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