August 29, 1997
RT Industries, Inc.
Attn: President
0000 X. Xxxx Xxxx Xxxxxxxxx
Xxxxxxx, XX 00000
Re: Lock-Up Agreement
Gentlemen:
In connection with the lock up agreement (the "Quality Lock-Up") executed
simultaneously herewith by the former stockholders (the "Quality Stockholders")
of Quality Automotive Company ("Quality") pursuant to the Agreement and Plan of
Merger, dated June 6, 1997, between, among others, Quality, the Quality
Stockholders and RT Industries, Inc. (the "Company"), whereby Quality
Stockholders acquired securities in the Company in partial consideration of the
merger of Quality with and into QUAC Acquisition Corp., the wholly-owned
subsidiary of the Company, Elm Grove Associates II LP ("Elm Grove") hereby
covenants and agrees:
1. Except (i) with respect to the 1,180,000 shares underlying warrants,
dated February 1, 1996 and March 15, 1996, respectively, held by Elm Grove; (ii)
with respect to the shares underlying warrants (as adjusted in the event of
default(s) under the Note, dated as of May 30, 1997 from the Company to Elm
Grove); and (iii) except as otherwise permitted in paragraph 2 hereof,
commencing on the date hereof (the "Effective Date") until the third year
anniversary of the Effective Date, Elm Grove will not directly or indirectly,
sell, offer for sale, transfer or otherwise dispose of the 750,000 shares of the
Common Stock of the Company acquired and beneficially owned by Elm Grove as of
the date hereof (the "Elm Grove Shares"), in any manner whatsoever, including
but not limited to a sale pursuant to Rule 144 ("Rule 144") of the rules and
regulations promulgated under the Securities Act of 1933, as amended, or
otherwise.
2. Commencing as of the third (3rd) year anniversary of the Effective Date
and continuing until the fifth (5th) year anniversary thereof, Elm Grove may
only sell, offer for sale, transfer or otherwise dispose of the Elm Grove Shares
only in quantities and at times which are pari passu with sales by the Quality
Stockholders, which stockholders simultaneously herewith have entered into a
lock-up agreement with the Company on terms identical to the terms of this
Agreement.
3. This Agreement does not affect or limit in any manner the ability and
right of Elm Grove to sell or transfer
shares of Common Stock of the Company acquired pursuant to the exercise by Elm
Grove of warrants heretofore or hereafter issued to it by the Company.
4. Elm Grove hereby consents to the Company giving the Company's Stock
Transfer Agent transfer instructions consistent with the provisions of
paragraphs 1 and 2 above.
5. It is intended by the parties that this Agreement, upon execution by Elm
Grove, shall be and become a valid and binding restriction on transfer of
securities within the meaning of Section 202 of the Delaware General Corporation
Law ("DGCL") (or any successor provisions). Accordingly, the undersigned
consents to the placement of an appropriate legend upon any certificates
evidencing his/her/its stock or right to acquire stock in the Company, as
contemplated by Section 202(a) of the DGCL (or any related or successor
provisions) and, upon request by the Company, the undersigned will submit his or
her securities of the Company for legending in accordance with this agreement.
6. This Agreement shall be governed by, and construed in accordance with,
the law of the State of Delaware without regard to its choice of law principles.
7. This Agreement may be executed in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement.
8. This Agreement and the agreements referred to herein constitute the
entire agreement, and supersede all prior agreements and undertakings, both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof.
9. A copy of this Agreement shall be maintained by the Company at its
principal place of business or registered office, and shall be made available
for examination by shareholders of the Company, in person or by agent or
attorney, on the same basis as the books and records of the Company are made
available.
Very truly yours,
Dated: August 29, 0000 XXX XXXXX ASSOCIATES II, L.P.
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By: Xxxxx Capital Limited
By: /s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx, President
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