Employee Stock Purchase Plan

INSURANCE AUTO AUCTIONS, INC.


EMPLOYEE STOCK PURCHASE PLAN


(Amended and Restated as of November 6, 1996)


I. PURPOSE


The Insurance Auto Auctions, Inc. Employee Stock Purchase Plan (the "Plan") is intended to provide employees of the Company and one or more of its Corporate Affiliates with the opportunity to acquire a proprietary interest in the Company through participation in a plan designed to qualify as an employee stock purchase plan under Section 423 of the Code.


II. DEFINITIONS


For purposes of administration of the Plan, the following terms shall have the meanings indicated:


Base Salary means the regular basic earnings paid to a Participant by one or more Participating Companies during such individual's period of participation in the Plan, plus any pre-tax contributions made by the Participant to any Code Section 401(k) salary deferral plan or any Code Section 125 cafeteria benefit program now or hereafter established by the Company or any Corporate Affiliate. There shall be excluded from the calculation of Base Salary (I) all overtime payments, bonuses, commissions, profit-sharing distributions and other incentive-type payments and (II) all contributions (other than Code Section 401(k) or Code Section 125 contributions) made on the Participant's behalf by the Company or one or more Corporate Affiliates under any employee benefit or welfare plan now or hereafter established.


Board means the Board of Directors of the Company.


Code means the Internal Revenue Code of 1986, as amended from time to time.


Common Stock means shares of the Company's common stock.


Company means Insurance Auto Auctions, Inc., a California corporation, and any corporate successor to all or substantially all of the assets or voting stock of Insurance Auto Auctions, Inc. which shall by appropriate action adopt the Plan.


Corporate Affiliate means any parent or subsidiary corporation of the Company (as determined in accordance with Code Section 424), including any parent or subsidiary corporation which becomes such after the Effective Date.


Effective Date means the first day of the initial purchase period under the Plan, which is scheduled to commence upon the later of (i) July 1, 1993 or (ii) the effective date of the S-8 Registration Statement covering the shares of Common Stock issuable under the Plan. However, for any Corporate Affiliate which becomes a Participating Company in the Plan after the first day of such initial purchase period, a subsequent Effective Date shall be designated with respect to participation by its Eligible Employees.


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Eligible Employee means any person who is engaged, on a regularly scheduled basis of more than twenty (20) hours per week for more than five (5) months per calendar year, in the rendition of personal services to the Company or any other Participating Company for earnings considered wages under Section 3121(a) of the Code.


Participant means any Eligible Employee of a Participating Company who is actively participating in the Plan.


Participating Company means the Company and any Corporate Affiliate or Affiliates now existing or at any time hereafter created or acquired.


Service means the period during which an individual is in the employ of the Company or any Corporate Affiliate and shall be measured from the later of (i) his or her hire date or (ii) the date of the Company's acquisition of that Corporate Affiliate.


III. ADMINISTRATION


The Plan shall be administered by a committee (the "Plan Administrator") comprised of two or more non-employee Board members appointed from time to time by the Board. The Plan Administrator shall have full authority to administer the Plan, including authority to interpret and construe any provision of the Plan and to adopt such rules and regulations for administering the Plan as it may deem necessary in order to comply with the requirements of Section 423 of the Code. Decisions of the Plan Administrator shall be final and binding on all parties who have an interest in the Plan.


IV. PURCHASE PERIODS


A. Shares of Common Stock shall be offered for purchase under the Plan through a series of successive purchase periods until such time as (i) the maximum number of shares of Common Stock available for issuance under the Plan shall have been purchased or (ii) the Plan shall have been sooner terminated in accordance with Article IX.


B. The Plan shall be implemented in a series of successive purchase periods, each of a duration of six (6) months. The initial purchase period will begin upon the later of (i) July 1, 1993 or (ii) the effective date of the S-8 Registration Statement covering the shares of Common Stock issuable under the Plan and will end on the last business day in December 1993. Subsequent purchase periods shall run from the first business day in January to the last business day in June and from the first business day in July to the last business day in December each year.


C. Under no circumstances shall any purchase period commence under the Plan, nor shall any shares of Common Stock be issued hereunder, until such time as (i) the Plan shall have been approved by the Company's Shareholders and (ii) the Company shall have complied with all applicable requirements of the Securities Act of 1933 (as amended), all applicable listing requirements of any securities exchange on which shares of the Common Stock are listed and all other applicable statutory and regulatory requirements.


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D. The Participant shall be granted a separate purchase right for each purchase period in which he or she participates. The purchase right shall be granted on the start date of the purchase period and shall be automatically exercised on the last business day of that period.


E. The acquisition of Common Stock through plan participation during any purchase period shall neither limit nor require the acquisition of Common Stock by the Participant in any subsequent purchase period.


V. ELIGIBILITY AND PARTICIPATION


A. Each Eligible Employee of a Participating Company shall be eligible to participate in the Plan on the start date of any purchase period beginning on or after his or her completion of the number of months of Service specified from time to time by the Plan Administrator. Unless otherwise specified by the Plan Administrator, there shall be no minimum eligibility requirements for participation in the Plan. The Plan Administrator may increase or decrease the eligibility period to be effective at the start of the next purchase period.


B. To participate for a particular purchase period, the Employee must complete the enrollment forms prescribed by the Plan Administrator (including a purchase agreement and a payroll deduction authorization) and file such forms with the Plan Administrator (or its designate) on or before the start date of that purchase period.


C. The payroll deduction authorized by the Participant for purposes of acquiring shares of Common Stock under the Plan may be any multiple of one percent (1%) of the Base Salary paid to the Participant during the purchase period, up to a maximum of fifteen percent (15%). The deduction rate so authorized shall continue in effect for the entire purchase period and for each successive purchase period under the Plan, except to the extent such rate is changed in accordance with the following guidelines:


- The Participant may, at any time during the purchase
period, reduce his or her rate of payroll deduction. Such
reduction shall become effective as soon as possible following the
filing of the requisite reduction form with the Plan Administrator
(or its designate), but the Participant may not effect more than
one such reduction per purchase period.


- The Participant may, prior to the commencement of any new
purchase period, increase or decrease the rate of his or her
payroll deduction by filing the appropriate form with the Plan
Administrator (or its designate). The new rate (which may not
exceed the fifteen percent (15%) maximum) shall become effective
as of the start date of the new purchase period.


Payroll deductions will automatically cease upon the termination of the Participant's purchase right in accordance with the applicable provisions ...