Exhibit
4.4


 


PURCHASE
MONEY SECURITY AGREEMENT


 


As of November 17, 2003, at Columbus, Ohio, Quality Products, Inc., a
Delaware corporation (the “Borrower”), and QPI Multipress, Inc., an Ohio
corporation, and Columbus Jack Corporation, an Ohio corporation (collectively
the “Guarantors”), enter into this Security Agreement with Dan Drexler, Richard
A. Drexler, TTEE, Richard A. Drexler Trust, U/A DTD 9/14/90, Dale S. Drexler,
TTEE, Dale S. Drexler Living Trust, U/A/D March 15, 1999, and Jason I. Drexler
(“Lenders”).


 


WITNESSETH:


 


WHEREAS,
concurrently with the execution of this Agreement, Lenders, Borrower and
Guarantors have executed a Promissory Note and Guarantee under which the
Lenders agree to lend U.S.$200,000 to Borrower for the purpose of purchasing a
120 inch Mazak M-5 Turning Center with Mazatrol Fusion 640T Control (the
“Machine”);


 


WHEREAS, Lenders
have agreed to act through Jason Drexler as their agent and Jason Drexler is
the duly appointed agent for the Lenders with the sole right to act as the Holder
of the Note unless and until he is replaced by a writing signed by all Lenders
and delivered to Borrower and Guarantors; and


 


WHEREAS, to induce
Lenders to lend this money and in consideration thereof, Borrower and
Guarantors have agreed to grant Lenders a purchase money security interest in
the Machine:


 


NOW, THEREFORE, the
parties hereby agree as follows:


 


1.  Security;
Enforcement; Application of Proceeds -


 


(a) To
secure payment and performance of its obligations under the Promissory Note,
Guarantee, and this Agreement, Borrower and Guarantors hereby transfer, assign,
and pledge to Lenders and grant Lenders a purchase money security interest in
the Machine.


 


(b) Upon (i) failure by Borrower
and/or Guarantors to perform any of their obligations or covenants, whether
under the Promissory Note, Guarantee, or this Agreement, (ii) any
representation or warranty made by Borrower and/or Guarantors to Lenders,
whether under the Promissory Note, Guarantee, or this Agreement, being false,
(iii) the occurrence of any other default under the Promissory Note or
Guarantee, or (iv) the occurrence of any event which, with the giving of notice
or passage of time or both, would constitute a default under the Promissory
Note, then, in any such case, the Holder may, with ten (10) business days
notice, take such actions as he deems advisable with respect to the Machine,
including, without limitation selling the Machine at public or private sale on
such terms as Holder deems appropriate. 
At any such sale Lenders may be the purchaser.  Holder shall give Borrower and Guarantors at least ten (10) days’
notice of any such sale.  At the request of the
Holder, Borrower will deliver the Machine in accordance with Holder’s
instructions.


 


(c) The receipts and other proceeds from any sale of
the Machine shall be applied as follows: first,
to the satisfaction of all obligations of Borrower and Guarantors to Lenders
under the Promissory Note and this Agreement in such order as the Lenders
determine; and then, any balance
to Borrower and Guarantors.


 


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2. 
Borrower and Guarantors’ Representations, Covenants, and Warranties -
The Borrower and Guarantors hereby make the following representations,
covenants, and warranties for the benefit of the Lenders:


 


(a) Quality Products, Inc., is duly
incorporated and validly existing under the laws of Delaware.  QPI Multipress, Inc. and Columbus Jack
Corporation are duly incorporated and validly existing under the laws of Ohio.  Each of these corporations is duly qualified
to conduct business in the State of Ohio; and each has the corporate power and
authority to own its property and assets and to carry on its business as it is
now being conducted;


 


(b) Each of the Borrower and
Guarantors has the corporate power and authority to execute, deliver and carry
out the terms and provisions of this Agreement, the Promissory Note, and
Guarantee and any other agreements and documents executed under or in
connection with this Agreement, and each has taken all necessary corporate
action to authorize the execution, delivery and performance of this Agreement;
this Agreement, the Promissory Note and the Guarantee constitute legally
binding obligations of Borrower and Guarantors and are enforceable against
Borrower and Guarantors in accordance with their respective terms;


 


(c) There shall be no claims,
security interests, options, rights, or other privileges outstanding with
respect to the Machine.  Borrower and
Guarantors warrant and covenant as follows:


 


(a)
Borrower or Guarantors shall be the sole and exclusive owner of the Machine and
the Machine is and shall remain free from any and all liens, security
interests, encumbrances, claims, and interests superior to Lenders’ security
interest, and no security agreement, financing statement, equivalent security,
or lien instrument or continuation statement 


covering
the Machine is on file or of record in any public office except the April 16,
2003 Security Agreement covering all of the assets of Borrower and Guarantors,
which Agreement by its terms is subordinate to this Purchase Money Security
Agreement;


 


(b)
Except for the April 16, 2003 Security Agreement granting security interests in
favor of certain lenders, Borrower and Guarantors shall not create, permit or
suffer to exist, and shall take such action as is necessary to remove, any
claim to or interest in or lien or encumbrance upon the Machine and shall
defend the right, title, and interest of Lenders in and to the Machine against
all claims and demands of all persons and entities at any time claiming the
same or any interest therein;


 


3. 
Covenants of Borrower and Guarantors to Act - The
Borrower and Guarantors will take or cause to be taken such action and execute
and deliver or cause to be executed and delivered such other documents as the
Lenders may request:


 


(a) In connection with this Agreement and the Machine,
and


 


(b) To perfect and to maintain the
perfection of Lenders’ security interest in the Machine, including, without
limitation, executing and filing financing and other statements under the
Uniform Commercial Code in effect in Ohio; and Borrower and Guarantors hereby
authorize


 


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Lenders to sign and file any such
statement on their behalf or file any such statement without their signature.


 


4. 
Negative Covenants of Borrower and Guarantors - The
Borrower and Guarantors will not without prior written consent of the Lenders,
sell, pledge, transfer, assign, or grant a security interest in the Machine.


 


5. 
Expenses - Borrower and Guarantors shall pay:


 


(a) Reasonable expenses (including,
without limitation, legal fees) incurred by Lenders in connection with
negotiating and preparing this Agreement, the Promissory Note, and Guarantee
and in connection with the transactions contemplated by these Agreements;


 


(b) Reasonable expenses (including,
without limitation, legal fees, court costs, the cost of appellate proceedings)
incurred by Lenders in connection with (i) enforcing, preserving, and defending
any rights and any security interest under this Agreement, (ii) protecting the
Machine and collecting on the sale of the Machine, and (iii) any proceeding
relating to Lenders’ security interest in the Machine.


 


Borrower and Guarantors shall be jointly and severally liable to pay
Lenders interest at the rate of 12% per
annum simple interest on any amount that Borrower and Guarantors owe
to Lenders under this Section: (i) from the date Lenders expend the amount in
any case where the Lenders have requested Borrower and Guarantors pay the same
and Borrower and Guarantors failed to do so, or (ii) from the date Lenders
request reimbursement in any case where Lenders have not requested Borrower and
Guarantors to pay the same.


 


6. 
Governing Law - This Agreement shall be governed by
and construed in accordance with the law of the State of Ohio.


 


7.  Dispute Resolution - The
Parties agree to submit any disputes involving money or damages greater than
$10,000 relating to this Agreement and/or transactions, duties, or obligations
to be performed under this Agreement, to mediation with a mediator approved by
the Parties to the dispute.  If the
Parties resolve their disputes through mediation, the Parties shall share the
mediator’s fees evenly but pay their own attorneys’ fees and other expenses
related to mediation.  If mediation
fails to resolve all disputes within thirty (30) days after the Parties submit
the dispute to a mediator, then either Party may file a court action or request
arbitration.  The Parties agree that
mediation is a pre-condition to filing an action of any kind.  The prevailing Party in any action or
arbitration relating to transactions contemplated by this Agreement shall be
entitled to costs and expenses including reasonable attorneys fees and the
attorney’s fees and expenses incurred in connection with mediation that failed
to resolve the dispute.  Claims of
$10,000 or less may be submitted to mediation or asserted in any other legal
manner including filing a court action.


 


8. 
Waiver - No failure to exercise and no delay on the
part of Lenders in exercising any right, power or privilege under this
Agreement or granted to them by law will operate as a waiver thereof; and any
single or partial exercise of any right, power, or privilege shall not preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege.  Lenders may waive any
right or other matter only by an instrument in writing signed by the Lenders.


 


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9. 
Rights and Remedies - The rights and remedies provided
in this Agreement are cumulative and not exclusive of any rights or remedies
provided by law or by any other agreement. 
Lenders will not be required to resort to or pursue any of their rights
or remedies under or with respect to any other agreement or with respect to any
other Machine, guarantee or other security before pursuing any of its rights or
remedies under this Agreement.  Lenders
may pursue their rights and remedies in such order as they determine.


 


10.  Notices - Notices under
this Agreement shall be sufficient only if sent (a) by overnight courier, or
(b) by facsimile or other electronic means and by U. S. Mail, or (c) personally
delivered to the other Party.  Notices
shall be addressed as follows:


 


	
  To Borrower and Guarantors:

  	
  To Lenders:

  
	
   

  	
   

  
	
  Quality Products, Inc.
2222 South Third Street

  Columbus, Ohio 43207
Tele: (614) 228-0185

  Fax: (614) 228-8340

  E-mail: tkensler@multipress.com

  	
  Jason I. Drexler

  N/A

  
	
   

  	
   

  
	
  With a copy to:

  C. Timothy Smoot, Attorney

  118 Via Buena Ventura

  Redondo Beach, CA 90277-5805

  Tele: (310) 791-1093

  Fax: (310) 791-8723

  E-mail: smoot@earthlink.net

  	
   

  



 


Notice shall be deemed given on receipt.


 


11. 
Lender’s Representative - Jason Drexler is the Holder
of the Promissory Note on Lenders’ behalf. 
Lenders agree to act through Jason Drexler as their agent for purposes
of this Agreement.  Borrower shall
consider Jason Drexler as the duly appointed agent for Lenders with the sole
right to act as the Holder of the Note unless and until he is replaced by a
writing signed by all Lenders.


 


10. 
Amendment - This Agreement may not be amended or
terminated except by an instrument in writing signed by the Borrower and
Guarantors and the Holder.


 


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IN WITNESS WHEREOF,
the Lenders and the Borrower and Guarantors execute this Agreement as of the
day and year first above written.


 


BORROWER


 


 


	Date: November 17, 2003
	
  QUALITY PRODUCTS, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/Tac D. Kensler

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Chief Financial Officer

  	
   

  	
   

  
	
   

  	
  Name and Title

  	
   

  	
   

  
							



 


GUARANTORS


 


 


	Date: November 17, 2003
	QPI MULTIPRESS, INC.
	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/Tac D. Kensler

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Chief Financial Officer

  	
   

  	
   

  
	
   

  	
  Name and Title

  	
   

  	
   

  
							



 


	Date: November 17, 2003
	COLUMBUS JACK CORPORATION
	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/Tac D. Kensler

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Chief Financial Officer

  	
   

  	
   

  
	
   

  	
  Name and Title

  	
   

  	
   

  
							



 


LENDERS


 


	Date: November 17, 2003
	 
	/s/Richard A. Drexler
	 
	 

	 
	Richard A. Drexler, TTEE Richard A. Drexler Trust, U/A DTD 9/14/90
	 

	 
	 
	 

	Date: November 17, 2003
	 
	/s/Dan L. Drexler
	 
	 

	 
	Dan L. Drexler
	 

	 
	 
	 

	Date: November 17, 2003
	 
	/s/Dale S. Drexler
	 
	 

	 
	Dale S. Drexler, TTEE
	 

	 
	Dale S. Drexler Living Trust, U/A/D March 15, 1999
	 

	 
	 
	 

	Date: November 17, 2003
	 
	/s/Jason I. Drexler
	 
	 

	 
	Jason I. Drexler
	 

								



 


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