EXHIBIT 10.74a
MONRO SERVICE CORPORATION/HONEYWELL FRICTION MATERIAL
AGREEMENT EXTENSION AMENDMENT
OCTOBER 4, 2001
This is an Amendment ("Amendment") to the MINIMUM PURCHASE AND
PREFERRED SUPPLY AGREEMENT ("Agreement"), dated January 13, 2000, between
Honeywell International Inc., on behalf of its Friction Materials business
("HFM"), AND Monro Service Corporation ("Monro"). Capitalized terms used in this
Amendment will have the same meaning given those terms in the Agreement.
1. All provisions of the Agreement remain in full force and effect;
provided that the term of the Agreement set forth in section 2 of the
Agreement is extended until January 31, 2005. Monro and HFM agree that
HFM may audit Monro's brake product purchases to monitor its compliance
with the requirement to purchase 90% of its Products from HFM during
the term of the Agreement and this Amendment.
2. Monro will be eligible, effective July 1, 2001, for additional and
incremental promotional discounts as follows:
- 1.5% Line Incentive discount on Bendix Premium brand only.
This incentive is an `off invoice' discount.
- Group Volume rebate paid quarterly on Bendix Premium brand
net shipments and Bendix Global drum and rotor brand net
promotional shipments that matches the percent earned by
the Group Monro is affiliated with at the end of each
quarter. HFM will take the dollars earned and provide
Monro with a modified calculation that will allow Monro to
spread the rebate across all three Product lines. (Bendix
Premium, Bendix Global and StopRite). Actual dollars
earned is still based solely on Bendix Premium and Bendix
Global volume. The dollars and percentages will change
quarterly and HFM will notify Monro within 45 days of the
change from quarter to quarter.
- The Group Volume rebate will be paid within 45 days of the
end of the quarter in the form of a credit memo direct to
Monro.
3. All other discounts and promotional funding specifically enumerated in
the Agreement remain in place.
- Such discounts will continue to be taken as negotiated in
the Agreement.
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MONRO SERVICE CORPORATION/HONEYWELL FRICTION MATERIAL
AGREEMENT EXTENSION AMENDMENT
October 4, 2001
4. *
Any eligible price increase will be accepted by Monro provided the
order fill ratio on the associated product line has been maintained at
or above 91% for the 90 days prior to the effective date of the price
increase. Monro must provide HFM with a current 12 month rolling
forecast to ensure HFM can maintain at or above 91% order fill. Monro's
actual volume cannot vary from the forecast by plus or minus 10% in
order for the above 91% order fill requirement to be enforced.
If HFM did not maintain 91% order fill and Monro's forecast was within
10% of actual volume, Monro will accept the price action as soon as HFM
provides 91% order fill for 90 days. If at anytime during that period
Monro's forecast varies by 10% or more, the price action will
immediately be accepted.
5. HFM will establish a cooperative advertising allowance for each Bendix
Global drum and rotor equal to the difference between Monro's 7/1/01
quoted invoice price and the applicable 7/1/01 Bendix Global Tan sheet
price. Within 45 days after the end of each quarter, HFM shall issue
Monro a cooperative advertising credit equal to the net quantity
purchased for each Bendix Global drum and rotor multiplied by the
applicable cooperative advertising allowance.
The initial credit will be for the 5/1/01 through 9/30/01 time period.
Monro's initial quoted invoice price for each drum and rotor added
after 7/1/01 will be the initial Bendix Global Tan sheet price
increased by a percentage equal to the difference between Monro's
weighted average 7/1/01 quoted invoice price and the weighted average
7/1/01 Bendix Global Tan sheet price.
The cooperative advertising allowance for all drums and rotors added
after 7/1/01 will be the difference between their initial Bendix Global
Tan sheet price and Monro's initial quoted invoice price.
Once established, the cooperative advertising allowance for any drum or
rotor will not be decreased.
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MONRO SERVICE CORPORATION/HONEYWELL FRICTION MATERIAL
AGREEMENT EXTENSION AMENDMENT
October 4, 2001
Should HFM decrease the Bendix Global Tan sheet price of any drum or
rotor, the applicable cooperative advertising allowance or allowances
shall be increased by a like amount and Monro's quoted invoice pricing
will remain unchanged.
6. HFM and Monro will institute a `production' ordering process to begin
no later than December 1, 2001, whereby:
- Monro will place a `production' order for A-type friction
on a mutually agreed to schedule, for delivery receipt six
(6) weeks from order date.
7. Shipments will be loaded to ensure safe and secure transport, and will
be accompanied with bills of lading and packing slips that correctly
correspond to the shipment.
8. In the event that Monro is acquired, either directly or indirectly,
through the sale of assets, merger, or otherwise, Monro, or its
successor(s) may terminate this Agreement upon 60 days written notice.
If such change of Monro ownership occurs on or before January 31, 2003;
Monro will make payment to HFM at the end of the 60 day written notice
in an amount as follows: If change occurs prior to 2/1/02 payment in
the amount of $333,333.00 U.S.; if change occurs between 2/1/02 and
1/31/03 payment in the amount of $166,667.00 U.S. If such change of
control should occur on, or after February 1, 2003, Monro will be
assessed no penalty for termination of this Agreement or applicable
addendum.
9. In the event of change of control of HFM, Monro has the right to look
for a new supplier after six months if the successor fails to maintain
all terms of the Agreement dated 1/13/2000 and this Amendment --
including line fill and quality.
9.a. In the event that a change of control of Honeywell Friction
Materials shall result in a party, person or corporate entity
controlling a majority share of HFM and such party, person or
corporate entity shall be a citizen of, or based in, a country
which is, or becomes, listed on the United States of America's
Department of State's Office of Defense Trade Control's Embargo
Reference Chart, Monro shall have the immediate right to
terminate this agreement without any prior notification. If such
termination occurs prior to January 31, 2002, Monro shall pay a
penalty of $333,333.00. If termination occurs between February 1,
2002 and January 31, 2003, Monro shall pay a penalty of
$166,667.00. Such penalty payment(s) shall be remitted to HFM
within 60 days of termination of this Agreement.
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MONRO SERVICE CORPORATION/HONEYWELL FRICTION MATERIAL
AGREEMENT EXTENSION AMENDMENT
October 4, 2001
10. In the event that HFM, in its discretion, substantially alters a
product's manufacturing process, or purchases from a third party a
product which is substantially different in terms of lesser quality
(based upon independent testing), or decides to cancel production or
sale of StopRite, RoadTuff or Bendix Global brand product, Monro shall
have the right to seek alternate sourcing opportunities which may
result in a reduction of annual purchases of HFM product. Nothing in
this section would negate section 5 of the original agreement dated
January 13, 2000.
11. HFM shall continue purchasing privileges of mid-grade friction material
to Monro's designated primary `loaded caliper' vendor, at similarly
competitive pricing, for the extended period of this Agreement. If
Monro changes `loaded caliper' vendors from Autoline, HFM reserves the
right to determine if the proposed new vendor meets HFMs customer
requirements.
Monro Service Corporation Honeywell International Inc., on
behalf of its Friction Materials
business
/s/ Robert W. August /s/ Tony Stone
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Signed Signed
Robert W. August Tony Stone
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Name Name
Senior Vice President - Finance Vice President/General Manager
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Title Title
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Date Date
* This information has been left out for confidentiality reasons.