FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
[Mark One]
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of
1934
For the Quarterly period ended March 31, 1996 or
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the Transition period from ________ to ________
Commission File Number 0-18707
-----------------
SPECIALTY RETAIL GROUP, INC.
(Exact Name of Small Business Issuer as specified in its charter)
Florida 59-2824411
- - --------------------------------------------------------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
Of incorporation or organization)
1720 Post Road East, Suite 112, Westport, Connecticut 06880
(Address of principal offices)
(203) 256-4380
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the issuer was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
----- -----
On May 3, 1996, 8,674,738 shares of the issuer's Common Stock were outstanding.
The Index to Exhibits
appears on page 13
Page 1 of 15
<PAGE>
SPECIALTY RETAIL GROUP, INC.
INDEX
-----
Page
----
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Condensed Consolidated Financial Statements as of
March 31, 1996
Condensed Consolidated Balance Sheet at
March 31, 1996 (unaudited) 3
Condensed Consolidated Statements of
Operations for the three-month and nine-month periods
ended March 31, 1996 and April 2, 1995 (unaudited) 4
Condensed Consolidated Statements of
Cash Flows for the nine-month periods ended
March 31, 1996 and April 2, 1995 (unaudited) 5
Notes to the Condensed Consolidated Financial
Statements as of March 31, 1996 (unaudited) 6
Item 2 - Management's Discussion and Analysis or Plan
of Operations 8
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 11
Item 6 - Exhibits and Reports on Form 8-K 11
Page 2 of 15
<PAGE>
Specialty Retail Group, Inc.
Condensed Consolidated Balance Sheet (Unaudited)
March 31, 1996
ASSETS
Current Assets:
Cash and cash equivalents $ 49,870
Investments in notes $ 600,000
Inventory 1,567,564
Other current assets 131,457
----------
Total current assets 2,348,891
Property and equipment, net 1,542,018
Goodwill, net of accumulated amortization 146,107
Equity investment 224,150
Other assets 133,496
----------
Total assets $4,394,662
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 1,064,204
Accrued liabilities 537,152
---------
Total current liabilities 1,601,356
Stockholders' equity:
Series A-1 Preferred Stock; 10,000,000 shares 2,394
authorized; $.001 par value; issued and
outstanding, 2,394,130 shares
Common Stock; 100,000,000 shares authorized; $.001 8,675
par value; 8,674,738 issued and outstanding
Additional paid-in capital 11,004,219
Accumulated deficit (8,046,318)
Treasury Stock - 240,500 shares at cost (175,664)
-----------
Total stockholders' equity 2,793,306
-----------
Total liabilities and stockholders' equity $ 4,394,662
===========
See accompanying notes (unaudited)
Page 3 of 15
<PAGE>
Specialty Retail Group, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE><CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
Mar. 31, 1996 Apr. 2, 1995 Mar. 31, 1996 Apr. 2, 1995
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Net sales $1,253,656 $1,094,667 $5,728,735 $4,159,811
Costs of sales 706,773 610,965 3,142,108 2,239,524
---------- ---------- ---------- ----------
Gross profit 546,883 483,702 2,586,627 1,920,287
Operating costs:
Selling 746,381 732,285 2,217,220 1,792,305
General and administrative 574,217 826,743 1,463,278 2,099,867
---------- ---------- --------- ---------
Earnings (loss) from operations (773,715) (1,075,326) (1,093,871) (1,971,885)
Other income, net 57,971 88,817 184,287 295,838
---------- ---------- --------- ---------
Earnings (loss) before income taxes (715,744) (986,509) (909,584) (1,676,047)
Income tax (provision) benefit 0 0 0 0
Net income (loss) ($715,744) ($986,509) ($909,584) ($1,676,047)
========== ========== ========== ============
Per share amounts:
Net income (loss) ($0.08) ($0.12) ($0.10) ($0.19)
======== ======== ======== ========
Weighted average number of
common shares outstanding 8,674,738 8,553,583 8,674,738 8,764,959
========== ========== ========= =========
</TABLE>
See accompanying notes (unaudited)
Page 4 of 15
<PAGE>
Specialty Retail Group, Inc.
Condensed Consolidated Statements of Cash Flows
9 Months Ended 9 Months Ended
March 31, 1996 April 2, 1995
(Unaudited) (Unaudited)
----------------- --------------
Cash flows from operating activities:
Net income (loss) ($909,584) ($1,676,047)
Adjustments to reconcile net income
(loss) to net cash used in operating
activities
Depreciation and amortization 227,448 217,522
(Increase) in inventory (165,688) (846,096)
(Increase)/decrease in other current assets (13,132) 138,056
(Increase) in other assets (32,734) (58,045)
Increase/(decrease) in accounts payable
and accrued liabilities (1,003,427) 615,397
----------- ----------
Total adjustments (987,533) 66,834
----------- ----------
Net cash used in operating activities 1,897,117 1,609,213
---------- ----------
Cash flows from investing activities:
Expenditures for property and equipment (142,051) (1,608,626)
Equity investment (224,150) 0
----------- ----------
Net cash used in investing activities (366,201) (1,608,626)
----------- -----------
Cash flows from financing activities: 0 (39,178)
Repayment of notes payable (600,000) 0
Investment in notes 0 (175,664)
---------- -----------
Repurchase of treasury stock
Net cash used in financing activities (600,000) (214,842)
----------- -----------
Net decrease in cash and cash equivalents (2,863,318) (3,432,681)
Cash and cash equivalents, beginning of period 2,913,188 7,636,420
---------- ----------
Cash and cash equivalents, end of period $ 49,870 $4,203,739
========== ==========
See accompanying notes (unaudited)
Page 5 of 15
<PAGE>
Specialty Retail Group, Inc.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
March 31, 1996
1. Basis of Presentation
---------------------
The Condensed Consolidated Balance Sheet of Specialty Retail Group, Inc.
(the "Company") as of March 31, 1996 and the Condensed Consolidated Statements
of Operations for the three months and nine months ended March 31, 1996 and
January 1, 1995, and the Condensed Consolidated Statements of Cash Flows for the
six months ended March 31, 1996 and April 2, 1995 reflect all adjustments which,
in the opinion of management, are necessary for a fair presentation of the
financial position of the Company as of March 31, 1996 and its results of
operations and cash flows for the periods presented.
2. Equity Investments
------------------
Effective December 14, 1996, the Company acquired 25% of the common stock
of CM Franchise Corp., a franchisor of specialty carpet retailers operating
under the registered trademark of "Carpet Master" for a total consideration of
$220,000. In addition, as part of the transaction, the Company also obtained an
option to acquire an additional 12.5% of CM Franchise Corp.'s common stock. The
Company has accounted for this transaction using the equity method.
3. Commitments, Contingencies and Other
------------------------------------
The Company is a party defendant in a lawsuit with a former officer,
director and stockholder who alleges, among other things, breach of contract,
fraud, defamation, interference with stock transfer rights, breach of fiduciary
duties by certain former officers of the Company, conspiracy to defraud, defame
and interfere with stock transfer rights and to inspect corporate records. The
Plaintiff claims he is entitled to a termination payment of $1,450,000 pursuant
to an employment agreement with the Company. The Company has denied the alleged
claims and has counterclaimed against the Plaintiff for fraud, breach of
contract and breach of fiduciary duties. The counter-claims are based upon
allegations that the Plaintiff committed wrongful conduct during his employment
with the Company. The parties have completed discovery at this time, and the
case will be scheduled for jury trial by the court.
The Company is vigorously defending itself against the Plaintiff's
allegations and is vigorously prosecuting its counterclaims. The ultimate
outcome of this litigation cannot presently be determined. Accordingly, no
provision for any liability that may result upon resolution has been made in the
financial statements. However, during the fourth quarter of fiscal 1995, the
Company took a reserve of $250,000 related to estimated legal fees as a result
of its continuing defense in this matter, which reserve was substantially
exhausted as of March
Page 6 of 15
<PAGE>
31, 1996. The Company does not expect to incur material legal expenses in this
matter during the quarter ending June 30, 1996.
4. Investment in Notes
-------------------
On November 17, 1995, the Company invested in a series of Promissory Notes
(the "Notes") for an aggregate of $1,000,000. The Maker of the Notes is a
corporation engaged in the finance industry. The Notes are automatically renewed
for 90 day maturities unless the Company determines not to renew. The Company
elected not to renew the Note that matured on February 29, 1996. Accordingly,
$400,000 of the original Notes were repaid during the quarter ended March 31,
1996. The remaining Notes, each for $300,000, currently have maturities of April
30, 1996 and June 30, 1996. The Company has elected not to renew the Note
maturing on April 30, 1996. The Notes bear interest at a rate of 15% compounded
annually and payable monthly. The Notes are guaranteed by Selig A. Zises, a
significant investor in the Maker of the Notes. Mr. Zises is the brother of
Seymour W. Zises, a director of the Company.
Page 7 of 15
<PAGE>
Item 2- Management's Discussion and Analysis or Plan of Operation
Introduction
Set forth below is a summary of the significant factors affecting the
operating results, financial condition and liquidity/cash flows of Specialty
Retail Group, Inc. (the "Company") for the three months and nine months ended
March 31, 1996 and April 2, 1995. This discussion should be read in conjunction
with the financial statements and notes thereto.
The operating subsidiary of the Company is Building Blocks, Inc. ("Building
Blocks"), which the Company acquired on April 13, 1993. Due to the seasonal
nature of the toy industry and the effects of store openings in fiscal 1995 and
fiscal 1996, and store closings in fiscal 1996, comparisons between results of
operations for the three months and nine months ended March 31, 1996 to prior
periods may not be meaningful or possible.
Results of Operations
In addition to the Building Blocks acquisition, in May 1993 the Company
established a real estate consulting division (the "Real Estate Division") which
it discontinued in 1995. The revenues and operating costs associated with the
real estate division are included in the three months and nine months ended
April 2, 1995. Also included in both the three months and nine months ended
March 31, 1996 and April 2, 1995 are the general and administrative costs and
other expenses associated with the Company's corporate overhead, and income from
interest on cash and cash equivalent balances. As described in Note 2 - Equity
Investments, effective December 14, 1995, the Company acquired 25% of the common
stock of CM Franchise Corp. The Company's proportion of the operating results
in CM Franchise Corp. from the effective date through March 31, 1996 was
immaterial and is not included in the results of operations.
Operations
- - ----------
Net sales, substantially all of which were generated by Building Blocks,
were $5,728,735 for the nine months ended March 31, 1996 versus $4,159,811 for
the nine months ended April 2, 1995, representing an increase of 37.7%. The
increase is primarily due to the increase in the number of stores operated by
Building Blocks. Of the thirteen stores operated during the nine month period,
nine were comparable stores. Comparable store sales for the period increased
8.7% from $3,421,811 to $3,718,198. Due to the seasonality of the toy industry
net sales for the nine months ended March 31, 1996 are not reflective of the
expected net sales of the Company for the full fiscal 1996.
Cost of sales increased 40.3% to $3,142,108 (54.8% of net sales) during the
nine months ended March 31, 1996 versus $2,239,524 (53.8% of net sales) for the
nine months ended April 2, 1995, representing the cost of additional inventory
to support the increased sales for Building Blocks.
Page 8 of 15
<PAGE>
Selling expenses were $2,217,220 (38.7% of net sales) for the nine months
ended March 31, 1996 versus $1,792,305 (43.1% of net sales) for the
corresponding period in the prior year. Such amounts include payroll, occupancy
and advertising expenses for the Building Blocks stores. The increase in fiscal
1996 resulted primarily from the increase in the number of stores operated by
the Company and the substantial advertising expenditures associated with new
store openings. As these new stores have matured, selling expense as a
percentage of sales has decreased.
General and administrative expenses were $1,463,278 (25.5% of net sales)
in the nine months ended March 31, 1996, representing a decrease of 30.3% from
$2,099,867 (50.5% of net sales) in the prior year. This decrease is
attributable to various cost reduction measures undertaken by the Company
including the elimination of its Real Estate Division and reduction in corporate
payroll. These reductions, combined with the increase in sales, resulted in a
strong improvement in these expenses measured as a percentage of net sales.
Liquidity and Capital Resources
The matters discussed under this caption that are forward looking
statements are based upon current management expectations that involve risks and
uncertainties. Such risks and uncertainties include, without limitation, the
ultimate results of the lawsuit described below, the impact which unforeseen
changes in the economy, competition, vendor selling terms, or unusual weather
could have on the Company operating results for the 1996 holiday season, and
both the timing and extent of franchise sales which may result from the
Company's recently implemented franchising program.
At March 31, 1996, the Company had cash and cash equivalents of $49,870,
and held short term notes of $600,000.
In the nine months ended March 31, 1996, cash used in operating activities
totaled $1,897,117 which reflects the expenses incurred by the Company for its
corporate overhead as well as to finance an increase since June 30, 1995 of
working capital at Building Blocks due to the growth in its number of Building
Blocks stores.
The Company is a defendant in a lawsuit with a former officer who is
claiming damages of not less than $1,450,000. The Company is defending this
case vigorously. Although no assurances can be given, Management does not
believe that such lawsuit will materially affect the Company's liquidity.
Management of the Company believes that it will require at least $500,000
of additional working capital to fund operations through March 31, 1997, and,
depending primarily upon the results of its franchising program, up to an
additional $750,000. Management believes that given the Company's present and
anticipated unencumbered inventory levels and the improvement in its operating
results as compared to the comparable prior year periods, such additional
working capital should be available on commercially reasonable terms.
Management has begun exploring possible sources of equity and/or debt financing
but has not obtained any commitments or agreements therefor. There can be no
assurances that any additional financing can be obtained nor the acceptability
of the terms of any financing which can be obtained.
While management currently plans to dedicate its resources principally to
the operations of Building Blocks, the Company may in the future pursue
additional acquisition opportunities. Under such circumstances, the Company
would attempt to negotiate acquisitions for stock of the Company. However, it
may determine to apply portion of the Company's liquid assets to the funding of
such acquisitions where such arrangements are considered beneficial to the
Company.
Page 9 of 15
<PAGE>
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
Peter Sayet v. Institute For Laboratory Medicine, Inc., ILM Acquisition
-----------------------------------------------------------------------
L.P., M.P. Partners L.P., ILM Acquisition Corporation, LSJM Partners, L.P., ILM
- - -------------------------------------------------------------------------------
N Corporation, Forest Hill Capital Corporation, Healthcare Venture Management
- - -----------------------------------------------------------------------------
Corporation, Selig Zises, Glenn Meyers and Laurence Lurie, Case No. 92-03746,
- - ---------------------------------------------------------
pending before Judge Margarita Esquiruz in the 11th Judicial Circuit Court in
and for Dade County, Florida.
Plaintiff, a stockholder and a former officer and director of the Company
has sued the Company and others for various alleged claims, including breach of
contract, fraud, defamation, interference with stock transfer rights, breach of
fiduciary duties by certain former officers of the Company, conspiracy to
defraud, defame and interfere with stock transfer rights and to inspect
corporate records. Plaintiff alleges that he is entitled to a termination
payment of $1,450,000 pursuant to his employment agreement with the Company,
which provides for payment of the termination payment in the event Plaintiff was
discharged without cause by the Company before his employment agreement expired.
All defendants have denied the alleged claims of Plaintiff, including his
alleged claim for recovery of the termination payment under the employment
agreement, to which defendants claim Plaintiff is not entitled because he
resigned.
The Company and certain other defendants have counterclaimed against
plaintiff for fraud, breach of contract and breach of fiduciary duties. Their
counterclaims are based upon their allegations that Plaintiff, among other
things, embezzled funds from the Company by procuring reimbursement from the
Company of personal expenses he incurred and false representations that
Plaintiff made or caused others to make with respect to the financial condition
of the Company.
The parties have conducted discovery, and the case will be scheduled for
jury trial by the court. It is impossible at this time to predict the
likelihood of an adverse determination or the amount of such, in light of the
fact that Plaintiff has asserted various claims for unliquidated amounts.
Regardless, it is the intention of the Company and all other defendants to
continue to defend vigorously against plaintiff's alleged claims. Similarly, it
is the intention of the Company and those defendants who have asserted
counterclaims to continue to prosecute vigorously the counterclaims against
plaintiff.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
--------
10.1 Agreement and Release dated March 6, 1996 between Building Blocks,
Inc. and James J. Williams.
10.2 Agreement and Release dated March 6, 1996 between Specialty Retail
Group, Inc. and James J. Williams.
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were required to be filed during the quarter
ended March 31, 1996.
Page 10 of 15
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this Report to be signed on its behalf by the undersigned, thereto duly
authorized.
SPECIALTY RETAIL GROUP, INC.
Date: May 10, 1996 By: /s/ Jonathon Heller
----------------------------------
Jonathon Heller
Treasurer and Principal Accounting Officer
By: /s/ Kevin R. Greene
--------------------------------
Kevin R. Greene
Chairman of the Board
Page 11 of 15
<PAGE>
Index to Exhibits
-----------------
Sequentially
Exhibit No Description Numbered Page
- - ---------- ----------- -------------
10.1 Agreement and Release dated 14
March 6, 1996 between Building
Blocks, Inc. and James J. Williams.
10.2 Agreement and Release dated 16
March 6, 1996 between Specialty
Retail Group, Inc. and James J. Williams.
Page 12 of 15
EXHIBIT 10.1
AGREEMENT AND RELEASE
James J. Williams, residing at 115 Linden Tree Road, Wilton,
Connecticut 06897 ("Employee") and BUILDING BLOCKS, INC., a Connecticut
corporation, having its principal offices and place of business at 1720 Post
Road East, Westport Connecticut 06880 ("Company") agree to the following:
1. Employee has been advised that due to changes in the Company's
business plans, and for other reasons which have been explained to him
Employee's employment with Company will cease on March 6, 1996 ("Termination
Date").
2. Although Company has no contractual obligation or policy under
which Employee would be entitled to severance, Company will pay Employee two
weeks salary as severance plus any accrued vacation days (net of required
withholding) on the 10th day after execution of this Agreement. Employee will
also be entitled to participate at his option and expense in Company's major
medical and hospitalization plans for 18 months in accordance with applicable
Federal law.
3. Company acknowledges that Employee is free to seek employment with
a competitor of Company. Employee acknowledges that during his employment at
Company he had access to, and possession of, confidential and proprietary
information, data, and documents of the Company and its affiliates
("Confidential Information"). Employee agrees that he will not at any time
disclose any Confidential Information and/or data, and will surrender to Company
all keys and credit cards (and all copies thereof) of the Company and its
affiliates on the Termination Date.
4. Employee realizes that there are various State and Federal laws
that prohibit employment discrimination on the basis of age, sex, race, color,
national origin, religion, disability, pregnancy or veteran status and that
these laws are enforced through the Equal Employment Opportunity Commission,
Department of Labor and State Human Rights Agencies. Employee acknowledges that
Company has not (a) discriminated against him, (b) breached any express or
implied contract with him or (c) otherwise acted unlawfully toward him. Employee
intends to and hereby gives up any rights he may have under these or any other
laws with respect to his employment at Company.
5. Save only for claims for breach of this Agreement, Employee, in
consideration of the payments described herein, hereby releases and discharges
Company, its successors, assigns, officers, directors, shareholders,
representatives, employees, and agents, from any and all actions, causes of
action, claims, or charges, including claims for attorneys' fees and costs,
whatsoever, in law or equity. The foregoing Release includes but is not limited
to, wrongful or unlawful discharge, violations of Title VII of the Civil Rights
Acts of 1964 as amended and the Civil Rights Act 1991 as amended, Age
Discrimination in Employment Act of 1967 as amended, the Equal Employment Act of
1972, the Employee Retirement Income Security Act of 1974 as amended, the
Consolidated Omnibus Budget Reconciliation Act of 1985, and any and all federal,
state and/or municipality Jaws, rules, regulations, or ordinances pertaining to
fair employment, human rights, wages, hours or any
Page 13 of 15
<PAGE>
other terms and conditions of employment, and termination of employment,
contracts, or any other laws or claims and Employee hereby further expressly
waives any and all rights under any laws that limit a general release to claims
against the other party known or suspected to exist as of the date of this
Agreement.
6. Employee completely understands the terms and conditions herein
and is entering into this Agreement and Release voluntarily. Employee has been
offered and has declined the opportunity to consult with family, counsel or
advisors for a period of three weeks before making his decision to accept or
reject the severance pay set forth herein and to sign or not sign this Agreement
and Release. Notwithstanding his execution hereof, Employee has 7 days after
such execution to change his mind and revoke this Agreement and Release by so
notifying the Company in a writing which is actually received by the Company on
or before March 13, 1996.
7. This Agreement and Release (i) may not be changed orally; (ii)
constitutes the sole agreement between the parties as to the subject matter
hereof; and (iii) shall be governed by, and construed and interpreted in
accordance with Connecticut law.
8. Employee hereby resigns as an officer and director of Building
Blocks, Inc.
9. If any provision of this Agreement and Release is held by a court
of competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions shall still continue in full force without being impaired or
invalidated in any way.
BY SIGNING THIS AGREEMENT AND RELEASE EMPLOYEE STATES THAT: HE HAS
READ IT; HE UNDERSTANDS IT AND KNOWS THAT HE IS GIVING UP IMPORTANT RIGHTS; HE
HAS HAD AN OPPORTUNITY TO ASK QUESTIONS ABOUT IT AND HAVE HAD QUESTIONS
ANSWERED. FURTHER, COMPANY HAS OFFERED EMPLOYEE THE TIME AND OPPORTUNITY TO
DISCUSS THIS AGREEMENT WITH HIS FAMILY ADVISOR AND ATTORNEY. EMPLOYEE IS SIGNING
THIS AGREEMENT FREELY AND VOLUNTARILY.
BUILDING BLOCKS, INC. EMPLOYEE
By: /s/KEVIN R. GREENE /s/JAMES J. WILLIAMS
--------------------------- ----------------------------
Kevin R. Greene, Chairman James J. Williams
Date: March 6, 1996 Date: March 6, 1996
Page 14 of 15
EXHIBIT 10.2
AGREEMENT AND RELEASE
---------------------
James J. Williams, residing at 115 Linden Tree Road, Wilton,
Connecticut 06897 ("Williams") and SPECIALTY RETAIL GROUP, INC., a Florida
corporation, having its principal offices and place of business at 1720 Post
Road East, Westport, Connecticut 06880 ("Company") agree to the following:
1. Williams' employment with Building Blocks, Inc. will terminate on
March 6, 1996.
2. Company has a contractual obligation to Williams under a certain
salary continuance letter ("Letter"). The parties hereto have agreed that in
lieu of, and in full settlement and satisfaction of, its obligations under the
Letter, Company will pay to Williams the sum of $33,654 within 10 days of the
date hereof.
3. Williams acknowledges that during his employment at Building
Blocks, Inc. he had access to, and possession of, confidential and proprietary
information, data, and documents of the Company and its affiliates
("Confidential Information"). Williams agrees that he will not at any time
disclose any Confidential Information.
4. Williams hereby resigns from all offices he holds in the Company.
5. Save only for claims for breach of this Agreement, Williams, in
consideration of the payments described herein, hereby releases and discharges
Company, its successors, assigns, officers, directors, shareholders,
representatives, employees, and agents, from any and all actions, causes of
action, claims, or charges, including claims for attorneys' fees and costs,
whatsoever, in law, or equity which Williams and his successors and assigns ever
had, or now have or hereafter shall or may have for, upon or by reason of any
matter, cause or thing whatsoever from the beginning of the world to the date of
this Agreement against the Company.
6. This Agreement and Release (i) may not be changed orally; (ii)
constitutes the sole agreement between the parties as to the subject matter
hereof; and (iii) shall be governed by, and construed and interpreted in
accordance with Connecticut law.
7. If any provision of this Agreement and Release is held by a court
of competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions shall still continue in full force without being impaired or
invalidated in any way.
SPECIALTY RETAIL GROUP, INC.
By: /s/KEVIN R. GREENE /s/ JAMES J. WILLIAMS
------------------------- -----------------------------------
Kevin R. Greene, Chairman James J. Williams
Date: March 6, 1996 Date: March 6, 1996
Page 15 of 15
