<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Event: August 5, 1996
United International Holdings, Inc.
----------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 0-21974 84-1116217
------------ ----------- --------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification #)
incorporation)
4643 South Ulster Street, Suite 1300, Denver, CO. 80237
--------------------------------------------------------
(Address of Principal Executive Office)
(303) 770-4001
---------------------------------------------------------
(Registrant's telephone number, including area code)
<PAGE>
Item 2. Acquisition or Disposition of Assets
- ------- ------------------------------------
On August 5, 1996, a wholly-owned subsidiary of United International Holdings,
Inc. (the "Company"), sold its effective 34% economic interest in its Sao Paulo,
Brazil multi-channel television system ("Net Sao Paulo") for $78.1 million. The
sale price was satisfied with $43.1 million of cash and a promissory note (which
is guaranteed by another shareholder of Net Sao Paulo) in the amount of $35.0
million, which bears interest at a rate of 12% per year, due August 5, 1997.
The Company expects the gain on sale to approximate $67.5 million.
The Company sold its 34% interest to Preferential Holdings Limited, a company
registered in the British Virgin Islands and an individual, neither of which is
affiliated with the Company or its officers and directors. The purchase price
was determined by negotiation among the parties. The Company considered
discounted cash flow analysis along with an analysis of internal rates of return
for the Company in agreeing to the price.
Item 7. Financial Statements and Exhibits
- ------- ---------------------------------
(b) Pro Forma Financial Information. On July 3, 1996, the Company acquired the
remaining 50% interest in Saturn Communications Limited ("Saturn"), which
operates a multi-channel television system in New Zealand. The Company
purchased the additional 50% interest in Saturn in exchange for 2.6% of the
common stock of UIH Australia/Pacific, Inc. ("UIH AP") a wholly-owned
subsidiary of the Company prior to the Saturn acquisition.
On June 26, 1996 the Company acquired the remaining 35% interest in Red de
Television y Servicios por Cable S.A. ("STX"), the company that operates a
multi-channel television system in Chile. The purchase price was
approximately $24.0 million, of which $16.0 million was paid at closing, the
balance to be paid over a two-year period in quarterly installments. The
Company currently owns 100% of STX, however, this is considered temporary
due to a pending transaction in Chile which will result in a less than
majority ownership. Thus, the Company's investment in STX is accounted for
under the equity method of accounting.
The following unaudited pro forma consolidated balance sheet gives effect to
the disposition of Net Sao Paulo and the acquisition of Saturn and STX as if
each had occurred on May 31, 1996. The following unaudited pro forma
consolidated statements of operations for the year ended February 29, 1996
and for the three months ended May 31, 1996 give effect to the disposition
of Net Sao Paulo and the acquisition of Saturn and STX as if each had
occurred on January 1, 1995. The consolidated financial information and
notes thereto do not purport to represent what the Company's results of
operations would actually have been if such transactions had in fact
occurred on such date.
The pro forma adjustments are based upon currently available information and
upon certain assumptions that management believes are reasonable under
current circumstances. The unaudited pro forma consolidated financial
information and accompanying notes should be read in conjunction with the
consolidated financial statements and the related notes thereto, and other
financial information pertaining to the Company, filed with the Securities
and Exchange Commission.
2
<PAGE>
<TABLE>
<CAPTION>
As of May 31, 1996
----------------------------------------------------------------------------
Disposition of Consolidation Acquisition
Historical Net Sao Paulo(1) of Saturn(2) of STX(3) Pro Forma
---------- ---------------- ------------- --------- ---------
(In thousands)
<S> <C> <C> <C> <C> <C>
Consolidated Condensed Balance Sheet
Assets
Cash and cash equivalents and short-term
investments including restricted cash............... $122,176 $ 43,098 $ 10 $(16,000) $149,284
Costs to be reimbursed by affiliated companies........ 8,166 -- -- -- 8,166
Property and equipment, net........................... 49,028 -- 2,345 -- 51,373
Acquisition, transaction and development costs........ 5,427 -- -- -- 5,427
Investments in and advances to affiliated companies... 274,542 (12,838) (4,308) 24,000 281,396
Goodwill.............................................. 45,977 -- 9,734 -- 55,711
Other assets.......................................... 52,486 35,000 1,432 -- 88,918
-------- -------- ------- -------- --------
Total assets.................................. $557,802 $ 65,260 $ 9,213 $ 8,000 $640,275
======== ======== ======= ======== ========
Liabilities and Stockholders' Equity
Accounts payable, accrued liabilities and other....... $ 16,029 $ -- $ 1,413 $ 8,000 $ 25,442
Senior secured notes and other debt................. 384,892 -- -- -- 384,892
-------- -------- ------- -------- --------
Total liabilities............................. 400,921 -- 1,413 8,000 410,334
Minority interest..................................... 1,889 -- 7,800 -- 9,689
Convertible preferred stock........................... 30,370 -- -- -- 30,370
Stockholders' equity.................................. 124,622 65,260 -- -- 189,882
-------- -------- ------- -------- --------
Total liabilities and stockholders' equity.... $557,802 $ 65,260 $ 9,213 $ 8,000 $640,275
======== ======== ======= ======== ========
</TABLE>
(1) Represents the Company's sale of Net Sao Paulo for $43.1 million in cash
and a note receivable in the amount of $35.0 million.
(2) Represents the Company's purchase of the additional 50% interest in Saturn
in exchange for 2.6% of the common stock of UIH AP. The fair value of the
shares issued was arrived at by using traditional valuation methodology in
the cable television industry such as discounted cash flow methods and the
Company's historical rates of return.
(3) Represents the acquisition of the additional 35% interest in STX for $16.0
million in cash and a note payable totaling $8.0 million.
<TABLE>
<CAPTION>
Fiscal Year Ended February 29, 1996
--------------------------------------------------------------------------------
Disposition of Consolidation Acquisition
Historical Net Sao Paulo(1) of Saturn(2) of STX(3) Pro Forma
---------- ---------------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C>
(In thousands, except share and per share data)
Consolidated Condensed Statement of Operations
Management fee income from related parties......... $ 507 $ -- $ -- $ -- $ 507
Service revenue..................................... 2,363 -- 148 -- 2,511
Operating expense................................... (4,224) -- (863) -- (5,087)
General and administrative expense.................. (22,483) -- (1,502) -- (23,985)
Depreciation and amortization....................... (2,331) -- (1,009) -- (3,340)
-------- ------- ------- ---- -----------
Net operating loss............................... (26,168) -- (3,226) -- (29,394)
Other income (expense):
Equity in income (losses) of affiliated companies, net (48,635) 5,837 1,438 337 (41,023)
Gain on sale of investment in affiliated company.... 16,013 70,236 -- -- 86,249
Interest, net....................................... (27,628) -- -- -- (27,628)
Provision for losses on investment related costs.... (6,055) -- -- -- (6,055)
Other............................................... 1,162 -- (55) -- 1,107
-------- ------- ------- ---- -----------
Net loss......................................... $(91,311) $76,073 $(1,843) $337 $ (16,744)
======== ======= ======= ==== ===========
Net loss per common share........................... $ (2.68) $ (0.49)
======== ===========
Weighted average number of shares outstanding....... 34,017,660 34,017,660
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended May 31, 1996
------------------------------------------------------------------------------
Disposition of Consolidation Acquisition
Historical Net Sao Paulo(1) of Saturn(2) of STX(3) Pro Forma
------------ ---------------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
(In thousands, except share and per share data)
Consolidated Condensed Statement of
Operations
Management fee income from related parties........... $ 317 $ -- $ -- $ -- $ 317
Service revenue...................................... 2,172 -- 52 -- 2,224
Operating expense.................................... (5,109) -- (252) -- (5,361)
General and administrative expense................... (6,344) -- (439) -- (6,783)
Depreciation and amortization........................ (2,897) -- (254) -- (3,151)
--------- ------- ------ ---- ---------
Net operating loss................................ (11,861) -- (893) -- (12,754)
Other income (expense):
Equity in income (losses) of affiliated companies,
net................................................. (12,202) 1,649 401 222 (9,930)
Gain on sale of investment in affiliated company..... -- 65,162 -- -- 65,162
Interest, net........................................ (11,308) -- -- -- (11,308)
Provision for losses on investment related costs..... (352) -- -- -- (352)
Other............................................... 405 -- 41 -- 446
--------- ------- ------ ---- ---------
Net income (loss)............................... $ (35,318) $66,811 $ (451) $222 $ 31,264
========= ======= ====== ==== =========
Unaudited net income (loss) per common share....... $ (0.91) $ 0.80
========= =========
Unaudited weighted average number of shares
outstanding........................................ 39,008,310 39,008,310
</TABLE>
(1) Represents the elimination of equity in losses of Net Sao Paulo recognized
during the year ended February 29, 1996 and the three months ended May 31,
1996 and the recognition of the gain on sale.
(2) Represents the consolidation of Saturn and the elimination of the previously
recorded equity in losses. Included in depreciation and amortization
expense is $624,000 and $161,000 of amortization for the year ended
February 29, 1996 and for the three months ended May 31, 1996,
respectively, related to the goodwill recorded in connection with the
purchase of the additional 50% interest in Saturn which will be amortized
over 15 years.
(3) Represents the additional equity in income recognized as a result of the
acquisition of the additional 35% interest in STX.
4
<PAGE>
(c) Exhibits
(1) Stock Sale Agreement between UIH Brazil SP, Inc. and United
International Properties, Inc. as sellers and Preferential Holdings
Limited and Antonio Vicente Austregesilo De Athayde as buyers dated
August 5, 1996.
(2) Promissory Note between Preferential Holdings Limited and UIH Brazil
SP, Inc. dated August 5, 1996.
5
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNITED INTERNATIONAL HOLDINGS, INC.
Date: August 15, 1996
-----------------------------------
By: /S/ Bernard G. Dvorak
----------------------------------------
Bernard G. Dvorak
Chief Financial Officer
(A Duly Authorized Officer and Principal Financial Officer)
6
<PAGE>
EXHIBIT 1
STOCK SALE AGREEMENT
This Agreement is made by and between:
I. As Sellers,
1. UTH BRAZIL SP, INC., a corporation with principal executive offices in
Denver, State of Colorado, U.S.A., at 4643 South Ulster Street, herein
represented by its attorney-in-fact, Manoel Joaquim Pereira dos Santos,
hereinafter referred to individually as UIH SP; and
2. UNITED INTERNATIONAL PROPERTIES, INC., a corporation with principal
executive offices in Denver, State of Colorado, U.S.A., at 4643 South
Ulster Street, herein represented by attorney-in-fact, Manoel Joaquim
Pereira dos Santos, hereinafter referred to individually as UIH; and
II. As Buyers,
3. PREFERENTIAL HOLDINGS LIMITED, a Company registered in Tortola, British
Virgin Islands, whose registered office is situated at PO Box 3340, Road
Town, Tortola, British Virgin Islands, herein represented by its
attorneys-in-fact, Roberto Pinheiro da Silva, Brazilian citizen, married,
accountant, holder of CIRG no. 04140327-0 and CIC/MF 455.608.207-25,
domicilied at Av. Afranio de Melo Franco, 135, Rio de Janeiro, State of
Rio de Janeiro, Brazil, Marcos da Cunha Carneiro, Brazilian citzen,
married, economist, holder of CIRG no. 04.831.135-1/IFP and CIC/MF
663.964.337-53, domicilied at Av. Afranio de Melo Franco, 135, Rio de
Janeiro, State of Rio de Janerio, Brazil hereinafter referred to
individually as PREFERENTIAL; and
4. ANTONIO VICENTE AUSTREGESILO DE ATHAYDE, a Brazilian citizen, married,
engineer, residing and domiciled in Sao Paulo, State of Sao Paulo,
Brazil, at Rua Rubens Margliano, 186, holder of CIRG no. 1,914,622-4,
and of CIC/MF no. 180,022,007-30, hereinafter referred to individually as
ATHAYDE, and
III. As Guarantor,
5. UBSP TECNOLOGIA LTDA., a Brazilian limited liability quota company with
head offices in Sao Paulo, State of Sao Paulo, Brazil, at Rua Bandeira
Paulista, 716 - 11th floor - suite 113, herein represented by its new
Managing Director Roberto Pinheiro da Silva, Brazilian citizen, married,
accountant, holder of CIRG no. 04140327-0 and CIC/MF 455.608.207-25,
domiciled at Av. Afranio de Melo Franco, 135, Rio de Janeiro, State of
Rio de Janerio, Brazil, hereinafter referred to sometimes as UBSP; and
<PAGE>
IV. As Consenting Parties,
6. BLANTON CORPORATION SOCIEDAD ANONIMA, an Uruguayan company with principal
offices in Montevideo, Uruguay, at Convencion 1343-Piso 9, herein
represented by its attorney-in-fact, Arthur Rotenberg, Brazilian citizen,
married, lawyer, holder of CIRG no. 5.130.140 and CIC/MF no.029.398.998-27,
hereinafter referred to individually as BLANTON;
7. SISON PARTICIPACOES E. EMPREENDIMENTOS LTDA., a Brazilian limited liability
quota company, with head offices in Porto Alegre, State of Rio Grande do
Sul, Brazil, at Avenida Erico Verissimo, 400, registered with the
Brazilian Taxpayer Registry (CGC/MF) under no. 93.135.606/0001-15, herein
represented by its attorney in fact Roberto Pinheiro da Silva (above
qualified), hereinafter referred to individually as SISON; and
8. NET BRASIL S.A., a Brazilian corporation, with head offices in Sao Paulo,
State of Sao Paulo, Brazil, at Avenida Miruna, 168, registered with the
Brazilian Taxpayer Registry (CGC/MF) under no.71.783.393/0001-03, herein
represented by its attorneys in fact, Antonio Vicente Austregesilo de
Athayde and Roberto Pinheiro da Silva, hereinafter referred to individually
as Net Brasil;
9. CABODINAMICA TV CABO SAO PAULO S/A., a Brazilian corporation with head
offices in this Capital City, at Av. Eusebio Matoso, 1.375, registered
with the Brazilian Taxpayer Registry (CGC/MF) under no. 65.516.154/0001-02,
herein represented by its Directors, Marcio Augusto Romeiro da Roza,
Brazilian citizen, married, manager, holder of CIRG no. 02321129-5 and
CIC/MF no. 181.107.207-06, domicilied at Rua Sanharo, 626, in Sao Paulo,
State of Sao Paulo, Brazil, and Joao Roberto Brito, Brazilian citizen,
married, manager, holder of CIRG no. 801.579.8146 and CIC/MF no.
381.908.850-49, domicilied at Av. Dr. Guilherme Dumondt Villares, 2000,
ap. 52, in Sao Paulo, State of Sao Paulo, Brazil, hereinafter referred
to individually as NET SAO PAULO;
10. ZENIT REALTY IMOVEIS S.A., a Brazilian Corporation, with head offices
in Rio de Janeiro, State of Rio de Janeiro, Brazil, at Av. Presidente
Wilson, 231, 2nd floor-part, registered with the Brazilian Taxpayer
Registry (CGC/MF) under no.72.051.675/0001-70, herein represented by
its attorneys in fact, Roberto Pinheiro da Silva and Marcos da Cunha
Carneiro, (both above qualified), hereinafter referred to individually
as ZENIT; and
11. GLOBO CABO S.A., a Brazilian corporation with head offices in the
City of Rio de Janeiro, State of Rio de Janeiro, registered with the
Brazillian Taxpayer Registry (CGC/MF) under no. 00.065.376/0001-84,
herein represented by its attorneys in fact, Antonio Vicente Austregesilo
de Athayde and Roberto Pinheiro da Silva, (both above qualified),
hereinafter referred to as GLOBOCABO
V. As Assignor.
12. UIH BRAZIL, INC., a company with main offices in Denver, State of
Colorado, USA, at 4643 South Ulster Street, hereinafter referred to
individually as UIH BRAZIL.
<PAGE>
WHEREAS, UIH and UIH SP are the only quotaholders of UBSP and the total
corporate capital of UBSP is of R$ 11,283,044.00 (eleven million two hundred
eighty three thousand and fourty four reais), divided into 11,283,044 quotas
(hereinafter referred to as the Quotas) in the par value of R$ 1.00 (one real)
each, all of which are free and clear of any burdens, liens or encumbrances of
any kind;
WHEREAS, UBSP holds 304,033 common shares (hereinafter referred to as the
Shares), representing 34% of the total capital stock of NET SAO PAULO, free and
clear of any burdens, liens or encumbrances of any kind, except that the Shares
are subject to a certain Shareholders' Agreement, as described below;
WHEREAS, UBSP was created as a result of a spin-off of UIH do Brasil Tecnologia
Ltda. (hereinafter referred to as UIH do Brasil), a Brazilian limited liability
company with head offices in Sao Paulo, State of Sao Paulo, Brazil, at Rua
Bandeira Paulista, 716-11th floor - suite 111, registered with the Brazilian
Paxpayer Registry (CGC/MF) under no. 71.732.556/0001-10, and UBSP is a successor
of UIH do Brasil in all rights and obligations previously held by UIH do Brasil
with respect to the Shares;
WHEREAS, UBSP, as a successor to UIH do Brasil, GLOBOCABO, BLANTON, SISON,
ZENIT, and the Board members of NET SAO PAULO are the only shareholders of NET
SAO PAULO and UIH do Brasil, GLOBOCABO, BLANTON, SISON, and ZENIT have signed a
Shareholders' Agreement dated as of April 20, 1993, as amended as of October 6,
1993 (hereinafter referred to as the Shareholders' Agreement);
WHEREAS, UIH and UIH SP have agreed to sell to BUYERS and BUYERS have agreed to
buy from UIH and UIH SP all of the equity interest held by UIH and UIH SP in
UBSP, which equity interest is represented by the Quotas;
The parties mutually agree and undertake to abide by and to make that their
successors or assignees abide by the following:
CLAUSE I
UIH SP and UIH hereby promise to assign and transfer to BUYERS the Quotas, fully
paid-in, in the aggregate par value of R$ 11,283,044.00 (eleven million two
hundred eighty three thousand and fourty four reais), representing 100% (one
hundred percent) of UBSP's corporate capital, free and clear of any burdens,
liens or encumbrances of any kind. BUYERS hereby promise to acquire from UIH
and UIH SP all of the Quotas, subject to the terms and conditions of this
Agreement, as follows: (i) UIH SP will sell all of its Quotas to PREFERENTIAL
and (ii) UIH will sell its quota to ATHAYDE.
CLAUSE II
BUYERS hereby agree to pay to SELLERS, for the purchase of the Quotas, the
amount of US$ 78,098,110.00 (seventy eight million ninety eight thousand one
hundred and ten United States dollars) as follows: (i) US$ 78,098,103 (seventy
eight million ninety eight thousand one hundred and three United States dollars)
shall be paid to UIH SP by PREFERENTIAL for the purchase of 11,283,044 quotas
out of the Quotas and (ii) US$ 7.00 (seven United States dollars) shall be paid
to UIH by ATHAYDE for the purchase
<PAGE>
of one quota out of the Quotas. All payments hereunder shall be made free
and clear of any deductions, setoffs or withholdings, in funds promptly
available to UIH and UIH SP in USA.
CLAUSE III
The total purchase price provided in Clause II hereof shall be paid by
BUYERS to SELLERS as follows:
(a) an initial payment in the amount of US$ 43,098,110.00 (fourty
three million ninety eight thousand one hundred and ten United
States dollars) is to be paid as follows, subject to the provisions
of Clause IV hereof in case of late payment: (i) US$ 43,098,103.00
(fourty three million, ninety eight thousand, one hundred and
three United States dollars) will be paid to UIH SP by PREFERENTIAL
and (ii) US$ 7.00(seven United States dollars) will be paid to
UIH by ATHAYDE up to August 7, 1996 by means of a wire transfer as
follows: [Sellers Bank Account]; and
(b) the balance of the total Purchase Price, in the amount of US$
35,000,000.00 (thirty five million United States dollars) will be paid to
UIH SP in one single installment within one year as of the date of the
signature of this agreement, PREFERENTIAL may pay this installment at any
time before its mature date, observed the Section VI hereof,
In consideration of the purchase and sale contemplated hereunder and as a
condition to such transaction, the parties also agree to the following:
(i) UIH do Brasil, UIH SP, UIH and affiliated companies will have
the right to purchase programming from NET BRASIL and its
affiliated companies, including, but not limited to, those
packaged and produced by Globosat. The terms and conditions of
this provisions will be consistent with NET BRASIL's normal
commercialization practices be it through the NET BRASIL
franchising agreements or strict programming sale at the
choice of either UIH do Brasil, UIH SP, UIH or their affiliated
companies for those operations where UIH do Brasil, UIH SP, UIH or
affiliated companies have invested and will invest in the future;
(ii) UIH do Brasil will retain its current ownership of 46.25% in
TV Cabo e Comunicacoes de Jundiai S.A. (the "Net Jundiai"),
a Brazilian corporation with head offices in the City of Jundiai,
State of Sao Paulo, at Rua Antonio Maximiliano de Almeida, 537,
registered with the Brazilian Taxpayer Registry (CGC/MF) under
no. 62.059.084/0001-96 and GLOBO CABO S.A. (GLOBOCABO) will
support UIH do Brasil in its suggestions of key executives for
Net Jundiai in the future; and
<PAGE>
(iii) Neither GLOBOCABO nor an affiliate of GLOBOCABO will compete with
TV Show Brasil S.A. in Fortaleza, State of Ceara, through investments
in the CATV or MMDS business in that market.
(c) NET BRASIL, GLOBOCABO, BLANTON, SISON, and ZENIT hereby give UIH, UIH SP,
UBSP and UIH do Brasil full release for any and all capital contributions
due to NET SAO PAULO by any of them on behalf of UBSP and/or UIH do
Brasil;
CLAUSE IV
The installment contemplated in Clause III(b) hereof shall bear interest at the
rate of 12% (twelve percent) per year to be computed on a pro rata basis from
the date of this Agreement until actual payment of the installment contemplated
in Clause III(b) is fully made. Payments in arrears will also be subject to a
penalty equivalent to 10% (ten percent) of the overdue amount. The accrued
interest shall be paid monthly to UIH SP until the installment contemplated in
Section III(b) is paid in full.
CLAUSE V
If the interest is not paid by PREFERENTIAL on its maturity date and remains
unpaid for a period in excess of thirty days from the maturity date, then UIH SP
shall be entitled to declare the acceleration of the maturity date of the
installment contemplated in Clause III(b), irrespective of any judicial or
out-of-court notice, and such installment shall then become immediately due and
payable after expiration of the 30-day period referred to above.
CLAUSE VI
PREFERENTIAL, hereby delivers to UIH SP a Promissory Note in favor of UIH SP, in
the amount of U$ 35,000,000.00 (thirty five million United States dollars), due
on August 5, 1997, representing the installment contemplated in Clause III(b),
duly guaranteed by Globo Comunicacoes e Participacoes Ltda. - GLOBOPAR, a
Brazilian corporation with head offices in the City of Rio de Janeiro, State of
Rio de Janeiro, at Av. Afranio de Melo Franco, 135, registered with the
Brazilian Taxpayer Registry (CGC/MF) under no. 27.865.757/0001-02. The
Promissory Note will be treated as a negotiable instrument keeping all its
characteristics including its assignability and endorsability by the UIH SP.
In case UIH SP assigns the Promissory Note to a third party using a rate lower
than the 12% (twelve per cent) per year, this rate should be applied upon the
assignment to the amounts due by PREFERENTIAL. PREFERENTIAL should be informed
within 30 (thirty) days after any assignment.
<PAGE>
CLAUSE VII
NET BRASIL, GLOBOCABO, BLANTON, SISON, and Zenit hereby expressly and
irrevocably waive any right of first refusal which NET BRASIL, GLOBOCABO,
BLANTON, SISON and/or ZENIT might have for acquisition of a pro rata portion of
the Shares and/or of the Quotas, pursuant to the terms of the Shareholders'
Agreement, and hereby expressly and irrevocably consent to the purchase and sale
transaction hereunder.
CLAUSE VIII
PREFERENTIAL shall be solely responsible for timely applying for and obtaining
any and all governmental licenses, approvals and registrations required in
connection with the transactions contemplated under this Agreement and shall
bear any and all risks, costs and expenses related thereto. The parties agree to
cooperate in signing the documents necessary to obtain such licenses, approvals
and registrations, as necessary. The parties agree that the transactions
contemplated hereunder are not conditional to PREFERENTIAL's obtaining such
licenses, approvals or registrations.
CLAUSE IX
The SELLERS and BUYERS are hereby signing the Second Amendment to the Articles
of Incorporation of UBSP whereby: (i) SELLERS assign and transfer to BUYERS the
Quotas, (ii) the headoffices of UBSP shall be moved to Avenida Miruna, 168 -
2nd. floor - part, in the city of Sao Paulo, State of Sao Paulo, Brazil, and
(iii) the management of UBSP shall be assigned to Roberto Pinheiro da Silva,
above qualified. The Board members of NET SAO PAULO appointed by UIH and UIH SP
through UBSP shall be replaced immediately effective as of August 5, 1996. The
assignment of the Quotas to Buyers shall take place as soon as (i) PREFERENTIAL
and/or NET SAO PAULO secure all required governmental licenses or approvals or
(ii) the purchase price is paid in full, whichever occurs last, as per the Third
Amendment to the Articles of Incorporation of UBSP signed hereby by SELLERS and
BUYERS.
CLAUSE X
As a result of the purchase and sale transaction contemplated hereunder, UIH
BRAZIL hereby assigns and transfers to PREFERENTIAL all of UIH BRAZIL's right,
title and interest in all credits arising out of the inter-company loans listed
in Attachment A, including without limitation all interest and any other
additional compensation related to such credits.
<PAGE>
CLAUSE XI
As of the date of this Agreement and provided that the payments set forth in
Clauses III and IV hereof are timely made by PREFERENTIAL, BUYERS are hereby
vested with full powers to manage and run UBSP as well as to exercise on behalf
of USBP all rights and privileges arising from the Shares. Likewise, BUYERS
undertake to bear all costs, expenses and burdens associated with the management
and operation of UBSP as of the date of this Agreement and, in connection, agree
to provide NET SAO PAULO pursuant to the equity participation of each one with
all funding and guaranties as necessary in order for NET SAO PAULO to meet its
funding requirements as of June 1st, 1996. BUYERS agree to indemnify, defend and
hold UIH and UIH SP harmless from all claims, damages, losses, costs and
expenses arising from the management and/or operation of UBSP and/or NET SAO
PAULO as of the date of this Agreement. This provision is applicable to all
parties and their successors at any title.
CLAUSE XII
SELLERS agree to indemnify, defend and hold BUYERS harmless from all claims,
damages, losses, costs and expenses arising from the management and/or operation
of UBSP and UIH do BRASIL prior to the date of this Agreement. However, BUYERS
acknowledge that SELLERS are not making any representations or warranties with
respect to NET SAO PAULO and agree that BUYERS will have no recourse against
SELLERS for any claims, damages, losses, costs or expenses arising from the
management and/or operation of NET SAO PAULO prior to the date of this
Agreement.
CLAUSE XIII
BUYERS agree to pay SELLERS, immediately upon demand but in no event later than
five days after such demand, any claims, damages, losses, costs and expenses
for which BUYERS are responsible under the terms of Clause XII hereof. SELLERS
agree to pay to BUYERS, immediately upon demand but in no event later than five
days after such demand, any claims, damages, losses, costs and expenses for
which SELLERS are responsible under the terms of Clause XII hereof.
CLAUSE XIV
In order to guarantee full and prompt payment by PREFERENTIAL of the
installment due UIH SP pursuant to Clause III(b) hereof, in the amount of
US$ 35,000,000 (thirty five million United states dollars) and of the accrued
interests due to UIH SP under the provisions of Clause IV hereof as well as
penalty charges as set forth in Clause IV hereof, UBSP hereby pledges to UIH SP
the Shares, representing today 25.5% of the capital stock of NET SAO PAULO.
BUYERS and UBSP agree that the pledged shares must at all times represent at
least 25.5% of the capital stock of NET SAO PAULO and, therefore, agree that any
and all shares which are issued by NET SAO PAULO up to 25.5% of the capital
stock of NET SAO PAULO shall be deemed included in the pledge.
<PAGE>
hereunder so that all the pledged shares represent at all times 25.5% of the
capital stock of NET SAO PAULO.
CLAUSE XV
BUYERS and UBSP agree that the pledge guaranty given by UBSP hereunder to UIH SP
is subject to the provisions of Clause V hereof and, therefore, agree that a
payment delay by PREFERENTIAL in excess of thirty days from the maturity date of
the installment due under Clause III(b) hereof and the accrued interest will
cause the automatic acceleration of the maturity date of the installment
pursuant to the provisions of Clause V hereof. The pledge hereunder is recorded
in the relevant corporate book of NET SAO PAULO and shall be deemed
automatically released when the payment secured by the pledge is made in full
according to the provisions of this Agreement, including Clauses III, IV and V
hereof. If payment of any amount due by PREFERENTIAL is withheld pursuant to
Clause XIII hereof, then the pledge hereunder will only be released when the
dispute regarding the payment withheld is solved definitively.
CLAUSE XVI
UBSP shall keep all of its voting rights in NET SAO PAULO, including those
relating to the pledged shares, during the term that the Shares are pledged to
UIH SP hereunder.
CLAUSE XVII
Until the installment described in Clause III(b) hereof is paid in full, neither
the control of UBSP nor the Shares can be sold or transferred by BUYERS or UBSP,
as the case may be, without the prior written consent of UIH SP.
CLAUSE XVIII
Without prejudice to the other provisions of this Agreement, NET BRASIL,
GLOBOCABO, BLANTON, SISON, NET SAO PAULO, and ZENIT give to UBSP (for itself and
as a successor to UIH do Brasil) and UBSP (for itself and a successor to UIH do
Brasil) give to BLANTON, SISON, NET SAO PAULO, and ZENIT forever full and
irrevocable release for any claims, rights or obligations resulting from UBSP's
(for itself and as a successor to UIH do Brasil) position as a shareholder of
NET SAO PAULO, including with respect to UBSP's (for itself and as a successor
to UIH do Brasil) rights and obligations under the existing Shareholders'
Agreement.
<PAGE>
CLAUSE XIX
This Agreement shall be governed by and construed in accordance with the laws of
the State of Colorado, USA, except as far as the pledge guaranty hereunder may
be subject to the laws of the Federative Republic of Brazil. Any legal action or
legal proceeding relating to this Agreement shall be instituted in any state or
federal court in New York, State of New York. However, if UIH SP needs to
enforce the pledge guaranty hereunder and/or any rights arising from such
guaranty, the Courts of the city, municipality and county of Sao Paulo, State of
Sao Paulo, Brazil, shall be the sole competent court for all judicial
proceedings with respect to enforcement of such pledge guaranty.
CLAUSE XX
NET BRASIL, GLOBOCABO, BLANTON, SISON and ZENIT hereby expressly and irrevocably
consent to the pledge guaranty given by UBSP under the terms of this Agreement.
NET SAO PAULO is also executing this Agreement to declare its full knowledge of
all the terms and conditions thereof as well as to express to consent to same as
far as the provisions hereunder apply to NET SAO PAULO.
CLAUSE XXI
Each party will bear its own legal, accounting, tax and other fees and expenses
incurred in connection with the transactions contemplated hereunder, except as
otherwise set forth in Clause II hereof.
CLAUSE XXII
The rights and obligations hereunder shall be in force until all the
transactions contemplated under this Agreement are satisfactorily completed.
This Agreement is made on a non-revocable basis for all parties hereto. This
provision is applicable to all parties hereof and their successors at any title.
CLAUSE XXIII
This Agreement may only be modified by a written document signed by all parties
hereto.
<PAGE>
And, being thus agreed and contracted, the parties sign this instrument in 12
(twelve) copies of equal test and effect, in the presence of the two undersigned
witnesses.
Sao Paulo, August 5, 1996
/s/ Manoel Joaquim Pereira dos Santos
UIH BRAZIL SP, INC.
/s/ Manoel Joaquim Pereira dos Santos
UNITED INTERNATIONAL PROPERTIES, INC.
/s/ Marcos da Cunha Carneiro
/s/ Roberto Pinheiro da Silva
PREFERENTIAL HOLDINGS LIMITED
/s/ Antonio Vicente Austregesilo de Athayde
ANTONIO VICENTE AUSTREGESILO DE ATHAYDE
/s/ Roberto Pinheiro da Silva
UBSP TECNOLOGIA LTDA.
/s/ Stephen Carter Dougherty
UIH DO BRASIL TECHNOLOGIA LTDA.
/s/ Roberto Pinheiro da Silva
/s/ Antonio Vicente Austregesilo de Athayde
GLOBO CASO S.A.
SISON S.A.
/s/ Roberto Pinheiro da Silva
/s/ Antonio Vicente Austregesilo de Athayde
NET BRASIL S.A.
/s/ Marcio Augusto Romeiro da Roza
/s/ Joao Alberto Brito
CABODINAMICA TV CABO SAO PAULO S.A.
/s/ Dante Raul Quinterno Schiaffino
/s/ Arthur Rotenberg
BLANTON CORPORATION SOCIEDAD ANONIMA
/s/ Roberto Pinheiro da Silva
SISON EMPREENDIMENTOS LTDA.
/s/ Roberto Pinheiro da Silva
/s/ Marcos da Cunha Carneiro
ZENIT REALTY IMOVEIS S/C S.A.
Witnesses:
1. /s/ Luis Carlos Barbosa /S/ Manoel Joaquim Pereira dos Santos
----------------------------------- UIH BRAZIL, INC
2. /s/ Antonio de Azevedo Dias Rebello
-----------------------------------
<PAGE>
Attachment A
UIH do Brasil
Mutuos de 1995 com Cabodinamica Net Sao Paulo, celidos a
UIH Brazil, Inc.
em Setembro de 1995
Saldos em 31 de Julho de 1996
R$ USDollars
--------------------------------------------- -------------
Valor Valor Valor atuali- Valor Hist.
Historico Cessao de zado por US$
R$ Credito Corr Monel/a/
3,085,000.00 3,857,868.00 4,211,345.80 3,809,798.83
Totals ============================================= =============
Obs: Saldos atualizados por CDI + 0.5% am ate a data de Cessao de
Credito. Atualizacao congelade a partir de antao.
<PAGE>
EXHIBIT 2
PROMISSORY NOTE
US$ 35,000,000.00 DUE: August 5, 1997
For value received, PREFERENTIAL HOLDINGS LIMITED, a Company registered in
Tortola, British Virgin Islands, whose registered office is situated at PO Box
3340, Road Town, Tortola, British Virgin Islands, hereby unconditionally
promises to pay to UIH BRAZIL SP, INC., a Corporation with principal executive
offices in Denver, State of Colorado, U.S.A., at 4643 South Ulster Street,
US$ 35,000,000.00 (Thirty-Five Million United States dollars) on the fifth day
of August of nineteen ninety seven (August 5th, 1997), to be paid in United
Stated dollars at payee's principal address, in immediately available funds,
free and clear of and without any deduction for all and any taxes, imposts,
levies, charges, including withholding income tax.
The principal amount shall bear interest at the rate of 12% (twelve percent) per
year to be computed on a pro rata basis from the date of this Promissory Note
until actual payment of the principal amount is fully made.
In the event that this Promissory Note is not paid on maturity the overdue
amount shall bear interest at the rate of 12% (twelve percent) per year to be
computed on a pro rata basis, and a penalty equivalent to 10% (ten percent) of
the amount.
PREFERENTIAL HOLDINGS LIMITED
By /s/ Roberto Pinheiro da Silva
By /s/ Marcos da Cunha Carneiro
-------------------------------------
Name:
Title:
Date:
GUARANTEE ("AVAL")
For value received, GLOBO COMUNICACOES E PARTICIPACOES LTDA. - GLOBOPAR, a
Brazilian corporation with head offices in the City of Rio de Janeiro, State of
Rio de Janeiro, Brazil, at Av. Afranio de Melo Franco, 135, registered with the
Brazilian Taxpayer Registry (CGC/MF) under no. 27.865.757/0001-02, hereby
unconditionally and irrevocably guarantees as primary obligor ("avalista") and
not as surely merely, the prompt and punctual payment of this Promissory Note on
maturity on due date together with any and all sums due under this Note or in
enforcing any right hereunder in respect thereto.
GLOBO COMUNICACOES E PARTICIPACOES LTDA. - GLOBOPAR
By /s/ Marcos da Cunha Carneiro
By /s/ Jose' Luis Magalhaes Salazar
--------------------------------------
Name:
Title:
Date:
