Federated Department Stores, Inc.
8 1/2% Senior Notes due 2003
Underwriting Agreement
----------------------
May 16, 1996
Goldman, Sachs & Co.,
CS First Boston Corporation and
Smith Barney Inc.,
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 $450,000,000
principal amount of Notes specified above (the "Securities").
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. 33-64973) 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 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;
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(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 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;
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(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, dated as of December 15, 1994 (the "Indenture"), as supplemented
by the Seventh Supplemental Indenture (the "Supplemental Indenture"),
between the Company and State Street Bank and Trust Company (successor to
The First National Bank of Boston), as Trustee (the "Trustee"), under which
the Securities are to be issued; the Indenture has been duly authorized,
executed and delivered and duly qualified under the Trust Indenture Act;
the Indenture constitutes (and the Supplemental Indenture, when executed
and delivered by the Company and the Trustee, 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 and the 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 and 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--Certain Restrictive
Covenants--Change of Control") 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 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
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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 or the consummation by the Company of the transactions
contemplated by this Agreement or the Indenture, as supplemented by the
Supplemental Indenture, except the registration of the Securities 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" and
"Description of the Notes", insofar as they purport to constitute a summary
of the terms of the Securities, and under the captions "Plan of
Distribution" and "Underwriting", insofar as they purport to describe the
provisions of the laws and 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
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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. 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 97.963% of the principal amount thereof, plus accrued
interest, if any, from May 22, 1996 to the Time of Delivery hereunder, the
principal amount of Securities set forth opposite the name of such Underwriter
in Schedule I hereto.
3. Upon the authorization by the Underwriters of the release of the
Securities, the several Underwriters propose to offer the Securities for sale
upon the terms and conditions set forth in the Prospectus as amended or
supplemented.
4. (a) The 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
Securities to Goldman, Sachs & Co., for the account of each Underwriter, against
payment by or on behalf of such Underwriter of the purchase price therefor in
Federal (same-day) funds by wire transfer to an account designated by the
Company for such purpose, by causing DTC to credit the Securities to the account
of Goldman, Sachs & Co. at DTC. The Company will cause the certificates
representing the Securities to be made available to Goldman, Sachs & Co. for
checking at least twenty-four hours prior to the Time of Delivery (as defined
below) 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 May 21, 1996 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 "Time of Delivery".
(b) The documents to be delivered at the Time of Delivery 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
6
York 10017 (the "Closing Location"), and the Securities will be delivered at the
Designated Office, all at the Time of Delivery. 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 Time of Delivery, 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.
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 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
Time of Delivery for which shall be disapproved by the Underwriters
promptly after reasonable notice thereof; to advise the Underwriters
promptly of such amendment or supplement after such Time of Delivery 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 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 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
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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 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 later of the Time of Delivery and such earlier time as
the Underwriters may notify the Company, 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;
(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;
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(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
statements furnished to or filed with the Commission or any national
securities exchange on which the Securities or any class of securities of
the Company is listed and (B) the documents specified in Section 7.04 of
the Indenture, as in effect at the Time of Delivery, 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";
and
(i) To use its best efforts to list the Securities, subject to
official notice of issuance, on the New York Stock Exchange.
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 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 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; (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.
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
9
warranties and other statements of the Company herein are, at and as of the Time
of Delivery, 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 the Time of
Delivery, 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 the
Time of Delivery, 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 the Time of
Delivery, 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 shall have furnished
to the Underwriters a letter, dated the date of delivery thereof, in form
and substance satisfactory to the Underwriters, and KPMG Peat Marwick LLP
shall have furnished to the Underwriters a "bring-down" letter, dated the
Time of Delivery, in form and substance satisfactory to the Underwriters
(the executed copy of the letter delivered prior to the execution of this
Agreement is attached hereto as Annex I and draft the form of the letter to
be delivered on the effective date of any post-effective amendment to the
Registration Statement and as of the Time of Delivery is attached hereto as
Annex II;
(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 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
10
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 Securities shall have been approved for listing, subject to
official 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 the Time of Delivery 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 Time
of Delivery, as to the performance by the Company of all of its obligations
hereunder to be performed at or prior to such Time of Delivery, 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 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
11
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 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
12
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; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability
13
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 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 the Time of
Delivery 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 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.
14
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.
15
If the foregoing is in accordance with your understanding, please sign
and return to us seven 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:
---------------------
Dennis J. Broderick,
Senior Vice President
Accepted as of the date hereof:
GOLDMAN, SACHS & CO.,
CS FIRST BOSTON CORPORATION and
SMITH BARNEY INC.
By:
---------------------------------------
(Goldman, Sachs & Co.)
On behalf of each of the Underwriters
16
SCHEDULE I
Principal Amount of Securities
to be Purchased
Goldman, Sachs & Co. . . . . . . . . . . $247,500,000
CS First Boston Corporation . . . . . . . . 157,500,000
Smith Barney Inc. . . . . . . . . . . . . . 45,000,000
----------
Total . . . . . . . . . . . . . . . $450,000,000
===========
17
ANNEX I
[Attach executed copy of initial comfort letter]
ANNEX II
[Attach form of bring-down comfort letter]
ANNEX III
GOLDMAN, SACHS & CO., May 22, 1996
CS FIRST BOSTON CORPORATION AND
SMITH BARNEY INC.,
C/O GOLDMAN, SACHS & CO.,
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
We have acted as your counsel in connection with the purchase by you of
$450,000,000 aggregate principal amount of 8 1/2% Senior Notes due 2003 (the
"Notes") of Federated Department Stores, Inc., a Delaware corporation (the
"Company"), pursuant to the Underwriting Agreement dated May 16, 1996 between
you and the Company.
We have examined the Registration Statement on Form S-3 (File No. 33-
64973) 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 January 22, 1996, as supplemented by the
prospectus supplement dated May 16, 1996 (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 February 3, 1996 and the Current Report on Form 8-K of the
Company dated May __, 1996 (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 Seventh
Supplemental Indenture dated as of May 21, 1996, the "Indenture") between the
Company and State Street Bank and Trust Company (successor to 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.
Based upon the foregoing, and subject to the qualifications and
limitations stated herein, we are of the opinion that:
III-1
Goldman, Sachs & Co. May 22, 1996
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 obligation 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 statements made in the Prospectus under the captions
"Description of Debt Securities" and "Description of the 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.
5. 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 Company, with
representatives of KPMG Peat Marwick LLP and with counsel to the
III-2
Goldman, Sachs & Co. May 22, 1996
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 May 16, 1996, 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) 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
May 22, 1996
Goldman, Sachs & Co.,
CS First Boston Corporation and
Smith Barney Inc.,
c/o Goldman, Sachs & Co.,
85 Broad Street
New York, New York 10004
Re: $450,000,000 Aggregate Principal Amount of 8 1/2% Senior Notes
due 2003 of Federated Department Stores, Inc.
------------------------------------------------------
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 $450,000,000 aggregate principal amount of the Company's 8 1/2% Senior Notes
due 2003 (the "Notes") pursuant to the Underwriting Agreement, dated May 16,
1996 (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;
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 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;
IV-1
Goldman, Sachs & Co. May 22, 1996
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; each subsidiary of the Company has been
duly incorporated as is validly existing as a corporation in good standing under
the laws of its jurisdiction of incorporation, except where the failure to be
duly incorporated, validly existing and in good standing would not, individually
or in the aggregate, have a Material Adverse Effect, taken as a whole; 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 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 and 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--Certain Restrictive Covenants--Change of Control") 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 clause (b) only, for such violations, defaults and failures as
individually or in the aggregate would not have a Material Adverse Effect;
IV-2
Goldman, Sachs & Co. May 22, 1996
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;
12. The statements set forth in the Prospectus, as amended or
supplemented prior to the date hereof, under the captions "Description of Debt
Securities" and "Description of the Notes," and under the captions "Plan of
Distribution" and "Underwriting," insofar as
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Goldman, Sachs & Co. May 22, 1996
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 Time of Delivery (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 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.
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Goldman, Sachs & Co. May 22, 1996
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
May 22, 1996
Goldman, Sachs & Co.,
CS First Boston Corporation and
Smith Barney Inc.,
c/o Goldman, Sachs & Co.,
85 Broad Street
New York, New York 10004
Re: $450,000,000 Aggregate Principal Amount of 8 1/2% Senior Notes
due 2003 of Federated Department Stores, Inc.
-------------------------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel for Federated Department Stores, Inc. (the
"Company") in connection with the sale of $450,000,000 aggregate principal
amount of the Company's 8 1/2% Senior Notes due 2003 (the "Notes") pursuant to
the Underwriting Agreement, dated May 16, 1996 (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. May 22, 1996
Indenture conform in all material respects to the descriptions thereof in the
Prospectus as amended or supplemented prior to the date hereof;
4. 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;
5. No consent, approval, authorization, order, registration, or
qualification of or with any 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 state securities or Blue Sky laws in
connection with the purchase and distribution of the Securities by the
Underwriters;
6. The statements set forth in the Prospectus as amended or
supplemented prior to the date hereof under the captions "Description of Debt
Securities" 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;
7. 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;
8. 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
9. 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 contained 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 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
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Goldman, Sachs & Co. May 22, 1996
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 6.
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 9, (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. May 22, 1996
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
V-4