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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )*
QUALITY PRODUCTS, INC.
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(NAME OF ISSUER)
COMMON STOCK, PAR VALUE $.00001
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(TITLE OF CLASS OF SECURITIES)
208611202
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(CUSIP NUMBER)
PI, Inc., 70 Airport Road, Hyannis, Massachusetts 02601
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(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS)
August 31, 1996
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(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 RULE 13D-1(b)(3) OR (4), CHECK THE FOLLOWING
BOX [ ].
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 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 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).
CUSIP NO. 208611202
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SCHEDULE 13D
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CUSIP NO. 208611202 PAGE 2 OF PAGES
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
PI, Inc.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
OO - See Item 3
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Massachusetts
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7 SOLE VOTING POWER
Common Stock, 500,000-666,6666 shares - See Item 5
NUMBER OF -----------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY
EACH -----------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH Common Stock, 500,000-666,6666 shares - See Item 5
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10 SHARED DISPOSITIVE POWER
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
Common Stock, 500,000-666,6666 shares - See Item 5
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (SEE INSTRUCTIONS) [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
20.87% to 27.83% - See Item 5
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14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
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ITEM 1. SECURITY AND ISSUER
This statement relates to convertible promissory note ("Note") in the principal
amount of Five Hundred Thousand and 00/100 ($500,000) Dollars, convertible
into shares of Common Stock, par value $.00001 (the "Common Stock"), of
Quality Products, Inc., whose principal executive offices and officers are
located at 560 Dublin Avenue, Columbus, OH 53215. See Item 5 for a description
of the terms of conversion, including the number of shares of Common Stock
which may be acquired upon conversion.
ITEM 2. IDENTITY AND BACKGROUND
The person filing this statement is PI, Inc., whose principal executive office
and officers are located at 70 Airport Road, Hyannis, Massachusetts 02601.
During the past five years, PI, Inc. has not been convicted in any criminal
proceedings and has not been a party to any civil proceedings 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.
PI, Inc. is a Massachusetts corporation.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Pursuant to a settlement agreement dated August 31, 1996 between PI, Inc. and
Quality Products, Inc. resolving pending litigation ("Litigation") between
such parties, PI, Inc. received the Note from Quality Products, Inc. in the
principal amount of Five Hundred Thousand and 00/100 ($500,000) Dollars, which
Note is convertible into shares of Common Stock of Quality Products, Inc.
ITEM 4. PURPOSE OF TRANSACTION
The purpose of the acquisition by PI, Inc. of the Note was to resolve all
claims asserted by PI, Inc. against Quality Products, Inc. in the Litigation.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
PI, Inc. is the owner of the Note, which is convertible into shares of Common
Stock ranging in number from 500,000 shares to 666,666 shares, depending upon
the timing and circumstances of conversion and subject to anti-dilution
adjustment in the event of reclassification, capital reorganization or other
change of outstanding Common Stock or in case of merger, sale of assets, and
other circumstances as provided in the Note. Conversion prices generally
range from $.75 per share of Common Stock to $1.00 per share.
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Conversion may occur at any time between the date of the note and August 31,
2001, subject to various conditions as provided in the Note. The shares which
may be acquired upon conversion of the Note would represent from 20.87% to
27.83% of the issued and outstanding Common Stock of Quality Products, Inc.
PI, Inc. has sole power to vote or direct the vote, and sole power to dispose
or direct the disposition of any shares of Common Stock acquired by it upon
conversion of the Note.
ITEM 6. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO SECURITIES
OF THE ISSUER
See Responses to Item 3, 4 and 5 above.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
The following documents are attached hereto as Exhibits.
7.1 Convertible Promissory Note dated August 31, 1996 from Quality Products,
Inc. to PI, Inc.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this Statement is true, complete
and correct.
July , 1997
PI, INC.
By: /s/ Scott C. Smith
--------------------------------
Name: Scott C. Smith
Title: Executive Vice President
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EXHIBIT 7.1
NEITHER THIS NOTE NOR THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF
THIS NOTE (THE "NOTE SHARES") HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 (THE "ACT"), AND NEITHER THIS NOTE 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.
QUALITY PRODUCTS, INC.
6% Convertible Note Due August 31, 2001
$ 500,000.00 Dublin, Ohio
August 31, 1996
Quality Products, Inc., a Delaware corporation (herein called the
"Company"), for value received, hereby promises to pay to PI, Inc., a Delaware
corporation with offices at P.O. Box S, 70 Airport Road, Hyannis, Massachusetts
02601 (the "Holder"), the principal sum of Five Hundred Thousand Dollars
($500,000.00) on August 30, 2001, at Hyannis, Massachusetts or such other
address as the Holder shall have specified by written notice to the Company (the
"Payment Address"), in such coin or currency of the United States of America as
at the time of payment shall be legal tender for the payment of public and
private debts, and, except as otherwise provided herein, to pay interest
(computed on the basis of a 365-day year, using the number of days actually
elapsed) at such Payment Address, in like coin or currency, on said principal
sum from the date hereof, quarterly on November 30, February 22, May 31 and
August 31 in each year, commencing as of the date hereof, at the rate of six
percent (6%) per annum. Interest shall be payable at the rate of twelve (12%)
percent on the entire unpaid principal amount of this Note from and after the
time such entire unpaid principal amount shall have become due and payable
(whether at maturity or by acceleration).
The entire unpaid principal amount of this Note, together with interest
thereon shall, at the option of the Holder, exercised by written notice to the
Company, forthwith be accelerated and become and be due and payable without
further notice if the Company fails to pay any principal or
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interest payable hereunder as and when same become due and payable and such
failure shall not have been cured within thirty (30) days after written notice
thereof to the Company by the Holder of this Note.
This Note is issued pursuant to a settlement agreement (the "Settlement
Agreement") dated as of the date hereof, by and between the Company and PI, Inc.
The Company agrees that from the date hereof through the earlier of (i)
conversion of this Note or (ii) August 30, 2001, it will not issue any
indebtedness senior to the indebtedness evidenced by this Note other than
indebtedness issued to a Financial Institution (as defined). The term "Financial
Institution" shall mean any bank as defined in Section 3(a)(2) of the Act, any
savings and loan association or other institution as defined in Section
3(a)(5)(A) of the Act, or any insurance company as defined in Section 2(13) of
the Act.
ARTICLE 1
Redemption or Conversion of Note.
1.1 Mandatory Redemption of Note. This Note shall, without any action on the
part of the holder thereof, be redeemed by the Company and automatically
converted into fully paid and nonassessable shares of Common Stock at a
conversion rate of $1.00 per share, on the date set forth in the "Redemption
Notice" (as such term is defined below). The term "Redemption Notice" as used
herein means a notice signed by the principal executive or financial officer of
the Company, certifying that (a) the closing price per share of the Common
Stock, determined in accordance with Section 1.9(b) of this Note, for each of
the thirty (30) consecutive trading days ending not earlier than five days prior
to the date of such notice exceeds $2.00, subject to adjustment as provided
herein; and (b) that the Company has filed all periodic reports required to be
filed under the Securities Exchange Act of 1934; and further providing that,
unless converted earlier by the registered holder pursuant to Section 1.3, the
entire principal amount of the Note will be converted into common stock at $1.00
per share on the date specified in the Redemption Notice which is not less than
15 days after the date of the Redemption Notice. The Note shall be deemed to
have been redeemed, converted and satisfied on the date set forth in such
notice, regardless of whether the Note has been physically surrendered for
redemption. Notwithstanding anything to the contrary herein, the Company shall
not be obligated to deliver certificates representing such shares of Common
Stock until such Note has been physically surrendered to the Company.
1.2 Optional Redemption of Note by Company. The Company shall have the right,
but not the obligation, to redeem the unpaid principal amount of this Note and
convert it into fully paid and nonassessable shares of Common Stock of the
Company at a conversion rate of $.75 per share. This option may be exercised by
delivery of an "Optional Redemption Notice" which, as used herein, means a
notice signed by the principal executive or financial officer of the Company
certifying that (a) the closing price per share of Common Stock determined in
accordance with Section 1.9(b) of this Note for each of the thirty (30)
consecutive trading days ending not earlier than five days prior to the date of
such notice, exceeds $1.50 per share, subject to adjustment as provided herein;
and (b)
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that the Company has filed all periodic reports required to be filed under the
Securities Exchange Act of 1934; and further providing that, unless converted
earlier by the registered holder pursuant to Section 1.3, the entire principal
amount of the Note will be converted into common stock at $.75 per share on the
date set forth in the Optional Redemption Notice which is not less than 15 days
after the date of the Optional Redemption Notice. The Note shall be deemed to
have been redeemed, converted and satisfied on the date set forth in such
notice, regardless of whether the Note has been surrendered for conversion.
However, the Company shall not be obligated to deliver certificates representing
such shares of Common Stock until such Note has been physically surrendered to
the Company.
1.3 Optional Conversion at Holder's Request. Subject to and upon compliance with
the provisions of this Section 1.3, the registered holder of this Note shall
have the right, at its option, at any time prior to 5:00 P.M., New York City
time on August 31, 2001, to convert the unpaid principal amount of this Note
into fully paid and nonassessable shares of Common Stock of the Company.
(a) In order to exercise the conversion privilege, the Holder
of this Note to be converted in whole or in part shall surrender the
Note at the address of the Company, and together with the notice
annexed hereto as Exhibit A. The number of shares of Common Stock
issuable upon conversion shall be determined by dividing the amount of
principal being converted by the conversion price in effect at such
time. Such Holder shall thereupon be deemed the holder of the shares of
Common Stock so issued and the principal amount of the Note shall be
deemed to have been paid in full.
(b) As promptly as practicable after the surrender of such
Note and the receipt of such notice, the Company shall issue and shall
deliver at such office to such holder, or on his written order, a
certificate or certificates for the number of full shares issuable upon
the conversion of such Note or portion thereof in accordance with the
provisions of this Section 1.3.
(c) Each conversion shall be deemed to have been effected on
the date on which such Note shall have been surrendered and such notice
shall have been received by the Company, as aforesaid, and the person
in whose name any certificate or certificates for shares of Common
Stock shall be issuable upon such conversion shall be deemed to have
become on said date the holder of record of the shares represented
thereby; provided, however, that any such surrender on any date when
the stock transfer books of the Company shall be closed shall
constitute the person in whose name the certificates are to be issued
as the record holder thereof for all purposes on the next succeeding
day on which such stock transfer books are open, but such conversion
shall be at the conversion price in effect on the date upon which such
Note shall have been surrendered.
(d) Conversion Price. The conversion price shall be the
Current Market Price as of the date the Note is surrendered for
conversion, determined in accordance with Section 1.9 of this
Agreement; provided, however, that the conversion price may not be less
than
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$.75 per share nor more than $1.00 per share, subject to adjustment as
provided herein. Notwithstanding the foregoing, the number of shares of
Common Stock issuable upon conversion will not be less than 12.5% of
the Company's Common Stock, on a fully diluted basis, and after giving
effect to such conversion. The term fully diluted basis as used in this
Section shall mean the number of shares of Common Stock which would be
outstanding after giving effect to the exercise and/or conversion of
all rights, warrants and options to acquire Company Common Stock
(collectively, the "Rights"), other than those Rights whose exercise
price or conversion price is equal to or greater than the conversion
price then in effect.
1.4 No Cash Payments in Lieu of Fractional Shares. No fractional shares of stock
or scrip representing fractional shares shall be issued upon conversion of
Notes.
1.5 Taxes on Shares Issued. The issue of stock certificates on conversion of
this Note shall be made without charge to the Holder for any issue, stamp or
other similar tax in respect of the issue thereof. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of stock in any name other than that
of the holder of the Note converted, and the Company shall not be required to
issue or deliver any such stock certificate unless and until the person or
persons requesting the issue thereof shall have paid to the Company the amount
of such tax or shall have established to the reasonable satisfaction of the
Company that such tax has been paid or that no such tax is payable.
1.6 Reservation of Shares; Shares to be Fully Paid, Compliance with Governmental
Requirements; Listing of Common Stock.
(a) The Company shall provide, free from preemptive rights,
out of its authorized but unissued shares, or out of shares held in its
treasury, sufficient shares to provide for the conversion of this Note.
(b) Before taking any action which would cause an adjustment
reducing the conversion price below the then par value, if any, of the
shares of Common Stock issuable upon conversion of this Note, the
Company will take all corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally
issue shares of such Common Stock at such adjusted conversion price.
(c) The Company covenants that all shares of Common Stock
which may be issued upon conversion of this Note will upon issue be
fully paid and nonassessable by the Company and free from all taxes,
liens and charges with respect to the issue thereof.
(d) The Company further covenants that in the event that the
Common Stock shall be listed on any registered stock exchange or any
other national securities exchange (which term shall include the Nasdaq
and the Nasdaq National Market) the Company will, if permitted by the
rules of such exchange, list and keep listed and for sale so long as
the
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Common Stock shall be so listed on such exchange, upon official notice
of issuance, all Common Stock issuable upon conversion of this Note.
1.7 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 with a subsidiary in which merger
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 or the class issuable upon conversion of this Note) 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 of this
Note shall have the right thereafter by converting this Note, 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 the Holder of the number of shares
of Common Stock which might have been acquired upon conversion of this Note
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 Note. The foregoing provisions of this Section 1.7 shall similarly
apply to successive reclassifications, capital reorganizations and changes of
shares of Common Stock and to successive consolidations, mergers, sales or
conveyances.
1.8 Payment of Interest on Conversion. The Company shall not, upon conversion of
this Note, be required to pay any interest accrued thereon from the day
immediately following the immediately preceding interest payment date through
the date of conversion; provided, however, that the Company shall pay all unpaid
interest accrued through and including the immediately preceding interest
payment date.
1.9 Current Market Price.
(a) For the purpose of any computation under this Article 1,
the current market price (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 the thirty (30) consecutive trading days commencing
forty-five (45) trading days before the day in question.
(b) The closing price for each day shall be (A) the average of
the closing bid and asked quotations of the Common Stock on NASDAQ
(which term shall include the Nasdaq Bulletin Board) or any other
automated quotation system or (B) if the Common Stock shall be listed
or admitted for trading on the New York or American Stock Exchange or
any successor exchange, the last sale price, or if no sale occurred on
such date, the average of the closing bid and asked prices of the
Common Stock on such exchange, or (C) if the Common Stock shall not be
included in any automated quotation system or listed on any such
exchange, the average of the closing bid and asked quotation for Common
Stock as reported by The Wall Street Journal, or if not reported
therein, by the National Quotation Bureau Incorporated (or other
recognized quotation service) if at least two (2) securities dealers
have
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inserted both bid and asked quotations for Common Stock on at least
five (5) of the ten (10) preceding trading days. If none of the
conditions set forth above is met, the closing price of Common Stock on
any day or the average of such closing prices for any period shall be
the fair market value of Common Stock as determined by appraisal by an
NASD member broker-dealer firm selected by the Board of Directors of
the Company.
1.10 Adjustment of Conversion Price. In case the Company shall on any one or
more occasions after the date hereof (1) pay a dividend or make a distribution
in shares of its capital stock (whether shares of Common Stock or of capital
stock of any other class) to all holders of its Common Stock, (2) subdivide its
outstanding Common Stock, or (3) combine its outstanding Common Stock into a
smaller number of shares, the conversion price in effect immediately prior
thereto shall be adjusted so that the Holder of the Note thereafter surrendered
for conversion shall be entitled to receive the number of shares of capital
stock of the Company which he would have owned or have been entitled to receive
after the happening of any of the events described above had such Note been
converted immediately prior to the happening of such event. Any adjustment made
pursuant to this Section 1.10 shall become effective immediately after the
record date in the case of a dividend or distribution or the effective date in
the case of a subdivision or combination. If, as a result of an adjustment made
pursuant to this Section 1.10, the Holder of the Note thereafter surrendered for
conversion shall become entitled to receive shares of two (2) or more classes of
capital stock of the Company, the Board of Directors (whose determination shall
be conclusive and shall be described in a written statement delivered to the
Holder of the Note at his Payment Address) shall determine the allocation of the
adjusted conversion price between or among shares of such classes of capital
stock.
ARTICLE 2
Registration under the Securities Act of 1933.
2.1 Piggyback Registration Rights. For the eight year period commencing the date
hereof, the Company shall advise the Holder of the Note or the Note Shares by
written notice at least two weeks prior to the filing of any registration
statement under the Act (other than a registration statement on Form S-4, Form
S-8 or subsequent similar forms) covering securities of the Company and will
upon the request of such holder, include in any such registration statement such
information as may be required to permit a public offering of the Note Shares;
provided, however, that if the registration statement relates to a public
offering by the Company of its securities and the managing underwriters advise
the Holder that the inclusion in the offering of securities being sold by the
Holder would adversely affect the ability of the Company to complete the public
offering (and other selling stockholders, if any, are similarly advised), then
the number of Note Shares to be registered by the Holder shall be reduced pro
rata to the extent necessary to reduce the amount of securities to be included
in the offering to the amount recommended by the managing underwriters. The
Holder hereby further agrees not to make any sales of the securities so included
for a period of one hundred eighty (180) days from the effective date of such
registration statement. The Company shall keep such registration statement
current for a period of up to six (6) months from the conclusion of such one
hundred eighty (180) day period; provided, however, that the Company shall not
be required
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to keep the registration statement effective beyond the date after which the
registration statement must be amended to include updated audited financial
statements. The Company shall supply prospectuses, qualify the Note Shares for
sale in such states as the Holder reasonably requests and furnish
indemnification in the manner as set forth in of this Article 2. Such holder
shall furnish information and indemnification in the manner set forth in of this
Article 2.
2.2 Demand Registration Rights. If the Holder of the Note Shares shall give
notice to the Company at any time during the five year period commencing three
years from the date hereof to the effect that such holder contemplates the
transfer of all of his Note Shares under such circumstances that a public
offering distribution (within the meaning of the Act) of the Note Shares will be
involved, then the Company shall, within sixty (60) days after receipt of such
notice, file a registration statement pursuant to the Act, to the end that the
Note Shares may be sold under said Act as promptly as practicable thereafter;
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 time, not to exceed six (6) months, as
the Holder of the Note Shares may request. Notwithstanding the foregoing, the
filing of the registration statement contemplated by this Section 2.2 may be
delayed for a period not exceeding six (6) months if the Board of Directors of
the Company determines that such delay is in the Company's best interests. The
rights granted pursuant to this Section 2.2 may only be exercised (i) on one
occasion; and (ii) subsequent to the acquisition of the Note Shares upon
conversion of the Note.
2.3 Other Provisions Pertaining to Registration Rights. The following provision
of this Article 2 shall also be applicable:
(a) The Company shall bear the entire cost and expense of any
registration of securities initiated by it under Article 2 hereof;
provided, however, that any Holder whose Note Shares are included in
such registration statement pursuant to this Article 2 shall, however,
bear the fees of his own counsel and accountants and any transfer taxes
or underwriting discounts or commissions applicable to the Note Shares
sold by him pursuant thereto.
(b) The Company shall indemnify and hold harmless each such
holder and each underwriter, within the meaning of the Act, who may
purchase from or sell for any such holder any Note Shares from and
against any and any losses, claims, damages and liabilities caused by
any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement for any post-effective
amendment thereto or any registration statement under the Act or any
prospectus included therein required to be filed or furnished by reason
of this Article 2 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 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
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liabilities are caused by any such untrue statement or alleged untrue
statement or omission or alleged omission based upon information
furnished or required to be 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 such 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
such Act and each other holder, 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 Article 2 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 is based
upon information furnished to the Company by any such holder or
underwriter expressly for use therein.
(c) Notwithstanding anything to the contrary herein, the
Holder shall not be entitled to register the Note Shares pursuant to
Section 2.1 or 2.2 hereof if at such time, the Holder is then able, in
the opinion of counsel for the Company, to sell such securities
pursuant to Rule 144 under the Act, without regard to the volume
limitations contained therein.
ARTICLE 3
Miscellaneous
3.1 Notices. Notice shall be given to the Company by certified mail, return
receipt requested. Notices to the Company shall be addressed to Quality
Products, Inc., 560 Dublin Avenue, Columbus, Ohio 43215, Attention: Bruce
Weaver, President, or such other address as the Company may, from time to time
advise the Holder. Notices to the Holder shall be addressed to their respective
Payment Addresses and shall be given by certified mail, return receipt
requested. Notices shall be deemed given on the date mailed.
3.2 Governing Law. This Note shall be governed by the laws of the State of
Delaware applicable to agreements executed and to be performed wholly within
such state.
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3.3 Waiver of Trial by Jury. In any legal proceeding to enforce payment of this
Note, the Company waives trial by jury and counterclaims, if any.
QUALITY PRODUCTS, INC.
By: /s/ Bruce Weaver
---------------------
Bruce Weaver,
President
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Exhibit A
NOTICE OF CONVERSION
[To be Signed Only Upon Conversion
of Part or All of Notes]
QUALITY PRODUCTS, INC.
The undersigned, the holder of the foregoing Note, hereby
surrenders such Note for conversion into shares of Common Stock of QUALITY
PRODUCTS, INC. to the extent of Five Hundred Thousand Dollars $500,000 unpaid
principal amount due on such Note, and requests that the certificates for such
shares be issued in the name of , and delivered to , whose
address is .
DATED:
(Signature)
(Signature must conform in all respects to name
of holder as specified on the face of the Note.)
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