Exhibit 10.3

EMPLOYEE MATTERS AGREEMENT

BY AND BETWEEN

KAR AUCTION SERVICES, INC.

AND

IAA, INC.

DATED AS OF JUNE 27, 2019

TABLE OF CONTENTS

		Page

Article I

DEFINITIONS

Section 1.01	Definitions	1
Section 1.02	Interpretation	3

Article II

GENERAL PRINCIPLES FOR ALLOCATION OF LIABILITIES

Section 2.01	General Principles	4
Section 2.02	Service Credit	5
Section 2.03	Benefit Plans	5
Section 2.04	Individual Agreements	6
Section 2.05	Non-U.S. Jurisdictions	6
Section 2.06	Assignment and Assumption of Assets and Liabilities	6

Article III

ASSIGNMENT OF EMPLOYEES

Section 3.01	Active Employees	7

Article IV

EQUITY, INCENTIVE AND EXECUTIVE COMPENSATION

Section 4.01	Generally	8
Section 4.02	Equity Incentive Awards	8
Section 4.03	Non-Equity Incentive Plans	11
Section 4.04	Director Compensation	11

Article V

U.S. QUALIFIED RETIREMENT PLANS

Section 5.01	SpinCo U.S. Savings Plan	12

Article VI

Director Deferred Compensation Plan

Section 6.01	KAR	13
Section 6.02	SpinCo.	13

Article VII

WELFARE BENEFIT PLANS

Section 7.01	Welfare Plans	14
Section 7.02	U.S. COBRA and HIPAA	14
Section 7.03	Vacation, Holidays and Leaves of Absence	15
Section 7.04	Severance and Unemployment Compensation	15
Section 7.05	Workers’ Compensation	15
Section 7.06	Insurance Contracts	15
Section 7.07	Third-Party Vendors	15
Section 7.08	SpinCo Retained Welfare Plans	15


Article VIII

NON-U.S. EMPLOYEES

Section 8.01	General	16

Article IX

MISCELLANEOUS

Section 9.01	Employee Records	16
Section 9.02	Preservation of Rights to Amend	16
Section 9.03	Fiduciary Matters	17
Section 9.04	Further Assurances	17
Section 9.05	Counterparts; Entire Agreement; Corporate Power	17
Section 9.06	Governing Law	17
Section 9.07	Assignability	17
Section 9.08	Third-Party Beneficiaries	18
Section 9.09	Notices	18
Section 9.10	Severability	18
Section 9.11	Force Majeure	19
Section 9.12	Headings	19
Section 9.13	Survival of Covenants	19
Section 9.14	Waivers of Default	19
Section 9.15	Dispute Resolution	19
Section 9.16	Specific Performance	19
Section 9.17	Amendments	19
Section 9.18	Interpretation	19
Section 9.19	Limitations of Liability	19
Section 9.20	Mutual Drafting	19

EMPLOYEE MATTERS AGREEMENT

This EMPLOYEE MATTERS AGREEMENT, dated as of June 27, 2019 (this “Agreement”), is by and between KAR Auction Services, Inc., a Delaware corporation (“KAR”), and IAA, Inc., a Delaware corporation and wholly owned subsidiary of KAR (“SpinCo”).

WHEREAS, as contemplated by the Separation and Distribution Agreement between KAR and SpinCo dated June 27, 2019, KAR and SpinCo desire to enter into this Agreement to provide for the allocation of Assets, Liabilities, and responsibilities with respect to certain matters relating to employees and other individual service providers (including employee compensation and benefit plans and programs) between them.

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01 Definitions. For purposes of this Agreement, the following terms shall have the meanings set forth below. Capitalized terms used in this Agreement but not otherwise defined herein shall have the meanings ascribed to them in the Separation and Distribution Agreement.

“17/18 KAR PRSU” shall have the meaning set forth in Section 4.02(b)(i).

“19 KAR PRSU” shall have the meaning set forth in Section 4.02(b)(ii).

“19 SpinCo PRSU” shall have the meaning set forth in Section 4.02(b)(ii).

“Action” shall have the meaning set forth in the Separation and Distribution Agreement.

“Affiliate” shall have the meaning set forth in the Separation and Distribution Agreement.

“Agreement” shall have the meaning set forth in the preamble to this Agreement and shall include all Schedules hereto (which may be delivered as soon as practicable following the Effective Time) and all amendments, modifications, and changes hereto entered into pursuant to Section 9.17.

“Ancillary Agreement” shall have the meaning set forth in the Separation and Distribution Agreement.

“Assets” shall have the meaning set forth in the Separation and Distribution Agreement.

“Benefit Plan” shall mean any contract, agreement, policy, practice, program, plan, trust, commitment or arrangement providing for benefits, perquisites or compensation of any nature from an employer to any Employee, or to any family member, dependent, or beneficiary of any such Employee, including pension plans, savings plans, thrift plans, supplemental pension plans and Welfare Plans, and contracts, agreements, policies, practices, programs, plans, trusts, commitments and arrangements providing for terms of employment, fringe benefits, severance benefits, change in control protections or benefits, travel and accident, life, accidental death and dismemberment, disability and accident insurance, tuition reimbursement, travel reimbursement, vacation, sick, personal or bereavement days, leaves of absences and holidays; provided, however, the term “Benefit Plan” does not include any government-sponsored benefits, such as workers’ compensation, unemployment or any similar plans, programs or policies.

“Closing KAR Stock Price” shall have the meaning set forth in Section 4.02(a)(i)(B).

“COBRA” shall mean the U.S. Consolidated Omnibus Budget Reconciliation Act of 1985, as codified at Section 601 et seq. of ERISA and at Section 4980B of the Code.

“Covered Participants” shall have the meaning set forth in Section 6.02(a).

“Effective Time” shall mean the Distribution Effective Time as defined in the Separation and Distribution Agreement.

“Employee” shall mean any KAR Group Employee or SpinCo Group Employee.

“Employment Taxes” shall mean any federal, state, local or foreign Taxes, charges, fees, duties, levies, imposts, rates, social security contributions or other assessments or obligations, in each case in the nature of a Tax, imposed on, due or asserted to be due from (i) Employees or Former Employees or (ii) the KAR Group or the SpinCo Group as employers or former employers of such Employees or Former Employees including employers’ and employees’ portions of Federal Insurance Contributions Act Taxes, employers’ Federal Unemployment Tax Act taxes and state and local unemployment insurance taxes, and employers’ withholding, reporting and remitting obligations with respect to any such Taxes or employees’ federal, state and local income taxes that are imposed on or due from Employees or Former Employees.

“Equity Award Deduction” shall mean any Tax deduction that may be taken pursuant to applicable Law with respect to any KAR Award or any SpinCo Award held by any Employee or any Former Employee.

“ERISA” shall mean the U.S. Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.

“Former Employees” shall mean Former KAR Group Employees and Former SpinCo Group Employees.

“Former KAR Group Employee” shall mean any individual who is a former employee of KAR or any of its Subsidiaries as of the Effective Time and who is not a Former SpinCo Group Employee.

“Former SpinCo Group Employee” shall mean any individual who is a former employee of KAR or any of its Subsidiaries as of the Effective Time and who, during the final twelve (12) months of his or her employment, was primarily in the service of the SpinCo Business.

“General Continuation Period” shall mean a period of time commencing as of the Distribution Date and ending on December 31, 2019.

“HIPAA” shall mean the U.S. Health Insurance Portability and Accountability Act of 1996, as amended, and the regulations promulgated thereunder.

“Individual Agreement” shall mean any individual (i) employment contract, (ii) retention, severance or change of control agreement, (iii) expatriate (including any international assignee) contract or agreement (including agreements and obligations regarding repatriation, relocation, equalization of taxes and living standards in the host country), or (iv) other agreement containing restrictive covenants (including confidentiality, non-competition and non-solicitation provisions) between a member of the KAR Group and a SpinCo Group Employee, as in effect immediately prior to the Effective Time.

“IRS” shall mean the United States Department of Treasury Internal Revenue Service.

“KAR” shall have the meaning set forth in the preamble to this Agreement.

“KAR Award” means the adjusted KAR Options, the KAR RSUs, KAR Restricted Stock Awards, and the KAR PRSUs, collectively.

“KAR Benefit Plan” shall mean any Benefit Plan established, sponsored or maintained by KAR or any of its Subsidiaries immediately prior to the Effective Time, excluding any SpinCo Benefit Plan.

“KAR Change of Control” shall have the meaning set forth in Section 4.02(h).

“KAR Compensation Committee” shall mean the Compensation Committee of the KAR Board.

“KAR Director Plan” shall have the meaning set forth in Section 6.01.

“KAR Equity-Based Plans” means the Stock Incentive Plan and the 2009 Omnibus Stock and Incentive Plan, each as amended from time to time.

“KAR ESPP” shall have the meaning set forth in Section 4.02(m)(i).

“KAR Group Employee” shall mean each individual who is employed by the KAR Group as of the Effective Time and who is not a SpinCo Group Employee (including any such individual who is not actively working as of the Effective Time as a result of illness, injury, vacation or other leave of absence).

“KAR Savings Plan” shall mean the KAR Auction Services, Inc. 401(k) Plan.

“KAR Service Provider” shall mean each KAR Group Employee and each individual who is a member of the KAR Board as of the Effective Time and is not a Transferred Director.

“KAR Welfare Plan” shall mean any Welfare Plan established, sponsored, maintained or contributed to by KAR or any of its Subsidiaries for the benefit of Employees or Former Employees, including but not limited to each Welfare Plan listed on Schedule 1.01(c) but excluding any SpinCo Welfare Plan.

“Opening KAR Stock Price” shall have the meaning set forth in Section 4.02(a)(i)(B).

“Opening SpinCo Stock Price” shall have the meaning set forth in Section 4.02(a)(i)(B).

“Option,” when immediately preceded by “KAR,” means an option (either nonqualified or an incentive stock option) to purchase KAR Shares granted by KAR prior to the Effective Time pursuant to a KAR Equity-Based Plan and, when immediately preceded by “SpinCo,” means an option to purchase SpinCo Shares, which option is granted pursuant to the SpinCo Long Term Incentive Plan as part of the adjustment to KAR Options as set forth in Section 4.02.

“Party” shall mean a party to this Agreement.

“Providing Party” shall have the meaning set forth in Section 2.02(b).

“PRSU,” when immediately preceded by “KAR,” means a performance-based RSU granted by KAR prior to the Effective Time pursuant to a KAR Equity-Based Plan and when immediately preceded by “SpinCo,” means a performance-based RSU granted by SpinCo granted pursuant to the SpinCo Long Term Incentive Plan as part of the adjustment to KAR PRSUs as set forth in Section 4.02.

“Requesting Party” shall have the meaning set forth in Section 2.02(b).

“Restricted Stock Award,” when immediately preceded by “KAR,” means a KAR Share granted by KAR prior to the Effective Time pursuant to a KAR Equity-Based Plan which is subject to vesting and forfeiture restrictions and when immediately preceded by “SpinCo,” means a SpinCo Share, which is granted pursuant to the SpinCo Long Term Incentive Plan as part of the adjustment to KAR Restricted Stock Awards as set forth in Section 4.02 which is subject to vesting and forfeiture restrictions.

“RSU,” when immediately preceded by “KAR,” means a restricted stock unit granted by KAR prior to the Effective Time pursuant to a KAR Equity-Based Plan representing a general unsecured promise by KAR to deliver a KAR Share or an amount in cash equal to the value of a KAR Share and when immediately preceded by “SpinCo,” means a restricted stock unit granted by SpinCo representing a general unsecured promise by SpinCo to deliver a SpinCo Share or an amount in cash equal to the value of a SpinCo Share, which unit is granted pursuant to the SpinCo Long Term Incentive Plan as part of the adjustment to KAR RSUs as set forth in Section 4.02.

“Securities Act” shall mean the U.S. Securities Act of 1933, as amended, together with the rules and regulations promulgated thereunder.

“Separation and Distribution Agreement” shall have the meaning set forth in the recitals to this Agreement.

“SpinCo” shall have the meaning set forth in the preamble to this Agreement.

“SpinCo Award” means the SpinCo Options, the SpinCo RSUs, the SpinCo Restricted Stock Awards, and the SpinCo PRSUs, collectively.

“SpinCo Benefit Plan” shall mean any Benefit Plan established, sponsored, maintained or contributed to by a member of the SpinCo Group as of or after the Effective Time.

“SpinCo Board” shall mean the Board of Directors of SpinCo.

“SpinCo Change of Control” shall have the meaning set forth in Section 4.02(h).

“SpinCo Director Plan” shall have the meaning set forth in Section 6.02(a).

“SpinCo Group Employee” shall mean those individuals employed by the SpinCo Group as of the Effective Time (including any such individual who is not actively working as of the Effective Time as a result of illness, injury, vacation or other leave of absence).

“SpinCo Long Term Incentive Plan” means the SpinCo Omnibus Stock and Incentive Plan adopted by SpinCo prior to the Effective Time.

“SpinCo Retained Welfare Plans” shall have the meaning set forth in Section 7.08.

“SpinCo Savings Plan” shall mean the IAA 401(k) Plan.

“SpinCo Service Provider” shall mean each SpinCo Group Employee and each individual who is a member of the SpinCo Board as of the Effective Time, including the Transferred Directors.

“SpinCo Welfare Plans” shall mean the Welfare Plans established, sponsored, maintained or contributed to by any member of the SpinCo Group for the benefit of SpinCo Group Employees and Former SpinCo Group Employees.

“Transferred Director” shall have the meaning set forth in Section 4.04(a).

“U.S.” shall mean the United States of America.

“Welfare Plan” shall mean any “welfare plan” (as defined in Section 3(1) of ERISA) or a “cafeteria plan” under Section 125 of the Code, and any benefits offered thereunder, and any other plan offering health benefits (including medical, prescription drug, dental, vision, mental health, substance abuse and retiree health), disability benefits, or life, accidental death and dismemberment, and business travel insurance, pre-tax premium conversion benefits, dependent care assistance programs, employee assistance programs, paid time-off programs, contribution funding toward a health savings account, flexible spending accounts or cashable credits.

Section 1.02 Interpretation. Section 10.16 of the Separation and Distribution Agreement is hereby incorporated by reference.

ARTICLE II

GENERAL PRINCIPLES FOR ALLOCATION OF LIABILITIES

Section 2.01 General Principles.

(a) Acceptance and Assumption of SpinCo Liabilities. On or prior to the Effective Time, but in any case prior to the Distribution, SpinCo and the applicable SpinCo Designees shall accept, assume and agree to faithfully perform, discharge and fulfill all of the following Liabilities in accordance with their respective terms (each of which shall be treated as a SpinCo Liability), regardless of when or where such Liabilities arose or arise, or whether the facts on which they are based occurred prior to or subsequent to the Effective Time, regardless of where or against whom such Liabilities are asserted or determined (including any Liabilities arising out of claims made by KAR’s or SpinCo’s respective directors, officers, Employees, Former Employees, agents, Subsidiaries or Affiliates against any member of the KAR Group or the SpinCo Group) or whether asserted or determined prior to the date hereof, and regardless of whether arising from or alleged to arise from negligence, recklessness, violation of Law, fraud or misrepresentation by any member of the KAR Group or the SpinCo Group, or any of their respective directors, officers, Employees, Former Employees, agents, Subsidiaries or Affiliates:

(i) any and all wages, salaries, incentive compensation (as the same may be modified by this Agreement), equity compensation (as the same may be modified by this Agreement), commissions, bonuses and any other employee compensation or benefits payable to or on behalf of any SpinCo Group Employees and Former SpinCo Group Employees after the Effective Time, without regard to when such wages, salaries, incentive compensation, equity compensation, commissions, bonuses or other employee compensation or benefits are or may have been awarded or earned;

(ii) any and all Liabilities whatsoever with respect to claims made by or with respect to any SpinCo Group Employees or Former SpinCo Group Employees in connection with any Benefit Plan not retained or assumed by any member of the KAR Group pursuant to this Agreement, the Separation and Distribution Agreement or any Ancillary Agreement;

(iii) any and all Employment Taxes with respect to SpinCo Group Employees and Former SpinCo Group Employees;

(iv) any and all other employment or service-related Liabilities with respect to SpinCo Group Employees and Former SpinCo Group Employees; and

(v) any and all Liabilities expressly assumed or retained by any member of the SpinCo Group pursuant to this Agreement or Schedule 2.4(a) of the Separation and Distribution Agreement.

(b) Acceptance and Assumption of KAR Liabilities. On or prior to the Effective Time, but in any case prior to the Distribution, KAR and certain members of the KAR Group designated by KAR shall accept, assume and agree to faithfully perform, discharge and fulfill all of the following Liabilities held by SpinCo or any SpinCo Designee and KAR and the applicable members of the KAR Group shall be responsible for such Liabilities in accordance with their respective terms (each of which shall be treated as a KAR Liability), regardless of when or where such Liabilities arose or arise, or whether the facts on which they are based occurred prior to or subsequent to the Effective Time, regardless of where or against whom such Liabilities are asserted or determined (including any Liabilities arising out of claims made by KAR’s or SpinCo’s respective directors, officers, Employees, Former Employees, agents, Subsidiaries or Affiliates against any member of the KAR Group or the SpinCo Group) or whether asserted or determined prior to the date hereof, and regardless of whether arising from or alleged to arise from negligence, recklessness, violation of Law, fraud or misrepresentation by any member of the KAR Group or the SpinCo Group, or any of their respective directors, officers, Employees, Former Employees, agents, Subsidiaries or Affiliates:

(i) any and all wages, salaries, incentive compensation (as the same may be modified by this Agreement), equity compensation (as the same may be modified by this Agreement), commissions, bonuses and any other employee compensation or benefits payable to or on behalf of any KAR Group Employees and Former KAR Group Employees after the Effective Time, without regard to when such wages, salaries, incentive compensation, equity compensation, commissions, bonuses or other employee compensation or benefits are or may have been awarded or earned;

(ii) any and all Liabilities whatsoever with respect to claims made by or with respect to any KAR Group Employees or Former KAR Group Employees in connection with any Benefit Plan not retained or assumed by any member of the SpinCo Group pursuant to this Agreement, the Separation and Distribution Agreement or any Ancillary Agreement;

(iii) any and all Employment Taxes with respect to KAR Group Employees and Former KAR Group Employees;

(iv) any and all other employment or service-related Liabilities with respect to KAR Group Employees and Former KAR Group Employees; and

(v) any and all Liabilities expressly assumed or retained by any member of the KAR Group pursuant to this Agreement or Schedule 2.4(b) of the Separation and Distribution Agreement.

(c) Unaddressed Liabilities. To the extent that this Agreement does not address particular Liabilities under any Benefit Plan and the Parties later determine that they should be allocated in connection with the Distribution, the Parties shall agree in good faith on the allocation, taking into account the handling of comparable Liabilities under this Agreement.

Section 2.02 Service Credit.

(a) Service for Eligibility, Vesting and Benefit Purposes. The SpinCo Benefit Plans shall, and SpinCo shall cause each member of the SpinCo Group to, recognize each SpinCo Group Employee’s and each Former SpinCo Group Employee’s full service with KAR or any of its Subsidiaries or predecessor entities at or before the Effective Time, to the same extent that such service was credited by KAR for similar purposes prior to the Effective Time as if such full service had been performed for a member of the SpinCo Group, for purposes of eligibility, vesting and determination of level of benefits under any such SpinCo Benefit Plan.

(b) Evidence of Prior Service. Notwithstanding anything in this Agreement to the contrary, but subject to Section 3.02 and applicable Law, upon reasonable request by either Party (the “Requesting Party”), the other Party (the “Providing Party”) will provide to the Requesting Party copies of any records available to the Providing Party to document the service, plan participation and membership of Former Employees of the Providing Party who are then Employees of the Requesting Party, and will cooperate with the Requesting Party to resolve any discrepancies or obtain any missing data for purposes of determining benefit eligibility, participation, vesting and calculation of benefits with respect to any such Employee.

Section 2.03 Benefit Plans.

(a) Establishment of Plans. Before the Effective Time, SpinCo shall, or shall cause an applicable member of the SpinCo Group to, adopt Benefit Plans (and related trusts, if applicable), with terms comparable (or such other standard as is specified in this Agreement with respect to any particular Benefit Plan) to those of the corresponding KAR Benefit Plans. The U.S. KAR Benefit Plans are listed on Schedule 2.03(a)(i) and the Canadian KAR Benefit Plans are listed on Schedule 2.03(a)(ii). SpinCo may limit participation in any such SpinCo Benefit Plan to SpinCo Group Employees and Former SpinCo Group Employees who participated in the corresponding KAR Benefit Plan immediately prior to the Effective Time. SpinCo shall, or shall cause an applicable member of the SpinCo Group to, adopt such other Benefit Plans as specified in this Agreement.

(b) Information and Operation. KAR shall provide SpinCo with information describing each KAR Benefit Plan election made by a SpinCo Group Employee or Former SpinCo Group Employee that may have application to SpinCo Benefit Plans from and after the Effective Time, and SpinCo shall use its commercially reasonable efforts to administer the SpinCo Benefit Plans using those elections. Each Party shall, upon reasonable request, and subject to any applicable privacy laws, provide the other Party and the other Party’s respective Affiliates, agents, and vendors all information reasonably necessary to the other Party’s operation or administration of its Benefit Plans.

(c) No Diminution of Benefits. Except as provided herein, during the General Continuation Period, SpinCo shall provide to each SpinCo Group Employee and Former SpinCo Group Employee employee benefits under SpinCo Benefit Plans that, in the aggregate, are substantially similar to the employee benefits provided to such employees immediately prior to the Effective Time. Notwithstanding the foregoing, during such period, SpinCo may make such changes, modifications or amendments to the applicable SpinCo Benefit Plan as may be required by applicable Law or as are necessary and appropriate to reflect the Separation.

(d) No Duplication or Acceleration of Benefits. Notwithstanding anything to the contrary in this Agreement, the Separation and Distribution Agreement or any Ancillary Agreement, no participant in any SpinCo Benefit Plan shall receive service credit or benefits to the extent that receipt of such service credit or benefits would result in duplication of benefits provided to such participant by the corresponding KAR Benefit Plan or any other plan, program or arrangement sponsored or maintained by a member of the KAR Group. Furthermore, unless expressly provided for in this Agreement, the Separation and Distribution Agreement or in any Ancillary Agreement or required by applicable Law, no provision in this Agreement shall be construed to create any right to accelerate vesting or entitlements under any compensation or Benefit Plan, program or arrangement sponsored or maintained by a member of the KAR Group or member of the SpinCo Group on the part of any Employee or Former Employee.

(e) No Expansion of Participation. Unless otherwise expressly provided in this Agreement, as otherwise determined or agreed to by KAR and SpinCo, as required by applicable Law, or as explicitly set forth in a SpinCo Benefit Plan, a SpinCo Group Employee or Former SpinCo Group Employee shall be entitled to participate in the SpinCo Benefit Plans at the Effective Time only to the extent that such SpinCo Group Employee or Former SpinCo Group Employee was entitled to participate in the corresponding KAR Benefit Plan as in effect immediately prior to the Effective Time (to the extent that such SpinCo Group Employee or Former SpinCo Group Employee does not participate in the respective SpinCo Benefit Plan immediately prior to the Effective Time), it being understood that this Agreement does not expand (i) the number of SpinCo Group Employees or Former SpinCo Group Employees entitled to participate in any SpinCo Benefit Plan or (ii) the participation rights of SpinCo Group Employees or Former SpinCo Group Employees in any SpinCo Benefit Plans beyond the rights of such SpinCo Group Employees or Former SpinCo Group Employees under the corresponding KAR Benefit Plans, in each case, after the Effective Time.

(f) Transition Services. The Parties acknowledge that the KAR Group or the SpinCo Group may provide administrative services for certain of the other Party’s compensation and benefit programs for a transitional period under the terms of the Transition Services Agreement. The Parties agree to enter into a business associate agreement (if required by HIPAA or other applicable health information privacy Laws) in connection with such Transition Services Agreement. To the extent that any services that are required to be provided by a Party under this Agreement are instead provided by the other Party under the Transition Services Agreement, the obligation of the relevant Party to provide such services under this Agreement shall commence at the expiration of the transitional period for such services under the Transition Services Agreement.

(g) Beneficiaries. References to KAR Group Employees, Former KAR Group Employees, SpinCo Group Employees, Former SpinCo Group Employees, and non-employee directors of either KAR or SpinCo (including Transferred Directors), shall be deemed to refer to their beneficiaries, dependents, survivors and alternate payees, as applicable.

Section 2.04 Individual Agreements.

(a) Assignment by KAR. To the extent permissible by the terms of any Individual Agreement and by applicable Law, KAR shall assign, or cause an applicable member of the KAR Group to assign, to SpinCo or another member of the SpinCo Group, as designated by SpinCo, all Individual Agreements, with such assignment to be effective as of the Effective Time.

(b) Assumption by SpinCo. To the extent permissible by the terms of any Individual Agreement and by applicable Law, SpinCo shall assume and honor, or cause a member of the SpinCo Group to assume and honor, any Individual Agreement effective as of the Effective Time.

(i) To the extent that assignment of any such Individual Agreement is not permitted by the terms of such agreement or by applicable Law, effective as of the Effective Time, each member of the SpinCo Group shall be considered, to the extent permitted by the terms of such Individual Agreement and applicable Law, to be a successor to each member of the KAR Group for purposes of, and a third−party beneficiary with respect to, such Individual Agreement, such that each member of the SpinCo Group shall enjoy all of the rights and benefits under such agreement (including rights and benefits as a third-party beneficiary), with respect to the business operations of the SpinCo Group; provided, however, that in no event shall KAR be permitted to enforce any Individual Agreement (including any restrictive covenants contained therein) against a SpinCo Group Employee or Former SpinCo Group Employee for action taken in such individual’s capacity as a SpinCo Group Employee or Former SpinCo Group Employee; and provided, further, that KAR shall only be permitted to enforce any Individual Agreement (including any restrictive covenants contained therein) on KAR’s own behalf for twenty-four (24) months following the Effective Time.

(ii) To the extent that any such Individual Agreement is assigned to SpinCo or another member of the SpinCo Group, then each member of the KAR Group shall be considered, to the extent permitted by the terms of such Individual Agreement and applicable Law, to be a third-party beneficiary with respect to such Individual Agreement, such that each member of the KAR Group shall enjoy all of the rights and benefits under such agreement (including rights and benefits as a third-party beneficiary), with respect to the business operations of the KAR Group; provided, however, that in no event shall KAR be permitted to enforce any Individual Agreement (including any restrictive covenants contained therein) against a SpinCo Group Employee or Former SpinCo Group Employee for action taken in such individual’s capacity as a SpinCo Group Employee or Former SpinCo Group Employee; and provided, further, that KAR shall only be considered a third-party beneficiary with respect to any such Individual Agreement (including with respect to any restrictive covenants contained therein) for twenty-four (24) months following the Effective Time.

(d) Notice. SpinCo shall, or shall cause another member of the SpinCo Group to, provide notice to all SpinCo Employees whose Individual Agreement is assigned pursuant to this Section 2.04 to SpinCo or another member of the SpinCo Group of such assignment and of the KAR Group’s continued enforcement rights.

Section 2.05 Non-U.S. Jurisdictions. Except as expressly set forth herein, the provisions of this Agreement shall apply in respect of all jurisdictions wherever situated; provided, however, that to the extent an Ancillary Agreement or an appendix attached hereto or a separation agreement between the Parties addresses employment, compensation and employee benefit matters, the terms of such Ancillary Agreement, appendix or separation agreement shall govern in respect of matters relating to employees employed in the applicable jurisdiction. KAR shall have the authority to adjust the treatment described in this Agreement (including any appendix attached hereto) or an Ancillary Agreement with respect to SpinCo Group Employees who are located outside of the United States in order to address different plans or benefits not addressed herein or to address applicable plans and benefits in a manner appropriate to the jurisdiction; ensure compliance with the applicable laws or regulations of countries outside of the United States; or to preserve the tax benefits provided under local tax law or regulation before the Distribution.

Section 2.06 Assignment and Assumption of Assets and Liabilities.

(a) Effective as of the Distribution Date, KAR assigns all of KAR’s or any member of the KAR Group’s rights and obligations under any arrangements (and all Assets and Liabilities related thereto) that transfer to SpinCo in accordance with the terms of this Agreement, subject to the terms and conditions thereof, to SpinCo or, if applicable, the appropriate member of the SpinCo Group, and SpinCo or any such member of the SpinCo Group accepts such assignment and assumes such arrangements, and agrees to be bound by the terms and provisions contained therein.

(b) Effective as of the Distribution Date, SpinCo assigns all of SpinCo’s or any member of the SpinCo Group’s rights and obligations under any arrangements (and all Assets and Liabilities related thereto) that transfer to KAR in accordance with the terms of this Agreement, subject to the terms and conditions thereof, to KAR or, if applicable, the appropriate member of the KAR Group, and KAR or any such member of the KAR Group accepts such assignment and assumes such arrangements, and agrees to be bound by the terms and provisions contained therein.

(c) Each of the Parties shall execute and deliver such additional documents, instruments, conveyances and assurances, and take such further actions as may be reasonably required to carry out the provisions of this Section 2.06.

ARTICLE III

ASSIGNMENT OF EMPLOYEES

Section 3.01 Active Employees.

(a) Assignment and Transfer of Employees. Immediately prior to the Effective Time, (i) the SpinCo Group and the applicable member of the KAR Group shall take such actions as are necessary to ensure that each SpinCo Group Employee employed by a member of the KAR Group is employed by a member of the SpinCo Group as of the Effective Time, and (ii) the KAR Group and the applicable member of the SpinCo Group shall take such actions as are necessary to ensure that each KAR Group Employee employed by a member of the SpinCo Group is employed by a member of the KAR Group as of the Effective Time.

(b) At-Will Status. Nothing in this Agreement shall create any obligation on the part of any member of the KAR Group or any member of the SpinCo Group to (i) continue the employment of any Employee or permit the return from a leave of absence for any period after the date of this Agreement (except as required by applicable Law) or (ii) change the employment status of any Employee from “at-will,” to the extent that such Employee is an “at-will” employee under applicable Law.

(c) Severance. The Parties acknowledge and agree that the Distribution and the assignment, transfer or continuation of the employment of Employees as contemplated by this Section 3.01 shall not be deemed an involuntary termination of employment entitling any SpinCo Group Employee or KAR Group Employee to severance payments or benefits, subject to the requirement of applicable Laws.

(d) Not a Change of Control/Change in Control. The Parties acknowledge and agree that neither the consummation of the Distribution nor any transaction contemplated by this Agreement, the Separation and Distribution Agreement or any other Ancillary Agreement shall be deemed a “change of control,” “change in control,” or term of similar import for purposes of any Benefit Plan sponsored or maintained by any member of the KAR Group or member of the SpinCo Group.

ARTICLE IV

EQUITY, INCENTIVE AND EXECUTIVE COMPENSATION

Section 4.01 Generally. Each KAR Award granted that is outstanding as of immediately prior to the Effective Time shall be adjusted as described below; provided, however, that, effective immediately prior to the Effective Time, the KAR Compensation Committee may provide for different adjustments with respect to some or all KAR Awards to the extent that the KAR Compensation Committee deems such adjustments necessary and appropriate. Any adjustments made by the KAR Compensation Committee pursuant to the foregoing sentence shall be deemed incorporated by reference herein as if fully set forth below and shall be binding on the Parties and their respective Affiliates. Before the Effective Time, the SpinCo Long Term Incentive Plan shall be established, with such terms as are necessary to permit the implementation of the provisions of Section 4.02. The adjustment or conversion of any KAR Award shall be effectuated in a manner that is intended to avoid the imposition of any penalty or other taxes on the holders thereof pursuant to Code Section 409A and, with respect to holders of KAR Awards who are Canadian taxpayers, in a manner consistent with the applicable conversion provisions of the Income Tax Act (Canada).

Section 4.02 Equity Incentive Awards.

(a) Stock Options.

(i) Conversion. Each KAR Option which is outstanding immediately prior to the Effective Time will be converted or disposed of (collectively referred to as a conversion herein) immediately prior to the Effective Time into (or in exchange for) two separate options, an adjusted KAR Option and a SpinCo Option, as set forth below. Conversion of any KAR Option which constitutes an incentive stock option shall be effected in a manner which complies with the requirements of Section 424 of the Code. The only consideration a holder of a KAR Option will receive for the conversion of any KAR Option is the adjusted KAR Option and the SpinCo Option, with the conversion subject to this Section 4.02.

(A) Number of Shares Subject to Options. The number of KAR Shares subject to each of the adjusted KAR Options will be equal to the number of KAR Shares subject to the KAR Option immediately prior to the Effective Time. The number of SpinCo Shares subject to the SpinCo Option will be equal to the number of KAR Shares subject to the KAR Option immediately prior to the Effective Time.

(B) Exercise Price. Unless otherwise determined by the KAR Compensation Committee prior to the Effective Time, the per share exercise price of the adjusted KAR Option shall be equal to the product of (1) the per share exercise price of the KAR Option immediately prior to the Effective Time multiplied by (2) a fraction, the numerator of which shall be the Opening KAR Stock Price (as defined below) and the denominator of which shall be the Closing KAR Stock Price (as defined below), which product shall be rounded up to the nearest whole cent. The per share exercise price of the SpinCo Option shall be equal to the product of (1) the per share exercise price of the KAR Option immediately prior to the Effective Time multiplied by (2) a fraction, the numerator of which shall be the Opening SpinCo Stock Price (as defined below) and the denominator of which shall be the Closing KAR Stock Price, which product shall be rounded up to the nearest whole cent. The “Opening KAR Stock Price” shall mean the per share closing trading price of KAR Shares, as traded on an ex-distribution basis on the last trading day immediately preceding the Distribution Date. The “Opening SpinCo Stock Price” shall mean the per share closing “when-issued” trading price of SpinCo Shares on the last trading day immediately preceding the Distribution Date. The “Closing KAR Stock Price” shall be the per share closing trading price of KAR Shares trading on the “regular way” basis on the last trading day immediately prior to the Distribution Date.

(C) The Parties agree that the conversion of each KAR Option held by a Canadian taxpayer as described in this Section 4.02(a) is intended to occur on a tax-deferred basis under subsection 7(1.4) of the Income Tax Act (Canada) and the Parties shall make such adjustment to the foregoing as is required to qualify for such treatment, including, if it is determined in good faith that the aggregate “in the money amount” of any adjusted KAR Option and SpinCo Option immediately after the conversion would otherwise exceed the “in the money amount” of the KAR Option immediately prior to the conversion, but only to the extent necessary and in a manner that does not otherwise adversely affect the holder of the KAR Option.

(ii) Option Terms.

(A) Terms and Conditions. Each adjusted KAR Option shall be subject to the same terms and conditions regarding term, vesting, and other provisions regarding exercise as set forth in the original KAR Option, except as set forth below. Each SpinCo Option issued pursuant to this Section 4.02(a) shall be subject to the same terms and conditions regarding term, vesting, and other provisions regarding exercise as set forth in the related KAR Option before the Effective Time, except as set forth below.

(B) Exercise; Withholding. Upon the exercise of a SpinCo Option, whether by a KAR Group Employee or a SpinCo Group Employee, the exercise price shall be paid to (or otherwise satisfied to the satisfaction of) SpinCo in accordance with the terms of the option, and SpinCo shall be solely responsible for the issuance of SpinCo Shares in respect of such exercise, for ensuring the withholding of all applicable Employment Tax on behalf of the employing entity of such holder, and for ensuring the remittance of such Employment Taxes to the employing entity of such holder. Upon the exercise of a KAR Option, whether by a KAR Group Employee or a SpinCo Group Employee, the exercise price shall be paid to (or otherwise satisfied to the satisfaction of) KAR in accordance with the terms of the KAR Option, and KAR shall be solely responsible for the issuance of KAR Shares, for ensuring the withholding of all applicable Employment Tax on behalf of the employing entity of such holder and for ensuring the remittance of such Employment Taxes to the employing entity of such holder.

(b) PRSUs.

(i) 17/18 KAR PRSU Conversion. Each KAR PRSU granted in 2017 and 2018 (the “17/18 KAR PRSU”) which is outstanding immediately prior to the Eﬀective Time will be converted immediately prior to the Eﬀective Time to a time-vested KAR RSU and as of the Effective Time shall be treated in accordance with Section 4.02(c) below. The number of KAR Shares subject to such KAR RSU immediately prior to the Effective Time shall be equal to the target number of KAR Shares underlying the applicable KAR PRSU. Following the Eﬀective Time, the KAR RSUs resulting from the conversion of the 17/18 KAR PRSUs shall remain subject to substantially the same terms and conditions as applicable to the 17/18 KAR PRSU prior to the Eﬀective Time; provided, however that from and after the Eﬀective Time no further performance-based vesting shall apply and the vesting of such KAR RSU shall be determined based solely upon the holder’s continued services with KAR or SpinCo, as applicable, through the third anniversary of the grant date of the applicable award, with such additional terms and conditions as may be determined by the applicable Compensation Committee.

(ii) 19 KAR PRSU Conversion. Each KAR PRSU granted in 2019 which is outstanding immediately prior to the Eﬀective Time will be converted upon the Effective Time into two separate performance restricted stock units, an adjusted KAR PRSU (the “19 KAR PRSU”) relating to KAR Shares and an adjusted SpinCo PRSU (the “19 SpinCo PRSU”) relating to SpinCo Shares, as set forth below.

(A) 19 KAR PRSU Terms and Conditions. The number of KAR Shares subject to each 19 KAR PRSU will be equal to the number of KAR Shares subject to the KAR PRSU. The 19 KAR PRSU shall be subject to the same terms and conditions as were applicable to the KAR PRSU immediately prior to the Effective Time, except that the performance-based vesting criteria shall be adjusted as determined by the KAR Compensation Committee and shall apply to the 2019 performance year only, with only service-based vesting to be applicable through the third anniversary of the grant date of the applicable award, with such additional terms and conditions as may be determined by the KAR Compensation Committee.

(B) 19 SpinCo PRSU Terms and Conditions. The number of SpinCo Shares subject to each 19 SpinCo PRSU will be equal to the number of KAR Shares subject to the corresponding 19 KAR PRSU. Each SpinCo PRSU shall be subject to the same terms and conditions as were applicable to the KAR PRSU immediately prior to the Effective Time, except that the performance-based vesting criteria shall be adjusted as determined by the KAR Compensation Committee and shall apply to the 2019 performance year only, with only service-based vesting to be applicable through the third anniversary of the grant date of the applicable award, with such additional terms and conditions as may be determined by the SpinCo Compensation Committee.

(i) Conversion. Upon the Effective Time, each holder of a KAR RSU which is outstanding immediately prior to the Eﬀective Time (including (1) KAR RSUs resulting from the conversion of 17/18 KAR PRSUs described in Section 4.02(b)(i) hereof and (2) KAR RSUs held pursuant to the KAR Director Plan) will continue to hold such KAR RSU and will, in addition thereto, receive a SpinCo RSU with respect to a number of SpinCo Shares equal to the number of KAR Shares subject to the corresponding KAR RSU immediately prior to the Effective Time.

(ii) RSU Terms and Conditions. Each KAR RSU shall be subject to the same terms and conditions as set forth in the original KAR RSU, except as set forth below. Each SpinCo RSU issued pursuant to this Section 4.02(c) shall be subject to the same terms and conditions as set forth in the related KAR RSU before the Effective Time, except as set forth below.

(d) Director Restricted Stock.

(i) Conversion. Upon the Effective Time, each holder of a KAR Restricted Stock Award which is outstanding immediately prior to the Eﬀective Time will continue to hold such KAR Restricted Stock Award and will, in addition thereto, receive a SpinCo Restricted Stock Award with respect to a number of SpinCo Shares equal to the number of KAR Shares subject to the corresponding KAR Restricted Stock Award immediately prior to the Effective Time.

(ii) Restricted Stock Terms and Conditions. Each KAR Restricted Stock Award shall be subject to the same terms and conditions as set forth in the original KAR Restricted Stock Award, except as set forth below. Each SpinCo Restricted Stock Award issued pursuant to this Section 4.02(d) shall be subject to the same terms and conditions as set forth in the related KAR Restricted Stock Award before the Effective Time, except as set forth below.

(e) PRSU/RSU/Restricted Stock Delivery; Withholding. SpinCo shall be solely responsible for the issuance of SpinCo Shares in respect of SpinCo RSUs and SpinCo Restricted Stock Awards and SpinCo PRSUs (in each case, regardless of the holder thereof), for ensuring the withholding of all applicable Employment Tax on behalf of the employing or service entity of such holder, and for ensuring the remittance of such Employment Taxes (if applicable) to the employing or service entity of such holder. KAR shall be solely responsible for the issuance of KAR Shares in respect of KAR RSUs and KAR Restricted Stock Awards and KAR PRSUs (in each case, regardless of the holder thereof), for ensuring the withholding of all applicable Employment Tax on behalf of the employing or service entity of such holder, and for ensuring the remittance of such Employment Taxes (if applicable) to the employing or service entity of such holder. SpinCo shall be solely responsible for the payment of cash in respect of KAR RSUs, KAR Restricted Stock Awards, KAR PRSUs, SpinCo RSUs, SpinCo Restricted Stock Awards, and SpinCo PRSUs held by SpinCo Service Providers, for ensuring the withholding of all applicable Employment Tax, and for ensuring the remittance of such Employment Taxes to the applicable governmental authority. KAR shall be solely responsible for the payment of cash in respect of KAR RSUs, KAR Restricted Stock Awards, KAR PRSUs, SpinCo RSUs, SpinCo Restricted Stock Awards, and SpinCo PRSUs held by KAR Service Providers, for ensuring the withholding of all applicable Employment Tax, and for ensuring the remittance of such Employment Taxes to the applicable governmental authority. Any forfeited SpinCo RSUs, SpinCo Restricted Stock Awards or SpinCo PRSUs will be forfeited to SpinCo and any forfeited KAR RSUs, KAR Restricted Stock Awards or KAR PRSUs will be forfeited to KAR (regardless of the employer of the holder thereof).

(f) PRSU/RSU Dividend Equivalents. Holders of SpinCo RSUs and SpinCo PRSUs who have a right to receive dividend equivalents with respect to SpinCo Shares underlying such award, will accrue such dividend equivalents and be paid by SpinCo to holders who are SpinCo Group Employees or KAR Group Employees, in each case on the payment date of the related SpinCo RSUs or SpinCo PRSUs (subject to the award vesting on such date); provided, however, that any interest payments that are payable with respect to such dividend equivalents will be sole responsibility of SpinCo for holders who are SpinCo Group Employees and KAR for holders who are KAR Group Employees. Holders of KAR RSUs and KAR PRSUs who have a right to receive dividend equivalents with respect to KAR Shares underlying such award, will accrue such dividend equivalents and be paid by KAR to holders who are SpinCo Group Employees or KAR Group Employees, in each case on the payment date of the related KAR RSUs or KAR PRSUs (subject to the award vesting on such date); provided, however, that any interest payments that are payable with respect to such dividend equivalents will be sole responsibility of SpinCo for holders who are SpinCo Group Employees and KAR for holders who are KAR Group Employees. Notwithstanding the foregoing, if the terms of the applicable awards provide that dividend equivalent rights shall increase the amount of shares subject to the award by the fair market value of any dividend, then KAR shall issue such additional shares with respect to KAR RSUs and KAR PRSUs and SpinCo shall issue such additional shares with respect to SpinCo RSUs and SpinCo PRSUs, in each case without regard to whether such awards are held by KAR Group Employees or SpinCo Group Employees.

(g) Service. Notwithstanding the foregoing, KAR will take such action as is necessary to ensure that with respect to KAR Awards that are held by SpinCo Service Providers as of and following the Effective Time, such individuals will not incur a termination of employment or service as a result of the Distribution for purposes of the KAR Awards. SpinCo will take such action as is necessary to ensure that with respect to the SpinCo Awards that are held by KAR Service Providers as of and following the Effective Time, such individuals will not incur a termination of employment or service as a result of the Distribution for purposes of the SpinCo Awards. For purposes of the vesting and termination provisions of the KAR Awards and the SpinCo Awards, continued service with a KAR Group member or a SpinCo Group member, as the case may be, shall be considered to be continued service for purposes of such award.

(h) Change in Control. Following the Distribution Date, for any award under this Section 4.02, any reference to a “change in control,” “change of control” or similar definition in an award agreement, employment agreement or KAR Equity-Based Plans applicable to such award (i) with respect to KAR Awards, shall be deemed to refer to a “change in control,” “change of control” or similar definition as set forth in the applicable award agreement, employment agreement or KAR Equity-Based Plans (a “KAR Change of Control”), and (ii) with respect to SpinCo Awards, shall be deemed to refer to a “Change in Control” as defined in the SpinCo Long Term Incentive Plan (a “SpinCo Change of Control”). Without limiting the foregoing, with respect to provisions related to vesting of awards, a KAR Change of Control shall be treated as a SpinCo Change of Control for purposes of SpinCo Awards held by KAR Service Providers, and a SpinCo Change of Control shall be treated as a KAR Change of Control for purposes of KAR Awards held by SpinCo Service Providers.

(i) Allocation of Tax Deduction. The Equity Award Deduction in respect of equity based awards held by KAR Service Providers (whether with respect to KAR Shares or SpinCo Shares) will be allocated to KAR. The Equity Award Deduction in respect of equity based awards held by SpinCo Service Providers as a result of the operation of this Section 4.02 (whether with respect to KAR Shares or SpinCo Shares) will be allocated to SpinCo.

(j) Partial Interests in Shares. Except with respect to any fractional interest in a Restricted Stock Award, which shall be treated in accordance with Section 3.4 of the Separation and Distribution Agreement, each interest in a fractional KAR Share with respect to any KAR Award that is held by a KAR Service Provider or a SpinCo Service Provider and that is outstanding immediately prior to the Effective Time shall remain outstanding and, to the extent administratively practicable, shall be subject to the adjustment set forth in this Section 4.02 in the same manner as a whole KAR Share.

(k) Administration. Each of KAR and SpinCo shall establish an appropriate administration system in order to handle exercises and delivery of shares in an orderly manner and provide reasonable levels of service for equity award holders.

(l) No Effect on Subsequent Awards. The provisions of this Section 4.02 shall have no effect on the terms and conditions of equity and equity-based awards granted following the Effective Time by KAR or SpinCo.

(m) Employee Stock Purchase Plan.

(i) The administrator of the KAR Group Employee Stock Purchase Plan (the “KAR ESPP”) shall take all actions necessary and appropriate to provide that: (1) the Option Period (as defined in the KAR ESPP) during which the Record Date is to occur shall end at a reasonable time before the Record Date to allow participants to purchase KAR Shares under the KAR ESPP prior to the Record Date; (2) participant payroll deductions and other contributions by SpinCo Group Service Providers under the KAR ESPP shall cease on or before the Record Date described in clause (1) of this paragraph; (3) SpinCo Group Employees in the KAR ESPP shall not be eligible to participate in any future Option Periods that begin following the Record Date; (4) any cash remaining in the KAR ESPP account of any SpinCo Group Employee described in clause (3) shall be refunded to such SpinCo Group Employee without interest as soon as administratively practicable; and (5) the next following Option Period shall be established by the administrator of the KAR ESPP in its sole discretion.

(ii) Unless otherwise determined by the SpinCo Board, effective as of or before the Distribution Date, SpinCo shall establish the SpinCo Group Employee Stock Purchase Plan, with terms substantially similar to those of the KAR ESPP as of the Distribution Date.

(n) Registration and Other Regulatory Requirements. SpinCo agrees to file applicable registration statements with respect to, and to cause to be registered pursuant to the Securities Act, the SpinCo Shares authorized for issuance under the SpinCo Long Term Incentive Plan, as required pursuant to the Securities Act, before the date of issuance of any SpinCo Shares pursuant to the SpinCo Long Term Incentive Plan. The Parties shall take such additional actions as are deemed necessary or advisable to effectuate the foregoing provisions of this Section 4.02(n), including compliance with securities Laws and other legal requirements associated with equity compensation awards in affected non-U.S. jurisdictions.

Section 4.03 Non-Equity Incentive Plans.

(a) Allocation of Liabilities. The KAR Group shall be solely responsible for funding, paying and discharging all obligations relating to the 2019 annual incentive bonus awards under the applicable KAR Benefit Plans in which short−term incentive compensation is provided with respect to payments earned before, as of or after the Effective Time by KAR Group Employees or Former KAR Group Employees, and no member of the SpinCo Group shall have any obligations with respect thereto. The SpinCo Group shall be solely responsible for funding, paying and discharging all obligations relating to the 2019 annual incentive bonus awards under the applicable KAR Benefit Plans in which short−term incentive compensation is provided with respect to payments earned before, as of or after the Effective Time by SpinCo Group Employees or Former SpinCo Group Employees, and no member of the KAR Group shall have any obligations with respect thereto.

(b) Transfer of Accruals. As soon as practicable following the Distribution, KAR shall transfer to SpinCo the applicable KAR Benefit Plan accruals in respect of SpinCo Group Employees and Former SpinCo Group Employees for the portion of the 2019 performance period that occurs prior to the Distribution, based on the level of accrual as of the Effective Time.

Section 4.04 Director Compensation.

(a) Establishment of SpinCo Outside Directors’ Compensation Plan. Before the Effective Time, SpinCo shall, as it deems appropriate, establish an outside directors’ compensation program for each SpinCo non−employee director as of the Effective Time who served on the KAR Board immediately prior to the Effective Time but who will no longer serve on the KAR Board following the Effective Time (a “Transferred Director”). As of the Effective Time, KAR shall cease to have any Liability to any such Transferred Director under the KAR outside directors’ compensation program.

(b) Other Liabilities. Except as provided in Section 4.04(a), KAR shall retain all other Liabilities and Assets relating to KAR non-employee director compensation.

(c) Director Compensation. KAR shall be responsible for the payment of any fees for service on the KAR Board that are earned at, before, or after the Effective Time, and SpinCo shall not have any responsibility for any such payments. With respect to any SpinCo non-employee director, SpinCo shall be responsible for the payment of any fees for service on the SpinCo Board that are earned at any time after the Effective Time and KAR shall not have any responsibility for any such payments. Notwithstanding the foregoing, SpinCo shall commence paying quarterly cash retainers to SpinCo non-employee directors in respect of the quarter in which the Effective Time occurs; provided that (i) if KAR has already paid such quarter’s cash retainers to KAR non-employee directors prior to the Effective Time, then within 30 days after the Distribution Date, SpinCo will pay KAR an amount equal to the portion of such payment that is attributable to Transferred Directors’ service to SpinCo after the Distribution Date, and (ii) if KAR has not yet paid such quarter’s cash retainers to KAR non-employee directors prior to the Effective Time, then within 30 days after the Distribution Date, KAR will pay SpinCo an amount equal to the portion of such payment that is attributable to Transferred Directors’ service to KAR on and prior to the Distribution Date. KAR Awards held by non-employee directors as of immediately prior to the Effective Time shall be treated as described in Section 4.02.

ARTICLE V

U.S. QUALIFIED RETIREMENT PLANS

Section 5.01 SpinCo U.S. Savings Plan.

(a) Establishment of Plan. Before the Effective Time, SpinCo shall provide KAR with (i) a copy of the SpinCo Savings Plan and (ii) a copy of certified resolutions of the SpinCo Board (or its authorized committee or other delegate) evidencing adoption of the SpinCo Savings Plan and the related trust(s) and the assumption by the SpinCo Savings Plan of the liabilities described in Section 5.01(b).

(b) Transfer of Account Balances. Not later than 30 days following the Distribution Date (or such later time as mutually agreed by the Parties), KAR shall cause the trustee of the KAR Savings Plan to transfer from the trust(s) which forms a part of the KAR Savings Plan to the trust(s) which forms a part of the SpinCo Savings Plan the account balances of the SpinCo Group Employees and Former SpinCo Group Employees under the KAR Savings Plan, determined as of the date of the transfer. Such transfers shall be made in kind, including promissory notes evidencing the transfer of outstanding loans. Any asset and liability transfers pursuant to this Section 5.01(b) shall comply in all respects with Sections 414(l) and 411(d)(6) of the Code.

(i) SpinCo Group Employees and Former SpinCo Group Employees shall (A) be eligible to participate in the SpinCo Savings Plan as of the Effective Time to the extent that they were eligible to participate in the KAR Savings Plan as of immediately prior to the Effective Time, and (B) receive credit for purposes of eligibility and vesting for all service credited for those purposes under the KAR Savings Plan as of immediately prior to the Distribution Date as if that service had been rendered to SpinCo; and

(ii) the account balance of each SpinCo Group Employee and Former SpinCo Group Employee under the KAR Savings Plan as of the date of the transfer of assets from the KAR Savings Plan (including any outstanding promissory notes) shall be credited to such individual’s account balance under the SpinCo Savings Plan.

(d) KAR Savings Plan after Effective Time. From and after the Effective Time, (i) the KAR Savings Plan shall continue to be responsible for liabilities in respect of KAR Group Employees and Former KAR Group Employees, and (ii) no SpinCo Group Employees or Former SpinCo Group Employees shall accrue any benefits under the KAR Savings Plan. Without limiting the generality of the foregoing, SpinCo Group Employees and Former SpinCo Group Employees shall cease to be participants in the KAR Savings Plan effective as of the Effective Time.

(e) Plan Fiduciaries. For all periods after the Effective Time, the Parties agree that the applicable fiduciaries of each of the KAR Savings Plan and the SpinCo Savings Plan, respectively, shall have the authority with respect to the KAR Savings Plan and the SpinCo Savings Plan, respectively, to determine the investment alternatives, the terms and conditions with respect to those investment alternatives and such other matters as are within the scope of their duties under ERISA and the terms of the applicable plan documents.

(f) No Loss of Unvested Benefits; No Distributions. The transfer of any SpinCo Group Employee’s employment to the SpinCo Group will not result in loss of that SpinCo Group Employee’s unvested benefits (if any) under the KAR Savings Plan, which benefit liability will be assumed under the SpinCo Savings Plan as provided herein. No SpinCo Group Employee shall be entitled to a distribution of his or her benefit under the KAR Savings Plan or SpinCo Savings Plan as a result of such transfer of employment.

ARTICLE VI

DIRECTOR DEFERRED COMPENSATION PLAN

Section 6.01 KAR. As of the Effective Time, KAR shall retain, and remain the sponsor of, the KAR Directors Deferred Compensation Plan (the “KAR Director Plan”).

Section 6.02 SpinCo.

(a) As of the Effective Time, SpinCo shall adopt a new nonqualified deferred compensation plan (the “SpinCo Director Plan”). All Transferred Directors who participated in the KAR Director Plan immediately prior to the Effective Time shall be eligible to participate in the SpinCo Director Plan to the same extent that such Transferred Director participated in the KAR Director Plan prior to the Effective Time (the “Covered Participants”). The SpinCo Director Plan shall assume the obligations of the KAR Director Plan with respect to the Covered Participants whether such benefits accrued before, on or after the Effective Time.

(b) Transfer of Liabilities. KAR shall cause the actuary of the KAR Director Plan to determine the proportional share of Liabilities relating to the Covered Participants to be transferred to the SpinCo Director Plan, respectively.

(c) Identified Errors. If any error with respect to a transfer of Liabilities required under this Section 6.02 is identified after the date on which the transfer was to occur, the Parties shall cooperate to effect the transfer as of the date when the transfer was to occur.

(d) Obligations and Liabilities.

(i) At and after the Effective Time, SpinCo shall be solely and exclusively responsible for all obligations and Liabilities with respect to, or in any way related to, the SpinCo Director Plan, whether accrued before, at or after the Effective Time.

(ii) At and after the Effective Time, KAR shall be solely and exclusively responsible for all obligations and Liabilities in respect of participants who are not Covered Participants with respect to, or in any way related to, the KAR Director Plan, whether accrued before, at or after the Effective Time.

ARTICLE VII

WELFARE BENEFIT PLANS

Section 7.01 Welfare Plans.

(a) Waiver of Conditions; Benefit Maximums. SpinCo shall use commercially reasonable efforts to cause the SpinCo Welfare Plans to:

(i) with respect to initial enrollment as of the Effective Time, waive (A) all limitations as to preexisting conditions, exclusions, and service conditions with respect to participation and coverage requirements applicable to any SpinCo Group Employee or Former SpinCo Group Employee, other than limitations that were in effect with respect to the SpinCo Group Employee or Former SpinCo Group Employee under the applicable KAR Welfare Plan as of immediately prior to the Effective Time, and (B) any waiting period limitation or evidence of insurability requirement applicable to a SpinCo Group Employee or Former SpinCo Group Employee other than limitations or requirements that were in effect with respect to such SpinCo Group Employee or Former SpinCo Group Employee under the applicable KAR Welfare Plans as of immediately prior to the Effective Time; and

(ii) take into account (A) with respect to aggregate annual, lifetime, or similar maximum benefits available under the SpinCo Welfare Plans, a SpinCo Group Employee’s or Former SpinCo Group Employee’s prior claim experience under the KAR Welfare Plans and any Benefit Plan that provides leave benefits; and (B) any eligible expenses incurred by a SpinCo Group Employee or Former SpinCo Group Employee and his or her covered dependents during the portion of the plan year of the applicable KAR Welfare Plan ending as of the Effective Time to be taken into account under such SpinCo Welfare Plan for purposes of satisfying all deductible, coinsurance, and maximum out-of-pocket requirements applicable to such SpinCo Group Employee or Former SpinCo Group Employee and his or her covered dependents for the applicable plan year to the same extent as such expenses were taken into account by KAR for similar purposes prior to the Effective Time as if such amounts had been paid in accordance with such SpinCo Welfare Plan.

(b) U.S. Health Savings Accounts. Prior to January 1, 2020, SpinCo shall, or shall cause a member of the SpinCo Group to, establish a SpinCo Welfare Plan that will provide health savings account benefits to SpinCo Group Employees on and after January 1, 2020.

(c) U.S. Flexible Spending Accounts. Prior to January 1, 2020, SpinCo shall, or shall cause a member of the SpinCo Group to, establish a SpinCo Welfare Plan that will provide health or dependent care flexible spending account benefits to SpinCo Group Employees on and after January 1, 2020.

(d) Allocation of Welfare Assets and Liabilities. Effective as of the Effective Time, the SpinCo Group shall assume all Liabilities relating to, arising out of or resulting from health and welfare coverage or claims incurred by or on behalf of SpinCo Group Employees or Former SpinCo Group Employees or their covered dependents under the KAR Welfare Plans or SpinCo Welfare Plans before, at, or after the Effective Time. No KAR Welfare Plan shall provide coverage to any SpinCo Group Employee or Former SpinCo Group Employee after the Effective Time, except as may be agreed between the Parties to address Employees who are on approved leaves of absence immediately prior to the Effective Time.

Section 7.02 U.S. COBRA and HIPAA. The KAR Group shall continue to be responsible for complying with, and providing coverage pursuant to, the health care continuation requirements of COBRA, the certificate of creditable coverage requirements of HIPAA, and the corresponding provisions of the KAR Welfare Plans with respect to any KAR Group Employees and any Former KAR Group Employees (and their covered dependents) who incur a qualifying event under COBRA before, as of, or after the Effective Time. Effective as of the Effective Time, the SpinCo Group shall assume responsibility for complying with, and providing coverage pursuant to, the health care continuation requirements of COBRA, the certificate of creditable coverage requirements of HIPAA, and the corresponding provisions of the SpinCo Welfare Plans with respect to any SpinCo Group Employees or Former SpinCo Group Employees (and their covered dependents) who incur a qualifying event or loss of coverage under the KAR Welfare Plans and/or the SpinCo Welfare Plans before, as of, or after the Effective Time. The Parties agree that the consummation of the transactions contemplated by the Separation and Distribution Agreement shall not constitute a COBRA qualifying event for any purpose of COBRA.

Section 7.03 Vacation, Holidays and Leaves of Absence. Effective as of the Effective Time, the SpinCo Group shall assume all Liabilities of the KAR Group with respect to vacation, holiday, annual leave or other leave of absence, and required payments related thereto, for each SpinCo Group Employee. The KAR Group shall retain all Liabilities with respect to vacation, holiday, annual leave or other leave of absence, and required payments related thereto, for each KAR Group Employee.

Section 7.04 Severance and Unemployment Compensation. Effective as of the Effective Time, the SpinCo Group shall assume any and all Liabilities to, or relating to, SpinCo Group Employees and Former SpinCo Group Employees in respect of severance and unemployment compensation, regardless of whether the event giving rise to the Liability occurred before, at or after the Effective Time. The KAR Group shall be responsible for any and all Liabilities to, or relating to, KAR Group Employees and Former KAR Group Employees in respect of severance and unemployment compensation, regardless of whether the event giving rise to the Liability occurred before, at or after the Effective Time.

Section 7.05 Workers’ Compensation. With respect to claims for workers’ compensation, (a) the SpinCo Group shall be responsible for all claims and Liabilities in respect of SpinCo Group Employees and Former SpinCo Group Employees, whether occurring before, at or after the Effective Time and the SpinCo Group shall be fully responsible for the administration, management and payment of all such claims and for the satisfaction of all such Liabilities, and (b) the KAR Group shall be responsible for all claims and Liabilities in respect of KAR Group Employees and Former KAR Group Employees, whether occurring before, at or after the Effective Time and the KAR Group shall be fully responsible for the administration, management and payment of all such claims and for the satisfaction of all such Liabilities. Notwithstanding the foregoing, if the SpinCo Group is unable to assume any such Liability or the administration, management or payment of any such claim solely because of the operation of applicable Law, the KAR Group shall retain such Liabilities and the SpinCo Group shall reimburse and otherwise fully indemnify the KAR Group for all such Liabilities, including the costs of administering the plans, programs or arrangements under which any such Liabilities have accrued or otherwise arisen.

Section 7.06 Insurance Contracts. To the extent that any KAR Welfare Plan is funded through the purchase of an insurance contract or is subject to any stop loss contract, the Parties will cooperate and use their commercially reasonable efforts to replicate such insurance contracts for SpinCo (except to the extent that changes are required under applicable state insurance Laws or filings by the respective insurers) and to maintain any pricing discounts or other preferential terms for both KAR and SpinCo for a reasonable term. Neither Party shall be liable for failure to obtain such insurance contracts, pricing discounts, or other preferential terms for the other Party. Each Party shall be responsible for any additional premiums, charges, or administrative fees that such Party may incur pursuant to this Section 7.06.

Section 7.07 Third-Party Vendors. To the extent that any KAR Welfare Plan is administered by a third-party vendor, the Parties will cooperate and use their commercially reasonable efforts to replicate any contract with such third-party vendor for SpinCo and to maintain any pricing discounts or other preferential terms for both KAR and SpinCo for a reasonable term. Neither Party shall be liable for failure to obtain such pricing discounts or other preferential terms for the other Party. Each Party shall be responsible for any additional premiums, charges, or administrative fees that such Party may incur pursuant to this Section 7.07.

Section 7.08 SpinCo Retained Welfare Plans. As of the Effective Time, the SpinCo Group shall retain sponsorship of the Welfare Plans listed on Schedule 7.08 (the “SpinCo Retained Welfare Plans”), and, from and after the Effective Time, all Liabilities under the SpinCo Retained Welfare Plans shall be Liabilities of the SpinCo Group.

ARTICLE VIII

NON-U.S. EMPLOYEES

Section 8.01 General. Notwithstanding anything in this Agreement to the contrary, all actions taken with respect to non-U.S. Employees or U.S. Employees working in non-U.S. jurisdictions shall be subject to and accomplished in accordance with applicable Law in the custom of the applicable jurisdictions.

ARTICLE IX

MISCELLANEOUS

Section 9.01 Employee Records.

(a) Sharing of Information. Subject to any limitations imposed by applicable Law, KAR and SpinCo (acting directly or through members of the KAR Group or the SpinCo Group, respectively) shall provide to the other and their respective authorized agents and vendors all information necessary for the Parties to perform their respective duties under this Agreement.

(b) Transfer of Personnel Records and Authorization. Subject to any limitation imposed by applicable Law and to the extent that it has not done so before the Effective Time, KAR shall transfer to SpinCo any and all employment records (including any Form I-9, Form W-2 or other IRS forms) with respect to SpinCo Group Employees and Former SpinCo Group Employees and other records reasonably required by SpinCo to enable SpinCo properly to carry out its obligations under this Agreement. Such transfer of records generally shall occur as soon as administratively practicable at or after the Effective Time. Each Party will permit the other Party reasonable access to Employee records, to the extent reasonably necessary for such accessing Party to carry out its obligations hereunder.

(c) Access to Records. To the extent not inconsistent with this Agreement, the Separation and Distribution Agreement or any applicable privacy protection Laws or regulations, reasonable access to Employee-related records after the Effective Time will be provided to members of the KAR Group and members of the SpinCo Group pursuant to the terms and conditions of Article VI of the Separation and Distribution Agreement.

(d) Maintenance of Records. With respect to retaining, destroying, transferring, sharing, copying and permitting access to all Employee-related information, KAR and SpinCo shall comply with all applicable Laws, regulations and internal policies, and shall indemnify and hold harmless each other from and against any and all Liability, claims, actions, and damages that arise from a failure (by the indemnifying Party or its Subsidiaries or their respective agents) to so comply with all applicable Laws, regulations and internal policies applicable to such information.

(e) Cooperation. Each Party shall use commercially reasonable efforts to cooperate and work together to unify, consolidate and share (to the extent permissible under applicable privacy/data protection laws) all relevant documents, resolutions, government filings, data, payroll, employment and benefit plan information on regular timetables and cooperate as needed with respect to (i) any litigation with respect to any employee benefit plan, policy or arrangement contemplated by this Agreement (except to the extent such other Party is an opposing party in such litigation), (ii) efforts to seek a determination letter, private letter ruling or advisory opinion from the IRS or U.S. Department of Labor or any other Governmental Authority on behalf of any employee benefit plan, policy or arrangement contemplated by this Agreement, and (iii) any filings that are required to be made or supplemented to the IRS, U.S. Pension Benefit Guaranty Corporation, U.S. Department of Labor or any other Governmental Authority; provided, however, that requests for cooperation must be reasonable and not interfere with daily business operations.

(f) Confidentiality. Notwithstanding anything in this Agreement to the contrary, all confidential records and data relating to Employees to be shared or transferred pursuant to this Agreement shall be subject to Section 6.9 of the Separation and Distribution Agreement and the requirements of applicable Law.

Section 9.02 Preservation of Rights to Amend. The rights of each member of the KAR Group and each member of the SpinCo Group to amend, waive, or terminate any plan, arrangement, agreement, program, or policy referred to herein shall not be limited in any way by this Agreement.

Section 9.03 Fiduciary Matters. KAR and SpinCo each acknowledges that actions required to be taken pursuant to this Agreement may be subject to fiduciary duties or standards of conduct under ERISA or other applicable Law, and no Party shall be deemed to be in violation of this Agreement if it fails to comply with any provisions hereof based upon its good-faith determination (as supported by advice from counsel experienced in such matters) that to do so would violate such a fiduciary duty or standard. Each Party shall be responsible for taking such actions as are deemed necessary and appropriate to comply with its own fiduciary responsibilities and shall fully release and indemnify the other Party for any Liabilities caused by the failure to satisfy any such responsibility.

Section 9.04 Further Assurances. Each Party hereto shall take, or cause to be taken, any and all reasonable actions, including the execution, acknowledgment, filing and delivery of any and all documents and instruments that any other Party hereto may reasonably request in order to effect the intent and purpose of this Agreement and the transactions contemplated hereby.

Section 9.05 Counterparts; Entire Agreement; Corporate Power.

(a) This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the Parties and delivered to the other Party.

(b) This Agreement and the Schedules and appendices hereto contain the entire agreement between the Parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter, and there are no agreements or understandings between the Parties other than those set forth or referred to herein or therein.

(c) KAR represents on behalf of itself and, to the extent applicable, each of its Subsidiaries, and SpinCo represents on behalf of itself and, to the extent applicable, each of its Subsidiaries, as follows:

(i) each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby; and

(ii) this Agreement has been duly executed and delivered by it and constitutes a valid and binding agreement of it enforceable in accordance with the terms hereof.

(d) Each Party acknowledges that it and each other Party is executing this Agreement by facsimile, stamp or mechanical signature, and that delivery of an executed counterpart of a signature page to this Agreement (whether executed by manual, stamp or mechanical signature) by facsimile or by email in portable document format (PDF) shall be effective as delivery of such executed counterpart of this Agreement. Each Party expressly adopts and confirms each such facsimile, stamp or mechanical signature (regardless of whether delivered in person, by mail, by courier, by facsimile or by email in portable document format (PDF)) made in its respective name as if it were a manual signature delivered in person, agrees that it will not assert that any such signature or delivery is not adequate to bind such Party to the same extent as if it were signed manually and delivered in person and agrees that, at the reasonable request of the other Party at any time, it will as promptly as reasonably practicable cause this Agreement to be manually executed (any such execution to be as of the date of the initial date thereof) and delivered in person, by mail or by courier.

Section 9.06 Governing Law. This Agreement (and any claims or disputes arising out of or related hereto or to the transactions contemplated hereby or to the inducement of any Party to enter herein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall be governed by and construed and interpreted in accordance with the Laws of the State of Delaware, irrespective of the choice of Laws principles of the State of Delaware, including all matters of validity, construction, effect, enforceability, performance and remedies.

Section 9.07 Assignability. The assignability provisions set forth in Section 10.3 of the Separation and Distribution Agreement shall apply to this Agreement.

Section 9.08 Third-Party Beneficiaries. The provisions of this Agreement are solely for the benefit of the Parties and are not intended to confer upon any other Person except the Parties any rights or remedies hereunder. There are no other third-party beneficiaries of this Agreement and this Agreement shall not provide any third party with any remedy, claim, Liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement. Nothing in this Agreement is intended to amend any employee benefit plan or affect KAR’s, SpinCo’s or the applicable plan sponsor’s right to amend or terminate any employee benefit plan pursuant to the terms of such plan. The provisions of this Agreement are solely for the benefit of the Parties, and no Employee or Former Employee, officer, director, or independent contractor or any other individual associated therewith shall be regarded for any purpose as a third-party beneficiary of this Agreement.

Section 9.09 Notices. All notices, requests, claims, demands or other communications under this Agreement shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by electronic mail (for which a confirmation email is obtained), or sent by overnight courier (providing proof of delivery) to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 9.09):

If to KAR, to:

	KAR Auction Services, Inc.
	13085 Hamilton Crossing Boulevard
	Carmel, Indiana 46032
	Email:	becca.polak@karauctionservices.com
	Attention:	Chief Legal Officer

with a copy (prior to the Effective Time) to:

	Skadden, Arps, Slate, Meagher & Flom LLP
	Four Times Square
	New York, New York 10036
	Email:	Sean.Doyle@skadden.com
		Gregory.Fernicola@skadden.com
		Dwight.Yoo@skadden.com
	Attention:	Sean C. Doyle
		Gregory A. Fernicola
		Dwight S. Yoo

If to SpinCo, to:

	Insurance Auto Auctions, Inc.
	Two Westbrook Corporate Center, Suite 500
	Westchester, Illinois 60154
	Email:	jkett@iaai.com
		skerley@iaai.com
	Attention:	John Kett
		Sidney Peryar

with a copy (prior to the Effective Time) to:

	Skadden, Arps, Slate, Meagher & Flom LLP
	Four Times Square
	New York, New York 10036
	Email:	Sean.Doyle@skadden.com
		Gregory.Fernicola@skadden.com
		Dwight.Yoo@skadden.com
	Attention:	Sean C. Doyle
		Gregory A. Fernicola
		Dwight S. Yoo

Any Party may, by notice to the other Party, change the address to which such notices are to be given.

Section 9.10 Severability. If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of any such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby. Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the Parties.

Section 9.11 Force Majeure. The Force Majeure provision set forth in Section 10.7 of the Separation and Distribution Agreement shall apply to this Agreement.

Section 9.12 Headings. The article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

Section 9.13 Survival of Covenants. Except as expressly set forth in this Agreement, the covenants, representations and warranties and other agreements contained in this Agreement, and Liability for the breach of any obligations contained herein, shall survive the Separation and the Distribution and shall remain in full force and effect thereafter.

Section 9.14 Waivers of Default. Waiver by any Party of any default by the other Party of any provision of this Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the waiving Party. No failure or delay by any Party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof, nor shall a single or partial exercise thereof prejudice any other or further exercise thereof or the exercise of any other right, power or privilege.

Section 9.15 Dispute Resolution. The dispute resolution procedures set forth in Article VII of the Separation and Distribution Agreement shall apply to any dispute, controversy or claim arising out of or relating to this Agreement.

Section 9.16 Specific Performance. Subject to Article VII of the Separation and Distribution Agreement, in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the Party or Parties who are, or are to be, thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief (on an interim or permanent basis) in respect of its rights or their rights under this Agreement, in addition to any and all other rights and remedies at Law or in equity, and all such rights and remedies shall be cumulative. The Parties agree that the remedies at law for any breach or threatened breach, including monetary damages, may be inadequate compensation for any loss and that any defense in any Action for specific performance that a remedy at law would be adequate is waived. Any requirements for the securing or posting of any bond with such remedy are hereby waived by each of the Parties.

Section 9.17 Amendments. No provisions of this Agreement shall be deemed waived, amended, supplemented or modified by a Party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of the Party against whom it is sought to enforce such waiver, amendment, supplement or modification.

Section 9.18 Interpretation. In this Agreement, (a) words in the singular shall be deemed to include the plural and vice versa and words of one gender shall be deemed to include the other genders as the context requires; (b) the terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the Schedules hereto and thereto) and not to any particular provision of this Agreement; (c) Article, Section and Schedule references are to the Articles, Sections and Schedules to this Agreement unless otherwise specified; (d) unless otherwise stated, all references to any agreement shall be deemed to include the exhibits, schedules and annexes to such agreement; (e) the word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless otherwise specified; (f) the word “or” shall not be exclusive; (g) unless otherwise specified in a particular case, the word “days” refers to calendar days; (h) references to “business day” shall mean any day other than a Saturday, a Sunday or a day on which banking institutions are generally authorized or required by law to close in the United States or New York, New York; (i) references herein to this Agreement or any other agreement contemplated herein shall be deemed to refer to this Agreement or such other agreement as of the date on which it is executed and as it may be amended, modified or supplemented thereafter, unless otherwise specified; and (j) unless expressly stated to the contrary in this Agreement, all references to “the date hereof,” “the date of this Agreement,” “hereby” and “hereupon” and words of similar import shall all be references to June 27, 2019.

Section 9.19 Limitations of Liability. Notwithstanding anything in this Agreement to the contrary, neither SpinCo or any member of the SpinCo Group, on the one hand, nor KAR or any member of the KAR Group, on the other hand, shall be liable under this Agreement to the other for any indirect, punitive, exemplary, remote, speculative or similar damages in excess of compensatory damages of the other arising in connection with the transactions contemplated hereby (other than any such Liability with respect to a Third-Party Claim).

Section 9.20 Mutual Drafting. This Agreement shall be deemed to be the joint work product of the Parties and any rule of construction that a document shall be interpreted or construed against a drafter of such document shall not be applicable to this Agreement.

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, the Parties have caused this Employee Matters Agreement to be executed by their duly authorized representatives.

KAR AUCTION SERVICES, INC.

By:	/s/ Eric M. Loughmiller
	Name:	Eric M. Loughmiller
	Title:	Executive Vice President and Chief Financial Officer

IAA, INC.
By:	/s/ John W. Kett
	Name:	John W. Kett
	Title:	Chief Executive Officer and President

Exhibit 10.4

IAA, INC.

2019 OMNIBUS STOCK AND INCENTIVE PLAN

Section 1. Purpose of Plan.

The name of the Plan is the IAA, Inc. 2019 Omnibus Stock and Incentive Plan (the “Plan”). The purpose of the Plan is to provide an additional incentive to selected management employees, directors, independent contractors, and consultants of the Company or its Affiliates (as hereinafter defined) whose contributions are essential to the growth and success of the Company’s business, in order to strengthen the commitment of such persons to the Company and its Subsidiaries, motivate such persons to faithfully and diligently perform their responsibilities and attract and retain competent and dedicated persons whose efforts will result in the long-term growth and profitability of the Company. To accomplish such purposes, the Plan provides that the Company may grant Options, Share Appreciation Rights, Restricted Shares, Other Share-Based Awards, Other Cash-Based Awards or any combination of the foregoing.

Section 2. Definitions.

For purposes of the Plan, the following terms shall be defined as set forth below:

(a) “Administrator” means the Board, or, if and to the extent the Board does not administer the Plan, the Committee in accordance with Section 3 hereof.

(b) “Affiliate” means a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the Person specified. An entity shall be deemed an Affiliate of the Company for purposes of this definition only for such periods as the requisite ownership or control relationship is maintained.

(c) “Award” means any Option, Share Appreciation Right, Restricted Share, Other Share-Based Award or Other Cash-Based Award granted under the Plan.

(d) “Award Agreement” means any written agreement, contract or other instrument or document evidencing an Award, including through electronic medium, which shall contain such terms and conditions with respect to an Award as the Administrator shall determine, consistent with the Plan.

(e) “Bylaws” mean the amended and restated bylaws of the Company, as may be amended and/or restated from time to time.

(f) “Beneficial Owner” (or any variant thereof) has the meaning defined in Rule 13d-3 under the Exchange Act.

(g) “Board” means the Board of Directors of the Company.

(h) “Cause” shall have the meaning assigned to such term in any individual employment or severance agreement or Award Agreement with the Participant or, if no such agreement exists or the agreement does not define “Cause,” then “Cause” shall mean (i) the refusal or neglect of the Participant to perform substantially his or her employment-related duties, (ii) the Participant’s personal dishonesty, incompetence, willful misconduct or breach of fiduciary duty, (iii) the Participant’s indictment for, conviction of or entering a plea of guilty or nolo contendere to a crime constituting a felony or his or her willful violation of any applicable law (other than a traffic violation or other offense or violation outside of the course of employment which in no way adversely affects the Company and its Subsidiaries or their reputation or the ability of the Participant to perform his or her employment-related duties or to represent the Company or any Subsidiary of the Company that employs such Participant), (iv) the Participant’s failure to reasonably cooperate, following a request to do so by the Company, in any internal or governmental investigation of the Company or any of its Subsidiaries, (v) any other act or conduct that would constitute cause for the termination of the Participant’s employment under applicable law as interpreted by the courts of the jurisdiction in which the Participant is employed from time to time, or (vi) the Participant’s material breach of any written covenant or agreement with the Company or any of its Subsidiaries not to disclose any information pertaining to the Company or such Subsidiary or not to compete or interfere with the Company or such Subsidiary.

(i) “Change in Capitalization” means any (i) merger, consolidation, reclassification, recapitalization, spin-off, spin-out, repurchase or other reorganization or corporate transaction or event, (ii) dividend (whether in the form of cash, Common Stock or other property), stock split or reverse stock split, (iii) combination or exchange of shares, (iv) other change in corporate structure or (v) declaration of a special dividend (including a cash dividend) or other distribution, which, in any such case, the Administrator determines, in its sole discretion, affects the Shares such that an adjustment pursuant to Section 5 hereof is appropriate.

(j) “Change in Control” shall be deemed to have occurred if an event set forth in any one of the following paragraphs occurs following the Effective Date:

(1) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or any Affiliate thereof) representing fifty percent (50%) or more of the combined voting power of the Company’s then outstanding securities; or

(2) the following individuals cease for any reason to constitute a majority of the number of directors then serving on the Board: individuals who, on the date hereof, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including, but not limited to, a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s shareholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved or recommended; or

(3) there is consummated a merger or consolidation of the Company or any Subsidiary thereof with any other corporation, other than a merger or consolidation immediately following which the individuals who comprise the Board immediately prior thereto constitute at least a majority of the Board of the entity surviving such merger or consolidation or, if the Company or the entity surviving such merger is then a subsidiary, the ultimate parent thereof; or

(4) the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than (A) a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least fifty percent (50%) of the combined voting power of the voting securities of which are owned by shareholders of the Company following the completion of such transaction in substantially the same proportions as their ownership of the Company immediately prior to such sale or (B) a sale or disposition of all or substantially all of the Company’s assets immediately following which the individuals who comprise the Board immediately prior thereto constitute at least a majority of the board of directors of the entity to which such assets are sold or disposed or, if such entity is a subsidiary, the ultimate parent thereof.

For each Award that constitutes deferred compensation under Code Section 409A, to the extent required to avoid accelerated taxation and/or tax penalties under Code Section 409A, a Change in Control shall be deemed to have occurred under the Plan with respect to such Award only if a change in the ownership or effective control of the Company or a change in ownership of a substantial portion of the assets of the Company shall also be deemed to have occurred under Code Section 409A.

Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the holders of Common Stock immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions.

(k) “Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto.

(l) “Committee” means any committee or subcommittee the Board may appoint to administer the Plan. Subject to the discretion of the Board, the Committee shall be composed entirely of individuals who meet the qualifications of a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act and any other qualifications required by the applicable stock exchange on which the Common Stock is traded. If at any time or to any extent the Board shall not administer the Plan, then the functions of the Administrator specified in the Plan shall be exercised by the Committee. Except as otherwise provided in the Articles of Incorporation or Bylaws, any action of the Committee with respect to the administration of the Plan shall be taken by a majority vote at a meeting at which a quorum is duly constituted or unanimous written consent of the Committee’s members.

(m) “Common Stock” means the common stock of the Company, having a par value $.01 per share.

(n) “Company” means IAA, Inc. (f/k/a IAA Spinco Inc.), a Delaware corporation (or any successor corporation, except as the term “Company” is used in the definition of “Change in Control” above).

(o) “Disability” shall have the meaning assigned to such term in any individual employment or severance agreement or Award Agreement with the Participant or, if no such agreement exists or the agreement does not define “Disability,” Disability means, with respect to any Participant, that such Participant (i) as determined by the Administrator in its sole discretion, is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than six (6) months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than six (6) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Company or an Affiliate thereof.

(p) “Effective Date” shall have the meaning set forth in Article 17 of the Plan.

(q) “Eligible Recipient” means an employee, director, independent contractor or consultant of the Company or any Affiliate of the Company who has been selected as an eligible participant by the Administrator; provided, however, to the extent required to avoid the imposition of additional taxes under Code Section 409A, an Eligible Recipient means an employee, director, independent contractor or consultant of the Company or any Subsidiary of the Company who has been selected as an eligible participant by the Administrator.

(r) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

(s) “Exercise Price” means, with respect to any Award under which the holder may purchase Shares, the price per share at which a holder of such Award granted hereunder may purchase Shares issuable upon exercise of such Award.

(t) “Fair Market Value” as of a particular date shall mean the fair market value of a share of Common Stock as determined by the Administrator in its sole discretion; provided, however, that (i) if the Common Stock is admitted to trading on a national securities exchange, the fair market value of a share of Common Stock on any date shall be the closing sale price reported for such share on such exchange on such date or, if no sale was reported on such date, on the last day preceding such date on which a sale was reported, or (ii) if the shares of Common Stock are not then listed on the New York Stock Exchange, the average of the highest reported bid and lowest reported asked prices for the shares of Common Stock as reported by the National Association of Securities Dealers, Inc. Automated Quotations System for the last preceding date on which there was a sale of such stock in such market, or (3) if the shares of Common Stock are not then listed on a national securities exchange or traded in an over-the-counter market or the value of such shares is not otherwise determinable, such value as determined by the Committee in good faith and in accordance with Code Section 409A.

(u) “Option” means an option to purchase shares of Common Stock granted pursuant to Section 7 hereof.

(v) “Other Cash-Based Award” means a cash Award granted to a Participant under Section 10 hereof, including cash awarded as a bonus or upon the attainment of Performance Goals or otherwise as permitted under the Plan.

(w) “Other Share-Based Award” means a right or other interest granted to a Participant under the Plan that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Common Stock, including, but not limited to, unrestricted Shares, restricted stock units, dividend equivalents or performance units, each of which may be subject to the attainment of Performance Goals or a period of continued employment or other terms or conditions as permitted under the Plan.

(x) “Participant” means any Eligible Recipient selected by the Administrator, pursuant to the Administrator’s authority provided for in Section 3 below, to receive grants of Options, Share Appreciation Rights, Restricted Shares, Other Share-Based Awards, Other Cash-Based Awards or any combination of the foregoing, and, upon his or her death, his or her successors, heirs, executors and administrators, as the case may be.

(y) “Performance Goals” means performance goals based on one or more of the following criteria: (i) earnings, including one or more of operating income, earnings before or after taxes, earnings before or after interest, depreciation, amortization, adjusted EBITDA, economic earnings, or extraordinary or special items or book value per share (which may exclude nonrecurring items); (ii) pre-tax income or after-tax income; (iii) earnings per Share (basic or diluted); (iv) operating profit; (v) revenue, revenue growth or rate of revenue growth; (vi) return on assets (gross or net), return on investment, return on capital, or return on equity; (vii) returns on sales or revenues; (viii) operating expenses; (ix) stock price appreciation (including total stockholder return, on an absolute basis or relative to a peer group or other index selected by the Committee); (x) cash flow, free cash flow, cash flow return on investment (discounted or otherwise), net cash provided by operations, or cash flow in excess of cost of capital; (xi) implementation or completion of critical projects or processes; (xii) cumulative earnings per share growth; (xiii) operating margin or profit margin; (xiv) cost targets, reductions and savings, productivity and efficiencies; (xv) strategic business criteria, consisting of one or more objectively determinable objectives based on meeting specified market penetration, geographic business expansion, customer satisfaction, employee satisfaction, human resources management, supervision of litigation, information technology, and goals relating to acquisitions, divestitures, joint ventures and similar transactions, and budget comparisons; (xvi) personal professional objectives, including any of the foregoing performance goals, the implementation of policies and plans, the negotiation of transactions, the development of long term business goals, formation of joint ventures, research or development collaborations, and the completion of other corporate transactions; and (xvii) any combination of, or a specified increase in, any of the foregoing. Where applicable, the Performance Goals may be expressed in terms of attaining a specified level of the particular criteria or the attainment of a percentage increase or decrease in the particular criteria, and may be applied to one or more of the Company or Affiliate thereof, or a division or strategic business unit of the Company, or may be applied to the performance of the Company relative to a market index, a group of other companies or a combination thereof, all as determined by the Committee. The Performance Goals may include a threshold level of performance below which no payment shall be made (or no vesting shall occur), levels of performance at which specified payments shall be made (or specified vesting shall occur), and a maximum level of performance above which no additional payment shall be made (or at which full vesting shall occur). Performance Goals may be equitably adjusted in recognition of unusual or non-recurring events affecting the Company or any Affiliate thereof or the financial statements of the Company or any Affiliate thereof, in response to changes in applicable laws or regulations, or to account for items of gain, loss or expense determined to be extraordinary or unusual in nature or infrequent in occurrence or related to the disposal of a segment of a business or related to a change in accounting principles or any other reason.

(z) “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any Subsidiary thereof, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary thereof, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company.

(aa) “Restricted Shares” means Shares granted pursuant to Section 9 below subject to certain restrictions that lapse at the end of a specified period or periods.

(bb) “Retirement” means a termination of a Participant’s employment, other than for Cause, on or after the attainment of age 65.

(cc) “Shares” means shares of Common Stock reserved for issuance under the Plan, as adjusted pursuant to the Plan, and any successor (pursuant to a merger, consolidation or other reorganization) security.

(dd) “Share Appreciation Right” means the right pursuant to an Award granted under Section 8 below to receive an amount equal to the excess, if any, of (i) the aggregate Fair Market Value, as of the date such Award or portion thereof is surrendered, of the Shares covered by such Award or such portion thereof, over (ii) the aggregate Exercise Price of such Award or such portion thereof.

(ee) “Subsidiary” means, with respect to any Person, as of any date of determination, any other Person as to which such first Person owns or otherwise controls, directly or indirectly, more than 50% of the voting shares or other similar interests or a sole general partner interest or managing member or similar interest of such other Person. An entity shall be deemed a Subsidiary of the Company for purposes of this definition only for such periods as the requisite ownership or control relationship is maintained.

Section 3. Administration.

(a) The Plan shall be administered by the Administrator and shall be administered, to the extent applicable, in accordance with Rule 16b-3 under the Exchange Act. The Plan is intended to comply, and shall be administered in a manner that is intended to comply, with Code Section 409A and shall be construed and interpreted in accordance with such intent. To the extent that an Award, issuance and/or payment is subject to Code Section 409A, it shall be awarded and/or issued or paid in a manner that will comply with Code Section 409A, including any applicable regulations or guidance issued by the Secretary of the Treasury and the Internal Revenue Service with respect thereto.

(b) Pursuant to the terms of the Plan, the Administrator, subject, in the case of any Committee, to any restrictions on the authority delegated to it by the Board, shall have the power and authority, without limitation:

(1) to select those Eligible Recipients who shall be Participants;

(2) to determine whether and to what extent Options, Share Appreciation Rights, Restricted Shares, Other Share-Based Awards, Other Cash-Based Awards or a combination of any of the foregoing, are to be granted hereunder to Participants;

(3) to determine the number of Shares to be covered by each Award granted hereunder;

(4) to determine the terms and conditions, not inconsistent with the terms of the Plan, of each Award granted hereunder (including, but not limited to, (i) the restrictions applicable to Restricted Shares and the conditions under which restrictions applicable to such Restricted Shares shall lapse, (ii) the Performance Goals and periods applicable to Awards (if any), (iii) the Exercise Price of each Award, (iv) the vesting schedule and terms applicable to each Award, (v) the number of Shares subject to each Award and (vi) subject to the requirements of Code Section 409A (to the extent applicable), any amendments to the terms and conditions of outstanding Awards, including, but not limited to, extending the exercise period of such Awards and accelerating the vesting schedule of such Awards;

(5) to determine the terms and conditions, not inconsistent with the terms of the Plan, which shall govern all written instruments evidencing Options, Share Appreciation Rights, Restricted Shares or Other Share-Based Awards, Other Cash-Based Awards or any combination of the foregoing granted hereunder;

(6) to determine the Fair Market Value;

(7) to determine the duration and purpose of leaves of absence which may be granted to a Participant without constituting termination of the Participant’s employment for purposes of Awards granted under the Plan;

(8) to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall from time to time deem advisable; and

(9) to construe and interpret the terms and provisions of the Plan and any Award issued under the Plan (and any Award Agreement relating thereto), and to otherwise supervise the administration of the Plan and to exercise all powers and authorities either specifically granted under the Plan or necessary and advisable in the administration of the Plan.

(c) All decisions made by the Administrator pursuant to the provisions of the Plan shall be final, conclusive and binding on all persons, including the Company and the Participants. No member of the Board or the Committee, nor any officer or employee of the Company or any Subsidiary thereof acting on behalf of the Board or the Committee, shall be personally liable for any action, omission, determination, or interpretation taken or made in good faith with respect to the Plan, and all members of the Board or the Committee and each and any officer or employee of the Company and of any Subsidiary thereof acting on their behalf shall, to the maximum extent permitted by law, be fully indemnified and protected by the Company in respect of any such action, omission, determination or interpretation.

Section 4. Shares Reserved for Issuance Under the Plan.

(a) Subject to Section 5 hereof, the number of shares of Common Stock that are reserved and available for issuance pursuant to Awards granted under the Plan is 7,551,042 shares. The aggregate Awards granted during any calendar year to any single individual shall not exceed, subject to adjustment as provided in Section 5 herein: (i) 1,000,000 shares subject to Options or Share Appreciation Rights, (ii) 500,000 shares subject to Restricted Shares or Other Share-Based Awards (other than Stock Appreciation Rights) and (iii) $5,000,000 with respect to Other Cash-Based Awards. Notwithstanding the foregoing, no Participant who is a non-employee director of the Company shall be granted Awards during any calendar year that, when aggregated with such non-employee director’s cash fees with respect to such calendar year, exceed $750,000 in total value (calculating the value of any such Awards based on the grant date fair value of such Awards for the Company’s financial reporting purposes).

(b) Shares issued under the Plan may, in whole or in part, be authorized but unissued Shares or Shares that shall have been or may be reacquired by the Company in the open market, in private transactions or otherwise. Any Shares subject to an Award under the Plan that, after the Effective Date, are forfeited, canceled, settled or otherwise terminated without a distribution of Shares to a Participant will thereafter be deemed to be available for Awards. In applying the immediately preceding sentence, if (i) Shares otherwise issuable or issued in respect of, or as part of, any Award other than Options and Share Appreciation Rights are withheld to cover taxes, such Shares shall not be treated as having been issued under the Plan and shall again be available for issuance under the Plan, (ii) Shares otherwise issuable or issued in respect of, or as part of, any Award of Options or Share Appreciation Rights are withheld to cover taxes or the Exercise Price, such Shares shall be treated as having been issued under the Plan and shall not be available for issuance under the Plan, and (iii) any Share-settled Share Appreciation Rights are exercised, the aggregate number of Shares subject to such Share Appreciation Rights shall be deemed issued under the Plan and shall not be available for issuance under the Plan. In addition, Shares tendered to exercise outstanding Options or other Awards or to cover applicable taxes on Awards of Options and Share Appreciation Rights shall not be available for issuance under the Plan, but Shares tendered to cover applicable taxes on Awards other than Options and Share Appreciation Rights shall be available for issuance under the Plan.

Section 5. Equitable Adjustments.

(a) In the event of any Change in Capitalization (including a Change of Control), an equitable substitution or proportionate adjustment shall be made, in each case, as may be determined by the Administrator, in its sole discretion, in (i) the aggregate number of shares of Common Stock reserved for issuance under the Plan, (ii) the kind and number of securities subject to, and the Exercise Price of any outstanding Options and Stock Appreciation Rights granted under the Plan, (iii) the kind, number and purchase price of shares of Common Stock, or the amount of cash or amount or type of other property, subject to outstanding Restricted Stock, Restricted Stock Units, Stock Bonuses and Other Stock-Based Awards granted under the Plan or (iv) the Performance Goals and performance periods applicable to any Awards granted under the Plan; provided, however, that any fractional shares resulting from the adjustment shall be eliminated. Such other equitable substitutions or adjustments shall be made as may be determined by the Administrator, in its sole discretion.

(b) Without limiting the generality of the foregoing, in connection with a Change in Capitalization (including a Change of Control), the Administrator may provide, in its sole discretion, but subject in all events to the requirements of Section 409A of the Code, for the cancellation of any outstanding Award in exchange for payment in cash or other property having an aggregate Fair Market Value equal to the Fair Market Value of the shares of Common Stock, cash or other property covered by such Award, reduced by the aggregate Exercise Price thereof, if any; provided, however, that if the Exercise Price of any outstanding Award is equal to or greater than the Fair Market Value of the shares of Common Stock, cash or other property covered by such Award, the Board may cancel such Award without the payment of any consideration to the Participant.

The determinations made by the Administrator or the Board, as applicable, pursuant to this Section 5 shall be final, binding and conclusive.

Section 6. Eligibility.

The Participants under the Plan shall be selected from time to time by the Administrator, in its sole discretion, from among Eligible Recipients.

Section 7. Options.

(a) General. Each Participant who is granted an Option shall enter into an Award Agreement with the Company, containing such terms and conditions as the Administrator shall determine, in its sole discretion, which Award Agreement shall set forth, among other things, the Exercise Price of the Option, the term of the Option and provisions regarding exercisability of the Option granted thereunder. The provisions of each Option need not be the same with respect to each Participant. More than one Option may be granted to the same Participant and be outstanding concurrently hereunder. Options granted under the Plan shall be subject to the terms and conditions set forth in this Section 7 and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Administrator shall deem desirable and set forth in the applicable Award Agreement. Each Option granted hereunder is intended to be a non-qualified Option and is not intended to qualify as an “incentive stock option” within the meaning of Code Section 422.

(b) Exercise Price. The Exercise Price of Shares purchasable under an Option shall be determined by the Administrator in its sole discretion at the time of grant, but in no event shall the Exercise Price of an Option be less than one hundred percent (100%) of the Fair Market Value of the Common Stock on the date of grant.

(c) Option Term. The maximum term of each Option shall be fixed by the Administrator, but no Option shall be exercisable more than ten (10) years after the date such Option is granted. Each Option’s term is subject to earlier expiration pursuant to the applicable provisions in the Plan and the Award Agreement. Notwithstanding the foregoing, the Administrator shall have the authority to accelerate the exercisability of any outstanding Option at such time and under such circumstances as the Administrator, in its sole discretion, deems appropriate.

(d) Exercisability. Each Option shall be exercisable at such time or times and subject to such terms and conditions, including the attainment of preestablished Performance Goals, as shall be determined by the Administrator in the applicable Award Agreement. The Administrator may also provide that any Option shall be exercisable only in installments, and the Administrator may waive such installment exercise provisions at any time, in whole or in part, based on such factors as the Administrator may determine in its sole discretion. Notwithstanding anything to the contrary contained herein, an Option may not be exercised for a fraction of a share.

(e) Method of Exercise. Options may be exercised in whole or in part by giving written notice of exercise to the Company specifying the number of Shares to be purchased, accompanied by payment in full of the aggregate Exercise Price of the Shares so purchased in cash or its equivalent, as determined by the Administrator. As determined by the Administrator, in its sole discretion, with respect to any Option or category of Options, payment in whole or in part may also be made (i) by means of consideration received under any cashless exercise procedure approved by the Administrator (including the withholding of Shares otherwise issuable upon exercise), (ii) in the form of unrestricted Shares already owned by the Participant which have a Fair Market Value on the date of surrender equal to the aggregate Exercise Price of the Shares as to which such Option shall be exercised, (iii) any other form of consideration approved by the Administrator and permitted by applicable law or (iv) any combination of the foregoing.

(f) Rights as Shareholder. A Participant shall have no rights to dividends or any other rights of a shareholder with respect to the Shares subject to an Option until the Participant has given written notice of the exercise thereof, has paid in full for such Shares and has satisfied the requirements of Section 14 hereof.

(g) Termination of Employment or Service. In the event of the termination of employment or service with the Company and all Affiliates thereof of a Participant who has been granted one or more Options, such Options shall be exercisable at such time or times and subject to such terms and conditions as set forth in the Award Agreement.

(h) Other Change in Employment Status. An Option shall be affected, both with regard to vesting schedule and termination, by leaves of absence, changes from full-time to part-time employment, partial disability or other changes in the employment status of an Participant, in the discretion of the Administrator.

Section 8. Share Appreciation Rights.

(a) General. Share Appreciation Rights may be granted either alone (“Free Standing Rights”) or in conjunction with all or part of any Option granted under the Plan (“Related Rights”). Related Rights may be granted either at or after the time of the grant of such Option. The Administrator shall determine the Eligible Recipients to whom, and the time or times at which, grants of Share Appreciation Rights shall be made, the number of Shares to be awarded, the price per Share, and all other conditions of Share Appreciation Rights. Notwithstanding the foregoing, no Related Right may be granted for more Shares than are subject to the Option to which it relates and any Share Appreciation Right must be granted with an Exercise Price not less than the Fair Market Value of Common Stock on the date of grant. The provisions of Share Appreciation Rights need not be the same with respect to each Participant. Share Appreciation Rights granted under the Plan shall be subject to the following terms and conditions set forth in this Section 8 and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Administrator shall deem desirable, as set forth in the applicable Award Agreement.

(b) Exercise Price. The Exercise Price of Shares purchasable under a Share Appreciation Right shall be determined by the Administrator in its sole discretion at the time of grant, but in no event shall the exercise price of a Share Appreciation Rights be less than one hundred percent (100%) of the Fair Market Value of a share of Common Stock on the date of grant.

(c) Awards; Rights as Shareholder. The prospective recipient of a Share Appreciation Right shall not have any rights with respect to such Award, unless and until such recipient has executed an Award Agreement and delivered a fully executed copy thereof to the Company, within a period of sixty (60) days (or such other period as the Administrator may specify) after the award date. Participants who are granted Share Appreciation Rights shall have no rights as shareholders of the Company with respect to the grant or exercise of such rights.

(d) Exercisability.

(1) Share Appreciation Rights that are Free Standing Rights shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Administrator in the applicable Award Agreement.

(2) Share Appreciation Rights that are Related Rights shall be exercisable only at such time or times and to the extent that the Options to which they relate shall be exercisable in accordance with the provisions of Section 7 above and this Section 8 of the Plan.

(e) Payment Upon Exercise.

(1) Upon the exercise of a Free Standing Right, the Participant shall be entitled to receive up to, but not more than, that number of Shares equal in value to the excess of the Fair Market Value as of the date of exercise over the price per share specified in the Free Standing Right multiplied by the number of Shares in respect of which the Free Standing Right is being exercised, with the Administrator having the right to determine the form of payment.

(2) A Related Right may be exercised by a Participant by surrendering the applicable portion of the related Option. Upon such exercise and surrender, the Participant shall be entitled to receive up to, but not more than, that number of Shares equal in value to the excess of the Fair Market Value as of the date of exercise over the Exercise Price specified in the related Option multiplied by the number of Shares in respect of which the Related Right is being exercised, with the Administrator having the right to determine the form of payment. Options which have been so surrendered, in whole or in part, shall no longer be exercisable to the extent the Related Rights have been so exercised.

(3) Notwithstanding the foregoing, the Administrator may determine to settle the exercise of a Share Appreciation Right in cash (or in any combination of Shares and cash).

(f) Termination of Employment or Service.

(1) In the event of the termination of employment or service with the Company and all Affiliates thereof of a Participant who has been granted one or more Free Standing Rights, such rights shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Administrator in the applicable Award Agreement.

(2) In the event of the termination of employment or service with the Company and all Affiliates thereof of a Participant who has been granted one or more Related Rights, such rights shall be exercisable at such time or times and subject to such terms and conditions as set forth in the related Options.

(g) Term.

(1) The term of each Free Standing Right shall be fixed by the Administrator, but no Free Standing Right shall be exercisable more than ten (10) years after the date such right is granted.

(2) The term of each Related Right shall be the term of the Option to which it relates, but no Related Right shall be exercisable more than ten (10) years after the date such right is granted.

Section 9. Restricted Shares.

(a) General. Restricted Shares may be issued either alone or in addition to other Awards granted under the Plan. The Administrator shall determine the Eligible Recipients to whom, and the time or times at which, Restricted Shares shall be made; the number of Shares to be awarded; the price, if any, to be paid by the Participant for the acquisition of Restricted Shares; the Restricted Period (as defined in paragraph (c) of this Section 9), if any, applicable to Restricted Shares; the Performance Goals (if any) applicable to Restricted Shares; and all other conditions of the Restricted Shares. If the restrictions, Performance Goals and/or conditions established by the Administrator are not attained, a Participant shall forfeit his or her Restricted Shares in accordance with the terms of the grant. The provisions of the Restricted Shares need not be the same with respect to each Participant.

(b) Awards and Certificates. The prospective recipient of Restricted Shares shall not have any rights with respect to any such Award, unless and until such recipient has executed an Award Agreement and delivered a fully executed copy thereof to the Company, within a period of sixty (60) days (or such other period as the Administrator may specify) after the award date. Except as otherwise provided below in Section 9(c), (i) each Participant who is granted an award of Restricted Shares may, in the Company’s sole discretion, be issued a stock certificate in respect of such Restricted Shares; and (ii) any such certificate so issued shall be registered in the name of the Participant, and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to any such Award. The Company may require that the stock certificates, if any, evidencing Restricted Shares granted hereunder be held in the custody of the Company until the restrictions thereon shall have lapsed, and that, as a condition of any award of Restricted Shares, the Participant shall have delivered a stock power, endorsed in blank, relating to the Shares covered by such Award. Notwithstanding anything in the Plan to the contrary, any Restricted Shares (whether before or after any vesting conditions have been satisfied) may, in the Company’s sole discretion, be issued in uncertificated form pursuant to the customary arrangements for issuing shares in such form.

(c) Restrictions and Conditions. The Restricted Shares granted pursuant to this Section 9 shall be subject to the following restrictions and conditions and any additional restrictions or conditions as determined by the Administrator at the time of grant or, subject to Code Section 409A, thereafter:

(1) The Administrator may, in its sole discretion, provide for the lapse of restrictions in installments and may accelerate or waive such restrictions in whole or in part based on such factors and such circumstances as the Administrator may determine, in its sole discretion, including, but not limited to, the attainment of certain Performance Goals, the Participant’s termination of employment or service as a director, independent contractor or consultant to the Company or any Affiliate thereof, or the Participant’s death or Disability. Notwithstanding the foregoing, upon a Change in Control, the outstanding Awards shall be subject to Section 11 hereof.

(2) Except as provided in Section 15 or in the Award Agreement, the Participant shall generally have the rights of a shareholder of the Company with respect to Restricted Shares during the Restricted Period, including the right to vote such shares and to receive any dividends declared with respect to such shares; provided, however, that except as provided in the applicable Award Agreement, any dividends declared during the Restricted Period with respect to such Restricted Shares shall only become payable if (and to the extent) the underlying Restricted Shares vest. Certificates for Shares of unrestricted Common Stock may, in the Company’s sole discretion, be delivered to the Participant only after the Restricted Period has expired without forfeiture in respect of such Restricted Shares, except as the Administrator, in its sole discretion, shall otherwise determine.

(3) The rights of Participants granted Restricted Shares upon termination of employment or service as a director, independent contractor, or consultant to the Company or to any Affiliate thereof terminates for any reason during the Restricted Period shall be set forth in the Award Agreement.

Section 10. Other Share-Based or Cash-Based Awards.

The Administrator is authorized to grant Awards to Participants in the form of Other Share-Based Awards or Other Cash-Based Awards, as deemed by the Administrator to be consistent with the purposes of the Plan and as evidenced by an Award Agreement. The Administrator shall determine the terms and conditions of such Awards, consistent with the terms of the Plan, at the date of grant or thereafter, including any Performance Goals and performance periods. Except as provided in the applicable Award Agreement, any dividend or dividend equivalent awarded hereunder shall be subject to the same restrictions, conditions and risks of forfeiture as the underlying Awards and shall only become payable if (and to the extent) the underlying Awards vest. Common Stock or other securities or property delivered pursuant to an Award in the nature of a purchase right granted under this Section 10 shall be purchased for such consideration, paid for at such times, by such methods, and in such forms, including, without limitation, Shares, other Awards, notes or other property, as the Administrator shall determine, subject to any required corporate action.

Section 11. Vesting In Connection With a Change in Control.

(a) Unless otherwise determined by the Administrator or as evidenced in an Award Agreement and except as provided in Section 11(b) below, in the event of the occurrence of a Change in Control, any unvested and outstanding Awards may be assumed or replaced by the Company or its successor with a substantially similar equity or cash incentive award and the same vesting terms as such unvested Award. Except as would otherwise result in adverse tax consequences under Section 409A of the Code, if (i) any unvested and outstanding Awards held by a Participant are assumed or replaced in such a Change in Control and such Participant’s employment with the Company or its successor is terminated without Cause or by the Participant for Good Reason (as defined in the Participant’s employment agreement with the Company, to the extent applicable) prior to the second anniversary of the Change in Control or (ii) any unvested and outstanding Awards are not assumed or replaced by the Company or its successor upon such Change in Control, then (1) any unvested or unexercisable portion of any Award carrying a right to exercise shall become fully vested and exercisable and (2) the restrictions, deferral limitations, payment conditions and forfeiture conditions applicable to an Award granted under the Plan shall lapse and such Awards shall be deemed fully vested and any performance conditions imposed with respect to such Awards shall be deemed to be fully achieved at the target level of performance.

(b) Notwithstanding anything to the contrary contained herein, unless otherwise determined by the Administrator or as evidenced in an Award Agreement or other agreement between the Company and a Participant, with respect to each Other Cash-Based Award granted to a Participant pursuant to the Company’s annual incentive plan or program, in the event that a Change in Control occurs during an annual performance period, each Participant shall be entitled to receive on the date of the Change in Control a payment with respect to such annual incentive award calculated based on the actual performance of the applicable Performance Goals through the date of the Change in Control, as determined by the Administrator in its discretion, pro-rated based on the number of days of the annual performance period that have elapsed prior to and including the date of the Change in Control.

Section 12. Amendment and Termination.

The Board or the Committee may amend, alter or terminate the Plan at any time, but no amendment, alteration, or termination shall be made that would impair the rights of a Participant under any Award theretofore granted without such Participant’s consent. Approval of the Company’s shareholders shall be obtained for any amendment that would require such approval in order to satisfy the requirements of any rules of the stock exchange on which the Common Stock is traded or other applicable law.

Subject to the terms and conditions of the Plan, the Administrator may modify, extend or renew outstanding Awards under the Plan, or accept the surrender of outstanding Awards (to the extent not already exercised) and grant new Awards in substitution of them (to the extent not already exercised). Except as provided in Section 5, the Administrator will not, however, modify any outstanding Option or Share Appreciation Right so as to specify a lower Exercise Price or grant price (and will not cancel an Option or Share Appreciation Right and substitute for it an Option or Share Appreciation Right with a lower Exercise Price or grant price), without the approval of the Company’s shareholders. In addition, except as provided in Section 5, the Administrator may not cancel an outstanding Option or Share Appreciation Right whose Exercise Price or grant price is equal to or greater than the current Fair Market Value of a Share and substitute for it another Award or cash payment without the prior approval of the Company’s shareholders. Notwithstanding the foregoing, no alteration, modification or termination of an Award will, without the prior written consent of the Participant, adversely alter or impair any rights or obligations under any Award already granted under the Plan.

Section 13. Unfunded Status of Plan.

The Plan is intended to constitute an “unfunded” plan for incentive compensation. With respect to any payments not yet made to a Participant by the Company, nothing contained herein shall give any such Participant any rights that are greater than those of a general creditor of the Company.

Section 14. Withholding Taxes.

Each Participant shall, no later than the date as of which the value of an Award first becomes includible in the gross income of such Participant for federal and/or state income tax purposes, pay to the Company, or make arrangements satisfactory to the Administrator regarding payment of, any federal, state, or local taxes of any kind required by law to be withheld with respect to the Award. The obligations of the Company under the Plan shall be conditional on the making of such payments or arrangements, and the Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to such Participant. Whenever cash is to be paid pursuant to an Award granted hereunder, the Company shall have the right to deduct therefrom an amount sufficient to satisfy any federal, state and local withholding tax requirements related thereto. Whenever Shares are to be delivered pursuant to an Award, the Company shall have the right to require the Participant to remit to the Company in cash an amount sufficient to satisfy any related federal, state and local taxes to be withheld and applied to the tax obligations. With the approval of the Administrator, a Participant may satisfy the foregoing requirement by electing to have the Company withhold from delivery of Shares or by delivering already owned unrestricted shares of Common Stock, in each case, having a value not exceeding the federal, state and local taxes to be withheld and applied to the tax obligations. Such Shares shall be valued at their Fair Market Value on the date of which the amount of tax to be withheld is determined. Fractional share amounts shall be settled in cash. Such an election may be made with respect to all or any portion of the Shares to be delivered pursuant to an Award. The Company may also use any other method of obtaining the necessary payment or proceeds, as permitted by law, to satisfy its withholding obligation with respect to any Option or other Award.

Section 15. Transfer of Awards.

Until such time as the Awards are fully vested and/or exercisable in accordance with the Plan or an Award Agreement, no purported sale, assignment, mortgage, hypothecation, transfer, charge, pledge, encumbrance, gift, transfer in trust (voting or other) or other disposition of, or creation of a security interest in or lien on, any Award or any agreement or commitment to do any of the foregoing (each, a “Transfer”) by any holder thereof in violation of the provisions of the Plan or an Award Agreement will be valid, except with the prior written consent of the Administrator, which consent may be granted or withheld in the sole discretion of the Administrator. Any purported Transfer of an Award or any economic benefit or interest therein in violation of the Plan or an Award Agreement shall be null and void ab initio, and shall not create any obligation or liability of the Company, and any person purportedly acquiring any Award or any economic benefit or interest therein transferred in violation of the Plan or an Award Agreement shall not be entitled to be recognized as a holder of such Shares. Unless otherwise determined by the Administrator in accordance with the provisions of the immediately preceding sentence, an Option may be exercised, during the lifetime of the Participant, only by the Participant or, during any period during which the Participant is under a legal disability, by the Participant’s guardian or legal representative.

Section 16. Continued Employment.

The adoption of the Plan shall not confer upon any Eligible Recipient any right to continued employment or service with the Company or any Affiliate thereof, as the case may be, nor shall it interfere in any way with the right of the Company or any Affiliate thereof to terminate the employment or service of any of its Eligible Recipients at any time.

Section 17. Effective Date.

The Effective Date of the Plan is June 28, 2019.

Section 18. Term of Plan.

No Award shall be granted pursuant to the Plan on or after the tenth anniversary of the Effective Date, but Awards theretofore granted may remain outstanding beyond that date.

Section 19. Code Section 409A.

The Plan as well as payments and benefits under the Plan are intended to be exempt from, or to the extent subject thereto, to comply with Code Section 409A, and, accordingly, to the maximum extent permitted, the Plan shall be interpreted in accordance therewith. Notwithstanding anything contained herein to the contrary, to the extent required in order to avoid accelerated taxation and/or tax penalties under Code Section 409A, the Participant shall not be considered to have terminated employment or service with the Company for purposes of the Plan and no payment shall be due to the Participant under the Plan or any Award until the Participant would be considered to have incurred a “separation from service” from the Company and its Affiliates within the meaning of Code Section 409A. Any payments described in the Plan that are due within the “short term deferral period” as defined in Code Section 409A shall not be treated as deferred compensation unless applicable law requires otherwise. Notwithstanding anything to the contrary in the Plan, to the extent that any Awards (or any other amounts payable under any plan, program or arrangement of the Company or any of its Affiliates) are payable upon a separation from service and such payment would result in the imposition of any individual tax and penalty interest charges imposed under Code Section 409A, the settlement and payment of such awards (or other amounts) shall instead be made on the first business day after the date that is six (6) months following such separation from service (or upon the Participant’s death, if earlier). Each amount to be paid or benefit to be provided under this Plan shall be construed as a separate identified payment for purposes of Code Section 409A. The Company makes no representation that any or all of the payments or benefits described in this Plan will be exempt from or comply with Code Section 409A and makes no undertaking to preclude Code Section 409A from applying to any such payment. The Participant shall be solely responsible for the payment of any taxes and penalties incurred under Code Section 409A.

Section 20. Erroneously Awarded Compensation.

The Plan and all Awards issued hereunder shall be subject to any compensation recovery policy adopted by the Company to comply with applicable law, including, without limitation, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or to comport with good corporate governances practices, as such policy may be amended from time to time.

Section 21. Governing Law.

The Plan shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of law of such state.

Delaware	001-38580	83-1030538
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

Two Westbrook Corporate Center, Suite 500 Westchester, Illinois		60154
(Address of principal executive offices)		(Zip code)

	(708) 492-7000
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	IAA	New York Stock Exchange


Name		Title

John W. Kett		President and Chief Executive Officer

Tim O’Day		President, U.S. Operations

Vance C. Johnston		Executive Vice President, Chief Financial Officer and Treasurer

Sidney Peryar		Executive Vice President, Chief Legal Officer and Secretary

Maju P. Abraham		Senior Vice President and Chief Information Officer


Exhibit No.		Description

2.1		Separation and Distribution Agreement, dated as of June 27, 2019, by and between KAR Auction Services, Inc. and IAA, Inc.†

3.1		Amended and Restated Certificate of Incorporation of IAA, Inc., dated as of June 27, 2019.

3.2		Amended and Restated By-laws of IAA, Inc., dated as of June 27, 2019.

10.1		Transition Services Agreement, dated as of June 27, 2019, by and between KAR Auction Services, Inc. and IAA, Inc.

10.2		Tax Matters Agreement, dated as of June 27, 2019, by and between KAR Auction Services, Inc. and IAA, Inc.

10.3		Employee Matters Agreement, dated as of June 27, 2019, by and between KAR Auction Services, Inc. and IAA, Inc.

10.4		IAA, Inc. 2019 Omnibus Stock and Incentive Plan.

99.1		Information Statement of IAA, Inc., dated as of June 14, 2019. (incorporated herein by reference to Exhibit 99.1 to the Current Report on Form 8-K filed by IAA, Inc. with the SEC on June 14, 2019).

99.2		Press Release of IAA, Inc., dated as of June 28, 2019.

	IAA, Inc.

Dated: June 28, 2019	By:	/s/ Vance C. Johnston
	Name:	Vance C. Johnston
	Title:	Executive Vice President, Chief
		Financial Officer and Treasurer

2.1	General	17
2.2	Internal Restructuring; Transfer of Assets and Assumption of Liabilities.	17
2.3	SpinCo Assets; KAR Assets	19
2.4	SpinCo Liabilities; KAR Liabilities	22
2.5	Approvals and Notifications	23
2.6	Novation of Liabilities	26
2.7	Release of Guarantees	27
2.8	Termination of Agreements	28
2.9	Treatment of Shared Contracts	29
2.10	Bank Accounts; Cash Balances	30
2.11	Ancillary Agreements	31
2.12	Disclaimer of Representations and Warranties	31
2.13	Financing Arrangements	32
2.14	Solvency and Liquidity	32
2.15	SpinCo Contribution	32

3.1	Sole and Absolute Discretion; Cooperation	33
3.2	Actions Prior to the Distribution	33
3.3	Conditions to the Distribution	34
3.4	The Distribution	36

4.1	Release of Pre-Distribution Claims	37
4.2	Indemnification by SpinCo	39
4.3	Indemnification by KAR	40
4.4	Indemnification Obligations Net of Insurance Proceeds and Other Amounts	41
4.5	Procedures for Indemnification of Third-Party Claims	42
4.6	Additional Matters	44
4.7	Right of Contribution	45
4.8	Covenant Not to Sue	46
4.9	Remedies Cumulative	46
4.10	Survival of Indemnities	46
4.11	Tax Matters Agreement Governs	46
4.12	Employee Matters Agreement Governs	46

5.1	Insurance Matters	46
5.2	Continuation of Director and Officer Insurance	49
5.3	Late Payments	49
5.4	Treatment of Payments for Tax Purposes	49
5.5	Inducement	49
5.6	Post-Effective Time Conduct	49
5.7	Restricted Businesses	50

6.1	Agreement for Exchange of Information	50
6.2	Ownership of Information	51
6.3	Compensation for Providing Information	51
6.4	Record Retention	51
6.5	Limitations of Liability	52
6.6	Other Agreements Providing for Exchange of Information	52
6.7	Production of Witnesses; Records; Cooperation	53
6.8	Privileged Matters	54
6.9	Confidentiality	56
6.10	Protective Arrangements	57

7.1	Good-Faith Officer Negotiation	58
7.2	Good-Faith CEO Negotiation	58
7.3	Resolution by Delaware Courts.	58
7.4	Conduct During Dispute Resolution Process	59

Exhibit A	SpinCo Certificate of Incorporation
Exhibit B	SpinCo Bylaws
Exhibit C	Restricted Businesses

Schedule 1.1	KAR Marks
Schedule 1.2	SpinCo Discontinued or Divested Businesses
Schedule 1.3	SpinCo Contracts
Schedule 1.4	SpinCo Intellectual Property
Schedule 1.5(i)	Owned Real Property
Schedule 1.5(ii)	Leased Real Property
Schedule 1.6	SpinCo Technology
Schedule 1.7	Transferred Entities
Schedule 2.1	Internal Restructuring
Schedule 2.3(a)(xi)	SpinCo Assets
Schedule 2.3(b)(vii)	KAR Intellectual Property
Schedule 2.3(b)(x)	KAR Assets
Schedule 2.4(a)(vi)	SpinCo Liabilities
Schedule 2.4(b)	KAR Liabilities
Schedule 2.8(b)(ii)	Intercompany Agreements
Schedule 2.9(b)	Shared Contracts to be Assigned to SpinCo
Schedule 4.3(f)	Specified KAR Information

	KAR AUCTION SERVICES, INC.


	By:	/s/ Eric M. Loughmiller
		Name: Eric M. Loughmiller
		Title: Executive Vice President and Chief Financial Officer

	IAA, INC.


	By:	/s/ John W. Kett
		Name: John W. Kett
		Title: Chief Executive Officer and President

	IAA, INC.

	By:	/s/ Rebecca Polak
	Name:	Rebecca Polak
	Title:	Secretary

8.1	Further Assurances	59
8.2	KAR Names	60

ARTICLE I

OFFICES

Section 1. Registered Office	1
Section 2. Other Offices	1
ARTICLE II

MEETINGS OF STOCKHOLDERS

Section 1. Place of Meetings	1
Section 2. Annual Meetings	1
Section 3. Special Meetings	1
Section 4. Nature of Business at Meetings of Stockholders	1
Section 5. Nomination of Directors	3
Section 6. Notice	5
Section 7. Adjournments	6
Section 8. Quorum	6
Section 9. Voting	6
Section 10. Proxies	7
Section 11. No Action by Written Consent	8
Section 12. List of Stockholders Entitled to Vote	8
Section 13. Record Date	8
Section 14. Stock Ledger	8
Section 15. Conduct of Meetings	9
Section 16. Inspectors of Election	9

ARTICLE III

DIRECTORS

Section 1. Number and Election of Directors	9
Section 2. Vacancies	9
Section 3. Duties and Powers	10
Section 4. Meetings	10
Section 5. Organization	10
Section 6. Resignations and Removals of Directors	10
Section 7. Quorum	11
Section 8. Actions of the Board by Written Consent	11
Section 9. Meetings by Means of Conference Telephone	11
Section 10. Committees	11
Section 11. Compensation	12
Section 12. Interested Directors	12

ARTICLE IV

OFFICERS

Section 1. General	12
Section 2. Election	12
Section 3. Voting Securities Owned by the Corporation	13
Section 4. Chairman of the Board of Directors	13
Section 5. President.	13
Section 6. Vice Presidents	14
Section 7. Secretary	14
Section 8. Treasurer	14
Section 9. Assistant Secretaries	14
Section 10. Assistant Treasurers	15
Section 11. Other Officers	15

ARTICLE V

STOCK

Section 1. Form of Certificates	15
Section 2. Signatures	15
Section 3. Lost Certificates	15
Section 4. Transfers	16
Section 5. Dividend Record Date	16
Section 6. Record Owners	16
Section 7. Transfer and Registry Agents	16

ARTICLE VI

NOTICES

Section 1. Notices	17
Section 2. Waivers of Notice	17

ARTICLE VII

GENERAL PROVISIONS

Section 1. Dividends	17
Section 2. Disbursements	18
Section 3. Fiscal Year	18
Section 4. Corporate Seal	18

ARTICLE VIII

INDEMNIFICATION

Section 1. Power to Indemnify in Actions, Suits or Proceedings other than Those by or in the Right of the Corporation	18
Section 2. Power to Indemnify in Actions, Suits or Proceedings by or in the Right of the Corporation	18
Section 3. Authorization of Indemnification	19
Section 4. Good Faith Defined	19
Section 5. Indemnification by a Court	19
Section 6. Expenses Payable in Advance	20
Section 7. Nonexclusivity of Indemnification and Advancement of Expenses	20
Section 8. Insurance	20
Section 9. Certain Definitions	21
Section 10. Survival of Indemnification and Advancement of Expenses	21
Section 11. Limitation on Indemnification	21
Section 12. Indemnification of Employees and Agents	21

ARTICLE IX

Section 1. Forum for Adjudication of Certain Disputes	22

ARTICLE X

AMENDMENTS

Section 1. Amendments	22
Section 2. Entire Board of Directors	22

Section 1.1	General	2

ARTICLE II

CERTAIN ALLOCATIONS

Section 2.1	General Rule	9
Section 2.2	Federal Income Tax Relating to Joint Returns	10
Section 2.3	Federal Income Tax Relating to Separate Returns	10
Section 2.4	State Tax Relating to Joint Returns	10
Section 2.5	State Tax Relating to Separate Returns	11
Section 2.6	Non-U.S. Tax Relating to Joint Returns	11
Section 2.7	Non-U.S. Tax Relating to Separate Returns	11
Section 2.8	Non-Income Taxes	11
Section 2.9	Internal Restructuring Taxes.	12
Section 2.10	Separation Taxes	12
Section 2.11	Determination of Tax Attributable to a Particular Entity	12
Section 2.12	Allocation of Employment Taxes and Equity Award Deductions	13
Section 2.13	Estimated Taxes.	13
Section 2.14	Transaction-Related Losses	13
Section 2.15	Straddle Periods	13
Section 2.16	Tax Refunds	13
Section 2.17	Prior Agreements	14

ARTICLE III

PREPARATION AND FILING OF TAX RETURNS

Section 3.1	KAR’ Responsibility	14
Section 3.2	Spinco’s Responsibility	14
Section 3.3	Right To Review Tax Returns	14
Section 3.4	Cooperation	15
Section 3.5	Tax Reporting Practices	15
Section 3.6	Reporting of Transactions	15
Section 3.7	Payment of Taxes	17
Section 3.8	Amended Returns and Carrybacks	18
Section 3.9	Tax Benefits	18
Section 3.10	Tax Attributes	18


ARTICLE IV

TAX-FREE STATUS OF THE DISTRIBUTION

Section 4.1	Representations and Warranties	19
Section 4.2	Restrictions on KAR	20
Section 4.3	Restrictions on Spinco	20

ARTICLE V

INDEMNITY OBLIGATIONS

Section 5.1	Indemnity Obligations	22
Section 5.2	Indemnification Payments	23
Section 5.3	Payment Mechanics	23
Section 5.4	Treatment of Payments	24

ARTICLE VI

TAX CONTESTS

Section 6.1	Notice	24
Section 6.2	Separate Returns	24
Section 6.3	Joint Returns	24
Section 6.4	Other Tax Contests	25
Section 6.5	Obligation of Continued Notice	25
Section 6.6	Settlement Rights	25
Section 6.7	Tax Contest Costs and Expenses.	26

ARTICLE VII

COOPERATION

Section 7.1	General	26
Section 7.2	Consistent Treatment	27

ARTICLE VIII

RETENTION OF RECORDS; ACCESS

Section 8.1	Retention of Records	27
Section 8.2	Access to Tax Records	27

ARTICLE IX

DISPUTE RESOLUTION

Section 9.1	Dispute Resolution Mechanics	28

ARTICLE X

MISCELLANEOUS PROVISIONS

Section 10.1	Conflicting Agreements	28
Section 10.2	Termination	28
Section 10.3	Interest on Late Payments	28
Section 10.4	Specific Performance	28
Section 10.5	Successors	29
Section 10.6	Application to Present and Future Subsidiaries	29
Section 10.7	Assignability	29
Section 10.8	No Fiduciary Relationship	29
Section 10.9	No Duplication; No Double Recovery.	29
Section 10.10	Further Assurances	29
Section 10.11	Survival	30
Section 10.12	Notices	30
Section 10.13	Effective Date	31

EXHIBITS

Exhibit A	Separation Plan

	KAR Auction Services, Inc..

	By:	/s/ Eric M. Loughmiller
		Name: Eric M. Loughmiller
		Title: Executive Vice President and Chief Financial Officer

	IAA, Inc.

	By:	/s/ John W. Kett
		Name: John W. Kett
		Title: Chief Executive Officer and President