Should go in the templates folder.
if you are running the current version of the source, you should be able to pile that under the sub EVENT_SPAWN now after Congdar's fix.
	Code:
	sub EVENT_SPAWN 
	{	
	
	quest::addloot(1025,1);
	quest::addloot(2801,1);
	quest::emote(" arms itself."); 
	quest::doanim(9);
	}