Document:

Document

Exhibit 10.8

KAR Auction Services, Inc.
Annual Incentive Program
Summary of Terms
2022

        

KAR Auction Services, Inc. Annual Incentive Program
Summary of Terms
The following is a summary of the 2022 KAR Auction Services, Inc. Annual Incentive Program (the “Program”) which is part of the KAR Auction Services, Inc. Amended and Restated 2009 Omnibus Stock and Incentive Plan (as may be amended from time to time, the “Omnibus Plan”).  Any awards under the Program are subject to the approval of the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of KAR Auction Services, Inc. (the “Company”).  The Committee has all final authority with respect to administration and interpretation of the Program.  All capitalized terms herein that are not otherwise defined shall have the meanings given to such terms in the Omnibus Plan.
Purpose of the Program
The purpose of the Program is to reward eligible employees of the Company with incentive compensation based on their contributions toward meeting and exceeding overall Company goals.
Eligibility
Key employees of the Company may participate in the Program as determined by the Committee.  
Effective Date
The Program is effective January 1, 2022.  The Company reserves the right to revise or terminate the Program at any time, with or without advance notice, in accordance with applicable law.
Performance Period
Each performance period under the Program will be one year in duration and will coincide with the Company's fiscal year (January 1st – December 31st).  
Awards
The award is tied to the performance of the Company and/or particular business unit, division, region or individual site during the performance period.  The award opportunity is expressed as a percentage of base salary, which typically will be determined at the end of the performance period.  The award is conditioned on satisfactory performance of job responsibilities.
Performance Goals and Targets
Through the annual planning process, performance goals and targets are established.  The performance goals and targets chosen for the Company, each business unit, division, region and site reflect the Company’s strategy, competitive situation and market potential.  The award may be weighted on a combination of the performance of the Company, business unit, division, region or site.  Actual performance goals and goal definitions are determined by the Committee and communicated to each participant.
The award is tied to specific “threshold,” “target” and “superior” performance goals.  The “threshold” is the minimum performance goal that must be met before any award is earned.  The “target” opportunity represents the award amount received if the Company meets its targeted financial and, if applicable, non-financial goals.  The “superior” opportunity represents the maximum performance goal that must be met for a maximum payout.  The actual performance goals, goal definitions and 
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award opportunities at threshold, target and superior levels of performance are determined by the Committee and communicated to each participant.  
Calculation of Awards
In calculating your award, base salary will be used as the basis for an award.  Please note that if your bonus opportunity changes during the Program year, your award will be prorated as explained in the examples below. 
Example One:  Employee is bonus eligible with a base salary of $40,000 with a target opportunity of 20% and receives a promotion on 8/1/22 with a base salary of $45,000 and a target opportunity of 25%. 
Bonus calculation would be as follows:
$40,000 x 20% = $8,000 (target award) x (performance factor x goal weighting) x proration (212/365)
plus
$40,000 x 25% = $10,000 (target award) x (performance factor x goal weighting) x proration (153/365)
Base salary from 1/1/22-7/31/22 (212 days) will be used plus base salary from 8/1/22-12/31/22 (153 days).  
Example Two:  Employee is bonus eligible with a base salary of $40,000 with a target opportunity of 20% and receives a promotion on 3/1/22 with a base salary of $45,000 and a target opportunity of 25%.  
Bonus calculation would be as follows:
$45,000 x 20% = $9,000 (target award) x (performance factor x goal weighting) x proration (59/365)
plus
$45,000 x 25% = $11,250 (target award) x (performance factor x goal weighting) x proration (306/365)
Base salary from 1/1/22-2/28/22 (59 days) will be used plus base salary from 3/1/22-12/31/22 (306 days).
The performance factor is directly related to performance relative to the established threshold, target and superior performance goals.  If actual results fall between the threshold, target or superior performance levels, straight-line interpolation will be used to determine the performance factor unless otherwise determined by the Committee.  Multiple goal weightings must add to 100%.
Payment of Awards
Generally, all awards are paid out annually; however, certain non-executive officer positions, if approved by the Committee and the applicable business unit president, may be paid out quarterly or semiannually.  
Generally, all awards will be paid out in cash, net of applicable withholding taxes.  While awards are generally paid as soon as practicable after the audited financial results are available for the performance period, in the Committee’s sole discretion, payments to participants other than executive officers of the Company may be based on an estimation of the audited financial results.  Additionally, awards may be paid in one or more installments, in the Committee’s sole discretion. 
In no event will any portion of any awards payable under the Program (including any pro rata awards paid upon certain terminations of employment described below and any installments) be paid later than March 15, 2023.
Discretionary Adjustment of Awards
The Committee retains discretion to adjust payouts up or down on a case-by-case basis. Individual award payouts may be adjusted downward or eliminated entirely due to personal performance of job responsibilities and/or noncompliance with corporate policy or controls.
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In addition, consistent with the terms of the Omnibus Plan, as applicable, the Committee may adjust any or all performance goals during a performance period to reflect unforeseen, unusual or extraordinary events or circumstances including but not limited to (i) changes in accounting principles or practices, (ii) extraordinary gains or losses on the sale of assets, (iii) new or amended laws or regulations, and (iv) acquisitions or divestitures.
The Committee also has the authority to impose such other limitations on awards as it may deem necessary or appropriate.
Prorated Awards
In the event that an individual transfers between business units or is promoted during the course of a performance period, a prorated award may be earned based on the time spent in each position.  
All eligible employees hired or promoted during the performance period will be prorated based on the number of days of Program eligibility, including the date of hire. 
All eligible employees hired on or after November 1st of the current year will not be eligible to participate in the Program until the beginning of the next Program year.
Termination of Employment
Forfeiture
Generally, unless an individual’s Committee-approved employment agreement provides otherwise, upon termination of employment for any reason, the individual will forfeit any award that has not been paid.
Retirement, Disability or Death
If employment is terminated as a result of retirement (defined below), disability (defined below) or death, the award will be prorated based on the number of months employed during the performance period prior to the termination of employment and based on and subject to actual performance during the performance period, in accordance with the Program.  Payment will be paid as soon as practicable in the following year after the audited financial results are available for the performance period, but in no event later than March 15, 2023.  In the event of death, the award will be paid to the individual’s beneficiary or, if no beneficiary is named, to their estate.
For purposes of the Program: (i) retirement shall mean a termination of a participant’s employment, other than for Cause, on or after the attainment of age 65, and (ii) disability shall mean the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment for the period of time as set forth under the long-term disability program maintained by the Company for the benefit of the participant. 
Voluntary Termination or Termination by the Company 
Other than in the event of a termination of employment as a result of retirement, in the event that a participant voluntarily terminates from employment or is involuntarily terminated by the Company, the participant will forfeit any award that has not been paid, in accordance with the Program.  In other words, a participant must be employed by the Company on the date the award is actually paid by the Company.
Termination or Modification of the Program
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The Committee may modify or terminate the Program at any time, effective at such date as the Committee may determine.  The Committee or Board may, prior to the end of the Program year, adopt a resolution fixing a minimum aggregate amount, which amount is in the Committee or Board’s discretion (a “Pool”), to be paid to participants under the Program for 2022.  After such a Pool is established, (i) the Program may not be modified or terminated and the amount of the Pool may not be reduced after December 31, 2022, and (ii) any amounts forfeited by individual participants hereunder because they are not employed as of the payment date will not reduce the Pool but will be reallocated among other participants in the Program, and shall not revert to the Company.

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EXHIBIT 10.10b
                                    

CERTAIN INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY DISCLOSED.
[**] INDICATES THAT INFORMATION HAS BEEN REDACTED.
Execution Version

AMENDMENT NO. 1 TO NINTH AMENDED AND RESTATED
RECEIVABLES PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 to NINTH AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT (this “Amendment”), dated as of November 5, 2021, is entered into among AFC FUNDING CORPORATION, an Indiana corporation (the “Seller”), AUTOMOTIVE FINANCE CORPORATION, an Indiana corporation (the “Servicer”), the Purchasers and Purchaser Agents signatories hereto, and BANK OF MONTREAL, as the agent (the “Agent”).
R E C I T A L S
A.    The Seller, the Servicer, the Purchasers, the Purchaser Agents, and the Agent are parties to that certain Ninth Amended and Restated Receivables Purchase Agreement dated as of September 29, 2020 (as amended, amended and restated, supplemented or otherwise modified prior to the date hereof, the “Agreement”).
B.    Pursuant to and in accordance with Section 6.1 of the Agreement, the Seller, the Servicer, the Purchasers, the Purchaser Agents and the Agent desire to amend the Agreement as hereinafter set forth.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1.Certain Defined Terms.  Capitalized terms which are used herein without definition and that are defined in the Agreement shall have the same meanings herein as in the Agreement.
2.Amendment to Agreement.  The Agreement is hereby amended as follows:
2.1.    The definition of “Required Enhancement Percentage” in Exhibit I to the Agreement is revised in its entirety to read as follows:
    “Required Enhancement Percentage” means [**] or such other percentage agreed by the Seller and all of the Purchaser Agents; provided, that any reductions to the Required Enhancement Percentage are subject to confirmation of the then–current rating of the Facility from any Rating Agency rating the Facility.
3.Representations and Warranties.  Each of the Seller and the Servicer hereby represents and warrants to the Agent, the Purchasers and the Purchaser Agents as follows:
(a)Representations and Warranties.  The representations and warranties of such Person contained in Exhibit III and Exhibit VII to the Agreement are true and correct as of the date hereof (unless stated to relate solely to an earlier date, in which case such representations and warranties were true and correct as of such earlier date).
									
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(b)Enforceability.  The execution and delivery by such Person of this Amendment, and the performance of its obligations under this Amendment and the Agreement, as amended hereby, are within its corporate powers and have been duly authorized by all necessary corporate action on its part.  This Amendment and the Agreement, as amended hereby, are its valid and legally binding obligations, enforceable in accordance with its terms.
(c)Termination Event.  No Termination Event or Unmatured Termination Event has occurred and is continuing. 
4.Effectiveness.  This Amendment shall become effective upon the receipt by (i) the Agent of each of the counterparts of this Amendment executed by each of the parties hereto and (ii) the Agent of written confirmation by Moody’s that this Amendment shall not cause the rating on the Agreement to be downgraded or withdrawn.
5.Effect of Amendment.  Except as expressly amended and modified by this Amendment, all provisions of the Agreement shall remain in full force and effect.  After this Amendment becomes effective, all references in the Agreement (or in any other Transaction Document) to “the Receivables Purchase Agreement,” “this Agreement,” “hereof,” “herein” or words of similar effect, in each case referring to the Agreement, shall be deemed to be references to the Agreement as amended by this Amendment.  This Amendment shall not be deemed to expressly or impliedly waive, amend or supplement any provision of the Agreement other than as set forth herein.
6.Counterparts.  This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, and each counterpart shall be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. Delivery of an executed counterpart of a signature page of this Amendment by telecopy, emailed pdf. or any other electronic means that reproduces an image of the actual executed signature page shall be effective as delivery of a manually executed counterpart of this Amendment.  The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to any  document to be signed in connection with this Amendment and the transactions contemplated hereby shall be deemed to include Electronic Signatures, deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act; provided that nothing herein shall require the Agent to accept electronic signatures in any form or format without its prior written consent. “Electronic Signature” means an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a Person with the intent to sign, authenticate or accept such contract or record.
7.Governing Law.  This Amendment shall be governed by, and construed in accordance with, the internal laws of the State of Indiana without reference to conflict of laws principles.
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8.Section Headings.  The various headings of this Amendment are inserted for convenience only and shall not affect the meaning or interpretation of this Amendment or the Agreement or any provision hereof or thereof.
9.Reaffirmation of Performance Guaranty.  By signing below, KAR Auction Services, Inc. reaffirms its obligations under the Performance Guaranty after giving effect to this Amendment.
[SIGNATURE PAGES FOLLOW]

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IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first above written.
AFC FUNDING CORPORATION, as Seller

By:  /s/ Amy Wirges                                                 
Name: Amy Wirges
Title:    Senior Vice President of Finance; Treasurer

AUTOMOTIVE FINANCE CORPORATION,
as Servicer

By:  /s/ Amy Wirges                                                 
Name:    Amy Wirges
Title:    Senior Vice President of Finance; Treasurer

												
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	AFC
Amendment No. 1 to Ninth A&R RPA
	

FAIRWAY FINANCE COMPANY, LLC, as a Purchaser

By:    /s/ Irina Khaimova                                        
Name:    Irina Khaimova
Title:    Vice President

BMO CAPITAL MARKETS CORP., as Purchaser
Agent for Fairway Finance Company, LLC and Bank of Montreal

By:    /s/ John Pappano                                         
Name:    John Pappano
Title:    Managing Director

												
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	AFC
Amendment No. 1 to Ninth A&R RPA
	

BANK OF MONTREAL, as Agent 

By:    /s/ Karen Louie                                            
Name:    Karen Louie
Title:    Director

BANK OF MONTREAL, as Purchaser 

By:    /s/ Karen Louie                                            
Name:    Karen Louie
Title:    Director

												
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	AFC
Amendment No. 1 to Ninth A&R RPA
	

ROYAL BANK OF CANADA,  as Purchaser Agent for Thunder Bay Funding, LLC

By:    /s/ Kevin P Wilson                                          
Name:    Kevin P Wilson
Title:    Authorized Signatory

By:    /s/ Irina Racheva                                             
Name:    Irina Racheva
Title:    Authorized Signatory

THUNDER BAY FUNDING, LLC, as a Purchaser

By:  Royal Bank of Canada,
        its attorney-in-fact

By:    /s/ Kevin P Wilson                                          
Name:    Kevin P Wilson
Title:    Authorized Signatory

PNC BANK, NATIONAL ASSOCIATION,
as Purchaser and Purchaser Agent for itself

By:    /s/ Lawrence Beller                                         
Name:    Lawrence Beller
Title:    Senior Vice President

TRUIST BANK, successor by merger to SunTrust Bank, as Purchaser and as Purchaser Agent for itself

By:    /s/ Vivek Saraswat                                         
Name:    Vivek Saraswat
Title:    Senior Vice President

												
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	AFC
Amendment No. 1 to Ninth A&R RPA
	

FIFTH THIRD BANK, NATIONAL ASSOCIATION, as Purchaser and as Purchaser Agent for itself

By:    /s/ Andrew D. Jones                                   
Name:    Andrew D. Jones
Title:    Managing Director

JPMORGAN CHASE BANK N.A., as Purchaser Agent for Chariot Funding LLC

By:    /s/ Evan Maschmeyer                               
Name:    Evan Maschmeyer
Title:    Vice President

CHARIOT FUNDING LLC, as a Purchaser

By:  JPMorgan Chase Bank, N.A., its attorney-in-
       fact

By:    /s/ Evan Maschmeyer                               
Name:    Evan Maschmeyer
Title:    Vice President

Acknowledged and Agreed:

KAR AUCTION SERVICES, INC.,
as provider of the Performance Guaranty

By:    /s/ Eric M. Loughmiller                   
    Name: Eric M. Loughmiller
    Title:   Executive Vice President and 
      Chief Financial Officer
												
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	AFC
Amendment No. 1 to Ninth A&R RPA

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