DOMINICKS SUPERMARKETS INC, DEF 14A, 1998-02-02

DOMINICKS SUPERMARKETS INC
DEF 14A, 1998-02-02
GROCERY STORES

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<PAGE> 1

SCHEDULE 14A

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-1l(c) or
Section 240.14a-12

DOMINICK'S SUPERMARKETS, 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] No fee required
[ ] 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: Not
Applicable
(2) Aggregate number of securities to which transaction applies: Not
Applicable.
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: Not Applicable.
(4) Proposed maximum aggregate value of transaction: Not Applicable.
(5) Total fee paid: Not Applicable.

[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-1l(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: Not Applicable.
(2) Form, Schedule or Registration Statement No.: Not Applicable.
(3) Filing party: Not Applicable
(4) Date filed: Not Applicable.

<PAGE> 2

DOMINICK'S SUPERMARKETS, INC.
505 RAILROAD AVENUE
NORTHLAKE, ILLINOIS 60164
-----------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 3, 1998
-----------------------------------

The 1998 Annual Meeting of Stockholders (the "Annual Meeting") of
Dominick's Supermarkets, Inc. (the "Company") will be held at the Park Hyatt
Los Angeles Hotel at Century City located at 2151 Avenue of the Stars, Los
Angeles, California 90067, on Tuesday, March 3, 1998, at 1:00 p.m., local time,
for the following purposes:

1. To elect four directors to serve until the 2001 Annual Meeting of
Stockholders of the Company and until their successors are elected and
qualified;

2. To approve the Dominick's Supermarkets, Inc. 1997 Employee Stock
Purchase Plan, to be effective as of March 3, 1998, as described
herein; and

3. To transact such other business as may properly come before the Annual
Meeting.

The Board of Directors of the Company (the "Board of Directors") has fixed
the close of business on Friday, January 23, 1998 as the record date for the
determination of stockholders entitled to notice of, and to vote at, the Annual
Meeting and any adjournment thereof.

In order to ensure your representation at the Annual Meeting, you are
requested to sign and date the enclosed proxy as promptly as possible and
return it in the enclosed envelope. If you attend the Annual Meeting and vote
your shares in person or file with the Secretary of the Company an instrument
revoking your proxy or a duly executed proxy bearing a later date, your proxy
will not be used.

All stockholders are cordially invited to attend the Annual Meeting.

By Order of the Board of Directors,

/s/ Deborah C. Paskin
Deborah C. Paskin
Secretary

February 4, 1998

<PAGE> 3

DOMINICK'S SUPERMARKETS, INC.
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
MARCH 3, 1998

This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Dominick's Supermarkets, Inc., a Delaware
corporation (the "Company"), of proxies in the form enclosed for use at the
Company's 1998 Annual Meeting of Stockholders (the "Annual Meeting") to be held
on Tuesday, March 3, 1998, or any adjournment or postponement of such meeting,
for the purposes set forth in the attached Notice of Annual Meeting of
Stockholders. The approximate date on which this Proxy Statement and
accompanying proxy card will first be sent to the Company's stockholders is
February 4, 1998.

Holders of record of common stock, par value $.01 per share (the
"Common Stock"), of the Company as of the close of business on January 23, 1998
are entitled to receive notice of, and to vote at, the Annual Meeting. The
outstanding Common Stock constitutes the only class of securities of the
Company entitled to vote at the Annual Meeting, and each share of Common Stock
entitles the holder thereof to one vote. Stockholders are not permitted to
cumulate their shares for the purpose of electing directors or otherwise. At
the close of business on January 23, 1998, there were 18,483,007 shares of
Common Stock and 2,884,326 shares of Class B common stock, which is convertible
into shares of Common Stock on a share-for-share basis at the election of the
holder at anytime, issued and outstanding.

A majority of the outstanding shares of Common Stock, represented in
person or by proxy, will constitute a quorum to conduct business at the Annual
Meeting. Stockholders who return properly signed proxy cards will have the
number of shares of Common Stock represented by such proxy cards counted as
"present" for purposes of establishing a quorum and determining the number of
votes needed for approval of all proposals before the Annual Meeting other than
the election of directors. Any stockholder who returns the proxy card but who
does not desire to vote and wishes to record this fact may abstain from voting
by marking the appropriate space on the proxy card. However, proxy cards marked
as abstaining and proxy cards containing broker non-votes will be counted as
present for both the purpose of establishing a quorum and the purpose of
determining the number of votes needed for approval of all proposals before the
Annual Meeting other than the election of directors. Directors will be elected
by a plurality of the votes of shares of Common Stock present in person or
represented by proxy at the Annual Meeting and entitled to vote on the election
of directors. Votes withheld and shares not voted will have no effect on the
election of directors. With regard to the proposal to approve the 1997 Employee
Stock Purchase Plan, approval will require the affirmative vote of the majority
of the shares present in person or represented by proxy at the Annual Meeting.
Abstentions on this proposal will have the effect of a negative vote. Under the
rules of the New York Stock Exchange, brokers who hold shares in street name
have discretionary authority to vote on certain proposals when they have not
received instructions from beneficial owners. On certain other matters,
however, brokers may not vote shares held for customers without specific
instructions from the customer. Any resulting broker non-vote on such a matter
would also have the effect of a negative vote.

Unless contrary instructions are indicated on the proxy, all shares
represented by valid proxies received pursuant to this solicitation (and not
revoked before they are voted) will be voted at the Annual Meeting FOR the
nominees named below for election as Directors and FOR the approval of the
Dominick's Supermarkets, Inc. 1997 Employee Stock Purchase Plan. With respect
to any other business which may properly come before the Annual Meeting and be
submitted to a vote of stockholders, proxies received by the Company will be
voted in accordance with the best judgment of the designated proxy holders. A
stockholder may revoke his or her proxy at any time before exercise by
delivering to the Secretary of the Company a written notice of such revocation,
by filing with the Secretary of the Company a duly executed proxy bearing a
later date, or by voting in person at the Annual Meeting.

This solicitation is made on behalf of the Board of Directors of the
Company (the "Board of Directors"). Costs of the solicitation will be borne by
the Company. Directors, officers and employees of the Company and its
affiliates may also solicit proxies by telephone, telegraph, fax or personal
interview. The Company will reimburse banks, brokerage firms and other
custodians, nominees and fiduciaries for reasonable expenses incurred by them
in sending proxy material to stockholders. Kissel-Blake Inc. will assist in the
solicitation of proxies by the Company for an estimated fee of $1,500, plus
reasonable out-of-pocket expenses.

The principal executive offices of the Company are located at 505
Railroad Avenue, Northlake, Illinois 60164. The Company's telephone number is
(708) 562-1000.

<PAGE> 4

PROPOSAL NO. 1:
ELECTION OF DIRECTORS

GENERAL

The Board of Directors is currently comprised of eleven members divided
into three classes serving staggered terms of three years each. Pursuant to the
Company's Amended and Restated Certificate of Incorporation (the "Certificate
of Incorporation") and Amended and Restated Bylaws (the "Bylaws"), the term of
office of one class of directors expires each year and at each annual meeting
the successors of the class whose term is expiring in that year are elected to
hold office for a term of three years and until their successors are elected
and qualified. The current terms of four directors expire in each of 1998 and
2000, and the current terms of three directors expire in 1999.

In the absence of instructions to the contrary, the persons named as
proxy holders in the accompanying proxy intend to vote in favor of the election
of the four nominees designated below, all of whom are currently directors of
the Company, to serve until the 2001 Annual Meeting of Stockholders of the
Company and until their respective successors are elected and qualified. The
Board of Directors expects that each of the nominees will be available to serve
as a director, but if any such nominee should become unavailable for election,
it is intended that the shares represented by the proxy will be voted for such
substitute nominee as may be designated by the Board of Directors.

Under the Bylaws, nominations of persons for election to the Board of
Directors, other than those made by or at the direction of the Board of
Directors, may be made at the Annual Meeting only if pursuant to a timely
notice thereof to the Secretary of the Company. To be timely, a stockholder's
notice must be delivered to the Secretary of the Company at the principal
executive offices of the Company not later than the close of business on the
60th day nor earlier than the close of business on the 90th day prior to the
first anniversary of the preceding year's annual meeting. A notice of
nomination must set forth certain information as required under the Bylaws.

NOMINEES FOR ELECTION AS DIRECTOR
<TABLE>
<CAPTION>

Present Position
Name Age With the Company Director Since
- --------------- --- ------------------ --------------
<S> <C> <C> <C>
Grace Barry 56 Director 1997

Peter P. Copses 39 Director 1995

Robert A. Mariano 47 President, Chief Executive 1995
Officer and Director

Ira L. Tochner 36 Director 1997

</TABLE>

GRACE BARRY has served as a director of the Company since January 1997.
Ms. Barry has been the Executive Director of The Economic Club of Chicago since
July 1986. From 1991 through 1995, Ms. Barry was the President and owner of Cafe
Galleria, Inc., a retail company in the food and gift business. In 1994, Ms.
Barry co-founded Grabur International, Inc., a retail gift and concession
business. From 1989 through 1996, Ms. Barry served as the Cable Commissioner for
the City of Chicago. Ms. Barry also serves on the boards of The Chicago Network,
The Joffrey Ballet of Chicago, Institute for Urban Life, The Golden Apple
Foundation, Toronto Sister Cities Committee, Old St. Patrick's Church and The
Arts Matter.

PETER P. COPSES has served as a director of the Company since March
1995. Mr. Copses also has served as a director of Food 4 Less Holdings, Inc.
("Food 4 Less") and Ralphs Grocery Company ("Ralphs") since 1995. Since 1990,
Mr. Copses has been a limited partner of Apollo Advisors, L.P. ("Apollo")
which, together with an affiliate, serves as managing general partner of the
Apollo Investment Funds, and of Lion Advisors, L.P. which serves as financial
advisor to certain institutional investors with respect to securities
investments. From March to September 1990, Mr. Copses was a Vice President in
the investment banking department of Donaldson, Lufkin & Jenrette Securities
Corporation. Mr. Copses is also a director of Family Restaurants, Inc., Paragon
Health Network, Inc. and Zale Corporation.

<PAGE> 5

ROBERT A. MARIANO has been the President and a director of the Company
since March 1995 and Chief Executive Officer since January 1996. Mr. Mariano
also served as Chief Operating Officer from March 1995 until January 1996. Mr.
Mariano joined the Company in 1972 and was Senior Vice President of Marketing
and Merchandising from 1994 to 1995, Senior Vice President of Perishable
Merchandising from 1989 to 1994, Senior Vice President of Operations from 1987
to 1989, and held a number of managerial positions prior to 1987.

IRA L. TOCHNER has served as a director of the Company since January
1997. Mr. Tochner joined The Yucaipa Companies ("Yucaipa") in 1990 and became a
general partner in 1995. Prior to 1990, Mr. Tochner was employed by Arthur
Andersen & Co. as a manager.

DIRECTORS CONTINUING IN OFFICE

DIRECTOR TERM
Name AGE SINCE EXPIRES

<S> <C> <C> <C>
Ronald W. Burkle ............. 45 1995 2000

Evan Bayh .................... 42 1997 2000

Linda McLoughlin Figel ....... 34 1996 1999

Patrick L. Graham ............ 48 1995 2000

David B. Kaplan .............. 30 1995 1999

Darren W. Karst .............. 38 1995 1999

Antony P. Ressler ............ 37 1995 2000

</TABLE>

RONALD W. BURKLE has been Chairman of the Board of the Company since
March 1995 and served as Chief Executive Officer from March 1995 to January
1996. Mr. Burkle co-founded Yucaipa, a private investment group specializing in
the acquisition and management of supermarket chains, in 1986. Mr. Burkle has
served as director and Chairman of the Board of Food 4 Less, whose principal
operating subsidiary is Ralphs, and Chairman of the Board and Chief Executive
Officer of its predecessor, Food 4 Less Supermarkets, Inc., since 1987. Mr.
Burkle also served as Chairman of the Board of Smitty's Supermarkets, Inc.
("Smitty's") from June 1994 until its merger in May 1996 with Smith's Food &
Drug Centers, Inc. ("Smith's"). He served as Chief Executive Officer of Smith's
from May 1996 until its merger with Fred Meyer, Inc. ("Fred Meyer") in
September 1997. Mr. Burkle has served as Chairman of the Board of Fred Meyer
since September 1997. Mr. Burkle also serves as a director of Kaufman and Broad
Home Corporation. Before founding Yucaipa, Mr. Burkle held a number of
supermarket executive positions and was a private investor in Southern
California.

EVAN BAYH has served as a director of the Company since January 1997.
Governor Bayh is a member of the law firm of Baker & Daniels. Governor Bayh was
Governor of the State of Indiana from January 1989 to January 1997. He has
served as chairman of the National Education Goals Panel and the Education
Commission of the States and as a member of the National Assessment in Education
Panel. Governor Bayh was a member of the executive committee of the National
Governors' Association and is a past chairman of the Democratic Governors'
Association.

LINDA MCLOUGHLIN FIGEL has been a director of the Company since August
1996. She joined Yucaipa in 1989 and became a general partner in 1991. Prior to
1989, Ms. Figel was employed by Bankers Trust Company in its Structured Finance
Group.

PATRICK L. GRAHAM has served as a director of the Company since March
1995. Mr. Graham has served as a director of Food 4 Less and Ralphs since 1995
and served as Vice President and a director of Smitty's from June 1994 until its
merger with Smith's in May 1996. Mr. Graham joined Yucaipa as a general partner
in 1993. Prior to that time he was a Managing Director in the corporate finance
department of Libra Investments, Inc. from 1992 to 1993 and Paine Webber Inc.
from 1990 to 1992. Prior to 1990, he was a Managing Director in the corporate
finance department of Drexel Burnham Lambert Incorporated.

<PAGE> 6

DAVID B. KAPLAN has served as a director of the Company since March
1995. Since 1991, Mr. Kaplan has been associated with and is a limited partner
of Apollo and Lion. Prior to 1991, Mr. Kaplan was a member of the corporate
finance department of Donaldson, Lufkin & Jenrette Securities Corporation. Mr.
Kaplan also serves as a director of Allied Waste Industries, Inc., Family
Restaurants, Inc., PRI Holdings, Inc. and WMC Finance Co., Inc.

DARREN W. KARST joined the Company in March 1995 as Senior Vice
President, Chief Financial Officer, Secretary and a director and was appointed
Executive Vice President, Finance and Administration in March 1996. Mr. Karst
joined Yucaipa in 1988 and has been a general partner since 1991. Prior to
1988, he was a manager at Ernst & Young LLP.

ANTONY P. RESSLER has served as a director of the Company since March
1995. In 1990, Mr. Ressler was one of the founding principals of Apollo, Lion
and of Ares Management, L.P. which serves as managing general partner of Ares
Leveraged Investment Fund, L.P., a private securities investment fund. Prior
to 1990, Mr. Ressler was a Senior Vice President in the high yield bond
department of Drexel Burnham Lambert Incorporated. Mr. Ressler is also a
director of Allied Waste Industries, Inc., Family Restaurants, Inc., United
International Holdings, Vail Resorts, Inc. and PRI Holdings, Inc.

All of the directors named above, other than Ms. Barry and Governor
Bayh, also serve on the Board of Directors of Dominick's Finer Foods, Inc.
("Dominick's"), the operating subsidiary of the Company.

STOCKHOLDERS AGREEMENT

Pursuant to the Amended and Restated Stockholders Agreement, dated as of
November 1, 1996 (the "Stockholders Agreement"), by and among the Company,
certain affiliates of Yucaipa and Apollo and certain other stockholders of the
Company, six of the Company's current directors (Messrs. Burkle, Graham, Karst,
Mariano and Tochner and Ms. Figel) were selected by Yucaipa and three of the
Company's current directors (Messrs. Copses, Kaplan and Ressler) were selected
by Apollo. Under the Stockholders Agreement, Yucaipa is entitled to nominate six
directors to the Board of Directors and Apollo is entitled to nominate three
directors to the Board of Directors provided that certain beneficial ownership
requirements set forth in the Stockholders Agreement continue to be met, and the
Stockholders Agreement provides that the parties thereto shall vote their shares
and take all actions otherwise necessary to ensure the election to the Board of
Directors of the Yucaipa nominees and the Apollo nominees. Messrs. Mariano and
Tochner are the current nominees of Yucaipa, and Mr. Copses is the current
nominee of Apollo. See "Certain Relationships and Related Transactions -
Stockholders Agreement."

BOARD MEETINGS AND COMMITTEES

Prior to January 31, 1997, the Board of Directors consisted of nine
persons: Messrs. Burkle, Copses, Graham, Kaplan, Karst, Mariano, Resnik and
Ressler and Ms. Figel. Mr. Mark A. Resnik, a director since 1995, died in
January 1997 and Mr. Tochner was appointed by the Board on January 31, 1997 to
fill the vacancy created by the death of Mr. Resnik. On January 31, 1997, the
total number of directors constituting the Board of Directors was increased to
eleven and, pursuant to the Certificate of Incorporation, Ms. Barry and
Governor Bayh were elected to serve on the Board of Directors by the
affirmative vote of a majority of the directors then in office. Ms. Barry and
Governor Bayh are "Independent Directors."

The Board of Directors held six (6) meetings during the fiscal year
ended November 1, 1997 ("Fiscal l997"). The Board of Directors has an Executive
Committee and an Audit Committee. There is no standing Nominating Committee.

Executive Committee. Messrs. Burkle, Graham and Mariano currently serve
on the Executive Committee. Subject to the Company's conflict of interest
policies and certain other limitations, the Executive Committee has been granted
all powers and authority of the Board of Directors in the management of the
business and affairs of the Company. The Executive Committee was created in 1995
and held no meetings in fiscal 1997.

Audit Committee. Ms. Barry and Governor Bayh currently serve on the
Audit Committee. The Audit Committee makes recommendations concerning the
engagement of independent auditors, reviews with independent auditors the plans
and results of the audit engagement, approves professional services provided by
the independent auditors, reviews the independence of the independent auditors,
considers the range of audit and non-audit fees, and reviews the adequacy of the
Company's internal accounting controls. The Audit Committee was established in
January 1997. The Audit Committee held one meeting in Fiscal 1997.

<PAGE> 7

DIRECTOR COMPENSATION

Prior to Fiscal 1997, the Company had not paid any compensation to its
directors for serving on the Board of Directors, but reimbursed such persons for
their out-of-pocket expenses incurred in connection with attending meetings of
the Board of Directors. Currently, the Company pays its non-employee directors
(other than those affiliated with Yucaipa) an annual retainer of $25,000 in
addition to fees in the amount of $2,500 per regular meeting of the Board of
Directors, $1,000 per meeting of any committee of the Board of Directors and
$1,000 per special meeting of the Board of Directors. Pursuant to the
Dominick's Supermarkets, Inc. Directors Deferred Compensation and Restricted
Stock Plan (the "Directors Plan"), directors of the Company may elect to
receive any such annual retainers and meeting fees in the form of restricted
shares of Common Stock or to defer such fees until retirement or other
specified date or event. The Company currently anticipates that it will
continue to reimburse all directors for their out-of-pocket expenses incurred
in connection with attending meetings of the Board of Directors.

Limitations of Liability and Indemnification Matters

Section 145 of the General Corporation Law of the State of Delaware (the
"Delaware General Corporation Law") gives Delaware corporations broad powers to
indemnify their present and former directors and officers against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred in connection with threatened, pending or
completed actions, suits or proceedings to which they are parties or are
threatened to be made parties by reason of being or having been such directors
or officers, subject to specified conditions and exclusions; gives a director or
officer who successfully defends an action the right to be so indemnified; and
permits a corporation to buy directors' and officers' liability insurance. Such
indemnification is not exclusive of any other rights to which those indemnified
may be entitled under any by-law, agreement, vote of stockholders or otherwise.

As permitted by Section 145 of the Delaware Corporation Law, Article V
of the Certificate of Incorporation provides for the indemnification by the
Company of its directors, officers, employees and agents against liabilities and
expenses incurred in connection with actions, suits or proceedings brought
against them by a third party or in the right of the Corporation by reason of
the fact that they were or are such directors, officers, employees or agents.

Article VI of the Certificate of Incorporation provides that to the
fullest extent permitted by the Delaware Corporation Law as the same exists or
may hereafter be amended, a director of the Company shall not be liable to the
Company or its stockholders for monetary damages for breach of fiduciary duty as
a director.

The Company has entered into, or intends to enter into, agreements to
indemnify its directors and executive officers in addition to the
indemnification provided for in the Certificate of Incorporation and Bylaws.
These agreements, among other things, will indemnify the Company's directors and
executive officers for certain expenses (including attorneys' fees) and all
losses, claims, liabilities, judgments, fines and settlement amounts incurred by
such person arising out of or in connection with such person's service as a
director or officer of the Company to the fullest extent permitted by applicable
law.

VOTE REQUIRED

The election of each director requires the affirmative vote of a
plurality of the votes of the shares of Common Stock present in person or
represented by proxy at the Annual Meeting, provided that a quorum is present.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR EACH OF THE
DIRECTORS NOMINATED IN PROPOSAL No. 1.

5
<PAGE> 8

PROPOSAL NO. 2:
APPROVAL OF DOMINICK'S SUPERMARKETS, INC.
1997 EMPLOYEE STOCK PURCHASE PLAN

GENERAL

On September 10, 1997, the Board of Directors adopted, subject to
stockholder approval, the Dominick's Supermarkets, Inc. 1997 Employee Stock
Purchase Plan (the "Plan") described herein. The stockholders are asked to
approve the adoption of the Plan.

The Company desires to implement the Plan effective as of March 3, 1998.
The purpose of the Plan is to assist employees of the Company and its Subsidiary
Corporations (as defined in the Plan) in acquiring a stock ownership interest in
the Company, which would help employees provide for their future security and to
encourage them to remain in the employment of the Company and its Subsidiary
Corporations.

The following is a description of the material provisions of the Plan, a
copy of which is set forth in Appendix A to this Proxy Statement. Unless
otherwise defined, capitalized terms used herein have the meanings ascribed to
them in the Plan. The summary which follows is not intended to be complete and
reference should be made to the Plan for a complete statement of its terms and
provisions.

ADMINISTRATION

The Plan will be administered by a Committee of the Board of Directors.
The Committee shall consist of the entire Board of Directors until such time as
the Board of Directors, in its sole discretion, appoints a Committee to
administer the plan. The Committee will have the power to interpret the Plan and
the Options and to adopt such rules for the administration, interpretation and
application of the Plan as are consistent therewith and to interpret, amend or
revoke any such rules.

ELIGIBILITY

Any employee of the Company or any Subsidiary Corporation who does not,
immediately after an Option is granted, own stock possessing five percent (5%)
or more of the total combined voting power or value of all classes of stock of
the Company, a Parent Corporation or a Subsidiary Corporation and who has been
employed by the Company or Subsidiary Corporation for not less than one (1)
year.

The maximum number of shares of Common Stock issuable under the Plan is
500,000.

GRANT OF OPTIONS

The Company will offer Options under the Plan to all Eligible Employees
in successive three (3) month Offering Periods until the earlier of (i) the date
when the number of shares of Common Stock available under the Plan have been
sold or (ii) the date when the Plan is terminated.

ELECTION OF PARTICIPANT

An Eligible Employee will generally participate in the Plan only by
means of payroll deduction. Each Eligible Employee who elects to participate in
the Plan shall deliver to the Company during the calendar month preceding a Date
of Grant no later than ten (10) working days before such Date of Grant, a
completed and executed written payroll deduction authorization in a form
prepared by the Company.

EXERCISE OF OPTIONS

Each Participant automatically and without any act on such Participant's
part shall be deemed to have exercised such Participant's Option on the Date of
Exercise to the extent that the balance then in the Participant's account under
the Plan is sufficient to purchase at the Option Price shares of Stock
subject to the Option.

<PAGE> 9

WITHDRAWAL FROM THE PLAN

Any Participant can withdraw from participation under the Plan at any
time except that no participant may withdraw during the last ten (10) days of
any Offering Period.

TERMINATION OF EMPLOYMENT

If the employment of a Participant terminates other than by death, the
Participant's participation in the Plan automatically and without any act on the
Participant's part shall terminate as of the date of the termination of the
Participant's employment. If the employment a Participant is terminated by
reason of Participant's death, the executor or administrator of the
Participant's estate may request in writing payment of the balance in the
Participant's account; provided that if the Company does not receive such notice
prior to the next Date of Exercise, the Participant's Option shall be deemed to
have been exercised on such date.

Vote Required

Stockholder approval of Proposal 2 requires the affirmative vote of the
holders of a majority of the shares of Common Stock present in person or by
represented by proxy at the Annual Meeting, provided that a quorum is present.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR PROPOSAL NO. 2.

<PAGE> 10

SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of January 23, 1998, the beneficial
ownership of Common Stock by (i) each person known by the Company to be the
beneficial owner of 5% or more of the Common Stock, (ii) each person who is a
director or Named Executive Officer (as defined below) of the Company and (iii)
all directors and executive officers of the Company as a group.

SHARES BENEFICIALLY OWNED
------------------------------------
AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNERSHIP CLASS(1)(2)
------------------------------------
NAME OF BENEFICIAL OWNER
- ------------------------
<S> <C> <C>
Yucaipa and affiliates:
Yucaipa Blackhawk Partners, L.P.......................... 2,007,256 10.9%
Yucaipa Chicago Partners, L.P............................ 253,470 1.4
Yucaipa Dominick's Partners, L.P......................... 663,333 3.6
The Yucaipa Companies(3) ................................ 3,874,492 17.3
Yucaipa Management L.L.C.(4)............................. - -
Ronald W. Burkle(5) .................................... 6,798,551 30.4
Linda McLoughlin Figel(3)(6)............................ - -
Patrick L. Graham(3)(7)................................. - -
Darren W. Karst(3)(8)................................... 47,113 *
Ira L. Tochner(3)(9).................................... - -
Total.................................................. 6,845,664 30.6

Robert A. Mariano(10) .................................... 283,520 1.5
Alice F. Smedstad(11) .................................... 14,807 *
Grace Barry............................................... l50 *
Evan Bayh................................................. 1,91S *
Apollo and affiliates:
Peter P. Copses(12) ..................................... 5,855,181 28.0
David B. Kaplan(12) ..................................... 5,855,181 28.0
Antony P. Ressler(12).................................... 5,857,030 28.0
Apollo Investment Fund, L.P.(13)......................... 2,927,591 14.9
Apollo Investment Fund III, L.P.(14)..................... 2,668,412 13.6
Apollo Overseas Partners III, L.P.(15) .................. 160,036 *
Apollo (U.K.) Partners III, L.P.(16) .................... 99,142 *
Total(17)............................................... 5,857,030 28.0

All directors and executive
officers as a group (18 persons)......................... 13,151,643 52.4

FMR Corp. (l8)............................................ 1,672,960 9.1
Ohio PERS (18)............................................ 1,080,000 5.8
</TABLE>

- ----------------------
*Less than 1.0%

<PAGE> 11

(1) Shares which each identified stockholder has the right to acquire
within 60 days of the date of the table set forth above are deemed to be
outstanding in calculating the percentage ownership of such stockholder, but
are not deemed to be outstanding as to any other person. Except as otherwise
indicated, the Company believes that the beneficial owners of shares of
Common Stock listed above have sole investment and voting power with respect
to such shares, subject to community property laws where applicable.
(2) Based on 18,483,007 shares of Common Stock outstanding as of January 23,
1998.

(3) Share amounts and percentages for Yucaipa include 3,874,492 shares of
Common Stock issuable to Yucaipa upon exercise of a warrant (the "Yucaipa
Warrant") issued to Yucaipa by the Company in connection with the
acquisition of Dominick's by the Company (the "Acquisition"). The Yucaipa
Warrant entitles Yucaipa to purchase 3,874,492 shares of Common Stock
(less a number of shares equal to the aggregate exercise price, if
exercised on a cashless basis) at an exercise price of $20.73 per share.
Yucaipa is controlled by Ronald W. Burkle. The address of Yucaipa is 10000
Santa Monica Blvd., Los Angeles, California 90067. Ms. Figel and Messrs.
Graham, Karst and Tochner disclaim beneficial ownership of any shares of
Common Stock issuable upon exercise of the Yucaipa Warrant.

(4) Yucaipa Management L.L.C. is a Delaware limited liability company
controlled by Ronald W. Burkle. Yucaipa Management L.L.C. is the sole
general partner of Yucaipa Blackhawk Partners, L.P., Yucaipa Chicago
Partners, L.P., and Yucaipa Dominick's Partners, L.P., which own 2,007,256,
253,470 and 663,333 shares of Common Stock, respectively. The foregoing
limited partnerships are parties to an Amended and Restated Stockholders
Agreement dated as of November 1, 1996 (the "Stockholders Agreement") which
gives Yucaipa the right to nominate up to six directors of the Company.

(5) Represents shares owned by Yucaipa Blackhawk Partners, L.P., Yucaipa
Chicago Partners, L.P., and Yucaipa Dominick's Partners, L.P. These
entities are affiliated partnerships controlled indirectly by Ronald W.
Burkle. Mr. Burkle is the controlling general partner of Yucaipa and the
sole managing member of Yucaipa Management L.L.C. See notes (3) and (4).

(6) Ms. Figel is a general partner of Yucaipa and a limited partner of Yucaipa
Blackhawk Partners, L.P. and Yucaipa Dominick's Partners, L.P. See
notes (3) and (4).

(7) Mr. Graham is a general partner of Yucaipa and a limited partner of
Yucaipa Blackhawk Partners, L.P. and Yucaipa Dominick's Partners, L.P. See
notes (3) and (4).

(8) Excludes options for 40,776 shares which are not exercisable within 60
days. Mr. Karst is a general partner of Yucaipa and a limited partner of
Yucaipa Blackhawk Partners, L.P. See notes (3) and (4).

(9) Mr. Tochner is a general partner of Yucaipa and a limited partner of
Yucaipa Blackhawk Partners, L.P. See notes (3) and (4).

(10) Excludes options for 83,552 shares of Common Stock which are not
exercisable within 60 days.

(11) Excludes options for 20,217 shares of Common Stock which are not
exercisable within 60 days.

(12) Includes 2,455,224 shares of Class B Common Stock, which is convertible
into shares of Common Stock on a share-for-share basis at the election of
the holder at any time. The shares reported for each of Messrs. Copses,
Kaplan and Ressler are beneficially owned by Apollo Investment Fund, L.P.,
Apollo Investment Funds III, L.P., Apollo Overseas Partners III, L.P. or
Apollo (U.K.) Partners III, L.P. (collectively, the "Apollo Funds").
Messrs. Copses, Kaplan and Ressler are associated with Apollo Advisors,
L.P. and Apollo Advisors II, L.P. (collectively, "Advisors"), the managing
general partners of the Apollo Funds. Messrs. Copses, Kaplan and Ressler
disclaim beneficial ownership of the Common Stock and the Class B Common
Stock held by the Apollo Funds. The Apollo Funds are parties to the
Stockholders Agreement, which entitles them to nominate up to three
directors of the Company. The address of Advisors is 2 Manhattanville
Road, Purchase, New York 10577.

(13) Includes 1,227,612 shares of Class B Common Stock, which is convertible
into shares of Common Stock on a share-for-share basis at the election of
the holder at any time.

(14) Includes 1,118,940 shares of Class B Common Stock, which is convertible
into shares of Common Stock on a share-for-share basis at the election
of the holder at any time.

(15) Includes 67,100 shares of Class B Common Stock, which is convertible into
shares of Common Stock on a share-for-share basis at the election of the
holder at any time.

(16) Includes 41,572 shares of Class B Common Stock, which is convertible into
shares of Common Stock on a share-for-share basis at the election of the
holder at any time.

(17) Includes 2,455,224 shares of Class B Common Stock, which is convertible
into shares of Common Stock on a share-for-share basis at the election of
the holder at any time.

(18) Based on the most recent filings of Schedule 13G received directly by the
Company with respect to such beneficial holder.

<PAGE> 12

EXECUTIVE OFFICERS

The following table sets forth the names, ages and positions of each of
the executive officers of the Company and its subsidiaries.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------

<S> <C> <C>
Ronald W. Burkle 45 Chairman of the Board

Robert A. Mariano 47 President and Chief Executive Officer

Darren W. Karst 38 Executive Vice President, Finance and Administration,
and Chief Financial Officer

John W. Boyle 39 Group Vice President, Information Technology and
Store Development

Robert R. DiPiazza 46 Group Vice President, Perishable Merchandising

Donald G. Fitzgerald 36 Group Vice President, Non-Perishable Merchandising
and Logistics

William B. Nasshan 39 Group Vice President, Sales and Marketing

Deborah C. Paskin 46 Group Vice President, Legal, General Counsel and
Secretary

Donald S. Rosanova 48 Group Vice President, Operations

Alice F. Smedstad 48 Group Vice President, Human Resources
</TABLE>

In addition to Messrs. Burkle, Mariano and Karst, whose biographies
appear above, the following persons are executive officers of the Company or its
subsidiaries:

JOHN W. BOYLE has been Group Vice President, Information Technology and
Store Development since March 1996. Mr. Boyle joined Dominick's in January l995
as Vice President, Management Information Systems and became Vice President,
Administration in March 1995. Prior to joining Dominick's, Mr. Boyle had been
employed as Vice President, Information Systems at Food 4 Less Supermarkets,
Inc. since 1993, and, before that, had been employed as a Senior Vice President
at Thrifty Drugstores.

ROBERT R. DIPIAZZA has been Group Vice President, Perishable
Merchandising since March 1996, and, prior to that, had served as Vice
President, Produce Operations since 1990. Before 1990, Mr. DiPiazza held a
number of other managerial positions at Dominick's.

DONALD G. FITZGERALD has been Group Vice President, Non-Perishable
Merchandising and Logistics since March 1996. Prior to that time Mr. Fitzgerald
had served as Vice President, Grocery Merchandising since 1994, as director of
grocery merchandising from 1993 to 1994 and as director of grocery purchasing
since 1990. Before 1990 Mr. Fitzgerald held several other managerial positions
at Dominick's.

WILLIAM B. NASSHAN has been Group Vice President, Sales and Marketing
since November, 1997. Before that, Mr. Nasshan was Vice President, Grocery and
Logistics since March 1996 and Vice President, Omni Operations from 1995 to
1996. Prior to joining Dominick's in 1995, Mr. Nasshan was Regional Director of
Marketing and Merchandising for Cub Foods, a division of SUPERVALU, Inc.

DEBORAH C. PASKIN has been Group Vice President, Legal, General Counsel
and Secretary since October 1997. Prior to that, Ms. Paskin was Vice President,
General Counsel and Secretary of Helene Curtis Industries, Inc. and held other
positions in the Helene Curtis Legal Department from 1990 through 1997. Ms.
Paskin was an attorney with Latham & Watkins from 1984 to 1990.

<PAGE> 13

DONALD S. ROSANOVA has been Group Vice President, Operations since
November 1997 and, prior to that, had been Group Vice President, Omni since
March, 1996. Prior to that time Mr. Rosanova had been Vice President,
Distribution and Transportation since 1992. Before 1992, Mr. Rosanova held
several other managerial positions at Dominick's.

ALICE F. SMEDSTAD has been Group Vice President, Human Resources since
December 1996. Mrs. Smedstad joined Dominick's in October 1995 as Vice
President, Human Resources. Prior to that time, Ms. Smedstad held several senior
human resource positions at The Dial Corporation from 1980 to 1995. Ms. Smedstad
began her professional career in manufacturing with the Procter & Gamble Company
in 1973.

<PAGE> 14

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table Sets forth information concern the compensation of
the Chief Executive Officer and other four most highly compensated executive
officers of the Company (the "Named Executive Officers"), whose total salary and
bonus for Fiscal 1997 exceeded $100,000 for services rendered in all capacities
to the Company and its subsidiaries.

<TABLE>
<CAPTION>
ANNUAL LONG TERM
COMPENSATION(1) COMPENSATION(2)
--------------- ---------------
SECURITIES
NAME AND FISCAL YEAR UNDERLYING ALL OTHER
PRINCIPAL POSITION ENDED SALARY BONUS OPTIONS(#) COMPENSATION(4)
- ----------------------------------- ---------------- -------- -------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Robert A. Mariano(3) .............. November 1, 1997 $522,300 $476,000 25,000 $ 15,467
President and Chief November 2, 1996 482,700 463,500 -- 14,700
Executive Officer October 28, 1995 334,200 216,000 146,379 3,463,700(5)

Darren W. Karst(5) ................ November 1, 1997 $314,770 $286,000 11,500 7,753
Executive Vice President, November 2, 1996 289,700 255,000 -- 7,100
Finance and Administration, and October 28, 1995 151,570 -- 73,189 1,700
Chief Financial Officer

Robert E. McCoy(7)................. November 1, 1997 $314,770 $286,000 11,500 $ 14,873
Executive Vice President, November 2, 1996 289,400 250,000 - 878,600(7)
Operations October 28, 1995 236,400 216,000 146,379 2,916,300(5)

Alice F. Smedstad(8) .............. November 1, 1997 $174,075 $45,260 3,750 $ 7,443
Group Vice President, November 2, 1996 155,800 17,000 -- 2,700
Human Resources October 28, 1995 -- -- 21,956

Herbert R Young(7) ............... November 1, 1997 $234,200 $214,200 3,750 $ 22,617
Group Vice President, Sales, November 2, 1996 229,300 225,000 -- 865,100(7)
Marketing and Advertising October 28, 1995 225,600 210,900 146,379 2,923,000(5)
</TABLE>

(1) Annual compensation is based on cash payments made during the fiscal
period. Bonus amounts paid relate to the prior year's performance. Fiscal
1997 salary amounts include an extra week related to salary earned in
fiscal 1996, but paid in fiscal 1997.

(2) Information for Messrs. Mariano, McCoy and Young excludes equity-based
compensation of Dominick's which was extinguished in connection with the
Acquisition.

(3) Mr. Mariano was appointed President and Chief Operating Officer in March
1995 and was subsequently appointed Chief Executive Officer in January
1996.

(4) Includes (i) insurance premiums paid under senior management benefit plans,
(ii) benefits paid under a senior management financial planning plan, (iii)
profit sharing plan contributions made by the Company, and (iv) certain
other employee benefits.

(5) Includes the redemption for cash of all Dominick's stock appreciation
rights held by Messrs. Mariano, McCoy and Young at the time of the
Acquisition in the amounts of $3,450,093, $2,901,460, and $2,901,460,
respectively.

(6) Mr. Karst joined the Company as Senior Vice President, Chief Financial
Officer and Secretary in March 1995 and was appointed Executive Vice
President, Finance and Administration in March 1996. Mr. Karst is a general
partner of Yucaipa, which provides services to the Company pursuant to the
Management Agreement. See "Certain Relationships and Related Transactions--
Management Agreement."

(7) Includes $864,000 and $843,708 paid to Messrs. McCoy and Young,
respectively, in connection with their respective employment agreements.
See "Employment Agreements."

(8) Messrs. Young and McCoy retired from the Company effective November 21,1997.

(9) Ms. Smedstat was appointed Group Vice President, Human Resources in
December 1996.

<PAGE> 15

EMPLOYMENT AGREEMENTS

Mariano Employment Agreement. Dominick's and Mr. Mariano entered into a
three-year employment agreement dated March 22, 1995 pursuant to which Mr.
Mariano was employed as President and Chief Operating Officer (or such other
offices as Dominick's Board of Directors may designate) at an annual base
salary of $400,000 (subject to increases at the discretion of the Board). In
January 1996, the Board of Directors appointed Mr. Mariano to the office of
Chief Executive Officer. His annual base salary was adjusted to $500,000 in
January 1996 and to $550,000 in August 1997. If Dominick's meets certain
financial targets determined by its Board of Directors, Mr. Mariano will also
be entitled to receive an annual incentive bonus not to exceed 200% of his
annual base salary. Mr. Mariano is eligible to participate in employee benefit
plans generally made available by Dominick's to its executive officers. At the
closing of the Acquisition, Mr. Mariano received a payment of $864,000 in
consideration of the cancellation of certain rights under his prior employment
agreement. Concurrently with the closing of the Acquisition, Mr. Mariano
exchanged 1,200 shares of Dominick's common stock for 190,293 shares of Common
Stock of the Company in a tax-deferred transaction. The employment agreement
may be terminated by either party upon 30 days' notice for any reason, or
immediately by Dominick's for cause. If during the term of the employment
contract, Mr. Mariano resigns or his employment is terminated by Dominick's for
any reason other than for cause, he will be entitled to receive a cash payment
equal to three times his annual base salary, less $864,000, and maintenance at
Dominick's expense of medical, dental and other benefits for 24 months
following such employment termination.

McCoy Employment Agreement. Dominick's and Mr. McCoy entered into a
three-year employment agreement dated March 22, 1995 pursuant to which Mr. McCoy
was employed at an annual base salary of $250,000. In March 1996, the Board of
Directors appointed Mr. McCoy to Executive Vice President, Operations. His
annual base salary was adjusted to $300,000 in February 1996 and to $312,000 in
February 1997. In consideration of the cancellation of certain rights under his
prior employment agreement, Mr. McCoy received a payment of $864,000 on March
22, 1996. Mr. McCoy retired from Dominick's effective November 21, 1997 under
the terms of an Early Retirement and Settlement Agreement. As part of that
agreement, he is entitled to continue to receive medical, dental and other
employee benefits through March 22,1998.

Young Employment Agreement. Dominick's and Mr. Young entered into a
three-year employment agreement dated March 22, 1995 pursuant to which Mr. Young
is employed at an annual base salary of $225,000. His annual salary was adjusted
to $231,500 in February 1997. In consideration of the cancellation of certain
rights under his prior employment agreement, Mr. Young received a payment of
$843,708 on March 22, 1996. Mr. Young retired from Dominick's effective November
21,1997 under the terms of an Early Retirement and Settlement Agreement. As part
of that agreement, Mr. Young is entitled to receive medical, dental and other
employee benefits through March 22,1998.

OPTION GRANTS TABLE

The following Option Grants Table sets forth, as to the Named Executive
Officers, certain information relating to stock options granted during Fiscal
1997.
<TABLE>
<CAPTION>

Individual Grants Potential Realizable
---------------------------------------------------- Value at Assumed
Number of % of Total Annual Rates of
Securities Options Stock Price
Underlying Granted to Exercise or Appreciation for
Options Employees in Base Price Expiration Option Term (4)
Name Granted (#) Fiscal Year(1) ($/Share) Date(2) 0% ($)(3) 5%($) 10% ($)
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert A. Mariano .. 25,000 10.9% $26.5625 9/2007 $- $417,625 $1,058,345
Darren W. Karst .... 11,500 5.0% $26.5625 9/2007 192,108 486,839
Robert E. McCoy .... 11,500 5.0% $26.5625 9/2007 192,108 486,839
Alice F. Smedstad .. 3,750 1.6% $26.5625 9/2007 62,644 158,752
Herbert R Young .... 3,750 1.6% $26.5625 9/2007 62,644 158,752

</TABLE>
- -----------------

(1) The total number of shares of Common Stock subject to options granted to
employees in the fiscal year ended November 1, 1997 was 228,960.
(2) Options may terminate before their expiration date if the optionee's status
as an employee or consultant is terminated or upon optionee's death.
(3) Based upon the fair market value of the Common Stock on the grant date, as
determined in good faith by the Board of Directors.
(4) The 5% and 10% assumed annual compound rates of stock price appreciation
are mandated by the rules of the Securities and Exchange Commission and do
not represent the Company's estimate or projection of future Common Stock
prices. There can be no assurance that the amounts reflected in this
table will be achieved.

13
<PAGE> 16

YEAR-END OPTION VALUE TABLE

No Named Executive Officer exercised stock options during Fiscal 1997. The
following table sets forth certain information concerning the number of stock
options held by the Named Executive Officers as of November 1, 1997, and the
value of in-the-money options outstanding as of such date.

<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED OPTIONS VALUE OF UNEXERCISED IN-THE-MONEY OPTIONS
AT NOVEMBER 1, 1997 AT NOVEMBER 1, 1997(1)
------------------------------- -----------------------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------------------- -----------------------------------------
<S> <C> <C> <C> <C>
Robert A. Mariano ............... 58,551 112,828 $1,737,091 $2,854,119
Darren W. Karst ................. 29,275 55,414 868,531 1,417,122
Robert E. McCoy ................. 109,788 48,091 3,757,247 1,199,863
Alice F. Smedstad ............... 5,489 20,217 162,848 525,809
Herbert R. Young ................ 109,788 40,341 3,757,247 1,122,847
</TABLE>
____________
(1) Value is based upon the closing price of the Common Stock on the
composite tape for the New York Stock Exchange on October 31, 1997 of
$36.50 minus the exercise price.

MANAGEMENT INCENTIVE PLAN

The Company's Management Incentive Plan (the "MIP program") covers all
executive officers and other key managers. Its purpose is to provide a direct
financial incentive in the form of an annual bonus to achieve or exceed
pre-determined financial objectives. The MIP program provides for varying
levels of payout to participants depending on the individual's level within the
organization. The Chief Executive Officer may receive a bonus ranging from 0%
up to 200% of base salary. Executive Vice Presidents may receive a bonus of up
to 100% of base salary and Group Vice Presidents may receive a bonus of up to
85% of base salary.

SENIOR MANAGEMENT DISABILITY PLANS

The Company maintains a Short Term Disability Plan ("STD Plan") for its
senior management. Under the STD Plan, an eligible employee who is disabled
will receive payments equal to either 66.67% or 100% of base salary, depending
upon the length of service with the Company, for a period of up to 26 weeks. An
eligible employee is considered disabled if, as a result of injury, covered
illness or pregnancy, the employee is unable to perform the duties of the
employee's regular occupation.

The Company maintains a Long Term Disability Plan ("LTD Plan") for its
senior management, which is designed to provide salary continuation beyond the
coverage extended through the STD Plan. Under the LTD Plan, an eligible
employee who is disabled for 180 days will receive monthly payments equal to
60% of the employee's monthly earnings (base salary plus bonus), not to exceed
a maximum of $30,000 per month, for the benefit duration specified in the LTD
Plan. An eligible employee is considered disabled if, as a result of injury or
illness for which the employee is under a doctor's care, the employee cannot
perform all of the material and substantial duties of the employee's regular
occupation.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Company does not have a board committee performing the functions of a
compensation committee. Ronald W. Burkle, the Chairman of the Board, and Robert
A. Mariano, the President and Chief Executive Officer, made decisions with
regard to executive officer compensation for Fiscal 1997, except that decisions
with regard to Awards under the 1996 Plan were made by the Board of Directors.

<PAGE> 17

REPORT ON COMPENSATION OF EXECUTIVE OFFICERS

The Board of Directors is responsible for developing the Company's
executive compensation policies and approving on an annual basis the
compensation policies applicable to the Chief Executive Officer and other
executive officers of the Company. The objectives of the Company's executive
compensation program are to support the achievement of desired performance by
the Company, provide compensation that will attract and retain superior talent
and reward performance, and align the executive officers' personal interests
and financial remuneration with the success of the Company by basing a
significant portion of their compensation upon Company performance.

The executive compensation program provides an overall level of
compensation opportunity that is competitive within the retail food and drug
industry, including those companies which compete directly with the Company in
its region, as well as companies outside the industry with which the Company may
compete for executive talent. Companies are selected for the purpose of
comparing compensation practices on the basis of a number of factors relative to
the Company, such as their size and complexity, the nature of their businesses,
the regions in which they operate, the structure of their compensation programs
(including the extent to which they rely on bonuses and other contingent forms
of compensation) and the availability of compensation information. In reviewing
the compensation practices of other companies, the Board of Directors considers
the fact that the compensation structures of most peer companies tend to be
significantly different than those of the Company in a number of respects,
particularly in such areas as the amount of bonus relative to salary paid by
such companies, their use of stock appreciation rights and stock options, the
time period over which stock options vest and the nature and amount of pension
benefits made available to executive officers. For these reasons, although the
Board of Directors has considered the compensation policies of certain peer
companies, the Board of Directors does not believe that all such companies are
comparable to the Company for the purpose of setting the compensation for the
Company's executive officers. The Board of Directors uses its discretion to set
executive compensation at levels warranted by external, internal and individual
circumstances. Actual compensation levels may be greater or less than average
compensation levels in other companies based upon annual and long-term
performance of the Company and each individual executive officer's performance.

The Company's executive officer compensation program is comprised of base
salary, cash bonus compensation, long-term incentive compensation in the form
of stock options, and other benefits such as those available through the
Company's medical and defined contribution plans.

Base Salary. Base salary levels for the Company's executive officers,
including the Chief Executive Officer, are set such 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 Board of Directors also takes into account
a number of factors, which primarily include individual experience and
performance, the 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 within his or her
responsibility of particular financial and non-financial goals, and other
contributions made by the officer to the Company's success. Specific factors
related to an individual's performance considered by the Board of Directors
include financial measures such as EBITDA (as adjusted), net income, sales, same
store sales, and cost savings and non-financial measures such as store openings,
site acquisitions or other specific tasks. The Board of Directors has not found
it practicable, and has not attempted, to assign relative weights to the
specific factors considered in determining base salary levels, and the specific
factors used may vary among achievement of any specific, pre-determined
performance targets.

Cash Bonus. The Company's Management Incentive Plan ("MIP") covers all
executive officers and other key managers. Its purpose is to provide a direct
financial incentive in the form of an annual bonus to achieve or exceed
pre-determined financial and individual objectives. The MIP program provides
for varying levels of payout to participants depending on the individual's
level within the organization. The Chief Executive Officer may receive a bonus
ranging from 0% up to 200% of base salary. Executive Vice Presidents may
receive a bonus of up to 100% of base salary, and Group Vice Presidents may
receive a bonus of up to 85% of base salary. In fiscal 1997, the MIP program
was based on actual results achieved compared to targeted performance in two
(2) categories: sales and EBITDA (as adjusted).

<PAGE> 18

1996 Equity Participation Plan. The Company's 1996 Equity Participation
Plan (the "1996 Plan") authorizes the Board of Directors to provide incentives
for officers, employees and consultants through granting of stock options,
restricted stock and other awards (collectively, "Awards"), thereby stimulating
their personal and active interest in the Company's development and financial
success, and inducing them to remain in the Company's employ. Grants of Awards
are made in amounts commensurate with the individual's responsibility and at a
level calculated to be competitive within the retail food and drug industries
as well as a broader group of companies of comparable size and complexity.
Options granted to date to executive officers vest over a five-year period
after the grant date, and do not include any specific, pre-determined
performance targets as a condition to vesting or granting. The Company believes
that such long-term grants serve the primary objective of retaining executives
and key managers, while also aligning executives and shareholder interests by
creating a strong and direct link between compensation and shareholder return
and by enabling executives and key managers to develop and maintain a
significant, long-term ownership interest in the Company. In fiscal 1997,
awards of 55,500 options were granted to Named Executive Officers. Grants of
additional stock options to the Named Executive Officers may be considered in
future periods by the Board of Directors.

Benefits. The Company provides medical and certain other benefits to
executive officers, including the Chief Executive Officer, that are generally
available to the Company's employees. The Company also provides executive
officers with supplemental death and disability benefits. The benefits
available under such arrangements are substantially similar for each of the
Company's executive officers, including the Chief Executive Officer, except to
the extent benefits are payable based upon the length of an officer's
employment with the Company.

Chief Executive Officer Compensation. The Chief Executive Officer's
compensation is reviewed and approved independently by the Board of Directors
subject to the provisions of his employment agreement. The Board of Directors
determines the Chief Executive Officer's compensation based upon the factors
applicable to the Company's other executive officers, which are described in
detail above, as well as a number of additional qualitative and quantitative
factors appropriate to his position as the Company's principal executive.

In accordance with the Company's compensation policies for all executive
officers, a large component of the Chief Executive Officer's compensation is
paid in the form of bonus, which, in order to provide an appropriate incentive
to maximize the Company's financial performance, is determined based upon
preset bonus maximums and the amount of the Company's actual sales and EBITDA
(as adjusted) compared to targeted sales and EBITDA (as adjusted). For Fiscal
1997, the Company did not achieve its targeted levels of sales and EBITDA (as
adjusted). Accordingly, the maximum pre-determined Chief Executive Officer
bonus for fiscal 1997 was not paid. Rather, the Chief Executive Officer
received a bonus of S476,000.

The Board of Directors believes that the Chief Executive Officer's total
cash compensation is appropriate in light of the Company's performance in
Fiscal 1997 and other factors described above.

<S> <C>
January 23, 1998 Ronald W. Burkle
Grace Barry
Evan Bayh
Peter P. Copses
Linda McLoughlin Figel
Patrick L. Graham
David B. Kaplan
Darren W. Karst
Robert A. Mariano
Antony P. Ressler
Ira L. Tochner
</TABLE>

The Report on Compensation of Executive Officers shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, and shall not
otherwise be deemed filed under such Acts.

<PAGE> 19

Stock Performance Graph

Set forth below is a line graph comparing the total cumulative return on the
Company's Common Stock based on the market price of the Common Stock since
November 1, 1996, when the Company's initial public offering of Common Stock
was completed

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

COMPARISON OF TOTAL CUMULATIVE RETURN OF
DOMINICK'S SUPERMARKETS, INC., S&P 500 STOCK INDEX,
AND S&P RETAIL STORES - FOOD CHAIN INDEX

---------------------------------------
-- Dominick's Supermarkets, Inc.

- S&P 500

- S&P Retail Stores - Food Chain Index
---------------------------------------

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

*Total Cumulative Return assumes $100 invested on November 1, 1996 in
Dominick's Supermarkets, Inc. the S&P 500 Stock Index, and the S&P Retail
Stores - Food Chain Index, with reinvestment of dividends. The Company's fiscal
year ended November 1, 1997.

<PAGE> 20

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who own more than ten percent
of a registered class of the Company's equity securities, to file reports of
ownership and changes of ownership with the Commission and each exchange on
which the Company's securities are registered. Officers, directors and greater
than ten percent stockholders are required by Commission regulations to furnish
the Company with copies of all ownership forms they file.

Based solely on a review of copies of reporting forms furnished to it, or
written representations that no forms were required, the Company believes that,
except as set forth below, all filing requirements applicable to its officers,
directors and beneficial owners under Section 16(a) of the Exchange Act were
complied with during Fiscal 1997. The Company notes that for Ira L. Tochner,
who was appointed to the Board on January 31, 1997, following the death of Mr.
Mark Resnik, a Form 3 was inadvertently not filed until January 22, 1998. In
addition, Form 5s for directors Ressler and Bayh were inadvertently not filed
until January 23, 1998 and January 17, 1998 respectively, for 1,745 restricted
shares of Common Stock awarded to them pursuant to the Directors Plan in fiscal
1997.

<PAGE> 21

1996 EQUITY PARTICIPATION PLAN

Under the Company's 1996 Equity Participation Plan (the "1996 Plan"), the
Board of Directors (or a committee appointed by the Board of Directors) may
grant or issue stock options, stock appreciation rights, restricted stock,
deferred stock, dividend equivalents, performance awards, stock payments and
other stock related benefits, or any combination thereof (collectively,
"Awards") to officers, employees and consultants of the Company. The 1996 Plan
also provides for the granting of options to the Company's independent
nonemployee directors. The prices for shares of Common Stock subject to options
and stock appreciation rights or pursuant to other Awards which may be granted
or made under the 1996 Plan are set by the Board of Directors (or a committee
thereof), provided that such price shall be no less than the par value of a
share of Common Stock, unless otherwise permitted by applicable state law, and
(i) in the case of incentive stock options ("ISOs") and Non-Qualified Stock
Options ("NQSOs") intended to qualify as performance-based compensation as
described in Section 162(m)(4)(C) of the Code, such price shall not be less
than 100% of the Fair Market Value (as defined in the 1996 Plan) of a share of
Common Stock on the date the option is granted; (ii) in the case of ISOs
granted to an individual then owning (within the meaning of Section 424(d) of
the Code) more than 10% of the total combined voting power of all classes of
stock of the Company or any Subsidiary or parent corporation thereof (within
the meaning of Section 422 of the Code) such price shall not be less than 110%
of the Fair Market Value of a share of Common Stock on the date the option is
granted; and (iii) in the case of options granted to independent non-employee
directors, such price shall equal 100% of the Fair Market Value of a share of
Common Stock on the date the option is granted. Under the 1996 Plan, not more
than 1,000,000 shares of Common Stock are authorized for issuance upon exercise
of options, stock appreciation rights and other Awards.

RESTATED 1995 STOCK OPTION PLAN

Under the Company's Restated 1995 Stock Option Plan (the "1995 Plan"),
certain officers and key employees of the Company received grants of NQSOs and
ISOs. As required by the 1995 Plan, all Incentive Stock Options granted
thereunder have a per share exercise price at least equal to 100% of the Fair
Market Value (as defined in the 1995 Plan) of Common Stock on the date of grant
and all Incentive Stock Options granted thereunder to employees who at the time
such option was granted owned (within the meaning of Section 424(d) of the
Code) more than 10% of the total combined voting power of all classes of
capital stock of the Company have a per share exercise price at least equal to
110% of the Fair Market Value of Common Stock on the date of grant. The 1995
Plan is administered by the Board of Directors which designates the individuals
who shall receive options, whether an optionee will receive ISOs, NQSOs or
both, and the amount, price restrictions and all other terms and provisions of
such options. Options granted and presently outstanding under the 1995 Plan
have terms of ten years and become exercisable either (i) as to at least 20% of
the shares of Common Stock covered thereby on each anniversary of the date such
option is granted or (ii) as to at least 25% of the shares of Common Stock
covered thereby on each anniversary of the date such option is granted
commencing with the second anniversary of such date.

<PAGE> 22

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

MANAGEMENT AGREEMENT

On November 1, 1996, the Company and Dominick's entered into a five-year
management agreement (the "Management Agreement") with Yucaipa. The Management
Agreement provides for the payment of an annual fee to Yucaipa in the amount of
$1.0 million per year. In addition, the Company may retain Yucaipa in an
advisory capacity in connection with certain acquisition or sale transactions,
in which case the Company will pay Yucaipa an advisory fee equal to one percent
(1.0%) of the transaction value. The term of the agreement is automatically
renewed on April 1 of each year for a five-year term unless 90 days' notice is
given by either party. The Management Agreement may be terminated at any time
by the Company upon 90 days' written notice, provided that Yucaipa will be
entitled to full payment of the annual fee under the agreement for the
remaining term thereof, unless the Company terminates for cause pursuant to the
terms of the agreement. Yucaipa may terminate the agreement if the Company
fails to make a payment due thereunder, or upon a Change of Control (as
generally defined in the Management Agreement to include certain mergers and
asset sales, and acquisitions of beneficial ownership of greater than 51% of
the Company's outstanding voting securities by persons other than Yucaipa).
Upon any such termination, Yucaipa will be entitled to full payment of the
annual fee for the remaining term of the agreement. Fees paid and accrued under
the Management Agreement were approximately $1.25 Million for management and
advisory services during Fiscal 1997.

YUCAIPA WARRANT

Upon the closing of the Acquisition, the Company issued to Yucaipa a
warrant to purchase 3,874,492 shares of Common Stock. The Yucaipa Warrant
became exercisable at the election of Yucaipa upon the consummation of the
Offering at an exercise price of $20.73 per share. If not exercised, the
Yucaipa Warrant will expire on March 22, 2000; provided, however, that if on
such date certain financial performance requirements are satisfied, the
expiration date will be extended to March 22, 2002 and, in such case, the
exercise price will be increased daily at a rate of 25% per annum. The Yucaipa
Warrant may be exercised for cash or on a cashless basis. Pursuant to the
cashless exercise provisions of the Yucaipa Warrant, upon exercise in full
Yucaipa would be entitled to receive a number of shares equal to the difference
between 3,874,492 shares and the number of shares having a market value as of
the exercise date equal to $80.3 million (i.e., the aggregate exercise price).

STOCKHOLDERS AGREEMENT

Under the terms of the Stockholders Agreement entered into by the Company,
certain affiliates of Yucaipa and Apollo and certain other stockholders of the
Company, Yucaipa is entitled to nominate six directors to the Board of Directors
and the Board of Directors of Dominick's. Yucaipa's right to nominate members to
such Boards of Directors will be reduced by three if Mr. Burkle ceases for any
reason to beneficially own at least 33 1/3% of the shares beneficially owned by
Yucaipa on the date of the Acquisition and shall terminate if Mr. Burkle ceases
for any reason (including death) to beneficially own at least 25% of the shares
beneficially owned by Yucaipa on such date. The Stockholders Agreement entitles
Apollo to nominate three directors to the Board of Directors and the Board of
Directors of Dominick's. Apollo's right to nominate members to such Boards of
directors will be reduced by one if Apollo ceases to beneficially own at least
33 1/3% of the shares beneficially owned by Apollo on the date of the
Acquisition and shall terminate if Apollo ceases to beneficially own at least
25% of the shares beneficially owned by Apollo on such date. If Apollo ceases to
own at least 25% of the shares beneficially owned by Apollo on the date of the
Acquisition and the parties to the Stockholders Agreement other than Apollo
beneficially own at least 33 1/3% of the shares of Common Stock beneficially
owned by such stockholders on the date of the Acquisition, Yucaipa will be
entitled to nominate an additional member to the Board of Directors and the
board of directors of Dominick's. Notwithstanding the foregoing, however, Apollo
may assign its rights to nominate two directors to a transferee (other than an
affiliate of Yucaipa) acquiring at least 66 2/3% of the shares held by Apollo on
the date of the Acquisition. The Stockholders Agreement provides that the
parties thereto shall vote their shares and take all actions otherwise necessary
to ensure the election to such boards of the Yucaipa nominees and the Apollo
nominees. The Yucaipa nominees to such boards are Messrs. Burkle, Karst, Graham,
Tochner and Mariano and Ms. Figel. The Apollo nominees are Messrs. Copses,
Kaplan and Ressler. In addition, Apollo and certain other stockholders will have
the right to participate in any bona fide transfer of the pecuniary interests in
Common Stock beneficially owned by Yucaipa and its affiliates. In certain
circumstances, Yucaipa will have the right to compel the participation of Apollo
and other stockholders in sales of all the outstanding shares of Company stock.
As of January 23, 1998 affiliates of Yucaipa and Apollo beneficially own
approximately 15.9% and 28.0%, respectively, of the outstanding Common Stock,
representing an equivalent percentage of the total voting power of the Company
(assuming conversion by Apollo of shares of Class B Common Stock into Common
Stock).

<PAGE> 23

INDEPENDENT AUDITORS

Ernst & Young LLP audited the Company's financial statements for Fiscal
1997, and has been the Company's independent auditors since its formation in
January 1995. The Board of Directors has selected Ernst & Young LLP to serve as
independent auditors for the Company for the fiscal year ending October 31,
1998. A representative of Ernst & Young LLP is expected to be present at the
Annual Meeting and will be given the opportunity to make a statement if he or
she desires to do so, and it is expected that such representative will be
available to respond to appropriate questions from the stockholders at the
Annual Meeting.

DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
FOR 1999 ANNUAL MEETING

Any stockholder intending to submit to the Company a proposal for
inclusion in the Company's proxy materials relating to the 1999 Annual Meeting
of Stockholder of the Company must submit such proposal so that it is received
by the Company no later than Friday, January 1, 1999.

OTHER MATTERS

The Company is not aware of any matters that may be presented for action
by the stockholders at the Annual Meeting other than those set forth above. If
any other matter shall properly come before the Annual Meeting, the persons
named in the accompanying form of proxy intend to vote thereon in accordance
with their best judgment.

The Company's Annual Report to Stockholders, including the Company's
audited financial statements for the fiscal year ended November 1, 1997, is
being mailed herewith to all stockholders of record. THE COMPANY WILL PROVIDE
WITHOUT CHARGE TO ANY PERSON SOLICITED HEREBY, UPON THE WRITTEN REQUEST OF ANY
SUCH PERSON, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL
YEAR ENDED NOVEMBER 1, 1997 FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
SUCH REQUESTS SHOULD BE DIRECTED TO C. MARK HUSSEY, VICE PRESIDENT, INVESTOR
RELATIONS, DOMINICK'S SUPERMARKETS, INC., 505 RAILROAD AVENUE, NORTHLAKE,
ILLINOIS 60164.

STOCKHOLDERS ARE URGED TO IMMEDIATELY MARK, DATE, SIGN AND RETURN THE ENCLOSED
PROXY IN THE ENVELOPE PROVIDED, TO WHICH NO POSTAGE NEED BE AFFIXED IF MAILED
IN THE UNITED STATES.

By Order of the Board of Directors,

/s/ DEBORAH C. PASKIN
DEBORAH C. PASKIN
Secretary

February 4, 1998
Northlake, Illinois

<PAGE> 24

APPENDIX A

DOMINICK'S SUPERMARKETS, INC.
1997 EMPLOYEE STOCK PURCHASE PLAN

Dominick's Supermarkets, Inc., a corporation organized under the laws of
the State of Delaware (the "Company"), hereby adopts the Dominick's
Supermarkets, Inc. 1997 Employee Stock Purchase Plan (the "Plans). The purposes
of the Plan are as follows:

(1) To assist employees of the Company and its Subsidiary Corporations (as
defined below) in acquiring a stock ownership interest in the Company pursuant
to a plan which is intended to qualify as an "employee stock purchase plan"
within the meaning of Section 423(b) of the Internal Revenue Code of 1986, as
amended.

(2) To help employees provide for their future security and to encourage
them to remain in the employment of the Company and its Subsidiary
Corporations.

1. DEFINITIONS

Whenever any of the following terms is used in the Plan with the first
letter or letters capitalized, it shall have the following meaning unless
context clearly indicates to the contrary (such definitions to be equally
applicable to both the singular and the plural forms of the terms defined):

(a) "Authorization" has the meaning assigned to that term in Section 3(b)
hereof.

(b) "Board of Directors" or "Board" means the Board of Directors of the
Company.

(d) "Committee" means the committee appointed to administer the Plan
pursuant to Section 2 hereof.

(e) "Company" means Dominick's Supermarkets, Inc., a Delaware corporation.

(f) "Date of Exercise" means, with respect to any Option, the last day of
the Offering Period for which the Option was granted.

(g) "Date of Grant" means, with respect to any Option, the date upon
which the Option is granted, as set forth in Section 3(a) hereof.

(h) "Eligible Compensation" means the employee's base pay.

(i) "Eligible Employee" means an employee of the Company or any
Subsidiary Corporation (1) who does not, immediately after an Option
is granted, own stock possessing five percent or more of the total
combined voting power or value of all classes of stock of the Company,
a Parent Corporation or a Subsidiary Corporation, (2) who has been
employed by the Company or any Subsidiary

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<PAGE> 25

Corporation for not less than one year and (3) is a minimum of
18 years of age at the time of election to participate in the Plan.
For purposes of this paragraph 1 (i), the rules of Section 424(b) of
the Code with regard to the attribution of stock ownership an
individual, and stock which an employee may purchase under
outstanding options shall be treated as stock owned by the employee.
During a leave of absence meeting the requirements of Treasury
Regulation 1.421-7(h)(2), an individual shall be treated as an
employee of the Company or Subsidiary Corporation employing such
individual immediately prior to such leave. "Eligible Employee" shall
not include any director of the Company or any Subsidiary Corporation
who does not render services to the Company in the status of an
employee within the meaning of Section 3401(c) of the Code.

(j) "Independent Director" shall mean a member of the Board who is not
an employee (as defined in accordance with Section 3401(c) of the
Code) of the Company or any Subsidiary Corporation.

(k) "Minimum Holding Period" shall mean one year from the Date of
Exercise with respect to such shares.

(l) "Offering Period" shall mean the three-month periods commencing
January 1, April 1, July 1 and October 1 of each Plan Year as
specified in Section 3(a) hereof or such other dates which are
three months apart as determined by the Committee. Options shall be
granted on the Date of Grant and exercised on the Date of Exercise as
provided in Sections 3(a) and 4(a) hereof.

(m) "Option" means an option granted under the Plan to an Eligible
Employee to purchase shares of the Company's Stock.

(n) "Option Period" means, with respect to any Option, the period
beginning upon the Date of Grant and ending upon the Date of
Exercise.

(o) "Option Price" has the meaning set forth in Section 4(b) hereof.

(p) "Parent Corporation" means any corporation, other than the Company,
in an unbroken chain of corporations ending with the Company if, at
the time of the granting of the Option, each of the corporations
other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the
other corporations in such chain.

(q) "Participant" means an Eligible Employee who has complied with the
provisions of Section 3(b) hereof.

(r) "Payday" means the regular and recurring established day for payment
of cash compensation to employees of the Company or any Subsidiary
Corporation.

(s) "Plan" means the Dominick's Supermarkets, Inc. 1997 Employee
Stock Purchase Plan.

(t) "Plan Year" means the calendar year.

(u) "Stock" means the shares of the Company's common stock, $.01
par value per share.

(v) "Subsidiary Corporation" means any corporation, other than the
Company, in an unbroken chain of corporations beginning with the
Company if, at the time of the granting of the Option, each of the
corporations other than the last corporation in an unbroken chain owns
stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.

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<PAGE> 26

2. STOCK SUBJECT TO THE PLAN

Subject to the provisions of Section 9 hereof (relating to adjustments
upon changes in the Stock) and Section 11 hereof (relating to amendments of the
Plan), the Stock which may be sold pursuant to Options granted under the Plan
shall not exceed an aggregate of 500,000 shares, and may be unissued shares or
treasury shares or shares bought on the market for purposes of the Plan.

3. GRANT OF OPTIONS

(a) General Statement. The Company shall offer Options under the Plan to
all Eligible Employees in successive three-month Offering Periods until the
earlier of (i) the date when the number of shares of Stock available under the
Plan have been sold or (ii) the date when the Plan is terminated. Dates of
Grant shall include January 1, April 1, July 1 and October 1 of each Plan Year
and/or such other date or dates as the Committee may from time to time
determine. Each Option shall expire on the Date of Exercise immediately after
the automatic exercise of the Option pursuant to Section 4(a) hereof. The
number of shares of Stock subject to each Option shall equal the payroll
deductions authorized by each Participant in accordance with subsection (b)
hereof for the Option Period, divided by the Option Price, except as provided
in Section 4(a); provided, however, that the maximum number of shares subject
to any Option shall not exceed 500.

(b) Election to Participate; Payroll Deduction Authorization. Except as
provided in subsection (d) hereof, an Eligible Employee shall participate in
the Plan only by means of payroll deduction. Each Eligible Employee who elects
to participate in the Plan shall deliver to the Company during the calendar
month preceding a Date of Grant no later than ten (10) days before such Date of
Grant, a completed and executed written payroll deduction authorization in a
form prepared by the Company (the "Authorization"). An Eligible Employee's
Authorization shall give notice of such Eligible Employee's election to
participate in the Plan for the next following Offering Period and subsequent
Offering Periods and shall designate a stated whole dollar amount of Eligible
Compensation to be withheld on each Payday. The amount withheld shall not be
less than $5.00 each Payday. The cash compensation payable to a Participant for
an Offering Period shall be reduced each Payday through a payroll deduction in
an amount equal to the stated withdrawal amount specified in the Authorization
payable on such Payday, and such amount shall be credited to the Participant's
account under the Plan. Any Authorization shall remain in effect until the
Eligible Employee amends the same pursuant to this subsection, withdraws
pursuant to Section 5 or ceases to be an Eligible Employee pursuant to Section
6.

(c) $25,000 Limitation. No Eligible Employee shall be granted an Option
under the Plan which permits his rights to purchase stock under the Plan and
under all other employee stock purchase plans of the Company, any Parent
Corporation or any Subsidiary Corporation subject to Section 423 of the Code to
accrue at a rate which exceeds $25,000 of fair market value of such stock
(determined at the time the Option is granted) for each calendar year in which
the Option is outstanding at any time. For purpose of the limitation imposed by
this Subsection 3(c), (i) the right to purchase stock under an Option accrues
when the Option (or any portion thereof) first becomes exercisable during the
calendar year, (ii) the right to purchase stock under an Option accrues at the
rate provided in the Option, but in no case may such rate exceed $25,000 of the
fair market value of such stock (determined at the time such Option is granted)
for any one calendar year and (iii) a right to purchase stock which has accrued
under an Option may not be carried over to any other Option.

(d) Leaves of Absence. During a leave of absence meeting the requirements
of Treasury Regulation Section 1.421-7(h)(2), a Participant may continue to
participate in the Plan by making cash payments to the Company on each Payday
equal to the amount of the Participant's payroll deductions
under the Plan for the Payday immediately preceding the first day of such
Participant's leave of absence.

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<PAGE> 27

4. EXERCISE OF OPTIONS; OPTION PRICE

(a) General Statement. Each Participant automatically and without any act
on such Participant's part shall be deemed to have exercised such Participant's
Option on the Date of Exercise to the extent that the balance then in the
Participant's account under the Plan is sufficient to purchase at the Option
Price shares of Stock subject to the Option. Certificates representing
fractional shares will not be issued.

(b) Option Price Defined. The option price per share of Stock (the "Option
Price") to be paid by a Participant upon the exercise of the Participant's
Option shall be equal to 90% of the lesser of the fair market value of a share
of Stock on the Date of Exercise or the fair market value of a share of Stock
on the Date of Grant. The fair market value of a share of Stock as of a given
date shall be: (i) the closing price of a share of Stock on the principal
exchange on which the Stock is then trading, if any, on such date, or, if
shares were not traded on such date, then on the next preceding trading day
during which a sale occurred; (ii) if the Stock is not traded on an exchange
but is quoted on Nasdaq or a successor quotation system, (1) the last sales
price (if the Stock is then listed as a National Market Issue under the NASD
National Market System) or (2) the mean between the closing representative bid
and asked prices (in all other cases) for a share of the Stock on such date,
or, if shares were not traded on such date, then on the next preceding trading
day during which a sale occurred, as reported by Nasdaq or such successor
quotation system; (iii) if the Stock is not publicly traded on an exchange and
not quoted on Nasdaq or a successor quotation system, the mean between the
closing bid and asked prices for a share of Stock on such date, or, if shares
were not traded on such date, then on the next preceding trading day during
which a sale occurred, as determined in good faith by the Committee; or (iv) if
the Stock is not publicly traded, the fair market value of a share of Stock
established by the Committee acting in good faith.

(c) Delivery of Statement of Account. As soon as practicable after the
exercise of any Option, the Company will deliver to the Participant or his or
her nominee a statement of account indicating the number of shares of Stock
purchased by the Participant from funds credited to the Participant's account
under the Plan. Certificates representing fractional shares will not be issued.
In the event the Company is required to obtain authority from any commission or
agency to issue any such certificate, the Company shall seek to obtain such
authority. The inability of the Company to obtain authority from any such
commission or agency which the Committee in its absolute discretion, deems
necessary for the lawful issuance of any such certificate shall relieve the
Company from liability to any Participant except to pay to the Participant the
amount of the balance in the Participant's account in cash in one lump sum
without any interest thereon.

(d) Pro Rata Allocations. If the total number of shares of Stock for which
Options are to be exercised on any date exceeds the number of shares remaining
unsold under the Plan (after deduction of all shares for which Options have
theretofore been exercised), the Committee shall make a pro rata allocation of
the available remaining shares in as nearly a uniform manner as shall be
practicable and any balance of payroll deductions credited to the accounts of
Participants which have not been applied to the purchase of shares of Stock
shall be paid to such Participants in cash in one lump sum within sixty (60)
days after the Date of Exercise, without any interest thereon.

(e) Shares acquired under the Plan that are held for less than the Minimum
Holding Period shall, at the option of the Company, be sold to the Company at
the lesser of the Option Price paid for such shares or the fair market value of
a share of Stock as defined in Section 4(b).

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<PAGE> 28

5. WITHDRAWAL FROM THE PLAN

(a) General Statement. Any Participant may withdraw from participation
under the Plan at any time except that no Participant may withdraw during the
last ten (10) days of any Offering Period. A Participant who wishes to withdraw
from the Plan must deliver to the Company a notice of withdrawal in a form
prepared by the Company (the "Withdrawal Election") not later than ten (10)
days prior to the Date of Exercise during any Offering Period. Upon receipt of
a Participant's Withdrawal Election, the Company shall pay to the Participant
the amount of the balance in the Participant's account under the Plan in cash
in one lump sum within sixty (60) days, without any interest thereon. Upon
receipt of a Participant's Withdrawal Election by the Company, the Participant
shall cease to participate in the Plan and the Participant's Option shall
terminate.

(b) Eligibility Following Withdrawal. A Participant who withdraws from the
Plan and who is still an Eligible Employee shall be eligible to participate
again in the Plan as of any subsequent Date of Grant by delivering to the
Company an Authorization pursuant to Section 3(b) hereof.

6. TERMINATION OF EMPLOYMENT

(a) Termination of Employment Other than by Death. If the employment of a
Participant terminates other than by death, the Participant's participation in
the Plan automatically and without any act on the Participant's part shall
terminate as of the date of the termination of the Participant's employment. As
soon as practicable after such a termination of employment, the Company will
pay to the Participant the amount of the balance in the Participant's account
under the Plan without any interest thereon. Upon a Participant's termination
of employment covered by this Section 6(a), the Participant's Authorization,
interest in the Plan and Option under the Plan shall terminate.

(b) Termination By Death. If the employment of a Participant is terminated
by the Participant's death, the executor of the Participant's will or the
administrator of the Participant's estate by written notice to the Company may
request payment of the balance in the Participant's account under the Plan, in
which event the Company shall make such payment without any interest thereon as
soon as practicable after receiving such notice. Upon receipt of such notice,
the Participant's Authorization, interest in the Plan and Option under the Plan
shall terminate. If the Company does not receive such notice prior to the next
Date of Exercise, the Participant's Option shall be deemed to have been
exercised on such Date of Exercise.

7. RESTRICTION UPON ASSIGNMENT

An Option granted under the Plan shall not be transferable other than by
will or the laws of descent and distribution, and is exercisable during the
Participant's lifetime only by the Participant. Except as provided in Section
6(b) hereof, an Option may not be exercised to any extent except by the
Participant. The Company shall not recognize and shall be under no duty to
recognize any assignment or alienation of the Participant's interest in the
Plan, the Participant's Option or any rights under the Participant's Option.

8. NO RIGHTS OF STOCKHOLDERS UNTIL SHARES ISSUED

With respect to shares of Stock subject to an Option, a Participant shall
not be deemed to be a stockholder of the Company, and the Participant shall not
have any of the rights or privileges of a stockholder, until such shares have
been issued to the Participant or his or her nominee following exercise of the
Participant's Option. No adjustments shall be made for dividends (ordinary or
extraordinary, whether in cash securities, or other property) or distribution
or other rights for which the record date occurs prior to the date of such
issuance, except as otherwise expressly provided herein.

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<PAGE> 29

9. CHANGES IN THE STOCK; ADJUSTMENTS OF AN OPTION

Whenever any change is made in the Stock or to Options outstanding under
the Plan, by reason of a stock split, stock dividend, recapitalization or other
subdivision, combination, or reclassification of shares, appropriate action
shall be taken by the Committee to adjust accordingly the number of shares of
Stock subject to the Plan and the number and the Option Price of shares of
Stock subject to the Options outstanding under the Plan to preserve, but not
increase, the rights of Participants hereunder.

10. USE OF FUNDS; NO INTEREST PAID

All funds received or held by the Company under the Plan shall be included
in the general funds of the Company free of any trust or other restriction and
may be used for any corporate purpose. No interest will be paid to any
Participant or credited to any Participant's account under the Plan with
respect to such funds.

11. AMENDMENT OF THE PLAN

The Board of Directors may amend, suspend, or terminate the Plan at any
time and from time to time, provided that approval by a vote of the holders of
more than 50% of the outstanding shares of the Company's capital stock entitled
to vote shall be required to amend the Plan (i) to decrease the Option Price
below a price computed in the manner stated in Section 4(b) hereof, (ii) to
alter the requirements for eligibility to participate in the Plan or (iii) in
any manner that would cause the Plan to no longer be an "employee stock
purchase plan" within the meaning of Section 423(b) of the Code, provided
further that with respect to any amendment to the Plan increasing the aggregate
number of shares which may be issued under the Plan, such amendment must be
approved by the stockholders of the Company within 12 months of such adoption.

12. ADMINISTRATION BY COMMITTEE; RULES AND REGULATIONS

(a) Appointment of Committee. The Plan shall be administered by the
Committee. The Committee shall consist of the entire Board until such time as
the Board, in its sole discretion, appoints a committee of the Board to
administer the Plan. Any such committee shall consist solely of two or more
Independent Directors appointed by and holding office at the pleasure of the
Board, each of whom is "non-employee director" as defined by Rule 16b-3. Each
member of the Committee shall serve for a term commencing on a date specified
by the Board of Directors and continuing until the member dies or resigns or is
removed from office by the Board of Directors. Appointment of Committee members
shall be effective upon acceptance of appointment. Committee members may resign
at any time by delivering written notice to the Board. Vacancies in the
Committee may be filled by the Board. The Committee at its option may utilize
the services of an agent to assist in the administration of the Plan including
establishing and maintaining an individual securities account under the Plan
for each Participant.

(b) Duties and Powers of Committee. It shall be the duty of the Committee
to conduct the general administration of the Plan in accordance with the
provisions of the Plan. The Committee shall have the power to interpret the
Plan and the terms of the Options and to adopt such rules for the
administration, interpretation, and application of the Plan as are consistent
therewith and to interpret, amend or revoke any such rules. In its absolute
discretion, the Board may at any time and from time to time exercise any and all
rights and duties of the Committee under the Plan.

(c) Majority Rule. The Committee shall act by a majority of its members in
office. The Committee may act either by vote at a meeting or by a memorandum or
other written instrument signed by a majority of the Committee.

A-6

<PAGE> 30

(d) Compensation; Professional Assistance; Good Faith Actions. All
expenses and liabilities incurred by members of the Committee in connection
with the administration of the Plan shall be borne by the Company. The
Committee may, with the approval of the Board, employ attorneys, consultants,
accountants, appraisers, brokers or other persons. The Committee, the Company
and its officers and directors 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, the Company 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 Plan or
the Options, and all members of the Committee shall be fully protected by the
Company in respect to any such action, determination, or interpretation.

13. NO RIGHTS AS AN EMPLOYEE

Nothing in the Plan shall be construed to give any person (including any
Eligible Employee or Participant) the right to remain in the employ of the
Company, a Parent Corporation or a Subsidiary Corporation or to affect the
right of the Company, any Parent Corporation or any Subsidiary Corporation to
terminate the employment of any person (including any Eligible Employee or
Participant) at any time, with or without cause.

14. MERGER, ACQUISITION OR LIQUIDATION OF THE COMPANY

In the event of the merger or consolidation of the Company into another
corporation, the acquisition by another corporation of all or substantially all
of the Company's assets or 50% or more of the Company's then outstanding voting
stock, the liquidation or dissolution of the Company or any other
reorganization of the Company, the Date of Exercise with respect to outstanding
Options shall be the business day immediately preceding the effective date of
such merger, consolidation, acquisition, liquidation, dissolution, or
reorganization unless the Committee shall, in its sole discretion, provide for
the assumption or substitution of such Options in a manner complying with
Section 424(a) of the Code.

15. TERM; APPROVAL BY STOCKHOLDERS

No Option may be granted during any period of suspension of the Plan or
after termination of the Plan. The Plan shall be submitted for the approval of
the Company's stockholders within 12 months after the date of the Board of
Directors' adoption of the Plan. Options may be granted prior to such
stockholder approval; provided, however, that such Options shall not be
exercisable prior to the time when the Plan is approved by the stockholders;
and provided, further, that if such approval has not been obtained by the end of
said 12-month period, all Options previously granted under the Plan shall
thereupon expire.

16. EFFECT UPON OTHER PLANS

The adoption of the Plan shall not affect any other compensation or
incentive plans in effect for the Company, any Parent Corporation or any
Subsidiary Corporation. Nothing in this Plan shall be construed to limit the
right of the Company, any Parent Corporation or any Subsidiary Corporation (a)
to establish any other forms of incentives or compensation for employees of the
Company, any Parent Corporation or any Subsidiary Corporation or (b) to grant
or assume options otherwise than under this Plan in connection with any proper
corporate purpose, including, but not by way of limitation, the grant or
assumption of options in connection with the acquisition, by purchase, lease,
merger, consolidation or otherwise, of the business, stock or assets of any
corporation, firm or association.

A-7

<PAGE> 31

17. CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES.

The Company shall not be required to issue or deliver any certificate or
certificates for shares of Stock purchased upon the exercise of Options prior
to fulfillment of all the following conditions:

(a) The admission of such shares to listing on all stock exchanges, if
any, on which is then listed; and

(b) The completion of any registration or other qualification of such
shares under any state or federal law or under the rulings or regulations
of the Securities and Exchange Commission or any other governmental
regulatory body, which the Committee shall, In its absolute discretion,
deem necessary or advisable; and

(c) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and

(d) The payment to the Company of all amounts which it is required to
withhold under federal, state or local law upon exercise of the Option; and

(e) The lapse of such reasonable period of time following the exercise
of the Option as the Committee may from time to time establish for reasons
of administrative convenience.

(f) The expiration of the Minimum Holding Period with respect to such
shares, subject to the option of the Company.

18. NOTIFICATION OF DISPOSITION

Each Participant shall give prompt notice to the Company of any
disposition or other transfer of any shares of Stock purchased upon exercise of
an Option if such disposition or transfer is made (a) within two (2) years from
the Date of Grant of the Option or (b) within one (1) year after the transfer
of such shares to such Participant upon exercise of such Option. Such notice
shall specify the date of such disposition or other transfer and the amount
realized, in cash, other property, assumption of indebtedness or other
consideration, by the Participant in such disposition or other transfer.

19. NOTICES

Any notice to be given under the terms of the Plan to the Company shall be
addressed to the Company in care of its Secretary and any notice to be given to
any Eligible Employee or Participant shall be addressed to such Employee at
such Employee's last address as reflected in the Company's records. By a notice
given pursuant to this Section, either party may designate a different address
for notices to be given to it, him or her. Any notice which is required to be
given to an Eligible Employee or a Participant shall, if the Eligible Employee
or Participant is then deceased, be given to the Eligible Employee's or
Participant's personal representative if such representative has previously
informed the Company of his status and address by written notice under this
Section. Any notice shall have been deemed duly given if enclosed in a properly
sealed envelope or wrapper addressed as aforesaid at the time it is deposited
(with postage prepaid) in a post office or branch post office regularly
maintained by the United States Postal Service.

A-8

<PAGE> 32

20. HEADINGS

Headings are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of the Plan.

A-9

<PAGE> 33

DOMINICK'S SUPERMARKETS, INC.

P ANNUAL MEETING OF STOCKHOLDERS - MARCH 3,1998
R
O THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
X
Y The undersigned stockholder of DOMINICK'S SUPERMARKETS, INC. does
hereby nominate, constitute and appoint Robert A. Mariano and Darren W. Karst
or either of them, the true and lawful proxies, agents and attorneys of the
undersigned, with full power of substitution, to vote for the undersigned all
of the common stock of said corporation standing in the name of the undersigned
on its books at the close of business on January 23, 1998 at the Annual Meeting
of Stockholders to be held at the Park Hyatt Los Angeles Hotel at Century City
located at 2151 Avenue of the Stars, Los Angeles, California 90067, on
Tuesday, March 3, 1998 at 1:00 p.m., local time, or any adjournment thereof,
with all of the powers which would be possessed by the undersigned if
personally present as follows on the reverse side.

CONTINUED AND TO BE SIGNED ON OTHER SIDE.

<PAGE> 34

[X] Please mark votes as in this example.

IF NO CONTRARY INSTRUCTION IS INDICATED, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF MANAGEMENT'S FOUR NOMINEES AS DIRECTORS.

<TABLE>
<CAPTION>
<S> <C> <C>
1. Election of Directors: 3. In their discretion, the Proxies
are authorized to vote upon
such other business as may
properly come before the meeting.

Nominees: Grace Barry, Peter P. Copses,
Robert A. Mariano and Ira L. Tochner.

FOR WITHHOLD ABSTAIN
[ ] [ ] [ ]
MARK HERE FOR ADDRESS
CHANGE AND NOTE AT LEFT [ ]

[ ] ____________________________________
For all nominees except as noted above

2. Adoption of the Dominick's Supermarkets, Inc. The undersigned hereby
1997 Employee Stock Purchase Plan acknowledges receipt of the
Notice of Annual Meeting
of Stockholders and the
Proxy Statement furnished
therewith.

FOR AGAINST ABSTAIN
[ ] [ ] [ ]

NOTE: Please sign name exactly as your name (or names) appear on the stock
certificate. When signing as attorney, executor, administrator, trustee or
guardian please give full title. If more than one trustee, all should sign. All
joint owners must sign.

PLEASE FILL IN, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED

Signature.........................Date....................

ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.

Signature.........................Date....................
</TABLE>