Joint Venture Agreement

EXHIBIT 10.38


JOINT VENTURE AGREEMENT


BETWEEN


1. Quelle Schickedanz AG & Co. with its seat in Furth, Germany (hereinafter referred to as "Quelle") and


2. Home Shopping Network Inc. with its seat in St. Petersburg, Florida, United States of America (hereinafter referred to as "HSN Inc."),


3. Home Shopping Network GmbH i.Gr. with its seat in Frankfurt am Main, Germany (hereinafter referred to as "HSN GmbH") (together with HSN Inc. jointly referred to as "HSN").


4. Thomas Kirch, (hereinafter referred to as "Kirch")


5. Dr. Georg Jakob Kofler, (hereinafter referred to as "Kofler")


Quelle, HSN, Kirch and Kofler are occasionally referred to as "Shareholders" or "Parties".


PREAMBLE


A. In April, 1995, Pro7 Television GmbH and Quelle have agreed to cooperate in the area of teleshopping in the form of the joint venture company H.O.T. Home Order Television GmbH & Co. KG, Unterfohring -- hereinafter referred to as "HOT-KG" -- and its general partner H.O.T. Home Order Television Verwaltungs GmbH, Unterfohring -- hereafter referred to as "HOT-GmbH". HOT-KG and HOT-GmbH are occasionally also referred to hereafter as "HOT Companies".


In December, 1995, Pro 7 Television GmbH was released from certain duties under the said cooperation agreement. At that time, Pro 7 Television GmbH divided its share in HOT-GmbH into two shares and transferred them to Kirch and Kofler. Also, Pro 7 Television GmbH transferred its interests in HOT-KG to Kirch and Kofler, who joined into the joint venture cooperation agreement described above.


Now, HSN, Quelle, Kirch and Kofler have agreed that HSN will join the HOT Companies pursuant to the provisions of the Purchase and Sale Agreement of the same day and the Articles of Incorporation attached as Exhibit 5.2.1 thereto -- hereafter referred to as Articles of Incorporation" -- for HOT-GmbH and the Partnership Agreement for HOT-KG attached as Exhibit 5.1.1 thereto -- hereafter referred to as Partnership Agreement" -- as well as the Rules of Procedure for the General Management of HOT-GmbH attached as Exhibit 5.2.2 thereto -- hereafter referred to as Rules of Procedure for the General Management" -- and the Rules of Procedure for the Advisory Board of HOT-GmbH attached as Exhibit 5.2.3 thereto -hereafter referred to as Rules of Procedure for the Advisory Board" -- as of September 1,1996 hereafter referred to as the "Relevant Date" -- or as soon as practicable and that HSN will join into the joint venture pursuant to the provisions of this Agreement.


B. HOT-KG produces teleshopping programs and broadcasts such programs via cable, satellite and terrestrially in Germany and other German speaking territories.


C. As there have not been any experiences in Germany with teleshopping as a new mode of distribution at the time of establishing the Joint Venture, HOT-KG was entrusted with the development of specific teleshopping formats and systems. In this respect the HOT-KG also took over the responsibility for selection of products to be marketed by way of teleshopping.


D. However, in order to enable HOT-KG to set up the teleshopping business and to operate it successfully, the shareholders are supporting and will support the HOT-Companies in the areas of their respective specific expertise as provided hereunder.


E. It is the purpose of this Agreement to govern the relationships among the shareholders of the venture on the one hand, and the relationship of the shareholders with the HOT-companies on the other hand in more 2


detail. This Agreement shall control in the event that there is a conflict between this Agreement and the other corporate agreements among the parties or in the event that the other corporate agreements are silent on an issue.


Therefore it is agreed as follows:


PART 1


CONCEPT OF THE PROJECT


SEC. 1 -- PROJECT "TELESHOPPING"


(1) The shareholders have agreed to distribute goods and services by way of teleshopping through the HOT Companies.


Teleshopping for the purposes of this Agreement is any form of broadcast which makes direct offers to the public for the purposes of sale, purchase or renting or leasing of goods or for the purposes of supplying services in consideration of money.


(2) HOT-KG currently operates, maintains and utilizes the systems required for the distribution of goods by way of teleshopping. HOT-KG is and will be responsible in particular for the choice of goods to be marketed by way of teleshopping.


(3) Furthermore, HOT-KG will rely on the support of the shareholders pursuant to service agreements insofar as necessary, economically viable and reasonable. All such related party agreements shall be subject to approval of the Advisory Board.


(4) The Parties are aware that HSN Inc. is subject to certain restraints of competition relating to the infomercial business.


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PART 2


IMPLEMENTATION OF THE PROJECT


SEC. 2 -- ADVISORY BOARD


(1) Currently the Advisory Board consists of Dr. Steffen Stremme (Chairman), Dr. Gunter Moissl, Dr. Georg Jakob Kofler (Vice Chairman) and Herbert Schroder.


(2) With effect as of the execution of the Purchase and Sale Agreement, the number of the members of the Advisory Board will be extended to six. HSN GmbH will appoint Michael McMullen and James G. Gallagher as members of the Advisory Board. With effect from the next Ordinary Shareholders' meeting pursuant to sec. 11 subsection (2) of the Articles of Incorporation of HOT-GmbH a representative of HSN GmbH will be chosen Chairman of the Advisory Board pursuant to sec. 10 Subsection (1) of the Articles of Incorporation of HOT-GmbH. With effect from the point of time set forth in the sentence before, a representative of Quelle will be chosen Vice Chairman of the Advisory Board. Otherwise there are no changes to the alternating of the chairmanship among the representatives of the Shareholders on the Advisory Board of HOT-GmbH as provided in the Articles of Incorporation.


SEC. 3 -- BUDGET AND INVESTMENT PLAN


(1) The Profit Plan attached as EXHIBIT 8.1.18 to the Purchase and Sale Agreement (hereinafter: "Profit Plan"), covers the period until December 31, 2000. The Parties undertake to provide HOT-KG with the means necessary for the implementation of the Profit Plan, subject to the reviews provided for in sec. 6.


(2) If due to a change of the underlying conditions, facts and circumstances, the Profit Plan referred to in subsection (1) needs to be changed, the parties undertake to amend it. Each Party hereof has the right to request such a change within 3 months of the date of the request.


If the Shareholders do not agree on a change to the Profit Plan as described above within a further period of 21 days after such a request has been submitted to the shareholders by the General Manager of HOT-KG the shareholders will present the matter in dispute to the accountant of HOT-KG who sha ...