MONRO MUFFLER BRAKE INC (Form: 10-K, Received: 05/28/2014 16:21:20)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(MARK ONE)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For Fiscal Year Ended March 29, 2014

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 0-19357

MONRO MUFFLER BRAKE, INC.

(Exact name of registrant as specified in its charter)


New York		16-0838627
(State of incorporation)		(I.R.S. Employer Identification No.)

200 Holleder Parkway, Rochester, New York		14615
(Address of principal executive offices)		(Zip code)

Registrant’s telephone number, including area code:

(585) 647-6400

Securities registered pursuant to Section 12(b) of the Act:

Common Stock, par value $.01 per share

Name of each exchange on which registered: The NASDAQ Stock Market

Securities registered pursuant to Section 12(g) of the Act:

NONE

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

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 x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

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. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “small reporting company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer x	Accelerated Filer ¨	Non-Accelerated Filer ¨	Smaller Reporting Company ¨
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The aggregate market value of the voting stock held by non-affiliates of the registrant, computed by reference to the closing price as of the last business day of the registrant’s most recently completed second fiscal quarter, September 28, 2013, was approximately $1,386,400,000.

As of May 9, 2014, 31,510,479 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 2014 Annual Meeting of Shareholders (the “Proxy Statement”) are incorporated by reference into Part III hereof.

PART I

Item 1. Business

GENERAL

Monro Muffler Brake, Inc. (“Monro”, the “Company”, “we”, “us”, or “our”) is a chain of 953 Company-operated stores (as of March 29, 2014), three franchised locations and 14 dealer-operated stores providing automotive undercar repair and tire services in the United States. At March 29, 2014, Monro operated Company stores in 22 states, including New York, Pennsylvania, Ohio, Connecticut, Massachusetts, West Virginia, Virginia, Maryland, Vermont, New Hampshire, New Jersey, North Carolina, South Carolina, Indiana, Rhode Island, Delaware, Maine, Illinois, Missouri, Wisconsin, Tennessee and Kentucky primarily under the names “Monro Muffler Brake & Service”, “Tread Quarters Discount Tire”, “Mr. Tire”, “Autotire Car Care Center”, “Tire Warehouse”, “Tire Barn Warehouse” and “Ken Towery’s Tire & Auto Care” (together, the “Company Stores”). Company Stores typically are situated in high-visibility locations in suburban areas and small towns, as well as in major metropolitan areas. Company Stores serviced approximately 5.3 million vehicles in fiscal 2014. (References herein to fiscal years are to the Company’s year ended fiscal March [e.g., references to “fiscal 2014” are to the Company’s fiscal year ended March 29, 2014].)

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. The Company was incorporated in the State of New York in 1959. In 1966, we discontinued our 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, we have continued our growth and have expanded our marketing area to include 22 additional states (including dealer locations).

In December 1998, Monro appointed Robert G. Gross as President and Chief Executive Officer, who began full-time responsibilities on January 1, 1999. Effective October 1, 2012, Mr. Gross assumed the role of Executive Chairman and John W. Van Heel was appointed Chief Executive Officer.

The Company’s principal executive offices are located at 200 Holleder Parkway, Rochester, New York 14615, and our telephone number is (585) 647-6400.

Monro provides a broad range of services on passenger cars, light trucks and vans for brakes; mufflers and exhaust systems; and steering, drive train, suspension and wheel alignment. Monro also provides other products and services, including tires and routine maintenance services, including state inspections. 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. Monro 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. Monro does not sell parts or accessories to the do-it-yourself market.

All of the Company’s stores, except Tire Warehouse and Tire Barn Warehouse stores, provide the services described above. Tire Warehouse and Tire Barn Warehouse stores only sell tires and tire related services and alignments. However, a growing number of our stores are more specialized in tire replacement and service and, accordingly, have a higher mix of sales in the tire category. These stores are described below as tire stores, whereas the majority of our stores are described as service stores. (See additional discussion under “Operating Strategy”.) At March 29, 2014, there were 532 stores designated as service stores and 421 as tire stores.

Our sales mix for fiscal 2014, 2013 and 2012 is as follows:


	Service Stores									Tire Stores									Total Company
	FY14			FY13			FY12			FY14			FY13			FY12			FY14			FY13			FY12
Brakes		24	%		24	%		26	%		9	%		9	%		10	%		15	%		15	%		18	%
Exhaust		9			9			10			1			1			1			4			4			5
Steering		11			12			12			8			8			8			9			10			10
Tires		18			17			16			60			60			60			44			42			39
Maintenance		38			38			36			22			22			21			28			29			28

Total		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%

The Company has one wholly-owned subsidiary, Monro Service Corporation, which is a Delaware corporation qualified to do business in the states of New York, Maryland, Illinois, Virginia, Kentucky and New Hampshire.

Monro Service Corporation holds all assets, rights, responsibilities and liabilities associated with our warehousing, purchasing, advertising, accounting, office services, payroll, cash management and certain other operations that are performed in the states of New York, Maryland, Illinois, Virginia, Kentucky and New Hampshire. We believe that this structure has enhanced operational efficiency and provides cost savings.

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 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 as a result of dealership closures by car manufacturers, such as Chrysler and General Motors. We believe that these factors present opportunities for increased sales by the Company, even though the number of specialized repair outlets (such as those operated by Monro and our direct competitors) has increased to meet growing 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 our continued ability to open/acquire and operate new stores on a profitable basis. Overall profitability of the Company may not meet expectations if acquired or new stores do not attain expected profitability.

Monro believes that there are significant expansion opportunities in new as well as existing market areas, which may result from a combination of constructing stores on vacant land and acquiring existing store locations. We believe that, as the industry consolidates due to the increasingly complex nature of automotive repair, the expanded capital requirements for state-of-the-art equipment and aging of existing shop owners, there will be increasing opportunities for acquisitions of existing businesses or store structures.

In that regard, we have completed several acquisitions in recent years, as follows:


Date of Acquisition	Seller	Number of Stores Acquired(a)			Location of Stores	Current Brand(f)
March 2004	Atlantic Automotive Corp.		26		MD, VA	Mr. Tire
October 2004	Rice Tire, Inc.		5		MD	Mr. Tire/Tread Quarters
March 2005	Henderson Holdings, Inc.		10		MD	Mr. Tire
April 2006	ProCare Automotive Service Solutions LLC		75		OH, PA	Monro/Mr. Tire
July 2007	Valley Forge Tire & Auto Centers		11		PA	Mr. Tire
July 2007	Craven Tire & Auto		8		VA	Mr. Tire
January 2008	Broad Elm Group		7		NY	Mr. Tire
June 2009	Am-Pac Tire Distributors		26		IL, MO	Autotire
September 2009	Midwest Tire & Auto Repair		4		IN	Mr. Tire
October 2009	Tire Warehouse Central, Inc.		41	(b)	ME, MA, NH, RI, VT	Tire Warehouse
November 2009	Cheshire Tire Center, Inc.		1		NH	Cheshire Tire
January 2010	Tire Warehouse Franchisees		2		MA, NH	Tire Warehouse
March 2010	Import Export Tire, Co.		5		PA	Mr. Tire
June 2010	Tire Warehouse Franchisee		2	(c)	ME	Tire Warehouse
November 2010	Courthouse Tire		3		VA	Mr. Tire
June 2011	Vespia Tire Centers, Inc.		24		NJ, PA	Mr. Tire
October 2011	Terry’s Tire Town		7		PA, OH	Mr. Tire
November 2011	Expert Tire, Inc.		1		ME	Tire Warehouse
April 2012	Kramer Tire Co.		20	(d)	VA	Kramer Tire/Tread Quarters
June 2012	Colony Tire Corporation		18		NC	Mr. Tire/Tread Quarters
August 2012	Tuffy Associates Corp.		17		SC, WI	Monro/Tread Quarters
October 2012	ChesleyCo, Inc.		5		NY	Monro/Mr. Tire
October 2012	Brothers Tire, Inc.		1		MA	Monro
November 2012	Everybody’s Oil Corporation		31		IL, IN, TN	Tire Barn Warehouse
December 2012	Ken Towery’s Auto Care of Kentucky, Inc./Ken Towery’s Auto Care of Indiana, Inc.		27	(e)	IN, KY	Ken Towery Tire & Auto Care
December 2012	Tire King of Durham, Inc.		9		NC	Mr. Tire
December 2012	Enger Auto Service, Inc.		12		OH	Mr. Tire
August 2013	Mitchell Tire Service		1		NJ	Mr. Tire
August 2013	Curry’s Automotive Group		10		MD, VA	Curry’s/Mr. Tire
October 2013	XL Tire Inc.		2		NC	Tread Quarters
November 2013	S & S Firestone, Inc.		4		KY	Ken Towery Tire & Auto Care
November 2013	Carl King Tire Co., Inc.		6		DE, MD	Mr. Tire
March 2014	Hometown Tire Company, Inc.		1		KY	Ken Towery Tire & Auto Care

(a)	Thirteen stores were subsequently closed due to redundancies or failure to achieve an acceptable level of profitability. See additional discussion under “Store Additions and Closings”.

(b)	Six franchised locations were also acquired. Prior to March 29, 2014, three were subsequently purchased by Monro and converted to Company-operated stores. During April 2014, two additional franchise locations were also purchased and converted.

(c)	Includes one service store acquired (subsequently closed and included in (a) above) in addition to the Tire Warehouse franchise location.

(d)	Two heavy truck tire and truck repair stores, two wholesale operations and a retread facility were also acquired and subsequently sold.

(e)	One wholesale operation was also acquired and is operating under the America’s Best Tires name.

(f)	In this table, “Monro” refers to the brand of “Monro Brake/Tires” or “Monro Muffler Brake & Service”, not the corporation.

The total number of stores that we operate in BJ’s Wholesale Clubs is 34 at March 29, 2014.

As of March 29, 2014, Monro had 953 Company-operated stores, three franchised locations and 14 dealer locations located in 23 states. The following table shows the growth in the number of Company-operated stores over the last five fiscal years:

STORE ADDITIONS AND CLOSINGS


	Year Ended Fiscal March
	2014			2013			2012			2011			2010
Stores open at beginning of year		937			803			781			777			710
Stores added during year		29	(b)		144	(c)		36	(d)		12	(e)		79	(f)
Stores closed during year(a)		(13	)		(10	)		(14	)		(8	)		(12	)

Stores open at end of year		953			937			803			781			777

Service (including BJ’s) stores		532			540			536			547			551

Tire stores		421			397			267			234			226

(a)

Generally, stores were closed because they failed to achieve or maintain an acceptable level of profitability or because a new Company Store was opened in the same market at a more favorable location. Additionally, in fiscal 2012, we sold all of our seven stores in the Long Island market to Mavis Tire for $2.0 million.

(b)	Includes 24 stores acquired in the fiscal 2014 Acquisitions.

(c)	Includes 140 stores acquired in the fiscal 2013 Acquisitions.

(d)	Includes 32 stores acquired in the fiscal 2012 Acquisitions.

(e)	Includes 10 stores acquired in the fiscal 2011 Acquisitions.

(f)	Includes 74 stores acquired in the fiscal 2010 Acquisitions.

We plan to add approximately four new greenfield stores in fiscal 2015 and to pursue appropriate acquisition candidates.

Key factors in market and site selection for selecting new greenfield store locations include population, demographic characteristics, vehicle population and the intensity of competition. Monro attempts to cluster stores in market areas in order to achieve economies of scale in advertising, supervision and distribution costs. All new greenfield sites presently under consideration are within Monro’s established market areas.

As a result of extensive analysis of our historical and projected store opening strategy, we have established major market profiles, as defined by market awareness: mature, existing and new markets. Over the next several years, we expect to build a greater percentage of stores in mature and existing markets in order to capitalize on our market presence and consumer awareness. During fiscal 2014, all of the stores added (including acquired stores) were located in existing markets.

We believe that management and operating improvements implemented over the last several fiscal years have enhanced our ability to sustain our growth. Monro 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.

We have customized the POS system to specific service and tire store requirements and deploy the appropriate version in each type of store. Being Windows-based, the system has simplified training of new employees. Additionally, the system includes the following:

•

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;

•

Electronic repair manuals that allow for instant access to a single source of accurate, up to date, original equipment manufacturer-direct diagnosis, repair and maintenance information;

•

Software which contains data that mirrors the scheduled maintenance requirements in vehicle owners’ manuals, specifically by make, model, year and mileage for every major automobile brand. Management believes that this software facilitates the presentation and sale of scheduled maintenance services to customers;

•

Streamlining of estimating and other processes;

•

Graphic catalogs;

•

A feature which facilitates tire searches by size;

•

Direct mail support;

•

Appointment scheduling;

•

Customer service history;

•

A thermometer graphic which guides store managers on the profitability of each job;

•

The ability to view inventory of up to the closest 14 stores or warehouse; and

•

Expanded monitoring of price changes. This requires more specificity on the reason for a discount, which management believes helps to control 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 us to better serve our customers.

The financing to open a new greenfield service 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 Monro (with building costs paid by Monro), or a land purchase with the building constructed by Monro. In all three cases, for service stores, each new store also will require approximately $200,000 for equipment (including a POS system and a truck) and approximately $55,000 in inventory. Because we generally do not extend credit to our 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 greenfield service store ranges, on average, from $350,000 to $950,000 depending on the location and which of the three financing methods is used. In general, tire stores are larger and have more service bays than Monro’s traditional service stores and, as a result, construction costs are at the high end of the range of new store construction costs. Total capital required to open a new greenfield tire (land and building leased) location costs, on average, approximately $600,000, including $225,000 for equipment and $150,000 for inventory. 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, but generally will pay less per bay for equipment and real property.

At March 29, 2014, we leased the land and/or the building at approximately 71% of our 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 service and tire stores, (excluding acquired stores and BJ’s locations), have average sales of approximately $384,000 and $1,015,000, respectively, in their first 12 months of operation, or $64,000 and $145,000, respectively, per bay.

STORE OPERATIONS

Store Format

The typical format for a Monro store is a free-standing building consisting of a sales area, fully-equipped service bays and a parts/tires storage area. In BJ’s locations, Monro and BJ’s both operate counters in the sales area, while Monro operates the service bay area. Most service bays are equipped with above-ground electric vehicle lifts. Generally, each store is located within 25 miles of a “key” store which carries approximately double the inventory of a typical store and serves as a mini-distribution point for slower moving inventory for other stores in its area. Individual store sizes, number of bays and stocking levels vary greatly, even within the service and tire store groups, and are dependent primarily on the availability of suitable store locations, population, demographics and intensity of competition among other factors (See additional discussion under “Store Additions and Closings”). A summary of average store data for service and tire stores is presented below:


	Average Number of Bays		Average Square Feet		Average Inventory		Average Number of Stock Keeping Units (SKUs)
Service stores (excluding BJ’s and ProCare)		6		4,400	$	100,000		2,700
Tire stores (excluding Tire Warehouse and Tire Barn Warehouse stores)		7		6,500	$	145,000		1,400

Data for the acquired ProCare service stores has been excluded because the stores’ stock rooms are smaller than those in typical service stores and therefore, they generally carry approximately half the amount of inventory of a typical service store.

Data for the Tire Warehouse and Tire Barn Warehouse stores has been excluded because these locations primarily install new tires and wheels and many perform alignments. Additionally, most Tire Warehouse stores have no indoor service bays. The store building houses a waiting room, storage area and an area to mount and balance tires on the car’s wheels once the wheels and tires have been removed from the car. Removal of old tires and wheels from, and installation of new tires and wheels on, customers’ cars are performed outdoors under a carport. A growing number of Tire Warehouse stores have an indoor bay to perform alignments. The average inventory carried by the Tire Warehouse and Tire Barn Warehouse stores is $236,000 per store.

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 6:00 p.m. on Saturday. A majority of store locations are also open Sundays from 9:00 a.m. to 5:00 p.m.

Inventory Control and Management Information System

All Company Stores communicate daily with the central office and warehouse by computerized inventory control and electronic POS management information systems, which enable us 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 up to the 14 stores or warehouse 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 and tires. It also improves profitability because it reduces the amount of inventory which must be purchased outside Monro from local vendors.

Quality Control and Warranties

To maintain quality control, we conduct audits to rate our employees’ telephone sales manner and the accuracy of pricing information given.

We have a customer survey program to monitor customer attitudes toward service quality, friendliness, speed of service, and several other factors for each store. Customer concerns are addressed by customer service and field management personnel.

Monro uses a “Double Check for Accuracy Program” as part of our routine store procedures. This quality assurance program requires that a technician and supervisory-level employee (or in certain cases, another technician in tire stores) independently inspect a customer’s vehicle, diagnose and document the necessary repairs, and agree on an estimate before presenting it to a customer. This process is formally documented on the written estimate by store personnel.

We are an active member of the Automotive Maintenance & Repair Association (AMRA). AMRA 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 through the Motorist Assurance Program (MAP). Participating companies commit to improving consumer confidence and trust in the automotive repair industry by adopting “Uniform Inspection Communication Standards” (“UICS”) established by MAP. These “UICS” are available in our stores and serve to provide consistent recommendations to customers in the diagnosis and repair of a vehicle.

We offer limited warranties on substantially all of the products and services that we provide. We believe that these warranties are competitive with industry practices and serve as a marketing tool to increase repeat business at our stores.

Store Personnel and Training

Monro supervises store operations primarily through our Divisional Vice Presidents who oversee Zone Managers who, in turn, oversee Market Managers. The typical service store is staffed by a Store Manager and four to six technicians, one of whom serves as the Assistant Manager. The typical tire store, except Tire Warehouse stores, is staffed by a Store Manager, an Assistant Manager and/or Service Manager, and four to eight technicians. Larger volume service and tire stores may also have one or two sales people. The higher staffing level at many tire stores is necessary to support their higher sales volume. Tire Warehouse stores are generally staffed by a Store Manager and two to four technicians, one of whom serves as the Assistant Manager. All Store Managers receive a base salary and Assistant Managers receive either hourly or salaried 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.

We believe 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. We make a concerted effort to recruit individuals who will have a long-term commitment to the Company and offer 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 our Store Managers and Market Managers started with the Company as technicians.

Many of our new technicians join the Company in their early twenties as trainees or apprentices. As they progress, many are promoted to technician and eventually master technician, the latter requiring ASE certification in both brakes and suspension. We offer a tool purchase program through which trainee technicians can acquire their own set of tools. We also will reimburse technicians for the cost of ASE certification registration fees and test fees and encourage all technicians to become certified by providing a higher hourly wage rate following their certification.

Our training program provides multiple training sessions to both Store Managers and technicians in each store, each year.

Management training courses are developed and delivered by our dedicated training department and Operations management, and are supplemented with live and on-line vendor training courses. Management training covers customer service, sales, human resources (counseling, recruiting, interviewing, etc.), leadership, scheduling, financial and operational areas, and is delivered on a regular basis. We believe that involving Operations management in the development and delivery of these sessions results in more relevant and actionable training for Store Managers, and helps to improve overall performance and staff retention.

Our training department develops and coordinates technical training courses on critical areas of automotive repair to Monro technicians (e.g. Antilock braking systems (“ABS”) brake repair, drivability, tire pressure monitoring system (“TPMS”), etc.) and also conducts required technical training to maintain compliance with state inspection licenses, where applicable, and AMRA/MAP accreditation. Additionally, our training department holds periodic field technical clinics for store personnel and coordinates technician attendance at technical clinics offered by our vendors. We have electronic repair manuals installed in all of our stores for daily reference. We also issue technical bulletins to all stores on innovative or complex repair processes, and maintain a centralized database for technical repair problems. In addition, Monro has established a telephone technical help line 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. Monro also maintains an employee web page that contains many resources that are available for both managers and technicians to reference.

OPERATING STRATEGY

Monro’s operating strategy is to provide our customers with a wide range of dependable, high-quality automotive services at a competitive price by emphasizing the following key elements.

Products and Services

The typical store provides a full range of undercar repair services for brakes, steering, mufflers and exhaust systems, drive train, suspension and wheel alignment, as well as tire replacement and service. These services apply to all makes and models of domestic and foreign cars, light trucks and vans. As a percentage of sales, the service stores provide significantly more brake and exhaust service than tire stores, and tire stores provide substantially more tire replacement and related services than service stores.

Stores generally provide many of the routine maintenance services (except engine diagnostic), which automobile manufacturers suggest or require in the vehicle owners’ manuals, and which fulfill manufacturers’ requirements for new car warranty compliance. We offer “Scheduled Maintenance” services in our stores whereby the aforementioned services are packaged and offered to consumers based upon the year, make, model and mileage of each specific vehicle. Management believes that we are able to offer this service in a more convenient and cost competitive fashion than auto dealers can provide.

Included in maintenance services are oil change services, heating and cooling system “flush and fill” service, belt installation, fuel system service and a transmission “flush and fill” service. Additionally, most stores replace and service batteries, starters and alternators. Stores in New York, West Virginia, New Hampshire,

Maryland, Rhode Island, Pennsylvania, North Carolina, Virginia, Missouri, Maine, Vermont and Wisconsin perform annual state inspections. Approximately 46% of our stores also offer air conditioning services.

We began a program in the third quarter of fiscal year 2007 to increase tire and tire related sales, such as alignments, in our service stores. The goal was to increase the overall sales of these stores by capturing tire and related sales from existing store traffic and eventually drive additional traffic and sales. The program involves increasing the specific sales training of store managers, expanding the tire merchandise selection in these stores, and raising the focus of store advertising in this category. This initiative, which is called “Black Gold”, has now been rolled out to 263 of the Company’s service stores, primarily in markets where we also have tire stores, which allows for greater utilization of inventory.

The format of the Tire Warehouse and Tire Barn Warehouse stores, acquired in fiscal year 2010 and fiscal year 2013, respectively, are slightly different from Monro’s typical service or tire stores (as described above) in that, generally, over 94% of the stores’ sales involve tire services, including the mounting and balancing of tires, and the sale of road hazard warranties. All stores provide the installation of wiper blades. Currently, 25 Tire Warehouse and 21 Tire Barn Warehouse stores perform alignments. In fiscal year 2015, Monro plans to expand the number of Tire Warehouse and Tire Barn Warehouse stores offering alignment services to a total of 52 stores.

Customer Satisfaction

Monro’s vision of being the dominant Auto Service provider in the markets we serve is supported by a set of values displayed in each Company Store emphasizing TRUST:

•

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

Also displayed in each Company Store are guiding principles in support of our commitment to customer service: only present needed work; fix vehicles right the first time; complete vehicle service on time; and exceed the customer’s expectations.

Additionally, each Company-operated store operates under the following set of customer satisfaction principles: free inspection of brakes, tires, shocks, front end and exhaust systems (as applicable); item-by-item review with customers of problem areas; free written estimates; written guarantees; drive-in service without an appointment; fair and reasonable prices; a 30-day best price guarantee; and repairs by professionally-trained undercar and tire specialists. (See additional discussion under “Store Operations: Quality Control and Warranties”.)

Competitive Pricing, Advertising and Co-branding Initiatives

Monro seeks to set competitive prices for quality services and products. We support our pricing strategy by advertising through direct mail coupon inserts and in-store promotional signage and displays. In addition, to increase consumer awareness of the services we offer, Monro advertises through radio, yellow pages, newspapers, service reminders and digital marketing. Our digital marketing efforts include email marketing, paid search on all major search engines, search remarketing, and banner and mobile advertising. We also manage social media profiles for all Monro brands on Twitter, Facebook and Foursquare.

Our websites include www.Monro.com , www.MrTire.com , www.Tirewarehouse.net , www.Kentowery.com , www.TireBarn.com and www.Currysauto.com . These sites help customers search for store locations, print coupons, make service appointments, shop for tires and access information on our services and products, as well as car care tips.

Monro currently maintains mobile apps on the iPhone and Android platforms for the Monro, Mr. Tire and Tire Warehouse brands. Our mobile apps enable customers to manage vehicle service records on their smart phones and access information, coupons and specials, as they do on our websites.

Centralized Control

Unlike many of our competitors, we operate, rather than franchise, most of our stores (except for the three Tire Warehouse franchises and 14 dealer locations). We believe that direct operation of stores enhances our 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 competence is maintained throughout the Company, as we require, as a condition of employment, that employees participate in periodic training programs, including sales, management, customer service and changes in automotive technology. Additionally, purchasing, distribution, merchandising, advertising, accounting and other store support functions are centralized primarily in Monro’s corporate headquarters in Rochester, New York, and are provided through our subsidiary, Monro Service Corporation. The centralization of these functions results in efficiencies and gives management the ability to closely monitor and control costs.

Comprehensive Training

We provide ongoing, comprehensive training to our store employees. We believe that such training provides a competitive advantage by enabling our technicians to provide quality service to our customers in all areas of undercar repair and tire service. (See additional discussion under “Store Operations: Store Personnel and Training”.)

PURCHASING AND DISTRIBUTION

Through our wholly-owned subsidiary Monro Service Corporation, we select and purchase tires, 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 16% of all parts and tires used in fiscal 2014.

Our ten largest vendors accounted for approximately 83% of our parts and tire purchases, with the largest vendor accounting for approximately 21% of total stocking purchases in fiscal 2014. In fiscal 2014 Monro imported approximately 28% of our parts and tire purchases. We purchase parts and tires from approximately 100 vendors. Management believes that our relationships with vendors are excellent and that alternative sources of supply exist, at comparable cost, for substantially all parts used in our business. We routinely obtain bids from vendors to ensure we are receiving competitive pricing and terms.

Most parts are shipped by vendors to our primary warehouse facility in Rochester, New York, and are distributed to stores by the Monro-operated tractor/trailer fleet. The majority of tires are shipped to our stores directly by vendors pursuant to orders placed by our headquarters staff. During fiscal 2013, we completed an expansion of our warehouse from 80,000 square feet to 135,000 square feet. Stores are replenished at least monthly from this warehouse, and such replenishment fills, on average, 95% of all items ordered by the stores’ automatic POS-driven replenishment system. The Rochester warehouse stocks approximately 4,400 SKUs. Monro also operates warehouses in Maryland, Virginia, Illinois, New Hampshire and Kentucky. These warehouses carry, on average, 1,200; 300; 1,200; 900 and 1,000 SKUs, respectively.

We enter into contracts with certain parts and tire suppliers, some of which require us to buy (at market prices) up to 100% of our annual purchases of specific products. These agreements expire at various dates through July 2017. We believe these agreements provide us with high quality, branded merchandise at preferred pricing, along with strong marketing and training support.

COMPETITION

Monro competes in the retail automotive service and tire industry. This industry is generally highly competitive and fragmented, and the number, size and strength of competitors vary widely from region to region. We believe 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, mass merchandisers’ operating service centers; and, to a lesser extent, gas stations, independent garages and Internet tire sellers. Monro considers TBC Corporation (operating under the NTB, Merchant’s Tire, Midas and Tire Kingdom brands), Firestone Complete Auto Care service stores and Meineke Discount Mufflers Inc. to be direct competitors. In most of the new markets that we have entered, at least one competitor was already present. In identifying new markets, we analyze, 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 29, 2014, Monro had 6,139 employees, of whom 5,779 were employed in the field organization, 139 were employed at the warehouses, 185 were employed at our corporate headquarters and 36 were employed in other offices. Monro’s employees are not members of any union. We believe that our relations with our employees are good.

REGULATION

Monro stores new oil and recycled antifreeze and generates and/or handles used tires and automotive oils, antifreeze and certain solvents, which are disposed of by licensed third-party contractors. In certain states, as required, we also recycle oil filters. Thus, we are 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 our handling and disposal of waste. The EPA, under the Clean Air Act, also regulates the installation of catalytic converters by Monro and all other repair stores by periodically spot checking repair 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 $37,500 per violation (or up to $37,500 per day for certain willful violations or failures to cooperate with authorities), for violations of RCRA and the Clean Air Act.

We are subject to various laws and regulations concerning workplace safety, zoning and other matters relating to our business. We maintain programs to facilitate compliance with these laws and regulations. We believe that we are 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.

Monro is environmentally conscious, and takes advantage of recycling opportunities at our offices, warehouses and stores. Cardboard, plastic shrink wrap and parts’ cores are returned to the warehouse by the stores on Monro stock trucks. There, they are accumulated for sale to recycling companies or returned to parts manufacturers for credit.

SEASONALITY

Although our 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. In the tire stores, the better sales months are typically May through August, and October through December. The slowest months are typically January through April and September. As a result, profitability is typically lower during slower sales months, or months where mix is more heavily weighted toward tires, which is a lower margin category. Additionally, since our stores are primarily located in the northeastern United States, profitability tends to be lower in the winter months when certain costs, such as utilities and snow plowing, are typically higher.

COMPANY INFORMATION AND SEC FILINGS

Monro 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. Monro’s SEC filings are available through this website free of charge, via a direct link to the SEC website at www.sec.gov . Monro’s filings with the SEC are also available to the public at the SEC Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549 or by calling the SEC at 1-800-SEC-0330.

Item 1A. Risk Factors

In addition to the risks discussed elsewhere in this annual report, the following are the important factors that could cause Monro’s actual results to differ materially from those projected in any forward looking statements:

We operate in the highly competitive automotive repair industry.

The automotive repair industry in which we operate is generally highly competitive and fragmented, and the number, size and strength of our competitors varies widely from region to region. We believe that competition in the industry is based primarily on customer service, reputation, store location, name awareness and price. Our primary competitors include national and regional undercar, tire specialty and general automotive service chains, both franchised and company-operated, car dealerships, mass merchandisers’ operating service centers and, to a lesser extent, gas stations, independent garages and Internet tire sellers. Some of our competitors have greater financial resources, are more geographically diverse and have better name recognition than we do, which might place us at a competitive disadvantage to those competitors. Because we seek to offer competitive prices, if our competitors reduce prices, we may be forced to reduce our prices, which could have a material adverse effect on our business, financial condition and results of operations. Further, our success within this industry also depends upon our ability to respond in a timely manner to changes in customer demands for both products and services. We cannot assure that we, or any of our stores, will be able to compete effectively. If we are unable to compete successfully in new and existing markets, we may not achieve our projected revenue and profitability targets.

We are subject to seasonality and cycles in the general economy and customers’ use of vehicles, which may impact demand for our products and services.

Although our business is not highly seasonal, our customers typically purchase more undercar services during the period of March through October than the period of November through February, when miles driven tend to be lower. Further, customers may defer or forego vehicle maintenance at any time during periods of inclement weather. In the tire stores, the better sales months are typically May through August, and October through December. The slowest months are typically January through April and September. As a result, profitability is typically lower during slower sales months, or months where mix is more heavily weighted toward tires, which is a lower margin category.

Additionally, since our stores are primarily located in the northeastern United States, profitability tends to be lower in the winter months when certain costs, such as utilities and snow plowing, are typically higher.

The automotive repair industry is subject to fluctuations in the general economy. During a downturn in the economy, customers may defer or forego vehicle maintenance or repair. During periods of good economic conditions, consumers may decide to purchase new vehicles rather than having their older vehicles serviced.

Further, our industry is influenced by the number of miles driven by automobile owners. Factors that may cause the number of miles driven by automobile owners to decrease include the weather, travel patterns, gas prices and, as discussed above, fluctuations in the general economy. Should a significant reduction in the number of miles driven by automobile owners occur, it would likely have an adverse effect on the demand for our products and services. For example, when the retail cost of gasoline increases, the number of miles driven by automobile owners may decrease, which could result in less frequent service intervals and fewer repairs. Accordingly, a significant reduction in the number of miles driven by automobile owners could have a material adverse effect on our business and results of operations.

We depend on our relationships with our vendors, including foreign sources, for certain inventory. Our business may be negatively affected by the risks associated with such relationships and international trade.

We depend on close relationships with our vendors for parts, tires and supplies and for our ability to purchase products at competitive prices and terms. Our ability to purchase at competitive prices and terms results from the volume of our purchases from these vendors. We have entered into various contracts with parts suppliers that require us to buy from them (at market prices) up to 100% of our annual purchases of specific products. These agreements expire at various dates through July 2017.

We believe that alternative sources exist for most of the products we sell or use at our stores, and we would not expect the loss of any one supplier to have a material adverse effect on our business, financial condition or results of operations. Our dependence on a small number of suppliers, however, subjects us to the risks of shortages and interruptions. If any of our suppliers do not perform adequately or otherwise fail to distribute parts or other supplies to our stores, our inability to replace the suppliers in a timely manner and on acceptable terms could increase our costs and could cause shortages or interruptions that could have a material adverse effect on our business, financial condition and results of operations.

Further, we depend on a number of products (e.g. brake parts, tires, oil filters) produced in foreign markets. We face risks associated with the delivery of inventory originating outside the United States, including:

•

potential economic and political instability in countries where our suppliers are located;

•

increases in shipping costs;

•

transportation delays and interruptions;

•

changes in U.S. and foreign laws affecting the importation and taxation of goods, including duties, tariffs and quotas, or changes in the enforcement of those laws; and

•

compliance with the United States Foreign Corrupt Practices Act, which generally prohibits U.S. companies from engaging in bribery or making other prohibited payments to foreign officials.

Our industry is subject to environmental, consumer protection and other regulation.

We are subject to various federal, state and local environmental laws, building and zoning requirements, employment laws and other governmental regulations regarding the operation of our business. For example, we

are subject to rules governing the handling, storage and disposal of hazardous substances contained in some of the products such as motor oil that we sell and use at our stores, the recycling of batteries, tires and used lubricants, and the ownership and operation of real property. These laws and regulations can impose fines and criminal sanctions for violations and require the installation of pollution control equipment or operational changes to decrease the likelihood of accidental hazardous substance releases. Accordingly, we could become subject to material liabilities relating to the investigation and cleanup of contaminated properties, and to claims alleging personal injury or property damage as a result of exposure to, or release of, hazardous substances. In addition, stricter interpretation of existing laws and regulations, new laws and regulations, the discovery of previously unknown contamination or the imposition of new or increased requirements could require us to incur costs or become the basis of new or increased liabilities that could have a material adverse effect on our business, financial condition and results of operations.

National automotive repair chains have also been the subject of investigations and reports by consumer protection agencies and the Attorneys General of various states. Publicity in connection with these kinds of investigations could have an adverse effect on our sales and, consequently, our business, financial condition and results of operations. State and local governments have also enacted numerous consumer protection laws with which we must comply.

The costs of operating our stores may increase if there are changes in laws governing minimum hourly wages, working conditions, overtime, workers’ compensation and health insurance rates, unemployment tax rates or other laws and regulations. A material increase in these costs that we were unable to offset by increasing our prices or by other means could have a material adverse effect on our business, financial condition and results of operations.

We are involved in litigation from time to time arising from the operation of our business and, as such, we could incur substantial judgments, fines, legal fees or other costs.

We are sometimes the subject of complaints or litigation from customers, employees or other third parties for various actions. From time to time, we are involved in litigation involving claims related to, among other things, breach of contract, negligence, tortious conduct and employment law matters, including payment of wages. The damages sought against us in some of these litigation proceedings could be substantial. Although we maintain liability insurance for some litigation claims, if one or more of the claims were to greatly exceed our insurance coverage limits or if our insurance policies do not cover a claim, this could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Business interruptions may negatively impact our store operations, availability of products and/or the operability of our computer systems, which may have a material negative effect on our business and results of operations. A breach of our computer systems could damage our reputation and have a material adverse effect on our business and results of operations.

If any of our locations in a particular region are unexpectedly closed permanently or for a period of time, it could have a negative impact on our business. Such closures could occur as a result of circumstances out of our control, including war, acts of terrorism, extreme weather conditions and other natural disasters. Further, if our ability to obtain products and merchandise for use in our stores is impeded, it could have a negative impact on our business. Factors that could negatively affect our ability to obtain products and merchandise include the sudden inability to import goods into the United States, for any reason and the curtailment or delay of commercial transportation. While we do maintain business interruption insurance, there is no guarantee that we will be able to use such insurance for any particular location closure or other interruption in operations.

Additionally, given the number of individual transactions we process each year, it is critical that we maintain uninterrupted operation of our computer and communications hardware and software systems. Our systems could be subject to damage or interruption from power outages, computer and telecommunications

failures, computer viruses, security breaches, including breaches of our transaction processing or other systems that result in the compromise of confidential customer data, catastrophic events such as fires, tornadoes and hurricanes, and usage errors by our employees. If our systems are breached, damaged or cease to function properly, we may have to make a significant investment to fix or replace them, we may suffer interruptions in our operations in the interim, we may face costly litigation, and our reputation with our customers may be harmed. The risk of disruption is increased in periods where complex and significant systems changes are undertaken. Any material interruption in our computer operations may have a material adverse effect on our business or results of operations.

If we fail to protect the security of personal information about our customers or employees, we could be subject to costly government enforcement actions or private litigation, and our reputation could suffer.

The nature of our business involves the receipt and storage of personal information about our customers and employees. If we experience a data security breach, we could be exposed to government enforcement actions and private litigation. In addition, our customers could lose confidence in our ability to protect their personal information, which could cause them to discontinue usage of credit cards or decline to use our services altogether. The loss of confidence from a data security breach involving employees could hurt our reputation and cause employee recruiting and retention challenges.

Our business is affected by advances in automotive technology.

The demand for our products and services could be adversely affected by continuing developments in automotive technology. Automotive manufacturers are producing cars that last longer and require service and maintenance at less frequent intervals in certain cases. Quality improvement of manufacturers’ original equipment parts has in the past reduced, and may in the future reduce, demand for our products and services, adversely affecting our sales. For example, manufacturers’ use of stainless steel exhaust components has significantly increased the life of those parts, thereby decreasing the demand for exhaust repairs and replacements. Longer and more comprehensive warranty or service programs offered by automobile manufacturers and other third parties also could adversely affect the demand for our products and services. We believe that a majority of new automobile owners have their cars serviced by a dealer during the period that the car is under warranty. In addition, advances in automotive technology continue to require us to incur additional costs to update our diagnostic capabilities and technical training programs.

We may not be successful in integrating new and acquired stores.

Management believes that our continued growth in sales and profit is dependent, in large part, upon our ability to open/acquire and operate new stores on a profitable basis. In order to do so, we must find reasonably priced new store locations and acquisition candidates that meet our criteria and we must integrate any new stores (opened or acquired) into our system. Our growth and profitability could be adversely affected if we are unable to open or acquire new stores or if new or existing stores do not operate at a sufficient level of profitability. If new stores do not achieve expected levels of profitability, this may adversely impact our ability to remain in compliance with our debt covenants or to make required payments under our credit facility.

Any impairment of goodwill, other intangible assets or long-lived assets could negatively impact our results of operations.

Our goodwill, other intangible assets or long-lived assets, are subject to an impairment test on an annual basis and are also tested whenever events and circumstances indicate that goodwill, intangible assets and/or long-lived assets may be impaired. Any excess goodwill resulting from the impairment test must be written off in the period of determination. Intangible assets (other than goodwill and indefinite-lived intangible assets) and other long-lived assets are generally amortized or depreciated over the useful life of such assets. In addition, from time

to time, we may acquire or make an investment in a business that will require us to record goodwill based on the purchase price and the value of the acquired tangible and intangible assets. We have significantly increased our goodwill as a result of our acquisitions. We may subsequently experience unforeseen issues with the businesses we acquire, which may adversely affect the anticipated returns of the business or value of the intangible assets and trigger an evaluation of the recoverability of the recorded goodwill and intangible assets for such business. Future determinations of significant write-offs of goodwill, intangible assets or other long-lived assets, as a result of an impairment test or any accelerated amortization or depreciation of other intangible assets or other long-lived assets could have a material negative impact on our results of operations and financial condition. We have completed our annual impairment test for goodwill, and have concluded that we do not have any impairment of goodwill for the year ended March 29, 2014.

Store closings result in acceleration of costs.

From time to time, in the ordinary course of our business, we close certain stores, generally based on considerations of store profitability, competition, strategic factors and other considerations. Closing a store could subject us to costs including the write-down of leasehold improvements, equipment, furniture and fixtures. In addition, we could remain liable for future lease obligations.

We rely on an adequate supply of skilled field personnel.

In order to continue to provide high quality services, we require an adequate supply of skilled field managers and technicians. Trained and experienced automotive field personnel are in high demand, and may be in short supply in some areas. We cannot assure that we will be able to attract, motivate and maintain an adequate skilled workforce necessary to operate our existing and future stores efficiently, or that labor expenses will not increase as a result of a shortage in the supply of skilled field personnel, thereby adversely impacting our financial performance. While the automotive repair industry generally operates with high field employee turnover, any material increases in employee turnover rates in our stores or any widespread employee dissatisfaction could also have a material adverse effect on our business, financial condition and results of operations.

If we are unable to generate sufficient cash flows from our operations, our liquidity will suffer and we may be unable to satisfy our obligations.

We currently rely on cash flow from operations and our Revolving Credit Facility to fund our business. Amounts outstanding on the Revolving Credit Facility are reported as debt on our balance sheet. While we believe that we have the ability to sufficiently fund our planned operations and capital expenditures for the foreseeable future, various risks to our business could result in circumstances that would materially affect our liquidity. For example, cash flows from our operations could be affected by changes in consumer spending habits, the failure to maintain favorable vendor payment terms or our inability to successfully implement sales growth initiatives, among other factors. We may be unsuccessful in securing alternative financing when needed on terms that we consider acceptable.

In addition, a significant increase in our leverage could have the following risks:

•

our ability to obtain additional financing for working capital, capital expenditures, store renovations, acquisitions or general corporate purposes may be impaired in the future;

•

our failure to comply with the financial and other restrictive covenants governing our debt, which, among other things, require us to comply with certain financial ratios and limit our ability to incur additional debt and sell assets, could result in an event of default that, if not cured or waived, could have a material adverse effect on our business, financial condition and results of operations; and

•

our exposure to certain financial market risks, including fluctuations in interest rates associated with bank borrowings could become more significant.

If we do not perform in accordance with our debt covenants, our lenders may restrict our ability to draw on our Revolving Credit Facility. We cannot assure that we will remain in compliance with our debt covenants in the future.

We depend on the services of key executives.

Our senior executives are important to our success because they have been instrumental in setting our strategic direction, operating our business, identifying, recruiting and training key personnel, identifying expansion opportunities and arranging necessary financing. Losing the services of any of these individuals could adversely affect our business until a suitable replacement could be found. It may be difficult to replace them quickly with executives of equal experience and capabilities. Although we have employment agreements with selected executives, we cannot prevent them from terminating their employment with us. Other executives are not bound by their employment agreements with us.

New accounting guidance or changes in the interpretation or application of existing accounting guidance could affect our financial performance adversely.

New accounting guidance may require systems and other changes that could increase our operating costs and/or change our financial statements. For example, implementing future accounting guidance related to leases and other areas impacted by the current convergence project between the Financial Accounting Standards Board (“FASB”) and the International Accounting Standards Board (“IASB”) could require us to make significant changes to our lease management system or other accounting systems, and could result in changes to our financial statements. Additionally, implementing future accounting guidance related to leases or other items could potentially impact certain performance metrics and financial ratios, and potentially require the renegotiation of debt covenants.

Unanticipated changes in the interpretation or application of existing accounting guidance could result in material charges or restatements of our financial statements, which may further result in litigation or regulatory actions which could have an adverse effect on our financial condition and results of operations.

Healthcare reform legislation could have a negative impact on our business, financial condition and results of operations.

The Patient Protection and Affordable Care Act (the “Act”), as well as other healthcare reform legislation considered by Congress and state legislators, could significantly impact our healthcare cost structure and increase our healthcare-related expenses. The Act requires employers, such as us, to provide health insurance for all qualifying employees or pay penalties for not providing coverage. Although we cannot predict with certainty the financial and operational impacts the Act will have, we expect to be required to provide health benefits to more employees than we currently do, which could raise our labor costs. We continue to evaluate the potential impact the healthcare reform legislation will have on our business and the steps necessary to mitigate the impacts, including potential modifications to our current benefit plans, operational changes to minimize the impact of the legislation to our cost structure and increases to selling prices to mitigate the expected increase in healthcare-related expenses. If we cannot effectively modify our programs and operations in response to the new legislation, our results of operations, financial condition and cash flows may be adversely impacted.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

The Company, through Monro Service Corporation, owns its office/warehouse facility of approximately 165,000 square feet (including 70,000 square feet from our recent expansion), which is located on 12.7 acres of land in Holleder Technology Park, in Rochester, New York. Monro Service Corporation also owns a second office/warehouse facility of approximately 28,000 square feet, which is located on 11.8 acres of land in Swanzey, New Hampshire. Additionally, we lease warehouse space in Maryland, Virginia, Illinois and Kentucky.

Of Monro’s 953 Company-operated stores at March 29, 2014, 280 were owned, 571 were leased and for 102 stores, only the land was leased. In general, we lease store sites for a ten-year period with several five-year renewal options. Giving effect to all renewal options, approximately 59% of the leases (396 stores) expire after 2024. 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. An officer of Monro or members of his family are the lessors, or have interests in entities that are the lessors, with respect to six of the leases. No related party leases, other than the six assumed as part of the Mr. Tire Acquisition in March 2004, have been entered into, and no new related party leases are contemplated.

As of March 29, 2014, there was $.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.

Item 3. Legal Proceedings

Monro currently and from time to time is involved in litigation incidental to the conduct of our business, including employment-related litigation arising from claims by current and former employees. Although we diligently defend against these claims, we may enter into discussions regarding settlement of these and other lawsuits, and may enter into settlement agreements, if management believes settlement is in the best interests of Monro and our shareholders. Although the amount of liability that may result from these matters cannot be ascertained, management does not currently believe that, in the aggregate, they will result in liabilities material to Monro’s financial condition or results of operations.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5 . Market for the Company’s Common Equity and Related Stockholder Matters

MARKET INFORMATION

Monro’s common stock, par value $.01 per share, (the “Common Stock”) is traded on the NASDAQ Stock Market under the symbol “MNRO”. The following table sets forth, for our last two fiscal years, the range of high and low sales prices on the NASDAQ Stock Market for the Common Stock:


	Fiscal 2014				Fiscal 2013
Quarter Ended	High		Low		High		Low
June	$	50.66	$	37.88	$	42.45	$	31.43
September	$	51.12	$	41.35	$	39.33	$	30.72
December	$	56.00	$	43.87	$	36.49	$	30.72
March	$	62.11	$	53.85	$	41.30	$	33.00

HOLDERS

At May 9, 2014, Monro’s Common Stock was held by approximately 4,400 shareholders of record or through nominee or street name accounts with brokers.

EQUITY COMPENSATION PLAN INFORMATION

As of March 29, 2014, Monro maintained stock option plans under which employees and non-employee directors could be granted Common Stock options to purchase shares of Monro’s Common Stock. The following table contains information relating to such plans as of March 29, 2014.


Plan Category	Number of Securities To Be Issued Upon Exercise of Outstanding Options (a)		Weighted Average Exercise Price of Outstanding Options (b)		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c)
Equity compensation plans approved by security holders		1,773,401	$	31.58		2,148,327
Equity compensation plans not approved by security holders		—		—		—

Total		1,773,401	$	31.58		2,148,327

DIVIDENDS

In May 2012, Monro’s Board of Directors declared its intention to pay a regular quarterly cash dividend of $.10 per common share or common share equivalent to be paid beginning with the first quarter of fiscal year 2013. Monro’s Board of Directors accelerated the record and payment date of the $.10 per share regular quarterly cash dividend for the fourth quarter such that the dividend was paid together with the third quarter dividend in December 2012. This combined dividend of $.20 per share was paid on December 21, 2012 to shareholders of record as of December 11, 2012.

In May 2013, Monro’s Board of Directors declared its intention to pay a regular quarterly cash dividend of $.11 per common share or common share equivalent to be paid beginning with the first quarter of fiscal year 2014.

In May 2014, Monro’s Board of Directors declared a regular quarterly cash dividend of $.13 per common share or common share equivalent to be paid to shareholders of record as of June 2, 2014. The dividend will be paid on June 12, 2014.

The declaration of and determination as to the payment of future dividends will be at the discretion of the Board of Directors and will depend on our financial condition, results of operations, capital requirements, compliance with charter and contractual restrictions, and such other factors as the Board of Directors deems relevant. Under our Revolving Credit Facility, we are not permitted to pay cash dividends in excess of 50% of our preceding year’s net income. For additional information regarding our Revolving Credit Facility, see Note 6 to the Company’s Consolidated Financial Statements.

Item 6 . Selected Financial Data

The following table sets forth selected financial and operating data of Monro for each year in the five-year period ended March 29, 2014. The financial data and certain operating data have been derived from Monro’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.


		Year Ended Fiscal March
		2014			2013			2012			2011			2010
		(Amounts in thousands, except per share data)
Income Statement Data :
Sales		$	831,432		$	731,997		$	686,552		$	636,678		$	564,639
Cost of sales, including distribution and occupancy costs			511,458			453,850			410,155			379,166			333,465

Gross profit			319,974			278,147			276,397			257,512			231,174
Operating, selling, general and administrative expenses			224,627			204,442			184,981			179,127			171,938

Operating income			95,347			73,705			91,416			78,385			59,236
Interest expense, net			9,470			7,213			5,220			5,095			6,090
Other income, net			(659	)		(332	)		(490	)		(647	)		(279	)

Income before provision for income taxes			86,536			66,824			86,686			73,937			53,425
Provision for income taxes			32,077			24,257			32,074			28,096			20,234

Net income		$	54,459		$	42,567		$	54,612		$	45,841		$	33,191

Earnings per share	Basic(a)	$	1.72		$	1.36		$	1.77		$	1.52		$	1.12

	Diluted(a)	$	1.67		$	1.32		$	1.69		$	1.44		$	1.07

Weighted average number of Common Shares and equivalents
	Basic(b)		31,394			31,067			30,716			30,200			29,508

	Diluted(b)		32,642			32,308			32,237			31,807			30,978

Cash dividends per common share or common share equivalent(b)(c)		$	0.44		$	0.40		$	0.35		$	0.28		$	0.23

Selected Operating Data:(d)
Sales growth:
Total			13.6	%		6.6	%		7.8	%		12.8	%		18.6	%
Comparable store(e)			(0.5	)%		(7.3	)%		2.0	%		4.2	%		7.2	%
Stores open at beginning of year			937			803			781			777			710


Stores open at end of year			953			937			803			781			777


Capital Expenditures(f)		$	32,150		$	34,185		$	28,556		$	17,507		$	21,333


Balance Sheet Data (at period end):
Net working capital		$	31,375		$	28,280		$	24,506		$	19,343		$	24,715
Total assets			759,956			739,433			510,092			451,840			444,143
Long-term obligations			187,040			214,809			51,164			41,990			96,427
Shareholders’ equity			415,984			365,042			327,499			280,249			232,670

(a)	See Note 10 to our Consolidated Financial Statements, included under Item 8 of this report, for calculation of basic and diluted earnings per share for fiscal years 2014, 2013 and 2012.

(b)	Adjusted in fiscal year 2010 for the effect of Monro’s December 2010 three-for-two stock split.

(c)	All years include four dividend payments other than fiscal year 2010 which has five payments/accruals due to timing.

(d)	Includes Company-operated stores only – no dealer or franchise locations.

(e)	Comparable store sales data (not adjusted for days) is calculated based on the change in sales of only those stores open as of the beginning of the preceding fiscal year.

(f)	Amount does not include the funding of the purchase price related to acquisitions.

Item 7 . Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following table sets forth income statement data of Monro expressed as a percentage of sales for the fiscal years indicated:


	Year Ended Fiscal March
	2014			2013			2012
Sales		100.0	%		100.0	%		100.0	%
Cost of sales, including distribution and occupancy costs		61.5			62.0			59.7

Gross profit		38.5			38.0			40.3
Operating, selling, general and administrative expenses		27.0			27.9			26.9

Operating income		11.5			10.1			13.3
Interest expense, net		1.1			1.0			0.8
Other income, net		(0.1	)		—			(0.1	)

Income before provision for income taxes		10.4			9.1			12.6
Provision for income taxes		3.9			3.3			4.7

Net income		6.5	%		5.8	%		8.0	%

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. When used in this Annual Report on Form 10-K, the words “anticipates”, “believes”, “contemplates”, “see”, “could”, “estimate”, “intend”, “plans” and variations thereof and similar expressions, are intended to identify forward-looking statements. 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 Monro’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, 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, disruption or unauthorized access to our computer systems, risks relating to protection of customer and employee personal data, risks relating to litigation, risks relating to integration of acquired businesses, including goodwill impairment and the risks set forth in “Item 1A. Risk Factors”. Except as required by law, we do not undertake to update any forward-looking statement that may be made from time to time by us or on our behalf.

CRITICAL ACCOUNTING POLICIES

We believe that the accounting policies listed below are those that are most critical to the portrayal of our 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.

Inventory

We evaluate 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 we believe inventory is stated at the lower of cost or market in the consolidated financial

statements. In addition, historically we have been able to return excess items to vendors for credit or sell such inventory to wholesalers. Future changes by vendors in their policies or willingness to accept returns of excess inventory could require a revision in the estimates.

Carrying Values of Goodwill and Long-Lived Assets

We have a history of growth through acquisitions. Assets and liabilities of acquired businesses are recorded at their estimated fair values as of the date of acquisition. Goodwill represents costs in excess of fair values assigned to the underlying net assets of acquired businesses. The carrying value of goodwill is subject to annual impairment reviews, which we typically perform in the third quarter of the fiscal year. Impairment reviews may also be triggered by any significant events or changes in circumstances affecting our business.

We have only one reporting unit which encompasses all operations including new acquisitions. The goodwill impairment test consists of a two-step process, if necessary. We perform a qualitative assessment to determine if it is more likely than not that the fair value is less than the carrying value of goodwill. If the qualitative factors are triggered, we perform the two-step process. The first step is to compare the fair value to the book value of our reporting unit. If the fair value is less than its carrying value, the second step of the impairment test must be performed in order to determine the amount of impairment loss, if any. The second step compares the implied fair value of goodwill with the carrying amount of that goodwill. If the carrying amount of goodwill exceeds its implied fair value, an impairment charge is recognized in an amount equal to that excess. The loss recognized cannot exceed the carrying amount of goodwill. We believe there is little risk of impairment.

Intangible assets primarily represent allocations of purchase price to identifiable intangible assets of acquired businesses and are amortized over their estimated useful lives. All intangibles and other long-lived assets are reviewed when events or changes in circumstances indicate that the asset’s carrying value may not be recoverable. If such indicators are present, it is determined whether the sum of the estimated undiscounted future cash flows attributable to such assets is less than their carrying values.

A deterioration of macroeconomic conditions may not only negatively impact the estimated operating cash flows used in our cash flow models, but may also negatively impact other assumptions used in our analyses, including, but not limited to, the estimated cost of capital and/or discount rates. Additionally, as discussed above, we are required to ensure that assumptions used to determine fair value in our analyses are consistent with the assumptions a hypothetical marketplace participant would use. As a result, the cost of capital and/or discount rates used in our analyses may increase or decrease based on market conditions and trends, regardless of whether our actual cost of capital has changed. Therefore, we may recognize an impairment of an intangible asset or assets even though realized actual cash flows are approximately equal to or greater than our previously forecasted amounts.

Self-Insurance Reserves

We are largely self-insured with respect to workers’ compensation, general liability and employee medical claims. In order to reduce our risk and better manage our overall loss exposure, we purchase stop-loss insurance that covers individual claims in excess of the deductible amounts, and caps total losses in a fiscal year. We maintain 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 our 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. For more complex reserve calculations, such as workers compensation, we use the services of an actuary on an annual basis to assist in determining the required reserve for open claims.

Stock-Based Compensation

The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model that uses the following assumptions. Expected volatilities are based on historical changes in the market price of the Company’s Common Stock. The expected term of options granted is derived from the terms and conditions of the award, as well as historical exercise behavior, and represents the period of time that options granted are expected to be outstanding. The risk-free rate is calculated using the implied yield on zero-coupon U.S. Treasury bonds with a remaining maturity equal to the expected term of the awards. We use historical data to estimate forfeitures. The dividend yield is based on historical experience and expected future changes.

Income Taxes

Our provision for income taxes and effective tax rates are calculated by legal entity and jurisdiction and are based on a number of factors, including our income, tax planning strategies, differences between tax laws and accounting rules, statutory tax rates and credits, uncertain tax positions and valuation allowances. We use significant judgment and estimates in evaluating our tax positions.

Tax law and accounting rules often differ as to the timing and treatment of certain items of income and expense. As a result, the tax rate reflected in our tax return (the current or cash tax rate) is different from the tax rate reflected in our Consolidated Financial Statements. Some of the differences are permanent, while other differences are temporary as they reverse over time. We record deferred tax assets and liabilities for any temporary differences between the tax reflected in our Consolidated Financial Statements and tax bases. We establish valuation allowances when we believe it is more-likely-than-not that some portion of our deferred tax assets will not be realized.

At any one time, our tax returns for several tax years are subject to examination by U.S. federal and state taxing jurisdictions. We establish tax liabilities in accordance with the accounting guidance on income taxes. Under the accounting guidance, the impact of an uncertain tax position taken or expected to be taken on an income tax return must be recognized in the financial statements at the largest amount that is more-likely-than-not to be sustained. An uncertain income tax position will not be recognized in the financial statements unless it is more-likely-than-not to be sustained. We adjust these tax liabilities, as well as the related interest and penalties, based on the latest facts and circumstances, including recently published rulings, court cases and outcomes of tax audits. To the extent our actual tax liability differs from our established tax liabilities for unrecognized tax benefits, our effective tax rate may be materially impacted. While it is often difficult to predict the final outcome of, the timing of, or the tax treatment of any particular tax position or deduction, we believe that our tax balances reflect the more-likely-than-not outcome of known tax contingencies.

RESULTS OF OPERATIONS

Fiscal 2014 As Compared To Fiscal 2013

Sales for fiscal 2014 increased $99.4 million or 13.6% to $831.4 million as compared to $732.0 million in fiscal 2013. The increase was due to an increase of $110 million related to new stores, of which $107 million came from the fiscal 2013 and fiscal 2014 acquisitions. Partially offsetting this was a decrease in comparable store sales of .5%. Additionally, there was a decrease in sales from closed stores amounting to $5.0 million. There were 361 selling days in both fiscal 2014 and fiscal 2013.

During the year, 29 stores were added and 13 were closed. At March 29, 2014, we had 953 Company-operated stores in operation.

We believe that the slight decrease in comparable store sales for fiscal 2014 resulted primarily from continued weak economic conditions. We believe that consumers continue to defer service repairs and tire replacements, especially on higher ticket items.

For the year, comparable store traffic was up slightly while average ticket was down. The brake, exhaust and shock categories each increased by about 1% on a comparable store basis for the year. The tire category declined about 1% as consumers traded down from higher priced tires. However, tire unit sales increased approximately 1% on a comparable store basis.

Harsh winter weather also negatively impacted sales during the fourth quarter of fiscal 2014, which resulted in stores being closed for periods of time, and consumers reluctant to travel.

Gross profit for fiscal 2014 was $320.0 million or 38.5% of sales as compared with $278.1 million or 38.0% of sales for fiscal 2013. The increase in gross profit for fiscal 2014, as a percentage of sales, is due to several factors. Labor costs decreased as a percentage of sales as compared to the prior year through focused payroll control. Labor productivity, as measured by sales per man hour, improved over the prior year as well.

Distribution and occupancy costs decreased as a percentage of sales from the prior year as we leveraged these largely fixed costs with the increase in sales from acquired stores.

Total material costs were relatively flat as a percentage of sales as compared to the prior year. This was due to a shift in mix to the lower margin service and tire categories, the latter due primarily to the acquisition of more tire stores, offset by a meaningful decline in product costs, particularly tires.

Operating expenses for fiscal 2014 were $224.6 million or 27.0% of sales compared with $204.4 million or 27.9% of sales for fiscal 2013. Excluding the increase in operating expenses related to the stores acquired in fiscal 2014 and fiscal 2013, operating expenses actually decreased by approximately $2.2 million. This demonstrates that we experienced leverage in this line on a comparable store basis through focused cost control and pay plans which appropriately adjust for performance.

Operating income in fiscal 2014 of $95.3 million increased 29.4% compared to operating income of $73.7 million in fiscal 2013, and increased as a percentage of sales from 10.1% to 11.5% for the reasons described above.

Net interest expense for fiscal 2014 increased by approximately $2.3 million as compared to the prior year, and increased as a percentage of sales from 1.0% to 1.1%. The weighted average debt outstanding for the year ended March 29, 2014 increased by approximately $61 million from fiscal 2013, primarily related to an increase in debt outstanding under our Revolving Credit Facility to fund the purchase of our acquisitions, as well as increased capital leases related to our fiscal 2013 acquisitions. Partially offsetting this increase was a decrease in the weighted average interest rate of approximately 40 basis points from the prior year due to a shift in the percentage of debt (revolver vs. capital leases) outstanding at a lower rate.

Our effective tax rate was 37.1% and 36.3%, respectively, of pre-tax income in fiscal 2014 and 2013. The difference primarily relates to the accounting for uncertain tax positions which may vary from year to year.

Net income for fiscal 2014 increased by $11.9 million, or 27.9%, from $42.6 million in fiscal 2013, to $54.5 million in fiscal 2014, and earnings per diluted share increased by 26.5% from $1.32 to $1.67 due to the factors discussed above.

Fiscal 2013 As Compared To Fiscal 2012

Sales for fiscal 2013 increased $45.4 million or 6.6% to $732.0 million as compared to $686.6 million in fiscal 2012. The increase was due to an increase of $99.6 million related to new stores, of which $95.3 million came from the fiscal 2012 and fiscal 2013 acquisitions. Offsetting this was a decrease in comparable store sales of 7.3%. Additionally, there was a decrease in sales from closed stores amounting to $6.4 million. Fiscal 2013 was a 52-week year, and therefore, there were 361 selling days as compared to 368 selling days in fiscal 2012. Adjusting for days, comparable store sales were down 5.5%.

As occurred in previous years, we completed the bulk sale of approximately $2.4 million of slower moving inventory to Icon International, a barter company, in exchange for barter credits. The margin recognized in these transactions is typically less than our normal profit margin. The barter transaction that occurred in fiscal 2013 decreased gross profit and operating expenses by .1% of sales.

During the year, 144 stores were added and 10 were closed. At March 30, 2013, we had 937 Company-operated stores in operation.

We believe that the decline in comparable store sales for fiscal 2013 resulted mainly from the continued weak U.S. economy. With the continuation of high gasoline prices, lack of consumer confidence and high unemployment, we believe that customers are continuing to defer tire purchases and service repairs, especially on higher ticket items. Additionally, we believe that the milder winter weather in 2013 and 2012 also led to consumers deferring tire purchases. While it appears that repairs and tire purchases are being deferred more and for longer than in prior years, most can only be deferred for a period of time due to safety issues or state inspection requirements.

Gross profit for fiscal 2013 was $278.1 million or 38.0% of sales as compared with $276.4 million or 40.3% of sales for fiscal 2012. The decrease in gross profit for fiscal 2013, as a percentage of sales, is due to several factors. Total material costs increased as a percentage of sales as compared to the prior year. This was due to a shift in mix to the lower margin service and tire categories, the latter due in part to the acquisition of more tire stores.

Distribution and occupancy costs increased as a percentage of sales from the prior year as we lost leverage on these largely fixed costs with lower comparable store sales.

Labor costs were relatively flat as a percentage of sales as compared to the prior year.

Operating expenses for fiscal 2013 were $204.4 million or 27.9% of sales compared with $185.0 million or 26.9% of sales for fiscal 2012. Excluding the operating expenses related to the stores acquired in fiscal 2013, operating expenses actually decreased by approximately $1.5 million, after adjusting for the extra week in fiscal 2012. This demonstrates that the Company experienced leverage in this line on a comparable store basis through focused cost control and pay plans which appropriately adjust for performance.

Operating income in fiscal 2013 of $73.7 million decreased 19.4% compared to operating income of $91.4 million in fiscal 2012, and decreased as a percentage of sales from 13.3% to 10.1% for the reasons described above.

Net interest expense for fiscal 2013 increased by approximately $2.0 million as compared to the prior year, and increased as a percentage of sales from .8% to 1.0%. The weighted average debt outstanding for the year ended March 30, 2013 increased by approximately $82 million from fiscal 2012, primarily related to an increase in debt outstanding under our Revolving Credit Facility to fund the purchase of our fiscal 2013 acquisitions. Largely offsetting this increase was a decrease in the weighted average interest rate of approximately 370 basis points from the prior year due to a shift in the percentage of debt (revolver vs. capital leases) outstanding at a lower rate. Additionally, amortization of financing fees over the higher outstanding revolving credit balance is causing a decrease in the weighted average interest rate.

Our effective tax rate was 36.3% and 37.0%, respectively, of pre-tax income in fiscal 2013 and 2012. The difference primarily relates to the accounting for uncertain tax positions which may vary from year to year.

Net income for fiscal 2013 decreased by $12.0 million, or 22.1%, from $54.6 million in fiscal 2012, to $42.6 million in fiscal 2013, and earnings per diluted share decreased by 21.9% from $1.69 to $1.32 due to the factors discussed above.

CAPITAL RESOURCES, CONTRACTUAL OBLIGATIONS AND LIQUIDITY

Capital Resources

Our primary capital requirements for fiscal 2014 were divided among the funding of acquisitions for $27.5 million, as well as the upgrading of facilities and systems and the funding of our store expansion program totaling $32.2 million. In fiscal 2013, our primary capital requirements were divided among the funding of acquisitions for $163.3 million, as well as the upgrading of facilities and systems, including the completion of the approximate $4.6 million expansion of the Rochester, New York office and warehouse facility which began in fiscal 2012, and the funding of our store expansion program totaling $34.2 million. In both fiscal years 2014 and 2013, capital requirements were primarily met by cash flow from operations and from our revolving credit facility.

In fiscal 2015, we intend to open approximately four new greenfield stores. Total capital required to open a new greenfield service store ranges, on average (excluding the acquired stores and BJ’s locations), from $350,000 to $950,000 depending on whether the store is leased, owned or land leased. Total capital required to open a new greenfield tire (land and building leased) location costs, on average, approximately $600,000, including $225,000 for equipment and $150,000 for inventory.

Monro paid dividends of $14.2 million in fiscal 2014. In May 2014, Monro’s Board of Directors declared its intention to pay a regular quarterly cash dividend of $.13 per common share or common share equivalent beginning with the first quarter of fiscal 2015.

We also plan to continue to seek suitable acquisition candidates. Management believes that we have sufficient resources available (including cash flow from operations and bank financing) to expand our business as currently planned for the next several years.

Contractual Obligations

Payments due by period under long-term debt, other financing instruments and commitments are as follows:


	Total		Within 1 Year		1 to 3 Years		3 to 5 Years		After 5 Years
	(Dollars in thousands)
Principal payments on long-term debt	$	106,501	$	660			$	105,841
Capital lease commitments/financing obligations		88,091		6,892	$	13,311		14,602	$	53,286
Operating lease commitments		126,417		33,204		52,791		29,276		11,146

Total	$	321,009	$	40,756	$	66,102	$	149,719	$	64,432

We believe that we can fulfill our contractual commitments utilizing our cash flow from operations and, if necessary, bank financing.

Liquidity

In June 2011, we entered into a five-year, $175 million Revolving Credit Facility agreement with seven banks (the “Credit Facility”). The Credit Facility amended and restated, in its entirety, the Credit Facility agreement previously entered into by Monro as of July 2005 and amended from time to time. The Credit Facility also provided an accordion feature permitting us to request an increase in availability of up to an additional $75 million.

Credit Facility now expires in December 2017; and the $75 million accordion feature was maintained. There were no other changes in terms including those related to covenants or interest rates. There are now six banks participating in the syndication. There was $105.8 million outstanding under the Credit Facility at March 29, 2014. We were in compliance with all debt covenants as of March 29, 2014.

The interest rate on the Credit Facility increased from 100 basis points to 125 basis points over LIBOR during fiscal year 2014. At March 29, 2014, the interest rate was 125 basis points over LIBOR.

Within the Credit Facility, we have a sub-facility of $40 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 was $22.7 million in an outstanding letter of credit at March 29, 2014.

The net availability under the Credit Facility at March 29, 2014 was $121.5 million.

Specific terms of the Credit Facility permit the payment of cash dividends not to exceed 50% of the prior year’s net income, and permit mortgages and specific lease financing arrangements with other parties with certain limitations. Additionally, the Credit Facility is not secured by our real property, although we have agreed not to encumber our real property, with certain permissible exceptions. The agreement also requires the maintenance of specified interest and rent coverage ratios.

In addition, we have financed certain store properties and vehicles with capital leases/financing obligations, which amount to $88 million and are due in installments through 2042.

During fiscal 1995, Monro 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 fiscal 2015.

INFLATION

We do not believe our operations have been materially affected by inflation. Monro has been successful, in many cases, in mitigating the effects of merchandise cost increases principally through the use of volume discounts and alternative vendors, as well as selling price increases. See additional discussion under Risk Factors.

FINANCIAL ACCOUNTING STANDARDS

See “Recent Accounting Pronouncements” in Note 1 to the consolidated financial statements for a discussion of the impact of recently issued accounting standards on our Consolidated Financial Statements as of March 29, 2014 and for the year then ended, as well as the expected impact on the Consolidated Financial Statements for future periods.

Item 7A . Quantitative and Qualitative Disclosures about Market Risk

Monro is exposed to market risk from potential changes in interest rates. At year end March 2014 and 2013, approximately .6% and .5%, respectively, of our debt financing, excluding capital leases, was at fixed interest rates and therefore, the fair value of such debt financing is affected by changes in market interest rates. Our cash flow exposure on floating rate debt interest expense would result in interest expense fluctuating approximately $1.1 million based upon our debt position at fiscal year ended March 29, 2014 and $1.3 million for fiscal year ended March 30, 2013 given a 1% change in LIBOR.

Debt financing, including current portion, had a carrying amount of $106.5 million and a fair value of $106.5 million as of March 29, 2014, as compared to a carrying amount of $127.8 million and a fair value of $127.8 million as of March 30, 2013.

Item 8. Financial Statements and Supplementary Data


	Page
Report of Independent Registered Public Accounting Firm		30
Audited Financial Statements:
Consolidated Balance Sheets at March 29, 2014 and March 30, 2013		31
Consolidated Statements of Comprehensive Income for the fiscal three years ended March 29, 2014		32
Consolidated Statements of Changes in Shareholders’ Equity for the fiscal three years ended March 29, 2014		33
Consolidated Statements of Cash Flows for the fiscal three years ended March 29, 2014		34
Notes to Consolidated Financial Statements		35
Selected Quarterly Financial Information (Unaudited)		65

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Monro Muffler Brake, Inc.:

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Monro Muffler Brake, Inc. and its subsidiary at March 29, 2014 and March 30, 2013, and the results of their operations and their cash flows for each of the three years in the period ended March 29, 2014 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 29, 2014, based on criteria established in Internal Control—Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included 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. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Rochester, New York

May 28, 2014

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS


	March 29, 2014			March 30, 2013
	(Dollars in thousands)
Assets
Current assets:
Cash and equivalents	$	1,205		$	1,463
Trade receivables		2,728			2,835
Federal and state income taxes receivable		2,171			2,336
Inventories		124,920			118,210
Deferred income tax assets		13,710			13,154
Other current assets		23,382			28,412

Total current assets		168,116			166,410


Property, plant and equipment		531,505			504,080
Less—Accumulated depreciation and amortization		(249,622	)		(229,034	)

Net property, plant and equipment		281,883			275,046
Goodwill		270,039			249,803
Intangible assets		29,371			32,396
Other non-current assets		10,547			10,458
Long-term deferred income tax assets		—			5,320

Total assets	$	759,956		$	739,433

Liabilities and Shareholders’ Equity
Current liabilities:
Current portion of long-term debt, capital leases and financing obligations	$	7,552		$	6,833
Trade payables		53,321			61,006
Accrued payroll, payroll taxes and other payroll benefits		20,206			18,302
Accrued insurance		32,353			29,498
Warranty reserves		9,557			9,060
Other current liabilities		13,752			13,431

Total current liabilities		136,741			138,130

Long-term capital leases and financing obligations		81,199			86,962
Long-term debt		105,841			127,847
Accrued rent expense		5,700			6,057
Other long-term liabilities		11,558			11,965
Deferred income tax liabilities		140			—
Long-term income taxes payable		2,793			3,430

Total liabilities		343,972			374,391

Commitments
Shareholders’ equity:
Class C Convertible Preferred Stock, $1.50 par value, $.064 conversion value; 150,000 shares authorized; 32,500 shares issued and outstanding		49			49
Common Stock, $.01 par value, 65,000,000 shares authorized; 37,567,902 and 37,327,967 shares issued at March 29, 2014 and March 30, 2013, respectively		376			373
Treasury Stock, 6,076,951 and 6,073,836 shares at March 29, 2014 and March 30, 2013, respectively, at cost		(90,241	)		(90,064	)
Additional paid-in capital		141,365			131,460
Accumulated other comprehensive loss		(3,135	)		(4,043	)
Retained earnings		367,570			327,267

Total shareholders’ equity		415,984			365,042

Total liabilities and shareholders’ equity	$	759,956		$	739,433

The accompanying notes are an integral part of these financial statements.

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	Year Ended Fiscal March
	2014			2013			2012
	(Amounts in thousands, except per share data)
Sales	$	831,432		$	731,997		$	686,552
Cost of sales, including distribution and occupancy costs		511,458			453,850			410,155

Gross profit		319,974			278,147			276,397

Operating, selling, general and administrative expenses		224,627			204,442			184,981


Operating income		95,347			73,705			91,416

Interest expense, net of interest income		9,470			7,213			5,220
Other income, net		(659	)		(332	)		(490	)


Income before provision for income taxes		86,536			66,824			86,686
Provision for income taxes		32,077			24,257			32,074


Net income	$	54,459		$	42,567		$	54,612


Other comprehensive income (loss):
Changes in pension, net of tax provision (benefit) of $556, ($299) and ($1,211), respectively		908			(488	)		(1,977	)


Other comprehensive income (loss)		908			(488	)		(1,977	)


Comprehensive income	$	55,367		$	42,079		$	52,635


Earnings per share:
Basic	$	1.72		$	1.36		$	1.77

Diluted	$	1.67		$	1.32		$	1.69


Weighted average number of common shares outstanding used in computing earnings per share:
Basic		31,394			31,067			30,716

Diluted		32,642			32,308			32,237

The accompanying notes are an integral part of these financial statements.

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY


	Class C Convertible Preferred Stock		Common Stock		Treasury Stock			Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total
	(Dollars in thousands)
Balance at March 26, 2011	$	49	$	360	$	(72,317	)	$	99,871	$	253,864		$	(1,578	)	$	280,249
Net income											54,612						54,612
Other comprehensive loss:
Pension liability adjustment (($3,188) pre-tax)														(1,977	)		(1,977	)
Dividends (1):
Preferred											(266	)					(266	)
Common											(10,770	)					(10,770	)
Tax benefit from exercise of stock options									5,314								5,314
Exercise of stock options(2)				8		(14,176	)		11,810								(2,358	)
Stock option compensation									2,695								2,695

Balance at March 31, 2012		49		368		(86,493	)		119,690		297,440			(3,555	)		327,499
Net income											42,567						42,567
Other comprehensive loss:
Pension liability adjustment (($787) pre-tax)														(488	)		(488	)
Dividends(1):
Preferred											(304	)					(304	)
Common											(12,436	)					(12,436	)
Tax benefit from exercise of stock options									2,764								2,764
Exercise of stock options(2)				5		(3,571	)		5,922								2,356
Stock option compensation									3,084								3,084

Balance at March 30, 2013		49		373		(90,064	)		131,460		327,267			(4,043	)		365,042
Net income											54,459						54,459
Other comprehensive income:
Pension liability adjustment ($1,464 pre-tax)														908			908
Dividends(1):
Preferred											(334	)					(334	)
Common											(13,822	)					(13,822	)
Tax benefit from exercise of stock options									1,866								1,866
Exercise of stock options(2)				3		(177	)		4,488								4,314
Stock option compensation									3,551								3,551

Balance at March 29, 2014	$	49	$	376	$	(90,241	)	$	141,365	$	367,570		$	(3,135	)	$	415,984

(1)	Dividends paid per common share or common share equivalent were $.44, $.40 and $.35, respectively, for the years ended March 29, 2014, March 30, 2013 and March 31, 2012.

(2)	Includes the receipt of treasury stock in connection with the exercise of stock options and to partially satisfy tax withholding obligations.

The accompanying notes are an integral part of these financial statements.

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Year Ended Fiscal March
	2014			2013			2012
	(Dollars in thousands) Increase (Decrease) in Cash
Cash flows from operating activities:
Net income	$	54,459		$	42,567		$	54,612

Adjustments to reconcile net income to net cash provided by operating activities -
Depreciation and amortization		31,688			27,500			23,583
Stock-based compensation expense		3,551			3,084			2,695
Excess tax benefits from share-based payment arrangements		(195	)		(441	)		(294	)
Net change in deferred income taxes		4,520			(375	)		3,162
Gain on bargain purchase		(217	)		—			—
Loss (gain) on disposal of assets		373			375			(1,247	)
Change in operating assets and liabilities (excluding acquisitions)
Trade receivables		107			(511	)		153
Inventories		(5,192	)		(5,968	)		4,589
Other current assets		5,149			(7,176	)		(3,668	)
Other non-current assets		1,844			5,468			(6,942	)
Trade payables		(7,685	)		15,657			4,048
Accrued expenses		3,656			3,826			(323	)
Federal and state income taxes payable		2,031			1,779			3,577
Other long-term liabilities		491			(844	)		(539	)
Long-term income taxes payable		(637	)		(505	)		(780	)

Total adjustments		39,484			41,869			28,014

Net cash provided by operating activities		93,943			84,436			82,626

Cash flows from investing activities:
Capital expenditures		(32,150	)		(34,185	)		(28,556	)
Acquisitions, net of cash acquired		(27,467	)		(163,326	)		(39,243	)
Proceeds from the disposal of assets		3,916			3,037			2,102

Net cash used for investing activities		(55,701	)		(194,474	)		(65,697	)

Cash flows from financing activities:
Proceeds from borrowings		304,321			371,031			189,502
Principal payments on long-term debt, capital leases and financing obligations		(333,174	)		(253,445	)		(198,236	)
Exercise of stock options		4,314			2,957			3,134
Excess tax benefits from share-based payment arrangements		195			441			294
Dividends paid		(14,156	)		(12,740	)		(11,036	)

Net cash (used for) provided by financing activities		(38,500	)		108,244			(16,342	)

(Decrease) increase in cash		(258	)		(1,794	)		587
Cash at beginning of year		1,463			3,257			2,670

Cash at end of year	$	1,205		$	1,463		$	3,257

The accompanying notes are an integral part of these financial statements.

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — SIGNIFICANT ACCOUNTING POLICIES

Background

Monro Muffler Brake, Inc. and its wholly owned subsidiary, Monro Service Corporation (together, “Monro”, “we”, “us”, or “our”), are engaged principally in providing automotive undercar repair and tire services in the United States. Monro had 953 Company-operated stores, three franchised locations and 14 dealer-operated automotive repair centers located primarily in the northeast and Great Lakes regions of the United States as of March 29, 2014. Monro’s operations are organized and managed in one operating segment.

Accounting estimates

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.

Fiscal year

Monro reports its results on a 52/53 week fiscal year ending on the last Saturday of March of each year. The following are the dates represented by each fiscal period:

“Year ended Fiscal March 2014”: March 31, 2013 – March 29, 2014 (52 weeks)

“Year ended Fiscal March 2013”: April 1, 2012 – March 30, 2013 (52 weeks)

“Year ended Fiscal March 2012”: March 27, 2011 – March 31, 2012 (53 weeks)

Consolidation

The Consolidated Financial Statements include Monro Muffler Brake, Inc. and its wholly owned subsidiary, Monro Service Corporation, after the elimination of intercompany transactions and balances.

Reclassifications

Certain amounts in these financials statements have been reclassified to maintain comparability among the periods presented.

Retrospective adjustments – Purchase accounting

During the quarter ended December 2013, we finalized the purchase accounting for several acquisitions that occurred in fiscal year 2013. We retrospectively adjusted the provisional amounts recognized at the acquisition dates to reflect fair value and made adjustments to the March 30, 2013 Consolidated Balance Sheet. (See Note 2.)

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Revenue recognition

Sales are recorded upon completion of automotive undercar repair and tire services provided to customers. The following was Monro’s sales mix for fiscal 2014, 2013 and 2012:


	Year Ended Fiscal March
	2014			2013			2012

Brakes		15	%		15	%		18	%

Exhaust		4			4			5

Steering		9			10			10

Tires		44			42			39

Maintenance		28			29			28


Total		100	%		100	%		100	%

Revenue from the sale of tire road hazard warranty agreements is recognized on a straight-line basis over the contract period or other method when costs are not incurred ratably.

Cash equivalents

We consider all highly liquid instruments with original maturities of three months or less to be cash equivalents.

Inventories

Our inventories consist of automotive parts and tires. Inventories are valued at the lower of cost or market value using the first-in, first-out (FIFO) method.

Barter credits

We value barter credits at the fair market value of the inventory exchanged, as determined by reference to price lists for buying groups and jobber pricing. We use these credits primarily to pay vendors for purchases (mainly inventory vendors for the purchase of parts and tires) or to purchase other goods or services from the barter company such as advertising and travel.

Property, plant and equipment

Property, plant and equipment are stated at cost. Depreciation of property, plant and equipment is provided on a straight-line basis. Buildings and improvements related to owned locations 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 5 to 10 years. Computer software is depreciated over lives varying from 3 to 7 years. Buildings and improvements related to leased locations are depreciated over the shorter of the asset’s useful life or the reasonably assured lease term, as defined in the accounting guidance on leases. 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 Consolidated Statements of Comprehensive Income. Expenditures for maintenance and repairs are expensed as incurred. (See Note 4.)

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Long-lived assets

We evaluate 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, we report assets to be disposed of at the lower of the carrying amount or the fair market value.

Store opening and closing costs

New store opening costs are charged to expense in the fiscal year when incurred. When we close a store, the estimated unrecoverable costs, including the remaining lease obligation net of sublease income, if any, are charged to expense.

Leases

Financing Obligations –

We are often involved in the construction of leased stores. In some cases, we are responsible for construction cost over runs or non-standard tenant improvements. As a result of this involvement, we are deemed the “owner” for accounting purposes during the construction period, requiring us to capitalize the construction costs on our Consolidated Balance Sheet. Upon completion of the project, we perform a sale-leaseback analysis pursuant to guidance on accounting for leases to determine if we can remove the assets from our Consolidated Balance Sheet. For some of these leases, we are considered to have “continuing involvement”, which precludes us from derecognizing the assets from our Consolidated Balance Sheet when construction is complete (“failed sale-leaseback”). In conjunction with these leases, we capitalize the construction costs on our Consolidated Balance Sheet and also record financing obligations representing payments owed to the landlord. We do not report rent expense for the properties which are owned for accounting purposes. Rather, rental payments under the lease are recognized as a reduction of the financing obligation and as interest expense.

Additionally, since we often assume leases in acquisition transactions, the accounting for a seller who was involved in the construction of leased stores passes to us.

During the fourth quarter of fiscal 2013, Monro conducted a review of its lease accounting practices as it relates to certain sale-leaseback transactions.

In connection with this review, we recorded an out of period adjustment to record previously unrecognized failed sale-leaseback transactions. The adjustment resulted in the recognition of additional property of $.4 million and capital leases and financing obligations of $.7 million on our March 2013 Consolidated Balance Sheet. As some of the stores impacted related to prior year acquisitions, we also recorded increases in goodwill of $1.9 million, deferred tax assets of $1.2 million and other long term liabilities of $2.3 million in our Consolidated Balance Sheet as of March 30, 2013. The impact to the fiscal 2013 Consolidated Statement of Comprehensive Income was recorded in the fourth quarter as a decrease of $1.0 million in occupancy costs and an increase of $.5 million in interest expense. The Company determined that this adjustment was not material to its current or prior period Consolidated Financial Statements.

Capital Leases –

Some of our property is held under capital leases. These assets are included in property, plant and equipment and depreciated over the term of the lease. We do not report rent expense for capital leases. Rather, rental payments under the lease are recognized as a reduction of the capital lease obligation and interest expense.

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Operating Leases –

All other leases are considered operating leases. Rent expense, including rent escalations, is recognized on a straight-line basis over the reasonably assured lease term, as defined in the accounting guidance on leases. Generally, the lease term is the base lease term plus certain renewal option periods for which renewal is reasonably assured.

Goodwill and intangible assets

We have a history of growth through acquisitions. Assets and liabilities of acquired businesses are recorded at their estimated fair values as of the date of acquisition. Goodwill represents costs in excess of fair values assigned to the underlying net assets of acquired businesses. The carrying value of goodwill is subject to annual impairment reviews in accordance with accounting guidance on goodwill, which we typically perform in the third quarter of the fiscal year. Impairment reviews may also be triggered by any significant events or changes in circumstances affecting our business.

We have one reporting unit which encompasses all operations including new acquisitions. The goodwill impairment test consists of a two-step process, if necessary. We perform a qualitative assessment to determine if it is more likely than not that the fair value is less than the carrying value of goodwill. If the qualitative factors are triggered, we perform the two-step process. The first step is to compare the fair value of our invested capital to the book value of its invested capital. If the fair value is less than its carrying value, the second step of the impairment test must be performed in order to determine the amount of impairment loss, if any. The second step compares the implied fair value of goodwill with the carrying amount of that goodwill. If the carrying amount of goodwill exceeds its implied fair value, an impairment charge is recognized in an amount equal to that excess. The loss recognized cannot exceed the carrying amount of goodwill.

A deterioration of macroeconomic conditions may not only negatively impact the estimated operating cash flows used in our cash flow models, but may also negatively impact other assumptions used in our analyses, including, but not limited to, the estimated cost of capital and/or discount rates. Additionally, as discussed above, in accordance with accounting guidance, we are required to ensure that assumptions used to determine fair value in our analyses are consistent with the assumptions a hypothetical market participant would use. As a result, the cost of capital and/or discount rates used in our analyses may increase or decrease based on market conditions and trends, regardless of whether our actual cost of capital has changed. Therefore, we may recognize an impairment of an intangible asset or assets even though realized actual cash flows are approximately equal to or greater than its previously forecasted amounts.

As a result of our annual qualitative assessment performed in the third quarter of fiscal 2014, there were no impairments. There have been no triggering events during the fourth quarter of fiscal 2014.

Self-insurance reserves

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

that covers individual claims in excess of the deductible amounts. We maintain 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 our 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. For more complex reserve calculations, such as workers’ compensation, we use the services of an actuary on an annual basis to assist in determining the required reserve for open claims.

Warranty

We provide an accrual for estimated future warranty costs for parts that we install based upon the historical relationship of warranty costs to sales. Warranty expense related to all product warranties at and for the years ended March 2014, 2013 and 2012 was not material to our financial position or results of operations. See additional discussion of tire road hazard warranty agreements under the “Revenue recognition” section of this footnote.

Comprehensive income

As it relates to Monro, comprehensive income is defined as net earnings as adjusted for pension liability adjustments and is reported net of related taxes in the Consolidated Statements of Comprehensive Income and in the Consolidated Statements of Changes in Shareholders’ Equity.

Income taxes

Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using tax rates based on currently enacted rules and legislation and anticipated rates that will be in effect when the differences are expected to reverse. The accounting guidance for uncertainties in income tax prescribes a comprehensive model for the financial statement recognition, measurement, presentation, and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. Monro recognizes a tax benefit from an uncertain tax position in the financial statements only when it is more likely than not that the position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits and a consideration of the relevant taxing authority’s administrative practices and precedents. (See Note 7.)

Treasury stock

Treasury stock is accounted for using the par value method. During the year ended March 31, 2012, Monro’s former Chief Executive Officer surrendered 386,000 shares of Monro’s Common Stock at fair market value to pay the exercise price and to partially satisfy tax withholding obligations on the exercise of 563,000 stock options. During the year ended March 30, 2013, Monro’s current Chief Executive Officer surrendered 43,000 shares of Monro’s Common Stock at fair market value to pay the exercise price and to partially satisfy tax withholding obligations on the exercise of 113,000 stock options. There was no activity for the Chief Executive Officer during the year ended March 29, 2014.

Stock-based compensation

We measure compensation cost arising from the grant of share-based payments to an employee at fair value, and recognize such cost in income over the period during which the employee is required to provide service in exchange for the award, usually the vesting period. Forfeitures are estimated on the grant date and revised in subsequent periods if actual forfeitures differ from those estimates.

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

We recognize compensation expense related to stock options using the straight-line approach. Option awards generally vest equally over the service period established in the award, typically four years. We estimate fair value using the Black-Scholes valuation model. Assumptions used to estimate the compensation expense are determined as follows:

•

Expected life of an award is based on historical experience and on the terms and conditions of the stock awards granted to employees;

•

Expected volatility is measured using historical changes in the market price of Monro’s Common Stock;

•

Risk-free interest rate is equivalent to the implied yield on zero-coupon U.S. Treasury bonds with a remaining maturity equal to the expected term of the awards;

•

Forfeitures are based substantially on the history of cancellations of similar awards granted by Monro in prior years; and

•

Dividend yield is based on historical experience and expected future changes.

The weighted average fair value of options granted during fiscal 2014, 2013 and 2012 was $10.10, $8.67 and $8.41, 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:


	Year Ended Fiscal March
	2014			2013			2012
Risk-free interest rate		.86	%		.53	%		1.11	%
Expected life, in years		4			4			4
Expected volatility		29.7	%		34.0	%		33.9	%
Expected dividend yield		.97	%		1.14	%		1.03	%

Total stock-based compensation expense included in cost of sales and selling, general and administrative expenses in Monro’s Consolidated Statements of Comprehensive Income for the years ended March 29, 2014, March 30, 2013 and March 31, 2012 was $3.6 million, $3.1 million and $2.7 million, respectively. The related income tax benefit was $1.3 million, $1.2 million and $1.0 million, respectively.

Earnings per share

Basic earnings per share is calculated by dividing net income less preferred stock dividends 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 the assumed exercise of stock options. (See Note 10.)

Advertising

We expense 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.

Direct response advertising consists primarily of coupons for Monro’s services. The capitalized costs of this advertising are amortized over the period of the coupon’s validity, which is typically two months.

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Prepaid advertising at March 29, 2014 and March 30, 2013, and advertising expense for the years ended March 2014, 2013 and 2012, were not material to these financial statements.

Vendor rebates and cooperative advertising credits

We account 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.

Guarantees

At the time we issue a guarantee, we recognize an initial liability for the fair value, or market value, of the obligation we assume under that guarantee.

Recent accounting pronouncements

In February 2013, the Financial Accounting Standards Board issued new accounting guidance for the reporting of amounts reclassified out of accumulated other comprehensive income. This guidance requires companies to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income when applicable, or to cross-reference the reclassifications with other disclosures that provide additional detail about the reclassification made when the reclassifications are not made to net income. This guidance is effective for fiscal years and interim periods beginning after December 15, 2012. The adoption of this guidance in the first quarter of fiscal 2014 did not have an impact on Monro’s Consolidated Financial Statements.

In July 2013, the Financial Accounting Standards Board issued new accounting guidance for income tax presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss or a tax credit carryforward exists. This guidance requires an entity to net its unrecognized tax benefits against the deferred tax assets for all same jurisdiction net operating loss or similar tax loss carryforwards, or tax credit carryforwards. The guidance is to be applied prospectively (with an option to apply retrospectively) and will apply to all unrecognized tax benefits that exist at the effective date. This guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2013, with early adoption permitted. As we already net our unrecognized tax benefits against the deferred tax assets for all same jurisdiction net operating loss carryforwards, this guidance had no impact on Monro’s Consolidated Financial Statements.

Other recent authoritative guidance issued by the FASB (including technical corrections to the Accounting Standards Codification) and the Securities and Exchange Commission did not, or are not expected to have a material effect on Monro’s Consolidated Financial Statements.

NOTE 2 — ACQUISITIONS

Monro’s acquisitions are strategic moves in our plan to fill in and expand our presence in our existing and contiguous markets, and leverage fixed operating costs such as distribution and advertising.

Subsequent Events

We have signed two definitive asset purchase agreements to complete the acquisition of ten and nine retail tire and automotive repair stores located in Michigan from Lentz U.S.A. Service Centers, Inc. and Kan Rock Tire Company, Inc., respectively, in June 2014. These stores will operate under the Monro Brake & Tire name. These acquisitions will be financed through our existing credit facility.

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

On April 13, 2014, we acquired two retail tire and automotive repair stores located in New Hampshire from Bald Tire & Auto, Inc. These retail tire and automotive repair stores were previously Tire Warehouse franchise locations and will continue to operate under the Tire Warehouse name. The acquisition was financed through our existing credit facility.

Fiscal 2014

During fiscal 2014, we acquired the following businesses for an aggregate purchase price of $27.5 million. The acquisitions were financed through our existing credit facility. The results of operations for these acquisitions are included in Monro’s financial results from the respective acquisition dates.

•

On March 2, 2014, we acquired one retail tire and automotive repair store located in Kentucky from Hometown Tire Company, Inc. This store operates under the Ken Towery Tire and Auto Care name.

•

On November 17, 2013, we acquired six retail tire and automotive repair stores located in Maryland and Delaware from Carl King Tire Co., Inc. These stores operate under the Mr. Tire name.

•

On November 17, 2013, we acquired four retail tire and automotive repair stores located in Kentucky from S&S Firestone, Inc. These stores operate under the Ken Towery Tire and Auto Care name.

•

On October 20, 2013, we acquired two retail tire and automotive repair stores located in North Carolina from XL Tire, Inc. These stores operate under the Tread Quarters brand name.

•

On August 18, 2013, we acquired ten retail tire and automotive repair stores located in Virginia and Maryland from Curry’s Automotive Group. These stores operate under the Curry’s/Mr. Tire name.

•

On August 11, 2013, we acquired one retail tire and automotive repair store located in New Jersey from Mitchell Tire Service. This store operates under the Mr. Tire name.

The acquisitions resulted in goodwill related to, among other things, growth opportunities, synergies and economies of scale expected from combining these businesses with ours, and unidentifiable intangible assets. All of the goodwill is expected to be deductible for tax purposes. We have recorded finite-lived intangible assets at their estimated fair value related to customer relationships, trade names and a non-compete agreement.

We expensed all costs related to the acquisitions during fiscal 2014. The total costs related to these acquisitions were not material to the Consolidated Statements of Comprehensive Income. These costs are included in the Consolidated Statements of Comprehensive Income primarily under operating, selling, general and administrative expenses.

Sales and net income for the fiscal 2014 acquired entities totaled $15.1 million and $.1 million, respectively, for the period from acquisition date through March 29, 2014.

Supplemental pro forma information for the current or prior reporting periods has not been presented due to the impracticability of obtaining detailed, accurate or reliable data for the periods the acquired entities were not owned by Monro.

The preliminary fair values of identifiable assets acquired and liabilities assumed were based on preliminary valuation data and estimates. The excess of the net purchase price over the net tangible and intangible assets

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

acquired was recorded as goodwill. Where the fair value of the net tangible and intangible assets exceeds the net purchase price, a gain was recorded. The preliminary allocation of the aggregate purchase price as of March 29, 2014 was as follows:


	As of Acquisition Date
	(Dollars in thousands)
Inventories	$	1,549
Other current assets		122
Property, plant and equipment		8,549
Intangible assets		1,283
Deferred income tax assets		111
Other non-current assets		94

Total assets acquired		11,708
Warranty reserves		167
Other current liabilities		1,616
Other long-term liabilities		130

Total liabilities assumed		1,913

Total net identifiable assets acquired	$	9,795

Total consideration transferred	$	27,518
Plus: gain on bargain purchase		217
Less: total net identifiable assets acquired		9,795

Goodwill	$	17,940

The following are the intangible assets acquired and their respective fair values and weighted average useful lives.


	As of Acquisition Date
	Dollars in thousands		Weighted Average Useful Life
Customer lists	$	767		7 years
Trade name		501		7 years
Non-compete agreement		15		3 years

Total	$	1,283		7 years

We continue to refine the valuation data and estimates related to road hazard warranty, intangible assets, real estate and real property leases for the fiscal 2014 acquisitions and expect to complete the valuations no later than the first anniversary date of the respective acquisition. We anticipate that adjustments will continue to be made to the fair values of identifiable assets acquired and liabilities assumed and those adjustments may or may not be material.

Fiscal 2013

During fiscal 2013, we acquired the following businesses for an aggregate purchase price of $163.5 million. The acquisitions were financed through our existing credit facility. The results of operations for these acquisitions are included in Monro’s financial results from the respective acquisition dates.

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

•

On December 30, 2012, we acquired 12 retail tire and automotive repair stores located in Ohio from Enger Auto Service Mentor, Inc. These stores operate under the Mr. Tire name.

•

On December 30, 2012, we acquired nine retail tire and automotive repair stores located in North Carolina from Tire King of Durham, Inc. These stores operate under the Mr. Tire name.

•

On December 16, 2012, we acquired 27 retail tire and automotive repair stores located in Indiana and Kentucky and a wholesale operation and warehouse in Kentucky from Ken Towery’s Auto Care of Kentucky, Inc. and Ken Towery’s Auto Care of Indiana, Inc. These retail stores operate under the Ken Towery’s Tire and Auto Care name and the wholesale operation operates under the America’s Best Tires name.

•

On November 18, 2012, we acquired 31 retail tire stores located in Indiana, Tennessee and Illinois from Everybody’s Oil Corporation. These stores operate under the Tire Barn Warehouse name.

•

On October 14, 2012, we acquired one retail tire and automotive repair store located in Massachusetts from Brothers Tire, Inc. This store operates under the Monro brand name.

•

On October 7, 2012, we acquired five retail tire and automotive repair stores located in New York from Chesley Co. Inc., a former Midas franchisee. These stores operate under the Mr. Tire and Monro brand names.

•

On August 12, 2012, we acquired 17 retail tire and automotive repair stores located in Wisconsin and South Carolina from Tuffy Associates Corp. These stores operate under the Monro and Tread Quarters brand names.

•

On June 3, 2012, we acquired 18 retail tire and automotive repair stores located in North Carolina from Colony Tire Corporation. These stores operate primarily under the Mr. Tire name.

•

On April 1, 2012, we acquired 20 retail tire and automotive repair stores located in Virginia from Kramer Tire Co. These stores operate primarily under the Tread Quarters brand name. As part of the Kramer acquisition, two heavy truck tire and truck repair stores, two wholesale operations and a retread facility also located in Virginia were acquired. The non-retail facilities and the two heavy truck tire and truck repair stores were disposed of during May 2012.

The acquisitions resulted in goodwill related to, among other things, growth opportunities, synergies and economies of scale expected from combining these businesses with ours and unidentifiable intangible assets. All of the goodwill is expected to be deductible for tax purposes. We have recorded finite-lived intangible assets at their estimated fair value related to customer relationships, trade names and favorable leases.

We expensed all costs related to the acquisitions during fiscal 2013. The total costs related to these acquisitions were $2.1 million for the year ended March 30, 2013. These costs are included in the Consolidated Statements of Comprehensive Income primarily under operating, selling, general and administrative expenses.

Sales and net loss for the fiscal 2013 acquired entities totaled $87.0 million and $1.4 million, respectively, for the period from acquisition date through March 30, 2013.

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

We finalized the purchase accounting relative to Kramer during fiscal 2013 and the other fiscal 2013 acquisitions during fiscal 2014. As a result of the final purchase price allocations, certain of the fair value amounts previously estimated were adjusted during the measurement period. These measurement period adjustments related to updated valuation reports and appraisals received from our external valuation specialists, as well as revisions to internal estimates. The changes in estimates recorded in fiscal 2014 include an increase in property, plant and equipment of $2.4 million; an increase in intangible assets of $4.3 million; an increase in the long-term deferred income tax asset of $7.5 million; an increase in the current portion of long-term debt, capital leases and financing obligations of $2.0 million; a decrease in warranty reserves of $.2 million; an increase in long-term capital leases and financing obligations of $28.9 million; and an increase in other long-term liabilities of $.3 million. The measurement period adjustments resulted in an increase to goodwill of $16.8 million.

We have recorded the identifiable assets acquired and liabilities assumed at their estimated fair values as of their respective acquisition dates, with the remainder recorded as goodwill as follows:


	As of Acquisition Date
	(Dollars in thousands)
Inventories	$	16,854
Other current assets		1,167
Property, plant and equipment		49,605
Intangible assets		21,112
Deferred income tax assets		13,179
Other non-current assets		9

Total assets acquired		101,926
Warranty reserves		3,217
Other current liabilities		4,694
Long-term capital leases and financing obligations		44,086
Other long-term liabilities		4,256

Total liabilities assumed		56,253

Total net identifiable assets acquired	$	45,673

Total consideration transferred	$	163,517
Less: total net identifiable assets acquired		45,673

Goodwill	$	117,844

As part of the purchase accounting adjustments recorded during the quarter ended December 2013, the March 30, 2013 consolidated balance sheet was retrospectively adjusted to reflect some of the purchase accounting measurement period adjustments described above. The retrospective adjustments included an increase in property, plant and equipment of $4.2 million; an increase in intangible assets of $3.9 million; an increase in the long-term deferred income tax asset of $7.4 million; an increase in goodwill of $14.5 million; an increase in the current portion of long-term debt, capital leases and financing obligations of $1.9 million; a decrease in warranty reserves of $.2 million; an increase in long-term capital leases and financing obligations of $28.1 million; and an increase in other long-term liabilities of $.2 million.

Additionally, the purchase accounting adjustments did not have a material impact on the current period or any prior period consolidated statements of comprehensive income, and, therefore, prior period consolidated statements of comprehensive income have not been retrospectively adjusted.

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following are the intangible assets acquired and their respective fair values and weighted average useful lives.


	As of Acquisition Date
	Dollars in thousands		Weighted Average Useful Life
Customer lists	$	9,160		7 years
Trade names		6,570		17 years
Favorable leases		5,382		12 years

Total	$	21,112		11 years

NOTE 3 — OTHER CURRENT ASSETS

The composition of other current assets is as follows:


	Year Ended Fiscal March
	2014		2013
	(Dollars in thousands)
Vendor rebates receivable	$	7,258	$	10,662
Other		16,124		17,750

	$	23,382	$	28,412

NOTE 4—PROPERTY, PLANT AND EQUIPMENT

The major classifications of property, plant and equipment are as follows:


			March 29, 2014						March 30, 2013
	Assets Owned		Assets Under Capital Lease/ Financing Obligations		Total		Assets Owned		Assets Under Capital Lease/ Financing Obligations		Total
	(Dollars in thousands)
Land	$	69,836			$	69,836	$	69,401			$	69,401
Buildings and improvements		186,093	$	66,057		252,150		177,869	$	64,993		242,862
Equipment, signage and fixtures		183,373				183,373		169,233				169,233
Vehicles		19,632		67		19,699		18,256		67		18,323
Construction-in-progress		6,447				6,447		4,261				4,261

		465,381		66,124		531,505		439,020		65,060		504,080
Less – Accumulated depreciation and amortization		226,870		22,752		249,622		210,490		18,544		229,034

	$	238,511	$	43,372	$	281,883	$	228,530	$	46,516	$	275,046

Depreciation expense totaled $28.6 million, $24.7 million and $22.0 million for the fiscal years ended March 2014, 2013 and 2012, respectively.

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Amortization expense recorded under capital leases and financing obligations and included in depreciation expense above totaled $5.2 million, $3.9 million and $3.2 million for the fiscal years ended March 2014, 2013 and 2012, respectively.

NOTE 5 — GOODWILL AND INTANGIBLE ASSETS

The changes in goodwill during fiscal 2014 and 2013 were as follows:


	Dollars in thousands
Balance at March 31, 2012	$	132,656
Fiscal 2013 acquisitions		115,548
Disposal of assets related to fiscal 2013 acquisitions		(704	)
Adjustments to fiscal 2012 purchase accounting		404
Other adjustments		1,899

Balance at March 30, 2013		249,803
Fiscal 2014 acquisitions		17,940
Adjustments to fiscal 2013 purchase accounting		2,296

Balance at March 29, 2014	$	270,039

In fiscal 2013, the other adjustments relate to our review of lease accounting practices. (See Note 1).

The composition of other intangible assets is as follows:


	Year Ended Fiscal March
	2014				2013
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
	(Dollars in thousands)
Customer lists	$	19,566	$	8,548	$	18,799	$	6,313
Trade names		14,003		4,648		13,502		3,891
Favorable leases		12,700		3,751		12,293		2,117
Other intangible assets		660		611		645		522

Total intangible assets	$	46,929	$	17,558	$	45,239	$	12,843

Monro’s intangible assets are being amortized over their estimated useful lives. The weighted average useful lives of Monro’s intangible assets are approximately nine years for customer lists, 14 years for trade names, 15 years for favorable leases and five years for other intangible assets.

Amortization of intangible assets, excluding amortization of favorable leases included in rent expense, during fiscal 2014, 2013 and 2012 totaled $3.1 million, $2.8 million and $1.6 million, respectively.

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Estimated future amortization of intangible assets is as follows:


	Customer lists/ Trade names/		Favorable
Year Ending Fiscal March	Other		Leases
	(Dollars in thousands)
2015	$	3,025	$	977
2016		2,890		887
2017		2,741		846
2018		2,673		818
2019		2,419		780

NOTE 6 — LONG-TERM DEBT, CAPITAL LEASES AND FINANCING OBLIGATIONS

Long-term debt, capital leases and financing obligations consist of the following:


	March 29, 2014			March 30, 2013
	(Dollars in thousands)
Revolving Credit Facility, LIBOR-based (a)	$	105,841		$	127,187
Mortgage Note Payable, non-interest bearing, secured by warehouse and office land, due in one installment in 2015					660

Long-term debt	$	105,841		$	127,847

Obligations under capital leases and financing obligations at various interest rates, due in installments through 2042	$	88,091		$	93,795
Mortgage Note Payable, non-interest bearing, secured by warehouse and office land, due in one installment in 2015		660
Less – Current portion of long-term debt, capital leases and financing obligations		(7,552	)		(6,833	)

Long-term capital leases and financing obligations	$	81,199		$	86,962

(a)	The London Interbank Offered Rate (LIBOR) at March 29, 2014 was .15%.

In June 2011, we entered into a five-year, $175 million Revolving Credit Facility agreement with seven banks (the “Credit Facility”). This Credit Facility amended and restated, in its entirety, the Credit Facility agreement previously entered into by Monro as of July 2005 and amended from time to time. The Credit Facility also provided an accordion feature permitting us to request an increase in availability of up to an additional $75 million.

In December 2012, the Credit Facility was amended to include the following: the committed sum was increased by $75 million to $250 million; the term was extended for another one and a half years, such that the Credit Facility now expires in December 2017; and the $75 million accordion feature was maintained. There were no other changes in terms including those related to covenants or interest rates. There are now six banks participating in the syndication. There was $105.8 million outstanding under the Credit Facility at March 29, 2014. We were in compliance with all debt covenants as of March 29, 2014.

The interest rate on the Credit Facility increased from 100 basis points to 125 basis points over LIBOR during fiscal year 2014. At March 29, 2014, the interest rate was 125 basis points over LIBOR.

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The net availability under the Credit Facility at March 29, 2014 was $121.5 million.

Long-term debt, including current portion, had a carrying amount of $106.5 million and a fair value of $106.5 million as of March 29, 2014, as compared to a carrying amount of $127.8 million and a fair value of $127.8 million as of March 30, 2013. 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 Monro for debt with similar maturities.

In addition, we have financed certain store properties and vehicles with capital leases/financing obligations, which amount to $88.1 million and are due in installments through 2042.

Aggregate debt maturities over the next five years are as follows:


	Capital Leases/ Financing Obligations
Year Ending Fiscal March	Aggregate Amount		Imputed Interest			All Other Debt		Total
	(Dollars in thousands)
2015	$	13,459	$	(6,567	)	$	660	$	7,552
2016		12,732		(6,061	)				6,671
2017		12,204		(5,564	)				6,640
2018		12,186		(5,050	)		105,841		112,977
2019		11,976		(4,510	)				7,466

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 7 — INCOME TAXES

The components of the provision for income taxes are as follows:


	Year Ended Fiscal March
	2014			2013			2012
	(Dollars in thousands)
Current -
Federal	$	25,978		$	22,366		$	26,002
State		1,579			2,266			2,910

		27,557			24,632			28,912

Deferred -
Federal		4,793			(101	)		3,273
State		(273	)		(274	)		(111	)

		4,520			(375	)		3,162

Total	$	32,077		$	24,257		$	32,074

Deferred tax (liabilities) assets consist of the following:


	March 29, 2014			March 30, 2013
	(Dollars in thousands)
Goodwill	$	(18,189	)	$	(13,104	)
Other		(734	)		(242	)

Total deferred tax liabilities		(18,923	)		(13,346	)

Insurance reserves		9,774			8,872
Property and equipment		5,815			6,637
Warranty and other reserves		4,228			4,322
Stock options		3,897			2,982
Deferred rent		1,961			2,086
Accrued compensation		1,650			1,444
Other		5,168			5,477

Total deferred tax assets		32,493			31,820

Net deferred tax assets	$	13,570		$	18,474

We have $3.7 million of state net operating loss carryforwards available as of March 29, 2014. The carryforwards expire in varying amounts through 2034. Based on all available evidence, we have determined that it is more likely than not that sufficient taxable income of the appropriate character within the carryforward period will exist for the realization of the tax benefits on existing state net operating loss carryforwards.

We believe it is more likely than not that all other future tax benefits will be realized as a result of current and future income.

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

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:


	Year Ended Fiscal March
	2014						2013						2012
	Amount			Percent			Amount			Percent			Amount			Percent
	(Dollars in thousands)
Federal income tax based on statutory tax rate applied to income before taxes	$	30,287			35.0		$	23,388			35.0		$	30,340			35.0
State income tax, net of federal income tax benefit		2,097			2.4			1,159			1.7			2,231			2.6
Other		(307	)		(0.3	)		(290	)		(0.4	)		(497	)		(0.6	)

	$	32,077			37.1		$	24,257			36.3		$	32,074			37.0

The following is a rollforward of Monro’s liability for income taxes associated with unrecognized tax benefits:


	Dollars in thousands
Balance at March 26, 2011	$	5,964
Tax positions related to current year:
Additions		1,000
Reductions
Tax positions related to prior years:
Additions		230
Reductions		(904	)
Settlements		(166	)
Lapses in statutes of limitations		(640	)

Balance at March 31, 2012		5,484
Tax positions related to current year:
Additions		1,198
Reductions
Tax positions related to prior years:
Additions
Reductions
Settlements		(266	)
Lapses in statutes of limitations		(712	)

Balance at March 30, 2013		5,704
Tax positions related to current year:
Additions		1,678
Reductions
Tax positions related to prior years:
Additions
Reductions		(88	)
Settlements		(381	)
Lapses in statutes of limitations		(1,013	)

Balance at March 29, 2014	$	5,900

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The total amount of unrecognized tax benefits was $5.9 million at March 29, 2014, the majority of which, if recognized, would affect the effective tax rate.

In the normal course of business, Monro provides for uncertain tax positions and the related interest and penalties, and adjusts its unrecognized tax benefits and accrued interest and penalties accordingly. During the years ended March 29, 2014, March 30, 2013 and March 31, 2012, we recorded a benefit from the reversal of accrued interest and penalties of approximately $.1 million, $.2 million and $.3 million, respectively, in income tax expense. Additionally, we had approximately $.3 million and $.5 million of interest and penalties associated with uncertain tax benefits accrued as of March 29, 2014 and March 30, 2013, respectively.

Monro is currently under state audit for the fiscal 2011 through 2012 tax years. It is reasonably possible that the examination phase of the audits for these years may conclude in the next 12 months, and that the related unrecognized tax benefits for tax positions taken regarding previously filed tax returns may change from those recorded as liabilities for uncertain tax positions in Monro’s Consolidated Financial Statements as of March 29, 2014. However, based on the status of the examinations, it is not possible to estimate the effect of any amount of such change to previously recorded uncertain tax positions.

We file U.S. federal income tax returns and income tax returns in various state jurisdictions. Monro’s fiscal 2011 through 2013 U.S. federal tax years and various state tax years remain subject to income tax examinations by tax authorities.

NOTE 8 — STOCK OWNERSHIP

A summary of the changes in the number of shares of Common Stock, Class C preferred stock and treasury stock is as follows:


	Common Stock Shares Issued		Class C Convertible Preferred Stock Shares Issued		Treasury Stock Shares
Balance at March 26, 2011		36,038,664		32,500		5,577,984
Stock options exercised		816,594				390,007

Balance at March 31, 2012		36,855,258		32,500		5,967,991
Stock options exercised		472,709				105,845

Balance at March 30, 2013		37,327,967		32,500		6,073,836
Stock options exercised		239,935				3,115

Balance at March 29, 2014		37,567,902		32,500		6,076,951

In March 2012, Monro’s Board of Directors approved a resolution to amend Monro’s Restated Certificate of Incorporation, subject to shareholder approval, to increase the number of authorized shares of Common Stock from 45,000,000 to 65,000,000. Monro’s shareholders approved the increase at our Annual Shareholders’ meeting on August 7, 2012.

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 Monro, the holders of the Class C preferred stock would be entitled to receive $1.50 per share out of the assets of Monro before any amount would be paid to holders of Common Stock. The conversion value of the Class C convertible preferred stock was $.064 per share at March 29, 2014 and March 30, 2013.

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 9 — SHARE BASED COMPENSATION

Monro currently grants stock option awards under the 2007 Incentive Stock Option Plan (the “2007 Plan”). The 2007 Plan was authorized by the Board of Directors in June 2007, initially reserving 873,000 shares (as retroactively adjusted for stock splits) of Common Stock for issuance to eligible employees and all non-employee directors. The 2007 Plan was approved by shareholders in August 2007. Prior to fiscal 2008, Monro had options outstanding under three other stock option plans: the 1994 Non-Employee Directors Stock Option Plan (the “1994 Plan”) (which was approved by shareholders in August 1995); the 1998 Incentive Stock Option Plan (the “1998 Plan”) (which was approved by shareholders in August 1999); and the 2003 Non-Employee Directors Stock Option Plan (the “2003 Plan”) (which was approved by shareholders in August 2003), collectively the “Prior Plans.” Upon shareholder approval of the 2007 Plan, all shares of Common Stock available for award under the 1998 and 2003 Plans were transferred to, and made available for award under the 2007 Plan. The 1994 Plan had no options available for grant upon adoption of the 2007 Plan. No further option grants may be made under the Prior Plans, although outstanding awards under the Prior Plans will remain outstanding in accordance with the terms of those plans and the stock option agreements entered into under those plans.

The 1994 Plan had a total of 675,345 common shares authorized for issuance; the 1998 Plan had a total of 4,016,250 shares authorized for issuance; and the 2003 Plan had a total of 315,000 shares authorized for issuance (all as retroactively adjusted for stock splits). Upon authorization of the 2007 Plan by shareholders, 628,662 shares (as retroactively adjusted for stock splits) were transferred from the 1998 and 2003 Plans into the 2007 Plan, bringing the total authorized shares to 1,501,662 (as retroactively adjusted for stock splits). In addition, in May 2013 and 2010, the Compensation Committee of the Board of Directors authorized an additional 2,000,000 and 1,500,000 shares (as retroactively adjusted for stock splits), respectively, of common stock for grant under the 2007 Plan, which were approved by shareholders in August 2013 and August 2010, respectively. At March 29, 2014, there was a total of 5,001,662 shares authorized for grant under the 2007 Plan (as retroactively adjusted for stock splits), including the shares transferred from the 1998 and 2003 Plans.

Generally, employee options vest within the first five years of their term, and have a duration of six to ten years. Outstanding options are exercisable for various periods through March 2020.

A summary of changes in outstanding stock options is as follows:


	Weighted Average Exercise Price		Options Outstanding
At March 26, 2011	$	19.35		2,525,678
Granted	$	32.86		173,075
Exercised	$	14.47		(816,594	)
Canceled	$	21.10		(30,571	)

At March 31, 2012	$	22.75		1,851,588

Granted	$	35.19		511,600
Exercised	$	12.54		(472,709	)
Canceled	$	29.99		(26,365	)

At March 30, 2013	$	28.66		1,864,114

Granted	$	45.38		181,400
Exercised	$	18.73		(239,935	)
Canceled	$	35.48		(32,178	)

At March 29, 2014	$	31.58		1,773,401

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The total shares exercisable at March 29, 2014, March 30, 2013 and March 31, 2012 was 1,160,572, 984,917 and 1,129,513, respectively. There were 2,148,327 shares available for grant at March 29, 2014.

The weighted average contractual term of all options outstanding at March 29, 2014 and March 30, 2013 was 3.1 years and 3.8 years, respectively. The aggregate intrinsic value of all options (the amount by which the market price of the stock on the date of exercise exceeded the exercise price of the option) outstanding at March 29, 2014 and March 30, 2013 was $44.2 million and $20.6 million, respectively.

The weighted average contractual term of all options exercisable at March 29, 2014 and March 30, 2013 was 2.8 years and 3.4 years, respectively. The aggregate intrinsic value of all options exercisable at March 29, 2014 and March 30, 2013 was $31.5 million and $14.7 million, respectively.

A summary of the status of and changes in nonvested stock options granted is as follows:


	Options			Weighted Average Grant-Date Fair Value (per Option)
Non-vested at March 26, 2011		930,039		$	7.83
Granted		173,075		$	8.41
Vested		(357,697	)	$	7.54
Canceled		(23,342	)	$	6.62

Non-vested at March 31, 2012		722,075		$	8.16

Granted		511,600		$	8.67
Vested		(332,566	)	$	7.98
Canceled		(21,912	)	$	8.26

Non-vested at March 30, 2013		879,197		$	8.52

Granted		181,400		$	10.11
Vested		(417,743	)	$	8.66
Canceled		(30,025	)	$	8.90

Non-vested at March 29, 2014		612,829		$	8.88

The following table summarizes information about fixed stock options outstanding at March 29, 2014:


	Options Outstanding						Options Exercisable
Range of Exercise Prices	Shares Under Option		Weighted Average Remaining Life		Weighted Average Exercise Price		Shares Under Option		Weighted Average Exercise Price
$ 9.27 - $26.64		467,267		2.71	$	18.82		429,343	$	18.28
$26.65 - $33.64		518,489		3.54	$	33.25		214,709	$	33.26
$33.65 - $35.31		433,250		2.03	$	35.28		340,750	$	35.28
$35.32 - $61.58		354,395		4.39	$	41.45		175,770	$	40.13

During the fiscal years ended March 29, 2014, March 30, 2013 and March 31, 2012, the fair value of awards vested under Monro’s stock plans was $3.6 million, $2.7 million and $2.7 million, respectively.

The aggregate intrinsic value is based on Monro’s closing stock price of $56.51, $39.71 and $41.49 as of the last trading day of the periods ended March 29, 2014, March 30, 2013 and March 31, 2012, respectively. The

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

aggregate intrinsic value of options exercised during the fiscal years ended March 29, 2014, March 30, 2013 and March 31, 2012 was $7.4 million, $10.6 million and $17.6 million, respectively. As of March 29, 2014, March 30, 2013 and March 31, 2012, there was $4.1 million, $6.0 million and $4.9 million, respectively, of unrecognized compensation expense related to non-vested fixed stock options that is expected to be recognized over a weighted average period of approximately two years, three years and three years, respectively.

Cash received from option exercises under all stock option plans was $4.3 million, $3.0 million and $3.1 million for the fiscal years ended March 29, 2014, March 30, 2013 and March 31, 2012, respectively. The actual tax benefit realized for the tax deductions from option exercises was $1.9 million, $2.8 million and $5.3 million for the fiscal years ended March 29, 2014, March 30, 2013 and March 31, 2012, respectively.

Monro issues new shares of Common Stock upon the exercise of stock options.

NOTE 10 — EARNINGS PER COMMON SHARE

The following is a reconciliation of basic and diluted earnings per common share for the respective years:


	Year Ended Fiscal March
	2014			2013			2012
	(Amounts in thousands, except per share data)
Numerator for earnings per common share calculation:
Net Income	$	54,459		$	42,567		$	54,612
Less: Preferred stock dividends		(334	)		(304	)		(266	)

Income available to common stockholders	$	54,125		$	42,263		$	54,346


Denominator for earnings per common share calculation:
Weighted average common shares, basic		31,394			31,067			30,716
Effect of dilutive securities:
Preferred stock		760			760			760
Stock options		488			481			761

Weighted average common shares, diluted		32,642			32,308			32,237

Basic earnings per common share:	$	1.72		$	1.36		$	1.77

Diluted earnings per common share:	$	1.67		$	1.32		$	1.69

The computation of diluted earnings per common share for fiscal 2014, 2013 and 2012 excludes the effect of assumed exercise of approximately 91,000, 955,000 and 682,000 of stock options, respectively, as the exercise price of these options was greater than the average market value of Monro’s Common Stock for those periods, resulting in an anti-dilutive effect on diluted earnings per share.

NOTE 11 — OPERATING LEASES AND OTHER COMMITMENTS

We lease retail facilities under noncancellable lease agreements which expire at various dates through fiscal 2032. 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.

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In recent years, we have entered into agreements for the sale/leaseback of certain stores. Realized gains are deferred and are credited to income as rent expense adjustments over the lease terms. We have lease renewal options under the real estate agreements at projected future fair market values.

Future minimum payments required under noncancellable leases (including closed stores) are as follows:


Year Ending Fiscal March	Leases		Less - Sublease Income			Net
	(Dollars in thousands)
2015	$	33,547	$	(343	)	$	33,204
2016		29,068		(295	)		28,773
2017		24,218		(200	)		24,018
2018		18,105		(137	)		17,968
2019		11,363		(55	)		11,308
Thereafter		11,237		(91	)		11,146

Total	$	127,538	$	(1,121	)	$	126,417

Rent expense under operating leases, net of sublease income, totaled $32,841,000, $32,204,000 and $28,490,000 in fiscal 2014, 2013 and 2012, respectively, including contingent rentals of $59,000, $85,000 and $93,000 in each respective fiscal year. Sublease income totaled $533,000, $636,000 and $386,000, respectively, in fiscal 2014, 2013 and 2012.

We enter into contracts with parts and tire suppliers, certain of which require us to buy (at market prices) up to 100% of our annual purchases of specific products. The agreements expire at various dates through July 2017. We believe these agreements provide us with high quality, branded merchandise at preferred pricing, along with strong marketing and training support.

On August 7, 2012, we entered into a new employment agreement with our Executive Chairman, Robert G. Gross (the “2012 Agreement”). The 2012 Agreement became effective on October 1, 2012 and has a three-year term. Under the 2012 Agreement, Mr. Gross (i) is paid a base salary of $420,000; (ii) is eligible to earn a target annual bonus, pursuant to the terms of Monro’s Management Incentive Compensation Plan, of up to 150% of his base salary upon the achievement of certain predetermined corporate objectives and (iii) participates in Monro’s other incentive and welfare and benefit plans made available to executives. Mr. Gross is entitled to certain payments upon death, disability, a termination without Cause (as defined therein), a resignation by Mr. Gross for Good Reason (as defined therein) or a termination in the event of a Change in Control of the Company (as defined therein), all as set forth in detail in the Agreement.

Prior to the existing agreement, we entered into an employment agreement with Mr. Gross, our then Chief Executive Officer (the “2007 Agreement”). The 2007 Agreement was effective on October 1, 2007 and had a five-year term. Under the 2007 Agreement, Mr. Gross (i) was paid a base salary of $840,000; (ii) was eligible to earn a target annual bonus, pursuant to the terms of Monro’s Management Incentive Compensation Plan, of up to 150% of his base salary upon the achievement of certain predetermined corporate objectives and (iii) participated in Monro’s other incentive and welfare and benefit plans made available to executives. Mr. Gross also received a special bonus of $750,000, paid in five annual installments of $150,000, which began on October 1, 2007 (the “Special Bonus”). If the 2007 Agreement terminated before October 1, 2012 either for Cause (as defined therein) or as the result of Mr. Gross’s resignation without Good Reason (as defined therein), then Mr. Gross would have been required to repay a portion of the last-received annual installment of the Special Bonus, pro-rata to the date

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

of termination. In consideration for Mr. Gross’s covenant not-to-compete with Monro or to solicit its employees, Monro began paying him an additional $750,000, payable in five equal installments of $150,000, beginning on October 1, 2012. These payments will continue through October 1, 2016.

On October 2, 2007, and in consideration for Mr. Gross’s execution of the 2007 Agreement, Monro’s Compensation Committee awarded to Mr. Gross an option to purchase 562,500 shares of Monro’s Common Stock at an exercise price equal to the closing price of Monro’s Common Stock on the date of the award of $15.20 per share, pursuant to our 2007 Stock Incentive Plan. As of October 1, 2010, these options were fully vested. (Both the number of shares and share price reflect the impact of the December 2010 stock split.)

On August 7, 2012, we entered into a new employment agreement with John W. Van Heel in recognition of his promotion to Chief Executive Officer (the “Van Heel Agreement”). The Van Heel Agreement became effective on October 1, 2012 and has a five-year term. Under the Van Heel Agreement, Mr. Van Heel (i) is paid a base salary of $550,000; (ii) is eligible to earn a target annual bonus, pursuant to the terms of Monro’s Management Incentive Compensation Plan, of up to 150% of his base salary upon the achievement of certain predetermined corporate objectives and (iii) participates in Monro’s other incentive and welfare and benefit plans made available to executives. Mr. Van Heel is entitled to certain payments upon death, disability, a termination without Cause (as defined therein), a resignation by Mr. Van Heel for Good Reason (as defined therein) or a termination in the event of a Change in Control of the Company (as defined therein), all as set forth in detail in the Van Heel Agreement.

On October 1, 2012, and in consideration for his execution of the Van Heel Agreement, Monro’s Compensation Committee awarded to Mr. Van Heel an option to purchase 300,000 shares of Monro’s Common Stock at an exercise price equal to the closing price of Monro’s Common Stock on the date of the award of $33.64 per share, pursuant to our 2007 Stock Incentive Plan. These options vest equally over four years, beginning October 1, 2013.

In February 2014, the Company entered into a new employment agreement (the “Tomarchio Agreement”) with Joseph Tomarchio Jr., Executive Vice President. The Tomarchio Agreement became effective April 1, 2014, and superseded the Company’s previous employment contract with Mr. Tomarchio, which was set to expire in December 2014. As planned, the Tomarchio Agreement extends Mr. Tomarchio’s employment as an Executive Vice President of the Company through June 2017 at a reduced schedule. Under the terms of the Tomarchio Agreement, Mr. Tomarchio will render exclusive services to the Company, leading the Company’s growing tire purchasing programs and related vendor relationships. In addition, he will continue to assist on sourcing acquisitions, provide input on advertising and marketing, and contribute at field meetings.

Under the Tomarchio Agreement, Mr. Tomarchio (i) is paid a base salary of $242,500; (ii) is eligible to earn a target annual bonus, pursuant to the terms of the Company’s bonus plan, of up to 87.5% of his base salary upon the achievement of certain predetermined corporate objectives, which is consistent with both other Company executives and Mr. Tomarchio’s previous employment agreement; and (iii) participates in the Company’s other incentive and welfare and benefit plans made available to executives. In addition, under the Agreement, Mr. Tomarchio is entitled to certain payments upon a termination without Cause (as defined therein), a resignation by Mr. Tomarchio for Good Reason (as defined therein) or a termination in the event of a Change in Control of the Company (as defined therein), all as set forth in detail in the Agreement.

On December 30, 2010, we entered into employment agreements with Mr. Van Heel, then President of Monro; Mr. Tomarchio, then Executive Vice President Store Operations; and Catherine D’Amico, our Executive Vice President and Chief Financial Officer (collectively, the “Agreements”). All three Agreements became

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

effective on January 1, 2011 and have a four-year term. Mr. Van Heel’s agreement terminated in connection with his promotion to Chief Executive Officer and execution of his new employment agreement effective October 1, 2012. Mr. Tomarchio’s agreement terminated in connection with his change in responsibilities and execution of his new employment agreement effective April 1, 2014.

Under the Agreement, Ms. D’Amico (i) is entitled to an annual base salary; (ii) is eligible to earn a target bonus, pursuant to the terms of the Monro’s bonus plan, up to 87.5% of her base salary, upon the achievement of certain predetermined corporate objectives and (iii) participate in Monro’s other incentive and welfare and benefit plans made available to executives. The base salary of each executive is reviewed annually by Monro’s Compensation Committee and may be increased to reflect performance and responsibilities of each such executive.

Finally, Ms. D’Amico is entitled to certain payments upon death, disability, and termination without Cause (as defined in the Agreement), a resignation by the executive for Good Reason (as defined in the Agreement) or a termination in the event of a Change in Control of the Company (as defined in the Agreement), all set forth in detail in the Agreement.

Also, on December 30, 2010 and in consideration of the executives’ execution of the Agreements, Monro’s Compensation Committee awarded to Messrs. Van Heel and Tomarchio and Ms. D’Amico an option to purchase 150,000, 120,000 and 90,000 shares of Monro’s Common Stock, respectively, at an exercise price equal to the closing price of Monro’s Common Stock on the date of the award of $35.31 per share, pursuant to our 2007 Stock Incentive Plan (together, the “Executive Options”). Each of the Executive Options vest equally over four years, beginning December 30, 2011.

In accordance with the policy adopted by Monro’s Compensation Committee in May 2009, no executives’ contracts include any provision for the payment of what is commonly referred to as an “excise tax gross-up” with respect to payments received by an executive upon a Change in Control (as defined in the Agreements).

NOTE 12 — EMPLOYEE RETIREMENT AND PROFIT SHARING PLANS

We sponsor a noncontributory defined benefit pension plan for Monro employees and the former Kimmel Automotive, Inc. employees. In fiscal 2005, the previously separate Monro and Kimmel pension plans were merged. The merged plan provides benefits to certain full-time employees who were employed with Monro and with Kimmel prior to April 2, 1998 and May 15, 2001, respectively.

Effective as of those dates, 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. 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, and now the merged plan, are based primarily on years of service and employees’ pay near retirement. The funding policy for Monro’s merged plan 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 for both 2014 and 2013.

The overfunded/(underfunded) status of Monro’s defined benefit plan is recognized as an other non-current asset/other long-term liability in the Consolidated Balance Sheets as of March 29, 2014 and March 30, 2013, respectively.

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The funded status of the plan is set forth below:


	Fiscal March
	2014			2013
	(Dollars in thousands)
Change in Plan Assets:
Fair value of plan assets at beginning of year	$	18,224		$	17,344
Actual return on plan assets		1,726			1,496
Employee contribution		0			0
Benefits paid		(581	)		(616	)

Fair value of plan assets at end of year		19,369			18,224


Change in Projected Benefit Obligation:
Benefit obligation at beginning of year		19,285			17,500
Interest cost		776			793
Actuarial (gain)/loss		(432	)		1,608
Benefits paid		(581	)		(616	)

Benefit obligation at end of year		19,048			19,285

Funded status of plan	$	321		$	(1,061	)

The projected and accumulated benefit obligations were equivalent at March 29, 2014 and March 30, 2013.

Amounts recognized in accumulated other comprehensive loss consist of:


	Year Ended Fiscal March
	2014		2013
	(Dollars in thousands)
Unamortized transition obligation	$	0	$	0
Unamortized prior service cost		0		0
Unamortized net loss		5,056		6,520

Total	$	5,056	$	6,520

Changes in plan assets and benefit obligations recognized in other comprehensive income consist of:


	Year Ended Fiscal March
	2014		2013
	(Dollars in thousands)
Net transition obligation	$	0	$	0
Prior service cost		0		0
Net actuarial income/(loss)		1,464		(787	)

Total	$	1,464	$	(787	)

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Pension expense (income) included the following components:


	Year Ended Fiscal March
	2014			2013			2012
	(Dollars in thousands)
Interest cost on projected benefit obligation	$	776		$	793		$	809
Expected return on plan assets		(1,193	)		(1,192	)		(1,189	)
Amortization of unrecognized actuarial loss		658			517			71

Net pension expense (income)	$	241		$	118		$	(309	)

The weighted-average assumptions used to determine benefit obligations are as follows:


	Year Ended Fiscal March
	2014			2013
Discount rate		4.42	%		4.08	%

The weighted-average assumptions used to determine net periodic pension costs are as follows:


	Year Ended Fiscal March
	2014			2013			2012
Discount rate		4.08	%		4.49	%		5.75	%
Expected long-term return on assets		7.00	%		7.00	%		7.00	%

The expected long-term rate of return on plan assets is established based upon assumptions related to historical returns and the future expectations for returns for each asset class, as well as the target asset allocation of the pension portfolio.

The investment strategy of the plan is to conservatively manage the assets in order to meet the plan’s long-term obligations 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 to match the long-term nature of the liabilities. Monro’s general target allocation for the plan is 40% fixed income and 60% equity securities.

Monro’s asset allocations, by asset category, are as follows at the end of each year:


	March 29, 2014			March 30, 2013
Cash and cash equivalents		2.9	%		1.6	%
Fixed income		34.1	%		39.5	%
Equity securities		63.0	%		58.9	%

Total		100.0	%		100.0	%

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The following table provides fair value measurement information for Monro’s major categories of defined benefit plan assets at March 29, 2014 and March 30, 2013, respectively:


	Fair Value Measurements at March 29, 2014 Using
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in thousands)
Equity securities:
U.S. companies	$	7,966	$	7,966
International companies		4,241		4,241
Fixed income:
U.S. corporate bonds		6,300			$	6,300
International bonds		302				302
Cash equivalents		560				560

Total	$	19,369	$	12,207	$	7,162


	Fair Value Measurements at March 30, 2013 Using
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

	(Dollars in thousands)
Equity securities:
U.S. companies	$	6,465	$	6,465
International companies		3,590		3,590
Fixed income:
U.S. corporate bonds		6,840			$	6,840
International bonds		364				364
Cash equivalents		288				288
Commodities		677		677

Total	$	18,224	$	10,732	$	7,492

There are no required or expected contributions in fiscal 2015 to the plan.

The following pension benefit payments are expected to be paid:


	Year Ended Fiscal March
	(Dollars in thousands)
2015	$	705
2016		742
2017		772
2018		803
2019		851
2020 - 2024		5,101

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

We have 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. We make matching contributions consistent with the provisions of the plan. Charges to expense for our matching contributions for fiscal 2014, 2013 and 2012 amounted to approximately $612,000, $615,000 and $631,000, respectively. We may also make annual profit sharing contributions to the plan at the discretion of Monro’s Compensation Committee.

We have 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, Monro will credit to the participants’ accounts such amounts as would have been contributed to Monro’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. We may also make such additional discretionary allocations as are determined by the Compensation Committee. The Deferred Compensation Plan is an unfunded arrangement and the participants or their beneficiaries have an unsecured claim against the general assets of Monro to the extent of their Deferred Compensation Plan benefits. We maintain 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 Monro’s Compensation Committee. The total liability recorded in our financial statements at March 29, 2014 and March 30, 2013 related to the Deferred Compensation Plan was $1,433,000 and $1,179,000, respectively.

Monro’s management bonus plan provides for the payment of annual cash bonus awards to participating employees, as selected by our Board of Directors, based primarily on Monro’s attaining pre-tax income targets established by our Board of Directors. During the years ended March 29, 2014 and March 31, 2012, we recorded charges to expense of $1,066,000 and $1,730,000, respectively. During the year ended March 30, 2013, we recorded a benefit of $66,000 related to the management bonus plan due to an over estimate of expense in fiscal 2012, as well as our failure to meet pre-tax earnings targets.

NOTE 13 — RELATED PARTY TRANSACTIONS

We are currently a party to leases for certain facilities where the lessor is an officer of Monro, or family members of such officer. Six leases were assumed in March 2004 in connection with the Mr. Tire Acquisition. The payments under such operating and capital leases amounted to $702,000, $685,000 and $669,000 for the years ended March 2014, 2013 and 2012, respectively. These payments are comparable to rents paid to unrelated parties. No amounts were payable at March 29, 2014 or March 30, 2013. No related party leases exist, other than the six assumed as part of the Mr. Tire Acquisition in March 2004, and no new leases are contemplated.

We have a management agreement with an investment banking firm associated with a principal shareholder/director of Monro to provide financial advice. The agreement provides for an annual fee of $300,000, plus reimbursement of out-of-pocket expenses. During each of the fiscal years 2014, 2013 and 2012, we incurred fees of $300,000, under this agreement. No amounts were payable at March 29, 2014 or March 30, 2013. In addition, this investment banking firm, from time to time, provides additional investment banking services to us for customary fees. Approximately half of all payments made to the investment banking firm under the management agreement are paid to another principal shareholder/director of Monro.

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 14 — SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

The following transactions represent non-cash investing and financing activities during the periods indicated:

Year ended March 29, 2014

In connection with the fiscal 2014 acquisitions (see Note 2), liabilities were assumed as follows:


Fair value of assets acquired	$	11,708,000
Goodwill		17,940,000
Gain on bargain purchase		(217,000	)
Cash paid, net of cash acquired		(27,518,000	)

Liabilities assumed	$	1,913,000

Year ended March 30, 2013

In connection with the fiscal 2013 acquisitions (see Note 2), liabilities were assumed as follows:


Fair value of assets acquired	$	101,926,000
Goodwill		117,602,000
Cash paid, net of cash acquired		(163,275,000	)

Liabilities assumed	$	56,253,000

In connection with the exercise of stock options and the satisfaction of tax withholding obligations by Monro’s Chief Executive Officer (see Note 1), an Executive Vice President and two members of Monro’s Board of Directors, we increased current liabilities, Common Stock, paid-in capital and treasury stock by $601,000, $2,000, $2,968,000 and $3,571,000, respectively.

In connection with the accounting for financing obligations, we increased deferred income tax asset, property, plant and equipment, goodwill, capital leases and financing obligations, other long-term liabilities by $1,164,000, $200,000, $1,899,000, $629,000 and $2,567,000, respectively and decreased intangible assets by $67,000.

Year ended March 31, 2012

In connection with the fiscal 2012 acquisitions, liabilities were assumed as follows:


Fair value of assets acquired	$	12,751,000
Goodwill		34,204,000
Cash paid, net of cash acquired		(39,243,000	)

Liabilities assumed	$	7,712,000

In connection with the recording of the pension liability adjustment, we decreased other non-current assets, other comprehensive income and long-term deferred tax liabilities by $3,033,000, $1,977,000 and $1,212,000, respectively and increased other long-term liabilities by $156,000.

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In connection with the accounting for income tax benefits related to the exercise of stock options, we decreased current liabilities and increased paid-in capital by $5,314,000.

In connection with the exercise of stock options and the satisfaction of tax withholding obligations by Monro’s former Chief Executive Officer (see Note 1) and one member of Monro’s Board of Directors, we increased current liabilities, Common Stock, paid-in capital and treasury stock by $5,485,000, $6,000, $8,685,000 and $14,176,000, respectively.


	Year Ended Fiscal March
	2014		2013		2012
	(Dollars in thousands)
Cash paid during the year:
Interest, net	$	9,099	$	6,914	$	4,924
Income taxes, net	$	25,849	$	22,850	$	25,813

NOTE 15 — LITIGATION

We are currently a party to various claims and legal proceedings incidental to the conduct of our business. If management believes that a loss arising from any of these matters is probable and can reasonably be estimated, we will record the amount of the loss, or the minimum estimated liability when the loss is estimated using a range, and no point within the range is more probable than another. As additional information becomes available, any potential liability related to these matters is assessed and the estimates are revised, if necessary. Litigation is subject to inherent uncertainties, and unfavorable rulings could occur and may include monetary damages. If an unfavorable ruling were to occur, there exists the possibility of a material adverse impact on the financial position and results of operations of the period in which any such ruling occurs, or in future periods. However, based on currently available information, management believes that the ultimate outcome of any of these matters, individually and in the aggregate, will not have a material adverse effect on our financial position, overall trends in results of operations or cash flow.

NOTE 16 — SUBSEQUENT EVENTS

See Note 2 for a discussion of acquisitions subsequent to March 29, 2014.

MONRO MUFFLER BRAKE, INC. AND SUBSIDIARY

SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The following table sets forth consolidated statement of income data by quarter for the years ended March 2014 and 2013. Individual line items summed by quarters may not agree to the annual amounts reported due to rounding.


	Fiscal Quarter Ended
	June 2013			Sept. 2013			Dec. 2013			March 2014
	(Amounts in thousands, except per share data)
Sales	$	206,172		$	205,321		$	216,695		$	203,244
Cost of sales		127,294			123,573			134,371			126,220

Gross profit		78,878			81,748			82,324			77,024
Operating, selling, general and administrative expenses		55,770			57,837			55,398			55,622

Operating income		23,108			23,911			26,926			21,402
Interest expense, net		1,809			2,048			3,216			2,397
Other income, net		(52	)		(179	)		(352	)		(76	)

Income before provision for income taxes		21,351			22,042			24,062			19,081
Provision for income taxes		7,779			8,392			8,733			7,173

Net income	$	13,572		$	13,650		$	15,329		$	11,908

Basic earnings per share	$	0.43		$	0.43		$	0.49		$	0.38

Diluted earnings per share(a)	$	0.42		$	0.42		$	0.47		$	0.36

Weighted average number of common shares used in computing earnings per share
Basic		31,302			31,390			31,417			31,469
Diluted		32,486			32,553			32,633			32,768

	Fiscal Quarter Ended
	June 2012			Sept. 2012			Dec. 2012			March 2013
	(Amounts in thousands, except per share data)
Sales	$	169,175		$	176,475		$	190,437		$	195,910
Cost of sales		101,063			106,624			120,827			125,336

Gross profit		68,112			69,851			69,610			70,574
Operating, selling, general and administrative expenses		48,423			50,126			50,782			55,111

Operating income		19,689			19,725			18,828			15,463
Interest expense, net		1,299			1,370			1,473			3,071
Other income, net		(53	)		(139	)		(59	)		(81	)

Income before provision for income taxes		18,443			18,494			17,414			12,473
Provision for income taxes		6,806			6,946			6,159			4,346

Net income	$	11,637		$	11,548		$	11,255		$	8,127

Basic earnings per share	$	0.37		$	0.37		$	0.36		$	0.26

Diluted earnings per share(a)	$	0.36		$	0.36		$	0.35		$	0.25

Weighted average number of common shares used in computing earnings per share
Basic		30,922			31,023			31,116			31,206
Diluted		32,164			32,206			32,240			32,297

(a)	Earnings per share for each period was computed by dividing net income by the weighted average number of shares of Common Stock and Common Stock Equivalents outstanding during the respective quarters.

Significant fourth quarter adjustments

There were no material, extraordinary, unusual or infrequently occurring items recognized in the fourth quarter of fiscal 2014.

During the fourth quarter of fiscal 2013, we recorded one significant adjustment. We decreased occupancy costs by $1.0 million and increased interest expense by $.5 million related to our review of lease accounting practices as discussed in Note 1 to the Consolidated Financial Statements.

Item 9 . Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A . Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports that we file or submit pursuant to the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s (SEC) rules and forms, and that such information is accumulated and communicated to Monro’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

In conjunction with the close of each fiscal quarter and under the supervision of the Chief Executive Officer and Chief Financial Officer, we conduct an evaluation of the effectiveness of our disclosure controls and procedures. It is the conclusion of Monro’s Chief Executive Officer and Chief Financial Officer, based upon an evaluation completed as of March 29, 2014, that our disclosure controls and procedures were effective in ensuring that any material information relating to Monro was recorded, processed, summarized and reported to its principal officers to allow timely decisions regarding required disclosures.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting. Monro’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States of America.

Monro’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of Monro; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of Monro are being made only in accordance with authorizations of management and directors of Monro; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of Monro’s assets that could have a material effect on the financial statements.

Management conducted an evaluation of the effectiveness of internal control over financial reporting based on the framework in Internal Control—Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that Monro’s internal control over financial reporting was effective as of March 29, 2014, the end of our fiscal year. Management has reviewed the results of its assessment with the Audit Committee of the Board of Directors. The effectiveness of Monro’s internal control over financial reporting as of March 29, 2014 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.

Inherent Limitations on Effectiveness of Controls

Monro’s management, including the Chief Executive Officer and Chief Financial Officer, does not expect that its disclosure controls and procedures or its internal control over financial reporting will prevent or detect all

errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within Monro have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls’ effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

Changes in Internal Controls over Financial Reporting

There were no changes in Monro’s internal control over financial reporting during the quarter ended March 29, 2014 that materially affected, or are reasonably likely to materially affect, Monro’s internal control over financial reporting.

PART III

Item 10. Directors and Executive Officers of the Company and Corporate Governance

Information concerning the directors and executive officers of Monro 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 “Section 16(a) Beneficial Ownership Reporting Compliance” in the Proxy Statement.

Information concerning Monro’s corporate governance policies and procedures is incorporated herein by reference to the section captioned “Corporate Governance” in the Proxy Statement.

Monro’s directors and executive officers are subject to the provisions of Monro’s Code of Ethics for Management Employees, Officers and Directors (the “Code”), which is available in the Investor Information section of Monro’s web site, www.monro.com . Changes to the Code and any waivers are also posted on Monro’s web site in the Investor Information section.

Item 11. Executive Compensation

Information concerning executive compensation is incorporated herein by reference to the sections captioned “Compensation Discussion and Analysis” and “Executive Compensation” in the Proxy Statement.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information concerning Monro’s shares authorized for issuance under its equity compensation plans at March 29, 2014 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.

Item 13. Certain Relationships and Related Transactions and Director Independence

Information concerning certain relationships and related transactions is incorporated herein by reference to the sections captioned “Compensation Committee Interlocks and Insider Participation” and “Certain Relationships and Related Transactions” in the Proxy Statement.

Item 14. Principal Accountant Fees and Services

Information concerning Monro’s principal accounting fees and services is incorporated herein by reference to the section captioned “Approval of Independent Registered Public Accounting Firm” in the Proxy Statement.

PART IV

Item 15. Exhibits and Financial Statement Schedules

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 agreements accompanying this Form 10-K or incorporated herein by reference may contain representations, warranties and other provisions that were made, among other things, to provide the parties thereto with specified rights and obligations and to allocate risk among them, and such agreements should not be relied upon by buyers, sellers or holders of Monro’s securities.

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.


MONRO MUFFLER BRAKE, INC.
(Registrant)

By:		/s/ J OHN W. V AN H EEL John W. Van Heel
		Chief Executive Officer and President

Date: May 28, 2014

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 and on the date indicated.


Signature	Title	Date

/s/ J OHN W. V AN H EEL John W. Van Heel	Chief Executive Officer, President and Director (Principal Executive Officer)	May 28, 2014

/s/ R OBERT G. G ROSS * Robert G. Gross	Executive Chairman, Director	May 28, 2014

/s/ C ATHERINE D’A MICO Catherine D’Amico	Executive Vice President-Finance, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)	May 28, 2014

/s/ R ICHARD A. B ERENSON * Richard A. Berenson	Director	May 28, 2014

/s/ F REDERICK M. D ANZIGER * Frederick M. Danziger	Director	May 28, 2014

/s/ D ONALD G LICKMAN * Donald Glickman	Director	May 28, 2014

/s/ S TEPHEN C. M C C LUSKI * Stephen C. McCluski	Director	May 28, 2014

/s/ R OBERT E. M ELLOR * Robert E. Mellor	Director	May 28, 2014

/s/ P ETER J. S OLOMON * Peter J. Solomon	Director	May 28, 2014

/s/ J AMES R. W ILEN * James R. Wilen	Director	May 28, 2014

/s/ E LIZABETH A. W OLSZON * Elizabeth A. Wolszon	Director	May 28, 2014



*By:		/ S / J OHN W. V AN H EEL
		John W. Van Heel, as Attorney-in-Fact

INDEX TO EXHIBITS

The following is a list of all exhibits filed herewith or incorporated by reference herein:


Exhibit No.		Document

3.01*		Restated Certificate of Incorporation of the Company, dated July 23, 1991, with Certificate of Amendment, dated November 1, 1991. (SEC File No: 0-19357, 1992 Form 10-K, Exhibit No. 3.01)

3.01a*		Certificate of Change of the Certificate of Incorporation of the Company, dated January 26, 1996. (August 2004 Form S-3, Exhibit 4.1(b))

3.01b*		Certificate of Amendment to Restated Certificate of Incorporation, dated April 15, 2004. (August 2004 Form S-3, Exhibit No. 4.1(c))

3.01c*		Certificate of Amendment to Restated Certificate of Incorporation, dated October 10, 2007. (2008 Form 10-K, Exhibit 3.01c)

3.01d*		Certificate of Amendment to Restated Certificate of Incorporation, dated August 1, 2012. (2013 Form 10-K, Exhibit 3.01d)

3.02*		Amended and Restated By-Laws of the Company, dated August 7, 2012. (December 2012 Form 8-K, Exhibit No. 3.02)

10.01*		2007 Stock Incentive Plan, effective as of June 29, 2007. (May 2008 Form S-8, Exhibit No. 4)**

10.01a*		Amendment No. 1 to the 2007 Stock Incentive Plan, dated August 9, 2007. (May 2008 Form S-8, Exhibit No. 4.1)**

10.01b*		Amendment No. 2 to the 2007 Stock Incentive Plan, dated September 27, 2007. (May 2008 Form S-8, Exhibit No. 4.2)**

10.01c*		Amendment No. 3 to the 2007 Stock Incentive Plan, dated August 10, 2010. (August 2010 Form 8-K, Exhibit No. 10.1)**

10.01d*		Amendment No. 4 to the 2007 Stock Incentive Plan, dated, May 16, 2012. (2012 Form 10-K, Exhibit No. 10.01d)**

10.01e*		Amendment No. 5 to the 2007 Stock Incentive Plan, dated June 28, 2013. (2013 Proxy, Exhibit A)**

10.01f		Amendment No. 6 to the 2007 Stock Incentive Plan, dated June 28, 2013. **

10.02*		1994 Non-Employee Directors’ Stock Option Plan. (March 2001 Form S-8, Exhibit No. 4.1)**

10.02a*		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)**

10.02b*		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)**

10.02c*		Amendment, dated as of August 2, 1999, to the 1994 Non-Employee Directors’ Stock Option Plan. (2002 Form 10-K, Exhibit No. 10.02c)**

10.02d*		Amendment, dated as of June 12, 2002, to the 1994 Non-Employee Directors’ Stock Option Plan. (2002 Form 10-K, Exhibit No. 10.02d)**

10.03*		Monro Muffler Brake, Inc. Deferred Compensation Plan, dated January 1, 2005 and last amended and restated as of January 1, 2011. (2011 Form 10-K, Exhibit No. 10.03)**

10.04		Monro Muffler Brake, Inc. Retirement Plan, adopted November 19, 2013 and effective as of April 1, 2013. **


Exhibit No.		Document

10.05		Amended and Restated Profit Sharing Plan, adopted on December 9, 2013 and effective as of April 1, 2013 . **

10.05a		Amendment to the Profit Sharing Plan, adopted on May 24, 2013 and effective as of April 1, 2013.**

10.06*		Employment Agreement, dated as of August 7, 2012 and effective October 1, 2012, between the Company and Robert G. Gross. (August 2012 Form 8-K, Exhibit No. 99.2)**

10.07*		Employment Agreement, dated December 30, 2010 and effective January 1, 2011, between the Company and Joseph Tomarchio, Jr. (January 2011 Form 8-K, Exhibit No. 99.2)**

10.08*		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)**

10.08a*		Amendment, dated May 20, 2003, to the 1998 Employee Stock Option Plan. (2004 Form 10-K, Exhibit No. 10.08a)**

10.08b*		Amendment, dated June 8, 2005, to the 1998 Employee Stock Option Plan. (April 2006 Form S-8 for the 1998 Plan, Exhibit No. 4.2)**

10.08c*		Amendment, dated September 26, 2007, to the 1998 Employee Stock Option Plan. (2008 Form 10-K, Exhibit 10.08c)**

10.09*		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)**

10.09a*		First amendment, dated January 1, 1989, to the Kimmel Automotive, Inc. Pension Plan. (2003 Form 10-K, Exhibit No. 10.09a)**

10.09b*		Second amendment, dated January 1, 1989, to the Kimmel Automotive, Inc. Pension Plan. (2003 Form 10-K, Exhibit No. 10.09b)**

10.09c*		Third amendment, dated May 2001, to the Kimmel Automotive, Inc. Pension Plan. (2003 Form 10-K, Exhibit No. 10.09c)**

10.09d*		Fourth Amendment, dated as of December 31, 2011, to the Kimmel Automotive, Inc. Pension Plan. (2012 Form 10-K, Exhibit No. 10.09d)**

10.10*		2003 Non-Employee Directors’ Stock Option Plan, effective August 5, 2003. (2004 Form 10-K, Exhibit No. 10.10)**

10.10a*		Amendment, dated June 8, 2005, to the 2003 Non-Employee Directors’ Stock Option Plan. (April 2006 Form S-8 for the 2003 Plan, Exhibit No. 4.1)**

10.11*		Amended and Restated Credit Agreement, dated as of June 13, 2011, by and among the Company, RBS Citizens, N.A., as Administrative Agent, and certain lenders party thereto. (June 2011 Form 8-K, Exhibit 10.11)

10.11a*		Amendment No. 1 to Amended and Restated Credit Agreement, dated as of December 17, 2012. (December 2012 Form 10-Q, Exhibit No. 10.11a)

10.12*		Security Agreement, dated as of July 13, 2005, by and among the Company, Monro Service Corporation, Monro Leasing, LLC and Charter One Bank, N.A., as Administrative Agent for the lenders party to the Credit Agreement. (June 2005 Form 10-Q, Exhibit No. 10.2)


Exhibit No.		Document

10.13*		Guaranty, dated as of July 13, 2005, of Monro Service Corporation. (June 2005 Form 10-Q, Exhibit No. 10.3)

10.15*		Negative Pledge Agreement, dated as of July 13, 2005, by and among the Company, Monro Service Corporation, Monro Leasing, LLC and Charter One Bank, N.A., as Administrative Agent for the lenders party to the Credit Agreement. (June 2005 Form 10-Q, Exhibit No. 10.5)

10.16*		Reaffirmation of Loan Papers, dated as of June 13, 2011, by Company (reaffirming, among other things, Company’s agreement, obligation and continuing liability under the Security Agreement and Negative Pledge Agreement, all dated as of July 13, 2005). (2012 Form 10-K, Exhibit No. 10.16)

10.17*		Reaffirmation of Loan Papers, dated as of June 13, 2011, by Monro Service Corporation (reaffirming, among other things, Monro Service Corporation’s agreement, obligation and continuing liability under the Security Agreement, Guaranty and Negative Pledge Agreement, all dated as of July 13, 2005). (2012 Form 10-K, Exhibit No. 10.17)

10.18*		Resale Restriction Agreement by and between the Company and each of its executive officers and certain senior-level managers, effective as of March 24, 2006. (March 2006 Form 8-K/A, Exhibit No. 10.1)

10.60*		Lease Agreement, dated as of February 1, 2012, between Monro Service Corporation and the County of Monroe Industrial Development Agency. (2012 Form 10-K, Exhibit No. 10.60)

10.61*		Leaseback Agreement, dated February 1, 2012 between the County of Monroe Industrial Development Agency and Monro Service Corporation. (2012 Form 10-K, Exhibit No. 10.61)

10.62*		Mortgage Agreement, dated September 28, 1994, between the Company and the City of Rochester, New York. (1995 Form 10-K, Exhibit No. 10.60)

10.63*		Lease Agreement, dated October 11, 1994, between the Company and the City of Rochester, New York. (1995 Form 10-K, Exhibit No. 10.61)

10.66*		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)

10.67*		Employment Agreement, dated as of August 7, 2012 and effective as of October 1, 2012, between the Company and John W. Van Heel. (August 2012 Form 8-K, Exhibit No. 99.1)**

10.68*		Employment Agreement, dated December 30, 2010 and effective as of January 1, 2011, between the Company and Catherine D’Amico. (January 2011 Form 8-K, Exhibit No. 99.3)**

10.69*		Employment Agreement, dated February 11, 2014 and effective April 1, 2014, between the Company and Joseph Tomarchio, Jr. (February 2014 Form 8-K, Exhibit No. 99.1)**

10.69a*		Amendment to Employment Agreement of Joseph Tomarchio, Jr., dated May 14, 2014 and effective April 1, 2014, between the Company and Joseph Tomarchio, Jr. (May 2014 Form 8-K, Exhibit No. 99.1)**

10.72*†		Supply Agreement, dated as of August 1, 2012, by and between Ashland Consumer Markets (a commercial business unit of Ashland, Inc.) and Monro Service Corporation. (December 2012 Form 10-Q, Exhibit No. 10.72)

10.77*		Management Incentive Compensation Plan, effective as of June 1, 2002. (2002 Form 10-K, Exhibit No. 10.77)**

10.79*		Agreement, dated January 1, 1998, between F&J Properties, Inc. and Mr. Tire, Inc., as predecessor-in-interest to the Company, effective January 1, 1998, with respect to Store No. 750. (2004 Form 10-K, Exhibit No. 10.79)

10.79a*		Assignment and Assumption of Lease, dated March 1, 2004, between Mr. Tire, Inc. and the Company, with respect to Store No. 750. (2004 Form 10-K, Exhibit No. 10.79a)


Exhibit No.		Document

10.79b*		Landlord’s Consent and Estoppel Certificate, dated as of February 27, 2004, by F&J Properties, Inc., with respect to Store No. 750. (2004 Form 10-K, Exhibit No. 10.79b)

10.79c*		Renewal letter, dated April 16, 2007, from the Company to F&J Properties, Inc. with respect to Store No. 750. (2007 Form 10-K, Exhibit No. 10.79c)

10.80*		Agreement, dated January 1, 1997, between The Three Marquees and Mr. Tire, Inc., as predecessor-in-interest to the Company, with respect to Store No. 753. (2004 Form 10-K, Exhibit No. 10.80)

10.80a*		Assignment and Assumption of Lease, dated March 1, 2004, between Mr. Tire, Inc. and the Company, with respect to Store No. 753. (2004 Form 10-K, Exhibit No. 10.80a)

10.80b*		Landlord’s Consent and Estoppel Certificate, dated as of February 27, 2004, by The Three Marquees, with respect to Store No. 753. (2004 Form 10-K, Exhibit No. 10.80b)

10.80c*		Renewal Letter, dated March 6, 2006, from the Company to The Three Marquees, with respect to Store No. 753. (2006 Form 10-K, Exhibit No. 10.80c)

10.81*		Agreement, dated April 1, 1998, between 425 Manchester Road, LLC and Mr. Tire, Inc., as predecessor-in-interest to the Company, with respect to Store No. 754. (2004 Form 10-K, Exhibit No. 10.81)

10.81a*		Assignment and Assumption of Lease, dated March 1, 2004, between Mr. Tire, Inc. and the Company, with respect to Store No. 754. (2004 Form 10-K, Exhibit No. 10.81a)

10.81b*		Landlord’s Consent and Estoppel Certificate, dated as of February 27, 2004, by 425 Manchester Road, LLC, with respect to Store No. 754. (2004 Form 10-K, Exhibit No. 10.81b)

10.81c*		Renewal Letter, dated June 8, 2007, from the Company to 425 Manchester Road, LLC, with respect to Store No. 754. (2008 Form 10-K, Exhibit No. 10.81c)

10.82*		Agreement, dated January 1, 1997, between The Three Marquees and Mr. Tire, Inc., as predecessor-in-interest to the Company, with respect to Store No. 756. (2004 Form 10-K, Exhibit No. 10.82)

10.82a*		Assignment and Assumption of Lease, dated March 1, 2004, between Mr. Tire, Inc. and the Company, with respect to Store No. 756. (2004 Form 10-K, Exhibit No. 10.82a)

10.82b*		Landlord’s Consent and Estoppel Certificate, dated as of February 27, 2004, by The Three Marquees, with respect to Store No. 756. (2004 Form 10-K, Exhibit No. 10.82b)

10.82c*		Renewal Letter, dated March 6, 2006, from the Company to The Three Marquees, with respect to Store No. 756. (2006 Form 10-K, Exhibit No. 10.82c)

10.83*		Agreement, dated January 1, 1997, between The Three Marquees and Mr. Tire, Inc., as predecessor-in-interest to the Company, with respect to Store No. 758. (2004 Form 10-K, Exhibit No. 10.83)

10.83a*		Assignment and Assumption of Lease, dated March 1, 2004, between Mr. Tire, Inc. and the Company, with respect to Store No. 758. (2004 Form 10-K, Exhibit No. 10.83a)

10.83b*		Landlord’s Consent and Estoppel Certificate, dated as of February 27, 2004, by The Three Marquees, with respect to Store No. 758. (2004 Form 10-K, Exhibit No. 10.83b)

10.83c*		Renewal Letter, dated March 6, 2006, from the Company to The Three Marquees, with respect to Store No. 758. (2006 Form 10-K, Exhibit No. 10.83c)

10.84*		Agreement, dated September 2, 1999, between LPR Associates and Mr. Tire, Inc., as predecessor-in-interest to the Company, with respect to Store No. 765. (2004 Form 10-K, Exhibit No. 10.84)


Exhibit No.		Document

10.84a*		Assignment and Assumption of Lease, dated March 1, 2004, between Mr. Tire, Inc. and the Company, with respect to Store No. 765. (2004 Form 10-K, Exhibit No. 10.84a)

10.84b*		Landlord’s Consent and Estoppel Certificate, dated as of February 27, 2004, by LPR Associates, with respect to Store No. 765. (2004 Form 10-K, Exhibit No. 10.84b)

10.84c*		Renewal Letter, dated October 29, 2008, from the Company to LPR Associates with respect to Store No. 765. (2009 Form 10-K, Exhibit No. 10.84c)

10.84d		Renewal Letter, dated December 4, 2013, from the Company to LPR Associates with respect to Store No. 765.

21.01		Subsidiaries of the Company.

23.01		Consent of PricewaterhouseCoopers LLP.

24.01		Powers of Attorney.

31.1		Certification of John W. Van Heel, Chief Executive Officer.

31.2		Certification of Catherine D’Amico, Executive Vice President – Finance and Chief Financial Officer.

32.1		Certification Pursuant to 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002).

		101.INS‡—XBRL Instance Document

		101.LAB‡—XBRL Taxonomy Extension Label Linkbase

		101.PRE‡—XBRL Taxonomy Extension Presentation Linkbase

		101.SCH‡—XBRL Taxonomy Extension Schema Linkbase

		101.DEF‡—XBRL Taxonomy Extension Definition Linkbase

•

An asterisk “*” following an exhibit number indicates that the exhibit is incorporated herein by reference to an exhibit to one of the following documents: (1) the Company’s Registration Statement on Form S-1 (Registration No. 33-41290), filed with the Securities and Exchange Commission on June 19, 1991 (“Form S-1”); (2) Amendment No. 1 thereto, filed July 22, 1991 (“Amendment No. 1”); (3) the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 1992 (“1992 Form 10-K”); (4) the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 1995 (“1995 Form 10-K”); (5) the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1995 (“September 1995 Form 10-Q”); (6) 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”); (7) the Company’s Annual Report on Form 10-K for the fiscal year ended March 30, 2002 (“2002 Form 10-K”); (8) the Company’s Annual Report on Form 10-K for the fiscal year ended March 28, 2003 (“2003 Form 10-K”); (9) the Company’s Annual Report on Form 10-K for the fiscal year ended March 27, 2004 (“2004 Form 10-K”); (10) the Company’s Registration Statement on Form S-3 (Registration No. 333-118176), filed with the Securities and Exchange Commission on August 12, 2004 (“August 2004 Form S-3”); (11) the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 25, 2005 (“June 2005 Form 10-Q”); (12) the Company’s Current Report on Form 8-K, filed March 31, 2006 (“March 2006 Form 8-K/A”); (13) the Company’s Registration Statement on Form S-8 (Registration No. 333-133044) filed with the Securities and Exchange Commission on April 6, 2006. (“April 2006 Form S-8 for 2003 Plan”); (14) the Company’s Registration Statement on Form S-8 (Registration No. 333-133045) filed with the Securities and Exchange Commission on April 6, 2006. (“April 2006 Form S-8 for 1998 Plan”); (15) the Company’s Annual Report on Form 10-K for the fiscal year ended March 25, 2006 (“2006 Form 10-K”); (16) the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2007 (“2007 Form 10-K”);

(17) the Company’s Annual Report on Form 10-K for fiscal year ended March 29, 2008 (“2008 Form 10-K”); (18) the Company’s Registration Statement on Form S-8 (Registration No. 333-151196) filed with the Securities and Exchange Commission on May 27, 2008 (“May 2008 Form S-8”); (19) the Company’s Annual Report on Form 10-K for the fiscal year ended March 28, 2009 (“2009 Form 10-K”); (20) Company’s Current Report on Form 8-K, filed on August 12, 2010 (“August 2010 Form 8-K”); (21) the Company’s Current Report on Form 8-K, filed on January 4, 2011 (“January 2011 Form 8-K”); (22) the Company’s Annual Report on Form 10-K for the fiscal year ended March 26, 2011 (“2011 Form 10-K”); (23) the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2012 (“2012 Form 10-K”); (24) the Company’s Current Report on Form 8-K, filed on June 16, 2011 (“June 2011 Form 8-K”); (25) the Company’s Current Report on Form 8-K, filed August 9, 2012 (“August 2012 Form 8-K”); (26) the Company’s Current Report on Form 8-K, filed on December 20, 2012 (“December 2012 Form 8-K”); (27) the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 29, 2012 (“December 2012 Form 10-Q”); (28) the Company’s Current Report on Form 8-K, filed February 11, 2014 (“February 2014 Form 8-K”); (29) the Annual Report on Form 10-K for the fiscal year ended March 30, 2013 (“2013 Form 10-K”); (30) the Company’s Definitive Proxy Statement on Form DEF14A, filed June 10, 2013 (“2013 Proxy”); and (31) the Company’s Current Report on Form 8-K, filed May 20, 2014 (“May 2014 Form 8-K”). The appropriate document and exhibit number are indicated in parentheses.

**	Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K pursuant to Item 14(c) hereof.

†	Portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment in accordance with Rule 24b-2 of the Securities Exchange Act of 1934.

‡

Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement of prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or deemed filed for purpose of Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under those sections.

Exhibit 10.01f

MONRO MUFFLER BRAKE, INC.

2007 STOCK INCENTIVE PLAN

AMENDMENT No. 6

WHEREAS, the Compensation Committee (the “Committee”) adopted a policy on July 3, 2010 with respect to the 2007 Stock Incentive Plan (the “Plan”), prohibiting both (i) the repricing of any awards except in limited circumstances involving corporate transactions, and (ii) the issuance and payment of dividends in connection with full value performance-based awards and the granting of voting rights to the recipients of such awards (collectively, the “Policy”), and the Policy was ratified by the Board on August 9, 2010; and

WHEREAS, the Board believes that amending the Plan to incorporate the terms of the Policy is in the best interests of the Company and its stockholders; and

WHEREAS, pursuant to Article 11 of the Plan, 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 believes that the amendment does not require approval of the Company’s stockholders because the amendment will not (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;

NOW, THEREFORE, pursuant to and in exercise of the authority retained by the Board under Article 11 of the Plan, the Plan is hereby amended, effective June 26, 2013, to provide as follows:

Section 3.2 of the Plan is hereby amended to add the following at the end thereof:

“Notwithstanding the foregoing, and except as otherwise provided by Article 10 hereof, neither the Board nor the Committee may amend the terms of outstanding Options to reduce the exercise price of such outstanding Options or to cancel such outstanding Options in exchange for cash or other Options with an exercise price that is less than the exercise price of the original Options, or take any other action with respect to Awards that would be treated as a repricing under the NASDAQ rules, regulations or listing standards, without stockholder approval.”

The Plan is hereby amended to include a new Section 6.6, which shall provide in its entirety as follows:

“6.6 Limitation on Certain Terms. Notwithstanding any other provision of this Article 6, no Restricted Stock Award granted under the Plan may provide the recipient of any such Award with the rights of a stockholder, including the right to vote the underlying shares of Common Stock or the right to receive any distributions made with respect to such shares of Common Stock as to which the restrictions have not yet lapsed, and any written agreement evidencing any such Award shall incorporate the limitations and restrictions; provided, however, a Restricted Stock Award that vests based on the satisfaction of specified performance goals may accrue dividend over the applicable performance period, and pay such dividends after the end of the applicable performance period to the extent that the performance goals have been satisfied.”

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 No. 6 to be executed, to be effective as of June 26, 2013.

Exhibit 10.04

MONRO MUFFLER BRAKE, INC.

RETIREMENT PLAN

TABLE OF CONTENTS


		Page

FOREWORD			1

SECTION 1 DEFINITIONS			2

Accrued Benefit			2
Actuarial Equivalent			2
1.1	Annuity Starting Date		2
1.2	Appropriate Form		2
1.3	Average Monthly Compensation		2
Beneficiary			2
1.4	Board of Directors		2
1.5	Code		2
1.6	Committee		2
1.7	Company		2
1.8	Compensation		2
1.9	Direct Rollover		3
1.10	Early Retirement		3
1.11	Early Retirement Date		4
1.12	Effective Date		4
1.13	Eligible Employee		4
1.14	Eligible Retirement Plan		4
1.15	Employee		4
1.16	Employer		4
1.17	Entry Date		4
1.18	ERISA		4
1.19	Group		4
1.20	Hour of Service		5
1.21	Late Retirement		5
1.22	Late Retirement Date		5
1.23	Leased Employee		5
1.24	Normal Retirement Date		6
1.25	One-Year Break in Service		6
1.26	Participant		6
1.27	Plan		6
1.28	Plan Year		6
1.29	Predecessor Employer		6
1.30	Pre-Retirement Survivor Annuity		7
1.31	Qualified Joint & One-Half Survivor Annuity		7
1.32	Service		7
1.33	Social Security Benefit		7
1.34	Special Early Retirement		7
1.35	Special Early Retirement Date		7
1.36	Spousal Consent		7
1.37	Spouse		7
1.38	Standard Form of Benefit		8
1.39	Trust		8
1.40	Trust Agreement		8
1.41	Trustee		8
1.42	Year of Service		8
1.43	Year of Vesting Service		8

(i)


		Page

SECTION 2 PARTICIPATION			9

2.1	Age and Service Requirements		9
2.2	Information at Participation		9
2.3	Change of Classification		9
2.4	Reinstatement and Reemployment		9
2.5	Transferred Employees		10
2.6	Joint Employment		10
2.7	Termination of Participation		10

SECTION 3 BENEFITS			10

3.1	Retirement Benefits		10
3.2	Vesting		11
3.3	Pre-Retirement Survivor Annuity		11
3.4	Limitation on Benefits		12
3.5	Purchase of Annuities		15
3.6	Cessation of Benefit Accruals		15

SECTION 4 CONTRIBUTIONS			15

4.1	Employer’s Contributions		15
4.2	Irrevocability of Employer’s Contributions		15
4.3	Adjustment for Gains		15
4.4	No Employee Contributions		15

SECTION 5 DISTRIBUTIONS			16

5.1	Standard Form of Benefit		16
5.2	Time of Distribution		16
5.3	Optional Forms of Benefit Payment		18
5.4	Beneficiaries		19
5.5	Indirect Payment of Benefits		20
5.6	Unclaimed Payments		20
5.7	Restrictions on Distributions		20
5.8	Rehire After Termination of Employment		20
5.9	Eligible Rollover Distributions		21
5.10	Minimum Required Distributions		22
5.11	HEART Act Provisions		25

SECTION 6 NOTICE AND WAIVER PROCEDURES			26

6.1	Qualified Joint & One-Half Survivor Annuity		26
6.2	Explanation of Rights		26

SECTION 7 ADMINISTRATION OF THE PLAN			26

7.1	Plan Administrator		26
7.2	Appointment of the Committee		27
7.3	Responsibility of Committee		27
7.4	Claims Procedure		27
7.5	Engagement of Accountant		28
7.6	Limitation on Liability		28
7.7	Agent for Service of Process		28
7.8	Delivery of Elections to Committee		28
7.9	Delivery of Notice to Participants		28

(ii)


		Page

SECTION 8 MANAGEMENT OF THE TRUST FUND			29

8.1	Trust Agreement		29
8.2	Appointment of the Trustee		29
8.3	Investment Authority		29
8.4	Form of Disbursements		29
8.5	Expenses of the Plan		29

SECTION 9 CERTAIN RIGHTS AND OBLIGATIONS OF EMPLOYERS			30

9.1	Disclaimer of Employer Liability		30
9.2	Employer-Employee Relationship		30
9.3	Nondiscriminatory Action		30

SECTION 10 NON-ALIENATION OF BENEFITS			30

10.1	Provision with Respect to Assignment and Levy		30
10.2	Alternate Application		30
10.3	Payments to Minors, etc.		31

SECTION 11 AMENDMENT AND TERMINATION OF THE PLAN			31

11.1	Right to Amend		31
11.2	Right to Terminate		31
11.3	Allocation of Assets on Termination		31
11.4	Merger		32
11.5	Appendix to the Plan		32
11.6	Prohibition Against Diversion		32

SECTION 12 MISCELLANEOUS PROVISIONS			32

12.1	Construction		32
12.2	Exhibits		32
12.3	Execution		33
12.4	Military Service		33

SECTION 13 PARTICIPATION IN THE PLAN BY SUBSIDIARIES OR GROUP MEMBERS			33

13.1	Participation by Subsidiaries or Group Members		33
13.2	Withdrawal of Participating Employers		33

SECTION 14 IN EVENT PLAN BECOMES TOP-HEAVY			34

14.1	Special Top-Heavy Definitions		34
14.2	Special Top-Heavy Provisions		35

SECTION 15			36

15.1	Limitations Applicable If the Plan’s Adjusted Funding Target Attainment Percentage Is Less Than 80 Percent, But Not Less Than 60 Percent		36
15.2	Limitations Applicable If the Plan’s Adjusted Funding Target Attainment Percentage Is Less Than 60 Percent		37
15.3	Limitations Applicable If the Plan Sponsor Is In Bankruptcy		38
15.4	Provisions Applicable After Limitations Cease to Apply		38
15.5	Notice Requirement		39
15.6	Methods to Avoid or Terminate Benefit Limitations		39
15.7	Special Rules		39
15.8	Definitions		41
15.9	Effective Date		41

(iii)


	Page

EXHIBIT A CALCULATION OF OPTIONAL FORMS OF BENEFIT		1

EXHIBIT B CALCULATION OF LUMP SUMS		1

EXHIBIT C LIMITATION ON CERTAIN BENEFITS		1

(iv)

FOREWORD

Effective as of February 1, 1972, in order to provide retirement benefits for its eligible employees, Monro Muffler Brake, Inc. adopted the Monro Muffler Brake, Inc. Retirement Plan (the “Plan”).

Effective as of April 1, 1980, the Plan was amended and restated to meet the requirements of Sections 401(a) and 501(a) of the Internal Revenue Code of 1954, as amended by the Employee Retirement Income Security Act of 1974 (hereinafter “ERISA”).

Effective April 1, 1984, the Plan was amended and restated to meet the requirements of the Tax Equity and Fiscal Responsibility Act of 1982, the Deficit Reduction Act of 1984 and the Retirement Equity Act of 1984.

Effective as of April 1, 1989 (and as of such other dates as are specified in the text) the Plan was amended and restated to conform to the requirements of the Internal Revenue Code of 1986 (hereinafter the “Code”), the Tax Reform Act of 1986, the Unemployment Compensation Amendments of 1992 and other applicable rules and legislation.

Effective April 1, 1997, the Plan was amended and restated to comply with various legislative and regulatory changes collectively known as “GUST”.

Effective April 1, 2007, the Plan was amended and restated to comply with the Economic Growth and Tax Relief Reconciliation Act of 2001 and other legislation.

The Plan is intended to continue to provide retirement and other incidental benefits to Eligible Employees (as defined herein).

The Plan is intended to comply with the applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, and Sections 401(a) and 501(a) of the Internal Revenue Code of 1986.

NOW, THEREFORE, effective April 1, 2013, except to the extent that any individual provision states a different effective date, the Plan is hereby amended and restated in its entirety to comply with the Pension Protection Act of 2006 and other legislation as follows:

SECTION 1

DEFINITIONS

The following words and phrases shall have the meanings set forth below unless a different meaning is plainly required by the context. Wherever any words are used in the singular, they shall be construed as though they were used in the plural in all appropriate cases.

1.1

“ Accrued Benefit ” means the retirement benefit a Participant would receive at his or her Normal Retirement Date as determined under Section 3.1(b), multiplied by a fraction, not greater than 1, the numerator of which is the Participant’s total number of Years of Service as of the date of determination and the denominator of which is the aggregate number of Years of Service the Participant would have accumulated if he or she had continued his or her employment until the earlier of his or her (a) Special Early Retirement Date or (b) Normal Retirement Date.

1.2	“ Actuarial Equivalent ” with respect to a benefit means a benefit of equivalent value when computed on the basis of the actuarial assumptions indicated in the applicable Exhibit to the Plan.

1.3	“ Annuity Starting Date ” means the first day of the first period for which an amount is paid as an annuity or any other form.

1.4	“ Appropriate Form ” means the written form provided or prescribed by the Committee for the particular purpose.

1.5

“ Average Monthly Compensation ” means the Compensation paid by the Company to a Participant during those last ten consecutive Plan Years prior to the Plan Year in which the Participant’s retirement occurs, divided by the number of Plan Years times 12. If a Participant has less than 10 full consecutive Plan Years from his or her date of employment to his or her date of termination, his or her Average Monthly Compensation will be the Compensation paid by the Company to a participant during the most recently completed full Plan Years, but no more than ten, divided by the number of Plan Years times 12.

Compensation subsequent to termination of participation pursuant to Section 2.7 shall not be recognized.

1.6	“ Beneficiary ” means the person(s), estate or trust designated by a Participant pursuant to Section 5.4.

1.7	“ Board of Directors ” or “ Board ” means the Board of Directors of Monro Muffler Brake, Inc.

1.8

“ Code ” means the Internal Revenue Code of 1986 as amended from time to time. Reference to a specific provision of the Code shall include such provision, any valid regulation or ruling promulgated thereunder and any comparable provision of future law that amends, supplements or supersedes such provision.

1.9	“ Committee ” means the administrative committee appointed by the Board to manage and administer the Plan in accordance with the provisions of Section 7 hereof.

1.10	“ Company ” means Monro Muffler Brake, Inc. and any successor to such corporation by merger, purchase, reorganization or otherwise.

1.11	“ Compensation ” means the total wages, salaries or other cash payments paid by the Employer, during the Plan Year, including the amount of any payments directly made by the Company to an

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Employee for non-work related sickness or disability for up to the first 90 days of such sickness or disability, and the amount of any reductions in the Participant’s otherwise payable compensation attributable to any “cafeteria plan” maintained by an Employer under Code Section 125, and excluding the following:

(a)

the amount of any payment (including any amount paid by an employer for insurance or annuities, or into a fund, to provide for any such payment) made to, or on behalf of, an employee or any of his or her dependents under a plan or system established by an employer which makes provision for his or her employees generally (or for his or her employees generally and their dependents) or for a class or classes of his or her employees (or for a class or classes of his or her employees and their dependents), on account of (i) sickness or accident disability which are received under a workers’ compensation law, or (ii) medical or hospitalization expenses in connection with sickness or accident disability, or (iii) death, except that this paragraph does not apply to a payment for group term life insurance to the extent that such payment is includible in the gross income of the employee,

(b)

any payment on account of sickness or accident disability, or medical or hospitalization expenses in connection with sickness or accident disability, made by an employer to, or on behalf of, an employee after the expiration of 6 calendar months following the last calendar month in which the employee worked for such employer,

(c)

the payment by an employer (without deduction from the remuneration of the employee) (i) of the tax imposed upon an employee under Code Section 3101, or (ii) of any payment required from an employee under a State unemployment compensation law,

(d)

imputed income,

(e)

reimbursed expenses,

(f)

any contributions or benefits arising in connection with this Plan or in connection with any other employee benefit or welfare plan of the Company (except as otherwise noted elsewhere in this Section 1.11).

(g)

any payment made by an Employer to an Employee, if at the time such payment is made such Employee is entitled to disability insurance benefits under Section 223(a) of the Social Security Act and such entitlement commenced prior to the calendar year in which such payment is made, and if such employee did not perform any services for such employer during the period for which such payment is made; and

(h)

such other payments as determined by the Committee under uniform rules applicable to all Employees similarly situated.

The Compensation of a Participant for a Plan Year shall not exceed the lesser of $100,000, or the dollar limit set forth in Section 401(a)(17) of the Code, as adjusted for increases in the cost-of-living in accordance with Section 401(a)(17)(B) of the Code. The cost-of-living adjustment in effect for a calendar year applies to any determination period beginning in such calendar year. If a determination period consists of fewer than 12 months, the annual compensation limit is an amount equal to the otherwise applicable compensation limit multiplied by a fraction, the numerator of which is the number of months in the short determination period, and the denominator of which is 12.

1.12	“ Direct Rollover ” means a payment by the Plan to the Eligible Retirement Plan specified by the Employee, former Employee, Spouse or Surviving Spouse.

1.13	“ Early Retirement ” means retirement of a Participant after age 55 but before age 65 provided that the Participant has at least 10 Years of Vesting Service at the time of retirement.

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1.14

“ Early Retirement Date ” means the date prior to Normal Retirement Date on which a Participant’s retirement benefit payments commence, which date shall be the first day of the month coincident with or next following the date on which a Participant commences Early Retirement, or such later date (prior to Normal Retirement Date) as the Participant shall select.

1.15	“ Effective Date ” means February 1, 1972. The Effective Date for this restatement can be found in the Foreword of the Plan. For any Employer (as defined in Section 1.19) added subsequent to the date of this restatement, Effective Date means the date on which such addition took place.

1.16	“ Eligible Employee ” means an Employee who has attained age 21 and who has completed his or her “Eligibility Service” (as defined below). An Eligible Employee shall participate in the Plan as set forth in Section 2.1.

The term “Eligible Employee” shall not include (a) an Employee who is represented by any collective bargaining agent, or included in any collective bargaining unit, recognized by the Company unless and until such Company and the collective bargaining agent agree that the Plan shall apply to such unit (provided that employee benefits have been the subject of good faith bargaining); (b) a leased employee as defined in Code Section 414(n)(2); or (c) any person engaged by the Employer as an “independent contractor,” even if it should later be determined by a governmental agency for some other purpose that such person is or was an “employee.”

An Employee shall have completed his or her “Eligibility Service” upon the first anniversary of his or her date of hire if he or she completed 1,000 or more Hours of Service during the 12 month period ending on such anniversary date. Subsequent Eligibility Service shall be measured by the completion of 1,000 or more Hours of Service during a Plan Year beginning with the Plan Year that commences during such period or in any subsequent Plan Year.

Service with a Group member shall be treated as employment with the Employer solely for purposes of determining eligibility for participation in the Plan.

1.17	“ Eligible Retirement Plan ” means a Plan described in Section 5.9(b)(ii) of the Plan.

1.18	“ Employee ” means any person employed by the Employer or a member of the Group but does not include any person whose relationship to the Employer under common law is that of an independent contractor. To the extent provided by Section 1.26, the term Employee also shall include a Leased Employee.

1.19

“ Employer ” means the Company and any subsidiary or affiliated entity which, with the approval of the Board and subject to such conditions as the Board may impose, adopts this Plan, and any successor or successors of any of them. If a subsidiary of the Company or a Group member adopts the Plan pursuant to Section 13.1, it shall be deemed the Employer with respect to its employees.

1.20	“ Entry Date ” means either April 1st or October 1st of any Plan Year.

1.21

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time-to-time. Reference to a specific provision of ERISA shall include such provision, any valid regulation or ruling promulgated thereunder and any comparable provision of future law that amends, supplements or supersedes such provision.

1.22	“ Group ” means the Employer and any other company which is related to the Employer as a member of a controlled group of corporations (as defined in Code Section 414(b)); as a trade or business under common control (as defined in Code Section 404(c)); any organization which is a

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member of an affiliated service group (as defined in Code Section 414(m)) which includes the Employer; and any other entity required to be aggregated with the Employer pursuant to Code Section 414(o). In determining the period of employment of an Employee, each such other employer shall be treated as a member of the Group only for such period or periods during which it is actually a Group member.

1.23	“ Hour of Service ” means:

(a)

Each hour for which an Employee is directly or indirectly paid, or entitled to payment, for the performance of duties as an Employee by an Employer or by a Group member;

(b)

Each hour for which an Employee is directly or indirectly paid, or entitled to payment by an Employer or by a Group member for reasons (such as vacation, sickness or disability) other than for the performance of duties, but counting as Hours of Service no more than 501 of such hours during any single continuous period during which no duties are performed; and

In the case of a family and medical leave of absence, a Participant shall be credited, to the extent required by the Family and Medical Leave Act of 1993, for purposes of eligibility for participation and vesting, with the total number of Hours of Service he or she would have worked had he or she not been on a family and medical leave of absence; and

(c)

Each hour for which back pay, irrespective of mitigation of damages, has been awarded or agreed to by an Employer or by a Group member.

In the event that an Employee is compensated on other than an hourly basis, the Employee shall be deemed to have completed 40 Hours of Service for each full week of employment, prorated on a daily basis. A Participant shall be deemed to have completed 40 Hours of Service for each full week of leave of absence approved for military service.

The same Hours of Service shall not be credited both under paragraphs (a) and (b) above, as the case may be, and paragraph (c) above, and each hour credited to an Employee under paragraphs (a), (b), or (c) above shall be credited in accordance with Section 2530.200b-2(b) and (c) of the U.S. Department of Labor’s Regulations, which hereby are incorporated by reference.

1.24	“ Late Retirement ” means the continued employment of an Active Participant after his or her Normal Retirement Date.

1.25	“ Late Retirement Date ” means the first day of the month coincident with or next following the actual retirement of a Participant who has been on Late Retirement.

1.26

“ Leased Employee ” means a person (other than an Employee of the Employer or an affiliate) who pursuant to an agreement between the Employer or an affiliate and any other person (“leasing organization”) has performed services for the Employer, its affiliates or related persons (determined in accordance with Section 414(n)(6) of the Code) on a substantially full-time basis (as defined for purposes of Section 414(n) of the Code) for a period of at least one year, and such services are performed under primary direction or control by the Employer or an affiliate. Contributions or benefits provided a Leased Employee by the leasing organization which are attributable to services performed for the Employer or an affiliate shall be treated as provided by the Employer or an affiliate.

A Leased Employee shall not be considered an Employee of the Employer or an affiliate if: (i) such employee is covered by a money purchase pension plan providing: (1) a nonintegrated employer contribution rate of at least ten percent (10%) of compensation, as defined in

- 5 -

Section 415(c)(3) of the Code, but including amounts contributed pursuant to a salary reduction agreement which are excludable from the employee’s gross income under Section 125, Section 132(f)(4), Section 402(e)(3), Section 402(g)(3), Section 402(h)(1)(B) or Section 403(b) of the Code, (2) immediate participation, and (3) full and immediate vesting; and (ii) Leased Employees do not constitute more than twenty percent (20%) of the Employer or an affiliate’s non-highly compensated workforce.

1.27	“ Normal Retirement Date ” means the first day of the month coincident with or next following the Participant’s 65th birthday.

1.28

“ One-Year Break in Service ” means a Plan Year during which an Employee completes no more than 500 Hours of Service. Hours of Service shall be recognized for a “permitted leave of absence” or a “maternity or paternity leave of absence” solely for purposes of determining whether a Participant has incurred a One-Year Break in Service.

Any period during which an Employee is absent from work on a family and medical leave of absence shall not constitute a period of severance to the extent required by the Family and Medical Leave Act of 1993.

To the extent required by the Family and Medical Leave Act of 1993, Years of Service credited for a family and medical leave of absence shall be that which would normally have been credited but for such absence and shall be credited solely for purposes of eligibility to participate, vesting and changes in the provisions of the Plan.

A “permitted leave of absence” means an unpaid, temporary cessation from active employment with the Employer or a Group member pursuant to a nondiscriminatory policy established by the Committee.

A “maternity or paternity leave of absence” means an absence from work for any period by reason of the Employee’s pregnancy, birth of the Employee’s child, placement of a child with the Employee in connection with the adoption of such child, or any absence for the purpose of caring for such child for a period immediately following such birth or placement. For this purpose, Hours of Service shall be credited for the Plan Year in which the absence from work begins, only if such credit is necessary to prevent the Employee from incurring a One-Year Break in Service, or, in any other case, in the immediately following Plan Year. The Hours of Service credited for a “maternity or paternity leave of absence” shall” be those which would normally have been credited but for such absence, or, in any case which the Committee is unable to determine such hours normally credited, eight Hours of Service per day. No more than 501 Hours of Service shall be credited for any maternity or paternity leave of absence.

1.29	“ Participant ” means any person participating in the Plan in accordance with the provisions of Section 2. “Active Participant” means a Participant who is working for an Employer and who completes at least 1,000 Hours of Service for his or her Employer(s) during a given Plan Year.

1.30	“ Plan ” means the Monro Muffler Brake, Inc. Retirement Plan as herein set forth, or as it may be amended from time to time.

1.31	“ Plan Year ” means each 12 consecutive month period beginning on April 1 and ending on March 31.

1.32	“ Predecessor Employer ” means a firm absorbed by the Company through a change of name, merger, acquisition or a change of corporate status, or a firm of which the company was once a part.

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1.33	“ Pre-Retirement Survivor Annuity ” means the annuity described in Section 3.3.

1.34

“ Qualified Joint & One-Half Survivor Annuity ” means an annuity payable for the life of a Participant (which is the Actuarial Equivalent of the Standard Form of Benefit for an unmarried Participant) with an annuity payable for life continuing, after the Participant’s death, to his or her Spouse. The amount continued to the Spouse shall be one-half of the amount payable to the Participant.

1.35	“ Service ” means employment with an Employer or Group member.

1.36

“ Social Security Benefit ” means the monthly amount available at age 65 to a Participant, as his or her Old-Age Insurance Benefit (excluding any benefit available on behalf of a spouse or other dependent) under the provisions of Title 11 of the Federal Social Security Act in effect on the earlier of age 65 or the date of his or her termination of employment with his or her Employer, whether or not such amount is actually paid without regard to any increases in the wage base or benefit levels that take effect after the date of termination of employment provided that if the Participant retires prior to his or her Social Security Retirement Age, his or her Social Security Benefit shall be estimated assuming the last full calendar years Compensation continues until he or she attains the Social Security Retirement Age. If a Participant terminates employment prior to age 55 and is eligible for a deferred vested benefit, the Social Security Benefit shall be estimated assuming the last full calendar years Compensation continues until his or her Social Security Retirement Age. Such amount shall be determined in accordance with uniform rules adopted by the Committee, and the fact that a Participant does not actually receive such amounts because of a failure to apply or continuance of employment or for any other reasons shall be disregarded.

1.37	“ Special Early Retirement ” means retirement of a Participant after age 60 but before age 65, provided that the Participant has at least 20 Years of Vesting Service at the time of retirement.

1.38

“ Special Early Retirement Date ” means the date prior to Normal Retirement Date on which a Participant’s retirement benefit payments commence, which date shall be the first day of the month coincident with or next following the date on which a Participant commences Special Early Retirement, or such later date (prior to Normal Retirement Date) as the Participant shall select.

1.39

“ Spousal Consent ” means written consent by the Participant’s Spouse to an election, designation of Beneficiary, or similar action by the Participant, which consent acknowledges the effect of such election, designation or action and is witnessed by a notary public; or “deemed consent” in which the Committee is satisfied that such consent cannot be obtained because there is no Spouse, because the Spouse cannot be located, or because of other circumstances which may be provided by applicable law.

Any consent or deemed consent with respect to a Spouse which satisfies these requirements shall be effective only with respect to such Spouse and may not be revoked by such Spouse with respect to the election, designation or other action to which such consent pertains.

Any consent of the Spouse to a waiver of the Qualified Joint & One-Half Survivor Annuity also must consent to the election of the Participant to the form of payment selected, and any waiver of the Qualified Joint & One-Half Survivor Annuity also must provide for the consent of the Spouse to the designation of Beneficiary if the primary Beneficiary is anyone other than the Spouse.

1.40	“ Spouse ” or “Surviving Spouse” means a person to whom a Participant is legally married on the earlier of (a) the date on which the Participant’s retirement benefit commences, or (b) the date of the Participant’s death. For purposes of the Pre-Retirement Survivor Annuity (as defined in

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Section 1.33) a Spouse shall not be considered a Surviving Spouse unless the Participant and the Spouse had been married throughout the 1-year period ending on the date of the Participant’s death.

To the extent provided under a qualified domestic relations order as defined in Code Section 414(p), the term shall include a former spouse.

1.41	“ Standard Form of Benefit ” means the form of retirement benefit specified in Section 5.1.

1.42	“ Trust ” or “Trust Fund” means the trust fund created by the provisions of the Plan which set forth the terms under which the Trustees shall hold and administer the assets of the Plan.

1.43	“ Trust Agreement ” means the agreement entered into between the Company and the Trustee as provided for in Section 8, as the same is amended from time to time.

1.44	“ Trustee ” or “Trustees” means the person or persons who are selected by the Board of Directors who may at any time be acting as a Trustee or Trustees under the Plan.

1.45	“ Year of Service ” means any Plan Year, whether before or after the Effective Date, during which an Employee completes at least 1,000 Hours of Service.

Service with a Group member shall be treated as employment with the Employer solely for purposes of determining Years of Service under this Plan.

A Participant who is on a leave of absence with the Armed Forces of the United States, shall accrue Years of Service while on such leave of absence, and if such Participant does not return to active employment with an Employer within the time limit required to retain his or her reemployment rights under the applicable Federal laws, the Participant shall be considered to have terminated employment as of the beginning of the period in which he or she incurs a One-Year Break in Service.

For purposes of Section 3.1(b)(ii), Years of Service with a Predecessor Employer shall be included as Service with the Employer. Such predecessor service shall be includible as Years of Service only if the service was continued without interruption with the Employer. Predecessor service performed as a sole-proprietor or partner shall be excluded. This service shall be included only to the extent that such inclusion does not result in a duplication of benefits by reason of being covered under any other separate non-governmental pension or profit sharing plan to which the Employer contributes.

1.46	“ Year of Vesting Service ” means any Plan Year during which an Employee completes at least 1,000 Hours of Service.

Service with a Group member shall be treated as employment with the Employer solely for purposes of determining Years of Service under this Plan.

A Participant who is on a leave of absence with the Armed Forces of the United States, shall accrued Years of Vesting Service while on such leave of absence, and if such Participant does not return to active employment with an Employer within the time limit required to retain his or her reemployment rights under the applicable Federal laws, the Participant shall be considered to have terminated employment as of the beginning of the period in which he or she incurs a One-Year Break in Service.

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In the case of a Participant who does not have any vested right to an Accrued Benefit, any Years of Service completed before he or she incurs a One-Year Break in Service shall not be taken into account if the number of consecutive One-Year Breaks in Service equals or exceeds the greater of (a) 5 or (b) the Participant’s Years of Service prior to such break. Years of Service completed before a given One-Year Break in Service shall not include any Year of Service that need not be taken into account because of a prior One-Year Break in Service.

In the case of a Participant who incurs a One-Year Break in Service, Years of Service before the Break in Service shall not be required to be taken into account until he or she has completed a Year of Service after his or her return to employment.

SECTION 2

PARTICIPATION

2.1	Age and Service Requirements

An Employee shall become a Participant on the Entry Date coincident with or next following the date on which he or she becomes an Eligible Employee.

For the purpose of this Section 2.1, an Employee’s Service shall commence on the date on which the Employee first performs an Hour of Service.

Notwithstanding any other provision in the Plan, no Participant shall accrue any additional benefit under the Plan for services rendered or compensation earned on or after September 30, 1999, and no Employee shall become a Participant in the Plan on or after such date.

2.2	Information at Participation

Upon becoming a Participant, an Employee shall provide any information necessary for purposes of administering the Plan that may be requested by the Committee.

2.3	Change of Classification

In the event that an Employee becomes an Eligible Employee, such Eligible Employee will become a Participant of this Plan, subject to the provisions of Section 2.1. Upon becoming a Participant he or she will be granted Years of Vesting Service under the Plan from the date on which he or she became an Employee of the Employer.

If a Participant ceases to be an Eligible Employee but continues as an Employee of the Employer or a Group member, he or she will continue to earn Years of Service.

2.4	Reinstatement and Reemployment

A Participant who incurs a One-Year Break in Service and then is reinstated or reemployed shall reenter this Plan upon completion of a Year of Service after his or her reinstatement or reemployment, retroactive to the date of reinstatement or reemployment. However, such Participant shall not be granted Years of Service for the period of employment prior to the break if (a) such Participant had previously acquired no vested rights under this Plan and (b) the number of the Participant’s consecutive One-Year Breaks in Service equals or exceeds the greater of (i) 5 or (ii) his or her Years of Service prior to the break in Service.

Any (non-Participant) Employee who terminates employment and is reemployed prior to incurring a One-Year Break in Service shall be treated, for purposes of this Plan, as though he or she never terminated employment. Such an Employee shall become a Participant as of the Entry Date coincident with or next following his or her reemployment date.

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Any person who was a Participant in the Plan at the time of his or her termination, and who did not incur a One-Year Break in Service, shall immediately re-enter the Plan and shall continue to vest (starting at the same point in the vesting schedule at which he or she left oft) in both his or her pre-termination and post-termination Accrued Benefit.

2.5	Transferred Employees

In the event that an Active Participant transfers to the employment of another Employer participating in this Plan, he or she shall not be deemed to have terminated his or her participation in this Plan, but shall continue to accrue Years of Service.

2.6	Joint Employment

Any Employee employed by more than one Employer shall be considered to be an Employee of each such Employer for purposes of eligibility for participation in the Plan and benefit accrual under the Plan. However, if an Employee is employed by 2 or more Employers at the same time, his or her periods of joint employment shall not create more than one period of time for the purposes of determining Years of Service or Years of Vesting Service under this Plan. His or her Compensation from all Employers shall be aggregated for purposes of determining his or her benefit, and the cost of such benefit shall be shared ratably by his or her Employers.

2.7	Termination of Participation

Participation in the Plan shall cease (a) when a Participant dies, or (b) if a Participant incurs a One-Year Break in Service before he or she has acquired any vested interest in his or her Accrued Benefit, or (c) if a Participant receives a lump sum distribution (applicable to lump sums of $5,000 or less) of the Actuarial Equivalent of his or her vested benefit, provided he or she is not then accruing benefits hereunder or (d) if a Participant receives a distribution of the Actuarial Equivalent of his or her vested benefit in the form of an annuity contract purchased on his or her behalf by the Trustees provided he or she is not then accruing benefits hereunder.

SECTION 3

BENEFITS

3.1	Retirement Benefits

(a)

Right to Benefit . A Participant who reaches his or her Normal Retirement Date while in the employ of the Employer or a Group member shall have a nonforfeitable right to 100% of his or her Accrued Benefit.

(b)

Amount of Retirement Benefit . Subject to the limits set forth herein, including the limits of Section 3.6, the monthly normal retirement benefit payable to an Employee eligible therefore and commencing on his or her Normal Retirement Date shall be equal to the product of (i) and (ii) below:

(i)

an amount equal to 45% of his or her Average Monthly Compensation, reduced by 45% of his or her Social Security Benefit; and

(ii)

a fraction, not greater than 1, the numerator of which is the Participant’s total number of Years of Service commencing with his or her date of hire and continues as if he or she remains an Employee until his or her Normal Retirement Date and the denominator of which is 10.

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(c)

Early Retirement . The amount in the Standard Form of Benefit payable for Early Retirement will be the Accrued Benefit determined at the date on which the Participant’s Service ceases, reduced, however, for early commencement in accordance with Section 5.2(g).

(d)

Special Early Retirement . The amount in the Standard Form of Benefit payable for Special Early Retirement will be the Accrued Benefit determined at the date on which the Participant’s Service ceases, unreduced for early commencement.

(e)

Late Retirement . A Participant may continue working after his or her Normal Retirement Date, but no retirement benefit shall be paid until the earlier of the date the Participant actually retires or the April 1 following the calendar year in which the Participant attains age 70 ¹ ⁄ ₂ .

The amount in the Standard Form of Benefit payable to a Participant who retires on his or her Late Retirement Date shall be equal to the amount determined under Section 3.1(b) as of the date on which the Participant’s Service ceases adjusted for late commencement in accordance with Section 5.2(h).

(f)

Termination of Employment . If a Participant’s employment with an Employer terminates for any reason other than retirement or death, the Participant shall be entitled to receive a benefit equal to his or her vested Accrued Benefit. Except as provided in Sections 5.2(b) and (g), this benefit shall become payable at the Participant’s Normal Retirement Date.

3.2

Vesting

A Participant who has completed at least 5 Years of Vesting Service shall be 100% vested in his or her Accrued Benefit.

Any Participant who reaches age 65 or satisfies the requirements for Early Retirement, whichever is earlier, while in the employ of the Employer shall be 100% vested in his or her Accrued Benefit.

If a Participant’s employment with the Employer terminates for any reason other than retirement, the Participant shall be entitled to receive a benefit equal to his or her vested Accrued Benefit. Except as provided in Sections 5.2(b) and (g), this benefit shall become payable at the Participant’s Normal Retirement Date.

Any Participant who has completed fewer than 5 Years of Vesting Service and has incurred a One-Year Break in Service shall not be vested in his or her Accrued Benefit and such Participant’s Accrued Benefit shall be forfeited when such Participant has incurred the 5th consecutive One-Year Break in Service.

3.3	Pre-Retirement Survivor Annuity

(a)

In General

Subject to the conditions set forth in this Section 3.3, if a married Participant with a vested right to an Accrued Benefit under Section 3 should die before his or her Annuity Starting Date, a Pre-Retirement Survivor Annuity, determined in accordance with paragraph (c) below, shall be payable to the Participant’s Spouse, except to the extent otherwise provided in Section 1.40 with respect to Qualified Domestic Relations Orders.

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There shall be no pre-retirement survivor benefit payable on behalf of a Participant who is either (i) unmarried or (ii) not vested in his or her Accrued Benefit, should he or she die before his or her Annuity Starting Date.

(b)

Amount of Pre-Retirement Survivor Annuity

(i)

If the Participant’s death occurs after he or she would have been eligible for Early Retirement, Pre-Retirement Survivor Annuity benefits shall be payable to the Participant’s Spouse, commencing with the month following the month of the Participant’s death and continuing for the then remaining lifetime of the Spouse, in an amount equal to 50% of the amount of benefit which would have been payable to the Participant if he or she had retired on the day before his or her death and retirement benefit payments had then commenced (reduced under Section 5.2(g) to reflect early commencement), in the form of a Qualified Joint & One-Half Survivor Annuity.

(ii)

If the Participant’s death occurs on or before the date he or she was eligible for Early Retirement, Pre-Retirement Survivor Annuity benefits shall be payable to the Participant’s Spouse, commencing with the month in which the Participant would have first been eligible for Early Retirement had the Participant survived, and continuing for the then remaining lifetime of the Spouse, in an amount equal to 50% of the amount of retirement benefit which would have been payable to the Participant if he or she had separated from Service on the date of his or her death (or date of separation from Service, if earlier), survived to the date the Participant would have been eligible for Early Retirement, retired and had retirement benefit payments commence (reduced under Section 5.2(g) to reflect early commencement) in the form of a Qualified Joint & One-Half Survivor Annuity, and died on the day after the date the Participant would have been first eligible for Early Retirement.

(c)

Claim for Benefits

Subject to paragraph (d), the Spouse may elect to defer commencement of the Pre-Retirement Survivor Annuity to no later than the date the Participant would have been eligible for Normal Retirement.

The Spouse must file a claim for benefits before payment of benefits will commence. The claim for benefits shall be in writing, in such form as the Committee shall designate, and shall include certifications as to the death of the Participant, the dates of birth of the Participant and of the Spouse, the date of marriage, and such other information as the Committee deems necessary.

(d)

Lump Sum Payment

If the Actuarial Equivalent value of a Pre-Retirement Survivor Annuity is $5,000 (or such greater amount as is permissible under Code Section 411(a)(11)) or less, payment to the Spouse shall be made in a lump sum as soon as practicable following the Participant’s death.

3.4	Limitation on Benefits.

(a)

Notwithstanding any provision in the Plan to the contrary, the Plan shall comply with the requirements of Code Section 415, and the Plan hereby incorporates by reference the

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rules and limitations of Code Section 415. The maximum annual benefit (i.e., the benefit computed under Section 6) payable under this Plan and all other defined benefit plans of the Employer shall be limited to the maximum amounts permitted under Code Section 415. In general, Section 415 limits a Participant’s annual benefit to the lesser of $160,000 or the Participant’s average annual compensation during the three consecutive Years of Service affording the highest such average, or during all years if less than three; provided that if the Participant has not completed ten years of participation, such maximum annual benefit shall be reduced in the ratio which the number of years of participation bears to ten. The maximum dollar limitation shall be adjusted in accordance with cost of living increases in the amount determined by the Commissioner of Internal Revenue.

(b)

If the benefit of a Participant begins prior to age 62, the defined benefit dollar limitation applicable to the Participant at such earlier age is an annual benefit payable in the form of a straight life annuity beginning at the earlier age that is the Actuarial Equivalent of the defined benefit dollar limitation applicable to the Participant at age 62 (adjusted under (a) above, if required). The defined benefit dollar limitation applicable at an age prior to age 62 is determined as the lesser of (i) the actuarial equivalent (at such age) of the defined benefit dollar limitation computed using a five percent interest rate and the applicable mortality table under Section 1.2, and (ii) the defined benefit dollar limitation multiplied by the ratio of the annual amount of the immediately commencing straight life annuity under the Plan at the Participant’s annuity starting date to the annual amount of the immediately commencing straight life annuity under the Plan at age 62, both determined without applying the limitations of Code section 415. No adjustment shall be made to the defined benefit dollar limitation to reflect the probability of a Participant’s death between the age at which benefits commence and age 62.

(c)

If the benefit of a Participant begins after the Participant attains age 65, the defined benefit dollar limitation applicable to the Participant at the later age is the annual benefit payable in the form of a straight life annuity beginning at the later age that is actuarially equivalent to the defined benefit dollar limitation applicable to the Participant at age 65 (adjusted under (a) above, if required). The Actuarial Equivalent of the defined benefit dollar limitation applicable at an age after age 65 is determined as the lesser of (i) the actuarial equivalent (at such age) of the defined benefit dollar limitation computed using a five percent interest rate and the applicable mortality table under Section 1.2, and (ii) the defined benefit dollar limitation multiplied by the ratio of the annual amount of the immediately commencing straight life annuity under the Plan at the Participant’s annuity starting date to the annual amount of the immediately commencing straight life annuity under the Plan at age 65, both determined without applying the limitations of Code section 415. No adjustment shall be made to the defined benefit dollar limitation to reflect the probability of a Participant’s death between age 65 and the age at which benefits commence.

(d)

Notwithstanding the foregoing, the benefit otherwise accrued or payable to a Participant under this Plan shall be deemed not to exceed the limitations under this Section if:

(i)

the Participant’s annual benefit does not exceed $10,000 multiplied by a fraction, (A) the numerator of which is the number of years (or part thereof) of participation in the Plan and (B) the denominator of which is 10; and

(ii)

the Participant had not at any time participated in a defined contribution plan maintained by the Employer.

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(e)

For purposes of this Section, a Participant’s compensation means the total remuneration paid to the Participant by the Employer during the Plan Year for personal services actually rendered including pre-tax salary reduction contributions to any Code section 401(k), 125 or 132(f)(4) plan or arrangement, but excluding Employer contributions to this Plan or any other plan of deferred compensation, amounts realized upon the exercise of stock options or the lifting of restrictions on restricted stock. Compensation also includes payments made within 2 ¹ ⁄ ₂ months after severance from employment or if later, the end of the limitation year during which the severance occurred, if they are payments that, absent a severance from employment, would have been paid to the Employee while the Employee continued in employment with the Employer, such as overtime, commissions, bonuses, and other similar compensation. Any payments not described above are not considered compensation if paid after severance from employment, even if they are paid within 2 ¹ ⁄ ₂ months following severance from employment or within the appropriate limitation year; except for payments to an individual who does not currently perform services for the Employer by reason of qualified military service (within the meaning of Code Section 414(u)(1)) to the extent these payments do not exceed amounts the individual would have received if the individual had continued to perform services for the Employer rather than entering qualified military service. Compensation does not include amounts that exceed the Code Section 401(a)(17) limit.

(f)

For purposes of adjusting the annual benefit to a straight life annuity, the following provisions shall apply:

(i)

In the case of forms of benefit which are subject to Code Section 417(e)(3), with respect to Plan Years beginning in 2004 and 2005, for purposes of adjusting the annual benefit to a straight life annuity, if the annual benefit is paid in any form other than a non-decreasing life annuity payable for a period not less than the life of a Participant or, in the case of a pre-retirement survivor annuity, the life of the surviving spouse, then the equivalent annual benefit shall be the greater of: (A) the equivalent annual benefit computed using the interest rate and mortality table specified in Section 1.2, and (B) the equivalent annual benefit computed using 5.5% and the mortality table specified in Section 1.2.

For Plan Years beginning January 1, 2006 and later, notwithstanding any provision in the Plan to the contrary with respect to the Code section 415 limit, the actuarially equivalent straight life annuity benefit is the greatest of (A), (B) or (C) below:

(A)

the annual amount of the straight life annuity, commencing at the annuity starting date computed using a 5.5% interest rate and the applicable mortality table under Code section 417(e),

(B)

the annual amount of the straight life annuity, commencing at the annuity starting date computed using the applicable interest rate and applicable mortality table under Code section 417(e), divided by 1.05, or

(C)

the annual amount of the straight life annuity, commencing at the annuity starting date computed using the interest rate and mortality table specified in Section 1.2 of the Plan.

(ii)

In the case of forms of benefit which are not subject to Code Section 417(e)(3), the equivalent annual benefit is equal to the greater of (A) the annual amount of the straight life annuity (if any) payable to the Participant under the Plan

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commencing at the same annuity starting date as the Participant’s form of benefit; and (B) the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the Participant’s form of benefit, computed using a five percent interest rate assumption and the applicable mortality table specified in Section 1.2 of the Plan for that annuity starting date.

3.5	Purchase of Annuities . The Committee may from time to time direct the Trustee to provide the benefits due to a particular Participant or Beneficiary through the purchase of annuity contracts or otherwise.

3.6

Cessation of Benefit Accruals . Notwithstanding any other provision in the Plan, no Participant shall accrue any additional benefit under the Plan for services rendered or compensation earned on or after September 30, 1999 and no Employee shall become a Participant in the Plan on or after such date.

SECTION 4

CONTRIBUTIONS

4.1	Employer’s Contributions . The Contributions of each Employer shall be payable at such intervals and in such amounts as may be directed by the Employer.

4.2

Irrevocability of Employer’s Contributions . Contributions made by an Employer shall be irrevocable and shall be held by the Trustees in accordance with the provisions of Section 8, except as specifically provided in this Section 4.2. In the case of a contribution made by an Employer which is made by a mistake of fact, the contribution shall be returned to the Employer within 1 year of the date on which it was made. Any earnings attributable to a contribution made by a mistake of fact shall remain in the Trust Fund; any losses shall be deducted from the amount to be returned to the Employer.

In the case of a contribution conditioned upon deductibility by the Employer under Code Section 404, the contribution shall be returned to the Employer, to the extent that the contribution is disallowed, within 1 year of the disallowance. All contributions hereunder are conditioned upon their deductibility.

If an Employer contribution is conditioned upon initial qualification of the Plan under Code Section 401(a), and if the Plan does not so qualify (and provided that the application for determination relating to initial qualification is filed by the due date of the Employer’s return for the taxable year in which the Plan was adopted), then this Section shall not prohibit the return of such contribution to the Employer within one year after the date of denial of qualification of the Plan.

4.3

Adjustment for Gains . Actuarial gains, including forfeitures and dividends, to the extent that they exceed actuarial losses, will be used to reduce future contributions to the Plan by the Employers and shall not be applied to increase the benefits any Employee would otherwise receive under the Plan.

4.4	No Employee Contributions . Employees shall not be permitted to contribute to the Plan.

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SECTION 5

DISTRIBUTIONS

5.1	Standard Form of Benefit

(a)

The Standard Form of Benefit for an unmarried Participant (or a married Participant who has waived the Qualified Joint & One-Half Survivor Annuity pursuant to Section 6) is a life annuity.

(b)

In the event that a Participant has a Spouse on the date on which his or her retirement benefit payments are to commence, the Standard Form of Benefit shall be a Qualified Joint & One-Half Survivor Annuity that is the Actuarial Equivalent of the Standard Form of Benefit under (a) above, unless the Participant has elected, in accordance with Section 6, prior to the Annuity Starting Date, not to receive his or her retirement benefit in the form of a Qualified Joint & One-Half Survivor Annuity.

5.2	Time of Distribution

(a)

In General . Retirement benefit payments shall commence on a Participant’s Normal Retirement Date, or on a Participant’s Early Retirement Date, Special Early Retirement or Late Retirement Date, whichever is applicable.

(b)

Cashouts . Notwithstanding any other provision of the Plan, if a Participant has terminated employment and the present value of his Accrued Benefit under this Plan is $5,000 or less, this present value shall be distributed under the terms of this Section 5.2(b) in lieu of all benefits to which the Participant is otherwise entitled under this Plan. If the present value of a Participant’s nonforfeitable Accrued Benefit is more than $1,000 but $5,000 or less, and he fails to elect to have his benefit paid in cash or transferred to an IRA of his own designation, his entire nonforfeitable Accrued Benefit shall be paid automatically to a rollover IRA of the Company’s designation. If a Participant terminates participation in the Plan at a time when the present value of his nonforfeitable Accrued Benefit attributable to Company contributions is $1,000 or less, the present value of his entire nonforfeitable Accrued Benefit shall be paid to him automatically in cash.

(c)

Rollover Distributions . Notwithstanding any provisions to the contrary, an Employee, former Employee, Spouse or Surviving Spouse who is entitled to benefits under the Plan may elect, at the time and in the manner prescribed by the Committee, to have any portion of an Eligible Rollover Distribution paid directly to an Eligible Retirement Plan specified by the Employee, former Employee, Spouse or Surviving Spouse in a Direct Rollover.

(d)

Required Annuity Starting Date . In no event shall a Participant’s Annuity Starting Date be later than the earlier of (i) or (ii) below:

(i)

the 60th day after the close of the Plan Year in which the latest occurs:

(A)

the Participant reaches Normal Retirement Date;

(B)

the Participant’s Service terminates; or

(C)

the Participant’s 10th anniversary of Plan participation.

(ii)

the later of April 1 of the calendar year following the calendar year in which the Participant attains age 70 ¹ ⁄ ₂ or retires, except that for a 5-percent owner the date shall be the April 1 of the calendar year following the calendar year in which the Participant attains age 70 ¹ ⁄ ₂ .

(e)

Payments While in Service . Any benefits payable under the provisions of this Section prior to the Participant’s termination of Service shall be based on the Actuarial Equivalent of the Participant’s vested Accrued Benefit as of the end of the Plan Year preceding the date of payment, and shall be redetermined as of the first day of each subsequent Plan Year, taking into account any additional accruals.

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(f)

Frequency of Payments . Retirement benefit payments shall be made monthly, in installments of 1/12 the annual amount except that the Committee in its discretion may direct that payments be made less frequently than once a month. Any periodic payments to be made less frequently than once a month shall be made at least once in a 12 month period.

(g)

Early or Special Early Retirement

(i)

The amount of benefit (as specified in Section 3.1(c)) payable for Early Retirement shall be either:

(A)

The Accrued Benefit, commencing at age 65, based on the Participant’s Average Monthly Compensation and Years of Service at the Participant’s termination of employment and the Plan provisions in effect at such date, or

(B)

The Accrued Benefit, commencing at the optional Early Retirement Date, based on the Participant’s Average Monthly Compensation and Years of Service up to his or her actual termination of employment and the Plan provisions in effect at such date, but reduced as follows:

(I)

For Participants electing to commence early retirement before age 65 but at or after age 60, the normal retirement benefit shall be reduced by 1/15 for each year by which the Participant’s actual retirement precedes his or her Normal Retirement Date, and

(II)

For Participant’s electing to commence early retirement before age 60, the normal retirement benefit shall be further reduced by 1/30 for each year by which the Participant’s actual retirement date precedes the date of his or her 60th birthday.

The reductions shown above shall be prorated for a partial year.

(ii)

The amount of benefit (as specified in Section 3.1(d)) payable for Special Early Retirement shall be retirement benefit payments commencing at either age 65 or the optional Special Early Retirement Date, based on the Participant’s Average Monthly Compensation and Years of Service at the Participant’s termination of employment and the Plan provisions in effect at such date unreduced for early commencement.

If a Participant satisfies the service requirement for Early Retirement or Special Early Retirement at the time his or her employment terminates, and if the Participant subsequently attains the age at which he or she would have been eligible for Early Retirement or Special Early Retirement if his or her employment had not terminated, the Participant may elect to receive benefit payments commencing on the first day of any month after he or she attains such age. The benefit payable shall be determined as set forth in the preceding paragraph.

(h)

Late Retirement . The amount of benefit (as specified in Section 3.1(e)) payable for Late Retirement shall be the normal retirement benefit payments commencing at age 65 based on the Participant’s Average Monthly Compensation and Years of Service at his or her Normal Retirement Date and the Plan provisions in effect at such date multiplied by the factor set forth in the table below for late commencement.

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NUMBER OF YEARS LATE RETIREMENT DATE FOLLOWS NORMAL RETIREMENT DATE	FACTOR
1		1.06
2		1.12
3		1.19
4		1.26
5		1.34
6		1.42
7		1.50
8		1.58
9		1.67
10		1.76

The above factors shall be prorated for a partial year (counting a partial month as a complete month). Factors for numbers of years beyond 10 shall be determined using a consistently applied reasonable actuarial equivalent method.

(i)

Suspension of Benefits . Benefit payments suspended pursuant to Section 2530.203-3 of the U.S. Department of Labor’s Regulations shall, upon the Employee’s subsequent termination of employment, be resumed no later than the first day of the third month after the Employee ceases to be in “Section 203(a)(3)(B) service” pursuant to such Regulations, and any initial payment on resumption shall include the payment for the month of resumption and amounts withheld between the cessation of “Section 203(a)(3)(B) service” and the resumption of payments.

5.3	Optional Forms of Benefit Payment

(a)

Elections . Subject to the provisions of Section 6, each Participant may elect to receive his or her retirement benefit in one of the optional forms specified in Section 5.3(b).

Such election shall be made on the Appropriate Form within the 180-day period ending on the Annuity Starting Date and shall require Spousal Consent, where applicable under Section 1.39. The Committee shall provide each Participant, no less than 30 days and no more than 180 days before the Participant’s Annuity Starting Date, a retirement application form describing the normal and optional forms of benefit payments, including their relative financial effects in terms of dollars per annuity payment on the Participant.

However, if the Actuarial Equivalent value of a Participant’s retirement benefit before his or her Annuity Starting Date is $5,000 (or such greater amount as is permissible under Code Section 41l(a)(11)) or less, payment shall be made in a single sum without the consent of the Participant or the Participant’s Spouse.

A Participant may change his or her election of an optional form of benefit payment at any time prior to the Annuity Starting Date. A Participant may revoke his or her option election at any time prior to his or her Annuity Starting Date and receive the Standard Form of Benefit. No change may be made after the Annuity Starting Date. However, if a Participant retires on Early Retirement or Special Early Retirement and then is reemployed and again becomes an Active Participant in the Plan, he or she shall be entitled to elect an optional form of benefit payment, or to change such an election, as if he or she had never been retired.

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(b)

Optional Forms

The optional forms of benefit payment which a Participant may elect are as follows:

(i)

Joint & Survivor Option . An annuity that is the Actuarial Equivalent of the Standard Form of Benefit and is payable for the life of a Participant, with the provision that after the Participant’s death his or her Beneficiary shall receive, for life, 100%, 75%, 66-2/3%, or 50% of the amount payable to the Participant.

(ii)

Life & Period Certain Annuity Option . An annuity that is the Actuarial Equivalent of the Standard Form of Benefit and is payable for the life of a Participant or for a stated minimum period of years, whichever is longer, with the provision that after the Participant’s death his or her Beneficiary shall receive the balance of payments (if any) due during the stated minimum period of years. The Participant shall select a minimum period of 5, 10 or 15 years, provided that such minimum shall not exceed the life expectancy of the Participant.

If both the Participant and his or her designated Beneficiary die before the stated minimum period of years has expired, the balance of the payments due shall be paid to the estate of the Participant, or the party or parties entitled by law to receive such payment.

If a Participant who has elected this option dies before his or her Annuity Starting Date or before his or her first benefit payment is due, his or her election shall be considered null and void.

If a Participant’s designated Beneficiary predeceases him or her, the Participant may designate another Beneficiary. A Participant may change his or her designated Beneficiary at any time by filing a written notice of the change with the Committee, subject to Spousal Consent.

(iii)

Life Annuity Option . An annuity that is payable for the life of a Participant.

If a Participant who has elected this option dies before his or her Annuity Starting Date and before his or her first benefit payment is due, his or her election shall be considered null and void.

5.4	Beneficiaries

Each Participant may designate on the Appropriate Form a Beneficiary or Beneficiaries to receive any payment(s) due under the Plan in the event of his or her death. The designation of a Beneficiary other than a Participant’s Spouse must be made with Spousal Consent. If a Participant fails to designate a Beneficiary, or if for any reason his or her designation is legally ineffective, or if no designated Beneficiaries survive to the date that a payment is due, payment shall be made to the Participant’s Spouse, if the Participant is married; otherwise, to the Participant’s estate.

A Participant may change his or her designated Beneficiary by filing written notice of the change with the Committee. Such a change must be made with Spousal Consent, and may be made at any time prior to the Annuity Starting Date or, with respect to optional forms of payment, at the times specified in 5.3(a) and/or 5.3(b)(ii).

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5.5	Indirect Payment of Benefits

If any Participant or designated Beneficiary is, in the judgment of the Committee, legally, physically, or mentally incapable of personally receiving and receipting for any payment due under this Plan, the Committee may direct that payment be made to the guardian or other legal representative of that Participant or Beneficiary, or, if there is none, to the person or institution then maintaining or having custody of that Participant or Beneficiary. Such payments shall constitute a full discharge with respect hereto.

5.6	Unclaimed Payments

If any amount is payable from the Trust Fund to any person and, after written notice from the Committee mailed to such person’s last known address, and such person shall not have presented himself or herself to the Committee within 2 years after the mailing of such notice, such amount shall be forfeited and applied to reduce Employer contributions; provided however, that the forfeited amount shall be restored and paid to the proper payee upon any ultimate claim for benefits by such proper payee.

5.7	Restrictions on Distributions

Any option which is available shall provide that the period over which payments are to be made to the Participant and his or her designated Beneficiary may not exceed the joint life and last survivor expectancy at actual retirement of the Participant and his or her Beneficiary; provided, however, that if the designated Beneficiary is other than the Spouse, the Participant must anticipate receiving more than 50% of the Actuarial Equivalent of his or her benefit calculated as of the date of his or her retirement.

No balance to be paid on the death of a Participant prior to the Participant’s Annuity Starting Date or upon the death of the Spouse shall be paid in installments over a period longer than 5 years from the date of death unless:

(a)

Payments are being made to the Participant’s Spouse and begin no later than the later of 1 year after the Participant’s death or the date on which the Participant would have reached age 70 ¹ ⁄ ₂ , and are to be paid over a period not longer than the lifetime (or life expectancy) of the Spouse; or

(b)

Payments are being made to a non-Spouse over a period no longer than the life (or life expectancy) of the Beneficiary, and distribution to the Beneficiary commences no later than 1 year after the Participant’s death (or Spouse’s death, where applicable).

Distributions made after the death of the Participant must be made at least as rapidly as under the method of distribution in effect prior to the Participant’s death.

Distributions will be made in accordance with Code Section 401(a)(9) and the regulations issued thereunder and such provisions shall override any distribution options in the Plan inconsistent with Code Section 401(a)(9).

5.8	Rehire After Termination of Employment

If a Former Participant again becomes a Participant, such renewed participation shall not result in duplication of benefits. Accordingly, if he or she has received a distribution of a vested Accrued Benefit under the Plan by reason of prior participation (and such distribution has not been repaid to the Plan with interest at the rate determined under Code Section 411(c)(2)(C), compounded annually from the date of distribution to the date of repayment, before the earlier of 5 years after

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the first date on which he or she is subsequently re-employed or the fifth consecutive One-Year Break in Service after the distribution), his or her Normal Retirement Benefit and Accrued Benefit shall be reduced by the Actuarial Equivalent (at the date of distribution) of the present value of the Accrued Benefit as of the date of distribution.

5.9	Eligible Rollover Distributions

(a)

Notwithstanding any provision of the Plan to the contrary that would otherwise limit a Distributee’s election under this Article, a Distributee may elect, at the time and in the manner prescribed by the Committee, to have any portion of an Eligible Rollover Distribution paid directly to an Eligible Retirement Plan specified by the Distributee in a Direct Rollover.

(b)

For purposes of this Section, the following terms have the meanings indicated below:

(i)

An “Eligible Rollover Distribution” is any distribution of all or any portion of the vested balance to the credit of the Distributee, except that an Eligible Rollover Distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the Distributee or the joint lives (or joint life expectancies) of the Distributee and the Distributee’s designated beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under Section 401(a)(9) of the Code; any hardship distribution described in Section 401(k)(2)(B)(i)(IV) of the Code; and the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities).

(ii)

An “Eligible Retirement Plan” is an individual retirement account described in Section 408(a) or 408A of the Code, an individual retirement annuity described in Section 408(b) of the Code, an annuity plan described in Section 403(a) of the Code, or a plan described in Section 401(a) or Section 403(b) which accepts the Distributee’s eligible rollover distribution, or Section 457(b) of the Code which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state, which agrees to separately account for amounts transferred into such plan from this Plan. In the case of an eligible rollover distribution to a non-spouse Beneficiary, an eligible retirement plan is an individual retirement account or individual retirement annuity.

(ii)

A “Distributee” includes an Employee or former Employee. In addition, the Employee’s or former Employee’s surviving spouse and the Employee’s or former Employee’s spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Code, are Distributees with regard to the interest of the spouse or former spouse.

(iii)

A “Direct Rollover” is a payment by the Plan to the Eligible Retirement Plan specified by the Distributee. Furthermore, the Employee’s nonspouse Beneficiary is a Distributee with regard to the interest of the nonspouse Beneficiary.

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5.10	Minimum Required Distributions

The requirements of this Section 5.10 will take precedence over any inconsistent provisions elsewhere in the Plan. All distributions required under this Section will be determined and made in accordance with the Treasury regulations under section 401(a)(9) of the Internal Revenue Code. Notwithstanding the other provisions of this Section, other than the preceding paragraph, distributions may be made under a designation made before January 1, 1984, in accordance with section 242(b)(2) of the Tax Equity and Fiscal Responsibility Act (TEFRA) and the provisions of the Plan that relate to section 242(b)(2) of TEFRA

(a)

Time and Manner of Distributions .

(i)

Required Beginning Date . A Participant’s entire interest will be distributed, or begin to be distributed, to the Participant no later than the Participant’s Required Beginning Date.

(ii)

Death of Participant Before Distributions Begin . If the Participant dies before distributions begin, the Participant’s entire interest will be distributed, or begin to be distributed, no later than as follows:

(A)

If the Participant’s surviving spouse is the Participant’s sole Designated Beneficiary, distributions to the surviving spouse will begin by December 31 of the calendar year immediately following the calendar year in which the Participant died, or by December 31 of the calendar year in which the Participant would have attained age 70 ¹ ⁄ ₂ , if later.

(B)

If the Participant’s surviving spouse is not the Participant’s sole Designated Beneficiary, distributions to the Designated Beneficiary will begin by December 31 of the calendar year immediately following the calendar year in which the Participant died.

(C)

If there is no Designated Beneficiary as of September 30 of the year following the year of the Participant’s death, the Participant’s entire interest will be distributed by December 31 of the calendar year containing the fifth anniversary of the Participant’s death.

(D)

If the Participant’s surviving spouse is the Participant’s sole Designated Beneficiary and the surviving spouse dies after the Participant but before distributions to the surviving spouse begin, this subsection 5.10(a)(ii), other than subsection 5.10(a)(ii)(A), will apply as if the surviving spouse were the Participant.

For purposes of this subsection 5.10(a)(ii) and subsection (d), distributions are considered to begin on the Participant’s Required Beginning Date (or, if subsection 5.10(a)(ii)(D) applies, the date distributions are required to begin to the surviving spouse under subsection 5.10(a)(ii)(A)). If annuity payments irrevocably commence to the Participant before the Participant’s Required Beginning Date (or to the Participant’s surviving spouse before the date distributions are required to begin to the surviving spouse under subsection 5.10(a)(ii)(A)), the date distributions are considered to begin is the date distributions actually commence.

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(iii)

Form of Distribution . Unless the Participant’s interest is distributed in the form of an annuity purchased from an insurance company or in a single sum on or before the Required Beginning Date, as of the first Distribution Calendar Year distributions will be made in accordance with subsections (b), (c) and (d) of this Section. If the Participant’s interest is distributed in the form of an annuity purchased from an insurance company, distributions thereunder will be made in accordance with the requirements of section 401(a)(9) of the Code and the Treasury regulations. Any part of the Participant’s interest which is in the form of an individual account described in section 414(k) of the Code will be distributed in a manner satisfying the requirements of section 401(a)(9) of the Code and the Treasury regulations that apply to individual accounts.

(b)

Determination of Amount to Be Distributed Each Year .

(i)

General Annuity Requirements . If the Participant’s interest is paid in the form of annuity distributions under the Plan, payments under the annuity will satisfy the following requirements:

(A)

the annuity distributions will be paid in periodic payments made at intervals not longer than one year;

(B)

the distribution period will be over a life (or lives) or over a period certain not longer than the period described in subsection (c) or (d);

(C)

once payments have begun over a period certain, the period certain will not be changed even if the period certain is shorter than the maximum permitted;

(D)

payments will either be non-increasing or increase only as follows:

(I)

by an annual percentage increase that does not exceed the annual percentage increase in a cost-of-living index that is based on prices of all items and issued by the Bureau of Labor Statistics;

(II)

to the extent of the reduction in the amount of the Participant’s payments to provide for a survivor benefit upon death, but only if the Beneficiary whose life was being used to determine the distribution period described in subsection (d) dies or is no longer the Participant’s Beneficiary pursuant to a qualified domestic relations order within the meaning of section 414(p);

(III)

to provide cash refunds of employee contributions upon the Participant’s death; or

(IV)

to pay increased benefits that result from a Plan amendment.

(ii)

Amount Required to Be Distributed by the Required Beginning Date . The amount that must be distributed on or before the Participant’s Required Beginning Date (or, if the Participant dies before distributions begin, the date distributions are required to begin under subsection 5.10(a)(ii)(A) or (B)) is the payment that is required for one payment interval. The second payment need not be made until the end of the next payment interval even if that payment interval ends in the next calendar year. Payment intervals are the periods for which payments are received, e.g., bi-monthly, monthly, semi-annually, or annually. All of the Participant’s benefit accruals as of the last day of the first Distribution

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Calendar Year will be included in the calculation of the amount of the annuity payments for payment intervals ending on or after the Participant’s Required Beginning Date.

(iii)

Additional Accruals After First Distribution Calendar Year . Any additional benefits accruing to the Participant in a calendar year after the first Distribution Calendar Year will be distributed beginning with the first payment interval ending in the calendar year immediately following the calendar year in which such amount accrues.

(c)

Requirements for Annuity Distributions That Commence During Participant’s Lifetime .

(i)

Joint Life Annuities Where the Beneficiary Is Not the Participant’s Spouse . If the Participant’s interest is being distributed in the form of a joint and survivor annuity for the joint lives of the Participant and a nonspouse Beneficiary, annuity payments to be made on or after the Participant’s Required Beginning Date to the Designated Beneficiary after the Participant’s death must not at any time exceed the applicable percentage of the annuity payment for such period that would have been payable to the Participant using the table set forth in Q&A-2 of section 1.401(a)(9)-6 of the Treasury regulations. If the form of distribution combines a joint and survivor annuity for the joint lives of the Participant and a nonspouse Beneficiary and a period certain annuity, the requirement in the preceding sentence will apply to annuity payments to be made to the Designated Beneficiary after the expiration of the period certain.

(ii)

Period Certain Annuities . Unless the Participant’s spouse is the sole Designated Beneficiary and the form of distribution is a period certain and no life annuity, the period certain for an annuity distribution commencing during the Participant’s lifetime may not exceed the applicable distribution period for the Participant under the Uniform Lifetime Table set forth in section 1.401(a)(9)-9 of the Treasury regulations for the calendar year that contains the annuity starting date. If the annuity starting date precedes the year in which the Participant reaches age 70, the applicable distribution period for the Participant is the distribution period for age 70 under the Uniform Lifetime Table set forth in section 1.401(a)(9)-9 of the Treasury regulations plus the excess of 70 over the age of the Participant as of the Participant’s birthday in the year that contains the annuity starting date. If the Participant’s spouse is the Participant’s sole Designated Beneficiary and the form of distribution is a period certain and no life annuity, the period certain may not exceed the longer of the Participant’s applicable distribution period, as determined under this subsection 5.10(c)(ii), or the joint life and last survivor expectancy of the Participant and the Participant’s spouse as determined under the Joint and Last Survivor Table set forth in section 1.401(a)(9)-9 of the Treasury regulations, using the Participant’s and spouse’s attained ages as of the Participant’s and spouse’s birthdays in the calendar year that contains the annuity starting date.

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(d)

Requirements for Minimum Distributions Where Participant Dies Before Date Distributions Begin .

(i)

Participant Survived by Designated Beneficiary . If the Participant dies before the date distribution of his or her interest begins and there is a Designated Beneficiary, the Participant’s entire interest will be distributed, beginning no later than the time described in subsection 5.10(a)(ii)(A) or (B), over the life of the Designated Beneficiary or over a period certain not exceeding:

(1)

unless the annuity starting date is before the first Distribution Calendar Year, the Life Expectancy of the Designated Beneficiary determined using the Beneficiary’s age as of the Beneficiary’s birthday in the calendar year immediately following the calendar year of the Participant’s death; or

(2)

if the annuity starting date is before the first Distribution Calendar Year, the Life Expectancy of the Designated Beneficiary determined using the Beneficiary’s age as of the Beneficiary’s birthday in the calendar year that contains the annuity starting date.

(ii)

No Designated Beneficiary . If the Participant dies before the date distributions begin and there is no Designated Beneficiary as of September 30 of the year following the year of the Participant’s death, distribution of the Participant’s entire interest will be completed by December 31 of the calendar year containing the fifth anniversary of the Participant’s death.

(iii)

Death of Surviving Spouse Before Distributions to Surviving Spouse Begin . If the Participant dies before the date distribution of his or her interest begins, the Participant’s surviving spouse is the Participant’s sole Designated Beneficiary, and the surviving spouse dies before distributions to the surviving spouse begin, this subsection (d) will apply as if the surviving spouse were the Participant, except that the time by which distributions must begin will be determined without regard to subsection 5.10(a)(ii)(A)).

(e)

Definitions . The following definitions will apply for purposes of this Section 5.10:

(i)

Designated Beneficiary. The individual who is designated as the Beneficiary under the Plan and is the designated Beneficiary under section 401(a)(9) of the Internal Revenue Code and section 1.401(a)(9)-4 of the Treasury regulations.

(ii)

Distribution Calendar Year. A calendar year for which a minimum distribution is required. For distributions beginning before the Participant’s death, the first distribution calendar year is the calendar year immediately preceding the calendar year which contains the Participant’s required beginning date. For distributions beginning after the Participant’s death, the first distribution calendar year is the calendar year in which distributions are required to begin pursuant to subsection 5.10(a)(ii).

(iii)

Life Expectancy. Life expectancy as computed by use of the Single Life Table in section 1.401(a)(9)-9 of the Treasury regulations.

(iv)

Required Beginning Date. The date specified in Section 5.2(d) of the Plan.

5.11	HEART Act Provisions.

(a)

Death Benefits . In the case of a Participant who dies while performing qualified military service (as defined in Code Section 414(u)), the survivors of the Participant are entitled to any additional benefits (other than benefit accruals relating to the period of qualified military service) provided under the Plan had the participant resumed and then terminated employment on account of death.

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(b)

Differential Wage Payments . An individual receiving a differential wage payment, as defined in Code Section 3401(h)(2), shall be treated as an Employee of the Employer making the payment, the differential wage payment shall be treated as Earnings, and the Plan shall not be treated as failing to meet the requirements of any provisions described in Section 414(u)(l)(C) of the Code by reason of any contribution to the Plan or benefit that is based on the differential wage payment.

SECTION 6

NOTICE AND WAIVER PROCEDURES

6.1	Qualified Joint & One-Half Survivor Annuity

At least 30 days but not more than 180 days before the Participant’s Annuity Starting Date, the Committee will supply the Participant with the Appropriate Form to describe the Qualified Joint & One-Half Survivor Annuity and provide a general explanation of the financial effect on the Participant’s benefit if he or she decides to accept the Qualified Joint & One-Half Survivor Annuity. The explanation will also explain the effect of an election option under Section 5.3. A Participant may waive this benefit and confirm any election of option within the 180 day period prior to his or her Annuity Starting Date, subject to Spousal Consent. For purposes of this paragraph, the Qualified Joint & One-Half Survivor Annuity payable with respect to a Participant who is unmarried shall be the Standard Form of Benefit payable under Section 5.1. Notwithstanding the above, a Participant may elect (with any applicable spousal consent) to waive any requirement that the written explanation be provided at least 30 days before the annuity starting date if the distribution commences more than 7 days after such explanation is provided.

6.2	Explanation of Rights

Any description under Section 6.1 above shall explain:

(a)

the terms and conditions of the Qualified Joint & One-Half Survivor Annuity;

(b)

the Participant’s right to waive, and the effect of a waiver of the Qualified Joint & One-Half Survivor Annuity;

(c)

the need for Spousal Consent;

(d)

the right to revoke, and the effect of a revocation, of a waiver of the Qualified Joint & One-Half Survivor Annuity; and

(e)

a description of the right of the Participant, if any, to defer receipt of a distribution and the consequences of failure to defer such receipt, in accordance with Treasury guidance under Code Section 411(a)(11).

SECTION 7

ADMINISTRATION OF THE PLAN

7.1	Plan Administrator

The Committee shall be the “plan administrator” of the Plan within the meaning of Section 3(16) of ERISA, and the Plan’s “named fiduciary” for the purposes of Section 402(a) of ERISA. Administration of the Plan shall be the responsibility of the Committee except to the extent that authority to act for the Company has otherwise been reserved to the Board of Directors.

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7.2	Appointment of the Committee

The Board may appoint one or more individuals to serve as the Committee who shall, on behalf of the Company, perform the duties of plan administrator. Any individuals, including but not limited to Employees and Participants, may be appointed to serve as members of the Committee. Such individuals shall. file a written consent to serve as a Committee member. Each Committee member shall serve until his or her resignation or dismissal by the Board. Vacancies shall be filled in the same manner as the original appointment. To resign, a Committee member shall give written notice which shall be effective on the earlier of the appointment of his or her successor or the passing of 60 days after such notice is mailed or personally delivered to the Board.

The Committee shall elect a Chairperson from their number and a Secretary who may, but need not, be a member of the Committee; may appoint from their number such committees with such powers as they shall determine; may authorize one or more of their number as agent to execute or deliver any instrument or make any payment on behalf of the Committee; and may retain counsel, employ agents and obtain clerical, consulting and accounting services as the Committee may require or deem advisable from time to time. The Committee shall hold meetings upon notice, at such place or places, and at such time or times and in such manner (by telephone or by use of a facsimile machine) as it may from time to time determine.

A majority of the Committee then in office shall constitute a quorum for the transaction of business at any meeting of the Committee. The vote of a majority of the members present at the time of the vote, if a quorum is present at such time, shall be the act of the Committee. Any action required or permitted to be taken at any meeting of the Committee may be taken without a meeting, if all the Committee members consent or have consented thereto in writing.

7.3	Responsibility of Committee

Subject to Section 7.1, the Committee shall be responsible for the administration, operation and interpretation of the Plan. The Committee shall establish rules from time to time for the transaction of its business. It shall have the exclusive right to interpret the Plan and to decide any and all matters arising thereunder or in connection with the administration of the Plan, and it shall endeavor to act, whether by general rules or by particular decisions, so as not to discriminate in favor of any person or class of person. Such decisions, actions and records of the Committee shall be conclusive and binding upon an Employer and all persons having or claiming to have any right or interest in or under the Plan.

The Committee shall maintain accounts to the extent it deems necessary or appropriate showing the fiscal transactions of the Plan.

7.4	Claims Procedure

In the event that any Participant or other payee claims to be entitled to a benefit under the Plan, and the Committee determines that such claim should be denied in whole or in part, the Committee shall, in writing, notify such claimant within 90 days of receipt of such claim that his or her claim has been denied, setting forth the specific reasons for such denial. Such notification shall be written in a manner reasonably expected to be understood by such Participant or other payee and shall set forth the pertinent sections of the Plan relied on, and where appropriate, an explanation of how the claimant can obtain review of such denial. Within 60 days after receipt of such notice, such claimant may request, by mailing or delivery of written notice to the Committee, a review by the Committee of the decision denying the claim. If the claimant fails to request such a review within such 60 day period, it shall be conclusively determined for all purposes of this Plan that the denial of such claim by the Committee is correct. If such claimant

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requests a review within such 60 day period, the Participant or other payee shall have 30 days after filing a request for review to submit additional written material in support of the claim. Within 60 days after the later of its receipt of the request for review or the request to submit additional written material, the Committee shall determine whether such denial of the claim was correct and shall notify such claimant in writing of its determination. If such determination is favorable to the claimant, it shall be binding and conclusive. If such determination is adverse to such claimant, it shall be binding and conclusive unless the claimant notifies the Committee within 90 days after the mailing or delivery to him or her by the Committee of its determination that the claimant intends to institute legal proceedings challenging the determination of the Committee, and actually institutes such legal proceedings within 180 days after such mailing or delivery.

7.5	Engagement of Accountant

The Company shall engage a “qualified public accountant” to prepare such audited financial statements of the operation of the Plan as shall be required by ERISA.

7.6	Limitation on Liability

The Committee shall not be liable for any act or omission on its part, excepting only its own willful misconduct or gross negligence or except as otherwise expressly provided by ERISA. To the extent permitted by applicable law, the Company shall indemnify and save harmless the Committee against any and all claims, demands, suits or proceedings in connection with the Plan and Trust Fund that may be brought by Participants or their beneficiaries, Employees of participating Employers, or by any other person, corporation, entity, government or agency thereof; provided, however that such indemnification shall not apply with respect to acts or omissions of willful misconduct or gross negligence. The Board at the expense of the Company, may settle such claim or demand asserted, or suit or proceedings brought, against the Committee when such settlement appears to be in the best interest of the Company.

7.7	Agent for Service of Process

The Committee or such other person as may from time to time be designated by the Committee shall be the agent for service of process under the Plan.

7.8	Delivery of Elections to Committee

All elections, designation, requests, notices, instructions and other communications required or permitted under the Plan from the Employer, a Participant, Beneficiary or other person to the Committee shall be on the Appropriate Form, shall be mailed by first-class mail or delivered to such location as shall be specified by the Committee, and shall be deemed to have been given or delivered only upon actual receipt thereof by the Committee at such location.

7.9	Delivery of Notice to Participants

All notices, statements, reports and other communications required or permitted under the Plan from the Employer or the Committee to any Employee, Participant, Beneficiary or other person, shall be deemed to have been duly given when delivered to, or when mailed by first class mail, postage prepaid, and addressed to such person at this address last appearing on the records of the Committee.

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SECTION 8

MANAGEMENT OF THE TRUST FUND

8.1	Trust Agreement

All assets of the Plan shall be held as a Trust Fund under a Trust Agreement with the Trustee for the exclusive benefit of Participants and their beneficiaries under the Plan, and paying the expenses of the Plan not paid directly by the Employer, and prior to the satisfaction of all liabilities with respect to such persons, no part of the corpus or income of the Trust Fund shall be used for or diverted to purposes other than for the exclusive benefit of such persons. No such person, nor any other person, shall have any interest in or right to any part of the earnings of the Trust Fund, or any rights in, to or under the Trust Fund or any part of its assets, except to the extent expressly provided in the Plan.

8.2	Appointment of the Trustee

All contributions to the Trust Fund shall be delivered to the Trustee, who shall be appointed by the Committee, with such powers in the Trustee as to control and disbursement of the Trust Fund as shall be in accordance with the Plan and Trust Agreement. The Committee may remove the Trustee at any time, upon reasonable notice, and upon such removal or upon the resignation of the Trustee, the Committee shall designate a successor Trustee.

8.3	Investment Authority

Subject to the provisions of the Trust Agreement, the Committee may appoint, and shall retain the power to discharge or replace, an investment manager or managers to manage any assets of the Plan. Such investment manager or managers shall: (a) be registered as an investment advisor under the Investment Advisers Act of 1940; (b) be a bank, as defined in the Investment Advisers Act of 1940; or (c) be an insurance company qualified to manage, acquire or dispose of qualified plan assets under the laws of more that one State; and shall acknowledge in writing to the Trustee and the Committee that it is a fiduciary with respect to the Plan. Notwithstanding anything in the Plan to the contrary, the Trustee shall be relieved of the authority and discretion to manage and solely control the assets of the Plan to the extent that authority to acquire, dispose of, or otherwise manage the assets of the Plan is delegated to one or more investment managers in accordance with this Section.

8.4	Form of Disbursements

The Trustees shall determine the manner in which the Trust Fund shall be disbursed in accordance with the Plan and the provisions of the Trust Agreement, including the form of voucher or warrant to be used in authorizing disbursements and the qualifications of persons authorized to approve and sign the same and any other matters incident to the disbursement of the Trust Fund.

8.5	Expenses of the Plan

Unless paid by the Employer, the expenses of the administration of the Plan shall be deemed to be expenses of the Trust Fund.

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SECTION 9

CERTAIN RIGHTS AND OBLIGATIONS OF EMPLOYERS

9.1	Disclaimer of Employer Liability

(a)

It is the intention of the Employer to continue this Plan and to make contributions regularly each year, but nothing in the Plan shall be deemed to require an Employer to make contributions under this Plan, and no Employer shall be under any legal obligation to contribute to this Plan, except to the extent provided by law.

(b)

No liability shall attach to any Employer for payment of any benefit or claim under the Plan, and Participants and their Beneficiaries, and all persons claiming with respect to them, shall have recourse only to the Trust Fund for payment of any benefit or claim.

(c)

The rights of the Participants of the Plan, their Beneficiaries, and other persons are hereby expressly limited and shall be only the rights accorded them under the provisions of the Plan.

9.2	Employer-Employee Relationship

The establishment of this Plan shall not be construed as conferring any legal or other rights upon any Employee or any person for a continuation of employment, nor shall it interfere with the rights of an Employer to discharge any Employee or otherwise act with relation to such person.

9.3	Nondiscriminatory Action

Any discretionary acts to be taken under the provisions of this Plan by an Employer or by the Committee with respect to the classification of employees, contributions, or distribution of benefits, shall be uniform and applicable to all Participants or Beneficiaries or other persons similarly situated.

SECTION 10

NON-ALIENATION OF BENEFITS

10.1	Provision with Respect to Assignment and Levy

No benefit under this Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, levy, or charge, and any attempt to do so shall be void; nor shall any benefit under this Plan be in any manner liable for or subject to the debts, contracts, liabilities, engagements or torts of the person entitled to such benefit.

Notwithstanding any provision in the Plan to the contrary, the Committee shall take such steps as are necessary under the Plan to comply with the terms of any applicable “Qualified Domestic Relations Order” (as defined by Code Section 414(p)). The accrued benefits of any Participants subject to such an order shall be adjusted to reflect any payments made pursuant to such Order.

The Committee shall adopt such procedures as it deems necessary and appropriate to carry out the provisions of this Section.

10.2	Alternate Application

If any Participant or Beneficiary under this Plan becomes bankrupt or attempts to anticipate, alienate, sell, transfer, assign, pledge, encumber, or charge any benefit under this Plan, except as may be specifically provided in the Plan, or if any benefit is levied upon, garnished, or attached, then payment of such benefit shall, at the discretion of the Committee, cease and terminate, and in that event the Committee may hold or apply such benefit or any part thereof for the benefit of the Participant or Beneficiary or his or her spouse, children, or other dependents in such manner and in such proportion as the Committee may deem proper.

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10.3	Payments to Minors, etc .

In the event any portion of the Trust Fund becomes distributable under the Plan to a minor or other person under legal disability, the Committee, in its sole discretion, may make such distribution in one or more of the following methods:

(a)

Directly to the minor or other person;

(b)

To the legal guardian or conservator of the minor or other person; or

(c)

To the spouse, parent, sibling, child, or other relative of the minor or other person for the use of the minor or other person.

The Committee shall not be required to see to the application of any distributions so made to any of such persons, but the receipts thereof shall be a full discharge of the liability of the Committee and the Trust Fund to such minor or other person.

SECTION 11

AMENDMENT AND TERMINATION OF THE PLAN

11.1	Right to Amend

The Company reserves the right to modify or amend any or all of the provisions of this Plan, in whole or in part, at any time and from time to time, by action of the Board; provided however, that the Committee may adopt amendments which do not materially affect the cost of the Plan or which may be necessary or appropriate to facilitate the administration, management or interpretation of the Plan or to conform the Plan thereto, or to qualify or to maintain the Plan and Trust as a plan and trust meeting the requirements of Code Sections 401(a) and 501(a), or any other applicable provisions of the law (including ERISA) and the regulations. Each participating Employer by its adoption of the Plan shall be deemed to have delegated authority to the Board and the Committee.

Anything in this Plan to the contrary notwithstanding, but consistent with applicable law, the Board in its sole discretion may make any modifications or amendments, additions or deletions in this Plan, as to benefits or otherwise, and retroactively if necessary, and regardless of the effect on the rights of any particular Participants, which it deems appropriate in order to bring this Plan into conformity with or to satisfy the conditions of any applicable laws or regulations, and in order that the Plan and the Trust may qualify and continue to qualify under Code Sections 401(a) and 501(a).

11.2	Right to Terminate

The Company reserves the right to terminate the Plan in full or in part at any time. Each Employer reserves the right to terminate this Plan with respect to its participating Employees. Upon the termination or partial termination of the Plan (if the Participant is affected by such partial termination), either with respect to the entire Plan or with respect to any Employer participating in the Plan, every affected Participant shall be 100% vested in his or her Accrued Benefit.

11.3	Allocation of Assets on Termination

If the Plan is terminated, the assets of the Plan available to provide benefits shall be allocated among the Participants and Beneficiaries receiving or entitled to receive benefits in accordance with the priority classes established by ERISA. The respective amounts allocated to such priority classes shall be distributed to or set aside for the benefit of the persons entitled thereto in such manner as is determined by the Committee.

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After the Plan has been terminated, the allocated assets shall be distributed to Participants and their Beneficiaries in the form of annuities, or, if the Actuarial Equivalent value of any benefit is $5,000 (or such greater amount as is permissible under Code Section 411(a)(11)) or less, in cash. Any residual assets shall be distributed to the Employer if all of the Plan’s liabilities to Participants and their Beneficiaries have been satisfied, and if the distribution does not contravene any provision of law.

11.4

Merger

Neither the merger of any Employer with any other company nor the merger or consolidation of this Plan with any other retirement plan whereby assets or liabilities are transferred shall result in the termination of this Plan, or be deemed a termination of employment with respects to any Employee.

The Plan may not merge, consolidate with or transfer assets or liabilities to another plan unless if the Plan then terminated, each Participant would be entitled to receive a benefit immediately after the merger, consolidation, or transfer which is equal to or greater than the benefit he or she would have been entitled to receive immediately before the merger, consolidation, or transfer, if the Plan had then terminated.

11.5	Appendix to the Plan

Notwithstanding any provision in the Plan to the contrary, the Board of Directors may elect to have special provisions apply with respect to a member of the Group and the employees of such Group member. Such special provisions, which may differ from the provisions of the Plan applicable to other employees, will be stated in an Appendix to the Plan which shall be applicable to such Group member and its employees.

11.6	Prohibition Against Diversion

No part of the corpus or income of the Trust Fund shall, by reason of any modification of or amendment to the Plan, or otherwise, be used for or diverted to purposes other than for the exclusive benefit of Participants and their Beneficiaries under the Plan and for the payment of administrative expenses of the Plan, except as provided in Section 11.3.

SECTION 12

MISCELLANEOUS PROVISIONS

12.1	Construction

The provisions of this Plan shall be construed, regulated, and administered according to the laws of the State of New York and ERISA.

12.2

Exhibits

Any Exhibits attached hereto, are hereby incorporated by reference and made a part of this Plan.

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12.3

Execution

This Plan has been established by the Employer in accordance with the resolutions adopted by its Board and may be executed in any number of counterparts, each of which shall be deemed to be an original. All the counterparts shall constitute one instrument, which may be sufficiently evidenced by any one counterpart.

12.4	Military Service

Notwithstanding any provision of this Plan to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with Section 414(u) of the Code.

SECTION 13

PARTICIPATION IN THE PLAN BY SUBSIDIARIES

OR GROUP MEMBERS

13.1	Participation by Subsidiaries or Group Members

Any subsidiary of the Company or Group member may, with the consent of the Board of Directors, become a party to this Plan by adopting the Plan for some or all of its Employees and by executing the Trust Agreement if required under such Trust Agreement. Upon the filing with the Committee of a certified copy of the resolutions or other documents evidencing the adoption of this Plan and a written instrument showing the consent of the Board to participation by such subsidiary or Group member and upon the execution of the Trust Agreement by such subsidiary or Group member, if required under such Trust Agreement, it shall be bound by all the terms thereof as they relate to its employees. Any contributions provided for in the Plan and made by such Employer shall become a part of the Trust Fund and shall be held by the Trustee subject to the terms and provisions of the Trust Agreement.

With the approval of the Company, a participating Employer may elect to have special provisions apply with respect to its Eligible Employees. Such special provisions, which may differ from the provisions of the Plan applicable to Employees of other Employers, shall be stated in an Appendix to the Plan which is applicable to such Employer.

13.2	Withdrawal of Participating Employers

In the event that an organization which has become a participating Employer pursuant to the provisions of Section 13.1, should cease to be a Group member or subsidiary of the Company, such organization shall forthwith be deemed to have withdrawn from the Plan and the Trust Agreement. Any one or more of the employers may voluntarily withdraw from the Plan by giving 6 months notice in writing of such intention to withdraw to the Board of Directors and to the Trustee (unless a shorter notice shall be agreed to by the Board of Directors and by the Trustee).

Upon any such withdrawal by any such Employer the Trustee shall determine that portion of the Trust Fund allocable to the Participants and their beneficiaries thereby affected, consistent with the provisions of ERISA and the regulations thereunder. Subject to the provisions of ERISA and regulations thereunder the Trustee shall then set aside from the trust assets then held by them, such securities and other property as they shall deem to be equal in value to the portion of the Trust Fund so allocable to the withdrawing Employer. At the discretion of the Trustee and subject to the provisions of ERISA and regulations thereunder the Trustee shall either (a) hold such assets so set aside and to apply the same for the exclusive benefit of the Participants and beneficiaries so affected on the same basis as if the Trust had been terminated pursuant to Section 11.2 upon the date of such withdrawal, or (b) deliver such assets to a Trustee to be selected by such withdrawing Employer.

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SECTION 14

IN EVENT PLAN BECOMES TOP-HEAVY

14.1	Special Top-Heavy Definitions

For purposes of this Section 14, the following terms shall have the following meanings:

(a)

“Determination Date” means, with respect to any Plan Year, the last Valuation Date of the preceding Plan Year.

(b)

“Key Employee” means any Employee or former Employee (including any deceased Employee) who at any time during the Plan Year that includes the Determination Date was an officer of the Company having annual compensation greater than $130,000, a five-percent owner of the Company, or a one-percent owner of the Company having annual compensation of more than $150,000. For this purpose, annual compensation means compensation within the meaning of section 415(c)(3) of the Code. The determination of who is a Key Employee will be made in accordance with section 416(i)(1) of the Code and the applicable regulations and other guidance of general applicability issued thereunder.

(c)

“Permissive Aggregation Group” means, with respect to a given Plan Year, this Plan and all other plans of the Employer and Group members (other than those included in the Required Aggregation Group) which, when aggregated with the Plans in the Required Aggregation Group, continue to meet the requirement of Code Sections 401(a)(4) and 410.

(d)

“Present Value of Accrued Benefit” means, in determining the value of any individual’s account or the present value of his or her accrued benefit under this Plan or any other plan in the Aggregation Group:

(i)

the value of such account or the present value of such Accrued Benefit shall be increased by the aggregate distributions made with respect to such individual under the Plan and any plan aggregated with the Plan under Code Section 416(g)(2) during the one-year period ending on the Determination Date and distributions under a terminated plan which, had it not been terminated, would have been aggregated with the Plan under Section 416(g)(2)(A)(i) of the Code. In the case of a distribution made for a reason other than severance from employment, death, or disability, this provision shall be applied by substituting “five-year period” for “one-year period.”;

(ii)

rollover contributions and transfers from other plans shall not be taken into account to the extent provided under Code Section 416 and the regulations thereunder;

(iii)

if any person had not performed any services for the Employer or any Group member at any time during the one-year period ending on the Determination Date, then the Participant’s Present Value of Accrued Benefit and account balances shall not be taken into account; and

(iv)

the present value of such Accrued Benefit for a defined benefit plan shall be determined by using actuarial assumptions set forth in the applicable Exhibit to the Plan.

- 34 -

(e)

“Required Aggregation Group” means with respect to a given Plan Year, (i) this Plan, (ii) each other plan of the Employer and a Group member in which a Key Employee is a participant, and (iii) each other plan of the Employer and a Group member which enables a plan described in (i) or (ii) to meet the requirements of Code Section 401(a)(4) or Code Section 410, regardless of whether the plan has terminated.

(f)

“Top-Heavy” means, with respect to the Plan for a Plan Year that the Present Value of Accrued Benefit of Key Employees exceeds 60% of the Present Value of Accrued Benefit of all Participants. For the purpose of making a determination as to the topheaviness of this Plan under Code Section 416(g), this Plan will be aggregated with any other plan maintained by the Employer and/or a Group member in the Aggregation Group. Pursuant to Code Section 416(g), the Top-Heavy Ratio for Key Employees for any Plan Year shall be determined as of the Determination Date based on the actuarial assumptions set forth in the applicable Exhibit to the Plan and the Present Value of Accrued Benefit determined by such assumptions as of the “Valuation Date.” For purposes of this Exhibit, the Valuation Date is any day within the Plan Year in which such Determination Date occurs on which the plan is valued for determining Plan costs.

The Present Value of Accrued Benefit under any defined benefit plan used in testing whether the plan is top heavy shall be determined as if pensions accrue ratably unless the same accrual rate is used for all plans maintained by the Employer.

(g)

“Top-Heavy Group” means, with respect to a given Plan Year, a group of plans of the Employer which, in the aggregate, meet the requirements of the definition contained in Code Section 416(g)(2)(b).

14.2	Special Top-Heavy Provisions

Notwithstanding any other provisions of the Plan to the contrary, the following provisions of this Section 14.2 shall automatically become operative and shall supersede any conflicting provisions of the Plan if, in any Plan Year, the Plan is Top-Heavy.

(a)

The Minimum Pension shall be payable to any Employee who is not a Key Employee equal to 2% of annual compensation, averaged over the consecutive Top-Heavy Plan Years (not in excess of five) that produce the highest average, for each Year of Service as a Participant completed after December 31, 1983 during which any Top-Heavy Plan Year ended, to a maximum of 20%. In determining a Participant’s Years of Service for this purpose, service which occurs during a Plan Year when the Plan benefits no Key Employee or former Key Employee shall be disregarded. Such Minimum Pension shall commence to a single Participant in the form of a single life annuity only (with no ancillary benefits) at Normal Retirement Date; provided, however, that if payments commence other than at Normal Retirement Date, the Minimum Pension must be at least the Actuarial Equivalent of the Minimum Pension payable at Normal Retirement Date.

This provision shall not apply to the extent minimum pension or contributions required under Code Section 416 are provided under another qualified plan maintained by the Employer.

(b)

The following vesting schedule shall be substituted for the provision appearing in Section 3 of the Plan:


Years of Vesting Service	Vested Percentage
At least 2		20	%
At least 3		40	%
At least 4		60	%
5 or more		100	%

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In the event that a Plan Year which follows a Top-Heavy Plan Year is not in itself a Top-Heavy Plan Year, then the vested percentage of each Participant who completed less than 3 Years of Service at the end of the last Top-Heavy Plan Year shall be determined without regard to this Article 14 but in no event shall his or her vested percentage of his or her Accrued Benefit at the date the Plan ceases to be Top-Heavy be reduced. A Participant who has 3 or more Years of Service at the end of a Top-Heavy Plan Year shall always be vested under either Section 3 of the Plan or this Section 14, whichever provision provides the more favorable vesting for such Participant.

(c)

In the event that Congress should provide by statute, or the Treasury Department should provide by regulation or ruling, that the limitations provided in this Section 14 are no longer necessary for the Plan to meet the requirements of Code Section 401 or other applicable law then in effect, such limitations shall become void and shall no longer apply, without the necessity of further amendment to the Plan.

SECTION 15

FUNDING-BASED RESTRICTIONS

15.1

Limitations Applicable If the Plan’s Adjusted Funding Target Attainment Percentage Is Less Than 80 Percent, But Not Less Than 60 Percent . Notwithstanding any other provisions of the Plan, if the Plan’s adjusted funding target attainment percentage for a Plan Year is less than 80 percent (or would be less than 80 percent to the extent described in subsection 15.1(b) below) but is not less than 60 percent, then the limitations set forth in this Section 15.1 apply.

(a)

50 Percent Limitation on Single Sum Payments, Other Accelerated Forms of Distribution, and Other Prohibited Payments . A Participant or Beneficiary is not permitted to elect, and the Plan shall not pay, a single sum payment or other optional form of benefit that includes a prohibited payment with an annuity starting date on or after the applicable section 436 measurement date, and the Plan shall not make any payment for the purchase of an irrevocable commitment from an insurer to pay benefits or any other payment or transfer that is a prohibited payment, unless the present value of the portion of the benefit that is being paid in a prohibited payment does not exceed the lesser of:

(i)

50 percent of the present value of the benefit payable in the optional form of benefit that includes the prohibited payment; or

(ii)

100 percent of the Pension Benefit Guaranty Corporation maximum benefit guarantee amount (as defined in section 1.436-1(d)(3)(iii)(C) of the Treasury regulations).

The limitation set forth in this subsection 15.1(a) does not apply to any payment of a benefit which under Code section 411(a)(11) may be immediately distributed without the consent of the Participant. If an optional form of benefit that is otherwise available under the terms of the Plan is not available to a Participant or Beneficiary as of the annuity starting date because of the application of the requirements of this subsection 15.1(a), the Participant or Beneficiary is permitted to elect to bifurcate the benefit into unrestricted and restricted portions (as described in section 1.436-1(d)(3)(iii)(D) of the Treasury regulations). The Participant or Beneficiary may also elect any other optional form of

- 36 -

benefit otherwise available under the Plan at that annuity starting date that would satisfy the 50 percent/Pension Benefit Guaranty Corporation maximum benefit guarantee amount limitation described in this subsection 15.1(a), or may elect to defer the benefit in accordance with any general right to defer commencement of benefits under the Plan.

(b)

Plan Amendments Increasing Liability for Benefits . No amendment to the Plan that has the effect of increasing liabilities of the Plan by reason of increases in benefits, establishment of new benefits, changing the rate of benefit accrual, or changing the rate at which benefits become nonforfeitable shall take effect in a Plan Year if the adjusted funding target attainment percentage for the Plan Year is:

(i)

Less than 80 percent; or

(ii)

80 percent or more, but would be less than 80 percent if the benefits attributable to the amendment were taken into account in determining the adjusted funding target attainment percentage.

The limitation set forth in this subsection 15.1(b) does not apply to any amendment to the Plan that provides a benefit increase under a Plan formula that is not based on compensation, provided that the rate of such increase does not exceed the contemporaneous rate of increase in the average wages of Participants covered by the amendment.

15.2

Limitations Applicable If the Plan’s Adjusted Funding Target Attainment Percentage Is Less Than 60 Percent . Notwithstanding any other provisions of the Plan, if the Plan’s adjusted funding target attainment percentage for a Plan Year is less than 60 percent (or would be less than 60 percent to the extent described in subsection 15.2(b) below), then the limitations in this Section 15.2 apply.

(a)

Single Sums, Other Accelerated Forms of Distribution, and Other Prohibited Payments Not Permitted . A Participant or Beneficiary is not permitted to elect, and the Plan shall not pay, a single sum payment or other optional form of benefit that includes a prohibited payment with an annuity starting date on or after the applicable section 436 measurement date, and the Plan shall not make any payment for the purchase of an irrevocable commitment from an insurer to pay benefits or any other payment or transfer that is a prohibited payment. The limitation set forth in this subsection 15.2(a) does not apply to any payment of a benefit which under Code section 411(a)(11) may be immediately distributed without the consent of the Participant.

(b)

Shutdown Benefits and Other Unpredictable Contingent Event Benefits Not Permitted to Be Paid . An unpredictable contingent event benefit with respect to an unpredictable contingent event occurring during a Plan Year shall not be paid if the adjusted funding target attainment percentage for the Plan Year is:

(i)

Less than 60 percent; or

(ii)

60 percent or more, but would be less than 60 percent if the adjusted funding target attainment percentage were redetermined applying an actuarial assumption that the likelihood of occurrence of the unpredictable contingent event during the Plan Year is 100 percent.

(c)

Benefit Accruals Frozen . Benefit accruals under the Plan shall cease as of the applicable section 436 measurement date. In addition, if the Plan is required to cease benefit

- 37 -

accruals under this subsection 15.2(c), then the Plan is not permitted to be amended in a manner that would increase the liabilities of the Plan by reason of an increase in benefits or establishment of new benefits.

15.3

Limitations Applicable If the Plan Sponsor Is In Bankruptcy . Notwithstanding any other provisions of the Plan, a Participant or Beneficiary is not permitted to elect, and the Plan shall not pay, a single sum payment or other optional form of benefit that includes a prohibited payment with an annuity starting date that occurs during any period in which the Plan sponsor is a debtor in a case under title 11, United States Code, or similar Federal or State law, except for payments made within a Plan Year with an annuity starting date that occurs on or after the date on which the Plan’s enrolled actuary certifies that the Plan’s adjusted funding target attainment percentage for that Plan Year is not less than 100 percent. In addition, during such period in which the Plan sponsor is a debtor, the Plan shall not make any payment for the purchase of an irrevocable commitment from an insurer to pay benefits or any other payment or transfer that is a prohibited payment, except for payments that occur on a date within a Plan Year that is on or after the date on which the Plan’s enrolled actuary certifies that the Plan’s adjusted funding target attainment percentage for that Plan Year is not less than 100 percent. The limitation set forth in this Section 15.3 does not apply to any payment of a benefit which under Code section 411(a)(11) may be immediately distributed without the consent of the Participant.

15.4	Provisions Applicable After Limitations Cease to Apply .

(a)

Resumption of Prohibited Payments . If a limitation on prohibited payments under subsection 15.1(a), subsection 15.2(a), or Section 15.3 applied to the Plan as of a section 436 measurement date, but that limit no longer applies to the Plan as of a later section 436 measurement date, then that limitation does not apply to benefits with annuity starting dates that are on or after that later section 436 measurement date.

(b)

Resumption of Benefit Accruals . If a limitation on benefit accruals under subsection 15.2(c) applied to the Plan as of a section 436 measurement date, but that limitation no longer applies to the Plan as of a later section 436 measurement date, then benefit accruals shall resume prospectively and that limitation does not apply to benefit accruals that are based on service on or after that later section 436 measurement date, except as otherwise provided under the Plan. The Plan shall comply with the rules relating to partial years of participation and the prohibition on double proration under Department of Labor regulation 29 CFR section 2530.204-2(c) and (d).

(c)

Shutdown and Other Unpredictable Contingent Event Benefits . If an unpredictable contingent event benefit with respect to an unpredictable contingent event that occurs during the Plan Year is not permitted to be paid after the occurrence of the event because of the limitation of subsection 15.2(b) but is permitted to be paid later in the same Plan Year (as a result of additional contributions or pursuant to the enrolled actuary’s certification of the adjusted funding target attainment percentage for the Plan Year that meets the requirements of section 1.436-1(g)(5)(ii)(B) of the Treasury regulations), then that unpredictable contingent event benefit shall be paid, retroactive to the period that benefit would have been payable under the terms of the Plan (determined without regard to subsection 15.2(b)). If the unpredictable contingent event benefit does not become payable during the Plan Year in accordance with the preceding sentence, then the Plan is treated as if it does not provide for that benefit.

(d)

Treatment of Plan Amendments That Do Not Take Effect . If a Plan amendment does not take effect as of the effective date of the amendment because of the limitation of subsection 15.1(b) or subsection 15.2(c), but is permitted to take effect later in the same

- 38 -

Plan Year (as a result of additional contributions or pursuant to the enrolled actuary’s certification of the adjusted funding target attainment percentage for the Plan Year that meets the requirements of section 1.436-1(g)(5)(ii)(C) of the Treasury regulations), then the Plan amendment must automatically take effect as of the first day of the Plan Year (or, if later, the original effective date of the amendment). If the Plan amendment cannot take effect during the same Plan Year, then it shall be treated as if it were never adopted, unless the Plan amendment provides otherwise.

15.5

Notice Requirement . See section 101(j) of ERISA for rules requiring the plan administrator of a single employer defined benefit pension plan to provide a written notice to Participants and Beneficiaries within 30 days after certain specified dates if the Plan has become subject to a limitation described in subsection 15.1(a), Section 15.2, or Section 15.3.

15.6

Methods to Avoid or Terminate Benefit Limitations . See Code section 436(b)(2), (c)(2), (e)(2), and (f) and section 1.436-1(f) of the Treasury regulations for rules relating to employer contributions and other methods to avoid or terminate the application of the limitations set forth in Sections 15.1, 15.2 and 15.3 for a Plan Year. In general, the methods a Plan sponsor may use to avoid or terminate one or more of the benefit limitations under Sections 15.1, 15.2 and 15.3 for a Plan Year include employer contributions and elections to increase the amount of Plan assets which are taken into account in determining the adjusted funding target attainment percentage, making an employer contribution that is specifically designated as a current year contribution that is made to avoid or terminate application of certain of the benefit limitations, or providing security to the Plan.

15.7	Special Rules .

(a)

Rules of Operation for Periods Prior to and After Certification of Plan’s Adjusted Funding Target Attainment Percentage .

(i)

In General . Code section 436(h) and section 1.436-1(h) of the Treasury regulations set forth a series of presumptions that apply (1) before the Plan’s enrolled actuary issues a certification of the Plan’s adjusted funding target attainment percentage for the Plan Year and (2) if the Plan’s enrolled actuary does not issue a certification of the Plan’s adjusted funding target attainment percentage for the Plan Year before the first day of the 10 ^th month of the Plan Year (or if the Plan’s enrolled actuary issues a range certification for the Plan Year pursuant to section 1.436-1(h)(4)(ii) of the Treasury regulations but does not issue a certification of the specific adjusted funding target attainment percentage for the Plan by the last day of the Plan Year). For any period during which a presumption under Code section 436(h) and section 1.436-1(h) of the Treasury regulations applies to the Plan, the limitations under Sections 15.1, 15.2, and 15.3 are applied to the Plan as if the adjusted funding target attainment percentage for the Plan Year were the presumed adjusted funding target attainment percentage determined under the rules of Code section 436(h) and section 1.436-1(h)(1), (2), or (3) of the Treasury regulations. These presumptions are set forth in subsections 15.7(a)(ii) through (iv).

- 39 -

(ii)

Presumption of Continued Underfunding Beginning First Day of Plan Year . If a limitation under Section 15.1, 15.2 or 15.3 applied to the Plan on the last day of the preceding Plan Year, then, commencing on the first day of the current Plan Year and continuing until the Plan’s enrolled actuary issues a certification of the adjusted funding target attainment percentage for the Plan for the current Plan Year, or, if earlier, the date subsection 15.7(a)(iii) or subsection 15.7(a)(iv) applies to the Plan:

(A)

The adjusted funding target attainment percentage of the Plan for the current Plan Year is presumed to be the adjusted funding target attainment percentage in effect on the last day of the preceding Plan Year; and

(B)

The first day of the current Plan Year is a section 436 measurement date.

(iii)

Presumption of Underfunding Beginning First Day of 4 ^th Month . If the Plan’s enrolled actuary has not issued a certification of the adjusted funding target attainment percentage for the Plan Year before the first day of the 4 ^th month of the Plan Year and the Plan’s adjusted funding target attainment percentage for the preceding Plan Year was either at least 60 percent but less than 70 percent or at least 80 percent but less than 90 percent, or is described in section 1.436-1(h)(2)(ii) of the Treasury regulations, then, commencing on the first day of the 4 ^th month of the current Plan Year and continuing until the Plan’s enrolled actuary issues a certification of the adjusted funding target attainment percentage for the Plan for the current Plan Year, or, if earlier, the date subsection 15.7(a)(iv) applies to the Plan:

(A)

The adjusted funding target attainment percentage of the Plan for the current Plan Year is presumed to be the Plan’s adjusted funding target attainment percentage for the preceding Plan Year reduced by 10 percentage points; and

(B)

The first day of the 4 ^th month of the current Plan Year is a section 436 measurement date.

(iv)

Presumption of Underfunding On and After First Day of 10 ^th Month . If the Plan’s enrolled actuary has not issued a certification of the adjusted funding target attainment percentage for the Plan Year before the first day of the 10 ^th month of the Plan Year (or if the Plan’s enrolled actuary has issued a range certification for the Plan Year pursuant to section 1.436-1(h)(4)(ii) of the Treasury regulations but has not issued a certification of the specific adjusted funding target attainment percentage for the Plan by the last day of the Plan Year), then, commencing on the first day of the 10 ^th month of the current Plan Year and continuing through the end of the Plan Year:

(A)

The adjusted funding target attainment percentage of the Plan for the current Plan Year is presumed to be less than 60 percent; and

(B)

The first day of the 10 ^th month of the current Plan Year is a section 436 measurement date.

(b)

New Plans, Plan Termination, Certain Frozen Plans, and Other Special Rules .

(i)

First 5 Plan Years . The limitations in subsection 15.1(b), subsection 15.2(b), and subsection 15.2(c) do not apply to a new Plan for the first 5 Plan Years of the Plan, determined under the rules of Code section 436(i) and section 1.436-1(a)(3)(i) of the Treasury regulations.

- 40 -

(ii)

Plan Termination . The limitations on prohibited payments in subsection 15.1(a), subsection 15.2(a), and Section 15.3 do not apply to prohibited payments that are made to carry out the termination of the Plan in accordance with applicable law. Any other limitations under this Section of the Plan do not cease to apply as a result of termination of the Plan.

(iii)

Exception to Limitations on Prohibited Payments Under Certain Frozen Plans . The limitations on prohibited payments set forth in subsections 15.1(a), 15.2(a), and Section 15.3 do not apply for a Plan Year if the terms of the Plan, as in effect for the period beginning on September 1, 2005, and continuing through the end of the Plan Year, provide for no benefit accruals with respect to any Participants. This subsection 15.7(b)(iii) shall cease to apply as of the date any benefits accrue under the Plan or the date on which a Plan amendment that increases benefits takes effect.

(iv)

Special Rules Relating to Unpredictable Contingent Event Benefits and Plan Amendments Increasing Benefit Liability . During any period in which none of the presumptions under subsection 15.7(a) apply to the Plan and the Plan’s enrolled actuary has not yet issued a certification of the Plan’s adjusted funding target attainment percentage for the Plan Year, the limitations under subsection 15.1(b) and subsection 15.2(b) shall be based on the inclusive presumed adjusted funding target attainment percentage for the Plan, calculated in accordance with the rules of section 1.436-1(g)(2)(iii) of the Treasury regulations.

(c)

Special Rules Under PRA 2010 .

(i)

Payments Under Social Security Leveling Options . For purposes of determining whether the limitations under subsection 15.1(a) or 15.2(a) apply to payments under a social security leveling option, within the meaning of Code section 436(j)(3)(C)(i), the adjusted funding target attainment percentage for a Plan Year shall be determined in accordance with the “Special Rule for Certain Years” under Code section 436(j)(3) and any Treasury regulations or other published guidance thereunder issued by the Internal Revenue Service.

(ii)

Limitation on Benefit Accruals . For purposes of determining whether the accrual limitation under subsection 15.2(c) applies to the Plan, the adjusted funding target attainment percentage for a Plan Year shall be determined in accordance with the “Special Rule for Certain Years” under Code section 436(j)(3) (except as provided under section 203(b) of the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010, if applicable).

(d)

Interpretation of Provisions . The limitations imposed by this Section of the Plan shall be interpreted and administered in accordance with Code section 436 and section 1.436-1 of the Treasury regulations.

15.8

Definitions . The definitions in the following Treasury regulations apply for purposes of this Section 15: section 1.436-1(j)(1) defining adjusted funding target attainment percentage; section 1.436-1(j)(2) defining annuity starting date; section 1.436-1(j)(6) defining prohibited payment; section 1.436-1(j)(8) defining section 436 measurement date; and section 1.436-1(j)(9) defining an unpredictable contingent event and an unpredictable contingent event benefit.

15.9	Effective Date . The rules in this Section 15 are effective for Plan Years beginning after December 31, 2007.

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IN WITNESS WHEREOF , and as evidence of the adoption of the amended and restated Plan Retirement Plan by the Company, it has caused the same to be signed by its officer duly authorized, and its corporate seal, if applicable, to be affixed this19th day of November, 2013.


ATTEST:				MONRO MUFFLER BRAKE, INC.

				By: /s/ Catherine D’Amico
Secretary				Executive Vice President - Chief Financial Officer

- 42 -

EXHIBIT A

CALCULATION OF OPTIONAL FORMS OF BENEFIT

DETERMINATION OF ACTUARIAL EQUIVALENCE -

OTHERWISE PAYABLE BENEFIT MULTIPLIED

BY APPROPRIATE ADJUSTMENT FACTOR

(MONTHLY RETIREMENT ANNUITY PER $1 PER MONTH)

[FOR PURPOSES OF THESE TABLES AGE MEANS AGE AT NEAREST BIRTHDAY]

The amount of a benefit to be paid in an optional form shall be equal to the product of (a) the Employee’s Accrued Benefit and (b) the Straight Life Adjustment Factor divided by the applicable optional form adjustment factor.

LIFE ANNUITY


AGE	STRAIGHT LIFE ADJUSTMENT FACTORS

50		129.16
51		127.74
52		126.25
53		124.71
54		123.11
55		121.45
56		119.71
57		117.91
58		116.02
59		114.05
60		112.02
61		109.91
62		107.75
63		105.52
64		103.21
65		100.85
66		98.45
67		96.03
68		93.60
69		91.18
70		88.76
71		86.36
72		83.99
73		81.62
74		79.23
75		76.79

CERTAIN AND LIFE ANNUITY


	CERTAIN PERIOD ADJUSTMENT FACTORS
AGE	60 MONTHS		120 MONTHS		180 MONTHS
50		129.76		131.38		133.68
51		128.40		130.17		132.68
52		126.98		128.91		131.65
53		125.51		127.61		130.60
54		123.98		126.28		129.53
55		122.40		124.90		123.45
56		120.75		123.47		127.36
57		119.03		122.01		126.26
58		117.25		120.51		125.16
59		115.41		118.98		124.07
60		113.51		117.43		122.98
61		111.55		115.86		121.90
62		109.55		114.29		120.83
63		107.50		112.72		119.79
64		105.41		111.14		118.77
65		103.29		109.58		117.78
66		101.16		108.02		116.82
67		99.03		106.50		115.91
68		96.92		105.00		115.05
69		94.83		103.53		114.24
70		92.75		102.10		113.48
71.		90.69		100.73		112.78
72		88.66		99.40		112.13
73		86.64		98.13		111.53
74		84.61		96.91		110.98
75		82.60		95.74		110.48

- 2 -

50% JOINT & SURVIVOR ANNUITY ADJUSTMENT FACTORS


Age of Contingent Annuitant	50		55		60		65		70		75
50		135.17		130.22		124.45		117.83		110.78		104.19
51		134.93		129.92		124.07		117.36		110.23		103.59
52		134.72		129.62		123.69		116.89		109.67		102.97
53		134.49		129.33		123.31		116.41		109.09		102.34
54		134.29		129.03		122.92		115.91		108.50		101.68
55		134.07		128.74		122.54		115.41		107.89		101.01
56		133.87		128.44		122.14		114.90		107.26		100.32
57		133.66		128.15		121.74		114.37		106.62		99.60
58		133.44		127.85		121.33		113.83		105.96		98.86
59		133.23		127.55		120.91		113.27		105.28		98.10
60		133.02		127.25		120.49		112.70		104.59		97.31
61		132.81		126.95		120.06		112.13		103.88		96.51
62		132.61		126.65		119.62		111.55		103.18		95.70
63		132.41		126.34		119.18		110.95		102.46		94.88
64		132.20		126.03		118.74		110.36		101.74		94.03
65		131.99		125.71		118.29		109.75		101.02		93.18
66		131.77		125.39		117.64		109.16		100.31		92.33
67		131.56		125.08		117.40		108.59		99.62		91.49
68		131.36		124.78		116.98		108.04		98.96		90.67
69		131.17		124.50		116.58		107.54		98.33		89.87
70		130.98		124.23		116.22		107.07		97.72		89.09
71		130.82		124.00		115.89		106.65		97.16		88.34
72		130.68		123.80		115.62		106.27		96.62		87.62
73		130.57		123.63		115.38		105.92		96.11		86.92
74		130.47		123.49		115.15		105.57		95.59		86.23
75		130.38		123.34		114.92		105.21		95.07		85.53

- 3 -

66 & 2/3% JOINT & SURVIVOR ANNUITY ADJUSTMENT FACTORS


Age of Contingent Annuitant	50		55		60		65		70		75
50		137.17		133.14		128.59		123.49		118.12		113.32
51		136.86		132.74		128.08		122.87		117.37		112.52
52		136.57		132.34		127.58		122.24		116.64		111.70
53		136.27		131.95		127.07		121.39		115.87		110.86
54		135.99		131.56		126.56		120.94		115.08		109.98
55		135.71		131.17		126.04		120.26		114.27		109.09
56		135.43		130.77		125.52		119.58		113.43		108.16
57		135.16		130.39		124.99		118.88		112.58		107.21
58		134.87		129.98		124.44		118.15		111.69		106.22
59		134.58		129.59		123.88		117.41		110.79		105.20
60		134.31		129.19		123.31		116.65		109.86		104.15
61		134.03		128.79		122.74		115.89		108.93		103.09
62		133.76		128.38		122.16		115.11		107.98		102.01
63		133.50		127.98		121.57		114.32		107.03		100.91
64		133.22		127.56		120.98		113.52		106.07		99.78
65		132.93		127.13		120.38		112.72		105.11		98.65
66		132.64		126.71		119.78		111.93		104.16		97.51
67		132.36		126.30		119.19		111.17		103.24		96.39
68		132.09		125.90		118.63		110.44		102.36		95.29
69		131.84		125.52		118.10		109.77		101.52		94.23
70		131.59		125.16		117.62		109.14		100.71		93.18
71		131.37		124.85		117.19		108.58		99.96		92.18
72		131.19		124.58		116.82		108.07		99.24		91.23
73		131.04		124.36		116.50		107.61		98.56		90.30
74		130.90		124.17		116.20		107.14		97.87		89.37
75		130.78		123.97		115.89		106.67		97.17		88.44

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100% JOINT & SURVIVOR ANNUITY ADJUSTMENT FACTORS


Age of Contingent Annuitant	50		55		60		65		70		75
50		141.17		138.99		136.88		134.81		132.80		131.59
51		140.71		138.39		136.12		133.88		131.70		130.39
52		140.27		137.79		135.36		132.93		130.58		129.16
53		139.83		137.21		134.60		131.96		129.42		127.89
54		139.41		136.61		133.83		130.98		128.24		126.58
55		138.99		136.03		133.06		129.97		127.02		125.23
56		138.57		135.44		132.27		128.94		125.77		123.85
57		138.15		134.85		131.47		127.89		124.49		122.42
58		137.72		134.25		130.65		126.80		123.16		120.94
59		137.30		133.66		129.81		125.69		121.80		119.40
69		136.88		133.06		128.96		124.56		120.42		117.83
61		136.46		132.46		128.10		123.40		119.01		116.24
62		136.06		131.85		127.23		122.24		117.59		114.61
63		135.66		131.24		126.35		121.06		116.17		112.97
64:		135.24		130.61		125.46		119.86		114.73		111.28
65		134.81		129.97		124.56		118.65		113.28		109.57
66		134.38		129.33		123.66		117.47		111.87		107.88
67		133.95		128.72		122.78		116.32		110.49		106.20
68		133.55		128.12		121.93		115.23		109.16		104.54
69		133.17		127.56		121.15		114.23		107.90		102.95
70		132.80		127.02		120.42		113.28		106.69		101.38
71		132.47		126.55		119.77		112.44		105.55		99.88
72		132.20		126.15		119.22		111.68		104.48		98.46
73		131.97		125.82		118.74		110.98		103.46		97.05
74		131.78		125.53		118.29		110.29		102.42		95.67
75		131.59		125.23		117.83		109.57		101.38		94.26

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EXHIBIT B

CALCULATION OF LUMP SUMS

Morality:

The “applicable mortality table” prescribed in Internal Revenue Code section 417(e)(3).

Interest:

The “applicable interest rate” prescribed in Code section 417(e)(3)(A), as amended, for the month of February preceding the Plan Year of the distribution. For purposes of these assumptions, February shall be the “lookback month” and the Plan Year shall be the “stability period” as defined under Treasury Regulations Section 1.417(e)-l.

Notwithstanding anything in the Plan to the contrary, with respect to the Code section 415 limit, for purposes of adjusting the annual benefit to a straight life annuity, the equivalent annual benefit shall be the greater of the equivalent annual benefit computed using the Plan’s interest rate and Plan mortality table (or other tabular factor) and the equivalent annual benefit computed using five percent (5%) interest rate assumption and the “applicable mortality table.” However, for purposes of adjusting the annual benefit to a straight life annuity, if the annual benefit is paid in any form other than a non-decreasing life annuity payable for a period not less than the life of a Participant or, in the case of a Pre-Retirement Survivor Annuity, the life of the surviving spouse, then the equivalent annual benefit shall be the greater of the equivalent annual benefit computed using the Plan interest rate and Plan mortality table (or other tabular factor) and the equivalent annual benefit computed using the “applicable interest rate” and the “applicable mortality table.” With respect to Plan Years beginning in 2004 and 2005, for purposes of adjusting the annual benefit to a straight life annuity, if the annual benefit is paid in any form other than a non-decreasing life annuity payable for a period not less than the life of a Participant or, in the case of a Pre-Retirement Survivor Annuity, the life of the surviving spouse, then the equivalent annual benefit shall be the greater of the equivalent annual benefit computed using the Plan interest rate and Plan mortality table (or other tabular factor) and the equivalent annual benefit computed using five and one-half percent (5.5%) and the “applicable mortality table.”

Effective January 1, 2006, notwithstanding any provision in the Plan to the contrary, with respect to the Code section 415 limit, for purposes of adjusting a lump sum payment or any other form of payment subject to Code section 417(e) to a straight life annuity, the interest rate to be used shall be the interest rate set for in (a), (b) or (c) below which produces the highest benefit:

(a)

5.5%,

(b)

the rate that produces a benefit of not more than 105% of the benefit that would be produced using the Code section 417(e) applicable interest rate, or

(c)

the rate specified in the Plan.

For purposes of determining the current value of a lump sum benefit, Actuarial Equivalence shall be calculated in accordance with Code Section 417(e)(3), Revenue Ruling 2007-67 and such other guidance as may be issued by the Commissioner of Internal Revenue; provided that the “applicable interest rate” shall be determined based on the look back month and stability period set forth above.

EXHIBIT C

LIMITATION ON CERTAIN BENEFITS

Anything in the Plan to the contrary notwithstanding, the following limitations shall apply to the payment of certain benefits:

(a)

The benefits provided by Employer contributions for Highly Compensated Employees and Highly Compensated Former Employees (as described in Code Section 414(q)) shall be limited upon the Plan’s termination to a benefit that is nondiscriminatory under Code Section 401(a)(4); and

(b)

Subject to the provisions of Section (b) of this Exhibit B, the annual I payment of benefits provided by Employer contributions for the 25 highest-paid Highly Compensated Employees and Highly Compensated Former Employees (as described in Code Section 414(q)) shall not exceed the annual payments that would be made under a single life annuity that is the actuarial equivalent of the Member’s accrued benefit and other benefits under the Plan.

The restrictions contained in sub-Section (b) above do not apply if:

(i)

after payment of benefits to a Member described in sub-Section (b) above the value of the Plan’s assets equals or exceeds 110% of its current liabilities (as defined in Code Section 412(1)(7); or

(ii)

the value of the benefits payable to a Member described in sub-Section (b) above is $5,000 or less; or

(iii)

the value of the benefits payable to a Member described in sub-Section (b) is less than 1% of its current liabilities (as defined in Code Section 412(l)(7)); or

(iv)

prior to receipt of a distribution the Member agrees that upon distribution he or she Will promptly deposit in escrow with an acceptable depository property, having a fair market value equal to at least 125% of the Restricted Amount (as defined below). Alternatively, the repayment agreement may be secured by a bank letter of credit or by posting a bond equal to at least 100% of the Restricted Amount. For this purpose, the bond must be furnished by an insurance company, bonding company or other surety approved by the U.S. Treasury Department as an acceptable surety for federal bonds, and

(v)

the Member agrees with the following provisions of this sub-Section (b)(v):

(A)

amounts in the escrow account in excess of 125% of the Restricted Amount may be paid to the Member. Where the repayment obligation has been secured by a bank letter of credit or a bond, any liability in excess of 100% of the Restricted Amount may be released; and

(B)

the Member has the right to receive any income from the property placed in escrow, provided however, that if the market value of the property in the escrow account falls below 110% of the Restricted Amount, the Member must deposit additional property to bring the value of the property held by the depository up to 125% of the Restricted Amount; and

(C)

A depository may not redeliver to a Member any property held under a repayment agreement, other than amounts in excess of 125% of the Restricted Amount, and a surety or bank may not release any liability on a bond or letter of credit unless the Committee certifies to the depository, surety or bank that the Member (or the Member’s estate) is no longer obligated to repay any amount under the repayment agreement. The Committee will make such a certification if any time after the distribution commences either (I) the value of Plan assets equals or exceeds 110% of the value of current liabilities; or (II) the value of the Member’s future Nonrestricted Limit (as defined below) constitutes less than 1% of the value of current liabilities; or (III) the value of the Member’s future Nonrestricted Limit does not exceed $5,000; or (IV) the Plan has terminated and the benefit received by the Member is nondiscriminatory.

For purposes of the above, the following definitions shall apply:

“Restricted Amount” is the excess of the Accumulated Amount (as defined below) of distributions made to the Member over the Accumulated Amount of the Member’s Nonrestricted Limit (as defined below).

“Nonrestricted Limit” is equal to the payments that could have been distributed to the Member, commencing when the distribution commenced to the Member, had the Member received payments in the form described in Section (7)(b) of this Exhibit B.

“Accumulated Amount” is the amount of a payment increased by a reasonable amount of interest from the date the payment was made (or would have been made) until the date for the determination of the Restricted Amount.

In the event that Congress should provide by statute, or the Treasury Department should provide by regulation or ruling, that the limitations provided in this Exhibit C are no longer necessary for the Plan to meet the requirements of Section 401 or other applicable law then in effect, such limitations shall become void and shall no longer apply, without the necessity ,of further amendment to the Plan.

- 2 -

Exhibit 10.05

MONRO MUFFLER BRAKE, INC.

PROFIT SHARING PLAN

Monro Muffler Brake, Inc. a New York corporation with its office and principal place of business in Rochester, New York (“Employer”), hereby continues, amends and restates the Monro Muffler Brake, Inc. Profit Sharing Plan (“Plan”), effective April 1, 2013, except that provisions stating different effective dates shall be effective on such dates.

The Plan was originally adopted as of May 1, 1960 and has since been restated a number of times since that date. The Plan was most recently restated effective as of April 1, 2007. This restatement updates the Plan to incorporate subsequent amendments, and to comply with other required legislative and regulatory changes.

This Plan is intended to be qualified as a cash or deferred profit sharing plan under sections 401(a) and 401(k) of the Internal Revenue Code.

TABLE OF CONTENTS


	Page

ARTICLE I Definitions		1

ARTICLE II Participation and Service		7

ARTICLE III Contributions		8

ARTICLE IV Allocations to Participants’ Accounts		10

ARTICLE V Benefits		17

ARTICLE VI Trust Fund		28

ARTICLE VII Plan Administrator and Other Fiduciaries		30

ARTICLE VIII Amendments		32

ARTICLE IX Successor Employer and Merger or Consolidation of Plans		33

ARTICLE X Plan Termination		34

ARTICLE XI Top-Heavy Provisions		35

ARTICLE XII Miscellaneous		37

Schedule A Service With Predecessor Organizations

- i -

ARTICLE I

Definitions

1.1

“Affiliated Company” means (1) a member of a controlled group of corporations of which the Employer is a member; (2) an unincorporated business which is part of a group of trades or businesses (whether or not incorporated) under common control with the Employer as determined pursuant to Code section 414(c); (3) a member of an affiliated service group of which the Employer is a member as determined pursuant to Code section 414(m); or (4) any other entity required to be aggregated with the Employer under Code section 414. For purposes of this Section, a controlled group of corporations means a group defined under Code section 1563(a) determined without regard to Code sections 1563(a)(4) and 1563(e)(3)(C).

1.2

“Beneficiary” means the Participant’s surviving spouse or, in the event there is no surviving spouse or the surviving spouse elects in writing not to receive any death benefits under the Plan, the person or persons (including a trust) designated by a Participant to receive any death benefit which shall be payable under this Plan.

1.3	“Board” means the Board of Directors of Monro Muffler Brake, Inc.

1.4	“Break in Service” means that an Employee fails to complete 500 or more Hours of Service during a Vesting Computation Period.

1.5	“Code” means the Internal Revenue Code of 1986, as amended from time to time.

1.6

“Compensation” means the gross remuneration (including any amount of salary reduced under Code sections 125, 132(f), or 401(k)) paid to a Participant by the Employer for personal services actually rendered during a Plan Year while a Participant in the Plan, but not including reimbursements or other expense allowances, fringe benefits (cash and noncash), moving expenses, deferred compensation, welfare benefits, stock-based compensation, or any amount in excess of the amount permitted under Code section 401(a)(17). In addition, for purposes of making Pre-Tax Savings Contributions under Section 3.1, “Compensation” shall not include regular annual bonuses made to Highly Compensated Employees. For purposes of this Section 1.7, “Compensation” shall include differential wage payments, within the meaning of Code section 3401(h)(2), paid to any individual by the Employer.

Compensation also includes payments made within 2 ¹ ⁄ ₂ months after severance from employment or, if later, the end of the Limitation Year during which the severance occurred, if they are payments that, absent a severance from employment, would have been paid to the Employee while the Employee continued in employment with the Employer, such as overtime, commissions, bonuses, and other similar compensation. Any payments not described above are not considered compensation if paid after severance from employment, even if they are paid within 2 ¹ ⁄ ₂ months following severance from employment or within the appropriate Limitation Year; except for, (i) payments to an individual who does not currently perform services for the Employer by reason of a qualified military service (within the meaning of Code section 414(u)(1)) to the extent

these payments do not exceed amounts the individual would have received if the individual had continued to perform services for the Employer rather than entering qualified military service, or (ii) compensation paid to a Participant who is permanently and totally disabled, as defined by Code section 22(e)(3), provided salary continuation applies to all Participants who are permanently and totally disabled for a fixed or determinable period, or the Participant was not a Highly Compensated Employee immediately before becoming disabled.

1.7	“Designated Beneficiary” means, for purposes of Section 5.4, the individual who is designated as the Beneficiary under Section 5.8 of the Plan and is the designated Beneficiary under Code section 401(a)(9) and section 1.401(a)(9)-1, Q&A-4 of the Treasury regulations.

1.8

“Disability” means a Participant’s physical or mental condition of a permanent nature which prevents the Participant from engaging in any substantial gainful employment within the Employer. Such disability shall be determined by the Plan Administrator in accordance with procedures uniformly applicable to all Participants. The Plan Administrator may rely upon a competent physician chosen by the Participant and approved by the Plan Administrator.

1.9

“Distribution Calendar Year” means, for purposes of Section 5.4, a calendar year for which a minimum distribution is required. For distributions beginning before the Participant’s death, the first Distribution Calendar Year is the calendar year immediately preceding the calendar year which contains the Participant’s Required Beginning Date. For distributions beginning after the Participant’s death, the first Distribution Calendar Year is the calendar year in which distributions are required to begin under Section 5.4(b). The required minimum distribution for the Participant’s first Distribution Calendar Year will be made on or before the Participant’s Required Beginning Date. The required minimum distribution for other Distribution Calendar Years, including the required minimum distribution for the Distribution Calendar Year in which the Participant’s required beginning date occurs, will be made on or before December 31 of that Distribution Calendar Year.

1.10	“Early Retirement Age” means the later of the date a Participant attains age 55 or completes five Years of Service; provided that for amounts credited to a Participant’s accounts on April 1, 2003, “Early Retirement Age” means the date the Participant attains age 55 with no service requirement.

1.11	“Effective Date” means May 1, 1960. The effective date of this restatement is April 1, 2013 generally except that each section that specifies a different effective date shall be effective on the date specified.

1.12	“Eligibility Computation Period” means the twelve-consecutive-month period beginning with an Employee’s Employment Date and every twelve-month-period beginning each anniversary date thereafter.

- 2 -

1.13	“Employee” means any person who is receiving remuneration for services rendered to the Employer, including any Leased Employee, or who would be receiving such remuneration except for a Leave of Absence.

1.14	“Employer” means Monro Muffler Brake, Inc. or its successor.

1.15	“Employer Matching Contribution Account” means that part of the account maintained for a Participant to record his share of the Employer’s matching contributions under Section 3.2.

1.16	“Employer Stock” means the common stock of Monro Muffler Brake, Inc.

1.17	“Employment Date” means the date on which an Employee first performs an Hour of Service for the Employer.

1.18

“Highly Compensated Employee” means an employee who is highly compensated as defined in Code section 414(q). Subject to the special limitations and definitions contained in Code section 414(q), a Highly Compensated Employee is (1) any employee who received compensation from the Employer in the preceding year in excess of $115,000 (adjusted for cost-of-living increases after 2013), or (2) who is a five-percent owner of the Employer at any time during the year or the preceding year. A five-percent owner of the Employer is any person who owns (or is considered as owning within the meaning of Code section 318) more than five percent of the outstanding stock of the Employer or stock possessing more than five percent of the total combined voting power of all stock of the Employer.

1.19	“Hour of Service” means each hour for which an Employee is paid, or entitled to payment, during an applicable computation period in accordance with the following:

(a)

Performance of Services . An Hour of Service shall be credited for each hour that the Employee is paid or entitled to payment for the performance of services for the Employer or an Affiliated Company.

(b)

Leaves of Absence, etc . An Hour of Service shall be credited for each hour during which no duties are performed but for which an Employee is paid or entitled to payment by the Employer or an Affiliated Company (whether or not the employment relationship has terminated) for any other purpose, including, without limitation, payment due to vacation, holiday, illness, disability, layoff, jury duty or Leave of Absence. Credit is also to be given for up to 501 Hours for which an Employee is on maternity or paternity leave of absence (i.e., pregnancy of the Employee, birth or adoption of the Employee’s child, or caring for the Employee’s child immediately following birth or adoption) in either the Plan Year in which such Leave commences or the following Plan Year, whichever is needed to forestall a Break in Service. No more than 501 Hours of Service shall be credited under this provision, however, to an Employee on account of any single continuous period during which no services are performed for the Employer or an Affiliated Company. In addition, no Hours of Service shall be credited with respect to payments made under a plan maintained by the Employer or an

- 3 -

Affiliated Company solely for complying with applicable workers’ compensation, or disability insurance laws or to payments which reimburse an Employee for medical or medically-related expenses.

(c)

Back pay . To the extent not credited for either of the preceding purposes, an Employee shall be credited with an Hour of Service for each hour for which back pay, irrespective of mitigation of damages, is either awarded or agreed to by the Employer or an Affiliated Company. If back pay is made with respect to one of the purposes set forth in provision (b) above, the number of creditable Hours of Service shall be subject to the limitations set forth in that provision.

(d)

Computation and Crediting of Hours . The Plan Administrator shall determine the number of creditable Hours of Service in any computation period on the basis of any records kept by the Employer that accurately reflect Hours of Service. If any payments (including back pay awards) relate to any period for which no duties are performed, the number of creditable Hours of Service shall equal the number of regularly scheduled working hours upon which the payment is based. If the payment is not calculated on the basis of units of time for which the hours may be determined, the number of creditable Hours of Service shall be equal to the amount of the payment divided by the Employee’s most recent hourly rate of compensation before the period during which no duties are performed. In no event, however, shall an Employee be credited with a greater number of Hours of Service than the number of regularly scheduled hours for the performance of services during the applicable period.

Hours of Service shall be credited to the computation period in which the services were performed, the period to which payments are made when no services are performed, or the period to which back pay awards relate, whichever is applicable. The crediting of Hours of Service for reasons other than the performance of services and the crediting of Hours of Service to computation periods shall be made in accordance with 29 C.F.R. sections 2530.200b-2(b) and (c) which are hereby incorporated by this reference.

(e)

Military Service . An Hour of Service shall be credited for each hour of the normally scheduled work hours for each day during any period the Employee is on leave of absence from the Employer or any Affiliated Company for military service with the Armed Forces of the United States, but not to exceed the period required under the law pertaining to veterans’ reemployment rights; provided that if he fails to report for work at the end of such leave during which he has employment rights, he shall not receive credit for hours on such leave.

1.20	“Income” means the net gain or loss of the Trust Fund from investments, as reflected by interest payments, dividends, realized and unrealized gains and losses on securities, other investment transactions and expenses paid from the Trust Fund.

1.21	“Leased Employee” means any person (other than an employee of the Employer) who pursuant to an agreement between the Employer and any other person (the “leasing

- 4 -

organization”) has performed services for the Employer (or for the Employer and related persons determined in accordance with Code section 414(n)(6)) on a substantially full time basis for a period of at least one year, and such services are performed under the primary direction or control of the Employer. Contributions or benefits provided a Leased Employee by the leasing organization which are attributable to services performed for the Employer shall be treated as provided by the Employer. A Leased Employee shall not be considered an employee of the Employer if: (i) such employee is covered by a money purchase pension plan providing: (1) a nonintegrated employer contribution rate of at least 10 percent of compensation, as defined in Code section 415(c)(3), but including amounts contributed by the Employer pursuant to a salary reduction agreement which are excludable from the employee’s gross income under section 125, section 402(a)(8), section 402(h) or section 403(b) of the Code, (2) immediate participation, and (3) full and immediate vesting; and (ii) Leased Employees do not constitute more than 20 percent of the Employer’s Non-Highly Compensated Employee workforce.

1.22

“Leave of Absence” means any absence authorized by the Human Resources Department of the Employer provided that all persons under similar circumstances must be treated alike in the granting of such Leave of Absence and provided further that the Participant returns within the period of authorized absence. An absence due to service in the Armed Forces of the United States shall be considered a Leave of Absence if the absence is caused by war or if the Employee is required to serve under the laws of conscription, provided the Employee returns to employment with the Employer within the period provided by law.

1.23	“Life Expectancy” means, for purposes of Section 5.4, the Life Expectancy as computed by use of the Single Life Table in section 1.401(a)(9)-9 of the Treasury regulations.

1.24	“Non-Highly Compensated Employee” means an employee who is not a Highly Compensated Employee.

1.25	“Normal Retirement Age” means age 65.

1.26	“Participant” means an Employee participating in the Plan in accordance with the provisions of Article II.

1.27

“Participant’s Account Balance” means, for purposes of Section 5.4, the account balance as of the last valuation date in the calendar year immediately preceding the Distribution Calendar Year (valuation calendar year) increased by the amount of any contributions made and allocated or forfeitures allocated to the account balance as of dates in the valuation calendar year after the valuation date and decreased by distributions made in the valuation calendar year after the valuation date. The account balance for the valuation calendar year includes any amounts rolled over or transferred to the plan either in the valuation calendar year or in the Distribution Calendar Year if distributed or transferred in the valuation calendar year.

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1.28	“Plan” means the Monro Muffler Brake, Inc. Profit Sharing Plan, as set forth herein, as amended from time to time.

1.29	“Plan Administrator” means Monro Muffler Brake, Inc.

1.30	“Plan Year” means the twelve consecutive month period beginning on April 1 and ending on March 31. The Plan Year shall be the limitation year as this term is used in regulations promulgated pursuant to the Employee Retirement Income Security Act of 1974.

1.31	“Pre-Tax Savings Contributions” means contributions made by the Employer on behalf of a Participant pursuant to a salary reduction agreement under Code section 401(k) and the regulations pertaining thereto, as set forth in Section 3.1.

1.32	“Profit Sharing Contribution Account” means that part of the account maintained for a Participant to record his share of any prior Employer profit sharing contributions.

1.33

“Required Beginning Date” shall mean April 1 of the calendar year following the later of: (i) the calendar year in which the Participant attains age 70 ¹ ⁄ ₂ ; or (ii) the calendar year in which the Participant retires. However if the Participant is a five-percent owner with respect to the plan year ending in the calendar year in which the Participant attains age 70 ¹ ⁄ ₂ , “Required Beginning Date” shall mean April 1 of the calendar year following the calendar year in which the Participant attains age 70 ¹ ⁄ ₂ .

1.34	“Rollover Account” means the account maintained in accordance with Section 3.5 to hold the assets of any tax-qualified retirement plan which are transferred to this Plan.

1.35	“Trust” or “Trust Fund” means the Monro Muffler Brake, Inc. Profit Sharing Trust maintained in accordance with the terms of the trust agreement, as amended from time to time, which constitutes a part of this Plan.

1.36	“Trustee” means [Investors Bank & Trust Company], or any other trustee appointed by the Board to administer the Trust.

1.37	“Valuation Date” means each business day.

1.38	“Vesting Computation Period” means the Plan Year, commencing with the Plan Year in which an Employee’s Employment Date occurs.

1.39

“Year of Service” means any Eligibility Computation Period, Vesting Computation Period or Plan Year during which an Employee completes at least 1,000 Hours of Service with the Employer or any Affiliated Company. Service with certain predecessor organizations will be recognized for eligibility and/or vesting purposes as set forth in Appendix A.

1.40	The masculine gender whenever used shall include the feminine and the singular shall include the plural, unless the context clearly indicates the contrary.

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ARTICLE II

Participation and Service

2.1	Eligibility . An Employee shall be eligible to become a Participant after attaining age 21, and at the earlier of the following:

(a)

if the Employee is expected to complete a Year of Service may enter after 3 months of actual service; or

(b)

the first day of the month following the end of the first Eligibility Computation Period during which the Employee has actually completed a Year of Service.

Notwithstanding the foregoing, this Plan does not cover (1) any Leased Employee; (2) any independent contractor (or any person treated by the Employer as an independent contractor regardless of any agency or judicial determination that the individual is an employee for other purposes); (3) any contract worker hired through, or who is an employee of, an outside agency; (4) any non-resident aliens (within the meaning of Code section 7701(b)(1)(B)) who receive no earned income (within the meaning of Code section 911(d)(2)) from the Employer which constitutes income from sources within the United States (within the meaning of Code section 861(a)(3)); or (4) any Employee who is a member of a unit covered by a collective bargaining agreement under which retirement benefits were the subject of good faith bargaining unless such bargaining agreement provides for the participation of such Employee in this Plan.

2.2

Participation . An Employee who has satisfied the eligibility requirements of Section 2.1 may become a Participant as of the first day of the month coinciding with or next following the date on which an Employee meets the eligibility requirements, provided that the Employee has completed a Pre-Tax Savings Contribution agreement in accordance with Section 3.1 and pursuant to such procedures and such rules as the Plan Administrator may have established for this purpose. Actual participation will commence as soon as administratively possible following the Employee’s return of any necessary enrollment materials. Employees who do not commence participation on this date may enter the Plan on the first day of any quarter in the Plan Year.

2.3

Participation and Service upon Reemployment . For purposes of eligibility to participate in the Plan, an Employee who has satisfied the eligibility requirements of Section 2.1, terminates employment and is subsequently reemployed by the Employer will be given credit for all pre-termination service upon return to employment.

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ARTICLE III

Contributions

3.1

Employee Pre-Tax Savings Contributions . A Participant may elect to have the Employer contribute to this Plan any whole percentage, up to 30 percent, of the Compensation that would otherwise be paid to him each payroll period. No contribution can exceed the contribution limitations set forth in Article IV nor, except as permitted by the Plan Administrator as part of an arrangement to satisfy the contribution limitations set forth in Article IV, the amount of Compensation paid to the Participant for a payroll period. The Plan Administrator may impose additional restrictions on the amount of Employee Pre-Tax Savings Contributions made by Highly Compensated Employees to meet applicable nondiscrimination requirements.

Employee Pre-Tax Savings Contributions under this Plan may be made solely pursuant to a Pre-Tax Savings agreement between an individual Participant and the Employer. The agreement shall be in such form and subject to such rules as the Plan Administrator may prescribe. Under the agreement, the Participant agrees to reduce his Compensation by a specified amount and his Employer agrees to contribute this salary-reduced amount to the Plan on behalf of the Participant. The percentage of Compensation designated by the Participant as his contribution rate will continue in effect, notwithstanding any change in his Compensation, until he elects to change such percentage. A Participant may, by filing a written election form furnished by the Plan Administrator, or by telephonic or electronic processing, as the Plan Administrator shall determine, change his percentage of contributions as of the first day of any quarter. Any such change will become effective as soon as is administratively practicable following the date the election is received by the Plan Administrator, or its designee. Pre-Tax Savings Contributions may be suspended at any time, in which case such contributions can be resumed as of the first day of the next quarter following an election by the Participant in accordance with procedures established by the Plan Administrator or its designee. An agreement will not be considered terminated solely because the Participant fails to receive any Compensation during the payroll period. An Employee’s contributions will be credited to his accounts as soon as practicable, and in all events not later than the time prescribed by law for making such contributions.

3.2

Employer Matching Contributions . At the Employer’s the Employer may make a matching contribution for the Plan Year in an amount equal to a percentage of each eligible Participant’s Employee Pre-Tax Savings Contributions, including catch-up contributions under Section 3.3, contributed during the Plan Year. If a matching contribution is made, it will be allocated to the Employer Matching Contribution Accounts of those Participants who completed 1,000 Hours of Service and are employed on the last day of the Plan Year. The Employer’s contributions shall be remitted to the Trustee on a regular basis following the Plan Year to which they relate but in no event shall they be made later than the date prescribed by law for filing the Employer’s federal income tax return (including extensions) for the Employer’s taxable year coincident with or ending in the Plan Year to which the contributions relate.

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Waiver of Last Day of Employment Requirement . For participants who terminate employment due to retirement (following Normal Retirement Age or Early Retirement Age), Disability or death, the last day of employment requirement and Year of Service requirement, as applicable, under subsections (a), (b) or (c) above shall be waived.

3.3

Catch-Up Contributions . All employees who are eligible to make Pre-Tax Savings Contributions under this Plan and who have attained age 50 before the close of the Plan Year shall be eligible to make catch-up contributions in accordance with, and subject to the limitations of, Code section 414(v). Such catch-up contributions shall not be taken into account for purposes of the provisions of the Plan implementing the required limitations of sections Code 402(g) and 415. The Plan shall not be treated as failing to satisfy the provisions of the Plan implementing the requirements of Code sections 401(k)(3), 401(k)(11), 401(k)(12), 410(b), or 416, as applicable, by reason of the making of such catch-up contributions.

3.4	Form of Employer Contributions . Employer contributions shall be made in cash.

3.5

Rollover Contributions Into Plan . Notwithstanding the limitations on contributions under Sections 3.1, 3.2, and 3.3, a Participant may make rollover contributions (as defined in Code sections 402(a)(5), 403(a)(4), 403(b)(8) and 408(d)(3)) to the extent the Plan Administrator in its discretion may permit and in accordance with rules it shall establish. In general, a Participant may make a rollover contribution from a qualified plan described in section Code 401(a) or 403(a), an annuity contract described in Code section 403(b), an individual retirement account or annuity described in Code section 408(a) or 408(b) to the extent that is eligible to be rolled over and would otherwise be includible in gross income, or an eligible plan under Code section 457(b) which is maintained by state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state. Notwithstanding the foregoing, no rollover contribution shall be permitted that includes after-tax Employee contributions.

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ARTICLE IV

Allocations to Participants’ Accounts

4.1

Individual Accounts . The Plan Administrator shall create and maintain individual accounts as records for disclosing the interest in the Trust of each Participant and Beneficiary. Such accounts shall record credits and charges in the manner herein described. A Participant’s account may have one or more of the following subaccounts: Employee Pre-Tax Savings Account, Employer Matching Contribution Account, a Profit Sharing Contribution Account and Rollover Account. The maintenance of individual accounts is only for accounting purposes, and a segregation of the assets of the Trust Fund to each account shall not be required. Distributions and withdrawals made from an account shall be determined as of the Valuation Date which is coincident with or next following the Plan Administrator’s receipt of a written request for a distribution or withdrawal.

4.2	Account Adjustments . The accounts of Participants and Beneficiaries shall be adjusted in accordance with the following:

(a)

Income : The Income of the Trust Fund shall be allocated to the accounts of Participants and Beneficiaries who had balances in their accounts on each Valuation Date. This allocation shall be made in the ratio that the value of each Participant’s account bears to the total value of all Participant accounts similarly invested. Each valuation shall be based on the fair market value of the assets in the Trust Fund on the preceding Valuation Date.

(b)

Contributions : Contributions shall be allocated to the accounts of the Participants on whose behalf the contributions were made as soon as administratively practicable following their being contributed.

4.3	Limitations on Contributions .

(a)

Limits on Employee Pre-Tax Savings Contributions . No Participant shall be permitted to have elective deferrals made under this Plan, or any other qualified plan maintained by the Employer during any taxable year, in excess of the dollar limitation contained in Code section 402(g) in effect for such taxable year, except to the extent permitted under Section 3.3 and Code section 414(v), if applicable. A Participant’s Employee Pre-Tax Savings Contributions to this Plan and any other plan shall not exceed $17,500 (adjusted for cost of living increases after 2013 as provided under the Code) in any taxable year of the Participant. To meet this limit no contribution to this Plan in excess of $17,500 (as adjusted) shall be accepted on behalf of any Participant during a calendar year. If a Participant participates in more than one Plan, the Participant shall notify the Plan Administrator of any excess contribution in a calendar year by March 1 of the following year. The Plan Administrator shall then cause the portion of such excess, plus the earnings thereon calculated up to the last day of the Plan Year to

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which the excess contribution relates, allocated to this Plan to be returned to the Participant by April 15 following the calendar year to which the excess contribution relates.

(b)

Code section 401(k) Limits . Notwithstanding any other provision of the Plan to the contrary, the Plan will apply the special nondiscrimination tests for Employee Pre-Tax Savings Contributions as provided in Code section 401(k)(3) and 1.401(k)-2 of the Treasury regulations, including any subsequent Internal Revenue Service guidance issued under Code section 401(k)(3) (the “actual deferral percentage test” or “ADP test”). For purposes of this test, the prior year testing method shall be used to determine the contribution percentages for the Non-Highly Compensated Employees.

The Actual Deferral Percentage, or ADP, for Participants who are Highly Compensated Employees for each Plan Year and the ADP for Participants who are Non-Highly Compensated Employees for the same Plan Year must satisfy one of the following tests:

(1)

(2)

The ADP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ADP for Participants who are Non-Highly Compensated Employees for the same Plan Year multiplied by 2.0, provided that the ADP for Participants who are Highly Compensated Employees does not exceed the ADP for Participants who are Non-Highly Compensated Employees by more than two percentage points.

“Actual deferral percentage” (“ADP”) shall mean, for a specified group of Participants (either Highly Compensated Employees or Non-Highly Compensated Employees) for a Plan Year, the average of the ratios (calculated separately for each Participant in such group) of (1) the amount of employer contributions actually paid over to the Trust on behalf of such Participant for the Plan Year to (2) the Participant’s compensation for such Plan Year. Employer contributions on behalf of any Participant shall include: (1) any Employee Pre-Tax Savings Contributions (other than catch-up contributions under Section 3.3) made pursuant to the Participant’s deferral election (including excess Employee Pre-Tax Savings Contributions of Highly Compensated Employees), but excluding (a) excess Employee Pre-Tax Savings Contributions of Non-Highly Compensated Employees that arise solely from Employee Pre-Tax Savings Contributions made under the Plan or plans of the Employer and (b) Employee Pre-Tax Savings Contributions that are taken into account in the Actual Contribution Percentage test (provided the ADP test is satisfied both with and without exclusion of these Employee Pre-Tax Savings Contributions), and (2) at the election of the Employer, his qualified non-elective contributions, if any. For purposes of computing Actual Deferral Percentages, an employee who would be a Participant

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but for the failure to make Employee Pre-Tax Savings Contributions shall be treated as a Participant on whose behalf no Employee Pre-Tax Savings Contributions are made. For purposes of the ADP test, compensation means compensation as defined in Code section 414(s).

The ADP for any Participant who is a Highly Compensated Employee for the Plan Year and who is eligible to have elective deferrals allocated to his accounts under two or more arrangements described in Code section 401(k), that are maintained by the Employer, shall be determined as if such elective deferrals were made under a single arrangement. If a Highly Compensated Employee participates in two or more cash or deferred arrangements that have different Plan Years, all cash or deferred arrangements ending with or within the same calendar year shall be treated as a single arrangement.

In the event that this Plan satisfies the requirements of Code sections 401(k), 401(a)(4), or 410(b) only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such sections of the Code only if aggregated with this Plan, then this Section shall be applied by determining the ADP of Employees as if all such plans were a single plan. Plans may be aggregated in order to satisfy Code section 401(k) only if they have the same Plan Year and use the same ADP testing method.

Distribution of Excess Contributions . Notwithstanding any other provision of this Plan, excess contributions, plus any income and minus any loss allocable thereto, shall be distributed no later than the last day of each Plan Year to Participants to whose accounts such excess contributions were allocated for the preceding Plan Year, except to the extent such excess contributions are classified as catch-up contributions as set forth in Section 3.3. Excess contributions are allocated to the Highly Compensated Employees with the largest amounts of employer contributions taken into account in calculating the ADP test for the year in which the excess arose, beginning with the Highly Compensated Employee with the largest amount of such employer contributions and continuing in descending order until all the excess contributions have been allocated. To the extent a Highly Compensated Employee has not reached his or her catch-up contribution limit under the Plan, excess contributions allocated to such Highly Compensated Employee are catch-up contributions and will not be treated as excess contributions. If such excess amounts (other than catch-up contributions) are distributed more than 2 1/2 months after the last day of the Plan Year in which such excess amounts arose, a ten percent excise tax will be imposed on the Company with respect to such amounts.

Excess contributions shall be adjusted for any income or loss up to the last day of the Plan Year to which the excess contribution relates. The Plan may use any reasonable method for computing the income or loss allocable to excess contributions, provided such method is used consistently for all Participants and for all corrective distributions under the Plan for the Plan Year, and is used by the Plan for allocating income or loss to Participant’s accounts.

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The Plan Administrator shall have the responsibility for monitoring compliance with the special nondiscrimination tests under Code sections 401(k) and 401(m) and shall have the power to take any steps it deems appropriate to ensure compliance, including limiting the amount of salary reduction permitted by the Highly Compensated Employees or requiring that the contributions for the Highly Compensated Employees be delayed or held in escrow before being paid over to the Trustee until such time as the Plan Administrator determines that contributions can be made on behalf of the Highly Compensated Employees without violating the requirements of Code sections 401(k) or 401(m).

(c)

Code section 401(m) Limits . Notwithstanding any other provision of the Plan to the contrary, the Plan will apply these special nondiscrimination tests for Employer matching contributions as provided in Code section 401(m)(2) and Treasury Regulation 1.401(m)-2, including any subsequent Internal Revenue Service guidance issued under Code section 401(m)(2) (the “actual contribution percentage test” or “ACP test”). For purposes of this test, the prior year testing method shall be used to determine the contribution percentages for the Non-Highly Compensated Employees.

The Actual Contribution Percentage, or ACP, for Participants who are Highly Compensated Employees for each Plan Year and the ACP for Participants who are Non-Highly Compensated Employees for the same Plan Year must satisfy one of the following tests:

(1)

(2)

The ACP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ACP for Participants who are Non-Highly Compensated Employees for the same Plan Year multiplied by two, provided that the ACP for Participants who are Highly Compensated Employees does not exceed the ACP for Participants who are Non-Highly Compensated Employees by more than two percentage points.

“Actual Contribution Percentage” (“ACP”) shall mean, for a specified group of Participants (either Highly Compensated Employees or Non-Highly Compensated Employees) for a Plan Year, the average of the Contribution Percentages of the Eligible Participants in the group. “Contribution Percentage” shall mean the ratio (expressed as a percentage) of the Participant’s Contribution Percentage Amounts to the Participant’s compensation for the Plan Year. “Contribution Percentage Amounts” shall mean the Matching Contributions made under the Plan on behalf of the Participant for the Plan Year. Such Contribution Percentage Amounts shall not include Matching Contributions that are forfeited either to correct excess aggregate contributions or because the contributions to which they relate are excess deferrals, excess contributions, or excess aggregate contributions. The Employer also may elect to use Employee Pre-Tax Savings Contributions in the

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Contribution Percentage Amounts so long as the ADP test is met before the Employee Pre-Tax Savings Contributions are used in the ACP test and continues to be met following the exclusion of those Employee Pre-Tax Savings Contributions that are used to meet the ACP test. For purposes of the ACP test, compensation means compensation as defined in Code section 414(s).

For purposes of this Section, the contribution percentage for any Participant who is a Highly Compensated Employee and who is eligible to have contribution percentage amounts allocated to his account under two or more plans described in Code section 401(a), or arrangements described in Code section 401(k) that are maintained by the Employer, shall be determined as if the total of such contribution percentage amounts was made under each plan. If a Highly Compensated Employee participates in two or more cash or deferred arrangements that have different Plan Years, all cash or deferred arrangements ending with or within the same calendar year shall be treated as a single arrangement.

In the event that this Plan satisfies the requirements of Code sections 401(m), 401(a)(4) or 410(b) only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such sections of the Code only if aggregated with this Plan, then this Section shall be applied by determining the contribution percentages of Employees as if all such plans were a single plan. Plans may be aggregated in order to satisfy Code section 401(m) only if they have the same Plan Year and use the same ACP testing method.

Distribution of Excess Aggregate Contributions . Notwithstanding any other provision of this Plan, excess aggregate contributions, plus any income and minus any loss allocable thereto, shall be forfeited, if forfeitable, or if not forfeitable, distributed, no later than the last day of each Plan Year to Participants to whose accounts such excess aggregate Contributions were allocated for the preceding Plan Year. Excess aggregate contributions are allocated to the Highly Compensated Employees with the largest contribution percentage amounts taken into account in calculating the ACP test for the year in which the excess arose, beginning with the Highly Compensated Employee with the largest amount of such contribution percentage amounts and continuing in descending order until all the excess aggregate contributions have been allocated. If such excess aggregate contributions are distributed more than 2 1/2 months after the last day of the Plan Year in which such excess amounts arose, a ten percent excise tax will be imposed on the Company with respect to those amounts. Excess aggregate contributions shall be treated as annual additions under the Plan even if distributed.

Excess aggregate contributions shall be adjusted for any income or loss up to the last day of the Plan Year to which the excess contribution relates. The Plan may use any reasonable method for computing the income or loss allocable to Excess Aggregate Contributions, provided such method is used consistently for all Participants and for all corrective distributions under the Plan for the Plan Year, and is used by the Plan for allocating income or loss to Participant’s accounts.

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Forfeitures of excess aggregate contributions shall be used to reduce Employer contributions.

(d)

Code section 415 Limits . Notwithstanding any provision in the Plan to the contrary, the Plan shall comply with the requirements of Code section 415, and the Plan hereby incorporates by reference the rules and limitations of Code section 415. Except to the extent permitted under Section 3.6 of the Plan and Code section 414(v), the “annual additions” that may be contributed or allocated to a Participant’s account under the Plan for any Plan Year shall not exceed the lesser of $51,000, as adjusted for increases in the cost-of-living under section Code 415(d) after 2013, or 100 percent of the Participant’s total compensation for such Plan Year.

For purposes of this Section, the term “annual additions” means the total each Plan Year of the Employer’s contributions, the Participant’s contributions and any Plan forfeitures that are allocated to a Participant’s account. The Participant’s contributions shall be determined without regard to the repayment of any loan or contributions allocated to a Rollover Account. In addition to the amounts calculated under this Plan, annual additions shall include such amounts, similarly calculated, that are contributed with respect to the Participant to any other defined contribution plan maintained by the Employer or by any Affiliated Company and Employer contributions to an individual medical account as described in Code sections 415(1) and 419A(d)(2). In determining whether a corporation is an Affiliated Company for this purpose only, the percentage control test set forth in Code section 1563(a) shall be a 50 percent test in place of the 80 percent test each place the 80 percent test appears in said Code section.

The term “compensation” for the purpose of this subsection (e) shall mean a Participant’s wages within the meaning of Code section 3401(a) (for purposes of income tax withholding at the source), plus amounts that would be included in wages but for an election under Code section 125(a), 132(f)(4), 402(e)(3), 402(h)(1)(B), 402(k), or 457(b). Compensation also includes payments made within 2 ¹ ⁄ ₂ months after severance from employment or, if later, the end of the limitation year during which the severance occurred, if they are payments that, absent a severance from employment, would have been paid to the Employee while the Employee continued in employment with the Employer, such as overtime, commissions, bonuses, and other similar compensation. Any payments not described above are not considered compensation if paid after severance from employment, even if they are paid within 2 ¹ ⁄ ₂ months following severance from employment or within the appropriate limitation year; except for, (i) payments to an individual who does not currently perform services for the Employer by reason of a qualified military service (within the meaning of Code section 414(u)(1)) to the extent these payments do not exceed amounts the individual would have received if the individual had continued to perform services for the Employer

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rather than entering qualified military service, or (ii) compensation paid to a Participant who is permanently and totally disabled, as defined by Code section 22(e)(3), provided salary continuation applies to all Participants who are permanently and totally disabled for a fixed or determinable period, or the Participant was not a Highly Compensated Employee immediately before becoming disabled. Compensation does not include amounts that exceed the Code section 401(a)(17) limit.

If the annual additions computed solely with respect to this Plan exceed the limitations of this Section, the excess annual additions shall be corrected by use of the Employee Plans Compliance Resolution System or any other correction method permitted by law.

If the annual additions exceed the limitations of this Section as a result of aggregating the additions to this Plan and other defined contribution plans of the Employer and any Affiliated Company, the Plan Administrator shall reduce the contributions to this Plan to comply with the limitations of this Section.

4.4

Notification to Participants of Benefits and Reductions . At least once each Plan Year the Plan Administrator shall notify Participants of the value of their accounts. The Plan Administrator shall also advise affected Participants of any reductions in contributions or benefits arising out of the limitations of Sections 4.3.

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ARTICLE V

Benefits

5.1	Payment of Benefits Generally .

(a)

Forms of Payment. All benefits payable to a Participant or, in the event of his death, to his Beneficiary, shall be paid in the form of a lump sum payment or installment payments over a period which does not exceed the life expectancy of the Participant, or the joint life expectancy of the Participant and his Beneficiary. The Plan Administrator shall provide each Participant with a retirement application form which shall provide a description of the right of the Participant, if any, to defer receipt of a distribution and the consequences of failure to defer such receipt in accordance with Treasury guidance under Code section 411(a)(11).

(b)

Timing of Benefit Payments. Benefits payable as a result of termination of employment on account of death, Disability, or upon reaching Early or Normal Retirement Age shall normally begin as soon as practicable following termination of employment or death.

Benefits payable as a result of any other termination of employment shall normally be paid as soon as administratively feasible after termination of employment and the earlier of the following to occur:

(1)

The one-year anniversary of the Participant’s termination of employment, provided the Participant has not been employed by the Employer at any time during the intervening period; or

(2)

The Participant has attained the Plan’s Early Retirement Age (disregarding any service requirement for Early Retirement).

Notwithstanding any direction by the Participant to the contrary, all payments must be payable pursuant to a schedule whereby the entire amount in the Participant’s accounts is paid over a period that does not extend beyond the life of the Participant or over the lives of the Participant and any individual he has designated as his Beneficiary (or over the life expectancies of the Participant and his designated individual Beneficiary). In addition, the payment method selected must provide that more than 50 percent of the present value of the payments projected to be paid to the Participant and his Beneficiary will be paid to the Participant during his life expectancy.

In the event of the death of a Participant or Beneficiary while benefits are being paid under a schedule which meets the requirements of the preceding paragraph payments shall continue pursuant to a schedule which is at least as rapid as the period selected.

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(c)

Missing Participants. If any person entitled to receive benefits of $100 or less cannot be located or fails to respond to Plan attempts to pay those benefits, the Plan Administrator shall have the discretion to take any reasonable actions to liquidate the account, including paying the benefits to any person or account for the benefit of the person otherwise entitled to receive them or to treat the amount due such person as a forfeiture used to reduce the Employer’s current or succeeding Plan contributions. If such missing person shall later be located, and has not received the benefit amount, the full amount previously paid or forfeited, plus reasonable interest, shall be restored by the Employer and credited to the individual’s account under the Plan.

5.2

Termination of Employment . A Participant who terminates employment shall be entitled to receive the vested portion of his accounts under the Plan in accordance with Section 5.1. For this purpose the following accounts are fully and immediately vested at all times: Employee Pre-Tax Savings Account and Rollover Account. The Employer Matching Contribution Account and Profit Sharing Contribution Account for each Participant shall be vested in accordance with the following schedule:


Participant’s Years Of Service	Percent of Account Vested			Percent of Account Forfeited

Less than 2		0	%		100	%
2 but fewer than 3		25	%		75	%
3 but fewer than 4		50	%		50	%
4 but fewer than 5		75	%		25	%
5 or more		100	%		0	%

If any Plan amendment changes the Plan’s vesting schedule, each Participant in the Plan as of the date the new schedule is adopted shall have his vested percentage deferred under whichever vesting schedule provides him with the greatest vesting percentage at any particular point in time.

Forfeitures that arise by virtue of applying the vesting schedule of this Section 5.2 shall first be used to restore previously forfeited amounts, secondly, to satisfy the Employer’s current or future contribution requirements and any remaining forfeitures may be used to offset qualified Plan expenses. If a Participant terminates employment prior to becoming vested, his non-vested account balance may be used immediately for any of the foregoing purposes. However, if such Participant returns to employment and again becomes eligible to participate in the Plan prior to incurring five consecutive one-year Breaks in Service, the Employer shall restore his forfeited account balance plus earnings.

If a Participant terminates employment and later returns to service, all pre-termination service shall be restored for purposes of determining the percentages of his Employer Matching Contribution Accounts that are vested.

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5.3	Severance from Employment .

(a)

A Participant’s accounts may be distributed on account of the Participant’s severance from employment. However, such a distribution shall be subject to the other provisions of the Plan regarding distributions, other than provisions that require a separation from service before such amounts may be distributed.

(b)

In the event the Employer sells substantially all of the assets of the Employer or a subsidiary, as described in section 1.401(k)-1(d)(4) of the regulations, to an unrelated party and Participants who are employed by the sold assets become employed by the purchaser of the assets, the Plan may distribute the vested account balances of such Participants. Such distributions shall be made in the form of a lump sum to the affected Participants no later than the end of the second calendar year after the calendar year in which the sale occurred. Distributions upon the sale of a subsidiary shall only occur if, following the sale, the Employer continues to maintain this Plan.

5.4	Death . In the event that the termination of a Participant’s employment is caused by his death, the entire amount then in each of his accounts shall be paid to his Beneficiary after receipt by the Plan Administrator of acceptable proof of death and in accordance with this Section 5.4.

(a)

In the event of the death of a Participant before benefit payments have commenced, any death benefit shall be distributed within five years of death unless the following conditions are met:

(1)

payments are made to an individual Beneficiary designated by the Participant;

(2)

payments are made for the life of such individual Beneficiary or over a period not extending beyond his Life Expectancy; and

(3)

payments commence within one year of death.

(b)

If the Participant dies before distributions begin, the Participant’s entire interest will be distributed, or begin to be distributed, no later than as follows:

(1)

If the Participant’s surviving spouse is the Participant’s sole Designated Beneficiary, then distributions to the surviving spouse will begin by December 31 of the calendar year immediately following the calendar year in which the Participant died, or by December 31 of the calendar year in which the Participant would have attained age 70 ¹ ⁄ ₂ , if later.

(2)

If the Participant’s surviving spouse is not the Participant’s sole Designated Beneficiary, then distributions to the Designated Beneficiary will begin by December 31 of the calendar year immediately following the calendar year in which the Participant died.

(3)

(4)

If the Participant’s surviving spouse is the Participant’s sole Designated Beneficiary and the surviving spouse dies after the Participant but before distributions to the surviving spouse begin, this Section 5.4(b), other than section 5.4(b)(1), will apply as if the surviving spouse were the Participant.

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For purposes of this Section 5.4(b) and Section 5.4(c), unless section 5.4(b)(4) applies, distributions are considered to begin on the Participant’s Required Beginning Date. If Section 5.4(a)(4) applies, distributions are considered to begin on the date distributions are required to begin to the surviving spouse under Section 5.4(b)(1). If distributions under an annuity purchased from an insurance company irrevocably commence to the Participant before the Participant’s Required Beginning Date (or to the Participant’s surviving spouse before the date distributions are required to begin to the surviving spouse under Section 5.4(b)(1)), the date distributions are considered to begin is the date distributions actually commence.

Unless the Participant’s interest is distributed in the form of an annuity purchased from an insurance company or in a single sum on or before the Required Beginning Date, as of the first Distribution Calendar Year distributions will be made in accordance with Sections 5.4(c) and 5.4(d). If the Participant’s interest is distributed in the form of an annuity purchased from an insurance company, distributions thereunder will be made in accordance with the requirements of Code section 401(a)(9) and the Treasury regulations.

(c)

If the Participant dies on or after the date distributions begin and there is a Designated Beneficiary, the minimum amount that will be distributed for each Distribution Calendar Year after the year of the Participant’s death is the quotient obtained by dividing the Participant’s Account Balance by the longer of the remaining Life Expectancy of the Participant or the remaining Life Expectancy of the Participant’s Designated Beneficiary, determined as follows:

(1)

The Participant’s remaining Life Expectancy is calculated using the age of the Participant in the year of death, reduced by one for each subsequent year.

(2)

If the Participant’s surviving spouse is the Participant’s sole Designated Beneficiary, the remaining Life Expectancy of the surviving spouse is calculated for each Distribution Calendar Year after the year of the Participant’s death using the surviving spouse’s age as of the spouse’s birthday in that year. For Distribution Calendar Years after the year of the surviving spouse’s death, the remaining Life Expectancy of the surviving spouse is calculated using the age of the surviving spouse as of the spouse’s birthday in the calendar year of the spouse’s death, reduced by one for each subsequent calendar year.

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(3)

If the Participant’s surviving spouse is not the Participant’s sole Designated Beneficiary, the Designated Beneficiary’s remaining Life Expectancy is calculated using the age of the Beneficiary in the year following the year of the Participant’s death, reduced by one for each subsequent year.

(4)

If the Participant dies on or after the date distributions begin and there is no Designated Beneficiary as of September 30 of the year after the year of the Participant’s death, the minimum amount that will be distributed for each Distribution Calendar Year after the year of the Participant’s death is the quotient obtained by dividing the Participant’s Account Balance by the Participant’s remaining Life Expectancy calculated using the age of the Participant in the year of death, reduced by one for each subsequent year.

(d)

If the Participant dies before the date distributions begin and there is a Designated Beneficiary, the minimum amount that will be distributed for each Distribution Calendar Year after the year of the Participant’s death is the quotient obtained by dividing the Participant’s Account Balance by the remaining Life Expectancy of the Participant’s Designated Beneficiary, determined as provided in Section 5.4(c).

If the Participant dies before the date distributions begin and there is no Designated Beneficiary as of September 30 of the year following the year of the Participant’s death, distribution of the Participant’s entire interest will be completed by December 31 of the calendar year containing the fifth anniversary of the Participant’s death.

If the Participant dies before the date distributions begin, the Participant’s surviving spouse is the Participant’s sole Designated Beneficiary, and the surviving spouse dies before distributions are required to begin to the surviving spouse under Section 5.4(b)(1), this Section 5.4(d) will apply as if the surviving spouse were the Participant.

5.5	Withdrawals Prior to Termination of Employment .

(a)

Age 59 ¹ ⁄ ₂ Withdrawals . A Participant who has reached age 59 ¹ ⁄ ₂ but who has not yet terminated employment may withdraw 100 percent of all of his accounts under the Plan, in a lump sum. Notwithstanding the previous sentence, amounts in a Participant’s Rollover Account may be withdrawn at any time.

(b)

Hardship Withdrawals . Contributions which have been allocated to a Participant’s Employee Pre-Tax Savings Account and earnings thereon which

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have been credited to the Participant’s account as of March 31, 1989, and vested amounts which have been credited to the Participant’s Profit Sharing Contribution Account and Employer Matching Contribution Account may be withdrawn by the Participant prior to separation from service only with the Plan Administrator’s approval if required to relieve financial hardship under rules uniformly applicable to all Participants. For the purposes of this Section, hardship is defined as an immediate and heavy financial need of the Participant where such Participant lacks other available resources.

The following are the only financial needs considered immediate and heavy:

(1)

deductible medical expenses (within the meaning of Code section 213(d)) of the Participant, the Participant’s spouse, children, or dependents;

(2)

the purchase (excluding mortgage payments) of a principal residence for the Participant;

(3)

payment of tuition and related educational fees for the next twelve months of post-secondary education for the Participant, the Participant’s spouse, children or dependents;

(4)

the need to prevent the eviction of the Participant from, or a foreclosure on the mortgage of, the Participant’s principal residence;

(5)

payment of burial or funeral expenses for the Participant’s deceased parent, spouse, children or dependents;

(6)

payment of expenses for the repair of damage to the Participant’s principal residence that would qualify for the casualty deduction under Code section 165 (determined without regard to whether the loss exceeds 10% of adjusted gross income).

The following additional rules apply to hardship withdrawals:

(1)

In order to take a hardship distribution, the Participant must have obtained all distributions, other than hardship distributions, and all nontaxable loans under all plans maintained by the Employer.

(2)

The Participant’s Elective Deferrals will be suspended for six months after the receipt of the hardship distribution.

(3)

The distribution may not exceed the amount of the immediate and heavy financial need plus amounts necessary to pay federal, state or local income taxes or penalties reasonably anticipated to result from the withdrawal.

5.6

Cash Outs . Any amount in excess of $5,000 (determined without regard to amounts in the Participant’s Rollover Account) shall be paid prior to Normal Retirement Age only with the written consent of the Participant. Accounts which are valued at $5,000 or less will be paid out to the Participant in the form of a lump sum within one year of separation from service with the Employer without the consent of the Participant.

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The following rules apply with respect to a Participant whose benefits become payable before Normal Retirement Age when the value of his vested benefit is $5,000 or less:

(a)

If a Participant separates from service and the value of his vested benefit is $1,000 or less, the value of the Participant’s benefit shall be paid as a lump sum distribution within one year of the separation from service and such payment may be made without the consent of the Participant.

(b)

If a Participant separates from service and the value of his vested benefit is more than $1,000 but does not exceed $5,000, and the Participant does not elect to have such distribution paid directly to an eligible retirement plan specified by the Participant in a direct rollover or to receive the distribution directly, then the Plan will pay the distribution in a direct rollover to an individual retirement plan designated by the Plan Administrator.

5.7	Loans to Participants . The Trustee shall make a loan to a Participant from the Participant’s accounts subject to such rules as the Plan Administrator may prescribe and subject to the following conditions:

(a)

A request for a loan by a Participant shall be made pursuant to rules established by the Plan Administrator. In deciding whether to approve or deny a Participant’s loan application, the Plan Administrator or its designee shall take into account the terms and conditions of this Section, and any other rules it may develop pursuant to this Section, any applicable legal requirements;

(b)

A loan cannot exceed the lesser of (1) 50 percent of the aggregate amounts in all of a Participant’s accounts; or (2) $50,000 reduced by the excess, if any, of the highest outstanding balance of loans during the one year period ending on the day before the loan is made over the outstanding balance of loans to the Participant on the date the loan is made. In determining whether the foregoing loan limits are satisfied, all loans from all plans of the Employer and of any Affiliated Company shall be aggregated;

(c)

The period of repayment for any loan shall be arrived at by mutual agreement between the Plan Administrator and the borrower, but such period shall not exceed a period of five years except in the case of a loan for the purpose of acquiring any house, apartment, condominium, or mobile home that is used or is to be used within a reasonable time as the principal residence of the Participant;

(d)

All loans must be repaid under a substantially level amortization period with payments being made at least quarterly;

(e)

Each loan shall be made against collateral being the assignment of the borrower’s entire right, title and interest in and to the Trust Fund, supported by the borrower’s collateral promissory note for the amount of the loan, including interest, payable to the order of the Trustee and/or such other collateral as the Plan Administrator may require;

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(f)

Each loan shall bear interest at a rate to be fixed by the Plan Administrator. The rate shall be commensurate with the rates charged by persons in the business of lending money for loans which would be made under similar circumstances. The Plan Administrator shall not discriminate among Participants in the matter of interest rates, but loans granted at different times may bear different rates if, in the opinion of the Plan Administrator, the difference in rates is justified by a change in general economic conditions;

(g)

A loan shall be treated as a directed investment by the borrower with respect to his accounts. The interest paid on the loan shall be credited to the borrower’s accounts and he shall not share in the Income of the Plan’s assets with respect to the amounts borrowed and not yet repaid;

(h)

If any loan made hereunder to a Participant is not repaid in accordance with its terms, the loan shall be in default. The Plan Administrator shall deduct the total amount thereof, including interest thereon, from any distribution of Trust assets to which the Participant, Former Participant or Beneficiary may be entitled. If the Participant’s account is not sufficient to pay the remaining balance of any such loan, he shall be liable for any balance still due, and shall continue to make payments to the Trustee. No distribution shall be made to any Participant, Former Participant or Beneficiary unless and until all unpaid loans, including accrued interest thereon, have been liquidated or offset against the account.

5.8

Designation of Beneficiary . If a Participant is married, his Beneficiary shall be his spouse who shall be entitled to his remaining account balance upon the Participant’s death. Upon the written election of the Participant, with his spouse’s written consent, a Participant may designate another Beneficiary. This election and consent must either be notarized or be witnessed by a Plan representative and returned to the Plan Administrator. If such election has been made or if the Participant is not married, the Participant may from time to time designate any person or persons (who may be designated contingently or successively and who may be an entity other than a natural person) as his Beneficiary to whom his Plan benefits shall be paid if he dies before receipt of all such benefits. Each Beneficiary designation shall be on a form prescribed by the Plan Administrator and will be effective only when filed with the Plan Administrator during the Participant’s lifetime. Each Beneficiary designation filed with the Plan Administrator will cancel all Beneficiary designations previously filed with the Plan Administrator. The revocation of a Beneficiary designation other than the spouse, no matter how effected, shall not require the consent of any designated Beneficiary.

If any unmarried Participant fails to designate a Beneficiary in the manner provided above, or if the Beneficiary predeceases the Participant or dies before complete distribution of the Participant’s benefits, the Plan Administrator, in its discretion, may direct the Trustee to distribute such Participant’s benefits (or the balance thereof) to the Participant’s estate.

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5.9

QDROs . Benefits shall be payable under this plan to an alternate payee pursuant to the terms of any qualified domestic relations order. The Plan Administrator has the responsibility for determining whether a domestic relations order is qualified and whether its payment terms are consistent with the terms of the Plan. Benefits may be distributed to alternate payees at any time after an order is deemed to be qualified even if the Participant is not entitled to receive an immediate distribution at such time. If the alternate payee’s interest is $5,000 or less, the Plan Administrator shall direct the Trustee to cash out the alternate payee’s benefit immediately.

5.10	Eligible Rollover Distributions . A Participant may elect, at the time and in the manner prescribed by the Plan Administrator, to have any portion of an “eligible rollover distribution” paid directly to an “eligible retirement plan” specified by the Participant in a direct rollover.

For the purpose of this Section, an “eligible rollover distribution” is any distribution of all or any portion of the balance to the credit of the Participant, except that an eligible rollover distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or Life Expectancy) of the Participant or the joint lives (or joint life expectancies) of the Participant and the Participant’s designated Beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under Code section 401(a)(9); the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities); and any hardship distribution. A portion of a distribution shall not fail to be an eligible rollover distribution merely because the portion consists of after-tax Participant contributions that are not includible in gross income. However, such portion may be transferred only to an individual retirement account or annuity described in Code section 408(a) or (b), to a qualified retirement plan described in Code section 401(a) or 403(a), or to an annuity contract described in Code section 403(b) that agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution of which is includible in gross income and the portion of such distribution which is not so includible.

An eligible retirement plan is an individual retirement account described in Code section 408(a) or 408A, an individual retirement annuity described in Code section 408(b), an annuity plan described in Code section 403(a), or a plan described in Code section 401(a) or Code section 403(b) which accepts the Participant’s eligible rollover distribution, or Code section 457(b) which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state, which agrees to separately account for amounts transferred into such plan from this Plan. The definition of eligible retirement plan shall also apply in the case of a distribution to a surviving spouse, or to a spouse or former spouse who is the alternate payee under a qualified domestic relations order as defined in Code section 414(p). In the case of an eligible rollover distribution to a non-spouse Beneficiary, an eligible retirement plan is an individual retirement account or individual retirement annuity as defined in Code section 408(a) or 408(b).

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For purposes of this Section 5.10, a Participant includes an Employee or former Employee. In addition, the Employee’s or former Employee’s surviving spouse and the Employee’s or former Employee’s spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Code section 414(p), are Participants with regard to the interest of the spouse or former spouse. A direct rollover is a payment by the Plan to the eligible retirement plan specified by the Participant. Furthermore, the Employee’s nonspouse Beneficiary is a Participant with regard to the interest of the nonspouse Beneficiary.

5.11	Military Service .

(a)

(b)

In the case of a Participant who dies while performing qualified military service (as defined in Code section 414(u)), the survivors of the Participant are entitled to any additional benefits (other than benefit accruals relating to the period of qualified military service) provided under the Plan had the participant resumed and then terminated employment on account of death.

(c)

For purposes of receiving a distribution under the Plan pursuant to Section 5.3, a Participant who is performing service in the uniformed services as described in Code section 3401(h)(2)(A) is treated as having terminated employment; provided that if such a Participant elects to receive a distribution under these circumstances the Participant may not make Pre-Tax Savings Contributions during the 6-month period after the date of distribution.

(d)

Repayment of any loan under Section 5.7 will be suspended for a participant on military leave as permitted under Code section 414(u)(4).

5.12

Minimum Required Distributions . All distributions required under the Plan will be determined and made in accordance with the Treasury regulations under Code section 401(a)(9). Notwithstanding the other provisions of the Plan, distributions may be made under a designation made before January 1, 1984, in accordance with section 242(b)(2) of the Tax Equity and Fiscal Responsibility Act (TEFRA) and the provisions of the Plan that relate to section 242(b)(2) of TEFRA. Under Code section 401(a)(9), a Participant’s entire interest will be distributed, or begin to be distributed, to the Participant no later than the Participant’s Required Beginning Date.

During the Participant’s lifetime, the minimum amount that will be distributed for each Distribution Calendar Year is the quotient obtained by dividing the Participant’s Account Balance by the distribution period in the Uniform Lifetime Table set forth in section 1.401(a)(9)-9 of the Treasury regulations, using the Participant’s age as of the Participant’s birthday in the Distribution Calendar Year. Required minimum

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distributions will be determined under this Section 5.12(b) beginning with the first Distribution Calendar Year and up to and including the Distribution Calendar Year that includes the Participant’s date of death.

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ARTICLE VI

Trust Fund

6.1

Exclusive Benefit of Participants . All contributions under this Plan shall be paid to the Trustee and deposited in the Trust Fund. All assets of the Trust Fund, including investment income, shall be retained for the exclusive benefit of Participants and Beneficiaries and shall be used to pay benefits to such persons or to pay administrative expenses of the Plan and Trust Fund to the extent not paid by the Employer and shall not revert to or inure to the benefit of the Employer.

6.2

Return of Erroneous Contributions . Notwithstanding Section 6.1, upon the Plan Administrator’s request in the case of any contribution which was made by a mistake of fact or which is disallowed as a deduction under the Code, or which is made conditional on the initial qualification of the Plan under the Code, shall be returned to the Employer within one year after the payment of the contribution, the denial of the qualification or the disallowance of the deduction (to the extent disallowed), whichever is applicable. All Employer contributions to this Plan are made contingent upon their deductibility under the Code.

6.3	Investment of Participant Accounts .

(a)

Establishment of Funds . The Plan Administrator shall direct the Trustee to maintain one or more funds that the Plan Administrator in its sole discretion decides from time to time to make available as investment options under the Plan. Such investment options shall include Employer Stock.

(b)

Participant Elections . Each Participant upon his commencement of participation in the Plan shall elect, in such form and in accordance with such rules as the Plan Administrator may prescribe, how his contributions are to be invested among the available investment choices, provided that no Participant shall be permitted to invest more than 25% of his total account balance in Employer Stock. All allocations among more than one fund shall be in increments of whole percentages. Once made, a Participant’s election shall remain in effect until a new election is made. A Participant may change his investment elections as to current and future contributions as of any dates that may be specified by the Plan Administrator. If for any reason a Participant fails to make an investment election or a previous election lapses, the contributions made by or on behalf of the Participant shall be invested in a fund designated by the Plan Administrator as a default option. In addition, a Participant may, in such form and in accordance with such rules as the Plan Administrator may prescribe, change the investment (in whole percent increments) of all or a portion of the accumulated amounts then in his accounts. Such a change may be made as of any dates that may be specified by the Plan Administrator.

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6.4	Monro Muffler Brake, Inc. Stock Fund

(a)

Required Investment Option . The Monro Muffler Brake, Inc. Stock Fund is required to be available to Participants as an investment choice pursuant to the terms of the Plan. No provision of the Plan is to be construed to confer discretion or authority in the Trustee or any fiduciary to remove the Monro Muffler Brake, Inc. Stock Fund as an investment choice or to limit Participants’ access to invest therein.

(b)

Investment in Employer Stock . The Monro Muffler Brake, Inc. Stock Fund shall be invested primarily in Employer Stock. The Trustee shall direct the investment of a portion of the Monro Muffler Brake, Inc. Stock Fund into cash or short-term securities to the extent necessary to maintain a level of liquidity that is reasonably expected to permit trades into and out of the fund.

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ARTICLE VII

Plan Administrator and Other Fiduciaries

7.1	Named Fiduciary and Plan Administrator . The Plan Administrator shall be the Named Fiduciary and Plan Administrator as these terms are used in the Employee Retirement Income Security Act of 1974. The Plan Administrator shall be the agent for the service of legal process with respect to the Plan.

7.2

Powers and Duties of Plan Administrator . The Plan Administrator shall administer the Plan in accordance with its terms and shall have all powers necessary to carry out the provisions of the Plan, except such powers as are specifically reserved to the Board or some other person. The Plan Administrator’s powers include the power to make and publish such rules and regulations as it may deem necessary to carry out the provisions of the Plan. The Plan Administrator shall interpret the Plan and shall determine all questions arising in the administration, interpretation, and application of the Plan. Any such determination by the Plan Administrator shall be conclusive and binding on all persons.

The Plan Administrator shall notify the Trustee of the liquidity and other requirements of the Plan from time to time.

7.3

Power to Appoint Advisers . The Plan Administrator may appoint such actuaries, accountants, attorneys, other specialists and such other persons as it deems necessary or desirable in connection with its functions. Such persons may, but need not, be performing services for the Employer. The Plan Administrator may appoint and remove trustees, insurance companies, investment managers and investment advisors. The Plan Administrator shall be entitled to rely upon any opinions or reports which shall be furnished to it by any such appointee.

7.4

Duties of Fiduciaries . All fiduciaries under the Plan and Trust shall act solely in the interests of the Participants and their Beneficiaries and in accordance with the terms and provisions of the Plan and Trust insofar as such documents are consistent with the Employee Retirement Income Security Act of 1974, and with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims. Any person may serve in more than one fiduciary capacity with respect to the Plan and Trust.

7.5

Allocation of Responsibility . The Board, Plan Administrator and Trustee possess certain specified powers, duties, responsibilities and obligations under the Plan and Trust. It is intended under this Plan and Trust that each be responsible solely for the proper exercise of its own functions and that each shall not be responsible for any act or failure to act of another, unless otherwise responsible for a breach of its own fiduciary duty. Generally, the Board shall be responsible for amending and terminating the Plan and Trust. The Plan Administrator is responsible for administering the Plan as described herein, and for

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appointing and removing asset managers such as trustees, insurance companies, and investment managers. The Trustee is responsible for the management and control of the Trust Fund assets which may be under its control as specifically provided in the trust agreement. The Board or Plan Administrator may designate persons, including committees, other than named fiduciaries to carry out fiduciary responsibilities (other than trustee responsibilities as defined in section 405(c)(3) of the Employee Retirement Income Security Act of 1974) under the Plan.

7.6

Claims Review Procedure . The Plan Administrator shall maintain a procedure under which any Participant or Beneficiary may assert a claim for benefits under the Plan. Any such claim shall be submitted in writing to the Plan Administrator within such reasonable period as the rules of the Plan Administrator may provide. The Plan Administrator shall take action on the claim within 60 days following its receipt and if it is denied shall at such time give the claimant written notice which clearly sets forth the specific reason or reasons for such denial, the specific Plan provision or provisions on which the denial is based, any additional information necessary for the claimant to perfect the claim, if possible, an explanation of why such additional information is needed, and an explanation of the Plan’s claims review procedure. The review procedure shall allow a claimant at least 60 days after receipt of the written notice of denial to request a review of such denied claim, and the Plan Administrator shall make its decision based on such review within 60 days (120 days if special circumstances require more time) of its receipt of the request for review. The decision on review shall be in writing and shall clearly describe the reasons for the Plan Administrator’s decision.

7.7

Limitations on Legal Actions . A claimant may not commence a judicial proceeding against any person, including the Plan, a Plan fiduciary, the Plan Administrator, the Plan sponsor, the Trustee, or any other person or committee, with respect to a claim for benefits without first exhausting the claims procedures set forth in the preceding paragraph. No suit or legal action contesting in whole or in part any denial of benefits under this Article VII shall be commenced later than the earlier of (i) the first anniversary of (A) the date of the notice of the final decision on appeals, or (B) if the claimant fails to request any level of administrative review within the timeframe permitted under the claims review procedure, the deadline for requesting the next level of administrative review, and (ii) the last date on which such legal action could be commenced under the applicable statute of limitations under ERISA (including, for this purpose, any applicable state statute of limitations that applies under ERISA to such legal action).

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ARTICLE VIII

Amendments

The Board reserves the right to make from time to time any amendment to this Plan which does not cause any part of the Trust Fund to be used for, or diverted to, any purpose other than the exclusive benefit of Participants or their Beneficiaries, provided however, that the Board may make any amendment it determines necessary or desirable, with or without retroactive effect, to comply with applicable laws. Notwithstanding the foregoing, the Board delegates to Executive Vice President – Finance, Chief Financial Officer of the Employer the authority to make any amendment that is required by applicable law or is administrative in nature, as determined by the Executive Vice President – Finance, Chief Financial Officer in his or her sole discretion.

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ARTICLE IX

Successor Employer and Merger or

Consolidation of Plans

9.1

Successor Employer . In the event of the dissolution, merger, consolidation or reorganization of the Employer, provision may be made by which the Plan and Trust will be continued by the successor, and, in that event, such successor shall be substituted for the Employer under the Plan. The substitution of the successor shall constitute an assumption of Plan liabilities by the successor and the successor shall have all of the powers, duties and responsibilities of the Employer under the Plan.

9.2

Plan Assets . In the event of any merger or consolidation of the Plan with, or transfer in whole or in part of the assets or liabilities of the Trust Fund to, another trust fund held under any other plan of deferred compensation maintained or to be established for the benefit of all or some of the Participants of this Plan, the assets of the Trust Fund applicable to such Participants shall be transferred to the other trust fund only if:

(a)

each Participant would (if either this Plan or the other plan then terminated) receive a benefit immediately after the merger, consolidation or transfer which is equal to or greater than the benefit he would have been entitled to receive immediately before the merger, consolidation or transfer (if this Plan had then terminated);

(b)

resolutions of the Boards of Directors of the Employer under this Plan, or of any new or successor employer of the affected Participants, shall authorize such transfer of assets; and, in the case of the new or successor employer of the affected Participants, its resolutions shall include an assumption of liabilities with respect to such Participants’ inclusion in the new employer’s plan; and

(c)

such other plan and trust are qualified under Code sections 401(a) and 501(a).

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ARTICLE X

Plan Termination

10.1

Right to Terminate . In accordance with the procedures set forth in this Article, the Board may terminate the Plan at any time. In the event of the dissolution, merger, consolidation or reorganization of the Employer, the Plan shall terminate and the Trust Fund shall be liquidated unless the Plan is continued by a successor to the Employer in accordance with Section 9.1.

10.2

Partial Termination . Upon termination of the Plan with respect to a group of Participants which constitutes a partial termination of the Plan, the accounts of all affected Participants shall become fully vested. The Trustee shall, in accordance with the directions of the Plan Administrator, allocate and segregate for the benefit of the Participants with respect to which the Plan is being terminated the proportionate interest of such persons in the Trust Fund. The funds so allocated and segregated shall be used by the Trustee to pay benefits in accordance with Section 10.3.

10.3

Liquidation of the Trust Fund . Upon termination of the Plan, by written notice or in actual operation, the accounts of all Participants affected thereby shall remain fully vested, and the Plan Administrator shall direct the Trustee to distribute the assets remaining in the Trust Fund, after payment of any expenses properly chargeable thereto, to Participants and Beneficiaries in proportion to their respective account balances.

10.4

Manner of Distribution . To the extent that no discrimination in value results, any distribution after termination of the Plan may be made, in whole or in part, in cash, in securities, or other assets in kind, as the Plan Administrator may determine. All non-cash distributions shall be valued at fair market value.

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ARTICLE XI

Top-Heavy Provisions

11.1	Rules to Apply if Plan Top-Heavy . Notwithstanding any other relevant provision of this Plan to the contrary, the following rules will apply for any Plan Year that the Plan becomes “top-heavy” (as defined in Section 11.2):

(a)

Vesting shall remain full and nonforfeitable.

(b)

For each top-heavy Plan Year the minimum contribution allocated in the aggregate to the Employee Tax-Deferred Contribution Account and the Employer Matching Contribution Account of each non-key employee (as defined in Code section 416(i)(2)) shall be equal to or greater than the lesser of the following amounts:

(1)

three percent of such non-key employee’s compensation; or

(2)

the highest percentage of compensation allocation made by or on behalf of any key employee (as defined in Code section 416(i)(1)).

Such allocation shall be made without regard to the number of Hours of Service or the compensation level of the non-key employee for the top-heavy Plan Year. Employer matching contributions under Section 3.2 shall be taken into account for purposes of satisfying the minimum contribution requirements of Code section 416(c)(2) and the Plan. Employer matching contributions that are used to satisfy the minimum contribution requirements shall be treated as matching contributions for purposes of the actual contribution percentage test and other requirements of Code section 401(m).

(c)

The maximum annual compensation of each employee that may be taken into account under the Plan shall not exceed $255,000 (as adjusted for cost of living increases after 2013, or other amount as may be permitted under the Code).

The top-heavy requirements of Code section 416 and this Article XI shall not apply in any year in which the Plan consists solely of a cash or deferred arrangement which meets the requirements of Code section 401(k)(12) and matching contributions with respect to which the requirements of Code section 401(m)(11) are met.

11.2

Top Heavy Definition . For purposes of this Section, the Plan will be considered “top-heavy” if on any given determination date (the last day of, the preceding Plan Year or, in the case of the Plan’s first year, the last day of such Plan Year) the sum of the account balances (including Employer Contribution Accounts, Employee Contribution Accounts and Rollover Accounts from related plans) for key employees is more than 60 percent of the sum of the account balances of all employees, excluding former key employees. The account balances shall include distributions made with respect to an Employee during the one-year period ending on the determination date but shall not include the account

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balances for any person who has not performed any services for the Employer at any time during the one-year period ending on the determination date. In the case of a distribution made for a reason other than severance from employment, death, or disability, this provision shall be applied by substituting a “five-year period” for “one-year period”. The method of determining the top-heavy ratio shall be made in accordance with Code section 416.

In making the top-heavy calculation, (a) all the Employer’s plans in which a key employee participates shall be aggregated with all other Employer plans which enable a plan in which a key employee participates to satisfy the Code’s non-discrimination requirements; and (b) all Employer plans not included in subparagraph (a), above, may be aggregated with the Employer’s plans included in subparagraph (a), above, if all of the aggregated plans would be comparable and satisfy the Code’s non-discrimination requirements.

11.3

Key Employee Definition . A key employee will be, for the purpose of this Section, any employee or former employee who at any time during the Plan Year containing the determination date is such within the meaning of Code section 416. As of the effective date, the term key employee includes the following individuals:

(a)

an officer who has annual compensation from the Employer of more than $130,000 (as adjusted for cost of living increases) ; or

(b)

a five-percent owner of the Employer; or

(c)

a one-percent owner of the Employer whose annual compensation from the Employer exceeds $150,000.

11.4

Relationship of the Normal and the Top-Heavy Vesting Schedules . If the Plan’s top-heavy status changes and this change alters the Plan’s normal vesting schedule, no Participant’s vested accrued benefit immediately prior to such change in status shall be diminished on account of the change in the vesting schedule. In addition, the vesting for each Participant in the Plan at the time of the change in status shall be determined under whichever schedule provides the greatest vested benefit at any particular point in time.

11.5

Participation in Other Plans . A non-key employee who participates in both this Plan and another top-heavy plan maintained by the Employer shall not be entitled to receive minimum benefits and/or minimum contributions under all such plans. If the other plan is a defined contribution plan, the minimum contribution required shall be satisfied if the total contributions to both plans satisfy the minimum contribution requirement. If the other plan is a defined benefit plan, the minimum shall be satisfied in the defined benefit plan by accruing a minimum benefit of two percent of compensation for each Plan Year of Service up to a maximum of ten Years of Service.

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ARTICLE XII

Miscellaneous

12.1

Nonguarantee of Employment . Nothing contained in this Plan shall be construed as a contract of employment between the Employer and any employee, or as a right of any employee to be continued in the employment of the Employer, or as a limitation on the right of the Employer to discharge any of its employees, with or without cause.

12.2

Right to Trust Assets . No Participant or Beneficiary shall have any right to, or interest in, any assets of the Trust Fund upon termination of employment or otherwise, except as provided from time to time under this Plan, and then only to the extent of the benefits payable under the Plan to such Participant, or Beneficiary out of the assets of the Trust Fund. All payments of benefits provided for in this Plan shall be made solely out of the assets of the Trust Fund.

12.3

Nonalienation of Benefits . Except for loans as provided in Section 5.7, benefits payable under this Plan shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or levy of any kind, either voluntary or involuntary, including any such liability which arises from the Participant’s bankruptcy, prior to actually being received by the person entitled to the benefit under the terms of the Plan; and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any right to benefits payable hereunder, shall be void. The Trust Fund shall not in any manner be liable for, or subject to, the debts, contracts, liabilities, engagements or torts of any person entitled to benefits hereunder. Nothing in this Section shall preclude payment of Plan benefits pursuant to a qualified domestic relations order as defined in Code section 414(p).

12.4	Discontinuance of Employer Contributions . In the event of the permanent discontinuance of contributions to the Plan by the Employer, the accounts of all Participants shall, as of the date of such discontinuance, remain fully vested and nonforfeitable.

12.5	Governing Law . To the extent not preempted by federal law, this Plan shall be interpreted and enforced in accordance with the laws of the State of New York.

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IN WITNESS WHEREOF, the Employer has caused its duly authorized officer to execute this Plan document on its behalf this 9th day of December, 2013.


MONRO MUFFLER BRAKE, INC.

		/s/ Catherine D’Amico

By:		Catherine D’Amico
Its:		Executive Vice President and Chief Financial Officer

- 38 -

APPENDIX A

SERVICE WITH PREDECESSOR ORGANIZATION

AS OF JANUARY 1, 2013

Service with the following organizations will be recognized for eligibility and/or vesting purposes as indicated:


	Eligibility	Vesting	No Credit Given
SMK Speedy International Inc. *	x	¨	¨

Atlantic Automotive Corp. * (Mr. Tire Stores)	x	¨	¨

Atlantic Automotive Corp. * (Mr. Tire HQ & WH)	x	¨	¨

Rice Tire, Inc. *	x	¨	¨

ProCare Automotive Service Solutions LLC *	x	¨	¨

Kimmel Automotive, Inc. *	x	¨	¨

Frasier Tire *	x	¨	¨

Henderson Holdings, Inc. *	x	¨	¨

Valley Forge Tire & Auto Centers	¨	¨	x

Craven Tire & Auto	¨	¨	x

Broad Elm Tire	¨	¨	x

Autotire Tire Pros *	x	¨	¨

Midwest Tire and Auto Repair *	x	¨	¨

Tire Warehouse Central, Inc. *	x	¨	¨

Cheshire Tire Center, Inc. *	x	¨	¨

Import Export Tire, Co. *	x	¨	¨

Courthouse Tire *	x	¨	¨

Vespia Tire Centers, Inc. *	x	x	¨

- 39 -



Kramer Tire Company *	x	x	¨

Colony Tire Corporation dba Colony Tire and Service Centers*	x	¨	¨

Terry’s Tire Town*	x	¨	¨

Tuffy Associates Corporation*	x	¨	¨

Everybody’s Oil Corporation dba Tire Barn*	x	¨	¨

Ken Towery’s Auto Care of Kentucky*	x	¨	¨

Enger Tire Center*	x	¨	¨

Tire King of Durham*	x	¨	¨

Chelsey Co., Inc. dba Midas	x	¨	¨

Brothers Tire, Inc.	x	¨	¨

*	For these predecessor organizations (marked with an asterisk), an Employee’s Service with the predecessor organization will be recognized only if the Employee was participating in the predecessor organization’s 401(k) plan at the time his or her employment with such organization was terminated.

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Exhibit 10.05a

AMENDMENT TO THE

MONRO MUFFLER BRAKE, INC. PROFIT SHARING PLAN (“PLAN”)

Pursuant to the provisions of Article XIV of the Plan, the Plan is hereby amended, effective April 1, 2013, by deleting Section VI.A.2 and substituting the following in its place:

Participants shall be permitted to terminate their Elective Deferrals at any time upon proper and timely notice to the Employer. Modifications and reinstatement of Participants’ Elective Deferrals will become effective as soon as administratively feasible on a prospective basis as provided for below:


Modifications	Reinstatement	Method
¨	¨	On a daily basis.
¨	¨	Upon days notice to the Plan Administrator.
¨	¨	On the first day of each quarter.
x	x	On the first day of the next month.
¨	¨	The beginning of the next payroll period.
¨	¨	On the first day of the next semi-annual period.
¨	¨	On the first day of the next Plan Year.

IN WITNESS WHEREOF , this Amendment was executed on the 24 ^th day of May, 2013.

Monro Muffler Brake, Inc.

/s/ Catherine D’Amico

Executive Vice President and Chief Executive Officer

Exhibit 10.84d

December 4, 2013

Via Certified Mail – Return Receipt Request

Mr. Frederick Tomarchio

Mt. Airy South Main Street, LLC

P.O. Box 55

Glenelg, MD 21237


RE:		Lease Agreement dated September 2, 1999 by and between Mt. Airy South Main Street, LLC, successor in interest to LPR Associates (“Landlord”) and Monro Muffler Brake, Inc., successor in interest to Mr. Tire, Inc. (“Tenant”) for premises situate at 1312 South Main Street, Mt. Airy, MD [MMB #765]

Dear Fred:

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 January 1, 2015 and expiring December 31, 2019. The rent for said renewal period shall be $12,871.17 per month.

Tenant shall have four five-year renewal options remaining.

Please do not hesitate to contact me at 800-876-6676 ext. 3305 or Mindi Collom at ext. 3320 if you have any questions relative to the renewal.

Very truly yours,

/s/ John W. Van Heel

John W. Van Heel

President and CEO

JVH:mc

Exhibit 21.01

SUBSIDIARY OF THE COMPANY


Monro Service Corporation		Delaware

Exhibit 23.01

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

May 28, 2014

Monro Muffler Brake, Inc.

200 Holleder Parkway

Rochester, New York 14615

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (File Nos. 333-34290, 333-57432, 333-133044, 333-151196, 333-63880 and 333-173129) of Monro Muffler Brake, Inc of our report dated May 28, 2014 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Rochester, New York

May 28, 2014

Exhibit 24.01

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned directors of Monro Muffler Brake, Inc., a New York corporation (the “Corporation”), do constitute and appoint JOHN W. VAN HEEL to be their true and lawful attorney-in-fact and agent, with full powers of substitution, 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 29, 2014 (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 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 directors on May 28, 2014.

/s/ Richard A. Berenson

Richard A. Berenson

/s/ Frederick M. Danziger

Frederick M. Danziger

/s/ Donald Glickman

Donald Glickman

/s/ Robert G. Gross

Robert G. Gross

/s/ Stephen C. McCluski

Stephen C. McCluski

/s/ Robert E. Mellor

Robert E. Mellor

/s/ Peter J. Solomon

Peter J. Solomon

/s/ James R. Wilen

James R. Wilen

/s/ Elizabeth A. Wolszon

Elizabeth A. Wolszon

Exhibit 31.1

CERTIFICATION

I, John W. Van Heel, certify that:

I have reviewed this annual report on Form 10-K of Monro Muffler Brake, Inc.;

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;

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;

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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(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 subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) 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

(d) 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

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):

(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.

Date: May 28, 2014

/s/ John W. Van Heel

John W. Van Heel

Chief Executive Officer and President

Exhibit 31.2

CERTIFICATION

I, Catherine D’Amico, certify that:

I have reviewed this annual report on Form 10-K of Monro Muffler Brake, Inc.;

(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.

Date: May 28, 2014

/s/ Catherine D’Amico

Catherine D’Amico

Executive Vice President – Finance,

Chief Financial Officer and Treasurer

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)

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 29, 2014 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/ John W. Van Heel		Dated: May 28, 2014
John W. Van Heel
Chief Executive Officer and President

/s/ Catherine D’Amico		Dated: May 28, 2014
Catherine D’Amico
Executive Vice President – Finance, Chief Financial Officer and Treasurer