What is the main purpose of Amendment No. 2 to the Rights Agreement?

The main purpose of Amendment No. 2 is to create an exception to the definition of "Acquiring Person" and introduce a "Passive Investor" category. This allows certain investors who meet specific criteria to acquire up to 18% of O'Reilly's common stock without triggering the Rights Agreement's "poison pill" provisions.

Who qualifies as a "Passive Investor" under the amended agreement?

Generally, a "Passive Investor" is defined as a person who reported owning over 10% of O'Reilly's outstanding common stock on Schedule 13G as of December 31, 2010, and who continues to meet the requirements for such ownership (up to 18%) as outlined in the amended Rights Agreement.

Does this amendment mean O'Reilly is actively seeking a takeover?

No, this amendment is typically a defensive measure. By defining "Passive Investor" and allowing for a higher threshold of ownership before triggering the Rights Agreement, the company provides flexibility for existing significant shareholders while still maintaining a mechanism to prevent unsolicited hostile takeovers above the 18% threshold.

What are the implications for existing shareholders?

For most existing shareholders, this amendment likely has minimal direct impact. However, it may provide greater certainty to shareholders who held over 10% as of December 31, 2010, allowing them to increase their stake up to 18% without facing immediate dilution or triggering defensive measures, as long as they adhere to the reporting and ownership requirements.

ORLY 8-K: Shareholder Matters

Summary

O'Reilly Automotive, Inc. (ORLY) filed a Form 8-K on May 20, 2011, to report a material modification to the rights of its security holders. The company entered into Amendment No. 2 to its Rights Agreement, dated May 7, 2002, as amended. This amendment introduces specific provisions related to "Acquiring Persons" and "Passive Investors." The key change allows certain investors, defined as "Passive Investors," to acquire up to 18% of O'Reilly's outstanding common stock without triggering the definition of an "Acquiring Person" under the Rights Agreement. This is contingent upon these investors meeting specific criteria, generally involving having reported ownership of over 10% but less than 18% on Schedule 13G as of December 31, 2010, and continuing to meet these requirements. The filing includes the amendment as an exhibit.

Key Highlights

1O'Reilly Automotive, Inc. filed an 8-K on May 20, 2011, reporting an amendment to its stockholder rights agreement.
2Amendment No. 2 modifies the definition of an "Acquiring Person" under the Rights Agreement.
3A new definition for "Passive Investor" has been added.
4Certain "Passive Investors" can now acquire up to 18% of the company's common stock without triggering the "Acquiring Person" definition.
5Eligibility for "Passive Investor" status generally requires having reported ownership of over 10% but less than 18% on Schedule 13G as of December 31, 2010.
6The amendment aims to provide flexibility for certain existing significant shareholders while potentially maintaining anti-takeover protections.
7The amendment is attached as Exhibit 4.5 to the filing.

O REILLY AUTOMOTIVE INC 8-K Report, Rights Modification (May 20, 2011)

Summary

Key Highlights

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