SEAGRAM CO LTD, 424B1, 1999-06-16

SEAGRAM CO LTD
424B1, 1999-06-16
BEVERAGES

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<PAGE> 1
As Filed Pursuant to Rule 424(b)(1)
Registration Nos. 333-78395;
333-78395-01

18,500,000 Units

THE SEAGRAM COMPANY LTD.

7.50% Adjustable Conversion-rate Equity Security Units
------------------------
Each unit consists of a contract to purchase common shares of The Seagram
Company Ltd. and a subordinated deferrable note of its subsidiary, Joseph E.
Seagram & Sons, Inc., that is guaranteed by The Seagram Company Ltd. You will
receive from each unit:

- distributions at the rate of 7.50% per year, paid quarterly, and

- on June 21, 2002, between 0.83333 and one common share of The
Seagram Company Ltd., depending on the average trading price of the
common shares at that time.

You may use the proceeds of a remarketing of the notes to satisfy your
payment obligation under the contracts, which is due on June 21, 2002. You may
also elect to deliver treasury securities or cash to satisfy that obligation, in
which case the notes will be returned to you.

The interest rate on the notes will be reset on March 21, 2002. We can
defer payments of interest for up to 5 years. Amounts that we defer will bear
interest at the rate of 7.50% until March 21, 2002, and at the reset interest
rate on the notes after that date.

You may not separate the notes from the contracts, except in limited
circumstances. The notes and contracts will therefore trade together as units.
The units have been approved for listing on the New York Stock Exchange, subject
to notice of issuance, under the symbol "VOY." Our common shares are listed on
the New York Stock Exchange under the symbol "VO". The last reported sale price
on the New York Stock Exchange on June 15, 1999 was $50 1/8 per share.

Investing in units involves risks described beginning on page 6.
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------

<TABLE>
<CAPTION>
Per Unit Total
-------- ------------
<S> <C> <C>
Initial public offering price............................... $50.125 $927,312,500
Underwriting discount....................................... $ 1.50 $ 27,750,000
Proceeds to us, before expenses............................. $48.625 $899,562,500
</TABLE>

The underwriters may, under the terms of the underwriting agreement,
purchase up to an additional 2,775,000 units from us at the initial public
offering price less the underwriting discount.

The underwriters expect to deliver the units against payment in New York,
New York on June 21, 1999.
------------------------
GOLDMAN, SACHS & CO.
BEAR, STEARNS & CO. INC.

MERRILL LYNCH & CO.

MORGAN STANLEY DEAN WITTER
------------------------
Prospectus dated June 15, 1999.
<PAGE> 2

[INSIDE FRONT COVER]

PHOTOGRAPHS OF SEAGRAM'S RECORDED MUSIC
PRODUCTS, FILMS, THEME PARKS AND
BEVERAGE ALCOHOL PRODUCTS
<PAGE> 3

PROSPECTUS SUMMARY

You should read the following summary together with the more detailed
information and financial statements and notes to the financial statements
appearing elsewhere in or incorporated by reference into this prospectus.

THE SEAGRAM COMPANY LTD.

We operate in two global business segments: entertainment and spirits and
wine. The entertainment segment produces and distributes recorded music and
motion picture, television and home video products throughout the world. It also
operates theme parks and retail stores. The spirits and wine segment produces
and markets distilled spirits, wines, coolers, beers and mixers in more than 190
countries and territories.

BUSINESS STRATEGY

We have transformed ourselves into a leading entertainment company with a
first-tier global spirits and wine business. Our objective is to enhance
shareholder value by executing the following strategies:

- - CAPITALIZE ON OUR LEADING POSITION IN THE MUSIC INDUSTRY: With the completion
of the PolyGram acquisition, we are the world's largest music company with a
22% market share (based on 1998 unit sales) and have the #1 position in every
major region in the world, including North America, South America, Europe and
Asia, and in every major music genre, including Hip-Hop, R&B, rock, country,
jazz and classical. We also have the largest music catalog in the world.

- - DEVELOP E-COMMERCE FOR MUSIC DISTRIBUTION: Our strategy is to be at the
forefront of the development of music distribution through e-commerce and
electronic delivery. We are actively participating in the development of
worldwide standards for the protection of digitized music which will allow
the commercial sale and distribution of music over the internet and all
future broadband channels. In April 1999, Seagram and BMG formed GetMusic, an
on-line music alliance, to create internet sites to promote and sell music.

- - PURSUE SIGNIFICANT POTENTIAL COST-SAVINGS FROM THE UNIVERSAL/POLYGRAM
COMBINATION: The PolyGram acquisition combined two of the leading music
companies with top record labels across all music genres and complementary
distribution capabilities. This combination has created the potential for
significant cost savings through consolidation of labels, manufacturing and
distribution facilities and corporate overhead reductions. We expect these
cost savings to reach $300 million annually by fiscal year 2001.

- - EXPAND BRANDED THEME PARKS: Recently, we have significantly expanded our
branded theme parks in North America, and made investments in Europe and
Asia. In May 1999, in Orlando, Florida, we opened with our partner Universal
Studios Islands of Adventure, a second major theme park, and CityWalk, a
dining, retail and entertainment complex. The new theme park features
attractions that draw on such well-known entertainment names as Jurassic
Park, Dr. Seuss and Marvel Comic Super Heroes. With the expected opening of
The Portofino Bay Hotel in September 1999 and two additional hotels in 2000
and 2001, adjacent to Universal Studios Florida and Universal Studios Islands
of Adventure, we intend to create a world-class destination

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<PAGE> 4

resort, Universal Studios Escape. In May 1999 we added Terminator 2:3D at our
California theme park, Universal Studios Hollywood. We acquired an interest
in and manage Universal's Port Aventura, a theme park near Barcelona, Spain.
The Universal Studios Japan theme park is under construction and is scheduled
to open in Osaka in 2001.

- - ENHANCE FILMED ENTERTAINMENT RETURNS: We have a valuable library of 3,000
feature films. We are committed to increasing its value through our current
development, production and marketing of motion pictures. We also plan to
seek to reduce the capital used in our motion picture business through
increased co-financing and co-production arrangements. In addition, we are
using our television library of nearly 24,000 episodes and our motion picture
library to gain equity stakes in new television channels internationally,
particularly in Europe.

- - STRENGTHEN STAKE IN DOMESTIC TELEVISION: In February 1998, we combined our
domestic television businesses with Home Shopping Network to form USA
Networks, a public company in which we own a 45% effective interest. USA
Networks has strong positions in programming, broadcast and cable
distribution, and e-commerce. As of June 15, 1999, the market value of this
investment was approximately $5.8 billion.

- - GROW OUR KEY SPIRITS AND WINE BRANDS AND MARKETS: It is our objective to grow
our key global brands: Chivas Regal, Crown Royal, Captain Morgan, Martell
Cognac and ABSOLUT VODKA. We have identified the United States, Germany,
Spain, the United Kingdom, Japan and Korea as priority established markets.
We also see growth potential in Brazil, Russia, Poland, China and India. We
are a leading producer and importer of fine wines in North America. We expect
to benefit from a recovery in the Asian markets and continued strong demand
in North America.

2
<PAGE> 5

THE OFFERING

THE UNITS

COMPONENTS OF UNITS

Each unit consists of a contract to purchase common shares of Seagram and a
subordinated deferrable note of Joseph E. Seagram & Sons, Inc., a subsidiary of
Seagram which we refer to as JES. The notes are guaranteed by Seagram. You will
receive from each unit:

- - distributions at the rate of 7.50% per year, paid quarterly, and

- - on June 21, 2002, between 0.83333 and one common share of Seagram, depending
on the average trading price of the common shares at that time.

The notes will be pledged to secure the unit holder's obligations to
Seagram to purchase the common shares under the contracts.

You may not separate the notes from the contracts, except in limited
circumstances. The notes and contracts will therefore trade together as units.

SETTLEMENT RATE

The number of common shares you will receive for each unit will be
determined by one of the following settlement rates:

- - If the average trading price equals or exceeds $60.15, you will receive
0.83333 common shares.

- - If the average trading price is less than $60.15 but greater than $50.125, you
will receive common shares having a value, based on the average trading price,
equal to $50.125.

- - If the average trading price is less than or equal to $50.125, you will
receive one common share.

The average trading price used to determine the settlement rate will be the
average closing price of the common shares during a 20-trading day period ending
before June 21, 2002. The settlement rate will be subject to anti-dilution
adjustment in case of stock splits, stock dividends, or other events affecting
the common shares. You can find more information about the settlement rate
starting on page 30.

SETTLEMENT MECHANICS

REMARKETING OF NOTES. On the third business day preceding March 21, 2002
the remarketing agent will remarket the notes and use the proceeds to purchase
substitute collateral. After the notes have been remarketed, the interest rate
on the notes will be reset at the rate determined by the remarketing agent.

Alternatively, you may elect not to participate in the remarketing and
retain the notes underlying the units by delivering cash which will be used to
buy treasury securities to serve as substitute collateral. After the notes have
been remarketed, the interest rate on the notes will be reset at the rate
determined by the remarketing agent.

EARLY SETTLEMENT. You may settle the purchase contracts underlying your
units at any time until the seventh business day preceding March 21, 2002, by
delivering $50.125 in cash per unit. You will receive 0.83333 common shares per
unit and the notes underlying the units upon delivery of the cash.

THE NOTES

The notes will:

- bear interest at an annual rate of 7.62% prior to March 21, 2002, and at
the reset rate after that date, paid quarterly, subject to the deferral
provisions described below,

- mature on June 21, 2004, and

3
<PAGE> 6

- not be redeemable prior to maturity.

The interest rate on the notes will be reset on March 21, 2002 in
connection with the remarketing of the notes described above.

JES may defer payments of interest on the notes. Any deferred payments of
interest will bear additional interest at an annual rate equal to the deferral
rate of 7.62% prior to March 21, 2002, and at the reset rate thereafter.

OTHER TERMS OF THE UNITS

CONTRACT FEES. The holders of units will be required to pay contract fees
to Seagram at an annual rate of 0.12%.

The obligation to the holders of units to pay contract fees to Seagram will
be funded solely out of payments made in respect of the notes or the pledged
securities. If payments made in respect of the pledged securities are
insufficient to cover the obligation of the holders of the units to pay contract
fees, such obligation will be deferred until the earlier of the date sufficient
cash is available and the stock purchase date.

Any deferred contract fees payable by the holders of units will bear
additional contract fees at the rate of 0.12% per annum (compounding on each
succeeding quarterly payment date) until paid.

LISTING. The units have been approved for listing on the New York Stock
Exchange, subject to notice of issuance, under the symbol "VOY."

U.S. FEDERAL INCOME TAX CONSEQUENCES. The notes will be subject to the
regulations concerning contingent payment debt instruments. As such, you will be
subject to federal income tax on the accrual of original issue discount in
respect of the notes. In addition, it is unlikely that you will be entitled to a
current deduction for the contract fees payable to Seagram. Thus, you will be
required to recognize income each quarter equal to the full amount of original
issue discount accrued with respect to the note, even though you will receive
less than the full amount of interest because of your payment to Seagram.
Because there is no statutory, judicial or administrative authority directly
addressing the tax treatment of the units or instruments similar to the units,
you are urged to consult your own tax advisor concerning the tax consequences of
an investment in the units.

USE OF PROCEEDS. JES will receive proceeds from this unit offering, net of
underwriting discounts and expenses, of approximately $898 million. Seagram will
receive proceeds, net of underwriting discounts and expenses, of approximately
$1,416 million from the common share offering described below. The proceeds to
Seagram of the offerings will be used:

- to repay borrowings under our bank credit facilities of approximately
$1.3 billion,

- to repay commercial paper borrowings of approximately $1.0 billion, and

- for general corporate purposes.

See "Use of Proceeds."

OTHER OFFERING

Seagram and certain selling shareholders are also offering 37,000,000
common shares in a separate offering. The common share and unit offering are not
conditioned on each other.

4
<PAGE> 7

SUMMARY FINANCIAL DATA
(US$ IN MILLIONS EXCEPT PER SHARE)
(UNAUDITED)

The historical consolidated financial data presented below is unaudited.
The pro forma financial data shows the effect of the acquisition of PolyGram as
if it had been consummated on July 1, 1997.

<TABLE>
<CAPTION>
ACTUAL PRO FORMA
FISCAL YEARS NINE MONTHS NINE MONTHS
ENDED ENDED ENDED
JUNE 30, MARCH 31, MARCH 31,
----------------- ----------- -----------
1997 1998 1999 1999
------- ------- ----------- -----------
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA
Revenues
Entertainment
Music................................................... $ 1,427 $ 1,461 $ 2,409 $ 4,994
Filmed entertainment.................................... 3,168 2,793 2,141 2,588
Recreation & other...................................... 825 695 618 618
Gain on sale of Putnam.................................. 64 -- -- --
------- ------- ------- -------
Entertainment............................................. 5,484 4,949 5,168 8,200
Spirits and wine.......................................... 4,870 4,525 3,621 3,621
------- ------- ------- -------
Total revenues.............................................. $10,354 $ 9,474 $ 8,789 $11,821
======= ======= ======= =======
Operating income (loss)
Entertainment
Music................................................... $ (58) $ (44) $ (80) $ 121
Filmed entertainment.................................... 157 229 (119) (194)
Recreation & other...................................... 31 24 31 31
Gain on sale of Putnam.................................. 64 -- -- --
------- ------- ------- -------
Entertainment............................................. 194 209 (168) (42)
Spirits and wine.......................................... 663 464 438 438
Restructuring charge...................................... -- -- (405) --
Corporate................................................. (138) (120) (68) (68)
------- ------- ------- -------
Total operating income (loss)............................... $ 719 $ 553 $ (203) $ 328
======= ======= ======= =======
Interest, net and other..................................... $ 147 $ 228 $ 301 $ 526
Net income (loss)........................................... $ 502 $ 946 $ 739 $ (155)
Basic earnings (loss) per share............................. $ 1.36 $ 2.70 $ 2.00 $ (0.39)
Diluted earnings (loss) per share........................... $ 1.35 $ 2.68 $ 2.00 $ (0.39)
FINANCIAL POSITION DATA (AT END OF PERIOD)
Current assets.............................................. $ 6,131 $ 6,971 $ 8,786
Total assets................................................ $20,447 $22,179 $35,699
Net debt.................................................... $ 2,227 $ 2,704 $ 8,450
Minority interest........................................... $ 1,851 $ 1,915 $ 1,878
Shareholders' equity........................................ $ 9,422 $ 9,316 $12,057
Shares outstanding at period end (thousands)................ 365,281 347,132 401,796
CASH FLOW DATA
Cash flow from operating activities....................... $ 664 $ (241) $ 387
Capital expenditures...................................... $ (393) $ (410) $ (314)
Other investing activities, net........................... $ 2,101 $ 1,109 $(5,356)
Dividends paid............................................ $ (239) $ (231) $ (181)
Depreciation and amortization............................. $ 393 $ 416 $ 506 $ 830
SUPPLEMENTAL INFORMATION
EBITDA
Entertainment
Music................................................... $ 72 $ 90 $ 212 $ 726
Filmed entertainment.................................... 373 463 211 147
Recreation & other...................................... 158 159 154 154
------- ------- ------- -------
Entertainment............................................. 603 712 577 1,027
Spirits and wine.......................................... 810 590 541 541
------- ------- ------- -------
Total EBITDA................................................ $ 1,413 $ 1,302 $ 1,118 $ 1,568
======= ======= ======= =======
Net income from continuing operations, plus amortization.... $ 584 $ 405 $ 231 $ 460
Net income from continuing operations, plus amortization,
per share................................................. $ 1.58 $ 1.16 $ .63 $ 1.16
</TABLE>

Summary financial data includes earnings before interest, taxes,
depreciation and amortization ("EBITDA"), which we believe is an appropriate
measure of our operating performance, given the significant goodwill associated
with our acquisitions. However, EBITDA should be considered in addition to, not
as a substitute for operating income, net income, cash flows and other measures
of financial performance in accordance with generally accepted accounting
principles. These amounts include our proportionate share of EBITDA of our
unconsolidated companies.

5
<PAGE> 8

RISK FACTORS

Before purchasing units, you should carefully consider the following risk
factors relating to the units.

YOU WILL BEAR THE ENTIRE RISK OF A DECLINE
IN THE PRICE OF THE COMMON SHARES

The market value of the common shares you receive on June 21, 2002 (which
we refer to as the "stock purchase date") may be materially different from the
price you pay for those common shares. If the average trading price of the
common shares on the stock purchase date is less than $50.125 (that is, less
than the closing price of the common shares on the date of this prospectus), you
will, on the stock purchase date, be required to purchase common shares at a
loss. Accordingly, a holder of units assumes the entire risk that the market
value of the common shares may decline. Any such decline could be substantial.

YOU WILL RECEIVE ONLY A PORTION OF ANY
APPRECIATION IN THE COMMON
SHARE PRICE

The number of common shares that will be issued upon settlement may decline
by up to 16.7% as the market value of the common shares increases. Therefore,
your opportunity for equity appreciation will be less than if you invested
directly in common shares. In addition, if the average trading price of the
common shares at the stock purchase date exceeds $50.125 but falls below $60.15,
you will receive no equity appreciation on the common shares.

THE MARKET PRICE FOR THE COMMON
SHARES IS UNPREDICTABLE

It is impossible to predict whether the market price of the common shares
will rise or fall. Many factors influence the trading prices of the common
shares. These factors include changes in our financial condition, results of
operations and prospects and complex and interrelated political, economic,
financial and other factors that can affect the capital markets generally, the
stock exchanges on which the common shares are traded and the market segments of
which we are a part.

YOU MAY SUFFER DILUTION OF THE COMMON SHARES ISSUABLE UPON SETTLEMENT OF
PURCHASE CONTRACTS

The number of common shares issuable upon settlement is subject to
adjustment only for stock splits and combina-
tions, stock dividends and certain other specified transactions. The number of
common shares issuable upon settlement of each purchase contract is not subject
to adjustment for other events, such as employee stock option grants, offerings
of common shares for cash or in connection with acquisitions or certain other
transactions, which may adversely affect the price of the common shares. The
terms of the units do not restrict our ability to offer common shares in the
future or to engage in other transactions that could dilute the common shares.
We have no obligation to consider the interests of the holders of the units for
any reason.

YOU HAVE NO RIGHTS AS COMMON SHAREHOLDERS

Until you acquire common shares upon settlement of your purchase contract,
you will have no rights with respect to the common shares, including voting
rights, rights to respond to tender offers and rights to receive any dividends
or other distributions on the common shares. Upon settlement of your purchase
contract, you will be entitled to exercise the rights of a holder of common
shares only as to actions for which the record date occurs after the settlement
date.

YOUR NOTES WILL BE SUBORDINATED

The obligations of JES under the notes will be unsecured and subordinate
and rank

6
<PAGE> 9

junior in right of payment to all present and future senior indebtedness of JES.
JES cannot make payments of principal of or interest on the notes if:

- JES is in default under any payment obligation with respect to senior
indebtedness beyond any applicable grace period,

- JES is otherwise in default with respect to any senior indebtedness
permitting the holders of the senior indebtedness to accelerate the
maturity of the senior indebtedness, or

- any judicial proceeding is pending with respect to any default with
respect to senior indebtedness.

Seagram's guarantees of the notes will be subordinated to present and
future senior indebtedness of Seagram in the same manner.

Neither the indenture nor the purchase contract agreement, which governs
the terms of the units, places any limitation on the amount of additional
secured or unsecured debt, including senior indebtedness, that may be incurred
by Seagram or JES or any of their subsidiaries.

YOUR PLEDGED SECURITIES
WILL BE ENCUMBERED

Although holders of units will be beneficial owners of the underlying
pledged securities, those pledged securities will be pledged with the collateral
agent to secure the obligations of the holders under the purchase contracts.
Therefore, for so long as the purchase contracts remain in effect, holders will
not be allowed to withdraw their pledged securities from this pledge arrangement
except in the limited circumstances described in this prospectus.

WE WILL HAVE THE OPTION
TO DEFER PAYMENTS

JES will have the right to defer interest payments on the notes at any time
or from time to time. However, deferred payments will bear additional interest
at an effective rate per year equal to 7.50% until March 21, 2002, and at the
reset rate, less the contract fee rate, thereafter (compounding quarterly) until
paid.

If we exercise our right to defer payments of interest, the market price of
the units is likely to decrease. In addition, the mere existence of the right to
defer payments may cause the market price of the units to be more volatile than
the market prices of other securities that are not subject to such deferrals.

PURCHASE CONTRACT AGREEMENT NOT QUALIFIED UNDER TRUST INDENTURE ACT; LIMITED
OBLIGATIONS OF UNIT AGENT

Although the notes included in the units will be issued pursuant to an
indenture qualified under the Trust Indenture Act, the purchase contract
agreement relating to the units will not be qualified under the Trust Indenture
Act. The purchase contract agent under the purchase contract agreement, who will
act as the agent and the attorney-in-fact for the holders of the units, will not
be qualified as a trustee under the Trust Indenture Act. Accordingly, holders of
the units will not have the benefits of the protections of the Trust Indenture
Act. Under the terms of the purchase contract agreement, the purchase contract
agent will have only limited obligations to the holders of the units.

YOU WILL HAVE OID INCOME

For U.S. federal income tax purposes, the notes will be classified as
contingent payment debt instruments. As a result, they will be considered to be
issued with original issue discount or OID, which you will be required to
include in income during your period of ownership of the notes, subject to

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<PAGE> 10

certain adjustments. Additionally, you will be required to recognize ordinary
income on all or a portion of any gain realized on a sale of notes or any gain
attributable to notes on a sale of units before maturity.

YOU WILL NOT BE PERMITTED
TO DEDUCT CONTRACT FEES

It is unlikely that you will be entitled to a current deduction with
respect to the contract fees payable by you. As a result, although the amount of
cash distributions made to you will be reduced by the amount of contract fees
payable to Seagram, you will nevertheless recognize ordinary income each quarter
equal to the full amount of original issue discount required to be accrued with
respect to the notes or treasury securities. See "United States Federal Income
Tax Consequences -- Purchase Contracts -- Contract Fees and Deferred Contract
Fees."

8
<PAGE> 11

DESCRIPTION OF SEAGRAM

ENTERTAINMENT

Our entertainment business is conducted through two units:

- - Universal Music Group which produces and distributes recorded music throughout
the world in all major genres including Hip-Hop, R&B, rock, country, jazz and
classical, and

- - Universal Studios Group which consists of our filmed entertainment (including
international television) and recreation and other businesses.

Matsushita Electric Industrial Co., Ltd. has an approximate 8.1% ownership
interest in the entities which own Universal Music Group and Universal Studios
Group.

MUSIC ENTERTAINMENT

Universal Music Group is the largest recorded music company in the world.
Universal Music Group was formed in December 1998 when we completed the
acquisition of PolyGram and includes the music business of both Universal and
PolyGram.

Universal Music Group develops, markets and sells recorded music through a
network of subsidiaries, joint ventures and licensees in 59 countries around the
world. Universal Music Group also manufactures recorded music and manufactures,
sells and distributes videos in the United States and internationally and
publishes music.

Universal Music Group's record companies create and market all genres of
recorded music, principally on compact discs and cassettes. Universal Music
Group's music appears on such labels as:

- - MCA, Universal Records, MCA Nashville, Blue Thumb, Geffen, DGC, GRP, Impulse!,
Rising Tide, DreamWorks Records and Interscope (50% owned) and its family of
labels including Almo Sounds and Outpost Records,

- - former PolyGram popular labels such as A&M, Def Jam (60% owned), Island,
Mercury, Mercury Nashville, Verve, Motown and Polydor, and

- - leading classical labels Decca Record Company, Deutsche Grammophon and
Philips.

Our subsidiaries and affiliates manufacture and distribute recorded music
for all of the labels in the Universal Music Group, affiliated label ventures,
and third party labels such as ZMM, Hollywood, Thump and others, and distribute
video product for Universal Music Group and others. We administer the release,
marketing and sale of recorded music in all major markets outside the United
States. We also release soundtrack albums for motion pictures and license music
for a wide variety of uses including recorded music, compilations,
videocassettes, videodiscs, video games, radio, television and motion pictures.

A music record company depends to a significant degree on its ability to
sign and retain artists who will appeal to popular taste over a period of time.
We believe that the scope and diversity of our popular music labels, repertoire
and catalogs allows us to respond to shifts in audience tastes. The United
States and the United Kingdom continue to be the source of approximately 60% of
international popular repertoire. From time to time certain national acts, such
as Andrea Bocelli from Italy, Aqua from Denmark, and Bjork from Iceland, appeal
to a wider international market. If

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<PAGE> 12
you include, however, the United States and the United Kingdom, sales of
locally-signed artists in their home territories, still represent 70% of
worldwide recorded music sales. Our leading local market position in almost
every major region provides a critical competitive advantage in this growing
segment.

Artists who are currently, directly or through third parties, under
contract with Universal Music Group for one or more important territories
include:

<TABLE>
<S> <C>
Bryan Adams Elton John
All Saints Melissa Etheridge
Aqua Hanson
Erykah Badu LL Cool J
Beastie Boys Reba McEntire
Beck Metallica
The Bee Gees Nine Inch Nails
Bjork Luciano Pavarotti
Mary J. Blige Sting
Blues Traveller Shania Twain
Andrea Bocelli Texas
Bon Jovi U2
Boyz II Men Stevie Wonder
The Cranberries Trisha Yearwood
Sheryl Crow
</TABLE>

We also own the largest catalog of recorded music in the world, with
legendary performers from the United States, the United Kingdom and around the
world, including:

<TABLE>
<S> <C>
ABBA Buddy Holly
Louis Armstrong Bob Marley and the
Jimmy Buffet Wailers
Patsy Cline Nirvana
John Coltrane 2 Pac
Ella Fitzgerald Diana Ross and the
Marvin Gaye Supremes
Jimi Hendrix Andrew Lloyd Webber
Billie Holliday The Who
</TABLE>

Sales from this catalog account for approximately 25% of our total recorded
music revenues each year.

Top selling albums in 1998 were recorded by:

<TABLE>
<S> <C>
All Saints Lighthouse Family
Andrea Bocelli Method Man
Boyzone Padre Marcelo Rossi
The Bee Gees (Brazil)
Chumbawamba Terra Samba (Brazil)
Sheryl Crow Shania Twain
DMX 2 Pac
Glay U2
Jay-Z Rob Zombie
</TABLE>

Universal Music Group had a total of 48 albums which each sold over one
million units in 1998.

We also own the Verve Group, including GRP and Impulse!, the world's
leading jazz labels whose artists include:

<TABLE>
<S> <C>
Herbie Hancock Diana Krall
Joe Henderson Wayne Shorter
Charlie Haden McCoy Tyner
</TABLE>

We estimate that the worldwide market for classical music represented
approximately 4% in retail value of the total music market in 1998. Universal
Music Group holds the leading position in the classical music market, accounting
for approximately 40% of worldwide sales, through its ownership of three major
classical label companies: Decca/London (based in the United Kingdom), Deutsche
Grammophon (based in Germany), and the Philips Music Group (based in The
Netherlands).

Top selling classical albums in 1998 were:

Andrea Bocelli
John Tesh
Braveheart Soundtrack

RELATED ACTIVITIES

MUSIC PUBLISHING. Music publishing involves the acquisition of rights to,
and exploitation of, musical compositions (as compared with recordings).
Principal sources of revenue are mechanical reproduction royalties from the
reproduction of musical works on sound carriers and license fees from radio and
television

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broadcasting and public performance of musical works.

We enter into agreements with composers and authors of musical compositions
for the purpose of exploiting the compositions through licensing for use in
sound recordings, films, videos and by way of live performances and
broadcasting. In addition, we license compositions for use in printed sheet
music and song folios. We also license and acquire catalogues of musical
compositions from third parties such as other music publishers and composers and
authors who have retained or re-acquired rights.

Our publishing catalog includes more than 660,000 titles that are owned or
controlled by it, making Universal Music Group the world's third largest music
publisher. Of these titles, approximately 35% are currently generating revenues.
Writers represented include:

<TABLE>
<S> <C>
Jerome Kern Glen Ballard
Leonard Bernstein Members of the
Andrew Lloyd Webber Cranberries
Tim Rice Bon Jovi
U2
</TABLE>

OTHER MUSIC RELATED ACTIVITIES. Universal Music Group is at the forefront
of the development of music distribution through e-commerce and electronic
delivery. Universal Music Group recently announced a long-term agreement with
InterTrust Technologies Corporation for a digital rights management platform for
e-commerce and electronic delivery, and is actively participating in the SDMI
Forum, an extensive group of content, consumer electronics, hardware, software
and internet companies who have joined to develop and define worldwide standards
for the protection of music and other digitizeable intellectual property. In
April 1999, Universal Music Group and BMG formed GetMusic, an on-line music
alliance, to create internet sites to promote and sell music. GetMusic will have
access to a combined database of 50 million customers worldwide, and will offer
exclusive artist information, exclusive interviews, and the ability to chat
on-line with artists and their fans.

FILMED ENTERTAINMENT

Universal Studios' filmed entertainment business:

- produces and distributes films worldwide in the theatrical, home video
and television markets,

- produces and distributes television episodic and made for television
programming in the international market,

- operates and has ownership interests in a number of international
channels including:

The Sci-Fi Channel Europe,
USA Latin America and Brazil,
13th Street, action and suspense
channels in France, Germany
and Spain, and
Studio Universal, a movie channel
in Italy,

- engages in the licensing of merchandising rights and film property
publishing rights, and

- engages in certain other activities through its ownership of the joint
venture and equity interests described below.

Universal Studios produces feature length films for initial theatrical
exhibition and television programming for international television markets.
Major motion pictures produced by us over the past several years include Nutty
Professor and Liar, Liar, and more recently such box office hits as Patch Adams
with Robin Williams, Life starring Eddie Murphy and Martin Lawrence, The Mummy
starring Brendan Fraser and Notting Hill with Julia Roberts and Hugh Grant.
Current upcoming important releases include Bowfinger starring Eddie Murphy and
Steve Martin, Mystery Men starring Ben Stiller and American Pie. In addition, we
produce animated and live action children's and family programming for networks,
basic

11
<PAGE> 14

cable and local television stations as well as home video.

The arrangements under which we produce, distribute and own theatrical
films, vary widely. Other parties may participate in varying degrees in revenues
or other contractually defined amounts. We control worldwide distribution of our
theatrical product, except where we act as a subdistributor in specified
territories or contracts for specified territories or for specifically defined
distribution rights.

Generally, we distribute theatrical films in the theatrical, pay television
and home video markets. Subsequently, we make theatrical films available for
broadcast on basic cable distribution throughout the world. The theatrical
license agreements with theater operators are on an individual picture basis,
and rentals under these agreements are generally a percentage of the theater's
receipts with, in some instances, a minimum guaranteed amount.

We distribute our theatrical product in the United States and Canada to
motion picture theaters. Theatrical distribution throughout the rest of the
world is primarily conducted by United International Pictures, which is equally
owned by Universal Studios, Metro-Goldwyn-Mayer Inc. and an affiliate of Viacom
Inc. We distribute product to all forms of the television medium in the United
States, Canada and other major international markets. Television distribution of
our 24,000 episode library in the United States is handled by USANi LLC
(approximately 50% owned by Universal) and throughout the rest of the world
primarily by Universal Studios. Universal Studios distributes television product
produced by USANi LLC and Universal Studios' own current library of television
programming in international markets. We market videocassettes and digital
videodiscs in the United States and internationally.

At March 31, 1999, Universal Studios owned a 45% effective interest in USA
Networks and an approximate 26% interest in Loews Cineplex Entertainment
Corporation, which exhibits theatrical films principally in the United States
and Canada, and a 49% interest in United Cinemas International Multiplex B.V.,
which operates motion picture theaters outside of the United States and Canada.

RECREATION AND OTHER

Universal Studios owns and operates Universal Studios Hollywood, a theme
park based on Universal Studios' filmed entertainment businesses and located at
Universal City, California. Adjacent to Universal Studios Hollywood is Universal
CityWalk, an integrated retail/entertainment zone which offers shopping, dining,
cinemas and entertainment. Universal Studios CityWalk is currently being
expanded from 300,000 to 400,000 square feet. We have a 50% interest in
Universal City Florida Partners, a joint venture which owns Universal Studios
Florida, a theme park on approximately 440 acres owned by the joint venture in
Orlando, Florida. Universal City Development Partners, a partnership in which we
have a 50% interest, is developing an additional theme park, Universal Studios
Islands of Adventure, and Universal Studios CityWalk, a nighttime entertainment
complex, on approximately 385 acres of land owned by the partnership and
adjacent to Universal Studios Florida. Universal Studios Islands of Adventure's
grand opening celebration took place in May 1999. Additionally, we have a 25%
interest in a joint venture which is currently developing three hotels adjacent
to the Orlando theme parks. The first hotel, The Portofino Bay Hotel, is
scheduled to open in September 1999. The theme parks, Universal Studios CityWalk
and hotels together comprise the newest Orlando multi-day entertainment resort,
Universal Studios Escape. In 1998, we purchased Wet 'n Wild Orlando, the highest
attended water park in the United States adjacent to Universal Studios Escape.
Since October 1998, construction has been underway for

12
<PAGE> 15

Universal Studios Japan in Osaka, Universal Studios's first theme park venture
outside the United States. Opening is scheduled for 2001. We also own a 37%
interest in, and manage, Universal's Port Aventura, S.A., a theme park located
on 2000 acres on the Mediterranean coast of Spain near Barcelona.

In addition, we are involved in other businesses including the operation of
retail gift stores and the development of entertainment software. We own Spencer
Gifts which operates approximately 640 retail gift stores throughout North
America through three groups of stores: the Spencer, DAPY and Glow gift shops.
Spencer, DAPY and Glow sell novelties, electronics, accessories, books and trend
driven products. Universal Studios also develops entertainment software
including the Crash Bandicoot and Spyro game series and owns an approximate 26%
interest (at March 31, 1999) in Interplay Entertainment, an entertainment
software developer.

SPIRITS AND WINE

Our spirits and wine business, directly and through affiliates and joint
ventures in more than 40 countries and territories, produces, markets and
distributes more than 225 brands of distilled spirits, more than 180 brands of
wines, Champagnes, Ports and Sherries, and more than 48 brands of coolers,
beers, mixers and other low-alcohol adult beverages, which are sold in over 190
countries and territories. Some of these products are sold worldwide and others
only in the geographic area where they are produced. In addition to marketing
our own brands, we also distribute distilled spirit, wine and beer brands owned
by others.

Some of our best-known brand names include:

- Crown Royal and Seagram's V.O. Canadian whiskies

- Seagram's 7 Crown blended whiskey

- Four Roses Bourbon

- Chivas Regal, Royal Salute and Passport Scotch Whiskies

- The Glenlivet and Glen Grant single malt Scotch Whiskies

- Martell Cognacs

- Seagram's Extra Dry Gin

- Captain Morgan and Myers's rums

- Mumm and Perrier-Jouet Champagnes

- Sterling Vineyards California Wines

We also distribute ABSOLUT VODKA, owned by V&S Vin & Sprit, in the United States
and in most major international markets.

We import into the United States fine wines, principally French wines and
Champagnes, and produce and market premium California and other wines. Among the
wines we produce and market are:

- Mumm and Perrier-Jouet Champagnes

- Sterling Vineyards California Wines

- Tessera California Wines

- Mumm Cuvee Napa California Sparkling Wine

- Sandeman Ports and Sherries

- Matheus Muller

- Mumm German sekt

The Monterey Vineyard California wines and Barton & Guestier (B&G) French wines
are produced for us.

We also market low-alcohol and non-alcohol adult beverages. Seagram's
Coolers are sold in a variety of fruit and mixed drink flavors. Its mixer line
includes ginger ale, club soda, tonic water and seltzer. We are the exclusive
U.S. importer of Grolsch Beer, owned by Royal Grolsch N.V., and of Steinlager
Beer, owned by Lion Nathan Limited.

13
<PAGE> 16

USE OF PROCEEDS

JES will receive proceeds from the unit offering, net of underwriting
discounts and expenses, of approximately $898 million. Seagram will receive
proceeds, net of underwriting discounts and expenses, of approximately $1,416
million from the common share offering. The net proceeds of the offerings will
be used:

- to repay borrowings under our bank credit facilities of approximately
$1.3 billion (in U.S. dollar equivalents) with maturities ranging from
June 1999 to up to three years,

- to repay commercial paper borrowings of approximately $1.0 billion with
maturities ranging up to 60 days, and

- for general corporate purposes.

The borrowings under the bank credit facilities were incurred in connection
with the acquisition of PolyGram and bear interest at floating rates (currently
at equivalent U.S. dollar interest rates ranging from 5.5% to 6.0% per annum).
The commercial paper bears interest at a floating rate (currently 5.5% per
annum).

PRICE RANGE OF COMMON SHARES

The common shares are traded on the New York Stock Exchange under the
symbol "VO". The following table sets forth, for the periods indicated, the high
and low sales prices reported by the New York Stock Exchange, and the dividends
per common share.

<TABLE>
<CAPTION>
SCL COMMON SHARES
-------------------------------
HIGH LOW DIVIDENDS
------- ------- ---------
<S> <C> <C> <C>
FISCAL 1997
First Quarter................................ $ 38.38 $ 30.88 $0.150
Second Quarter............................... $ 41.88 $ 35.25 $0.165
Third Quarter................................ $ 42.75 $ 38.00 $0.165
Fourth Quarter............................... $ 41.88 $ 35.75 $0.165
FISCAL 1998
First Quarter................................ $ 41.13 $ 33.94 $0.165
Second Quarter............................... $ 37.63 $ 30.25 $0.165
Third Quarter................................ $ 39.75 $ 31.44 $0.165
Fourth Quarter............................... $ 46.69 $ 36.81 $0.165
FISCAL 1999
First Quarter................................ $ 41.94 $ 28.69 $0.165
Second Quarter............................... $ 38.38 $ 25.13 $0.165
Third Quarter................................ $ 51.25 $ 37.81 $0.165
Fourth Quarter (through June 15, 1999)....... $ 65.00 $ 49.81 $0.165
</TABLE>

14
<PAGE> 17

CAPITALIZATION

The following table sets forth as of March 31, 1999 (1) the historical
capitalization of Seagram, (2) the pro forma adjustments for this offering and
the common share offering and (3) the capitalization of Seagram giving pro forma
effect to the offerings and the application of the net proceeds as described in
"Use of Proceeds." The table should be read in conjunction with Seagram's
financial statements, the notes thereto and the other financial data and
statistical information included or incorporated by reference in this
prospectus.

<TABLE>
<CAPTION>
AS OF MARCH 31, 1999
--------------------------------------
PRO FORMA PRO FORMA
ACTUAL ADJUSTMENTS AS ADJUSTED
------- ----------- --------------
(U.S. $ IN MILLIONS)
(UNAUDITED)
<S> <C> <C> <C>
Net debt......................................... $ 8,450 $(1,387)(a) $ 7,063
Minority interest................................ 1,878 1,878
Shareholder's equity............................. 12,057 1,387(a) 13,444
------- ------- -------
Total capitalization............................. $22,385 -- $22,385
======= =======
</TABLE>

- ---------------
(a) Reflects issuance of 18,500,000 7.50% adjustable conversion-rate equity
security units and 29,000,000 common shares, the net proceeds of which will
be used to repay existing borrowings.

15
<PAGE> 18

RATIO OF EARNINGS TO FIXED CHARGES

<TABLE>
<CAPTION>
FIVE-MONTH
TRANSITION NINE MONTHS
FISCAL YEARS ENDED PERIOD FISCAL FISCAL ENDED
JANUARY 31, ENDED YEAR ENDED YEAR ENDED MARCH 31,
------------------ JUNE 30, JUNE 30, JUNE 30, -----------
1994 1995 1996 1996 1997 1998 1998 1999
---- ---- ---- ---------- ---------- ---------- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SEAGRAM
Ratio of earnings to fixed charges...... 1.93 1.69 1.73 1.21 3.21 5.10 5.88 (a)
Pro forma ratio of earnings to fixed
charges............................... -- -- -- -- -- 2.28 -- (c)

JES
Ratio of earnings to fixed charges...... 2.03 1.94 1.52 (b) 1.71 1.10 1.34 1.09
</TABLE>

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

(a) Fixed charges exceeded earnings by $430 million for the nine month period
ended March 31, 1999.

(b) Fixed charges exceeded earnings by $37 million for the transition period
ended June 30, 1996.

For these ratios, "earnings" was determined by adding "fixed charges"
(excluding capitalized interest) and minority interest in net income to income
from continuing operations after eliminating equity in undistributed earnings.
"Fixed charges" consists of interest on all indebtedness (including capitalized
interest), amortization of debt discount and expenses and an interest factor
attributable to rentals.

16
<PAGE> 19

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

Seagram's selected historical consolidated financial data presented below
as of June 30, 1997 and 1998 and for the fiscal years then ended were derived
from the Seagram's historical consolidated financial statements and the notes
thereto contained in Seagram's Annual Report on Form 10-K for the fiscal year
ended June 30, 1998, as amended, which is incorporated herein by reference, and
have been audited by PricewaterhouseCoopers LLP, independent accountants. In
addition, Seagram's selected historical consolidated financial data presented
below for the fiscal years ended January 31, 1994, 1995 and 1996 and the
five-month transition period ended June 30, 1996 were derived from Seagram's
historical consolidated financial statements for the fiscal years ended January
31, 1995 and 1996 and the five-month transition period ended June 30, 1996 which
have been audited by PricewaterhouseCoopers LLP. The data presented as of March
31, 1998 and 1999 and for the nine months ended March 31, 1998 and March 31,
1999 are derived from Seagram's unaudited consolidated financial statements
contained in Seagram's Quarterly Report on Form 10-Q for the quarter ended March
31, 1999, which is incorporated herein by reference. As a result of Seagram's
sale of Tropicana Products, Inc. and Seagram's global juice business, Seagram's
Consolidated Financial Statements report the results of Tropicana as
discontinued operations. The data presented below should be read in conjunction
with Seagram's consolidated financial statements.

Seagram's consolidated financial statements have been prepared in
accordance with U.S. generally accepted accounting principles which conform in
all material respects to Canadian generally accepted accounting principles.
Except as otherwise noted, figures are in millions of U.S. dollars.

17
<PAGE> 20

THE SEAGRAM COMPANY LTD.
(US$ IN MILLIONS)
(UNAUDITED)

<TABLE>
<CAPTION>
FIVE-
MONTH
TRANSITION UNAUDITED
FISCAL YEARS ENDED PERIOD FISCAL YEARS NINE MONTHS ENDED
JANUARY 31, ENDED ENDED JUNE 30, MARCH 31,
--------------------------- JUNE 30, ----------------- -----------------
1994 1995 1996 1996 1997 1998 1998 1999
------- ------- ------- ---------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Revenues............................. $ 4,724 $ 4,994 $ 7,787 $ 4,112 $10,354 $ 9,474 $ 7,372 $ 8,789
Operating income (loss).............. $ 622 $ 614 $ 435 $ 93 $ 719 $ 553 $ 538 $ (203)
Interest, net and other.............. $ 275 $ 317 $ 195 $ 99 $ 147 $ 228 $ 183 $ 301
Gain on sale of Time Warner shares... $ -- $ -- $ -- $ -- $ 154 $ 926 $ 433 $ --
Gain on USAi transaction............. $ -- $ -- $ -- $ -- $ -- $ 360 $ 360 $ --
Equity earnings (losses) from
unconsolidated companies........... $ 18 $ 14 $ 47 $ 35 $ 62 $ (45) $ (40) $ 129
Income (loss) from continuing
operations before the cumulative
effect of accounting change........ $ 249 $ 170 $ 144 $ 67 $ 445 $ 880 $ 571 $ (330)
Income (loss) from discontinued
Tropicana operations, after tax.... 34 24 30 18 57 66 51 (3)
Gain on sale of discontinued
Tropicana operations, after tax.... -- -- -- -- -- -- -- 1,072
Discontinued DuPont activities, after
tax................................ 96 617 3,232 -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- -------
Income before cumulative effect of
accounting change.................. 379 811 3,406 85 502 946 622 739
Cumulative effect of accounting
change, after tax.................. -- (75) -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- -------
Net income........................... $ 379 $ 736 $ 3,406 $ 85 $ 502 $ 946 $ 622 $ 739
======= ======= ======= ======= ======= ======= ======= =======
FINANCIAL POSITION DATA
(AT END OF PERIOD)
Current assets....................... $ 3,532 $ 3,938 $ 6,194 $ 6,307 $ 6,131 $ 6,971 $ 7,001 $ 8,786
Common stock of DuPont............... 3,154 3,670 631 651 1,034 1,228 1,118 955
Common stock of Time Warner.......... 1,769 2,043 2,356 2,228 1,291 -- 847 --
Other noncurrent assets.............. 1,754 1,773 10,230 10,328 10,257 12,246 11,696 25,958
Net assets of discontinued Tropicana
operations......................... 1,220 1,270 1,549 1,693 1,734 1,734 1,672 --
------- ------- ------- ------- ------- ------- ------- -------
Total assets................ $11,429 $12,694 $20,960 $21,207 $20,447 $22,179 $22,334 $35,699
======= ======= ======= ======= ======= ======= ======= =======
Current liabilities.................. $ 2,776 $ 3,865 $ 3,557 $ 4,383 $ 3,087 $ 4,709 $ 5,092 $ 8,796
Long term indebtedness............... $ 3,051 $ 2,838 $ 2,889 $ 2,562 $ 2,478 $ 2,225 $ 2,152 $ 7,073
Total liabilities.................... $ 6,428 $ 7,174 $ 9,788 $10,163 $ 9,174 $10,948 $11,210 $21,764
Minority interest.................... -- 11 1,844 1,839 1,851 1,915 1,902 1,878
Shareholders' equity................. 5,001 5,509 9,328 9,205 9,422 9,316 9,222 12,057
------- ------- ------- ------- ------- ------- ------- -------
Total liabilities and
shareholders' equity...... $11,429 $12,694 $20,960 $21,207 $20,447 $22,179 $22,334 $35,699
======= ======= ======= ======= ======= ======= ======= =======
CASH FLOW DATA
Cash flow from operating
activities....................... $ 370 $ 370 $ 222 $ 315 $ 664 $ (241) $ 18 $ 387
Capital expenditures............... $ (118) $ (124) $ (349) $ (245) $ (393) $ (410) $ (257) $ (314)
Other investing activities, net.... $(1,556) $ (341) $ 2,260 $ (346) $ 2,101 $ 1,109 $ 596 $(5,356)
Dividends paid..................... $ (209) $ (216) $ (224) $ (112) $ (239) $ (231) $ (173) $ (181)
</TABLE>

18
<PAGE> 21

MANAGEMENT'S DISCUSSION AND ANALYSIS OF SELECTED HISTORICAL
CONSOLIDATED FINANCIAL DATA AND SUPPLEMENTAL FINANCIAL INFORMATION

The discussion and analysis which follows is derived from the management's
discussion and analysis of financial condition and results of operations
included in our Form 10-Q for the fiscal quarter ended March 31, 1999, which is
incorporated herein by reference. The discussion presented below should be read
in conjunction with the Form 10-Q.

RESULTS OF OPERATIONS

This discussion includes revenues and operating income for the three lines
of business within the entertainment segment: music, filmed entertainment and
recreation and other. This discussion also includes information about our share
of the results of investments in companies which are not consolidated with the
results of Seagram. Investments in these companies are reported as "Equity
earnings from unconsolidated companies". We believe this information will help
you to better understand Seagram's business results.

This information also includes earnings before interest, taxes,
depreciation and amortization from consolidated companies, referred to as
"EBITDA." Because of the significant goodwill associated with our acquisitions,
we believe EBITDA is an appropriate measure of operating performance. However,
you should note that EBITDA is not a substitute for operating income, net
income, cash flows and other measures of financial performance as defined by
U.S. generally accepted accounting principals.

Seagram acquired PolyGram on December 10, 1998. The results for the nine
months ended March 31, 1999 include the PolyGram results from the date of
acquisition. The discussion also includes pro forma financial information which
shows the effect of the PolyGram acquisition and the USA transactions as if they
had occurred at July 1, 1997. The USA transactions are:

- the acquisition on October 21, 1997 of an incremental 50% interest in the
USA Networks partnership for $1.7 billion,

- the sale on February 12, 1998 of a 50% interest in USA Networks to USA
Networks, Inc., and

- the contribution of the remaining 50% in USA Networks, the majority of
the televisions assets of Universal Studios, Inc. and 50% of the
international operations of USA Networks to USANi LLC.

In exchange for the contribution, Universal Studios, Inc. received a 10.7%
interest in USAi and a 45.8% exchangeable interest in USANi LLC.

19
<PAGE> 22

THE SEAGRAM COMPANY LTD.
(US$ IN MILLIONS EXCEPT PER SHARE)
(UNAUDITED)

<TABLE>
<CAPTION>
ACTUAL PROFORMA
NINE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
------------------ ------------------
1998 1999 1998 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues
Entertainment
Music.................................................. $ 1,096 $ 2,409 $ 4,661 $ 4,994
Filmed entertainment................................... 2,333 2,141 2,739 2,588
Recreation & other..................................... 544 618 544 618
------- ------- ------- -------
Entertainment............................................. 3,973 5,168 7,944 8,200
Spirits & wine............................................ 3,399 3,621 3,399 3,621
------- ------- ------- -------
Total revenues.............................................. $ 7,372 $ 8,789 $11,343 $11,821
======= ======= ======= =======
Operating income (loss)
Entertainment
Music.................................................. $ (23) $ (80) $ (32) $ 121
Filmed entertainment................................... 217 (119) 71 (194)
Recreation & other..................................... 29 31 29 31
------- ------- ------- -------
Entertainment............................................. 223 (168) 68 (42)
Spirits & wine............................................ 374 438 374 438
Restructuring charge...................................... -- (405) -- --
Corporate................................................. (59) (68) (59) (68)
------- ------- ------- -------
Total operating income (loss)............................... 538 (203) 383 328
Interest, net & other....................................... 183 301 457 526
Gain on sale of Time Warner shares.......................... 433 -- 433 --
Gain on USAi transaction.................................... 360 -- 360 --
Provision (benefit) for income taxes........................ 489 (18) 399 76
Minority interest........................................... 48 (27) 22 3
Equity earnings (losses) from unconsolidated companies...... (40) 129 4 122
------- ------- ------- -------
NET INCOME (LOSS) BEFORE DISCONTINUED OPERATIONS............ $ 571 $ (330) $ 302 $ (155)
======= =======
Income (loss) from discontinued operations.................. 51 (3)
Gain on sale of discontinued operations..................... -- 1,072
------- -------
NET INCOME.................................................. $ 622 $ 739
======= =======
EARNINGS PER SHARE -- Basic
Income (loss) from continuing operations.................. $ 1.63 $ (0.90) $ 0.76 $ (0.39)
Income (loss) from discontinued operations................ 0.14 (0.01)
Gain on sale of discontinued operations................... -- 2.91
------- -------
$ 1.77 $ 2.00
======= =======
EARNINGS PER SHARE -- Diluted
Income (loss) from continuing operations.................. $ 1.62 $ (0.90) $ 0.75 $ (0.39)
Income (loss) from discontinued operations................ 0.14 (0.01)
Gain on sale of discontinued operations................... -- 2.91
------- -------
$ 1.76 $ 2.00
======= =======
Net cash provided by operating activities................... $ 18 $ 387
Net cash provided by (used for) investing activities........ $ 339 $(5,670)
Net cash provided by financing activities................... $ 471 $ 5,082
</TABLE>

20
<PAGE> 23

SUPPLEMENTAL FINANCIAL INFORMATION
ACTUAL REVENUES AND EBITDA
(US$ IN MILLIONS)
(UNAUDITED)

<TABLE>
<CAPTION>
REVENUES EBITDA
------------------- ------------------
NINE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
------------------- ------------------
1998 1999 1998 1999
------ ------- ------ ------
<S> <C> <C> <C> <C>
Entertainment
Music
Consolidated companies........................... $1,096 $ 2,409 $ 72 $ 208
Unconsolidated companies......................... 56 49 5 4
------ ------- ------ ------
Total............................................ 1,152 2,458 77 212
Filmed entertainment
Consolidated companies........................... 2,333 2,141 293 (67)
Unconsolidated companies......................... 775 1,287 93 278
------ ------- ------ ------
Total............................................ 3,108 3,428 386 211
Recreation & other
Consolidated companies........................... 544 618 83 92
Unconsolidated companies......................... 217 192 41 62
------ ------- ------ ------
Total............................................ 761 810 124 154
Entertainment
Consolidated companies........................... 3,973 5,168 448 233
Unconsolidated companies......................... 1,048 1,528 139 344
------ ------- ------ ------
Total entertainment.............................. 5,021 6,696 587 577
------ ------- ------ ------
Spirits & wine
Consolidated companies........................... 3,399 3,621 525 536
Unconsolidated companies......................... 175 115 2 5
Charge for Asia.................................. (60) --
------ ------- ------ ------
Total spirits & wine............................. 3,574 3,736 467 541
------ ------- ------ ------
Total company
Consolidated companies........................... 7,372 8,789 973 769
Unconsolidated companies......................... 1,223 1,643 141 349
Charge for Asia.................................. (60) --
------ ------- ------ ------
Total............................................ $8,595 $10,432 $1,054 $1,118
Unconsolidated companies adjustment................... (141) (349)
Depreciation expense.................................. (174) (212)
Amortization of intangibles & step-up of assets....... (147) (294)
Restructuring charge -- entertainment................. -- (405)
Corporate expenses.................................... (54) (61)
------ ------
Operating income (loss)............................... $ 538 $ (203)
====== ======
</TABLE>

21
<PAGE> 24

SUPPLEMENTAL FINANCIAL INFORMATION
PRO FORMA REVENUES AND EBITDA
(US$ IN MILLIONS)
(UNAUDITED)

<TABLE>
<CAPTION>
REVENUES EBITDA
-------------------------- --------------------------
NINE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
-------------------------- --------------------------
1998 1999 1998 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Entertainment
Music
Consolidated companies........................ $ 4,661 $ 4,994 $ 593 $ 722
Unconsolidated companies...................... 56 49 5 4
------- ------- ------ ------
Total......................................... 4,717 5,043 598 726
Filmed entertainment
Consolidated companies........................ 2,739 2,588 133 (131)
Unconsolidated companies...................... 1,134 1,287 199 278
------- ------- ------ ------
Total......................................... 3,873 3,875 332 147
Recreation & other
Consolidated companies........................ 544 618 83 92
Unconsolidated companies...................... 217 192 41 62
------- ------- ------ ------
Total......................................... 761 810 124 154
Entertainment
Consolidated companies........................ 7,944 8,200 809 683
Unconsolidated companies...................... 1,407 1,528 245 344
------- ------- ------ ------
Total entertainment........................... 9,351 9,728 1,054 1,027
------- ------- ------ ------
Spirits & wine
Consolidated companies........................ 3,399 3,621 525 536
Unconsolidated companies...................... 175 115 2 5
Charge for Asia............................... (60) --
------- ------- ------ ------
Total spirits & wine.......................... 3,574 3,736 467 541
------- ------- ------ ------
Total company
Consolidated companies........................ 11,343 11,821 1,334 1,219
Unconsolidated companies...................... 1,582 1,643 247 349
Charge for Asia............................... -- -- (60) --
------- ------- ------ ------
Total......................................... $12,925 $13,464 1,521 1,568
Unconsolidated companies adjustment............................................ (247) (349)
Depreciation expense........................................................... (228) (238)
Amortization of goodwill & step-up of assets................................... (609) (592)
Corporate expenses............................................................. (54) (61)
------ ------
Operating income............................................................... $ 383 $ 328
====== ======
</TABLE>

22
<PAGE> 25

Revenues increased 19 percent in the nine months ended March 31, 1999
compared to the same period in 1998. This was primarily due to the PolyGram
acquisition and improved spirits and wine results. The nine month results
include a $405 million pre-tax restructuring charge for the integration of
PolyGram into the existing music and film operations. Operating income of $538
million in the nine months of the prior year also included a $60 million charge
for Asia Pacific spirits and wine operations. Excluding those charges, operating
income declined 66 percent in the nine month period. The decrease reflects the
higher amortization and depreciation expense associated with the PolyGram
acquisition. Disappointing box office releases of several motion pictures also
contributed to the decline.

For the nine months ended March 31, 1999, EBITDA from consolidated and
unconsolidated companies increased six percent to $1,118 million on total
revenues of $10.4 billion. Excluding the $60 million charge for Asia Pacific
spirits and wine operations from last year's results, EBITDA from consolidated
and unconsolidated companies was flat for the nine months ended March 31, 1999.

On a pro forma basis for consolidated companies, revenues increased four
percent in the nine months ended March 31, 1999 to $11.8 billion. Operating
income was $328 million for the nine months ended March 31, 1999 compared with
$383 million for the same period in 1998. Excluding the $60 million charge for
Asia Pacific spirits and wine operations in the prior year, pro forma operating
income was down 26 percent for the nine months. For the nine months, pro forma
EBITDA decreased four percent. Excluding the $60 million charge for Asia Pacific
spirits and wine operations in the prior year, pro forma EBITDA declined nine
percent. The decline in pro forma operating income and EBITDA in the nine month
period is primarily due to the poor performance of the filmed entertainment
business, which more than offset improvements in all other businesses.

RESTRUCTURING CHARGE

Seagram recorded a restructuring charge in the second quarter of $405
million. This charge relates to our efforts to streamline entertainment
operations after the acquisition of PolyGram. The charge related entirely to
Seagram's global music and film production, financial, marketing and
distribution operations. It included:

- severance,

- rationalization of facilities and labels,

- termination of artists and distribution contracts, and

- costs related to exiting film production arrangements and properties in
development.

Music operations account for the majority of the charge. We exclude this
restructuring charge when discussing EBITDA and pro forma results.

The components of the $405 million charge are:

- $126 million for severance and other employee related costs,

- $128 million for facility and label rationalization, and

- $151 million of contract termination and other costs.

The severance and other employee-related costs provide for a reduction of
approximately 1,200 employees worldwide. This reduction is due to facility
closures, elimination of duplicate positions and streamlining of operations in
order to obtain cost reductions. The facility rationalization costs provide for
domestic and international lease terminations and the write-off of the net book
value of furniture, fixtures and equipment and leasehold improvements for

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<PAGE> 26

vacated properties. The costs of contract terminations are comprised primarily
of:

- artists' contracts,

- distribution contracts,

- story property commitments, and

- term deals.

The cash element of the charge is approximately $318 million. The noncash
element of the charge is approximately $87 million. As of March 31, 1999, cash
payments of approximately $47 million have been made against the charge. As of
that date, approximately $11 million of non-cash elements were used. We
anticipate these activities will be substantially completed by December 31,
1999.

ENTERTAINMENT

The entertainment segment contributed $5.2 billion to revenues in the nine
months ended March 31, 1999, an increase of 30 percent compared to the same
period in 1998. The increase was primarily due to the acquisition of PolyGram,
partially offset by lower filmed entertainment revenues. There was an operating
loss of $168 million for the nine months ended March 31, 1999 versus income of
$223 million for the same period in 1998. The decline in operating income was
primarily due to increased amortization and depreciation expense from the
PolyGram acquisition and disappointing motion picture results.

The prior year consolidated results include USA Networks from October 21,
1997 until February 12, 1998, during which time our interest was 100 percent. In
the current year, following the USA transactions, our interest is approximately
50 percent of USANi LLC. The results of USANi LLC are included in equity
earnings in unconsolidated companies. Equity in earnings from unconsolidated
companies increased to $129 million in the nine months ended March 31, 1999
versus losses last year of $37 million. The increase in equity earnings reflects
the improved operating results in the businesses of USANi LLC and the impact of
the USA transactions. In addition, we benefited from improved operating results
at Loews Cineplex Entertainment Corporation ("Loews Cineplex") in the nine month
period ended March 31, 1999 compared to Cineplex Odeon Corporation (owned in the
prior year).

On a pro forma basis, revenues increased three percent in the nine months
ended March 31, 1999 to $8.2 billion. There was an operating loss of $42 million
for the nine months ended March 31, 1999 versus income of $68 million in the
same period in 1998.

MUSIC

Consolidated Operations

Actual revenues more than doubled in the nine month period ended March 31,
1999. There was an operating loss of $80 million for the nine month period,
compared to a loss of $23 million for the same period in 1998. EBITDA almost
tripled in the nine month period ended March 31, 1999 compared to the prior
year. The significant increases in revenues and EBITDA are largely due to the
PolyGram acquisition. The decline in operating income is primarily due to higher
amortization and depreciation expenses from the PolyGram acquisition.

On a pro forma basis, revenues increased seven percent in the nine months
ended March 31, 1999. This increase was due to improved sales of higher priced
units. Pro forma operating income was $121 million for the nine months ended
March 31, 1999 compared to a loss of $32 million for the same period in 1998.
Pro forma EBITDA increased 22 percent in the nine months ended March 31, 1999
compared to the same period in 1998. These improvements are due to Seagram's
progress in integrating PolyGram and Universal Music and eliminating costs.

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<PAGE> 27

Unconsolidated Operations

The equity in earnings from unconsolidated companies was income of $4
million for the nine months ended March 31, 1999, and was unchanged compared to
the same period in 1998. Unconsolidated companies include Universal Concerts
Canada and Universal/PACE Amphitheaters Group, L.P. Both companies are concert
joint ventures and are not material to Universal Music Group.

FILMED ENTERTAINMENT

Consolidated Operations

Filmed Entertainment revenues declined eight percent in the nine month
period ended March 31, 1999 compared to the same period in 1998. Operating
income decreased on a nine-month basis from income of $217 million in the prior
year to a loss of $119 million in the current year. The prior year nine-month
results included operating income of $76 million for USA Networks from October
21, 1997 until February 12, 1998. In the current year the contribution of USANi
LLC is included in equity from unconsolidated companies and not in consolidated
operations. The Motion Picture Group results declined because of the
disappointing box office performance of current year releases such as Virus,
edTV, Meet Joe Black and Babe: Pig in the City. Also, comparisons with last
year's results are difficult since those results benefited from the carryover of
The Lost World: Jurassic Park and Liar, Liar. International Television and
Library results declined year-on-year due to start-up costs relating to the new
international channels and lower television library sales. On a nine-month
basis, EBITDA from consolidated companies declined from $293 million in the
prior year to a loss of $67 million in the current year. The prior year results
included $97 million of EBITDA related to USA Networks, which was consolidated
from October 21, 1997 until February 12, 1998. There is no contribution from USA
Networks in consolidated EBITDA in the current year.

On a pro forma basis, Filmed Entertainment includes the results of PolyGram
Filmed Entertainment in the motion picture group and the prior year results
reflect the USA Transactions as though they had both occurred at July 1, 1997.
On a pro forma basis, revenues declined six percent in the nine month period
ended March 31, 1999 to $2.6 billion. EBITDA was a loss of $131 million for the
nine months ended March 31, 1999 compared to income of $133 million in the prior
year. Operating income on a nine-month basis decreased from income of $71
million in the prior year to a loss of $194 million in the current year.

The poor response to edTV materially diminished Filmed Entertainment's
outlook for the year. However, with the success of Life and a promising slate
for the remainder of this calendar year -- including The Mummy, Notting Hill and
American Pie -- the Motion Picture Group expects to improve its box office
performance. Even though we expect to improve box office results, we anticipate
a loss in the fourth quarter in line with the loss for the third quarter, and it
will be several quarters before our film business returns to profitability.

Unconsolidated Operations

The equity in earnings from unconsolidated companies increased from a loss
of $26 million for the nine month period in the prior year to income of $127
million in the current year. Revenues from unconsolidated companies increased 66
percent over the prior nine months. EBITDA tripled in the nine month period. The
significant improvement is due primarily to improved operating results in the
businesses of USANi LLC. It is also due to the impact of including USANi's
results in equity in earnings from unconsolidated companies for all of the
current year. In the prior year, Seagram owned 100 percent of USA Networks for
the period from October 21, 1997 to February 12, 1998. During that period, the
results were included in consolidated oper-

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<PAGE> 28

ations, not in equity in earnings from unconsolidated companies. In addition,
Seagram benefited from improved operating results at Loews Cineplex in the nine-
month period compared to Cineplex Odeon Corporation (owned in the prior year).
In addition to USANi LLC and Loews Cineplex, the unconsolidated companies
principally include United Cinemas International Multiplex B.V., Cinema
International Corporation N.V., Cinema International B.V. and Brillstein Grey
Entertainment.

RECREATION AND OTHER

Consolidated Operations

Revenues for recreation and other increased 14 percent in the nine month
period ended March 31, 1999. Operating income increased seven percent to $31
million on a nine-month basis. EBITDA increased 11 percent in the nine month
period. These increases reflect the success of the Crash Bandicoot and Spyro
video games and improved sales by Spencer Gifts. This was partially offset by
the weakness of Universal Studios Hollywood. Attendance at the theme park in
Hollywood declined 10 percent for the nine months ended March 31, 1999, largely
due to the impact of the Asian economic and currency crisis on tourism. There
was essentially no change in per capita spending at the park year-on-year.

Unconsolidated Operations

In the nine months ended March 31, 1999, the equity in earnings from
unconsolidated companies improved from a loss of $15 million in the prior year
to a loss of $2 million in the current year. Revenues from unconsolidated
companies decreased 12 percent while EBITDA increased 51 percent. The
improvement in the nine month results is largely due to a gain recognized by
Sega GameWorks L.L.C., on the sale of its game sales operation to Sega in the
first quarter. In addition to Sega GameWorks, the unconsolidated companies
include Universal Studios Florida, Port Aventura, Interplay Entertainment Corp
as well as other smaller Investments. At Universal Studios Florida, paid
attendance declined one percent year-to-date, while per capita spending
increased one percent year-to-date, principally driven by a higher admission
price.

SPIRITS AND WINE

Consolidated Operations

Revenues increased seven percent in the nine months while operating income
increased 17 percent in the nine months. Operating income in the prior year
included a $60 million charge related to operations in Asia. Excluding the
impact of this charge, operating income increased one percent for the nine
months.

Asia Pacific's revenues increased 65 percent for the nine months and
operating income increased 33 percent, as the region continues to recover from
the difficult economic conditions experienced there after the first quarter last
year. Revenues in North America were five percent higher for the nine months.
Operating income in North America was six percent higher for the nine months.
These improvements reflect higher volumes and pricing, partially offset by
increased marketing investment. Europe's revenues increased five percent in the
nine months while operating income increased two percent in the nine months. In
Latin America, the nine months revenues declined two percent and operating
income decreased 10 percent. These declines are due to the difficult economic
conditions in the region, particularly in Brazil.

In the nine months ended March 31, 1999, cost of goods sold as a percentage
of revenues increased to 53.2 percent from 52.1 percent the prior year. Selling,
general and administrative expenses as a percentage of revenues decreased to
34.2 percent from 35.4 percent due to slight reductions in both brand spending
and overhead expenses coupled with improved revenues. Total brand spending
declined one percent at constant exchange rates in

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<PAGE> 29

the nine-month period. Brand equity spending increased three percent for the
nine months at constant exchange rates.

Spirits and wine case volumes, including unconsolidated companies,
increased two percent in the nine months.

EBITDA from consolidated companies increased 15 percent in the nine months.
Excluding the impact of the $60 million charge for Asia Pacific from the prior
year results, EBITDA would have increased two percent in the nine months.

Unconsolidated Operations

The equity in earnings of unconsolidated companies was breakeven in the
nine months compared to a loss of $3 million in the prior year period. Revenues
from unconsolidated companies declined by 34 percent in the nine months. EBITDA
more than doubled in the nine months. The year-on-year variances are primarily
due to changes in the entities that are included in unconsolidated companies. In
the current year they are Kirin-Seagram Limited in Japan and Seagram (Thailand)
Limited. In the nine months ended March 31, 1998 they also included Doosan
Seagram Co., Ltd. in Korea. As a result of an additional investment in Doosan
Seagram Co., Ltd. at the end of June 1998, that affiliate's results are now
consolidated.

CORPORATE EXPENSES AND INTEREST, NET AND OTHER

Corporate expenses were $68 million in the current year nine months as
compared to $59 million in the prior year. The year-on-year variance is
primarily due to increased costs associated with certain stock-based
compensation resulting from the change in the market value of Seagram's shares
during the period. Interest, net and other was $301 million in the current nine
months and $183 million in the prior year nine months. The increase reflects the
funding of the PolyGram acquisition.

NET INCOME/(LOSS)

In the nine months, which includes the $1.1 billion after-tax gain on the
sale of Tropicana, net income was $739 million or $2.00 per basic share and per
diluted share. In the nine months, net income from continuing operations was a
loss of $86 million or $0.23 per share, compared with income of $153 million or
$0.44 per share in the prior year. Income from continuing operations excludes:

- the entertainment restructuring charge,

- the prior year charge for Asia Pacific spirits and wine operations,

- the gains on the sale of Time Warner shares and USAi transaction, and

- discontinued Tropicana operations.

The net income decline primarily reflects the operating income shortfall and
higher interest expense associated with funding the PolyGram acquisition, which
are partially offset by high equity earnings from unconsolidated companies.

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<PAGE> 30

DISCLOSURE REGARDING FORWARD-LOOKING INFORMATION

This prospectus contains or incorporates by reference statements which
constitute "forward-looking statements," in that they include statements
regarding the intent, belief or current expectations of our directors and
officers with respect to our future operating performance, both before and after
the consummation of the offerings. Such statements include any forecasts,
projections and descriptions of anticipated cost savings or other synergies. You
should be aware that any such forward-looking statements are not guarantees of
future performance and may involve risks and uncertainties, and that actual
results may differ from those set forth in the forward-looking statements as a
result of various factors (including, without limitations, the actions of
competitors, future global economic conditions, market conditions, foreign
exchange rates, and operating and financial risks related to managing growth and
integrating acquired businesses), many of which are beyond our control. The
occurrence of any such factors not currently expected by us would significantly
alter the results set forth in these statements.

ACCOUNTING TREATMENT

The purchase contracts are forward transactions in the common shares. Upon
settlement of a purchase contract, Seagram will receive $50.125 per purchase
contract and will issue the requisite number of common shares. The amount
received by Seagram will be credited to common shares without nominal or par
value within shareholders' equity.

Prior to the issuance of common shares upon settlement of the purchase
contracts, it is anticipated that the units will be reflected in Seagram's
earnings per share calculations using the treasury stock method. Under this
method, the number of common shares used in calculating earnings per share is
deemed to be increased by the excess, if any, of the number of shares issuable
upon settlement of the purchase contracts over the number of shares that could
be purchased by Seagram in the market (at the average market price during the
period) using the proceeds receivable upon settlement. Consequently, it is
anticipated there will be no dilutive effect on our earnings per share except
during periods when the average market price of common shares is above $60.15.

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<PAGE> 31

DESCRIPTION OF UNITS

The summaries of documents described below are not necessarily complete.
Copies of those documents are on file with the SEC as part of our registration
statement. See "Where You Can Find More Information" on page 55 for information
on how to obtain copies. Because this section is a summary, it does not describe
every aspect of the units. This summary is subject to and qualified in its
entirety by reference to all the provisions of each of the underlying
agreements.

Each unit will have a stated amount of $50.125. Each unit will initially
consist of:

(1) a purchase contract under which

- the holder will purchase from Seagram on the stock purchase date of June
21, 2002, for cash in an amount equal to the stated amount, between
0.83333 of a share and one common share of Seagram (depending on the
average trading price of the common shares on the stock purchase date, as
described below), and

- the holder will pay Seagram contract fees at the contract fee rate of
0.12% of the stated amount per year as described below

(2) a note of JES, guaranteed on a subordinated basis by Seagram,

- having a principal amount equal to the stated amount,

- bearing interest at a rate of 7.62% until March 21, 2002, and at the
reset rate thereafter, and

- maturing on June 21, 2004.

As long as a purchase contract remains in effect, the purchase contract and the
related note cannot be separated and you may transfer them only as an integrated
unit, except in limited circumstances.

Between the date of issuance of the units and the stock purchase date, you
will be entitled to receive cash payments totalling 7.50% of the stated amount
per year, payable in arrears on March 21, June 21, September 21 and December 21
of each year, beginning on September 21, 1999 (unless deferred as described
herein). If you do not provide cash as substitute collateral to settle the
underlying purchase contract, in the manner described below, the treasury
consideration received from the remarketing will be applied on the stock
purchase date to the purchase of common shares pursuant to the purchase
contract.

You will pledge the notes underlying a unit to the collateral agent to
secure your obligations to Seagram.

Each holder, by accepting the units, will be deemed to have

- irrevocably agreed to be bound by the terms of the purchase contract
agreement, pledge agreement and purchase contracts for so long as holder
remains a holder of such units, and

- appointed the purchase contract agent under the purchase contract
agreement as the holder's agent to enter into and perform the purchase
contracts on behalf of the holder.

FORMATION OF THE UNITS

At the closing of the offering of the units, the underwriters will (1)
enter into purchase contracts with Seagram and (2) purchase notes from JES for
cash. The underwriters will fund that cash payment by the sale of the units to
the initial investors. The notes will then be pledged to the collateral agent to
secure the obligations owed to Seagram under the purchase contracts. The rights
to purchase common shares under a purchase contract, together with the notes or
other pledged securities, subject to the obligations owed to Seagram under such
purchase contract, and the

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<PAGE> 32

pledge arrangements securing the foregoing obligations, are collectively
referred to in this prospectus as a "unit".

Seagram will enter into:

- - a purchase contract agreement with The Bank of New York, as unit agent,
governing the appointment of the purchase contract agent as the agent and
attorney-in-fact for the holders of the units, the purchase contracts, the
transfer, exchange or replacement of certificates representing the units and
certain other matters relating to the units and

- - a pledge agreement between Seagram and Citibank, N.A. as collateral agent
creating a pledge and security interest for the benefit of Seagram to secure
the obligations of holders of units under the purchase contracts.

DESCRIPTION OF THE PURCHASE CONTRACTS

Each purchase contract underlying a unit will require the holder of that
unit to purchase, and Seagram to sell, on the stock purchase date, for cash in
an amount equal to $50.125, a number of common shares equal to the settlement
rate. The settlement rate will be calculated as follows (subject to adjustment
as described below under "-- Anti-Dilution Adjustments"):

(1) if the average trading price is greater than or equal to the threshold
appreciation price of $60.15 (that is, 20% higher than the stated
amount), the settlement rate will be 0.83333;

(2) if the average trading price is between the threshold appreciation
price and the stated amount, the settlement rate will equal the stated
amount divided by the average trading price (that is, the shares
deliverable under the contract will have a value, based on the average
trading price of the common stock, equal to the stated amount); and

(3) if the average trading price is less than or equal to the stated
amount, the settlement rate will be one.

"average trading price" means the average of the closing prices per common
share on each of the twenty consecutive trading days ending on the last trading
day before the stock purchase date.

"closing price" of a common share on any date of determination means the
closing sale price (or, if no closing price is reported, the last reported sale
price) of the common shares on the NYSE on such date, or if the common shares
are not listed for trading on the NYSE on any such date, as reported in the
composite transactions for the principal U.S. securities exchange on which the
common shares are so listed, or if the common shares are not so listed on a U.S.
national or regional securities exchange, as reported by The Nasdaq Stock
Market, or if the common shares are not so reported, the last quoted bid price
of the common shares in the over-the-counter market as reported by the National
Quotation Bureau or similar organization, or if such bid price is not available,
the market value of the common shares on such date as determined by a nationally
recognized investment banking firm retained for this purpose by Seagram.

"trading day" means a day on which the common shares (1) are not suspended
from trading on any national or regional securities exchange or association or
over-the-counter market at the close of business and (2) have traded at least
once on the national or regional securities exchange or association or
over-the-counter market that is the primary market for the trading of the common
shares.

Seagram will not issue any fractional shares pursuant to the purchase
contracts. In lieu of a fraction of a share otherwise issuable in respect of
purchase contracts

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<PAGE> 33

being settled by a holder of units, the holder will be entitled to receive an
amount of cash equal to such fraction times the average closing price.

Cash payments on the units will accrue at a rate per year that is greater
than the current dividend yield on the common shares. However, since the number
of common shares issuable upon settlement of each purchase contract may decline
by up to approximately 16.7% as the average closing price increases, the
opportunity for equity appreciation afforded by an investment in the units is
less than that afforded by a direct investment in the common shares.

Prior to the stock purchase date, the common shares purchasable on
settlement of purchase contracts will not be deemed to be outstanding for any
purpose and you will not have any voting rights, rights to dividends or other
distributions or other rights or privileges of a shareholder of Seagram by
virtue of holding units.

SETTLEMENT

Remarketing

Unless a holder delivers cash in an amount equal to the purchase price of
the treasury consideration as described below or cash in early settlement of the
purchase contracts, the notes will be remarketed on the remarketing date which
will be the third business day preceding the last quarterly payment date before
the stock purchase date. Seagram will enter into a remarketing agreement with a
nationally recognized investment banking firm, pursuant to which that firm will
agree to use its commercially reasonable best efforts to remarket the notes on
the remarketing date at a price equal to 100.25% of the value of the treasury
consideration. The remarketing agent will retain 0.25% of the proceeds as a
remarketing fee.

The "treasury consideration" in respect of any notes will consist of
treasury securities in an amount sufficient to:

- generate for the quarterly payment date falling on the stock purchase
date, an amount of cash equal to the aggregate interest that is scheduled
to be payable on those notes being remarketed on that quarterly payment
date, assuming for this purpose, even if not true, that (a) no interest
payment will then have been deferred and (b) the interest rate on the
notes remains at the initial rate;

- an amount of cash equal to the stated amount of the units which include
those notes; and

- if JES is then deferring interest payments, an amount equal to the
aggregate unpaid interest payments on those notes being remarketed
accrued to March 21, 2002.

The remarketing agent will use the proceeds from a successful remarketing
to purchase the treasury consideration which it will deliver to the purchase
contract agent and the collateral agent by noon, New York City time, on the last
quarterly payment date before the stock purchase date.

Alternatively, a holder of units may elect not to participate in the
remarketing and retain the notes underlying those units by delivering cash in an
amount equal to the purchase price of the treasury consideration. A holder
electing not to participate in the remarketing must notify the purchase contract
agent of such election not later than 10:00 a.m. on the seventh business day
prior to March 21, 2002 and deliver such cash to the purchase contract agent not
later than 10:00 a.m. on the fourth business day prior to March 21, 2002.

On the stock purchase date the purchase contract agent will apply the
proceeds of the treasury consideration to pay the purchase price under the
purchase contract.

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<PAGE> 34

If the remarketing agent cannot remarket the notes on the remarketing date,
the remarketing agent will continue to attempt to remarket the notes until the
stock purchase date. If the remarketing agent fails to remarket the notes prior
to the stock purchase date, Seagram will be entitled to exercise its rights as a
secured party on the stock purchase date and, subject to applicable law, retain
the notes pledged as collateral or sell them in one or more private sales.

Early Settlement

At any time not later than 10:00 a.m. on the seventh business day prior to
March 21, 2002, a holder of units may settle the related purchase contracts by
delivering to the purchase contract agent immediately available funds in an
amount equal to $50.125 multiplied by the number of purchase contracts being
settled plus any deferred contract fees.

Upon early settlement, Seagram will issue, and the holder will be entitled
to receive, 0.83333 common shares for each unit (regardless of the market price
of the common shares on the date of early settlement), subject to adjustment
under the circumstances described under "-- Anti-Dilution Adjustments" below.
The holder will also receive the notes underlying those units. The holder's
right to receive future contract fee payments will terminate.

Early Settlement Upon Merger

Prior to the stock purchase date, if Seagram is involved in a merger in
which at least 30% of the consideration for the common shares consists of cash
or cash equivalents ("cash merger"), on or after the date of the cash merger
each holder of the units has the right to accelerate and settle the underlying
purchase contracts. We refer to this right as the "early settlement right."
Seagram will provide each of the holders with a notice of the completion of a
cash merger. The notice will specify a date on which the optional early
settlement will occur and a date by which each holder's early settlement right
must be exercised. The notice will set forth, among other things, the applicable
settlement rate and the amount of the cash, securities and other consideration
receivable by the holder upon settlement. To exercise the early settlement
right, you must deliver to the purchase contract agent, on or before the early
settlement date, the certificate evidencing your units and payment of the
applicable purchase price in the form of a certified or cashier's check. If you
exercise the early settlement right, Seagram will deliver to you the cash,
securities and other property as set forth in the notice.

CONTRACT FEES

The holders of units are required to pay contract fees to Seagram.

The obligation of the holders of units to pay contract fees to Seagram will
be funded out of payments made in respect of the notes or pledged securities. If
payments made in respect of the notes or pledged securities are insufficient to
cover the obligation of the holders of the units to pay contract fees, such
obligation will be deferred until the earlier of the date sufficient cash is
available and the stock purchase date. It is unlikely such holders will be
entitled to a current deduction for contract fees. As a result, although the
amount of cash distributions made to holders will be reduced by the amount of
contract fees payable to Seagram, holders will nevertheless recognize income
each quarter equal to the full amount of interest accrued with respect to the
notes underlying the units held by such holder.

Any deferred contract fees will bear additional contract fees at 0.12% (the
"deferral rate") (compounding on each succeeding quarterly payment date) until
paid. Contract fees payable for any period will be computed on the basis of a
360-day year consisting of twelve 30-day months. Contract fees will accrue from
the date of issuance of the units to the stock purchase

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<PAGE> 35

date and will be payable in arrears on the quarterly payment dates (unless
deferred as described above). If the purchase contracts are terminated, your
obligation to pay contract fees (including any deferred contract fees) will also
terminate.

ANTI-DILUTION ADJUSTMENTS

The formula for determining the settlement rate may be adjusted if certain
events occur, including:

(1) the payment of a stock dividend or other distributions on common
shares;

(2) the issuance to all holders of common shares of rights or warrants
entitling them to subscribe for or purchase common shares at less than the
current market price (as defined below);

(3) subdivisions of common shares (including an effective subdivision of
the common shares through reclassification of the common shares);

(4) distributions to all holders of common shares of evidences of
indebtedness of Seagram, securities, cash or other assets (excluding any
dividend or distribution covered by clause (1) or (2) above and any dividend or
distribution paid exclusively in cash);

(5) distributions consisting exclusively of cash to all holders of common
shares in an aggregate amount that, when combined with (a) other all-cash
distributions made within the preceding 12 months and (b) the cash and the fair
market value, as of the date of expiration of the tender or exchange offer
referred to below, of the consideration paid in respect of any tender or
exchange offer by Seagram or a subsidiary for the common shares concluded within
the preceding 12 months, exceeds 15% of Seagram's aggregate market
capitalization (such aggregate market capitalization being the product of the
current market price of the common shares multiplied by the number of common
shares then outstanding) on the date fixed for the determination of shareholders
entitled to receive such distribution; and

(6) the successful completion of a tender or exchange offer made by Seagram
or any subsidiary for the common shares which involves an aggregate
consideration that, when combined with (a) any cash and the fair market value of
other consideration payable in respect of any other tender or exchange offer by
Seagram or a subsidiary for the common shares concluded within the preceding 12
months and (b) the aggregate amount of any all-cash distributions to all holders
of the common shares made within the preceding 12 months, exceeds 15% of
Seagram's aggregate market capitalization on the date of expiration of such
tender or exchange offer.

The "current market price" per common share on any day means the average of
the daily closing prices for the five consecutive trading days selected by
Seagram commencing not more than 20 trading days before, and ending not later
than, the earlier of the day in question and the day before the "ex date" with
respect to the issuance or distribution requiring such computation. For purposes
of this paragraph, the term "ex date", when used with respect to any issuance or
distribution, means the first date on which the common shares trade without the
right to receive the issuance or distribution.

Certain reclassifications, consolidations, mergers, sales or transfers of
assets or other transactions may cause the common shares to be converted into
the right to receive other securities, cash or property. If this happens, each
purchase contract would, without the consent of the holders of units, become a
contract to purchase only the kind and amount of securities, cash or other
property that the holder would be entitled to receive if the holder had settled
its purchase contract immediately before the transaction.

If at any time Seagram makes a distribution of property to its shareholders
which

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would be taxable to the shareholders as a dividend for U.S. federal income tax
purposes (that is, distributions, evidences of indebtedness or assets of
Seagram, but generally not stock dividends or rights to subscribe to capital
stock) and, pursuant to the settlement rate adjustment provisions of the
purchase contract agreement, the settlement rate is increased, that increase may
be deemed to be the receipt of taxable income to holders of units. See "U.S.
Federal Income Tax Consequences -- Adjustment to Settlement Rate".

In addition, Seagram may increase the settlement rate if our Board of
Directors deems it advisable to avoid or diminish any income tax to holders of
common shares resulting from any dividend or distribution of shares (or rights
to acquire shares) or from any event treated as a dividend or distribution for
income tax purposes or for any other reasons.

Adjustments to the settlement rate will be calculated to the nearest
1/10,000th of a share. No adjustment in the settlement rate will be required
unless the adjustment would require an increase or decrease of at least one
percent in the settlement rate. If any adjustment is not required to be made
because it would not change the settlement rate by at least one percent, then
the adjustment will be carried forward and taken into account in any subsequent
adjustment.

Seagram will be required, as soon as practicable, following the occurrence
of an event that requires or permits an adjustment in the settlement rate, to
provide written notice to the holders of units of the occurrence of that event.
Seagram will also be required to deliver a statement in reasonable detail
setting forth the method by which the adjustment to the settlement rate was
determined and setting forth the revised settlement rate.

TERMINATION

The purchase contracts, and the rights and obligations of Seagram and of
the holders of the units under the purchase contracts (including the right and
obligation of Seagram to receive and the holders to pay contract fees or
deferred contract fees and the right and obligation of the holders to purchase
and Seagram to sell common shares), will automatically terminate if Seagram
becomes subject to certain events of bankruptcy, insolvency or reorganization.
Upon any termination, the pledged securities will be distributed in the manner
described below.

PLEDGED SECURITIES AND PLEDGE AGREEMENT

Under the pledge agreement, the pledged securities will be pledged to the
collateral agent, for the benefit of Seagram, to secure the obligations of
holders of units to purchase common shares under the purchase contracts. The
pledged securities will initially consist of the notes. If treasury securities
are exchanged for pledged securities upon a successful remarketing, the treasury
securities will automatically be substituted as pledged securities and the
former pledged securities will automatically be released from the pledge and
security interest created by the pledge agreement.

The rights of the holders of the units to the underlying pledged securities
will be subject to the pledge and security interest created by the pledge
agreement. No holder of units will be permitted to withdraw the pledged
securities underlying those units from the pledge arrangement except upon the
settlement or termination of the purchase contracts or as described under
"-- Description of the Purchase Contracts -- Settlement" above. Subject to the
pledge and security interest, however, each holder of units will have full
beneficial ownership of the underlying pledged securities and will be entitled
(directly or through the collateral agent) to all of the rights provided by the
pledged securities, and we

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<PAGE> 37

will have no rights in pledged securities other than our security interest.

QUARTERLY PAYMENTS ON PLEDGED SECURITIES

The collateral agent, upon receipt of interest payments on the pledged
securities, will distribute those payments to the purchase contract agent, which
will, in turn, distribute that amount, minus the contract fees, to the holders
of units on the record date. As long as the units remain in book-entry only
form, the record date for any payment will be one business day before the
payment date.

SETTLEMENT OF PURCHASE CONTRACTS

On the stock purchase date, the amount paid on such treasury securities at
maturity will be released from the pledge and security interest created by the
pledge agreement and will be used to satisfy the purchase contract as specified
under "-- Description of the Purchase Contracts -- Settlement".

TERMINATION OF PURCHASE CONTRACTS

Upon termination of the purchase contracts (see "-- Description of the
Purchase Contracts -- Termination"), the collateral agent will release the
pledged securities underlying the units to the purchase contract agent for
distribution to the holders of the units, upon presentation and surrender of the
certificates evidencing such units. If upon such termination any holder would
otherwise be entitled to receive a principal amount of treasury securities of
any series that is not an integral multiple of $1,000, the purchase contract
agent will distribute to that holder treasury securities of that series in a
principal amount equal to the next lower integral multiple of $1,000. The
purchase contract agent will sell the treasury securities not otherwise
distributed to the holder (together with the treasury securities of that series
not otherwise distributed to other holders) and will distribute the net proceeds
to all the holders (in accordance with their respective interests therein).

THE PURCHASE CONTRACT AGREEMENT

GENERAL

Distributions on the units will be payable, purchase contracts will be
settled and transfers of the units will be registrable at the office of the
purchase contract agent in the Borough of Manhattan, The City of New York. In
addition, if the units do not remain in book-entry form, payment of
distributions on the units may be made, at the option of Seagram, by check
mailed to the address of the persons shown on the unit register.

If any quarterly payment date or the stock purchase date is not a business
day, then any payment required to be made on that date must be made on the next
business day (and so long as the payment is made on the next business day,
without any interest or other payment on account of any such delay), except that
if the next business day is in the next calendar year, the payment or settlement
will be made on the prior business day with the same force and effect as if made
on the payment date. A "business day" means any day other than Saturday, Sunday
or any other day on which banking institutions in The City of New York are
authorized or obligated by law or executive order to be closed.

If you fail to surrender the certificate evidencing your units to the
purchase contract agent on the stock purchase date, the common shares issuable
in settlement of the related purchase contracts will be registered in the name
of the purchase contract agent. These common shares, together with any
distributions on them, will be held by the purchase contract agent as agent for
your benefit, until the certificate is presented and surrendered or you provide
satisfactory evidence that the certificate has been destroyed, lost or stolen,
together with any indemnity that may be required by the purchase contract agent
and Seagram.

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If the purchase contracts have terminated prior to the stock purchase date,
the related pledged securities have been transferred to the purchase contract
agent for distribution to the holders and you fail to surrender the certificate
evidencing your units to the purchase contract agent, the pledged securities
that would otherwise be delivered to you and any related payments will be held
by the purchase contract agent as agent for your benefit, until you present and
surrender the certificate or provide the evidence and indemnity described above.

The purchase contract agent will not be required to invest or to pay
interest on any amounts held by it before distribution.

No service charge will be made for any registration of transfer or exchange
of the units, except for any applicable tax or other governmental charge.

MODIFICATION

The purchase contract agreement, the pledge agreement and the purchase
contracts may be amended with the consent of the holders of a majority of the
units at the time outstanding. However, no modification may, without the consent
of the holder of each outstanding unit affected by the modification,

(1) change any payment date,

(2) change the amount or type of pledged securities required to be pledged
to secure obligations under the units, impair the right of the holder of any
units to receive distributions on the pledged securities underlying such units
or otherwise adversely affect the holder's rights in or to pledged securities,

(3) change the place or currency of payment for any amounts payable in
respect of the units, increase any amounts payable by holders in respect of
units or decrease any other amounts receivable by holders in respect of units,

(4) impair the right to institute suit for the enforcement of any purchase
contract,

(5) reduce the number of common shares purchasable under any purchase
contract, increase the price to purchase common shares on settlement of any
purchase contract, change the stock purchase date or otherwise adversely affect
the holder's rights under any purchase contract or,

(6) reduce the above stated percentage of outstanding units the consent of
whose holders is required for the modification or amendment of the provisions of
the master unit agreement, the pledge agreement or the purchase contracts.

CONSOLIDATION, MERGER, SALE OR CONVEYANCE

Seagram will agree in the purchase contract agreement that it will not
merge with or into or consolidate with any other entity or sell, assign,
transfer, lease or convey all or substantially all of its properties and assets
to any person, firm or corporation unless

(1) Seagram is the continuing corporation or the successor corporation is a
corporation organized under the laws of Canada or the United States of America
or a province or state thereof;

(2) The successor entity expressly assumes the obligations of Seagram under
the purchase contract agreement, the pledge agreement and the purchase
contracts; and

(3) Seagram or such corporation is not, immediately after such merger,
consolidation, sale, assignment, transfer, lease or conveyance, in default in
the performance of any of its obligations under the purchase contract agreement,
the pledge agreement or the purchase contracts.

TITLE

Seagram, the purchase contract agent and the collateral agent may treat the
registered holder of any units as the absolute owner of those units for the
purpose of making payment and settling the related

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purchase contracts and for all other purposes.

REPLACEMENT OF UNITS CERTIFICATES

If physical certificates are issued, we will replace any mutilated
certificate at your expense upon surrender of that certificate to the unit
agent. We will replace certificates that become destroyed, lost or stolen at
your expense upon delivery to us and the purchase contract agent of satisfactory
evidence that the certificate has been destroyed, lost or stolen, together with
any indemnity that may be required by the purchase contract agent and us.

We, however, are not required to issue any certificates representing units
on or after the stock purchase date or after the purchase contracts have
terminated. In place of the delivery of a replacement certificate following the
stock purchase date, the purchase contract agent, upon delivery of the evidence
and indemnity described above, will deliver the common shares issuable pursuant
to the purchase contracts included in the units evidenced by the certificate,
or, if the purchase contracts have terminated prior to the stock purchase date,
transfer the pledged securities related to the units evidenced by the
certificate.

GOVERNING LAW

The purchase contract agreement, the pledge agreement and the purchase
contracts will be governed by, and construed in accordance with, the laws of the
State of New York.

INFORMATION CONCERNING THE PURCHASE CONTRACT AGENT

The Bank of New York will initially act as purchase contract agent. The
purchase contract agent will act as the agent for the holders of units from time
to time. The purchase contract agreement will not obligate the purchase contract
agent to exercise any discretionary authority in connection with a default under
the terms of the purchase contract agreement, the pledge agreement and the
purchase contracts, or the pledged securities.

The purchase contract agreement will contain provisions limiting the
liability of the unit agent. The purchase contract agreement will contain
provisions under which the purchase contract agent may resign or be replaced.
Resignation or replacement of the purchase contract agent will be effective upon
appointment of a successor.

The purchase contract agent is one of a number of banks with which Seagram
and its subsidiaries maintain ordinary banking and trust relationships.

INFORMATION CONCERNING THE COLLATERAL AGENT

Citibank, N.A. will initially act as collateral agent. The collateral agent
will act solely as our agent and will not assume any obligation or relationship
of agency or trust for or with any of the holders of the units except for the
obligations owed by a pledgee of property to the owner thereof under the pledge
agreement and applicable law.

The pledge agreement will contain provisions limiting the liability of the
collateral agent. The pledge agreement will contain provisions under which the
collateral agent may resign or be replaced. Such resignation or replacement
would be effective upon the appointment of a successor.

The collateral agent is one of a number of banks with which Seagram and its
subsidiaries maintain ordinary banking and trust relationships.

DESCRIPTION OF THE NOTES AND THE GUARANTEES

The notes are to be issued under the indenture. The Bank of New York will
initially act as trustee under the indenture. The indenture is qualified under
the Trust Indenture Act.

The notes will be subordinated to senior indebtedness of JES.
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The notes will mature on June 21, 2004. The notes will not be redeemable at
the option of JES prior to the maturity date.

INTEREST

Interest on the notes will accrue from the first date of issuance of the
notes at an initial rate of 7.62% prior to March 21, 2002, and at the reset rate
thereafter. Interest will be payable quarterly in arrears on each quarterly
payment date (each, an "interest payment date"), subject to the deferral
provisions described below. Interest will be payable to the holders of the notes
on each record date, which will be one business day before the interest payment
date. The amount of interest payable for any period will be computed on the
basis of a 360-day year consisting of twelve 30-day months. If any date on which
interest is payable is not a business day, then payment of the interest will be
made on the next business day (and if payment is made on the next business day,
without any interest or other payment as a result of such delay), except that if
the next business day is in the next succeeding calendar year, the payment will
be made on the prior business day, in each case with the same force and effect
as if made on the date such payment was originally payable.

MARKET RATE INCREASE

By 9:30 a.m., New York City time, on the remarketing date, the remarketing
agent will determine the interest rate that will be sufficient to cause the then
current aggregate market value of the notes to be at least equal to 100.25% of
the cash purchase price equivalent of the treasury consideration. The notes will
thereafter bear interest at that increased rate.

If the remarketing agent is unable to remarket all the notes tendered or
deemed tendered for purchase, the remarketing agent will continue to attempt to
remarket the notes until the stock purchase date. If the remarketing agent fails
to remarket the notes prior to the stock purchase date, a failed remarketing
will be deemed to have occurred.

The "cash equivalent of the treasury consideration" means the cash value on
the remarketing date of the treasury consideration, assuming for this purpose,
even if not true, that (1) the treasury securities included in the treasury
consideration are highly liquid treasury securities maturing on or within 35
days prior to the stock purchase date (as determined in good faith by the
remarketing agent in a manner intended to minimize the cash equivalent of the
treasury consideration) and (2) those treasury securities are valued based on
the ask-side price of the treasury securities at 9:00 a.m., New York City time,
on the remarketing date (as determined on a same day settlement basis by a
reasonable and customary means selected in good faith by the remarketing agent)
plus accrued interest to that date.

OPTION TO DEFER INTEREST PAYMENTS

So long as no event of default has occurred and is continuing, JES will
have the right under the indenture at any time during the term of the notes to
defer the payment of interest for a period not extending beyond the maturity
date. We refer to any such period of deferral as an "extension period". At the
end of an extension period, JES must pay all interest then accrued and unpaid
(together with accrued interest at the deferral rate compounded on each
succeeding Interest payment date).

During any extension period, Seagram and JES may not take any of the
prohibited actions described under "-- Certain Covenants of JES and Seagram".

Prior to the expiration of any extension period, JES may further extend the
extension period, but not beyond the maturity date. Upon the termination of any
extension period and the payment of all amounts then due on any interest payment
date, JES may elect to begin a new extension period, subject to the same
requirements as

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<PAGE> 41

described above. No interest will be due and payable during an extension period.
JES must give the trustee written notice of its election of any extension period
(or its further extension) at least five business days prior to the earliest of:

(1) the date the interest on the notes would have been payable except for
the election to begin or extend the extension period;

(2) the date the trustee is required to give notice to any securities
exchange or to holders of notes of the record date or the date the interest is
payable; and

(3) the record date.

The Trustee must give notice of JES' election to begin or extend a new extension
period to the holders of the notes. There is no limitation on the number of
times that JES may elect to begin an extension period.

CERTAIN COVENANTS OF SEAGRAM AND JES

JES will covenant that during an extension period or during the continuance of
an event of default, JES will not:

(1) make any payment of principal, interest or premium, if any, on or
repay, repurchase or redeem any debt securities of JES that rank pari passu to
or junior in right of payment to the notes, or

(2) make any guarantee payments with respect to any guarantee by JES of any
securities of any of its subsidiaries if such guarantee ranks pari passu or
junior in right of payment to the notes.

Seagram will also covenant that, during an extension period or during the
continuance of an event of default, it will not:

(1) make any payment of principal, interest or premium, if any, on or
repay, repurchase or redeem any debt securities of Seagram that rank pari passu
or junior in right of payment to the guarantees of the notes, or

(2) make any guarantee payments with respect to any guarantee by Seagram if
such guarantee ranks pari passu or junior in right of payment to the notes.

Seagram will also covenant that, during an extension period or during the
continuance of an event of default, it will not declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of Seagram's capital stock, other than:

(1) dividends or distributions in, or options, warrants or rights to
subscribe for or purchase, common shares of Seagram,

(2) any declaration of a dividend in connection with the implementation of
a stockholder's rights plan, or the issuance of shares under any such plan in
the future, or the redemption or repurchase of any such rights pursuant thereto,

(3) as a result of a reclassification of Seagram capital stock solely into
shares of one or more classes or series of Seagram capital stock or the exchange
or conversion of one class or series of Seagram capital stock for another class
or series of Seagram capital stock,

(4) the purchase of fractional interests in shares of Seagram capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged and

(5) purchases of common shares in connection with Seagram's normal course
issuer bid-purchases or the satisfaction by Seagram of its obligations under any
benefit plans for its and its subsidiaries' directors, officers or employees or
any of Seagram's dividend reinvestment plans.

GUARANTEES

Seagram will unconditionally guarantee, on a subordinated basis, the due
and punctual payment of principal of and interest on the notes, when and as the
same shall become due and payable, whether at the maturity date, by declaration

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<PAGE> 42

of acceleration or otherwise. Interest and additional amounts paid by Seagram
may be subject to Canadian withholding taxes. The withholding tax rate in
respect of payments made to residents of the United States within the meaning of
the Canada-United States Income Tax Convention (1980) would be 10% by virtue of
such Convention. Seagram will further agree, however, that any amounts to be
paid by Seagram under the guarantees will be paid without deduction or
withholding for or on account of any and all present or future tax, duty,
assessment or governmental charge imposed upon or as a result of such payment by
the Government of Canada, or any province or other political subdivision or
taxing authority thereof or therein, or if deduction or withholding of any such
tax, duty, assessment or charge shall at any time be required by or on behalf of
the Government of Canada or any such province, political subdivision or taxing
authority, Seagram will pay such additional amount in respect of principal and
interest as may be necessary in order that the net amounts paid to the holders
of the notes or the Trustee, as the case may be, pursuant to the guarantees
after such deduction or withholding shall not be less than the amount provided
for in the notes to be then due and payable; except that no such additional
amount shall be payable in respect of any notes to any holder (1) who is subject
to such tax, duty, assessment or governmental charge in respect of the notes by
reason of his being connected with Canada otherwise than merely by the holding
or ownership of the notes, or (2) who is not dealing at arm's length with
Seagram (within the meaning of the Income Tax Act (Canada) as reenacted or
amended from time to time), or (3) with respect to any estate, inheritance,
gift, sales, transfer, personal property or any other similar tax, duty,
assessment or governmental charge, or (4) with respect to any tax, duty,
assessment or governmental charge payable otherwise than by withholding payments
in respect of the notes, or (5) with respect to any combination of the above.

SUBORDINATION

If JES distributes assets as part of its dissolution, winding up,
liquidation or reorganization, payments on the notes will be subordinated in
right of payment to the prior payment in full of all senior indebtedness. No
payment on the notes may be made at any time when:

- JES is in default under any payment obligation with respect to senior
indebtedness beyond any applicable grace period,

- JES is otherwise in default with respect to any senior indebtedness
permitting the holders of the senior indebtedness to accelerate the
maturity of the senior indebtedness, or

- any judicial proceeding is pending with respect to any default with
respect to senior indebtedness.

Seagram's guarantees of the notes will be subordinated to present and
future senior indebtedness of Seagram in the same manner.

Holders of notes will be subrogated to the rights of holders of senior
indebtedness to the extent JES makes payments on senior indebtedness upon any
distribution of assets in any such proceedings out of the distributive share of
the notes. Due to this subordination, certain creditors may recover more,
ratably, than holders of the notes in a distribution of assets upon insolvency.

The guarantees will be subordinated in right of payment to senior
indebtedness of

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Seagram, on terms comparable to the subordination of the notes.

"Senior indebtedness" means:

(a) indebtedness for money borrowed;

(b) indebtedness evidenced by a note, debenture, bond or other security or
instrument and indebtedness incurred, created or assumed in connection with the
acquisition of any property, other than trade accounts payable;

(c) obligations as lessee under capitalized leases, including without
limitation, leases of property made as part of any sale and lease-back
transaction; and

(d) indebtedness, obligations and liabilities of others which Seagram or
JES, as applicable, has guaranteed, endorsed or otherwise agreed to be liable
for or acquire;

except that "senior indebtedness" will not include any such indebtedness,
obligation or liability which expressly states that it is junior or subordinate
to or ranks pari passu in right of payment to the notes or guarantees.
Substantially all of the indebtedness set forth under "Capitalization", other
than the Liquid Yield Option Notes, constitutes senior indebtedness. The
indenture, notes and guarantees do not limit our ability to issue additional
senior indebtedness.

CONSOLIDATION, MERGERS AND SALES OF ASSETS. Neither Seagram nor JES will
consolidate, amalgamate or merge with, or convey, transfer or lease all or
substantially all its assets to any person, unless:

- the successor corporation, in the case of JES, is a U.S. corporation or,
in the case of Seagram, is a Canadian or U.S. corporation, and assumes
the obligations evidenced by the securities or guarantees;

- immediately after the transaction, no event of default, and no event
which, after notice or lapse of time or both, would become an event of
default, has occurred and is continuing; and

- certain other conditions are met.

MODIFICATION OF THE INDENTURE

Seagram, JES and the trustee may, with the consent of the holders of at
least 50% in aggregate principal amount of the notes, modify the indenture or
the rights of the holders of the notes.

However, no modification may, without the consent of the holder of each
note:

- change the stated maturity of the notes;

- reduce the rate of payment of interest on the notes;

- reduce the principal amount of the notes or the premium, if any, on the
notes;

- change any obligation of JES to pay additional amounts;

- change the place of payment where principal and interest are payable;

- change the currency or currency unit in which the notes are payable;

- impair the right to sue for the enforcement of any such payment on or
after the maturity of the notes;

- reduce the percentage of the notes referred to above whose holders need
to consent to the modification or a waiver; or

- adversely modify the terms and conditions of the guarantees.

EVENTS OF DEFAULTS

The indenture provides that the events of default for the notes will be:

- failure to pay principal on any notes when due;

- failure to pay any interest within 30 days of the date when due;

- failure to perform for 90 days after notice any other covenant in the
indenture; and

- certain events of bankruptcy, insolvency or reorganization.
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If an event of default occurs and is continuing, either the trustee or the
holders of 25% in principal amount of outstanding notes of that series may
declare the notes of that series due and payable. Seagram and JES are each
required to annually certify to the trustee that JES has fulfilled its
obligations under the indenture during the preceding year.

Holders of a majority in principal amount of the notes will be entitled to
control certain actions of the trustee under the indenture and to waive past
defaults regarding the notes. The trustee generally will not be required to act
at the request of holders, unless the holders offer the trustee reasonable
security or indemnity.

If an event of default occurs and is continuing, the trustee may use any
sums that it holds under the indenture for compensation due, as agreed by JES
and the trustee, and for reasonable expenses incurred, prior to paying the
holders of the notes.

Before any holder of notes may sue JES for an event of default, other than
for payment on that holder's note when due, the holders of not less than 25% in
principal amount of the notes outstanding must have requested the trustee to
take action and waited 60 days for the trustee to act. If the trustee sues,
holders may not do so.

CONCERNING THE TRUSTEE

Seagram and JES have had and may continue to have banking relationships
with the trustee in the ordinary course of business.

BOOK-ENTRY SYSTEM

The Depository Trust Company (the "depositary") will act as securities
depositary for the units. The units will be issued only as fully-registered
securities registered in the name of Cede & Co. or another nominee of the
depositary. Fully-registered global security certificates, representing the
total aggregate number of units, will be issued, will be deposited with the
depositary and will bear a legend regarding restrictions on their exchanges and
registration of transfer as described below.

The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in the units so long as
such units are represented by global security certificates.

The depositary is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended. The depositary holds securities that its
participants deposit with it. The depositary also facilitates the settlement
among participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations ("direct participants"). The depositary is owned by a number of
its direct participants and by the NYSE, the American Stock Exchange, Inc., and
the National Association of Securities Dealers, Inc. Access to the depositary
system is also available to others, such as securities brokers and dealers,
banks and trust companies that clear transactions through or maintain a direct
or indirect custodial relationship with a direct participant either directly or
indirectly ("indirect participants"). The rules applicable to the depositary and
its participants are on file with the commission.
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No transfer of global security certificates in whole or in part may be
registered in the name of any person other than the depositary or a nominee of
the depositary unless the depositary has notified Seagram that it is unwilling
or unable to continue as depositary for such global security certificates or has
ceased to be qualified to act as depositary under the purchase contract
agreement or if there occurs and continues a default by Seagram under one or
more principal agreements. All units and portions of units represented by global
security certificates will be registered in such names as the depositary may
direct.

As long as the depositary or its nominee is the registered owner of the
global security certificates, such depositary or such nominee, as the case may
be, will be considered the sole owner and holder of the global security
certificates and all units represented thereby for all purposes under the units,
purchase contracts, purchase contract agreement and pledge agreement. Except in
the limited circumstances referred to in the paragraph above, owners of
beneficial interests in global security certificates will not be entitled to
have such global security certificates or the underlying units registered in
their names, will not receive or be entitled to receive physical delivery of
certificates and will not be considered to be owners or holders of such global
security certificates or any underlying units for any purpose under the units,
purchase contracts and principal agreements. All payments on the units
represented by the global security certificates and all deliveries of pledged
securities or common shares to the holders thereof will be made to the
depositary or its nominee, as the case may be, as the holder thereof.

Ownership of beneficial interests in the global security certificates will
be limited to participants or persons that may hold beneficial interests through
institutions that have accounts with the depositary. Ownership of beneficial
interests in global security certificates will be shown only on, and the
transfer of those ownership interests will be effected only through, records
maintained by the depositary or its nominee (with respect to participants'
interests) or any such participant (with respect to interests of persons held by
such participants on their behalf). Procedures for settlement of purchase
contracts on the stock purchase date will be governed by arrangements among the
depositary, participants and persons that may hold beneficial interests through
participants designed to permit such settlement without the physical movement of
certificates. Payments, transfers, deliveries, exchanges and other matters
relating to beneficial interests in global security certificates may be subject
to various policies and procedures adopted by the depositary from time to time.
The depositary has advised Seagram that it will not take any action permitted to
be taken by a holder of units unless directed to do so by one or more
participants to whose account the depositary interests in the global security
certificates are credited and only for the number of units as to which such
participant or participants has or have given such direction. None of Seagram,
the purchase contract agent nor any of their agents will have any responsibility
or liability to any aspect of the depositary's or any participant's records
relating to, or for payment made on account of, beneficial interests in global
security certificates, or for maintaining, supervising or reviewing any of the
depositary's records or any participant's records relating to such beneficial
ownership interests.

The information in this section concerning the depositary and its book-
entry system has been obtained from sources that we believe to be reliable, but
we do not take responsibility for its accuracy.

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DESCRIPTION OF SHARE CAPITAL

The following brief summary of our share capital is not complete and is
qualified in its entirety by reference to all the provisions of our articles of
amalgamation and our by-laws.

Our authorized capital currently consists of an unlimited number of common
shares, of which 403,479,724 common shares were outstanding at June 10, 1999,
and an unlimited number of preferred shares, none of which are outstanding.

COMMON SHARES

A holder of common shares receives one vote per share at shareholder
meetings, except at meetings where only the holders of a different class or
series of shares may vote. Subject to the rights of another class or series of
shares that rank ahead of the common shares:

- - holders of common shares receive dividends when declared and paid by the board
of directors, and

- - if Seagram is liquidated, holders of common shares are entitled to the
remaining property of Seagram, after all prior claims are satisfied.

Shares that rank ahead of the common shares include our first preferred
shares and second preferred shares. Holders of common shares are not entitled to
any preemptive rights to acquire any other securities.

At March 31, 1999, JES, had outstanding Liquid Yield Option Notes
("LYONs"). The LYONs:

- - are guaranteed by Seagram on a subordinated basis,

- - are convertible into common shares at a conversion rate of 18.44 common shares
for each $1,000 face amount LYON (297,256 shares at March 31, 1999), and

- - mature on March 5, 2006.

At March 31, 1999, 37,550,310 common shares were potentially issuable upon
the conversion of the LYONs and the exercise of outstanding employee stock
options.

We send holders of common shares annual reports containing audited
financial statements. In addition, we send holders of common shares quarterly
reports containing unaudited financial information if they make an annual
election to receive that information.

The transfer agents and registrars for the common shares are CIBC Mellon
Trust Company and ChaseMellon Shareholder Services L.L.C.

Under Canadian income tax law, payment of dividends by us to holders of
common shares who are not Canadian residents is subject to Canadian withholding
tax. For holders who are U.S. residents, 15% of the dividends must generally be
withheld under treaty arrangements between the United States and Canada. For
holders resident in other countries, the withholding rate varies. For a U.S.
shareholder, the amount of tax withheld in Canada will generally:

- - be deductible from gross income, or

- - at the election of the taxpayer (subject to various conditions) the amount
withheld in Canada may be credited against U.S. income tax.

Dividends received by a U.S. shareholder will not qualify for the partial
dividends received deduction allowable to corporations.

This discussion is provided for purposes of general information only. You
should refer to the additional information in "U.S. Federal Income Tax
Consequences" and "Canadian Income Tax Consequences."

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PREFERRED SHARES

Preferred shares are divided into two classes, first preferred shares and
second preferred shares. For payment of dividends and the distribution of assets
in the event of the liquidation, dissolution or winding-up of Seagram:

- - first preferred shares rank in priority to common shares and second preferred
shares, and

- - second preferred shares rank in priority to common shares.

First preferred shares and second preferred shares are issuable in series.
The board of directors can determine the number, designation, rights,
privileges, restrictions and conditions to be attached to the preferred shares
of each series, including:

- - dividend rights,

- - voting rights,

- - conversion rights,

- - redemption and purchase provisions, and

- - restrictions on payment of dividends on common shares or any other shares
ranking junior to the shares of the series.

U.S. FEDERAL INCOME TAX CONSEQUENCES

In the opinion of Simpson Thacher & Bartlett, the following is an accurate
summary of the material United States federal income tax consequences of the
purchase, ownership and disposition of units, notes and common shares acquired
under a purchase contract. Unless otherwise stated, this summary applies only to
holders who purchase units in the initial offering at the issue price, who holds
the units, notes and common shares as capital assets and who are United States
holders. In addition, this summary applies only to holders (1) who are residents
of the United States for purposes of the current Canada-United States Income Tax
Treaty (the "Treaty"), (2) whose units, notes and common shares are not, for
purposes of the Treaty, effectively connected with a permanent establishment in
Canada, (3) who otherwise qualify for the full benefits of the Treaty, and (4)
whose units, notes and common shares will not be considered taxable Canadian
property as discussed under "Canadian Income Tax Consequences". United States
holders include the following:

- - a person who is a citizen or resident of the United States,

- - a corporation or partnership created or organized in or under the laws of the
United States or any state thereof or the District of Columbia,

- - an estate the income of which is subject to United States federal income
taxation, regardless of its source, or

- - a trust

- that is subject to the supervision of a court within the United States
and the control of one or more United States persons, or

- that has a valid election in effect under applicable Treasury regulations
to be treated as a United States person.

The tax treatment of a holder may vary depending on the holder's particular
situation. This summary does not deal with special classes of holders. For
example, this summary does not address:

- - tax consequences to holders who may be subject to special tax treatment, such
as banks, thrifts, real estate investment trusts, regulated investment
companies, insurance companies, dealers in securities or currencies, or
tax-exempt investors,

- - tax consequences to persons that will hold units, notes or common shares
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<PAGE> 48

acquired under a purchase contract as a position in a "straddle," "synthetic
security", "hedge", "integrated transaction", "conversion transaction" or
"constructive sale",

- - tax consequences to holders of units, notes or common shares acquired pursuant
to a purchase contract whose functional currency is not the U.S. dollar,

- - tax consequences to shareholders, partners or beneficiaries of a holder of
units, notes or common shares acquired under a purchase contract,

- - alternative minimum tax consequences, if any, or

- - any state, local or foreign tax consequences.

IF YOU ARE NOT A UNITED STATES PERSON, YOU ARE URGED TO CONSULT YOUR OWN
TAX ADVISORS REGARDING THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF AN
INVESTMENT IN UNITS, INCLUDING THE POTENTIAL APPLICATION OF UNITED STATES
WITHHOLDING TAXES.

This summary is based upon the Internal Revenue Code of 1986, as amended,
Treasury regulations (including proposed Treasury regulations) issued
thereunder, Internal Revenue Service rulings and pronouncements and judicial
decisions now in effect, all of which are subject to change, possibly on a
retroactive basis. Any such changes may be applied retroactively in a manner
that could cause the tax consequences to vary substantially from the
consequences described below, possibly adversely affecting you.

No statutory, administrative or judicial authority directly addresses the
treatment of units or instruments similar to units for United States federal
income tax purposes. As a result, no assurance can be given that the Internal
Revenue Service will agree with the tax consequences described herein. YOU ARE
URGED TO CONSULT YOUR OWN TAX ADVISORS WITH RESPECT TO YOUR TAX CONSEQUENCES OF
THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE UNITS, INCLUDING THE TAX
CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE
EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR OTHER TAX LAWS.

UNITS

ALLOCATION OF PURCHASE PRICE. Your acquisition will be treated as an
acquisition of the note and the purchase contract constituting the unit. The
purchase price of each unit will be allocated between the note and the purchase
contract in proportion to their respective fair market values at the time of
purchase. Such allocation will establish your initial tax basis in the note and
the purchase contract. We will report the fair market value of each note as
$50.125 and the fair market value of each purchase contract as $0. This position
will be binding on you (but not on the Internal Revenue Service) unless you
explicitly disclose a contrary position on a statement attached to your timely
filed United States federal income tax return for the taxable year in which a
unit is acquired. Thus, absent such disclosure, you should allocate the purchase
price for a unit in accordance with the foregoing. The remainder of this
discussion assumes that this allocation of the purchase price will be respected
for United States federal income tax purposes.

NOTES

INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT. Because of the manner in
which the interest rate on the notes is reset, the notes will be classified as
contingent payment debt instruments subject to the "noncontingent bond method".
As discussed more fully below, the effect of such method will be (i) to require
you, regardless of your usual method of tax accounting, to use an accrual method
with respect to the notes, (ii) possibly to result in the accrual of interest
income by you in excess of interest payments actually received, and (iii)
generally to result in ordinary rather than capital treatment of

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any gain or loss on the sale, exchange or other disposition of the notes. See
"-- Sale or Disposition of Units".

You will accrue original issue discount each year based on the "comparable
yield" of the notes. The comparable yield of the notes will generally be the
rate at which JES would issue a fixed rate debt instrument with terms and
conditions similar to the notes. JES is required to provide the comparable yield
to you, and, solely for tax purposes, is also required to provide a projected
payment schedule that includes the actual interest payments on the notes and
estimates the amount and timing of contingent payments on the notes. JES has
determined that the comparable yield is 7.86% and the projected payment schedule
for the notes, per $50.125 of stated amount, is $.95 for each quarter ending on
or prior to the remarketing date and $1.03 for each quarter ending after the
remarketing date. The projected payment, per $50.125 of stated amount, at the
maturity date is $51.15 (which includes the stated principal of the notes as
well as the final interest payment).

The amount of original issue discount on a note for each accrual period is
determined by multiplying the comparable yield of the note (adjusted for the
length of the accrual period) by the note's adjusted issue price at the
beginning of the accrual period (determined in accordance with the rules set
forth in the original issue discount regulations relating to contingent payment
debt instruments). The amount of original issue discount so determined will then
be allocated on a ratable basis to each day in the accrual period that you hold
the note.

If the actual contingent payments made on the note in a taxable year differ
from the projected contingent payments, adjustments will be made for such
differences. A positive adjustment, for the amount by which an actual contingent
payment exceeds a projected contingent payment, will be treated as additional
interest. A negative adjustment will:

- - first, reduce the amount of interest required to be accrued in the current
year,

- - second, any negative adjustments that exceed the amount of interest accrued in
the current year will be treated as ordinary loss to the extent that your
total interest inclusions exceed the total amount of net negative adjustments
treated as ordinary loss in prior taxable years, and

- - third, any excess negative adjustments will be carried forward to offset
future income or amount realized on disposition.

You are generally bound by the comparable yield and projected payment
schedule provided by JES. However, if you believe that JES' projected payment
schedule is unreasonable, you may set your own projected payment schedule so
long as you explicitly disclose the use of such schedule and the reason
therefor. Unless otherwise prescribed by the Commissioner of the Internal
Revenue Service, such disclosure must be made in a statement attached to your
timely filed federal income tax return for the taxable year in which the note is
acquired.

ADJUSTMENT TO TAX BASIS IN NOTES. The tax basis of a note will be increased
by the amount of any interest recognized under the noncontingent bond method and
reduced by payments of interest (or principal) received with respect to the
notes.

SALE, EXCHANGE OR OTHER DISPOSITION OF NOTES. Upon the sale, exchange or
other disposition of a note (including the remarketing thereof) other than upon
retirement at maturity of the note, you will recognize gain or loss in an amount
equal to the difference between your amount realized (except to the extent that
the amount realized is characterized as a payment in respect of accrued but
unpaid

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interest that you have not previously included in gross income, which will be
taxable as interest) and your tax basis in the note. Selling expenses incurred
will reduce the amount of gain or increase the amount of loss recognized by you
upon the sale, exchange or other disposition. Gain realized on the sale,
exchange or disposition other than retirement at maturity will be treated as
ordinary income. Loss realized on the sale, exchange or other disposition will
be treated as ordinary loss to the extent of your prior net inclusions (reduced
by the total net negative adjustments previously allowed as an ordinary loss).
Any loss in excess of such amount will be treated as capital loss. The
deductibility of capital losses is subject to limitations. Gain or loss
recognized upon retirement at maturity will be treated as a positive or negative
adjustment, respectively, as described above under "-- Interest Income and
Original Issue Discount".

PURCHASE CONTRACTS

CONTRACT FEES AND DEFERRED CONTRACT FEES. There is no direct authority
addressing the treatment of the contract fees and deferred contract fees under
current law, and such treatment is unclear. It is unlikely that you will be
entitled to a current deduction in respect of the payment of contract fees. As a
result, although the amount of cash distributions made to you in respect of the
notes or treasury securities will be reduced by the amount of contract fees
payable to Seagram, you will nevertheless recognize ordinary income each quarter
equal to the full amount of original issue discount accrued with respect to the
notes or treasury securities held by you, without a corresponding deduction for
payment of the contract fees. Payment of the contract fees by you will likely
increase your basis in the purchase contract, and, thus, effectively increase
your basis of the common shares you receive under the purchase contract.

If contract fees are deferred, additional contract fees payable by you
should be deductible by you as interest expense, subject to applicable
limitations. See "-- Acquisition of Common Shares under a Purchase Contract,"
"-- Sale or Disposition of Units" and "-- Termination of Purchase Contract."

ACQUISITION OF COMMON SHARES UNDER A PURCHASE CONTRACT. You generally will
not recognize gain or loss on the purchase of common shares under a purchase
contract, except with respect to any cash paid in lieu of a fractional share of
common shares. Subject to the following discussion, your aggregate initial tax
basis in the common shares received under a purchase contract generally should
equal (a) the purchase price paid for such common shares, plus (b) your tax
basis in the purchase contract (if any), less (c) the portion of such purchase
price and tax basis allocable to the fractional share. Payments of contract fees
by you to Seagram that are not deductible by you will likely increase your tax
basis in the purchase contract or common shares to be received thereunder. See
"-- Contract Fees and Deferred Contract Fees" above. For tax purposes, the
holding period for common shares received under a purchase contract will
commence on the day acquired.

EARLY SETTLEMENT OF PURCHASE CONTRACT. You will not recognize gain or loss
on the receipt of your proportionate share of notes upon early settlement of a
purchase contract and you will have the same tax basis in such notes as before
such early settlement.

TERMINATION OF PURCHASE CONTRACT. If a purchase contract terminates, you
will recognize gain or loss equal to the difference between your amount realized
(if any) upon such termination and your adjusted tax basis (if any) in the
purchase contract at the time of such termination. Payments of contract fees by
you to Seagram that are not deductible by you will

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<PAGE> 51

likely increase your tax basis in the purchase contract. See "-- Income from
Contract Fees and Deferred Contract Fees" above. Any such gain or loss may be
capital gain or loss. Capital gains of individuals derived in respect of capital
assets held for more than one year are taxed at a maximum rate of 20%. The
deductibility of capital losses is subject to limitations. You will not
recognize gain or loss on the receipt of your proportionate share of the notes
or treasury securities upon termination of the purchase contract and you will
have the same tax basis in such notes or treasury securities as before such
termination. If the termination of the purchase contract occurs when the
purchase contract has a negative value, see " -- Sale or Disposition of Units".
You should consult your own tax advisor regarding the termination of the
purchase contract when the purchase contract has a negative value.

ADJUSTMENT TO SETTLEMENT RATE. You might be treated as receiving a
constructive distribution from Seagram if (i) the settlement rate is adjusted
and as a result of such adjustment your proportionate interest in the assets or
earnings and profits of Seagram is increased and (ii) the adjustment is not made
pursuant to a bona fide, reasonable anti-dilution formula. An adjustment in the
settlement rate would not be considered made pursuant to such a formula if the
adjustment were made to compensate you for certain taxable distributions with
respect to the common shares. Thus, under certain circumstances, an increase in
the settlement rate might give rise to a taxable dividend to you even though you
would not receive any cash related thereto.

OWNERSHIP OF COMMON SHARES ACQUIRED UNDER THE PURCHASE CONTRACT.

TAXATION OF DIVIDENDS. The gross amount of dividends paid to you on common
shares (including amounts withheld to reflect Canadian withholding taxes) will
be treated as dividend income to you, to the extent paid out of current or
accumulated earnings and profits, as determined under United States federal
income tax principles. You will be required to include any such dividend in your
gross income as ordinary income on the day received by you. Such dividends will
not be eligible for the dividends received deduction allowed to corporations.

The amount of any dividend paid in Canadian dollars will equal the United
States dollar value of the Canadian dollars received calculated by reference to
the exchange rate in effect on the date the dividend is received regardless of
whether the Canadian dollars are converted into United States dollars. If you do
not convert the Canadian dollars you receive into United States dollars on the
date of receipt, you will have a basis in the Canadian dollars equal to its
United States dollar value on the date of receipt. Any gain or loss realized on
a subsequent conversion or other disposition of the Canadian dollars will be
treated as ordinary income or loss.

The maximum rate of withholding tax on dividends paid to you pursuant to
the Treaty is 15 percent. Subject to certain conditions and limitations,
Canadian withholding taxes on dividends may be treated as foreign taxes eligible
for credit against your United States federal income tax liability. For purposes
of calculating the foreign tax credit, dividends paid on the common shares will
be treated as income from sources outside the United States and will generally
constitute "passive income" or, in the case of certain holders, "financial
services income". Special rules apply to certain individuals whose foreign
source income during the taxable year consists entirely of "qualified passive
income" and whose creditable foreign taxes paid or accrued during the taxable
year do not exceed $300 ($600 in the case of a joint return). Further, in
certain circumstances, if you (i) have held common shares for less than a
specified minimum period for each dividend payment during which it is not

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protected from risk of loss, (ii) are obligated to make payments related to the
dividends or (iii) hold the common shares in arrangements in which your expected
economic profit, after non-U.S. taxes, is insubstantial, you will not be allowed
a foreign tax credit for foreign taxes imposed on dividends paid on common
shares. The rules governing the foreign tax credit are complex. You are urged to
consult your tax advisor regarding the availability of the foreign tax credit
under your particular circumstances including the possible adverse impact on
creditability to the extent you are entitled to a refund of any Canadian tax
withheld or a reduced rate of withholding.

To the extent that the amount of any distribution exceeds our current and
accumulated earnings and profits for a taxable year, the distribution will first
be treated as a tax-free return of capital, causing a reduction in the adjusted
basis of the common shares (thereby increasing the amount of gain, or decreasing
the amount of loss, to be recognized by you on a subsequent disposition of the
common shares), and the balance in excess of adjusted basis will be taxed as
capital gain recognized on a sale or exchange. Consequently, such distributions
in excess of our current and accumulated earnings and profits would not give
rise to foreign source income and you would not be able to use the foreign tax
credit arising from any Canadian withholding tax imposed on such distribution
unless such credit can be applied (subject to applicable limitations) against
U.S. tax due on other foreign source income in the appropriate category for
foreign tax purposes.

TAXATION OF CAPITAL GAINS. You will recognize taxable gain or loss on any
sale or exchange of a common share in an amount equal to the difference between
your amount realized for the common share and your tax basis in the common
share. Such gain or loss will be capital gain or loss. Capital gains of
individuals derived with respect to capital assets held for more than one year
are taxed at a maximum rate of 20%. The deductibility of capital losses is
subject to limitations. Any gain or loss recognized by a U.S. Holder will
generally be treated as United States source gain or loss.

TREASURY SECURITIES

Your initial basis in the treasury securities will be equal to the amount
paid for the treasury securities.

If you are on the cash method of accounting, you will generally not include
income on the treasury securities until payment is received on the underlying
treasury securities. If you are on the accrual method of accounting, you will be
required to include original issue discount or acquisition discount, as the case
may be, in income over the remaining term of the treasury security and will
increase your basis in the treasury security by the amount of original issue
discount or acquisition discount, as the case may be, included in income.

SALE OR DISPOSITION OF UNITS

Upon a disposition of a unit, you will be treated as having sold, exchanged
or disposed of the purchase contract and the notes or treasury securities, as
the case may be, that constitute such unit. You generally will have gain or loss
equal to the difference between the portion of your proceeds allocable to the
purchase contract and the notes or treasury securities, as the case may be, and
your respective adjusted tax bases in the purchase contract and the notes or
treasury securities. In the case of the purchase contracts and the treasury
securities, such gain or loss generally will be capital gain or loss, except to
the extent that you are treated as having received an amount with respect to
accrued and unpaid interest on the treasury securities not previously included
in income, which will be treated as ordinary interest income. Capital gains of
individuals derived in respect of

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capital assets held for more than one year are taxed at a maximum rate of 20%.
The deductibility of capital losses is subject to limitations.

Gain on the sale, exchange or other disposition of a note other than
retirement of the note at maturity generally will be treated as ordinary income.
Loss from the disposition of a note will be treated as ordinary loss to the
extent of your prior net interest inclusions (reduced by the total net negative
adjustments previously allowed as an ordinary loss). Any loss in excess of such
amount will be treated as capital loss.

If the disposition of a unit occurs when the purchase contract has a
negative value, you should be considered to have received additional
consideration for the notes or treasury securities in an amount equal to such
negative value, and to have paid such amount to be released from your obligation
under the purchase contract. You should consult your tax advisor regarding a
disposition of a unit at a time when the purchase contract has a negative value.

Payments of contract fees by you to Seagram that are not deductible by you
will likely increase your tax basis in the purchase contract (See "-- Contract
Fees and Deferred Contract Fees" above.

NON-UNITED STATES HOLDERS

The following summary discusses the tax consequences to Non-United States
holders. You are a "Non-United States holder" if you are not a United States
holder.

U.S. FEDERAL WITHHOLDING TAX

The 30% U.S. federal withholding tax will not apply to any payments with
respect to the notes or treasury securities provided that:

- - you do not actually or constructively own 10% or more of the total combined
voting power of all classes of our voting stock within the meaning of the Code
and Treasury regulations,

- - you are not a controlled foreign corporation that is related to us through
stock ownership,

- - you are not a bank whose receipt of interest on the notes is described in
Section 881(c)(3)(A) of the Code, and

- - either (a) you provide your name and address on an IRS Form W-8, and certify,
under penalty of perjury, that you are not a U.S. person or (b) a financial
institution holding the notes or treasury securities on your behalf certifies,
under penalty of perjury, that it has received an IRS Form W-8 from you as the
beneficial owner and provides us with a copy.

If you cannot satisfy the requirements described above, payments of
interest made to you will be subject to the 30% U.S. federal withholding tax,
unless you provide us with a properly executed (1) IRS Form 1001 claiming an
exemption from, or reduction in, withholding under the benefit of a tax treaty
or (2) IRS Form 4224 stating that interest paid on the notes and treasury
securities is not subject to withholding tax because it is effectively connected
with your conduct of a trade or business in the United States.

The 30% U.S. federal withholding tax will not apply to any gain or income
that you realize on the sale, exchange or other disposition of the units, notes
or treasury securities.

U.S. FEDERAL INCOME TAX

If you are engaged in a trade or business in the United States and interest
on the notes and treasury securities is effectively connected with the conduct
of that trade or business, you will be subject to U.S. federal income tax on
that interest and original issue discount on a net income basis (although exempt
from the 30% withholding tax) in the same manner as if you were a U.S. person as
defined under the Code. In addition, if you are a foreign corporation, you may
be subject to a branch profits tax equal to 30% (or lower
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applicable treaty rate) of your earnings and profits for the taxable year,
subject to adjustments that are effectively connected with the conduct by you of
a trade or business in the United States. For this purpose, interest on the
notes and treasury securities will be included in earnings and profits.

Any gain or income realized by you on the disposition of a unit, note or
treasury security will generally not be subject to U.S. federal income or
withholding tax unless:

(1) that gain or income is effectively connected with the conduct of a trade or
business in the United States by you, or

(2) you are an individual who is present in the United States for 183 days or
more in the taxable year of that disposition, and certain other conditions
are met.

BACKUP WITHHOLDING TAX AND INFORMATION REPORTING

Unless you are an exempt recipient, such as a corporation, payments under
the units, notes, treasury securities or common shares, the proceeds received
with respect to a fractional share of common shares upon the settlement of a
purchase contract, and the proceeds received from the units, notes, treasury
securities or common shares may be subject to information reporting and may also
be subject to United States federal backup withholding tax at the rate of 31% if
you fail to supply an accurate taxpayer identification number or otherwise fail
to comply with applicable United States information reporting or certification
requirements. Any amounts so withheld will be allowed as a credit against your
United States federal income tax liability.

If you are a Non-United States holder, no information reporting or backup
withholding will be required with respect to payments made by us if a statement
described above under "Non-United States Holders" has been received and the
payor does not have actual knowledge that you are a United States holder.

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CANADIAN INCOME TAX CONSEQUENCES

In the opinion of Goodman Phillips & Vineberg, the following is an accurate
summary of certain Canadian federal income tax considerations under the Income
Tax Act (Canada) (the "Act") generally applicable to holders of units, notes and
common shares who are residents of the United States for purposes of the
Canada-United States Income Tax Convention, 1980 (the "Convention") who have not
been and will not be resident or deemed to be resident in Canada at any time
while they have held or will hold any such units, notes, and common shares.
Furthermore, this summary is only applicable to such holders to whom such units,
notes and common shares are not "taxable Canadian property", as defined in the
Act, and who do not use or hold or are not deemed to use or hold such units,
notes and common shares in connection with carrying on a business in Canada.

Generally, the units, notes and common shares will not be taxable Canadian
property provided that the common shares of Seagram are listed on a prescribed
stock exchange (which currently includes the Toronto Stock Exchange and the New
York Stock Exchange), you do not use or hold, and are not deemed to use or hold,
the common shares in connection with carrying on a business in Canada and you,
persons with whom you do not deal at arm's length or you and such persons, have
not owned (taking into account any interest in or option in respect of the
shares of Seagram) 25% or more of the issued shares of any class or series of
the capital stock of Seagram at any time within the five (5) years immediately
preceding the date of disposition.

This summary is not applicable to you if you carry on an insurance business
in Canada and elsewhere, in respect of the units, notes and common shares that
are effectively connected with your Canadian insurance business or that are
"designated insurance property" as defined in the Act.

This summary is based on the Act, the regulations thereunder and counsel's
understanding of the administrative policies and assessing practices published
by Revenue Canada, in effect as of the date of this Prospectus. This summary
takes into account all proposed amendments to the Act and the regulations
thereunder announced by the Minister of Finance of Canada, prior to the date
hereof (the "Tax Proposals"), although no assurances can be given that the Tax
Proposals will be enacted in the form proposed, or at all. This summary does not
take into account or anticipate any other changes in law, administrative policy
or assessing practice, whether by judicial, governmental or legislative action
or decision, nor does it take into account provincial, territorial or foreign
income tax legislation or considerations, which may differ from the Canadian
federal income tax considerations described herein. No advance income tax ruling
has been sought or obtained from Revenue Canada to confirm the tax consequences
of any of the transactions described herein.

This summary is of a general nature only and is not intended to be, and
should not be construed to be legal, business or tax advice to you. You should
consult your own tax advisor for advice with respect to your particular
circumstances.

For the purposes of the Act, all amounts, including dividends, must be
expressed in Canadian dollars; amounts denominated in United States dollars must
be converted into Canadian dollars based on the United States dollar exchange
rate generally prevailing at the time such amounts arise.

CONTRACT FEES

There is no specific authority addressing the Canadian tax treatment of the
contract fees under current law. This summary assumes that the contract fees,
excluding the additional contract fees payable in the event that payment of the
contract fees is deferred, are commensu-

53
<PAGE> 56

rate with the undertaking made by such holder in agreeing to subscribe for
common shares and that such contract fees are in no way attributable to the
notes, whether on account of principal, interest or otherwise.

You will not be subject to tax under the Act in respect of the contract
fees (excluding the additional contract fees), or upon the sale or other
disposition of the units, notes and common shares (except to the extent that
proceeds of disposition payable by a resident or deemed resident of Canada
include an amount of accrued and unpaid additional contract fees).

Where you (either directly from Seagram or indirectly upon a disposition to
a resident or deemed resident of Canada where part of the proceeds of
disposition may be allocable to accrued and unpaid additional contract fees),
receive a payment of additional contract fees, the payment will be regarded as a
payment, as, on account or in lieu of payment of, or in satisfaction of interest
for Canadian tax purposes and will be subject to Canadian withholding tax under
the Convention at the rate of 10% of the gross amount of such payment, provided
such holder is the beneficial owner of such payment.

DIVIDENDS

Where such a holder of common shares receives or is deemed to receive a
dividend, such amount will generally be subject to Canadian withholding tax
under the Convention at the rate of 15% of the gross amount of such payment,
provided you are the beneficial owner of such payment.

SALE OF COMMON SHARES

You will not be subject to tax under the Act upon the sale or other
disposition of the common shares.

GUARANTEE PAYMENTS

Certain payment in respect of the Debentures made to you by Seagram
pursuant to the Guarantees may be subject to Canadian withholding tax under the
Convention at a rate of 10% of the gross amount of such payments, provided such
holder is the beneficial owner of such payments. In this connection, see
"Guarantees" at page 39.

LEGAL MATTERS

Simpson Thacher & Bartlett, our U.S. counsel, and Goodman Phillips &
Vineberg S.E.N.C., Seagram's Canadian counsel, will provide opinions for us
regarding the validity of the securities. Barnes & Thornburg, Indiana counsel of
JES, will opine on the validity of the securities on behalf of JES. Sullivan &
Cromwell, U.S. counsel to the underwriters, will pass upon the validity of the
notes, the purchase contracts and the guarantees and Ogilvy Renault S.E.N.C.,
Canadian counsel to the underwriters, will pass upon the validity of the common
shares to be issued under the purchase contracts and the due authorization and
execution of the purchase contracts and the guarantees, for the underwriters.

EXPERTS

The consolidated financial statements of Seagram as of June 30, 1997 and
1998 and for the year ended January 31, 1996, the five-month period ended June
30, 1996 and the years ended June 30, 1997 and 1998, incorporated in this
prospectus by reference to Seagram's Annual Report on Form 10-K for the fiscal
year ended June 30, 1998, as amended, have been incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of that firm as experts in accounting and auditing.

54
<PAGE> 57

The consolidated financial statements of PolyGram as of December 31, 1996
and 1997 and for each of the years in the three year period ended December 31,
1997 incorporated in this prospectus by reference to Seagram's Form 8-K, dated
August 25, 1998, as amended, have been audited by KPMG Accountants N.V., as
stated in their report, and have been so incorporated in reliance upon the
report of that firm given on the authority of that firm as experts in accounting
and auditing.

WHERE YOU CAN FIND MORE INFORMATION

Seagram files annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy any reports, proxy
statements and other information filed by Seagram at the SEC's Public Reference
Rooms at:

- 450 Fifth Street, NW, Washington, D.C. 20549,

- Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511, and

- Seven World Trade Center, New York, New York 10048.

You may also request copies of these documents, upon payment of a
duplicating fee, by writing to the Public Reference Section of the SEC. Please
call the SEC at 1-800-SEC-0330 for further information on the SEC's Public
Reference Rooms. Seagram's SEC filings are also available on the SEC's Internet
site (http://www.sec.gov).

We have filed with the SEC a registration statement on Form S-3 under the
Securities Act of 1933, covering the securities described in this prospectus.
For further information with respect to us and those securities, you should
refer to our registration statement and its exhibits. We have summarized certain
key provisions of contracts and other documents that we refer to in this
prospectus. Because a summary may not contain all the information that is
important to you, you should review the full text of the document. We have
included copies of these documents as exhibits to our registration statement.

The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to another document that Seagram filed with the SEC. The
information incorporated by reference is an important part of this prospectus,
and information that Seagram files later with the SEC will automatically update
and supersede this information. We incorporate by reference the documents listed
below and any future filings made with the SEC under Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934 until we sell all of the
securities.

- Seagram's Annual Report on Form 10-K for the fiscal year ended June 30,
1998, as amended,

- Seagram's Quarterly Reports on Form 10-Q for the quarterly periods ended
September 30, 1998, December 31, 1998 and March 31, 1999,

- Seagram's Current Reports on Form 8-K dated July 20, 1998, August 4,
1998, August 25, 1998, as amended, September 1, 1998, as amended,
November 10, 1998, November 16, 1998, November 24, 1998, December 6,
1998, December 9, 1998, December 10, 1998, as amended, December 14, 1998,
April 7, 1999 and May 13, 1999.

You may request a copy of Seagram's filings (other than exhibits) at no
cost, by writing or telephoning Seagram at 1430 Peel Street, Montreal, Quebec
H3A 1S9, telephone (514) 849-5271, attention: Shareholder Services.
55
<PAGE> 58

JURISDICTION OVER SEAGRAM

Seagram is a Canadian corporation and certain of its directors and officers
and the experts referred to above are citizens or residents of countries other
than the United States. A substantial portion of the assets of Seagram and of
those persons are located outside the United States. Accordingly, it may be
difficult for investors:

- to obtain jurisdiction over Seagram and those directors and officers and
experts in courts in the United States in actions predicated on the civil
liability provisions of the U.S. federal securities laws,

- to enforce against Seagram or such persons judgments obtained in such
actions,

- to obtain judgments against Seagram or those persons in original actions
in Canadian or other foreign courts predicated solely upon the U.S.
federal securities laws, or

- to enforce against Seagram or those persons in Canadian or other foreign
courts judgments of courts in the United States predicated upon the civil
liability provisions of the U.S. federal securities laws.

56
<PAGE> 59

UNDERWRITING

Seagram and JES and the underwriters for the offering named below have
entered into an underwriting agreement with respect to the units being offered.
Subject to certain conditions, (1) Seagram has agreed to enter into the purchase
contracts with each of the underwriters named below underlying the respective
number of units indicated opposite its name below, (2) JES has agreed to sell to
each of the underwriters the notes underlying the respective number of units
indicated opposite its name below, and (3) each of the underwriters has
severally agreed to enter into the purchase contracts with Seagram, purchase the
notes from JES and pledge such notes under the pledge agreement.

<TABLE>
<CAPTION>
Underwriters Number of Units
------------ ---------------
<S> <C>
Goldman, Sachs & Co......................................... 10,175,000
Bear, Stearns & Co. Inc..................................... 2,775,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated.......... 2,775,000
Morgan Stanley & Co. Incorporated........................... 2,775,000
----------
Total............................................. 18,500,000
==========
</TABLE>

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

If the underwriters sell more units than the total number set forth in the
table above, the underwriters have an option to buy up to an additional
2,775,000 units to cover such sales. They may exercise that option for 30 days.
If any units are purchased pursuant to this option, the underwriters will
severally purchase units in approximately the same proportion as set forth in
the table above.
The following table shows the per unit and total underwriting discounts and
commissions to be paid to the underwriters by JES. These amounts are shown
assuming both no exercise and full exercise of the underwriters' option to
purchase 2,775,000 additional units.

<TABLE>
<CAPTION>
Paid by JES
---------------------------
No Exercise Full Exercise
----------- -------------
<S> <C> <C>
Per Unit............. $ 1.50 $ 1.50
Total................ $27,750,000 $31,912,500
</TABLE>

Units sold by the underwriters to the public will initially be offered at
the initial public offering price set forth on the cover of this prospectus. Any
units sold by the underwriters to securities dealers may be sold at a discount
of up to $0.90 per unit from the initial public offering price. Any such
securities dealers may resell any units purchased from the underwriters to
certain other brokers or dealers at a discount of up to $0.10 per unit from the
initial public offering price. If all the units are not sold at the initial
public offering price, the underwriters may change the offering price and the
other selling terms.

JES and Seagram have agreed with the underwriters not to dispose of or
hedge any of its units, notes or common shares (other than the concurrent common
share offerings) or any securities of Seagram which are substantially similar to
the common shares, or securities convertible into or exchangeable for common
shares (other than the units offered in this offering) during the period from
the date of this prospectus continuing through the date which is 90 days after
the date of this prospectus, except with the prior written consent of Goldman,
Sachs & Co. This agreement does not apply to any existing employee benefit
plans.

The units will be a new issue of securities with no established trading

U-1
<PAGE> 60

market. The units have been approved for listing on the New York Stock Exchange,
subject to notice of issuance, under the symbol "VOY." The underwriters have
advised Seagram and JES that they intend to make a market in the units, but they
are not obligated to do so and may discontinue market making at any time without
notice. No assurance can be given as to the liquidity of the trading market for
the units.

In connection with the offering, the underwriters may purchase and sell the
units or common shares in the open market. These transactions may include short
sales, stabilizing transactions and purchases to cover positions created by
short sales. Short sales involve the sale by the underwriters of a greater
number of units than they are required to purchase in the offering. Stabilizing
transactions consist of certain bids or purchases made for the purpose of
preventing or retarding a decline in the market price of the units or the common
shares while the offering pursuant to this prospectus is in progress.

The underwriters also may impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the underwriting
discount received by it because the underwriters have repurchased units sold by
or for the account of that underwriter in stabilizing or short covering
transactions.

These activities by the underwriters may stabilize, maintain or otherwise
affect the market price of the units or the common shares. As a result, the
price of the units or the common shares may be higher than the price that
otherwise might exist in the open market. If these activities are commenced,
they may be discontinued by the underwriters at any time. These transactions may
be effected on the NYSE, in the over-the-counter market or otherwise.

Seagram and JES estimate that their share of the total expenses of this
offering, excluding underwriting discounts and commissions, will be
approximately $1.3 million.

Seagram and JES have agreed to indemnify the several underwriters against
certain liabilities, including liabilities under the Securities Act of 1933.

Certain of the underwriters have acted as financial advisors to JES and
Seagram and have received customary compensation for such services. John S.
Weinberg, a Managing Director of Goldman, Sachs & Co., is also a director of
Seagram.

U-2
<PAGE> 61

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

No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained in this prospectus. You must
not rely on any unauthorized information or representations. This prospectus is
an offer to sell only the shares offered hereby, but only under circumstances
and in jurisdictions where it is lawful to do so. The information contained in
this prospectus is current only as of its date.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary................... 1
Risk Factors......................... 6
Description of Seagram............... 9
Use of Proceeds...................... 14
Price Range of Common Shares......... 14
Capitalization....................... 15
Ratio of Earnings to Fixed Charges... 16
Selected Historical Consolidated
Financial Data..................... 17
Management's Discussion and Analysis
of Selected Historical Consolidated
Financial Data and Supplemental
Financial Information.............. 19
Disclosure Regarding Forward-Looking
Information........................ 28
Accounting Treatment................. 28
Description of Units................. 29
Description of Share Capital......... 44
U.S. Federal Income Tax
Consequences....................... 45
Canadian Income Tax Consequences..... 53
Legal Matters........................ 54
Experts.............................. 54
Where You Can Find More Information.. 55
Jurisdiction Over Seagram............ 56
Underwriting......................... U-1
</TABLE>

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18,500,000 Units
THE SEAGRAM COMPANY LTD.
7.50% Adjustable
Conversion-rate
Equity Securities Units
------------------------
[SEAGRAM LOGO]
------------------------
GOLDMAN, SACHS & CO.
BEAR, STEARNS & CO. INC.
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
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