<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 10, 1999
REGISTRATION NO. 333-78395
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------------
THE SEAGRAM COMPANY LTD. --
LA COMPAGNIE SEAGRAM LTEE JOSEPH E. SEAGRAM & SONS, INC.
(EXACT NAME OF REGISTRANTS AS SPECIFIED IN THEIR CHARTERS)
<TABLE>
<S> <C>
CANADA INDIANA
(STATE OR OTHER JURISDICTION OF (STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION) INCORPORATION OR ORGANIZATION)
NONE 13-1285240
(I.R.S. EMPLOYER IDENTIFICATION NO.) (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
1430 PEEL STREET 375 PARK AVENUE
MONTREAL, QUEBEC, CANADA H3A 1S9 NEW YORK, NEW YORK 10152
(514) 849-5271 (212) 572-7000
</TABLE>
(ADDRESSES, INCLUDING ZIP CODES, AND TELEPHONE NUMBERS, INCLUDING
AREA CODES, OF REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)
ROBERT W. MATSCHULLAT
JOSEPH E. SEAGRAM & SONS, INC.
375 PARK AVENUE
NEW YORK, NEW YORK 10152
(212) 572-7000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANTS' AGENT FOR SERVICE AND AUTHORIZED REPRESENTATIVE OF THE SEAGRAM
COMPANY LTD. IN THE UNITED STATES)
COPIES TO:
<TABLE>
<S> <C>
GEORGE R. KROUSE, JR., ESQ. ROBERT E. BUCKHOLZ, JR., ESQ.
SARAH E. COGAN, ESQ. SULLIVAN & CROMWELL
SIMPSON THACHER & BARTLETT 125 BROAD STREET
425 LEXINGTON AVENUE NEW YORK, NEW YORK 10004
NEW YORK, NEW YORK 10017-3909
</TABLE>
-------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
-------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act, please check the following box. [ ]
-------------------------
The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act or until the Registration Statement shall become effective on
such date as the Securities and Exchange Commission, acting pursuant to said
Section 8(a), may determine.
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- --------------------------------------------------------------------------------
<PAGE> 2
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PRELIMINARY
PROSPECTUS IS NOT AN OFFER TO SELL NOR DOES IT SEEK AN OFFER TO BUY THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION. DATED JUNE 10, 1999.
18,500,000 Units
THE SEAGRAM COMPANY LTD.
% 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:
- interest payments at the rate of % per year, paid quarterly,
- contract fee payments at the rate of an additional % per year,
paid quarterly, and
- on June , 2002, between 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 , 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 , 2002. We can
defer payments of interest for up to 5 years and contract fees for up to 3
years. Amounts that we defer will bear interest at the rate of % until
March , 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 May 21, 1999 was $53 3/8 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............................ $ $
Underwriting discount.................................... $ $
Proceeds to us, before expenses.......................... $ $
</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 , 1999.
------------------------
GOLDMAN, SACHS & CO.
BEAR, STEARNS & CO. INC.
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
------------------------
Prospectus dated June , 1999.
<PAGE> 3
[INSIDE FRONT COVER]
PHOTOGRAPHS OF SEAGRAM'S RECORDED MUSIC
PRODUCTS, FILMS, THEME PARKS AND
BEVERAGE ALCOHOL PRODUCTS
<PAGE> 4
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. This month, in Orlando, Florida, we will open 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
1
<PAGE> 5
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 May 21, 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> 6
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:
- - interest payments at the rate of % per year, paid quarterly,
- - contract fee payments at the rate of an additional % per year, paid
quarterly, and
- - on June , 2002, between 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 $ , you will receive
common shares.
- - If the average trading price is less than $ but greater than
$ , you will receive common shares having a value, based on the
average trading price, equal to $ .
- - If the average trading price is less than or equal to $ , 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 , 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 , 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 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 , 2002, by
delivering $ in cash per unit. You will receive 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 % prior to March , 2002, and at
the reset rate after that date, paid quarterly, subject to the deferral
provisions described below,
3
<PAGE> 7
- mature on June , 2004, and
- not be redeemable prior to maturity.
The interest rate on the notes will be reset on March , 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 % prior to March , 2002, and at the reset rate thereafter.
OTHER TERMS OF THE UNITS
CONTRACT FEES. Seagram may defer contract fee payments for up to 3 years
at a deferral rate of % per year.
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, the contract fees and deferred contract fees
may be taxed to you as ordinary income, when received or accrued, in accordance
with your method of accounting. 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 estimates (assuming a unit offering price of $54)
that it will receive net proceeds from this unit offering of approximately $968
million. Seagram also estimates (assuming a common share offering price of $54)
that it will receive net proceeds of approximately $1,525 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 $1.1 billion, and
- for general corporate purposes.
See "Use of Proceeds."
OTHER OFFERING
Seagram and certain selling shareholders are also offering 37,000,000
common shares in a separate offering. The common share and unit offering are not
conditioned on each other.
4
<PAGE> 8
SUMMARY FINANCIAL DATA
(US$ 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 $ 592
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> 9
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 , 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 $ (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 % 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 $ but falls below
$ , 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> 10
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 a rate per year equal to % until March , 2002, and at the reset
rate thereafter (compounding quarterly) until paid.
Seagram will have the right to defer the payment of contract fees on the
purchase contracts at any time or from time to time. However, deferred payments
of contract fees will bear additional contract fees at a rate per year equal to
% (compounding quarterly) until paid. You will have no right to
receive contract fees, including deferred contract fees, if the purchase
contracts are terminated. The purchase contracts will terminate if Seagram
experiences certain events of bankruptcy, insolvency, or reorganization.
If we exercise our right to defer payments of interest or contract fees,
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
7
<PAGE> 11
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 each holder will be required
to include in income during the holder's period of ownership of the notes,
subject to certain adjustments. Additionally, holders 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.
8
<PAGE> 12
DESCRIPTION OF SEAGRAM
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.
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
9
<PAGE> 13
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
10
<PAGE> 14
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 (launch date June 1999),
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 and The
Mummy starring Brendan Fraser. Current upcoming important releases include
Bowfinger starring Eddie Murphy and Steve Martin, Notting Hill with Julia
Roberts and Hugh Grant, Mystery Men starring Ben Stiller and American Pie. In
addition, we produce animated and live
11
<PAGE> 15
action children's and family programming for networks, basic 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 is scheduled for May 28 through Memorial Day, May 31,
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
12
<PAGE> 16
water park in the United States adjacent to Universal Studios Escape. Since
October 1998, construction has been underway for 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
13
<PAGE> 17
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.
USE OF PROCEEDS
JES estimates (assuming a unit offering price of $54) that the net proceeds
to it from the units offering will be approximately $968 million. Seagram also
plans to sell common shares in a separate offering. Assuming completion of the
common share offering by Seagram, Seagram estimates (assuming a common share
offering price of $54) that it will receive net proceeds of approximately $1,525
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 up to
three years,
- to repay commercial paper borrowings of approximately $1.1 billion with
maturities ranging up to 350 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 May 21, 1999).......... $65.00 $49.81 $0.165
</TABLE>
14
<PAGE> 18
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 (assuming a unit and common share offering price of
$54 per unit or common share) and (3) the capitalization of Seagram giving pro
forma effect to the offerings and the application of the estimated 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 $(1,494)(a) $ 6,956
Minority interest................................ 1,878 1,878
Shareholder's equity............................. 12,057 1,494(a) 13,551
------- ------- -------
Total capitalization............................. $22,385 -- $22,385
======= =======
</TABLE>
- ---------------
(a) Reflects issuance of 18,500,000 % adjustable conversion-rate equity
security units and 29,000,000 common shares, the estimated net proceeds of
which will be used to repay existing borrowings.
15
<PAGE> 19
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.
(c) Pro forma fixed charges exceeded pro forma earnings by $124 million for the
nine month period ended March 31, 1999.
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> 20
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> 21
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> 22
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 $1.7 billion,
- the sale on February 12, 1998 of a 50% interest in USA Networks to USA
Networks, Inc., and
- the contribution of the remaining 50% in USA Networks, the majority of
the televisions assets of Universal Studios, Inc. and 50% of the
international operations of USA Networks to USANi LLC.
In exchange for the contribution, Universal Studios, Inc. received a 10.7%
interest in USAi and a 45.8% exchangeable interest in USANi LLC.
19
<PAGE> 23
THE SEAGRAM COMPANY LTD.
(US$ 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> 24
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> 25
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> 26
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> 27
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.
24
<PAGE> 28
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-
25
<PAGE> 29
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
26
<PAGE> 30
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.
27
<PAGE> 31
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 $ 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 the
$ .
28
<PAGE> 32
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 $ . 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
, 2002, for cash in an amount equal to the stated amount, between
0. 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
- Seagram will pay the holders of units contract fees at the contract fee
rate of 0. % 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 % until March , 2002, and at the
reset rate thereafter, and
- maturing on June , 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, contract fees and interest totalling
% of the stated amount per year, payable in arrears on March , June ,
September and December of each year (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 the 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
29
<PAGE> 33
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 $ , 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 $ (that is, % higher than the stated
amount), the settlement rate will be 0. ;
(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
30
<PAGE> 34
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 % 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 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 , 2002.
The remarketing agent will use the proceeds from a successful remarketing
to purchase the treasury consideration which it will deliver to the unit 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 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 , 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 , 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> 35
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 , 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 $ multiplied by the number of purchase contracts being
settled.
Upon early settlement, Seagram will issue, and the holder will be entitled
to receive, 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
Seagram will be required to pay contract fees to the holders of units, as
specified above.
So long as no default in Seagram's obligations under the purchase contract
agreement or the pledge agreement has occurred and is continuing, Seagram will
have the right to defer the payment of contract fees at any time or from time to
time for a period not extending beyond the stock purchase date. To exercise this
right, Seagram must give the holders and the purchase contract agent notice at
least five business days before the earlier of
(1) the date that payment would otherwise have been payable,
(2) the date Seagram is required to give notice to any securities exchange
or to holders of units of the record date or the date such payment is payable
and
(3) that record date.
During any such deferral period, Seagram may not take any of the actions that it
would be prohibited from taking during an extension period as described under
"-- Description of the Notes and Guarantees -- Option to Defer Interest Payment
Date" below.
Any deferred contract fees will bear additional contract fees at % (the
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"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 date and will be payable
in arrears on the quarterly payment dates (unless deferred as described above).
If the purchase contracts are terminated, your right to receive 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
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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 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 to
receive 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 securi-
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ties and will be entitled (directly or through the collateral agent) to all of
the rights provided by the pledged securities, and we 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 together with 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
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with any indemnity that may be required by the purchase contract agent and
Seagram.
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 abso-
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lute owner of those units for the purpose of making payment and settling the
related 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 unit 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.
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The notes will be subordinated to senior indebtedness of JES.
The notes will mature on June , 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 % prior to March , 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 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, 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 described above. No interest will be due and payable during an
extension period. JES must give the trustee written notice of
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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
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
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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.
Neither the indenture nor the master unit 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.
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 Seagram, on terms comparable to the subordination of the notes.
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"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 403,046,179 common shares were outstanding at April 30, 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 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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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
$ 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. 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 any gain or loss on the sale, exchange or
redemption of the
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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 % and the projected payment
schedule for the notes, per $ of stated amount, is $ (which is
the stated interest payment) for each quarter ending on or prior to the
remarketing date and $ for each quarter ending after the remarketing date.
The projected payment, per $ of stated amount, at the maturity date is
$ (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.
PURCHASE CONTRACTS
INCOME FROM 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. Contract fees and
deferred contract fees may constitute taxable income to you when received or
accrued, in accor-
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dance with your method of tax accounting. To the extent Seagram is required to
file information returns with respect to contract fees or deferred contract
fees, it intends to report such payments as taxable income to you. You should
consult your own tax advisor concerning the treatment of contract fees and
deferred contract fees, including the possibility that any such payment may be
treated as a loan, purchase price adjustment, or rebate rather than being
includible in income on a current basis. The treatment of contract fees and
deferred contract fees could affect your tax basis in a purchase contract or
common shares received under a purchase contract or your amount realized upon
the sale or disposition of a unit or the termination of a purchase contract. To
the extent Canada imposes withholding taxes on the additional contract fees,
your ability to claim foreign tax credits for the withholding taxes will depend
upon the characterization of the contract fees for United States federal income
tax purposes. Please consult your own tax advisor. 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
or deferred contract fees that have been received in cash by you but were not
includible in your income should reduce your tax basis in the purchase contract
or the common shares to be received thereunder (see "-- Income from 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 or
deferred contract fees, if any, received by you but not includible in your
income should either reduce your tax basis in the purchase contract or result in
an amount realized on the termination of the purchase contract. Any contract
fees or deferred contract fees includible in your income but not paid should
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.
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
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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 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
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
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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.
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, or to the extent
your are treated as having received an amount with respect to accrued contract
fees or deferred contract fees, which may be treated as ordinary income, in each
case to the extent not previously included in income. 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.
Gain on the sale, exchange or retirement of a note 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 or deferred contract fees that have not
previously been included in your income should either reduce your tax basis in
the purchase contract or result in an increase in the amount realized on the
disposition of the purchase contract. Any contract fees or deferred contract
fees included in your income but not paid should increase your tax basis in the
purchase contract (see "-- Income from 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
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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 of
principal or interest on 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.
Except as discussed below, the 30% U.S. federal withholding tax will not
apply to any gain or income that you realize on the sale, exchange, retirement
or other disposition of the units, notes or treasury securities.
U.S. FEDERAL ESTATE TAX
Your estate will not be subject to U.S. federal estate tax on the units,
notes or treasury securities beneficially owned by you at the time of your
death, provided that (1) you do not 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, and (2) interest on those notes and treasury securities
would not have been, if received at the time of your death, effectively
connected with the conduct by you of a trade or business in the United States.
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 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,
(2) you are an individual who is present in the United States for 183 days or
more in the taxable year of that disposition,
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and certain other conditions are met; or
(3) to the extent the gain is considered accrued but unpaid interest on the note
or treasury security, the requirements described above are not satisfied.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
Unless you are an exempt recipient, such as a corporation, payments under
the units, notes 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.
52
<PAGE> 56
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
53
<PAGE> 57
payable in the event that payment of the
contract fees is deferred, are commensurate 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
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<PAGE> 58
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
that firm as experts in accounting and auditing.
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
55
<PAGE> 59
Peel Street, Montreal, Quebec H3A 1S9, telephone (514) 849-5271, attention:
Shareholder Services.
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.
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<PAGE> 60
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.........................................
Bear, Stearns & Co. Inc.....................................
Merrill Lynch, Pierce, Fenner & Smith Incorporated..........
Morgan Stanley & Co. Incorporated...........................
----------
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 Full
Exercise Exercise
-------- --------
<S> <C> <C>
Per Unit............. $ $
Total................ $ $
</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 % 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 % 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> 61
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> 62
------------------------------------------------------
------------------------------------------------------
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>
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
18,500,000 Units
THE SEAGRAM COMPANY LTD.
% Adjustable
Conversion-rate
Equity Securities
------------------------
[SEAGRAM LOGO]
------------------------
GOLDMAN, SACHS & CO.
BEAR, STEARNS & CO. INC.
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
------------------------------------------------------
------------------------------------------------------
<PAGE> 63
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The amount of expenses in connection with the issuance and distribution of
the securities which are being newly registered hereby, other than underwriting
discounts and commissions, is estimated as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission filing fee............... $ 319,700
Costs of printing and engraving............................. 300,000
Legal fees and expenses..................................... 350,000
Blue Sky fees and expenses.................................. 10,000
Accounting fees and expenses................................ 40,000
Trustee's fee............................................... 25,000
Rating agencies' fees....................................... 215,000
Miscellaneous............................................... 40,300
----------
Total.................................................. $1,300,000
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 124, Subsections (1) through (4), of the Canada Business
Corporations Act (the "Act") provides as follows:
"124. (1) Indemnification.--Except in respect of an action by or on
behalf of the corporation or body corporate to procure a judgment in its
favour, a corporation may indemnify a director or officer of the
corporation, a former director or officer of the corporation or a person
who acts or acted at the corporation's request as a director or officer of
a body corporate of which the corporation is or was a shareholder or
creditor, and his heirs and legal representatives, against all costs,
charges and expenses, including an amount paid to settle an action or
satisfy a judgment, reasonably incurred by him in respect of any civil,
criminal or administrative action or proceeding to which he is made a party
by reason of being or having been a director or officer of such corporation
or body corporate, if
(a) he acted honestly and in good faith with a view to the best
interests of the corporation; and
(b) in the case of a criminal or administrative action or proceeding
that is enforced by a monetary penalty, he had reasonable grounds
for believing that his conduct was lawful.
(2) Indemnification in derivative actions.--A corporation may with the
approval of a court indemnify a person referred to in subsection (1) in
respect of an action by or on behalf of the corporation or body corporate
to procure a judgment in its favour, to which he is made a party by reason
of being or having been a director or an officer of the corporation or body
corporate, against all costs, charges and expenses reasonably incurred by
him in connection with such action if he fulfils the conditions set out in
paragraphs (1)(a) and (b).
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(3) Indemnity as of right.--Notwithstanding anything in this section,
a person referred to in subsection (1) is entitled to indemnity from the
corporation in respect of all costs, charges and expenses reasonably
incurred by him in connection with the defense of any civil, criminal or
administrative action or proceeding to which he is made a party by reason
of being or having been a director or officer of the corporation or body
corporate, if the person seeking indemnity
(a) was substantially successful on the merits in his defense of the
action or proceeding, and
(b) fulfills the conditions set out in paragraphs (1)(a) and (b).
(4) Directors' and officers' insurance.--A corporation may purchase
and maintain insurance for the benefit of any person referred to in
subsection (1) against any liability incurred by him
(a) in his capacity as a director or officer of the corporation, except
where the liability relates to his failure to act honestly and in
good faith with a view to the best interests of the corporation; or
(b) in his capacity as a director or officer of another body corporate
where he acts or acted in that capacity at the corporation's
request, except where the liability relates to his failure to act
honestly and in good faith with a view to the best interests of the
body corporate."
Sections 7.02 and 7.03 of the General By-Laws of The Seagram Company Ltd.
provide as follows:
"Section 7.02--Indemnity. Without in any manner derogating from or
limiting the mandatory provisions of the Act but subject to the conditions
contained therein, the Corporation shall indemnify a director or officer of
the Corporation, a former director or officer of the Corporation, or a
person who acts or acted at the Corporation's request as a director or
officer of a body corporate of which the Corporation is or was a
shareholder or creditor, and his heirs and legal representatives, against
all costs, charges and expenses, including an amount paid to settle an
action or satisfy a judgment, reasonably incurred by him in respect of any
civil, criminal or administrative action or proceeding to which he is made
a party by reason of being or having been a director or officer of the
Corporation or such body corporate, if
(a) he acted honestly and in good faith with a view to the best
interests of the Corporation; and
(b) in the case of a criminal or administrative action or proceeding
that is enforced by a monetary penalty, he has reasonable grounds
for believing that his conduct was lawful.
Section 7.03--Insurance. Subject to the limitations contained in the
Act, the Corporation may purchase and maintain such insurance for the
benefit of the persons mentioned in Section 7.02, as the board may from
time to time determine."
Chapter 37 of the Business Corporation Law of Indiana, the state of
incorporation of Joseph E. Seagram & Sons, Inc., provides that, effective August
1, 1987, (i) unless limited by its articles of incorporation, a corporation
shall indemnify a director or officer (and may indemnify an employee or agent of
the corporation) who was wholly successful, on the merits or otherwise, in the
defense of any proceeding to which such person was a party because such person
is or was a director, officer, employee or agent of the corporation, as
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<PAGE> 65
the case may be, against reasonable expenses incurred by such person in
connection with the proceeding and (ii) a corporation may indemnify an
individual made a party to a proceeding because the individual is or was a
director, officer, employee or agent of the corporation against liability
incurred in the proceeding if (1) the individual's conduct was in good faith;
and (2) the individual reasonably believed (A) in the case of conduct in the
individual's official capacity with the corporation, that the individual's
conduct was in its best interests; and (B) in all other cases, that the
individual's conduct was at least not opposed to its best interests; and (3) in
the case of any criminal proceeding, the individual either (A) had reasonable
cause to believe the individual's conduct was lawful; or (B) had no reasonable
cause to believe the individual's conduct was unlawful. Such indemnification
shall not be deemed exclusive of any other rights to which those indemnified may
be entitled under any provision of the articles of incorporation, by-laws,
resolution, or other authorization adopted, after notice, by a majority vote of
all the voting shares then issued and outstanding.
Sections 43 through 50 of the By-Laws of Joseph E. Seagram & Sons, Inc.
provide as follows:
"43. The corporation (1) shall indemnify any person who is or was a
director, officer, or employee of the corporation or is or was serving at
the request of the corporation as a director, officer or employee of
another corporation, and (2) may indemnify any person who is or was an
agent of the corporation or is or was serving at the request of the
corporation as an agent of or participant in another corporation or as
director, officer, employee or agent of or participant in a partnership,
joint venture, trust or other enterprise, and who by reason of such fact is
or was a witness or a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, against any and all judgments,
liabilities, assessments, fines, amounts paid in settlement, costs, charges
and expenses (including attorneys' fees) of every kind and nature which
such person may actually and reasonably incur in connection with such
action, suit or proceeding (or any appeal therein). Notwithstanding the
foregoing, (a) in the event of an action, suit or proceeding brought by or
in the right of the corporation to procure a judgment in its favor, no
indemnification shall be made with respect to any claim, issue or matter as
to which the person seeking to be indemnified shall have been adjudged to
be liable for negligence or misconduct in the performance of his duty to
the corporation, unless and only to the extent that the court in which such
action or suit was brought or to which it was appealed shall determine upon
application that, despite the adjudication of liability, in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for any such expenses which the court shall deem proper, and (b)
no indemnification shall be made with respect to any claim, issue or matter
as to which the person seeking to be indemnified shall have (i) been
adjudged by a court or administrative agency to have acted illegally or
improperly or (ii) made or agreed to make any payment in settlement unless
it is determined in accordance with Section 44 of these by-laws, that such
person acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. The final disposition of any action, suit or
proceeding by judgment, order, settlement or conviction, or upon a plea of
nolo contendere or its equivalent, shall not of itself create a presumption
that a person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best
II-3
<PAGE> 66
interests of the corporation, nor, with respect to any criminal action or
proceeding, that he had reasonable cause to believe that his conduct was
unlawful.
44. Any determination contemplated by clause (b) of Section 43 of
these by-laws shall be made (1) by the Board of Directors by a majority
vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (2) if such a quorum is not obtainable, or
even if obtainable, a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (3) by the shareholders.
45. The indemnification provided herein shall not be deemed exclusive
of any other rights to which those seeking indemnification may be entitled
under any agreement, vote of shareholders or disinterested directors or
otherwise, both as to action in any official capacity and as to action in
another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee, agent or
participant and shall inure to the benefit of the heirs, executors and
administrators of such a person.
46. The corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of or participant in another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under the provisions of these by-laws, Section 25-202 of the General
Corporation Act of the State of Indiana or otherwise.
47. For purposes of Sections 43 through 46 of these by-laws, (1) Any
person who, while a director, officer or employee of the corporation or
while serving at the request of the corporation as a director, officer or
employee of a 'subsidiary' as hereinafter defined, acts or acted as a
fiduciary with respect to an employee benefit plan sponsored by the
corporation or by one or more subsidiaries, or with respect to a
multi-employer employee benefit plan contributed to by the corporation or
by one or more subsidiaries, shall be conclusively deemed to occupy such
fiduciary position by reason of the fact that such person is or was such
director, officer or employee. As used herein the term 'subsidiary' means a
corporation of which a majority of the shares of capital stock have the
power ordinarily and generally in the absence of contingencies to elect a
majority of the directors thereof is held by the corporation and/or one or
more subsidiaries.
(2) Any person who is or was a director, officer or employee of a
'wholly-owned subsidiary' as hereinafter defined shall be conclusively
deemed to occupy such position at the request of the corporation. As used
herein the term 'wholly-owned subsidiary' means any corporation of which
all shares of capital stock having the power ordinarily and generally in
the absence of contingencies to vote for the election of directors,
exclusive of director's qualifying shares, are held by the corporation
and/or one or more wholly-owned subsidiaries.
48. For the purposes of Sections 43 through 48 of these by-laws,
references to 'the corporation' include all constituent corporations
absorbed in a consolidation or merger as well as the resulting or surviving
corporation so that any person who is or was a director, officer, employee
or agent of or participant in such a constituent corporation or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of or participant in another corporation,
partnership, joint venture, trust or other enterprise shall stand in the
same position under the provisions of such
II-4
<PAGE> 67
Sections with respect to the resulting or surviving corporation as he would
if he had served the resulting or surviving corporation in the same
capacity.
49. The corporation may pay expenses incurred in appearing as a
witness in or defending any action, suit or proceeding (whether civil,
criminal, administrative or investigative) before the final disposition
thereof upon receipt of an undertaking, by or on behalf of the person for
whose benefit such payment is to be made, to repay to the corporation any
excess of such payment over the indemnification from the corporation to
which such person ultimately shall be determined to be entitled under these
by-laws.
50. The invalidity or unenforceability of any provision of Sections 43
through 48 of these by-laws shall not affect the validity or enforceability
of the remaining provisions of such Sections."
The directors and officers of the Registrants are covered by insurance
policies indemnifying against certain liabilities, including certain liabilities
arising under the Securities Act, which might be incurred by them in such
capacities and against which they cannot be indemnified by the Registrants.
ITEM 16. LIST OF EXHIBITS.
Reference is made to information contained in the Exhibit Index filed as a
part of this Registration Statement.
ITEM 17. UNDERTAKINGS.
Each of the undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A
and contained in a form of prospectus filed by the registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of this registration statement as of the
time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrants pursuant to the foregoing
provisions, or otherwise, the Registrants have been advised that in
the opinion of the SEC such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer, or controlling person of
the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification
by it is against public
II-5
<PAGE> 68
policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
(4) It will reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more
than 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective registration statement.
II-6
<PAGE> 69
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, JOSEPH E.
SEAGRAM & SONS, INC. CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT
MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED, IN THE CITY OF NEW YORK AND THE STATE OF NEW YORK, ON JUNE 10,
1999.
JOSEPH E. SEAGRAM & SONS, INC.
(Registrant)
By /s/ DANIEL R. PALADINO
------------------------------------
Daniel R. Paladino
Executive Vice President -- Legal &
Environmental Affairs
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED ON JUNE 10, 1999 BY THE FOLLOWING PERSONS
IN THE CAPACITIES AT JOSEPH SEAGRAM & SONS, INC. INDICATED.
Principal Executive Officer:
<TABLE>
<C> <S>
* Director, President and Chief Executive
- --------------------------------------------------- Officer
(Edgar Bronfman, Jr.)
</TABLE>
Principal Financial Officer and Agent
for Service:
<TABLE>
<C> <S>
* Director, Vice Chairman and Chief Financial
- --------------------------------------------------- Officer
(Robert W. Matschullat)
</TABLE>
Principal Accounting Officer:
<TABLE>
<C> <S>
* Vice President and Controller
- ---------------------------------------------------
(Frank Merganthaler)
</TABLE>
II-7
<PAGE> 70
Directors:
<TABLE>
<C> <S>
* Director
- ---------------------------------------------------
(Edgar M. Bronfman)
* Director
- ---------------------------------------------------
(Charles R. Bronfman)
* Director
- ---------------------------------------------------
(Daniel R. Paladino)
</TABLE>
- -------------------------
* By signing his name hereto, Daniel R. Paladino signs this Registration
Statement on behalf of each of the persons indicated above pursuant to a power
of attorney duly executed by such persons and filed with the Securities and
Exchange Commission.
By /s/ DANIEL R. PALADINO
-----------------------------------
(Daniel R. Paladino,
Attorney-in-fact)
II-8
<PAGE> 71
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE SEAGRAM
COMPANY LTD. CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS
ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED, IN THE CITY OF MONTREAL, PROVINCE OF QUEBEC, CANADA, ON JUNE
10, 1999.
THE SEAGRAM COMPANY LTD.
(Registrant)
By /s/ DANIEL R. PALADINO
------------------------------------
Daniel R. Paladino
Executive Vice President --
Legal & Environmental Affairs
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED ON JUNE 10, 1999 BY THE FOLLOWING PERSONS
IN THE CAPACITIES AT THE SEAGRAM COMPANY LTD. INDICATED.
Principal Executive Officer:
<TABLE>
<C> <S>
* Director, President and Chief Executive
- --------------------------------------------------- Officer
(Edgar Bronfman, Jr.)
</TABLE>
Principal Financial Officer and Agent
for Service:
<TABLE>
<C> <S>
* Director, Vice Chairman and Chief Financial
- --------------------------------------------------- Officer
(Robert W. Matschullat)
</TABLE>
Principal Accounting Officer:
<TABLE>
<C> <S>
* Director, Vice Chairman and Chief Financial
- --------------------------------------------------- Officer
(Robert W. Matschullat)
</TABLE>
II-9
<PAGE> 72
Directors:
EDGAR M. BRONFMAN*
CHARLES R. BRONFMAN*
SAMUEL BRONFMAN II*
MATTHEW W. BARRETT*
LAURENT BEAUDOIN*
CORNELIS BOONSTRA*
RICHARD H. BROWN*
WILLIAM G. DAVIS*
ANDRE DESMARAIS*
BARRY DILLER *
MICHELE J. HOOPER*
DAVID L. JOHNSTON*
E. LEO KOLBER*
MARIE-JOSEE KRAVIS*
SAMUEL MINZBERG*
JOHN S. WEINBERG*
- -------------------------
* By signing his name hereto, Daniel R. Paladino signs this Registration
Statement on behalf of each of the persons indicated above pursuant to a power
of attorney duly executed by such persons and filed with the Securities and
Exchange Commission.
By /s/ DANIEL R. PALADINO
-----------------------------------
(Daniel R. Paladino,
Attorney-in-fact)
II-10
<PAGE> 73
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<S> <C> <C>
1* -- Form of Underwriting Agreement
3(a) -- Restated Articles of Incorporation of Joseph E. Seagram &
Sons, Inc. (incorporated by reference to Exhibit 4(a) to
Registration Statement on Form S-3 (No. 333-4136) of The
Seagram Company Ltd. and Joseph E. Seagram & Sons, Inc.).
(b) -- By-Laws of Joseph E. Seagram & Sons, Inc., as amended
(incorporated by reference to Exhibit 4(b) to Registration
Statement on Form S-3 (No. 333-4136) of The Seagram Company
Ltd. and Joseph E. Seagram & Sons, Inc.).
(c) -- Articles of Amalgamation dated February 1, 1995 between The
Seagram Company Ltd. and Centenary Distillers Ltd.
(incorporated by reference to Exhibit 3(a) of The Seagram
Company Ltd.'s Annual Report on Form 10-K for the fiscal
year ended January 31, 1995), as amended by Certificate and
Articles of Amendment dated May 31, 1995 (incorporated by
reference to Exhibit 3(a) of The Seagram Company Ltd.'s
Quarterly Report on Form 10-Q for the fiscal quarter ended
April 30, 1995).
(d) -- General By-Laws of The Seagram Company Ltd., as amended
(incorporated by reference to Exhibit 3(b) to The Seagram
Company Ltd.'s Quarterly Report on Form 10-Q for the fiscal
quarter ended April 30, 1996).
4(a) -- Indenture dated as of September 15, 1991, among Joseph E.
Seagram & Sons, Inc., The Seagram Company Ltd. and The Bank
of New York, as Trustee (incorporated by reference to
Exhibit 4(g) of the Current Report on Form 8-K of The
Seagram Company Ltd. dated November 8, 1991, as amended).
(b)* -- Form of Note.
(c)* -- Form of Supplemental Indenture, among Joseph E. Seagram &
Sons, Inc., The Seagram Company Ltd. and The Bank of New
York.
(d)* -- Form of Remarketing Agreement among Joseph E. Seagram &
Sons, Inc., The Seagram Company Ltd. and the remarketing
agents.
(e)* -- Form of Purchase Contract Agreement, between The Seagram
Company Ltd. and The Bank of New York as agent.
(f)* -- Pledge Agreement, between The Seagram Company Ltd. and
Citibank, N.A., as Collateral Agent.
(g)* -- Form of Unit (Included in Exhibit 4(e)).
5(a)** -- Opinion and Consent of Simpson Thacher & Bartlett.
(b)** -- Opinion and Consent of Goodman Phillips & Vineberg S.E.N.C.
(c)* -- Opinion and Consent of Barnes & Thornburg.
12(a)** -- Computation of ratio of earnings to fixed charges -- The
Seagram Company Ltd.
(b)** -- Computation of ratio of earnings to fixed charges -- Joseph
E. Seagram & Sons, Inc.
</TABLE>
<PAGE> 74
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<S> <C> <C>
23(a)* -- Consent of PricewaterhouseCoopers LLP, independent
accountants, with respect to the financial statements of The
Seagram Company Ltd.
(b)* -- Consent of KPMG Accountants N.V., independent accountants,
with respect to the financial statements of PolyGram N.V.
(c)** -- Consents of Simpson Thacher & Bartlett, Goodman Phillips &
Vineberg S.E.N.C. and Barnes & Thornburg are included in
their opinions filed as Exhibits 5(a), 5(b) and 5(c),
respectively.
24(a)** -- Power of Attorney -- The Seagram Company Ltd.
(b)** -- Power of Attorney -- Joseph E. Seagram & Sons, Inc.
25 ** -- Statement of Eligibility of Trustee.
</TABLE>
- -------------------------
* Filed herewith.
** Previously filed.
<PAGE> 1
THE SEAGRAM COMPANY LTD.
JOSEPH E. SEAGRAM & SONS, INC.
-% ADJUSTABLE CONVERSION-RATE EQUITY SECURITY UNITS
-------------
Underwriting Agreement
-------------
June -, 1999
Goldman, Sachs & Co.
Bear, Stearns & Co. Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Morgan Stanley & Co. Incorporated
As representatives of the several Underwriters
named in Schedule I hereto
c/o Goldman, Sachs & Co.
85 Broad Street,
New York, New York 10004.
Ladies and Gentlemen:
The Seagram Company Ltd., a Canadian corporation (the "Company")
proposes, subject to the terms and conditions stated herein, to enter into the
Purchase Contracts (the "Purchase Contracts") with you on behalf of the
Underwriters named in Schedule I hereto (the "Underwriters"). The Purchase
Contracts are evidenced by the Unit Certificates and are referred to in the
Purchase Contract Agreement to be dated as of June -, 1999 (the "Purchase
Contract Agreement") between the Company and The Bank of New York, as Purchase
Contract Agent (the "Purchase Contract Agent"), underlying an aggregate of
18,500,000 -% Adjustable Conversion-rate Equity Security Units (the "Firm
Units"). In connection therewith, the Company and its subsidiary, Joseph E.
Seagram, Inc., an Indiana corporation ("JES"), propose, subject to the terms and
conditions stated herein, that JES issue and sell to the Underwriters an
aggregate of 18,500,000 -% Subordinated Deferrable Notes (the "Notes"),
guaranteed by the Company (the "Guarantees"). In connection with the Purchase
Contract Agreement, pursuant to the Pledge Agreement, to be dated as of June -,
1999 (the "Pledge Agreement"), among the Company, the Purchase Contract Agent
and Citibank, N.A., as collateral agent and securities intermediary (the
"Collateral Agent"), the Notes underlying the Units will be pledged by the
Purchase Contract Agent on behalf of the holders of the Units to secure the
holders' obligations to the Company under
1
<PAGE> 2
the Purchase Contracts underlying such Units. The rights to purchase newly
issued common shares of the Company (the "Common Shares") under a Purchase
Contract, together with the Notes or other Pledged Securities securing such
Purchase Contract, subject to (a) the obligations owed to the Company under such
Purchase Contract and (b) the pledge arrangements under the Pledge Agreement
securing the foregoing obligations, collectively constitute an Adjustable
Conversion-rate Equity Security Unit (a "Unit"). Unless the context otherwise
requires, for purposes of this Agreement, the act of entering into a Purchase
Contract underlying a Unit and purchasing a Note underlying a Unit shall be
referred to as a "purchase" of such Unit. In addition to the purchase of Firm
Units subject to the terms and conditions herein, the Company and JES propose to
grant the Underwriters an option to purchase up to 2,775,000 additional Units
(the "Optional Units"). The Firm Units and any Optional Units purchased by the
Underwriters are herein called the "Units".
Capitalized terms used herein without definition shall be used as
defined in the Purchase Contract Agreement (as defined herein).
1. The Company and JES represent and warrant to, and agree with, each of the
Underwriters that:
(a) A registration statement on Form S-3 (File No. 333-78395
(the "Initial Registration Statement") in respect of the Units, the
Purchase Contracts, the Notes, the Guarantees and the Common Shares has
been filed with the Securities and Exchange Commission (the
"Commission"); the Initial Registration Statement and any
post-effective amendment thereto, each in the form heretofore delivered
to you, and, excluding exhibits thereto but including all documents
incorporated by reference in the prospectus contained therein, to you
for each of the other Underwriters, have been declared effective by the
Commission in such form; other than a registration statement, if any,
increasing the size of the offering or offerings (a "Rule 462(b)
Registration Statement"), filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended (the "Act"), which became effective
upon filing, the documents incorporated by reference therein, any
post-effective amendment thereto and any preliminary prospectus filed
pursuant to Rule 424(b), no other document with respect to the Initial
Registration Statement or document incorporated by reference therein
has heretofore been filed or transmitted for filing with the
Commission; and no stop order suspending the effectiveness of the
Initial Registration Statement, any post-effective amendment thereto or
the Rule 462(b) Registration Statement, if any, has been issued and no
proceeding for that purpose has been initiated or threatened by the
Commission (any preliminary prospectus included in the Initial
Registration Statement or filed with the Commission pursuant to Rule
424(a) of the rules and regulations of the Commission under the Act is
hereinafter called a "Preliminary Prospectus"); the various parts of
the Initial Registration Statement and the Rule 462(b) Registration
Statement, if any, including all exhibits thereto and including (i) the
information contained in any Preliminary Prospectus or the form of
final prospectus filed with the Commission pursuant to Rule 424(b)
under the Act in accordance with Section 5(a) hereof and deemed by
virtue of Rule 430A under the Act to be part of the Initial
Registration Statement at the time it was declared effective and (ii)
the documents incorporated by reference
2
<PAGE> 3
in the prospectus contained in the Initial Registration Statement at
the time such part of the Initial Registration Statement became
effective, each as amended at the time such part of the Initial
Registration Statement became effective or such part of the Rule 462(b)
Registration Statement, if any, became or hereafter becomes effective,
are hereinafter collectively called the "Registration Statement"; and
such final prospectus, in the form first filed pursuant to Rule 424(b)
under the Act, is hereinafter called the "Prospectus"; and any
reference herein to any Preliminary Prospectus or the Prospectus shall
be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the Act, as of
the date of such Preliminary Prospectus or Prospectus, as the case may
be; any reference to any amendment or supplement to any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include
any documents filed after the date of such Preliminary Prospectus or
Prospectus, as the case may be, under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and incorporated by reference in
such Preliminary Prospectus or Prospectus, as the case may be; and any
reference to any amendment to the Initial Registration Statement shall
be deemed to refer to and include any annual report of the Company
filed pursuant to Section 13(a) or 15(d) of the Exchange Act after the
effective date of the Initial Registration Statement that is
incorporated by reference in the Registration Statement.
(b) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, conformed in all
material respects to the requirements of the Act and the rules and
regulations of the Commission thereunder, and did not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Company
by an Underwriter through Goldman, Sachs & Co. expressly for use
therein.
(c) The documents incorporated by reference in the Prospectus,
when they became effective or were filed with the Commission, as the
case may be, conformed in all material respects to the requirements of
the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder, and none of such documents,
as of their respective effective or filing dates, contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; and any further documents so filed and
incorporated by reference in the Prospectus or any further amendment or
supplement thereto, when such documents become effective or are filed
with the Commission, as the case may be, will conform in all material
respects to the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission thereunder
and will not, as of their respective effective or filing dates, contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that this representation and
3
<PAGE> 4
warranty shall apply only to documents so filed and incorporated by
reference during the period that a prospectus relating to the Units is
required to be delivered in connection with sales of such Units by any
underwriters (such period being hereinafter sometimes referred to as
the "prospectus delivery period"), and provided further, that this
representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter through Goldman,
Sachs & Co. expressly for use therein.
(d) The Registration Statement, as of its effective date,
conformed, and the Prospectus and any further amendments or supplements
to the Registration Statement or the Prospectus, as of their respective
effective or filing dates, will conform, in all material respects to
the requirements of the Act and the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act") and the rules and regulations of
the Commission thereunder and do not and will not, as of the applicable
effective date as to the Registration Statement and any amendment
thereto and as of the applicable filing date as to the Prospectus and
any amendment or supplement thereto, contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, that this representation and warranty shall apply
only to amendments or supplements filed or made during the prospectus
delivery period, and provided, further, that this representation and
warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in writing
to the Company by an Underwriter through Goldman, Sachs & Co. expressly
for use therein.
(e) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements of
the Company included or incorporated by reference in the Prospectus any
loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree which is
material to the Company and its subsidiaries taken as a whole,
otherwise than as set forth or contemplated in the Prospectus; and,
since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any
material decrease in the capital stock or increase in long-term debt of
the Company and its subsidiaries taken as a whole, or any material
adverse change, or any development involving a prospective material
adverse change, in or affecting the general affairs, management,
financial position, shareholders' equity or results of operations of
the Company and its subsidiaries taken as a whole, otherwise than as
set forth or contemplated in the Prospectus;
(f) The Company has been duly incorporated and is validly
existing as a corporation in good standing (in this section references
to the good standing of any Canadian corporation refer only to the fact
that such corporation has a current certificate of compliance) under
the laws of Canada, with power and authority to own its properties and
conduct its business as described in the Prospectus. Each of the
following subsidiaries of the Company has been duly incorporated and is
4
<PAGE> 5
validly existing as a corporation in good standing under the laws of
its jurisdiction of incorporation, such subsidiaries being hereinafter
sometimes referred to as the "Specified Subsidiaries": J.E. Seagram
Corp., Joseph E. Seagram & Sons, Inc., JES Developments, Inc., PolyGram
N.V. and Universal Studios, Inc.;
(g) All of the issued common shares of the Company have been
duly and validly authorized and issued, and are fully paid and
non-assessable; and all of the issued shares of capital stock of each
of the Specified Subsidiaries have been duly and validly authorized and
issued, are fully paid and non-assessable and, except for Polygram N.V.
and Universal Studios, Inc., are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or claims.
The Company indirectly owns approximately 91.9% of each of PolyGram
N.V. and Universal Studios, Inc;
(h) The Notes have been duly authorized and, when the Notes
are executed, authenticated, and delivered in connection with the
purchase of the Units hereunder, the Notes will constitute valid and
legally binding obligations of JES, enforceable in accordance with
their terms and entitled to the benefits provided by the indenture,
dated as of September 15, 1991, as supplemented as of June __, 1999
(the "Indenture") among JES, the Company, as guarantor and The Bank of
New York, as Trustee (the "Trustee"); the Guarantees have been duly
authorized by the Company and, upon the due execution, authentication
and delivery of the Notes and due endorsement of the Guarantees
thereon, such Guarantees will have been duly executed and delivered and
will constitute valid and binding obligations of the Company,
enforceable in accordance with their terms and entitled to the benefits
provided by the Indenture; the Indenture has been fully authorized by
JES and the Company and at the Time of Delivery (as defined below), the
Indenture will be duly qualified under the Trust Indenture Act and will
constitute a valid and legally binding instrument of JES and the
Company, enforceable in accordance with its terms, in each case subject
to the qualification that enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally, by general equitable
principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law), by an implied covenant of good faith
and fair dealing and, in the case of the Company, by the provisions of
the Currency Act (Canada) or the provisions of the Code of Civil
Procedure of Quebec relating to exclusive jurisdiction of Quebec courts
and imperative rules of law in certain matters; and the Notes, the
Guarantees and the Indenture conform to the descriptions thereof in the
Prospectus;
(i) The Common Shares to be issued and sold by the Company
pursuant to the Purchase Contracts and the Purchase Contract Agreement
have been duly authorized and reserved for issuance and, when issued
and delivered against payment therefor as provided in the Purchase
Contracts and the Purchase Contract Agreement, will be validly issued
and fully paid and non-assessable and currently conform to the
description of the common shares of the Company in the Prospectus;
(j) The execution, delivery and performance of this Agreement,
the Indenture, the Purchase Contract Agreement, the Pledge Agreement
and the
5
<PAGE> 6
Remarketing Agreement by the Company and JES, as applicable, and the
consummation by the Company and JES of the transactions contemplated
hereby and thereby and the issuance and delivery of the Units, the
Purchase Contracts, the Notes, the Guarantees and the Common Shares to
be issued and sold pursuant to the Purchase Contracts, will not
conflict with or result in a material breach of any of the terms or
provisions of, or constitute a material default under, or result in the
creation or imposition of any material lien, charge or encumbrance upon
any of the property or assets of the Company or any of its Specified
Subsidiaries pursuant to the terms of, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument material to the
operations of the Company to which the Company or any of its Specified
Subsidiaries is a party or by which the Company or any of its Specified
Subsidiaries is bound or to which any of the property or assets of the
Company or any of its Specified Subsidiaries is subject,; nor will such
action result in any violation of the provisions of the Certificate of
Amalgamation, as amended, or the General By-laws of the Company, or any
statute or any order, rule or regulation of any court or governmental
agency or body in the United States having jurisdiction over the
Company or any of its Specified Subsidiaries or any of their respective
properties; and no consent, approval, authorization, order,
registration or qualification of or with any such court or governmental
agency over the Company or JES is required for the execution, delivery
and performance of this Agreement, the Indenture, the Purchase Contract
Agreement, the Pledge Agreement and the Remarketing Agreement by the
Company and JES, as applicable, and the consummation by the Company and
JES of the transactions contemplated hereby and thereby and the
issuance and delivery of the Units, the Purchase Contracts, the Notes,
the Guarantees and the Common Shares to be issued and sold pursuant to
the Purchase Contracts, except, in connection with the remarketing of
the Notes pursuant to the Remarketing Agreement, the registration under
the Act of the Notes and the approval of listing of the Units by the
New York Stock Exchange ("NYSE"), such consents as have been obtained
under the Act, the Exchange Act and the Trust Indenture Act, and such
consents, authorizations, registrations or qualifications as may be
required under state, provincial or other foreign securities or Blue
Sky laws in connection with the purchase and distribution of the Units
by the Underwriters;
(k) The Units have been duly authorized and, when duly
executed, authenticated, and delivered, and upon payment therefor as
set forth herein will constitute valid and legally binding obligations
of the Company enforceable in accordance with their terms and entitled
to the benefit provided by the Purchase Contract Agreement, subject to
the qualification that enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally, by general equitable
principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law), by an implied covenant of good faith
and fair dealing and, by the provisions of the Currency Act (Canada) or
the provisions of the Code of Civil Procedure of Quebec relating to
exclusive jurisdiction of Quebec courts and imperative rules of law in
certain matters; and the Units conform to the descriptions thereof in
the Prospectus;
6
<PAGE> 7
(l) The Purchase Contract Agreement and the Pledge Agreement
have been duly authorized by the Company, and, when executed and
delivered by the other parties thereto, will constitute valid and
legally binding obligations of the Company, enforceable in accordance
with their terms, subject, to the qualification that enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors' rights generally, by
general equitable principles (regardless of whether such enforceability
is considered in a proceeding in equity or at law), by an implied
covenant of good faith and fair dealing, by the provisions of the
Currency Act (Canada) or the provisions of the Code of Civil Procedure
of Quebec relating to exclusive jurisdiction of Quebec courts and
imperative rules of law in certain matters; the Purchase Contract
Agreement, the Pledge Agreement and the Remarketing Agreement conform
or will conform to the descriptions thereof in the Prospectus; and the
provisions of the Pledge Agreement are effective to create in favor of
the Collateral Agent for the benefit of the Company, a valid and
perfected security interest under the New York Uniform Commercial Code
as in effect on the date hereof in the State of New York in the Pledged
Securities from time to time credited to the Collateral Account;
(m) This Agreement has been duly authorized, executed and
delivered by each of the Company and JES; and the Remarketing Agreement
to be entered into by the Company, JES and a remarketing agent, has
been duly authorized by the Company and JES and will be, when executed
and delivered by the Company and JES, duly executed and delivered by
the Company and JES, and will conform to the description thereof set
forth in the Prospectus;
(n) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company or any
of its subsidiaries is a party or of which any property of the Company
or any of its subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries, are reasonably
expected to have a material adverse effect on the current or future
consolidated financial position, shareholders' equity or results of
operations of the Company and its subsidiaries; and, to the best of the
Company's knowledge, no such proceedings are threatened or contemplated
by governmental authorities or threatened by others; and
(o) PricewaterhouseCoopers LLP and KPMG Accountants N.V., who
have certified certain financial statements of the Company and its
subsidiaries, are each independent public accountants as required by
the Act and the rules and regulations of the Commission thereunder.
2. Subject to the terms and conditions herein set forth, (a) the
Company and each of the Underwriters, severally and not jointly, agree to enter
into the Purchase Contracts underlying the number of Firm Units set forth
opposite the name of such Underwriter in Schedule I hereto, (b) JES agrees that
it will issue and sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from JES, at a purchase price of
____% of the principal amount thereof, the principal amount of Notes underlying
the number of Firm Units set forth opposite the name of such Underwriter in
Schedule I hereto, and (c) in the event and to the extent that the Underwriters
shall exercise the election to enter into additional Purchase Contracts
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<PAGE> 8
underlying Optional Units as provided below, (i) the Company and each of the
Underwriters, severally and not jointly, agree to enter into that number of
additional Purchase Contracts as to which such election shall have been
exercised (to be adjusted by you so as to eliminate fractional Purchase
Contracts) determined by multiplying the aggregate number of additional Purchase
Contracts the Underwriters elect to purchase by a fraction, the numerator of
which is the maximum number of Optional Units set forth opposite the name of
such Underwriter in Schedule I hereto and the denominator of which is the
maximum number of Optional Units set forth in total opposite the names of all
such Underwriters in Schedule I hereto and (ii) JES agrees that it will issue
and sell to each of the Underwriters and each of the Underwriters agrees,
severally and not jointly, to purchase from JES at the purchase price set forth
in clause (a) of this Section II, plus accrued interest on the Notes, and minus
accrued Purchase Contract Fees payable to the Company under the Purchase
Contract Agreement, if any, an aggregate amount of Notes underlying such
additional Purchase Contracts.
The Company hereby grants to the Underwriters the right to enter into,
at their election, Purchase Contracts underlying up to 2,775,000 Optional Units
and JES hereby grants the Underwriters the right to purchase from JES at their
election up to an aggregate of $________________ principal amount of Notes
underlying such Optional Units, for the sole purpose of covering overallotments
in the sale of the Firm Units. Any such election to enter into such additional
Purchase Contracts and purchase such Notes may be exercised only by written
notice from you to the Company and JES, given within a period of 30 calendar
days after the date of this Agreement and setting forth the aggregate number of
such additional Purchase Contracts to be entered into and principal amount of
Notes to be purchased and the date on which the related Optional Units are to be
delivered, as determined by you but in no event earlier than the First Time of
Delivery (as defined in Section 4 hereof) or, unless you, the Company and JES
otherwise agree in writing, earlier than two or later than ten business days
after the date of such notice.
The Underwriters agree to pledge to the Collateral Agent, on behalf of
the initial purchasers of the Units, the Notes underlying the Units. Such pledge
shall be effected by the delivery to the Collateral Agent in New York by the
Underwriters of the Notes to be pledged at the appropriate Time of Delivery (as
defined below) in accordance with the Pledge Agreement.
3. Upon the authorization by you of the release of the Firm Units, the
several Underwriters propose to offer the Firm Units for sale upon the terms and
conditions set forth in the Prospectus.
4. (a) The Units to be purchased by each Underwriter hereunder will be
represented by one or more definitive global Units in book-entry form which will
be deposited by or on behalf of the Company and JES with The Depository Trust
Company ("DTC") or its designated custodian and delivered to Goldman, Sachs &
Co., for the account of each Underwriter, upon at least forty-eight hours' prior
notice to the Company and JES by Goldman Sachs & Co. and against payment by or
on behalf of such Underwriter of the purchase price therefor by transfer of
Federal (same day) funds to the account designated by JES and delivery to the
Collateral Agent of the Notes relating to such Units at least forty-eight hours
in advance. The Company will cause the certificates representing the Units to be
made available for checking at least twenty-four hours prior to
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<PAGE> 9
the Time of Delivery (as defined below) at the office of DTC or its designated
custodian (the "Designated Office"). The time and date of such delivery and
payment shall be, with respect to the Firm Units, 10:00 a.m., New York time, on
June -, 1999 or such other time and date as Goldman, Sachs & Co., the Company
and JES may agree upon in writing, and, with respect to the Optional Units,
10:00 a.m., New York time, on the date specified by Goldman, Sachs & Co. in the
written notice given by Goldman, Sachs & Co. of the Underwriters' election to
purchase such Optional Units, or such other time and date as Goldman, Sachs &
Co., the Company and JES may agree upon in writing. Such time and date for
delivery of the Firm Units is herein called the "First Time of Delivery", such
time and date for delivery of the Optional Units, if not the First Time of
Delivery, is herein called the "Second Time of Delivery", and each such time and
date for delivery is herein called a "Time of Delivery";
(b) The documents to be delivered at each Time of Delivery by
or on behalf of the parties hereto pursuant to Section 7 hereof, including the
cross-receipt for the Units and any additional documents requested by the
Underwriters pursuant to Section 7(k) hereof, will be delivered at the offices
of Sullivan & Cromwell, 375 Park Avenue, New York, New York 10152 (the "Closing
Location"), and the Units will be delivered at the Designated Office, all at
each Time of Delivery. A meeting will be held at the Closing Location at ___
p.m., New York City time, on the New York Business Day next preceding each Time
of Delivery, at which meeting the final drafts of the documents to be delivered
pursuant to the preceding sentence will be available for review by the parties
hereto. For the purposes of this Section 4, "New York Business Day" shall mean
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in New York are generally authorized or obligated by law or
executive order to close.
5. (a) The Company and JES agree with each of the
Underwriters:
(i) To prepare the Prospectus in a form approved by you and to
file such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier time
as may be required by Rule 430A(a)(3) under the Act; to make no further
amendment or any supplement to the Registration Statement or Prospectus prior to
the last Time of Delivery which shall be disapproved by you promptly after
reasonable notice thereof; to advise you, promptly after it receives notice
thereof, of the time when any amendment to the Registration Statement has been
filed or becomes effective or any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish you copies thereof; to file promptly
all reports and any definitive proxy or information statements required to be
filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of the Prospectus and for so
long as the delivery of a prospectus is required in connection with the offering
or sale of the Units; to advise you, promptly after it receives notice thereof,
of the issuance by the Commission of any stop order or of any order preventing
or suspending the use of any Preliminary Prospectus or prospectus, of the
suspension of the qualification of the Units for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or supplementing
of the Registration Statement or Prospectus or for additional information; and,
in the event of the issuance of any stop order or of any order preventing or
suspending
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<PAGE> 10
the use of any Preliminary Prospectus or prospectus or suspending any such
qualification, promptly to use its best efforts to obtain the withdrawal of such
order;
(ii) Promptly from time to time to take such action as you may
reasonably request to qualify the Units for offering and sale under the
securities laws of such jurisdiction in the United States as you may request and
to comply with such laws so as to permit the continuance of sales and dealings
therein in such jurisdictions for as long as may be necessary to complete the
distribution of the Units, provided that in connection therewith neither the
Company nor JES shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any jurisdiction;
(iii) Prior to noon New York City time, on the New York
Business Day next succeeding the date of this Agreement and from time to time,
to furnish the Underwriters with copies of the Prospectus in such quantities as
you may reasonably request, and, if the delivery of a prospectus is required at
any time prior to the expiration of nine months after the time of issue of the
Prospectus in connection with the offering or sale of the Units and if at such
time any events shall have occurred as a result of which such Prospectus as then
amended or supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made when such
Prospectus is delivered, not misleading, or, if for any other reason it shall be
necessary during such same period to amend or supplement the Prospectus or to
file under the Exchange Act any document incorporated by reference in the
Prospectus in order to comply with the Act, the Exchange Act or the Trust
Indenture Act, to notify you and upon your request to prepare and file with the
Commission an amendment, supplement or document which will correct such
statement or omission or effect such compliance and to furnish without charge to
each Underwriter and to any dealer in securities as many copies as you may from
time to time reasonably request of any such amended Prospectus or supplement to
the Prospectus which will correct such statement or omission or effect such
compliance, and in case any Underwriter is required to deliver a prospectus in
connection with sales of any such Units at any time nine months or more after
the time of issue of the Prospectus, upon your request but at the expense of
such Underwriter, to prepare and deliver to such Underwriter as many copies as
you may request of an amended or supplemented Prospectus complying with Section
10(a)(3) of the Act;
(iv) During the period beginning from the date hereof and
continuing to and including the date 90 days after the date of the Prospectus,
not to offer, sell, contract to sell or otherwise dispose of, except as
otherwise set forth in the Prospectus or provided hereunder, any securities of
the Company or JES that are substantially similar to the Units, including but
not limited to any securities that are convertible into or exchangeable for, or
that represent the right to receive, common shares or any such substantially
similar securities (other than (A) the issuance of 2 million common shares to
one or more of the Selling Shareholders prior to the First Time of Delivery, or
(B) pursuant to employee stock option plans existing on, or upon the conversion
or exchange of convertible or exchangeable securities outstanding as of, the
date of this Agreement), without your prior written consent;
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<PAGE> 11
(v) To use the net proceeds received by JES from the sale of
the Units pursuant to this Agreement in the manner specified in the Prospectus
under the caption "Use of Proceeds";
(vi) To use their best efforts to list, subject to notice of
issuance, the Units on the NYSE; and
(vii) If the Company and JES elect to rely upon Rule 462(b),
they shall file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) by 10:00 p.m., Washington, D.C. time, on the date of
this Agreement, and at the time of filing either pay to the Commission the
filing fee for the Rule 462(b) Registration Statement or give irrevocable
instructions for the payment of such fee pursuant to Rule 111(b) under the Act.
(b) The Company also represents and warrants to, and agrees
with, each of the Underwriters to make generally available to its
securityholders as soon as practicable, but in any event not later than eighteen
months after the effective date of the Registration Statement, earnings
statements of the Company and its subsidiaries (which need not be audited)
complying with Section 11(a) of the Act and the rules and regulations of the
Commission thereunder (including, at the option of the Company, Rule 158).
6. The Company covenants and agrees with the several Underwriters that
(a) the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Units under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, the Blue Sky Memorandum, and
any other documents in connection with the offering, purchase, sale and delivery
of the Units; (iii) all expenses in connection with the qualification of the
Units for offering and sale under state securities laws as provided in Section
5(b) hereof, including the reasonable fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with the
Blue Sky survey; (iv) all fees and expenses in connection with listing the Units
on the NYSE; (v) any fees charged by securities rating services for rating the
Units; (vi) the cost of preparing the Units, the Notes and any Common Shares;
(vii) the fees and expenses of the Purchase Contract Agent and Collateral Agent
and any agent of the Purchase Contract Agent and Collateral Agent and the fees
and disbursements of any counsel for the Purchase Contract Agent, Collateral
Agent or Remarketing Agent in connection with the Purchase Contract Agreement,
the Pledge Agreement or the Remarketing Agreement; (viii) the fees and expenses
of the Trustee under the Indenture, and any agent of the Trustee, and the fees
and disbursements of any counsel for the Trustee in connection with the
Indenture and the Notes; and all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section. It is understood, however, that the Company shall
bear the cost of any other matters not directly relating to the sale and
purchase of the Units pursuant to this Agreement, and that, except as provided
in this Section, and Sections 8 and 11 hereof, the Underwriters will pay all of
their own costs and expenses, including the fees of their counsel, transfer
taxes on
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<PAGE> 12
resale of any of the Units by them, and any advertising expenses connected with
any offers they may make.
7. The obligations of the Underwriters hereunder, as to the Units to be
delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company and JES are, at and as of such Time of Delivery, true and correct,
the condition that the Company and JES shall have performed all of their
respective obligations hereunder theretofore to be performed, and the following
additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed
for such filing by the rules and regulations under the Act and in
accordance with Section 5(a) hereof; if the Company has elected to rely
upon Rule 462(b), the Rule 462(b) Registration Statement shall have
become effective by 10:00 p.m., Washington, D.C. time, on the date of
this Agreement; no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and
no proceeding for that purpose shall have been initiated or threatened
by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction;
(b) Sullivan & Cromwell, U.S. counsel for the Underwriters,
and Ogilvy Renault S.E.N.C., Canadian counsel for the Underwriters,
shall have furnished to you such written opinion or opinions, dated
such Time of Delivery, with respect to, in the case of Ogilvy Renault
S.E.N.C., the matters covered by Section 7(d)(iii) and (xi) and, in the
case of Sullivan & Cromwell, the incorporation of JES, the validity of
the Notes, the Guarantees, the Indenture, the Purchase Contract, the
Pledge Agreement, the Common Shares, the accuracy of the Registration
Statement and the Prospectus and such other related matters as you may
reasonably request, and such counsel shall have received such papers
and information as they may reasonably request to enable them to pass
upon such matters (Sullivan & Cromwell being entitled to rely, as to
all matters of Canadian law upon the opinion of Canadian counsel
described in paragraph (d) of this Section 7, and, as to all matters of
law of the State of Indiana upon the opinion of Barnes & Thornburg);
(c) Simpson Thacher & Bartlett, U.S. counsel for the Company,
shall have furnished to you their written opinion, dated the Time of
Delivery, in form and substance satisfactory to you (such counsel being
entitled to state that they have assumed that any document referred to
in their opinion and executed by the Company has been duly authorized,
executed and delivered pursuant to Canadian law and being entitled to
rely, as to all matters of Canadian law, solely upon the opinion of
Canadian counsel described in paragraph (d) of this Section 7) (such
counsel also being entitled to rely in respect of matters of law other
than of United States federal or New York law on opinions of local
counsel of the Company and its subsidiaries and as to matters of fact
upon certificates of public officials and of officers of the Company or
its subsidiaries, provided that such counsel shall state that they
believe that both you and they are justified in relying upon such
opinions and certificates), to the effect that:
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(i) Joseph E. Seagram & Sons, Inc. has been duly
incorporated and is validly existing as a corporation under
the laws of the State of Indiana; and each of J.E. Seagram
Corp., JES Developments, Inc. and Universal Studios, Inc. has
been duly incorporated and is validly existing and in good
standing under the laws of the State of Delaware;
(ii) All of the outstanding shares of capital stock
of JES have been duly authorized by JES and are validly
issued, fully paid and non-assessable and are owned indirectly
by the Company, to the knowledge of such counsel, free and
clear of any adverse claim; all of the outstanding shares of
capital stock of J.E. Seagram Corp. have been duly authorized
by J.E. Seagram Corp. and are validly issued, fully paid and
non-assessable and are owned directly by the Company to the
knowledge of such counsel free and clear of any adverse claim;
all of the outstanding shares of capital stock of JES
Developments, Inc. have been duly authorized by JES
Developments Inc. and are validly issued, are fully paid and
non-assessable, and are owned indirectly by JES to the
knowledge of such counsel, free and clear of any adverse
claim; and all the outstanding Shares of capital stock of
Universal Studios, Inc. have been duly authorized by Universal
Studios, Inc. and are validly issued, are fully paid and
non-assessable, and such that are owned indirectly by the
Company, to the knowledge of such counsel, free and clear of
any adverse claim;
(iii) To such counsel's knowledge, there are no legal
or governmental proceedings pending to which the Company or
any of its subsidiaries is a party or of which any property of
the Company or any of its subsidiaries is the subject which
are required to be described in the Prospectus which are not
described as required; and to such counsel's knowledge no such
proceedings have been asserted by governmental authorities or
by others;
(iv) This Agreement has been duly authorized,
executed and delivered by the Company and JES;
(v) Assuming that the Purchase Contract Agreement and
Pledge Agreement have been duly authorized, executed and
delivered by Seagram and, assuming that the Purchase Contract
Agreement is the valid and binding obligation of the Purchase
Contract Agent and that the Pledge Agreement is the valid and
binding obligation of the Collateral Agent and Securities
Intermediary, the Purchase Contract Agreement and the Pledge
Agreement constitute valid and legally binding obligations of
the Company enforceable against the Company in accordance with
their respective terms;
(vi) The provisions of the Pledge Agreement are
effective to create in favor of the Collateral Agent for the
benefit of the Company, a valid and perfected security
interest under the New York Uniform Commercial Code as in
effect on the date hereof in the State of New York in the
Pledged Securities from time to time credited to the
Collateral Account;
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<PAGE> 14
(vii) The Notes have been duly authorized, executed
and delivered by JES and, assuming due authentication hereof
by the Trustee, and upon payment and delivery in accordance
with this Agreement, will constitute valid and legally binding
obligations of JES enforceable against JES in accordance with
their terms and entitled to the benefits of the Indenture;
assuming the Guarantees relating to the Notes have been duly
authorized, endorsed on the Notes and executed, issued and
delivered in accordance with Canadian law, the Guarantees will
constitute valid and legally binding obligations of the
Company enforceable in accordance with their terms and
entitled to the benefits of the Indenture; and the Notes, such
Guarantees and the Indenture conform to the descriptions
thereof in the Prospectus;
(viii) The Indenture has been duly authorized,
executed and delivered by the JES and duly qualified under the
Trust Indenture Act and, assuming the due authorization,
execution and delivery thereof by the Company and the Trustee
(other than Section 516 thereof as to which such counsel need
not express any opinion), constitutes a valid and legally
binding instrument of JES and the Company enforceable in
accordance with its terms;
(ix) Assuming that the Units have been duly
authorized, executed and delivered by Seagram and, assuming
due execution by the Purchase Contract Agent as
attorney-in-fact of the holders thereof and due authentication
by the Purchase Contract Agent and upon payment and delivery
in accordance with the Underwriting Agreement, the Units will
constitute valid and legally binding obligations of Seagram
entitled to the benefits of the Purchase Contract Agreement
and enforceable against Seagram in accordance with their
terms;
(x) The issuance and sale of the Units and the
compliance by the Company and JES with all of the provisions
of the Underwriting Agreement will not breach or result in a
default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument filed as an exhibit
to the Registration Statement or any document or filing
incorporated by reference therein to which the Company or any
of its subsidiaries is a party or by which the Company or any
of its subsidiaries is bound or to which any of the property
or assets of the Company or any of its subsidiaries is
subject, nor will such action violate the charter documents,
as amended, or the By-laws of JES or, with respect to the
United States and the States of New York and Indiana, will
such action result in any violation of any statute or, to the
knowledge of such counsel, any order, rule or regulation of
any court or governmental agency or body having jurisdiction
over the Company or any of its subsidiaries or any of their
properties;
(xi) With respect to the United States and the States
of New York and Indiana, no consent, approval, authorization,
order, registration or qualification of or with any such court
or governmental agency or body is required for the issue and
the sale of the Units, and the compliance by the
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<PAGE> 15
Company and JES with all of the provisions of this Agreement,
except such that have been obtained or made under the Act, the
Trust Indenture Act and the Exchange Act, and such consents,
approvals, authorizations, registrations or qualifications as
may be required under state securities, or Blue Sky laws in
connection with the purchase and distribution of the Units by
the Underwriters;
(xii) Neither the Company nor JES is an "investment
company", within the meaning of the Investment Company Act of
1940, as amended;
(xiii) Such counsel does not know of any contracts or
other documents of a character required to be filed as an
exhibit to the Registration Statement or required to be
incorporated by reference into the Prospectus or required to
be described in the Registration Statement or in the
Prospectus which are not filed or incorporated by reference or
described as required;
(xiv) Subject to the qualifications and limitations
stated in the Prospectus, the statements set forth in the
Prospectus under the caption "United States Federal Income Tax
Consequences," insofar as they purport to constitute summaries
of matters of United States federal tax law and regulations or
legal conclusions with respect thereto, constitute accurate
summaries of the matters described therein in all material
respects; and
(xv) Such opinion may also include a paragraph to the
effect that such counsel has not independently verified the
accuracy, completeness or fairness of the statements made or
included in the Registration Statement, the Prospectus and the
documents incorporated by reference in the Prospectus and that
such counsel takes no responsibility therefor; provided,
however, that such opinion shall state that the discussion set
forth in the Prospectus under the heading "Certain Federal
Income Tax Consequences", insofar as it relates to matters of
United States federal income tax law, is accurate in all
material respects. Such opinion may also state that in the
course of the preparation by the Company of the Registration
Statement and the Prospectus, such counsel participated in
conferences with certain officers and employees of the Company
and with representatives of the independent accountants of the
Company. Such opinion may state that such counsel did not
prepare the documents incorporated by reference in the
Prospectus; however, such counsel discussed such documents
with the Company prior to their filing with the Commission,
and that based upon such counsel's examination of the
Registration Statement, the Prospectus and the documents
incorporated by reference in the Prospectus, such counsel's
investigations made in connection with the preparation of the
Registration Statement and the Prospectus and such counsel's
participation in the conferences referred to above, (i) such
counsel is of the opinion that the Registration Statement and
any amendment thereto made by the Company made prior to such
Time of Delivery, as of its respective effective date, and the
Prospectus and any amendment or supplement thereto made by the
Company prior to such
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<PAGE> 16
Time of Delivery, as of their respective issue dates, complied
as to form in all material respects with the requirements of
the Act and the applicable rules and regulations of the
Commission thereunder, and (ii) such counsel has no reason to
believe that the Registration Statement or any amendment
thereto (including the documents incorporated by reference in
the Prospectus), made by the Company prior to such Time of
Delivery, as of its respective effective date, contained any
untrue statement of a material fact or omitted to state any
material fact required to be stated therein, or required in
order to make the statements therein not misleading, or that
as of such Time of Delivery, either the Registration Statement
or the Prospectus or any amendment or supplement thereto made
by the Company prior to such Time of Delivery (including the
documents incorporated by reference therein), contain any
untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in
light of the circumstances in which the statements were made
when such documents were so filed, not misleading, except that
in each case such counsel need express no opinion with respect
to the financial statements or other financial data contained
or incorporated by reference in the Registration Statement or
any amendment thereto, or in the Prospectus and any amendment
or supplement thereto made by the Company prior to such Time
of Delivery.
(d) Goodman Phillips & Vineberg S.E.N.C., Canadian counsel for
the Company, shall have furnished to you their written opinion, dated
the Time of Delivery, in form and substance satisfactory to you (such
counsel being entitled to rely, as to all matters of United States or
United States state law, solely upon the opinion of United States
counsel described in paragraph (c) of this Section 7) (such counsel
also being entitled to rely in respect of matters of law other than
matters of Canadian federal or Quebec law solely upon opinions of local
counsel and as to matters of fact upon certificates of officers of the
Company or its subsidiaries, provided that such counsel shall state
that they believe both they and you are justified in relying thereon)
to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation under the laws of Canada
with corporate power and authority to own its properties and
conduct its business as described in the Prospectus, and has
received a certificate of compliance under the Canada Business
Corporations Act;
(ii) The Company has been duly qualified for the
transaction of business under the laws of the Province of
Quebec;
(iii) The Company has an authorized capitalization as
set forth in the Prospectus, and has taken all corporate
proceedings so that all of the issued common shares of the
Company have been duly and validly authorized and issued as
fully paid and non-assessable; and the common shares conform
to the description of the common shares contained in the
Prospectus;
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(iv) The Common Shares to be issued and sold by the
Company pursuant to the Purchase Contracts and the Purchase
Contract Agreement have been duly authorized and reserved for
issuance and, when issued and delivered against payment
therefor as provided in the Purchase Contracts and the
Purchase Contract Agreement, will be duly and validly issued,
fully paid and non-assessable;
(v) To such counsel's knowledge and other than as set
forth or contemplated in the Prospectus, there are no legal or
governmental proceedings pending in the Province of Quebec to
which the Company or any of its subsidiaries is a party or of
which any property of the Company or any of its subsidiaries
is the subject, which, if determined adversely to the Company
or any of its subsidiaries, would individually or in the
aggregate be, in the opinion of such counsel, material to the
Company and its subsidiaries taken as a whole; and to such
counsel's knowledge, no such proceedings have been threatened
by governmental authorities or by others;
(vi) Each of this Agreement, the Purchase Contract
Agreement, the Purchase Contracts, which are evidenced by the
Unit Certificates being delivered at such Time of Delivery,
the Pledge Agreement and the Indenture, has been duly
authorized, executed and, to the extent delivery is governed
by the the laws of the Province of Quebec, delivered by the
Company;
(vii) The Guarantees have been duly authorized and
upon the due execution, authentication, issuance and delivery
of the Notes pursuant to this Agreement and the Indenture, and
upon the Guarantees being duly endorsed on the Notes and
executed, such Guarantees will have been duly issued and
delivered; and, assuming that the Notes and the Guarantees of
the Notes constitute valid and legally binding obligations of
JES and the Company, respectively, enforceable in accordance
with their terms under the laws of the State of New York, such
Guarantees will constitute valid and legally binding
obligations of the Company under the laws of the Province of
Quebec and the laws of Canada applicable therein, subject, as
to enforcement, to general principles of equity or principles
to substantially the same effect in civil law, to bankruptcy,
insolvency, reorganization, moratorium and other laws relating
to or affecting creditors' rights generally, subject to the
qualification that specific performance and injunction are
remedies which are available only in the discretion of the
court before which any proceedings therefor may be brought,
subject to the provisions of the Currency Act (Canada), which
preclude a court in Canada from giving a judgment in a
currency other than Canadian currency and subject to the
provisions of the Criminal Code (Canada) which preclude the
enforcement of any obligation to pay interest at an effective
annual rate of interest that exceeds 60%;
(viii) The Indenture has been duly authorized,
executed and, to the extent delivery is governed by the laws
of the Province of Quebec, delivered by the Company and,
assuming that the Indenture has been duly
17
<PAGE> 18
authorized, executed and delivered by JES and the Trustee and
is binding on JES and the Trustee, and assuming that the
Indenture constitutes a valid and legally binding instrument
of the Company enforceable in accordance with its terms under
the laws of the State of New York, the Indenture (other than
Section 516 thereof, as to which such counsel need express no
opinion) constitutes a valid and legally binding instrument of
the Company under the laws of the Province of Quebec and the
laws of Canada applicable therein, enforceable in accordance
with its terms under the laws of the Province of Quebec and
the laws of Canada applicable therein, subject, as to
enforcement, to general principles of equity or principles to
substantially the same effect in civil law, to bankruptcy,
insolvency, reorganization, moratorium and other laws relating
to or affecting creditors' rights generally, subject to the
qualification that specific performance and injunction are
remedies which are available only in the discretion of the
court before which any proceedings therefor may be brought,
subject to the provisions of the Currency Act (Canada), which
preclude a court in Canada from giving a judgment in a
currency other than Canadian currency and subject to the
provisions of the Criminal Code (Canada) which preclude the
enforcement of any obligation to pay interest at an effective
annual rate of interest that exceeds 60%; and all taxes and
fees required under the laws of Canada or the Province of
Quebec to be paid with respect to the execution of the
Indenture and the issuance of the Guarantees relating to the
Notes have been paid;
(ix) The Purchase Contract Agreement, the Pledge
Agreement and the Purchase Contracts have been duly
authorized, executed and, to the extent delivery is governed
by the laws of the Province of Quebec, delivered by the
Company and, assuming due authorization, execution and
delivery by the other parties thereto, and assuming that each
such agreement constitutes a valid and legally binding
agreement of the Company enforceable in accordance with its
terms under the laws of the State of New York, each of the
Purchase Contract Agreement, the Pledge Agreement and the
Purchase Contracts constitutes a valid and legally binding
instrument of the Company under the laws of the Province of
Quebec and the laws of Canada applicable therein, subject, as
to enforcement, to general principles of equity or principles
to substantially the same effect in civil law, to bankruptcy,
insolvency, reorganization, moratorium and other laws relating
to or affecting creditors' rights generally, subject to the
qualification that specific performance and injunction are
remedies which are available only in the discretion of the
court before which any proceedings therefor may be brought,
subject to the provisions of the Currency Act (Canada), which
preclude a court in Canada from giving a judgment in a
currency other than Canadian currency and subject to the
provisions of the Criminal Code (Canada) which preclude the
enforcement of any obligation to pay interest at an effective
annual rate of interest that exceeds 60%;
18
<PAGE> 19
(x) The entry into the Purchase Contracts by the
Company, the issuance of Guarantees, the issue and sale of the
Common Shares by the Company pursuant to the Purchase
Contracts, the compliance by the Company with all of the
provisions of this Agreement, the Purchase Contracts, the
Purchase Contract Agreement, the Pledge Agreement, the
Indenture and the Guarantees, and the consummation of the
transactions herein and therein contemplated will not conflict
with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument filed as an exhibit to the Registration Statement
or an Exchange Act document incorporated or deemed
incorporated by reference therein, nor will such action result
in any violation of the provisions of the Certificate of
Amalgamation, as amended, or the General By-Laws of the
Company or, with respect to Canada or the Province of Quebec
(or, insofar as such orders are concerned, any other Province
thereof), any statute or, to the knowledge of such counsel any
order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties; and no consent,
approval, authorization, order, registration or qualification
of or with any such court or governmental agency or body of
Canada or the Province of Quebec is required for the entry
into the Purchase Contracts underlying the Units by the
Company, the issue of the Guarantees, the issue and sale of
the Common Shares by the Company pursuant to the Purchase
Contracts, the compliance by the Company with all of the
provisions of this Agreement, the Purchase Contracts, the
Purchase Contract Agreement, the Pledge Agreement, the
Guarantees or the Indenture or the consummation by the Company
of the transactions herein or therein contemplated, other than
those which have been obtained or made;
(xi) No filing or registration of the Registration
Statements, any Preliminary Prospectus or the Prospectus is
necessary under the laws of Canada or the Province of Quebec
in connection with the issue and sale outside of Canada of the
Units pursuant to this Agreement except for those which have
been made;
(xii) No tax or stamp duty under the laws of Canada
or the Province of Quebec is payable in connection with the
creation, issue and delivery to the Underwriters of the Notes
and the Purchase Contracts, which are evidenced by the Units,
and the Guarantees;
(xiii) Under the laws of Canada and of the Province
of Quebec currently in force and under current practice of the
courts of the Province of Quebec at the date of such opinion,
such courts would give effect to the choice of New York law as
the law governing this Agreement, the Purchase Contract
Agreement, the Purchase Contracts, the Guarantees, the
Indenture and the Pledge Agreement subject to proof of such
laws as a question of fact; provided that such choice of law
is bona fide (in the sense that it was not made with a view to
avoiding the consequences of the laws
19
<PAGE> 20
of any other jurisdiction) and provided that such choice of
law is not contrary to public order, as that term is applied
by the courts in the Province of Quebec; and
(xiv) Subject to the qualifications and limitations
stated in the Prospectus, the statements set forth in the
Prospectus under the caption "Canadian Income Tax
Consequences", insofar as they purport to constitute summaries
of matters of Canadian tax law and regulations of legal
conclusions with respect thereto, constitute accurate
summaries of the matters described therein.
Such opinion shall also state that (i) such counsel did not
prepare the Registration Statements, the Prospectus or any documents
incorporated by reference in the Prospectus and (ii) such counsel has
no reason to believe that any Registration Statement or any amendment
thereto (including the documents incorporated by reference in the
Prospectus), as of its respective effective date (or, with respect to
any Registration Statement as to which an Annual Report on Form 10-K of
the Company has been filed subsequent to the effective date thereof and
is deemed to be incorporated by reference therein, as of the date of
filing o the most recent such Annual Report on Form 10-K) (other than
the financial statements and other financial and statistical
information contained therein, as to which such counsel need express no
belief) contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in
order to make the statements therein concerning the Company not
misleading or that the Prospectus or any amendment or supplement
thereto (including the documents incorporated by reference in the
Prospectus) contains any untrue statement of a material fact or omits
to state any material fact necessary in order to make the statements
therein, in the light of circumstances under which they were made, not
misleading.
Such opinion shall also state that any final and conclusive
judgment obtained against the Company in the United States in respect
of the Purchase Contracts, the Purchase Contract Agreement, the
Guarantees, the Indenture and the Pledge Agreement, would be recognized
and enforced by the courts of the Province of Quebec provided that (A)
the United States court rendering such judgment had jurisdiction over
the Company, as determined under the relevant provisions of the laws of
the Province of Quebec; (B) such judgment is not subject to ordinary
remedies (such as appeal or judicial review) and is final and
enforceable in the United States; (C) such judgment was not rendered in
contravention of the fundamental principles of procedure (such as
notice of fair hearing, right to be heard, right to an independent and
impartial tribunal and rules against bias); (D) there were no
proceedings pending in the Province of Quebec and no judgment rendered
in the Province of Quebec or in another jurisdiction meeting the
necessary conditions for recognition in the Province of Quebec between
the same parties, based on the same facts and having the same object;
(E) such judgment is not manifestly inconsistent with public order as
understood in international relations; (F) such judgment does not
enforce obligations arising from foreign revenue laws, unless there is
reciprocity, or arising from other laws of a public nature, such as
20
<PAGE> 21
expropriatory or penal laws; (G) the action to enforce such judgment is
commenced in the Province of Quebec within three (3) years after the
date of such judgment; and (H) such judgment is not contrary to any
order made by the Attorney-General of Canada under the Foreign
Extra-territorial Measures Act (Canada) or by the Competition Tribunal
under the Competition Act (Canada);
(e) On the date of the Prospectus at a time prior to the
execution of this Agreement, at 9:30 a.m., New York City time, on the
effective date of any post-effective amendment to the Registration
Statement filed subsequent to the date of this Agreement and also at
each Time of Delivery, PricewaterhouseCoopers LLP and KPMG Accountants
N.V., who have certified the financial statements of the Company and
its subsidiaries included or incorporated by reference in the
Registration Statement, shall each have furnished to you a letter or
letters, dated the respective dates of delivery thereof, in form and
substance satisfactory to you, delivered prior to the execution of this
Agreement;
(f) (i) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial
statements included or incorporated by reference in the Prospectus any
loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus, and (ii) since the
respective dates as of which information is given in the Prospectus
there shall not have been any change in the capital stock or long-term
debt of the Company or any of its subsidiaries or any change, or any
development involving a prospective change, in or affecting the general
affairs, management, financial position, shareholders' equity or
results of operations of the Company and its subsidiaries, otherwise
than as set forth or contemplated in the Prospectus, the effect of
which, in any such case described in clause (i) or (ii), is in your
judgment so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Units being delivered at such Time of Delivery on the terms and in the
manner contemplated in the Prospectus;
(g) Subsequent to the date hereof there shall not have
occurred any of the following: (i) a suspension or material limitation
in trading in securities generally on the NYSE; (ii) a general
moratorium on commercial banking activities in Canada or New York
declared by Canadian federal, Canadian Provincial, United States
federal or New York State authorities; (iii) a suspension or material
limitation in trading in the Company's common shares on the New York
Stock Exchange; or (iv) the outbreak or escalation of hostilities
involving the United States or Canada or the declaration by the United
States or Canada of a national emergency or war, if the effect of any
such event specified in this clause (iv) in your judgment makes it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Units on the terms and in the manner contemplated in
the Prospectus;
(h) The Units to be sold by the Company at the Time of
Delivery shall have been duly listed, subject to notice of issuance, on
the NYSE;
21
<PAGE> 22
(i) The Company shall have complied with the provisions of
Section 5(c) hereof with respect to the furnishing of prospectuses on
the New York Business Day next succeeding the date of this Agreement;
and
(j) Each of the Company and JES shall have furnished or caused
to be furnished to you at such Time of Delivery certificates of
officers of the Company and JES, respectively, satisfactory to you as
to the accuracy of the representations and warranties of the Company
and JES, as applicable, herein at and as of such Time of Delivery, as
to the performance by the Company and JES of all of their respective
obligations hereunder to be performed at or prior to such Time of
Delivery, and as to such other matters as you may reasonably request,
and the Company and JES shall have furnished or caused to be furnished
certificates as to the matters set forth in subsections (a) and (g) of
this Section.
8. (a) The Company and JES jointly and severally will indemnify and
hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating or defending any such
action or claim as such expenses are incurred; provided, however, that the
Company and JES shall not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any Preliminary Prospectus, the Registration Statement or the Prospectus or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company and JES by any Underwriter through Goldman,
Sachs & Co. expressly for use therein;
(b) Each Underwriter will indemnify and hold harmless the
Company and JES against any losses, claims, damages or liabilities to which the
Company or JES may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in any Preliminary Prospectus, the Registration Statement or
the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company and JES by such
Underwriter through Goldman, Sachs & Co. expressly for use therein; and will
reimburse the Company and JES for any legal or other expenses
22
<PAGE> 23
reasonably incurred by the Company or JES in connection with investigating or
defending any such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (c) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against an
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (which shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. In no event shall the indemnifying party
be liable for the fees and expenses of more than one counsel for all indemnified
parties in connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, provided that this sentence shall not impair any right of an
indemnified party to be indemnified for its reasonable costs of investigation.
An indemnifying party shall not be liable for any settlement of any action or
claim for monetary damages which an indemnified party may effect without the
indemnifying party's consent, which consent shall not be unreasonably withheld.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (c) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company and JES on the one hand and the
Underwriters on the other from the offering of the Units. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law or if the indemnified party failed to give the notice required
under subsection (d) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and JES on the one hand and the Underwriters on the other
in connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company and JES on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
of the Units purchased under this Agreement (before deducting expenses) received
by the Company and JES bear to the total underwriting discounts and commissions
received by the Underwriters with respect to the Units purchased under this
23
<PAGE> 24
Agreement, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company and JES on the one hand or the Underwriters on the other
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
JES and the Underwriters agree that it would not be just and equitable if
contributions pursuant to this subsection (e) were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this subsection (e). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to above in this
subsection (e) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this subsection (e),
no Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Units underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this subsection (e) to contribute are several in proportion to their respective
underwriting obligations and not joint.
9. (a) If any Underwriter shall default in its obligation to purchase
the Units which it has agreed to purchase hereunder at the time of delivery, you
may in your discretion arrange for you or another party or other parties to
purchase such Units on the terms contained herein. If within thirty-six hours
after such default by any Underwriter you do not arrange for the purchase of
such Units, then the Company and JES shall be entitled to a further period of
thirty-six hours within which to procure another party or other parties
satisfactory to you to purchase such Units on such terms. In the event that,
within the respective prescribed periods, you notify the Company and JES that
you have so arranged for the purchase of such Units, or the Company and JES
notify you that they have so arranged for the purchase of such Units, you or the
Company and JES shall have the right to postpone such Time of Delivery for a
period of not more than seven days, in order to effect whatever changes may
thereby be made necessary in the Registration Statement or the Prospectus, or in
any other documents or arrangements, and the Company and JES agree to file
promptly any amendments to the Registration Statement or the Prospectus which in
your opinion may thereby be made necessary. The term "Underwriter" as used in
this Agreement shall include any person substituted under this Section with like
effect as if such person had originally been a party to this Agreement with
respect to such Units.
(b) If, after giving effect to any arrangements for the
purchase of the Units of a defaulting Underwriter or Underwriters by you and the
Company and JES as provided in subsection (a) above, the aggregate number of
such Units which remains unpurchased does not exceed one-eleventh of the
aggregate number of all of the Units to be purchased at such Time of Delivery,
then Company and JES shall have the right to require each non-defaulting
Underwriter to purchase the number of Units which such
24
<PAGE> 25
Underwriter agreed to purchase hereunder at such Time of Delivery and, in
addition, to require each non-defaulting Underwriter to purchase its pro rata
share (based on the number of Units which such Underwriter agreed to purchase
hereunder) of the Units of such defaulting Underwriter or Underwriters for which
such arrangements have not been made; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the
purchase of the Units of a defaulting Underwriter or Underwriters by you and the
Company and JES as provided in subsection (a) above, the aggregate number of
such Units which remains unpurchased exceeds one-eleventh of the aggregate
number of all of the Units to be purchased at such Time of Delivery, or if the
Company and JES shall not exercise the right described in subsection (b) above
to require non-defaulting Underwriters to purchase Units of a defaulting
Underwriter or Underwriters, then this Agreement (or, with respect to the Second
Time of Delivery, the obligations of the Underwriters to purchase and of the
Company and JES to sell the Optional Securities) shall thereupon terminate,
without liability on the part of any non-defaulting Underwriter or the Company
and JES, except for the expenses to be borne by the Company and JES and the
Underwriters as provided in Section 6 hereof and the indemnity and contribution
agreements in Section 8 hereof; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company, JES and the several Underwriters, as set
forth in this Agreement or made by or on behalf of it, respectively, pursuant to
this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company
or JES, or any officer or director or controlling person of the Company and JES,
and shall survive delivery of and payment for the Units.
Anything herein to the contrary notwithstanding, the indemnity
agreement of the Company and JES in subsection (a) of Section 8 hereof, the
representations and warranties in subsections (ii), (iii) and (iv) of Section 1
hereof and any representation or warranty as to the accuracy of the Registration
Statement or the Prospectus contained in any certificate furnished by the
Company and JES pursuant to Section 7 hereof, insofar as they may constitute a
basis for indemnification for liabilities (other than payment by the Company and
JES of expenses incurred or paid in the successful defense of any action, suit
or proceeding) arising under the Act, shall not extend to the extent of any
interest therein of a controlling person or partner of an Underwriter who is a
director, officer or controlling person of the Company and JES when the
Registration Statement has become effective, except in each case to the extent
that an interest of such character shall have been determined by a court of
appropriate jurisdiction as not against public policy as expressed in the Act.
Unless in the opinion of counsel for the Company the matter has been settled by
controlling precedent, the Company and JES will, if a claim for such
indemnification is asserted, submit to a court of appropriate jurisdiction the
question whether such interest is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
the Company and JES shall not then be under any liability to any Underwriter
except as provided in Sections 6 and 8 hereof; but, if for any other reason any
Units are not delivered
25
<PAGE> 26
by or on behalf of the Company and JES as provided herein, the Company and JES
will reimburse the Underwriters through you for all out-of-pocket expenses
approved in writing by you, including fees and disbursements of counsel,
reasonably incurred by the Underwriters in making preparations for the purchase,
sale and delivery of the Units not so delivered, but the Company and JES shall
then be under no further liability to any Underwriter in respect of the Units
not so delivered except as provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives at 32 Old Slip, 21st Floor,
New York, New York 10005, Attention: Registration Department; and if to the
Company and JES, shall be delivered or sent by mail, telex or facsimile
transmission to the respective addresses of the Company and JES set forth in the
Registration Statement, Attention: Vice President and Treasurer; provided,
however, that any notice to an Underwriter pursuant to Section 8 (d) hereof
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its Underwriters' Questionnaire or telex
constituting such Questionnaire, which address will be supplied to the Company
and JES by you upon request.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company, JES and, to the extent provided in
Sections 8 and 10 hereof, the officers and directors of the Company and JES and
each person who controls the Company, JES or any Underwriter, and their
respective heirs, executors, administrators, successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement. No purchaser of any of the Units from any Underwriter shall be deemed
a successor or assign by reason merely of such purchase.
14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
26
<PAGE> 27
If the foregoing is in accordance with your understanding, please sign
and return to us eight counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement among each of the Underwriters and
the Company and JES. It is understood that your acceptance of this letter on
behalf of each of the Underwriters is pursuant to the authority set forth in a
form of Agreement among Underwriters, the form of which shall be submitted to
the Company for examination upon request, but without warranty on your part as
to the authority of the signers thereof.
Very truly yours,
The Seagram Company Ltd.
By: __________________________________
Name:
Title:
By: __________________________________
Name:
Title:
Joseph E. Seagram & Sons, Inc.
By: __________________________________
Name:
Title:
Accepted as of the date hereof
Goldman, Sachs & Co.
Bear, Stearns & Co. Inc.
Merrill, Lynch, Pierce, Fenner & Smith Incorporated
Morgan Stanley & Co. Incorporated
By: ......................................
(Goldman, Sachs & Co.)
On behalf of each of the Underwriters
27
<PAGE> 28
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER OF
OPTIONAL
SECURITIES TO BE
TOTAL NUMBER OF PURCHASED IF
FIRM UNITS MAXIMUM
UNDERWRITER TO BE PURCHASED OPTION EXERCISED
----------- --------------- ----------------
<S> <C> <C>
Goldman, Sachs & Co.......................................
Bear, Stearns & Co. Inc...................................
Merrill, Lynch, Pierce, Fenner & Smith
Incorporated............................................
Morgan Stanley & Co. Incorporated.........................
[Other Underwriters]
--------------- ----------------
TOTAL............................................ 18,500,000 2,775 000
=============== ================
</TABLE>
<PAGE> 1
[Form of Note]
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Company
(as defined herein) or its agent for registration of transfer, exchange, or
payment, and any certificate issued is registered in the name of Cede & Co. or
in such other name as is requested by an authorized representative of DTC (and
any payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC). ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.
REGISTERED REGISTERED
NUMBER
R- _____ $[AMOUNT]
JOSEPH E. SEAGRAM & SONS, INC.
% SUBORDINATED DEFERRABLE NOTES DUE 2004
GUARANTEED AS TO PAYMENT OF PRINCIPAL AND INTEREST BY
THE SEAGRAM COMPANY LTD.
CUSIP
SEE REVERSE FOR CERTAIN DEFINITIONS
JOSEPH E. SEAGRAM & SONS, INC., a corporation duly organized and existing under
the laws of Indiana (herein called the "Company," which term includes any
successor corporation under the Indenture hereinafter referred to), for value
received, hereby promises to pay to
CEDE & CO.
% %
DUE 2004 DUE 2004
, or registered assigns,
the principal sum of
$[AMOUNT]
on , 2004, and to pay interest thereon from , 1999 or
from the most recent Interest Payment Date to which interest has been paid or
duly provided for, quarterly on March 31, June 30, September 30 and December 31
in each year, commencing , 1999, at the rate of % per annum until
, 2002 and at the Reset Rate thereafter until the principal hereof
is paid or duly provided for. The interest so payable, and punctually paid or
duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Note (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be one Business Day preceding such
Interest Payment Date. Any such interest not so punctually paid or duly
provided for will forthwith cease to be payable to the registered Holder on
such Regular Record Date and may either be paid to the Person in whose name
this Note (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date to be fixed by the Trustee for the payment
of such Defaulted Interest, notice whereof shall be given to Holders of Notes
not less than 10 days prior to such Special Record Date, or be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon such notice as
may be required by such exchange, all as more fully provided in said Indenture.
Payment of the principal of and interest on this Note will be made at the
office or agency of the Company maintained for that purpose in the Borough of
Manhattan, The City of New York, New York, in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts; provided, however, that at the option of the
Company interest may be paid by check drawn on a bank in the Borough of
Manhattan, The City of New York, New York, mailed to the address of the person
entitled thereto as such address shall appear in the Security Register.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, neither this
Note nor the Guarantee endorsed hereon shall be entitled to any benefit under
the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this Debenture to be duly
executed under its corporate seal.
Dated: __________, 1999 JOSEPH E. SEAGRAM & SONS, INC.
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the
series designated in, and issued under,
the Indenture described herein.
THE BANK OF NEW YORK, as Trustee
By Attest: By
Authorized Signatory Secretary Vice President and Treasurer
<PAGE> 2
JOSEPH E. SEAGRAM & SONS, INC.
% SUBORDINATED DEFERRABLE NOTES DUE 2004
GUARANTEED AS TO PAYMENT OF PRINCIPAL AND INTEREST BY
THE SEAGRAM COMPANY LTD.
This Note is one of a duly authorized issue of Notes of the Company
designated as its % Subordinated Deferrable Notes due 2004 (herein called the
"Notes") limited (except as provided in the Indenture) in aggregate principal
amount to $ ,000,000, issued and to be issued under an Indenture, dated as of
September 15, 1991, among the Company, as issuer, The Seagram Company Ltd., as
guarantor (herein called the "Guarantor"), and The Bank of New York, as trustee
(the "Trustee"), as supplemented by the First Supplemental Indenture among the
Company, the Guarantor, and the Trustee (the "Indenture").
This Note is a global Security within the meaning of the Indenture and is
registered in the name of a Depositary or a nominee of a Depositary. This global
Security is exchangeable for Notes registered in the name of a Person other than
the Depositary or its nominee only in the limited circumstances described in the
Indenture and as may be set forth on the face hereof, and no transfer of this
Note (other than a transfer of this Note as a whole by the Depositary) may be
registered except in such limited circumstances.
If an Event of Default shall occur and be continuing, the principal of all
the Notes may be declared due and payable in the manner and with the effect
provided in the Indenture.
The Guarantor is subject to the provisions of the Indenture relating to a
subordination and deferral.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the Guarantor and the rights of the Holders of the Notes under the
Indenture at any time by the Company, the Guarantor and the Trustee with the
consent of the Holders of more than 50% in aggregate principal amount of the
Outstanding Securities of each series of Securities then Outstanding affected
thereby. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Notes at the time
Outstanding, on behalf of the Holders of all the Notes, to waive compliance by
the Company or the Guarantor or both with certain provisions of the Indenture
and certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Note shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of any Note
issued upon the registration of transfer hereof or in exchange herefor or in
lieu hereof, whether or not notation of such consent or waiver is made upon
this Note.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the right of the Holder of this Note, which
is absolute and unconditional, to receive payment of the principal of and
interest on this Note at the times, place and rate, and in the coin or
currency, herein prescribed.
Prior to due presentment for registration of transfer, the Company, the
Guarantor, the Trustee and any agent of the Company, the Guarantor or the
Trustee may meet the person in whose name this Note is registered as the owner
hereof for all purposes, except as otherwise set forth in the Indenture,
whether or not this Note be overdue and neither the Company, the Guarantor, the
Trustee nor any such agent shall be affected by notice to the contrary.
This Note has not been and will not be qualified for sale under the
securities laws of Canada or any province or territory thereof. Accordingly,
neither this Note nor any interest herein may be offered or sold, directly or
indirectly, in Canada or to residents of Canada in contravention of the
securities laws of Canada or any province or territory thereof.
The Indenture, the Notes and the Guarantees endorsed thereon shall be
governed by and construed in accordance with the laws of the State of New York.
All terms used in this Note which are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
GUARANTEE
For value received, THE SEAGRAM COMPANY LTD., a company organized under the
laws of Canada (herein called the "Guarantor", which term includes any successor
corporation under the Indenture referred to in the Note upon which this
Guarantee is endorsed), hereby unconditionally guarantees to the Holder of the
Note upon which this Guarantee is endorsed, and to the Trustee on behalf of such
Holder, the due and punctual payment of the principal of and interest (including
any additional amounts payable in accordance with the terms of such Note and the
Indenture) on such Note, whether at the Stated Maturity or by declaration of
acceleration or otherwise, according to the terms of such Note and of the
Indenture. In case of the failure of the Company punctually to make any such
payment of principal or interest, the Guarantor hereby agrees to cause any such
payment to be made punctually when and as the same shall become due and payable,
whether at the Stated Maturity or by declaration of acceleration or otherwise
and as if such payment were made by the Company.
The Guarantor shall make all payments in respect of principal of and
interest (including interest on amounts in default) on the Notes pursuant to
this Guarantee without deduction or withholding for or on account of any present
or future taxes, duties, assessments or governmental charges of whatever nature
imposed or levied upon or as a result of such payments by or on behalf of any
Canadian Taxing Authority, unless deduction or withholding of such taxes,
duties, assessments or governmental charges is required.
If the Guarantor is required to withhold or deduct any amounts from the
principal of or interest (including interest on amounts in default) on the Notes
on account of any taxes, duties, assessments or governmental charges mentioned
in the preceding paragraph, the Guarantor shall pay such additional amounts as
may be necessary in order that every net payment of the principal of and
interest (including interest on amounts in default) on the Notes, after such
withholding or deduction, shall not be less than the amount provided for in the
Notes to be then due and payable, except that no such additional amounts shall
be payable in respect of any Note to any Holder:
(a) who is subject to such taxes, duties, assessments or governmental
charges in respect of such Note by reason of his being connected with
Canada otherwise than merely by the holding or ownership of such Note,
or
(b) Who is not dealing at arm's length with the Guarantor (within the
meaning of the Income Tax Act (Canada) as reenacted or amended from
time to time), or
(c) with respect to any estate inheritance, gift, sales, transfer, personal
property or any other similar tax, duty, assessment or governmental
charge, or
(d) with respect to any tax, duty, assessment or governmental charge
payable otherwise than by withholding payments in respect of such
Notes, or
(e) with respect to any combination of the above.
Wherever in this Guarantee or the Indenture there is mention, in any
context, of payment of principal and/or interest (including interest on amounts
in default) of , on or in respect of the Notes or any Note by virtue of the
Guarantee or Guarantees thereof, such mention shall be deemed to include
mention of the payment of any additional amounts to the extent that, in such
context, such additional amounts are, were or would be payable pursuant to the
provisions of the preceding paragraph.
The Guarantor hereby agrees that its obligations hereunder shall be
unconditional irrespective of the validity, regularity or enforceability of such
Note or the Indenture, the absence of any action to enforce the same, any waiver
or consent by the Holder of such Note or by the Trustee with respect to any
provision thereof or of the Indenture, the obtaining of any judgment against the
Company or any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor.
The Guarantor hereby waives the benefits of division and discussion, diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a proceeding first
against the Company, protest or notice with respect to such Note or the
indebtedness evidenced thereby and all demands whatsoever, and covenants that
this Guarantee will not be discharged except by complete performance of the
obligations contained in such Note and in this Guarantee.
The Holder of the Note upon which this Guarantee is endorsed is entitled
to the further benefits relating hereto set forth in the Indenture. No
reference herein to the Indenture and no provision of this Guarantee or of the
Indenture shall alter or impair the guarantee of the Guarantor, which is
absolute and unconditional, of the due and punctual payments of the principal
of and interest (including any additional amounts referred to above) on the
Note upon which this Guarantee is endorsed.
This Guarantee shall be governed by and construed in accordance with the
laws of the State of New York.
All terms used in this Guarantee which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
This Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Debenture upon which this
Guarantee is endorsed shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized signatories.
IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be
duly executed.
Attest: THE SEAGRAM COMPANY LTD.
By
Secretary Vice President and Treasurer
____________________________
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT -- _______________ Custodian ________________
(Cust) (Minor)
Under Uniform Gifts to Minors Act
________________________________
(State)
Additional abbreviation may also be used though not in the above list
________________________________________________
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned hereby
sell(s), assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE
_____________________________________________________________
_____________________________________________________________
________________________________________________________________________________
Please print or typewrite name and address including postal zip code of assignee
________________________________________________________________________________
the within Debenture of JOSEPH E. SEAGRAM & SONS, INC. and does hereby
irrevocably constitute and appoint
____________________________________________________________________ attorney
to transfer the said Debenture on the books of the within named Company, with
full power of substitution in the premises.
Dated ________________________________________
Signature(s) Guaranteed:
________________________________________________________________________________
_______________________________________________________________________________
The signature(s) to this assignment must correspond with the name(s) as written
upon the face of the Debenture in every particular without alteration or
enlargement or any change whatever. The signature(s) should be guaranteed by a
commercial bank or trust company by a New York Stock Exchange member or firm
whose signature is known to the registrar.
<PAGE> 1
FIRST SUPPLEMENTAL INDENTURE
FIRST SUPPLEMENTAL INDENTURE, dated as of June __, 1999 (this "First
Supplemental Indenture"), among Joseph E. Seagram & Sons, Inc., an Indiana
corporation ("JES"), The Seagram Company Ltd. a Canadian corporation (the
"Guarantor"), and The Bank of New York, as trustee (the "Trustee"), under the
Indenture dated as of September 15, 1991 among JES, the Guarantor and the
Trustee (the "Indenture").
WHEREAS, JES and the Guarantor executed and delivered the Indenture to the
Trustee to provide for the issuance from time to time of JES' unsecured
debentures, notes or other evidences of indebtedness (collectively the
"Securities," and individually, a "Security") to be issued in one or more
series as might be determined by JES under the Indenture, in an unlimited
aggregate principal amount which may be authenticated and delivered as provided
in the Indenture;
WHEREAS, pursuant to the terms of the Indenture, JES desires to provide
for the establishment of a new series of Securities to be known as the __%
Junior Subordinated Notes due 2004 (the "Notes"), the form and substance of
such Notes and the terms, provisions and conditions thereof to be as set forth
in the Indenture and this First Supplemental Indenture;
WHEREAS, JES and the Guarantor have requested that the Trustee execute and
deliver this First Supplemental Indenture, all requirements necessary to make
this First Supplemental Indenture a valid instrument in accordance with its
terms have been performed, and the execution and delivery of this First
Supplemental Indenture has been duly authorized in all respects;
NOW, THEREFORE, in consideration of the purchase and acceptance of the
Notes by the Holders thereof, and for the purpose of setting forth, as provided
in the Indenture, the form and substance of the Notes and the terms, provisions
and conditions thereof, JES and the Guarantor covenant and agree with the
Trustee as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definition of Terms.
Unless the context otherwise requires:
(a) a term not defined herein that is defined in the Indenture has
the same meaning when used in this First Supplemental Indenture;
(b) a term defined anywhere in this First Supplemental Indenture
has the same meaning throughout;
<PAGE> 2
2
(c) the singular includes the plural and vice versa;
(d) a reference to a Section or Article is to a Section or Article of this
First Supplemental Indenture;
(e) headings are for convenience of reference only and do not affect
interpretation;
"Purchase Contract" has the meaning specified in the Unit Agreement.
"Remarketing" means the operation of the procedures for remarketing
specified in Article IV hereof.
"Remarketing Agent" shall mean any remarketing agent engaged by JES.
"Remarketing Date" means three business days prior to ___________, 2002.
"Reset Rate" means the rate per annum that results from the Remarketing of
the Notes.
"Senior Indebtedness" of the Company means the principal of (and premium,
if any) and interest and other amounts payable with respect to the following,
whether outstanding at the date of execution of this First Supplemental
Indenture or thereafter incurred, created or assumed: (a) indebtedness of the
Company for money borrowed; (b) indebtedness of the Company evidenced by a
note, debenture, bond or other security or instrument and indebtedness of the
Company incurred, created or assumed in connection with the acquisition of any
property, but excluding trade accounts payable; (c) obligations of the Company
as lessee under leases which are capitalized in accordance with generally
accepted accounting principles applicable to the Company, including, without
limitation, leases of property made as part of any sale and lease-back
transaction; and (d) indebtedness, obligations and liabilities of others in
respect of which the Company is liable as guarantor, endorser or otherwise or
which the Company has agreed to purchase or otherwise acquire; other than (i)
any such indebtedness, obligation or liability referred to in clauses (a)
through (d) above which by its terms is expressed to be junior or subordinate
in right of payment to the Notes, or to rank pari passu with the Notes in right
of payment, (ii) the Notes and (iii) the Company's Liquid Yield Option Notes
due 2006 which shall rank pari passu with the Notes in right of payment.
"Senior Indebtedness" of the Guarantor means the principal of (and premium,
if any) and interest and other amounts payable with respect to the following,
whether outstanding at the date of execution of this First Supplemental
Indenture or thereafter incurred, created or assumed: (a) indebtedness of the
Guarantor for money borrowed; (b) indebtedness of the Guarantor evidenced by a
note, debenture, bond or other security or instrument and indebtedness of the
Guarantor incurred, created or assumed in connection with the acquisition of any
property, but excluding trade accounts payable; (c) obligations of the Guarantor
as lessee under leases which are capitalized in accordance with generally
accepted accounting principles applicable to the Guarantor, including without
limitation, leases of property made as part of any sale and lease-
<PAGE> 3
3
back transaction; and (d) indebtedness, obligations and liabilities of others
in respect of which the Guarantor is liable as guarantor, endorser or otherwise
or which the Guarantor has agreed to purchase or otherwise acquire; other than
(i) any such indebtedness, obligation or liability referred to in clauses (a)
through (d) above which by its terms is expressed to be junior or subordinate
in right of payment to the Guarantees, or to rank pari passu with the
Guarantees in right of payment and (ii) the Notes and the Guarantees.
"Treasury Consideration" has the meaning specified in the Unit Agreement.
"Unit Agreement" means the agreement dated as of June __, 1999, between
the Trustee and the Guarantor.
"Units" has the meaning specified in the Unit Agreement.
ARTICLE II
TERMS AND CONDITIONS OF THE NOTES
Section 2.1 Designation and Principal Amount.
There is hereby authorized a series of Securities designated the "__%
Subordinated Deferrable Notes due 2004," limited in aggregate principal amount
to $[AMOUNT - INCLUDE OVER-ALLOTMENT AMOUNT]
Section 2.2 Maturity.
The Stated Maturity will be June, 2004.
Section 2.3 Interest.
(a) Each Note will bear interest at the rate of __% per annum from June,
1999 until March, 2002, and at the Reset Rate thereafter, payable quarterly in
arrears on the Interest Payment Dates, which shall be March __, June __,
September __ and December __, of each year, commencing _________, 1999.
(b) Interest not paid on the scheduled payment date will accumulate and
compound quarterly at the rate of __% per annum until March __, 2002, and at
the Reset Rate thereafter.
(c) The Regular Record Dates for the Notes shall be the 15th Business Day
prior to each Interest Payment Date.
ARTICLE III
EXTENSION OF INTEREST PAYMENT PERIOD
<PAGE> 4
4
Section 3.1 Extension of interest Payment Period.
JES shall have the right at any time, and from time to time, during the
term of Notes, to defer payments of interest by extending the interest payment
period of such Notes for a period not extending, in the aggregate, beyond the
June __, 2004 (the "Extended Interest Payment Period"), during which Extended
Interest Payment Period no interest shall be due and payable. To the extent
permitted by applicable law, interest, the payment of which has been deferred
because of the extension of the interest payment period pursuant to this Section
3.1, will bear interest thereon at the rate of __% until March __, 2002, and at
the Reset Rate thereafter compounded quarterly for each quarter of the Extended
Interest Payment Period ("Compounded Interest"). At the end of the Extended
Interest Payment Period, JES shall pay all interest accrued and unpaid on the
Notes and Compounded Interest (together, "Deferred Interest") that shall be
payable to the Holders of the Notes in whose names the Notes are registered in
the Security Register on the first record date after the end of the Extended
Interest Payment Period. During any such Extended Interest Payment Period or an
Event of Default, however, JES shall not (a) make any payment of principal,
interest or premium, if any, on or repay, repurchase or redeem any debt
securities issued by JES that rank pari passu to or junior to the Notes, or (b)
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 light of payment to the Notes. In addition, during any Extended
Interest Payment Period or an Event of Default, the Guarantor shall not (a) make
any payment of principal interest, or premium, if any, on or repay, repurchase
or redeem any debt securities of the Guarantor that rank pari passu or junior in
right of payment to the guarantees of the Notes, (b) make any guarantee payments
with respect to any guarantee by the Guarantor if such guarantee ranks pari
passu or junior in right of payment to the Notes, or (c) declare or pay any
dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Guarantor's capital stock (other
than (1) dividends or distributions in, or options, warrants or rights to
subscribe for or purchase, common shares of the Guarantor, (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) the
reclassification of the Guarantor's capital stock solely into shares of one or
more classes or series of the Guarantor's capital stock or the exchange or
conversion of one class or series of the Guarantor's capital stock for another
class or series of the Guarantor's capital stock, (4) the purchase of fractional
interests in shares of the Guarantor's 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 the Guarantor's
normal course issuer bid-purchases or the satisfaction by the Guarantor of its
obligations under any benefit plans for its and its subsidiaries' directors,
officers or employees or any of the Guarantor's dividend reinvestment plans).
Prior to the termination of any Extended Interest Payment Period, JES may
further extend such period, provided that such period together with all such
previous and further extensions thereof shall not extend beyond the Maturity
Date of the Notes. Upon the termination of any Extended Interest Payment Period
and the payment of all Deferred Interest then due, JES may commence a new
Extended Interest Payment Period, subject to the foregoing requirements. No
interest shall be due and payable during an Extended Interest Payment Period,
except at the end thereof, but JES, at its option, may prepay on any Interest
Payment Date all or any portion of the interest accrued during the then elapsed
portion of an Extended Payment Period.
<PAGE> 5
5
Section 3.2 Notice of Extension.
JES shall give written notice to the Unit Agent and the Trustee of its
selection of such Extended Interest Payment Period five Business Days before the
earlier of (i) the date the interest on the Notes would have been payable
except for the election to begin or extend the extension period; (ii) the date
the Trustee is required to give notice to any securities exchange or to holders
of Notes of the record date on the date interest is payable, and (iii) the
record date.
ARTICLE IV
REMARKETING
Section 4.1 Remarketing.
(a) JES shall request, not later than 15 nor more than 30 calendar days
prior to the Remarketing Date, that the Depositary notify the Holders of the
Notes and the holders of the Units of the Remarketing and of the procedures that
must be followed if a holder of a Unit wishes to settle the Purchase Contract
early.
(b) Under Section of the Unit Agreement, holders of Units that do not
give notice of their intention to settle the Purchase Contract component of
their Unit on or prior to the seventh Business Day preceding the Remarketing
Date, shall be deemed to have consented to the disposition of the Note component
of their Unit in the Remarketing. Promptly after such seventh Business Day, the
Unit Agent, based on the notices received by it prior to such time, shall notify
JES and the Remarketing Agent of the amount of Notes to be tendered for purchase
in the Remarketing.
(c) On the Remarketing Date, the Remarketing Agent will use commercially
reasonable efforts to remarket the Notes, at a price equal to 100.25% of the
Treasury Consideration.
(d) If the Remarketing Agent determines that it will be able to remarket
all of the Notes tendered or deemed tendered for purchase at a price of 100.25%
of the Treasury Consideration prior to 4:00 p.m., New York City time, on the
Remarketing Date, the Remarketing Agent shall determine the Reset Rate, which
shall be the rate per annum (rounded to the nearest one-thousandth (0.001) of
one percent per annum) that the Remarketing Agent determines to be the lowest
rate per annum that will enable it to remarket all of the Notes tendered or
deemed tendered for Remarketing.
(e) If the Remarketing Agent cannot remarket the Notes on the Remarketing
Date, the Remarketing Agent will continue to attempt to remarket the Notes until
, 2002.
(f) By approximately 4:30 p.m., New York City time, on the Remarketing
Date, provided that the Remarketing Agent has successfully remarketed the Notes,
the Remarketing Agent shall advise, by telephone (i) the Depositary, the Trustee
and JES of the Reset Rate determined in the Remarketing and the amount of Notes
sold in the Remarketing, (ii) each
<PAGE> 6
6
purchaser (or the Depositary participant thereof) of the Reset Rate and the
amount of Notes such purchaser is to purchase and (iii) each purchaser to give
instructions to its Depositary participant to pay the purchase price on _______,
2002 in same day funds against delivery of the Notes purchased through the
facilities of the Depositary.
(g) In accordance with the Depositary's normal procedures, on _______,
2002, the transactions described above with respect to each Debenture tendered
for purchase and sold in the Remarketing shall be executed through the
Depositary, and the accounts of the respective Depositary participants shall be
debited and credited and such Notes delivered by book-entry as necessary to
effect purchases and sales of such Notes. The Depositary shall make payment in
accordance with its normal procedures.
(h) Under the Remarketing Agreement, JES, in its capacity as issuer of the
Notes, shall be liable for, and shall pay, any and all costs and expenses
incurred in connection with the Remarketing.
(i) The tender and settlement procedures set in this Section 4.1, including
provisions for payment by purchasers of the Notes in the Remarketing, shall be
subject to modification to the extent required by the Depositary or if the
book-entry system is no longer available for the Notes at the time of the
Remarketing, to facilitate the tendering and remarketing of the Notes in
certificated form. In addition, the Remarketing Agent may modify the settlement
procedures set forth herein in order to facilitate the settlement process.
ARTICLE V
SUBORDINATION
Section 5.1 Agreement to Subordinate; Certain Definitions.
The Company covenants and agrees, and each Holder of a Note, by his
acceptance thereof, whether upon original issue or upon transfer or assignment,
likewise covenants and agrees, that, to the extent and in the manner hereinafter
set forth in this Article, the indebtedness represented by the Notes and the
payment of the principal and interest on each and all of the Notes, and all
other amounts payable under the Notes, are hereby expressly made subordinate and
subject in right of payment to the prior payment in full of all Senior
Indebtedness of the Company.
The Guarantor covenants and agrees, and each Holder of a Guarantee, by his
acceptance thereof, whether upon original issue or upon transfer or assignment,
likewise covenants and agrees, that, to the extent and in the manner hereinafter
set forth in this Article, the indebtedness represented by the Guarantees and
the payment of the principal and interest on each and all of the Notes, and all
other amounts payable under the Notes, by virtue of the Guarantees, are hereby
expressly made subordinate and subject in right of payment to the prior payment
in full of all Senior Indebtedness of the Guarantor.
<PAGE> 7
7
Each of the Company and the Guarantor severally (but not jointly) covenants
and agrees, and each Holder of a Note or Guarantee, as the case may be, whether
upon original issue or upon transfer or assignment, likewise covenants and
agrees, to be bound by the provisions hereinbelow set forth in this Article V
and for such purpose in this Article V only the term "Obligor" means, on the one
hand, the Company if this Article V is being applied to the Company, and, on the
other hand, the Guarantor if this Article V is being applied to the Guarantor,
as the case may be, and the term "Obligation" or "Obligations" means
respectively the Notes or the Guarantees, as the case may be; it being
understood that the obligations represented by the Notes and the Senior
Indebtedness of the Company, as such, are not obligations of the Guarantor, and
the obligations represented by the Guarantees and the Senior Indebtedness of the
Guarantor, as such, are not obligations of the Company; provided, that, in the
case of the Guarantor, references to payments of principal and interest include
payments or acceleration or similar matters made or to be made in respect of the
Notes, which by virtue of the Guarantees represent obligations or acceleration
thereof or other similar matters with respect thereto of the Guarantor.
Section 5.2 No Payment if Senior Indebtedness is in Default or if
Securities or Guarantees in Default.
No payment on account of principal or interest or any other amount payable
with respect to, the Obligations shall be made by the Obligor during (1) the
continuance of any default in the payment of any principal of (or premium, if
any), sinking fund or interest on, or any other amount payable with respect to,
any Senior Indebtedness of such Obligor, whether at stated maturity, upon
acceleration or otherwise, (2) the continuance of any other default with respect
to any Senior Indebtedness permitting the holders of such Senior Indebtedness to
accelerate the maturity of the Senior Indebtedness or (3) any judicial
proceeding which is pending with respect to any default with respect to Senior
Indebtedness of such Obligor.
Section 5.3 Payment Over of Proceeds Upon Dissolution, Default, etc., of
the Company or the Guarantor.
Upon (i) the occurrence of any default referred to in subsection 5.2 above
which shall not have been cured or waived or (ii) any payment or distribution of
assets of the Obligor of any kind or character, whether in cash, property or
securities, to creditors upon any dissolution or winding-up or total or partial
liquidation or reorganization of the Obligor, whether voluntary or involuntary
or in bankruptcy, insolvency, receivership or other proceedings, all principal
(and premium, if any), sinking fund payments and interest and other amounts due
or to become due upon all Senior Indebtedness of the Obligor shall first be paid
in full, or payment thereof provided for in accordance with its terms, before
any payment is made on account of the principal or interest on the indebtedness
evidenced by the Obligations, or on account of any other amounts payable under
the Obligations or this First Supplemental Indenture, and upon any such
dissolution or winding-up or liquidation or reorganization, any payment or
distribution of assets of the Obligor of any kind or character, whether in cash,
property or securities (other than securities of the Obligor or any other person
provided for by a plan of reorganization or readjustment, the payment of which
is subordinate, at least to the extent provided in this Article V with respect
to the Obligations, to the payment in full of all such Senior Indebtedness,
<PAGE> 8
8
provided the rights of holders of such Senior Indebtedness are not altered by
such reorganization or readjustment), to which the Holders of the Obligations
would, except for the provisions hereof, be entitled, shall be paid by the
Obligator or by any receiver, trustee in bankruptcy, liquidating trustee, agent
or other person making such payment or distribution, or by the Holders of the
Obligations or by the Trustee under this Indenture if received by them or it,
directly to the holders of Senior Indebtedness of the Obligor (pro rata to each
such holder on the basis of the respective amounts of such Senior Indebtedness
held by such holder) or their representatives, to the extent necessary to pay
all Senior Indebtedness of the Obligor in full after giving effect to any
concurrent or prior payment or distribution to or for the holders of such Senior
Indebtedness, before any payment or distribution is made to the Holders of the
indebtedness evidenced by the Obligations or to the Trustee under this
Indenture.
In the event that any payment or distribution of assets of the Obligor of
any kind of character, whether in cash, property or securities, not permitted by
the foregoing, shall be received by the Trustee or any Holder of an Obligation
before all Senior Indebtedness of the Obligor is paid in full, or provision is
made for such payment, in accordance with its terms, such payment or
distribution shall be held in trust for the benefit of, and shall be paid over
or delivered to, the holders of such Senior Indebtedness of the Obligor (pro
rata to each such holder on the basis of the respective amounts of Senior
Indebtedness held by such holder) or their representative or representatives, or
to the trustee or trustees under any indenture, deed or agreement pursuant to
which any instruments evidencing any of such Senior Indebtedness of the Obligor
may have been issued, as their respective interests may appear, for application
to the payment of all Senior Indebtedness of the Obligor remaining unpaid to the
extent necessary to pay all such Senior Indebtedness of the Obligor in full in
accordance with its terms, after giving effect to any prior or concurrent
payment or distribution to the holders of such Senior Indebtedness of the
Obligor.
This Trustee, however, shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness of the Obligor. The Trustee shall not be liable
to any such holder of Senior Indebtedness if it shall pay over or distribute to
or on behalf of Holders of Obligations, or the Obligor, moneys or assets to
which any holder of Senior Indebtedness of the Obligor shall be entitled by
virtue of this Article V.
Section 5.4 Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the prior payment in full of all Senior Indebtedness of the
Obligor, the Holders of the Obligations shall be subrogated (equally and ratably
with the holders of all indebtedness of the Obligor which by its express terms
ranks on a parity with the Obligations and is entitled to like rights of
subrogation) to the rights of the holders of such Senior Indebtedness to receive
payments or distributions of assets or securities of the Obligor applicable to
the Senior Indebtedness of the Obligor, until the Obligations shall be paid in
full. For purposes of such subrogation, no payments or distributions in respect
of the Senior Indebtedness of the Obligor of assets or securities which
otherwise would have been payable or distributable to Holders of the Obligations
shall, as between the Obligor, its creditors other than the holders of Senior
Indebtedness of the Obligor, and the Holders of Obligations, be deemed to be a
payment by the Obligor to or on account of the Senior Indebtedness of the
Obligor, and no payments or
<PAGE> 9
9
distributions to the Trustee or the Holders of the Obligations of assets or
securities which are applied to the satisfaction of Senior Indebtedness of the
Obligor by virtue of the subordination herein provided for shall, as between the
Obligor, its creditors other than the holders of Senior Indebtedness of the
Obligor, and the Holders of Obligations, to be deemed to be a payment by Obligor
to or on account of the Obligations.
Section 5.5 Provisions Are Solely to Define Relative Rights.
The provisions of this Article V are and are intended solely for the
purpose of defining the relative rights of the Holders of Obligations, on the
one hand, and the holders of the Senior Indebtedness of the Obligor on the other
hand. Nothing contained in this Article V or elsewhere in this First
Supplemental Indenture or in the Obligations is intended to or shall impair, as
between the Obligor, its creditors other than holders of Senior Indebtedness of
the Obligor, and the Holders of the Obligations, the obligation of the Obligor,
which is absolute and unconditional, to pay to the Holders of the Obligations
the principal and interest on the Obligations as and when the same shall become
due and payable in accordance with their terms, or is intended to or shall
affect the relative rights against the Obligor of the Holders of the Obligations
and of creditors of the Obligor, other than the holders of the Senior
Indebtedness of a Obligor, nor shall anything herein or therein prevent the
Trustee or the Holder of the Obligation from exercising all remedies otherwise
permitted by applicable law upon default, subject to the rights, if any, under
this Article V of the Holders of Senior Indebtedness in respect of cash,
property or securities of the Obligor otherwise payable or delivered to the
Trustee or such Holder upon the exercise of any such remedy.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Ratification of Indenture.
The Indenture, as supplemented by this First Supplemental Indenture, is in
all respects ratified and confirmed, and this First Supplemental Indenture shall
be deemed part of the Indenture in the manner and to the extent herein and
therein provided.
Section 6.2 Trustee Not Responsible for Recitals.
The recitals herein contained are made by the Guarantor and JES and not by
the Trustee, and the Trustee assumes no responsibility for the correctness
thereof. The Trustee makes no representation as to the validity or sufficiency
of this First Supplemental Indenture.
Section 6.3 Governing Law.
This First Supplemental Indenture and each Note shall be deemed to be a
contract made under the internal laws of the State of New York and for all
purposes shall be construed in accordance with the laws of said State.
<PAGE> 10
10
Section 6.4 Severability.
In case any one or more of the provisions contained in this First
Supplemental Indenture or in the Notes shall for any reason be held invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this First
Supplemental Indenture or of the Notes, but this First Supplemental Indenture
and the Notes shall be construed as if such invalid or illegal or unenforceable
provision had never been contained herein or therein.
Section 6.5 Counterparts.
This First Supplemental Indenture may be executed in any number of
counterparts each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
<PAGE> 11
11
IN WITNESS WHEREOF, the parties hereto have caused the First Supplemental
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, on the date or dates indicated in the
acknowledgments and as of the day and year first above written.
JOSEPH E. SEAGRAM & SONS, INC.
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
Attest:
- -------------------------------
Name:
Title:
THE SEAGRAM COMPANY LTD.
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
Attest:
- -------------------------------
Name:
Title:
THE BANK OF NEW YORK, as Trustee
By:
------------------------------
Name:
Title:
<PAGE> 12
12
Attest:
- -------------------------------
Name:
Title:
<PAGE> 1
S&C Draft of June 10, 1999
THE SEAGRAM COMPANY LTD.
JOSEPH E. SEAGRAM & SONS INC.
-% SUBORDINATED DEFERRABLE NOTES DUE 2004
REMARKETING AGREEMENT
[date]
[NAME OF REMARKETING AGENT]
____________________________
____________________________
Ladies and Gentlemen:
[Name of Remarketing Agent], a _____________________ (the
"Remarketing Agent"), is undertaking to remarket -% Subordinated Deferrable
Notes due 2004 (stated liquidation amount $___ per Subordinated Deferrable Note)
(the "Notes"), issued by Joseph E. Seagram and Sons, Inc., an Indiana
corporation ("JES"), pursuant to the Purchase Contract Agreement between The
Seagram Company Ltd., a Canadian corporation (the "Company"), and The Bank of
New York, as Purchase Contract Agent (the "Purchase Contract Agent"), dated as
of June - , 1999 (the "Purchase Contract Agreement"). The Notes are guaranteed
by the Company (the "Guarantees"). The Notes have been issued pursuant to an
indenture dated as of September 15, 1991, among the Company, JES and The Bank of
New York as Indenture Trustee (the "Trustee"), as amended on June -, 1999 (the
"Indenture").
Capitalized terms used and not defined in this Agreement shall
have the meanings set forth in the Purchase Contract Agreement or the Indenture,
as the case may be.
The Remarketing (as defined below) of the Notes is provided
for in the Purchase Contract Agreement. As used in this Agreement, the term
"Remarketed Notes" means the Notes subject to the Remarketing as notified to the
Remarketing Agent by the Purchase Contract Agent on or prior to the fourth
Business Day prior to the Purchase Contract Settlement Date; the term
"Remarketing Procedures" means the procedures in connection with the Remarketing
of the Notes described in the Purchase Contract Agreement and the Indenture, as
the case may be; and the term "Remarketing" means the remarketing of the
Remarketed Notes pursuant to the Remarketing Procedures.
Section 1. Appointment and Obligations of the Remarketing Agent. (a)
The Company and JES (the "Issuers") hereby appoint ___________ as exclusive
<PAGE> 2
Remarketing Agent, and ____________ hereby accepts appointment as Remarketing
Agent, for the purpose of (i) Remarketing Remarketed Notes on behalf of the
holders thereof and (ii) performing such other duties as are assigned to the
Remarketing Agent in the Remarketing Procedures, all in accordance with and
pursuant to the Remarketing Procedures.
(b) The Remarketing Agent agrees (i) to use commercially reasonable
efforts to remarket the Remarketed Notes tendered or deemed tendered to the
Remarketing Agent in the Remarketing, (ii) to notify the Issuers, the Depository
and the Trustee promptly of the Reset Rate and (iii) to carry out such other
duties as are assigned to the Remarketing Agent in the Remarketing Procedures,
all in accordance with the provisions of the Remarketing Procedures.
(c) On the sixth Business Day prior to March - 2002, after
identification by the Purchase Contract Agent of the number of Holders of Units
electing to effect a Collateral Substitution, the Remarketing Agent shall
purchase an option, excercisable for the delivery on March - 2002 of 100.25% of
the Treasury Consideration in respect of such Notes. The Company and JES shall
reimburse the Remarketing Agent for the purchase of the option. The Remarketing
Agent shall notify the Purchase Contract Agent by 3:00 p.m on the sixth Business
Day prior to March - 2002, of the [AMOUNT] [CASH] required, pursuant to the
option, to purchase the Treasury Consideration necessary for a Holder to effect
a Collateral Substitution.
(d) On the third Business Day immediately preceding ______, 2002 (the
"Remarketing Date"), the Remarketing Agent shall use commercially reasonable
efforts to remarket, at a price equal to 100.25% of the Treasury Consideration,
the Remarketed Notes tendered or deemed tendered for purchase.
(e) If, as a result of the efforts described in Section l(b), the
Remarketing Agent determines that it will be able to remarket all Remarketed
Notes tendered or deemed tendered for purchase at a price of 100.25% of the
Treasury Consideration prior to 4:00 P.M., New York City time, on the
Remarketing Date, the Remarketing Agent shall determine (i) the Reset Rate,
which shall be the rate per annum (rounded to the nearest one-thousandth (0.001)
of one percent per annum) that the Remarketing Agent determines, to be the
lowest rate per annum that will enable it to remarket all Remarketed Notes
tendered or deemed tendered for Remarketing and (ii) purchase the Treasury
Consideration related to the Remarketed Notes and the Notes for which Holders
have effected a Collateral Substitution.
(f) If none of the holders of Remarketed Notes elects to have
Remarketed Notes remarketed in the Remarketing, the Remarketing Agent shall
determine the rate
-2-
<PAGE> 3
that would have been established had a Remarketing been held on the Remarketing
Date, and such rate shall be the Reset Rate.
(g) If the Remarketing Agent cannot remarket the Notes on the
Remarketing Date, the Remarketing Agent will continue to attempt to remarket the
Notes until June -, 2002.
(h) If, by 4:00 P.M., New York City time, on June -, 2002, the
Remarketing Agent is unable to remarket all Remarketed Notes tendered or deemed
tendered for purchase, a failed Remarketing ("Failed Remarketing") shall be
deemed to have occurred, and the Remarketing Agent shall so advise by telephone
the Purchase Contract Agent, the Trustee, the Company and JES.
(i) By approximately 4:30 P.M., New York City time, on the Remarketing
Date, provided that there has not been a Failed Remarketing, the Remarketing
Agent shall advise, by telephone (i) the Trustee, the Company and JES of the
Reset Rate determined in the Remarketing and the number of Remarketed Notes sold
in the Remarketing, (ii) each purchaser (or the Depositary participant thereof)
of the Reset Rate and the number of Remarketed Notes such purchaser is to
purchase and (iii) each purchaser to give instructions to its Depositary
participant to pay the purchase price on the March -, 2002 in same day funds
against delivery of the Remarketed Notes purchased through the facilities of the
Depositary.
(j) In accordance with the Depositary's normal procedures, on
__________, 2002, the transactions described above with respect to each Note
tendered for purchase and sold in the Remarketing shall be executed through the
Depositary, and the accounts of the respective Depositary participants shall be
debited and credited and such Notes delivered by book-entry as necessary to
effect purchases and sales of such Notes. The Depositary shall make payment in
accordance with its normal procedures.
(k) The tender and settlement procedures set in this Section 1,
including provisions for payment by purchasers of the Notes in the Remarketing,
shall be subject to modification to the extent required by the Depositary or if
the book-entry system is no longer available for the Notes at the time of the
Remarketing, to facilitate the tendering and remarketing of the Notes in
certificated form. In addition, the Remarketing Agent may modify the settlement
procedures set forth herein in order to facilitate the settlement process.
(l) The Remarketing Agent shall remit to the Collateral Agent the
Treasury Consideration subject to the Pledge Agreement.
-3-
<PAGE> 4
(m) The Remarketing Agent shall return as a [Remarketing Fee] an amount
not exceeding 28 basis points (.28%) of the cash purchase price of the Treasury
Consideration.
2. Representations, Warranties and Agreements of the Company and JES.
The Company and JES jointly and severally represent, warrant and agree (i) on
and as of the date hereof, (ii) on and as of the date the Prospectus or other
Remarketing Materials (each as defined in Section 2(a) below) are first
distributed in connection with the Remarketing (the "Commencement Date"), (iii)
on and as of the Remarketing Date, and (iv) on and as of March -, 2002 that:
(a) A registration statement or registration statements on
Form S-3 (File No. 333-78395) and an amendment or amendments thereto
with respect to the initial offering of the Notes have (i) been
prepared by the Issuers in conformity with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the
rules and regulations (the "Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") thereunder, (ii) been filed
with the Commission under the Securities Act and (iii) become effective
under the Securities Act; a registration statement on Form S-3, if
required to be filed in connection with the Remarketing, may also be
prepared by the Issuers in conformity with the requirements of the
Securities Act and the Rules and Regulations and filed with the
Commission under the Securities Act; and the Indenture has been
qualified under the Trust Indenture Act of 1939, as amended, (the
"Trust Indenture Act"). Copies of such registration statement or
registration statements that have become effective and the amendment or
amendments to such registration statements have been delivered by the
Issuers to you. As used in this Agreement, "Effective Time" means the
date and time as of which the last of such registration statements that
have become effective or may be filed, or the most recent
post-effective amendment thereto, if any, was declared effective by the
Commission; "Effective Date" means the date of the Effective Time of
such last registration statement; Preliminary Prospectus means each
prospectus included in such last registration statement, or amendment
thereto, before it became effective under the Securities Act and any
prospectus filed by the Issuers with your consent pursuant to Rule
424(a) of the Rules and Regulations; "Registration Statement" means
such last registration statement, as amended at its Effective Time,
including documents incorporated by reference therein at such time and,
if applicable, all information contained in the final prospectus filed
with the Commission pursuant to Rule 424(b) of the Rules and
Regulations, including any information deemed to be part of such
Registration Statement as of the Effective Time pursuant to paragraph
(b) of Rule 430A of the Rules and Regulations; and "Prospectus" means
such final prospectus, as first filed pursuant to Rule 424(b) of the
Rules and Regulations. Reference made herein to any Preliminary
Prospectus,
-4-
<PAGE> 5
the Prospectus or any other information furnished by the Issuers to the
Remarketing Agent for distribution to investors in connection with the
Remarketing (the "Remarketing Materials") shall be deemed to refer to
and include any documents incorporated by reference therein pursuant to
Item 12 of Form S-3 under the Securities Act as of the date of such
Preliminary Prospectus or the Prospectus, as the case may be, or, in
the case of Remarketing Materials, referred to as incorporated by
reference therein, and any reference to any amendment or supplement to
any Preliminary Prospectus, the Prospectus or the Remarketing Materials
shall be deemed to refer to and include any document filed under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), after
the date of such Preliminary Prospectus or the Prospectus incorporated
by reference therein pursuant to Item 12 of Form S-3 or, if so
incorporated, the Remarketing Materials, as the case may be; and any
reference to any amendment to the Registration Statement shall be
deemed to include any annual report of the Company or JES filed with
the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act
after the Effective Time that is incorporated by reference in the
Registration Statement.
(b) The Registration Statement conforms (and the Prospectus
and any further amendments or supplements to the Registration Statement
or the Prospectus, when they become effective or are filed with the
Commission, as the case may be, will conform) in all respects to the
requirements of the Securities Act and the Rules and Regulations, and
the Registration Statement, the Prospectus and the Remarketing
Materials do not and will not, as of the Effective Date (as to the
Registration Statement and any amendment thereto), as of the applicable
filing date (as to the Prospectus and any amendment or supplement
thereto) and as of the Commencement Date, Remarketing Date and Purchase
Contract Settlement Date (as to any Remarketing Materials) contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; provided that no representation and warranty is
made as to the statement of eligibility and qualification on Form T-1
of the Trustee under the Trust Indenture Act, or as to information
contained in or omitted from the Registration Statement, the Prospectus
or the Remarketing Materials in reliance upon and in conformity with
written information furnished to the Issuers by the Remarketing Agent
specifically for inclusion therein; the Indenture, the Purchase
Contract Agreement each conform in all material respects to the
requirements of the Trust Indenture Act and the applicable rules and
regulations thereunder; and the Commission has not issued an order
preventing or suspending the use of the Registration Statement, any
Preliminary Prospectus, the Prospectus or the Remarketing Materials.
-5-
<PAGE> 6
(c) The documents incorporated by reference in the Prospectus,
when they became effective or were filed with the Commission, as the
case may be, conformed in all material respects to the requirements of
the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder, and none of such documents,
as of their respective effective or filing dates, contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; and any further documents so filed and
incorporated by reference in the Prospectus or any further amendment or
supplement thereto, when such documents become effective or are filed
with the Commission, as the case may be, will conform in all material
respects to the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission thereunder
and will not, as of their respective effective or filing dates, contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that this representation and
warranty shall apply only to documents so filed and incorporated by
reference during the period that a prospectus relating to the Units is
required to be delivered in connection with sales of such Units by any
underwriters (such period being hereinafter sometimes referred to as
the "prospectus delivery period"), and provided further, that this
representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by the Remarketing Agent expressly
for use therein.
(d) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements of
the Company included or incorporated by reference in the Prospectus any
loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree which is
material to the Company and its subsidiaries taken as a whole,
otherwise than as set forth or contemplated in the Prospectus or in the
Remarketing Materials; and, since the respective dates as of which
information is given in the Registration Statement and the Prospectus,
there has not been any material decrease in the capital stock or
increase in long-term debt of the Company and its subsidiaries taken as
a whole, or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general
affairs, management, financial position, shareholders' equity or
results of operations of the Company and its subsidiaries taken as a
whole, otherwise than as set forth or contemplated in the Prospectus or
in the Remarketing Materials;
(e) The Company has been duly incorporated and is validly
existing as a corporation in good standing (in this section references
to the good standing of
-6-
<PAGE> 7
any Canadian corporation refer only to the fact that such corporation
has a current certificate of compliance) under the laws of Canada, with
power and authority to own its properties and conduct its business as
described in the Prospectus or any Remarketing Materials. Each of the
following subsidiaries of the Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
its jurisdiction of incorporation, such subsidiaries being hereinafter
sometimes referred to as the "Significant Subsidiaries": J.E. Seagram
Corp., JES, JES Developments, Inc., PolyGram N.V. and Universal
Studios, Inc.;
(f) All of the issued common shares of the Company have been
duly and validly authorized and issued, and are fully paid and
non-assessable; and all of the issued shares of capital stock of each
of the Specified Subsidiaries have been duly and validly authorized and
issued, are fully paid and non-assessable and, except for Polygram N.V.
and Universal Studios, Inc., are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or claims.
The Company indirectly owns approximately 91.9% of each of PolyGram
N.V. and Universal Studios, Inc;
(g) The Notes have been duly authorized, executed, issued and
delivered by JES (assuming due authentication by the Trustee),
constitute valid and binding obligations of JES entitled to the
benefits provided by the Indenture and are enforceable in accordance
with its terms, except as the same may be limited by bankruptcy,
insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity
principle; the Indenture has been duly authorized, executed and
delivered by the Company and JES and (assuming due execution and
delivery by the Trustee), constitutes a valid and binding agreement of
each of the Company and JES, enforceable against the Company and JES in
accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general
equity principles; and the Notes and the Indenture conform to the
descriptions thereof contained in the Prospectus;
(h) The execution, delivery and performance this Agreement by
the Company and JES, the issue and sale of the Notes by JES, the
execution, delivery and performance of the Guarantees by the Company,
the compliance by the Company with the provisions of this Agreement,
the Guarantees, the Pledge Agreement and the Indenture, the compliance
by JES with the provisions of this Agreement, the Indenture, the Notes
and the Remarketing Agreement, and the consummation by the Company and
JES of the transactions herein and therein contemplated, will not
conflict with or result in a material breach of any of the terms or
provisions of, or constitute a material default under, or result in the
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<PAGE> 8
creation or imposition of any material lien, charge or encumbrance upon
any of the property or assets of the Company or any of its Specified
Subsidiaries pursuant to the terms of, any indenture, mortgage, deed of
trust, loan agreement or other agreement material to the operations of
the Company or instrument to which the Company or any of its Specified
Subsidiaries is a party or by which the Company or any of its Specified
Subsidiaries is bound or to which any of the property or assets of the
Company or any of its Specified Subsidiaries is subject, or which would
cause a current or prospective material adverse change in or affecting
the financial position, shareowners' equity or results of operations of
the Company and its subsidiaries considered as a whole or affect the
validity of the Units or the legal authority of the Company to perform
its obligations under the Units; nor will such action result in any
violation of the provisions of the Certificate of Amalgamation, as
amended, or the General By-laws of the Company, or any statute or any
order, rule or regulation of any court or governmental agency or body
in the United States having jurisdiction over the Company or any of its
Specified Subsidiaries or any of their respective properties; and no
consent, approval, authorization, order, registration or qualification
of or with any such court or governmental agency over the Company or
JES is required for the entry into this Agreement by the Company and
JES, the issue and sale of the Notes by JES, the execution, delivery
and performance of the Guarantees by the Company and JES, the
compliance by the Company with all of the provisions of this Agreement,
the Pledge Agreement, or the Indenture, the compliance by JES with the
provisions of this Agreement, the Remarketing Agreement, the Indenture
and the Notes, and the consummation of the transactions herein or
therein contemplated by the Company and JES, except in connection with
their remarketing pursuant to the Remarketing Agreement, the
registration under the Act of the Notes and the approval of listing of
the Units by the New York Stock Exchange ("NYSE"); such consents as
have been obtained under the Act, the Exchange Act and the Trust
Indenture Act; in connection with their remarketing pursuant to the
Remarketing Agreement; and such consents, authorizations, registrations
or qualifications as may be required under state, provincial or other
foreign securities or Blue Sky laws in connection with the purchase and
distribution of the Units by the Underwriters;
(i) The Guarantees have been duly and validly authorized by
the Company and upon the due execution, authentication and delivery of
the Notes and due endorsement of the Guarantees thereon, such
Guarantees constitute valid and binding obligations of the Company,
enforceable in accordance with their terms, subject, as the
enforcement, to bankruptcy, insolvency, reorganization and other laws
of general applicability relating to or affecting creditors' rights and
to general equity principles; and the Guarantees conform to the
descriptions thereof in the Prospectus;
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<PAGE> 9
(j) This Agreement and the Pledge Agreement have been duly and
validly authorized by the Company, and, when executed and delivered by
the other parties thereto, will constitute valid and binding
obligations of the Company, enforceable in accordance with their terms,
subject, as to enforcement, bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting creditors'
rights and to general equity principles; the Pledge Agreement and this
Agreement conform or will conform to the descriptions thereof in the
Prospectus; and the Pledge Agreement creates, as collateral security
for the performance when due by the holders from time to time of the
Units of their respective obligations under the Purchase Contracts, a
legal, valid and perfected security interest (as that term is defined
in the Uniform Commercial Code, as adopted and currently in effect in
the State of New York), in favor of the Collateral Agent, in the right,
title and interest of such holders in the Pledged Securities (as
defined in the Pledge Agreement) constituting a part of such Units;
(k) This Agreement has been duly and validly authorized by JES
and, when executed and delivered by the other parties thereto, will
constitute valid and binding obligations of JES, enforceable in
accordance with its terms, subject, as to enforcement, bankruptcy,
insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity
principles;
(l) Other than as set forth in the Prospectus or in any
Remarketing Materials, there are no legal or governmental proceedings
pending to which the Company or any of its subsidiaries is a party or
of which any property of the Company or any of its subsidiaries is the
subject which, if determined adversely to the Company or any of its
subsidiaries, are reasonably expected to have a material adverse effect
on the current or future consolidated financial position, shareholders'
equity or results of operations of the Company and its subsidiaries;
and, to the best of the Company's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by
others; and
(m) PricewaterhouseCoopers LLP and KPMG Accountants N.V., who
have certified certain financial statements of the Company and its
subsidiaries, are each independent public accountants as required by
the Act and the rules and regulations of the Commission thereunder.
3. Fees and Expenses. (a) For the performance of its services as
Remarketing Agent hereunder, the Remarketing Agent shall return an amount not
exceeding 25 basis points (.25%) of the cash purchase price of the Treasury
Consideration.
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<PAGE> 10
(b) Each of the Company and JES, severally and jointly, covenants and
agrees with the Remarketing Agent that (a) the Company and JES will pay or cause
to be paid the following: (i) the costs incident to the preparation and printing
of the Registration Statement, prospectus and any Remarketing Materials and any
amendments or supplements thereto; (ii) the costs of distributing the
Registration Statement, prospectus and any Remarketing Materials and any
amendments or supplements thereto; (iii) any fees and expenses of qualifying the
Remarketed Securities under the securities laws of the several jurisdictions as
provided in Section 4(g) and of preparing, printing and distributing a Blue Sky
memorandum (including related fees and expenses of counsel to the Remarketing
Agent); (iv) all other costs and expenses incident to the performance of the
obligations of the Company and JES hereunder; and (v) the reasonable fees and
expenses of counsel tot he Remarketing Agent in connection with their duties
hereunder.
4. Further Agreements of the Company and JES. The Company and JES,
jointly and severally, agree to use their reasonable best efforts:
(a) To prepare any registration statement or prospectus, if
required, in connection with the Remarketing, in a form approved by the
Remarketing Agent and to file any such prospectus pursuant to the
Securities Act within the period required by the Rules and Regulations;
to advise the Remarketing Agent, promptly after it receives notice
thereof, of the time when any amendment to the Registration Statement
has been filed or becomes effective or any supplement to the Prospectus
or any amended Prospectus has been filed and to furnish the Remarketing
Agent with copies thereof; to file promptly all reports and any
definitive proxy or information statements required to be filed by the
Company with the Commission pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of the Prospectus and
for so long as the delivery of a prospectus is required in connection
with the offering or sale of Remarketed Notes; to advise the
Remarketing Agent, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order preventing
or suspending the use of the Prospectus, of the suspension of the
qualification of any of the Remarketed Notes for offering or sale in
any jurisdiction, of the initiation or threatening of any proceeding
for any such purpose, or of any request by the Commission for the
amending or supplementing of the Registration Statement or the
Prospectus or for additional information; and, in the event of the
issuance of any stop order or of any order preventing or suspending the
use of any Prospectus or suspending any such qualification, to use
promptly its best efforts to obtain its withdrawal.
(b) To furnish promptly to the Remarketing Agent and to
counsel for the Remarketing Agent a signed copy of the Registration
Statement as originally
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<PAGE> 11
filed with the Commission, and each amendment thereto filed with the
Commission, including all consents and exhibits filed therewith.
(c) To deliver promptly to the Remarketing Agent in New York
City such number of the following documents as the Remarketing Agent
shall request: (i) conformed copies of the Registration Statement as
originally filed with the Commission and each amendment thereto (in
each case excluding exhibits other than this Agreement and the
Indenture, (ii) the Prospectus and any amended or supplemented
Prospectus, (iii) any document incorporated by reference in the
Prospectus (excluding exhibits thereto) and (iv) any Remarketing
Materials; and, if the delivery of a prospectus is required at any time
in connection with the Remarketing and if at such time any event shall
have occurred as a result of which the Prospectus as then amended or
supplemented would include any untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made when such Prospectus is delivered, not misleading, or if for
any other reason it shall be necessary during such same period to amend
or supplement the Prospectus or to file under the Exchange Act any
document incorporated by reference in the Prospectus in order to comply
with the Securities Act or the Exchange Act, to notify the Remarketing
Agent and, upon its request, to file such document and to prepare and
furnish without charge to the Remarketing Agent and to any dealer in
securities as many copies as the Remarketing Agent may from time to
time request of an amended or supplemented Prospectus which will
correct such statement or omission or effect such compliance.
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Company or the Remarketing
Agent, be required by the Securities Act or requested by the
Commission.
(e) Prior to filing with the Commission (i) any amendment to
the Registration Statement or supplement to the Prospectus or any
document incorporated by reference in the Prospectus or (ii) any
Prospectus pursuant to Rule 424 of the Rules and Regulations, to
furnish a copy thereof to the Remarketing Agent and counsel for the
Remarketing Agent; and not to file any such amendment or supplement
which shall be disapproved by the Remarketing Agent promptly by
reasonable notice.
(f) As soon as practicable after the Effective Date of the
Registration Statement to make generally available to the Company's
securityholders and to deliver to the Remarketing Agent an earnings
statement of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the
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<PAGE> 12
Securities Act and the Rules and Regulations (including, at the option
of the Company, Rule 158).
(g) Promptly from time to time to take such action as the
Remarketing Agent may reasonably request to qualify any of the
Remarketed Notes and the obligations of the Company under the
Guarantees for offering and sale under the securities laws of such
jurisdictions as the Remarketing Agent may request and to comply with
such laws so as to permit the continuance of sales and dealings therein
in such jurisdictions for as long as may be necessary to complete the
distribution of the Notes; provided that in connection therewith,
neither the Company nor JES shall be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction.
5. Conditions to the Remarketing Agent's Obligations. The obligations
of the Remarketing Agent hereunder are subject to the accuracy, on and as of the
date when made, of the representations and warranties of the Company and JES
contained herein, to the performance by the Company and JES of their respective
obligations hereunder, and to each of the following additional terms and
conditions:
(a) The Prospectus shall have been timely filed with the
Commission; no stop order suspending the effectiveness of the
Registration Statement or any part thereof or suspending the
qualification of the Indenture, the Guarantees or the Purchase Contract
Agreement shall have been issued and no proceeding for that purpose
shall have been initiated or threatened by the Commission; and any
request of the Commission for inclusion of additional information in
the Registration Statement or the Prospectus or otherwise shall have
been complied with.
(b) The Remarketing Agent shall not have discovered and
disclosed to the Company on or prior to the Remarketing Date that the
Prospectus, the Registration Statement, or the Remarketing Materials
or any amendment or supplement thereto contains any untrue statement of
a fact which, in the opinion of counsel for the Remarketing Agent, is
material or omits to state any fact which, in the opinion of such
counsel, is material and is required to be stated therein or is
necessary to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident
to the authorization, form and validity of this Agreement, the
Indenture, the Remarketed Notes, the Guarantees, the Prospectus, the
Registration Statement, the Remarketing Materials and all other legal
matters relating to this Agreement and the transactions contemplated
hereby shall be reasonably satisfactory in all material respects to
counsel for the Remarketing Agent, and the Issuers shall have
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<PAGE> 13
furnished to such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters.
(d) Simpson Thacher & Bartlett, U.S. counsel for the Company
and JES, shall have furnished to you their written opinion, dated the
Remarketing Date, in form and substance satisfactory to you (such
counsel being entitled to state that they have assumed that any
document referred to in their opinion and executed by the Company has
been duly authorized, executed and delivered pursuant to Canadian law
and being entitled to rely, as to all matters of Canadian law, solely
upon the opinion of Canadian counsel described in paragraph (d) of this
Section 7) (such counsel also being entitled to rely in respect of
matters of law other than of United States federal or New York law on
opinions of local counsel of the Company and its subsidiaries and as to
matters of fact upon certificates of public officials and of officers
of the Company or its subsidiaries, provided that such counsel shall
state that they believe that both you and they are justified in relying
upon such opinions and certificates), to the effect that:
(i) Joseph E. Seagram & Sons, Inc. has been duly
incorporated and is validly existing as a corporation under
the laws of the State of Indiana; and each of J.E. Seagram
Corp., JES Developments, Inc. and Universal Studios, Inc. has
been duly incorporated and is validly existing and in good
standing under the laws of the State of Delaware;
(ii) All of the outstanding shares of capital stock
of Joseph E. Seagram & Sons, Inc. have been duly authorized by
Joseph E. Seagram & Sons, Inc. and are validly issued, are
fully paid and non-assessable and are owned indirectly by the
Company, to the knowledge of such counsel, free and clear of
any adverse claim; all of the outstanding shares of capital
stock of J.E. Seagram Corp. have been duly authorized by J.E.
Seagram Corp. and are validly issued, are fully paid and
non-assessable and are owned indirectly by Joseph E. Seagram &
Sons, Inc. to the knowledge of such counsel, free and clear of
any adverse claim; all of the outstanding shares of capital
stock of JES Developments, Inc. have been duly authorized by
JES Developments Inc. and are validly issued, are fully paid
and non-assessable, and are owned indirectly by Joseph E.
Seagram & Sons, Inc. to the knowledge of such counsel, free
and clear of any adverse claim; and all the outstanding Shares
of capital stock of Universal Studios, Inc. have been duly
authorized by Universal Studios, Inc. and are validly issued,
are fully paid and non-assessable, and such that are owned
indirectly by the Company, to the best knowledge of such
counsel, free and clear of any adverse claim;
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<PAGE> 14
(iii) To such counsel's knowledge, there are no legal
or governmental proceedings pending to which the Company or
any of its subsidiaries is a party or of which any property of
the Company or any of its subsidiaries is the subject which
are required to be described in the Prospectus which are not
described as required; and to such counsel's knowledge no such
proceedings have been asserted by governmental authorities or
by others;
(iv) This Agreement has been duly authorized,
executed and delivered by the Company and JES;
[(v) The Registration Statement was declared
effective under the Act, and the Indenture was qualified under
the Trust Indenture Act, as of the date and time specified in
such opinion, the Prospectus was filed with the Commission
pursuant to the subparagraph of Rule 424(b) of the Rules and
Regulations specified in such opinion on the date specified
therein and, to the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has
been issued and no proceeding for that purpose is pending or
threatened by the Commission.]
(vi) The provisions of the Pledge Agreement are
effective to create in favor of the Collateral Agent for the
benefit of the Company, a valid and perfected security
interest under the New York Uniform Commercial Code as in
effect on the date hereof in the State of New York in the
Pledged Securities from time to time credited to the
Collateral Account;
(vii) The Notes have been duly authorized, executed
and delivered by JES and, assuming due authentication thereof
by the Trustee, and upon payment and delivery in accordance
with Underwriting Agreement, will constitute valid and legally
binding obligations of JES enforceable against JES in
accordance with their terms and entitled to the benefits of
the Indenture; assuming the Guarantees relating to the Notes
have been duly authorized, endorsed on the Notes and executed,
issued and delivered in accordance with Canadian law, the
Guarantees will constitute valid and legally binding
obligations of the Company enforceable in accordance with
their terms and entitled to the benefits of the Indenture; and
the Notes, such Guarantees and the Indenture conform to the
descriptions thereof in the Prospectus;
(viii) The Indenture has been duly authorized,
executed and delivered by JES and duly qualified under the
Trust Indenture Act and,
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<PAGE> 15
assuming the due authorization, execution and delivery thereof
by the Company and the Trustee (other than Section 516 thereof
as to which such counsel need not express any opinion),
constitutes a valid and legally binding instrument of JES and
the Company enforceable in accordance with its terms;
(ix) Assuming that the Units have been duly
authorized, executed and delivered by the Company and,
assuming due execution by the Purchase Contract Agent as
attorney-in-fact of the holders thereof and due authentication
by the Purchase Contract Agent and upon payment and delivery
in accordance with the Underwriting Agreement, the Units will
constitute valid and legally binding obligations of the
Company entitled to the benefits of the Purchase Contract
Agreement and enforceable against the Company in accordance
with their terms;
(x) The issuance and sale of the Units and the
compliance by the Company and JES with all of the provisions
of the Underwriting Agreement will not breach or result in a
default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument filed as an exhibit
to the Registration Statement or any document or filing
incorporated by reference therein to which the Company or any
of its subsidiaries is a party or by which the Company or any
of its subsidiaries is bound or to which any of the property
or assets of the Company or any of its subsidiaries is
subject, nor will such action violate the charter documents,
as amended, or the By-laws of JES or, with respect to the
United States and the States of New York and Indiana, will
such action result in any violation of any statute or, to the
knowledge of such counsel, any order, rule or regulation of
any court or governmental agency or body having jurisdiction
over the Company or any of its subsidiaries or any of their
properties;
(xi) With respect to the United States and the States
of New York and Indiana, no consent, approval, authorization,
order, registration or qualification of or with any such court
or governmental agency or body is required for the issue and
the sale of the Units, and the compliance by the Company and
JES with all of the provisions of the Underwriting Agreement,
except such that have been obtained or made under the Act, the
Trust Indenture Act and the Exchange Act, and such consents,
approvals, authorizations, registrations or qualifications as
may be required under state securities, or Blue Sky laws in
connection with the purchase and distribution of the Units by
the Underwriters;
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<PAGE> 16
(xii) Neither the Company or JES is an "investment
company", as such term is defined in the Investment Company
Act of 1940, as amended;
(xiii) Such counsel does not know of any contracts or
other documents of a character required to be filed as an
exhibit to the Registration Statement or required to be
incorporated by reference into the Prospectus or required to
be described in the Registration Statement or in the
Prospectus which are not filed or incorporated by reference or
described as required;
(xiv) Subject to the qualifications and limitations
stated in the Prospectus, the statements set forth in the
Prospectus under the caption "United States Federal Income Tax
Consequences," insofar as they purport to constitute summaries
of matters of United States federal tax law and regulations or
legal conclusions with respect thereto, constitute accurate
summaries of the matters described therein in all material
respects; and
(xv) Such opinion may also include a paragraph to the
effect that such counsel has not independently verified the
accuracy, completeness or fairness of the statements made or
included in the Registration Statements, the Prospectus and
the documents incorporated by reference in the Prospectus and
that such counsel takes no responsibility therefor; provided,
however, that such opinion shall state that the discussion set
forth in the Prospectus under the heading "Certain Federal
Income Tax Consequences", insofar as it relates to matters of
United States federal income tax law, is accurate in all
material respects. Such opinion may also state that in the
course of the preparation by the Company of the Registration
Statement and the Prospectus, such counsel participated in
conferences with certain officers and employees of the Company
and with representatives of the independent accountants of the
Company. Such opinion may state that such counsel did not
prepare the documents incorporated by reference in the
Prospectus; however, such counsel discussed such documents
with the Company prior to their filing with the Commission,
and that based upon such counsel's examination of the
Registration Statement, the Prospectus and the documents
incorporated by reference in the Prospectus, such counsel's
investigations made in connection with the preparation of the
Registration Statement and the Prospectus and such counsel's
participation in the conferences referred to above, (i) such
counsel is of the opinion that the Registration Statement and
any amendment thereto made by the Company made prior to such
Time of Delivery, as of its respective effective date, and the
Prospectus
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<PAGE> 17
and any amendment or supplement thereto made by the Company
prior to such Time of Delivery, as of their respective issue
dates, complied as to form in all material respects with the
requirements of the Act and the applicable rules and
regulations of the Commission thereunder, and (ii) such
counsel has no reason to believe that the Registration
Statement or any amendment thereto (including the documents
incorporated by reference in the Prospectus), made by the
Company prior to such Time of Delivery , as of its respective
effective date, contained any untrue statement of a material
fact or omitted to state any material fact required to be
stated therein, or required in order to make the statements
therein not misleading, or that as of such Time of Delivery,
either the Registration Statement or the Prospectus or any
amendment or supplement thereto made by the Company prior to
such Time of Delivery (including the documents incorporated by
reference therein), contain any untrue statement of a material
fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances in which the
statements were made when such documents were so filed, not
misleading, except that in each case such counsel need express
no opinion with respect to the financial statements or other
financial data contained or incorporated by reference in the
Registration Statement or any amendment thereto, or in the
Prospectus and any amendment or supplement thereto made by the
Company prior to such Time of Delivery.
(e) Goodman Phillips & Vineberg S.E.N.C., Canadian counsel for
the Company, shall have furnished to you their written opinion, dated
the Time of Delivery, in form and substance satisfactory to you (such
counsel being entitled to rely, as to all matters of United States or
United States state law, solely upon the opinion of United States
counsel described in paragraph (d) of this Section 6) (such counsel
also being entitled to rely in respect of matters of law other than
matters of Canadian federal or Quebec law solely upon opinions of local
counsel and as to matters of fact upon certificates of officers of the
Company or its subsidiaries, provided that such counsel shall state
that they believe both they and you are justified in relying thereon)
to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation under the laws of Canada
with corporate power and authority to own its properties and
conduct its business as described in the Prospectus, and has
received a certificate of compliance under the Canada Business
Corporations Act;
(ii) The Company has been duly qualified for the
transaction of business under the laws of the Province of
Quebec;
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<PAGE> 18
(iii) The Company has an authorized capitalization as
set forth in the Prospectus, and all of the issued common
shares of the Company have been duly and validly authorized
and issued and are fully paid and non-assessable; and the
common shares conform to the description of the share capital
contained in the Prospectus;
(iv) To the best of such counsel's knowledge and
other than as set forth or contemplated in the Prospectus,
there are no legal or governmental proceedings pending in the
Province of Quebec to which the Company or any of its
subsidiaries is a party or of which any property of the
Company or any of its subsidiaries is the subject, which, if
determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate be, in
the opinion of such counsel, material to the Company and its
subsidiaries taken as a whole; and to the best of such
counsel's knowledge, no such proceedings have been threatened
by governmental authorities or by others;
(v) Each of this Agreement, the Purchase Contract
Agreement, the Purchase Contracts, the Pledge Agreement and
the Indenture, has been duly authorized, executed and
delivered by the Company;
(vi) The Guarantees have been duly authorized, duly
endorsed on the Notes and executed, and upon the due
execution, authentication, issuance and delivery of the Notes
pursuant to this Agreement and the Indenture, such Guarantees
have been duly issued and delivered; the Guarantees of the
Notes when endorsed on the Notes and executed, and upon the
execution, authentication, issuance and delivery of the Notes
pursuant to the Indenture; and, assuming that the Guarantees
of the Notes constitute valid and legally binding obligations
of the Company enforceable in accordance with their terms
under the laws of the State of New York, such Guarantees will
constitute valid and legally binding obligations of the
Company under the laws of the Province of Quebec and the laws
of Canada applicable therein, subject, as to enforcement, to
general principles of equity or principles to substantially
the same effect in civil law to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to
affecting creditors' rights generally, subject to the
qualification that specific performance and injunction are
remedies which are available only in the discretion of the
court before which any proceedings therefor may be brought,
subject to the provisions of the Currency Act (Canada), which
preclude a court in Canada from giving a judgment in a
currency other than Canadian currency and subject to the
provisions of the Criminal Code (Canada) which preclude the
enforcement
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<PAGE> 19
of any obligation to pay interest at an effective annual rate
of interest that exceeds 60%;
(vii) The Indenture has been duly authorized,
executed and delivered by the Company and, assuming that the
Indenture has been duly authorized, executed and delivered by
JES and is binding on JES, and assuming that the Indenture
constitutes a valid and legally binding instrument of the
Company enforceable in accordance with its terms under the
laws of the State of New York, the Indenture (other than
Section 516 thereof, as to which such counsel need express no
opinion) constitutes a valid and legally binding instrument of
the Company under the laws of the Province of Quebec and the
laws of Canada applicable therein, enforceable in accordance
with its terms under the laws of the Province of Quebec and
the laws of Canada applicable therein, subject, as to
enforcement, to general principles of equity or principles to
substantially the same effect in civil law, to bankruptcy,
insolvency, reorganization, moratorium and other laws relating
to or affecting creditors' rights generally, subject to the
qualification that specific performance and injunction are
remedies which are available only in the discretion of the
court before which any proceedings therefor may be brought,
subject to the provisions of the Currency Act (Canada), which
preclude a court in Canada from giving a judgment in a
currency other than Canadian currency and subject to the
provisions of the Criminal Code (Canada) which preclude the
enforcement of any obligation to pay interest at an effective
annual rate of interest that exceeds 60%; and all taxes and
fees required under the laws of Canada or the Province of
Quebec to be paid with respect to the execution of the
Indenture and the issuance of the Guarantees relating to the
Notes have been paid;
(viii) The Purchase Contract Agreement, the Pledge
Agreement and the Purchase Contracts have been duly
authorized, executed and delivered by the Company and,
assuming due authorization, execution and delivery by the
other parties thereto, and assuming that each such agreement
constitutes a valid and legally binding agreement of the
Company enforceable in accordance with its terms under the
laws of the State of New York, each of the Purchase Contract
Agreement, the Pledge Agreement and the Purchase Contracts
constitutes a valid and legally binding instrument of the
Company under the laws of the Province of Quebec; and the laws
of Canada applicable therein, subject, as to enforcement, to
general principles of equity or principles to substantially
the same effect in civil law, to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or
affecting creditors' rights
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<PAGE> 20
generally, subject to the qualification that specific
performance and injunction are remedies which are available
only in the discretion of the court before which any
proceedings therefor may be brought, subject to the provisions
of the Currency Act (Canada), which preclude a court in Canada
from giving a judgment in a currency other than Canadian
currency and subject to the provisions of the Criminal Code
(Canada) which preclude the enforcement of any obligation to
pay interest at an effective annual rate of interest that
exceeds 60%;
(ix) The entry into the Purchase Contracts by the
Company, the issuance of the Guarantees, the issue and sale of
the Common Shares by the Company pursuant to the Purchase
Contracts, the compliance by the Company with all of the
provisions of this Agreement, the Purchase Contracts, the
Purchase Contract Agreement, the Pledge Agreement, the
Indenture and the Guarantees, and the consummation of the
transactions herein and therein contemplated will not conflict
with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel to which the Company or any
of its subsidiaries is a party or by which the Company or any
of its subsidiaries is bound or to which any of the property
or assets of the Company or any of its subsidiaries is
subject, nor will such action result in any violation of the
provisions of the Certificate of Amalgamation, as amended, or
the General By-Laws of the Company or, with respect to Canada
or the Province of Quebec (or, insofar as such orders are
concerned, any other Province thereof), any statute or, to the
knowledge of such counsel any order, rule or regulation of any
court or governmental agency or body having jurisdiction over
the Company or any of its subsidiaries or any of their
properties; and no consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body of Canada or the Province of
Quebec is required for the entry into the Purchase Contracts
underlying the Units by the Company, the issue of the
Guarantees, the issue and sale of the Common Shares by the
Company pursuant to the Purchase Contracts, the compliance by
the Company with all of the provisions of this Agreement, the
Purchase Contracts, the Purchase Contract Agreement, the
Pledge Agreement, the Guarantees or the Indenture or the
consummation by the Company of the transactions herein or
therein contemplated, other than those which have been
obtained or made;
(x) No filing or registration of the Registration
Statements, any Preliminary Prospectus or the Prospectus is
necessary under the laws of
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<PAGE> 21
Canada or the Province of Quebec in connection with the
Registration of the Notes;
(xi) No tax or stamp duty under the laws of Canada or
the Province of Quebec is payable in connection with the
creation, issue and delivery to the Underwriters of the Notes
and the Purchase Contracts, which are evidenced by the Units,
and the Guarantees;
(xii) Under the laws of Canada and of the Province of
Quebec currently in force and under current practice of the
courts of the Province of Quebec at the date of such opinion,
such courts would give effect to the choice of New York law as
the law governing this Agreement, the Purchase Contract
Agreement, the Purchase Contracts, the Guarantees, the
Indenture and the Pledge Agreement subject to proof of such
laws as a question of fact; provided that such choice of law
is bona fide (in the sense that it was not made with a view to
avoiding the consequences of the laws of any other
jurisdiction) and provided that such choice of law is not
contrary to public order, as that term is applied by the
courts in the Province of Quebec; and
(xiii) Any statements with respect to matters of
Canadian law and regulations set forth in the Prospectus are
accurate in all material respects. Such opinion shall also
state that (i) such counsel did not prepare the Registration
Statements, the Prospectus or any documents incorporated by
reference in the Prospectus and (ii) such counsel has no
reason to believe that any Registration Statement or any
amendment thereto (including the documents incorporated by
reference in the Prospectus), as of its respective effective
date (or, with respect to any Registration Statement as to
which an Annual Report on Form 10-K of the Company has been
filed subsequent to the effective date thereof and is deemed
to be incorporated by reference therein, as of the date of
filing o the most recent such Annual Report on Form 10-K)
(other than the financial statements and other financial and
statistical information contained therein, as to which such
counsel need express no belief) contained any untrue statement
of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make
the statements therein concerning the Company not misleading
or that the Prospectus or any amendment or supplement thereto
(including the documents incorporated by reference in the
Prospectus) contains any untrue statement of a material fact
or omits to state any material fact necessary in order to make
the statements therein, in the light of circumstances under
which they were made, not misleading.
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<PAGE> 22
Such opinion shall also state that any final and conclusive
judgment obtained against the Company in the United States in respect
of this Agreement, would be recognized and enforced by the courts of
the Province of Quebec provided that (A) the United States court
rendering such judgment had jurisdiction over the Company, as
determined under the relevant provisions of the laws of the Province of
Quebec; (B) such judgment is not subject to ordinary remedies (such as
appeal or judicial review) and is final and enforceable in the United
States; (C) such judgment was not rendered in contravention of the
fundamental principles of procedure (such as notice of fair hearing,
right to be heard, right to an independent and impartial tribunal and
rules against bias); (D) there were no proceedings pending in the
Province of Quebec and no judgment rendered in the Province of Quebec
between the same parties, based on the same facts and having the same
object; (E) such judgment is not manifestly inconsistent with public
order as understood in international relations; (F) such judgment does
not enforce obligations arising from foreign revenue laws, unless there
is reciprocity, or arising from other laws of a public nature, such as
expropriatory or penal laws; (G) the action to enforce such judgment is
commenced in the Province of Quebec within three (3) years after the
date of such judgment; and (H) such judgment is not contrary to any
order made by the Attorney-General of Canada under the Foreign
Extra-territorial Measures Act (Canada) or by the Competition Tribunal
under the Competition Act (Canada);
(f) On the Remarketing Date, the Company shall have furnished
to the Remarketing Agent letters addressed to the Remarketing Agent and
dated such date, in form and substance satisfactory to the Remarketing
Agent, of PricewaterhouseCoopers, and KPMG Accountants N.V., containing
statements and information of the type ordinarily included in
accountants' "comfort letters" with respect to certain financial
information contained in the Prospectus and in the Remarketing
Materials.
(g) (i) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial
statements included or incorporated by reference in the Prospectus any
loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus, and (ii) since the
respective dates as of which information is given in the Prospectus
there shall not have been any change in the capital stock or long-term
debt of the Company or any of its subsidiaries or any change, or any
development involving a prospective change, in or affecting the general
affairs, management, financial position, shareholders' equity or
results of operations of the Company and its subsidiaries, otherwise
than as set forth or contemplated in the Prospectus, the
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<PAGE> 23
effect of which, in any such case described in clause (i) or (ii), is
in your judgment so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Units being delivered at such Time of Delivery on the terms and in the
manner contemplated in the Prospectus;
(h) Subsequent to the date hereof there shall not have
occurred any of the following: (i) a suspension or material limitation
in trading in securities generally on the NYSE; (ii) a general
moratorium on commercial banking activities in Canada or New York
declared by Canadian federal, Canadian Provincial, United States
federal or New York State authorities; (iii) a suspension or material
limitation in trading in the Company's common shares on the New York
Stock Exchange; or (iv) the outbreak or escalation of hostilities
involving the United States or Canada or the declaration by the United
States or Canada of a national emergency or war, if the effect of any
such event specified in this clause (iv) in your judgment makes it
impracticable or inadvisable to proceed with the Remarketing or the
delivery of the Units on the terms and in the manner contemplated in
the Prospectus;
(i) The Units to be sold by the Company at the Time of
Delivery shall have been duly listed, subject to notice of issuance, on
the NYSE;
(j) The Company shall have complied with the provisions of
Section 5(c) hereof with respect to the furnishing of prospectuses on
the New York Business Day next succeeding the date of this Agreement;
and
(k) Each of the Company and JES shall have furnished or caused
to be furnished to you at such Time of Delivery certificates of
officers of the Company and JES, respectively, satisfactory to you as
to the accuracy of the representations and warranties of the Company
and JES, as applicable, herein at and as of such Time of Delivery, as
to the performance by the Company and JES shall have furnished or
caused to be furnished certificates as to the matters set forth in
subsections (a) and (i) above.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Remarketing Agent.
6. Indemnification and Contribution. (a) The Company and JES jointly
and severally will indemnify and hold harmless the Remarketing Agent against any
losses, claims, damages or liabilities, joint or several, to which the
Remarketing Agent may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or
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<PAGE> 24
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement, the Prospectus, the
Remarketing Materials, or any amendment or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and will reimburse the Remarketing Agent for any legal or other
expenses reasonably incurred by the Remarketing Agent in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company and JES shall not be liable in any
such case to the extent that any such loss, claim, damage or liability arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in any Preliminary Prospectus, the
Registration Statement, the Prospectus, the Remarketing Materials or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company and JES by the Remarketing Agent expressly
for use therein;
(b) The Remarketing Agent will indemnify and hold harmless the
Company and JES against any losses, claims, damages or liabilities to which the
Company or JES may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement, the Prospectus, the Remarketing Materials or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement, the Prospectus, the Marketing Materials
or any such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company and JES by the Remarketing
Agreement expressly for use therein; and will reimburse the Company and JES for
any legal or other expenses reasonably incurred by the Company or JES in
connection with investigating or defending any such action or claim as such
expenses are incurred.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against an
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled
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<PAGE> 25
to participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (which shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. In no event shall the indemnifying party be liable for
the fees and expenses of more than one counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances,
provided that this sentence shall not impair any right of an indemnified party
to be indemnified for its reasonable costs of investigation. An indemnifying
party shall not be liable for any settlement of any action or claim for monetary
damages which an indemnified party may effect without the indemnifying party's
consent, which consent shall not be unreasonably withheld.
(d) If the indemnification provided for in this Section 6 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company and JES on the one hand and the
Remarketing Agent on the other from the Remarketing. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the indemnified party failed to give the notice required under
subsection (d) above, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and JES on the one hand and the Remarketing Agent on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative benefits received
by the Company and JES on the one hand and Remarketing Agent on the other shall
be deemed to be in the same proportion as shall be appropriate to reflect the
relative benefits received by the Company and JES on the one hand and the
Remarketing Agent on the other hand. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company and JES on the one hand or the
Remarketing Agent on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The
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<PAGE> 26
Company and JES and the Remarketing Agent agree that it would not be just and
equitable if contributions pursuant to this subsection (e) were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this subsection (e). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this subsection (e) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (e), the Remarketing shall not be required to contribute any amount
in excess of the amount by which the total price at which the Units underwritten
by it and distributed to the public were offered to the public exceeds the
amount of any damages which Remarketing Agent has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
7. Resignation and Removal of the Remarketing Agent. The Remarketing
Agent may resign and be discharged from its duties and obligations hereunder,
and the Company may remove the Remarketing Agent, by giving 60 days' prior
written notice, in the case of a resignation, to JES, the Unit Agent, and the
Indenture Trustee and, in the case of a removal, the removed Remarketing Agent,
the Purchase Contract Agent, and the Trustee; provided however, that (i) the
Company may not remove the Remarketing Agent unless (A) the Remarketing Agent
becomes involved as a debtor in a bankruptcy, insolvency or similar proceeding,
(B) the Remarketing Agent shall not be among the 15 underwriters with the
largest volume underwritten in dollars, on a lead or co-managed basis, of U.S.
domestic debt securities during the twelve-month period ended as of the last
calendar quarter preceding the Remarketing Date or (C) the Remarketing Agent
shall be subject to one or more legal restrictions preventing the performance of
its obligations hereunder and (ii) no such resignation nor any such removal
shall become effective until the Company shall have appointed at least one
nationally recognized broker-dealer as successor Remarketing Agent and such
successor Remarketing Agent shall have entered into a remarketing agreement with
the Company and JES in which it shall have agreed to conduct the Remarketing in
accordance with the Remarketing Procedures. In any such case, the Company will
use its reasonable efforts to appoint a successor Remarketing Agent and enter
into such a remarketing agreement with such person as soon as reasonably
practicable. The provisions of Sections 4 and 7 shall survive the resignation or
removal of any Remarketing Agent pursuant to this Agreement.
8. Dealing in the Remarketed Notes. The Remarketing Agent, when acting
as a Remarketing Agent or in its individual or any other capacity, may, to the
extent permitted by law, buy, sell, hold and deal in any of the Remarketed
Notes. The
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<PAGE> 27
Remarketing Agent may exercise any vote or join in any action which any
beneficial owner of Remarketed Notes may be entitled to exercise or take
pursuant to the Purchase Contract Agreement or the Indenture with like effect as
if it did not act in any capacity hereunder. The Remarketing Agent, in its
individual capacity, either as principal or agent, may also engage in or have an
interest in any financial or other transaction with the Company and JES as
freely as if it did not act in any capacity hereunder.
9. Remarketing Agent's Performance; Duty of Care. The duties and
obligations of the Remarketing Agent shall be determined solely by the express
provisions of this Agreement and the Purchase Contract Agreement and the
Indenture. No implied covenants or obligations of or against the Remarketing
Agent shall be read into this Agreement, the Purchase Contract Agreement or the
Indenture. In the absence of bad faith on the part of the Remarketing Agent, the
Remarketing Agent may conclusively rely upon any document furnished to it, which
purports to conform to the requirements of this Agreement, the Purchase Contract
Agreement or the Indenture as to the truth of the statements expressed in any of
such documents. The Remarketing Agent shall be protected in acting upon any
document or communication reasonably believed by it to have been signed,
presented or made by the proper party or parties. The Remarketing Agent, acting
under this Agreement, shall incur no liability to the Company or to any holder
of Remarketed Notes in its individual capacity or as Remarketing Agent for any
action or failure to act, on its part in connection with a Remarketing or
otherwise, except if such liability is judicially determined to have resulted
from the gross negligence or willful misconduct on its part.
10. Termination. This Agreement shall terminate as to the Remarketing
Agent on the effective date of the resignation or removal of the Remarketing
Agent pursuant to Section 8. In addition, the obligations of the Remarketing
Agent hereunder may be terminated by it by notice given to the Company prior to
10:00 A.M., New York City time, on the Remarketing Date if, prior to that time,
any of the events described in Sections 5(g), (h), (i) OR (j) shall have
occurred.
11. Notices. All statements, requests, notices and agreements hereunder
shall be in writing, and: (a) if to the Remarketing Agent, shall be delivered or
sent by mail, telex or facsimile transmission to _____________,
________________, New York, New York _______, Attention: BONY (Fax: (212)
________________);
(b) if to the Company and JES shall be delivered or sent by mail, telex
or facsimile transmission to the address of the Company set forth in the
Prospectus, Attention: ___________. (Fax: ____________________).
Any such statements, requests, notices or agreements shall take effect at the
time of receipt thereof.
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<PAGE> 28
12. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Remarketing Agent, the Company,
JES, and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except that
(x) the representations, warranties, indemnities and agreements of the Company
and JES contained in this Agreement shall also be deemed to be for the benefit
of the officers and employees of the Remarketing Agent and the person or
persons, if any, who control the Remarketing Agent within the meaning of Section
15 of the Securities Act and (y) the indemnity agreement of the Remarketing
Agent contained in Section 7(b) of this Agreement shall be deemed to be for the
benefit of directors, officers and employees of the Company and JES and any
person controlling the Company and JES within the meaning of Section 15 of the
Securities Act. Nothing in this Agreement is intended or shall be construed to
give any person, other than the persons referred to herein, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision contained herein.
13. Survival. The respective indemnities, representations, warranties
and agreements of the Company and JES and the Remarketing Agent contained in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall survive the Remarketing and shall remain in full force and
effect, regardless of any investigation made by or on behalf of any of them or
any person controlling any of them.
14. Definition of the Terms "Business Day" and "Subsidiary". For
purposes of this Agreement, (a) "business day" means any day on which the New
York Stock Exchange, Inc. is open for trading and (b) "subsidiary" has the
meaning set forth in Rule 405 under the Securities Act.
15. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF NEW YORK.
16. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
17. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
If the foregoing correctly sets forth the agreement among the Company,
JES and the Remarketing Agent, please indicate your acceptance in the space
provided for that purpose below.
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<PAGE> 29
Very truly yours,
THE SEAGRAM COMPANY LTD.
By:__________________________
Name:
Title:
JOSEPH E. SEAGRAM & SONS, INC.
By:__________________________
Name:
Title:
Accepted:
[NAME OF REMARKETING AGENT]
By:____________________________
Authorized Representative
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<PAGE> 1
=============================================================
THE SEAGRAM COMPANY LTD.
AND
THE BANK OF NEW YORK,
as Purchase Contract Agent
---------------------------
PURCHASE CONTRACT AGREEMENT
---------------------------
Dated as of June -, 1999
=============================================================
<PAGE> 2
S&C Draft of June 6, 1999
TABLE OF CONTENTS
Page
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RECITALS .....................................................................1
ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.....................................................1
SECTION 102. Form of Documents Delivered to Purchase Contract Agent..........8
SECTION 103. Acts of Holders; Record Dates...................................9
SECTION 104. Notices, etc. to Purchase Contract Agent and the Company.......10
SECTION 105. Notice to Holders; Waiver......................................11
SECTION 106. Effect of Headings and Table of Contents.......................11
SECTION 107. Successors and Assigns.........................................12
SECTION 108. Separability Clause............................................12
SECTION 109. Benefits of Agreement..........................................12
SECTION 110. Governing Law..................................................12
SECTION 111. Legal Holidays.................................................12
SECTION 112. Counterparts...................................................13
SECTION 113. Inspection of Agreement........................................13
ARTICLE TWO PURCHASE CONTRACT CERTIFICATE FORMS
SECTION 201. Forms of Unit Certificates Generally...........................13
SECTION 202. Form of Unit Agent's Certificate of Authentication.............14
ARTICLE THREE THE UNITS
SECTION 301. Title and Terms; Denominations.................................14
SECTION 302. Rights and Obligations Evidenced by the Unit Certificates......14
SECTION 303. Execution, Authentication, Delivery and Dating.................14
SECTION 304. Temporary Unit Certificates....................................15
SECTION 305. Registration; Registration of Transfer and Exchange............16
SECTION 306. Mutilated, Destroyed, Lost and Stolen Unit Certificates........18
SECTION 307. Persons Deemed Owners..........................................19
SECTION 308. Cancellation...................................................20
SECTION 309. Payments on the Units..........................................20
ARTICLE FOUR THE PLEDGED SECURITIES
SECTION 401. Payments on the Pledged Securities.............................21
SECTION 402. Transfer of Pledged Securities Upon Occurrence of Termination
Event..........................................................21
SECTION 403. Transfer of Pledged Securities Upon Early Settlement and Merger
Early Settlement...............................................22
SECTION 404. Transfer of Notes Upon Remarketing.............................22
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S&C Draft of June 6, 1999
Page
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SECTION 405. Substitution of Pledged Securities.............................23
ARTICLE FIVE THE PURCHASE CONTRACTS
SECTION 501. Purchase of Common Shares......................................24
SECTION 502. Contract Fees..................................................25
SECTION 503. [Intentionally left Blank].....................................25
SECTION 504. Payment of Purchase Price......................................25
SECTION 505. Issuance of Common Shares......................................27
SECTION 506. Adjustment of Settlement Rate..................................27
SECTION 507. Notice of Adjustments and Certain Other Events.................32
SECTION 508. No Fractional Shares...........................................33
SECTION 509. Charges and Taxes..............................................33
SECTION 510. Termination Event; Notice......................................34
SECTION 511. Early Settlement...............................................34
Section 512. Early Settlement Upon Merger...................................35
ARTICLE SIX REMEDIES
SECTION 601. Unconditional Rights of Holders................................37
SECTION 602. Restoration of Rights and Remedies.............................37
SECTION 603. Rights and Remedies Cumulative.................................38
SECTION 604. Delay or Omission Not Waiver...................................38
SECTION 605. Undertaking for Costs..........................................38
SECTION 606. Waiver of Stay or Extension Laws...............................38
ARTICLE SEVEN THE PURCHASE CONTRACT AGENT
SECTION 701. Certain Duties and Responsibilities............................39
SECTION 702. Notice of Default..............................................40
SECTION 703. Certain Rights of Purchase Contract Agent......................40
SECTION 704. Not Responsible for Recitals or Issuance of Units..............41
SECTION 705. May Hold Units.................................................41
SECTION 706. Money Held in Trust............................................41
SECTION 707. Compensation and Reimbursement.................................42
SECTION 708. Purchase Contract Agent Required; Eligibility..................42
SECTION 709. Resignation and Removal; Appointment of Successor..............43
SECTION 710. Acceptance of Appointment by Successor.........................44
SECTION 711. Merger, Conversion, Consolidation or Succession to Business....45
SECTION 712. Preservation of Information; Communications to Holders.........45
SECTION 713. No Obligations of Purchase Contract Agent......................46
SECTION 714. Tax Compliance.................................................46
ARTICLE EIGHT SUPPLEMENTAL AGREEMENTS
SECTION 801. Supplemental Agreements Without Consent of Holders.............47
SECTION 802. Supplemental Agreements with Consent of Holders................47
SECTION 803. Execution of Supplemental Agreements...........................48
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S&C Draft of June 6, 1999
Page
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SECTION 804. Effect of Supplemental Agreements..............................49
SECTION 805. Reference to Supplemental Agreements...........................49
ARTICLE NINE CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 901. Covenant Not to Merge, Consolidate, Sell or Convey Property
Except Under Certain Conditions................................49
SECTION 902. Rights and Duties of Successor Corporation.....................50
SECTION 903. Opinion of Counsel to Purchase Contract Agent..................50
ARTICLE TEN COVENANTS
SECTION 1001. Performance Under Purchase Contracts..........................51
SECTION 1002. Maintenance of Office or Agency...............................51
SECTION 1003. Company to Reserve Common Shares..............................51
SECTION 1004. Covenants as to Common Shares.................................52
SECTION 1005. Statements of Officers of the Company as to Default...........52
TESTIMONIUM..................................................................52
SIGNATURES...................................................................52
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S&C Draft of June 6, 1999
Page
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EXHIBIT A Form of Unit Certificate
EXHIBIT B Form of Pledge Agreement
EXHIBIT C Notice to Purchase Contract Agent
EXHIBIT D Instruction to Purchase Contract Agent
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<PAGE> 6
S&C Draft of June 6, 1999
PURCHASE CONTRACT AGREEMENT, dated as of May -, 1999, between THE
SEAGRAM COMPANY LTD., a Canadian corporation (the "Company"), and THE BANK OF
NEW YORK, a New York corporation, acting as Purchase Contract Agent for the
Holders of Units from time to time (the "Purchase Contract Agent").
RECITALS
The Company has duly authorized the execution and delivery of this
Agreement and the Unit Certificates evidencing the Units.
All things necessary to make the Purchase Contracts, when the Unit
Certificates are executed by the Company and authenticated, executed on behalf
of the Holders and delivered by the Purchase Contract Agent, as in this
Agreement provided, the valid obligations of the Company and the Holders, and to
constitute these presents a valid agreement of the Company and the Holders, in
accordance with its terms, have been done.
WITNESSETH:
For and in consideration of the premises and the entering into of the
Purchase Contracts by the Holders thereof, it is mutually agreed as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular; and
(b) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to
any particular Article, Section or other subdivision.
"Act" has the meaning specified in Section 103.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person,
<PAGE> 7
S&C Draft of June 6, 1999
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Agreement" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more agreements
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Average Trading Price" has the meaning specified in Section 501.
"Board of Directors" means the board of directors of the Company or a
duly authorized committee of that board.
"Board Resolution" means one or more resolutions of the Board of
Directors, a copy of which has been certified by the Secretary or an Assistant
Secretary of the Company to have been duly adopted by the Board of Directors and
to be in full force and effect on the date of such certification and delivered
to the Purchase Contract Agent.
"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.
"Cash Merger" has the meaning specified in Section 511.
"Closing Price" has the meaning specified in Section 501.
"Collateral Agent" means -, as Collateral Agent under the Pledge
Agreement, until a successor Collateral Agent shall have become such pursuant to
the applicable provisions of the Pledge Agreement, and thereafter "Collateral
Agent" shall mean the Person who is then the Collateral Agent thereunder.
"Collateral Substitution" has the meaning specified in Section 405.
"Common Shares" means the Common Shares, without nominal or par value,
of the Company having such terms as set forth in the Company's Articles of
Amalgamation, as amended from time to time.
"Company" means the Person designated as the "Company" in the first
paragraph of this instrument until a successor shall have become such, and
thereafter "Company" shall mean such successor.
"Contract Fee" means, with respect to each Purchase Contract, a fee
payable by the Holder of the related Unit to the Company, accruing on the Stated
Amount of such Unit from and including the date of first issuance of any Units
to but excluding the Stock Purchase
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Date and payable quarterly in arrears on each Quarterly Payment Date to and
including the Stock Purchase Date at a rate per annum equal to the Contract Fee
Rate (and computed on the basis of a 360-day year of twelve 30-day months), plus
any additional fees accrued thereon pursuant to Section 503.
"Contract Fee Rate" means 0.-%.
"Corporate Trust Office" means the principal office of the Purchase
Contract Agent, at which at any particular time its corporate trust business
shall be administered, which office at the date hereof is located at 101 Barclay
Street, New York, New York 10286.
"Current Market Price" has the meaning specified in Section 506(a)(8).
"Deferral Rate" means -% per annum plus, for the period after the
Remarketing Date, the amount (if any) by which the interest rate on the Notes
shall have been increased on the Remarketing Date in accordance with the terms
of the Notes.
"Depositary" means a clearing agency registered under the Exchange Act
that is designated to act as Depositary for Global Units as contemplated by
Section 305.
"Early Settlement" has the meaning set forth in Section 511.
"Early Settlement Date" has the meaning set forth in Section 511.
"Early Settlement Rate" has the meaning set forth in Section 511.
"Exchange Act" means the Securities Exchange Act of 1934 or any statute
successor thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 103.
"Global Unit Certificate" means a Unit Certificate that evidences all
or part of the Units and is registered in the name of the Depositary or a
nominee thereof.
"Guarantees" means the Company's guarantees of the Notes.
"Holder" means a Person in whose name a Unit Certificate is registered
in the Unit Register; "Holder", when used with respect to any particular Unit
Certificate (or Unit), means a Person in whose name such Unit Certificate (or
the Unit Certificate evidencing such Unit) is registered in the relevant Unit
Register.
"Indenture" means the Indenture, dated as of September 15, 1991, among
the Company, Joseph E. Seagram & Sons, Inc. and The Bank of New York, as
Trustee, as the
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S&C Draft of June 6, 1999
same may be amended or supplemented from time to time with respect to the terms
of the Notes in accordance with the terms thereof.
"Issuer Order" or "Issuer Request" means a written order or request
signed in the name of the Company by its Chairman of the Board, its Chief
Executive Officer, its President, its Chief Financial Officer, a Vice Chairman
or a Vice President, and by its Treasurer, an Assistant Treasurer, its
Controller, an Assistant Controller, its Secretary or an Assistant Secretary,
and delivered to the Purchase Contract Agent.
"JES" means Joseph E. Seagram & Sons, Inc., an Indiana corporation.
"Merger Early Settlement" has the meaning set forth in Section 512.
"Merger Early Settlement Date" has the meaning set forth in Section
512.
"Notes" means the -% Subordinated Deferrable Notes due -, 2004 of JES
issued under the Indenture and guaranteed, on a subordinated basis, by the
Company.
"NYSE" has the meaning specified in Section 501.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, the Chief Executive Officer, the President, the Chief Financial
Officer, a Vice Chairman or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Controller, an Assistant Controller, the Secretary or an
Assistant Secretary of the Company and delivered to the Purchase Contract Agent.
"Opinion of Counsel" means an opinion in writing signed by legal
counsel, who may be an employee of or counsel to the Company.
"Outstanding Unit Certificates" means, as of the date of determination,
all Unit Certificates theretofore authenticated, executed and delivered pursuant
to this Agreement, except:
(a) Unit Certificates theretofore canceled by the Purchase
Contract Agent or delivered to the Purchase Contract Agent for
cancellation; and
(b) Unit Certificates in exchange for or in lieu of which
other Unit Certificates have been authenticated and delivered pursuant
to this Agreement, other than any such Unit Certificate in respect of
which there shall have been presented to the Unit Agent proof
satisfactory to it that such Unit Certificate is held by a bona fide
purchaser in whose hands the Units evidenced by such Unit Certificate
are valid obligations of the Company.
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"Outstanding Units" means, as of the date of determination, all Units
evidenced by then Outstanding Unit Certificates, except, on or after the
Termination Date or Stock Purchase Date, Units for which the underlying Pledged
Securities or the Common Stock purchasable upon settlement of the underlying
Purchase Contracts, as the case may be, have been theretofore deposited with the
Purchase Contract Agent in trust for the Holders of such Units; provided,
however, that in determining whether the Holders of the requisite number of
Units have given any request, demand, authorization, direction, notice, consent
or waiver hereunder, Units owned by the Company or any Affiliate of the Company
shall be disregarded and deemed not to be outstanding, except that, in
determining whether the Purchase Contract Agent shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Units which the Purchase Contract Agent actually knows to be so
owned shall be so disregarded. Units so owned which have been pledged in good
faith may be regarded as Outstanding Units if the pledgee establishes to the
satisfaction of the Purchase Contract Agent the pledgee's right so to act with
respect to such Units and that the pledgee is not the Company or any Affiliate
of the Company.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Pledge" means the pledge of the Pledged Securities under the Pledge
Agreement.
"Pledge Agreement" means the Pledge Agreement, dated as of the date
hereof, among the Company, the Collateral Agent and the Purchase Contract Agent,
in its capacity as Purchase Contract Agent and as attorney-in-fact for the
Holders from time to time of the Units, the form of which is attached hereto as
Exhibit B, as the same may be amended from time to time in accordance with the
terms hereof and thereof.
"Pledged Securities" has the meaning specified in the Pledge Agreement.
"Predecessor Unit Certificate" of any particular Unit Certificate means
every previous Unit Certificate evidencing all or a portion of the rights and
obligations of the Holder under the Units evidenced thereby; and, for the
purposes of this definition, any Unit Certificate authenticated and delivered
under Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or
stolen Unit Certificate shall be deemed to evidence the same rights and
obligations of the Holder as the mutilated, destroyed, lost or stolen Unit
Certificate.
"Principal Agreements" means this Agreement (including the obligations
under the Purchase Contracts) and the Pledge Agreement.
"Purchase Contract" means the obligation of the Company to sell and the
Holder of the related Unit to purchase Common Shares on the terms and subject to
the conditions set forth in Article Five hereof.
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"Purchase Contract Settlement Fund" has the meaning specified in
Section 505.
"Quarterly Payment Date" means each March, June, September and December
commencing -, 1999.
"Record Date", when used with respect to any payment date, means the
Business Day next preceding such payment date.
"Remarketing Agent" means any remarketing agent engaged by JES.
"Remarketing Agreement" means the form of remarketing agreement by and
between the Company and the Remarketing Agent.
"Remarketing Date" means the third Business Day preceding the last
Quarterly Payment Date before the Stock Purchase Date.
"Reorganization Event" has the meaning specified in Section 506(b).
"Responsible Officer", when used with respect to the Purchase Contract
Agent, means any officer of the Purchase Contract Agent assigned by the Purchase
Contract Agent to administer corporate trust matters and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of his or her knowledge of and familiarity with the
particular subject.
"Securities Intermediary" means the Collateral Agent.
"Senior Indebtedness" has the meaning specified in the Indenture.
"Settlement Rate" has the meaning specified in Section 501.
"Stated Amount" means $- per Unit.
"Stock Purchase Date" means -, 2002 or such earlier date on which the
Purchase Contract may be settled pursuant to Section 511 or Section 512.
"Termination Date" means the date, if any, on which a Termination Event
occurs.
"Termination Event" means the occurrence of any of the following events
at any time on or prior to the Stock Purchase Date: (a) the entry by a court
having jurisdiction in the premises of (1) a decree or order for relief in
respect of the Company in an involuntary case or proceeding under any applicable
bankruptcy law or (2) a decree or order adjudging the Company a bankrupt or
insolvent, or approving as property filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company under any
applicable bankruptcy law, or appointing a custodian, receiver, liquidator,
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S&C Draft of June 6, 1999
assignee, trustee, sequestrator or other similar official of the Company or of
substantially all of the property of the Company, or ordering the winding up or
liquidation of the affairs of the Company, and the continuance of any decree or
order for relief or any such other decree or order unstayed and in effect for a
period of 90 consecutive days; or (b) the commencement by the Company of a
voluntary case or proceeding under any applicable bankruptcy law, or of any
other case or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by the Company to the entry of a decree or order for relief in respect
of the Company in an involuntary case or proceeding under any applicable
bankruptcy law, or to the commencement of any bankruptcy or insolvency case or
proceeding against the Company, or the filing by the Company of a petition or
answer or consent seeking reorganization or relief under any applicable
bankruptcy law, or the consent by the Company to the filing of such petition or
to the appointment of or the taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or similar official of the Company
or of substantially all or the property of the Company, or the making by the
Company of an assignment for the benefit of creditors, or the admission by the
Company in writing of its inability to pay its debts generally as they become
due, or the taking of corporate action by the Company in furtherance of any such
action.
"Threshold Appreciation Price" means $_______ per Common Share.
"TIA" means the Trust Indenture Act of 1939 or any statute successor
thereto, in each case as amended from time to time.
"Trading Day" has the meaning specified in Section 501.
"Treasury Consideration" in respect of any Notes consists of Treasury
Securities in an amount sufficient to generate (i) 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 that purpose that (x) no interest payment
will then have been deferred and (y) the interest rate on the Notes remains at
the initial rate; (ii) an amount of cash equal to the stated amount of the Units
which include those Notes; and (iii) if JES is then deferring interest payments,
an amount equal to the aggregate unpaid interest payments on the Notes being
remarketed accrued to March -, 2002.
"Underwriting Agreement" means the Underwriting Agreement dated June -,
1999, among the Company, Joseph E. Seagram & Sons, Inc., and Goldman, Sachs &
Co., Bear, Stearns & Co. Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Morgan Stanley & Co. Incorporated, as representatives of the
Underwriters named therein.
"Unit" means the rights to purchase Common Shares under a Purchase
Contract, together with ownership of the Notes or other Pledged Securities
pledged to secure the obligations owed to the Company under such Purchase
Contract, and subject to the pledge arrangements securing the foregoing
obligations. The Purchase Contracts and/or Pledged
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Securities constituting a part of any Units are sometimes referred to herein as
"underlying" such Units and are sometimes herein said to "underlie" such Units.
"Purchase Contract Agent" means the Person named as the "Purchase
Contract Agent" in the first paragraph of this Agreement until a successor
Purchase Contract Agent shall have become such pursuant to the applicable
provisions of this Agreement, and thereafter "Purchase Contract Agent" shall
mean the Person who is then the Purchase Contract Agent hereunder.
"Unit Certificate" means a certificate evidencing the rights and
obligations of a Holder in respect of the number of Units, as the case may be,
specified on such certificate.
"Unit Register" and "Unit Registrar" have the respective meanings
specified in Section 305.
"Vice President" means any vice president, whether or not designated by
a number or a word or words added before or after the title "vice president".
SECTION 102. Form of Documents Delivered to Purchase Contract Agent.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
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S&C Draft of June 6, 1999
SECTION 103. Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Purchase Contract Agent and, where it is hereby expressly required, to
the Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Agreement and (subject to Section 701) conclusive in favor of
the Purchase Contract Agent and the Company, if made in the manner provided in
this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Purchase Contract Agent deems sufficient.
(c) The ownership of Units shall be proved by the Unit Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Unit shall bind every future Holder of
the same Unit and the Holder of every Unit Certificate evidencing such Unit
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof in respect of anything done, omitted or suffered to be done by the
Purchase Contract Agent or the Company in reliance thereon, whether or not
notation of such action is made upon such Unit Certificate.
(e) The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Units entitled to give, make or take any
request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Agreement to be given, made or taken by
Holders of Units. If any record date is set pursuant to this paragraph, the
Holders of Outstanding Units on such record date, and no other Holders, shall be
entitled to take the relevant action, whether or not such Holders remain Holders
after such record date; provided that no such action shall be effective
hereunder unless taken on or prior to the applicable Expiration Date by Holders
of the requisite number of Outstanding Units on such record date. Nothing in
this paragraph shall be construed to prevent the Company from setting a new
record date for any action for which a record date
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S&C Draft of June 6, 1999
has previously been set pursuant to this paragraph (whereupon the record date
previously set shall automatically and with no action by any Person be canceled
and be of no effect), and nothing in this paragraph shall be construed to render
ineffective any action taken by Holders of the requisite number of Outstanding
Units on the date such action is taken. Promptly after any record date is set
pursuant to this paragraph, the Company, at its own expense, shall cause notice
of such record date, the proposed action by Holders and the applicable
Expiration Date to be given to the Purchase Contract Agent in writing and to
each Holder of Units in the manner set forth in Section 105.
With respect to any record date set pursuant to this Section, the
Company may designate any date as the "Expiration Date" and from time to time
may change the Expiration Date to any earlier or later day; provided that no
such change shall be effective unless notice of the proposed new Expiration Date
is given to the Purchase Contract Agent in writing, and to each Holder of Units
in the manner set forth in Section 105, on or prior to the existing Expiration
Date. If an Expiration Date is not designated with respect to any record date
set pursuant to this Section, the Company shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date as provided
in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be
later than the 180th day after the applicable record date.
SECTION 104. Notices, etc. to Purchase Contract Agent and the Company.
Any request, demand, authorization, direction, notice, consent, waiver
or other Act of Holders or other document provided or permitted by this
Agreement to be made upon, given or furnished to, or filed with,
(a) the Purchase Contract Agent by any Holder or by the
Company shall be sufficient for every purpose hereunder (unless
otherwise herein expressly provided) if made, given, furnished or filed
in writing and personally delivered or mailed, first-class postage
prepaid, to the Purchase Contract Agent at 101 Barclay, the Corporate
Trust Office, Attention: -, or at any other address previously
furnished in writing by the Purchase Contract Agent to the Holders and
the Company, or
(b) the Company by the Purchase Contract Agent or by any
Holder shall be sufficient for every purpose hereunder (unless
otherwise herein expressly provided) if made, given, furnished or filed
in writing and personally delivered or mailed, first-class postage
prepaid, to the Company at 1430 Peel Street, Montreal, Quebec, Canada
H3A 159, Attention: -, or at any other address previously furnished in
writing by the Company to the Purchase Contract Agent.
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S&C Draft of June 6, 1999
SECTION 105. Notice to Holders; Waiver.
Except as otherwise provided, where this Agreement provides for notice
to Holders of any event, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed, first-class
postage prepaid, to each Holder affected by such event, at his address as it
appears in the Unit Register, not later than the latest date, and not earlier
than the earliest date, prescribed for the giving of such notice. In any case
where notice to Holders is given by mail, neither the failure to mail such
notice nor any defect in any notice so mailed to any particular Holder shall
affect the sufficiency of such notice with respect to other Holders. Where this
Agreement provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Purchase Contract Agent, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Purchase
Contract Agent shall constitute a sufficient notification for every purpose
hereunder.
SECTION 106. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 107. Successors and Assigns.
All covenants and agreements in this Agreement by the Company shall
bind its successors and assigns, whether so expressed or not.
SECTION 108. Separability Clause.
In case any provision in this Agreement or in the Units shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions hereof and thereof shall not in any way be affected or
impaired thereby.
SECTION 109. Benefits of Agreement.
Nothing in this Agreement or in the Unit Certificates, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder and the Holders, any benefits or any legal or equitable
right, remedy or claim under this Agreement. The Holders from time to time shall
be beneficiaries of this Agreement and shall be bound by all of the terms and
conditions hereof and of the Units evidenced by their Unit Certificates by their
acceptance of delivery thereof.
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S&C Draft of June 6, 1999
SECTION 110. Governing Law.
THIS AGREEMENT AND THE UNITS SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES THEREOF.
SECTION 111. Legal Holidays.
In any case where any Quarterly Payment Date or the Stock Purchase Date
shall not be a Business Day, then (notwithstanding any other provision of this
Agreement or of the Units) payment in respect of distributions or interest on or
principal of Pledged Securities or Contract Fees shall not be made, Purchase
Contracts shall not be performed and other actions described herein shall not
occur, but such payments shall be made, the Purchase Contracts shall be
performed and such other actions shall occur, as applicable, on the next
succeeding Business Day with the same force and effect as if made on such
Quarterly Payment Date or Stock Purchase Date, as the case may be; provided,
that to the extent such payment is made on the next succeeding Business Day, no
distributions or interest shall accrue or be payable by the Company or any
Holder for the period from and after any such Quarterly Payment Date or Stock
Purchase Date, as the case may be, to the date of payment or performance; except
that if such next succeeding Business Day is in the next succeeding calendar
year, such payment shall be made, the Purchase Contracts shall be performed or
such other action shall occur on the immediately preceding Business Day with the
same force and effect as if made on such Quarterly Payment Date or the Stock
Purchase Date.
SECTION 112. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which, when so executed, shall be deemed an original, but all such counterparts
shall together constitute one and the same instrument.
SECTION 113. Inspection of Agreement.
A copy of this Agreement shall be available at all reasonable times at
the Corporate Trust Office for inspection by any Holder.
ARTICLE TWO
PURCHASE CONTRACT CERTIFICATE FORMS
SECTION 201. Forms of Unit Certificates Generally.
Unit Certificates evidencing Units shall be in substantially the form
set forth in Exhibit A hereto, with such letters, numbers or other marks of
identification or designation
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S&C Draft of June 6, 1999
and such legends or endorsements printed, lithographed or engraved thereon as
may be required by the rules of any securities exchange on which the Units are
listed or Depositary therefor, or as may, consistently herewith, be determined
by the officers of the Company executing such Unit Certificates, as evidenced by
their execution of the Unit Certificates.
The definitive Unit Certificates shall be printed, lithographed or
engraved on steel engraved borders or may be produced in any other manner, all
as determined by the officers of the Company executing the Unit Certificates,
consistent with the provisions of this Agreement, as evidenced by their
execution thereof.
Every Global Purchase Contract Certificate authenticated, executed and
delivered hereunder shall bear a legend in substantially the following form:
THIS UNIT CERTIFICATE IS A GLOBAL UNIT CERTIFICATE WITHIN THE MEANING
OF THE PURCHASE CONTRACT AGREEMENT HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS UNIT
CERTIFICATE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A UNIT
CERTIFICATE REGISTERED, AND NO TRANSFER OF THIS UNIT CERTIFICATE IN
WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER
THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT.
SECTION 202. Form of Unit Agent's Certificate of Authentication.
The form of the Unit Agent's certificate of authentication of the Units
shall be in substantially the form set forth on the form of the Unit
Certificates.
ARTICLE THREE
THE UNITS
SECTION 301. Title and Terms; Denominations.
The aggregate number of Units evidenced by Unit Certificates
authenticated, executed on behalf of the Holders and delivered hereunder is
limited to -, except for Unit Certificates authenticated, executed and delivered
upon registration of transfer of, in exchange for, or in lieu of, other Unit
Certificates pursuant to Section 304, 305, 306 or 805.
Unit Certificates shall be issuable only in registered form and only in
denominations of a single Unit and any integral multiple thereof.
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S&C Draft of June 6, 1999
SECTION 302. Rights and Obligations Evidenced by the Unit Certificates.
Each Unit Certificate shall evidence the number of Units specified
therein. Prior to the purchase, if any, of Common Shares under the Purchase
Contracts, the Units shall not entitle the Holders to any of the rights or
privileges of a holder of Common Shares by virtue of holding such Units,
including, without limitation, the right to vote or receive any dividends or
other distributions or to consent or to receive notice as stockholders in
respect of the meetings of stockholders or for the election of directors of the
Company or for any other matter.
SECTION 303. Execution, Authentication, Delivery and Dating.
Subject to the provisions of Section 309 hereof, upon the execution and
delivery of this Agreement, and at any time and from time to time thereafter,
the Company may deliver Unit Certificates executed by the Company to the
Purchase Contract Agent for authentication, execution on behalf of the Holders
and delivery, together with its Issuer Order for authentication of such Unit
Certificates, and the Purchase Contract Agent in accordance with such Issuer
Order shall authenticate, execute on behalf of the Holders and make such Unit
Certificates available for delivery.
The Unit Certificates shall be executed on behalf of the Company by its
Chairman of the Board, its Chief Executive Officer, its President, its Chief
Financial Officer or one of its Vice Presidents, under its corporate seal
reproduced thereon attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Unit Certificates may
be manual or facsimile.
Unit Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Unit
Certificates or did not hold such offices at the date of such Unit Certificates.
Each Unit Certificate shall be dated the date of its authentication.
No Purchase Contract evidenced by a Unit Certificate shall be valid
until such Unit Certificate has been executed on behalf of the Holder by the
manual signature of an authorized signatory of the Purchase Contract Agent, as
such Holder's attorney-in-fact. Such signature by an authorized signatory of the
Purchase Contract Agent shall be conclusive evidence that the Holder of such
Unit Certificate has entered into the Purchase Contracts evidenced by such Unit
Certificate.
No Unit Certificate shall be entitled to any benefit under this
Agreement or be valid or obligatory for any purpose unless there appears on such
Unit Certificate a certificate of authentication substantially in the form
provided for herein executed by an authorized
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S&C Draft of June 6, 1999
signatory of the Purchase Contract Agent by manual signature, and such
certificate upon any Unit Certificate shall be conclusive evidence, and the only
evidence, that such Unit Certificate has been duly authenticated and delivered
hereunder.
SECTION 304. Temporary Unit Certificates.
Pending the preparation of definitive Unit Certificates, the Company
shall execute and deliver (together with an Issuer Order) to the Purchase
Contract Agent, and the Purchase Contract Agent shall authenticate, execute on
behalf of the Holders, and deliver, in lieu of such definitive Unit
Certificates, temporary Unit Certificates which are in substantially the form
set forth in Exhibit A hereto, with such letters, numbers or other marks of
identification or designation and such legends or endorsements printed,
lithographed or engraved thereon as may be required by the rules of any
securities exchange on which the Units are listed or Depositary therefor, or as
may, consistently herewith, be determined by the officers of the Company
executing such Unit Certificates, as evidenced by their execution of the Unit
Certificates.
If temporary Unit Certificates are issued, the Company will cause
definitive Unit Certificates to be prepared without unreasonable delay. After
the preparation of definitive Unit Certificates, the temporary Unit Certificates
shall be exchangeable for definitive Unit Certificates upon surrender of the
temporary Unit Certificates at the Corporate Trust Office, at the expense of the
Company and without charge to the Holder. Upon surrender for cancellation of any
one or more temporary Unit Certificates, the Company shall execute and deliver
to the Purchase Contract Agent, and the Purchase Contract Agent shall
authenticate, execute on behalf of the Holder, and deliver in exchange therefor,
one or more definitive Unit Certificates of authorized denominations and
evidencing a like number of Units, as the case may be, as the temporary Unit
Certificate or Unit Certificates so surrendered. Until so exchanged, the
temporary Unit Certificates shall in all respects evidence the same benefits and
the same obligations with respect to the Units evidenced thereby as definitive
Unit Certificates.
SECTION 305. Registration; Registration of Transfer and Exchange.
The Purchase Contract Agent shall keep at the Corporate Trust Office
registers (the registers maintained in such office being herein referred to as
the "Unit Registers") in which, subject to such reasonable regulations as it may
prescribe, the Purchase Contract Agent shall provide for the registration of
Unit Certificates evidencing the Units and of transfers of Unit Certificates
evidencing Units (the Purchase Contract Agent, in such capacity, the "Unit
Registrar"). Upon request from any Trustee or the Company, the Purchase Contract
Agent shall furnish to such requesting party a copy of the Unit Register for the
Unit Certificates evidencing the Units as promptly as practicable.
Upon surrender for registration of transfer of any Unit Certificate at
the Corporate Trust Office, the Company shall execute and deliver to the
Purchase Contract Agent, and the
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Purchase Contract Agent shall authenticate, execute on behalf of the designated
transferee or transferees, and deliver, in the name of the designated transferee
or transferees, one or more new Unit Certificates evidencing a like number of
Units.
At the option of the Holder, Unit Certificates may be exchanged for
other Unit Certificates evidencing a like number of Units upon surrender of the
Unit Certificates to be exchanged at the Corporate Trust Office. Whenever any
Unit Certificates are so surrendered for exchange, the Company shall execute and
deliver to the Purchase Contract Agent, and the Purchase Contract Agent shall
authenticate, execute on behalf of the Holder, and deliver the Unit Certificates
which the Holder making the exchange is entitled to receive.
All Unit Certificates issued upon any registration of transfer or
exchange of a Unit Certificate shall evidence the ownership of the same number
of Units, and be entitled to the same benefits and subject to the same
obligations, under the Principal Agreements as the Units, evidenced by the Unit
Certificate surrendered upon such registration of transfer or exchange.
Every Unit Certificate presented or surrendered for registration of
transfer or for exchange shall (if so required by the Purchase Contract Agent)
be duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Purchase Contract Agent duly executed, by
the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of a Unit Certificate, but the Company and the Purchase Contract Agent
may require payment from the Holder of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Unit Certificates (which, for these
purposes, includes a transfer of Pledged Securities as contemplated by Section
504(a)), other than any exchanges pursuant to Sections 304, 306 and 805 not
involving any transfer.
Notwithstanding the foregoing, the Company shall not be obligated to
execute and deliver to the Purchase Contract Agent, and the Purchase Contract
Agent shall not be obligated to authenticate, execute on behalf of the Holder
and deliver any Unit Certificate in respect of a Unit Certificate presented or
surrendered for registration of transfer or for exchange on or after the Stock
Purchase Date or the Termination Date. In lieu of delivery of a new Unit
Certificate, upon satisfaction of the applicable conditions specified above in
this Section and receipt of appropriate registration or transfer instructions
from such Holder, the Purchase Contract Agent shall (a) if the Stock Purchase
Date has occurred, deliver the Common Shares issuable in respect of the Purchase
Contracts forming a part of the Units evidenced by such Unit Certificate, or (b)
if a Termination Event shall have occurred on or prior to the Stock Purchase
Date, transfer the liquidation or principal amount of the Pledged Securities
evidenced thereby, in each case subject to the applicable conditions and in
accordance with the applicable provisions of Article Five hereof.
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S&C Draft of June 6, 1999
The provisions of Clauses (a), (b), (c) and (d) below shall apply only
to Global Unit Certificates:
(a) Each Global Unit Certificate authenticated and executed on
behalf of the Holders under this Agreement shall be registered in the
name of the Depositary designated for such Global Unit Certificate or a
nominee thereof and delivered to such Depositary or a nominee thereof
or custodian therefor, and each such Global Unit Certificate shall
constitute a single Unit Certificate for all purposes of this
Agreement.
(b) Notwithstanding any other provision in this Agreement, no
Global Unit Certificate may be exchanged in whole or in part for Unit
Certificates registered, and no transfer of a Global Unit Certificate
in whole or in part may be registered, in the name of any Person other
than the Depositary for such Global Unit Certificate or a nominee
thereof unless (i) such Depositary (x) has notified the Company that it
is unwilling or unable to continue as Depositary for such Global Unit
Certificate or (y) has ceased to be a clearing agency registered under
the Exchange Act or (ii) there shall have occurred and be continuing a
default by the Company in respect of its obligations under one or more
Principal Agreements.
(c) Subject to Clause (b) above, any exchange of a Global Unit
Certificate for other Unit Certificates may be made in whole or in
part, and all Unit Certificates issued in exchange for a Global Unit
Certificate or any portion thereof shall be registered in such names as
the Depositary for such Global Unit Certificate shall direct.
(d) Every Unit Certificate authenticated and delivered upon
registration of transfer of, in exchange for or in lieu of a Global
Unit Certificate or any portion thereof, whether pursuant to this
Section, Section 304, 306 or 805 or otherwise, shall be authenticated,
executed on behalf of the Holders and delivered in the form of, and
shall be, a Global Unit Certificate, unless such Unit Certificate is
registered in the name of a Person other than the Depositary for such
Global Unit Certificate or a nominee thereof.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Unit Certificates.
If any mutilated Unit Certificate is surrendered to the Unit Agent, the
Company shall execute and deliver to the Purchase Contract Agent, and the
Purchase Contract Agent shall authenticate, execute on behalf of the Holder, and
deliver in exchange therefor, a new Unit Certificate, evidencing the same number
of Units and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Purchase Contract
Agent (a) evidence to their satisfaction of the destruction, loss or theft of
any Unit Certificate, and
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(b) such security or indemnity as may be required by them to save each of them
and any agent of any of them harmless, then, in the absence of notice to the
Company or the Purchase Contract Agent that such Unit Certificate has been
acquired by a bona fide purchaser, the Company shall execute and deliver to the
Purchase Contract Agent, and the Purchase Contract Agent shall authenticate,
execute on behalf of the Holder, and deliver to the Holder, in lieu of any such
destroyed, lost or stolen Unit Certificate, a new Unit Certificate, evidencing
the same number of Units and bearing a number not contemporaneously outstanding.
Notwithstanding the foregoing, the Company shall not be obligated to
execute and deliver to the Purchase Contract Agent, and the Purchase Contract
Agent shall not be obligated to authenticate, execute on behalf of the Holder,
and deliver to the Holder, on or after the Stock Purchase Date or the
Termination Date, a Unit Certificate in respect of any mutilated, destroyed,
lost or stolen Unit Certificate. In lieu of delivery of a new Unit Certificate,
upon satisfaction of the applicable conditions specified above in this Section
and receipt of appropriate registration or transfer instructions from such
Holder, the Purchase Contract Agent shall (a) if the Stock Purchase Date has
occurred, deliver the Common Shares issuable in respect of the Purchase
Contracts forming a part of the Units evidenced by such Unit Certificate, or (b)
if a Termination Event shall have occurred on or prior to the Stock Purchase
Date, transfer the liquidation or principal amount of the Pledged Securities
evidenced thereby, in each case subject to the applicable conditions and in
accordance with the applicable provisions of Article Five hereof.
Upon the issuance of any new Unit Certificate under this Section, the
Company and the Purchase Contract Agent may require the payment by the Holder of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and
expenses of the Purchase Contract Agent) connected therewith.
Every new Unit Certificate issued pursuant to this Section in lieu of
any destroyed, lost or stolen Unit Certificate shall constitute an original
additional contractual obligation of the Company and of the Holder, whether or
not the destroyed, lost or stolen Unit Certificate shall be at any time
enforceable by anyone, and shall be entitled to all the benefits and be subject
to all the obligations of the Principal Agreements equally and proportionately
with any and all other Unit Certificates delivered hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
settlement of mutilated, destroyed, lost or stolen Unit Certificates.
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S&C Draft of June 6, 1999
SECTION 307. Persons Deemed Owners.
Prior to due presentment of a Unit Certificate for registration of
transfer, the Company and the Purchase Contract Agent, and any agent of the
Company or the Purchase Contract Agent, may treat the Person in whose name such
Unit Certificate is registered as the owner of the Units evidenced thereby, for
the purpose of receiving payments of distributions or interest on the Pledged
Securities, receiving or making payments of Contract Fees and performance of the
underlying Purchase Contracts and for all other purposes whatsoever, whether or
not the payment of distributions or interest on the Pledged Securities or any
Contract Fee payable in respect of the Purchase Contracts constituting a part of
the Units evidenced thereby shall be overdue and notwithstanding any notice to
the contrary, and neither the Company nor the Purchase Contract Agent, nor any
agent of the Company or the Purchase Contract Agent, shall be affected by notice
to the contrary.
Notwithstanding the foregoing, with respect to any Global Unit
Certificate, nothing herein shall prevent the Company, the Purchase Contract
Agent or any agent of the Company or the Purchase Contract Agent, from giving
effect to any written certification, proxy or other authorization furnished by
any Depositary (or its nominee), as a Holder, with respect to such Global Unit
Certificate or impair, as between such Depositary and owners of beneficial
interests in such Global Unit Certificate, the operation of customary practices
governing the exercise of rights of such Depositary (or its nominee) as Holder
of such Global Unit Certificate.
SECTION 308. Cancellation.
All Unit Certificates surrendered for delivery of Common Shares on or
after the Stock Purchase Date, transfer of Pledged Securities after the
occurrence of a Termination Event or registration of transfer or exchange shall,
if surrendered to any Person other than the Purchase Contract Agent, be
delivered to the Purchase Contract Agent and, if not already canceled, shall be
promptly canceled by it. The Company may at any time deliver to the Purchase
Contract Agent for cancellation any Unit Certificates previously authenticated,
executed and delivered hereunder which the Company may have acquired in any
manner whatsoever, and all Unit Certificates so delivered shall, upon Issuer
Order, be promptly canceled by the Purchase Contract Agent. No Unit Certificates
shall be authenticated, executed on behalf of the Holder and delivered upon
transfer of, in exchange for or in lieu of any Unit Certificates canceled as
provided in this Section, except as expressly permitted by this Agreement. All
canceled Unit Certificates held by the Purchase Contract Agent shall be disposed
of as directed by Issuer Order.
If the Company or any Affiliate of the Company shall acquire any Unit
Certificate, such acquisition shall not operate as a cancellation of such Unit
Certificate unless and until such Unit Certificate is delivered to the Unit
Agent canceled or for cancellation.
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S&C Draft of June 6, 1999
SECTION 309. Payments on the Units.
Contract Fees payable by the Company to the Holders, and all amounts
payable to Holders as required by Section 401 or 504(b), will be payable at the
office of the Purchase Contract Agent in The City of New York maintained for
that purpose or, at the option of the Company, by check mailed to the address of
the Person entitled thereto at such address as it appears on the relevant Unit
Register on the Record Date; provided, however, that for so long as any Units
are evidenced by Global Certificates, the Purchase Contract Agent will pay each
such amount payable in respect of such Units by wire transfer in same-day funds,
no later than 2:00 p.m., New York City time, on the Business Day such amount is
received by the Purchase Contract Agent from the Collateral Agent or the Company
(or, if such amount is received by the Purchase Contract Agent after 1:00 p.m.,
New York City time, on a Business Day or on a day that is not a Business Day, no
later than 10:00 a.m., New York City time, on the next succeeding Business Day),
to the Depositary, to the account or accounts designated by it for such purpose.
ARTICLE FOUR
THE PLEDGED SECURITIES
SECTION 401. Payments on the Pledged Securities.
Subject to Section 504(b), upon receipt from the Collateral Agent of
payments in respect of the Pledged Securities underlying any Holder's Units, the
Purchase Contract Agent shall pay any amount, which remains after any payments
payable to the Company by such Holder in respect of the Contract Fee, if any,
have been made by the Collateral Agent on behalf of such Holder, to the Person
in whose name the Unit Certificate (or one or more Predecessor Unit
Certificates) evidencing such Units is registered at the close of business on
the Record Date next preceding such Quarterly Payment Date.
Payments on the Pledged Securities on the Stock Purchase Date are
addressed in Section 504.
SECTION 402. Transfer of Pledged Securities Upon Occurrence of Termination
Event.
Upon the occurrence of a Termination Event and the transfer of the
Pledged Securities underlying each Holder's Units to the Purchase Contract Agent
pursuant to the terms of the Pledge Agreement, the Purchase Contract Agent shall
request transfer instructions with respect to such Pledged Securities from such
Holder by written request mailed to such Holder at his address as it appears in
the relevant Unit Register and shall give notice of such Termination Event to
the Collateral Agent. Thereafter, upon surrender to the Purchase Contract Agent
of a Unit Certificate evidencing a Holder's Units, with transfer instructions in
proper form for transfer of the underlying Pledged Securities, the Purchase
Contract Agent shall transfer the Pledged Securities evidenced by such Unit
Certificate to such Holder in accordance with such instructions; provided,
however, that if the Pledged Securities are to be transferred to a Person other
than the Person in whose name such Unit
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S&C Draft of June 6, 1999
Certificate is registered, no such transfer shall be made unless the Person
requesting the transfer has paid any transfer and other taxes required by reason
of such transfer to a Person other than the registered Holder of such Unit
Certificate or has established to the satisfaction of the Company that such tax
either has been paid or is not payable. Until the foregoing conditions to
transfer any of the Pledged Securities underlying any Units has been met, the
Purchase Contract Agent shall hold such Pledged Securities as custodian for the
Holder of such Units.
If upon a Termination Event any Holder of Units would, after satisfying
the foregoing conditions, otherwise be entitled to receive (or have transferred
to such Holder's designee) Treasury Securities of any series having a principal
amount that is not an integral multiple of $1,000, such Holder shall instead be
entitled to receive (or have transferred to such Holder's designee) Treasury
Securities of such series in a principal amount equal to the next lower integral
multiple of $1,000 plus a portion of the net proceeds from the sale of Treasury
Securities of such series contemplated by the succeeding sentence representing
such Holder's interest therein. As soon as practicable after transfer to the
Purchase Contract Agent of the Pledged Securities as provided in the Pledge
Agreement, the Purchase Contract Agent shall, on behalf of all Holders who, by
virtue of the preceding sentence, will not be entitled to a portion of the
Treasury Securities of any series to which they would otherwise be entitled,
aggregate and sell the Treasury Securities of such series representing such
portion to or through one or more U.S. government securities dealers at then
prevailing prices, deduct from the proceeds of such sales all commissions and
other out-of-pocket transaction costs incurred in connection with such sales
and, until the net proceeds therefrom have been distributed to the Holders
entitled thereto or their designees, hold such proceeds in trust for such
Holders.
SECTION 403. Transfer of Pledged Securities Upon Early Settlement and Merger
Early Settlement.
(a) In the event of Early Settlement as described in Section 511, the
Pledged Securities with respect to all Units which have been presented for
settlement shall be released by the Collateral Agent to the Unit Holder upon
satisfaction of the conditions precedent described in Section 511.
(b) In the event of a Cash Merger as described in Section 512, the
Pledged Securities with respect to all Units which have been presented for
payment on the Merger Early Settlement Date shall be released by the Collateral
Agent and presented to the Company in consideration for the securities, cash and
other property receivable by the Unit Holder in settlement of the Unit pursuant
to Section 506(b).
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S&C Draft of June 6, 1999
SECTION 404. Transfer of Notes Upon Remarketing.
Upon receipt of the notice from the Purchase Contract Agent under
Section 504(a), the Collateral Agent, pursuant to the terms of the Pledge
Agreement, may cause the Notes subject to such notice to be presented to the
Remarketing Agent for remarketing and subsequent transfer.
SECTION 405. Substitution of Pledged Securities.
(a) A Holder may separate the Notes from the related Purchase Contracts
in respect of a Unit by substituting for such Notes cash to be used by the
Remarketing Agent to purchase Treasury Consideration in respect of such Notes (a
"Collateral Substitution"). Each Holder of a Unit who intends to effect a
Collateral Substitution shall notify the Purchase Contract Agent by use of a
notice substantially in the form of Exhibit C hereto of its intention to effect
a Collateral Substitution. Such notice shall be given prior to 10:00 a.m., New
York City time, on the seventh Business Day prior to March __, 2002. Prior to
11:00 a.m., New York City time, on the next succeeding Business Day, the
Purchase Contract Agent shall notify the Company and the Remarketing Agent of
the receipt of such notices from Holders intending to make a Collateral
Substitution.
(b) On the fifth Business Day prior to March __, 2002, the Purchase
Contract Agent shall publish a notice in a leading daily newspaper in New York
City, which is expected to be The Wall Street Journal, stating the amount of the
Treasury Consideration which will need to be contributed per Note in order to
effect a Collateral Substitution and the cash payment required to so purchase
such Treasury Consideration.
(c) To effect such Collateral Substitution the Holder shall (a) deposit
with the Securities Intermediary the Treasury Consideration in respect of the
Notes comprising part of such Units prior to 12:00 p.m. New York City time on
the fourth Business Day prior to March __, 2002 and (b) give a notice to the
Purchase Contract Agent, substantially in the form of Exhibit D hereto, stating
that the Holder has transferred the amount of each needed to purchase the
relevant amount of each needed to purchase the Treasury Consideration in respect
of their Units to the Securities Intermediary and requesting that the Purchase
Contract Agent instruct the Collateral Agent to release the Notes underlying
such Units, whereupon the Purchase Contract Agent shall give such instruction to
the Collateral Agent, substantially in the form of Exhibit A to the Pledge
Agreement. If a Holder fails to deliver the Treasury Consideration prior to
11:00 a.m., New York City time on the fourth Business Day prior to March __,
2002, such Holder's Notes will be remarketed by the Remarketing Agent.
(d) In the event of a Collateral Substitution as described in this
Section 405, the Pledged Securities with respect to all Units which have been
presented for settlement shall be released by the Securities Intermediary to the
Holder upon satisfaction of the conditions precedent described in this Section
405. The date of such release shall not be prior to March __, 2002.
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S&C Draft of June 6, 1999
(e) Holders who elect to separate the Notes from the related Purchase
Contract and to substitute Treasury Securities for such Notes, shall be
responsible for any reasonable fees or expenses payable to the Collateral Agent
for its services as collateral agent in respect of the substitution, and the
Company shall not be responsible for any such fees or expenses.
ARTICLE FIVE
THE PURCHASE CONTRACTS
SECTION 501. Purchase of Common Shares.
Each Holder of a Unit Certificate, by his acceptance thereof, agrees
that it has entered into and shall be bound by the underlying Purchase Contract
the terms and conditions of which are set forth in this Article Five. Each
Purchase Contract shall obligate the Holder of such Unit to purchase, and the
Company to sell, on the Stock Purchase Date, at a price equal to the Stated
Amount, a number of shares of Common Stock equal to the Settlement Rate, unless,
on or prior to the Stock Purchase Date, there shall have occurred a Termination
Event. The "Settlement Rate" is equal to (a) if the Average Trading Price (as
defined below) is greater than or equal to the Threshold Appreciation Price, -
of a Common Share per Purchase Contract, (b) if the Average Trading Price is
less than the Threshold Appreciation Price but is greater than the Stated
Amount, a fractional share of Common Share per Purchase Contract equal to the
Stated Amount divided by the Average Trading Price (rounded upward or downward
to the nearest 1/10,000th of a share or, if there is not a nearest 1/10,000th of
a share, to the next lower 1/10,000th of a share) and (c) if the Average Trading
Price is less than or equal to the Stated Amount, one Common Share per Purchase
Contract, in each case subject to adjustment as provided in Section 506. As
provided in Section 509, no fractional Common Shares will be issued upon
settlement of Purchase Contracts.
The 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 immediately preceding the Stock Purchase Date. The "Closing Price"
of the Common Shares 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 New York Stock Exchange (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 United States
securities exchange on which the Common Shares are so listed, or if the Common
Shares are not so listed on a United States 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 for 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 the Company. A "Trading Day" means a
day on which the Common Shares (A) are not suspended from trading on any
national or regional securities exchange or association or over-the-counter
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S&C Draft of June 6, 1999
market at the close of business and (B) 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.
Each Holder of a Unit Certificate evidencing Units, by his acceptance
thereof, irrevocably authorizes the Purchase Contract Agent to enter into and
perform the underlying Purchase Contracts on his behalf as his attorney-in-fact,
agrees to be bound by the terms and provisions thereof, covenants and agrees to
perform his obligations under such Purchase Contracts, consents to the
provisions of the Principal Agreements, irrevocably authorizes the Purchase
Contract Agent to enter into and perform the Pledge Agreement on his behalf as
his attorney-in-fact, and consents to and agrees to be bound by the Pledge of
the Pledged Securities underlying such Units pursuant to the Pledge Agreement.
Each Holder of Units, by his acceptance thereof, further irrevocably covenants
and agrees that, if because of a Failed Remarketing described in Section 504(b),
a Holder is unable to satisfy its obligation to the Company under the Purchase
Contracts underlying such Units as provided in Section 504(a), then to the
extent and in the manner provided in Section 504(b) and the Pledge Agreement,
but subject to the terms thereof, payments in respect of all or a portion of the
principal of or proceeds from the Pledged Securities on the Stock Purchase Date
shall be paid by the Collateral Agent to the Company in satisfaction of such
Holder's obligations under such Purchase Contract and such Holder shall acquire
no right, title or interest in such payments.
Upon registration of transfer of a Unit Certificate, the transferee
shall be bound (without the necessity of any other action on the part of such
transferee) by the terms of the Purchase Contracts evidenced thereby and by the
Pledge Agreement and the transferor shall be released from all such obligations
evidenced by the Unit Certificate so transferred. The Company covenants and
agrees, and each Holder of a Unit Certificate, by his acceptance thereof,
likewise covenants and agrees, to be bound by the provisions of this paragraph.
SECTION 502. Contract Fees.
Contract Fees payable in respect of each Purchase Contract to the
Company will be paid to the Company by the Collateral Agent, on behalf of the
Holders, on each Quarterly Payment Date to and including the Stock Purchase
Date, provided that the Collateral Agent shall have received sufficient payments
in respect of Pledged Securities.
Each Unit Certificate delivered under this Agreement upon registration
of transfer of, in exchange for or in lieu of any other Unit Certificate shall
carry the rights to receive and obligations to pay Contract Fees accrued and
unpaid, and to accrue, which were carried by the Purchase Contracts evidenced by
such other Unit Certificate.
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S&C Draft of June 6, 1999
SECTION 503. [Intentionally left Blank].
SECTION 504. Payment of Purchase Price.
(a) The Purchase Contract Agent shall notify the Remarketing Agent,
promptly after 11:00 a.m., New York City time, on the third Business Day
immediately preceding the Remarketing Date, of the aggregate principal amount of
Notes held by the Unit Agent all of which shall be remarketed in accordance with
the Remarketing Agreement.
Upon application of the proceeds from the remarketing of the Notes
equal to the Treasury Consideration by the Collateral Agent in accordance with
the Pledge Agreement, such Holders' obligations to pay the Purchase Price for
the Common Shares under the related Purchase Contracts on the Stock Purchase
Date will be deemed to have been satisfied in full. Holders whose Notes are so
remarketed shall not be responsible for the payment of any remarketing fee in
connection therewith. If, in spite of using reasonable efforts, the Remarketing
Agent cannot remarket the related Notes of such Holders at a price of 100.25% of
the Treasury Consideration prior to the Stock Purchase Date, the remarketing
shall be deemed to have failed (a "Failed Remarketing") and in accordance with
the terms of the Pledge Agreement the Collateral Agent, for the benefit of the
Company, may exercise its rights as a secured party with respect to such Notes
under the Pledge Agreement, including those actions specified in paragraph (b)
below. The Company shall cause a notice of such Failed Remarketing to be
published on the second Business Day immediately preceding the Stock Purchase
Date in a daily newspaper in the English language of general circulation in The
City of New York.
(b) With respect to any Notes which are subject to a Failed
Remarketing, the Collateral Agent for the benefit of the Company reserves all of
its rights as a secured party with respect thereto and, subject to applicable
law and paragraph (c) below, may, among other things, (i) retain the Notes in
full satisfaction of the Holders' obligations under the Purchase Contracts or
(ii) sell the Notes in one or more public or private sales; provided, that if
upon a Failed Remarketing the Collateral Agent exercises such rights for the
benefit of the Company with respect to such Notes, any accrued and unpaid
distributions on such Notes shall become payable by the Company to the Purchase
Contract Agent for payment to the beneficial owner of the Units to which such
Notes relate.
(c) The obligations of the Holders to pay the Purchase Price are
non-recourse obligations and, except to the extent paid by Early Settlement or
Merger Early Settlement, are payable solely out of the proceeds of any Pledged
Securities pledged to secure the obligations of the Holders and in no event will
Holders be liable for any deficiency between the proceeds of the disposition of
the Pledged Securities and the Purchase Price.
(d) The Company shall not be obligated to issue any Common Shares in
respect of a Purchase Contract or deliver any certificates therefor to the
Holder of the related Unit unless the Company shall have received payment in
full of the aggregate purchase price for
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S&C Draft of June 6, 1999
Common Shares to be purchased thereunder in the manner herein set forth (either
directly or by operation of set-off as contemplated by the preceding sentence).
SECTION 505. Issuance of Common Shares.
As promptly as practicable on or after the Stock Purchase Date, upon
receipt by the Company of payment in full of the aggregate purchase price for
the Common Shares purchased by the Holders pursuant to the foregoing provisions
of this Article, and subject to Section 506(b), the Company shall deposit with
the Purchase Contract Agent, for the benefit of the Holders of the Units, one or
more certificates representing the Common Shares registered in the name of the
Purchase Contract Agent (or its nominee) as custodian for the Holders (such
certificates for Common Shares, together with any dividends or distributions
with respect thereto, being hereinafter referred to as the "Purchase Contract
Settlement Fund") to which the Holders are entitled hereunder. Subject to the
foregoing, upon surrender of a Unit Certificate to the Purchase Contract Agent
on or after the Stock Purchase Date, with the form of Settlement Instructions
thereon duly completed and executed, the Holder of such Unit Certificate shall
be entitled to receive in exchange therefor a certificate representing that
number of whole Common Shares which such Holder is entitled to receive pursuant
to the provisions of this Article Five (after taking into account all Units then
held by such Holder) together with cash in lieu of fractional shares as provided
in Section 509 and any dividends or distributions with respect to such shares
constituting part of the Purchase Contract Settlement Fund, but without any
interest thereon, and the Unit Certificate so surrendered shall forthwith be
cancelled. Such shares shall be registered in the name of the Holder or the
Holder's designee as specified in the form of Settlement Instructions appearing
on the surrendered Unit Certificate.
If any Common Shares issued in respect of a Purchase Contract are to be
registered to a Person other than the Person in whose name the Unit Certificate
evidencing such Purchase Contract is registered, no such registration shall be
made unless the Person requesting such registration has paid any transfer and
other taxes required by reason of such registration in a name other than that of
the registered Holder of the Unit Certificate evidencing such Purchase Contract
or has established to the satisfaction of the Company that such tax either has
been paid or is not payable.
SECTION 506. Adjustment of Settlement Rate.
(a) Adjustments for Dividends, Distributions, Stock Splits, Etc.
(1) In case the Company shall pay or make a dividend or other
distribution on any class of common stock of the Company in Common Shares, the
Settlement Rate in effect at the opening of business on the day following the
date fixed for the determination of stockholders entitled to receive such
dividend or other distribution shall be increased by dividing such Settlement
Rate by a fraction of which the numerator shall be the number of Common Shares
outstanding at the close of business on the date fixed for such determination
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S&C Draft of June 6, 1999
and the denominator shall be the sum of such number of shares and the total
number of shares constituting such dividend or other distribution, such increase
to become effective immediately after the opening of business on the day
following the date fixed for such determination. For the purposes of this
paragraph (1), the number of Common Shares at any time outstanding shall not
include shares held in the treasury of the Company but shall include shares
issuable in respect of scrip certificates issued in lieu of fractions of Common
Shares. The Company will not pay any dividend or make any distribution on Common
Shares held in the treasury of the Company.
(2) In case the Company shall issue rights, options or warrants to all
holders of its Common Shares (not being available on an equivalent basis to
Holders of the Units upon settlement of the Purchase Contracts underlying such
Units) entitling them, for a period expiring within 45 days after the record
date for the determination of stockholders entitled to receive such rights,
options or warrants, to subscribe for or purchase Common Shares at a price per
share less than the Current Market Price per Common Share on the date fixed for
the determination of stockholders entitled to receive such rights, options or
warrants (other than pursuant to a dividend reinvestment plan), the Settlement
Rate in effect at the opening of business on the day following the date fixed
for such determination shall be increased by dividing such Settlement Rate by a
fraction of which the numerator shall be the number of Common Shares outstanding
at the close of business on the date fixed for such determination plus the
number of Common Shares which the aggregate of the offering price of the total
number of Common Shares so offered for subscription or purchase would purchase
at such Current Market Price and the denominator shall be the number of Common
Shares outstanding at the close of business on the date fixed for such
determination plus the number of Common Shares so offered for subscription or
purchase, such increase to become effective immediately after the opening of
business on the day following the date fixed for such determination. For the
purposes of this paragraph (2), the number of Common Shares at any time
outstanding shall not include shares held in the treasury of the Company but
shall include shares issuable in respect of scrip certificates issued in lieu of
fractions of Common Shares. The Company shall not issue any such rights, options
or warrants in respect of Common Shares held in the treasury of the Company.
(3) In case outstanding Common Shares shall be subdivided into a
greater number of Common Shares, the Settlement Rate in effect at the opening of
business on the day following the day upon which such subdivision becomes
effective shall be proportionately increased, and, conversely, in case
outstanding Common Shares shall each be combined into a smaller number of Common
Shares, the Settlement Rate in effect at the opening of business on the day
following the day upon which such combination becomes effective shall be
proportionately reduced, such increase or reduction, as the case may be, to
become effective immediately after the opening of business on the day following
the day upon which such subdivision or combination becomes effective.
(4) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Share evidences of its indebtedness or assets
(including securities, but
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excluding any rights or warrants referred to in paragraph (2) of this Section,
any dividend or distribution paid exclusively in cash and any dividend or
distribution referred to in paragraph (1) of this Section), the Settlement Rate
shall be increased so that the same shall equal the rate determined by dividing
the Settlement Rate in effect immediately prior to the close of business on the
date fixed for the determination of stockholders entitled to receive such
distribution by a fraction of which the numerator shall be the Current Market
Price per share of the Common Shares on the date fixed for such determination
less the then fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution filed with
the Purchase Contract Agent) of the portion of the assets or evidences of
indebtedness so distributed applicable to one Common Share and the denominator
shall all be such Current Market Price per Common Share, such adjustment to
become effective immediately prior to the opening of business on the day
following the date fixed for the determination of stockholders entitled to
receive such distribution. In any case in which this paragraph (4) is
applicable, paragraph (2) of this Section shall not be applicable.
(5) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Shares cash (excluding any cash that is distributed in
a Reorganization Event to which Section 506(b) applies or as part of a
distribution referred to in paragraph (4) of this Section) in an aggregate
amount that, when combined with (I) the aggregate amount of any other
distributions to all holders of its Common Shares made exclusively in cash
within the 12 months preceding the date of payment of such distribution to the
extent such amount has not already been applied in a prior adjustment pursuant
to this paragraph (5) and (II) the aggregate of the cash plus the fair market
value (as determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution), as of the date of expiration of
such tender or exchange offer, of the consideration paid in respect of any
tender or exchange offer by the Company or any of its subsidiaries for all or
any portion of the Common Stock expiring within the 12 months preceding the date
of payment of such distribution and in respect of which no adjustment pursuant
to paragraph (6) of this Section has been made, exceeds 15% of the product of
the Current Market Price per Common Share on the date fixed for the
determination of stockholders entitled to receive such distribution times the
number of Common Shares outstanding on such date (such excess portion of such
distribution being herein referred to as the "Excess Amount"), the Settlement
Rate shall be increased so that the same shall equal the rate determined by
dividing the Settlement Rate in effect immediately prior to the close of
business on the date fixed for the determination of stockholders entitled to
receive such distribution by a fraction of which (i) the numerator shall be the
Current Market Price per Common Share on the date fixed for such determination
less an amount equal to (x) such Excess Amount divided by (y) the number of
Common Shares outstanding at the close of business on the date fixed for such
determination and (ii) the denominator shall be the Current Market Price per
Common Share on the date fixed for such determination, such adjustment to become
effective immediately prior to the opening of business on the day following the
date fixed for the determination of stockholders entitled to receive such
distribution.
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(6) In case the Company or any subsidiary of the Company shall
consummate a tender or exchange offer for all or any portion of the Common
Shares and pay an aggregate consideration in respect thereof having a fair
market value (as determined by the Board of Directors, whose determination shall
be conclusive and described in a Board Resolution) that, when combined with (I)
the aggregate of the cash plus the fair market value (as determined by the Board
of Directors, whose determination shall be conclusive and described in a Board
Resolution), as of the date of expiration of such tender or exchange offer, of
the consideration paid in respect of any other tender or exchange offer by the
Company or any of its subsidiaries for all or any portion of the Common Shares
expiring within the 12 months preceding the date of expiration of such tender or
exchange offer and in respect of which no adjustment pursuant to this paragraph
(6) has been made and (II) the aggregate amount of any distributions to all
holders of the Company's Common Shares made exclusively in cash within 12 months
preceding the date of expiration of such tender or exchange offer to the extent
such amount has not already been applied in a prior adjustment pursuant to
paragraph (5) of this Section, exceeds 15% of the product of the Current Market
Price per share of the Common Stock on the date of expiration of such tender or
exchange offer times the number of Common Shares outstanding (including any
tendered shares) at the close of business on the date of such expiration, the
Settlement Rate shall be increased so that the same shall equal the rate
determined by dividing the Settlement Rate in effect immediately prior to the
close of business on the date of such expiration by a fraction of which (i) the
numerator shall be (A) the product of (I) the Current Market Price per Common
Share on the date of such expiration and (II) the number of Common Shares
outstanding (including any tendered shares) at the close of business on the date
of such expiration less (B) the amount of cash plus the fair market value
(determined as aforesaid) of the aggregate consideration paid in respect of such
tender or exchange offer and (ii) the denominator shall be the product of (A)
the Current Market Price per share of the Common Stock on the date of such
expiration and (B) the number of Common Shares outstanding (including any
tendered shares) at the close of business on the date of such expiration less
the number of shares acquired pursuant to such tender or exchange, such
adjustment to become effective immediately prior to the opening of business on
the day following the date of such expiration.
(7) The reclassification of Common Shares into securities including
securities other than Common Stock (other than any reclassification upon a
Reorganization Event to which Section 506(b) applies) shall be deemed to involve
(i) a distribution of such securities other than Common Stock to all holders of
Common Stock (and the effective date of such reclassification shall be deemed to
be "the date fixed for the determination of stockholders entitled to receive
such distribution" and the "date fixed for such determination" within the
meaning of paragraph (4) of this Section), and (ii) a subdivision or
combination, as the case may be, of the number of Common Shares outstanding
immediately prior to such reclassification into the number of Common Shares
outstanding immediately thereafter (and the effective date of such
reclassification shall be deemed to be "the day upon which such subdivision
becomes effective" or "the day upon which such combination becomes effective",
as the case may be, and "the day upon which such subdivision or combination
becomes effective" within the meaning of paragraph (3) of this Section).
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(8) The "Current Market Price" per Common Share on any day means the
average of the daily Closing Prices for the 5 consecutive Trading Days selected
by the Company 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, shall mean the first date on which the Common Shares
trade regular way on such exchange or in such market without the right to
receive such issuance or distribution.
(9) All adjustments to the Settlement Rate shall be calculated to the
nearest 1/10,000th of a Common Share (or, if there is not a nearest 1/10,000th
of a share, to the next lower 1/10,000th of a share). No adjustment in the
Settlement Rate shall be required unless such adjustment would require an
increase or decrease of at least one percent therein; provided, however, that
any adjustments which by reason of this subparagraph are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
If an adjustment is made to the Settlement Rate pursuant to paragraph (1), (2),
(3), (4), (5), (6), (7) or (10) of this Section 506(a), an adjustment shall also
be made to the Average Trading Price solely to determine which of clauses (a),
(b) or (c) of the definition of Settlement Rate in Section 501 will apply on the
Stock Purchase Date. Such adjustment shall be made by multiplying the Average
Trading Price by a fraction of which the numerator shall be the Settlement Rate
immediately after such adjustment pursuant to paragraph (1), (2), (3), (4), (5),
(6), (7) or (10) of this Section 506(a) and the denominator shall be the
Settlement Rate immediately before such adjustment.
(10) The Company may make such increases in the Settlement Rate, in
addition to those required by this Section, as it considers to be advisable in
order to avoid or diminish any income tax to any holders of Common Shares
resulting from any dividend or distribution of stock or issuance of rights or
warrants to purchase or subscribe for stock or from any event treated as such
for income tax purposes or for any other reasons.
(b) Adjustment for Consolidation, Merger or Other Reorganization Event.
In the event of (i) any consolidation or merger of the Company with or into
another Person (other than a merger or consolidation in which the Company is the
continuing corporation and in which the Common Shares outstanding immediately
prior to the merger or consolidation is not exchanged for cash, securities or
other property of the Company or another corporation), (ii) any sale, transfer,
lease or conveyance to another Person of the property of the Company as an
entirety or substantially as an entirety, (iii) any statutory exchange of
securities of the Company with another Person (other than in connection with a
merger or acquisition) or (iv) any liquidation, dissolution or winding up of the
Company (any such event, a "Reorganization Event"), each Holder of Units will
thereafter be entitled to receive on the Stock Purchase Date with respect to
each Purchase Contract forming a part thereof, the kind and amount of
securities, cash and other property receivable upon such Reorganization Event by
a Holder of the number of Common Shares issuable on account of such Purchase
Contract if the Stock Purchase Date had occurred immediately prior to such
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Reorganization Event, assuming such Holder of Common Shares is not a Person with
which the Company consolidated or into which the Company merged or which merged
into the Company or to which such sale or transfer was made, as the case may be
("constituent Person"), or an Affiliate of a constituent Person, and failed to
exercise his rights of election, if any, as to the kind or amount of securities,
cash and other property receivable upon such Reorganization Event (provided that
if the kind or amount of securities, cash and other property receivable upon
such Reorganization Event is not the same for each Common Share held immediately
prior to such Reorganization Event by other than a constituent Person or an
Affiliate thereof and in respect of which such rights of election shall not have
been exercised ("non-electing share"), then for the purpose of this Section the
kind and amount of securities, cash and other property receivable upon such
Reorganization Event by each non-electing share shall be deemed to be the kind
and amount so receivable per share by a plurality of the non-electing shares).
In the event of such a Reorganization Event, the Person formed by such
consolidation, merger or exchange or the Person which acquires the assets of the
Company or, in the event of a liquidation or dissolution of the Company, the
Company or a liquidating trust created in connection therewith, shall execute
and deliver to the Purchase Contract Agent an agreement supplemental hereto
providing that the Holders of Outstanding Units shall have the rights provided
by this Section 506. Such supplemental agreement shall provide for adjustments
which, for events subsequent to the effective date of such supplemental
agreement, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section. The above provisions of this Section
shall similarly apply to successive Reorganization Events.
SECTION 507. Notice of Adjustments and Certain Other Events.
(a) Whenever the Settlement Rate is adjusted as herein provided, the
Company shall:
(i) forthwith compute the adjusted Settlement Rate in
accordance with Section 506 and prepare and transmit to the Purchase
Contract Agent an Officers' Certificate setting forth the Settlement
Rate, the method of calculation thereof in reasonable detail, and the
facts requiring such adjustment and upon which such adjustment is
based; and
(ii) within 10 Business Days following the occurrence of an
event that permits or requires an adjustment to the Settlement Rate
pursuant to Section 506 (or if the Company is not aware of such
occurrence, as soon as practicable after becoming so aware), provide a
written notice to the Holders of the Units of the occurrence of such
event and a statement in reasonable detail setting forth the method by
which the adjustment to the Settlement Rate was determined and setting
forth the adjusted Settlement Rate.
(b) The Purchase Contract Agent shall not at any time be under any duty
or responsibility to any holder of Units to determine whether any facts exist
which may require
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any adjustment of the Settlement Rate, or with respect to the nature or extent
or calculation of any such adjustment when made, or with respect to the method
employed in making the same. The Purchase Contract Agent shall not be
accountable with respect to the validity or value (or the kind or amount) of any
Common Shares, or of any securities or property, which may at the time be issued
or delivered with respect to any Purchase Contract; and the Purchase Contract
Agent makes no representation with respect thereto. The Purchase Contract Agent
shall not be responsible for any failure of the Company to issue, transfer or
deliver any Common Shares pursuant to a Purchase Contract or to comply with any
of the duties, responsibilities or covenants of the Company contained in this
Article.
SECTION 508. No Fractional Shares.
No fractional shares or scrip representing fractional Common Shares
shall be issued or delivered upon settlement on the Stock Purchase Date. If Unit
Certificates evidencing more than one Purchase Contract shall be surrendered for
settlement at one time by the same Holder, the number of full Common Shares
which shall be delivered upon settlement shall be computed on the basis of the
aggregate number of Purchase Contracts evidenced by the Unit Certificates so
surrendered. Instead of any fractional Common Share which would otherwise be
deliverable upon settlement of any Purchase Contracts on the Stock Purchase
Date, the Company, through the Purchase Contract Agent, shall make a cash
payment in respect of such fractional interest in an amount equal to such
fraction times the Average Trading Price. The Company shall provide the Purchase
Contract Agent from time to time with sufficient funds to permit the Purchase
Contract Agent to make all cash payments required by this Section 508 in a
timely manner.
SECTION 509. Charges and Taxes.
The Company will pay all stock transfer and similar taxes attributable
to the initial issuance and delivery of the Common Shares pursuant to the
Purchase Contracts; provided, however, that the Company shall not be required to
pay any such tax or taxes which may be payable in respect of any exchange of or
substitution for a Unit Certificate evidencing a Purchase Contract or any
issuance of a Common Share in a name other than that of the registered Holder of
a Unit Certificate surrendered in respect of the Purchase Contracts evidenced
thereby, other than in the name of the Purchase Contract Agent, as custodian for
such Holder, and the Company shall not be required to issue or deliver such
share certificates or Unit Certificates unless or until the Person or Persons
requesting the transfer or issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid.
SECTION 510. Termination Event; Notice.
The Purchase Contracts and the obligations and rights of the Company
and the Holders thereunder, including, without limitation, all obligations and
rights to pay or receive any accrued or deferred Contract Fees or to settle such
Purchase Contracts pursuant to this
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Article Five, shall immediately and automatically terminate, without the
necessity of any notice or action by any Holder, the Purchase Contract Agent or
the Company, if, on or prior to the Stock Purchase Date, a Termination Event
shall have occurred. Upon the occurrence of a Termination Event, the Company
shall give written notice to the Purchase Contract Agent and the Collateral
Agent, at their addresses as they appear in the Unit Registers. Upon and after
the occurrence of a Termination Event, the provisions of this Article Five
(other than this Section 510) shall automatically terminate and be of no further
force or effect, and the Unit Certificates shall thereafter represent only the
right to receive the Pledged Securities forming a part of the Units theretofore
evidenced thereby in accordance with the provisions of Section 402 and the
Pledge Agreement.
SECTION 511. Early Settlement.
(a) Subject to and upon compliance with the provisions of this Section
511, at the option of the Holder thereof, Purchase Contracts underlying Units
may be settled early ("Early Settlement") on or prior to 10:00 a.m. on the
Seventh Business Day immediately preceding March -, 2002, as provided herein. In
order to exercise the right to effect Early Settlement with respect to any
Purchase Contracts, the Holder of a Unit Certificate shall deliver such Unit
Certificate to the Purchase Contract Agent at the Corporate Trust Office duly
endorsed for transfer to the Company or in blank with the form of Election to
Settle Early on the reverse side thereof duly completed and accompanied by
payment (payable to the Company in immediately available funds) in an amount
equal to $- times the number of Purchase Contracts with respect to which the
Holder has elected to effect Early Settlement plus any accrued and unpaid
Contract Fees related to such Units. If the foregoing requirements are first
satisfied with respect to Purchase Contracts underlying Units at or prior to
5:00 p.m., New York City time, on a Business Day, such date shall be the "Early
Settlement Date" with respect to such Units and if such requirements are first
satisfied after 5:00 p.m., New York City time, on a Business Day or on a day
that is not a Business Day, the "Early Settlement Date" with respect to such
Units shall be the next succeeding Business Day.
(b) Upon Early Settlement of Purchase Contracts by a Holder of the
related Units, the Company shall issue, and the Holder shall be entitled to
receive regardless of the market price of the Common Shares on the Early
Settlement Date, - Common Shares on account of each Purchase Contract as to
which Early Settlement is effected (the "Early Settlement Rate"). The Early
Settlement Rate shall be adjusted in the manner and at the same time as the
Settlement Rate is adjusted.
(c) No later than the third Business Day after the applicable Early
Settlement Date the Company shall cause (i) the Common Shares issuable upon
Early Settlement of Purchase Contracts to be issued and delivered, together with
payment in lieu of any fraction of a share, as provided in Section 508, and (ii)
the related Notes to be released from the Pledge by the Collateral Agent and
transferred, in each case, to the Purchase Contract Agent for delivery to the
Holder thereof or its designee.
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(d) Upon Early Settlement of any Purchase Contracts, and subject to
receipt of Common Shares from the Company and the Notes from the Collateral
Agent, as applicable, the Purchase Contract Agent shall, in accordance with the
instructions provided by the Holder thereof on the applicable form of Election
to Settle Early on the reverse of the Unit Certificate evidencing the related
Units, (i) transfer to the Holder the Notes forming a part of such Units, and
(ii) deliver to the Holder a certificate or certificates for the full number of
Common Shares issuable upon such Early Settlement, together with payment in lieu
of any fraction of a share, as provided in Section 508.
(e) In the event that Early Settlement is effected (i) no Contract Fees
will accrue following the Early Settlement Date, and (ii) with respect to
Purchase Contracts underlying less than all the Units evidenced by a Unit
Certificate, upon such Early Settlement the Company shall execute and the
Purchase Contract Agent shall authenticate, countersign and deliver to the
Holder thereof, at the expense of the Company, a Unit Certificate evidencing the
Units as to which Early Settlement was not effected.
SECTION 512. Early Settlement Upon Merger.
(a) In the event of a merger or consolidation of the Company of the
type described in clause (i) of Section 506(b) in which the Common Shares
outstanding immediately prior to such merger or consolidation are exchanged for
consideration consisting of at least 30% cash or cash equivalents (any such
event a "Cash Merger"), then the Company (or the successor to the Company
hereunder) shall be required to offer the Holder of each Unit the right to
settle the Purchase Contract underlying such Unit prior to the Stock Purchase
Date ("Merger Early Settlement") as provided herein. On or before the fifth
Business Day after the consummation of a Cash Merger the Company or, at the
request and expense of the Company, the Purchase Contract Agent shall give all
Holders notice, in the manner provided in Section 105, of the occurrence of the
Cash Merger and of the right of Merger Early Settlement arising as a result
thereof. The Company shall also deliver a copy of such notice to the Purchase
Contract Agent and the Collateral Agent.
Each such notice shall contain:
(i) the date, which shall be not less than 20 nor more than 30
days after the date of such notice, on which the Merger Early
Settlement will be effected (the "Merger Early Settlement Date");
(ii) the date, which shall be three Business Days prior to the
Merger Early Settlement Date, by which the Merger Early Settlement
right must be exercised;
(iii) the Settlement Rate in effect as a result of such Cash
Merger and the kind and amount of securities, cash and other property
receivable by the Holder upon settlement of each Purchase Contract
pursuant to Section 506(b);
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(iv) a statement to the effect that all or a portion of the
Stated Amount payable by the Holder to settle the Purchase Contract
will be offset against the amount of cash so receivable upon exercise
of Merger Early Settlement, as applicable;
(v) the instructions a Holder must follow to exercise the
Merger Early Settlement right; and
(vi) a statement to the effect that accrued and unpaid
Contract Fees in respect of the Purchase Contracts for which Merger
Early Settlement shall have been effected shall be payable on the
Merger Early Settlement Date and that upon such payment Contract Fees
on such Purchase Contracts shall cease to accrue.
(b) To exercise a Merger Early Settlement right, a Holder shall deliver
to the Purchase Contract Agent on or before 5:00 p.m., New York City time on the
date specified in the notice the Unit Certificate(s) with respect to which the
Merger Early Settlement right is being exercised with the form of "Election to
Settle Early" on the reverse thereof, duly completed accompanied by payment of
the purchase price for the property to be purchased pursuant to the Purchase
Contracts underlying such Units plus accrued and unpaid Contract Fees related to
such Units, which payment shall be made in lawful money of the United States by
certified or cashier's check payable to the order of the Company in immediately
available funds in an amount equal to the aggregate Stated Amount of the Units
in respect of which the Merger Early Settlement is being effected less the
amount of cash that otherwise would be deliverable by the Company or its
successor upon settlement of the Purchase Contract in lieu of Common Shares
pursuant to Section 506(b) and as described in the notice to Holders.
(c) In the event a Merger Early Settlement right shall be exercised by
a Holder in accordance with the terms hereof, (i) on the Merger Early Settlement
Date the Company shall deliver or cause to be delivered by the Purchase Contract
Agent to each such exercising Holder the net cash, securities and other property
to be received, as provided herein, by such exercising Holder in respect of the
number of Purchase Contracts for which such Merger Early Settlement right was
exercised, after deducting all unpaid Contract Fees accrued to the Merger Early
Settlement Date payable by such Holder on such Purchase Contracts, in accordance
with the settlement instructions provided by such Holder and (ii) all references
herein to Stock Purchase Date shall be deemed to refer to such Merger Early
Settlement Date and all references to the form of Settlement Instruction shall
be deemed to refer to the form of Election to Settle Early, as applicable.
(d) In the event that Merger Early Settlement is effected with respect
to less than all of the Purchase Contracts underlying the Units evidenced by a
Unit Certificate, upon such Merger Early Settlement the Company shall execute
and the Purchase Contract Agent shall authenticate, execute on behalf of the
Holders and deliver to the Holder thereof, at the
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expense of the Company, a Unit Certificate evidencing the Units as to which
Merger Early Settlement was not effected.
ARTICLE SIX
REMEDIES
SECTION 601. Unconditional Rights of Holders.
Notwithstanding any other provision in this Agreement, the Holder of
any Unit shall have the right, which is absolute and unconditional but which is
subject to Section 510, to purchase Common Shares pursuant to the Purchase
Contract underlying such Unit and to receive payment of Contract Fees payable by
the Company to such Holder with respect to such Purchase Contract and, in each
such case, to institute suit for the enforcement of any such right, and such
rights shall not be impaired without the consent of such Holder.
SECTION 602. Restoration of Rights and Remedies.
If any Holder of Units has instituted any proceeding to enforce any
right or remedy under this Agreement and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to such Holder,
then and in every such case, subject to any determination in such proceeding,
the Company and such Holder shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of such
Holder shall continue as though no such proceeding had been instituted.
SECTION 603. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement of
mutilated, destroyed, lost or stolen Unit Certificates in the last paragraph of
Section 306, no right or remedy herein conferred upon or reserved to the Holders
of Units is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 604. Delay or Omission Not Waiver.
No delay or omission of any Holder to exercise any right or remedy
shall impair any such right or remedy or constitute a waiver of any such right.
Every right and remedy given by this Article or by law to the Holders may be
exercised from time to time, and as often as may be deemed expedient, by such
Holders.
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SECTION 605. Undertaking for Costs.
All parties to this Agreement agree, and each Holder of any Unit by his
acceptance of the Unit Certificate evidencing such Unit shall be deemed to have
agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Agreement, or in any suit against
the Purchase Contract Agent for any action taken, suffered or omitted by it as
Purchase Contract Agent, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; provided that
the provisions of this Section shall not apply to any suit instituted by the
Company, to any suit instituted by the Purchase Contract Agent, to any suit
instituted by any Holder of Units, or group of Holders, holding in the aggregate
more than 10% of the number of Outstanding Units, or to any suit instituted by
any Holder of Units for the enforcement of payments due in respect of Pledged
Securities or Contract Fees on Purchase Contracts underlying such Units on or
after the respective due dates therefor, or for enforcement of the right to
purchase Common Shares under the Purchase Contracts constituting a part of such
Units.
SECTION 606. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Agreement; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Purchase Contract Agent or the Holders, but will
suffer and permit the execution of every such power as though no such law had
been enacted.
ARTICLE SEVEN
THE PURCHASE CONTRACT AGENT
SECTION 701. Certain Duties and Responsibilities.
(a)(i) The Purchase Contract Agent undertakes to perform, with
respect to the Units, such duties and only such duties as are
specifically set forth in this Agreement, and no implied covenants or
obligations shall be read into this Agreement against the Purchase
Contract Agent; and
(ii) in the absence of bad faith or negligence on its part,
the Purchase Contract Agent may, with respect to the Units,
conclusively rely, as to the truth of
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the statements and the correctness of the opinions expressed therein,
upon certificates or opinions furnished to the Purchase Contract Agent
and conforming to the requirements of this Agreement, but in the case
of any certificates or opinions which by any provision hereof are
specifically required to be furnished to the Purchase Contract Agent,
the Purchase Contract Agent shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this
Agreement but shall have no duty to confirm or investigate the accuracy
or mathematical calculations or other facts stated therein.
(b) No provision of this Agreement shall be construed to relieve the
Purchase Contract Agent from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that
(i) this Subsection shall not be construed to limit the effect
of Subsection (a) of this Section;
(ii) the Purchase Contract Agent shall not be liable for any
error of judgment made in good faith by a Responsible Officer, unless
it shall be proved that the Purchase Contract Agent was negligent in
ascertaining the pertinent facts; and
(iii) no provision of this Agreement shall require the
Purchase Contract Agent to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(c) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Purchase Contract Agent shall be subject to the
provisions of this Section.
SECTION 702. Notice of Default.
Within 90 days after the occurrence of any default by the Company
hereunder, of which a Responsible Officer of the Purchase Contract Agent has
actual knowledge, the Purchase Contract Agent shall transmit by mail to all
Holders of Units, as their names and addresses appear in the Unit Registers,
notice of such default hereunder, unless such default shall have been cured or
waived.
SECTION 703. Certain Rights of Purchase Contract Agent.
Subject to the provisions of Section 701:
(a) the Purchase Contract Agent may rely and shall be
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opin-
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ion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by an Officers' Certificate, Issuer
Order or Issuer Request, and any resolution of the Board of Directors
of the Company may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Agreement the
Purchase Contract Agent shall deem it desirable that a matter be proved
or established prior to taking, suffering or omitting any action
hereunder, the Purchase Contract Agent (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate of the Company;
(d) the Purchase Contract Agent may consult with counsel and
the advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
(e) the Purchase Contract Agent shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Purchase Contract
Agent, in its discretion, may make reasonable further inquiry or
investigation into such facts or matters related to the issuance of the
Units and the execution, delivery and performance of the Purchase
Contracts as it may see fit, and, if the Purchase Contract Agent shall
determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of the Company,
personally or by agent or attorney; and
(f) the Purchase Contract Agent may execute any of its powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Purchase Contract Agent shall not
be responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it hereunder.
SECTION 704. Not Responsible for Recitals or Issuance of Units.
The recitals contained herein and in the Unit Certificates shall be
taken as the statements of the Company and the Purchase Contract Agent assumes
no responsibility for their correctness. The Purchase Contract Agent makes no
representations as to the validity or sufficiency of this Agreement or of the
Units. The Purchase Contract Agent shall not be
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accountable for the use or application by the Company of the proceeds in respect
of the Notes or Purchase Contracts.
SECTION 705. May Hold Units.
Any Unit Registrar or any other agent of the Company, or the Purchase
Contract Agent, in its individual or any other capacity, may become the owner or
pledgee of Units and may otherwise deal with the Company with the same rights it
would have if it were not Unit Registrar or such other agent, or the Purchase
Contract Agent.
SECTION 706. Money Held in Trust.
Money held by the Purchase Contract Agent hereunder need not be
segregated from other funds except to the extent required by law. The Purchase
Contract Agent shall be under no obligation to invest or pay interest on any
money received by it hereunder except as otherwise agreed with the Company.
SECTION 707. Compensation and Reimbursement.
The Company agrees:
(a) to pay to the Purchase Contract Agent from time to time
reasonable compensation for all services rendered by it hereunder as
the Company and the Purchase Contract Agent shall from time to time
agree in writing;
(b) except as otherwise expressly provided herein, to
reimburse the Purchase Contract Agent upon its request for all
reasonable expenses, disbursements and advances incurred or made by the
Purchase Contract Agent in accordance with any provision of this
Agreement (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(c) to indemnify the Purchase Contract Agent and any
predecessor Purchase Contract Agent and their agents for, and to hold
each of them harmless against, any and all loss, damage, claim,
liability or expense, including taxes (other than taxes based upon,
measured by or determined by the income of the Purchase Contract
Agent), incurred without negligence or bad faith on its part, arising
out of or in connection with the acceptance or administration of its
duties hereunder, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
The provision of this Section 707 shall survive the termination of this
Agreement and the resignation or removal of the Purchase Contract Agent.
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SECTION 708. Purchase Contract Agent Required; Eligibility.
There shall at all times be an Purchase Contract Agent hereunder which
shall be a corporation or banking association organized and doing business under
the laws of the United States of America, any State thereof or the District of
Columbia, authorized under such laws to exercise corporate trust powers, having
a combined capital and surplus of at least $50,000,000, subject to supervision
or examination by Federal or State authority and having a corporate trust office
in the Borough of Manhattan, The City of New York, if there be such a
corporation in the Borough of Manhattan, The City of New York qualified and
eligible under this Article and willing to act on reasonable terms. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of said supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time the Purchase Contract
Agent shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
SECTION 709. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Purchase Contract Agent and no
appointment of a successor Purchase Contract Agent pursuant to this Article
shall become effective until the acceptance of appointment by the successor
Purchase Contract Agent in accordance with the applicable requirements of
Section 710.
(b) The Purchase Contract Agent may resign at any time by giving
written notice thereof to the Company 60 days prior to the effective date of
such resignation. If the instrument of acceptance by a successor Purchase
Contract Agent required by Section 710 shall not have been delivered to the
Purchase Contract Agent within 30 days after the giving of such notice of
resignation, the resigning Purchase Contract Agent may petition any court of
competent jurisdiction for the appointment of a successor Purchase Contract
Agent.
(c) The Purchase Contract Agent may be removed at any time by Act of
the Holders of a majority in number of the Outstanding Units delivered to the
Purchase Contract Agent and the Company.
(d) If at any time
(i) the Purchase Contract Agent fails to comply with Section
310(b) of the TIA, as if the Purchase Contract Agent were an indenture
trustee under an indenture qualified under the TIA, after written
request therefor by the Company or by any Holder who has been a bona
fide Holder of a Unit for at least six months, or
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(ii) the Purchase Contract Agent shall cease to be eligible
under Section 708 and shall fail to resign after written request
therefor by the Company or by any such Holder, or
(iii) the Purchase Contract Agent shall become incapable of
acting or shall be adjudged a bankrupt or insolvent or a receiver of
the Purchase Contract Agent or of its property shall be appointed or
any public officer shall take charge or control of the Purchase
Contract Agent or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (x) the Company by a Board Resolution may remove the
Purchase Contract Agent, or (y) any Holder who has been a bona fide Holder of a
Unit for at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of the
Purchase Contract Agent and the appointment of a successor Purchase Contract
Agent.
(e) If the Purchase Contract Agent shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Purchase
Contract Agent for any cause, the Company, by a Board Resolution, shall promptly
appoint a successor Purchase Contract Agent and shall comply with the applicable
requirements of Section 710. If no successor Purchase Contract Agent shall have
been so appointed by the Company and accepted appointment in the manner required
by Section 710, any Holder who has been a bona fide Holder of a Unit for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor
Purchase Contract Agent.
(f) The Company shall give, or shall cause such successor Purchase
Contract Agent to give, notice of each resignation and each removal of the
Purchase Contract Agent and each appointment of a successor Purchase Contract
Agent by mailing written notice of such event by first-class mail, postage
prepaid, to all Holders of Units as their names and addresses appear in the Unit
Registers. Each notice shall include the name of the successor Purchase Contract
Agent and the address of its Corporate Trust Office.
SECTION 710. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Purchase
Contract Agent, every such successor Purchase Contract Agent so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Purchase
Contract Agent an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Purchase Contract Agent shall become
effective and such successor Purchase Contract Agent, without any further act,
deed or conveyance, shall become vested with all the rights, powers, agencies
and duties of the retiring Purchase Contract Agent; but, on the request of the
Company or the successor Purchase Contract Agent, such retiring Purchase
Contract Agent shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor
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Purchase Contract Agent all the rights, powers and trusts of the retiring
Purchase Contract Agent and shall duly assign, transfer and deliver to such
successor Purchase Contract Agent all property and money held by such retiring
Purchase Contract Agent hereunder.
(b) Upon request of any such successor Purchase Contract Agent, the
Company shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Purchase Contract Agent all such
rights, powers and agencies referred to in paragraph (a) of this Section.
(c) No successor Purchase Contract Agent shall accept its appointment
unless at the time of such acceptance such successor Purchase Contract Agent
shall be qualified and eligible under this Article.
SECTION 711. Merger, Conversion, Consolidation or Succession to Business.
Any corporation or banking association into which the Purchase Contract
Agent may be merged or converted or with which it may be consolidated, or any
corporation or banking association resulting from any merger, conversion or
consolidation to which the Purchase Contract Agent shall be a party, or any
corporation or banking association succeeding to all or substantially all the
corporate trust business of the Purchase Contract Agent, shall be the successor
of the Purchase Contract Agent hereunder, provided such corporation or banking
association shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Unit Certificates shall have been
authenticated and executed on behalf of the Holders, but not delivered, by the
Purchase Contract Agent then in office, any successor by merger, conversion or
consolidation to such Purchase Contract Agent may adopt such authentication and
execution and deliver the Unit Certificates so authenticated and executed with
the same effect as if such successor Purchase Contract Agent had itself
authenticated and executed such Units.
SECTION 712. Preservation of Information; Communications to Holders.
(a) The Purchase Contract Agent shall preserve, in as current a form as
is reasonably practicable, the names and addresses of Holders received by the
Purchase Contract Agent in its capacity as Unit Registrar.
(b) If three or more Holders (herein referred to as "applicants") apply
in writing to the Purchase Contract Agent, and furnish to the Purchase Contract
Agent reasonable proof that each such applicant has owned a Unit for a period of
at least six months preceding the date of such application, and such application
states that the applicants desire to communicate with other Holders with respect
to their rights under this Agreement or under the Units and is accompanied by a
copy of the form of proxy or other communication which such applicants propose
to transmit, then the Purchase Contract Agent shall, within five Business Days
after the receipt of such application, afford such applicants access to the
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information preserved at the time by the Purchase Contract Agent in accordance
with Section 712(a).
(c) Every Holder of Units, by receiving and holding the Unit
Certificates evidencing the same, agrees with the Company and the Purchase
Contract Agent that none of the Company, the Purchase Contract Agent nor any
agent of any of them shall be held accountable by reason of the disclosure of
any such information as to the names and addresses of the Holders in accordance
with Section 712(b), regardless of the source from which such information was
derived.
SECTION 713. No Obligations of Purchase Contract Agent.
Except to the extent otherwise provided in this Agreement, the Purchase
Contract Agent assumes no obligations and shall not be subject to any liability
under this Agreement or any Purchase Contract in respect of the obligations of
the Holder of any Unit thereunder. The Company agrees, and each Holder of a Unit
Certificate, by his acceptance thereof, shall be deemed to have agreed, that the
Unit Agent's execution of the Unit Certificates on behalf of the Holders shall
be solely as agent and attorney-in-fact for the Holders, and that the Purchase
Contract Agent shall have no obligation to perform such Purchase Contracts on
behalf of the Holders, except to the extent expressly provided in Article Five
hereof.
SECTION 714. Tax Compliance.
(a) The Purchase Contract Agent, on its own behalf and on behalf of the
Company, will comply with all applicable certification, information reporting
and withholding (including "backup" withholding) requirements imposed by
applicable tax laws, regulations or administrative practice with respect to (i)
any payments made with respect to the Units or (ii) the issuance, delivery,
holding, transfer, redemption or exercise of rights under the Units. Such
compliance shall include, without limitation, the preparation and timely filing
of required returns and the timely payment of all amounts required to be
withheld to the appropriate taxing authority or its designated agent.
(b) The Purchase Contract Agent shall comply with any direction
received from the Company with respect to the application of such requirements
to particular payments or Holders or in other particular circumstances, and may
for purposes of this Agreement rely on any such direction in accordance with the
provisions of Section 701(a)(ii) hereof.
(c) The Purchase Contract Agent shall maintain all appropriate records
documenting compliance with such requirements, and shall make such records
available, on written request, to the Company or to its authorized
representative within a reasonable period of time after receipt of such request.
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ARTICLE EIGHT
SUPPLEMENTAL AGREEMENTS
SECTION 801. Supplemental Agreements Without Consent of Holders.
Without the consent of any Holders, the parties to either Principal
Agreement, at any time and from time to time, may enter into one or more
agreements supplemental hereto or thereto, in form satisfactory to such parties,
for any of the following purposes:
(1) to evidence the succession of another Person to any such
party, and the assumption by any such successor of the covenants of
such party herein or therein and under the Units; or
(2) to add to the covenants of the Company for the benefit of
the Holders, or to surrender any right or power herein conferred upon
the Company; or
(3) to evidence and provide for the acceptance of appointment
hereunder by a successor Purchase Contract Agent; or
(4) to make provision with respect to the rights of Holders
pursuant to the requirements of Section 506(b); or
(5) to cure any ambiguity, to correct or supplement any
provisions herein or therein which may be inconsistent with any other
provisions herein or therein, or to make any other provisions with
respect to such matters or questions arising under such Principal
Agreement, provided such action shall not adversely affect the
interests of the Holders.
SECTION 802. Supplemental Agreements with Consent of Holders.
With the consent of the Holders of not less than a majority of the
Outstanding Units, by Act of said Holders delivered to the parties to either
Principal Agreement, such parties (when authorized, in the case of the Company,
by a Board Resolution) may enter into an agreement or agreements supplemental to
such Principal Agreement for the purpose of modifying in any manner the terms of
the Units, or the provisions of such Principal Agreement or the rights of the
Holders in respect of the Units; provided, however, that no such supplemental
agreement shall, without the consent of the Holder of each Outstanding Unit
affected thereby,
(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
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Unit to receive distributions or interest payments on the underlying
Pledged Securities or otherwise adversely affect the Holder's rights in
or to such Pledged Securities;
(3) reduce the Contract Fees or other amounts receivable by
Holders in respect of Units or increase other amounts payable by
Holders in respect of Units or change any place where, or the coin or
currency in which, any Contract Fees or other amounts receivable or
payable in respect of Units are payable;
(4) impair the right to institute suit for the enforcement of
any Purchase Contract;
(5) reduce the number of Common Shares to be purchased
pursuant to any Purchase Contract, increase the price to purchase
Common Shares upon 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 percentage of the Outstanding Units the consent
of whose Holders is required for any such supplemental agreement.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental agreement, but it shall
be sufficient if such Act shall approve the substance thereof.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Persons entitled to consent to any supplemental
agreement to any Principal Agreement. If a record date is fixed, the Holders on
such record date, or their duly designated proxies, and only such Persons, shall
be entitled to consent to such supplemental agreement, whether or not such
Holders remain Holders after such record date; provided, that unless such
consent shall have become effective by virtue of the requisite percentage having
been obtained prior to the date which is 90 days after such record date, any
such consent previously given shall automatically and without further action by
any Holder be cancelled and of no further effect.
SECTION 803. Execution of Supplemental Agreements.
In executing, or accepting the additional agencies created by, any
supplemental agreement permitted by this Article or the modifications thereby of
the agencies created by the Principal Agreements, the Purchase Contract Agent
shall be entitled to receive and (subject to Section 701) shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
such supplemental agreement is authorized or permitted by this Agreement. The
Purchase Contract Agent may, but shall not be obligated to, enter into any such
supplemental agreement which affects the Unit Agent's own rights, duties or
immunities under this Agreement or otherwise.
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SECTION 804. Effect of Supplemental Agreements.
Upon the execution of any supplemental agreement under this Article,
the relevant Principal Agreement shall be modified in accordance therewith, and
such supplemental agreement shall form a part of such Principal Agreement for
all purposes; and every Holder of Unit Certificates theretofore or thereafter
authenticated, executed on behalf of the Holder and delivered hereunder shall be
bound thereby.
SECTION 805. Reference to Supplemental Agreements.
Unit Certificates authenticated, executed on behalf of the Holders and
delivered after the execution of any supplemental agreement pursuant to this
Article may, and shall if required by the Purchase Contract Agent, bear a
notation in form approved by the Purchase Contract Agent as to any matter
provided for in such supplemental agreement. If the Company shall so determine,
new Unit Certificates so modified as to conform, in the opinion of the Purchase
Contract Agent and the Company, to any such supplemental agreement may be
prepared and executed by the Company and authenticated, executed on behalf of
the Holders and delivered by the Purchase Contract Agent in exchange for
Outstanding Unit Certificates evidencing the same number of Units.
ARTICLE NINE
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 901. Covenant Not to Merge, Consolidate, Sell or Convey Property
Except Under Certain Conditions.
The Company covenants that it will not merge or consolidate with any
other Person or sell, assign, transfer, lease or convey all or substantially all
of its assets to any Person, unless (a) the Company shall be the continuing
corporation, or the successor (if other than the Company) shall be a corporation
organized and existing under the laws of Canada or the United States of America
or a Province or State thereof and such corporation shall assume the obligations
of the Company under the Purchase Contracts and the Pledge Agreement by one or
more supplemental agreements in form satisfactory to the Purchase Contract Agent
and, in the case of the Pledge Agreement, the Collateral Agent, executed and
delivered to the Purchase Contract Agent, and, in the case of the Pledge
Agreement, the Collateral Agent by such corporation, and (b) the Company or such
successor corporation, as the case may be, shall not, immediately after such
merger or consolidation, or such sale, assignment, transfer, lease or
conveyance, be in default in the performance of any covenant or condition under
any Principal Agreement or under any of the Units.
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SECTION 902. Rights and Duties of Successor Corporation.
In case of any such consolidation, merger, sale, assignment, transfer,
lease or conveyance and upon any such assumption by the successor corporation,
such successor corporation shall succeed to and be substituted for the Company
with the same effect as if it had been named in the Principal Agreements as the
Company. Such successor corporation thereupon may cause to be signed, and may
issue either in its own name or in the name of The Seagram Company Ltd., any or
all of the Unit Certificates evidencing Units issuable hereunder which
theretofore shall not have been signed by the Company and delivered to the
Purchase Contract Agent; and, upon the order of such successor corporation,
instead of the Company, and subject to all the terms, conditions and limitations
in this Agreement prescribed, the Purchase Contract Agent shall authenticate and
execute on behalf of the Holders and deliver any Unit Certificates which
previously shall have been signed and delivered by the officers of the Company
to the Purchase Contract Agent for authentication and execution, and any Unit
Certificate evidencing Units which such successor corporation thereafter shall
cause to be signed and delivered to the Purchase Contract Agent for that
purpose. All the Unit Certificates so issued shall in all respects have the same
legal rank and benefit under this Agreement as the Unit Certificates theretofore
or thereafter issued in accordance with the terms of this Agreement as though
all of such Unit Certificates had been issued at the date of the execution
hereof.
In case of any such consolidation, merger, sale or conveyance such
change in phraseology and form (but not in substance) may be made in the Unit
Certificates evidencing Units thereafter to be issued as may be appropriate.
SECTION 903. Opinion of Counsel to Purchase Contract Agent.
The Purchase Contract Agent, subject to Sections 701 and 703, shall be
provided an Opinion of Counsel as conclusive evidence that any such
consolidation, merger, sale, assignment, transfer, lease or conveyance, and any
such assumption, complies with the provisions of this Article.
ARTICLE TEN
COVENANTS
SECTION 1001. Performance Under Purchase Contracts.
The Company covenants and agrees for the benefit of the Holders from
time to time of the Units that it will duly and punctually perform its
obligations under the Purchase Contracts in accordance with the terms of the
Purchase Contracts and this Agreement.
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SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in the Borough of Manhattan, The City of New
York an office or agency where Unit Certificates may be presented or surrendered
for acquisition of Common Shares upon settlement and for transfer of Pledged
Securities upon occurrence of a Termination Event, where Unit Certificates may
be surrendered for registration of transfer or exchange, where payment of
Contract Fees payable by the Company to the Holders may be made and where
notices and demands to or upon the Company in respect of the Units and this
Agreement may be served. The Company will give prompt written notice to the
Purchase Contract Agent of the location, and any change in the location, of such
office or agency. If at any time the Company shall fail to maintain any such
required office or agency or shall fail to furnish the Purchase Contract Agent
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office, and the Company hereby
appoints the Purchase Contract Agent as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies where Unit Certificates may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York for such purposes. The Company will
give prompt written notice to the Purchase Contract Agent of any such
designation or rescission and of any change in the location of any such other
office or agency. The Company hereby designates as the place of payment for the
Units the Corporate Trust Office and appoints the Purchase Contract Agent at its
Corporate Trust Office as paying agent in such city.
SECTION 1003. Company to Reserve Common Shares.
The Company shall at all times prior to the Stock Purchase Date reserve
and keep available, free from preemptive rights, out of its authorized but
unissued Common Shares the full number of Common Shares issuable against tender
of payment in respect of all Purchase Contracts underlying the Units.
SECTION 1004. Covenants as to Common Shares.
The Company covenants that all Common Shares which may be issued
against tender of payment in respect of the Purchase Contracts underlying the
Units will, upon issuance, be newly issued (i.e., not issued out of treasury
shares) and be duly authorized, validly issued, fully paid and nonassessable.
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SECTION 1005. Statements of Officers of the Company as to Default.
The Company will deliver to the Purchase Contract Agent, on or before -
in each year (beginning the first - after the date of the original issuance of
the Units hereunder) a brief certificate from the principal executive, financial
or accounting officer of the Company stating that in the course of the
performance by the signer of his or her duties as an officer of the Company he
or she would normally have knowledge of any default or non-compliance by the
Company in the performance of any covenants or conditions contained in this
Agreement, stating whether or not he or she has knowledge of any such default or
non-compliance and, if so, specifying each such default or non-compliance of
which the signer has knowledge and the nature thereof. For purposes of this
Section 1005, non-compliance or default shall be determined without regard to
any grace period or requirement of notice.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
THE SEAGRAM COMPANY LTD.
By:
THE BANK OF NEW YORK,
as Purchase Contract Agent
By:
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EXHIBIT A
FORM OF UNIT CERTIFICATE
THE SEAGRAM COMPANY LTD.
-% ADJUSTABLE CONVERSION-RATE EQUITY SECURITY UNITS
(STATED AMOUNT $- PER UNIT)
CUSIP No. 811850205
No. ____ ____________ Units
This Unit Certificate certifies that Cede & Co. is the
registered Holder of the number of Units set forth above. Each Unit represents
the right to purchase Common Shares under a Purchase Contract with The Seagram
Company Ltd., a Canadian corporation (the "Company"), together with ownership of
the Subordinated Deferrable Notes of Joseph E. Seagram & Sons, Inc. (the
"Notes") or other Pledged Securities pledged to secure the obligations owed to
the Company under such Purchase Contract, subject to the pledge arrangements
securing the foregoing obligations.
Each Purchase Contract evidenced hereby is governed by and set
forth in a Purchase Contract Agreement, dated as of June __, 1999 (the "Purchase
Contract Agreement"), between the Company and The Bank of New York, as Purchase
Contract Agent (herein called the "Purchase Contract Agent"). All terms used
herein which are not defined herein and which are defined in the Purchase
Contract Agreement have the meanings set forth therein. The Pledge evidenced
hereby is governed by the Pledge Agreement. Reference is hereby made to the
Purchase Contract Agreement and the Pledge Agreement, and any supplemental
agreements thereto, for a description of the respective rights, limitations of
rights, obligations, duties and immunities thereunder of the Purchase Contract
Agent, the Company, the Collateral Agent and the Holders. The summary contained
herein is qualified in its entirety by the provisions of the Principal
Agreements, and the Principal Agreements shall govern the rights of the parties
to the extent that there is any conflict between such summary and such
provisions.
Each Purchase Contract evidenced hereby obligates the Holder
of this Unit Certificate to purchase, and the Company to sell, on June -, 2002
(the "Stock Purchase Date"), at a price equal to $- per unit (the "Stated
Amount"), a number of Common Shares, having such terms as set forth in the
Company's Articles of Amalgamation, as amended from time to time ("Common
Shares"), of the Company equal to the Settlement Rate, unless on
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<PAGE> 58
S&C Draft of June 6, 1999
or prior to the Stock Purchase Date there shall have occurred a Termination
Event. The "Settlement Rate" is equal to (a) if the Average Trading Price (as
defined in the Purchase Contract Agreement) is greater than or equal to $- (the
"Threshold Appreciation Price"), - of a Common Share per Purchase Contract, (b)
if the Average Trading Price is less than the Threshold Appreciation Price but
is greater than the Stated Amount, a fractional Common Share per Purchase
Contract equal to the Stated Amount divided by the Average Trading Price
(rounded to the nearest 1/10,000th of a share or, if there is no nearest
1/10,000th of a share, rounded downward to the nearest 1/10,000th of a share)
and (c) if the Average Trading Price is less than or equal to the Stated Amount,
one Common Share per Purchase Contract, in each case subject to adjustment as
provided in the Purchase Contract Agreement. No fractional Common Shares will be
issued upon settlement of Purchase Contracts, but instead of issuing any
fractional interest the Company shall make a cash payment as provided in the
Purchase Contract Agreement. The purchase price for the Common Shares to be
purchased pursuant to each Purchase Contract evidenced hereby, if not paid by
10:00 a.m., New York City time, on the Stock Purchase Date, shall be paid by
application of payments received by the Company on the Stock Purchase Date from
the Collateral Agent pursuant to the Pledge Agreement in respect of the Pledged
Securities pledged to secure such Holder's obligations under such Purchase
Contract.
The Purchase Contracts and the obligations and rights of the
Company and the Holders thereunder, including, without limitation, the rights
and obligations to receive and pay accrued or deferred Contract Fees, shall
immediately and automatically terminate, without the necessity of any notice or
action by any Holder, the Purchase Contract Agent or the Company, if, on or
prior to the Stock Purchase Date, a Termination Event shall have occurred. Upon
and after the occurrence of a Termination Event, the Collateral Agent shall
release the Pledged Securities from the Pledge. The Units shall thereafter
represent the right to receive the Pledged Securities forming a part of such
Units in accordance with the provisions of the Purchase Contract Agreement and
the Pledge Agreement.
The [Company][Holder] shall pay, on each March, June,
September and December, commencing __________________, 1999 (each, a "Quarterly
Payment Date"), in respect of each Purchase Contract evidenced hereby, a fee
(the "Contract Fee") accruing on the Stated Amount of such Unit from and
including the date of first issuance of the Units at a rate per annum equal to
__% (the "Contract Fee Rate") (computed on the basis of a 360- day year of
twelve 30-day months and subject to deferral as described in the Master Unit
Agreement), plus any additional fees accrued thereon pursuant to Section 503 of
the Master Unit Agreement. [SUCH PAYMENT WILL BE FUNDED OUT OF PAYMENTS MADE IN
RESPECT OF THE PLEDGED SECURITIES EVIDENCED HEREBY].
Pursuant to the Pledge Agreement, the Pledged Securities
constituting part of each Unit evidenced hereby have been pledged to the
Collateral Agent, for the benefit of the Company, to secure the obligations of
the Holder under the Purchase Contract comprising a portion of such Unit.
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<PAGE> 59
S&C Draft of June 6, 1999
The Pledge Agreement provides that all payments with respect
to any of the pledged Notes received by the Collateral Agent shall be paid by
the Collateral Agent, by wire transfer in same day funds no later than 1:00
p.m., New York City time, on the date of receipt (or, if the date of receipt is
not a Business Day or if such payment is received by the Collateral Agent after
noon, New York City time, on the date of receipt, then such payment shall be
made by the Collateral Agent no later than 10:00 a.m., New York City time, on
the next succeeding Business Day), as follows:
(a) in the case of payments not scheduled to fall on and that are not
in respect of amounts due on the Stock Purchase Date or Early Settlement Date,
as applicable, to the Purchase Contract Agent, to the account designated by it
for payments in respect of Units; and
(b) in the case of payments scheduled to fall on or that are in respect
of amounts due on the Stock Purchase Date, the Merger Early Settlement Date, or
the Merger Early Settlement Date
(i) first, to the Company, to the account designated by it for
such purpose, in an amount equal to the aggregate amount payable to the
Company in respect of Units, and
(ii) second, to the extent of any amount remaining after the
payment (if any) referred to in (i) above, to the Purchase Contract
Agent, to the account designated by it for payments in respect of
Units.
>> (i) first, to the Company, to the account designated by it
for such purpose, in an amount equal to the Contract Fees, if any, then
payable to the Company in respect of Units, and
(ii) second, to the extent of any amount remaining after the
payment (if any) referred to in (i) above, to the Purchase Contract
Agent, to the account designated by it for payments in respect of
Units.
Distributions on the Pledged Securities forming part of the
Unit evidenced hereby, which are payable quarterly in arrears on March -, June
- -, September - and December - of each year, commencing -, 1999, shall, subject
to receipt thereof by the Purchase Contract Agent from the Collateral Agent, be
paid to the Person in whose name this Unit Certificate is registered at the
close of business on the Record Date next preceding the relevant payment date.
The transfer of any Unit Certificate will be registered and
Unit Certificates may be exchanged as provided in the Purchase Contract
Agreement. The Unit Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents permitted by the
Purchase Contract Agreement. No service charge shall be
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<PAGE> 60
S&C Draft of June 6, 1999
required for any such registration of transfer or exchange, but the Company and
the Purchase Contract Agent may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith. For so long as
the Purchase Contract underlying a Unit remains in effect, such Unit shall not
be separable into its constituent parts, and the rights and obligations of the
Holder of such Unit in respect of the Pledged Securities and Purchase Contract
constituting such Unit may be transferred and exchanged only as an integrated
Unit.
Upon registration of transfer of this Unit Certificate, the
transferee shall be bound (without the necessity of any other action on the part
of such transferee) by the terms of the Purchase Contracts evidenced hereby and
by the Pledge Agreement, and the transferor shall be released from such
obligations. The Company covenants and agrees, and the Holder, by his acceptance
hereof, likewise covenants and agrees, to be bound by the provisions of this
paragraph.
The Holder of this Unit Certificate, by his acceptance hereof,
irrevocably authorizes the Purchase Contract Agent to enter into and perform the
related Purchase Contracts evidenced hereby on his behalf as his
attorney-in-fact, agrees to be bound by the terms and provisions thereof,
covenants and agrees to perform his obligations under such Purchase Contracts,
consents to the provisions of the Principal Agreements, irrevocably authorizes
the Purchase Contract Agent to enter into and perform the Pledge Agreement on
his behalf as his attorney-in-fact, and consents to and agrees to be bound by
the Pledge evidenced hereby pursuant to the Pledge Agreement.
Subject to certain exceptions, the provisions of the Principal
Agreements may be amended with the consent of the Holders of at least a majority
of the Outstanding Units.
THE PURCHASE CONTRACTS SHALL FOR ALL PURPOSES BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
The Company, the Purchase Contract Agent and any agent of the
Company or the Purchase Contract Agent may treat the Person in whose name this
Unit Certificate is registered as the owner of the Units evidenced hereby for
the purpose of receiving payments of distributions or interest on the Pledged
Securities, receiving the rights and performing the obligations under the
Purchase Contracts and for all other purposes whatsoever, whether or not any
payments in respect thereof be overdue and notwithstanding any notice to the
contrary, and neither the Company, the Purchase Contract Agent nor any such
agent shall be affected by notice to the contrary.
THE PURCHASE CONTRACTS SHALL NOT, PRIOR TO THE SETTLEMENT
THEREOF, ENTITLE THE HOLDER TO ANY OF THE RIGHTS OF A HOLDER OF COMMON SHARES.
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<PAGE> 61
S&C Draft of June 6, 1999
Copies of the Principal Agreements are available for
inspection at the offices of the Purchase Contract Agent.
Unless the certificate of authentication hereon has been
executed by the Purchase Contract Agent by manual signature, this Unit
Certificate shall not be entitled to any benefit under the Principal Agreements
or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company and the Holder hereby agree to
their respective obligations under the Purchase Contracts evidenced by this
instrument, and the Holder hereby acknowledges that the Pledged Securities
evidenced by this instrument are subject to the Pledge under the Pledge
Agreement.
THE SEAGRAM COMPANY LTD.
By:_________________________________
Attest: _____________________________
HOLDER SPECIFIED ABOVE
By: THE BANK OF NEW YORK,
as Attorney-in-Fact of such Holder
By: ________________________________
Dated:
Unit Agent's Certificate of Authentication
This is one of the Unit Certificates referred to in the within
mentioned Purchase Contract Agreement.
THE BANK OF NEW YORK
as Purchase Contract Agent
By: ________________________________
A-5
<PAGE> 62
S&C Draft of June 6, 1999
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for Common
Shares deliverable upon settlement on or after the Stock Purchase Date of the
Purchase Contracts underlying the number of Units evidenced by this Unit
Certificate be registered in the name of, and delivered, together with a check
in payment for any fractional share, to the undersigned at the address indicated
below unless a different name and address have been indicated below. If shares
are to be registered in the name of a Person other than the undersigned, the
undersigned will pay any transfer tax payable incident thereto.
Dated: ________________________ ____________________________________
Signature*
If shares are to be registered in the REGISTERED HOLDER
name of and delivered to a Person
other than the Holder, please print Please print name and address of
such Person's name and address: Registered Holder:
Name Name
Address Address
Social Security or other Taxpayer
Identification Number, if any
* Signature must be guaranteed by an eligible Guarantor Institution
(banks, stockbrokers, savings and loan associations and credit unions)
with membership in an approved signature medallion program pursuant to
Securities and Exchange Commission Rule 17Ad-15 if Common Shares are to
be delivered other than to, and in the name of, the registered Holder.
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<PAGE> 63
S&C Draft of June 6, 1999
If shares are to be registered in REGISTERED HOLDER
the name of and delivered to a
Person other than the Holder,
please print such Person's name and Please print name and address of
address: Registered Holder:
Name Name
Address Address
Social Security or other Taxpayer
Identification Number, if any
A-7
<PAGE> 64
S&C Draft of June 6, 1999
ELECTION TO SETTLE EARLY
The undersigned Holder directs that a certificate for Common
Shares deliverable upon settlement on or after the Early Settlement Date of the
Purchase Contracts underlying the number of Units evidenced by this Unit
Certificate be registered in the name of, and delivered to the undersigned at
the address indicated below unless a different name and address have been
indicated below. If shares are to be registered in the name of a Person other
than the undersigned, the undersigned will pay any transfer tax payable incident
thereto.
Dated: ________________________ ____________________________________
Signature*
If shares are to be registered in the REGISTERED HOLDER
name of and delivered to a Person
other than the Holder, please print Please print name and address of
such Person's name and address: Registered Holder:
Name Name
Address Address
Social Security or other Taxpayer
Identification Number, if any
* Signature must be guaranteed by an eligible Guarantor Institution
(banks, stockbrokers, savings and loan associations and credit unions)
with membership in an approved signature medallion program pursuant to
Securities and Exchange Commission Rule 17Ad-15 if Common Shares are to
be delivered other than to, and in the name of, the registered Holder.
A-8
<PAGE> 65
S&C Draft of June 6, 1999
EXHIBIT C
NOTICE TO PURCHASE CONTRACT AGENT
THE BANK OF NEW YORK
[address]
Attention: -
Re: -% Adjustable Conversion-rate Equity Security Units of
The Seagram Company Ltd. (the "Company")
The undersigned Holder hereby notifies you that for purposes of a
Collateral Substitution it intends to deliver to Citibank, N.A., as Securities
Intermediary, for credit to the Collateral Account, cash for the purchase of
Treasury Consideration in exchange for the Notes held in the Collateral Account
in respect of the number of Units specified below, in accordance with the Pledge
Agreement, dated as of June -, 1999 (the "Pledge Agreement"; unless otherwise
defined herein, terms defined in the Pledge Agreement are used herein as defined
therein), among you, the Company, and the Collateral Agent and the Securities
Intermediary. The undersigned Holder will pay all applicable fees relating to
such exchange.
Date:__________________________ __________________________________
Signature
Signature Guarantee:______________
Please print name and address of registered Holder:
_________________________________ _________________________________
Name Social Security or other Taxpayer
Identification Number, if any
Address
__________________________________ Number of Units _________
_________________________________
_________________________________
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<PAGE> 66
S&C Draft of June 6, 1999
EXHIBIT D
INSTRUCTION TO PURCHASE CONTRACT AGENT
THE BANK OF NEW YORK
[address]
Attention: -
Re: -% Adjustable Conversion-rate Equity Security Units of
The Seagram Company Ltd. (the "Company")
The undersigned Holder hereby notifies you that it has delivered to
Citibank, N.A., as Securities Intermediary, for credit to the Collateral
Account, cash for the purchase of Treasury Consideration in exchange for Notes
held in the Collateral Account in respect of the number of Units specified
below, in accordance with the Pledge Agreement, dated as of June -, 1999 (the
"Pledge Agreement"; unless otherwise defined herein, terms defined in the Pledge
Agreement are used herein as defined therein), among you, the Company, and the
Collateral Agent and the Securities Intermediary. The undersigned Holder has
paid all applicable fees relating to such exchange. The undersigned Holder
hereby instructs you to instruct the Collateral Agent to release to you on
behalf of the undersigned Holder the Notes related to such Units.
Date:__________________________ __________________________________
Signature
Signature Guarantee:______________
Please print name and address of registered Holder:
_________________________________ _________________________________
Name Social Security or other Taxpayer
Identification Number, if any
Address
__________________________________ Number of Units _________
__________________________________
__________________________________
D-1
<PAGE> 1
EXHIBIT 4(f)
THE SEAGRAM COMPANY LTD.
AND
CITIBANK, N.A.
as Collateral Agent and Securities Intermediary
AND
THE BANK OF NEW YORK
as Purchase Contract Agent and as Attorney-In-Fact
PLEDGE AGREEMENT
Dated as of June -, 1999
<PAGE> 2
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of June -, 1999, between THE SEAGRAM COMPANY
LTD., a Canadian corporation (the "Company", as such term is more fully defined
in the Purchase Contract Agreement referred to below); CITIBANK, N.A., as
Collateral Agent, in its capacity as a "securities intermediary" as defined in
Section 8- 102(a)(14) of the Code (as defined herein) (in such capacity, the
"Securities Intermediary"), and THE BANK OF NEW YORK as Purchase Contract Agent
and as attorney-in-fact of the Holders from time to time of the Units.
RECITALS
The Company and the Purchase Contract Agent are parties to the Purchase
Contract Agreement, dated as of the date hereof (as the same may be supplemented
or amended from time to time in accordance with the terms thereof, the "Purchase
Contract Agreement"). The Purchase Contract Agreement contemplates that the
Notes or Treasury Securities that from time to time underlie the Units be
pledged to the Collateral Agent to secure the obligations of the Holders of
Units under the Purchase Contracts that underlie such Units.
Pursuant to the terms of the Principal Agreements and the Purchase
Contract Certificates, the Holders from time to time of the Units irrevocably
authorize the Purchase Contract Agent, as attorney-in-fact of such Holders, to
execute and deliver this Agreement on behalf of such Holders and to grant the
pledge provided hereby of the Pledged Securities underlying such Units as
provided herein and subject to the terms hereof.
Accordingly, the Company, the Collateral Agent and the Purchase
Contract Agent, in its capacity as Purchase Contract Agent and as
attorney-in-fact of the Holders from time to time of the Units, agree as
follows:
SECTION 1. Definitions. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(a) capitalized terms used but not defined herein are used
herein as defined in the Purchase Contract Agreement;
(b) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to
any particular Article, Section or other subdivision; and
(c) all other terms contained herein shall, unless the context
indicates otherwise, have the meanings assigned to such terms by the
Code (as defined herein) to the extent the same are defined therein.
<PAGE> 3
"Agreement" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more agreements
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Applicable Treasury Regulations" means Part 357 of Title 31 of the
Code of Federal Regulations (31 CFR Sections 357 et seq.) and any other
regulations of the United States Treasury Department from time to time
applicable to the transfer or pledge of book-entry Treasury Securities.
"Code" has the meaning specified in Section 2 hereof.
"Collateral" has the meaning specified in Section 2 hereof.
"Collateral Account" means the trust account (number -) maintained at -
in the name of "Citibank, N.A., as Collateral Agent".
"Pledged Securities" means all Notes constituting a part of the Units
and any Treasury Consideration delivered in exchange for Notes in accordance
with Section 5(b) hereof (or securities entitlements thereto) in each case that
have been delivered to the Collateral Agent and not released by the Collateral
Agent to the Purchase Contract Agent under the provisions of this Agreement.
"Proceeds" means all interest, dividends, cash, instruments,
securities, financial assets (as defined in Article 8 of the Code) and other
property and proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged
Securities.
SECTION 2. The Pledge. The Holders from time to time of the Units
acting through the Purchase Contract Agent, as their attorney-in-fact, hereby
pledge to the Collateral Agent (for the benefit of the Company), and grant to
the Collateral Agent, for the benefit of the Company a security interest in all
of the right, title and interest of such Holders in and to (i) the Pledged
Securities, (ii) the Collateral Account and all securities, financial assets and
other property credited thereto and all security entitlements related thereto
and (iii) all proceeds from each of the foregoing (collectively, the
"Collateral"), as collateral security to ensure the performance when due by such
Holders of their respective obligations under the Purchase Contracts underlying
such Units. Concurrently with the execution of this Agreement, the initial
Holders of the first - Units issued under the Purchase Contract Agreement, the
Purchase Contract Agent and the Collateral Agent are causing $- aggregate
principal amount of Notes to be delivered to, and registered in the name of, the
Collateral Agent, and such Notes will thereupon constitute Pledged Securities
forming a part of such Units. As used in this Section 2, the term "delivery"
shall have the meaning ascribed to it in the Uniform Commercial Code as in
effect in the State of New York (the "Code"). In addition, the execution hereof
by the Purchase Contract Agent and the Collateral Agent shall constitute an
acknowledgment by the Collateral Agent and Securities Intermediary of the
-2-
<PAGE> 4
Pledge and of the Securities Intermediary's holding of such Notes or other
Pledged Securities substituted therefor in accordance with the provisions hereof
subject to the Pledge and of the Securities Intermediary's crediting such Notes
or other Pledged Securities to the Collateral Account for purposes of perfecting
the Pledge under applicable law, including, to the extent applicable, the
Uniform Commercial Code as adopted and in effect in any applicable jurisdiction
and the Applicable Treasury Regulations. Subject to the Pledge, the Holders from
time to time of the Units shall have full beneficial ownership of the Pledged
Securities underlying such Units, and shall be entitled (directly or through the
Collateral Agent) to all of the rights provided by such Pledged Securities, and
the Company shall have no rights with respect to such Pledged Securities other
than its security interest therein.
SECTION 3. Payments in Respect of the Pledged Securities. Any payment
received by the Collateral Agent in respect of the Pledged Securities underlying
any Unit shall be paid by the Collateral Agent, by wire transfer in same day
funds no later than 1:00 p.m., New York City time, on the date of receipt (or,
if the date of receipt is not a Business Day or if such payment is received by
the Collateral Agent after noon, New York City time, on the date of receipt,
then such payment shall be made by the Collateral Agent no later than 10:00
a.m., New York City time, on the next succeeding Business Day), as follows:
(a) in the case of payments not scheduled to fall on and that are not
in respect of amounts due on the Stock Purchase Date or Early Settlement Date,
as applicable, to the Purchase Contract Agent, to the account designated by it
for payments in respect of Units; and
(b) in the case of payments scheduled to fall on or that are in respect
of amounts due on the Stock Purchase Date, the Early Settlement Date, or
the Merger Early Settlement Date, in accordance with written instructions
issued to the Collateral Agent by the Purchase Contract Agent,
(i) first, to the Company, to the account designated by it for
such purpose, in an amount equal to the aggregate amount payable to the
Company in respect of Units, and
(ii) second, to the extent of any amount remaining after the
payment (if any) referred to in (i) above, to the Purchase Contract
Agent, to the account designated by it for payments in respect of
Units.
All payments received by the Purchase Contract Agent as
provided herein shall be applied by the Purchase Contract Agent pursuant to the
provisions of the Purchase Contract Agreement.
SECTION 4. [intentionally left blank]
SECTION 5. Release and Substitution of Pledged Securities. (a) Upon
written notice to the Collateral Agent by the Company or the Purchase Contract
Agent that there has
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<PAGE> 5
occurred a Termination Event, the Collateral Agent shall release all Pledged
Securities from the Pledge and shall transfer, without recourse, such released
Pledged Securities, free and clear of any lien, pledge or security interest
created hereby, to the Purchase Contract Agent for delivery by the Purchase
Contract Agent pursuant to the provisions of the Purchase Contract Agreement.
(b) In connection with a Collateral Substitution, subject to receipt by
the Collateral Agent of the Treasury Consideration required by Section 405 of
the Purchase Contract Agreement, the Collateral Agent shall release upon written
instruction from the Purchase Contract Agent, substantially in the form of
Exhibit A hereto, the Pledged Securities underlying the number of Units
indicated in such instruction from the Pledge and transfer, without recourse,
such released Pledged Securities, free and clear of any lien, pledge or security
interest created hereby, to the Purchase Contract Agent for delivery by the
Purchase Contract Agent pursuant to the provisions of the Purchase Contract
Agreement. The Treasury Securities received by the Collateral Agent in
connection with the Collateral Substitution shall be subject to the Pledge and
constitute the Pledged Securities in respect of the Units.
(c) In connection with an Early Settlement, no later than the third
Business Day after the applicable Early Settlement Date, the Collateral Agent
shall release the Pledged Securities relating to Units with respect to which
payment in full under Section 511 of the Purchase Contract Agreement has been
received by the Purchase Contract Agent, upon written notice to that effect to
the Collateral Agent by the Purchase Contract Agent, from the Pledge and
transfer, without recourse, such released Pledged Securities, free and clear of
any lien, pledge or security interest created hereby, to the Purchase Contract
Agent for delivery to such Holders pursuant to the provisions of the Purchase
Contract Agreement.
(d) In connection with a successful remarketing of the Notes pursuant
to the provisions of the Purchase Contract Agreement and the Remarketing
Agreement, upon written notice, substantially in the form of Exhibit B hereto,
by the Purchase Contract Agent to the Collateral Agent of the aggregate
principal amount of Notes that have been remarketed, the Collateral Agent shall
release and transfer, without recourse, such Notes, free and clear of any lien,
pledge or security interest created hereby, to the Remarketing Agent for the
purpose of settling the sales and purchases effected in the remarketing.
(e) In connection with a Merger Early Settlement, the Collateral Agent
shall release and transfer to the Company the Pledged Securities with respect to
all Units which have been presented for payment on the Merger Early Settlement
Date, upon written notice by the Company substantially in the form of Exhibit C
hereto to that effect.
SECTION 6. Rights and Remedies. (a) The Collateral Agent shall have all
of the rights and remedies with respect to the Collateral of a secured party
under the Code (whether or not said Code is in effect in the jurisdiction where
the rights and remedies are asserted) and, with respect to Pledged Securities
which are Treasury Securities, the Applicable
-4-
<PAGE> 6
Treasury Regulations, and such additional rights and remedies to which a secured
party is entitled under the laws in effect in any jurisdiction where any rights
and remedies hereunder may be asserted.
(b) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, in the event the Collateral Agent is unable
to make payments to the Purchase Contract Agent, which payments are due to the
Company pursuant to the Purchase Contracts underlying any Units, or in the event
of a Failed Remarketing, the Collateral Agent shall have and shall exercise,
upon the written direction of the Company, with reference to the Pledged
Securities underlying such Units and the obligations of the Holders of such
Units, any and all of the rights and remedies available to a secured party
under the Code and the Applicable Treasury Regulations after default by a
debtor, and as otherwise granted herein or under any other law, including, but
not limited to, the right to retain the Pledged Securities in full satisfaction
of the Holders' obligations under the Purchase Contracts or to sell the Pledged
Securities in one or more private or public sales.
(c) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, the Collateral Agent is hereby irrevocably
authorized to receive and collect all payments of principal of or distributions
or interest on the Pledged Securities, in each case subject to the provisions
hereof.
(d) The Purchase Contract Agent agrees that, from time to time, upon
the written request of the Collateral Agent to the Purchase Contract Agent, the
Purchase Contract Agent shall execute and deliver such further documents and do
such other acts and things as the Collateral Agent may reasonably request in
order to maintain the Pledge, and the perfection and priority thereof, and to
confirm the rights of the Collateral Agent hereunder.
SECTION 7. The Collateral Agent. The Collateral Agent and the Company
hereby agree among themselves as follows (it being understood and agreed that,
except as provided in Section 7.08, neither the Purchase Contract Agent nor any
Holder of Units shall have any rights or duties under this Section 7):
7.01 Appointment, Powers and Immunities. The Collateral Agent shall act
hereunder as agent for the Company, with such powers as are specifically vested
in the Collateral Agent by the terms of this Agreement, together with such other
powers as are reasonably incidental thereto. The Collateral Agent: (a) shall
have no duties or responsibilities except those expressly set forth in this
Agreement and no implied covenants or obligations shall be inferred from this
Agreement against the Collateral Agent, nor shall the Collateral Agent be bound
by the provisions of any agreement by any party hereto beyond the specific terms
hereof; (b) shall not be responsible to the Company for any recitals contained
in this Agreement, or in any certificate or other document referred to or
provided for in, or received by it under, this Agreement, the Units, the
Purchase Contract Agreement or for the value,
-5-
<PAGE> 7
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement (other than as against the Collateral Agent), the Units, the Purchase
Contract Agreement or any other document referred to or provided for herein or
therein or for any failure by the Company, or any other Person (except the
Collateral Agent) to perform any of its obligations hereunder or thereunder; (c)
shall not be required to initiate or conduct any litigation or collection
proceedings hereunder (except pursuant to directions furnished under Section
7.02 hereof); (d) shall not be responsible for any action taken or omitted to be
taken by it hereunder or under any other document or instrument referred to or
provided for herein or in connection herewith or therewith, except for its own
gross negligence or wilful misconduct; and (e) shall not be required to advise
any party as to selling or retaining, or taking or refraining from taking any
action with respect to, any Units or any property deposited hereunder. Subject
to the foregoing, during the term of this Agreement the Collateral Agent shall
take all reasonable action in connection with the safekeeping and preservation
of the Pledged Securities hereunder.
No provision of this Agreement shall require the Collateral Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder. In no event shall the Collateral
Agent be liable for any amount in excess of the value of the Pledged Securities.
7.02 Instructions of the Company. The Company shall have the right, by
one or more instruments in writing executed and delivered to the Collateral
Agent, to direct the time, method and place of conducting any proceeding for any
right or remedy available to the Collateral Agent, or of exercising any power
conferred on the Collateral Agent, or to direct the taking or refraining from
taking of any action authorized by this Agreement; provided, however, that (a)
such direction shall not conflict with the provisions of any law or of this
Agreement and (b) the Collateral Agent shall receive indemnity reasonably
satisfactory to it. Nothing in this Section 7.02 shall impair the right of the
Collateral Agent in its discretion to take any action or omit to take any action
which it deems proper and which is not inconsistent with such direction.
7.03 Reliance by Collateral Agent. The Collateral Agent shall be
entitled to conclusively rely upon any certification, order, judgment, opinion,
notice or other communication or document (including, without limitation, any
thereof by telephone, telecopy, telex, telegram or cable) believed by it to be
genuine and correct and to have been signed or sent by or on behalf of the
proper Person or Persons (without being required to determine the correctness of
any fact stated therein), and upon advice and statements of legal counsel and
other experts selected by the Collateral Agent. As to any matters not expressly
provided for by this Agreement, the Collateral Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder in accordance with
instructions given by the Company in accordance with this Agreement.
Upon written request by the Collateral Agent, the Company or the
Purchase Contract Agent, as the case may be, shall provide the Collateral Agent
from time to time with a
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<PAGE> 8
certificate of the Company or the Purchase Contract Agent certifying the
incumbency of representatives of the Company or the Purchase Contract Agent
authorized to instruct, direct and give notice to, the Collateral Agent under
this Agreement. Until the Collateral Agent receives a subsequent incumbency
certificate, the Collateral Agent shall be entitled to rely on the last such
certificate delivered to it under this Agreement.
7.04 Rights in Other Capacities. The Collateral Agent and its
affiliates may (without having to account therefor to the Company) accept
deposits from, lend money to, make investments in and generally engage in any
kind of banking, trust or other business with the Company, the Purchase Contract
Agent and any Holder of Units as if it were not acting as the Collateral Agent,
and the Collateral Agent and its affiliates may accept fees and other
consideration from the Company, the Purchase Contract Agent and any Holder of
Units without having to account for the same to the Company, provided that the
Collateral Agent covenants and agrees with the Company that the Collateral Agent
shall not accept, receive or permit there to be created in its favor any
security interest, lien or other encumbrance of any kind in or upon the Pledged
Securities, except as contemplated by the terms hereof.
7.05 Non-Reliance on Collateral Agent. The Collateral Agent shall not
be required to keep itself informed as to the performance or observance by the
Purchase Contract Agent or any Holder of Units of this Agreement, the Purchase
Contract Agreement, the Units or any other document referred to or provided for
herein or therein or to inspect the properties or books of the Purchase Contract
Agent or any Holder of Units. The Collateral Agent shall not have any duty or
responsibility to provide the Company with any credit or other information
concerning the affairs, financial condition or business of the Purchase Contract
Agent or any Holder of Units that may come into the possession of the Collateral
Agent or any of its affiliates.
7.06 Compensation and Indemnity. The Company agrees: (a) to pay the
Collateral Agent from time to time reasonable compensation as agreed upon for
all services rendered by it hereunder and (b) to indemnify the Collateral Agent
and its officers, directors, employees and agents for, and to hold them harmless
against, any loss, liability or expense including taxes (other than taxes based
upon, measured by or determined by the income of the Collateral Agent) incurred
without gross negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of its powers and duties under
this Agreement, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of such powers
and duties. The provisions of this Section 7.06 shall survive the resignation or
removal of the Collateral Agent and the termination of this Agreement.
In order to effect a Collateral Substitution, the Collateral Agent may
charge reasonable fees and expenses for its services as Collateral Agent in
respect of such substitution. Such fees and expenses shall be borne by the
Holder substituting such collateral but shall not be the responsibility of the
Company.
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<PAGE> 9
7.07 Failure to Act. In the event of any ambiguity in the provisions of
this Agreement or any dispute between or conflicting claims by or among the
undersigned and/or any other Person with respect to any funds or property
deposited hereunder, the Collateral Agent shall be entitled, at its sole option,
to refuse to comply with any and all claims, demands or instructions with
respect to such property or funds so long as such dispute or conflict shall
continue, and the Collateral Agent shall not be or become liable in any way to
any of the undersigned for its failure or refusal to comply with such
conflicting claims, demands or instructions. The Collateral Agent shall be
entitled to refuse to act until either (a) such conflicting or adverse claims or
demands shall have been finally determined by a court of competent jurisdiction
or settled by agreement between the conflicting parties as evidenced in a
writing satisfactory to the Collateral Agent or (b) the Collateral Agent shall
have received security or an indemnity satisfactory to the Collateral Agent
sufficient to save the Collateral Agent harmless from and against any and all
loss, liability or expense which the Collateral Agent may incur by reason of its
acting. The Collateral Agent may in addition elect to commence an interpleader
action or seek other judicial relief or orders as the Collateral Agent may deem
necessary. Notwithstanding anything contained herein to the contrary, the
Collateral Agent shall not be required to take any action that is in its opinion
contrary to law or to the terms of this Agreement, or which would in its opinion
subject it or any of its officers, employees or directors to liability.
7.08 Resignation of Collateral Agent. Subject to the appointment and
acceptance of a successor Collateral Agent as provided below, (a) the Collateral
Agent may resign at any time by giving notice thereof to the Company and the
Purchase Contract Agent, (b) the Collateral Agent may be removed at any time by
written notice from the Company, and (c) if the Collateral Agent fails to
perform any of its material obligations hereunder in any material respect for a
period of not less than 20 days after receiving written notice of such failure
by the Purchase Contract Agent and such failure shall be continuing, the
Collateral Agent may be removed by the Purchase Contract Agent. The Purchase
Contract Agent shall promptly notify the Company of any removal of the
Collateral Agent pursuant to clause (c) of the immediately preceding sentence.
Upon any such resignation or removal, the Company shall have the right to
appoint a successor Collateral Agent. If no successor Collateral Agent shall
have been so appointed and shall have accepted such appointment within 30 days
after the retiring Collateral Agent's giving of notice of resignation or such
removal, then the retiring Collateral Agent may petition any court of competent
jurisdiction for the appointment of a successor Collateral Agent. The Collateral
Agent shall be a bank which has an office in New York, New York with a combined
capital and surplus of at least $50,000,000. Upon the acceptance of any
appointment as Collateral Agent hereunder by a successor Collateral Agent, such
successor Collateral Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring Collateral Agent, and
the retiring Collateral Agent shall take all appropriate action to transfer any
money and property held by it hereunder (including the Pledged Securities) to
such successor Collateral Agent. The retiring Collateral Agent shall, upon such
succession, be discharged from its duties and obligations as Collateral Agent
hereunder. After any retiring Collateral Agent's resignation hereunder as
Collateral Agent, the provisions of this Section 7 shall continue in effect for
its
-8-
<PAGE> 10
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as the Collateral Agent.
7.09 Right to Appoint Agent or Advisor. The Collateral Agent shall have
the right to appoint agents or advisors in connection with any of its duties
hereunder, and the Collateral Agent shall not be liable for any action taken or
omitted by such agents or advisors selected in good faith.
7.10 Survival. The provisions of this Section 7 shall survive
termination of this Agreement and the resignation or removal of the Collateral
Agent.
SECTION 8. Miscellaneous.
8.01 Amendments. This Agreement may be amended in the manner set forth
in Section 801 of the Purchase Contract Agreement for supplemental agreements.
In executing any amendment permitted by this Section, the Collateral Agent shall
be entitled to receive and (subject to Section 7.01 hereof) shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
such amendment is authorized or permitted by this Agreement and is for a purpose
set forth in Section 801 of the Purchase Contract Agreement, and that all
conditions precedent herein and in the Principal Agreements related to such
amendment have been satisfied.
8.02 No Waiver. No failure on the part of the Collateral Agent or any
of its agents to exercise, and no course of dealing with respect to, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the Collateral Agent
or any of its agents of any right, power or remedy hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
The remedies herein are cumulative and are not exclusive of any remedies
provided by law.
8.03 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES THEREOF. The Company, the Collateral Agent and the
Holders from time to time of the Units, acting through the Purchase Contract
Agent as their attorney-in-fact, hereby submit to the nonexclusive jurisdiction
of the United States District Court for the Southern District of New York and of
any New York state court sitting in New York City for the purposes of all legal
proceedings arising out of or relating to this Agreement or the transactions
contemplated hereby. The Company, the Collateral Agent and the Holders from time
to time of the Units, acting through the Purchase Contract Agent as their
attorney-in-fact, irrevocably waive, to the fullest extent permitted by
applicable law, any objection which they may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in an inconvenient
forum.
-9-
<PAGE> 11
8.04 Legal Holidays. In any case where any Quarterly Payment Date or
the Stock Purchase Date shall not be a Business Day, then (notwithstanding any
other provision of this Agreement or of the Units) the actions required by this
Agreement to occur on such date shall not occur on such date, but instead shall
occur on the next succeeding Business Day with the same force and effect as if
they had occurred on such Quarterly Payment Date or Stock Purchase Date, as the
case may be; except that if such next succeeding Business Day is in the next
calendar year, such actions shall occur on the immediately preceding Business
Day with the same force and effect as if made on such Quarterly Payment Date or
Stock Purchase Date.
8.05 Notices. All notices, requests, consents and other communications
provided for herein (including, without limitation, any modifications of, or
waivers or consents under, this Agreement) shall be given or made in writing
(including, without limitation, by telecopy) delivered to the intended recipient
at the "Address for Notices" specified below its name on the signature pages
hereof or, as to any party, at such other address as shall be designated by such
party in a notice to the other parties. Except as otherwise provided in this
Agreement, all such communications shall be deemed to have been duly given when
transmitted by telecopier or personally delivered or, in the case of a mailed
notice, upon receipt, in each case given or addressed as aforesaid.
8.06 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the respective successors and assigns of the Company,
the Collateral Agent and the Purchase Contract Agent, and the Holders from time
to time of the Units, by their acceptance of the same, shall be deemed to have
agreed to be bound by the provisions hereof and to have ratified the agreements
of, and the grant of the Pledge hereunder by, the Purchase Contract Agent, as
their attorney-in-fact.
8.07 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
8.08 Severability. If any provision hereof is invalid or unenforceable
in any jurisdiction, then, to the fullest extent permitted by law, (a) the other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be liberally construed in order to carry out the intentions of the parties
hereto as nearly as may be possible and (b) the invalidity or unenforceability
of any provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
8.09 Expenses, etc. The Company agrees to reimburse the Collateral
Agent for: (a) all reasonable out-of-pocket costs and expenses of the Collateral
Agent (including, without limitation, the reasonable fees and expenses of
counsel to the Collateral Agent), in connection with (i) the negotiation,
preparation, execution and delivery or performance of this Agreement and (ii)
any modification, supplement or waiver of any of the terms of this Agreement;
(b) all reasonable costs and expenses of the Collateral Agent (including,
without
-10-
<PAGE> 12
limitation, reasonable fees and expenses of counsel) in connection with (i) any
enforcement or proceedings resulting or incurred in connection with causing any
Holder of Units to satisfy its obligations under the Purchase Contracts forming
a part of the Units and (ii) the enforcement of this Section 8.09; and (c) all
transfer, stamp, documentary or other similar taxes, assessments or charges
levied by any governmental or revenue authority in respect of this Agreement or
any other document referred to herein and all costs, expenses, taxes,
assessments and other charges incurred in connection with any filing,
registration, recording or perfection of any security interest contemplated
hereby.
8.10 Security Interest Absolute. All rights of the Collateral Agent and
security interests hereunder, and all obligations of the Holders from time to
time of the Units here under, shall be absolute and unconditional irrespective
of:
(a) any lack of validity or enforceability of any provision of
the Units or any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or
any other term of, or any increase in the amount of, all or any of the
obligations of Holders of Units under the related Purchase Contracts or
any other amendment or waiver of any term of, or any consent to any
departure from any requirement of, the Purchase Contract Agreement or
any Units or any other agreement or instrument relating thereto; or
(c) any other circumstance which might otherwise constitute a
defense available to, or discharge of, a borrower, a guarantor or a
pledgor.
[SIGNATURE PAGE FOLLOWS]
-11-
<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
THE SEAGRAM COMPANY LTD.
By:
Name:
Title:
THE BANK OF NEW YORK,
as Purchase Contract Agent and as attorney-in-fact
of the Holders from time to time of the Units
By:
Name:
Title:
Address for Notices:
-
Citibank, N.A.,
as Collateral Agent
By:
Name:
Title:
Address for Notices:
Global Agency & Trust Services
111 Wall Street
New York, New York 10005
<PAGE> 14
EXHIBIT A
INSTRUCTION
FROM PURCHASE CONTRACT AGENT
TO COLLATERAL AGENT
Citibank, N.A.
Global Agency & Trust Services
111 Wall Street
New York, New York 10005
Re: -% Adjustable Conversion-rate Equity Security Units of The
Seagram Company Ltd. (the "Company)
Please refer to the Pledge Agreement dated as of June -, 1999 (the
"Pledge Agreement"), among the Company, you, as Collateral Agent and Securities
Intermediary, and the undersigned, as Purchase Contract Agent and as
attorney-in-fact for the holders of Units from time to time. Capitalized terms
used herein but not defined shall have the meaning set forth in the Pledge
Agreement.
We hereby notify you in accordance with Section 5(b) of the Pledge
Agreement that the Holder named below has elected to substitute Treasury
Consideration as required under Section 405 of the Purchase Contract Agreement
in exchange for $_________ principal amount of Notes and has delivered to the
undersigned a notice stating that the Holder has transferred such Treasury
Consideration to the Securities Intermediary, for credit to the Collateral
Account.
We hereby request that you, as the Securities Intermediary, upon
confirmation that such Treasury Securities or security entitlements thereto have
been credited to the Collateral Account, release to the undersigned an equal
principal amount of Notes in accordance with Section 5(b) of the Pledge
Agreement.
THE BANK OF NEW YORK
Date: ___________________ By: __________________________
Name:
Title:
<PAGE> 15
Please print name and address of Holder electing to substitute Treasury
Securities or security entitlements thereto for the Notes:
____________________________ ___________________________
Name Social Security or other Taxpayer
Identification Number, if any
____________________________
Address
____________________________
____________________________
<PAGE> 16
EXHIBIT B
NOTICE
FROM PURCHASE CONTRACT AGENT
TO COLLATERAL AGENT
Citibank, N.A.
Global Agency & Trust Services
111 Wall Street
New York, New York 10005
Re: -% Adjustable Conversion-rate Equity Security Units of The
Seagram Company Ltd. (the "Company)
Please refer to the Pledge Agreement dated as of June -, 1999 (the
"Pledge Agreement"), among the Company, you, as Collateral Agent and Securities
Intermediary, and the undersigned, as Purchase Contract Agent and as
attorney-in-fact for the holders of Units from time to time. Capitalized terms
used herein but not defined shall have the meaning set forth in the Pledge
Agreement.
We hereby notify you in accordance with Section 5(d) of the Pledge
Agreement that Notes in an aggregate principal amount of $_________ have been
remarketed in accordance with the Purchase Contract Agreement and the
Remarketing Agreement.
We hereby request that you, as the Securities Intermediary, release to
[_________], as the Remarketing Agent, [wiring and DTC account information],
an equal principal amount of Notes in accordance with Section 5(d) of the Pledge
Agreement.
[add name of remarketing agent account info]
DTC-account no.
THE BANK OF NEW YORK
Date: ___________________ By: __________________________
Name:
Title:
<PAGE> 17
EXHIBIT C
NOTICE
FROM PURCHASE CONTRACT AGENT
TO COLLATERAL AGENT
Citibank, N.A.
Global Agency & Trust Services
111 Wall Street
New York, New York 10005
Re: -% Adjustable Conversion-rate Equity Security Units of The
Seagram Company Ltd. (the "Company)
Please refer to the Pledge Agreement dated as of June -, 1999 (the
"Pledge Agreement"), among the Company, you, as Collateral Agent and Securities
Intermediary, and the undersigned, as Purchase Contract Agent and as
attorney-in-fact for the holders of Units from time to time. Capitalized terms
used herein but not defined shall have the meaning set forth in the Pledge
Agreement.
We hereby notify you in accordance with Section 5(e) of the Pledge
Agreement that Holders have presented [_______] Units for payment on the Merger
Early Settlement Date.
We hereby request that you, as the Securities Intermediary, release to
the undersigned [$_________] aggregate amount of [specify security], Pledged
Securities related to such Units, in accordance with Section 5(e) of the Pledge
Agreement.
THE BANK OF NEW YORK
Date: ___________________ By: __________________________
Name:
Title:
<PAGE> 1
Exhibit 5(c)
[BARNES & THORNBURG LETTERHEAD]
May 24, 1999
Joseph E. Seagram & Sons, Inc.
375 Park Avenue
New York, New York 10152
The Seagram Company Ltd.
1430 Peel Street
Montreal, Quebec
Canada H3A 1S9
Ladies and Gentleman:
We are acting as Indiana counsel to Joseph E. Seagram & Sons, Inc., an
Indiana corporation (the "Company"), in connection with the Registration
Statement on Form S-3 of the Company and The Seagram Company Ltd., a Canadian
corporation (the "Guarantor"), under the Securities Act of 1933, as amended (the
"Act"), filed with the Securities and Exchange Commission on May 13, 1999 (the
"Registration Statement"), relating to (i) the Company's debt securities ("Debt
Securities"), (ii) the guarantees of the Guarantor which will be issued in
connection with the Debt Securities (the "Guarantees"), (iii) share purchase
contracts, representing rights to purchase common shares of the Guarantor (the
"Stock Purchase Contracts"), (iv) share purchase units ("Share Purchase Units"),
which will be sold by the Guarantor and which represent ownership of the Share
Purchase Contracts and the Debt Securities, securing the obligations of holders
under the Share Purchase Contracts, and (v) common shares of the Guarantor,
without nominal or par value (the "Common Shares"), to be issued and sold from
time to time for an aggregate initial offering price not to exceed
$1,150,000,000 (or the equivalent thereof in foreign denominated currencies or
composite currencies). The Debt Securities, the Guarantees, the Stock Purchase
Contracts, the Share Purchase Units, and the Common Shares are collectively
referred to herein as the "Securities".
We have examined (1) the Registration Statement, and (2) the Indenture,
dated as of September 15, 1991 (the "Indenture"), among the Guarantor, the
Company and The Bank of New York, as trustee (the "Trustee"). We have also
examined, and have relied as to matters of fact upon, originals or copies,
certified or otherwise identified to our satisfaction, of such corporate
records, agreements, documents and other instruments and such certificates or
comparable documents of public officials and of officers and representatives of
the Company, and have made such other and further investigations, as we have
deemed relevant and necessary as a basis for the opinions hereinafter set forth.
In such examination, we have assumed the genuineness of all signatures, the
legal capacity of natural persons, the authenticity of all documents submitted
to us as originals, the
<PAGE> 2
Joseph E. Seagram & Sons, Inc.
The Seagram Company Ltd.
June 7, 1999
Page 2
conformity to original documents of all documents submitted to us as certified
or photostatic copies, and the authenticity of the originals of such latter
documents.
In addition, we have assumed that (i) the Registration Statement will have
become effective; (ii) a Prospectus Supplement will have been prepared and filed
with the Securities and Exchange Commission describing the Securities offered
thereby, (iii) all Securities issued will be issued and sold in compliance with
applicable federal and state securities laws and solely in the manner stated in
the Registration Statement and the appropriate Prospectus Supplement; (iv) a
definitive purchase, underwriting or similar agreement with respect to any
Securities offered will have been duly authorized and validly executed and
delivered by the Company, the Guarantor (when applicable) and the other parties
thereto and will be governed by the laws of the State of New York; and (v) any
securities issuable upon conversion, exchange or exercise of any Security being
offered will be duly authorized, created and, if appropriate, reserved for
issuance upon such conversion, exchange or exercise.
Based on the foregoing, we are of the opinion that, under the laws of the
State of Indiana, with respect to the Debt Securities, when (i) all necessary
corporate action has been taken by the Company to approve the issuance and
terms of such Debt Securities, the terms of the offering thereof and related
matters, and (ii) such Debt Securities shall have been duly executed,
authenticated, issued and delivered in accordance with the laws of the State of
Indiana and the State of New York, the provisions of the Indenture dated as of
September 15, 1991 (the "Indenture"), among the Company, the Guarantor and The
Bank of New York, as Trustee, a copy of which has been incorporated by
reference as an exhibit to the Registration Statement, and the applicable
definitive purchase, underwriting, or similar agreement approved by the Board
of Directors of the Company (the "Board") or by an officer of the Company
acting pursuant to authority delegated by the Board, upon payment of the
consideration therefor provided for therein, such Debt Securities will be
validly issued and will constitute valid and legally binding obligations of the
Company, in accordance with and subject to the terms thereof. We express no
opinion as to any corporate action required to be taken by either the Guarantor
or The Bank of New York, as Trustee, and, for purposes of this opinion,
expressly assume that all required corporate action has been duly and validly
taken by each of them.
Our opinions set forth above are subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
We are qualified to practice law in the State of Indiana. We do not
purport to be experts on any law other than the laws of the United States or
the State of Indiana. We are not expressing any opinion concerning any law
other than the laws of the State of Indiana, and, insofar as Indiana.
BARNES & THORNBURG
<PAGE> 3
Joseph E. Seagram & Sons, Inc.
The Seagram Company Ltd.
June 7, 1999
Page 3
law is involved, we are not expressing any opinion concerning either the
applicability of, or compliance with, Indiana laws relating to the distribution
of securities.
This opinion letter is rendered to you in connection with the
above-described transactions, and may not be relied upon by you for any other
purpose, or relied upon, or furnished to, any other person, firm or corporation
without our prior written consent; provided, however, that we hereby consent to
the filing of this opinion as an exhibit to the Registration Statement and to
the reference to us under the caption "Legal Matters" in the Prospectus forming
a part thereof.
This opinion may be relied upon by Simpson Thacher & Bartlett.
Very truly yours,
/s/ Barnes & Thornburg
-----------------------
BARNES & THORNBURG
<PAGE> 1
EXHIBIT 23(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
OF THE SEAGRAM COMPANY LTD.
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated August 12, 1998, except as to Note 1
which is as of August 25, 1998, relating to the financial statements, which
appears in The Seagram Company Ltd.'s Annual Report on Form 10-K for the year
ended June 30, 1998, as amended. We also consent to the incorporation by
reference of our report dated August 12, 1998 relating to the financial
statement schedule, which appears in such Annual Report on Form 10-K, as
amended. We also consent to the references to us under the headings "Experts"
and "Selected Historical Consolidated Financial Data" in such Registration
Statement.
PricewaterhouseCoopers LLP
New York, New York
June 7, 1999
<PAGE> 1
EXHIBIT 23(b)
CONSENT OF INDEPENDENT AUDITORS OF POLYGRAM N.V.
We consent to incorporation by reference in the Prospectus constituting
part of the Registration Statement on Form S-3 of The Seagram Company Ltd. and
Joseph E. Seagram & Sons, Inc. of our Report dated February 11, 1998, relating
to the Consolidated Balance Sheets of PolyGram N.V. as of December 31, 1996 and
1997, and the related Consolidated Statements of Income, Consolidated Statements
of Cash Flows and Consolidated Statements of Changes in Shareholders' Equity for
each of the years in the three-year period ended December 31, 1997 of PolyGram
N.V., incorporated by reference in The Seagram Company Ltd.'s Form 8-K dated
August 25, 1998, as amended. We also consent to the reference to our firm under
the heading "Experts" in such Prospectus.
KPMG Accountants N.V.
Amsterdam, The Netherlands
June 7, 1999
