Document:

Exhibit 10.32 - Form of 2015 PRSU Agreement

Exhibit 10.32

KAR Auction Services, Inc.

2009 OMNIBUS STOCK AND INCENTIVE PLAN

PERFORMANCE-BASED RESTRICTED STOCK UNIT AGREEMENT
2015 AWARD

THIS AGREEMENT (the “Agreement”) is made between KAR Auction Services, Inc., a Delaware corporation (the “Company”), and [NAME] (the “Recipient”) pursuant to the KAR Auction Services, Inc. 2009 Omnibus Stock and Incentive Plan, as amended (the “Plan”).  Capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Plan.  The parties hereto agree as follows:

1.    Grant of Restricted Stock Units.  The Company hereby grants to the Recipient a target number of [_______] Restricted Stock Units (the “Award”) as of [___________], 2015, subject to the terms and conditions of the Plan and this Agreement.  The Restricted Stock Units shall vest based on the Company’s performance during the “Period of Restriction,” as specified in Section 4 and pursuant to the terms of this Agreement. A “Restricted Stock Unit” is an “Other Share-Based Award” under the Plan and each Restricted Stock Unit entitles the Recipient to a share of Common Stock upon vesting subject to the terms of this Agreement.
2.    Restrictions.  The Restricted Stock Units may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, whether voluntarily or involuntarily or by operation of law.  The Recipient shall have no rights in the Common Stock underlying the Restricted Stock Units until the termination of the Period of Restriction specified in Section 4 below or as otherwise provided in the Plan or this Agreement.  The Recipient shall not have any voting rights with respect to the Restricted Stock Units.
3.    Restricted Stock Unit Account.  The Company shall maintain an account (the “Restricted Stock Unit Account” or “Account”) on its books in the name of the Recipient, which shall reflect the number of Restricted Stock Units awarded to the Recipient.
4.    Period of Restriction.  Subject to the provisions of the Plan and this Agreement, unless vested or forfeited earlier as described in Section 5, 6, or 7 of this Agreement, as applicable, the number of Restricted Stock Units that shall become vested shall be calculated in accordance with the chart below, based on the Company’s “Cumulative Adjusted Net Income Per Share” for the “Measurement Period,” calculated as of the “Measurement Date” (each as defined below).  If the Company’s Cumulative Adjusted Net Income Per Share falls between Threshold and Target or between Target and Maximum levels of performance, the number of Restricted Stock Units that vest shall be calculated using straight-line interpolation.  Such vesting shall occur upon certification by the Committee that the applicable performance criteria have been met. 

        

	
		
	Cumulative Adjusted Net Income Per Share During the Measurement Period
	Number of Restricted Stock Units Vesting

	Below Threshold: 
Below $[____]
	0

	Threshold:
$[____]
	[0.5x]

	Target:
$[____]
	[x]

	Maximum:
Greater than or equal to $[____]
	[2x]

x = [Target number of Restricted Stock Units]
“Cumulative Adjusted Net Income Per Share” shall mean the sum of the Company’s Adjusted Net Income Per Share for the three fiscal years in the Measurement Period.  “Adjusted Net Income Per Share” for a fiscal year is calculated by dividing Adjusted Net Income by the weighted average diluted common shares outstanding per year.  “Adjusted Net Income” for a fiscal year is equal to the Company’s net income as reported in the Form 10-K filed by the Company with respect to such fiscal year, adjusted to (i) exclude gains/losses from certain nonrecurring and unbudgeted capital transactions, including debt prepayment, debt refinancing and similar items, (ii) exclude depreciation and amortization expenses resulting from the revaluation of certain assets at the time of the 2007 merger consistent with the Company’s calculation of its reported adjusted net income, (iii) exclude certain expenses incurred in connection with stock-based compensation related to the 2007 merger consistent with the Company’s calculation of its reported adjusted net income, (iv) exclude acquisition contingent consideration, (v) exclude the impact of significant acts of God or other events outside of the Company’s control that may affect the overall economic environment, and (vi) exclude significant asset impairments.
“Measurement Period” shall mean the period commencing on January 1, 2015 and ending on the Measurement Date.
“Measurement Date” shall mean December 31, 2017.
Upon vesting, all vested Restricted Stock Units shall cease to be considered Restricted Stock Units, subject to the terms and conditions of the Plan and this Agreement, and the Recipient shall be entitled to receive one share of Common Stock for each vested Restricted Stock Unit in the Recipient’s Restricted Stock Unit Account.
5.    Vesting upon Termination by the Company without Cause, by the Recipient for Good Reason or due to Retirement, Disability or Death.  If, from January 1, 2015 until the “Payment Date” (as defined in Section 9), the Recipient experiences a termination of employment by the Company without Cause, by the Recipient due to “Good Reason” as defined in the Recipient’s employment agreement, if the Recipient is a party to an employment agreement with the Company that defines such term, or by reason of Retirement, Disability or death, then the Recipient shall be entitled to receive, on the Payment Date, a number of shares of Common Stock the Recipient would 

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have been entitled to under Section 4 if he or she had remained employed until the last day of the Period of Restriction (based on actual performance during the Period of Restriction, as described in Section 4) multiplied by a fraction, the numerator of which shall be the number of full calendar months during the period from January 1, 2015 through the date the Recipient’s employment terminated and the denominator of which shall be 36, the total number of months in the Period of Restriction.
6.    Forfeiture upon Termination by the Company for Cause or upon Recipient’s Resignation Without Good Reason.  If, from January 1, 2015 until the “Payment Date” (as defined in Section 9), the Recipient experiences a termination of employment by the Company for Cause or by the Recipient other than for “Good Reason” as defined in the Recipient’s employment agreement, if the Recipient is a party to an employment agreement with the Company that defines such term, then the Recipient shall forfeit any Restricted Stock Units that are subject to the Period of Restriction on the date of such termination of employment.
7.    Vesting upon Change in Control.  Upon a Change in Control occurring during the Measurement Period, the Target number of Restricted Stock Units shall become immediately vested on the date of such Change in Control and shall be paid to the Recipient as soon as administratively feasible thereafter (but in no event later than March 15 of the year following the year in which such Change in Control occurs).
8.    Adjustment in Capitalization.  In the event of any change in the Common Stock through stock dividends or stock splits, a corporate split-off or split-up, or recapitalization, merger, consolidation, exchange of shares, or a similar event, the number of Restricted Stock Units subject to this Agreement shall be equitably adjusted by the Committee.
9.    Delivery of Stock Certificates.  Subject to the requirements of Sections 10 and 11 below, as promptly as practicable after the Committee certifies that Restricted Stock Units ceased to be subject to the Period of Restriction in accordance with this Agreement, but in no event later than March 15 of the year following the year in which the shares became vested (the “Payment Date”), the Company may, if applicable, cause to be issued and delivered to a brokerage account for the benefit of the Recipient certificates or electronic book entry credit for the shares of Common Stock that correspond to the vested Restricted Stock Units.
10.    Tax Withholding.  Whenever Common Stock is to be issued or any payment is to be made under this Agreement, the Company or any Subsidiary shall withhold, or require the Recipient to remit to the Company or such Subsidiary, an amount sufficient to satisfy the statutory minimum federal, state, and local withholding tax requirements relating to such transaction, and the Company or such Subsidiary may defer any payment or issuance of Common Stock until such requirements are satisfied. 
11.    Securities Laws.  This Award is a private offer that may be accepted only by a Recipient who satisfies the eligibility requirements outlined in the Plan and the Committee’s administrative procedures.  The future value of Common Stock acquired under the Plan is unknown and could increase or decrease.

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Neither the Plan nor any offering materials related to the Plan may be distributed to the public.  The Common Stock should be resold only on the New York Stock Exchange and should not be resold to the public except in full compliance with local securities laws.

12.    No Guarantee of Employment.  Nothing in this Agreement shall interfere with or limit in any way the right of the Company or any Subsidiary to terminate the Recipient’s employment at any time, or confer upon the Recipient any right to continue in the employ of the Company or any Subsidiary.  
13.    Compliance with Code Section 409A.  Notwithstanding any provision of the Plan or this Agreement to the contrary, the Award is intended to be exempt from or, in the alternative, comply with Code Section 409A and the interpretive guidance thereunder, including the exceptions for stock rights and short-term deferrals.  The Plan and the Agreement will be construed and interpreted in accordance with such intent.  References in the Plan and this Agreement to “termination of employment” and similar terms shall mean a “separation from service” within the meaning of that term under Code Section 409A.  Any payment or distribution that is to be made to a Recipient who is a “specified employee” of the Company within the meaning of that term under Code Section 409A and as determined by the Committee, on account of a “separation from service” under Code Section 409A, may not be made before the date which is six months after the date of such “separation from service,” unless the payment or distribution is exempt from the application of Code Section 409A by reason of the short-term deferral exemption or otherwise.
14.    Dividend Equivalents. The Recipient will accrue dividend equivalents with respect to the Award. Dividend equivalents represent the right to receive additional shares of Common Stock in the future, subject to the terms and conditions of this Agreement. Dividend equivalents will be determined based on the dividends that the Recipient would have received, had the Recipient held shares of Common Stock equal to the vested number of Restricted Stock Units from January 1, 2015 until the earlier to occur of the Payment Date or the date of a Change in Control, and assuming that the dividends were reinvested in Common Stock (and any dividends on such shares were reinvested in Common Stock). The dividend equivalents will be subject to the same transfer restrictions and forfeiture and vesting conditions as specified in this Agreement.
15.    No Fractional Shares.  No fractional shares of Common Stock shall be issued or delivered under this Agreement.  The Committee shall determine whether cash or other property shall be issued or paid in lieu of such fractional shares of Common Stock or whether such fractional shares of Common Stock or any rights thereto shall be forfeited or otherwise eliminated.
16.    Amendment.  The Committee may at any time amend, modify or terminate this Agreement; provided, however, that no such action of the Committee shall adversely affect the Recipient’s rights under this Agreement without the consent of the Recipient.  The Committee, to the extent it deems necessary or advisable in its sole discretion, reserves the right, but shall not be required, to unilaterally amend or modify this Agreement so that the Award qualifies for exemption from or complies with Code Section 409A; provided, however, that the Committee and the Company make no representations that the Award shall be exempt from or comply with Code Section 409A and make no undertaking to preclude Code Section 409A from applying to the Award.

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17.    Plan Terms and Committee Authority.  This Agreement and the rights of the Recipient hereunder are subject to all of the terms and conditions of the Plan, as it may be amended from time to time, as well as to such policies, rules and regulations as the Committee may adopt for administration of the Plan, including but not limited to any stock ownership and stock holding guidelines.  It is expressly understood that the Committee is authorized to administer, construe and make all determinations necessary or appropriate for the administration of the Plan and this Agreement, all of which shall be binding upon the Recipient.  Any inconsistency between this Agreement and the Plan shall be resolved in favor of the Plan.  The Recipient hereby acknowledges receipt of a copy of the Plan and this Agreement.
18.    Severability.  If any provision of this Agreement is determined to be invalid, illegal or unenforceable in any jurisdiction, or as to any person, or would disqualify the Plan or the Agreement under any law deemed applicable by the Board, such provision shall be construed or deemed amended to conform to applicable laws, or, if it cannot be so construed or deemed amended without, in the Board’s determination, materially altering the intent of the Plan or the Agreement, such provision shall be stricken as to such jurisdiction or person, and the remainder of the Agreement shall remain in full force and effect.
19.    Governing Law and Jurisdiction.  The Plan and this Agreement shall be construed in accordance with and governed by the laws of the State of Delaware, United States of America.  The jurisdiction and venue for any disputes arising under, or any action brought to enforce (or otherwise relating to), the Plan will be exclusively in the courts in the State of Indiana, County of Hamilton, United States of America, including the Federal Courts located therein (should Federal jurisdiction exist).
20.    Successors.  All obligations of the Company under this Agreement will be binding on any successor to the Company, whether the existence of the successor results from a direct or indirect purchase of all or substantially all of the business or assets of the Company or both, or a merger, consolidation or otherwise.
21.    Erroneously Awarded Compensation.  This Award shall be subject to any compensation recovery policy adopted by the Company to comply with applicable law, including, without limitation, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or to comport with good corporate governances practices, as such policy may be amended from time to time.
[signature page follows]

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IN WITNESS WHEREOF, the Recipient and the Company have executed this Agreement as of this ___ day of [________], 2015.

	
		
	

_______________________________
	KAR AUCTION SERVICES, INC.

By:   _______________________________

	[NAME]
	Its:   _______________________________

6Exhibit 10.1

 

Amendment #1 to the Employment Agreement 
 Between Humam Sakhnini and Activision Blizzard, Inc.

 

This Amendment #1 to the Employment Agreement (“Amendment #1”) is effective as of the date signed by the Employer, by and between Humam Sakhnini (“Employee” or “you”) and Activision Blizzard, Inc. (“Activision Blizzard” or the “Employer,” and, together with its subsidiaries, the “Activision Blizzard Group”).  All capitalized terms shall have the same meaning set forth in the Employment Agreement (as defined below).

 

RECITALS:

 

Employee and Employer entered into an Employment Agreement dated as of January 9, 2012, (the “Employment Agreement”).  Employee and Employer desire to amend the Employment Agreement in certain respects as set forth herein.

 

AGREEMENT:

 

The parties hereby agree to amend the terms of the Employment Agreement.  Except as specifically set forth in this Amendment #1, the Employment Agreement shall remain unmodified and in full force and effect.  If any term or provision of the Employment Agreement is contradictory to, or inconsistent with, any term or provision of this Amendment #1, then the terms of this Amendment #1 shall in all events control.  The amended terms are as follows:

 

1.                                      Term of Employment.  In Section 1(a), the entire paragraph is deleted and replaced with the following: “The term of your employment under this Agreement (the “Term”) shall commence on February 1, 2012 (the “Effective Date”) and shall end on March 31, 2017 (the “Expiration Date”) (or such earlier date on which your employment is terminated under Section 9).  The Employer shall once have the option to extend the Term by up to one year by notifying you in writing of its intent to do so at least six (6) months prior to the original Expiration Date.  The final date of any such extended Term shall thereafter be referred to as the “Expiration Date” for purposes of this Agreement and the Term shall end on such date (or such earlier date on which your employment is terminated).  Except as set forth in Section 11(s), upon the Expiration Date (or such earlier date on which your employment is terminated) all obligations and rights under this Agreement shall immediately lapse.”

 

2.                                      Compensation.  In Section 2(b), the entire paragraph is deleted and replaced with the following:  “Commencing March 1, 2015, you shall receive a base salary (“Base Salary”) of $700,000, which shall be paid in accordance with the Employer’s payroll policies.  Beginning in 2016, your Base Salary shall be reviewed periodically and may be increased by an amount determined by the Employer, in its sole and absolute discretion.”

 

3.                                      Compensation.  Section 2(e) is hereby added to the Employment Agreement and shall read as follows:

 

“(e)                            Subject to the approval of the Compensation Committee, Activision Blizzard shall grant to you equity awards with a total target grant value of $3,250,000 (and a total grant value

 

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of $3,737,500 if the 2014 Maximum PSU Grant Value (as defined below) were achieved) as follows:

 

(i)                                     Activision Blizzard shall grant to you non-qualified stock options to purchase shares of Activision Blizzard’s common stock with a total grant value of approximately $1,300,000 (the “2014 Options”).  The actual number of stock options awarded to you on the grant date shall be determined based on the official closing price of Activision Blizzard’s common stock on the effective date of the grant, as reported by NASDAQ (the “Grant Date Price”), and an applicable binomial factor selected by the company.  The number of stock options awarded shall be rounded to the nearest whole number, and Activision Blizzard retains the discretion to modify the methodology for such calculations as needed.  The 2014 Options shall be awarded with an exercise price that is equal to the Grant Date Price.  Finally, two-thirds of the 2014 Options shall vest on March 30, 2017, and one-third of the 2014 Options shall vest on March 30, 2018, in each case, subject to your remaining employed by the Activision Blizzard Group through the applicable vesting date.

 

(ii)                                  Activision Blizzard shall grant to you performance-vesting restricted share units which represent the conditional right to receive shares of Activision Blizzard’s common stock (the “2014 Performance Share Units”), with a target value at the time of grant of approximately $1,950,000 (the “2014 Target PSU Grant Value”).  The actual number of 2014 Performance Share Units awarded to you on the grant date shall be equal to the 2014 Target PSU Grant Value divided by the Grant Date Price (it being recognized that if the maximum performance objectives are met for all of the 2014 Performance Share Units, the value of the shares received upon vesting for all of the 2014 Performance Share Units would have been $2,437,500 at the time of grant of the 2014 Performance Share Units, representing 125% of the 2014 Target PSU Grant Value (the “2014 Maximum PSU Grant Value”).  The number of 2014 Performance Share Units awarded shall be rounded to the nearest whole number and shall be determined by the Compensation Committee in its sole discretion, and Activision Blizzard retains the discretion to modify the methodology for such calculations as needed.  Subject to your remaining employed by the Activision Blizzard Group through the applicable vesting dates, the actual number of shares of Activision Blizzard’s common stock (“Shares”) that shall be received on each of the applicable vesting dates is determined as follows:

 

a.              One-third of the 2014 Performance Share Units (the “First Tranche 2014 Performance Share Units”) shall vest on March 30, 2017, if, and only if, the Compensation Committee determines that non-GAAP operating income (“2015 OI”) for Activision Blizzard is 85% or more of the annual operating plan operating income objective established by the Board of Directors (the “2015 AOP

 

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OI Objective”) for Activision Blizzard (the “2015 Performance Objective”) for 2015.  If the 2015 OI is less than 85% of the 2015 AOP OI Objective, then the First Tranche 2014 Performance Share Units will not vest and shall be forfeited.  If the 2015 OI is 85% or more of the 2015 AOP OI Objective, the number of Shares that shall be received with regard to the First Tranche 2014 Performance Share Units on the applicable vesting date shall be equal to the product of:  (1) the number of First Tranche 2014 Performance Share Units; and (2) the ratio of the 2015 OI to the 2015 AOP OI Objective, up to a maximum of 125%.

 

b.              One-third of the 2014 Performance Share Units (the “Second Tranche 2014 Performance Share Units”) shall vest on March 30, 2017, if, and only if, the Compensation Committee determines that non-GAAP operating income (“2016 OI”) for Activision Blizzard is 85% or more of the annual operating plan operating income objective established by the Board of Directors (the “2016 AOP OI Objective”) for Activision Blizzard (the “2016 Performance Objective”) for 2016.  If the 2016 OI is less than 85% of the 2016 AOP OI Objective, then the Second Tranche 2014 Performance Share Units will not vest and shall be forfeited.  If the 2016 OI is 85% or more of the 2016 AOP OI Objective, the number of Shares that shall be received with regard to the Second Tranche 2014 Performance Share Units on the applicable vesting date shall be equal to the product of:  (1) the number of Second Tranche 2014 Performance Share Units; and (2) the ratio of the 2016 OI to the 2016 AOP OI Objective, up to a maximum of 125%.

 

c.               One-third of the 2014 Performance Share Units (the “Third Tranche 2014 Performance Share Units”) shall vest on March 30, 2018, if, and only if, the Compensation Committee determines that non-GAAP operating income (“2017 OI”) for Activision Blizzard is 85% or more than the annual operating plan operating income objective established by the Board of Directors (“2017 AOP OI Objective”) for Activision Blizzard (the “2017 Performance Objective”) for 2017.  If the 2017 OI is less than 85% of the 2017 AOP OI Objective, then the Third Tranche 2014 Performance Share Units will not vest and shall be forfeited.  If the 2017 OI is 85% or more of the 2017 AOP OI Objective, the number of Shares that shall be received with regard to the Third Tranche 2014 Performance Share Units on the applicable vesting date shall be equal to the product of:  (1) the number of Third Tranche 2014 Performance Share Units; and (2) the ratio of the 2017 OI to the 2017 AOP OI Objective, up to a maximum of 125%.

 

Collectively, the 2014 Options and the 2014 Performance Share Units shall be referred to as the “2014 Equity Awards”.  You acknowledge that the grant of 2014 Equity Awards pursuant to this

 

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Section 2(e) is expressly conditioned upon approval by the Compensation Committee and that the Compensation Committee has discretion to approve or disapprove the grants and/or to determine and make modifications to the terms of the grants.  The 2014 Equity Awards shall be subject to all terms of the equity incentive plan pursuant to which they are granted (the “Incentive Plan”), the Employer’s Executive Stock Ownership Guidelines (including, but not limited to, all of the limitations on equity awards described therein) which are attached as Exhibit B, and Activision Blizzard’s standard forms of award agreement.  In the event of a conflict between this Agreement and the terms of the Incentive Plan or award agreements, the Incentive Plan or the award agreements, as applicable, shall govern.  These Equity Awards, if and when approved by the Compensation Committee, shall be in addition to any previous equity incentive awards made to you.”

 

4.                                      Entire Agreement.  In Section 11(a), the first sentence is deleted and replaced with the following: “This Agreement, the Proprietary Information Agreement, and the Activision Blizzard Group Dispute Resolution Agreement (the “Dispute Resolution Agreement”, as referenced in Section 11(k) below), supersede all prior or contemporaneous agreements and statements, whether written or oral, concerning the terms of your employment with the Activision Blizzard Group, and no amendment or modification of these agreements shall be binding unless it is set forth in a writing signed by both the Employer and you.”

 

5.                                      Arbitration.  Section 11(k) is deleted and replaced with the following:  “Except as otherwise provided in this Agreement, both parties agree that any dispute or controversy between them will be settled by final and binding arbitration pursuant to the terms of the Dispute Resolution Agreement (attached hereto as Exhibit C).”

 

	
AGREED AND ACCEPTED:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Employer
    	
 
    	
Employee
    
	
 
    	
 
    	
 
    
	
ACTIVISION   BLIZZARD, INC.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Chris B.   Walther
    	
 
    	
/s/ Human Sakhnini
    
	
 
    	
Chris B. Walther
    	
 
    	
Humam Sakhnini
    
	
 
    	
Chief Legal Officer
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Date:
    	
10/30/14
    	
 
    	
Date:
    	
10/20/14
    
						

 

4

 

Exhibit B

 

Executive Stock Ownership Guidelines

 

5

 

Exhibit C

 

Dispute Resolution Agreement

 

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