Exhibit
4.8


 


NOTE


 


	
  $300,000

  	
  October 15, 2002

  



 


FOR VALUE RECEIVED, the undersigned, QUALITY PRODUCTS,
INC. a Delaware corporation (“Borrower”), with offices at 2222 South Third
Street, Columbus, Ohio 43207, hereby promises to pay to the order of Dennis Mellman
or any subsequent holder of this Note (“Holder”) in lawful money of the United
States and in immediately available funds, the principal amount Three Hundred
Thousand Dollars ($300,000) as follows: commencing June 30, 2004, the Company
shall make quarterly payments of principal in the amount of Twelve Thousand
Five Hundred Dollars ($12,500) on the last calendar day of June, September,
December and March, with a final payment of Two Hundred Thirty Seven Thousand
Five Hundred Dollars ($237,500) due on September 30, 2005 (the “Maturity
Date”).


 


Interest shall accrue on the unpaid balance of said
principal sum at the rate of  Ten
Percent (10%) per annum (computed on the basis of a 360 day year) from the date
hereof until said principal sum is fully paid. 
Payments of interest under this Note shall be made on the last calendar
day of each of December, March, June and September, commencing on December 31,
2002.


 


Principal and interest under this Note may be prepaid,
in whole or in part, at any time without premium or penalty.


 


1.             Subordination.  Notwithstanding anything to the contrary
herein, all Subordinated Indebtedness shall be subordinate and junior in right
of payment to all Superior Indebtedness, in each case to the extent and in the
manner set forth in this Section 1.


 


(a)           As
used in this Section 1, the following terms have the following respective
meanings:


 


(i)  “Superior Indebtedness” shall mean all
indebtedness of Borrower from time to time other than Subordinated
Indebtedness, including, without limitation, indebtedness incurred from time to
time to U.S. Bank National Association or any of Borrower’s secured lenders (as
described on Borrower’s financial statements), but excluding indebtedness to
unsecured creditors of Borrower; and 
(ii)  “Subordinated Indebtedness”
shall mean all principal of and interest on this Note.


 


(b)           Notwithstanding anything to the
contrary contained herein, in the event Borrower shall default in the payment
or performance of any obligations with respect to any Superior Indebtedness
when the same becomes due, whether at maturity or at a date fixed for
prepayment or by declaration, acceleration or otherwise, then, unless and until
such default shall have been remedied or waived, no direct or indirect payment
(in cash, property or securities or by set-off or otherwise) shall be made of
or on account of any Subordinated Indebtedness or as a sinking fund for
Subordinated Indebtedness or in


 

















 


respect of any redemption, retirement, purchase or
other acquisition of any Subordinated Indebtedness.


 


(c)           So long as any Superior Indebtedness
remains outstanding, no holder of Subordinated Indebtedness shall declare or
join in any declaration of acceleration of the maturity of the Subordinated
Indebtedness during a period commencing on the occurrence of a Default (as
defined below) and ending on the acceleration of any Superior Indebtedness.


 


(d)           The holders of Subordinated
Indebtedness shall execute and deliver such documents and instruments and take
such further actions as are necessary in the reasonable judgment of Borrower or
any holder of Superior Indebtedness to effectuate the provisions of this
Section 1.


 


2.             Default.  Each of the following events or occurrences
shall constitute a “Default” under this Note: (a) Borrower shall fail to pay to
Holder any interest or principal owing hereunder when it becomes due and
payable, either at maturity, upon declaration or acceleration or otherwise and
such default shall continue for a period of thirty (30) days after Borrower has
received written notice informing it of such default from Holder; (b) Borrower
shall fail to duly perform any of its other agreements or obligations under
this Note, within thirty (30) days after Holder provides written notice to
Borrower thereof; (c) the dissolution or liquidation (by operation of law or
otherwise) which is not remedied within thirty (30) days of Borrower; (d) if
any default shall be declared pursuant to the terms of any Superior
Indebtedness; or (e) a receiver, trustee or custodian shall be appointed for Borrower
or any part of its property, or any proceeding shall be commenced by or against
Borrower, under any bankruptcy, reorganization, debt arrangement or insolvency
law, and, in the case of any such proceeding commenced against Borrower, such
proceeding shall not be dismissed within thirty (30) days thereafter.


 


3.             Default
Interest.  Upon any Default, any
unpaid amounts shall bear default interest, from such date until the date of
actual payment (and before as well as after judgment) at the per annum rate of
twelve percent (12%), computed daily on the basis of a 360 day year.


 


4.             Remedy
Upon Default.  Upon the occurrence
and during the continuance of a Default, Holder at its option shall have all
rights and remedies of a creditor under Ohio law.  In addition to the foregoing rights and remedies, following a
Default, Holder, by written notice to Borrower, shall have the right to declare
all or any amounts shall become immediately due and payable, without further
notice, demand, declaration or presentment of any kind (provided that upon a
Default described in clause (d) of Section 2, all amounts owing hereunder
automatically shall become due and payable, without declaration, notice, demand
or presentment of any kind).  The
Company agrees to pay to Holder all reasonable expenses incurred or paid by
Holder, including reasonable attorneys’ fees and court costs, in connection
with the collection of this Note after a Default under this Note.


 


5.             Waiver
of Presentment.  Except as provided
herein, Borrower hereby waives presentment, diligence in the collection or
protection, protest, notice of protest and default, and


 


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notice of dishonor.  No delay by
Holder in the exercise of any right or remedy shall operate as a waiver
thereof, and no single or partial exercise by Holder of any right or remedy
shall preclude any other or further exercise thereof or the exercise of any
other right or remedy. If any part of this Note is unenforceable, that will not
make any other part unenforceable.


 


6.             Successors
and Assigns. This Note and the agreements made herein shall inure to the
benefit of and be binding upon Borrower, the holder hereof and their respective
successors and permitted assigns .


 


7.             Amendment:
Modification. This Note may not be amended or modified except by an
agreement in writing signed by the party to be charged.


 


8.             Fees,
Expenses.  Borrower agrees to pay
all collection expenses, court costs, and reasonable attorneys fees and
disbursements (whether or not litigation is commenced) that may be incurred in
connection with the collection or enforcement of this Note.


 


9.             Governing
Law; Jurisdiction.  This Note shall
be governed by and construed in accordance with the laws of Ohio, without
giving effect to principles of conflicts of law. Borrower hereby (i)
irrevocably consents and agrees that any action or proceeding for the
enforcement of this Note may be brought in any Federal or state court situated
in Franklin County, Ohio, (ii) agrees that any process in any action commenced
in such court under this Agreement may be served upon Borrower at the address
above (or such new address for service, which shall be the same address as
Borrower’s principal office, as Borrower may notify Holder in writing by
certified mail, return receipt requested), which, by certified or registered
mail, return receipt requested, or by an overnight courier service which
obtains evidence of delivery, with the same full force and effect as if
personally served upon Borrower, in addition to any other method of service
permitted by law, and (iii) waives any claim that such court is not a
convenient forum for any such action and waives any defense of lack of in
personam jurisdiction or improper venue with respect thereon.


 


10.           Registrar.   The Company shall maintain books for the
transfer and registration of this Note. 
Such registers shall show the names and addresses of the respective
Holders of this Note and the principal amount thereof.


 


11.           Transfer.  In addition to the other provisions of this
Note, any transfer of this Note shall be effected only if Borrower shall have
received an opinion of counsel addressed to Borrower, to the effect that the
proposed transfer of the Note may be effected in compliance with applicable
law.


 


12.           Lost
Note.  In case this Note shall be
mutilated or lost, stolen or destroyed, Borrower may in its discretion issue
and deliver in exchange and substitution for a mutilated Note which shall be
cancelled, or in lieu of and substitution for a lost, stolen or destroyed Note,
a new Note of like tenor and in the same principal amount; but only upon
receipt of evidence satisfactory to Borrower of such loss, theft or destruction
and indemnity, if requested, also


 


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satisfactory to it. Applicants for such substitute Notes shall also
comply with such other reasonable regulations and pay such other reasonable
charges as Borrower may prescribe.


 


IN WITNESS WHEREOF, Borrower has executed and delivered this Note as of
the date first above written.


 


 


	
   

  	
  QUALITY PRODUCTS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard Drexler

  	
   

  
	
   

  	
  Its:

  	
  Chairman

  	
   

  



 


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