Warrant to Purchase
WB-___ Exhibit 4.6 **_______**
hares 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, 2001
SERIES B COMMON STOCK PURCHASE WARRANT
OF
QUALITY PRODUCTS, INC.
This is to certify that, FOR VALUE RECEIVED, _________________ 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 two dollars
($2.00), ___________ (______) 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 October 1, 1999 and ending at 5:00 P.M. New York City time, on
September 30, 2001; 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 exercise 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 B Warrants" shall
mean any or all of the warrants designated as Series B 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 i
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 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 NasdaqStock Market ("Nasdaq") or other automated
quotation system which provides information as to the last sale price, the
current value shall be the average ofthe 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 such 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.
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(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 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.
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(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 (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.
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(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.
(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.
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(j) REGISTRATION UNDER THE SECURITIES ACT OF 1933.
(10) (A) In the event that, at any time during the five year
period commencing October 1, 1999, 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 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, 1999, 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 t
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.
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(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) 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.
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(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 t
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.
(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 B 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 B 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 B
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 B Warrants and Series A 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:
Xxxxx Xxxxxx, President
8
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:
9
