Document:

Exhibit

EXHIBIT 4.3

DESCRIPTION OF THE REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934

KAR Auction Services, Inc. (the “Company,” “we,” “us” and “our”) has one class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended: our common stock.

The general terms and provisions of our common stock are summarized below. This summary does not purport to be complete and is subject to, and is qualified in its entirety by express reference to, the provisions of our amended and restated certificate of incorporation and by-laws, each of which is filed as an exhibit to the Annual Report on Form 10‐K of which this Exhibit 4.3 is a part. We encourage you to read our amended and restated certificate of incorporation and by-laws and the applicable provisions of the General Corporation Law of the State of Delaware (“DGCL”) for additional information.

Our authorized capital stock consists of 400,000,000 shares of common stock, par value $0.01 per share, and 100,000,000 shares of preferred stock, par value $0.01 per share.

Description of Common Stock

We have one class of common stock. All holders of our common stock are entitled to the same rights and privileges, as described below.

Voting Rights. Each holder of our common stock is entitled to one vote for each share on all matters submitted to a vote of the holders of our common stock, voting together as a single class, including the election of directors. Our stockholders do not have cumulative voting rights in the election of directors. Directors standing for election at an annual meeting of stockholders, or any special meeting of stockholders called for the purpose of electing directors, will be elected by a majority of the votes cast in an uncontested election.

Dividends. Subject to the prior rights of holders of preferred stock, holders of our common stock are entitled to receive dividends, if any, as may be declared from time to time by our board of directors.

Other Rights. Holders of our common stock have no preemptive, subscription, redemption or conversion rights. All of our outstanding shares of common stock are fully paid and non-assessable.

Liquidation and Dissolution. Subject to the prior rights of our creditors and the satisfaction of any liquidation preference granted to the holders of any then outstanding shares of preferred stock, in the event of our liquidation, dissolution or winding up, holders of our common stock will be entitled to share ratably in the net assets legally available for distribution to stockholders.

Transfer Agent.  The registrar and transfer agent for our common stock is American Stock Transfer and Trust Company. 

Listing.  Our common stock is listed on the New York Stock Exchange under the symbol “KAR.”

Anti-Takeover Effects of Delaware Law, Our Amended and Restated Certificate of Incorporation and By-laws

Provisions of the DGCL and our amended and restated certificate of incorporation and by-laws could make it more difficult to acquire the Company by means of a tender offer, a proxy contest or otherwise, or to remove incumbent officers and directors. These provisions, summarized below, are expected to discourage certain types of coercive takeover practices and takeover bids that our board of directors may consider inadequate and to encourage persons seeking to acquire control of the Company to first negotiate with our board of directors. The summary of the provisions set forth below does not purport to be complete and is qualified in its entirety by reference to our amended and restated certificate of incorporation and by-laws and the DGCL.

We elected in our amended and restated certificate of incorporation not to be subject to Section 203 of the DGCL, an anti-takeover law. In general, Section 203 of the DGCL prohibits a publicly held Delaware corporation from engaging in a “business combination,” such as a merger, with a person or group owning 15% or more of the corporation’s voting stock for a period of three years following the date the person became an interested stockholder, unless (with certain exceptions) the business combination or the transaction in which the person became an interested stockholder is approved in a prescribed manner. Accordingly, we will not be subject to any anti-takeover effects of Section 203.

Certain other provisions of our amended and restated certificate of incorporation and by-laws may be considered to have an anti-takeover effect and may delay or prevent a tender offer or other corporate transaction that a stockholder might consider to be in its best interest, including those transactions that might result in payment of a premium over the market price for our shares. These provisions are designed to discourage certain types of transactions that may involve an actual or threatened change of control of us without prior approval of our board of directors. These provisions are meant to encourage persons interested in acquiring control of us to first consult with our board of directors to negotiate terms of a potential business combination or offer. We believe that these provisions protect against an unsolicited proposal for a takeover of us that might affect the long term value of our stock or that may be otherwise unfair to our stockholders. These provisions may also prevent or discourage attempts to remove and replace incumbent directors.  These provisions include:
		
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	rules regarding how our stockholders may present proposals or nominate directors for election at stockholder meetings;

		
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	permitting our board of directors to issue preferred stock without stockholder approval;

		
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	granting to the board of directors, and not to the stockholders, the sole power to set the number of directors;

		
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	authorizing vacancies on our board of directors to be filled only by a vote of the majority of the directors then in office and specifically denying our stockholders the right to fill vacancies in the board;

		
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	authorizing the removal of directors, with or without cause, only upon the affirmative vote of holders of a majority of the outstanding shares of our common stock entitled to vote for the election of directors; 

		
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	prohibiting stockholders from calling special meetings of stockholders; and

		
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	prohibiting stockholder action by written consent.Exhibit

EXHIBIT 10.13

KAR Auction Services, Inc.
Annual Incentive Program
Summary of Terms
2020

Executive Committee

        

KAR Auction Services, Inc. Annual Incentive Program

Summary of Terms

The following is a summary of the 2020 KAR Auction Services, Inc. Annual Incentive Program (the “Program”) which is part of the KAR Auction Services, Inc. 2009 Omnibus Stock and Incentive Plan, as amended and restated on June 10, 2014 (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, 2020.  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 1 – December 31).  

Awards

The award is tied to the financial performance of the Company during the performance period as well as individual performance based on the Committee’s assessment of your individual achievement of your 2020 Management By Objectives (“MBOs”).  The award is weighted on a combination of the overall performance of the Company (80%) and the individual achievement of your MBOs (20%). 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.

Company Performance

Through the annual planning process, Company performance goals and targets are established.  The performance goals and targets chosen for the Company reflect the Company’s strategy, competitive situation and market potential. 

The Company performance component  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 

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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 award opportunities at threshold, target and superior levels of performance are determined by the Committee and communicated to each participant.  

MBOs

The MBO component is tied to the Committee’s assessment of your individual achievement of your assigned MBOs. In order for any bonus to be earned on the MBO component, at least a threshold level of Company performance must be met, and at least a target level of Company performance must be met for the MBO component to be paid at a level above target.

Calculation of Awards

In calculating your award, base salary as of your first paycheck in July during the Program year will be utilized.  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 8/1/2020 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 (Company performance x .80 + MBO achievement x .20)  x proration 7/12ths 
plus
$40,000 x 25% = $10,000 (target award) x (Company performance x .80 + MBO achievement x .20)  x proration 5/12ths 

Base salary as of first paycheck in July will be utilized and applied to bonus opportunity changes

Example Two:  Employee is bonus eligible with a base salary of $40,000 with a target opportunity of 20% and receives a promotion on 3/1/2020 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 (Company performance x .80 + MBO achievement x .20)  x proration 2/12ths 
plus
$45,000 x 25% = $11,250 (target award) x (Company performance x .80 + MBO achievement x .20)  x proration 10/12ths 

Base salary as of first paycheck in July will be utilized and applied to bonus opportunity changes

The Company performance factor is directly related to financial performance relative to the established threshold, target and superior performance goals.  If actual financial results fall between the threshold, target or superior performance levels, straight-line interpolation will be used to determine the performance factor.  Multiple goal weightings must add to 100%.

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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, 2021.

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.

In addition, consistent with the terms of the Omnibus Plan, as applicable, the Committee may adjust any or all financial goals during 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 on or before the 15th of the month will be prorated based on the number of months of Program eligibility, including the month of hire.

All eligible employees hired or promoted on or after the 16th of the month will be eligible to participate in the Program at the beginning of the following month. 

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 employment agreement provides otherwise, upon termination of employment for any reason, the individual will forfeit any award that has not been paid.

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Retirement, Disability or Death

In the event that 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, 2021.  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

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 2020.  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, 2020, 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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