0000950172-05-000664.txt : 20120628 0000950172-05-000664.hdr.sgml : 20120628 20050303143505 ACCESSION NUMBER: 0000950172-05-000664 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20050303 DATE AS OF CHANGE: 20050303 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: INSURANCE AUTO AUCTIONS, INC CENTRAL INDEX KEY: 0000880026 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MOTOR VEHICLES & MOTOR VEHICLE PARTS & SUPPLIES [5010] IRS NUMBER: 953790111 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-42080 FILM NUMBER: 05657427 BUSINESS ADDRESS: STREET 1: TWO WESTBROOK CORPORATE CENTER STREET 2: SUITE 500 CITY: WESTCHESTER STATE: IL ZIP: 60154 BUSINESS PHONE: 708-492-7000 MAIL ADDRESS: STREET 1: TWO WESTBROOK CORPORATE CENTER STREET 2: SUITE 500 CITY: WESTCHESTER STATE: IL ZIP: 60154 FORMER COMPANY: FORMER CONFORMED NAME: INSURANCE AUTO AUCTIONS INC /CA DATE OF NAME CHANGE: 19930328 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Axle Holdings, Inc. CENTRAL INDEX KEY: 0001319519 IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: C/O KELSO & COMPANY STREET 2: 320 PARK AVENUE, 24TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 212-751-3939 MAIL ADDRESS: STREET 1: C/O KELSO & COMPANY STREET 2: 320 PARK AVENUE, 24TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 SC 13D 1 nyc501514.txt SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D (Rule 13D) Under the Securities Exchange Act of 1934 INSURANCE AUTO AUCTIONS, INC. -------------------------------------------------------- (Name of Issuer) COMMON STOCK, NO PAR VALUE -------------------------------------------------------- (Title of Class of Securities) 457875102 -------------------------------------------------------- (CUSIP Number) James J. Connors, II, Esq. Vice President and General Counsel Kelso & Company 320 Park Avenue, 24th Floor New York, NY 10022 (212) 223-2379 -------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) With a copy to: Lou R. Kling, Esq. Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, New York 10036 (212) 735-3000 February 22, 2005 -------------------------------------------------------- (Date of Event Which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box [ ]. NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Section 240.13d-7 for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or otherwise subject to the liabilities of that section of the Exchange Act but shall be subject to all other provisions of the Exchange Act (however, see the Notes). ------ ------------------------------------------------------------------------- 1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) Axle Holdings, Inc. ------ ------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) [ ] (b) [X] ------ ------------------------------------------------------------------------- 3. SEC USE ONLY ------ ------------------------------------------------------------------------- 4. Source of Funds (See Instructions) 00 ------ ------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [ ] ------ ------------------------------------------------------------------------- 6. Citizenship or Place of Organization Illinois -------------------------------------------------------------------------------- 7. Sole Voting Power 0 Number of ------- ------------------------------------------- Shares 8. Shared Voting Power Beneficially Owned by 3,387,400 (1) Each ------- ------------------------------------------- Reporting 9. Sole Dispositive Power Person with 0 ------- ------------------------------------------- 10. Shared Dispositive Power 0 ------ ------------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person 3,387,400 ------ ------------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) [ ] ------ ------------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11) 28.6% (2) ------ ------------------------------------------------------------------------- 14. Type of Reporting Person (See Instructions) CO ------ ------------------------------------------------------------------------- (1) Based on the 3,387,400 outstanding shares of Common Stock of Insurance Auto Auctions, Inc. (the "Issuer") beneficially owned in the aggregate, as of February 22, 2005, by (i) ValueAct Capital Partners, L.P., (ii) ValueAct Capital Partners II, L.P., (iii) ValueAct Capital Master Fund, L.P., and (iv) ValueAct Capital Partners Co-Investors, L.P. (collectively, the "ValueAct Funds"), as represented and warranted in the Voting Agreement (as defined in Item 3 below). (2) Based on 11,850,796 shares of Common Stock issued and outstanding as of February 18, 2005, as represented and warranted in the Merger Agreement (as defined in Item 4 below). Based upon the Issuer's reported 11,547,995 outstanding shares of Common Stock as reported in the Issuer's Form 10-Q for the quarter ended September 26, 2004, this percentage would be 29.3%. ITEM 1. SECURITY AND ISSUER. The class of equity security to which this Schedule 13D relates is the common stock, no par value (the "Common Stock"), of Insurance Auto Auctions, Inc., an Illinois corporation (the "Issuer"). The principal executive offices of the Issuer are located at 850 East Algonquin Rd., Suite 100, Schaumburg, Illinois 60173. ITEM 2. IDENTITY AND BACKGROUND. The name of the person filing this Schedule 13D is Axle Holdings, Inc., an Illinois Corporation ("Holdings"). Holdings was incorporated on February 18, 2005 for the purpose of effecting an acquisition of the outstanding shares of capital stock of the Issuer, as described in Item 4 below (the "Acquisition"). All of the outstanding capital stock of Holdings is currently owned by Kelso Investment Associates VII, L.P., a Delaware limited partnership ("KIA VII"), and KEP VI, LLC, a Delaware limited liability company ("KEP VI"), two private investment funds affiliated with Kelso & Company, L.P., a Delaware limited partnership ("Kelso"). Kelso is a private investment firm specializing in acquisition transactions. The general partner of KIA VII is Kelso GP VII, L.P., a Delaware limited liability partnership ("Kelso GP LP"), the principal business of which is serving as the general partner of KIA VII. The general partner of Kelso GP LP is Kelso GP VII, LLC, a Delaware limited liability company ("Kelso GP LLC"), the principal business of which is serving as the general partner of Kelso GP LP. The principal address of Holdings, KIA VII, KEP VI, Kelso GP LP and Kelso GP LLC is c/o Kelso and Company, 320 Park Avenue, 24th Floor, New York, New York 10022. The name, citizenship, principal occupation and address of each executive officer and director of Holdings and each managing member of KIA VII, KEP VI, Kelso GP LP and Kelso GP LLC are set forth in Schedule I, which is incorporated by reference herein. During the last five years, none of the persons or entities referred to in this Item 2 (including those persons listed on Schedule I) has been (i) convicted in a criminal proceeding (excluding traffic violations and similar misdemeanors) or (ii) a party to a civil proceeding or a judicial or administrative body of competent jurisdiction and as a result of such proceeding, was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. All of the persons or entities referred to in this Item 2 (including those persons listed on Schedule I) hereby expressly disclaim beneficial ownership of any shares of Common Stock, and the filing of this Statement shall not be construed as an admission that such persons or entities are, for purposes of Section 13(d) of the Exchange Act, as amended, the beneficial owners of any such shares of Common Stock. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. Holdings may be deemed to have acquired beneficial ownership of 3,387,400 shares of Common Stock, pursuant to the Voting Agreement, dated as of February 22, 2005, among Holdings, ValueAct Capital Partners, L.P., ValueAct Capital Partners II, L.P., ValueAct Capital Master Fund, L.P., and ValueAct Capital Partners Co-Investors, L.P. (each a "Shareholder" and, collectively, the "Shareholders") (the "Voting Agreement"). The Voting Agreement was entered into in connection with, and as consideration for, the execution and delivery of the Merger Agreement (as defined in Item 4 below) by Holdings, and Holdings did not pay any additional consideration in connection with the execution and delivery of the Voting Agreement. ITEM 4. PURPOSE OF TRANSACTION. On February 22, 2005, the Issuer, Holdings and Axle Merger Sub, Inc., an Illinois corporation and wholly-owned subsidiary of Holdings ("AcquisitionCo"), entered into an Agreement and Plan of Merger (the "Merger Agreement") pursuant to which the Issuer will become a subsidiary of Holdings. The Merger Agreement contemplates that AcquisitionCo will merge with and into the Issuer (the "Merger") and each outstanding share of the Issuer's Common Stock (the "Shares"), except for treasury shares and dissenting shares, will be converted into the right to receive $28.25 in cash per share (the "Merger Consideration"). In addition, in the Merger all outstanding options to purchase Shares, other than certain options held by members of management that will exchanged for options to purchase common stock of Holdings, will be cancelled in exchange for $28.25 in cash, less the applicable option price. The Merger is subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, including obtaining Issuer stockholder approval. Pursuant to the Voting Agreement, each of the Shareholders has agreed to vote, or execute written consents with respect to, all of the Common Stock held by such Shareholder (i) in favor of approval and adoption of the Merger Agreement, the transactions contemplated thereby (including, without limitation, the Merger) and any actions required in furtherance thereof and (ii) against (a) 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 Issuer under such Voting Agreement, the Merger Agreement, or any other agreement contemplated thereby, (b) any Acquisition Proposal (as defined in Section 11.8 of the Merger Agreement) and 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, (c) any change in the composition of the Board of Directors of the Issuer, other than as contemplated by the Merger Agreement, and (d) any amendment to the articles of incorporation or by-laws of the Issuer, other than as contemplated by the Merger Agreement. In addition, each Shareholder has granted an irrevocable proxy to Holdings and any designee thereof and each of Holdings' officers, as such Shareholder's attorney, agent and proxy with the full power of substitution, to vote and otherwise act with respect to all such Shareholder's Shares at any meeting of the shareholders of the Issuer (whether annual or special and whether or not an adjourned or postponed meeting) or pursuant to any action by written consent, in accordance with the foregoing. Under the Voting Agreement, each Shareholder has agreed not to sell, transfer, pledge, assign or otherwise dispose of its Shares (or enter into a contract with respect to the foregoing), grant any proxies or enter into any voting agreement with respect to its Shares, deposit its Shares in any voting trust or knowingly take any action that would interfere with the performance of its obligations under the Voting Agreement. Each Shareholder has also agreed not to solicit, initiate, facilitate or encourage the making of any Acquisition Proposals with respect to the Issuer or engage in any negotiations or discussions concerning any Acquisition Proposal. The Voting Agreement terminates upon the earliest of (i) the termination of the Merger Agreement in accordance with its terms, (ii) a mutual written agreement of Holdings and the Shareholder to terminate the Voting Agreement, or (iii) the consummation of the transactions contemplated by the Merger Agreement. The foregoing summaries, and all references to the Merger Agreement and the Voting Agreement set forth in this Item 4 are qualified in their entirety by reference to the copies of the Merger Agreement and the Voting Agreement filed as Exhibits 1 and 2, respectively, and are incorporated herein by reference. As provided in the Merger Agreement, the articles of incorporation and by-laws of the AcquisitionCo as in effect immediately prior to the Merger, will be the articles of incorporation and by-laws of the surviving corporation after the Merger until thereafter amended. If the transactions contemplated by the Merger Agreement are consummated, the Common Stock of the Issuer will be delisted from the Nasdaq Stock Exchange and will be deregistered under Section 12(g)(4) of the Exchange. Except as indicated above, none of Holdings or, to the knowledge of Holdings, any person named in Item 2 has any plans or proposals which relate to or would relate or would result in any of the events, actions or conditions specified in paragraphs (a) through (j) of Item 4 of Schedule 13D. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) The responses of Holdings with respect to Rows 11, 12 and 13 of the cover pages of this Schedule 13D that relate to the aggregate number and percentage of Common Stock are incorporated herein by reference. (b) The responses of Holdings with respect to Rows 7, 8, 9 and 10 of the cover pages of this Schedule 13D that relate to the number of shares as to which Holdings has sole power to vote or to direct the vote, shared power to vote or to direct the vote and sole or shared power to dispose or to direct the disposition are incorporated herein by reference. Holdings may be deemed to have shared power to vote such shares of Common Stock with respect to the limited matters described in Item 3 above. However, Holdings expressly disclaims any beneficial ownership of the shares of Common Stock that are covered by the Voting Agreement. Except as set forth in this Schedule 13D, to the knowledge of Holdings, no person named in Item 2 beneficially owns any shares of Common Stock. (c) Except as described in this Schedule 13D, during the past 60 days there have been no other transactions in the securities of the Issuer effected by Holdings or, to the knowledge of Holdings, the other persons named in Item 2. (d) Not applicable. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. Except as described in this Schedule 13D or the Exhibits hereto, to the knowledge of Holdings, there are no contracts, arrangements, understandings or relationships among the persons named in Item 2 and between such persons and any other person with respect to any securities of the Issuer, including but not limited to the transfer or voting of any shares of Common Stock, finder's fees, joint ventures, loans or option arrangements, puts or calls, guarantees or profits, division of profits or loss or the giving or withholding of proxies. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. Exhibit 1 Agreement and Plan of Merger, dated as of February 22, 2005, by and among Axle Holdings, Inc., Axle Merger Sub, Inc. and Insurance Auto Auctions, Inc. (incorporated herein by reference to Exhibit 99.1 to Insurance Auto Auctions, Inc.'s Current Report on Form 8-K, filed February 23, 2005 (Commission File No. 0-19594)). Exhibit 2 Voting Agreement, dated as of February 22, 2005, by and among Axle Holdings, Inc., ValueAct Capital Partners, L.P., ValueAct Capital Partners II, L.P., ValueAct Capital Master Fund, L.P., and ValueAct Capital Partners Co-Investors, L.P.* * Filed herewith. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth herein is true, complete and correct. AXLE HOLDINGS, INC. By: /s/ James J. Connors, II ---------------------------------------- Name: James J. Connors, II Title: Vice President and Assistant Secretary Dated: March 3, 2005 Schedule I DIRECTORS AND EXECUTIVE OFFICERS OF HOLDINGS The following table sets forth the name and present principal occupation of each director and executive officer of Holdings. The business address of each such person is c/o Kelso and Company, L.P., 320 Park Avenue, 24th Floor, New York, New York 10022 and each such person is a citizen of the United States. Directors and Executive Officers Present Principal Employment -------------------------------- ---------------------------- Michael B. Goldberg Managing Director of Kelso David I. Wahrhaftig Managing Director of Kelso Frank J. Loverro Managing Director of Kelso James J. Connors, II Vice President and General Counsel of Kelso Howard A. Matlin Vice President and Chief Financial Officer The following table sets forth the name and present principal occupation of each managing member of KIA VII, KEP VI, Kelso GP LP and Kelso GP LLC. The business address of each such person is c/o Kelso & Company, 320 Park Avenue, 24th Floor, New York, New York 10022 and each such person is a citizen of the United States. Directors and Executive Officers Present Principal Employment -------------------------------- ---------------------------- Frank T. Nickell President and Chief Executive Officer of Kelso Thomas R. Wall, IV Managing Director of Kelso George E. Matelich Managing Director of Kelso Michael B. Goldberg Managing Director of Kelso David I Wahrhaftig Managing Director of Kelso Frank K. Bynum, Jr. Managing Director of Kelso Philip E. Berney Managing Director of Kelso Frank J. Loverro Managing Director of Kelso Michael B. Lazar Managing Director of Kelso EX-99 2 nyc501865.txt EXHIBIT 2 - VOTING AGREEMENT 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 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 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. 435 Pacific Avenue Fourth Floor San Francisco, CA 94133 Attention: George F. Hamel Jr. Tel: (415) 249-1202 Fax: (415) 362-5727 with a copy to: Dechert LLP 4000 Bell Atlantic Tower 1717 Arch Street Philadelphia, PA 19103-2793 Attention: Christopher G. Karras Tel: (215) 994-4000 Fax: (215) 994-2222 If to Buyer Parent: c/o Kelso & Company 320 Park Avenue, 24th Floor New York, NY 10022 Attention: James J. Connors, II Tel: (212) 751-3939 Fax: (212) 223-2379 with a copy to: Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, New York 10036 Attention: Lou R. Kling Tel: (212) 735-3000 Fax: (917) 777-2770 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/ Peter H. Kamin ---------------------------- Name: Peter H. Kamin Title: Partner VALUEACT CAPITAL PARTNERS II, L.P. By: /s/ Peter H. Kamin ---------------------------- Name: Peter H. Kamin Title: Partner VALUEACT CAPITAL MASTER FUND, L.P By: /s/ Peter H. Kamin ---------------------------- Name: Peter H. Kamin Title: Partner VALUEACT CAPITAL PARTNERS CO- INVESTORS, L.P By: /s/ Peter H. Kamin ---------------------------- Name: Peter H. Kamin Title: Partner AXLE HOLDINGS, INC. By: /s/ Frank J. Loverro --------------------------- Name: Frank J. Loverro 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