EXECUTION VERSION
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
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(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.
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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
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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.
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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
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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
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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
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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.
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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/ P. H. Xxxxx
-----------------------------------
Name: P. H. XXXXX
Title: PARTNER
VALUEACT CAPITAL PARTNERS II, L.P.
By: /s/ P. H. Xxxxx
-----------------------------------
Name: P. H. XXXXX
Title: PARTNER
VALUEACT CAPITAL MASTER FUND, L.P
By: /s/ P. H. Xxxxx
-----------------------------------
Name: P. H. XXXXX
Title: PARTNER
VALUEACT CAPITAL PARTNERS CO-INVESTORS, L.P
By: /s/ P. H. Xxxxx
-----------------------------------
Name: P. H. XXXXX
Title: PARTNER
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AXLE HOLDINGS, INC.
By: /s/ Xxxxx X. XxXxxxx
------------------------------
Name: Xxxxx X. XxXxxxx
Title: VP & Secretary
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EXHIBIT I
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
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