-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Jpy6TGPi29yy6Y/tycOSgaSRgngEjxpjkwFRuEwDiZgVuYM9fiMPKmwW8hEx54yJ VemM2JXJ17SlWcrp28ICSQ== 0000950152-98-007788.txt : 19980925 0000950152-98-007788.hdr.sgml : 19980925 ACCESSION NUMBER: 0000950152-98-007788 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980917 ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980924 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MONRO MUFFLER BRAKE INC CENTRAL INDEX KEY: 0000876427 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-AUTOMOTIVE REPAIR, SERVICES & PARKING [7500] IRS NUMBER: 160838627 STATE OF INCORPORATION: NY FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-19357 FILM NUMBER: 98714082 BUSINESS ADDRESS: STREET 1: 200 HOLLEDER PKWY CITY: ROCHESTER STATE: NY ZIP: 14615-3808 BUSINESS PHONE: 7166476100 8-K 1 MONRO MUFFLER BRAKE, INC. 8-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Date of Report (Date of Earliest Event Reported): September 17, 1998 MONRO MUFFLER BRAKE, INC. ------------------------- (Exact name of registrant as specified in its charter) Commission File Number 0-19357 New York 16-0838627 (State of incorporation) (I.R.S. Employer Identification No.) 200 Holleder Parkway, Rochester, New York 14615 (Address of principal executive offices) (zip code) Registrant's telephone number, including area code (716) 647-6400 2 Item 2. Acquisition or Disposition of Assets. - ---------------------------------------------- On September 17, 1998, the Company announced the completion of its acquisition of 189 Company-owned stores and 14 franchised stores from Bloor Automotive Inc. and Speedy Car-X Inc. (together, the "Sellers") in the United States for an aggregate purchase price of $52.0 million, as adjusted. The complete text of the press release issued by the Company is attached hereto as exhibit 99.1 hereto and incorporated by reference herein in its entirety. Item 5. Other Events - --------------------- Prior to the completion of the acquisition, on August 31, 1998, the Company along with SMK Speedy International Inc. (formerly Speedy Muffler King Inc.) and the Sellers agreed to amend the definitive purchase agreement, originally executed April 13, 1998, as amended, (the "Agreement"), in order to, among other things, extend the outside termination date from "August 31, 1998," to "September 17, 1998." Amendment No. 2 to the Agreement has been filed as exhibit 10.1 to this Form 8-K. Item 7. Financial Statements and Exhibits. - ------------------------------------------ (a) Financial Statements of business required. The relevant financial statements of the Sellers required by this Item 7(a) shall be filed by the Company on or prior to December 1, 1998. (b) Pro forma financial information. The relevant pro forma financial information with respect to Company and the Sellers required by this Item 7(b) shall be filed by the Company on or prior to December 1, 1998. (c) Exhibits The following is a list of exhibits filed with this Current Report on Form 8-K indexed to their location in the sequentially numbered copy. Exhibit No. Description Page - ----------- ----------- ---- 99.1 Press Release dated September 17, 1998 4 10.1 Amendment No. 2 to the Asset Purchase Agreement dated August 31, 1998 6 2 3 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. MONRO MUFFLER BRAKE, INC. ------------------------- (Registrant) September 23, 1998 /s/ Catherine D'Amico --------------------- Catherine D'Amico Sr. Vice President-Finance & CFO 3 EX-99.1 2 EXHIBIT 99.1 1 EXHIBIT 99.1 CONTACT: Jack M. Gallagher President Chief Executive Officer (716) 647-6400 Catherine D'Amico Senior Vice President - Finance Chief Financial Officer (716) 647-6400 Investor Relations: FOR IMMEDIATE RELEASE Betsy Brod/Jonathan Schaffer Media Contact: Eileen King Morgen-Walke Associates, Inc. (212) 850-5600 MONRO MUFFLER BRAKE, INC. COMPLETES ACQUISITION OF 203 SPEEDY U.S.A. STORES ROCHESTER, N.Y. -- SEPTEMBER 17, 1998 -- MONRO MUFFLER BRAKE, INC. (NASDAQ:MNRO) announced today that it has completed its acquisition of 189 company-operated and 14 franchised Speedy stores, all located in the United States, from SMK Speedy International Inc. (TSE: SMK) of Toronto, Canada. Sales for the fiscal year ended January 3, 1998 for the 189 company-operated stores, some of which were opened only part of the year, were approximately $86 million. While Monro expects the acquisition to have a slightly dilutive impact on earnings in the current 1999 fiscal year, the Company anticipates that the acquired operations should begin to contribute to earnings per share during fiscal 2000, and should be increasingly accretive in subsequent years. Concurrent with the closing of the acquisition, Monro obtained a new $135 million secured credit facility from lenders led by The Chase Manhattan Bank. Approximately $51 million was borrowed under this facility to pay the all-cash purchase price in the acquisition, with an additional $16 million to be borrowed to provide for the closing of up to 20 underperforming or redundant Speedy stores, capital expenditures at remaining Speedy stores and transaction expenses. In addition, Monro refinanced approximately $35 million of indebtedness through the new credit facility, with the balance of the facility available for future working capital needs. - MORE - 4 2 MONRO MUFFLER BRAKE COMPLETES ACQUISITION OF 203 SPEEDY U.S.A. STORES PAGE -2- "With this acquisition, we have substantially increased our presence in Monro's existing Northeastern markets," said Jack Gallagher, Chief Executive Officer of Monro Muffler Brake. "Specifically, the new locations offer us greater presence in urban markets and bring our total number of stores to 558. "As we move forward, our near-term focus will be on increasing the revenues of the Speedy stores through more focused marketing efforts, as well as cost savings from improved inventory management and lower merchandise acquisition and distribution costs. The latter will result from centralizing purchasing and distribution within Monro's current system. Once the acquired locations are integrated at the operational level, we will concentrate on diversifying their product and service offerings to mirror those at our existing Monro stores. This represents an extremely attractive opportunity for us as Monro has previously made considerable progress by recognizing industry trends and developing new products and services, such as our scheduled maintenance program, in response to changing market conditions. We also look forward to working with Monro's new employees as they realize the benefits of Monro's unique `Best Practices' approach to management and operations." Mr. Gallagher continued, "I am confident that the six months of planning and preparation by the Monro and Speedy employees and vendors will result in a rapid and smooth integration of the two companies. Monro is now a stronger organization with the critical mass to compete even more successfully in the national automotive service arena." Monro Muffler Brake operates a chain of stores providing automotive undercar repair services in the United States. The Company currently operates 558 stores in New York, Pennsylvania, Ohio, Connecticut, Massachusetts, West Virginia, Virginia, Maryland, Vermont, New Hampshire, New Jersey, North Carolina, South Carolina, Indiana, Rhode Island, Delaware and Michigan. Monro's stores provide a full range of services for exhaust systems, brake systems, steering and suspension systems and many vehicle maintenance services. Certain statements made above may be forward-looking and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve uncertainties which may cause the Company's actual results in future periods to differ materially from those expressed. These uncertainties include, but are not necessarily limited to, uncertainties affecting retail generally (such as consumer confidence and demand for auto repair); risks relating to leverage and debt service (including sensitivity to fluctuations in interest rates); dependence on, and competition within, the primary markets in which the Company's stores are located; the need for, and costs associated with, store renovations and other capital expenditures; and the risks described from time to time in the Company's SEC reports which include the report on Form 10K for the fiscal year ended March 31, 1998. # # # 5 EX-10.1 3 EXHIBIT 10.1 1 EXHIBIT 10.1 AMENDMENT #2 TO ASSET PURCHASE AGREEMENT THIS AMENDMENT #2, dated as of August 31, 1998 (the "Amendment"), is to the ASSET PURCHASE AGREEMENT, dated as of April 13, 1998 (the "Agreement"), as amended by AMENDMENT #1, dated as of August 11, 1998, by and among SPEEDY MUFFLER KING INC., an Ontario corporation ("Parent"), SPEEDY (U.S.A.), INC., a Delaware corporation ("Speedy U.S.A."), BLOOR AUTOMOTIVE INC., a Delaware corporation ("Bloor"), SPEEDY CAR-X INC., a Delaware corporation ("Car-X", and together with Bloor, "Sellers"), SPEEDY HOLDING CORP., a Delaware corporation ("Purchaser"), and MONRO MUFFLER BRAKE, INC., a New York corporation ("Monro"). WITNESSETH: ----------- WHEREAS, Parent, Speedy U.S.A., Sellers, Purchaser and Monro desire to amend the Agreement on the terms and conditions hereinafter set forth; WHEREAS, any capitalized term used and not defined herein shall have the same meaning as set forth in the Agreement. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. A new Section 2.8 to Article 2 of the Agreement is hereby added to read in its entirety as follows: "Section 2.8 PRORATIONS. The following prorations relating to the Assets will be made as of the Closing Date, with Sellers liable to the extent such items relate to any time period up to and including the Closing Date and Purchaser liable to the extent such items relate to periods subsequent to the Closing Date, in each case if not already taken into account on the Statement of Net Assets. Except as otherwise specifically provided herein, the net amount of all such prorations will be settled and paid by the applicable party on the date the Adjusting Payment is made pursuant to Section 2.5 hereof: (a) Personal property taxes, real estate taxes and assessments, and other taxes, if any, on or with respect to the Assets, but excluding all Transfer Taxes which are imposed as a result of the transactions contemplated hereby; (b) Rents, additional rents, taxes and other items payable by Sellers under any lease, license, permit, contract or other agreement or arrangement to be assigned to or assumed by Purchaser; 6 2 (c) The amount of charges for sewer, water, fuel, telephone, electricity and other utilities; and (d) All other items normally adjusted in connection with similar transactions. If the actual expense of any of the above items for the billing period within which the Closing Date falls is not known on the date the Adjusting Payment is made, the proration shall be made based on (i) the actual expense incurred in the previous billing period, for expenses billed less often than quarterly, and (ii) the average expense incurred in the preceding three billing periods, for expenses billed quarterly or more often. Each party agrees to furnish all other parties hereto with such documents and other records as shall be reasonably requested in order to confirm all proration calculations." 2. Paragraph (a) of Section 3.5 of the Agreement is hereby amended by adding a new paragraph at the end of such paragraph as follows: "Sellers acknowledge that Purchaser's acceptance or knowledge of deeds delivered pursuant to Section 6.2(h) hereof containing an exception relating to "zoning, building and other laws and ordinances of general application" shall not constitute a waiver of any alleged breach of any representation or warranty of Parent or Sellers contained in this Agreement; provided, that this paragraph shall not give Purchaser or Monro any additional rights not otherwise contemplated herein." 3. The last two sentences of Section 3.19 of the Agreement are hereby amended to read in their entirety as follows: Except as set forth in Schedule 3.19(v), no written, or, to the knowledge of Sellers, oral claims are pending against or have been delivered to Sellers or any of their Affiliates by any person with respect to the use of any Intellectual Property or challenging or questioning the validity or effectiveness of any license or agreement relating to the same, and the current use by Sellers of the Intellectual Property does not infringe in any material respect on any trademark, service mark, trade name, copyright, trade secret, right of privacy or right of publicity of any third party. Schedule 3.19(v) sets forth a list of all states in which Sellers are operating the Business under a trade name, and each jurisdiction in which any such trade name is registered. 4. The next to last sentence of Section 5.15 of the Agreement is hereby amended to read in its entirety as follows: "The cost of such title insurance shall be shared equally by Purchaser and Sellers up to an aggregate coverage of $52 million (with Sellers bearing one-half of the pro rata portion of the total premium, with Purchaser bearing the balance of the premium if Purchaser purchases aggregate coverage in excess of $52 million); provided, that Sellers shall bear the cost of any of the corrective actions required under Section 5.17." 7 3 5. Paragraph (d) of Section 6.1 of the Agreement is hereby amended to read in its entirety as follows: "Section 6.1. CONDITION TO EACH PARTY'S OBLIGATIONS. The respective obligations of each party to effect the transactions contemplated hereby shall be subject to the fulfillment at or prior to the Closing of each of the following conditions: (d) TITLE INSURANCE. Purchaser shall have obtained good and valid title insurance policies or, in final form, irrevocable title insurance binders, dated as of the Closing Date, conforming to the specifications set forth in Section 5.15, with respect to all Real Property and Leased Real Property, other than Unpermitted Exceptions having a cost to cure of $500,000 or less, provided that if a title policy with respect to a parcel of Real Property or Leased Real Property is unable to be issued, the allocated value of such property shall be used in lieu of the cost to cure; PROVIDED, FURTHER, HOWEVER, that the cost to cure exceptions related to Real Property and Leased Real Property referred to on Schedule 9.10(a)(i) shall not count towards the $500,000 threshold referred to in this paragraph." 6. Paragraph (d) of Section 8.1 of the Agreement is hereby amended to read in its entirety as follows: "Section 8.1. TERMINATION. This Agreement may be terminated at any time at or prior to the Closing (the "Termination Date"): (d) by notice from either Monro or Parent to the other if the Acquisition shall not have been consummated on or before (i) July 13, 1998, if the Sellers have caused the condition set forth in Section 6.1(c) to be satisfied on or before June 22, 1998, and otherwise (ii) 20 days after the Sellers have caused the condition set forth in Section 6.1(c) to be satisfied, but in no event later than September 17, 1998 (unless in any case the failure to consummate the Acquisition by such date shall be due to the action or failure to act of the party or its Affiliate seeking to terminate this Agreement, including, without limitation, any breach of its obligations under Section 5.4)." 7. The reference in paragraph (i) of Section 9.1 of the Agreement to "Section 3.3(b)" is corrected to refer to "Section 3.5(b)". 8. A new Section 9.10 of Article 9 is hereby added to read in its entirety as follows: "Section 9.10. SPECIFIC INDEMNIFICATION. 8 4 Notwithstanding anything to the contrary contained in Sections 9.1, 9.4 and the first sentence of 9.5 hereof: (a) Sellers, Speedy U.S.A. and Parent, jointly and severally shall indemnify, defend and hold harmless the Purchaser Indemnified Parties from all Losses arising or relating to: (i) the failure of Sellers, Speedy U.S.A. and Parent to cure (which shall include the title company insuring over an exception) any exception referred to on Schedule 9.10(a)(i); provided, however, that this indemnification shall not apply to any Losses by the Purchaser Indemnified Parties arising or relating to the recordation by Purchaser, Monro or any assignee of Purchaser or Monro of any lease or memorandum of lease with respect to any Leased Real Property located in the State of Maryland conveyed by Sellers pursuant to the Agreement; and (ii) the failure of Sellers, Speedy U.S.A. and Parent to obtain and deliver non-disturbance agreements, as described in Section 5.4(f) hereof, and/or mortgage releases, for the Leased Real Property listed on Schedule 9.10(a)(ii) (b) The Claims Period with respect to Purchaser Losses described in Section 9.10(a)(i) above relating to Real Property shall terminate on the five year anniversary of the Closing Date. (c) The Claims Period with respect to Purchaser Losses described in Section 9.10(a)(i) above relating to Leased Real Property shall terminate on the earlier of (a) the later of 18 months after the Closing Date and the expiration of the Real Property Lease (in accordance with its current terms and without giving effect to the exercise of any option to extend or renew thereunder) for the respective Leased Real Properties, and (b) the five year anniversary of the Closing Date. (d) The Claims Period with respect to Purchaser Losses described in Section 9.10(a)(ii) shall terminate on the five year anniversary of the Closing Date. (e) For purposes of this Article IX, "Purchaser Losses" shall include the Losses of the Purchaser Indemnified Parties described in this Section 9.10 as to which the Purchaser Indemnified Parties are entitled to indemnification. Notwithstanding anything to the contrary contained herein, the Seller's indemnification obligations with respect to this Section 9.10 relating to a particular parcel of Real Property or Leased Real Property shall be limited to an amount equal to the maximum amount of title insurance coverage obtained on such parcel as contemplated by Section 6.1, or, if no such coverage has been obtained, an amount equal to the allocated value of such property on Schedule 6.1(c)(i) or (ii). 9. Section 10.11 is hereby amended by replacing "Closing Date" in the first sentence with "Delivery Date." 9 5 10. CONTROLLING LAW. This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York without reference to New York's choice of law rules. 11. SEVERABILITY. Any provision hereof which is prohibited or unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction will not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by law, the parties hereto waive any provision of law which renders any such provision prohibited or unenforceable in any respect. 12. COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and it shall not be necessary in making proof of this Agreement or the terms hereof to produce or account for more than one of such counterparts. 10 6 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed, as of the date first above written. SMK SPEEDY INTERNATIONAL INC. (formerly known as SPEEDY MUFFLER KING INC.) By: /s/ Mary Jane Allen ----------------------------------------- Name: Mary Jane Allen Title: Treasurer BLOOR AUTOMOTIVE INC. By: /s/ Mary Jane Allen ----------------------------------------- Name: Mary Jane Allen Title: Controller SPEEDY CAR-X INC. By: /s/ Mary Jane Allen ----------------------------------------- Name: Mary Jane Allen Title: Controller SPEEDY (U.S.A.), INC. By: /s/ Mary Jane Allen ----------------------------------------- Name: Mary Jane Allen Title: Controller SPEEDY HOLDING CORP. By: /s/ Catherine D'Amico ----------------------------------------- Name: Catherine D'Amico Title: Secretary MONRO MUFFLER BRAKE, INC. By: /s/ Catherine D'Amico ----------------------------------------- Name: Catherine D'Amico Title: Chief Financial Officer 11 7 SCHEDULE 9.10(a)(i) Shop No. -------- Gaps in Chain of Title - 1915 2931 0663 2070 Encroachments - 3108 New York - parking encroaches onto adjacent property 4503 Virginia - Speedy's bldg. encroaches onto adjacent property 3.89 feet 0676 Connecticut - underground storm drain running under bldg. 3440 Ohio - 10' storm sewer easement running under bldg. 2106 Michigan - Speedy's parking encroaches onto adjacent property 3461 Ohio - Easement running under property Encumbrances - 3739 termination of previous lease of record 2004 termination of previous lease of record Judgments - 3751 Judgments against Fee Owner and Goodyear $60,006.89 plus interest & penalties Failure to record a Memorandum of Lease of each of the following Maryland sites - 1903 1905 1908 1909 1912 12 8 SCHEDULE 9.10(a)(ii) Shops at which SNDAs are required from private mortgage holders: 1913 1915 1918 3752 3141 2070 13 -----END PRIVACY-ENHANCED MESSAGE-----