BRUNOS INC, DEF 14A, 1996-06-19

BRUNOS INC
DEF 14A, 1996-06-19
GROCERY STORES

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SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

Filed by the Registrant /x/
Filed by a Party other than the Registrant / /

Check the appropriate box:

/ / Preliminary Proxy Statement
/ / Confidential, for use of the Commission only (as permitted by Rule
14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12

BRUNO'S, INC.
(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(j)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it was
determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:

/ / Fee paid previously with preliminary materials

/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously.
Identify the previous filing by registration statement number, or the
Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:

<PAGE>
800 Lakeshore Parkway, Birmingham, Alabama 35211

June 18, 1996
Dear Fellow Stockholders:

You are cordially invited to attend the 1996 Annual Meeting of
Stockholders of Bruno's, Inc., ("Bruno's"). This meeting will be held at the
offices of Bruno's, 800 Lakeshore Parkway, Birmingham, Alabama on Thursday,
July 11, 1996 at 9:00 a.m. Central Time.

Eight Directors are to be elected at the Annual Meeting. In addition, you
will be asked to ratify the selection of independent accountants, approve the
1996 Stock Purchase and Option Plan for Key Employees of Bruno's, Inc. and
Subsidiaries and consider such other matters as may properly be brought before
the meeting.

Crimson Associates, L.P. and KKR Partners II, L.P., which together own
approximately 82.8% of Bruno's Common Stock, have advised Bruno's that they
intend to vote their shares of Common Stock in favor of each of the matters
specified above. Therefore, approval of such matters by the shareholders of
Bruno's is assured.

It is very important that your shares be represented at the Annual
Meeting, whether or not you plan to attend personally. Therefore, you should
complete and sign the enclosed proxy card and return it as soon as possible in
the enclosed postage-paid envelope. This will ensure that your shares are
represented at the Annual Meeting.

Yours very truly,

/s/ William J. Bolton
William J. Bolton
Chairman of the Board and
Chief Executive Officer
<PAGE>
800 Lakeshore Parkway, Birmingham, Alabama 35211

_________________________

NOTICE OF 1996 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 11, 1996
_________________________

To the Stockholders of
Bruno's, Inc.:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Bruno's,
Inc. will be held at the offices of Bruno's, Inc. ("Bruno's"), 800 Lakeshore
Parkway, Birmingham, Alabama on Thursday, July 11, 1996 at 9:00 a.m. Central
Time, to consider the following matters:

1. the election of eight Directors;

2. the ratification of the appointment of Deloitte & Touche LLP as
independent certified public accountants for the current fiscal year;

3. the approval of the 1996 Stock Purchase and Option Plan for Key
Employees of Bruno's, Inc. and Subsidiaries; and

4. the transaction of such other business as may properly be brought
before the meeting.

Details concerning those matters to come before the meeting are set forth
in the accompanying proxy statement for your inspection.

The Form 10-K / Annual Report of your Company for the fiscal year ended
January 27, 1996 is enclosed. We hope you will find it informative.

Pursuant to the By-laws of Bruno's, the Board of Directors has fixed the
close of business on June 11, 1996, as the time for determining shareholders of
record entitled to notice of, and to vote at, the Annual Meeting. Each share of
Bruno's common stock, $.01 per value, will entitle the holder thereof to one
vote on all matters which may properly come before the Annual Meeting.

By Order of the Board of Directors,

/s/ Walter M. Grant
Walter M. Grant
Secretary

Dated: June 18, 1996
<PAGE>
TABLE OF CONTENTS
Page

Proposal One: Election of Directors . . . . . . . . . . . . . . . . . . . 5
Information Concerning Directors and Nominees . . . . . . . . . . . . 5
Meetings and Committees of the Board of Directors . . . . . . . . . . 6
Security Ownership of Certain Beneficial Owners and Management . . . 8
The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Compliance with Section 16(a) of the Securities Exchange Act . . . . 10
Directors' Compensation . . . . . . . . . . . . . . . . . . . . . . . 11
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Compensation Committee Report . . . . . . . . . . . . . . . . . . . . 11
Compensation Committee . . . . . . . . . . . . . . . . . . . . . . . 12
Compensation Committee Interlocks and Insider Participation . . . . . 12
Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . 14
Summary Compensation Table . . . . . . . . . . . . . . . . . . . . . 15
Stock Option Plans . . . . . . . . . . . . . . . . . . . . . . . . . 17
Aggregated Option Exercises and Option Values . . . . . . . . . . . . 17
Profit Sharing and 401(k) Retirement Plan . . . . . . . . . . . . . . 18
Employment Contracts with Executive Officers . . . . . . . . . . . . 18
Other Agreements with Officers and Directors . . . . . . . . . . . . 19
Certain Relationships and Related Transactions . . . . . . . . . . . 21
Performance Graph . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Proposal Two: Selection of Auditors . . . . . . . . . . . . . . . . . . . 24
Proposal Three: Approval of 1996 Stock Purchase and Option Plan for Key
Employees of Bruno's, Inc. and Subsidiaries . . . . . . . . . . . . . 24
The 1996 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Certain Federal Income Tax Matters . . . . . . . . . . . . . . . . . 32
Purchases and Grants Under the 1996 Plan . . . . . . . . . . . . . . 33
Stockholders List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Stockholder Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Other Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
<PAGE>
_________________________

PROXY STATEMENT
_________________________

This Proxy Statement has been prepared on behalf of the Board of Directors
of Bruno's, Inc. ("Bruno's" or the "Company") in connection with the
solicitation of proxies (each, a "Proxy") to be used at the Annual Meeting of
Stockholders of Bruno's to be held on July 11, 1996, and any adjournments or
postponements thereof. The Proxy may be revoked at any time prior to being
voted by written notice to the Secretary of the Company, by submission of a
Proxy bearing a later date or by voting in person at the meeting. Each valid
and timely Proxy not revoked will be voted at the meeting in accordance with
instructions thereon or if no instructions are specified thereon, then the
Proxy will be voted as recommended by the Board of Directors. The affirmative
vote of a majority of the votes cast is required for the election of directors,
ratification of the selection of independent accountants, approval of the 1996
Stock Purchase and Option Plan for Key Employees of Bruno's, Inc. and
Subsidiaries (the "1996 Plan") and the approval of any stockholder proposals
that may be offered at the Annual Meeting. Abstentions and broker non-votes
will not be included in vote totals and will have no effect on the outcome of
any vote.

Only holders of record at the close of business on June 11, 1996, of
Bruno's common stock, par value $.01 per share (the "Common Stock"), will be
entitled to vote at the Annual Meeting. On that date, there were outstanding
25,147,639 shares of Common Stock. Each share of Common Stock is entitled to
one vote on each matter to be voted on at the Annual Meeting. Shares
representing a majority of the votes entitled to be cast by the outstanding
shares of Common Stock must be represented in person or by proxy at the Annual
Meeting in order for a quorum to be present.

As of June 11, 1996, Crimson Associates, L.P. and KKR Partners II, L.P.
(the "Common Stock Partnerships") owned approximately 82.8% of the Common
Stock. The Common Stock Partnerships have advised Bruno's that they intend to
vote all of their shares of Common Stock in favor of the election of the eight
nominated directors, the ratification of the selection of Deloitte & Touche LLP
as independent accountants and the approval of the 1996 Plan. Such action by
the Common Stock Partnerships is sufficient to elect such directors and approve
such matters without any action on the part of any other holder of Common
Stock. Certain of the nominees for Director of Bruno's are affiliated with the
general partner of each of the Common Stock Partnerships. See "Compensation
Committee Interlocks and Insider Participation," herein.

The complete mailing address of the principal executive office of the
Company is 800 Lakeshore Parkway, Birmingham, Alabama 35211. The approximate
date on which this Proxy Statement is first being sent to Stockholders is June
19, 1996.
<PAGE>
PROPOSAL ONE:

ELECTION OF DIRECTORS

One of the purposes of the Annual Meeting is the election of eight
directors, constituting the entire Board of Directors of the Corporation, to
hold office until the next Annual Meeting and until their successors are
elected and qualified. Each nominee is now a member of the Board of Directors
of Bruno's. If, for any reason, any of said nominees becomes unavailable for
election, the holders of the Proxies may exercise discretion to vote for
substitutes proposed by the Board of Directors. Management has no reason to
believe that the persons named will be unable to serve if elected or decline to
do so.

The election of each nominated Director requires a majority of the votes
cast at the Annual Meeting. If a Stockholder wishes to withhold authority to
vote for any nominee, such Stockholder can do so by following the directions
set forth on the enclosed Proxy or on the ballot to be distributed at the
Annual Meeting, if such Stockholder wishes to vote in person. The persons named
in the enclosed Proxy will vote the shares of Common Stock covered by such
Proxy for the election of the nominees set forth below, unless instructed to
the contrary.

INFORMATION CONCERNING DIRECTORS AND NOMINEES

Set forth below is certain information concerning each nominee for
Director of Bruno's.

Name Age Positions Held During Previous Five Years
- ------------------------------ ---- -----------------------------------------

William J. Bolton 49 Chairman of the Board of Directors and Chief Executive
Officer of the Company since August 1995. President of
Jewel Food Stores from 1991 to August 1995 and Chief
Operating Officer-Markets of American Stores Company
from April 1995 to August 1995.

Henry R. Kravis 52 Director of the Company since August 1995. Founding
Partner, Kohlberg Kravis Roberts & Co. ("KKR"). Member
of the Board of Directors of American Re Corporation,
AutoZone, Inc., Borden, Inc., Duracell International
Inc., Flagstar Companies, Inc., Flagstar Corporation,
IDEX Corporation, K-III Communications Corp., Merit
Behavioral Care Corporation, Newsquest Capital
plc, Owens-Illinois, Inc., Owens-Illinois Group,
Inc., Safeway Inc., The Stop & Shop Companies,
Inc., Union Texas Petroleum Holdings, Inc., Walter
Industries, Inc. and World Color Press, Inc.
<PAGE>
George R. Roberts 52 Director of the Company since August 1995. Founding
Partner, KKR. Member of the Board of Directors
of AutoZone, Inc., Borden, Inc., Duracell
International Inc., Flagstar Companies, Inc.,
Flagstar Corporation, IDEX Corporation, K-III
Communications Corp., Merit Behavioral Care
Corporation, Newsquest Capital plc,
Owens-Illinois, Inc., Owens-Illinois Group, Inc.,
Red Lion Properties, Inc., Safeway Inc.,
The Stop & Shop Companies, Inc., Union Texas
Petroleum Holdings, Inc., Walter Industries,
Inc. and World Color Press, Inc.

Paul E. Raether 49 Director of the Company since August 1995. General
Partner, KKR. Member of the Board of Directors of
Duracell International Inc., Flagstar Companies,
Inc., Flagstar Corporation, Fred Meyer, Inc.,
IDEX Corporation, and The Stop & Shop Companies, Inc.

James H. Greene, Jr. 45 Director of the Company since August 1995. General
Partner, KKR. Member of the Board of Directors
of Owens-Illinois, Inc., Owens-Illinois Group,
Inc., Safeway Inc., The Stop & Shop Companies,
Inc., Union Texas Petroleum Holdings, Inc. and
The Vons Companies, Inc.

Nils P. Brous 31 Director of the Company since August 1995.
Executive of KKR since November 1992. Prior
thereto, Associate, Goldman, Sachs & Co.
Member of the Board of Directors of
Canadian General Insurance Group Limited
and Granum Communications, Inc.

Ronald G. Bruno 43 Director of the Company since 1983. Chairman
of the Board from December 1991 to August
1995, Chief Executive Officer of the Company
from October 1990 to August 1995 and President
of the Company from 1986 to 1994. Member
of the Board of Directors of SouthTrust Bank
of Alabama, Books-A-Million, Inc. and Russell Corp.

Robert G. Tobin 57 Director of the Company since September 1995.
Chairman of the Board of Directors, Chief
Executive Officer and President of The
Stop & Shop Companies, Inc. Member of
the Board of Directors of First Brands
Corporation.

Ronald G. Bruno has agreed to serve as a Director until August 18, 1998,
subject to the customary right of a director to resign, pursuant to a
stockholders agreement executed in connection with the August 18, 1995 merger
of Crimson Acquisition Corp. with and into Bruno's (the "Merger"). See "The
Merger."

Messrs. Kravis and Roberts are first cousins.

MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS

During the transition period from July 2, 1995 to January 27, 1996 (the
"Transition Period"), the Board of Directors met on four occasions. No
incumbent Director, other than Henry R. Kravis and George R. Roberts, attended
fewer than 75% of the aggregate number of Board meetings and committee meetings
on which such Board member served. The Company's Executive Committee,
consisting of William J. Bolton, Paul E. Raether, James H. Greene, Jr. and Nils
P. Brous, met on two occasions during the Transition Period. The Company's
<PAGE>
Audit Committee, consisting of Nils P. Brous and Ronald G. Bruno, met once
during the Transition Period. The Company's Compensation Committee, consisting
of Paul E. Raether, James H. Greene, Jr. and Nils P. Brous, met on two
occasions during the Transition Period. The Company does not have a Nominating
Committee.

The functions of the Audit Committee include reviewing with the
independent accountants the plans and results of the annual audit, approving
the audit and non-audit services by such independent accountants, reviewing the
scope and results of the Company's internal auditing procedures, reviewing the
adequacy of the Company's system of internal accounting controls and reviewing
the annual financial statements prepared for release to stockholders and the
public. The functions of the Compensation Committee include reviewing the
salaries and bonuses of senior management and the review and approval of
participation in, and administration of, the 1996 Plan. The Executive Committee
has authority to act for the Board of Directors on most matters during
intervals between Board meetings.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the
beneficial ownership of Common Stock as of June 1, 1996 by (i) each director,
(ii) the Chief Executive Officer and each of the other four most highly
compensated executive officers of the Company during the Transition Period,
(iii) all executive officers and directors as a group and (iv) the Company's
principal stockholders. Other than as set forth in the table below, there are
no persons known to the Company to beneficially own more than 5% of the Common
Stock.

<TABLE>
<CAPTION>
Amount & Nature
Name and Address of Beneficial Percentage of
of Beneficial Owner Ownership Common Stock
- ----------------------------------------------------- ------------
<S> <C> <C>
KKR Associates, L.P. . . . .. . . . . 30,833,333 <F2><F3> 88%
9 West 57th Street
New York, NY 10019

William J. Bolton . . . . . . . . . 83,333 <F4><F1>
P.O. Box 2486
Birmingham, AL 35201

Henry R. Kravis . . . . . . . . . . . ---- ----
9 West 57th Street
New York, NY 10019

George R. Roberts . . . . . . . . . . .---- ----
2800 Sand Hill Road
Suite 200
Menlo Park, CA 94025

Paul E. Raether . . . . . . . . . . . ---- ----
9 West 57th Street
New York, NY 10019

James H. Greene, Jr. . . . . . . . ---- ----
2800 Sand Hill Road
Suite 200
Menlo Park, CA 94025
<PAGE>
Nils P. Brous . . . . . . . . . . . ---- ----
9 West 57th Street
New York, NY 10019

Ronald G. Bruno . . . . . . . . . . 85,118 <F5><F1>
Two Perimeter Park South
Suite 300 East
Birmingham, AL 35243

Robert G. Tobin . . . . . . . . . . ---- ----
1385 Hancock Street
Quincy, MA 02169

David Clark . . . . . . . . . . . . 20,833 <F4><F1>
P.O. Box 2486
Birmingham, AL 35201

Michael F. Heintzman . . . . . . . 20,833 <F4><F1>
P.O. Box 2486
Birmingham, AL 35201

Lisa R. Kranc . . . . . . . . . . . 15,625 <F4><F1>
P.O. Box 2486
Birmingham, AL 35201

R. Michael Conley . . . . . . . . . 1,710<F1>
P.O. Box 2486
Birmingham, AL 35201

All executive officers and 233,237<F1>
directors as a group (16
persons) <F6> . . . . . . . . . . . . . . . . . . .

____________________
<FN>
<F1> Owns less than 1% of the total outstanding Common Stock.
<F2> Shares of Common Stock shown as owned by KKR Associates, L.P. ("KKR
Associates") are owned of record by the Common Stock Partnerships of which
KKR Associates is the sole general partner and as to which it possesses
sole voting and investment power. Messrs. Kravis, Roberts, Raether and
Greene (all of whom are directors of the Company) and Robert I.
MacDonnell, Michael W. Michelson, Saul A. Fox, Michael T. Tokarz, Perry
Golkin, Clifton S. Robbins, Scott M. Stuart and Edward A. Gilhuly, as the
general partners of KKR Associates, may be deemed to share beneficial
ownership of such shares. Nils Brous is a limited partner of KKR
Associates. Each of these individuals disclaims beneficial ownership of
any shares owned by KKR Associates. Robert G. Tobin is a limited partner
of one of the Common Stock Partnerships.
<PAGE>
<F3> Includes 10 million shares that will be issued by the Company upon
exercise of 10 million warrants granted by the Company in connection with
the Merger.

<F4> See "Employment Contracts with Executive Officers."

<F5> Includes 33,024 shares owned directly by Ronald G. Bruno, 283 shares owned
jointly with his wife, 176 shares owned by his wife, 1,325 shares held as
a Trustee for his minor son and 50,310 shares held as co-trustee for
various family members.

<F6> Includes shares owned by the above-named executive officers and directors,
as well as those owned by Paul F. Garrison and Glenn J. Griffin, each a
former officer and director of the Company. The Company expects that
James J. Hagan, named Chief Financial Officer of the Company in May 1996,
and Walter M. Grant, named Senior Vice President, General Counsel and
Secretary of the Company in June 1996, will purchase Common Stock upon
execution of their Employment Contracts. See "Employment Contracts with
Executive Officers."

</TABLE>

THE MERGER

On August 18, 1996, in connection with the Merger, approximately 94.7% of
the issued and outstanding shares of Common Stock were converted into cash, and
the remaining 5.3% of the then issued and outstanding shares were retained by
the shareholders of the Company. As a result of the Merger, the Common Stock
Partnerships, of which KKR Associates is the sole general partner and as to
which it possesses sole voting and investment power, received 20,833,333 shares
of Common Stock, or approximately 83.33%, of the Common Stock outstanding
immediately after the Merger, and 10 million warrants to purchase up to an
additional 10 million shares of Common Stock in the aggregate at an exercise
price of $12.00 per share, subject to anti-dilution adjustments (the
"Warrants").

In connection with the financing of the Merger, the Company completed an
offering of $400.0 million aggregate principal amount of 10 1/2% Senior
Subordinated Notes due 2005 and entered into a credit facility with certain
financial institutions, including Chemical Bank, as administrative agent,
consisting of a $475.0 million term loan facility and a $125.0 million
revolving credit facility. In addition, the Common Stock Partnerships made a
capital contribution of $250.0 million to Crimson Acquisition Corp. immediately
preceding the Merger. The funds for these purchases were contributed to the
Common Stock Partnerships by their general and limited partners from their
respective assets.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT

Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers, directors and
persons who own more than ten percent of a registered class of the Company's
equity securities ("Reporting Persons") to file reports of ownership and
<PAGE>
changes in ownership on Forms 3, 4 and 5 with the Securities and Exchange
Commission (the "SEC"). These Reporting Persons are required by SEC regulations
to furnish the Company with copies of all Forms 3, 4 and 5 they file with the
SEC.

Based solely on the Corporation's review of the copies of the forms it has
received and written representations from certain Reporting Persons, the
Company believes that all of its Reporting Persons complied with all filing
requirements applicable to them with respect to transactions during the
Transition Period.

DIRECTORS' COMPENSATION

Directors of the Company who are not officers or employees of Bruno's are
entitled to receive directors' fees and are eligible to participate in any of
the Company's retirement and/or stock option plans. Messrs. Kravis, Roberts,
Raether, Greene, Brous, Tobin and Bruno each received a director's fee of
$12,500 for services rendered from August 18, 1995 through the end of the
Transition Period. In addition, the Company paid $3,000 to each of Messrs.
Benny M. LaRussa Jr., Richard Cohn, Judy M. Merritt, J. Mason Davis and Bart
Starr for their services as Directors of the Company from the beginning of the
Transition Period through the date of the Merger.

EXECUTIVE COMPENSATION

COMPENSATION COMMITTEE REPORT

The Compensation Committee of the Company, whose members are listed below,
is composed entirely of non-employee Directors. The Committee reviews and
approves all compensation arrangements for executive officers and, in that
regard, has developed compensation policies for the executives which seek to
enhance the profitability of the Company with an appropriate balance between
long-term and short-term profitability goals and to assure the ability of the
Company to attract and retain executive employees with competitive
compensation. Actions by the Committee are reported to the Board and, in
appropriate cases, ratified by the Board prior to implementation.

The compensation program of the Company seeks specifically to motivate the
executives of the Company to achieve objectives which benefit the Company
within their respective areas of responsibility, with particular emphasis on
continued growth in revenues, expense control, operating efficiency, and the
ultimate realization of profits for the Company, approximately equal weight
being given to each of these criteria in evaluating performance.

Base salary levels for the Company's executive officers, including the
Chief Executive Officer, are set so that the overall cash compensation package
for executive officers, including bonus opportunity, compares favorably to
companies with which the Company competes for executive talent. In determining
salaries, the Compensation Committee also takes into account a number of
factors, which primarily include individual experience and performance, the
<PAGE>
officer's level of responsibility, the cost of living and historical salary
levels. The measures of individual performance considered include, to the
extent applicable to an individual executive officer, a number of quantitative
and qualitative factors such as the Company's historical and recent financial
performance, the individual's achievement of particular nonfinancial goals
within his or her responsibility, and other contributions made by the officer
to the Company's success. The Compensation Committee has not found it
practicable to, and has not attempted to, assign relative weights to the
specific factors considered in determining base salary levels, since the
specific factors used may vary among officers. As is typical for most
companies, payment of base salary amounts generally is not conditioned upon the
achievement of any specific, pre-determined performance targets.

In addition to base salary, each executive, including the Chief Executive
Officer, may earn an incentive of up to 100% of such executive's base pay. The
compensation policies of the Company are general and subjective both as to
salary and as to the other components of the compensation program.
The Company's compensation program also includes benefits typically
offered to executives of similar businesses to promote management stability,
consisting of a profit sharing plan, deferred compensation agreements and
control of change agreements.

The Transition Period compensation of William J. Bolton, the Company's
Chief Executive Officer and the Transition Period compensation of Ronald G.
Bruno, the Company's former Chief Executive Officer, were based on factors
applicable to the Company's executive officers, discussed above, as well as
certain subjective factors, including the leadership provided by each of them
in their role as Chief Executive Officer. The salaries of all of the executives
are set based on a review of salaries paid by other retail supermarket chains
of a similar size to that of the Company for executives of similar experience
and skills. The Company uses compensation surveys of supermarket retailers as a
competitive reference but does not determine its compensation practices
according to survey salaries.

Legislation enacted in 1993 imposes certain limits on the tax
deductibility of executive compensation. The Committee's policy is to maximize
the tax deductibility of executive compensation to the extent consistent with
its responsibility to effectively compensate executives based on performance.

COMPENSATION COMMITTEE

Following the Merger, the Board of Directors of the Company approved the
appointment of a Compensation Committee composed of Paul E. Raether, James H.
Greene, Jr. and Nils P. Brous. Prior to the Merger, the Compensation Committee
was comprised of Richard Cohn, Bart Starr and Judy Merritt, each a director of
the Company at such time.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Kohlberg Kravis Roberts & Co. ("KKR"), which is an affiliate of KKR
Associates, may receive investment banking fees for services rendered to the
Company in connection with certain transactions. During the Transition Period,
<PAGE>
KKR received a fee of $15 million from the Company for arranging the Merger and
the financing therefor. In addition, KKR renders management, consulting and
financial services to the Company for an annual fee of $1 million plus
expenses. During the Transition Period, $537,667, including expenses, was paid
to KKR. Messrs. Raether and Greene are general partners of KKR and Mr. Brous is
an executive of KKR.

The Common Stock Partnerships hold an aggregate of 20,833,333 shares of
Common Stock as well as warrants (the "Warrants") to acquire 10 million
additional shares to be issued upon exercise of the Warrants. These shares of
Common Stock and the Warrants were acquired pursuant to the Merger in exchange
for the stock of Crimson Acquisition Corp. owned by the Common Stock
Partnerships. The Warrants are exercisable at a price of $12.00 per share,
subject to adjustment. The general partner of the Common Stock Partnerships is
KKR Associates, a New York limited partnership of which Paul E. Raether, and
James H. Greene, Jr. are among the general partners. Mr. Brous is a limited
partner of KKR Associates. KKR Associates has sole voting and investment power
with respect to such shares.

The Common Stock Partnerships have the right, under certain circumstances
and subject to certain conditions, to require the Company to register under the
Securities Act of 1933, as amended, shares of Common Stock and Warrants held by
them. The Common Stock Partnerships have both demand and "piggyback"
registration rights. Under the agreements providing for registration rights,
the Company will pay all expenses in connection with any such registration.

[Remainder of Page Intentionally Left Blank]
<PAGE>
EXECUTIVE OFFICERS

Set forth below is certain information concerning each current executive
officer of Bruno's.

Name Age Positions Held During Previous Five Years

William J. Bolton 49 Chairman of the Board of Directors and Chief
Executive Officer of the Company since August
1995. President, Jewel Food Stores from 1991
to August 1995 and Chief Operating
Officer-Markets, American Stores Company from
April 1995 to August 1995.

James J. Hagan 37 Senior Vice President and Chief Financial
Officer since May 1996. Executive Vice
President and Chief Financial Officer,
Revco D.S., Inc. from August 1995 to May
1996. Senior Vice President-Real Estate,
Revco D.S., Inc. from July 1993 to
August 1995. Prior thereto, Vice President
and Treasurer, Revco D.S., Inc.

David B. Clark 43 Senior Vice President - Operations
since November 1995. Executive
Vice President - Merchandising and
Operations, Cub Food Stores/Super Valu, Inc.
from 1992 to November 1995. Executive Vice
President, Jewel Osco Southwest
Division of American Stores, Inc. from
1991-1992. Prior thereto, Senior Vice
President - Marketing, Skaggs Alpha Beta
(predecessor to Jewel Osco Southwest
Division).

Michael F. Heintzman 42 Senior Vice President - Merchandising
since October 1995. Vice President -
Merchandising, The Kroger Co. (Michigan
marketing area) from 1993 to October
1995. Director Perishable Merchandising,
Kroger Food Stores and The Kroger
Co. from 1991 to 1993. Prior thereto,
Manager-Perishable Merchandising, The
Kroger Co. (Atlanta Division).

Lisa R. Kranc 42 Senior Vice President - Marketing since
January 1996. Vice President - Marketing,
Giant Eagle, Inc. from 1992 to January 1996.
Prior thereto, Brand Management - Alberto
Culver, Inc.

Walter M. Grant 51 Senior Vice President and General Counsel since
June 1996. Consultant, MetroMedia International
Group, Inc. from November 1995 to June 1996. Senior
Vice President and General Counsel, The Actava
Group Inc. from July 1993 to November 1995. Senior
Vice President and General Counsel, Smith &
Nephew plc, North American operations from
October 1991 to June 1993. Prior thereto, Vice
President, General Counsel and Secretary,
Contel Corporation.

R. Michael Conley 44 Assistant General Counsel and Assistant
Secretary since June 1996. Corporate Counsel
from July 1992 to June 1996. Assistant
Secretary from 1988 to July 1992.
<PAGE>
SUMMARY COMPENSATION TABLE

The following table summarizes the compensation paid to or accrued by the
Company during the Transition Period and the previous three fiscal years for
(i) William J. Bolton, the Chief Executive Officer and Chairman of the Board of
Directors, and the other four most highly compensated executive officers of the
Company as of the end of the Transition Period, (ii) Ronald G. Bruno, who was
succeeded as Chief Executive Officer and Chairman of the Board of Directors by
Mr. Bolton and (iii) Paul F. Garrison and Glenn J. Griffin, each of whom
resigned as executive officers of the Company during the Transition Period.
<TABLE>
<CAPTION>
Long-Term
Compensation
Transition Period Compensation Awards All Other Compensation
------------------------------------ ----------- ------------------------------------
Other Options by Deferred Employment Profit
Compensation Number Compensation Continuity Sharing
Name / Position Year Salary <F1> Bonus <F2> <F3> of Shares <F4> <F5> <F6>
- ------------------ -------------- ---------- --------- ----------- ----------- ------------ ---------- --------

<S> <C> <C> <C> <C> <C> <C> <C> <C>
William J. Bolton Transition 1996 $169,200 $300,000 $ -0- -0- N/A -0- N/A
Chairman of the
Board and CEO

David Clark Transition 1996 $ 47,439 $ 30,000 $ -0- -0- N/A -0- N/A
Senior Vice
President -
Operations

Michael F. Transition 1996 $ 53,644 $ 25,000 $ -0- -0- N/A -0- N/A
Heintzman
Senior Vice
President -
Merchandising

Lisa R. Kranc Transition 1996 $ 6,731 $ -0- $ -0- -0- N/A -0- N/A
Senior Vice
President -
Marketing

R. Michael Conley Transition 1996 $107,700 $ 12,150 $ 49,898 -0- $ 730,900 $404,983 $ 2,200
Assistant Fiscal 1995 135,000 67,500 -0- 17,500 5,377 -0- 3,000
General Counsel Fiscal 1994 110,000 16,500 -0- 17,500 4,725 -0- 5,060
and Assistant Fiscal 1993 90,000 13,500 -0- 17,500 17,153 -0- 2,070
Secretary
(former
Corporate
Counsel and
Secretary)
<PAGE>
Ronald G. Bruno, Transition 1996 $118,800 $ -0- $172,945 -0- $1,700,300 $895,005 $ 2,400
Former Chairman Fiscal 1995 325,000 162,500 -0- 50,000 -0- -0- 3,000
of the Board and Fiscal 1994 300,000 45,000 -0- 50,000 -0- -0- 11,617
Former CEO Fiscal 1993 305,769 45,000 -0- 50,000 51,607 -0- 7,015

Paul F. Garrison,
Former
President & Transition 1996 $164,500 -0- $ 79,017 -0- $ 390,700 $818,052 $ 3,000
Chief Fiscal 1995 290,000 $145,000 -0- 25,000 358,998 -0- 3,000
Operating Fiscal 1994 260,381 39,250 -0- 25,000 38,624 -0- 10,709
Officer Fiscal 1993 259,904 38,250 -0- 25,000 235,841 -0- 5,963

Glenn J. Griffin,
Former Transition 1996 $144,700 -0- $ 79,017 -0- $1,184,000 $722,052 $ 2,900
Executive Vice Fiscal 1995 255,000 $127,500 -0- 25,000 29,028 -0- 3,000
President, CFO Fiscal 1994 235,000 35,250 -0- 25,000 7,838 -0- 10,122
and Treasurer Fiscal 1993 239,520 35,250 -0- 25,000 70,077 -0- 5,495

____________________
<FN>
<F1> The amounts listed in this column reflect the services provided during
the Transition Period (i) by William J. Bolton beginning August 21,
1995, David Clark beginning November 13, 1995, Michael F. Heintzman
beginning October 22, 1995 and Lisa R. Kranc beginning January 8, 1996,
(ii) by R. Michael Conley throughout the Transition Period, (iii) by
Ronald G. Bruno from July 2, 1995 through August 20, 1995, (iv) by Paul
F. Garrison from July 2, 1995 through November 18, 1995 and (v) by Glenn
J. Griffin from July 2, 1995 through November 18, 1995. James J. Hagan
and Walter M. Grant became executive officers of the Company subsequent
to the Transition Period.
<F2> The amounts listed in this column with respect to Messrs. Bolton, Clark
and Heintzman represent payments of signing bonuses to each such
executive upon the signing of their respective employment contracts. See
"Employment Contracts with Executive Officers."
<F3> The amounts listed in this column with respect to Messrs. Bruno, Conley,
Garrison and Griffin represent payments by the Company for reimbursement
of tax obligations incurred pursuant to the exercise of Company stock
options in connection with the Merger.
<F4> The amounts listed in this column represent the amounts accrued by the
Company under Employment and Deferred Compensation Agreements to provide
for deferred compensation benefits for its executives in connection with
the Merger.
<F5> The amounts listed in this column represent the amounts accrued by the
Company under Employment Continuity Agreements to provide for
compensation benefits to certain executives and employees in connection
with the "change of control" precipitated by the Merger.
<F6> The amounts listed in this column represent the Company's contributions
under its Profit Sharing Plan.
</TABLE>
<PAGE>
STOCK OPTION PLANS

Prior to the Merger, the Company maintained an Employee Incentive Stock
Option Plan (the "Pre-Merger Employee Plan") for its employees and a Non-
Employee Director Stock Option Plan (the "Pre-Merger Director Plan" and,
together with the Pre-Merger Employee Plan, the "Pre-Merger Plans"). No options
were granted under the Pre-Merger Plans during the Transition Period. In
connection with the Merger, all options granted under the Pre-Merger Plans
vested and the Pre-Merger Plans were terminated. During the Transition Period,
the Board of Directors approved the establishment of the 1996 Plan. See
"Proposal Three: Approval of 1996 Stock Purchase and Option Plan for Key
Employees of Bruno's Inc. and Subsidiaries." No options were awarded under the
1996 Plan during the Transition Period. Following the Transition Period, under
the 1996 Plan, the Company awarded stock options to each of William J. Bolton,
David Clark, Michael F. Heintzman and Lisa R. Kranc. See "Purchases and Grants
Under the 1996 Plan."

AGGREGATED OPTION EXERCISES AND OPTION VALUES

The following table shows information concerning the exercise of stock
options granted pursuant to the Pre-Merger Option Plan during the Transition
Period by each of the named executive officers. Immediately prior to the
Merger, Messrs. Bruno, Garrison, Griffin and Conley exercised options granted
to them pursuant to the Pre-Merger Option Plan. The following table shows
information concerning the exercise of such options during the Transition
Period.

Aggregated Option Exercises During Transition Period
and Transition Period-End Option Values
<TABLE>
<CAPTION>
Shares Number of
Acquired Value Options at
on Exercise Realized Transition
Name (Number) (Dollars) <F1> Period-End
- ------------------------------------------------- ----------------------- ----------------------- ------------------------

<S> <C> <C> <C>
William J. Bolton . . . . . . . . . . . . . . . . 0 $ 0 0
David Clark . . . . . . . . . . . . . . . . . . . 0 0 0
Michael F. Heintzman . . . . . . . . . . . . . . 0 0 0
Lisa R. Kranc . . . . . . . . . . . . . . . . . . 0 0 0
R. Michael Conley . . . . . . . . . . . . . . . . 52,500 138,219 0
Ronald Bruno . . . . . . . . . . . . . . . . . . 150,000 364,550 0
Paul F. Garrison . . . . . . . . . . . . . . . . 75,000 189,731 0
Glenn J. Griffin . . . . . . . . . . . . . . . . 75,000 189,731 0

____________________
<FN>

<F1> The amounts listed in this column represent the dollar value received by
each named executive officer upon exercise of his stock option in
<PAGE>
exchange for Common Stock and the subsequent conversion of each share of
such Common Stock into $11.66 cash and 0.28336 shares of Common Stock
pursuant to the Merger.

</TABLE>

PROFIT SHARING AND 401(K) RETIREMENT PLAN

The Company maintains a profit sharing and deferred retirement plan
pursuant to Section 401(k) of the Internal Revenue Code of 1986, as amended.
All employees who are not eligible to participate in a union-sponsored or co-
sponsored qualified retirement plan will participate after one year of service
and attainment of age 21.

A separate salary reduction account and matching employer contribution
account are maintained for each plan participant. Participants make
contributions to their salary reduction account on a payroll deduction basis.
The Company makes matching contributions, on a dollar-for-dollar basis, up to
two percent (2%) of compensation, to the employee's matching employer
contribution account. The Company may also make contributions to the employees'
discretionary contribution account on a discretionary basis in an amount
determined annually by the Board of Directors.

All contributions are paid to AmSouth Bank of Alabama, N.A., as Trustee,
to hold, invest and reinvest the funds. All accounts are vested at death,
retirement or disability. Upon termination of service, discretionary accounts
are not vested until the fifth year of service. Subject to certain time and
amount restrictions and tax penalties, participants may make early withdrawals
from their salary reduction accounts. The total of employer and employee
contributions for each participant, annually, cannot exceed the lesser of 25%
of compensation or $30,000.

A participant will be entitled to receive a distribution of his vested
accounts upon termination of employment, including retirement, disability or
death. Payment will be made in the form of either a lump sum or installments
paid over a period of 15 years. A participant's interest in the Company's
discretionary contributions begins to vest in the fourth year and becomes 100%
vested after the participant completes five (5) years of service or upon death,
disability or normal retirement. All other contributions (whether made by the
Company or the participant) are fully vested at all times.

EMPLOYMENT CONTRACTS WITH EXECUTIVE OFFICERS

On August 21, 1995, William J. Bolton succeeded Ronald G. Bruno as the
Company's Chairman and Chief Executive Officer. The Company and Mr. Bolton have
entered into an employment agreement pursuant to which Mr. Bolton, among other
things, (i) received a signing bonus of $300,000, (ii) will receive an annual
base salary of $400,000 for three years commencing on September 1, 1995, (iii)
will receive an annual bonus, subject to the attainment of certain performance
goals, in an amount not to exceed 100% of his base salary, (iv) purchased
$1,000,000 of Common Stock at $12.00 per share, which purchase was partially
funded by a loan from the Company, (v) will participate in incentive
compensation plans of the Company, (vi) received relocation expenses and (vii)
<PAGE>
will receive the greater of eighteen month's base salary plus 150% of his
target bonus or his base salary for the remainder of his employment agreement
if he quits for good reason or if the Company terminates his employment without
cause.

During the Transition Period, the Company also entered into employment
agreements with each of David Clark, Senior Vice President-Operations, Michael
F. Heintzman, Senior Vice President-Merchandising, and Lisa R. Kranc, Senior
Vice President-Marketing (together, the "New Senior Executives"). Pursuant to
these employment agreements, the New Senior Executives, among other things, (i)
received, with respect to Mr. Clark, a signing bonus of $30,000, and with
respect to Mr. Heintzman, a signing bonus of $25,000, (ii) will receive an
annual base salary of $225,000 for Mr. Clark, $200,000 for Mr. Heintzman and
$175,000 for Ms. Kranc, commencing on January 1, 1996 for Messrs. Clark and
Heintzman (although Mr. Clark and Mr. Heintzman commenced their employment with
the Company prior to such date) and on January 8, 1996 for Ms. Kranc, and
continuing for a period of three years, (iii) will receive an annual bonus,
subject to the attainment of certain performance goals, in an amount not to
exceed 100% of such base salary, (iv) purchased $250,000, $250,000, and
$187,500 of Common Stock, respectively, at $12.00 per share, which purchases
were partially funded by a loan from the Company, (v) will participate in
incentive compensation plans of the Company, (vi) received relocation expenses
and (vii) will receive twelve month's base salary if he or she quits for good
reason or if the Company terminates his or her employment without cause.

The Company also expects to enter into employment agreements with James J.
Hagan, who became the Company's Senior Vice President and Chief Financial
Officer in May 1996, and Walter M. Grant, who became the Company's Senior Vice
President and General Counsel in June 1996, pursuant to which Messrs. Hagan and
Grant, among other things, (i) will receive an annual base salary of $275,000
and $240,000, respectively, (ii) will receive an annual bonus, subject to the
attainment of certain performance goals, in an amount not to exceed 100% of
such base salary and (iii) will purchase shares of Common Stock at $12.00 per
share.

OTHER AGREEMENTS WITH OFFICERS AND DIRECTORS

At the time of the Merger, five current or former executive officers of
the Company, Ronald G. Bruno, Paul F. Garrison, Glenn J. Griffin, Kenneth J.
Bruno, and R. Michael Conley (the "Pre-Merger Executive Officers"), along with
14 other current or former employees of the Company, were parties to Employment
Continuity Agreements (the "Employment Continuity Agreements") with the Company
which provide for lump sum cash payments equal to three times, in the case of
Ronald G. Bruno, two times, in the case of the other Pre-Merger Executive
Officers, and one time, in the case of the other employees, the sum of his
annual base salary at the time of termination, plus his incentive compensation
bonus for the year preceding termination. Benefits under the Employment
Continuity Agreements were payable if a covered employee's employment is
terminated by the employee for "good reason" or by the Company without "cause"
within one year following a "change of control."

At the time of the Merger, the Pre-Merger Executive Officers were also
parties to Employment and Deferred Compensation Agreements (the "Deferred
<PAGE>
Compensation Agreements") with the Company. The Deferred Compensation
Agreements provided for monthly payments of retirement benefits to such persons
equal to 5% of the average annual compensation for the three fiscal years ended
immediately prior to the initial payment date for a period of 180 months upon
the earlier of retirement after age 65, retirement after 25 years of service,
disability, death or the occurrence of an event which would entitle the
employee to receive benefits under his Employment Continuity Agreement. In
connection with its approval of the Merger, the Board of Directors of the
Company approved the payment to the Pre-Merger Executive Officers of a lump sum
payment, on termination of employment, of the benefits payable under the
Deferred Compensation Agreements based on a discount rate of 8% per annum.

Ronald G. Bruno remained as an officer of the Company after the Merger
until the appointment of William J. Bolton as Chief Executive Officer. Kenneth
J. Bruno resigned in late September 1995, Paul F. Garrison resigned in late
November 1995 and Glenn J. Griffin resigned in late November 1995. R. Michael
Conley has continued in the employ of the Company following the Merger in order
to accomplish in an orderly fashion the transition of ownership of the Company
contemplated by the Merger. In general, if Mr. Conley remains in the employ of
the Company for at least one year following August 18, 1995 (or such shorter
period as may be determined by the Board of Directors of the Company, as was
the case with respect to Messrs. Ronald Bruno, Garrison, Griffin and Kenneth
Bruno), on the earlier of (i) the thirtieth day after his replacement has
commenced employment and (ii) August 18, 1996 (the "Date of Payment") he will
be entitled to receive, and each of Messrs. Ronald Bruno, Garrison, Griffin and
Kenneth Bruno have received, any amounts that would have been payable to him
under the terms of his Employment Continuity Agreement as of the end of the
fiscal year ending on July 1, 1995 if he had been terminated by the Company
without Good Cause (as defined in the Employment Continuity Agreement) together
with the retirement benefit that would have been payable to him under the terms
of the relevant Deferred Compensation Agreement; provided that commencing on
August 18, 1995 and continuing during the post-Merger employment period, Mr.
Conley shall receive from the Company a monthly salary based on 13 pay periods
equal to his total base salary and bonus for the fiscal year ended July 1,
1995, divided by 13 (provided that no further bonus or incentive compensation
shall be payable for such periods).

Shares of Common Stock held by officers and Directors of the Company on
the date of the Merger were converted into the right to receive the same
consideration as shares of Common Stock held by other shareholders. Company
stock options held by officers and Directors of the Company were treated in the
same manner as Company stock options held by other shareholders, except that no
such officer or Director was entitled to a direct cash payment of the excess of
$12.00 over the exercise price per share of such Company stock option. See
"Aggregated Option Exercises and Option Values."

Company stock options held by five former non-employee Directors of the
Company at the time of the Merger (Benny M. LaRussa, Jr., Richard Cohn, Judy M.
Merritt, J. Mason Davis, Jr. and Bart Starr), which had not as yet vested,
vested as a result of the Merger, providing a benefit above the exercise price
of those options of approximately $77,500 to each of such non-employee
Directors for an aggregate gain of approximately $387,500.
<PAGE>
In connection with the Merger, the Company has agreed to indemnify all
former Directors and officers of the Company and its subsidiaries and, subject
to certain limitations, to maintain the directors' and officers' insurance and
indemnification policy in effect on the date of the Merger, for six years
following the date of the Merger.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

KKR, which is an affiliate of KKR Associates, may receive investment
banking fees for services rendered to the Company in connection with certain
transactions. During the Transition Period, KKR received a fee of $15 million
from the Company for arranging the Merger and the financing therefor. In
addition, KKR renders management, consulting and financial services to the
Company for an annual fee of $1 million plus expenses; $537,667, including
expenses, was paid to KKR during the Transition Period. Messrs. Raether and
Greene are general partners of KKR and Mr. Brous is an executive of KKR.

The Common Stock Partnerships hold an aggregate of 20,833,333 million
shares of Common Stock as well as Warrants to acquire 10 million additional
shares to be issued upon exercise of the Warrants. These shares of Common Stock
and the Warrants were acquired pursuant to the Merger in exchange for the stock
of Crimson Acquisition Corp. owned by the Common Stock Partnerships. The
Warrants are exercisable at a price of $12.00 per share, subject to adjustment.
The general partner of the Common Stock Partnerships is KKR Associates, a New
York limited partnership of which Henry R. Kravis, George R. Roberts, Paul E.
Raether, Robert I. MacDonnell, Michael W. Michelson, Saul A. Fox, James H.
Greene, Jr., Michael T. Tokarz, Perry Golkin, Clifton S. Robbins, Scott M.
Stuart and Edward A. Gilhuly are the general partners. KKR Associates has sole
voting and investment power with respect to such shares.

In connection with their purchases of Common Stock pursuant to the 1996
Plan, the Company extended loans on February 15, 1996 to Mr. Bolton, Mr.
Heintzman and Ms. Kranc, and on March 13, 1996 to Mr. Clark, in the amounts of
$443,253, $125,000, $93,750 and $125,000, respectively. Each loan accrues
interest at 5.65%, is payable upon the disposition of any of the Management
Shares by each such executive and is secured by the Common Stock held by each
such executive.

Prior to becoming a Director of the Company, Robert G. Tobin received a
fee of $200,000 from the Company for services rendered in connection with the
Merger.
<PAGE>
During the Transition Period, the Company purchased $133,622.12 of
inventory from C&M Food Distributors, Inc., a corporation which is owned by
Benny M. LaRussa, Jr., a former director of the Company, and his children.
<PAGE>
PERFORMANCE GRAPH

The following graph provides a comparison of the five and a half-year
cumulative total return for the Company, the Standard & Poor's 500 Index, and a
peer group of 23 companies<F1>. The comparison covers the period from the last
trading day prior to the end of Bruno's fiscal year ended June 30, 1990 to the
last trading day prior to the end of the Transition Period and assumes that
$100 was invested at the beginning of such time span. The returns of each
company have been weighted according to the companies' respective stock market
capitalization.

<F1> The selected peer group consists of the following companies: Albertson's,
Inc., American Stores Co., Buttery Food and Drug Co., Delchamps, Inc.,
Eagle Food Centers, Food Lion, Inc., Giant Food, Inc., Great Atlantic and
Pacific Tea Co., Hannaford Brothers Company, Ingles Markets, Kroger Co.,
Marsh Supermarkets, Rudduck Corp., Safeway, Inc., Seaway Food Town,
Smith's Food & Drug Centers, Inc., Southland Corp., The Stop & Shop
Companies, Inc., Supervalu, Inc., Village Supermarkets, Inc., Vons
Companies, Weis Markets, Inc, and Winn Dixie Stores, Inc.

GRAPH

<TABLE>
<CAPTION>
June 30, June 29, June 27, July 3, July 2, July 1, January 27,
1990 1991 1992 1993 1994 1995 1996
----------- ----------- ----------- ----------- ----------- ----------- ------------

<S> <C> <C> <C> <C> <C> <C> <C>
Bruno's . . . . . . . . . . $100 $125.55 $ 89.25 $ 63.16 $ 50.16 $ 82.58 $ 73.70
S&P 500 . . . . . . . . . . 100 107.40 121.80 138.40 140.35 176.94 209.40
Peer Group . . . . . . . . 100 113.51 103.41 119.27 121.24 137.98 156.26
</TABLE>
<PAGE>
PROPOSAL TWO:

SELECTION OF AUDITORS

At the Annual Meeting, Stockholders will be asked to ratify the selection
of Deloitte & Touche LLP as independent certified public accountants and tax
advisors of the Company for the current fiscal year. The Board of Directors
recommends that the Stockholders ratify such selection of Deloitte & Touche
LLP.

Deloitte & Touche LLP independent certified public accountants, have
audited the financial statements of the Company for the Transition Period ended
January 27, 1996. Services provided by Deloitte & Touche LLP included work
related to the audit of the financial statements, reviews of unaudited
quarterly financial information and preparation of state and federal income tax
returns.

A representative of Deloitte & Touche LLP is expected to attend this
meeting. He will be afforded the opportunity to make a statement, if he
desires, and will be available to respond to appropriate questions.

On September 28, 1995, the Company dismissed Arthur Andersen LLP as its
independent accountants. The reports of Arthur Andersen LLP on the financial
statements for the past two years contained no adverse opinion or disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope or
accounting principle. The Company's Audit Committee participated in and
approved the decision to change independent accountants.

In connection with its audit for the two most recent fiscal years and
through September 28, 1995, there were no disagreements with Arthur Andersen
LLP on any matter of accounting principle or practice, financial statements
disclosure, or auditing scope or procedure, which disagreements, if not
resolved to the satisfaction of Arthur Andersen LLP, would have caused them to
make reference in their report on the financial statements for such years.

The Company engaged Deloitte & Touche LLP as its new independent
accountants and tax advisors as of September 28, 1995. During the two most
recent years and through September 28, 1995, the Company has not consulted with
Deloitte & Touche LLP on items which (1) were or should have been subject to
SAS 50 or (2) concerned the subject matter of a disagreement or reportable
event with the former auditor (as described in Regulation SK Item 304(a)(2)).

PROPOSAL THREE:

APPROVAL OF 1996 STOCK PURCHASE AND OPTION PLAN
FOR KEY EMPLOYEES OF
BRUNO'S, INC. AND SUBSIDIARIES

At the Annual Meeting, Stockholders will be also asked to consider and
approve the 1996 Stock Purchase and Option Plan for Key Employees of Bruno's,
Inc. and Subsidiaries (the "1996 Plan"). The approval of the Plan requires a
<PAGE>
majority of the votes cast at the Annual Meeting. The Board of Directors
recommends that the Stockholders approve the 1996 Plan.

THE 1996 PLAN

Under the terms of the 1996 Plan, Bruno's may grant incentive awards
("Grants") to employees of, or other persons having a unique relationship to,
Bruno's or one of its subsidiaries. Grants may be in the form of "incentive
stock options" under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), other stock options, stock appreciation rights,
restricted stock, purchase stock, dividend equivalent rights, performance
units, performance shares or other stock-based grants or any combination
thereof. The 1996 Plan was approved by the Board of Directors of Bruno's (the
"Board") on September 28, 1995.

Purposes of the 1996 Plan

The purposes of the 1996 Plan are:

(1) to promote the long term financial interests and growth of Bruno's and
its subsidiaries by attracting and retaining management personnel with the
training, experience and ability to enable them to make a substantial
contribution to the success of Bruno's business;

(2) to motivate management personnel by means of growth-related incentives
to achieve long range goals; and

(3) to further the identity of interests of participants with those of the
stockholders of Bruno's through opportunities for increased stock, or
stock-based, ownership in Bruno's.

The 1996 Plan is not subject to the provisions of the Employee Retirement
Income Security Act of 1974, as amended, nor is it intended to be qualified
under Section 401(a) of the Code.

The terms upon which Grants are awarded are required to be evidenced by
written agreements consistent with the 1996 Plan ("Grant Agreements") executed
by Bruno's and the person to whom one or more Grants have been made.

Eligibility

Grants may be awarded to employees of, or other persons having a unique
relationship with, Bruno's or any of its subsidiaries. No Grants may be made
under the 1996 Plan to non-employee directors of Bruno's or its subsidiaries.
"Employees" are persons, including officers, in the regular full-time
employment of Bruno's or any of its subsidiaries who, in the opinion of the
Compensation Committee of the Board (the "Committee"), are, or are expected to
be, primarily responsible for the management, growth or protection of some part
or all of the business of the Bruno's.

As of June 1, 1996, Bruno's had 8 directors, of whom 7 are ineligible to
be awarded Grants by virtue of their service on the Committee and/or not being
employees of Bruno's or any of its subsidiaries. As of January 27, 1996,
Bruno's had approximately 26,200 employees.
<PAGE>
As used in the 1996 Plan, the term "Participant" means an employee, or
other person having a unique relationship with Bruno's or one of its
subsidiaries, to whom one or more Grants have been made and such Grants have
not all been forfeited or terminated under the 1996 Plan; provided, however, a
non-employee director of Bruno's or one of its subsidiaries may not be a
Participant.

Administration of the 1996 Plan

The Committee conducts the general administration of the 1996 Plan in
accordance with the 1996 Plan's provisions. The Committee may adopt its own
rules of procedure and the action of a majority of the Committee, taken at a
meeting or taken without a meeting by a writing signed by such majority,
constitutes action by the Committee. The Committee has the power and authority
to administer, construe and interpret the 1996 Plan, to make rules for carrying
it out and to make changes in such rules. Any such interpretations, rules and
administration shall be consistent with the basic purposes of the 1996 Plan.

The Committee consists of one or more members of the Board. It is
appointed by and serves at the pleasure of the Board and is subject to the
supervision and control of the Board. None of the members of the Committee are
eligible to be selected for Grants under the 1996 Plan, or can have been so
eligible for selection within one year prior to their appointment. The members
of the Committee must qualify to administer the 1996 Plan for purposes of Rule
16b-3 (and any other applicable rule) promulgated under Section 16 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").

The Committee may delegate to the Chief Executive Officer and to other
senior officers of Bruno's its duties under the 1996 Plan subject to such
conditions and limitations as the Committee shall prescribe, except that only
the Committee may designate and make Grants to Participants who are subject to
Section 16 of the Exchange Act.

The Committee may employ attorneys, consultants, accountants, appraisers,
brokers or other persons. The Committee, Bruno's and the officers and directors
of Bruno's shall be entitled to rely upon the advice, opinions or valuations of
any such persons. All actions taken and all interpretations and determinations
made by the Committee in good faith shall be final and binding upon all
Participants, Bruno's and all other interested persons. No member of the
Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the 1996 Plan or the Grants,
and all members of the Committee shall be fully protected by Bruno's with
respect to any such action, determination or interpretation.

The Committee may from time to time make Grants under the 1996 Plan to
employees or other persons having a unique relationship with Bruno's or any of
its subsidiaries and in such form and having such terms, conditions and
limitations as the Committee may determine, subject to the provisions of the
1996 Plan. No Grants may be made under this 1996 Plan to non-employee directors
of Bruno's or any of its subsidiaries. The terms, conditions and limitations of
each Grant under the 1996 Plan must be set forth in an agreement (the "Grant
Agreement"), in a form approved by the Committee, consistent, however, with the
terms of the 1996 Plan; provided that Grant Agreements will contain provisions
dealing with the treatment of Grants in the event of the termination, death or
<PAGE>
disability of a Participant and may also include provisions concerning the
treatment of Grants in the event of a change of control of Bruno's. Subject to
the provisions of the 1996 Plan, the Committee will determine the forms and
amounts of Grants for Participants. The Committee has the authority to make
such amendments to any terms and conditions applicable to outstanding Grants as
are consistent with the 1996 Plans, provided that, except for adjustments under
the adjustment provisions discussed below, no such action shall modify such
Grant in a manner adverse to the Participant without the Participant's consent
except as such modification is provided for or contemplated in the terms of the
Grant.

The current members of the Committee, all of whom are members of the
Board, are Paul E. Raether, James H. Greene, Jr. and Nils P. Brous. The
business address of Messrs. Raether and Brous is 9 West 57th Street, New York,
New York 10022. The business address of Mr. Greene is 2800 Sand Hill Road,
Suite 200, Menlo Park, California 94025.
Securities Offered Pursuant to the 1996 Plan

The total number of shares of Common Stock available for grants under the
1996 Plan is 2,050,000 shares of the authorized Common Stock as of the
effective date of the 1996 Plan. The number of shares of Common Stock subject
to grants under the 1996 Plan to any one Participant may not be more than
500,000 shares.

Unless restricted by applicable law, shares of Common Stock related to
Grants (other than Grants of purchased Purchase Stock (as hereinafter defined))
that are forfeited, terminated, cancelled or expire unexercised will
immediately become available for other Grants.

In the event of any change in the outstanding Common Stock by reason of a
stock split, spin-off, stock dividend, stock combination or reclassification,
recapitalization or merger, change of control, or similar event, the Committee
may adjust appropriately the number of shares of Common Stock subject to the
1996 Plan and available for or covered by Grants and prices per share of Common
Stock related to outstanding Grants or to grant the right to purchase
additional Company Stock for par value or grant options with an exercise price
of par value in the event the Common Stock Partnerships exercise the Warrants
and make such other revisions to outstanding Grants as it deems are equitably
required.

In its absolute discretion, and on such terms and conditions as it deems
appropriate, coincident with or after the grant of any Stock Option or any
Stock-Based Grant, the Committee may provide that such Stock Option or Stock-
Based Grant cannot be exercised after the merger or consolidation of the
Company into another corporation, the exchange of all or substantially all of
the assets of the Company for the securities of another corporation, the
acquisition by another corporation of 80% or more of the Company's then
outstanding shares of voting stock or the recapitalization, reclassification,
liquidation or dissolution of the Company, and if the Committee so provides, it
may, in its absolute discretion and on such terms and conditions as it deems
appropriate, also provide, either by the terms of such Stock Option or Stock-
Based Grant or by a resolution adopted prior to the occurrence of such merger,
consolidation, exchange, acquisition, recapitalization, reclassification,
<PAGE>
liquidation or dissolution, that, for some period of time prior to such event,
such Stock Option or Stock-Based Grant shall be exercisable as to all shares
subject thereto, notwithstanding anything to the contrary herein (but subject
to certain limits set forth in the 1996 Plan) and that, upon the occurrence of
such event, such Stock Option or Stock-Based Grant shall terminate and be of no
further force or effect; provided, however, that the Committee may also
provide, in its absolute discretion, that even if the Stock Option or Stock-
Based Grant shall remain exercisable after any such event, from and after such
event, any such Stock Option or Stock-Based Grant shall be exercisable only for
the kind and amount of securities and/or other property, or the cash equivalent
thereof, receivable as a result of such event by the holder of a number of
shares of stock for which such Stock Option or Stock-Based Grant could have
been exercised immediately prior to such event.

The 1996 Plan provides that, unless the Committee determines otherwise, no
benefit or promise under the 1996 Plan shall be secured by any specific assets
of Bruno's or any of its subsidiaries, nor shall any assets of Bruno's or its
subsidiaries be designated as attributable or allocated to the satisfaction of
Bruno's' obligations under the 1996 Plan.

No Grants may be made under the 1996 Plan after April 6, 2002, but the
terms of Grants made on or before the expiration of the 1996 Plan may extend
beyond such expiration. At the time a Grant is made or amended or the terms or
conditions of a Grant are changed, the Committee may provide for limitations or
conditions on such Grant.

Deferrals of Grant payouts may be provided for, at the sole discretion of
the Committee, in the Grant Agreements.

Grants

Grants may be granted singly, in combination or in tandem. Grants, in the
Committee's sole discretion, may take the form of Incentive Stock Options,
Other Stock Options, Stock Appreciation Rights, Restricted Stock, Purchase
Stock, Dividend Equivalent Rights, Performance Units, Performance Shares or
Other Stock-Based Grants (each as hereinafter defined).

"Incentive Stock Options" are stock options within the meaning of Section
422 of the Code to purchase Common Stock. In addition to other restrictions
contained in the 1996 Plan, an Incentive Stock Option (i) may not be exercised
more than ten years after the date it is granted, (ii) may not have an option
price less than the Fair Market Value (as hereinafter defined) of Common Stock
on the date the option is granted, (iii) must otherwise comply with Section 422
of the Code and (iv) must be designated as an "Incentive Stock Option" by the
Committee. The maximum aggregate Fair Market Value of Common Stock (determined
at the time of each Grant) with respect to which any Participant may first
exercise Incentive Stock Options under the 1996 Plan and any Incentive Stock
Options granted to the Participant for such year under any plans of the Company
or any of its subsidiaries in any calendar year is $100,000. Payment of the
option price must be made in cash or in shares of Common Stock, or a
combination thereof, in accordance with the terms of the 1996 Plan, the Grant
Agreement and any applicable guidelines of the Committee in effect at the time.
<PAGE>
"Other Stock Options" or "Non-Qualified Options" are options to purchase
Common Stock which are not designated by the Committee as "Incentive Stock
Options" (together, Other Stock Options and Non-Qualified Options, "Options").
At the time of the Grant the Committee will determine, and have contained in
the Grant Agreement or other 1996 Plan rules, the option exercise period, the
option price and such other conditions or restrictions on the grant or exercise
of the Option as the Committee deems appropriate, which may include the
requirement that the grant of Options is predicated on the acquisition of
Purchase Stock by the optionee. In addition to other restrictions contained in
the 1996 Plan, a Non-Qualified Option (i) may not be exercised more than 10
years after the date it is granted and (ii) may not have an option exercise
price less than 50% of the Fair Market Value of Common Stock on the date the
option is granted.

"Stock Appreciation Rights" or "SARS" are rights that on exercise entitle
the holder to receive the excess of (i) the Fair Market Value of a share of
Common Stock on the date of exercise over (ii) the Fair Market Value on the
date of Grant (the "base value") multiplied by (iii) the number of rights
exercised in cash, stock or a combination thereof as determined by the
Committee. Stock Appreciation Rights granted under the 1996 Plan may, but need
not be, granted in conjunction with an option. The Committee, in the Grant
Agreement or by other 1996 Plan rules, may impose such conditions or
restrictions on the exercise of Stock Appreciation Rights as it deems
appropriate, and may terminate, amend or suspend such Stock Appreciation Rights
at any time. No Stock Appreciation Right granted under the 1996 Plan may be
exercised less than six months or more than 10-years after the date it is
granted except in the event of death or disability of a Participant. To the
extent that any Stock Appreciation Right that shall have become exercisable,
but shall not have been exercised or cancelled or, by reason of any termination
of employment, shall have become non-exercisable, it shall be deemed to have
been exercised automatically, without any notice of exercise, on the last day
of which it is exercisable, provided that any conditions or limitations on its
exercise are satisfied (other than (i) notice of exercise and (ii) exercise or
election to exercise during the period prescribed) and the Stock Appreciation
Right shall then have value. Such exercise will be deemed to specify that the
holder elects to receive cash and that such exercise of a Stock Appreciation
Right shall be effective as of the time of automatic exercise.

"Restricted Stock" is Common Stock delivered to a Participant with or
without payment of consideration with restrictions or conditions on the
Participant's right to transfer or sell such stock; provided that the price of
any Restricted Stock delivered for consideration and not as bonus stock may not
be less than 50% of the Fair Market Value of Common Stock on the date such
Restricted Stock is granted or the price of such Restricted Stock may be the
par value. If a Participant irrevocably elects in writing in the calendar year
preceding a Grant of Restricted Stock, dividends paid on the Restricted Stock
granted may be paid in shares of Restricted Stock equal to the cash dividend
paid on Common Stock. The number of shares of Restricted Stock and the
restrictions or conditions on such shares will be as the Committee determines,
in the Grant Agreement or by other 1996 Plan rules, and the certificate for the
Restricted Stock will bear evidence of the restrictions or conditions. No
Restricted Stock may have a restriction period of less than six months, other
than in the case of death or disability.
<PAGE>
"Purchase Stock" are shares of Common Stock offered to a Participant at
such price as determined by the Committee, the acquisition of which will make
him eligible to receive a Grant under the 1996 Plan, including, but not limited
to Other Stock Options; provided that the price of such Purchase Stock may not
be less than 50% of the Fair Market Value of the Common Stock on the date such
shares of Purchase Stock are offered.

"Dividend Equivalent Rights" are rights to receive cash payments from the
Company at the same time and in the same amount as any cash dividends paid on
an equal number of shares of Common Stock to shareholders of record during the
period such rights are effective. The Committee, in the Grant Agreement or by
other 1996 Plan rules, may impose such restrictions and conditions on the
Dividend Equivalent Rights, including the date such rights will terminate, as
it deems appropriate and may terminate, amend or suspend such Dividend
Equivalent Rights at any time.

"Performance Units" are rights to receive at a specified future date
payment in cash of an amount equal to all or a portion of the value of a unit
granted by the Committee. At the time of the Grant, in the Grant Agreement or
by other 1996 Plan rules, the Committee must determine the base value of the
unit, the performance factors applicable to the determination of the ultimate
payment value of the unit and the period over which the Company's performance
will be measured. These factors must include a minimum performance standard for
the Bruno's below which no payment will be made and a maximum performance level
above which no increased payment will be made. The term over which Bruno's
performance will be measured must be not less than six months.

"Performance Shares" are rights to receive at a specified future date
payment in cash or Common Stock, as determined by the Committee, of an amount
equal to all or a portion of the Fair Market Value for all days that the Common
Stock is traded during the last 45 days of the specified period of performance
of a specified number of shares of Common Stock at the end of a specified
period based on Bruno's performance during the period. At the time of the
Grant, the Committee, in the Grant Agreement or by 1996 Plan rules, will
determine the factors which will govern the portion of the rights so payable
and the period over which Bruno's performance will be measured. The factors
will be based on Bruno's performance and must include a minimum performance
standard for the Bruno's below which no payment will be made and a maximum
performance level above which no increased payment will be made. The term
over which Bruno's performance will be measured must be not less than six
months. Performance Shares will be granted for no consideration.

The Committee may make "Other Stock-Based Grants" under the 1996 Plan
pursuant to which shares of Common Stock (which may, but need not, be shares of
Restricted Stock) are or may in the future be acquired, or Grants denominated
in stock units, including Grants valued using measures other than market value.
Other Stock-Based Grants may be granted with or without consideration;
provided, however, that the price of any such Grant made for consideration that
provides for the acquisition of shares of Common Stock or other equity
securities of Bruno's may not be less than 50% of the Fair Market Value of the
Common Stock or such other equity securities on the date of grant of such
Grant. Such Other Stock-Based Grants may be made alone, in addition to or in
<PAGE>
tandem with any Grant of any type made under the 1996 Plan and must be
consistent with the purposes of the 1996 Plan.

Under the terms of the 1996 Plan, "Fair Market Value" means such value of
a share of Common Stock as reported for stock exchange transactions and/or
determined in accordance with any applicable resolutions or regulations of the
Committee in effect at the relevant time.

The Committee may make Grants to employees who are subject to the laws of
nations other than the United States, which Grants may have terms and
conditions that differ from the terms thereof as provided elsewhere in the 1996
Plan for the purpose of complying with foreign laws.

Rights in the Event of Death or Termination of Employment; Rights in the Event
of Merger; Assignment

Grant Agreements must contain provisions dealing with the treatment of
Grants in the event of the termination, death or disability of a Participant.
Grant Agreements may also include provisions concerning the treatment of Grants
in the event of a change of control of Bruno's.

No election as to benefits or exercise of options, Stock Appreciation
Rights or other rights may be made during a Participant's lifetime by anyone
other than the Participant except by a legal representative appointed for or by
the Participant.

For purposes of the 1996 Plan, unless the Committee determines otherwise:
(a) a transfer of a Participant's employment without an intervening period of
separation among Bruno's and any subsidiary of Bruno's shall not be deemed a
termination of employment and (b) a Participant who is granted in writing a
leave of absence shall be deemed to have remained in the employ of Bruno's
during such leave of absence.

Other than as specifically provided with regard to the death of a
Participant, no benefit under the 1996 Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge, and any attempt to do so shall be void. No such benefit shall, prior to
receipt thereof by the Participant, be in any manner liable for or subject to
the debts, contracts, liabilities, engagements or torts of the Participant.

The 1996 Plan provides that nothing contained therein shall affect the
right of Bruno's to terminate any Participant's employment at any time or for
any reason.

Amendment and Termination of the 1996 Plan

The Board may amend, suspend or terminate the 1996 Plan except that no
such action, other than an action under the adjustment provisions of the 1996
Plan, may be taken which would, without shareholder approval, increase the
aggregate number of shares of Common Stock available for Grants under the 1996
Plan, decrease the price of outstanding options, change the requirements
relating to the Committee or extend the term of the 1996 Plan.

Unless previously terminated by the Board, the 1996 Plan will terminate on
July 11, 2006.
<PAGE>
CERTAIN FEDERAL INCOME TAX MATTERS

With respect to the United States federal income tax consequences of the
1996 Plan, the Company has been advised as follows:

Incentive Stock Options. Under present law, a Participant will not realize
taxable income upon either the grant or the exercise of an Incentive Stock
Option, and the Company employer will not receive an income tax deduction at
either such time. If the Participant does not dispose of Common Stock acquired
upon exercise of the Incentive Stock Option within either (i) two years after
the date of the grant of the Incentive Stock Option or (ii) one year after the
date of exercise, a subsequent sale of Shares will be taxed as long-term
capital gain or loss. If the Participant, within either of the above periods,
disposes of Common Stock acquired upon exercise of the Incentive Stock Option,
the Participant will generally realize as ordinary income an amount equal to
the lesser of (i) the gain realized by the Participant on such disposition or
(ii) the excess of the fair market value of the Common Stock on the date of the
exercise over the exercise price. In such event, the Company generally would be
entitled to an income tax deduction equal to the amount recognized as ordinary
income by the Participant. Any gain in excess of such amount realized by the
Participant as ordinary income would be taxed as short-term or long-term
capital gain (depending on the holding period). The difference between the
exercise price and the fair market value of the Common Stock at the time of
Incentive Stock Option is exercised will be an adjustment in computing
alternative minimum taxable income for the purpose of the alternative minimum
tax imposed by Section 55 on the Code.

Other Stock Options or Non-Qualified Options. Under present law, a
Participant will not realize taxable income upon the grant of Other Stock
Options or Non-Qualified Options and the Company will not receive an income tax
deduction at such time. Upon exercise of Other Stock Options or Non-Qualified
Options, the Participant will generally realize ordinary income in an amount
equal to the excess of the fair market value of the Common Stock on the date of
exercise over the exercise price. Upon a subsequent sale of the Common Stock,
the Participant will recognize short-term or long-term capital gain depending
upon his or her holding period for the Common Stock. The Company is generally
allowed an income tax deduction equal to the amount recognized as ordinary
income by the Participant.

Stock Appreciation Rights. Amounts received by the Participant upon the
exercise of Stock Appreciation Rights are taxed at ordinary rates when
received. The Company is generally allowed an income tax deduction equal to the
amount recognized as ordinary income by the Participant.

Performance Units and Performance Shares. Amounts received by the
Participant pursuant to Performance Units or Performance Shares are taxed at
ordinary rates when received; however, if a Participant has the right to
receive payment pursuant to Performance Units or Performance Shares and chooses
to defer receipt of such payment, he or she may be subject to taxation at
ordinary rates at the time he or she first had the right to receive payment.

Other Stock-Based Awards. Amounts received by the Participant upon the
grant of Other Stock-Based Awards are ordinarily taxed at ordinary rates when
received. However, if such awards consist of property subject to restrictions,
<PAGE>
the amounts generally will not be taxed until the restrictions lapse or until
the Participant makes an election under Section 83(b) of the Code. Subject to
Section 162(m) of the Code, the Company employer is generally allowed an income
tax deduction, equal to the amount recognized as ordinary income by the
Participant, at the time such amount is taxed.

Compliance with Section 162(m). The 1996 Plan should allow certain
Incentive Stock Options, Other Stock Options, Non-Qualified Options, Stock
Appreciation Rights and Other Stock Based Awards granted under the 1996 Plan to
be treated as qualified performance-based compensation under Section 162(m) of
the Code. The Committee may, however, from time to time award compensation that
is not deductible under Section 162(m) of the Code.

PURCHASES AND GRANTS UNDER THE 1996 PLAN

Following the Transition Period, under the 1996 Plan, the Company and each
of William J. Bolton, David Clark, Michael F. Heintzman and Lisa R. Kranc
executed (i) Management Stockholder's Agreements, pursuant to which, among
other things, such officers purchased 83,333, 20,833, 20,833 and 15,625 shares
of Common Stock (the "Management Shares") at a purchase price of $12.00 per
share and received certain registration rights with respect to such Common
Stock and (ii) Non-Qualified Stock Option Agreements, pursuant to which Mr.
Bolton, Mr. Clark, Mr. Heintzman and Ms. Kranc were granted Non-Qualified
Options to purchase, at a price of $12.00 per share, up to 250,000 shares,
62,500 shares, 62,500 shares and 46,875 shares of Common Stock, respectively.
Half of such Options are "Time Options" and half are "Performance Options."
Time Options vest 20% per year over the five year period following the award
date, while Performance Options vest 20% per year on the August 18 following a
year in which certain annual and cumulative cash flow targets are achieved,
subject to "catch-up vesting" for unmet target years upon the attainment of
cash flow targets in subsequent years. Regardless of performance against cash
flow targets, all Performance Options vest seven years from the grant date.
Vesting ceases upon termination of the employment; however Time Options vest in
full upon death or disability or retirement. The Time Options and Performance
Options expire upon the earlier of (i) 10 years following the grant date, (ii)
the first anniversary of death or disability or retirement, (iii) a specified
period following any termination of employment other than for cause, (iv)
termination for cause and (v) the date of any merger or reconsolidation.
Exercisability of Time Options will accelerate upon a change of control of the
Company. As of June 14, 1996, the market price of the Common Stock, as reported
on over-the-counter "pink sheets" was $13.25.

The Company also expects to enter into Management Stockholder's Agreements
and Non-Qualified Stock Option Agreements with James J. Hagan, who became the
Company's Senior Vice President and Chief Financial Officer in May 1996, and
Walter M. Grant, who became the Company's Senior Vice President and General
Counsel in June 1996, pursuant to which Messrs. Hagan and Grant would purchase
shares of Common Stock and receive Non-Qualified Options. See "Employment
Contracts with Executive Officers."

In connection with their purchases of the Management Shares pursuant to
the 1996 Plan, the Company extended loans on February 15, 1996 to Mr. Bolton,
Mr. Heintzman and Ms. Kranc, and on March 13, 1996 to Mr. Clark, in the amounts
<PAGE>
of $443,253, $125,000, $93,750 and $125,000, respectively. Each loan accrues
interest at 5.65%, is payable upon the disposition of any of the Management
Shares by each such executive and is secured by the Common Stock held by each
such executive.

STOCKHOLDERS LIST

A complete list of the Stockholders entitled to vote at the annual meeting
of Stockholders to be held July 11, 1996, will be available for inspection
during normal business hours at the principal office of the Company for a
period of at least 10 days prior to the meeting, upon written request to the
Company by a Stockholder, and at all times during the annual meeting at the
place of the meeting.

STOCKHOLDER PROPOSALS

In order for proposals by Stockholders to be considered for inclusion in
the Proxy and Proxy Statement relating to the 1997 Annual Meeting of
Stockholders, such proposals must be received by the Secretary of Bruno's at
the principal executive offices of Bruno's on or before March 14, 1997.
<PAGE>
OTHER MATTERS

Management of Bruno's does not know of any other matters to be brought
before the meeting. If any other matter properly comes before the Annual
Meeting, it is intended that the holders of Proxies will act in respect thereof
in accordance with their best judgement.

Proxies may be solicited by personal interview, telephone or mail. Banks,
brokerage houses and other custodians, nominees or fiduciaries will be
requested to forward soliciting materials to their principals and to obtain
authorization for the execution of Proxies, and, upon request, will be
reimbursed for their reasonable out-of-pocket expenses incurred in that
process. The Company will bear the cost of the solicitation of proxies which is
expected to be nominal.

By Order of the Board of Directors,

/s/ Walter M. Grant
Walter M. Grant
Secretary

BRUNO'S HAS SENT A COPY OF ITS REPORT ON FORM 10-K FOR THE TRANSITION
PERIOD ENDED JANUARY 27, 1996, INCLUDING FINANCIAL STATEMENTS, TO EACH OF ITS
STOCKHOLDERS OF RECORD ON JUNE 11, 1996 AND EACH BENEFICIAL STOCKHOLDER ON THAT
DATE. IF YOU HAVE NOT RECEIVED YOUR COPY, BRUNO'S WILL PROVIDE A COPY WITHOUT
CHARGE (A REASONABLE FEE WILL BE CHARGED FOR EXHIBITS), UPON RECEIPT OF A
WRITTEN REQUEST THEREFOR MAILED TO THE COMPANY'S OFFICES, ATTENTION: SECRETARY.
<PAGE>
BRUNO'S, INC.
BIRMINGHAM, ALABAMA

THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS FOR THE ANNUAL MEETING
OF STOCKHOLDERS ON THE 11TH DAY OF JUNE, 1996.

The undersigned hereby appoints William J. Bolton and James J. Hagan, and
each of them, each with the power to appoint his substitute, attorneys with the
powers the undersigned would possess if personally present to vote all of the
Common Stock of Bruno's, Inc. held of record by the undersigned on June 11,
1996, at the annual meeting of the Stockholders to be held on the 11th day of
July 1996, at the offices of Bruno's, Inc., 800 Lakeshore Parkway, Birmingham,
Alabama 35211, at 9:00 o'clock a.m. Central Time, and at any adjournments
thereof, upon the matters set forth below and described in the notice and proxy
statement for said meeting, copies of which have been received by the
undersigned; and, in their discretion, upon all other matters which may come
before the meeting. Without otherwise limiting the general authorization hereby
given, said attorneys are instructed to vote as follows on the matters set
forth below:

(1) ELECTION OF DIRECTORS

/ / FOR all nominees listed below
(except as marked to the contrary below)

/ / WITHHOLD AUTHORITY
to vote for all nominees listed below

INSTRUCTION--TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.

William J. Bolton, Henry R. Kravis, George R. Roberts, Paul E.
Raether, James H. Greene, Jr., Nils P. Brous, Ronald G. Bruno and
Robert G. Tobin.

(2) Proposal to ratify the engagement of the accounting firm of Deloitte
& Touche LLP as independent public accountants and tax advisors for
the current fiscal year.

FOR / / AGAINST / / ABSTAIN / /

(3) Proposal to approve the 1996 Stock Purchase and Option Plan for Key
Employees of Bruno's, Inc. and Subsidiaries.

FOR / / AGAINST / / ABSTAIN / /

(4) In their discretion, upon such other matters as may properly come
before the meeting.

AUTHORIZED / / NOT AUTHORIZED / /
<PAGE>
The shares represented by this proxy will be voted in accordance with the
specifications made by the undersigned herein. IF NO SPECIFICATION IS MADE,
THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3.

Please mark, sign, date and return this proxy in the enclosed envelope as
soon as possible, even though you plan to attend this meeting.

To help our preparations for the meeting, please check here if you plan to
attend. / /
<PAGE>
SIGN HERE EXACTLY AS NAME(S) APPEAR(S) ABOVE

______________________ Date: ______

When shares are held by joint tenants, both should
sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by
president or other authorized officer. If a partnership,
please sign in partnership name by authorized person.

If your address has changed, please note new
address:

Address:_____________________________

Zip Code ________________________