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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)*
Quality Products, Inc
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock
- --------------------------------------------------------------------------------
(Title of Class of Securities)
747578409
- --------------------------------------------------------------------------------
(CUSIP Number)
Richard W. Cohen
Robinson Brog Leinwand Greene Genovese & Gluck, P.C.
1345 Avenue of the Americas, New york, NY 10105-0143, Telephone (212)586-4050
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
November 25, 1997
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement of Schedule 13G to report
the acquisition which is the subject of the Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with this statement [X].
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class.) (See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filed 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 the
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 purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
(Continued on following page(s))
<PAGE>
CUSIP No. 747578409 13D
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Murray Koppelman
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
New York
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
423,332
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING --------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH
423,332
--------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
423,332
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[X]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.5%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
<PAGE>
Item 1. Security and Issuer.
The securities to which this Amendment No. 2 to Schedule 13D
(the "Amendment") relates are the shares of Common Stock (the "Stock") of
Quality Products, Inc. (the "Company"). The Company's principal executive office
is located at 560 Dublin Avenue, c/o Multipress, Inc., Columbus, Ohio 43215.
Item 2. Identity and Background.
This Schedule 13D is filed by Mr. Murray Koppelman
("Koppelman" or the "Reporting Person"). The Reporting Person's business address
is 575 Lexington Avenue, New York, New York 10022. The Reporting Person is a
citizen of the United States. The Reporting Person is president and sole
shareholder of Eastlake Securities, Inc., a registered broker-dealer
("Eastlake"). During the last five years, neither Koppelman nor Eastlake has
been (a) convicted in any criminal proceeding (excluding traffic violations or
similar misdemeanors), nor been (b) a party to a civil proceeding of 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.
Item 3. Source and Amount of Funds or Other Consideration.
The Warrants which are the subject of this Amendment were
issued in connection with the Company's sale in a private placement on November
25, 1997, of 30 Units for $51,000 per Unit for an aggregate price of $1,530,000
(the "Private Placement"). Eastlake served as placement agent in the Private
Placement. Each Unit consists of: (1) a $50,000 interest in a $1,500,000 6%
promissory note due December 29, 2000; (2) a Series A Warrant, currently
exercisable, to purchase 10,000 shares of the Company's common stock for $1.00
per share, expiring September 30, 1999 (the "Series A Warrants"); and (3) a
Series B Warrant to purchase 15,000 shares of the Company's Common Stock for
$2.00 per share, exercisable beginning October 1, 1999 and expiring September
30, 2001 (the "Series B Warrants"). The makers of the Private Placement Note are
the Company and its wholly-owned subsidiary Q.P.I. Multipress. The payee is
Eastlake, as payment agent for the Unit-holders (the "Private Placement Note").
The Reporting Person does not have any contracts, arrangements or understandings
with any other person with respect to the securities of the Company, other than
(1) Series A and Series B Warrants - 60,000 Series A Warrants and 75,000 Series
B Warrants issued to the Reporting Person in connection with his purchase in his
individual capacity of 6 Units, and 30,000 Series A Warrants and 45,000 Series B
Warrants issued to Eastlake as compensation
<PAGE>
for its services as placement agent in the Private Placement and (2) Right of
First Refusal Agreement dated November 25, 1997 granting Eastlake a three-year
right of first refusal to act as the Company's underwriter or placement agent in
sales of the Company's securities. The source of funds used by the Reporting
Person to purchase the 6 Units which included Series A Warrnants to purchase
60,000 shares of common stock (the "Warrants") was the Reporting Person's
personal funds.
The 90,000 and 45,000 shares issuable upon exercise of the
Reporting Person's and Eastlake's respective Series B Warrants are not covered
by this Amendment, because such shares can not be acquired by the Reporting
Person within the next 60 days.
Item 4. Purpose of Transaction.
The Series A Warrants and Series B Warrants acquired by the
Reporting Person were acquired and are being held as an investment. Neither
Eastlake nor Koppelman has any present plans or proposals which relate to or
would result in: (a) the acquisition or disposition by any person of additional
securities of the Company (other than the Note); (b) an extraordinary corporate
transaction, such as a merger, reorganization or liquidation of the Company or
any of its subsidiaries; (c) a sale or transfer of a material amount of assets
of the Company or any of its subsidiaries; (d) any change in the present board
of directors or management of the Company, including any plans or proposals to
change the number or term of directors or to fill any existing vacancies on the
board; (e) any material change in the present capitalization or dividend policy
of the issuer; (f) any other material change in the Company's business or
corporate structure; (g) changes in the Company's charter, bylaws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the Company by any person; (h) causing a class of securities of the
Company to be delisted from a national securities exchange or cease to be
authorized to be quoted in an inter-dealer quotation system of a registered
national securities association; (i) a class of equity securities of the Company
becoming eligible for termination of registration pursuant to Section 12(g)(4)
of the Securities Exchange Act of 1934; or (j) any action similar to any of
those enumerated above.
Item 5. Interest in Securities of the Issuer.
The Reporting Person may be deemed to own beneficially, in the
aggregate, 423,332 shares of Stock (representing the 66,666 shares issued August
29, 1997, the 266,666 shares issuable upon conversion of the Company's $200,000
principal amount Note
<PAGE>
issued by the Company to the Reporting Person in August 1997 (the "August 1997
Note"), the 60,000 shares of Common Stock issuable upon exercise of the Series A
Warrants purchased by Koppelman in the Private Placement and the 30,000 shares
of Common Stock issuable upon exercise of the Series A Warrants issued to
Eastlake as compensation in connection with the Private Placement. Based on the
2,395,680 shares of Stock outstanding as reflected on the Company's Quarterly
Report on Form 10-Q for the period ended June 30, 1997, plus the 133,332 shares
issued August 29, 1997 to the Reporting Person and on other person, the 266,666
additional shares issuable to the Reporting Person upon conversion of its August
1997 Note, and the 90,000 shares issuable upon Koppelman's and Eastlake's Series
A Warrants, the Reporting Person's 423,333 shares beneficially owned constitute
approximately 14.5% of the shares of Stock outstanding. The Reporting Person has
the sole power to vote and direct the vote or to dispose and direct the
disposition of the Stock which he owns.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer
The Reporting Person and Eastlake do not have any contracts,
arrangements or understandings with any other person with respect to the
securities of the Company.
Item 7. Material to be Filed as Exhibits.
EX 99.1 Agreement dated August 7, 1997 between Cohen and
the Reporting Person (the "Agreement"). (1)
EX 99.2 The Note, dated August 31, 1996. (1)
EX 99.3 New Note, dated August 29, 1997. (1)
EX 99.4 Form of Series A Warrant.
EX 99.5 Right of First Refusal Agreement dated
November 25, 1997
--------------
(1) Filed with the Reporting Person's Schedule 13D dated
August 7, 1997.
<PAGE>
Signatures
After reasonable inquiry and to the best of the undersigned's
knowledge and belief, the undersigned certifies that the information set forth
in this statement is true, complete and correct.
November 26, 1997
/s/Murray Koppelman
Murray Koppelman
<PAGE>
Signatures
After reasonable inquiry and to the best of the undersigned's
knowledge and belief, the undersigned certifies that the information set forth
in this statement is true, complete and correct.
November 26, 1997
Murray Koppelman
<PAGE>
Warrant to Purchase
WA-20 **60,000**
Shares of Common Stock
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND NEITHER THIS WARRANT NOR SUCH SHARES MAY BE SOLD, ENCUMBERED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENT, AND, IF AN EXEMPTION
SHALL BE APPLICABLE, THE HOLDER SHALL HAVE DELIVERED AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
Void after 5:00 P.M. New York City time on September 30, 1999
SERIES A COMMON STOCK PURCHASE WARRANT
OF
QUALITY PRODUCTS, INC.
This is to certify that, FOR VALUE RECEIVED, MURRAY KOPPELMAN or registered
assigns ("Holder"), is entitled to purchase, on the terms and subject to the
provisions of this Warrant, from Quality Products, Inc., a Delaware
corporation (the "Company"), at an exercise price per share of one dollar
($1.00), sixty thousand (60,000) shares of common stock, par value $.00001 per
share ("Common Stock"),of the Company at any time during the period
(the "Exercise Period"), as hereinafter defined. The Exercise Period
shall mean the period commencing November 1, 1997 and ending at 5:00 P.M. New
York City time, on September 30,1999; provided, however, that if such
date is a day on which banking institutions in the State of New York are
authorized by law to close, then on the next succeeding day which shall not be
such a day. The number of shares of Common Stock to be issued upon the exercis
of this Warrant and the price to be paid for a share of Common Stock may be
adjusted from time to time in the manner set forth in this Warrant. The shares
of Common Stock deliverable upon such exercise, and as adjusted from time to
time, are hereinafter sometimes referred to as "Warrant Shares," and the
exercise price for the purchase of a share of Common Stock pursuant to this
Warrant, in effect at any time, as the same may be adjusted from time to time,
is hereinafter sometimes referred to as the "Exercise Price." Reference in
the Warrant to the "Series A Warrants" shall mean any or all of the warrants
designated as Series A Common Stock Purchase Warrants by the Company.
(a) EXERCISE OF WARRANT.
(1) This Warrant may be exercised in whole at any time or in
part from time to time during the Exercise Period by presentation and surrender
hereof to the Company at its principal office, or at the office of its stock
transfer agent, if any, with the Purchase Form annexed hereto duly executed and
accompanied by payment of the Exercise Price for the number of shares of Common
Stock specified in such form. Payment of the Exercise Price may be made either
by check (subject to collection) in the amount of the Exercise Price or by
delivery of such number of shares of Common Stock as has a current value,
determined in the manner provided for in Paragraph (a)(2) of this Warrant (with
the current value being based on the market price of the Common Stock on the
date the Warrant, accompanied by the shares of Common Stock delivered in respect
of such exercise, is received by the Company or its transfer agent), equal to
the Exercise Price. If this Warrant should be exercised in part only, whether
pursuant to this Paragraph (a)(1) or pursuant to Paragraph (a)(2) of this
Warrant, the Company shall, upon surrender of this Warrant for cancellation,
execute and deliver a new Warrant evidencing the rights of the Holder hereof to
purchase the balance of the shares of Common Stock purchasable hereunder. Upon
receipt by the Company of this Warrant at its office, or by the stock transfer
agent of the Company at its office, in proper form for exercise, the Holder
shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock
- 1 -
<PAGE>
transfer books of the Company shall then be closed or that certificates
representing such shares of Common Stock shall not then be actually delivered to
the Holder.
(2) In lieu of exercising this Warrant by payment of the
Exercise Price pursuant to Paragraph (a)(1) of this warrant, the Holder shall
have the right to exchange this Warrant, in whole or in part to the extent that
this Warrant has not been exercised, for the number of shares of Common Stock
determined by (i) multiplying (x) the number of shares as to which this Warrant
is being exercised by (y) the difference between the current value per share of
Common Stock on the date of exercise and the Exercise Price per share, as in
effect on such date, and (ii) dividing the result so obtained by the current
value per share of Common Stock on the date of exercise. The date of exercise
shall mean, for purposes of this Paragraph (a)(2), the date on which this
Warrant accompanied by the notice of exercise is received by the Company. The
current value per share of Common Stock shall be determined as follows:
(A) If the Common Stock is listed on a national
securities exchange or admitted to unlisted trading privileges on such exchange
or listed for trading on the Nasdaq Stock Market ("Nasdaq") or other automated
quotation system which provides information as to the last sale price, the
current value shall be the average of the reported last sale prices of one
share of Common Stock on such exchange or system on the last five (5) trading
days prior to the date of exercise of this Warrant, or if, on any of suc
dates, no such sale is made on such day, the average of the closing bid and
asked prices for such date on such exchange or system shall be used; or
(B) If the Common Stock is not so listed or admitted
to unlisted trading privileges, the current value shall be the average of the
reported last bid and asked prices of one share of Common Stock as reported by
Nasdaq, the National Quotation Bureau, Inc. or other similar reporting service,
on the last five (5) trading days prior to the date of the exercise of this
Warrant; or
(C) If the Common Stock is not so listed or admitted
to unlisted trading privileges and bid and asked prices are not so reported,
the current value of one share of Common Stock shall be an amount, not less
than book value, determined in such reasonable manner as may be prescribed by
the Board of Directors of the Company.
(b) RESERVATION OF SHARES. The Company hereby agrees that at all times
there shall be reserved for issuance and/or delivery upon exercise of this
Warrant such number of shares of Common Stock as shall be required for issuance
and delivery upon exercise of this Warrant and that it shall not, without the
prior approval of the holders of a majority of the Warrants then outstanding,
increase the par value of the Common Stock.
(c) FRACTIONAL SHARES. No fractional shares or script representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise of this Warrant,
the Company shall pay to the Holder an amount in cash equal to such fraction
multiplied by the current market value of such fractional share, determined in
the manner set forth in Paragraph (a)(2) of this Warrant, except that the price
shall be based on the closing price on the last trading day before the date of
exercise.
(d) EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to the Company or at the office of its stock transfer
agent, if any, for other Warrants of different denominations entitling the
holder thereof to purchase in the aggregate the same number of shares of Common
Stock purchasable hereunder. Subject to the provisions of Paragraph (k) of this
Warrant, upon surrender of this Warrant to the Company or at the office of its
stock transfer agent, if any, with the Assignment Form annexed hereto duly
executed and funds sufficient to pay any transfer tax, the Company shall,
without charge, execute and deliver a new Warrant in the name of the assignee
named in such instrument of assignment and this Warrant shall promptly be
canceled. This Warrant may be divided or combined with other Warrants which
carry the same rights upon presentation hereof at the office of the Company or
at the office of its stock transfer agent, if any, together with a written
notice specifying the names and denominations in which new Warrants are to be
issued and signed by the Holder hereof. The term "Warrant" as used herein
includes
- 2 -
<PAGE>
any Warrants into which this Warrant may be divided or exchanged. Upon receipt
by the Company of evidence satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Warrant, if mutilated, the Company will execute and deliver a new Warrant
of like tenor. Any such new Warrant executed and delivered shall constitute an
additional contractual obligation on the part of the Company, whether or not
this Warrant so lost, stolen, destroyed, or mutilated shall be at any time
enforceable by anyone.
(e) RIGHTS OF THE HOLDER. The Holder shall not, by virtue of this
Warrant, be entitled to any rights of a stockholder in the Company, either at
law or equity, and the rights of the Holder are limited to those expressed in
the Warrant and are not enforceable against the Company except to the extent set
forth in this Warrant.
(f) ANTI-DILUTION PROVISIONS. The Exercise Price in effect at any time
and the number and kind of securities purchasable upon exercise of each Warrant
shall be subject to adjustment as follows:
(1) In case the Company shall, subsequent to the date hereof,
(A) pay a dividend or make a distribution on its shares of Common Stock in
shares of Common Stock (B) subdivide or reclassify its outstanding Common Stock
into a greater number of shares, or (C) combine or reclassify its outstanding
Common Stock into a smaller number of shares or otherwise effect a reverse
split, the Exercise Price in effect at the time of the record date for such
dividend or distribution or of the effective date of such subdivision,
combination or reclassification shall be proportionately adjusted so that the
Holder of this Warrant exercised after such date shall be entitled to receive
the aggregate number and kind of shares which, if this Warrant had been
exercised immediately prior to such time, he would have owned upon such exercise
and been entitled to receive upon such dividend, subdivision, combination or
reclassification. Such adjustment shall be made successively whenever any event
listed in this Paragraph (f)(1) shall occur.
(2) In case the Company shall, subsequent to the date hereof,
issue rights or warrants to all holders of its Common Stock entitling them to
subscribe for or purchase shares of Common Stock (or securities convertible into
Common Stock) at a price (or having a conversion price per share) less than the
current market price of the Common Stock (as defined in Paragraph (f)(5) of this
Warrant) on the record date mentioned below, the Exercise Price shall be
adjusted so that the same shall equal the price determined by multiplying the
Exercise Price in effect immediately prior to the date of such issuance by a
fraction, of which the numerator shall be the number of shares of Common Stock
outstanding on the record date mentioned below plus the number of additional
shares of Common Stock which the aggregate offering price of the total number of
shares of Common Stock so offered (or the aggregate conversion price of the
convertible securities so offered) would purchase at such current market price
per share of the Common Stock, and of which the denominator shall be the number
of shares of Common Stock outstanding on such record date plus the number of
additional shares of Common Stock offered for subscription or purchased (or into
which the convertible securities so offered are convertible). Such adjustment
shall be made successively whenever such rights or warrants are issued and shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such rights or warrants; and to the extent that
shares of Common Stock or securities convertible into Common Stock are not
delivered after the expiration of such rights or warrants, the Exercise Price
shall be readjusted to the Exercise Price which would then be in effect had the
adjustments made upon the issuance of such rights or warrants been made upon the
basis of delivery of only the number of shares of Common Stock (or securities
convertible into Common Stock) actually delivered.
(3) In case the Company shall, subsequent to the date hereof,
distribute to all holders of Common Stock evidences of its indebtedness or
assets (excluding cash dividends or distributions paid out of current earnings
and dividends or distributions referred to in Paragraph (f)(1) of this Warrant,
or subscription rights or warrants (excluding those referred to in Paragraph
(f)(2) of this Warrant), then in each such case the Exercise Price in effect
thereafter shall be determined by multiplying the Exercise Price in effect
immediately prior thereto by a fraction, of which the numerator shall be the
total number of shares of Common Stock outstanding multiplied by the current
market price per share of Common Stock (as defined in Paragraph (f)(5) of this
Warrant), less the fair market value
- 3 -
<PAGE>
(as determined in good faith by the Company's Board of Directors) of said assets
or evidences of indebtedness so distributed or of such rights or warrants, and
of which the denominator shall be the total number of shares of Common Stock
outstanding multiplied by such current market price per share of Common Stock.
Such adjustment shall be made successively whenever such a record date is fixed.
Such adjustment shall be made whenever any such distribution is made and shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such distribution.
(4) Whenever the Exercise Price payable upon exercise of each
Warrant is adjusted pursuant to Paragraphs (f)(1), (2) or (3) of this Warrant,
the number of shares of Common Stock purchasable upon exercise of each Warrant
shall simultaneously be adjusted by multiplying the number of shares of Common
Stock issuable upon exercise of each Warrant in effect on the date thereof by
the Exercise Price in effect on the date thereof and dividing the product so
obtained by the Exercise Price, as adjusted. In no event shall the Exercise
Price per share be less than the par value per share, and, if any adjustment
made pursuant to Paragraph (f)(1), (2) or (3) would result in an exercise price
of less than the par value per share, then, in such event, the Exercise Price
per share shall be the par value per share.
(5) For the purpose of any computation under Paragraphs (f)(2)
and (3) of this Warrant, the current market price per share of Common Stock at
any date shall be deemed to be the average of the daily closing prices for
thirty (30) consecutive trading days commencing 45 trading days before such
date. The closing price for each day shall be the reported last sale price
regular way or, in case no such reported sale takes place on such day, the
average of the reported last bid and asked prices regular way, in either case on
the principal national securities exchange on which the Common Stock is admitted
to trading or listed or on Nasdaq, or if not listed or admitted to trading on
such exchange or such System, the average of the reported highest bid and
reported lowest asked prices as reported by Nasdaq, the National Quotation
Bureau, Inc. or other similar organization if Nasdaq is no longer reporting such
information, or if not so available, the fair market price as reasonably
determined in good faith by the Board of Directors.
(6) No adjustment in the Exercise Price shall be required
unless such adjustment would require an increase or decrease of at least five
cents ($0.05) in such price; provided, however, that any adjustments which by
reason of this Paragraph (f)(6) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Paragraph (f) shall be made to the nearest cent or to the nearest
one-hundredth of a share, as the case may be. Anything in this Paragraph (f) to
the contrary notwithstanding, the Company shall be entitled, but shall not be
required, to make such changes in the Exercise Price, in addition to those
required by this Paragraph (f), as it in its discretion shall determine to be
advisable in order that any dividend or distribution in shares of Common Stock,
subdivision, reclassification or combination of Common Stock, issuance of
warrants to purchase Common Stock or distribution of evidences of indebtedness
or other assets (excluding cash dividends) referred to hereinabove in this
Paragraph (f) hereafter made by the Company to the holders of its Common Stock
shall not result in any tax to the holders of its Common Stock or securities
convertible into Common Stock.
(7) The Company may retain a firm of independent public
accountants of recognized standing selected by the Board of Directors (who may
be the regular accountants engaged by the Company) to make any computation
required by this Paragraph (f), and a certificate signed by such firm shall be
conclusive evidence of the correctness of such adjustment.
(8) In the event that at any time, as a result of an
adjustment made pursuant to Paragraph (f)(1) of this Warrant, the Holder of any
Warrant thereafter shall become entitled to receive any shares of the Company,
other than Common Stock, thereafter the number of such other shares so
receivable upon exercise of any Warrant shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in Paragraphs (f)(1) to
(6), inclusive, of this Warrant.
- 4 -
<PAGE>
(9) Irrespective of any adjustments in the Exercise Price or
the number or kind of shares purchasable upon exercise of Warrants, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in this and similar Warrants initially
issued by the Company.
(g) OFFICER'S CERTIFICATE. Whenever the Exercise Price shall be
adjusted as required by the provisions of Paragraph (f) of this Warrant, the
Company shall forthwith file in the custody of its Secretary or an Assistant
Secretary at its principal office and with its stock transfer agent, if any, an
officer's certificate showing the adjusted Exercise Price and the adjusted
number of shares of Common Stock issuable upon exercise of each Warrant,
determined as herein provided, setting forth in reasonable detail the facts
requiring such adjustment, including a statement of the number of additional
shares of Common Stock, if any, and such other facts as shall be necessary to
show the reason for and the manner of computing such adjustment. Each such
officer's certificate shall be made available at all reasonable times for
inspection by the Holder, and the Company shall, forthwith after each such
adjustment, mail, by first class mail, a copy of such certificate to the Holder
at the Holder's address set forth in the Company's Warrant Register.
(h) NOTICES TO WARRANT HOLDERS. So long as this Warrant shall be
outstanding, (1) if the Company shall pay any dividend or make any distribution
upon Common Stock (other than a regular cash dividend payable out of retained
earnings) or (2) if the Company shall offer to the holders of Common Stock for
subscription or purchase by them any share of any class or any other rights or
(3) if any capital reorganization of the Company, reclassification of the
capital stock of the Company, consolidation or merger of the Company with or
into another corporation, sale, lease or transfer of all or substantially all of
the property and assets of the Company to another corporation, or voluntary or
involuntary dissolution, liquidation or winding up of the Company shall be
effected, then in any such case, the Company shall cause to be mailed by
certified mail, return receipt requested, to the Holder, at least fifteen days
prior to the date specified in clauses (i) and (ii), as the case may be, of this
Paragraph (h) a notice containing a brief description of the proposed action and
stating the date on which (i) a record is to be taken for the purpose of such
dividend, distribution or rights, or (ii) such reclassification, reorganization,
consolidation, merger, conveyance, lease, dissolution, liquidation or winding up
is to take place and the date, if any is to be fixed, as of which the holders of
Common Stock or other securities shall receive cash or other property
deliverable upon such reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation or winding up.
(i) RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the Company, or in case of any consolidation or merger of the
Company with or into another corporation (other than a merger in which the
Company is the continuing corporation and which does not result in any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the class issuable upon exercise of this Warrant) or in case
of any sale, lease or conveyance to another corporation of the property of the
Company as an entirety, the Company shall, as a condition precedent to such
transaction, cause effective provisions to be made so that the Holder shall have
the right thereafter by exercising this Warrant, to purchase the kind and amount
of shares of stock and other securities and property receivable upon such
reclassification, capital reorganization and other change, consolidation,
merger, sale or conveyance by a holder of the number of shares of Common Stock
which might have been purchased upon exercise of this Warrant immediately prior
to such reclassification, change, consolidation, merger, sale or conveyance. Any
such provision shall include provision for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Warrant. The foregoing provisions of this Paragraph (i) shall similarly apply to
successive reclassifications, capital reorganizations and changes of shares of
Common Stock and to successive consolidations, mergers, sales or conveyances.
(j) REGISTRATION UNDER THE SECURITIES ACT OF l933.
(1) (A) In the event that, at any time during the five year
period commencing November 1, 1997, the Company registers its securities
pursuant to the Securities Act of 1933, as amended (the "Securities Act"), in
connection with a public offering of its securities (other than a registration
statement on Form S-4 or S-8 or
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subsequent similar forms), the Company shall advise the registered holders of
the Series A Warrants or the Warrant Shares (each such person being referred to
herein as a "holder") by written notice at least one (1) week prior to the
filing of any registration statement under the Securities Act covering
securities of the Company and will upon the request of any such holder include
in any such registration statement such information as may be required to permit
a public offering of the Warrant Shares; provided, however, that the Company
shall not be required to include such Warrant Shares in a registration statement
relating solely to an offering by the Company of securities for its own account
if the managing underwriter shall have advised the Company that the inclusion of
such Warrant Shares will have a material adverse effect upon the ability of the
Company to sell securities for its own account, and provided further that the
holders are not treated less favorably than others having piggyback registration
rights. The Company shall keep such registration statement current for a period
of nine (9) months from the effective date of such registration statement or
until such earlier date as all of the registered Warrant Shares shall have been
sold. In connection with such registration, if requested by the managing
underwriter as a condition to the inclusion of the Warrant Shares in the
registration statement, the holders shall agree put to sell or otherwise
distribute the Warrant Shares pursuant to the registration statement for such
period (the "lock-up period") as the managing underwriter shall request, in
which event the Company will keep the registration statement effective for six
(6) months after the expiration of the lock-up period.
(B) If the majority holder, as hereinafter defined,
shall give notice to the Company at any
time during the two-year period commencing October 1, 1998, to the effect that
such holder contemplates the sale of the Warrant Shares under such circumstances
that a public distribution (within the meaning of the Securities Act) of the
Warrant Shares will be involved, then the Company shall, subject to Paragraph
(j)(1)(C) of this Warrant, within sixty (60) days after receipt of such notice,
file a registration statement pursuant to the Act, to the end that the Warrant
Shares may be sold under the Securities Act as promptly as practicable
thereafter, and the Company will use its best efforts to cause such registration
to become effective; provided that such holder shall furnish the Company with
appropriate information (relating to the intentions of such holder) in
connection therewith as the Company shall reasonably request in writing. The
Company shall keep such registration statement current for such period, not to
exceed the greater of nine (9) months or such longer period as the registration
statement may be used without requiring audited financial statements covering a
period subsequent to that for which audited financial statements are otherwise
required, as the majority holder may request. Upon receipt of notice the Company
shall promptly give notice to the holder holders of Series A Warrants and shall,
at the request of such holders, include their Warrant Shares in the same manner
as if they had given the notice pursuant to this Paragraph (j)(1)(B). The
holders of the Series A Warrants shall be entitled to only one (1) demand
registration right pursuant to this Paragraph (j)(1)(B).
(C) Notwithstanding the provisions of Paragraph
(j)(1)(B), the Company shall be
entitled to defer the filing of the registration statement demanded pursuant to
said Paragraph (j)(1)(B) under the following circumstances.
(i) If the notice from the majority
holder shall be given during the first two months of the Company's fiscal year,
the Company shall not be required to file the registration statement prior to
thirty (30) days after the filing by the Company of its Form 10-K Annual Report
for the prior fiscal year.
(ii) In the event that the Company has
completed an acquisition or contemplates an acquisition for which financial
statements of the acquired company are required to be included in the
registration statement, the Company shall not be required to file the
registration statement until forty-five (45)days after the required financial
statements (in form and substance appropriate for filing with the Securities
and Exchange Commission) for the company which was or is to be acquired have
been received by the Company.
(iii) In the event that, at any time, the
Company shall be engaged in confidential negotiations with respect to a business
transaction or business agreement which would have to be disclosed in a
registration statement, the Company's obligation to file the registration
statement or any amendment to a registration statement and the Company's
obligation to keep a registration statement current shall be deferred until
forty-five (45)
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<PAGE>
days after the first to occur of (x) the date that such negotiations have been
terminated, or (y) the date that the transaction has been consummated, or (z)
the date that an agreement relating to the transaction has been executed and the
Company has publicly announced the transaction.
(2) The following provision of this Paragraph (j) shall also
be applicable:
(A) The Company shall bear the entire cost and
expense of any registration of securities initiated by it under Paragraph
(j)(1)(A) of this Warrant or filed pursuant to Paragraph (j)(1)(B) of this
Warrant. Any holder whose Warrant Shares are included in any such
registration statement pursuant to this Paragraph (j) shall, however,
bear the fees of his own counsel and accountants and any transfer taxes
or underwriting discounts or commissions (including any non-accountable
expense allowance)applicable to the Warrant Shares sold by him pursuant thereto.
(B) The Company shall indemnify and hold harmless
each holder and each underwriter,
within the meaning of the Securities Act, who may purchase from or sell for any
such holder any Warrant Shares from and against any and all losses, claims,
damages and liabilities (including fees and expenses of counsel, which counsel
shall, if, in the reasonable opinion of counsel for the Company, the
representation by such counsel of both the Company and the indemnified parties
constitutes a conflict of interest under applicable Code of Professional
Responsibility, be separate from counsel for the Company, provided, that the
Company shall not be required to pay the fees of more than one firm representing
all holders and all other parties who are entitled to indemnification as a
result of the same or similar allegations, which counsel shall be selected by
the holders of a majority of the shares held by all of such indemnified parties)
caused by any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any post-effective amendment thereto
or any registration statement under the Securities Act or any prospectus
included therein required to be filed or furnished by reason of this Paragraph
(j) or any application or other filing under any state securities law caused by
any omission or alleged omissions to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading to
which such holder or any such underwriter or any of them may become subject
under the Securities Act, the Securities Exchange Act of 1934, as amended, or
other Federal or state statutory law or regulation, at common law or otherwise,
except insofar as such losses, claims, damages or liabilities are caused by any
such untrue statement or alleged untrue statement or omission or alleged
omission based upon information furnished to the Company by any such holder or
underwriter expressly for use therein, which indemnification shall include each
person, if any, who controls any such underwriter within the meaning of the
Securities Act; provided, however, that any such holder or underwriter shall at
the same time indemnify the Company, its directors, each officer signing the
related registration statement, each person, if any, who controls the Company
within the meaning of the Securities Act and each other holder, in the manner
set forth in this Paragraph (j)(2)(B), from and against any and all losses,
claims, damages and liabilities caused by any untrue statement or alleged untrue
statement of a material fact contained in any registration statement or any
prospectus required to be filed or furnished by reason of this Paragraph (j) or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, insofar as such losses, claims, damages or liabilities are caused by
any untrue statement or alleged untrue statement or omission based upon
information furnished to the Company by any such holder or underwriter expressly
for use therein.
(C) Neither the giving of any notice by any holder
nor the making of any request for
prospectuses shall impose any upon any holder making such request any obligation
to sell any Warrant Shares or exercise any Warrants.
(D) In connection with any registration statement
filed pursuant to this Paragraph (j), the
Company shall supply prospectuses and qualify the Warrant Shares for sale in
such states as the Warrant holders may reasonably designates, provided that the
Company shall not be required to qualify or register the Warrant Shares in any
jurisdiction where such qualification or registration would require the Company
to submit generally to the jurisdiction of such state.
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<PAGE>
(E) As a condition to the inclusion of the Warrant
Shares of the holder of this Warrant, such holder shall (i) furnish the
information and indemnification as set forth in Paragraph (j)(2)(B) of this
Warrant and (ii) agree not to sale or otherwise transfer any Warrant Shares
pursuant to a registration statement upon receipt of advice from the Company
that the registration statement is no longer current until the holder is
advised that the Warrant Shares may be sold pursuant to the registration
statement.
(F) The registration rights contained in this
Paragraph (j) shall relate to the Warrant
Shares held by any transferee unless such transferee may sell such Warrant
Shares without restriction whether pursuant to Rule 144 of the Commission
pursuant to the Securities Act or any subsequent similar rule or otherwise.
(3) The term "majority holder" shall mean the holders of at
least a majority of the shares of Common Stock for which the Series A Warrants
(considered in the aggregate) are exercisable and shall include any owner or
combination of owners of such securities, which ownership shall be calculated by
determining the number of shares of Common Stock held by such owner or owners
resulting from the exercise of any Series A Warrant after giving effect to any
stock dividend, split, reverse split or other recapitalization and the number of
shares of Common Stock issuable upon exercise of any unexercised Series A
Warrants.
(4) The Company's agreements with respect to the Warrant
Shares in this Paragraph (j) shall continue in effect regardless of the exercise
of the Warrants.
(5) The holders of the Warrants Shares shall not be entitled
to registration rights pursuant to this Paragraph (j) if at or prior to the
effective date of such registration statement, such holder may sell all of the
Warrant Shares owned by the holder pursuant to Rule 144 of the Securities and
Exchange Commission under the Securities Act. For purposes of this Paragraph
(j)(5), Warrant Shares shall include shares issued or issuable upon exercise of
all Series A Warrants and Series B Common Stock Purchase Warrants of the Company
which are owned by such holder.
(k) TRANSFER TO COMPLY WITH THE SECURITIES ACT OF 1933.
This Warrant or the Warrant Shares or any other security issued or issuable
upon exercise of this Warrant may not be sold or otherwise disposed of except
as follows:
(1) To a person who, in the opinion of counsel for the
Company, is a person to whom this Warrant or Warrant Shares may legally be
transferred without registration and without the delivery of a current
prospectus under the Act with respect thereto and then only against receipt of
an agreement of such person to comply with the provisions of this Paragraph (k)
with respect to any resale or other disposition of such securities which
agreement shall be satisfactory in form and substance to the Company and its
counsel; or
(2) to any person upon delivery of a prospectus then meeting
the requirements of the Act relating to such securities and the offering thereof
for such sale or disposition.
Dated as of November ___, 1997
QUALITY PRODUCTS , INC.
By:
Bruce Weaver, President
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<PAGE>
PURCHASE FORM
Dated: , 19
The undersigned hereby (i) irrevocably exercises this
_________ Warrant to the extent of purchasing______ shares of Common Stock and
hereby makes payment of $________ in payment of the Exercise Price
therefor, and (ii)represents and warrants that the undersigned is an
"accredited investor" as such term is defined in Rule 501
promulgated under the Securities Act of 1933, as amended.
_______ The undersigned hereby (i) irrevocably exercises this Warrant to the
extent of purchasing______ shares of Common Stock and hereby makes
payment of $_______ in payment of the Exercise Price therefor by
delivery of shares of Common Stock pursuant to Paragraph (a)(1) of
this Warrant,, and (ii) represents and warrants that the undersigned
is an "accredited investor" as such term is defined in Rule 501
promulgated under the Securities Act of 1933, as amended.
________ The undersigned hereby (i) irrevocably elects to exchange this
Warrant to the extent of _______ shares of Common Stock pursuant
to the provision of Paragraph (a)(2) of this Warrant, and (ii)
represents and warrants that the undersigned is an "accredited
investor" as such term is defined in Rule 501 promulgated
under the Securities Act of 1933, as amended.
_________
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name_____________________________________________________
(Please typewrite or print in block letters)
Signature _______________________________________________
Social Security or Employer Identification No. __________
ASSIGNMENT FORM
FOR VALUE RECEIVED,
hereby sells, assigns and transfer unto
Name ___________________________________________________
(Please typewrite or print in block letters)
Address ________________________________________________
Social Security or Employer Identification No. __________
The right to purchase Common Stock represented by this Warrant to the extent of
______________ shares as to which such right is exercisable and does hereby
irrevocably constitute and appoint ______________ attorney to transfer the same
on the books of the Company with full power of substitution.
Dated:_________________, 19 ____
Signature ______________________
Signature Medallion Guaranteed:
_______________________________
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<PAGE>
Quality Products, Inc.
c/o QPI Multipress, Inc.
560 Dublin Avenue
Columbus, Ohio 43215-2388
November ___, 1997
Eastlake Securities, Inc.
575 Lexington Avenue
New York, New York 10022
Re: Quality Products, Inc. (the "Company")
Ladies and Gentlemen:
During the three-year period commencing on the date hereof, Eastlake
Securities, Inc. ("Eastlake") shall have the right of first refusal (i) to act
as underwriter or agent for any public or private offering (excluding sales
pursuant to Rule 144 of the Securities and Exchange Commission under the
Securities Act of 1933, as amended, or any subsequent, similar or comparable
regulation) of the Company's or its subsidiaries' securities by the Company (a
"Subsequent Company Offering") and (ii) to purchase for Eastlake's own account
any of the securities of the Company or any of its subsidiaries pursuant to any
Subsequent Company Offering. Eastlake may exercise its rights under this letter
either by itself or together with other broker/dealers registered pursuant to
the Securities Exchange Act of 1934, as amended. Accordingly, if during such
period, the Company intends to make a Subsequent Company Offering, the Company
shall notify Eastlake in writing of such intention and the proposed terms of the
Offering. The Company shall thereafter promptly furnish Eastlake with such
information concerning the business, condition and prospects of the Company as
Eastlake may reasonably request. If within thirty days of the receipt of such
notice of intention and statement of terms, Eastlake does not accept in writing
such offer to act as underwriter or agent with respect to such offering or to
purchase such securities for its own account upon the terms proposed, the
Company shall, during the following 120 day period, be free to negotiate the
terms with other registered broker/dealers with respect to such offering on such
proposed terms. Before the Company shall accept any proposal which differs
materially from the proposal previously submitted to Eastlake or, subsequent to
such 120 day period, accept any proposal, the preferential rights of Eastlake,
as described above, shall be reinstated and the same procedure with respect to
such modified proposal or such subsequent proposal as provided above shall be
adopted. The failure by Eastlake to exercise its right of first refusal at any
particular instance shall not in any way effect such right with respect to any
Subsequent Company Offering. This agreement shall terminate if Murray Koppelman
shall cease to be a principal executive officer of Eastlake. Eastlake may not
assign its rights under this agreement.
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<PAGE>
Very truly yours,
QUALITY PRODUCTS, INC.
By:_________________________________
Bruce Weaver, President
AGREED AND ACCEPTED:
EASTLAKE SECURITIES, INC.
By:_________________________________
Murray Koppelman, President
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