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UNITED STATES
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 Report (Date of earliest event reported): January 3, 1997
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SHOP TELEVISION NETWORK, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 33-14802 95-4186153
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1800 CENTURY PARK EAST, 14th FLOOR
LOS ANGELES, CALIFORNIA 90067
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 203-2436
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ITEM 5. OTHER EVENTS.
On January 3, 1997, Shop Television Network, Inc., a Delaware
corporation ("STN"), entered into a Settlement Agreement and Release (the
"Settlement Agreement") with Hillel Chodos ("Chodos") and Fierstein & Sturman
("F&S"), former counsel to STN in its litigation with JCPenney Company, Inc.
STN had been seeking to enforce against such former counsel an order issued by
the United States Bankruptcy Court for the Central District of California (the
"Bankruptcy Court") on May 21, 1993, requiring the repayment to STN of
approximately $283,498. Chodos and F&S had appealed the Bankruptcy Court's
order, but the order was affirmed by the U.S. District Court and the Ninth
Circuit Court of Appeals, and the United States Supreme Court denied a
petition by Chodos and F&S for a writ of certiorari.
Pursuant to the Settlement Agreement, all pending claims between the
parties were dismissed and released, and the sum of $283,498, together with
interest of $37,706, was paid to STN. An order approving the settlement and
dismissing the adversary proceedings between the parties was issued by the
Bankruptcy Court on February 10, 1997.
As a result of the foregoing settlement, STN believes that it has
wound up and closed its business and discharged its remaining liabilities.
Accordingly, the Board of Directors has approved the making of a final
liquidating distribution to stockholders of record on February 16, 1995, the
record date for the initial liquidating distribution. STN currently
anticipates making a final liquidating distribution of $0.13 per share of
common stock, or approximately $804,000.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
1. Settlement Agreement and Release among Hillel Chodos, Fierstein &
Sturman and Shop Television Network, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed by the undersigned hereunto
duly authorized.
SHOP TELEVISION NETWORK, INC.
Dated: June 9, 1997 By /s/ Michael E. Rosen
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Michael E. Rosen, Chairman of the Board,
President and Chief Executive Officer
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SETTLEMENT AGREEMENT AND RELEASE
This is a Settlement Agreement and Release ("Release") by and between
Hillel Chodos ("Chodos") and Fierstein & Sturman ("F&S"), on the one hand, and
Shop Television Network, Inc. ("STN"), on the other hand. Chodos, F&S and STN
(collectively referred to as the "Parties") enter into this Release based on
the following facts and recitals:
A. Chodos and F&S represented STN in the state court proceeding
known as Shop Television Network, Inc. v. J.C. Penney Co., Inc., et al. (the
"State Court Proceeding"), prior to February 12, 1992, when STN filed a
voluntary petition under Chapter 11 of the Bankruptcy Code, commencing the
bankruptcy case known as In re Shop Television Network, Inc., filed in the
United States Bankruptcy Court for the Central District of California
("Bankruptcy Court"), as Case No. LA 92-15618-SB ("Bankruptcy Case").
B. The Bankruptcy Court did not approve Chodos' application to
be employed as special litigation counsel to represent STN in the State Court
Proceeding.
C. STN commenced an adversary proceeding, known as Shop
Television Network, Inc., v. Hillel Chodos and Fierstein & Sturman Law
Corporation, United States Bankruptcy Court for the Central District of
California, Adv. Proc. No. LA 92-03989-SB ("Adversary Proceeding"), against
Chodos and F&S to recover the advance paid by STN to Chodos and F&S prior to the
commencement of the Bankruptcy case.
D. Chodos and F&S filed a cross-complaint against STN for fees
Chodos and F&S claimed they were owed based on their representation of STN in
the State Court Proceeding.
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E. STN filed a motion pursuant to Section 329 of the Bankruptcy
Code and Federal Rules of Bankruptcy Procedure Rule 2017, for an order requiring
the return of funds paid to Chodos and F&S. The Bankruptcy Court granted the
motion in part and ordered the return of $283,498.38 paid to Chodos and F&S.
That order has been affirmed by the U.S. District Court and the Ninth Circuit
Court of Appeal. The Supreme Court denied a petition by Chodos and F&S for a
writ of certiorari.
F. The $283,498.38 was being held in a separate interest-bearing
client trust account at McCutchen, Doyle, Brown & Enersen, LLP. After the
Supreme Court denied the petition for writ of certiorari, Chodos and F&S
authorized McCutchen, Doyle, Brown & Enersen, LLP, to release to STN the funds,
which with interest totaled $321,204.81. The funds were paid to STN on or about
November 22, 1996 (the "Turnover Funds").
G. The Parities desire to avoid the cost attendant to further
litigation and to finally and forever resolve any and all claims each may have
against the other.
In consideration of the foregoing, and the mutual promises set
forth herein, the Parties hereby agree as follows:
1. RELEASE BY STN. Upon the Effective Date, STN, together with its
agents, employees, representatives, administrators, attorneys, insurers,
lenders, shareholders, officers, directors, divisions, affiliates,
partnerships, partners, joint venturers, parent and/or subsidiary corporations,
assigns, heirs, and successors-in-interest, and each of them, in respect of the
mutual promises and other consideration recited in this Release, do hereby fully
and forever release, relieve, waive, relinquish and discharge, jointly and
severally, Chodos and F&S, together with their property, and their current and
former agents, employees, representatives, administrators,
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attorneys, insurers, underwriters, lenders, shareholders, officers, directors,
divisions, affiliates, partnerships, partners, joint venturers, parent and/or
subsidiary corporations, assigns, predecessors-in-interest and
successors-in-interest, and each of them, of and from any and all manner of
actions, causes of actions, suits, proceedings, liens, debts, liabilities,
obligations, costs, expenses, sums of money, controversies, accounts, dues,
fines, penalties, damages, claims, judgments, executions and demands of every
nature, kind and description whatsoever, whether known or unknown, either by
law, in equity, or otherwise, wherever or whenever brought, which have arisen,
may arise from, be connected with, or in any way related to, the Bankruptcy
Case, the State Court Action and/or the Adversary Proceeding, provided,
however, that this Release does not extend to the obligations of any Released
Party pursuant to this Release.
2. RELEASE BY CHODOS AND F&S. Upon the Effective Date, Chodos and
F&S, and each of them, together with their agents, employees, representatives,
administrators, attorneys, insurers, lenders, shareholders, officers,
directors, divisions, affiliates, partnerships, partners, joint venturers,
parent and/or subsidiary corporations, assigns, heirs, and
successors-in-interest, and each of them, in respect of the mutual promises and
other consideration recited in this Release, do hereby fully and forever
release, relieve, waive, relinquish and discharge, jointly and severally, STN,
together with its property (including, without limitation, the Turnover Funds),
and its current and former agents, employees, representatives, administrators,
attorneys, insurers, underwriters, lenders, shareholders, officers, directors,
divisions, affiliates, partnerships, partners, joint venturers, parent and/or
subsidiary corporations, assigns, predecessors-in-interest and
successors-in-interest, and each of them, of and from any and all manner of
actions, causes of action, suits, proceedings, liens, debts, liabilities,
obligations, costs, expenses, sums of money, controversies, accounts, dues,
fines, penalties, damages, claims, judgments, executions and
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demands of every nature, kind and description whatsoever, whether known or
unknown, either by law, in equity, or otherwise, wherever or whenever brought,
which have arisen, could have arisen in, or may arise from, be connected with,
or in any way related to, the Bankruptcy Case, the State Court Action or the
Adversary Proceeding; provided, however, that this Release does not extend to
any obligations of the STN pursuant to this Release.
3. Without limiting the generality of paragraphs 1 and 2, and in
addition to and independent of these paragraphs, STN, Chodos and F&S each
release the other from any and all claims, demands and causes of action of any
kind whatsoever (collectively referred to as "Claims"), whether known or
unknown, which each party now has or ever has had or ever in the future may
have, which are based on, arise out of, are related to or connected with (i)
any and all claims arising out of the representation of STN by Chodos and F&S
prior to the date of execution of this Release; (ii) any and all claims arising
out of the termination of that representation; (iii) any and all claims which
were made or could have been asserted with regard to the representation of STN
by Chodos and F&S in the State Court Proceeding; (iv) any and all claims which
were made or could have been asserted in the Bankruptcy Case or the Adversary
Proceeding. Each of the Parties represents and warrants that it has the
exclusive right to prosecute and compromise each of the claims referred to
above, and it has not assigned, transferred, conveyed or otherwise disposed of
any claim or demand relating to any right released herein. Each of the Parties
agrees to hold the others harmless and indemnify the others should any other
person or entity, which any party knew or should have known had the right to
assert any such claim against the other parties, assert any of those claims
against the other parties.
4. Each of the Parties covenant and agree never to commence,
maintain, prosecute, or cause, permit, encourage, or advise to be commenced, or
assist or participate
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(except in response to legal process) in the prosecution of any action or
proceeding against any other party based upon any of the claims released
hereunder.
5. As a further consideration and inducement for this compromise
settlement and release, each of the Parties expressly waives the benefits of
Section 1542 of the California Civil Code, which provides:
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor
at the time of executing the release which if known by
him must have materially affected his settlement with
the debtor."
The Parties agree and represent that this Release extends to all claims in any
way based upon, connected with or related to the matters described in
paragraphs 1, 2 and 3 above, whether or not those claims are known or suspected
by them.
6. Each of the Parties declares that it knows and understands the
contents of this Release, that it has been given a reasonable period of time to
consider it, that it has been fully advised by its attorneys with respect to
it, that it understands this is a full, final compromise, release and
settlement of all claims referred to herein, and that after signing this
Release, it cannot sue any of the other Parties ever again upon any claim
released by them under paragraphs 1, 2 and 3 above.
7. Each of STN, Chodos and F&S denies the allegations against them
contained in the Adversary Proceeding. This Release is made to buy peace and
for no other reason. It shall not be deemed an admission of liability on the
part of any party or corporation released hereby.
8. Upon the Effective Date of this Release, STN, Chodos and F&S
shall immediately execute and file a Stipulation of Dismissal with Prejudice of
the Adversary
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Proceeding, and any and all other actions, complaints, claims or charges, state
or federal, any of them may have pending against any of the others. The
Parties understand that those documents serve to dismiss those actions and
complaints with prejudice in their entirety and without costs or attorneys'
fees.
9. Each party hereto shall pay its own attorneys' fees and costs
arising out of or in connection with the claims released in paragraphs 1, 2 and
3 above and in connection with the preparation and execution of this Release.
In the event any action is taken in order to enforce this Release or any term
hereof, the prevailing party shall be entitled to recover its costs, fees and
expenses including, without limitation, reasonable attorneys' fees.
10. This Release shall be binding upon, and shall insure to the
benefit of, all parties hereto and each of their heirs, executors,
administrators, assigns, successors, and beneficiaries.
11. This Release constitutes the entire agreement between the
Parties, and constitutes the complete, final and exclusive embodiment of their
agreement with respect to its subject matter. It supersedes all prior and
contemporaneous agreements, representations, and understandings. The terms of
this Release are contractual and not a mere recital. This Release is being
executed without reliance on any promise, warranty or representation by any
party or any representative or any party other than those expressly contained
herein. This Release may not be amended except by writing duly executed by an
authorized representative of each party against whom enforcement of any
amendment is sought.
12. This Release is subject to the approval of the Bankruptcy
Court. The Effective Date of this Release shall be the first business day
after the Bankruptcy Court's order approving this Release has become final and
nonappealable. The Parties agree that they shall
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immediately file a Stipulation in the form attached as Exhibit A requesting
that the status conference in the Adversary Proceeding presently set for
January 1997 be continued for three months to allow approval of the Release by
the Bankruptcy Court. The Parties further agree that all activity in the
Adversary Proceeding, with the exception of efforts to obtain approval of this
Release, shall be stayed pending approval or non-approval of this Release.
13. If any provision or term of this Release or its application to
any entity or circumstance shall be held to be invalid or unenforceable, the
remainder of this Release shall not be affected and every other provision of
the Agrement shall be enforced to the fullest extent permitted by law.
14. This Release shall be governed by and construed in accordance
with the laws of the State of California.
15. This Release may be executed in counterparts, each of which will
be deemed an original, but all of which together shall constitute one and the
same instrument.
Date: January 3, 1997 /s/ HILLEL CHODOS
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Hillel Chodos
FIERSTEIN & STURMAN
Date: By: /s/ Bruce Altschuld
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SHOP TELEVISION NETWORK, INC.
Date: By: /s/ Michael E. Rosen
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Its:
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