Earl Scheib, Inc. to Be Acquired by Kelly Capital, LLC for $2.00 Per Share in Cash Merger

SHERMAN OAKS, Calif. February 18, 2009: Earl Scheib, Inc. (Pink Sheets: ESHB) announced today that it has entered into a definitive merger agreement pursuant to which Kelly Capital, LLC, a San Diego based private equity fund, will acquire all of the issued and outstanding shares of the common stock of Earl Scheib for $2.00 per share in cash. The agreed acquisition price reflects a 567% premium over the last closing price of Earl Scheib's common stock as quoted on the Pink Sheets on February 18, 2009. The transaction is valued at approximately $8 million. Concurrent with the execution of the merger agreement, Kelly Capital paid Earl Scheib $1 million which amount becomes nonrefundable to Kelly Capital upon the occurrence of certain breaches of the merger agreement by Kelly Capital.

The Board of Directors of Earl Scheib, Inc. has unanimously approved the merger agreement and recommends its approval by the Company's stockholders. The transaction is expected to close by April 15, 2009, subject to the receipt of majority stockholder approval, as well as the satisfaction of other customary closing conditions.

Pursuant to the merger agreement, the Board of Directors of Earl Scheib may consider unsolicited alternative acquisition proposals from third parties subject to compliance with specific terms set forth in the merger agreement, including, without limitation, the payment of a break up fee, the refund of the $1 million amount previously paid to Earl Scheib and expense reimbursement to Kelly Capital in the event an alternative transaction is recommended to the stockholders by the Board. The Company does not intend to disclose developments, if any, with respect to inquiries or proposals it receives until the Board of Directors has made a determination that such an alternative proposal is superior to this transaction and further subject to compliance with the merger agreement.

Christian K. Bement, President and Chief Executive Officer of Earl Scheib, Inc., stated that, “In March of 2008 we began the formal process of exploring strategic alternatives with the assistance of our financial advisor. The sole focus of our process was the enhancement of stockholder value. This merger is the culmination of that process, in which we explored a wide range of strategic and financial alternatives. It is our firm belief that this transaction provides the best possible alternative for our stockholders, while at the same time preserving the Earl Scheib name and operation.

“As a company, we have always been, and will continue to be focused on serving the best interests of our stockholders. Despite the continuing unprecedented turbulent economic climate, our belief in the strength of the Earl Scheib name has never wavered. By entering into this transaction with Kelly Capital, we continue to look ahead to the future.”

Michael Kelly, Chief Executive Officer of Kelly Capital, shares Mr. Bement’s optimism regarding the transaction. “Earl Scheib is the longest running and largest company owned operator in the automotive painting industry, and the most recognized name in the market. We are excited about the opportunities that this transaction will afford both Kelly Capital as well as Earl Scheib, Inc.”