FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
DATE OF REPORT (Date of earliest event reported): June 30, 1998
SPECIALITY RETAIL SERVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-17941 22-2686442
(State or other juris- (Commission (IRS Employer
diction of incorporation) File Number) Identification No.)
2300 Northlake Centre Drive, Suite 200
Tucker, Georgia 30084
(Address of Principal Executive Offices)
Registrant's telephone number: (770)496-4565
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FORM 8-K
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
Not applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 26, 1998, Speciality Retail Services, Inc. (the "Company") entered
into an Agreement and Plan of Share Exchange (the "Agreement"), under which
the Company agreed to acquire all of the issued and outstanding common
stock of Emission Control, SDN, a Malaysian corporation ("EC"). The
Company completed the acquisition of EC on June 30, 1998.
Pursuant to the Agreement, the Company issued 10,000,000 shares of common
stock to the shareholders of EC to acquire all of its outstanding common
stock. In addition, seven controlling shareholders, who hold a total of
2,960,489 shares of common stock, granted the Company an option to
repurchase their shares for (a) $2.00 per share, if the option is exercised
during the first 180 days following the Effective Date, (b) $3.00 per
share, if the option is exercised between 181 and 360 days following the
Effective Date, (c) $4.00 per share, if the option is exercised between 361
and 540 days following the Effective Date, and (d) $5.00 per share, if the
option is exercised between 540 days and two years following the Effective
Date. In order to implement the option, the shares owned by said
shareholders were placed in escrow for a two year period.
EC owns the rights to mine gold in the State of Kelantan, Malaysia,
pursuant to seven leases covering 534.4 hectares of land. EC is in the
process of obtaining a mining certificate to commence actual mining of the
prospect, and plans to begin actual mining in the near future.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 5. OTHER EVENTS
Not applicable.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS
On June 30, 1998, Bentley Blum, Murray Steinfink and Andrew Oddi resigned
as directors and officers of the Company, and Sumiyoshi Omure, Hisao Edo
and John Lozo were appointed as directors. In addition, Mr. Omure was
appointed president and treasurer, Mr. Lozo was appointed vice president
and Yukio Mizuhashi was appointed secretary. The resignations of Messrs.
Blum, Steinfink, and Oddi occurred pursuant to the Agreement and not as a
result of any dispute with management of the Company (See Item 2 herein).
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired: To be filed
by amendment.
(b) Pro forma financial information: To be filed by
amendment.
(c) Exhibits:
10.1 Agreement and Plan of Share Exchange by and
among Specialty Retail Services, Inc. and Emission
Control, SDN
ITEM 8. CHANGE IN FISCAL YEAR
Not applicable.
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S
Not applicable.
<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 hereunto duly authorized.
SPECIALITY RETAIL SERVICES, INC.
Date: 7/15/98 By: /s/ John Lozo
_____________________________
John Lozo, Vice President
AGREEMENT AND PLAN OF SHARE EXCHANGE
THIS AGREEMENT AND PLAN OF SHARE EXCHANGE (the "Agreement") dated this
26th day of June 1998, by and between SPECIALTY RETAIL SERVICES, INC., a
Delaware corporation ("SRSI") and EMISSION CONTROL, SDN, a Malaysian
corporation ("EC").
WHEREAS, SRSI and EC deem it advisable and in the best interests of
each that SRSI acquire all of the issued and outstanding common stock of EC
(the "Share Exchange") in return for newly issued shares of common stock of
SRSI; and
WHEREAS, SRSI and EC have approved and adopted this Agreement as a
"plan of reorganization" within the meaning of Section 368(a)(1)(B) of the
Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, provisions, and conditions contained herein, and for other good
and valuable consideration, the adequacy and receipt of which are hereby
acknowledged, the parties hereto agree that SRSI shall acquire all of the
issued and outstanding common stock of EC, upon and subject to the
following terms and conditions:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings, unless the context shall otherwise require:
(a) "SRSI Common Stock" shall mean the common stock of SRSI.
(b) "SRSI Preferred Stock" shall mean the Class B Preferred Stock,
no par value, of SRSI, as more fully described in the Articles of
Incorporation of SRSI.
(c) "EC Stock" shall mean the common stock of EC.
(d) "Effective Date" shall mean the date on which Articles of
Share Exchange are filed with the Secretary of State of the State of
Delaware, and to the extent applicable, the appropriate governmental agency
of Japan, or such other date as is designated therein.
(e) "Exceptions Schedule" shall mean Exhibit A in the case of SRSI
and Exhibit B in the case of EC, both of which are attached hereto as
Exhibits.
(f) "Record Date" shall mean the date(s) fixed by the Boards of
Directors of EC for determination of the shares entitled to notice of and
to vote at the Shareholder Meetings.
(g) "EC Fully-Diluted Equity" shall have the meaning set forth in
Section 3.01.
ARTICLE II
GENERAL TERMS AND PROVISIONS
Section 2.01 Effectiveness. At the Effective Date, SRSI shall issue
new SRSI Common Stock in exchange for all, and not less than all, of the
outstanding shares of EC Stock on the terms provided herein.
Section 2.02 Directors and Officers of SRSI. At the Effective Date,
the existing members of the Board of Directors of SRSI shall resign, and
Hisao Edo, Sumiyoshi Omure and John Lozo shall be appointed as replacement
directors to fill the vacant Board seats of SRSI until the next annual
meeting of the Board of Directors of SRSI.
Section 2.03 Indebtedness and SRSI Preferred Stock. As at the date of
this Agreement and at the Effective Date, there is and there will not be
any existing indebtedness, other related obligations or SRSI Preferred
Stock owed by SRSI and its subsidiaries to Bentley J. Blum and the Blum
Asset Trust (collectively, the "Blum Group") and to Murray Steinfink.
Section 2.04 Indemnity. On the Effective Date, SRSI shall enter into
an indemnity agreement with Bentley J. Blum, in the form of that agreement
which is attached hereto as Exhibit B, under which Mr. Blum (and, to the
extent they are signatories thereto, certain other persons) shall indemnify
and hold SRSI harmless from and against any and all claims or liabilities
arising out of or related to the claims asserted in that product liability
lawsuit described in Section C of the Exceptions Schedule.
Section 2.05 Call Option. As of the Effective Date, Bentley J. Blum,
Murray Steinfink and Paul E. Hannesson, the principal stockholders of SRSI,
shall grant to EC or its affiliates (the "EC Group") an option in the form
of Exhibit D annexed hereto (the "Call Option"). Pursuant to the Call
Option, the EC Group shall have the right and option to purchase from
Messrs. Blum, Steinfink and Hannesson, exercisable for a period of up to
two (2) years following the Effective Date (when such option shall expire),
all shares of SRSI Stock currently owned by them. In the event the Call
Option shall be timely exercised, the holders thereof shall have the right
to purchase all or any part of the stock subject to the Call Option for (a)
$2.00 per share, if exercised during the first 180 days following the
Effective Date, (b) $3.00 per share, if exercised between 181 and 360 days
following the Effective Date, (c) $4.00 per share, if exercised between 361
and 540 days following the Effective Date, and (d) $5.00 per share, if
exercised after 540 days following the Effective Date and prior to the
expiration of the Call Option.
Section 2.06 Brokerage Fees. For services rendered in connection with
the negotiation and consummation of the transactions contemplated by this
Agreement, SRSI shall issue the following persons the following number of
shares of Rule 144 restricted stock on the Effective Date: Kimberly Reckles
- - 16,667 shares; Tracy Edgar - 33,667 shares; Xebec, Ltd. - 16,666 shares;
Steven Trapp - 5,000 shares; Michael D. Dion - 28,000 shares; Can Altikulac
- - 400,000 shares.
Section 2.07 Due Diligence Period. Each party shall promptly provide
the other with such books, records, documents and consents that the other
may reasonably request to investigate the representations, warranties and
financial condition of the party, including all articles of incorporation
and amendments, bylaws and amendments, minutes of all incorporators,
directors and shareholders meetings or consent minutes with respect to
actions taken by incorporators, directors, or shareholders, all financial
statements, tax returns, and all material contracts, leases, and agreements
to which it is a party or an intended beneficiary within two (2) days of
the date of this Agreement.
Section 2.08 Taking of Necessary Action. SRSI and EC shall take all
such actions as may be necessary or appropriate in order to effectuate the
transactions contemplated by this Agreement. If, at any time after the
Effective Date, any further action is necessary or desirable to carry out
the purposes of this Agreement or to vest SRSI with title to any or all of
the EC Stock, the officers and directors of SRSI, and its subsidiaries, at
the expense of SRSI, shall take such necessary or desirable action.
ARTICLE III
EXCHANGE OF SHARES
Section 3.01 Exchange Ratio. On the Effective Date, SRSI shall issue a
total of 10,000,000 shares of its SRSI Common Stock to all of the
shareholders of EC in exchange for all of the issued and outstanding EC
Stock. Each holder of shares of EC Stock shall be entitled to receive that
number of shares of SRSI Common Stock equal to (a) the number of shares of
EC Stock held by the holder (b) multiplied by 10,000,000 and (c) divided by
the sum of the total number of shares of EC Stock (i) which are outstanding
as of the Effective Date, (ii) which are issuable upon the conversion of
any other securities of EC which are convertible into shares of EC Stock,
or (iii) which are issuable upon the exercise of any other securities of EC
which may be exercised or exchanged for shares of EC Stock, assuming all
such securities were converted or exercised immediately prior to the
Effective Date (the "EC Fully-Diluted Equity").
There shall be no fractional shares issued, and the actual number of
shares to be issued shall be rounded up to the nearest whole number of
shares. Any securities of EC which are convertible into or exercisable for
shares of EC Stock shall be exchanged for the type and number of shares of
SRSI Common Stock equal to the number of shares of SRSI Common Stock which
the holder of such securities would receive if it converted or exercised
its securities into shares of EC Stock, as applicable, immediately prior to
the Effective Date. The shares of EC Common Stock, if any, held in the
treasury of EC ("Treasury Shares") shall be cancelled and shall not be
exchanged or combined in accordance with the provisions of this Section
3.01.
Section 3.02 Exchange of Certificates. As soon as practicable after
the Effective Date, each holder of a certificate for shares of EC Stock,
upon surrender of same to Bank of New York (the "Transfer Agent"), shall be
entitled to receive, in exchange therefor, a certificate or certificates
representing the number of full shares of SRSI Common Stock for and into
which the shares of EC Stock, represented by the certificate or
certificates so surrendered, shall have been exchanged, as provided in
Section 3.01 hereinabove. As soon as practicable after the Effective Date,
the Transfer Agent shall send a notice and transmittal form to each holder
of record of an outstanding certificate which, immediately prior to the
Effective Date, evidenced shares of EC Stock, advising such shareholder of
the terms of exchange and combination effected by the Share Exchange and
the procedure for surrendering to the Transfer Agent such certificate or
certificates in exchange for one or more certificates representing the full
number of shares of SRSI Common Stock, as determined by Section 3.01
hereinabove.
Section 3.03 Unexchanged Certificates. Until surrendered in accordance
with Section 3.02 hereinabove, each outstanding certificate which, prior to
the Effective Date of the Share Exchange, evidenced shares of EC Stock,
for all corporate purposes of SRSI shall be deemed to evidence ownership of
the number of shares of SRSI Common Stock for and into which shares of EC
Stock represented thereby will have been exchanged and combined; provided,
however, that until each such outstanding certificate is surrendered and
exchanged, no dividend or distribution payable to the holders of record of
SRSI Common Stock as of any date subsequent to the Effective Date of the
Share Exchange shall be paid to the holder of such outstanding certificate
which shall not have been surrendered with respect thereto. After the
Effective Date of the Share Exchange, there shall be no further registry of
transfers of EC Stock on the books of EC and, if a certificate
representing such shares or warrants is presented for transfer to SRSI, it
shall be cancelled and exchanged for a certificate representing shares of
SRSI Common Stock, as provided for herein.
Section 3.04 Certificates in Other Names. If any certificate
representing shares of SRSI Common Stock is to be issued in a name other
than that in which the certificate surrendered in exchange therefor is
registered, it shall be a condition precedent to the issuance thereof that
the certificate so surrendered be properly endorsed and otherwise in proper
form for transfer, that the person requesting the exchange pay to the
Transfer Agent any transfer or other taxes required by reason of such
issuance, and that counsel to SRSI approve such transfer.
Section 3.05 Stock Legends. Certificates representing shares of SRSI
Common Stock shall bear a legend restricting transfer of the shares of the
SRSI Common Stock represented by such certificate in substantially the form
set forth below:
"The shares evidenced by this certificate have not been registered
under the Securities Act of 1933 and may not be transferred, nor will any
assignee or endorsee hereof be recognized as an owner hereof by the issuer
for any purpose, unless a registration statement under the Securities Act
of 1933, as amended, with respect to such shares shall then be in effect or
unless the availability of an exemption from registration with respect to
any proposed transfer or disposition of such shares shall be established to
the satisfaction of counsel for the issuer."
SRSI shall, from time to time, make stop transfer notations in its
records to ensure compliance in connection with any proposed transfer of
the shares with the Act, and all applicable state securities laws.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The following representations and warranties are hereby made (i) by
SRSI to EC with respect to SRSI and (ii) by EC to SRSI with respect to EC.
Section 4.01 Organization; Authorization. It is a corporation duly
organized, validly existing, and in good standing under the laws of the
state or country of its incorporation and has full power and authority to
carry on its business as it now is being conducted and to own the
properties and assets it now owns. It is duly qualified to do business as a
foreign corporation and is in good standing in every jurisdiction in which
the conduct of its business or ownership of its property requires such
qualification; and, subject to the requisite approval of and authorization
by the holders of its capital stock, it has full power and authority to
enter into this Agreement and to carry out the transactions contemplated
herein.
Section 4.02 No Defaults. It is not a party to or bound by any
contract or agreement, or subject to any charter provision or other legal
restriction (other than restrictions applicable to corporations or
businesses generally), which adversely affects its business, operations,
properties, assets, or condition, financial or otherwise. It is not in
default under any material contract, lease, agreement, or other undertaking
to which it is a party or by which it is bound. Subject to the requisite
approval of and authorization by the holders of its capital stock, neither
the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby, nor compliance with the terms and
conditions hereof will conflict with, result in a breach of the unwaived
terms and conditions of, or constitute a default under its articles of
incorporation or bylaws or any contract, agreement, commitment, or other
undertaking to which it is a party or by which it is bound.
Section 4.03 Governmental Consents. Except for the requirements of the
Securities Act of 1933, as amended (the "1933 Act"), and any applicable
state securities laws, and the filing and recording of the appropriate
documents as required by the laws of the State of Delaware and the country
of Malaysia, no consent or approval of, or filing or registration with, any
governmental or regulatory authority is required in connection with the
performance of the terms of this Agreement.
Section 4.04 Examination of Documents. All original documents and
other information relating to its affairs will be made available, and
copies of any such documents will be furnished, upon request to the other
party and its counsel. Included among the documents to be made available
are all articles of incorporation and amendments, bylaws and amendments,
minutes of all incorporators, directors and shareholders meetings or
consent minutes with respect to actions taken by incorporators, directors,
or shareholders, all financial statements, tax returns, and all material
contracts, leases, and agreements to which it is a party or an intended
beneficiary.
Section 4.05 Title to Assets. It has good and marketable title to all
of its properties and assets, both real and personal, free and clear of all
security interest liens, claims, equities of others, and restrictions on
the right to transfer, except as disclosed in the Exceptions Schedule.
Section 4.06 Tax Returns and Payments. All of its tax returns and
reports required by law to be filed have been duly filed, and all taxes,
assessments, fees, and other governmental charges (other than those
presently payable without interest or penalty or those which are being
contested in good faith by appropriate proceedings diligently conducted and
which are disclosed in the Exceptions Schedule) upon it or upon any of its
properties, assets, interest, or income which are due or are to become due
have been paid or adequately reserved against. None of its federal income
tax returns is currently under examination by the Internal Revenue Service.
Section 4.07 No Litigation. Except as disclosed in the Exceptions
Schedule:
(a) there is no action, proceeding, claim, or investigation pending or
threatened against it or to which any of its assets or properties are
subject before any court or any governmental department, commission, board,
bureau, agency, or instrumentality which involves the possibility of any
judgment or liability or which might adversely affect its assets, business,
or goodwill and, after investigations it knows of no basis or grounds for
any such action, proceeding, claim, or investigation; and
(b) there is no outstanding order, writ, injunction, or decree of any
court, government department, commission, board, bureau, government agency,
or instrumentality, or any arbitration award, against it.
Section 4.08 No Adverse Changes. Between the date of this Agreement
and the Effective Date, as a condition precedent to the obligations
hereunder, it will not, without the other party's prior written consent,
take any of the following actions: it will not engage in any material
transaction not in the ordinary course of its business, make or declare any
dividends or distributions of its capital, surplus, or profits, or redeem
or issue any shares of its common stock or other securities. There will be
no changes in its assets, properties, liabilities, or financial condition
from those shown in its financial statements or in its condition, other
than changes which do not materially affect, singly or in the aggregate,
its business, assets, properties, or financial condition. Other than as set
forth in the Exceptions Schedule, it will not borrow any amounts or incur
any liabilities other than pursuant to contracts entered into in the
ordinary course of business; discharge any lien or encumbrance or satisfy
any liabilities other than current liabilities incurred in the ordinary
course of business; mortgage, pledge, or subject to lien or charge or any
other encumbrance any of its assets or properties; sell, assign, or
transfer any of its assets except in the ordinary course of business; waive
any rights of substantial value; or loan money to any of its directors,
officers, or shareholders.
Section 4.09 No Adverse Claims. Except as set forth in the Exceptions
Schedule, none of its officers or employees has any claim against it except
for salaries or other ordinary expenses, and it is not obligated to any of
such persons in any way or for any amount except for salaries, wages, or
ordinary expenses.
Section 4.10 Books and Records Complete. Its books and records are
accurate and complete and there are no matters for which proper entry has
not been made in such books and records.
Section 4.11 Insurance. It is adequately insured with respect to risks
usually insured against by companies owning properties and conducting
business similar to those owned and conducted by it. All policies are
presently in force and paid in full and will continue to be so without
interruption until the Effective Date.
Section 4.12 No Brokerage Fees. No agent, broker, investment banker,
person, or firm acting on its behalf, to the best of its knowledge, is or
will be entitled to any broker's or finder's fee or any other commission or
fee, directly or indirectly, in connection with any of the transactions
contemplated hereby, except for the Brokers.
Section 4.13 Compliance with Certain Laws. It is in full compliance
with: (i) all federal, state, and local laws regulating atmospheric, water,
and other pollution or damage to the environment, and (ii) all federal,
state, and local laws prohibiting discrimination based on race, creed,
color, sex, age, disability, or national origin.
Section 4.14 Authorization of Board of Directors. Its Board of
Directors has duly authorized the execution and delivery of this Agreement
and all documents and transactions called for hereunder, and, subject to
the requisite approval and authorization by the holders of its capital
stock, this Agreement constitutes a valid and binding obligation of the
corporation in accordance with the Agreement's terms. Each shall deliver to
the other a certified copy of resolutions of its Board of Directors
pertaining to the foregoing. It has taken or will exert its best efforts to
take, prior to the Effective Date, all action required by law, its Articles
of Incorporation and Bylaws, and otherwise to authorize the execution,
delivery, and performance of this Agreement.
Section 4.15 Contracts. Other than as set forth in the Exceptions
Schedule, it is not a party to any (i) labor agreements, (ii) contracts of
employment, (iii) contracts for the purchase, sale, or lease (as lessor or
lessee) of real estate or personal property, (iv) contracts for services to
be rendered to it, (v) employee insurance, hospital, or medical expense
programs, or (vi) pension or profit-sharing plans, retirement plans, bonus
or incentive agreements or plans, or stock purchase or stock option plans,
formal or informal.
Section 4.16 Accounts and Notes Receivable. The accounts and notes
receivable as shown in its most recent consolidated balance sheet and the
accounts and notes receivable acquired by it subsequent to said date have
been collected or are believed by it to be collectible at the aggregate
recorded amounts thereof, less applicable reserves shown on such balance
sheet.
Section 4.17 Property and Equipment. The property and equipment as
shown on its most recent consolidated balance sheet are in good operating
condition and in a state of good maintenance and repair. The use of its
real property conforms in all material respects with applicable ordinances,
regulations, zoning, or building codes, and other applicable laws.
Section 4.18 Capitalization. Except as set forth in the Exceptions
Schedule, it has no obligation under any agreement with any person to
register any of its securities under the 1933 Act or any applicable state
securities laws and, during the two years preceding the date of this
Agreement, it has not sold or issued any of its securities in a transaction
which was not registered under the 1933 Act or any applicable state
securities law. There are no preemptive rights with respect to any of its
securities.
(a) EC. EC represents and warrants that its authorized capital stock
consists of 100,000 shares of common stock, of which 3 shares are issued
and outstanding. All of the issued and outstanding shares of EC Common
Stock are validly issued, fully paid, and nonassessable.
(b) SRSI. SRSI represents and warrants that its authorized capital
stock consists of 15,000,000 shares of common stock, no par value per
share, of which 3,367,018 shares are issued and outstanding. All of the
issued and outstanding shares of SRSI Common Stock are validly issued,
fully paid, and nonassessable. There are no outstanding shares of SRSI
Preferred Stock.
Section 4.19 Principal Shareholders. No person owns of record or, to
the best of its knowledge, owns beneficially five percent or more of any
class of the issued and outstanding shares of its voting securities, except
as set forth on the Exceptions Schedule and as follows:
(a) SRSI: The following persons own the following percentages of SRSI
Stock: see Item 12 of Form 10-K for year ended December 31, 1997 of SRSI.
(b) EC: The following persons own the following percentages of EC
Stock: Sumiyoshi Omure - 67%; Yukio Mizuhashi - 33%.
Section 4.20 No Subsidiaries. It has no subsidiaries. SRSI
specifically represents and warrants that on December 30, 1997 it sold all
of the issued and outstanding common stock of all of its former
subsidiaries, being Gobi-Primak, Inc., Salon Technologies, Inc., New Jersey
Salon Mart, Inc., Special Market Services, Inc., Piscataway Salon Mart,
Inc. and East Brunswick Salon Mart, Inc.
Section 4.21 Information Furnished. It has furnished to the other
party copies of all reports filed with the Securities and Exchange
Commission pursuant to Sections13(a) and 15(d) of the Securities Exchange
act of 1934 and, to the best of its knowledge, such reports do not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements contained therein not misleading. Such
reports contain all of the material and relevant information concerning its
business and financial condition as of their respective dates.
Section 4.22 Fully Reporting Issuer. With respect to SRSI, it is
subject to the requirements to file reports pursuant to Sections 13 or
15(d) of the Securities Exchange Act of 1934, it has filed all reports with
the Securities and Exchange Commission which it is required to file
pursuant to Sections 13(a), 14 and 15(d) Securities Exchange Act of 1934
for the preceding thirty-six calendar months, and it has filed timely all
reports required to be filed during the preceding twelve calendar months.
Section 4.23 Options and Other Rights. Except as set forth on the
Exception Schedule, there are no outstanding options, warrants, or rights
to subscribe for, purchase, or receive shares of its common stock or any
other securities convertible into common stock:
Section 4.24 Representations True. No representation or warranty
contained herein, nor any statement or certificate furnished hereunder or
in connection herewith, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary to
make the statements contained herein or therein not misleading.
ARTICLE V
COVENANTS
Section 5.01 Shareholder Meetings. Except as set forth in the
Exceptions Schedule, SRSI covenants and agrees that it does not need
approval from its shareholders to enter into or perform under this
Agreement under its Articles of Incorporation, By-Law or the law of its
state of incorporation. EC shall promptly obtain the written consent to
all of their shareholders to the transactions contemplated by this
Agreement, and if such written consent is not obtained within ten (10) days
of the date of this Agreement, then said corporation shall submit this
Agreement to its shareholders for approval, as provided for in its Articles
of Incorporation and Bylaws, at a special or annual meeting of shareholders
(the "Shareholder Meeting") to be held on the earliest practicable date.
Section 5.02 Preservation of Business; Access to Documents. From and
after the date of this Agreement and until the Effective Date, SRSI and EC
covenant and agree with each other that each corporation shall:
(a) use its best efforts to preserve its business organization,
goodwill, and business relationships intact and to retain the services of
its officers and key employees;
(b) provided the same does not violate any statute, order, decree,
rule, regulation, or contract, give each other and its authorized agents
full access, during normal business hours, upon reasonable notice, to all
of its assets, properties, books, records, agreements, and commitments and
furnish such representatives during such period with all such information
concerning its affairs as the other may reasonably request; provided.
however that each party and its authorized agents shall hold in confidence
all documents and information thus acquired or learned concerning the
parties and, if the transactions contemplated by this Agreement are not
consummated, all such documents shall immediately thereafter be returned to
the appropriate parties;
(c) take all necessary corporate and any other action, and use its
best efforts to obtain all consents, approvals, and agreements required to
carry out the transactions contemplated in this Agreement and to satisfy,
or cause to be satisfied, the conditions specified herein; and
(d) maintain in full force and effect insurance policies providing
coverages and amount of coverage as now provided.
Section 5.03 Business in Ordinary Course. SRSI and EC further covenant
and agree with each other that each of the representations and warranties
set forth in Article IV will be true and correct on the Effective Date.
Except as set forth on the Exceptions Schedule or as specifically
authorized by this Agreement, until the Effective Date, neither SRSI nor EC
shall do any of the following except with the prior written consent of the
other party:
(a) effect any general salary increase except in line with its past
practices;
(b) enter into any written employment agreement;
(c) increase the base compensation or other benefits of any employee
by more than 10%;
(d) make any contribution to any trust or plan for the benefit of
employees not required by the present terns thereof or in accordance with
its past practices;
(e) make any change in any employee benefit plan which would
materially increase the cost thereof or adopt any new employee benefit
plan;
(f) issue or commit to issue any capital stock or other ownership
interests.
(g) grant or omit to grant any options, warrants, or other rights to
subscribe for or purchase or otherwise acquire any shares of capital stock
or other ownership interests or issue or commit to issue any securities
convertible into or exchangeable for shares of its common stock or other
ownership interests;
(h) declare, set aside, or pay any dividend or distribution with
respect to its common stock or other ownership interests;
(i) directly or indirectly redeem, purchase, or otherwise acquire or
commit to acquire any of its common stock or other ownership interest or
directly or indirectly terminate or reduce or commit to terminate or reduce
any bank line of credit or the availability of any funds under any loan or
financing agreement;
(j) effect a split or reclassification of any capital stock or
recapitalization;
(k) change its articles of incorporation, bylaws, or other governing
instruments, except to effectuate the transactions contemplated by this
Agreement;
(1) borrow or agree to borrow any funds except pursuant to existing
bank lines of credit or other existing loan agreements or financing
arrangements; or
(m) waive or commit to waive any right of substantial value.
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
The obligations of the parties under this Agreement are subject to the
satisfaction of the following express conditions precedent at or before the
Effective Date:
Section 6.01 Compliance with Laws. All statutory requirements for the
valid consummation by it of the transactions contemplated by this Agreement
shall have been fulfilled.
Section 6.02 Blue Sky Filings. All Blue Sky filings and permits or
orders required to carry out the transactions contemplated by this
Agreement shall have been made and received containing no term or condition
reasonably unacceptable to it.
Section 6.03 Documents. All corporate and other proceedings in
connection with the transactions contemplated herein and all documents
incident thereto shall be reasonably satisfactory in form and substance to
it and its counsel.
Section 6.04 Shareholder Approvals; Limit on Dissenting Shares. To the
extent shareholder approval is required by any party to this Agreement,
this Agreement and the transactions contemplated hereby shall have been
approved by the written consent of all shareholders of the corporation, or
the corporation shall have received the requisite approval and
authorization of its shareholders at a duly held special or annual meeting
of the corporation's shareholders. No holders of any outstanding shares of
each party to this Agreement shall dissent from the Share Exchange.
Section 6.05 Opinions of Counsel. Unless waived in writing by the
parties prior to the Effective Date, each corporation shall have caused its
counsel to prepare and deliver to the other an opinion, dated as of the
Effective Date, in form and substance satisfactory to the other, to the
effect that:
(a) It has been duly incorporated and is a validly existing
corporation in good standing under the laws of its state or country of
incorporation, with full corporate power and authority to own and operate
its properties and to carry on its business as presently being conducted.
(b) It is duly qualified and licensed to transact business in each
state or other jurisdiction in which it transacts business and by each
governmental authority by which it is required to be licensed, except for
jurisdictions in which failure to qualify would not materially and
adversely affect its business, operations, or financial condition.
(c) It has an authorized capital as set forth in Article IV
hereinabove and the outstanding shares of its common stock stated as issued
and outstanding have been duly and validly issued and are fully paid and
nonassessable and contain no preemptive rights. To the best knowledge of
such counsel, there are no outstanding options, warrants, or other rights
to subscribe for, purchase, or receive shares of its common stock or
securities convertible into its common stock, other than as set forth in
Article IV hereinabove.
(d) Neither the execution and delivery of this Agreement nor
compliance with the terms of this Agreement will conflict with or result in
a material breach of any of the terms, conditions, or provisions of, or
constitute a material default under its articles of incorporation or bylaws
or any material note, indenture, mortgage, deed of trust, or other material
agreement or instrument known to such counsel to which it is a party or by
which it or any of its property is bound, or any existing law, order, rule,
regulation, writ, injunction, or decree known to such counsel of any
government, governmental instrumentality, agency, body, arbitration
tribunal, or court, domestic or foreign, having jurisdiction over it or its
properties.
(e) This Agreement has been duly authorized and executed by it, and
all corporate action by it required to authorize the Share Exchange has
been taken.
(f) Such counsel knows of no material litigation, proceeding, or
governmental investigation pending or threatened against or relating to it
or its properties or business.
In rendering such opinion, counsel may rely on certificates of its
officers as to matters of fact and, as to matters of law, may rely on
opinions of local counsel chosen by it provided that copies of such
opinions of such other counsel accompany the opinion delivered by counsel.
Section 6.06 Certificate of President and Secretary. Each corporation
shall have furnished to the other a certificate of the President or Vice
President and the Secretary of the respective company, dated as of the
Effective Date, to the effect that the representations and warranties of
the respective company in this Agreement are true and correct at and as of
the Effective Date, that no error, misstatement, or omission has been
discovered or is known with respect to such representations and warranties,
and that the respective company has complied with all the agreements and
has satisfied all the covenants on its part to be performed at or prior to
the Effective Date.
Section 6.07 No Adverse Change. Between the date of execution of this
Agreement and the Effective Date, SRSI and EC, (a) except in the ordinary
course of its business, shall not have incurred any liabilities or
obligations (direct or contingent) or disposed of any of its assets, or
entered into any material transaction or suffered or experienced any
materially adverse change in its condition, financial or otherwise, and (b)
shall not have increased its issued and outstanding shares of common stock
or any other securities.
ARTICLE VII
TERMINATION, FURTHER ASSURANCES, AND MISCELLANEOUS
Section 7.01 Termination and Postponement. This Agreement and the
Share Exchange contemplated hereby may be terminated, and the transactions
provided for herein abandoned, at any time prior to but not after the
Effective Date, as follows:
(a) by any party to this Agreement by written notice to the other
parties to this Agreement on or before July 10, 1998 in the event such
party determines that the consummation of the transactions contemplated by
this Agreement are not feasible or in the parties' best interests as a
result of the due diligence review provided for in Section 2.07 herein.
(b) by mutual consent of the Boards of Directors of SRSI or EC;
(c) by the Board of Directors of SRSI or EC if any of the conditions
set forth in Article VI shall not have been met by August 31, 1998; or
(d) by the Board of Directors of SRSI or EC if the Share Exchange has
not been effected by August 31, 1998, which date shall not be extended
unless otherwise requested by the Board of Directors of SRSI or EC. In the
event of the termination and abandonment of this Agreement and the Share
Exchange contemplated hereby, this Agreement shall become void and of no
effect, without any liability on the part of any party or its directors,
officers, or shareholders.
Section 7.02 Survival. All agreements, representations, and warranties
made hereunder or in connection with the transactions contemplated hereby
shall survive the Effective Date and remain effective in accordance with
the terms hereof regardless of any investigation at any time made by or on
behalf of SRSI or EC.
Section 7.03 Expenses. In the event that this Agreement shall be
terminated pursuant to Section 7.01 hereinabove, all further obligations of
SRSI or EC under this Agreement shall terminate without further liability
of either corporation to the other.
Section 7.04 Assignment. This Agreement may not be assigned nor any of
the performances hereunder delegated by operation of law or otherwise by
any party hereto, and any purported assignment or delegation shall be void.
Section 7.05 Headings. The article and section headings of this
Agreement are inserted for convenience of reference only and do not
constitute a part of this Agreement.
Section 7.06 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
successors, legal representatives, assigns, and transferors.
Section 7.07 Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof.
There are no representations, warranties, conditions, or other obligations
except as herein specifically provided. Any waiver, amendment, or
modification hereof must be in writing. A waiver in one instance shall not
be deemed to be a continuing waiver or waiver in any other instance.
Section 7.08 Counterparts. This Agreement may be executed in
counterparts and each counterpart hereof shall be deemed to be an original,
but all such counterparts together shall constitute but one agreement an
original, but all such counterparts together shall constitute but one
agreement.
Section 7.09 Notices. All notices, requests, instructions, or other
documents to be given hereunder shall be deemed given if in writing, sent
registered mail:
to SRSI:
Bentley Blum
150 East 58th Street, Suite 3400
New York, New York 10155
and
Stephen A. Weiss
Greenberg Taurig
200 Park Avenue
New York, New York 10166
Fax: (212) 801-6400
to EC:
Sumiyoshi Omure
Tokyo Triple A Co., Ltd.
202 Restplace, 5-24-8 Okudo
Katsushika-ku, Tokyo, Japan
and
Robert J. Mottern
Mottern, Fisher & Rosenthal, P.C.
2300 Northlake Centre Drive
Suite 200
Tucker, Georgia 30084
Fax: (770) 496-4560
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.
SPECIALTY RETAIL SERVICES, INC.,
a Delaware corporation
\s\ Bentley Blum
-----------------------------
(SEAL) By: Bentley Blum, President
EMISSION CONTROL, SDN BHD,
a Malaysian corporation
\s\ Sumiyoshi Omure
-----------------------------
(SEAL) By: Sumiyoshi Omure, Director
ATTEST:
\s\ Yukio Mizuhashi
-----------------------------
By: Yukio Mizuhashi, Director
<PAGE>
SCHEDULE A
EXCEPTIONS SCHEDULE FOR SRSI:
All matters disclosed on Form 10-Ks for SRSI as of the years ended December
31, 1996 and 1997, and the quarter ended March 31, 1998, which are
incorporated herein by reference.
<PAGE>
SCHEDULE B
EXCEPTIONS SCHEDULE FOR EC:
<PAGE>
SCHEDULE C
INDEMNITY AGREEMENT
<PAGE>
AGREEMENT OF INDEMNITY
This Agreement made this 30th day of June, 1998 between Bentley Blum
(hereinafter referred to as "Indemnitor") and Specialty Retail Services,
Inc., a Delaware corporation (hereinafter referred to as "Indemnitee").
It is hereby agreed that, in consideration of $10.00 and other
valuable consideration paid by Indemnitee and received in hand by
Indemnitor, Indemnitor agrees at all times after entering this contract to
indemnify and hold harmless Indemnitee against all claims, suits, damages,
costs, loses and expenses (including, without limitation, court costs,
expenses, and attorney's fees), in any manner, whether directly or
indirectly, resulting from or arising out of those claims asserted by
Michelle Schrader and Gary Schrader vs. The Grayson O Group and American
International Industries against the Indemnitee, currently pending in The
United States District Court for the Eastern District of Pennsylvania No.
96-CV-7109.
Indemnitor may, at his option, assume the defense of the claim
(including, but not limited to, the employment of counsel, who shall be
counsel satisfactory to Indemnitee, and the payment of expenses of said
counsel), and shall be entitled to settle and compromise said claim in the
name of the Indemnitee on such terms as the Indemnitor may negotiate,
provided that the Indemnitee shall have no obligation to contribute any
funds or assets to said settlement. Indemnitee shall have the right to
employ separate counsel in any such action or claim and to participate in
the defense thereof, and such fees and expenses of such counsel shall be at
the expense of the Indemnitor. Promptly after a final determination by a
court of law of the amount of the claim, the Indemnitor shall pay the claim
or the Indemnitee an amount in cash equal to the claim.
This Agreement shall be binding on and inure to the benefit of the
heirs, executors, administrators and assigns of the respective parties to
this Agreement.
In witness whereof, I have hereunto set my hand and affixed my seal,
this 30th day of June, 1998.
INDEMNITOR:
\s\ Bentley Blum
---------------------------
Bentley Blum
INDEMNITEE:
Specialty Retail Services, Inc.,
a Delaware corporation
\s\ Sumiyoshi Omure
----------------------------
By: Sumiyoshi Omure, President
<PAGE>
SCHEDULE D
CALL OPTION
<PAGE>
CALL OPTION AGREEMENT
THIS CALL OPTION AGREEMENT made this 30th day of June, 1998 (the
"Effective Date"), between Specialty Retail Services, Inc. (the
"Corporation"), Bentley Blum ("Blum"), The Blum Asset Trust (the "Trust"),
Murray Steinfink ("Steinfink"), Hannesson Family Trust, c/o Paul Hannesson,
Suzanne G. Hannesson, Jon Paul Hannesson and Krista Hannesson (collectively
("Hannesson").
WHEREAS, Blum owns 1,055,772 shares of common stock in the
Corporation, the Trust owns 1,758,548 shares of Common Stock of the
Corporation, Steinfink owns 168,044 shares of common stock in the
Corporation, and Hannesson owns 65,625 shares of common stock in the
Corporation (collectively, the "Common Shares");
WHEREAS, Blum, the Trust, Steinfink and Hannesson have agreed to grant
the Corporation the option to purchase part or all of the Common Shares on
the terms and conditions set forth herein;
WHEREAS, the Common Shares are held by Mottern, Fisher & Rosenthal,
P.C. as Escrow Agent pursuant to the Escrow Agreement of even date herewith
which is attached hereto as an Exhibit.
Now, therefore, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the parties hereto
agree as follows:
1. Grant of Option. Blum, the Trust, Steinfink and Hannesson hereby
irrevocably grant to the Corporation the right and option, hereinafter
called the Option, to purchase all or any part of the Common Shares on the
terms and conditions set forth herein at the following prices: (a) $2.00
per share, if exercised during the first 180 days following the Effective
Date, (b) $3.00 per share, if exercised between 181 and 360 days following
the Effective Date, (c) $4.00 per share, if exercised between 361 and 540
days following the Effective Date, and (d) $5.00 per share, if exercised
after 540 days following the Effective Date and prior to the expiration of
the Call Option.
2. Term of Option. The Option may be exercised at any time from time
to time as to any part of or all the Common Shares until a date two (2)
years after the Effective Date; provided, however, that the Option may not
be exercised as to less than 100 shares at any one time (or the remaining
shares then purchasable under the Option, if less than 100 shares). If this
Option is exercised as to less than all of the Common Shares outstanding,
then the number of Common Shares of Blum, the Trust, Steinfink and
Hannesson purchased by said exercise shall be that percentage of Common
Shares which each originally turned over to the Escrow Agent divided by the
total number of Common Shares turned over to the Escrow Agent by Blum, the
Trust, Steinfink and Hannesson. The purchase price of the Common Shares as
to which the Option shall be exercised shall be paid in full in cash or
certified funds at the time of exercise. Blum, the Trust, Steinfink and
Hannesson shall have all rights of a shareholder with respect to the Common
Shares covered by the Option prior to the date of exercise of this Option
with respect to such Common Shares.
3. Changes in Capital Structure. If all or any portion of the Option
shall be exercised subsequent to any share dividend, split-up,
recapitalization, merger, consolidation, combination or exchange of shares,
separation, reorganization, or liquidation occurring after the date hereof,
as a result of which shares of any class shall be issued in respect of
outstanding Common Shares or Common Shares shall be changed into the same
or a different number of shares of the same or another class or classes,
the person or persons so exercising the Option shall receive, for the
aggregate price paid upon such exercise, the aggregate number and class of
shares which, if Common Shares (as authorized at the date hereof) had been
purchased at the date hereof for the same aggregate price (on the basis of
the price per share set forth in Paragraph 2 hereof) and had not been
disposed of, such person or persons would be holding, at the time of such
exercise, as a result of such purchase and all such share dividends, split-
ups, recapitalization, mergers, consolidations, combinations or exchanges
of shares, separations, reorganizations, or liquidations; provided,
however, that no factional share shall be issued upon any such exercise,
and the aggregate price paid shall be appropriately reduced on account of
any fractional share not issued. No adjustment shall be made in the
minimum number of shares which may be purchased at any one time, as fixed
by paragraph 3 hereof.
4 Method of Exercising Option. Subject to the terms and conditions
of this Agreement, the Option may be exercised by written notice to Blum,
the Trust, Steinfink, Hannesson and the Escrow Agent. Such notice shall
state the election to exercise the Option and the number of Common Shares
in respect of which it is being exercised, and shall be signed by an
officer of the Corporation. Such notice shall be accompanied by payment of
the full purchase price of such Common Shares, in which event the Escrow
Agent shall, as soon as practicable after the notice and payment shall have
been received, deliver a certificate or certificates representing such
Common Shares to the Corporation and the purchase price to Blum, Steinfink,
and Hannesson. Payment of such purchase price shall, in all cases, be made
by certified check or wire transfer to the order of the Escrow Agent.
In witness whereof the Corporation has caused this Option Agreement to
be duly executed by its officers thereunto duly authorized, and the
Optionholder has hereunto set his hand and seal, all on the day and year
first above written.
SPECIALTY RETAIL SERVICES, INC.
\s\ Sumiyoshi Omure
--------------------------------
BY: Sumiyoshi Omure, President
\s\ Bentley J. Blum
---------------------------------
Bentley Blum
THE BLUM ASSET TRUST
By: \s\ Bentley Blum
---------------------------------
Bentley J. Blum, Trustee
\s\ Murray Steinfink
---------------------------------
Murray Steinfink
HANNESSON FAMILY TRUST
By \s\ Paul Hannesson
----------------------------------
Paul Hannesson, Trustee
\s\ Suzanne G. Hannesson
----------------------------------
Suzanne G. Hannesson
\s\ Jon Hannesson
----------------------------------
Jon Hannesson
\s\ Krista Hannesson
----------------------------------
Krista Hannesson
<PAGE>
ESCROW AGREEMENT
THIS AGREEMENT is made and entered into as of the date set forth
below, by and among Specialty Retail Services, Inc., a Delaware corporation
("SRSI"), Bentley Blum ("Blum"), The Blum Asset Trust (the "Trust"), Murray
Steinfink ("Steinfink"), Hannesson Family Trust, c/o Paul Hannesson,
Suzanne G. Hannesson, Jon Paul Hannesson and Krista Hannesson (collectively
("Hannesson"), and Mottern, Fisher & Rosenthal, P.C. (the "Escrow Agent").
WITNESSETH
WHEREAS, on or about June 26, 1998, SRSI entered into an Agreement and
Plan of Share Exchange (the "Agreement") with Emission Control, SDN BHD
("EC"), a Malaysian corporation, under which SRSI agreed to purchase all of
the outstanding common stock of EC;
WHEREAS, the Effective Date under the Agreement was ___________, 1998;
WHEREAS, pursuant to the Agreement, SRSI, Blum, the Trust, Steinfink
and Hannesson entered into a Call Option Agreement, under which Blum,
Steinfink and Hannesson granted SRSI the right to purchase the shares of
common stock which each owned in SRSI at certain prices for a two year
period after the Effective Date;
WHEREAS, Blum, Steinfink and Hannesson have agreed to deposit said
shares in escrow in order implement the Call Option Agreement, and have
executed this Agreement to evidence the terms of said escrow with the
Escrow Agent.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter contained, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties hereto agree as follows:
1. The parties hereby designate, constitute and appoint Escrow Agent
as the "Escrow Agent" under this Agreement.
2. The Escrow Agent hereby acknowledges receipt of the following
shares of common stock in SRSI (the "Shares") from Blum, the Trust,
Steinfink and Hannesson:
a) From Blum: 1,055,772 shares represented by certificates nos. SR
0002 & SR 0028;
b) From the Trust: 1,758,548 shares represented by certificate no. SR
0031;
c) From Steinfink: 80,544 shares represented by certificate no. SR
0030;
d) From Hannesson Family Trust: 16,407 shares represented by
certificate no. SR 0003.
e) From Suzanne Hannesson: 16,406 shares represented by certificate
no. SR 0004;
f) From Jon Paul Hannesson: 16,406 shares represented by certificate
no. SR 00005;
g) From Krista Hannesson, 16,406 shares represented by certificate no.
SR 0006;
3. The Shares are to be held by Escrow Agent in escrow and disposed of
pursuant to and strictly in accordance with the terms and conditions of
this Agreement. Escrow Agent shall hold the Shares in a safe place,
provided that Escrow Agent shall not be obligated to obtain insurance
covering the loss and/or destruction of the Shares unless the Parties so
request and advance the Escrow Agent sufficient funds to pay for said
insurance. The Escrow Agent undertakes to perform only such duties as are
expressly set forth in this Agreement, and no implied duties or obligations
of the Escrow Agent shall be read into this Agreement. The parties agree
that the Escrow Agrent may open a brokerage account for the purpose of
holding the Shares, and SRSI, Blum, the Trust, Steinfink and Hannesson
agree to execute all documents and supply all endorsements to enable the
Escrow Agent to open said account and deposit the Shares therein.
4. The Escrow Agent shall at all times be authorized to deliver the
Shares in accordance with the terms of the Call Option Agreement or with
written instructions executed by all the Parties. In the event the Escrow
Agent shall receive a written claim of default under the Call Option
Agreement by any of the Parties, then the Escrow Agent shall not release
the Shares from escrow unless and until the Escrow Agent shall have
received joint written instructions from the Parties as the proper deliver
of the Shares or Escrow Agent has received direction from a court of
competent jurisdiction (after expiration of any applicable appeal period)
as to the proper party entitled to receipt of the Shares. Escrow Agent
shall be authorized to file an action in interpleader to determine the
proper party entitled to the Shares; and the defaulting party, as
determined in such proceeding, shall indemnify and hold harmless the Escrow
Agent from all costs and expenses, including reasonable attorney's fees
associated with the proceeding. Escrow Agent may act in reliance upon any
writing or instrument or signature which it in good faith believes to be
genuine and may assume that any person purporting to give any writing,
notice, advice, or instruction in connection with the provisions hereof has
been duly authorized to do so. Escrow Agent shall not be liable in any
manner for the sufficiency or correctness as to form, manner of execution
or validity of any instrument deposited in this escrow nor as to the
identity, authority or right of any persons executing the same; and its
duties hereunder shall be limited to the safekeeping of the Shares and for
the disposition of same in accordance with this Agreement. Escrow Agent
hereby executes this Agreement for the sole and exclusive purpose of
evidencing its Agreement of the provisions hereof.
5. The Parties hereby agree to indemnify and hold the Escrow Agent
harmless from any and all claims, liabilities, losses, actions, suits or
proceedings at law or in equity, or any other expense, fees, or charges of
any character or nature, which it may incur or with which it may be
threatened by reason of its acting as Escrow Agent under this Agreement;
and in connection therewith, to indemnify the Escrow Agent against any and
all expenses, including reasonable attorney's fees and the cost of
defending any action, suit or proceeding or resisting any claim.
6. The Escrow Agent may consult with counsel of its own choice and
shall have full and complete authorization and protection for any action
taken or suffered by it and hereunder in good faith and in accordance with
the opinion of such counsel. The Escrow Agent shall otherwise not be liable
for any mistakes of fact or error in judgment, or for any acts or omissions
of any kind unless caused by its willful misconduct or gross negligence.
7. All reasonable out-of-pocket expenses of Escrow Agent in connection
with the services rendered under this Agreement shall be paid by SRSI.
8. Upon release and/or delivery of all Shares in accordance with the
terms of the Call Option Agreement and this Agreement, this Agreement shall
terminate and the parties shall be released hereunder except with respect
to the indemnification obligations of SRSI in favor of the Escrow Agent.
9. The provisions of this Agreement may not be amended, supplemented,
waived or changed orally, but only by a writing signed by the party as to
whom enforcement of any such amendment, modification, supplement or waiver
is sought and making specific reference to this Agreement.
10. All notices required or permitted hereunder, and under any
instrument delivered pursuant hereto, shall be given in writing, and shall
be deemed to have been given and received upon the earlier to occur of: (a)
the actual receipt of any such notice by the intended recipient; and (b)
the third business day following deposit of any such notice enclosed in a
wrapper with postage prepaid, properly addressed to the intended recipient
at its address set forth below, as a certified item, return receipt
requested, in an official depository of and under the care and custody of
the United States Postal Service. The parties' address for notice shall be
as follows:
If to Blum, the Trust, Steinfink or Hannesson:
Bentley Blum
150 East 58th Street, Suite 3400
New York, New York 10155
and
Stephen A. Weiss
Greenberg Taurig
200 Park Avenue
New York, New York 10166
Fax: (212) 801-6400
If to SRSI:
Sumiyoshi Omure
Tokyo Triple A Co., Ltd.
202 Restplace, 5-24-8 Okudo
Katsushika-ku, Tokyo, Japan
If to Escrow Agent:
Robert J. Mottern, Esq.
Mottern, Fisher & Rosenthal, P.C.
2300 Northlake Centre Drive
Suite 200
Tucker, Georgia 30084
Fax: (770) 496-4560
Any party hereto may change its address for notice set forth herein by
giving the other parties at least 10 days advance written notice of such
change of address.
11. Escrow Agent shall have no duties or responsibilities other than
those expressly set forth herein. Escrow Agent shall not be liable for any
action taken or omitted by it, or any action suffered by it, except for
gross negligence or willful misconduct. The Escrow Agent shall not be
bound by any notice or demand unless evidenced by a writing delivered to
Escrow Agent signed by the proper party or parties.
12. This Agreement contains the entire understanding between and among
the parties hereto with respect to the subject matter hereof, and shall be
binding upon and inure to the benefit of such parties, and their respective
heirs, successors in interest and legal representatives.
13. This Agreement is governed by, and is to be construed in
accordance with, the laws of the State of Georgia.
This Agreement may be executed in counterpart. As of 6/30/98
SPECIALTY RETAIL SERVICES, INC.
\s\ Sumiyoshi Omure
--------------------------------
BY: Sumiyoshi Omure, President
\s\ Bentley J. Blum
---------------------------------
Bentley Blum
THE BLUM ASSET TRUST
By: \s\ Bentley Blum
---------------------------------
Bentley J. Blum, Trustee
\s\ Murray Steinfink
---------------------------------
Murray Steinfink
HANNESSON FAMILY TRUST
By \s\ Paul Hannesson
----------------------------------
Paul Hannesson, Trustee
\s\ Suzanne G. Hannesson
----------------------------------
Suzanne G. Hannesson
\s\ Jon Hannesson
----------------------------------
Jon Hannesson
\s\ Krista Hannesson
----------------------------------
Krista Hannesson
ACCEPTED AND AGREED TO AS
ESCROW AGENT:
MOTTERN, FISHER & ROSENTHAL, P.C.
\s\ Robert J. Mottern
----------------------------------
By: Robert J. Mottern, President
