Federated Department Stores, Inc.
5% Convertible Subordinated Notes due 2003
Underwriting Agreement
----------------------
September 22,1995
Goldman, Sachs & Co.
CS First Boston Corporation,
c/o Goldman, Sachs & Co.
85 Broad Street,
New York, New York 10004
Ladies and Gentlemen:
Federated Department Stores, Inc., a Delaware corporation (the
"Company"), proposes, subject to the terms and conditions stated herein, to
issue and sell to you (the "Underwriters") an aggregate of $305,000,000
principal amount of Notes specified above (the "Firm Securities"). In
addition, the Company proposes to grant to the Underwriters named in
Schedule I hereto (the "Underwriters") an option to purchase up to an
additional $45,000,000 principal amount of Notes (the "Option Securities").
The Firm Securities and the Option Securities, if purchased, are
hereinafter collectively called the "Securities". The Securities will be
convertible into shares of Common Stock, par value $0.01 per share (the
"Common Stock"), of the Company, upon the terms and subject to the
conditions and adjustments set forth in the Indenture, dated as of December
15, 1994 (the "Indenture"), as supplemented by the Fourth Supplemental
Indenture (the "Supplemental Indenture"), between the Company and The First
National Bank of Boston, as Trustee (the "Trustee").
1. The Company represents and warrants to, and agrees with, each
of the Underwriters that:
(a) A registration statement on Form S-3 (File No. 33-59691) in
respect of the Securities 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 or to be delivered to the Underwriters without exhibits
thereto, but with documents incorporated by reference in the
prospectus contained therein, 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 (other than prospectuses filed or to be filed pursuant to
Rule 424(b) of the rules and regulations of the Commission under the
Securities Act of 1933, as amended (the "Act"), each in the form
heretofore delivered or to be delivered to the Underwriters); and no
stop order suspending the effectiveness of such registration statement
has been issued and no proceeding for that purpose has been initiated
or threatened by the Commission (any preliminary prospectus included
in such registration statement or filed with the Commission pursuant
to Rule 424(a) under the Act is hereinafter called a "Preliminary
Prospectus"); the various parts of such registration statement,
including all exhibits thereto and the documents
incorporated by reference in the prospectus contained in the
registration statement at the time such part of the registration
statement became effective but excluding Form T-1, each as amended at
the time such part of the registration statement became effective, are
hereinafter collectively called the "Registration Statement"; the
prospectus relating to the Securities, in the form in which it has
most recently been filed, or transmitted for filing, with the
Commission on or prior to the date of this Agreement, being
hereinafter called the "Prospectus"; any reference herein to any
Preliminary Prospectus or 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, as of the date of such
Preliminary Prospectus or Prospectus, as the case may be; any
reference to any amendment or supplement to any Preliminary Prospectus
or the Prospectus shall be deemed to refer to and include any
documents filed after the date of such Preliminary Prospectus or
Prospectus, as the case may be, under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and incorporated by reference
in such Preliminary Prospectus or Prospectus, as the case may be; 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 Sections 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; and any reference to the
Prospectus as amended or supplemented shall be deemed to refer to the
Prospectus as amended or supplemented in relation to the Securities in
the form in which it is filed with the Commission pursuant to Rule
424(b) under the Act in accordance with Section 5(a) hereof, including
any documents incorporated by reference therein as of the date of such
filing);
(b) The documents incorporated by reference in the Prospectus,
when they became effective or were filed with the Commission, as the
case may be, 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
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 Underwriters
through Goldman, Sachs & Co. expressly for use in the Prospectus as
amended or supplemented;
(c) The Registration Statement and the Prospectus conform, and
any further amendments or supplements to the Registration Statement or
the Prospectus will conform, in all material respects to the
requirements of the Act and the Trust Indenture Act of 1939, as
amended (the "Trust Indenture 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
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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 Underwriters through Goldman, Sachs & Co. expressly for use in
the Prospectus as amended or supplemented;
(d) There has not been any material adverse change in the
business, financial position or results of operations of the Company
and its subsidiaries, taken as a whole, from the respective dates as
of which information is given in the Registration Statement and the
Prospectus. 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 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 as amended or
supplemented; and, since the respective dates as of which information
is given in the Registration Statement and the Prospectus, there has
not been any change in the capital stock (other than immaterial
issuances and forfeitures of stock in connection with equity-based
compensation plans of executive officers of the Company or as set
forth or contemplated in the Prospectus as amended or supplemented, or
any increase in excess of $25,000,000 in long-term debt of the Company
or any of its subsidiaries otherwise than as set forth or contemplated
in the Prospectus as amended or supplemented, or any material adverse
change, or any development involving a prospective material adverse
change, in or affecting the general affairs, management, financial
position, shareholders' equity or results of operations of the Company
and its subsidiaries, otherwise than as set forth or contemplated in
the Prospectus as amended or supplemented;
(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 disclosed in
the Prospectus as amended or supplemented, or as do not, individually
or in the aggregate, have a material adverse effect on the business,
financial position or results of operations or reasonably foreseeable
prospects of the Company and its subsidiaries taken as a whole (a
"Material Adverse Effect"); 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 would
not, individually or in the aggregate, have a Material Adverse Effect;
(f) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus as
amended or supplemented, 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 is required to
be so qualified, except where failure to be so qualified and in good
standing individually or in the aggregate would not have a Material
Adverse Effect; and each Significant Subsidiary (as such term is
defined in Rule 405 under the Act) has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
its jurisdiction of incorporation and each subsidiary of the
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Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation, except where failure to be duly incorporated, validly
existing and in good standing would not, individually or in the
aggregate, have a Material Adverse Effect;
(g) 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; all of the issued shares of capital stock of each
Significant Subsidiary have been duly and validly authorized and
issued, are fully paid and non-assessable and (except as otherwise
disclosed in the Prospectus as amended or supplemented) are owned
directly or indirectly by the Company, free and clear of all material
liens, encumbrances, equities or claims; 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
are owned directly or indirectly by the Company, free and clear of all
liens, encumbrances, equities or claims (except as otherwise disclosed
in the Prospectus as amended or supplemented or where, individually or
in the aggregate, the failure to have been duly and validly authorized
and issued, to be fully paid and non-assessable and to be owned
directly or indirectly by the Company free and clear of liens,
encumbrances, equities or claims would not have a Material Adverse
Effect);
(h) The Securities have been duly authorized and, when issued
and delivered pursuant to this Agreement, will have been duly
executed, authenticated, issued and delivered and will constitute
valid and legally binding obligations of the Company entitled to the
benefits provided by the Indenture as supplemented by the Supplemental
Indenture; all of the shares of Common Stock issuable upon conversion
of the Securities have been duly and validly authorized and reserved
for issuance upon such conversion and, when issued and delivered in
accordance with the terms of the Indenture as supplemented by the
Supplemental Indenture, will be duly and validly issued, fully paid
and non-assessable; the Indenture has been duly authorized and duly
qualified under the Trust Indenture Act; the Indenture and, when
executed and delivered by the Company and the Trustee, the
Supplemental Indenture, will constitute a valid and legally binding
instrument, enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, and other laws of general applicability relating to or
affecting creditors' rights and to general principles of equity,
regardless of whether such enforceability is considered in a
proceeding in equity or at law; and the Securities, the Common Stock
and the Indenture as supplemented by the Supplemental Indenture will
conform to the descriptions thereof in the Prospectus as amended or
supplemented;
(i) The issue and sale of the Securities and the compliance by
the Company with all of the provisions of the Securities, the
Indenture as supplemented by the Supplemental Indenture and this
Agreement, the consummation of the transactions herein and therein
contemplated (other than to the extent set forth in the Prospectus as
amended or supplemented under the caption "Description of the Notes-
Repurchase at Option of Holders Upon a Change in Control") and the
issuance and delivery of shares of Common Stock issuable upon
conversion of the Securities 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,
sale/leaseback agreement, loan agreement or other similar financing
agreement or instrument or other agreement or instrument to which the
Company or any of its
4
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, except for such
conflicts, breaches, violations and defaults as individually or in the
aggregate would not have a Material Adverse Effect, nor will such
action result in any material violation of the provisions of the
Certificate of Incorporation or By-laws of the Company or any material
statute, order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Company or any of its Significant
Subsidiaries or any of their properties, nor will such action result
in any violation of the provisions 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 except for such violations as individually or in the
aggregate would not have a Material Adverse Effect; and no consent,
approval, authorization, order, registration or qualification of or
with any such court or governmental agency or body is required for the
issue and sale of the Securities, the consummation by the Company of
the transactions contemplated by this Agreement or the Indenture as
supplemented by the Supplemental Indenture or the issuance of shares
of Common Stock upon conversion of the Securities, except the
registration of the Securities and the Common Stock under the Act, the
Exchange Act and such as have been obtained under the Trust Indenture
Act 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
Securities by the Underwriters;
(j) Neither the Company nor any of its Significant Subsidiaries
(i) is in violation of its certificate of incorporation or by-laws (or
comparable governing documents), (ii) is in default, and no event has
occurred which, with notice or lapse of time or both, would constitute
such a default, in the due performance or observance of any material
obligation, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or
instrument to which it is a party or by which it or any of its
properties may be bound, or (iii) is in material violation of any
material law, ordinance, governmental rule, regulation or court decree
to which it or its property is subject, or (iv) has failed to obtain
any material license, permit, certificate, franchise or other
governmental authorization or permit necessary to the ownership of its
property or to the conduct of its business; and none of the
subsidiaries of the Company (i) is in violation of its certificate of
incorporation or by-laws (or comparable governing documents), (ii) is
in default, and no event has occurred which, with notice or lapse of
time or both, would constitute such a default, in the due performance
or observance of any obligation, covenant or condition contained in
any indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which it is a party or by which it or any
of its properties may be bound, or (iii) is in violation of any law,
ordinance, governmental rule, regulation or court decree to which it
or its property is subject, or (iv) has failed to obtain any license,
permit, certificate, franchise or other governmental authorization or
permit necessary to the ownership of its property or to the conduct of
its business, except for such violations, defaults and failures as
individually or in the aggregate would not have a Material Adverse
Effect;
(k) The statements set forth in the Prospectus as amended or
supplemented under the captions "Description of Debt Securities",
"Description of Capital Stock" and "Description of the Notes", insofar
as they purport to constitute a summary of the terms of the Securities
and the Common Stock, and under the captions "Plan of Distribution"
and "Underwriting", insofar as they purport to describe the provisions
of the laws and
5
documents referred to therein, present fair and accurate summaries of
such terms and fair and accurate descriptions of such provisions,
respectively.
(l) Other than as set forth in the Prospectus as amended or
supplemented, 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
which, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a Material
Adverse Effect; and, to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities
or threatened by others;
(m) The Company is not and, after giving effect to the offering
and sale of the Securities, will not be an "investment company" or an
entity "controlled" by an "investment company", as such terms are
defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act");
(n) 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; and
(o) KPMG Peat Marwick LLP, who have certified certain 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.
2. (a) Subject to the terms and conditions herein set forth,
the Company agrees to issue and sell to each of the Underwriters, and each
of the Underwriters agrees, severally and not jointly, to purchase from the
Company, at a purchase price of 97.5% of the principal amount thereof, plus
accrued interest from September 27, 1995 to the First Delivery Date (as
such term is defined in Section 4(a) hereof), the principal amount of Firm
Securities set forth opposite the name of such Underwriter in Schedule I
hereto.
(b) In addition, the Company grants to the Underwriters an
option to purchase up to an additional $45,000,000 principal amount of
Option Securities. Such option is granted solely for the purpose of
covering over-allotments in the sale of Firm Securities and is exercisable
as provided in Section 4 hereof. The principal amount of Option Securities
to be purchased by each Underwriter shall be in proportion to the principal
amount of Firm Securities set opposite the name of such Underwriter in
Schedule I hereto. The purchase price for any Option Securities purchased
by the Underwriters shall be 97.5% of the principal amount thereof, plus
accrued interest from September 27, 1995 to the Second Delivery Date (as
such term is defined in Section 4(c) hereof).
(c) The Company shall not be obligated to deliver any of the
Securities to be delivered on the First Delivery Date or the Second
Delivery Date, as the case may be, except upon payment for all the
Securities to be purchased on such Delivery Date as provided herein.
3. Upon the authorization by the Underwriters of the release of
the Firm Securities, the several Underwriters propose to offer the Firm
Securities for sale upon the terms and conditions set forth in the
Prospectus as amended or supplemented.
6
4. (a) The Firm Securities to be purchased by each Underwriter
hereunder will be represented by one or more definitive global securities
in book-entry form which will be deposited by or on behalf of the Company
with The Depository Trust Company ("DTC") or its designated custodian. The
Company will deliver the Firm Securities to Goldman, Sachs & Co., through
the facilities of DTC, for the account of each Underwriter, against payment
by or on behalf of such Underwriter of the purchase price therefor by
certified or official bank check or checks, payable to the order of the
Company in New York Clearing House (next day) funds. The Company will
cause the certificates representing the Firm Securities to be made
available to Goldman, Sachs & Co. for checking at least twenty-four hours
prior to the First Delivery Date at the office of DTC or its designated
custodian (the "Designated Office"). The time and date of such delivery
and payment shall be 9:30 a.m., New York City time, on September 27, 1995
or such other time and date as Goldman, Sachs & Co. and the Company may
agree upon in writing. Such time and date are herein called the "First
Delivery Date".
(b) The documents to be delivered at the First Delivery Date by
or on behalf of the parties hereto pursuant to Section 7 hereof, including
the cross-receipt for the Securities and any additional documents requested
by the Underwriters pursuant to Section 7(j) hereof, will be delivered at
the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York,
New York 10017 (the "Closing Location"), and the Firm Securities will be
delivered at the Designated Office, all at the First Delivery Date. A
meeting will be held at the Closing Location at 2:00 p.m., New York City
time, on the New York Business Day next preceding the First Delivery Date,
at which meeting the final drafts of the documents to be delivered pursuant
to the preceding sentence will be available for review by the parties
hereto. For purposes of this Section 4, "New York Business Day" shall mean
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on
which banking institutions in New York are generally authorized or
obligated by law or executive order to close.
(c) The option granted in Section 2 is hereby exercised in full.
The date and time the Option Securities are to be delivered, which are
sometimes referred to as the "Second Delivery Date," shall be the First
Delivery Date.
(d) The Option Securities to be purchased by each Underwriter
hereunder will be represented by one or more definitive global securities
in book-entry form which will be deposited by or on behalf of the Company
with the DTC or its designated custodian. On the Second Delivery Date, the
Company will deliver the Option Securities to Goldman, Sachs & Co., through
the facilities of DTC, for the account of each Underwriter, against payment
by or on behalf of such Underwriter of the purchase price therefor by
certified of official bank check or checks, payable to the order of the
Company in New York Clearing House (next-day) funds. The Company will
cause the certificates representing the Option Securities to be made
available to Goldman, Sachs & Co. for checking at least twenty-four hours
prior to the Second Delivery Date at the Designated Office. Delivery of
and payment for the Option Securities shall be made at 9:30 A.M., New York
City time, on the Second Delivery Date, or such other time and date as
Goldman, Sachs & Co. and the Company may agree upon in writing.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus as amended or supplemented in a
form approved by the Underwriters and to file such Prospectus pursuant
to Rule 424(b) under the Act not later than the Commission's close of
business on the second business day following the
7
execution and delivery of this Agreement or, if applicable, such
earlier time as may be required by Rule 424(b); to make no further
amendment or any supplement to the Registration Statement or
Prospectus after the date of this Agreement and prior to the earlier
of (i) the thirtieth day following the First Delivery Date or (ii) the
Second Delivery Date which shall have been disapproved by the
Underwriters promptly after reasonable notice thereof; to advise the
Underwriters promptly of such amendment or supplement after such date
and furnish the Underwriters with copies thereof; to file promptly 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 for so long as the delivery of
a prospectus is required in connection with the offering or sale of
the Securities, and during such same period to advise the Underwriters
promptly after it receives notice thereof, of the time when any
amendment to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amended
Prospectus has been filed with the Commission, of the issuance by the
Commission of any stop order or of any order preventing or suspending
the use of any prospectus relating to the Securities, of the
suspension of the qualification of the Securities or the shares of
Common Stock issuable upon conversion of the Securities 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 such stop order or of any such order preventing or
suspending the use of any prospectus relating to the Securities or
suspending any such qualification, to promptly use its best efforts to
obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as the
Underwriters may reasonably request to qualify the Securities and the
Common Stock issuable upon conversion of the Securities for offering
and sale under the securities laws of such jurisdictions as the
Underwriters 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
Securities, provided that in connection therewith the Company shall
not be required to qualify as a foreign corporation, to file a general
consent to service of process in any jurisdiction or to take any
action that would subject it to general taxation in any jurisdiction;
(c) Prior to 10:00 a.m., New York City time, on the business day
next succeeding the date of this Agreement and from time to time
thereafter, to furnish the Underwriters with copies of the Prospectus
as amended or supplemented in such quantities in New York City as the
Underwriters may 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 Securities 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 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 same period
to amend or supplement such Prospectus or to file under the Exchange
Act any document incorporated by reference in such Prospectus in order
to comply with the Act, the Exchange Act or the Trust Indenture Act,
to notify the Underwriters and, upon your request and subject to your
approval, to file such document and to prepare and furnish
8
without charge to each Underwriter and to any dealer in securities as
many copies as the Underwriters 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 any Underwriter is required to deliver a
prospectus in connection with sales of any of the Securities at any
time nine months or more after the time of issue of the Prospectus,
upon request of such Underwriter but at the expense of such
Underwriter, to prepare and deliver to such Underwriter as many copies
as such Underwriter 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) under the Act), an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with Section 9(a)
of the Act and the rules and regulations of the Commission thereunder
(including, at the option of the Company, Rule 158, in which case this
Section 5(d) shall not be construed to require the Company to file any
report referred to in Rule 158 prior to the time at which such report
is otherwise due);
(e) During the period beginning from the date hereof and
continuing to and including the date 90 days after the date hereof,
not to offer, sell, contract to sell or otherwise dispose of, except
as provided hereunder, any securities of the Company that are
substantially similar to the Securities or the Common Stock, including
but not limited to any securities that are convertible into or
exchangeable for, or that represent the right to receive, Common Stock
or any such substantially similar securities (other than pursuant to
equity based employee and director compensation plans and plans of
reorganization of the Company or Broadway Stores, Inc. ("Broadway") or
their respective subsidiaries or any predecessors of any of the
foregoing existing on, or upon the exercise, conversion or exchange
(including successive exercises, conversions and/or exchanges) of
warrants or convertible or exchangeable securities of either the
Company or Broadway outstanding as of, the date of this Agreement or
issuable pursuant to the Merger Agreement, the Stock Agreement or the
Prudential Agreement (as such terms are defined in the Prospectus as
amended or supplemented)), without the prior written consent of
Goldman, Sachs & Co.;
(f) For so long as Securities are in global form, to furnish to
the holders of the Securities as soon as practicable after the end of
each fiscal year an annual report (including a balance sheet and
statements of income, shareholders' equity and cash flows of the
Company and its consolidated subsidiaries certified by independent
public accountants) and, as soon as practicable after the end of each
of the first three quarters of each fiscal year (beginning with the
fiscal quarter ending after the effective date of the Registration
Statement), consolidated summary financial information of the Company
and its subsidiaries for such quarter in reasonable detail; and to
furnish to the holders of the Securities all other documents specified
in Section 7.04 of the Indenture, all in the manner so specified;
(g) During a period of three years from the effective date of
the Registration Statement, to furnish to the Underwriters copies of
all reports or other communications (financial or other) furnished to
the Company's stockholders generally, and to deliver to the
Underwriters (i) as soon as they are available, (A) copies of any
reports and financial
9
statements furnished to or filed with the Commission or any national
securities exchange on which the Securities, the Common Stock or any
other class of securities of the Company is listed and (B) the
documents specified in Section 7.04 of the Indenture, as in effect at
each Delivery Date, and (ii) such additional information concerning
the business and financial condition of the Company as the
Underwriters may from time to time reasonably request, provided that
any material nonpublic information received by the Underwriters will
be held in confidence and not used in violation of any applicable law
(such financial statements to be on a consolidated basis to the extent
the accounts of the Company and its subsidiaries are consolidated in
reports furnished to its shareholders generally or to the Commission);
(h) To use the net proceeds received by it from the sale of the
Securities pursuant to this Agreement in the manner specified in the
Prospectus as amended or supplemented under the caption "Use of
Proceeds";
(i) To reserve and keep available at all times, free of
preemptive rights, shares of Common Stock for the purpose of enabling the
Company to satisfy any obligations to issue shares of its Common Stock upon
conversion of the Securities; and
(j) To list on the New York Stock Exchange, subject to notice of
issuance, the shares of Common Stock issuable upon conversion of the
Securities.
6. The Company covenants and agrees with the several
Underwriters 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 Securities and the
shares of Common Stock issuable upon conversion of the Securities under the
Act and all other expenses in connection with the preparation, printing and
filing of the Registration Statement, any Preliminary Prospectus and the
Prospectus and amendments and supplements thereto and the mailing and
delivering of copies thereof to the Underwriters and dealers; (ii) the cost
of producing any Agreement among Underwriters, this Agreement, the
Indenture, the Blue Sky and Legal Investment Memoranda, closing documents
(including any compilations thereof) and any other documents in connection
with the offering, purchase, sale and delivery of the Securities; (iii) all
expenses in connection with the qualification of the Securities and the
shares of Common Stock issuable upon conversion of the Securities for
offering and sale under state securities laws as provided in Section 5(b)
hereof, including the fees and disbursements of counsel for the
Underwriters (not to exceed $15,000 in the aggregate) in connection with
such qualification and in connection with the Blue Sky and legal investment
surveys; (iv) any fees charged by securities rating services for rating the
Securities; (v) the filing fees incident to, and fees and the disbursements
of counsel for the Underwriters in connection with, any required review by
the National Association of Securities Dealers, Inc. of the terms of the
sale of the Securities; (vi) the cost of preparing the Securities and the
Common Stock; (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 Indenture and the Securities; and (viii) all other
costs and expenses incident to the performance of its obligations hereunder
which are not otherwise specifically provided for in this Section. It is
understood, however, that, except as provided in this Section, and Sections
7 and 9 hereof, the Underwriters will pay all of their own costs and
expenses, including the fees of their counsel, transfer taxes on resale of
any of the Securities by them, and any advertising expenses connected with
any offers they may make.
10
7. The obligations of the Underwriters to purchase the
Securities hereunder shall be subject in the sole discretion of the
Underwriters to the condition that all representations and warranties and
other statements of the Company herein are, at and as of each Delivery
Date, 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:
(a) The Prospectus as amended or supplemented, shall have been
filed with the Commission pursuant to Rule 424(b) within the
applicable time period prescribed for such filing by the rules and
regulations under the Act and in accordance with Section 5(a) hereof
and the Indenture shall have been qualified under the Trust Indenture
Act; no stop order suspending the effectiveness of the Registration
Statement or any part thereof 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 complied with to the reasonable
satisfaction of the Underwriters;
(b) Simpson Thacher & Bartlett, counsel for the Underwriters,
shall have furnished to the Underwriters a written opinion, dated such
Delivery Date, in substantially the form attached hereto as Annex III;
(c) The General Counsel or Deputy General Counsel of the Company
shall have furnished to the Underwriters his written opinion, dated
such Delivery Date, in substantially the form attached hereto as Annex
IV;
(d) Jones, Day, Reavis & Pogue, counsel for the Company, shall
have furnished to the Underwriters a written opinion, dated such
Delivery Date, in substantially the form attached hereto as Annex V;
(e) On the date hereof at a time prior to the execution of this
Agreement, and at 9:30 a.m., New York City time, on the effective date
of any post-effective amendment to the Registration Statement filed
subsequent to the date of this Agreement, KPMG Peat Marwick LLP and
Price Waterhouse LLP shall have each furnished to the Underwriters a
letter, dated the date of delivery thereof, in form and substance
satisfactory to the Underwriters, in the forms attached hereto as
Annex I(a) and Annex II(a), respectively and at each Delivery Date,
KPMG Peat Marwick LLP and Price Waterhouse LLP shall have each
furnished to the Underwriters a "bring-down" letter dated such
Delivery Date, in form and substance satisfactory to the Underwriters
(the executed copies of the letters delivered prior to the execution
of this Agreement are attached as Annex I(a) and Annex II(a) hereto
and draft forms of letters to be delivered on the effective date of
any post-effective amendment to the Registration Statement and as of
such Delivery Date are attached as Annex I(b) and Annex II(b) hereto,
respectively);
(f)(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 as
first amended or supplemented 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 as first amended or supplemented, and
(ii) since the respective dates as of which information is given in
the
11
Prospectus as first amended or supplemented 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, shareholders' equity or results of operations of
the Company and its subsidiaries, otherwise than as set forth or
contemplated in the Prospectus as first amended or supplemented, the
effect of which, in any such case described in clause (i) or (ii), is
in the judgment of the Underwriters so material and adverse as to make
it impracticable or inadvisable to proceed with the public offering or
the delivery of the Securities on the terms and in the manner
contemplated in the Prospectus as first amended or supplemented;
(g) On or after the date hereof, (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities 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, and (ii) no such organization shall have publicly announced that
it has under surveillance or review, with possible negative implications,
its rating of any of the Company's debt securities;
(h) 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
suspension or material limitation in trading in the Company's
securities on the New York Stock Exchange; (iii) a general moratorium
on commercial banking activities declared by either Federal or New
York State authorities; or (iv) 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 (iv) in the judgment of the
Underwriters makes it impracticable or inadvisable to proceed with the
public offering or the delivery of the Securities on the terms and in
the manner contemplated in the Prospectus as first amended or
supplemented; or (v) the occurrence of any material adverse change in
the existing financial, political or economic conditions in the United
States or elsewhere which, in the judgment of the Underwriters, would
materially and adversely affect the financial markets or the market
for the Securities and other debt securities;
(i) The shares of Common Stock issuable upon conversion of the
Securities shall have been approved for listing, subject to notice of
issuance, on the New York Stock Exchange; and
(j) The Company shall have furnished or caused to be furnished
to the Underwriters at such Delivery Date certificates of officers of
the Company satisfactory to the Underwriters as to the accuracy of the
representations and warranties of the Company herein at and as of such
Delivery Date, as to the performance by the Company of all of its
obligations hereunder to be performed at or prior to such Delivery
Date, as to the matters set forth in subsections (a) and (f) of this
Section and as to such other matters as the Underwriters may
reasonably request.
8. (a) The Company will indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter 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
12
statement of a material fact contained in any Preliminary Prospectus, any
preliminary prospectus supplement, 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 each Underwriter for any legal
or other expenses reasonably incurred by such Underwriter 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 any Preliminary
Prospectus, any preliminary prospectus supplement, the Registration
Statement or the Prospectus as amended or supplemented, or any such
amendment or supplement thereto in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through
Goldman, Sachs & Co. expressly for use therein.
(b) Each Underwriter 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 any Preliminary Prospectus, any
preliminary prospectus supplement, the Registration Statement or the
Prospectus as amended or supplemented, 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 any Preliminary
Prospectus, any preliminary prospectus supplement, the Registration
Statement or the Prospectus as amended or supplemented or any such
amendment or supplement thereto in reliance upon and in conformity with
written information furnished to the Company by such Underwriter through
Goldman, Sachs & Co. 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, jointly with any
other indemnifying party similarly notified, 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 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. No
indemnifying party shall, without the written consent of the indemnified
party, effect the settlement or compromise of, or consent to the entry of
any judgment with respect to, any pending or threatened action or claim in
respect of which indemnification or contribution may be sought
13
hereunder (whether or not the indemnified party is an actual or potential
party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party
from all liability arising out of such action or claim and (ii) does not
include a statement as to or an admission of fault, culpability or a
failure to act, by or on behalf of any indemnified party.
(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 Underwriters on the other from the offering of the
Securities. 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 Underwriters 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 Underwriters on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. 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 Underwriters 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
Underwriters agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by pro rata allocation
(even if the Underwriters were treated as one entity for such purpose) or
by any other method of allocation which does not take account of the
equitable considerations referred to above in this subsection (e). 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 (e) 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), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such
Underwriter 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. The Underwriters' obligations in
this subsection (d) to contribute are several in proportion to their
respective underwriting obligations and not joint.
(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 any Underwriter within the meaning of the Act;
14
and the obligations of the Underwriters under this Section 8 shall be in
addition to any liability which the respective Underwriters may otherwise
have and shall extend, upon the same terms and conditions, to each officer
and director of the Company (including any person who, with his or her
consent, is named in the Registration Statement as about to become a
director of the Company) and to each person, if any, who controls the
Company within the meaning of the Act.
9. (a) If, on either Delivery Date, any Underwriter shall
default in its obligation to purchase the Securities which it has agreed to
purchase hereunder, the Underwriters may in their discretion arrange for
the Underwriters or another party or other parties to purchase such
Securities on the terms contained herein. If within thirty-six hours after
such default by any Underwriter the Underwriters do not arrange for the
purchase of such Securities, then the Company shall be entitled to a
further period of thirty-six hours within which to procure another party or
other parties satisfactory to the Underwriters to purchase such Securities
on such terms. In the event that, within the respective prescribed
periods, the Underwriters notify the Company that they have so arranged for
the purchase of such Securities, or the Company notifies the Underwriters
that it has so arranged for the purchase of such Securities, the
Underwriters or the Company shall have the right to postpone such Delivery
Date for a period of not more than seven days in order to effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus as amended or supplemented or in any other documents or
arrangements, and the Company agrees to file promptly any amendments or
supplements to the Registration Statement or the Prospectus which in the
opinion of the Underwriters may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person
substituted under this Section with like effect as if such person had
originally been a party to this Agreement with respect to such Securities.
(b) If, after giving effect to any arrangements for the purchase
of the Securities of a defaulting Underwriter or Underwriters by the
Underwriters and the Company as provided in subsection (a) above, the
aggregate principal amount of such Securities which remains unpurchased
does not exceed one-eleventh of the aggregate principal amount of all the
Securities, then the Company shall have the right to require each
non-defaulting Underwriter to purchase the principal amount of Securities
which such Underwriter agreed to purchase hereunder and, in addition, to
require each non-defaulting Underwriter to purchase its pro rata share
(based on the principal amount of Securities which such Underwriter agreed
to purchase hereunder) of the Securities of such defaulting Underwriter or
Underwriters for which such arrangements have not been made; but nothing
herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the purchase
of the Securities of a defaulting Underwriter or Underwriters by the
Underwriters and the Company as provided in subsection (a) above, the
aggregate principal amount of Securities which remains unpurchased exceeds
one-eleventh of the aggregate principal amount of all the Securities, or if
the Company shall not exercise the right described in subsection (b) above
to require non-defaulting Underwriters to purchase Securities of a
defaulting Underwriter or Underwriters, then this Agreement (or, with
respect to the Second Delivery Date, the obligation of the Underwriters to
purchase, and of the Company to sell, the Option Securities) shall
thereupon terminate, without liability on the part of any non-defaulting
Underwriter or the Company, except for the expenses to be borne by the
Company and the Underwriters as provided in Section 6 hereof and the
indemnity and contribution agreements in Section 8 hereof; but nothing
herein shall relieve a defaulting Underwriter from liability for its
default.
15
10. The respective indemnities, agreements, representations,
warranties and other statements of the Company and the several
Underwriters, as set forth in this Agreement or made by or on behalf of
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 any Underwriter or any controlling
person of any Underwriter or the Company, or any officer or director or
controlling person of the Company, and shall survive delivery of and
payment for the Securities.
11. If this Agreement shall be terminated pursuant to Section 9
hereof, the Company shall not then be under any liability to any
Underwriter except as provided in Sections 6 and 8 hereof; but, if for any
other reason, the Securities are not delivered by or on behalf of the
Company as provided herein, the Company will reimburse the Underwriters for
all out-of-pocket expenses, including fees and disbursements of counsel,
reasonably incurred by the Underwriters in making preparations for the
purchase, sale and delivery of the Securities, but the Company shall then
be under no further liability to any Underwriter except as provided in
Sections 6 and 8 hereof.
12. All statements, requests, notices, and agreements hereunder
shall be in writing, and if to the Underwriters shall be delivered or sent
by mail, telex or facsimile transmission to the Underwriters in care of
Goldman, Sachs & Co., 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: Chief Financial Officer and
Attention: Secretary; provided, however, that any notice to an Underwriter
pursuant to Section 8(c) hereof shall be delivered or sent by mail, telex
or facsimile transmission to such Underwriter at its address set forth in
its Underwriters' Questionnaire, or telex constituting such Questionnaire,
which address will be supplied to the Company by the Underwriters upon
request. Any such statements, requests, notices or agreements shall take
effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to
the benefit of, the Underwriters, the Company and, to the extent provided
in Sections 8 and 10 hereof, the officers and directors of the Company and
each person who controls the Company or any Underwriter, 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 Securities from any Underwriter
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. 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 respective counterparts shall together
constitute one and the same instrument.
16
If the foregoing is in accordance with your understanding, please
sign and return to us six counterparts hereof, and upon the acceptance
hereof by the Underwriters, this letter and such acceptance hereof shall
constitute a binding agreement among each of the Underwriters and the
Company.
Very truly yours,
Federated Department Stores, Inc.
By: /s/ Ronald W. Tysoe
-------------------------------
Name: Ronald W. Tysoe
Title: Vice Chairman and Chief
Financial Officer
Accepted as of the date hereof:
Goldman, Sachs & Co.
CS First Boston Corporation
By: /s/ Goldman, Sachs & Co.
- --------------------------------
(Goldman, Sachs & Co.)
On Behalf of Each of the Underwriters
17
SCHEDULE I
Principal Amount of Securities
to be Purchased
Goldman, Sachs & Co. 244,000,000
CS First Boston Corporation 61,000,000
-----------
Total $305,000,000
===========
18
ANNEX III
Goldman, Sachs & Co.
CS First Boston Corporation
c/o Goldman, Sachs & Co.
85 Broad Street September 27, 1995
New York, New York 10004
Ladies and Gentlemen:
We have acted as your counsel in connection with the purchase by
you of $350,000,000 aggregate principal amount of 5% Convertible
Subordinated Notes due 2003 (the "Notes") of Federated Department Stores,
Inc., a Delaware corporation (the "Company"), pursuant to the Underwriting
Agreement dated September 22, 1995 between you and the Company.
We have examined the Registration Statement on Form S-3 (File No.
33-59691) filed by the Company under the Securities Act of 1933, as amended
(the "Act"), as it became effective under the Act (the "Registration
Statement"); and the Company's prospectus dated June 28, 1995, as
supplemented by the prospectus supplement dated September 22, 1995 (the
"Prospectus"), filed by the Company pursuant to Rule 424(b) of the rules
and regulations of the Securities and Exchange Commission (the
"Commission") under the Act, which pursuant to Form S-3 incorporates by
reference the Annual Report on Form 10-K of the Company for the fiscal year
ended January 28, 1995, the Quarterly Reports on Form 10-Q of the Company
for the fiscal quarters ended April 29 and July 29, 1995, the Current
Reports on Form 8-K of the Company dated September 21, 1995 and September
22, 1995 (the "Exchange Act Documents"), each as filed under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); and the Indenture
dated as of December 15, 1994, (as supplemented by the Fourth Supplemental
Indenture dated as of September 27, 1995, the "Indenture") between the
Company and First National Bank of Boston, as Trustee (the "Trustee")
relating to the Notes. In addition, we have examined, and have relied as to
matters of fact upon, the documents delivered to you at the closing, and
upon originals or copies, certified or otherwise identified to our
satisfaction, of such corporate records, agreements, documents and other
instruments and such certificates or comparable documents of public
officials and of officers and representatives of the Company, and have made
such other and further investigations, as we have deemed relevant and
necessary as a basis for the opinions hereinafter set forth.
In such examination, we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original
documents of all documents submitted to us as certified or photostatic
copies, and the authenticity of the originals of such latter documents.
III-1
Goldman, Sachs & Co. September 27, 1995
CS First Boston Corporation
Based upon the foregoing, and subject to the qualifications and
limitations stated herein, we are of the opinion that:
1. The Company has been duly incorporated and is validly existing
and in good standing as a corporation under the laws of the State of
Delaware.
2. The Indenture has been duly authorized, executed and delivered
by the Company and duly qualified under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"), and, assuming due
authorization, execution and delivery thereof by the Trustee,
constitutes a valid and legally binding instrument of the Company
enforceable against the Company in accordance with its terms.
3. The Notes have been duly authorized, executed and issued by
the Company and, assuming due authentication thereof by the Trustee
and upon payment and delivery in accordance with the Underwriting
Agreement, will constitute valid and legally binding obligations of
the Company enforceable against the Company in accordance with their
terms and entitled to the benefits of the Indenture.
4. The shares of the Company's Common Stock, par value $0.01 per
share (the "Common Stock"), issuable upon conversion of the Notes has
been duly and validly authorized and reserved for issuance upon
conversion and, when issued and delivered in accordance with the terms
of the Indenture, will be validly issued, fully paid and
non-assessable.
5. The statements made in the Prospectus under the captions
"Description of Debt Securities", "Description of Capital Stock" and
"Description of Notes," insofar as they purport to constitute
summaries of certain terms of documents referred to therein,
constitute accurate summaries of the terms of such documents in all
material respects.
6. The Underwriting Agreement has been duly authorized, executed
and delivered by the Company.
Our opinions set forth in paragraphs 2 and 3 above are subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith and
fair dealing.
All legal proceedings taken by the Company in connection with the
offering of the Notes and the legal opinions, dated the date hereof,
rendered to you by Dennis J. Broderick, General Counsel of the Company, and
Jones, Day, Reavis & Pogue, counsel for the Company, pursuant to the
Underwriting Agreement, are in form satisfactory to us.
We have not independently verified the accuracy, completeness or
fairness of the statements made or included in the Registration Statement,
the Prospectus or the Exchange Act Documents and take no responsibility
therefor, except as and to the extent set forth in paragraph 4 above. In
the course of the preparation by the Company of the Registration Statement
and the Prospectus Supplement (excluding the Exchange Act Documents), we
participated in conferences with certain officers and employees of the
III-2
Goldman, Sachs & Co. September 27, 1995
CS First Boston Corporation
Company, with representatives of KPMG Peat Marwick LLP and with counsel to
the Company. We did not participate in the preparation of the Exchange Act
Documents. Based upon our examination of the Registration Statement, the
Prospectus and the Exchange Act Documents, our investigations made in
connection with the preparation of the Registration Statement and the
Prospectus Supplement (excluding the Exchange Act Documents) and our
participation in the conferences referred to above, (i) we are of the
opinion that the Registration Statement, as of its effective date, and the
Prospectus, as of September 22, 1995, complied as to form in all material
respects with the requirements of the Act, the Trust Indenture Act and the
applicable rules and regulations of the Commission thereunder and that the
Exchange Act Documents complied as to form when filed in all material
respects with the requirements of the Exchange Act and the applicable rules
and regulations of the Commission thereunder, except that in each case we
express no opinion with respect to the financial statements or other
financial data contained or incorporated by reference in the Registration
Statement, the Prospectus or the Exchange Act Documents, and (ii) we have
no reason to believe that the Registration Statement , as of its effective
date (including the Exchange Act Documents on file with the Commission on
such effective date), contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading or that
the Prospectus (including the Exchange Act Documents) as of its date and as
of the date hereof contains any untrue statement of a material fact or
omits to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that in each case we express no belief with respect to
the financial statements or other financial data contained or incorporated
by reference in the Registration Statement, the Prospectus or the Exchange
Act Documents.
We are members of the Bar of the State of New York and we do not
express any opinion herein concerning any law other than the law of the
State of New York, the federal law of the United States and the Delaware
General Corporation Law.
This opinion is rendered to you in connection with the above
described transactions. This opinion may not be relied upon by you for any
other purpose, or relied upon by, or furnished to, any other person, firm
or corporation without our prior written consent.
Very truly yours,
SIMPSON THACHER & BARTLETT
III-3
ANNEX IV
September 27, 1995
Goldman, Sachs & Co.
CS First Boston Corporation
c/o Goldman, Sachs & Co.,
85 Broad Street
New York, New York 10004
Re: $350,000,000 Aggregate Principal Amount of 5% Convertible Subordinated
Notes due October 1, 2003 of Federated Department Stores, Inc.
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Ladies and Gentlemen:
As General Counsel of Federated Department Stores, Inc. (the
"Company"), I have acted as counsel for the Company in connection with the
sale of $350,000,000 aggregate principal amount of the Company's 5%
Convertible Subordinated Notes due 2003 (the "Notes") pursuant to the
Underwriting Agreement, dated September 22, 1995 (the "Underwriting
Agreement"), between you and the Company. This opinion is furnished to you
pursuant to Section 7(c) of the Underwriting Agreement. Except as
otherwise defined herein, terms used herein with initial capital letters
are so used with the respective meanings ascribed thereto in the
Underwriting Agreement.
I have examined such documents, records and matters of law as I
have deemed necessary for purposes of this opinion. Based thereupon, I am
of the opinion that:
1. The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware,
with corporate power and authority to own its properties and conduct its
business as described in the Prospectus as amended or supplemented prior to
the date hereof;
2. 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 and all of the shares of the Company's Common Stock, par
value $0.01 per share (the "Common Stock"), issuable upon conversion of the
Securities have been duly and validly authorized and reserved for issuance
upon conversion and, when issued and delivered in accordance with the terms
of the Indenture, will be duly and validly issued, fully paid and
non-assessable;
3. 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
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Goldman, Sachs & Co. September 27, 1995
CS First Boston Corporation
which it is required to be so qualified, except for such failures to be so
qualified and in good standing as individually or in the aggregate would
not have a Material Adverse Effect;
4. Each Significant Subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation; all of the issued
shares of capital stock of each such Significant Subsidiary have been duly
and validly authorized and issued, are fully paid and non-assessable, and
(except as otherwise disclosed in the Prospectus as amended or supplemented
prior to the date hereof) are owned directly or indirectly by the Company,
free and clear of all material liens, encumbrances, equities or claims; and
all of the issued shares of capital stock of each Significant Subsidiary of
the Company have been duly and validly authorized and issued, are fully
paid and non-assessable and are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or claims
(except as otherwise disclosed in the Prospectus as amended or supplemented
prior to the date hereof or where, individually or in the aggregate, the
failure to have been duly and validly authorized and issued, to be fully
paid and non-assessable or to be owned directly or indirectly by the
Company free and clear of liens, encumbrances, equities or claims would not
have a Material Adverse Effect);
5. To my knowledge, other than as disclosed in the Prospectus as
amended or supplemented prior to the date hereof, 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 which, if determined adversely to the
Company or any of its subsidiaries, is reasonably likely individually or in
the aggregate to have a Material Adverse Effect; and, to my knowledge, no
such proceedings are threatened or contemplated by governmental authorities
or threatened by others;
6. The issue and sale of the Securities and the compliance by the
Company with all of the provisions of the Securities, the Indenture and the
Underwriting Agreement, the consummation of the transactions therein
contemplated (other than to the extent set forth in the Prospectus as
amended or supplemented prior to the date hereof under the caption
"Description of the Notes--Repurchase at Option of Holders Upon a Change in
Control") and the issuance and delivery of the shares of the Common Stock
issuable upon conversion of the Notes 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, sale/leaseback
agreement, loan agreement or other financing agreement or any other
agreement or instrument known to me 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, except for such conflicts, breaches,
violations and defaults as individually or in the aggregate would not have
a Material Adverse Effect, nor will such action result in any material
violation of the provisions of the Certificate of Incorporation or By-laws
of the Company or (a) any material statute, order, rule or regulation of
any court or governmental agency or body having jurisdiction over the
Company or any of its Significant Subsidiaries or any of their properties
or (b) any statute, 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, except, with respect to this
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Goldman, Sachs & Co. September 27, 1995
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clause (b) only, for such violations, defaults and failures as individually
or in the aggregate would not have a Material Adverse Effect;
7. Neither the Company nor any of its Significant Subsidiaries is
(a) in violation of its certificate of incorporation or by-laws (or
comparable governing documents) or (b) in default in the performance or
observance of any material obligation, covenant or condition contained in
any indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument known to me after due inquiry to which it is a
party or by which it or any of its properties may be bound, and, to my
knowledge after due inquiry, none of the subsidiaries of the Company is (a)
in material violation of its certificate of incorporation or by-laws (or
comparable governing documents) or (b) in default in the performance or
observance of any material obligation, covenant or condition contained in
any indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument known to me after due inquiry to which it is a
party or by which it or any of its properties may be bound, except for such
violations and defaults as individually or in the aggregate would not have
a Material Adverse Effect;
8. The Underwriting Agreement has been duly authorized, executed
and delivered by the Company;
9. The Securities have been duly authorized, executed,
authenticated, issued, and delivered and constitute valid and legally
binding obligations of the Company enforceable against the Company in
accordance with their terms and entitled to the benefits provided by the
Indenture, except as the enforceability of the Securities and the Indenture
may be limited by bankruptcy, insolvency, reorganization, and other laws of
general applicability relating to or affecting creditors' rights and to
general principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law; and the Securities and the
Indenture conform in all material respects to the descriptions thereof in
the Prospectus, as amended or supplemented prior to the date hereof;
10. The Indenture has been duly authorized, executed and delivered
and constitutes a valid and legally binding instrument, enforceable against
the Company in accordance with its terms, except as the enforceability of
the Indenture may be limited by bankruptcy, insolvency, reorganization, and
other laws of general applicability relating to or affecting creditors'
rights and to general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law; and the
Indenture has been duly qualified under the Trust Indenture Act;
11. No consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the issue and sale of the Securities or the consummation by
the Company of the transactions contemplated by the Underwriting Agreement
or the Indenture, except such as have been obtained under the Act, the
Exchange Act, and the Trust Indenture Act, and such consents, approvals,
authorizations, registrations, or qualifications as may be required under
the state securities or Blue Sky laws in connection with the purchase and
distribution of the Securities by the Underwriters;
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Goldman, Sachs & Co. September 27, 1995
CS First Boston Corporation
12. The statements set forth in the Prospectus, as amended or
supplemented prior to the date hereof, under the captions "Description of
Debt Securities", "Description of Capital Stock" and "Description of the
Notes," and under the captions "Plan of Distribution" and "Underwriting,"
insofar as they purport to summarize the provisions of the laws and documents
referred to therein, present fair summaries of such provisions;
13. The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act;
14. The documents incorporated by reference in the Prospectus or
any amendment or supplement thereto made by the Company prior to the date
hereof (other than the financial statements and related schedules and other
financial or statistical data contained therein, as to which I express no
opinion), when they were filed with the Commission, complied as to form in
all material respects with the requirements of the Exchange Act and the
rules and regulations of the Commission thereunder; and I have no reason to
believe that any of the documents referred to in this paragraph 14, when
such documents were so filed, contained 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. However, I have
not independently verified, and I assume no responsibility for the
accuracy, completeness or fairness of the Registration Statement or the
Prospectus as amended or supplemented (including any documents incorporated
by reference therein), except to the extent of the opinion expressed in
paragraph 12); and
15. The Registration Statement and the Prospectus and any
amendments and supplements thereto made by the Company prior to the date
hereof (other than the financial statements and related schedules and other
financial or statistical data therein, as to which I express no opinion)
comply as to form in all material respects with the requirements of the Act
and the Trust Indenture Act and the rules and regulations thereunder; and I
do not know of any amendment to the Registration Statement required to be
filed or of any contract or other document 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.
In rendering the opinions in paragraphs 9 through 15 hereof, I
have relied solely on the opinion of Jones, Day, Reavis & Pogue furnished
to you pursuant to Section 7(d) of the Underwriting Agreement.
In rendering this opinion, I have assumed that (i) the signatures
on all documents examined by me are genuine and that, where any such
signature purports to have been made in a corporate, governmental,
fiduciary or other capacity, the person who affixed such signature to such
document had authority to do so and (ii) the statements and certificates
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Goldman, Sachs & Co. September 27, 1995
CS First Boston Corporation
described in the following paragraph are accurate in all material respects
at the date of this opinion.
I am a member of the bar of the State of Ohio, and have not been
admitted to the bar of any other jurisdiction. In rendering the opinions
set forth herein, my examination of matters of law has been limited to the
federal laws of the United States of America, the corporation laws of the
States of Delaware and Ohio, and the laws of the State of New York. In
rendering the opinions in paragraphs 1-13 and paragraph 15, I have relied,
as to certain matters of fact, without any independent investigation,
inquiry or verification, upon statements or certificates of representatives
of the Company and of the Trustee under the Indenture and upon statements
or certificates of public officials.
This opinion is furnished by me, as General Counsel of the
Company, to you solely for your benefit and solely with respect to the
purchase by you of the Notes from the Company, upon the understanding that
I am not assuming hereby any professional responsibility to any other
person whatsoever.
Very truly yours,
Dennis J. Broderick
IV-5
Annex V
September 27, 1995
Goldman, Sachs & Co.,
CS First Boston Corporation
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Re: $350,000,000 Aggregate Principal Amount of 5% Convertible
Subordinated Notes due 2003 of Federated Department Stores, Inc.
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Ladies and Gentlemen:
We have acted as counsel for Federated Department Stores, Inc.
(the "Company") in connection with the sale of $350,000,000 aggregate
principal amount of the Company's 5% Convertible Subordinated Notes due
2003 (the "Notes") pursuant to the Underwriting Agreement, dated September
22, 1995 (the "Underwriting Agreement"), between you and the Company. This
opinion is furnished to you pursuant to Section 7(d) of the Underwriting
Agreement. Except as otherwise defined herein, terms used herein with
initial capital letters are so used with the respective meanings ascribed
thereto in the Underwriting Agreement.
We have examined such documents, records, and matters of law as we
have deemed necessary for purposes of this opinion. Based thereupon, we
are of the opinion that:
1. The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware,
with corporate power and authority to own its properties and conduct its
business as described in the Prospectus as amended or supplemented prior to
the date hereof;
2. The Underwriting Agreement has been duly authorized, executed,
and delivered by the Company;
3. The Securities have been duly authorized, executed,
authenticated, issued, and delivered and constitute valid and legally
binding obligations of the Company enforceable against the Company in
accordance with their terms and entitled to the benefits provided by the
Indenture, except as the enforceability of the Securities and the Indenture
may be limited by bankruptcy, insolvency, reorganization, and other laws of
general applicability relating to or affecting creditors' rights and to
general principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law; and the Securities and the
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Goldman, Sachs & Co. September 27, 1995
CS First Boston Corporation
Indenture conform in all material respects to the descriptions thereof in
the Prospectus as amended or supplemented prior to the date hereof;
4. The shares of the Company's Common Stock, par value $0.01 per
share (the "Common Stock"), issuable upon conversion of the Notes has been
duly authorized and reserved for issuance upon conversion and, when issued
and delivered in accordance with the terms of the Indenture, will be
validly issued, fully paid and non-assessable.
5. The Indenture has been duly authorized, executed, and
delivered and constitutes a valid and legally binding instrument,
enforceable against the Company in accordance with its terms, except as the
enforceability of the Indenture may be limited by bankruptcy, insolvency,
reorganization, and other laws of general applicability relating to or
affecting creditors' rights and to general principles of equity, regardless
of whether such enforceability is considered in a proceeding in equity or
at law; and the Indenture has been duly qualified under the Trust Indenture
Act;
6. No consent, approval, authorization, order, registration, or
qualification of or with any such court or governmental agency or body is
required for the issue and sale of the Securities, the consummation by the
Company of the transactions contemplated by this Agreement or the Indenture
or the issuance of the Common Stock, upon conversion of the Securities,
except such as have been obtained under the Act, the Exchange Act, and the
Trust Indenture Act, 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
Securities and the Common Stock by the Underwriters;
7. The statements set forth in the Prospectus as amended or
supplemented prior to the date hereof under the captions "Description of
Debt Securities", "Description of Capital Stock" and "Description of the
Notes," and under the captions "Plan of Distribution" and "Underwriting,"
insofar as they purport to summarize the provisions of the laws and
documents referred to therein, present fair summaries of such provisions;
8. The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act;
9. The documents incorporated by reference in the Prospectus or
any amendment or supplement thereto made by the Company prior to the date
hereof (other than the financial statements and related schedules and other
financial or statistical data contained therein, as to which we express no
opinion), when they were filed with the Commission, complied as to form in
all material respects with the requirements of the Exchange Act and the
rules and regulations of the Commission thereunder; and
10. The Registration Statement and the Prospectus and any
amendments and supplements thereto made by the Company prior to the date
hereof (other than the financial statements and related schedules and other
financial or statistical data therein, as to which we express no opinion)
comply as to form in all material respects with the requirements of the Act
and the Trust Indenture Act and the rules and regulations thereunder; and
we do not
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Goldman, Sachs & Co. September 27, 1995
CS First Boston Corporation
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.
We have participated in the preparation of the Registration
Statement and the Prospectus (but not the documents incorporated into the
Registration Statement or the Prospectus by reference) and, based on such
participation, no facts have come to our attention which cause us to
believe that, as of its effective date, the Registration Statement or any
amendment thereto made by the Company prior to the date hereof (other than
the financial statements and related schedules and other financial data
contained therein, as to which we express no belief) 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 amendment or
supplement thereto made by the Company prior to the date hereof (other than
the financial statements and related schedules and other financial data
contained therein, as to which we express no belief) contained an untrue
statement of a material fact or omitted to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading or that, as of the date hereof, either
the Registration Statement or the Prospectus or any amendment or supplement
thereto made by the Company prior to the date hereof (other than the
financial statements and related schedules and other financial data
contained therein, as to which we express no belief) contains an untrue
statement of a material fact or omits to state a material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading. However, we have not independently
verified, and we assume no responsibility for, the accuracy, completeness,
or fairness of the Registration Statement or the Prospectus as amended or
supplemented (including any documents incorporated or deemed to be
incorporated by reference therein) except to the extent of the opinion
expressed in paragraph 7.
In rendering the foregoing opinions, we have assumed (i) the due
authorization, execution, and delivery of the Underwriting Agreement by or
on behalf of the Underwriters, (ii) that the signature on all documents
examined by us are genuine and that where any such signature purports to
have been made in a corporate, governmental, fiduciary, or other capacity,
the person who affixed such signature to such document had authority to do
so, and (iii) that the statements and certificates described in the
following paragraph are accurate in all material respects at the date of
this opinion.
In rendering the opinions in paragraphs 1 through 10, (i) our
examination of matters of law has been limited to the federal laws of the
United States of America, the laws of the State of New York, and the
General Corporation Law of the State of Delaware and (ii) we have relied,
as to certain matters of fact, without any independent investigation,
inquiry, or verification, upon statements or certificates of
representatives of the Company and of the Trustee under the Indenture and
upon statements or certificates of public officials.
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Goldman, Sachs & Co. September 27, 1995
CS First Boston Corporation
This opinion is furnished by us, as counsel for the Company, to
you solely for your benefit and solely with respect to the purchase by you
of the Notes from the Company, upon the understanding that we are not
assuming hereby any professional responsibility to any other person
whatsoever.
Very truly yours,
Jones, Day, Reavis & Pogue
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