Item 1.01 Entry into a Material Definitive Agreement.
On February 24, 2022, KAR Auction Services, Inc. (the “Company”)
entered into a Securities and Asset Purchase Agreement (the “Purchase Agreement”) with Carvana Group, LLC, a Delaware limited
liability company (“Buyer”), and Carvana Co., a Delaware corporation, solely for purposes of Section 10.15 thereof as
guarantor (the “Guarantor”), pursuant to which Buyer will acquire the US physical auction business of the Company (the “Transferred
Business”, and together along with the other transactions contemplated therein, the “Transaction”).
Total cash consideration payable by Buyer to Company for the sale of
the Transferred Business is $2.2 billion, subject to adjustment for cash, indebtedness, transaction expenses and net working capital.
The consummation of the Transaction is subject to the satisfaction
or waiver of certain customary closing conditions, including (a) the completion of certain pre-closing restructuring steps in connection
with the Transaction, (b) the accuracy of each party’s representations and warranties (subject to customary materiality and
other qualifiers), (c) each party’s performance and compliance with its covenants contained in the Purchase Agreement, (d) the
expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, which occurred at 11:59 pm
ET on February 23, 2022, and (e) the absence of any statute, rule, regulation, executive order, decree, temporary restraining
order, preliminary or permanent injunction or other issued order preventing the consummation of the Transaction. The Transaction is not
subject to any financing condition. None of the Company, Buyer nor Guarantor require the approval of their stockholders or members, as
applicable, to close the Transaction.
The Purchase Agreement contains customary representations, warranties
and covenants, including those restricting the operation of the Transferred Business prior to the closing of the Transaction without the
consent of Buyer.
Either Buyer or the Company may terminate the Purchase Agreement (i) by
written notice to the other party, if (a) the closing of the Transaction has not consummated on or before the close of business on
June 24, 2022, or (b) if any final and non-appealable order, decree or injunction has been issued by a governmental entity permanently
enjoining or otherwise prohibiting the consummation of the Transaction, provided that the failure to consummate the Transaction pursuant
to clauses (a) and (b) was not primarily caused by a material breach under the Purchase Agreement by the party seeking to terminate
the Purchase Agreement, or (ii) if the other party is in breach under the Purchase Agreement such that certain conditions to the
closing of the Transaction are incapable of being satisfied and such breach is not cured in the time period specified in the Purchase
Agreement. The Purchase Agreement may also be terminated by the mutual written consent of Buyer and Seller. Subject to the satisfaction
or waiver of the closing conditions set forth in the Purchase Agreement, the Transaction is expected to close in the second quarter of
2022.
The description of the Purchase Agreement set forth under this
Item 1.01 does not purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Agreement,
which is attached hereto as Exhibit 2.1 and incorporated herein by reference.
The representations, warranties and covenants of the Company, Buyer
and Guarantor contained in the Purchase Agreement have been made solely for the benefit of the parties thereto. In addition, such representations,
warranties and covenants (i) have been made only for purposes of the Purchase Agreement, (ii) are subject to materiality qualifications
contained in the Purchase Agreement which may differ from what may be viewed as material by investors, (iii) were made only as of
the date of the Purchase Agreement or such other date as is specified in the Purchase Agreement and (iv) have been included in the
Purchase Agreement for the purpose of allocating risk between the contracting parties rather than establishing matters as fact. Accordingly,
the Purchase Agreement is included with this filing only to provide investors with information regarding the terms of the Purchase Agreement,
and not to provide investors with any other factual information regarding the Company, Buyer, Guarantor or their respective businesses.
Investors should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual
state of facts or condition of the Company, Buyer, Guarantor or any of their respective subsidiaries or affiliates. Moreover, information
concerning the subject matter of the representations and warranties may change after the date of the Purchase Agreement, which subsequent
information may or may not be fully reflected in the Company’s, Buyer’s or Guarantor’s public disclosures.