Joint Venture Agreement

EXHIBIT 10.52


(INCLUDING PORTIONS SUBJECT TO A
WITHDRAWN APPLICATION FOR CONFIDENTIAL TREATMENT
PURSUANT TO RULE 24b-2) 2


QVC NETWORK, INC.


and


QVC BRITAIN


and


BRITISH SKY BROADCASTING LIMITED


and


PRECIS (1192) LIMITED


and


QVC


--------------------------------


JOINT VENTURE AGREEMENT


--------------------------------


Allen Allen & Hemsley
Bucklersbury House
3 Queen Victoria Street
LONDON EC4N 8EL
Ref: LON:412057:BMW 3
TABLE OF CONTENTS


1. DEFINITIONS AND INTERPRETATION . . . . . . . . . . . . . . . . 1


1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Interpretation . . . . . . . . . . . . . . . . . . . . 8


2. THE VENTURE . . . . . . . . . . . . . . . . . . . . . . . . . . 9


2.1 Formation . . . . . . . . . . . . . . . . . . . . . . . 9
2.2 The Closing . . . . . . . . . . . . . . . . . . . . . . 10
2.3 Principal Office . . . . . . . . . . . . . . . . . . . 11
2.4 Purpose . . . . . . . . . . . . . . . . . . . . . . . . 11
2.5 Term . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.6 Early Termination . . . . . . . . . . . . . . . . . . . 11


3. MANAGEMENT AND OPERATIONS OF THE VENTURE . . . . . . . . . . . 11


3.1 Board of Directors . . . . . . . . . . . . . . . . . . . 11
3.2 Designation . . . . . . . . . . . . . . . . . . . . . . 12
3.3 Decision-Making . . . . . . . . . . . . . . . . . . . . 12
3.4 Meetings of the Board of Directors . . . . . . . . . . 12
3.5 Actions Requiring Board Approval . . . . . . . . . . . 13
3.6 Annual Budget Approval . . . . . . . . . . . . . . . . 16
3.7 Officer and Senior Executives . . . . . . . . . . . . . 17
3.8 Other Employees and Services . . . . . . . . . . . . . 17
3.9 Insurance . . . . . . . . . . . . . . . . . . . . . . . 17
3.10 Venture Funds . . . . . . . . . . . . . . . . . . . . . 17
3.11 Shareholder and Parent Covenants . . . . . . . . . . . 18


4. TRANSACTIONS BETWEEN THE VENTURERS AND THE VENTURE . . . . . . 18


4.1 Renewal of Contracts Between a Venturer and the
Venture . . . . . . . . . . . . . . . . . . . . . . . . 18
4.2 Termination of Contracts Between a Venturer and the
Venture . . . . . . . . . . . . . . . . . . . . . . . . 18
4.3 Consideration of Transactions with the Venture . . . . 18
4.4 Payment of Fees and Expenses . . . . . . . . . . . . . 18
4.5 Venture Obligations . . . . . . . . . . . . . . . . . . 19
4.6 Venture Payments . . . . . . . . . . . . . . . . . . . 19


5. BORROWINGS BY, AND FUNDING OF, THE VENTURE . . . . . . . . . . 19


5.1 Funding to the Break Even Date . . . . . . . . . . . . 19
5.2 Repayment of Funding Loans; Dividend Policies . . . . . 21
5.3 Funding After the Break Even Date . . . . . . . . . . . 21
5.4 Funding Loan by Affiliate . . . . . . . . . . . . . . . 22


6. ACCOUNTING AND TAXATION . . . . . . . . . . . . . . . . . . . . 22


6.1 Financial Year . . . . . . . . . . . . . . . . . . . . 22
6.2 Maintenance of Books and Records . . . . . . . . . . . 22
6.3 Access to Books of Account . . . . . . . . . . . . . . 22
6.4 Financial Statements . . . . . . . . . . . . . . . . . 23
6.5 Taxation . . . . . . . . . . . . . . . . . . . . . . . 24 4
(ii)


7. RESTRICTIONS ON DISPOSITION OF VENTURE INTERESTS . . . . . . . 25


7.1 Prohibition an Direct Disposition of Venture
Interests . . . . . . . . . . . . . . . . . . . . . . . 25
7.2 Subsidiary Status . . . . . . . . . . . . . . . . . . . 26
7.3 Effect of Prohibited Dispositions . . . . . . . . . . . 26


8. EVENTS OF DEFAULT: CONSEQUENCES AND REMEDIES; SPECIAL TERMINATION
EVENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 27


8.1 Events of Default . . . . . . . . . . . . . . . . . . . 27
8.2 Termination of Venture . . . . . . . . . . . . . . . . 27
8.3 Additional Remedies . . . . . . . . . . . . . . . . . . 28


9. BUSINESS OF THE VENTURE . . . . . . . . . . . . . . . . . . . . 28


9.1 Restrictive Provisions . . . . . . . . . . . . . . . . 28
9.2 Other Activities; Right to compete . . . . . . . . . . 30
9.3 Acknowledgments . . . . . . . . . . . . . . . . . . . . 30
9.4 Additional QVC Covenants . . . . . . . . . . . . . . . 31
9.5 Additional BSkyB Covenants . . . . . . . . . . . . . . 31
9.6 Covenants of the Venturers . . . . . . . . . . . . . . 31
9.7 Transponder . . . . . . . . . . . . . . . . . . . . . . 31
9.8 Sub-Lease of Premises . . . . . . . . . . . . . . . . . 32
9.9 Hiring Restrictions . . . . . . . . . . . . . . . . . . 34
9.10 Rights and Remedies Upon Breach . . . . . . . . . . . . 35
9.11 Reasonableness; Severability . . . . . . . . . . . . . 35
9.12 Confidential Information . . . . . . . . . . . . . . . 35


10. TERMINATION OF THE VENTURE . . . . . . . . . . . . . . . . . . 36


10.1 Termination . . . . . . . . . . . . . . . . . . . . . . 36
10.2 Consequences of a Termination . . . . . . . . . . . . . 36
10.3 Subordination and Non-Recourse . . . . . . . . . . . . 37


11. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 37


11.1 Representations and Warranties . . . . . . . . . . . . 37
11.2 Additional Representations . . . . . . . . . . . . . . 38
11.3 Survival . . . . . . . . . . . . . . . . . . . . . . . 38


12. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 39


12.1 Entire Agreement, Construction . . . . . . . . . . . . . 39
12.2 Governing Law . . . . . . . . . . . . . . . . . . . . . 39
12.3 Third Party Beneficiaries . . . . . . . . . . . . . . . 39
12.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . 39
12.S Waivers and Amendments . . . . . . . . . . . . . . . . 39
12.6 Notices . . . . . . . . . . . . . . . . . . . . . . . . 40
12.7 Counterparts . . . . . . . . . . . . . . . . . . . . . 40
12.8 Severability . . . . . . . . . . . . . . . . . . . . . 41
12.9 Successors and Assigns . . . . . . . . . . . . . . . . 41
12.10 No Right of Set-Off . . . . . . . . . . . . . . . . . . 41
12.11 Headings; Clause References . . . . . . . . . . . . . . 41
12.12 No Partnership . . . . . . . . . . . . . . . . . . . . 41
12.13 Restrictive Trade Practices Act . . . . . . . . . . . . 41 5
(iii)


12.14 Conflicts with Ancillary Agreements . . . . . . . . . . 41
12.15 Conflicts with Memorandum of Association and Articles of
Association . . . . . . . . . . . . . . . . . . . . . . 41
12.16 Termination . . . . . . . . . . . . . . . . . . . . . . 42 6 THIS JOINT VENTURE AGREEMENT is made the 11th day of October 1993


AMONG:


1. QVC NETWORK INC., a company duly organised under the laws of Delaware
with its registered office at Goshen Corporate Park, West Chester,
Pennsylvania ("QVC");


2. QVC BRITAIN, an unlimited company registered in and incorporated under
the laws of England, number 2825241 c/o Willkie Farr & Gallagher,
Dauntsey House, 4B Frederick's Place, London, EC2R 8AB ("QVC Sub");


3. BRITISH SKY BROADCASTING LIMITED, a limited company registered in and
duly organised and incorporated in England, number 2247735 of 6
Centaurs Business Park, Grant Way, Isleworth, Middlesex, TW7 5QD,
United Kingdom ("BSkyB");


4. PRECIS (1192) LIMITED, a limited company registered in and duly
organised and incorporated in England, number 280711 of 6 Centaurs
Business Park, Grant Way, Isleworth, Middlesex, TW7 5QD, United
Kingdom ("BSkyB Sub"); and


(QVC Sub and BSkyB Sub may herein be individually referred to as a
"Venturer" and collectively referred to as the "Venturers")


5. QVC, an unlimited company incorporated in and duly organised under the
laws of England, registered no. 2807164, with its registered office at
or to be at MarcoPolo House, Queenstown Road, London SW8, United
Kingdom (the "Venture").


WHEREAS:


A. The parties desire to participate in the Venture for the purpose of
engaging in the business of owning and operating a Home Shopping
Channel as a direct-to-the-consumer retail television network (the
"Service") serving cable and satellite dish homes within the United
Kingdom, the Republic of Ireland, the Isle of Man and the Channel
Isles (collectively, the "Territory") and to be encrypted using
VideoCrypt technology.


B. Direct-to-home distribution to dish houses will be provided by means
of the Service being included within BSkyB's "Basic Tier" which has
launched as an encrypted service as from 1st October 1993.


C. BSkyB leases an Astra transponder from Societe Europeenne des
Satellites S.A. ("SES"), which it has agreed to provide to the Venture
via the Transponder Sub-Lease (and also to provide uplinking and
related services) at cost


D. The business of the Venture is to be run from certain premises
currently leased by BSkyB and known as "MarcoPolo House", Queenstown
Road, London (the "Premises") which premises are to be sub-leased by
BSkyB to the Venture at cost.


E. QVC has agreed to provide funding to the Venture subject to the Agreed
Cap until the Break Even Date as hereafter provided.


NOW, THEREFORE, in consideration of the premises and other covenants and conditions contained herein, the parties hereto agree as follows:


1. DEFINITIONS AND INTERPRETATION


1.1 DEFINITIONS


In this Agreement the following terms have the following meanings
(terms defined in the singular to include the plural and vice versa): 7
2


"A DIRECTORS" has the meaning ascribed to that term in Clause 3.2


"A SHARES" has the meaning ascribed to that term in Clause 2.1(a).


"ACCOUNTANTS" means the independent chartered accountants and
registered auditors of the Venture.


"ADDITIONAL TERM" has the meaning ascribed to that term in Clause 2.5.


"AFFILIATE" means, with respect to any specified Person, any other
Person who or which, directly or indirectly through one or more
intermediaries, Controls, is Controlled by such specified Person.
Notwithstanding the foregoing, (i) neither the Venture nor any Person
Controlled by the Venture shall be deemed to be an "Affiliate " of any
Venturer or of any Affiliate of a Venturer, and (ii) no Venturer or
any Affiliate thereof shall be deemed to be an "Affiliate" of any
other Venturer or any Affiliate thereof by virtue of its equity
ownership in the Venture.


"AGENTS" has the meaning ascribed to that term in Clause 9.12.


"AGREEMENT" means this Agreement as it may from time to time be
amended, supplemented or otherwise modified in accordance with the
terms hereof.


"AGREED CAP" means ten million pounds sterling (Pound 10,000,000).


"ANCILLARY AGREEMENTS" means the Sub-Leases, the DTH Distribution
Agreement and the Transponder Sub-Lease.


"ANNUAL BUDGET" means, for any Financial Year of the Venture, either
(i) the budget and projected cash flow statement for the Venture for
such Financial Year, as approved by the Board of Directors, or (ii)
the budget and projected cash flow statement deemed to be the Annual
Budget pursuant to Clause 3.6(c) for such Financial Year, in either
case, conforming in form to the 1994 Annual Budget and containing
information in all categories included in the 1994 Annual Budget, as
amended or modified from time to time pursuant to Clause 3.6. Unless
the context otherwise requires, references to the Annual Budget shall
be deemed to be references to the Annual Budget then in effect.


"ASTRA TRANSPONDER" means the transponder on the Astra 1A satellite,
the Astra 1B satellite or the Astra 1C satellite that BSkyB has
identified for the purposes of transmitting the Service or any
replacement satellite access to which is provided by SES.


"B DIRECTORS" has the meaning ascribed to that term in Clause 3.2


"B SHARES" has the meaning ascribed to that term in Clause 2.1(a).


"BANK BASE RATE" means the base rate of Midland Bank PLC or if such
bank is no longer in existence, such other bank as shall be determined
in good faith by the Board of Directors.


"BANKRUPTCY PROCEEDING" means, with respect to any specified Person,
any case, proceeding or other action under any existing or future law
of any jurisdiction relating to bankruptcy, insolvency, reorganization
or relief of debtors, seeking to have an order for relief entered with
respect to such Person, or seeking to adjudicate such Person a
bankrupt or insolvent or seeking appointment of a receiver, trustee,
custodian or similar official for such Person or for all or any
substantial part of such Person's assets.


"BOARD OF DIRECTORS" or "BOARD" has the meaning ascribed to that term
in Clause 3.1. 8
3


"BREACHING VENTURER" has the meaning ascribed to that term in Clause
8.2.


"BREAK EVEN DATE" means the date agreed between the parties (or
failing such agreement as determined by the Accountants who in making
such determination shall be deemed to be acting as experts and not as
arbitrators) being the last day of a Fiscal Quarter when:


(i) for that and the preceding Fiscal Quarter, the Venture has
achieved positive net cash flow on a monthly basis; and


(ii) the Venture can operate as a viable going concern without
funding support from the Venturers.


"BUDGET CERTIFICATE" has the meaning ascribed to that term in Clause
5.1(b).


"BUSINESS" means (i) the ownership and operation of the Service in the
Territory, (ii) the Hard Encryption of the Service and the
distribution thereof by satellite feed to viewers via satellite, cable
and such other means or media as to the Venturers seems fit (subject
to applicable regulatory requirements), (iii) such other functions as
shall be approved by the Board of Directors and (iv) all functions
incidental thereto including the ownership, lease and operation of
real and personal property acquired in connection with the foregoing
and the entering into and execution of agreements in connection with
the foregoing.


"BUSINESS DAY" means any day except a Saturday, Sunday or other day on
which commercial banks in London, England or Philadelphia,
Pennsylvania are authorised by law to close.


"CEO/MD" has the meaning ascribed to that term in Clause 3.7.


"CFO" has the meaning ascribed to that term in Clause 3.7.


"CHANNEL" has the same meaning as "Service".


"CLAIMANT COMPANY" has the meaning ascribed to that term in Clause 6.5
(b)(i).


"CLASSES" has the meaning ascribed to that term in Clause 3.2.


"CLOSING" has the meaning ascribed to that term in Clause 2.1.


"COMMITMENT INCREASE" has the meaning ascribed to that term in Clause
3.6(c).


"CONFIDENTIAL INFORMATION" means (i) the existence, and terms of, this
Agreement, (ii) all business and technical information relating to the
Business that is proprietary to the Venture or otherwise not available
to the general public and (iii) all trade secrets, technologies and
know-how of either Venturer in the areas of its expertise including,
without limitation, QVC's know-how in home shopping and direct
marketing and BSkyB's know-how in programming for and distribution to
United Kingdom audiences, encryption and BSkyB's subscriber base
(including but not limited to subscriber names and addresses) provided
however that such Confidential Information shall not include, with
respect to any Venturer desiring to disclose any information, any
information that (A) has become generally available to the public
other than as a result of a disclosure by such Venturer, its
Affiliates or its Agents in breach of Clause 9.12, (B) has been
independently developed by such Venturer or an Affiliate of such
Venturer without violating any obligations owed to the Venture or (C)
was or becomes available to such Venturer or an Affiliate of such
Venturer on a non-confidential basis from a third party having no
obligation of confidentiality to a Venturer or the Venture and which
has not itself received such information directly or indirectly in
breach of any such obligation of confidentiality. 9
4


"CONSORTIUM PROVISIONS" has the meaning ascribed to that term in
Clause 6.5(b).


"CONTROL" means, as to any Person, the power to direct or cause the
direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.
The term "Controlled" has a correlative meaning.


"DEFAULTED FUNDING LOAN" has the meaning ascribed to that term in
Clause 8.1(a).


"DEFICIT" has the meaning ascribed to that term in Clause 5.1(b).


"DIRECT EMPLOYEES COSTS" has the meaning ascribed to that term in
Clause 9.4(a).


"DIRECTORS" has the meaning ascribed to that term in Clause 3.2.


"DISPOSITION" means any sale, assignment, alienation, gift, exchange,
conveyance, transfer, pledge, hypothecation, granting of a security
interest (including a floating charge) or other disposition or
attempted disposition whatsoever, whether voluntary or involuntary.
The term "Dispose" means to make a Disposition.


"DOLLAR" or "$" means lawful currency of the United States of America.


"DTH" means the delivery of audio and video signals via high-powered
Hard Encrypted satellite transmission to owners or lessees of
television receive-only home satellite earth stations for private
non-commercial dwelling unit reception.


"DTH DISTRIBUTION AGREEMENT" means the DTH Distribution Agreement
between the Venture and BSkyB, substantially in the form of Exhibit F
hereto, as it may from time to time be amended or modified in
accordance with the terms hereof or thereof.


"EC" means the European Economic Community.


"EVENT OF DEFAULT" has the meaning ascribed to that term in Clause 8.1.


"FAIR MARKET VALUE" means, as to any equity interest in the Venture or
other property, the price at which a willing seller would sell and a
willing buyer would buy such property having full knowledge of the
facts, in an arm's-length transaction without time constraints, and
without being under any compulsion to buy or sell.


"FINANCIAL STATEMENTS" has the meaning ascribed to that term in Clause
3.6(b).


"FINANCIAL YEAR" means the annual reference period for accounting for
and maintaining records of the transactions of the Venture.


"FIRST LEASE" has the meaning ascribed to that term in Clause 9.8(a).


"FIRST VENTURER" has the meaning ascribed to that term in Clause
9.1(b).


"FISCAL QUARTER" or "QUARTER" means each 3 month period ending on the
last day of each of September, December, March and June during the
Term and the period of 3 months or less which terminates on the last
day of the Term.


"FUNDING DATE" means any date on which Funding Loans are required to
be made by QVC pursuant to this Agreement and without limiting the
generality of the foregoing includes any date an which Funding Loans
are due for repayment and profits are not available to make such
repayment.


"FUNDING EVENT OF DEFAULT" has the meaning ascribed to that term in
Clause 8.1(a). 10
5


"FUNDING LOAN" means a funding loan made or to be made by QVC or any
of its Affiliates to the Venture pursuant to Clauses 2.2 and 5.1.


"FUNDING LOAN NOTE" means a promissory note issued by the Venture to
QVC (or any QVC Affiliate having made a Funding Loan) in respect of a
Funding Loan in the form attached hereto as Exhibit E or in such other
form as QVC and the Venture may agree from time to time.


"FUNDING NOTICE" has the meaning ascribed to that term in Clause
5.3(a).


"GAAP" means such generally accepted accounting principles as are
applied in, and would be generally acceptable in the United Kingdom as
of the date of the financial statement or other document with respect
to which the term is used.


"GOVERNMENTAL AUTHORITY" means any federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality of the United States of America or any state thereof,
or any government or governmental, supernational or state agency or
regulatory body of the United Kingdom, Ireland or the EC.


"GUARANTEE PAYMENT" means any payment made by QVC pursuant to the
terms of the Transponder Sub-Lease Guarantee or the Sub-Lease
Guarantee.


"HARD ENCRYPTION" means encryption using the videocrypt technology
that is descrambled by subscribers in the Territory by means of a
single "smart card" viewing card and "HARD ENCRYPTED" has a
corresponding meaning.


"INDEBTEDNESS FOR BORROWED MONEY" means:


(i) obligations for borrowed money (whether secured or unsecured);


(ii) obligations representing the deferred purchase price of
property or services other than accounts payable arising in
the ordinary course of business;


(iii) obligations in respect of operating or capital leases entered
into other than in the ordinary course of business, whether or
not such obligations would be required to be shown as a
liability on a balance sheet under GAAP; and


(iv) any guarantee or other obligations having the economic effect
of a guarantee in respect of any obligations referred to in
sub-paragraphs (i), (ii) or (iii) above.


"INITIAL TERM" has the meaning ascribed to that term in Clause 2.5.


"LANDLORD" has the meaning set out in Clause 9.8(a).


"LIENS" means any pledges, security interests, charges, restrictions
on or conditions to transfer, voting or exercise or enjoyment of any
right or beneficial interest, options, rights of first refusal and
other liens, claims, encumbrances, restrictions and equities of any
nature whatsoever.


"MATERIAL ADVERSE EFFECT" means any effect which is or is reasonably
likely to be materially adverse to the business of the Venture or the
relevant Venturer and its subsidiaries, taken as a whole (including
the continued conduct of the operation thereof in substantially the
manner currently conducted), or to the assets or liabilities of the
business or financial condition or results of operations of the
Venture or the relevant Venturer and its subsidiaries, taken as a
whole, or to the transactions (including performance thereof)
contemplated by this Agreement and the Ancillary Agreements. 11
6


"1994 ANNUAL BUDGET" has the meaning ascribed to that term in Clause
3.6(a).


"NEW BUSINESS" has the meaning ascribed to that term in Clause 9.1(b).


"NON-BREACHING VENTURER" has the meaning ascribed to that term in
Clause 8.2


"NON-FUNDING VENTURER" has the meaning ascribed to that term in Clause
8.1.


"OFFER NOTICE" has the meaning ascribed to that term in Clause 9.1(c).


"OFFERED TERMS" has the meaning ascribe ...