998            1997            1996
                                                                 ----------      ----------      ----------
<S>                                                              <C>             <C>             <C>

Sales                                                            $  2,266.8      $  2,312.7      $  2,307.8
Gross profit                                                          639.5           705.7           713.7
Operating and administrative expenses                                 568.9           582.9           571.2
Depreciation and amortization                                          98.8            85.5            77.1
Amortization of excess reorganization value                           104.3           102.6            84.0
Unusual items                                                           6.3             9.8            40.6
Interest expense, net                                                 113.8           105.8            99.0
Income tax (provision) benefit                                        (51.4)           (2.5)           18.9
Extraordinary gain on debt discharge                                    -               -             854.8
Net (loss) income                                                    (304.0)         (183.4)          715.6
Net (loss) income applicable to common stock                         (312.4)         (185.4)          715.6


Sales percentage increase (decrease)                                   (2.0)%           0.2%           (3.5)%
Gross profit as a percentage of sales                                  28.2%           30.5%           30.9%
Operating and administrative expenses as a percentage of sales         25.1%           25.2%           24.7%
</TABLE>


     The Company announced on January 27, 1998, that it had retained the firm of
Salomon Smith Barney as financial advisor to evaluate various financial
alternatives available, including a capital restructuring, which affected the
Company's operations in several ways. The majority of the trade reacted
favorably to the announcement. However, there were some significant exceptions,
which negatively affected product availability, associated costs and promotional
opportunities.

     Sales for Fiscal 1998 decreased $45.9 million or 2.0% compared to Fiscal
1997. The decrease for same store sales (sales of stores which were operated
during the comparable periods of both fiscal years) in Fiscal 1998 was 0.9%.
Competitors continued to open new locations and remodel stores at a more
aggressive rate than the Company. Same store sales results, by quarter for
Fiscal 1998, beginning with the first quarter, were (1.8)%, (1.6)%, 0.8% and
(0.8)%. Same store sales comparisons were negatively influenced by the inclusion
of two Easter periods in the prior fiscal year. Due to the timing of the Easter
holiday in calendar 1998, there was no Easter selling period in the current
fiscal year while Fiscal 1997 included two. Adjusting the prior year sales to
exclude the Easter holiday effect, same store sales for Fiscal 1998 decreased
approximately 0.04%. Same store sales for the Fiscal 1998 fourth quarter
excluding Easter increased approximately 0.7%. The new management team and their
marketing strategies favorably affected sales in the second half of Fiscal 1998
and to some extent mitigated competitor marketing programs. During Fiscal 1998
the Company opened two new stores, two replacement stores and closed eight
stores. Sales for Fiscal 1997 increased $4.9 million or 0.2% compared to Fiscal
1996. Same store sales changes, by quarter for Fiscal 1997, beginning with the
first quarter, were 1.0%, 2.0%, (0.8)% and (0.4)% versus the prior year. During
Fiscal 1997, the Company opened one new store, two replacement stores, completed
six major renovations, and closed four stores.

     Gross profit as a percentage of sales was 28.2% in Fiscal 1998 compared to
30.5% in Fiscal 1997. The decrease in gross profit is primarily attributable to
a reduction in promotional income and instability in margin rates in the first
half of the fiscal year. Margins stabilized in the second half primarily as a
result of new management strategies partially mitigating the negative effects of
the January 27, 1998 announcement. Gross profit as a percentage of sales was
30.5% in Fiscal 1997 compared to 30.9% in Fiscal 1996.

                                       12
<PAGE>

     Operating and administrative expenses as a percentage of sales were 25.1%
during Fiscal 1998, compared to 25.2% during Fiscal 1997. Operating and
administrative expenses as a percentage of sales were 25.2% during Fiscal 1997,
compared to 24.7% during Fiscal 1996.

     Depreciation and amortization of $98.8 million in Fiscal 1998 was $13.3
million higher than the prior year's $85.5 million. The increase was primarily
due to the provisions of Financial Accounting Standards No. 121 ("FAS No. 121"),
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of" netted against new and closed store activity. FAS No. 121
resulted in a review of the Company's operating assets for impairment at the
individual store level using a future cash flow and market value approach. For
those store level assets where the remaining net book value exceeded the sum of
estimated future operating cash flows, an impairment loss of $25.0 million was
recognized for the excess of net book value over estimated fair value. The
increase in depreciation and amortization expense during Fiscal 1997 was largely
attributable to the application of FAS No. 121, whereby $6.4 million of an
impairment loss was recorded to reduce the estimated fair value of certain store
assets.

     Unusual items recorded in Fiscal 1998 consisted of (a) $2.7 million in
connection with legal, advisory and bank fees associated with the Plan of
Reorganization, (b) a $3.0 million charge to supplement a reserve set at fiscal
year end 1997 for the reorganization of the Company during Fiscal 1998 and (c)
additional charges of $665,000 for legal costs to supplement a reserve created
as a result of the Company's Chapter 11 filing in calendar year 1995. Unusual
items in Fiscal 1997 consisted of (a) a $7.8 million provision for restructuring
which principally relates to severance costs in connection with a reduction of
administrative overhead and (b) a $2.0 million adjustment of inventory
valuation. Unusual items in Fiscal 1996 consisted of (a) a $2.5 million
organizational restructuring provision, (b) a $15.0 million provision related to
the closure of the Company's two New York metropolitan area warehouses, (c) a
$4.5 million provision relating to a voluntary resignation program and (d) $18.6
million of restructuring charges incurred in connection with the 1995 Chapter 11
proceedings.

     Interest expense was $113.8 million in Fiscal 1998 compared to $105.8
million in the prior year. This expense includes the accrual for the March 2,
1998 interest payment on the Senior Notes that was not paid. The increase in
interest expense in Fiscal 1998 compared to the prior year primarily resulted
from the supplemental term loan facility negotiated in August 1997, as part of
the Credit Agreement. The increase in interest expense in Fiscal 1997 compared
to Fiscal 1996 is principally a result of higher capitalized lease costs and
renegotiated debt related to the Company's emergence from bankruptcy.

     The income tax provision for Fiscal 1998 was $51.4 million compared to a
provision of $2.5 million in Fiscal 1997. The income tax provision for Fiscal
1998 represents the establishment of a valuation allowance for the Company's
remaining deferred tax asset relating to temporary differences. During Fiscal
1997, the Company recorded an income tax provision of $2.5 million. The Company
wrote down $8.5 million of the previously recorded income tax benefits and
recorded a valuation allowance for the balance of the previously recorded
benefits relating to the use of operating loss carryforwards.

Liquidity and Capital Resources

     Chapter 11 Filing

         Pursuant to the Disclosure Statement, Grand Union commenced a
prepetition solicitation of votes by the holders of Senior Notes and preferred
stock to accept or reject the Company's proposed Plan of Reorganization. The
Plan of Reorganization generally provides that trade and business creditors will
be unimpaired and will continue to be paid in the ordinary course of business,
so long as shipments are made to the Company under terms at least equivalent to
those in place prior to January 27, 1998. The Plan of Reorganization further
provides that (i) the Company's Senior Notes will be cancelled and exchanged for
all of the reorganized Company's common stock; (ii) the Company's existing
common stock will be cancelled and exchanged for five-year warrants to purchase
approximately 1.5% of new common stock at an exercise price of $19.82 per share;
(iii) the Company's preferred stock will be cancelled and exchanged for (a)
five-year warrants to purchase approximately 10.5% of the new common stock at an
exercise price of $19.82 per share, (b) five-year warrants to purchase
approximately 2.5% of the new common stock at an exercise price of $23.15 per
share, and (c) four-year warrants to purchase approximately 1% of the new common
stock at an exercise price of $12.32 per share; and (iv) the Company's warrants
and stock options will be cancelled. At the conclusion of the solicitation
period, which commenced on May 22, 1998 and ended on June 22, 1998, the Plan of
Reorganization had been accepted by the requisite vote of the holders of the
Senior Notes and by all holders of the preferred stock. Although Grand Union
believes that the Plan of Reorganization will satisfy all

                                       13
<PAGE>

requirements necessary for confirmation by the Bankruptcy Court, there can be no
assurance that the Court will reach the same conclusion. Moreover, there can be
no assurance that modifications of the Plan of Reorganization will not be
required for confirmation or that such modifications would not necessitate the
resolicitation of votes. On June 24, 1998, the Company filed a voluntary
petition for relief under chapter 11 with the Bankruptcy Court.

     As previously reported, in recent months, the Company had been experiencing
liquidity problems and had been unable to borrow the funds necessary to pay the
interest due on its Senior Notes and finance its working capital and other
business needs.

     Since March 2, 1998, the Company has been in default of its obligations
under the Senior Notes and operating with waivers of cross defaults under the 
Credit Agreement. As of June 24, 1998, the Company has approximately $22 
million of borrowings and approximately $33 million of outstanding trade 
letters of credit. In addition, the Filing by the Company constitutes an 
automatic default under the Credit Agreement.

     In connection with the Filing, on June 24, 1998, the Company entered into a
$172,022,020 revolving credit agreement (the "DIP Facility") with SBC and LCPI
(together, the "DIP Lenders"). The DIP Facility consists of a revolving credit
facility in an aggregate amount of $172,022,020, inclusive of a $50 million
letter of credit facility. Loans under the DIP Facility will be guaranteed by
each of the Company's subsidiaries. The DIP Facility will mature upon the
earlier of (i) October 22, 1998 or (ii) the effective date of the Plan of
Reorganization.

         The proceeds of the DIP Facility will be used (i) to finance the
working capital needs of the Company and its subsidiaries in the ordinary course
of business, (ii) to finance the payment of Chapter 11 expenses, (iii) for
general corporate purposes and (iv) to refinance the revolving credit and term
loans and to replace, backstop or cash collateralize letters of credit
outstanding under the Company`s existing Credit Agreement.

         The DIP Facility is secured by substantially all of the assets of Grand
Union and its subsidiaries. The interest rate applicable to the DIP Facility
will be equal to, at Grand Union's election, either (i) 1.5% above the higher of
(A) Citibank's prime rate and (B) the federal funds rate plus 0.50%, or (ii)
2.5% above the rate for eurodollar deposits for one, two or three weeks or one
month (as selected by Grand Union) in the interbank eurodollar market. Grand
Union will pay an underwriting fee of $1,100,000 and is required to pay a
$25,000 per month administrative fee. In addition, Grand Union pays a commitment
fee of 0.5% per annum on the average daily unused portion of the DIP Facility
and a fronting fee of 0.125% on the aggregate undrawn face amount of outstanding
letters of credit. The availability of the DIP Facility is conditioned, among
other things, upon the entry of an order of the Bankruptcy Court approving the
DIP Facility, which is anticipated to occur 15 days after the Filing.

     On the Consummation Date, Grand Union will enter into the Exit Facility. On
April 23, 1998, Grand Union received a letter from SBC Warburg Dillon Read Inc.,
SBC, Lehman Brothers Inc. and LCPI, pursuant to which Swiss Bank Corporation and
Lehman Commercial Paper Inc. (collectively, the "Agent Banks") committed to
provide financing to Grand Union in the aggregate principal amount of $300
million upon consummation of the Plan of Reorganization. The Agent Banks, as
agents for a syndicate of banks, financing institutions and other entities,
including the Agent Banks (collectively, the "New Grand Union Lenders"), will
provide Grand Union with the Exit Facility. The Exit Facility will be guaranteed
by all of Grand Union's subsidiaries.

     The Exit Facility will be comprised of: (i) a $230 million term loan
facility (the "Term Loan") and (ii) a $70 million revolving credit facility (the
"Revolving Credit Facility"). The Term Loan and Revolving Credit Facility will
mature on the fifth anniversary of the Consummation Date. The proceeds of the
Exit Facility will be used to refinance the obligations under the DIP Facility
and the Supplemental Term Loan claims under the existing Credit Agreement and
the excess portion will be used for the working capital needs of Grand Union and
its subsidiaries, including capital expenditures. Up to $50 million of the
Revolving Credit Facility will be available for the issuance of letters of
credit. The Exit Facility will be secured by substantially all of the assets of
the Company and its subsidiaries. The availability of the Exit Facility is
conditioned, among other things, upon the Bankruptcy Court having entered an
order confirming the Plan of Reorganization on or before August 31, 1998.

     As of March 28, 1998, the Company had $17 million of borrowings and
approximately $44 million of letters of credit outstanding under its $68
million revolving credit facility.

                                       14
<PAGE>

         Significant expenditures and resources used to finance such
expenditures for the three fiscal years ended March 28, 1998 are reflected in
the following table (in millions):

<TABLE>
<CAPTION>
                                                                            Fiscal          Fiscal          Fiscal
                                                                             1998            1997            1996
                                                                            ------          ------          ------
<S>                                                                      <C>             <C>              <C>
Resources used:
  Debt and capital lease repayments                                       $    27.8         $    18.5       $   102.0
  Capital expenditures                                                         39.7              55.1            43.7
  Loan placement fees                                                           9.8                 -             3.1
  Operating activities                                                         36.1                 -            49.4
                                                                         =============   =============   =============
                                                                          $   113.4         $    73.6       $   198.2
                                                                         =============   =============   =============
Financed by:
  Net proceeds from sale of Class A Preferred Stock                       $    40.0         $    51.0       $       -
  Net proceeds from long-term debt                                             78.0               9.0               -
  Proceeds from New Bank Facility                                                 -                 -           137.2
  Property disposals                                                            5.9               8.0            11.0
  Operating activities                                                            -               0.4               -
                                                                         -------------   -------------   -------------
                                                                          $   123.9         $    68.4      $    148.2
                                                                         =============   =============   =============

</TABLE>

Year 2000 Compliance

     The Company is working to assure business continuity with respect to the
issues which are anticipated to arise related to the calendar year 2000. The
Company is aware of many of the types of problems that could occur as the
millennium approaches and is assessing any exposure from a product, services and
systems standpoint, and working with customers, suppliers and partners. The
Company intends to address all Year 2000 issues as they are identified. The
Company's goal is to achieve maximum compliance both internally and externally.
As part of the Company's goal to achieve year 2000 compliance, it will seek
"millennium certification" and/or representations and warranties from suppliers,
vendors and business partners about their Year 2000 compliance. The Company's
Year 2000 effort is being coordinated by a Year 2000 Steering Committee
comprised of several officers of the Company. Within the Company, resources are
being committed, and projects are being planned and undertaken as required with
the goal of achieving Year 2000 compliance. Based on current information, costs
of addressing potential problems are not expected to have a material adverse
impact on the Company's financial position, results of operations or cash flows
in future periods. However, if the Company, its customers or vendors are unable
to resolve such processing issues in a timely manner, it could result in a
material financial risk.

Impact of New Accounting Standards

     In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income," ("SFAS No. 130") effective for fiscal years beginning after December
15, 1997. SFAS No. 130 requires the reporting and display of comprehensive
income and its components in an entity's financial statements.

     In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 131, "Disclosures about Segments of an
Enterprise and Related Information," (SFAS 131) effective for fiscal years
beginning after December 15, 1997. SFAS 131 provides accounting guidance for
reporting information about operating segments and requires both interim and
annual segment reporting.

     In February 1998, the FASB issued Statement of Financial Accounting
Standards No. 132, Employers' Disclosures about Pensions and Other
Postretirement Benefits ("SFAS No. 132"), which will be effective for financial
statements beginning after

                                       15
<PAGE>

December 15, 1997. SFAS No. 132 revises employers' disclosure about pension and
other postretirement benefit plans. It does not change the measurement or
recognition of those plans.

     These statements, which will be adopted by the Company in Fiscal 1999,
affect financial statement presentation and disclosure but will not have an
impact on the Company's consolidated financial position or results of
operations.

     In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," ("SFAS No. 133") effective for fiscal
quarters of fiscal years beginning after June 15, 1999. SFAS No. 133 requires
that an entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value.
The Company currently does not have any derivative instruments and, therefore,
does not expect the adoption of this SFAS to have an effect on the Company's
financial position or results of operations.

Future Outlook

     Upon the Consummation of the Plan of Reorganization, the Company will be in
a position to aggressively pursue opportunities that it could not previously.
Due to an historically overleveraged balance sheet, the Company has had
insufficient resources to appropriately fund capital expenditures. The
significant reduction in debt, and the attendant reduction in interest expense,
to be effected by a reorganization of the Company, together with the execution
of the Exit Facility, will provide the Company with substantially improved
liquidity, $50 million of which will be available upon emergence. This
substantial reduction of debt and the availability of new funds should enable
the Company to execute a capital expenditure program that will enhance the
operations, profitability and competitiveness of the Company. The marketing
strategies of the new senior management team instituted in the second half of
Fiscal 1998 will continue. The Company has determined that to maximize
profitability, it should (i) expand its existing store base, including the
development of new stores and the remodeling of existing units; (ii) implement a
program for maximizing advertising and promotion allowance revenues from the
company's suppliers; and (iii) perform ongoing evaluation and, when appropriate,
close or modify store locations that are not adequately contributing. The
Company remains committed to building its sales base in existing stores. An
objective of reducing operating costs in both the stores and administration will
continue in conjunction with the focus on improving store conditions and
customer service.

Special Note Concerning Forward-Looking Statements

     Except for historical information, statements by the Company under the
caption "Future Outlook" and elsewhere in this report may be considered
"forward-looking statements" within the meaning of federal securities law. Such
forward-looking statements are subject to risks, uncertainties and other factors
that could cause actual results to differ materially from future results
expressed or implied by such forward-looking statements. Potential risks and
uncertainties include, but are not limited to, the competitive environment in
which the Company operates, the ability of the Company to maintain and improve
its gross sales and margins, the liquidity of the Company on a cash flow basis
(including the Company's ability to comply with the financial covenants of its
credit agreement and to fund the Company's capital expenditure program), the
Company's ability to complete its capital expenditures on a timely basis, the
success of operating initiatives, the viability of the Company's strategic plan,
regional weather conditions, and the general economic conditions in the
geographic areas in which the Company operates. Although Grand Union believes
that the Consummation Date will occur within the next two months, there can be
no assurance as to such timing or as to the Consummation of the Plan of
Reorganization.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

     Not applicable.

Item 8.  Financial Statements and Supplementary Data

     The Financial Statements and Supplementary Data listed below are included
in this report on the page indicated.

Index to Financial Statements:

<TABLE>

Document                                                                                          Page
<S>                                                                                               <C>
Reports of Independent Accountants                                                                 F-1

Consolidated Statement of Operations for the 52 weeks ended March 28, 1998 and
   March 29, 1997 and the 41 weeks ended March 30, 1996 (Successor Company)
   and the 11 weeks ended June 17, 1995 (Predecessor Company)                                      F-3
</TABLE>
                                       16
<PAGE>

<TABLE>

<S>                                                                                               <C>
Consolidated Balance Sheet at March 28, 1998 and March 29, 1997                                    F-4

Consolidated Statement of Cash Flows for the 52 weeks ended March 28, 1998 and
   March 29, 1997 and the 41 weeks ended March 30, 1996 (Successor Company)
   and the 11 weeks ended June 17, 1995 (Predecessor Company)                                      F-5

Notes to Consolidated Financial Statements                                                         F-6

     All other schedules are omitted either because they are not applicable or
the required information is disclosed in the consolidated financial statements
or notes thereto.
</TABLE>

Item 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure

     None.

PART III

Item 10.  Directors and Executive Officers of the Registrant

     The names, ages and present principal occupations of the directors and
executive officers of Grand Union as of June 26, 1998, are set forth below.

<TABLE>
<CAPTION>

Name                                                  Age     Position
----                                                  ---     --------
<S>                                                   <C>     <C>
J. Wayne Harris..................................      59     Director, Chairman and Chief Executive Officer
Jack W. Partridge, Jr............................      53     Director, Vice Chairman and Chief Administrative Officer
Gary M. Philbin..................................      41     Director, President and Chief Merchandising Officer
Jeffrey P. Freimark..............................      43     Executive Vice President and Chief Financial Officer
Raymond H. Ayers.................................      53     Corporate Vice President, Real Estate
L. Andrew DePaolis...............................      55     Corporate Vice President, Advertising and Marketing
Jasper S. Meadows................................      47     Corporate Vice President, Grocery and General Merchandising
Francis E. Nicastro..............................      56     Corporate Vice President and Treasurer
Glenn J. Smith...................................      34     Corporate Vice President, General Counsel and Assistant Secretary
Donald C. Vaillancourt...........................      53     Corporate Vice President, Public Affairs Counsel and Secretary
Jordan H. Krimstein..............................      67     Director
Mark H. Manski...................................      46     Director
Martha A. Pritchard..............................      42     Director

</TABLE>

     Mr. Harris has been a Director, Chairman and Chief Executive Officer of the
Company since August 1, 1997. From September, 1992 until joining the Company,
Mr. Harris served as: Senior Vice President, North East Operations, The Great
Atlantic and Pacific Tea Company ("A&P"), a leading supermarket chain; Executive
Vice President and Chief Operating Officer for A&P's US Operations; and, most
recently, Chairman and Chief Executive Officer of A&P Canada, Ltd. Between 1986
and 1992, Mr. Harris was President of the Cincinnati/Dayton Division of The
Kroger Company ("Kroger"), the largest food retailer in the United States.

     Mr. Partridge has been a Director of Grand Union since January 15, 1998 and
was elected Vice Chairman and Chief Administrative Officer effective January 5,
1998. Mr. Partridge joined Grand Union after a 23-year career with Kroger, where
he served as Group Vice President and a member of the company's Senior
Management Committee.

     Mr. Philbin has been a Director of the Company since October 30, 1997, and
was elected President and Chief Merchandising Officer of the Company on October
3, 1997. From June, 1996 until joining the Company, Mr. Philbin was Executive
Vice President in charge of Merchandising and Operations for the Cub Food Store
Division of SuperValu, Inc. Before joining Cub Foods, Mr. Philbin was Vice
President of Merchandising with the Waldbaum's Division of A&P from July,

                                       17
<PAGE>

1993. Prior to his employment with Waldbaum's, Mr. Philbin served in
merchandising and operations capacities with Kroger commencing in January 1990.

     Mr. Freimark has been the Company's Executive Vice President and Chief
Financial Officer since March 3, 1997. From March 3, 1997, to January 5, 1998,
Mr. Freimark also served as the Company's Chief Administrative Officer. Prior to
joining the Company, Mr. Freimark served as Executive Vice President and Chief
Financial Officer of Pueblo Xtra International, Inc., a leading supermarket
chain in the Commonwealth of Puerto Rico and the Territory of the U.S. Virgin
Islands, from 1992 and as Senior Vice President, Finance, Administration and
Treasurer beginning in 1986. Prior to that he was Vice President-Finance and
Corporate Secretary of Kings Super Markets, Inc., a New Jersey supermarket
chain.

     Mr. Ayers has been the Corporate Vice President in charge of Real Estate
since 1988. He has been with the Company for 30 years. Prior to his present
position, Mr. Ayers served in several capacities in the Real Estate Department,
starting in 1968, as a trainee.

     Mr. DePaolis has been the Corporate Vice President in charge of Advertising
and Marketing since 1996. Mr. DePaolis served as Corporate Vice President of
Advertising and Sales Promotion from 1990 until 1996 when he was appointed to
his present position. Mr. DePaolis joined the Company in 1968, spending most of
his time in the Advertising Department.

     Mr. Meadows has been Corporate Vice President in charge of Grocery and
General Merchandise since May 1997. Preceding that Mr. Meadows served in various
positions in the Company's Grocery and General Merchandise Department. He joined
the Company in 1972 as a trainee in our stores.

     Mr. Nicastro has been Corporate Vice President and Treasurer of the Company
since September 1989. Prior to that, he spent 20 years with the Singer Company,
a manufacturing company, the last three of which were as Treasurer.

     Mr. Smith has been Corporate Vice President, General Counsel and Assistant
Secretary since February 1998. Mr. Smith commenced his employment with Grand
Union in August 1995 as Director of Labor Relations and Employment Practices. He
was promoted to Vice President of Labor and Employment Counsel in May 1997 and
to Vice President, General Counsel and Assistant Secretary in August 1997. Prior
to joining Grand Union, Mr. Smith was an Associate with the law firm of Grotta,
Glassman and Hoffman, P.A., in Roseland, New Jersey from September 1991 to
August 1995.

     Mr. Vaillancourt has been Corporate Vice President, Public Affairs Counsel
and Secretary since June, 1997. Prior to that he served in a number of
capacities with the Company. Effective January 1985, Mr. Vaillancourt became
Corporate Vice President, Corporate Communications and Consumer Affairs.
Effective January 1980, he was appointed Vice President, Corporate
Communications and Consumer Affairs. Effective October 1976, he became Director,
Corporate Communications and Consumer Affairs. In December 1971, he was promoted
to Assistant to the Director of Public Relations.

     Mr. Krimstein has been a Director since October 30, 1997. Mr. Krimstein
currently serves as the National President of the School of the Art Institute of
Chicago Alumni Association and is a member of the School's Board of Governors.
In 1995, Mr. Krimstein retired from his position as Executive Vice President and
Executive Creative Director for the Chicago office of Campbell, Mithun, Esty,
Inc., a large advertising agency headquartered in Minneapolis, Minnesota. Mr.
Krimstein was with Campbell, Mithun, Esty, Inc. for 38 years in a variety of
positions.

     Mr. Manski has been a Director since October 30, 1997. Mr. Manski has been
President and Founder of the RoundHill Group, Ltd., since 1994. The firm
specializes in strategic, operational, management and financial advisory
services to middle market companies. From 1993 to 1994, Mr. Manski was President
and Chief Executive Officer of The Direct Marketing Group, Inc. ("DMG"), a large
independent full service direct response marketing firm. From 1983 until joining
DMG, Mr. Manski was with IBJ Schroder Bank & Trust Company, where he was a
Senior Vice President and deputy head of the bank's Credit Division.

     Ms. Pritchard has been a Director since October 30, 1997. Ms. Pritchard is
a Principal of Bick Capital Advisors, Inc., a financial advisory firm. From 1995
to 1997, Ms. Pritchard was a founding partner and Managing Director, Head of
High Yield Bond Sales for Toronto Dominion Securities (USA), Inc., an investment
banking firm. From 1991 to 1994, Ms. Pritchard was Vice President, High Yield
Bond Sales with Salomon Brothers, Inc., an investment banking firm. Prior to
that, Ms. Pritchard worked with Dillon, Read & Co., Inc., Salomon Brothers, Inc,
and The Bank of New York.

                                       18
<PAGE>

     Executive officers of the Company are appointed and serve at the discretion
of the Board of Directors. Each director of the Company is elected for a period
of one year and will serve until his or her successor is duly elected and
qualified. On the Consummation Date, the Board of Directors of Grand Union shall
consist of eleven members, eight of whom shall be selected by the Unofficial
Noteholder Committee and three of whom shall be Messrs. Harris, Partridge, and
Philbin, who shall serve as directors for the entire term of their employment
agreements. Notwithstanding the foregoing, the Board of Directors may consist of
fewer than eleven members so long as, unless the Unofficial Noteholder Committee
agrees otherwise, the members of the Board of Directors who are not either Mr.
Harris, Mr. Partridge or Mr. Philbin have at least five-sevenths (5/7ths) of the
voting power on the Board of Directors.

     In addition, the following individuals served as directors or executive
officers of the Company during Fiscal 1998:

<TABLE>
<CAPTION>

Name                                               Positions                                                  Served through
----                                               ---------                                                  --------------
<S>                                                <C>                                                        <C>
Roger E. Stangeland..............................  Director, Chairman Emeritus                                April 22, 1998
                                                   Chairman of the Board and Chief Executive Officer          October 1, 1997
James J. Costello................................  Director                                                   April 22, 1998
Geoffrey T. Moore................................  Director                                                   April 22, 1998
Clifford A. Miller...............................  Director                                                   April 22, 1998
J. Richard Stonesifer............................  Director                                                   April 22, 1998
Gilbert C. Vuolo.................................  Senior Vice President, Human Resources and Labor           March 3, 1998
                                                   Relations
William E. Kinslow...............................  Corporate Vice President, Management Information           October 3, 1997
                                                   Systems
William G. Kagler................................  Director                                                   August 26, 1997
Daniel E. Josephs................................  Director                                                   August 8, 1997
David Y. Ying....................................  Director                                                   July 28, 1997
John W. Schroeder................................  Vice President, General Counsel and Secretary              May 15, 1997
Joseph J. McCaig.................................  Director, President and Chief Executive Officer            May 7, 1997

</TABLE>

Item 11.  Executive Compensation

Executive Compensation

     The following table sets forth compensation paid or accrued by the Company
during the three fiscal years ended March 28, 1998 ("Fiscal 1998"), March 29,
1997 ("Fiscal 1997") and March 30, 1996 ("Fiscal 1996"), to the Company's Chief
Executive Officer, four other executive officers, and two other executive
officers who separated from the Company during Fiscal 1998, one of whom served
as the Company's Chief Executive Officer during Fiscal 1998 and another whose
salary and bonus exceeded $100,000 for Fiscal 1998 (collectively, the "Named
Executive Officers"), for services rendered to the Company and its subsidiaries
in all capacities during such three fiscal year period:

                                       19
<PAGE>

<TABLE>
<CAPTION>

                                                                                    Long Term
                                                                                   Compensation
                                                    Annual Compensation               Awards
                                              ------------------------------        Securities
                                                                                    Underlying                  All Other
Name and Principal Position      Year         Salary($)         Bonus ($)(1)      Options/SARs(#)          Compensation ($)(2)
                                 ----         ---------         ------------      ---------------          -------------------
<S>                              <C>           <C>              <C>                <C>                      <C>

J. Wayne Harris............       1998          394,402              415,384        1,250,000                    118,693
  Chairman and Chief
  Executive Officer

Gary M. Philbin............       1998          168,347              168,269          450,000                     27,685
  President and Chief
  Merchandising Officer

Jeffrey P. Freimark........       1998          330,436              222,000           95,000                    643,205
  Executive Vice
  President and Chief
  Financial Officer

Francis E. Nicastro........       1998          173,100               29,760            6,500                      6,752
  Corporate Vice                  1997          160,484                    0                0                      6,355
  President and Treasurer         1996          149,858               36,838            5,800                      4,411

Raymond H. Ayers.........         1998          157,242               32,788           15,000                      6,460
  Corporate Vice
  President Real Estate

FORMER EXECUTIVES
Joseph J. McCaig                  1998           91,745               16,246                0                  1,101,085
  President and Chief             1997          538,462               39,939                0                     13,221
  Executive Officer               1996          454,310               90,000           47,800                    181,786
  


Gilbert C. Vuolo............      1998          182,308                    0                0                    204,858
  Senior Vice President,          1997          188,715                    0                0                      4,920
  Human Resources                 1996          145,792               29,440            6,560                      4,244
</TABLE>

-----------
The "Other Annual Compensation" column was omitted since the aggregate amount of
perquisites and other personal benefits in respect of Fiscal 1998, Fiscal 1997,
and Fiscal 1996 is less than the lower of $50,000 or 10% of the total annual
salary and bonus reported for each of the Named Executive Officers and no other
compensation of the type required to be described in the "Other Annual
Compensation" column was paid in Fiscal 1998, Fiscal 1997, or Fiscal 1996.

(1)    Included in the "Bonus" column for Fiscal 1998 are amounts paid during
       the fiscal year ending April 3, 1999 for performance in Fiscal 1998. For
       Fiscal 1997 the amounts in the "Bonus" column represent payments made
       during Fiscal 1998 for performance in Fiscal 1997. All amounts included
       in the "Bonus" column for Fiscal 1996 are retention payments paid to the
       Named Executive Officers for their remaining in the Company's employ from
       the bankruptcy through the end of Fiscal 1996.

(2)    "All Other Compensation" includes the following: (i) contributions to the
       Company's Savings Plan under Section 401(k) made by the Company in Fiscal
       1998 for each of the named executive officers as follows: Mr. McCaig -
       $331; Mr. Freimark - $625; Mr. Nicastro - $1,538; Mr. Ayers - $1,535 and
       Mr. Vuolo - $1,414. The amounts for Fiscal 1997 and Fiscal 1996,
       respectively, were as follows: Mr. McCaig - $1,875 and $1,414; Mr.
       Nicastro - $1,543 and $520; and Mr.

                                       20
<PAGE>

       Vuolo - $1,598 and $1,516 and (ii) premium payments for life insurance
       made by the Company in Fiscal 1998 for each of the named officers were as
       follows: Mr. Harris - $10,887; Mr. McCaig - $754; Mr. Philbin - $2,818;
       Mr. Freimark - $3,708; Mr. Nicastro - $5,214; Mr. Ayers - $4,925 and Mr.
       Vuolo - $3,444. The amounts for Fiscal 1997 and Fiscal 1996,
       respectively, were as follows: Mr. McCaig - $11,346 and $10,843; Mr.
       Nicastro - $4,812 and $4,811; and Mr. Vuolo - $3,322 and $2,416. The
       Fiscal 1998 amounts for Messrs. Harris, Philbin and Freimark include
       payments for relocation costs incurred when joining the Company, in the
       following amounts: Mr. Harris - $107,806; Mr. Philbin - $24,867; and Mr.
       Freimark - $638,872. The Fiscal 1998 amounts for Mr. McCaig and Mr. Vuolo
       include payments connected with their separation from the Company, in the
       following amounts: Mr. McCaig - $1,100,000 and Mr. Vuolo - $200,000. The
       Fiscal 1996 amount for Mr. McCaig includes $169,217, which is the value
       of securities distributed from custodial accounts established pursuant to
       non-competition, and confidentiality agreements entered into by Mr.
       McCaig in August 1993. This amount was distributed as a result of the
       Company's filing for bankruptcy in 1995, and offset the Company's
       obligations to the executive under The Grand Union Company Supplemental
       Retirement Program for Key Executives.

Harris Employment Agreement

     Mr. Harris, the Company's Chairman and Chief Executive Officer, is employed
by the Company pursuant to a four-year employment agreement dated as of August
1, 1997 (the "Harris Employment Agreement"). Pursuant to the Harris Employment
Agreement, Mr. Harris is entitled to receive (a) an annual salary of $600,000
(prorated during the first and last fiscal years during the term of the
agreement); (b) bonus compensation determined in accordance with the Company's
Bonus Plan (i) for the fiscal year ended March 28, 1998, up to a maximum bonus
equal to 120% of his base salary paid for such period, and subject to a
guaranteed minimum bonus for such period equal to 75% of the base salary
actually paid to him during such period and (ii) during the remaining term of
the Harris Employment Agreement, with a bonus of at least 100% of Mr. Harris's
base salary, subject to achievement by the Company of performance targets
determined by the Compensation Committee of the Company's Board of Directors;
and (c) payment or reimbursement of the costs of maintaining a residence near
the Company's principal executive offices (and/or relocation expenses if Mr.
Harris relocates to a permanent residence near the Company's principal executive
offices) and weekly travel between such residence and another residence
maintained by Mr. Harris.

     In connection with the execution of the Harris Employment Agreement, Mr.
Harris was also granted options under the Company's 1995 Equity Incentive Plan
(the "EIP") to purchase an aggregate of 1,250,000 shares of the Company's common
stock at the prices and on the terms described herein and in the EIP. Except as
otherwise noted, all of the options are exercisable for ten years from the date
of grant, unless earlier terminated. Such options become exercisable as follows:
(i) options to purchase 500,000 shares at an exercise price equal to $1.375 (the
closing price as reported by NASDAQ-National Market on August 1, 1997), which
became exercisable immediately; (ii) options to purchase 100,000 shares at an
exercise price equal to $1.375, which became exercisable immediately upon
approval by stockholders of the Company of an amendment to the EIP; (iii)
options to purchase 200,000 shares at an exercise price equal to $1.375, which
shall become exercisable if and when the Company shall have earnings before
interest, tax, depreciation and amortization expense ("EBITDA") of an aggregate
of at least $147 million for any 13 continuous 4 week fiscal reporting periods
commencing after August 1, 1997 and ending on or before the end of the Company's
fiscal year ending in 2000; (iv) options to purchase 150,000 shares at an
exercise price equal to $2.375, which become exercisable on and after August 1,
1998; (v) options to purchase 150,000 shares at an exercise price equal to
$3.375, which become exercisable on and after August 1, 1999; and (vi) options
to purchase 150,000 shares at an exercise price equal to $4.375, which become
exercisable on and after August 1, 2000.

     Pursuant to the Harris Employment Agreement and if he completes his four
year term thereunder, Mr. Harris will be credited with his years of service with
the Company plus 7 additional years of service for purposes of the Company's
Supplemental Retirement Plan for Key Executives. If Mr. Harris does not complete
the term of the Harris Employment Agreement or if he works additional years
after completing the term of the Harris Employment Agreement, he may be credited
with a different number of years of additional service. Mr. Harris is also
entitled to other employee benefits which the Company believes to be customary
for executives in Mr. Harris's position, and he and the Company have agreed to
rights of termination, payments and other benefits on termination under certain
circumstances, confidentiality, and non-competition, in each case which the
Company believes to be customary for agreements with executives in Mr. Harris's
position.

     In connection with the Plan of Reorganization, Grand Union and Mr. Harris
will execute an amendment to his employment agreement (the "Harris Amendment"),
which will amend and restate Mr. Harris' employment agreement and will become
effective as of the Consummation Date. Under the terms of the Harris Amendment,
Mr. Harris will be employed by Grand

                                       21
<PAGE>

Union for a four-year term of employment beginning on the Consummation Date and
will be entitled to receive (a) an annual salary of $600,000; (b) bonus
compensation determined in accordance with the Company's Executive Annual
Incentive Bonus Plan (the "EAIB Plan") up to a maximum bonus equal to 125% of
his base salary paid for such period, subject to the achievement by Grand Union
of specified EBITDA targets determined by the Compensation Committee; and (c) so
long as Mr. Harris does not maintain a permanent residence within 100 miles of
Grand Union's principal office, payment or reimbursement of the costs of
maintaining a local residence near Grand Union's principal executive offices
(subject to income tax gross-up procedures) and weekly travel between Grand
Union's principal executive offices and the permanent residence maintained by
Mr. Harris.

     Pursuant to the Harris Amendment, for purposes of Grand Union's
Supplemental Retirement Plan for Key Executives, Mr. Harris will be credited
with 7 additional years of service, plus one year for each year of service with
Grand Union. In addition, Mr. Harris will be credited with a total of 15 years
of service (inclusive of the aforementioned years of service) if Mr. Harris
completes his full term of employment under the Harris Amendment. Mr. Harris
will also be entitled to other employee benefits which Grand Union believes to
be customary for executives in Mr. Harris's position. The Harris Amendment
provides for rights of termination, payments and other benefits on termination
under certain circumstances, confidentiality, and non-competition, in each case
which Grand Union believes to be customary for agreements with executives in Mr.
Harris's position.

Partridge Employment Agreement

     Mr. Partridge, the Company's Vice Chairman and Chief Administrative
Officer, is employed by the Company pursuant to a four-year employment agreement
dated as of January 5, 1998 (the "Partridge Employment Agreement"). Pursuant to
the Partridge Employment Agreement, Mr. Partridge is entitled to receive: (a) a
one-time signing bonus of $75,000; (b) an annual salary of $350,000 per year,
prorated based on the actual number of weeks worked during the fiscal years
ending 1998 and 2002; (c) bonus compensation in an amount determined by the
Company's Compensation Committee based on the achievement of specified EBITDA
targets established by the Compensation Committee, subject to the following: (x)
for the fiscal year ending March 28, 1998 and the first half of the fiscal year
ending March 27, 1999, the minimum bonus payable for such period shall be 100%
of Mr. Partridge's base salary paid for such period; and (y) for the second half
of the fiscal year ending March 27, 1999, the maximum bonus payable shall be
125% of Mr. Partridge's base salary for the applicable period; and (d) payment
or reimbursement of the reasonable costs of local accommodations for Mr.
Partridge and appropriate travel expenses for Mr. Partridge between such
accommodations and Wayne, New Jersey.

     In connection with the execution of the Partridge Employment Agreement, Mr.
Partridge was also granted options to purchase up to 450,000 shares of the
Company's common stock on the terms and subject to the conditions set forth
below and in the EIP. Except as otherwise noted, all of the options are
exercisable for ten years from the date of grant, unless earlier terminated.
Such options become exercisable as follows: (i) options to purchase 175,000
shares at an exercise price equal to $2.0625 (the closing price as reported by
NASDAQ SmallCap Market on the Effective Date), exercisable immediately; (ii)
options to purchase 75,000 shares at an exercise price equal to $2.0625, which
shall become exercisable if and when the Company shall have earnings before
interest, tax, depreciation and amortization expense of an aggregate of at least
$147 million for any 13 continuous 4 week fiscal reporting periods commencing on
the Effective Date and ending on or before the end of the Company's fiscal year
ending in 2000; (iii) options to purchase 100,000 shares at an exercise price
equal to $3.0625, exercisable on or after January 5, 1999; and (iv) options to
purchase 100,000 shares at an exercise price equal to $4.0625, exercisable on or
after January 5, 2000.

     Pursuant to the Partridge Employment Agreement, Mr. Partridge will be
credited with 7 additional years of service for purposes of the Company's
Supplemental Retirement Plan for Key Executives if he completes his four year
term under the Partridge Employment Agreement.

     In connection with the Plan of Reorganization, Grand Union and Mr.
Partridge will execute an amendment to his employment agreement (the "Partridge
Amendment"), which will amend and restate Mr. Partridge's employment agreement
and will become effective as of the Consummation Date. Under the terms of the
Partridge Amendment, Mr. Partridge will be employed by Grand Union for a
four-year term of employment beginning on the Consummation Date and will earn
cash compensation during the term of employment as follows: (a) base salary at
an annual rate of $350,000; (b) bonus compensation determined in accordance with
the EAIB Plan up to a maximum bonus equal to 125% of his base salary paid for
such period, subject to the achievement by Grand Union of specified EBITDA
targets determined by the Compensation Committee, with the exception that Mr.
Partridge shall receive a guaranteed bonus payment equal to a minimum of 100% of

                                       22
<PAGE>

his base salary paid to him for the first half of fiscal year 1999; and (c) so
long as Mr. Partridge does not maintain a permanent resident within 100 miles of
Grand Union's principal office, payment or reimbursement of the cost of
maintaining a local residence near Grand Union's principal executive office
(subject to income tax gross-up procedures) and appropriate travel expenses for
Mr. Partridge between Grand Union's principal executive offices and such
permanent residence.

     Pursuant to the Partridge Amendment, for purposes of Grand Union's
Supplemental Retirement Plan for Key Executives, Mr. Partridge will be credited
with 7 additional years of service, plus one year for each year of service with
Grand Union. The Partridge Amendment also contains provisions concerning other
employee benefits, rights of termination, payments and other benefits on
termination under certain circumstances, confidentiality, and non-competition,
which Grand Union believes to be customary for agreements with executives in Mr.
Partridge's position.

Philbin Employment Agreement

     Mr. Philbin, the Company's President and Chief Merchandising Officer, is
employed by the Company pursuant to a four-year employment agreement dated as of
October 3, 1997 (the "Philbin Employment Agreement"). Pursuant to the Philbin
Employment Agreement, Mr. Philbin is entitled to receive (a) an annual salary of
$350,000 (prorated during the first and last fiscal years during the term of the
agreement); (b) bonus compensation determined in accordance with the Company's
Bonus Plan (i) for the fiscal year ended March 28, 1998 subject to a guaranteed
minimum bonus for such period equal to 100% of the base salary actually paid to
him during such period and (ii) during the remaining term of the Philbin
Employment Agreement, with a bonus target of up to 100% of Mr. Philbin's base
salary if the Company achieves the performance targets determined by the
Compensation Committee of the Company's Board of Directors; and (c) payment or
reimbursement of the costs of travel by Mr. Philbin and his immediate family
between the New York/New Jersey metropolitan area and the Midwestern United
States. In connection with the execution of the Philbin Employment Agreement,
Mr. Philbin received an interest-free loan from the Company in the amount of
$225,000, repayable upon the expiration or earlier termination of the Philbin
Employment Agreement.

     In connection with the execution of the Philbin Employment Agreement, Mr.
Philbin was also granted options under the EIP to purchase an aggregate of
450,000 shares of the Company's common stock at the prices and on the terms
described herein and in the EIP. Except as otherwise noted, all of the options
are exercisable for ten years from the date of grant, unless earlier terminated.
Such options become exercisable as follows: (i) options to purchase 150,000
shares at an exercise price equal to $2.125 (the closing price as reported by
NASDAQ-SmallCap Market on October 3, 1997), which became exercisable
immediately; (ii) options to purchase 50,000 shares at an exercise price equal
to $2.125, which shall become exercisable if and when the Company shall have
EBITDA of an aggregate of at least $147 million for any 13 continuous 4 week
fiscal reporting periods commencing after October 3, 1997 and ending or before
the end of the Company's fiscal year ending in 2000; (iii) options to purchase
100,000 shares at an exercise price equal to $2.875, which become exercisable on
and after October 3, 1998; (iv) options to purchase 75,000 shares at an exercise
price equal to $3.625, which become exercisable on and after October 3, 1999;
and (v) options to purchase 75,000 shares at an exercise price equal to $4.315,
which become exercisable on and after October 3, 2000.

     Pursuant to the Philbin Employment Agreement, Mr. Philbin is entitled to be
credited with 6 additional years of service for purposes of the Company's
Supplemental Retirement Plan for Key Executives if he is employed by the Company
on October 3, 2001, and is entitled to other employee benefits which the Company
believes to be customary for executives in Mr. Philbin's position, and he and
the Company have agreed to rights of termination, payments and other benefits on
termination under certain circumstances, confidentiality, and non-competition,
in each case which the Company believes to be customary for agreements with
executives in Mr. Philbin's position.

     Pursuant to the Plan of Reorganization, Grand Union and Mr. Philbin will
execute an amendment to his employment agreement (the "Philbin Amendment"),
which will amend and restate Mr. Philbin's employment agreement and will become
effective as of the Consummation Date. Under the terms of the Philbin Amendment,
Mr. Philbin will be employed by Grand Union for a four-year term of employment
beginning on the Consummation Date and will be entitled to receive an annual
salary of $350,000; (b) bonus compensation determined in accordance with the
EAIB Plan up to a maximum bonus equal to 125% of his base salary paid for such
period, subject to the achievement by Grand Union of specified EBITDA targets
determined by the Compensation Committee; and (c) payment or reimbursement of
the costs of travel by Mr. Philbin and his immediate family between New York/New
Jersey metropolitan area and the Midwestern United States.

                                       23
<PAGE>

     Pursuant to the Philbin Amendment, for purposes of Grand Union's
Supplemental Retirement Plan for Key Executives, Mr. Philbin will be credited
with 6 additional years of service, plus one year for each year of service with
Grand Union. The Philbin Amendment also contains provisions concerning other
employee benefits, rights of termination, payments and other benefits on
termination under certain circumstances, confidentiality, and non-competition,
in each case which Grand Union believes to be customary for agreements with
executives in Mr. Philbin's position.

Employment Arrangements with Mr. Freimark

     Effective March 3, 1997, the Company hired Jeffrey P. Freimark to serve as
the Company's Executive Vice President, Chief Financial and Administrative
Officer. Pursuant to the terms of a letter dated January 29, 1997, the Company
agreed to pay Mr. Freimark an initial annual base salary in the amount of
$325,000, and a signing bonus in the amount of $150,000. In addition, Mr.
Freimark was eligible to participate in the Company's annual incentive plan for
management, with a maximum bonus of 48% of his base salary, based on achievement
by the Company of certain financial and/or sales performance targets; provided,
however, that for the fiscal year ending March 28, 1998, the Company guaranteed
Mr. Freimark a minimum bonus payment of $25,000. Upon his hire, Mr. Freimark was
also granted options to purchase 20,000 shares of the Company's Common Stock,
vesting in equal increments over a four year period, all exercisable at a price
of $3.688. Effective November 20, 1998, Mr. Freimark was granted a stock option
(fully vested at the time of issuance) to purchase an additional 75,000 shares
of the Company's Common Stock at an exercise price of $2.15625 per share. At the
time of his hire, Mr. Freimark was also made eligible for other standard
benefits provided to the Company's executive officers, including participation
in the Company's Supplemental Retirement Plan for Key Executives.

     Mr. Freimark is currently Grand Union's Executive Vice President and Chief
Financial Officer. In connection with the Plan of Reorganization, Grand Union
and Mr. Freimark will execute an employment agreement (the "Freimark Employment
Agreement") which will become effective on the Consummation Date. Under the
terms of the Freimark Employment Agreement, Mr. Freimark will be employed by
Grand Union for a four-year term of employment and will receive an annual base
salary in the amount of $325,000. In addition, Mr. Freimark will participate in
the EAIB Plan, with a maximum bonus of 100% of his base salary, based on
achievement by Grand Union of certain specified EBITDA targets set by the
Compensation Committee.

     Pursuant to the Freimark Employment Agreement and for purposes of Grand
Union's Supplemental Retirement Plan for Key Executives, Mr. Freimark will be
credited with 4 additional years of service, plus one year for each year of
service with Grand Union. The Freimark Employment Agreement also contains
provisions concerning other employee benefits, rights of termination, payments
and other benefits on termination under certain circumstances, confidentiality,
and non-competition, which Grand Union believes are customary for agreements
with executives in Mr. Freimark's position.

Management Stock Options

     In connection with the consummation of the Plan of Reorganization, all
currently outstanding options will be cancelled and Messrs. Harris, Philbin,
Partridge and Freimark (collectively, the "Senior Managers") will be granted
options under the EIP to purchase an aggregate of 2,138,693 shares of Grand
Union's common stock at the prices and on the terms described herein and in the
EIP. Except as otherwise noted, all of the options are exercisable for four
years from the Consummation Date, unless earlier terminated. The options will be
granted to the Senior Managers in five tranches and exercisable as follows: (i)
306,122 options at an exercise price of $12.32 per share; (ii) 466,176 options
exercisable when fiscal year end EBITDA is at least $125 million at an exercise
price of $12.32 per share; (iii) 313,923 options exercisable when fiscal year
end EBITDA is at least $135 million at an exercise price of $12.32 per share;
(iv) 317,094 options exercisable when fiscal year end EBITDA is at least $145
million at an exercise price of $10.65 per share; and (v) 735,377 options
exercisable when fiscal year end EBITDA is at least $155 million at an exercise
price of $10.65 per share. With respect to each tranche, Messrs. Harris,
Partridge, Philbin and Freimark will be entitled to 50%, 20%, 20% and 10%,
respectively, of the options granted. The Compensation Committee will be
required to certify in writing or in approved minutes of the Committee that the
foregoing performance standards have been satisfied prior to the exercise of the
respective option. The options granted to Senior Managers will vest ratably
across each tranche as follows: (a) one-fifth on the Consummation Date; (b)
one-fifth on each of the first three anniversaries of the Consummation Date; and
(c) one-fifth on the ninetieth day immediately prior to the fourth anniversary
of the Consummation Date. The vested options and shares received upon exercise
of options ("Option Shares") will become transferable in tranches of 20%, 20%,
30% and 30% (expressed as a percentage of vested and unvested options) on each
of the first four anniversaries, respectively, of the date of grant. Except as
described in the preceding sentence and except for

                                       24
<PAGE>

transfers in connection with estate planning, the options and Option Shares will
not be transferable during the term of a Senior Manager's employment.

               Aggregated Option/SAR Exercises in Last Fiscal Year
                      and Fiscal Year-End Option/SAR Values

<TABLE>
<CAPTION>

Name
----                         Number of Securities                        Value of
                            Underlying Unexercised               Unexercised In-the-Money
                           Options/SARs at FY-End(#)            Options/SARs at FY-End ($)
                        -------------------------------       -------------------------------
                        Exercisable       Unexercisable       Exercisable       Unexercisable
                        -----------       -------------       -----------       -------------
<S>                     <C>                <C>                <C>               <C>

J. Harris                  600,000             650,000               0                0
G. Philbin                 150,000             300,000               0                0
J. Freimark                 80,000              15,000               0                0
R. Ayers                    20,800                   0               0                0
L. DePaolis                 25,800                   0               0                0
J. Meadows                  27,200                   0               0                0
F. Nicastro                 12,600                   0               0                0
G. Smith                    15,000                   0               0                0
D. Vaillancourt             20,800                   0               0                0
</TABLE>

     In connection with the consummation of the Plan of Reorganization all
currently outstanding options will be cancelled.

Pension Plan Table

     The table below shows, on a combined basis for The Grand Union Company
Employees' Retirement Plan (the "Retirement Plan"), and The Grand Union Company
Supplemental Retirement Program for Key Executives (the "Supplemental Plan"),
the estimated annual benefit payable upon retirement to specified compensation
and years of service classifications of 5, 10 and 15 or more years of service.
The credited years of service under these plans for Messrs. McCaig and Freimark
are 23 and 0 years, respectively. Messrs. Harris, Partridge, and Philbin will be
eligible to participate in the Retirement Plan effective January 1, 1999; they
were participants in the Supplemental Plan immediately upon hire. Messrs. Ayers,
Nicastro, and Vuolo are not entitled to any Supplemental Plan benefits. The
current base compensation set forth in the "salary" column of the Summary
Compensation Table does not differ substantially from covered compensation under
these Plans. The retirement benefits shown are based upon retirement at age 62
and the payment of a single-life annuity to the employee.

                                                   Years of Service
                                     ------------------------------------------
                                          5              10         15 or more
                                     ----------     ----------     ------------

 $100,000.......................     $   21,667     $   43,333     $   65,000
  150,000.......................         32,500         65,000         97,500
  200,000.......................         43,333         86,667        130,000
  250,000.......................         54,167        108,333        162,500
  300,000.......................         65,000        130,000        195,000
  350,000.......................         75,833        151,667        227,500
  400,000.......................         86,667        173,333        260,000
  450,000.......................         97,500        195,000        292,500
  500,000.......................        108,333        216,667        325,000
  550,000.......................        119,167        238,333        357,500
  600,000.......................        130,000        260,000        390,000
  650,000.......................        140,833        281,667        422,500



                                       25
<PAGE>

The estimated Retirement Benefits shown below are expressed in the form of an
annuity commencing at age 65. Note that the actual Retirement Benefit that each
participant eventually receives from the Retirement Plan may be lower upon
application of the statutory benefit limitations under Section 415 of the Code.
In addition, each participant may elect to receive his Retirement Benefit as
early as age 55 (provided the participant has ten years of service) in an
actuarially reduced amount, or under one of the optional forms of payment.


                                              Estimated
                                      Qualified Retirement Plan
                                            Age 65 Annual
                                    Accrued Benefit as of 3/28/98
                                    -----------------------------
             J. McCaig                         $56,000
             F. Nicastro                       $16,700
             R. Ayers                          $40,800
             G. Vuolo                          $48,700



The benefits actually payable to an individual executive are reduced, in some
cases substantially, through offsets for primary Social Security benefits and
the actuarial equivalent of the value of securities received by those executives
who received distributions in 1995 and 1994. Mr. McCaig received prior
distributions totaling $208,535 during 1994 and 1995. The estimated social
security and total offset amounts are $18,000 and $227,000, respectively. These
amounts are expressed as a single life annuity payable beginning at age 62 based
on the Supplement Plan's definition of actuarial equivalence and a 7% interest
rate conversion assumption.

The Grand Union Company Employees' Retirement Plan

     The Retirement Plan is a tax-qualified, noncontributory retirement plan,
providing retirement benefits for the Company's eligible salaried and hourly
non-union employees, union employees not covered by other pension plans, and all
of its officers. Under the Retirement Plan, a participant's benefit is generally
1.5% of the average of his or her five consecutive years of highest annual
compensation multiplied by years of service not in excess of 35 minus primary
social security benefits. Benefits under the plan are paid under several
alternatives, including monthly or lump sum payments at the employee's election.
Benefits are normally payable at age 65; however, the plan provides for early
retirement with reduced benefits commencing at age 55. The Code places certain
limits on pension benefits which may be paid under plans qualified under the
Code.

Supplemental Retirement Plan For Key Executives

     The Supplemental Plan is a non-qualified pension plan pursuant to which
certain key employees of the Company and its affiliates ("Participants") earn a
supplemental pension in addition to the pension benefit to which they are
entitled under the Retirement Plan. The pension benefit formula under the
Supplemental Plan is expressed as an annual pension, payable monthly (i) if the
Participant is not married on his retirement date, for the Participant's life,
or (ii) if the Participant is married on his retirement date, the same amount as
described in clause (i) for the duration of the Participant's life and
thereafter 50% of such amount for the duration of the life of the Participant's
surviving spouse. The amount of the annual pension payable upon retirement at
age 62 or later is determined as the "target benefit" minus the "plan offsets".
The "target benefit" is an annual pension equal to the product of 4-1/3% of the
Participant's final year's base salary rate in effect immediately prior to his
separation or as may be adjusted by the committee administering the Supplemental
Plan in its sole discretion, multiplied by the Participant's number of years of
actual or deemed credited service (in most cases, up to 15 years) under the
Supplemental Plan. "Plan offsets" for Participants retiring at age 62 or later
are equal to the sum of the Participant's (i) primary Social Security benefits
payable at the later of age 62 or the Participant's actual retirement age, (ii)
benefits under the Retirement Plan payable at the later of age 62 or the
Participant's actual retirement age in the form of a single life annuity, and
(iii) benefits, if any, payable from the qualified retirement plan(s) of the
Participant's previous employer(s). Participants may also retire early (i) at or
after attaining age 50 but prior to attaining age 55, with the consent of the
Company (the consent

                                       26
<PAGE>

requirement is waived for a Participant who becomes disabled or is involuntarily
terminated other than for cause), or (ii) at or after age 55, without any
requirement for consent by the Company. For Participants who retire early, the
"target benefit" is reduced by 5% per year for each year the Participant is
under age 62. Supplemental Plan benefits are payable in an actuarially
determined single sum no later than 30 days following the Participant's date of
retirement or other termination of employment. In general, no Supplemental Plan
benefits will be paid to a Participant whose employment with the Company
terminates prior to the Participant's attaining age 50. In May 1995, the
Supplemental Plan was modified to provide that (x) in the case of Mr. McCaig,
the base salary would be deemed to be an amount not less than $500,000 and (y)
notwithstanding the general requirement of the Supplemental Plan, benefits will
not be paid to persons who retire prior to age 50, except persons who were
participants in the Supplemental Plan prior to April 1, 1995, who will be
eligible for early retirement without forfeiture of benefits under the
Supplemental Plan from and after age 47 with Company consent. Pursuant to
existing Harris Employment Agreement, the Partridge Employment Agreement and the
Philbin Employment Agreement, as detailed above, Messrs. Harris, Partridge and
Philbin were granted additional credited service under the terms of the
Supplemental Plan. As further discussed above and in connection with the Plan of
Reorganization, similar arrangements will exist under the Harris Amendment, the
Partridge Amendment, the Philbin Amendment and the Freimark Employment
Agreement.

Compensation of Directors

     Each non-employee director receives an annual fee of $25,000 for serving on
the Board, and meeting fees of $1,500 for each Board meeting attended in person,
$750 for each committee meeting attended in person and each telephonic Board
meeting attended, and $375 for each telephonic committee meeting attended. In
addition, the Chairman of the Audit Committee and the Chairman of the
Compensation Committee, receive $500 for each Committee meeting they attend in
person as Chairman and $250 for each telephonic committee meeting they attend as
Chairman. In March 1998, in connection with the negotiations of the Plan of
Reorganization, the Board formed a Special Committee comprised of Directors
Krimstein, Manski and Pritchard. Members of the Special Committee were
compensated as follows: 1) $2,000 for any in-person meetings and 2) $1,000 for
any day requiring a significant time commitment toward the restructuring. In
connection with duties arising from membership on the Special Committee, Mr.
Krimstein received aggregate consideration of $36,000, Mr. Manski received
aggregate consideration of $37,000 and Ms. Pritchard received aggregate
consideration of $33,000. Effective July 1, 1997, Directors were eligible to
elect to receive all or part of their annual retainer and fees in common stock.
No stock was delivered to a director. In January 1998, the Board returned to an
all cash compensation method. Directors receive reimbursement of reasonable
expenses incidental to attendance at meetings of the Board of Directors or its
committees.

     Each non-employee director also receives an automatic initial grant of
options to purchase 5,000 shares of common stock, and additional grants to
purchase 1,500 shares with each re-election by stockholders. All options have a
term of ten years and generally become exercisable (i) six months after the
grant date as to one-third of the shares, (ii) on the earlier of the first
anniversary of the grant date or the annual meeting of stockholders closest
thereto as to the second third of the shares and as to one share of any
remainder, and (iii) on the earlier of the second anniversary of the grant date
or the annual meeting of stockholders closest thereto as to the last third of
the shares and the second share of any two-share remainder. All directors are
reimbursed for expenses incurred on the Company's behalf.

Indemnification Agreements

     The Company has entered into indemnification agreements with each of its
directors and executive officers pursuant to which the Company has agreed to
indemnify such persons to the fullest extent permitted by law against expenses,
judgments, fines, penalties or amounts paid in settlement actually and
reasonably incurred by such person in connection with legal proceedings in which
the person was involved by reason of being a director or officer of the Company.
Under current law, such indemnification generally is available if such person
acted in good faith and in a manner he or she reasonably believed to be in the
best interests of the Company and, with respect to criminal proceedings, had no
reasonable cause to believe his or her conduct was unlawful. Under current law,
such person is not indemnified in respect of matters as to which he or she has
been adjudged liable to the Company unless a court determines that, under the
circumstances, he or she is reasonably entitled to such indemnification.
Comparable indemnification rights are also provided pursuant to the Company's
Certificate of Incorporation.



                                       27
<PAGE>

Severance Plans

     On and effective April 14, 1998, the Board of Directors adopted (i) The
Grand Union Company Discretionary Severance Plan for Non-Union Associates (the
"Discretionary Severance Plan") and (ii) The Grand Union Company Severance Plan
for Exempt Personnel (the "Exempt Severance Plan"). The Discretionary Severance
Plan and the Exempt Severance Plan supercede any prior severance plan or policy
which may have existed prior to April 14, 1998. Generally, the Discretionary
Severance Plan applies to all non-union, non-salaried, hourly associates working
in the Company's stores and non-union hourly personnel who work in the Company's
offices. Under the Discretionary Severance Plan, eligible terminated associates
of the Company are generally eligible to receive the equivalent of one week's
regular pay for each two years of service to a maximum of 26 weeks of total
severance benefits. However, the Plan Administrator retains the absolute right
and discretion to determine whether an employee will be offered severance
benefits and the terms and amount of the severance benefits to be paid, if any.
Subject to all of the terms and conditions of the Exempt Severance Plan, all
salaried personnel at the Company's headquarters and salaried store personnel
who are actively employed and working may be eligible to receive a severance
benefit under the Exempt Severance Plan. Severance benefits under the Exempt
Severance Plan will generally be payable to eligible employees terminated due to
a job elimination, a reduction in force for economic reasons, a decision to
outsource work performed by Company employees to a third party service provider,
or another Company initiated event (other than the sale of a major business unit
of the Company). Under the Exempt Severance Plan, eligible employees will
receive a lump sum severance benefit of one week's pay. Additionally the Exempt
Severance Plan provides for a lump-sum severance payment equal to (i) in the
case of salaried employees holding the office of Senior Vice President or above,
18 months' base salary less the one week base severance benefit; (ii) in the
case of salaried employees holding the office of Corporate Vice President, 12
months' base salary less the one week base severance benefit; (iii) in the case
of salaried employees holding the office of appointed vice president or
director, 6 months' base salary less the one week base severance benefit; and
(iv) in the case of all other salaried employees, one week's base salary for
each year of service to the Company up to a maximum of 26 weeks less the one
week base severance benefit. Any employee of the Company who has a separate
written agreement with the Company, which provides for payment of severance
benefits will receive no severance benefit under either the Discretionary
Severance Plan or the Exempt Severance Plan. Each of the Senior Managers
employment agreements (as will be amended pursuant to the Plan of
Reorganization) contain provisions providing for termination payments that
render them ineligible for severance benefits under the Discretionary Severance
Plan and/or Exempt Severance Plan.

Change-in-Control Provisions

     Under the Company's EIP and 1995 Non-Employee Directors' Stock Option Plan,
certain provisions take effect on a change in control of the Company. Under both
plans, on the twentieth (20th) trading day prior to the effective date of the
change in control, all stock options not otherwise vested become fully vested,
and any restrictions or other conditions applicable to restricted stock or other
incentives awarded under the Employee Plan lapse or are deemed satisfied and
such awards become fully vested and/or immediately payable. In addition, the
value of any canceled award is paid out in cash unless the award holder receives
either (i) the right to acquire the same basket of cash and securities available
to holders of Common Stock, or (ii) if pooling of interests is a condition of
the transaction, an equivalent right in a successor security which would enable
the transaction to qualify for pooling of interests. Under both plans, a change
in control is defined to include: (1) any person, entity or Group (persons or
entities acting together) is or becomes the beneficial owner of more than 50% of
the Voting Stock of the Company (as defined below); (2) a consolidation, merger
or sale of substantially all of the assets of the Company, with the effect that
any person, entity or Group becomes the beneficial owner of more than 50% of the
Voting Stock of the Company or the Company is not the surviving entity; (3)
during any consecutive two-year period commencing July 1, 1996, individuals who
constituted the Board of Directors at the beginning of such period, together
with any new directors whose election by the Board of Directors or nomination
for election by stockholders was approved by 66-2/3% of the directors who were
in office at the beginning of the period or whose election or nomination was so
approved, cease to constitute a majority of the Board of Directors then in
office; or (4) any order, judgment or decree of dissolution or split-up of the
Company, and such order remains undischarged or unstayed for a period in excess
of 60 days. For purposes of determining whether a change in control has
occurred, "more than 50% of the Voting Stock" means more than 50% of one or more
classes of stock pursuant to which the holders have the general power to vote
for the election of members of the Board of Directors, and the aggregate of such
classes for which the person, entity or Group holds more than 50% has the power
to elect more than 50% of the members of the Board of Directors.

     Pursuant to the Plan of Reorganization, each Senior Manager's employment
agreement (as amended) will provide that if reorganized Grand Union terminates a
Senior Manager without "Cause," or if such Senior Manager resigns for "Good
Reason" (each as defined in their employment agreements), within twelve months
following a "Change of Control" (as defined



                                       28
<PAGE>

below), such Senior Manager shall be entitled to severance pay equal to the sum
of (i) the product of (x) 2.99 times (y) 120% of such Senior Managers' base
salary then in effect, plus (ii) such Senior Manager's accrued and unpaid bonus
based on the ratable portion of EBITDA through the date of termination pursuant
to such Senior Managers' existing employment contracts and the continuation of
certain other benefits as set forth in the agreements. "Change of Control" shall
mean, after the Consummation Date, the acquisition by any person or entity,
directly or indirectly, of more than 50% of the common stock; provided, however,
that no Change of Control shall occur by reason of the issuance of common stock
to holders of the Senior Notes upon the Consummation Date. The employment
agreements for the Senior Managers and the EIP shall continue to provide for
certain termination obligations for certain events not covered under this change
of control provision.

Compensation Committee Interlocks And Insider Participation

     The Board of Directors maintains a compensation committee (the
"Compensation Committee") consisting of three directors. The Compensation
Committee currently consists of Ms. Pritchard and Messrs. Manski and Krimstein,
with Mr. Manski acting as Chairman. From October 30, 1997 to April 22, 1998, the
Compensation Committee consisted of Ms. Pritchard, Mr. Miller and Mr.
Stonesifer, with Mr. Miller serving as Chairman. Messrs. Miller and Stonesifer
served on the Compensation Committee from September 1996. Mr. Kagler served on
the Compensation Committee from June 1995 until August 1997.

     No member of the Board participates in decisions regarding his own
compensation as an executive officer of the Company.

Section 16(a) Beneficial Ownership Reporting Compliance

     Section 16(a) of the Exchange Act requires the Company's directors and
executive officers and persons who beneficially own more than 10% of a
registered class of the Company's equity securities to file with the Securities
and Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company on Forms 3,
4, and 5. Officers, directors and greater than 10% beneficial stockholders are
required by rules promulgated by the Securities and Exchange Commission to
furnish the Company with copies of all Section 16(a) reports they file. Based
solely on its review of the copies of reporting forms furnished to the Company,
or written representations of reporting persons, the Company believes that all
filing requirements under Section 16(a) of the Exchange Act applicable to its
directors, officers and any persons holding 10% or more of the Company's Common
Stock with respect to the Company's fiscal year ended March 28, 1998, were
satisfied, with the exception of the late Form 3 filings for Mr. Harris and Mr.
Meadows.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

Security Ownership By Certain Beneficial Owners and Management

     Set forth below is certain information as of June 24, 1998 (except as
otherwise indicated), regarding the beneficial ownership of the Company's
preferred stock and common stock by (i) any person known by the Company to
beneficially own more than 5% of any class of voting securities of the Company;
(ii) each director; (iii) each of the Named Executive Officers (as defined
below) identified in the Summary Compensation Table; and (iv) all directors and
executive officers as a group. Included in the table are shares that the holder
has the right to acquire within 60 days from the date above. Except as indicated
otherwise, the Company believes, based on information furnished by such owners,
that the beneficial owners of the Company's common stock and preferred stock
listed below have sole investment and voting power with respect to such shares,
subject to applicable community property laws. Unless otherwise indicated, the
address for all natural persons listed in the table below is c/o The Grand Union
Company, 201 Willowbrook Boulevard, Wayne, New Jersey 07470. Pursuant to the
Plan of Reorganization all outstanding shares of the Company's preferred stock
and common stock will be cancelled.

<TABLE>
<CAPTION>

                  Name of Beneficial Owner                             Amount and
                  ------------------------                             Nature of
                                                                       Beneficial                Percent
                                                                      Ownership(1)             of Class(1)
                                                                      ------------             -----------
<S>                                                                   <C>                      <C>
Preferred Stock A
</TABLE>


                                       29
<PAGE>

<TABLE>
<CAPTION>

                  Name of Beneficial Owner                             Amount and
                  ------------------------                             Nature of
                                                                       Beneficial                Percent
                                                                      Ownership(1)             of Class(1)
                                                                      ------------             -----------
<S>                                                                   <C>                      <C>

   Trefoil Capital Investors II, L.P. .....................          620,212     (2)(3)          47.69%
   GE Investment Private Placement Partners II,
       A Limited Partnership...............................          620,212     (3)(4)          47.69%
       The Stangeland Family Limited Partnership...........           60,142        (5)           4.62%

Preferred Stock B

   Trefoil Capital Investors II, L.P. .....................          400,000     (2)(3)          50.00%
   GE Investment Private Placement Partners II,
       A Limited Partnership...............................          400,000     (3)(4)          50.00%

Common Stock

   Trefoil Capital Investors II, L.P. .....................       17,610,674     (2)(3)          38.77%
   GE Investment Private Placement Partners II,
       A Limited Partnership...............................       17,610,674     (3)(4)          38.77%
   Donaldson, Lufkin & Jenrette Securities Corporation.....        1,039,177        (6)          10.19%
   Jordan H. Krimstein.....................................            2,166        (7)               *
   Mark H. Manski..........................................            2,166        (7)               *
   Martha A. Pritchard.....................................            2,166        (7)               *
   J. Wayne Harris.........................................          650,000        (8)           6.02%
   Jack W. Partridge.......................................          185,000        (8)           1.78%
   Gary M. Philbin.........................................          158,000        (8)           1.53%
   Jeffrey P. Freimark.....................................           80,000        (8)               *
   Francis E. Nicastro.....................................           12,300        (8)               *
   Ray Ayers...............................................           20,800        (8)               *
   All Directors and Executive Officers as a
   group (13 persons)......................................        1,201,398        (9)          10.60%
</TABLE>

-----------
*        Less than 1%.

(1)    Beneficial ownership is determined pursuant to Rule 13d-3 under the
       Securities Exchange Act of 1934, as amended (the "Exchange Act") as
       applied by Item 403 of Regulation S-K. Pursuant to these rules,
       percentage ownership is calculated by including in the numerator and the
       denominator for a beneficial owner shares which such owner has the right
       to acquire within 60 days.

(2)    The general partners of Trefoil Capital Investors II, L.P. ("Trefoil")
       are Trefoil Investors II, Inc., a Delaware corporation ("Trefoil II"),
       and Sigma Hedge Partners, G.P., a Delaware partnership ("Sigma"). Trefoil
       II is the managing general partner of Trefoil. The general partners of
       Sigma are Delta PT Investors Corporation, a Delaware corporation
       ("Delta"), and Epsilon Equities, Inc., a Delaware corporation
       ("Epsilon"), each of which is wholly owned by the General Electric
       Pension Trust, a New York common law trust ("GEPT"). The principal
       executive offices of Trefoil and Trefoil II are located at 4444 Lakeside
       Drive, Burbank, California 91505. The principal executive offices of
       Sigma, Delta, Epsilon and GEPT are located at 3003 Summer Street, P.O.
       7900, Stamford, Connecticut 06904. Sigma, Delta, Epsilon and the Trustees
       of GEPT each holds shared dispositive power over the shares of Preferred
       Stock held by Trefoil and the shares of Common Stock into which such
       shares of Preferred Stock are convertible. Trefoil II holds sole voting
       power, and Sigma, Delta, Epsilon and GEPT hold no voting power, with
       respect to the shares of Preferred Stock held by Trefoil and the shares
       of Common Stock into which such shares of Preferred Stock are
       convertible.

(3)    Trefoil and GE Investment Private Placement Partners II, A Limited
       Partnership, a Delaware limited partnership ("GEI" and, collectively with
       Trefoil, the "Investors") may be deemed to beneficially own all of the
       shares of Preferred Stock held by the Investors due to a Stockholders
       Agreement between the Investors pursuant to which the Investors have

                                       30
<PAGE>

       each agreed to certain joint action relating to voting and disposition of
       the Preferred Stock and the Common Stock issuable on conversion of the
       Preferred Stock. Each share of Preferred Stock A is convertible into
       6.8966 shares of Common Stock, and each share of Preferred Stock B is
       convertible into 20.8333 shares of Common Stock.

(4)    GE Investment Management Incorporated, a Delaware corporation ("GEIM")
       serves as the managing general partner of GEI. GEIM is a wholly owned
       subsidiary of General Electric Company and a registered investment
       advisor. The principal executive offices of GEI, GEIM and General
       Electric Company are located at 3003 Summer Street, P.O. Box 7900,
       Stamford, Connecticut 06904. GEIM is the managing general partner of GEI
       and holds sole voting power and sole dispositive power with respect to
       such shares.

(5)    The Roger and Lilah Stangeland Living Trust (the "Trust") serves as
       general partner for The Stangeland Family Limited Partnership, a limited
       partnership for the benefit of Roger and Lilah Stangeland (the
       "Stangeland Partnership"). Mr. Stangeland and his wife serve as
       co-trustees of the Trust. Pursuant to a stockholder agreement among the
       Company, the Investors and the Stangeland Partnership, the Stangeland
       Partnership has granted to the Investors certain take-along rights, and
       the Investors have granted to the Stangeland Partnership certain
       tag-along rights, with respect to such shares. Solely to the extent any
       of such take-along or tag-along rights may be exercised, the Stangeland
       Partnership and the Investors share dispositive power with respect to
       such shares. Mr. Stangeland shares with his wife voting and dispositive
       power with respect to all shares held by the Stangeland Partnership.

(6)    Such information is as of June 10, 1998 and is based upon the information
       provided in the Schedule 13G filed by AXA Assurances I.A.R.D. Mutuelle,
       AXA Assurances Vie Mutuelle, Alpha Assurances Vie Mutuelle, AXA Courtage
       Assurance Mutuelle (collectively, the "Mutuelle AXA"), AXA-UAP and The
       Equitable Companies Incorporated. Mutelle AXA, as a group, beneficially
       owns a majority interest in AXA-UAP, which beneficially owns a majority
       interest in The Equitable Companies, which is a parent holding company
       with respect to the holdings of Donaldson, Lufkin & Jenrette Securities
       Corporation, which has sole voting and dispositive power over the shares
       of common stock. Such holdings consist of 1,038,127 shares of common
       stock and warrants exercisable for 1,050 shares of common stock.

(7)    Represents shares subject to acquisition pursuant to options exercisable
       under the 1995 Non-Employee Directors' Stock Option Plan.

(8)    Represents shares subject to acquisition pursuant to options exercisable
       under the EIP, except for 50,000 shares of Common Stock owned directly by
       Mr. Harris, 10,000 shares of Common Stock owned directly by Mr.
       Partridge, and 8,000 shares of Common Stock owned directly by Mr.
       Philbin.

(9)    Includes 1,127,200 shares subject to acquisition pursuant to options
       exercisable under the EIP and 6,498 shares subject to acquisition
       pursuant to options exercisable under the 1995 Non-Employee Directors'
       Stock Option Plan.


Item 13.  Certain Relationships and Related Transactions

Pre-Bankruptcy Relationships and Transactions

     On January 25, 1995, the Company filed a petition under Chapter 11 of the
federal bankruptcy laws. The Company emerged from bankruptcy on June 15, 1995,
the effective date of the bankruptcy court's approval of the Company's
reorganization plan. Prior to June 15, 1995, the Company was a wholly owned
subsidiary of Grand Union Capital Corporation ("Capital"), which in turn was a
wholly owned subsidiary of Grand Union Holdings Corporation ("Holdings").
Holdings was controlled by Miller Tabak Hirsch & Co. ("MTH") and its affiliates,
which also control Penn Traffic.

     The following applies to relationships that existed prior to June 15, 1995.
Mr. Gary D. Hirsch served as Chairman and a Director of the Company and also as
Chairman and a Director of Penn Traffic. Mr. Martin A. Fox served as a Director,
Vice President and Assistant Secretary of the Company and Vice Chairman-Finance
and Assistant Secretary of Penn Traffic. Messrs. Hirsch and Fox received
compensation from MTH, of which Mr. Hirsch is a general partner of the managing
partner, and Mr. Fox is Executive Vice President. Messrs. Hirsch and Fox did not
receive salaries from Penn Traffic and did not participate in cash bonus plans
of Penn Traffic, and received no compensation in their capacities as executive
officers or directors of the Company.

                                       31
<PAGE>

     Mr. McCaig served as a director of the Company from June 15, 1995 until May
7, 1997. Until May 31, 1995, Mr. McCaig was a member of the Board of Directors
of Penn Traffic, for which he received compensation of $10,000 per annum and
$1,000 per Board of Directors meeting attended. Mr. McCaig became a Director of
Holdings in July 1989 and a Director of Capital in July 1992. He became
President of Holdings and Capital in May 1993. Mr. McCaig served as a Director
of Penn Traffic from September 1992 until May 1995.

     Mr. Hirsch is no longer a director of the Company. While he was a director,
he was an indirect beneficiary of the following transactions. Prior to June 15,
1995, MTH was engaged as financial advisor to Penn Traffic and as a financial
advisor to the Company, in the latter case pursuant to an agreement (the "MTH
Agreement"), under which MTH was to have provided certain financial consulting
and business management services to the Company through July 1997. In accordance
with the Company's post-bankruptcy Reorganization Plan, the MTH Agreement was
terminated on June 15, 1995 and the Company executed a settlement agreement (the
"MTH Settlement Agreement"). The MTH Settlement Agreement provides for the
termination of the MTH Agreement, payment by the Company of accrued and unpaid
fees under the MTH Agreement through June 15, 1995, and for the indemnification
of MTH and certain entities related to MTH (the "MTH Entities") from certain
claims and liabilities, subject to the terms and limitations set forth in the
MTH Settlement Agreement. The Company deposited $3.0 million relating to the
indemnification in escrow on June 15, 1995. During Fiscal 1996, the Company paid
$315,000 to MTH, pursuant to the MTH Agreement. On July 30, 1990, P&C Foods,
which is indirectly controlled by MTH, and the Company entered into an Operating
Agreement pursuant to which the Company acquired the right to operate 13 P&C
Foods' stores in New England under the Grand Union name until July 2000.
Pursuant to the Operating Agreement, the Company agreed to pay P&C Foods a
minimum annual fee which will average $10.7 million per year during the ten-year
lease term. Pursuant to the terms of the Operating Agreement, a $15 million
prepayment of the annual fee was made to P&C Foods in connection with the
recapitalization of the Company in 1992. The Operating Agreement was assumed
during the Chapter 11 bankruptcy case and will continue on its current terms.
From September 1993 until September 1995, the Company participated in a program
to consolidate the purchasing, storage and distribution of health and beauty
care and general merchandise product with Penn Traffic. During Fiscal 1996, the
Company purchased from Penn Traffic's inventory of health and beauty care and
general merchandise products at cost approximately $30.1 million for store
operations and approximately $12.8 million at the termination of the agreement.

Post-Bankruptcy Relationships.

     Mr. Ying, a director of the Company from June 15, 1995 until July 28, 1997,
was a managing director of Donaldson Lufkin & Jenrette Securities Corporation
("DLJ") from January 1993 to June 1997. During Fiscal 1995 and Fiscal 1996, DLJ
acted as financial advisor to the Informal Committee of certain holders of
Subordinated Notes in connection with the restructuring of the Company and
received compensation from the Company of $1,278,000 for such services.

     Near the end of Fiscal 1996, the Company entered into an agreement with DLJ
to provide investment banking services and advice to the Company. During the
term of DLJ's engagement, it had the exclusive right to act as sole managing
underwriter, exclusive placement agent, sole dealer manager or exclusive
solicitation agent with respect to any public offering of the Company's
securities, any private offering of any of the Company's debt securities, or any
exchange offer or refinancing transaction relating to the Company's Senior Notes
or other securities of the Company. The agreement also contains various other
provisions, including an obligation by DLJ to keep confidential certain
information provided to it by the Company, and an obligation by the Company to
indemnify and hold harmless DLJ, its parent and its affiliates, and the
directors, officers, agents, and employees of DLJ, its parent and its affiliates
("Indemnified Persons"), from and against various potential losses and
liabilities arising out of or in connection with misstatements or omissions in
disclosure documents or in connection with advice or services rendered by an
Indemnified Person. In Fiscal 1997, the Company entered into the Stock Purchase
Agreement (referred to below) in connection with which DLJ rendered various
services pursuant to the agreement, including a Fairness opinion. In connection
with the agreement DLJ received aggregate payments of $4,838,000, reflecting a
Transaction Fee of $3,753,000, a Fairness Fee of $1,000,000 (for a fairness
opinion), and reimbursement of expenses in the amount of $85,000. DLJ received
an additional fee of $250,000 for services rendered in connection with
solicitation of consents and waivers from the holders of the Company's Senior
Notes.

     In May 1997, the Company entered into an agreement with DLJ to advise a
Committee of Independent Directors (the "Committee") with advice in respect to
the restructuring of obligations under the Stock Purchase Agreement. As
compensation for the services provided to the Committee, the Company paid DLJ
$500,000 in connection with a fairness opinion with respect to the transactions
contemplated by the Acceleration and Exchange Agreement described under "1996
Preferred Stock Purchase" below.

                                       32
<PAGE>

     Mr. Moore, a director of the Company from September 17, 1996 to April 22, 
1998, is a managing director and executive officer of Shamrock Capital Advisors,
Inc. ("SCA"). Pursuant to a three-year management services agreement (the
"Services Agreement") dated July 30, 1996 between the Company and SCA, SCA shall
consult with and provide advice to the officers and management employees of the
Company concerning matters (i) relating to the Company's financial policies and
the development and implementation of the Company's business plans and (ii)
generally arising out of the business affairs of the Company. The Services
Agreement expires by its terms in September 1999. SCA's compensation for such
management and consulting services under the Services Agreement was $300,000 in
the fiscal year ending in 1997 and will be $400,000 for the fiscal year ending
in 1998. No further payments will be made to SCA due to the restructuring The
Company also reimburses SCA for its reasonable out-of-pocket costs and expenses
incurred in connection with the performance of its services under the Services
Agreement. The Company has agreed to indemnify SCA against all claims,
liabilities, expenses, losses or damages (or actions in respect thereof) related
to or arising out of actions taken (or omitted to be taken) by SCA pursuant to
the terms of the Services Agreement; provided that such liabilities did not
result primarily from actions taken, or omitted to be taken, by SCA in bad faith
or due to SCA's gross negligence or officers and any persons holding 10% or more
of the Company's Common Stock with respect to the Company's fiscal year ended
March 30, 1996, were satisfied.

     1996 Issuance of Old Preferred Stock Interests

     In a series of related transactions commencing on July 30, 1996, Trefoil
Capital Investors II, L.P. and GE Investment Private Placement Partners II, A
Limited Partnership (the "Purchasers") acquired beneficial ownership of an
aggregate of approximately 70.77% of Grand Union's outstanding voting stock. On
July 30, 1996, Grand Union entered into a definitive agreement (the "Stock
Purchase Agreement") to sell $100 million of Class A Convertible Preferred Stock
("Class A Preferred") to the Purchasers. Each share of the Class A Preferred was
to be convertible at the option of the holder, at any time, into 6.8966 shares
of common stock. Pursuant to the Stock Purchase Agreement, the Purchasers agreed
to purchase, and Grand Union agreed to sell, an aggregate of 2,000,000 shares of
Class A Preferred at a purchase price of $50 per share (the "Stated Value") in
stages through February 25, 1998. On September 17, 1996, the first stage of the
transaction was closed, and the Purchasers acquired 800,000 shares of Class A
Preferred for an aggregate purchase price of $40 million.

     At a subsequent closing held on February 25, 1997, the Purchasers purchased
an additional 400,000 shares of Class A Preferred for an aggregate purchase
price of $20 million. Additional subsequent closings were scheduled for August
26, 1997 and February 25, 1998 (the "Subsequent Closings"). If the Subsequent
Closings had occurred, the Purchasers would have been required to purchase an
additional 800,000 shares of Class A Preferred for an aggregate purchase price
of $40 million.

     Pursuant to an Acceleration and Exchange Agreement (the "Acceleration
Agreement"), dated June 12, 1997, between Grand Union and the Purchasers, at the
request of Grand Union, the Purchasers agreed to accelerate to June 12, 1997
(the "Accelerated Closing") the sale and purchase of the 800,000 shares of Class
A Preferred (the "Accelerated Shares"), which was to have occurred at the
Subsequent Closings, and to exchange (the "Exchange") the Accelerated Shares for
800,000 shares of Class B Convertible Preferred Stock ("Class B Preferred"). At
the Accelerated Closing, Grand Union received the $40 million purchase price for
the sale of the Accelerated Shares. Immediately following the Accelerated
Closing, the Purchasers completed the Exchange pursuant to which they received
an aggregate of 800,000 shares of Class B Preferred, in consideration for their
surrender of the Accelerated Shares. Until February 20, 1998, each share of
Class B Preferred was convertible at the option of the holder, at any time, into
20.8333 shares of common stock. Pursuant to the Acceleration Agreement,
effective February 20, 1998, this conversion ratio was reset such that each
share of Class B Preferred is convertible into 33.3333 shares of common stock.

     On March 20, 1997, Grand Union consummated the sale to The Roger Stangeland
Family Limited Partnership (the "Stangeland Partnership") of 60,000 shares of
Class A Preferred at a purchase price of $50 per share (the "Stangeland
Shares"), pursuant to the terms of a Stock Purchase Agreement, dated February
25, 1997, as amended by Amendment No. 1 thereto dated as of March 20, 1997 (as
so amended, the "Stangeland Stock Purchase Agreement"), between Grand Union and
Mr. Stangeland, a director of the Company from June 15, 1995 to April 22, 1998.
Pursuant to a Stockholder Agreement dated February 25, 1997 (the "Stangeland
Stockholder Agreement"), among the Purchasers, Mr. Stangeland and Grand Union,
Mr. Stangeland has granted the Purchasers certain take-along rights, the
Purchasers have granted Mr. Stangeland certain tag-along rights, and the
Purchasers and Grand Union have granted Mr. Stangeland certain registration
rights related to the Stangeland Shares and any shares of Class A Preferred, and
common stock, if any, paid as dividends with respect to the Class A Preferred
(collectively, "Securities"). Pursuant to an Addendum, dated as of March 20,
1997, to the Stangeland Stockholder Agreement, the Stangeland Partnership has
succeeded to all of the rights, and has assumed all of the obligations, of Mr.
Stangeland pursuant to the Stangeland Stockholder Agreement. The Purchasers
disclaim any and all

                                       33
<PAGE>

ownership of the Stangeland Shares or any additional Securities acquired by the
Stangeland Partnership in respect of the Stangeland Shares.

     As of June 24, 1998, there were a total of 1,300,566 outstanding shares of
Class A Preferred, which were convertible into an aggregate of 8,969,483 shares
of common stock, and a total of 800,000 outstanding shares of Class B Preferred,
which were convertible into an aggregate of 26,666,640 shares of common stock.
Together, the aggregate shares of Class A Preferred and Class B Preferred
account for approximately 77.74% of Grand Union's outstanding voting stock.

     On September 30, 1996, December 31, 1996 and March 31, 1997, Grand Union
paid dividends on the Class A Preferred through the issuance of a total of
40,566 shares of Class A Preferred, with an aggregate Stated Value of
$2,028,300. Grand Union elected to suspend the declaration of the dividends
payable June 30, 1997, September 30, 1997, December 31, 1997 and March 31, 1998.
The dividends on the Class A Preferred and the Class B Preferred and the accrued
and unpaid dividends through March 31, 1998 have been accounted for by a charge
against "Capital in Excess of Par Value" and a corresponding increase in the
carrying amounts of the Class A Preferred and Class B Preferred. The Class A
Preferred and Class B Preferred have a liquidation preference over the common
stock equal to the Stated Value of the outstanding shares of the preferred stock
plus all accrued and unpaid dividends.


PART IV

Item 14.  Exhibits, Financial Statement Schedules and Report on Form 8-K
          [to be updated]

The following documents are filed as a part of this report:

(a)  Financial statements

     All financial statements as set forth under Item 8.

(b)  Report on Form 8-K

     1.  Relating to the hiring of Jack W. Partridge, Jr. - filed on
         January 27, 1998.

     2. Relating to the agreement on terms of a capital restructuring - filed on
        March 31, 1998.

     3. Relating to the commencement of the solicitation of votes on the Plan of
        Reorganization - filed on May 28, 1998.

(c)  Exhibits

Exhibit
Number                              Description of Document
-------                             -----------------------

    2.1      Second Amended Chapter 11 Plan of Reorganization of The Grand Union
             Company ("Grand Union"), filed with the United States Bankruptcy
             Court, District of Delaware, on April 19, 1995, incorporated by
             reference to Exhibit T3E1 to Grand Union's Form T-3 dated May 8,
             1995.

    2.2      Findings of Fact, Conclusions of Law and Order Confirming the
             Second Amended Plan of Reorganization proposed by Grand Union,
             dated May 31, 1995, incorporated by reference to Exhibit 2.2 to
             Grand Union's Annual Report on Form 10-K for the fiscal year ended
             April 1, 1995 ("Fiscal 1995").

    2.3      Minute Order Clarifying Findings of Fact, Conclusions of Law and
             Order Confirming Second Amended Plan of Reorganization proposed by
             Grand Union, dated June 14, 1995, incorporated by reference to
             Exhibit 2.3 to Grand Union's Annual Report on Form 10-K for Fiscal
             1995.

    2.4      Chapter 11 Plan of Reorganization filed with the United States
             Bankruptcy Court, District of New Jersey, on

                                       34
<PAGE>

Exhibit
Number                              Description of Document
-------                             -----------------------

             June 24, 1998, incorporated by reference to Exhibit 1 to Exhibit
             2.1. to Grand Union's Current Report on Form 8-K filed May 28,
             1998.

    3.1      Certificate of Incorporation  of Grand Union, as amended through
             January 6, 1997, incorporated by reference to Exhibit 3.1 to Grand
             Union's Annual Report on Form 10-K for Fiscal 1997.

    3.2      Certificate of Designation of Class A Convertible Preferred Stock,
             incorporated by reference to Exhibit 10.4 to Grand Union's
             Quarterly Report on Form 10-Q for the period ended October 12,
             1996.

    3.3      Certificate of Designation of Class B Convertible Preferred Stock,
             dated as of June 11, 1997, incorporated by reference to Exhibit
             3.1 to Grand Union's Annual Report on Form 10-K for Fiscal 1997.

    3.4      By-laws of The Grand Union Company, as amended through January
             15, 1998, incorporated by reference to Exhibit 3.1 to Grand
             Union's Quarterly Report on Form 10-Q for the period ended January
             3, 1998.

    4.1      Form of Common Stock Certificate of Grand Union, incorporated by
             reference to Exhibit 4.1 to Grand Union's Annual Report on Form
             10-K for Fiscal 1995.

    4.2      Warrant Agreement dated as of June 15, 1995, between Grand Union
             and American Stock Transfer & Trust Company, as Warrant Agent for
             300,000 Series 1 Warrants and 600,000 Series 2 Warrants,
             incorporated by reference to Exhibit 4.5 to Grand Union's Annual
             Report on Form 10-K for Fiscal 1995.

    4.3      Registration Rights Agreement dated as of June 15, 1995, among
             Grand Union and Each of the Persons Named in Schedule A thereto
             for the Common Stock, incorporated by reference to Exhibit 4.6 to
             Grand Union's Annual Report on Form 10-K for Fiscal 1995.

    4.4      Registration Rights Agreement dated as of June 15, 1995, by and
             among Grand Union and the Holders Named therein for the
             Registrable Notes, incorporated by reference to Exhibit 4.7 to
             Grand Union's Annual Report on Form 10-K for Fiscal 1995.

    4.5      Indenture dated as of June 15, 1995, between Grand Union, as
             Issuer, and IBJ Schroeder Bank & Trust Company, as Trustee for the
             12% Senior Notes due September 1, 2004, including form of the 12%
             Senior Notes due 2004, incorporated by reference to Exhibit 4.2 to
             Grand Union's Annual Report on Form 10-K for Fiscal 1995.

    4.6      First Supplement Indenture, dated September 9, 1996, to the
             Indenture dated as of June 15, 1995, between Grand Union, as
             Issuer, and IBJ Schroeder Bank & Trust Company, as Trustee for the
             12% Senior Notes due September 1, 2004, incorporated by reference
             to Exhibit 10.3 to Grand Union's Quarterly Report on Form 10-Q for
             the period ended October 12, 1996.

    4.7      Form of Warrant Agreement, to be executed on the Consummation
             Date, between Grand Union and American Stock Transfer & Trust
             Company, as Warrant Agent, incorporated by reference to Exhibit A
             to Exhibit 1 to Exhibit 2.1. to Grand Union's Current Report on
             Form 8-K filed May 28, 1998.

   10.1      Agreement to Hold Separate dated July 17, 1989, by and among MTH
             Holdings Inc. ("MTH Holdings"), GU Acquisition Corporation
             ("GUAC"), Salomon Inc. and the Federal Trade Commission (the "FTC")
             entered into in the matter of MTH Holdings and GUAC before the FTC,
             incorporated by reference to Exhibit No. 10.5 to Grand Union's
             Registration Statement on Form S-1 (Registration No. 33-29707) (the
             "1989 Grand Union Registration Statement").

   10.2      Agreement containing Consent Order among MTH Holdings, GUAC and the
             FTC entered into in the matter of

                                       35
<PAGE>

Exhibit
Number                              Description of Document
-------                             -----------------------

             MTH Holdings and GUAC before the FTC, incorporated by reference to
             Exhibit No. 10.6 to the 1989 Grand Union Registration Statement.

   10.3      Amended and Restated Borrower Pledge Agreement dated as of June 15,
             1995, made by Grand Union to Bankers Trust Company ("Bankers
             Trust"), as Collateral Agent incorporated by reference to Exhibit
             10.10 to Grand Union's Annual Report on Form 10-K for Fiscal 1995.

   10.4      Amended and Restated Borrower Security Agreement dated as of June
             15, 1995, between Grand Union and Bankers Trust, as Collateral
             Agent (included in Exhibit 4.4), incorporated by reference to
             Exhibit 10.11 to Grand Union's Annual Report on Form 10-K for
             Fiscal 1995.

   10.5      Subsidiary Security Agreement dated as of June 15, 1995, among the
             corporations listed on Schedule 1 thereto and Bankers Trust, as
             Collateral Agent, incorporated by reference to Exhibit 10.12 to
             Grand Union's Annual Report on Form 10-K for Fiscal 1995.

   10.6      Subsidiary Guaranty dated as of June 15, 1995, made by each of the
             corporations from time to time listed on Annex A attached thereto
             in favor of the Banks and the Agent from time to time party to the
             Credit Agreement, incorporated by reference to Exhibit 10.13 to
             Grand Union's Annual Report on Form 10-K for Fiscal 1995.

   10.7      Form of Indenture of Open-End Mortgage, Deed of Trust, Deed to
             Secure Debt, Security Agreement, Assignment of Leases, Rents and
             Profits, Financing Statement and Fixture Filing, dated as of June
             15, 1995, made by Grand Union to Bankers Trust, as Collateral
             Agent, incorporated by reference to Exhibit 10.14 to Grand Union's
             Annual Report on Form 10-K for Fiscal 1995.

   10.8      Tenth Amendment to the Amended and Restated Credit Agreement dated
             as of June 15, 1995, (the "Credit Agreement"), which amends and
             restates the Credit Agreement as of August 31, 1997 among Grand
             Union, the lending institutions listed from time to time on
             Schedule 1 thereto, and Bankers Trust, as Agent, including Exhibits
             A-1, A-2 and A-3, and various Schedules thereto, incorporated by
             reference to Grand Union's Current Report on Form 8-K filed on
             September 3, 1997.

   10.9      Eleventh  Amendment to the Credit Agreement dated as of August
             29, 1997, incorporated by reference to Exhibit 10.1 of Grand
             Union's Quarterly Report on Form 10-K for the period ended January
             3, 1998.

   10.10     Twelfth Amendment to the Credit Agreement dated as of January 9,
             1998, incorporated by reference to Exhibit 10.2 of Grand Union's
             Quarterly Report on Form 10-K for the period ended January 3, 1998.

   10.11     Thirteenth Amendment to the Credit Agreement dated April 17, 1998.

   10.12     Supply and Distribution Agreement between Grand Union and C&S
             Wholesalers, dated June 15, 1995, incorporated by reference to
             Exhibit 10.3 to Grand Union's Quarterly Report on Form 10-Q/A for
             the period ended January 6, 1996.

   10.13     First Amendment to the Supply and Distribution Agreement between
             Grand Union and C&S Wholesalers, dated June 15, 1995, incorporated
             by reference to Exhibit 10.4 to Grand Union's Quarterly Report on
             Form 10-Q/A for the period ended January 6, 1996.

   10.14     Supply and Distribution Agreement between Grand Union and C&S
             Wholesalers, dated January 2, 1996, incorporated by reference to
             Exhibit 10.5 to Grand Union's Quarterly Report on Form 10-Q/A for
             the period ended January 6, 1996.

                                       36
<PAGE>

Exhibit
Number                              Description of Document
-------                             -----------------------

   10.15     Agreement with C&S Wholesalers Inc. dated January 21, 1996,
             incorporated by reference to Exhibit 10.28 to Grand Union's Annual
             Report on Form 10-K/A for Fiscal 1997.

   10.16     Fourth Amendment and Restatement of The Grand Union Company
             Supplemental Retirement Program for Key Executives effective as of
             November 20, 1997.

   10.17     The Grand Union Company Discretionary Severance Plan for Non-Union
             Associates effective April 14, 1998.

   10.18     The Grand Union Company Severance Plan for Exempt Personnel
             effective April 14, 1998.

   10.19     The Grand Union Company 1995 Equity Incentive Plan, as amended,
             incorporated by reference to Exhibit 6 to Grand Union's Disclosure
             Statement filed as Exhibit 2.1 to Grand Union's Form 8-K filed May
             28, 1998.

   10.20     The Grand Union Company 1995 Non-Employee Directors Stock Option
             Plan, incorporated by reference to Exhibit 10.2 to Grand Union's
             Quarterly Report on Form 10-Q for the period ended January 6, 1996.

   10.21     First Amendment to the 1995 Non-Employee Directors' Stock Option
             Plan of Grand Union, incorporated by reference to Exhibit 10.6 to
             Grand Union's Quarterly Report on Form 10-Q for the period ended
             July 20, 1996.

   10.22     Non-competition Agreement between Grand Union and Darrell W. Stine,
             incorporated by reference to Exhibit 10.26 of Grand Union's Annual
             Report on Form 10-K for Fiscal 1996.

   10.23     Non-competition Agreement between Grand Union and Gilbert C. Vuolo,
             incorporated by reference to Exhibit 10.27 of Grand Union's Annual
             Report on Form 10-K for the Fiscal 1996.

   10.24     Form of Indemnification Agreement between the Company and R.
             Stangeland, D. Josephs, W. Kagler, D. McClure, Jr., D. Ying, J.
             McCaig, W. Louttit, K. Baum, D. Stine, G. Vuolo and J. Schroeder,
             incorporated by reference to Exhibit 10.7 to Grand Union's
             Quarterly Report on Form 10-Q for the period ended July 20, 1996.

   10.25     Form of Indemnification Agreement between Grand Union and
             J. Costello, C. Miller, G. Moore and J.R. Stonesifer, incorporated
             by reference to Exhibit 10.1 to Grand Union's Quarterly Report on
             Form 10-Q for the period ended October 12, 1996.

   10.26     Form of Indemnification Agreement between the Company and J.
             Freimark (dated March 3, 1997), D. Vaillancourt (dated June 5,
             1997), G. Smith (dated August 7, 1997), J. Harris (dated August 11,
             1997), G. Philbin (dated October 3, 1997), Javier Ramirez, Vice
             President Tax and Assistant Secretary (dated October 30, 1997), J.
             Krimstein (dated October 30, 1997), M. Manski (dated October 30,
             1997), M. Pritchard (dated October 30, 1997) and J. Partridge
             (dated January 5, 1998).

   10.27     Stock Purchase Agreement dated July 30, 1996, among Grand Union,
             Trefoil Capital Investors II, L.P. and GE Investment Private
             Placement Partners II, A Limited Partnership, incorporated by
             reference to Exhibit 10.1 to Grand Union's report filed on Form 8-K
             dated July 30, 1996.

   10.28     Amendment No. 1 to the Stock Purchase Agreement dated July 30,
             1996, among Grand Union, Trefoil Capital Investors II, L.P., and GE
             Investment Private Placement Partners II, a Limited Partnership,
             incorporated by reference to Exhibit 10.50 to Grand Union's Annual
             Report on Form 10-K for Fiscal 1997.

   10.29     Management Agreement between Grand Union and Shamrock Capital
             Advisors, Inc., dated July 30, 1996, incorporated by reference to
             Exhibit 10.7 to Grand Union's Quarterly Report on Form 10-Q for the
             period ended October 12, 1996.

                                       37
<PAGE>

Exhibit
Number                              Description of Document
-------                             -----------------------

   10.30     Stock Purchase Agreement by and between Grand Union and Roger
             Stangeland, dated as of February 25, 1997, incorporated by
             reference to Exhibit 10.52 to Grand Union's Annual Report on Form
             10-K for Fiscal 1997.

   10.31     Amendment No. 1, dated March 20, 1997, to the Stock Purchase
             Agreement between Grand Union and Roger Stangeland, dated as of
             February 25, 1997, incorporated by reference to Exhibit 10.53 to
             Grand Union's Annual Report on Form 10-K for Fiscal 1997.


                                       38
<PAGE>

Exhibit
Number                              Description of Document
-------                             -----------------------

   10.32     Stockholder Agreement between Trefoil Capital Investors II, L.P., a
             Delaware limited partnership, GE Investment Private Placement
             Partners II, A Limited Partnership, a Delaware limited partnership,
             Roger Stangeland, an individual, and Grand Union, incorporated by
             reference to Exhibit 10.55 to Grand Union's Annual Report on Form
             10-K for Fiscal 1997.

   10.33     Addendum to Stockholder Agreement among Trefoil Capital Investors
             II, L.P., a Delaware limited partnership, GE Investment Private
             Placement Partners II, A Limited Partnership, a Delaware limited
             partnership, Roger Stangeland, an individual, and The Grand Union
             Company, a Delaware corporation, incorporated by reference to
             Exhibit 10.56 to Grand Union's Annual Report on Form 10-K for
             Fiscal 1997.

   10.34     Acceleration and Exchange Agreement, dated as of June 5, 1997, by
             and among The Grand Union Company, Trefoil Capital Investors II,
             L.P., a Delaware limited partnership, and GE Investments Private
             Placement Partners II, A Limited Partnership, a Delaware limited
             partnership, including Exhibits thereto, incorporated by reference
             to Exhibit 10.57 to Grand Union's Annual Report on Form 10-K for
             Fiscal 1997.

   10.35     Amendment No. 1, dated as of June 5, 1997, to the Registration
             Rights Agreement dated as of July 30, 1996, by and among The Grand
             Union Company, Trefoil Capital Investors II, L.P., a Delaware
             limited partnership, and GE Investments Private Placement Partners
             II, A Limited Partnership, a Delaware limited partnership,
             incorporated by reference to Exhibit 10.58 to Grand Union's Annual
             Report on Form 10-K for Fiscal 1997.

   10.36     Employment Agreement, dated as of August 1, 1997, between Grand
             Union and J. Wayne Harris, incorporated by reference to Exhibit
             99.1 Grand Union's Current Report on Form 8-K filed on August 1,
             1997.

   10.37     Employment Agreement, dated as of October 3, 1997, between Grand
             Union and Gary M. Philbin, incorporated by reference to Exhibit
             99.1 Grand Union's Current Report on Form 8-K filed on October 29,
             1997.

   10.38     Employment Agreement, dated as of January 5, 1998, between Grand
             Union and Jack W. Partridge, incorporated by reference to Exhibit
             99.1 Grand Union's Current Report on Form 8-K filed on January 28,
             1998.

   10.39     Exit Facility Commitment Letter, dated April 23, 1998, among Grand
             Union and Swiss Bank Corporation, SBC Warburg Dillon Read Inc.,
             Lehman Commercial Paper Inc. and Lehman Brothers Inc.

   10.40     Revolving Credit Agreement, dated as of June 24, 1998, by and
             among Grand Union and Swiss Bank Corporation, SBC Warburg Dillon
             Read Inc., Lehman Commercial Paper Inc. and Lehman Brothers Inc.

   10.41     Guarantee and Collateral Agreement, dated as of June 24, 1998, by
             the Company's subsidiaries for the benefit of Lehman Commercial
             Parer Inc. as Administrative Agent.

   21.1      Subsidiaries of Grand Union.

   27.1      Financial Data Schedule.



                                       39
<PAGE>


                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                             THE GRAND UNION COMPANY
                                  (Registrant)

Date: June 26, 1998                  /s/ Jeffrey P. Freimark
                           ----------------------------------------------------
                                         Jeffrey P. Freimark
                           Executive Vice President and Chief Financial Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>

                  Signature                                         Title                              Date

<S>                                            <C>                                                <C>
           /s/ J. Wayne Harris                 Director, Chairman, and Chief                      June 26, 1998
---------------------------------------------- Executive Officer
               J. Wayne Harris                 (Principal Executive Officer)

           /s/ Jack W. Partridge, Jr.          Director, Vice Chairman and                        June 26, 1998
---------------------------------------------- Chief Administrative Officer
               Jack W. Partridge, Jr.

           /s/ Gary M. Philbin                 Director, President and Chief                      June 26, 1998
---------------------------------------------- Merchandising Officer
               Gary M. Philbin

           /s/ Jordan H. Krimstein             Director                                           June 26, 1998
----------------------------------------------
               Jordan H. Krimstein

           /s/ Mark H. Manski                  Director                                           June 26, 1998
----------------------------------------------
               Mark H. Manski

           /s/ Martha A. Pritchard             Director                                           June 26, 1998
----------------------------------------------
               Martha A. Pritchard

           /s/ Jeffrey P. Freimark             Executive Vice President and                      June 26, 1998
---------------------------------------------- Chief Financial Officer
               Jeffrey P. Freimark             (Principal Financial Officer and
                                                Principal Accounting Officer)
</TABLE>

<PAGE>


                       REPORT OF INDEPENDENT ACCOUNTANTS
                               (Post-Emergence)


     To the Shareholders and the Board of Directors of
     The Grand Union Company


         In our opinion, the accompanying consolidated balance sheet and the
     related consolidated statements of operations and cash flows present
     fairly, in all material respects, the financial position of The Grand
     Union Company and its subsidiaries (the "Company") at March 28, 1998 and
     March 29, 1997 and the results of their operations and their cash flows
     for the 52 weeks ended March 28, 1998 and March 29, 1997 in conformity
     with generally accepted accounting principles. These financial statements
     are the responsibility of the Company's management; our responsibility is
     to express an opinion on these financial statements based on our audits.
     We conducted our audits of these statements in accordance with generally
     accepted auditing standards which require that we plan and perform the
     audit to obtain reasonable assurance about whether the financial
     statements are free of material misstatement. An audit includes
     examining, on a test basis, evidence supporting the amounts and
     disclosures in the financial statements, assessing the accounting
     principles used and significant estimates made by management, and
     evaluating the overall financial statement presentation. We believe that
     our audits provide a reasonable basis for the opinion expressed above.

         The accompanying consolidated financial statements have been prepared 
     assuming that the Company will continue as a going concern. As discussed 
     in Note 1 to the consolidated financial statements, on June 24, 1998 the 
     Company filed a voluntary petition for relief, under Chapter 11 of Title 
     11 of the United States Code ("Chapter 11"), with the United States 
     Bankruptcy Court for the District of New Jersey. As such, there is 
     substantial doubt about the Company's ability to continue as a going 
     concern. Management's plans in regard to these matters are also described 
     in Note 1. The consolidated financial statements do not include any 
     adjustments that might result from the outcome of this uncertainty.

         As discussed in Note 3 to the consolidated financial statements, on
     May 31, 1995, the United States Bankruptcy Court for the District of
     Delaware confirmed the Company's 1995 Plan of Reorganization, as amended 
     (the "1995 Plan"). Confirmation of the Plan resulted in the discharge of 
     all claims against the Company that arose before January 25, 1995 and 
     terminated all rights and interests of equity shareholders as provided for
     in the 1995 Plan. The 1995 Plan became effective on June 15, 1995 and the 
     Company emerged from Chapter 11. In connection with its emergence from 
     Chapter 11, the Company adopted Fresh-Start Reporting as of June 18, 1995.


     PRICE WATERHOUSE LLP
     Florham Park, New Jersey
     June 24, 1998


                                     F-1

<PAGE>



                       REPORT OF INDEPENDENT ACCOUNTANTS

                                (Pre-Emergence)

     To the Shareholders and the Board of Directors of

     The Grand Union Company

         In our opinion, the accompanying consolidated statements of
     operations and cash flows present fairly, in all material respects, the
     results of operations and cash flows of The Grand Union Company and its
     subsidiaries (the "Company") for the 11 weeks ended June 17, 1995, in
     conformity with generally accepted accounting principles. These financial
     statements are the responsibility of the Company's management; our
     responsibility is to express an opinion on these financial statements
     based on our audits. We conducted our audits of these statements in
     accordance with generally accepted auditing standards which require that
     we plan and perform an audit to obtain reasonable assurance about whether
     the financial statements are free of material misstatement. An audit
     includes examining, on a test basis, evidence supporting the amounts and
     disclosures in the financial statements, assessing the accounting
     principles used and significant estimates made by management and
     evaluating the overall financial statement presentation. We believe that
     our audits provide a reasonable basis for the opinion expressed above.

         As discussed in Note 3 to the consolidated financial statements, on
     January 25, 1995, the Company filed a voluntary petition for relief under
     Chapter 11 of Title 11 of the United States Code ("Chapter 11") in the
     United States Bankruptcy Court for the District of Delaware. The 
     Company's 1995 Plan of Reorganization, as amended, became effective on June
     15, 1995 and the Company emerged from Chapter 11. In connection with its
     emergence from Chapter 11, the Company adopted Fresh-Start Reporting as
     of June 18, 1995.

     PRICE WATERHOUSE LLP

     New York, New York
     May 17, 1996


                                     F-2

<PAGE>



                           THE GRAND UNION COMPANY
                     CONSOLIDATED STATEMENT OF OPERATIONS
                (dollars in thousands, except per share data)

<TABLE>
<CAPTION>

                                                                            Successor                         Predecessor
                                                                             Company                            Company
                                                      ---------------------------------------------------------------------
                                                         52 Weeks          52 Weeks          41 Weeks          11 Weeks
                                                          Ended             Ended              Ended             Ended
                                                        March 28,         March 29,          March 30,         June 17,
                                                           1998              1997              1996              1995
                                                      ---------------   ---------------    --------------    --------------
<S>                                                   <C>               <C>                <C>              <C>         
Sales                                                   $ 2,266,770       $ 2,312,673        $ 1,819,928      $    487,882

Cost of sales                                            (1,627,233)       (1,606,926)        (1,250,072)         (344,041)
                                                      ---------------   ---------------    --------------    --------------

Gross profit                                                639,537           705,747            569,856           143,841

Operating and administrative expenses                      (568,903)         (582,889)          (453,620)        ( 117,544)

Depreciation and amortization                               (98,789)          (85,459)           (59,840)          (17,215)

Amortization of excess reorganization value                (104,332)         (102,607)           (83,985)                -

Unusual items                                                (6,333)           (9,800)           (22,000)          (18,627)

Interest expense, net                                      (113,770)         (105,823)           (79,194)          (19,791)
                                                      ---------------   ---------------    --------------    --------------

(Loss) before income taxes and extraordinary
 gain on debt discharge                                    (252,590)         (180,831)          (128,783)          (29,336)

Income tax (provision) benefit                              (51,393)           (2,523)            18,927                 -
                                                      ---------------   ---------------    --------------    --------------

(Loss) before extraordinary gain on debt
    discharge                                              (303,983)         (183,354)          (109,856)          (29,336)

Extraordinary gain on debt discharge                              -                 -                  -           854,785
                                                      ---------------   ---------------    --------------    --------------

Net (loss) income                                          (303,983)         (183,354)          (109,856)          825,449

Accrued dividends on preferred stock                         (8,431)           (2,000)                 -                 -
                                                      ---------------   ---------------    --------------    --------------

Net (loss) income applicable to common stock           $   (312,414)     $   (185,354)      $   (109,856)     $    825,449
                                                      ===============   ===============    ==============    ==============

Basic and diluted net (loss) per share                 $     (31.12)     $     (18.54)      $    (10.99)
                                                      ===============   ===============    ==============

Weighted average number of shares
  outstanding                                                10,039            10,000             10,000
                                                      ===============   ===============    ==============
</TABLE>


         See accompanying notes to consolidated financial statements.

                                     F-3

<PAGE>



                            THE GRAND UNION COMPANY
                          CONSOLIDATED BALANCE SHEET
   (dollars in thousands, except par value and liquidation preference data)

<TABLE>
<CAPTION>

                                                                                  March 28,              March 29,
                                                                                     1998                   1997
                                                                               -----------------      -----------------
<S>                                                                              <C>                   <C>           
ASSETS
Current assets:
 Cash and temporary investments                                                  $       44,745        $       34,119
 Receivables                                                                             21,378                28,966
 Inventories                                                                            128,370               131,409
 Other current assets                                                                    14,787                14,326
                                                                               -----------------      -----------------
   Total current assets                                                                 209,280               208,820
Property, net                                                                           389,637               411,911
Excess reorganization value, net                                                        230,734               335,065
Beneficial leases, net                                                                   39,531                52,266
Deferred tax asset                                                                            -                51,393
Other assets                                                                             23,049                12,375
                                                                               -----------------      -----------------
                                                                                  $     892,231         $   1,071,830
                                                                               =================      =================

LIABILITIES AND STOCKHOLDERS' (DEFICIT) 
Current liabilities:

  Current maturities of long-term debt                                             $    798,551         $          46
  Current portion of obligations under capital leases                                     7,562                 8,045
  Accounts payable and accrued liabilities                                              189,439               175,540
                                                                               -----------------      -----------------
     Total current liabilities                                                          995,552               183,631
Long-term debt                                                                                -               740,207
Obligations under capital leases                                                        153,425               140,058
Other noncurrent liabilities                                                             96,458                96,144
                                                                               -----------------      -----------------
     Total liabilities                                                                1,245,435             1,160,040
                                                                               -----------------      -----------------

Redeemable Class A Preferred Stock, $1.00 par value, 3,500,000 shares
    authorized, 1,300,566 shares issued and outstanding, liquidation
    preference $70,685,000 and $65,000,000, respectively                                 70,685                65,000
                                                                               -----------------      -----------------

Redeemable Class B Preferred Stock, $1.00 par value, 1,400,000 shares
    authorized, 800,000 shares issued and outstanding, liquidation 
    preference $42,746,000                                                               42,746                     -
                                                                               -----------------      -----------------

Stockholders' (deficit):
   Common stock, $.01 par value; 60,000,000 shares
     authorized, 10,202,018 and 10,000,000 shares issued and
     outstanding at March 28, 1998 and March 29, 1997, respectively                         102                   100

   Preferred stock, $1.00 par value; 10,000,000 shares
     authorized, less amount authorized as Class A and Class
     B preferred stock, no shares issued and outstanding                                      -                     -
   Capital in excess of par value                                                       132,006               139,900

   Accumulated deficit                                                                 (598,743)             (293,210)
                                                                               -----------------      -----------------
     Total stockholders' (deficit)                                                     (466,635)             (153,210)
                                                                               -----------------      -----------------
                                                                                  $     892,231         $   1,071,830
                                                                               =================      =================
</TABLE>


         See accompanying notes to consolidated financial statements.


                                     F-4

<PAGE>


                            THE GRAND UNION COMPANY
                     CONSOLIDATED STATEMENT OF CASH FLOWS
                            (dollars in thousands)

<TABLE>
<CAPTION>
                                                                                    Successor                       Predecessor
                                                                                     Company                          Company
                                                                 ------------------------------------------------------------------
                                                                    52 Weeks        52 Weeks         41 Weeks         11 Weeks
                                                                     Ended            Ended           Ended            Ended
                                                                   March 28,        March 29,       March 30,         June 17,
                                                                      1998            1997             1996             1995
                                                                 --------------- ---------------- --------------- -----------------
<S>                                                              <C>             <C>              <C>             <C>          
OPERATING ACTIVITIES:
 Net (loss) income                                                  $ (303,983)     $ (183,354)      $ (109,856)   $     825,449
 Adjustments to reconcile net (loss) income to
   net cash provided by (used for) operating 
   activities before reorganization items paid:
    Extraordinary gain on debt discharge                                     -               -                -        (854,785)
    Depreciation and amortization                                      203,121         188,066          143,825          17,215
    Deferred taxes                                                      51,393           2,523          (18,927)              -
    Noncash interest                                                       907            (188)          14,552           1,126
 Net changes in assets and liabilities:

   Receivables                                                           7,588           2,973          (12,652)          1,769
   Inventories                                                           3,039           2,097           50,372          12,946
   Other current assets                                                   (461)           (617)             123           2,776
   Accounts payable and accrued liabilities                             15,582          (2,783)         (59,509)        (34,928)
   Other                                                                (9,627)         (2,867)          (7,733)          4,493
                                                                 --------------- ---------------- --------------- -----------------
 Net cash provided by (used for) operating
   activities before reorganization items paid                         (32,441)          5,850              195         (23,939)
   Reorganization items paid                                            (3,681)         (5,484)         (20,729)         (4,913)
                                                                 --------------- ---------------- --------------- -----------------
 Net cash provided by (used for) operating activities                  (36,122)            366          (20,534)        (28,852)
                                                                 --------------- ---------------- --------------- -----------------
INVESTMENT ACTIVITIES:

  Capital expenditures                                                 (39,727)        (55,147)         (40,402)         (3,301)
  Disposals of property                                                  5,897           8,011            5,555           5,452
                                                                 --------------- ---------------- --------------- -----------------
 Net cash provided by (used for) investment activities                 (33,830)        (47,136)         (34,847)          2,151
                                                                 --------------- ---------------- --------------- -----------------
FINANCING ACTIVITIES:

  Net proceeds from sale of preferred stock                             40,000          51,000                -               -
  Net proceeds from sale of common stock                                   258               -                -               -
  Proceeds from new bank debt                                                -               -                -         104,144
  Payment of old bank debt                                                   -               -                -         (93,144)
  Net proceeds from long-term debt                                      77,978           9,000           33,089               -
  Loan placement fees                                                   (9,842)              -                -          (3,125)
  Obligations under capital leases discharged                           (8,770)        (10,543)          (6,126)         (1,707)
  Net repayment of long-term debt                                      (19,046)         (7,993)            (808)           (239)
                                                                 --------------- ---------------- --------------- -----------------
 Net cash provided by financing activities                              80,578          41,464           26,155           5,929
                                                                 --------------- ---------------- --------------- -----------------

Net increase (decrease) in cash and temporary investments               10,626          (5,306)         (29,226)        (20,772)
Cash and temporary investments at beginning of period                   34,119          39,425           68,651          89,423
                                                                 --------------- ---------------- --------------- -----------------
Cash and temporary investments at end of period                   $     44,745    $     34,119     $     39,425   $      68,651
                                                                 =============== ================ =============== =================

Supplemental disclosure of cash flow information:
  Interest payments                                               $     77,658     $   105,045     $     57,565   $       9,515
  Capital lease obligations incurred                                    21,654          23,452            8,529          20,072
  Accrued dividends                                                      8,431           2,000                -               -
  Decrease in common stock par value                                         -           9,900                -               -
</TABLE>


         See accompanying notes to consolidated financial statements.


                                     F-5
<PAGE>



                            THE GRAND UNION COMPANY

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     NOTE 1 - Management Plans and Subsequent Events

         On January 27, 1998 The Grand Union Company, a Delaware corporation
     ("Grand Union" or the "Company"), announced that it had retained the firm
     of Salomon Smith Barney as a financial advisor to evaluate various
     financial alternatives, including a capital restructuring. In February
     1998, the Company commenced negotiations with the Secured Banks regarding
     obtaining necessary waivers to avoid the consequences of an event of
     default under the Credit Agreement and to facilitate the restructuring
     contemplated by the Company's proposed plan of reorganization (the "Plan
     of Reorganization"). Those negotiations resulted in an agreement by the
     Secured Banks to waive certain defaults under the Credit Agreement,
     subject to the terms and conditions of such waiver.

         The same industry and financial pressures that required Grand Union
     to commence negotiations with the Secured Banks also led the Company to
     commence negotiations regarding a restructuring of its obligations with
     the holders of the Senior Notes. In February and March 1998, eight
     institutions owning approximately 48% of the Senior Notes agreed to serve
     on an unofficial noteholder committee (the "Unofficial Noteholder
     Committee") and receive confidential, non-public information about Grand
     Union.

         Grand Union participated in extensive negotiations with the
     Unofficial Noteholder Committee regarding the terms of a proposed
     financial restructuring. During this time, Grand Union failed to make the
     approximately $36 million interest payment due and payable on the Senior
     Notes on March 2, 1998, which resulted in the occurrence of events of
     default under the Indenture governing the Senior Notes and the Credit
     Agreement. Nevertheless, negotiations between Grand Union and the
     Unofficial Noteholder Committee continued, and on March 30, 1998, the
     parties reached an agreement in principle on the terms of a restructuring
     to be effectuated pursuant to a plan of reorganization under chapter 11
     of the Bankruptcy Code. On May 13, 1998, Grand Union, the Unofficial
     Noteholder Committee and the holders of the Grand Union's preferred stock
     reached an agreement in principle regarding the proposed treatment of the
     preferred stock.

         Pursuant to a Disclosure Statement, dated May 22, 1998 (the
     "Disclosure Statement"), Grand Union commenced a prepetition solicitation
     of votes by the holders of Senior Notes and preferred stock to accept or
     reject the Plan of Reorganization. The Plan of Reorganization generally
     provides that trade and business creditors will be unimpaired and will
     continue to be paid in the ordinary course of business, so long as
     shipments are made to the Company under terms at least equivalent to
     those in place prior to January 27, 1998. The Plan of Reorganization
     further provides that (i) the Company's Senior Notes will be cancelled
     and exchanged for all of the reorganized Company's common stock; (ii) the
     Company's existing common stock will be cancelled and exchanged for
     five-year warrants to purchase approximately 1.5% of the new common stock
     at an exercise price of $19.82 per share; (iii) the Company's preferred
     stock will be cancelled and exchanged for (a) five-year warrants to
     purchase approximately 10.5% of the new common stock at an exercise price
     of $19.82 per share, (b) five-year warrants to purchase approximately
     2.5% of the new common stock at an exercise price of $23.15 per share,
     and (c) four-year warrants to purchase approximately 1% of the new common
     stock at an exercise price of $12.32 per share; and (iv) the Company's
     outstanding warrants and stock options will be cancelled. At the
     conclusion of the solicitation period, which commenced on May 22, 1998
     and ended on June 22, 1998, the Plan of Reorganization had been accepted
     by holders of approximately 99% of the Senior Notes in principal amount
     and approximately 92% in number of such holders that voted on the Plan of
     Reorganization and by all holders of the preferred stock that voted on
     the Plan of Reorganization. Holders of approximately 72% in principal
     amount of the outstanding Senior Notes voted to accept the Plan of
     Reorganization. Although Grand Union believes that the Plan of
     Reorganization will satisfy all requirements necessary for confirmation
     by the Bankruptcy Court (as defined below), there can be no assurance
     that the Bankruptcy Court will reach the same conclusion. Moreover, there
     can be no assurance that modifications of the Plan of Reorganization will
     not be required for confirmation or that such modifications would not
     necessitate the resolicitation of votes.

         On June 24, 1998, the Company filed a voluntary petition for relief
     (the "Filing") under chapter 11, Title 11 of the United States Code, as
     amended ("Chapter 11"), with the United States Bankruptcy Court for the
     District of New Jersey (the "Bankruptcy Court"). The Company is in
     possession of its property and is maintaining and operating its business
     as a debtor-in-possession pursuant to the provisions of Sections 1107 and
     1108 of Chapter 11.


                                     F-6

<PAGE>


         As previously reported, in recent months, the Company had been
     experiencing liquidity problems and had been unable to borrow the funds
     necessary to pay the interest due on its Senior Notes and finance its
     working capital and other business needs.

         Since March 2, 1998, the Company has been in default of its
     obligations under the Senior Notes and operating with waivers of cross
     defaults under the Credit Agreement. As of June 24, 1998 the Company had 
     $22 million of borrowings and approximately $33 million of letters of 
     credit outstanding under its $100 million revolving credit facility. In 
     addition, the Filing by the Company constitutes an automatic default 
     under the Credit Agreement.

         In connection with the Filing, on June 24, 1998, the Company entered
     into a $172,022,020 firm underwritten revolving credit agreement (the
     "DIP Facility") with Swiss Bank Corporation ("SBC") and Lehman Commercial
     Paper Inc. ("LCPI"), as agents for a syndicate of lenders (together, the
     "DIP Lenders"). The DIP Facility consists of a revolving credit facility
     in an aggregate amount of $172,022,020, inclusive of a $50 million letter
     of credit facility. Loans under the DIP Facility will be guaranteed by
     each of the Company's subsidiaries. The DIP Facility will mature upon the
     earlier of (i) October 22, 1998, or (ii) the effective date of the Plan
     of Reorganization.

         The proceeds of the DIP Facility will be used (i) to finance the
     working capital needs of the Company and its subsidiaries in the ordinary
     course of business, (ii) to finance the payment of Chapter 11 expenses,
     (iii) for general corporate purposes and (iv) to refinance the revolving
     credit and term loans and to replace, backstop or cash collateralize
     letters of credit outstanding under the Credit Agreement.

         The DIP Facility is secured by substantially all of the assets of
     Grand Union and its subsidiaries. The interest rate applicable to the DIP
     Facility will be equal to, at Grand Union's election, either (i) 1.5%
     above the higher of (A) Citibank's prime rate and (B) the federal funds 
     rate plus 0.5%, or (ii) 2.5% above the rate for eurodollar deposits for 
     one, two or three weeks or one month (as selected by Grand Union) in the
     interbank eurodollar market. Grand Union committed to pay an underwriting
     fee of $1,100,000 and is required to pay a $25,000 per month
     administrative fee. In addition, Grand Union will pay a commitment fee of
     0.5% per annum on the average daily unused portion of the DIP Facility
     and a fronting fee of 0.125% on the aggregate undrawn face amount of
     outstanding letters of credit. The availability of the DIP Facility is
     conditioned, among other things, upon the entry of an order of the
     Bankruptcy Court approving the DIP Facility, which is anticipated to
     occur 15 days after the Filing.

         On the date the Plan of Reorganization is consummated (the
     "Consummation Date"), Grand Union will enter into a new credit facility
     (the "Exit Facility"). On April 23, 1998, Grand Union received a letter
     from SBC Warburg Dillon Read Inc., SBC, Lehman Brothers Inc. and LCPI,
     pursuant to which SBC and LCPI (collectively, the "Agent Banks")
     committed to provide financing to Grand Union in the aggregate principal
     amount of $300 million upon consummation of the Plan of Reorganization.
     The Agent Banks, as agents for a syndicate of banks, financing
     institutions and other entities, including the Agent Banks (collectively,
     the "New Grand Union Lenders"), will provide Grand Union with the Exit
     Facility. The Exit Facility will be guaranteed by all of Grand Union's
     subsidiaries.

         The Exit Facility will be comprised of: (i) a $230 million term loan
     facility (the "Term Loan") and (ii) a $70 million revolving credit
     facility (the "Revolving Credit Facility"). The Term Loan and Revolving
     Credit Facility will mature on the fifth anniversary of the Consummation
     Date. The proceeds of the Exit Facility will be used to refinance the
     obligations under the DIP Facility and the Supplemental Term Loan claims
     under the Credit Agreement and the excess portion will be used for the
     working capital needs of the Company and its subsidiaries, including
     capital expenditures. Up to $50 million of the Revolving Credit Facility
     will be available for the issuance of letters of credit. The Exit
     Facility will be secured by substantially all of the assets of the
     Company and its subsidiaries. The availability of the Exit Facility is
     conditioned, among other things, upon the Bankruptcy Court having entered
     an order confirming the Plan of Reorganization on or before August 31,
     1998.

     NOTE 2 - Basis of Presentation and Summary of Significant Accounting 
     Policies

         The Company is a regional food retailer, which currently operates
     stores in six northeastern states. The Company has been publicly owned
     since June 15, 1995. Prior to June 15, 1995, Grand Union Capital
     Corporation ("Capital"), a wholly owned subsidiary of Grand Union
     Holdings Corporation ("Holdings") owned all of Grand Union's Common
     Stock.

                                     F-7

<PAGE>


     Basis of Presentation

         As of the Company's emergence from Chapter 11 ("Chapter 11") of Title
     11 of the United States Code (the "Code") on June 15, 1995 (the
     "Effective Date", see Note 3) the Company adopted fresh-start reporting
     in accordance with American Institute of Certified Public Accountants
     Statement of Position 90-7, "Financial Reporting By Entities in
     Reorganization Under The Bankruptcy Code" ("Fresh-Start Reporting"). In
     connection with the adoption of Fresh-Start Reporting, a new entity has
     been deemed created for financial reporting purposes. The period
     presented prior to the Effective Date has been designated "Predecessor
     Company" and the periods subsequent to the Effective Date have been
     designated "Successor Company".

     Principles of Consolidation

         The consolidated financial statements include the accounts of the
     Company and its subsidiaries, all of which are wholly owned. Intercompany
     transactions and balances have been eliminated in consolidation.

     Fiscal Year

         The Company's fiscal year ends on the Saturday nearest the last day
     of March. The years ended March 28, 1998 ("Fiscal 1998"), March 29, 1997
     ("Fiscal 1997"), and March 30, 1996 ("Fiscal 1996") were each comprised
     of 52 weeks. Fiscal 1996 includes the 11 weeks prior to the Effective
     Date which have been designated "Predecessor Company" and the 41 weeks
     subsequent to the Effective Date which have been designated "Successor
     Company".

     Temporary Cash Investments

         The Company considers all liquid investments with original maturities 
     of three months or less to be cash equivalents.

     Inventories

         Grocery and general merchandise inventories are all valued at the
     lower of last-in, first-out ("LIFO") cost or market. At March 28, 1998
     and March 29, 1997 approximately $112,411,000 and $111,923,000,
     respectively, of grocery and general merchandise inventories were valued
     using the LIFO method. Replacement cost exceeded LIFO cost of these
     inventories by approximately $3,783,000 and $3,800,000 at March 28, 1998
     and March 29, 1997, respectively. Perishable inventories are valued at
     the lower of average cost or market, which adequately provides for the
     matching of costs and related revenues due to the rapid turnover of such
     inventories.

     Property and Depreciation

         Land, buildings, fixtures and equipment and leasehold improvements
     are recorded at cost and include interest on the funds borrowed to
     finance construction. Depreciation and amortization of buildings,
     fixtures and equipment and leasehold improvements is computed using the
     straight-line method over estimated useful lives ranging from three to
     forty years. Properties held under capital leases are capitalized net of
     gains on sale-leaseback transactions and are amortized using the
     straight-line method over the life of the asset or the life of the lease,
     as appropriate.

     Excess Reorganization Value

         Excess Reorganization Value, established in connection with
     Fresh-Start Reporting, is being amortized on a straight-line basis over
     five years. Accumulated amortization was $290,925,000 and $186,592,000 at
     March 28, 1998 and March 29, 1997, respectively.

     Beneficial Leases

         Amortization of beneficial leases is computed using the straight-line
     basis over the lease life. At March 28, 1998 and March 29, 1997,
     accumulated amortization was $40,159,000 and $27,682,000, respectively.

     Amortization of Debt Premium

         The Company amortizes premiums in connection with the issuance of
     long-term debt over the life of the respective issue.


                                     F-8

<PAGE>

     Deferred Financing Fees

         Financing fees are deferred and amortized over the expected life of
     the related loan. At March 28, 1998 and March 29, 1997, accumulated
     amortization was $2,342,000 and $802,000, respectively.

     Income Taxes

         Deferred income taxes are recognized for tax consequences of
     "temporary differences" by applying enacted statutory tax rates,
     applicable to future years, to differences between the financial
     reporting and the tax basis of existing assets and liabilities. Valuation
     allowances are recorded to the extent that it is more likely than not
     that future tax benefits will not be realized.

     Retirement Plans

         The Company maintains a noncontributory, trusteed pension plan
     covering eligible employees and a supplemental nonqualified, nontrusteed
     plan for certain executives. The Company's policy is to fund pension
     amounts, which satisfy the requirements of the Employee Retirement Income
     Security Act of 1974, as amended ("ERISA"). The Company also maintains a
     saving plan in which eligible employees may contribute up to a total of
     14% of their salary; the allowable percentage of pre- and post-tax
     contributions vary depending upon the earnings of a particular employee.
     The Company provides a match of 25% on the dollar up to the first 4% of
     employee contributions.

     Postretirement Benefits other than Pension

         The Company accrues the estimated cost of retiree benefit payments,
     other than pension, during the years each employee provides services.

     Stock-Based Compensation

         The Company accounts for stock-based compensation using the intrinsic
     value method under which compensation cost is measured as the excess, if
     any, of the quoted market price of the Company's stock at the date of
     grant over the exercise price of the option granted. Compensation cost
     for stock options, if any, is recognized ratably over the vesting period.
     The Company provides additional pro forma disclosures as required under
     Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting
     for Stock-Based Compensation."

     Self Insurance

         The Company self-insures workers' compensation, automobile liability,
     general liability and non-union employee medical costs to varying
     deductible limits, and with the exception of medical costs, carries third
     party insurance in excess of such limits. Reserves are provided for the
     estimated settlement value up to the deductible limit of all claims
     incurred during each policy year.

     Advertising Costs

         Advertising costs are expensed as incurred. Advertising expense for
     Fiscal 1998, Fiscal 1997, the 41 weeks ended March 30, 1996, and the 11
     weeks ended June 17, 1995 was $33,216,000, $37,481,000, $28,084,000, and
     $7,383,000, respectively.

     Store Closure Expense

         Estimated net costs of holding and disposing of closed stores are
     provided as of the later of the date the decision is made to close the
     store or the date such costs are reasonably estimable.

     Pre-opening Costs

         Store pre-opening costs are charged to expense as incurred.


                                     F-9

<PAGE>

     Fair Value of Financial Instruments

         The carrying amount of cash, temporary cash investments, receivables,
     accounts payable, accrued liabilities and debt, other than the Senior
     Notes, approximates fair value. The fair value of the Senior Notes, based
     upon published trading values, is $311,107,000 and $592,444,000 at March
     28,1998 and March 29, 1997, respectively.

     Use of Estimates

         The preparation of financial statements in conformity with generally
     accepted accounting principles requires management to make estimates and
     assumptions that affect the reported amounts of assets and liabilities
     and the disclosure of contingent assets and liabilities at the date of
     the financial statements and the reported amounts of revenues, costs and
     expenses during the reporting period. Actual results could differ from
     those estimates. Areas of significant estimates include self-insurance
     reserves, realization of deferred tax assets, retirement benefit
     reserves, recoverability of long-lived assets, restructuring and other
     reserves.

     Net Loss Per Share

         Net loss per share is computed in accordance with SFAS No. 128,
     "Earnings Per Share" ("SFAS No. 128"), which is effective for interim and
     year end periods ending after December 15, 1997. This statement requires
     that entities present, on the face of the income statement for all
     periods presented, basic and diluted per share amounts. Basic earnings
     per share is computed using the weighted average number of common shares
     outstanding for the period. Diluted earnings per share considers the
     impact of any dilutive stock options or warrants outstanding (potential
     common shares). For Fiscal 1998, Fiscal 1997, and the 41 weeks ended
     March 30, 1996, potentially dilutive shares totaling 29,554,440,
     10,126,763, and 235,680 have been excluded from the computation of the
     Company's diluted earnings per share because the effect would have been
     anti-dilutive. The Company adopted SFAS No. 128 in the third quarter of
     Fiscal 1998.

     Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of

         In March 1995, the Financial Accounting Standards Board ("FASB")
     issued SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets
     and for Long-Lived Assets to Be Disposed Of", ("SFAS No. 121"), which
     establishes accounting standards for the impairment of long-lived assets,
     certain identifiable intangibles, and goodwill related to those assets to
     be held and used and for long-lived assets and certain identifiable
     intangibles to be disposed of. The Company adopted SFAS No. 121 as of the
     Effective Date.

     Reclassifications

         Certain reclassifications have been made to the prior years'
     consolidated financial statements to conform to the Fiscal 1998
     presentation.

     New Accounting Standards Not Yet Adopted

         In June 1997,  the FASB issued SFAS No. 130,  "Reporting  Comprehensive
     Income," ("SFAS No. 130") effective for fiscal years beginning after
     December 15, 1997. SFAS No. 130 requires the reporting and display of
     comprehensive income and its components in an entity's financial
     statements.

         In June 1997, the FASB issued SFAS No. 131, "Disclosures about
     Segments of an Enterprise and Related Information," ("SFAS No. 131")
     effective for fiscal years beginning after December 15, 1997. SFAS No.
     131 provides accounting guidance for reporting information about
     operating segments and requires both interim and annual segment reporting.

         In February 1998, the FASB issued SFAS No. 132, "Employers'
     Disclosures about Pensions and Other Postretirement Benefits" ("SFAS No.
     132"), which will be effective for financial statements beginning after
     December 15, 1997. SFAS No. 132 revises employers' disclosure about
     pension and other postretirement benefit plans. It does not change the
     measurement or recognition of those plans.

         These statements, which will be adopted by the Company in Fiscal 1999,
     affect financial statement presentation and disclosure but will not have an
     impact on the Company's consolidated financial position or results of
     operations.

                                     F-10

<PAGE>

         In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
     Instruments and Hedging Activities," ("SFAS No. 133") effective for fiscal
     quarters of fiscal years beginning after June 15, 1999. SFAS No. 133
     requires that an entity recognize all derivatives as either assets or
     liabilities in the statement of financial position and measure those
     instruments at fair value. The Company currently does not have any
     derivative instruments and, therefore, does not expect the adoption of this
     SFAS to have an effect on the Company's financial position or results of
     operations.

     NOTE 3 -1995 Reorganization

         On November 29, 1994, the Company announced that it was not likely to
     be able to fund cash interest payments due in early calendar 1995, and
     that it intended to develop a capital restructuring plan. Beginning on
     January 16, 1995, the Company did not make interest payments required
     under its outstanding debt obligations.

         On January 24, 1995, the Company announced that it had reached an
     agreement in principle with its bank lenders and with members of informal
     committees of certain holders of its 11.375% Senior Notes due 1999 (the
     "11.375% Senior Notes") and 11.25% Senior Notes due 2000 (the "11.25%
     Senior Notes" and, collectively with the 11.375% Senior Notes, the "Old
     Senior Notes") and certain holders of its 12.25% Senior Subordinated
     Notes due 2002 (the "12.25% Subordinated Notes"), 12.25% Senior
     Subordinated Notes due 2002, Series A (the "Series A 12.25% Subordinated
     Notes") and 13% Senior Subordinated Notes due 1998 (the "13% Subordinated
     Notes" and, collectively with the 12.25% Subordinated Notes and the
     Series A 12.25% Subordinated Notes, the "Subordinated Notes") on the
     terms of a capital restructuring.

     1995 Chapter 11 Bankruptcy Filings - On January 25, 1995 (the "Filing
     Date"), as part of the implementation of such agreement, the Company
     filed a voluntary petition for relief under chapter 11 ("Chapter 11") of
     Title 11 of the United States Code (the "Code") in the United States
     Bankruptcy Court for the District of Delaware (the "Bankruptcy Court").
     From the Filing Date through the Effective Date, the Company operated as
     a debtor-in-possession under Chapter 11 of the Code and was subject to
     the supervision of the Bankruptcy Court in accordance with the Code.
     During this period, the Company's business was operated under a series of
     "first day orders", which, among other things, permitted it to retain
     certain financial and legal advisors and which authorized payment of
     certain pre-petition employee costs, including worker's compensation
     benefits, and pre-petition trade claims, subject to the satisfaction of
     various requirements.

          On January 30, 1995, the Company (as debtor and as
     debtor-in-possession) entered into a credit agreement (the "DIP
     Facility") with the banks party thereto providing for borrowings of up to
     $150 million on a revolving credit basis. On February 16, 1995, final
     approval of the DIP Facility was granted and the Bankruptcy Court also
     issued a Final Cash Collateral Order which allowed the Company to use
     cash collateral to pay operating expenses in the ordinary course of
     business. The DIP Facility provided for a commitment fee equal to .5% of
     the average unused portion. There were no borrowings made under the DIP
     Facility during the Chapter 11 proceedings and it was terminated on the
     Effective Date.

         On February 16, 1995, Capital consented to the entry of an order for
     relief in respect of an involuntary Chapter 11 petition filed in the
     Bankruptcy Court on February 6, 1995 by entities purporting to be holders
     of Capital's 15% Senior Zero Coupon Notes due 2004 (the "Capital Senior
     Zero Notes") and 16.5% Senior Subordinated Zero Coupon Notes due 2007
     (the "Capital Subordinated Zero Notes" and, collectively with the Capital
     Senior Zero Notes, the "Capital Notes"). On February 16, 1995, Holdings,
     of which Capital was a wholly owned subsidiary, filed a voluntary Chapter
     11 petition in the Bankruptcy Court.

     1995 Plan of Reorganization - The Bankruptcy Court confirmed the Second
     Amended Chapter 11 Plan of The Grand Union Company, dated as of April 19,
     1995, (as confirmed, the "Plan"), on May 31, 1995 (the "Confirmation
     Date"), and the Company emerged from Chapter 11 on the Effective Date.

         On the Effective Date, Grand Union adopted a restated certificate of
     incorporation (the "New Certificate"), the principal effects of which
     were: (i) to authorize 30,000,000 shares of new common stock (the "Common
     Stock") (of which 10,000,000 shares were issued under the Plan) and (ii)
     to prohibit the issuance of non-voting equity securities. The Plan
     provided for full payment of all allowed administrative expenses and all
     allowed general unsecured and priority claims. On the Effective Date,
     obligations relating to the Company's existing bank credit agreement (the
     "Old Bank Credit Agreement") were paid in full and the Company entered
     into an Amended and Restated Credit Agreement (the "Bank Facility") with
     its bank lending group which provides for a five-year revolving credit
     facility of $100,000,000 (the "Revolving Credit Facility") and a
     seven-year term loan facility of $104,144,371 (the "Term Loan"). The Bank
     Facility is secured by a lien on substantially all of the assets of the
     Company and its subsidiaries.

         As of the Effective Date, the Old Senior Notes, which had an
     aggregate principal amount of $525,000,000 plus accrued interest, were
     deemed cancelled and each holder of Old Senior Notes became entitled to
     receive its pro rata share of the Company's new 12% Senior Notes due 2004
     (the "Senior Notes") having an aggregate principal amount of $595,475,922
     issued pursuant to the Plan. Subsequent to the Effective Date, the
     Company issued $595,421,000 aggregate principal amount of Senior Notes
     and made cash payments of $54,922 for fractional amounts to the holders
     of the Old Senior Notes. The Senior Notes began to accrue interest
     beginning on September 1, 1995. Accordingly, the Senior Notes have been
     discounted at 12% for the period from June 15, 1995 to September 1, 1995
     and imputed interest was charged at 12% during 


                                     F-11

<PAGE>


     that period. In addition, the difference between such discounted value
     and the fair value of the Senior Notes at the Effective Date was recorded
     as a debt premium totaling $5,779,000 which is being amortized over the
     life of the Senior Notes.

         As of the Effective Date, the Subordinated Notes, which had an
     aggregate principal amount of $566,150,000, and the old capital stock of
     Grand Union were deemed cancelled and each holder of Subordinated Notes
     became entitled to receive its pro rata share of an aggregate of
     10,000,000 shares of Common Stock issued pursuant to the Plan.

         The Plan also provided for the issuance of warrants to purchase an
     aggregate of 900,000 shares of Common Stock to holders of several other
     series of long-term debt of its then parent company (the "Capital Notes")
     pursuant of the terms of a settlement reached among the Company, its then
     direct and indirect parent companies, the Official Committee of Unsecured
     Creditors of its then parent company and certain holders of the Capital
     Notes. Such warrants are comprised of 300,000 Series 1 Warrants to
     purchase shares of Common Stock at a purchase price of $30 per share and
     of 600,000 Series 2 Warrants to purchase shares of Common Stock at a
     purchase price of $42 per share. The warrants expire on June 15, 2000.

         The Plan made no provision for the holders of the remaining long-term
     debt, Redeemable Preferred Stock, common shares or warrants to purchase
     common shares of the Company's then indirect parent. Holdings and Capital
     were dissolved on March 28, 1996 and March 27, 1996, respectively.

         Interest expense was not accrued on the Subordinated Notes, Capital
     Notes, and Holdings Junior Notes subsequent to the Filing Date.
     Accordingly, interest expense for the 11 weeks ended June 17, 1995 and
     the 52 weeks ended April 1, 1995 excludes contractual interest expense of
     $23,569,000 and $21,269,000, respectively.

         For financial reporting purposes, the Company accounted for the
     consummation of the Plan effective June 17, 1995. In accordance with
     Fresh-Start Reporting, the Company valued its assets and liabilities at
     fair values and eliminated its retained earnings at the Effective Date.
     The reorganization value of the Company was determined utilizing several
     methods which yielded similar results including (a) the trading value of
     the Company's Common Stock for a representative number of days subsequent
     to the Effective Date and the fair value of the Company's obligations as
     of the Effective Date, (b) discounted cash flows and (c) a multiple of
     adjusted trailing year operating cash flow. The total reorganization
     value as of the Effective Date was determined to be $1,334,000,000 which
     was $521,657,000 in excess of the aggregate fair value of the Company's
     tangible and identified intangible assets. Such excess is classified as
     "Excess reorganization value, net" in the accompanying consolidated
     balance sheet.

                                     F-12


<PAGE>



         The components of reorganization items included as unusual items in
     the consolidated statement of operations are as follows (in thousands):

<TABLE>
<CAPTION>

                                                                                 11 Weeks
                                                                                  Ended
                                                                                 June 17,
                                                                                   1995
                                                                                 --------
<S>                                                                             <C>
     Fresh-Start Reporting:
        Establish excess reorganization value                                   $ 521,657
        Eliminate existing goodwill                                              (540,434)
        Revalue beneficial leases                                                  40,633
        Establish deferred tax asset                                               35,414
        Revalue pension assets and liabilities and postretirement obligations     (23,653)
        Record lease rejection liability                                          (19,734)
        Provide for warehouse closing                                             (10,450)
        Eliminate LIFO inventory reserve                                            7,757
        Provide for other reorganization liabilities                               (5,400)
        Record liability for fair value of interest rate protection agreement      (3,500)
        Other                                                                      (1,905)
                                                                                ---------
      Total Fresh-Start Reporting                                                     385
     Professional fees incurred in connection with the reorganization             (20,000)
     Interest earned on accumulated cash resulting from the
       Chapter 11 proceedings                                                         988
                                                                                ----------
             Total reorganization items                                         $ (18,627)
                                                                                =========
</TABLE>

         At June 17, 1995, as a result of the debt restructuring, the Company
     recorded an extraordinary gain on debt discharge as follows (in
     thousands):

<TABLE>
<S>                                                                                                 <C>
         Elimination of Old Debt, deferred financing fees and accrued interest discharged                $ 1,589,506
         Issuance of Senior Notes                                                                           (580,721)
         Issuance of Common Stock                                                                           (154,000)
                                                                                                    -------------------
            Extraordinary gain on debt discharge                                                         $   854,785
                                                                                                    ===================
</TABLE>

     NOTE 4 - Unusual items

         Unusual items included in the consolidated statements of operations
consist of the following (in thousands):

<TABLE>
<CAPTION>

                                                                              Successor                         Predecessor
                                                                               Company                            Company
                                                -----------------------------------------------------------  ----------------
                                                    52 Weeks             52 Weeks              41 Weeks           11 Weeks
                                                     Ended                Ended                 Ended              Ended
                                                    March 28,            March 29,             March 30,          June 17,
                                                      1998                 1997                  1996               1995
                                                ----------------    ------------------     ----------------  ----------------
<S>                                             <C>                 <C>                    <C>                 <C>      
       Charges relating to severance                  $  3,000              $  7,800            $       -           $       -
       Inventory valuation reserve                           -                 2,000                    -                   -
       Provision for warehouse closures                      -                     -               15,000                   -
       Charges relating to voluntary 
       resignation programs                                  -                     -                4,500                   -
       Provision for reorganizational 
       restructuring                                         -                     -                2,500                   -
       1998 reorganization items                         2,668                     -                    -                   -
       1995 reorganization items                           665                     -                    -              18,627
                                                ----------------    ------------------     ----------------    ----------------
           Total unusual items                        $  6,333              $  9,800            $  22,000           $  18,627
                                                ================    ==================     ================    ================
</TABLE>

                                     F-13

<PAGE>

         The Company recorded $2,668,000 of unusual charges during the fourth
     quarter of Fiscal 1998 in connection with legal, advisory and bank fees
     associated with the planned prepackaged restructuring. Additionally, the
     Company recorded $3,665,000 of unusual charges during the third quarter
     of Fiscal 1998. This charge included a $3,000,000 supplement for a
     reserve set at fiscal year end 1997 for the reorganization of the Company
     during Fiscal 1998 and additional charges of $665,000 for legal costs to
     supplement a reserve created as a result of the Company's Chapter 11
     filing in calendar year 1995.

         During the fourth quarter of Fiscal 1997, the Company  recorded 
     $9,800,000 of unusual charges including $7,800,000 of severance and
     $2,000,000 of an inventory valuation reserve.

         In Fiscal 1996, the Company entered into several supply agreements
     with C&S Wholesale Grocers, Inc. ("C&S"), pursuant to which C&S stocks
     and distributes to all Grand Union stores substantially all of the
     merchandise formerly owned and warehoused by Grand Union. Under the
     agreements, C&S stocks and supplies grocery and perishable products from
     its own warehouses and stocks and supplies health and beauty care and
     general merchandise products from the Company's Montgomery, New York
     warehouse. Accordingly, the Company recorded a provision relating to the
     closure of two metropolitan New York warehouses consisting principally of
     the cash costs of severance, pension withdrawal liability, security and
     other expenses directly related to the closing of the warehouses.
     Substantially all of the net costs of closing these facilities were paid
     prior to March 30, 1996.

         During the 41 weeks ended March 30, 1996, the Company made cash
     payments of $4,500,000 relating to voluntary resignation incentive
     programs under which certain classes of store employees accepted monetary
     incentives to voluntarily resign from their positions.

         The provision for organizational restructuring of $2,500,000 is
     principally comprised of the cash cost of severance, all of which was
     paid at March 29, 1997, and future lease payments.

     NOTE 5 - Property

     Property, at cost, consists of the following (in thousands):

<TABLE>
<CAPTION>

                                                               March 28,           March 29,
                                                                  1998                1997
                                                             ---------------     ----------------
<S>                                                          <C>                 <C>     
     Property owned:
       Land                                                       $ 18,055             $ 19,196
       Buildings                                                    66,162               60,422
       Fixtures and equipment                                      185,470              168,053
       Leasehold improvements                                      132,382              126,002
                                                             ---------------     ----------------
                                                                   402,069              373,673

     Less: accumulated depreciation and amortization               124,709               81,098
                                                             ---------------     ----------------
     Property owned, net                                           277,360              292,575
                                                             ---------------     ----------------

     Property held under capital leases:

       Land and buildings                                          131,094              112,056
       Equipment                                                    15,552               18,081
                                                             ---------------     ----------------
                                                                   146,646              130,137
     Less: accumulated amortization                                 34,369               10,801
                                                             ---------------     ----------------
     Property held under capital leases, net                       112,277              119,336
                                                             ---------------     ----------------
     Property                                                    $ 389,637            $ 411,911
                                                             ===============     ================
</TABLE>

         Depreciation and amortization of owned and leased property for Fiscal
     1998, Fiscal 1997, the 41 weeks ended March 30, 1996, and the 11 weeks
     ended June 17, 1995 was $78,554,000, $64,256,000, $42,706,000, and
     $11,246,000, respectively.

         As discussed in Note 2, the Company adopted SFAS No. 121 as of the
     Effective Date. This statement requires companies to record impairments
     of long-lived assets, certain identifiable intangibles, and associated
     goodwill when there is evidence that events or changes in circumstances
     have made recovery of an asset's carrying value unlikely. In accordance
     with this statement, the Company performed an evaluation of its assets
     for impairment considering the present value of estimated net future
     operating cash flows. The result of such a review resulted in an
     impairment loss of $25,020,000 and 


                                     F-14

<PAGE>

     $6,362,000 for March 28, 1998 and March 29, 1997, respectively, which was
     recorded through depreciation in order to write down certain impaired 
     store assets.

     NOTE 6 - Receivables and Accounts Payable and Accrued Liabilities

         Receivables  at March 28, 1998 and March 29, 1997 are net of  
     allowances for doubtful accounts of $5,542,000 and $4,530,000,
     respectively.

         Accounts payable and accrued liabilities consist of the following (in
thousands):

<TABLE>
<CAPTION>

                                                   March 28,           March 29,
                                                      1998                1997
                                               ----------------    ----------------
<S>                                            <C>                 <C>      
     Accounts payable                               $  73,135          $  100,789
     Accrued liabilities:
      Payroll                                          22,513              20,285
      Interest                                         44,832               9,405
      Insurance                                        15,076              16,070
      Other                                            33,883              28,991
                                               ----------------    ----------------
        Total accounts payable and 
            accrued liabilities                      $189,439            $175,540
                                               ================    ================
</TABLE>


     NOTE 7 - Income Taxes

     The components of the deferred income tax (provision) benefit are as
follows (in thousands):

<TABLE>
<CAPTION>
                                                                       Successor                                 Predecessor
                                                                        Company                                    Company
                                                  --------------------------------------------------------   ------------------
                                                    52 Weeks             52 Weeks          41 Weeks              11 Weeks
                                                     Ended                 Ended             Ended                Ended
                                                   March 28,             March 29,         March 30,             June 17,
                                                      1998                 1997              1996                  1995
                                                  --------------       ---------------   --------------       -----------------
<S>                                               <C>                   <C>               <C>                <C>

             Federal                              $   (43,872)           $   (2,154)         $    16,157      $             -
             State                                     (7,521)                 (369)               2,770                    -
                                                  --------------       ---------------   ----------------    ------------------

             Income tax (provision) benefit       $   (51,393)           $   (2,523)         $    18,927      $             -
                                                  ==============       ===============   =================   ==================

</TABLE>

                                     F-15

<PAGE>



         The reconciliation of the income tax (provision) benefit computed at
     the federal statutory rate to the reported income tax (provision) benefit
     is as follows (in thousands):

<TABLE>
<CAPTION>

                                                                               Successor                               Predecessor
                                                                                Company                                  Company
                                                               ------------------------------------------------     ---------------
                                                                52 Weeks          52 Weeks         41 Weeks             11 Weeks
                                                                  Ended            Ended             Ended                Ended
                                                                March 28,        March 29,         March 30,            June 17,
                                                                  1998              1997             1996                 1995
                                                               -------------    --------------    -------------     ---------------
<S>                                                            <C>              <C>               <C>               <C>
     Benefit computed at federal statutory tax rate              $  88,407        $  63,291         $  45,074        $   10,268
     Increase (decrease) in the benefit resulting from:
       Amortization of excess reorganization value                 (36,257)         (35,429)          (28,992)                -
       Amortization of goodwill                                          -                -                 -            (6,295)
       State and local taxes, net of federal tax benefit             9,039            5,242             2,770                 -
       Deferred tax asset valuation allowance                     (114,587)         (29,841)                -            (3,948)
       Write-down of unrealizable deferred tax asset                     -           (8,500)                -                 -
       Other                                                         2,005            2,714                75               (25)
                                                               -------------    --------------    -------------     ---------------
     Income tax (provision) benefit                              $ (51,393)        $ (2,523)         $ 18,927       $         -
                                                               =============    ==============    =============     ===============
</TABLE>

     The components of the net deferred tax asset are as follows (in
thousands):

<TABLE>
<CAPTION>

                                                     March 28,    March 29,
                                                      1998           1997
                                                    ----------   -----------
<S>                                                 <C>          <C>
Deferred tax assets:
  Non-cash interest                                 $   1,922    $   2,111
  Insurance reserve                                    18,922       19,597
  Pension                                               6,784        5,419
  Postretirement benefit liability                     14,887       14,671
  Depreciable assets                                    8,459            -
  Other miscellaneous reserves                         21,088       23,505
  Net operating loss carryforward                      77,052       29,841
                                                    ---------    ---------
Total deferred tax assets                             149,114       95,144
                                                    ---------    ---------

Deferred tax liabilities:
  Depreciable assets                                        -        9,299
  Other                                                 4,686        4,611
                                                    ---------    ---------
Total deferred tax liabilities                          4,686       13,910
                                                    ---------    ---------

Net deferred tax asset before valuation allowance     144,428       81,234

Valuation allowance                                  (144,428)     (29,841)
                                                    ---------    ---------
Net deferred tax asset                              $       -     $ 51,393    
                                                    =========    =========

</TABLE>

         The Company recorded no income tax benefit relating to net operating
     losses generated during Fiscal 1998, as they were offset by a valuation
     allowance. Due to the circumstances described in Note 1, management 
     determined that it was more likely than not that the remaining deferred 
     tax asset would not be realized. As such, during the fourth quarter of 
     Fiscal 1998, the Company established a valuation allowance for its 
     remaining deferred tax asset relating to temporary differences.

         During the fourth quarter of Fiscal 1997, the Company determined that
     the likelihood of realizing its entire deferred tax asset had diminished
     as a result of the application of Internal Revenue Code Section 382 as
     well as other long-term financial prospects. Section 382, which was
     triggered by the sale of Class A Preferred Stock, limits the amount of
     future annual net operating loss carryforwards which may be utilized
     subsequent to a change in control. Consequently, during the fourth
     quarter of Fiscal 1997, the Company wrote off $8,500,000 of its deferred
     tax asset that related to net operating loss carryforwards expected to
     expire due to Section 382 limitations and established a valuation
     allowance to fully reserve for the portion of its deferred tax asset
     related to its remaining net operating loss carryforwards.


                                     F-16

<PAGE>

         As of March 28, 1998, the Company had net operating loss
     carryforwards of approximately $190,345,000 for tax purposes, expiring in
     the year 2011. Due to Section 382, there will be a limitation on the
     amount of annual net operating loss carryforwards, which can be utilized.

         Under existing income tax laws, the Company is not required to
     include in its taxable income any cancellation of debt income as a result
     of the debt forgiven pursuant to the Plan. Accordingly, no income taxes
     were provided on the extraordinary gain on debt discharge in the
     statement of operations for the 11 weeks ended June 17, 1995. There are
     no remaining operating loss or credit carryforwards of the Predecessor
     Company and there was no change in the tax basis of the Company's assets
     as of the Effective Date.

     NOTE 8 - Debt

         The components of the Company's debt are as follows (in thousands):

<TABLE>
<CAPTION>

                                                                   March 28,        March 29,
                                                                     1998              1997
                                                               ---------------    ---------------
<S>                                                            <C>                <C>
       Equipment mortgage notes                                $           -      $           46

       Bank Credit Agreements:
         Term Loans                                                  182,122            104,144
         Revolving Credit Facility                                    17,000             36,000
       12% Senior Notes due September 1, 2004 
       (includes $4,008 and $4,642 of
       unamortized debt premium at March 28, 1998 
       and March 29, 1997)                                           599,429            600,063
                                                               ---------------    ---------------
                                                                     798,551            740,253

       Less: current maturities of long-term debt                    798,551                 46
                                                               --------------     ---------------
       Long-term debt                                          $           -       $    740,207
                                                               ===============    ===============
</TABLE>


         In August 1997, Grand Union executed an amendment to the Amended and
     Restated Credit Agreement (the "Credit Agreement"), among Grand Union,
     Bankers Trust Company, as Agent, and the lenders party thereto (the
     "Secured Banks"), dated as of June 15, 1995, as amended. As amended, the
     Credit Agreement is comprised of a term loan, a revolving credit facility
     and a supplemental term loan. The term loan is in the aggregate principal
     amount of $104,144,371.

         The revolving credit commitment is for $67,878,000, of which a
     maximum of $60,000,000 may be utilized in the form of letters of credit.
     The commitment expires June 15, 2000. In each year, no more than
     $40,000,000 of the revolving credit facility may be outstanding in the
     form of borrowed money (excluding letter of credit utilization) for any
     30-day period between July 15th and August 31st. As of March 28, 1998, an
     aggregate of $43,528,000 of letters of credit were issued and outstanding
     under the Credit Agreement. Grand Union incurs a commitment fee of 0.5%
     per annum on the average unused portion of the revolving credit facility.

         As part of the August 1997 amendment of the Credit Agreement, Grand
     Union obtained the supplemental term loan to enable it, among other
     things, to make its required September 1, 1997 interest payment on the
     Company's 12% Senior Notes due 2004 (the "Senior Notes"). The
     supplemental term loan facility is in an aggregate principal amount of
     $77,977,980, which matures on March 1, 2003. The supplemental term loan
     increased the total amount available under the Credit Agreement to $250
     million. The supplemental term loan has no required amortization and may
     be prepaid without penalty on or after August 31, 1998.

         The term loan and the revolving credit facility are secured by a lien
     and security interest in all of the tangible and intangible assets of
     Grand Union, including the shares of its four subsidiaries and mortgages
     on specified leaseholds. The supplemental term loan is subordinate to the
     term loan and the revolving credit facility. It is secured by the same
     lien and security interest that secures the term loan and revolving
     credit facility but the rights of the lenders under the supplemental term
     loan in respect of such lien and security interest are subordinate to the
     rights of the lenders under the term loan and the revolving credit
     facility.

         The term loan and revolving credit facility of the Credit Agreement
     bear interest at the base rate (generally prime) plus 2% or the relevant
     one-, two-, three-, or six-month Eurodollar rate plus 3.75% (including
     standard yield protection provisions). The supplemental term loan bears
     interest at 15% for the first year of the loan, increasing by .50% every
     six months thereafter, payable semiannually in arrears, plus additional
     interest accruing at 1% per annum payable only after the term loan and
     revolving credit facility have been paid in full and then only upon
     payment or prepayment of principal with respect to 


                                     F-17


<PAGE>


     which such additional interest has accrued. The term loan requires
     quarterly principal payments of $13,018,000 from September 30, 2000
     through June 15, 2002.

         The Credit Agreement contains certain restrictions and financial
     covenants relating to, among other things, minimum financial performance
     and limitations on the incurrence of additional indebtedness, asset
     sales, dividends, capital expenditures, and prepayment of other
     indebtedness.

         Notwithstanding the increased commitment provided under the August
     1997 amendment to the Credit Agreement, due to a continuing lack of
     sufficient liquidity, increasing competition and consolidation, and
     falling margins, Grand Union determined that its financial resources
     would be insufficient to satisfy the approximately $36 million interest
     payment due and payable on March 2, 1998 on the Senior Notes. Grand Union
     did not make the March 2, 1998 interest payment to holders of the Senior
     Notes. The failure to make such interest payment constituted a default
     under the Indenture governing the Senior Notes and a cross-default under
     the Credit Agreement. Accordingly, in February 1998, Grand Union
     commenced negotiations with the Secured Banks regarding obtaining
     necessary waivers to avoid the consequences of an event of default under
     the Credit Agreement and to facilitate the restructuring contemplated by
     the Company's proposed plan of reorganization (the "Plan of
     Reorganization") (see Note 1). Those negotiations resulted in an
     agreement by the Secured Banks to waive certain defaults under the Credit
     Agreement, subject to the terms and conditions of such waiver.

         At March 28, 1998, borrowings under the Revolving Credit Facility and
     Term Loans were at weighted interest rates of 10.50% and 9.44%,
     respectively. At March 29, 1997, borrowings under the Revolving Credit
     Facility and Term Loan were at weighted interest rates of 8.77% and
     9.11%, respectively.

         For the 11 weeks ended June 17, 1995, pursuant to the 1995 Plan, on the
     Effective Date, the Old Senior Notes were deemed cancelled and each holder
     became entitled to receive its pro rata share of the Successor Company's 
     Senior Notes having an aggregate principal amount of $595,421,000. 
     Interest on the Senior Notes was payable semi-annually each March 1 and 
     September 1.

     NOTE 9 - Issuance of Preferred Stock

         In a series of related transactions commencing on July 30, 1996,
     Trefoil Capital Investors II, L.P. and GE Investment Private Placement
     Partners II, A Limited Partnership (the "Purchasers") acquired beneficial
     ownership of an aggregate of approximately 70.77% of Grand Union's
     outstanding voting stock. On July 30, 1996, Grand Union entered into a
     definitive agreement (the "Stock Purchase Agreement") to sell $100
     million of Class A Convertible Preferred Stock ("Class A Preferred") to
     the Purchasers. Each share of the Class A Preferred was to be convertible
     at the option of the holder, at any time, into 6.8966 shares of common
     stock. Pursuant to the Stock Purchase Agreement, the Purchasers agreed to
     purchase, and Grand Union agreed to sell, an aggregate of 2,000,000
     shares of Class A Preferred at a purchase price of $50 per share (the
     "Stated Value") in stages through February 25, 1998. On September 17,
     1996, the first stage of the transaction was closed, and the Purchasers
     acquired 800,000 shares of Class A Preferred for an aggregate purchase
     price of $40 million.

         At a subsequent closing held on February 25, 1997, the Purchasers
     purchased an additional 400,000 shares of Class A Preferred for an
     aggregate purchase price of $20 million. Additional subsequent closings
     were scheduled for August 26, 1997 and February 25, 1998 (the "Subsequent
     Closings"). If the Subsequent Closings had occurred, the Purchasers would
     have been required to purchase an additional 800,000 shares of Class A
     Preferred for an aggregate purchase price of $40 million.

         Pursuant to an Acceleration and Exchange Agreement (the "Acceleration
     Agreement"), dated June 12, 1997, between Grand Union and the Purchasers,
     at the request of Grand Union, the Purchasers agreed to accelerate to
     June 12, 1997 (the "Accelerated Closing") the sale and purchase of the
     800,000 shares of Class A Preferred (the "Accelerated Shares"), which was
     to have occurred at the Subsequent Closings, and to exchange (the
     "Exchange") the Accelerated Shares for 800,000 shares of Class B
     Convertible Preferred Stock ("Class B Preferred"). At the Accelerated
     Closing, Grand Union received the $40 million purchase price for the sale
     of the Accelerated Shares. Immediately following the Accelerated Closing,
     the Purchasers completed the Exchange pursuant to which they received an
     aggregate of 800,000 shares of Class B Preferred, in consideration for
     their surrender of the Accelerated Shares. Until February 20, 1998, each
     share of Class B Preferred was convertible at the option of the holder,
     at any time, into 20.8333 shares of common stock. Pursuant to the
     Acceleration Agreement, effective February 20, 1998, this conversion
     ratio was reset such that each share of Class B Preferred is convertible
     into 33.3333 shares of common stock.

         On March 20, 1997, Grand Union consummated the sale to The Roger
     Stangeland Family Limited Partnership (the "Stangeland Partnership") of
     60,000 shares of Class A Preferred at a purchase price of $50 per share
     (the "Stangeland Shares"), pursuant to the terms of a Stock Purchase
     Agreement, dated February 25, 1997, as amended by Amendment No. 

                                     F-18

<PAGE>


     1 thereto dated as of March 20, 1997 (as so amended, the "Stangeland
     Stock Purchase Agreement"), between Grand Union and Mr. Stangeland, a
     director of the Company from June 15, 1995 to April 22, 1998. Pursuant to
     a Stockholder Agreement dated February 25, 1997 (the "Stangeland
     Stockholder Agreement"), among the Purchasers, Mr. Stangeland and Grand
     Union, Mr. Stangeland has granted the Purchasers certain take-along
     rights, the Purchasers have granted Mr. Stangeland certain tag-along
     rights, and the Purchasers and Grand Union have granted Mr. Stangeland
     certain registration rights related to the Stangeland Shares and any
     shares of Class A Preferred, and common stock, if any, paid as dividends
     with respect to the Class A Preferred (collectively, "Securities").
     Pursuant to an Addendum, dated as of March 20, 1997, to the Stangeland
     Stockholder Agreement, the Stangeland Partnership has succeeded to all of
     the rights, and has assumed all of the obligations, of Mr. Stangeland
     pursuant to the Stangeland Stockholder Agreement. The Purchasers disclaim
     any and all ownership of the Stangeland Shares or any additional
     Securities acquired by the Stangeland Partnership in respect of the
     Stangeland Shares.

         As of June 24, 1998, there were a total of 1,300,566 outstanding
     shares of Class A Preferred, which were convertible into an aggregate of
     8,969,483 shares of common stock, and a total of 800,000 outstanding
     shares of Class B Preferred, which were convertible into an aggregate of
     26,666,640 shares of common stock. Together, the aggregate shares of
     Class A Preferred and Class B Preferred account for approximately 77.74%
     of Grand Union's outstanding voting stock.

         On September 30, 1996, December 31, 1996 and March 31, 1997, Grand
     Union paid dividends on the Class A Preferred through the issuance of a
     total of 40,566 shares of Class A Preferred, with an aggregate Stated
     Value of $2,028,300. Grand Union elected to suspend the declaration of
     the dividends payable June 30, 1997, September 30, 1997, December 31,
     1997 and March 31, 1998. The dividends on the Class A Preferred and the
     Class B Preferred and the accrued and unpaid dividends through March 31,
     1998 have been accounted for by a charge against "Capital in Excess of
     Par Value" and a corresponding increase in the carrying amounts of the
     Class A Preferred and Class B Preferred. The Class A Preferred and Class
     B Preferred have a liquidation preference over the common stock equal to
     the Stated Value of the outstanding shares of the preferred stock plus
     all accrued and unpaid dividends.

     NOTE 10 - Property Leases

         The Company operates principally in leased stores and offices, and in
     most cases holds renewal options with varying terms. Many of the leases
     contain clauses, which provide for increased rentals based upon increases
     in real estate taxes and lessors' operating expenses.

          Future minimum payments under capital and non-cancelable operating
     leases, net of minimum sublease income, as of March 28, 1998 are as
     follows (in thousands):

<TABLE>
<CAPTION>
                                                                             Capital            Operating
                                                                        ----------------     --------------
<S>                                                                     <C>                  <C>
     Fiscal
     1999                                                                  $   27,784         $   32,977
     2000                                                                      25,788             32,867
     2001                                                                      23,672             26,217
     2002                                                                      22,550             22,288
     2003                                                                      23,816             20,605
     Later years                                                              295,727            131,676
                                                                         ---------------     --------------
     Total minimum lease payments                                             419,337            266,630
     Less: estimated executory costs included in 
     total minimum lease payments                                                (169)                 -

     Less: sublease rental income                                              (2,961)           (18,290)
                                                                         ---------------     --------------

     Net minimum lease payments                                               416,207          $ 248,340
                                                                                             ==============
     Less: portion representing interest                                      258,181
                                                                         ---------------
     Present value of net minimum lease payments                              158,026
     Less: current portion of obligations under capital leases                  7,562
                                                                         ---------------
     Non-current portion of obligations under capital leases 
     (net of sublease rental income)                                        $ 150,464
                                                                         ===============
</TABLE>


         Contingent rentals incurred on capital leases for Fiscal 1998, Fiscal
     1997, the 41 weeks ended March 30, 1996, and the 11 weeks ended June 17,
     1995 were $81,000, $106,000, $130,000, and $39,000, respectively.

                                     F-19

<PAGE>


         The rental expense for all operating leases was $48,262,000,
     $45,847,000, $33,923,000, and $8,696,000 during Fiscal 1998, Fiscal 1997,
     the 41 weeks ended March 30, 1996, and the 11 weeks ended June 17, 1995,
     respectively. Contingent rental expense included in total rental expense
     was $2,538,000, $2,870,000, $2,127,000, and $638,000 during Fiscal 1998,
     Fiscal 1997, the 41 weeks ended March 30, 1996, and the 11 weeks ended
     June 17, 1995, respectively.

     NOTE 11 - Stockholders' (Deficit) and Redeemable Old Common and Preferred
     Stock

         Changes in Stockholders' (Deficit) and Redeemable Old Common Stock
were as follows (in thousands):

<TABLE>
<CAPTION>

                                                                  Redeemable             Old           Capital in
                                                 Common           Old Common            Common          Excess of
                                                  Stock            Stock (a)            Stock           Par Value      (Deficit)
                                               -------------    -----------------    --------------    -------------  --------------
<S>                                            <C>              <C>                  <C>               <C>            <C>
     Predecessor Company
     Balance at April 1, 1995                   $        -        $      9,407         $        1       $        -     $   (824,184)
     Net income for the 11 weeks ended
       June 17, 1995                                     -                   -                  -                -          825,449
     Extinguishment of stockholders'
      equity in connection with bankruptcy               -              (9,407)                (1)                           (1,265)
                                               -------------    -----------------    --------------    -------------  --------------

     Balance at June 17, 1995                   $                 $         -          $        -        $       -     $         -
                                               =============    =================    ==============    =============  ==============
</TABLE>


     (a) The Redeemable Old Common Stock represents shares of Holdings held by
     management investors, which were redeemable under certain limited
     circumstances at the option of the holder.


                                     F-20

<PAGE>

<TABLE>
<CAPTION>

                                                                                              Stockholders' (Deficit) Equity
                                                                                      --------------------------------------------
                                    Redeemable         Redeemable
                                      Class A            Class B                                     Capital in
                                     Preferred          Preferred         Common       Preferred      Excess of
                                       Stock              Stock           Stock          Stock        Par Value      (Deficit)
                                  -----------------  -----------------  ------------  -------------  -------------  --------------

<S>                              <C>                 <C>                <C>           <C>            <C>            <C>
Successor Company
Balance at June 17, 1995             $          -       $          -     $       -     $        -    $        -      $       -

Issuance of Common Stock                        -                  -        10,000              -       144,000              -

Net loss for the 41 weeks
  ended March 30, 1996                          -                  -             -              -         -           (109,856)
                                  -----------------  -----------------  ------------  -------------  -------------  --------------

Balance at March 30, 1996                       -                  -        10,000              -       144,000       (109,856)

Preferred stock issuance
  charges                                       -                  -             -              -       (12,000)
                                                                                                                             -
Decrease in Common Stock par
  value                                         -                  -        (9,900)             -         9,900
                                                                                                                             -
Issuance of Class A Preferred
  Stock                                    63,000                  -             -              -             -              -

Accrued preferred stock
  dividends                                 2,000                  -             -              -        (2,000)             -

Net loss for Fiscal 1997                        -                  -             -              -             -       (183,354)
                                  -----------------  -----------------  ------------  -------------  -------------  --------------

Balance at March 29, 1997                  65,000                  -           100              -        139,900      (293,210)

Issuance of Common Stock                        -                  -             2              -            256             -

Issuance of Class B
  Preferred   Stock                             -             40,000             -              -              -             -

Accrued Class A preferred
stock dividends                             5,685                 -              -              -         (5,685)            -

Accrued Class B preferred
  stock dividends                               -              2,746             -              -         (2,746)            -

Additional minimum pension
  liability                                     -                  -             -              -              -        (1,550)

Other                                           -                  -             -              -            281             -

Net loss for Fiscal 1998                        -                  -             -              -              -      (303,983)
                                  -----------------  -----------------  ------------  -------------  -------------  --------------

Balance at March 28, 1998          $       70,685    $        42,746    $      102     $        -     $  132,006    $ (598,743)
                                  =================  =================  ============  =============  =============  ==============
</TABLE>


         The Company's Certificate of Incorporation and Bylaws were restated
     as of the Effective Date and subsequently amended. The Certificate of
     Incorporation as amended authorizes the issuance of 60,000,000 shares of
     Common Stock and 10,000,000 shares of preferred stock. On November 7,
     1996, the Company's shareholders approved a decrease in the par value of
     Common Stock from $1.00 to $0.01 per share.

         Under the 1995 Plan of Reorganization, on the Effective Date, the Old
     Common Stock was cancelled and, as described in Note 3, holders of the
     Subordinated Notes became entitled to receive their pro rata share of
     10,000,000 shares of Common Stock. In addition, on the Effective Date,
     holders of Capital Senior Zero Notes and Capital Subordinated Zero Notes
     who executed releases became entitled to receive an aggregate of Series 1
     Warrants to purchase 300,000 shares of Common Stock at an exercise price
     of $30 per share and Series 2 Warrants to purchase 600,000 shares of
     Common Stock at an exercise price of $42 per share. Both the Series 1
     Warrants and the Series 2 Warrants will expire five years after the
     Effective Date. As of March 28, 1998, no warrants have been exercised.
     The Common Stock and all other equity securities issued under the
     Certificate as amended are voting securities (although the voting rights
     of any new preferred stock issued will differ from those of Common Stock)
     and do not have any preemptive rights to subscribe for additional shares.


                                     F-21

<PAGE>


         Changes in Redeemable Old Preferred Stock of the Predecessor Company
were as follows (in thousands):

<TABLE>
<CAPTION>

                                                              Series            Series        Series            Total
                                                                A                 B              C
                                                         --------------    -------------    --------------    ----------------
<S>                                                      <C>               <C>              <C>              <C>           
     Balance at April 1, 1995                            $    69,182       $     9,010      $    86,600         $   164,792
     Extinguishment of Predecessor Company
        Stock in connection with bankruptcy                  (69,182)           (9,010)         (86,600)           (164,792)
                                                         --------------    -------------    --------------    ----------------
     Balance at June 17, 1995                            $         -       $         -      $         -       $           -       
                                                         ==============    =============    ==============    ================
</TABLE>

         The Series A cumulative exchangeable redeemable preferred stock
     ("Series A old preferred stock") had a $.01 par value, 500,000 shares
     authorized, and 351,745 shares issued and outstanding. The Series B
     cumulative redeemable convertible preferred stock ("Series B old
     preferred stock") had a $.01 par value, 500,000 shares authorized, and
     78,256 shares issued and outstanding. The Series C cumulative redeemable
     convertible preferred stock ("Series C old preferred stock") had a $.01
     par value, 500,000 shares authorized, and 440,771 shares issued and
     outstanding.

     NOTE 12 - Pension Plans

         The components of net periodic pension expense for the Company's
defined benefit pension plans are as follows (in thousands):

<TABLE>
<CAPTION>

                                                                 Fiscal            Fiscal              Fiscal
                                                                  1998              1997                1996
                                                             ----------------    -------------      ---------------
<S>                                                          <C>                 <C>                <C>
     Service cost - benefits earned during the period         $       4,492        $     4,351      $       4,317
     Interest costs on projected benefit obligations                 12,700             12,700             12,523
     Return on plan assets                                          (41,802)           (16,993)           (32,921)
     Net amortization and deferral                                   29,384              3,690             17,877
                                                             ----------------    -------------      ---------------

     Net periodic pension expense                             $       4,774        $     3,748      $       1,796
                                                             ================    =============      ===============
</TABLE>


         The Company has not segregated the respective Successor and
     Predecessor Company pension expense for Fiscal 1996 because it is
     impractical to do so.

         The actuarial present value of benefit obligations and the funded
     status of the Company's pension plans are as follows (in thousands):


<TABLE>
<CAPTION>

                                                                  Qualified             Nonqualified
                                                          ----------------------    ----------------------
                                                          March 28,    March 29,    March 28,    March 29,
                                                             1998        1997         1998          1997
                                                          ---------    ---------    ---------    ---------
<S>                                                       <C>          <C>          <C>          <C>
     Actuarial present value of benefit
     obligations:
       Vested benefits                                    $(165,814)   $(159,438)   $  (7,264)   $  (4,715)

       Nonvested benefits                                    (4,176)      (4,038)        (165)          --
                                                          ---------    ---------    ---------    ---------

        Total benefits                                    $(169,990)   $(163,476)   $  (7,429)   $  (4,715)
                                                          =========    =========    =========    =========

     Projected benefit obligations                        $(194,482)   $(186,207)   $  (7,789)   $  (5,364)
     Plan assets, primarily stocks and bonds,
     at fair value                                          192,386      169,707           --           --
                                                          ---------    ---------    ---------    ---------

     Funded (unfunded) status                                (2,096)     (16,500)      (7,789)      (5,364)

     Unrecognized net (gain) loss                            (9,946)       8,674        1,910        2,073
     Unrecognized prior service cost                             --           --        2,925          (20)

     Adjustment required to recognize minimum liability          --           --       (4,475)      (1,404)
                                                          ---------    ---------    ---------    ---------

     Accrued pension liability                            $ (12,042)   $  (7,826)   $  (7,429)   $  (4,715)
                                                          =========    =========    =========    =========
</TABLE>

                                     F-22

<PAGE>



         Significant actuarial assumptions used in all Company sponsored plans
were as follows:

<TABLE>
<CAPTION>

                                                                            Fiscal               Fiscal                Fiscal
                                                                            1998                 1997                  1996
                                                                       -----------------    -----------------     -----------------
<S>                                                                    <C>                  <C>                   <C>  
     Discount rates                                                         6.75%                7.25%                 7.25%
     Rates of increase in future compensation                               4.50%                4.50%                 3.50%
     Long-term rate of return on plan assets                                8.25%                8.75%                 9.75%
</TABLE>

     NOTE 13 - Postretirement Health Care and Life Insurance Benefits

          The Company provides certain health care and life insurance benefits
     for substantially all of its full-time non-union employees and union
     employee groups. The Company's postretirement plans currently are not
     funded. The Company's union employee groups are participants in
     multi-employer plans, which require monthly contributions and which are
     not subject to the provisions of SFAS No. 106, "Employers' Accounting for
     Postretirement Benefits Other Than Pensions".

         Net postretirement benefit cost consisted of the following (in
thousands):

<TABLE>
<CAPTION>

                                                                             Fiscal             Fiscal              Fiscal
                                                                              1998               1997                1996
                                                                         ---------------    ---------------     ---------------
<S>                                                                      <C>                <C>                 <C>        
     Service cost - benefits earned during the period                      $       720        $       728         $       591
     Interest cost on accumulated postretirement benefit
      obligation                                                                 2,690              2,668               2,594
                                                                         ---------------    ---------------     ---------------
     Net postretirement benefit expense                                     $    3,410         $    3,396          $    3,185
                                                                         ===============    ===============     ===============
</TABLE>

         The Company has not segregated the respective Successor and
     Predecessor Company postretirement benefit expense for Fiscal 1996
     because it is impractical to do so.

     The unfunded accrued postretirement benefit cost consists of the
following (in thousands):


<PAGE>

<TABLE>
<CAPTION>
                                                      March 28,    March 29,
                                                        1998         1997
                                                      ---------   ----------
<S>                                                   <C>         <C>
     Accumulated postretirement benefit 
     obligation:
     
       Retirees                                       $(23,939)   $(20,660)
       Fully eligible active plan participants          (2,919)     (2,482)
       Other active plan participants                  (17,785)    (15,189)
                                                      --------    --------
        Total                                          (44,643)    (38,331)
     Unrecognized net loss                               7,851       2,521
                                                      --------    --------
     Accrued postretirement benefit cost              $(36,792)   $(35,810)
                                                      ========    ========

</TABLE>


         The assumed health care cost trend rate used in measuring the
     accumulated postretirement obligation as of March 28, 1998 and March 29,
     1997 was 10.0% and 11.0%, respectively, for associates pre-age 65 and
     7.0% and 8.0%, respectively, for associates post-age 65, decreasing each
     successive year by 1% until the respective trend rates reach 4.50% and
     4.75%, respectively, after which the trend rate remains constant. An
     increase of 1% in the assumed health care cost trend rate for the current
     year would increase the accumulated postretirement benefit obligation by
     approximately $226,000 and the annual service cost plus interest cost
     component by approximately $15,000.

         The Company provides benefits for all future retirees based on a
     service related flat dollar premium allowance. Accordingly, the health
     care trend rate will not be a significant factor in determining Grand
     Union's liability for future retirees under its postretirement health
     care arrangements. The assumed discount rate used in determining the
     accumulated postretirement benefit obligation for Fiscal 1998 and Fiscal
     1997 was 6.75% and 7.25%, respectively.

                                     F-23

<PAGE>



     NOTE 14 - Equity Compensation Plans

         The Company grants options for common stock under two plans, The
     Grand Union Company 1995 Equity Incentive Plan ("Employees' Plan") and
     The Grand Union Company 1995 Non-Employee Directors' Stock Option Plan
     ("Directors' Plan"). During Fiscal 1998, the Employees' Plan was amended
     to increase the aggregate number of shares issuable from 900,000 shares
     to 6,000,000 shares of the Company's Common Stock. The Directors' Plan,
     which provides for the issuance of options to purchase up to 100,000
     shares of the Company's Common Stock, remained unchanged. Both Plans are
     administered by a committee of the Board of Directors. Options under both
     plans expire ten years from the grant date.

         The following tables summarize information about options outstanding
for both stock option plans:

<TABLE>
<CAPTION>
                                          ----------------------------------------------------------------------------------------
                                                   Fiscal 1998                     Fiscal 1997                  Fiscal 1996
                                          ------------------------------  ------------------------------  ------------------------
                                                              Weighted                        Weighted                  Weighted
                                                              Average                         Average                   Average
                                                              Exercise                        Exercise                  Exercise
     Employees' Plan                            Shares         Price            Shares         Price         Shares      Price
     ---------------                            ------        --------          ------        --------       ------     --------
     <S>                                        <C>           <C>               <C>           <C>            <C>        <C>
 
    Outstanding at
       beginning of year                            226,280      $6.365             210,680      $6.625        -        $       -
     Granted                                      4,133,800       2.146              20,000       3.688      210,680        6.625
     Exercised                                       (5,325)      1.844                   -           -        -                -
     Cancelled or expired                          (121,974)      5.658              (4,400)      6.625         -               -
                                                 ----------     -------            --------     -------      -------       -------
     Outstanding at
       end of year                                4,232,781      $2.271             226,280      $6.365      210,680       $6.625
                                                 ==========     =======            ========     =======      -------       -------
     Options exercisable
       at year-end                                2,983,981      $1.972             206,280      $6.625      210,680       $6.625
                                                 ==========     =======            ========     =======      =======       =======
     Available for issuance under the
     plan                                         1,767,219                         673,720                  689,320

     Weighted average contractual life
     (years)                                          9.386                           6.348                    6.872

     Range of exercise prices              $1.375 to $6.625                $3.688 to $6,625                   $6.625

<CAPTION>


                                          ----------------------------------------------------------------------------------------
                                                   Fiscal 1998                     Fiscal 1997                  Fiscal 1996
                                          ------------------------------  ------------------------------  ------------------------
                                                              Weighted                        Weighted                  Weighted
                                                              Average                         Average                   Average
                                                              Exercise                        Exercise                  Exercise
     Directors' Plan                            Shares         Price            Shares         Price         Shares      Price
     ---------------                            ------        --------          ------        --------       ------     --------
     <S>                                        <C>           <C>               <C>           <C>            <C>        <C>

     Outstanding at
       beginning of year                             51,000     $5.941            25,000      $5.750              -          -
     Granted                                         27,000      2.208            26,000       6.125         25,000      5.750
     Exercised                                            -          -                 -          -               -          -
     Cancelled or expired                            (9,500)     5.928                 -          -               -          -
                                                 ----------     ------          --------      ------        -------      -----
     Outstanding at
       end of year                                   68,500     $4.472            51,000      $5.941         25,000     $5.750
                                                 ==========     ======          ========      ======        =======     ======
     Options exercisable
       at year-end                                   34,336     $5.907            51,000      $6.625         25,000     $5.750
                                                 ==========     ======          ========      ======        =======     ======
     Available for issuance under the
     plan                                            31,500                       49,000                    75,000

     Weighted average contractual life                7.577                        8.365                     8.061
     (years)

     Range of exercise prices              $2.156 to $6.125             $5.750 to $6.125                    $5.750

</TABLE>


         These options will expire if not exercised at specific dates ranging
     from April 1, 1998 to January 5, 2008 for the Employee Plan and July 28,
     1998 to December 5, 2011 for the Directors' Plan. However, see Note 1
     regarding Management's plans and subsequent events. 

                                     F-24

<PAGE>



          The Company adopted the disclosure only option under SFAS No. 123,
     (see Note 1) as of March 29, 1997. If the accounting provisions of SFAS
     No. 123 had been adopted as of the beginning of Fiscal 1997, the effect
     on Fiscal 1998 and Fiscal 1997 net loss would not have been material.

     NOTE 15 - Related Party Transactions

         In connection with the Stock Purchase Agreement, the Company paid
     transaction fees to Shamrock Capital Advisors, Inc. (SCA), the investment
     managers for Trefoil Capital Advisors II, L.P., and GE Investment
     Management Corporation of $2,000,000 each, and the Company paid
     Donaldson, Lufkin and Jenrette ("DLJ"), a managing director of which
     serves on the Company's board of directors, approximately $5,200,000 for
     advisory services, fairness opinion, and other miscellaneous expenses.

         Also in connection with the Stock Purchase Agreement, the Company
     entered into a management services agreement (the "Services Agreement")
     with SCA. The Company paid $552,000 and $300,000 for Fiscal 1998 and
     Fiscal 1997, respectively, under the Services Agreement. The Service
     Agreement expires by its terms in September 1999. No further payments
     will be made to SCA due to the Plan of Reorganization.

         An agreement was also made in connection with the sale of the Class A
     Convertible Preferred Stock with Roger E. Stangeland, Chairman of the
     Board, wherewith he personally purchased an additional 60,000 shares of
     the same preferred stock for an aggregate price of $3,000,000.

          DLJ provided the Company with consulting services in connection with
     the bankruptcy. DLJ was paid $1,278,000 in Fiscal 1996 for services in
     connection with the bankruptcy proceedings.

         Prior to the Effective Date, the Company was party to a financial
     advisory agreement with MTH (the "MTH Agreement"), pursuant to which MTH,
     which indirectly controlled the Company and Penn Traffic Company ("Penn
     Traffic"), was to have provided certain financial consulting and business
     management services to the Company through July 1997. In accordance with
     the Plan, the MTH Agreement was terminated on the Effective Date and
     Grand Union executed a settlement agreement (the "MTH Settlement
     Agreement"), which provides for the termination of the MTH Agreement,
     payment by Grand Union of accrued and unpaid fees under the MTH Agreement
     through the Effective Date and for the indemnification of MTH and certain
     entities related to MTH from certain claims and liabilities, subject to
     the terms and limitations set forth in the MTH Settlement Agreement. The
     Company deposited $3,000,000 relating to the indemnification in escrow on
     the Effective Date. During the 11 weeks ended June 17, 1995 and Fiscal
     1995, the Company paid $315,000 and $750,000, respectively, to MTH,
     pursuant to the MTH Agreement.

         From September 1993 until September 1995, Grand Union and Penn
     Traffic were parties to a combined purchasing and distribution agreement
     relating to general merchandise and health and beauty care products. In
     September 1995, Grand Union purchased from Penn Traffic approximately
     $12,821,000 of merchandise, which had been owned by Penn Traffic under
     the joint buying arrangement.

     NOTE 16- Contingency Matters and Commitments

         The Company is subject to certain legal proceedings and claims
     arising in connection with its business. It is management's opinion that
     the ultimate resolution of such legal proceedings and claims will not
     have a material adverse effect on the Company's consolidated results of
     operations or its financial position.

                                     F-25

<PAGE>



     NOTE 17 - Quarterly Financial Information (Unaudited) (in thousands,
except loss per share and market price)

<TABLE>
<CAPTION>
                                                  ---------------------------------------------------------------------
                                                       1st (a)            2nd             3rd                 4th
                                                  --------------- -- --------------- --------------- --- --------------
<S>                                               <C>               <C>              <C>                 <C>      
     Fiscal 1998:
     Sales                                           $ 707,983         $  518,910       $ 534,320           $ 505,556
     Gross profit                                      189,469            148,664         156,205             145,199
     Unusual items                                           -                  -          (3,665)             (2,668)
     (Loss) before income taxes                        (79,242)           (56,926)        (45,828)            (70,594)
     Net (loss)                                        (79,242)           (56,926)        (45,828)           (121,987)
     Net (loss) applicable to common stock             (81,299)           (59,000)        (47,924)           (124,192)
     Net (loss) per common share                         (8.13)             (5.90)          (4.79)             (12.22)
     Market Price -high                                 3 9/16              3 1/8         2 31/32               2 1/4
     Market Price -low                                  1 7/16              1 1/8         1 23/32               1


<CAPTION>

                                                       1st (a)            2nd             3rd                 4th
                                                  --------------- -- --------------- --------------- --- --------------
<S>                                               <C>               <C>              <C>                 <C>      
     Fiscal 1997:
     Sales                                           $ 726,823         $  533,412       $ 537,151           $ 515,287
     Gross profit                                      221,899            162,158         164,335             157,355
     Unusual items                                           -                  -               -              (9,800)
     (Loss) before income taxes                        (48,251)           (37,635)        (38,364)            (56,581)
     Net (loss)                                        (43,812)           (30,653)        (31,677)            (77,212)
     Net (loss) applicable to common stock             (43,812)           (30,896)        (32,465)            (78,181)
     Net (loss) per common share                         (4.38)              (3.09)          (3.25)             (7.82)
     Market Price -high                                 7 9/16              6 7/8          7 3/16              5 3/16
     Market Price -low                                   5 7/8              5              4 1/12              3

</TABLE>


     (a) Represents 16 weeks, all other quarters are 12 weeks.



                                     F-26
<PAGE>
                                EXHIBIT INDEX

Exhibit
Number                              Description of Document
-------                             -----------------------
    2.1      Second Amended Chapter 11 Plan of Reorganization of The Grand Union
             Company ("Grand Union"), filed with the United States Bankruptcy
             Court, District of Delaware, on April 19, 1995, incorporated by
             reference to Exhibit T3E1 to Grand Union's Form T-3 dated May 8,
             1995.

    2.2      Findings of Fact, Conclusions of Law and Order Confirming the
             Second Amended Plan of Reorganization proposed by Grand Union,
             dated May 31, 1995, incorporated by reference to Exhibit 2.2 to
             Grand Union's Annual Report on Form 10-K for the fiscal year ended
             April 1, 1995 ("Fiscal 1995").

    2.3      Minute Order Clarifying Findings of Fact, Conclusions of Law and
             Order Confirming Second Amended Plan of Reorganization proposed by
             Grand Union, dated June 14, 1995, incorporated by reference to
             Exhibit 2.3 to Grand Union's Annual Report on Form 10-K for Fiscal
             1995.

    2.4      Chapter 11 Plan of Reorganization filed with the United States
             Bankruptcy Court, District of New Jersey, on


<PAGE>

Exhibit
Number                              Description of Document
-------                             -----------------------

             June 24, 1998, incorporated by reference to Exhibit 1 to Exhibit
             2.1. to Grand Union's Current Report on Form 8-K filed May 28,
             1998.

    3.1      Certificate of Incorporation  of Grand Union, as amended through
             January 6, 1997, incorporated by reference to Exhibit 3.1 to Grand
             Union's Annual Report on Form 10-K for Fiscal 1997.

    3.2      Certificate of Designation of Class A Convertible Preferred Stock,
             incorporated by reference to Exhibit 10.4 to Grand Union's
             Quarterly Report on Form 10-Q for the period ended October 12,
             1996.

    3.3      Certificate of Designation of Class B Convertible Preferred Stock,
             dated as of June 11, 1997, incorporated by reference to Exhibit
             3.1 to Grand Union's Annual Report on Form 10-K for Fiscal 1997.

    3.4      By-laws of The Grand Union Company, as amended through January
             15, 1998, incorporated by reference to Exhibit 3.1 to Grand
             Union's Quarterly Report on Form 10-Q for the period ended January
             3, 1998.

    4.1      Form of Common Stock Certificate of Grand Union, incorporated by
             reference to Exhibit 4.1 to Grand Union's Annual Report on Form
             10-K for Fiscal 1995.

    4.2      Warrant Agreement dated as of June 15, 1995, between Grand Union
             and American Stock Transfer & Trust Company, as Warrant Agent for
             300,000 Series 1 Warrants and 600,000 Series 2 Warrants,
             incorporated by reference to Exhibit 4.5 to Grand Union's Annual
             Report on Form 10-K for Fiscal 1995.

    4.3      Registration Rights Agreement dated as of June 15, 1995, among
             Grand Union and Each of the Persons Named in Schedule A thereto
             for the Common Stock, incorporated by reference to Exhibit 4.6 to
             Grand Union's Annual Report on Form 10-K for Fiscal 1995.

    4.4      Registration Rights Agreement dated as of June 15, 1995, by and
             among Grand Union and the Holders Named therein for the
             Registrable Notes, incorporated by reference to Exhibit 4.7 to
             Grand Union's Annual Report on Form 10-K for Fiscal 1995.

    4.5      Indenture dated as of June 15, 1995, between Grand Union, as
             Issuer, and IBJ Schroeder Bank & Trust Company, as Trustee for the
             12% Senior Notes due September 1, 2004, including form of the 12%
             Senior Notes due 2004, incorporated by reference to Exhibit 4.2 to
             Grand Union's Annual Report on Form 10-K for Fiscal 1995.

    4.6      First Supplement Indenture, dated September 9, 1996, to the
             Indenture dated as of June 15, 1995, between Grand Union, as
             Issuer, and IBJ Schroeder Bank & Trust Company, as Trustee for the
             12% Senior Notes due September 1, 2004, incorporated by reference
             to Exhibit 10.3 to Grand Union's Quarterly Report on Form 10-Q for
             the period ended October 12, 1996.

    4.7      Form of Warrant Agreement, to be executed on the Consummation
             Date, between Grand Union and American Stock Transfer & Trust
             Company, as Warrant Agent, incorporated by reference to Exhibit A
             to Exhibit 1 to Exhibit 2.1. to Grand Union's Current Report on
             Form 8-K filed May 28, 1998.

   10.1      Agreement to Hold Separate dated July 17, 1989, by and among MTH
             Holdings Inc. ("MTH Holdings"), GU Acquisition Corporation
             ("GUAC"), Salomon Inc. and the Federal Trade Commission (the "FTC")
             entered into in the matter of MTH Holdings and GUAC before the FTC,
             incorporated by reference to Exhibit No. 10.5 to Grand Union's
             Registration Statement on Form S-1 (Registration No. 33-29707) (the
             "1989 Grand Union Registration Statement").

   10.2      Agreement containing Consent Order among MTH Holdings, GUAC and the
             FTC entered into in the matter of


<PAGE>

Exhibit
Number                              Description of Document
-------                             -----------------------

             MTH Holdings and GUAC before the FTC, incorporated by reference to
             Exhibit No. 10.6 to the 1989 Grand Union Registration Statement.

   10.3      Amended and Restated Borrower Pledge Agreement dated as of June 15,
             1995, made by Grand Union to Bankers Trust Company ("Bankers
             Trust"), as Collateral Agent incorporated by reference to Exhibit
             10.10 to Grand Union's Annual Report on Form 10-K for Fiscal 1995.

   10.4      Amended and Restated Borrower Security Agreement dated as of June
             15, 1995, between Grand Union and Bankers Trust, as Collateral
             Agent (included in Exhibit 4.4), incorporated by reference to
             Exhibit 10.11 to Grand Union's Annual Report on Form 10-K for
             Fiscal 1995.

   10.5      Subsidiary Security Agreement dated as of June 15, 1995, among the
             corporations listed on Schedule 1 thereto and Bankers Trust, as
             Collateral Agent, incorporated by reference to Exhibit 10.12 to
             Grand Union's Annual Report on Form 10-K for Fiscal 1995.

   10.6      Subsidiary Guaranty dated as of June 15, 1995, made by each of the
             corporations from time to time listed on Annex A attached thereto
             in favor of the Banks and the Agent from time to time party to the
             Credit Agreement, incorporated by reference to Exhibit 10.13 to
             Grand Union's Annual Report on Form 10-K for Fiscal 1995.

   10.7      Form of Indenture of Open-End Mortgage, Deed of Trust, Deed to
             Secure Debt, Security Agreement, Assignment of Leases, Rents and
             Profits, Financing Statement and Fixture Filing, dated as of June
             15, 1995, made by Grand Union to Bankers Trust, as Collateral
             Agent, incorporated by reference to Exhibit 10.14 to Grand Union's
             Annual Report on Form 10-K for Fiscal 1995.

   10.8      Tenth Amendment to the Amended and Restated Credit Agreement dated
             as of June 15, 1995, (the "Credit Agreement"), which amends and
             restates the Credit Agreement as of August 31, 1997 among Grand
             Union, the lending institutions listed from time to time on
             Schedule 1 thereto, and Bankers Trust, as Agent, including Exhibits
             A-1, A-2 and A-3, and various Schedules thereto, incorporated by
             reference to Grand Union's Current Report on Form 8-K filed on
             September 3, 1997.

   10.9      Eleventh  Amendment to the Credit Agreement dated as of August
             29, 1997, incorporated by reference to Exhibit 10.1 of Grand
             Union's Quarterly Report on Form 10-K for the period ended January
             3, 1998.

   10.10     Twelfth Amendment to the Credit Agreement dated as of January 9,
             1998, incorporated by reference to Exhibit 10.2 of Grand Union's
             Quarterly Report on Form 10-K for the period ended January 3, 1998.

   10.11     Thirteenth Amendment to the Credit Agreement dated April 17, 1998.

   10.12     Supply and Distribution Agreement between Grand Union and C&S
             Wholesalers, dated June 15, 1995, incorporated by reference to
             Exhibit 10.3 to Grand Union's Quarterly Report on Form 10-Q/A for
             the period ended January 6, 1996.

   10.13     First Amendment to the Supply and Distribution Agreement between
             Grand Union and C&S Wholesalers, dated June 15, 1995, incorporated
             by reference to Exhibit 10.4 to Grand Union's Quarterly Report on
             Form 10-Q/A for the period ended January 6, 1996.

   10.14     Supply and Distribution Agreement between Grand Union and C&S
             Wholesalers, dated January 2, 1996, incorporated by reference to
             Exhibit 10.5 to Grand Union's Quarterly Report on Form 10-Q/A for
             the period ended January 6, 1996.

<PAGE>

Exhibit
Number                              Description of Document
-------                             -----------------------

   10.15     Agreement with C&S Wholesalers Inc. dated January 21, 1996,
             incorporated by reference to Exhibit 10.28 to Grand Union's Annual
             Report on Form 10-K/A for Fiscal 1997.

   10.16     Fourth Amendment and Restatement of The Grand Union Company
             Supplemental Retirement Program for Key Executives effective as of
             November 20, 1997.

   10.17     The Grand Union Company Discretionary Severance Plan for Non-Union
             Associates effective April 14, 1998.

   10.18     The Grand Union Company Severance Plan for Exempt Personnel
             effective April 14, 1998.

   10.19     The Grand Union Company 1995 Equity Incentive Plan, as amended,
             incorporated by reference to Exhibit 6 to Grand Union's Disclosure
             Statement filed as Exhibit 2.1 to Grand Union's Form 8-K filed May
             28, 1998.

   10.20     The Grand Union Company 1995 Non-Employee Directors Stock Option
             Plan, incorporated by reference to Exhibit 10.2 to Grand Union's
             Quarterly Report on Form 10-Q for the period ended January 6, 1996.

   10.21     First Amendment to the 1995 Non-Employee Directors' Stock Option
             Plan of Grand Union, incorporated by reference to Exhibit 10.6 to
             Grand Union's Quarterly Report on Form 10-Q for the period ended
             July 20, 1996.

   10.22     Non-competition Agreement between Grand Union and Darrell W. Stine,
             incorporated by reference to Exhibit 10.26 of Grand Union's Annual
             Report on Form 10-K for Fiscal 1996.

   10.23     Non-competition Agreement between Grand Union and Gilbert C. Vuolo,
             incorporated by reference to Exhibit 10.27 of Grand Union's Annual
             Report on Form 10-K for the Fiscal 1996.

   10.24     Form of Indemnification Agreement between the Company and R.
             Stangeland, D. Josephs, W. Kagler, D. McClure, Jr., D. Ying, J.
             McCaig, W. Louttit, K. Baum, D. Stine, G. Vuolo and J. Schroeder,
             incorporated by reference to Exhibit 10.7 to Grand Union's
             Quarterly Report on Form 10-Q for the period ended July 20, 1996.

   10.25     Form of Indemnification Agreement between Grand Union and
             J. Costello, C. Miller, G. Moore and J.R. Stonesifer, incorporated
             by reference to Exhibit 10.1 to Grand Union's Quarterly Report on
             Form 10-Q for the period ended October 12, 1996.

   10.26     Form of Indemnification Agreement between the Company and J.
             Freimark (dated March 3, 1997), D. Vaillancourt (dated June 5,
             1997), G. Smith (dated August 7, 1997), J. Harris (dated August 11,
             1997), G. Philbin (dated October 3, 1997), Javier Ramirez, Vice
             President Tax and Assistant Secretary (dated October 30, 1997), J.
             Krimstein (dated October 30, 1997), M. Manski (dated October 30,
             1997), M. Pritchard (dated October 30, 1997) and J. Partridge
             (dated January 5, 1998).

   10.27     Stock Purchase Agreement dated July 30, 1996, among Grand Union,
             Trefoil Capital Investors II, L.P. and GE Investment Private
             Placement Partners II, A Limited Partnership, incorporated by
             reference to Exhibit 10.1 to Grand Union's report filed on Form 8-K
             dated July 30, 1996.

   10.28     Amendment No. 1 to the Stock Purchase Agreement dated July 30,
             1996, among Grand Union, Trefoil Capital Investors II, L.P., and GE
             Investment Private Placement Partners II, a Limited Partnership,
             incorporated by reference to Exhibit 10.50 to Grand Union's Annual
             Report on Form 10-K for Fiscal 1997.

   10.29     Management Agreement between Grand Union and Shamrock Capital
             Advisors, Inc., dated July 30, 1996, incorporated by reference to
             Exhibit 10.7 to Grand Union's Quarterly Report on Form 10-Q for the
             period ended October 12, 1996.


<PAGE>

Exhibit
Number                              Description of Document
-------                             -----------------------

   10.30     Stock Purchase Agreement by and between Grand Union and Roger
             Stangeland, dated as of February 25, 1997, incorporated by
             reference to Exhibit 10.52 to Grand Union's Annual Report on Form
             10-K for Fiscal 1997.

   10.31     Amendment No. 1, dated March 20, 1997, to the Stock Purchase
             Agreement between Grand Union and Roger Stangeland, dated as of
             February 25, 1997, incorporated by reference to Exhibit 10.53 to
             Grand Union's Annual Report on Form 10-K for Fiscal 1997.



<PAGE>

Exhibit
Number                              Description of Document
-------                             -----------------------

   10.32     Stockholder Agreement between Trefoil Capital Investors II, L.P., a
             Delaware limited partnership, GE Investment Private Placement
             Partners II, A Limited Partnership, a Delaware limited partnership,
             Roger Stangeland, an individual, and Grand Union, incorporated by
             reference to Exhibit 10.55 to Grand Union's Annual Report on Form
             10-K for Fiscal 1997.

   10.33     Addendum to Stockholder Agreement among Trefoil Capital Investors
             II, L.P., a Delaware limited partnership, GE Investment Private
             Placement Partners II, A Limited Partnership, a Delaware limited
             partnership, Roger Stangeland, an individual, and The Grand Union
             Company, a Delaware corporation, incorporated by reference to
             Exhibit 10.56 to Grand Union's Annual Report on Form 10-K for
             Fiscal 1997.

   10.34     Acceleration and Exchange Agreement, dated as of June 5, 1997, by
             and among The Grand Union Company, Trefoil Capital Investors II,
             L.P., a Delaware limited partnership, and GE Investments Private
             Placement Partners II, A Limited Partnership, a Delaware limited
             partnership, including Exhibits thereto, incorporated by reference
             to Exhibit 10.57 to Grand Union's Annual Report on Form 10-K for
             Fiscal 1997.

   10.35     Amendment No. 1, dated as of June 5, 1997, to the Registration
             Rights Agreement dated as of July 30, 1996, by and among The Grand
             Union Company, Trefoil Capital Investors II, L.P., a Delaware
             limited partnership, and GE Investments Private Placement Partners
             II, A Limited Partnership, a Delaware limited partnership,
             incorporated by reference to Exhibit 10.58 to Grand Union's Annual
             Report on Form 10-K for Fiscal 1997.

   10.36     Employment Agreement, dated as of August 1, 1997, between Grand
             Union and J. Wayne Harris, incorporated by reference to Exhibit
             99.1 Grand Union's Current Report on Form 8-K filed on August 1,
             1997.

   10.37     Employment Agreement, dated as of October 3, 1997, between Grand
             Union and Gary M. Philbin, incorporated by reference to Exhibit
             99.1 Grand Union's Current Report on Form 8-K filed on October 29,
             1997.

   10.38     Employment Agreement, dated as of January 5, 1998, between Grand
             Union and Jack W. Partridge, incorporated by reference to Exhibit
             99.1 Grand Union's Current Report on Form 8-K filed on January 28,
             1998.

   10.39     Exit Facility Commitment Letter, dated April 23, 1998, among Grand
             Union and Swiss Bank Corporation, SBC Warburg Dillon Read Inc.,
             Lehman Commercial Paper Inc. and Lehman Brothers Inc.

   10.40     Revolving Credit Agreement, dated as of June 24, 1998, by and
             among Grand Union and Swiss Bank Corporation, SBC Warburg Dillon
             Read Inc., Lehman Commercial Paper Inc. and Lehman Brothers Inc.

   21.1      Subsidiaries of Grand Union.

   27.1      Financial Data Schedule.