SECURITIES AND EXCHANGE COMMISSION
Form 10-K
(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) |
| For Fiscal Year Ended March 27, 2004 |
or
| o |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) |
Commission File Number 0-19357
Monro Muffler Brake, Inc.
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New York
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16-0838627 | |
| (State of incorporation) | (I.R.S. Employer Identification No.) | |
| 200 Holleder Parkway | ||
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Rochester, New York
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14615 | |
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(Address of principal executive
offices)
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(Zip code) | |
Registrant’s telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
Securities registered pursuant to Section 12(g) of the Act:
Indicate by check mark if the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes þ No o
As of May 28, 2004, the aggregate market value of voting stock held by non-affiliates of the registrant was $265,871,000.
As of May 29, 2004, 13,337,921 shares of the registrant’s Common Stock, par value $.01 per share, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the registrant’s definitive proxy statement (to be filed pursuant to Regulation 14A) for the 2004 Annual Meeting of Shareholders (the “Proxy Statement”) are incorporated by reference into Part III hereof.
PART I
General
Monro Muffler Brake, Inc. (“Monro” or
the “Company”) is a chain of 595 Company-operated
stores, 10 kiosk locations and 18 dealer-operated stores
providing automotive undercar repair and tire services in the
United States. At March 27, 2004, Monro operated Company
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 Maine under the names “Monro
Muffler Brake & Service”, “Speedy Auto Service by
Monro”, “Kimmel Tires-Auto Service”, “Tread
Quarters Discount Tire” and “Mr. Tire”
(together, the “Company Stores”). The Company’s
stores typically are situated in high-visibility locations in
suburban areas and small towns, as well as in major metropolitan
areas. The Company Stores serviced approximately 2,664,000
vehicles in fiscal 2004. (References herein to fiscal years are
to the Company’s year ended fiscal March [e.g., references
to “fiscal 2004” are to the Company’s fiscal year
ended March 27, 2004].)
The Company considers “Monro” and
“Speedy” branded stores to compose the Service
Division of the Company, and the “Kimmel”, “Tread
Quarters” and “Mr. Tire” branded stores to
compose the Tire Division of the Company.
The predecessor to the Company was founded by
Charles J. August in 1957 as a Midas Muffler franchise in
Rochester, New York, specializing in mufflers and exhaust
systems. In 1966, the Company discontinued its affiliation with
Midas Muffler, and began to diversify into a full line of
undercar repair services. An investor group led by Peter J.
Solomon and Donald Glickman purchased a controlling interest in
the Company in July 1984. At that time, Monro operated 59
stores, located primarily in upstate New York, with
approximately $21 million in sales in fiscal 1984. Since 1984,
Monro has continued its growth and has expanded its marketing
area to include 17 additional states. In September 1998,
Monro acquired 189 company-operated and 14 franchised Speedy
stores, all located in the United States, from SMK Speedy
International Inc. of Toronto, Canada. During fiscal 2003, the
Company acquired 34 company-operated tire and automotive repair
stores in Maryland and Virginia through its acquisition of
Kimmel Automotive, Inc. (“Kimmel” or the “Kimmel
Acquisition”), and separately purchased ten
company-operated tire and automotive repair stores in South
Carolina from Frasier Tire Service, Inc. (the “Frasier
Acquisition”). Effective March 1, 2004 the Company
acquired 26 retail stores and 10 kiosks providing tire and
automotive repair services in Baltimore, Maryland and Arlington,
Virginia from Mr. Tire, Inc. and its sole shareholder,
Atlantic Automotive Corp. (the “Mr. Tire
Acquisition”). (See additional discussion under
“Expansion Strategy”.)
In December 1998, the Company appointed
Robert G. Gross as President and Chief Executive Officer, who
began full-time responsibilities on January 1, 1999.
The Company was incorporated in the State of New
York in 1959. The Company’s principal executive offices are
located at 200 Holleder Parkway, Rochester, New York 14615, and
its telephone number is (585) 647-6400.
The Company provides a broad range of services on
passenger cars, light trucks and vans for brakes (estimated at
29% of fiscal 2004 sales); mufflers and exhaust systems (17%);
and steering, drive train, suspension and wheel alignment (15%).
The Company also provides other products and services including
tires (13%) and routine maintenance services including state
inspections (26%). Monro specializes in the repair and
replacement of parts which must be periodically replaced as they
wear out. Normal wear on these parts generally is not covered by
new car warranties. The Company typically does not perform
under-the-hood repair services except for oil change services,
various “flush and fill” services and some minor
tune-up services. (See additional discussion under
“Operating Strategy”.) The Company does not sell parts
or accessories to the do-it-yourself market.
1
The Company has three wholly-owned subsidiaries,
Monro Service Corporation, Monro Leasing, LLC and Brazos
Automotive Properties Management, Inc. (“BAPM”), all
of which are Delaware companies qualified to do business in the
State of New York.
Monro Service Corporation holds all assets,
rights, responsibilities and liabilities associated with the
Company’s warehousing, purchasing, advertising, accounting,
office services, payroll, cash management and certain other
operations that are performed in New York State and Maryland.
The Company believes that this structure has enhanced, and will
continue to enhance, operational efficiency and provide cost
savings.
Monro Leasing, LLC was established primarily to
act as lessee in real estate transactions for store locations.
Currently, the sole member of the entity is the Company.
The Company acquired all of the outstanding stock
of BAPM in June 2003 to effect the purchase of 86
properties financed under its former synthetic lease facility.
This company was dissolved in June 2004.
Kimmel Automotive, Inc. operated as a
wholly-owned subsidiary of Monro from April 1, 2002, the
date of the Company’s acquisition of Kimmel, to
March 29, 2003, at which time it was merged with Monro and
dissolved.
Industry Overview
According to industry reports, demand for
automotive repair services, including undercar repair and tire
services, has increased due to the general increase in the
number of vehicles registered, the growth in vehicle miles
driven, the increase in the average age of vehicles and the
increased complexity of vehicles, which makes it more difficult
for a vehicle owner to perform do-it-yourself repairs.
At the same time as demand for automotive repair
services has grown, the number of general repair outlets has
decreased, principally because fewer gas stations now perform
repairs, and because there are fewer new car dealers. Monro
believes that these factors present opportunities for increased
sales by the Company, even though the number of specialized
repair outlets (such as those operated by the Company and its
direct competitors) has increased to meet the growth in demand.
Expansion Strategy
Monro has experienced significant growth in
recent years due to acquisitions and, to a lesser extent, the
opening of new stores. Management believes that the continued
growth in sales and profits of the Company is dependent, in
large part, upon its continued ability to open/acquire and
operate new stores on a profitable basis. In addition, overall
profitability of the Company could be reduced if new stores do
not attain profitability.
Monro believes that there are significant
expansion opportunities in new as well as existing market areas
which will result from a combination of constructing stores on
vacant land, opening full service Monro stores within host
retailers’ service center locations (e.g. BJ’s
Wholesale Clubs) and acquiring existing store locations. The
Company believes that, as the industry consolidates due to the
increasingly complex nature of automotive repair and the
expanded capital requirements for state-of-the-art equipment,
there will be increasing opportunities for acquisitions of
existing businesses or store structures, and to open stores in
host retailers’ locations.
In that regard, effective April 1, 2002, the
Company completed the Kimmel Acquisition. Kimmel operated 34
tire and automotive repair stores in Maryland and Virginia, as
well as Wholesale and Truck Tire Divisions (including two
commercial stores). In June 2002, Monro disposed of
Kimmel’s Truck Tire Division, including its retread plant
and two commercial stores.
In February 2003, as a result of the Frasier
Acquisition, Monro acquired ten company-operated tire and
automotive repair store locations in the Charleston and
Columbia, South Carolina markets. These stores operate under the
Tread Quarters brand name.
Effective March 1, 2004, the Company
completed the Mr. Tire Acquisition, which added 26 retail
tire and automotive repair stores and 10 kiosk locations in
Maryland and Virginia, as well as a wholesale operation based in
Baltimore, Maryland.
2
Considering the Mr. Tire Acquisition, the
Company now has 60 locations in Baltimore, Maryland. To further
solidify the Company’s leading position in this large metro
area, in the first quarter of fiscal 2005, the existing Speedy
locations were converted to Monro branded stores and the Kimmel
stores were converted to Monro and Mr. Tire branded stores.
The Company believes that this initiative will increase brand
awareness and raise visibility of its two dominant brands in the
market. In connection with this re-branding effort, the Company
closed one existing Kimmel store in fiscal 2005.
The Mr. Tire kiosk locations operate in
dealerships owned by Atlantic Automotive Corp., providing their
service customers with tire inspections and supplying these
dealerships with tires.
During fiscal 2004, the Company opened 12
full-service, Monro branded stores within BJ’s Wholesale
Clubs in New York (4), North Carolina (3), New Hampshire (2),
Massachusetts (1), Rhode Island (1) and Maine (1), bringing
the total number of stores that the Company operates in
BJ’s Wholesale Clubs to 14 at March 27, 2004.
Additionally, in September 1998, the Company
completed the acquisition of 189 Company-operated and 14
franchised Speedy stores (the “Acquired Speedy
stores”), from SMK Speedy International Inc. of Toronto,
Canada. The Acquired Speedy stores are located primarily in
complementary areas in Monro’s existing markets in the
Northeast, Mid-Atlantic and Midwest regions of the United States.
As of March 27, 2004, Monro had 595
Company-operated stores, 10 kiosk locations and 18 dealer
locations located in 18 states. The following table shows the
growth in the number of Company-operated stores over the last
five fiscal years:
The Company plans to open approximately 25 new
stores in fiscal 2005, including 20 in BJ’s Wholesale
Clubs, and to continue to search for appropriate acquisition
candidates or opportunities to operate stores within host
retailers’ locations. In future years, should the Company
find that there are not suitable acquisition or retail
partnership candidates, it might increase its new store
(greenfield) openings.
The Company has developed a systematic method for
selecting new store locations and a targeted approach to
marketing new stores. Key factors in market and site selection
include population, demographic characteristics, vehicle
population and the intensity of competition. These factors are
evaluated through the use of a proprietary computer model
developed for the Company. The characteristics of each potential
site are compared by the model to the profiles of existing
stores, and the model then projects sales for that site. Monro
attempts to cluster stores in market areas in order to achieve
economies of scale in advertising, supervision and distribution
costs. All new sites presently under consideration are within
Monro’s established market areas.
3
As a result of extensive analysis of its
historical and projected store opening strategy, the Company has
established major market profiles, as defined by market
awareness: mature, existing and new markets. Over the next
several years, the Company expects to build a greater percentage
of stores in mature and existing markets in order to capitalize
on the Company’s market presence and consumer awareness.
All 40 stores opened or acquired in fiscal 2004 were in mature
or existing markets.
The Company believes that management and
operating improvements implemented over the last several fiscal
years will enhance its ability to sustain its growth. The
Company has a chain-wide computerized inventory control and
electronic point-of-sale (“POS”) management
information system, which has increased management’s
ability to monitor operations as the number of stores has grown.
(Mr. Tire stores are on a separate POS system but will be
converted to the Monro POS system during fiscal 2005.) Being
Windows-based, the system has simplified training of new
employees. Additionally, the system includes electronic mail and
electronic cataloging, which allows store managers to
electronically research the specific parts needed for the make
and model of the car being serviced. This enhanced system
includes software which contains data that mirrors the scheduled
maintenance requirements in vehicle owners’ manuals,
specifically by make, model, year and mileage for every
automobile. Management believes that this software facilitates
the presentation and sale of scheduled maintenance services to
customers. Other enhancements include the streamlining of
estimating and other processes; graphic catalogs; direct mail
support; appointment scheduling; customer service history; a
thermometer graphic which guides store managers on the
profitability of each job; and expanded monitoring of price
changes. This latter change requires more specificity on the
reason for a discount, which management believes will lead to
reduced discounting. Enhancements will continue to be made to
the POS system annually in an effort to increase efficiency,
improve the quality and timeliness of store reporting and enable
the Company to better serve its customers.
The financing to open a new store location may be
accomplished in one of three ways: a store lease for the land
and building (in which case, land and building costs will be
financed primarily by the lessor), a land lease with the
building constructed by the Company (with building costs paid by
the Company), or a land purchase with the building constructed
by the Company. In all three cases, each new store also will
require approximately $140,000 for equipment (including a POS
system and a truck) and approximately $70,000 in inventory.
Because Monro generally does not extend credit to its customers,
stores generate almost no receivables and a new store’s
actual net working capital investment is nominal. Total capital
required to open a new store ranges, on average (based upon the
last five fiscal years’ openings, excluding the BJ’s
locations, and the acquired Speedy, Kimmel, Frasier and
Mr. Tire stores), from $300,000 to $1,000,000 depending on
the location and which of the three financing methods is used.
In instances where Monro acquires an existing business, it may
pay additional amounts for intangible assets such as customer
lists, covenants not-to-compete, trade names and goodwill.
Total capital required to open a store within a
BJ’s Wholesale Club is substantially less than opening a
greenfield store.
At March 27, 2004, the Company leased the
land and/or the building at approximately 68% of its store
locations and owned the land and building at the remaining
locations. Monro’s policy is to situate new stores in the
best locations, without regard to the form of ownership required
to develop the locations.
New stores, excluding acquired stores and
BJ’s locations, have average sales of approximately
$360,000 in their first 12 months of operation, or $60,000
per bay.
Operating Strategy
Monro’s operating strategy is to provide its
customers with dependable, high-quality automotive service at a
competitive price by emphasizing the following key elements.
All stores provide a full range of undercar
repair services for brakes, steering, mufflers and exhaust
systems, drive train, suspension and wheel alignment. These
services apply to all makes and models of domestic and foreign
cars, light trucks and vans. In addition, all stores provide
many of the routine maintenance services
4
Substantially all of the stores provide oil
change services as well as tire sales and installation. All
stores perform a heating and cooling system “flush and
fill” service and belt installation, and most perform a
transmission “flush and fill” service. Additionally,
all stores replace and service batteries, starters and
alternators. Stores in New York, West Virginia, New Hampshire,
Maryland, Rhode Island, New Jersey, Pennsylvania, North
Carolina, Virginia and Vermont also perform annual state
inspections. Approximately 23% of the Company’s stores also
offer air conditioning services.
The Company’s vision of being the dominant
Auto Service provider in the markets it serves has been
supported, since fiscal 2000, by a set of values displayed in
each Company store emphasizing TRUST:
Additionally, each Company-operated store
displays and operates under the following set of customer
satisfaction principles: free inspection of brakes, shocks,
front end and exhaust systems; item-by-item review with
customers of problem areas; free written estimates; written
guarantees; drive-in service without an appointment; fair and
reasonable prices as advertised; and repairs by professionally
trained undercar specialists. (See additional discussion under
“Store Operations: Quality Control and Warranties”.)
The Company seeks to set competitive prices for
quality services and products. The Company supports its pricing
strategy by advertising through direct mail coupon inserts and
in-store promotional signage and displays. In addition, the
Company advertises through radio, yellow pages, newspapers and
electronic mail to increase consumer awareness of the services
offered.
The Company employs co-branding initiatives to
more quickly increase consumer awareness in certain markets. The
Company believes that, especially in newer markets, customers
may more readily be drawn into its stores because of their
familiarity with national brand names. Some of these initiatives
have included cross-promotional offers with professional sports
teams, national fast food chains and video rental stores, as
well as with regional supermarkets. As part of its BJ’s
Wholesale Club program, the Company has implemented a series of
co-branded initiatives to market the Company’s services to
the large number of BJ’s Wholesale Club members where a new
Monro store has opened within the BJ’s Wholesale Club
service center.
Unlike many of its competitors, the Company
operates, rather than franchises, all of its stores (except for
the 18 dealer locations). Monro believes that direct operation
of stores enhances its ability to compete by providing
centralized control of such areas of operations as service
quality, store appearance, promotional activity and pricing. A
high level of technical competence is maintained throughout the
Company, as Monro requires, as a condition of employment, that
employees participate in comprehensive training programs to keep
pace with technology changes. Additionally, purchasing,
distribution, merchandising, advertising, accounting and other
5
The Company provides ongoing, comprehensive
training to its store employees. Monro believes that such
training provides a competitive advantage by enabling its
technicians to provide quality service to its customers in all
areas of undercar repair. (See additional discussion under
“Store Operations: Store Personnel and Training”.)
Store Operations
The typical format for a Monro repair store is a
free-standing building of approximately 4,500 square feet
consisting of a sales area, six fully-equipped service bays and
a parts storage area, with a parking lot with space for
approximately 17 cars. Acquired Speedy stores average five bays
per location with approximately 4,200 square feet. The stores
acquired from Kimmel and Frasier average six bays per location
with approximately 4,600 square feet and the acquired
Mr. Tire stores average seven bays and 5,900 square feet.
The stores opened in BJ’s locations average five bays and
2,700 square feet. In BJ’s locations, the Company and
BJ’s both operate counters in the sales area, while the
Company operates the service bay area. Most service bays are
equipped with above-ground electric vehicle lifts. The typical
Service Division store carries approximately $71,000 of
inventory and approximately 3,300 stock keeping units
(“SKUs”). The Kimmel and Tread Quarters tire stores
typically carry approximately $60,000 of inventory and
approximately 1,100 SKUs, while Mr. Tire stores carry
approximately $108,000 of inventory and approximately 1,100 SKUs
to support their higher sales volume. Generally, each store is
located within 25 miles of a “key” store which carries
approximately 70% more inventory than a typical store and serves
as a mini-distribution point for slower moving inventory for
other stores in its area.
The stores generally are situated in
high-visibility locations in suburban areas, major metropolitan
areas or small towns and offer easy customer access. The typical
store is open from 7:30 a.m. to 7:00 p.m. on Monday through
Friday and from 7:30 a.m. to 5:00 p.m. on Saturday. The
Company’s Mr. Tire locations are also open Sundays
from 9:00 a.m. to 5:00 p.m.
All Company stores (except Mr. Tire)
communicate daily with the central office and warehouse by
computerized inventory control and electronic POS management
information systems, which enable the Company to collect sales
and operational data on a daily basis, to adjust store pricing
to reflect local conditions and to control inventory on a near
“real-time” basis. Additionally, each store has
access, through the POS system, to the inventory carried by the
seven stores nearest to it. Management believes that this
feature improves customer satisfaction and store productivity by
reducing the time required to locate out-of-stock parts.
(Mr. Tire will be integrated into Monro’s POS and
inventory control systems during fiscal 2005.)
To maintain quality control, the Company conducts
audits to rate its employees’ telephone sales manner and
the accuracy of pricing information given.
The Company has a customer survey program to
monitor customer attitudes toward service quality, friendliness,
speed of service, and several other factors for each store. This
program includes a monthly telephone survey contacting customers
of all stores. (Twenty customers are contacted for each store
during each fiscal quarter.) Customer concerns are addressed via
letter and personal follow-up by customer service and field
management personnel.
The Company uses a “Double Check for
Accuracy Program” as part of its routine store procedures.
This quality assurance program requires that a technician and
supervisory-level employee independently inspect a
6
The Company is an active member of the Motorist
Assurance Program (“MAP”). MAP is an organization of
automotive retailers, wholesalers and manufacturers which was
established as part of an industry-wide effort to address the
ethics and business practices of companies in the automotive
repair industry. Participating companies commit to improving
consumer confidence and trust in the automotive repair industry
by adopting “Uniform Inspection Guidelines” and
“Standards of Service” established by MAP. These
“Standards of Service” are posted in the
Company’s stores and serve to provide consistent
recommendations to customers in the diagnosis and repair of a
vehicle.
Monro offers limited warranties on substantially
all of the products and services that it provides. The Company
believes that these warranties are competitive with industry
practices and serve as a marketing tool to increase repeat
business at the stores.
On a rotating basis, headquarters management
personnel participate in the Company’s day-in-the-store
program by working in a store, under the direction of the store
manager, to better understand the latest developments at the
store level, with the goal of improving support and service to
the field.
The Company supervises store operations primarily
through its Divisional Vice Presidents who oversee Zone Managers
who, in turn, oversee Market Managers. The typical Service
Division store is staffed by a Store Manager and four to six
technicians, one of whom serves as the Assistant Manager. The
typical Kimmel and Tread Quarters store is staffed by a Store
Manager, an Assistant Manager and four to seven technicians. The
typical Mr. Tire store is staffed by a Store Manager, an
Assistant Manager and/or Service Manager, one or two sales
people and five to eight technicians. The higher staffing level
at Mr. Tire stores is necessary to support the higher sales
volume at those stores. All Store Managers receive a base
salary, and Assistant Managers receive hourly compensation. In
addition, Store Managers and Assistant Managers may receive
other compensation based on their store’s customer
relations, gross profit, labor cost controls, safety, sales
volume and other factors via a monthly or quarterly bonus based
on performance in these areas.
Monro believes that the ability to recruit and
retain qualified technicians is an important competitive factor
in the automotive repair industry, which has historically
experienced a high turnover rate. Monro makes a concerted effort
to recruit individuals who will have a long-term commitment to
the Company and offers an hourly rate structure and additional
compensation based on productivity; a competitive benefits
package including health, dental, life and disability insurance;
a 401(k)/profit-sharing plan; as well as the opportunity to
advance within the Company. Many of the Company’s Managers
and Market Managers started with the Company as technicians.
Many of the Company’s new technicians join
the Company in their early twenties as trainees or apprentices.
As they progress, they are promoted to technician and eventually
master technician, the latter requiring ASE certification in
both brakes and suspension. The Company offers a tool purchase
program through which trainee technicians can acquire their own
set of tools. The Company also will reimburse technicians for
the cost of ASE certification registration fees and test fees
and encourages all technicians to become certified by providing
a higher hourly wage rate following their certification.
The Company’s training department conducts
in-house technical clinics for store personnel and management
training programs for new Store Managers, and coordinates
attendance at sales and technical clinics offered by the
Company’s vendors. Each Monro store maintains a library of
20 to 25 instructional videos. The Company issues technical
bulletins to all stores on innovative or complex repair
processes, and maintains a centralized data base for technical
repair problems. In addition, the Company has established a
telephone technical hotline to provide assistance to store
personnel in resolving problems encountered while diagnosing and
repairing vehicles. The help line is available during all hours
of store operation.
The Company has established Monro University to
provide comprehensive training and development of current and
prospective Store Managers. Training is accomplished through an
intensive one-week instructional
7
Purchasing and Distribution
The Company, through its wholly-owned subsidiary
Monro Service Corporation, selects and purchases parts and
supplies for all Company-operated stores on a centralized basis
through an automatic replenishment system. Although purchases
outside the centralized system (“outside purchases”)
are made when needed at the store level, these purchases are low
by industry standards, and accounted for approximately 17% of
all parts used in fiscal 2004.
The Company’s ten largest vendors accounted
for approximately 54% of its parts purchases, with the largest
vendor accounting for approximately 15% of total purchases in
fiscal 2004. The Company purchases parts from over 100 vendors.
Management believes that the Company’s relationships with
vendors are excellent and that alternative sources of supply
exist, at comparable cost, for substantially all parts used in
the Company’s business. The Company routinely obtains bids
from vendors to ensure it is receiving competitive pricing and
terms.
Most parts are shipped by vendors to the
Company’s primary warehouse facility in Rochester, New
York, and are distributed to stores through the Company-operated
tractor/trailer fleet. Most stores are replenished once every
week from this warehouse, and such replenishment fills, on the
average, 96% of all items ordered by the stores’ automatic
POS-driven replenishment system. The warehouse stocks
approximately 8,400 SKUs. The Kimmel warehouses, located in
Maryland and Virginia, carry, on average, approximately 1,000
SKUs consisting primarily of tires and the Mr. Tire
warehouse in Baltimore carries, on average, 2,400 SKUs. During
fiscal 2005, the Company plans to consolidate its two Baltimore
warehouses into a single location upon the expiration of the
Kimmel warehouse lease.
The Company has entered into various contracts
with parts suppliers which require it to buy up to 90% of its
annual purchases of specific products including brakes, exhaust,
oil and ride control at market prices. These agreements expire
at various dates through November 2007. The Company
believes these agreements provide it with high quality, branded
merchandise at preferred pricing, along with strong marketing
and training support.
Competition
The Company competes in the retail automotive
service industry. This industry is generally highly competitive
and fragmented, and the number, size and strength of competitors
varies widely from region to region. The Company believes that
competition in this industry is based on customer service and
reputation, store location, name awareness and price.
Monro’s primary competitors include national and regional
undercar, tire specialty and general automotive service chains,
both franchised and company-operated; car dealerships; and, to a
lesser extent, gas stations and independent garages. Monro
considers Midas, Inc. and Meineke Discount Mufflers Inc. to be
direct competitors. In most of the new markets that the Company
has entered, at least one competitor was already present. In
identifying new markets, the Company analyzes, among other
factors, the intensity of competition. (See “Expansion
Strategy” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations”.)
Employees
As of March 27, 2004, Monro had 3,210
employees, of whom 2,993 were employed in the field
organization, 57 were employed at the warehouses and 160 were
employed at the Company’s corporate
8
Regulation
The Company stores new oil and recycled
antifreeze and generates and handles used automotive oils,
antifreeze and certain solvents, which are disposed of by
licensed third-party contractors. In certain states, as
required, the Company also recycles oil filters. Thus, the
Company is subject to a number of federal, state and local
environmental laws including the Comprehensive Environmental
Response Compensation and Liability Act (“CERCLA”). In
addition, the United States Environmental Protection Agency (the
“EPA”), under the Resource Conservation and Recovery
Act (“RCRA”), and various state and local
environmental protection agencies regulate the Company’s
handling and disposal of waste. The EPA, under the Clean Air
Act, also regulates the installation of catalytic converters by
the Company and all other repair stores by periodically spot
checking jobs, and has the power to fine businesses that use
improper procedures or materials. The EPA has the authority to
impose sanctions, including civil penalties up to $25,000 per
violation (or up to $25,000 per day for certain willful
violations or failures to cooperate with authorities), for
violations of RCRA and the Clean Air Act.
The Company is subject to various laws and
regulations concerning workplace safety, zoning and other
matters relating to its business. The Company believes that it
is in substantial compliance with all applicable environmental
and other laws and regulations and that the cost of such
compliance is not material to the Company.
The Company is environmentally conscious, and
takes advantage of recycling opportunities both at its
headquarters and at its stores. Cardboard, plastic shrink wrap
and parts’ cores are returned to the warehouse by the
stores on the weekly stock truck. There, they are accumulated
for sale to recycling companies or returned to parts
manufacturers for credit.
Seasonality
Although the Company’s business is not
highly seasonal, customers do purchase more undercar service
during the period of March through October than the period of
November through February, when miles driven tend to be lower.
As a result, sales and profitability are typically lower during
the latter period. In the Tire Division, the better sales months
are typically May through August, and October through December.
The slowest months are typically January through April and
September.
Company Information and SEC Filings
The Company maintains a website at
www.monro.com
and makes its annual, quarterly and
periodic Securities and Exchange Commission (“SEC”)
filings available through the Investor Information section of
that website. The Company’s SEC filings are available
through this website free of charge, via a direct link to the
SEC website at
www.sec.gov
. The Company’s filings
with the SEC are also available to the public at the SEC Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549
or by calling the SEC at 1-800-SEC-0330.
The Company, through Monro Service Corporation,
owns its office/warehouse facility of approximately 95,000
square feet, which is located on 12.7 acres of land in Holleder
Technology Park, in Rochester, New York.
In connection with the Speedy Acquisition in
September 1998, the Company financed most of the real
estate formerly owned by SMK Speedy International Inc. via a
synthetic lease (off-balance sheet) agreement. (See additional
discussion under “Capital Resources and Liquidity”).
Of the total number of Company-operated Acquired Speedy
locations, 18 buildings on land-leased sites and 68 parcels of
land and buildings on formerly owned locations were leased under
this arrangement. In June 2003, the Company purchased the
general and limited partnership interests in Brazos Automotive
Properties, L.P. (“BAP”), the entity holding title to
these properties, and, accordingly, has consolidated the related
assets and debt in its financial statements at March 27, 2004.
(See also Note 2 to the financial statements.)
9
Of Monro’s 595 Company-operated stores at
March 27, 2004, 192 were owned, 268 were leased and for
135, the land only was leased. In general, the Company leases
store sites for a ten-year period with several five-year renewal
options. Giving effect to all renewal options, approximately 51%
of the operating leases (195 stores) expire after 2015. Certain
of the leases provide for contingent rental payments if a
percentage of annual gross sales exceeds the base fixed rental
amount. The highest contingent percentage rent of any lease is
6.75%, and no such lease has adversely affected profitability of
the store subject thereto. Certain officers and directors of the
Company or members of their families are the lessors, or have
interests in entities that are the lessors, with respect to 46
of the leases. No related party leases, other than renewals or
modifications of leases on existing stores and the six assumed
as part of the Mr. Tire acquisition, have been entered into
since May 1989, and no new related party leases are
contemplated.
The Rochester, New York office and warehouse
facility are subject to mortgages held by commercial banks or
private investors. As of March 27, 2004, the outstanding
amount under the mortgage on the headquarters office and
warehouse facility was $1.7 million. There was also
$0.7 million outstanding under a mortgage held by the City
of Rochester, New York, secured by the land on which the
headquarters office and warehouse is located.
The Company is not a party or subject to any
legal proceedings other than certain routine claims and lawsuits
that arise in the normal course of its business. The Company
does not believe that such routine claims or lawsuits,
individually or in the aggregate, will have a material adverse
effect on its financial condition or results of operations.
No matters were submitted to a vote of security
holders during the fourth quarter of fiscal 2004.
PART II
Market Information
The Common Stock is traded on the
over-the-counter market and is quoted on the NASDAQ National
Market System under the symbol “MNRO”. The following
table sets forth, for the Company’s last two fiscal years,
the range of high and low sales prices on the NASDAQ National
Market System for the Common Stock adjusted, as appropriate, for
the Company’s October 2003 three-for-two stock split:
Holders
At June 4, 2004, the Company’s Common
Stock was held by approximately 2,500 shareholders of record or
through nominee or street name accounts with brokers.
Dividends
On September 16, 2003, the Company’s
Board of Directors declared a three-for-two stock split in the
form of a 50% stock dividend payable to shareholders of record
on October 21, 2003. Information regarding the number of
shares of Common Stock outstanding and market prices of the
Common Stock, as set forth in this Form 10-K, reflect the
impact of this stock split.
10
While the Company has not paid any cash dividends
on the Common Stock since its inception, any future
determination as to the payment of dividends will be at the
discretion of the Board of Directors and will depend on the
Company’s financial condition, results of operations,
capital requirements, compliance with charter and contractual
restrictions, and such other factors as the Board of Directors
deems relevant.
The following table sets forth selected financial
and operating data of the Company for each year in the five-year
period ended March 27, 2004. The financial data and certain
operating data have been derived from the Company’s audited
financial statements. This data should be read in conjunction
with the financial statements and related notes included under
Item 8 of this report and in conjunction with other
financial information included elsewhere in this Form 10-K.
11
The following table sets forth income statement
data of the Company expressed as a percentage of sales for the
fiscal years indicated:
Forward-Looking Statements
The statements contained in this Annual Report on
Form 10-K that are not historical facts, including (without
limitation) statements made in this Item and in
“Item 1 — Business”, may contain statements
of future expectations and other forward-looking statements made
pursuant to the Safe Harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements are
subject to risks, uncertainties and other important factors that
could cause actual results to differ materially from those
expressed. These factors include, but are not necessarily
limited to, product demand, 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, the effect of
economic conditions, the impact of competitive services and
pricing, product development, parts supply restraints or
difficulties, industry regulation, risks relating to leverage
and debt service (including sensitivity to fluctuations in
interest rates), continued availability of capital resources and
financing, risks relating to integration of acquired businesses
and other factors set forth or incorporated elsewhere herein and
in the Company’s other SEC filings. The Company does not
undertake to update any forward-looking statement that may be
made from time to time by or on behalf of the Company.
Critical Accounting Policies
The Company believes that the accounting policies
listed below are those that are most critical to the portrayal
of the Company’s financial condition and results of
operations, and that required management’s most difficult,
subjective and complex judgments in estimating the effect of
inherent uncertainties. This section should be read in
conjunction with Note 1 to the consolidated financial statements
which includes other significant accounting policies.
The Company evaluates whether inventory is stated
at the lower of cost or market based on historical experience
with the carrying value and life of inventory. The assumptions
used in this evaluation are based on current market conditions
and the Company believes inventory is stated at the lower of
cost or market in the consolidated financial statements. In
addition, historically the Company has been able to return
excess items to vendors for credit. Future changes by vendors in
their policies or willingness to accept returns of excess
inventory could require a revision in the estimates.
12
Goodwill represents the amount paid in
consideration for an acquisition in excess of the net assets
acquired. In accordance with Statement of Financial Accounting
Standards No. 142 (“SFAS 142”), “Goodwill
and Other Intangible Assets”, the Company does not amortize
goodwill for new acquisitions made after June 30, 2001. For
acquisitions prior to that date, the Company continued to
amortize goodwill only through the end of fiscal 2002. The
Company conducts tests for impairment of goodwill annually or
more frequently if circumstances indicate that the asset might
be impaired. These impairment tests include management estimates
of future cash flows that are dependent upon subjective
assumptions regarding future operating results including growth
rates, discount rates, capital requirements and other factors
that impact the estimated fair value. An impairment loss is
recognized to the extent that an asset’s carrying amount
exceeds its fair value.
The Company evaluates the carrying values of its
long-lived assets to be held and used in the business by
reviewing undiscounted cash flows by operating unit. Such
evaluations are performed whenever events and circumstances
indicate that the carrying amount of an asset may not be
recoverable. In such instances, the carrying values are adjusted
for the differences between the fair values and the carrying
values. Additionally, in the case of fixed assets related to
locations that will be closed or sold, the Company writes fixed
assets down to their estimated recovery value.
The Company is largely self-insured with respect
to workers compensation, general liability and employee medical
claims. In order to reduce its risk and better manage its
overall loss exposure, the Company purchases stop-loss insurance
that covers individual claims in excess of the deductible
amounts. The Company maintains an accrual for the estimated cost
to settle open claims as well as an estimate of the cost of
claims that have been incurred but not reported. These estimates
take into consideration the historical average claim volume, the
average cost for settled claims, current trends in claim costs,
changes in the Company’s business and workforce, and
general economic factors. These accruals are reviewed on a
quarterly basis, or more frequently if factors dictate a more
frequent review is warranted.
The Company provides an accrual for estimated
future warranty costs based upon the historical relationship of
warranty costs to sales, except for tire road hazard warranties
which are accounted for in accordance with Financial Accounting
Standards Board (“FASB”) Technical Bulletin 90-1. The
warranty reserve and warranty expense related to all product
warranties at and for the fiscal years ended March 2004 and
2003 were not material to the Company’s financial position
or results of operations.
Fiscal 2004 as Compared to Fiscal
2003
Sales for fiscal 2004 increased
$21.4 million, or 8.3% to $279.5 million as compared
to $258.0 million in fiscal 2003. The increase was due to
an increase of approximately $10.9 million from stores
added since March 31, 2002, of which the acquired
Mr. Tire stores accounted for $3.5 million. Comparable
store sales increased 4.7%. There were 306 selling days in
fiscal years 2004 and 2003.
During the year, 40 stores were added and five
were closed. At March 27, 2004, the Company had 595 stores
and 10 kiosk locations in operation.
Management believes that the improvement in sales
resulted from several factors aimed at driving store traffic,
including an increase in the number of oil changes performed, an
increase in scheduled maintenance services and an increase in
commercial/fleet business. Price increases in areas such as shop
supply and environmental fees, as well as in several product
categories, also contributed to the sales improvement.
Additionally, after six fiscal years of declines in comparable
store exhaust sales, exhaust sales leveled off in fiscal 2004.
The exhaust decline had resulted primarily from
manufacturers’ use (beginning in the mid-1980s and
completed in the mid-1990s) of non-corrosive stainless steel
exhaust systems on almost all new cars, which has extended the
life of exhaust systems and resulted in declining exhaust sales.
13
The Company introduced “Scheduled
Maintenance” services in all of its stores late in fiscal
2001. These services are required by vehicle manufacturers to
comply with warranty schedules, and are offered by Monro in a
more convenient and cost competitive fashion than auto dealers
can provide. Management believes that these services, which are
offered both in bundled “packages” and individually,
will continue to contribute positively to comparable store sales
in future years, and have helped to mitigate the aforementioned
decline in exhaust which negatively impacted recent fiscal years.
Additionally, the Company continued to reward
store employees with pay programs focused on high customer
service scores. Management believes that, in spite of the
sluggish economic environment, it is continuing to build the
trust of its customers, through quality, integrity and fair
pricing, and is gaining an advantage over some of its
competitors.
Gross profit for fiscal 2004 was
$114.8 million or 41.1% of sales, as compared with
$105.6 million or 40.9% of sales for fiscal 2003. The
improvement in gross profit as a percentage of sales is
primarily attributable to a decline in technician labor costs as
well as distribution and occupancy costs which are included in
cost of sales. Technician labor costs decreased due to better
operational control and improved productivity, as measured by
sales per man hour. Since the Company began formally tracking
this statistic over the last seven years, productivity has
increased every year, and since fiscal 1998, is up 32%.
The decrease in distribution and occupancy costs
as a percentage of sales is largely due to the buyout of the
synthetic lease properties which occurred on June 27, 2003.
As a result of this transaction, approximately $.8 million
of expense, which formerly was recorded as rent expense and
included in cost of sales, was recorded as interest expense
during the year. There was also an additional $1.0 million of
expense recorded as rent in the prior year which did not recur
in FY04 due to: a) the buyout of several synthetic lease
properties in March 2003 and b) a reduction in interest rates in
FY04. The interest rate reduction occurred with the expiration
of swap agreements mid-year. Additionally, there was a reduction
in the spread over LIBOR which the Company pays, resulting from
the Company’s improved financial performance, as well as
the elimination of the synthetic lease lessor. This reduction
was partially offset by approximately $.4 million of
additional depreciation recognized during the year, now that the
related properties are recorded on the Company’s balance
sheet. Additionally, with strong comparable store sales, the
Company was able to obtain some leverage in occupancy costs
which are largely fixed expenses.
These decreases were partially offset by an
increase in material usage partially related to a shift in mix,
which includes a greater percentage of higher-cost tire sales,
an increase in oil costs and an increase in parts purchased
outside of the Company’s normal distribution system
(“outside purchases”). These parts carry much higher
costs than parts which the Company purchases directly from
manufacturers and distributes through its central distribution
system. Due to parts proliferation and the Company’s
expansion into more services, having the correct mix of
inventory in the stores is a challenge that the Company works
very hard to master in order to control its cost of sales. While
the Company, which purchases approximately 17% of parts outside
its normal distribution system, has performed better than many
of its competitors, which experience upwards of 50% outside
purchases, it is not satisfied with these results and remains
focused on reducing outside purchases from current levels.
Operating, selling, general and administrative
expenses for fiscal 2004 increased by $3.7 million to
$84.7 million and, as a percentage of sales, decreased by
1.1% as compared to fiscal 2003. The increase in expenditures is
primarily due to increased store manager wages to improve the
quality and retention of this highly important position for the
Company, increased workers compensation costs, increased expense
to comply with Sarbanes-Oxley requirements and increased utility
costs. These increases were partially offset by a planned
reduction in advertising expense as the Company shifted dollars
from more expensive radio, newspaper and electronic advertising
to the more efficient and cost-effective direct mail marketing.
Additionally, there was a $1.6 million charge in FY03 for the
vesting of performance-based options for the Company’s
Chief Executive Officer which did not recur in FY04. There was
also a reduction in fiscal 2004 expense for field management.
Operating income in fiscal 2004 of
$30.1 million, or 10.8% of sales, increased by
$5.5 million from the fiscal 2003 level of
$24.6 million, due to the factors discussed above.
14
Interest expense, net of interest income,
decreased as a percent of sales from 1.0% in fiscal 2003 to .9%
in fiscal 2004. The weighted average debt outstanding for the
year ended March 27, 2004 increased by approximately $9.2
million from fiscal 2003. Largely offsetting this increase was a
decrease in the weighted average interest rate for the year
ended March 27, 2004 of approximately 1.3% from the rate of
6.8% for the year ended March 29, 2003, resulting in a
slight increase in expense between the two years.
Other expense, net, for fiscal 2004 was
$0.1 million, consisting of $0.3 million in
amortization expense partially offset by $0.2 million of
gains on sale of fixed assets and miscellaneous income. In
fiscal 2003 the Company reported other income, net, of
$0.2 million, consisting of amortization expense of $0.3
million offset by gains on sale of fixed assets and
miscellaneous income of $0.5 million.
The Company’s effective tax rate was 38% of
pre-tax income in fiscal 2004 and 2003.
Net income for fiscal 2004 increased by
$3.3 million, or 23.9%, to $17.0 million as compared to
$13.7 million in fiscal 2003, due to the factors discussed.
Fiscal 2003 as Compared to Fiscal
2002
Effective April 1, 2002, the Company
purchased all of the outstanding common stock, as well as a
portion of the preferred stock, of Kimmel Automotive, Inc. based
in Baltimore, Maryland. In June 2002, the Company purchased
the remaining preferred stock. Kimmel Automotive operated 34
tire and automotive repair stores in Maryland and Virginia, as
well as Wholesale and Truck Tire Divisions (including two
commercial stores). Effective June 29, 2002, the Company
sold the Truck Tire Division. The results of operations of
Kimmel since its acquisition are included in the consolidated
results of the Company for the twelve months ended
March 29, 2003. The acquired operations were accretive to
earnings for the twelve months ended March 29, 2003.
Sales for fiscal 2003 increased
$33.1 million, or 14.8% to $258.0 million as compared
to $224.9 million in fiscal 2002. The increase was due to
an increase of approximately $29.5 million from stores
added since April 1, 2001, of which the acquired Kimmel
stores accounted for $24.8 million. Comparable store sales
increased 2.9%. There were 306 selling days in fiscal years 2003
and 2002.
During the year, 50 stores were added and four
were closed. At March 29, 2003, the Company had 560 stores
in operation.
Management believes that the improvement in sales
resulted from several factors aimed at driving store traffic,
including an increase in the number of oil changes performed, an
increase in scheduled maintenance services and an increase in
commercial/fleet business. Coupled with price increases in areas
such as shop supply and environmental fees, as well as in some
product categories, the Company was able to offset the
continuing decline in exhaust sales.
Gross profit for fiscal 2003 was
$105.6 million or 40.9% of sales, as compared with
$91.8 million or 40.8% of sales for fiscal 2002. The
improvement in gross profit as a percentage of sales is
primarily attributable to a decline in technician labor costs as
well as distribution and occupancy costs which are included in
cost of sales. As comparable store sales improve, the Company is
able to better leverage the latter costs, many of which are
fixed. Technician labor costs improved due to better operational
control and improved productivity, as measured by sales per man
hour. Since the Company began formally tracking this statistic
over the last six years, productivity has increased every year,
and since fiscal 1998, is up 29%.
These decreases were partially offset by an
increase in material usage primarily related to a shift in mix,
which includes a greater percentage of higher-cost tire sales,
since the acquisition of Kimmel.
Operating, selling, general and administrative
expenses for fiscal 2003 increased by $11.4 million to
$81.0 million and, as a percentage of sales, increased by
.5% as compared to fiscal 2002. The increase is primarily due to
increased store manager wages to improve the quality and
retention of this highly important position for the Company,
increased health insurance costs, and increased
performance-based bonuses related to improved Company results.
In addition, the Company recorded a compensation charge in both
fiscal years 2003 and 2002 associated with the vesting of
performance-based stock options granted in December 1998 to
the Company’s Chief Executive Officer. The charge in fiscal
year 2003 was approximately $1.6 million as compared
15
Operating income in fiscal 2003 of
$24.6 million, or 9.5% of sales, increased by
$2.3 million from the fiscal 2002 level of
$22.2 million, due to the factors discussed above.
Interest expense, net of interest income,
decreased as a percent of sales from 1.7% in fiscal 2002 to 1.0%
in fiscal 2003. The weighted average interest rate for the year
ended March 29, 2003 was approximately 1.0% lower than the
rate of 7.8% for the year ended March 30, 2002.
Additionally, the weighted average debt outstanding for the year
ended March 29, 2003 decreased by approximately
$11.5 million from fiscal 2002, resulting in a decrease in
expense between the two years.
As noted above, the Company discontinued
amortization of goodwill in fiscal 2003 in accordance with SFAS
142. This change, along with net gains on disposals of fixed
assets, led to $.2 million of other income in fiscal 2003
as compared with other expense of $.8 million in fiscal
2002.
The Company’s effective tax rate was 38% of
pre-tax income in fiscal 2003 and 35.9% in fiscal 2002.
Net income for fiscal 2003 increased by
$2.4 million, or 21.4%, to $13.7 million as compared to
$11.3 million in fiscal 2002, due to the factors discussed.
Capital Resources and Liquidity
The Company’s primary capital requirements
for fiscal 2004 were divided among the funding of the
Mr. Tire Acquisition for $25.5 million, the
Company’s store expansion program and the upgrading of
facilities and systems in existing stores, totaling
$14.3 million.
In both fiscal years 2004 and 2003, these capital
requirements were primarily met by cash flow from operations
and, additionally, in fiscal 2004, through the use of the
Company’s Revolving Credit facility.
In fiscal 2005, the Company intends to open
approximately 25 new stores, of which 20 are expected to be
stores located within BJ’s Wholesale Clubs. Total capital
required to open a new store ranges, on average (based upon the
last five fiscal years’ openings — excluding the
acquired Speedy, Kimmel, Frasier, Mr. Tire stores and
BJ’s locations), from $300,000 to $1,000,000 depending on
whether the store is leased, owned or land leased. Total capital
required to open a store within a BJ’s Wholesale Club is
substantially less than for a greenfield store.
The Company also plans to continue to seek
suitable acquisition candidates. Management believes that the
Company has sufficient resources available (including cash flow
from operations and bank financing) to expand its business as
currently planned for the next several years.
Payments due by period under long-term debt,
other financing instruments and commitments are as follows:
Concurrent with the closing of the acquisition of
189 company-operated Speedy stores in September 1998, the
Company obtained a secured credit facility from a syndication of
lenders led by The Chase Manhattan Bank. The financing structure
consisted of a $25 million term loan and a $75 million
Revolving Credit facility.
16
In March 2003, the Company repaid the
outstanding balance under its then existing term loan
($1.9 million) and renewed its credit facility agreement.
The amended financing arrangement consists of an
$83.4 million Revolving Credit facility (of which
approximately $37.3 million was outstanding at
March 27, 2004), and a non-amortizing credit loan (formerly
synthetic lease financing) totaling $26.6 million (all of
which was outstanding at March 27, 2004).
The Revolving Credit portion of the facility has
a three-year term expiring in September 2006. On
June 27, 2003, the Company purchased the entity holding
title to the properties and debt under the synthetic lease and,
accordingly, consolidated both the assets and debt related to
such lease on its balance sheet at March 27, 2004. In
accordance with the Company’s credit facility agreement,
the synthetic lease was converted to a three-year,
non-amortizing revolving credit loan, also expiring in
September 2006.
The loans bear interest at the prime rate or
other LIBOR-based rate options tied to the Company’s
financial performance. Interest only is payable monthly on the
Revolving Credit facility and credit loan throughout the term.
The Company must also pay a facility fee on the unused portion
of the commitment.
The Revolving Credit facility is secured by all
accounts receivable, inventory and other personal property. The
Company has also entered into a negative pledge agreement not to
encumber any real property or equipment, with certain
permissible exceptions. The non-amortizing credit loan is
secured by the real property to which it relates.
Within the aforementioned $83.4 million
Revolving Credit facility, the Company has available a
sub-facility of $10 million for the purpose of issuing
standby letters of credit. The line requires fees aggregating
1.375% annually of the face amount of each standby letter of
credit, payable quarterly in arrears. There were
$6.4 million in outstanding letters of credit under this
line at March 27, 2004.
During fiscal 1995, the Company purchased 12.7
acres of land for $.7 million from the City of Rochester,
New York, on which its office/warehouse facility is located. The
City has provided financing for 100% of the cost of the land via
a 20-year non-interest bearing mortgage, all due and payable in
2015.
To finance its office/warehouse building, the
Company obtained permanent mortgage financing in fiscal 1996
consisting of a 10-year mortgage for $2.9 million and an
eight-year term loan in the amount of $.7 million. The
mortgage requires monthly interest payments, and equal monthly
installments of principal based on a 20-year amortization
period. The Company entered into an interest rate swap agreement
with a major financial institution which effectively fixed the
interest rate over the terms of the aforementioned agreements at
7.15%. The term loan was repaid in full in fiscal 2004.
In addition, the Company has financed certain
store properties and equipment with capital leases, which amount
to $3.0 million at March 27, 2004 and are due in
installments through 2018.
Certain of the Company’s long-term debt
agreements require, among other things, the maintenance of
specified interest and rent coverage ratios and amounts of
tangible net worth. They also contain restrictions on dividend
payments. The Company is in compliance with these requirements
at March 27, 2004. These agreements permit mortgages and
specific lease financing arrangements with other parties with
certain limitations.
Inflation
The Company does not believe its operations have
been materially affected by inflation. The Company has been
successful, in many cases, in mitigating the effects of
merchandise cost increases principally through the use of volume
discounts and alternative vendors.
17
Financial Accounting Standards
See “Recent Accounting Pronouncements”
in Note 1 to the financial statements for a discussion of the
impact of recently issued accounting standards on the
Company’s financial statements as of March 27, 2004,
for the year then ended, as well as the expected impact on the
Company’s financial statements for future periods.
The Company is exposed to market risk from
potential changes in interest rates. The Company regularly
evaluates these risks and has entered into an interest rate swap
agreement, expiring in 2005, with a notional amount of
$1.8 million. The agreement limits the interest rate
exposure on the Company’s floating rate debt, related
specifically to the mortgage on its office and warehouse
facility in Rochester, New York, via the exchange of fixed and
floating rate interest payments periodically over the life of
the agreement without the exchange of the underlying principal
amount. The fixed rate paid by the Company under this agreement
is 7.15%.
At year end March 2004 and 2003,
approximately 1% of the Company’s long-term debt, excluding
capital leases, was at fixed interest rates and therefore, the
fair value is affected by changes in market interest rates.
Long-term debt, including current portion, had a carrying amount
of $66.3 million and a fair value of $66.0 million as
of March 27, 2004, as compared to a carrying amount of
$33.4 million and a fair value of $32.7 million as of
March 29, 2003. The Company’s cash flow exposure on
floating rate debt, which is not supported by interest rate swap
agreements, would result in interest expense fluctuating
approximately $.6 million based upon the Company’s
debt position at fiscal year ended March 27, 2004 and
$.2 million for fiscal year ended March 29, 2003,
given a 1% change in LIBOR.
The Company believes the amount of risk and the
use of derivative financial instruments described above are not
material to the Company’s financial condition or results of
operations.
18
19
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To the Board of Directors and Shareholders of
Monro Muffler Brake, Inc.:
In our opinion, the accompanying consolidated
balance sheets and the related consolidated statements of
income, cash flow and changes in shareholders’ equity
present fairly, in all material respects, the financial position
of Monro Muffler Brake, Inc. and its subsidiaries at
March 27, 2004 and March 29, 2003, and the results of
their operations and their cash flows for each of the three
years in the period ended March 27, 2004 in conformity with
accounting principles generally accepted in the United States of
America. These financial statements are the responsibility of
the Company’s management. Our responsibility is to express
an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with the
standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant
estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
As discussed in Note 1 to the Consolidated
Financial Statements, the Company adopted Statement of Financial
Accounting Standards No. 142, “Goodwill and Other
Intangible Assets”, on March 31, 2002.
PricewaterhouseCoopers LLP
Rochester, New York
20
MONRO MUFFLER BRAKE, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
The accompanying notes are an integral part of
these financial statements.
21
MONRO MUFFLER BRAKE, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
The accompanying notes are an integral part of
these financial statements.
22
MONRO MUFFLER BRAKE, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN
SHAREHOLDERS’ EQUITY
The accompanying notes are an integral part of
these financial statements.
23
MONRO MUFFLER BRAKE, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
The accompanying notes are an integral part of
these financial statements.
24
MONRO MUFFLER BRAKE, INC. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
Note 1 — Significant Accounting
Policies
Monro Muffler Brake, Inc. and its wholly owned
subsidiaries, Monro Service Corporation, Monro Leasing, LLC and
Brazos Automotive Properties Management, Inc. (“BAPM”)
(the “Company”), is engaged principally in providing
automotive undercar repair services in the United States. The
Company had 595 Company-operated stores, 10 kiosk locations and
18 dealer-operated automotive repair centers located primarily
in the northeast region of the United States as of
March 27, 2004. The Company’s operations are organized
and managed in one operating segment.
The accompanying consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles. The preparation of financial
statements in conformity with such principles requires the use
of estimates by management during the reporting period. Actual
results could differ from those estimates.
During the fiscal year ended March 31, 2001,
the Board of Directors of the Company elected to change the
Company’s fiscal year end from March 31 to the last
Saturday in March. This change was effective with fiscal year
2002 which began on April 1, 2001.
The following are the dates represented by each
fiscal period:
“Year ended Fiscal March 2004”:
March 30, 2003 — March 27, 2004 (52 weeks)
“Year ended Fiscal March 2003”:
March 31, 2002 — March 29, 2003 (52 weeks)
“Year ended Fiscal March 2002”:
April 1, 2001 — March 30, 2002 (52 weeks)
The consolidated financial statements include the
Company and its wholly owned subsidiaries, Monro Service
Corporation, Monro Leasing, LLC and BAPM, after the elimination
of intercompany transactions and balances.
Sales are recorded upon completion of automotive
undercar repair and tire services provided to customers. Sales
of tire road hazard warranties are accounted for in accordance
with Financial Accounting Standards Board (“FASB”)
Technical Bulletin 90-1. Revenue from the sale of these
agreements is recognized on a straight-line basis over the
contract period.
The Company considers all highly liquid
instruments with original maturities of three months or less to
be cash equivalents.
The Company’s inventories consist of
automotive parts and tires. Substantially all merchandise
inventories are valued under the first-in, first-out (FIFO)
method.
25
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The Company accounts for the receipt of barter
credits in accordance with EITF No. 93-11, “Accounting
for Barter Transactions”. Barter credits are recorded in
the appropriate period when used depending upon the nature of
the related expenditure.
Property, plant and equipment are stated at cost.
Depreciation of property, plant and equipment is provided on the
straight-line basis. Buildings and improvements are depreciated
over lives varying from 10 to 39 years; machinery, fixtures
and equipment over lives varying from 5 to 15 years; and
vehicles over lives varying from 4 to 8 years. Computer
software is depreciated over lives varying from 3 to
7 years. When property is sold or retired, the cost and
accumulated depreciation are eliminated from the accounts and a
gain or loss is recorded in the Statement of Income.
Expenditures for maintenance and repairs are expensed as
incurred.
Certain leases have been capitalized and are
classified on the balance sheet as fixed assets. These assets
are being amortized on a straight-line basis over their
estimated lives, which coincide with the terms of the leases
(See Note 3).
The Company accounts for impaired long-lived
assets in accordance with Statement of Financial Accounting
Standards No. 144 (“SFAS 144”), “Accounting
for the Impairment or Disposal of Long-Lived Assets”. This
standard prescribes the method for asset impairment evaluation
for long-lived assets and certain identifiable intangibles that
are either held and used or to be disposed of. The Company
evaluates the ability to recover long-lived assets whenever
events or circumstances indicate that the carrying value of the
asset may not be recoverable. In the event assets are impaired,
losses are recognized to the extent the carrying value exceeds
the fair value. In addition, the Company reports assets to be
disposed of at the lower of the carrying amount or the fair
market value less selling costs.
New store opening costs are charged to expense in
the fiscal year when incurred. When the Company closes a store,
the estimated unrecoverable costs, including the remaining lease
obligation net of sublease income, if any, are charged to
expense.
For acquisitions completed on or before
June 30, 2001, the excess of the cost over the fair value
of net assets of purchased businesses is recorded as goodwill
and until March 30, 2002, was amortized on a straight-line
basis over periods of 20 years or less. The cost of other
acquired intangibles is amortized on a straight-line basis over
their estimated useful lives.
The Company has adopted Statement of Financial
Accounting Standards No. 141 (“SFAS 141”),
“Business Combinations”. All business combinations
consummated on or after July 1, 2001 are accounted for in
accordance with that pronouncement. In addition, in accordance
with Statement of Financial Accounting Standards No. 142
(“SFAS 142”), “Goodwill and Other Intangible
Assets”, effective March 31, 2002, the Company no
longer amortizes goodwill. The Company tests its recorded
goodwill balance for impairment at least annually.
The Company provides an accrual for estimated
future warranty costs based upon the historical relationship of
warranty costs to sales. The warranty reserve and warranty
expense related to all product warranties at and for
26
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
the fiscal years ended March 2004, 2003 and
2002 were not material to the Company’s financial position
or results of operations.
The Company reports derivatives and hedging
activities in accordance with Statement of Financial Accounting
Standards No. 133 (“SFAS 133”), “Accounting
for Derivative Instruments and Hedging Activities”, as
amended. This statement requires that all derivative instruments
be recorded on the balance sheet at fair value. Changes in the
fair value of derivatives are recorded each period in current
earnings or other comprehensive income, depending on whether the
derivative is designated as part of a hedge transaction, and if
it is, depending on the type of hedge transaction.
Comprehensive income is reported in accordance
with Statement of Financial Accounting Standards No. 130
(“SFAS 130”), “Reporting Comprehensive
Income”. As it relates to the Company, comprehensive income
is defined as net earnings as adjusted for minimum pension
liability and SFAS 133 adjustment to equity, and is reported net
of related taxes.
The Company’s purchases of common stock are
recorded as “Treasury Stock” and result in a reduction
of “Shareholders’ Equity”.
The Company applies the intrinsic-value-based
method of accounting prescribed by Accounting Principles Board
(APB) Opinion No. 25, “Accounting for Stock
Issued to Employees”, and related interpretations including
FASB Interpretation No. 44, “Accounting for Certain
Transactions Involving Stock Compensation, an Interpretation of
APB Opinion No. 25”, issued in March 2000, to
account for its fixed-plan stock options. Under this method,
compensation expense is recorded on the date of grant only if
the current market price of the underlying stock exceeds the
exercise price. The Company’s policy generally is to grant
stock options at fair market value at the date of grant.
Statement of Financial Accounting Standards
No. 123, “Accounting for Stock-Based
Compensation”, (“SFAS 123”) established
accounting and disclosure requirements using a fair-value-based
method of accounting for stock-based employee compensation
plans. As allowed by SFAS 123, the Company has elected to
continue to apply the intrinsic-value-based method of accounting
described above, and has adopted only the disclosure
requirements of SFAS 123. The following table illustrates the
effect on net income if the fair-value-based method had been
applied to all outstanding and unvested awards in each period.
27
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Pro forma compensation expense computed under
SFAS 123 for fiscal 2003 includes approximately $400,000 related
to 120,000 stock options granted to the Company’s Chief
Executive Officer in that year. These stock options were
immediately vested. In addition, stock option expense as
recorded under APB 25 in fiscal 2003 and 2002 relates to the
vesting of performance-based stock options totalling 150,000 in
each year for the Company’s Chief Executive Officer.
The weighted average fair value of options
granted during fiscal 2004, 2003 and 2002 was $10.91, $8.97 and
$5.87, respectively. The fair values of the options granted were
estimated on the date of their grant using the Black-Scholes
option-pricing model with the following weighted-average
assumptions:
Forfeitures are recognized as they occur.
On September 16, 2003, the Company’s
Board of Directors declared a three-for-two stock split in the
form of a 50% stock dividend payable to shareholders of record
on October 21, 2003. Basic and diluted earnings per share,
weighted average shares outstanding and associated data in all
applicable footnotes have been adjusted to reflect the
aforementioned stock split.
Earnings per share for all periods have been
calculated in accordance with Statement of Financial Accounting
Standards No. 128, “Earnings Per Share”. Basic
earnings per share have been calculated by dividing net income
by the weighted average number of shares of Common Stock
outstanding during the year. Diluted earnings per share is
calculated by dividing net income by the weighted average number
of shares of Common Stock and equivalents outstanding during the
year. Common Stock equivalents represent shares issuable upon
assumed exercise of stock options and stock purchase warrants.
(See Note 10.)
The Company expenses the production costs of
advertising the first time the advertising takes place, except
for direct response advertising which is capitalized and
amortized over its expected period of future benefits.
28
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Direct response advertising consists primarily of
coupons for the Company’s services. The capitalized costs
of this advertising are amortized over the period of the
coupon’s validity, which ranges from six weeks to one year.
Prepaid advertising at fiscal year end
March 2004 and 2003, and advertising expense for the fiscal
years ended March 2004, 2003 and 2002, were not material to
these financial statements.
In accordance with EITF 02-16, “Accounting
by a Customer (Including a Reseller) for Certain Consideration
Received from a Vendor”, for vendor agreements entered into
or modified after December 31, 2002, the Company accounts
for vendor rebates and cooperative advertising credits as a
reduction of the cost of products purchased, except where the
rebate or credit is a reimbursement of costs incurred to sell
the vendor’s product, in which case it is offset against
the costs incurred. Vendor rebates and credits associated with
vendor agreements entered into prior to December 31, 2002
are recognized as cooperative advertising income as earned and
are classified as a reduction of selling, general and
administrative expenses.
The Company reports all information on its
pension plan benefits in accordance with Statement of Financial
Accounting Standards (SFAS) No. 132,
“Employers’ Disclosure about Pensions and Other
Postretirement Benefits (revised 2003)”.
In accordance with FASB Interpretation
No. 45 (“FIN 45”), “Guarantor’s
Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others”, at the time
the Company issues a guarantee, it recognizes an initial
liability for the fair value, or market value, of the
obligations it assumes under that guarantee.
Certain amounts in these financial statements
have been reclassified to improve reporting and maintain
comparability among the periods presented.
In December 2003, the FASB issued Statement
of Financial Accounting Standards No. 132 (revised 2003),
“Employers’ Disclosures about Pensions and Other
Postretirement Benefits — an amendment of FASB
Statements No. 87, 88, and 106 (Issued
December 2003)”. This Statement revises
employers’ disclosures about pension plans and other
postretirement benefit plans. It does not change the measurement
or recognition of those plans required by FASB SFAS 87,
“Employers’ Accounting for Pensions”, SFAS 88,
“Employers’ Accounting for Settlements and
Curtailments of Defined Benefit Pension Plans and for
Termination Benefits”, and SFAS 106, “Employers’
Accounting for Postretirement Benefits Other Than
Pensions”. This Statement retains the disclosure
requirements contained in FASB Statement of Financial Accounting
Standards No. 132, “Employers’ Disclosures about
Pensions and Other Postretirement Benefits” (“SFAS
132”), which it replaces. It requires additional
disclosures to those in the original SFAS 132 about the assets,
obligations, cash flows, and net periodic benefit cost of
defined benefit pension plans and other defined benefit
postretirement plans. The disclosure requirements in this
statement are effective for interim periods starting after
December 15, 2003. The Company adopted these changes in its
Form 10-K for fiscal 2004.
In January 2003, the FASB issued
Interpretation No. 46, “Consolidation of Variable
Interest Entities, and Interpretation of ARB No. 51”,
which requires all variable interest entities (VIEs) to be
consolidated by the
29
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
primary beneficiary. The primary beneficiary is
the entity that holds the majority of the beneficial interests
in the variable interest entity. In addition, the Interpretation
expands disclosure requirements for both VIEs that are
consolidated as well as VIEs from which the entity is the holder
of a significant amount of the beneficial interests, but not the
majority. See Note 2 regarding the Company’s fiscal 2004
buyout of the properties under its synthetic lease arrangement.
In June 2001, SFAS 143 was issued, effective
for financial statements for fiscal years beginning after
June 15, 2002. SFAS 143 requires entities to establish
liabilities for legal obligations associated with the retirement
of tangible long-lived assets. The Company adopted this
statement effective April 1, 2003 as required, and such adoption
had no material impact on the Company’s financial
statements.
In May 2003, the FASB issued SFAS
No. 150, “Accounting for Certain Financial Instruments
with Characteristics of Both Liabilities and Equity”
(“SFAS 150”). SFAS 150 requires that certain financial
instruments, which under previous guidance were recorded as
equity, be recorded as liabilities. The financial instruments
affected include mandatorily redeemable stock, certain financial
instruments that require or may require the issuer to buy back
some of its shares in exchange for cash or other assets, and
certain obligations that can be settled with shares of stock.
The adoption of SFAS 150 did not have any effect on the
Company’s financial statements.
Note 2 — Acquisitions
Effective March 1, 2004 the Company acquired
36 tire and automotive repair locations in the Baltimore,
Maryland and Arlington, Virginia areas from Mr. Tire, Inc. (the
“Seller”) and its sole shareholder, Atlantic
Automotive Corp. (“Atlantic”) (the “Mr. Tire
Acquisition”). The acquired locations include 26 leased
retail stores and 10 kiosks which operate in Atlantic automotive
dealerships. The Company intends to continue to utilize the
acquired assets to operate the Mr. Tire locations.
Although the 36 Mr. Tire locations are in
the same general markets in which Monro competes, existing
Company stores are mainly situated in non-overlapping areas.
Plans are to close only one existing store in the Baltimore area.
Pursuant to the terms of an Asset Purchase
Agreement, dated as of February 9, 2004, by and among the
Company, the Seller and Atlantic (the “Purchase
Agreement”), the Company purchased certain of Seller’s
assets, including inventory, fixed assets and intellectual
property and assumed certain of Seller’s liabilities,
including Seller’s obligations pursuant to the real
property leases for each of the 26 retail store locations,
certain warranty obligations outstanding to customers and
certain other liabilities. The purchase price amounted to
approximately $25.5 million in cash, including transaction
costs, $3 million in assumed liabilities and
$.4 million in warrants to purchase the Company’s
common stock (as described below) (the “Purchase
Price”). The Purchase Price will be adjusted post-closing
to reflect, among other things, final counts of inventory and
fixed assets. At the Closing, the Company issued a two-year
warrant agreement (the “Warrant”) to Atlantic,
pursuant to which Atlantic may purchase 100,000 shares (the
“Shares”) of the Company’s $.01 par value Common
Stock at $22.33 per share, the closing price of the
Company’s common stock on February 6, 2004. Atlantic
may not exercise the Warrant for a period of six months after
the Closing or until September 1, 2004 and the Company has
agreed to use its best efforts to submit all required
information and filings with the SEC in order to register the
Shares. The value of the Shares was estimated by the Company
using the Black-Scholes option-pricing model using a two-year
term, a risk-free interest rate of 1.8% and expected volatility
of 28.6%. The Company financed the cash portion of the Purchase
Price with bank debt under the Company’s existing Revolving
Credit facility.
30
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The following table summarizes the preliminary
estimated fair values of the assets acquired and liabilities
assumed at the date of the Mr. Tire acquisition:
The estimated fair value of purchased assets and
liabilities assumed is subject to modification based upon the
resolution of the purchase price adjustments described above,
valuations of tangible and intangible assets and the completion
of the Company’s purchase accounting procedures. The
Company expects to complete the purchase price allocation in the
first half of fiscal 2005.
See Notes 4 and 5 for goodwill and intangible
asset disclosures related to the Mr. Tire Acquisition. The
operating results of the acquired Mr. Tire locations are
included in the Company’s financial statements from
March 1, 2004.
Unaudited pro forma results of operations for the
fiscal years ended March 27, 2004 and March 29, 2003,
as if the Mr. Tire Acquisition had occurred at the
beginning of the Company’s fiscal year ended
March 2003, are presented below. The pro forma results
include estimates and assumptions which management believes are
reasonable, including adjustments to reflect amortization of
acquired intangible assets, depreciation based on the adjustment
to the fair market value of property acquired, interest on
acquisition debt, and related income tax effects. The pro forma
results have been prepared for comparative purposes only and are
not necessarily indicative of the results which would have
occurred if the Mr. Tire acquisition had been in effect on
the dates indicated, or which may result in the future.
The strike price of the Warrant shares exceeded
the Company’s average stock price in fiscal 2003 and 2004.
Accordingly, the shares were excluded from weighted average
shares used to compute pro forma earnings per share.
On June 27, 2003, the Company purchased the
land and buildings under its existing synthetic lease facility
through the acquisition of the general and limited partnership
interests in Brazos Automotive Properties, L.P.
31
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
(“BAP”), for approximately $935,000 in
cash (the “Lease Buyout”). The Lease Buyout was
financed through the Company’s existing credit facility.
BAP held the title related to 86 properties leased, under an
operating lease, to a subsidiary of the Company and used in the
conduct of the Company’s auto service business. BAP was
also the debtor on a $26.6 million loan related to these
properties. BAP, which became a wholly owned subsidiary of the
Company as a result of the Lease Buyout, was established in 1998
for the purpose of acquiring certain properties and leasing them
to the Company.
The purchase of the general partnership interest
was completed through the purchase of 100% of the outstanding
common stock of Brazos Automotive Properties Management, Inc.,
the general partner of BAP, from Brazos River Leasing, L. P. The
limited partnership interest was acquired from Heller Financial,
Inc., a subsidiary of G.E. Capital, the holder of that interest.
In March 2004, the Company dissolved BAP, thereby
eliminating it as a subsidiary.
As a result of this Lease Buyout, land and
buildings, at their fair value of approximately
$27.5 million including acquisition costs, have been
reflected on the Company’s balance sheet. Additionally,
long-term debt of $26.6 million has also been reflected.
The debt is non-amortizing and is due in September 2006
(See Note 6).
Subsequent to this transaction, payments on the
lease, which were reported as rent prior to the Lease Buyout,
are reported as interest expense. Rent expense related to the
synthetic lease recorded in fiscal 2003 was $2.2 million.
Rent expense related to the synthetic lease properties in fiscal
2004 (through June 2003) was $.4 million and interest
expense in fiscal 2004 was $.8 million. The reduced expense
in fiscal 2004 resulted primarily from the expiration in
August 2003 of an interest rate swap arrangement that fixed
the interest rate on the debt related to these properties, as
well as a reduction in March 2003 of $5 million in the
principal amount financed under the synthetic lease. Also, in
fiscal 2004, the Company recorded depreciation expense related
to the assets acquired in the Lease Buyout of approximately $.4
million. These depreciation charges commenced in the
Company’s second quarter of its fiscal year 2004 after the
Lease Buyout.
Effective April 1, 2002, the Company
purchased all of the outstanding common stock, as well as a
portion of the preferred stock, of Kimmel Automotive, Inc.
(“Kimmel”), based in Baltimore, Maryland (the
“Kimmel Acquisition”). Kimmel operated 34 tire and
automotive repair stores in Maryland and Virginia, as well as
Wholesale and Truck Tire Divisions (including two commercial
stores). The purchase price for Kimmel was approximately
$6 million in cash, plus the assumption of approximately
$4 million of liabilities. The acquisition was financed
through the Company’s existing bank credit facility.
In June 2002, the Company purchased the
remaining preferred stock of Kimmel, with a face value of
$1.6 million, for approximately $.7 million. The $.7
million is included in the liabilities assumed in the purchase
of Kimmel. Additionally, effective June 29, 2002, the
Company sold Kimmel’s Truck Tire division, including its
retread plant and two commercial stores, for approximately
$.4 million in cash and $.5 million in notes
receivable. The sale of these assets effectively reduced the net
purchase price of the retail store operations.
32
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The following table summarizes the fair values of
the assets acquired and liabilities assumed at the date of the
Kimmel Acquisition.
See Notes 4 and 5 for goodwill and intangible
asset disclosures related to the Kimmel Acquisition. The results
of operations of Kimmel are included in the Company’s
results from April 1, 2002.
On February 10, 2003, the Company acquired
certain assets of Frasier Tire Service, Inc.
(“Frasier”), representing ten company-operated Frasier
Tire Service store locations in the Charleston and Columbia,
South Carolina markets. The purchased assets consist primarily
of inventory and equipment. The purchase price of the assets was
approximately $1 million in cash. The acquisition was
financed through the Company’s Revolving Credit facility.
The results of operations of the acquired Frasier stores are
included in the Company’s results from February 10,
2003.
Note 3 — Property, Plant and
Equipment
The major classifications of property, plant and
equipment are as follows:
Capitalized interest costs aggregated $30,000 in
fiscal 2004 and $31,000 in fiscal 2003.
Amortization expense recorded under capital
leases totaled $365,000, $406,000 and $562,000 for the fiscal
years ended March 2004, 2003 and 2002, respectively.
33
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Note 4 — Goodwill
The changes in goodwill during fiscal 2003 and
2004 were as follows:
The amount of goodwill recorded for the
Mr. Tire Acquisition is subject to change for the impact of
purchase price adjustments provided for in the related Purchase
Agreement, the finalization of valuations of tangible and
intangible assets acquired and completion of purchase accounting
procedures. Goodwill acquired in fiscal 2003 relating to the
purchase of Kimmel was $3.4 million and of Frasier, was
$.4 million. The goodwill recorded for the Mr. Tire
and Frasier acquisitions is amortizable for tax purposes while
the Kimmel goodwill is not.
The Company performed its required annual
impairment test of goodwill during the third quarter of fiscal
2004. No impairment loss resulted from that annual impairment
test.
Transitional disclosures regarding the effect of
goodwill amortization on net income during fiscal years 2004,
2003 and 2002 are as follows:
Amortization expense associated with goodwill
totaled $529,000 in the fiscal year ended March 2002.
34
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Note 5 — Intangible Assets and Other
Noncurrent Assets
Intangible and other noncurrent assets consist of
the following at March 2004 and 2003:
The increases in customer list, trade name and
other intangible assets in fiscal 2004 relate to the purchase of
Mr. Tire, which occurred in March 2004. The customer
list value of $2,290,000 is being amortized over its estimated
useful life of 15 years, while the value assigned to the
Mr. Tire trade name, $1,000,000, is being amortized over
its estimated useful life of three years. The other intangible
asset of $400,000 relates to the value of the Company’s
agreement with Atlantic Automotive to operate Mr. Tire
kiosks in Atlantic dealerships. This amount is being amortized
over its estimated useful life of four years. The remaining
trade name value of $1,000,000 relates to the Tread Quarters
trade name, acquired in fiscal 2003. The Tread Quarters name is
being amortized over its estimated useful life of five years.
Financing fees and related accumulated
amortization were each reduced by $2,669,000 during fiscal 2004
as the costs related to the Company’s 1998 Revolving Credit
and synthetic lease facilities and its headquarters term loan,
became fully amortized. The credit facility was renewed in
March 2003 and the related costs are being amortized over
the term of the new agreement, which ends in September 2006.
Amortization of intangible assets during fiscal
2004 totaled $795,000. Of this amount, $303,000 was recorded as
amortization expense, $431,000 related to the revolving credit
facility fees was recorded as interest expense and $61,000
related to the synthetic lease facility fees was reported as
rent and classified in cost of sales.
Amortization of intangible assets during fiscal
2003 totaled $787,000. Of this amount, $286,000 was recorded as
amortization expense, $399,000 related to the revolving credit
facility fees was recorded as interest expense and $102,000
related to the synthetic lease facility fees was reported as
rent and classified in cost of sales.
Amortization expense on intangible assets (other
than goodwill), which relates primarily to trade names and
non-compete agreements in fiscal years 2004 and 2003 and to
non-compete agreements in fiscal 2002, totaled $303,000,
$286,000 and $166,000, respectively, in the fiscal years ended
March 2004, 2003 and 2002.
Substantially all intangible assets are tax
deductible, except for the amortization of the Tread Quarters
trade name.
Other non-current assets of $1.1 million
primarily consist of the long-term portion of various
receivables and security deposits.
35
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Estimated future amortization of intangible
assets is as follows:
Note 6 — Long-Term Debt
Long-term debt consists of the following:
Concurrent with the closing of the acquisition of
189 company-operated Speedy stores in September 1998, the
Company obtained a secured credit facility from a syndication of
lenders led by The Chase Manhattan Bank. The financing structure
consisted of a $25 million term loan and a $75 million
Revolving Credit facility. Additionally, there was synthetic
lease (off-balance sheet) financing for a significant portion of
the Speedy real estate, totaling $35 million.
In March 2003, the Company repaid the
outstanding balance under its then existing term loan
($1.9 million) and renewed its credit facility agreement.
The amended financing arrangement consists of an
$83.4 million Revolving Credit facility (of which
approximately $37.3 million was outstanding at
March 27, 2004), and a non-amortizing credit loan (formerly
synthetic lease financing) totaling $26.6 million (all of
which was outstanding at March 27, 2004).
The Revolving Credit portion of the facility has
a three-year term expiring in September 2006. On
June 27, 2003, the Company purchased the entity holding
title to the properties and debt under the synthetic lease and,
36
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
accordingly, consolidated both the assets and
debt related to such lease on its balance sheet at
March 27, 2004. In accordance with the Company’s
credit facility agreement, the synthetic lease was converted to
a three-year, non-amortizing revolving credit loan, also
expiring in September 2006.
The loans bear interest at the prime rate or
other LIBOR-based rate options tied to the Company’s
financial performance. Interest only is payable monthly on the
Revolving Credit facility and credit loan throughout the term.
The Company must also pay a facility fee on the unused portion
of the commitment.
The Revolving Credit facility is secured by all
accounts receivable, inventory and other personal property. The
Company has also entered into a negative pledge agreement not to
encumber any real property or equipment, with certain
permissible exceptions. The non-amortizing credit loan is
secured by the real property to which it relates.
Within the aforementioned $83.4 million
Revolving Credit facility, the Company has available a
sub-facility of $10 million for the purpose of issuing
standby letters of credit. The line requires fees aggregating
1.375% annually of the face amount of each standby letter of
credit, payable quarterly in arrears. There were
$6.4 million in outstanding letters of credit under this
line at March 27, 2004.
During fiscal 1995, the Company purchased 12.7
acres of land for $.7 million from the City of Rochester,
New York, on which its office/warehouse facility is located. The
City has provided financing for 100% of the cost of the land via
a 20-year non-interest bearing mortgage, all due and payable in
2015.
To finance its office/warehouse building, the
Company obtained permanent mortgage financing in fiscal 1996
consisting of a 10-year mortgage for $2.9 million and an
eight-year term loan in the amount of $.7 million. The
mortgage requires monthly interest payments, and equal monthly
installments of principal based on a 20-year amortization
period. The Company entered into an interest rate swap agreement
with a major financial institution which effectively fixed the
interest rate over the terms of the aforementioned agreements at
7.15%. The term loan was repaid in full in fiscal 2004.
In addition, the Company has financed certain
store properties and equipment with capital leases, which amount
to $3.0 million at March 27, 2004 and are due in
installments through 2018.
The Company was a party to two additional
interest rate swap agreement that expired in August 2003,
with an aggregate notional amount of $34 million. The
purpose of these agreements was to limit the interest rate
exposure on the Company’s floating rate debt. Fixed rates
under these agreements ranged from 5.21% to 5.23%.
Certain of the Company’s long-term debt
agreements require, among other things, the maintenance of
specified interest and rent coverage ratios and amounts of
tangible net worth. They also contain restrictions on dividend
payments. The Company is in compliance with these requirements
at March 27, 2004. These agreements permit mortgages and
specific lease financing arrangements with other parties with
certain limitations.
37
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Aggregate debt maturities over the next five
years and thereafter are as follows:
Note 7 — Fair Value of Financial
Instruments
Financial instruments consist of the following:
The fair value of cash and cash equivalents,
accounts receivable and accounts payable approximated book value
at March 27, 2004 and March 29, 2003 because their
maturity is generally less than one year in duration. The fair
value of long-term debt was estimated based on discounted cash
flow analyses using either quoted market prices for the same or
similar issues, or the current interest rates offered to the
Company for debt with similar maturities.
While it is not the Company’s intention to
terminate its derivative financial instruments, fair values were
estimated, based on market rates or quotes from brokers, which
represented the amounts that the Company would receive or pay if
the instruments were terminated at the respective balance sheet
dates. These fair values indicated that the termination of
interest rate swaps would have resulted in a $.1 million
loss and a $.8 million loss as of March 27, 2004 and
March 29, 2003, respectively.
38
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Note 8 — Income Taxes
The components of the provision for income taxes
are as follows:
Deferred tax (liabilities) assets consist of
the following:
The Company has $5.5 million of state net
operating loss carryforwards available as of March 27,
2004. The carryforwards expire in varying amounts from 2004
through 2022.
39
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
A reconciliation between the U. S. Federal
statutory tax rate and the effective tax rate reflected in the
accompanying financial statements is as follows:
Note 9 — Convertible Preferred Stock
and Common Stock
A summary of the changes in the number of shares
of Class C preferred stock and common stock is as follows:
In September 2003, the Board of Directors
authorized an amendment to the Company’s Restated
Certificate of Incorporation to increase the number of
authorized shares of Common Stock from 15,000,000 to 20,000,000.
This amendment was approved by the Company’s shareholders
in December 2003. Additionally, the Board authorized a
three-for-two stock split that was paid in October 2003 to
shareholders of record as of October 21, 2003. All share
amounts herein have been adjusted for this stock split.
Holders of at least 60% of the Class C
preferred stock must approve any action authorized by the
holders of common stock. In addition, there are certain
restrictions on the transferability of shares of Class C
preferred stock. In the event of a liquidation, dissolution or
winding-up of the Company, the holders of the Class C preferred
stock would be entitled to receive $1.50 per share out of the
assets of the Company before any amount would be paid to holders
of common stock. The conversion value of the Class C
convertible preferred stock is $.144 per share at March 27,
2004.
40
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Under the 1984 and 1987 Incentive Stock Option
Plans, 1,091,508 shares (as retroactively adjusted for stock
dividends and the stock split) of common stock were reserved for
issuance to officers and key employees. The 1989 Incentive Stock
Option Plan authorized an additional 259,883 shares (as
retroactively adjusted for stock dividends and the stock split)
for issuance.
In January 1994, May 1995 and
May 1997, the Board of Directors authorized an additional
386,714, 164,961 and 315,000 shares, respectively (all amounts
retroactively adjusted for stock dividends and the stock split),
for issuance under the 1989 Plan. These amounts were approved by
shareholders in August 1994, August 1995 and
August 1997, respectively.
In November 1998, the Board of Directors
authorized the 1998 Incentive Stock Option Plan, reserving
1,125,000 shares (as retroactively adjusted for the stock split)
of common stock for issuance to officers and key employees. The
Plan was approved by shareholders in August 1999.
In May 2003, the Board of Directors
authorized an additional 300,000 shares (as retroactively
adjusted for the stock split) for issuance under the 1998 Plan,
which was approved by shareholders in August 2003.
Generally, options vest within the first five
years of their term, and have a duration of ten years.
Outstanding options are exercisable for various periods through
March 2014.
A summary of changes in outstanding stock options
(as retroactively adjusted for stock dividends and the stock
split) is as follows:
41
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The following table summarizes information about
fixed stock options outstanding at March 27, 2004:
In August 1994, the Board of Directors
authorized a non-employee directors’ stock option plan
which was approved by shareholders in August 1995. The Plan
initially reserved 100,278 shares of common stock (as
retroactively adjusted for stock dividends and the stock split),
and provides for (i) the grant to each non-employee
director as of August 1, 1994 of an option to purchase
4,559 shares of the Company’s common stock (as
retroactively adjusted for stock dividends and the stock split)
and (ii) the annual grant to each non-employee director of
an option to purchase 4,559 shares (as retroactively adjusted
for stock dividends and the stock split) on the date of the
annual meeting of shareholders beginning in 1995. The options
expire ten years from the date of grant and have an exercise
price equal to the fair market value of the Company’s
common stock on the date of grant. Options vest immediately upon
issuance.
In May 1997 and May 1999, the Board of
Directors authorized an additional 102,375 and 97,500 shares,
respectively (both amounts as retroactively adjusted for stock
dividends and the stock split) for issuance under the Plan.
These amounts were approved by shareholders in August 1997
and August 1999, respectively.
In May 2003, the Board of Directors
authorized the 2003 Non-Employee Directors’ Stock Option
Plan, reserving 90,000 shares (as retroactively adjusted for the
stock split) of common stock for issuance to outside directors,
which was approved by shareholders in August 2003. The
provisions of the Plan are similar to the 1994 Non-Employee
Directors’ Stock Option Plan, except that options expire
five years from the date of grant.
A summary of changes in these stock options is as
follows:
42
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Note 10 — Earnings Per Common
Share
The following is a reconciliation of basic and
diluted earnings per common share for the respective years:
The computation of diluted earnings per common
share for fiscal years 2004, 2003 and 2002 excludes the effect
of assumed exercise of approximately 108,000, 99,000 and 100,000
stock options and warrants, respectively, as the exercise price
of these options and warrants was greater than their average
market value, resulting in an anti-dilutive effect on diluted
earnings per share.
Note 11 — Operating Leases and Other
Commitments
The Company leases retail facilities and store
equipment under noncancellable lease agreements which expire at
various dates through fiscal year 2019. In addition to stated
minimum payments, certain real estate leases have provisions for
contingent rentals when retail sales exceed specified levels.
Generally, the leases provide for renewal for various periods at
stipulated rates. Most of the facilities’ leases require
payment of property taxes, insurance and maintenance costs in
addition to rental payments, and several provide an option to
purchase the property at the end of the lease term.
In recent years, the Company has entered into
agreements for the sale/leaseback of certain stores and into
agreements for the sale/leaseback of store equipment. The
Company has lease renewal options under the real estate
agreements at projected future fair market values and has both
purchase and renewal options under the equipment lease
agreements. Realized gains are deferred and are credited to
income as rent expense adjustments over the lease terms.
43
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Future minimum payments required under
noncancellable leases are as follows:
Rent expense under operating leases, net of
sublease income, totaled $16,905,000, $18,213,000 and
$16,465,000 in fiscal 2004, 2003 and 2002, respectively,
including contingent rentals of $277,000, $283,000 and $307,000
in each respective fiscal year. Sublease income totaled
$339,000, $313,000 and $293,000, respectively, in fiscal 2004,
2003 and 2002. As described in Note 2, rent expense is lower in
fiscal 2004 primarily due to the June 2003 buyout of
properties under the Company’s former synthetic lease
agreement.
The Company has entered into various contracts
with parts suppliers which require it to buy up to 90% of its
annual purchases of specific products including brakes, exhaust,
oil and ride control at market prices. The agreements expire at
various dates through November 2007. The Company believes
these agreements provide it with high quality, branded
merchandise at preferred pricing, along with strong marketing
and training support.
The Company amended its employment agreement (the
“CEO Agreement”) in November 2002 with Robert G.
Gross, its President and Chief Executive Officer. The CEO
Agreement, which provides for a base salary plus a bonus,
subject to the discretion of the Company’s Compensation
Committee, has a 48-month term ending December 31, 2006.
The CEO Agreement also provides for a special retention bonus of
$250,000 payable annually on each January 1 beginning in 2003
and ending in 2006. The CEO Agreement includes a covenant
against competition with the Company for two years after
termination. The CEO Agreement provides the executive with a
minimum of one year’s salary and certain additional rights
in the event of a termination without cause (as defined
therein), or a termination in the event of change in control (as
defined therein).
The Company renewed its employment agreement in
May 2003 with Catherine D’Amico, its Executive Vice
President and Chief Financial Officer (the “CFO
Agreement”). The CFO Agreement provides a base salary, to
be reviewed annually, plus a bonus, subject to the discretion of
the Company’s Compensation Committee. The CFO Agreement has
a 41-month term ending September 30, 2006, and includes a
covenant against competition with the Company for two years
after termination. The CFO Agreement provides
Ms. D’Amico with a minimum of one year’s salary
and certain additional rights in the event of a termination
without cause (as defined therein), or a termination in the
event of a change in control (as defined therein).
Note 12 — Employee Retirement and
Profit Sharing Plans
The Company sponsors separate noncontributory
defined benefit pension plans for Monro employees and the former
Kimmel Automotive, Inc. employees that provide benefits to
certain full-time employees who were employed with the Company
and with Kimmel prior to April 2, 1998 and May 15,
2001, respectively. Each company’s Board of Directors
approved plan amendments whereby the benefits of each of the
defined benefit plans would be frozen and the plans would be
closed to new participants as of those dates. Prior to these
amendments, coverage under the plans began after employees
completed one year of service and attainment of age 21. Benefits
under both plans were based primarily on years of service and
employees’ pay near retirement.
44
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The funding policy for both plans is consistent
with the funding requirements of Federal law and regulations.
The measurement date used to determine the pension plan
measurements disclosed herein is March 31.
The funded status of each plan is set forth below:
The projected and accumulated benefit obligations
were equivalent for both plans at March 31, 2004 and
March 31, 2003.
Pension cost included the following components:
The unrecognized transition asset for the Monro
plan was amortized over 15 years beginning April 1, 1988
and became fully amortized in fiscal 2002.
45
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The increase (decrease) in the additional
minimum liability, before income tax effect, included in
accumulated other comprehensive income is as follows:
The weighted-average assumptions used to
determine benefit obligations are as follows:
The weighted-average assumptions used to
determine net periodic pension costs are as follows:
The expected long-term rate of return on plan
assets assumption is established based upon the plan’s
asset allocations using assumptions related to historical
returns, correlations and volatilities of those asset classes.
The investment strategy of these plans is to
conservatively manage the assets of each plan to meet the
plan’s long-term liabilities while maintaining sufficient
liquidity to pay current benefits. This is achieved by holding
equity investments while investing a portion of assets in long
duration bonds in order to match the long-term nature of the
liabilities.
The Company’s weighted average asset
allocations, by asset category, are as follows:
The Company expects to contribute approximately
$308,000 in required contributions in fiscal 2005 to the Kimmel
plan.
The Company has a 401(k)/profit sharing plan that
covers full-time employees who meet the age and service
requirements of the plan. The 401(k) salary deferral option was
added to the plan during fiscal 2000. The first employee
deferral occurred in March 2000. The Company makes matching
contributions consistent with the provisions of the plan. The
Company’s matching contributions for fiscal 2004, 2003 and
2002 amounted to approximately $480,000, $475,000 and $403,000,
respectively. The Company may also make annual profit sharing
contributions to the plan at the discretion of the Compensation
and Benefits Committee of the Board of Directors.
46
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The Company has a deferred compensation plan (the
“Deferred Compensation Plan”) to provide an
opportunity for additional tax-deferred savings to a select
group of management or highly compensated employees. The
Deferred Compensation Plan permits participants to defer all or
any portion of the compensation that would otherwise be payable
to them for the calendar year. In addition, the Company will
credit to the participants’ accounts such amounts as would
have been contributed to the Company’s 401(k)/ Profit
Sharing Plan but for the limitations that are imposed under the
Internal Revenue Code based upon the participants’ status
as highly compensated employees. The Company may also make such
additional discretionary allocations as are determined by the
Compensation Committee of the Board of Directors. No amounts
credited under the Deferred Compensation Plan are funded and the
Company maintains accounts to reflect the amounts owed to each
participant. At least annually, the accounts are credited with
earnings or losses calculated on the basis of an interest rate
or other formula as determined by the Compensation Committee.
The total liability recorded in the Company’s financial
statements at March 27, 2004 related to the Deferred
Compensation Plan was $111,000.
The Company’s management bonus plan provides
for the payment of annual cash bonus awards to participating
employees, as selected by the Board of Directors, based
primarily on the Company’s attaining pre-tax income targets
established by the Board of Directors. Charges to expense
applicable to the management bonus plan totaled $1,246,000,
$1,280,000 and $797,000 for the fiscal years ended
March 2004, 2003 and 2002, respectively.
Note 13 — Related Party
Transactions
In December 1998, the Company loaned
$523,000 to its newly-appointed Chief Executive Officer to
purchase 75,000 shares of the Company’s common stock at the
then fair market value. (This loan was made subsequent to the
Executive’s purchase of 25,000 shares using his own funds.)
The loan matured on December 1, 2003 in accordance with the
provisions of the CEO Agreement. At March 27, 2004, no
balance was outstanding on this loan. All principal and interest
due under the loan were forgiven in accordance with the CEO
Agreement, based upon the CEO’s continued employment with
the Company. The Company reported amounts forgiven on this loan
as compensation expense.
Certain (a) officers and directors of the
Company, (b) partnerships in which such persons have
interests or (c) trusts of which members of their families
are beneficiaries are lessors of certain facilities to the
Company. Payments under such operating and capital leases
amounted to $1,694,000, $1,631,000 and $1,643,000 for the fiscal
years ended March 2004, 2003 and 2002, respectively.
Amounts payable under these lease agreements totaled $35,000 and
$37,000, respectively, at March 27, 2004 and March 29,
2003. No related party leases, other than renewals or
modifications of leases on existing stores and the six assumed
as part of the Mr. Tire Acquisition in March 2003, have been
entered into since May 1989, and no new leases are
contemplated.
The Company has a management agreement with an
investment banking firm associated with a principal
shareholder/director of the Company to provide financial advice.
The agreement provides for an annual fee of $300,000 (the fee
was increased effective July 2003, such increase having
been approved by the Company’s Compensation Committee),
plus reimbursement of out-of-pocket expenses. During fiscal
2004, 2003 and 2002, the Company incurred fees of $265,000,
$160,000 and $160,000 annually under this agreement,
respectively. In addition, this investment banking firm, from
time to time, provides additional investment banking services to
the Company for customary fees. Approximately half of all
payments made to the investment banking firm are paid to another
principal shareholder/director of the Company.
Additionally, during fiscal 2004, the Company
paid legal fees on behalf of these principal
shareholder/directors in connection with Company stock
transactions, totalling $67,000 and $10,000, respectively.
47
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Note 14 — Supplemental Disclosure of
Cash Flow Information
The following transactions represent noncash
investing and financing activities during the periods indicated:
In connection with the sale of stores, the
Company reduced both fixed assets and other long-term
liabilities by $831,000.
In connection with recording the value of the
Company’s interest rate swap contracts, other comprehensive
income increased by $397,000, other current liabilities
decreased by $575,000, other long-term liabilities decreased by
$65,000 and the deferred income tax liability was increased by
$243,000.
In fiscal 2004, the Company recorded a minimum
liability related to its defined benefit pension plan that
decreased current liabilities and deferred tax assets by $79,000
and $30,000, respectively, and increased other comprehensive
income by $49,000.
In connection with the exercise of stock options,
the Company decreased deferred tax assets by $80,000, decreased
current liabilities by $359,000 and increased additional paid-in
capital by $279,000.
In connection with the forgiveness of a loan to
the Company’s Chief Executive Officer, the Company
recognized $78,000 of compensation expense and decreased the
note receivable from shareholder for the same amount.
In connection with the acquisition of Brazos
Automotive Properties, L.P., the Company paid $935,000 (Note 2),
as follows:
In connection with the acquisition of
Mr. Tire (Note 2), liabilities were assumed as follows:
In connection with the sale of stores, the
Company reduced both fixed assets and other long-term
liabilities by $15,000.
In connection with recording the value of the
Company’s interest rate swap contracts, other comprehensive
income increased by $194,000, other current liabilities
increased by $423,000, other long-term liabilities decreased by
$768,000 and the deferred income tax liability was reduced by
$151,000.
In fiscal 2003, the Company recorded a minimum
liability related to its defined benefit pension plan that
increased current liabilities and deferred tax assets by
$624,000 and $237,000, respectively, and decreased other
comprehensive income by $387,000.
In connection with performance-based executive
compensation, the Company recognized compensation expense of
$1,603,000, decreased other long-term liabilities by $208,000
and increased additional paid-in capital by $1,811,000.
48
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
In connection with the exercise of stock options,
the Company increased deferred tax assets by $80,000, decreased
current liabilities by $271,000 and increased additional paid-in
capital by $351,000.
In connection with the forgiveness of a loan to
the Company’s Chief Executive Officer, the Company
recognized $105,000 of compensation expense and decreased the
note receivable from shareholder for the same amount.
In June 2002, holders of the Class C
preferred stock converted 26,727 shares into 185,218 shares of
common stock. As a result, preferred stock decreased by $41,000
and common stock and additional paid-in capital increased by
$2,000 and $39,000, respectively.
In connection with the acquisition of Kimmel and
certain assets of Frasier (Note 2), liabilities were assumed as
follows:
The fair value of Kimmel assets acquired and cash
paid has been reduced by the Kimmel Truck Tire sale proceeds of
$400,000 that were received in the second quarter of fiscal 2003
and will be further reduced upon the collection of the $500,000
notes receivable related to this sale.
Capital lease obligations of $80,000 were
incurred under various agreements.
In connection with the sale of assets, the
Company reduced fixed assets and other current liabilities by
$160,000 and $158,000, respectively, and increased other current
assets by $2,000.
In connection with performance-based executive
compensation, the Company recognized compensation expense of
$727,000, increased other long-term liabilities by $208,000 and
increased additional paid-in capital by $519,000.
In connection with the forgiveness of a loan to
the Company’s Chief Executive Officer, the Company
recognized $105,000 of compensation expense and decreased the
note receivable from shareholder for the same amount.
In connection with recording the value of the
Company’s interest rate swap contracts, other comprehensive
income decreased by $666,000, other current liabilities
increased by $152,000, other long-term liabilities increased by
$954,000 and the deferred income tax liability was reduced by
$440,000.
Note 15 — Litigation
The Company and its subsidiaries are involved in
legal proceedings, claims and litigation arising in the ordinary
course of business. In management’s opinion, the outcome of
such current legal proceedings is not expected to have a
material effect on future operating results or on the
Company’s consolidated financial position.
49
MONRO MUFFLER BRAKE, INC. AND
SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL INFORMATION
(UNAUDITED)
The following table sets forth income statement
data by quarter for the fiscal years ended March 2004 and
2003. Earnings per share and weighted average share information
has been adjusted for the Company’s October 2003
three-for-two stock split.
50
None.
The Company maintains disclosure controls and
procedures that are designed to ensure that information required
to be disclosed in the Company’s Securities Exchange Act
reports is recorded, processed, summarized and reported within
the time periods specified in the SEC’s rules and forms,
and that such information is accumulated and communicated to the
Company’s management, including its Chief Executive Officer
and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure. In designing and
evaluating the disclosure controls and procedures, management
recognized that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of
achieving the desired control objectives, and management
necessarily was required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.
In conjunction with the close of each fiscal
quarter, the Company conducts an update, a review and an
evaluation of the effectiveness of the Company’s disclosure
controls and procedures. It is the conclusion of the
Company’s Chief Executive Officer and Chief Financial
Officer, based upon an evaluation completed as of the end of the
most recent fiscal quarter reported on herein, that the
Company’s disclosure controls and procedures are
sufficiently effective to ensure that any material information
relating to the Company is recorded, processed, summarized and
reported to its principal officers to allow timely decisions
regarding required disclosures.
There were no changes in the Company’s
internal accounting processes and control procedures or other
factors subsequent to the date of the evaluation referred to
above that could significantly affect the Company’s
disclosure controls.
51
Item 1.
Business
Table of Contents
Table of Contents
Store Additions and Closings
Year ended fiscal March,
2004
2003
2002
2001
2000
560
514
511
512
524
40
(c)
50
(b)
4
4
13
(5
)
(4
)
(1
)
(5
)
(25
)
595
560
514
511
512
(a)
Generally, stores were closed because they failed
to achieve an acceptable level of profitability or because a new
Monro store was opened in the same market at a more favorable
location. Store closures in fiscal 2003 include the sale of two
commercial tire stores and a retread plant that were acquired in
the purchase of Kimmel in the first quarter of fiscal 2003.
Fiscal 2000 closures primarily relate to underperforming or
redundant Speedy locations.
(b)
Includes 37 stores acquired in the Kimmel
Acquisition and 10 stores acquired in the Frasier Acquisition.
(c)
Includes 26 stores acquired in the Mr. Tire
Acquisition and 12 stores opened in BJ’s Wholesale Club
locations.
Table of Contents
Products and Services
Table of Contents
Customer Satisfaction
•
T
otal Customer
Satisfaction
•
R
espect, Recognize
and Reward (employees who are committed to these values)
•
U
nparalleled Quality
and Integrity
•
S
uperior Value and
•
T
eamwork
Competitive Pricing, Advertising and
Co-branding Initiatives
Centralized Control
Table of Contents
Comprehensive Training
Store Format
Inventory Control and Management
Information System
Quality Control and
Warranties
Table of Contents
Store Personnel and Training
Table of Contents
Table of Contents
Item 2.
Properties
Table of Contents
Item 3.
Legal Proceedings
Item 4.
Submission of Matters to a Vote of Security
Holders
Item 5.
Market for the Company’s Common Equity
and Related Stockholder Matters
Fiscal 2004
Fiscal 2003
Quarter Ended
High
Low
High
Low
$
19.66
$
13.76
$
15.53
$
11.34
21.32
18.33
14.52
10.28
23.72
18.16
12.66
10.50
25.59
19.15
14.53
10.69
Table of Contents
Item 6.
Selected Financial Data
Year ended fiscal March,
2004
2003
2002
2001
2000
(Dollars in thousands, except per share data)
$
279,457
$
258,026
$
224,853
$
222,955
$
224,928
164,650
152,432
133,042
133,196
135,719
114,807
105,594
91,811
89,759
89,209
84,708
81,040
69,604
66,988
67,593
30,099
24,554
22,207
22,771
21,616
2,613
2,601
3,731
5,768
6,831
59
(189
)
833
896
2,015
27,427
22,142
17,643
16,107
12,770
10,422
8,414
6,336
6,411
5,076
$
17,005
$
13,728
$
11,307
$
9,696
$
7,694
$
1.31
$
1.08
$
.92
$
.79
$
.62
$
1.18
$
.97
$
.83
$
.73
$
.57
Stock and equivalents Basic(b)
12,954
12,699
12,293
12,273
12,458
14,400
14,105
13,583
13,336
13,446
8.3
%
14.8
%
0.9
%
(0.9
%)
14.2
%
4.7
%
2.9
%
0.3
%
(1.4
%)
(1.6
%)
560
514
511
512
524
595
560
514
511
512
$
14,327
$
14,822
$
8,615
$
11,045
$
14,265
$
28,164
$
21,880
$
12,423
$
11,823
$
10,207
262,790
207,200
185,796
190,494
192,603
68,763
36,183
34,123
50,857
63,639
143,799
124,392
106,544
94,497
85,462
(a)
Earnings per share for each fiscal year was
computed by dividing net income by the weighted average number
of shares of Common Stock and Common Stock equivalents
outstanding during the respective year.
(b)
Adjusted in fiscal years 2000-2003 for the effect
of the Company’s October 2003 three-for-two stock
split. See Note 1 to the financial statements.
(c)
Includes Company-operated stores only — no
dealer locations.
(d)
Comparable store sales data is calculated based
on the change in sales of only those stores open as of the
beginning of the preceding fiscal year.
(e)
Amount does not include the funding of the Kimmel
or Frasier Acquisitions in fiscal year 2003 or the Mr. Tire
Acquisition in fiscal 2004.
Table of Contents
Item 7.
Management’s Discussion and Analysis
of Financial Condition and Results of Operations
Year ended fiscal March,
2004
2003
2002
100.0
%
100.0
%
100.0
%
58.9
59.1
59.2
41.1
40.9
40.8
30.3
31.4
30.9
10.8
9.5
9.9
.9
1.0
1.7
.1
(0.1
)
0.4
9.8
8.6
7.8
3.7
3.3
2.8
6.1
%
5.3
%
5.0
%
Inventory
Table of Contents
Carrying Values of Goodwill and Long-Lived
Assets
Self-Insurance Reserves
Warranty
Table of Contents
Table of Contents
Table of Contents
Capital Resources
Contractual Obligations
Within
Within 2 to
Within 4 to
After 5
Total
1 year
3 years
5 years
years
(Dollars in Thousands)
$
66,303
$
164
$
65,461
$
18
$
660
3,038
414
737
887
1,000
78,202
17,663
27,969
17,109
15,461
$
147,543
$
18,241
$
94,167
$
18,014
$
17,121
Table of Contents
Table of Contents
Item 7a.
Quantitative and Qualitative Disclosures
about Market Risk
Table of Contents
Item 8.
Financial Statements and Supplementary
Data
Page
20
21
22
23
24
25
51
Table of Contents
Table of Contents
March 27,
March 29,
2004
2003
(Dollars in thousands)
ASSETS
$
1,533
$
69
1,975
1,902
54,050
51,256
2,811
1,661
10,373
8,989
70,742
63,877
259,641
222,278
(99,925
)
(90,130
)
159,716
132,148
26,240
8,150
6,092
3,025
$
262,790
$
207,200
LIABILITIES AND SHAREHOLDERS’
EQUITY
$
578
$
625
16,704
16,955
1,045
1,593
8,963
7,968
3,072
1,857
12,216
12,999
42,578
41,997
68,763
36,183
3,791
3,500
3,859
1,128
118,991
82,808
97
97
133
88
(1,831
)
(1,831
)
44,057
42,178
0
(78
)
(413
)
(859
)
101,756
84,797
143,799
124,392
$
262,790
$
207,200
Table of Contents
Year ended fiscal March,
2004
2003
2002
(Dollars in thousands, except
per share data)
$
279,457
$
258,026
$
224,853
164,650
152,432
133,042
114,807
105,594
91,811
84,708
81,040
69,604
30,099
24,554
22,207
2,613
2,601
3,731
59
(189
)
833
27,427
22,142
17,643
10,422
8,414
6,336
$
17,005
$
13,728
$
11,307
$
1.31
$
1.08
$
.92
$
1.18
$
.97
$
.83
12,954
12,699
12,293
14,400
14,105
13,583
Table of Contents
Class C
Note
Accumulated
Convertible
Additional
Receivable
Other
Preferred
Common
Treasury
Paid-in
From
Retained
Comprehensive
Stock
Stock
Stock
Capital
Shareholder
Earnings
Income
Total
(Dollars in Thousands)
$
138
$
84
$
(1,831
)
$
36,632
$
(288
)
$
59,762
$
94,497
11,307
11,307
$
(666
)
(666
)
10,641
782
782
105
105
519
519
138
84
(1,831
)
37,933
(183
)
71,069
(666
)
106,544
13,728
13,728
194
194
(387
)
(387
)
13,535
(41
)
2
39
351
351
2
2,044
2,046
105
105
1,811
1,811
97
88
(1,831
)
42,178
(78
)
84,797
(859
)
124,392
17,005
17,005
397
397
49
49
17,451
279
279
1
1,210
1,211
44
(46
)
(2
)
78
78
390
390
$
97
$
133
$
(1,831
)
$
44,057
$
0
$
101,756
$
(413
)
$
143,799
(1)
Components of comprehensive income are reported
net of related taxes of $273, $86 and $440 in fiscal years 2004,
2003, and 2002, respectively.
Table of Contents
Year ended fiscal March,
2004
2003
2002
(Dollars in thousands)
Increase (Decrease) in Cash
$
17,005
$
13,728
$
11,307
13,204
12,338
12,834
1,603
727
2,243
84
647
(37
)
(48
)
204
(73
)
(287
)
(65
)
840
(4,247
)
(3,750
)
(1,299
)
(2,764
)
488
791
(99
)
333
(251
)
3,192
1,591
(322
)
3,566
663
(189
)
945
(40
)
937
(622
)
(926
)
15,844
13,661
12,706
32,849
27,389
24,013
(14,327
)
(14,822
)
(8,615
)
(947
)
(25,506
)
(7,228
)
2,212
421
78
(38,568
)
(21,629
)
(8,537
)
174,495
115,060
116,374
(168,521
)
(123,239
)
(132,941
)
(2
)
1,211
2,046
782
7,183
(6,133
)
(15,785
)
1,464
(373
)
(309
)
69
442
751
$
1,533
$
69
$
442
Table of Contents
Background
Accounting estimates
Fiscal year
Consolidation
Revenue recognition
Cash equivalents
Inventories
Table of Contents
Barter credits received for properties
sold/sublet
Property, plant and equipment
Long-lived assets
Store opening and closing
costs
Goodwill and intangible
assets
Warranty
Table of Contents
Derivative financial
instruments
Comprehensive income
Treasury Stock
Stock-based compensation
Year Ended Fiscal March,
2004
2003
2002
(Dollars in thousands,
except per share data)
$
17,005
$
13,728
$
11,307
994
451
(420
)
(1,953
)
(880
)
$
16,585
$
12,769
$
10,878
Table of Contents
Year Ended Fiscal March,
2004
2003
2002
(Dollars in thousands,
except per share data)
$
1.31
$
1.08
$
.92
$
1.28
$
1.01
$
.89
$
1.18
$
.97
$
.83
$
1.15
$
.91
$
.80
Year Ended Fiscal March,
2004
2003
2002
3.86%
4.46%
5.25%
9 years
9 years
9 years
29.2%
29.6%
29.6%
0%
0%
0%
Stock split effected in the form of stock
dividend
Earnings per share
Advertising
Table of Contents
Vendor Rebates and Cooperative Advertising
Credits
Pension Expense
Guarantees
Reclassifications
Recent accounting
pronouncements
Table of Contents
Fiscal 2004
Mr. Tire
Table of Contents
At March 1, 2004
(Dollars in millions)
$
3.9
1.9
22.7
28.5
1.8
.8
2.6
$
25.9
Year Ended Fiscal March
2004
2003
(Dollars in thousands,
except for per share amounts)
$
325,000
$
302,000
$
17,513
$
14,035
$
1.35
$
1.11
$
1.22
$
1.00
Buyout of synthetic lease
properties
Table of Contents
Fiscal 2003
Kimmel Automotive, Inc.
Table of Contents
At April 1, 2002
(Dollars in millions)
$
2.2
2.3
5.7
10.2
2.9
1.2
.2
4.3
$
5.9
Frasier Tire Service, Inc.
March 27, 2004
March 29, 2003
Owned
Leased
Total
Owned
Leased
Total
(Dollars in thousands)
$
41,157
$
41,157
$
30,319
$
30,319
116,449
$
4,332
120,781
98,653
$
4,332
102,985
85,322
85,322
77,647
77,647
9,601
759
10,360
9,416
921
10,337
2,021
2,021
990
990
254,550
5,091
259,641
217,025
5,253
222,278
96,320
3,605
99,925
86,728
3,402
90,130
$
158,230
$
1,486
$
159,716
$
130,297
$
1,851
$
132,148
Table of Contents
(Dollars in thousands)
$
4,306
3,844
8,150
17,973
117
$
26,240
Year Ended Fiscal March,
2004
2003
2002
(Dollars in thousands,
except per share data)
$
17,005
$
13,728
$
11,307
328
$
17,005
$
13,728
$
11,635
$
1.31
$
1.08
$
0.92
0.03
$
1.31
$
1.08
$
0.95
$
1.18
$
0.97
$
0.83
0.03
$
1.18
$
0.97
$
0.86
Table of Contents
March 27, 2004
March 29, 2003
Gross
Gross
Carrying
Accumulated
Carrying
Accumulated
Amount
Amortization
Amount
Amortization
(Dollars in thousands)
$
2,290
$
13
2,000
428
$
1,000
$
200
420
144
420
84
726
251
3,214
2,429
400
8
1,100
1,104
$
6,936
$
844
$
5,738
$
2,713
Table of Contents
Year Ending Fiscal March,
(Dollars in thousands)
$
1,054
1,054
878
305
156
1,545
March 27,
March 29,
2004
2003
(Dollars in thousands)
$
37,300
$
30,700
26,558
1,718
1,865
54
660
660
3,038
3,443
67
86
69,341
36,808
578
625
$
68,763
$
36,183
(a)
The prime rate at March 27, 2004 was 4.00%.
The London Interbank Offered Rate (LIBOR) at March 27,
2004 was 1.09%.
Table of Contents
Table of Contents
Capital Leases
Aggregate
Imputed
All Other
Year Ending Fiscal March,
Amount
Interest
Debt
Total
(Dollars in thousands)
$
888
$
(474
)
$
164
$
578
766
(419
)
1,586
1,933
749
(359
)
63,875
64,265
729
(287
)
18
460
651
(206
)
0
445
1,259
(259
)
660
1,660
$
69,341
March 27, 2004
March 29, 2003
Notional
Carrying
Fair
Notional
Carrying
Fair
Amount
Amount
Value
Amount
Amount
Value
(Dollars in thousands)
$
66,303
$
65,962
$
33,365
$
32,695
$
1,768
$
(120
)
$
(120
)
$
35,865
$
(761
)
$
(761
)
(a)
These agreements are intended to manage exposure
to interest rate risks associated with both long-term
(on-balance sheet) debt and synthetic leases (off-balance sheet
at March 2003).
Table of Contents
Year Ended Fiscal March,
2004
2003
2002
(Dollars in thousands)
$
7,180
$
7,934
$
4,891
644
882
798
7,824
8,816
5,689
2,086
(423
)
784
512
21
(137
)
2,598
(402
)
647
$
10,422
$
8,414
$
6,336
March 27,
March 29,
March 30,
2004
2003
2002
(Dollars in thousands)
$
(7,763
)
$
(5,410
)
$
(4,810
)
(711
)
(805
)
(582
)
(634
)
(468
)
(716
)
(397
)
(1,206
)
(1,013
)
(9,505
)
(7,889
)
(7,121
)
1,073
1,655
2,079
923
1,012
291
1,150
796
502
3,426
3,173
2,670
1,885
1,786
1,740
8,457
8,422
7,282
$
(1,048
)
$
533
$
161
Table of Contents
Year Ended Fiscal March,
2004
2003
2002
Amount
Percent
Amount
Percent
Amount
Percent
(Dollars in thousands)
$
9,599
35.0
$
7,750
35.0
$
6,157
34.9
728
2.7
589
2.7
423
2.4
95
.3
75
.3
(244
)
(1.4
)
$
10,422
38.0
$
8,414
38.0
$
6,336
35.9
Class C
Common
Convertible
Stock
Preferred
Treasury
Shares
Stock Shares
Stock
Issued
Issued
Shares
8,373,678
91,727
216,800
61,646
8,435,324
91,727
216,800
185,218
(26,727
)
165,318
8,785,860
65,000
216,800
4,433,151
108,400
96,242
13,315,253
65,000
325,200
Table of Contents
Weighted Average
Available
Exercise Price
Outstanding
Exercisable
For Grant
$
6.69
1,289,706
579,540
650,738
$
7.69
171,225
(171,225
)
310,014
$
7.95
(92,469
)
(92,469
)
$
7.52
(58,992
)
(18,357
)
33,300
$
6.58
1,309,470
778,728
512,813
$
12.67
290,588
(290,588
)
470,417
$
8.22
(211,509
)
(211,509
)
$
9.03
(31,626
)
(7,905
)
30,255
$
7.55
1,356,923
1,029,731
252,480
300,000
$
15.64
173,363
(173,363
)
107,759
$
8.84
(122,800
)
(122,800
)
$
12.38
(35,128
)
(2,711
)
35,128
1,372,358
1,011,979
414,204
Table of Contents
Options Outstanding
Options Exercisable
Weighted
Weighted
Weighted
Average
Average
Average
Range of
Shares
Remaining
Exercise
Shares
Exercise
Exercise Prices
Under Option
Life
Price
Under Option
Price
$
4.75 - $ 7.00
750,109
4.84
$
5.26
727,031
$
5.25
$
7.01 - $13.00
354,773
6.80
$
9.97
260,688
$
10.37
$
13.01 - $24.36
267,476
8.74
$
14.72
24,260
$
13.31
Available
Option Price
for
Per Share
Outstanding
Exercisable
Grant
$
5.00 - $11.34
223,355
223,355
76,798
$ 8.57
31,909
31,909
(31,909
)
$
5.00 - $11.34
255,264
255,264
44,889
$ 8.53
(36,468
)
(36,468
)
$12.82
27,351
27,351
(27,351
)
$12.82
(4,558
)
(4,558
)
4,558
$
5.00 - $12.82
241,589
241,589
22,096
90,000
$ 9.75
(13,676
)
(13,676
)
$20.19
31,910
31,910
(31,910
)
259,823
259,823
80,186
Table of Contents
Year Ended Fiscal March,
2004
2003
2002
(Dollars in thousands,
except per share data)
$
17,005
$
13,728
$
11,307
12,954
12,699
12,293
676
732
954
770
674
336
14,400
14,105
13,583
$
1.31
$
1.08
$
.92
$
1.18
$
.97
$
.83
Table of Contents
Less –
Sublease
Year Ending Fiscal March,
Leases
Income
Net
(Dollars in thousands)
$
17,663
$
(553
)
$
17,110
15,142
(516
)
14,626
12,827
(439
)
12,388
10,008
(408
)
9,600
7,101
(335
)
6,766
15,461
(851
)
14,610
$
78,202
$
(3,102
)
$
75,100
Table of Contents
Monro
Kimmel
Year Ended Fiscal March,
2004
2003
2004
2003
(Dollars in thousands)
$
7,203
$
6,346
$
1,840
$
2,179
579
814
383
(174
)
82
571
184
655
(133
)
(418
)
(395
)
(166
)
(165
)
8,101
7,203
2,241
1,840
7,114
6,308
2,643
2,361
439
427
160
165
672
774
192
282
(418
)
(395
)
(166
)
(165
)
7,807
7,114
2,829
2,643
294
89
(588
)
(803
)
2,029
2,043
545
624
(545
)
(624
)
$
2,323
$
2,132
$
(588
)
$
(803
)
Monro
Kimmel
Year Ended Fiscal March,
2004
2003
2002
2004
2003
(Dollars in thousands)
$
439
$
427
$
432
$
160
$
165
(623
)
(514
)
(492
)
(149
)
(168
)
(29
)
75
86
51
37
$
(109
)
$
(1
)
$
(38
)
$
48
$
(3
)
Table of Contents
Monro
Kimmel
Year Ended Fiscal March,
2004
2003
2004
2003
(Dollars in thousands)
$
—
$
—
$
(79
)
$
624
Monro
Kimmel
Year Ended Fiscal March,
2004
2003
2004
2003
5.75
%
6.25
%
5.75
%
6.25
%
8.00
%
8.00
%
8.00
%
8.00
%
Monro
Kimmel
Year Ended Fiscal March,
2004
2003
2004
2003
6.25
%
7.25
%
6.25
%
7.25
%
8.00
%
8.00
%
8.00
%
8.00
%
Monro
Kimmel
Year Ended Fiscal March,
2004
2003
2004
2003
3.3
%
1.2
%
5.1
%
50.8
%
86.0
%
90.5
%
42.7
%
18.1
%
10.7
%
8.3
%
52.2
%
31.1
%
100.0
%
100.0
%
100.0
%
100.0
%
Table of Contents
Table of Contents
Year ended March 27, 2004
$
27,494,000
(935,000
)
$
26,559,000
$
28,527,000
(25,506,000
)
(390,000
)
$
2,631,000
Year ended March 29, 2003
Table of Contents
$
11,600,000
(7,200,000
)
$
4,400,000
Year ended March 30, 2002
Interest and income taxes paid
Year Ended Fiscal March,
2004
2003
2002
(Dollars in thousands)
$
1,974
$
2,407
$
3,436
$
8,369
$
7,567
$
5,645
Table of Contents
Fiscal Quarter Ended
June
Sept.
Dec.
March
2003
2003
2003
2004
(Dollars in thousands, except per share data)
$
73,643
$
74,107
$
64,549
$
67,159
41,408
42,653
39,291
41,299
32,235
31,454
25,258
25,860
22,051
21,095
19,981
21,581
10,184
10,359
5,277
4,279
593
889
515
616
44
(44
)
(123
)
182
9,547
9,514
4,885
3,481
3,628
3,618
1,854
1,323
$
5,919
$
5,896
$
3,031
$
2,158
$
.46
$
.46
$
.23
$
.17
$
.41
$
.40
$
.21
$
.15
12,890
12,966
12,976
12,985
14,381
14,582
14,612
14,486
2002
2002
2002
2003
$
67,908
$
68,003
$
60,716
$
61,399
38,013
39,392
37,787
37,240
29,895
28,611
22,929
24,159
22,900
20,026
18,418
19,696
6,995
8,585
4,511
4,463
766
642
623
570
(151
)
32
(2
)
(68
)
6,380
7,911
3,890
3,961
2,424
3,006
1,477
1,507
$
3,956
$
4,905
$
2,413
$
2,454
$
.32
$
.38
$
.19
$
.19
$
.28
$
.35
$
.17
$
.17
12,447
12,761
12,764
12,828
14,084
14,063
14,037
14,156
Table of Contents
Item 9.
Changes in and Disagreements with
Accountants on Accounting and Financial Disclosure
Item 9A.
Controls and Procedures
Disclosure controls and procedures
Changes in internal controls
Table of Contents
PART III
Information concerning the directors and
executive officers of the Company is incorporated herein by
reference to the section captioned “Election of
Directors” and “Executive Officers”,
respectively, in the Proxy Statement.
Information concerning required
Section 16(a) disclosure is incorporated herein by
reference to the section captioned “Compliance with
Section 16(a) of the Exchange Act” in the Proxy
Statement.
Information concerning executive compensation is
incorporated herein by reference to the section captioned
“Executive Compensation” in the Proxy Statement.
Information concerning the Company’s shares
authorized for issuance under its equity compensation plans at
March 27, 2004 and security ownership of certain beneficial
owners and management is incorporated herein by reference to the
sections captioned “Security Ownership of Principal
Shareholders, Directors and Executive Officers” and
“Equity Compensation Plan Information” in the Proxy
Statement.
Information concerning certain relationships and
related transactions is incorporated herein by reference to the
sections captioned “Compensation Committee Interlocks and
Insider Participation” and “Certain Transactions”
in the Proxy Statement.
Information concerning the Company’s
principal accounting fees and services is incorporated herein by
reference to the section captioned “Approval of Independent
Accountants” in the Proxy Statement.
PART IV
Financial
Statements
Reference is made to Item 8 of Part II
hereof.
Financial
Statement Schedules
Schedules have been omitted because they are
inapplicable, not required, the information is included
elsewhere in the Financial Statements or the notes thereto or is
immaterial. Specific to warranty reserves and related activity,
as stated in the Financial Statements, these amounts are
immaterial.
Exhibits
Reference is made to the Index to Exhibits
accompanying this Form 10-K as filed with the Securities
and Exchange Commission. The Company will furnish to any
shareholder, upon written request, any exhibit listed in such
Index to Exhibits upon payment by such shareholder of the
Company’s reasonable expenses in furnishing any such
exhibit.
52
Reports
on Form 8-K
The following reports on Form 8-K were filed
during the last quarter of fiscal 2004:
A Form 8-K, dated March 12, 2004, was
furnished to report the closing of the Company’s
acquisition of 36 Mr. Tire locations from Mr. Tire,
Inc. and its sole shareholder, Atlantic Automotive Corp. under
Item 2. The Company also furnished the related press
release, dated March 1, 2004 in an exhibit.
A Form 8-K, dated February 17, 2004,
was furnished to report the signing of a definitive agreement to
acquire 36 Mr. Tire locations from Mr. Tire, Inc. and
its sole shareholder, Atlantic Automotive Corp. under
Item 5. The Company also furnished the related press
release, dated February 10, 2004, in an exhibit.
A Form 8-K, dated January 22, 2004
furnished the Company’s press release announcing its
unaudited operating results for the quarter ended December 27,
2003. An exhibit containing the Company’s press release was
attached.
53
Item 10.
Directors and Executive Officers of the
Company
Item 11.
Executive Compensation
Item 12.
Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder
Matters
Item 13.
Certain Relationships and Related
Transactions
Item 14.
Principal Accounting Fees and
Services
Item 15.
Exhibits, Financial Statement Schedules,
and Reports on Form 8-K
Table of Contents
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: June 10, 2004
Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities indicated as of June 10, 2004.
54
INDEX TO EXHIBITS
The following is a list of all exhibits filed herewith or incorporated by
reference herein:
2
3
4
5
6
7
8
9
10
11
12
MONRO MUFFLER BRAKE, INC.
(REGISTRANT)
By /s/ ROBERT G. GROSS
Robert G. Gross
President and Chief Executive
Officer
Signature
Title
/s/ CATHERINE D’AMICO
Catherine D’Amico
Executive Vice President-Finance, Chief Financial
Officer and Treasurer
(Principal Financial and Accounting Officer)
Director
Director
Director
Director
Director
Director
Director
Director
*By
/s/ ROBERT G. GROSS
Robert G. Gross
Chief Executive Officer,
Director and as Attorney-in-Fact
Table of Contents
Exhibit No.
Document
Stock Purchase Agreement, dated June 27, 2003, between the Company and
Brazos River Leasing, L.P. (August 2003 Form 8-K/A, Exhibit 2.1)
Agreement to Purchase Limited Partnership Interest, dated June 27, 2003,
between the Company and Heller Financial, Inc. (August 2003 Form 8-K/A,
Exhibit 2.2)
Asset Purchase Agreement, dated as of February 9, 2004, among the
Company, Mr. Tire, Inc. and Atlantic Automotive Corp. (March 2004 Form
8-K, Exhibit 10.1)
First Amendment to Asset Purchase Agreement, dated as of March 1, 2004,
among the Company, Mr. Tire, Inc. and Atlantic Automotive Corp. (March
2004 Form 8-K, Exhibit 10.02)
Second Amendment to Asset Purchase Agreement, dated as of April 13, 2004,
among the Company, Mr. Tire, Inc. and Atlantic Automotive Corp.
Restated Certificate of Incorporation of the Company, dated July 23,
1991, with Certificate of Amendment, dated November 1, 1991 (1992 Form
10-K, Exhibit No. 3.01)
Certificate of Amendment to Restated Certificate of Incorporation, dated
April 15, 2004.
Restated By-Laws of the Company, dated July 23, 1991. (Amendment No. 1,
Exhibit No. 3.04)
1994 Non-Employee Directors’ Stock Option Plan. (March 2001 Form S-8,
Exhibit No. 4.1)**
Amendment, dated as of May 12, 1997, to the 1994 Non-Employee
Directors’ Stock Option Plan. (March 2001 Form S-8, Exhibit No. 4.2)**
Amendment, dated as of May 18, 1999, to the 1994 Non-Employee
Directors’ Stock Option Plan. (March 2001 Form S-8, Exhibit No. 4.3)**
Amendment, dated as of August 2, 1999, to the 1994 Non-Employee
Directors’ Stock Option Plan. (2002 Form 10-K, Exhibit No. 10.02c)**
Amendment, dated as of June 12, 2002, to the 1994 Non-Employee
Directors’ Stock Option Plan. (2002 Form 10-K, Exhibit No. 10.02d)**
1989 Employees’ Incentive Stock Option Plan, as amended through December
23, 1992. (December 1992 Form S-8, Exhibit No. 4.3)**
Amendment, dated as of January 25, 1994, to the 1989 Employees’
Incentive Stock Option Plan. (1994 Form 10-K, Exhibit No. 10.03a and March
2001 Form S-8, Exhibit No. 4.2)**
Amendment, dated as of May 17, 1995, to the 1989 Employees’ Incentive
Stock Option Plan. (1995 Form 10-K, Exhibit No. 10.03b and March 2001 Form
S-8, Exhibit No. 4.3) **
Table of Contents
Exhibit No.
Document
Amendment, dated as of May 12, 1997, to the 1989 Employees’ Incentive
Stock Option Plan. (1997 Form 10-K, Exhibit No. 10.03c and March 2001
Form S-8, Exhibit No. 4.4)**
Amendment, dated as of January 29, 1998, to the 1989 Employees’
Incentive Stock Option Plan. (1998 Form 10-K, Exhibit No. 10.03d)**
Retirement Plan of the Company, as amended and restated effective as of
April 1, 1989. (September 1993 Form 10-Q, Exhibit No. 10)**
Amendment, dated as of August 2, 1999, to the Retirement Plan of the
Company, as amended and restated effective as of April 1, 1989. (June
2001 Form 10-Q, Exhibit No. 10.04a)**
Profit Sharing Plan, amended and restated as of April 1, 1993. (1995
Form 10-K, Exhibit No. 10.05) **
Amendment, dated as of March 1, 2000, to the Profit Sharing Plan. (June
2001 Form S-8, Exhibit No. 4)**
Second Amended and Restated Employment Agreement, dated November 14,
2002, by and between the Company and Robert G. Gross. (2003 Form 10-K,
Exhibit No. 10.06)**
Amended and Restated Secured Loan Agreement, dated February 16, 1999, by
and between the Company and Robert G. Gross. (December 1998 Form 10-Q,
Exhibit No. 10.2)**
1998 Employee Stock Option Plan, effective November 18, 1998. (December
1998 Form 10-Q, Exhibit No. 10.3 and March 2001 Form S-8, Exhibit No. 4)**
Amendment, dated as of May 20, 2003, to the 1998 Employee Stock Option
Plan.
Kimmel Automotive, Inc. Pension Plan, as amended and restated effective
January 1, 1989, adopted December 29, 1994. (2003 Form 10-K, Exhibit No.
10.09)**
First amendment, dated January 1, 1989, to the Kimmel Automotive, Inc.
Pension Plan. (2003 Form 10-K, Exhibit No. 10.09a)**
Second amendment, dated January 1, 1989, to the Kimmel Automotive
Pension Plan. (2003 Form 10-K, Exhibit No. 10.09b)**
Third amendment, dated May 2001, to the Kimmel Automotive, Inc. Pension
Plan. (2003 Form 10-K, Exhibit No. 10.09c)**
2003 Non-Employee Directors’ Stock Option Plan, effective August 5,
2003.
Amended and Restated Credit Agreement, dated as of March 19, 2003, by
and among the Company, JPMorgan Chase Bank, as agent, and certain lenders
party thereto. (2003 Form 10-K, Exhibit No. 10.11)
Amended and Restated Credit Agreement, dated as of March 19, 2003,
executed by and among Brazos Automotive Properties, L.P., JPMorgan Chase
Bank, and certain lenders party thereto. (2003 Form 10-K, Exhibit No.
10.12)
Table of Contents
Exhibit No.
Document
Amended and Restated Residual Guaranty, dated as of March 19, 2003,
between the Company and JPMorgan Chase Bank. (2003 Form 10-K, Exhibit No.
10.13)
First Amendment to the Facilities Lease Agreement, dated as of March 19,
2003, between Brazos Automotive Properties, L.P. and Monro Leasing LLC.
(2003 Form 10-K, Exhibit No. 10.14)
First Amendment to the Ground Lease Agreement, dated as of March 19,
2003, between Brazos Automotive Properties, L.P. and Monro Leasing LLC.
(2003 Form 10-K, Exhibit No. 10.15)
Amended and Restated Guaranty, dated as of March 19, 2003, between the
Company and Brazos Automotive Properties, L.P. (2003 Form 10-K, Exhibit
No. 10.16)
First Amendment to the Agreement of Sublease, dated as of March 19,
2003, by and among Monro Leasing LLC, the Company and Brazos Automotive
Properties, L.P. (2003 Form 10-K, Exhibit No. 10.17)
Sublease, dated June 1, 1980, among August, August and Lane Co-venture
and the Company, with Amendment of Lease, dated July 11, 1984, and
assigned by August, August and Lane Co-venture to AA & L Associates, L.P.,
effective January 2, 1996, with respect to Store No. 3. (Form S-1,
Exhibit No. 10.19)
Assignment of Lease, effective January 2, 1996, among August, August
and Lane Co-venture and AA & L Associates, L.P. and August, August and
Lane of Rochester LLC, with respect to Store Nos. 3, 12, 17, 44, 49, 51,
52, 54, 58, 31, 33 and 34. (1999 Form 10-K, Exhibit No. 10.19a)
Lease, dated March 8, 1972, among Charles J. August, Burton S. August
and Sheldon A. Lane and the Company, with Amendment of Lease, dated July
11, 1984, with respect to Store No. 7. (Form S-1, Exhibit No. 10.20)
Confirmation of Assignment of Lease, dated December 31, 1991, assigning
Lease from Charles J. August, Burton S. August and Sheldon A. Lane to
Stoneridge 7 Realty Partnership, with respect to Store No. 7. (1992 Form
10-K, Exhibit No. 10.20a)
Lease, effective December 1, 1985, among Chase Lincoln First Bank, N.A.
and Burton S. August, as Trustees and the Company, with Assignment of
Lease, dated June 7, 1991, among Chase Lincoln First Bank, N.A. and Burton
S. August, as Trustees, and August, Eastwood & August, with respect to
Store No. 8. (Form S-1, Exhibit No. 10.21)
Lease, dated February 10, 1972, among Charles J. August, Burton S.
August and Sheldon A. Lane and the Company as amended July 11, 1984 and
assigned to Lane, August, August Trust on June 7, 1991, and assigned to
Lane, August, August LLC effective January 2, 1996, with respect to Store
No. 9. (Form S-1, Exhibit No. 10.22)
Modification and Extension Agreement, dated November 19, 1998, between
Lane, August & August, LLC, and the Company, with respect to Store No. 9.
(1999 Form 10-K, Exhibit No. 10.22a)
Table of Contents
Exhibit No.
Document
Lease, dated May 1, 1973, among Charles J. August, Burton S. August and
Sheldon A. Lane and the Company, with Amendment of Lease, dated July 11,
1984, and Assignment of Lease, dated June 7, 1991, assigning Lease from
Charles J. August, Burton S. August and Sheldon A. Lane to 35 Howard Road
Joint Venture, with respect to Store No. 10. (Form S-1, Exhibit No.
10.23)
Lease, dated May 7, 1973, among Charles J. August, Burton S. August and
Sheldon A. Lane and the Company, with Amendment of Lease, dated July 11,
1984, and assigned by Mssrs. August, August and Lane to AA & L Associates,
L.P., effective January 2, 1996, with respect to Store No. 12. (Form S-1,
Exhibit No. 10.24)
Lease, dated July 25, 1974, among Charles J. August, Burton S. August
and Sheldon A. Lane and the Company, with Amendment of Lease, dated July
11, 1984, and Assignment of Lease, dated June 7, 1991, assigning Lease
from Charles J. August, Burton S. August and Sheldon A. Lane to AA & L
Associates, L.P., with respect to Store No. 14. (Form S-1, Exhibit No.
10.25)
Lease, effective April 1, 1975, among Charles J. August, Burton S.
August and Sheldon A. Lane and the Company, with Amendment of Lease, dated
July 11, 1984, and Assignment of Lease, dated June 7, 1991, assigning
Lease from Charles J. August, Burton S. August and Sheldon A. Lane to
Lane, August, August Trust and further assigned by Lane, August, August
Trust to Lane, August, August LLC, effective January 2, 1996, with respect
to Store No. 15. (Form S-1, Exhibit No. 10.26)
Modification and Extension Agreement, dated November 19, 1998, between
Lane, August & August, LLC, and the Company, with respect to Store No. 15.
(1999 Form 10-K, Exhibit No. 10.26a)
Lease, dated as of September 25, 1991, among Charles J. August, Burton
S. August and Sheldon A. Lane and the Company, and assigned by August,
August and Lane Co-venture to AA & L Associates, L.P., effective January
2, 1996, with respect to Store No. 17. (1992 Form 10-K, Exhibit No.
10.27)
Lease, effective May 1, 1979, among Charles J. August, Burton S. August
and Sheldon A. Lane and the Company, with Amendment of Lease, dated July
11, 1984, and Assignment of Lease, dated June 7, 1991, assigning Lease
from Charles J. August, Burton S. August and Sheldon A. Lane to AA & L
Associates, L.P., with respect to Store No. 23. (Form S-1, Exhibit No.
10.28)
Lease, effective May 1, 1980, among Charles J. August, Burton S. August
and Sheldon A. Lane and the Company, with Amendment of Lease, dated July
11, 1984, and Assignment of Lease, dated June 7, 1991, assigning Lease
from Charles J. August, Burton S. August and Sheldon A. Lane to AA & L
Associates, L.P., with respect to Store No. 25. (Form S-1, Exhibit No.
10.29)
Lease, effective July 1, 1980, among Charles J. August, Burton S. August
and Sheldon A. Lane and the Company, with Amendment of Lease, dated July
11, 1984, and Assignment of Lease, dated June 7, 1991, assigning Lease
from Charles J. August, Burton S. August and Sheldon A. Lane to AA & L
Associates, L.P., with respect to Store No. 28. (Form S-1, Exhibit No.
10.31)
Table of Contents
Exhibit No.
Document
Lease, effective November 1, 1980, among Charles J. August, Burton S.
August and Sheldon A. Lane and the Company, with Amendment of Lease, dated
July 11, 1984, and Assignment of Lease, dated June 7, 1991, assigning
Lease from Charles J. August, Burton S. August and Sheldon A. Lane to AA &
L Associates, L.P., with respect to Store No. 29. (Form S-1, Exhibit No.
10.32)
Lease, effective August 1, 1983, among Charles J. August, Burton S.
August and Sheldon A. Lane and the Company, with Amendment of Lease, dated
July 11, 1984, and Assignment of Lease, dated June 7, 1991, assigning
Lease from Charles J. August, Burton S. August and Sheldon A. Lane to AA &
L Associates, L.P., with respect to Store No. 30. (Form S-1, Exhibit No.
10.33)
Modification and Extension Agreement, dated February 25, 1998, between
AA & L Associates, L.P., and the Company, with respect to Store Nos. 30,
36 and 43. (1999 Form 10-K, Exhibit No. 10.33a)
Lease, effective March 1, 1997, between August, August and Lane of
Rochester, LLC, and the Company, dated March 3, 1997, with respect to
Store No. 31. (1999 Form 10-K, Exhibit No. 10.34)
Modification and Extension Agreement, dated August 12, 1991, among
Charles J. August, Burton S. August and Sheldon A. Lane and the Company,
and assigned by Mssrs. August, August and Lane to August, August and Lane
of Rochester, LLC, effective January 2, 1996, with respect to Store No.
33. (1992 Form 10-K, Exhibit No. 10.35)
Lease, effective December 1, 1981, among Charles J. August, Burton S.
August and Sheldon A. Lane and the Company, with Amendment of Lease, dated
July 11, 1984, and assigned by Mssrs. August, August and Lane to August,
August and Lane of Rochester, LLC, effective January 2, 1996, with respect
to Store No. 34. (Form S-1, Exhibit No. 10.36)
Lease, dated April 10, 1984, among Charles J. August, Burton S. August
and Sheldon A. Lane and the Company, with Amendment of Lease, dated July
11, 1984, and Assignment of Lease, dated June 7, 1991, assigning Lease
from Charles J. August, Burton S. August and Sheldon A. Lane to AA & L
Associates, L.P., with respect to Store No. 35. (Form S-1, Exhibit No.
10.37)
Extension Agreement, dated September 18, 2003, between AA & L
Associates, L.P. and the Company, with respect to Store No. 35.
Lease, effective October 1, 1983, among Charles J. August, Burton S.
August and Sheldon A. Lane and the Company, with Amendment of Lease, dated
July 11, 1984, with respect to Store No. 36. (Form S-1, Exhibit No.
10.38)
Assignment of Lease, dated October 1, 1991, assigning Lease from
Charles J. August, Burton S. August and Sheldon A. Lane to AA & L
Associates, L.P., with respect to Store No. 36. (1992 Form 10-K, Exhibit
No. 10.38a)
Lease, effective July 1, 1983, among Charles J. August, Burton S. August
and Sheldon A. Lane and the Company, with Amendment of Lease, dated July
11, 1984, and Assignment of Lease, dated June 7, 1991, assigning Lease
from Charles J. August, Burton S. August and Sheldon A. Lane to AA & L
Associates, L.P., with respect to Store No. 43. (Form S-1, Exhibit No.
10.39)
Table of Contents
Exhibit No.
Document
Extension Agreement, dated February 18, 2003, among AA & L Associates,
L.P., and the Company, with respect to Store Nos. 30, 36 and 43.
Lease, dated as of February 1, 1983, among Charles J. August, Burton S.
August and Sheldon A. Lane and the Company, with Amendment of Lease, dated
July 11, 1984, and assigned by Mssrs. August, August and Lane to AA & L
Associates, L.P., effective January 2, 1996, with respect to Store No. 44.
(Form S-1, Exhibit No. 10.40)
Extension Agreement, dated February 19, 2003, among AA & L Associates,
L.P., and the Company, with respect to Store Nos. 3, 7, 10, 12, 14 and 44.
(2003 Form 10-K, Exhibit No. 10.40a)
Sublease, dated as of May 1, 1979, among Charles J. August, Burton S.
August and Sheldon A. Lane and the Company, with Amendment of Lease, dated
July 11, 1984, and Assignment of Lease, dated June 7, 1991, assigning
Lease from Charles J. August, Burton S. August and Sheldon A. Lane to AA &
L Associates, L.P., with respect to Store No. 45. (Form S-1, Exhibit No.
10.41)
Lease, effective October 1, 1985, among Charles J. August, Burton S.
August and Sheldon A. Lane and the Company, with Amendment of Lease, dated
as of July 11, 1984, and Assignment of Lease, dated June 7, 1991, among
Burton S. August, as Trustee, and Lane, August, August Trust, and assigned
by Lane, August, August Trust to Lane, August, August LLC, effective
January 2, 1996, with respect to Store No. 48. (Form S-1, Exhibit No.
10.42)
Extension Agreement, effective June 26, 2000, among the Company and
Burton S. August, as Trustee, and Lane, August, August Trust, and assigned
by Lane, August, August Trust to Lane, August & August LLC, with respect
to Store No. 48. (2001 Form 10-K, Exhibit No. 10.42a)
Lease, dated as of January 1, 1984, among Charles J. August, Burton S.
August and Sheldon A. Lane and the Company, with Amendment of Lease, dated
July 11, 1984, and assigned by Mssrs. August, August and Lane to AA & L
Associates, L.P., effective January 2, 1996, with respect to Store No. 49.
(Form S-1, Exhibit No. 10.43)
Lease, dated July 1, 1982, among Charles J. August, Burton S. August and
Sheldon A. Lane and the Company, with Amendment of Lease, dated July 11,
1984, and assigned by Mssrs. August, August and Lane to AA & L Associates,
L.P., effective January 2, 1996, with respect to Store No. 51. (Form S-1,
Exhibit No. 10.44)
Extension Agreement, effective December 19, 2001, between AA & L
Associates, L.P. and the Company, with respect to Store No. 51. (2002
Form 10-K, Exhibit No. 10.44a)
Lease, dated July 1, 1982, among Charles J. August, Burton S. August and
Sheldon A. Lane and the Company, with Amendment of Lease, dated July 11,
1984, and assigned by August, August and Lane Co-venture to AA & L
Associates, L.P., effective January 2, 1996, with respect to Store No. 52.
(Form S-1, Exhibit No. 10.45)
Extension Agreement, effective December 19, 2001, between AA & L
Associates, L.P. and the Company, with respect to Store No. 52. (2002
Form 10-K, Exhibit No. 10.45a)
Table of Contents
Exhibit No.
Document
Lease, dated May 1, 1979, among Charles J. August, Burton S. August and
Sheldon A. Lane and the Company, with Amendment of Lease, dated July 11,
1984, and Assignment of Lease, dated June 7, 1991, assigning Lease from
Charles J. August, Burton S. August and Sheldon A. Lane to AA & L
Associates, L.P., with respect to Store No. 53. (Form S-1, Exhibit No.
10.46)
Extension Agreement, dated October 14, 2002, among AA & L Associates,
L.P., and the Company, with respect to Store No. 53. (2003 Form 10-K,
Exhibit No. 10.46a)
Lease, dated July 1, 1982, among Charles J. August, Burton S. August and
Sheldon A. Lane and the Company, with Amendment of Lease, dated July 11,
1984, and assigned by August, August and Lane Co-venture to AA & L
Associates, L.P., effective January 2, 1996, with respect to Store No. 54.
(Form S-1, Exhibit No. 10.47)
Modification Agreement, effective January 1988, among Charles J.
August, Burton S. August and Sheldon A. Lane, and the Company, with
respect to Store No. 54. (1999 Form 10-K, Exhibit No. 10.47a)
Extension Agreement, effective December 19, 2001, between AA & L
Associates, L.P. and the Company, with respect to Store No. 54. (2002
Form 10-K, Exhibit No. 10.47b)
Lease, effective September 1, 1983, among Charles J. August, Burton S.
August and Sheldon A. Lane and the Company, with Amendment of Lease, dated
July 11, 1984, and Assignment of Lease, dated June 7, 1991, assigning
Lease from Charles J. August, Burton S. August and Sheldon A. Lane to AA &
L Associates, L.P., with respect to Store No. 55. (Form S-1, Exhibit No.
10.48)
Extension Agreement, dated September 23, 2002, among AA & L Associates,
L.P., and the Company, with respect to Store No. 55. (2003 Form 10-K,
Exhibit 10.48a)
Lease, dated as of July 1, 1984, among Charles J. August, Burton S.
August and Sheldon A. Lane and the Company, with Amendment of Lease, dated
July 11, 1984, and Assignment of Lease, dated June 7, 1991, assigning
Lease from Charles J. August, Burton S. August and Sheldon A. Lane to AA &
L Associates, L.P., with respect to Store No. 57. (Form S-1, Exhibit No.
10.49)
Modification and Extension Agreement, dated September 15, 1999, between
AA & L Associates, L.P. and the Company, with respect to Store No. 57.
(2000 Form 10-K, Exhibit No. 10.49a)
Extension Agreement, dated December 15, 2003, between AA & L Associates,
L.P. and the Company, with respect to Store No. 57.
Lease, dated July 1, 1982, among Charles J. August, Burton S. August and
Sheldon A. Lane and the Company, with Amendment of Lease, dated July 11,
1984, and assigned by August, August and Lane Co-venture to AA & L
Associates, L.P., effective January 2, 1996, with respect to Store No. 58.
(Form S-1, Exhibit No. 10.50)
Modification and Extension Agreement, dated August 12, 1991, between AA
& L Associates, L.P. and the Company, with respect to Store No. 60. (1992
Form 10-K, Exhibit No. 10.51)
Table of Contents
Exhibit No.
Document
Modification and Extension Agreement, dated November 28, 2001, between
AA & L Associates, L.P. and the Company, with respect to Store No. 58.
(2002 Form 10-K, Exhibit No. 10.51)
Extension Agreement, effective December 19, 2001, between AA & L
Associates, L.P. and the Company, with respect to Store No. 58. (2002
Form 10-K, Exhibit No. 10.51a)
Lease, signed October 22, 1986, between the Company and Conifer
Johnstown Associates, with respect to Store No. 63. (Form S-1, Exhibit
No. 10.52)
Lease Addendum, effective February 18, 1996, between Conifer Johnstown
Associates and the Company, with respect to Store No. 63. (1999 Form
10-K, Exhibit No. 10.52a)
Lease, dated January 25, 1988, between the Company and Conifer Northeast
Associates, with Letter Agreement, dated February 3, 1988, amending Lease;
and Amendment Agreement, dated January 6, 1989, with respect to Store No.
107. (Form S-1, Exhibit No. 10.54)
Lease Addendum, effective February 18, 1996, between Conifer Northeast
Associates and the Company, with respect to Store No. 107. (1999 Form
10-K, Exhibit No. 10.54a)
Lease, dated March 16, 1988, between the Company and Conifer Northeast
Associates, with Letter Agreement, dated February 3, 1988, amending Lease;
and Amendment Agreement, dated January 6, 1989, with respect to Store No.
109. (Form S-1, Exhibit No. 10.55)
Lease Addendum, effective February 18, 1996, between Conifer Northeast
Associates and the Company, with respect to Store No. 109. (1999 Form
10-K, Exhibit No. 10.55a)
Lease, dated February 11, 1988, between the Company and Conifer
Northeast Associates, with Letter Agreement, dated February 3, 1988,
amending Lease; and Amendment Agreement, dated January 6, 1989, and
Non-Disturbance and Attornment Agreement, dated February 11, 1988, between
the Company and Central Trust Company, with respect to Store No. 114.
(Form S-1, Exhibit No. 10.56)
Lease Addendum, effective February 18, 1996, between Conifer Northeast
Associates and the Company, with respect to Store No. 114. (1999 Form
10-K, Exhibit No. 10.56a)
Purchase Agreement, dated December 1, 1987, between the Company and
Conifer Northeast Associates, with Lease, dated February 25, 1988, between
the Company and Conifer Northeast Associates, with Letter Agreement, dated
February 3, 1988, amending Lease; and Amendment Agreement, dated January
6, 1989; and Non-Disturbance and Attornment Agreement, dated February 25,
1988, between the Company and Central Trust Company, with respect to Store
No. 116. (Form S-1, Exhibit No. 10.57)
Lease Addendum, effective February 18, 1996, between Conifer Northeast
Associates and the Company, with respect to Store No. 116. (1999 Form
10-K, Exhibit No. 10.57a)
Lease, dated May 12, 1989, between the Company and Conifer Penfield
Associates (as successor to Conifer Development, Inc.), with respect to
Store No. 132. (Form S-1, Exhibit No. 10.58)
Amendment Agreement, dated June 30, 1993, between Conifer Penfield
Associates, L.P. and the Company, with respect to Store No. 132. (1999
Form 10-K, Exhibit No. 10.58a)
Table of Contents
Exhibit No.
Document
Modification and Extension Agreement, dated November 1, 1993, between
AA & L Associates, L.P. and the Company, with respect to Store Nos. 1, 23,
25, 27, 28, 29, 35, 53, 57 and 60. (1994 Form 10-K, Exhibit No. 10.57)
Mortgage Agreement, dated September 28, 1994, between the Company and
the City of Rochester, New York. (1995 Form 10-K, Exhibit No. 10.60)
Lease Agreement, dated October 11, 1994, between the Company and the
City of Rochester, New York. (1995 Form 10-K, Exhibit No. 10.61)
Mortgage Notes, Collateral Security Mortgage and Security Agreement,
Indemnification Agreement and Guarantee, dated September 22, 1995, between
Monro Service Corporation, County of Monroe Industrial Development Agency,
the Company and The Chase Manhattan Bank, N.A. (September 1995 Form 10-Q,
Exhibit No. 10.02)
Amendment to Lease Agreement, dated September 19, 1995, between the
Company and the County of Monroe Industrial Development Agency. (September
1995 Form 10-Q, Exhibit No. 10.00)
Amended and Restated Employement Agreement dated May 15, 2003, between
the Company and Catherine D’Amico. (2003 Form 10-K, Exhibit No. 10.68)**
Purchase Agreement between Walker Manufacturing Company, a division of
Tenneco Automotive, and the Company, dated as of June 29, 1999. (2000 Form
10-K, Exhibit No. 10.70)
Asset Purchase Agreement by and among Speedy Muffler King Inc., Bloor
Automotive Inc., Speedy Car-X Inc., Speedy (U.S.A.) Inc., Speedy
Holding Corp. and the Company, dated as of April 13, 1998.
(April 1998 Form 8-K, Exhibit No. 10.1)
Amendment No. 2 to the Asset Purchase Agreement by and among Speedy
Muffler King Inc., Bloor Automotive Inc., Speedy Car-X Inc., Speedy
(U.S.A.) Inc., Speedy Holding Corp. and the Company, dated August 31,
1998. (September 1998 Form 8-K, Exhibit No. 10.1)
Form of Agreement – “Purchase Agreement and Escrow Instructions” between
Realty Income Corporation – buyer and the Company – seller, dated November
12, 1997. (1998 Form 10-K, Exhibit No. 10.70)
“Purchase Agreement and Escrow Instructions” between Realty Income
Corporation – buyer and the Company – seller, dated March 31, 1999. (1999
Form 10-K, Exhibit No. 10.73)
Amendment to “Purchase Agreement and Escrow Instructions” between
Realty Income Corporation – buyer and the Company – seller, dated May 6,
1999, with respect to Store Nos. 372 and 368. (1999 Form 10-K, Exhibit
No. 10.73a)
“Minimum Purchase and Preferred Supplier Agreement” between Honeywell
International Inc., on behalf of its Friction Materials business and Monro
Service Corporation, dated January 13, 2000. (2000 Form 10-K, Exhibit No.
10.74)
Table of Contents
Exhibit No.
Document
“Agreement Extension Amendment” between Honeywell International Inc. on
behalf of its Friction Materials business and Monro Service Corporation,
effective July 1, 2001. (2002 Form 10-K, Exhibit No. 10.74a)
Supply Agreement between Monro Muffler Brake, Inc. and The Valvoline
Company, a division of Ashland Inc., effective November 1, 2002.
(December 2002 Form 10-Q, Exhibit No. 10.79)
Automotive Filter Sales Agreement between Monro Muffler Brake, Inc. and
The Valovine Company, a division of Ashland Inc., dated November 1, 2002.
(December 2002 Form 10-Q, Exhibit No. 10.80)
“Tenneco Automotive Ride Control Products Supply Agreement” between
Tenneco Automotive Operating Company Inc. and Monro Service Corporation,
effective July 1, 2001. (2002 Form 10-K, Exhibit No. 10.76)
Management Incentive Compensation Plan, effective as of June 1, 2002.
(2002
Form 10-K, Exhibit No. 10.77)**
Merchandising Agreement between Monro Muffler Brake, Inc. and Morse
Automotive Corporation, dated September 1, 2002. (September 2002 Form
10-Q, Exhibit No. 10.78)
Agreement, dated January 1, 1998, between F&J Properties, Inc. and Mr.
Tire, Inc., effective January 1, 1998, with respect to Store No. 750.
Assignment and Assumption of Lease, dated March 1, 2004, between Mr.
Tire, Inc. and the Company, with respect to Store No. 750.
Landlord’s Consent and Estoppel Certificate, dated as of February 27,
2004, by F&J Properties, Inc., with respect to Store No. 750.
Agreement, dated January 1, 1997, between The Three Marquees and Mr.
Tire, Inc., with respect to Store No. 753.
Assignment and Assumption of Lease, dated March 1, 2004, between Mr.
Tire, Inc. and the Company, with respect to Store No. 753.
Landlord’s Consent and Estoppel Certificate, dated as of February 27,
2004, by The Three Marquees, with respect to Store No. 753.
Agreement, dated April 1, 1998, between 425 Manchester Road, LLC and Mr.
Tire, Inc., with respect to Store No. 754.
Assignment and Assumption of Lease, dated March 1, 2004, between Mr.
Tire, Inc. and the Company, with respect to Store No. 754.
Landlord’s Consent and Estoppel Certificate, dated as of February 27,
2004, by 425 Manchester Road, LLC, with respect to Store No. 754.
Agreement, dated January 1, 1997, between The Three Marquees and Mr.
Tire, Inc., with respect to Store No. 756.
Assignment and Assumption of Lease, dated March 1, 2004, between Mr.
Tire, Inc. and the Company, with respect to Store No. 756.
Table of Contents
Table of Contents
Form 8-K”); (15) the Company’s Quarterly Report on Form 10-Q for
the fiscal quarter ended September 30, 1998 (“September 1998
Form 10-Q”); (16) the Company’s Annual Report on Form 10-K for
the fiscal year ended March 31, 1999 (“1999 Form 10-K”); (17)
the Company’s Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 1999 (“September 1999 Form 10-Q”);
(18) the Company’s Annual Report on Form 10-K for the fiscal
year ended March 31, 2000 (“2000 Form 10-K”); (19) the Company’s
Registration Statement on Form S-8, filed with the Securities
and Exchange Commission on April 7, 2000 (“April 2000 Form
S-8”); (20) the Company’s Registration Statements on Forms S-8,
filed with the Securities and Exchange Commission on March 22,
2001 (each a “March 2001 Form S-8”); (21) the Company’s
Registration Statement on Form S-8, filed with the Securities
and Exchange Commission on June 26, 2001 (“June 2001 Form S-8”);
(22) the Company’s Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 2001 (“June 2001
Form 10-Q”); (23) the
Company’s Annual Report on Form 10-K for the fiscal year ended
March 30, 2002 (“2002 Form 10-K”), (24) the Company’s Quarterly
Report on Form 10-Q for the fiscal quarter ended September 28,
2002 (“September 2002 Form 10-Q”); (25) the Company’s Quarterly
Report on Form 10-Q for the fiscal quarter ended December 28,
2002 (“December 2002 Form 10-Q”); (26) the Company’s Annual
Report on Form 10-K for the fiscal year ended March 28, 2003
(“2003 Form 10-K”); (27) the Company’s Current Report on Form
8-K/A, filed on August 12, 2003 to amend and restate the Current
Report on Form 8-K, filed July 14, 2003 (“August 2003 Form
8-K/A”) or (28) the Company’s Current Report on Form 8-K filed
on March 12, 2004 (“March 2004 Form 8-K”). The appropriate
document and exhibit number are indicated in parentheses.
Exhibit 2.05
SECOND AMENDMENT TO ASSET PURCHASE AGREEMENT
THIS SECOND AMENDMENT (“Second Amendment”), dated as of April 13, 2004 to that certain Asset Purchase Agreement dated as of February 9, 2004, as clarified by that certain Side Letter Agreement dated February 9, 2004, as further clarified by that certain First Amendment to Asset Purchase Agreement dated as of March 1, 2004, as may be further amended and clarified, (the “Original Agreement”), by and among Mr. Tire, Inc., (“Mr. Tire”), Atlantic Automotive Corp. (“Atlantic”) and Monro Muffler Brake, Inc. (“Monro”)
RECITALS
WHEREAS , Mr. Tire, Atlantic and Monro have entered into the Original Agreement, which provides for the sale of the Assets of Mr. Tire to Monro; and
WHEREAS , Mr. Tire, Atlantic and Monro desire, pursuant to this Second Amendment, agree to further amend the Original Agreement. All capitalized terms used herein and not otherwise defined herein shall have the meaning ascribed to such term in the Original Agreement.
NOW, THEREFORE, IN CONSIDERATION OF THE premises and mutual covenants and obligations contained herein, the parties agree, intending to be legally bound, as follows:
1. Schedule 7.07E to the Original Agreement contains the entire agreement between the parties with respect to the provision of services by Mr. Tire to Monro following the Closing (the “Transition Agreement”).
2. The parties acknowledge that between March 1 and March 28, 2004, Monro hired certain employees of Mr. Tire and that, during the term of the Transition Agreement, certain of these employees will provide Transition Services to Mr. Tire under the direction of Mr. Tire. Schedule 2 to this Amendment lists those employees who made provide such services to Mr. Tire (Monro Employees). With respect to any Transition Services provided by Monro Employees, the applicable provisions of the Transition Agreement (including but not limited to, billing for Employee Costs, authority of Monro Employees to bind Mr. Tire and indemnification), shall be reversed to reflect that these Monro Employees are providing Transition Services to Mr. Tire. However, Mr. Tire will continue to bill Monro for its pro rata share of corporate overhead costs. Further, both the assessment and hire of Transition Employees by Monro and the “System Requirements” provisions shall not be revised.
3. Sections 2.05B and 2.05C of the Original Agreement are hereby amended to reflect that Seller will have until May 31, 2004 to prepare the Inventory Statement and the Fixed Asset Statement and that Buyer will then have until July 31, 2004 to audit and reconcile such Inventory and Fixed Asset Statements.
4. Section 2.05D of the Original Agreement is hereby amended by adding the following as the last three sentences of the paragraph: Seller shall finalize any and all adjustments required pursuant to this section by May 31, 2004 except for the vacation accrual, which Seller shall finalize by May 7, 2004, and Buyer shall subsequently have until July 31, 2004 in which to audit such adjustments. With respect to vacation accrual, Seller acknowledges that following Closing and until such time as the vacation accrual adjustments are finalized, Buyer will rely on the information provided to it on an on-going basis by Seller’s Payroll Supervisor with respect to the vacation accrued by any Transferred Employees and Transition Employees (as defined in the Transition Agreement set forth in Schedule 7.07E) subsequently hired by Buyer (the “Interim Accruals”). Seller agrees that, after the parties have finalized the vacation accrual adjustments, if any, it will indemnify and hold Buyer harmless from and against any payments made by Buyer to any such employees based upon the Interim Accruals which ultimately are determined to have been owed.
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5. The duties, obligations, and responsibilities of the parties contained in Section 1 through 4 of this Second Amendment, have survived, and shall continue to survive the Closing and the Execution of this Second Amendment.
6. Except as amended hereby, the Original Agreement and each of the Schedules and Exhibits thereto are affirmed and restated.
7. This Second Amendment shall be effective as of the date first above written and shall not affect or impair the remainder of the terms of the provisions of the Original Agreement, which shall continue in full force and effect without modification thereto.
8. This Second Amendment shall be governed by and construed and enforced in accordance with the laws of the State of Maryland applicable to agreements made and to be performed entirely in Maryland.
9 . This Second Amendment may be executed in any number of counterparts, all of which taken together shall constitute one complete document.
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IN WITNESS WHEREOF , each of the parties hereto has executed this Second Amendment or has caused this Second Amendment to be duly executed and delivered in its name and on its behalf all as of the day and year first above written.
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WITNESS:
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MILE ONE TIRE, INC. | |||||
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/s/
Anne M. Tacka
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By: |
/s/ Louis Richards
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Name: | Louis Richards | ||||
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Title: | Treasurer | ||||
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ATLANTIC AUTOMOTIVE CORP. | |||||
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/s/ Anne M. Tacka
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By: | /s/ Louis Richards | ||||
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Name: | Louis Richards | ||||
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Title: | Vice President | ||||
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MONRO MUFFLER BRAKE, INC. | |||||
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/s/ Maureen E. Mulholland
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By: | /s/ Catherine D’Amico | ||||
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Name: | Catherine D’Amico | ||||
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Title: | Executive Vice President, CFO and Treasurer |
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Schedule 2
EMPLOYEE NAME
AGNEW, ANTONIO
BOTHE, HENRY T.
BROWN, HOMER O.
CURRIE, WALTER F.
ESPEY, TIMOTHY C.
FARRELL, JENIFER O.
FERRARACCI, JOSEPH V.
FINKLER, DMITRY
FLEURY, REBECCA L.
GASKINS, EMANUEL E.
KOCH, TERRENCE L.
KUES, PAMELA A.
LAFFERMAN, BERNARD N.
LEWMAN, KEVIN E.
LONGERBEAM, GARY L.
MCGREW, WILLIAM H.
MCMICHAEL, GREGORY
MENTGES, NINA M.
MURRAY, LILLIAN J.
SALM, KENNETH N.
SAUNDERS, KENNETH L.
SHAKOOR, LEMUEL H.
SPITALNY, HOWARD F.
STRANEY, JOHN W.
THOMAS, JUDITH
TOMARCHIO JR., JOSEPH
TSIMMERMAN, DANIEL
TUCKER, KENDRA R.
VICKERS, SCOTT L.
WADE, ELAINE P.
WALKER, RODNEY G.
WILKINS, ROY N.
WOOTEN, ARAY L.
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Exhibit 3.01a
New York State
Department of State
Division of Corporations, State Records
and Uniform Commercial Code
41 State Street
Albany, NY 12231
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
MONRO MUFFLER BRAKE, INC.
Under Section 805 of the New York Business Corporation Law
1. The name of the Corporation is Monro Muffler Brake, Inc. The Corporation was formed under the name Midas Service Corporation, Inc.
2. The Certificate of Incorporation was filed with the Department of State on October 5, 1959.
3. The amendment effected by this Certificate of Amendment is as follows:
The first sentence of Section 4 of the Certificate of Incorporation relating to the aggregate number of shares which the Corporation shall have the authority to issue and the number of each class of shares authorized is hereby amended by deleting such sentence and in its place substituting the following:
“4. The aggregate number of shares which the Corporation shall have the authority to issue is 24,900,000 shares, consisting of:
(1) 20,000,000 shares of Common Stock, $.01 par value per share (the “Common Stock”);
(2) 150,000 shares of Class C Convertible Preferred Stock, $1.50 par value per share (the “Class C Preferred Stock”); and
(3) 4,750,000 shares of serial preferred stock. $.01 par value per share (the “Serial Preferred Stock”).”
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4. The Certificate of Amendment was authorized by the vote of the board of directors followed by the vote of a majority of all outstanding shares entitled to vote thereon at a meeting of shareholders followed by the unanimous written consent of the Corporation’s Class C Convertible Preferred Stock.
| /s/ Catherine D’Amico | ||||
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Name: | Catherine D’Amico | ||
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Title: | Executive Vice President – Finance, | ||
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Chief Financial Officer and Treasurer | |||
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| /s/ Robert W. August | ||||
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Name: | Robert W. August | ||
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Title: | Senior Vice President – Store Support and Secretary | ||
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Exhibit 10.08a
AMENDMENT TO THE
MONRO MUFFLER BRAKE, INC. 1998 STOCK OPTION PLAN
AMENDMENT to the Monro Muffler Brake, Inc. 1998 Stock Option Plan, dated as of this 20th day of May, 2003.
WHEREAS, Monro Muffler Brake, Inc. (the “Company”) maintains the Monro Muffler Brake, Inc. 1998 Stock Option Plan (the “Plan”) to encourage and enable all eligible employees of the Company and its subsidiaries to acquire a proprietary interest in the Company through the ownership of the Company’s common stock;
WHEREAS, pursuant to Article 9 of the Plan, the Board of Directors of Monro Muffler Brake, Inc. (the “Board”) may amend the Plan provided that any amendment that would (i) materially increase the aggregate number of shares which may be issued under the Plan, (ii) materially increase the benefits accruing to employees under the Plan, or (iii) materially modify the requirements as to eligibility for participation in the Plan, shall be subject to the approval of the Company’s stockholders; and
WHEREAS, the Board desires to amend the Plan to increase the aggregate number of shares of Common Stock which may be issued under the Plan from 750,000 to 950,000.
NOW, THEREFORE, pursuant to and in exercise of the authority retained by the Board under Article 9 of the Plan, subject to ratification by the shareholders of the Company, the Plan is hereby amended, effective August 5, 2003, to provide as follows:
1. The first sentence of Section 2.2 of the Plan is hereby amended by deleting “750,000” and inserting “950,000” in its place.
2. The Plan, except as otherwise set forth herein, shall remain in full force and effect in all other respects.
IN WITNESS WHEREOF, the Board has caused this Amendment to be executed, to be effective as of the day and year first written above.
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Exhibit 10.10
MONRO MUFFLER BRAKE, INC.
2003 NON-EMPLOYEE DIRECTORS’ STOCK OPTION PLAN
1. PURPOSE. The purpose of this 2003 Non-Employee Directors’ Stock Option Plan (the “Plan”) is to secure for Monro Muffler Brake, Inc., a New York corporation (the “Company”), and its shareholders the benefits of the incentive inherent in increased common stock ownership by members of the Company’s Board of Directors (the “Board”) who are not also employees of the Company or any of its subsidiaries (a “Non-Employee Director”). Options to purchase shares of the Company’s Common Stock, $.01 par value, or such other shares as are substituted pursuant to paragraph 5(e) or (f) below (the “Common Stock”), shall be granted to Non-Employee Directors of the Company pursuant to the terms of this Plan.
2. ELIGIBILITY. Each Non-Employee Director shall be eligible to receive awards of non-qualified stock options in accordance with the specific provisions of paragraph 4 below (“Options”). The adoption of this Plan shall not be deemed to give any member of the Board any right to be granted an Option to purchase Common Stock except to the extent and upon such terms and conditions consistent with the Plan as may be determined by the Compensation Committee of the Board (the “Committee”).
3. LIMITATION ON AGGREGATE SHARES. The maximum number of shares of Common Stock with respect to which Options may be granted under this Plan and which may be issued upon the exercise thereof shall not exceed, in the aggregate, 60,000 shares, subject to adjustment pursuant to paragraph 5(e) below; provided, however, that if any Options granted under this Plan expire unexercised or are cancelled, terminated or forfeited in any manner without the issuance of Common Stock thereunder, the shares with respect to which such Options were granted shall be available under this Plan. Such shares of Common Stock may be either authorized and unissued shares, treasury shares or a combination thereof, as the Committee shall determine.
4. TERMS AND CONDITIONS OF OPTIONS. Options granted under this Plan shall be subject to such terms and conditions and evidenced by written agreements in such form as shall be determined from time to time by the Committee and shall in any event be subject to the terms and conditions set forth in this Plan. In the event of any conflict between a written agreement and the Plan, the terms of the Plan shall govern.
a. ANNUAL OPTIONS. Each year on the date of the Annual Meeting of the Company’s Shareholders (the “Annual Shareholders Meeting”), commencing with the 2003 Annual Shareholders Meeting, each Non-Employee Director shall automatically receive an Option to purchase 3,039 shares of Common Stock.
b. OPTION PRICE. The Option price per share of Common Stock shall be 100% of the “Fair Market Value” of a share of Common Stock on the date of grant (the “Option Price”). The Fair Market Value of the Common Stock on any given date means (i) the mean between the highest and lowest reported sale prices on the New York Stock Exchange—Composite Transactions Table (or, if not so reported, on any domestic stock exchanges on which the Common Stock is then listed); (ii) if the Common Stock is not listed on any domestic stock exchange, the mean between the closing high bid and low asked prices as reported by the National Association of Securities Dealers Automated Quotation National Market System (or, if not so reported, by the system then regarded as the most reliable source of such quotations); (iii) if the Common Stock is listed on a domestic exchange or quoted in the domestic over-the-counter market, but there are no reported sales or quotations, as the case may be, on the given date, the value determined pursuant to (i) or (ii) using the reported sale prices or quotations on the last previous date on which so reported; or (iv) if none of the foregoing clauses apply, the fair market value as determined in good faith by the Committee.
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c. TERM OF OPTIONS. Each Option shall be exercisable for five years after the date of grant.
d. EXERCISE OF OPTIONS. Options shall be exercised by written notice to the Company (to the attention of the Secretary of the Company) accompanied by payment in full of the Option Price. Payment of the Option Price may be made, at the discretion of the Non-Employee Director, (i) in cash (including check, bank draft or money order), (ii) by delivery of Common Stock (valued at the Fair Market Value thereof on the date of exercise) or (iii) by delivery of a combination of cash and Common Stock; provided, however, that the Committee may, in any instance, in order to prevent any possible violation of law, require the Option Price to be paid in cash; and provided, further, that the right to deliver Common Stock in payment of the Option Price may be limited or denied in any Option agreement.
e. RIGHTS AS A SHAREHOLDER. No Non-Employee Director shall have any rights as a shareholder with respect to any shares covered by an Option until the date a stock certificate for such shares is issued to him or her. Except as otherwise provided herein, no adjustments shall be made for dividends or distributions of other rights for which the record date is prior to the date such stock certificate is issued.
5. ADDITIONAL PROVISIONS.
a. CONDITIONS AND LIMITATIONS ON EXERCISE. Any Option shall be exercisable immediately upon the date of grant. Notwithstanding the foregoing, (i) no Option shall be exercisable prior to the adoption of the Plan by the Company’s shareholders at the Company’s 2003 Annual Shareholders Meeting, as provided in paragraph 9 below, and (ii) no shares of Common Stock issuable upon the exercise of an Option may be sold, assigned, pledged or otherwise transferred for a period of six months after the later to occur of (x) the adoption of the Plan by the Company’s shareholders and (y) the grant of the Option, as is specified in Rule 16b-3 (or other period of time specified in such rule as such rule may be amended from time to time) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
b. TERMINATION OF TERM OF DIRECTORSHIP. Subject to paragraph 4(c) above, any Option shall be exercisable during the holder’s term as a director of the Company and for thirty (30) days after the holder ceases to be a director of the Company. Notwithstanding the foregoing, an Option may be exercisable after (i) the death or disability, as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), of a holder while a director of the Company at any time until the earlier to occur of (A) the one year anniversary of the date of death or disability and (B) the termination of such Option pursuant to paragraph 4(c) above; and (ii) the retirement from the Board at the age of 65 or thereafter (“Retirement”) of a holder while a director of the Company until the termination of such Option pursuant to paragraph 4(c) above.
c. LISTING, REGISTRATION AND COMPLIANCE WITH LAWS AND REGULATIONS. Each Option shall be subject to the requirement that if at any time the Committee shall determine in its discretion that the listing, registration or qualification of the shares subject to the Option upon any securities exchange or automated quotation system or under any state or federal securities or other law or regulation, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition to or in connection with the granting of such Option or the issuance or purchase of shares thereunder, no such Option may be exercised, in whole or in part, unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee. The holder of such Option will supply the Company with such certificates, representations and information as the Company shall request and shall otherwise cooperate with the Company in obtaining such listing, registration, qualification, consent or approval. The Committee may at any time impose any limitations upon the exercise of an Option or the sale of the Common Stock issued upon exercise of an Option that, in the Committee’s discretion, are necessary or desirable in order to comply with Section 16 of the Exchange Act and the rules and regulations
21
thereunder.
d. NONTRANSFERABILITY OF OPTIONS. Options may not be transferred, assigned, pledged or hypothecated (whether by operation of law or otherwise) other than by will or the laws of descent and distribution or pursuant to a final court order, and, during the lifetime of the person to whom they are granted, may be exercised only by such person (or his or her guardian or legal representative). Any attempted assignment, transfer, pledge, hypothecation or other disposition of an Option not specifically permitted herein shall be null and void and without effect.
e. ADJUSTMENT FOR CHANGE IN COMMON STOCK. If the outstanding Common Stock is hereafter changed by reason of reorganization, merger, consolidation, recapitalization, reclassification, stock split-up, combination, exchange of shares, or the like, or dividends payable in shares of the Common Stock or other securities or assets, an appropriate adjustment shall be made by the Committee in the aggregate number of shares available under the Plan, in the number of shares subject to Options to be granted thereafter pursuant to Section 4(a), and in the number of shares and price per share subject to outstanding Options. Any adjustment in the number of shares shall apply appropriately to only the unexercised portion of any Option granted hereunder. If fractions of a share would result from any such adjustment, the adjustment shall be revised to the next higher whole number of shares.
f. CHANGE IN CONTROL OF THE COMPANY. In the event of a Change in Control of the Company, the Options may be assumed by the successor corporation or a parent of such successor corporation or substantially equivalent options may be substituted by the successor corporation or a parent of such successor corporation, and if the successor corporation does not assume the Options or substitute options, then the Options shall terminate if not exercised as of the date of the Change in Control of the Company or other prescribed period of time. “Change in Control” shall mean any of the following: (i) any person who is not an “affiliate” (as defined in Rule 12b-2 of the Exchange Act) of the Company as of the effective date of the Plan becomes the beneficial owner, directly or indirectly, of 50% or more of the combined voting power of the then outstanding securities of the Company except pursuant to a public offering of securities of the Company; (ii) the sale of the Company substantially as an entirety (whether by sale of stock, sale of assets, merger, consolidation, or otherwise) to a person who is not an affiliate of the Company as of the effective date of the Plan; or (iii) there occurs a merger, consolidation or other reorganization of the Company with a person who is not an affiliate of the Company as of the effective date of the Plan, and in which the Company is not the surviving entity.
g. LIQUIDATION OR DISSOLUTION. In the event of the liquidation or dissolution of the Company, Options shall terminate immediately prior to the liquidation or dissolution.
h. TAXES. The Company shall be entitled, if necessary or desirable, to withhold (or secure payment from the Non-Employee Director in lieu of withholding) the amount of any withholding or other tax due from the Company with respect to any shares issuable under this Plan, and the Company may defer such issuance unless indemnified to its satisfaction. The Committee may, in its sole discretion and subject to such rules as it may adopt, permit a Non-Employee Director to elect to satisfy any such withholding obligation, in whole or in part, by having the Company withhold shares of Common Stock that are otherwise issuable upon the exercise of such Option and have a Fair Market Value (as of the date of exercise) equal to the amount required to be withheld, or by surrendering to the Company previously-acquired shares of Common Stock that have such a Fair Market Value.
6. ADMINISTRATION. This Plan shall be administered by the Committee. Subject to Section 7 hereof, the Committee shall have full power to construe and interpret this Plan and Options granted hereunder, to establish and amend rules for its administration and to correct any defect or omission and to reconcile any inconsistency in this Plan or in any Option granted hereunder to the extent the Committee deems desirable to carry this Plan or any Option granted hereunder into effect. All actions taken and interpretations and determinations made by the Committee in good faith shall be final and binding upon the Company, all Non-Employee Directors who have received awards under the Plan and all other interested parties. The Committee may act a meeting or by an instrument executed by all
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of its members. All actions taken and decisions made by the Committee pursuant to this Plan shall be binding and conclusive on all persons interested in this Plan. The Committee may delegate to one or more of its members or to any other person or persons such ministerial duties as it may deem advisable.
7. TERMINATION AND AMENDMENT. At any time the Committee may suspend or terminate this Plan and make such additions or amendments as it deems advisable; provided, that such additions or amendments are made in compliance with Rule 16b-3 of the Exchange Act (as such rule may be amended from time to time); and provided, further, that any amendment that would (i) materially increase the aggregate number of shares which may be issued under the Plan, (ii) materially increase the benefits accruing to Non-Employee Directors under the Plan, or (iii) materially modify the requirements as to eligibility for participation in the Plan, shall be subject to the approval of the Company’s shareholders, except that any such increase or modification that may result from adjustments authorized by Section 5(e) hereof shall not require such shareholder approval. No Options shall be granted hereunder after August 4, 2013. Notwithstanding any termination (other than pursuant to paragraph 5(a) above), the terms of the Plan shall continue to apply to Options granted prior to any such termination. No suspension, termination, modification or amendment of the Plan may, without the consent of the Non-Employee Director to whom an award shall theretofore have been granted, adversely affect the rights of such Non-Employee Director under such award.
8. LIABILITY. No member of the Committee shall be personally liable for any action, interpretation or determination made with respect to the Plan or awards made thereunder, and each member of the Committee shall be fully indemnified and protected by the Company with respect to any liability he or she may incur with respect to any such action, interpretation or determination, to the extent permitted by applicable law and to the extent provided by the Company’s Certificate of Incorporation and By-laws, as amended from time to time.
9. EFFECTIVE DATE OF PLAN. The Plan shall be effective as of August 5, 2003 or such later date as the Board may determine, provided that the adoption of the Plan shall have been approved by the Company’s shareholders at the Company’s 2003 Annual Shareholders Meeting. If the Plan is not so approved by the Company’s shareholders, the Plan and all Options granted hereunder shall terminate.
10. NOTICES. Notices required or permitted to be made under the Plan shall be sufficiently made if personally delivered to the Non-Employee Director or sent by regular mail addressed (a) to the Non-Employee Director’s address as set forth in the books and records of the Company, or (b) to the Company or the Committee at the principal office of the Company clearly marked “Attention: Compensation Committee”.
11. SEVERABILITY . In the event that any provision of the Plan shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
12. GOVERNING LAW. The Plan and each agreement hereunder shall be governed in all respects by the laws of the State of New York.
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Exhibit 10.37a
September 18, 2003
Mr. Burton S. August
AA&L Associates
c/o Monro Muffler Brake
200 Holleder Parkway
Rochester, NY 14624
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RE:
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Lease agreement between AA&L Associates (Landlord) and MONRO Muffler/Brake & Service, Inc. (Tenant) for premises situate at 1745 Western Avenue, Guilderland, NY [MMB #35] |
Dear Burt:
Please accept this letter as Monro Muffler / Brake, Inc.’s official notification of our intent to renew said lease agreement for the second five-year renewal period commencing on April 1, 2004 and expiring March 31, 2009. The rent for said renewal period shall be $3,500.00 per month.
Tenant shall have one five-year option remaining.
If you have any questions relative to this matter, please do not hesitate to contact me at 647-6400 ext. 384.
Yours truly,
/s/ Thomas M. Aspenleiter
Thomas M. Aspenleiter
VP Real Estate
TMA:mc
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Exhibit 10.39a
February 18, 2003
Mr. Burton August, Sr.
AA&L Associates
200 Holleder Parkway
Rochester, NY 14615
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RE:
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Lease Renewals for Auburn, New York [MMB #30]; Bath, New York [MMB #43] and Hudson, New York [MMB #36] |
Dear Burt:
Please accept this letter as Monro Muffler / Brake, Inc.’s official notification of our intent to renew said lease agreements for the final five-year renewal period
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MMB #30
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Auburn, NY | August 1, 2003 – July 31, 2008 | $2,500.00/mo. | |||
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MMB #43
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Bath, NY | March 1, 2003 – February 28, 2008 | $2,000.00/mo. | |||
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MMB #36
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Hudson, NY | October 1, 2003 – September 30, 2008 | $2,900.00/mo. |
Burt, I would like to sit down with you to discuss additional renewal options for Monro since there are no options past 2008.
Yours truly,
/s/ Thomas M. Aspenleiter
Thomas M. Aspenleiter
VP Real Estate
TMA:mc
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Exhibit 10.49b
December 15, 2003
Mr. Burton S. August
AA&L Associates
c/o Monro Muffler Brake, Inc.
200 Holleder Parkway
Rochester, NY 14624
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RE:
|
Lease agreement between AA&L Associates (Landlord) and MONRO Muffler/Brake & Service, Inc. (Tenant) for premises situate at 1910 Ridge Road, West Seneca, NY [MMB #57] |
Dear Burt:
Please accept this letter as Monro Muffler / Brake, Inc.’s official notification of our intent to renew said lease agreement for the five-year renewal period commencing on July 1, 2004 and expiring June 30, 2009. The rent for said renewal period shall be $3,500.00 per month.
Tenant shall have one five-year renewal option remaining.
Please do not hesitate to contact me at 800-876-6676 ext. 384 if you have any questions relative to the renewal.
Yours truly,
/s/ Thomas M. Aspenleiter
Thomas M. Aspenleiter
VP Real Estate
TMA:mc
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Exhibit 10.79
AGREEMENT
This agreement entered into this 1 st day of January 1998, by and between F & J Properties, Inc. (hereinafter called “Landlord”) and Mr. Tire, Inc. (hereinafter called “Tenant”).
WITNESSETH:
That for and in consideration of the rents herein reserved and to be paid by tenant to the Landlord and of the covenants and agreements herein set forth to be kept, performed and observed by Tenant, the Landlord does hereby rent, demise and lease to the Tenant and the Tenant does hereby take, lease and hire from the Landlord, upon the terms and conditions hereinafter set forth, land and improvements located at 5910 Liberty Road, Baltimore, Maryland, (the “Premises”), including specially a certain building located thereon, (the “Building”).
1. Term
The Term of this Lease shall be ten (10) years commencing January 1, 1998 and terminating December 31, 2007, both dates inclusive (the “Term”). Tenant shall have the option of renewing and extending the term of this lease for two (2) successive term of ten (10) years, for the same rental terms and conditions as the original term.
2. Rent
(A) Tenant, in consideration of this Lease, agrees to pay to Landlord, Basic Rent during the Term hereof, the sum of six hundred sixteen thousand six hundred ninety seven dollars and 28/100 dollars ($616,697.28), all payable without deduction or set off or demand, to be received on or before the first day of each month in accordance with the following schedule:
(i) For the Lease Year January 1, 1998-December 31, 1998, fifty eight thousand nine hundred forty five dollars and 20/100 dollars ($58,945.20) payable in twelve equal monthly installments of four thousand nine hundred twelve dollars and 10/100 dollars ($4,912.10);
(ii) For the Lease Year January 1, 1999-December 31, 1999, fifty nine thousand five hundred thirty four dollars and 64/100 dollars ($59,534.64) payable in twelve equal monthly installments of four thousand nine hundred sixty one dollars and 22/100 dollars ($4,961.22);
(iii) For the Lease Year January 1, 2000-December 31, 2000, sixty thousand one hundred twenty nine dollars and 96/100 dollars ($60,129.96) payable in twelve equal monthly installments of five thousand ten dollars and 83/100 dollars ($5,010.83);
(iv) For the Lease Year January 1, 2001-December 31, 2001, sixty thousand seven hundred thirty one dollars and 28/100 dollars ($60,731.28) payable in twelve equal monthly installments of five thousand sixty dollars and 94/100 dollars ($5,060.94);
(v) For the Lease Year January 1, 2002-December 31, 2002, sixty one thousand three hundred thirty eight dollars and 60/100 dollars ($61,338.60) payable in twelve equal monthly installments of five thousand one hundred eleven dollars and 55/100 dollars ($5,111.55);
(vi) For the Lease Year January 1, 2003-December 31, 2003, sixty one thousand nine hundred fifty two dollars and 04/100 dollars ($61,952.04) payable in twelve equal monthly installments of five thousand one hundred sixty two dollars and 67/100 dollars ($5,162.67);
(vii) For the Lease Year January 1, 2004-December 31, 2004, sixty two thousand five hundred seventy one dollars and 60/100 dollars ($62,571.60) payable in twelve equal monthly installments of five thousand two hundred fourteen dollars and 30/100 dollars ($5,214.30);
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(viii) For the Lease Year January 1, 2005-December 31, 2005, sixty three thousand one hundred ninety seven dollars and 28/100 dollars ($63,197.28) payable in twelve equal monthly installments of five thousand two hundred sixty six dollars and 44/100 dollars ($5,266.44);
(ix) For the Lease Year January 1, 2006-December 31, 2006, sixty three thousand eight hundred twenty nine dollars and 20/100 dollars ($63,829.20) payable in twelve equal monthly installments of five thousand three hundred nineteen dollars and 10/100 dollars ($5,319.10);
(x) For the Lease Year January 1, 2007-December 31, 2007, sixty four thousand four hundred sixty seven dollars and 48/100 dollars ($64,467.48) payable in twelve equal monthly installments of five thousand three hundred seventy two dollars and 29/100 dollars ($5,372.29);
In the event that tenant pays Landlord any installments of Basic Rent or Percentage Rent after the due date, or any Additional Rent (as hereinafter defined) later than the (5 th ) day after billing therefore, then and in such event, Tenant shall pay to Landlord, together with and in addition to said installment of Basic Rent or Additional Rent, a late charge of five percent (5%) of installment past due. Any installments of Basic Rent or Additional Rent not made within ten (10) days from the date due shall, in addition to the foregoing late charges, bear interest from the date due at the rate of eighteen percent (18%) per annum (the “Default Rate”). If Landlord, during the Term of this Lease, receives two (2) or more checks from Tenant which are returned for insufficient funds.
Landlord, in addition to applicable late charges and reimbursement for any additional cost incurred by reason of any returned check, may require, at Landlord’s election, that any future payment shall be either bank certified, cashier’s or treasurer’s check. None of the foregoing late charges shall be construed to limit or otherwise waive any other remedies available to Landlord for Tenant’s default under this Lease. Anything contained herein to the contrary notwithstanding, the late charges provided hereunder shall be abated for one violation each Lease Year, provided Tenant cures such late payment within five (5) days after written notice that the same is past due.
(B) Tenant shall tender all payments due hereunder by good check to Landlord c/o F & J Properties, P.O. Box 428, Savage, Maryland 20763, or to such other party or such other address as Landlord may designate from time to time by written notice to Tenant. If Landlord shall at any time or times accept said Basic Rent or Additional Rent after it shall become due and payable, such acceptance shall not excuse delay upon subsequent occasions, or constitute a waiver of any or all of Landlords rights hereunder.
(C) This Lease is what is commonly called a “triple net lease”, it being understood that Landlord shall receive the rent free and clear of any and all other impositions, taxes, liens, charges, or expenses of any nature whatsoever in connection with the ownership and operation of the Premises. In addition to the Basic Rent, Tenant shall pay to the parties respectively entitled thereto all impositions, insurance premiums, utility charges (including but not limited to gas, fuel, electric, water, sewer, trash removal and telephone charges), operating charges, maintenance charges, construction costs, and any other charges, costs, and expenses which arise or may be contemplated under any provisions of the Lease during the Term hereof. All of such charges, costs, and expenses shall constitute Additional Rent, and upon the failure of Tenant to pay any of such costs, charges or expenses, Landlord shall have the same rights and remedies as otherwise provided in this Lease for the failure of Tenant to pay Basic Rent. For purposes herein contained the term “Rent” shall refer to Basic Rent and Additional Rent. It is the intention of the parties hereto that this Lease shall not be terminable for any reason by the Tenant unless otherwise expressly permitted under the terms of this Lease and that Tenant shall in no event be entitled to any abatement of or reduction in Rent payable hereunder, except as herein expressly provided. Any present or future law to the contrary shall not alter this agreement of the parties. If Tenant defaults in the making of any payment to any third party or in the doing of any act required to be made or done by Tenant, then Landlord may, but shall not be required to make such payment or do such act, and the amount of the expense thereof, if made or done by Landlord, within interest thereon at the Default Rate accruing from the date paid by Landlord, together with an additional charge of fifteen percent (15%) of the amount so paid to cover Landlord’s administrative costs, shall be paid by Tenant to Landlord and shall constitute Additional Rent hereunder due and payable by Tenant upon receipt by Tenant of a written statement of costs from Landlord. The making of such payment or the doing of such act by Landlord shall not operate to cure Tenant’s default, nor shall it prevent Landlord from the pursuit of any remedy to which Landlord would otherwise be entitled.
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3. Additional Rent.
Tenant, in addition to Basic Rent, shall pay Additional Rent as hereafter specified, payable by Tenant to Landlord under this Lease being deemed “Additional Rent”. Basic Rent and Additional Rent shall collectively be referred to as “Rent”.
(A) Impositions.
Tenant shall pay throughout the Term, as Additional Rent, all taxes and assessments, general and special, if any, levied and assessed on the Premises, any improvements or alterations thereto and any personal property located therein, and all other governmental charges and impositions of any kind or nature whatsoever, general or special, foreseen and unforeseen, which if not paid when due, would encumber the title to the Building, all of which are herein called “Impositions” provided, however, that Impositions relating to fiscal periods of the taxing authority which precede or extend beyond the Term of this Lease shall be appointed between Landlord and Tenant. Landlord shall periodically provide Tenant with Landlords estimate of Impositions coming due, and Tenant shall pay to Landlord monthly, together with Basic Rent, one twelfth (1/12) of Landlords estimate of Impositions. Landlord shall forward to Tenant copies of all notices, bills or other statements received by Landlord concerning any Impositions and the presentation of any such invoice shall be conclusive evidence of the amount of the particular element of the Imposition to which the bill or statement refers. Any overpayment or deficiency in Tenants payment of Impositions shall be “Adjusted” within thirty (30) days after Tenants receipt of such statement. For purposes of this Lease “Adjusted” or “Adjustment” means the adjustment between Landlord and Tenant of any overpayment or deficiency in payment by Tenant of Impositions. Any required Adjustment shall be made, as the case may be by;
(i) Tenants payment to Landlord of any deficiency or
(ii) by Landlord’s crediting to Tenant’s account any overpayment or, if such Adjustment is made at the end of the term, Landlord’s reimbursement to Tenant of such overpayment less any amounts due from Tenant. At anytime during a Lease Year, Landlord may re-estimate Tenant’s share of Impositions and adjust Tenant’s monthly installments payable thereafter during the Lease Year to reflect more accurately Tenant’s share of Impositions as reestimated by Landlord.
For purposes hereof, “Impositions” shall also include any and all business licenses and/or franchise taxes imposed upon Tenant, and any taxes, assessments or other levies which may at any time be imposed against the Premises by any federal, state, county, municipal, quasi governmental or corporate entity in respect of public transportation or works or other governmental authority any assessments for public improvements or benefits and including also any tax, assessment or other charges in the nature of a sales, excise, use or other tax upon the Rent payable under this Lease, whether assessed against Tenant or Landlord, or the Premises. Impositions shall also include the cost (including attorney’s fees, consultant fees, witness and appraisal costs) of any negotiation, contest or appeal pursued by Landlord (regardless of outcome). The provisions of this Lease shall not be deemed to require Tenant to Pay municipal, state or federal income, gross receipts or excess Profits taxes assess against the Landlord, or municipal, state or federal estate, succession, or inheritance taxes imposed upon the Landlord provided, however, that if, at any time during the Term of this Lease, the methods of taxation of real estate prevailing on the date of the Lease shall be altered or supplemental so as to cause in lien thereof the whole of the taxes, assessments and other governmental charges owed, levied and assessed on the Premises to be levied and assessed on the Rent payable by tenant to Landlord under this lease, then the taxes so levied and assessed on the Rent shall be deemed to be Impositions and shall be payable by Tenant.
In addition to Tenant’s share of Impositions, Tenant shall pay, prior to the date due, to the appropriate taxing authority, any and all sales, excise and other taxes levied, imposed or assessed with respect to the operation of Tenant’s business and with respect to its inventory, furniture, fixtures, equipment and all leasehold improvements installed by Tenant, any prior tenant or by Landlord on behalf of Tenant. In no event shall Tenant have the right to contest Impositions absent Landlord’s prior written consent, which consent may be withheld or delayed in Landlord’s sole and absolute discretion.
(B) Insurance/Indemnity.
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The Landlord assumes no liability or responsibility whatsoever with respect to the conduct and operations of the business to be conducted within the Premises. The Landlord shall not be liable for any accident or injury to any person or persons or property in or about the Premises which are caused by any reason whatsoever, including, but not limited to the conduct and operations of said business, or by virtue of equipment or property owned or permitted in the Premises by the Tenant except when caused by Landlord’s gross negligence and then, only to the extent not covered under Tenant’s insurance. The Tenant agrees to indemnify and hold the Landlord, its agents, employees and lenders having liens against the Premises (“Indemnities”) from and against all liability, claims, suits, causes of action, demands, judgments, cost, interest and expenses (including also actual counsel fees and disbursements incurred in the defense thereof) to which any Indemnities may be subject or suffered, whatsoever by reason of any claim for, injury to, or death of, any person or persons or damage to or loss of property (including also any loss of use thereof) or otherwise, and arising from or in connection with the use by Tenant of, or from any work or anything whatsoever done by Tenant or any of its officers, directors, agents, contractors, employees, licensees or while within the Premises, invitees in any part of the Premises, during the Term of this Lease, or arising from any condition of the Premises due to or resulting from any default by Tenant in keeping observance or performance of any covenant or agreement contained in this Lease or from any fault or neglect of Tenant or any of its officers, directors, agents, contractors, employees, licensees or while within the Premises, invitees.
(ii) In order to assure the Indemnity referred to hereinabove, Tenant shall carry and keep in full force and effect at all times during the Term of this Lease, for the protection of Landlord and Tenant and naming both Landlord, Tenant and any Indemnities of Landlord as may exist from time to time or other parties as landlord may designate from time to time as parties insured, public liability insurance with limits for bodily injury or death of a least ONE MILLION DOLLARS ($1,000,000.00) for any one person or occurrence and at least THREE MILLION DOLLARS ($3,000,000.00) in the aggregate for any accident or number of persons, and on hundred percent (100%) actual replacement cost and extended coverage insurance for all risks, fire, casualty and Property damage covering the Premises, including, but not limited to the heating, air conditioning, water heater, water pump, plumbing (including sprinkler), electrical and mechanical systems serving the Premises and leasehold improvements (including those made by any prior tenant), lifts and auto/truck bays and Alterations, such policies to carry special endorsements covering against damage or loss by earthquake and against damage by water covered by so call flood insurance. All such policies shall, at Landlord’s election, name party as Landlord may designate as loss payee. In addition Tenant shall maintain rental interruption insurance sufficient to cover Rent payable under this Lease for no less than a one year period from and after the date of casualty throughout the Term naming Landlord or upon prior written notice, such other parties as Landlord may designate, as sole loss payee. In no event shall minimum amounts of coverage called for herein be less that the amount required by lenders having liens on the Premises. Copies of all such policies and/or certificates of insurance shall be furnished to Landlord upon request without undo delay.
(iii) Tenant shall obtain or cause to be obtained prior to commencement of any permitted alterations or other work, and keep in force during performance of the work, public liability and workmen compensation insurance to cover all contracts to be employed and covering Tenant, if Tenant elects to do any work itself The covering limits, form, and content of such policies shall be commercially reasonable and customary as reasonably determined by Landlord, but no event in amounts less than that required under applicable law. Tenant shall also, upon Landlord’s request, carry contract insurance or cause its contracts to post performance bonds. Before commencement of any works on the Premises, Tenant shall deliver certificates to Landlord showing such insurance and/or performance bonds to be in effect.
(IV) Tenant shall carry statutory workman compensation insurance covering its employees in, on and about the Premises. Copy of such policy and/or certificate of insurance shall be furnished to Landlord upon request without undo delay.
(v) A insurance policies required to be obtained by Tenant hereunder shall be issued by recognized and responsible insurance companies, having a “Best Insurance” rating of not less than A and a credit rating not less than XV and be qualified to do business in Maryland, and shall provide that such policies shall not be cancelled without thirty (30) days prior written notice to Landlord. Landlord shall be named as an additional insured and whenever designated by Landlord, as sole loss payee on all such policies, with the exception of the statutory
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workmen compensation coverage referred to herein and other casualty insurance carried by Tenant covering trade fixtures, equipment and inventory paid for and brought upon the premises by Tenant. Tenant shall deliver to Landlord at least once each Lease year, but so often as Landlord may request from time to time, a copy of all such insurance policies or a certificate thereof showing the same to be in full force and effect.
(vi) In the event Tenant shall fail to keep in force and maintain any such policy of insurance, Landlord shall have the right, at its option, and at the sole cost of Tenant, in addition to all other rights and remedies in the event of default, to purchase such policy or policies of insurance and to pay the premiums thereon. In such, event Tenant shall pay Landlord as Additional Rent an amount equal to Landlord’s cost of such insurance plus fifteen percent (15%) to cover Landlord’s administrative costs in procuring and administering such insurance, upon receipt of a written demand therefore.
(vii) Anything in this Lease to the contrary notwithstanding, the Tenant does hereby release the Landlord from any and all liability for any loss or damage to its property or Premises caused by fire or any of the other casualties covered by the risks included in insurance policies required to be carried by Tenant, including but not limited to Tenant’s general liability, extended coverage all risk, property damage, flood, earthquake and casualty insurance. This release is given notwithstanding that such liability casualty or loss shall have resulted from the negligence of Landlord or Tenant or their respective agents, employees, licenses, contractors or invites. Tenant agrees to cause it insurance policies covering the Premises and contents thereof to contain an appropriate endorsement whereby the insurer agrees that the insurance policy and coverage will not be invalidated by reason of the foregoing waiver of the right of recovery against the Landlord for loss occurring to the properties covered by such policy, and whereby such insurer also waives any right of subrogation against the Landlord and Tenant will, upon request, deliver to Landlord a certificate evidencing such waiver of subrogation by the insurer.
(viii) Anything in this Section 3 to the contrary notwithstanding, Landlord shall have the option, either alternatively or in combination with Tenant, to carry such casualty and property insurance covering the Premises, leasehold improvements, Alterations, and systems serving the Premises, including but not limited to the heating, air conditioning, water heater, water pump, plumbing (including sprinkler), electrical, and mechanical systems, Landlord may determine to be reasonable or necessary to protect its interests, and bill the cost of any insurance carried directly by Landlord to Tenant. Any premiums so billed by Landlord to Tenant shall be Additional Rent and payable within five (5) days of written demand.
4. Possession of Premises, TENANT’S Work.
Landlord delivers, and Tenant accepts the Premises “as is”. Tenant further acknowledges that is has fully inspected the Premises prior to the execution of this Lease and does hereby assume all of the risks, including but not limited to patent or latent defects as well as responsibility for all existing environmental conditions. Tenant further understands and agrees that Landlord shall be under no liability nor have any obligation to do any preoccupancy work or make any repairs in or to the Premises, except as otherwise expressly provided herein, any work which may be necessary to adapt the Premises for Tenant’s occupancy or for the operation of Tenant’s business therein (including any Alterations that may be necessary now or hereafter to effectuate compliance with any applicable laws), the sole responsibility therefore being that of Tenant and shall be performed by Tenant at its sole cost and expense.
5. Tenant’s Covenants:
Tenant hereby covenants as follows:
(A) Not to use Premises for any disorderly or unlawful purpose, nor for any purpose not expressly permitted pursuant to this Lease.
(B) To keep the Premises and approaches thereto, including parking areas, clean and free from trash and rubbish, to remove snow and ice from the adjacent sidewalks and any parking areas and loading areas which are a portion of the Premises, and to keep any show windows and signs neat, clean and in good order; and not to store any material or trash of any nature whatsoever on the exterior of the Premises, unless same is contained in covered dumpsters and not to store or dispose of any materials, except in accordance with all applicable laws. Tenant
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shall contract and arrange for, at Tenant’s expense, trash and materials removal at such intervals as are necessary to satisfy the requirements of this paragraph and applicable laws.
(C) Not to operate any machinery in the Premises which may cause excessive vibration or damage to the Premises, nor create any nuisance.
(D) To inspect all portions of the Premises, both interior and exterior and all machinery and equipment therein, so it may promptly detect the need for repairs to any thereof, to make such repairs as it is herein obligate to make.
(E) Not to place any loads or machinery or safes in the Premises in excess of the existing floor loads or utilize any equipment which would overload the Premises existing systems.
6. Use of Premises.
(A) Tenant hereby covenants and agrees the Premises shall not be used for any purpose other than for the following purposes: Retail and office use and automotive uses as allowed by law.
(B) Tenant, at its own expense, shall comply with and carry out promptly, all orders, requirements or conditions imposed by the ordinances, laws and regulations of the United States, Maryland and of all other governmental authorities having jurisdiction over the Premises or Tenant, which are occasioned by or required in the conduct of Tenant’s business in the Premises, including but not limited to all environmental laws and regulations now or hereafter promulgated relative thereto. Tenant shall further comply with the Americans with Disabilities Act of 1990 (ADA) and any amendment to ADA, as well as applicable state land local laws, regulations and ordinances regarding access to, employment of, and service to individuals covered by the ADA. The compliance with ADA will include, but not be limited to, the design, construction and Alterations of the Premises. Tenant will indemnify Landlord and save it harmless from all penalties, claims and demands, resulting from any noncompliance. Tenant shall be responsible for obtaining and shall promptly obtain at its sole cost and expense all licenses, permits, certificates of occupancy, variances, special exceptions or any other permission necessary for its use, occupancy, repairs and subject to Section 8, signs, and subject to Section 9, Alterations of the Premises by Tenant as contemplated herein.
(C) Tenant shall not suffer or permit the Premises or any portion thereof to be used by the public without restriction or in such a manner as might reasonably tend to impair Landlord’s title to the Premises, or any portion thereof, or in such manner as might reasonably make possible a claim of adverse usage or adverse possession by the public, as such or of implied dedication of the Premises or any portion thereof Tenant hereby expressly recognizes that in no event shall it be deemed the agent of Landlord, and no contractor of Tenant shall by virtue of its contract be entitle to assert any lien against the Premises or Landlord’s interest therein.
7. Repairs, Maintenance.
(A) Landlord shall, subject to the need therefore not being caused in whole or part by the negligent or willful acts or omission of Tenant, its agents, employees, contractors or assigns, and subject to the aggregate cost thereof over the term not exceeding two (2) months of the then current Rent, maintain the exterior, structural walls, and foundations of the building except for alterations and improvements made by Tenant affecting the foregoing, which shall be Tenant’s responsibility to maintain and repair. Tenant shall throughout the Term, at no cost or expense to Landlord, make all other necessary repairs to the interior and exterior of the Premises, including, without limitation, the roof, the plumbing, the parking lot, mechanical and electrical systems serving the Premises. Tenant shall, in addition, at no cost or expense to Landlord, maintain the Premises, and all fixtures, equipment, Alternations and improvements installed or made by Tenant, by Landlord or any prior tenants contained therein, including, but not limited to, heating, air conditioning, water heater, water pump, plumbing (including sprinkler system), electrical and mechanical systems, in at least as good repair order and condition as the same are in on the Lease Commencement Date or date installed by Tenant, reasonable wear and tear and loss by fire or other casualty (to the extent this Lease is terminated pursuant to Section 21 and insurance proceeds sufficient to replace the same are paid to Landlord or its designee or unless Landlord elects, pursuant to Section 21, to restore the Premises), and promptly at no cost or expense to Landlord, shall make or cause to be made, all necessary repairs, interior and exterior, structural and non structural, foreseen as well as unforeseen. Tenant, at its
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own cost and expense shall also keep, maintain and repair all sideways, driveways, ground (including lawn care) and parking areas in a clean, neat and orderly condition and shall remove all snow and ice therefrom.
(B) All personal property of the Tenant in the Premises shall be there at the sole risk of the Tenant. Landlord shall not be liable for any accident or damage to the property of Tenant resulting from any reason whatsoever. Tenant hereby expressly releases Landlord from liability incurred or claimed by reason of damage therefrom.
8. Signs and Personal Property
Tenant agrees that no sign, awning, advertisement or notice shall be inscribed, affixed or displayed on any part of the Premises, except if first approved by Landlord, which approval will not be unreasonably withheld, conditioned or delayed. Such signage shall further be subject to all requirements and regulations of applicable governmental authorities having jurisdiction over the installation, placement and appearance of signs. Existing signs are deemed approved.
9. Alterations
(A) Tenant shall not make alterations, installations, changes, replacements, additions or improvements in or to the Premises or any part thereof (“Alterations”), or delay its consent with respect to same, provided such work shall be non structural and provided further that such work shall not affect any of the mechanical, electrical or other systems servicing the building, and provided further, that Landlord shall have received plans and specifications in a form and detail satisfactory to Landlord of any such proposed Alterations, installations, changes, replacements, additions or improvements. Tenant agrees to provide Landlord with the name of any proposed contractors of Tenant, certificates of liability insurance maintained by such contractors in amounts acceptable to Landlord, and copies of all plans for such improvements at the time request for Landlord’s approval is made by Tenant. Tenant shall provide Landlord with a copy of all requisite permits prior to commencement of any such work as its sole expense. All of Tenant’s aforesaid Alterations shall be performed in a good and workman like manner and in compliance with all applicable laws, codes, rules and ordinances. Landlord may at its option and discretion require Tenant at Tenant’s expense, to repair any damage to the Premises caused by either the removal or installation of aforesaid Alterations, or the removal or installation of any of Tenant’s equipment or fixtures that are removable, and Tenant will promptly comply with such directions. In addition to all legal, equitable and other rights and remedies available to Landlord, it is agreed that if Tenant, after receipt of written notice and failure to cure same within ten (10) days, does not comply with its obligations under this Section the Landlord shall have the right (but not the obligation) to perform or cause to be performed Tenant’s obligations, duties and covenants under this Section or any other provisions of this Lease, in which event Tenant shall reimburse to Landlord upon written demand all costs incurred by Landlord as a result thereof, plus fifteen percent (15%) to cover Landlord’s administrative costs.
(B) Tenant shall have no authority to incur any debt or to make any charge against Landlord, or to create any lien upon the Premises for any work or materials furnished for the same, and if any such lien should be filed against the Premises on account of work done to or labor or materials furnished on the Premises at Tenant’s request (whether or not Tenant obtained Landlord’s approval), Tenant shall have a period of thirty (30) days or such shorter period as required by law or Landlord’s lenders having liens against the Premises from the date notice of such lien is brought to attention to pay off said lien and have the same discharged of record, or if Tenant disputes such lien or the amount thereof, to post with the court having appropriate jurisdiction adequate bond required to release said lien of record. If Tenant shall fail to cause such lien to be so discharged or bonded within the time prescribed above, then, in addition to any other right or remedy of Landlord, Landlord may bond or discharge the same by paying the amount claimed to be due the amount so paid by Landlord, plus fifteen percent (15%) to cover Landlord’s administrative costs, plus Landlord’s actual attorney’s fees in either defending or procuring discharge of such lien, together with interest thereon at the Default Rate shall be due and payable by Tenant to Landlord as additional Rent, upon demand.
(C) All existing leasehold improvements, alterations and other additions or installations made to or within the Premises shall be Landlord’s property upon installation and shall not be removed from the Premises. Notwithstanding the foregoing, upon the expiration or earlier termination of the Lease, Tenant shall at Tenant’s expense, remove any of the foregoing items (except Alterations made with Landlord’s consent, where at the time
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of consent Landlord does not specify that the same will need to be removed upon expiration or earlier termination of the Lease) from the Premises if Landlord gives Tenant written notices to do so. Tenant shall promptly repair or, at Landlord’s election reimburse Landlord for the cost of repairing all damage done to the Premises by such removal.
10. Assignment and Subletting.
Tenant acknowledges that Landlord has entered into this Lease based on the financial creditworthiness and business reputation of Tenant and that such was a material inducement to Landlord’s entering into Lease. Accordingly, Tenant shall not, either directly, or indirectly, or by operation of law or by merger, reorganization or otherwise:
(a) assign, mortgage, pledge, encumber or otherwise transfer this Lease, the Term and estate hereby granted or any interest hereunder;
(b) permit the Premises or any part to be utilized by anyone other than Tenant or
(c) sublet or hypothecate (all of which be hereafter referred to as a “Transfer”) the Premises or any part thereof without obtaining in each instance, Landlord’s written consent, which may be withheld, conditioned or delayed in Landlord’s sole and absolute discretion. The transfer of any ownership interest in Tenant so as result in a change of control by way of merger, sale, reorganization, transfer of stock (except with respect to transfer of stock which is listed on a “National Securities Exchange” as defined in the Securities Exchange Act of 1934), sale of assets, appointment of a receiver or take-over by governmental authorities or otherwise shall be deemed a prohibited Transfer requiring Landlord’s consent. Transfer of Tenant’s right to occupy or use all or any portion of the Premises made without Landlord’s consent shall be null and void and confer no rights upon any third person. The consent by Landlord to any Transfer of Tenant’s rights hereunder shall not constitute a waiver of the necessity for such consent to any subsequent attempted Transfer. Receipt by Landlord or Rent due hereunder from any party other than Tenant shall not be deemed to be a consent to any such Transfer, nor relieve Tenant of its obligating to pay Rent for the full Tern of this Lease, Tenant shall have no claim and hereby waives the right to make claim against Landlord to damages by reason of refusal, withholding or delaying by Landlord of consent to a requested Transfer. Tenant agrees at the time of requesting Landlord’s consent to pay to Landlord an amount equal to Two Thousand and 00/100 Dollars ($2,000.00) to cover Landlord’s attorney fees and administrative expense for the review, processing or preparation of any document in connection with a permitted Transfer, such payment to be made in consideration of Landlord’s review and independent of and regardless as to whether or not Landlord’s consent is granted.
11. Examination of Premises.
After reasonable advance notice, except in cases of an emergency, Tenant shall allow Landlord and its agents reasonable access to the Premises during all reasonable hours for the purpose of examining the same to ascertain and determine if the Premises are in good repair and condition and for making repairs required of Landlord hereunder. Landlord’s access shall in no event constitute an eviction in whole or in part of Tenant and in no event shall such access give rise to any claim of disrupted use, breach of quiet enjoyment nor shall such access in any way affect or alter Tenant’s obligation to pay Rent as and when provided herein. Landlord may exhibit the Premises to prospective purchasers at anytime during the Term hereof and to prospective tenants during the last twelve (12) months of the Term. Landlord, during the last twelve (12) months of the Term, or any time Tenant shall be in default of its obligations hereunder, shall have the right to post For Rent signs on the Premises.
12. Subordination/Attornment.
Tenant agrees that this Lease shall be subject and subordinate to the lien or liens of any mortgages, deed or deeds of trust, or other security interests (collectively the “Interest”) that may now or may hereafter be placed against the Premises and that this clause shall be self operating. Notwithstanding the fact that this clause is self-operating, if Landlord requests, Tenant shall execute any instruments, releases or other documents that may be required for the purpose of confirming that this Lease, and Tenant’s interest is subject and subordinate to the lien of any Interest, whether original or substituted. Tenant covenants and agrees in the event any proceedings are brought
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for the foreclosure of any such mortgage or deed of trust, to return to the purchaser upon any such foreclosure sale and to recognize such foreclosure sale and to recognize such purchaser as the Landlord under this Lease and that upon failure to do so within ten (10) days of demand, Landlord shall be deemed and designated by Tenant as its Attorney-In-Fact, such to be coupled with an interest, with full authority to execute any instruments required of Tenant under this Lease. Tenant further waives the provisions of any statute or rule of law, now or hereafter in effect, which may give or purport to give Tenant any right or election to terminate or otherwise adversely affect this Lease and the obligations of Tenant hereunder in the event any such foreclosure proceedings is brought.
13. Insolvency or Bankruptcy of Tenant.
If at any time prior to the Commencement Date of this Lease, or any time during the term hereby demised, there shall be filed by or against Tenant in any court pursuant to any statute either of the United States or of any state a petition in bankruptcy or insolvency or for reorganization or for the appointment of a receiver or trustee of all or a portion of Tenants property, and if within thirty (30) days hereof Tenant fails to secure a discharge thereof, or if Tenant makes an assignment for the benefit of creditors, or petitions for or enters into a plan under the Bankruptcy Code (as defined below), this Lease, at the option of Landlord, may be cancelled and terminated by notice of cancellation to Tenant effective three (3) days thereafter, in which event neither Tenant nor Guarantor nor any person claiming through or under Tenant or Guarantor by virtue of any statute or of an order of any court shall be entitled to possession, or to remain in possession of the Premises, and Landlord, in addition to the other rights and remedies Landlord has by virtue of any other provision herein or elsewhere in this Lease contained or by virtue of any statue or rule of law may retain as liquidate damages any Rent, security, deposit or monies received by Landlord from Tenant or others in behalf of Tenant. If Tenant becomes a debtor within the meaning of the Bankruptcy Reform act of 1978, as the same may from time to time be amended (“Bankruptcy Code”) and notwithstanding any other provisions of this Lease, this Lease and Landlord’s and Tenant’s rights are then made subject to such Bankruptcy Code, it is covenanted and agreed that the failure of Tenant or its representative appointed in accordance with said Bankruptcy Code to furnish accurate information and adequate assurances as to the source of Rent and other consideration due under this Lease, or conduct or have conducted at the Premises Tenant’s business as provided in Section 6 hereof, shall in any case each be deemed a default under this Section 20, and Landlord shall have all rights and remedies herein afforded to it in the event of any default by Tenant under this Lease. Tenant’s interest in this Lease shall not pass to any trustee or receiver or assignee for the benefit of creditors or operation of law except as may be specially provided by the Bankruptcy Code.
14. Default.
(A) In event that:
(i) Tenant shall fail to pay when due any payment of the Rent payable by Tenant hereunder and such failure shall continue for a period of five (5) days following receipt by Tenant of written notice thereof (such notice only being required once in any twelve month period) or
(ii) Tenant shall violate any other term, covenant or condition of this Lease or neglect or fail to perform or to observe any of the other terms, conditions or covenants herein contained on Tenant’s part to be performed or observed and Tenant shall fail to remedy the same within fifteen (15) days of written notice thereof from Landlord, provided however, that if cure is not reasonably possible within the aforesaid fifteen (15) day period, then, in such event, Tenant shall be afforded an additional reasonable time within to effectuate cure or
(iii) in the event that this Lease or the Premises or any part thereof shall be taken upon execution or by other process of law directed against Tenant, or shall be taken upon or subject to any attachment at the instance of any creditor of or claimant against Tenant, or taken over by governmental authority or otherwise breach Section 13 above; or
(iv) if Tenant shall abandon, vacate or desert the Premises, or fail to operate the Premises from the purposes provided in Section 6 thereof, or
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(v) Tenant shall, except as expressly otherwise permitted herein, Transfer its interest in this Lease, then in any one or more of such events, Tenant shall be in default of the Lease and Landlord shall have the right, as its option, in addition to any other rights and remedies set forth in this Lease or provided at law or in equity either:
(1.) To terminate this Lease and if the event of default is not so cured, Tenant’s right to possession of the Premises shall cease and the Lease shall thereupon be terminated; or
(ii.) With or without notice to re-enter and take possession of the Premises without terminating the Lease, or any part thereof, and repossess the same as Landlord’s former estate and expel the Tenant and those claiming through or under Tenant, and remove the effects of both or higher, (forcibly, if necessary), and the Landlord shall have the right, without further notice or demand, to take the action and do the things aforesaid without being deemed guilty of any manner of trespass and without prejudice to any remedies for arrears of rent or preceding breach of contract, it being expressly understood that if the Landlord elects to re-enter, Landlord may terminate this Lease, or from time to time, without terminating the Lease, may relet the Premises, or any part thereof, for such terms and rental or rentals and upon such other terms and conditions as Landlord may deem advisable, with the right to make such Alterations and repairs and grant such rental concessions to prospective tenants of the Premises at Tenant’s expense, as Landlord in its sole business judgment believes reasonably necessary in connection with securing another tenant. No such re-entry or taking of possession of the Premises by Landlord shall be construed as an election on Landlord’s part to terminate this Lease unless a written notice of such intention is given to Tenant or unless the termination hereof be decreed by court of competent jurisdiction. In no event shall Landlord be obligated to relet the Premises or mitigate damages, it being understood that the failure to relet or mitigate shall in no event reduce Landlord’s entitlement to Basic Rent, Percentage Rent, Additional Rent and other sums payable under this Lease throughout the Term.
(3.) In no event shall Landlord be obligated to provide notice of default more often than once in a twelve (12) month period, it being understood that Landlord may exercise its rights under this Lease in the event of default without notice if a notice of default has previously been given during the immediately preceding twelve (12) month period; or
(4.) In the event of any such termination, Tenant shall nevertheless pay the Rent and all other sums as herein provided up to the time of such termination, and thereafter, Tenant, until the end of what would have been the term of this Lease in the absence of such termination, and whether or not the Premises shall have been relet, shall be liable to Landlord for and shall pay to Landlord, as liquidated current damages, an amount equal to:
(i) The Rent and all sums as hereinbefore provided which would otherwise be payable hereunder if such termination had not occurred, less the net proceeds, if any, of reletting of the Premises after deducting all of the Landlord’s expenses in connection in with such reletting, including without limitation, all repossession costs, brokerage commissions, legal expenses including actual attorney’s fees, expenses of employees, alteration and remodeling costs, and expenses of preparation for such reletting; or
(ii) The present value of the Rent and all other sums as herein before provided which would otherwise be payable hereunder if such termination had not occurred, discounted at an interest rate equal to the Prime Rate of interest as published in the Wall Street Journal as of the date of default, Tenant shall pay such liquidated current damages on the days on which the Basic Rent would have been payable hereunder if this Lease had not been terminate or at Landlord’s election, shall pay such amount to Landlord by lump sum, upon demand. If this Lease shall be terminated as aforesaid, Landlord may but shall not be obligated to relet the Premises or any part thereof, for the account and benefit of Tenant, for such terms and to such person or persons and for such period or periods as Landlord may determine and any such sums received shall be applied first against all of the Landlord’s expenses in connection with such reletting, including without limitation, all repossession costs, brokerage commissions, legal expenses including actual attorney’s fees, expenses of employees, alteration and remodeling costs, and expenses of preparation for such reletting, and then against damages occasioned by Tenant’s default. The acceptance of a tenant by Landlord in place of Tenant shall not operate as a release of Tenant from the performance of any covenant, promise or agreement herein contained, and the performance of any substitute tenant by the payment of Rent, or otherwise, shall not constitute satisfaction of the obligations of Tenant arising hereunder. Any damages or deficiencies, at the option of Landlord, may be recovered by Landlord in separate actions, from time to time, as Tenant’s obligations for payment would have accrued if the Term had continued, or
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from time to time as said damages or deficiencies shall have been made more easily ascertainable by reletting of the Premises, or any such action by Landlord may, at the option of Landlord, be deferred until the expiration of the Term or may be accelerated and immediately due and payable.
(B) Tenant hereby expressly waives any provision of law now in force or which hereafter may be enacted giving Tenant the right under any condition after default to the redemption and repossession of the Premises or any part thereof
(C) Unless otherwise agreed to by the parties in writing, no payment by Tenant or receipt by Landlord of a lesser amount than the installments of Rent herein stipulated shall be deemed to be other than on account of the earliest stipulated Rent, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as Rent be deemed an accord and satisfaction, and the Landlord may accept such check or payment without prejudice to the Landlord’s right to recover the balance of such Rent or pursue any other remedy.
(D) In addition to and not in limitation of the other remedies provided in this Lease, the Landlord shall be entitled to the restraint by injunction of any violation or attempted or threatened violation of any of the terms, covenants, conditions, provisions or agreements of this Lease.
(E) If Tenant shall default in the performance of any covenant on its part to be performed by virtue of any provision of this Lease, and if in connection with the enforcement of its rights or remedies, Landlord shall incur fees and expenses for services rendered (including without limitation, reasonable attorney’s (fees), then such fees and expenses shall be immediately reimbursed by Tenant to Landlord on demand. In the event Landlord shall file any legal action for the collection of Rent or any eviction proceeding, whether summary or otherwise, for the non payment of Rent, and Tenant shall make payment of such Rent due payable prior to the rendering of any judgment, then Landlord shall be entitled to collect, and Tenant shall be obligated to pay, in addition to all Rent due (including the late charges provided for above), all court filing fees and actual legal fees of Landlord.
(F) The remedies of Landlord provided for in this Lease are cumulative and are not intended to be exclusive of other remedies to which Landlord may be lawfully entitled. The exercise by Landlord of any remedy to which it is entitle shall not preclude or hinder the exercise of any other such remedy, nor constitute an election of remedies.
15. Effect of Waiver.
If, under the provisions of this Lease, summons or other notice shall, at any time, be served upon Tenant by Landlord and a compromise or settlement shall be effected either before or after judgement or decree, whereby Tenant shall be allowed or permitted to retain possession of the Premises, the same shall not constitute a waiver of any covenant or agreement herein contained, or of this Lease itself except to the set forth in such comprise or settlement. No waiver by Landlord or Tenant of any breach of agreement herein contained shall be construed to be a waiver of the covenant itself or of any subsequent breach thereof. No re-entry by Landlord and no acceptance by Landlord of keys from Tenant shall be considered an acceptance of a surrender of the Lease.
16. Estoppel Certificates.
Landlord and Tenant agree at any time and from time to time, upon not less than ten (10) days prior written notice by the other, to execute, acknowledge and deliver to the other party a statement in writing certifying
(1) that this Lease is unmodified and in full force and effect (or if there have been modifications, that the Lease is in full force and effect as modified and stating the modification),
(ii) the date to which the Rent hereunder has been paid by Tenant,
(iii) whether or not to the knowledge of the party giving such estoppel, Landlord or Tenant are in default in the performance of any covenant, agreement or condition contained in Lease, and, if so, specifying each such default of which such party may have knowledge, and
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(iv) the address to which notices to such party should be sent, and
(v) such other matters as Landlord may require. Any such statement delivered pursuant hereto may be replied upon by Landlord, Tenant any other prospective tenant or purchaser, any owner of the Premises, any mortgagee or prospective mortgagee of the Premises or of Landlord’s interest therein, or any prospective assignee of any such interest.
17. Eminent Domain.
Tenant agrees that if the Building, or so much of the Premises so as impair Tenant’s use of the Premises, shall be taken or condemned for public or quasi-public use or purpose by any competent authority, Tenant shall have no claim against the Landlord and shall not have any claim or right to any portion of the amount that may be awarded as damages or paid as a result of any such condemnation; and all rights of the Tenant to damages therefore, if any, are hereby assigned by the Tenant to the Landlord. Upon any condemnation or taking, affecting the whole or any substantial part of the Premises as provided above, the Term of this Lease shall cease and terminate unless the parties otherwise agree in writing. The Tenant shall have no claim for the value of any unexpected Term of this Lease. If less than the whole of the Building or substantial part of the Premises is taken or condemned by any governmental authority for any public or quasi-public use or purpose, and in the event neither Landlord not Tenant shall desire to terminate this Lease, then and in such event the Basic Rent shall be equitably adjusted on the date when title vests in such governmental authority and the Lease shall otherwise continue in full force and effect. For purposes of this Section, a substained part of the Building shall be considered to have been taken if twenty five percent (25%) or more is taken. A substained portion of the Premises shall be deemed taken if more than twenty twenty five percent (25%) of the areas of available for parking are taken. Notwithstanding anything to the contrary contained herein. Tenant shall be entitled to pursue a separate claim for the value or Tenant’s furnishings, equipment, movable trade fixtures which are not deemed pursuant to this Lease to be Landlord’s property and then only to the extent paid for by Tenant and provided such claim shall in no manner diminish the award or other compensation to which Landlord would otherwise be entitled.
18. Quiet-Enjoyment.
Subject to the rights reserved to Landlord herein, Landlord covenants the if Tenant shall not be in default hereunder (after the expiration of any notice and cure period). Tenant shall at all times peaceably and quietly have, hold and enjoy the Premises in accordance with the terms and conditions of this Lease, without any interruption from Landlord or any other person claiming through or under Landlord.
19. Notices
Until further notice by either party to the other, in writing, all notice or communications required or permitted hereunder shall be sent by registered or certified mail, return receipt requested, (a) If to Landlord, addressed to:
F & J Properties
P.O. Box 428
Savage, Maryland 20763
(b) If to Tenant, addressed to:
Mr. Tire, Inc.
P.O. Box 428
Savage, Maryland 20763
20. Tenant Holdover
This Lease shall expire, without notice by either part to the other at midnight of the last day of the Term. If Tenant shall not immediately surrender possession of the Premises at the termination of this Lease, Tenant, at Landlord’s election, shall become either a Tenant at sufferance, or Tenant from month to month, Landlord
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expressly reserving the right to terminate such tenancy and reenter and take possession of the Premises with or without notice or process. Tenant hereby promises and represents that it will promptly surrender the Premises, in accordance with the terms and conditions of this Lease, and hereby acknowledges that such promise is a material inducement to Landlord to enter into this Lease Agreement. Tenant further agrees to indemnify and hold Landlord harmless from and against any and all claims or liability, to any part whatsoever, occasioned from and by Tenant’s holding over, including any actual attorney’s fee or other costs associated therewith. In the event Tenant shall holdover subsequent to the expiration of the Term or any renewal term of this Lease, Landlord shall in lieu of Rent, be entitled to demand and receive from Tenant monthly use and occupancy payments for each month in which Tenant shall holdover subsequent to the expiration of the term of Lease, in an amount equal to twice the Basic Rent during the last month of the term of this Lease, plus any and all Additional Rent or other charges due under this Lease. Each such use and occupancy payment shall be due on or before the first day of each calendar month in which Tenant shall holdover hereunder. In no event shall Landlord’s demand or acceptance of such use and occupancy payments be considered to constitute an acquiescence by Landlord to the extension of the Term hereof, and Landlord shall be entitled to obtain immediate possession of the Premises irrespective of any such demand or acceptance. In the event Tenant shall pay monthly use and occupancy payments for any calendar month following expiration of the Term hereof such payment shall be prorated upon Tenant’s surrender of full and exclusive possession of the Premises to the Landlord, free of any and all other parties claiming through or under the Tenant.
21. Damage by Casualty.
(A) Tenant shall give prompt notice to Landlord in case of any fire or other damage or casualty to the Premises or the Building. If
(i) the Building shall be damaged to the extent that in Landlord’s reasonable judgment, repairing such damage or destruction would not be economically feasible;
(ii) the Building shall be damaged as a result of a risk which is not covered or any portion thereof shall require that the insurance proceeds under the policies referred to in Section 3. (B) hereof be used for other than repairing, replacing and rebuilding such damage, then in any event Landlord may terminate this Lease by notice given within ninety (90) days after such event. In the event this Lease is terminated as provided above in this Section 21: (i) the entire proceeds of the insurance provided for in Section 3. (B) hereof shall be paid by the insurance company or companies directly to Landlord and shall belong to, and be the sole property of, Landlord; (1) the portion of proceeds of the insurance provided for in Section 3. (B) which is insuring equipment, fixtures and other items, which by the terms of the Lease, belong to the Landlord by whatever cause shall be paid by the insurance company or companies directly to Landlord, and shall belong to, and be the sole property of, Landlord”
(iii) Tenant shall immediately vacate the Premises in accordance with this Lease
(iv) all Rent shall be apportioned and paid to the date on which possession is relinquished or the date of such damage, whichever last occurs; and
(v) Landlord and Tenant shall be relieved from any and all further liability or last obligation hereunder except as expressly provided in this Lease. Tenant hereby waives any and all rights to terminate this Lease that it may have, by reason of damage to the Premises by fire, flood, earthquake or other casualty, pursuant to any presently existing or hereafter enacted statute or pursuant to any other law.
(B) If all or any portion of the Building is damaged by fire, flood, earthquake or other casualty and this Lease is not terminated in accordance with the provisions of Section 21 (A), then all insurance proceeds under the policies referred to in Section 3 (B) hereof that are recovered on account of any such damage by fire or casualty shall be made available for the payment of the cost of repair, replacing and rebuilding and as soon as practicable after such damage occurs Landlord shall, using the proceeds provided for by Section 3 (B) hereof, repair or rebuild the Building and other portions of the Premises or such portion hereof to its condition immediately prior to such occurrence to the extent the cost therefore is fully funded by insurance proceeds. Alternatively, at Landlord’s option, Landlord may require that Tenant perform such repairs, in which case, Landlord shall make available to Tenant, insurance proceeds received by Landlord-In no event shall be obligated to repair or replace Tenant’s
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movable trade fixtures or other personal property. In addition, Tenant shall, using the remaining proceeds of the insurance proceeds from policies provided for in Section 3 (B) hereof, repair, restore and replace Tenant’s movable trade fixtures, personalty and equipment. If the aforesaid insurance proceeds under the insurance provided for in Section 3 (B) hereof shall be less the cost of repairing or replacing Tenant’s movable trade fixtures, equipment and personalty, or other items required to be insured by Tenant pursuant to Section 3 (B) hereof, Tenant shall pay the entire excess cost thereof, and if such insurance proceeds shall be greater than the cost of such repair, restoration, replacement or building, the excess proceeds shall belong to, and be the property of Tenant.
(C) In the event of any repair or rebuilding pursuant to the provisions of Section 21 hereof, then only to the extent Landlord receives rental insurance proceeds equal to the Rent due during the period the Building and other portions of the Premises are undergoing repairs and Tenant’s use is precluded, there shall be abated an equitable portion of the Basic Rent during the existence of such damage, based upon the portion of the Premises which is rendered untenantable and the duration thereof Landlord shall not be liable or obligated to tenant to any extent whatsoever by reason of any fire or other casualty damage to the Premises, or any damages suffered by Tenant by reason thereof, or the deprivation of Tenant’s possession of all or any of the Premises.
22. Jury Trial Waiver.
Landlord and Tenant hereby waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other one in respect of any matter whatsoever arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant hereunder, Tenant’s use OF occupancy of the Premises, and/or claim of injury or damage. Tenant acknowledges that the waiver of jury trial has been reviewed with counsel and is an acceptable and material business term of this Lease.
23. General Provisions.
(A) Nothing in this Lease shall be deemed or construed in any way as constituting the consent or request of Landlord, expressed or implied, by inference or otherwise to any contractor, subcontractor, laborer or materials for the performance of any labor or the furnishing of any materials for any specific improvement, alteration or repair of the Premises or any part thereof.
(B) Nothing herein contained shall in any way be considered or construed as creating the legal relation of a partnership or joint venture between Landlord and Tenant, it being expressly understood and agreed by the parties hereto that the relationship between the parties shall be one of Landlord and Tenant.
(C) It is further and agreed that the covenants, agreements and conditions shall be binding upon the Landlord and Tenant, as we as their respective, heirs, executors, administrators, successors and permitted assigns.
(D) This Lease shall be governed and construed in accordance with the laws of the State of Maryland.
(E) If any covenants or agreements of this Lease or the application thereof to any person or circumstances shall be held to be invalid or unenforceable, then, and in each such event, the remainder of this Lease or the application on such covenant or agreement to any other person or any other circumstances shall not be thereby affected, and each covenant and agreement hereof shall remain valid and enforceable to the fullest extent permitted by law.
(F) Upon the request of Landlord, Tenant shall execute and deliver a memorandum of Lease or short form Lease suitable for recording. In no event shall Tenant record this Lease or any short form Lease without Landlord’s written consent, such consent to be withheld, conditioned or delayed in Landlord’s sole and absolute discretion.
(G) In the event that any mortgage providing financing on the Premises requires, as a condition of such financing, that modifications to the Lease be Obtained, and provided that such modifications
(1) Do not increase the Rent and other sums due hereunder, or
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(ii) Constitute a no material change any substantive rights, obligations or liabilities of Tenant under this Lease, then Landlord may submit to Tenant a written amendment to this Lease incorporating such changes, and if Tenant does not execute and return such written amendment within ten (10) days after the same has been submitted to Tenant, then Landlord shall thereafter have the right at it sole option, to immediately cancel and terminate this Lease or to exercise its powers as attorney-in-fact, pursuant to Section 23 (O) below.
(H) Any obligation arising during the Term of this Lease under any provision herein contained, which would by its nature require the Tenant to take certain action after the expiration of the termination of this Lease to fully comply with the obligation arising during the Term, shall be deemed to survive the expiration of the Term or other termination of this Lease to the extent of requiring any such action to be performed after the expiration of the Term which is necessary to fully perform the obligation that erode during the Term of this Lease.
(I) The captions and headings throughout this Lease are for convenience and reference only, and the words contained in such captions shall in no way be held or deemed to meaning of any provision of this Lease.
(J) Words of any gender used in this Lease shall be held to include any other gender, and words in the singular number shall be held to include the plural and words in the plural shall be held to include the singular, when the sense so requires.
(K) Further, if the holder of a mortgage or deed of trust which includes the Premises, notifies the Tenant that such holder has taken over the Landlord’s rights under this Lease, Tenant shall not assert any right to deduct the cost of repairs or any monetary claim against the Landlord from Rent thereafter due and payable, but shall look solely to the Landlord’s interest in the Premises for satisfaction of such claim.
(L) By its entry into this Lease the Tenant represents and acknowledges to the Landlord that the Tenant has satisfied itself as to the use which it is permitted to make of the Premises and has inspected the Premises and confirms that the same are acceptable to Tenant, Tenant further acknowledges that Landlord has made no representations, warranties or covenants to Tenant except as expressly provided herein.
(M) No diminution or shutting off light, air or view by any structure that may be erected on the Premises or on any adjacent or nearby properties shall in any manner affect this Lease or obligations of Tenant hereunder.
(N) Time is of the essence with respect to the performance of Tenant’s obligations hereunder, including, but not limited to the obligation to pay Basic Rent, Percentage Rent, Additional Rent and other sums due hereunder.
(O) In the event Tenant shall fail or refuse to execute and deliver to Landlord any document or instrument which may be required under the terms of this Lease within ten (10) days after Landlord’s written request therefore, Tenant hereby irrevocably appoints Landlord as Attorney-In-Fact for Tenant, such appointment being coupled with an interest, with full power and authority to execute and deliver such documents or instruments for and in the name of Tenant.
24. Brokers.
The respective parties certify that no person or company provided services as a broker, agent, finder or assisted in the negotiations of this Agreement. Each party agrees to indemnify the other for any claim asserted by any person or company purporting to act on its behalf in providing services as a broker, agent or finder, in connection with this Agreement.
25. Entire Agreement.
It is understood and agreed by and between the parties hereto that this Lease and the Exhibits attached hereto contain the final and entire agreement between the said parties and they shall not be bound by any terms, statements, conditions or representations, oral or written, not herein contained.
26. Landlord’s Liability.
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If the Landlord shall sell, convey or otherwise dispose of its interest in the Premises, then the undersigned Landlord shall be deemed to be released of all obligations hereunder arising from the date of such transfer, and the transferee shall be deemed to be the Landlord hereunder for all purposes hereunder. Anything contained in this Lease or as provided at law to the contrary notwithstanding. Tenant acknowledges that as an express condition to Landlord’s entering into this Lease, Tenant agrees that Landlord, its agents, officers, employees and assigns shall have no personal liability nor shall any of them be subject to monetary claim of any kind or nature. In the event of a breach or default by Landlord, Tenant shall have no right to consequential damages, claims for loss sales or profits or the like, any and all such claims being expressly waived as a material inducement to Landlord’s entering into this Lease. Moreover, in the event of a breach or default by Landlord of any of its obligations under this Lease, Tenant acknowledges and agrees that its sole remedy shall be limited to an action for specific performance and even then, only to the extent the cost of such performance is less than two (2) months Rent, any amounts to effect specific performance over and above such sum being Tenant’s responsibility, being a negotiated condition of this Lease that Landlord’s aggregate cost of repairs under Section 7 shall never exceed over the Term the sum of two (2) months then current Rent. The provisions hereof shall insure to Landlord’s successors and assigns.
27. Force Majeure.
Each party shall be excused from performing any obligation or under takings provided for in this Lease for so long as such performance is prevented or delayed, retarded or hindered by act of God, fire, earthquake, flood, explosion, action of the elements, war, invasion, insurrection, riot, mob violation, sabotage, inability to procure or general shortage of labor, equipment, facilities, materials or supplies in the open market, failure of transportation, strike, lockout, action of labor unions, condemnation, laws, order of government or civil or military or naval authorities, or any other cause, whether similar or dissimilar to the foregoing, not within the reasonable control of the party prevented, retarded, or hindered thereby, including reasonable delays for adjustments of insurance. Anything contained herein to the contrary notwithstanding, Tenant’s obligation to pay Basic Rent, Additional Rent, or other charges due under the applicable provisions of the Lease, shall not be excused by reason of any of the foregoing events.
28. Modification.
This Lease cannot be changed or terminated orally. Any agreement hereafter made shall be ineffective to change, modify or discharge this Lease in whole or in part, unless such agreement is in writing and signed by the party against whom enforcement of the change, modification or discharge is sought.
29. Hazardous Material.
The term “Hazardous Material” as used in this Lease shall mean any product, substance, chemical, material or waste whose presence, nature, quantity and/or intensity of existence, use, manufacture, disposal, transportation, spill, release or effect, either by itself or in combination with other materials expected to be on the Premises, is either:
(i) Potentially injurious to the public health, safety or welfare, the environment or the Premises,
(ii) Regulated or monitored by any government authority, or
(iii) A basis for liability of Landlord or Tenant or any occupant of the Premises to any governmental agency or third party under applicable statute or common law theory. Hazardous Materials shall include, but not be limited to, hydrocarbons, petroleum, gasoline, crude oil or any products, by-products or fractions thereof Tenant shall not engage in any activity in, on or about the Premises which constitutes a Reportable Use (as hereinafter defined) of Hazardous Materials without the express prior written consent of Landlord and compliance in a timely manner (at Tenant’s sole cost and expenses) with all applicable law. “Reportable Use” shall mean
(1) The installation or use of any above or below ground storage tank
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(ii) The generation, possession, storage, use, transportation, or disposal of Hazardous Materials. Reportable Use shall also include Tenant being responsible for the presence in, on or about the Premises of Hazardous Materials with respect to which any applicable law requires that a notice be given to persons entering or occupying the Premises or neighboring properties. Notwithstanding the foregoing, Tenant may, without Landlord’s prior consent, but in compliance with all applicable laws, use any ordinary and customary materials reasonably required to be used by Tenant in the normal course of Tenant’s business permitted on the Premises so long as such use is not a Reportable Use and does not expose the Premises or neighboring properties to any meaningful risk of contamination or damage or expose Landlord to any liability thereof. In addition, Landlord may (but without any obligation to do so) condition its consent to the use or presence of any Hazardous Materials, and activities including Hazardous Materials, by Tenant upon Tenant’s giving Landlord such additional assurances as Landlord, in its reasonable discretion, deems necessary to protect itself the public, the Premises and environment against damage, contamination or injury and/or liability therefrom, including, but not limited to, the installation (and removal on or before Lease expiration or earlier termination) of reasonably necessary protective modifications to the premises (such as concrete encasements) and/or the deposit of an additional security deposit. Tenant shall be reasonable for compliance with applicable laws respecting Hazardous Materials discovered, now or hereafter, to be existing in the Premises and Tenant shall indemnify and hold Landlord harmless for all claims, costs, liabilities, obligations of any kind and nature related to the use, presence abatement or contaminants of Hazardous Materials on the Premises. It is further expressly understood and agreed, that any Hazardous Materials which become exposed or discovered as a result of Tenant’s Work or Alternations, and which but for such works not have been exposed or discovered, and which but for such works would not be required by government authorities to be abated, shall be abated by Tenant at Tenant’s sole cost and expense as part of Tenant’s Work or Alterations provided by law.
IN WITNESS WHEREOF, Tenant has caused these presents to be signed and sealed by its President and duly authorized agent and representative having power to bind Corporation and Landlord has caused these presents to be signed and sealed by its President, all as of the day and year first written hereinabove.
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| Witness: | F & J Properties, Inc. | |||||||
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/s/ Pamela A. Kues
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By | /s/ Joseph Tomarchio, Jr. | [SEAL] | |||||
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Joseph Tomarchio, Jr. | |||||||
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| Witness: | Mr. Tire, Inc. | |||||||
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/s/ Pamela A. Kues
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By: | /s/ Fredric A. Tomarchio | [SEAL] | |||||
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Fredric A. Tomarchio, President | |||||||
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Exhibit 10.79a
ASSIGNMENT AND ASSUMPTION OF LEASE
THIS ASSIGNMENT AND ASSUMPTION OF LEASE (the “Agreement”), is made as of the 1 st day of March, 2004, (the “Effective Date”)by and between Mr. Tire, Inc., a Maryland corporation having an address of 23 Walker Avenue, Baltimore, Maryland (“Assignor”) and Monro Muffler Brake, Inc., a New York Corporation having a principal address of 200 Holleder Parkway, Rochester, New York (“Assignee”).
RECITALS
WHEREAS, Assignor as tenant, and F&J Properties, Inc., as landlord, entered into a lease, dated January 1, 1998 (the “Lease”) relating to real property known as 5910 Liberty Road located in Baltimore, Baltimore County, Maryland (the “Premises”); and
WHEREAS, Assignor and Assignee entered into a certain Asset Purchase Agreement dated as of February 9, 2004, as clarified by that certain Side Letter Agreement dated as of February 9, 2004, as same may be further amended and clarified (“Asset Purchase Agreement”), pursuant to which Assignor agreed to assign to Assignee all of Assignor’s right, title and interest as tenant under the Lease and Assignee agreed to assume all of Assignor’s obligations under the Lease.
NOW THEREFORE, pursuant to and in consideration of the Asset Purchase Agreement:
1. Assignor hereby assigns and transfers all of its right, title, and interest in the Lease to Assignee to have and to hold the same from and after the date hereof for the remainder of the term of the Lease.
2. Assignee hereby assumes and agrees to perform all obligations of Assignor pursuant to the Lease which accrue from the date hereof through the remainder of the term of the Lease. Assignor will remain liable for all of its obligations which accrued prior to the date hereof.
3. The representations and warranties set forth in the Asset Purchase Agreement with respect to the Lease assigned hereby, specifically, but not limited to, those set forth in Section 3.10 are incorporated in this Assignment as though set forth in full herein.
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IN WITNESS WHEREOF, this Assignment has been duly executed by the parties as of the Effective Date.
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By: | /s/ Lonnie L. Swiger | ||
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Lonnie L. Swiger, Vice President | |||
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By: | /s/ Robert G. Gross | ||
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Robert G. Gross, President & CEO | |||
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STATE OF MARYLAND
COUNTY OF HOWARD SS.:
On the 26 th day of February, 2004, before me, personally appeared Lonnie L. Swiger personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.
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/s/ Rachel V. Castranova | |
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Rachel V. Casstranova commissioned as Rachel V. Flad | |
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Notary Public |
STATE OF NEW YORK
COUNTY OF MONROE SS.:
On the 1st day of March, 2004, before me, personally appeared Robert G. Gross personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.
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/s/ Mindi S. Collom | |
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Mindi S. Collom | |
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Notary Public |
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Exhibit 10.79b
LANDLORD’S CONSENT AND ESTOPPEL CERTIFICATE
F&J Properties, Inc., the person, firm or corporation identified as the landlord on Schedule “A” attached hereto (“Landlord”), DOES HEREBY CERTIFY THAT:
1. Landlord has entered into a certain lease which is more particularly described in said Schedule (the “Lease”) covering a portion of certain real property located at 5910 Liberty Road in Baltimore County, Maryland (the “Premises”).
2. The Lease is valid, in full force and effect on the date hereof and enforceable in accordance with its terms and has not been modified or amended from the date of its execution to the date hereof, except as may otherwise be indicated on said Schedule “A.”
3. The term of the Lease commenced on the date of commencement shown on Schedule “A” and will terminate, unless renewed or extended in accordance with its terms, on the date of termination shown on Schedule “A”.
4. All conditions precedent to the commencement of the term of the Lease and to the payment of the basic rent, additional rent, percentage rent (if any) and all other charges specified therein have been satisfied or waived by Landlord.
5. Landlord has delivered and Tenant has accepted and is in possession of the Premises and is paying the basic rent, additional rent, percentage rent (if any) and all other charges specified therein.
6. The Premises and the use and occupancy thereof by Tenant comply with the terms of the Lease.
7. Neither the Landlord under the Lease nor, to the best of Landlords knowledge, Tenant is in default with respect to the performance or observance of any of their respective covenants or obligations under the terms of the Lease nor has any event occurred with which the giving of notice or the passage of time would constitute a default under the Lease.
8. Landlord has not received any prepayment of any basic rent due under the Lease, other than the current month’s rent.
9. There are no rights of offset, abatement or reduction of basic rent presently accruing to Tenant by reason of any provision of the Lease or otherwise.
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This Certificate is being given to and may be relied upon by Monro Muffler Brake, Inc. (“Monro”) their successors and/or assigns, to induce Monro to acquire Tenant’s leasehold interest under the Lease pursuant to an Asset Purchase Agreement between Atlantic Automotive Corp., its wholly-owned subsidiary, Mr. Tire, Inc. and Monro Muffler Brake, Inc. dated February 9, 2004.
Landlord hereby acknowledges that its consent to the assignment of Tenant’s interest pursuant to the provisions of the Lease has been requested and consents to the assignment by Mr. Tire, Inc. to Monro Muffler Brake, Inc. of the Tenant’s leasehold interest.
IN WITNESS WHEREOF, Landlord has caused this Consent and Estoppel Certificate to be duly executed this 27 th day of February, 2004.
LANDLORD
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By:
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/s/ Fredric A. Tomarchio | |
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Name:
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Fredric A. Tomarchio
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Title:
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Member |
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SCHEDULE “A”
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Name of Landlord:
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F&J Properties, Inc. | |
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Name of Tenant:
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Mr. Tire, Inc. | |
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Date of Lease:
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January 1, 1998 | |
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Leased Premises:
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5910 Liberty Road | |
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Baltimore, MD 21207
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Date(s) of amendment(s) to Lease (if any):
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None |
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Term of Lease: Commencement:
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January 1, 1998 | |
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Termination:
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December 31, 2007 | |
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Option Terms (if any):
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2 Successive Ten (10) Year Terms |
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Exhibit 10.80
AGREEMENT
This agreement entered into this 1 st day of January 1997, by and between The Three Marquees (hereinafter called “Landlord”) and Mr. Tire, Inc. (hereinafter called “Tenant”).
WITNESSETH:
That for and in consideration of the rents herein reserved and to be paid by tenant to the Landlord and of the covenants and agreements herein set forth to be kept, performed and observed by Tenant, the Landlord does hereby rent, demise and lease to the Tenant and the Tenant does hereby take, lease and hire from the Landlord, upon the terms and conditions hereinafter set forth, land and improvements located at 1746 E. Joppa Road, Towson, Maryland, (the “Premises”), including specially a certain building located thereon, (the “Building”).
| 1. | Term |
The Term of this Lease shall be ten (10) years commencing January 1, 1997 and terminating December 31, 2006, both dates inclusive (the “Term”). Tenant shall have the option of renewing and extending the term of this lease for two (2) successive term of ten (10) years, for the same rental terms and conditions as the original term.
| 2. | Rent |
(A) Tenant, in consideration of this Lease, agrees to pay to Landlord, Basic Rent during the Term hereof, to be received on or before the first day of each month in accordance with the following schedule:
(i) For the Lease Year January 1, 1997-December 31, 1997, eighty one thousand three hundred one dollars and 75/100 dollars ($81,301.75) payable in twelve equal monthly installments of six thousand seven hundred seventy five dollars and 15/100 dollars ($6,775.15);
(ii) For each of the Lease Years beginning January 1, 1998 through and including the leas year beginning January 1, 2006 the following rental adjustment shall apply: The rental amount from the previous year shall be adjusted by the Consumer Price Index, specifically the CPI for all Urban Consumers. The adjustment shall be no less than 3.5% per year and no more than 7% per year.
In the event that tenant pays Landlord any installments of Basic Rent or Percentage Rent after the due date, or any Additional Rent (as hereinafter defined) later than the (5 th ) day after billing therefore, then and in such event, Tenant shall pay to Landlord, together with and in addition to said installment of Basic Rent or Additional Rent, a late charge of five percent (5%) of installment past due. Any installments of Basic Rent or Additional Rent not made within ten (10) days from the date due shall, in addition to the foregoing late charges, bear interest from the date due at the rate of eighteen percent (18%) per annum (the “Default Rate”). If Landlord, during the Term of this Lease, receives two (2) or more checks from Tenant which are returned for insufficient funds.
Landlord, in addition to applicable late charges and reimbursement for any additional cost incurred by reason of any returned check, may require, at Landlord’s election, that any future payment shall be either bank certified, cashier’s or treasurer’s check. None of the foregoing late charges shall be construed to limit or otherwise waive any other remedies available to Landlord for Tenant’s default under this Lease. Anything contained herein to the contrary notwithstanding, the late charges provided hereunder shall be abated for one violation each Lease Year, provided Tenant cures such late payment within five (5) days after written notice that the same is past due.
(B) Tenant shall tender all payments due hereunder by good check to Landlord c/o The Three Marquees, P.O. Box 428, Savage, Maryland 20763, or to such other party or such other address as Landlord may designate from time to time by written notice to Tenant. If Landlord shall at any time or times accept said Basic Rent or Additional Rent after it shall become due and payable, such acceptance shall not excuse delay upon subsequent occasions, or constitute a waiver of any or all of Landlords rights hereunder.
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(C) This lease is what is commonly called a “triple net lease”, it being understood that Landlord shall receive the rent free and clear of any and all other impositions, taxes, liens, charges, or expenses of any nature whatsoever in connection with the ownership and operation of the Premises. In addition to the Basic Rent, Tenant shall pay to the parties respectively entitled thereto all impositions, insurance premiums, utility charges (including but not limited to gas, fuel, electric, water, sewer, trash removal and telephone charges), operating charges, maintenance charges, construction costs, and any other charges, costs, and expenses which arise or may be contemplated under any provisions of the Lease during the Term hereof. All of such charges, costs, and expenses shall constitute Additional Rent, and upon the failure of Tenant to pay any of such costs, charges or expenses, Landlord shall have the same rights and remedies as otherwise provided in this Lease for the failure of Tenant to pay Basic Rent. For purposes herein contained the term “Rent” shall refer to Basic Rent and Additional Rent. It is the intention of the parties hereto that this Lease shall not be terminable for any reason by the Tenant unless otherwise expressly permitted under the terms of this Lease and that Tenant shall in no event be entitled to any abatement of or reduction in Rent payable hereunder, except as herein expressly provided. Any present or future law to the contrary shall not alter this agreement of the parties. If Tenant defaults in the making of any payment to any third party or in the doing of any act required to be made or done by Tenant, then Landlord may, but shall not be required to make such payment or do such act, and the amount of the expense thereof, if made or done by Landlord, within interest thereon at the Default Rate accruing from the date paid by Landlord, together with an additional charge of fifteen percent (15%) of the amount so paid to cover Landlord’s administrative costs, shall be paid by Tenant to Landlord and shall constitute Additional Rent hereunder due and payable by Tenant upon receipt by Tenant of a written statement of costs from Landlord. The making of such payment or the doing of such act by Landlord shall not operate to cure Tenant’s default, nor shall it prevent Landlord from the pursuit of any remedy to which Landlord would otherwise be entitled.
| 3. | Additional Rent. |
Tenant, in addition to Basic Rent, shall pay Additional Rent as hereafter specified, payable by Tenant to Landlord under this Lease being deemed “Additional Rent”. Basic Rent and Additional Rent shall collectively be referred to as “Rent”.
(A) Impositions.
Tenant shall pay throughout the Term, as Additional Rent, all taxes and assessments, general and special, if any, levied and assessed on the Premises, any improvements or alterations thereto and any personal property located therein, and all other governmental charges and impositions of any kind or nature whatsoever, general or special, foreseen and unforeseen, which if not paid when due, would encumber the title to the Building, all of which are herein called “Impositions” provided, however, that Impositions relating to fiscal periods of the taxing authority which precede or extend beyond the Term of this Lease shall be appointed between Landlord and Tenant. Landlord shall periodically provide Tenant with Landlords estimate of Impositions coming due, and Tenant shall pay to Landlord monthly, together with Basic Rent, one twelfth (1/12) of Landlords estimate of Impositions. Landlord shall forward to Tenant copies of all notices, bills or other statements received by Landlord concerning any Impositions and the presentation of any such invoice shall be conclusive evidence of the amount of the particular element of the Imposition to which the bill or statement refers. Any overpayment or deficiency in Tenants payment of Impositions shall be “Adjusted” within thirty (30) days after Tenants receipt of such statement. For purposes of this Lease “Adjusted” or “Adjustment” means the adjustment between Landlord and Tenant of any overpayment or deficiency in payment by Tenant of Impositions. Any required Adjustment shall be made, as the case may be by;
(i) Tenants payment to Landlord of any deficiency or
(ii) by Landlord’s crediting to Tenant’s account any overpayment or, if such Adjustment is made at the end of the term, Landlord’s reimbursement to Tenant of such overpayment less any amounts due from Tenant. At anytime during a Lease Year, Landlord may re-estimate Tenant’s share of Impositions and adjust Tenant’s monthly installments payable thereafter during the Lease Year to reflect more accurately Tenant’s share of Impositions as reestimated by Landlord.
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For purposes hereof, “Impositions” shall also include any and all business
licenses and/or franchise taxes imposed upon Tenant, and any taxes, assessments
or other levies which may at any time be imposed against the Premises by any
federal, state, county, municipal, quasi governmental or corporate entity in
respect of public transportation or works or other governmental authority any
assessments for public improvements or benefits and including also any tax,
assessment or other charges in the nature of a sales, excise, use or other tax
upon the Rent payable under this Lease, whether assessed against Tenant or
Landlord, or the Premises. Impositions shall also include the cost (including
attorney’s fees, consultant fees, witness and appraisal costs) of any
negotiation, contest or appeal pursued by Landlord (regardless of outcome). The
provisions of this Lease shall not be deemed to require Tenant to Pay
municipal, state or federal income, gross receipts or excess Profits taxes
assess against the Landlord, or municipal, state or federal estate, succession,
or inheritance taxes imposed upon the Landlord provided, however, that if, at
any time during the Term of this Lease, the methods of taxation of real estate
prevailing on the date of the Lease shall be altered or supplemental so as to
cause in lien thereof the whole of the taxes, assessments and other
governmental charges owed, levied and assessed on the Premises to be levied and
assessed on the Rent payable by tenant to Landlord under this lease, then the
taxes so levied and assessed on the Rent shall be deemed to be Impositions and
shall be payable by Tenant.
In addition to Tenant’s share of Impositions, Tenant shall pay, prior to the
date due, to the appropriate taxing authority, any and all sales, excise and
other taxes levied, imposed or assessed with respect to the operation of
Tenant’s business and with respect to its inventory, furniture, fixtures,
equipment and all leasehold improvements installed by Tenant, any prior tenant
or by Landlord on behalf of Tenant. In no event shall Tenant have the right to
contest Impositions absent Landlord’s prior written consent, which consent may
be withheld or delayed in Landlord’s sole and absolute discretion.
(B) Insurance/Indemnity.
The Landlord assumes no liability or responsibility whatsoever with respect to the conduct and operations of the business to be conducted within the Premises. The Landlord shall not be liable for any accident or injury to any person or persons or property in or about the Premises which are caused by any reason whatsoever, including, but not limited to the conduct and operations of said business, or by virtue of equipment or property owned or permitted in the Premises by the Tenant except when caused by Landlord’s gross negligence and then, only to the extent not covered under Tenant’s insurance. The Tenant agrees to indemnify and hold the Landlord, its agents, employees and lenders having liens against the Premises (“Indemnities”) from and against all liability, claims, suits, causes of action, demands, judgments, cost, interest and expenses (including also actual counsel fees and disbursements incurred in the defense thereof) to which any Indemnities may be subject or suffered, whatsoever by reason of any claim for, injury to, or death of, any person or persons or damage to or loss of property (including also any loss of use thereof) or otherwise, and arising from or in connection with the use by Tenant of, or from any work or anything whatsoever done by Tenant or any of its officers, directors, agents, contractors, employees, licensees or while within the Premises, invitees in any part of the Premises, during the Term of this Lease, or arising from any condition of the Premises due to or resulting from any default by Tenant in keeping observance or performance of any covenant or agreement contained in this Lease or from any fault or neglect of Tenant or any of its officers, directors, agents, contractors, employees, licensees or while within the Premises, invitees.
(ii) In order to assure the Indemnity referred to hereinabove, Tenant shall carry and keep in full force and effect at all times during the Term of this Lease, for the protection of Landlord and Tenant and naming both Landlord, Tenant and any Indemnities of Landlord as may exist from time to time or other parties as landlord may designate from time to time as parties insured, public liability insurance with limits for bodily injury or death of a least ONE MILLION DOLLARS ($1,000,000.00) for any one person or occurrence and at least THREE MILLION DOLLARS ($3,000,000.00) in the aggregate for any accident or number of persons, and on hundred percent (100%) actual replacement cost and extended coverage insurance for all risks, fire, casualty and Property damage covering the Premises, including, but not limited to the heating, air conditioning, water heater, water pump, plumbing (including sprinkler), electrical and mechanical systems serving the Premises and leasehold improvements (including those made by any prior tenant), lifts and auto/truck bays and Alterations, such policies to carry special endorsements covering against damage or loss by earthquake and against damage by water covered by so call flood insurance. All such policies shall, at Landlord’s election, name party as Landlord may designate as loss payee. In addition Tenant shall maintain rental interruption insurance sufficient to cover Rent payable under this Lease for no less than a one year period from and after the date of casualty throughout the
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Term naming Landlord or upon prior written notice, such other parties as Landlord may designate, as sole loss payee. In no event shall minimum amounts of coverage called for herein be less that the amount required by lenders having liens on the Premises. Copies of all such policies and/or certificates of insurance shall be furnished to Landlord upon request without undo delay.
(iii) Tenant shall obtain or cause to be obtained prior to commencement of any permitted alterations or other work, and keep in force during performance of the work, public liability and workmen compensation insurance to cover all contracts to be employed and covering Tenant, if Tenant elects to do any work itself The covering limits, form, and content of such policies shall be commercially reasonable and customary as reasonably determined by Landlord, but no event in amounts less than that required under applicable law. Tenant shall also, upon Landlord’s request, carry contract insurance or cause its contracts to post performance bonds. Before commencement of any works on the Premises, Tenant shall deliver certificates to Landlord showing such insurance and/or performance bonds to be in effect.
(IV) Tenant shall carry statutory workman compensation insurance covering its employees in, on and about the Premises. Copy of such policy and/or certificate of insurance shall be furnished to Landlord upon request without undo delay.
(v) An insurance policies required to be obtained by Tenant hereunder shall be issued by recognized and responsible insurance companies, having a “Best Insurance” rating of not less than A and a credit rating not less than XV and be qualified to do business in Maryland, and shall provide that such policies shall not be cancelled without thirty (30) days prior written notice to Landlord. Landlord shall be named as an additional insured and whenever designated by Landlord, as sole loss payee on all such policies, with the exception of the statutory workmen compensation coverage referred to herein and other casualty insurance carried by Tenant covering trade fixtures, equipment and inventory paid for and brought upon the premises by Tenant. Tenant shall deliver to Landlord at least once each Lease year, but so often as Landlord may request from time to time, a copy of all such insurance policies or a certificate thereof showing the same to be in full force and effect.
(vi) In the event Tenant shall fail to keep in force and maintain any such policy of insurance, Landlord shall have the right, at its option, and at the sole cost of Tenant, in addition to all other rights and remedies in the event of default, to purchase such policy or policies of insurance and to pay the premiums thereon. In such, event Tenant shall pay Landlord as Additional Rent an amount equal to Landlord’s cost of such insurance plus fifteen percent (15%) to cover Landlord’s administrative costs in procuring and administering such insurance, upon receipt of a written demand therefore.
(vii) Anything in this Lease to the contrary notwithstanding, the Tenant does hereby release the Landlord from any and all liability for any loss or damage to its property or Premises caused by fire or any of the other casualties covered by the risks included in insurance policies required to be carried by Tenant, including but not limited to Tenant’s general liability, extended coverage all risk, property damage, flood, earthquake and casualty insurance. This release is given notwithstanding that such liability casualty or loss shall have resulted from the negligence of Landlord or Tenant or their respective agents, employees, licenses, contractors or invites. Tenant agrees to cause it insurance policies covering the Premises and contents thereof to contain an appropriate endorsement whereby the insurer agrees that the insurance policy and coverage will not be invalidated by reason of the foregoing waiver of the right of recovery against the Landlord for loss occurring to the properties covered by such policy, and whereby such insurer also waives any right of subrogation against the Landlord and Tenant will, upon request, deliver to Landlord a certificate evidencing such waiver of subrogation by the insurer.
(viii) Anything in this Section 3 to the contrary notwithstanding, Landlord shall have the option, either alternatively or in combination with Tenant, to carry such casualty and property insurance covering the Premises, leasehold improvements, Alterations, and systems serving the Premises, including but not limited to the heating, air conditioning, water heater, water pump, plumbing (including sprinkler), electrical, and mechanical systems, Landlord may determine to be reasonable or necessary to protect its interests, and bill the cost of any insurance carried directly by Landlord to Tenant. Any premiums so billed by Landlord to Tenant shall be Additional Rent and payable within five (5) days of written demand.
| 4. | Possession of Premises, TENANT’S Work. |
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Landlord delivers, and Tenant accepts the Premises “as is”. Tenant further acknowledges that is has fully inspected the Premises prior to the execution of this Lease and does hereby assume all of the risks, including but not limited to patent or latent defects as well as responsibility for all existing environmental conditions. Tenant further understands and agrees that Landlord shall be under no liability nor have any obligation to do any preoccupancy work or make any repairs in or to the Premises, except as otherwise expressly provided herein, any work which may be necessary to adapt the Premises for Tenant’s occupancy or for the operation of Tenant’s business therein (including any Alterations that may be necessary now or hereafter to effectuate compliance with any applicable laws), the sole responsibility therefore being that of Tenant and shall be performed by Tenant at its sole cost and expense.
| 5. | Tenant’s Covenants: |
Tenant hereby covenants as follows:
(A) Not to use Premises for any disorderly or unlawful purpose, nor for any purpose not expressly permitted pursuant to this Lease.
(B) To keep the Premises and approaches thereto, including parking areas, clean and free from trash and rubbish, to remove snow and ice from the adjacent sidewalks and any parking areas and loading areas which are a portion of the Premises, and to keep any show windows and signs neat, clean and in good order; and not to store any material or trash of any nature whatsoever on the exterior of the Premises, unless same is contained in covered dumpsters and not to store or dispose of any materials, except in accordance with all applicable laws. Tenant shall contract and arrange for, at Tenant’s expense, trash and materials removal at such intervals as are necessary to satisfy the requirements of this paragraph and applicable laws.
(C) Not to operate any machinery in the Premises which may cause excessive vibration or damage to the Premises, nor create any nuisance.
(D) To inspect all portions of the Premises, both interior and exterior and all machinery and equipment therein, so it may promptly detect the need for repairs to any thereof, to make such repairs as it is herein obligate to make.
(E) Not to place any loads or machinery or safes in the Premises in excess of the existing floor loads or utilize any equipment which would overload the Premises existing systems.
| 6. | Use of Premises. |
(A) Tenant hereby covenants and agrees the Premises shall not be used for any purpose other than for the following purposes: vehicle tire sales, repairs, parts accessories, maintenance and service.
(B) Tenant, at its own expense, shall comply with and carry out promptly, all orders, requirements or conditions imposed by the ordinances, laws and regulations of the United States, Maryland and of all other governmental authorities having jurisdiction over the Premises or Tenant, which are occasioned by or required in the conduct of Tenant’s business in the Premises, including but not limited to all environmental laws and regulations now or hereafter promulgated relative thereto. Tenant shall further comply with the Americans with Disabilities Act of 1990 (ADA) and any amendment to ADA, as well as applicable state land local laws, regulations and ordinances regarding access to, employment of, and service to individuals covered by the ADA. The compliance with ADA will include, but not be limited to, the design, construction and Alterations of the Premises. Tenant will indemnify Landlord and save it harmless from all penalties, claims and demands, resulting from any noncompliance. Tenant shall be responsible for obtaining and shall promptly obtain at its sole cost and expense all licenses, permits, certificates of occupancy, variances, special exceptions or any other permission necessary for its use, occupancy, repairs and subject to Section 8, signs, and subject to Section 9, Alterations of the Premises by Tenant as contemplated herein.
(C) Tenant shall not suffer or permit the Premises or any portion thereof to be used by the public without restriction or in such a manner as might reasonably tend to impair Landlord’s title to the Premises, or any portion
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thereof, or in such manner as might reasonably make possible a claim of adverse usage or adverse possession by the public, as such or of implied dedication of the Premises or any portion thereof Tenant hereby expressly recognizes that in no event shall it be deemed the agent of Landlord, and no contractor of Tenant shall by virtue of its contract be entitle to assert any lien against the Premises or Landlord’s interest therein.
| 7. | Repairs, Maintenance. |
(A) Landlord shall, subject to the need therefore not being caused in whole or part by the negligent or willful acts or omission of Tenant, its agents, employees, contractors or assigns, and subject to the aggregate cost thereof over the term not exceeding two (2) months of the then current Rent, maintain the exterior, structural walls, and foundations of the building except for alterations and improvements made by Tenant affecting the foregoing, which shall be Tenant’s responsibility to maintain and repair. Tenant shall throughout the Term, at no cost or expense to Landlord, make all other necessary repairs to the interior and exterior of the Premises, including, without limitation, the roof, the plumbing, the parking lot, mechanical and electrical systems serving the Premises. Tenant shall, in addition, at no cost or expense to Landlord, maintain the Premises, and all fixtures, equipment, Alternations and improvements installed or made by Tenant, by Landlord or any prior tenants contained therein, including, but not limited to, heating, air conditioning, water heater, water pump, plumbing (including sprinkler system), electrical and mechanical systems, in at least as good repair order and condition as the same are in on the Lease Commencement Date or date installed by Tenant, reasonable wear and tear and loss by fire or other casualty (to the extent this Lease is terminated pursuant to Section 21 and insurance proceeds sufficient to replace the same are paid to Landlord or its designee or unless Landlord elects, pursuant to Section 21, to restore the Premises), and promptly at no cost or expense to Landlord, shall make or cause to be made, all necessary repairs, interior and exterior, structural and non structural, foreseen as well as unforeseen. Tenant, at its own cost and expense shall also keep, maintain and repair all sideways, driveways, ground (including lawn care) and parking areas in a clean, neat and orderly condition and shall remove all snow and ice therefrom.
(B) All personal property of the Tenant in the Premises shall be there at the sole risk of the Tenant. Landlord shall not be liable for any accident or damage to the property of Tenant resulting from any reason whatsoever. Tenant hereby expressly releases Landlord from liability incurred or claimed by reason of damage therefrom.
| 8. | Signs and Personal Property |
Tenant agrees that no sign, awning, advertisement or notice shall be inscribed, affixed or displayed on any part of the Premises, except if first approved by Landlord, which approval will not be unreasonably withheld, conditioned or delayed. Such signage shall further be subject to all requirements and regulations of applicable governmental authorities having jurisdiction over the installation, placement and appearance of signs. Existing signs are deemed approved.
| 9. | Alterations |
(A) Tenant shall not make alterations, installations, changes, replacements, additions or improvements in or to the Premises or any part thereof (“Alterations”), or delay its consent with respect to same, provided such work shall be non structural and provided further that such work shall not affect any of the mechanical, electrical or other systems servicing the building, and provided further, that Landlord shall have received plans and specifications in a form and detail satisfactory to Landlord of any such proposed Alterations, installations, changes, replacements, additions or improvements. Tenant agrees to provide Landlord with the name of any proposed contractors of Tenant, certificates of liability insurance maintained by such contractors in amounts acceptable to Landlord, and copies of all plans for such improvements at the time request for Landlord’s approval is made by Tenant. Tenant shall provide Landlord with a copy of all requisite permits prior to commencement of any such work as its sole expense. All of Tenant’s aforesaid Alterations shall be performed in a good and workman like manner and in compliance with all applicable laws, codes, rules and ordinances. Landlord may at its option and discretion require Tenant at Tenant’s expense, to repair any damage to the Premises caused by either the removal or installation of aforesaid Alterations, or the removal or installation of any of Tenant’s equipment or fixtures that are removable, and Tenant will promptly comply with such directions. In addition to all legal, equitable and other rights and remedies available to Landlord, it is agreed that if Tenant, after receipt of written notice and failure to cure same within ten (10) days, does not comply with its obligations under this
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Section the Landlord shall have the right (but not the obligation) to perform or cause to be performed Tenant’s obligations, duties and covenants under this Section or any other provisions of this Lease, in which event Tenant shall reimburse to Landlord upon written demand all costs incurred by Landlord as a result thereof, plus fifteen percent (15%) to cover Landlord’s administrative costs.
(B) Tenant shall have no authority to incur any debt or to make any charge against Landlord, or to create any lien upon the Premises for any work or materials furnished for the same, and if any such lien should be filed against the Premises on account of work done to or labor or materials furnished on the Premises at Tenant’s request (whether or not Tenant obtained Landlord’s approval), Tenant shall have a period of thirty (30) days or such shorter period as required by law or Landlord’s lenders having liens against the Premises from the date notice of such lien is brought to attention to pay off said lien and have the same discharged of record, or if Tenant disputes such lien or the amount thereof, to post with the court having appropriate jurisdiction adequate bond required to release said lien of record. If Tenant shall fail to cause such lien to be so discharged or bonded within the time prescribed above, then, in addition to any other right or remedy of Landlord, Landlord may bond or discharge the same by paying the amount claimed to be due the amount so paid by Landlord, plus fifteen percent (15%) to cover Landlord’s administrative costs, plus Landlord’s actual attorney’s fees in either defending or procuring discharge of such lien, together with interest thereon at the Default Rate shall be due and payable by Tenant to Landlord as additional Rent, upon demand.
(C) All existing leasehold improvements, alterations and other additions or installations made to or within the Premises shall be Landlord’s property upon installation and shall not be removed from the Premises. Notwithstanding the foregoing, upon the expiration or earlier termination of the Lease, Tenant shall at Tenant’s expense, remove any of the foregoing items (except Alterations made with Landlord’s consent, where at the time of consent Landlord does not specify that the same will need to be removed upon expiration or earlier termination of the Lease) from the Premises if Landlord gives Tenant written notices to do so. Tenant shall promptly repair or, at Landlord’s election reimburse Landlord for the cost of repairing all damage done to the Premises by such removal.
| 10. | Assignment and Subletting. |
Tenant acknowledges that Landlord has entered into this Lease based on the financial creditworthiness and business reputation of Tenant and that such was a material inducement to Landlord’s entering into Lease. Accordingly, Tenant shall not, either directly, or indirectly, or by operation of law or by merger, reorganization or otherwise:
(a) assign, mortgage, pledge, encumber or otherwise transfer this Lease, the Term and estate hereby granted or any interest hereunder;
(b) Permit the Premises or any part to be utilized by anyone other than Tenant or
(c) Sublet or hypothecate (all of which be hereafter referred to as a “Transfer”) the Premises or any part thereof without obtaining in each instance, Landlord’s written consent, which may be withheld, conditioned or delayed in Landlord’s sole and absolute discretion. The transfer of any ownership interest in Tenant so as result in a change of control by way of merger, sale, reorganization, transfer of stock (except with respect to transfer of stock which is listed on a “National Securities Exchange” as defined in the Securities Exchange Act of 1934), sale of assets, appointment of a receiver or take-over by governmental authorities or otherwise shall be deemed a prohibited Transfer requiring Landlord’s consent. Transfer of Tenant’s right to occupy or use all or any portion of the Premises made without Landlord’s consent shall be null and void and confer no rights upon any third person. The consent by Landlord to any Transfer of Tenant’s rights hereunder shall not constitute a waiver of the necessity for such consent to any subsequent attempted Transfer. Receipt by Landlord or Rent due hereunder from any party other than Tenant shall not be deemed to be a consent to any such Transfer, nor relieve Tenant of its obligating to pay Rent for the full Tern of this Lease, Tenant shall have no claim and hereby waives the right to make claim against Landlord to damages by reason of refusal, withholding or delaying by Landlord of consent to a requested Transfer. Tenant agrees at the time of requesting Landlord’s consent to pay to Landlord an amount equal to Two Thousand and 00/100 Dollars ($2,000.00) to cover Landlord’s attorney fees and administrative expense for the review, processing or preparation of any document in connection with a permitted Transfer, such payment to be
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made in consideration of Landlord’s review and independent of and regardless as to whether or not Landlord’s consent is granted.
| 11. | Examination of Premises. |
After reasonable advance notice, except in cases of an emergency, Tenant shall allow Landlord and its agents reasonable access to the Premises during all reasonable hours for the purpose of examining the same to ascertain and determine if the Premises are in good repair and condition and for making repairs required of Landlord hereunder. Landlord’s access shall in no event constitute an eviction in whole or in part of Tenant and in no event shall such access give rise to any claim of disrupted use, breach of quiet enjoyment nor shall such access in any way affect or alter Tenant’s obligation to pay Rent as and when provided herein. Landlord may exhibit the Premises to prospective purchasers at anytime during the Term hereof and to prospective tenants during the last twelve (12) months of the Term. Landlord, during the last twelve (12) months of the Term, or any time Tenant shall be in default of its obligations hereunder, shall have the right to post For Rent signs on the Premises.
| 12. | Subordination/Attornment. |
Tenant agrees that this Lease shall be subject and subordinate to the lien or liens of any mortgages, deed or deeds of trust, or other security interests (collectively the “Interest”) that may now or may hereafter be placed against the Premises and that this clause shall be self operating. Notwithstanding the fact that this clause is self-operating, if Landlord requests, Tenant shall execute any instruments, releases or other documents that may be required for the purpose of confirming that this Lease, and Tenant’s interest is subject and subordinate to the lien of any Interest, whether original or substituted. Tenant covenants and agrees in the event any proceedings are brought for the foreclosure of any such mortgage or deed of trust, to return to the purchaser upon any such foreclosure sale and to recognize such foreclosure sale and to recognize such purchaser as the Landlord under this Lease and that upon failure to do so within ten (10) days of demand, Landlord shall be deemed and designated by Tenant as its Attorney-In-Fact, such to be coupled with an interest, with full authority to execute any instruments required of Tenant under this Lease. Tenant further waives the provisions of any statute or rule of law, now or hereafter in effect, which may give or purport to give Tenant any right or election to terminate or otherwise adversely affect this Lease and the obligations of Tenant hereunder in the event any such foreclosure proceedings is brought.
| 13. | Insolvency or Bankruptcy of Tenant. |
If at any time prior to the Commencement Date of this Lease, or any time during the term hereby demised, there shall be filed by or against Tenant in any court pursuant to any statute either of the United States or of any state a petition in bankruptcy or insolvency or for reorganization or for the appointment of a receiver or trustee of all or a portion of Tenants property, and if within thirty (30) days hereof Tenant fails to secure a discharge thereof, or if Tenant makes an assignment for the benefit of creditors, or petitions for or enters into a plan under the Bankruptcy Code (as defined below), this Lease, at the option of Landlord, may be cancelled and terminated by notice of cancellation to Tenant effective three (3) days thereafter, in which event neither Tenant nor Guarantor nor any person claiming through or under Tenant or Guarantor by virtue of any statute or of an order of any court shall be entitled to possession, or to remain in possession of the Premises, and Landlord, in addition to the other rights and remedies Landlord has by virtue of any other provision herein or elsewhere in this Lease contained or by virtue of any statue or rule of law may retain as liquidate damages any Rent, security, deposit or monies received by Landlord from Tenant or others in behalf of Tenant. If Tenant becomes a debtor within the meaning of the Bankruptcy Reform act of 1978, as the same may from time to time be amended (“Bankruptcy Code”) and notwithstanding any other provisions of this Lease, this Lease and Landlord’s and Tenant’s rights are then made subject to such Bankruptcy Code, it is covenanted and agreed that the failure of Tenant or its representative appointed in accordance with said Bankruptcy Code to furnish accurate information and adequate assurances as to the source of Rent and other consideration due under this Lease, or conduct or have conducted at the Premises Tenant’s business as provided in Section 6 hereof, shall in any case each be deemed a default under this Section 20, and Landlord shall have all rights and remedies herein afforded to it in the event of any default by Tenant under this Lease. Tenant’s interest in this Lease shall not pass to any trustee or receiver or assignee for the benefit of creditors or operation of law except as may be specially provided by the Bankruptcy Code.
| 14. | Default. |
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(A) In event that:
(i) Tenant shall fail to pay when due any payment of the Rent payable by Tenant hereunder and such failure shall continue for a period of five (5) days following receipt by Tenant of written notice thereof (such notice only being required once in any twelve month period) or
(ii) Tenant shall violate any other term, covenant or condition of this Lease or neglect or fail to perform or to observe any of the other terms, conditions or covenants herein contained on Tenant’s part to be performed or observed and Tenant shall fail to remedy the same within fifteen (15) days of written notice thereof from Landlord, provided however, that if cure is not reasonably possible within the aforesaid fifteen (15) day period, then, in such event, Tenant shall be afforded an additional reasonable time within to effectuate cure or
(iii) In the event that this Lease or the Premises or any part thereof shall be taken upon execution or by other process of law directed against Tenant, or shall be taken upon or subject to any attachment at the instance of any creditor of or claimant against Tenant, or taken over by governmental authority or otherwise breach Section 13 above; or
(iv) If Tenant shall abandon, vacate or desert the Premises, or fail to operate the Premises from the purposes provided in Section 6 thereof, or
(v) Tenant shall, except as expressly otherwise permitted herein, Transfer its interest in this Lease, then in any one or more of such events, Tenant shall be in default of the Lease and Landlord shall have the right, as its option, in addition to any other rights and remedies set forth in this Lease or provided at law or in equity either:
(1.) To terminate this Lease and if the event of default is not so cured, Tenant’s right to possession of the Premises shall cease and the Lease shall thereupon be terminated; or
(2.) With or without notice to re-enter and take possession of the Premises without terminating the Lease, or any part thereof, and repossess the same as Landlord’s former estate and expel the Tenant and those claiming through or under Tenant, and remove the effects of both or higher, (forcibly, if necessary), and the Landlord shall have the right, without further notice or demand, to take the action and do the things aforesaid without being deemed guilty of any manner of trespass and without prejudice to any remedies for arrears of rent or preceding breach of contract, it being expressly understood that if the Landlord elects to re-enter, Landlord may terminate this Lease, or from time to time, without terminating the Lease, may relet the Premises, or any part thereof, for such terms and rental or rentals and upon such other terms and conditions as Landlord may deem advisable, with the right to make such Alterations and repairs and grant such rental concessions to prospective tenants of the Premises at Tenant’s expense, as Landlord in its sole business judgment believes reasonably necessary in connection with securing another tenant. No such re-entry or taking of possession of the Premises by Landlord shall be construed as an election on Landlord’s part to terminate this Lease unless a written notice of such intention is given to Tenant or unless the termination hereof be decreed by court of competent jurisdiction. In no event shall Landlord be obligated to relet the Premises or mitigate damages, it being understood that the failure to relet or mitigate shall in no event reduce Landlord’s entitlement to Basic Rent, Percentage Rent, Additional Rent and other sums payable under this Lease throughout the Term.
(3.) In no event shall Landlord be obligated to provide notice of default more often than once in a twelve (12) month period, it being understood that Landlord may exercise its rights under this Lease in the event of default without notice if a notice of default has previously been given during the immediately preceding twelve (12) month period; or
(4.) In the event of any such termination, Tenant shall nevertheless pay the Rent and all other sums as herein provided up to the time of such termination, and thereafter, Tenant, until the end of what would have been the term of this Lease in the absence of such termination, and whether or not the Premises shall have been relet, shall be liable to Landlord for and shall pay to Landlord, as liquidated current damages, an amount equal to:
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(i) The Rent and all sums as hereinbefore provided which would otherwise be payable hereunder if such termination had not occurred, less the net proceeds, if any, of reletting of the Premises after deducting all of the Landlord’s expenses in connection in with such reletting, including without limitation, all repossession costs, brokerage commissions, legal expenses including actual attorney’s fees, expenses of employees, alteration and remodeling costs, and expenses of preparation for such reletting; or
(ii) The present value of the Rent and all other sums as herein before provided which would otherwise be payable hereunder if such termination had not occurred, discounted at an interest rate equal to the Prime Rate of interest as published in the Wall Street Journal as of the date of default, Tenant shall pay such liquidated current damages on the days on which the Basic Rent would have been payable hereunder if this Lease had not been terminate or at Landlord’s election, shall pay such amount to Landlord by lump sum, upon demand. If this Lease shall be terminated as aforesaid, Landlord may but shall not be obligated to relet the Premises or any part thereof, for the account and benefit of Tenant, for such terms and to such person or persons and for such period or periods as Landlord may determine and any such sums received shall be applied first against all of the Landlord’s expenses in connection with such reletting, including without limitation, all repossession costs, brokerage commissions, legal expenses including actual attorney’s fees, expenses of employees, alteration and remodeling costs, and expenses of preparation for such reletting, and then against damages occasioned by Tenant’s default. The acceptance of a tenant by Landlord in place of Tenant shall not operate as a release of Tenant from the performance of any covenant, promise or agreement herein contained, and the performance of any substitute tenant by the payment of Rent, or otherwise, shall not constitute satisfaction of the obligations of Tenant arising hereunder. Any damages or deficiencies, at the option of Landlord, may be recovered by Landlord in separate actions, from time to time, as Tenant’s obligations for payment would have accrued if the Term had continued, or from time to time as said damages or deficiencies shall have been made more easily ascertainable by reletting of the Premises, or any such action by Landlord may, at the option of Landlord, be deferred until the expiration of the Term or may be accelerated and immediately due and payable.
(B) Tenant hereby expressly waives any provision of law now in force or which hereafter may be enacted giving Tenant the right under any condition after default to the redemption and repossession of the Premises or any part thereof
(C) Unless otherwise agreed to by the parties in writing, no payment by Tenant or receipt by Landlord of a lesser amount than the installments of Rent herein stipulated shall be deemed to be other than on account of the earliest stipulated Rent, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as Rent be deemed an accord and satisfaction, and the Landlord may accept such check or payment without prejudice to the Landlord’s right to recover the balance of such Rent or pursue any other remedy.
(D) In addition to and not in limitation of the other remedies provided in this Lease, the Landlord shall be entitled to the restraint by injunction of any violation or attempted or threatened violation of any of the terms, covenants, conditions, provisions or agreements of this Lease.
(E) If Tenant shall default in the performance of any covenant on its part to be performed by virtue of any provision of this Lease, and if in connection with the enforcement of its rights or remedies, Landlord shall incur fees and expenses for services rendered (including without limitation, reasonable attorney’s (fees), then such fees and expenses shall be immediately reimbursed by Tenant to Landlord on demand. In the event Landlord shall file any legal action for the collection of Rent or any eviction proceeding, whether summary or otherwise, for the non payment of Rent, and Tenant shall make payment of such Rent due payable prior to the rendering of any judgment, then Landlord shall be entitled to collect, and Tenant shall be obligated to pay, in addition to all Rent due (including the late charges provided for above), all court filing fees and actual legal fees of Landlord.
(F) The remedies of Landlord provided for in this Lease are cumulative and are not intended to be exclusive of other remedies to which Landlord may be lawfully entitled. The exercise by Landlord of any remedy to which it is entitle shall not preclude or hinder the exercise of any other such remedy, nor constitute an election of remedies.
| 15. | Effect of Waiver. |
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If, under the provisions of this Lease, summons or other notice shall, at any time, be served upon Tenant by Landlord and a compromise or settlement shall be effected either before or after judgement or decree, whereby Tenant shall be allowed or permitted to retain possession of the Premises, the same shall not constitute a waiver of any covenant or agreement herein contained, or of this Lease itself except to the set forth in such comprise or settlement. No waiver by Landlord or Tenant of any breach of agreement herein contained shall be construed to be a waiver of the covenant itself or of any subsequent breach thereof. No re-entry by Landlord and no acceptance by Landlord of keys from Tenant shall be considered an acceptance of a surrender of the Lease.
| 16. | Estoppel Certificates. |
Landlord and Tenant agree at any time and from time to time, upon not less than ten (10) days prior written notice by the other, to execute, acknowledge and deliver to the other party a statement in writing certifying
(1) that this Lease is unmodified and in full force and effect (or if there have been modifications, that the Lease is in full force and effect as modified and stating the modification),
(ii) The date to which the Rent hereunder has been paid by Tenant,
(iii) Whether or not to the knowledge of the party giving such estoppel, Landlord or Tenant are in default in the performance of any covenant, agreement or condition contained in Lease, and, if so, specifying each such default of which such party may have knowledge, and
(iv) The address to which notices to such party should be sent, and
(v) Such other matters as Landlord may require. Any such statement delivered pursuant hereto may be replied upon by Landlord, Tenant any other prospective tenant or purchaser, any owner of the Premises, any mortgagee or prospective mortgagee of the Premises or of Landlord’s interest therein, or any prospective assignee of any such interest.
| 17. | Eminent Domain. |
Tenant agrees that if the Building, or so much of the Premises so as impair Tenant’s use of the Premises, shall be taken or condemned for public or quasi-public use or purpose by any competent authority, Tenant shall have no claim against the Landlord and shall not have any claim or right to any portion of the amount that may be awarded as damages or paid as a result of any such condemnation; and all rights of the Tenant to damages therefore, if any, are hereby assigned by the Tenant to the Landlord. Upon any condemnation or taking, affecting the whole or any substantial part of the Premises as provided above, the Term of this Lease shall cease and terminate unless the parties otherwise agree in writing. The Tenant shall have no claim for the value of any unexpected Term of this Lease. If less than the whole of the Building or substantial part of the Premises is taken or condemned by any governmental authority for any public or quasi-public use or purpose, and in the event neither Landlord not Tenant shall desire to terminate this Lease, then and in such event the Basic Rent shall be equitably adjusted on the date when title vests in such governmental authority and the Lease shall otherwise continue in full force and effect. For purposes of this Section, a substained part of the Building shall be considered to have been taken if twenty five percent (25%) or more is taken. A substained portion of the Premises shall be deemed taken if more than twenty twenty five percent (25%) of the areas of available for parking are taken. Notwithstanding anything to the contrary contained herein. Tenant shall be entitled to pursue a separate claim for the value or Tenant’s furnishings, equipment, movable trade fixtures which are not deemed pursuant to this Lease to be Landlord’s property and then only to the extent paid for by Tenant and provided such claim shall in no manner diminish the award or other compensation to which Landlord would otherwise be entitled.
| 18. | Quiet-Enjoyment. |
Subject to the rights reserved to Landlord herein, Landlord covenants the if Tenant shall not be in default hereunder (after the expiration of any notice and cure period). Tenant shall at all times peaceably and quietly
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have, hold and enjoy the Premises in accordance with the terms and conditions of this Lease, without any interruption from Landlord or any other person claiming through or under Landlord.
| 19. | Notices |
Until further notice by either party to the other, in writing, all notice or communications required or permitted hereunder shall be sent by registered or certified mail, return receipt requested,
(a) If to Landlord, addressed to:
The
Three Marquees
P.O. Box 428
Savage,
Maryland 20763
(b) If to Tenant, addressed to:
Mr. Tire, Inc.
P.O. Box 428
Savage, Maryland 20763
| 20. | Tenant Holdover |
This Lease shall expire, without notice by either part to the other at midnight of the last day of the Term. If Tenant shall not immediately surrender possession of the Premises at the termination of this Lease, Tenant, at Landlord’s election, shall become either a Tenant at sufferance, or Tenant from month to month, Landlord expressly reserving the right to terminate such tenancy and reenter and take possession of the Premises with or without notice or process. Tenant hereby promises and represents that it will promptly surrender the Premises, in accordance with the terms and conditions of this Lease, and hereby acknowledges that such promise is a material inducement to Landlord to enter into this Lease Agreement. Tenant further agrees to indemnify and hold Landlord harmless from and against any and all claims or liability, to any part whatsoever, occasioned from and by Tenant’s holding over, including any actual attorney’s fee or other costs associated therewith. In the event Tenant shall holdover subsequent to the expiration of the Term or any renewal term of this Lease, Landlord shall in lieu of Rent, be entitled to demand and receive from Tenant monthly use and occupancy payments for each month in which Tenant shall holdover subsequent to the expiration of the term of Lease, in an amount equal to twice the Basic Rent during the last month of the term of this Lease, plus any and all Additional Rent or other charges due under this Lease. Each such use and occupancy payment shall be due on or before the first day of each calendar month in which Tenant shall holdover hereunder. In no event shall Landlord’s demand or acceptance of such use and occupancy payments be considered to constitute an acquiescence by Landlord to the extension of the Term hereof, and Landlord shall be entitled to obtain immediate possession of the Premises irrespective of any such demand or acceptance. In the event Tenant shall pay monthly use and occupancy payments for any calendar month following expiration of the Term hereof such payment shall be prorated upon Tenant’s surrender of full and exclusive possession of the Premises to the Landlord, free of any and all other parties claiming through or under the Tenant.
| 21. | Damage by Casualty. |
(A) Tenant shall give prompt notice to Landlord in case of any fire or other damage or casualty to the Premises or the Building. If
(i) the Building shall be damaged to the extent that in Landlord’s reasonable judgment, repairing such damage or destruction would not be economically feasible;
(ii) the Building shall be damaged as a result of a risk which is not covered or any portion thereof shall require that the insurance proceeds under the policies referred to in Section 3 (B) hereof be used for other than repairing, replacing and rebuilding such damage, then in any event Landlord may terminate this Lease by notice given within ninety (90) days after such event. In the event this Lease is terminated as provided above in this Section 21: (i) the entire proceeds of the insurance provided for in Section 3. (B) hereof shall be paid by the insurance
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company or companies directly to Landlord and shall belong to, and be the sole property of, Landlord; (1) the portion of proceeds of the insurance provided for in Section 3. (B) which is insuring equipment, fixtures and other items, which by the terms of the Lease, belong to the Landlord by whatever cause shall be paid by the insurance company or companies directly to Landlord, and shall belong to, and be the sole property of, Landlord;
(iii) Tenant shall immediately vacate the Premises in accordance with this Lease;
(iv) all Rent shall be apportioned and paid to the date on which possession is relinquished or the date of such damage, whichever last occurs; and
(v) Landlord and Tenant shall be relieved from any and all further liability or last obligation hereunder except as expressly provided in this Lease. Tenant hereby waives any and all rights to terminate this Lease that it may have, by reason of damage to the Premises by fire, flood, earthquake or other casualty, pursuant to any presently existing or hereafter enacted statute or pursuant to any other law.
(B) If all or any portion of the Building is damaged by fire, flood, earthquake or other casualty and this Lease is not terminated in accordance with the provisions of Section 21 (A), then all insurance proceeds under the policies referred to in Section 3. (B) hereof that are recovered on account of any such damage by fire or casualty shall be made available for the payment of the cost of repair, replacing and rebuilding and as soon as practicable after such damage occurs Landlord shall, using the proceeds provided for by Section 3. (B) hereof, repair or rebuild the Building and other portions of the Premises or such portion hereof to its condition immediately prior to such occurrence to the extent the cost therefore is fully funded by insurance proceeds. Alternatively, at Landlord’s option, Landlord may require that Tenant perform such repairs, in which case, Landlord shall make available to Tenant, insurance proceeds received by Landlord-In no event shall be obligated to repair or replace Tenant’s movable trade fixtures or other personal property. In addition, Tenant shall, using the remaining proceeds of the insurance proceeds from policies provided for in Section 3. (B) hereof, repair, restore and replace Tenant’s movable trade fixtures, personalty and equipment. If the aforesaid insurance proceeds under the insurance provided for in Section 3. (B) hereof shall be less the cost of repairing or replacing Tenant’s movable trade fixtures, equipment and personalty, or other items required to be insured by Tenant pursuant to Section 3. (B) hereof, Tenant shall pay the entire excess cost thereof, and if such insurance proceeds shall be greater than the cost of such repair, restoration, replacement or building, the excess proceeds shall belong to, and be the property of Tenant.
(C) In the event of any repair or rebuilding pursuant to the provisions of Section 21 hereof, then only to the extent Landlord receives rental insurance proceeds equal to the Rent due during the period the Building and other portions of the Premises are undergoing repairs and Tenant’s use is precluded, there shall be abated an equitable portion of the Basic Rent during the existence of such damage, based upon the portion of the Premises which is rendered untenantable and the duration thereof Landlord shall not be liable or obligated to tenant to any extent whatsoever by reason of any fire or other casualty damage to the Premises, or any damages suffered by Tenant by reason thereof, or the deprivation of Tenant’s possession of all or any of the Premises.
| 22. | Jury Trial Waiver. |
Landlord and Tenant hereby waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other one in respect of any matter whatsoever arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant hereunder, Tenant’s use OF occupancy of the Premises, and/or claim of injury or damage. Tenant acknowledges that the waiver of jury trial has been reviewed with counsel and is an acceptable and material business term of this Lease.
| 23. | General Provisions. |
(A) Nothing in this Lease shall be deemed or construed in any way as constituting the consent or request of Landlord, expressed or implied, by inference or otherwise to any contractor, subcontractor, laborer or materials for the performance of any labor or the furnishing of any materials for any specific improvement, alteration or repair of the Premises or any part thereof.
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(B) Nothing herein contained shall in any way be considered or construed as creating the legal relation of a partnership or joint venture between Landlord and Tenant, it being expressly understood and agreed by the parties hereto that the relationship between the parties shall be one of Landlord and Tenant.
(C) It is further and agreed that the covenants, agreements and conditions shall be binding upon the Landlord and Tenant, as we as their respective, heirs, executors, administrators, successors and permitted assigns.
(D) This Lease shall be governed and construed in accordance with the laws of the State of Maryland.
(E) If any covenants or agreements of this Lease or the application thereof to any person or circumstances shall be held to be invalid or unenforceable, then, and in each such event, the remainder of this Lease or the application on such covenant or agreement to any other person or any other circumstances shall not be thereby affected, and each covenant and agreement hereof shall remain valid and enforceable to the fullest extent permitted by law.
(F) Upon the request of Landlord, Tenant shall execute and deliver a memorandum of Lease or short form Lease suitable for recording. In no event shall Tenant record this Lease or any short form Lease without Landlord’s written consent, such consent to be withheld, conditioned or delayed in Landlord’s sole and absolute discretion.
(G) In the event that any mortgage providing financing on the Premises requires, as a condition of such financing, that modifications to the Lease be Obtained, and provided that such modifications
(i) Do not increase the Rent and other sums due hereunder, or
(ii) Constitute a no material change any substantive rights, obligations or liabilities of Tenant under this Lease, then Landlord may submit to Tenant a written amendment to this Lease incorporating such changes, and if Tenant does not execute and return such written amendment within ten (10) days after the same has been submitted to Tenant, then Landlord shall thereafter have the right at it sole option, to immediately cancel and terminate this Lease or to exercise its powers as Attorney-In-Fact, pursuant to Section 23 (O) below.
(H) Any obligation arising during the Term of this Lease under any provision herein contained, which would by its nature require the Tenant to take certain action after the expiration of the termination of this Lease to fully comply with the obligation arising during the Term, shall be deemed to survive the expiration of the Term or other termination of this Lease to the extent of requiring any such action to be performed after the expiration of the Term which is necessary to fully perform the obligation that erode during the Term of this Lease.
(I) The captions and headings throughout this Lease are for convenience and reference only, and the words contained in such captions shall in no way be held or deemed to meaning of any provision of this Lease.
(J) Words of any gender used in this Lease shall be held to include any other gender, and words in the singular number shall be held to include the plural and words in the plural shall be held to include the singular, when the sense so requires.
(K) Further, if the holder of a mortgage or deed of trust which includes the Premises, notifies the Tenant that such holder has taken over the Landlord’s rights under this Lease, Tenant shall not assert any right to deduct the cost of repairs or any monetary claim against the Landlord from Rent thereafter due and payable, but shall look solely to the Landlord’s interest in the Premises for satisfaction of such claim.
(L) By its entry into this Lease the Tenant represents and acknowledges to the Landlord that the Tenant has satisfied itself as to the use which it is permitted to make of the Premises and has inspected the Premises and confirms that the same are acceptable to Tenant, Tenant further acknowledges that Landlord has made no representations, warranties or covenants to Tenant except as expressly provided herein.
(M) No diminution or shutting off light, air or view by any structure that may be erected on the Premises or on any adjacent or nearby properties shall in any manner affect this Lease or obligations of Tenant hereunder.
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(N) Time is of the essence with respect to the performance of Tenant’s obligations hereunder, including, but not limited to the obligation to pay Basic Rent, Percentage Rent, Additional Rent and other sums due hereunder.
(O) In the event Tenant shall fail or refuse to execute and deliver to Landlord any document or instrument which may be required under the terms of this Lease within ten (10) days after Landlord’s written request therefore, Tenant hereby irrevocably appoints Landlord as Attorney-In-Fact for Tenant, such appointment being coupled with an interest, with full power and authority to execute and deliver such documents or instruments for and in the name of Tenant.
| 24. | Brokers. |
The respective parties certify that no person or company provided services as a broker, agent, finder or assisted in the negotiations of this Agreement. Each party agrees to indemnify the other for any claim asserted by any person or company purporting to act on its behalf in providing services as a broker, agent or finder, in connection with this Agreement.
| 25. | Entire Agreement. |
It is understood and agreed by and between the parties hereto that this Lease and the Exhibits attached hereto contain the final and entire agreement between the said parties and they shall not be bound by any terms, statements, conditions or representations, oral or written, not herein contained.
| 26. | Landlord’s Liability. |
If the Landlord shall sell, convey or otherwise dispose of its interest in the Premises, then the undersigned Landlord shall be deemed to be released of all obligations hereunder arising from the date of such transfer, and the transferee shall be deemed to be the Landlord hereunder for all purposes hereunder. Anything contained in this Lease or as provided at law to the contrary notwithstanding. Tenant acknowledges that as an express condition to Landlord’s entering into this Lease, Tenant agrees that Landlord, its agents, officers, employees and assigns shall have no personal liability nor shall any of them be subject to monetary claim of any kind or nature. In the event of a breach or default by Landlord, Tenant shall have no right to consequential damages, claims for loss sales or profits or the like, any and all such claims being expressly waived as a material inducement to Landlord’s entering into this Lease. Moreover, in the event of a breach or default by Landlord of any of its obligations under this Lease, Tenant acknowledges and agrees that its sole remedy shall be limited to an action for specific performance and even then, only to the extent the cost of such performance is less than two (2) months Rent, any amounts to effect specific performance over and above such sum being Tenant’s responsibility, being a negotiated condition of this Lease that Landlord’s aggregate cost of repairs under Section 7 shall never exceed over the Term the sum of two (2) months then current Rent. The provisions hereof shall insure to Landlord’s successors and assigns.
| 27. | Force Majeure. |
Each party shall be excused from performing any obligation or under takings provided for in this Lease for so long as such performance is prevented or delayed, retarded or hindered by act of God, fire, earthquake, flood, explosion, action of the elements, war, invasion, insurrection, riot, mob violation, sabotage, inability to procure or general shortage of labor, equipment, facilities, materials or supplies in the open market, failure of transportation, strike, lockout, action of labor unions, condemnation, laws, order of government or civil or military or naval authorities, or any other cause, whether similar or dissimilar to the foregoing, not within the reasonable control of the party prevented, retarded, or hindered thereby, including reasonable delays for adjustments of insurance. Anything contained herein to the contrary notwithstanding, Tenant’s obligation to pay Basic Rent, Additional Rent, or other charges due under the applicable provisions of the Lease, shall not be excused by reason of any of the foregoing events.
| 28. | Modification. |
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This Lease cannot be changed or terminated orally. Any agreement hereafter made shall be ineffective to change, modify or discharge this Lease in whole or in part, unless such agreement is in writing and signed by the party against whom enforcement of the change, modification or discharge is sought.
| 29. | Hazardous Material. |
The term “Hazardous Material” as used in this Lease shall mean any product, substance, chemical, material or waste whose presence, nature, quantity and/or intensity of existence, use, manufacture, disposal, transportation, spill, release or effect, either by itself or in combination with other materials expected to be on the Premises, is either:
(i) Potentially injurious to the public health, safety or welfare, the environment or the Premises,
(ii) Regulated or monitored by any government authority, or
(iii) A basis for liability of Landlord or Tenant or any occupant of the Premises to any governmental agency or third party under applicable statute or common law theory. Hazardous Materials shall include, but not be limited to, hydrocarbons, petroleum, gasoline, crude oil or any products, by-products or fractions thereof Tenant shall not engage in any activity in, on or about the Premises which constitutes a Reportable Use (as hereinafter defined) of Hazardous Materials without the express prior written consent of Landlord and compliance in a timely manner (at Tenant’s sole cost and expenses) with all applicable law. “Reportable Use” shall mean
(1) The installation or use of any above or below ground storage tank
(2) The generation, possession, storage, use, transportation, or disposal of Hazardous Materials. Reportable Use shall also include Tenant being responsible for the presence in, on or about the Premises of Hazardous Materials with respect to which any applicable law requires that a notice be given to persons entering or occupying the Premises or neighboring properties. Notwithstanding the foregoing, Tenant may, without Landlord’s prior consent, but in compliance with all applicable laws, use any ordinary and customary materials reasonably required to be used by Tenant in the normal course of Tenant’s business permitted on the Premises so long as such use is not a Reportable Use and does not expose the Premises or neighboring properties to any meaningful risk of contamination or damage or expose Landlord to any liability thereof. In addition, Landlord may (but without any obligation to do so) condition its consent to the use or presence of any Hazardous Materials, and activities including Hazardous Materials, by Tenant upon Tenant’s giving Landlord such additional assurances as Landlord, in its reasonable discretion, deems necessary to protect itself the public, the Premises and environment against damage, contamination or injury and/or liability therefrom, including, but not limited to, the installation (and removal on or before Lease expiration or earlier termination) of reasonably necessary protective modifications to the premises (such as concrete encasements) and/or the deposit of an additional security deposit. Tenant shall be reasonable for compliance with applicable laws respecting Hazardous Materials discovered, now or hereafter, to be existing in the Premises and Tenant shall indemnify and hold Landlord harmless for all claims, costs, liabilities, obligations of any kind and nature related to the use, presence abatement or contaminants of Hazardous Materials on the Premises. It is further expressly understood and agreed, that any Hazardous Materials which become exposed or discovered as a result of Tenant’s Work or Alternations, and which but for such works not have been exposed or discovered, and which but for such works would not be required by government authorities to be abated, shall be abated by Tenant at Tenant’s sole cost and expense as part of Tenant’s Work or Alterations provided by law.
| 30. | Security Deposit. |
The Tenant shall deposit with the Landlord on the date of execution hereof the sum of two thousand five hundred dollars and 00/100 ($2,500.00) as security for the performance by Tenant of terms of this Lease. Landlord, may use, apply or retain the whole or any part of the security so deposited to the extent required for the payment of rent or other sums as to which tenant is in default or any sum which Landlord may be required to expend by reason of Tenant’s default in respect of any terms of this Lease, including but not limited to, damages or deficiencies in reletting the Premises. In the even that Tenant shall comply with all the terms of this Lease, the security deposit shall be returned to Tenant after the date fixed as the end of the Lease and after deliver of
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possession of the Premises to the Landlord. In the event of sale of the Premises, the Landlord shall have the right to transfer the security deposit to the Purchaser, and Landlord shall thereupon be released from all liability for the return of such deposit. No interest shall accrue on the security deposit for Tenants benefit, any interest earned thereon being Landlord’s property. Landlord shall not be obligated to hold the security deposit in any particular account but rather may commingle same with Tenant’s other funds.
IN WITNESS WHEREOF, Tenant has caused these presents to be signed and sealed by its President and duly authorized agent and representative having power to bind Corporation and Landlord has caused these presents to be signed and sealed by its President, all as of the day and year first written hereinabove.
| Landlord | ||||
| Witness: | The Three Marquees | |||
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/s/ Pamela A. Kues
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By: | /s/ Joseph Tomarchio, Jr. [SEAL] | ||
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Joseph Tomarchio, Jr. | |||
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| Tenant | ||||
| Witness: | Mr. Tire, Inc. | |||
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/s/ Pamela A. Kues
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By: | /s/ Fredric A. Tomarhio [SEAL] | ||
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Fredric A. Tomarchio, President | |||
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Exhibit 10.80a
ASSIGNMENT AND ASSUMPTION OF LEASE
THIS ASSIGNMENT AND ASSUMPTION OF LEASE (the “Agreement”), is made as of the 1 st day of March, 2004 (the “Effective Date”), by and between Mr. Tire, Inc., a Maryland corporation having an address of 23 Walker Avenue, Baltimore, Maryland (“Assignor”) and Monro Muffler Brake, Inc., a New York Corporation having a principal address of 200 Holleder Parkway, Rochester, New York (“Assignee”).
RECITALS
WHEREAS, Assignor as tenant, and 1746 E. Joppa Road, LLC, as landlord, entered into a lease, dated January 1, 1997 (the “Lease”) relating to real property known as 1746 East Joppa Road located in Towson, Baltimore County, Maryland (the “Premises”); and
WHEREAS, Assignor and Assignee entered into a certain Asset Purchase Agreement dated as of February 9, 2004, as clarified by that certain Side Letter Agreement dated as of February 9, 2004, as same may be further amended and clarified (“Asset Purchase Agreement”), pursuant to which Assignor agreed to assign to Assignee all of Assignor’s right, title and interest as tenant under the Lease and Assignee agreed to assume all of Assignor’s obligations under the Lease.
NOW THEREFORE, pursuant to and in consideration of the Asset Purchase Agreement:
1. Assignor hereby assigns and transfers all of its right, title, and interest in the Lease to Assignee to have and to hold the same from and after the date hereof for the remainder of the term of the Lease.
2. Assignee hereby assumes and agrees to perform all obligations of Assignor pursuant to the Lease which accrue from the date hereof through the remainder of the term of the Lease. Assignor will remain liable for all of its obligations which accrued prior to the date hereof.
3. The representations and warranties set forth in the Asset Purchase Agreement with respect to the Lease assigned hereby, specifically, but not limited to, those set forth in Section 3.10 are incorporated in this Assignment as though set forth in full herein.
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IN WITNESS WHEREOF, this Assignment has been duly executed by the parties as of the Effective Date.
| MR. TIRE, INC. | ||||
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By: | /s/ Lonnie L. Swiger | ||
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Lonnie L. Swiger, Vice President | |||
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| MONRO MUFFLER BRAKE, INC. | ||||
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By: | /s/ Robert G. Gross | ||
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Robert G. Gross, President & CEO | |||
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STATE OF MARYLAND
COUNTY OF HOWARD SS.:
On the 26 th day of February, 2004, before me, personally appeared Lonnie L. Swiger personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.
| /s/ Rachel V. Castranova | ||||
| Rachel V. Casstranova commissioned as Rachel V. Flad | ||||
| Notary Public | ||||
STATE OF NEW YORK
COUNTY OF MONROE SS.:
On the 1 st day of March, 2004, before me, personally appeared Robert G. Gross personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.
| /s/ Mindi S. Collom | ||||
| Mindi S. Collom | ||||
| Notary Public | ||||
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Exhibit 10.80b
LANDLORD’S CONSENT AND ESTOPPEL CERTIFICATE
1746 E. Joppa Road, LLC, the person, firm or corporation identified as the landlord on Schedule “A” attached hereto (“Landlord”), DOES HEREBY CERTIFY THAT:
1. Landlord has entered into a certain lease which is more particularly described in said Schedule (the “Lease”) covering a portion of certain real property located at 1746 E. Joppa Road in Towson, Baltimore County, Maryland (the “Premises”).
2. The Lease is valid, in full force and effect on the date hereof and enforceable in accordance with its terms and has not been modified or amended from the date of its execution to the date hereof, except as may otherwise be indicated on said Schedule “A.”
3. The term of the Lease commenced on the date of commencement shown on Schedule “A” and will terminate, unless renewed or extended in accordance with its terms, on the date of termination shown on Schedule “A”.
4. All conditions precedent to the commencement of the term of the Lease and to the payment of the basic rent, additional rent, percentage rent (if any) and all other charges specified therein have been satisfied or waived by Landlord.
5. Landlord has delivered and Tenant has accepted and is in possession of the Premises and is paying the basic rent, additional rent, percentage rent (if any) and all other charges specified therein.
6. The Premises and the use and occupancy thereof by Tenant comply with the terms of the Lease.
7. Neither the Landlord under the Lease nor, to the best of Landlords knowledge, Tenant is in default with respect to the performance or observance of any of their respective covenants or obligations under the terms of the Lease nor has any event occurred with which the giving of notice or the passage of time would constitute a default under the Lease.
8. Landlord has not received any prepayment of any basic rent due under the Lease, other than the current month’s rent.
9. There are no rights of offset, abatement or reduction of basic rent presently accruing to Tenant by reason of any provision of the Lease or otherwise.
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This Certificate is being given to and may be relied upon by Monro Muffler Brake, Inc. (“Monro”) their successors and/or assigns, to induce Monro to acquire Tenant’s leasehold interest under the Lease pursuant to an Asset Purchase Agreement between Atlantic Automotive Corp., its wholly-owned subsidiary, Mr. Tire, Inc. and Monro Muffler Brake, Inc. dated February 9, 2004.
Landlord hereby acknowledges that its consent to the assignment of Tenant’s interest pursuant to the provisions of the Lease has been requested and consents to the assignment by Mr. Tire, Inc. to Monro Muffler Brake, Inc. of the Tenant’s leasehold interest.
IN WITNESS WHEREOF, Landlord has caused this Consent and Estoppel Certificate to be duly executed this 27 th day of February, 2004.
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LANDLORD | |||
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By: | /s/ Fredric A. Tomarchio | ||
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Name: |
Fredric A. Tomarchio
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Title: | Member |
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SCHEDULE “A”
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Name of Landlord:
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1746 E. Joppa Road, LLC | |
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Name of Tenant:
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Mr. Tire, Inc. | |
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Date of Lease:
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January 1, 1997 | |
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Leased Premises:
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1746 East Joppa Road | |
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Towson, MD 21234 | |
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Date(s) of amendment(s) to Lease (if any):
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None |
| Term of Lease: Commencement: | January 1, 1997 | |||
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Termination: | December 31, 2006 | ||
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Option Terms (if any): | 2 Ten (10) Year Terms | ||
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Exhibit 10.81
AGREEMENT
This agreement entered into this 1 st day of April 1998, by and between 425 Manchester Road L.L.C. (hereinafter called “Landlord”) and Mr. Tire, Inc. (hereinafter called “Tenant”).
WITNESSETH:
That for and in consideration of the rents herein reserved and to be paid by tenant to the Landlord and of the covenants and agreements herein set forth to be kept, performed and observed by Tenant, the Landlord does hereby rent, demise and lease to the Tenant and the Tenant does hereby take, lease and hire from the Landlord, upon the terms and conditions hereinafter set forth, land and improvements located at 425 Manchester Road, Westminster, Maryland, (the “Premises”), including specially a certain building located thereon, (the “Building”).
| 1. | Term |
The Term of this Lease shall be ten (10) years commencing April 1, 1998 and terminating March 31, 2008, both dates inclusive (the “Term”). Tenant shall have the option of renewing and extending the term of this lease for two(2) successive term of ten (10) years, for the same rental terms and conditions as the original term.
| 2. | Rent |
(A) Tenant, in consideration of this Lease, agrees to pay to Landlord, Basic Rent during the Term hereof, the sum of one million one hundred sixty nine thousand three hundred fifteen dollars and 69/100 dollars ($1,169,315.69), all payable without deduction or set off or demand, to be received on or before the first day of each month in accordance with the following schedule:
(i)For the Lease Year April 1, 1998-March 31, 1999, one hundred two thousand dollars and 00/100 dollars ($102,000.00) payable in twelve equal monthly installments of eight thousand five hundred dollars and 00/100 dollars ($8,500.00);
(ii)For the Lease Year April 1, 1999-March 31, 2000, one hundred five thousand sixty dollars and 00/100 dollars ($105,060.00) payable in twelve equal monthly installments of eight thousand seven hundred fifty five dollars and 00/100 dollars ($8,755.00);
(iii)For the Lease Year April 1, 2000-March 31, 2001, one hundred eight thousand two hundred eleven dollars and 80/100 dollars ($108,211.80) payable in twelve equal monthly installments of nine thousand seventeen dollars and 65/100 dollars ($9,017.65);
(iv)For the Lease Year April 1, 2001-March 31, 2002, one hundred eleven thousand four hundred fifty eight dollars and 15/100 dollars ($111,458.15) payable in twelve equal monthly installments of nine thousand two hundred eighty eight dollars and 18/100 dollars ($9,288.18);
(v)For the Lease Year April 1, 2002-March 31, 2003, one hundred fourteen thousand eight hundred one dollars and 90/100 dollars ($114,801.90) payable in twelve equal monthly installments of nine thousand five hundred sixty six dollars and 82/100 dollars ($9,566.82);
(vi)For the Lease Year April 1, 2003-March 31, 2004, one hundred eighteen thousand two hundred forty five dollars and 96/100 dollars ($118,245.96) payable in twelve equal monthly installments of nine thousand eight hundred fifty three dollars and 83/100 dollars ($9,853.83);
(vii)For the Lease Year April 1, 2004-March 31, 2005, one hundred twenty one thousand seven hundred ninety three dollars and 33/100 dollars ($121,793.33) payable in twelve equal monthly installments of ten thousand one hundred forty nine dollars and 44/100 dollars ($10,149.44);
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(viii)For the Lease Year April 1, 2005-March 31, 2006, one hundred twenty five thousand four hundred forty seven dollars and 13/100 dollars ($125,447.13) payable in twelve equal monthly installments of ten thousand four hundred fifty three dollars and 93/100 dollars ($10,453.93);
(ix)For the Lease Year April 1, 2006-March 31, 2007, one hundred twenty nine thousand two hundred ten dollars and 55/100 dollars ($129,210.55) payable in twelve equal monthly installments of ten thousand seven hundred sixty seven dollars and 55/100 dollars ($10,767.55);
(x)For the Lease Year April 1, 2007-March 31, 2008, one hundred thirty three thousand eighty six dollars and 86/100 dollars ($133,086.86) payable in twelve equal monthly installments of eleven thousand ninety dollars and 57/100 dollars ($11,090.57);
In the event that tenant pays Landlord any installments of Basic Rent or Percentage Rent after the due date, or any Additional Rent (as hereinafter defined) later than the (5 th ) day after billing therefore, then and in such event, Tenant shall pay to Landlord, together with and in addition to said installment of Basic Rent or Additional Rent, a late charge of five percent (5%) of installment past due. Any installments of Basic Rent or Additional Rent not made within ten (10) days from the date due shall, in addition to the foregoing late charges, bear interest from the date due at the rate of eighteen percent (18%) per annum (the “Default Rate”). If Landlord, during the Term of this Lease, receives two (2) or more checks from Tenant which are returned for insufficient funds.
Landlord, in addition to applicable late charges and reimbursement for any additional cost incurred by reason of any returned check, may require, at Landlord’s election, that any future payment shall be either bank certified, cashier’s or treasurer’s check. None of the foregoing late charges shall be construed to limit or otherwise waive any other remedies available to Landlord for Tenant’s default under this Lease. Anything contained herein to the contrary notwithstanding, the late charges provided hereunder shall be abated for one violation each Lease Year, provided Tenant cures such late payment within five (5) days after written notice that the same is past due.
(B) Tenant shall tender all payments due hereunder by good check to Landlord c/o The Three Marquees, P.O. Box 428, Savage, Maryland 20763, or to such other party or such other address as Landlord may designate from time to time by written notice to Tenant. If Landlord shall at any time or times accept said Basic Rent or Additional Rent after it shall become due and payable, such acceptance shall not excuse delay upon subsequent occasions, or constitute a waiver of any or all of Landlords rights hereunder.
(C) This Lease is what is commonly called a “triple net lease”, it being understood that Landlord shall receive the rent free and clear of any and all other impositions, taxes, liens, charges, or expenses of any nature whatsoever in connection with the ownership and operation of the Premises. In addition to the Basic Rent, Tenant shall pay to the parties respectively entitled thereto all impositions, insurance premiums, utility charges (including but not limited to gas, fuel, electric, water, sewer, trash removal and telephone charges), operating charges, maintenance charges, construction costs, and any other charges, costs, and expenses which arise or may be contemplated under any provisions of the Lease during the Term hereof. All of such charges, costs, and expenses shall constitute Additional Rent, and upon the failure of Tenant to pay any of such costs, charges or expenses, Landlord shall have the same rights and remedies as otherwise provided in this Lease for the failure of Tenant to pay Basic Rent. For purposes herein contained the term “Rent” shall refer to Basic Rent and Additional Rent. It is the intention of the parties hereto that this Lease shall not be terminable for any reason by the Tenant unless otherwise expressly permitted under the terms of this Lease and that Tenant shall in no event be entitled to any abatement of or reduction in Rent payable hereunder, except as herein expressly provided. Any present or future law to the contrary shall not alter this agreement of the parties. If Tenant defaults in the making of any payment to any third party or in the doing of any act required to be made or done by Tenant, then Landlord may, but shall not be required to make such payment or do such act, and the amount of the expense thereof, if made or done by Landlord, within interest thereon at the Default Rate accruing from the date paid by Landlord, together with an additional charge of fifteen percent (15%) of the amount so paid to cover Landlord’s administrative costs, shall be paid by Tenant to Landlord and shall constitute Additional Rent hereunder due and payable by Tenant upon receipt by Tenant of a written statement of costs from Landlord. The making of such payment or the doing of such act by Landlord shall not operate to cure Tenant’s default, nor shall it prevent Landlord from the pursuit of any remedy to which Landlord would otherwise be entitled.
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| 3. | Additional Rent. |
Tenant, in addition to Basic Rent, shall pay Additional Rent as hereafter specified, payable by Tenant to Landlord under this Lease being deemed “Additional Rent”. Basic Rent and Additional Rent shall collectively be referred to as “Rent”.
(A) Impositions.
Tenant shall pay throughout the Term, as Additional Rent, all taxes and assessments, general and special, if any, levied and assessed on the Premises, any improvements or alterations thereto and any personal property located therein, and all other governmental charges and impositions of any kind or nature whatsoever, general or special, foreseen and unforeseen, which if not paid when due, would encumber the title to the Building, all of which are herein called “Impositions” provided, however, that Impositions relating to fiscal periods of the taxing authority which precede or extend beyond the Term of this Lease shall be appointed between Landlord and Tenant. Landlord shall periodically provide Tenant with Landlords estimate of Impositions coming due, and Tenant shall pay to Landlord monthly, together with Basic Rent, one twelfth (1/12) of Landlords estimate of Impositions. Landlord shall forward to Tenant copies of all notices, bills or other statements received by Landlord concerning any Impositions and the presentation of any such invoice shall be conclusive evidence of the amount of the particular element of the Imposition to which the bill or statement refers. Any overpayment or deficiency in Tenants payment of Impositions shall be “Adjusted” within thirty (30) days after Tenants receipt of such statement. For purposes of this Lease “Adjusted” or “Adjustment” means the adjustment between Landlord and Tenant of any overpayment or deficiency in payment by Tenant of Impositions. Any required Adjustment shall be made, as the case may be by;
(i) Tenants payment to Landlord of any deficiency or
(ii) by Landlord’s crediting to Tenant’s account any overpayment or, if such Adjustment is made at the end of the term, Landlord’s reimbursement to Tenant of such overpayment less any amounts due from Tenant. At anytime during a Lease Year, Landlord may re-estimate Tenant’s share of Impositions and adjust Tenant’s monthly installments payable thereafter during the Lease Year to reflect more accurately Tenant’s share of Impositions as reestimated by Landlord.
For purposes hereof, “Impositions” shall also include any and all business licenses and/or franchise taxes imposed upon Tenant, and any taxes, assessments or other levies which may at any time be imposed against the Premises by any federal, state, county, municipal, quasi governmental or corporate entity in respect of public transportation or works or other governmental authority any assessments for public improvements or benefits and including also any tax, assessment or other charges in the nature of a sales, excise, use or other tax upon the Rent payable under this Lease, whether assessed against Tenant or Landlord, or the Premises. Impositions shall also include the cost (including attorney’s fees, consultant fees, witness and appraisal costs) of any negotiation, contest or appeal pursued by Landlord (regardless of outcome). The provisions of this Lease shall not be deemed to require Tenant to Pay municipal, state or federal income, gross receipts or excess Profits taxes assess against the Landlord, or municipal, state or federal estate, succession, or inheritance taxes imposed upon the Landlord provided, however, that if, at any time during the Term of this Lease, the methods of taxation of real estate prevailing on the date of the Lease shall be altered or supplemental so as to cause in lien thereof the whole of the taxes, assessments and other governmental charges owed, levied and assessed on the Premises to be levied and assessed on the Rent payable by tenant to Landlord under this lease, then the taxes so levied and assessed on the Rent shall be deemed to be Impositions and shall be payable by Tenant.
In addition to Tenant’s share of Impositions, Tenant shall pay, prior to the date due, to the appropriate taxing authority, any and all sales, excise and other taxes levied, imposed or assessed with respect to the operation of Tenant’s business and with respect to its inventory, furniture, fixtures, equipment and all leasehold improvements installed by Tenant, any prior tenant or by Landlord on behalf of Tenant. In no event shall Tenant have the right to contest Impositions absent Landlord’s prior written consent, which consent may be withheld or delayed in Landlord’s sole and absolute discretion.
(B) Insurance/Indemnity.
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The Landlord assumes no liability or responsibility whatsoever with respect to the conduct and operations of the business to be conducted within the Premises. The Landlord shall not be liable for any accident or injury to any person or persons or property in or about the Premises which are caused by any reason whatsoever, including, but not limited to the conduct and operations of said business, or by virtue of equipment or property owned or permitted in the Premises by the Tenant except when caused by Landlord’s gross negligence and then, only to the extent not covered under Tenant’s insurance. The Tenant agrees to indemnify and hold the Landlord, its agents, employees and lenders having liens against the Premises (“Indemnities”) from and against all liability, claims, suits, causes of action, demands, judgments, cost, interest and expenses (including also actual counsel fees and disbursements incurred in the defense thereof) to which any Indemnities may be subject or suffered, whatsoever by reason of any claim for, injury to, or death of, any person or persons or damage to or loss of property (including also any loss of use thereof) or otherwise, and arising from or in connection with the use by Tenant of, or from any work or anything whatsoever done by Tenant or any of its officers, directors, agents, contractors, employees, licensees or while within the Premises, invitees in any part of the Premises, during the Term of this Lease, or arising from any condition of the Premises due to or resulting from any default by Tenant in keeping observance or performance of any covenant or agreement contained in this Lease or from any fault or neglect of Tenant or any of its officers, directors, agents, contractors, employees, licensees or while within the Premises, invitees.
(ii) In order to assure the Indemnity referred to hereinabove, Tenant shall carry and keep in full force and effect at all times during the Term of this Lease, for the protection of Landlord and Tenant and naming both Landlord, Tenant and any Indemnities of Landlord as may exist from time to time or other parties as landlord may designate from time to time as parties insured, public liability insurance with limits for bodily injury or death of a least ONE MILLION DOLLARS ($1,000,000.00) for any one person or occurrence and at least THREE MILLION DOLLARS ($3,000,000.00) in the aggregate for any accident or number of persons, and on hundred percent (100%) actual replacement cost and extended coverage insurance for all risks, fire, casualty and Property damage covering the Premises, including, but not limited to the heating, air conditioning, water heater, water pump, plumbing (including sprinkler), electrical and mechanical systems serving the Premises and leasehold improvements (including those made by any prior tenant), lifts and auto/truck bays and Alterations, such policies to carry special endorsements covering against damage or loss by earthquake and against damage by water covered by so call flood insurance. All such policies shall, at Landlord’s election, name party as Landlord may designate as loss payee. In addition Tenant shall maintain rental interruption insurance sufficient to cover Rent payable under this Lease for no less than a one year period from and after the date of casualty throughout the Term naming Landlord or upon prior written notice, such other parties as Landlord may designate, as sole loss payee. In no event shall minimum amounts of coverage called for herein be less that the amount required by lenders having liens on the Premises. Copies of all such policies and/or certificates of insurance shall be furnished to Landlord upon request without undo delay.
(iii) Tenant shall obtain or cause to be obtained prior to commencement of any permitted alterations or other work, and keep in force during performance of the work, public liability and workmen compensation insurance to cover all contracts to be employed and covering Tenant, if Tenant elects to do any work itself The covering limits, form, and content of such policies shall be commercially reasonable and customary as reasonably determined by Landlord, but no event in amounts less than that required under applicable law. Tenant shall also, upon Landlord’s request, carry contract insurance or cause its contracts to post performance bonds. Before commencement of any works on the Premises, Tenant shall deliver certificates to Landlord showing such insurance and/or performance bonds to be in effect.
(IV) Tenant shall carry statutory workman compensation insurance covering its employees in, on and about the Premises. Copy of such policy and/or certificate of insurance shall be furnished to Landlord upon request without undo delay.
(v) A insurance policies required to be obtained by Tenant hereunder shall be issued by recognized and responsible insurance companies, having a “Best Insurance” rating of not less than A and a credit rating not less than XV and be qualified to do business in Maryland, and shall provide that such policies shall not be cancelled without thirty (30) days prior written notice to Landlord. Landlord shall be named as an additional insured and whenever designated by Landlord, as sole loss payee on all such policies, with the exception of the statutory
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workmen compensation coverage referred to herein and other casualty insurance carried by Tenant covering trade fixtures, equipment and inventory paid for and brought upon the premises by Tenant. Tenant shall deliver to Landlord at least once each Lease year, but so often as Landlord may request from time to time, a copy of all such insurance policies or a certificate thereof showing the same to be in full force and effect.
(vi) In the event Tenant shall fail to keep in force and maintain any such policy of insurance, Landlord shall have the right, at its option, and at the sole cost of Tenant, in addition to all other rights and remedies in the event of default, to purchase such policy or policies of insurance and to pay the premiums thereon. In such, event Tenant shall pay Landlord as Additional Rent an amount equal to Landlord’s cost of such insurance plus fifteen percent (15%) to cover Landlord’s administrative costs in procuring and administering such insurance, upon receipt of a written demand therefore.
(vii) Anything in this Lease to the contrary notwithstanding, the Tenant does hereby release the Landlord from any and all liability for any loss or damage to its property or Premises caused by fire or any of the other casualties covered by the risks included in insurance policies required to be carried by Tenant, including but not limited to Tenant’s general liability, extended coverage all risk, property damage, flood, earthquake and casualty insurance. This release is given notwithstanding that such liability casualty or loss shall have resulted from the negligence of Landlord or Tenant or their respective agents, employees, licenses, contractors or invites. Tenant agrees to cause it insurance policies covering the Premises and contents thereof to contain an appropriate endorsement whereby the insurer agrees that the insurance policy and coverage will not be invalidated by reason of the foregoing waiver of the right of recovery against the Landlord for loss occurring to the properties covered by such policy, and whereby such insurer also waives any right of subrogation against the Landlord and Tenant will, upon request, deliver to Landlord a certificate evidencing such waiver of subrogation by the insurer.
(viii) Anything in this Section 3 to the contrary notwithstanding, Landlord shall have the option, either alternatively or in combination with Tenant, to carry such casualty and property insurance covering the Premises, leasehold improvements, Alterations, and systems serving the Premises, including but not limited to the heating, air conditioning, water heater, water pump, plumbing (including sprinkler), electrical, and mechanical systems, Landlord may determine to be reasonable or necessary to protect its interests, and bill the cost of any insurance carried directly by Landlord to Tenant. Any premiums so billed by Landlord to Tenant shall be Additional Rent and payable within five (5) days of written demand.
| 4. | Possession of Premises, TENANT’S Work. |
Landlord delivers, and Tenant accepts the Premises “as is”. Tenant further acknowledges that is has fully inspected the Premises prior to the execution of this Lease and does hereby assume all of the risks, including but not limited to patent or latent defects as well as responsibility for all existing environmental conditions. Tenant further understands and agrees that Landlord shall be under no liability nor have any obligation to do any preoccupancy work or make any repairs in or to the Premises, except as otherwise expressly provided herein, any work which may be necessary to adapt the Premises for Tenant’s occupancy or for the operation of Tenant’s business therein (including any Alterations that may be necessary now or hereafter to effectuate compliance with any applicable laws), the sole responsibility therefore being that of Tenant and shall be performed by Tenant at its sole cost and expense.
| 5. | Tenant’s Covenants: |
Tenant hereby covenants as follows:
(A) Not to use Premises for any disorderly or unlawful purpose, nor for any purpose not expressly permitted pursuant to this Lease.
(B) To keep the Premises and approaches thereto, including parking areas, clean and free from trash and rubbish, to remove snow and ice from the adjacent sidewalks and any parking areas and loading areas which are a portion of the Premises, and to keep any show windows and signs neat, clean and in good order; and not to store any material or trash of any nature whatsoever on the exterior of the Premises, unless same is contained in covered dumpsters and not to store or dispose of any materials, except in accordance with all applicable laws. Tenant
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shall contract and arrange for, at Tenant’s expense, trash and materials removal at such intervals as are necessary to satisfy the requirements of this paragraph and applicable laws.
(C) Not to operate any machinery in the Premises which may cause excessive vibration or damage to the Premises, nor create any nuisance.
(D) To inspect all portions of the Premises, both interior and exterior and all machinery and equipment therein, so it may promptly detect the need for repairs to any thereof, to make such repairs as it is herein obligate to make.
(E) Not to place any loads or machinery or safes in the Premises in excess of the existing floor loads or utilize any equipment which would overload the Premises existing systems.
| 6. | Use of Premises. |
(A) Tenant hereby covenants and agrees the Premises shall not be used for any purpose other than for the following purposes: vehicle tire sales, repairs, parts accessories, maintenance and service.
(B) Tenant, at its own expense, shall comply with and carry out promptly, all orders, requirements or conditions imposed by the ordinances, laws and regulations of the United States, Maryland and of all other governmental authorities having jurisdiction over the Premises or Tenant, which are occasioned by or required in the conduct of Tenant’s business in the Premises, including but not limited to all environmental laws and regulations now or hereafter promulgated relative thereto. Tenant shall further comply with the Americans with Disabilities Act of 1990 (ADA) and any amendment to ADA, as well as applicable state land local laws, regulations and ordinances regarding access to, employment of, and service to individuals covered by the ADA. The compliance with ADA will include, but not be limited to, the design, construction and Alterations of the Premises. Tenant will indemnify Landlord and save it harmless from all penalties, claims and demands, resulting from any noncompliance. Tenant shall be responsible for obtaining and shall promptly obtain at its sole cost and expense all licenses, permits, certificates of occupancy, variances, special exceptions or any other permission necessary for its use, occupancy, repairs and subject to Section 8, signs, and subject to Section 9, Alterations of the Premises by Tenant as contemplated herein.
(C) Tenant shall not suffer or permit the Premises or any portion thereof to be used by the public without restriction or in such a manner as might reasonably tend to impair Landlord’s title to the Premises, or any portion thereof, or in such manner as might reasonably make possible a claim of adverse usage or adverse possession by the public, as such or of implied dedication of the Premises or any portion thereof Tenant hereby expressly recognizes that in no event shall it be deemed the agent of Landlord, and no contractor of Tenant shall by virtue of its contract be entitle to assert any lien against the Premises or Landlord’s interest therein.
| 7. | Repairs, Maintenance. |
(A) Landlord shall, subject to the need therefore not being caused in whole or part by the negligent or willful acts or omission of Tenant, its agents, employees, contractors or assigns, and subject to the aggregate cost thereof over the term not exceeding two (2) months of the then current Rent, maintain the exterior, structural walls, and foundations of the building except for alterations and improvements made by Tenant affecting the foregoing, which shall be Tenant’s responsibility to maintain and repair. Tenant shall throughout the Term, at no cost or expense to Landlord, make all other necessary repairs to the interior and exterior of the Premises, including, without limitation, the roof, the plumbing, the parking lot, mechanical and electrical systems serving the Premises. Tenant shall, in addition, at no cost or expense to Landlord, maintain the Premises, and all fixtures, equipment, Alternations and improvements installed or made by Tenant, by Landlord or any prior tenants contained therein, including, but not limited to, heating, air conditioning, water heater, water pump, plumbing (including sprinkler system), electrical and mechanical systems, in at least as good repair order and condition as the same are in on the Lease Commencement Date or date installed by Tenant, reasonable wear and tear and loss by fire or other casualty (to the extent this Lease is terminated pursuant to Section 21 and insurance proceeds sufficient to replace the same are paid to Landlord or its designee or unless Landlord elects, pursuant to Section 21, to restore the Premises), and promptly at no cost or expense to Landlord, shall make or cause to be made, all necessary repairs, interior and exterior, structural and non structural, foreseen as well as unforeseen. Tenant, at its
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own cost and expense shall also keep, maintain and repair all sideways, driveways, ground (including lawn care) and parking areas in a clean, neat and orderly condition and shall remove all snow and ice therefrom.
(B) All personal property of the Tenant in the Premises shall be there at the sole risk of the Tenant. Landlord shall not be liable for any accident or damage to the property of Tenant resulting from any reason whatsoever. Tenant hereby expressly releases Landlord from liability incurred or claimed by reason of damage therefrom.
| 8. | Signs and Personal Property |
Tenant agrees that no sign, awning, advertisement or notice shall be inscribed, affixed or displayed on any part of the Premises, except if first approved by Landlord, which approval will not be unreasonably withheld, conditioned or delayed. Such signage shall further be subject to all requirements and regulations of applicable governmental authorities having jurisdiction over the installation, placement and appearance of signs. Existing signs are deemed approved.
| 9. | Alterations |
(A) Tenant shall not make alterations, installations, changes, replacements, additions or improvements in or to the Premises or any part thereof (“Alterations”), or delay its consent with respect to same, provided such work shall be non structural and provided further that such work shall not affect any of the mechanical, electrical or other systems servicing the building, and provided further, that Landlord shall have received plans and specifications in a form and detail satisfactory to Landlord of any such proposed Alterations, installations, changes, replacements, additions or improvements. Tenant agrees to provide Landlord with the name of any proposed contractors of Tenant, certificates of liability insurance maintained by such contractors in amounts acceptable to Landlord, and copies of all plans for such improvements at the time request for Landlord’s approval is made by Tenant. Tenant shall provide Landlord with a copy of all requisite permits prior to commencement of any such work as its sole expense. All of Tenant’s aforesaid Alterations shall be performed in a good and workman like manner and in compliance with all applicable laws, codes, rules and ordinances. Landlord may at its option and discretion require Tenant at Tenant’s expense, to repair any damage to the Premises caused by either the removal or installation of aforesaid Alterations, or the removal or installation of any of Tenant’s equipment or fixtures that are removable, and Tenant will promptly comply with such directions. In addition to all legal, equitable and other rights and remedies available to Landlord, it is agreed that if Tenant, after receipt of written notice and failure to cure same within ten (10) days, does not comply with its obligations under this Section the Landlord shall have the right (but not the obligation) to perform or cause to be performed Tenant’s obligations, duties and covenants under this Section or any other provisions of this Lease, in which event Tenant shall reimburse to Landlord upon written demand all costs incurred by Landlord as a result thereof, plus fifteen percent (15%) to cover Landlord’s administrative costs.
(B) Tenant shall have no authority to incur any debt or to make any charge against Landlord, or to create any lien upon the Premises for any work or materials furnished for the same, and if any such lien should be filed against the Premises on account of work done to or labor or materials furnished on the Premises at Tenant’s request (whether or not Tenant obtained Landlord’s approval), Tenant shall have a period of thirty (30) days or such shorter period as required by law or Landlord’s lenders having liens against the Premises from the date notice of such lien is brought to attention to pay off said lien and have the same discharged of record, or if Tenant disputes such lien or the amount thereof, to post with the court having appropriate jurisdiction adequate bond required to release said lien of record. If Tenant shall fail to cause such lien to be so discharged or bonded within the time prescribed above, then, in addition to any other right or remedy of Landlord, Landlord may bond or discharge the same by paying the amount claimed to be due the amount so paid by Landlord, plus fifteen percent (15%) to cover Landlord’s administrative costs, plus Landlord’s actual attorney’s fees in either defending or procuring discharge of such lien, together with interest thereon at the Default Rate shall be due and payable by Tenant to Landlord as additional Rent, upon demand.
(C) All existing leasehold improvements, alterations and other additions or installations made to or within the Premises shall be Landlord’s property upon installation and shall not be removed from the Premises. Notwithstanding the foregoing, upon the expiration or earlier termination of the Lease, Tenant shall at Tenant’s expense, remove any of the foregoing items (except Alterations made with Landlord’s consent, where at the time
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of consent Landlord does not specify that the same will need to be removed upon expiration or earlier termination of the Lease) from the Premises if Landlord gives Tenant written notices to do so. Tenant shall promptly repair or, at Landlord’s election reimburse Landlord for the cost of repairing all damage done to the Premises by such removal.
| 10. | Assignment and Subletting. |
Tenant acknowledges that Landlord has entered into this Lease based on the financial creditworthiness and business reputation of Tenant and that such was a material inducement to Landlord’s entering into Lease. Accordingly, Tenant shall not, either directly, or indirectly, or by operation of law or by merger, reorganization or otherwise:
(a) assign, mortgage, pledge, encumber or otherwise transfer this Lease, the Term and estate hereby granted or any interest hereunder;
(b) permit the Premises or any part to be utilized by anyone other than Tenant or
(c) sublet or hypothecate (all of which be hereafter referred to as a “Transfer”) the Premises or any part thereof without obtaining in each instance, Landlord’s written consent, which may be withheld, conditioned or delayed in Landlord’s sole and absolute discretion. The transfer of any ownership interest in Tenant so as result in a change of control by way of merger, sale, reorganization, transfer of stock (except with respect to transfer of stock which is listed on a “National Securities Exchange” as defined in the Securities Exchange Act of 1934), sale of assets, appointment of a receiver or take-over by governmental authorities or otherwise shall be deemed a prohibited Transfer requiring Landlord’s consent. Transfer of Tenant’s right to occupy or use all or any portion of the Premises made without Landlord’s consent shall be null and void and confer no rights upon any third person. The consent by Landlord to any Transfer of Tenant’s rights hereunder shall not constitute a waiver of the necessity for such consent to any subsequent attempted Transfer. Receipt by Landlord or Rent due hereunder from any party other than Tenant shall not be deemed to be a consent to any such Transfer, nor relieve Tenant of its obligating to pay Rent for the full Tern of this Lease, Tenant shall have no claim and hereby waives the right to make claim against Landlord to damages by reason of refusal, withholding or delaying by Landlord of consent to a requested Transfer. Tenant agrees at the time of requesting Landlord’s consent to pay to Landlord an amount equal to Two Thousand and 00/100 Dollars ($2,000.00) to cover Landlord’s attorney fees and administrative expense for the review, processing or preparation of any document in connection with a permitted Transfer, such payment to be made in consideration of Landlord’s review and independent of and regardless as to whether or not Landlord’s consent is granted.
| 11. | Examination of Premises. |
After reasonable advance notice, except in cases of an emergency, Tenant shall allow Landlord and its agents reasonable access to the Premises during all reasonable hours for the purpose of examining the same to ascertain and determine if the Premises are in good repair and condition and for making repairs required of Landlord hereunder. Landlord’s access shall in no event constitute an eviction in whole or in part of Tenant and in no event shall such access give rise to any claim of disrupted use, breach of quiet enjoyment nor shall such access in any way affect or alter Tenant’s obligation to pay Rent as and when provided herein. Landlord may exhibit the Premises to prospective purchasers at anytime during the Term hereof and to prospective tenants during the last twelve (12) months of the Term. Landlord, during the last twelve (12) months of the Term, or any time Tenant shall be in default of its obligations hereunder, shall have the right to post For Rent signs on the Premises.
| 12. | Subordination/Attornment. |
Tenant agrees that this Lease shall be subject and subordinate to the lien or liens of any mortgages, deed or deeds of trust, or other security interests (collectively the “Interest”) that may now or may hereafter be placed against the Premises and that this clause shall be self operating. Notwithstanding the fact that this clause is self-operating, if Landlord requests, Tenant shall execute any instruments, releases or other documents that may be required for the purpose of confirming that this Lease, and Tenant’s interest is subject and subordinate to the lien of any Interest, whether original or substituted. Tenant covenants and agrees in the event any proceedings are brought
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for the foreclosure of any such mortgage or deed of trust, to return to the purchaser upon any such foreclosure sale and to recognize such foreclosure sale and to recognize such purchaser as the Landlord under this Lease and that upon failure to do so within ten (10) days of demand, Landlord shall be deemed and designated by Tenant as its Attorney-In-Fact, such to be coupled with an interest, with full authority to execute any instruments required of Tenant under this Lease. Tenant further waives the provisions of any statute or rule of law, now or hereafter in effect, which may give or purport to give Tenant any right or election to terminate or otherwise adversely affect this Lease and the obligations of Tenant hereunder in the event any such foreclosure proceedings is brought.
| 13. | Insolvency or Bankruptcy of Tenant. |
If at any time prior to the Commencement Date of this Lease, or any time during the term hereby demised, there shall be filed by or against Tenant in any court pursuant to any statute either of the United States or of any state a petition in bankruptcy or insolvency or for reorganization or for the appointment of a receiver or trustee of all or a portion of Tenants property, and if within thirty (30) days hereof Tenant fails to secure a discharge thereof, or if Tenant makes an assignment for the benefit of creditors, or petitions for or enters into a plan under the Bankruptcy Code (as defined below), this Lease, at the option of Landlord, may be cancelled and terminated by notice of cancellation to Tenant effective three (3) days thereafter, in which event neither Tenant nor Guarantor nor any person claiming through or under Tenant or Guarantor by virtue of any statute or of an order of any court shall be entitled to possession, or to remain in possession of the Premises, and Landlord, in addition to the other rights and remedies Landlord has by virtue of any other provision herein or elsewhere in this Lease contained or by virtue of any statue or rule of law may retain as liquidate damages any Rent, security, deposit or monies received by Landlord from Tenant or others in behalf of Tenant. If Tenant becomes a debtor within the meaning of the Bankruptcy Reform act of 1978, as the same may from time to time be amended (“Bankruptcy Code”) and notwithstanding any other provisions of this Lease, this Lease and Landlord’s and Tenant’s rights are then made subject to such Bankruptcy Code, it is covenanted and agreed that the failure of Tenant or its representative appointed in accordance with said Bankruptcy Code to furnish accurate information and adequate assurances as to the source of Rent and other consideration due under this Lease, or conduct or have conducted at the Premises Tenant’s business as provided in Section 6 hereof, shall in any case each be deemed a default under this Section 20, and Landlord shall have all rights and remedies herein afforded to it in the event of any default by Tenant under this Lease. Tenant’s interest in this Lease shall not pass to any trustee or receiver or assignee for the benefit of creditors or operation of law except as may be specially provided by the Bankruptcy Code.
| 14. | Default. |
(A) In event that:
(i) Tenant shall fail to pay when due any payment of the Rent payable by Tenant hereunder and such failure shall continue for a period of five (5) days following receipt by Tenant of written notice thereof (such notice only being required once in any twelve month period) or
(ii) Tenant shall violate any other term, covenant or condition of this Lease or neglect or fail to perform or to observe any of the other terms, conditions or covenants herein contained on Tenant’s part to be performed or observed and Tenant shall fail to remedy the same within fifteen (15) days of written notice thereof from Landlord, provided however, that if cure is not reasonably possible within the aforesaid fifteen (15) day period, then, in such event, Tenant shall be afforded an additional reasonable time within to effectuate cure or
(iii) In the event that this Lease or the Premises or any part thereof shall be taken upon execution or by other process of law directed against Tenant, or shall be taken upon or subject to any attachment at the instance of any creditor of or claimant against Tenant, or taken over by governmental authority or otherwise breach Section 13 above; or
(iv) If Tenant shall abandon, vacate or desert the Premises, or fail to operate the Premises from the purposes provided in Section 6 thereof, or
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(v) Tenant shall, except as expressly otherwise permitted herein, Transfer its interest in this Lease, then in any one or more of such events, Tenant shall be in default of the Lease and Landlord shall have the right, as its option, in addition to any other rights and remedies set forth in this Lease or provided at law or in equity either:
(1.) To terminate this Lease and if the event of default is not so cured, Tenant’s right to possession of the Premises shall cease and the Lease shall thereupon be terminated; or
(2.) With or without notice to re-enter and take possession of the Premises without terminating the Lease, or any part thereof, and repossess the same as Landlord’s former estate and expel the Tenant and those claiming through or under Tenant, and remove the effects of both or higher, (forcibly, if necessary), and the Landlord shall have the right, without further notice or demand, to take the action and do the things aforesaid without being deemed guilty of any manner of trespass and without prejudice to any remedies for arrears of rent or preceding breach of contract, it being expressly understood that if the Landlord elects to re-enter, Landlord may terminate this Lease, or from time to time, without terminating the Lease, may relet the Premises, or any part thereof, for such terms and rental or rentals and upon such other terms and conditions as Landlord may deem advisable, with the right to make such Alterations and repairs and grant such rental concessions to prospective tenants of the Premises at Tenant’s expense, as Landlord in its sole business judgment believes reasonably necessary in connection with securing another tenant. No such re-entry or taking of possession of the Premises by Landlord shall be construed as an election on Landlord’s part to terminate this Lease unless a written notice of such intention is given to Tenant or unless the termination hereof be decreed by court of competent jurisdiction. In no event shall Landlord be obligated to relet the Premises or mitigate damages, it being understood that the failure to relet or mitigate shall in no event reduce Landlord’s entitlement to Basic Rent, Percentage Rent, Additional Rent and other sums payable under this Lease throughout the Term.
(3.) In no event shall Landlord be obligated to provide notice of default more often than once in a twelve (12) month period, it being understood that Landlord may exercise its rights under this Lease in the event of default without notice if a notice of default has previously been given during the immediately preceding twelve (12) month period; or
(4.) In the event of any such termination, Tenant shall nevertheless pay the Rent and all other sums as herein provided up to the time of such termination, and thereafter, Tenant, until the end of what would have been the term of this Lease in the absence of such termination, and whether or not the Premises shall have been relet, shall be liable to Landlord for and shall pay to Landlord, as liquidated current damages, an amount equal to:
(i) The Rent and all sums as hereinbefore provided which would otherwise be payable hereunder if such termination had not occurred, less the net proceeds, if any, of reletting of the Premises after deducting all of the Landlord’s expenses in connection in with such reletting, including without limitation, all repossession costs, brokerage commissions, legal expenses including actual attorney’s fees, expenses of employees, alteration and remodeling costs, and expenses of preparation for such reletting; or
(ii) The present value of the Rent and all other sums as herein before provided which would otherwise be payable hereunder if such termination had not occurred, discounted at an interest rate equal to the Prime Rate of interest as published in the Wall Street Journal as of the date of default, Tenant shall pay such liquidated current damages on the days on which the Basic Rent would have been payable hereunder if this Lease had not been terminate or at Landlord’s election, shall pay such amount to Landlord by lump sum, upon demand. If this Lease shall be terminated as aforesaid, Landlord may but shall not be obligated to relet the Premises or any part thereof, for the account and benefit of Tenant, for such terms and to such person or persons and for such period or periods as Landlord may determine and any such sums received shall be applied first against all of the Landlord’s expenses in connection with such reletting, including without limitation, all repossession costs, brokerage commissions, legal expenses including actual attorney’s fees, expenses of employees, alteration and remodeling costs, and expenses of preparation for such reletting, and then against damages occasioned by Tenant’s default. The acceptance of a tenant by Landlord in place of Tenant shall not operate as a release of Tenant from the performance of any covenant, promise or agreement herein contained, and the performance of any substitute tenant by the payment of Rent, or otherwise, shall not constitute satisfaction of the obligations of Tenant arising hereunder. Any damages or deficiencies, at the option of Landlord, may be recovered by Landlord in separate actions, from time to time, as Tenant’s obligations for payment would have accrued if the Term had continued, or
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from time to time as said damages or deficiencies shall have been made more easily ascertainable by reletting of the Premises, or any such action by Landlord may, at the option of Landlord, be deferred until the expiration of the Term or may be accelerated and immediately due and payable.
(B) Tenant hereby expressly waives any provision of law now in force or which hereafter may be enacted giving Tenant the right under any condition after default to the redemption and repossession of the Premises or any part thereof
(C) Unless otherwise agreed to by the parties in writing, no payment by Tenant or receipt by Landlord of a lesser amount than the installments of Rent herein stipulated shall be deemed to be other than on account of the earliest stipulated Rent, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as Rent be deemed an accord and satisfaction, and the Landlord may accept such check or payment without prejudice to the Landlord’s right to recover the balance of such Rent or pursue any other remedy.
(D) In addition to and not in limitation of the other remedies provided in this Lease, the Landlord shall be entitled to the restraint by injunction of any violation or attempted or threatened violation of any of the terms, covenants, conditions, provisions or agreements of this Lease.
(E) If Tenant shall default in the performance of any covenant on its part to be performed by virtue of any provision of this Lease, and if in connection with the enforcement of its rights or remedies, Landlord shall incur fees and expenses for services rendered (including without limitation, reasonable attorney’s (fees), then such fees and expenses shall be immediately reimbursed by Tenant to Landlord on demand. In the event Landlord shall file any legal action for the collection of Rent or any eviction proceeding, whether summary or otherwise, for the non payment of Rent, and Tenant shall make payment of such Rent due payable prior to the rendering of any judgment, then Landlord shall be entitled to collect, and Tenant shall be obligated to pay, in addition to all Rent due (including the late charges provided for above), all court filing fees and actual legal fees of Landlord.
(F) The remedies of Landlord provided for in this Lease are cumulative and are not intended to be exclusive of other remedies to which Landlord may be lawfully entitled. The exercise by Landlord of any remedy to which it is entitle shall not preclude or hinder the exercise of any other such remedy, nor constitute an election of remedies.
| 15. | Effect of Waiver. |
If, under the provisions of this Lease, summons or other notice shall, at any time, be served upon Tenant by Landlord and a compromise or settlement shall be effected either before or after judgement or decree, whereby Tenant shall be allowed or permitted to retain possession of the Premises, the same shall not constitute a waiver of any covenant or agreement herein contained, or of this Lease itself except to the set forth in such comprise or settlement. No waiver by Landlord or Tenant of any breach of agreement herein contained shall be construed to be a waiver of the covenant itself or of any subsequent breach thereof. No re-entry by Landlord and no acceptance by Landlord of keys from Tenant shall be considered an acceptance of a surrender of the Lease.
| 16. | Estoppel Certificates. |
Landlord and Tenant agree at any time and from time to time, upon not less than ten (10) days prior written notice by the other, to execute, acknowledge and deliver to the other party a statement in writing certifying
(1) that this Lease is unmodified and in full force and effect (or if there have been modifications, that the Lease is in full force and effect as modified and stating the modification),
(ii) the date to which the Rent hereunder has been paid by Tenant,
(iii) whether or not to the knowledge of the party giving such estoppel, Landlord or Tenant are in default in the performance of any covenant, agreement or condition contained in Lease, and, if so, specifying each such default of which such party may have knowledge, and
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(iv) the address to which notices to such party should be sent, and
(v) such other matters as Landlord may require. Any such statement delivered pursuant hereto may be replied upon by Landlord, Tenant any other prospective tenant or purchaser, any owner of the Premises, any mortgagee or prospective mortgagee of the Premises or of Landlord’s interest therein, or any prospective assignee of any such interest.
| 17. | Eminent Domain. |
Tenant agrees that if the Building, or so much of the Premises so as impair Tenant’s use of the Premises, shall be taken or condemned for public or quasi-public use or purpose by any competent authority, Tenant shall have no claim against the Landlord and shall not have any claim or right to any portion of the amount that may be awarded as damages or paid as a result of any such condemnation; and all rights of the Tenant to damages therefore, if any, are hereby assigned by the Tenant to the Landlord. Upon any condemnation or taking, affecting the whole or any substantial part of the Premises as provided above, the Term of this Lease shall cease and terminate unless the parties otherwise agree in writing. The Tenant shall have no claim for the value of any unexpected Term of this Lease. If less than the whole of the Building or substantial part of the Premises is taken or condemned by any governmental authority for any public or quasi-public use or purpose, and in the event neither Landlord not Tenant shall desire to terminate this Lease, then and in such event the Basic Rent shall be equitably adjusted on the date when title vests in such governmental authority and the Lease shall otherwise continue in full force and effect. For purposes of this Section, a substained part of the Building shall be considered to have been taken if twenty five percent (25%) or more is taken. A substained portion of the Premises shall be deemed taken if more than twenty five percent (25%) of the areas of available for parking are taken. Notwithstanding anything to the contrary contained herein. Tenant shall be entitled to pursue a separate claim for the value or Tenant’s furnishings, equipment, movable trade fixtures which are not deemed pursuant to this Lease to be Landlord’s property and then only to the extent paid for by Tenant and provided such claim shall in no manner diminish the award or other compensation to which Landlord would otherwise be entitled.
| 18. | Quiet-Enjoyment. |
Subject to the rights reserved to Landlord herein, Landlord covenants the if Tenant shall not be in default hereunder (after the expiration of any notice and cure period). Tenant shall at all times peaceably and quietly have, hold and enjoy the Premises in accordance with the terms and conditions of this Lease, without any interruption from Landlord or any other person claiming through or under Landlord.
| 19. | Notices |
Until further notice by either party to the other, in writing, all notice or communications required or permitted hereunder shall be sent by registered or certified mail, return receipt requested, (a) If to Landlord, addressed to:
425 Manchester Road, L.L.C.
P.O. Box 428
Savage,
Maryland 20763
(b) If to Tenant, addressed to:
Mr. Tire, Inc.
P.O. Box 428
Savage, Maryland 20763
| 20. | Tenant Holdover |
This Lease shall expire, without notice by either part to the other at midnight of the last day of the Term. If Tenant shall not immediately surrender possession of the Premises at the termination of this Lease, Tenant, at Landlord’s election, shall become either a Tenant at sufferance, or Tenant from month to month, Landlord
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expressly reserving the right to terminate such tenancy and reenter and take possession of the Premises with or without notice or process. Tenant hereby promises and represents that it will promptly surrender the Premises, in accordance with the terms and conditions of this Lease, and hereby acknowledges that such promise is a material inducement to Landlord to enter into this Lease Agreement. Tenant further agrees to indemnify and hold Landlord harmless from and against any and all claims or liability, to any part whatsoever, occasioned from and by Tenant’s holding over, including any actual attorney’s fee or other costs associated therewith. In the event Tenant shall holdover subsequent to the expiration of the Term or any renewal term of this Lease, Landlord shall in lieu of Rent, be entitled to demand and receive from Tenant monthly use and occupancy payments for each month in which Tenant shall holdover subsequent to the expiration of the term of Lease, in an amount equal to twice the Basic Rent during the last month of the term of this Lease, plus any and all Additional Rent or other charges due under this Lease. Each such use and occupancy payment shall be due on or before the first day of each calendar month in which Tenant shall holdover hereunder. In no event shall Landlord’s demand or acceptance of such use and occupancy payments be considered to constitute an acquiescence by Landlord to the extension of the Term hereof, and Landlord shall be entitled to obtain immediate possession of the Premises irrespective of any such demand or acceptance. In the event Tenant shall pay monthly use and occupancy payments for any calendar month following expiration of the Term hereof such payment shall be prorated upon Tenant’s surrender of full and exclusive possession of the Premises to the Landlord, free of any and all other parties claiming through or under the Tenant.
| 21. | Damage by Casualty. |
(A) Tenant shall give prompt notice to Landlord in case of any fire or other damage or casualty to the Premises or the Building. If
(i) The Building shall be damaged to the extent that in Landlord’s reasonable judgment, repairing such damage or destruction would not be economically feasible;
(ii) The Building shall be damaged as a result of a risk which is not covered or any portion thereof shall require that the insurance proceeds under the policies referred to in Section 3. (B) hereof be used for other than repairing, replacing and rebuilding such damage, then in any event Landlord may terminate this Lease by notice given within ninety (90) days after such event. In the event this Lease is terminated as provided above in this Section 21: (i) the entire proceeds of the insurance provided for in Section 3. (B) hereof shall be paid by the insurance company or companies directly to Landlord and shall belong to, and be the sole property of, Landlord; (1) the portion of proceeds of the insurance provided for in Section 3. (B) which is insuring equipment, fixtures and other items, which by the terms of the Lease, belong to the Landlord by whatever cause shall be paid by the insurance company or companies directly to Landlord, and shall belong to, and be the sole property of, Landlord;
(iii) Tenant shall immediately vacate the Premises in accordance with this Lease;
(iv) All Rent shall be apportioned and paid to the date on which possession is relinquished or the date of such damage, whichever last occurs; and
(v) Landlord and Tenant shall be relieved from any and all further liability or last obligation hereunder except as expressly provided in this Lease. Tenant hereby waives any and all rights to terminate this Lease that it may have, by reason of damage to the Premises by fire, flood, earthquake or other casualty, pursuant to any presently existing or hereafter enacted statute or pursuant to any other law.
(B) If all or any portion of the Building is damaged by fire, flood, earthquake or other casualty and this Lease is not terminated in accordance with the provisions of Section 21 (A), then all insurance proceeds under the policies referred to in Section 3. (B) hereof that are recovered on account of any such damage by fire or casualty shall be made available for the payment of the cost of repair, replacing and rebuilding and as soon as practicable after such damage occurs Landlord shall, using the proceeds provided for by Section 3. (B) hereof, repair or rebuild the Building and other portions of the Premises or such portion hereof to its condition immediately prior to such occurrence to the extent the cost therefore is fully funded by insurance proceeds. Alternatively, at Landlord’s option, Landlord may require that Tenant perform such repairs, in which case, Landlord shall make available to Tenant, insurance proceeds received by Landlord-In no event shall be obligated to repair or replace Tenant’s
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movable trade fixtures or other personal property. In addition, Tenant shall, using the remaining proceeds of the insurance proceeds from policies provided for in Section 3. (B) hereof, repair, restore and replace Tenant’s movable trade fixtures, personalty and equipment. If the aforesaid insurance proceeds under the insurance provided for in Section 3. (B) hereof shall be less the cost of repairing or replacing Tenant’s movable trade fixtures, equipment and personalty, or other items required to be insured by Tenant pursuant to Section 3. (B) hereof, Tenant shall pay the entire excess cost thereof, and if such insurance proceeds shall be greater than the cost of such repair, restoration, replacement or building, the excess proceeds shall belong to, and be the property of Tenant.
(C) In the event of any repair or rebuilding pursuant to the provisions of Section 21 hereof, then only to the extent Landlord receives rental insurance proceeds equal to the Rent due during the period the Building and other portions of the Premises are undergoing repairs and Tenant’s use is precluded, there shall be abated an equitable portion of the Basic Rent during the existence of such damage, based upon the portion of the Premises which is rendered untenantable and the duration thereof Landlord shall not be liable or obligated to tenant to any extent whatsoever by reason of any fire or other casualty damage to the Premises, or any damages suffered by Tenant by reason thereof, or the deprivation of Tenant’s possession of all or any of the Premises.
| 22. | Jury Trial Waiver. |
Landlord and Tenant hereby waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other one in respect of any matter whatsoever arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant hereunder, Tenant’s use OF occupancy of the Premises, and/or claim of injury or damage. Tenant acknowledges that the waiver of jury trial has been reviewed with counsel and is an acceptable and material business term of this Lease.
| 23. | General Provisions. |
(A) Nothing in this Lease shall be deemed or construed in any way as constituting the consent or request of Landlord, expressed or implied, by inference or otherwise to any contractor, subcontractor, laborer or materials for the performance of any labor or the furnishing of any materials for any specific improvement, alteration or repair of the Premises or any part thereof.
(B) Nothing herein contained shall in any way be considered or construed as creating the legal relation of a partnership or joint venture between Landlord and Tenant, it being expressly understood and agreed by the parties hereto that the relationship between the parties shall be one of Landlord and Tenant.
(C) It is further and agreed that the covenants, agreements and conditions shall be binding upon the Landlord and Tenant, as we as their respective, heirs, executors, administrators, successors and permitted assigns.
(D) This Lease shall be governed and construed in accordance with the laws of the State of Maryland.
(E) If any covenants or agreements of this Lease or the application thereof to any person or circumstances shall be held to be invalid or unenforceable, then, and in each such event, the remainder of this Lease or the application on such covenant or agreement to any other person or any other circumstances shall not be thereby affected, and each covenant and agreement hereof shall remain valid and enforceable to the fullest extent permitted by law.
(F) Upon the request of Landlord, Tenant shall execute and deliver a memorandum of Lease or short form Lease suitable for recording. In no event shall Tenant record this Lease or any short form Lease without Landlord’s written consent, such consent to be withheld, conditioned or delayed in Landlord’s sole and absolute discretion.
(G) In the event that any mortgage providing financing on the Premises requires, as a condition of such financing, that modifications to the Lease be Obtained, and provided that such modifications
(i) Do not increase the Rent and other sums due hereunder, or
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(ii) Constitute a no material change any substantive rights, obligations or liabilities of Tenant under this Lease, then Landlord may submit to Tenant a written amendment to this Lease incorporating such changes, and if Tenant does not execute and return such written amendment within ten (10) days after the same has been submitted to Tenant, then Landlord shall thereafter have the right at it sole option, to immediately cancel and terminate this Lease or to exercise its powers as attorney-in-fact, pursuant to Section 23 (O) below.
(H) Any obligation arising during the Term of this Lease under any provision herein contained, which would by its nature require the Tenant to take certain action after the expiration of the termination of this Lease to fully comply with the obligation arising during the Term, shall be deemed to survive the expiration of the Term or other termination of this Lease to the extent of requiring any such action to be performed after the expiration of the Term which is necessary to fully perform the obligation that erode during the Term of this Lease.
(I) The captions and headings throughout this Lease are for convenience and reference only, and the words contained in such captions shall in no way be held or deemed to meaning of any provision of this Lease.
(J) Words of any gender used in this Lease shall be held to include any other gender, and words in the singular number shall be held to include the plural and words in the plural shall be held to include the singular, when the sense so requires.
(K) Further, if the holder of a mortgage or deed of trust which includes the Premises, notifies the Tenant that such holder has taken over the Landlord’s rights under this Lease, Tenant shall not assert any right to deduct the cost of repairs or any monetary claim against the Landlord from Rent thereafter due and payable, but shall look solely to the Landlord’s interest in the Premises for satisfaction of such claim.
(L) By its entry into this Lease the Tenant represents and acknowledges to the Landlord that the Tenant has satisfied itself as to the use which it is permitted to make of the Premises and has inspected the Premises and confirms that the same are acceptable to Tenant, Tenant further acknowledges that Landlord has made no representations, warranties or covenants to Tenant except as expressly provided herein.
(M) No diminution or shutting off light, air or view by any structure that may be erected on the Premises or on any adjacent or nearby properties shall in any manner affect this Lease or obligations of Tenant hereunder.
(N) Time is of the essence with respect to the performance of Tenant’s obligations hereunder, including, but not limited to the obligation to pay Basic Rent, Percentage Rent, Additional Rent and other sums due hereunder.
(O) In the event Tenant shall fail or refuse to execute and deliver to Landlord any document or instrument which may be required under the terms of this Lease within ten (10) days after Landlord’s written request therefore, Tenant hereby irrevocably appoints Landlord as attorney-in-fact for Tenant, such appointment being coupled with an interest, with full power and authority to execute and deliver such documents or instruments for and in the name of Tenant.
| 24. | Brokers. |
The respective parties certify that no person or company provided services as a broker, agent, finder or assisted in the negotiations of this Agreement. Each party agrees to indemnify the other for any claim asserted by any person or company purporting to act on its behalf in providing services as a broker, agent or finder, in connection with this Agreement.
| 25. | Entire Agreement. |
It is understood and agreed by and between the parties hereto that this Lease and the Exhibits attached hereto contain the final and entire agreement between the said parties and they shall not be bound by any terms, statements, conditions or representations, oral or written, not herein contained.
| 26. | Landlord’s Liability. |
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If the Landlord shall sell, convey or otherwise dispose of its interest in the Premises, then the undersigned Landlord shall be deemed to be released of all obligations hereunder arising from the date of such transfer, and the transferee shall be deemed to be the Landlord hereunder for all purposes hereunder. Anything contained in this Lease or as provided at law to the contrary notwithstanding. Tenant acknowledges that as an express condition to Landlord’s entering into this Lease, Tenant agrees that Landlord, its agents, officers, employees and assigns shall have no personal liability nor shall any of them be subject to monetary claim of any kind or nature. In the event of a breach or default by Landlord, Tenant shall have no right to consequential damages, claims for loss sales or profits or the like, any and all such claims being expressly waived as a material inducement to Landlord’s entering into this Lease. Moreover, in the event of a breach or default by Landlord of any of its obligations under this Lease, Tenant acknowledges and agrees that its sole remedy shall be limited to an action for specific performance and even then, only to the extent the cost of such performance is less than two (2) months Rent, any amounts to effect specific performance over and above such sum being Tenant’s responsibility, being a negotiated condition of this Lease that Landlord’s aggregate cost of repairs under Section 7 shall never exceed over the Term the sum of two (2) months then current Rent. The provisions hereof shall insure to Landlord’s successors and assigns.
| 27. | Force Majeure. |
Each party shall be excused from performing any obligation or under takings provided for in this Lease for so long as such performance is prevented or delayed, retarded or hindered by act of God, fire, earthquake, flood, explosion, action of the elements, war, invasion, insurrection, riot, mob violation, sabotage, inability to procure or general shortage of labor, equipment, facilities, materials or supplies in the open market, failure of transportation, strike, lockout, action of labor unions, condemnation, laws, order of government or civil or military or naval authorities, or any other cause, whether similar or dissimilar to the foregoing, not within the reasonable control of the party prevented, retarded, or hindered thereby, including reasonable delays for adjustments of insurance. Anything contained herein to the contrary notwithstanding, Tenant’s obligation to pay Basic Rent, Additional Rent, or other charges due under the applicable provisions of the Lease, shall not be excused by reason of any of the foregoing events.
| 28. | Modification. |
This Lease cannot be changed or terminated orally. Any agreement hereafter made shall be ineffective to change, modify or discharge this Lease in whole or in part, unless such agreement is in writing and signed by the party against whom enforcement of the change, modification or discharge is sought.
| 29. | Hazardous Material. |
The term “Hazardous Material” as used in this Lease shall mean any product, substance, chemical, material or waste whose presence, nature, quantity and/or intensity of existence, use, manufacture, disposal, transportation, spill, release or effect, either by itself or in combination with other materials expected to be on the Premises, is either:
(i) Potentially injurious to the public health, safety or welfare, the environment or the Premises,
(ii) Regulated or monitored by any government authority, or
(iii) A basis for liability of Landlord or Tenant or any occupant of the Premises to any governmental agency or third party under applicable statute or common law theory. Hazardous Materials shall include, but not be limited to, hydrocarbons, petroleum, gasoline, crude oil or any products, by-products or fractions thereof Tenant shall not engage in any activity in, on or about the Premises which constitutes a Reportable Use (as hereinafter defined) of Hazardous Materials without the express prior written consent of Landlord and compliance in a timely manner (at Tenant’s sole cost and expenses) with all applicable law. “Reportable Use” shall mean
(1) The installation or use of any above or below ground storage tank
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(2) The generation, possession, storage, use, transportation, or disposal of Hazardous Materials. Reportable Use shall also include Tenant being responsible for the presence in, on or about the Premises of Hazardous Materials with respect to which any applicable law requires that a notice be given to persons entering or occupying the Premises or neighboring properties. Notwithstanding the foregoing, Tenant may, without Landlord’s prior consent, but in compliance with all applicable laws, use any ordinary and customary materials reasonably required to be used by Tenant in the normal course of Tenant’s business permitted on the Premises so long as such use is not a Reportable Use and does not expose the Premises or neighboring properties to any meaningful risk of contamination or damage or expose Landlord to any liability thereof. In addition, Landlord may (but without any obligation to do so) condition its consent to the use or presence of any Hazardous Materials, and activities including Hazardous Materials, by Tenant upon Tenant’s giving Landlord such additional assurances as Landlord, in its reasonable discretion, deems necessary to protect itself the public, the Premises and environment against damage, contamination or injury and/or liability therefrom, including, but not limited to, the installation (and removal on or before Lease expiration or earlier termination) of reasonably necessary protective modifications to the premises (such as concrete encasements) and/or the deposit of an additional security deposit. Tenant shall be reasonable for compliance with applicable laws respecting Hazardous Materials discovered, now or hereafter, to be existing in the Premises and Tenant shall indemnify and hold Landlord harmless for all claims, costs, liabilities, obligations of any kind and nature related to the use, presence abatement or contaminants of Hazardous Materials on the Premises. It is further expressly understood and agreed, that any Hazardous Materials which become exposed or discovered as a result of Tenant’s Work or Alternations, and which but for such works not have been exposed or discovered, and which but for such works would not be required by government authorities to be abated, shall be abated by Tenant at Tenant’s sole cost and expense as part of Tenant’s Work or Alterations provided by law.
| 30. | Security Deposit. |
The Tenant shall deposit with the Landlord on the date of execution hereof the sum of eight thousand five hundred dollars and 00/100 ($8,500.00) as security for the performance by Tenant of terms of this Lease. Landlord, may use, apply or retain the whole or any part of the security so deposited to the extent required for the payment of rent or other sums as to which tenant is in default or any sum which Landlord may be required to expend by reason of Tenant’s default in respect of any terms of this Lease, including but not limited to, damages or deficiencies in reletting the Premises. In the even that Tenant shall comply with all the terms of this Lease, the security deposit shall be returned to Tenant after the date fixed as the end of the Lease and after deliver of possession of the Premises to the Landlord. In the event of sale of the Premises, the Landlord shall have the right to transfer the security deposit to the Purchaser, and Landlord shall thereupon be released from all liability for the return of such deposit. No interest shall accrue on the security deposit for Tenants benefit, any interest earned thereon being Landlord’s property. Landlord shall not be obligated to hold the security deposit in any particular account but rather may commingle same with Tenant’s other funds.
IN WITNESS WHEREOF, Tenant has caused these presents to be signed and sealed by its President and duly authorized agent and representative having power to bind Corporation and Landlord has caused these presents to be signed and sealed by its President, all as of the day and year first written hereinabove.
| Landlord | ||||
| Witness: | 425 Manchester Road, L.L.C. | |||
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/s/ P. Olen Snider, Jr.
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By: | /s/ George W. Clampet [SEAL] | ||
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George W. Clampet, General Partner | |||
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| Tenant | ||||
| Witness: | Mr. Tire, Inc. | |||
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/s/ P. Olen Snider, Jr
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By: | /s/ Fredric A. Tomarchio [SEAL] | ||
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Fredric A. Tomarchio, President | |||
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Exhibit 10.81a
ASSIGNMENT AND ASSUMPTION OF LEASE
THIS ASSIGNMENT AND ASSUMPTION OF LEASE (the “Agreement”), is made as of the 1 st day of March, 2004 (the “Effective Date”), by and between Mr. Tire, Inc., a Maryland corporation having an address of 23 Walker Avenue, Baltimore, Maryland (“Assignor”) and Monro Muffler Brake, Inc., a New York Corporation having a principal address of 200 Holleder Parkway, Rochester, New York (“Assignee”).
RECITALS
WHEREAS, Assignor as tenant, and 425 Manchester Road, LLC, as landlord, entered into a lease, dated April 1, 1998, (the “Lease”) relating to real property known as 425 Manchester Road located in Westminster, Carroll County, Maryland (the “Premises”); and
WHEREAS, Assignor and Assignee entered into a certain Asset Purchase Agreement dated as of February 9, 2004, as clarified by that certain Side Letter Agreement dated as of February 9, 2004, as same may be further amended and clarified (“Asset Purchase Agreement”), pursuant to which Assignor agreed to assign to Assignee all of Assignor’s right, title and interest as tenant under the Lease and Assignee agreed to assume all of Assignor’s obligations under the Lease.
NOW THEREFORE, pursuant to and in consideration of the Asset Purchase Agreement:
1. Assignor hereby assigns and transfers all of its right, title, and interest in the Lease to Assignee to have and to hold the same from and after the date hereof for the remainder of the term of the Lease.
2. Assignee hereby assumes and agrees to perform all obligations of Assignor pursuant to the Lease which accrue from the date hereof through the remainder of the term of the Lease. Assignor will remain liable for all of its obligations which accrued prior to the date hereof.
3. The representations and warranties set forth in the Asset Purchase Agreement with respect to the Lease assigned hereby, specifically, but not limited to, those set forth in Section 3.10 are incorporated in this Assignment as though set forth in full herein.
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IN WITNESS WHEREOF, this Assignment has been duly executed by the parties as of the Effective Date.
| MR. TIRE, INC. | ||||||
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| By: /s/ Lonnie L. Swiger | ||||||
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Lonnie L. Swiger, Vice President | |||||
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MONRO MUFFLER BRAKE, INC. | |||||
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| By: /s/ Robert G. Gross | ||||||
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Robert G. Gross, President & CEO | |||||
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STATE OF MARYLAND
COUNTY OF HOWARD SS.:
On the 26 th day of February, 2004, before me, personally appeared Lonnie L. Swiger personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.
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/s/ Rachel V. Castranova
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Rachel V. Casstranova commissioned as Rachel V. Flad
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Notary Public
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STATE OF NEW YORK
COUNTY OF MONROE SS.:
On the 1 st day of March, 2004, before me, personally appeared Robert G. Gross personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.
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/s/ Mindi S. Collom
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Mindi S. Collom
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Notary Public
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Exhibit 10.81b
LANDLORD’S CONSENT AND ESTOPPEL CERTIFICATE
425 Manchester Road, LLC, the person, firm or corporation identified as the landlord on Schedule “A” attached hereto (“Landlord”), DOES HEREBY CERTIFY THAT:
1. Landlord has entered into a certain lease which is more particularly described in said Schedule (the “Lease”) covering a portion of certain real property located at 425 Manchester Road in Westminster, Carroll County, Maryland (the “Premises”).
2. The Lease is valid, in full force and effect on the date hereof and enforceable in accordance with its terms and has not been modified or amended from the date of its execution to the date hereof, except as may otherwise be indicated on said Schedule “A.”
3. The term of the Lease commenced on the date of commencement shown on Schedule “A” and will terminate, unless renewed or extended in accordance with its terms, on the date of termination shown on Schedule “A”.
4. All conditions precedent to the commencement of the term of the Lease and to the payment of the basic rent, additional rent, percentage rent (if any) and all other charges specified therein have been satisfied or waived by Landlord.
5. Landlord has delivered and Tenant has accepted and is in possession of the Premises and is paying the basic rent, additional rent, percentage rent (if any) and all other charges specified therein.
6. The Premises and the use and occupancy thereof by Tenant comply with the terms of the Lease.
7. Neither the Landlord under the Lease nor, to the best of Landlords knowledge, Tenant is in default with respect to the performance or observance of any of their respective covenants or obligations under the terms of the Lease nor has any event occurred with which the giving of notice or the passage of time would constitute a default under the Lease.
8. Landlord has not received any prepayment of any basic rent due under the Lease, other than the current month’s rent.
9. There are no rights of offset, abatement or reduction of basic rent presently accruing to Tenant by reason of any provision of the Lease or otherwise.
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This Certificate is being given to and may be relied upon by Monro Muffler Brake, Inc. (“Monro”) their successors and/or assigns, to induce Monro to acquire Tenant’s leasehold interest under the Lease pursuant to an Asset Purchase Agreement between Atlantic Automotive Corp., its wholly-owned subsidiary, Mr. Tire, Inc. and Monro Muffler Brake, Inc. dated February 9, 2004.
Landlord hereby acknowledges that its consent to the assignment of Tenant’s interest pursuant to the provisions of the Lease has been requested and consents to the assignment by Mr. Tire, Inc. to Monro Muffler Brake, Inc. of the Tenant’s leasehold interest.
IN WITNESS WHEREOF, Landlord has caused this Consent and Estoppel Certificate to be duly executed this 27 th day of February, 2004.
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LANDLORD | |||
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By: | /s/ Fredric A. Tomarchio | ||
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Name: | Fredric A. Tomarchio | ||
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Title: | Member |
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SCHEDULE “A”
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Name of Landlord:
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425 Manchester Road LLC | |||
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Name of Tenant:
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Mr. Tire, Inc. | |||
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Date of Lease:
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April 1, 1998 | |||
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Leased Premises:
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425 Manchester Road | (Rte. 27) | ||
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Westminster, MD 21158 | |||
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Date(s) of amendment(s) to Lease (if any):
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None | |||
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Term of Lease: Commencement:
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April 1, 1998 | |||
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Termination:
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March 31, 2008 | |||
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Option Terms (if any):
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2 Ten (10) Year Terms | |||
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Exhibit 10.82
AGREEMENT
This agreement entered into this 1 st day of January 1997, by and between The Three Marquees (hereinafter called “Landlord”) and Mr. Tire, Inc. (hereinafter called “Tenant”).
WITNESSETH:
That for and in consideration of the rents herein reserved and to be paid by tenant to the Landlord and of the covenants and agreements herein set forth to be kept, performed and observed by Tenant, the Landlord does hereby rent, demise and lease to the Tenant and the Tenant does hereby take, lease and hire from the Landlord, upon the terms and conditions hereinafter set forth, land and improvements located at 1105 North Point Road, Dundalk Maryland, (the “Premises”), including specially a certain building located thereon, (the “Building”).
1. Term
The Term of this Lease shall be ten (10) years commencing January 1, 1997 and terminating December 31, 2006, both dates inclusive (the “Term”). Tenant shall have the option of renewing and extending the term of this lease for two (2) successive term of ten (10) years, for the same rental terms and conditions as the original term.
2. Rent
(A) Tenant, in consideration of this Lease, agrees to pay to Landlord, Basic Rent during the Term hereof, to be received on or before the first day of each month in accordance with the following schedule:
(i) For the Lease Year January 1, 1997-December 31, 1997, seventy four thousand six hundred thirty dollars and 88/100 dollars ($74,630.88) payable in twelve equal monthly installments of six thousand two hundred nineteen dollars and 24/100 dollars ($6,219.24);
(ii) For each of the Lease Years beginning January 1,1 998 through and including the leas year beginning January 1, 2006 the following rental adjustment shall apply: The rental amount from the previous year shall be adjusted by the Consumer Price Index, specifically the CPI for all Urban Consumers. The adjustment shall be no less than 3.5% per year and no more than 7% per year.
In the event that tenant pays Landlord any installments of Basic Rent or Percentage Rent after the due date, or any Additional Rent (as hereinafter defined) later than the (5 th ) day after billing therefore, then and in such event, Tenant shall pay to Landlord, together with and in addition to said installment of Basic Rent or Additional Rent, a late charge of five percent (5%) of installment past due. Any installments of Basic Rent or Additional Rent not made within ten (10) days from the date due shall, in addition to the foregoing late charges, bear interest from the date due at the rate of eighteen percent (18%) per annum (the “Default Rate”). If Landlord, during the Term of this Lease, receives two (2) or more checks from Tenant which are returned for insufficient funds.
Landlord, in addition to applicable late charges and reimbursement for any additional cost incurred by reason of any returned check, may require, at Landlord’s election, that any future payment shall be either bank certified, cashier’s or treasurer’s check. None of the foregoing late charges shall be construed to limit or otherwise waive any other remedies available to Landlord for Tenant’s default under this Lease. Anything contained herein to the contrary notwithstanding, the late charges provided hereunder shall be abated for one violation each Lease Year, provided Tenant cures such late payment within five (5) days after written notice that the same is past due.
(B) Tenant shall tender all payments due hereunder by good check to Landlord c/o The Three Marquees, P.O. Box 428, Savage, Maryland 20763, or to such other party or such other address as Landlord may designate from time to time by written notice to Tenant. If Landlord shall at any time or times accept said Basic Rent or Additional Rent after it shall become due and payable, such acceptance shall not excuse delay upon subsequent occasions, or constitute a waiver of any or all of Landlords rights hereunder.
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(C) This Lease is what is commonly called a “triple net lease”, it being understood that Landlord shall receive the rent free and clear of any and all other impositions, taxes, liens, charges, or expenses of any nature whatsoever in connection with the ownership and operation of the Premises. In addition to the Basic Rent, Tenant shall pay to the parties respectively entitled thereto all impositions, insurance premiums, utility charges (including but not limited to gas, fuel, electric, water, sewer, trash removal and telephone charges), operating charges, maintenance charges, construction costs, and any other charges, costs, and expenses which arise or may be contemplated under any provisions of the Lease during the Term hereof. All of such charges, costs, and expenses shall constitute Additional Rent, and upon the failure of Tenant to pay any of such costs, charges or expenses, Landlord shall have the same rights and remedies as otherwise provided in this Lease for the failure of Tenant to pay Basic Rent. For purposes herein contained the term “Rent” shall refer to Basic Rent and Additional Rent. It is the intention of the parties hereto that this Lease shall not be terminable for any reason by the Tenant unless otherwise expressly permitted under the terms of this Lease and that Tenant shall in no event be entitled to any abatement of or reduction in Rent payable hereunder, except as herein expressly provided. Any present or future law to the contrary shall not alter this agreement of the parties. If Tenant defaults in the making of any payment to any third party or in the doing of any act required to be made or done by Tenant, then Landlord may, but shall not be required to make such payment or do such act, and the amount of the expense thereof, if made or done by Landlord, within interest thereon at the Default Rate accruing from the date paid by Landlord, together with an additional charge of fifteen percent (15%) of the amount so paid to cover Landlord’s administrative costs, shall be paid by Tenant to Landlord and shall constitute Additional Rent hereunder due and payable by Tenant upon receipt by Tenant of a written statement of costs from Landlord. The making of such payment or the doing of such act by Landlord shall not operate to cure Tenant’s default, nor shall it prevent Landlord from the pursuit of any remedy to which Landlord would otherwise be entitled.
3. Additional Rent.
Tenant, in addition to Basic Rent, shall pay Additional Rent as hereafter specified, payable by Tenant to Landlord under this Lease being deemed “Additional Rent”. Basic Rent and Additional Rent shall collectively be referred to as “Rent”.
(A) Impositions.
Tenant shall pay throughout the Term, as Additional Rent, all taxes and assessments, general and special, if any, levied and assessed on the Premises, any improvements or alterations thereto and any personal property located therein, and all other governmental charges and impositions of any kind or nature whatsoever, general or special, foreseen and unforeseen, which if not paid when due, would encumber the title to the Building, all of which are herein called “Impositions” provided, however, that Impositions relating to fiscal periods of the taxing authority which precede or extend beyond the Term of this Lease shall be appointed between Landlord and Tenant. Landlord shall periodically provide Tenant with Landlords estimate of Impositions coming due, and Tenant shall pay to Landlord monthly, together with Basic Rent, one twelfth (1/12) of Landlords estimate of Impositions. Landlord shall forward to Tenant copies of all notices, bills or other statements received by Landlord concerning any Impositions and the presentation of any such invoice shall be conclusive evidence of the amount of the particular element of the Imposition to which the bill or statement refers. Any overpayment or deficiency in Tenants payment of Impositions shall be “Adjusted” within thirty (30) days after Tenants receipt of such statement. For purposes of this Lease “Adjusted” or “Adjustment” means the adjustment between Landlord and Tenant of any overpayment or deficiency in payment by Tenant of Impositions. Any required Adjustment shall be made, as the case may be by;
(i) Tenants payment to Landlord of any deficiency or
(ii) by Landlord’s crediting to Tenant’s account any overpayment or, if such Adjustment is made at the end of the term, Landlord’s reimbursement to Tenant of such overpayment less any amounts due from Tenant. At anytime during a Lease Year, Landlord may re-estimate Tenant’s share of Impositions and adjust Tenant’s monthly installments payable thereafter during the Lease Year to reflect more accurately Tenant’s share of Impositions as reestimated by Landlord.
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For purposes hereof, “Impositions” shall also include any and all business licenses and/or franchise taxes imposed upon Tenant, and any taxes, assessments or other levies which may at any time be imposed against the Premises by any federal, state, county, municipal, quasi governmental or corporate entity in respect of public transportation or works or other governmental authority any assessments for public improvements or benefits and including also any tax, assessment or other charges in the nature of a sales, excise, use or other tax upon the Rent payable under this Lease, whether assessed against Tenant or Landlord, or the Premises. Impositions shall also include the cost (including attorney’s fees, consultant fees, witness and appraisal costs) of any negotiation, contest or appeal pursued by Landlord (regardless of outcome). The provisions of this Lease shall not be deemed to require Tenant to Pay municipal, state or federal income, gross receipts or excess Profits taxes assess against the Landlord, or municipal, state or federal estate, succession, or inheritance taxes imposed upon the Landlord provided, however, that if, at any time during the Term of this Lease, the methods of taxation of real estate prevailing on the date of the Lease shall be altered or supplemental so as to cause in lien thereof the whole of the taxes, assessments and other governmental charges owed, levied and assessed on the Premises to be levied and assessed on the Rent payable by tenant to Landlord under this lease, then the taxes so levied and assessed on the Rent shall be deemed to be Impositions and shall be payable by Tenant.
In addition to Tenant’s share of Impositions, Tenant shall pay, prior to the date due, to the appropriate taxing authority, any and all sales, excise and other taxes levied, imposed or assessed with respect to the operation of Tenant’s business and with respect to its inventory, furniture, fixtures, equipment and all leasehold improvements installed by Tenant, any prior tenant or by Landlord on behalf of Tenant. In no event shall Tenant have the right to contest Impositions absent Landlord’s prior written consent, which consent may be withheld or delayed in Landlord’s sole and absolute discretion.
(B) Insurance/Indemnity.
The Landlord assumes no liability or responsibility whatsoever with respect to the conduct and operations of the business to be conducted within the Premises. The Landlord shall not be liable for any accident or injury to any person or persons or property in or about the Premises which are caused by any reason whatsoever, including, but not limited to the conduct and operations of said business, or by virtue of equipment or property owned or permitted in the Premises by the Tenant except when caused by Landlord’s gross negligence and then, only to the extent not covered under Tenant’s insurance. The Tenant agrees to indemnify and hold the Landlord, its agents, employees and lenders having liens against the Premises (“Indemnities”) from and against all liability, claims, suits, causes of action, demands, judgments, cost, interest and expenses (including also actual counsel fees and disbursements incurred in the defense thereof) to which any Indemnities may be subject or suffered, whatsoever by reason of any claim for, injury to, or death of, any person or persons or damage to or loss of property (including also any loss of use thereof) or otherwise, and arising from or in connection with the use by Tenant of, or from any work or anything whatsoever done by Tenant or any of its officers, directors, agents, contractors, employees, licensees or while within the Premises, invitees in any part of the Premises, during the Term of this Lease, or arising from any condition of the Premises due to or resulting from any default by Tenant in keeping observance or performance of any covenant or agreement contained in this Lease or from any fault or neglect of Tenant or any of its officers, directors, agents, contractors, employees, licensees or while within the Premises, invitees.
(ii) In order to assure the Indemnity referred to hereinabove, Tenant shall carry and keep in full force and effect at all times during the Term of this Lease, for the protection of Landlord and Tenant and naming both Landlord, Tenant and any Indemnities of Landlord as may exist from time to time or other parties as landlord may designate from time to time as parties insured, public liability insurance with limits for bodily injury or death of a least ONE MILLION DOLLARS ($1,000,000.00) for any one person or occurrence and at least THREE MILLION DOLLARS ($3,000,000.00) in the aggregate for any accident or number of persons, and on hundred percent (100%) actual replacement cost and extended coverage insurance for all risks, fire, casualty and Property damage covering the Premises, including, but not limited to the heating, air conditioning, water heater, water pump, plumbing (including sprinkler), electrical and mechanical systems serving the Premises and leasehold improvements (including those made by any prior tenant), lifts and auto/truck bays and Alterations, such policies to carry special endorsements covering against damage or loss by earthquake and against damage by water covered by so call flood insurance. All such policies shall, at Landlord’s election, name party as Landlord may designate as loss payee. In addition Tenant shall maintain rental interruption insurance sufficient to cover Rent payable under this Lease for no less than a one year period from and after the date of casualty throughout the
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Term naming Landlord or upon prior written notice, such other parties as Landlord may designate, as sole loss payee. In no event shall minimum amounts of coverage called for herein be less that the amount required by lenders having liens on the Premises. Copies of all such policies and/or certificates of insurance shall be furnished to Landlord upon request without undo delay.
(iii) Tenant shall obtain or cause to be obtained prior to commencement of any permitted alterations or other work, and keep in force during performance of the work, public liability and workmen compensation insurance to cover all contracts to be employed and covering Tenant, if Tenant elects to do any work itself The covering limits, form, and content of such policies shall be commercially reasonable and customary as reasonably determined by Landlord, but no event in amounts less than that required under applicable law. Tenant shall also, upon Landlord’s request, carry contract insurance or cause its contracts to post performance bonds. Before commencement of any works on the Premises, Tenant shall deliver certificates to Landlord showing such insurance and/or performance bonds to be in effect.
(IV) Tenant shall carry statutory workman compensation insurance covering its employees in, on and about the Premises. Copy of such policy and/or certificate of insurance shall be furnished to Landlord upon request without undo delay.
(v) A insurance policies required to be obtained by Tenant hereunder shall be issued by recognized and responsible insurance companies, having a “Best Insurance” rating of not less than A and a credit rating not less than XV and be qualified to do business in Maryland, and shall provide that such policies shall not be cancelled without thirty (30) days prior written notice to Landlord. Landlord shall be named as an additional insured and whenever designated by Landlord, as sole loss payee on all such policies, with the exception of the statutory workmen compensation coverage referred to herein and other casualty insurance carried by Tenant covering trade fixtures, equipment and inventory paid for and brought upon the premises by Tenant. Tenant shall deliver to Landlord at least once each Lease year, but so often as Landlord may request from time to time, a copy of all such insurance policies or a certificate thereof showing the same to be in full force and effect.
(vi) In the event Tenant shall fail to keep in force and maintain any such policy of insurance, Landlord shall have the right, at its option, and at the sole cost of Tenant, in addition to all other rights and remedies in the event of default, to purchase such policy or policies of insurance and to pay the premiums thereon. In such, event Tenant shall pay Landlord as Additional Rent an amount equal to Landlord’s cost of such insurance plus fifteen percent (15%) to cover Landlord’s administrative costs in procuring and administering such insurance, upon receipt of a written demand therefore.
(vii) Anything in this Lease to the contrary notwithstanding, the Tenant does hereby release the Landlord from any and all liability for any loss or damage to its property or Premises caused by fire or any of the other casualties covered by the risks included in insurance policies required to be carried by Tenant, including but not limited to Tenant’s general liability, extended coverage all risk, property damage, flood, earthquake and casualty insurance. This release is given notwithstanding that such liability casualty or loss shall have resulted from the negligence of Landlord or Tenant or their respective agents, employees, licenses, contractors or invites. Tenant agrees to cause it insurance policies covering the Premises and contents thereof to contain an appropriate endorsement whereby the insurer agrees that the insurance policy and coverage will not be invalidated by reason of the foregoing waiver of the right of recovery against the Landlord for loss occurring to the properties covered by such policy, and whereby such insurer also waives any right of subrogation against the Landlord and Tenant will, upon request, deliver to Landlord a certificate evidencing such waiver of subrogation by the insurer.
(viii) Anything in this Section 3 to the contrary notwithstanding, Landlord shall have the option, either alternatively or in combination with Tenant, to carry such casualty and property insurance covering the Premises, leasehold improvements, Alterations, and systems serving the Premises, including but not limited to the heating, air conditioning, water heater, water pump, plumbing (including sprinkler), electrical, and mechanical systems, Landlord may determine to be reasonable or necessary to protect its interests, and bill the cost of any insurance carried directly by Landlord to Tenant. Any premiums so billed by Landlord to Tenant shall be Additional Rent and payable within five (5) days of written demand.
4. Possession of Premises, TENANT’S Work.
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Landlord delivers, and Tenant accepts the Premises “as is”. Tenant further acknowledges that is has fully inspected the Premises prior to the execution of this Lease and does hereby assume all of the risks, including but not limited to patent or latent defects as well as responsibility for all existing environmental conditions. Tenant further understands and agrees that Landlord shall be under no liability nor have any obligation to do any preoccupancy work or make any repairs in or to the Premises, except as otherwise expressly provided herein, any work which may be necessary to adapt the Premises for Tenant’s occupancy or for the operation of Tenant’s business therein (including any Alterations that may be necessary now or hereafter to effectuate compliance with any applicable laws), the sole responsibility therefore being that of Tenant and shall be performed by Tenant at its sole cost and expense.
5. Tenant’s Covenants:
Tenant hereby covenants as follows:
(A) Not to use Premises for any disorderly or unlawful purpose, nor for any purpose not expressly permitted pursuant to this Lease.
(B) To keep the Premises and approaches thereto, including parking areas, clean and free from trash and rubbish, to remove snow and ice from the adjacent sidewalks and any parking areas and loading areas which are a portion of the Premises, and to keep any show windows and signs neat, clean and in good order; and not to store any material or trash of any nature whatsoever on the exterior of the Premises, unless same is contained in covered dumpsters and not to store or dispose of any materials, except in accordance with all applicable laws. Tenant shall contract and arrange for, at Tenant’s expense, trash and materials removal at such intervals as are necessary to satisfy the requirements of this paragraph and applicable laws.
(C) Not to operate any machinery in the Premises which may cause excessive vibration or damage to the Premises, nor create any nuisance.
(D) To inspect all portions of the Premises, both interior and exterior and all machinery and equipment therein, so it may promptly detect the need for repairs to any thereof, to make such repairs as it is herein obligate to make.
(E) Not to place any loads or machinery or safes in the Premises in excess of the existing floor loads or utilize any equipment which would overload the Premises existing systems.
6. Use of Premises.
(A) Tenant hereby covenants and agrees the Premises shall not be used for any purpose other than for the following purposes: vehicle tire sales, repairs, parts accessories, maintenance and service.
(B) Tenant, at its own expense, shall comply with and carry out promptly, all orders, requirements or conditions imposed by the ordinances, laws and regulations of the United States, Maryland and of all other governmental authorities having jurisdiction over the Premises or Tenant, which are occasioned by or required in the conduct of Tenant’s business in the Premises, including but not limited to all environmental laws and regulations now or hereafter promulgated relative thereto. Tenant shall further comply with the Americans with Disabilities Act of 1990 (ADA) and any amendment to ADA, as well as applicable state land local laws, regulations and ordinances regarding access to, employment of, and service to individuals covered by the ADA. The compliance with ADA will include, but not be limited to, the design, construction and Alterations of the Premises. Tenant will indemnify Landlord and save it harmless from all penalties, claims and demands, resulting from any noncompliance. Tenant shall be responsible for obtaining and shall promptly obtain at its sole cost and expense all licenses, permits, certificates of occupancy, variances, special exceptions or any other permission necessary for its use, occupancy, repairs and subject to Section 8, signs, and subject to Section 9, Alterations of the Premises by Tenant as contemplated herein.
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(C) Tenant shall not suffer or permit the Premises or any portion thereof to be used by the public without restriction or in such a manner as might reasonably tend to impair Landlord’s title to the Premises, or any portion thereof, or in such manner as might reasonably make possible a claim of adverse usage or adverse possession by the public, as such or of implied dedication of the Premises or any portion thereof Tenant hereby expressly recognizes that in no event shall it be deemed the agent of Landlord, and no contractor of Tenant shall by virtue of its contract be entitle to assert any lien against the Premises or Landlord’s interest therein.
7. Repairs, Maintenance.
(A) Landlord shall, subject to the need therefore not being caused in whole or part by the negligent or willful acts or omission of Tenant, its agents, employees, contractors or assigns, and subject to the aggregate cost thereof over the term not exceeding two (2) months of the then current Rent, maintain the exterior, structural walls, and foundations of the building except for alterations and improvements made by Tenant affecting the foregoing, which shall be Tenant’s responsibility to maintain and repair. Tenant shall throughout the Term, at no cost or expense to Landlord, make all other necessary repairs to the interior and exterior of the Premises, including, without limitation, the roof, the plumbing, the parking lot, mechanical and electrical systems serving the Premises. Tenant shall, in addition, at no cost or expense to Landlord, maintain the Premises, and all fixtures, equipment, Alternations and improvements installed or made by Tenant, by Landlord or any prior tenants contained therein, including, but not limited to, heating, air conditioning, water heater, water pump, plumbing (including sprinkler system), electrical and mechanical systems, in at least as good repair order and condition as the same are in on the Lease Commencement Date or date installed by Tenant, reasonable wear and tear and loss by fire or other casualty (to the extent this Lease is terminated pursuant to Section 21 and insurance proceeds sufficient to replace the same are paid to Landlord or its designee or unless Landlord elects, pursuant to Section 21, to restore the Premises), and promptly at no cost or expense to Landlord, shall make or cause to be made, all necessary repairs, interior and exterior, structural and non structural, foreseen as well as unforeseen. Tenant, at its own cost and expense shall also keep, maintain and repair all sideways, driveways, ground (including lawn care) and parking areas in a clean, neat and orderly condition and shall remove all snow and ice therefrom.
(B) All personal property of the Tenant in the Premises shall be there at the sole risk of the Tenant. Landlord shall not be liable for any accident or damage to the property of Tenant resulting from any reason whatsoever. Tenant hereby expressly releases Landlord from liability incurred or claimed by reason of damage therefrom.
8. Signs and Personal Property
Tenant agrees that no sign, awning, advertisement or notice shall be inscribed, affixed or displayed on any part of the Premises, except if first approved by Landlord, which approval will not be unreasonably withheld, conditioned or delayed. Such signage shall further be subject to all requirements and regulations of applicable governmental authorities having jurisdiction over the installation, placement and appearance of signs. Existing signs are deemed approved.
9. Alterations
(A) Tenant shall not make alterations, installations, changes, replacements, additions or improvements in or to the Premises or any part thereof (“Alterations”), or delay its consent with respect to same, provided such work shall be non structural and provided further that such work shall not affect any of the mechanical, electrical or other systems servicing the building, and provided further, that Landlord shall have received plans and specifications in a form and detail satisfactory to Landlord of any such proposed Alterations, installations, changes, replacements, additions or improvements. Tenant agrees to provide Landlord with the name of any proposed contractors of Tenant, certificates of liability insurance maintained by such contractors in amounts acceptable to Landlord, and copies of all plans for such improvements at the time request for Landlord’s approval is made by Tenant. Tenant shall provide Landlord with a copy of all requisite permits prior to commencement of any such work as its sole expense. All of Tenant’s aforesaid Alterations shall be performed in a good and workman like manner and in compliance with all applicable laws, codes, rules and ordinances. Landlord may at its option and discretion require Tenant at Tenant’s expense, to repair any damage to the Premises caused by either the removal or installation of aforesaid Alterations, or the removal or installation of any of Tenant’s
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equipment or fixtures that are removable, and Tenant will promptly comply with such directions. In addition to all legal, equitable and other rights and remedies available to Landlord, it is agreed that if Tenant, after receipt of written notice and failure to cure same within ten (10) days, does not comply with its obligations under this Section the Landlord shall have the right (but not the obligation) to perform or cause to be performed Tenant’s obligations, duties and covenants under this Section or any other provisions of this Lease, in which event Tenant shall reimburse to Landlord upon written demand all costs incurred by Landlord as a result thereof, plus fifteen percent (15%) to cover Landlord’s administrative costs.
(B) Tenant shall have no authority to incur any debt or to make any charge against Landlord, or to create any lien upon the Premises for any work or materials furnished for the same, and if any such lien should be filed against the Premises on account of work done to or labor or materials furnished on the Premises at Tenant’s request (whether or not Tenant obtained Landlord’s approval), Tenant shall have a period of thirty (30) days or such shorter period as required by law or Landlord’s lenders having liens against the Premises from the date notice of such lien is brought to attention to pay off said lien and have the same discharged of record, or if Tenant disputes such lien or the amount thereof, to post with the court having appropriate jurisdiction adequate bond required to release said lien of record. If Tenant shall fail to cause such lien to be so discharged or bonded within the time prescribed above, then, in addition to any other right or remedy of Landlord, Landlord may bond or discharge the same by paying the amount claimed to be due the amount so paid by Landlord, plus fifteen percent (15%) to cover Landlord’s administrative costs, plus Landlord’s actual attorney’s fees in either defending or procuring discharge of such lien, together with interest thereon at the Default Rate shall be due and payable by Tenant to Landlord as additional Rent, upon demand.
(C) All existing leasehold improvements, alterations and other additions or installations made to or within the Premises shall be Landlord’s property upon installation and shall not be removed from the Premises. Notwithstanding the foregoing, upon the expiration or earlier termination of the Lease, Tenant shall at Tenant’s expense, remove any of the foregoing items (except Alterations made with Landlord’s consent, where at the time of consent Landlord does not specify that the same will need to be removed upon expiration or earlier termination of the Lease) from the Premises if Landlord gives Tenant written notices to do so. Tenant shall promptly repair or, at Landlord’s election reimburse Landlord for the cost of repairing all damage done to the Premises by such removal.
10. Assignment and Subletting.
Tenant acknowledges that Landlord has entered into this Lease based on the financial creditworthiness and business reputation of Tenant and that such was a material inducement to Landlord’s entering into Lease. Accordingly, Tenant shall not, either directly, or indirectly, or by operation of law or by merger, reorganization or otherwise:
(a) assign, mortgage, pledge, encumber or otherwise transfer this Lease, the Term and estate hereby granted or any interest hereunder;
(b) permit the Premises or any part to be utilized by anyone other than Tenant or
(c) sublet or hypothecate (all of which be hereafter referred to as a “Transfer”) the Premises or any part thereof without obtaining in each instance, Landlord’s written consent, which may be withheld, conditioned or delayed in Landlord’s sole and absolute discretion. The transfer of any ownership interest in Tenant so as result in a change of control by way of merger, sale, reorganization, transfer of stock (except with respect to transfer of stock which is listed on a “National Securities Exchange” as defined in the Securities Exchange Act of 1934), sale of assets, appointment of a receiver or take-over by governmental authorities or otherwise shall be deemed a prohibited Transfer requiring Landlord’s consent. Transfer of Tenant’s right to occupy or use all or any portion of the Premises made without Landlord’s consent shall be null and void and confer no rights upon any third person. The consent by Landlord to any Transfer of Tenant’s rights hereunder shall not constitute a waiver of the necessity for such consent to any subsequent attempted Transfer. Receipt by Landlord or Rent due hereunder from any party other than Tenant shall not be deemed to be a consent to any such Transfer, nor relieve Tenant of its obligating to pay Rent for the full Tern of this Lease, Tenant shall have no claim and hereby waives the right to make claim against Landlord to damages by reason of refusal, withholding or delaying by Landlord of consent to a requested
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Transfer. Tenant agrees at the time of requesting Landlord’s consent to pay to Landlord an amount equal to Two Thousand and 00/100 Dollars ($2,000.00) to cover Landlord’s attorney fees and administrative expense for the review, processing or preparation of any document in connection with a permitted Transfer, such payment to be made in consideration of Landlord’s review and independent of and regardless as to whether or not Landlord’s consent is granted.
11. Examination of Premises.
After reasonable advance notice, except in cases of an emergency, Tenant shall allow Landlord and its agents reasonable access to the Premises during all reasonable hours for the purpose of examining the same to ascertain and determine if the Premises are in good repair and condition and for making repairs required of Landlord hereunder. Landlord’s access shall in no event constitute an eviction in whole or in part of Tenant and in no event shall such access give rise to any claim of disrupted use, breach of quiet enjoyment nor shall such access in any way affect or alter Tenant’s obligation to pay Rent as and when provided herein. Landlord may exhibit the Premises to prospective purchasers at anytime during the Term hereof and to prospective tenants during the last twelve (12) months of the Term. Landlord, during the last twelve (12) months of the Term, or any time Tenant shall be in default of its obligations hereunder, shall have the right to post For Rent signs on the Premises.
12. Subordination/Attornment.
Tenant agrees that this Lease shall be subject and subordinate to the lien or liens of any mortgages, deed or deeds of trust, or other security interests (collectively the “Interest”) that may now or may hereafter be placed against the Premises and that this clause shall be self operating. Notwithstanding the fact that this clause is self-operating, if Landlord requests, Tenant shall execute any instruments, releases or other documents that may be required for the purpose of confirming that this Lease, and Tenant’s interest is subject and subordinate to the lien of any Interest, whether original or substituted. Tenant covenants and agrees in the event any proceedings are brought for the foreclosure of any such mortgage or deed of trust, to return to the purchaser upon any such foreclosure sale and to recognize such foreclosure sale and to recognize such purchaser as the Landlord under this Lease and that upon failure to do so within ten (10) days of demand, Landlord shall be deemed and designated by Tenant as its Attorney-In-Fact, such to be coupled with an interest, with full authority to execute any instruments required of Tenant under this Lease. Tenant further waives the provisions of any statute or rule of law, now or hereafter in effect, which may give or purport to give Tenant any right or election to terminate or otherwise adversely affect this Lease and the obligations of Tenant hereunder in the event any such foreclosure proceedings is brought.
13. Insolvency or Bankruptcy of Tenant.
If at any time prior to the Commencement Date of this Lease, or any time during the term hereby demised, there shall be filed by or against Tenant in any court pursuant to any statute either of the United States or of any state a petition in bankruptcy or insolvency or for reorganization or for the appointment of a receiver or trustee of all or a portion of Tenants property, and if within thirty (30) days hereof Tenant fails to secure a discharge thereof, or if Tenant makes an assignment for the benefit of creditors, or petitions for or enters into a plan under the Bankruptcy Code (as defined below), this Lease, at the option of Landlord, may be cancelled and terminated by notice of cancellation to Tenant effective three (3) days thereafter, in which event neither Tenant nor Guarantor nor any person claiming through or under Tenant or Guarantor by virtue of any statute or of an order of any court shall be entitled to possession, or to remain in possession of the Premises, and Landlord, in addition to the other rights and remedies Landlord has by virtue of any other provision herein or elsewhere in this Lease contained or by virtue of any statue or rule of law may retain as liquidate damages any Rent, security, deposit or monies received by Landlord from Tenant or others in behalf of Tenant. If Tenant becomes a debtor within the meaning of the Bankruptcy Reform act of 1978, as the same may from time to time be amended (“Bankruptcy Code”) and notwithstanding any other provisions of this Lease, this Lease and Landlord’s and Tenant’s rights are then made subject to such Bankruptcy Code, it is covenanted and agreed that the failure of Tenant or its representative appointed in accordance with said Bankruptcy Code to furnish accurate information and adequate assurances as to the source of Rent and other consideration due under this Lease, or conduct or have conducted at the Premises Tenant’s business as provided in Section 6 hereof, shall in any case each be deemed a default under this Section 20, and Landlord shall have all rights and remedies herein afforded to it in the event of any default by Tenant
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under this Lease. Tenant’s interest in this Lease shall not pass to any trustee or receiver or assignee for the benefit of creditors or operation of law except as may be specially provided by the Bankruptcy Code.
14. Default.
(A) In event that:
(i) Tenant shall fail to pay when due any payment of the Rent payable by Tenant hereunder and such failure shall continue for a period of five (5) days following receipt by Tenant of written notice thereof (such notice only being required once in any twelve month period) or
(ii) Tenant shall violate any other term, covenant or condition of this Lease or neglect or fail to perform or to observe any of the other terms, conditions or covenants herein contained on Tenant’s part to be performed or observed and Tenant shall fail to remedy the same within fifteen (15) days of written notice thereof from Landlord, provided however, that if cure is not reasonably possible within the aforesaid fifteen (15) day period, then, in such event, Tenant shall be afforded an additional reasonable time within to effectuate cure or
(iii) in the event that this Lease or the Premises or any part thereof shall be taken upon execution or by other process of law directed against Tenant, or shall be taken upon or subject to any attachment at the instance of any creditor of or claimant against Tenant, or taken over by governmental authority or otherwise breach Section 13 above; or
(iv) if Tenant shall abandon, vacate or desert the Premises, or fail to operate the Premises from the purposes provided in Section 6 thereof, or
(v) Tenant shall, except as expressly otherwise permitted herein, Transfer its interest in this Lease, then in any one or more of such events, Tenant shall be in default of the Lease and Landlord shall have the right, as its option, in addition to any other rights and remedies set forth in this Lease or provided at law or in equity either:
(1.) To terminate this Lease and if the event of default is not so cured, Tenant’s right to possession of the Premises shall cease and the Lease shall thereupon be terminated; or
(2.) With or without notice to re-enter and take possession of the Premises without terminating the Lease, or any part thereof, and repossess the same as Landlord’s former estate and expel the Tenant and those claiming through or under Tenant, and remove the effects of both or higher, (forcibly, if necessary), and the Landlord shall have the right, without further notice or demand, to take the action and do the things aforesaid without being deemed guilty of any manner of trespass and without prejudice to any remedies for arrears of rent or preceding breach of contract, it being expressly understood that if the Landlord elects to re-enter, Landlord may terminate this Lease, or from time to time, without terminating the Lease, may relet the Premises, or any part thereof, for such terms and rental or rentals and upon such other terms and conditions as Landlord may deem advisable, with the right to make such Alterations and repairs and grant such rental concessions to prospective tenants of the Premises at Tenant’s expense, as Landlord in its sole business judgment believes reasonably necessary in connection with securing another tenant. No such re-entry or taking of possession of the Premises by Landlord shall be construed as an election on Landlord’s part to terminate this Lease unless a written notice of such intention is given to Tenant or unless the termination hereof be decreed by court of competent jurisdiction. In no event shall Landlord be obligated to relet the Premises or mitigate damages, it being understood that the failure to relet or mitigate shall in no event reduce Landlord’s entitlement to Basic Rent, Percentage Rent, Additional Rent and other sums payable under this Lease throughout the Term.
(3.) In no event shall Landlord be obligated to provide notice of default more often than once in a twelve (12) month period, it being understood that Landlord may exercise its rights under this Lease in the event of default without notice if a notice of default has previously been given during the immediately preceding twelve (12) month period; or
(4.) In the event of any such termination, Tenant shall nevertheless pay the Rent and all other sums as herein provided up to the time of such termination, and thereafter, Tenant, until the end of what would have been the
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term of this Lease in the absence of such termination, and whether or not the Premises shall have been relet, shall be liable to Landlord for and shall pay to Landlord, as liquidated current damages, an amount equal to:
(i) The Rent and all sums as hereinbefore provided which would otherwise be payable hereunder if such termination had not occurred, less the net proceeds, if any, of reletting of the Premises after deducting all of the Landlord’s expenses in connection in with such reletting, including without limitation, all repossession costs, brokerage commissions, legal expenses including actual attorney’s fees, expenses of employees, alteration and remodeling costs, and expenses of preparation for such reletting; or
(ii) The present value of the Rent and all other sums as herein before provided which would otherwise be payable hereunder if such termination had not occurred, discounted at an interest rate equal to the Prime Rate of interest as published in the Wall Street Journal as of the date of default, Tenant shall pay such liquidated current damages on the days on which the Basic Rent would have been payable hereunder if this Lease had not been terminate or at Landlord’s election, shall pay such amount to Landlord by lump sum, upon demand. If this Lease shall be terminated as aforesaid, Landlord may but shall not be obligated to relet the Premises or any part thereof, for the account and benefit of Tenant, for such terms and to such person or persons and for such period or periods as Landlord may determine and any such sums received shall be applied first against all of the Landlord’s expenses in connection with such reletting, including without limitation, all repossession costs, brokerage commissions, legal expenses including actual attorney’s fees, expenses of employees, alteration and remodeling costs, and expenses of preparation for such reletting, and then against damages occasioned by Tenant’s default. The acceptance of a tenant by Landlord in place of Tenant shall not operate as a release of Tenant from the performance of any covenant, promise or agreement herein contained, and the performance of any substitute tenant by the payment of Rent, or otherwise, shall not constitute satisfaction of the obligations of Tenant arising hereunder. Any damages or deficiencies, at the option of Landlord, may be recovered by Landlord in separate actions, from time to time, as Tenant’s obligations for payment would have accrued if the Term had continued, or from time to time as said damages or deficiencies shall have been made more easily ascertainable by reletting of the Premises, or any such action by Landlord may, at the option of Landlord, be deferred until the expiration of the Term or may be accelerated and immediately due and payable.
(B) Tenant hereby expressly waives any provision of law now in force or which hereafter may be enacted giving Tenant the right under any condition after default to the redemption and repossession of the Premises or any part thereof
(C) Unless otherwise agreed to by the parties in writing, no payment by Tenant or receipt by Landlord of a lesser amount than the installments of Rent herein stipulated shall be deemed to be other than on account of the earliest stipulated Rent, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as Rent be deemed an accord and satisfaction, and the Landlord may accept such check or payment without prejudice to the Landlord’s right to recover the balance of such Rent or pursue any other remedy.
(D) In addition to and not in limitation of the other remedies provided in this Lease, the Landlord shall be entitled to the restraint by injunction of any violation or attempted or threatened violation of any of the terms, covenants, conditions, provisions or agreements of this Lease.
(E) If Tenant shall default in the performance of any covenant on its part to be performed by virtue of any provision of this Lease, and if in connection with the enforcement of its rights or remedies, Landlord shall incur fees and expenses for services rendered (including without limitation, reasonable attorney’s (fees), then such fees and expenses shall be immediately reimbursed by Tenant to Landlord on demand. In the event Landlord shall file any legal action for the collection of Rent or any eviction proceeding, whether summary or otherwise, for the non payment of Rent, and Tenant shall make payment of such Rent due payable prior to the rendering of any judgment, then Landlord shall be entitled to collect, and Tenant shall be obligated to pay, in addition to all Rent due (including the late charges provided for above), all court filing fees and actual legal fees of Landlord.
(F) The remedies of Landlord provided for in this Lease are cumulative and are not intended to be exclusive of other remedies to which Landlord may be lawfully entitled. The exercise by Landlord of any remedy to which it is entitle shall not preclude or hinder the exercise of any other such remedy, nor constitute an election of remedies.
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15. Effect of Waiver.
If, under the provisions of this Lease, summons or other notice shall, at any time, be served upon Tenant by Landlord and a compromise or settlement shall be effected either before or after judgement or decree, whereby Tenant shall be allowed or permitted to retain possession of the Premises, the same shall not constitute a waiver of any covenant or agreement herein contained, or of this Lease itself except to the set forth in such comprise or settlement. No waiver by Landlord or Tenant of any breach of agreement herein contained shall be construed to be a waiver of the covenant itself or of any subsequent breach thereof. No re-entry by Landlord and no acceptance by Landlord of keys from Tenant shall be considered an acceptance of a surrender of the Lease.
16. Estoppel Certificates.
Landlord and Tenant agree at any time and from time to time, upon not less than ten (10) days prior written notice by the other, to execute, acknowledge and deliver to the other party a statement in writing certifying
(1) that this Lease is unmodified and in full force and effect (or if there have been modifications, that the Lease is in full force and effect as modified and stating the modification),
(ii) the date to which the Rent hereunder has been paid by Tenant,
(iii) whether or not to the knowledge of the party giving such estoppel, Landlord or Tenant are in default in the performance of any covenant, agreement or condition contained in Lease, and, if so, specifying each such default of which such party may have knowledge, and
(iv) the address to which notices to such party should be sent, and
(v) such other matters as Landlord may require. Any such statement delivered pursuant hereto may be replied upon by Landlord, Tenant any other prospective tenant or purchaser, any owner of the Premises, any mortgagee or prospective mortgagee of the Premises or of Landlord’s interest therein, or any prospective assignee of any such interest.
17. Eminent Domain.
Tenant agrees that if the Building, or so much of the Premises so as impair Tenant’s use of the Premises, shall be taken or condemned for public or quasi-public use or purpose by any competent authority, Tenant shall have no claim against the Landlord and shall not have any claim or right to any portion of the amount that may be awarded as damages or paid as a result of any such condemnation; and all rights of the Tenant to damages therefore, if any, are hereby assigned by the Tenant to the Landlord. Upon any condemnation or taking, affecting the whole or any substantial part of the Premises as provided above, the Term of this Lease shall cease and terminate unless the parties otherwise agree in writing. The Tenant shall have no claim for the value of any unexpected Term of this Lease. If less than the whole of the Building or substantial part of the Premises is taken or condemned by any governmental authority for any public or quasi-public use or purpose, and in the event neither Landlord not Tenant shall desire to terminate this Lease, then and in such event the Basic Rent shall be equitably adjusted on the date when title vests in such governmental authority and the Lease shall otherwise continue in full force and effect. For purposes of this Section, a substained part of the Building shall be considered to have been taken if twenty five percent (25%) or more is taken. A substained portion of the Premises shall be deemed taken if more than twenty twenty five percent (25%) of the areas of available for parking are taken. Notwithstanding anything to the contrary contained herein. Tenant shall be entitled to pursue a separate claim for the value or Tenant’s furnishings, equipment, movable trade fixtures which are not deemed pursuant to this Lease to be Landlord’s property and then only to the extent paid for by Tenant and provided such claim shall in no manner diminish the award or other compensation to which Landlord would otherwise be entitled.
18. Quiet-Enjoyment.
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Subject to the rights reserved to Landlord herein, Landlord covenants the if Tenant shall not be in default hereunder (after the expiration of any notice and cure period). Tenant shall at all times peaceably and quietly have, hold and enjoy the Premises in accordance with the terms and conditions of this Lease, without any interruption from Landlord or any other person claiming through or under Landlord.
19. Notices
Until further notice by either party to the other, in writing, all notice or communications required or permitted hereunder shall be sent by registered or certified mail, return receipt requested, (a) if to Landlord, addressed to:
The Three Marquees
P.O. Box 428
Savage, Maryland 20763
(b) If to Tenant, addressed to:
Mr. Tire, Inc.
P.O. Box 428
Savage, Maryland 20763
20. Tenant Holdover
This Lease shall expire, without notice by either part to the other at midnight of the last day of the Term. If Tenant shall not immediately surrender possession of the Premises at the termination of this Lease, Tenant, at Landlord’s election, shall become either a Tenant at sufferance, or Tenant from month to month, Landlord expressly reserving the right to terminate such tenancy and reenter and take possession of the Premises with or without notice or process. Tenant hereby promises and represents that it will promptly surrender the Premises, in accordance with the terms and conditions of this Lease, and hereby acknowledges that such promise is a material inducement to Landlord to enter into this Lease Agreement. Tenant further agrees to indemnify and hold Landlord harmless from and against any and all claims or liability, to any part whatsoever, occasioned from and by Tenant’s holding over, including any actual attorney’s fee or other costs associated therewith. In the event Tenant shall holdover subsequent to the expiration of the Term or any renewal term of this Lease, Landlord shall in lieu of Rent, be entitled to demand and receive from Tenant monthly use and occupancy payments for each month in which Tenant shall holdover subsequent to the expiration of the term of Lease, in an amount equal to twice the Basic Rent during the last month of the term of this Lease, plus any and all Additional Rent or other charges due under this Lease. Each such use and occupancy payment shall be due on or before the first day of each calendar month in which Tenant shall holdover hereunder. In no event shall Landlord’s demand or acceptance of such use and occupancy payments be considered to constitute an acquiescence by Landlord to the extension of the Term hereof, and Landlord shall be entitled to obtain immediate possession of the Premises irrespective of any such demand or acceptance. In the event Tenant shall pay monthly use and occupancy payments for any calendar month following expiration of the Term hereof such payment shall be prorated upon Tenant’s surrender of full and exclusive possession of the Premises to the Landlord, free of any and all other parties claiming through or under the Tenant.
21. Damage by Casualty.
(A) Tenant shall give prompt notice to Landlord in case of any fire or other damage or casualty to the Premises or the Building. If
(i) the Building shall be damaged to the extent that in Landlord’s reasonable judgment, repairing such damage or destruction would not be economically feasible;
(ii) the Building shall be damaged as a result of a risk which is not covered or any portion thereof shall require that the insurance proceeds under the policies referred to in Section 3. (B) hereof be used for other than repairing, replacing and rebuilding such damage, then in any event Landlord may terminate this Lease by notice given within ninety (90) days after such event. In the event this Lease is terminated as provided above in this Section
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21: (i) the entire proceeds of the insurance provided for in Section 3. (B) hereof shall be paid by the insurance company or companies directly to Landlord and shall belong to, and be the sole property of, Landlord; (1) the portion of proceeds of the insurance provided for in Section 3. (B) which is insuring equipment, fixtures and other items, which by the terms of the Lease, belong to the Landlord by whatever cause shall be paid by the insurance company or companies directly to Landlord, and shall belong to, and be the sole property of, Landlord;
(iii) Tenant shall immediately vacate the Premises in accordance with this Lease
(iv) All Rent shall be apportioned and paid to the date on which possession is relinquished or the date of such damage, whichever last occurs; and
(v) Landlord and Tenant shall be relieved from any and all further liability or last obligation hereunder except as expressly provided in this Lease. Tenant hereby waives any and all rights to terminate this Lease that it may have, by reason of damage to the Premises by fire, flood, earthquake or other casualty, pursuant to any presently existing or hereafter enacted statute or pursuant to any other law.
(B) If all or any portion of the Building is damaged by fire, flood, earthquake or other casualty and this Lease is not terminated in accordance with the provisions of Section 21 (A), then all insurance proceeds under the policies referred to in Section 3. (B) hereof that are recovered on account of any such damage by fire or casualty shall be made available for the payment of the cost of repair, replacing and rebuilding and as soon as practicable after such damage occurs Landlord shall, using the proceeds provided for by Section 3. (B) hereof, repair or rebuild the Building and other portions of the Premises or such portion hereof to its condition immediately prior to such occurrence to the extent the cost therefore is fully funded by insurance proceeds. Alternatively, at Landlord’s option, Landlord may require that Tenant perform such repairs, in which case, Landlord shall make available to Tenant, insurance proceeds received by Landlord-In no event shall be obligated to repair or replace Tenant’s movable trade fixtures or other personal property. In addition, Tenant shall, using the remaining proceeds of the insurance proceeds from policies provided for in Section 3 (B) hereof, repair, restore and replace Tenant’s movable trade fixtures, personalty and equipment. If the aforesaid insurance proceeds under the insurance provided for in Section 3 (B) hereof shall be less the cost of repairing or replacing Tenant’s movable trade fixtures, equipment and personalty, or other items required to be insured by Tenant pursuant to Section 3 (B) hereof, Tenant shall pay the entire excess cost thereof, and if such insurance proceeds shall be greater than the cost of such repair, restoration, replacement or building, the excess proceeds shall belong to, and be the property of Tenant.
(C) In the event of any repair or rebuilding pursuant to the provisions of Section 21 hereof, then only to the extent Landlord receives rental insurance proceeds equal to the Rent due during the period the Building and other portions of the Premises are undergoing repairs and Tenant’s use is precluded, there shall be abated an equitable portion of the Basic Rent during the existence of such damage, based upon the portion of the Premises which is rendered untenantable and the duration thereof Landlord shall not be liable or obligated to tenant to any extent whatsoever by reason of any fire or other casualty damage to the Premises, or any damages suffered by Tenant by reason thereof, or the deprivation of Tenant’s possession of all or any of the Premises.
22. Jury Trial Waiver.
Landlord and Tenant hereby waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other one in respect of any matter whatsoever arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant hereunder, Tenant’s use OF occupancy of the Premises, and/or claim of injury or damage. Tenant acknowledges that the waiver of jury trial has been reviewed with counsel and is an acceptable and material business term of this Lease.
23. General Provisions.
(A) Nothing in this Lease shall be deemed or construed in any way as constituting the consent or request of Landlord, expressed or implied, by inference or otherwise to any contractor, subcontractor, laborer or materials for the performance of any labor or the furnishing of any materials for any specific improvement, alteration or repair of the Premises or any part thereof.
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(B) Nothing herein contained shall in any way be considered or construed as creating the legal relation of a partnership or joint venture between Landlord and Tenant, it being expressly understood and agreed by the parties hereto that the relationship between the parties shall be one of Landlord and Tenant.
(C) It is further and agreed that the covenants, agreements and conditions shall be binding upon the Landlord and Tenant, as we as their respective, heirs, executors, administrators, successors and permitted assigns.
(D) This Lease shall be governed and construed in accordance with the laws of the State of Maryland.
(E) If any covenants or agreements of this Lease or the application thereof to any person or circumstances shall be held to be invalid or unenforceable, then, and in each such event, the remainder of this Lease or the application on such covenant or agreement to any other person or any other circumstances shall not be thereby affected, and each covenant and agreement hereof shall remain valid and enforceable to the fullest extent permitted by law.
(F) Upon the request of Landlord, Tenant shall execute and deliver a memorandum of Lease or short form Lease suitable for recording. In no event shall Tenant record this Lease or any short form Lease without Landlord’s written consent, such consent to be withheld, conditioned or delayed in Landlord’s sole and absolute discretion.
(G) In the event that any mortgage providing financing on the Premises requires, as a condition of such financing, that modifications to the Lease be Obtained, and provided that such modifications
(1) Do not increase the Rent and other sums due hereunder, or
(ii) Constitute a no material change any substantive rights, obligations or liabilities of Tenant under this Lease, then Landlord may submit to Tenant a written amendment to this Lease incorporating such changes, and if Tenant does not execute and return such written amendment within ten (10) days after the same has been submitted to Tenant, then Landlord shall thereafter have the right at it sole option, to immediately cancel and terminate this Lease or to exercise its powers as attorney-in-fact, pursuant to Section 23 (O) below.
(H) Any obligation arising during the Term of this Lease under any provision herein contained, which would by its nature require the Tenant to take certain action after the expiration of the termination of this Lease to fully comply with the obligation arising during the Term, shall be deemed to survive the expiration of the Term or other termination of this Lease to the extent of requiring any such action to be performed after the expiration of the Term which is necessary to fully perform the obligation that erode during the Term of this Lease.
(I) The captions and headings throughout this Lease are for convenience and reference only, and the words contained in such captions shall in no way be held or deemed to meaning of any provision of this Lease.
(J) Words of any gender used in this Lease shall be held to include any other gender, and words in the singular number shall be held to include the plural and words in the plural shall be held to include the singular, when the sense so requires.
(K) Further, if the holder of a mortgage or deed of trust which includes the Premises, notifies the Tenant that such holder has taken over the Landlord’s rights under this Lease, Tenant shall not assert any right to deduct the cost of repairs or any monetary claim against the Landlord from Rent thereafter due and payable, but shall look solely to the Landlord’s interest in the Premises for satisfaction of such claim.
(L) By its entry into this Lease the Tenant represents and acknowledges to the Landlord that the Tenant has satisfied itself as to the use which it is permitted to make of the Premises and has inspected the Premises and confirms that the same are acceptable to Tenant, Tenant further acknowledges that Landlord has made no representations, warranties or covenants to Tenant except as expressly provided herein.
(M) No diminution or shutting off light, air or view by any structure that may be erected on the Premises or on any adjacent or nearby properties shall in any manner affect this Lease or obligations of Tenant hereunder.
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(N) Time is of the essence with respect to the performance of Tenant’s obligations hereunder, including, but not limited to the obligation to pay Basic Rent, Percentage Rent, Additional Rent and other sums due hereunder.
(O) In the event Tenant shall fail or refuse to execute and deliver to Landlord any document or instrument which may be required under the terms of this Lease within ten (10) days after Landlord’s written request therefore, Tenant hereby irrevocably appoints Landlord as attorney-in-fact for Tenant, such appointment being coupled with an interest, with full power and authority to execute and deliver such documents or instruments for and in the name of Tenant.
24. Brokers.
The respective parties certify that no person or company provided services as a broker, agent, finder or assisted in the negotiations of this Agreement. Each party agrees to indemnify the other for any claim asserted by any person or company purporting to act on its behalf in providing services as a broker, agent or finder, in connection with this Agreement.
25. Entire Agreement.
It is understood and agreed by and between the parties hereto that this Lease and the Exhibits attached hereto contain the final and entire agreement between the said parties and they shall not be bound by any terms, statements, conditions or representations, oral or written, not herein contained.
26. Landlord’s Liability.
If the Landlord shall sell, convey or otherwise dispose of its interest in the Premises, then the undersigned Landlord shall be deemed to be released of all obligations hereunder arising from the date of such transfer, and the transferee shall be deemed to be the Landlord hereunder for all purposes hereunder. Anything contained in this Lease or as provided at law to the contrary notwithstanding. Tenant acknowledges that as an express condition to Landlord’s entering into this Lease, Tenant agrees that Landlord, its agents, officers, employees and assigns shall have no personal liability nor shall any of them be subject to monetary claim of any kind or nature. In the event of a breach or default by Landlord, Tenant shall have no right to consequential damages, claims for loss sales or profits or the like, any and all such claims being expressly waived as a material inducement to Landlord’s entering into this Lease. Moreover, in the event of a breach or default by Landlord of any of its obligations under this Lease, Tenant acknowledges and agrees that its sole remedy shall be limited to an action for specific performance and even then, only to the extent the cost of such performance is less than two (2) months Rent, any amounts to effect specific performance over and above such sum being Tenant’s responsibility, being a negotiated condition of this Lease that Landlord’s aggregate cost of repairs under Section 7 shall never exceed over the Term the sum of two (2) months then current Rent. The provisions hereof shall insure to Landlord’s successors and assigns.
27. Force Majeure.
Each party shall be excused from performing any obligation or under takings provided for in this Lease for so long as such performance is prevented or delayed, retarded or hindered by act of God, fire, earthquake, flood, explosion, action of the elements, war, invasion, insurrection, riot, mob violation, sabotage, inability to procure or general shortage of labor, equipment, facilities, materials or supplies in the open market, failure of transportation, strike, lockout, action of labor unions, condemnation, laws, order of government or civil or military or naval authorities, or any other cause, whether similar or dissimilar to the foregoing, not within the reasonable control of the party prevented, retarded, or hindered thereby, including reasonable delays for adjustments of insurance. Anything contained herein to the contrary notwithstanding, Tenant’s obligation to pay Basic Rent, Additional Rent, or other charges due under the applicable provisions of the Lease, shall not be excused by reason of any of the foregoing events.
28. Modification.
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This Lease cannot be changed or terminated orally. Any agreement hereafter made shall be ineffective to change, modify or discharge this Lease in whole or in part, unless such agreement is in writing and signed by the party against whom enforcement of the change, modification or discharge is sought.
29. Hazardous Material.
The term “Hazardous Material” as used in this Lease shall mean any product, substance, chemical, material or waste whose presence, nature, quantity and/or intensity of existence, use, manufacture, disposal, transportation, spill, release or effect, either by itself or in combination with other materials expected to be on the Premises, is either:
(i) Potentially injurious to the public health, safety or welfare, the environment or the Premises,
(ii) Regulated or monitored by any government authority, or
(iii) A basis for liability of Landlord or Tenant or any occupant of the Premises to any governmental agency or third party under applicable statute or common law theory. Hazardous Materials shall include, but not be limited to, hydrocarbons, petroleum, gasoline, crude oil or any products, by-products or fractions thereof Tenant shall not engage in any activity in, on or about the Premises which constitutes a Reportable Use (as hereinafter defined) of Hazardous Materials without the express prior written consent of Landlord and compliance in a timely manner (at Tenant’s sole cost and expenses) with all applicable law. “Reportable Use” shall mean
(1) The installation or use of any above or below ground storage tank
(ii) The generation, possession, storage, use, transportation, or disposal of Hazardous Materials. Reportable Use shall also include Tenant being responsible for the presence in, on or about the Premises of Hazardous Materials with respect to which any applicable law requires that a notice be given to persons entering or occupying the Premises or neighboring properties. Notwithstanding the foregoing, Tenant may, without Landlord’s prior consent, but in compliance with all applicable laws, use any ordinary and customary materials reasonably required to be used by Tenant in the normal course of Tenant’s business permitted on the Premises so long as such use is not a Reportable Use and does not expose the Premises or neighboring properties to any meaningful risk of contamination or damage or expose Landlord to any liability thereof. In addition, Landlord may (but without any obligation to do so) condition its consent to the use or presence of any Hazardous Materials, and activities including Hazardous Materials, by Tenant upon Tenant’s giving Landlord such additional assurances as Landlord, in its reasonable discretion, deems necessary to protect itself the public, the Premises and environment against damage, contamination or injury and/or liability therefrom, including, but not limited to, the installation (and removal on or before Lease expiration or earlier termination) of reasonably necessary protective modifications to the premises (such as concrete encasements) and/or the deposit of an additional security deposit. Tenant shall be reasonable for compliance with applicable laws respecting Hazardous Materials discovered, now or hereafter, to be existing in the Premises and Tenant shall indemnify and hold Landlord harmless for all claims, costs, liabilities, obligations of any kind and nature related to the use, presence abatement or contaminants of Hazardous Materials on the Premises. It is further expressly understood and agreed, that any Hazardous Materials which become exposed or discovered as a result of Tenant’s Work or Alternations, and which but for such works not have been exposed or discovered, and which but for such works would not be required by government authorities to be abated, shall be abated by Tenant at Tenant’s sole cost and expense as part of Tenant’s Work or Alterations provided by law.
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IN WITNESS WHEREOF, Tenant has caused these presents to be signed and sealed by its President and duly authorized agent and representative having power to bind Corporation and Landlord has caused these presents to be signed and sealed by its President, all as of the day and year first written hereinabove.
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Landlord | |||
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Witness:
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The Three Marquees | |||
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/s/ Pamela A. Kues
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By: | /s/ Joseph Tomarchio, Jr. [SEAL] | ||
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Joseph Tomarchio, Jr. | |||
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Tenant | |||
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Witness:
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Mr. Tire, Inc. | |||
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/s/ Pamela A. Kues
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By: | /s/ Fredric A. Tomarchio [SEAL] | ||
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Fredric A. Tomarchio, President | |||
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Exhibit 10.82a
ASSIGNMENT AND ASSUMPTION OF LEASE
THIS ASSIGNMENT AND ASSUMPTION OF LEASE (the “Agreement”), is made as of the 1 st day of March, 2004 (the “Effective Date”), by and between Mr. Tire, Inc., a Maryland corporation having an address of 23 Walker Avenue, Baltimore, Maryland (“Assignor”) and Monro Muffler Brake, Inc., a New York Corporation having a principal address of 200 Holleder Parkway, Rochester, New York (“Assignee”).
RECITALS
WHEREAS, Assignor as tenant, and The Three Marques, as landlord, entered into a lease, dated January 1, 1997 (the “Lease”) relating to real property known as 1105 Old North Point Road located in Dundalk, Baltimore County, Maryland (the “Premises”); and
WHEREAS, Assignor and Assignee entered into a certain Asset Purchase Agreement dated as of February 9, 2004, as clarified by that certain Side Letter Agreement dated as of February 9, 2004, as same may be further amended and clarified (“Asset Purchase Agreement”), pursuant to which Assignor agreed to assign to Assignee all of Assignor’s right, title and interest as tenant under the Lease and Assignee agreed to assume all of Assignor’s obligations under the Lease.
NOW THEREFORE, pursuant to and in consideration of the Asset Purchase Agreement:
1. Assignor hereby assigns and transfers all of its right, title, and interest in the Lease to Assignee to have and to hold the same from and after the date hereof for the remainder of the term of the Lease.
2. Assignee hereby assumes and agrees to perform all obligations of Assignor pursuant to the Lease which accrue from the date hereof through the remainder of the term of the Lease. Assignor will remain liable for all of its obligations which accrued prior to the date hereof.
3. The representations and warranties set forth in the Asset Purchase Agreement with respect to the Lease assigned hereby, specifically, but not limited to, those set forth in Section 3.10 are incorporated in this Assignment as though set forth in full herein.
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IN WITNESS WHEREOF, this Assignment has been duly executed by the parties as of the Effective Date.
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MR. TIRE, INC. | |||
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By: | /s/ Lonnie L. Swiger | ||
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Lonnie L. Swiger, Vice President | |||
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MONRO MUFFLER BRAKE, INC. | |||
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By: | /s/ Robert G. Gross | ||
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Robert G. Gross, President & CEO | |||
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STATE OF MARYLAND
COUNTY OF HOWARD SS.:
On the 26 th day of February, 2004, before me, personally appeared Lonnie L. Swiger personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.
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/s/ Rachel V. Castranova
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Rachel V. Casstranova commissioned as Rachel V. Flad
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Notary Public
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STATE OF NEW YORK
COUNTY OF MONROE SS.:
On the 1 st day of March, 2004, before me, personally appeared Robert G. Gross personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.
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/s/ Mindi S. Collom
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Mindi S. Collom
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Notary Public
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Exhibit 10.82b
LANDLORD’S CONSENT AND ESTOPPEL CERTIFICATE
The Three Marquees, the person, firm or corporation identified as the landlord on Schedule “A” attached hereto (“Landlord”), DOES HEREBY CERTIFY THAT:
1. Landlord has entered into a certain lease which is more particularly described in said Schedule (the “Lease”) covering a portion of certain real property located at 1105 North Point Road in Dundalk, Baltimore County, Maryland (the “Premises”).
2. The Lease is valid, in full force and effect on the date hereof and enforceable in accordance with its terms and has not been modified or amended from the date of its execution to the date hereof, except as may otherwise be indicated on said Schedule “A.”
3. The term of the Lease commenced on the date of commencement shown on Schedule “A” and will terminate, unless renewed or extended in accordance with its terms, on the date of termination shown on Schedule “A”.
4. All conditions precedent to the commencement of the term of the Lease and to the payment of the basic rent, additional rent, percentage rent (if any) and all other charges specified therein have been satisfied or waived by Landlord.
5. Landlord has delivered and Tenant has accepted and is in possession of the Premises and is paying the basic rent, additional rent, percentage rent (if any) and all other charges specified therein.
6. The Premises and the use and occupancy thereof by Tenant comply with the terms of the Lease.
7. Neither the Landlord under the Lease nor, to the best of Landlords knowledge, Tenant is in default with respect to the performance or observance of any of their respective covenants or obligations under the terms of the Lease nor has any event occurred with which the giving of notice or the passage of time would constitute a default under the Lease.
8. Landlord has not received any prepayment of any basic rent due under the Lease, other than the current month’s rent.
9. There are no rights of offset, abatement or reduction of basic rent presently accruing to Tenant by reason of any provision of the Lease or otherwise.
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This Certificate is being given to and may be relied upon by Monro Muffler Brake, Inc. (“Monro”) their successors and/or assigns, to induce Monro to acquire Tenant’s leasehold interest under the Lease pursuant to an Asset Purchase Agreement between Atlantic Automotive Corp., its wholly-owned subsidiary, Mr. Tire, Inc. and Monro Muffler Brake, Inc. dated February 9, 2004.
Landlord hereby acknowledges that its consent to the assignment of Tenant’s interest pursuant to the provisions of the Lease has been requested and consents to the assignment by Mr. Tire, Inc. to Monro Muffler Brake, Inc. of the Tenant’s leasehold interest.
IN WITNESS WHEREOF, Landlord has caused this Consent and Estoppel Certificate to be duly executed this 27 th day of February, 2004.
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LANDLORD | |||
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By: | /s/ Fredric A. Tomarchio | ||
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Name: | Fredric A. Tomarchio | ||
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Title: | Member |
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SCHEDULE “A”
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Name of Landlord:
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The Three Marquees | ||||
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Name of Tenant:
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Mr. Tire, Inc. | ||||
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Date of Lease:
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January 1, 1997 | ||||
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Leased Premises:
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1105 Old N. Point Road, | ||||
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a/k/a 1105 North Point Road | ||||
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Dundalk, MD 21222 | ||||
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Date(s) of amendment(s) to Lease (if any):
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None | ||||
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Term of Lease:
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Commencement: | January 1, 1997 | ||
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Termination: | December 31, 2006 | ||
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Option Terms (if any): | 2 Ten (10) Year Terms |
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Exhibit 10.83
AGREEMENT
This agreement entered into this 1 st day of January 1997, by and between The Three Marquees (hereinafter called “Landlord”) and Mr. Tire, Inc. (hereinafter called “Tenant”).
WITNESSETH:
That for and in consideration of the rents herein reserved and to be paid by tenant to the Landlord and of the covenants and agreements herein set forth to be kept, performed and observed by Tenant, the Landlord does hereby rent, demise and lease to the Tenant and the Tenant does hereby take, lease and hire from the Landlord, upon the terms and conditions hereinafter set forth, land and improvements located at 1105 North Point Road, Dundalk Maryland, (the “Premises”), including specially a certain building located thereon, (the “Building”).
1. Term
The Term of this Lease shall be ten (10) years commencing January 1, 1997 and terminating December 31, 2006, both dates inclusive (the “Term”). Tenant shall have the option of renewing and extending the term of this lease for two (2) successive term of ten (10) years, for the same rental terms and conditions as the original term.
2. Rent
(A) Tenant, in consideration of this Lease, agrees to pay to Landlord, Basic Rent during the Term hereof, to be received on or before the first day of each month in accordance with the following schedule:
(i) For the Lease Year January 1, 1997-December 31, 1997, thirty seven thousand three hundred ninety four dollars and 76/100 dollars ($37,394.76) payable in twelve equal monthly installments of three thousand one hundred sixteen dollars and 23/100 dollars ($3,116.23);
(ii) For each of the Lease Years beginning January 1,1 998 through and including the leas year beginning January 1, 2006 the following rental adjustment shall apply: The rental amount from the previous year shall be adjusted by the Consumer Price Index, specifically the CPI for all Urban Consumers. The adjustment shall be no less than 3.5% per year and no more than 7% per year.
In the event that tenant pays Landlord any installments of Basic Rent or Percentage Rent after the due date, or any Additional Rent (as hereinafter defined) later than the (5 th ) day after billing therefore, then and in such event, Tenant shall pay to Landlord, together with and in addition to said installment of Basic Rent or Additional Rent, a late charge of five percent (5%) of installment past due. Any installments of Basic Rent or Additional Rent not made within ten (10) days from the date due shall, in addition to the foregoing late charges, bear interest from the date due at the rate of eighteen percent (18%) per annum (the “Default Rate”). If Landlord, during the Term of this Lease, receives two (2) or more checks from Tenant which are returned for insufficient funds.
Landlord, in addition to applicable late charges and reimbursement for any additional cost incurred by reason of any returned check, may require, at Landlord’s election, that any future payment shall be either bank certified, cashier’s or treasurer’s check. None of the foregoing late charges shall be construed to limit or otherwise waive any other remedies available to Landlord for Tenant’s default under this Lease. Anything contained herein to the contrary notwithstanding, the late charges provided hereunder shall be abated for one violation each Lease Year, provided Tenant cures such late payment within five (5) days after written notice that the same is past due.
(B) Tenant shall tender all payments due hereunder by good check to Landlord c/o The Three Marquees, P.O. Box 428, Savage, Maryland 20763, or to such other party or such other address as Landlord may designate from time to time by written notice to Tenant. If Landlord shall at any time or times accept said Basic Rent or Additional Rent after it shall become due and payable, such acceptance shall not excuse delay upon subsequent occasions, or constitute a waiver of any or all of Landlord’s rights hereunder.
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(C) This lease is what is commonly called a “triple net lease”, it being understood that Landlord shall receive the rent free and clear of any and all other impositions, taxes, liens, charges, or expenses of any nature whatsoever in connection with the ownership and operation of the Premises. In addition to the Basic Rent, Tenant shall pay to the parties respectively entitled thereto all impositions, insurance premiums, utility charges (including but not limited to gas, fuel, electric, water, sewer, trash removal and telephone charges), operating charges, maintenance charges, construction costs, and any other charges, costs, and expenses which arise or may be contemplated under any provisions of the Lease during the Term hereof. All of such charges, costs, and expenses shall constitute Additional Rent, and upon the failure of Tenant to pay any of such costs, charges or expenses, Landlord shall have the same rights and remedies as otherwise provided in this Lease for the failure of Tenant to pay Basic Rent. For purposes herein contained the term “Rent” shall refer to Basic Rent and Additional Rent. It is the intention of the parties hereto that this Lease shall not be terminable for any reason by the Tenant unless otherwise expressly permitted under the terms of this Lease and that Tenant shall in no event be entitled to any abatement of or reduction in Rent payable hereunder, except as herein expressly provided. Any present or future law to the contrary shall not alter this agreement of the parties. If Tenant defaults in the making of any payment to any third party or in the doing of any act required to be made or done by Tenant, then Landlord may, but shall not be required to make such payment or do such act, and the amount of the expense thereof, if made or done by Landlord, within interest thereon at the Default Rate accruing from the date paid by Landlord, together with an additional charge of fifteen percent (15%) of the amount so paid to cover Landlord’s administrative costs, shall be paid by Tenant to Landlord and shall constitute Additional Rent hereunder due and payable by Tenant upon receipt by Tenant of a written statement of costs from Landlord. The making of such payment or the doing of such act by Landlord shall not operate to cure Tenant’s default, nor shall it prevent Landlord from the pursuit of any remedy to which Landlord would otherwise be entitled.
3. Additional Rent.
Tenant, in addition to Basic Rent, shall pay Additional Rent as hereafter specified, payable by Tenant to Landlord under this Lease being deemed “Additional Rent”. Basic Rent and Additional Rent shall collectively be referred to as “Rent”.
(A) Impositions.
Tenant shall pay throughout the Term, as Additional Rent, all taxes and assessments, general and special, if any, levied and assessed on the Premises, any improvements or alterations thereto and any personal property located therein, and all other governmental charges and impositions of any kind or nature whatsoever, general or special, foreseen and unforeseen, which if not paid when due, would encumber the title to the Building, all of which are herein called “Impositions” provided, however, that Impositions relating to fiscal periods of the taxing authority which precede or extend beyond the Term of this Lease shall be appointed between Landlord and Tenant. Landlord shall periodically provide Tenant with Landlords estimate of Impositions coming due, and Tenant shall pay to Landlord monthly, together with Basic Rent, one twelfth (1/12) of Landlords estimate of Impositions. Landlord shall forward to Tenant copies of all notices, bills or other statements received by Landlord concerning any Impositions and the presentation of any such invoice shall be conclusive evidence of the amount of the particular element of the Imposition to which the bill or statement refers. Any overpayment or deficiency in Tenants payment of Impositions shall be “Adjusted” within thirty (30) days after Tenants receipt of such statement. For purposes of this Lease “Adjusted” or “Adjustment” means the adjustment between Landlord and Tenant of any overpayment or deficiency in payment by Tenant of Impositions. Any required Adjustment shall be made, as the case may be by;
(i) Tenants payment to Landlord of any deficiency or
(ii) by Landlord’s crediting to Tenant’s account any overpayment or, if such Adjustment is made at the end of the term, Landlord’s reimbursement to Tenant of such overpayment less any amounts due from Tenant. At anytime during a Lease Year, Landlord may re-estimate Tenant’s share of Impositions and adjust Tenant’s monthly installments payable thereafter during the Lease Year to reflect more accurately Tenant’s share of Impositions as reestimated by Landlord.
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For purposes hereof, “Impositions” shall also include any and all business licenses and/or franchise taxes imposed upon Tenant, and any taxes, assessments or other levies which may at any time be imposed against the Premises by any federal, state, county, municipal, quasi governmental or corporate entity in respect of public transportation or works or other governmental authority any assessments for public improvements or benefits and including also any tax, assessment or other charges in the nature of a sales, excise, use or other tax upon the Rent payable under this Lease, whether assessed against Tenant or Landlord, or the Premises. Impositions shall also include the cost (including attorney’s fees, consultant fees, witness and appraisal costs) of any negotiation, contest or appeal pursued by Landlord (regardless of outcome). The provisions of this Lease shall not be deemed to require Tenant to Pay municipal, state or federal income, gross receipts or excess Profits taxes assess against the Landlord, or municipal, state or federal estate, succession, or inheritance taxes imposed upon the Landlord provided, however, that if, at any time during the Term of this Lease, the methods of taxation of real estate prevailing on the date of the Lease shall be altered or supplemental so as to cause in lien thereof the whole of the taxes, assessments and other governmental charges owed, levied and assessed on the Premises to be levied and assessed on the Rent payable by tenant to Landlord under this lease, then the taxes so levied and assessed on the Rent shall be deemed to be Impositions and shall be payable by Tenant.
In addition to Tenant’s share of Impositions, Tenant shall pay, prior to the date due, to the appropriate taxing authority, any and all sales, excise and other taxes levied, imposed or assessed with respect to the operation of Tenant’s business and with respect to its inventory, furniture, fixtures, equipment and all leasehold improvements installed by Tenant, any prior tenant or by Landlord on behalf of Tenant. In no event shall Tenant have the right to contest Impositions absent Landlord’s prior written consent, which consent may be withheld or delayed in Landlord’s sole and absolute discretion.
(B) Insurance/Indemnity.
The Landlord assumes no liability or responsibility whatsoever with respect to the conduct and operations of the business to be conducted within the Premises. The Landlord shall not be liable for any accident or injury to any person or persons or property in or about the Premises which are caused by any reason whatsoever, including, but not limited to the conduct and operations of said business, or by virtue of equipment or property owned or permitted in the Premises by the Tenant except when caused by Landlord’s gross negligence and then, only to the extent not covered under Tenant’s insurance. The Tenant agrees to indemnify and hold the Landlord, its agents, employees and lenders having liens against the Premises (“Indemnities”) from and against all liability, claims, suits, causes of action, demands, judgments, cost, interest and expenses (including also actual counsel fees and disbursements incurred in the defense thereof) to which any Indemnities may be subject or suffered, whatsoever by reason of any claim for, injury to, or death of, any person or persons or damage to or loss of property (including also any loss of use thereof) or otherwise, and arising from or in connection with the use by Tenant of, or from any work or anything whatsoever done by Tenant or any of its officers, directors, agents, contractors, employees, licensees or while within the Premises, invitees in any part of the Premises, during the Term of this Lease, or arising from any condition of the Premises due to or resulting from any default by Tenant in keeping observance or performance of any covenant or agreement contained in this Lease or from any fault or neglect of Tenant or any of its officers, directors, agents, contractors, employees, licensees or while within the Premises, invitees.
(ii) In order to assure the Indemnity referred to hereinabove, Tenant shall carry and keep in full force and effect at all times during the Term of this Lease, for the protection of Landlord and Tenant and naming both Landlord, Tenant and any Indemnities of Landlord as may exist from time to time or other parties as landlord may designate from time to time as parties insured, public liability insurance with limits for bodily injury or death of a least ONE MILLION DOLLARS ($1,000,000.00) for any one person or occurrence and at least THREE MILLION DOLLARS ($3,000,000.00) in the aggregate for any accident or number of persons, and on hundred percent (100%) actual replacement cost and extended coverage insurance for all risks, fire, casualty and Property damage covering the Premises, including, but not limited to the heating, air conditioning, water heater, water pump, plumbing (including sprinkler), electrical and mechanical systems serving the Premises and leasehold improvements (including those made by any prior tenant), lifts and auto/truck bays and Alterations, such policies to carry special endorsements covering against damage or loss by earthquake and against damage by water covered by so call flood insurance. All such policies shall, at Landlord’s election, name party as Landlord may designate as loss payee. In addition Tenant shall maintain rental interruption insurance sufficient to cover Rent payable under this Lease for no less than a one year period from and after the date of casualty throughout the
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Term naming Landlord or upon prior written notice, such other parties as Landlord may designate, as sole loss payee. In no event shall minimum amounts of coverage called for herein be less that the amount required by lenders having liens on the Premises. Copies of all such policies and/or certificates of insurance shall be furnished to Landlord upon request without undo delay.
(iii) Tenant shall obtain or cause to be obtained prior to commencement of any permitted alterations or other work, and keep in force during performance of the work, public liability and workmen compensation insurance to cover all contracts to be employed and covering Tenant, if Tenant elects to do any work itself The covering limits, form, and content of such policies shall be commercially reasonable and customary as reasonably determined by Landlord, but no event in amounts less than that required under applicable law. Tenant shall also, upon Landlord’s request, carry contract insurance or cause its contracts to post performance bonds. Before commencement of any works on the Premises, Tenant shall deliver certificates to Landlord showing such insurance and/or performance bonds to be in effect.
(IV) Tenant shall carry statutory workman compensation insurance covering its employees in, on and about the Premises. Copy of such policy and/or certificate of insurance shall be furnished to Landlord upon request without undo delay.
(v) A insurance policies required to be obtained by Tenant hereunder shall be issued by recognized and responsible insurance companies, having a “Best Insurance” rating of not less than A and a credit rating not less than XV and be qualified to do business in Maryland, and shall provide that such policies shall not be cancelled without thirty (30) days prior written notice to Landlord. Landlord shall be named as an additional insured and whenever designated by Landlord, as sole loss payee on all such policies, with the exception of the statutory workmen compensation coverage referred to herein and other casualty insurance carried by Tenant covering trade fixtures, equipment and inventory paid for and brought upon the premises by Tenant. Tenant shall deliver to Landlord at least once each Lease year, but so often as Landlord may request from time to time, a copy of all such insurance policies or a certificate thereof showing the same to be in full force and effect.
(vi) In the event Tenant shall fail to keep in force and maintain any such policy of insurance, Landlord shall have the right, at its option, and at the sole cost of Tenant, in addition to all other rights and remedies in the event of default, to purchase such policy or policies of insurance and to pay the premiums thereon. In such, event Tenant shall pay Landlord as Additional Rent an amount equal to Landlord’s cost of such insurance plus fifteen percent (15%) to cover Landlord’s administrative costs in procuring and administering such insurance, upon receipt of a written demand therefore.
(vii) Anything in this Lease to the contrary notwithstanding, the Tenant does hereby release the Landlord from any and all liability for any loss or damage to its property or Premises caused by fire or any of the other casualties covered by the risks included in insurance policies required to be carried by Tenant, including but not limited to Tenant’s general liability, extended coverage all risk, property damage, flood, earthquake and casualty insurance. This release is given notwithstanding that such liability casualty or loss shall have resulted from the negligence of Landlord or Tenant or their respective agents, employees, licenses, contractors or invites. Tenant agrees to cause it insurance policies covering the Premises and contents thereof to contain an appropriate endorsement whereby the insurer agrees that the insurance policy and coverage will not be invalidated by reason of the foregoing waiver of the right of recovery against the Landlord for loss occurring to the properties covered by such policy, and whereby such insurer also waives any right of subrogation against the Landlord and Tenant will, upon request, deliver to Landlord a certificate evidencing such waiver of subrogation by the insurer.
(viii) Anything in this Section 3 to the contrary notwithstanding, Landlord shall have the option, either alternatively or in combination with Tenant, to carry such casualty and property insurance covering the Premises, leasehold improvements, Alterations, and systems serving the Premises, including but not limited to the heating, air conditioning, water heater, water pump, plumbing (including sprinkler), electrical, and mechanical systems, Landlord may determine to be reasonable or necessary to protect its interests, and bill the cost of any insurance carried directly by Landlord to Tenant. Any premiums so billed by Landlord to Tenant shall be Additional Rent and payable within five (5) days of written demand.
4. Possession of Premises, TENANT’S Work.
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Landlord delivers, and Tenant accepts the Premises “as is”. Tenant further acknowledges that is has fully inspected the Premises prior to the execution of this Lease and does hereby assume all of the risks, including but not limited to patent or latent defects as well as responsibility for all existing environmental conditions. Tenant further understands and agrees that Landlord shall be under no liability nor have any obligation to do any preoccupancy work or make any repairs in or to the Premises, except as otherwise expressly provided herein, any work which may be necessary to adapt the Premises for Tenant’s occupancy or for the operation of Tenant’s business therein (including any Alterations that may be necessary now or hereafter to effectuate compliance with any applicable laws), the sole responsibility therefore being that of Tenant and shall be performed by Tenant at its sole cost and expense.
5. Tenant’s Covenants:
Tenant hereby covenants as follows:
(A) Not to use Premises for any disorderly or unlawful purpose, nor for any purpose not expressly permitted pursuant to this Lease.
(B) To keep the Premises and approaches thereto, including parking areas, clean and free from trash and rubbish, to remove snow and ice from the adjacent sidewalks and any parking areas and loading areas which are a portion of the Premises, and to keep any show windows and signs neat, clean and in good order; and not to store any material or trash of any nature whatsoever on the exterior of the Premises, unless same is contained in covered dumpsters and not to store or dispose of any materials, except in accordance with all applicable laws. Tenant shall contract and arrange for, at Tenant’s expense, trash and materials removal at such intervals as are necessary to satisfy the requirements of this paragraph and applicable laws.
(C) Not to operate any machinery in the Premises which may cause excessive vibration or damage to the Premises, nor create any nuisance.
(D) To inspect all portions of the Premises, both interior and exterior and all machinery and equipment therein, so it may promptly detect the need for repairs to any thereof, to make such repairs as it is herein obligate to make.
(E) Not to place any loads or machinery or safes in the Premises in excess of the existing floor loads or utilize any equipment which would overload the Premises existing systems.
6. Use of Premises.
(A) Tenant hereby covenants and agrees the Premises shall not be used for any purpose other than for the following purposes: vehicle tire sales, repairs, parts accessories, maintenance and service.
(B) Tenant, at its own expense, shall comply with and carry out promptly, all orders, requirements or conditions imposed by the ordinances, laws and regulations of the United States, Maryland and of all other governmental authorities having jurisdiction over the Premises or Tenant, which are occasioned by or required in the conduct of Tenant’s business in the Premises, including but not limited to all environmental laws and regulations now or hereafter promulgated relative thereto. Tenant shall further comply with the Americans with Disabilities Act of 1990 (ADA) and any amendment to ADA, as well as applicable state land local laws, regulations and ordinances regarding access to, employment of, and service to individuals covered by the ADA. The compliance with ADA will include, but not be limited to, the design, construction and Alterations of the Premises. Tenant will indemnify Landlord and save it harmless from all penalties, claims and demands, resulting from any noncompliance. Tenant shall be responsible for obtaining and shall promptly obtain at its sole cost and expense all licenses, permits, certificates of occupancy, variances, special exceptions or any other permission necessary for its use, occupancy, repairs and subject to Section 8, signs, and subject to Section 9, Alterations of the Premises by Tenant as contemplated herein.
(C) Tenant shall not suffer or permit the Premises or any portion thereof to be used by the public without restriction or in such a manner as might reasonably tend to impair Landlord’s title to the Premises, or any portion
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thereof, or in such manner as might reasonably make possible a claim of adverse usage or adverse possession by the public, as such or of implied dedication of the Premises or any portion thereof Tenant hereby expressly recognizes that in no event shall it be deemed the agent of Landlord, and no contractor of Tenant shall by virtue of its contract be entitle to assert any lien against the Premises or Landlord’s interest therein.
7. Repairs, Maintenance.
(A) Landlord shall, subject to the need therefore not being caused in whole or part by the negligent or willful acts or omission of Tenant, its agents, employees, contractors or assigns, and subject to the aggregate cost thereof over the term not exceeding two (2) months of the then current Rent, maintain the exterior, structural walls, and foundations of the building except for alterations and improvements made by Tenant affecting the foregoing, which shall be Tenant’s responsibility to maintain and repair. Tenant shall throughout the Term, at no cost or expense to Landlord, make all other necessary repairs to the interior and exterior of the Premises, including, without limitation, the roof, the plumbing, the parking lot, mechanical and electrical systems serving the Premises. Tenant shall, in addition, at no cost or expense to Landlord, maintain the Premises, and all fixtures, equipment, Alternations and improvements installed or made by Tenant, by Landlord or any prior tenants contained therein, including, but not limited to, heating, air conditioning, water heater, water pump, plumbing (including sprinkler system), electrical and mechanical systems, in at least as good repair order and condition as the same are in on the Lease Commencement Date or date installed by Tenant, reasonable wear and tear and loss by fire or other casualty (to the extent this Lease is terminated pursuant to Section 21 and insurance proceeds sufficient to replace the same are paid to Landlord or its designee or unless Landlord elects, pursuant to Section 21, to restore the Premises), and promptly at no cost or expense to Landlord, shall make or cause to be made, all necessary repairs, interior and exterior, structural and non structural, foreseen as well as unforeseen. Tenant, at its own cost and expense shall also keep, maintain and repair all sideways, driveways, ground (including lawn care) and parking areas in a clean, neat and orderly condition and shall remove all snow and ice therefrom.
(B) All personal property of the Tenant in the Premises shall be there at the sole risk of the Tenant. Landlord shall not be liable for any accident or damage to the property of Tenant resulting from any reason whatsoever. Tenant hereby expressly releases Landlord from liability incurred or claimed by reason of damage therefrom.
8. Signs and Personal Property
Tenant agrees that no sign, awning, advertisement or notice shall be inscribed, affixed or displayed on any part of the Premises, except if first approved by Landlord, which approval will not be unreasonably withheld, conditioned or delayed. Such signage shall further be subject to all requirements and regulations of applicable governmental authorities having jurisdiction over the installation, placement and appearance of signs. Existing signs are deemed approved.
9. Alterations
(A) Tenant shall not make alterations, installations, changes, replacements, additions or improvements in or to the Premises or any part thereof (“Alterations”), or delay its consent with respect to same, provided such work shall be non structural and provided further that such work shall not affect any of the mechanical, electrical or other systems servicing the building, and provided further, that Landlord shall have received plans and specifications in a form and detail satisfactory to Landlord of any such proposed Alterations, installations, changes, replacements, additions or improvements. Tenant agrees to provide Landlord with the name of any proposed contractors of Tenant, certificates of liability insurance maintained by such contractors in amounts acceptable to Landlord, and copies of all plans for such improvements at the time request for Landlord’s approval is made by Tenant. Tenant shall provide Landlord with a copy of all requisite permits prior to commencement of any such work as its sole expense. All of Tenant’s aforesaid Alterations shall be performed in a good and workman like manner and in compliance with all applicable laws, codes, rules and ordinances. Landlord may at its option and discretion require Tenant at Tenant’s expense, to repair any damage to the Premises caused by either the removal or installation of aforesaid Alterations, or the removal or installation of any of Tenant’s equipment or fixtures that are removable, and Tenant will promptly comply with such directions. In addition to all legal, equitable and other rights and remedies available to Landlord, it is agreed that if Tenant, after receipt of written notice and failure to cure same within ten (10) days, does not comply with its obligations under this
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Section the Landlord shall have the right (but not the obligation) to perform or cause to be performed Tenant’s obligations, duties and covenants under this Section or any other provisions of this Lease, in which event Tenant shall reimburse to Landlord upon written demand all costs incurred by Landlord as a result thereof, plus fifteen percent (15%) to cover Landlord’s administrative costs.
(B) Tenant shall have no authority to incur any debt or to make any charge against Landlord, or to create any lien upon the Premises for any work or materials furnished for the same, and if any such lien should be filed against the Premises on account of work done to or labor or materials furnished on the Premises at Tenant’s request (whether or not Tenant obtained Landlord’s approval), Tenant shall have a period of thirty (30) days or such shorter period as required by law or Landlord’s lenders having liens against the Premises from the date notice of such lien is brought to attention to pay off said lien and have the same discharged of record, or if Tenant disputes such lien or the amount thereof, to post with the court having appropriate jurisdiction adequate bond required to release said lien of record. If Tenant shall fail to cause such lien to be so discharged or bonded within the time prescribed above, then, in addition to any other right or remedy of Landlord, Landlord may bond or discharge the same by paying the amount claimed to be due the amount so paid by Landlord, plus fifteen percent (15%) to cover Landlord’s administrative costs, plus Landlord’s actual attorney’s fees in either defending or procuring discharge of such lien, together with interest thereon at the Default Rate shall be due and payable by Tenant to Landlord as additional Rent, upon demand.
(C) All existing leasehold improvements, alterations and other additions or installations made to or within the Premises shall be Landlord’s property upon installation and shall not be removed from the Premises. Notwithstanding the foregoing, upon the expiration or earlier termination of the Lease, Tenant shall at Tenant’s expense, remove any of the foregoing items (except Alterations made with Landlord’s consent, where at the time of consent Landlord does not specify that the same will need to be removed upon expiration or earlier termination of the Lease) from the Premises if Landlord gives Tenant written notices to do so. Tenant shall promptly repair or, at Landlord’s election reimburse Landlord for the cost of repairing all damage done to the Premises by such removal.
10. Assignment and Subletting.
Tenant acknowledges that Landlord has entered into this Lease based on the financial creditworthiness and business reputation of Tenant and that such was a material inducement to Landlord’s entering into Lease. Accordingly, Tenant shall not, either directly, or indirectly, or by operation of law or by merger, reorganization or otherwise:
(a) assign, mortgage, pledge, encumber or otherwise transfer this Lease, the Term and estate hereby granted or any interest hereunder;
(b) permit the Premises or any part to be utilized by anyone other than Tenant or
(c) sublet or hypothecate (all of which be hereafter referred to as a “Transfer”) the Premises or any part thereof without obtaining in each instance, Landlord’s written consent, which may be withheld, conditioned or delayed in Landlord’s sole and absolute discretion. The transfer of any ownership interest in Tenant so as result in a change of control by way of merger, sale, reorganization, transfer of stock (except with respect to transfer of stock which is listed on a “National Securities Exchange” as defined in the Securities Exchange Act of 1934), sale of assets, appointment of a receiver or take-over by governmental authorities or otherwise shall be deemed a prohibited Transfer requiring Landlord’s consent. Transfer of Tenant’s right to occupy or use all or any portion of the Premises made without Landlord’s consent shall be null and void and confer no rights upon any third person. The consent by Landlord to any Transfer of Tenant’s rights hereunder shall not constitute a waiver of the necessity for such consent to any subsequent attempted Transfer. Receipt by Landlord or Rent due hereunder from any party other than Tenant shall not be deemed to be a consent to any such Transfer, nor relieve Tenant of its obligating to pay Rent for the full Tern of this Lease, Tenant shall have no claim and hereby waives the right to make claim against Landlord to damages by reason of refusal, withholding or delaying by Landlord of consent to a requested Transfer. Tenant agrees at the time of requesting Landlord’s consent to pay to Landlord an amount equal to Two Thousand and 00/100 Dollars ($2,000.00) to cover Landlord’s attorney fees and administrative expense for the review, processing or preparation of any document in connection with a permitted Transfer, such payment to be
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made in consideration of Landlord’s review and independent of and regardless as to whether or not Landlord’s consent is granted.
11. Examination of Premises.
After reasonable advance notice, except in cases of an emergency, Tenant shall allow Landlord and its agents reasonable access to the Premises during all reasonable hours for the purpose of examining the same to ascertain and determine if the Premises are in good repair and condition and for making repairs required of Landlord hereunder. Landlord’s access shall in no event constitute an eviction in whole or in part of Tenant and in no event shall such access give rise to any claim of disrupted use, breach of quiet enjoyment nor shall such access in any way affect or alter Tenant’s obligation to pay Rent as and when provided herein. Landlord may exhibit the Premises to prospective purchasers at anytime during the Term hereof and to prospective tenants during the last twelve (12) months of the Term. Landlord, during the last twelve (12) months of the Term, or any time Tenant shall be in default of its obligations hereunder, shall have the right to post For Rent signs on the Premises.
12. Subordination/Attornment.
Tenant agrees that this Lease shall be subject and subordinate to the lien or liens of any mortgages, deed or deeds of trust, or other security interests (collectively the “Interest”) that may now or may hereafter be placed against the Premises and that this clause shall be self operating. Notwithstanding the fact that this clause is self-operating, if Landlord requests, Tenant shall execute any instruments, releases or other documents that may be required for the purpose of confirming that this Lease, and Tenant’s interest is subject and subordinate to the lien of any Interest, whether original or substituted. Tenant covenants and agrees in the event any proceedings are brought for the foreclosure of any such mortgage or deed of trust, to return to the purchaser upon any such foreclosure sale and to recognize such foreclosure sale and to recognize such purchaser as the Landlord under this Lease and that upon failure to do so within ten (10) days of demand, Landlord shall be deemed and designated by Tenant as its Attorney-In-Fact, such to be coupled with an interest, with full authority to execute any instruments required of Tenant under this Lease. Tenant further waives the provisions of any statute or rule of law, now or hereafter in effect, which may give or purport to give Tenant any right or election to terminate or otherwise adversely affect this Lease and the obligations of Tenant hereunder in the event any such foreclosure proceedings is brought.
13. Insolvency or Bankruptcy of Tenant.
If at any time prior to the Commencement Date of this Lease, or any time during the term hereby demised, there shall be filed by or against Tenant in any court pursuant to any statute either of the United States or of any state a petition in bankruptcy or insolvency or for reorganization or for the appointment of a receiver or trustee of all or a portion of Tenants property, and if within thirty (30) days hereof Tenant fails to secure a discharge thereof, or if Tenant makes an assignment for the benefit of creditors, or petitions for or enters into a plan under the Bankruptcy Code (as defined below), this Lease, at the option of Landlord, may be cancelled and terminated by notice of cancellation to Tenant effective three (3) days thereafter, in which event neither Tenant nor Guarantor nor any person claiming through or under Tenant or Guarantor by virtue of any statute or of an order of any court shall be entitled to possession, or to remain in possession of the Premises, and Landlord, in addition to the other rights and remedies Landlord has by virtue of any other provision herein or elsewhere in this Lease contained or by virtue of any statue or rule of law may retain as liquidate damages any Rent, security, deposit or monies received by Landlord from Tenant or others in behalf of Tenant. If Tenant becomes a debtor within the meaning of the Bankruptcy Reform act of 1978, as the same may from time to time be amended (“Bankruptcy Code”) and notwithstanding any other provisions of this Lease, this Lease and Landlord’s and Tenant’s rights are then made subject to such Bankruptcy Code, it is covenanted and agreed that the failure of Tenant or its representative appointed in accordance with said Bankruptcy Code to furnish accurate information and adequate assurances as to the source of Rent and other consideration due under this Lease, or conduct or have conducted at the Premises Tenant’s business as provided in Section 6 hereof, shall in any case each be deemed a default under this Section 20, and Landlord shall have all rights and remedies herein afforded to it in the event of any default by Tenant under this Lease. Tenant’s interest in this Lease shall not pass to any trustee or receiver or assignee for the benefit of creditors or operation of law except as may be specially provided by the Bankruptcy Code.
14. Default.
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(A) In the event that:
(i) Tenant shall fail to pay when due any payment of the Rent payable by Tenant hereunder and such failure shall continue for a period of five (5) days following receipt by Tenant of written notice thereof (such notice only being required once in any twelve month period) or
(ii) Tenant shall violate any other term, covenant or condition of this Lease or neglect or fail to perform or to observe any of the other terms, conditions or covenants herein contained on Tenant’s part to be performed or observed and Tenant shall fail to remedy the same within fifteen (15) days of written notice thereof from Landlord, provided however, that if cure is not reasonably possible within the aforesaid fifteen (15) day period, then, in such event, Tenant shall be afforded an additional reasonable time within to effectuate cure or
(iii) in the event that this Lease or the Premises or any part thereof shall be taken upon execution or by other process of law directed against Tenant, or shall be taken upon or subject to any attachment at the instance of any creditor of or claimant against Tenant, or taken over by governmental authority or otherwise breach Section 13 above; or
(iv) if Tenant shall abandon, vacate or desert the Premises, or fail to operate the Premises from the purposes provided in Section 6 thereof, or
(v) Tenant shall, except as expressly otherwise permitted herein, Transfer its interest in this Lease, then in any one or more of such events, Tenant shall be in default of the Lease and Landlord shall have the right, as its option, in addition to any other rights and remedies set forth in this Lease or provided at law or in equity either:
(1.) To terminate this Lease and if the event of default is not so cured, Tenant’s right to possession of the Premises shall cease and the Lease shall thereupon be terminated; or
(ii.) With or without notice to re-enter and take possession of the Premises without terminating the Lease, or any part thereof, and repossess the same as Landlord’s former estate and expel the Tenant and those claiming through or under Tenant, and remove the effects of both or higher, (forcibly, if necessary), and the Landlord shall have the right, without further notice or demand, to take the action and do the things aforesaid without being deemed guilty of any manner of trespass and without prejudice to any remedies for arrears of rent or preceding breach of contract, it being expressly understood that if the Landlord elects to re-enter, Landlord may terminate this Lease, or from time to time, without terminating the Lease, may relet the Premises, or any part thereof, for such terms and rental or rentals and upon such other terms and conditions as Landlord may deem advisable, with the right to make such Alterations and repairs and grant such rental concessions to prospective tenants of the Premises at Tenant’s expense, as Landlord in its sole business judgment believes reasonably necessary in connection with securing another tenant. No such re-entry or taking of possession of the Premises by Landlord shall be construed as an election on Landlord’s part to terminate this Lease unless a written notice of such intention is given to Tenant or unless the termination hereof be decreed by court of competent jurisdiction. In no event shall Landlord be obligated to relet the Premises or mitigate damages, it being understood that the failure to relet or mitigate shall in no event reduce Landlord’s entitlement to Basic Rent, Percentage Rent, Additional Rent and other sums payable under this Lease throughout the Term.
(3.) In no event shall Landlord be obligated to provide notice of default more often than once in a twelve (12) month period, it being understood that Landlord may exercise its rights under this Lease in the event of default without notice if a notice of default has previously been given during the immediately preceding twelve (12) month period; or
(4.) In the event of any such termination, Tenant shall nevertheless pay the Rent and all other sums as herein provided up to the time of such termination, and thereafter, Tenant, until the end of what would have been the term of this Lease in the absence of such termination, and whether or not the Premises shall have been relet, shall be liable to Landlord for and shall pay to Landlord, as liquidated current damages, an amount equal to:
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(i) The Rent and all sums as hereinbefore provided which would otherwise be payable hereunder if such termination had not occurred, less the net proceeds, if any, of reletting of the Premises after deducting all of the Landlord’s expenses in connection in with such reletting, including without limitation, all repossession costs, brokerage commissions, legal expenses including actual attorney’s fees, expenses of employees, alteration and remodeling costs, and expenses of preparation for such reletting; or
(ii) The present value of the Rent and all other sums as herein before provided which would otherwise be payable hereunder if such termination had not occurred, discounted at an interest rate equal to the Prime Rate of interest as published in the Wall Street Journal as of the date of default, Tenant shall pay such liquidated current damages on the days on which the Basic Rent would have been payable hereunder if this Lease had not been terminate or at Landlord’s election, shall pay such amount to Landlord by lump sum, upon demand. If this Lease shall be terminated as aforesaid, Landlord may but shall not be obligated to relet the Premises or any part thereof, for the account and benefit of Tenant, for such terms and to such person or persons and for such period or periods as Landlord may determine and any such sums received shall be applied first against all of the Landlord’s expenses in connection with such reletting, including without limitation, all repossession costs, brokerage commissions, legal expenses including actual attorney’s fees, expenses of employees, alteration and remodeling costs, and expenses of preparation for such reletting, and then against damages occasioned by Tenant’s default. The acceptance of a tenant by Landlord in place of Tenant shall not operate as a release of Tenant from the performance of any covenant, promise or agreement herein contained, and the performance of any substitute tenant by the payment of Rent, or otherwise, shall not constitute satisfaction of the obligations of Tenant arising hereunder. Any damages or deficiencies, at the option of Landlord, may be recovered by Landlord in separate actions, from time to time, as Tenant’s obligations for payment would have accrued if the Term had continued, or from time to time as said damages or deficiencies shall have been made more easily ascertainable by reletting of the Premises, or any such action by Landlord may, at the option of Landlord, be deferred until the expiration of the Term or may be accelerated and immediately due and payable.
(B) Tenant hereby expressly waives any provision of law now in force or which hereafter may be enacted giving Tenant the right under any condition after default to the redemption and repossession of the Premises or any part thereof
(C) Unless otherwise agreed to by the parties in writing, no payment by Tenant or receipt by Landlord of a lesser amount than the installments of Rent herein stipulated shall be deemed to be other than on account of the earliest stipulated Rent, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as Rent be deemed an accord and satisfaction, and the Landlord may accept such check or payment without prejudice to the Landlord’s right to recover the balance of such Rent or pursue any other remedy.
(D) In addition to and not in limitation of the other remedies provided in this Lease, the Landlord shall be entitled to the restraint by injunction of any violation or attempted or threatened violation of any of the terms, covenants, conditions, provisions or agreements of this Lease.
(E) If Tenant shall default in the performance of any covenant on its part to be performed by virtue of any provision of this Lease, and if in connection with the enforcement of its rights or remedies, Landlord shall incur fees and expenses for services rendered (including without limitation, reasonable attorney’s (fees), then such fees and expenses shall be immediately reimbursed by Tenant to Landlord on demand. In the event Landlord shall file any legal action for the collection of Rent or any eviction proceeding, whether summary or otherwise, for the non payment of Rent, and Tenant shall make payment of such Rent due payable prior to the rendering of any judgment, then Landlord shall be entitled to collect, and Tenant shall be obligated to pay, in addition to all Rent due (including the late charges provided for above), all court filing fees and actual legal fees of Landlord.
(F) The remedies of Landlord provided for in this Lease are cumulative and are not intended to be exclusive of other remedies to which Landlord may be lawfully entitled. The exercise by Landlord of any remedy to which it is entitle shall not preclude or hinder the exercise of any other such remedy, nor constitute an election of remedies.
15. Effect of Waiver.
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If, under the provisions of this Lease, summons or other notice shall, at any time, be served upon Tenant by Landlord and a compromise or settlement shall be effected either before or after judgement or decree, whereby Tenant shall be allowed or permitted to retain possession of the Premises, the same shall not constitute a waiver of any covenant or agreement herein contained, or of this Lease itself except to the set forth in such comprise or settlement. No waiver by Landlord or Tenant of any breach of agreement herein contained shall be construed to be a waiver of the covenant itself or of any subsequent breach thereof. No re-entry by Landlord and no acceptance by Landlord of keys from Tenant shall be considered an acceptance of a surrender of the Lease.
16. Estoppel Certificates.
Landlord and Tenant agree at any time and from time to time, upon not less than ten (10) days prior written notice by the other, to execute, acknowledge and deliver to the other party a statement in writing certifying
(1) that this Lease is unmodified and in full force and effect (or if there have been modifications, that the Lease is in full force and effect as modified and stating the modification),
(ii) the date to which the Rent hereunder has been paid by Tenant,
(iii) whether or not to the knowledge of the party giving such estoppel, Landlord or Tenant are in default in the performance of any covenant, agreement or condition contained in Lease, and, if so, specifying each such default of which such party may have knowledge, and
(iv) the address to which notices to such party should be sent, and
(v) such other matters as Landlord may require. Any such statement delivered pursuant hereto may be replied upon by Landlord, Tenant any other prospective tenant or purchaser, any owner of the Premises, any mortgagee or prospective mortgagee of the Premises or of Landlord’s interest therein, or any prospective assignee of any such interest.
17. Eminent Domain.
Tenant agrees that if the Building, or so much of the Premises so as impair Tenant’s use of the Premises, shall be taken or condemned for public or quasi-public use or purpose by any competent authority, Tenant shall have no claim against the Landlord and shall not have any claim or right to any portion of the amount that may be awarded as damages or paid as a result of any such condemnation; and all rights of the Tenant to damages therefore, if any, are hereby assigned by the Tenant to the Landlord. Upon any condemnation or taking, affecting the whole or any substantial part of the Premises as provided above, the Term of this Lease shall cease and terminate unless the parties otherwise agree in writing. The Tenant shall have no claim for the value of any unexpected Term of this Lease. If less than the whole of the Building or substantial part of the Premises is taken or condemned by any governmental authority for any public or quasi-public use or purpose, and in the event neither Landlord not Tenant shall desire to terminate this Lease, then and in such event the Basic Rent shall be equitably adjusted on the date when title vests in such governmental authority and the Lease shall otherwise continue in full force and effect. For purposes of this Section, a substained part of the Building shall be considered to have been taken if twenty five percent (25%) or more is taken. A substained portion of the Premises shall be deemed taken if more than twenty twenty five percent (25%) of the areas of available for parking are taken. Notwithstanding anything to the contrary contained herein. Tenant shall be entitled to pursue a separate claim for the value or Tenant’s furnishings, equipment, movable trade fixtures which are not deemed pursuant to this Lease to be Landlord’s property and then only to the extent paid for by Tenant and provided such claim shall in no manner diminish the award or other compensation to which Landlord would otherwise be entitled.
18. Quiet-Enjoyment.
Subject to the rights reserved to Landlord herein, Landlord covenants the if Tenant shall not be in default hereunder (after the expiration of any notice and cure period). Tenant shall at all times peaceably and quietly
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have, hold and enjoy the Premises in accordance with the terms and conditions of this Lease, without any interruption from Landlord or any other person claiming through or under Landlord.
19. Notices
Until further notice by either party to the other, in writing, all notice or communications required or permitted hereunder shall be sent by registered or certified mail, return receipt requested, (a) If to Landlord, addressed to:
The Three Marquees
P.O. Box 428
Savage, Maryland 20763
(b) If to Tenant, addressed to:
20. Tenant Holdover
This Lease shall expire, without notice by either part to the other at midnight of the last day of the Term. If Tenant shall not immediately surrender possession of the Premises at the termination of this Lease, Tenant, at Landlord’s election, shall become either a Tenant at sufferance, or Tenant from month to month, Landlord expressly reserving the right to terminate such tenancy and reenter and take possession of the Premises with or without notice or process. Tenant hereby promises and represents that it will promptly surrender the Premises, in accordance with the terms and conditions of this Lease, and hereby acknowledges that such promise is a material inducement to Landlord to enter into this Lease Agreement. Tenant further agrees to indemnify and hold Landlord harmless from and against any and all claims or liability, to any part whatsoever, occasioned from and by Tenant’s holding over, including any actual attorney’s fee or other costs associated therewith. In the event Tenant shall holdover subsequent to the expiration of the Term or any renewal term of this Lease, Landlord shall in lieu of Rent, be entitled to demand and receive from Tenant monthly use and occupancy payments for each month in which Tenant shall holdover subsequent to the expiration of the term of Lease, in an amount equal to twice the Basic Rent during the last month of the term of this Lease, plus any and all Additional Rent or other charges due under this Lease. Each such use and occupancy payment shall be due on or before the first day of each calendar month in which Tenant shall holdover hereunder. In no event shall Landlord’s demand or acceptance of such use and occupancy payments be considered to constitute an acquiescence by Landlord to the extension of the Term hereof, and Landlord shall be entitled to obtain immediate possession of the Premises irrespective of any such demand or acceptance. In the event Tenant shall pay monthly use and occupancy payments for any calendar month following expiration of the Term hereof such payment shall be prorated upon Tenant’s surrender of full and exclusive possession of the Premises to the Landlord, free of any and all other parties claiming through or under the Tenant.
21. Damage by Casualty.
(A) Tenant shall give prompt notice to Landlord in case of any fire or other damage or casualty to the Premises or the Building. If
(i) the Building shall be damaged to the extent that in Landlord’s reasonable judgment, repairing such damage or destruction would not be economically feasible;
(ii) the Building shall be damaged as a result of a risk which is not covered or any portion thereof shall require that the insurance proceeds under the policies referred to in Section 3. (B) hereof be used for other than repairing, replacing and rebuilding such damage, then in any event Landlord may terminate this Lease by notice given within ninety (90) days after such event. In the event this Lease is terminated as provided above in this Section 21: (i) the entire proceeds of the insurance provided for in Section 3. (B) hereof shall be paid by the insurance company or companies directly to Landlord and shall belong to, and be the sole property of, Landlord; (1) the
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portion of proceeds of the insurance provided for in Section 3. (B) which is insuring equipment, fixtures and other items, which by the terms of the Lease, belong to the Landlord by whatever cause shall be paid by the insurance company or companies directly to Landlord, and shall belong to, and be the sole property of, Landlord:
(iii) Tenant shall immediately vacate the Premises in accordance with this Lease
(iv) all Rent shall be apportioned and paid to the date on which possession is relinquished or the date of such damage, whichever last occurs; and
(v) Landlord and Tenant shall be relieved from any and all further liability or last obligation hereunder except as expressly provided in this Lease. Tenant hereby waives any and all rights to terminate this Lease that it may have, by reason of damage to the Premises by fire, flood, earthquake or other casualty, pursuant to any presently existing or hereafter enacted statute or pursuant to any other law.
(B) If all or any portion of the Building is damaged by fire, flood, earthquake or other casualty and this Lease is not terminated in accordance with the provisions of Section 21 (A), then all insurance proceeds under the policies referred to in Section 3 (B) hereof that are recovered on account of any such damage by fire or casualty shall be made available for the payment of the cost of repair, replacing and rebuilding and as soon as practicable after such damage occurs Landlord shall, using the proceeds provided for by Section 3 (B) hereof, repair or rebuild the Building and other portions of the Premises or such portion hereof to its condition immediately prior to such occurrence to the extent the cost therefore is fully funded by insurance proceeds. Alternatively, at Landlord’s option, Landlord may require that Tenant perform such repairs, in which case, Landlord shall make available to Tenant, insurance proceeds received by Landlord-In no event shall be obligated to repair or replace Tenant’s movable trade fixtures or other personal property. In addition, Tenant shall, using the remaining proceeds of the insurance proceeds from policies provided for in Section 3 (B) hereof, repair, restore and replace Tenant’s movable trade fixtures, personalty and equipment. If the aforesaid insurance proceeds under the insurance provided for in Section 3 (B) hereof shall be less the cost of repairing or replacing Tenant’s movable trade fixtures, equipment and personalty, or other items required to be insured by Tenant pursuant to Section 3 (B) hereof, Tenant shall pay the entire excess cost thereof, and if such insurance proceeds shall be greater than the cost of such repair, restoration, replacement or building, the excess proceeds shall belong to, and be the property of Tenant.
(C) In the event of any repair or rebuilding pursuant to the provisions of Section 21 hereof, then only to the extent Landlord receives rental insurance proceeds equal to the Rent due during the period the Building and other portions of the Premises are undergoing repairs and Tenant’s use is precluded, there shall be abated an equitable portion of the Basic Rent during the existence of such damage, based upon the portion of the Premises which is rendered untenantable and the duration thereof Landlord shall not be liable or obligated to tenant to any extent whatsoever by reason of any fire or other casualty damage to the Premises, or any damages suffered by Tenant by reason thereof, or the deprivation of Tenant’s possession of all or any of the Premises.
22. Jury Trial Waiver.
Landlord and Tenant hereby waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other one in respect of any matter whatsoever arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant hereunder, Tenant’s use OF occupancy of the Premises, and/or claim of injury or damage. Tenant acknowledges that the waiver of jury trial has been reviewed with counsel and is an acceptable and material business term of this Lease.
23. General Provisions.
(A) Nothing in this Lease shall be deemed or construed in any way as constituting the consent or request of Landlord, expressed or implied, by inference or otherwise to any contractor, subcontractor, laborer or materials for the performance of any labor or the furnishing of any materials for any specific improvement, alteration or repair of the Premises or any part thereof.
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(B) Nothing herein contained shall in any way be considered or construed as creating the legal relation of a partnership or joint venture between Landlord and Tenant, it being expressly understood and agreed by the parties hereto that the relationship between the parties shall be one of Landlord and Tenant.
(C) It is further and agreed that the covenants, agreements and conditions shall be binding upon the Landlord and Tenant, as we as their respective, heirs, executors, administrators, successors and permitted assigns.
(D) This Lease shall be governed and construed in accordance with the laws of the State of Maryland.
(E) If any covenants or agreements of this Lease or the application thereof to any person or circumstances shall be held to be invalid or unenforceable, then, and in each such event, the remainder of this Lease or the application on such covenant or agreement to any other person or any other circumstances shall not be thereby affected, and each covenant and agreement hereof shall remain valid and enforceable to the fullest extent permitted by law.
(F) Upon the request of Landlord, Tenant shall execute and deliver a memorandum of Lease or short form Lease suitable for recording. In no event shall Tenant record this Lease or any short form Lease without Landlord’s written consent, such consent to be withheld, conditioned or delayed in Landlord’s sole and absolute discretion.
(G) In the event that any mortgage providing financing on the Premises requires, as a condition of such financing, that modifications to the Lease be Obtained, and provided that such modifications
(1) Do not increase the Rent and other sums due hereunder, or
(ii) Constitute a no material change any substantive rights, obligations or liabilities of Tenant under this Lease, then Landlord may submit to Tenant a written amendment to this Lease incorporating such changes, and if Tenant does not execute and return such written amendment within ten (10) days after the same has been submitted to Tenant, then Landlord shall thereafter have the right at it sole option, to immediately cancel and terminate this Lease or to exercise its powers as attorney-in-fact, pursuant to Section 23 (O) below.
(H) Any obligation arising during the Term of this Lease under any provision herein contained, which would by its nature require the Tenant to take certain action after the expiration of the termination of this Lease to fully comply with the obligation arising during the Term, shall be deemed to survive the expiration of the Term or other termination of this Lease to the extent of requiring any such action to be performed after the expiration of the Term which is necessary to fully perform the obligation that erode during the Term of this Lease.
(I) The captions and headings throughout this Lease are for convenience and reference only, and the words contained in such captions shall in no way be held or deemed to meaning of any provision of this Lease.
(J) Words of any gender used in this Lease shall be held to include any other gender, and words in the singular number shall be held to include the plural and words in the plural shall be held to include the singular, when the sense so requires.
(K) Further, if the holder of a mortgage or deed of trust which includes the Premises, notifies the Tenant that such holder has taken over the Landlord’s rights under this Lease, Tenant shall not assert any right to deduct the cost of repairs or any monetary claim against the Landlord from Rent thereafter due and payable, but shall look solely to the Landlord’s interest in the Premises for satisfaction of such claim.
(L) By its entry into this Lease the Tenant represents and acknowledges to the Landlord that the Tenant has satisfied itself as to the use which it is permitted to make of the Premises and has inspected the Premises and confirms that the same are acceptable to Tenant, Tenant further acknowledges that Landlord has made no representations, warranties or covenants to Tenant except as expressly provided herein.
(M) No diminution or shutting off light, air or view by any structure that may be erected on the Premises or on any adjacent or nearby properties shall in any manner affect this Lease or obligations of Tenant hereunder.
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(N) Time is of the essence with respect to the performance of Tenant’s obligations hereunder, including, but not limited to the obligation to pay Basic Rent, Percentage Rent, Additional Rent and other sums due hereunder.
(O) In the event Tenant shall fail or refuse to execute and deliver to Landlord any document or instrument which may be required under the terms of this Lease within ten (10) days after Landlord’s written request therefore, Tenant hereby irrevocably appoints Landlord as attorney-in-fact for Tenant, such appointment being coupled with an interest, with full power and authority to execute and deliver such documents or instruments for and in the name of Tenant.
24. Brokers.
The respective parties certify that no person or company provided services as a broker, agent, finder or assisted in the negotiations of this Agreement. Each party agrees to indemnify the other for any claim asserted by any person or company purporting to act on its behalf in providing services as a broker, agent or finder, in connection with this Agreement.
25. Entire Agreement.
It is understood and agreed by and between the parties hereto that this Lease and the Exhibits attached hereto contain the final and entire agreement between the said parties and they shall not be bound by any terms, statements, conditions or representations, oral or written, not herein contained.
26. Landlord’s Liability.
If the Landlord shall sell, convey or otherwise dispose of its interest in the Premises, then the undersigned Landlord shall be deemed to be released of all obligations hereunder arising from the date of such transfer, and the transferee shall be deemed to be the Landlord hereunder for all purposes hereunder. Anything contained in this Lease or as provided at law to the contrary notwithstanding. Tenant acknowledges that as an express condition to Landlord’s entering into this Lease, Tenant agrees that Landlord, its agents, officers, employees and assigns shall have no personal liability nor shall any of them be subject to monetary claim of any kind or nature. In the event of a breach or default by Landlord, Tenant shall have no right to consequential damages, claims for loss sales or profits or the like, any and all such claims being expressly waived as a material inducement to Landlord’s entering into this Lease. Moreover, in the event of a breach or default by Landlord of any of its obligations under this Lease, Tenant acknowledges and agrees that its sole remedy shall be limited to an action for specific performance and even then, only to the extent the cost of such performance is less than two (2) months Rent, any amounts to effect specific performance over and above such sum being Tenant’s responsibility, being a negotiated condition of this Lease that Landlord’s aggregate cost of repairs under Section 7 shall never exceed over the Term the sum of two (2) months then current Rent. The provisions hereof shall insure to Landlord’s successors and assigns.
27. Force Majeure.
Each party shall be excused from performing any obligation or under takings provided for in this Lease for so long as such performance is prevented or delayed, retarded or hindered by act of God, fire, earthquake, flood, explosion, action of the elements, war, invasion, insurrection, riot, mob violation, sabotage, inability to procure or general shortage of labor, equipment, facilities, materials or supplies in the open market, failure of transportation, strike, lockout, action of labor unions, condemnation, laws, order of government or civil or military or naval authorities, or any other cause, whether similar or dissimilar to the foregoing, not within the reasonable control of the party prevented, retarded, or hindered thereby, including reasonable delays for adjustments of insurance. Anything contained herein to the contrary notwithstanding, Tenant’s obligation to pay Basic Rent, Additional Rent, or other charges due under the applicable provisions of the Lease, shall not be excused by reason of any of the foregoing events.
28. Modification.
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This Lease cannot be changed or terminated orally. Any agreement hereafter made shall be ineffective to change, modify or discharge this Lease in whole or in part, unless such agreement is in writing and signed by the party against whom enforcement of the change, modification or discharge is sought.
29. Hazardous Material.
The term “Hazardous Material” as used in this Lease shall mean any product, substance, chemical, material or waste whose presence, nature, quantity and/or intensity of existence, use, manufacture, disposal, transportation, spill, release or effect, either by itself or in combination with other materials expected to be on the Premises, is either:
(i) Potentially injurious to the public health, safety or welfare, the environment or the Premises,
(ii) Regulated or monitored by any government authority, or
(iii) A basis for liability of Landlord or Tenant or any occupant of the Premises to any governmental agency or third party under applicable statute or common law theory. Hazardous Materials shall include, but not be limited to, hydrocarbons, petroleum, gasoline, crude oil or any products, by-products or fractions thereof Tenant shall not engage in any activity in, on or about the Premises which constitutes a Reportable Use (as hereinafter defined) of Hazardous Materials without the express prior written consent of Landlord and compliance in a timely manner (at Tenant’s sole cost and expenses) with all applicable law. “Reportable Use” shall mean
(1) The installation or use of any above or below ground storage tank
(ii) The generation, possession, storage, use, transportation, or disposal of Hazardous Materials. Reportable Use shall also include Tenant being responsible for the presence in, on or about the Premises of Hazardous Materials with respect to which any applicable law requires that a notice be given to persons entering or occupying the Premises or neighboring properties. Notwithstanding the foregoing, Tenant may, without Landlord’s prior consent, but in compliance with all applicable laws, use any ordinary and customary materials reasonably required to be used by Tenant in the normal course of Tenant’s business permitted on the Premises so long as such use is not a Reportable Use and does not expose the Premises or neighboring properties to any meaningful risk of contamination or damage or expose Landlord to any liability thereof. In addition, Landlord may (but without any obligation to do so) condition its consent to the use or presence of any Hazardous Materials, and activities including Hazardous Materials, by Tenant upon Tenant’s giving Landlord such additional assurances as Landlord, in its reasonable discretion, deems necessary to protect itself the public, the Premises and environment against damage, contamination or injury and/or liability therefrom, including, but not limited to, the installation (and removal on or before Lease expiration or earlier termination) of reasonably necessary protective modifications to the premises (such as concrete encasements) and/or the deposit of an additional security deposit. Tenant shall be reasonable for compliance with applicable laws respecting Hazardous Materials discovered, now or hereafter, to be existing in the Premises and Tenant shall indemnify and hold Landlord harmless for all claims, costs, liabilities, obligations of any kind and nature related to the use, presence abatement or contaminants of Hazardous Materials on the Premises. It is further expressly understood and agreed, that any Hazardous Materials which become exposed or discovered as a result of Tenant’s Work or Alternations, and which but for such works not have been exposed or discovered, and which but for such works would not be required by government authorities to be abated, shall be abated by Tenant at Tenant’s sole cost and expense as part of Tenant’s Work or Alterations provided by law.
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IN WITNESS WHEREOF, Tenant has caused these presents to be signed and sealed by its President and duly authorized agent and representative having power to bind Corporation and Landlord has caused these presents to be signed and sealed by its President, all as of the day and year first written hereinabove.
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Landlord | |||
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Witness:
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The Three Marquees | |||
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/s/ Pamela A. Kues
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By: | /s/ Joseph Tomarchio, Jr. [SEAL] | ||
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Joseph Tomarchio, Jr. | |||
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Tenant | |||
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Witness:
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Mr. Tire, Inc. | |||
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/s/ Pamela A. Kues
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By: | /s/ Fredric A. Tomarchio [SEAL] | ||
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Fredric A. Tomarchio, President | |||
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Exhibit 10.83a
ASSIGNMENT AND ASSUMPTION OF LEASE
THIS ASSIGNMENT AND ASSUMPTION OF LEASE (the “Agreement”), is made as of the 1 st day of March, 2004 (the “Effective Date”), by and between Mr. Tire, Inc., a Maryland corporation having an address of 23 Walker Avenue, Baltimore, Maryland (“Assignor”) and Monro Muffler Brake, Inc., a New York Corporation having a principal address of 200 Holleder Parkway, Rochester, New York (“Assignee”).
RECITALS
WHEREAS, Assignor as tenant, and The Three Marques, as landlord, entered into a lease, dated January 1, 1997 (the “Lease”) relating to real property known as 118 Back River Neck Road located in Essex, Baltimore County, Maryland (the “Premises”); and
WHEREAS, Assignor and Assignee entered into a certain Asset Purchase Agreement dated as of February 9, 2004, as clarified by that certain Side Letter Agreement dated as of February 9, 2004, as same may be further amended and clarified (“Asset Purchase Agreement”), pursuant to which Assignor agreed to assign to Assignee all of Assignor’s right, title and interest as tenant under the Lease and Assignee agreed to assume all of Assignor’s obligations under the Lease.
NOW THEREFORE, pursuant to and in consideration of the Asset Purchase Agreement:
1. Assignor hereby assigns and transfers all of its right, title, and interest in the Lease to Assignee to have and to hold the same from and after the date hereof for the remainder of the term of the Lease.
2. Assignee hereby assumes and agrees to perform all obligations of Assignor pursuant to the Lease which accrue from the date hereof through the remainder of the term of the Lease. Assignor will remain liable for all of its obligations which accrued prior to the date hereof.
3. The representations and warranties set forth in the Asset Purchase Agreement with respect to the Lease assigned hereby, specifically, but not limited to, those set forth in Section 3.10 are incorporated in this Assignment as though set forth in full herein.
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IN WITNESS WHEREOF, this Assignment has been duly executed by the parties as of the Effective Date.
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By:
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/s/ Lonnie L. Swiger | |
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Lonnie L. Swiger, Vice President | |
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MONRO MUFFLER BRAKE, INC. | |
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By:
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/s/ Robert G. Gross | |
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Robert G. Gross, President & CEO | |
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STATE OF MARYLAND
On the 26 th day of February, 2004, before me, personally appeared Lonnie L. Swiger personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.
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/s/ Rachel V. Castranova
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Rachel V. Casstranova commissioned as Rachel V. Flad
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Notary Public
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STATE OF NEW YORK
On the 1 st day of March, 2004, before me, personally appeared Robert G. Gross personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.
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/s/ Mindi S. Collom
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Mindi S. Collom
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Notary Public
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Exhibit 10.83b
LANDLORD’S CONSENT AND ESTOPPEL CERTIFICATE
The Three Marquees, the person, firm or corporation identified as the landlord on Schedule “A” attached hereto (“Landlord”), DOES HEREBY CERTIFY THAT:
1. Landlord has entered into a certain lease which is more particularly described in said Schedule (the “Lease”) covering a portion of certain real property located at 118 Back River Neck Road in Essex, Baltimore County, Maryland (the “Premises”).
2. The Lease is valid, in full force and effect on the date hereof and enforceable in accordance with its terms and has not been modified or amended from the date of its execution to the date hereof, except as may otherwise be indicated on said Schedule “A.”
3. The term of the Lease commenced on the date of commencement shown on Schedule “A” and will terminate, unless renewed or extended in accordance with its terms, on the date of termination shown on Schedule “A”.
4. All conditions precedent to the commencement of the term of the Lease and to the payment of the basic rent, additional rent, percentage rent (if any) and all other charges specified therein have been satisfied or waived by Landlord.
5. Landlord has delivered and Tenant has accepted and is in possession of the Premises and is paying the basic rent, additional rent, percentage rent (if any) and all other charges specified therein.
6. The Premises and the use and occupancy thereof by Tenant comply with the terms of the Lease.
7. Neither the Landlord under the Lease nor, to the best of Landlords knowledge, Tenant is in default with respect to the performance or observance of any of their respective covenants or obligations under the terms of the Lease nor has any event occurred with which the giving of notice or the passage of time would constitute a default under the Lease.
8. Landlord has not received any prepayment of any basic rent due under the Lease, other than the current month’s rent.
9. There are no rights of offset, abatement or reduction of basic rent presently accruing to Tenant by reason of any provision of the Lease or otherwise.
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This Certificate is being given to and may be relied upon by Monro Muffler Brake, Inc. (“Monro”) their successors and/or assigns, to induce Monro to acquire Tenant’s leasehold interest under the Lease pursuant to an Asset Purchase Agreement between Atlantic Automotive Corp., its wholly-owned subsidiary, Mr. Tire, Inc. and Monro Muffler Brake, Inc. dated February 9, 2004.
Landlord hereby acknowledges that its consent to the assignment of Tenant’s interest pursuant to the provisions of the Lease has been requested and consents to the assignment by Mr. Tire, Inc. to Monro Muffler Brake, Inc. of the Tenant’s leasehold interest.
IN WITNESS WHEREOF, Landlord has caused this Consent and Estoppel Certificate to be duly executed this 27 th day of February, 2004.
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LANDLORD | |||
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By: | /s/ Fredric A. Tomarchio | ||
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Name: | Fredric A. Tomarchio | ||
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Title: | Member |
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SCHEDULE “A”
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Name of Landlord:
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The Three Marquees | |
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Name of Tenant:
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Mr. Tire, Inc. | |
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Date of Lease:
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January 1, 1997 | |
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Leased Premises:
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118 Back River Neck Road | |
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Essex, MD 21221 |
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Date(s) of amendment(s) to Lease (if any):
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None |
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Term of Lease:
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Commencement: | January 1, 1997 | ||
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Termination: | December 31, 2006 | ||
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Option Terms (if any): | 2 Ten (10) Year Terms |
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Exhibit 10.84
LEASE AGREEMENT
THIS LEASE AGREEMENT is made this 2 nd day of September, 1999, by and between LPR ASSOCIATES, a Maryland Partnership, having an office at 1312 South Main Street, Suite 2, Mt. Airy, Maryland 21771 (hereinafter called “Landlord”) and MR. TIRE, INC., a Maryland corporation with office at 23 Walker Avenue, Baltimore, Maryland 21208 (hereinafter called “Tenant”).
WITNESSETH: That in consideration of the rents, covenant and agreements
herein contained, Landlord leases to Tenant, and Tenant rents from Landlord,
the hereinafter described store premises (hereinafter called the “premises”).
6,156 square feet of floor space as shown on the plan
attached hereto as Exhibit “A” together with the right to use,
in common with Landlord, other tenants of the Center and their
patrons, the common areas of the Center.
The Food Lion Shopping Center on South Main Street in the
Town of Mt. Airy, Frederick County, Maryland.
Years 1-5 - $101,568.00; $8,464.00 per month
Years 6-10 - $116,840.88; $9,736.74 per month
Years 11-15 - $134,323.92; $11,193.66 per month
Years 16-20 - $154,454.04; $12,871.17 per month
Years 21-25 - $177,662.16; $14,805.18 per month
Years 26-30 - $204,317.64; $17,026.47 per month
Years 31-35 - $234,974.52; $19,581.21 per month
Years 36-40 - $270,186.84; $22,515.57 per month
Tenant shall reimburse Landlord for its share 7% of the
annual real property taxes, common area expenses and insurance
premiums for the Center.
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Security Deposit:
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$8,464.00 |
ARTICLE I
THE PREMISES
Section 1.1. Landlord shall perform all of the work set forth in Exhibit “B”; provided, however, if the cost thereof exceeds One Hundred Eighty-Eight Thousand Dollars ($188,000.00), Tenant shall, promptly, upon demand, pay the excess to Landlord. Tenant shall perform any other work necessary for it to conduct the business allowed by this Lease; provided, however, Tenant shall submit to Landlord, for its prior approval, plans for its work.
ARTICLE II
TERM
Section 2.1. Commencement Date and Length of Initial Term. The initial term of this Lease shall begin on the earlier to occur of (i) thirty (30) days from the date Landlord’s architect notifies Tenant that it has
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completed its work in the premises as set forth in Exhibit B in a manner sufficient to allow Tenant to obtain a certificate of use and occupancy after Tenant completes its work in the Premises or (ii) the day on which Tenant opens for business in the premises; and end ten (10) years after the first day of the first full calendar month of the term.
Section 2.2. Renewal Term. Tenant shall have the option to renew the term of this Lease for six (6) additional, successive terms of five (5) years each, provided that this Lease is in full force and effect and free of defaults by Tenant on the day a renewal option is exercised and on the day a renewal term begins. The renewal terms shall be on the same terms, covenants and conditions as the initial term, except that the rent shall be as hereinabove set forth, and there shall be no further right of renewal after the last renewal term provided for herein. Each right of renewal must be exercised by delivery to Landlord of an unequivocal written notice of election to renew at least twelve (12) months prior to the end of the initial term, or the then renewal term, as the case may be and upon the giving of notice and without any further instrument, this Lease shall be renewed.
ARTICLE III
QUIET ENJOYMENT, SUBORDINATION,
COMMENCEMENT AND ESTOPPEL CERTIFICATES
Section 3.1. Quiet Enjoyment. So long as Tenant complies with the terms, covenants and conditions of this Lease on Tenant’s part, Tenant shall have the peaceful and quiet use of the premises, subject to the terms, covenants and conditions of this Lease, without interference by Landlord or anyone claiming by, through or under Landlord.
Section 3.2. Mortgage Subordination and Seniority. The holder of any mortgage or deed of trust hereafter placed upon the Center shall have the right to elect, at any time, whether this Lease shall be subordinate to the operation and effect of the mortgage or deed of trust. Tenant shall, upon request, execute a subordination agreement in form satisfactory to the holder; provided that the Agreement stipulates that Tenant’s possession shall not be disturbed so long as it is not in default of its obligations hereunder.
Section 3.3. Commencement and Estoppel Certificates. When the term begins, Tenant shall promptly enter into a written agreement with Landlord stipulating the beginning and ending dates of the initial term. Within three (3) days after a written request from time to time made by Landlord, Tenant shall deliver to Landlord a signed and acknowledged statement setting forth: (i) that this Lease is unmodified, in full force and effect, free of existing defaults of landlord and free of defenses against enforceability (or if there have been modifications or defaults, or if Tenant claims defenses against the enforceability hereof, then stating the modifications, defaults and/or defenses), (ii) the dates to which rent and additional rent have been paid, and the amount of any advance rentals paid, (iii) the beginning and ending dates of the initial term, (iv) whether Tenant has given notice exercising the right to renew this Lease, and if so, the renewal terms so opted, (v) that Tenant has no outstanding claims against Landlord (or if there are any claims, then stating the nature and amount of such claims) and (vi) the status of any other obligation of either party under or with respect to this Lease; it being intended that any such statement may be relied upon by any purchaser or mortgagee of Landlord’s interest in the premises, or any prospective purchaser or mortgagee.
ARTICLE IV
RENT
Section 4.1. Minimum Rent. The minimum rent shall be paid in advance, on the first day of each calendar month.
Section 4.2. Additional Rent. Whenever under the terms of this Lease any sum is required to be paid by Tenant in addition to minimum rent, whether or not such sum is herein designated as “additional rent” or provision is made for collection additional rent, it shall, nevertheless, be deemed to be additional rent, and shall be collectible as rent. All minimum rent and additional rent shall be paid without set off, abatement, deduction or recoupment, except as expressly set forth in this Lease. Any payment by Tenant of a lesser amount
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of minimum or additional rental than is then due shall be applied to such category of arrearage as Landlord may designate irrespective of any contrary designation by Tenant and to the oldest, most recent or other portion of the sum due as Landlord may determine; and Landlord’s acceptance of any partial payment shall not be deemed an accord and satisfaction and shall be without prejudice to Landlord’s right to pursue other remedies.
Section 4.3. Payment. All rent payable and all statements due by Tenant to Landlord shall be paid and mailed to Landlord at P. O. Box 128, Mt. Airy, Maryland 21771 or at such other address as Landlord may designate in writing to Tenant.
Section 4.4. Net Rent. The rent reserved hereunder shall be net, net, net to Landlord and all costs, charges, expense and obligations of every kind relating to the premises and its use and occupancy, which may arise or become due during the term of this Lease, shall be paid by Tenant.
ARTICLE V
SECURITY DEPOSIT
Section 5.1. Landlord hereby acknowledges receipt from Tenant of Eight Thousand Four Hundred Sixty-Four Dollars ($8,464.00) to be held by Landlord as security for the payment of rent and the performance of Tenant’s other obligations under this Lease. This deposit shall be returned to Tenant at the end of the tenancy, so long as all rent and additional rent payable to that date has been received by Landlord and Tenant is not otherwise in default of any of its obligations hereunder. If Tenant defaults in the payment of rent or in the performance or observance of any other obligation its part under this Lease, Landlord may apply the deposit to payment of the rent in default or other money arrearage and/or to the damages and costs incurred by Landlord as a result of any default, and/or to costs incurred by Landlord in rectifying any default, and/or to the prepayment of minimum rent for any subsequent period of the term and/or to any amount to which Landlord may be entitled under this Lease; and Tenant shall promptly thereafter restore the deposit to the original amount. The right of Landlord to apply the security deposit as above specified shall not be construed as a limitation upon Landlord’s right to invoke any other remedy available under this Lease or at law or equity for breach of this Lease, or to collect the full amount of damages owing by Tenant on account of any breach.
ARTICLE VI
PERMITTED USE AND CONTINUED OCCUPANCY
Section 6.1. (a) Permitted Use. The premises shall be used and occupied solely as an auto service center and Allstate Rent-A-Car. The premises may not be used for any other purpose.
(b) Special Restrictions. Without any intention to diminish the efficacy of Section 6.1(a), but in order to specify particular uses and practices which, if engaged in by Tenant, would be in violation of other leases, or recorded agreements pertaining to the Center, or of exclusive use privileges which Landlord has, will or may desire to grant or which constitute businesses or practices which Landlord may desire to prohibit or control, Tenant shall not, at any time: operate a second hand store, general merchandise or discount department store, “Army Navy” or “surplus” store, nor may the premises be utilized for the sale of health and/or beauty aids, automobiles, trucks, trailers, or other motor vehicles, pornographic materials or merchandise normally used or associated with illegal or unlawful activities, nor may the premises be used as a food supermarket, dairy store, ice cream store, hardware store, convenience store, drug store or pharmacy, or as a pool hall, bowling alley, funeral parlor, movies or live theater or peep show, arcade (for video games, pinball machines, or other amusement devices), massage parlor, cocktail lounge, tavern, bar, flea market, health spa, child center, skating rink, establishment which sells alcoholic beverages for on-premises consumption or other health, recreational or entertainment type activity. No vending machines may be placed anywhere outside of the premises.
Section 6.3. Permitted Name. Tenant shall conduct business on the premises in the name of “MR. TIRE-Allstate Rent-A-Car” and under no other name or trade name unless the use of another name is approved in writing by Landlord.
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Section 6.4. Restrictions on Landlord. So long as Tenant is continuously conducting its automotive service business in the premises, Landlord shall not lease any space in the Center (other than the premises) for the primary purpose of operating an automotive service center. In order to satisfy the requirements hereof, leases of space in the Shopping Center hereafter made may require the lessee thereunder to covenant either that it will not use its premises for the aforesaid prohibited purpose or that such lessee shall use its premises only for some specific purpose or purposes specified in such lease (and not prohibited hereby). Landlord shall not be liable in damages or otherwise if any lessee in the Center violates any such covenant in the lease between Landlord and such lessee; and Tenant shall not be entitled to cancel this Lease by reason of other lessee’s violation of any such covenant. Tenant may, however, at its expense, bring an action at law or in equity in its own name or in Landlord’s name, against any lessee to enforce any such covenant or to enjoin the violation thereof; Tenant shall save Landlord harmless from any liability or expense that Landlord might suffer or incur by reason of the filing of such action by Tenant in Landlord’s name.
The parties acknowledge that the foregoing restriction has been imposed at the request of Tenant and for the sole benefit of Tenant. Accordingly, Tenant agrees to indemnify and hold Landlord harmless from all damages, costs, and liabilities whatever, including but not limited to Landlord’s attorneys’ fees and any award of damages incurred by Landlord as a result of legal proceedings, either threatened or instituted, as a result of the imposition of the foregoing restrictions.
The foregoing restriction shall not apply to the premises presently occupied by “Food Lion” and “Southern States”; and shall be subject to right of the hardware store in the Center to sell any or all of items that Tenant may sell from the premises.
ARTICLE VII
COMMON AREAS
Section 7.1. (a) Tenant’s Right to Use Common Areas. Tenant and its customers shall be entitled to the non-exclusive use, free of charge, but in common with others, of (1) the automobile parking areas (herein called “parking areas”) from time to time made available by Landlord in the Center, for parking of vehicle only; (2) the entrances and exits thereto and the driveways thereon, for vehicular and pedestrian ingress and egress only (which parking areas, entrances, exits thereto and the driveways thereon, for vehicular and pedestrian ingress and egress only (which parking areas, entrances, exits and driveways are sometimes herein collectively called “vehicle areas”); and (3) the pedestrian walkways in the Center, for pedestrian ingress and egress only. All of the facilities described in (1), (2) and (3) are herein sometimes collectively called “common areas”. Tenant and its contractors, agents (other than premises employees), licensees, invitees and suppliers may use any of the vehicle areas for ingress and egress and may use the parking areas for parking of noncommercial vehicles and may load and unload commercial vehicles in the parking area at the service door to the premises and shall thereafter promptly remove such vehicles; and may use any delivery driveway designated by Landlord for access to the premises for deliveries, pickups and other services to the premises, but no other driveways. All such uses shall be subject to rules and regulations prescribed from time to time by Landlord; and Landlord shall have exclusive management and control over the common areas. The common areas shall only be used as herein set forth. The storage or placing of tires or any other items or the sale of any item, or the placement of vending machines outside the premises or anywhere in the common areas or in the corridor or loading area is prohibited. Parking in any driveway or other area of the Center not specifically designed for parking is prohibited.
(b) Employee Parking. Tenant and its employees shall have the right, in common with others, to park vehicles in the areas that Landlord designates as employee parking areas and in no other areas and may use the other vehicle areas for ingress and egress only. Tenant shall promptly furnish to Landlord, on request, license numbers of vehicles used by Tenant and its employees. If for employee of Tenant parks a vehicle in an area other than that designated for parking of employees, Tenant shall pay Landlord Ten Dollars ($10.00) per day or partial day for each vehicle so parked, and Landlord shall have the right to remove such vehicle to the designate employee parking area at Tenant’s expense, if Landlord gives the manager of the premises oral or written notice of such employee’s current or past parking violations at least two (2) days prior to removal. Tenant shall defend, indemnify and save Landlord harmless from any claims for damages which may be made against Landlord by any employee of Tenant on account of or arising out of removal of a vehicle belonging to an employee of Tenant.
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(c) Control of Parking Areas. In order to preserve the parking areas for the use of patrons of the Center, Landlord may exact parking charges (by meters or otherwise) provided that provision is made for free parking ticket validation for Tenant’s customers, may close temporarily all or any portion of the common areas as may be required for proper maintenance and/or repair or to avoid areas as may be required for proper maintenance and/or repair or to avoid deduction to public use, and take such other action as it deems advisable in its business judgment in order to secure or improve the convenience and use thereof by the tenants of the Center and their customers. Landlord may from time to time change the location, layout and arrangement of the parking areas, driveways and walkways and erect buildings or other temporary or permanent structures or improvements thereon, provided that Landlord maintains sufficient automobile parking facilities for the Center to comply with legal requirements, and does not deprive Tenant of access to the premises.
(d) No Public Use. Nothing herein contained shall be deemed to be a dedication of the common areas to public use, it being Landlord’s intention that the common areas may be used only by Tenant and the other permitted users mentioned in this Section, and then only for the limited purposes specified as to each user.
Section 7.2. Maintenance of Common Areas. Landlord shall provide illumination of the common areas during such after dark hours as Landlord shall determine, and shall keep the common areas in reasonable repair, substantially clear of ice and snow to allow substantial use thereof for the intended purpose, with reasonable diligence under the circumstances.
Section 7.3. Maintenance Contribution. As a contribution to Landlord’s costs of operating and maintaining the common areas and the facilities thereon, Tenant shall pay Landlord, beginning on the commencement date, 7% of the cost of maintaining and operating the common areas and facilities of the Center. Tenant shall be billed quarterly for its contribution to Common Area Costs. This year, Tenant’s quarterly contribution would be $525.00. Contributions shall be adjusted within thirty (30) days after Landlord determines its actual costs for any fiscal period to reflect Tenant’s actual share of costs, at which time Landlord shall provide Tenant with detailed breakdown of the costs and expenses, and, if requested, copies of bills for items included thereon. Tenant shall pay any balance owing for the period, or shall be refunded any excess, as the case may be, and the monthly payments shall also be adjusted to conform to the cost projection adopted by Landlord.
ARTICLE VIII
ASSIGNMENT AND SUBLETTING
Section 8.1. Restrictions on Assignment. Tenant shall not assign this Lease or sublease any of the premises, without Landlord’s prior written consent, which consent shall not be unreasonably withheld or delayed. Any assignment by operation of law, attachment or assignment for the benefit of creditors shall constitute a default hereunder.
Section 8.2. No Waiver. If Landlord consents to any assignment or sublease as defined in and prohibited by Section 8.1, any rent in excess of the rent reserved herein shall be paid to Landlord and, in addition to any other consideration that may pass between the parties in connection therewith, Tenant and any assignee or sublessee shall be deemed to have covenanted not to make any further assignment or sublease contrary to the provisions of Section 8.1. and such covenant shall be deemed to have been made as of the date of consent and shall take effect prospectively from the date thereof.
ARTICLE IX
REPAIRS
Section 9.1. Tenant shall make all necessary repairs to the sprinkler system, heating, ventilating and air conditioning systems and all other machinery, equipment, facilities and systems in and servicing the premises and Tenant shall keep the premises, including the store front, windows, doors and signs, in good condition and repair, and shall make all replacements required to maintain said status of repair. Tenant shall maintain a service
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contract for the heating, ventilating and air conditioning systems servicing the premises with companies acceptable to Landlord. At the beginning of the term of copy of the contract shall be given to Landlord and copies of renewals thereof given to Landlord prior to expiration. Tenant shall also keep in good condition and repair the common areas within fifteen feet of the wall of the premises service door, and Tenant shall keep said area clean. Landlord shall maintain and repair the roof, walls and other structural portions, excluding the overhead doors and adjacent areas of the premises. All repairs and replacements shall be equal in quality to original construction.
ARTICLE X
UTILITIES
Section 10.1. Payment for Utilities. Beginning on the date Tenant enters the premises, Tenant shall pay all charges for water and sewer service furnished to the premises based on the usage shown by utility company meters exclusively for the premises. Tenant shall also pay, when due, all consumption charges for all other services furnished to the premises, including, but without limitation, heat, air conditioning, electricity and telephone. Charges billed by utility companies shall be paid by Tenant directly to the companies.
Landlord shall not be liable to Tenant for damages because of any interruption in utility services, and Tenant shall not be entitled to claim a constructive eviction due to such interruption, but Landlord shall proceed with reasonable diligence to restore such service to the extent that it is within Landlord’s control.
ARTICLE XI
TENANT’S OPERATIONS, ALTERATIONS, MACHINES, SIGNS AND COMPLIANCE
Section 11.1. Rules and Regulations. Tenant shall comply with the rules and regulations set forth on Exhibit “C” attached hereto, and with any additions and modifications adopted from time to time by Landlord, and each rule and regulation shall be deemed a covenant of this Lease to be performed and observed by Tenant.
Section 11.2. Garbage Collection Service. Landlord has provided a dumpster near the rear of the premises in which Tenant shall place all garbage and trash generated on site. Tenant may not, however, place any tires, lubricants or any other hazardous materials therein. Tenant shall provide for removal of such items. Tenant may not, however, place any garbage or trash generated off site and all such refuse may not be brought to the Center. Tenant shall insure that all of its refuse is placed in the dumpster and that the area surrounding the dumpster is clean and neat.
Section 11.3. Alterations. Tenant shall not make any alterations, additions or improvements to the store front of the premises or any alterations, additions or improvements affecting structural or support elements of or in the building of which premises are a part, or affecting any utility system servicing the which the premises or other parts of the Center. Any alterations, additions or improvements by Tenant which are permitted hereunder or hereafter approved by Landlord shall immediately become the property of Landlord and remain upon the premises at the end of the term unless Landlord notifies Tenant to restore the premises to its original condition, in which event Tenant shall comply with such requirement prior to the expiration of the term. Tenant shall not cut or drill into, or secure any fixtures, apparatus or equipment of any kind to, any part of the premises without Landlord’s prior written consent; and if Tenant shall cut through or pierce the roof or exterior walls of the premises, Landlord’s repair obligations respecting the roof or exterior walls (as the case may be) under Section 9.1 hereof shall thereupon terminate. Before undertaking any alterations permitted hereunder or consented to by Landlord, Tenant shall obtain and furnish to Landlord an endorsement to the public liability insurance policy required to be carried by Tenant under Section 14.02 hereof to cover liabilities incurred in connection with any work undertaken by Tenant.
Section 11.4. Signs. Tenant may, at its expense, pursuant to applicable permits, install a single face sign on the front and side of the premises and, a sign panel in place of the Rite-Aid panel on the existing free standing sign facing Ridge Ville Boulevard. The design of each shall be approved by Landlord prior to installation. Tenant shall not place, suffer to be placed or maintain any other sign, billboard, marquee, awning, decoration,
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placard, lettering, advertising matter or other thing of any kind, permanent or temporary, on the exterior of the premises, or in or on any window, or door of the premises.
Section 11.5. Compliance with Laws and Insurance Requirements. Tenant shall promptly comply with all laws, rules, regulations, requirements and recommendations of governmental bodies and public authorities and of the Insurance Service Office for the area in which the premises are situated and of Landlord’s insurers, pertaining to the premises and the use and occupancy thereof, and to fire preventive, warning and extinguishing apparatus. Tenant shall not do or suffer to be done, or keep or suffer to be kept anything in or about the premises which will contravene any of Landlord’s insurance policies on the Center or any part thereof (including, without limitation fire, casualty, liability, and rent insurance) or which will prevent Landlord from procuring policies in companies reasonably acceptable to Landlord, or which will impair Landlord’s rights to collect on any insurance policy; and if anything done, omitted to be done or suffered to be done by Tenant (including, without limitation, failure to occupy the premises) or kept, or suffered by Tenant to be kept in or about the premises shall cause the rate of any insurance on the premises or on any other part of the Center to be increased above the rate applicable to the least hazardous type of retail occupancy permitted in the Center or shall cause any policy of Landlord’s to be canceled or result in the disturbance of an insurance recovery, then Tenant will pay the increase in premium promptly upon Landlord’s demand or indemnify Landlord for any loss to the extent that insurance proceeds are insufficient to fully cover such loss, as the case may be.
ARTICLE XII
MECHANIC’S LIENS AND OTHER LIENS
Section 12.1. Mechanic’s and Materialmen’s Liens. If any mechanic’s or other lien is filed against any part of the Center by reason of any labor, material or service furnished or alleged to have been furnished to Tenant or for any change, alteration, addition or repair to the premises made by Tenant, Tenant shall cause such lien to be released of record by payment, bond or otherwise as allowed by law, at Tenant’s expense, within thirty (30) days after the filing thereof; and Tenant shall, at its expense, defend any proceeding for the enforcement of any such lien, discharge any judgment thereon and save Landlord harmless from all losses and expenses resulting therefrom, including counsel fees and other expenses incurred by Landlord if it elects to defend or participate in the defense of such proceeding.
Section 12.2. Other Liens. Tenant shall not permit the premises to be subjected to any statutory lien by reason of any act or omission of Tenant or its concessionaires, licensees or subtenants or their respective agents, employees or contractors; and in the event that any such lien attaches to the premises or the Center, Tenant shall discharge the same promptly by payment, bond or otherwise as allowed by law, at its expense, within thirty (30) days after the filing thereof.
ARTICLE XIII
ROOF, WALLS AND INTERIOR
Section 13.1. Use of Roof and Walls by Landlord. Landlord reserves the exclusive rights to the use of all or any part of the roof of the premises, air space there above, and the rear and side walls of the premises, for support or other purposes.
Section 13.2. Pipes and Conduits. Landlord reserves the right to install and maintain pipes, conduits, wires and ducts in and through the premises to serve other part of the Center, so long as any visible installation does not unreasonably interfere with the use or appearance of the premises.
ARTICLE XIV
PUBLIC LIABILITY AND INSURANCE
Section 14.1. Damage to Landlord’s Property. Tenant shall indemnify Landlord for any damage to any property of Landlord in the Center caused by or arising out of or in connection with any act or omission of
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Tenant, its employees, agents or contractors, or Tenant’s occupancy or use of the premises, or any thing, matter or condition of, on or pertaining to the premises, or any breach by Tenant of any term, covenant or condition of this Lease to be performed or observed By Tenant.
Section 14.2. (a) Indemnity of Landlord. Tenant shall defend, indemnify and save Landlord harmless from and against any and all claims, actions, demands, damages, liability and expenses (including counsel fees) for injury to the property of others and injury or death of persons, which is caused by or arises out of or in connection with Tenant’s use or occupancy of the premises or the common areas, or any thing, matter or condition of, on or pertaining to the premises, or any act or omission of Tenant, its agents, employees, or contractors, or out of breach by Tenant of any term, covenant or condition of this Lease to be performed or observed By Tenant.
(b) Liability Insurance. Tenant shall, at its expense, maintain Commercial General Liability Insurance, and sprinkler damage liability insurance, if applicable, covering personal injury and property damage, which shall include Landlord and Tenant as named insureds, and shall include contractual indemnity coverage for Tenant’s liability hereunder with combined minimum liability limits of Two Million Dollars ($2,000,000.00) written on an occurrence basis. The foregoing limits shall be increased every five (5) years to an amount equal to that then carried by similar businesses in The Baltimore Metropolitan Area.
(c) Plate Glass Insurance. Tenant shall, at its expense, maintain plate glass insurance for the full replacement value of all plate glass in the premises.
(d) Carrier. All insurance required by this Lease shall be written with insurance companies licensed to do business in Maryland and shall contain an endorsement requiring thirty (30) days prior written notice to Landlord of any modification, cancellation or surrender.
(e) Delivery of Policies. Prior to the beginning of the term Tenant shall deliver to Landlord the original insurance policies required by this Article bearing a notation by the insurer or its agent that the premium is paid; and renewal certificates of each policy shall be delivered to Landlord at least thirty (30) days prior to the expiration of any policy term bearing a notation that the renewal premium has been paid.
ARTICLE XV
REAL ESTATE TAXES
Section 15.1. Payment of Real Estate Taxes. Tenant shall pay to Landlord, promptly upon demand, its share of all real estate taxes, assessments and other governmental charges levied against the Center. Tenant’s share is 7% of the total payable for the Center. Tenant shall pay all real estate or other taxes attributable to improvements to the premises made by Tenant. When Tenant makes any leasehold improvements to the premises, it shall promptly furnish Landlord with a certified statement of the cost; and the taxes attributable thereto shall be paid by Tenant. Tenant’s obligation to pay taxes and other charges shall be apportioned with respect to the tax years in which the term begins and ends, and Tenant shall pay to Landlord, at the beginning of the term, its apportioned share for the balance of the tax year in which the term begins. Taxes are paid in July and Tenant’s share for the current year would be $4,000.00. Upon request, Landlord shall provide Tenant with a copy of the bill, Tenants share of taxes shall be apportioned for the year in which the term begins and ends, if appropriate.
Section 15.2. Licenses and Permits. Tenant shall obtain all permits respecting Tenant’s use and occupancy of the premises, and shall pay all minor privilege charges, occupancy permit fees, license fees or other charges or taxes which are imposed on or with respect to the premises and the use and occupancy thereof.
ARTICLE XVI
TENANT’S PROPERTY
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Section 16.1. Trade Fixtures. Trade fixtures and equipment (called “fixtures” in this Article) installed by Tenant in the premises shall be owned, leased or financed in the name of Tenant only. Promptly upon request, Tenant shall furnish Landlord with evidence of the nature of its interest in the fixtures. The fixtures shall be maintained by Tenant in attractive condition and in good repair, and shall remain the property of Tenant. Fixtures shall be removable at the expiration of the term if Tenant is not then in default under this Lease, and shall be removed by Tenant at the end of the term upon Landlord’s demand; and upon removal Tenant shall repair any damage to the premises caused by installation or removal of fixtures and any wear and tear caused by the presence or use of the fixtures.
Section 16.2. Negligence of Landlord and Acts of Other Tenants. Tenant shall carry a standard business owners insurance policy on Tenant improvement and its trade fixtures, merchandise and other personal property in the premises for their full replacement value, and Landlord shall be named as an additional insured. Landlord shall not be liable to Tenant for any damage to any such property or to any property required to be insured by Tenant, from any cause, unless (i) the damage is due to Landlord’s negligence and (ii) the damage is caused by an occurrence which is not an insured hazard under the standard business owners policy available for insuring property of Tenant at the time of the loss; it being understood that it is not the intention of the parties that Landlord be relieved from liability to Tenant for negligence contrary to any statute or public policy of the State of Maryland, but rather that Tenant avail itself of available insurance coverage without subjecting Landlord to liability for losses that could have been insured, and without subjecting Landlord to subrogation claims of any insurer.
ARTICLE XVII
LANDLORD’S ENTRY ON PREMISES
Section 17.1. Landlord and its representatives may enter the premises at reasonable times to inspect the premises, to enforce the provisions of this Lease, to make repairs required of it hereunder, to rectify defaults of Tenant pursuant to the rights granted to Landlord hereunder, to make repairs to other premises in the Center, to check the temperature in the premises and to repair any utility lines or system or systems servicing other parts of the Center or to rectify any condition in the premises adversely affecting other occupants of the Center. Landlord may bring upon the premises all things necessary to perform any work done in the premises pursuant to this Section. Nothing herein contained shall be deemed or construed to impose upon Landlord any obligation or responsibility whatsoever for the care, maintenance or repair of the premises, except as otherwise specifically provided in this Lease. Any work performed by Landlord hereunder shall be performed with reasonable care and completed expeditiously, subject to excusable delays under Section 9.01.
ARTICLE XVIII
FIRE OR OTHER CASUALTY
Section 18.1. Repair and Restoration. If the premises are damaged or destroyed by fire, or other casualty included in the standard extended coverage endorsement to fire insurance policies used in Maryland, Landlord shall, with reasonable diligence, but subject to delays in adjusting the insurance loss and excusable delays, repair the damage to (or replace) those parts of the premises and the facilities therein which were originally constructed and/or installed by Landlord. Tenant shall with reasonable diligence repair the damage to (or replace) those parts of the premises and the facilities therein which were originally constructed and/or installed by Tenant, and all other leasehold improvements made by Tenant. Notwithstanding the foregoing, if as a result of any casualty the premises is substantially destroyed, or the building in which the premises are located is substantially destroyed or damaged (irrespective of damage to the premises), then Landlord may, by notice to Tenant within one month after such occurrence, elect to terminate this Lease, in which event this Lease shall terminate on the date specified in such notice and all obligations of the parties hereunder shall be adjusted as of such date. Except as otherwise provided in this Section, this Lease shall not terminate as a result of any damage or destruction to the premises. If the premises are rendered untenantable, in whole or in part, because of such casualty, the minimum rent payable by Tenant shall abate proportionately to Tenant’s loss of use until the damage has been repaired.
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Section 18.2. Payment of Insurance Premiums. Landlord shall maintain all risk hazard insurance and rental loss insurance on the Center, including the premises, in such amounts as it may desire or which may be required by any mortgage lender. Tenant shall pay to Landlord, promptly upon demand, Tenant’s share of the premiums for this insurance. Tenant’s share is 7% of the total premiums for the Center. At the beginning of the term, Tenant shall pay Landlord its share of the premium for the balance of the premium year. Insurance premiums are paid in September and Tenant’s share for the current year would be $425.00. Upon request, Landlord shall provide Tenant with a copy of the bill, Tenants share of insurance shall be apportioned for the years in which the term begins and ends, if appropriate.
ARTICLE XIX
EMINENT DOMAIN
Section 19.1. Effect of Total or Partial Condemnation. If the premises are condemned in whole or part under power of eminent domain, this Lease shall terminate on the date title or possession vests in the condemning authority, whichever is first. Rent, Additional Rent and other changes payable hereunder shall be apportioned as of the date of termination.
Section 19.2. Other Condemnation in the Center. If the building in which the premises is located or if other buildings in the Center are condemned under the power of eminent domain, or if the nature, location or extent of any proposed condemnation affecting the Center is such that Landlord elects in good faith to demolish all or substantially all of the building in which the premises is located, then Landlord may terminate this Lease by giving written notice of termination to Tenant at any time after such condemnation, and this Lease shall terminate on the date specified in such notice.
Section 19.3. Condemnation Awards. In the event of any condemnation of all or part of the premises or the Center, Tenant shall not be entitled to share in any part of the condemnation award (including consequential damages) for the taking, either for its leasehold estate or for its rights to use any of the common areas of the Center, whether or not this Lease is terminated under the provisions of this Article by reason of condemnation. Tenant shall, however, be entitled to retain any separate award obtained from the condemning authority for moving expenses and loss of trade fixtures to the extent compensable without diminution of Landlord’s award.
Section 19.4. Definitions. As used herein, the terms “condemned” and “condemnation” include sale by Landlord to a condemning authority under threat of condemnation. Landlord shall have the power and authority to convey the entire fee simple title in all or any part of the premises or the Center to the condemning authority without Tenant’s joinder, and any such conveyance by Landlord alone shall be deemed free and clear of any leasehold or other interest of Tenant therein, and any condemning authority shall be entitled to rely upon the provisions of this sentence in accepting a deed from Landlord alone. As use herein the term “condemnation award” includes the proceeds from any sale to a condemning authority under threat of condemnation.
ARTICLE XX
BANKRUPTCY OR INSOLVENCY
Section 20.1. If any transfer of Tenant’s interest in the premises is made under execution or similar legal process, or if a petition is filed by or against Tenant to adjudicate Tenant a bankrupt or insolvent under any federal or state law, or if a receiver or trustee is appointed for Tenant’s business or property and such appointment is not vacated within thirty (30) days, or if a petition is filed by or against Tenant under any provision of federal or state law for a corporate reorganization of Tenant or an arrangement with creditors, or if Tenant makes an assignment or deed of trust for the benefit of its creditors, or if in any other manner Tenant’s interest under this Lease shall pass to another by operation of law, then, Tenant shall be deemed to have committed a material breach of this Lease, and Landlord may, at its option, terminate this Lease and reenter the premises; but, notwithstanding such termination. Tenant shall remain liable for all rent and damages which may be due at the time of termination and for the liquidated damages set forth in Section 21.3 of this Lease. Nothing contained in this Lease shall be deemed to preclude Landlord from obtaining the maximum amount recoverable from Tenant under law in any proceeding referred to in this Section; and Tenant hereby covenants that in the event of a termination or reentry under this Section, Tenant shall be liable to
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Landlord for the maximum amount recoverable from Tenant under the law pertaining to proceeding resulting in reentry or termination by Landlord.
ARTICLE XXI
DEFAULTS AND REMEDIES
Section 21.1. Abatement of Tenant’s Defaults. If Tenant fails to maintain any insurance required to be maintained by it under this Lease, or fails to furnish evidence of insurance renewals at the times in this Lease required, or allows such insurance to lapse or be canceled, Landlord may obtain such insurance for Tenant without notice. If Tenant defaults in the performance or observance of any other non-monetary term, covenant or condition to be performed or observed by it under this Lease, and such default continues for more than fifteen (15) days after written notice thereof, Landlord may take action to rectify such default on Tenant’s behalf and Landlord may rectify such default on Tenant’s behalf immediately and without such notice if immediate action is reasonably believed to be required in order to avoid injury or damage to other persons or property (including Landlord’s property). Landlord may enter the premises to rectify such defaults.
All money advanced and costs and expenses incurred by Landlord in rectifying any default (including Landlord’s reasonable legal fees) together with interest thereon at the rate of twelve percent per annum from the date advanced until paid, shall be repaid by Tenant to Landlord on demand.
Section 21.2. Distraint and Default Rent. If any payments of rent or additional rent are in arrears for more than ten (10) days after written notice of non-payment, (a) Landlord may distrain therefore, and shall be entitled to the benefit of all laws pertaining to distraint or actions in the nature of distraint; and (b) beginning on the 11th day of arrearage and continuing until such arrearage is paid, Tenant shall be liable to Landlord for payment of additional rent (herein called “arrearage rent” for the purpose of this Section) for the period of such arrearage at a daily rate equal to one percent (1%) of such arrearage for each of the first ten (10) days thereof, and an annual rate of fifteen percent (15%) of such arrearage thereafter. Any payments by Tenant to Landlord made after the accrual of arrearage rent may be applied by Landlord to such arrearage rent irrespective of the obligation for which Tenant may earmark such payment.
Section 21.3. Termination and/or Reletting for Default: Liquidated Damages. If Tenant defaults in the payment of rent or additional rent payable under this Lease, and such default continues for more than ten (10) days after written notice of non-payment; or if Tenant defaults in the performance or observance of any term, covenant or condition to be performed by it hereunder which may be performed merely by the payment of money and such default is not rectified within five (5) days after written notice thereof; if Tenant shall allow any insurance policy required to be carried by it hereunder to lapse or to be canceled; of if Tenant defaults in the performance or observance of any other term, covenant or condition of this Lease on its part to be performed or observed and does not commence to rectify such default within fifteen (15) days after written notice thereof or does not thereafter diligently complete the rectification thereof; if Tenant vacates or abandons the premises; then, in any of such events, Landlord may, at its option, (i) terminate this Lease and reenter the premises; or (ii) reenter the premises without terminating this Lease, and assume custody and control thereof for the purpose of protecting the premises and/or for reletting the premises as agent for Tenant, if Landlord elects to relet, and such agency shall be deemed as a power coupled with an interest and shall be irrevocable; and in either such event Landlord shall be entitled to the benefit of all provisions of the public general laws of Maryland and the public local laws and ordinances of the locality in which the premises is located respecting the summary eviction of tenants in default or tenants holding over, or respecting proceedings in forcible entry and detainer. Notwithstanding the foregoing:
(a) Tenant shall remain liable for any rent and damages which may be due or sustained prior thereto, and shall pay Landlord for all costs and expenses, including, but not limited to, attorneys’ and brokers’ fees and expenses, paid or incurred by Landlord in connection with: (i) obtaining possession of the premises; (ii) removal and storage of Tenant’s or other occupant’s property; (iii) care, maintenance and repair of the premises while vacant; (iv) reletting the whole or any part of the premises; and (v) repairing, altering, renovating, partitioning, enlarging, remodeling or otherwise putting the premises, either separately or as part of larger premises, into condition acceptable to, and reasonably necessary to obtain new tenants.
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(b) In the event this Lease is terminated pursuant to the above, Tenant shall further be liable to Landlord for liquidated damages to be calculated and payable as follows: the monthly rent and additional rent payable by Tenant hereunder, shall be payable when due for the balance of the term, less the rent, if any, received by Landlord from others to whom the premises may be rented on such terms and conditions and at such rentals as Landlord, in its sole discretion, shall deem proper; provided, however, if Tenant fails to pay any such amount when due, Landlord shall be entitled to receive a lump sum payment equal to the difference between the annual rent and additional rent payable for the balance of the term (including annual taxes and insurance premiums), and the fair rental value of the premises for the balance of the term: provided, however, that if Landlord relets the premises for all or a part of the balance of the term then Landlord may, at its option, designate the monthly fair rental value of the premises for the balance of the term as being equal to the average monthly rent payable by the new tenant.
ARTICLE XXII
CUMULATIVE REMEDIES AND GOVERNING LAW
Section 22.1. Remedies Cumulative. Mention in this Lease of any specific right or remedy shall not preclude Landlord from exercising any other right or remedy available at law or in equity; and the failure of Landlord to insist in any one or more instances upon a strict or prompt performance of any obligation of Tenant under this Lease or to exercise any option, right or remedy herein contained or available at law or equity shall not be construed as a waiver or relinquishment thereof, unless expressly waived in writing by Landlord. The waiver by Landlord of any breach of this Lease shall not constitute a waiver of the covenant, term or condition breached or of any subsequent breach of the same or any other covenant, term or condition of this Lease; and the acceptance by Landlord of rent during the continuance of any breach of this Lease by Tenant shall not constitute a waiver of such breach. Whenever any provision of this Lease require Landlord’s consent to any act or conduct of Tenant, such provision shall be construed to mean Landlord’s written consent; and knowledge of, or acquiescence by Landlord in, any act or conduct shall not be deemed a waiver of the requirement for written consent. Exercise by Landlord, or the beginning of the exercise by Landlord, of any one or more of the rights or remedies provided for in this Lease or now or hereafter existing at law or in equity or by statute or otherwise shall not be construed as an election of remedies so as to preclude the simultaneous or subsequent exercise by Landlord of any other right or remedy for such breach. If Landlord obtains a judgment against Tenant arising out of any default by Tenant under this Lease, then Tenant shall pay Landlord reasonable counsel fees incurred by Landlord in connection therewith.
Section 22.2. Governing Laws. This Lease shall be construed under the laws of the State of Maryland. The parties acknowledge that this Lease has been drafted, negotiated, made, delivered and consummated in the State of Maryland.
Section 22.3. No Trial by Jury. Landlord and Tenant hereby mutually waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other with respect to any matter arising out of or in any way connected with this Lease or the use and occupancy of the premises.
ARTICLE XXIII
RECORDING; NO REDEMPTION OR MERGER
Section 23.1. Recording. Either party may, at its expense, record a memorandum of this Lease among the Land Records of the political subdivision in which the premises are located.
Section 23.2. Waiver of Redemption. The parties stipulate that the premises is leased exclusively for commercial purposes within the meaning of Section 8-110(a) of the Real Property Article of the Annotated Code of Maryland, and that the provisions of Section 8-110(b) of said Article (or of any future statute) pertaining to redemption of reversionary interests under leases shall be inapplicable to this Lease.
ARTICLE XXIV
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NOTICES
Section 24.1. All notices from either party to the other under this Lease shall be sent by registered or certified U.S. mail, return receipt requested or by private courier service or hand delivered with signed receipt. Whenever in this Lease reference is made to a notice to be given, such notice shall be deemed to be given when mailed, wired or hand delivered to the proper notice address of the party to be notified.
Notices to Landlord shall be addressed to it at P.O.Box 128, Mt. Airy, Maryland 21771. Notices to Tenant shall be addressed to it at the premises or 23 Walker Avenue, Baltimore, Maryland 21208, with a copy to John R. Wise, Esquire, Suite 1100, 100 Light Street, Baltimore, Maryland 21202. Either party may, from time to time, designate a different address for receiving notices, by giving the other party notice of the change of address in the manner above specified.
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ARTICLE XXV
MISCELLANEOUS PROVISIONS
Section 25.1. Successors and Assigns. This Lease and the covenants, terms and conditions herein contained shall inure to the benefit of and be binding upon Landlord, its successors and assigns, and shall be binding upon and inure to the benefit of Tenant and its permitted successors and assigns. As used herein the term “Tenant” includes its permitted successors and assigns, and the term “Landlord” includes its successors and assigns.
If Landlord transfers its estate in the premises, or if Landlord further leases the premises subject to this Lease, Landlord shall thereafter be relieved of all obligations of Landlord expressed in this Lease or implied by law.
If Tenant obtains a money judgment against Landlord, any partner of Landlord or Landlord’s successors or assigns under any provisions of, or with respect to this Lease or on account of any matter, condition or circumstance arising out of the relationship of the parties under this Lease, Tenant’s occupancy of the premises or Landlord’s ownership of the Center, Tenant shall be entitled to have execution upon such judgment only upon Landlord’s fee simple estate in the Center and not out of any other assets of Landlord, any partner of Landlord, or Landlord’s successors or assigns; and Landlord shall be entitled to have any judgment so qualified to constitute a lien only on said estate, subject to any liens antedating such judgment.
Section 25.3. Entire Agreement. This Lease contains the final agreement between the parties hereto. Landlord shall not have any obligation not expressly set forth herein; and neither party shall be bound by any promises or representations prior to the date hereof which are not expressly set forth herein.
Section 25.4. Captions: Deletions: Definitions. The headings and captions used in this Lease are for convenience only and are not a part of this Lease. If any printed provision of this Lease is deleted by the parties, such deletion may not be utilized in interpreting the rights of the parties hereunder: but each party shall have all rights which it would have had, at law or otherwise, if such deleted provision has never been printed herein.
Section 25.5. Floor Plan. Nothing shown on Exhibit A shall be deemed to be a representation by Landlord as to any matter respecting the Center or as a condition of this Lease, unless such representation or condition is expressly set forth herein, Exhibit A is attached only for the purpose of showing the size and location of the Premises.
Section 25.6. Obligations Surviving Termination. If this Lease is terminated for any reason other than default of Tenant, all liabilities of the parties shall be adjusted as of the effective date of termination. Any termination by reason of a default of Tenant shall not affect any obligation or liability of Tenant under this Lease which accrued prior to the effective date of termination, and all such obligations and liabilities of Tenant shall survive termination.
Section 25.7. Genders. The use of the masculine, feminine or neuter gender here in shall be deemed to mean the correct gender applicable, and the use of the singular shall include the plural, or conversely, as the context may require.
Section 25.8. Partial Invalidity. If any term, covenant or condition of this Lease or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such term, covenant or condition to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and every other term, covenant or condition of this Lease shall be valid and be enforced to the fullest extent permitted by law.
Section 25.9. Brokers. Tenant represents and warrants that it has not dealt with any broker or realtor in respect of this Lease except Donald J. Dietz, H&R Retail, Inc. and agrees to defend, indemnify and save Landlord harmless against all demands, claims and liabilities arising out of any dealings between Tenant and any other broker or realtor.
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Section 25.10. No Partnership. By executing this Lease, Landlord does not, in any way or for any purpose, become a partner or joint venturer of Tenant in the conduct of Tenant’s business, or otherwise. Any provisions of this Lease regarding the use of the premises or operation of Tenant’s business are included solely for the purpose of maintaining an orderly shopping center.
Section 25.11. Surrender of Premises. At the expiration of the tenancy hereby created, or upon any reentry by Landlord pursuant to this Lease, Tenant shall, without notice to quit, which Tenant hereby waives, surrender the premises in the same condition as the premises were upon the commencement of the initial term, reasonable wear and tear excepted, and shall deliver all keys for the premises to Landlord at the place then fixed for the payment of rent, and shall inform Landlord of all combinations on locks, safes and vaults, if any, in the premises. Tenant shall remove all of its trade fixtures and inventory and any alterations, additions or improvements which Landlord requires to be removed before surrendering the premises as aforesaid, and shall repair any damage to the premises caused by removal. Tenant’s obligation to observe or perform this covenant shall survive the expiration or other termination of this Lease.
IN WITNESS WHEREOF, the parties have executed this Lease under their respective hands and seals as of the day and year first above written:
| WITNESS: | LANDLORD: LPR ASSOCIATES | |||
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/s/
H. Virgil Porter
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By: | /s/ James W. Linton, Jr. (SEAL) | ||
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James W. Linton, Jr., General Partner | |||
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| TENANT: MR. TIRE, INC. | ||||
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/s/ H. Virgil Porter
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By: | /s/ Fredric Tomarchio (SEAL) | ||
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Fredric Tomarchio, President | |||
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Exhibit 10.84a
ASSIGNMENT AND ASSUMPTION OF LEASE
THIS ASSIGNMENT AND ASSUMPTION OF LEASE (the “Agreement”), is made as of the 1 st day of March, 2004 (the “Effective Date”), by and between Mr. Tire, Inc., a Maryland corporation having an address of 23 Walker Avenue, Baltimore, Maryland (“Assignor”) and Monro Muffler Brake, Inc., a New York Corporation having a principal address of 200 Holleder Parkway, Rochester, New York (“Assignee”).
RECITALS
WHEREAS, Assignor as tenant, and Mt. Airy South Main Street, LLC, (f/k/a LPR Associates) as landlord, entered into a lease, dated September 2, 1999 (the “Lease”) relating to real property known as part of the Food Lion Shopping Center, 1312 South Main Street located in Mt. Airy, Frederick County, Maryland (the “Premises”); and
WHEREAS, Assignor and Assignee entered into a certain Asset Purchase Agreement dated as of February 9, 2004, as clarified by that certain Side Letter Agreement dated as of February 9, 2004, as same may be further amended and clarified (“Asset Purchase Agreement”), pursuant to which Assignor agreed to assign to Assignee all of Assignor’s right, title and interest as tenant under the Lease and Assignee agreed to assume all of Assignor’s obligations under the Lease.
NOW THEREFORE, pursuant to and in consideration of the Asset Purchase Agreement:
1. Assignor hereby assigns and transfers all of its right, title, and interest in the Lease to Assignee to have and to hold the same from and after the date hereof for the remainder of the term of the Lease.
2. Assignee hereby assumes and agrees to perform all obligations of Assignor pursuant to the Lease which accrue from the date hereof through the remainder of the term of the Lease. Assignor will remain liable for all of its obligations which accrued prior to the date hereof.
3. The representations and warranties set forth in the Asset Purchase Agreement with respect to the Lease assigned hereby, specifically, but not limited to, those set forth in Section 3.10 are incorporated in this Assignment as though set forth in full herein.
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IN WITNESS WHEREOF, this Assignment has been duly executed by the parties as of the Effective Date.
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By: | /s/ Lonnie L. Swiger | ||
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Lonnie L. Swiger, Vice President | |||
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By: | /s/ Robert G. Gross | ||
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Robert G. Gross, President & CEO | |||
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STATE OF MARYLAND
COUNTY OF HOWARD SS.:
On the 26 th day of February, 2004, before me, personally appeared Lonnie L. Swiger personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.
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/s/ Rachel V. Castranova | |
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Rachel V. Casstranova commissioned as Rachel V. Flad | |
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Notary Public |
STATE OF NEW YORK
COUNTY OF MONROE SS.:
On the 1 st day of March, 2004, before me, personally appeared Robert G. Gross personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.
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/s/ Mindi S. Collom | |
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Mindi S. Collom | |
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Notary Public |
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Exhibit 10.84b
LANDLORD’S CONSENT AND ESTOPPEL CERTIFICATE
Mt. Airy South Main Street, LLC (f/k/a LPR Associates) , the person, firm or corporation identified as the landlord on Schedule “A” attached hereto (“Landlord”), DOES HEREBY CERTIFY THAT:
1. Landlord has entered into a certain lease which is more particularly described in said Schedule (the “Lease”) covering a portion of certain real property located at 1312 South Main Street in Mt. Airy, Frederick County, Maryland (the “Premises”).
2. The Lease is valid, in full force and effect on the date hereof and enforceable in accordance with its terms and has not been modified or amended from the date of its execution to the date hereof, except as may otherwise be indicated on said Schedule “A.”
3. The term of the Lease commenced on the date of commencement shown on Schedule “A” and will terminate, unless renewed or extended in accordance with its terms, on the date of termination shown on Schedule “A”.
4. All conditions precedent to the commencement of the term of the Lease and to the payment of the basic rent, additional rent, percentage rent (if any) and all other charges specified therein have been satisfied or waived by Landlord.
5. Landlord has delivered and Tenant has accepted and is in possession of the Premises and is paying the basic rent, additional rent, percentage rent (if any) and all other charges specified therein.
6. The Premises and the use and occupancy thereof by Tenant comply with the terms of the Lease.
7. Neither the Landlord under the Lease nor, to the best of Landlords knowledge, Tenant is in default with respect to the performance or observance of any of their respective covenants or obligations under the terms of the Lease nor has any event occurred with which the giving of notice or the passage of time would constitute a default under the Lease.
8. Landlord has not received any prepayment of any basic rent due under the Lease, other than the current month’s rent.
9. There are no rights of offset, abatement or reduction of basic rent presently accruing to Tenant by reason of any provision of the Lease or otherwise.
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This Certificate is being given to and may be relied upon by Monro Muffler Brake, Inc. (“Monro”) their successors and/or assigns, to induce Monro to acquire Tenant’s leasehold interest under the Lease pursuant to an Asset Purchase Agreement between Atlantic Automotive Corp., its wholly-owned subsidiary, Mr. Tire, Inc. and Monro Muffler Brake, Inc. dated February 9, 2004.
Landlord hereby acknowledges that its consent to the assignment of Tenant’s interest pursuant to the provisions of the Lease has been requested and consents to the assignment by Mr. Tire, Inc. to Monro Muffler Brake, Inc. of the Tenant’s leasehold interest.
IN WITNESS WHEREOF, Landlord has caused this Consent and Estoppel Certificate to be duly executed this 27 th day of February, 2004.
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LANDLORD | |||
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By: | /s/ Fredric A. Tomarchio | ||
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Name: |
Fredric A. Tomarchio
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Title: | Member |
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SCHEDULE “A”
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Name of Landlord:
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Mt. Airy South Main Street, LLC | |
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(f/k/a LPR Associates) | |
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Name of Tenant:
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Mr. Tire, Inc. | |
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Date of Lease:
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September 2, 1999 | |
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Leased Premises:
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1312 South Main Street | |
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Mt. Airy, MD 21771 | |
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Date(s) of amendment(s) to Lease (if any):
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December 31, 1999 | |
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(Confirmation Agreement) | |
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Term of Lease: Commencement:
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December 18, 1999 | |
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Termination:
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December 18, 2009 | |
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Option Terms (if any):
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6 Five (5) year renewal terms. |
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Exhibit 10.85
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), NOR UNDER ANY STATE SECURITIES LAW AND MAY NOT BE PLEDGED, SOLD, ASSIGNED OR TRANSFERRED UNLESS (i) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT, AND ANY APPLICABLE STATE SECURITIES LAW REQUIREMENTS HAVE BEEN MET OR (ii) EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS UNDER THE ACT, AND THE REGISTRATION OR QUALIFICATION REQUIREMENTS OF APPLICABLE STATE SECURITIES LAW ARE AVAILABLE.
Void after March 1, 2006
MONRO MUFFLER BRAKE, INC.
WARRANT TO PURCHASE COMMON STOCK
This warrant (“Warrant”) certifies that for value received, Atlantic Automotive Corp., or its registered assigns (the “Holder”) has the right to purchase, at any time on or before the Expiration Date (hereinafter defined) an aggregate of 100,000 shares (the “Shares”) of $0.01 par value Common Stock (the “Common Stock”) of Monro Muffler Brake, Inc., a New York corporation (the “Company”), at an exercise price per Share determined as hereafter provided (the “Per Share Exercise Price”), subject to the provisions and upon the terms and conditions hereinafter set forth.
1. Exercise and Payment.
1.1 Exercise. The purchase rights represented by this Warrant may be exercised by the Holder at any time following the six (6) month anniversary of the date hereof and prior to the Expiration Date (“the Exercise Period”), in whole or in part, by the surrender of a duly executed exercise notice in the form attached hereto as Exhibit A at the principal office of the Company, and by the payment to the Company, by check or wire transfer of an amount equal to the aggregate Per Share Exercise Price of the Shares being purchased.
1.2 Stock Certificate. In the event of the exercise of this Warrant, the Company shall deliver to the Holder promptly following such exercise a certificate for the Shares so purchased.
2. Per Share Exercise Price. The Per Share Exercise Price shall initially be $22.33 per Share (as adjusted for stock splits, dividends, recapitalizations, combinations and the like) and shall be subject to adjustment as specified in Section 4.
3. Stock Fully Paid; Reservation of Shares; Efforts to Register. All of the Shares issuable upon the exercise of this Warrant will, upon issuance and receipt of the Per Share Exercise Price therefor, be validly issued and outstanding, fully paid and nonassessable, and free from all taxes, liens and changes with respect to the issuance thereof, except such assessments as may arise pursuant to Section 630 of the New York Business Corporation Law. During the period within which this Warrant may be exercised, the Company shall at all times have authorized and reserved for issuance sufficient shares of its Common Stock to provide for the exercise of this Warrant. If at any time during the Exercise Period the number of authorized but unissued shares of Common Stock shall not be sufficient to permit exercise of this Warrant, the Company shall take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number as shall be sufficient for such purposes. The Company shall use its best efforts to submit all required information and filings with the Securities and Exchange Commission in order to register the Shares.
4. Adjustment of Per Share Exercise Price and Number of Shares. The number and kind of securities purchasable upon the exercise of this Warrant and the Per Share Exercise Price therefor shall be subject to adjustment from time to time upon the occurrence of certain events, as follows:
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4.1 Reclassification, Consolidation or Merger. In case of any reclassification or change of the Common Stock (other than a change in par value, or as a result of an event referred to in Section 4.2), or in case of any Merger Event (as defined herein), the Company or the successor corporation, as the case may be, shall execute a new warrant, providing that the Holder shall have the right to exercise such new warrant, and procure upon such exercise and payment of the same aggregate Per Share Exercise Price, in lieu of the shares of Common Stock theretofore issuable upon exercise of this Warrant, the kind and amount of shares of stock, other securities, money and property receivable upon such reclassification, change, or Merger Event by a Holder of an equivalent number of shares of Common Stock. Such new warrant shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 4.
4.2 Stock Splits, Dividends and Combinations. In the event that the Company shall at any time subdivide the outstanding shares of Common Stock, or shall issue a stock dividend on its outstanding shares of Common Stock, the number of Shares issuable upon exercise of this Warrant immediately prior to such subdivision or to the issuance of such stock dividend shall be proportionately increased and the Per Share Exercise Price shall be proportionately decreased so that the Holder of the Warrant after such time shall be entitled to receive the number of shares of Common Stock which the Holder would have owned or been entitled to receive had such Warrant been exercised immediately prior to such event, and in the event that the Company shall at any time combine the outstanding shares of Common Stock, the number of Shares issuable upon exercise of this Warrant immediately prior to such combination shall be proportionately decreased, and the Per Share Exercise Price shall be proportionately increased so that the Holder of the Warrant after such time shall be entitled to receive the number of shares of Common Stock which the Holder would have owned or been entitled to receive had such Warrant been exercised prior to such event, in either case effective at the close of business on the date of such subdivision, stock dividend or combination, as the case may be.
5. Notice of Adjustments. In the event that: (i) the Company shall declare any dividend or distribution upon shares of its capital stock, whether in cash, property, stock or other securities; (ii) the Company shall offer for subscription pro rata to the holders of its Common Stock any additional shares of stock of any class or other rights; (iii) there shall be any merger or consolidation of the Company with or into a third party pursuant to which the Company’s shareholders prior to the transaction own less than fifty percent (50%) of the surviving entity or the sale of all or substantially all of the assets of the Company (a “Merger Event”); or (iv) there shall be any voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in connection with each such event, the Company shall send to the Holder:
(a) At least ten (10) days prior written notice of the date on which the books of the Company shall close or a record shall be taken for such dividend, distribution, subscription rights (specifying the date on which the Holders of capital stock shall be entitled thereto) or for determining rights to vote in respect of such Merger Event, dissolution, liquidation or winding up; and
(b) In the case of any such Merger Event, dissolution, liquidation or winding up, at least ten (10) days prior written notice of the date when the same shall take place (and specifying the date on which the Holders of capital stock shall be entitled to exchange their capital stock for securities or other property deliverable upon such Merger Event, dissolution, liquidation or winding up).
(c) Each such written notice shall set forth, in reasonable detail, (i) the event requiring the adjustment, (ii) the amount of the adjustment, (iii) the method by which such adjustment was calculated, (iv) the Per Share Exercise Price, and (v) the number of shares subject to purchase hereunder after giving effect to such adjustment, and shall be given by first class mail, postage prepaid, addressed to the Holder, at the address as shown on the books of the Company.
6. Fractional Shares. No fractional shares of Common Stock will be issued in connection with any exercise hereunder. In lieu of such fractional shares the Company shall make a cash payment therefor based upon the fair market value per share on the date of exercise, as determined by the Board of Directors of the Company in good faith.
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7. Representations and Warranties of the Holder. Unless the Shares being purchased have been registered under the Act, the Holder hereby represents and warrants to the Company, with respect to its acquisition of the Warrant, as follows:
7.1 Experience. The Holder has sufficient knowledge and experience in financial and business matters so that the Holder is capable of evaluating the merits and risks of his investment in the Company and has the capacity to protect the Holder’s own interests.
7.2 Investment. The Holder is acquiring the Warrant and the Shares for investment for its own account, not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution thereof. The Holder understands that the Warrant and the Shares have not been, and will not be, registered under the Act by reason of a specific exemption from the registration provisions of the Act, the availability of which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of such Holder’s representations as expressed herein.
7.3 Rule 144. The Holder acknowledges that the Warrant and the Shares must be held indefinitely unless subsequently registered under the Act or unless an exemption from such registration is available. The Holder is aware of the provisions of Rule 144 promulgated under the Act which permit limited resale of shares of restricted stock subject to the satisfaction of certain conditions, including, among other things, the existence of a public market for the shares, the availability of certain current public information about the Company, the resale occurring not less than one (1) year after a party has purchased and paid for the security to be sold, the sale being effected through a “broker’s transaction” or in transactions directly with a “market maker” and the number of shares being sold during any three-month period not exceeding specified limitations.
7.4 No Solicitation. The Holder knows of no public solicitation or advertisement of an offer in connection with the proposed issuance and sale of the Warrant or the Shares.
8. Restrictions on Transfer.
8.1 Restrictive Legend. Unless the Shares being purchased have been registered under the Act, each certificate representing (i) the Common Stock and (ii) any other securities issued in respect of the Common Stock upon any stock split, stock dividend, recapitalization, merger, consolidation or similar event, (collectively, the “Restricted Securities”) shall (unless otherwise permitted by the provisions of Section 8.2 below) be stamped or otherwise imprinted with a legend in substantially the following form (in addition to any legend required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THESE SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT.
8.2 Notice of Proposed Transfers. The Holder of each certificate representing Restricted Securities by acceptance thereof agrees to comply in all respects with the provisions of this Section 8. Prior to any proposed transfer of any Restricted Securities, unless there is in effect a registration statement under the Act covering the proposed transfer, the Holder thereof shall give written notice to the Company of such holder’s intention to effect such transfer. Each such notice shall describe the manner and circumstances of the proposed transfer in sufficient detail, and shall, if the Company reasonably requests, be accompanied by a written opinion of legal counsel who shall be reasonably satisfactory to the Company, addressed to the Company and reasonably satisfactory in form and substance to the Company’s counsel, to the effect that the proposed transfer of the Restricted Securities may be effected without registration under the Act; provided, however, that no opinion need be obtained with respect to a transfer (i) by a Holder that is an entity to any affiliated corporations, partnerships, limited liability companies and other entities, as well as the current or former constituent partners or members of affiliated entities, or to the estate of any such current or former partner or member, or (ii) the transfer by gift, will or intestate succession by any such current or former partner or member or affiliate, or by any other individual, or
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(iii) the transfer by any such current or former partner or member or affiliate, or any other individual, to his or her spouse, ancestors, lineal descendants and siblings as well as trusts for the benefit of the individual and such other foregoing persons, provided that in any such case the transferee agrees in writing to be subject to the terms hereof. Each certificate evidencing the Restricted Securities transferred as above provided shall bear the appropriate restrictive legend set forth in Section 8.1 above, except that such certificate shall not bear such restrictive legend if in the opinion of counsel for the Company such legend is not required in order to establish compliance with any provisions of the Act.
9. Rights of Holders. No Holder of this Warrant shall be entitled by virtue of this Warrant to vote or receive dividends or be deemed the holder of Common Stock or any other securities of the Company which may at any time be issuable on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the Holder, as such, any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value, consolidation, merger, conveyance, or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until the Warrant shall have been exercised and the Shares purchasable upon the exercise hereof shall have become deliverable, as provided herein; provided, however, that this Warrant shall not limit any other voting rights or notice rights of the Holder of this Warrant expressly granted under the Company’s Certificate of Incorporation or under other instrument or agreement pursuant to which the Holder is a party or has been duly assigned such rights.
10. Expiration of Warrant. Notwithstanding any other provision of this Warrant, this Warrant shall expire and shall no longer be exercisable at 5:00 p.m., New York time, on March 1, 2006 (the “Expiration Date”).
11. Miscellaneous.
11.1 Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of New York, without reference to conflicts of laws principles thereof.
11.2 Successors and Assigns. Except as otherwise provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors, and administrators of the Company and the Holder.
11.3 Entire Agreement; Amendment. This Warrant, together with the Asset Purchase Agreement pursuant to which this Warrant was issued, constitute the full and entire understanding and agreement between the parties with regard to the subject hereof. Neither this Warrant nor any term hereof may be amended, waived, discharged, or terminated other than by a written instrument signed by the party against whom enforcement of any such amendment, waiver, discharge or termination is sought.
11.4 Notices, etc. All notices and other communications required or permitted hereunder shall be in writing and shall be deemed effectively given upon delivery to the party to be notified in person or by courier service or by registered or certified mail, postage prepaid, addressed (a) to the Holder, at the address set forth below or at such other address as such Holder shall have furnished the Company in writing, or (b) if to the Company, at the address set forth below and addressed to the attention of the Chief Executive Officer, or at such other address as the Company shall have furnished to the Holder.
11.5 Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is lost, stolen, mutilated or destroyed, the Company may, on such terms as to indemnify or otherwise as it may reasonably impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like denomination and tender as the Warrant so lost, stolen, mutilated or destroyed. Any such new Warrant shall constitute an original contractual obligation of the Company.
166
| Issued this 4 th day of March, 2004. | MONRO MUFFLER BRAKE, INC. | |||||
| 200 Holleder Parkway | ||||||
| Rochester, New York 14615 | ||||||
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By: | /s/ Robert G. Gross | ||||
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Robert G. Gross, President | |||||
[Company’s signature page to Warrant]
167
| ATLANTIC AUTOMOTIVE CORP. | ||||
| 23 Walker Avenue | ||||
| Baltimore, Maryland 21208 | ||||
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By: | /s/ Steven Fader | ||
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Steven Fader, President | |||
[Holder’s signature page to Warrant]
168
EXHIBIT A
NOTICE OF EXERCISE
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TO: | Monro Muffler Brake, Inc. | ||
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200 Holleder Parkway | |||
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Rochester, New York 14615 |
1. The undersigned hereby elects to purchase shares of Common Stock (the “Common Stock”) of Monro Muffler Brake, Inc. pursuant to the terms of the attached Warrant.
2. The undersigned elects to exercise the attached Warrant and tenders herewith payment in full for the purchase price of the shares being purchased, together with all applicable transfer taxes, if any. The purchase price is being paid by (check one):
(i) check;
(ii) wire transfer;
3. Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below:
Name:
Address:
4. Unless the aforesaid shares of Common Stock have been registered under the Act, the undersigned hereby represents and warrants that the aforesaid shares of Common Stock are being acquired for the account of the undersigned for investment and not with a view to, or for resale, in connection with the distribution thereof, and that the undersigned has no present intention of distributing or reselling such shares. In support thereof, unless the aforesaid shares of Common Stock have been registered under the Act, the undersigned has executed and delivered herewith an Investment Representation Statement in substantially the form attached to the Warrant as Exhibit B.
ATLANTIC AUTOMOTIVE CORP.
By:
Steven
Fader, President
169
EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
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PURCHASER
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SECURITY
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: | Common Stock of Monro Muffler Brake, Inc. (the “Company”) Issued upon Exercise of Warrant to Purchase Common Stock | ||
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AMOUNT
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: | Shares (the “Shares”) | ||
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DATE
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: | ,20 |
In connection with the acquisition of the above-listed Securities, the undersigned holder (the “Holder”) of a warrant (the “Warrant”) to purchase the Shares represents to the Company the following:
(a) Experience. The Holder has sufficient knowledge and experience in financial and business matters so that the Holder is capable of evaluating the merits and risks of his investment in the Company and has the capacity to protect his own interests.
(b) Investment. The Holder is acquiring the Shares for investment for its own account, not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution thereof in violation of the Act. The Holder understands that the Shares have not been, and will not be, registered under the Act by reason of a specific exemption from the registration provisions of the Act, the availability of which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of such Holder’s representations as expressed herein.
(c) Rule 144. The Holder acknowledges that the Shares must be held indefinitely unless subsequently registered under the Act or unless an exemption from such registration is available. The Holder is aware of the provisions of Rule 144 promulgated under the Act which permit limited resale of shares of restricted stock subject to the satisfaction of certain conditions, including, among other things, the existence of a public market for the shares, the availability of certain current public information about the Company, the resale occurring not less than one (1) year after a party has purchased and paid for the security to be sold, the sale being effected through a “broker’s transaction” or in transactions directly with a “market maker” and the number of shares being sold during any three-month period not exceeding specified limitations.
(d) No Solicitation. The Holder knows of no public solicitation or advertisement of an offer in connection with the proposed issuance and sale of the Shares.
(e) Residence. The residence of the Holder is located in the State of .
Date: ,20
170
Exhibit 21.01
SUBSIDIARIES OF THE COMPANY
Monro Service Corporation
Monro Leasing, LLC
Brazos Automotive Properties Management, Inc.
171
Exhibit 23.01
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (File No. 33-56458, 333-34290, 333-57438, 333-57432,
333-57450) of Monro Muffler Brake, Inc. of our report dated May 20, 2004
relating to the financial statements and financial statement schedule, which
appears in this Form 10-K.
PRICEWATERHOUSECOOPERS LLP
Rochester, New York
June 10, 2004
172
Exhibit 24.01
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a director of
Monro Muffler Brake, Inc., a New York corporation (the “Corporation”),
constitutes and appoints ROBERT G. GROSS to be his true and lawful
attorney-in-fact and agent, with full powers of substitution and
resubstitution, for and in the name, place and stead of the undersigned, in any
and all capacities in connection with the filing of the Annual Report on Form
10-K of the Corporation for the fiscal year ended March 27, 2004 (the “Form
10-K”) with the Securities and Exchange Commission, to sign the Form 10-K and
any and all amendments related thereto and to file the same, with any exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent, or his
substitutes, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully
for all intents and purposes as the undersigned might or could do in person,
hereby ratifying and confirming all that said attorney-in-fact and agent, or
his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this power of attorney has been signed by the following director on
June 4, 2004.
/s/ Robert W. August
/s/ Richard A. Berenson
/s/ Frederick M. Danziger
/s/ Donald Glickman
/s/ Robert E. Mellor
/s/ Peter J. Solomon
/s/ Lionel B. Spiro
/s/ Francis R. Strawbridge
Robert W. August
Richard A. Berenson
Frederick M. Danziger
Donald Glickman
Robert E. Mellor
Peter J. Solomon
Lionel B. Spiro
Francis R. Strawbridge
173
Exhibit 31.1
CERTIFICATION
I, Robert G. Gross, President and Chief Executive
Officer, certify that:
1. I have reviewed this annual report on
Form 10-K of Monro Muffler Brake, Inc.;
2. Based on my knowledge, this report does
not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial
statements, and other financial information included in this
report, fairly present in all material respects the financial
condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying
officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
5. The registrant’s other certifying
officer and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the
equivalent functions):
Date: June 10, 2004
(a) Designed such disclosure controls and
procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material
information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
report is being prepared;
(b) Evaluated the effectiveness of the
registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(c) Disclosed in this report any change in
the registrant’s internal control over financial reporting
that occurred during the registrant’s most recent fiscal
quarter (the registrant’s fourth fiscal quarter in the case
of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant’s
internal control over financial reporting; and
(a) All significant deficiencies and
material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
(b) Any fraud, whether or not material, that
involves management or other employees who have a significant
role in the registrant’s internal control over financial
reporting.
/s/ ROBERT G. GROSS
Robert G. Gross
President and Chief Executive
Officer
Exhibit 31.2
CERTIFICATION
I, Catherine D’Amico, Executive Vice
President – Finance and Chief Financial Officer, certify
that:
1. I have reviewed this annual report on
Form 10-K of Monro Muffler Brake, Inc.;
2. Based on my knowledge, this report does
not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial
statements, and other financial information included in this
report, fairly present in all material respects the financial
condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying
officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
5. The registrant’s other certifying
officer and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the
equivalent functions):
Date: June 10, 2004
(a) Designed such disclosure controls and
procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material
information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
report is being prepared;
(b) Evaluated the effectiveness of the
registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(c) Disclosed in this report any change in
the registrant’s internal control over financial reporting
that occurred during the registrant’s most recent fiscal
quarter (the registrant’s fourth fiscal quarter in the case
of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant’s
internal control over financial reporting; and
(a) All significant deficiencies and
material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
(b) Any fraud, whether or not material, that
involves management or other employees who have a significant
role in the registrant’s internal control over financial
reporting.
/s/ CATHERINE D’AMICO
Catherine D’Amico
Executive Vice
President — Finance and
Chief Financial Officer
Exhibit 32.1
CERTIFICATION PURSUANT TO
Pursuant to, and solely for purposes of, 18
U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act
of 2002), each of the undersigned hereby certifies in the
capacity and on the date indicated below that:
1. The Annual Report of Monro Muffler Brake, Inc.
(“Monro”) on Form 10-K for the period ended
March 27, 2004 as filed with the Securities and Exchange
Commission on the date hereof (the “Report”) fully
complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly
presents, in all material respects, the financial condition and
results of operations of Monro.
/s/ ROBERT G. GROSS
Robert G. Gross
Chief Executive Officer
Dated: June 10, 2004
/s/ CATHERINE D’AMICO
Catherine D’Amico
Chief Financial Officer
Dated: June 10, 2004