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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 CP II"), 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 CP II 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
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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 appl
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