Exhibit 10.16b

 

FIRST AMENDMENT
TO THE
SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
KAR Holdings II, LLC

 

This First Amendment to the Second Amended and Restated Limited Liability
Company Agreement of KAR Holdings II, LLC (this “Amendment”), effective as of
December 10, 2009, amends the Second Amended and Restated Limited Liability
Company Agreement of KAR Holdings II, LLC, dated April 20, 2007 (the
“Agreement”).  Capitalized terms used but not otherwise defined herein shall
have the meanings given such terms in the Agreement.

 

WHEREAS, in connection with an Initial Public Offering, the Company entered into
a director designation agreement with KAR Auction Services, Inc. (formerly known
as KAR Holdings, Inc.) pursuant to which the Company received certain rights
with respect to the designation of directors on the Board of Directors of KAR
Auction Services, Inc.; and

 

WHEREAS, the undersigned, constituting all of the Investor Members of the
Company, desire to amend the Agreement to include provisions whereby the
Investor Members agree upon the allocation among the Investor Members of the
director designation rights of the Company under such director designation
agreement with KAR Auction Services, Inc. entered into in connection with the
Initial Public Offering.

 

NOW THEREFORE, in accordance with Section 14.10 of the Agreement and for good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound, the undersigned, constituting
all of the hereby agree as follows:

 

1.             Amendment.

 

(a)           Section 4.1 of the Agreement is hereby amended by adding new
sub-section (e) to Section 4.1 of the Agreement which new subsection shall read
in its entirety as follows:

 

“(e)         Director Designation Rights for KAR Auction Services.

 

(i)            For so long as the Company has the right, pursuant to the
Director Designation Agreement, dated as of December 10, 2009, by and between
the Company and KAR Auction Services (the “Director Designation Agreement”), to
designate seven individuals to the board of directors of KAR Auction Services
(each such individual designated by the Company, a “Director Nominee”), (A) each
of Kelso, GSCP and VAC shall have the right, in their sole discretion, to each
designate two of such Director Nominees, and (B) Parthenon shall have the right,
in its sole discretion, to designate one of such Director Nominees.

 

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(ii)           For so long as the Company has the right, pursuant to the
Director Designation Agreement, to designate six Director Nominees, (A) each of
Kelso, GSCP and VAC shall have the right, in their sole discretion, to each
designate two of such Director Nominees, and (B) Parthenon shall no longer have
the right to designate any Director Nominees but Parthenon shall have the right,
pursuant to the Director Designation Agreement, to designate a non-voting
observer to attend any meetings of the board of directors of KAR Auction
Services (which right may be waived by such party in its sole discretion).  In
the event that the board of directors of KAR Auction Services fails to make a
determination that all of the Director Nominees designated by GSCP and VAC
pursuant to this Section 4.1(e)(ii) are “independent” (as contemplated by the
applicable rules of the New York Stock Exchange), then (i) each of GSCP and VAC
agree to substitute one of their respective designees for Director Nominees with
an individual that the board of directors of KAR Auction Services affirmatively
determines qualifies as “independent” (as contemplated by the applicable
rules of the New York Stock Exchange); and (ii) GSCP and VAC shall each have the
right, pursuant to the Director Designation Agreement, to designate one
non-voting observer to attend any meetings of the board of directors of KAR
Auction Services (which right may be waived by such party in its sole
discretion).

 

(iii)          For so long as the Company has the right, pursuant to the
Director Designation Agreement, to designate four Director Nominees, (A) Kelso
shall have the right, in its sole discretion, to designate two of such Director
Nominees, and (B) each of GSCP and VAC shall have the right, in their sole
discretion, to designate one of such Director Nominees.

 

(iv)          For so long as the Company has the right, pursuant to the Director
Designation Agreement, to designate three Director Nominees, each of Kelso, GSCP
and VAC shall have the right, in their sole discretion, to designate one of such
Director Nominees.

 

(v)           For so long as the Company has the right, pursuant to the Director
Designation Agreement, to designate one Director Nominee, (A) Kelso shall have
the right, in its sole discretion, to designate such Director Nominee, and
(B) each GSCP and VAC shall have the right, pursuant to the Director Designation
Agreement, to designate one non-voting observer to attend any meetings of the
board of directors of KAR Auction Services (which right may be waived by such
party in its sole discretion); it being understood that such right shall not
apply to the extent an observer has already been designated by GSCP or VAC
pursuant to the Director Designation Agreement and Section 4.1(e)(ii) above and
is continuing to serve as an observer.

 

(vi)          In the event the Company ceases to hold, in the aggregate, at
least 50.0% of the total number of shares of common stock of KAR Auction
Services outstanding at any time, without limiting the generality of Section
4.1(e)(ii) above, the Investor Members agree to cooperate to take actions that
they mutually agree are necessary or advisable to ensure that the board of
directors of KAR Auction Services is comprised of a majority of independent
directors (as such term is defined by the rules governing the New York Stock
Exchange), including, without limitation, cooperating to remove directors (other
than Director Nominees) that are not independent directors (as such term is
defined by the rules governing the New York Stock Exchange).

 

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(vii)         Vacancies arising through the death, resignation or removal of a
Director Nominee designated by any of Kelso, GSCP, VAC or Parthenon pursuant to
this Section 4.1(e) may be filled by the Company only with a Director Nominee
designated by the applicable Investor Member whose original designated Director
Nominee has vacated his or her position, and the Director Nominee so chosen
shall hold office until the next election and until his or her successor is duly
elected and qualified, or until his or her earlier death, resignation or
removal.”

 

(b)           Section 15.1 of the Agreement is hereby amended by deleting the
following definition:

 

“KAR Holdings” means KAR Holdings, Inc., a Delaware corporation.

 

(c)           Section 15.1 of the Agreement is hereby amended to include the
following defined terms, in the appropriate alphabetical order:

 

“Director Designation Agreement” has the meaning given in Section 4.1(e)(i).

 

“Director Nominee” has the meaning given in Section 4.1(e)(i).

 

“KAR Auction Services” means KAR Auction Services, Inc., a Delaware corporation
(formerly known as KAR Holdings, Inc.).

 

(d)           Each instance the term “KAR Holdings” is used in the Agreement
shall be replaced with the term “KAR Auction Services.”

 

(e)           Section 12.10(b) of the Agreement is hereby amended and restated
in its entirety to read in its entirety as follows:

 

“(b)         Holdings IPO.  In order to implement any Holdings IPO, this
Agreement shall continue to remain in full force and effect with any amendments
or modifications thereto as shall be effectuated by the Investor Members
requesting such Holdings IPO in accordance with Section 12.10(a) above; provided
that, following such Holdings IPO (A) the governance provisions herein
(including the provisions of Article IV (but excluding Section 4.1(e), which
shall apply to the Subsidiary that effects the Holdings IPO) shall apply only
with respect to the Company and the Subsidiaries of the Company (other than the
Subsidiary that effects the Holdings IPO and its Subsidiaries), and (B) the
Company shall not vote any shares of the Subsidiary that effects the Holdings
IPO in favor of any action without the prior written consent of the Majority
Sponsors.

 

2.             Headings.  Headings in this Amendment are for convenience of
reference only, and shall neither limit nor amplify the provisions of this
Amendment.

 

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3.             Continuation of Agreement.  Except as otherwise expressly
provided herein, all of the terms and provisions of the Agreement shall remain
in full force and effect and this Amendment shall not amend or modify any other
rights, powers, duties, or obligations of any party to the Agreement.

 

4.             Complete Agreement.  This Amendment contains the entire agreement
between the parties hereto with respect to the matters contained herein and
supersedes and replaces any prior agreement between the parties with respect to
the matters set forth in this Amendment.

 

5.             Counterparts.  This Amendment may be executed in any number of
counterparts and any such counterparts may be transmitted by facsimile
transmission, and each of such counterparts, whether an original or a facsimile
of an original, shall be deemed to be an original and all of such counterparts
together shall constitute a single agreement.

 

[Signatures appear on the following page.]

 

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IN WITNESS WHEREOF, the parties have hereunto executed this Amendment as of the
date first above written.

 

 

GS CAPITAL PARTNERS VI PARALLEL, L.P.

 

 

 

By:

GS ADVISORS VI, L.L.C., its General Partner

 

 

 

By:

/s/ Laurie E. Schmidt

 

 

Name: Laurie E. Schmidt

 

 

Title: Vice President

 

 

 

 

 

 

 

GS CAPITAL PARTNERS VI GMBH & CO. KG

 

 

 

By:

GS ADVISORS VI, L.L.C., its Managing Limited Partner

 

 

 

By:

/s/ Laurie E. Schmidt

 

 

Name: Laurie E. Schmidt

 

 

Title: Vice President

 

 

 

 

 

 

 

GS CAPITAL PARTNERS VI FUND, L.P.

 

 

 

By:

GSCP VI ADVISORS, L.L.C., its General Partner

 

 

 

By:

/s/ Laurie E. Schmidt

 

 

Name: Laurie E. Schmidt

 

 

Title: Vice President

 

 

 

 

 

 

 

GS CAPITAL PARTNERS VI OFFSHORE FUND, L.P.

 

 

 

By:

GSCP VI OFFSHORE ADVISORS, L.L.C. its General Partner

 

 

 

By:

/s/ Laurie E. Schmidt

 

 

Name: Laurie E. Schmidt

 

 

Title: Vice President

 

Signature Page — First Amendment to Second Amended and Restated Limited
Liability Company Operating Agreement

 

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KELSO INVESTMENT ASSOCIATES VII, L.P.

 

 

 

 

By:

Kelso GP VII, L.P., its General Partner

 

 

 

 

By:

Kelso GP VII, LLC, its General Partner

 

 

 

By:

/s/ James J. Connors, II

 

 

Name: James J. Connors, II

 

 

Title: Managing Member

 

 

 

 

 

 

 

KEP VI, LLC

 

 

 

 

By:

/s/ James J. Connors, II

 

 

Name: James J. Connors, II

 

 

Title: Managing Member

 

 

 

 

 

 

 

AXLE HOLDINGS II, LLC

 

 

 

 

By:

/s/ John W. Kett

 

 

Name: John W. Kett

 

 

Title: Management Member

 

 

 

 

 

 

 

VALUEACT CAPITAL MASTER FUND, L.P.

 

 

 

 

By: VA Partners I, LLC, its General Partner

 

 

 

By:

/s/ G. Mason Morfit

 

 

Name: G. Mason Morfit

 

 

Title: Vice President

 

 

 

 

 

 

 

PCAP KAR LLC

 

 

 

 

By:

/s/ David Ament

 

 

Name: David Ament

 

 

Title: President

 

Signature Page — First Amendment to Second Amended and Restated Limited
Liability Company Operating Agreement

 

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