Form of Exchange Stock Option Agreement

Exhibit 10.18


AXLE HOLDINGS, INC.

EXCHANGE STOCK OPTION AGREEMENT

EXCHANGE STOCK OPTION AGREEMENT (the " Agreement" ), dated as of May 25, 2005, between Axle Holdings, Inc., a Delaware corporation (" Holdings" ), and [ ] (the " Employee" ). Capitalized terms used herein without definition have the meaning set forth in Section 15 hereof.


WHEREAS, in connection with the merger (the " Merger" ) of Axle Merger Sub, Inc., an Illinois corporation, with and into Insurance Auto Auctions, Inc., an Illinois corporation (" IAA" ) Holdings and the Employee entered into a Conversion Agreement, dated as of May 25, 2005 (the " Conversion Agreement" ), pursuant to which the Employee agreed to exchange certain options to purchase shares of common stock of IAA held by the Employee prior to the Merger (the " IAA Options" ) for options to purchase common stock of Holdings (" Holdings Common Stock" ).


NOW, THEREFORE, the parties hereto agree as follows:


1. Confirmation of Grant, Option Price .


(a) Confirmation of Grant . Holdings hereby evidences and confirms the grant to the Employee, effective as of the date hereof (the " Grant Date" ), of options to purchase from Holdings the number of shares of Holdings Common Stock (the " Options" ) specified on Schedule A hereto; provided, however, that such grant is expressly conditioned upon the Employee executing the Shareholders Agreement and the Registration Rights Agreement.

(b) Option Price . Each Option shall have the exercise price per share (the " Option Price" ) specified on Schedule A hereto.


(c) Character of Options . The Options granted hereunder are not intended to be " incentive stock options" within the meaning of section 422 of the Internal Revenue Code of 1986, as amended (the " Code" ).


2. Vesting, Exercisability and Forfeiture .


All Options granted pursuant to this Agreement shall be fully vested as of the date hereof and shall terminate on the date specified on Schedule A hereto, which is the date the applicable IAA Options would have otherwise terminated if the Employee had not entered into the Conversion Agreement and if the IAA Options had remained outstanding following the Merger (the " Expiration Date" ). All Options may be exercised, subject to the provisions hereof, upon the same terms and conditions as were applicable to the IAA Options under, as the case may be, an option award agreement

between the Employee and IAA, the IAA 2003 Stock Incentive Plan and the IAA 1991 Stock Option Plan.

3. Method of Exercise and Payment .

All or part of the Options may be exercised by the Employee upon ( a ) the Employee' s written notice to Holdings of exercise, ( b ) the Employee' s payment of the Option Price in full at the time of exercise ( i ) in cash or cash equivalents, ( ii ) with the consent of the Committee, in unencumbered shares of Holdings Common Stock owned by the Employee for at least six (6) months (or such longer period as is required by applicable accounting standards to avoid a charge to earnings) having a Fair Market Value on the date of exercise equal to such Option Price, or (if permitted by the Committee and subject to such terms and conditions as it may determine) by surrender of outstanding awards under the Axle Holdings, Inc. Stock Incentive Plan, or ( iii ) in accordance with such procedures or in such other form as the Committee shall from time to time determine (including by permitting broker' s cashless exercise procedure). As soon as practicable after receipt of a written exercise notice and payment in full of the exercise price of any Options, but subject to Section 6 below, Holdings shall deliver to the Employee a certificate or certificates representing the shares of Holdings Common Stock acquired upon the exercise of such Options, registered in the name of the Employee, provided that, if Holdings, in its sole discretion, shall determine that, under applicable securities laws, any certificates issued under this Section 3 must bear a legend restricting the transfer of such Holdings Common Stock, such certificates shall bear the appropriate legend. It is agreed that Employee may satisfy clause (a) above by delivering written notice to Holdings of his desire to pay the Option Price as described in the preceding sentence on or before the exercise date.


4. Termination of Employment .


(a) Upon any termination of the Employee' s employment with the Company or any Subsidiary, the Options (or any shares of Holdings Common Stock purchased by the Employee upon exercise of the Options) then held by the Employee shall be subject to Sections 2 (" Put Rights" ) and 3 (" Call Rights" ) of the Shareholders Agreement.


(b) Upon a termination of the Employee' s employment with the Company or any Subsidiary, any Options then held by the Employee shall be governed by the terms and conditions relating to termination of employment as were applicable to the IAA Options under, as the case may be, an option award agreement between the Employee and IAA, the IAA 2003 Stock Incentive Plan and the IAA 1991 Stock Option Plan.


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5. Exit Event .


(a) Payment . Unless the Committee shall otherwise determine in the manner set forth in Section 5(b), in the event of an Exit Event, each outstanding Option shall be canceled in exchange for a payment in cash of an amount equal to the excess, if any, of the Exit Event Price over the Option Price.


(b) Alternative Options . Notwithstanding Section 5(a), no cancellation or cash settlement or other payment shall occur with respect to any Option in connection with an Exit Event if the Committee reasonably determines in good faith, prior to the occurrence of such Exit Event, that such Option shall be honored or assumed, or new rights substituted therefor (such honored, assumed or substituted Option being hereinafter referred to as an " Alternative Option" ) by the new employer, provided that any such Alternative Option must:

(i) provide the Employee that held such Option with rights and entitlements substantially equivalent to or better than the rights, terms and conditions applicable under such Option, including, but not limited to, an identical or better exercise and vesting schedule and identical or better timing and methods of payment; and


(ii) have substantially equivalent economic value to such Option (determined at the time of the Exit Event).


6. Tax Withholdings .


Whenever Holdings Common Stock is to be issued pursuant to the exercise of an Option or any cash payment is to be made hereunder, Holdings or any Subsidiary shall have the power to withhold, or require the Employee to remit to Holdings or such Subsidiary, an amount sufficient to satisfy the statutory minimum federal, state, and local withholding tax requirements relating to such transaction (which amount may be paid in whole or in part by withholding a number of shares of Common Stock subject to such Option), and Holdings or such Subsidiary may defer payment of cash or issuance of Holdin ...