Exhibit 2
VOTING AGREEMENT
This VOTING AGREEMENT (the "Agreement"), dated as of February 22,
2005, is entered into by and among Axle Holdings, Inc., a Delaware corporation
("Buyer Parent"), ValueAct Capital Partners, L.P., a Delaware limited
partnership ("ValueAct CP"), ValueAct Capital Partners II, L.P., a Delaware
limited partnership ("ValueAct XX XX"), ValueAct Capital Master Fund, L.P., a
British Virgin Islands limited partnership ("ValueAct Master") and ValueAct
Capital Partners Co-Investors, L.P., a Delaware limited partnership ("ValueAct
Co-Investors", and together with ValueAct CP, ValueAct XX XX and ValueAct
Master, each a "Shareholder" and collectively, the "Shareholders").
WHEREAS, concurrently with the execution and delivery of this
Agreement, Buyer Parent, Axle Merger Sub, Inc., an Illinois corporation
("Buyer") and Insurance Auto Auctions, Inc., an Illinois corporation (the
"Company"), are entering into an Agreement and Plan of Merger (the "Merger
Agreement"), which Merger Agreement has been unanimously approved by the Axle
Board (other than recused members) and which provides, among other things, for
a merger of Buyer with and into the Company, with the Company remaining as the
surviving corporation (the "Merger");
WHEREAS, as of the date hereof, each Shareholder is the beneficial
owner of the number of shares of common stock of the Company, no par value
(the "Common Stock") opposite such Shareholder's name set forth on Exhibit I
attached hereto (the shares of Common Stock held by all Shareholders, the
"Shares");
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, Buyer Parent has required that the Shareholders agree, and each
Shareholder is willing to agree, to the matters set forth herein; and
WHEREAS, capitalized terms used but not otherwise defined herein
shall have the respective meanings attributed to them in the Merger Agreement.
NOW, THEREFORE, in consideration of the foregoing and the agreements
set forth below, the parties hereto agree as follows:
1. Voting of Shares.
1.1 Voting Agreement.
(a) Each Shareholder hereby agrees to vote (or cause to be voted) all
of the Shares which such Shareholder has the right to so vote at the Axle
Shareholders' Meeting in favor of the approval and adoption of the Merger
Agreement, the transactions contemplated thereby (including, without
limitation, the Merger) and any actions required in furtherance thereof. In
addition, from the date hereof and until the termination of this Agreement
pursuant to Section 9, each Shareholder hereby agrees to vote (or cause to be
voted) at any annual, special or other meeting of the shareholders of the
Company, and at any adjournment or adjournments thereof, or pursuant to any
consent in lieu of a meeting or otherwise, all of the Shares which such
Shareholder has the right to so vote:
(i) against any action or agreement that would reasonably be
expected to result in a breach in any material respect of any
covenant, representation or warranty or any other obligation of the
Company under this Agreement, the Merger Agreement, or any other
agreement contemplated hereby or thereby;
(ii) against any Acquisition Proposal and against any other
proposal for action or agreement that is intended, or would
reasonably be expected, to impede, interfere with, delay, frustrate,
postpone or adversely affect the consummation of the transactions
contemplated by the Merger Agreement;
(iii) against any change in the composition of the Axle
Board, other than as contemplated by the Merger Agreement; and
(iv) against any amendment to the Articles of Incorporation
or by-laws of the Company, other than as contemplated by the Merger
Agreement.
(b) Any vote required to be cast or consent required to be executed
pursuant to this Section 1.1 shall be cast or executed in accordance with the
applicable procedures relating thereto so as to ensure that it is duly counted
for purposes of determining that quorum is present (if applicable) and for
purposes of recording the results of that vote or consent.
(c) If any action is taken by written consent rather than at a
meeting of the shareholders of the Company, consent shall be given or withheld
by each Shareholder with respect to the Shares held by such Shareholder in the
same manner as if such Shares were voted at a meeting in accordance with the
provisions of Section 1.1(a).
1.2 Irrevocable Proxy. Each Shareholder hereby irrevocably grants to,
and appoints, Buyer Parent and any designee thereof and each of Buyer Parent's
officers, as such Shareholder's attorney, agent and proxy (such grants and
appointment, the "Irrevocable Proxy"), with full power of substitution, to
vote and otherwise act with respect to all of such Shareholder's Shares at any
meeting of the shareholders of the Company (whether annual or special and
whether or not an adjourned or postponed meeting), and in any action by
written consent of the shareholders of the Company, on the matters and in the
manner specified in Section 1.1. THIS PROXY AND POWER OF ATTORNEY ARE
IRREVOCABLE AND COUPLED WITH AN INTEREST SUFFICIENT IN LAW TO SUPPORT AN
IRREVOCABLE PROXY AND, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, SHALL BE
VALID AND BINDING ON ANY PERSON TO WHOM SHAREHOLDER MAY TRANSFER ANY OF ITS
SHARES IN BREACH OF THIS AGREEMENT. Each Shareholder hereby revokes all other
proxies and powers of attorney with respect to all of such Shareholder's
Shares that may have heretofore been appointed or granted, and no subsequent
proxy (whether revocable or irrevocable) or power of attorney shall be given
(and if given, shall not be effective) by such Shareholder with respect
thereto on the matters covered by Section 1.1. Each Shareholder hereby affirms
that the irrevocable proxy set forth in this Section 1.2 is given in
connection with the execution of the Merger Agreement, and that such
irrevocable proxy is given to secure the performance of the duties of such
Shareholder under this Agreement.
1.3 Fiduciary Responsibilities. Subject to Section 5 hereof,
notwithstanding any other provision of this Agreement to the contrary, nothing
contained in this Agreement shall limit the rights and obligations of any
officer of any Shareholder in his capacity as a director of the Company from
taking any action in his capacity as a director of the Company that the Axle
Board is permitted to take pursuant to the terms of the Merger Agreement, and
no such action taken by an officer of any Shareholder in any such capacity
shall be deemed to constitute a breach of any provision of this Agreement.
2. Representations and Warranties of each Shareholder.
Each Shareholder represents and warrants to Buyer Parent as follows:
2.1 Binding Agreement. Such Shareholder is a limited partnership duly
formed, validly existing and in good standing under the laws of the State or
territory of its formation and has the capacity to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by such Shareholder and the
consummation by such Shareholder of the transactions contemplated hereby have
been duly and validly authorized by all necessary action of such Shareholder,
and no other action or proceedings are necessary to authorize the execution,
delivery and performance of this Agreement by such Shareholder and the
consummation by such Shareholder of the transactions contemplated hereby. Such
Shareholder has duly and validly executed and delivered this Agreement and
this Agreement constitutes a legal, valid and binding obligation of such
Shareholder, enforceable against such Shareholder in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws affecting creditors' rights
generally and by general equitable principles.
2.2 No Conflict. Neither the execution and delivery of this Agreement
by such Shareholder, the consummation by such Shareholder of the transactions
contemplated hereby, the performance by such Shareholder of its obligations
hereunder nor the compliance by such Shareholder with any provisions hereof,
will (a) result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default under its partnership agreement
or other organizational documents or any material contract, agreement,
instrument, commitment, arrangement or understanding to which such Shareholder
is a party, or result in the creation of any Lien with respect to such
Shareholder's Shares, (b) violate or conflict with any writ, judgment,
injunction or decree applicable to such Shareholder or such Shareholder's
Shares or (c) require any consent, authorization or approval with respect to
such Shareholder of any Person, including any Governmental Authority.
2.3 Ownership of Shares. Such Shareholder is the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act, which meaning will apply for
all purposes of this Agreement) of, and has the sole power to vote and dispose
of, the Shares listed opposite such Shareholder's name on Exhibit I hereto,
free and clear of any Liens (including any restriction on the right to vote,
sell or otherwise dispose of such Shares), except as may exist by reason of
this Agreement or pursuant to applicable law. Except as provided for or
disclosed in this Agreement, the Merger Agreement and the transactions and
other agreements contemplated hereby and thereby, there are no outstanding
options or other rights to acquire from such Shareholder, or obligations of
such Shareholder to sell or to dispose of, any Shares held by such Shareholder
or other equity interests of any kind in the Company. As of the date of this
Agreement, the number of shares set forth opposite such Shareholder's name on
Exhibit I hereto represents all of the shares of capital stock of the Company
beneficially owned by such Shareholder.
2.4 Brokers. There are no claims for broker's or finder's fees or
brokerage commissions or other like payments in connection with this Agreement
or the transactions contemplated hereby pursuant to arrangements made by such
Shareholder, and such Shareholder has not retained any broker or similar
intermediary to act directly or indirectly on its behalf in connection with
the transactions contemplated by this Agreement.
3. Representations and Warranties of Buyer Parent.
Buyer Parent represents and warrants to the Shareholders as follows:
3.1 Binding Agreement. Buyer Parent is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Delaware and has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by Buyer Parent and the
consummation by Buyer Parent of the transactions contemplated hereby have been
duly and validly authorized by the Boards of Directors of Buyer Parent, and no
other corporate proceedings of Buyer Parent are necessary to authorize the
execution, delivery and performance of this Agreement by Buyer Parent and the
consummation by Buyer Parent of the transactions contemplated hereby. Buyer
Parent has duly and validly executed this Agreement and this Agreement
constitutes a legal, valid and binding obligation of Buyer Parent, enforceable
against it in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws affecting creditors' rights generally and by general equitable
principles.
3.2 No Conflict. Neither the execution and delivery of this Agreement
by Buyer Parent, the consummation by Buyer Parent of the transactions
contemplated hereby, the performance by Buyer Parent of its obligations
hereunder, nor the compliance by Buyer Parent with any of the provisions
hereof, will (a) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default under its
organizational documents or any contract, agreement, instrument, commitment,
arrangement or understanding to which Buyer Parent is a party, (b) violate or
conflict with any writ, judgment, injunction or decree applicable to Buyer
Parent or (c) require any consent, authorization or approval with respect to
Buyer Parent of any Person, including any Governmental Authority.
4. Transfer and Other Restrictions.
4.1 Certain Prohibited Transfers. Each Shareholder agrees not to,
except as provided for in the Merger Agreement:
(a) sell, sell short, transfer (including gift), pledge,
encumber, assign or otherwise dispose (whether by sale, liquidation,
dissolution, dividend, distribution or otherwise) of, or enter into
any contract, option or other arrangement or understanding with
respect to the sale, transfer, pledge, encumbrance, assignment or
other disposition of, any Shares or any interest contained therein
(each a "Transfer") other than pursuant to this Agreement, unless the
Person to which such Shares are to be Transferred expressly agrees to
be bound by this Agreement in a written instrument reasonably
satisfactory to Buyer Parent;
(b) grant any proxies or power of attorney or enter into a
voting agreement or other arrangement relating to the matters covered
by Section 1.1, with respect to any Shares other than this Agreement;
(c) deposit any Shares into a voting trust; or
(d) knowingly, directly or indirectly, take or cause the
taking of any other action that would restrict, limit or interfere
with the performance of such Shareholder's obligations hereunder or
the transactions contemplated hereby, excluding any bankruptcy
filing.
4.2 Additional Shares. Without limiting any provisions of the Merger
Agreement, in the event (i) of any stock dividend, stock split,
recapitalization, reclassification, combination or exchange of shares of
capital stock of the Company on, of or affecting any Shareholder's Shares or
(ii) any Shareholder shall become the beneficial owner or record owner of any
additional shares of capital stock of the Company, or other securities
entitling the holder thereof to vote or give consent with respect to the
matters set forth in Section 1.1 hereof, in each case, then the terms of this
Agreement shall apply to the shares of capital stock or other securities of
the Company held by such Shareholder immediately following the effectiveness
of the events described in clause (i), or such Shareholder becoming the
beneficial or record owner thereof, as described in clause (ii), as the case
may be. Each Shareholder hereby agrees, while this Agreement is in effect, to
notify Buyer Parent of the number of any new Shares acquired by such
Shareholder, if any, after the date hereof.
5. No Solicitation. During the term of this Agreement, each Shareholder agrees
that it will not, and will not permit its directors, officers, investment
bankers, attorneys and accountants to, and will use its Reasonable Efforts to
cause its employees, Affiliates, representatives and other agents not to,
directly or indirectly, (i) solicit, initiate, facilitate or encourage any
inquiries or the making or submission of any proposal that constitutes, or
could reasonably be expected to lead to, an Acquisition Proposal, (ii) engage
in negotiations or discussions concerning, or provide any non-public
information (or otherwise afford access to the properties, books or records of
Axle or any Axle Subsidiary) to any Person or entity in connection with, any
Acquisition Proposal or (iii) agree to, enter into any letter of intent or
similar agreement in principle with respect to, approve, recommend or
otherwise endorse or support any Acquisition Proposal. Upon execution of this
Agreement, each Shareholder shall, and shall cause its representatives and
agents to cease immediately and cause to be terminated any and all existing
discussions, conversations, negotiations and other communications with any
Person conducted heretofore with respect to, or that could reasonably be
expected to lead to, an Acquisition Proposal.
6. Public Announcements.
Other than in an amendment to the Shareholders' Schedule 13D, each
Shareholder shall not issue, or cause the publication of, any press release or
other public announcement with respect to the terms of this Agreement without
the prior approval of Buyer Parent, except to the extent required by Law or by
any listing agreement with, or the policies of, a national securities exchange
and, in any such event, after reasonable prior notice to the other party.
7. Waiver of Appraisal Rights.
To the fullest extent permitted by Law, each Shareholder hereby
irrevocably waives any and all rights of appraisal or dissenters' rights under
Illinois Law that such Shareholder may have with regard to the Merger and
agrees not to take any actions necessary in connection with exercising or
perfecting such appraisal or dissenters' rights.
8. Specific Enforcement.
The parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with the terms hereof or were otherwise breached and that each
party shall be entitled to specific performance of the terms hereof in
addition to any other remedy which may be available at law or in equity.
9. Termination.
This Agreement shall terminate on the earliest to occur of (i) the
termination of the Merger Agreement in accordance with its terms, (ii) an
mutual written agreement of Buyer Parent and the Shareholder to terminate this
Agreement or (iii) the consummation of the transactions contemplated by the
Merger Agreement. Upon termination of this Agreement, all obligations of the
parties hereunder shall terminate (including the irrevocable proxy granted by
Section 1.2 hereof), and the representations and warranties shall not survive
termination; provided that the termination of this Agreement in accordance
with this Section 9 shall not relieve any party from liability for any
intentional or material breach of its obligations hereunder committed prior to
such termination.
10. Notices.
All notices, requests, demands, waivers and other communications
required or permitted to be given under this Agreement to any party hereunder
shall be in writing and deemed given if addressed as provided below (or at
such other address as the addressee shall have specified by notice actually
received by the addressor) and if either (a) actually delivered in fully
legible form, to such address, (b) in the case of any nationally recognized
express mail service, one (1) day shall have elapsed after the same shall have
been deposited with such service, or (c) if by fax, on the day on which such
fax was sent, provided that a copy is sent the same day by overnight courier
or express mail service.
If to Shareholder(s), to:
c/o ValueAct Capital Partners, L.P.
000 Xxxxxxx Xxxxxx
Xxxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx Xx.
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Dechert LLP
0000 Xxxx Xxxxxxxx Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxxxxxxx X. Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
If to Buyer Parent:
c/o Kelso & Company
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, XX
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
11. Certain Events.
Each Shareholder agrees that this Agreement and the obligations
hereunder shall, to the extent permitted by law, attach to such Shareholder's
Shares and shall be binding upon any person or entity to which legal or
beneficial ownership of such Shares shall pass, whether by operation of law or
otherwise.
12. Entire Agreement.
This Agreement (including the documents and instruments referred to
herein) constitutes the entire agreement and supersedes all other prior
agreements and understandings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof.
13. Consideration.
This Agreement is granted in consideration of the execution and
delivery of the Merger Agreement by Axle, Buyer Parent and Buyer.
14. Amendments.
This Agreement may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed by the
parties hereto.
15. Successors and Assigns.
This Agreement shall not be assigned by operation of law or otherwise
without the prior written consent of the other parties hereto, except that
Buyer Parent may assign its rights under this Agreement to any Affiliate of
Buyer Parent. This Agreement will be binding upon, inure to the benefit of and
be enforceable by each party and such party's respective heirs, beneficiaries,
executors, representatives and permitted assigns.
16. Counterparts.
This Agreement may be executed by facsimile and in two or more
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
17. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Illinois (regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof).
18. Severability.
Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
19. Headings.
The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
20. Further Assurances.
Each Shareholder shall, upon request of Buyer Parent, execute and
deliver any additional documents and take such actions as may reasonably be
necessary to carry out the provisions hereof.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the undersigned on the day and year first written above.
VALUEACT CAPITAL PARTNERS, L.P.
By: /s/ Xxxxx X. Xxxxx
----------------------------
Name: Xxxxx X. Xxxxx
Title: Partner
VALUEACT CAPITAL PARTNERS II, L.P.
By: /s/ Xxxxx X. Xxxxx
----------------------------
Name: Xxxxx X. Xxxxx
Title: Partner
VALUEACT CAPITAL MASTER FUND, L.P
By: /s/ Xxxxx X. Xxxxx
----------------------------
Name: Xxxxx X. Xxxxx
Title: Partner
VALUEACT CAPITAL PARTNERS CO-
INVESTORS, L.P
By: /s/ Xxxxx X. Xxxxx
----------------------------
Name: Xxxxx X. Xxxxx
Title: Partner
AXLE HOLDINGS, INC.
By: /s/ Xxxxx X. Xxxxxxx
---------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President and Secretary
Exhibit I to the Voting Agreement
---------------------------------
Shareholder Common Stock
----------- ------------
ValueAct Capital Partners, L.P. 1,550,310 shares
ValueAct Capital Partners II, L.P. 219,692 shares
ValueAct Capital Master Fund, L.P. 1,575,259 shares
ValueAct Capital Partners Co-Investors, L.P. 42,139 shares
