<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 10, 1999
REGISTRATION NO. 333-78393
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CANADA
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)
NONE
(I.R.S. EMPLOYER IDENTIFICATION NO.)
1430 PEEL STREET
MONTREAL, QUEBEC, CANADA H3A 1S9
(514) 849-5271
(ADDRESSES, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S 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 REGISTRANT'S 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: As soon as
practicable 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 Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant 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.
[SEAGRAM LOGO]
37,000,000 Shares
THE SEAGRAM COMPANY LTD.
Common Shares
-------------------------
This prospectus relates to an offering of 26,000,000 common shares in the
United States. In addition, 7,500,000 common shares are being offered in Canada
and 3,500,000 common shares are being offered internationally. The total number
of shares offered under all three offerings is 37,000,000 common shares.
Seagram is offering 29,000,000 of the shares to be sold in the offerings.
The selling shareholders named in this prospectus are offering an additional
8,000,000 common shares.
The common shares are listed on the New York Stock Exchange under the
symbol "VO". The last reported sale price of the common shares on the New York
Stock Exchange on May 21, 1999 was $53 3/8 per share.
------------------------
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 share Total
--------- -----
<S> <C> <C>
Initial price to public..................................... $ $
Underwriting discount....................................... $ $
Proceeds, before expenses, to Seagram....................... $ $
Proceeds, before expenses, to the selling shareholders...... $ $
</TABLE>
The underwriters may, under the terms of the underwriting agreements,
purchase up to an additional 5,550,000 shares from Seagram at the initial price
to public less the underwriting discount.
The underwriters expect to deliver the shares against payment in New York,
New York on June , 1999.
--------------------------------
Global Coordinator
GOLDMAN, SACHS & CO.
-------------------------------------
GOLDMAN, SACHS & CO.
BEAR, STEARNS & CO. INC.
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
CREDIT SUISSE FIRST BOSTON
PAINEWEBBER INCORPORATED
SALOMON SMITH BARNEY
BLAYLOCK & PARTNERS, L.P.
------------------------
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 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
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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.
3
<PAGE> 6
THE COMMON SHARE OFFERINGS
Common shares offered in all
offerings by:
Seagram................. 29,000,000 shares
The selling
shareholders................. 8,000,000 shares
----------
Total.............. 37,000,000 shares(1)
----------
----------
U.S. offering........... 26,000,000 shares
Canadian offering....... 7,500,000 shares
International
offering..................... 3,500,000 shares
----------
Total.............. 37,000,000 shares(1)
----------
----------
Common shares to be
outstanding after the U.S.
offering, the Canadian
offering and the
international offering..... 432,046,179 shares(1)
Use of proceeds.............. Seagram estimates (assuming a common share
offering price of $54) that it will receive net
proceeds from the U.S. offering, the Canadian
offering and the international offering of
approximately $996 million, $395 million and $134
million, respectively. Seagram is also offering
18,500,000 % adjustable conversion-rate equity
security units in a separate offering and
estimates that it will receive net proceeds of
approximately $968 million from that offering.
The net proceeds to Seagram of the offerings will
be used:
- to repay borrowings under our bank credit
facilities of approximately $1.3 billion (in
U.S. dollar equivalents),
- to repay commercial paper borrowings of
approximately $1.1 billion, and
- for general corporate purposes.
See "Use of Proceeds".
NYSE symbol.................. VO
- ---------------
(1) Except as otherwise indicated, the information in this prospectus assumes
that none of the over-allotment options is exercised.
OTHER OFFERING
Seagram is also offering 18,500,000 % adjustable conversion-rate equity
security units in a separate offering in the United States. The common share
offerings and the unit offering are not conditioned on each other.
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<PAGE> 7
SUMMARY FINANCIAL DATA
(US$ IN MILLIONS EXCEPT PER SHARE)
(UNAUDITED)
The historical consolidated financial data presented below is unaudited.
The pro forma financial data shows the effect of the acquisition of PolyGram as
if it had been consummated on July 1, 1997.
<TABLE>
<CAPTION>
ACTUAL PRO FORMA
NINE MONTHS NINE MONTHS
FISCAL YEARS 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> 8
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 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
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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 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.
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<PAGE> 10
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 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,
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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 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, 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,
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produces, markets and distributes more than 225 brands of distilled spirits,
more than 180 brands of wines, Champagnes, Ports and Sherries, and more than 48
brands of coolers, beers, mixers and other low-alcohol adult beverages, which
are sold in over 190 countries and territories. Some of these products are sold
worldwide and others only in the geographic area where they are produced. In
addition to marketing our own brands, we also distribute distilled spirit, wine
and beer brands owned by others.
Some of our best-known brand names include:
- Crown Royal and Seagram's V.O. Canadian whiskies
- Seagram's 7 Crown blended whiskey
- Four Roses Bourbon
- Chivas Regal, Royal Salute and Passport Scotch Whiskies
- The Glenlivet and Glen Grant single malt Scotch Whiskies
- Martell Cognacs
- Seagram's Extra Dry Gin
- Captain Morgan and Myers's rums
- Mumm and Perrier-Jouet Champagnes
- Sterling Vineyards California Wines
We also distribute ABSOLUT VODKA, owned by V&S Vin & Sprit, in the United States
and in most major international markets.
We import into the United States fine wines, principally French wines and
Champagnes, and produce and market premium California and other wines. Among the
wines we produce and market are:
- Mumm and Perrier-Jouet Champagnes
- Sterling Vineyards California Wines
- Tessera California Wines
- Mumm Cuvee Napa California Sparkling Wine
- Sandeman Ports and Sherries
- Matheus Muller
- Mumm German sekt
The Monterey Vineyard California wines and Barton & Guestier (B&G) French wines
are produced for us.
We also market low-alcohol and non-alcohol adult beverages. Seagram's
Coolers are sold in a variety of fruit and mixed drink flavors. Its mixer line
includes ginger ale, club soda, tonic water and seltzer. We are the exclusive
U.S. importer of Grolsch Beer, owned by Royal Grolsch N.V., and of Steinlager
Beer, owned by Lion Nathan Limited.
10
<PAGE> 13
USE OF PROCEEDS
Seagram estimates (assuming a common share offering price of $54) that it
will receive net proceeds from the U.S. offering, the Canadian offering and the
international offering of approximately $996 million, $395 million and $134
million, respectively. Seagram also plans to sell % adjustable
conversion-rate equity security units in a separate offering. Assuming
completion of the unit offering by Seagram, Seagram estimates (assuming a unit
offering price of $54) that it will receive net proceeds of approximately $968
million from the unit 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>
SEAGRAM 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>
11
<PAGE> 14
CAPITALIZATION
The following table sets forth as of March 31, 1999 (1) the historical
capitalization of Seagram, (2) the pro forma adjustments for the common share
offerings and the % adjustable conversion-rate equity security units
offering (assuming a common share and unit offering price of $54 per common
share or unit) and (3) the capitalization of Seagram giving pro forma effect to
the offerings and the application of the estimated net proceeds as described in
"Use of Proceeds". The table should be read in conjunction with Seagram's
financial statements, the notes thereto and the other financial data and
statistical information included or incorporated by reference in this
prospectus.
<TABLE>
<CAPTION>
AS OF MARCH 31, 1999
--------------------------------------
PRO FORMA PRO FORMA
ACTUAL ADJUSTMENTS AS ADJUSTED
------- ----------- --------------
(US$ 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.
12
<PAGE> 15
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
Our selected historical consolidated financial data presented below as of
June 30, 1997 and 1998 and for the fiscal years then ended were derived from our
historical consolidated financial statements and the notes thereto contained in
our 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, our 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 our 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 our
unaudited consolidated financial statements contained in our Quarterly Report on
Form 10-Q for the quarter ended March 31, 1999, which is incorporated herein by
reference. As a result of our sale of Tropicana Products, Inc. and our global
juice business, our consolidated financial statements report the results of
Tropicana as discontinued operations. The data presented below should be read in
conjunction with our consolidated financial statements.
Our 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.
13
<PAGE> 16
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>
14
<PAGE> 17
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 principles.
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 $1.7 billion,
- the sale on February 12, 1998 of a 50% interest in USA Networks to USA
Networks, Inc., and
- the contribution of the remaining 50% in USA Networks, the majority of
the televisions assets of Universal Studios, Inc. and 50% of the
international operations of USA Networks to USANi LLC.
In exchange for the contribution, Universal Studios, Inc. received a 10.7%
interest in USAi and a 45.8% exchangeable interest in USANi LLC.
15
<PAGE> 18
THE SEAGRAM COMPANY LTD.
(US$ 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>
16
<PAGE> 19
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>
17
<PAGE> 20
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>
18
<PAGE> 21
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
vacated properties. The costs of contract terminations are comprised primarily
of:
- artists' contracts,
- distribution contracts,
- story property commitments, and
- term deals.
19
<PAGE> 22
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 increased to
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.
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.
20
<PAGE> 23
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 operations, 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
21
<PAGE> 24
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 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
22
<PAGE> 25
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.
23
<PAGE> 26
THE SELLING SHAREHOLDERS
The following table sets forth for each selling shareholder:
- that selling shareholder's beneficial ownership of common shares prior to
the offering and the percentage of total voting power represented thereby
and
- the number of common shares to be beneficially owned by that selling
shareholder after the offering and the percentage of total voting power
represented thereby.
Charles R. Bronfman is Co-Chairman of Seagram.
<TABLE>
<CAPTION>
BEFORE THE OFFERING AFTER THE OFFERING
----------------------------- COMMON SHARES ----------------------------------
COMMON SHARES PERCENTAGE OF TO BE SOLD IN COMMON SHARES PERCENTAGE OF
BENEFICIALLY TOTAL VOTING THE TO BE BENEFICIALLY TOTAL VOTING
NAME OF SELLING SHAREHOLDER OWNED POWER OFFERING OWNED POWER
- --------------------------- ------------- ------------- ------------- ------------------ -------------
<S> <C> <C> <C> <C> <C>
C. Bronfman Family Trust(1)........ 16,320,000 4.0% 2,000,000 14,320,000 3.6%
Esarbee Investments Limited(1)
CRB Associates, Limited
Partnership(1)
The Charles R. Bronfman Trust(1)
The Charles Bronfman Trust(1)
The CRB Foundation(2)
The Chastell Foundation(2)
Subtotal...................... 7,354,164 1.8% 6,000,000 1,354,164 0.3%
---------- ---- --------- ---------- ----
Total(3)........................... 23,674,164 5.9% 8,000,000 15,674,164 3.9%
</TABLE>
- ---------------
(1) The selling shareholders are trusts formed for the benefit of Charles R.
Bronfman and his descendants or are entities principally owned directly or
indirectly by trusts formed for the benefit of the Bronfman family.
(2) Charles R. Bronfman is a member and a director of these foundations.
(3) The selling shareholders may transfer some or all of their common shares
prior to the completion of the offering. Transferees who receive Seagram
common shares prior to the completion of the offering may offer those shares
pursuant to this prospectus.
24
<PAGE> 27
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, Joseph E. Seagram & Sons, Inc., our subsidiary, 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
Considerations for U.S. Persons" and "Canadian Income Tax Consequences".
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
25
<PAGE> 28
- 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.
26
<PAGE> 29
U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR U.S. PERSONS
The following summary describes the material U.S. federal income tax
consequences of the ownership of common shares as of the date hereof to U.S.
persons as defined in the Internal Revenue Code of 1986 (the "Code") (1) who are
residents of the United States for purposes of the current Canada-United States
Income Tax Treaty (the "Treaty"), (2) whose common shares are not, for purposes
of the Treaty, effectively connected with a permanent establishment in Canada
and (3) who otherwise qualify for the full benefits of the Treaty. Under the
Code, a "U.S. person" means a person who is any of the following:
- 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 political subdivision thereof,
- an estate the income of which is subject to U.S. 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 U.S. persons or that has a valid
election in effect under applicable U.S. Treasury regulations to be
treated as a U.S. person.
This summary is based on current law, which is subject to change (perhaps
retroactively), is for general purposes only and should not be considered tax
advice. This summary does not represent a detailed description of the U.S.
federal income tax consequences to you in light of your particular
circumstances. In addition, it does not represent a detailed description of the
U.S. federal income tax consequences applicable to you if you are subject to
special treatment under the U.S. federal income tax laws (including if you are a
dealer in securities or currencies, a financial institution, an insurance
company, a tax exempt organization, a person holding the common shares as part
of a hedging, integrated or conversion transaction, constructive sale or
straddle, a person owning 10% or more of our voting stock or a U.S. person whose
"functional currency" is not the U.S. dollar). For purposes of this discussion,
we have assumed that you will hold the common shares as a capital asset as
defined under the Code. In addition, we have assumed that the common shares will
not be considered taxable Canadian property as described under "Canadian Income
Tax Consequences". We cannot assure you that a change in law will not alter
significantly the tax considerations that we describe in this summary.
YOU SHOULD CONSULT YOUR OWN TAX ADVISOR CONCERNING THE PARTICULAR U.S.
FEDERAL INCOME TAX CONSEQUENCES TO YOU OF THE OWNERSHIP OF COMMON SHARES, AS
WELL AS THE CONSEQUENCES TO YOU ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR
OTHER TAXING JURISDICTION.
TAXATION OF DIVIDENDS
The gross amount of dividends paid to you (including amounts withheld to
reflect Canadian withholding taxes) will be treated as dividend income, to the
extent paid out of our current or accumulated earnings and profits, as
determined under U.S. federal income tax principles. You will be required to
include any such dividends in your gross income as ordinary income on the day it
is received. Such dividends will not be eligible for the dividends received
deduction allowed to corporations under the Code.
The amount of any dividend paid in Canadian dollars will equal the U.S.
dollar value of the Canadian dollars received by you calculated by reference to
the exchange rate in effect on the date received, regardless of whether the
Canadian dollars are converted into U.S. dollars. If you do not convert the
Canadian dollars you receive into U.S. dollars on the date of receipt, you will
have a basis in the Canadian dollars equal to their U.S. dollar value on the
date of receipt. Any gain or loss realized by you on a subsequent conversion or
other disposition of the Canadian dollars will be treated as ordinary income or
loss.
27
<PAGE> 30
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, for certain holders, "financial services
income". Special rules will apply to you if your foreign source income during
the taxable year consists entirely of "qualified passive income" and your
creditable foreign taxes paid or accrued during the taxable year do not exceed
$300 ($600 in the case of a joint return). Further, you may not be allowed a
foreign tax credit for foreign taxes imposed on dividends paid on common shares
if you (1) have held common shares for less than a specified minimum period
during which you are not protected from risk of loss, (2) are obligated to make
payments related to the dividends or (3) hold the common shares in an
arrangement in which your expected economic profit, after non-U.S. taxes, is
insubstantial. 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.
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 to you, causing a reduction in the
adjusted basis of your 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). The balance in excess of your adjusted basis
will be taxed to you as capital gain recognized on a sale or exchange.
Consequently, such distributions in excess of our current and accumulated
earnings and profits would not give rise to foreign source income and you would
not be able to use the foreign tax credit arising from any Canadian withholding
tax imposed on such distributions unless such credit can be applied (subject to
applicable limitations) against U.S. tax you owe on other foreign source income
in the appropriate category for foreign tax purposes.
TAXATION OF CAPITAL GAINS
When you sell, exchange or otherwise dispose of a common share, you will
recognize gain or loss equal to the difference between the amount you receive
and your basis in the common share. Your gain or loss will generally be treated
as United States source gain or loss and will be capital gain or loss. If you
are an individual and the common share being sold, exchanged or otherwise
disposed of is a capital asset held for more than one year, you may be eligible
for reduced rates of taxation on any capital gain recognized. Your ability to
deduct capital losses is subject to limitations.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Unless you are an exempt recipient such as a corporation, payments on the
common shares and the proceeds received with respect to the sale of common
shares may be subject to information reporting and may also be subject to U.S.
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 U.S. information reporting or certification requirements. Any amounts
so withheld will be allowed as a credit against your U.S. federal income tax
liability.
28
<PAGE> 31
CANADIAN INCOME TAX CONSEQUENCES
INTRODUCTION
In the opinion of Goodman Phillips & Vineberg, our Canadian counsel, the
following is an accurate summary of Canadian federal income tax considerations
under the Income Tax Act(Canada) (the "Act") generally applicable to holders of
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 common shares. This summary is only
applicable to you if the common shares are not "taxable Canadian property", as
defined in the Act, and you do not use or hold or are not deemed to use or hold
common shares in connection with carrying on a business in Canada.
Generally, the common shares will not be taxable Canadian property provided
that they 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, those common shares in connection with
carrying on a business in Canada and that you, persons with whom you do not deal
at arm's length or you and those persons, have not owned (taking into account
any interest in or option in respect of the common shares) 25% or more of the
issued shares of any class or series of our capital stock at any time within
five years 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 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 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
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 advisors 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 U.S. dollars must be
converted into Canadian dollars based on the U.S. dollar exchange rate generally
prevailing at the time such amounts arise.
TAXATION OF DIVIDENDS
Where you receive or are deemed to receive a dividend, it will generally be
subject to Canadian withholding tax under the Convention at the rate of 15%,
provided you are the beneficial owner of such payment.
SALE OR DISPOSITION
You will not be subject to tax under the Act upon the sale or other
disposition of the common shares.
29
<PAGE> 32
VALIDITY OF COMMON SHARES
Simpson Thacher & Bartlett, our U.S. counsel, will provide an opinion for
us regarding the registration of the common shares under the Securities Act of
1933. Goodman Phillips & Vineberg S.E.N.C., our Canadian counsel, will provide
opinions for us regarding the validity of the common shares. The Underwriters
are being advised as to U.S. matters by Sullivan & Cromwell, U.S. counsel for
those underwriters. Ogilvy Renault S.E.N.C., Canadian counsel for the
underwriters, will pass upon the validity of the common shares for those
underwriters.
EXPERTS
Our consolidated financial statements as of June 30, 1997 and 1998 and for
the year ended January 31, 1996, the five-month transition period ended June 30,
1996 and the years ended June 30, 1997 and 1998, incorporated in this prospectus
by reference to our Annual Report on Form 10-K for the fiscal year ended June
30, 1998, as amended, have been so incorporated in reliance on the report of
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 our 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
We file 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 us 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 operation of the
SEC's Public Reference Rooms. Our SEC filings are also available to the public
on the SEC's Internet site (http://www.sec.gov).
We have filed 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 we filed with the SEC. The information
incorporated by reference is an important part of this prospectus, and
information that we file later with the SEC will automatically update and
supersede this information. We incorporate by reference the
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<PAGE> 33
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.
- our Annual Report on Form 10-K for the fiscal year ended June 30, 1998,
as amended,
- our Quarterly Reports on Form 10-Q for the quarterly periods ended
September 30, 1998, December 31, 1998 and March 31, 1999,
- our 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 our filings (other than exhibits) at no cost, by
writing or telephoning SCL at 1430 Peel Street, Montreal, Quebec H3A 1S9,
telephone (514) 849-5271, attention: Shareholder Services.
JURISDICTION OVER SEAGRAM
We are a Canadian corporation and certain of our directors and officers and
the experts referred to above are citizens or residents of countries other than
the United States. A substantial portion of our assets and of those persons are
located outside the United States. Accordingly, it may be difficult for
investors:
- to obtain jurisdiction over us and those directors and officers and
experts in courts in the United States in actions predicated on the civil
liability provision of the U.S. federal securities,
- to enforce against us or those persons judgments obtained in such
actions,
- to obtain judgments against us 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 us or those persons in Canadian or other foreign
courts judgments of courts in the United States predicated upon the civil
liability provision of the U.S. federal securities laws.
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.
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<PAGE> 34
UNDERWRITING
Seagram, the selling shareholders and the underwriters for the U.S.
offering (the "U.S. underwriters") named below have entered into an underwriting
agreement with respect to the shares being offered. Subject to certain
conditions, each U.S. underwriter has severally agreed to purchase the number of
shares indicated in the following table. Goldman, Sachs & Co., Bear, Stearns &
Co. Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley &
Co. Incorporated, Credit Suisse First Boston Corporation, PaineWebber
Incorporated, Salomon Smith Barney Inc. and Blaylock & Partners, L.P. are the
representatives of the U.S. underwriters.
<TABLE>
<CAPTION>
Number of
U.S. Underwriters Shares
----------------- ----------
<S> <C>
Goldman, Sachs & Co. .......................................
Bear, Stearns & Co. Inc. ...................................
Merrill Lynch, Pierce, Fenner & Smith Incorporated..........
Morgan Stanley & Co. Incorporated...........................
Credit Suisse First Boston Corporation......................
PaineWebber Incorporated....................................
Salomon Smith Barney Inc....................................
Blaylock & Partners, L.P. ..................................
----------
Total................................... 26,000,000
==========
</TABLE>
If the U.S. underwriters sell more shares than the total number set forth
in the table above, the U.S. underwriters have an option to buy up to an
additional 3,900,000 shares from Seagram to cover such sales. They may exercise
that option for 30 days. If any shares are purchased pursuant to this option,
the U.S. underwriters will severally purchase shares in approximately the same
proportion as set forth in the table above.
The following tables show the per share and total underwriting discounts
and commissions to be paid to the U.S. underwriters by Seagram and the selling
shareholders. These amounts are shown assuming both no exercise and full
exercise of the U.S. underwriters' option to purchase 3,900,000 additional
shares.
<TABLE>
<CAPTION>
Paid by Seagram
----------------------------
No Exercise Full Exercise
----------- -------------
<S> <C> <C>
Per Share............ $ $
Total................ $ $
</TABLE>
<TABLE>
<CAPTION>
Paid by the Selling
Shareholders
----------------------------
No Exercise Full Exercise
----------- -------------
<S> <C> <C>
Per Share............ $ $
Total................ $ $
</TABLE>
Shares sold by the U.S. underwriters to the public will initially be
offered at the initial price to public set forth on the cover of this
prospectus. Any shares sold by the U.S. underwriters to securities dealers may
be sold at a discount of up to $ per share from the initial price to
public. Any such securities dealers may resell any shares purchased from the
underwriters to certain other brokers or dealers at a discount of up to $
per share from the initial price to public. If all the shares are not sold at
the initial price to public, the representatives may change the offering price
and the other selling terms.
Seagram and the selling shareholders have entered into an underwriting
agreement with underwriters for the sale of common shares internationally.
Seagram has also entered into an underwriting agreement with underwriters for
the sale of common shares in Canada. The terms and conditions of this offering
and of the concurrent Canadian and international offerings are substantially the
same and the sale of common shares in all three offerings are conditioned on
each other. Goldman Sachs International, Bear, Stearns International Limited,
Merrill Lynch International and Morgan Stanley & Co.
U-1
<PAGE> 35
International Limited are representatives of the underwriters for the
international offering and Goldman Sachs Canada, CIBC World Markets Inc., RBC
Dominion Securities Inc. and Nesbitt Burns Inc. are underwriters for the
Canadian offering.
The underwriters for all three offerings have entered into agreements in
which they have agreed to restrictions on where and to whom they and any dealer
purchasing from them may offer common shares as a part of the distribution of
the common shares. The underwriters have also agreed that they may sell common
shares among each of the underwriting groups.
Seagram and the selling shareholders have agreed with the underwriters not
to dispose of or hedge any of their common shares (other than the common shares
offered in the common share offerings) or securities convertible into or
exchangeable for common shares (other than the units offered in the unit
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 stock plans.
In connection with this offering, the underwriters may purchase and sell
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
shares 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 common shares while
the offering 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 representatives have repurchased common
shares 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 common shares. As a result, the price of 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 New York
Stock Exchange, in the over-the-counter market or otherwise.
Seagram estimates that the total expenses of this offering, excluding
underwriting discounts and commissions, will be approximately $1.2 million.
Seagram has 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 Seagram and
have received customary compensation for those services. John S. Weinberg, a
Managing Director of Goldman, Sachs & Co., and Matthew W. Barrett, Chairman of a
Canadian chartered bank affiliated with an underwriter for the Canadian
offering, are also directors of Seagram.
This prospectus may be used by the underwriters and other dealers in
connection with offers and sales of the shares, including sales of shares
initially sold by the underwriters in the international and Canadian offerings,
to persons located in the United States.
U-2
<PAGE> 36
------------------------------------------------------
------------------------------------------------------
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................... 2
Description of Seagram............... 6
Use of Proceeds...................... 11
Price Range of Common Shares......... 11
Capitalization....................... 12
Selected Historical Consolidated
Financial Data..................... 13
Management's Discussion and Analysis
of Selected Historical Consolidated
Financial Data and Supplemental
Financial Information.............. 15
The Selling Shareholders............. 24
Description of Share Capital......... 25
U.S. Federal Income Tax
Considerations for U.S. Persons.... 27
Canadian Income Tax Consequences..... 29
Validity of Common Shares............ 30
Experts.............................. 30
Where You Can Find More
Information........................ 30
Jurisdiction Over Seagram............ 31
Disclosure Regarding Forward-Looking
Information........................ 31
Underwriting......................... U-1
</TABLE>
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
37,000,000 Shares
THE SEAGRAM COMPANY LTD.
Common Shares
-------------------------
[SEAGRAM LOGO]
-------------------------
GOLDMAN, SACHS & CO.
BEAR, STEARNS & CO. INC.
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
CREDIT SUISSE FIRST BOSTON
PAINEWEBBER INCORPORATED
SALOMON SMITH BARNEY
BLAYLOCK & PARTNERS, L.P.
Representatives of the Underwriters
------------------------------------------------------
------------------------------------------------------
<PAGE> 37
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............... $ 639,400
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
Transfer Agent and Registrar fees and expenses.............. 25,000
Miscellaneous............................................... 35,600
----------
Total.................................................. $1,400,000
==========
</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).
(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
II-1
<PAGE> 38
(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."
The directors and officers of the Registrant 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 Registrant.
II-2
<PAGE> 39
ITEM 16. LIST OF EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<C> <C> <S>
1* -- Form of Underwriting Agreement.
4(a) -- 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).
(b) -- 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).
(c)*** -- Form of The Seagram Company Ltd. common share certificate.
5*** -- Opinion and Consent of Goodman Phillips & Vineberg S.E.N.C.
12*** -- Computation of ratio of earnings to fixed charges.
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)*** -- Consent of Goodman Phillips & Vineberg S.E.N.C. is included
in its opinion filed as Exhibit 5.
24*** -- Power of Attorney.
</TABLE>
- ---------------
* Filed herewith.
*** Previously filed.
ITEM 17. UNDERTAKINGS.
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 purposes 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 Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has 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
II-3
<PAGE> 40
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 policy as expressed in the
Securities Act and will be governed by the final adjudication of
such issue.
(4) The prospectus will reflect 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-4
<PAGE> 41
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.
<TABLE>
<C> <S>
Principal Executive Officer:
* Director, President and Chief Executive
- --------------------------------------------------- Officer
(Edgar Bronfman, Jr.)
Principal Financial Officer and Agent
for Service:
* Director, Vice Chairman and Chief Financial
- --------------------------------------------------- Officer
(Robert W. Matschullat)
Principal Accounting Officer:
* Director, Vice Chairman and Chief Financial
- --------------------------------------------------- Officer
(Robert W. Matschullat)
</TABLE>
II-5
<PAGE> 42
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 and the Post-Effective Amendments 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-6
<PAGE> 43
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<S> <C> <C>
1* -- Form of Underwriting Agreement.
4(a) -- 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).
(b) -- 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).
(c)*** -- Form of The Seagram Company Ltd. common share certificate.
5*** -- Opinion and Consent of Goodman Phillips & Vineberg S.E.N.C.
12*** -- Computation of ratio of earnings to fixed charges.
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)*** -- The consent of Goodman Phillips & Vineberg S.E.N.C. is
included in its opinion filed as Exhibit 5.
24*** -- Power of Attorney.
</TABLE>
- ---------------
* Filed herewith.
*** Previously filed.
<PAGE> 1
THE SEAGRAM COMPANY LTD.
COMMON SHARES
U.S. Underwriting Agreement
June -, 1999
Goldman, Sachs & Co.
Bear, Stearns & Co. Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
PaineWebber Incorporated
Salomon Smith Barney Inc.
Blaylock & Partners L.P.
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 issue and sell
to the Underwriters named in Schedule I hereto (the "Underwriters") an aggregate
of 19,000,000 common shares and, at the election of the Underwriters, up to
2,850,000 additional common shares of the Company, and the shareholders of the
Company named in Schedule II hereto (the "Selling Shareholders") propose,
subject to the terms and conditions stated herein, to sell to the Underwriters
an aggregate of 7,000,000 common shares. The aggregate of 26,000,000 common
shares to be sold by the Company and the Selling Shareholders is herein called
the "Firm Shares", and the aggregate of 2,850,000 additional common shares to be
sold by the Company is herein called the "Optional Shares". The Firm Shares and
the Optional Shares that the Underwriters elect to purchase pursuant to Section
2 hereof are herein collectively called the "Shares".
It is understood and agreed to by all parties that (i) the Company
is concurrently entering into an agreement (the "Canadian Underwriting
Agreement") providing for the sale
1
<PAGE> 2
by the Company of up to a total of 8,625,000 common shares (the "Canadian
Shares"), including the overallotment option thereunder, through arrangements
with certain underwriters in Canada (the "Canadian Underwriters"), for whom
Goldman Sachs Canada, CIBC World Markets Inc., RBC Dominion Securities Inc. and
Nesbitt Burns Inc. are acting as lead managers, and (ii) the Company and the
Selling Shareholders are concurrently entering into an agreement (the
"International Underwriting Agreement") providing for the sale by the Company
and the Selling Shareholders of up to a total of 4,025,000 common shares (the
"International Shares"), including the overallotment option thereunder, through
arrangements with certain underwriters outside the United States and Canada (the
"International Underwriters"), for whom Goldman Sachs International, Bear,
Stearns International, Merrill Lynch International and Morgan Stanley & Co.
International Limited are acting as representatives of the International
Underwriters. Anything herein to the contrary notwithstanding, the respective
closings under this Agreement, the Canadian Underwriting Agreement and the
International Underwriting Agreement are hereby expressly made conditional on
one another. The Underwriters hereunder, the Canadian Underwriters and the
International Underwriters are simultaneously entering into an Agreement among
U.S., Canadian and International Underwriting Syndicates (the "Agreement among
Syndicates") which provides, among other things, for the transfer of common
shares among the three syndicates. Four forms of prospectus are to be used in
connection with the offering and sale of common shares contemplated by the
foregoing, one relating to the Shares hereunder and two (one French and one
English language version) relating to the Canadian Shares and one relating to
the International Shares. The form of prospectus relating to the International
Shares will be substantially identical to the prospectus relating to the Shares,
except for certain substitute pages. Except as used in Sections 2, 3, 4, 9 and
11 herein, and except as the context may otherwise require, references
hereinafter to the Shares shall include all the common shares which may be sold
pursuant to either this Agreement, the Canadian Underwriting Agreement or the
International Underwriting Agreement.
1. (a) The Company represents and warrants to, and agrees with, each of
the Underwriters that:
(i) A registration statement on Form S-3 (File No. 333-78393) (the
"Initial Registration Statement") in respect of the 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, no other
document with respect to the Initial Registration Statement or document
incorporated by reference therein has heretofore been filed 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
2
<PAGE> 3
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 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 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 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).
(ii) 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 or
by a Selling Shareholder expressly for use in the preparation of the
answers therein to Item 7 of Form S-3.
(iii) 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
3
<PAGE> 4
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 Shares is required
to be delivered in connection with sales of such Shares 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 or by a Selling Shareholder
expressly for use in the preparation of the answers therein to Item 7
of Form S-3.
(iv) The Registration Statement, as of its effective date,
conforms, 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 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 or by a Selling Shareholder expressly for use in the
preparation of the answers therein to Item 7 of Form S-3.
(v) 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
4
<PAGE> 5
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;
(vi) 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
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.;
(vii) All of the issued shares of capital stock of the Company have
been duly and validly authorized and issued, and are fully paid and
non-assessable; and all of the 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 the outstanding
shares of each of PolyGram N.V. and Universal Studios, Inc.;
(viii) The unissued Shares to be issued and sold by the Company to
the Underwriters hereunder, under the Canadian Underwriting Agreement
and under the International Underwriting Agreement have been duly
authorized and, when issued and delivered against payment therefor as
provided herein, will be duly and validly issued and fully paid and
non-assessable and will conform to the description of the common shares
of the Company contained in the Prospectus;
(ix) The issue and sale of the Shares to be sold by the Company
hereunder, under the Canadian Underwriting Agreement and under the
International Underwriting Agreement and the compliance by the Company
with all of the provisions of this Agreement, the Canadian Underwriting
Agreement and the International Underwriting Agreement and the
consummation 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
creation or imposition of any material lien, charge and encumbrance
upon any of the property or assets of the Company or any of its
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
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 Articles of
Amalgamation 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 having jurisdiction over the Company or any of its subsidiaries or
any of
5
<PAGE> 6
their respective properties; and no consent, approval, authorization,
order, registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the
Shares or the consummation by the Company of the transactions
contemplated by this Agreement, the Canadian Underwriting Agreement and
the International Underwriting Agreement, except the registration under
the Act of the Shares and such consents, approvals, 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 Shares by the Underwriters,
the Canadian Underwriters and the International Underwriters;
(x) Other than as set forth in the Prospectus, in the international
prospectus or in the Canadian prospectuses, 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 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
(xi) 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.
(b) Each of the Selling Shareholders represents and warrants to,
and agrees with, each of the Underwriters and the Company that:
(i) All consents, approvals, authorizations and orders necessary
for the execution and delivery by such Selling Shareholder of this
Agreement, the International Underwriting Agreement and the Power of
Attorney hereinafter referred to, and for the sale and delivery of the
Shares to be sold by such Selling Shareholder hereunder and under the
International Underwriting Agreement, have been obtained; and such
Selling Shareholder has full right, power and authority to enter into
this Agreement, the International Underwriting Agreement and the Power
of Attorney and to sell, assign, transfer and deliver the Shares to be
sold by such Selling Shareholder hereunder and under the International
Underwriting Agreement;
(ii) The sale of the Shares to be sold by such Selling Shareholder
hereunder and under the International Underwriting Agreement and the
compliance by such Selling Shareholder with all of the provisions of
this Agreement, the International Underwriting Agreement and the Power
of Attorney 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 statute, indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which such Selling Shareholder is a
party or by which such Selling Shareholder is bound, or to which any of
the property or assets of such Selling Shareholder is subject, nor will
such action result
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<PAGE> 7
in any violation of the provisions of any statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over such Selling Shareholder or the property of such
Selling Shareholder;
(iii) Such Selling Shareholder has, and immediately prior to the
Time of Delivery (as defined in Section 4 hereof) such Selling
Shareholder will have, good and valid title to the Shares to be sold by
such Selling Shareholder hereunder, and under the International
Underwriting Agreement, free and clear of all liens, encumbrances,
equities or claims; and, upon delivery of such Shares and payment
therefor pursuant hereto and thereto, good and valid title to such
Shares, free and clear of all liens, encumbrances, equities or claims,
will pass to the several Underwriters or the International
Underwriters, as the case may be;
(iv) During the period beginning from the date hereof and
continuing to and including the date 90 days after the date of the
Prospectus, such Selling Shareholder will not offer, sell, contract to
sell or otherwise dispose of, except as provided hereunder or under the
International Underwriting Agreement or as otherwise disclosed in the
Prospectus, any securities of the Company that are substantially
similar to the Shares, including but not limited to any securities that
are convertible into or exchangeable for, or that represent the right
to receive, common shares of the Company or any such substantially
similar securities (other than (A) upon the conversion or exchange of
convertible or exchangeable securities outstanding as of the date of
this Agreement or (B) to a Bronfman Trust Permitted Transferee (as such
term is defined in Schedule III hereto) which has entered into
agreements, in form and substance satisfactory to the Underwriters and
their counsel, to abide by the provisions of this Section 1(b)(iv)),
without the prior written consent of Goldman, Sachs & Co.;
(v) Such Selling Shareholder has not taken and will not take,
directly or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares;
(vi) To the extent that any statements or omissions made in the
Registration Statement, the Prospectus or any amendment or supplement
thereto are made in reliance upon and in conformity with written
information furnished to the Company by such Selling Shareholder
expressly for use therein, the Registration Statement did, and the
Prospectus and any further amendments or supplements to the
Registration Statement and the Prospectus, when they become effective
or are filed with the Commission, as the case may be, will, insofar as
such statements are concerned, conform in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder and will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading insofar as such
statements are concerned;
(vii) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, such Selling Shareholder will
7
<PAGE> 8
deliver to you prior to or at the First Time of Delivery (as
hereinafter defined) a properly completed and executed United States
Treasury Department Form W-8 or W-9 (or other applicable form or
statement specified by Treasury Department regulations in lieu
thereof);
(viii) Such Selling Shareholder has duly executed and delivered a
Power of Attorney, in the form agreed to by the Underwriters, the
Company and the Selling Shareholders (the "Power of Attorney"),
appointing the persons indicated in Schedule II hereto, and each of
them, as such Selling Shareholder's attorneys-in-fact (the
"Attorneys-in-Fact") with authority to execute and deliver this
Agreement and the International Underwriting Agreement on behalf of
such Selling Shareholder, to determine the purchase price to be paid by
the several Underwriters and the International Underwriters to the
Selling Shareholder as provided in Section 2 hereof, to authorize the
delivery of the Shares to be sold by such Selling Shareholder hereunder
and otherwise to act on behalf of such Selling Shareholder in
connection with the transactions contemplated by this Agreement and the
International Underwriting Agreement; and
(ix) The appointments by such Selling Shareholder of the
Attorneys-in-Fact by the Power of Attorney for purposes of the
offerings contemplated in this Agreement and the International
Underwriting Agreement are irrevocable; the obligations of the Selling
Shareholder hereunder shall not be terminated by operation of law,
whether by the death or incapacity of any individual Selling
Shareholder or, in the case of an estate or trust, by the death or
incapacity of any executor or trustee or the termination of such estate
or trust, or in the case of a partnership or corporation, by the
dissolution of such partnership or corporation, or by the occurrence of
any other event; if any individual Selling Shareholder or any such
executor or trustee should die or become incapacitated, or if any such
estate or trust should be terminated, or if any such partnership or
corporation should be dissolved, or if any other such event should
occur, before the delivery of the Shares hereunder, certificates
representing the Shares shall be delivered by or on behalf of the
Selling Shareholder in accordance with the terms and conditions of this
Agreement and of the International Underwriting Agreement; and actions
taken by the Attorneys-in-Fact pursuant to the Powers of Attorney shall
be as valid as if such death, incapacity, termination, dissolution or
other event had not occurred, regardless of whether or not the
Attorneys-in-Fact, or any of them, shall have received notice of such
death, incapacity, termination, dissolution or other event.
2. Subject to the terms and conditions herein set forth, (a) the
Company and each of the Selling Shareholders agrees, severally and not jointly,
to sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company and each of the Selling
Shareholders, at a purchase price per share of $ __, the number of Firm Shares
(to be adjusted by you so as to eliminate fractional shares) determined by
multiplying the aggregate number of Firm Shares to be sold by the Company and
each of the Selling Shareholders as set forth opposite their respective names in
Schedule II hereto by a fraction, the numerator of which is the aggregate number
of Firm Shares to be purchased by such Underwriter as set forth opposite the
name of such Underwriter in Schedule I hereto and the denominator of which is
the aggregate number
8
<PAGE> 9
of Firm Shares to be purchased by all of the Underwriters from the Company and
each of the Selling Shareholders hereunder, and (b) in the event and to the
extent that the Underwriters shall exercise the election to purchase Optional
shares as provided below, the Company agrees to sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not jointly, to
purchase from the Company, at the purchase price per share set forth in clause
(a) of this Section 2, that portion of the number of Optional Shares as to which
such election shall have been exercised (to be adjusted by you so as to
eliminate fractional shares) determined by multiplying such number of Optional
Shares by a fraction the numerator of which is the maximum number of Optional
Shares which such Underwriter is entitled to purchase as set forth opposite the
name of such Underwriter in Schedule I hereto and the denominator of which is
the maximum number of Optional Shares that all of the Underwriters are entitled
to purchase hereunder.
The Company, to the extent indicated in Schedule II hereto, hereby
grants to the Underwriters the right to purchase at their election up to
2,850,000 Optional Shares, at the purchase price per share set forth in the
paragraph above, for the sole purpose of covering sales in excess of the number
of Firm Shares. Any such election to purchase Optional Shares may be exercised
only by written notice from you to the Company, given within a period of 30
calendar days after the date of this Agreement and setting forth the aggregate
number of Optional Shares to be purchased and the date on which such Optional
Shares 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 and
the Attorneys-in-Fact otherwise agree in writing, no earlier than two or later
than ten business days after the date of such notice.
3. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth herein or in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as Goldman, Sachs & Co. may request upon at least forty-eight hours' prior
notice to the Company and each of the Selling Shareholders shall be delivered by
or on behalf of the Company and each of the Selling Shareholders to Goldman,
Sachs & Co., including at the option of Goldman, Sachs & Co., through the
facilities of The Depository Trust Company ("DTC"), for the account of such
Underwriter, against payment by or on behalf of such Underwriter of the purchase
price therefor by wire transfer of Federal (same-day) funds to the account
specified by the Company and each of the Selling Shareholders to Goldman, Sachs
& Co. at least forty-eight hours in advance. The Company and the Selling
Shareholders will cause the certificates representing the Shares to be made
available for checking and packaging at least twenty-four hours prior to the
Time of Delivery (as defined below) with respect thereto 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 Shares, 10:00 a.m., New
York City time, on June __, 1999 or such other time and date as Goldman, Sachs &
Co., the Company and the Selling Shareholders may agree upon in writing, and,
with respect to the Optional Shares, 10:00 a.m., New York City time, on the date
specified by Goldman, Sachs & Co. in the written notice given by Goldman, Sachs
& Co. of the Underwriter's election to purchase such Optional Shares, or
9
<PAGE> 10
such other time and date as Goldman, Sachs & Co. and the Company may agree upon
in writing. Such time and date for delivery of the Firm Shares is herein called
the "First Time of Delivery", such time and date for delivery of the Optional
Shares, 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 Shares 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 Shares 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. The Company agrees with each of the Underwriters:
(a) 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 Shares; to advise you, promptly after it receives notice thereof,
of the issuance by the Commission of any stop order or of any order preventing
or suspending the use of any Preliminary Prospectus or prospectus, of the
suspension of the qualification of the Shares for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or supplementing
of the Registration Statement or Prospectus or for additional information; and,
in the event of the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or prospectus or suspending any
such qualification, promptly to use its best efforts to obtain the withdrawal of
such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under the
securities laws of such 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
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<PAGE> 11
as may be necessary to complete the distribution of the Shares, provided that in
connection therewith the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction;
(c) 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 Shares 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 or the Exchange 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 Shares 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;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the effective
date of the Registration Statement, 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);
(e) 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, under the Canadian Underwriting
Agreement and under the International Underwriting Agreement, any securities of
the Company that are substantially similar to the Shares, including but not
limited to any securities that are convertible into or exchangeable for, or that
represent the right to receive, common shares of the Company 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;
(f) To use the net proceeds received by it from the sale of the
Shares pursuant to this Agreement, the Canadian Underwriting Agreement and the
International
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<PAGE> 12
Underwriting Agreement in the manner specified in the Prospectus under the
caption "Use of Proceeds";
(g) To use its best efforts to list, subject to notice of issuance,
the Shares on the New York Stock Exchange (the "Exchange"); and
(h) If the Company elects to rely upon Rule 462(b), the Company
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 the Company shall 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.
6. The Company covenants and agrees with the several Underwriters that
the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares 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 International Underwriting
Agreement, the Agreement among Syndicates, the Selling Agreements, the Blue Sky
Memorandum, if any, and any other documents in connection with the offering,
purchase, sale and delivery of the Shares; (iii) all expenses in connection with
the qualification of the Shares for offering and sale under state securities
laws as provided in Section 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 Shares on the New York Stock Exchange;
(v) the cost of preparing stock certificates and (vi) the cost and charges of
any transfer agent or registrar; and all other costs and expenses incident to
the performance of its obligations hereunder which are not otherwise
specifically provided for in this Section. Each Selling Shareholder will pay or
cause to be paid all costs and expenses incident to the performance of such
Selling Shareholder's obligations hereunder which are not otherwise specifically
provided for in this Section, including (i) any fees and expenses of counsel for
such Selling Shareholder, (ii) such Selling Shareholder's pro rata share of the
fees and expenses of the Attorneys-in-Fact and the Custodian and (iii) any taxes
incident to the sale and delivery of the Shares to be sold by such Selling
Shareholder to the Underwriters hereunder. In connection with clause (c) (iii)
of the preceding sentence, Goldman, Sachs & Co. agrees to pay any New York State
stock transfer tax, and each of the Selling Shareholders agrees to reimburse
Goldman, Sachs & Co. for associated carrying costs if such tax payment is not
rebated on the day of payment and for any portion of such tax payment not
rebated. It is understood, however, that the Company shall bear, and the Selling
Shareholder shall not be required to pay or to reimburse the Company for, the
cost of any other matters not directly relating to the sale and purchase of the
Shares 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, stock transfer taxes on
resale of any of the Shares by them, and any advertising expenses connected with
any offers they may make.
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<PAGE> 13
7. The obligations of the Underwriters hereunder, as to the Shares 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 of the Selling Shareholders herein are, at and as of such Time
of Delivery, true and correct, the condition that the Company and each of the
Selling Shareholders shall have performed all of its and their 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 the matters, in the case of Ogilvy Renault
covered in paragraphs (iii) and (vii) of subsection (d) below, and, in
the case of Sullivan & Cromwell, in respect of the Registration
Statement and the Prospectus as well as 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 Ogilvy Renault
S.E.N.C. described above and 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 an 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, on 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 or 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
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<PAGE> 14
Indiana; and each of J.E. Seagram Corp., JES Developments, Inc. and
Universal Studios, Inc. has been duly incorporated and is validly
existing as a corporation 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, 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; and 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
the Company, 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, are to the knowledge of
such counsel, owned free and clear of any adverse claim;
(iii) To such counsel's knowledge and other than as set forth
or contemplated in the Prospectus, there are no legal or governmental
proceedings pending to which the Company or any of its subsidiaries is
a party or of which any property of the Company or any of its
subsidiaries is the subject 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) The issue and sale of the Shares being delivered at such
Time of Delivery to be sold by the Company and the compliance by the
Company with all of the provisions of this Agreement and the
International 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 bound or to which
any of the property or assets of the Company or any of its subsidiaries
is subject, nor, 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;
(v) 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
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<PAGE> 15
required for the issue and the sale by the Company of the Shares or the
compliance by the Company with the provisions of this Agreement and the
International Underwriting Agreement, except such that have been
obtained or made under the 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 Shares by the Underwriters and the
International Underwriters;
(vi) The Company is not an "investment company", within the
meaning of the Investment Company Act of 1940, as amended;
(vii) 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; and
(viii) 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. 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 prior to such Time of Delivery, as of its
respective effective date, and the Prospectus and any amendment or
supplement thereto 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 necessary to make the
15
<PAGE> 16
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 prior to such Time of Delivery (including the
documents incorporated by reference therein), contains any untrue
statement of a material fact or omits to state any material fact
necessary to make the statements therein, in light of the circumstances
in which the statements were made, 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 (including the
documents incorporated by reference therein) 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
actions or proceedings such that all of the issued common
shares of the Company (including the Shares being delivered at
such Time of Delivery), have been duly and validly authorized
and issued as fully paid and non-assessable; and the Shares
conform to the description of the Common shares contained in
the Prospectus;
(iv) 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
16
<PAGE> 17
subsidiaries taken as a whole; and to such counsel's
knowledge, no such proceedings have been threatened by
governmental authorities or by others;
(v) This Agreement and the International Underwriting
Agreement have been duly authorized, executed and delivered by
the Company;
(vi) The issue and sale of the Shares being delivered
at such Time of Delivery to be sold by the Company and the
compliance by the Company with all of the provisions of this
Agreement and the International 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 result in
any violation of the provisions of the charter documents, as
amended, or the by-laws of the Company or, with respect to
Canada or the Province of Quebec, 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;
(vii) 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,
nor is any consent, approval, authorization, order,
registration or qualification of or with any court or
governmental agency or body of Canada or the Province of
Quebec required, for the issue and sale outside Canada of the
Shares, other than those which have been obtained or made;
(viii) 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
Shares;
(ix) 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 and the International
Underwriting 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
(x) 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
17
<PAGE> 18
Registration Statements, the Prospectus or any documents
incorporated by reference in the Prospectus 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 (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, as of such Time of Delivery, the
Prospectus or any amendment or supplement thereto made by the
Company prior to such Time of Delivery (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 to make the statements
therein, in light of circumstances under which the statements
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 this Agreement or the International Underwriting 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 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) Goodman Philips & Vineberg (New York), relying on the
opinions of Goodman Philips & Vineberg S.E.N.C., Bergman Horowitz
Reynolds and Chancery Chambers, counsel for each of the Selling
Shareholders, together with the local counsel for each of the Selling
Shareholders as indicated in Schedule II hereto, shall have furnished
to you their written opinion with respect to each of the Selling
Shareholders, dated the First Time of Delivery, in form and substance
satisfactory to you (such counsel being entitled to rely, as to all
matters of law other than United States federal or the laws of the
States of the United States solely upon the opinion
18
<PAGE> 19
of such local counsel) (such counsel also being entitled to rely, as to
matters of fact, upon certificates of officers of each Selling
Shareholder, provided that such counsel shall sate that they believe
both they and you are justified in relying thereon), to the effect
that:
(i) A Power of Attorney has been duly executed and
delivered by such Selling Shareholder and constitutes a valid
and binding instrument of such Selling Shareholder in
accordance with its terms;
(ii) This Agreement and the International Underwriting
Agreement have been duly executed and delivered by or on
behalf of such Selling Shareholder; and the sale of the Shares
to be sold by such Selling Shareholder hereunder and
thereunder and the compliance by such Selling Shareholder with
all of the provisions of this Agreement, the International
Underwriting Agreement and the Power of Attorney will not
conflict with or result in a breach or violation of any terms
or provisions of, or constitute a default under, any statute,
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel to which such
Selling Shareholder is a party or by which such Selling
Shareholder is bound, or to which any of the property or
assets of such Selling Shareholder is subject, nor will such
action result in any violation of the provisions of any order,
rule or regulation known to such counsel of any court or
governmental agency or body having jurisdiction over such
Selling Shareholder or the property of such Selling
Shareholder;
(iii) No consent, approval, authorization or order of
any court or governmental agency or body is required by the
Selling Shareholders for the consummation of the transactions
contemplated by this Agreement and the International
Underwriting Agreement in connection with the Shares to be
sold by such Selling Shareholder hereunder or thereunder,
except, in each case, as has been duly obtained and is in full
force and effect, such as have been obtained under the Act and
such as may be required under state or foreign securities or
Blue Sky laws in connection with the purchase and distribution
of such Shares by the Underwriters or the International
Underwriters;
(iv) Immediately prior to the First Time of Delivery
such Selling Shareholder had good and valid title to the
Shares to be sold at the Time of Delivery by such Selling
Shareholder under this Agreement and the International
Underwriting Agreement, free and clear of all liens,
encumbrances, equities or claims, and full right, power and
authority to sell, assign, transfer and deliver the Shares to
be sold by such Selling Shareholder hereunder and thereunder;
and
(v) Assuming that the Underwriters or the
International Underwriters, as the case may be, purchase the
Securities to be sold by such Selling Shareholder to the
Underwriters at the First Time of Delivery for value and
without notice of any "adverse claim" (as defined in Section
8- 102 of the UCC), upon the crediting of the Underwriters' or
International
19
<PAGE> 20
Underwriters' accounts with such Shares in the records of DTC,
Cede & Co. or such other nominee designated by DTC will
acquire all rights that such Selling Shareholder had in the
Shares and will be a "protected purchaser" of such Shares (as
defined in Section 8-303) of the UCC), the Underwriters or the
International Underwriters, as the case may be, will acquire a
valid "security entitlement" (within the meaning of Section
8-501 of the UCC) to such Shares, and no action based on an
"adverse claim" (as defined in Section 8-102 of the UCC) may
be asserted against the Underwriters or the International
Underwriters, as the case may be, with respect to such
security entitlement.
In rendering such opinion, such counsel may state that they express no
opinion as to the laws of any jurisdiction in which they are not qualified to
practice, including, without limitation, with respect to Canadian counsel, any
jurisdiction outside the Province of Quebec (except as to Canadian federal laws
applicable therein) and with respect to United States counsel, any jurisdiction
outside or the United States, as the case may be, and in rendering the opinion
in subparagraph (iv) such counsel may rely upon a certificate of such Selling
Shareholder in respect of matters of fact as to ownership of, and liens,
encumbrances, equities or claims on the Shares sold by such Selling Shareholder,
provided that such counsel shall state that they believe that both you and they
are justified in relying upon such certificate;
(f) On the date of the Prospectus at a time prior to the
execution of this Agreement, at 10:00 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;
(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 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
20
<PAGE> 21
offering or the delivery of the Shares 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 New York Stock Exchange; (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 Shares on the terms and in the manner contemplated in
the Prospectus;
(i) The Shares to be sold by the Company and each of the
Selling Shareholders at the Time of Delivery shall have been duly
listed, subject to notice of issuance, on the New York Stock Exchange;
(j) The Company has obtained and delivered to the Underwriters
executed copies of an agreement from certain shareholders of the
Company set forth on Schedule IV hereto to the effect set forth in
subsection 1(b)(iv) hereof in form and substance satisfactory to you;
(k) 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;
(l) The Company and each of the Selling Shareholders shall
have furnished or caused to be furnished to you at such Time of
Delivery certificates of officers of the Company and each of the
Selling Shareholders, respectively, satisfactory to you as to the
accuracy of the representations and warranties of the Company and each
of the Selling Shareholders, respectively, herein at and as of such
Time of Delivery, as to the performance by the Company and each of the
Selling Shareholders 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 shall have
furnished or caused to be furnished certificates as to the matters set
forth in subsections (a) and (g) of this Section; and
(m) The purchase of the Canadian Shares under the Canadian
Underwriting Agreement and the International Shares under the
International Underwriting Agreement shall occur no later than
contemporaneously with the purchase of the Shares under this Agreement.
8. (a) The Company, and each Selling Shareholder severally and not
jointly 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
21
<PAGE> 22
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 each Selling
Shareholder 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 or any Selling Shareholder by any
Underwriter through Goldman, Sachs & Co. expressly for use therein; provided
further, however, that each Selling Shareholder shall be liable in any such case
only 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 by or on behalf of the Selling
Shareholders to the Company or the Underwriters through Goldman, Sachs & Co.
expressly for use therein. In this regard, the Company acknowledges that to
facilitate an orderly distribution of common shares to be issued by the Company,
the Company asked the Selling Shareholders (or their predecessors in title) not
to dispose of any of their common shares of the Company in May 1999 as they had
originally planned. In consideration of those agreements the Company agreed to
include common shares of the Selling Shareholders in the offerings contemplated
by the U.S. Underwriting Agreement and the International Underwriting Agreement
and to indemnify the Underwriters in that context.
(b) The liability of each Selling Shareholder pursuant to this
Section 8 shall not exceed the product of the number of Shares sold by
such Selling Shareholder and the initial price to the public of the
Shares as set forth in the Prospectus.
(c) Each Underwriter will indemnify and hold harmless both the
Company and each Selling Shareholder against any losses, claims,
damages or liabilities to which the Company or such Selling Shareholder
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 by such
Underwriter through Goldman, Sachs & Co. expressly for use therein; and
will reimburse the Company and each Selling Shareholder for any legal
or other expenses reasonably incurred by the Company or such
22
<PAGE> 23
Selling Shareholder in connection with investigating or defending any
such action or claim as such expenses are incurred.
(d) 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.
(e) 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 the Selling Shareholders on the one hand and the
Underwriters on the other from the offering of the Shares. 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 the Selling Shareholders 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 the Selling Shareholders
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 Shares purchased under this Agreement (before deducting expenses)
received by the Company and the Selling Shareholders bear to the total
underwriting discounts and
23
<PAGE> 24
commissions received by the Underwriters with respect to the Shares
purchased under this 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 or a Selling Shareholder 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, each of the Selling Shareholders
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 or the Selling Shareholders
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), (i) a Selling Shareholder shall
only be liable to make contributions hereunder in the event and to the
extent that 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 or omission or alleged mission 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 by or on behalf of the Selling
Shareholders to the Company or the Underwriters through Goldman, Sachs
& Co. expressly for use therein, and (ii) no Underwriter shall be
required to contribute any amount in excess of the amount by which the
total price at which the Shares 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. Notwithstanding the provisions of this subsection (e), no
Selling Shareholder shall be required to contribute any amount in
excess of the amount by which the product of the number of Shares sold
by such Selling Shareholder and the initial price to public of the
Shares set forth in the Prospectus exceeds the amount of damages which
such Selling Shareholder 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. The obligations of the Company,
on the one hand, and the Selling Shareholders, on the other, in this
subsection (e) to contribute are several and not joint. The Selling
Shareholders' obligations in this subsection (e) are subject to
subsection (b) above.
(f) The obligations of the Company and the Selling
Shareholders under this Section 8 shall (without duplication) be in
addition to any liability which the Company and the respective Selling
Shareholder may otherwise have and shall extend, upon the same terms
and conditions, to each person, if any, who controls any Underwriter
within the meaning of the Act; and the obligations of the Underwriters
under this Section 8 shall (without duplication) be in addition to any
liability which the respective Underwriters may
24
<PAGE> 25
otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company and to each person, if any, who controls the
Company or any Selling Shareholder within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to
purchase the Shares 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 Shares 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 Shares, then the Company and the Selling Shareholders 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 Shares on
such terms. In the event that, within the respective prescribed periods, you
notify the Company and the Selling Shareholders that you have so arranged for
the purchase of such Shares, or the Company and the Selling Shareholders notify
you that they have so arranged for the purchase of such Shares, you or the
Company and the Selling Shareholders 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
agrees 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 Shares.
(b) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the
Company and the Selling Shareholders as provided in subsection (a)
above, the aggregate number of such Shares which remains unpurchased
does not exceed one-eleventh of the aggregate number of all of the
Shares to be purchased at such Time of Delivery, then Company and the
Selling Shareholders shall have the right to require each
non-defaulting Underwriter to purchase the number of Shares which such
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 Shares which such Underwriter
agreed to purchase hereunder) of the Shares 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 Shares of a defaulting Underwriter or Underwriters by you and the
Company and the Selling Shareholders as provided in subsection (a)
above, the aggregate number of such Shares which remains unpurchased
exceeds one-eleventh of the aggregate number of all of the Shares to be
purchased at such Time of Delivery, or if the Company and the Selling
Shareholders shall not exercise the right described in subsection (b)
above to require non-defaulting Underwriters to purchase Shares 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 to sell the Optional
Shares) shall thereupon terminate, without liability on the part of any
non-defaulting Underwriter or the Company or the Selling Shareholders,
except for the expenses to be borne by the Company and the Selling
Shareholders and the Underwriters as provided in
25
<PAGE> 26
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, the several Selling Shareholders and the
several Underwriters, as set forth in this Agreement or made by or on behalf of
them, respectively, pursuant to this Agreement shall remain in full force and
effect, regardless of any investigation (or any statement as to the results
thereof) made by or on behalf of any Underwriter or any controlling person of
any Underwriter, or the Company, or any of the Selling Shareholders, or any
officer or director or controlling person of the Company, or any controlling
person of any Selling Shareholder, and shall survive delivery of and payment for
the Shares.
Anything herein to the contrary notwithstanding, the indemnity
agreement of the Company in subsection (a) of Section 8 hereof, the
representations and warranties in subsections (a)(ii), (a)(iii) and (a)(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 pursuant to Section 7 hereof, insofar as they may constitute a
basis for indemnification for liabilities (other than payment by the Company 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 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 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,
neither the Company, nor any Selling Shareholder shall then be under any
liability to any Underwriter except as provided in Sections 6 and 8 hereof; but,
if for any other reason any Shares are not delivered by or on behalf of the
Company or any of the Selling Shareholders as provided herein, the Company 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 Shares not so delivered, but the Company and the Selling
Shareholders shall then be under no further liability to any Underwriter in
respect of the Shares 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 jointly or by Goldman, Sachs & Co. on behalf of you as the
representatives; and in all dealings with any Selling Shareholder hereunder, you
and the Company shall be entitled to act and rely upon any statement, request,
notice or agreement on behalf of such Selling Shareholder made or given by any
or all of the Attorneys-in-Fact for such Selling Shareholder.
26
<PAGE> 27
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; if to any Selling
Shareholder shall be delivered or sent by mail, telex or facsimile transmission
to counsel for such Selling Shareholder at its address set forth in Schedule II
hereto; and if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: 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
or any of the Selling Shareholders by you upon request. Any such statements,
requests, notices or agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company and the Selling Shareholders and, to
the extent provided in Sections 8 and 10 hereof, the officers and directors of
the Company and each person who controls the Company, or any Underwriter, and
their respective heirs, executors, administrators, successors and assigns, and
no other person shall acquire or have any right under or by virtue of this
Agreement. No purchaser of any of the Shares 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.
If the foregoing is in accordance with your understanding, please sign
and return to us one for the Company, for each of the Selling Shareholders and
for each of the Representatives plus one for each counsel, if any 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, the Company and each of the Selling
Shareholders. 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 (U.S. Version), the form of which shall be
submitted to the Company and the Selling Shareholders for examination upon
request, but without warranty on your part as to the authority of the signers
thereof.
27
<PAGE> 28
Any person executing and delivering this Agreement as Attorney-in-Fact
for a Selling Shareholder represents by so doing that he has been duly appointed
as Attorney-in-Fact by such Selling Shareholder pursuant to a validly existing
and binding Power of Attorney which authorizes such Attorney-in-Fact to take
such action.
Very truly yours,
The Seagram Company Ltd.
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
Esarbee Investments Limited
CRB Associates, Limited Partnership
C. Bronfman Family Trust
The Charles R. Bronfman Trust
The Charles Bronfman Trust
The CRB Foundation
The Chastell Foundation
By: -------------------------------
Name: Title: As Attorney-in-Fact
acting on behalf of the Selling
Shareholders named in Schedule II
to this Agreement.
Accepted as of the date hereof
Goldman, Sachs & Co.
Bear, Stearns & Co. Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
PaineWebber Incorporated
Salomon Smith Barney
Blaylock & Partners, L.P.
By:
-------------------------------------------
(Goldman, Sachs & Co.)
On behalf of each of the Underwriters
28
<PAGE> 29
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER OF
OPTIONAL SHARES
TOTAL NUMBER OF TO BE PURCHASED
FIRM SHARES IF 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...............
Credit Suisse First Boston Corporation..........
PaineWebber Incorporated........................
Salomon Smith Barney............................
Blaylock & Partners, L.P........................
[NAMES OF OTHER UNDERWRITERS]...................
---------- ---------
TOTAL............................... 26,000,000 2,850,000
========== =========
</TABLE>
<PAGE> 30
SCHEDULE II
<TABLE>
<CAPTION>
NUMBER OF
OPTIONAL SHARES
TOTAL TO BE SOLD IF
NUMBER OF FIRM MAXIMUM
SHARES TO BE SOLD OPTION EXERCISED
----------------- ----------------
<S> <C> <C>
The Company............................................ 19,000,000 2,850,000
The Selling Shareholder(s)(a):......................... - 0
Esarbee Investments Limited............................
CRB Associates, Limited Partnership(b).................
C. Bronfman Family Trust(b)............................
The Charles R. Bronfman Trust(c).......................
The Charles Bronfman Trust.............................
The CRB Foundation.....................................
The Chastell Foundation................................
---------- ---------
TOTAL...................................... 26,000,000 2,850,000
========== =========
</TABLE>
(a) Each of the Selling Shareholders is represented by Goodman
Phillips & Vineberg S.E.N.C., and Goodman Phillips & Vineberg (New York)
__________, certain of the Selling Shareholders are also represented by Bergman
Horowitz Reynolds __________ or Chancery Chambers __________ 1501 McGill College
Avenue, Montreal, PQ H3A 3N9, Canada and each of the Selling Shareholders has
appointed Samuel Minzberg, Richard Doyle, Michael Vineberg, Gary Gartner, Jeff
Shein and Steven Levin, and each of them, as the Attorneys-in-Fact for such
Selling Shareholder.
(b) This Selling Shareholder is also represented by Bergman Horowitz
Reynolds .
(c) This Selling Shareholder is also represented by Chancery Chambers .
<PAGE> 31
SCHEDULE III
"Bronfman Trust Permitted Transferees" means:
i) Charles R. Bronfman and his lineal descendants;
ii) the spouses of any one or more of the foregoing;
iii) any trust of which any one or more of such persons is a beneficiary;
iv) a partnership in which one or more of the foregoing entities owns a
majority equity interest; and
v) any company directly or indirectly under the Control of one or more of
the foregoing;
"Control" means, in the case of a company or corporation, the beneficial
ownership of
(a) voting securities carrying not less than 50.1%of the votes that may be
cast at a meeting of shareholders of the company (other than meetings
of a particular class); and
(b) securities carrying the right to receive not less than 50.1% of the
residual assets of a company upon liquidation or dissolution, after
provision for any shares entitled to receive property of a fixed or
determinable value upon liquidation or dissolution in priority to the
right of any other class or classes of shares.
<PAGE> 32
Schedule IV
[List of Shareholders to come]
<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
