O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
Exhibit 10.18 - Performance Incentive Plan
PERFORMANCE INCENTIVE PLAN
I. Purpose.
The purpose of the O'Reilly Performance Incentive Plan is to provide
additional incentive to the Participants to remain in the employ of the Company
and to compensate them for their accomplishment of individual and departmental
goals, and for their contribution to the financial performance of the Company.
II. Definitions.
"Award Date" means, with respect to any Target Award, the date on which
such Target Award is granted by the committee.
"Award Year" means, with respect to any Target Award, the Year in which
such Target Award is granted by the committee.
"Board" means the Board of Directors of O'Reilly Automotive, Inc.
"Bonus" means the amount, expressed in dollars, to be earned by the
Participant who receives a Target Award, subject to the achievement of the
Criteria.
"Committee" means the Executive Committee of the Board.
"Common Stock" means the $.01 par value common stock of O'Reilly
Automotive, Inc.
"Company" means collectively, O'Reilly Automotive, Inc. and its
subsidiaries, currently consisting of Ozark Automotive Distributors, Inc.,
Greene County Realty Co. and O'Reilly II Aviation, Inc.
"Criteria" means, with respect to each Participant, the specific goals and
objectives required to be met by the Company, department and/or individual
Participant in order to earn the Bonus which is the subject of the Target
Award.
"Disability" means the total and permanent disability of a Participant,
established to the reasonable satisfaction of the Committee.
"Escrow Agent" means the Boatmen's Trust Company.
"Escrow Agreement" means the agreement among the Company, the Escrow Agent
and the Participant providing for the deposit of certificates representing
Restricted Stock in escrow to be held by the Escrow Agent pending the
expiration or earlier termination of the Forfeiture Period, which agreement
shall be in the form attached hereto as Exhibit A.
"Expiration Date" means, with respect to Restricted Stock (or portion(s)
thereof), the date determined by the Committee upon which the forfeiture
provisions of Section V.B. hereof shall lapse, and in absence of such
determination, the dates prescribed in Section V.C. hereof.
"Fair Market Value" means, with respect to a share of Restricted Stock, the
average of the highest and lowest sale prices of the Common Stock, as
reported on the NASDAQ National Market System, for the day immediately
preceding the Award Date.
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O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
Exhibit 10.18 - Performance Incentive Plan (continued)
"Forfeiture Period" means, with respect to Restricted Stock, that period
commencing on the date of the issuance of such Restricted Stock to the
Participant and ending on the first to occur of (i) the Expiration Date, or
(ii) the occurrence of a Qualifying Event.
"Participant" means an employee of the Company at the management level who
is approved by the Committee to participate in the Plan.
"Plan" means the O'Reilly Automotive, Inc. Performance Incentive Plan.
"Qualifying Event" means those events specified in Section V.D. hereof.
"Restricted Stock" means shares of the Common Stock issued to Participants
pursuant to the Plan, which shares shall be subject to the risk of
forfeiture as provided in Section V.B. hereof during the Forfeiture Period.
"Target Award" means the award by the Committee to a Participant of the
right to receive a Bonus, consisting of cash and Restricted Stock, subject
to the achievement during the Award Year in question of the Criteria.
"Target Award Notice" means the written notice of the committee of the
Target Award, specifying the amount of the Bonus, the Criteria to be met in
order to earn the Bonus, the Forfeiture Period(s) applicable to the
Restricted Stock (if different than as set forth in Section V.C. hereof)
and such other matters deemed relevant by the Committee.
"Year" means any 12-month period beginning January 1 and ending at midnight
on December 31 of each year.
III. Eligibility.
The Committee shall from time to time determine and designate Participants.
The Committee shall decide within sixty days from the beginning of each Year
whether to grant any Participant a Target Award under the Plan for that Year and
the amount of the Bonus granted, subject to the achievement by the Participant
and/or the Company of the Criteria. The Criteria shall be (i) established from
time to time by the Committee, (ii) in writing, and (iii) provided to each
Participant simultaneously with delivery to the Participant of the Target Award
Notice. In adopting such Criteria, the Committee may take into account: (1) each
Participant's individual performance, including the achievement of specified
departmental goals; (2) the Company's performance, including specified
financial goals; and (3) any other factors that the Committee may consider
relevant. The Committee shall advise the Participant and the Company of each
Target Award by delivery of a target Award Notice as soon as practicable
following the grant of the Target Award. The Participant shall execute the
Target Award Notice indicating his or her receipt thereof and agreement to be
bound by the terms and provisions thereof and the Plan. Such execution shall
also evidence and shall be deemed such Participant's execution of the Escrow
Agreement, to be effective upon the issuance of shares of Restricted Stock.
IV. Method of Payment.
Bonuses, to the extent earned by a Participant under the terms of the
Criteria, shall be paid to Participants only if such Participants are employed
by the Company on December 31st of the Award Year. Two-thirds of such Bonus
shall be payable in cash and one-third in shares of Restricted Stock having a
Fair Market Value equal to the one-third of the amount of the Bonus (subject to
rounding, as provided below). Additionally:
A. Participants shall receive their Bonuses, subject to all applicable
withholding for taxes and other items, within thirty (30) days of the completion
of the annual audit of the financial statements of the Company for the Award
Year.
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O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
Exhibit 10.18 - Performance Incentive Plan (continued)
B. Any fractional share of Restricted Stock resulting from the calculation
of Fair Market Value of the Restricted Stock portion of the Bonus will be
rounded down to the nearest whole number, and the Participant's cash portion of
the Bonus will be increased by an amount equal to the value of the fractional
remainder. No shares will be issued for fractional amounts of shares.
C. If a Participant becomes Disabled or dies during any Award Year, the
Committee may elect to pay a pro rata portion of his or her Bonus, to the extent
ultimately earned by achievement of the applicable Criteria, entirely in cash to
the Participant or his or her estate. If a Participant resigns following the end
of an Award Year but prior to the date Bonuses are to be paid for the Award
Year, the Participant will be entitled to receive only the cash portion of any
Bonus earned (e.g., two-thirds of the total Bonus).
V. Restrictions on Transferability; Forfeiture.
A. Upon payment of a Bonus, the shares of Restricted Stock shall be duly
transferred to the Participant and a certificate or certificates for such shares
shall be issued in the Participant's name. The Participant shall thereupon be a
shareholder with respect to all of the shares represented by such certificate or
certificates and shall have all of the rights other shareholders with respect to
all such shares, including the right to vote such shares and to receive all the
dividends and other distributions (subject to the provisions of Section VII
hereof) paid with respect to such shares, provided, however, that such shares
shall be subject to the restrictive and forfeiture provisions hereinafter set
forth. Certificates representing shares of Restricted Stock shall be imprinted
with a legend to the effect that the shares represented thereby may not be sold,
exchanged, transferred, pledged, hypothecated or otherwise disposed of except in
accordance with the terms of this Plan. The Participant, immediately upon
receipt of such certificate(s), shall deposit such certificate(s) together with
a stock power or other instrument of transfer, appropriately endorsed in blank,
with the Escrow Agent to be held pursuant to the Escrow Agreement, with the
expenses of such escrow to be borne by the Company.
B. During the Forfeiture Period, shares of Restricted Stock to which the
Forfeiture Period applies shall be subject to the following:
1. None of such restricted Stock shall be sold, exchanged, transferred,
pledged, hypothecated, or otherwise disposed of; and
2. If, at any time during the Forfeiture Period, the employment of the
Participant with the Company ceases for any reason other than the
occurrence of a Qualifying Event, then all Restricted Stock awarded
hereunder to a Participant then subject to a Forfeiture Period shall
thereupon automatically, and without further action on the part of the
Company, be forfeited by the Participant, and all such Restricted Stock
shall thereupon be reconveyed, transferred and assigned to the Company.
C. The provisions of Section V.B. hereof with respect to the
nontransferability and forfeiture of Restricted Stock shall lapse as to such
Restricted Stock upon the expiration of the Forfeiture Period as to which such
shares of Restricted Stock are subject, whereupon such provisions will be of no
force and effect. The Committee, in its discretion, may determine on the Award
Date the Forfeiture Period or Forfeiture Periods applicable to the Restricted
Stock which are the subject of the Target Award. In absence of such
determination by the Committee, the Expiration Dates for the Forfeiture Periods
applicable to such Restricted Stock shall be as follows:
1. The Expiration Date applicable to one-third of the total number of
shares of Restricted Stock issued pursuant to a Target Award, rounded up to
the nearest whole share, shall be December 31st of the Year immediately
following the Award Year of such Target Award;
2. The Expiration Date applicable to an additional one-third of the total
number of such shares of Restricted Stock, rounded downward to the nearest
whole share shall be December 31st of the second year following such Award
Year; and
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O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
Exhibit 10.18 - Performance Incentive Plan (continued)
3. The Expiration Date applicable to the remaining shares of Restricted
Stock shall be December 31st of the third year following such Award Year.
D. The following shall constitute a Qualifying Event:
1. the retirement of Participant with fifteen (15) or more years
of service.
2. the retirement of a Participant at age sixty (60) or older; or
3. the death or Disability of a Participant.
VI. Shares Subject to Plan.
Subject to the provisions of Section VII, the maximum number of shares of
Common Stock that may be issued under this Plan shall not exceed, in the
aggregate, 100,000 shares. Such shares may be unissued shares, or issued shares
that have been reacquired. If any shares of Restricted Stock are forfeited
during the Forfeiture Period, such shares shall not be available again for grant
under the Plan.
VII. Adjustment Upon Changes in Stock.
If any change is made in the Common Stock by reason of any merger,
consolidation, reorganization, recapitalization, stock dividend, split-up,
combination of shares, exchange of shares, change in corporate structure, or
otherwise, the Committee shall make an appropriate adjustment to the kind and
maximum number of shares subject to the Plan. Any additional shares, or rights
to acquire shares, that result from such an adjustment shall be subject to the
same restrictions that apply to the Participant's Restricted Stock previously
received pursuant to the Plan and shall be deposited with the Escrow Agent to be
held by the Escrow Agent pending the expiration or earlier termination of the
Forfeiture Period applicable thereto. No fractional shares of Common Stock shall
be issued under the Plan on account of any such adjustment, and a Participant's
interest in the shares resulting from such an adjustment shall always be limited
to the lower number of whole shares that result from the adjustment.
VIII. Administration.
The Plan shall be administered by the Committee. The day-to-day
administrative responsibilities may be delegated to other officers or employees
designated by the Committee. The decisions of the Committee as to the facts in
any case arising relative to the Plan, and the meaning and intent of any
provision of the Plan, or its application, shall be final and conclusive.
IX. Limitations.
No officer or employee of the Company shall at any time have any right to
receive a Target Award hereunder, and neither the action of O'Reilly
Automotive, Inc. in establishing the Plan, nor any action taken by it or by the
Board or the Committee under the Plan, nor any provision of the Plan, shall be
construed as giving any officer or employee of the Company or any other person
the right to be retained or employed by the Company.
X. Amendment; Termination.
At any time and from time to time, the Board may elect to alter, amend or
modify this Plan, terminate the Plan, change the participation requirements for
the Plan, or make other such changes to the Plan or the Escrow Agreement as the
Board deems necessary and appropriate; provided, however, that no such
alteration, amendment or modification shall adversely affect the rights of any
Participant with respect to any Target Award then granted or shares of
Restricted Stock then subject to the Escrow Agreement.
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O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
Exhibit 10.18 - Performance Incentive Plan (continued)
XI. Rules of Construction.
The terms of the Plan shall be construed in accordance with the laws
of the State of Missouri.
XII. Effective Date.
The Plan shall become effective as of January 1, 1995.
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