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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2016
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OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
(State or other jurisdiction of incorporation or organization)
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20-8744739
(I.R.S. Employer Identification No.)
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Title of each class
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Name of each exchange on which registered
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Common Stock, par value $0.01 per share
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New York Stock Exchange
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
o
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•
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"we," "us," "our" and "the Company" refer, collectively, to KAR Auction Services, Inc. and all of its subsidiaries;
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•
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"ADESA" or "ADESA Auctions" refer, collectively, to ADESA, Inc., a wholly-owned subsidiary of KAR Auction Services, and ADESA, Inc.'s subsidiaries, including Openlane, Inc. (together with Openlane, Inc.'s subsidiaries, "Openlane") and ADESA Remarketing Limited (formerly known as GRS Remarketing Limited ("GRS" or "ADESA Remarketing Limited"));
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"AFC" refers, collectively, to Automotive Finance Corporation, a wholly-owned subsidiary of ADESA, and Automotive Finance Corporation's subsidiaries and other related entities, including PWI Holdings, Inc.;
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"AutoVIN" refers to AutoVIN, Inc., our wholly-owned subsidiary;
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"Credit Agreement" refers to the Amended and Restated Credit Agreement, dated March 11, 2014, as amended on March 9, 2016, among KAR Auction Services, as the borrower, the several banks and other financial institutions or entities from time to time parties thereto and the administrative agent;
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•
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"Credit Facility" refers to the three-year senior secured term loan B-1 facility ("Term Loan B-1"), the seven-year senior secured term loan B-2 facility ("Term Loan B-2"), the seven-year senior secured term loan B-3 facility ("Term Loan B-3"), the $300 million, five-year senior secured revolving credit facility (the "revolving credit facility") and the $250 million, five-year senior secured revolving credit facility (the "old revolving credit facility"), the terms of which are set forth in the Credit Agreement. Term Loan B-1 and the old revolving credit facility were extinguished in March 2016 with proceeds received from Term Loan B-3;
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•
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"IAA" refers, collectively, to Insurance Auto Auctions, Inc., a wholly-owned subsidiary of KAR Auction Services, and Insurance Auto Auctions, Inc.'s subsidiaries and other related entities, including HBC Vehicle Services Limited ("HBC"); and
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"KAR Auction Services" refers to KAR Auction Services, Inc., and not to its subsidiaries.
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•
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Remarketing channels and systems that are increasingly becoming more interconnected;
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•
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An increase in customer demand and dependency on data in buying and selling decisions; and
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•
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Rapidly advancing technology with opportunity for application in the remarketing industry.
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•
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Extend and integrate our platform
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•
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Leverage unique data and analytic capabilities
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•
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Continue to improve operating efficiency
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•
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Using excess cash flow to invest in strategic growth initiatives and return capital to shareholders
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•
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Establishing Physical Auction Presence in Key Automotive Marketplaces
: The Company is focused on expanding its physical auction footprint into key markets where there is opportunity for growth and meaningful customer demand for greater choice, technology, and integrated remarketing solutions. These geographies also provide a platform for the regional deployment and expansion of the Company’s other ancillary and related services, as well as enhancing AFC's floorplan financing to independent used vehicle dealers. In 2016, the Company completed acquisitions or opened new physical sites as follows:
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◦
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Brasher’s Auto Auctions: adding eight auction locations and Brasher’s floorplan financing business to the ADESA and AFC business units and establishing the Company’s physical presence in northern California, Oregon, Washington, Utah and Washington.
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◦
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Sanford Auto Dealers Exchange: establishing the Company’s presence in the Orlando and central Florida marketplaces.
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◦
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Flint Auto Auction: located in the Detroit metropolitan area serving customers in Michigan, Ohio, Indiana and Illinois.
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◦
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ADESA Chicago: KAR successfully opened a new used car auction site in Chicago in October 2016. Chicago is one of the largest automotive markets in the U.S. The Company now delivers the full range of whole car, salvage, and financing solutions in the Chicago marketplace.
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•
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Expanding Opportunities for Customers to Buy and Sell Online
: We are focused on enhancing our Internet solutions in all of the key channels in which we operate, and we will continue to invest in technology platforms in order to capitalize on new opportunities and attract new customers. Online vehicle remarketing solutions provide the opportunity to improve the customer experience, expand our volume of transactions and potentially increase proceeds for sellers through greater buyer participation at auctions. Online buying activity continues to accelerate and represents an increasing portion of wholesale transactions across the industry. Providing consistent, accurate and user-friendly online solutions remains a strategic priority. Advancing our online solutions allows us to connect more effectively with our current customers and engage with a broader range of geographically diverse customers.
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•
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Expanding our International Presence
: In both our whole car and salvage vehicle businesses, we have experience managing a global buyer base with relationships in over 110 countries. We believe we are well positioned to grow internationally. We continue to identify opportunities to expand certain of our service offerings globally. We expect that our ability to efficiently layer in our product and technology licensing will allow us to enter other mature auction markets.
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•
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Develop alternative marketplaces
: The Company is identifying innovative venues for the exchange of used vehicles through internal development, targeted partnerships and acquisitions.
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Services
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Description
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Auction Related Services
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ADESA provides marketing and advertising for the vehicles to be auctioned, dealer registration, storage of consigned and purchased inventory, clearing of funds, arbitration of disputes, auction vehicle registration, condition report processing, photo services, post-sale inspections, security for consigned inventory, title processing, sales results reports, pre-sale lineups and auctioning of vehicles by licensed auctioneers.
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Transportation Services
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We provide both inbound (pickup) and outbound (delivery) transportation services utilizing our own equipment and personnel as well as licensed and insured third party carriers. Through our subsidiary, CarsArrive and its Internet-based system which provides automated vehicle shipping services, customers can instantly review price quotes and delivery times, and vehicle transporters can check available loads and also receive instant notification of available shipments. The same system is utilized at our whole car auction locations.
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Reconditioning Services
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Our auctions provide detailing, body work, paintless dent repair ("PDR"), light mechanical work, glass repair, tire and key replacement and upholstery repair. Key replacement services are primarily provided by our subsidiary, HTL.
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Inspection Services Provided By AutoVIN
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AutoVIN provides vehicle condition reporting, inventory verification auditing, program compliance auditing and facility inspections. Field managers are equipped with handheld computers and digital cameras to record all inspection and audit data on-site. The same technology is utilized at our whole car auction locations and we believe that the expanded utilization of comprehensive vehicle condition reports with pictures facilitates dealers sourcing vehicles via the Internet.
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Title and Repossession Administration and Remarketing Services
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PAR provides end-to-end management of the remarketing process including titling, repossession administration, inventory management, auction selection, pricing and representation of the vehicles at auction for those customers seeking to outsource all or just a portion of their remarketing needs. Recovery Database Network, Inc. ("RDN") is a specialized provider of B2B software and data solutions for automotive lenders and repossession companies.
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Vehicle Research Services Provided by Autoniq
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Autoniq provides dealers real-time vehicle information such as pricing, history reports and market guides. Its mobile app allows used car dealers to scan VINs on mobile devices, view auction run lists and access vehicle history reports and market value reports instantly. Autoniq offers access to valued resources such as CARFAX and AutoCheck, as well as Black Book Daily, NADA guides, Kelley Blue Book and Galves pricing guide information. It also includes a comprehensive wholesale and retail market report for all markets in the United States.
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ADESA Analytical Services
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ADESA Analytical Services provides value-added market analysis to our customers and the media. These services include access to publications and custom analysis of wholesale market trends for ADESA's customers, including peer group and market benchmarking studies, analysis of the benefits of reconditioning, site selection for optimized remarketing of vehicles, portfolio analysis of auction sales and computer-generated mapping and buyer analysis.
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Proprietary ADESA Technology
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Description
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ADESA.com and ADESA DealerBlock®
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This platform provides for either real-time or "bulletin-board" online auctions of consigned inventory at physical auction locations and is powered by Openlane technology. We also utilize this platform to provide upstream and midstream selling capabilities for our consignors, which facilitate the sale of vehicles prior to their arrival at a physical auction site. Auctions can be either closed (restricted to certain eligible dealers) or open (available to all eligible dealers) and inventory feeds of vehicles are automated with many customers' systems as well as third party providers that are integrated with various dealer management systems. Oftentimes, the upstream and midstream closed sales are "private-labeled" for the consignors.
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ADESA LiveBlock®
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Our live auction Internet bidding solution, ADESA LiveBlock®, operates in concert with our physical auctions and provides registered buyers with the opportunity to participate in live auctions. Potential buyers bid online in real time along with the live local bidders and other Internet bidders via a simple, web-based interface. ADESA LiveBlock® provides real-time streaming audio and video from the live auction and still images of vehicles and other data. Buyers inspect and evaluate the vehicle and listen to the live call of the auctioneer while viewing the physical auction that is underway.
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ADESA Run List®
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Provides a summary of consigned vehicles offered for auction sale, allowing dealers to preview inventory and vehicle condition reports prior to an auction event.
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ADESA Market Guide®
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Provides wholesale auction prices, auction sales results, market data and vehicle condition information.
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ADESA Virtual Inventory
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Subscription-based service to allow dealers to embed ADESA's search technology into a dealer's website to increase the number of vehicles advertised by the dealer.
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Services
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Description
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Live and Live Online Auction Model
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Vehicles are offered simultaneously to live and online buyers in a live auction format utilizing i-Bid LIVE
SM
technology. We believe this exposes the vehicles to the maximum number of potential buyers.
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Total Loss Solutions
TM
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Provides insurance companies with outsource solutions for the portion of the claims process prior to total loss determination and assignment to a salvage auction. The suite of products includes vehicle inspection and title procurement services that help insurance companies reduce cycle time and cost, while improving employee engagement, ultimately increasing policyholder retention.
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Catastrophe (CAT) Services
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IAA’s Catastrophe Services is a key offering to our insurance clients. Catastrophic weather events can cause extensive damage, often resulting in thousands of total-loss vehicles. Our CAT services philosophy is built upon a three-tier approach; pre-CAT planning, on-scene response and effective post-CAT management. To provide our insurance carrier partner with the highest level of service, we carefully track storm patterns and have response teams ready when disaster strikes. In the event of a catastrophe, IAA draws from an established network of partners to securing towing services and storage space. A mobile CAT Command Center as well as dedicated IAA staff serve as an on-the-go, centralized point of crisis management. When the vehicles are ready for sale, we promote them to our global buyer base with targeted marketing efforts for efficient sale and file closure.
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Vehicle Inspection Centers
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We maintain vehicle inspection centers ("VIC") at many of our facilities. A VIC is a temporary storage and inspection facility located at one of our sites that is operated by the insurance company. Some of these sites are formalized through temporary license agreements with the insurance companies that supply the vehicles. Having a VIC minimizes vehicle storage charges incurred by insurance company suppliers at the temporary storage facility or repair shop and also improves service time for the policyholder.
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Transportation and Towing
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Inbound logistics administration with actual services typically provided by third-party carriers.
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Remarketing Market
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Focuses on vehicles, rental sellers, fleet and leasing companies, banks and dealer trade-in inventory.
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Donation Market
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Processes vehicles for a variety of charitable organizations across the United States and Canada, assisting them in turning donated vehicles into cash to support their respective cause.
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Proprietary IAA Technology
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Description
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i-Bid LIVE
SM
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Our live auction Internet bidding solution, i-Bid LIVE, operates in concert with our physical auctions and provides registered buyers with the opportunity to participate in live auctions. Potential buyers bid online in real time along with the live local bidders and other Internet bidders via a simple, web-based interface. In addition, i-Bid LIVE provides real-time streaming audio from the live auction and images of salvage vehicles and other data. Buyers inspect and evaluate the salvage vehicle and listen to the auction while it is underway.
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I-Buy Fast
SM
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I-Buy Fast is an immediate buying option that allows qualified buyers to purchase vehicles between auctions for a fixed price. Each I-Buy Fast vehicle first runs at a previous auction where an established reserve price was not met.
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CSAToday®
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The process of salvage disposition through our system begins when a vehicle seller first consigns the vehicle to be sold through IAA via a variety of factors including a total loss, a recovered theft, a vehicle donation, a fleet vehicle retired, a vehicle repossessed, etc. A seller representative consigns the vehicle to us, either by phone, facsimile or electronically through CSAToday, our online proprietary salvage inventory management system.
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With CSAToday, vehicle sellers enter vehicle data electronically and then track and manage the progress of vehicles in terms of both time and sales price. With this tool, they have 24-hour access to their vehicles. The information provided through this system ranges from the details associated with a specific vehicle, to comprehensive management reports for an entire area or geographic region. Additional features of this system include inventory management tools and a powerful new IAA Market Value
TM
tool that helps customers determine the approximate value of a potential vehicle. This tool is helpful to adjusters when evaluating the "repair vs. total" decision. The management tools provided by CSAToday enable seller personnel to monitor and manage their vehicles more effectively. For example, insurance company sellers can also use CSAToday to view original garage receipts, verify ignition key availability, view settlement documents and images of the vehicles and receive updates of other current meaningful data.
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Automated Salvage Auction Processing (ASAP)
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We have developed a proprietary web-based information system, Automated Salvage Auction Processing system, or ASAP, to streamline all aspects of our operations and centralize operational data collection. The system provides sellers with 24-hour online access to powerful tools to manage the salvage disposition process, including inventory management, sales price analysis and electronic data interchange of titling information.
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Our other information systems, including i-Bid LIVE and CSAToday systems, are integrated with our ASAP product, facilitating seamless auction processes and information flow with internal operational systems. Our technology platform is a significant competitive advantage that allows us to efficiently manage our business, improve customer selling prices, shorten customers' selling cycle and lower our customers' administration costs.
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•
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incurring significantly higher capital expenditures and operating expenses;
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•
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entering new markets with which we are unfamiliar;
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•
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incurring potential undiscovered liabilities at acquired businesses;
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•
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failing to maintain uniform standards, controls and policies;
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•
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impairing relationships with employees and customers as a result of management changes; and
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increasing expenses for accounting and computer systems, as well as integration difficulties.
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•
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exposure to foreign currency exchange rate risk, which may have an adverse impact on our revenues and profitability;
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•
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restrictions on our ability to repatriate funds, as well as repatriation of funds currently held in foreign jurisdictions to the U.S. may result in higher effective tax rates;
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•
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tariffs and trade barriers and other regulatory or contractual limitations on our ability to operate in certain foreign markets;
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compliance with the Foreign Corrupt Practices Act;
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dealing with unfamiliar regulatory agencies and laws favoring local competitors;
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•
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dealing with political and/or economic instability;
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•
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the difficulty of managing and staffing foreign offices, as well as the increased travel, infrastructure, legal and compliance costs associated with international operations;
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•
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localizing our product offerings; and
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•
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adapting to different business cultures and market structures.
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•
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Fluctuations in the supply of used vehicles.
We are dependent on the supply of used vehicles coming to auction, and our financial performance depends, in part, on conditions in the automotive industry. During the past global economic downturn and credit crisis, there was an erosion of retail demand for new and used vehicles that led many lenders to cut back on originations of new loans and leases and led to significant manufacturing capacity reductions by automakers selling vehicles in the United States and Canada. Capacity reductions could depress the number of vehicles received at auction in the future and could lead to reduced vehicles from various suppliers, negatively impacting auction volumes. In addition, weak growth in or declining new vehicle sales negatively impacts used vehicle trade-ins to dealers and auction volumes. These factors could adversely affect our revenues and profitability.
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•
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Decline in the demand for used vehicles.
We may experience a decrease in demand for used vehicles from buyers due to factors including the lack of availability of consumer credit and declines in consumer spending and consumer confidence. Adverse credit conditions also affect the ability of dealers to secure financing to purchase used vehicles at auction, which further negatively affects buyer demand. In addition, a reduction in the number of franchised and independent used car dealers may reduce dealer demand for used vehicles.
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•
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Decrease in consumer spending.
Consumer purchases of new and used vehicles may be adversely affected by economic conditions such as employment levels, wage and salary levels, trends in consumer confidence and spending, reductions in consumer net worth, interest rates, inflation, the availability of consumer credit and taxation policies. Consumer purchases in general may decline during recessions, periods of prolonged declines in the equity markets or housing markets and periods when disposable income and perceptions of consumer wealth are lower. Changes to U.S. federal tax policy may negatively affect consumer spending. In addition, the increased use of vehicle sharing and alternate methods of transportation, including autonomous vehicles, could lead to a decrease in consumer purchases of new and used vehicles and a decrease in vehicle rentals. To the extent retail and rental car company demand for new and used vehicles decreases, negatively impacting our auction volumes, our results of operations and financial position could be materially and adversely affected.
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•
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Volatility in the asset-backed securities market.
Volatility and disruption in the asset-backed commercial paper market could lead to a narrowing of interest rate spreads at AFC in certain periods. In addition, any volatility and disruption has affected, and could affect, AFC’s cost of financing related to its securitization facility.
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•
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Ability to service and refinance indebtedness.
Uncertainty in the financial markets may negatively affect our ability to service our existing debt, access additional financing or to refinance our existing indebtedness on favorable terms or at all. If economic weakness exists, it may affect our cash flow from operations and results of operations, which may affect our ability to service payment obligations on our debt or to comply with our debt covenants.
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•
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Increased counterparty credit risk.
Any market deterioration could increase the risk of the failure of financial institutions party to our Credit Agreement and other counterparties with which we do business to honor their obligations to us. Our ability to replace any such obligations on the same or similar terms may be limited if challenging credit and general economic conditions exist.
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•
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limiting our ability to borrow additional amounts to fund working capital, capital expenditures, debt service requirements, execution of our business strategy, acquisitions and other purposes;
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•
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requiring us to dedicate a substantial portion of our cash flow from operations to pay principal and interest on debt, which would reduce the funds available for other purposes, including funding future expansion;
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making us more vulnerable to adverse changes in general economic, industry and competitive conditions, in government regulation and in our business by limiting our flexibility in planning for, and making it more difficult to react quickly to, changing conditions; and
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exposing us to risks inherent in interest rate fluctuations because the majority of our indebtedness is at variable rates of interest, which could result in higher interest expenses in the event of increases in interest rates.
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•
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our debt holders could declare all outstanding principal and interest to be due and payable;
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the lenders under our senior secured credit facilities could terminate their commitments to lend us money and foreclose against the assets securing their borrowings; and
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•
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we could be forced into bankruptcy or liquidation.
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•
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The acquisition and sale of used, leased, totaled and recovered theft vehicles are regulated by state or other local motor vehicle departments in each of the locations in which we operate.
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•
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Some of the transport vehicles used at our auctions are regulated by the U.S. Department of Transportation or similar regulatory agencies in the other countries in which we operate.
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•
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In many states and provinces, regulations require that a salvage vehicle be forever “branded” with a salvage notice in order to notify prospective purchasers of the vehicle’s previous salvage status.
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•
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Some state, provincial and local regulations limit who can purchase salvage vehicles, as well as determine whether a salvage vehicle can be sold as rebuildable or must be sold for parts or scrap only.
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•
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AFC is subject to laws in certain states and in Canada which regulate commercial lending activities and interest rates and, in certain jurisdictions, require AFC or one of its subsidiaries to be licensed.
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•
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PWI is subject to laws, regulations and insurance licensing requirements in certain states which are applicable to the sale of vehicle service contracts.
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•
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We are subject to various local zoning requirements with regard to the location of our auction and storage facilities, which requirements vary from location to location.
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•
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Certain of the Company's subsidiaries are indirectly subject to the regulations of the Consumer Financial Protection Act of 2010, or the CFPA, due to their vendor relationships with financial institutions.
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•
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PAR is subject to laws in certain states which regulate repossession administration activities and, in certain jurisdictions, require PAR to be licensed.
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•
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We deal with significant amounts of cash in our operations and are subject to various reporting and anti-money laundering regulations.
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•
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our announcements or our competitors’ announcements regarding new products or services, enhancements, significant contracts, acquisitions or strategic investments;
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•
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changes in earnings estimates or recommendations by securities analysts, if any, who cover our common stock;
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•
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results of operations that are below our announced guidance or below securities analysts’ or consensus estimates or expectations;
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•
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fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;
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•
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changes in our capital structure, such as future issuances of securities, sales of large blocks of common stock by our stockholders or our incurrence of additional debt;
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•
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repurchases of our common stock pursuant to our share repurchase program;
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•
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investors’ general perception of us and our industry;
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•
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changes in general economic and market conditions;
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•
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changes in industry conditions; and
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changes in regulatory and other dynamics.
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•
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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 the stockholders, the sole power to set the number of directors;
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•
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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 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; and
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•
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prohibiting stockholder action by written consent.
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2016
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2015
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||||||||||||
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High
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Low
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|
High
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Low
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||||||||
4th Quarter (October 1 - December 31)
|
$
|
44.10
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|
|
$
|
38.16
|
|
|
$
|
38.98
|
|
|
$
|
35.26
|
|
3rd Quarter (July 1 - September 30)
|
$
|
43.91
|
|
|
$
|
40.23
|
|
|
$
|
39.87
|
|
|
$
|
34.70
|
|
2nd Quarter (April 1 - June 30)
|
$
|
41.76
|
|
|
$
|
35.68
|
|
|
$
|
38.77
|
|
|
$
|
35.87
|
|
1st Quarter (January 1 - March 31)
|
$
|
38.44
|
|
|
$
|
31.54
|
|
|
$
|
39.52
|
|
|
$
|
33.25
|
|
|
2016
|
|
2015
|
||||
4th Quarter (October 1 - December 31)
|
$
|
0.32
|
|
|
$
|
0.27
|
|
3rd Quarter (July 1 - September 30)
|
$
|
0.29
|
|
|
$
|
0.27
|
|
2nd Quarter (April 1 - June 30)
|
$
|
0.29
|
|
|
$
|
0.27
|
|
1st Quarter (January 1 - March 31)
|
$
|
0.29
|
|
|
$
|
0.27
|
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
(Dollars in millions)
|
||||||
October 1 - October 31
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
500.0
|
|
November 1 - November 30
|
|
1,131,000
|
|
|
41.33
|
|
|
1,131,000
|
|
|
453.3
|
|
||
December 1 - December 31
|
|
800,200
|
|
|
42.01
|
|
|
800,200
|
|
|
419.6
|
|
||
Total
|
|
1,931,200
|
|
|
$
|
41.61
|
|
|
1,931,200
|
|
|
|
|
(1)
|
In October 2016, the board of directors authorized a repurchase of up to
$500 million
of the Company’s outstanding common stock, par value
$0.01
per share, through October 26, 2019. Repurchases may be made in the open market or through privately negotiated transactions, in accordance with applicable securities laws and regulations, including pursuant to repurchase plans designed to comply with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The timing and amount of any repurchases is subject to market and other conditions.
|
Company/Index
|
Base Period
12/31/2011
|
|
12/31/2012
|
|
12/31/2013
|
|
12/31/2014
|
|
12/31/2015
|
|
12/31/2016
|
||||||||||||
KAR Auction Services, Inc.
|
$
|
100
|
|
|
$
|
151.44
|
|
|
$
|
228.63
|
|
|
$
|
276.88
|
|
|
$
|
304.58
|
|
|
$
|
361.01
|
|
S&P 400 Midcap Index
|
$
|
100
|
|
|
$
|
117.88
|
|
|
$
|
157.37
|
|
|
$
|
172.74
|
|
|
$
|
168.99
|
|
|
$
|
204.03
|
|
S&P 500 Index
|
$
|
100
|
|
|
$
|
116.00
|
|
|
$
|
153.57
|
|
|
$
|
174.60
|
|
|
$
|
177.01
|
|
|
$
|
198.18
|
|
|
Year Ended December 31,
|
||||||||||||||||||
(Dollars in millions except per share amounts)
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Operations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating revenues
|
|
|
|
|
|
|
|
|
|
||||||||||
ADESA
(1)
|
$
|
1,765.3
|
|
|
$
|
1,427.8
|
|
|
$
|
1,271.0
|
|
|
$
|
1,165.5
|
|
|
$
|
1,097.2
|
|
IAA
|
1,098.0
|
|
|
994.4
|
|
|
895.9
|
|
|
830.0
|
|
|
716.1
|
|
|||||
AFC
|
286.8
|
|
|
268.4
|
|
|
250.1
|
|
|
224.7
|
|
|
193.8
|
|
|||||
Total operating revenues
|
$
|
3,150.1
|
|
|
$
|
2,690.6
|
|
|
$
|
2,417.0
|
|
|
$
|
2,220.2
|
|
|
$
|
2,007.1
|
|
Operating expenses
(exclusive of depreciation and amortization)
(1)
|
2,410.5
|
|
|
2,050.5
|
|
|
1,842.7
|
|
|
1,769.1
|
|
|
1,549.9
|
|
|||||
Operating profit
|
499.0
|
|
|
427.3
|
|
|
377.7
|
|
|
256.7
|
|
|
267.0
|
|
|||||
Interest expense
|
138.8
|
|
|
91.4
|
|
|
86.2
|
|
|
104.7
|
|
|
119.4
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income
|
222.4
|
|
|
214.6
|
|
|
169.3
|
|
|
67.7
|
|
|
92.0
|
|
|||||
Net income per share
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
1.62
|
|
|
1.53
|
|
|
1.21
|
|
|
0.49
|
|
|
0.67
|
|
|||||
Diluted
|
1.60
|
|
|
1.51
|
|
|
1.19
|
|
|
0.48
|
|
|
0.66
|
|
|||||
Weighted average shares outstanding
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
137.6
|
|
|
140.1
|
|
|
140.2
|
|
|
137.9
|
|
|
136.5
|
|
|||||
Diluted
|
139.1
|
|
|
142.3
|
|
|
141.8
|
|
|
140.8
|
|
|
139.0
|
|
|||||
Cash dividends declared per common share
|
1.19
|
|
|
1.08
|
|
|
1.02
|
|
|
0.82
|
|
|
0.19
|
|
|
As of December 31,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Financial Position:
|
|
|
|
|
|
|
|
|
|
||||||||||
Working capital
(2)(3)
|
$
|
506.2
|
|
|
$
|
232.2
|
|
|
$
|
490.2
|
|
|
$
|
366.0
|
|
|
$
|
297.6
|
|
Total assets
(3)
|
6,557.6
|
|
|
5,771.5
|
|
|
5,334.8
|
|
|
5,089.3
|
|
|
4,897.4
|
|
|||||
Total debt, net of unamortized debt issuance costs/discounts
(2)
|
2,470.3
|
|
|
1,865.1
|
|
|
1,743.5
|
|
|
1,738.4
|
|
|
1,796.5
|
|
|||||
Total stockholders' equity
|
1,397.3
|
|
|
1,386.1
|
|
|
1,547.1
|
|
|
1,481.8
|
|
|
1,443.7
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Other Financial Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities
|
$
|
360.8
|
|
|
$
|
475.0
|
|
|
$
|
431.3
|
|
|
$
|
434.0
|
|
|
$
|
290.2
|
|
Capital expenditures
|
155.1
|
|
|
134.7
|
|
|
101.0
|
|
|
96.6
|
|
|
102.0
|
|
|||||
Depreciation and amortization
|
240.6
|
|
|
212.8
|
|
|
196.6
|
|
|
194.4
|
|
|
190.2
|
|
(1)
|
Prior to 2016, the gross selling prices for certain vehicles owned and subsequently sold by ADESA were incorrectly netted against cost of services, but have been deemed immaterial. Beginning in 2016, the gross selling prices of the owned vehicles were included in revenue and costs of services, resulting in an increase to ADESA’s revenue and a corresponding increase in cost of services. Prior year amounts have been revised to reflect these changes. For the years ended December
|
(2)
|
Working capital is defined as current assets less current liabilities.
|
(3)
|
Amounts prior to 2016 have been adjusted to reflect the adoption of ASU 2015-03. The update required debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability instead of being presented as an asset. For further information, see Note 2 to the Consolidated Financial Statements, included elsewhere in this Annual Report on Form 10-K.
|
•
|
our ability to successfully implement our business strategies or realize expected cost savings and revenue enhancements;
|
•
|
our ability to effectively maintain or update information and technology systems;
|
•
|
our ability to implement and maintain measures to protect against cyber-attacks;
|
•
|
significant current competition and the introduction of new competitors;
|
•
|
competitive pricing pressures;
|
•
|
any losses of key personnel;
|
•
|
our ability to meet or exceed customers' expectations, as well as develop and implement information systems responsive to customer needs;
|
•
|
business development activities, including greenfields, acquisitions and integration of acquired businesses;
|
•
|
costs associated with the acquisition of businesses or technologies;
|
•
|
fluctuations in consumer demand for and in the supply of used, leased and salvage vehicles and the resulting impact on auction sales volumes, conversion rates and loan transaction volumes;
|
•
|
our ability to obtain land or renew/enter into new leases at commercially reasonable rates;
|
•
|
decreases in the number of used vehicles sold at physical auctions;
|
•
|
changes in the market value of vehicles auctioned, including changes in the actual cash value of salvage vehicles;
|
•
|
trends in new and used vehicle sales and incentives, including wholesale used vehicle pricing;
|
•
|
the ability of consumers to lease or finance the purchase of new and/or used vehicles;
|
•
|
the ability to recover or collect from delinquent or bankrupt customers;
|
•
|
economic conditions including fuel prices, commodity prices, foreign exchange rates and interest rate fluctuations;
|
•
|
trends in the vehicle remarketing industry;
|
•
|
trends in the number of commercial vehicles being brought to auction, in particular off-lease volumes;
|
•
|
changes in the volume of vehicle production, including capacity reductions at the major original equipment manufacturers;
|
•
|
laws, regulations and industry standards, including changes in regulations governing the sale of used vehicles, the processing of salvage vehicles and commercial lending activities;
|
•
|
our ability to maintain our brand and protect our intellectual property;
|
•
|
the costs of environmental compliance and/or the imposition of liabilities under environmental laws and regulations;
|
•
|
weather, including increased expenses as a result of catastrophic events;
|
•
|
general business conditions;
|
•
|
our substantial amount of debt;
|
•
|
restrictive covenants in our debt agreements;
|
•
|
our assumption of the settlement risk for vehicles sold;
|
•
|
litigation developments;
|
•
|
our self-insurance for certain risks;
|
•
|
interruptions to service from our workforce;
|
•
|
any impairment to our goodwill or other intangible assets;
|
•
|
changes in effective tax rates;
|
•
|
changes to accounting standards; and
|
•
|
other risks described from time to time in our filings with the SEC, including the Quarterly Reports on Form 10-Q to be filed by us in 2017.
|
•
|
The ADESA Auctions segment serves a domestic and international customer base through live and online auctions and through
77
whole car auction facilities in North America that are developed and strategically located to draw professional sellers and buyers together and allow the buyers to inspect and compare vehicles remotely or in person. Through ADESA.com, powered by Openlane technology, ADESA offers comprehensive private label remarketing solutions to automobile manufacturers, captive finance companies and other institutions to offer vehicles via the Internet prior to arrival at the physical auction. Vehicles at ADESA's auctions are typically sold by commercial fleet operators, financial institutions, rental car companies, new and used vehicle dealers and vehicle manufacturers and their captive finance companies to franchise and independent used vehicle dealers. ADESA also provides value-added ancillary services including inbound and outbound transportation logistics, reconditioning, vehicle inspection and certification, titling, administrative and collateral recovery services. ADESA also includes ADESA Remarketing Limited, an online whole car vehicle remarketing business in the United Kingdom.
|
•
|
The IAA segment serves a domestic and international customer base through live and online auctions and through
172
salvage vehicle auction sites in the United States and Canada at
December 31, 2016
. IAA also includes HBC, which operates from
11
locations in the United Kingdom. The salvage auctions facilitate the remarketing of damaged vehicles designated as total losses by insurance companies, charity donation vehicles, recovered stolen (or theft) vehicles and low value used vehicles. The salvage auction business specializes in providing services such as inbound transportation, titling, salvage recovery and claims settlement administrative services.
|
•
|
The AFC segment provides short-term, inventory-secured financing, known as floorplan financing, primarily to independent used vehicle dealers. At
December 31, 2016
, AFC conducted business at
126
locations in the United States and Canada. The Company also sells vehicle service contracts through Preferred Warranties, Inc. ("PWI").
|
|
Year Ended
December 31,
|
||||||
(Dollars in millions except per share amounts)
|
2016
|
|
2015
|
||||
Revenues
|
|
|
|
||||
ADESA
|
$
|
1,765.3
|
|
|
$
|
1,427.8
|
|
IAA
|
1,098.0
|
|
|
994.4
|
|
||
AFC
|
286.8
|
|
|
268.4
|
|
||
Total revenues
|
3,150.1
|
|
|
2,690.6
|
|
||
Cost of services*
|
1,827.4
|
|
|
1,548.5
|
|
||
Gross profit*
|
1,322.7
|
|
|
1,142.1
|
|
||
Selling, general and administrative
|
583.1
|
|
|
502.0
|
|
||
Depreciation and amortization
|
240.6
|
|
|
212.8
|
|
||
Operating profit
|
499.0
|
|
|
427.3
|
|
||
Interest expense
|
138.8
|
|
|
91.4
|
|
||
Other income, net
|
(0.5
|
)
|
|
(4.6
|
)
|
||
Loss on extinguishment of debt
|
5.4
|
|
|
—
|
|
||
Income before income taxes
|
355.3
|
|
|
340.5
|
|
||
Income taxes
|
132.9
|
|
|
125.9
|
|
||
Net income
|
$
|
222.4
|
|
|
$
|
214.6
|
|
Net income per share
|
|
|
|
||||
Basic
|
$
|
1.62
|
|
|
$
|
1.53
|
|
Diluted
|
$
|
1.60
|
|
|
$
|
1.51
|
|
|
Year Ended
December 31,
|
||||||
(Dollars in millions)
|
2016
|
|
2015
|
||||
ADESA revenue
|
$
|
1,765.3
|
|
|
$
|
1,427.8
|
|
Cost of services*
|
1,036.5
|
|
|
836.9
|
|
||
Gross profit*
|
728.8
|
|
|
590.9
|
|
||
Selling, general and administrative
|
327.0
|
|
|
276.6
|
|
||
Depreciation and amortization
|
100.0
|
|
|
86.2
|
|
||
Operating profit
|
$
|
301.8
|
|
|
$
|
228.1
|
|
Vehicles sold
|
2,885,000
|
|
|
2,465,000
|
|
|
Year Ended
December 31,
|
||||||
(Dollars in millions)
|
2016
|
|
2015
|
||||
IAA revenue
|
$
|
1,098.0
|
|
|
$
|
994.4
|
|
Cost of services*
|
708.0
|
|
|
633.6
|
|
||
Gross profit*
|
390.0
|
|
|
360.8
|
|
||
Selling, general and administrative
|
104.2
|
|
|
98.1
|
|
||
Depreciation and amortization
|
87.9
|
|
|
80.8
|
|
||
Operating profit
|
$
|
197.9
|
|
|
$
|
181.9
|
|
Vehicles sold
|
2,184,000
|
|
|
1,970,000
|
|
|
Year Ended
December 31,
|
||||||
(Dollars in millions except volumes and per loan amounts)
|
2016
|
|
2015
|
||||
AFC revenue
|
|
|
|
||||
Interest and fee income
|
$
|
275.1
|
|
|
$
|
246.8
|
|
Other revenue
|
10.3
|
|
|
9.7
|
|
||
Provision for credit losses
|
(30.7
|
)
|
|
(16.0
|
)
|
||
Other service revenue
|
32.1
|
|
|
27.9
|
|
||
Total AFC revenue
|
286.8
|
|
|
268.4
|
|
||
Cost of services*
|
82.9
|
|
|
78.0
|
|
||
Gross profit*
|
203.9
|
|
|
190.4
|
|
||
Selling, general and administrative
|
28.7
|
|
|
27.8
|
|
||
Depreciation and amortization
|
31.1
|
|
|
30.8
|
|
||
Operating profit
|
$
|
144.1
|
|
|
$
|
131.8
|
|
Loan transactions
|
1,718,000
|
|
|
1,607,000
|
|
||
Revenue per loan transaction, excluding "Other service revenue"
|
$
|
148
|
|
|
$
|
150
|
|
|
Year Ended
December 31,
|
||||||
(Dollars in millions)
|
2016
|
|
2015
|
||||
Selling, general and administrative
|
$
|
123.2
|
|
|
$
|
99.5
|
|
Depreciation and amortization
|
21.6
|
|
|
15.0
|
|
||
Operating loss
|
$
|
(144.8
|
)
|
|
$
|
(114.5
|
)
|
|
Year Ended
December 31,
|
||||||
(Dollars in millions except per share amounts)
|
2015
|
|
2014
|
||||
Revenues
|
|
|
|
||||
ADESA
|
$
|
1,427.8
|
|
|
$
|
1,271.0
|
|
IAA
|
994.4
|
|
|
895.9
|
|
||
AFC
|
268.4
|
|
|
250.1
|
|
||
Total revenues
|
2,690.6
|
|
|
2,417.0
|
|
||
Cost of services*
|
1,548.5
|
|
|
1,371.3
|
|
||
Gross profit*
|
1,142.1
|
|
|
1,045.7
|
|
||
Selling, general and administrative
|
502.0
|
|
|
471.4
|
|
||
Depreciation and amortization
|
212.8
|
|
|
196.6
|
|
||
Operating profit
|
427.3
|
|
|
377.7
|
|
||
Interest expense
|
91.4
|
|
|
86.2
|
|
||
Other income, net
|
(4.6
|
)
|
|
(3.8
|
)
|
||
Loss on extinguishment of debt
|
—
|
|
|
30.3
|
|
||
Income before income taxes
|
340.5
|
|
|
265.0
|
|
||
Income taxes
|
125.9
|
|
|
95.7
|
|
||
Net income
|
$
|
214.6
|
|
|
$
|
169.3
|
|
Net income per share
|
|
|
|
||||
Basic
|
$
|
1.53
|
|
|
$
|
1.21
|
|
Diluted
|
$
|
1.51
|
|
|
$
|
1.19
|
|
|
Year Ended
December 31,
|
||||||
(Dollars in millions)
|
2015
|
|
2014
|
||||
ADESA revenue
|
$
|
1,427.8
|
|
|
$
|
1,271.0
|
|
Cost of services*
|
836.9
|
|
|
745.9
|
|
||
Gross profit*
|
590.9
|
|
|
525.1
|
|
||
Selling, general and administrative
|
276.6
|
|
|
259.9
|
|
||
Depreciation and amortization
|
86.2
|
|
|
80.2
|
|
||
Operating profit
|
$
|
228.1
|
|
|
$
|
185.0
|
|
Vehicles sold
|
2,465,000
|
|
|
2,198,000
|
|
|
Year Ended
December 31,
|
||||||
(Dollars in millions)
|
2015
|
|
2014
|
||||
IAA revenue
|
$
|
994.4
|
|
|
$
|
895.9
|
|
Cost of services*
|
633.6
|
|
|
555.7
|
|
||
Gross profit*
|
360.8
|
|
|
340.2
|
|
||
Selling, general and administrative
|
98.1
|
|
|
98.8
|
|
||
Depreciation and amortization
|
80.8
|
|
|
76.2
|
|
||
Operating profit
|
$
|
181.9
|
|
|
$
|
165.2
|
|
Vehicles sold
|
1,970,000
|
|
|
1,732,000
|
|
|
Year Ended
December 31,
|
||||||
(Dollars in millions except volumes and per loan amounts)
|
2015
|
|
2014
|
||||
AFC revenue
|
|
|
|
||||
Interest and fee income
|
$
|
246.8
|
|
|
$
|
225.0
|
|
Other revenue
|
9.7
|
|
|
11.9
|
|
||
Provision for credit losses
|
(16.0
|
)
|
|
(12.3
|
)
|
||
Other service revenue
|
27.9
|
|
|
25.5
|
|
||
Total AFC revenue
|
268.4
|
|
|
250.1
|
|
||
Cost of services*
|
78.0
|
|
|
69.7
|
|
||
Gross profit*
|
190.4
|
|
|
180.4
|
|
||
Selling, general and administrative
|
27.8
|
|
|
28.8
|
|
||
Depreciation and amortization
|
30.8
|
|
|
30.4
|
|
||
Operating profit
|
$
|
131.8
|
|
|
$
|
121.2
|
|
Loan transactions
|
1,607,000
|
|
|
1,445,000
|
|
||
Revenue per loan transaction, excluding "Other service revenue"
|
$
|
150
|
|
|
$
|
155
|
|
|
Year Ended
December 31,
|
||||||
(Dollars in millions)
|
2015
|
|
2014
|
||||
Selling, general and administrative
|
$
|
99.5
|
|
|
$
|
83.9
|
|
Depreciation and amortization
|
15.0
|
|
|
9.8
|
|
||
Operating loss
|
$
|
(114.5
|
)
|
|
$
|
(93.7
|
)
|
|
Three Months Ended
December 31,
|
||||||
(Dollars in millions except per share amounts)
|
2016
|
|
2015
|
||||
Revenues
|
|
|
|
||||
ADESA
|
$
|
442.3
|
|
|
$
|
365.9
|
|
IAA
|
302.6
|
|
|
261.6
|
|
||
AFC
|
68.8
|
|
|
68.2
|
|
||
Total revenues
|
813.7
|
|
|
695.7
|
|
||
Cost of services*
|
488.3
|
|
|
414.3
|
|
||
Gross profit*
|
325.4
|
|
|
281.4
|
|
||
Selling, general and administrative
|
148.8
|
|
|
128.5
|
|
||
Depreciation and amortization
|
64.7
|
|
|
56.0
|
|
||
Operating profit
|
111.9
|
|
|
96.9
|
|
||
Interest expense
|
38.0
|
|
|
24.2
|
|
||
Other expense (income), net
|
0.3
|
|
|
(2.5
|
)
|
||
Loss on extinguishment of debt
|
1.4
|
|
|
—
|
|
||
Income before income taxes
|
72.2
|
|
|
75.2
|
|
||
Income taxes
|
26.7
|
|
|
26.9
|
|
||
Net income
|
$
|
45.5
|
|
|
$
|
48.3
|
|
Net income per share
|
|
|
|
||||
Basic
|
$
|
0.33
|
|
|
$
|
0.35
|
|
Diluted
|
$
|
0.33
|
|
|
$
|
0.35
|
|
|
Three Months Ended
December 31, |
||||||
(Dollars in millions)
|
2016
|
|
2015
|
||||
ADESA revenue
|
$
|
442.3
|
|
|
$
|
365.9
|
|
Cost of services*
|
269.4
|
|
|
221.3
|
|
||
Gross profit*
|
172.9
|
|
|
144.6
|
|
||
Selling, general and administrative
|
89.2
|
|
|
69.3
|
|
||
Depreciation and amortization
|
27.4
|
|
|
22.4
|
|
||
Operating profit
|
$
|
56.3
|
|
|
$
|
52.9
|
|
Vehicles sold
|
700,000
|
|
|
605,000
|
|
|
Three Months Ended
December 31, |
||||||
(Dollars in millions)
|
2016
|
|
2015
|
||||
IAA revenue
|
$
|
302.6
|
|
|
$
|
261.6
|
|
Cost of services*
|
198.7
|
|
|
173.0
|
|
||
Gross profit*
|
103.9
|
|
|
88.6
|
|
||
Selling, general and administrative
|
25.3
|
|
|
25.5
|
|
||
Depreciation and amortization
|
23.5
|
|
|
21.7
|
|
||
Operating profit
|
$
|
55.1
|
|
|
$
|
41.4
|
|
Vehicles sold
|
610,000
|
|
|
517,000
|
|
|
Three Months Ended
December 31, |
||||||
(Dollars in millions except volumes and per loan amounts)
|
2016
|
|
2015
|
||||
AFC revenue
|
|
|
|
||||
Interest and fee income
|
$
|
69.6
|
|
|
$
|
63.9
|
|
Other revenue
|
2.6
|
|
|
2.7
|
|
||
Provision for credit losses
|
(11.7
|
)
|
|
(5.5
|
)
|
||
Other service revenue
|
8.3
|
|
|
7.1
|
|
||
Total AFC revenue
|
68.8
|
|
|
68.2
|
|
||
Cost of services*
|
20.2
|
|
|
20.0
|
|
||
Gross profit*
|
48.6
|
|
|
48.2
|
|
||
Selling, general and administrative
|
6.8
|
|
|
6.8
|
|
||
Depreciation and amortization
|
7.7
|
|
|
7.6
|
|
||
Operating profit
|
$
|
34.1
|
|
|
$
|
33.8
|
|
Loan transactions
|
417,000
|
|
|
408,000
|
|
||
Revenue per loan transaction, excluding "Other service revenue"
|
$
|
145
|
|
|
$
|
150
|
|
|
Three Months Ended
December 31, |
||||||
(Dollars in millions)
|
2016
|
|
2015
|
||||
Selling, general and administrative
|
$
|
27.5
|
|
|
$
|
26.9
|
|
Depreciation and amortization
|
6.1
|
|
|
4.3
|
|
||
Operating loss
|
$
|
(33.6
|
)
|
|
$
|
(31.2
|
)
|
|
December 31,
|
||||||
(Dollars in millions)
|
2016
|
|
2015
|
||||
Cash and cash equivalents
|
$
|
201.8
|
|
|
$
|
155.0
|
|
Restricted cash
|
17.9
|
|
|
16.2
|
|
||
Working capital
|
506.2
|
|
|
232.2
|
|
||
Amounts available under Credit Facility*
|
219.5
|
|
|
110.0
|
|
||
Cash flow from operations for the year ended
|
360.8
|
|
|
475.0
|
|
*
|
There were related outstanding letters of credit totaling approximately
$29.7 million
and
$28.0 million
at
December 31, 2016
and
2015
, respectively, which reduced the amount available for borrowings under the revolving credit facility.
|
|
Three Months Ended December 31, 2016
|
||||||||||||||||||
(Dollars in millions)
|
ADESA
|
|
IAA
|
|
AFC
|
|
Corporate
|
|
Consolidated
|
||||||||||
Net income (loss)
|
$
|
27.9
|
|
|
$
|
29.0
|
|
|
$
|
19.8
|
|
|
$
|
(31.2
|
)
|
|
$
|
45.5
|
|
Add back:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income taxes
|
16.0
|
|
|
16.8
|
|
|
12.2
|
|
|
(18.3
|
)
|
|
26.7
|
|
|||||
Interest expense, net of interest income
|
(0.2
|
)
|
|
—
|
|
|
9.4
|
|
|
28.7
|
|
|
37.9
|
|
|||||
Depreciation and amortization
|
27.4
|
|
|
23.5
|
|
|
7.7
|
|
|
6.1
|
|
|
64.7
|
|
|||||
Intercompany interest
|
9.3
|
|
|
9.5
|
|
|
(8.7
|
)
|
|
(10.1
|
)
|
|
—
|
|
|||||
EBITDA
|
80.4
|
|
|
78.8
|
|
|
40.4
|
|
|
(24.8
|
)
|
|
174.8
|
|
|||||
Intercompany charges
|
3.1
|
|
|
—
|
|
|
—
|
|
|
(3.1
|
)
|
|
—
|
|
|||||
Non-cash stock-based compensation
|
1.2
|
|
|
0.7
|
|
|
0.4
|
|
|
1.7
|
|
|
4.0
|
|
|||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
1.4
|
|
|
—
|
|
|
1.4
|
|
|||||
Acquisition related costs
|
1.3
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
1.4
|
|
|||||
Securitization interest
|
—
|
|
|
—
|
|
|
(7.7
|
)
|
|
—
|
|
|
(7.7
|
)
|
|||||
Minority interest
|
1.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.1
|
|
|||||
Other
|
0.9
|
|
|
0.7
|
|
|
0.2
|
|
|
(0.3
|
)
|
|
1.5
|
|
|||||
Total addbacks
|
7.6
|
|
|
1.4
|
|
|
(5.7
|
)
|
|
(1.6
|
)
|
|
1.7
|
|
|||||
Adjusted EBITDA
|
$
|
88.0
|
|
|
$
|
80.2
|
|
|
$
|
34.7
|
|
|
$
|
(26.4
|
)
|
|
$
|
176.5
|
|
|
Three Months Ended December 31, 2015
|
||||||||||||||||||
(Dollars in millions)
|
ADESA
|
|
IAA
|
|
AFC
|
|
Corporate
|
|
Consolidated
|
||||||||||
Net income (loss)
|
$
|
25.1
|
|
|
$
|
23.3
|
|
|
$
|
21.4
|
|
|
$
|
(21.5
|
)
|
|
$
|
48.3
|
|
Add back:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income taxes
|
13.9
|
|
|
11.1
|
|
|
13.4
|
|
|
(11.5
|
)
|
|
26.9
|
|
|||||
Interest expense, net of interest income
|
(0.3
|
)
|
|
—
|
|
|
6.9
|
|
|
17.2
|
|
|
23.8
|
|
|||||
Depreciation and amortization
|
22.4
|
|
|
21.7
|
|
|
7.6
|
|
|
4.3
|
|
|
56.0
|
|
|||||
Intercompany interest
|
12.1
|
|
|
9.5
|
|
|
(7.9
|
)
|
|
(13.7
|
)
|
|
—
|
|
|||||
EBITDA
|
73.2
|
|
|
65.6
|
|
|
41.4
|
|
|
(25.2
|
)
|
|
155.0
|
|
|||||
Intercompany charges
|
1.9
|
|
|
0.1
|
|
|
—
|
|
|
(2.0
|
)
|
|
—
|
|
|||||
Non-cash stock-based compensation
|
0.9
|
|
|
0.3
|
|
|
0.3
|
|
|
1.4
|
|
|
2.9
|
|
|||||
Acquisition related costs
|
0.6
|
|
|
—
|
|
|
0.2
|
|
|
0.2
|
|
|
1.0
|
|
|||||
Securitization interest
|
—
|
|
|
—
|
|
|
(5.5
|
)
|
|
—
|
|
|
(5.5
|
)
|
|||||
Minority interest
|
0.2
|
|
|
(1.1
|
)
|
|
—
|
|
|
—
|
|
|
(0.9
|
)
|
|||||
Other
|
0.8
|
|
|
0.7
|
|
|
0.3
|
|
|
0.2
|
|
|
2.0
|
|
|||||
Total addbacks
|
4.4
|
|
|
—
|
|
|
(4.7
|
)
|
|
(0.2
|
)
|
|
(0.5
|
)
|
|||||
Adjusted EBITDA
|
$
|
77.6
|
|
|
$
|
65.6
|
|
|
$
|
36.7
|
|
|
$
|
(25.4
|
)
|
|
$
|
154.5
|
|
|
Year Ended December 31, 2016
|
||||||||||||||||||
(Dollars in millions)
|
ADESA
|
|
IAA
|
|
AFC
|
|
Corporate
|
|
Consolidated
|
||||||||||
Net income (loss)
|
$
|
156.9
|
|
|
$
|
101.1
|
|
|
$
|
88.4
|
|
|
$
|
(124.0
|
)
|
|
$
|
222.4
|
|
Add back:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income taxes
|
92.7
|
|
|
59.3
|
|
|
54.0
|
|
|
(73.1
|
)
|
|
132.9
|
|
|||||
Interest expense, net of interest income
|
(0.3
|
)
|
|
—
|
|
|
34.1
|
|
|
104.6
|
|
|
138.4
|
|
|||||
Depreciation and amortization
|
100.0
|
|
|
87.9
|
|
|
31.1
|
|
|
21.6
|
|
|
240.6
|
|
|||||
Intercompany interest
|
41.7
|
|
|
37.8
|
|
|
(33.8
|
)
|
|
(45.7
|
)
|
|
—
|
|
|||||
EBITDA
|
391.0
|
|
|
286.1
|
|
|
173.8
|
|
|
(116.6
|
)
|
|
734.3
|
|
|||||
Intercompany charges
|
10.9
|
|
|
0.3
|
|
|
—
|
|
|
(11.2
|
)
|
|
—
|
|
|||||
Non-cash stock-based compensation
|
4.6
|
|
|
2.6
|
|
|
1.8
|
|
|
10.1
|
|
|
19.1
|
|
|||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
1.4
|
|
|
4.0
|
|
|
5.4
|
|
|||||
Acquisition related costs
|
4.9
|
|
|
0.2
|
|
|
0.1
|
|
|
3.4
|
|
|
8.6
|
|
|||||
Securitization interest
|
—
|
|
|
—
|
|
|
(28.0
|
)
|
|
—
|
|
|
(28.0
|
)
|
|||||
Minority interest
|
3.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.8
|
|
|||||
(Gain)/Loss on asset sales
|
1.6
|
|
|
0.2
|
|
|
—
|
|
|
0.6
|
|
|
2.4
|
|
|||||
Other
|
2.7
|
|
|
(0.5
|
)
|
|
0.2
|
|
|
(0.1
|
)
|
|
2.3
|
|
|||||
Total addbacks
|
28.5
|
|
|
2.8
|
|
|
(24.5
|
)
|
|
6.8
|
|
|
13.6
|
|
|||||
Adjusted EBITDA
|
$
|
419.5
|
|
|
$
|
288.9
|
|
|
$
|
149.3
|
|
|
$
|
(109.8
|
)
|
|
$
|
747.9
|
|
|
Year Ended December 31, 2015
|
||||||||||||||||||
(Dollars in millions)
|
ADESA
|
|
IAA
|
|
AFC
|
|
Corporate
|
|
Consolidated
|
||||||||||
Net income (loss)
|
$
|
109.2
|
|
|
$
|
92.8
|
|
|
$
|
83.2
|
|
|
$
|
(70.6
|
)
|
|
$
|
214.6
|
|
Add back:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income taxes
|
62.3
|
|
|
52.4
|
|
|
51.3
|
|
|
(40.1
|
)
|
|
125.9
|
|
|||||
Interest expense, net of interest income
|
0.1
|
|
|
—
|
|
|
24.1
|
|
|
66.6
|
|
|
90.8
|
|
|||||
Depreciation and amortization
|
86.2
|
|
|
80.8
|
|
|
30.8
|
|
|
15.0
|
|
|
212.8
|
|
|||||
Intercompany interest
|
49.7
|
|
|
37.7
|
|
|
(25.3
|
)
|
|
(62.1
|
)
|
|
—
|
|
|||||
EBITDA
|
307.5
|
|
|
263.7
|
|
|
164.1
|
|
|
(91.2
|
)
|
|
644.1
|
|
|||||
Intercompany charges
|
7.9
|
|
|
0.7
|
|
|
—
|
|
|
(8.6
|
)
|
|
—
|
|
|||||
Non-cash stock-based compensation
|
3.8
|
|
|
1.1
|
|
|
1.3
|
|
|
6.5
|
|
|
12.7
|
|
|||||
Acquisition related costs
|
2.7
|
|
|
0.1
|
|
|
0.2
|
|
|
1.8
|
|
|
4.8
|
|
|||||
Securitization interest
|
—
|
|
|
—
|
|
|
(18.7
|
)
|
|
—
|
|
|
(18.7
|
)
|
|||||
Minority interest
|
0.8
|
|
|
(1.4
|
)
|
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
|||||
(Gain)/Loss on asset sales
|
3.6
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
3.5
|
|
|||||
Other
|
2.3
|
|
|
1.0
|
|
|
0.4
|
|
|
0.3
|
|
|
4.0
|
|
|||||
Total addbacks
|
21.1
|
|
|
1.4
|
|
|
(16.8
|
)
|
|
—
|
|
|
5.7
|
|
|||||
Adjusted EBITDA
|
$
|
328.6
|
|
|
$
|
265.1
|
|
|
$
|
147.3
|
|
|
$
|
(91.2
|
)
|
|
$
|
649.8
|
|
|
Three Months Ended
|
|
Twelve
Months
Ended
|
||||||||||||||||
(Dollars in millions)
|
March 31,
2016
|
|
June 30,
2016
|
|
September 30,
2016
|
|
December 31,
2016 |
|
December 31, 2016
|
||||||||||
Net income (loss)
|
$
|
60.7
|
|
|
$
|
61.8
|
|
|
$
|
54.4
|
|
|
$
|
45.5
|
|
|
$
|
222.4
|
|
Add back:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income taxes
|
36.7
|
|
|
37.7
|
|
|
31.8
|
|
|
26.7
|
|
|
132.9
|
|
|||||
Interest expense, net of interest income
|
28.7
|
|
|
35.7
|
|
|
36.1
|
|
|
37.9
|
|
|
138.4
|
|
|||||
Depreciation and amortization
|
56.4
|
|
|
59.0
|
|
|
60.5
|
|
|
64.7
|
|
|
240.6
|
|
|||||
EBITDA
|
182.5
|
|
|
194.2
|
|
|
182.8
|
|
|
174.8
|
|
|
734.3
|
|
|||||
Non-cash stock-based compensation
|
5.5
|
|
|
4.9
|
|
|
4.7
|
|
|
4.0
|
|
|
19.1
|
|
|||||
Loss on extinguishment of debt
|
4.0
|
|
|
—
|
|
|
—
|
|
|
1.4
|
|
|
5.4
|
|
|||||
Acquisition related costs
|
2.6
|
|
|
3.3
|
|
|
1.3
|
|
|
1.4
|
|
|
8.6
|
|
|||||
Securitization interest
|
(6.4
|
)
|
|
(6.7
|
)
|
|
(7.2
|
)
|
|
(7.7
|
)
|
|
(28.0
|
)
|
|||||
Minority interest
|
0.6
|
|
|
1.0
|
|
|
1.1
|
|
|
1.1
|
|
|
3.8
|
|
|||||
(Gain)/Loss on asset sales
|
0.4
|
|
|
0.4
|
|
|
1.3
|
|
|
0.3
|
|
|
2.4
|
|
|||||
Other
|
0.3
|
|
|
—
|
|
|
0.8
|
|
|
1.2
|
|
|
2.3
|
|
|||||
Total addbacks
|
7.0
|
|
|
2.9
|
|
|
2.0
|
|
|
1.7
|
|
|
13.6
|
|
|||||
Adjusted EBITDA
|
$
|
189.5
|
|
|
$
|
197.1
|
|
|
$
|
184.8
|
|
|
$
|
176.5
|
|
|
$
|
747.9
|
|
|
Year Ended
December 31,
|
||||||
(Dollars in millions)
|
2016
|
|
2015
|
||||
Net cash provided by (used by):
|
|
|
|
||||
Operating activities
|
$
|
360.8
|
|
|
$
|
475.0
|
|
Investing activities
|
(765.3
|
)
|
|
(547.6
|
)
|
||
Financing activities
|
453.2
|
|
|
94.5
|
|
||
Effect of exchange rate on cash
|
(1.9
|
)
|
|
(19.8
|
)
|
||
Net increase in cash and cash equivalents
|
$
|
46.8
|
|
|
$
|
2.1
|
|
•
|
an increase in cash used for acquisitions of approximately $314.0 million; and
|
•
|
an increase in capital expenditures of approximately $20.4 million. For a discussion of the Company's capital expenditures, see “Capital Expenditures” below;
|
•
|
a decrease in the additional finance receivables held for investment of approximately $119.5 million.
|
•
|
the debt refinancing and payment activities in the first quarter of 2016, for which the Company received approximately $558.9 million of cash after the repayment and rollover of debt; and
|
•
|
a $147.2 million decrease in cash used for the repurchase and retirement of common stock;
|
•
|
a decrease in the additional obligations collateralized by finance receivables of approximately $253.0 million; and
|
•
|
an increase in payments for debt issuance costs of $21.9 million.
|
•
|
On
February 17, 2016
, the Company announced a cash dividend of
$0.29
per share that was paid on
April 5, 2016
, to stockholders of record at the close of business on
March 23, 2016
.
|
•
|
On
May 3, 2016
, the Company announced a cash dividend of
$0.29
per share that was paid on
July 5, 2016
, to stockholders of record at the close of business on
June 22, 2016
.
|
•
|
On
August 2, 2016
, the Company announced a cash dividend of
$0.29
per share that was paid on
October 4, 2016
, to stockholders of record at the close of business on
September 21, 2016
.
|
•
|
On
November 3, 2016
, the Company announced a cash dividend of
$0.32
per share that was paid on
January 6, 2017
, to stockholders of record at the close of business on
December 21, 2016
.
|
•
|
On
February 21, 2017
, the Company announced a cash dividend of
$0.32
per share that is payable on
April 4, 2017
, to stockholders of record at the close of business on
March 22, 2017
.
|
|
Payments Due by Period
|
||||||||||||||||||
Contractual Obligations
|
Total
|
|
Less than
1 year
|
|
1 - 3 Years
|
|
4 - 5 Years
|
|
More than
5 Years
|
||||||||||
Long-term debt
|
|
|
|
|
|
|
|
|
|
||||||||||
$300 million revolving credit facility
|
$
|
80.5
|
|
|
$
|
80.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Term Loan B-2 (a)
|
1,082.7
|
|
|
11.2
|
|
|
22.4
|
|
|
1,049.1
|
|
|
—
|
|
|||||
Term Loan B-3 (a)
|
1,339.9
|
|
|
13.5
|
|
|
27.0
|
|
|
27.0
|
|
|
1,272.4
|
|
|||||
Capital lease obligations (b)
|
52.5
|
|
|
27.2
|
|
|
25.1
|
|
|
0.2
|
|
|
—
|
|
|||||
Interest payments relating to long-term debt (c)
|
561.3
|
|
|
108.1
|
|
|
209.9
|
|
|
172.1
|
|
|
71.2
|
|
|||||
Operating leases (d)
|
1,118.9
|
|
|
121.7
|
|
|
220.2
|
|
|
182.6
|
|
|
594.4
|
|
|||||
Total contractual cash obligations
|
$
|
4,235.8
|
|
|
$
|
362.2
|
|
|
$
|
504.6
|
|
|
$
|
1,431.0
|
|
|
$
|
1,938.0
|
|
(a)
|
The table assumes the long-term debt is held to maturity.
|
(b)
|
We have entered into capital leases for furniture, fixtures, equipment and software. The amounts include the interest portion of the capital leases. Future capital lease obligations would change if we entered into additional capital lease agreements.
|
(c)
|
Interest payments on long-term debt are projected based on the contractual rates of the debt securities. Interest rates for the variable rate term debt instruments were held constant at rates as of
December 31, 2016
.
|
(d)
|
Operating leases are entered into in the normal course of business. We lease most of our auction facilities, as well as other property and equipment under operating leases. Some lease agreements contain options to renew the lease or purchase the leased property. Future operating lease obligations would change if the renewal options were exercised and/or if we entered into additional operating lease agreements.
|
|
Page
|
KAR Auction Services, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and the dispositions of our assets;
|
•
|
Provide reasonable assurance that our transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and Board of Directors; and
|
•
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
|
/s/ JAMES P. HALLETT
|
James P. Hallett
Chief Executive Officer
(Principal Executive Officer)
|
|
/s/ ERIC M. LOUGHMILLER
|
Eric M. Loughmiller
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Operating revenues
|
|
|
|
|
|
||||||
ADESA Auction Services
|
$
|
1,765.3
|
|
|
$
|
1,427.8
|
|
|
$
|
1,271.0
|
|
IAA Salvage Services
|
1,098.0
|
|
|
994.4
|
|
|
895.9
|
|
|||
AFC
|
286.8
|
|
|
268.4
|
|
|
250.1
|
|
|||
Total operating revenues
|
3,150.1
|
|
|
2,690.6
|
|
|
2,417.0
|
|
|||
Operating expenses
|
|
|
|
|
|
||||||
Cost of services (exclusive of depreciation and amortization)
|
1,827.4
|
|
|
1,548.5
|
|
|
1,371.3
|
|
|||
Selling, general and administrative
|
583.1
|
|
|
502.0
|
|
|
471.4
|
|
|||
Depreciation and amortization
|
240.6
|
|
|
212.8
|
|
|
196.6
|
|
|||
Total operating expenses
|
2,651.1
|
|
|
2,263.3
|
|
|
2,039.3
|
|
|||
Operating profit
|
499.0
|
|
|
427.3
|
|
|
377.7
|
|
|||
Interest expense
|
138.8
|
|
|
91.4
|
|
|
86.2
|
|
|||
Other income, net
|
(0.5
|
)
|
|
(4.6
|
)
|
|
(3.8
|
)
|
|||
Loss on extinguishment of debt
|
5.4
|
|
|
—
|
|
|
30.3
|
|
|||
Income before income taxes
|
355.3
|
|
|
340.5
|
|
|
265.0
|
|
|||
Income taxes
|
132.9
|
|
|
125.9
|
|
|
95.7
|
|
|||
Net income
|
$
|
222.4
|
|
|
$
|
214.6
|
|
|
$
|
169.3
|
|
Net income per share
|
|
|
|
|
|
||||||
Basic
|
$
|
1.62
|
|
|
$
|
1.53
|
|
|
$
|
1.21
|
|
Diluted
|
$
|
1.60
|
|
|
$
|
1.51
|
|
|
$
|
1.19
|
|
Dividends declared per common share
|
$
|
1.19
|
|
|
$
|
1.08
|
|
|
$
|
1.02
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Net income
|
$
|
222.4
|
|
|
$
|
214.6
|
|
|
$
|
169.3
|
|
Other comprehensive loss, net of tax
|
|
|
|
|
|
||||||
Foreign currency translation loss
|
(9.1
|
)
|
|
(38.5
|
)
|
|
(20.3
|
)
|
|||
Unrealized loss on postretirement benefit obligation
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|||
Total other comprehensive loss, net of tax
|
(9.1
|
)
|
|
(38.6
|
)
|
|
(20.3
|
)
|
|||
Comprehensive income
|
$
|
213.3
|
|
|
$
|
176.0
|
|
|
$
|
149.0
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
201.8
|
|
|
$
|
155.0
|
|
Restricted cash
|
17.9
|
|
|
16.2
|
|
||
Trade receivables, net of allowances of $13.0 and $6.6
|
682.9
|
|
|
511.9
|
|
||
Finance receivables, net of allowances $12.0 and $9.0
|
1,780.2
|
|
|
1,632.0
|
|
||
Other current assets
|
158.4
|
|
|
131.0
|
|
||
Total current assets
|
2,841.2
|
|
|
2,446.1
|
|
||
Other assets
|
|
|
|
||||
Goodwill
|
2,057.0
|
|
|
1,795.9
|
|
||
Customer relationships, net of accumulated amortization of $707.8 and $619.3
|
461.0
|
|
|
417.7
|
|
||
Other intangible assets, net of accumulated amortization of $301.6 and $258.1
|
320.1
|
|
|
310.8
|
|
||
Other assets
|
35.8
|
|
|
34.1
|
|
||
Total other assets
|
2,873.9
|
|
|
2,558.5
|
|
||
Property and equipment, net of accumulated depreciation of $655.6 and $569.6
|
842.5
|
|
|
766.9
|
|
||
Total assets
|
$
|
6,557.6
|
|
|
$
|
5,771.5
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Liabilities and Stockholders' Equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
648.5
|
|
|
$
|
608.4
|
|
Accrued employee benefits and compensation expenses
|
100.7
|
|
|
90.9
|
|
||
Accrued interest
|
2.2
|
|
|
0.8
|
|
||
Other accrued expenses
|
149.4
|
|
|
128.4
|
|
||
Income taxes payable
|
5.0
|
|
|
5.3
|
|
||
Dividends payable
|
43.7
|
|
|
37.2
|
|
||
Obligations collateralized by finance receivables
|
1,280.3
|
|
|
1,189.0
|
|
||
Current maturities of long-term debt
|
105.2
|
|
|
153.9
|
|
||
Total current liabilities
|
2,335.0
|
|
|
2,213.9
|
|
||
Non-current liabilities
|
|
|
|
||||
Long-term debt
|
2,365.1
|
|
|
1,711.2
|
|
||
Deferred income tax liabilities
|
291.7
|
|
|
300.8
|
|
||
Other liabilities
|
168.5
|
|
|
159.5
|
|
||
Total non-current liabilities
|
2,825.3
|
|
|
2,171.5
|
|
||
Commitments and contingencies (Note 16)
|
|
|
|
||||
Stockholders' equity
|
|
|
|
||||
Preferred stock, $0.01 par value:
|
|
|
|
||||
Authorized shares: 100,000,000
|
|
|
|
|
|
||
Issued shares: none
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value:
|
|
|
|
||||
Authorized shares: 400,000,000
|
|
|
|
|
|
||
Issued and outstanding shares:
|
|
|
|
|
|
||
136,639,217 (2016)
|
|
|
|
|
|
||
137,795,296 (2015)
|
1.4
|
|
|
1.4
|
|
||
Additional paid-in capital
|
1,371.1
|
|
|
1,407.6
|
|
||
Retained earnings
|
74.1
|
|
|
17.3
|
|
||
Accumulated other comprehensive loss
|
(49.3
|
)
|
|
(40.2
|
)
|
||
Total stockholders' equity
|
1,397.3
|
|
|
1,386.1
|
|
||
Total liabilities and stockholders' equity
|
$
|
6,557.6
|
|
|
$
|
5,771.5
|
|
|
Common
Stock
Shares
|
|
Common
Stock
Amount
|
|
Additional
Paid-In
Capital
|
|
(Accumulated
Deficit)/Retained Earnings
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Total
|
|||||||||||
Balance at December 31, 2013
|
139.0
|
|
|
$
|
1.4
|
|
|
$
|
1,534.0
|
|
|
$
|
(72.3
|
)
|
|
$
|
18.7
|
|
|
$
|
1,481.8
|
|
Net income
|
|
|
|
|
|
|
|
169.3
|
|
|
|
|
169.3
|
|
||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
(20.3
|
)
|
|
(20.3
|
)
|
||||||||
Issuance of common stock under stock plans
|
2.3
|
|
|
|
|
27.6
|
|
|
|
|
|
|
27.6
|
|
||||||||
Stock-based compensation expense
|
|
|
|
|
|
28.0
|
|
|
|
|
|
|
28.0
|
|
||||||||
Excess tax benefit from stock-based compensation
|
|
|
|
|
|
4.1
|
|
|
|
|
|
|
4.1
|
|
||||||||
Cash dividends declared to stockholders ($1.02 per share)
|
|
|
|
|
|
|
(143.4
|
)
|
|
|
|
(143.4
|
)
|
|||||||||
Balance at December 31, 2014
|
141.3
|
|
|
1.4
|
|
|
1,593.7
|
|
|
(46.4
|
)
|
|
(1.6
|
)
|
|
1,547.1
|
|
|||||
Net income
|
|
|
|
|
|
|
|
214.6
|
|
|
|
|
214.6
|
|
||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
(38.6
|
)
|
|
(38.6
|
)
|
||||||||
Issuance of common stock under stock plans
|
1.8
|
|
|
|
|
22.7
|
|
|
|
|
|
|
22.7
|
|
||||||||
Stock-based compensation expense
|
|
|
|
|
|
11.7
|
|
|
|
|
|
|
11.7
|
|
||||||||
Excess tax benefit from stock-based compensation
|
|
|
|
|
|
7.1
|
|
|
|
|
|
|
7.1
|
|
||||||||
Repurchase and retirement of common stock
|
(5.3
|
)
|
|
|
|
(227.6
|
)
|
|
|
|
|
|
(227.6
|
)
|
||||||||
Cash dividends declared to stockholders ($1.08 per share)
|
|
|
|
|
|
|
(150.9
|
)
|
|
|
|
(150.9
|
)
|
|||||||||
Balance at December 31, 2015
|
137.8
|
|
|
1.4
|
|
|
1,407.6
|
|
|
17.3
|
|
|
(40.2
|
)
|
|
1,386.1
|
|
|||||
Net income
|
|
|
|
|
|
|
|
222.4
|
|
|
|
|
222.4
|
|
||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
(9.1
|
)
|
|
(9.1
|
)
|
||||||||
Issuance of common stock under stock plans
|
1.5
|
|
|
|
|
6.6
|
|
|
|
|
|
|
6.6
|
|
||||||||
Stock-based compensation expense
|
|
|
|
|
|
18.1
|
|
|
|
|
|
|
18.1
|
|
||||||||
Excess tax benefit from stock-based compensation
|
|
|
|
|
|
17.2
|
|
|
|
|
|
|
17.2
|
|
||||||||
Repurchase and retirement of common stock
|
(2.7
|
)
|
|
|
|
(80.4
|
)
|
|
|
|
|
|
(80.4
|
)
|
||||||||
Dividends earned under stock plans
|
|
|
|
|
2.0
|
|
|
(2.0
|
)
|
|
|
|
—
|
|
||||||||
Cash dividends declared to stockholders ($1.19 per share)
|
|
|
|
|
|
|
|
(163.6
|
)
|
|
|
|
(163.6
|
)
|
||||||||
Balance at December 31, 2016
|
136.6
|
|
|
$
|
1.4
|
|
|
$
|
1,371.1
|
|
|
$
|
74.1
|
|
|
$
|
(49.3
|
)
|
|
$
|
1,397.3
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Operating activities
|
|
|
|
|
|
||||||
Net income
|
$
|
222.4
|
|
|
$
|
214.6
|
|
|
$
|
169.3
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
240.6
|
|
|
212.8
|
|
|
196.6
|
|
|||
Provision for credit losses
|
40.5
|
|
|
18.8
|
|
|
16.6
|
|
|||
Deferred income taxes
|
(4.2
|
)
|
|
5.0
|
|
|
(24.5
|
)
|
|||
Amortization of debt issuance costs
|
8.8
|
|
|
7.2
|
|
|
7.5
|
|
|||
Stock-based compensation
|
18.1
|
|
|
11.7
|
|
|
28.0
|
|
|||
Excess tax benefit from stock-based compensation
|
(17.2
|
)
|
|
(7.1
|
)
|
|
(4.1
|
)
|
|||
Loss (gain) on disposal of fixed assets
|
0.1
|
|
|
0.9
|
|
|
(0.2
|
)
|
|||
Loss on extinguishment of debt
|
5.4
|
|
|
—
|
|
|
30.3
|
|
|||
Other non-cash, net
|
9.5
|
|
|
2.0
|
|
|
3.6
|
|
|||
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
|
|
||||||
Trade receivables and other assets
|
(194.7
|
)
|
|
(127.0
|
)
|
|
(52.3
|
)
|
|||
Accounts payable and accrued expenses
|
31.5
|
|
|
136.1
|
|
|
60.5
|
|
|||
Net cash provided by operating activities
|
360.8
|
|
|
475.0
|
|
|
431.3
|
|
|||
Investing activities
|
|
|
|
|
|
||||||
Net increase in finance receivables held for investment
|
(176.4
|
)
|
|
(295.9
|
)
|
|
(282.8
|
)
|
|||
Acquisition of businesses (net of cash acquired) and equity method investments
|
(432.1
|
)
|
|
(118.1
|
)
|
|
(31.9
|
)
|
|||
Purchases of property, equipment and computer software
|
(155.1
|
)
|
|
(134.7
|
)
|
|
(101.0
|
)
|
|||
Proceeds from the sale of property and equipment
|
—
|
|
|
0.3
|
|
|
1.1
|
|
|||
(Increase) decrease in restricted cash
|
(1.7
|
)
|
|
0.8
|
|
|
1.8
|
|
|||
Net cash used by investing activities
|
(765.3
|
)
|
|
(547.6
|
)
|
|
(412.8
|
)
|
|||
Financing activities
|
|
|
|
|
|
||||||
Net increase in book overdrafts
|
17.7
|
|
|
10.7
|
|
|
9.9
|
|
|||
Net (decrease) increase in borrowings from lines of credit
|
(59.5
|
)
|
|
140.0
|
|
|
—
|
|
|||
Net increase in obligations collateralized by finance receivables
|
96.8
|
|
|
349.8
|
|
|
99.6
|
|
|||
Proceeds from long-term debt
|
1,336.5
|
|
|
—
|
|
|
1,767.2
|
|
|||
Payments for debt issuance costs/amendments
|
(32.8
|
)
|
|
(10.9
|
)
|
|
(12.3
|
)
|
|||
Payments on long-term debt
|
(662.6
|
)
|
|
(21.5
|
)
|
|
(1,785.1
|
)
|
|||
Payments on capital leases
|
(25.6
|
)
|
|
(20.5
|
)
|
|
(19.4
|
)
|
|||
Payments of contingent consideration and deferred acquisition costs
|
(3.6
|
)
|
|
(1.2
|
)
|
|
(0.2
|
)
|
|||
Initial net investment for interest rate caps
|
—
|
|
|
(2.2
|
)
|
|
—
|
|
|||
Issuance of common stock under stock plans
|
6.6
|
|
|
22.7
|
|
|
27.6
|
|
|||
Excess tax benefit from stock-based compensation
|
17.2
|
|
|
7.1
|
|
|
4.1
|
|
|||
Repurchase and retirement of common stock
|
(80.4
|
)
|
|
(227.6
|
)
|
|
—
|
|
|||
Dividends paid to stockholders
|
(157.1
|
)
|
|
(151.9
|
)
|
|
(139.9
|
)
|
|||
Net cash provided by (used by) financing activities
|
453.2
|
|
|
94.5
|
|
|
(48.5
|
)
|
|||
Effect of exchange rate changes on cash
|
(1.9
|
)
|
|
(19.8
|
)
|
|
(8.7
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
46.8
|
|
|
2.1
|
|
|
(38.7
|
)
|
|||
Cash and cash equivalents at beginning of period
|
155.0
|
|
|
152.9
|
|
|
191.6
|
|
|||
Cash and cash equivalents at end of period
|
$
|
201.8
|
|
|
$
|
155.0
|
|
|
$
|
152.9
|
|
Cash paid for interest
|
$
|
124.5
|
|
|
$
|
79.7
|
|
|
$
|
75.9
|
|
Cash paid for taxes, net of refunds
|
$
|
121.6
|
|
|
$
|
129.9
|
|
|
$
|
102.2
|
|
•
|
"we," "us," "our" and "the Company" refer, collectively, to KAR Auction Services, Inc. and all of its subsidiaries;
|
•
|
"ADESA" or "ADESA Auctions" refer, collectively, to ADESA, Inc., a wholly-owned subsidiary of KAR Auction Services, and ADESA, Inc.'s subsidiaries, including Openlane, Inc. (together with Openlane, Inc.'s subsidiaries, "Openlane") and ADESA Remarketing Limited (formerly known as GRS Remarketing Limited ("GRS" or "ADESA Remarketing Limited"));
|
•
|
"AFC" refers, collectively, to Automotive Finance Corporation, a wholly-owned subsidiary of ADESA, and Automotive Finance Corporation's subsidiaries and other related entities, including PWI Holdings, Inc.;
|
•
|
"Credit Agreement" refers to the Amended and Restated Credit Agreement, dated March 11, 2014, as amended on March 9, 2016, among KAR Auction Services, as the borrower, the several banks and other financial institutions or entities from time to time parties thereto and the administrative agent;
|
•
|
"Original Credit Agreement" refers to the Credit Agreement, dated May 19, 2011, as amended on November 29, 2012 and March 12, 2013, among KAR Auction Services, as the borrower, the several banks and other financial institutions or entities from time to time parties thereto and the administrative agent;
|
•
|
"Credit Facility" refers to the
three
-year senior secured term loan B-1 facility ("Term Loan B-1"), the
seven
-year senior secured term loan B-2 facility ("Term Loan B-2"), the
seven
-year senior secured term loan B-3 facility ("Term Loan B-3"), the
$300 million
,
five
-year senior secured revolving credit facility (the "revolving credit facility") and the
$250 million
,
five
-year senior secured revolving credit facility (the "old revolving credit facility"), the terms of which are set forth in the Credit Agreement. Term Loan B-1 and the old revolving credit facility were extinguished in March 2016 with proceeds received from Term Loan B-3;
|
•
|
"Original Credit Facility" refers to the
six
-year senior secured term loan facility ("Term Loan B") and the
$250 million
,
five
-year senior secured revolving credit facility, the terms of which are set forth in the Original Credit Agreement;
|
•
|
"IAA" refers, collectively, to Insurance Auto Auctions, Inc., a wholly-owned subsidiary of KAR Auction Services, and Insurance Auto Auctions, Inc.'s subsidiaries and other related entities, including HBC Vehicle Services Limited ("HBC"); and
|
•
|
"KAR Auction Services" refers to KAR Auction Services, Inc. and not to its subsidiaries.
|
|
Originally Reported
|
|
Reclassified
|
|
As Adjusted
|
||||||
Unamortized debt issuance costs
|
$
|
20.3
|
|
|
$
|
(20.3
|
)
|
|
$
|
—
|
|
Obligations collateralized by finance receivables
|
1,201.2
|
|
|
(12.2
|
)
|
|
1,189.0
|
|
|||
Long-term debt
|
1,719.3
|
|
|
(8.1
|
)
|
|
1,711.2
|
|
|
Year Ended December 31,
|
||||||||||
AFC Revenue (In millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Interest and fee income
|
$
|
275.1
|
|
|
$
|
246.8
|
|
|
$
|
225.0
|
|
Other revenue
|
10.3
|
|
|
9.7
|
|
|
11.9
|
|
|||
Provision for credit losses
|
(30.7
|
)
|
|
(16.0
|
)
|
|
(12.3
|
)
|
|||
Other service revenue
|
32.1
|
|
|
27.9
|
|
|
25.5
|
|
|||
|
$
|
286.8
|
|
|
$
|
268.4
|
|
|
$
|
250.1
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
PRSUs
|
$
|
10.3
|
|
|
$
|
6.1
|
|
|
$
|
3.5
|
|
RSUs
|
5.9
|
|
|
2.5
|
|
|
—
|
|
|||
Service options
|
1.9
|
|
|
3.1
|
|
|
3.6
|
|
|||
Exit options
|
—
|
|
|
—
|
|
|
20.9
|
|
|||
Total stock-based compensation expense
|
$
|
18.1
|
|
|
$
|
11.7
|
|
|
$
|
28.0
|
|
Restricted Stock Units
|
|
Number
|
|
Weighted Average Grant Date Fair Value
|
|||
RSUs at January 1, 2016
|
|
240,387
|
|
|
$
|
37.04
|
|
Granted
|
|
285,386
|
|
|
34.91
|
|
|
Vested
|
|
(82,860
|
)
|
|
36.96
|
|
|
Forfeited
|
|
(25,201
|
)
|
|
35.78
|
|
|
RSUs at December 31, 2016
|
|
417,712
|
|
|
$
|
35.67
|
|
Amount Vested
|
|
Vesting Conditions
|
|
Vested & Exercisable Date
|
25% of exit options vested and became exercisable when
|
|
(i) the fair market value of Company common stock exceeded $20.00
|
|
March 2013
|
An additional 25% of exit options vested and became exercisable when
|
|
(i) the fair market value of Company common stock exceeded $25.00
|
|
August 2013
|
An additional 25% of exit options vested and became exercisable when
|
|
(i) the fair market value of Company common stock exceeded $30.00
|
|
March 2014
|
An additional 25% of exit options vested and became exercisable when
|
|
(i) the fair market value of Company common stock exceeds $35.00
|
|
March 2015
|
Service Options
|
Number
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
(in millions)
|
|||||
Outstanding at January 1, 2016
|
2,163,329
|
|
|
$
|
21.66
|
|
|
|
|
|
|
|
Granted
|
—
|
|
|
N/A
|
|
|
|
|
|
|
||
Exercised
|
(429,274
|
)
|
|
17.57
|
|
|
|
|
|
|
||
Forfeited
|
(28,760
|
)
|
|
25.66
|
|
|
|
|
|
|
||
Canceled
|
(17,370
|
)
|
|
25.87
|
|
|
|
|
|
|
||
Outstanding at December 31, 2016
|
1,687,925
|
|
|
$
|
22.59
|
|
|
5.8 years
|
|
$
|
33.8
|
|
Exercisable at December 31, 2016
|
1,149,057
|
|
|
$
|
19.45
|
|
|
5.1 years
|
|
$
|
26.6
|
|
Exit Options
|
Number
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
(in millions)
|
|||||
Outstanding at January 1, 2016
|
1,808,428
|
|
|
$
|
11.27
|
|
|
|
|
|
|
|
Granted
|
—
|
|
|
N/A
|
|
|
|
|
|
|
||
Exercised
|
(817,152
|
)
|
|
10.54
|
|
|
|
|
|
|
||
Forfeited
|
—
|
|
|
N/A
|
|
|
|
|
|
|
||
Canceled
|
—
|
|
|
N/A
|
|
|
|
|
|
|
||
Outstanding at December 31, 2016
|
991,276
|
|
|
$
|
11.90
|
|
|
2.0 years
|
|
$
|
30.4
|
|
Exercisable at December 31, 2016
|
991,276
|
|
|
$
|
11.90
|
|
|
2.0 years
|
|
$
|
30.4
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Net income
|
$
|
222.4
|
|
|
$
|
214.6
|
|
|
$
|
169.3
|
|
Weighted average common shares outstanding
|
137.6
|
|
|
140.1
|
|
|
140.2
|
|
|||
Effect of dilutive stock options and restricted stock awards
|
1.5
|
|
|
2.2
|
|
|
1.6
|
|
|||
Weighted average common shares outstanding and potential common shares
|
139.1
|
|
|
142.3
|
|
|
141.8
|
|
|||
Net income per share
|
|
|
|
|
|
||||||
Basic
|
$
|
1.62
|
|
|
$
|
1.53
|
|
|
$
|
1.21
|
|
Diluted
|
$
|
1.60
|
|
|
$
|
1.51
|
|
|
$
|
1.19
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Allowance for Credit Losses
|
|
|
|
|
|
||||||
Balance at beginning of period
|
$
|
9.0
|
|
|
$
|
8.0
|
|
|
$
|
8.0
|
|
Provision for credit losses
|
30.7
|
|
|
16.0
|
|
|
12.3
|
|
|||
Recoveries
|
4.2
|
|
|
4.1
|
|
|
3.5
|
|
|||
Less charge-offs
|
(31.9
|
)
|
|
(19.1
|
)
|
|
(15.8
|
)
|
|||
Balance at end of period
|
$
|
12.0
|
|
|
$
|
9.0
|
|
|
$
|
8.0
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Allowance for Doubtful Accounts
|
|
|
|
|
|
||||||
Balance at beginning of period
|
$
|
6.6
|
|
|
$
|
6.3
|
|
|
$
|
4.8
|
|
Provision for credit losses
|
9.8
|
|
|
2.8
|
|
|
4.3
|
|
|||
Less net charge-offs
|
(3.4
|
)
|
|
(2.5
|
)
|
|
(2.8
|
)
|
|||
Balance at end of period
|
$
|
13.0
|
|
|
$
|
6.6
|
|
|
$
|
6.3
|
|
|
December 31, 2016
|
|
Net Credit Losses
During 2016
|
||||||||
|
Principal Amount of:
|
|
|||||||||
(in millions)
|
Receivables
|
|
Receivables
Delinquent
|
|
|||||||
Floorplan receivables
|
$
|
1,781.1
|
|
|
$
|
12.0
|
|
|
$
|
27.7
|
|
Other loans
|
11.1
|
|
|
—
|
|
|
—
|
|
|||
Total receivables managed
|
$
|
1,792.2
|
|
|
$
|
12.0
|
|
|
$
|
27.7
|
|
|
December 31, 2015
|
|
Net Credit Losses
During 2015
|
||||||||
|
Principal Amount of:
|
|
|||||||||
(in millions)
|
Receivables
|
|
Receivables
Delinquent
|
|
|||||||
Floorplan receivables
|
$
|
1,635.5
|
|
|
$
|
7.0
|
|
|
$
|
15.0
|
|
Other loans
|
5.5
|
|
|
—
|
|
|
—
|
|
|||
Total receivables managed
|
$
|
1,641.0
|
|
|
$
|
7.0
|
|
|
$
|
15.0
|
|
|
December 31,
2016 |
|
December 31,
2015 |
||||
Obligations collateralized by finance receivables, gross
|
$
|
1,300.0
|
|
|
$
|
1,201.2
|
|
Unamortized securitization issuance costs
|
(19.7
|
)
|
|
(12.2
|
)
|
||
Obligations collateralized by finance receivables
|
$
|
1,280.3
|
|
|
$
|
1,189.0
|
|
|
ADESA
Auctions
|
|
IAA
|
|
AFC
|
|
Total
|
||||||||
Balance at December 31, 2014
|
$
|
962.7
|
|
|
$
|
523.5
|
|
|
$
|
219.0
|
|
|
$
|
1,705.2
|
|
Increase for acquisition activity
|
77.6
|
|
|
14.7
|
|
|
—
|
|
|
92.3
|
|
||||
Other
|
(0.9
|
)
|
|
(0.7
|
)
|
|
—
|
|
|
(1.6
|
)
|
||||
Balance at December 31, 2015
|
$
|
1,039.4
|
|
|
$
|
537.5
|
|
|
$
|
219.0
|
|
|
$
|
1,795.9
|
|
Increase for acquisition activity
|
224.1
|
|
|
0.8
|
|
|
44.7
|
|
|
269.6
|
|
||||
Other
|
(6.6
|
)
|
|
(1.9
|
)
|
|
—
|
|
|
(8.5
|
)
|
||||
Balance at December 31, 2016
|
$
|
1,256.9
|
|
|
$
|
536.4
|
|
|
$
|
263.7
|
|
|
$
|
2,057.0
|
|
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||||||||||
|
Useful
Lives
(in years)
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Carrying
Value
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Carrying
Value
|
||||||||||||
Customer relationships
|
5 - 19
|
|
$
|
1,168.8
|
|
|
$
|
(707.8
|
)
|
|
$
|
461.0
|
|
|
$
|
1,037.0
|
|
|
$
|
(619.3
|
)
|
|
$
|
417.7
|
|
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||||||||||
|
Useful Lives
(in years)
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Carrying
Value
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Carrying
Value
|
||||||||||||
Tradenames
|
2 - Indefinite
|
|
$
|
201.1
|
|
|
$
|
(6.9
|
)
|
|
$
|
194.2
|
|
|
$
|
199.2
|
|
|
$
|
(5.3
|
)
|
|
$
|
193.9
|
|
Computer software & technology
|
3 - 13
|
|
404.8
|
|
|
(279.7
|
)
|
|
125.1
|
|
|
354.2
|
|
|
(238.3
|
)
|
|
115.9
|
|
||||||
Covenants not to compete
|
1 - 5
|
|
15.8
|
|
|
(15.0
|
)
|
|
0.8
|
|
|
15.5
|
|
|
(14.5
|
)
|
|
1.0
|
|
||||||
Total
|
|
|
$
|
621.7
|
|
|
$
|
(301.6
|
)
|
|
$
|
320.1
|
|
|
$
|
568.9
|
|
|
$
|
(258.1
|
)
|
|
$
|
310.8
|
|
|
Useful Lives
(in years)
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||||
Land
|
|
|
$
|
266.4
|
|
|
$
|
236.8
|
|
Buildings
|
5 - 40
|
|
244.7
|
|
|
217.0
|
|
||
Land improvements
|
5 - 20
|
|
167.7
|
|
|
149.1
|
|
||
Building and leasehold improvements
|
3 - 33
|
|
384.5
|
|
|
348.4
|
|
||
Furniture, fixtures and equipment
|
1 - 10
|
|
388.6
|
|
|
325.5
|
|
||
Vehicles
|
3 - 10
|
|
19.1
|
|
|
15.0
|
|
||
Construction in progress
|
|
|
27.1
|
|
|
44.7
|
|
||
|
|
|
1,498.1
|
|
|
1,336.5
|
|
||
Accumulated depreciation
|
|
|
(655.6
|
)
|
|
(569.6
|
)
|
||
Property and equipment, net
|
|
|
$
|
842.5
|
|
|
$
|
766.9
|
|
|
December 31,
|
||||||
Classes of Property
|
2016
|
|
2015
|
||||
Furniture, fixtures and equipment
|
$
|
149.2
|
|
|
$
|
120.4
|
|
Accumulated depreciation
|
(94.2
|
)
|
|
(71.3
|
)
|
||
Capital lease assets
|
$
|
55.0
|
|
|
$
|
49.1
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Balance at beginning of period
|
$
|
36.1
|
|
|
$
|
33.3
|
|
|
$
|
27.8
|
|
Net payments
|
(76.5
|
)
|
|
(66.3
|
)
|
|
(55.8
|
)
|
|||
Expense
|
83.5
|
|
|
69.1
|
|
|
61.3
|
|
|||
Balance at end of period
|
$
|
43.1
|
|
|
$
|
36.1
|
|
|
$
|
33.3
|
|
|
|
|
|
|
|
|
December 31,
|
||||||
|
Interest Rate*
|
|
Maturity
|
|
2016
|
|
2015
|
||||||
Term Loan B-1
|
LIBOR
|
|
+ 2.50%
|
|
March 11, 2017
|
|
$
|
—
|
|
|
$
|
637.2
|
|
Term Loan B-2
|
Adjusted LIBOR
|
|
+ 3.1875%
|
|
March 11, 2021
|
|
1,082.7
|
|
|
1,098.0
|
|
||
Term Loan B-3
|
Adjusted LIBOR
|
|
+ 3.50%
|
|
March 9, 2023
|
|
1,339.9
|
|
|
—
|
|
||
Revolving credit facility
|
Adjusted LIBOR
|
|
+ 2.50%
|
|
March 9, 2021
|
|
80.5
|
|
|
—
|
|
||
Old revolving credit facility
|
LIBOR
|
|
+ 2.25%
|
|
March 11, 2019
|
|
—
|
|
|
140.0
|
|
||
Canadian line of credit
|
CAD Prime
|
|
+ 0.50%
|
|
Repayable upon demand
|
|
—
|
|
|
—
|
|
||
Total debt
|
|
|
|
|
|
|
2,503.1
|
|
|
1,875.2
|
|
||
Unamortized debt issuance costs/discounts
|
|
|
|
|
|
(32.8
|
)
|
|
(10.1
|
)
|
|||
Current portion of long-term debt
|
|
|
|
|
|
|
(105.2
|
)
|
|
(153.9
|
)
|
||
Long-term debt
|
|
|
|
|
|
|
$
|
2,365.1
|
|
|
$
|
1,711.2
|
|
2017
|
$
|
105.2
|
|
2018
|
24.7
|
|
|
2019
|
24.7
|
|
|
2020
|
24.7
|
|
|
2021
|
1,051.4
|
|
|
Thereafter
|
1,272.4
|
|
|
|
$
|
2,503.1
|
|
•
|
In August 2015, we purchased
three
interest rate caps for an aggregate amount of approximately
$1.5 million
with an aggregate notional amount of
$800 million
to manage our exposure to interest rate movements on our variable rate Credit Facility if/when
three-month LIBOR
(i) exceeded
2.0%
between August 19, 2015 (the effective date) and September 29, 2016 and (ii) exceeds
1.75%
between September 30, 2016 and August 19, 2017 (the maturity date).
|
•
|
In April 2015, we purchased
two
interest rate caps for an aggregate amount of approximately
$0.7 million
with an aggregate notional amount of
$400 million
to manage our exposure to interest rate movements on our variable rate Credit Facility when
three-month LIBOR
exceeds
1.5%
. The interest rate cap agreements each had an effective date of April 16, 2015 and each matures on March 31, 2017.
|
•
|
In August 2013, we purchased
four
interest rate caps for an aggregate amount of approximately
$2.2 million
with an aggregate notional amount of
$1.2 billion
to manage our exposure to interest rate movements on our variable rate Credit Facility if/when
three-month LIBOR
exceeded
1.0%
. The interest rate cap agreements each matured on August 16, 2015.
|
|
|
Asset Derivatives
|
||||||||||
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||
Derivatives Not Designated as Hedging Instruments
|
|
Balance Sheet Location
|
|
Fair Value
|
|
Balance Sheet Location
|
|
Fair Value
|
||||
2015 Interest rate caps
|
|
Other assets
|
|
$
|
—
|
|
|
Other assets
|
|
$
|
0.7
|
|
|
|
Location of Gain / (Loss) Recognized in Income on Derivatives
|
|
Amount of Gain / (Loss)
Recognized in Income on Derivatives
|
||||||||||
|
|
|
Year Ended December 31,
|
|||||||||||
Derivatives Not Designated as Hedging Instruments
|
|
|
2016
|
|
2015
|
|
2014
|
|||||||
2015 Interest rate caps
|
|
Interest expense
|
|
$
|
(0.7
|
)
|
|
$
|
(1.5
|
)
|
|
N/A
|
|
|
2013 Interest rate caps
|
|
Interest expense
|
|
N/A
|
|
|
—
|
|
|
(0.8
|
)
|
|
Operating
Leases
|
|
Capital
Leases
|
||||
2017
|
$
|
121.7
|
|
|
$
|
27.2
|
|
2018
|
115.0
|
|
|
17.9
|
|
||
2019
|
105.2
|
|
|
7.2
|
|
||
2020
|
94.5
|
|
|
0.1
|
|
||
2021
|
88.1
|
|
|
0.1
|
|
||
Thereafter
|
594.4
|
|
|
—
|
|
||
|
$
|
1,118.9
|
|
|
$
|
52.5
|
|
Less: interest portion of capital leases
|
|
|
|
0.8
|
|
||
Total
|
|
|
|
$
|
51.7
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Income before income taxes:
|
|
|
|
|
|
||||||
Domestic
|
$
|
265.8
|
|
|
$
|
259.5
|
|
|
$
|
199.3
|
|
Foreign
|
89.5
|
|
|
81.0
|
|
|
65.7
|
|
|||
Total
|
$
|
355.3
|
|
|
$
|
340.5
|
|
|
$
|
265.0
|
|
Income tax expense (benefit):
|
|
|
|
|
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
100.1
|
|
|
$
|
88.6
|
|
|
$
|
87.0
|
|
Foreign
|
22.9
|
|
|
22.6
|
|
|
21.1
|
|
|||
State
|
14.1
|
|
|
9.7
|
|
|
12.1
|
|
|||
Total current provision
|
137.1
|
|
|
120.9
|
|
|
120.2
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
(1.6
|
)
|
|
6.5
|
|
|
(18.6
|
)
|
|||
Foreign
|
(2.4
|
)
|
|
(1.8
|
)
|
|
(2.2
|
)
|
|||
State
|
(0.2
|
)
|
|
0.3
|
|
|
(3.7
|
)
|
|||
Total deferred provision
|
(4.2
|
)
|
|
5.0
|
|
|
(24.5
|
)
|
|||
Income tax expense
|
$
|
132.9
|
|
|
$
|
125.9
|
|
|
$
|
95.7
|
|
|
Year Ended December 31,
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
Statutory rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State and local income taxes, net
|
2.4
|
%
|
|
2.1
|
%
|
|
3.0
|
%
|
Reserves for tax exposures
|
(0.2
|
)%
|
|
0.3
|
%
|
|
(0.1
|
)%
|
Change in valuation allowance
|
0.6
|
%
|
|
0.3
|
%
|
|
(0.2
|
)%
|
International operations
|
(0.8
|
)%
|
|
(1.2
|
)%
|
|
(0.6
|
)%
|
Other, net
|
0.4
|
%
|
|
0.5
|
%
|
|
(1.0
|
)%
|
Effective rate
|
37.4
|
%
|
|
37.0
|
%
|
|
36.1
|
%
|
|
2016
|
|
2015
|
||||
Gross deferred tax assets:
|
|
|
|
||||
Allowances for trade and finance receivables
|
$
|
9.1
|
|
|
$
|
5.5
|
|
Accruals and liabilities
|
62.6
|
|
|
54.1
|
|
||
Employee benefits and compensation
|
30.6
|
|
|
27.2
|
|
||
Net operating loss carryforwards
|
25.1
|
|
|
26.7
|
|
||
Investment basis difference
|
4.1
|
|
|
2.6
|
|
||
Other
|
11.6
|
|
|
9.9
|
|
||
Total deferred tax assets
|
143.1
|
|
|
126.0
|
|
||
Deferred tax asset valuation allowance
|
(26.4
|
)
|
|
(21.2
|
)
|
||
Total
|
116.7
|
|
|
104.8
|
|
||
Gross deferred tax liabilities:
|
|
|
|
||||
Property and equipment
|
(120.0
|
)
|
|
(104.4
|
)
|
||
Goodwill and intangible assets
|
(274.6
|
)
|
|
(293.4
|
)
|
||
Other
|
(13.8
|
)
|
|
(7.8
|
)
|
||
Total
|
(408.4
|
)
|
|
(405.6
|
)
|
||
Net deferred tax liabilities
|
$
|
(291.7
|
)
|
|
$
|
(300.8
|
)
|
2017
|
$
|
0.3
|
|
2018
|
0.2
|
|
|
2019
|
0.2
|
|
|
2020
|
0.8
|
|
|
2021
|
0.8
|
|
|
2022 to 2036
|
22.8
|
|
|
|
$
|
25.1
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Balance at beginning of period
|
$
|
14.9
|
|
|
$
|
18.6
|
|
Increase in prior year tax positions
|
1.2
|
|
|
—
|
|
||
Decrease in prior year tax positions
|
—
|
|
|
(1.9
|
)
|
||
Increase in current year tax positions
|
1.4
|
|
|
1.2
|
|
||
Settlements
|
—
|
|
|
—
|
|
||
Lapse in statute of limitations
|
(3.5
|
)
|
|
(3.0
|
)
|
||
Balance at end of period
|
$
|
14.0
|
|
|
$
|
14.9
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Foreign currency translation loss
|
$
|
(49.4
|
)
|
|
$
|
(40.3
|
)
|
Unrealized gain on postretirement benefit obligation, net of tax
|
0.1
|
|
|
0.1
|
|
||
Accumulated other comprehensive loss
|
$
|
(49.3
|
)
|
|
$
|
(40.2
|
)
|
|
ADESA
Auctions |
|
IAA
|
|
AFC
|
|
Holding
Company |
|
Consolidated
|
||||||||||
Operating revenues
|
$
|
1,765.3
|
|
|
$
|
1,098.0
|
|
|
$
|
286.8
|
|
|
$
|
—
|
|
|
$
|
3,150.1
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of services (exclusive of depreciation and amortization)
|
1,036.5
|
|
|
708.0
|
|
|
82.9
|
|
|
—
|
|
|
1,827.4
|
|
|||||
Selling, general and administrative
|
327.0
|
|
|
104.2
|
|
|
28.7
|
|
|
123.2
|
|
|
583.1
|
|
|||||
Depreciation and amortization
|
100.0
|
|
|
87.9
|
|
|
31.1
|
|
|
21.6
|
|
|
240.6
|
|
|||||
Total operating expenses
|
1,463.5
|
|
|
900.1
|
|
|
142.7
|
|
|
144.8
|
|
|
2,651.1
|
|
|||||
Operating profit (loss)
|
301.8
|
|
|
197.9
|
|
|
144.1
|
|
|
(144.8
|
)
|
|
499.0
|
|
|||||
Interest expense
|
0.1
|
|
|
—
|
|
|
34.1
|
|
|
104.6
|
|
|
138.8
|
|
|||||
Other (income) expense, net
|
(0.5
|
)
|
|
(0.6
|
)
|
|
—
|
|
|
0.6
|
|
|
(0.5
|
)
|
|||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
1.4
|
|
|
4.0
|
|
|
5.4
|
|
|||||
Intercompany expense (income)
|
52.6
|
|
|
38.1
|
|
|
(33.8
|
)
|
|
(56.9
|
)
|
|
—
|
|
|||||
Income (loss) before income taxes
|
249.6
|
|
|
160.4
|
|
|
142.4
|
|
|
(197.1
|
)
|
|
355.3
|
|
|||||
Income taxes
|
92.7
|
|
|
59.3
|
|
|
54.0
|
|
|
(73.1
|
)
|
|
132.9
|
|
|||||
Net income (loss)
|
$
|
156.9
|
|
|
$
|
101.1
|
|
|
$
|
88.4
|
|
|
$
|
(124.0
|
)
|
|
$
|
222.4
|
|
Total assets
|
$
|
2,898.0
|
|
|
$
|
1,358.9
|
|
|
$
|
2,213.8
|
|
|
$
|
86.9
|
|
|
$
|
6,557.6
|
|
Capital expenditures
|
$
|
74.8
|
|
|
$
|
41.1
|
|
|
$
|
7.3
|
|
|
$
|
31.9
|
|
|
$
|
155.1
|
|
|
ADESA
Auctions
|
|
IAA
|
|
AFC
|
|
Holding
Company
|
|
Consolidated
|
||||||||||
Operating revenues
|
$
|
1,427.8
|
|
|
$
|
994.4
|
|
|
$
|
268.4
|
|
|
$
|
—
|
|
|
$
|
2,690.6
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of services (exclusive of depreciation and amortization)
|
836.9
|
|
|
633.6
|
|
|
78.0
|
|
|
—
|
|
|
1,548.5
|
|
|||||
Selling, general and administrative
|
276.6
|
|
|
98.1
|
|
|
27.8
|
|
|
99.5
|
|
|
502.0
|
|
|||||
Depreciation and amortization
|
86.2
|
|
|
80.8
|
|
|
30.8
|
|
|
15.0
|
|
|
212.8
|
|
|||||
Total operating expenses
|
1,199.7
|
|
|
812.5
|
|
|
136.6
|
|
|
114.5
|
|
|
2,263.3
|
|
|||||
Operating profit (loss)
|
228.1
|
|
|
181.9
|
|
|
131.8
|
|
|
(114.5
|
)
|
|
427.3
|
|
|||||
Interest expense
|
0.7
|
|
|
—
|
|
|
24.1
|
|
|
66.6
|
|
|
91.4
|
|
|||||
Other (income) expense, net
|
(1.7
|
)
|
|
(1.7
|
)
|
|
(1.5
|
)
|
|
0.3
|
|
|
(4.6
|
)
|
|||||
Intercompany expense (income)
|
57.6
|
|
|
38.4
|
|
|
(25.3
|
)
|
|
(70.7
|
)
|
|
—
|
|
|||||
Income (loss) before income taxes
|
171.5
|
|
|
145.2
|
|
|
134.5
|
|
|
(110.7
|
)
|
|
340.5
|
|
|||||
Income taxes
|
62.3
|
|
|
52.4
|
|
|
51.3
|
|
|
(40.1
|
)
|
|
125.9
|
|
|||||
Net income (loss)
|
$
|
109.2
|
|
|
$
|
92.8
|
|
|
$
|
83.2
|
|
|
$
|
(70.6
|
)
|
|
$
|
214.6
|
|
Total assets
|
$
|
2,390.9
|
|
|
$
|
1,292.1
|
|
|
$
|
2,025.0
|
|
|
$
|
63.5
|
|
|
$
|
5,771.5
|
|
Capital expenditures
|
$
|
70.0
|
|
|
$
|
40.4
|
|
|
$
|
7.0
|
|
|
$
|
17.3
|
|
|
$
|
134.7
|
|
|
ADESA
Auctions
|
|
IAA
|
|
AFC
|
|
Holding
Company
|
|
Consolidated
|
||||||||||
Operating revenues
|
$
|
1,271.0
|
|
|
$
|
895.9
|
|
|
$
|
250.1
|
|
|
$
|
—
|
|
|
$
|
2,417.0
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of services (exclusive of depreciation and amortization)
|
745.9
|
|
|
555.7
|
|
|
69.7
|
|
|
—
|
|
|
1,371.3
|
|
|||||
Selling, general and administrative
|
259.9
|
|
|
98.8
|
|
|
28.8
|
|
|
83.9
|
|
|
471.4
|
|
|||||
Depreciation and amortization
|
80.2
|
|
|
76.2
|
|
|
30.4
|
|
|
9.8
|
|
|
196.6
|
|
|||||
Total operating expenses
|
1,086.0
|
|
|
730.7
|
|
|
128.9
|
|
|
93.7
|
|
|
2,039.3
|
|
|||||
Operating profit (loss)
|
185.0
|
|
|
165.2
|
|
|
121.2
|
|
|
(93.7
|
)
|
|
377.7
|
|
|||||
Interest expense
|
0.9
|
|
|
0.2
|
|
|
18.7
|
|
|
66.4
|
|
|
86.2
|
|
|||||
Other (income) expense, net
|
(2.4
|
)
|
|
(1.6
|
)
|
|
—
|
|
|
0.2
|
|
|
(3.8
|
)
|
|||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
30.3
|
|
|
30.3
|
|
|||||
Intercompany expense (income)
|
56.9
|
|
|
38.5
|
|
|
(22.7
|
)
|
|
(72.7
|
)
|
|
—
|
|
|||||
Income (loss) before income taxes
|
129.6
|
|
|
128.1
|
|
|
125.2
|
|
|
(117.9
|
)
|
|
265.0
|
|
|||||
Income taxes
|
43.2
|
|
|
48.4
|
|
|
48.6
|
|
|
(44.5
|
)
|
|
95.7
|
|
|||||
Net income (loss)
|
$
|
86.4
|
|
|
$
|
79.7
|
|
|
$
|
76.6
|
|
|
$
|
(73.4
|
)
|
|
$
|
169.3
|
|
Total assets
|
$
|
2,272.0
|
|
|
$
|
1,233.8
|
|
|
$
|
1,771.3
|
|
|
$
|
57.7
|
|
|
$
|
5,334.8
|
|
Capital expenditures
|
$
|
42.3
|
|
|
$
|
39.3
|
|
|
$
|
6.4
|
|
|
$
|
13.0
|
|
|
$
|
101.0
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Operating revenues
|
|
|
|
|
|
||||||
U.S.
|
$
|
2,737.6
|
|
|
$
|
2,337.9
|
|
|
$
|
2,094.3
|
|
Foreign
|
412.5
|
|
|
352.7
|
|
|
322.7
|
|
|||
|
$
|
3,150.1
|
|
|
$
|
2,690.6
|
|
|
$
|
2,417.0
|
|
2016 Quarter Ended
|
March 31
|
|
June 30
|
|
Sept. 30
|
|
Dec. 31
|
||||||||
Operating revenues
|
$
|
758.3
|
|
|
$
|
788.5
|
|
|
$
|
789.6
|
|
|
$
|
813.7
|
|
Operating expenses
|
|
|
|
|
|
|
|
||||||||
Cost of services (exclusive of depreciation and amortization)
|
432.0
|
|
|
447.6
|
|
|
459.5
|
|
|
488.3
|
|
||||
Selling, general, and administrative
|
141.1
|
|
|
146.9
|
|
|
146.3
|
|
|
148.8
|
|
||||
Depreciation and amortization
|
56.4
|
|
|
59.0
|
|
|
60.5
|
|
|
64.7
|
|
||||
Total operating expenses
|
629.5
|
|
|
653.5
|
|
|
666.3
|
|
|
701.8
|
|
||||
Operating profit
|
128.8
|
|
|
135.0
|
|
|
123.3
|
|
|
111.9
|
|
||||
Interest expense
|
28.7
|
|
|
35.8
|
|
|
36.3
|
|
|
38.0
|
|
||||
Other (income) expense, net
|
(1.3
|
)
|
|
(0.3
|
)
|
|
0.8
|
|
|
0.3
|
|
||||
Loss on extinguishment of debt
|
4.0
|
|
|
—
|
|
|
—
|
|
|
1.4
|
|
||||
Income before income taxes
|
97.4
|
|
|
99.5
|
|
|
86.2
|
|
|
72.2
|
|
||||
Income taxes
|
36.7
|
|
|
37.7
|
|
|
31.8
|
|
|
26.7
|
|
||||
Net income
|
$
|
60.7
|
|
|
$
|
61.8
|
|
|
$
|
54.4
|
|
|
$
|
45.5
|
|
Basic net income per share of common stock
|
$
|
0.44
|
|
|
$
|
0.45
|
|
|
$
|
0.39
|
|
|
$
|
0.33
|
|
Diluted net income per share of common stock
|
$
|
0.44
|
|
|
$
|
0.44
|
|
|
$
|
0.39
|
|
|
$
|
0.33
|
|
|
|
|
|
|
|
|
|
||||||||
Recorded increase in ADESA operating revenues and cost of services for owned vehicles
|
$
|
13.3
|
|
|
$
|
16.7
|
|
|
$
|
15.8
|
|
|
$
|
14.8
|
|
2015 Quarter Ended
|
March 31
|
|
June 30
|
|
Sept. 30
|
|
Dec. 31
|
||||||||
Operating revenues
|
$
|
645.0
|
|
|
$
|
671.5
|
|
|
$
|
678.4
|
|
|
$
|
695.7
|
|
Operating expenses
|
|
|
|
|
|
|
|
||||||||
Cost of services (exclusive of depreciation and amortization)
|
364.7
|
|
|
379.7
|
|
|
389.8
|
|
|
414.3
|
|
||||
Selling, general, and administrative
|
121.5
|
|
|
123.5
|
|
|
128.5
|
|
|
128.5
|
|
||||
Depreciation and amortization
|
50.9
|
|
|
51.8
|
|
|
54.1
|
|
|
56.0
|
|
||||
Total operating expenses
|
537.1
|
|
|
555.0
|
|
|
572.4
|
|
|
598.8
|
|
||||
Operating profit
|
107.9
|
|
|
116.5
|
|
|
106.0
|
|
|
96.9
|
|
||||
Interest expense
|
21.0
|
|
|
21.8
|
|
|
24.4
|
|
|
24.2
|
|
||||
Other (income) expense, net
|
(2.2
|
)
|
|
0.4
|
|
|
(0.3
|
)
|
|
(2.5
|
)
|
||||
Income before income taxes
|
89.1
|
|
|
94.3
|
|
|
81.9
|
|
|
75.2
|
|
||||
Income taxes
|
34.6
|
|
|
34.8
|
|
|
29.6
|
|
|
26.9
|
|
||||
Net income
|
$
|
54.5
|
|
|
$
|
59.5
|
|
|
$
|
52.3
|
|
|
$
|
48.3
|
|
Basic net income per share of common stock
|
$
|
0.39
|
|
|
$
|
0.42
|
|
|
$
|
0.37
|
|
|
$
|
0.35
|
|
Diluted net income per share of common stock
|
$
|
0.38
|
|
|
$
|
0.41
|
|
|
$
|
0.37
|
|
|
$
|
0.35
|
|
|
|
|
|
|
|
|
|
||||||||
Recorded increase in ADESA operating revenues and cost of services for owned vehicles
|
$
|
12.6
|
|
|
$
|
13.2
|
|
|
$
|
11.7
|
|
|
$
|
13.5
|
|
Plan Category
|
Number of
securities to be
issued upon exercise
of outstanding
options, warrants
and rights(1)
|
|
Weighted-average
exercise price of
outstanding
options,
warrants and
rights(2)
|
|
Number of securities
remaining available for
future issuance under equity
compensation
plans (excluding securities
reflected in first column)(3)
|
||||
Equity compensation plans approved by security holder(s)
|
3,661,231
|
|
|
$
|
18.64
|
|
|
6,768,518
|
|
Equity compensation plans not approved by security holders
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
3,661,231
|
|
|
$
|
18.64
|
|
|
6,768,518
|
|
|
(1)
|
Includes (a) service options, exit options, performance-based restricted stock units ("PRSUs") and restricted stock units ("RSUs") issued under the KAR Auction Services, Inc. 2009 Omnibus Stock and Incentive Plan; and (b) service and exit options issued under the KAR Auction Services, Inc. Stock Incentive Plan. The amount of PRSUs outstanding at target of 564,318 have been included in the table above.
|
(2)
|
Awards issued by KAR Auction Services, Inc. have exercise prices ranging from $10.00 to $30.89. The weighted-average price in the table above only reflects the weighted-average exercise price of outstanding options. The weighted-average exercise price does not include the PRSUs or RSUs.
|
(3)
|
The number of securities available for future issuance includes (a) 6,213,942 shares of common stock that may be issued under the KAR Auction Services, Inc. 2009 Omnibus Stock and Incentive Plan; and (b)
554,576
shares of common stock that may be issued under the KAR Auction Services, Inc. Employee Stock Purchase Plan.
|
a)
|
The following documents have been filed as part of this report or, where noted, incorporated by reference:
|
1)
|
Financial Statements—the consolidated financial statements of KAR Auction Services, Inc. and its consolidated subsidiaries are filed as part of this report under Item 8.
|
2)
|
Financial Statement Schedules—all schedules have been omitted because the matter or conditions are not present or the information required to be set forth therein is included in the consolidated financial statements and related notes thereto.
|
3)
|
Exhibits—the exhibit list in the Exhibit Index is incorporated herein by reference as the list of exhibits required as part of this report.
|
KAR Auction Services, Inc.
|
|
||
|
|
|
|
By:
|
|
/s/ JAMES P. HALLETT
|
|
|
|
James P. Hallett
Chief Executive Officer
|
|
|
|
February 23, 2017
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ JAMES P. HALLETT
|
|
Chief Executive Officer and Chairman of the Board
|
|
February 23, 2017
|
James P. Hallett
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ ERIC M. LOUGHMILLER
|
|
Chief Financial Officer
|
|
February 23, 2017
|
Eric M. Loughmiller
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/s/ TODD F. BOURELL
|
|
Director
|
|
February 23, 2017
|
Todd F. Bourell
|
|
|
||
|
|
|
|
|
/s/ DONNA R. ECTON
|
|
Director
|
|
February 23, 2017
|
Donna R. Ecton
|
|
|
||
|
|
|
|
|
/s/ MARK E. HILL
|
|
Director
|
|
February 23, 2017
|
Mark E. Hill
|
|
|
||
|
|
|
|
|
/s/ J. MARK HOWELL
|
|
Director
|
|
February 23, 2017
|
J. Mark Howell
|
|
|
||
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|
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|
|
/s/ LYNN JOLLIFFE
|
|
Director
|
|
February 23, 2017
|
Lynn Jolliffe
|
|
|
||
|
|
|
|
|
/s/ MICHAEL T. KESTNER
|
|
Director
|
|
February 23, 2017
|
Michael T. Kestner
|
|
|
||
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|
|
|
/s/ JOHN P. LARSON
|
|
Lead Independent Director
|
|
February 23, 2017
|
John P. Larson
|
|
|
||
|
|
|
|
|
/s/ STEPHEN E. SMITH
|
|
Director
|
|
February 23, 2017
|
Stephen E. Smith
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
|||||||
Exhibit No.
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed
Herewith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.1a
|
|
|
Asset Purchase Agreement, dated as of February 17, 2016, by and among ADESA, Inc., Brasher’s
Reno Auto Auction, L.L.C., BIAA, L.L.C., Brasher’s Auto Auctions, West Coast Auto Auctions, Inc.
and the other parties thereto
|
|
8-K
|
|
001-34568
|
|
2.1
|
|
2/18/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.1b
|
|
|
First Amendment to Asset Purchase Agreement, dated as of April 1, 2016, to that certain Asset Purchase Agreement dated as of February 17, 2016, by and among ADESA, Inc., Brasher’s Reno Auto Auction, L.L.C., BIAA, L.L.C., Brasher’s Auto Auctions, West Coast Auto Auctions, Inc. and the other parties thereto
|
|
10-Q
|
|
001-34568
|
|
2.1b
|
|
5/4/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.2
|
|
|
Asset Purchase Agreement, dated as of February 17, 2016, by and among ADESA, Inc., Brasher’s
Auto Auctions and the other parties thereto
|
|
8-K
|
|
001-34568
|
|
2.2
|
|
2/18/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.3
|
|
|
Asset Purchase Agreement, dated as of February 17, 2016, by and among ADESA, Inc., West Coast
Auto Auctions, Inc., Brasher’s Cascade Auto Auction, Inc., Brasher’s Northwest Auto Auction, Inc.,
Brasher’s Sacramento Auto Auction, Inc., Brasher’s Fresno Auto Auction, Inc. and the other parties
thereto
|
|
8-K
|
|
001-34568
|
|
2.3
|
|
2/18/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.1
|
|
|
Amended and Restated Certificate of Incorporation of KAR Auction Services, Inc.
|
|
10-Q
|
|
001-34568
|
|
3.1
|
|
8/3/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.2
|
|
|
Second Amended and Restated By-Laws of KAR Auction Services, Inc.
|
|
8-K
|
|
001-34568
|
|
3.1
|
|
11/4/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.1
|
|
|
Form of common stock certificate
|
|
S-1/A
|
|
333-161907
|
|
4.15
|
|
12/10/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1a
|
|
|
Amendment and Restatement Agreement, dated March 11, 2014, among KAR Auction Services, Inc. and certain of its subsidiaries and JPMorgan Chase Bank, N.A., as administrative agent, swingline lender and issuing lender (the Amended and Restated Credit Agreement and the Amended and Restated Guarantee and Collateral Agreement are included as Exhibits A and B thereto, respectively)
|
|
8-K
|
|
001-34568
|
|
10.1
|
|
3/12/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1b
|
|
|
Incremental Commitment Agreement and First Amendment, dated as of March 9, 2016, among KAR Auction Services, Inc., JPMorgan Chase Bank, N.A., as administrative agent, certain subsidiaries of the Company party thereto and the several lenders party thereto
|
|
8-K
|
|
001-34568
|
|
10.1
|
|
3/9/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.2
|
|
*
|
KAR Auction Services, Inc. (formerly KAR Holdings, Inc.) Stock Incentive Plan
|
|
S-8
|
|
333-164032
|
|
10.1
|
|
12/24/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.3
|
|
*
|
Form of Nonqualified Stock Option Agreement of KAR Auction Services, Inc. (formerly KAR Holdings, Inc.) pursuant to the Stock Incentive Plan
|
|
S-4
|
|
333-148847
|
|
10.15
|
|
1/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.4
|
|
*
|
Employment Agreement, dated February 27, 2012, between KAR Auction Services, Inc. and James P. Hallett
|
|
10-K
|
|
001-34568
|
|
10.15
|
|
2/28/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.5
|
|
*
|
Employment Agreement, dated April 13, 2015, between KAR Auction Services, Inc. and Stephane St-Hilaire
|
|
10-Q
|
|
001-34568
|
|
10.7
|
|
5/6/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
|||||||
Exhibit No.
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed
Herewith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.6
|
|
*
|
Amended and Restated Employment Agreement, dated March 24, 2014, between KAR Auction Services, Inc. and Don Gottwald
|
|
8-K
|
|
001-34568
|
|
10.1
|
|
3/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.7
|
|
*
|
Employment Agreement, dated December 17, 2013, between KAR Auction Services, Inc. and Eric Loughmiller
|
|
8-K
|
|
001-34568
|
|
10.5
|
|
12/17/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.8
|
|
*
|
Employment Agreement, dated May 1, 2014, between KAR Auction Services, Inc. and John Kett
|
|
10-K
|
|
001-34568
|
|
10.10
|
|
2/18/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.9a
|
|
*
|
Employment Agreement, dated December 17, 2013, between KAR Auction Services, Inc. and Peter Kelly
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.9b
|
|
*
|
Amendment to Employment Agreement, dated December 31, 2014, between KAR Auction Services, Inc. and Peter Kelly
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.10
|
|
*
|
KAR Auction Services, Inc. (formerly KAR Holdings, Inc.) Annual Incentive Program (2014)
|
|
10-K
|
|
333-148847
|
|
10.29
|
|
3/11/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.11
|
|
*
|
KAR Auction Services, Inc. Annual Incentive Plan Summary of Terms for Plan Year 2015
|
|
10-Q
|
|
001-34568
|
|
10.11
|
|
5/6/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.12
|
|
*
|
KAR Auction Services, Inc. Annual Incentive Plan Summary of Terms for Plan Year 2016
|
|
10-Q
|
|
001-34568
|
|
10.13
|
|
5/4/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.13
|
|
*
|
KAR Auction Services, Inc. Annual Incentive Program Summary of Terms 2017
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.14a
|
|
^
|
Amended and Restated Purchase and Sale Agreement, dated May 31, 2002, between AFC Funding Corporation and Automotive Finance Corporation
|
|
S-4
|
|
333-148847
|
|
10.32
|
|
1/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.14b
|
|
|
Amendment No. 1 to Amended and Restated Purchase and Sale Agreement, dated June 15, 2004
|
|
S-4
|
|
333-148847
|
|
10.33
|
|
1/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.14c
|
|
|
Amendment No. 2 to Amended and Restated Purchase and Sale Agreement, dated January 18, 2007
|
|
S-4
|
|
333-148847
|
|
10.34
|
|
1/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.14d
|
|
^
|
Amendment No. 3 to Amended and Restated Purchase and Sale Agreement, dated April 20, 2007
|
|
S-4
|
|
333-148847
|
|
10.35
|
|
1/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.14e
|
|
|
Amendment No. 4 to Amended and Restated Purchase and Sale Agreement, dated January 30, 2009
|
|
10-K
|
|
001-34568
|
|
10.19e
|
|
2/28/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.14f
|
|
|
Amendment No. 5 to Amended and Restated Purchase and Sale Agreement, dated April 25, 2011
|
|
10-K
|
|
001-34568
|
|
10.19f
|
|
2/28/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.15
|
|
^
|
Seventh Amended and Restated Receivables Purchase Agreement, dated December 20, 2016, among AFC Funding Corporation, Automotive Finance Corporation, the entities from time to time parties hereto as Purchasers or Purchaser Agents and Bank of Montreal
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.16
|
|
^
|
Fourth Amended and Restated Receivables Purchase Agreement, dated December 20, 2016, between Automotive Finance Canada Inc., KAR Auction Services, Inc. and BNY Trust Company of Canada
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.17a
|
|
|
Ground Lease, dated September 4, 2008, between ADESA San Diego, LLC and First Industrial L.P. (East 39 Acres at Otay Mesa, California)
|
|
8-K
|
|
333-148847
|
|
10.3
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.17b
|
|
|
Guaranty of Lease, dated September 4, 2008, between KAR Auction Services, Inc. (formerly KAR Holdings, Inc.) and First Industrial L.P. (East 39 Acres at Otay Mesa, California)
|
|
8-K
|
|
333-148847
|
|
10.11
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
||||||
Exhibit No.
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed
Herewith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.18a
|
|
Ground Lease, dated September 4, 2008, between ADESA San Diego, LLC and First Industrial L.P. (West 39 Acres at Otay Mesa, California)
|
|
8-K
|
|
333-148847
|
|
10.4
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.18b
|
|
Guaranty of Lease, dated September 4, 2008, between KAR Auction Services, Inc. (formerly KAR Holdings, Inc.) and First Industrial L.P. (West 39 Acres at Otay Mesa, California)
|
|
8-K
|
|
333-148847
|
|
10.12
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.19a
|
|
Ground Lease, dated September 4, 2008, between ADESA California, LLC and ADESA San Diego, LLC and First Industrial Pennsylvania, L.P. (Sacramento, California)
|
|
8-K
|
|
333-148847
|
|
10.5
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.19b
|
|
Guaranty of Lease, dated September 4, 2008, between KAR Auction Services, Inc. (formerly KAR Holdings, Inc.) and First Industrial Pennsylvania, L.P. (Sacramento, California)
|
|
8-K
|
|
333-148847
|
|
10.13
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.20a
|
|
Ground Lease, dated September 4, 2008, between ADESA California, LLC and First Industrial Pennsylvania, L.P. (Tracy, California)
|
|
8-K
|
|
333-148847
|
|
10.6
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.20b
|
|
Guaranty of Lease, dated September 4, 2008, between KAR Auction Services, Inc. (formerly KAR Holdings, Inc.) and First Industrial Pennsylvania, L.P. (Tracy, California)
|
|
8-K
|
|
333-148847
|
|
10.14
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.21a
|
|
Ground Lease, dated September 4, 2008, between ADESA Washington, LLC and First Industrial, L.P. (Auburn, Washington)
|
|
8-K
|
|
333-148847
|
|
10.7
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.21b
|
|
Guaranty of Lease, dated September 4, 2008, between KAR Auction Services, Inc. (formerly KAR Holdings, Inc.) and First Industrial, L.P. (Auburn, Washington)
|
|
8-K
|
|
333-148847
|
|
10.15
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.22a
|
|
Ground Lease, dated September 4, 2008, between ADESA Texas, Inc. and First Industrial, L.P. (Houston, Texas)
|
|
8-K
|
|
333-148847
|
|
10.8
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.22b
|
|
Guaranty of Lease, dated September 4, 2008, between KAR Auction Services, Inc. (formerly KAR Holdings, Inc.) and First Industrial, L.P. (Houston, Texas)
|
|
8-K
|
|
333-148847
|
|
10.16
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.23a
|
|
Ground Lease, dated September 4, 2008, between ADESA Florida, LLC and First Industrial Financing Partnership, L.P. (Bradenton, Florida)
|
|
8-K
|
|
333-148847
|
|
10.10
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.23b
|
|
Guaranty of Lease, dated September 4, 2008, between KAR Auction Services, Inc. (formerly KAR Holdings, Inc.) and First Industrial Financing Partnership, L.P. (Bradenton, Florida)
|
|
8-K
|
|
333-148847
|
|
10.18
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.24a
|
|
Ground Sublease, dated October 3, 2008, between ADESA Atlanta, LLC and First Industrial, L.P. (Fairburn, Georgia)
|
|
10-Q
|
|
333-148847
|
|
10.21
|
|
11/13/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.24b
|
|
Guaranty of Lease, dated October 3, 2008, between KAR Auction Services, Inc. (formerly KAR Holdings, Inc.) and First Industrial, L.P. (Fairburn, Georgia)
|
|
10-Q
|
|
333-148847
|
|
10.22
|
|
11/13/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.25
|
|
Form of Indemnification Agreement
|
|
8-K
|
|
001-34568
|
|
10.1
|
|
12/17/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
|||||||
Exhibit No.
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed
Herewith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.26a
|
|
*
|
KAR Auction Services, Inc. 2009 Omnibus Stock and Incentive Plan, as Amended June 10, 2014
|
|
DEF 14A
|
|
001-34568
|
|
Appendix A
|
|
4/29/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.26b
|
|
*
|
First Amendment to the KAR Auction Services, Inc. 2009 Omnibus Stock and Incentive Plan
|
|
10-K
|
|
001-34568
|
|
10.24b
|
|
2/18/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.27a
|
|
*
|
KAR Auction Services, Inc. Employee Stock Purchase Plan
|
|
S-8
|
|
333-164032
|
|
10.3
|
|
12/24/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.27b
|
|
*
|
Amendment No. 1 to KAR Auction Services, Inc. Employee Stock Purchase Plan dated March 31, 2010
|
|
10-Q
|
|
001-34568
|
|
10.60
|
|
8/4/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.27c
|
|
*
|
Amendment No. 2 to KAR Auction Services, Inc. Employee Stock Purchase Plan dated April 1, 2010
|
|
10-Q
|
|
001-34568
|
|
10.61
|
|
8/4/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.28
|
|
*
|
KAR Auction Services, Inc. Directors Deferred Compensation Plan, effective December 10, 2009
|
|
10-Q
|
|
001-34568
|
|
10.62
|
|
8/4/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.29
|
|
*
|
Form of Director Restricted Share Agreement
|
|
10-Q
|
|
001-34568
|
|
10.63
|
|
8/4/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.30
|
|
*
|
Form of Nonqualified Stock Option Agreement
|
|
S-1/A
|
|
333-161907
|
|
10.65
|
|
12/4/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.31
|
|
*
|
Form of 2015 Restricted Stock Unit Award Agreement for Section 16 Officers
|
|
10-Q
|
|
001-34568
|
|
10.29a
|
|
5/6/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.32
|
|
*
|
Form of 2016 Restricted Stock Unit Award Agreement for Section 16 Officers
|
|
10-K
|
|
001-34568
|
|
10.30
|
|
2/18/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.33
|
|
*
|
Form of 2017 Restricted Stock Unit Award Agreement for Section 16 Officers
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.34
|
|
*
|
Form of Performance-Based Restricted Stock Unit Agreement (Total Shareholder Return Percentile Rank vs. S&P 500)
|
|
8-K
|
|
001-34568
|
|
10.2
|
|
12/17/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.35
|
|
*
|
Form of Performance-Based Restricted Stock Unit Agreement (Cumulative Adjusted Net Income Per Share)
|
|
8-K
|
|
001-34568
|
|
10.1
|
|
3/3/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.36
|
|
*
|
Form of 2015 Performance-Based Restricted Stock Unit Agreement (Cumulative Adjusted Net Income Per Share)
|
|
10-Q
|
|
001-34568
|
|
10.32
|
|
5/6/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.37
|
|
*
|
Form of 2016 Performance-Based Restricted Stock Unit Agreement (Cumulative Operating Adjusted Net Income Per Share)
|
|
10-K
|
|
001-34568
|
|
10.34
|
|
2/18/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.38
|
|
*
|
Form of 2017 Performance-Based Restricted Stock Unit Agreement (Cumulative Operating Adjusted Net Income Per Share)
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21.1
|
|
|
Subsidiaries of KAR Auction Services, Inc.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23.1
|
|
|
Consent of KPMG LLP, Independent Registered Public Accounting Firm
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
Incorporated by Reference
|
|
|
|||||||
Exhibit No.
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed
Herewith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
|
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.2
|
|
|
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.1
|
|
|
Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.2
|
|
|
Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH
|
|
|
XBRL Taxonomy Extension Schema
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.CAL
|
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.DEF
|
|
|
XBRL Taxonomy Extension Definition Linkbase
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.LAB
|
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.PRE
|
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
^
|
Portions of this exhibit have been redacted pursuant to a request for confidential treatment filed separately with the Secretary of the Securities and Exchange Commission pursuant to Rule 406 under the Securities Act of 1933, as amended.
|
|
|
*
|
Denotes management contract or compensation plan, contract or arrangement.
|
(a)
|
Notices
. For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below:
|
“Employer”
|
“Employee”
|
|
|
KAR AUCTION SERVICES, INC.
|
|
|
|
|
|
|
|
By:
/s/ James P. Hallett
|
/s/ Peter Kelly
|
|
|
Printed:
James P. Hallett
|
|
|
|
Title:
Chief Executive Officer
|
|
|
|
|
|
|
ARTICLE I. AMOUNTS AND TERMS OF THE PURCHASES
|
1
|
|
Section 1.1.
|
Purchase Facility
|
1
|
Section 1.2.
|
Making Purchases
|
2
|
Section 1.3.
|
Participation Computation
|
4
|
Section 1.4.
|
Settlement Procedures
|
4
|
Section 1.5.
|
Fees
|
7
|
Section 1.6.
|
Payments and Computations, Etc
|
8
|
Section 1.7.
|
Legal Final Maturity Date
|
8
|
Section 1.8.
|
Increased Costs
|
8
|
Section 1.9.
|
Dilutions; Application of Payments
|
10
|
Section 1.10.
|
Requirements of Law
|
10
|
Section 1.11.
|
Inability to Determine Eurodollar Rate
|
11
|
Section 1.12.
|
Additional and Replacement Purchasers, Increase in Maximum Amount
|
11
|
ARTICLE II. REPRESENTATIONS AND WARRANTIES; COVENANTS; TERMINATION EVENTS
|
13
|
|
Section 2.1.
|
Representations and Warranties; Covenants
|
13
|
Section 2.2.
|
Termination Events
|
13
|
ARTICLE III. INDEMNIFICATION
|
13
|
|
Section 3.1.
|
Indemnities by the Seller
|
13
|
Section 3.2.
|
Indemnities by AFC
|
16
|
Section 3.3.
|
Indemnities by Successor Servicer
|
17
|
ARTICLE IV. ADMINISTRATION AND COLLECTIONS
|
18
|
|
Section 4.1.
|
Appointment of Servicer
|
18
|
Section 4.2.
|
Duties of Servicer; Relationship to Backup Servicing Agreement
|
19
|
Section 4.3.
|
Deposit Accounts; Establishment and Use of Certain Accounts
|
20
|
Section 4.4.
|
Enforcement Rights
|
22
|
Section 4.5.
|
Responsibilities of the Seller
|
23
|
Section 4.6.
|
Servicing Fee
|
23
|
Section 4.7.
|
Specified Ineligible Receivables
|
23
|
|
|
|
|
-i-
|
|
ARTICLE V. THE AGENTS
|
24
|
|
Section 5.1.
|
Appointment and Authorization
|
24
|
Section 5.2.
|
Delegation of Duties
|
25
|
Section 5.3.
|
Exculpatory Provisions
|
25
|
Section 5.4.
|
Reliance by Agents
|
25
|
Section 5.5.
|
Notice of Termination Date
|
26
|
Section 5.6.
|
Non-Reliance on Agent, Purchaser Agents and Other Purchasers
|
26
|
Section 5.7.
|
Agent, Purchaser Agents and Purchasers
|
27
|
Section 5.8.
|
Indemnification
|
27
|
Section 5.9.
|
Successor Agent
|
27
|
ARTICLE VI. MISCELLANEOUS
|
27
|
|
Section 6.1.
|
Amendments, Etc
|
27
|
Section 6.2.
|
Notices, Etc
|
28
|
Section 6.3.
|
Assignability
|
28
|
Section 6.4.
|
Costs, Expenses and Taxes
|
29
|
Section 6.5.
|
No Proceedings; Limitation on Payments
|
30
|
Section 6.6.
|
Confidentiality
|
31
|
Section 6.7.
|
GOVERNING LAW AND JURISDICTION
|
31
|
Section 6.8.
|
Execution in Counterparts
|
31
|
Section 6.9.
|
Survival of Termination
|
31
|
Section 6.10.
|
WAIVER OF JURY TRIAL
|
31
|
Section 6.11.
|
Entire Agreement
|
32
|
Section 6.12.
|
Headings
|
32
|
Section 6.13.
|
Liabilities of the Purchasers
|
32
|
Section 6.14.
|
Tax Treatment
|
32
|
|
-ii-
|
|
|
-i-
|
|
|
2
|
|
|
3
|
|
|
4
|
|
|
5
|
|
|
6
|
|
|
7
|
|
|
8
|
|
|
9
|
|
|
10
|
|
|
11
|
|
|
12
|
|
|
13
|
|
|
14
|
|
|
15
|
|
|
16
|
|
|
17
|
|
|
18
|
|
|
19
|
|
|
20
|
|
|
21
|
|
|
22
|
|
|
23
|
|
|
24
|
|
|
25
|
|
|
26
|
|
|
27
|
|
|
28
|
|
|
29
|
|
|
30
|
|
|
31
|
|
|
32
|
|
|
S-1
|
Seventh Amended and Restated
Receivables Purchase Agreement |
|
S-2
|
Seventh Amended and Restated
Receivables Purchase Agreement |
|
S-3
|
Seventh Amended and Restated
Receivables Purchase Agreement |
|
S-4
|
Seventh Amended and Restated
Receivables Purchase Agreement |
|
S-6
|
Seventh Amended and Restated
Receivables Purchase Agreement |
|
S-6
|
Seventh Amended and Restated
Receivables Purchase Agreement |
|
S-7
|
Seventh Amended and Restated
Receivables Purchase Agreement |
|
S-8
|
Seventh Amended and Restated
Receivables Purchase Agreement |
|
S-9
|
Seventh Amended and Restated
Receivables Purchase Agreement |
/s/ Francesca C. York
_________
Signature |
My Commission Expires:
12-05-24
____________
|
Francesca C. York
___________
Printed Name |
My County of Residence:
Hamilton
____________
|
/s/ Francesca C. York
__________
Signature |
My Commission Expires:
12-05-24
_____________
|
___________________________
Printed Name |
My County of Residence:
Hamilton
_____________
|
|
S-10
|
Seventh Amended and Restated
Receivables Purchase Agreement |
|
EX-I-
1
|
|
|
EX-I-
2
|
|
|
EX-I-
3
|
|
|
EX-I-
4
|
|
|
EX-I-
5
|
|
CPR x I x
ED
+ TF
|
360
|
ED
|
BR x I x 360 + TF
|
BR
|
=
|
the Bank Rate for the applicable portion of the Investment for such Yield Period
|
I
|
=
|
the applicable portion of Investment during such Yield Period
|
CPR
|
=
|
the CP Rate of such Purchaser (or its Related CP Issuer) for the applicable portion of the Investment for such Yield Period
|
ED
|
=
|
the actual number of days during such Yield Period
|
TF
|
=
|
the Termination Fee, if any, for such portion of Investment of the Participation for such Yield Period;
|
|
EX-I-
6
|
|
|
EX-I-
7
|
|
|
EX-I-
8
|
|
|
EX-I-
9
|
|
Eurodollar Rate =
|
(pursuant to clause (i) above) for such day
|
|
EX-I-
10
|
|
|
EX-I-
11
|
|
|
EX-I-
12
|
|
|
EX-I-
13
|
|
|
EX-I-
14
|
|
|
EX-I-
15
|
|
I
|
= the Investment of such Participation at the time of computation as reduced by the amount of cash in the Collection Accounts at the end of business on either (i) with respect to any Servicer Report, the last Business Day of the prior calendar month, or (ii) with respect to any Portfolio Certificate, the last Business Day of the prior calendar week, in each case that was wired to the respective Purchaser on the immediately following Business Day to pay down that Purchaser’s Investment.
|
LR
|
= the Loss Reserve of such Participation at the time of computation (calculated after reducing the Purchaser’s Investment by the amount of cash in the Collection Accounts at the end of business on either (i) with respect to any Servicer Report, the last Business Day of the prior calendar month, or (ii) with respect to any Portfolio Certificate, the last Business Day of the prior calendar week, in each case that was wired to the respective Purchaser on the second immediately following Business Day to pay down that Purchaser’s Investment).
|
DP
|
= the aggregate unfulfilled purchase amounts of all Deferring Purchasers at such time.
|
NRPB
|
= the Net Receivables Pool Balance at the time of computation.
|
LA
|
= the amount on deposit in the Liquidation Account (other than amounts transferred thereto from the Deposit Accounts to pay
|
|
EX-I-
16
|
|
|
EX-I-
17
|
|
|
EX-I-
18
|
|
|
EX-I-
19
|
|
|
EX-I-
20
|
|
|
EX-I-
21
|
|
|
EX-I-
22
|
|
|
EX-I-
23
|
|
|
EX-I-
24
|
|
|
EX-II-
1
|
|
|
EX-II-
2
|
|
|
EX-III-
1
|
|
|
EX-III-
2
|
|
|
EX-III-
3
|
|
|
EX-III-
4
|
|
|
EX-III-
5
|
|
|
EX-III-
6
|
|
|
EX-IV-
1
|
|
|
EX-IV-
2
|
|
|
EX-IV-
3
|
|
|
EX-IV-
4
|
|
|
EX-IV-
5
|
|
|
EX-IV-
6
|
|
|
EX-IV-
7
|
|
|
EX-IV-
8
|
|
|
EX-IV-
9
|
|
|
EX-IV-
10
|
|
|
EX-IV-
11
|
|
|
EX-V-
1
|
|
|
EX-V-
2
|
|
|
EX-V-
3
|
|
|
EX-V-
4
|
|
I\11418185.1
|
EX-VI-
1
|
|
|
|
Reduction for: Special Concentration limit - [*]
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
Reduction for: Special Concentration limit - [*]
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
Reduction for: Special Concentration limit - [*]
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
Reduction for: Special Concentration limit - [*]
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
Reduction for: Special Concentraion limit - [*]
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
Net Receivables Pool Balance
|
2A
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
Liquidation Account balance excess/(deficit)
|
|
|
|
||||
|
|
Amount of Collections on deposit in the Liquidation Account (other than amounts transferred thereto from the Deposit Accounts to pay Discount, Servicing Fee, Unaffiliated Servicing Fee, Backup Servicing Fee, Transition Expenses and Program Fees, Note Placement Fee and Indemnified Amounts)
|
2B
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate Participation TEST:
|
(1) / (2)
|
|
|
||||
|
|
Is Aggregate Participation less than or equal to 100%?
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
Cash Reserve ([*])
|
|
|
|
|
|||
|
|
|
Is Level One Trigger applicable?
|
|
|
|
||
|
|
|
|
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Cash Reserve Account balance
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3A
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Cash Reserve Required Amount (1A * Cash Reserve %)
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3B
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Cash Reserve TEST: (3A must be greater than or equal to 3B)
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IN WITNESS WHEREOF, the SELLER has caused this Portfolio Certificate to be executed and delivered by the Servicer. In addition, as of the date of this Portfolio Certificate, both AFC and AFC Funding are in compliance with all Representations & Warranties and Covenants. Also, no Termination Events or Unmatured Termination Events have occurred under the RPA.
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Automotive Finance Corporation, as Servicer
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By: _________________________________
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Name:
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Title:
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I\11418185.1
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EX-VI-
2
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EX-VII-
1
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EX-VII-
2
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EX-VII-
3
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EX-VII-
4
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SCH-I-1
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Deposit Bank
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Deposit Account
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[*]
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[*]
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[*]
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[*]
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[*]
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[*]
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SCH-II-1
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Net Receivables Pool Balance Calculation
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A.
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Total Pool Receivables
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(A)
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B.
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Specified Ineligible Receivables
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(B)
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C.
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Total Pool Receivables excluding Specified Ineligible Receivables
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(A) - (B)
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(C)
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D.
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Title Attached Receivables
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(D)
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Prior ME Recvs:
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E.
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Receivables subject to Back-up Servicing Fee
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(C) - (D)
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(E)
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|||||
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Note: In calculating NRPB, there should be no duplication of amounts previously reduced from a different category.
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||||||||||
F.
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ineligible Receivables
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|||||||||
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Non-US residents, governmental, or other ineligible obligors
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f1
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Delinquent Receivables
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f2
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Defaulted Receivables
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f3
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Obligors with [*] Defaulted Receivables
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f4
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Short-pays
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f5
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NSF
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f6
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Ineligible Contract Terms
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f7
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Over [*] outstanding
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f8
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Rental [*] on books
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f9
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Other ineligible vehicle types
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f10
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Sold out-of-trust
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f11
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SCH-III-
1
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Obligors subject to bankruptcy or Insolvency Proceedings
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f12
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Rental Receivables ([*])
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f13
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Rental Receivables ([*])
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f14
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Term [*] payoff
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f15
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Total ineligible Receivables
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(sum f)
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(F)
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G.
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Eligible Receivables
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(E) - (F)
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(G)
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H.
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Normal Concentration Percentage
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|||||||||
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Obligor Name
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Amount
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Also, has Rental? Y/N
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Concentration limit
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Normal Concentration Percentage
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Excess concentrations
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Retail Obligors
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[*] * (G)
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0
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h1
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[*] * (G)
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0
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h2
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[*] * (G)
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0
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h3
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[*] * (G)
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0
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h4
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[*] * (G)
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0
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h5
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[*] * (G)
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0
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h6
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[*] * (G)
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0
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h7
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Rental Obligors
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[*] * (G)
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0
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h8
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[*] * (G)
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0
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h9
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[*] * (G)
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0
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h10
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[*] * (G)
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0
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h11
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(sum h)
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0
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(H)
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Reduction to NRPB
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SCH-III-
2
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I.
|
Special Concentration Percentage - Special Obligors
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|||||||||
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Obligor Name
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Amount
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Also, has Rental? Y/N
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Concentration Limit
|
Special Concentration Percentage
|
Excess concentrations
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Retail Obligors
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[*] * (G)
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0
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i1
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[*] * (G)
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0
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i2
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[*] * (G)
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0
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i3
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[*] * (G)
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0
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i4
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[*] * (G)
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0
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i5
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[*] * (G)
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0
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i6
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[*] * (G)
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0
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i7
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[*] * (G)
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0
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i8
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[*] * (G)
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0
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i9
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Rental Obligors
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[*] * (G)
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0
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i10
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[*] * (G)
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0
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i11
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[*] * (G)
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0
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i12
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[*] * (G)
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0
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i13
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(sum i)
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||
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0
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(I)
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Reduction to NRPB
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SCH-III-
3
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J.
|
All Obligors exceeding [*] Normal Concentration limit (aggregate concentration limit [*])
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||||||
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Obligor Name
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Amount
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|
Concentration Limit
|
Normal Concentration Percentage
|
Value of Receivables included for Obligors exceeding [*]
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||
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[*] * (G)
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j1
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[*] * (G)
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j2
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[*] * (G)
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j3
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[*] * (G)
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j4
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[*] * (G)
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j5
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[*] * (G)
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j6
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[*] * (G)
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j7
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[*] * (G)
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j8
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[*] * (G)
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j9
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[*] * (G)
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j10
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[*] * (G)
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j11
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[*] * (G)
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j12
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[*] * (G)
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j13
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|
Total of Special Obligors exceeding [*]
|
(i)
|
|
(sum j)
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|
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|
||
|
[*] Special Concentration Percentage x (G)
|
(ii)
|
|
if (i) > (ii), then (ii) - (i)
|
0
|
|
(J)
|
|
|||
|
Excess concentration
|
|
|
|
|
|
Reduction to NRPB
|
|
|||
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||
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|
|
SCH-III-
4
|
|
K.
|
Special Concentration Percentage - Specialty Vehicles
|
|
|||||||||
|
|
|
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|
|
|
|
|
|
|
|
|
Total Motorcycles (including all-terrain vehicles)
|
(i)
|
|
|
|
|
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|
||
|
All-Terrain Vehicles
|
(ii)
|
|
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|
||
|
All-Terrain Vehicles advance Limit
|
(iii)
|
[*]
|
|
|
|
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|
|
||
|
All Terrain Vehicles discounted amount
|
(ii) x (iii)
|
|
(iv)
|
|
|
|
|
|
||
|
Total Motorcycles discounted amount
|
(i) - (ii) + (iv)
|
|
(x)
|
|
|
|
||||
|
|
Discounted amount
|
|
|
(ii) *([*]-(iii))
|
|
k1
|
|
|||
|
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|
|
Salvage Vehicles
|
(v)
|
|
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|
||
|
Advance limit
|
(vi)
|
[*]
|
|
|
|
|
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|
||
|
Salvage Vehicles discounted amount
|
(v) x (vi)
|
|
(y)
|
|
|
|
||||
|
|
Discounted amount
|
|
|
(v) *([*]-(vi))
|
|
k2
|
|
|||
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|
Marine Crafts
|
(vii)
|
|
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|
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|
||
|
Advance limit
|
(viii)
|
[*]
|
|
|
|
|
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|
||
|
Marine Crafts discounted amount
|
(vii) x (viii)
|
|
(z)
|
|
|
|
||||
|
|
Discounted amount
|
|
|
(vii) *([*]-(viii))
|
|
k3
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|
SCH-III-
5
|
|
|
SCH-III-
6
|
|
M.
|
Special Concentration Percentage - Rental Receivables
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
||
|
Total Rental Receivables
|
|
|
(i)
|
|
|
|
|
|
||
|
Obligor Rental Receivables excess concentrations
|
(ii)
|
|
|
|
|
|
||||
|
Total Rental Receivables, net of Obligor excess concentrations
|
(iii)
|
|
(i) - (ii)
|
|
|
|
||||
|
[*] Special Concentration Percentage * (G)
|
(iv)
|
|
|
|
|
|
||||
|
Excess concentration
|
|
if (iii) > (iv), then (iii) - (iv)
|
|
|
|
(M)
|
||||
|
|
|
|
|
|
|
|
|
Reduction to NRPB
|
||
|
|
|
|
|
|
|
|
|
|
|
|
N.
|
Special Concentration Percentage - Minimum Curtailment Payment
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables (excluding Rental) w/ curtailment pymt [*], but [*]
|
(i)
|
|
|
|
|
|
||||
|
[*] Special Concentration Percentage x (G)
|
(ii)
|
|
|
|
|
|
||||
|
Excess Concentration
|
|
if (i) > (ii), then (i) - (ii)
|
0
|
|
0
|
(N)
|
||||
|
|
|
|
|
|
|
|
|
Reduction to NRPB
|
||
O.
|
Special Concentration Percentage - Auction Credit
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Auction Credits
|
|
|
(i)
|
|
|
|
|
|
||
|
[*] Special Concentration Percentage x (G)
|
(ii)
|
|
|
|
|
|
||||
|
Excess Concentration
|
|
if (i) > (ii), then (i) - (ii)
|
0
|
|
0
|
(O)
|
||||
|
|
|
|
|
|
|
|
|
Reduction to NRPB
|
||
P.
|
Special Concentration Percentage - Term > [*]
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Receivables outstanding [*]
|
(i)
|
|
|
|
|
|
||||
|
[*] Special Concentration Percentage x (G)
|
(ii)
|
|
|
|
|
|
||||
|
Excess Concentration
|
|
if (i) > (ii), then (i) - (ii)
|
0
|
|
0
|
(P)
|
||||
|
|
|
|
|
|
|
|
|
Reduction to NRPB
|
||
Q.
|
Total of discounts and excess concentrations
|
|
(Sum H through P)
|
|
|
(Q)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Receivables Pool Balance
|
|
(G) + (Q)
|
|
|
|
|
SCH-III-
7
|
|
|
SCH-IV-1
|
|
|
SCH-V-1
|
|
|
SCH-VI-1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PURCHASE/PAYDOWN REQUEST
|
||||
|
|
|
|
|
|
For Settlement on:
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TRANSACTION AMOUNT
|
CLIENT NAME: AFC FUNDING CORPORATION
|
|
CURRENT OUTSTANDINGS:
|
|
|||||||
|
|
|
|
|
|
PURCHASE / INCREASE:
|
|
|||
|
|
|
|
|
|
PAYDOWN:
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PURCHASE AMOUNT
|
|
PAYDOWN AMOUNT
|
|
CURRENT OUTSTANDINGS
|
|
REQUESTED OUTSTANDINGS
|
|
MAXIMUM LIMIT
|
|
|
|
|
|
|
|||||
BK OF MONTREAL
|
|
|
|
|
|
|
|
|
|
[*]
|
|
|
|
|
|
|
|
|
|
|
|
FAIRWAY
|
|
|
|
|
|
|
|
|
|
[*]
|
|
|
|
|
|
|
|
|
|
|
|
CHARIOT
|
|
|
|
|
|
|
|
|
|
[*]
|
|
|
|
|
|
|
|
|
|
|
|
FIFTH THIRD
|
|
|
|
|
|
|
|
|
|
[*]
|
|
|
|
|
|
|
|
|
|
|
|
PNC
|
|
|
|
|
|
|
|
|
|
[*]
|
|
|
|
|
|
|
|
|
|
|
|
THUNDER BAY
|
|
|
|
|
|
|
|
|
|
[*]
|
|
|
|
|
|
|
|
|
|
|
|
TOTALS
|
|
|
|
|
|
|
|
|
|
$1,500,000,000.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paydowns
|
|
|
|
|
|
|
|
|
|
|
BMO
|
|
FAIRWAY
|
|
CHARIOT
|
|
FIFTH THIRD
|
|
PNC
|
|
THUNDER BAY
|
|
|
|
|
|
|
|
|
|
|
|
Purchases / Increases
|
|
|
|
|
|
|
|
|
|
|
AFC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AFC Funding Corporation, as Seller
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:____________________
|
|
Dated:_____________________
|
||||
|
|
|
|
Name:
|
|
|
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
Annex A-1
|
|
|
|
|
|
|
|
|
|
|
|
|
||
AFC Funding Corporation
|
|
|
|
|
|
|
|
|
|
|||
Servicer Report
|
|
|
|
|
|
Dated:
|
|
|
|
|||
All amounts in US Dollars
|
|
|
|
|
|
# of Days in Month:
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||
This Servicer report is delivered pursuant to the Seventh Amended and Restated Receivables Purchase Agreement (the “RPA”) dated as of December 20, 2016 among AFC Funding Corporation, as Seller, Automotive Finance Corporation, as Servicer, the entities identified from time to time as Purchasers or Purchaser Agents, and Bank of Montreal, as Agent.
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
Part I
|
Representations & Warranties
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
||
|
The Servicer certifies that (i) the figures on this Servicer Report to be true and complete, (ii) no Termination Events have occurred, (iii) the Representations and Warranties are true and correct, and (iv) the Servicer has satisfied all of its obligations under the Agreement in all material respects, in each case as of the date hereof. In addition, the Servicer confirms that no subservicing arrangements exist.
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
||
|
(Delivered by the Servicer, on behalf of the Seller pursuant to Exhibit IV(l)(iii) of the Receivables Purchase Agreement)
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
||
|
Automotive Finance Corporation
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||
|
By:
|
|
Date:
|
|
|
|
|
|
|
|
||
|
Name: Dwayne Price
|
|
|
|
|
|
|
|
|
|||
|
Title: Assistant Treasurer
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
Annex B-
1
|
|
Part II
|
Maximum Amount, Investment Amount, and Participation as of:
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
Total
|
||
|
Maximum Commitments / Maximum Amount
|
|
|
|
|
|
|
|
||||
|
Commitment %
|
|
|
|
|
|
|
|
|
|
||
1)
|
Aggregate Investment amount
|
|
|
|
|
|
|
|
||||
2)
|
Aggregate unfulfilled purchases pending in connection with Deferred Purchase Date
|
|
|
|
|
|||||||
3)
|
Cash wired from Collection Account
|
|
|
|
|
|
|
|
||||
4)
|
Aggregate Investment of Participations (1 + 2 - 3)
|
|
|
|
|
|
|
|
||||
5)
|
Loss Reserve
|
|
|
|
|
|
|
|
|
|
||
6)
|
Net Receivable Pool Balance + excess in Liq. Acct
|
|
|
|
|
|
|
|
||||
|
Participation ((4 + 5) / 6))
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||
Part III
|
Receivables Rollforward and Aging Information
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||
|
See details as of calendar month end in Section I below.
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
||
Part IV
|
Net Receivables Pool Balance
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||
|
See details as of calendar month end in Section II below.
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||
Part V
|
Reserves (see Section III)
|
$
|
|
%
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||
A.
|
Loss Reserve
|
|
Available overcollateralization
|
|
|
|
|
|
|
|||
|
|
|
Minimum level
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
||
B.
|
Cash Reserve
|
|
Available Cash Reserve
|
|
|
|
|
|
|
|||
|
|
|
Minimum level (min % * Investment)
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
Annex B-
2
|
|
Part VI
|
Termination Events (see Section IV)
|
Actual
|
|
Trigger Level
|
|
|
|
|||||
A.
|
[*]
|
|
|
|
|
|
[*]
|
|
|
|
|
|
B.
|
Eligible Receivables < $100 million
|
|
|
|
100,000,000
|
|
|
|
|
|||
C.
|
[*]
|
|
|
|
|
|
[*]
|
|
|
|
||
D.
|
[*]
|
|
|
|
|
|
[*]
|
|
|
|
||
E.
|
[*]
|
|
|
|
|
|
[*]
|
|
|
|
||
F.
|
[*]
|
|
|
|
|
|
[*]
|
|
|
|
||
G.
|
Net Spread test [*]
|
|
|
|
[*]
|
|
|
|
||||
H.
|
Net Spread test [*]
|
|
|
|
[*]
|
|
|
|
||||
I.
|
[*]
|
|
|
|
|
|
[*]
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
Part VII
|
Financial Triggers & Covenants (see Section V)
|
Actual
|
|
Trigger Level
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||
A.
|
Bankruptcy
|
|
|
|
|
|
|
|
|
|
||
B.
|
Material Adverse Change
|
|
|
|
|
|
|
|
||||
C.
|
ERISA / IRS section 6323 Lien
|
|
|
|
|
|
|
|
||||
D.
|
Change in Control (AFC < 100% of Seller; KAR < 80% of AFC)
|
|
|
|
|
|
|
|||||
E.
|
KAR Financial Covenant violation
|
|
|
|
|
|
|
|
||||
F.
|
Default / cross acceleration of corporate Debt (Seller or AFC > $1MM; KAR > $35MM)
|
|
|
|
|
|
|
|||||
G.
|
Increase to Utilization Fee
|
|
|
|
|
|
|
|
||||
H.
|
AFC consolidated cash equivalents are at least [*] (incl [*] unrestricted cash)
|
|
|
|
|
|
|
|||||
I.
|
Cash Reserve exceeds required amount
|
|
|
|
|
|
|
|
||||
J.
|
Level One Trigger
|
|
|
|
|
|
|
|||||
K.
|
AFC's Debt (excluding AFC Funding & AFCI) > ([*])
|
|
|
[*]
|
|
|
|
|
||||
L.
|
Tangible Net Worth test (AFC)
|
|
|
[*]
|
|
|
|
|
||||
M.
|
Tangible Net Worth test (Seller)
|
|
|
[*]
|
|
|
|
|
||||
N.
|
Leverage ratio (Debt / equity) of AFC - quarterly
|
|
|
[*]
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
Annex B-
3
|
|
|
Annex B-
4
|
|
B.
|
Finance Charge Collections
|
|
|
|
|
|
|
|
||||
1)
|
Interest
|
|
|
|
|
|
|
|
||||
2)
|
Floorplan Fee
|
|
|
|
|
|
|
|
||||
3)
|
Other Fees
|
|
|
|
|
|
|
|
|
|
||
|
Finance Charge Collections (1 + 2 + 3)
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||
C.
|
Write-Offs
|
|
|
|
|
|
|
|
|
|
||
|
Total Write-Offs
|
|
|
|
|
|
|
|
|
|
||
|
Write-Offs [*]
|
|
|
|
|
|
|
|
|
|
||
|
Total Converted to Notes
|
|
|
|
|
|
|
|
||||
|
Converted to Notes [*]
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||
D.
|
Receivables Aging Report
|
|
|
|
|
|
|
|
||||
|
|
|
|
Current Month
|
|
|
|
|
|
|
||
1)
|
Current
|
|
|
|
|
|
|
|
|
|
||
2)
|
[*] days past due
|
|
|
|
|
|
|
|
|
|
||
3)
|
[*] days past due
|
|
|
|
|
|
|
|
|
|
||
4)
|
[*] days past due
|
|
|
|
|
|
|
|
|
|
||
5)
|
[*] days past due
|
|
|
|
|
|
|
|
|
|
||
6)
|
[*] days past due
|
|
|
|
|
|
|
|
|
|
||
|
Total Receivables (1 + 2 + 3 + 4 + 5 + 6)
|
|
|
|
|
|
|
|
||||
|
Average maturity (ref purposes only)
|
|
|
|
|
|
|
|
||||
|
|
|
Difference
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
E.
|
Payment Rate / Implied Turnover
|
|
|
|
|
|
|
|
||||
1)
|
[*]
|
|
|
|
|
|
|
|
|
|
||
2)
|
[*]
|
|
|
|
|
|
|
|
|
|
||
|
[*]
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
Annex B-
5
|
|
F.
|
Delinquent Receivables
|
|
|
|
|
|
|
|
||||
|
Receivables[*] days past due
|
|
|
|
Specified Ineligible Receivables
|
|||||||
|
|
|
|
|
|
|
(Assets sold to AFC Funding Corp., but not eligible for the Net Receivables Pool Balance. These items are not included in the rollforward and are not aged)
|
|||||
G.
|
Defaulted Receivables
|
|
|
|
||||||||
|
Receivables [*] days past due
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||
H.
|
Obligor Information
|
|
|
|
Dismantlers
|
|
|
|||||
|
Number of active dealers
|
|
|
|
Affiliated Obligors
|
|
|
|||||
|
Average dealer size / average dealer concentration
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||
SECTION II - Net Receivables Pool Balance
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||
|
Net Receivables Pool Balance Calculation
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||
A.
|
Total Pool Receivables
|
|
|
|
|
|
(A)
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||
B.
|
Specified Ineligible Receivables
|
|
|
|
|
|
(B)
|
|
||||
|
|
|
|
|
|
|
|
|
||||
C.
|
Total Pool Receivables excluding Specified Ineligible Receivables
|
|
|
(A) - (B)
|
|
(C)
|
|
|||||
|
|
|
|
|
|
|
|
|
||||
D.
|
Title Attached Receivables
|
|
|
|
|
|
(D)
|
|
||||
|
|
|
|
|
|
|
|
|
Prior ME Recvs
|
|||
E.
|
Receivables subject to Back-up Servicing Fee
|
|
|
|
(C) - (D)
|
|
(E)
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
Annex B-
6
|
|
|
|
Note: In calculating NRPB, there should be no duplication of amounts previously reduced from a different category.
|
|
|||||||||
F.
|
ineligible Receivables
|
|
|
|
|
|
|
|
|
|||
|
Non-US residents, governmental, or other ineligible obligors
|
|
|
f1
|
|
|
|
|||||
|
Delinquent Receivables
|
|
|
f2
|
|
|
|
|||||
|
Defaulted Receivables
|
|
|
f3
|
|
|
|
|||||
|
Obligors with [*] Defaulted Receivables
|
|
|
f4
|
|
|
|
|||||
|
Short-pays
|
|
|
f5
|
|
|
|
|||||
|
NSF
|
|
|
f6
|
|
|
|
|||||
|
Ineligible contract terms
|
|
|
f7
|
|
|
|
|||||
|
Over [*] outstanding
|
|
|
f8
|
|
|
|
|||||
|
Rental[*] on books
|
|
|
f9
|
|
|
|
|||||
|
Other ineligible vehicle types
|
|
|
f10
|
|
|
|
|||||
|
Sold out-of-trust
|
|
|
f11
|
|
|
|
|||||
|
Obligors subject to bankruptcy or Insolvency Proceedings
|
|
|
f12
|
|
|
|
|||||
|
Rental Receivables ([*])
|
|
|
f13
|
|
|
|
|||||
|
Rental Receivables ([*])
|
|
|
f14
|
|
|
|
|||||
|
Term [*] payoff
|
|
|
f15
|
|
|
|
|||||
|
|
|
|
Total ineligible Receivables
|
|
(sum f)
|
|
|
(F)
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
G.
|
Eligible Receivables
|
|
|
(E) - (F)
|
|
|
(G)
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
Annex B-
7
|
|
H.
|
Normal Concentration Percentage
|
|
|
|
|
|
|
|
|
|
||
|
Obligor Name
|
Amount
|
Also, has Rental? Y/N
|
Concentration limit
|
Normal Concentration Percentage
|
Excess concentrations
|
|
|
|
|||
|
Retail Obligors
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
h1
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
h2
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
h3
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
h4
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
h5
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
h6
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
h7
|
|
|
|
||
|
Rental Obligors
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
h8
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
h9
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
h10
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
h11
|
(sum h)
|
|
|
||
|
|
|
|
|
|
|
|
|
(H)
|
|
||
|
|
|
|
|
|
|
Reduction to NRPB
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
Annex B-
8
|
|
I.
|
Special Concentration Percentage - Special Obligors
|
|
|
|
|
|
|
|
||||
|
Obligor Name
|
Amount
|
Also, has Rental? Y/N
|
Concentration limit
|
Special Concentration Percentage
|
Excess concentrations
|
|
|
|
|||
|
Retail Obligors
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
i1
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
i2
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
i3
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
i4
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
i5
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
i6
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
i7
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
i8
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
i9
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
Rental Obligors
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
i10
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
i11
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
i12
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
i13
|
(sum i)
|
|
|
||
|
|
|
|
|
|
|
|
|
(I)
|
|
||
|
|
|
|
|
|
|
Reduction to NRPB
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
Annex B-
9
|
|
J.
|
All Obligors exceeding [*] Normal Concentration Percentage (aggregate concentration limit [*])
|
|
|
|
||||||||
|
Obligor Name
|
Amount
|
|
Concentration Limit
|
Normal Concentration Percentage
|
Value of Receivables included for Obligors exceeding [*]
|
||||||
|
|
|
|
|
[*] * (G)
|
|
j1
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
j2
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
j3
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
j4
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
j5
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
j6
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
j7
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
j8
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
j9
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
j10
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
j11
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
j12
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
j13
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
Total of Special Obligors exceeding [*]
|
(i)
|
|
(sum j)
|
|
|
|
|
|
||||
[*] Special Concentration Percentage x (G)
|
(ii)
|
|
if (i) > (ii), then (ii) - (i)
|
|
|
(J)
|
|
|||||
Excess concentration
|
|
|
|
|
Reduction to NRPB
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
Annex B-
10
|
|
K.
|
Special Concentration Percentage - Specialty Vehicles
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||
Total Motorcycles (including all-terrain vehicles)
|
(i)
|
|
|
|
|
|
|
|
||||
All-Terrain Vehicles
|
(ii)
|
|
|
|
|
|
|
|
||||
All-Terrain Vehicles advance limit
|
(iii)
|
[*]
|
|
|
|
|
|
|
||||
All-Terrain Vehicles discounted amount
|
(ii) x (iii)
|
|
(iv)
|
|
|
|
|
|
||||
Total Motorcycles discounted amount
|
|
|
(i) - (ii) + (iv)
|
|
(x)
|
|
|
|
||||
|
|
Discounted amount
|
|
|
|
(ii) *([*]-(iii))
|
|
k1
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
||
|
Salvage Vehicles
|
(v)
|
|
|
|
|
|
|
|
|||
|
Advance limit
|
|
(vi)
|
[*]
|
|
|
|
|
|
|
||
|
Salvage Vehicles discounted amount
|
|
(v) x (vi)
|
|
(y)
|
|
|
|
||||
|
|
Discounted amount
|
|
|
|
(v) *([*]-(vi))
|
|
k2
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
||
|
Marine Crafts
|
|
(vii)
|
|
|
|
|
|
|
|
||
|
Advance limit
|
|
(viii)
|
[*]
|
|
|
|
|
|
|
||
|
Marine Crafts discounted amount
|
|
(vii) x (viii)
|
|
(z)
|
|
|
|
||||
|
|
Discounted amount
|
|
|
(vii) *([*]-(viii))
|
|
|
k3
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
||
Specialty Vehicle Type
|
Amount
|
|
Concentration limit
|
Special Concentration Percentage
|
Excess concentrations
|
|
|
|||||
|
[*]
|
|
l1
|
|
[*] * (G)
|
0
|
|
k4
|
|
|
|
|
|
[*]
|
|
l2
|
|
[*] * (G)
|
0
|
|
k5
|
|
|
|
|
|
[*]
|
|
l3
|
|
[*] * (G)
|
0
|
|
k6
|
|
|
|
|
|
[*]
|
|
l4
|
|
[*] * (G)
|
0
|
|
k7
|
|
|
|
|
|
[*]
|
|
l5
|
|
[*] * (G)
|
0
|
|
k8
|
|
|
|
|
|
[*]
|
|
l6
|
|
[*] * (G)
|
0
|
|
k9
|
|
|
|
|
|
[*]
|
|
l7
|
|
[*] * (G)
|
0
|
|
k10
|
|
|
|
|
|
Excess concentration
|
|
|
|
|
(sum k1 to k10)
|
|
(K)
|
|
|||
|
|
|
|
|
|
|
Reduction to NRPB
|
|
|
Annex B-
11
|
|
|
Annex B-
12
|
|
P.
|
Special Concentration Percentage - Term[*]
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||
Total Receivables outstanding [*]
|
(i)
|
|
|
|
|
|
|
|
||||
[*] Special Concentration Percentage x (G)
|
(ii)
|
|
|
|
|
|
|
|
||||
Excess concentration
|
|
if (i) > (ii), then (i) - (ii)
|
|
|
|
(P)
|
|
|||||
|
|
|
|
|
|
|
Reduction to NRPB
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||
Q.
|
Total of discounts and excess concentrations
|
|
(Sum H through P)
|
|
|
(Q)
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
Net Receivables Pool Balance
|
|
|
|
|
(G) + (Q)
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
SECTION III - Reserves
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||
A.
|
Loss Reserve Calculation
|
|
Total
|
|
|
|
||||||
1)
|
Aggregate Investment
|
|
|
|
|
|
[*] Delinquency Ratio
|
|||||
2)
|
Aggregate unfulfilled Purchases pending in connection with Deferred Purchase Date
|
|
|
|
|
|
||||||
3)
|
Cash wired in from Collection Accounts
|
|
|
|
|
|
||||||
4)
|
Aggregate Investment of Participations (1 + 2 - 3)
|
|
|
|
|
|
||||||
5)
|
Loss Percentage
|
|
|
|
|
|
||||||
|
|
Loss Reserve (4 * 5)
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||
|
Loss Percentage Calculation
|
|
|
|
|
|
|
|||||
5)
|
[*]
|
|
|
|
|
|
|
|
|
|
||
6)
|
[*]
|
|
|
|
|
|
|
|
|
|
||
7)
|
[*]
|
|
|
|
|
|
|
|
|
|
||
8)
|
Minimum loss percentage
|
|
|
|
|
|
|
|
||||
9)
|
Minimum loss percentage
|
|
|
|
|
|
|
|
||||
|
|
Loss Percentage [*]
|
|
|
|
|
|
|
|
Annex B-
13
|
|
|
Annex B-
14
|
|
C.
|
Liquidation Account Balance
|
|
|
|
Total
|
|
|
|
||||
|
Liquidation Account balance
|
|
``
|
|
|
|
|
|
||||
|
Last billing paid
|
|
|
|
|
|
|
|
|
|
||
1)
|
Unaffiliated Servicing Fee (not previously set aside)
|
|
|
|
|
|
|
|
||||
2)
|
Backup Serv. Fees ([*]) (not previously set aside)
|
|
|
|
[*] Backup Servicing Fee calculation
|
|||||||
3)
|
Transition Expenses (if any, not previously set aside)
|
|
|
|
|
[*]
|
|
|
||||
4)
|
Discount
|
|
|
|
|
|
|
[*]
|
|
|
||
5)
|
Program Fees
|
|
|
|
|
[*]
|
|
|
||||
|
Minimum Balance (1 + 2 + 3 + 4 +5)
|
|
|
|
|
[*]
|
|
|
||||
|
Excess cash / (deficit)
|
|
In Compliance
|
|
|
[*]
|
|
|
||||
|
|
|
|
|
|
|
|
[*]
|
|
|
||
|
|
|
|
|
|
|
|
[*]
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
SECTION IV - Termination Events
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||
XVI.
|
Termination Events - Month End Only
|
|
|
|
|
|
|
|||||
A.
|
Participation Test
|
|
|
|
|
|
|
|||||
|
1)
|
Aggregate Investments
|
|
|
|
For Reference: calculation of numerator
|
||||||
|
2)
|
Aggregate unfulfilled Deferred Purchases
|
|
|
|
|
ADD
|
|
||||
|
3)
|
Loss Reserve
|
|
|
|
|
[*] days
|
|
||||
|
4)
|
Cash wired from Collection Account
|
|
|
Total write-offs
|
|
||||||
|
5)
|
Aggregate Investment of Participations + Loss Reserve (1 + 2 +3 -4)
|
|
Total conv to notes
|
|
|||||||
|
6)
|
Net Receivable Pool Balance + excess in Liquidation Acct
|
|
|
DEDUCT
|
|
||||||
|
|
Participation % (5 / 6)
|
|
|
|
Write-offs [*]
|
|
|||||
|
|
Participation % limit
|
|
|
|
Conv to notes [*]
|
|
|||||
|
|
|
|
|
|
|
|
Total Defaulted
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
Annex B-
15
|
|
B.
|
Default Ratio Test
|
|
|
|
|
|
|
|
||||
|
1)
|
Receivables [*] days past due + write-offs and notes [*] past due
|
|
|
|
|
|
|||||
|
|
+ A/R conv to notes [*] past due
|
|
|
|
|
|
|||||
|
2)
|
Receivables floorplanned [*] prior (cash disbur.)
|
|
|
|
|
|
|||||
|
|
Default Ratio (1 / 2)
|
|
|
|
|
|
|||||
|
|
Maximum [*] Default Ratio
|
|
[*]
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|||||
|
|
[*] avg Default Ratio
|
|
|
|
|
|
|||||
|
|
Maximum [*] avg Default Ratio
|
|
[*]
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|||||
C.
|
Delinquency Ratio Test
|
|
|
|
|
|
||||||
|
1)
|
Total Delinquent Receivables
|
|
|
|
|
|
|||||
|
2)
|
Outstanding Balance of Pool Receivables
|
|
|
|
|
|
|||||
|
|
Delinquency Ratio (1 / 2)
|
|
|
|
|
|
|||||
|
|
Maximum [*] Delinquency Ratio
|
|
[*]
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|||||
|
|
[*] avg Delinquency Ratio
|
|
|
|
|
|
|||||
|
|
Maximum [*] avg Delinquency Ratio
|
|
[*]
|
|
|
|
|
||||
D.
|
Net Spread Test
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|||||
|
1)
|
Finance Charge Collections
|
|
|
|
|
|
|||||
|
2)
|
Discount expensed during month (actual)
|
|
|
|
|
|
|||||
|
3)
|
Program Fees
|
|
|
|
|
|
|||||
|
4)
|
Backup Servicing Fees ([*]) and Unaffiliated Servicer Fees
|
|
|
|
|
|
|||||
|
5)
|
Transition Expenses (if any)
|
|
|
|
|
|
|||||
|
6)
|
Servicer Fee
|
[*]
|
|
|
|
|
|||||
|
7)
|
Other fees > $100
|
|
|
|
|
|
|||||
|
8)
|
Receivables [*] days past due
|
|
|
|
|
|
|||||
|
9)
|
Write-offs / non-cash adjustments
|
|
|
|
|
|
|||||
|
10)
|
A/R converted to notes
|
|
|
|
|
|
|||||
|
11)
|
|
Subtotal - carry costs and losses (2 thru 10)
|
|
|
|
|
|
|
Annex B-
16
|
|
|
12)
|
Add Back (9 & 10) greater than [*] old
|
|
|
|
|
|
|
||||
|
13)
|
Recoveries
|
|
|
|
|
|
|
||||
|
14)
|
Collections on Defaulted Receivables
|
|
|
|
|
|
|
||||
|
15)
|
Excess Finance Charge Collections (1 - 11 + 12 + 13 + 14)
|
|
|
|
|
|
|||||
|
16)
|
Average aggregate Outstanding Balance Pool Receivables
|
|
|
|
|
|
|||||
|
17)
|
Net Spread ([*])
|
|
|
|
|
|
|
||||
|
18)
|
Minimum Net Spread (current month)
|
|
|
[*]
|
|
|
|
|
|||
|
|
Compliance ([*])
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
|
19)
|
[*] avg Net Spread
|
|
|
|
|
|
|
||||
|
20)
|
Minimum Net Spread ([*])
|
|
|
[*]
|
|
|
|
|
|||
|
|
Compliance ([*])
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
|
21)
|
[*] avg Net Spread (Level One Trigger)
|
|
|
|
|
|
|
||||
|
22)
|
Minimum Net Spread ([*])
|
|
|
[*]
|
|
|
|
|
|||
|
|
Compliance ([*])
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
E.
|
Payment Rate
|
|
|
|
|
|
|
|
||||
|
1)
|
Collections of principal on all Pool Receivables
|
|
|
|
|
|
|
||||
|
2)
|
Beginning aggregate Outstanding Balance of Pool Receivables
|
|
|
|
|
|
|||||
|
|
Payment Rate (1 / 2)
|
|
|
|
|
|
|
||||
|
3)
|
[*] Payment Rate
|
|
|
|
|
|
|
||||
|
4)
|
Minimum [*] avg Payment Rate
|
|
|
[*]
|
|
|
|
||||
|
|
Compliance ([*])
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||
F.
|
Minimum Eligible Receivables
|
|
|
|
|
|
|
|
||||
|
1)
|
Eligible Receivables
|
|
|
|
|
|
|
||||
|
2)
|
Minimum Eligible Receivables
|
|
|
100,000,000
|
|
|
|
|
|||
|
|
Compliance (1 > 2)
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
Annex B-
17
|
|
|
Annex B-
18
|
|
D.
|
Seller Liquidity
|
|
|
|
|
|
|
|||||
|
1)
|
AFC cash and cash equivalents
|
|
|
|
|
|
|||||
|
2)
|
Minimum cash and equivalents
|
|
[*]
|
|
|
|
|||||
|
3)
|
AFC unrestricted cash
|
|
|
|
|
|
|||||
|
4)
|
Minimum unrestricted cash
|
|
[*]
|
|
|
|
|||||
|
|
Compliance (1 > 2 & 3 > 4)
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
N/A
|
|
|
|
|
|
|
|
||
|
|
In Compliance
|
Yes
|
|
|
|
|
|
|
|
||
|
|
Violation
|
No
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
Annex B-
19
|
|
|
2
|
|
|
3
|
|
|
S-
1
|
Joinder Agreement ([__________])
|
|
S-
2
|
Joinder Agreement ([__________])
|
|
S-
3
|
Joinder Agreement ([__________])
|
|
S-
4
|
Joinder Agreement ([__________])
|
|
S-
5
|
Joinder Agreement ([__________])
|
ARTICLE
1 INTERPRETATION
|
2
|
|
1.1
|
Definitions
|
2
|
1.2
|
Headings
|
20
|
1.3
|
Number, Gender, Etc
|
20
|
1.4
|
Non-Business Days
|
20
|
1.5
|
Governing Law
|
21
|
1.6
|
References to Statutes
|
21
|
1.7
|
Severability
|
21
|
1.8
|
Currency
|
21
|
1.9
|
Schedules
|
21
|
ARTICLE
2 PURCHASES AND INCREASES
|
22
|
|
2.1
|
Purchase Request and Increase
|
22
|
2.2
|
Purchase and Sale
|
23
|
2.3
|
Ownership Interests
|
23
|
2.4
|
Transfer From Deposit Accounts to Collection Account
|
24
|
2.5
|
Allocations of Seller's Share of Collections Before the Termination Date
|
24
|
2.6
|
Allocation of Trust's Share of Collections Before the Termination Date
|
24
|
2.7
|
Payments from Collection Account
|
25
|
2.8
|
Allocation and Payment of Seller's Share of Collections After a Termination Date
|
26
|
2.9
|
Allocation of Trust's Share of Collections After a Termination Date
|
26
|
2.10
|
Payments from Collection Account After a Termination Date
|
27
|
2.11
|
Purchases Limited by Program Limit
|
27
|
2.12
|
Program Limit
|
28
|
2.13
|
Voluntary Paydown of Investment
|
28
|
2.14
|
Cash Reserve Account
|
28
|
2.15
|
Calculations
|
29
|
2.16
|
Specified Ineligible Receivables
|
29
|
2.17
|
Collection Account
|
29
|
ARTICLE
3 CONDITIONS PRECEDENT
|
30
|
|
3.1
|
Conditions Precedent for the Initial Purchase
|
30
|
3.2
|
Conditions Precedent in Favour of the Trust for Purchase/All Increases
|
31
|
ARTICLE
4 REPRESENTATIONS AND WARRANTIES
|
32
|
|
4.1
|
General Representations and Warranties of the Seller
|
32
|
4.2
|
Survival
|
35
|
4.3
|
Representations and Warranties of the Trust
|
35
|
4.4
|
Survival
|
36
|
ARTICLE
5 ADMINISTRATION
|
36
|
|
5.1
|
Designation of the Servicer
|
36
|
5.2
|
Standard of Care
|
36
|
5.3
|
Authorization of Servicer
|
36
|
5.4
|
Enforcement of Contracts
|
37
|
5.5
|
Assignment for Purpose of Enforcement
|
37
|
5.6
|
Deposit of Collections
|
37
|
5.7
|
Description of Services
|
37
|
5.8
|
Affirmative Covenants of the Servicer
|
39
|
5.9
|
Reporting Requirements of the Servicer
|
42
|
5.10
|
Negative Covenants of the Servicer
|
43
|
5.11
|
Servicer Termination Events
|
44
|
5.12
|
Effecting a Servicer Transfer
|
46
|
5.13
|
Appointment of Replacement Servicer
|
46
|
5.14
|
Additional Servicer Covenants Following a Servicer Transfer
|
46
|
5.15
|
Trust Rights Following a Servicer Transfer
|
47
|
5.16
|
Power of Attorney; Further Assurances
|
47
|
5.17
|
Deemed Collections
|
48
|
ARTICLE
6 TRIGGER EVENTS
|
49
|
|
6.1
|
Meaning of Trigger Event
|
49
|
6.2
|
Action Upon Occurrence of a Trigger Event
|
53
|
6.3
|
Optional Repurchase of Pool Receivables
|
53
|
53
|
||
7.1
|
Affirmative Covenants of the Seller
|
53
|
7.2
|
Reporting Requirements of the Seller
|
55
|
7.3
|
Negative Covenants of the Seller
|
56
|
7.4
|
Covenants of the Trust
|
57
|
ARTICLE
8 PERFORMANCE GUARANTEE
|
57
|
|
8.1
|
Performance Guarantee
|
57
|
8.2
|
Guarantee Unconditional
|
58
|
8.3
|
Recourse against Servicer
|
59
|
8.4
|
Authorization by the Performance Guarantor
|
59
|
8.5
|
No Subrogation
|
59
|
8.6
|
Stay of Acceleration
|
59
|
8.7
|
Representations and Warranties
|
60
|
8.8
|
Payments
|
61
|
ARTICLE
9 INDEMNIFICATION
|
62
|
|
9.1
|
Indemnification by the Seller
|
62
|
9.2
|
Notification of Potential Liability
|
64
|
9.3
|
Litigation
|
64
|
9.4
|
Tax Indemnity
|
64
|
9.5
|
Tax Credit
|
65
|
ARTICLE
10 MISCELLANEOUS
|
66
|
|
10.1
|
Liability of the Trust and the Securitization Agent
|
66
|
10.2
|
Delegation in Favour of Securitization Agent
|
66
|
|
|
|
10.3
|
Change in Circumstances
|
66
|
10.4
|
Amendments, Waivers, Etc.
|
68
|
10.5
|
Notices, Etc.
|
68
|
10.6
|
No Waiver; Remedies
|
68
|
10.7
|
Binding Effect; Assignability
|
68
|
10.8
|
Costs and Expenses
|
68
|
10.9
|
Confidentiality
|
69
|
10.10
|
Effect of Agreement
|
69
|
10.11
|
Agreement Non-Exclusive
|
69
|
10.12
|
No Set-off
|
69
|
10.13
|
Termination
|
69
|
10.14
|
Discharge of Certain Registrations in the Province of Quebec
|
70
|
10.15
|
Execution in Counterparts
|
70
|
10.16
|
Amendment and Restatement
|
70
|
(a)
|
as to which any payment, or part thereof, remains unpaid for more than 90 days after the due date for such payment;
|
(b)
|
which, consistent with the Credit and Collection Polices, would be written off the Seller's books as uncollectible; or
|
(c)
|
which is converted to a long term payment plan in the form of a note or other similar document;
|
(a)
|
direct obligations of, or obligations fully guaranteed as to the timely payment of principal and interest by, the Government of Canada or the government of British Columbia, Alberta or Ontario, provided any such government is rated not less than R-1 (middle) by DBRS;
|
(b)
|
any security having a rating of at least R-1 (middle) from DBRS, or, in the case of asset backed commercial paper, a rating of a least R-1 (high) from DBRS, but for greater certainty, excluding commercial paper that is extendable by its terms;
|
(c)
|
any other class of investments approved in writing by the Trust (other than those set out in (a) and (b) above); and
|
(d)
|
without limiting the generality of the foregoing, if qualified under (b) or (c) above, securities of the Bank of Montreal and any Affiliate thereof may be considered Eligible Investments for the purposes of this definition;
|
(a)
|
the Obligor of which (i) is a Person that is a resident of Canada and located in a province or territory of Canada, or is a co-signer or guarantor of the such Receivable and is resident in the United States, (ii) is not the Government of Canada or any agency or instrumentality thereof or any federal crown corporation, and (iii) is not any provincial or territorial government or agency thereof;
|
(b)
|
that is not a Defaulted Receivable or Delinquent Receivable;
|
(c)
|
which is denominated and payable to the Seller only in Canadian dollars in Canada;
|
(d)
|
which, together with the related Contract and Related Security, has been originated or acquired in Canada by the Seller in the ordinary course of business;
|
(e)
|
which arises under a Contract which, together with such Receivable and the Related Security in respect thereof, is in full force and effect and constitutes the legal, valid and binding obligation of the Obligor thereof, enforceable by the Seller and its assigns against such Obligor in accordance with its terms subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors' rights generally and to equitable principles of general application;
|
(f)
|
which is secured by the Related Security which contains customary and enforceable provisions such that the rights and remedies of the Seller and its assigns are adequate for realization against the collateral of the benefits of the security, including the Related Security of such Receivable, subject to the limitations on enforceability in (e) above;
|
(g)
|
in respect of which the Related Vehicle and Proceeds Security, as against creditors of the applicable Obligor, is a perfected, valid, subsisting and enforceable Security Interest in the Financed Vehicle in favour of the Seller, perfected by all necessary or appropriate filings, registrations, recordings or other actions in each jurisdiction necessary to ensure the perfection of such Security Interest for the term thereof and which, in respect of the Related Vehicle Security, is subject only to Security Interests in favour of other Persons which are subordinate in priority to the Related Vehicle Security, Operation of Law Claims and Government and Employee Claims, and provided that, to the knowledge of the Seller at such time, no enforcement or collection proceedings have been
|
(h)
|
for which the interest of the Seller in the Receivable and the Related Security related thereto and the Contract giving rise thereto, as against creditors of the Seller, is free and clear of all Security Interests and rights of others, other than Government and Employee Claims, Operation of Law Claims, Blocked Account Claims and those created pursuant to this Agreement;
|
(i)
|
upon the purchase of an interest in such Receivable and the Related Security in respect thereof by the Trust, the Trust will obtain good and marketable title to the Trust's Co-Ownership Interest therein free and clear of any Security Interest created by, or arising through, the Seller (as opposed to a Security Interest created by, or arising through an Obligor) other than Blocked Account Claims;
|
(j)
|
the sale of which pursuant to the terms hereof does not contravene or conflict with any law, rules or regulations applicable thereto, or require the consent of the Obligor or any other Person;
|
(k)
|
in respect of which, to the knowledge of the Seller, no enforcement action, whether by repossession or otherwise, has been taken by any Person in respect of the related Financed Vehicle;
|
(l)
|
there is no federal, provincial or local law or ordinance under which such Receivable or the Related Security is subject to any Taxes, nor will any payment or remittance to be made by or on behalf of the Seller on its own behalf or on behalf of any Obligor under this Agreement be subject to any Taxes; provided, however, that this statement shall not extend to any Taxes payable by, or required to be withheld by the Seller on account of Taxes payable on the income or capital of the Trust or Taxes payable in respect of GST or PST payable by Obligors;
|
(m)
|
(i) which satisfies all applicable requirements of the Credit and Collection Policies, (ii) other than with respect to a Rental Receivable, whose terms require a minimum principal payment of not less than [*] plus accrued interest and, if applicable, payment of the applicable floorplan fees or curtailment fees, on each Curtailment Date, provided that, subject to a Special Concentration Percentage, such minimum principal payment for a Receivable may be less than [*] so long as it is at least [*], (iii) for which all payments required to be made pursuant to the related Contract in connection with any Curtailment Date extension have not been waived and have been made within [*] of each such extension, (iv) whose terms, including the due date thereof have not otherwise been amended or modified in any material respect, and [*];
|
(n)
|
which is payable on demand and which the related Contract requires repayment on the earlier of (i) [*] following the sale of the related Financed Vehicle, and (ii) the Curtailment Date for such Receivable;
|
(o)
|
which arises from the making of a loan to finance the purchase of (i) an automobile or light duty truck, driven or drawn by mechanical power, manufactured primarily for use on the public streets, roads or highways, with two axles or (ii) a Specialty Vehicle;
|
(p)
|
where not more than [*] of the aggregate Principal Balance of all Receivables of the Obligor of such Receivable and its Affiliates are Defaulted Receivables;
|
(q)
|
the Obligor of which is not an Affiliate of the Seller or the Performance Guarantor, an Excluded Obligor or a father, mother, son or daughter (or any Affiliate thereof) of any officer or director of the Seller or its Affiliates;
|
(r)
|
the Obligor of which is not, to the knowledge of the Seller, subject to any proceedings of the type described in Sections 5.11(g) or 5.11(h);
|
(s)
|
which is guaranteed by the related Obligor's parent, general partner or owners, provided that, in the Servicer's discretion, guarantees shall not be required from (i) public companies, (ii) private equity firms or other similar entities, or (iii) passive partners or minority partners when an operating partner has provided a guarantee;
|
(t)
|
which is not a Specified Ineligible Receivable or an Excluded Receivable;
|
(u)
|
with respect to which the Trust has not given Seller at least five (5) Business Days notice that such Receivable will not be an Eligible Receivable hereunder, provided that such designation is in good faith and based on a reasonable business judgement by the Trust that such Receivable should not be considered an Eligible Receivable;
|
(v)
|
for which the Obligor has not "short-paid" the Receivables or paid with non-sufficient funds;
|
(w)
|
if the Receivable is an Auction Credit, then (i) the wholesale auction is not fronting for a government or a governmental subdivision or agency, (ii) the Servicer has received a bill of sale evidencing the transaction between the wholesale auction and purchasing dealer, (iii) the wholesale auction has been underwritten in accordance with the Credit and Collection Policies’ requirements for platinum dealers, (iv) a PPSA financing statement or equivalent has been filed against the wholesale auction, and (v) clauses (e) and (s) above shall be deemed to be satisfied if the wholesale auction, rather than the applicable dealer, signs the applicable Contract; and
|
(x)
|
(i) except for any Contract which has been executed electronically, there is only one original, executed copy of such Contract held by the Seller and (ii) for any Contract which has been executed electronically, such Contact has been executed in compliance with all applicable e-sign laws and the Seller has access to an electronic copy of such Contract executed by all parties thereto which can be printed and used to enforce such Contract;
|
TA x TR
|
365
|
(a)
|
indebtedness for borrowed money (including, without limitation, amounts payable to Affiliates);
|
(b)
|
obligations evidenced by bonds, debentures, notes or other similar instruments;
|
(c)
|
the redemption price of any redeemable preference shares;
|
(d)
|
obligations in respect of letters of credit or similar instruments issued or accepted by any bank or other institution; and
|
(e)
|
obligations under direct or indirect guarantees in respect of, and obligations (contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to in clauses (a) through (d) above;
|
(a)
|
the Servicer has failed to deliver a Servicer Report or a Portfolio Certificate in accordance with the terms hereof;
|
(b)
|
any of the statements contained in Section 3.2(b) are not satisfied and have not been waived by the Trust; or
|
(c)
|
the Trust's Share is greater than 100%;
|
(a)
|
the Related Vehicle and Proceeds Security;
|
(b)
|
all of the Seller's interest in all warranties, indemnities, service obligations and other contract rights issued or granted by, or otherwise existing under applicable
|
(c)
|
all guarantees and Security Interests (other than the Related Vehicle and Proceeds Security) from time to time, if any, purporting to secure payment of such Receivable, whether pursuant to the Contract related to such Receivable, or otherwise, together with all financing statements or other instruments describing any collateral securing such Receivable, and including all Security Interests (other than the Related Vehicle and Proceeds Security) granted by any Person (whether or not the primary Obligor on such Receivable) under or in connection therewith and purporting to secure payment of such Receivable;
|
(d)
|
all Records relating to such Receivable, including all original Contracts;
|
(e)
|
all service contracts and other contracts and agreements relating to such Receivable; and
|
(f)
|
all proceeds of or relating to any of the foregoing, including proceeds of or relating to the Receivable;
|
(i)
|
[*];
|
(ii)
|
[*];
|
(iii)
|
[*];
|
(iv)
|
[*];
|
(v)
|
[*];
|
(vi)
|
[*];
|
(vii)
|
[*];
|
(viii)
|
[*];
|
(ix)
|
[*]; and
|
(x)
|
[*];
|
(a)
|
the Trigger Date;
|
(b)
|
January 31, 2020, which date may be extended by notice from the Trust to the Seller upon agreement to such extension by the Seller and the Trust; and
|
(c)
|
the date the Seller designates as the Termination Date upon 30 days' notice to the Trust;
|
I + DP + LR
|
NRPB
|
I
|
=
|
the Investment at the time of computation, reduced by the aggregate amount deposited in the Collection Account on (i) with respect to any Servicer Report, the last Business Day of the immediately prior Collection Period, or (ii) with respect to any Portfolio Certificate, the last Business Day of the prior calendar week, provided that in the case of each of (i) and (ii) above, an equal amount is wired to the Trust on the immediately following Remittance Date to pay down the Investment,
|
DP
|
=
|
the aggregate unfulfilled purchase amounts of the Trust at such time,
|
LR
|
=
|
the Loss Reserve at the time of computation,
|
NRPB
|
=
|
the Net Receivables Pool Balance at the time of computation,
|
1.2
|
Headings
|
1.3
|
Number, Gender, Etc.
|
1.4
|
Non-Business Days
|
1.5
|
Governing Law
|
1.6
|
References to Statutes
|
1.7
|
Severability
|
1.8
|
Currency
|
1.9
|
Schedules
|
Schedule "A"
|
-
|
Form of Purchase Request
|
Schedule "B"
|
-
|
Location of Records
|
Schedule "C"
|
-
|
Form of Servicer Report
|
Schedule "D"
|
-
|
Form of Portfolio Certificate
|
Schedule "E"
|
-
|
Deposit Accounts
|
Schedule "F"
|
-
|
Form of Increase Request
|
Schedule "G"
|
-
|
Form of Quebec Assignment
|
Schedule "H"
|
-
|
Net Receivables Pool Balance Calculation
|
2.1
|
Purchase Request and Increase
|
(a)
|
At any time on or after February 8, 2010 and on or prior to February 15, 2010, the Seller may, by delivery of an appropriately completed Purchase Request to the Trust, request the Trust to purchase an undivided co-ownership interest in the Receivables Pool from the Seller. The Purchase Request shall specify (i) the amount of the Cash Payments to be paid to the Seller (which shall not be less than $30,000,000 and shall be an integral multiple of $100,000) and the Net Cash Payment to be paid to the Seller, and (ii) the date of such Purchase.
|
(b)
|
From time to time after the Purchase hereunder up to the Termination Date, the Seller may, by delivery of an appropriately completed Increase Request delivered to the Trust at least one Business Day prior to the date of the proposed Increase, request the Trust to increase the Investment and the amount of its undivided co-ownership interest in the Receivables Pool. The Increase Request shall specify, (i) the amount of the Cash Payment and the Net Cash Payment to be paid to the Seller, (ii) the date of such Increase (which shall be a Remittance Date), and (iii) the account number of the Seller into which the Net Cash Payment should be deposited.
|
(c)
|
Notwithstanding the foregoing, the Trust may, in its sole discretion by written notice to the Seller and the Servicer by 5:00 p.m. on the date of receipt of an Increase Request, elect to fund any requested Increase no later than the [*] day following the Seller's delivery of an Increase Request (the "
Deferred Increase Date
"), rather than on the requested Increase date. In the event that the Trust so elects to defer funding an Increase, subject to the adjustment of the Investment for certain purposes as described in Section 2.1(d), the Trust shall be obligated to fund such Increase no later than such Deferred Increase Date so long as all applicable conditions precedent to such Increase pursuant to Section 3.2 were satisfied on the related requested Increase date (regardless of whether such conditions precedent to funding are not satisfied thereafter or on the Deferred Increase Date). The Trust may (in its sole discretion) fund such Increase on any Business Day prior to such Deferred Increase Date. Subject to any adjustment of the Cash Payment payable as described in Section 2.1(d), the Seller shall be obligated to accept the proceeds of any such Increase on the date funded by the Trust.
|
(d)
|
Future Increase Requests and reports shall be calculated on a pro forma basis including any unfulfilled Increases in the calculation of the Investment (e.g., the calculation of the Trust's Share shall include such unfulfilled Increases). For the avoidance of doubt, any payments required by clause (c) of the definition of Paydown Date shall be satisfied first by reducing the current balance of any unfulfilled Increases to zero before allocating the Trust's Share of Collections to
|
2.2
|
Purchase and Sale
|
(a)
|
If the conditions precedent in Section 3.1 (in the case of the Purchase hereunder) and Section 3.2 are satisfied or have not been satisfied but have been waived by the Trust, on the date specified in the Purchase Request, the Seller shall sell, assign and transfer to the Trust, and the Trust shall purchase, an undivided co-ownership interest in the Receivables Pool, having the terms and attributes and conferring upon the Trust the entitlements and property rights set out in Section 2.3, for the Purchase Price applicable to the Purchase, and the Trust shall deposit the applicable Cash Deposit Amount into the Cash Reserve Account and pay to the Seller the Net Cash Payment in respect thereof on the date of such Purchase. Upon the making of such payment and deposit, all of the Seller's right, title and interest in and to an undivided co-ownership interest in the Receivables Pool shall be sold, assigned and transferred to the Trust on a fully serviced basis without recourse (except as provided by this Agreement), without the need of any formality or other instrument of assignment.
|
(b)
|
If the conditions precedent in Section 3.2 are satisfied or have not been satisfied but have been waived by the Trust, on the date specified in an Increase Request, the Seller shall sell, assign and transfer to the Trust, and the Trust shall purchase, an additional undivided co-ownership interest in the Receivables Pool, having the terms and attributes and conferring upon the Trust the entitlements and property rights set out in Section 2.3, for the additional Purchase Price applicable to the Increase, and the Trust shall deposit the applicable Cash Deposit Amount into the Cash Reserve Account and pay to the Seller the Net Cash Payment in respect thereof on the date of such Increase and thereafter the Investment shall be increased by the amount of the Cash Payment and the Trust's Share shall be calculated based on such increased Investment. Upon the making of such payment and deposit pursuant to the Increase Request, an additional interest in the Receivables Pool shall be sold, assigned and transferred to the Trust on a fully serviced basis without recourse (except as provided by this Agreement), without the need of any formality or other instrument of assignment, such that the Trust's Share shall be calculated based on such increased Investment.
|
(c)
|
In addition to Sections 2.2(a) and 2.2(b), but subject to the last sentence of this Section 2.2(c), the Seller shall, on the date hereof, execute and deliver to the Trust the Quebec Assignment. For greater certainty, to the extent there is any conflict or inconsistency between this Agreement and the Quebec Assignment, the Quebec Assignment shall govern.
|
2.3
|
Ownership Interests
|
2.4
|
Transfer From Deposit Accounts to Collection Account
|
2.5
|
Allocations of Seller's Share of Collections Before the Termination Date
|
(a)
|
to the Replacement Servicer, an amount equal to the Seller's Share of the sum of any Replacement Servicer Fee and any Collection Costs, and any arrears thereof, and to the Backup Servicer, the Seller's Share of any Backup Servicing Fees and Transition Expenses, and any arrears thereof;
|
(b)
|
in respect of the Cash Reserve Account, the amount, if any, by which the balance on deposit in the Cash Reserve Account is less than the Cash Reserve Required Amount; and
|
(c)
|
to the Seller, any remaining balance on account of the Seller's Retained Interest.
|
2.6
|
Allocation of Trust's Share of Collections Before the Termination Date
|
(a)
|
to the Replacement Servicer, an amount equal to the Trust's Share of the sum of any Replacement Servicer Fee and any Collection Costs, and any arrears thereof,
|
(b)
|
to the Trust, an amount equal to the sum of the Funding Discount and the Standby Fees accrued through such day;
|
(c)
|
to the Trust, subject to Section 2.1(d), if such Business Day is a Paydown Date, an amount up to the amount of the Investment for application in reduction of the Investment; provided that if a Paydown Date has occurred pursuant to clause (c) of the definition of Paydown Date, the amount to be applied in reduction of the Investment shall only be the amount (subject to such amounts being in integral multiples of $100,000) necessary to cause the Trust's Share to be reduced to an amount equal to or less than 100%;
|
(d)
|
into the Cash Reserve Account, the amount, if any (after giving effect to Section 2.5(b)), by which the balance on deposit in the Cash Reserve Account is less than the Cash Reserve Required Amount;
|
(e)
|
to the Trust, if a voluntary paydown of the Investment is being made, for application in reduction of the Investment in accordance with Section 2.13;
|
(f)
|
to the relevant Indemnified Party, an amount equal to the aggregate amounts owed to such Indemnified Party pursuant to Sections 9.1 or 9.4 that remain unpaid;
|
(g)
|
to the Trust, any other amounts owing to the Trust hereunder; and
|
(h)
|
to the Seller, any remaining balance as Deferred Purchase Price.
|
2.7
|
Payments from Collection Account
|
(a)
|
amounts allocated for the benefit of the Replacement Servicer and Backup Servicer pursuant to Sections 2.5(a) and 2.6(a) shall be paid to the Replacement Servicer and Backup Servicer, as applicable, when due and payable;
|
(b)
|
amounts allocated pursuant to Sections 2.5(b) and 2.6(d) shall be deposited to the Cash Reserve Account;
|
(c)
|
amounts allocated pursuant to (i) Section 2.6(b) shall be paid to the Trust on each Remittance Date and (ii) Section 2.6(g) shall be paid to the Trust on the second Remittance Date of each month;
|
(d)
|
amounts allocated pursuant to Sections 2.6(c) and 2.6(e) shall be paid to the Trust on each Remittance Date and the Investment shall be reduced by the amounts distributed and applied pursuant to such Sections;
|
(e)
|
amounts allocated for the benefit of an Indemnified Party pursuant to Section 2.6(f) shall be paid when due and payable to such Indemnified Party or as such Indemnified Party may otherwise direct; and
|
(f)
|
amounts allocated pursuant to Section 2.5(c) shall be paid to the Seller in respect of the Seller's Retained Interest on each Business Day and amounts allocated pursuant to Section 2.6(h) shall be paid to the Seller in respect of Deferred Purchase Price on each Business Day.
|
2.8
|
Allocation and Payment of Seller's Share of Collections After a Termination Date
|
(a)
|
to the Replacement Servicer, an amount equal to the Seller's Share of the sum of any Replacement Servicer Fee and any Collection Costs, and any arrears thereof, and to the Backup Servicer, the Seller's Share of any Backup Servicing Fees and Transition Expenses, and any arrears thereof;
|
(b)
|
to the relevant Indemnified Party, an amount equal to the aggregate amounts owed to such Indemnified Party pursuant to Sections 9.1 or 9.4 that remain unpaid; and
|
(c)
|
to the Seller, the balance on account of the Seller's Retained Interest.
|
2.9
|
Allocation of Trust's Share of Collections After a Termination Date
|
(a)
|
to the Replacement Servicer, an amount equal to the Trust's Share of the sum of any Replacement Servicer Fee and any Collection Costs, and any arrears thereof, and to the Backup Servicer, the Trust's Share of the Backup Servicing Fees and Transition Expenses, and any arrears thereof;
|
(b)
|
to the Trust, an amount equal to the Funding Discount accrued through such day;
|
(c)
|
to the Trust, an amount equal to the Investment;
|
(d)
|
to the extent the amounts payable under Section 2.8(b) have not been satisfied in full, to the relevant Indemnified Party, an amount equal to the aggregate amounts
|
|
owed to such Indemnified Party pursuant to Sections 9.1 or 9.4 that remain unpaid;
|
(e)
|
to the Trust, any other amounts owing to the Trust hereunder; and
|
(f)
|
to the Seller, the balance, as Deferred Purchase Price.
|
2.10
|
Payments from Collection Account After a Termination Date
|
(a)
|
amounts held on deposit for the benefit of the Replacement Servicer pursuant to Sections 2.8(a) and 2.9(a) shall be paid to the Replacement Servicer when due and payable;
|
(b)
|
amounts held on deposit for the benefit of the Backup Servicer pursuant to Sections 2.8(a) and 2.9(a) shall be paid to the Backup Servicer when due and payable;
|
(c)
|
amounts held on deposit for the benefit of an Indemnified Party pursuant to Sections 2.8(b) and 2.9(d) shall be paid to such Indemnified Party or as such Indemnified Party may otherwise direct, when due and payable;
|
(d)
|
amounts allocated pursuant to Sections 2.9(b) and 2.9(e) shall be paid to the Trust on such dates as the Trust may determine;
|
(e)
|
amounts allocated pursuant to Section 2.9(c) shall be paid to the Trust on each Remittance Date and the Investment shall be reduced by such amounts distributed; and
|
(f)
|
amounts allocated pursuant to Section 2.8(c) shall be paid to the Seller in respect of the Seller's Retained Interest on each Business Day and amounts allocated pursuant to Section 2.9(f) shall be paid to the Seller on account of Deferred Purchase Price on each Business Day.
|
2.11
|
Purchases Limited by Program Limit
|
2.12
|
Program Limit
|
2.13
|
Voluntary Paydown of Investment
|
(a)
|
unless otherwise agreed by the Trust, the amount of any such reduction shall be not less than $1,000,000 and shall be an integral multiple of $1,000,000, and the Investment after giving effect to such reduction shall be not less than $30 million, and
|
(b)
|
the Seller shall use reasonable efforts to choose a reduction amount, and the date of commencement thereof, so that to the extent practicable such reduction shall commence and conclude in the same Collection Period.
|
2.14
|
Cash Reserve Account
|
2.15
|
Calculations
|
2.16
|
Specified Ineligible Receivables
|
2.17
|
Collection Account
|
3.1
|
Conditions Precedent for the Initial Purchase
|
(a)
|
a certificate of an officer of the Seller attaching copies of its constating documents;
|
(b)
|
a certificate of status for the Seller in the Province of Ontario and a certificate of compliance for the Performance Guarantor in the State of Delaware;
|
(c)
|
resolutions of the board of directors of the Seller approving and authorizing the execution, delivery and performance of this Agreement and the other documents to be delivered by the Seller hereunder, and the Purchase and any Increase hereunder up to the Program Limit, certified by a senior officer of the Seller to be in full force and effect as of the Initial Closing Date;
|
(d)
|
incumbency certificates of the officers of the Seller executing this Agreement and the other documents to be delivered by the Seller hereunder showing their names, offices and specimen signatures on which certificates the Trust shall be entitled to conclusively rely until such time as the Trust receives from the Seller a replacement certificate meeting the requirements of this Section 3.1(d);
|
(e)
|
a copy of the Credit and Collection Policies and sample copies of each of the forms of Contract and other documents used or acquired by the Seller in each of the provinces of Canada with respect to Financed Vehicles and the Related Security, including credit application forms;
|
(f)
|
reports showing the results of the searches conducted in the Provinces of Ontario and Quebec against the Seller and its predecessors on the Business Day immediately preceding the Initial Closing Date to determine the existence of any Security Interests in the Pool Assets;
|
(g)
|
copies of verification statements, officially stamped or marked to indicate that copies of such documents have been filed with the appropriate Governmental Authorities in the Provinces of Ontario and Quebec or, if officially stamped copies are not available prior to the Initial Closing Date, photocopies of documents accepted for filing or registration, of all financing statements or other similar statements or other registrations, if any, filed in such province or provinces with respect to the Purchase to ensure recognition as against third parties of the interests of the Trust in the Pool Assets; in each case showing the Seller's address as 1717 Burton Road, Vars, Ontario, K0A 3H0;
|
(h)
|
evidence that such Persons as the Trust may have designated who have registered financing statements or similar instruments against the Seller shall have entered into such agreements or acknowledgements or amended their registrations, filings or recordings so as to negate any Security Interest or other interest in the Pool Assets capable of encumbering or defeating the interests of the Trust therein;
|
(i)
|
executed copies of this Agreement, the Program Fee Side Letter, the Quebec Assignment and the other agreements and instruments called for hereunder;
|
(j)
|
an opinion of counsel to the Seller (including certain matters under Quebec Law) dated as of the Initial Closing Date, which opinions may rely on an officer's certificate of the Seller as to certain factual matters;
|
(k)
|
an opinion of counsel to the Performance Guarantor dated as of the Initial Closing Date;
|
(l)
|
Blocked Account Agreements with respect to the Deposit Accounts executed by the banks or other financial institutions at which each of the Deposit Accounts are located shall have been be executed and delivered to the Trust in form satisfactory to the Trust; and
|
(m)
|
such other documentation as may be required by the Trust or its counsel, Bennett Jones LLP or the Seller or its counsel, Osler Hoskin & Harcourt LLP, acting reasonably.
|
3.2
|
Conditions Precedent in Favour of the Trust for Purchase/All Increases
|
(a)
|
the Trust shall have received the Purchase Request or Increase Request duly executed by the Seller;
|
(b)
|
immediately prior to, at the time of and after giving effect to the Purchase or Increase, the following statements will be true, and the Seller, by accepting any payment pursuant to Section 2.2 in respect of the Purchase or any Increase, will be deemed to have certified that:
|
(i)
|
the representations and warranties of the Seller contained in Section 4.1 are correct on and as of the date of purchase as though made on and as of such date; and
|
(ii)
|
no event has occurred and is continuing, or would result from the effecting of such Purchase or Increase, that constitutes a Trigger Event or would constitute a Trigger Event by further requirement that notice be given or time elapse or both; and
|
(c)
|
all other documents, instruments, opinions and agreements required by the terms hereof to be delivered to the Trust shall have been so delivered and shall be satisfactory in form and substance to the Trust, acting reasonably, and the Trust shall have received such other approvals, opinions or documents as it may reasonably request.
|
4.1
|
General Representations and Warranties of the Seller
|
(a)
|
the Seller is a corporation duly incorporated and existing under its jurisdiction of incorporation, the Seller is not a "non-resident" of Canada for the purposes of the
Income Tax Act
(Canada) and the Seller is duly qualified, licensed or registered in each of the provinces of Canada to carry on its present business and operations, except where the failure to be so qualified, licensed or registered could not reasonably be expected to have a Material Adverse Effect;
|
(b)
|
the execution, delivery and performance by the Seller of this Agreement and all other instruments, agreements and documents to be delivered by it hereunder, and the transactions contemplated hereby and thereby, are within the Seller's powers, have been duly authorized by all necessary corporate action and do not contravene (i) the Seller's constating documents or by-laws, (ii) any resolution of its board of directors (or any committee thereof) or shareholders or (iii) any law or any contractual restriction binding on or affecting the Seller (including pursuant to any indentures, loan or credit agreements, leases, mortgages or security agreements), the contravention of which could reasonably be expected to have a Material Adverse Effect, and do not result in or require the creation of any Security Interest (other than any Security Interest created pursuant to this Agreement and the Related Security, the Blocked Account Claims, or Security Interests permitted by this Agreement), upon or with respect to any of its properties, and the consummation of the transactions contemplated hereby does not require approval of shareholders or approval or consent of any Person under any contract to which the Seller is a party;
|
(c)
|
no authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or regulatory body is required for the due execution, delivery and performance by the Seller of this Agreement or any other instrument, agreement or document to be delivered hereunder or thereunder except (i) those that have already been given, filed or obtained, as the case may be, and (ii) financing statements filed in favour of the Trust;
|
(d)
|
this Agreement and the other instruments, agreements and documents executed in connection herewith constitute legal, valid and binding obligations of the Seller enforceable against it in accordance with their terms, subject to (a) applicable bankruptcy, reorganization, winding-up, insolvency, moratorium and other laws of general application limiting the enforcement of creditors' rights; (b) the fact that the granting of equitable remedies such as specific performance and injunction is within the discretion of a court of competent jurisdiction; and (c) general principles of equity;
|
(e)
|
all filings, recordings, registrations or other actions required under this Agreement have been made or taken in Ontario (the parties acknowledge that in Quebec such filings, recordings, registrations or other actions shall be taken immediately following closing), in order to validate, preserve, perfect or protect the interests (including the co-ownership interest) of the Trust in, and the rights of the Trust to collect, any and all of the Pool Assets, including the right to enforce the Related Security;
|
(f)
|
as of the date hereof, the chief executive office of the Seller is located in Ontario and the books, Records and documents related to the Receivables in which the Seller has an interest and other printed information (excluding policies or certificates of insurance) evidencing or relating to the Pool Assets, the Obligors and the related Financed Vehicles are located at the offices shown in Schedule "B";
|
(g)
|
the Records contain all information reasonably necessary for the enforcement and Collection by the Trust of the Pool Assets, including the name, address and phone number of each Obligor, the Principal Balance and any accrued interest and fees on each Pool Receivable, the vehicle identification number of each related Financed Vehicle and the payment history of the Obligor with respect to each Pool Receivable, as such information may change from time to time;
|
(h)
|
each Servicer Report and Portfolio Certificate fully and accurately summarizes the information contained therein and reflects all of the Pool Receivables and the adjusted Principal Balances;
|
(i)
|
there is no order, judgment or decree of any court, arbitrator or similar tribunal or Governmental Authority purporting to enjoin or restrain, and there are no proceedings before any court, arbitrator or similar tribunal or Governmental Authority seeking to enjoin or restrain the Seller from effecting the Purchase or any Increase hereunder, or the Seller, its agents or the Trust from making any collection in respect thereof, which could reasonably be expected to have a Material Adverse Effect;
|
(j)
|
there are no actions, suits or proceedings in existence or, to the knowledge of the Seller, pending or threatened, against or affecting the Seller or its Affiliates, or the property of the Seller or of any such Affiliates, in any court, or before any
|
(k)
|
the transactions contemplated herein do not require compliance with the
Bulk Sales Act
(Ontario) or any similar legislation of any other jurisdiction;
|
(l)
|
all documents, computer files, microfiche or other records and materials containing information or disclosure relating to the Seller, the Backup Servicer, the Performance Guarantor, the Obligors, the Financed Vehicles and the Pool Assets made available to the Trust from time to time will be true and correct in all material respects;
|
(m)
|
the computer records of the Seller which contain particulars of the Pool Assets will contain notations, marks or other designations sufficient to identify that an interest in the Pool Assets has been sold by the Seller to the Trust hereunder;
|
(n)
|
the Records relating to the Pool Assets are current and reflect all material transactions between the Seller and the Obligors under such Pool Assets and any other Person in respect thereof;
|
(o)
|
each Pool Receivable included as an Eligible Receivable in the calculation of the Net Receivables Pool Balance is an Eligible Receivable as of the date of such calculation;
|
(p)
|
the Credit and Collection Policies in their current form do not contain any amendments or new policies or practices when compared to the historical policies and practices of the Servicer that would have adversely affected the historical collection results that have been furnished to the Trust;
|
(q)
|
since December 31, 2015, there has been no material adverse change in the business, operations, property or financial condition of the Seller or AFC, the ability of the Seller or AFC to perform its obligations under this Agreement or the other documents delivered or to be delivered by it hereunder or the collectability of the Pool Receivables, or which affects the legality, validity, or enforceability of this Agreement or the other documents delivered or to be delivered by it hereunder; and
|
(r)
|
the Seller is not: (i) a country, territory, organization, person or entity named on an Office of Foreign Asset Control (OFAC) list; (ii) a Person that resides or has a place of business in a country or territory named on such lists or which is designated as a "Non-Cooperative Jurisdiction" by the Financial Action Task Force on Money Laundering, or whose subscription funds are transferred from or through such a jurisdiction; (iii) a "Foreign Shell Bank" within the meaning of the USA PATRIOT Act, i.e., a foreign bank that does not have a physical presence in any country and that is not affiliated with a bank that has a physical presence and an acceptable level of regulation and supervision; or (iv) a person or entity that resides in or is organized under the laws of a jurisdictions designated by the
|
4.2
|
Survival
|
4.3
|
Representations and Warranties of the Trust
|
(a)
|
the Trust is validly existing under the laws of the Province of Ontario;
|
(b)
|
the execution, delivery and performance by it of this Agreement and the other documents to be delivered by it hereunder (i) are within its powers and (ii) do not contravene: (A) the documents pursuant to which it was established, (B) in any material respect, any law, rule or regulation applicable to it, (C) any material contractual restriction binding on or affecting it or its property, or (D) any material order, writ, judgement, award, injunction or decree binding on or affecting it or its property;
|
(c)
|
no authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or regulatory body is required for the due execution, delivery and performance by it of this Agreement or any other document to be delivered by it hereunder other than those which have been obtained or completed;
|
(d)
|
this Agreement constitutes a legal, valid and binding obligation enforceable against it in accordance with its terms subject to (a) applicable bankruptcy, reorganization, winding-up, insolvency, moratorium and other laws of general application limiting the enforcement of creditors' rights; (b) the fact that the granting of equitable remedies such as specific performance and injunction is within the discretion of a court of competent jurisdiction; and (c) general principles of equity;
|
(e)
|
there is no pending or, to its knowledge, threatened, action or proceeding affecting it or any of its assets before any court, governmental agency or arbitrator which would, if determined adversely, have a material adverse effect on the Seller's rights or interests hereunder; and
|
(f)
|
it is not a non-resident of Canada within the meaning of the Income Tax Act (Canada).
|
4.4
|
Survival
|
5.1
|
Designation of the Servicer
|
5.2
|
Standard of Care
|
5.3
|
Authorization of Servicer
|
5.4
|
Enforcement of Contracts
|
5.5
|
Assignment for Purpose of Enforcement
|
5.6
|
Deposit of Collections
|
5.7
|
Description of Services
|
(a)
|
take or cause to be taken all such actions as may be necessary or desirable from time to time to collect the Pool Receivable in accordance with the terms and provisions of the applicable Contract and in accordance with the terms of this Agreement;
|
(b)
|
keep an individual record with respect to the Pool Receivable and post to it all payments received under or in respect of such Pool Receivable;
|
(c)
|
deposit all Collections in respect of the Pool Receivable to the Deposit Accounts as required by Section 5.6, regardless of any defence, set-off right or counterclaim;
|
(d)
|
give timely notice to the Obligor of the Pool Receivable of any payment or other default thereunder within the Servicer's knowledge;
|
(e)
|
record the Pool Receivable as being delinquent or defaulted in accordance with the Credit and Collection Policies;
|
(f)
|
investigate all delinquencies and defaults under the Pool Receivable;
|
(g)
|
respond to all reasonable enquiries of the Obligor of the Pool Receivable or other obligors under the Related Security;
|
(h)
|
take such steps as are reasonably necessary or appropriate to maintain the perfection and priority, as the case may be, of the Security Interests, if any, created pursuant to the Pool Receivable and the Related Security and, subject to Sections 5.7(m) and (n) to refrain from releasing or subordinating any such Security Interest in whole or in part except to the extent that the Servicer would have done so in a similar situation with respect to other Receivables administered by it on its own behalf;
|
(i)
|
make all payments to Governmental Authorities and others where a statutory lien or deemed trust having priority over the Trust's interest in any of the Pool Assets has arisen (provided that nothing herein shall preclude the Servicer from contesting any claim in the ordinary course of business and in good faith);
|
(j)
|
subject to Sections 5.3 and 5.4, determine the advisability of taking action and instituting and carrying out legal proceedings with respect to the Pool Receivable and the Related Security in case of default by the Obligor under such Pool Receivable and take such action and institute and carry out such legal proceedings determined by it to be advisable;
|
(k)
|
maintain Records with respect to the Pool Receivable and the Related Security and, subject to Section 10.9, grant representatives of the Trust reasonable access to examine and make copies of such Records and a reasonable opportunity to
|
(l)
|
hold as trust property for and on behalf of the Trust and the Seller, free and clear, as against creditors of the Seller, of all Security Interests and rights of others other than Government and Employee Claims, Operation of Law Claims and those created pursuant to this Agreement, all Records with respect to the Pool Receivable at any one or more of the offices identified in Schedule "B" until the Final Termination Date;
|
(m)
|
execute and deliver all such assignments, releases and discharges of the Pool Receivable and the Related Security as are required by the terms thereof and upon receipt of all amounts due thereunder or as necessary to allow the Servicer to liquidate and sell a Financed Vehicle in accordance with the Credit and Collection Policies;
|
(n)
|
settle, compromise and otherwise deal with any claims under the Pool Receivable or the Related Security if necessary, advisable or otherwise permitted in accordance with the terms of the related Contract, this Agreement and the Credit and Collection Policies; and
|
(o)
|
maintain a complete list of Excluded Receivables and shall update such list on a timely basis for all changes thereto.
|
5.8
|
Affirmative Covenants of the Servicer
|
(a)
|
comply in all respects with all applicable laws, rules, regulations and orders with respect to it, its business and properties, all Pool Assets and the performance of its obligations as Servicer, such compliance to include paying before the same become delinquent all Taxes and Security Interests imposed upon the Servicer or its property in accordance with its normal policies with respect thereto, except to the extent the same are contested in good faith and by appropriate proceedings or where failure to do so could not reasonably be expected to have a Material Adverse Effect;
|
(b)
|
preserve and maintain its corporate existence, rights, franchises and privileges in the jurisdiction of its incorporation, and qualify and remain qualified as an extra-provincial corporation or other out-of-jurisdiction corporation in each jurisdiction where the failure to preserve and maintain such existence, rights, franchises, privileges and qualifications could reasonably be expected to have a Material Adverse Effect;
|
(c)
|
hold as trust property for and on behalf of the Trust and the Seller, at any one or more of the offices designated under the heading "Location of Records" in Schedule "B" (provided that, as may be necessary, originals may be delivered to any law firm acting on behalf of the Servicer in connection with any claims or proceedings connected with a Pool Asset) with respect to each Pool Receivable, until the obligations in respect of such Pool Receivable have been satisfied, the following documents or instruments, which are hereby constructively delivered to the Trust:
|
(i)
|
the original Contracts applicable to the Pool Receivables;
|
(ii)
|
the original credit application, credit analysis and credit agency report (unless no such report could be obtained in respect of the Obligor) and "credit bureau score" and "custom score" records, if any, relating to the Obligor, all in accordance with the Credit and Collection Policies;
|
(iii)
|
all other documents that the Servicer shall keep on file, in accordance with its customary procedures, evidencing the Related Security; and
|
(iv)
|
any and all other documents that the Servicer shall keep on file, in accordance with its customary procedures, relating to a Receivable, an Obligor or any Financed Vehicles;
|
(d)
|
comply with the Credit and Collections Policies in regard to the Pool Assets and otherwise, as applicable, in performing its covenants hereunder, except to the extent that non-compliance therewith would not materially adversely affect the Trust's interest in any Pool Assets with respect thereto or the collectability or enforceability thereof, it being agreed for the purposes of this Agreement that the invalidity or loss of priority of any material Security Interest in any Financed Vehicle comprising part of the Related Security related to any Pool Receivable would materially adversely affect the Trust's interest therein;
|
(e)
|
at its own expense, employ and provide general administrative, supervisory and accounting staff and general overhead as may from time to time be reasonably required to carry out its obligations hereunder and cause its employees to perform their responsibilities in collecting and administering the Pool Assets in the same manner as if the Pool Assets were owned by the Seller, except (i) to the extent necessary or desirable to accommodate the exercise by the Trust of its rights under this Agreement, or (ii) as otherwise required hereby;
|
(f)
|
pay from its own funds all general administrative and out-of-pocket expenses and other costs incurred by it in carrying out its obligations hereunder and all fees and expenses of any administrator appointed or subcontractor retained by it;
|
(g)
|
cause the computer records of the Seller which contain particulars of the Pool Assets to contain notations, marks or other designations sufficient to identify that an interest in the Pool Assets has been sold by the Seller to the Trust hereunder;
|
(h)
|
maintain and implement administrative and operating procedures (including an ability to recreate Records in the event of the destruction of the originals of such Records) to keep and maintain, and keep and maintain all Records and other information reasonably necessary or advisable to enable the Servicer to produce the information required to be produced by it pursuant hereto or reasonably necessary or advisable for the enforcement of all of the Pool Receivables and Related Security (including Records adequate to permit the daily identification of all Collections under and adjustments to each Pool Receivable);
|
(i)
|
at any time and from time to time during regular business hours, upon five Business Days' prior notice, subject to Section 10.9, (A) assemble such of the Records or copies thereof as may reasonably be requested by the Trust and make same available to the Trust at the principal place of business of the Servicer and, if the Records cannot be provided solely at such office, at such other offices of the Servicer or its Affiliates where Records are kept, and permit the Trust, its agents or representatives, to examine and make copies, as reasonably required, of such Records and (B) permit the Trust or its agents to visit the offices and properties of the Seller for the purpose of discussing matters relating to the Pool Assets and the Servicer's performance hereunder with any of the Servicer's officers or employees having knowledge of such matters, provided that the Trust shall act reasonably to minimize any disruption to the Servicer in connection therewith; provided that prior to the occurrence of a Cash Reserve Event or a Trigger Event, the Trust shall not be reimbursed for more than two such examinations in any year, if a Cash Reserve Event has occurred and is continuing, the Trust shall not be reimbursed for more than four such examinations in any year and, if a Trigger Event has occurred and is continuing, the Trust shall be reimbursed for all such examinations;
|
(j)
|
to the extent the Records consist in whole or in part of computer programs which are licensed by the Servicer, the Servicer will, forthwith upon the occurrence of the first Servicer Termination Event, use its best efforts to arrange for the licence or sublicence of such programs to the Trust for the limited purpose of permitting the Trust or any Replacement Servicer to administer and collect the Pool Assets and to enforce the rights acquired by the Trust in respect of the Related Security;
|
(k)
|
at its expense, timely and fully perform and comply in all material respects with all material provisions, covenants and other promises required to be observed by the Seller under the Contracts in connection with the Pool Assets;
|
(l)
|
permit the Trust at any reasonable time and from time to time to inspect the data processing systems used by the Servicer to service, administer and collect the Pool Receivables and the Related Security and, in the event that the Seller is not the Servicer, to permit the Servicer to use, through the Seller only (and not directly), any computer or computer related equipment, together with all necessary software, that had been used by the Seller to service, administer and collect the Pool Receivables and the Related Security immediately prior to the
|
(m)
|
give the Trust not less than 30 days' prior written notice of any change in the address of its chief place of business and chief executive office, and written notice promptly after any change in the address of an office listed under the heading "Location of Records" in Schedule "B", and each such notice shall be deemed to amend Schedule "B" accordingly;
|
(n)
|
provide to the Trust not less than 30 days' prior notice of any change in the name of the Servicer as stated in its constating documents;
|
(o)
|
co-operate with, and offer such assistance as may reasonably be requested by, the chartered accountants selected by the Trust to furnish reports in respect of the Trust, the Purchase, any Increases and the servicing of the Pool Assets under this Agreement;
|
(p)
|
upon request of the Trust and with the Servicer's written consent, such consent not to be unreasonably withheld, request the Servicer's auditors to assist the Trust's auditors to the extent and in such manner as is reasonably required for the Trust's auditors to report on the status of the Pool Assets under this Agreement;
|
(q)
|
make or cause to be made all filings, recordings, registrations and take all other actions in each jurisdiction necessary to validate, preserve, perfect or protect the co-ownership interests of the Trust in the Pool Assets including, the right to enforce the Related Security; and
|
(r)
|
following the occurrence and during the continuation of a Termination Event or a Cash Reserve Event, the Servicer shall provide to the Backup Servicer and the Trust (if requested) on a daily basis an electronic download with respect to the Pool Receivables in form and substance acceptable to the Backup Servicer (and which shall include, but not be limited to, all Records related to each Receivable required by the Backup Servicer to service and collect such Receivable) and a Portfolio Certificate (including information with respect to all Collections received and all Receivables acquired by the Seller). Following the occurrence and during the continuation of a Cash Reserve Event, the Trust shall have the right to require the Seller or the Servicer to, and upon such request the Seller or the Servicer, as applicable, shall, assemble copies of all of the Contracts and make the same available to the Backup Servicer or other third-party custodian specified by, and at a place selected by, the Trust within 30 days.
|
5.9
|
Reporting Requirements of the Servicer
|
(a)
|
on each Reporting Date, a Servicer Report relating to the Pool Assets during the related Collection Period and relating to all transactions between the Seller in its
|
(b)
|
on the first Business Day of each week, a Portfolio Certificate relating to the Pool Assets as of the close of business of the Servicer on the last day of the prior week;
|
(c)
|
upon the Trust's reasonable request therefor, a listing by Obligor of all Pool Receivables and current aging report for all Delinquent Receivables;
|
(d)
|
forthwith after the occurrence of each Servicer Termination Event and each event or the existence of any fact which, with the giving of such notice or lapse of time or both, may constitute a Servicer Termination Event, a statement of a senior financial officer or accounting officer of the Servicer setting forth details as to such Servicer Termination Event or fact or event and the action which the Servicer has taken and is proposing to take with respect thereto; and
|
(e)
|
promptly, from time to time, such other documents, records, information or reports with respect to the Pool Assets or the conditions or operations, financial or otherwise, of the Servicer as the Trust may from time to time reasonably request.
|
5.10
|
Negative Covenants of the Servicer
|
(a)
|
except as otherwise provided herein, whether by operation of law or otherwise, purport to sell, assign or otherwise dispose of, or create or suffer to exist any Security Interest upon or with respect to the Seller's or the Trust's interest in the Pool Assets if the effect of such Security Interest would be to cause the related Pool Receivable not to be an Eligible Receivable, or assign any right to receive payment under, or to enforce the Servicer's interest in, any of the Pool Assets, provided that the Servicer may enter into arrangements with collection agencies, private investigation firms and law firms to directly collect and hold payments of Receivables in trust for the benefit of the Trust and the Seller in accordance with the Credit and Collection Policies;
|
(b)
|
without the prior written consent of the Trust, make any change in the Credit and Collection Policies which could reasonably be expected to have a Material Adverse Effect, or make any change to its credit, collection and administration practices and procedures with respect to Pool Receivables or Receivables which are to become Pool Receivables, provided that prior written consent shall not be required for changes to standard operating procedures (excluding any changes to credit underwriting criteria), however, the Trust can prevent a change, or require that a change be reversed, by notifying the Servicer that the Trust reasonably believes such a change would have a material adverse impact on the Pool Receivables;
|
(c)
|
after the occurrence and during the continuance of a Trigger Event, extend the maturity or adjust the Principal Balance or otherwise modify the terms of any Pool Receivable in any material respect, or amend, modify or waive any term or condition of any related Contract in any material respect;
|
(d)
|
release any security, guarantee or insurance securing any indebtedness under any of the Pool Receivables, except to the extent that granting such release is in accordance with this Agreement, the Credit and Collection Policies and the Servicer's usual practices as an obligee or such security or insurance is replaced in a form acceptable to the Trust, acting reasonably;
|
(e)
|
take any action that adversely affects the perfection, validity or protection of the Trust's rights to collect amounts owing in respect of the Pool Receivables and the proceeds thereof, including the right to enforce the Related Security, except to the extent that the Servicer would have done so in a similar situation with respect to other similar receivables administered by it on its own behalf;
|
(f)
|
enter into any transaction of reorganization, amalgamation or arrangement, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution) or sell, lease or otherwise dispose of its assets as an entirety or substantially as an entirety; except that the Servicer may enter into a transaction of reorganization, amalgamation, or arrangement, so long as (i) such transaction could not reasonably be expected to have a Material Adverse Effect, (ii) as a condition to the completion of such transaction, the continued or reorganized corporation shall have executed an agreement of assumption to perform every obligation of the Servicer hereunder and under the other agreements, instruments and documents executed and delivered by the Servicer hereunder or otherwise contemplated hereby, (iii) the Backup Servicer shall have provided its written consent and acknowledged its continuing obligations under the Backup Servicer Agreement in respect of the obligations of such continued or reorganized corporation, and (iv) the Performance Guarantor shall have provided its written consent and acknowledged its continuing obligations under this Agreement in respect of the obligations of such continued or reorganized corporation; or
|
(g)
|
resign as Servicer (provided, for greater certainty, that nothing herein contained shall limit the ability of the Trust to appoint a Replacement Servicer in accordance with the provisions of this Agreement).
|
5.11
|
Servicer Termination Events
|
(a)
|
the Servicer fails to make any payment or deposit to be made by it hereunder and such failure continues for two Business Days after the occurrence of such failure;
|
(b)
|
any failure on the part of the Servicer to duly perform or observe any material term, condition, covenant or agreement of the Servicer set forth in this Agreement (other than Section 5.10(f)) or any document executed in connection herewith, other than such as are specifically referred to in paragraph (a) above, which failure continues unremedied for a period of 30 days after the date on which the Servicer receives written notice thereof from the Trust specifying the default or breach;
|
(c)
|
any representation or warranty made by the Servicer (or any of its officers) in or pursuant to this Agreement, the Purchase Request, any Increase Request, any Servicer Report, any Portfolio Certificate or any document executed in connection herewith or therewith proves to have been false or incorrect in any material respect when made and has not been cured within 30 days after written notice thereof has been received by the Servicer from the Trust;
|
(d)
|
the taking of possession by an encumbrancer (including a receiver, receiver manager or trustee) of any assets of the Servicer (other than solely to perfect a security interest therein), or the levying or enforcement or a distress or execution or any similar process against any part of the assets of the Servicer that remains unsatisfied for 30 days after the Servicer becoming aware thereof, which materially adversely affects the Servicer's ability to perform its obligations hereunder;
|
(e)
|
the issuance or levying of a writ of execution, attachment or similar process against all or a substantial portion of the property of the Servicer, the Backup Servicer or the Performance Guarantor, in connection with any judgment against the Servicer, the Backup Servicer or the Performance Guarantor in any amount that materially affects the property of the Servicer, the Backup Servicer or the Performance Guarantor if such writ of execution, attachment or similar process shall not have been stayed or dismissed after 45 days;
|
(f)
|
any failure on the part of the Servicer to duly perform or observe the terms of Section 5.10(f);
|
(g)
|
any of the Servicer, AFC or the Performance Guarantor shall generally not pay its debts as they become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceedings shall be instituted by or against the Servicer or the Performance Guarantor seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding-up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency, reorganization or relief of debtors, or seeking the entry of an order for relief by the appointment of a receiver, trustee or other similar official for it or for any substantial part of its property and, if such proceeding has been instituted against the Servicer or the Performance Guarantor, as the case may be, either such proceeding has not been stayed or dismissed within 45 days or any of the actions sought in such proceeding (including the entry of an order for relief or the
|
(h)
|
the filing by the Servicer, AFC or the Performance Guarantor of a notice of intention to make a proposal under the
Bankruptcy and Insolvency Act
, the
Companies' Creditors Arrangement Act
or any other similar legislation in the applicable jurisdiction, to some or all of its creditors.
|
5.12
|
Effecting a Servicer Transfer
|
5.13
|
Appointment of Replacement Servicer
|
5.14
|
Additional Servicer Covenants Following a Servicer Transfer
|
(a)
|
instruct the Obligor of each Pool Receivable (and any other Persons, if applicable, in the case of the Related Security) to remit all payments due under the Pool Receivables and Related Security to the Replacement Servicer;
|
(b)
|
remit to the Replacement Servicer all payments, if any, received by the predecessor Servicer from Obligors and from other Persons, if applicable, under the Pool Assets;
|
(c)
|
segregate all cash, cheques and other instruments constituting Collections in a manner acceptable to the Trust and, immediately upon receipt, deposit all such cash, cheques and instruments, duly endorsed or with duly executed instruments of transfer, to an account specified by the Replacement Servicer;
|
(d)
|
cause the computer records of the Seller which contain particulars of the Pool Assets to contain notations, marks or other designations sufficient to identify that an interest in the Pool Assets has been sold by the Seller to the Trust hereunder;
|
(e)
|
deliver copies or originals of all Records (including computer diskettes or tapes containing all information necessary or reasonably desirable to enable the Trust or its agent to collect the amounts owing under the Pool Receivables and the Related Security, together with a printed copy or microfiche of all such information) to the Trust or as it may direct in writing (or retain the same in segregated storage if so directed), and provide the Trust or its agent with all reasonable assistance necessary to decipher the information contained on the computer diskettes or tapes; and
|
(f)
|
perform any and all acts and execute and deliver any and all documents as may reasonably be requested by the Trust in order to effect the purposes of this Agreement or to enable the Replacement Servicer to collect and enforce the Pool Receivables and any Related Security and Collections related thereto.
|
5.15
|
Trust Rights Following a Servicer Transfer
|
(a)
|
perform the services, duties and functions of the Servicer specified in Article 5 of this Agreement with respect to the Pool Assets as the Trust reasonably deems fit;
|
(b)
|
notify any Obligor of the purchase by the Trust and the sale, transfer and assignment by the Seller of any Pool Assets under this Agreement;
|
(c)
|
contact any Obligor for any reasonable purpose, including for the performance of audits and verification analyses, and the determination of account balances and other data maintained by the predecessor Servicer;
|
(d)
|
direct any Obligor to make all payments on account of any Pool Receivables or Related Security directly to the Trust at an address designated by the Trust or to such third party (including the Replacement Servicer) or bank or depositary as may be designated by the Trust;
|
(e)
|
request any Obligor to change the instructions for any direct debit or electronic funds transfer otherwise payable to the Seller or the Servicer; and
|
(f)
|
proceed directly against any Obligor and take any and all other actions, in the Seller's name or otherwise, necessary or reasonably desirable to collect the Pool Receivables, enforce the Related Security or effect any related result.
|
5.16
|
Power of Attorney; Further Assurances
|
(a)
|
The Seller hereby grants to the Trust an irrevocable power of attorney, with full power of substitution, coupled with an interest, to take in the name of the Seller or in the name of the Trust, acting reasonably, all steps necessary or advisable to
|
(b)
|
The Trust hereby covenants and agrees that it will not exercise any of the rights conferred by Section 5.16(a) except upon the occurrence of a Trigger Event and then only in respect of the Pool Assets.
|
5.17
|
Deemed Collections
|
(a)
|
If, on any day prior to the Final Termination Date, any Pool Receivable is either (i) reduced or cancelled as a result of any breach by the Seller or the Servicer of its obligations hereunder or of the terms of the related Contract; or (ii) reduced or cancelled as a result of a set-off in respect of any claim by the applicable Obligor against the Seller or the Servicer (whether such claim arises out of the same or a related transaction or an unrelated transaction or the loss of or interference with the right of the Obligor to quiet enjoyment of, and continued possession of, the Financed Vehicle), the Servicer or the Seller and the Servicer (on a joint and several basis), so long as the Servicer is the Seller or an Affiliate thereof, as the case may be shall, for all purposes hereof, be irrebuttably deemed to have received a Collection of such Receivable in the amount of such reduction or cancellation and shall deposit such amount to the Deposit Accounts in accordance with the terms of Section 5.6.
|
(b)
|
If on any day prior to the Final Termination Date any Security Interest, other than a Blocked Account Claim, is validly asserted by any Person (other than the Trust) against any Pool Receivable (as determined by a court of competent jurisdiction or due to the agreement or acquiescence of the Seller or Servicer), and such Security Interest has arisen by or through the action or inaction of the Seller or the Servicer, and, with respect to any Security Interest granted by or arising through an Obligor and asserted against a Financed Vehicle, such Security Interest ranks
|
(c)
|
If on any day prior to the Final Termination Date it is discovered or determined (i) that any Pool Receivable included as an Eligible Receivable in the calculation of the Net Receivables Pool Balance was not an Eligible Receivable on the date of such calculation, or (ii) the Servicer, so long as the Servicer is the Seller or an Affiliate thereof, has extended, amended or otherwise modified a Contract in contravention of Section 5.10(c), the Seller shall be deemed to have received on such day a Collection of such Pool Receivable in full.
|
(d)
|
If the Seller or Servicer has been deemed, pursuant to Section 5.17(a), (b) or (c) to have received a Collection of any Pool Receivable in full, upon deposit by the Seller or Servicer to the Collection Account of the amount thereof, the Trust will be deemed to have sold to the Seller or Servicer, as the case may be, without further instrument or formality, the related Pool Receivables together with the Related Security in respect thereof free and clear of all Security Interests arising through the Trust but otherwise on an "as is, where is" basis without recourse to, or representation or warranty of the Trust.
|
6.1
|
Meaning of Trigger Event
|
(a)
|
the Seller or the Servicer fails to make any payment or deposit to be made by it hereunder and such failure continues for two Business Days after the occurrence of such failure;
|
(b)
|
any failure on the part of the Seller to duly perform or observe any material term, condition, covenant or agreement of the Seller set forth in this Agreement (other than Section 7.3(c)) or any document executed in connection herewith, other than such as are specifically referred to in paragraph (a) above, which failure continues unremedied for a period of 30 days after the date on which the Seller receives written notice thereof from the Trust specifying the default or breach;
|
(c)
|
a Servicer Termination Event occurs;
|
(d)
|
any representation or warranty made by the Seller (or any of its officers) in or pursuant to this Agreement, the Purchase Request, any Increase Request, any Servicer Report, any Portfolio Certificate or any document executed in connection herewith or therewith proves to have been false or incorrect in any material respect when made and has not been cured within 30 days after written notice thereof has been received by the Seller from the Trust;
|
(e)
|
the taking or possession by an encumbrancer (including a receiver, receiver manager or trustee) of any assets of the Seller (other than solely to perfect a security interest therein) or the levying or enforcement or a distress or execution or any similar process against any of the assets of the Seller that remains unsatisfied for 30 days after the Seller becoming aware thereof, which materially adversely affects the Seller's ability to perform its obligations hereunder;
|
(f)
|
the issuance or levying of a writ of execution, attachment or similar process against all or a substantial portion of the property of the Seller, in connection with any judgment against the Seller in any amount that materially affects the property of the Seller if such writ of execution, attachment or similar process shall not have been stayed or dismissed after 45 days;
|
(g)
|
any failure on the part of the Seller to duly perform or observe the terms of Section 7.3(c);
|
(h)
|
the filing by the Seller of a notice of intention to make a proposal under the
Bankruptcy and Insolvency Act
, the
Companies' Creditors Arrangement Act
or any other similar legislation in the applicable jurisdiction, to some or all of its creditors;
|
(i)
|
the Seller shall generally not pay its debts as they become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceedings shall be instituted by or against the Seller seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding-up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency, reorganization or relief of debtors, or seeking the entry of an order for relief by the appointment of a receiver, trustee or other similar official for it or for any substantial part of its property and, if such proceeding has been instituted against the Seller either such proceeding has not been stayed or dismissed within 45 days or any of the actions sought in such proceeding (including the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official) are granted, or the Seller take any corporate action to authorize any of the actions described in this Section 6.1(i);
|
(j)
|
the Seller shall fail to transfer to any Replacement Servicer when required any rights, pursuant to the Agreement, which the Seller then has with respect to the servicing of the Pool Receivables;
|
(k)
|
(i) a default shall occur in the payment when due (subject to any applicable grace period), whether by acceleration or otherwise, of any Indebtedness of the Seller, AFC or the Performance Guarantor or (ii) a default shall occur in the performance or observance of any obligation or condition with respect to such Indebtedness if the effect of such default is to accelerate the maturity of any such Indebtedness, and, in the case of either clause (i) or clause (ii), the Indebtedness with respect to which non-payment and/or non-performance shall have occurred and is
|
(l)
|
this Agreement, the Purchase or any Increases shall for any reason (other than pursuant to the terms hereof) cease to create, or shall for any reason cease to be, a valid and enforceable perfected co-ownership interest in each Pool Receivable and the Collections with respect thereto;
|
(m)
|
as of any Settlement Date, the arithmetic average of the Default Ratios for the most recent [*] shall exceed [*] or the Default Ratio as of any Settlement Date shall exceed [*];
|
(n)
|
as of any Settlement Date, the arithmetic average of the Delinquency Ratios for the most recent [*] shall exceed [*] or the Delinquency Ratio as of any Settlement Date shall exceed [*];
|
(o)
|
as of any Settlement Date, the arithmetic average of the Net Spread for the most recent [*] shall be [*];
|
(p)
|
the Tangible
Net Worth of the Seller shall be less than [*] or the Tangible Net Worth of AFC shall be less than [*] (provided that if GAAP is adjusted such that leases that were previously treated as operating leases are treated as debt, the parties shall negotiate in good faith to adjust this provision to reflect a level which takes into consideration such change);
|
(q)
|
any material adverse change shall occur in the reasonable business judgment of the Trust in the collectability of the Receivables or the business, operations, property or financial condition of the Seller or the Performance Guarantor;
|
(r)
|
this Agreement shall cease to be in full force and effect with respect to the Performance Guarantor, the Performance Guarantor shall fail to comply with or perform any provision of this Agreement, or the Performance Guarantor (or any Person by, through or on behalf of the Performance Guarantor) shall contest in any manner the validity, binding nature or enforceability of this Agreement with respect to the Performance Guarantor;
|
(s)
|
the sum of all of the Seller's Indebtedness, net of [*], exceeds [*] (provided that if GAAP is adjusted such that leases that were previously treated as operating leases are treated as debt, the parties shall negotiate in good faith to adjust this provision to reflect a level which takes into consideration such change),
|
(t)
|
the Seller's Indebtedness (excluding guarantees) to equity ratio is greater than [*] (provided that if GAAP is adjusted such that leases that were previously treated as operating leases are treated as debt, the parties shall negotiate in good faith to adjust this provision to reflect a level which takes into consideration such change),
|
(u)
|
the aggregate of the Principal Balances of all Eligible Receivables shall be less than $30 million;
|
(v)
|
a Blocked Account Agreement in favour of the Trust in place with respect to any Deposit Account shall have terminated other than as a result of any action by the Trust (and not been replaced) or shall be of no force and effect or otherwise unenforceable;
|
(w)
|
AFC shall not hold, directly or indirectly, 100% of the outstanding share capital of the Seller, or the Performance Guarantor shall not hold, directly or indirectly, at least 80% of all of the outstanding share capital of AFC; provided that, for greater certainty, the pledge as security by the Seller or the Performance Guarantor, as the case may be, of all or any of such shares shall not be a Trigger Event hereunder;
|
(x)
|
the amount on deposit in the Cash Reserve Account shall at any time before the Termination Date fail to equal or exceed the Cash Reserve Required Amount for a period of [*];
|
(y)
|
(i) any of the Seller or the Servicer shall have asserted that this Agreement or any document executed herewith to which it is a party is not valid and binding on the parties thereto; or (ii) any court, governmental authority or agency having jurisdiction over any of the parties to any of such documents or any property thereof shall find or rule that any material provisions of any of such documents is not valid and binding on the parties thereto and all appeals therefrom have been decided or the time to appeal has run;
|
(z)
|
the Backup Servicer shall resign or be terminated and no successor Backup Servicer reasonably acceptable to the Trust shall have been appointed pursuant to a replacement Backup Servicing Agreement, within 90 days of such resignation or termination, as applicable; unless on or prior to the first day on which a Backup Servicer is required to be appointed pursuant to this paragraph (z), the Performance Guarantor's senior unsecured debt shall be rated at least "BBB-" by Standard & Poor's and "Baa3" by Moody's; provided, that a Trigger Event shall be deemed to occur if no Backup Servicer reasonably acceptable to the Trust shall have been appointed within 90 days following any subsequent withdrawal, suspension or downgrade of such senior unsecured debt ratings of the Performance Guarantor below "BBB-" by Standard & Poor's or below "Baa3" by Moody's or, if the applicable rating is "BBB-" by Standard & Poor's or "Baa3" by Moody's, the placement of such ratings on credit watch or similar notation;
|
(aa)
|
the occurrence of a KAR Financial Covenant Termination Event;
|
(bb)
|
the average Payment Rate for the [*] is less than [*];
|
(cc)
|
at any time the Trust Share exceeds 100%, and such condition shall continue unremedied for five days after any date, any Servicer Report or Portfolio Certificate is required to be delivered;
|
(dd)
|
as reported on its consolidated balance sheet, AFC shall fail to maintain (as measured as of the last Business Day of each calendar week) cash and cash equivalents (including, without limitation, any intercompany receivable payable by KAR to AFC upon demand) of at least [*], at least [*] of which must constitute unrestricted cash (i.e., cash that is neither (i) pledged to a third party unrelated to the KAR Credit Facility, nor (ii) in an account in which a third party unrelated to the KAR Credit Facility has a perfected security interest; or
|
(ee)
|
the Termination Date shall have occurred.
|
6.2
|
Action Upon Occurrence of a Trigger Event
|
6.3
|
Optional Repurchase of Pool Receivables
|
7.1
|
Affirmative Covenants of the Seller
|
(a)
|
comply in all respects with all applicable laws, rules, regulations and orders with respect to it, its business and properties and all Pool Assets, such compliance to include paying before the same become delinquent all Taxes and Security Interests imposed upon the Seller or its property in accordance with its normal policies with respect thereto, except to the extent the same are contested in good faith and by appropriate proceedings or where failure to do so could not reasonably be expected to have a Material Adverse Effect;
|
(b)
|
preserve and maintain its corporate existence, rights, franchises and privileges in the jurisdiction of its incorporation, and qualify and remain qualified as an extra-provincial corporation or other out-of-jurisdiction corporation in each jurisdiction where the failure to preserve and maintain such existence, rights, franchises, privileges and qualification could reasonably be expected to have a Material Adverse Effect;
|
(c)
|
at any time and from time to time during regular business hours, upon five Business Days' prior written notice, subject to Section 10.9, (A) assemble such of the Records or copies thereof in its possession or control as may reasonably be required by the Trust and make same available to the Trust at the principal place of business of the Seller and, if the Records cannot be provided solely at such office, at such other offices of the Seller or its Affiliates where Records are kept, and permit the Trust, its agents or representatives, to examine and make copies, as reasonably requested, of such Records and (B) permit the Trust or its agents to visit the offices and properties of the Seller and its Affiliates for the purpose of discussing matters relating to the Pool Assets and the Seller's performance hereunder with any of the Seller's officers or employees having knowledge of such matters, provided that the Trust shall act reasonably to minimize any disruption to the Seller in connection therewith; provided that prior to the occurrence of a Cash Reserve Event or a Trigger Event, the Trust shall not be reimbursed for more than two such examinations in any year, if a Cash Reserve Event has occurred and is continuing, the Trust shall not be reimbursed for more than four such examinations in any year and, if a Trigger Event has occurred and is continuing, the Trust shall be reimbursed for all such examinations;
|
(d)
|
at its expense, timely and fully perform and comply in all material respects with all material provisions, covenants and other obligations required to be observed, complied with or performed by the Seller under the Contracts relating to the Pool Assets;
|
(e)
|
give the Trust at least 30 days' prior written notice of any change in the address of its chief place of business and chief executive office, and written notice promptly after any change in the address of an office listed under the heading "Location of Records" in Schedule "B", and each such notice shall be deemed to amend Schedule "B" accordingly;
|
(f)
|
provide to the Trust not less than 30 days' prior notice of any change in the name of the Seller as stated in its constating documents;
|
(g)
|
co-operate with, and offer such assistance as may reasonably be requested by, the chartered accountants selected by the Trust to furnish reports in respect of the Trust, the Purchase and any Increase and the servicing of the Pool Assets under this Agreement;
|
(h)
|
upon request of the Trust and with the Seller's written consent, such consent not to be unreasonably withheld, request the Seller's auditors to assist the Trust's auditors to the extent and in such manner as is reasonably required for the Trust's auditors to report on the status of the Pool Assets under this Agreement;
|
(i)
|
conduct Lot Checks of each Obligor in accordance with the Seller's customary practices or on such more frequent intervals as may be reasonably requested by the Trust;
|
(j)
|
promptly after becoming aware thereof, but in any event no later than two Business Days thereafter, provide the Trust with notice of any Servicer Termination Event that is continuing when the Seller becomes aware thereof; and
|
(k)
|
make or cause to be made all filings, recordings, and registrations and take all other actions in each jurisdiction necessary or appropriate to validate, preserve, perfect or protect the co-ownership interests of the Trust in the Pool Assets, including the right to enforce the Related Security.
|
7.2
|
Reporting Requirements of the Seller
|
(a)
|
within five Business Days after the Seller becomes aware of a material adverse change in the business, operations, properties or condition (financial or otherwise) (other than matters of a general economic nature) of the Seller, the Backup Servicer or the Performance Guarantor, or of an occurrence of a breach of its obligations under this Agreement, notice of such change or occurrence together with a statement by a responsible officer of the Seller specifying the facts, the nature and period of existence of any such breach, condition or event and the action the Seller has taken, is taking and proposes to take with respect thereto;
|
(b)
|
within five Business Days of the Seller becoming aware thereof, notice of any litigation or other court or arbitration proceeding affecting the Seller which could reasonably be expected to have a Material Adverse Effect;
|
(c)
|
within five Business Days of the Seller becoming aware thereof, notice of any litigation or other court or arbitration proceeding affecting the Backup Servicer or the Performance Guarantor which could reasonably be expected to have a Material Adverse Effect;
|
(d)
|
as soon as available and in any event within 45 days after the end of each fiscal quarter of the Seller, the unaudited financial statements of the Seller and, as soon
|
(e)
|
as soon as available and in any event within 90 days after the end of the fiscal year of the Performance Guarantor, the audited consolidated balance sheet of the Performance Guarantor and its consolidated subsidiaries as of the end of such year and the related audited consolidated statements of income and of cash flows for such year; reported on by KPMG LLP or other independent certified public accountants of nationally recognized standing;
|
(f)
|
promptly after the sending or filing thereof, copies of all reports which the Seller sent to any holders of securities which it has offered to the public;
|
(g)
|
forthwith after the occurrence of each Trigger Event and each event or the existence of any fact which, with the giving of notice or lapse of time or both, may constitute a Trigger Event, a statement of a senior financial officer or accounting officer of the Seller setting forth details as to such Trigger Event or fact or event and the action which the Seller has taken and is proposing to take with respect thereto;
|
(h)
|
notice of any material change to the Credit and Collection Policies or change to the standard operating practices or procedures;
|
(i)
|
promptly, from time to time, such other documents, records, information or reports with respect to the Pool Assets or the conditions or operations, financial or otherwise, of the Seller as the Trust may from time to time reasonably request; and
|
(j)
|
promptly after any changes, the current list of Excluded Receivables.
|
7.3
|
Negative Covenants of the Seller
|
(a)
|
except as otherwise provided herein, and whether by operation of law or otherwise, purport to sell, assign or otherwise dispose of, or create or suffer to exist any Security Interest upon or with respect to the Seller's or the Trust's interest in the Pool Assets if the effect of such Security Interest would be to cause the related Pool Receivable not to be an Eligible Receivable, or assign any right to receive payment under, or to enforce the Seller's interest in, any of the Pool Assets,
provided, that the Seller or Servicer may sell the interest of the Seller and the Trust in Defaulted Receivables including any Contracts and Related Security with respect thereto and any judgement obtained thereon to any Person who is not an Affiliate of the Seller or Servicer (and does not own 5% or more of any equity interest in the Servicer or any Affiliate thereof and in which the Servicer does not own, directly or indirectly, 5% or more of the equity of such Person) on arm’s-length terms in order to maximize collections thereon;
|
(b)
|
take any action that adversely affects the perfection, validity or protection of the Trust's rights to collect amounts owing pursuant to the Pool Assets and the proceeds thereof, including the right to enforce the Related Security, except to the extent that the Seller would have done so in a similar situation with respect to other similar receivables administered by it on its own behalf; or
|
(c)
|
enter into any transaction of reorganization, amalgamation or arrangement, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution) or, other than with respect to sales, assignments, leases, licences or transfers of computer hardware and software, or of leases and licences relating thereto or any rights or benefits thereunder, in the ordinary course of business, sell, lease or otherwise dispose of its assets as an entirety or substantially as an entirety; except that the Seller may enter into a transaction of reorganization, amalgamation, or arrangement, so long as (i) such transaction could not reasonably be expected to have a Material Adverse Effect, (ii) as a condition to the completion of such transaction, the continued or reorganized corporation shall have executed an agreement of assumption to perform every obligation of the Seller hereunder and under the other agreements, instruments and documents executed and delivered by the Seller hereunder or otherwise contemplated hereby, (iii) the Backup Servicer shall have provided its written consent and acknowledged its continuing obligations under the Backup Servicer Agreement in respect of the obligations of such continued or reorganized corporation and (iv) the Performance Guarantor shall have provided its written consent and acknowledged its continuing obligations under this Agreement in respect of the obligations of such continued or reorganized corporation.
|
7.4
|
Covenants of the Trust
|
(a)
|
until the Final Termination Date, use commercially reasonably efforts to ensure that the fair value of the Pool Assets held by it will constitute no more than one-half of the total fair value of all assets owned by it; and
|
(b)
|
not use personal information relating to Obligors received from the Seller other than in connection with the collection, servicing and administration of the Pool Assets and for other reasonable purposes ancillary thereto, all in accordance with and as allowed by applicable law.
|
8.1
|
Performance Guarantee
|
8.2
|
Guarantee Unconditional
|
(a)
|
any extension, modification, amendment or renewal of, or indulgence with respect to, or substitutions for, the Guaranteed Obligations or any part thereof or any agreement relating thereto at any time;
|
(b)
|
any failure or omission to enforce any right, power or remedy with respect to the Guaranteed Obligations or any part thereof or any agreement relating thereto, or any collateral securing the Guaranteed Obligations or any part thereof;
|
(c)
|
any waiver of any right, power or remedy or of any default with respect to the Guaranteed Obligations or any part thereof or any agreement relating thereto or with respect to any collateral securing the Guaranteed Obligations or any part thereof;
|
(d)
|
any release, surrender, compromise, settlement, waiver, subordination or modification, with or without consideration, of any collateral securing the Guaranteed Obligations or any part thereof, any other guarantees with respect to the Guaranteed Obligations or any part thereof, or any other obligation of any person or entity with respect to the Guaranteed Obligations or any part thereof;
|
(e)
|
the enforceability or validity of the Guaranteed Obligations or any part thereof or the genuineness, enforceability or validity of any agreement relating thereto or with respect to any collateral securing the Guaranteed Obligations or any part thereof;
|
(f)
|
the application of payments received from any source to the payment of indebtedness of the Seller or the Servicer other than the Guaranteed Obligations, any part thereof or amounts which are not covered by this Agreement, even though the Trust might lawfully have elected to apply such payments to any part or all of the Guaranteed Obligations;
|
(g)
|
any other act, or omission to act, or delay of any kind by any of the Servicer, the Seller, the Trust or any other person or any other circumstance whatsoever, whether similar or dissimilar to the foregoing, which might, but for the provisions of this Section 8.2, constitute a legal or equitable discharge, defense, limitation or
|
(h)
|
the existence of any claim, set-off or other rights which the Performance Guarantor may have at any time against the Seller, the Servicer or any other Person, including any Obligor, whether in connection with any transactions under this Agreement, any related document or any other transaction,
|
8.3
|
Recourse against Servicer
|
8.4
|
Authorization by the Performance Guarantor
|
8.5
|
No Subrogation
|
8.6
|
Stay of Acceleration
|
8.7
|
Representations and Warranties
|
(a)
|
it is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware;
|
(b)
|
it has full power and authority to execute and deliver this Agreement and to perform the terms and conditions hereof and is duly qualified, licensed or registered in each relevant jurisdiction to carry on its present business and operations except where the failure to be so qualified, licensed or registered does not and will not materially adversely affect such operations or its ability to perform its obligations hereunder, as applicable;
|
(c)
|
the execution, delivery and performance by the Performance Guarantor of this Agreement, and the transactions contemplated hereby, are within the powers of the Performance Guarantor, have been duly authorized by all necessary corporate or other action (as applicable) and do not contravene (i) the constating documents or by-laws of the Performance Guarantor, or (ii) any law or any contractual restriction binding on or affecting the Performance Guarantor, the contravention of which could be expected to materially adversely affect the Performance Guarantor's ability to perform its obligations hereunder, does not result in or require the creation of any Security Interest upon or with respect to the Performance Guarantor's properties, and the consummation of the transactions contemplated hereby does not require approval of shareholders or partners or approval or consent of any Person under any contract to which the Performance Guarantor is a party, except, to the extent such approvals have been granted;
|
(d)
|
no authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or regulatory body is required for the due execution, delivery and performance by the Performance Guarantor of this Agreement, other than those that have been obtained or made, as the case may be, or any filings required after the date hereof with any securities regulators;
|
(e)
|
this Agreement constitutes a legal, valid and binding obligation of the Performance Guarantor, enforceable against it in accordance with its terms subject to (i) applicable bankruptcy, reorganization, winding-up, insolvency, moratorium and other laws of general application limiting the enforcement of creditors' rights; (ii) the fact that the granting of equitable remedies such as specific performance and injunction is within the discretion of a court of competent jurisdiction; and (iii) general principles of equity;
|
(f)
|
there has been no material adverse change in the business of the Performance Guarantor since the date of the most recent audited financial statements of the Performance Guarantor delivered to the Trust;
|
(g)
|
there is no order, judgment or decree of any court, arbitrator or similar tribunal or Governmental Authority purporting to enjoin or restrain, and there are no proceedings before any court, arbitrator or similar tribunal or Governmental Authority which might materially adversely affect the Performance Guarantor's ability to perform its obligations hereunder; and
|
(h)
|
there are no actions, suits or proceedings in existence or, to the Performance Guarantor's knowledge, pending or threatened, against or affecting it or its property in any court, or before any arbitrator of any kind, or before or by any governmental body, in respect of which there is a reasonable possibility of an adverse determination that could materially adversely affect the Performance Guarantor's financial condition or materially adversely affect the ability of the Performance Guarantor to perform its obligations under this Agreement; and
|
(i)
|
it is not: (i) a country, territory, organization, person or entity named on an Office of Foreign Asset Control (OFAC) list; (ii) a Person that resides or has a place of business in a country or territory named on such lists or which is designated as a "Non-Cooperative Jurisdiction" by the Financial Action Task Force on Money Laundering, or whose subscription funds are transferred from or through such a jurisdiction; (iii) a "Foreign Shell Bank" within the meaning of the USA PATRIOT Act, i.e., a foreign bank that does not have a physical presence in any country and that is not affiliated with a bank that has a physical presence and an acceptable level of regulation and supervision; or (iv) a person or entity that resides in or is organized under the laws of a jurisdictions designated by the United States Secretary of the Treasury under Sections 311 or 312 of the USA PATRIOT Act as warranting special measures due to money laundering concerns.
|
8.8
|
Payments
|
9.1
|
Indemnification by the Seller
|
(a)
|
the failure of any information contained in a Servicer Report or a Portfolio Certificate to be true and correct (including the failure of a Pool Receivable included in the calculation of Net Receivables Pool Balance to be an Eligible Receivable as of the date of such calculation), or the failure of any other information provided to the Trust or the Securitization Agent with respect to Receivables or this Agreement to be true and correct;
|
(b)
|
the failure of any representation or warranty or statement made or deemed made by the Seller (or any of its officers) under or in connection with this Agreement to have been true and correct in all respects when made;
|
(c)
|
the failure by the Seller to comply with any applicable law, rule or regulation with respect to any Pool Assets or the related Contract; or the failure of any Pool Assets or the related Contract to conform to any such applicable law, rule or regulation;
|
(d)
|
the failure to vest in the Trust a valid and enforceable perfected first ranking (as against the Seller and creditors of the Seller) co-ownership interest in the Pool Receivables and the Related Security and Collections with respect thereto;
|
(e)
|
the failure to have filed, or any delay in filing, financing statements or other similar instruments or documents under the PPSA of any applicable jurisdiction or other applicable laws with respect to any Pool Receivables and the Related Security and Collections in respect thereof, whether at the time of the Purchase or any Increase at any subsequent time;
|
(f)
|
any dispute, claim, offset or defense (other than discharge in bankruptcy of the Obligor) of the Obligor to the payment of any Pool Receivable (including,
|
(g)
|
any failure of the Seller to perform its duties or obligations in accordance with the provisions hereof or to perform its duties or obligations under the Contracts;
|
(h)
|
any products liability or other claim, investigation, litigation or proceeding arising out of or in connection with goods, insurance or services that are the subject of or secure any Contract;
|
(i)
|
the commingling of Collections of Pool Assets at any time with other funds;
|
(j)
|
any investigation, litigation or proceeding related to this Agreement or the use of proceeds of Purchases or in respect of any Pool Receivable, Related Security or Contract;
|
(k)
|
any reduction in the Investment as a result of the payment of allocations of Collections pursuant to Sections 2.7(d), 2.10(e) or 2.13, in the event that all or a portion of such payments shall thereafter be rescinded or otherwise must be returned for any reason;
|
(l)
|
any tax or governmental fee or charge (other than any tax upon or measured by net income or gross receipts), all interest and penalties thereon or with respect thereto, and all reasonable out-of-pocket costs and expenses, including the reasonable fees and expenses of counsel in defending against the same, which may arise by reason of the purchase or ownership of the Trust's Co-Ownership Interest or other interests in the Receivables Pool or in any Related Security or Contract;
|
(m)
|
the failure by the Seller or the Servicer to pay when due any taxes payable by it, including, without limitation, the franchise taxes and sales, excise or personal property taxes payable in connection with the Receivables;
|
(n)
|
the failure by the Seller or the Servicer to be duly qualified to do business, to be in good standing or to have filed appropriate registration documents in any jurisdiction;
|
(o)
|
the failure to vest and maintain vested in the Trust a perfected ownership interest in respect of the Trust's Co-Ownership Interest free and clear of any Security Interest created by or through the Seller, whether existing at the time of the consummation of the transactions contemplated hereby or at any time thereafter, other than Security Interests created by or arising through the Trust;
|
(p)
|
any claim for personal injury, death, property damage or product liability which may arise by reason of, result from or be caused by, or relate to the use, operation, maintenance or ownership of, the Financed Vehicles; and
|
(q)
|
any material failure of the Seller to perform its duties or obligations, as Servicer or otherwise, in accordance with the provisions of this Agreement.
|
9.2
|
Notification of Potential Liability
|
9.3
|
Litigation
|
9.4
|
Tax Indemnity
|
(a)
|
the sum payable to the Trust shall be increased as may be necessary (or an amount shall be owed to the Trust) so that, after all required deductions, withholdings or payments in respect of such Taxes have been made, the Trust receives or retains an amount equal to the sum that the Trust would have received or retained had no such deductions, withholdings or payments been made;
|
(b)
|
the Seller shall make such deductions or withholdings; and
|
(c)
|
the Seller shall pay forthwith the full amount deducted or withheld to the relevant taxation authority or other authority in accordance with applicable law and will provide to the Trust copies of such forms as are required to be provided to such authority evidencing the payment by the Seller.
|
9.5
|
Tax Credit
|
10.1
|
Liability of the Trust and the Securitization Agent
|
10.2
|
Delegation in Favour of Securitization Agent
|
10.3
|
Change in Circumstances
|
(a)
|
the introduction of, or any change in, or in the interpretation, administration application or implementation of, any applicable law or regulation by any court or Governmental Authority, in each case, adopted, issued, taking effect or occurring after the later of: (i) the date hereof; and (ii) the most recent date on which the Termination Date is extended in accordance with the terms of this Agreement; or
|
(b)
|
the compliance by any of the Trust, the Securitization Agent, BMONB and/or any liquidity provider or credit enhancement provider to the Trust, or any of their Affiliates (each, an "
Affected Person
"), with any changed or introduced guideline, direction or request, or any change in the interpretation or administration thereof made after the later of: (i) the date hereof; and (ii) the most recent date on which the Termination Date is extended in accordance with the terms of this Agreement, from or by any Governmental Authority or professional self-regulating or governing body (including, for greater certainty, the Office of the Superintendent of Financial Institutions Canada, the Board of Governors of
|
(i)
|
(A) increasing the costs, expenses or liabilities of, or imposes, modifies or deems applicable any reserve, assessment, fee, tax, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of, in each case any Affected Person (including as a result of a change in the Affected Person's capital position), as such costs, expenses or liabilities relate to the Trust making, funding or maintaining the Investment hereunder, provided that in the case of BMONB or any of its Affiliates, such increased costs, liabilities or expenses shall be limited to those that are directly attributable to increases in regulatory capital of BMONB or such Affiliates, (B) reducing the rate of return (on capital or otherwise) to any Affected Person in connection with, or as a result of the Affected Person either having to raise additional capital or incurring a deteriorated capital position as a result of the Trust making, funding or maintaining the Investment hereunder, (C) requiring the payment of any Taxes on or calculated with reference to the capital or debt of any Affected Person or (D) requiring any Affected Person to make any payment it would not otherwise be required to make; or
|
(ii)
|
reducing the amount received or receivable by the Trust under this Agreement or in respect of any Pool Receivable, and provided that any such introductions or changes enumerated in clauses (a) and (b) above are of application across any applicable industry in which such Affected Person participates and are not limited in their application to one or more Affected Persons,
|
10.4
|
Amendments, Waivers, Etc.
|
10.5
|
Notices, Etc.
|
10.6
|
No Waiver; Remedies
|
10.7
|
Binding Effect; Assignability
|
10.8
|
Costs and Expenses
|
10.9
|
Confidentiality
|
10.10
|
Effect of Agreement
|
10.11
|
Agreement Non-Exclusive
|
10.12
|
No Set-off
|
10.13
|
Termination
|
10.14
|
Discharge of Certain Registrations in the Province of Quebec
|
10.15
|
Execution in Counterparts
|
10.16
|
Amendment and Restatement
|
AUTOMOTIVE FINANCE CANADA INC.
|
|
|
|
|
|
Per:
|
/s/ Amy Wirges
|
|
Name Amy Wirges
Title Vice President of Finance and Treasurer
|
|
|
Address:
1717 Burton Road
Vars, ON
K0A 3H0
|
|
Attention: Vice President of Legal
Telecopier No.: 613-443-3436
|
|
With a copy to:
Automotive Finance Corporation
13085 Hamilton Crossing Blvd.
Suite 300
Carmel, Indiana
46032
|
|
Attention: Vice President of Legal
Telecopier No.: 866-929-3430
|
|
And to:
Automotive Finance Corporation
13085 Hamilton Crossing Blvd.
Suite 300
Carmel, Indiana
46032
|
|
Attention: Amy Wirges
Telecopier No.: 317-360-3766
|
KAR AUCTION SERVICES, INC.
|
|
|
|
|
|
Per:
|
/s/ Rebecca C. Polak
|
|
Name Rebecca C. Polak
Title Executive Vice President, General Counsel and Secretary
|
Address:
13085 Hamilton Crossing Blvd.
Carmel, IN 46032
USA
|
|
Attention: Becca C. Polak
Executive Vice President and
General Counsel and Secretary
Telecopier No.: 317-249-4518
|
BNY TRUST COMPANY OF CANADA
, in its capacity as trustee of
PRECISION TRUST
, by its Securitization Agent,
BMO NESBITT BURNS INC.
|
|
|
|
|
|
Per:
|
/s/ John Vidinovski
|
|
Name John Vidinovski
Title Managing Director
|
Per:
|
/s/ Chris Romano
|
|
Name Chris Romano
Title Managing Director
|
|
|
|
|
c/o BMO Nesbitt Burns Inc.
3rd Floor Podium
1 First Canadian Place
Toronto, Ontario
M5X 1H3
|
|
Attention: Managing Director
Securitization
Telecopier No.: 416-359-1910
|
TO:
|
PRECISION TRUST
c/o BMO NESBITT BURNS INC. 3rd Floor Podium 1 First Canadian Place Toronto, Ontario M5X 1H3
Telecopier No.: (416) 359-1910
|
(i)
|
the representations and warranties of the Seller contained in Section 4.1 of the Receivables Purchase Agreement are correct on and as of the date of the Purchase as though made on and as of such date;
|
(ii)
|
no event has occurred and is continuing, or would result from the effecting of such Purchase, that constitutes a Trigger Event or would constitute a Trigger Event by further requirement that notice be given or time elapse or both;
|
(iii)
|
the attached Portfolio Certificate (Schedule "D") fully and accurately reflects the Pool Receivables and adjusted Principal Balances; and
|
Date of Purchase:
|
|
Cash Payment:
|
|
Cash Deposit Amount [*]:
|
|
Net Cash Payment:
|
|
Transferred to [*]:
|
|
|
|
AUTOMOTIVE FINANCE CANADA INC.
|
|
Per:
|
|
|
[Name]
[Title]
|
Per:
|
|
|
[Name]
[Title]
|
Calgary – Branch 54
|
ADESA Calgary
|
1621 Veterans Boulevard NE Airdrie, AB T4A 2G6
|
|
|
Edmonton – Branch 129
|
ADESA Edmonton
|
1701 9th Street
|
Nisku, AB T9E 8M8
|
|
|
Halifax – Branch 61
|
ADESA Halifax
|
300 Sky Boulevard
|
Enfield, NS B2T1K3
|
|
|
Kitchener – Branch 53
|
218 Boida Ave. Unit #2, RR #1
|
Ayr, ON N0B1E0
|
|
|
Montreal – Branch 21
|
ADESA Montreal
|
300 Albert Mondou
|
St. Eustache, PQ J7R7A7
|
|
|
Ottawa – Branch 14
|
ADESA Ottawa
|
1717 Burton Rd
|
Vars, ON K0A3H0
|
|
|
Toronto – Branch 56
|
ADESA Toronto
|
55 Auction Lane
|
Brampton, ON L6T 5P4
|
|
Toronto – Branch 182
Toronto Impact Office
535 Wentworth Street S.W.
Oshawa, ON L1J 6G5
|
Vancouver – Branch 49
|
ADESA Vancouver
|
7111 No. 8 Road
|
Richmond, BC V6W 1L9
|
|
|
Winnipeg – Branch 113
|
ADESA Winnipeg
|
Box 19, Group 242, RR # 2
|
Winnipeg, MB R3C 2E6
|
|
|
Saskatoon – Branch 155
|
ADESA Saskatoon
|
618 – 48th Street East
|
Saskatoon, Saskatchewan S7K 6K4
|
|
|
Carmel Office
|
Automotive Finance Canada Inc.
|
c/o Automotive Finance Corporation
|
13085 Hamilton Crossing Blvd., Suite 300
|
Carmel, IN 46032
|
Part VII
|
Financial Triggers & Covenants (see Section V)
|
|
Actual
|
|
Trigger Level
|
|
|
|
||||
A.
|
Bankruptcy
|
|
|
|
|
|
|
|
||||
B.
|
Material Adverse Change
|
|
|
|
|
|
|
|||||
C.
|
Change in Control (AFC < 100% of Seller; KAR < 80% of AFC)
|
|
|
|
|
|
|
|||||
D.
|
Cash Reserve < Cash Reserve Required Amount
|
|
|
|
|
|
|
|||||
E.
|
KAR Financial Covenant violation
|
|
|
|
|
|
|
|||||
F.
|
Default / cross acceleration of corporate Indebtedness (Seller or AFC > $1MM; KAR > $35MM)
|
|
|
|
|
|
|
|||||
G.
|
AFC consolidated cash equivalents are at least [*] (incl. [*] unrestricted cash)
|
|
|
|
|
|
|
|||||
H.
|
Seller's Indebtedness limitation [*]
|
|
|
[*]
|
|
|
|
|
||||
I.
|
Tangible Net Worth test (AFC)
|
|
|
[*]
|
|
|
|
|
||||
J.
|
Tangible Net Worth test (AFCI)
|
|
|
[*]
|
|
|
|
|
||||
K.
|
Leverage ratio (Indebtedness / equity); AFCI
|
|
|
[*]
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||
Part VIII
|
Reporting Requirements
|
Timing
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||
A.
|
Reporting period
|
[*]
|
|
|
|
|
|
|||||
B.
|
Reporting dates
|
[*]
|
|
|
|
|
|
|||||
C.
|
Unaudited quarterly financial statements - Seller & Servicer
|
[*]
|
|
|
|
|
|
|||||
D.
|
Unaudited annual F/S - Seller & Servicer; audited consolidating KAR F/S
|
[*]
|
|
|
|
|
|
|||||
E.
|
KAR compliance certificate
|
[*]
|
|
|
|
|
|
|||||
F.
|
Material Changes to Servicer Report
|
[*]
|
|
|
|
|
|
|||||
G.
|
List of subservicers with contact information
|
[*]
|
|
|
|
|
|
|||||
H.
|
Changes to Excluded Receivables
|
[*]
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Section I - Receivables Rollforward and Aging Information
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||
A.
|
Receivables Rollforward
|
Current Month
|
|
|
|
|
|
|
||||
1)
|
Beginning Principal Balance
|
|
|
|
|
|
|
|
||||
2)
|
Receivables Floorplanned
|
|
|
|
|
|
|
|
||||
3)
|
Principal Receipts
|
|
|
|
|
|
|
|
||||
4)
|
Write-Offs
|
|
|
|
|
|
|
|
||||
5)
|
A/R Converted to Notes
|
|
|
|
|
|
|
|
||||
|
Ending Principal Balance (1 + 2 - 3 - 4 - 5)
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||
B.
|
Finance Charge Collections
|
|
|
|
|
|
|
|
||||
1)
|
Interest
|
|
|
|
|
|
|
|
||||
2)
|
Floorplan Fee
|
|
|
|
|
|
|
|
||||
3)
|
Other Fees
|
|
|
|
|
|
|
|
||||
|
Finance Charge Collections (1 + 2 + 3)
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
C.
|
Write-Offs
|
|
|
Current Month
|
|
|
|
|
|
|
||
|
Total Write-Offs
|
|
|
|
|
|
|
|
||||
|
Write-Offs [*]
|
|
|
|
|
|
|
|
||||
|
Total Converted to Notes
|
|
|
|
|
|
|
|
||||
|
Converted to Notes [*]
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||
D.
|
Receivables Aging Report
|
|
|
|
|
|
|
|
||||
1)
|
Current
|
|
|
|
|
|
|
|
||||
2)
|
[*] days past due
|
|
|
|
|
|
|
|
||||
3)
|
[*] days past due
|
|
|
|
|
|
|
|
||||
4)
|
[*] days past due
|
|
|
|
|
|
|
|
||||
5)
|
[*] days past due
|
|
|
|
|
|
|
|
||||
6)
|
[*] days past due
|
|
|
|
|
|
|
|
||||
|
Total Receivables (1 + 2 + 3 + 4 + 5 + 6)
|
|
|
|
|
|
|
|
||||
|
Average maturity (ref purposes only)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
F.
|
ineligible Receivables
|
|
|
|
|
|
|
|
||||
|
Non-Canadian residents, governmental, or other ineligible obligors
|
|
f1
|
|
|
|
||||||
|
Delinquent Receivables
|
|
f2
|
|
|
|
||||||
|
Defaulted Receivables
|
|
f3
|
|
|
|
||||||
|
Obligors with [*] Defaulted Receivables
|
|
f4
|
|
|
|
||||||
|
Short-pays
|
|
f5
|
|
|
|
||||||
|
NSF
|
|
f6
|
|
|
|
||||||
|
Ineligible contract terms
|
|
f7
|
|
|
|
||||||
|
Over [*] outstanding
|
|
f8
|
|
|
|
||||||
|
Rental [*] months on books
|
|
f9
|
|
|
|
||||||
|
Other ineligible vehicle types
|
|
f19
|
|
|
|
||||||
|
Sold out-of-trust
|
|
f11
|
|
|
|
||||||
|
Obligors subject to bankruptcy or insolvency proceedings
|
|
f12
|
|
|
|
||||||
|
Rental Receivables ([*])
|
|
f13
|
|
|
|
||||||
|
Rental Receivables ([*])
|
|
f14
|
|
|
|
||||||
|
Term [*] payoff
|
|
f15
|
|
|
|
||||||
|
|
|
|
Total ineligible Receivables
|
(sum f)
|
|
|
(F)
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
||
G.
|
Eligible Receivables
|
|
|
(E) - (F)
|
|
|
(G)
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
H.
|
Normal Concentration Percentage
|
|
|
|
|
|
|
|||||
Obligor Name
|
Amount
|
Also, has Rental? Y/N
|
Concentration limit
|
Normal Concentration Percentage
|
Excess concentrations
|
|
|
|
|
|||
|
Retail Obligors
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
[*] * (G)
|
|
h1
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
h2
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
h3
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
h4
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
h5
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
h6
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
h7
|
|
|
|
||
|
Rental Obligors
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
[*] * (G)
|
|
h8
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
h9
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
h10
|
(sum h)
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
h11
|
|
(H)
|
|
||
|
|
|
|
|
[*] * (G)
|
|
h12
|
Reduction to NRPB
|
||||
|
|
|
|
|
|
|
|
|
|
|
||
I.
|
Special Concentration Percentage - Special Obligors
|
|
|
|
|
|
|
|||||
|
Obligor Name
|
Amount
|
Also, has Rental? Y/N
|
Concentration Limit
|
Special Concentration Percentage
|
Excess concentrations
|
|
|
|
|
||
|
Retail Obligors
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
[*] * (G)
|
|
i1
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
i2
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
i3
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
i4
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
i5
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
i6
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
K.
|
Special Concentration Percentage - Specialty Vehicles
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||
|
Total Motorcycles (including all-terrain vehicles)
|
(i)
|
|
|
|
|
|
|
|
|||
|
All-Terrain Vehicles
|
(ii)
|
|
|
|
|
|
|
|
|||
|
All-Terrain Vehicles advance limit
|
(iii)
|
[*]
|
|
|
|
|
|
|
|||
|
All-Terrain Vehicles discounted amount
|
(ii) x (iii)
|
|
(iv)
|
|
|
|
|
|
|||
|
Total Motorcycles discounted amount
|
(i) - (ii) + (iv)
|
|
(x)
|
|
|
|
|||||
|
|
Discounted amount
|
|
|
|
(ii) *([*]-(iii))
|
|
|
k1
|
|
||
|
Salvage Vehicles
|
(v)
|
|
|
|
|
|
|
|
|||
|
Advance Limit
|
(vi)
|
[*]
|
|
|
|
|
|
|
|||
|
Salvage Vehicles discounted amount
|
|
(v) x (vi)
|
|
(y)
|
|
|
|
||||
|
|
Discounted amount
|
|
|
|
(v) *([*]-(vi))
|
|
|
k2
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
Marine Crafts
|
(vii)
|
|
|
|
|
|
|
|
|||
|
Advance Limit
|
(viii)
|
[*]
|
|
|
|
|
|
|
|||
|
Marine Crafts discounted amount
|
|
(vii) x (viii)
|
|
(z)
|
|
|
|
||||
|
|
Discounted amount
|
|
|
|
(vii) *([*]-(viii))
|
|
|
k3
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
Specialty Vehicle Type
|
Amount
|
|
Concentration limit
|
Special Concentration Percentage
|
Excess concentrations
|
|
|
|
|
||
|
[*]
|
|
l1
|
|
[*] * (G)
|
0
|
k4
|
|
|
|
||
|
[*]
|
|
l2
|
|
[*] * (G)
|
0
|
k5
|
|
|
|
||
|
[*]
|
|
l3
|
|
[*] * (G)
|
0
|
k6
|
|
|
|
||
|
[*]
|
|
l4
|
|
[*] * (G)
|
0
|
k7
|
|
|
|
||
|
[*]
|
|
l5
|
|
[*] * (G)
|
0
|
k8
|
|
|
|
||
|
[*]
|
|
l6
|
|
[*] * (G)
|
0
|
k9
|
|
|
|
||
|
[*]
|
|
l7
|
|
[*] * (G)
|
0
|
k10
|
|
|
|
||
|
Excess concentration
|
|
|
|
|
(sum k)
|
|
|
(K)
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
O.
|
Special Concentration Percentage - Auction Credit
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||
|
Total Auction Credits
|
(i)
|
|
|
|
|
|
|
|
|||
|
[*] Special Concentration Percentage x (G)
|
(ii)
|
|
|
|
|
|
|
|
|||
|
Excess concentration
|
|
if (i) > (ii), then (i) - (ii)
|
|
|
|
(O)
|
|
||||
|
|
|
|
|
|
|
|
Reduction to NRPB
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
||
P.
|
Special Concentration Percentage - Term [*]
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||
|
Total Receivables outstanding [*]
|
(i)
|
|
|
|
|
|
|
|
|||
|
[*] Special Concentration Percentage x (G)
|
(ii)
|
|
|
|
|
|
|
|
|||
|
Excess concentration
|
|
if (i) > (ii), then (i) - (ii)
|
|
|
|
(P)
|
|
||||
|
|
|
|
|
|
|
|
Reduction to NRPB
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
||
Q.
|
Total of discounts and excess concentrations
|
|
|
(Sum H through P)
|
|
|
(Q)
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
Net Receivables Pool Balance
|
|
|
|
(G) + (Q)
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
SECTION III - Minimum Reserves
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||
A.
|
Loss Reserve Calculation
|
|
|
|
Total
|
|
[*] Delinquency Ratio
|
|||||
1)
|
[*]
|
|
|
|
|
|
|
|
Dec-16
|
[*]
|
||
2)
|
[*]
|
|
|
|
|
|
|
|
Nov-16
|
[*]
|
||
3)
|
[*]
|
|
|
|
|
|
|
|
Oct-16
|
[*]
|
||
|
|
Loss Reserve ((1 - 2) * 3)
|
|
|
|
|
|
Sep-16
|
[*]
|
|||
|
|
|
|
|
|
|
|
|
Aug-16
|
[*]
|
||
|
Loss Percentage Calculation
|
|
|
|
|
|
Jul-16
|
[*]
|
||||
4)
|
[*]
|
|
|
|
|
|
|
|
Jun-16
|
[*]
|
||
5)
|
[*]
|
|
|
|
|
|
|
|
May-16
|
[*]
|
||
6)
|
[*] (see below)
|
|
|
|
|
|
Apr-16
|
[*]
|
||||
7)
|
Minimum Loss Percentage
|
|
|
|
|
|
Mar-16
|
[*]
|
||||
|
|
Loss Percentage ([*])
|
|
|
|
|
[*]
|
|
Feb-16
|
[*]
|
||
|
|
|
|
|
|
|
|
|
Jan-16
|
[*]
|
||
|
Default Ratio Component
|
|
|
|
|
|
|
|
|
|||
8)
|
[*]
|
|
|
|
|
|
|
|
[*] Avg Default Ratio
|
|||
9)
|
[*]
|
|
|
|
|
|
|
|
Dec-16
|
[*]
|
||
10)
|
[*]
|
|
|
|
|
|
|
|
Nov-16
|
[*]
|
||
11)
|
[*]
|
|
|
|
|
|
|
|
Oct-16
|
[*]
|
||
|
|
Default Ratio Component ((10 / 11) * 9)
|
|
|
[*]
|
|
Sep-16
|
[*]
|
||||
|
|
|
|
|
|
|
|
|
Aug-16
|
[*]
|
||
B.
|
Cash Reserve Event (Determination)
|
|
|
|
|
Jul-16
|
[*]
|
|||||
|
Adjusted Net Spread [*]
|
|
|
|
|
|
Jun-16
|
[*]
|
||||
|
Adjusted Net Spread [*]
|
|
|
|
|
|
May-16
|
[*]
|
||||
|
|
[*]
|
|
|
|
I.
|
|
|
Apr-16
|
[*]
|
||
|
|
[*]
|
|
|
|
|
[*]
|
|
Mar-16
|
[*]
|
||
|
|
|
|
|
|
|
|
|
Feb-16
|
[*]
|
||
|
|
|
|
|
|
|
|
|
Jan-16
|
[*]
|
|
Delinquency Ratio, current month
|
|
|
II.
|
|
|
|
|
||||
|
|
[*]
|
|
|
|
|
[*]
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
[*] avg Payment Rate
|
|
|
III.
|
|
|
|
|
||||
|
|
Minimum Payment Rate
|
|
|
[*]
|
|
|
|
||||
|
|
|
|
|
|
|
[*]
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
Cash Reserve Event?
|
|
[*]
|
[*]
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||
C.
|
Cash Reserve Required Amount
|
|
|
|
|
|
|
|||||
|
Calculation date of most recent Cash Reserve Event ([*])
|
|
|
|
(fill in the date manually or "N/A")
|
|||||||
|
Has the Cash Reserve Event been cured for [*]?
|
|
|
|
|
|
|
|
||||
|
Cash Reserve Event trigger applicable (occurred and not cured for [*]) ?
|
|
|
|
|
|
||||||
|
1)
|
Application percentage
|
|
|
|
|
|
|
||||
|
2)
|
Aggregate Investment
|
|
|
|
|
|
|||||
|
3)
|
Required amount based on Investment and performance [*]
|
|
|
|
|
|
|||||
|
4)
|
Supplement Yield Reserve Amount
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|||||
|
|
Cash Reserve Required Amount [*]
|
|
|
|
|
|
|||||
|
|
Actual Cash Reserve balance
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
D.
|
Net Spread Test
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|||||
|
1)
|
Finance Charge Collections
|
|
|
|
|
|
|||||
|
2)
|
Funding Discount expensed during month
|
|
|
|
|
|
|||||
|
3)
|
Standby Fee (unused fee)
|
|
|
|
|
|
|||||
|
4)
|
Replacement Servicer Fee (if $0 there should be a Notional Servicer Fee)
|
|
|
|
|
|
|||||
|
5)
|
Notional Servicer Fee [*]
|
|
|
|
|
|
|||||
|
6)
|
Backup Servicing Fees
|
|
|
|
|
|
|||||
|
7)
|
Transition Expenses (if any)
|
|
|
|
|
|
|||||
|
8)
|
Other Fees > $100
|
|
|
|
|
|
|||||
|
9)
|
Defaults as defined for the Default Ratio test
|
|
|
|
|
|
|||||
|
10)
|
|
Subtotal - carry costs and losses (2 thru 9)
|
|
|
|
|
|||||
|
11)
|
Recoveries
|
|
|
|
|
|
|
||||
|
12)
|
Collections on Defaulted Receivables
|
|
|
|
|
|
|
||||
|
13)
|
Subtotal: excess Finance Charge Collections (1 - 10 + 11 + 12)
|
|
|
|
|
|
|
||||
|
14)
|
Average aggregate balance Pool Receivables
|
|
|
|
|
|
|
||||
|
|
Net Spread (before allocation of Supplemental Yield) ([*])
|
|
|
|
|
|
|
||||
|
15)
|
Adjusted Net Spread Amount (allocation of Supplemental Yield)
|
|
|
|
|
|
|
||||
|
16)
|
Subtotal: excess Finance Charge Collections + allocation (13 + 15)
|
|
|
|
|
|
|
||||
|
17)
|
Average aggregate balance Pool Receivables
|
|
|
|
|
|
|
||||
|
18)
|
Net Spread ([*])
|
|
|
|
|
|
|
||||
|
|
Minimum [*] Net Spread
|
[*]
|
|
|
|
|
|
||||
|
|
Compliance ([*] > [*])
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
E.
|
Payment Rate
|
|
|
|
|
|
|
|||||
|
1)
|
Collections of principal on all Pool Receivables (excl. Collections of principal on Spec. Ineligible Receivables)
|
|
|
||||||||
|
2)
|
Beginning aggregate O/S Balance of Pool Receivables (excl. Collections of principal on Spec. Ineligible Receivables)
|
|
|
||||||||
|
3)
|
Payment Rate (1 / 2)
|
|
|
|
|
|
|
||||
|
4)
|
[*] Payment Rate
|
|
|
|
|
|
|
||||
|
5)
|
Minimum [*] Payment Rate
|
|
|
[*]
|
|
|
|
|
|||
|
|
Compliance (4 > 5)
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||
F.
|
Minimum Eligible Receivables
|
|
|
|
|
|
|
|||||
|
1)
|
Eligible Receivables
|
|
|
|
|
|
|||||
|
2)
|
Minimum Eligible Receivables
|
|
30,000,000
|
|
|
|
|
||||
|
|
Compliance (1 > 2)
|
|
|
|
|
|
|||||
G.
|
Minimum Cash Reserve
|
|
|
|
|
|
||||||
|
1)
|
Amount on deposit in Cash Reserve
|
|
|
|
|
|
|||||
|
2)
|
Minimum Cash Reserve amount
|
|
[*]
|
|
|
|
|
||||
|
|
Compliance (1 > 2)
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||
SECTION V - Financial Triggers & Covenants
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
||
A.
|
Tangible Net Worth Test
|
|
|
|
|
|
|
|
||||
1
|
AFC
|
|
|
|
|
|
|
|
|
|
||
|
1)
|
AFC's Shareholder's Equity
|
|
|
|
|
|
|||||
|
2)
|
AFC's Intangible Assets
|
|
|
|
|
|
|||||
|
3)
|
Tangible Net Worth (1 - 2)
|
|
|
|
|
|
|||||
|
4)
|
Minimum Tangible Net Worth
|
|
[*]
|
|
|
|
|
||||
|
|
Compliance (3 > 4)
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|||||
2
|
Seller - AFCI
|
|
|
|
|
|
||||||
|
1)
|
AFCI Shareholder's Equity
|
|
|
|
|
|
|||||
|
2)
|
AFCI's Intangible Assets
|
|
|
|
|
|
|||||
|
3)
|
Tangible Net Worth (1 - 2)
|
|
|
|
|
|
|||||
|
4)
|
Minimum Tangible Net Worth
|
|
[*]
|
|
|
|
|
||||
|
|
Compliance (3 > 4)
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
B.
|
Seller's Indebtedness (including Investment)
|
|
|
|
|
|
|
|
||||
|
1)
|
Maximum Indebtedness ([*])
|
|
|
|
|
|
|
||||
|
2)
|
All Indebtedness ([*])
|
|
|
|
|
|
|
||||
|
|
Compliance (1 > 2)
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
C.
|
Seller's Indebtedness (including Investment) / Equity
|
|
|
|
|
|
|
|||||
|
1)
|
Maximum Indebtedness / equity
|
|
|
[*]
|
|
|
|
|
|||
|
2)
|
AFCI Indebtedness / equity
|
|
|
|
|
|
|
||||
|
|
Compliance (1 > 2)
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
D.
|
Seller Liquidity
|
|
|
|
|
|
|
|||||
|
1)
|
AFC cash and cash equivalents
|
|
|
|
|
|
|
||||
|
2)
|
Minimum cash and equivalents
|
|
|
[*]
|
|
|
|
|
|||
|
3)
|
AFC unrestricted cash
|
|
|
|
|
|
|
||||
|
4)
|
Minimum unrestricted cash
|
|
|
[*]
|
|
|
|
|
|||
|
|
Compliance (1 > 2 & 3 > 4)
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
N/A
|
|
|
|
|
|
|
|
||
|
|
In Compliance
|
Yes
|
|
|
|
|
|
|
|
||
|
|
Violation
|
No
|
|
|
|
|
|
|
|
Carry Costs referenced in the RPA Section 2.6 have been set aside
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate Participation TEST:
|
(1) / (2)
|
|
|||||
|
Is Aggregate Participation less than or equal to [*]?
|
|
|
||||
|
|
|
|
|
|
|
|
Cash Reserve [*]
|
|
|
|
||||
|
|
Is Level One Trigger applicable?
|
|
|
|||
|
|
|
|
|
|
|
|
|
[*]
|
times the Investment in 1A
|
|
|
|||
|
|
|
|
|
|
|
|
|
Supplemental Yield Reserve Amount
|
|
|
||||
|
|
|
|
|
|
|
|
|
Cash Reserve Required Amount
|
3A
|
|
||||
|
|
|
|
|
|
|
|
|
Cash Reserve Account Balance
|
3B
|
|
||||
|
|
|
|
|
|
|
|
Cash Reserve TEST: (3B must be greater than or equal to 3A)
|
|
|
|||||
|
|
|
|
|
|
|
|
IN WITNESS WHEREOF, the SELLER has caused this Portfolio Certificate to be executed and delivered by the Servicer. In addition, as of the date of this Portfolio Certificate, AFCI is in compliance with all Representations & Warranties and Covenants. Also, no Termination Events have occurred under the Receivables Purchase Agreement.
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
Automotive Finance Corporation, as Servicer
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
By: _________________________________
|
|||
|
|
|
|
Name:
|
|
|
|
|
|
|
|
Title:
|
|
|
Account Name
|
Account Type
|
Account Number
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
TO:
|
PRECISION TRUST
c/o BMO NESBITT BURNS INC. 3rd Floor Podium 1 First Canadian Place Toronto, Ontario M5X 1H3
Telecopier No.: (416) 359-1910
|
(i)
|
the representations and warranties of the Seller contained in Section 4.1 of the Receivables Purchase Agreement are correct on and as of the date of purchase as though made on and as of such date; and
|
(ii)
|
no event has occurred and is continuing, or would result from the effecting of such Purchase, that constitutes a Trigger Event or would constitute a Trigger Event by further requirement that notice be given or time elapse or both; and
|
(iii)
|
the attached weekly Portfolio Certificate fully and accurately reflects the Pool Receivables and adjusted Principal Balances.
|
Remittance Date:
|
|
Current aggregate Investment:
|
|
Increase to Investment (Cash Payment) (at least Cdn$500,000, increments of Cdn$100,000):
|
|
Cash Reserve Required Amount [*]:
|
|
|
|
Current Cash Reserve Account balance:
|
|
Cash Deposit Amount (if req'd) Transferred to Precision Trust Cash Reserve Account [*]: Net Cash Payment:
|
|
Transferred to Seller's Account No. [*]:
|
|
AUTOMOTIVE FINANCE CANADA INC.
|
|
Per:
|
|
|
[Name]
[Title]
|
Per:
|
|
|
[Name]
[Title]
|
(a)
|
the Obligor of such Receivable is located in the Province of Québec; or
|
(b)
|
such Receivable is payable to an address or an account in the Province of Québec;
|
|
|
AUTOMOTIVE FINANCE CANADA
INC./FINANCEMENT D’AUTOMOBILES CANADA INC.
|
|
By:
|
|
||
|
Name:
|
||
|
Title:
|
||
|
|
|
|
|
|
By:
|
|
|
|
|
Name:
|
|
|
|
Title:
|
|
|
BNY TRUST COMPANY OF CANADA,
solely in its capacity as trustee of
PRECISION TRUST, by its Securitization Agent, BMO NESBITT BURNS INC.
|
|
By:
|
|
||
|
Name:
|
||
|
Title:
|
||
|
|
|
|
|
|
By:
|
|
|
|
|
Name:
|
|
|
|
Title:
|
|
Net Receivables Pool Balance Calculation
|
|
In calculating NRPB, there should be no duplication of amounts previously reduced from a different category.
|
||||||
|
|
|
|
|
|
||||
A.
|
Total Pool Receivables
|
|
|
|
|
(A)
|
|||
|
|
|
|
|
|
|
|
|
|
B.
|
Specified Ineligible Receivables
|
|
|
|
|
(B)
|
|||
|
|
|
|
|
|
|
|||
C.
|
Total Pool Receivables excluding Specified Ineligible Receivables
|
|
|
(A) - (B)
|
|
(C)
|
|||
|
|
|
|
|
|
|
|||
D.
|
Accounts Payable (Title Status "T" from "Title Absent Exclusions Report")
|
|
|
|
(D)
|
||||
|
|
|
|
|
|
|
|
|
|
E.
|
Total Pool Receivables excluding Specified Ineligible Receivables and Title Status "T"
|
(C) - (D)
|
|
(E)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F.
|
ineligible Receivables
|
||||||||
|
Non-Canadian residents, governmental, or other ineligible obligors
|
|
f1
|
|
|
||||
|
Delinquent Receivables
|
|
f2
|
|
|
||||
|
Defaulted Receivables
|
|
f3
|
|
|
||||
|
Obligors with [*] Defaulted Receivables
|
|
f4
|
|
|
||||
|
Short-pays
|
|
f5
|
|
|
||||
|
NSF
|
|
f6
|
|
|
||||
|
Ineligible contract terms
|
|
f7
|
|
|
||||
|
Over [*] outstanding
|
|
f8
|
|
|
||||
|
Rental [*] on books
|
|
f9
|
|
|
||||
|
Other ineligible vehicle types
|
|
f19
|
|
|
||||
|
Sold out-of-trust
|
|
f11
|
|
|
||||
|
Obligors subject to bankruptcy or insolvency proceedings
|
|
f12
|
|
|
||||
|
Rental Receivables ([*])
|
|
f13
|
|
|
||||
|
Rental Receivables ([*])
|
|
f14
|
|
|
||||
|
Term [*] payoff
|
|
f15
|
|
|
||||
|
|
|
|
|
Total ineligible Receivables
|
(sum f)
|
|
(F)
|
|
|
|
|
|
|
|
|
|
|
|
G.
|
Eligible Receivables
|
|
|
(E) - (F)
|
|
(G)
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H.
|
Normal Concentration Percentage
|
||||||||
|
Obligor Name
|
Amount
|
Also, has Rental? Y/N
|
Concentration limit
|
Normal Concentration Percentage
|
Excess concentrations
|
|
|
|
|
Retail Obligors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
[*] * (G)
|
|
h1
|
|
|
|
|
|
|
|
[*] * (G)
|
|
h2
|
|
|
|
|
|
|
|
[*] * (G)
|
|
h3
|
|
|
|
|
|
|
|
[*] * (G)
|
|
h4
|
|
|
|
|
|
|
|
[*] * (G)
|
|
h5
|
|
|
|
|
|
|
|
[*] * (G)
|
|
h6
|
|
|
|
|
|
|
|
[*] * (G)
|
|
h7
|
|
|
|
Rental Obligors
|
|
|
|
|
|
|||
|
|
|
|
|
[*] * (G)
|
|
h8
|
|
|
|
|
|
|
|
[*] * (G)
|
|
h9
|
|
|
|
|
|
|
|
[*] * (G)
|
|
h10
|
(sum h)
|
|
|
|
|
|
|
[*] * (G)
|
|
h11
|
|
(H)
|
|
|
|
|
|
[*] * (G)
|
|
h12
|
Reduction to NRPB
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
I.
|
Special Concentration Percentage - Special Obligors
|
||||||||
|
Obligor Name
|
Amount
|
Also, has Rental? Y/N
|
Concentration Limit
|
Special Concentration Percentage
|
Excess concentrations
|
|
|
|
|
Retail Obligors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
[*] * (G)
|
|
i1
|
|
|
|
|
|
|
|
[*] * (G)
|
|
i2
|
|
|
|
|
|
|
|
[*] * (G)
|
|
i3
|
|
|
|
|
|
|
|
[*] * (G)
|
|
i4
|
|
|
|
|
|
|
|
[*] * (G)
|
|
i5
|
|
|
|
|
|
|
|
[*] * (G)
|
|
i6
|
|
|
|
|
|
|
|
[*] * (G)
|
|
i7
|
|
|
|
Rental Obligors
|
|
|
|
|
|
|
||
|
|
|
|
|
[*] * (G)
|
|
i8
|
|
|
|
|
|
|
|
[*] * (G)
|
|
i9
|
|
|
|
|
|
|
|
[*] * (G)
|
|
i10
|
(sum i)
|
|
|
|
|
|
|
[*] * (G)
|
|
i11
|
|
(I)
|
|
|
|
|
|
[*] * (G)
|
|
i12
|
Reduction to NRPB
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J.
|
All Obligors exceeding [*] Normal Concentration Percentage (aggregate concentration limit [*])
|
|
|
|
|||||
|
Obligor Name
|
Amount
|
|
Concentration Limit
|
Normal Concentration Percentage
|
Value of Receivables included for Obligors exceeding [*]
|
|||
|
|
|
|
|
[*] * (G)
|
|
j1 (limited to 3%)
|
||
|
|
|
|
|
[*] * (G)
|
|
j2 (limited to 2%)
|
||
|
|
|
|
|
[*] * (G)
|
|
j3 (limited to 2%)
|
||
|
|
|
|
|
[*] * (G)
|
|
j4 (limited to 2%)
|
||
|
|
|
|
|
[*] * (G)
|
|
j5 (limited to 2%)
|
||
|
|
|
|
|
[*] * (G)
|
|
j6 (limited to 2%)
|
||
|
|
|
|
|
[*] * (G)
|
|
j7 (limited to 2%)
|
||
|
|
|
|
|
[*] * (G)
|
|
j8 (limited to 2%)
|
||
|
|
|
|
|
[*] * (G)
|
|
j9 (limited to 2%)
|
||
|
|
|
|
|
[*] * (G)
|
|
j10 (limited to 2%)
|
||
|
|
|
|
|
|
|
|
|
|
|
Total of Special Obligors exceeding [*]
|
(i)
|
(sum j)
|
|
|
|
|
||
|
[*] Special Concentration Percentage x (G)
|
(ii)
|
|
|
|
|
|
||
|
Excess concentration
|
|
if (i) > (ii), then (ii) - (i)
|
|
(J)
|
||||
|
|
|
|
|
|
|
|
Reduction to NRPB
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
K.
|
Special Concentration Percentage - Specialty Vehicles
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
Total Motorcycles (including all-terrain vehicles)
|
(i)
|
|
|
|
|
|
|
|
|
All-Terrain Vehicles
|
(ii)
|
|
|
|
|
|
|
|
|
All-Terrain Vehicles advance limit
|
(iii)
|
[*]
|
|
|
|
|
|
|
|
All-Terrain Vehicles discounted amount
|
(ii) x (iii)
|
|
(iv)
|
|
|
|
|
|
|
Total Motorcycles discounted amount
|
|
|
(i) - (ii) + (iv)
|
|
(x)
|
|
|
|
|
|
Discounted amount
|
|
|
(ii) *([*]-(iii))
|
|
k1
|
||
|
Salvage Vehicles
|
(v)
|
|
|
|
|
|
|
|
|
Advance Limit
|
(vi)
|
[*]
|
|
|
|
|
|
|
|
Salvage Vehicles discounted amount
|
|
(v) x (vi)
|
|
(y)
|
|
|
||
|
|
Discounted amount
|
|
(v) *([*]-(vi))
|
|
k2
|
|||
|
|
|
|
|
|
|
|
|
|
|
Marine Crafts
|
|
(vii)
|
|
|
|
|
|
|
|
Advance Limit
|
(viii)
|
[*]
|
|
|
|
|
|
|
|
Marine Crafts discounted amount
|
|
(vii) x (viii)
|
|
(z)
|
|
|
||
|
|
Discounted amount
|
|
(vii) *([*]-(viii))
|
|
k3
|
|||
|
|
|
|
|
|
|
|
|
|
|
Specialty Vehicle Type
|
Amount
|
|
Concentration limit
|
Special Concentration Percentage
|
Excess concentrations
|
|
|
|
|
[*]
|
|
l1
|
|
[*] * (G)
|
|
k4
|
|
|
|
[*]
|
|
l2
|
|
[*] * (G)
|
|
k5
|
|
|
|
[*]
|
|
l3
|
|
[*] * (G)
|
|
k6
|
|
|
|
[*]
|
|
l4
|
|
[*] * (G)
|
|
k7
|
|
|
|
[*]
|
|
l5
|
|
[*] * (G)
|
|
k8
|
|
|
|
[*]
|
|
l6
|
|
[*] * (G)
|
|
k9
|
|
|
|
[*]
|
|
l7
|
|
[*] * (G)
|
|
k10
|
|
|
|
Excess concentration
|
|
|
(sum k)
|
|
(K)
|
|||
|
|
|
|
|
|
|
|
Reduction to NRPB
|
_______________________________
|
KAR AUCTION SERVICES, INC.
By: _______________________________
|
[NAME]
|
Its: _______________________________
|
Cumulative Operating 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]
|
_______________________________
|
KAR AUCTION SERVICES, INC.
By: _______________________________
|
[NAME]
|
Its: _______________________________
|
Name
|
|
State or Jurisdiction of Incorporation or Organization
|
|
ADESA, Inc.
|
|
Delaware
|
|
ADESA Corporation, LLC
|
|
Indiana
|
|
A.D.E. of Ark-La-Tex, Inc.
|
|
Louisiana
|
|
A.D.E. of Knoxville, LLC
|
|
Tennessee
|
|
ADESA Ark-La-Tex, LLC
|
|
Louisiana
|
|
ADESA Arkansas, LLC
|
|
Delaware
|
|
ADESA Atlanta, LLC
|
|
New Jersey
|
|
ADESA Birmingham, LLC
|
|
Alabama
|
|
ADESA California, LLC
|
|
California
|
|
ADESA Charlotte, LLC
|
|
North Carolina
|
|
ADESA Colorado, LLC
|
|
Colorado
|
|
ADESA Dealer Services, LLC
|
|
Indiana
|
|
ADESA Des Moines, LLC
|
|
Iowa
|
|
ADESA Florida, LLC
|
|
Florida
|
|
ADESA Illinois, LLC
|
|
Illinois
|
|
ADESA Impact Texas, LLC
|
|
Texas
|
|
ADESA Indianapolis, LLC
|
|
Indiana
|
|
ADESA Lansing, LLC
|
|
Michigan
|
|
ADESA Lexington, LLC
|
|
Kentucky
|
|
ADESA Mexico, LLC
|
|
Indiana
|
|
ADESA Minnesota, LLC
|
|
Minnesota
|
|
ADESA Missouri, LLC
|
|
Missouri
|
|
ADESA Nevada, LLC
|
|
Nevada
|
|
ADESA New Jersey, LLC
|
|
New Jersey
|
|
ADESA New York, LLC
|
|
New York
|
|
ADESA Ohio, LLC
|
|
Ohio
|
|
ADESA Oklahoma, LLC
|
|
Oklahoma
|
|
ADESA Pennsylvania, LLC
|
|
Pennsylvania
|
|
ADESA Phoenix, LLC
|
|
New Jersey
|
|
ADESA San Diego, LLC
|
|
California
|
|
ADESA- South Florida, LLC
|
|
Indiana
|
|
ADESA Texas, Inc.
|
|
Texas
|
|
ADESA Virginia, LLC
|
|
Virginia
|
|
ADESA Wisconsin, LLC
|
|
Wisconsin
|
|
AFC CAL, LLC
|
|
California
|
|
Asset Holdings III, L.P.
|
|
Ohio
|
|
Auto Dealers Exchange of Concord, LLC
|
|
Massachusetts
|
|
Auto Dealers Exchange of Memphis, LLC
|
|
Tennessee
|
|
Automotive Finance Consumer Division, LLC
|
|
Indiana
|
|
Automotive Finance Corporation
|
|
Indiana
|
|
Automotive Recovery Services, Inc.
|
|
Indiana
|
|
AUTONIQ, LLC
|
|
Virginia
|
|
AutoVIN, Inc.
|
|
Indiana
|
|
Name
|
|
State or Jurisdiction of Incorporation or Organization
|
|
MobileTrac LLC
|
|
Delaware
|
|
PAR, Inc.
|
|
Indiana
|
|
Axle Holdings, Inc.
|
|
Delaware
|
|
Axle Holdings Acquisition Company, LLC
|
|
Delaware
|
|
Insurance Auto Auctions, Inc.
|
|
Illinois
|
|
Insurance Auto Auctions Corp.
|
|
Delaware
|
|
Insurance Auto Auctions Tennessee LLC
|
|
Tennessee
|
|
Insurance Auto Auctions of Georgia LLC
|
|
Georgia
|
|
IAA Acquisition Corp.
|
|
Delaware
|
|
IAA Services, Inc.
|
|
Illinois
|
|
Auto Disposal Systems, Inc.
|
|
Ohio
|
|
High Tech National, LLC
|
|
Indiana
|
|
HT Locksmiths, Inc.
|
|
Indiana
|
|
Sioux Falls Auto Auction, Inc.
|
|
South Dakota
|
|
Tri-State Auction Co., Inc.
|
|
North Dakota
|
|
Zabel & Associates, Inc.
|
|
North Dakota
|
|
LiveBlock Auctions International, Inc.
|
|
Nevada
|
|
LiveBlock Auctions Canada Ltd.
|
|
Saskatchewan
|
|
WFEA Holdings, Inc.
|
|
Alberta
|
|
CarBuyCo, LLC
|
|
North Carolina
|
|
AFC Funding Corporation
|
|
Indiana
|
|
AuctionTrac, LLC
|
|
Indiana
|
|
OPENLANE, Inc.
|
|
Delaware
|
|
CarsArrive Network, Inc.
|
|
Georgia
|
|
Recovery Database Network, Inc.
|
|
Delaware
|
|
OPENLANE Canada Co.
|
|
Nova Scotia
|
|
OPENLANE Canada Inc.
|
|
Ontario
|
|
NEPO Auto Centre, Inc.
|
|
Ontario
|
|
Auction Vehicles of Mexico, S. de R.L. de C.V.
|
|
Federal District of Mexico
|
|
Adesur S. de R.L. de C.V.
|
|
Federal District of Mexico
|
|
2540-0714 Quebec Inc.
|
|
Quebec
|
|
504811 NB Ltd.
|
|
New Brunswick
|
|
51937 Newfoundland & Labrador Limited
|
|
Newfoundland
|
|
79378 Manitoba Inc.
|
|
Manitoba
|
|
ADESA Auctions Canada Corporation
|
|
Nova Scotia
|
|
ADESA Montreal Corporation
|
|
Nova Scotia
|
|
ADESA Quebec Corporation
|
|
Quebec
|
|
ADESA Remarketing Services Inc.
|
|
Ontario
|
|
AutoVIN Canada Inc.
|
|
Nova Scotia
|
|
Automotive Finance Canada Inc.
|
|
Ontario
|
|
Impact Auto Auctions Ltd.
|
|
Ontario
|
|
Impact Auto Auctions Sudbury Ltd.
|
|
Ontario
|
|
Suburban Auto Parts Inc.
|
|
Ontario
|
|
1st Interactive Design Limited
|
|
United Kingdom
|
|
Holding & Barnes PLC
|
|
United Kingdom
|
|
HBC Vehicle Services Limited
|
|
United Kingdom
|
|
Preferred Warranties, Inc.
|
|
Pennsylvania
|
|
Name
|
|
State or Jurisdiction of Incorporation or Organization
|
|
Preferred Nationwide Reinsurance Company, Ltd.
|
|
Turks and Caicos
|
|
Preferred Warranties of Florida, Inc.
|
|
Florida
|
|
PWI Holdings, Inc.
|
|
Pennsylvania
|
|
Superior Warranties, Inc.
|
|
Pennsylvania
|
|
Automotive Key Controls, LLC
|
|
Indiana
|
|
High Tech Locksmiths Canada ULC
|
|
Alberta
|
|
ADESA Idaho, LLC
|
|
Idaho
|
|
ADESA Oregon, LLC
|
|
Oregon
|
|
ADESA Utah, LLC
|
|
Utah
|
|
KAR Auction Services International Limited
|
|
United Kingdom
|
|
KAR International Holdings Limited
|
|
United Kingdom
|
|
ADESA Remarketing Limited
|
|
United Kingdom
|
|
Gilbert Mitchell Holdings Limited
|
|
United Kingdom
|
|
Gilbert Mitchell Limited
|
|
United Kingdom
|
|
2544972 Ontario Inc.
|
|
Ontario
|
|
1099983 B.C. Unlimited Liability Company
|
|
British Columbia
|
|
Impact Newco US, LLC
|
|
Delaware
|
|
1)
|
I have reviewed this Annual Report on Form 10-K of KAR Auction Services, Inc.;
|
2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4)
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5)
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ JAMES P. HALLETT
|
James P. Hallett
Chief Executive Officer
|
1)
|
I have reviewed this Annual Report on Form 10-K of KAR Auction Services, Inc.;
|
2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4)
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5)
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ ERIC M. LOUGHMILLER
|
Eric M. Loughmiller
Executive Vice President and Chief Financial Officer
|
1)
|
The report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
|
2)
|
the information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ JAMES P. HALLETT
|
James P. Hallett
Chief Executive Officer
|
1)
|
The report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
|
2)
|
the information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ ERIC M. LOUGHMILLER
|
Eric M. Loughmiller
Executive Vice President and Chief Financial Officer
|