
<PAGE>
 
                                                                Draft of 7/31/95
                                                                     EXHIBIT 1.1

                                 THE KROGER CO.
                                  COMMON STOCK
                          (PAR VALUE $1.00 PER SHARE)
                                   __________

                               STANDBY AGREEMENT



                                                          ________________, 1995

Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.

Dear Sirs:

          The Kroger Co., an Ohio corporation (the "Company"), proposes, subject
to the terms and conditions stated herein, to redeem on __________, 1995 (the
"Redemption Date") all of its outstanding 6-3/8% Convertible Junior Subordinated
Notes due 1999 (the "Securities"), which are convertible into shares (the
"Conversion Shares") of Common Stock, par value $1.00 per share (the "Common
Stock"), of the Company, at a redemption price of 104.554% of the principal
amount of Securities plus accrued interest thereon from June 1, 1995 to the
Redemption Date (the "Redemption Price"). The right to convert such Securities
into Common Stock will expire at the close of business on ____________, 1995
(the "Expiration Date").

          The Company desires to make arrangements pursuant to which the Company
will have the option to sell directly to Goldman, Sachs & Co. (the "Purchaser")
up to the number of shares of Common Stock (the "Shares") equal to the positive
difference, if any, between (i) the number of shares (the "Redemption Shares")
of Common Stock that would have been issuable upon conversion of the Securities
that are not surrendered for conversion on or prior to the close of business on
the Expiration Date, minus (ii) (A) if on the close of business on the
Expiration Date the Closing Price (as defined in Section 10) of the Common Stock
is greater than $19.84 per share, 535,332 shares of Common Stock or (B) if such
Closing Price is not greater than $19.84 per share, zero.

     1.  The Company represents and warrants to, and agrees with, the Purchaser
that:

          (a)  A registration statement in respect of the Shares has been filed
     with the Securities and Exchange Commission (the "Commission"); such
     registration statement and any post-effective amendment thereto, each in
     the form heretofore delivered to you, and, excluding exhibits thereto but
     including all documents incorporated by reference in the prospectus
     contained therein, to you have been declared effective by the Commission in
     such form; no other document with respect to such registration statement or
     document incorporated by reference therein has heretofore been filed or
     transmitted for filing with the Commission; no stop orders suspending the
     effectiveness of such registration statement has been issued and no
     proceeding for that
<PAGE>
 
     purpose has been initiated or threatened by the Commission; the various
     parts of such registration statement, including all exhibits thereto, and
     including the documents incorporated by reference in the prospectus
     contained in the registration statement at the time such registration
     statement became effective, each as amended at the time such registration
     statement became effective, being hereinafter called the "Registration
     Statement"; and the prospectus on file with the Commission at the time the
     Registration Statement became effective being hereinafter called the
     "Prospectus;"  and any reference herein to the Prospectus shall be deemed
     to refer to and include the documents incorporated by reference therein
     pursuant to Item 12 of Form S-3 under the Act; any reference to any
     amendment or supplement to the Prospectus shall be deemed to refer to and
     include any documents filed after the date of such Prospectus, under the
     Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
     incorporated by reference in such Prospectus; and any reference to any
     amendment to the Registration Statement shall be deemed to refer to and
     include any annual report of the Company filed pursuant to Section 13(a) or
     15(d) of the Exchange Act after the effective date of the Registration
     Statement that is incorporated by reference in the Registration Statement;

          (b)  The documents incorporated by reference in the Prospectus, when
     they were filed with the Commission, conformed in all material respects to
     the requirements of the Act or the Exchange Act, as applicable, and the
     rules and regulations of the Commission thereunder, and none of such
     documents at such filing date contained an untrue statement of a material
     fact or omitted to state a material fact required to be stated therein or
     necessary to make the statements therein not misleading; and any further
     documents so filed and incorporated by reference in the Prospectus or any
     further amendment or supplement thereto, when such documents become
     effective or are filed with the Commission, as the case may be, will
     conform in all material respects to the requirements of the Act or the
     Exchange Act, as applicable, and the rules and regulations of the
     Commission thereunder and will not contain an untrue statement of a
     material fact or omit to state a material fact required to be stated
     therein or necessary to make the statements therein not misleading;
     provided, however, that this representation and warranty shall not apply to
     any statements or omissions made in reliance upon and in conformity with
     information furnished in writing to the Company by the Purchaser expressly
     for use therein;

          (c)  The Registration Statement conforms, and the Prospectus and any
     further amendments or supplements to the Registration Statement or the
     Prospectus did or will, at the time of effectiveness or filing with the
     Commission, as the case may be, conform, in all material respects to the
     requirements of the Act and the rules and regulations of the Commission
     thereunder and do not and will not, as of the applicable effective date as
     to the Registration Statement and any amendment thereto and as of the
     applicable filing date as to the Prospectus and any amendment or supplement
     thereto, contain an untrue statement of a material fact or omit to state a
     material fact required to be stated therein or necessary to make the
     statements therein not misleading; provided, however, that this
     representation and warranty shall not apply to any statements or omissions
     made in reliance upon and in conformity with information furnished in
     writing to the Company by the Purchaser expressly for use therein;

                                      -2-
<PAGE>
 
          (d)  Neither the Company nor any of its subsidiaries has sustained
     since the date of the latest audited financial statements included or
     incorporated by reference in the Prospectus any material loss or
     interference with its businesses from fire, explosion, flood or other
     calamity, whether or not covered by insurance, or from any material labor
     dispute or court or governmental action, order or decree, otherwise than as
     set forth or contemplated in the Prospectus; and, since the respective
     dates as of which information is given in the Registration Statement and
     the Prospectus, there has not been any material change in the capital stock
     or long-term debt of the Company or any of its subsidiaries or any material
     adverse change, or any development involving a prospective material adverse
     change, in or affecting the general affairs, management, financial
     position, stockholders' equity or results of operations of the Company and
     its subsidiaries, otherwise than as set forth or contemplated in the
     Prospectus;

          (e)  The Company and its subsidiaries have good and marketable title
     in fee simple to all real property and good and marketable title to all
     personal property owned by them, in each case free and clear of all liens,
     encumbrances and defects except such as are described in the Prospectus or
     such as do not materially affect the value of such property and do not
     materially interfere with the use made and proposed to be made of such
     property by the Company and its subsidiaries; and any real property and
     buildings held under lease by the Company and its subsidiaries are held by
     them under valid, subsisting and enforceable leases with such exceptions as
     are not material and do not materially interfere with the use made and
     proposed to be made of such property and buildings by the Company and its
     subsidiaries;

          (f)  The Company has been duly incorporated and is validly existing as
     a corporation in good standing under the laws of the State of Ohio, with
     power and authority (corporate and other) to own its properties and conduct
     its business as described in the Prospectus, and has been duly qualified as
     a foreign corporation for the transaction of business and is in good
     standing under the laws of each other jurisdiction in which it owns or
     leases properties, or conducts any business, so as to require such
     qualification, or is subject to no material liability or disability by
     reason of the failure to be so qualified in any such jurisdiction; and each
     subsidiary of the Company has been duly incorporated and is validly
     existing as a corporation and is in good standing under the laws of its
     jurisdiction of incorporation;

          (g)  The Company has an authorized capitalization as set forth in the
     Prospectus, and all of the issued shares of capital stock of the Company
     have been duly and validly authorized and issued, are fully paid and non-
     assessable and conform to the description of the Common Stock contained in
     the Prospectus; the Conversion Shares have been duly and validly authorized
     and reserved for issuance; the Conversion Shares, when issued and delivered
     in accordance with the provisions of the Securities and the Indenture dated
     as of December 1, 1992 (the "Indenture") between the Company and Chemical
     Bank, as Trustee (the "Trustee"), and the Shares, when issued and delivered
     upon sale by the Company to the Purchaser as herein provided, will be duly
     and validly issued, fully paid and non-assessable and will conform to the
     description of the Common Stock contained in the Prospectus; the Company's
     stockholders have no preemptive rights with respect to the Common Stock;
     and all of the issued shares of capital stock of each subsidiary of the
     Company have been duly and validly authorized and issued, are fully paid
     and non-assessable and (except for

                                      -3-
<PAGE>
 
     directors' qualifying shares) are owned directly or indirectly by the
     Company, free and clear of all liens, encumbrances, equities or claims,
     other than liens arising under the Senior Competitive Advance and Revolving
     Credit Facility Agreement, dated as of July 19, 1994, among the Company
     and the financial institutions named therein, the Indenture, dated as of
     January 1, 1993 between the Company and IBJ Schroder Bank & Trust Company
     and the Indenture, dated as of July 1, 1993 between the Company and Star
     Bank, National Association, as Trustee;

          (h)  At the close of business on _________, 1995, $___________
     principal amount of the Securities was outstanding; the Company has duly
     authorized the redemption of all outstanding Securities on the Redemption
     Date at the Redemption Price and the Company has taken all action required
     to be taken through the date hereof under the terms of the Securities, the
     Indenture and otherwise to effect such redemption; the Securities are, and
     will continue to be, convertible into the Conversion Shares at the
     conversion price of $18.68 per share of Common Stock by surrender of
     Securities to the Trustee prior to the close of business on the Expiration
     Date, at which time the conversion right will expire;

          (i)  The redemption of the Securities, the issuance and sale of the
     Conversion Shares upon conversion of the Securities and the Shares upon the
     sale by the Company to the Purchaser as herein provided, and the compliance
     by the Company with all of the provisions of this Agreement and the
     consummation of the transactions contemplated herein will not conflict with
     or result in a breach or violation of any of the terms or provisions of, or
     constitute a default under, any indenture, mortgage, deed of trust, loan
     agreement or other agreement or instrument to which the Company or any of
     its subsidiaries is a party or by which the Company or any of its
     subsidiaries is bound or to which any of the property or assets of the
     Company or any of its subsidiaries is subject; nor will such actions result
     in any violation of the provisions of the Articles of Incorporation, as
     amended, or the Regulations of the Company; nor will such actions result in
     a violation of any statute or any order, rule or regulation of any court or
     governmental agency or body having jurisdiction over the Company or any of
     its subsidiaries or any of their properties; and no consent, approval,
     authorization, order, registration or qualification of or with any such
     court or governmental agency or body is required for the redemption of the
     Securities, the issuance of the Conversion Shares upon conversion of the
     Securities or the Shares upon the sale by the Company to the Purchaser as
     herein provided, or the consummation by the Company of the transactions
     contemplated by this Agreement except registration of the Shares under the
     Act, which will have been completed on the date hereof, listing of the
     Shares on the New York Stock Exchange ("NYSE"), which will be completed
     prior to the Time of Delivery (as defined in Section 3), and such consents,
     approvals, authorizations, registrations or qualifications as may be
     required under state securities or Blue Sky laws in connection with the
     purchase and distribution of the Shares by the Purchaser as herein
     provided;

          (j)  Other than as set forth or contemplated in the Prospectus, there
     are no legal or governmental proceedings pending to which the Company or
     any of its subsidiaries is a party or of which any property of the Company
     or any of its subsidiaries is the subject with respect to which there is a
     reasonable likelihood of a determination which would individually or in the
     aggregate have a material adverse effect on the consolidated financial
     position, stockholders' equity or results of operations of the

                                      -4-
<PAGE>
 
     Company and its subsidiaries; and, to the best of the Company's knowledge,
     no such proceedings are threatened or contemplated by governmental
     authorities or threatened by others;

          (k)  The Company is not subject to regulation under the Investment
     Company Act of 1940, as amended (the "Investment Company Act");

          (l)  Coopers & Lybrand L.L.P., who have audited certain consolidated
     financial statements of the Company and its subsidiaries, are independent
     public accountants as required by the Act and the rules and regulations of
     the Commission thereunder;

          (m)  None of the transactions contemplated by this Agreement
     (including, without limitation, the use of the proceeds from the sale of
     the Shares) will violate or result in a violation of Section 7 of the
     Exchange Act, or any regulation promulgated thereunder, including, without
     limitation, Regulations G, T, U and X of the Board of Governors of the
     Federal Reserve System;

          (n)  The Company will apply the net proceeds from the sale of Shares
     for the purpose set forth in the Prospectus under the caption "Use of
     Proceeds";

          (o)  No person has any right to request or demand to have any shares
     of Common Stock or other securities of the Company registered pursuant to
     the Registration Statement or another registration statement pursuant to
     the Act;

          (p)  The statements set forth in the Prospectus under the caption
     "Description of Capital Stock", insofar as they purport to constitute a
     summary of the terms of the capital stock of the Company and under the
     captions "Standby Arrangements" and "Redemption of Notes and Alternatives
     to Redemption", insofar as they purport to describe the provisions of the
     laws and documents referred to therein, are accurate, complete and fair;
     and

          (q)  Neither the Company nor any of its affiliates does business with
     the government of Cuba or with any person or affiliate located in Cuba
     within the meaning of Section 517.075, Florida Statutes.

     2.  (a)  Subject to the terms and conditions herein set forth, the
     Purchaser agrees, at the option of the Company, exercisable by giving
     notice to the Purchaser not later than 5:00 p.m., New York City time, on
     the Expiration Date, to purchase from the Company at the Time of Delivery
     at a price per share of $19.34, if there are fewer than 2,675,000
     Redemption Shares, and $19.10 per share if there are 2,675,000 or more
     Redemption Shares, such number of Shares as shall be specified in such
     notice but not in excess of the total number of Shares; and

          (b) Certificates in definitive form for the Shares to be purchased by
     the Purchaser hereunder shall be delivered by or on behalf of the Company
     against payment by Purchaser of the purchase price therefor at the office
     of Goldman, Sachs & Co., 85 Broad Street, New York, New York 10004.

                                      -5-
<PAGE>
 
     3.  As compensation to the Purchaser for its commitment hereunder, the
Company agrees to pay to the Purchaser, no later than 2:00 pm, (New York City
time) on ________, 1995 (such time and date being hereinafter referred to as the
"Time of Delivery") at the offices of Sullivan & Cromwell, 250 Park Avenue, New
York, New York 10177, in immediately available funds, payable by wire
transferred to an account designated by the Purchaser, the sum of $250,000.

     4.  The Company agrees with the Purchaser:

          (a)  To make no further amendment or any supplement to the
     Registration Statement or Prospectus prior to the Time of Delivery which
     shall be disapproved by you in good faith promptly after reasonable notice
     thereof; to advise you, promptly after it receives notice thereof, of the
     time when the Registration Statement, or any amendment thereto, has been
     filed or becomes effective or any supplement to the Prospectus or any
     amended Prospectus has been filed and to furnish you with copies thereof;
     to timely file all reports and any definitive proxy or information
     statements required to be filed by the Company with the Commission pursuant
     to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the
     date of the Prospectus and for so long as the delivery of a prospectus is
     required in connection with the offering or sale of the Shares; to advise
     you, promptly after it receives notice thereof, of the issuance by the
     Commission of any stop order or of any order preventing or suspending the
     use of the Prospectus, of the suspension of the qualification of the Shares
     for offering or sale in any jurisdiction, of the initiation or threatening
     of any proceeding for any such purpose, or of any request by the Commission
     for the amending or supplementing of the Registration Statement or
     Prospectus or for additional information; and, in the event of the issuance
     of any stop order or of any order preventing or suspending the use of the
     Prospectus or suspending any such qualification, to use promptly its best
     efforts to obtain its withdrawal;

          (b)  Promptly from time to time to take such action as you may
     reasonably request to qualify the Shares for offering and sale under the
     securities laws of such jurisdictions as you may request and to comply with
     such laws so as to permit the continuance of sales and dealings therein in
     such jurisdictions for as long as may be necessary to complete the
     distribution of the Shares, provided that in connection therewith the
     Company shall not be required to qualify as a foreign corporation or to
     file a general consent to service of process in any jurisdiction;

          (c)  To furnish the Purchaser with copies of the Prospectus in such
     quantities as you may from time to time reasonably request, and, if the
     delivery of a prospectus is required at any time prior to the expiration of
     nine months after the time of issue of the Prospectus in connection with
     the offering or sale of the Shares and if at such time any event shall have
     occurred as a result of which the Prospectus as then amended or
     supplemented would include an untrue statement of a material fact or omit
     to state any material fact necessary in order to make the statements
     therein, in the light of the circumstances under which they were made when
     such Prospectus is delivered, not misleading, or, if for any other reason
     it shall be necessary during such period to amend or supplement the
     Prospectus or to file under the Exchange Act any document incorporated by
     reference in the Prospectus in order to comply with the Act or the Exchange
     Act, to notify you and upon your request to file such document and to

                                      -6-
<PAGE>
 
     prepare and furnish without charge to the Purchaser and to any dealer in
     securities as many copies as you may from time to time reasonably request
     of an amended Prospectus or a supplement to the Prospectus which will
     correct such statement or omission or effect such compliance, and in case
     the Purchaser is required to deliver a prospectus in connection with sales
     of any of the Shares at any time nine months or more after the time of
     issue of the Prospectus, upon request of the Purchaser but at the expense
     of the Purchaser, to prepare and deliver to the Purchaser as many copies as
     you may request of an amended or supplemented Prospectus complying with
     Section 10(a)(3) of the Act;

          (d)  To make generally available to its securityholders as soon as
     practicable, but in any event not later than eighteen months after the
     effective date of the Registration Statement (as defined in Rule 158(c)),
     an earnings statement of the Company and its subsidiaries (which need not
     be audited) complying with Section 11(a) of the Act and the rules and
     regulations thereunder (including at the option of the Company Rule 158);

          (e)  During the period beginning from the date hereof and continuing
     to and including the Time of Delivery and, if the Purchaser purchases any
     Shares hereunder, further continuing to and including the date 180 days
     after the Redemption Date, not to offer, sell, contract to sell or
     otherwise dispose of, any shares of Common Stock of the Company, any
     securities of the Company substantially similar to the Common Stock or any
     securities convertible into or exchangeable for Common Stock or any
     substantially similar security (except for any securities, issued, offered,
     sold or disposed of by the Company to its stock option and other benefit
     plans maintained for its officers, directors and employees or Common Stock
     issued or distributed in connection with the conversion of any security of
     the Company outstanding on the date of the Prospectus) without your prior
     written consent;

          (f)  To use its best efforts to list, subject to notice of issuance,
     the Shares on the NYSE; and

          (g)  To cause to be given notice of redemption on the date hereof (the
     "Effective Date"), such notice to be in the form submitted to and approved
     by you and to be in accordance with the requirements of Article Eleven of
     the Indenture, and to contain the information called for thereby, and to
     furnish such copies of such notice to you as you may request; and, in
     addition, to cause to be given notice of redemption by press release at
     such times as you and the Company may mutually agree;

          (h)  To advise you or to cause you to be advised on each business day
     prior to the Time of Delivery of the principal amount of the Securities
     surrendered on the preceding business day for conversion into shares of
     Common Stock or for redemption; and

          (i)  To supplement the Prospectus, or file a post-effective amendment
     to the Registration Statement, after the Redemption Date to set forth the
     results of the call for redemption and other information that may be
     required to comply with the rules of the Commission, if applicable, and, if
     the Purchaser purchases any Shares hereunder, not later than 15 days after
     the Redemption Date, to file a post-effective amendment

                                      -7-
<PAGE>
 
     to the Registration Statement or to take such other steps as may be
     necessary to remove from registration all shares of Common Stock which have
     not been issued to the Purchaser pursuant to Section 2 hereof.

     5.  The Company covenants and agrees with the Purchaser that the Company
will pay or cause to be paid the following:  (i) the fees, disbursements and
expenses of the Company's counsel and accountants in connection with the
registration of the Shares under the Act, the redemption of the Securities, the
issuance of the Conversion Shares upon conversion of the Securities or the
Shares upon the sale by the Company to the Purchaser as herein provided, and all
other expenses in connection with the preparation, printing and filing of the
Registration Statement, and the Prospectus and amendments and supplements
thereto and the mailing and delivering of copies thereof to the Purchaser and
dealers; (ii) the cost of printing, producing this Agreement, the Blue Sky
survey or publishing the notice of redemption of the Securities and related
letters of transmittal, notice of guaranteed delivery and any other documents
(including newspaper notices or advertisements) in connection with the
redemption or conversion of the Securities and the offering, purchase, sale and
delivery of the Shares; (iii) all expenses in connection with the qualification
of the Shares for offering and sale under state securities laws as provided in
Section 4(b) hereof, including the fees and disbursements of counsel for the
Purchaser in connection with such qualification and in connection with the Blue
Sky surveys; (iv) the filing fees incident to securing any required review by
the National Association of Securities Dealers, Inc. of the terms of the
issuance or sale of the Shares; (v) the cost of preparing stock certificates;
(vi) the cost and charges of any transfer agent or registrar for the Securities
and the Common Stock and any fees and expenses incurred under the Indenture;
(vii) the fees and expenses of the Trustee and any agent of the Trustee, and the
fees and disbursements of counsel for the Trustee in connection with the
redemption of the Securities; (viii) the fees incurred in connection with
listing the Shares on the NYSE; (ix) if the Purchaser does not purchase any 
Shares hereunder the reasonable fees and disbursements of counsel to the
Purchaser; and (x) all other costs and expenses incident to the performance of
its obligations hereunder which are not otherwise specifically provided for in
this Section. Except as otherwise provided by this Section, Section 8 and
Section 11, Purchaser shall pay all of its own costs and expenses, including any
advertising expenses connected with any offer it may make.

     6.  (a) Until the close of business on the Expiration Date, the Purchaser
may conduct a trading account to purchase Securities in such amount and at such
prices as the Purchaser may deem advisable. All Securities so purchased will be
converted into shares of Common Stock. The shares of Common Stock acquired by
the Purchaser pursuant to the provisions of this Section may be sold at any time
or from time to time by the Purchaser. It is also understood that, for the
purpose of stabilizing the price of the Common Stock or otherwise, the Purchaser
may purchase and sell shares of Common Stock or other securities of the Company
and over-allot in effecting sales of Common Stock, all in such amounts and at
such prices as the Purchaser may deem advisable.

     (b) The Purchaser agrees to remit to the Company an amount equal to not
less than 50% of the excess, if any, of (i) the total proceeds received on the
sale of the Shares, less any selling concessions, transfer taxes and other
direct out-of-pocket selling expenses, over (ii) the purchase price for the 
Shares hereunder. On completion of the sale of all of the Shares, the Purchaser 
will furnish the Company a statement setting forth the total proceeds received
on the sale of the Shares and the applicable selling concessions, transfer taxes
and other direct, out-of-pocket selling expenses. Payment of any amount due
under this paragraph will be made by the Purchaser on the second business day
following the sale by the Purchaser of all the Shares in New York Clearing
House (next day) funds drawn to the order of the Company. 

     7.  The obligations of the Purchaser hereunder, shall be subject, in its
discretion, to the condition that all representations and warranties and other
statements of the Company herein are, at and as of the Effective Date and are
at, and as of the Time of Delivery (other than Section 1(d)) true and correct,
the condition that the Company shall have performed all of its obligations
hereunder theretofore to be performed, and the following additional conditions
(other than, in the case of the Time of Delivery, paragraphs (e), (f), and, to 
the extent related to paragraph (e), paragraph (i)):

                                      -8-
<PAGE>
 
          (a)  The Registration Statement shall have become effective, and you
     shall have received prompt notice thereof; no stop order suspending the
     effectiveness of the Registration Statement shall have been issued and no
     proceeding for that purpose shall have been initiated or threatened by the
     Commission; and all requests for additional information on the part of the
     Commission shall have been compiled with to your reasonable satisfaction;

          (b)  Sullivan & Cromwell, counsel for the Purchaser, shall have
     furnished to you such opinion or opinions, dated the Effective Date and the
     Time of Delivery, with respect to the incorporation of the Company, this
     Agreement, the validity of the Shares, the Registration Statement, the
     Prospectus, and other related matters as you may reasonably request, and
     such counsel shall have received such papers and information as they may
     reasonably request to enable them to pass upon such matters;

          (c)  Paul W. Heldman, Vice President, Secretary and General Counsel of
     the Company, shall have furnished to you his written opinion, dated the
     Effective Date and Time of Delivery, in form and substance satisfactory to
     you, to the effect that:

                    (i)  The Company has been duly incorporated and is validly
          existing as a corporation in good standing under the laws of the State
          of Ohio, with corporate power and authority to own its properties and
          conduct its business as described in the Prospectus;

                    (ii)  The Company has an authorized capitalization as set
          forth in the Prospectus, and all of the issued shares of capital stock
          of the Company have been duly and validly authorized and issued and
          are fully paid and non-assessable; the Conversion Shares and the
          Shares have been duly and validly authorized for issuance; the
          Conversion Shares, when issued and delivered in accordance with the
          Securities and the Indenture, and the Shares, when issued and
          delivered upon the sale by the Company to the Purchaser as herein
          provided, will be duly and validly issued and fully paid and non-
          assessable and will conform to the description of the Common Stock
          contained in the Prospectus;

                    (iii)  The Company has been duly qualified as a foreign
          corporation for the transaction of business and is in good standing
          under the laws of each other jurisdiction in which it owns or leases
          properties, or conducts any business, so as to require such
          qualification, or is subject to no material liability or disability by
          reason of failure to be so qualified in any such jurisdiction (such
          counsel being entitled to rely in respect of the opinion in this
          clause upon opinions of local counsel and in respect of matters of
          fact upon certificates of officers of the Company, provided that such
          counsel shall state that he believes that both you and he are
          justified in relying upon such opinions and certificates);

                    (iv)  Each subsidiary of the Company, with respect to which
          the Company owns, directly or indirectly, a 50% or greater equity
          interest (each a "subsidiary"), has been duly incorporated and is
          validly existing as a corporation in good standing under the laws of
          its jurisdiction of incorporation; and all of

                                      -9-
<PAGE>
 
          the issued shares of capital stock of each such subsidiary have been
          duly and validly authorized and issued, are fully paid and non-
          assessable, and (except for directors' qualifying shares) are owned
          directly or indirectly by the Company, free and clear of all liens,
          encumbrances, equities or claims, other than liens arising under the
          Senior Competitive Advance and Revolving Credit Facility Agreement,
          dated as of July 19, 1994, among the Company and the financial
          institutions named therein, the Indenture, dated as of January 1, 1993
          between the Company and IBJ Schroder Bank & Trust Company and the
          Indenture, dated as of July 1, 1993 between the Company and Star, Bank
          National Association, as Trustee, (such counsel being entitled to rely
          in respect of the opinion in this clause upon opinions of local
          counsel and in respect of matters of fact upon certificates of
          officers of the Company or its subsidiaries, provided that such
          counsel shall state that he believes that both you and he are
          justified in relying upon such opinions and certificates);

                    (v)   The Company and its subsidiaries have good and
          marketable title in fee simple to all real property owned by them, in
          each case free and clear of all liens, encumbrances and defects except
          such as are described in the Prospectus or such as do not materially
          affect the value of such property and do not interfere with the use
          made and proposed to be made of such property by the Company and its
          subsidiaries; and any real property and buildings held under lease by
          the Company and its subsidiaries are held by them under valid,
          subsisting and enforceable leases with such exceptions as are not
          material and do not interfere with the use made and proposed to be
          made of such property and buildings by the Company and its
          subsidiaries (in giving the opinion in this clause, such counsel may
          state that no examination of record titles for the purpose of such
          opinion has been made, and that he is relying upon a general review of
          the titles of the Company and its subsidiaries, upon opinions of local
          counsel and abstracts, reports and policies of title companies
          rendered or issued at or subsequent to the time of acquisition of such
          property by the Company or its subsidiaries, upon opinions of counsel
          to the lessors of such property and, in respect of matters of fact,
          upon certificates and statements of officers of the Company or its
          subsidiaries, provided that such counsel shall state that he believes
          that both you and he are justified in relying upon such opinions,
          abstracts, reports, policies and certificates);

                    (vi)  To the best of such counsel's knowledge and other than
          as set forth in the Prospectus, there are no legal or governmental
          proceedings pending to which the Company or any of its subsidiaries is
          a party or of which any property of the Company or any of its
          subsidiaries is the subject with respect to which there is a
          reasonable likelihood of determinations which would individually or in
          the aggregate have a material adverse effect on the consolidated
          financial position, stockholders' equity or results of operations of
          the Company and its subsidiaries; and, to the best of such counsel's
          knowledge, no such proceedings are threatened or contemplated by
          governmental authorities or threatened by others;

                    (vii) This Agreement has been duly authorized, executed and
          delivered by the Company;

                                      -10-
<PAGE>
 
                    (viii) The Securities are convertible in accordance with
          their terms and pursuant to the Indenture in the manner and upon the
          terms described in the Prospectus;

                    (ix)   The redemption by the Company on the Redemption Date
          of all the outstanding Securities in the manner and upon the terms
          described in the Prospectus has been duly authorized by all required
          corporate action and is in compliance with the terms of the Indenture
          and the Securities;

                    (x)    The redemption of the Securities, the issuance and
          sale of the Conversion Shares upon conversion of the Securities or the
          Shares upon the sale by the Company to the Purchaser as herein
          provided, the compliance by the Company with all of the provisions of
          this Agreement and the consummation of the transactions herein
          contemplated, to the best of such counsel's knowledge, will not
          conflict with or result in a breach or violation of any of the terms
          or provisions of, or constitute a default under, any indenture,
          mortgage, deed of trust, loan agreement or other agreement or
          instrument to which the Company or any of its subsidiaries is a party
          or by which the Company or any of its subsidiaries is bound or to
          which any of the property or assets of the Company or any of its
          subsidiaries is subject; nor will such actions result in any violation
          of the provisions of the Articles of Incorporation, as amended, or the
          Regulations of the Company or any statute of the United States of
          America or of Ohio or any other statute known to such counsel or any
          order, rule or regulation of any court or governmental agency or body
          having jurisdiction over the Company or any of its subsidiaries or any
          of their properties;

                    (xi)   To the best of such counsel's knowledge, no consent,
          approval, authorization, order, registration or qualification of or
          with any such court or governmental agency or body is required by or
          on behalf of the Company for the redemption of the Securities, the
          issuance of the Conversion Shares upon conversion of the Securities or
          the Shares upon the sale by the Company to the Purchaser as herein
          provided or the consummation by the Company of the other transactions
          contemplated by this Agreement, except such as have been obtained
          under the Act, the listing of the Shares on the NYSE, which will occur
          prior to the Time of Delivery, and such consents, approvals,
          authorizations, registrations or qualifications as may be required
          under state securities or Blue Sky laws in connection with the
          purchase and distribution of the Shares by the Purchaser;

                    (xii)  The documents incorporated by reference in the
          Prospectus or any further amendment or supplement thereto made by the
          Company prior to the Time of Delivery (other than (a) the financial
          statements, notes and schedules thereto included or incorporated by
          reference therein and (b) other financial and statistical information
          included or incorporated by reference therein, as to all of which such
          counsel need express no opinion), when they became effective or were
          filed with the Commission, as the case may be, complied as to form in
          all material respects with the requirements of the Act or the Exchange
          Act, as applicable, and the rules and regulations of the

                                      -11-
<PAGE>
 
          Commission thereunder; and such counsel has no reason to believe that
          any of such documents, when such documents became effective or were so
          filed, as the case may be, contained, in the case of a registration
          statement which became effective under the Act, an untrue statement of
          a material fact, or omitted to state a material fact required to be
          stated therein or necessary to make the statements therein not
          misleading, or, in the case of other documents which were filed under
          the Act or the Exchange Act with the Commission, an untrue statement
          of a material fact or omitted to state a material fact necessary in
          order to make the statements therein, in the light of the
          circumstances under which they were made when such documents were so
          filed, not misleading;

                    (xiv)  The Registration Statement and the Prospectus and any
          further amendments and supplements thereto made by the Company prior
          to the Time of Delivery (other than (a) the financial statements,
          notes and schedules thereto included or incorporated by reference
          therein and (b) other financial and statistical information included
          or incorporated by reference therein, as to all of which such counsel
          need express no opinion) comply as to form in all material respects
          with the requirements of the Act and the rules and regulations
          thereunder; such counsel has no reason to believe that, as of its
          effective date, the Registration Statement or any further amendment
          thereto made by the Company prior to the Time of Delivery (other than
          (a) the financial statements, notes and schedules thereto included or
          incorporated by reference therein and (b) other financial and
          statistical information included or incorporated by reference therein,
          as to all of which such counsel need express no opinion) contained an
          untrue statement of a material fact or omitted to state a material
          fact required to be stated therein or necessary to make the statements
          therein not misleading or that, as of its date, the Prospectus or any
          further amendment or supplement thereto made by the Company prior to
          the Time of Delivery (other than (a) the financial statements, notes
          and schedules thereto included or incorporated by reference therein
          and (b) other financial or statistical information included or
          incorporated by reference therein, as to all of which such counsel
          need express no opinion) contained an untrue statement of a material
          fact or omitted to state a material fact necessary to make the
          statements therein, in light of the circumstances in which they were
          made, not misleading or that, as of the Time of Delivery, either the
          Registration Statement or the Prospectus or any further amendment or
          supplement thereto made by the Company prior to the Time of Delivery
          (other than (a) the financial statements, notes and schedules thereto
          included or incorporated by reference therein and (b) other financial
          or statistical information included or incorporated by reference
          therein, as to all of which such counsel need express no opinion)
          contains an untrue statement of a material fact or omits to state a
          material fact necessary to make the statements therein, in light of
          the circumstances in which they were made, not misleading; and such
          counsel does not know of any amendment to the Registration Statement
          required to be filed or of any contracts or other documents of a
          character required to be filed as an exhibit to the Registration
          Statement or required to be incorporated by reference into the
          Prospectus or required to be described in the Registration Statement
          or the Prospectus which are not filed or incorporated by reference or
          described as required; 

                                      -12-
<PAGE>
 
          In rendering such opinion, such counsel may state that he expresses no
opinion as to the laws of any jurisdiction outside the United States;

          (d)  At 10:00 a.m., New York City time, on the Effective Date and the
     date of the most recently filed post-effective amendment to the
     Registration Statement and also at the Time of Delivery, Coopers & Lybrand 
     L.L.P. shall have furnished to you a letter or letters, dated the
     respective date of delivery thereof, in form and substance satisfactory to
     you, to the effect set forth in Annex I hereto;

          (e)  (i) Neither the Company nor any of its subsidiaries shall have
     sustained since the date of the latest audited financial statements
     included or incorporated by reference in the Prospectus any loss or
     interference with its business from fire, explosion, flood or other
     calamity, whether or not covered by insurance, or from any labor dispute or
     court or governmental action, order or decree, otherwise than as set forth
     or contemplated in the Prospectus, and (ii) since the respective dates as
     of which information is given in the Prospectus there shall not have been
     any change in the capital stock or long-term debt of the Company or any of
     its subsidiaries or any change, or any development involving a prospective
     change, in or affecting the general affairs, management, financial
     position, stockholders' equity or results of operations of the Company and
     its subsidiaries, otherwise than as set forth or contemplated in the
     Prospectus, the effect of which, in any such case described in Clause (i)
     or (ii), is in your judgment so material and adverse as to make it
     impracticable or inadvisable to proceed with the transactions contemplated
     by this Agreement on the terms and in the manner contemplated in the
     Prospectus;

          (f)  There shall not have occurred (i) a downgrading in the rating
     accorded the Company's debt securities or preferred stock by any
     "nationally recognized statistical rating organization," as that term is
     defined by the Commission for purposes of Rule 436(g) (2) under the Act or
     (ii) a public announcement by any such organization that it has under
     surveillance or review, with possible negative implications, its rating of
     any of the Company's debt securities or preferred stock;

          (g)  On or after the date hereof there shall not have occurred any of
     the following:  (i) a suspension or material limitation in trading in
     securities generally on the New York Stock Exchange; (ii) a general
     moratorium on commercial banking activities in New York declared by either
     Federal or New York State authorities; or (iii) the outbreak or escalation
     of hostilities involving the United States or the declaration by the United
     States of a national emergency or war, if the effect of any such event
     specified in this clause (iii) in your judgment makes it impracticable or
     inadvisable to proceed with the transactions contemplated by this Agreement
     on the terms and in the manner contemplated by the Prospectus;

          (h)  The Conversion Shares are listed, and the Shares to be sold by
     the Company at the Time of Delivery shall have been duly listed, subject to
     notice of issuance, on the NYSE; and

          (i) The Company shall have furnished or caused to be furnished to you
     on the Effective Date and at Time of Delivery certificates of officers of
     the Company satisfactory to you as to the accuracy of the representations
     and warranties of the

                                      -13-
<PAGE>
 
     Company herein at and as of the Effective Date or the Time of Delivery
     (other than, in the case of the Time of Delivery, Section 1(d)),
     respectively, as to the performance by the Company of all of its
     obligations hereunder to be performed at or prior to the Effective Date or
     the Time of Delivery, as the case may be, as to the matters set forth in
     subsections (a) and (e) of this Section and as to such other matters as you
     may reasonably request.

     8.  (a)  The Company will indemnify and hold harmless the Purchaser against
any losses, claims, damages or liabilities, to which the Purchaser may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse the Purchaser for any
legal or other expenses reasonably incurred by the Purchaser in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement or the Prospectus or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by the Purchaser expressly for use therein.

     (b)  The Purchaser will indemnify and hold harmless the Company against any
losses, claims, damages or liabilities to which the Company may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in the Registration Statement or the Prospectus or
any such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by the Purchaser expressly for use therein;
and will reimburse the Company for any legal or other expenses reasonably
incurred by the Company in connection with investigating or defending any such
action or claim as such expenses are incurred.

     (c)  Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, to assume the defense thereof,
with counsel satisfactory to such indemnified party (who shall not, except with
the consent of the indemnified party, be counsel to the indemnifying party),
and, after notice from the indemnifying party to such indemnified party 

                                      -14-
<PAGE>
 
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation;

     (d)  If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Purchaser on the other from the
transactions contemplated by this Agreement. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the indemnified party failed to give the notice required under
subsection (c) above, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Purchaser on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Purchaser on the other with respect to the
transactions contemplated by this Agreement shall be deemed to be in the same
proportion as the market value of the Common Stock issuable upon conversion of
the Securities on the last Trading Day (as defined in Section 10) immediately
preceding the date of this Agreement (calculated based on the Closing Price of
the Common Stock) bears to the compensation received by the Purchaser pursuant
to Section 3. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or the Purchaser on the
other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Purchaser agree that it would not be just and equitable if contributions
pursuant to this subsection (d) were determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to above in this subsection (d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this subsection
(d) shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this subsection (d), the
Purchaser shall not be required to contribute any amount in excess of the amount
by which the total price at which the Shares purchased by it and distributed to
the public were offered to the public exceeds the amount of any damages which
the Purchaser has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.

     (e)  The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls the
Purchaser within the meaning of the Act; and the obligations of the Purchaser
under this Section 8 shall be in addition to any liability

                                      -15-
<PAGE>
 
which the Purchaser may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company and to each person, if
any, who controls the Company within the meaning of the Act.

     9.  The respective indemnities, agreements, representations, warranties and
other statements of the Company and the Purchaser as set forth in this Agreement
or made by them, respectively, pursuant to this Agreement, shall remain in full
force and effect, regardless of any investigation (or any statement as to the
results thereof) made by or on behalf of the Purchaser or any controlling person
of the Purchaser or the Company, or any officer or director or controlling
person of the Company, and shall survive delivery of the Conversion Shares and
the Shares and payment for the Shares.

     10.  For purposes of this Agreement, "Trading Day" means a day on which the
Common Stock is traded on the NYSE, and "Closing Price" means the reported last
sale price regular way per share of the Common Stock, or in case no such
reported sale takes place on such day, the average of the reported closing bid
and asked prices regular way, in either case on the NYSE.

     11.  If for any reason after the notice pursuant to Section 2(a) has been 
delivered, Shares included in such notice are not delivered by or on behalf of
the Company as provided herein, the Company will reimburse the Purchaser for all
out-of-pocket expenses, including fees and disbursements of counsel, reasonably
incurred by the Purchaser in making preparations for the purchase, sale and
delivery of the Shares not so delivered, but the Company shall then be under no
further liability to the Purchasers in respect of the Shares not so delivered
except as provided in Section 5 and Section 8 hereof.

     12.  All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Purchaser shall be delivered or sent by mail, telex or
facsimile transmission to Goldman, Sachs & Co., at 85 Broad Street, New York,
New York 10004, Attention: Registration Department; and if to the Company shall
be delivered or sent by mail, telex or facsimile transmission to the address of
the Company set forth in the Registration Statement, Attention: General Counsel.
Any such statements, requests, notices or agreements shall take effect at the
time of receipt thereof.

     13.  This Agreement shall be binding upon, and inure solely to the benefit
of, the Purchaser, the Company and, to the extent provided in Section 8 and
Section 9 hereof, the officers and directors of the Company and each person who
controls the Company or the Purchaser, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Shares from the Purchaser shall be deemed a successor or assign by reason merely
of such purchase.

     14.  Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.

     15.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.

                                      -16-
<PAGE>
 
     16.  This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.

     If the foregoing is in accordance with your understanding, please sign and
return to us five counterparts hereof, and upon the acceptance hereof by you
this letter and such acceptance hereof shall constitute a binding agreement
between you and the Company.

                                       Very truly yours,

                                       The Kroger Co.

                                       By:
                                            __________________________________
                                            Name:
                                            Title:

Accepted as of the date hereof:



__________________________________
   (Goldman, Sachs & Co.)

                                      -17-
<PAGE>
 
                                    ANNEX I


          Pursuant to Section 7(d) of the Standby Agreement, the accountants
shall furnish letters to the Purchaser to the effect that:

          (i)   They are independent certified public accountants with respect
     to the Company and its subsidiaries within the meaning of the Act and the
     applicable published rules and regulations thereunder;

          (ii)  In their opinion, the financial statement and any supplementary
     financial information and schedules (and, if applicable, prospective
     financial statements and/or pro forma financial information) examined by
     them and included or incorporated by reference in the Registration
     Statement or the Prospectus comply as to form in all material respects with
     the applicable accounting requirements of the Act or the Exchange Act, as
     applicable, and the related published rules and regulations thereunder,
     and, if applicable, they have made a review in accordance with standards
     established by the American Institute of Certified Public Accountants of
     the consolidated interim financial statements, selected financial data, pro
     forma financial information, prospective financial statements and/or
     condensed financial statements derived from audited financial statements of
     the Company for the periods specified in such letter, as indicated in their
     reports thereon, copies of which have been furnished to the Purchaser;

          (iii) They have made a review in accordance with the standards
     established by the American Institute of Certified Public Accountants of
     the unaudited condensed consolidated statements of income, consolidated
     balance sheets and consolidated statements of cash flows included in the
     Prospectus as indicated in their reports thereon copies of which have been
     separately furnished to the Purchaser and on the basis of specified
     procedures including inquiries of officials of the Company who have
     responsibility for financial and accounting matters regarding whether the
     unaudited condensed consolidated financial statements referred to in
     paragraph (vi)(A)(i) below comply as to form in all material respects with
     the applicable accounting requirements of the Act and the related published
     rules and regulations, nothing came to their attention that caused them to
     believe that the unaudited condensed consolidated financial statements do
     not comply as to form in all material respects with the applicable
     accounting requirements of the Act and the related published rules and
     regulations;

          (iv)  The unaudited selected financial information with respect to the
     consolidated results of operations and financial position of the Company
     for the five most recent fiscal years incorporated by reference in the
     Prospectus and included in Item 6 of the Company's Annual Report on Form 
     10-K for the most recent fiscal year agrees with the corresponding amounts
     (after restatements where applicable) in the audited consolidated financial
     statements for such five fiscal years which were included or incorporated
     by reference in the Company's Annual Reports on Form 10-K for such fiscal
     years;

                                      A-1
<PAGE>
 
          (v)   They have compared the information in the Prospectus under
     selected captions with the disclosure requirements of Regulation S-K and on
     the basis of limited procedures specified in such letter nothing came to
     their attention as a result of the foregoing procedures that caused them to
     believe that this information does not conform in all material respects
     with the disclosure requirements of Items 301 and 302 of Regulation S-K;

          (vi)  On the basis of limited procedures, not constituting an audit in
     accordance with generally accepted accounting standards, consisting of a
     reading of the unaudited financial statements and other information
     referred to below, a reading of the latest available interim financial
     statements of the Company and its subsidiaries, inspection of the minute
     books of the Company and its subsidiaries since the date of the latest
     audited financial statements included or incorporated by reference in the
     Prospectus, inquiries of officials of the Company and its subsidiaries
     responsible for financial and accounting matters and such other inquiries
     and procedures as may be specified in such letter, nothing came to their
     attention that caused them to believe that:

               (A)  (i)  the unaudited condensed consolidated statements of
          income, consolidated balance sheets and consolidated statements of
          cash flows included or incorporated by reference in the Company's
          Quarterly Reports on Form 10-Q incorporated by reference in the
          Prospectus do not comply as to form in all material respects with the
          applicable accounting requirements of the Exchange Act as it applies
          to Form 10-Q and the related published rules and regulations
          thereunder, or (ii) any material modifications should be made to the
          unaudited condensed consolidated statements of income, consolidated
          balance sheets and consolidated statements of cash flows included in
          the Prospectus for them to be in conformity with generally accepted
          accounting principles;

               (B)  any other unaudited income statement data and balance sheet
          items included in the Prospectus do not agree with the corresponding
          items in the unaudited consolidated financial statements from which
          such data and items were derived, and any such unaudited data and
          items were not determined on a basis substantially consistent with the
          basis for the corresponding amounts in the audited consolidated
          financial statements included or incorporated by reference in the
          Company's Annual Report on Form 10-K for the most recent fiscal year;

               (C)  the unaudited financial statements which were not included
          in the Prospectus but from which were derived the unaudited condensed
          financial statements referred to in Clause (A) and any unaudited
          income statement data and balance sheet items included in the
          Prospectus and referred to in Clause (B) were not determined on a
          basis substantially consistent with the basis for the audited
          financial statements included or incorporated by reference in the
          Company's Annual Report on Form 10-K for the most recent fiscal year,

               (D)  any unaudited pro forma consolidated condensed financial
          statements included in the Prospectus do not comply as to form in all
          material respects with the applicable accounting requirements of the
          Act and the published rules and regulations thereunder or the pro form
          adjustments have not

                                      A-2

<PAGE>
 
          been properly applied to the historical amounts in the compilation of
          those statements;

               (E)  as of a specified date not more than five days prior to the
          date of such letter, there have been any changes in the consolidated
          capital stock (other than issuances of capital stock upon exercise of
          options and stock appreciation rights, upon earn-outs of performance
          shares and upon conversions of convertible securities, in each case
          which were outstanding on the date of the latest balance sheet
          included or incorporated by reference in the Prospectus) or any
          increase in the consolidated long-term debt of the Company and its
          subsidiaries, or any decreases in consolidated net current assets or
          net assets or other items specified by the Purchaser, or any increases
          in any items specified by the Purchaser, in each case as compared with
          amounts shown in the latest balance sheet included or incorporated by
          reference in the Prospectus, except in each case for changes,
          increases or decreases which the Prospectus discloses have occurred or
          may occur or which are described in such letter; and

               (F)  for the period from the date of the latest financial
          statements included or incorporated by reference in the Prospectus to
          the specified date referred to in Clause (E) there were any decreases
          in consolidated net revenues or operating profit or the total or per
          share amounts of consolidated net income or other items specified by
          the Purchaser, or any increases in any items specified by the
          Purchaser, in each case as compared with the comparable period of the
          preceding year and with any other period of corresponding length
          specified by the Purchaser, except in each case for decreases or
          increases which the Prospectus discloses have occurred or may occur or
          which are described in such letter, and

          (vii)  In addition to the audit referred to in their report(s)
     included or incorporated by reference in the Prospectus and the limited
     procedures, inspection of minute books, inquiries and other procedures
     referred to in paragraphs (iii) and (vi) above, they have carried out
     certain specified procedures, not constituting an audit in accordance with
     generally accepted auditing standards, with respect to certain amounts,
     percentages and financial information specified by the Purchaser, which are
     derived from the general accounting records of the Company and its
     subsidiaries, which appear in the Prospectus (excluding documents
     incorporated by reference), or in Part II, or in exhibits and schedules to,
     the Registration Statement specified by the Purchaser or in documents
     incorporated by reference in the Prospectus specified by the Purchaser, and
     have compared certain of such amounts, percentages and financial
     information with the accounting records of the Company and its subsidiaries
     and have found them to be in agreement.

                                      A-3
