Document:

Exhibit

EXHIBIT 10.13

KAR Auction Services, Inc.
Annual Incentive Plan
Summary of Terms
Plan Year 2016

        

KAR Auction Services, Inc. Annual Incentive Plan

Summary of Terms

The following is a summary of the 2016 KAR Auction Services, Inc. Annual Incentive Plan (the “Plan”) which is part of the KAR Auction Services, Inc. 2009 Omnibus Stock and Incentive Plan, as Amended June 10, 2014 (the “Omnibus Plan”).  For executive officers of the Company, the Plan constitutes a Cash-Based Award under the Omnibus Plan that is intended to be “qualified performance based compensation” under Section 162(m) of the Code and shall be subject to the terms of the Omnibus Plan related thereto and administered accordingly.  Any awards under the Plan 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 Plan.  All capitalized terms herein that are not otherwise defined shall have the meanings given to such terms in the Omnibus Plan.

Purpose of the Plan

The purpose of the Plan 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 Plan as determined by the Committee.  

Effective Date

This Plan is effective January 1, 2016.  The Company reserves the right to revise or terminate the Plan at any time, with or without advance notice, in accordance with applicable law.

Performance Period

Each performance period under the Plan 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 personal performance as well as the financial performance of the Company 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.  Awards to executive officers of the Company are subject to the individual annual limit for Other Cash-Based Awards specified in the Omnibus Plan.

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 award opportunities at threshold, target and superior levels of performance are set forth in an individual’s personalized incentive compensation statement.  The award is conditioned on satisfactory performance of job responsibilities.

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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 overall performance of the Company, business unit, division, region or site.  Actual performance goals and goal definitions are included with the personalized incentive compensation statement materials. 

Calculation of Awards

In calculating your award, actual base salary during the plan year will be utilized.  Please note that if your salary or bonus opportunity changes during the plan 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 merit increase of 2% on 7/1/2015.  Bonus calculation would be as follows: 

$40,000 x 20% = $8,000 (target award) x performance factor x goal weighting x proration 6/12ths 
plus
$40,800 x 20% = $8,160 (target award) x performance factor x goal weighting x proration 6/12ths 

Example Two:  Employee is bonus eligible with a base salary of $40,000 with a target opportunity of 20% and receives a promotion on 7/1/2015 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 6/12ths 
plus
$45,000 x 25% = $11,250 (target award) x performance factor x goal weighting x proration 6/12ths 

The 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%.

Payment of Awards

Generally, all awards are paid out annually; however, certain non-executive officer positions, if approved by the Committee and 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 Board’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 Board’s sole discretion. 

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In no event will any portion of any awards payable under the Plan (including any pro rata awards paid upon certain terminations of employment described below and any installments) be paid later than March 15, 2017.

Discretionary Adjustment of Awards

The Committee retains discretion to adjust payouts up or down on a case-by-case basis; provided, however, that for participants who are executive officers of the Company, the Committee may only reduce payments.  Individual award payouts may be adjusted downward due to personal performance of job responsibilities.  Individual award payouts may be eliminated entirely for noncompliance with corporate policy or controls.

In addition, consistent with the terms of the Omnibus Plan and Section 162(m) of the Code, each 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 plan eligibility, including the month of hire.

All eligible employees hired or promoted on or after the 16th of the month will be eligible to participant in the Plan 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 Plan until the beginning of the next Plan year.

Termination of Employment

Generally

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

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 Plan.  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, 2017.  In the event of death, the award will be paid to the individual’s beneficiary or, if no beneficiary is named, to their estate.

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For purposes of the Plan: (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 plan maintained by the Company for the benefit of the participant. 

Voluntary Termination or Termination by the Company 

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 Plan.  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 Plan

The Committee may modify or terminate the Plan at any time, effective at such date as the Committee may determine.  The Committee or Board will, prior to the end of the Plan 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 Plan for 2016.  After such a Pool is established, (i) the Plan may not be modified or terminated and the amount of the Pool may not be reduced after December 31, 2016, 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 Plan who are not subject to Section 162(m) of the Code, and shall not revert to the Company.

5Exhibit

EXHIBIT 10.15b
EXECUTION VERSION

Portions of this Exhibit have been omitted based upon a request for confidential treatment.  This Exhibit, including the non-public information, has been filed separately with the Securities and Exchange Commission.  "[*]" designates portions of this document that have been redacted pursuant to the request for confidential treatment filed with the Securities and Exchange Commission.

AMENDMENT NO. 1 TO SIXTH AMENDED AND RESTATED 
RECEIVABLES PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 to SIXTH AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT (this “Amendment”), dated as of March 2, 2016, is entered into among AFC FUNDING CORPORATION, an Indiana corporation (the “Seller”), AUTOMOTIVE FINANCE CORPORATION, an Indiana corporation (the “Servicer”), FAIRWAY FINANCE COMPANY, LLC, as a Purchaser, CHARIOT FUNDING LLC, as a Purchaser, DEUTSCHE BANK AG, NEW YORK BRANCH, as a Purchaser and as Purchaser Agent for itself, FIFTH THIRD BANK, as a Purchaser and as Purchaser Agent for itself, JPMORGAN CHASE BANK, N.A., as a Purchaser Agent for Chariot Funding LLC, BMO CAPITAL MARKETS CORP., as Purchaser Agent for Fairway Finance Company, LLC, and BANK OF MONTREAL, as the initial 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 Sixth Amended and Restated Receivables Purchase Agreement dated as of June 16, 2015 (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 amended as follows:
2.1    The definition of “Maximum Amount” in Exhibit I to the Agreement is hereby amended in its entirety to read as follows:
“Maximum Amount” means the lesser of (i) $1,250,000,000 or (ii) the sum of the Maximum Commitments of all Purchasers.
2.2    The Maximum Commitment listed on the signature page to the Agreement for [*] is hereby amended by deleting the phrase “[*]” and inserting in lieu thereof “[*]”.

	
			
	 
	 
	 

3.    Adjustments. On the date hereof, the Seller shall make purchases from the Purchasers and repayments of Investment on a non-pro rata basis to reflect the amendments made hereby, such that after giving effect thereto the Investment of each Purchaser Group is the same percentage of its Maximum Commitment, as reflected on the attached Purchase Request.
4.    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).
(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.
5.    Effectiveness.  This Amendment shall become effective upon (i) the receipt by the Agent of each of the counterparts of this Amendment (whether by facsimile or otherwise) executed by each of the parties hereto, (ii) the receipt by [*] of its upfront fee payable under the fee letter and (iii) receipt by the Purchaser Agents of a corporate opinion for the Seller in form and substance acceptable to them.
6.    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.
7.    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.

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8.    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.
9.    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.
10.    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/ James E. Money II    
Name: James E. Money, II
Title: Chief Financial Officer & Treasurer
 
 
 
AUTOMOTIVE FINANCE CORPORATION, 
as Servicer

 
 
By: /s/ James E. Money II    
Name: James E. Money, II
Title: Chief Financial Officer & Treasurer
 
 
 

S-1

	
				
	 
	 
	AFC
Amendment No. 1 to Sixth A&R RPA
	 

FAIRWAY FINANCE COMPANY, LLC, as a Purchaser

 
 
By: /s/ April Grosso    
Name: April Grosso
Title: Vice President
 
 
 
BMO CAPITAL MARKETS CORP., as Purchaser 
Agent for Fairway Finance Company, LLC 

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

S-2

	
				
	 
	 
	AFC
Amendment No. 1 to Sixth A&R RPA
	 

BANK OF MONTREAL, as Agent 

 
 
By: /s/ Christopher L. Clark    
Name: Christopher L. Clark
Title: Vice President
 

S-3

	
				
	 
	 
	AFC
Amendment No. 1 to Sixth A&R RPA
	 

DEUTSCHE BANK AG, NEW YORK BRANCH, as Purchaser and Purchaser Agent for itself

 
 
By: /s/ Daniel Gerber    
Name: Daniel Gerber
Title: Director

By: /s/ Robert Sheldon    
Name: Robert Sheldon
Title: Managing Director

S-4

	
				
	 
	 
	AFC
Amendment No. 1 to Sixth A&R RPA
	 

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

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

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

 
By: /s/ Elizabeth A. Slawin    
Name: Elizabeth A. Slawin
Title: Vice President

CHARIOT FUNDING LLC, as a Purchaser 
 
By:  JPMorgan Chase Bank, N.A., its attorney-in- 
       fact

 
By: /s/ Elizabeth A. Slawin    
Name: Elizabeth A. Slawin
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

S-5

	
				
	 
	 
	AFC
Amendment No. 1 to Sixth A&R RPA

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