Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On March 1, 2021, the Board of Directors ("Board") of KAR Auction Services, Inc.
(the "Company") appointed James P. Hallett, the Company's Chief Executive
Officer, as the Executive Chairman of the Company, and appointed Peter J. Kelly,
the Company's President, as the Chief Executive Officer of the Company, each
effective April 1, 2021. In connection with his appointment as Chief Executive
Officer, Mr. Kelly will assume the role of the Company's principal executive
officer. Mr. Hallett will remain Chairman of the Board.
In addition, the Board authorized the increase of the size of the Board to
eleven (11) directors and appointed Mr. Kelly to the Board, effective April 1,
2021. Mr. Kelly will serve for a term expiring at the 2021 annual meeting of the
Company's stockholders and until his successor is duly elected and qualified.
Mr. Kelly, age 52, has been President of the Company since January 2019.
Previously, Mr. Kelly served as the President of Digital Services from December
2014 to January 2019 and the Chief Technology Officer from June 2013 to January
2019. Mr. Kelly was the President and Chief Executive Officer of Openlane from
February 2011 to June 2013. Prior to that, Mr. Kelly was President and Chief
Financial Officer of Openlane from February 2010 to February 2011. Mr. Kelly was
a co-founder of Openlane in 1999 and served in a number of executive roles at
Openlane from 1999 to 2010.
In connection with Mr. Kelly's appointment as Chief Executive Officer, the
Company and Mr. Kelly entered into an amendment to Mr. Kelly's employment
agreement with the Company (the "Amendment"). Pursuant to the Amendment, Mr.
Kelly will receive an increase in his annual base salary and annual automobile
allowance to $750,000 and $25,000, respectively. The Amendment also provides
that in the event Mr. Kelly is terminated by the Company without "cause" or Mr.
Kelly resigns for "good reason" (each as defined in his employment agreement),
Mr. Kelly would be entitled to receive, subject to his execution and
non-revocation of a release of claims, a lump sum cash payment equal to two
times the sum of his annual base salary plus target annual bonus for the year in
which such termination of employment occurs. The Amendment provides for Mr.
Kelly to be nominated to serve as a member of the Board.
In connection with Mr. Hallett's appointment as Executive Chairman, the Company
has entered into a new employment agreement with Mr. Hallett (the "Employment
Agreement"), superseding his prior employment agreement with the Company. The
Employment Agreement has a stated term commencing April 1, 2021 and ending on
March 31, 2023.
Under the Employment Agreement, Mr. Hallett is generally eligible to (i) earn a
base salary, (ii) earn an annual cash bonus, (iii) receive equity-based awards
consistent with other executive-level employees of the Company, (iv) participate
in the Company's standard health and welfare benefit programs and (v) receive an
annual automobile allowance. The Employment Agreement provides for Mr. Hallett
to be nominated to serve as a member of the Board.
In the event Mr. Hallett is terminated by the Company without "cause" or Mr.
Hallett resigns for "good reason" (each as defined in the Employment Agreement),
Mr. Hallett would be entitled to receive, subject to his execution and
non-revocation of a release of claims, (i) a lump sum cash payment equal to two
and a half times the sum of his annual base salary plus target annual bonus for
the year in which such termination of employment occurs; (ii) if Mr. Hallett is
participating in the Company's health plans on the date of such termination of
employment, COBRA premium payments for 18 months or until Mr. Hallett becomes
eligible for coverage under another employer's health plan (the "Continued
Benefits"); (iii) payment of a pro-rata portion of any annual bonus that Mr.
Hallett would have received for the year of termination based on actual
performance (the "Pro Rata Bonus"); and (iv) a payment equal to the amount of
any annual bonus which has been earned in a prior year but which has not yet
been paid to Mr. Hallett (the "Earned but Unpaid Bonus").
In the event Mr. Hallett terminated due to death or "disability" (as defined in
the Employment Agreement), Mr. Hallett or his estate/beneficiaries would be
entitled to receive (i) Continued Benefits; (ii) the Pro Rata Bonus; and (iii)
the Earned but Unpaid Bonus.
Upon a termination of employment for any reason, Mr. Hallett will be subject to
the following one year post-termination restrictive covenants: (i)
non-competition restrictions and (ii) non-solicitation of Company employees and
customers.
The foregoing summary of the Amendment and Employment Agreement is qualified in
its entirety by reference to the full texts of the agreements, which are
attached as Exhibits 10.1 and 10.2 hereto and incorporated herein by reference.
Other than with respect to the compensation matters described above, there are
no arrangements or understandings between Messrs. Hallett or Kelly and any other
persons pursuant to which Mr. Hallett was appointed the Company's Executive

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Chairman and Mr. Kelly was appointed the Company's Chief Executive Officer. There are also no family relationships between Messrs. Hallett or Kelly and any director or executive officer of the Company. Neither Mr. Hallett nor Mr. Kelly have a direct or indirect interest in any transaction or proposed transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K. Item 7.01 Regulation FD Disclosure.

On March 2, 2021, the Company issued a press release announcing the foregoing executive leadership transition, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference. In addition, a copy of the letter from Mr. Hallett to the Company's stockholders in connection with the executive leadership transition is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

EXHIBIT NO. DESCRIPTION OF EXHIBIT

10.1 Employment Agreement, dated March 1, 2021, between KAR Auct ion

Services, Inc. and James P. Hallett



10.2         Amendment No. 1 to Employ    ment Agreement, dated March 1,
2021    , between KAR Auction Services, Inc. and Peter J. Kelly

99.1         Press Release dated March 2, 2021

99.2         S    tockholder Letter dated March 2, 2021

104 Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.

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