SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
TV FILME, INC.
----------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
1) Title of each class of securities to which transaction applies:
N/A
2) Aggregate number of securities to which transaction applies:
N/A
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
N/A
4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
N/A
|_| Fee paid previously with preliminary materials.
<PAGE>
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: N/A
2) Form, Schedule or Registration Statement No.: N/A
3) Filing Party: N/A
4) Date Filed: N/A
<PAGE>
[TV FILME LOGO]
August 4, 1997
Dear Fellow Stockholder:
You are cordially invited to attend the 1997 Annual Meeting of
Stockholders of TV Filme, Inc., which will be held on Tuesday, September 9,
1997, in the Cook Meeting Room at Kelley Drye & Warren LLP, 101 Park Avenue, New
York, New York 10178 at 10:00 a.m., local time. Doors to the meeting will open
at 9:30 a.m.
The business to be considered and voted upon at the meeting is explained
in the accompanying Notice of Annual Meeting of Stockholders and Proxy
Statement.
Whether or not you plan to attend the Annual Meeting in person, it is
important that your shares of Common Stock be represented and voted at the
Annual Meeting. Accordingly, after reading the enclosed Notice of Annual Meeting
and Proxy Statement, please sign, date and return the enclosed proxy card in the
postage-paid envelope provided.
Thank you for your support of our Company.
Sincerely,
/s/ Hermano Studart Lins de Albuquerque
Hermano Studart Lins de Albuquerque
CHIEF EXECUTIVE OFFICER
<PAGE>
TV FILME, INC.
SCS, QUADRA 07-Bl.A
ED. EXECUTIVE TOWER, SALA 601
70.300-911 BRASILIA - DF
BRAZIL
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 9, 1997
------------------------
To the Stockholders of TV Filme, Inc.:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of the stockholders of
TV Filme, Inc., a Delaware corporation (the "Company"), will be held on Tuesday,
September 9, 1997, in the Cook Meeting Room at Kelley Drye & Warren LLP, 101
Park Avenue, New York, New York 10178 at 10:00 a.m., local time, for the
following purposes:
1. To elect two Class I directors to hold office until the 2000 Annual
Meeting of Stockholders;
2. To ratify the appointment of Ernst & Young Auditores Independentes
S.C. as independent auditors for the Company for fiscal year 1997; and
3. To transact such other business as may properly be presented at the
1997 Annual Meeting and at any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on August 1, 1997
as the record date for the purpose of determining stockholders who are entitled
to notice of and to vote at the 1997 Annual Meeting and any adjournments or
postponements thereof. A list of such stockholders will be available during
regular business hours at the offices of Kelley Drye & Warren LLP, 101 Park
Avenue, New York, New York 10178 for the ten days before the meeting, for
inspection by any stockholder for any purpose germane to the meeting.
By Order of the Board of Directors,
/s/ Hermano Studart Lins de Albuquerque
Hermano Studart Lins de Albuquerque
SECRETARY
August 4, 1997
<PAGE>
TV FILME, INC.
SCS, QUADRA 07-Bl.A
ED. EXECUTIVE TOWER, SALA 601
70.300-911 BRASILIA - DF
BRAZIL
------------------------
PROXY STATEMENT
------------------------
This Proxy Statement is being furnished to stockholders of TV Filme, Inc.,
a Delaware corporation (the "Company"), in connection with the solicitation of
proxies by the Company's Board of Directors from holders of the outstanding
shares of the Company's common stock, $0.01 par value per share (the "Common
Stock"), for use at the 1997 Annual Meeting of Stockholders of the Company to be
held on Tuesday, September 9, 1997, in the Cook Meeting Room at Kelley Drye &
Warren LLP, 101 Park Avenue, New York, New York 10178 at 10:00 a.m., local time,
and at any adjournments or postponements thereof (the "Annual Meeting"), for the
purpose of considering and acting upon the matters set forth in the accompanying
Notice of Annual Meeting of Stockholders.
Only holders of record of Common Stock as of the close of business on
August 1, 1997 (the "Record Date") are entitled to notice of, and to vote at,
the Annual Meeting and any adjournments or postponements thereof. At the close
of business on such date, the Company had 10,189,296 shares of Common Stock
issued and outstanding. Holders of Common Stock are entitled to one vote on each
matter considered and voted upon at the Annual Meeting for each share of Common
Stock held of record as of the Record Date. Holders of Common Stock may not
cumulate their votes for the election of directors. Shares of Common Stock
represented by a properly executed proxy, if such proxy is received in time and
not revoked, will be voted at the Annual Meeting in accordance with the
instructions indicated in such proxy. IF NO INSTRUCTIONS ARE INDICATED, SHARES
REPRESENTED BY PROXY WILL BE VOTED "FOR" THE ELECTION, AS DIRECTORS OF THE
COMPANY, OF THE TWO NOMINEES NAMED IN THE PROXY TO SERVE UNTIL THE 2000 ANNUAL
MEETING OF STOCKHOLDERS, "FOR" THE RATIFICATION OF THE APPOINTMENT OF ERNST &
YOUNG AUDITORES INDEPENDENTES S.C. AS INDEPENDENT AUDITORS FOR THE COMPANY FOR
FISCAL YEAR 1997 AND IN THE DISCRETION OF THE PROXY HOLDERS AS TO ANY OTHER
MATTER WHICH MAY PROPERLY BE PRESENTED AT THE ANNUAL MEETING OR ANY ADJOURNMENTS
OR POSTPONEMENTS THEREOF.
The Proxy Statement and the accompanying proxy card are being mailed
to Company stockholders on or about August 4, 1997.
Any holder of Common Stock giving a proxy in the form accompanying the
Proxy Statement has the power to revoke the proxy prior to its use. A proxy can
be revoked (i) by an instrument of revocation delivered prior to the Annual
Meeting to the Secretary of the Company, (ii) by a duly executed proxy bearing a
later date or time than the date or time of the proxy being revoked, or (iii) at
the Annual Meeting if the stockholder is present and elects to vote in person.
Mere attendance at the Annual Meeting will not serve to revoke the proxy. All
written notices of revocation of proxies should be addressed as follows:
Corporate Secretary, TV Filme, Inc., c/o James P. Prenetta, Kelley Drye & Warren
LLP, Two Stamford Plaza, 281 Tresser Blvd., Stamford, CT. 06901.
A plurality of the votes duly cast is required for the election of
directors. The affirmative vote of a majority of the votes duly cast is required
to approve the other matter to be acted upon at the Annual
<PAGE>
Meeting. Under the General Corporation Law of the State of Delaware, the state
in which the Company is incorporated, an abstaining vote is not deemed to be a
"vote cast." As a result, abstentions and broker "non-votes" (votes withheld by
brokers in the absence of instructions from street-name holders) are not
included in the tabulation of the voting results on the election of directors or
issues requiring approval of a majority of the votes cast and, therefore, do not
have the effect of votes in opposition in such tabulations. Broker "non-votes"
and the shares as to which a stockholder abstains are included for purposes of
determining whether a quorum of the shares is present at a meeting.
The Company's principal executive offices are located at SCS, Quadra
07-Bl.A, Ed. Executive Tower, Sala 601, 70.300-911 Brasilia - DF Brazil. The
telephone number of the Company at such office is 011-55-61-225-4766.
PROPOSAL 1 - ELECTION OF DIRECTORS
The number of directors of the Company, as determined by the Board of
Directors is seven. The Board of Directors of the Company consists of three
classes: Class I, Class II and Class III, as nearly equal in number as possible.
One of the three classes, comprising approximately one-third of the directors,
is elected each year to succeed the directors whose terms are expiring.
Directors hold office until the annual meeting for the year in which their terms
expire and until their successors are elected and qualified unless, prior to
that date, they have resigned, retired, or otherwise left office. In accordance
with the Company's Certificate of Incorporation, Class I directors are to be
elected at the Annual Meeting, Class II directors are to be elected at the 1998
Annual Meeting of Stockholders and Class III directors are to be elected at the
1999 Annual Meeting of Stockholders.
At the Annual Meeting, two Class I directors are to be elected to the
Board, each to serve until the Annual Meeting of Stockholders to be held in
2000. The nominees for election at the Annual Meeting are Hermano Studart Lins
de Albuquerque and David E. Libowitz. Both nominees are presently directors of
the Company. If either nominee is unable or unwilling to serve as a director,
proxies may be voted for a substitute nominee designated by the present Board.
The Board of Directors has no reason to believe that either nominee will be
unable or unwilling to serve as a director.
The following table sets forth the name and age (as of the date of the
Annual Meeting) of the directors, the class to which each director has been
nominated for election or elected, their principal occupations at present, the
positions and offices, if any, held by each director with the Company in
addition to the position as a director, and the period during which each has
served as a director of the Company.
SERVED AS
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION -- POSITION SINCE
- ---- --- --------------------------------- ---------
CLASS I -- 1997
Hermano Studart Lins de
Albuquerque.............. 34 Chief Executive Officer and
Secretary 1996
David E. Libowitz............ 34 Vice President of E.M. Warburg, 1997
Pincus & Co., LLC
<PAGE>
CLASS II -- 1998
Carlos Andre Studart Lins
de Albuquerque........... 33 President and Chief Operating Officer 1996
Douglas M. Karp.............. 42 Managing Director of E.M. Warburg, 1996
Pincus & Co., LLC
Raul Rosenthal............... 49 Executive Vice President of 1997
Strategic Planning and
Corporate Development
and of five business
units of Abril S.A.
CLASS III -- 1999
Alvaro J. Aguirre............ 31 Chief Financial Officer 1996
Jose Augusto Pinto Moreira... 54 Executive Vice President of 1996
Finance Administration
of Abril S.A.
CLASS I DIRECTORS
HERMANO STUDART LINS DE ALBUQUERQUE, one of the co-founders of the
Company, has served as Chief Executive Officer, Secretary and a director of the
Company since its incorporation. Mr. Lins received a Master's degree in
Artificial Intelligence from the University of Sussex, England and a Bachelor of
Science degree in Electronic Engineering from the University of Brasilia. Mr.
Lins was a member of the MMDS Regulation Commission, a Brazilian government
advisory board and is a member of the Technical Advisory Board for National
Satellite Publishing Inc. Mr. Lins is the brother of Mr.
Carlos Andre Studart Lins de Albuquerque.
DAVID E. LIBOWITZ has served as a director of the Company since April
1997. Mr. Libowitz is a Vice President of E.M. Warburg, Pincus & Co., LLC and
has been associated with E.M. Warburg, Pincus & Co., LLC (or its predecessor
E.M. Warburg, Pincus & Co., Inc.) since July 1991. Mr. Libowitz is a director of
Caribiner International, Inc. and several privately held companies.
CLASS II DIRECTORS
CARLOS ANDRE STUDART LINS DE ALBUQUERQUE, one of the co-founders of the
Company, has served as President, Chief Operating Officer and a director of the
Company since its incorporation. Mr. Lins also served as Treasurer of the
Company from its incorporation until July 1997. Mr. Lins received a Bachelor of
Science degree in Physics from the University of Brasilia and a Bachelor of
Science degree in Mathematics from the University of Ceub. Mr. Lins is the
brother of Mr. Hermano Studart Lins de Albuquerque.
DOUGLAS M. KARP has served as Chairman of the Board of the Company since
its incorporation. Mr. Karp has been a Managing Director of E.M. Warburg, Pincus
& Co., LLC (or its predecessor, E.M. Warburg, Pincus & Co., Inc.) since May
1991. Prior to joining E.M. Warburg, Pincus & Co., LLC, Mr. Karp held several
positions with Salomon Inc, including Managing Director from January 1990 to
<PAGE>
May 1991, Director from January 1989 to December 1989 and Vice President from
October 1986 to December 1988. Mr. Karp is a director of LCI International,
Inc., TresCom International, Inc., Journal Register Company and several
privately held companies.
RAUL ROSENTHAL has served as a director of the Company since July 1997. Mr.
Rosenthal has been the Executive Vice President of Strategic Planning and
Corporate Development and five business units of Abril S.A. (including Telephone
Directories, Abril Collections and Database Marketing) since September 1996.
Prior to joining Abril S.A., from 1986 to 1996 Mr. Rosenthal held several
senior management positions with American Express, including President of
American Express do Brazil, a position in which he was responsible for the
Credit Card business and the American Express Bank from 1994 to 1996, President
of the Establishments Service Group for Latin America and the Caribbean from
1995 to 1996, and President of American Express in Argentina and Uruguay from
1990 to 1993. Mr. Rosenthal is a director of a privately held company.
CLASS III DIRECTORS
ALVARO J. AGUIRRE has served as Chief Financial Officer and a director of
the Company since June 1996. Prior to joining the Company, Mr. Aguirre was a
member of the Latin America Corporate Finance Group of Morgan Stanley & Co.,
Incorporated from 1994 to 1996 and a securities attorney at the law firm of
Sullivan & Cromwell from 1991 to 1994.
JOSE AUGUSTO PINTO MOREIRA has served as a director of the Company since
its incorporation. Mr. Moreira has been the Executive Vice President of Finance
and Administration of Abril S.A. since 1982. Mr. Moreira is a director of
several privately held companies.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE ELECTION
OF HERMANO STUDART LINS DE ALBUQUERQUE AND DAVID E.
LIBOWITZ AS CLASS I DIRECTORS.
GENERAL INFORMATION RELATING TO THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS
The business and affairs of the Company are managed by the Board of
Directors. To assist it in carrying out its duties, the Board of Directors has
delegated certain authority to two committees. The Board of Directors held one
meeting in 1996. Each member of the Board of Directors attended at least 75% of
the aggregate meetings of the Board of Directors and the committees of the Board
of which he was a member during 1996.
COMMITTEES OF THE BOARD OF DIRECTORS
During 1996, the standing committees of the Board of Directors included an
Audit Committee and a Compensation Committee (as hereinafter defined). The Board
of Directors does not have a nominating committee or any committee performing
similar functions, and all matters which would be considered by such a committee
are acted upon by the full Board of Directors. The Company's By-laws contain an
advance notice procedure with regard to the nomination, other than by or at the
discretion of the Board of Directors, of candidates for election as directors
and with regard to certain matters to be brought before the annual meeting of
stockholders. In general, notice must be received by the Company
<PAGE>
not less than 60 days prior to the meeting and must contain certain specified
information concerning the person to be nominated or the matter to be brought
before the meeting and concerning the stockholder submitting the proposal. The
foregoing is only a summary of the detailed provisions of the Company's Amended
and Restated By-laws and is qualified by reference to the text thereof.
During 1996, the Audit Committee, consisting of Douglas M. Karp, Gary D.
Nusbaum and Jose Augusto Pinto Moreira, held no meetings. Gary D. Nusbaum
resigned as a director of the Company in March 1997. The Audit Committee
recommends to the Board of Directors the firm to be appointed as independent
accountants to audit the Company's financial statements, discusses the scope and
results of the audit with the independent accountants, reviews with management
and the independent accountants the Company's interim and year-end operating
results, considers the adequacy of the internal controls and audit procedures of
the Company and reviews the non-audit services to be performed by the
independent accountants.
During 1996, the Compensation Committee, consisting of Douglas M. Karp,
Gary D. Nusbaum and Jose Augusto Pinto Moreira, held no meetings. The
Compensation Committee reviews general policy matters relating to compensation
and benefits of employees and officers of the Company and administers the Stock
Option Plan (as hereinafter defined). In addition, the Compensation Committee
considers proposals with respect to the creation of and changes to executive
compensation plans and reviews appropriate criteria for establishing performance
targets.
COMPENSATION OF DIRECTORS
Independent directors are eligible to receive an annual fee of $10,000, a
meeting fee of $1,000 for every meeting of the Board of Directors attended and
each committee meeting held separately and a $500 fee for each meeting of the
Board of Directors or committee meeting participated in by telephone. All
directors are reimbursed for out-of-pocket expenses. Under the Stock Option
Plan, the Company may, from time to time and in the sole discretion of the Board
of Directors, grant options to directors who are not members of the Compensation
Committee.
EXECUTIVE COMPENSATION
The following table sets forth a summary of the compensation paid or
accrued by the Company for services rendered to the Company in all capacities
for the past two fiscal years by its Chief Executive Officer and each of the
Company's other executive officers whose total salary and bonus exceeded
$100,000 during such fiscal years (collectively, the "Named Executive
Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
--------------------------------------- ------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND POSITION YEAR SALARY ($) BONUS ($) COMPENSATION OPTIONS (#) COMPENSATION ($)
----------------- ---- ---------- --------- ------------ ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Hermano Studart................ 1996 $113,979 $200,000(1) -0- 110,000 $6,520(2)
Lins de Albuquerque, 1995 98,463 111,500 -0- 49,788(3) -
Chief Executive Officer
Carlos Andre Studart 1996 113,979 200,000(1) -(4)- 110,000 6,520(2)
Lins de Albuquerque,........ 1995 98,463 111,500 -0- 49,788(3) -
President, Chief Operating
Officer and Treasurer
<PAGE>
Alvaro J. Aguirre,............. 1996 62,499 200,000(1)(6) -0- 110,000 6,520(2)
Chief Financial Officer(5)
</TABLE>
- ---------------------
(1) Includes non-cash bonus payments made to the Named Executive Officers in
the form of Common Stock in the amounts of $123,333 for Messrs. Hermano
Lins and Carlos Andre Lins and $25,000 for Mr. Aguirre.
(2) The compensation reflected in this column represents Company paid life
insurance premiums.
(3) These options were exercised by Messrs. Hermano Lins and Carlos Andre Lins
in 1995.
(4) The aggregate value of perquisites and other personal benefits have not
been reflected because the amounts were below the Securities and Exchange
Commission's (the "Commission") threshold for disclosure (i.e., the lesser
of $50,000 or 10% of the total of annual salary and bonus for such
officer).
(5) Mr. Aguirre joined the Company in June 1996.
(6) Includes a special one-time sign on bonus in the amount of $50,000.
EMPLOYMENT AGREEMENTS
The Company and ITSA-Intercontinental Telecomunicacoes Ltda. ("ITSA") have
entered into employment agreements with each of Messrs. Hermano Lins and Carlos
Andre Lins, pursuant to which Mr. Hermano Lins has agreed to serve full time as
Chief Executive Officer and Secretary of the Company, Mr. Carlos Andre Lins has
agreed to serve full time as President, Chief Operating Officer and Treasurer of
the Company, and each has agreed to serve in comparable executive positions at
ITSA. The annual base salary under such agreements for each of Messrs. Lins is
$125,000. Such salaries will be reviewed at least annually by the Board of
Directors of the Company and may be increased but not decreased. In addition,
each of Messrs. Lins are eligible to receive an annual bonus, payable by ITSA,
in amounts to be determined by the Board of Directors taking into consideration,
among other things, the financial and operating performance of the Company.
Pursuant to each of Messrs. Lins's employment agreements, if the Company
terminates the executive's employment either without "cause" (as defined
therein) or because of the death of the executive, ITSA is required to pay the
executive any unpaid base salary accrued through the date of termination, plus
an amount equal to an additional 12 months' base salary. Although Brazilian law
does not permit employment agreements of this type to be for a fixed term, each
agreement does include a non-competition provision and a prohibition on the
solicitation of clients and employees.
The Company has entered into an employment agreement with Mr. Aguirre,
pursuant to which Mr. Aguirre has agreed to serve full time as Chief Financial
Officer of the Company until December 31, 1998, unless terminated earlier in
accordance with the terms of such agreement. The annual base salary under such
agreement is $125,000. Such salary will be reviewed at least annually by the
Board of Directors of the Company and may be increased but not decreased. In
addition, Mr. Aguirre is eligible to receive an annual bonus. Such annual bonus
was $125,000 for the period ending December 31, 1996, with amounts for
subsequent years to be determined by the Board of Directors of the Company,
taking into consideration among other things, the financial and operating
performance of the Company. Upon executing his employment agreement, Mr. Aguirre
received a one-time bonus of $50,000. Pursuant to Mr. Aguirre's employment
agreement, if the Company terminates Mr. Aguirre's employment because of the
death or disability of Mr. Aguirre, the Company is required to pay Mr. Aguirre
or his estate any unpaid base salary accrued through the date of termination,
plus an amount equal to an additional 12 months' base salary. If the Company
terminates Mr. Aguirre without "cause" (as defined therein), the Company is
required to pay Mr. Aguirre any unpaid base salary accrued through the date of
termination, plus an amount equal to the unpaid base salary for the balance of
the term and the pro rata portion of any
<PAGE>
agreed upon annual bonus. The agreement includes a non-competition provision and
a prohibition on the solicitation of clients and employees.
STOCK OPTIONS
STOCK OPTION PLAN
On July 18, 1996, the Board of Directors adopted and the stockholders of
the Company approved the Stock Option Plan (which plan, as subsequently amended
in June 1997, is hereinafter referred to as the "Stock Option Plan"), which
provides for the grant to officers, key employees and consultants of the Company
of both "incentive stock options" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), and
stock options that are non-qualified for U.S. federal income tax purposes. The
total number of shares of Common Stock for which options may be granted pursuant
to the Stock Option Plan is 936,432, subject to certain adjustments reflecting
changes in the Company's capitalization. In addition, no employee may receive
options for more than 200,000 shares of Common Stock in the aggregate in any
fiscal year. The Stock Option Plan is administered by the Compensation
Committee. The Compensation Committee determines, among other things, which
officers, employees and consultants receive options under the plan, the time
when options are granted, the type of option (incentive stock options or
non-qualified stock options, or both) to be granted, the number of shares
subject to each option, the time or times when the options become exercisable,
and, subject to certain conditions discussed below, the option price and
duration of the options. Members of the Compensation Committee are not eligible
to receive options under the Stock Option Plan.
The exercise price for incentive stock options will be determined by the
Compensation Committee, but may not be less than the fair market value on the
date of grant and the term of any such option may not exceed ten years from the
date of grant. With respect to any participant in the Stock Option Plan who owns
stock representing more than 10% of the voting power of the outstanding capital
stock of the Company, the exercise price of any incentive stock option may not
be less than 110% of the fair market value of such shares on the date of grant
and the term of such option may not exceed five years from the date of grant.
The exercise price of non-qualified stock options will be determined by
the Compensation Committee on the date of grant, but may not be less than the
par value of the Common Stock on the date of grant, and the term of such option
may not exceed ten years from the date of grant.
Payment of the option price may be made by certified or bank cashier's
check, by tender of shares of Common Stock then owned by the optionee or by any
other means acceptable to the Company. Options granted pursuant to the Stock
Option Plan are not transferrable, except by will or the laws of descent and
distribution in the event of death. During an optionee's lifetime, the options
are exercisable only by the optionee.
The Board of Directors has the right at any time and from time to time to
amend or modify the Stock Option Plan, without the consent of the Company's
stockholders or optionees; provided that no such action may adversely affect
options previously granted without the optionee's consent, and provided further
that no such action, without the approval of the stockholders of the Company,
may increase the total number of shares of Common Stock which may be purchased
pursuant to options granted under the plan, expand the class of persons eligible
to receive grants of options under the plan, decrease the minimum option price,
extend the maximum term of options granted under the plan or extend the term of
the plan. The expiration date of the Stock Option Plan after which no option may
be granted thereunder is 2006.
<PAGE>
Options to purchase 407,000 shares of Common Stock were granted upon the
consummation of the initial public offering in August 1996 (the "Initial Public
Offering"), of which 297,000 are exercisable at $10.00 per share and 110,000 of
which are exercisable at $11.00 per share, and which generally vest and become
exercisable at the rate of 20% per year for five years beginning on August 2,
1997. Options to purchase an additional 10,000 shares of Common Stock were
granted in each of December 1996 and February 1997 at an exercise price of
$11.75 per share and options to purchase 15,000 shares of Common Stock were
granted in July 1997 at an exercise price of $10.75.
The Company has filed with the Commission a Registration Statement on Form
S-8 covering the shares of Common Stock underlying options granted under the
Stock Option Plan.
STOCK OPTION GRANTS
The following table sets forth information regarding grants of options to
purchase Common Stock during the fiscal year ended December 31, 1996 to each of
the Named Executive Officers. No stock appreciation rights were granted during
1996.
OPTION GRANTS IN 1996
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
------------------------------------------------------- AT ASSUMED ANNUAL
NUMBER OF PERCENT OF RATES OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM (3)
OPTIONS EMPLOYEES IN PRICE EXPIRATION --------------------------
NAME GRANTED (#) 1996 (1) ($/SHARE)(2) DATE (5%) (10%)
- ---- ----------- ------------- ------------ ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Hermano Studart Lins de
Albuquerque............. 110,000(4) 26.4% $10.00 08/02/06 $691,784 $1,753,116
Carlos Andre Studart Lins
de Albuquerque.......... 110,000(4) 26.4 10.00 08/02/06 691,784 1,753,116
Alvaro J. Aguirre.......... 110,000(4) 26.4 11.00 07/26/06 760,962 1,928,428
</TABLE>
- -----------
(1) The Company granted options to purchase a total of 417,000 shares of Common
Stock in 1996.
(2) Each of the Company's stock options were granted at or above the fair
market value on the date of grant. The fair market value of the Common
Stock on December 31, 1996 was $13.00 per share.
(3) Amounts reported in these columns represent amounts that may be realized
upon exercise of options immediately prior to the expiration of their term
assuming the specified compounded rates of appreciation (5% and 10%) on the
Common Stock over the term of the options. These assumptions are based on
rules promulgated by the Commission and do not reflect the Company's
estimate of future stock price appreciation. Actual gains, if any, on the
stock option exercises and Common Stock holdings are dependent on the
timing of such exercise and the future performance of the underlying Common
Stock. There can be no assurance that the rates of appreciation assumed in
this table can be achieved or that the amounts reflected will be received
by the option holder.
(4) These options vest and become fully exercisable as to 20% on the first
anniversary of the date of grant (August 2, 1997 for each of Messrs.
Hermano Lins and Carlos Andre Lins and July 26, 1997 for Mr. Aguirre) and
as to an additional 20% on each anniversary thereafter until all such
options are fully vested and exercisable. Mr. Aguirre's options also vest,
to the extent not then vested, on December 31, 1998, if his employment
agreement with the Company is not renewed.
<PAGE>
YEAR-END VALUE TABLE
The following table sets forth information regarding the number and year
end value of unexercised options held at December 31, 1996 by each of the Named
Executive Officers. No stock options or stock appreciation rights were exercised
by the Named Executive Officers during fiscal 1996.
FISCAL 1996 OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED "IN-THE-MONEY" (1)
OPTIONS AT FISCAL OPTIONS AT FISCAL
YEAR-END (#) YEAR-END ($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------------------- -------------------------
Hermano Studart Lins
de Albuquerque.......... 0/110,000 $0/$330,000
Carlos Andre Studart Lins
de Albuquerque.......... 0/110,000 0/330,000
Alvaro J. Aguirre.......... 0/110,000 0/220,000
- ------------
(1) Options are "in-the-money" if the fair market value of the underlying
securities exceeds the exercise price of the options. The amounts set
forth represent the difference between $13.00 per share, the fair market
value of the Common Stock issuable upon exercise of options at December
31, 1996, and the exercise price of the option, multiplied by the
applicable number of options.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company did not have a Compensation Committee during the first seven
months of 1996. As a result, Messrs. Karp, Nusbaum (a former director and Vice
President of the Company), Hermano Lins, Carlos Andre Lins and Moreira
participated in deliberations concerning executive officer compensation. In
connection with the Initial Public Offering, the Board of Directors established
a Compensation Committee comprised of Messrs. Karp, Nusbaum and Moreira. Mr.
Karp is a general partner of Warburg, Pincus & Co., a New York general
partnership ("WP") which is the sole general partner of Warburg, Pincus
Investors, L.P. ("Warburg, Pincus"). Mr. Moreira is the Executive Vice President
of Finance and Administration of Abril S.A. Mr. Libowitz became a member of the
Compensation Committee in April 1997 to fill the vacancy created by the
resignation of Mr. Nusbaum.
BOARD AND COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
Prior to July 1996, decisions regarding executive compensation and grants
of stock options were made by the full Board of Directors. In July 1996, the
Board of Directors established a Compensation Committee (the "Compensation
Committee"), composed of Messrs. Karp, Nusbaum and Moreira, and delegated to
such committee the responsibility for administering and evaluating the Company's
executive compensation program.
EXECUTIVE COMPENSATION POLICY
The Company's compensation program is designed to attract, motivate, reward
and retain executive personnel capable of making significant contributions to
the long-term success of the Company.
<PAGE>
During 1996, the Company's compensation program consisted of base salary, an
annual incentive bonus (paid in a combination of shares of Common Stock and
cash) and stock option grants. Base salary provides the foundation for the
Company's executive pay; its purpose is to compensate the executive for
performing his basic duties. The purpose of annual incentive bonuses is to
provide rewards for favorable performance and achievement of intermediate-term
objectives while the purpose of stock option grants is to provide incentives and
rewards for long-term performance and to motivate long-term strategic planning.
BASE SALARY. Base salaries for the Company's executive officers are set
annually subject to certain minimum requirements established under the
executives' employment agreement. See "Executive Compensation--Employment
Agreements." During 1996, the Company did not employ a formula approach that
links cash compensation to corporate performance nor did it utilize any formal
survey or other compilation of empirical data on executive compensation paid by
other companies. Instead, executive compensation was determined based on a
number of subjective factors, including individual responsibilities,
performance, contribution and experience, as well as the Company's performance
as compared with the prior year and general economic factors. The base salary
paid to the Company's Chief Executive Officer in 1996 was contractually based.
INCENTIVE BONUSES. The Company's executive officers and certain other
management personnel are eligible to receive annual incentive bonuses which are
linked to the financial and operating performance of the Company and the
individual's performance. Based on the actual performance of the Company and the
Chief Executive Officer during 1996, the Chief Executive Officer received a
$200,000 bonus, $123,333 of which was paid in shares of Common Stock and $76,667
of which was paid in cash. Such bonus payment was determined based on a number
of factors, including the Company's successful completion of the Initial Public
Offering, the Company's successful completion of a $140.0 million note offering
in December 1996 and increases in the Company's subscriber base.
STOCK OPTIONS. The Company's compensation program also utilizes stock
option awards, which are intended to provide additional incentive to increase
stockholder value. All stock option awards are granted with an exercise price
equal to 100% of fair market value of the Common Stock on the date of grant and
vest at a rate of 20% annually. Currently, no specific formula is used to
determine option awards to employees but instead awards are based on subjective
evaluation of each individual's overall past and expected future contribution to
the Company. Pursuant to the terms of his employment agreement, the Chief
Executive Officer received a grant of 110,000 options during 1996.
SECTION 162(M) OF THE INTERNAL REVENUE CODE
In connection with making decisions with respect to executive compensation,
the Board of Directors and Compensation Committee have taken into account, as
one of the factors which they consider, the provisions of Section 162(m) of the
Internal Revenue Code, which limits the deductibility by the Company of certain
categories of compensation in excess of $1,000,000 paid to certain executive
officers.
Respectfully submitted,
Douglas M. Karp (From April 19, 1996, as a director and member of the
Compensation Committee).
Hermano Studart Lins de Albuquerque (From April 19, 1996, as a director).
Carlos Andre Studart Lins de Albuquerque (From April 19, 1996, as a
director).
Gary D. Nusbaum (From April 19, 1996, as a director and member of the
Compensation Committee).
Jose Augusto Pinto Moreira (From April 19, 1996, as a director and member
of the Compensation Committee).
Alvaro J. Aguirre (From June 27, 1996, as a director).
<PAGE>
Claudio Dascal (From July 24, 1996, as a director).
CERTAIN TRANSACTIONS
The Company has been a party to the following transactions with its
executive officers, directors and five percent stockholders.
In May 1993, the Company issued and sold 1,169,096 shares of Common Stock
to Tevecap S.A. ("Tevecap") for a purchase price of $1.3 million.
In July 1994, the Company effected a recapitalization pursuant to which
Mrs. Maria Nise Studart Lins de Albuquerque, Mr. Hermano Lins, Mr. Carlos Andre
Lins and Tevecap exchanged all of their shares of common stock of TV Filme
Servicos de Telecomunicacoes S.A. on a one-for-one basis for shares of common
stock of ITSA (the predecessor company of the Company).
In July 1994, the Company issued and sold 2,126,132 shares of Common Stock
(after giving effect to the Restructuring) (as hereinafter defined) to Warburg,
Pincus for an aggregate purchase price of $5.0 million.
In August 1995, the Company issued and sold 1,052,924 shares of Common
Stock (after giving effect to the Restructuring) to Warburg, Pincus for an
aggregate purchase price of $3.3 million.
In March 1996, the Company issued and sold 783,700 shares of Common Stock
and warrants to purchase an additional 567,952 shares of Common Stock (after
giving effect to the Restructuring) to Warburg, Pincus for approximately $5.1
million, and issued and sold 287,664 shares of Common Stock and warrants to
purchase an additional 208,372 shares of Common Stock (after giving effect to
the Restructuring) to Tevecap for approximately $1.9 million. Such warrants are
exercisable at $6.52 per share.
Immediately prior to the consummation of the Initial Public Offering, in
connection with the Restructuring the Company issued 3,962,756, 1,456,760,
254,472, 254,472 and 1,069,520 shares of Common Stock to Warburg, Pincus,
Tevecap, Mr. Hermano Lins, Mr. Carlos Andre Lins and Mrs. Maria Nise Lins,
respectively, with a value of $39.6 million, $14.6 million, $2.5 million, $2.5
million and $10.7 million, respectively, based on the price of the Common Stock
sold in the Initial Public Offering. Such shares were issued in exchange for all
of their shares of common stock of ITSA, which had the same value as the shares
of Common Stock received in the exchange.
Immediately prior to the consummation of the Initial Public Offering, in
connection with the Restructuring the Company issued warrants to purchase
567,952 shares of Common Stock to Warburg, Pincus and warrants to purchase
208,372 shares of Common Stock to Tevecap in exchange for all of their warrants
to purchase shares of common stock of ITSA.
From time to time during January 1994 to March 1996, Tevecap and certain of
its affiliates made short-term loans to the Company for working capital
purposes. During this period, the maximum amount outstanding pursuant to such
loans was approximately $6.4 million. During April 1996, the Company resumed
borrowing from Tevecap and its affiliates for working capital purposes, all of
which borrowings were repaid with the proceeds of the Initial Public Offering
with the exception of $200,000 which was due and paid in February 1997 and
$200,000 which is due in February 1998.
<PAGE>
From December 1993 to April 2, 1996, certain members of the Lins family,
including Mr. Hermano Lins, Chief Executive Officer and Secretary of the
Company, Mr. Carlos Andre Lins, the President and Chief Operating Officer of the
Company, their mother Mrs. Maria Nise Lins and several of her other children,
owned in the aggregate 100% of Prava Sistemas de Comunicacoes Ltda. ("Prava"),
which provides wireless cable installation services to hotels, hospitals and
single-family houses, among other services. Messrs. Lins each owned
approximately 7% of Prava and Mrs. Maria Nise Lins owned approximately 40% of
Prava during such period. In the years ended December 31, 1995, 1994, and 1993,
respectively, Prava's revenues from the Company were approximately $260,000,
$70,000 and $0 representing, respectively, approximately 65%, 37% and 0% of
Prava's total revenues for such year. On April 2, 1996, the Lins family sold all
of their interests in Prava to unrelated third parties.
In July 1994, the Company, Tevecap and certain other parties thereto
entered into an agreement pursuant to which Tevecap agreed to provide
programming exclusively to the Company in certain areas (the "Programming
Agreement"). In June 1996, the Programming Agreement was amended and restated
effective August 2, 1996. From time to time, in connection with the Programming
Agreement the Company enters into agreements with TVA Sistema de Televisao S.A.
("TV Sistema") and certain of its affiliates regarding specified channels. The
agreements typically have a two-year term and determine the monthly fees which
the Company pays for such channels. In the years ended December 31, 1996, 1995
and 1994, TVA Sistema's and its affiliates' revenues from the Company aggregated
approximately $6.7 million, $1.3 million and $178,000, respectively, net of
discounts on programming fees compared to list prices. Such discounts received
by the Company in 1994 and the first ten months of 1995, were $340,000 and
$539,000, in 1994 and 1995, respectively. No discounts were received in 1996 and
such discounts are not expected to recur. The Company purchases from Tevecap a
program guide which it distributes to its subscribers monthly. Amounts paid to
Tevecap in 1994, 1995 and 1996 were $0, $113,000 and $750,000, respectively.
In late 1994, TV Filme Servicos de Telecomunicacoes Ltda. ("TV Filme
Servicos) purchased licenses to operate the Company's wireless cable systems in
Goiania and Belem from an affiliate of TVA Sistema for a purchase price of
$400,000 each. The Company believes such prices were below fair market value.
Such purchase prices were payable in equal annual installments of $100,000 per
license, due in February of each of the years 1995, 1996, 1997 and 1998. Such
installment payments do not bear interest. As of August 1, 1997, $200,000
remained outstanding.
In connection with the Initial Public Offering, the Company entered into a
restructuring (the "Restructuring") pursuant to which all of the preferred stock
of ITSA was converted into common stock of ITSA and each share of common stock
of ITSA was exchanged for 1,844 shares of Common Stock of the Company. Pursuant
to the Restructuring, (i) 51% of the voting stock of TV Filme Servicos was
transferred to TVTEL Ltda., an entity all the stock of which is owned by certain
stockholders of the Company who are Brazilian nationals, including certain
directors and executive offices of the Company (namely Tevecap, Mrs. Maria Nise
Lins, Messrs. Hermano Lins and Carlos Andre Lins and Ms. Maria Veronica Lins),
with ITSA retaining 49% of the voting stock and 83% of the economic interests in
TV Filme Servicos; (ii) the operating assets of the wireless cable systems of
Brasilia were transferred from TV Filme Servicos to TV Filme Brasilia Servicos
de Telecomunicacoes Ltda.; and (iii) TV Filme Servicos entered into various
agreements with ITSA and its subsidiaries pursuant to which, among other things,
TV Filme Servicos has authorized ITSA to operate the existing wireless cable
systems under its current licenses and to operate future cable systems under
future license grants. The Company has a representative on the executive
management team of TV Filme Servicos and any sale or transfer of any current or
future license held by TV Filme Servicos is prohibited. ITSA entered into
various agreements with TV Filme Servicos which authorize ITSA's subsidiaries to
operate the existing wireless cable systems under its current licenses and all
other pay television systems under future licenses.
<PAGE>
The Company believes that the above transactions were or are on terms no
less favorable to the Company than could have been obtained in transactions with
independent third parties. All future transactions between the Company and its
officers, directors, principal stockholders or their respective affiliates, will
be on terms no less favorable to the Company than can be obtained from
unaffiliated third parties.
SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Common Stock, as of July 31, 1997, by (i) each
person known to the Company to be the beneficial owner of more than 5% of the
Common Stock, (ii) each of the Company's directors, (iii) each of the Named
Executive Officers, and (iv) all directors and executive officers as a group.
All information with respect to beneficial ownership has been furnished to the
Company by the respective stockholders of the Company.
AMOUNT AND
NATURE OF PERCENTAGE
BENEFICIAL OF
NAME AND ADDRESS (1) OWNERSHIP (2) CLASS (2)
-------------------- -------------- ----------
Warburg, Pincus Investors, L.P.
466 Lexington Avenue
New York, New York 10017(3)(4)............. 4,530,708 42.1%
Tevecap S.A.
Rua do Rocio, 313
Suite 101
Sao Paulo, Brazil(5)....................... 1,665,132 16.0
Maria Nise Studart Lins de Albuquerque........ 1,069,520 10.5
Hermano Studart Lins de Albuquerque........... 286,968 2.8
Carlos Andre Studart Lins de Albuquerque...... 286,968 2.8
Douglas M. Karp(4)(6)......................... 4,530,708 42.1
Jose Augusto Pinto Moreira(5)(7).............. 1,665,132 16.0
Raul Rosenthal(5)(7).......................... 1,665,132 16.0
David E. Libowitz............................. -- --
Alvaro J. Aguirre(8).......................... 27,128 *
All Executive officers and directors
as a group (7 persons)...................... 6,796,904 61.6%
- ----------------
* Less than 1%.
(1) Unless otherwise indicated above, the address for each stockholder
identified above is TV Filme, Inc. c/o ITSA-Intercontinental
Telecomunicacoes Ltda, SCS, Quadra 07-Bl.A, Ed. Executive Tower, Sala 601,
70.300-911 Brasilia-DF, Brazil.
(2) Beneficial ownership is determined in accordance with the rules of the
Commission. In computing the number of shares beneficially owned by a
person and the percentage ownership of that person, shares of Common Stock
subject to options and warrants held by that person that are currently
exercisable or exercisable within 60 days of July 31, 1997 are deemed
outstanding. Such shares, however, are not deemed outstanding for the
purposes of computing the percentage ownership of any other person. Except
as indicated in the footnotes to this table, each
<PAGE>
stockholder named in the table has sole voting and investment power with
respect to the shares set forth opposite such stockholder's name.
(3) E.M. Warburg, Pincus & Co., LLC, a New York limited liability company
("E.M. Warburg"), manages Warburg, Pincus. WP, the sole general partner of
Warburg, Pincus, has a 20% interest in the profits of Warburg, Pincus.
Lionel I. Pincus is the managing partner of WP and the managing member of
E.M. Warburg and may be deemed to control both WP and E.M. Warburg. The
members of E.M. Warburg are substantially the same as the partners of WP.
(4) Includes 567,952 shares of Common Stock which Warburg, Pincus has the right
to acquire through exercise of a warrant issued by the Company in March
1996.
(5) Includes 208,372 shares of Common Stock which Tevecap has the right to
acquire through exercise of a warrant issued by the Company in March 1996.
(6) All of the shares indicated as owned by Mr. Karp are owned directly by
Warburg, Pincus and are included because of Mr. Karp's affiliation with
Warburg, Pincus. Mr. Karp, the Chairman of the Board of the Company, is a
Managing Director and member of E.M. Warburg and a general partner of WP.
As such, Mr. Karp may be deemed to have an indirect pecuniary interest,
within the meaning of Rule 16a-1 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), in an indeterminate portion of the shares
of Common Stock beneficially owned by Warburg, Pincus and WP. Mr. Karp
disclaims "beneficial ownership" of these shares within the meaning of Rule
13d-3 under the Exchange Act.
(7) All of the shares indicated as owned by Mr. Moreira and Mr. Rosenthal,
respectively, are owned directly by Tevecap and are included because of Mr.
Moreira's and Mr. Rosenthal's respective affiliations with Tevecap. Mr.
Moreira and Mr. Rosenthal each disclaim "beneficial ownership" of these
shares within the meaning of Rule 13d-3 under the Exchange Act.
(8) Includes the following number of shares of Common Stock which the executive
officers have the right to acquire through the exercise of options within
60 days of July 31, 1997: Mr. Hermano Lins, 22,000; Mr. Carlos Andre Lins,
22,000; and Mr. Aguirre, 22,000.
CUMULATIVE TOTAL STOCKHOLDER RETURN
The following graph shows a comparison of cumulative total returns on the
Common Stock against the cumulative total returns for The Nasdaq Stock Market -
U.S. and Foreign Index and The Nasdaq Telecommunications Index. The graph
assumes an investment of $100 on July 30, 1996 (the date the Common Stock began
trading on The Nasdaq National Market) in the Common Stock, The Nasdaq Stock
Market - U.S. and Foreign Index and The Nasdaq Telecommunications Index.
Cumulative total return assumes reinvestment of dividends. The performance shown
is not necessarily indicative of future performance.
<PAGE>
[Performance Graph]
MONTHLY CUMULATIVE TOTAL VALUES*($)
------------------------------------------------------------
THE NASDAQ THE NASDAQ
1996 STOCK MARKET - U.S. AND TELECOMMUNICATIONS
MONTH-END THE COMPANY FOREIGN INDEX INDEX
- --------- ----------- ------------- -----
July 113 101 102
August 139 107 106
September 138 115 110
October 150 113 105
November 138 120 107
December 128 120 110
*$100 invested on July 30, 1996 in Common Stock or index, including
reinvestment of dividends, fiscal year ending December 31.
<PAGE>
PROPOSAL 2 - RATIFICATION OF THE SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors desires to obtain stockholder ratification of the
resolution appointing Ernst & Young Auditores Independentes S.C., as independent
accountants for the Company for fiscal year 1997. Ernst & Young Auditores
Independentes S.C. served as the Company's auditors for the fiscal year ended
December 31, 1996.
If the appointment of Ernst & Young Auditores Independentes S.C. is not
ratified, the adverse vote will be considered as an indication to the Board of
Directors that it should select other independent accountants for the following
fiscal year. Given the difficulty and expense of making any substitution of
accountants after the beginning of the current fiscal year, it is contemplated
that the appointment for fiscal year 1997 will be permitted to stand unless the
Board of Directors finds other good reason for making a change.
A representative of Ernst & Young Auditores Independentes S.C. will attend
the Annual Meeting, will have an opportunity to make a statement if he or she
desires to do so, and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG AUDITORES
INDEPENDENTES S.C. AS INDEPENDENT AUDITORS FOR THE COMPANY FOR FISCAL
YEAR 1997.
COSTS OF SOLICITATION
The cost of preparing, printing and mailing this Proxy Statement and the
accompanying proxy card, and the cost of solicitation of proxies on behalf of
the Company's Board of Directors will be borne by the Company. In addition to
the use of the mail, proxies may be solicited personally or by telephone or
regular employees of the Company without additional compensation. Banks,
brokerage houses and other institutions, nominees or fiduciaries will be
requested to forward the proxy materials to the beneficial owners of the Common
Stock held of record by such persons and entities and will be reimbursed for
their reasonable expenses incurred in connection with forwarding such material.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows of no
other matters which will be brought before the Annual Meeting. In the event that
any other business is properly presented at the Annual Meeting, it is intended
that the persons named in the enclosed proxy will have authority to vote such
proxy in accordance with their judgment on such business.
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
certain officers and persons holding more than 10% of a registered class of the
Company's equity securities to file reports of ownership and reports of changes
in ownership with the Commission and The Nasdaq National Market. Directors,
certain officers and greater than 10% stockholders are also required by
Commission regulations to furnish the Company with copies of all such reports
that they file. Based on the Company's review of copies of such forms provided
to it, the Company believes that all filing requirements were complied with
during the fiscal year ended December 31, 1996, except for one late filing for
each of Messrs. Hermano Lins, Carlos Andre Lins, Aguirre and Dascal.
SUBMISSION OF STOCKHOLDER PROPOSALS
Stockholder proposals submitted for inclusion in the Proxy Statement to be
issued in connection with the Company's 1998 Annual Meeting of Stockholders must
be mailed to the Corporate Secretary, TV Filme, Inc., c/o John Capetta, Kelley
Drye & Warren LLP, Two Stamford Plaza, 281 Tresser Blvd., Stamford, CT 06901 and
must be received by the Corporate Secretary on or before May 2, 1998. See
"General Information Relating to the Board of Directors -- Committees of the
Board of Directors."
ANNUAL REPORT
A copy of the Company's 1996 Annual Report to Stockholders is being mailed
with this Proxy Statement to each stockholder entitled to vote at the Annual
Meeting. Stockholders not receiving a copy of such Annual Report may obtain one,
without charge, by writing or calling James P. Prenetta of Kelley Drye & Warren
LLP, Two Stamford Plaza, 281 Tresser Blvd., Stamford, CT 06901, telephone (203)
351-8038.
By Order of the Board of Directors,
/s/ Hermano Studart Lins de Albuquerque
Hermano Studart Lins de Albuquerque
SECRETARY
August 4, 1997
<PAGE>
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
TV FILME, INC.
The undersigned hereby appoints Hermano Studart Lins de Albuquerque
and Alvaro J. Aguirre as proxies, with power to act without the other and with
power of substitution, and hereby authorizes them to represent and vote, as
designated on the other side, all the shares of stock of TV Filme, Inc. standing
in the name of the undersigned with all powers which the undersigned would
possess if present at the Annual Meeting of Stockholders of the Company to be
held September 9, 1997 or any adjournment or postponement thereof. This Proxy,
when properly executed, will be voted in the manner directed herein by the
undersigned. If this Proxy is returned without direction being given, this Proxy
will be voted FOR proposals 1 and 2.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
<TABLE>
<S> <C>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2. Please mark ---
your vote as | X |
indicated on ---
this example
ITEM 1 - ELECTION OF DIRECTORS ITEM 2 - APPOINTMENT OF ERNST & YOUNG
WITHHELD AUDITORES INDEPENDENTES S.C., AS
FOR FOR ALL INDEPENDENT ACCOUNTANTS
--- -------
--- ---
| | | | FOR AGAINST ABSTAIN
--- ---
--- --- ---
| | | | | |
--- --- ---
Nominees:
Hermano Studart Lins de Albuquerque
David E. Libowitz
WITHHELD FOR: (Write each nominee's name in
space provided below.)
- --------------------------------------------
Signature------------------------------- Signature --------------------------- Date----------------
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustees
or guardian, please give full title as such.
- ------------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
</TABLE>
