Document:

f8k061507ex10iii_somerset.htm

    THIS
      NOTE AND THE SHARES OF COMMON STOCK AS ADDITIONAL CONSIDERATION AND ACQUIRABLE
      ON CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
      AS AMENDED, AND MAY NOT BE SOLD, OFFERED FOR SALE, HYPOTHECATED OR OTHERWISE
      TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL, WHICH
      COUNSEL AND OPINION SHALL BE SATISFACTORY TO THE CORPORATION, THAT SUCH
      REGISTRATION IS NOT REQUIRED.

    

    CONVERTIBLE
      PROMISSORY NOTE

    

    

    
      	
              $50,000.00

            	
                         BEDMINSTER,
                NJ

            
	 	
                         JUNE
                15, 2007

            

    

    

    

    FOR
      VALUE RECEIVED, the undersigned,
      SOMERSET INTERNATIONAL GROUP, INC., a Delaware corporation (the "Corporation"),
      agrees and promises to pay to Sophia Meneve (the
      "Holder") at 90 Washington Valley Road, Bedminster, New Jersey 07921, or at
      such
      other place or places as the Holder may designate in writing, the principal
      amount of FIFTY THOUSAND ($50,000) DOLLARS, with interest as provided, in legal
      tender of the United States of America, in immediately available funds, as
      follows:

    

    
      	
              (a)

            	
              The
                unpaid principal amount from time to time outstanding shall bear
                interest
                from this date until paid at a rate equal to 12.00% per
                year.  Interest shall be computed for the actual number of days
                elapsed on the basis of a year of 360
                days.

            

    

    

    
      	
              (b)

            	
              The
                “Maturity Date” shall be the sixtieth (60th) day from the date that the
                above date.

            	
              The
                Corporation shall nevertheless be obligated to pay the holder a minimum
                of
                180 days of interest on the principal being
                repaid.

            

    

    

    
      	
              (c)

            	
              The
                entire principal amount of this Note, together with all accrued interest,
                shall be due and payable on the first business day following the
                Maturity
                Date.

            

    

    

    
      	
              (d)

            	
              The
                Corporation may at its option prepay this Note, in whole or in part,
                prior
                to the Maturity Date.  Upon such prepayment, the Corporation
                shall nevertheless be obligated to pay the holder a minimum of 180
                days of
                interest on the principal being
                prepaid.

            

    

    

    
      	
              (e)

            	
              As
                additional consideration, the Corporation shall issue to he Holder
                fifty
                thousand (50,000) shares of the Corporation’s Common Stock, $.001 par
                value per share, and a Warrant to purchase an additional 50,000 shares
                of
                the Corporation’s Common Stock at a strike price of $.12 per
                share.

            

    

    

    1.           Place
      and Manner of Payment.  All sums due under this Note are payable
      not later than 12:30p.m. Eastern time, in legal tender of the United States
      of
      America, in immediately available funds, without offset or
      setoff.  Any remittances by check shall be made one business day prior
      to the time such payment is due subject to the condition that such check may
      be
      handled for collection in accordance with the practice of the collecting bank
      or
      banks, and any receipt shall be void unless the amount due is actually received
      by the Holder.

    

    2.           Events
      of Default; Consequences.  In the event of the occurrence of an
      Event of Default (as defined) the Holder may declare the entire unpaid principal
      balance of this Note, together with interest accrued, immediately due and
      payable at the place of payment, without presentment, protest, notice or demand,
      all of which are expressly waived.  The term "Event of Default" shall
      mean:

     

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    
 

    (a)           the
      failure to pay any principal or interest due under this Note or under the other
      Convertible Notes within ten days after the day on which any such payment is
      due;

    

    (b)           the
      Corporation shall make an assignment for the benefit of creditors or admit
      in
      writing its inability to pay its debts generally as they become due or fail
      to
      generally pay its debts as they become due; an order, judgment or decree shall
      be entered for relief in respect of or adjudicating the Corporation or any
      of
      its subsidiaries bankrupt or insolvent; the Corporation or any of its
      subsidiaries shall petition or apply to any tribunal for the appointment of,
      or
      taking of possession by, a trustee, receiver, custodian, or liquidator or other
      similar official of the Corporation or any subsidiary or of any substantial
      part
      of any of their respective assets; the Corporation or any of its subsidiaries
      shall commence any proceeding relating to the Corporation or any subsidiary
      under any bankruptcy, reorganization, arrangement, insolvency, readjustment
      of
      debt, dissolution or liquidation law of any jurisdiction, or any such petition
      or application is filed or any such proceeding is commenced against the
      Corporation or any of its subsidiaries and such petition, application or
      proceeding is not dismissed within 60 days;

    

    (c)           Any
      representation or warranty made by the Corporation herein is breached or is
      false or misleading in any material respect, or any schedule, certificate,
      financial statement, report, notice, or other writing furnished by the
      Corporation to the holder is false or misleading in any material respect on
      the
      date as of which the facts therein set forth are stated or
      certified.

    

    (d)           In
      addition to any rights the Holder may have hereunder and/or pursuant to
      applicable law, if there is any Event of Default, the rate of interest on all
      unpaid principal shall be automatically increased to 15% per annum, retroactive
      to the issue date of this Note, and there will be an additional 50,000 warrants
      due to the Holder under the same terms and conditions as the Common Stock
      Warrant Agreement entered into with the Holder at this same date.

    

    3.           No
      Setoff, Etc.  The obligations of the Corporation to pay the
      principal balance and interest due to the Holder shall be absolute and
      unconditional and the Corporation shall make such payment without abatement,
      diminution or deduction regardless of any cause or circumstances whatsoever
      including, without limitation, any defense, setoff, recoupment, or counterclaim
      which the Corporation may have or assert against the Holder or any other
      person.

    

    4.           Waiver
      of Presentment, Etc.  The Corporation waives presentment, demand,
      notice of dishonor, protest and notice of nonpayment and protest.

    

    5.           Costs
      of Collection.  The Corporation shall pay all costs and expenses
      of collection incurred by the Holder, including reasonable attorneys'
      fees.

    

    6.           Conversion.  The
      Holder may, at any time prior to the Maturity Date, convert the principal amount
      of this Note plus any accrued interest, or any portion thereof, into fully
      paid
      and nonassessable shares of the Common Stock, $.001 par value, of the
      Corporation (the "Common Stock"), on the basis of one share of such stock for
      each $0.20 (the "Conversion Price") in unpaid principal and/or
      interest.  Such conversion shall be effected by the surrender of this
      Note at the principal office of the Corporation (or such other office or agency
      of the Corporation in the continental United States as the Corporation may
      designate by notice in writing to the Holder) at any time during usual business
      hours, together with notice in writing that the Holder wishes to convert a
      portion or all of this Note, which notice shall also state the name(s) (with
      addresses) and denominations in which the certificate(s) for Common Stock shall
      be issued and shall include instructions for delivery
      thereof.  

     

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

     

     

    Such
      conversion shall be deemed to have been effected as of the close of business
      on
      the date on which this Note shall have been surrendered and such notice shall
      have been received, and at such time (the "Voluntary Conversion Date") the
      rights of the Holder with respect to the principal amount of the Note converted
      shall cease and the person(s) in whose name(s) any certificate(s) for Common
      Stock are to be issued upon such conversion shall be deemed to have become
      the
      holder or holders of record of the shares of Common Stock represented by such
      certificate(s).  As soon as practicable after the Voluntary Conversion
      Date, the Corporation shall deliver to, or as directed by, the Holder,
      certificates representing the number of shares of Common Stock issuable by
      reason of such conversion registered in such name or names and such denomination
      or denominations as the Holder shall have specified, together with cash as
      provided in Section 11 in respect of any fraction of a share of such stock
      otherwise issuable upon such conversion.  In each case of conversion
      of this Note in part only, the Corporation shall receive and hold this Note
      as a
      fiduciary agent of the Holder, shall endorse on this Note the date and amount
      of
      this Note so converted, and such amount shall be deemed no longer
      outstanding.  Upon such endorsement, the Corporation shall promptly
      return this Note to the Holder.

    

    7.           Reservation
      of Common Stock

    

    (a)           The
      Corporation will at all times from and after this date reserve and keep
      available out of its authorized but unissued shares of Common Stock or its
      treasury shares, or otherwise, solely for the purpose of issuance upon the
      conversion of this Note, such number of shares of Common Stock as shall then
      be
      issuable upon the conversion of this Note.  The Corporation covenants
      that all shares of Common Stock which shall be so issuable shall, when issued,
      be duly and validly issued, fully paid and nonassessable and free from all
      taxes, liens and charges.

    

    (b)           The
      Corporation will not take any action which would result in any adjustment of
      the
      number of shares of Common Stock acquirable upon conversion of this Note if
      the
      total number of shares issuable after such action upon conversion of this Note,
      together with the total number of shares of Common Stock then outstanding,
      would
      exceed the total number of shares of Common Stock then authorized under the
      Corporation's Certificate of Incorporation which are not reserved or required
      to
      be reserved for any purpose other than the purpose of issue upon conversion
      of
      this Note.

    

    (c)           The
      issuance of certificates for shares of Common Stock upon conversion of this
      Note
      shall be made without charge to the Holder for any issuance tax or other cost
      incurred by the Corporation in connection with such conversion and the related
      issuance of shares of Common Stock.

    

    (d)           If
      any shares of Common Stock required to be reserved for purposes of conversion
      of
      this Note require, before such shares may be issued upon conversion,
      registration with or approval of any governmental authority under any federal
      or
      state law (other than any registration under the Securities Act of 1933, as
      then
      in effect, or any similar federal statute then in force, or any state securities
      law, required by reason of any transfer involved in such conversion) or listing
      on any domestic securities exchange, the Corporation will, at its expense and
      as
      expeditiously as possible, use its best efforts to cause such shares to be
      duly
      registered or approved for listing or listed on such domestic securities
      exchange, as the case may be.

    

    (e)           The
      Purchaser is entitled to piggyback registration rights associated with the
      Shares underlying this Agreement.

     

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    
 

    8.   Subdivisions
      and
      Combinations.

    

    (a)           In
      the event the Corporation shall at any time subdivide by any stock split its
      outstanding Common Stock into a greater number of shares of such stock, the
      Conversion Price shall be proportionately decreased.  Conversely, in
      the event the outstanding shares of one or more classes of Common Stock shall
      at
      any time be combined into a smaller number of shares by a reverse stock split,
      the Conversion Price shall be proportionately
      increased.    In the case of any subdivision or combination
      described in this Section 9, the adjustment to be made pursuant hereto shall
      be
      made as of the close of business on the date immediately prior to the date
      upon
      which such corporate action becomes effective.

    

    (b)           No
      Adjustment for Small Amounts.  Notwithstanding any provision of
      subsections (a) of this Section 9 which may be to the contrary, the Corporation
      shall not be required to give effect to any adjustment to the Conversion Price
      if the amount of such adjustment would be less than $.01, but any such
      adjustment shall be carried forward and adjustment with respect thereto shall
      be
      made at the time of and together with any subsequent adjustment which, together
      with such amount and any other amount or amounts so carried forward, causes
      a
      cumulative net adjustment of $.03 or more.

    

    (c)           Organic
      Changes, Etc.  If any capital reorganization or reclassification
      of the capital stock of the Corporation (other than a change in par value,
      or
      from par value to no par value, or from no par value to par value, or as a
      result of an issuance of Common Stock by dividend or other distribution or
      by
      reason of a subdivision or combination), or any consolidation or merger of
      the
      Corporation with or into another corporation, or any sale of all or
      su­bstantially all of the Corporation's property and assets to any person,
      firm or corporation (collectively, any "Organic Change") shall be effected
      in
      such a way that holders of Common Stock shall be entitled to receive (either
      directly or upon subsequent liquidation) stock, securities or assets with
      respect to or in exchange for Common Stock, then, as a condition to such Organic
      Change, lawful and adequate provision shall be made whereby the Holders shall
      thereafter have the right to acquire and receive upon the basis and upon the
      terms and conditions specified herein and in lieu of the shares of Common Stock
      of the Corporation immediately theretofore acquirable and receivable (directly
      or upon subsequent conversion, assuming unrestricted convertibility) upon the
      conversion of this Note, such shares of stock, securities or assets as may
      be
      issued or payable with respect to or in exchange for a number of outstanding
      shares of Common Stock equal to the number of shares of Common Stock immediately
      theretofore acquirable and receivable (directly or upon subsequent conversion,
      assuming unrestricted convertibility) upon conversion of this Note had such
      Organic Change not taken place (except that the terms of the parenthetical
      provision at the end of the next sentence shall be applied in determining the
      number of shares of Common Stock immediately theretofore acquirable and
      receivable).  In any such case, appropriate provision shall be made
      with respect to the Holder's rights and interests to the end that the provisions
      contained in this Note (including without limitation provisions for adjustments
      of the number of shares of Common Stock acquirable and receivable upon the
      exercise of the conversion rights granted herein) shall thereafter be applicable
      in relation to any shares of stock, securities or assets thereafter deliverable
      upon the conversion of this Note (including, in the case of any such
      consolidation, merger or sale in which the successor corporation or purchasing
      entity is other than the Corporation, an immediate adjustment in the number
      of
      shares of Common Stock acquirable and receivable upon conversion of this
      Note).  

     

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

     

    In
      the
      event of a merger or consolidation of the Corporation with or into another
      corporation or the sale of all or substantially all of the Corporation's
      property and assets to another corporation as a result of which a number of
      shares of common stock of the surviving or purchasing corporation greater or
      lesser than the number of shares of Common Stock of the Corporation outstanding
      immediately prior to such merger, consolidation or sale are issuable to holders
      of Common Stock, the aggregate number of shares of Common Stock into which
      this
      Note was convertible in effect immediately prior to such merger, consolidation
      or sale shall be adjusted (pursuant to Subsection (a) of this Section 9) as
      though there were a subdivision or combination of the outstanding shares of
      Common Stock.  The provisions of this subsection (c) shall similarly
      apply to successive Organic Changes.

    

    9.           Notice
      of Adjustment.

    

    (a)           Immediately
      upon any adjustment in the number of shares of Common Stock acquirable and
      receivable upon conversion of this Note or any adjustment or readjustment in
      the
      Conversion Price, the Corporation shall send written notice to the Holder,
      which
      notice shall set forth in reasonable detail the method of calculation and the
      facts upon which such calculation is based.  The Corporation shall,
      upon written request at any time of any holder of the Convertible Notes, furnish
      or cause to be furnished to such holder a similar certificate setting forth
      (i)
      such adjustments and readjustments, (ii) the Conversion Price then in effect,
      and (iii) the number of shares of Common Stock and the amount, if any, of other
      property which then would be received upon the conversion of the Convertible
      Notes.  The Corporation may retain a firm of independent public
      accountants of recognized standing which may be the firm regularly retained
      by
      the Corporation to make any computation required under this Section and a
      certificate signed by such firm shall be conclusive evidence of the correctness
      of any computation made under this Section.

     

          
(b)    In
      the
      event that:

    
      
        	
                 

              	
                (i)

              	
                there
                  is any proposed combination or subdivision of the outstandingshares
                  of
                  Common Stock;

              

      

       

    

    
      	
               

            	
              (ii)

            	
              there
                shall be any proposed Organic Change;
                or

            

    

    

    
      	
               

            	
              (iii)

            	
              there
                shall be any proposed voluntary or involuntary dissolution, liquidation
                or
                winding up of the Corporation;

            

    

    

    then
      in
      connection with each such event, the Corporation shall send to the Holder:
      (A)
      at least 60 days' prior written notice of the date on which the books of the
      Corporation shall close or a record shall be taken for determining voting rights
      in respect of such event; and (B) in the case of any proposed Organic Change,
      dissol­ution, liquidation or winding up, at least 60 days' prior written
      notice of the date when the same shall take place (and specifying the date
      on
      which the holders of Common Stock shall be entitled to exchange their Common
      Stock for securities or other property deliverable upon such Organic Change,
      dissolution, liquidation or winding up).

    

    10.           Fractional
      Interests.  The Corporation shall not be required to issue any
      fractional shares of Common Stock on the conversion of this Note.  If
      any fraction of a share of Common Stock except for the provisions of this
      Section II would be issuable upon conversion of this Note, the Corporation
      shall
      purchase such fraction for an amount in cash equal to the current market price
      of such fraction on the last Business Day prior to conversion.

    

    11.           Voting.  Nothing
      contained in this Note shall be construed as conferring upon the Holder the
      right to vote or to consent or to receive notice as a stockholder in respect
      of
      the meetings of stockholders for the election of directors of the Corporation
      or
      any other matter.  Notwithstanding the foregoing, the Corporation
      shall mail by first class to the Holder at the address specified in Section
      14,
      one copy of all materials forwarded to stockholders, said mailing to be made
      promptly after mailing to stockholders.

     

     

    
      
         

      

      
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    12.           Notices.

    

    (a)  Any
      notice pursuant to this Note to be given or made by the Holder to or upon the
      Corporation shall be sufficiently given or made if sent by certified or
      registered mail, postage prepaid, addressed (until another address is sent
      by
      the Corporation to the Holder) as follows:

    

    To
      the
      Corporation:

    

    John
      X.
      Adiletta, President

    Somerset
      International Group,
      Inc.

    90
      Washington Valley Road

    Bedminster,
      NJ 07921

    

    To
      the Holder:

    

    Sophia
      Meneve

    12
      Oratam Road

    Upper
      Saddle River, NJ
      07458

    

    (b)           Any
      notice pursuant to this Note to be given or made by the Corporation to or upon
      the Holder shall be sufficiently given or made if sent by certified or
      registered mail, postage prepaid, addressed (until another address is sent
      by
      the Holder to the Corporation) to the address of the Holder set forth
      above.

    

    13.           Governing
      Law.  This Note shall be governed by and construed in accordance
      with the internal laws of the State of Delaware.

    

    14.           Register
      of Notes.  The Corporation shall keep at its principal office (or
      such other place the Corporation reasonably designates) a register for the
      registration of Convertible Notes.  Each transfer of the Convertible
      Notes, conversion thereof into Common Stock and payment thereunder as well
      as
      the name and address of such holder of Convertible Notes shall be noted on
      the
      register of Convertible Notes.  The register shall be made available
      by the Corporation for review by the Holder or his agent during usual business
      hours of the Corporation.

    

    15.           Modification
      and Waiver.  No modification or waiver of any provision of this
      Note, or any departure by the Corporation therefrom, shall in any event be
      effective unless the same shall be in writing signed by the Holder and then
      such
      modification or waiver shall be effective only in the specific instance for
      the
      specific purpose given.  Notwithstanding the foregoing, the Board of
      Directors of the Corporation, in its sole discretion, shall have the right
      at
      any time or from time to time to decrease the Conversion Price and/or to
      increase the number of shares of Common Stock issuable upon conversion of this
      Note.  Such reduction of the Conversion Price and/or increase in the
      number of shares of Common Stock issuable upon exercise shall be effective
      for a
      period or periods to be determined by such Board.

    

    

    Somerset
      International Group,
      Inc.

     

    
 

    By: 
/s/ 
John
      X.
      Adiletta        

                                                                                    John
      X.
      Adiletta, Presidentf8k061507ex10iv_somerset.htm

    THIS
      WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
      BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT
      AND
      THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
      OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
      REGISTRATION STATEMENT UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
      SATISFACTORY TO SOMERSET INTERNATIONAL GROUP, INC. THAT SUCH REGISTRATION IS
      NOT
      REQUIRED.

    

    

    COMMON
      STOCK PURCHASE WARRANT

    Issue
      Date: June 15,
      2007

     

    Somerset
      International Group, Inc, a corporation organized under the laws of the State
      of
      Delaware (the “Company”), hereby certifies that, for value received, under the
      terms of a Convertible Promissory Note Agreement dated June 7,
      2007,  Sophia Meneve, an individual, with an address at 12 Oratam
      Road, Upper Saddle River, New Jersey, or her assigns (the “Holder”), is
      entitled, subject to the terms set forth below, to purchase from the Company
      at
      any time after the Issue Date up to 5:00 p.m., E.S.T on June 14, 2010 (the
      “Expiration Date”), up to fifty thousand (50,000) fully paid and nonassessable
      shares of the common stock of the Company (the “Common Stock”), $.001 par value
      per share, at a per share purchase price of $.12.  The aforedescribed
      purchase price per share, as adjusted from time to time as herein provided,
      is
      referred to herein as the "Purchase Price."

    As
      used
      herein the following terms, unless the context otherwise requires, have the
      following respective meanings:

     

    (a)           The
      term “Company” shall include Somerset International Group, Inc. and any
      corporation which shall succeed or assume the obligations of Somerset
      International Group, Inc. hereunder.

     

    (b)           The
      term “Common Stock” includes (a) the Company's Common Stock, $.001 par
      value per share, as authorized on the date of the Convertible Note Agreement,
      and (b) any other securities into which or for which any of the securities
      described in (a) may be converted or exchanged pursuant to a plan of
      recapitalization, reorganization, merger, sale of assets or
      otherwise.

     

     (c)           The
      term “Other Securities” refers to any stock (other than Common Stock) and other
      securities of the Company or any other person (corporate or otherwise) which
      the
      holder of the Warrant at any time shall be entitled to receive, or shall have
      received, on the exercise of the Warrant, in lieu of or in addition to Common
      Stock, or which at any time shall be issuable or shall have been issued in
      exchange for or in replacement of Common Stock or Other Securities pursuant
      to
      Section 4 or otherwise.

     

    1.           Exercise
      of Warrant.

     

    1.1.           Number
      of Shares Issuable upon Exercise.  From and after the Issue Date
      through and including the Expiration Date, the Holder hereof shall be entitled
      to receive, upon exercise of this Warrant in whole in accordance with the terms
      of subsection 1.2 or upon exercise of this Warrant in part in accordance
      with subsection 1.3, shares of Common Stock of the Company, subject to
      adjustment pursuant to Section 4.

     

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    1.2.           Full
      Exercise.  This Warrant may be exercised in full by the Holder
      hereof by delivery of an original or facsimile copy of the form of subscription
      attached as Exhibit A hereto (the “Subscription Form") duly executed by
      such Holder and surrender of the original Warrant within seven (7) days of
      exercise, to the Company at its principal office or at the office of its Warrant
      Agent (as provided hereinafter), accompanied by payment, in cash, wire transfer
      or by certified or official bank check payable to the order of the Company,
      in
      the amount obtained by multiplying the number of shares of Common Stock for
      which this Warrant is then exercisable by the Purchase Price then in
      effect.

     

    1.3.           Partial
      Exercise.  This Warrant may be exercised in part (but not for a
      fractional share) by surrender of this Warrant in the manner and at the place
      provided in subsection 1.2 except that the amount payable by the Holder on
      such partial exercise shall be the amount obtained by multiplying (a) the
      number of whole shares of Common Stock designated by the Holder in the
      Subscription Form by (b) the Purchase Price then in effect.  On
      any such partial exercise, the Company, at its expense, will forthwith issue
      and
      deliver to or upon the order of the Holder hereof a new Warrant of like tenor,
      in the name of the Holder hereof or as such Holder (upon payment by such Holder
      of any applicable transfer taxes) may request, the whole number of shares of
      Common Stock for which such Warrant may still be exercised.

     

    1.4.           Company
      Acknowledgment. The Company will, at the time of the exercise of the
      Warrant, upon the request of the Holder hereof acknowledge in writing its
      continuing obligation to afford to such Holder any rights to which such Holder
      shall continue to be entitled after such exercise in accordance with the
      provisions of this Warrant. If the Holder shall fail to make any such request,
      such failure shall not affect the continuing obligation of the Company to afford
      to such Holder any such rights.

     

    1.5.           Trustee
      for Warrant Holders. In the event that a bank or trust company shall have
      been appointed as trustee for the Holder of the Warrants pursuant to
      Subsection 3.2, such bank or trust company shall have all the powers and
      duties of a warrant agent (as hereinafter described) and shall accept, in its
      own name for the account of the Company or such successor person as may be
      entitled thereto, all amounts otherwise payable to the Company or such
      successor, as the case may be, on exercise of this Warrant pursuant to this
      Section 1.

     

                  
      1.6.           Delivery
      of Stock Certificates, etc. on Exercise. The Company agrees that the shares
      of Common Stock purchased upon exercise of this Warrant shall be deemed to
      be
      issued to the Holder hereof as the record owner of such shares as of the close
      of business on the date on which this Warrant shall have been surrendered and
      payment made for such shares as aforesaid. As soon as practicable after the
      exercise of this Warrant in full or in part, and in any event within five (5)
      days thereafter, the Company at its expense (including the payment by it of
      any
      applicable issue taxes) will cause to be issued in the name of and delivered
      to
      the Holder hereof, or as such Holder (upon payment by such Holder of any
      applicable transfer taxes) may direct in compliance with applicable securities
      laws, a certificate or certificates for the number of duly and validly issued,
      fully paid and nonassessable shares of Common Stock (or Other Securities) to
      which such Holder shall be entitled on such exercise, plus, in lieu of any
      fractional share to which such Holder would otherwise be entitled.

     

    2.           Adjustment
      for Reorganization, Consolidation, Merger, etc.

     

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    2.1.           Reorganization,
      Consolidation, Merger, etc.  In case at any time or from time to
      time, the Company shall (a) effect a reorganization, (b) consolidate
      with or merge into any other person or (c) transfer all or substantially
      all of its properties or assets to any other person under any plan or
      arrangement contemplating the dissolution of the Company, then, in each such
      case, as a condition to the consummation of such a transaction, proper and
      adequate provision shall be made by the Company whereby the Holder of this
      Warrant, on the exercise hereof as provided in Section 1, at any time after
      the consummation of such reorganization, consolidation or merger or the
      effective date of such dissolution, as the case may be, shall receive, in lieu
      of the Common Stock (or Other Securities) issuable on such exercise prior to
      such consummation or such effective date, the stock and other securities and
      property (including cash) to which such Holder would have been entitled upon
      such consummation or in connection with such dissolution, as the case may be,
      if
      such Holder had so exercised this Warrant, immediately prior thereto, all
      subject to further adjustment thereafter as provided in
      Section 4.

     

    2.2.           Dissolution.  In
      the event of any dissolution of the Company following the transfer of all or
      substantially all of its properties or assets, the Company, prior to such
      dissolution, shall at its expense deliver or cause to be delivered the stock
      and
      other securities and property (including cash, where applicable) receivable
      by
      the Holder of the Warrants after the effective date of such dissolution pursuant
      to this Section 3 to a bank or trust company (a "Trustee") having its
      principal office in New York, NY, as trustee for the Holder of the
      Warrants.

     

    2.3.           Continuation
      of Terms.  Upon any reorganization, consolidation, merger or
      transfer (and any dissolution following any transfer) referred to in this
      Section 3, this Warrant shall continue in full force and effect and the
      terms hereof shall be applicable to the Other Securities and property receivable
      on the exercise of this Warrant after the consummation of such reorganization,
      consolidation or merger or the effective date of dissolution following any
      such
      transfer, as the case may be, and shall be binding upon the issuer of any Other
      Securities, including, in the case of any such transfer, the person acquiring
      all or substantially all of the properties or assets of the Company, whether
      or
      not such person shall have expressly assumed the terms of this Warrant as
      provided in Section 4.  In the event this Warrant does not
      continue in full force and effect after the consummation of the transaction
      described in this Section 3, then only in such event will the Company's
      securities and property (including cash, where applicable) receivable by the
      Holder of the Warrants be delivered to the Trustee as contemplated by
      Section 3.2.

     

                  2.4                                Extraordinary
      Events Regarding Common Stock.  In the event that the Company
      shall (a) subdivide its outstanding shares of Common Stock, or
      (b) combine its outstanding shares of the Common Stock into a smaller
      number of shares of the Common Stock, then, in each such event, the Purchase
      Price shall, simultaneously with the happening of such event, be adjusted by
      multiplying the then Purchase Price by a fraction, the numerator of which shall
      be the number of shares of Common Stock outstanding immediately prior to such
      event and the denominator of which shall be the number of shares of Common
      Stock
      outstanding immediately after such event, and the product so obtained shall
      thereafter be the Purchase Price then in effect. The Purchase Price, as so
      adjusted, shall be readjusted in the same manner upon the happening of any
      successive event or events described herein in this
      Section 2.4.  The number of shares of Common Stock that the
      Holder of this Warrant shall thereafter, on the exercise hereof as provided
      in
      Section 1, be entitled to receive shall be adjusted to a number determined
      by multiplying the number of shares of Common Stock that would otherwise (but
      for the provisions of this Section 2) be issuable on such exercise by a
      fraction of which (a) the numerator is the Purchase Price that would
      otherwise (but for the provisions of this Section 2) be in effect, and
      (b) the denominator is the Purchase Price in effect on the date of such
      exercise.

     

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

       3.           Certificate
      as to Adjustments.  In each case of any adjustment or readjustment
      in the shares of Common Stock (or Other Securities) issuable on the exercise
      of
      the Warrants, the Company at its expense will promptly cause its Chief Financial
      Officer or other appropriate designee to compute such adjustment or readjustment
      in accordance with the terms of the Warrant and prepare a certificate setting
      forth such adjustment or readjustment and showing in detail the facts upon
      which
      such adjustment or readjustment is based, including a statement of (a) the
      consideration received or receivable by the Company for any additional shares
      of
      Common Stock (or Other Securities) issued or sold or deemed to have been issued
      or sold, (b) the number of shares of Common Stock (or Other Securities)
      outstanding or deemed to be outstanding, and (c) the Purchase Price and the
      number of shares of Common Stock to be received upon exercise of this Warrant,
      in effect immediately prior to such adjustment or readjustment and as adjusted
      or readjusted as provided in this Warrant. The Company will forthwith mail
      a
      copy of each such certificate to the Holder of the Warrant and any Warrant
      Agent
      of the Company.

     

      4.           Reservation
      of Stock, etc. Issuable on Exercise of Warrant; Financial
      Statements.   The Company will at all times reserve and keep
      available, solely for issuance and delivery on the exercise of the Warrants,
      all
      shares of Common Stock (or Other Securities) from time to time issuable on
      the
      exercise of the Warrant.  This Warrant entitles the Holder hereof to
      receive copies of all financial and other information distributed or required
      to
      be distributed to the holders of the Company's Common Stock.

     

     5.           Assignment;
      Exchange of Warrant.  Subject to compliance with applicable
      securities laws, this Warrant, and the rights evidenced hereby, may be
      transferred by any registered holder hereof (a "Transferor"). On the surrender
      for exchange of this Warrant, with the Transferor's endorsement in the form
      of
      Exhibit B attached hereto (the “Transferor Endorsement Form") and together
      with an opinion of counsel reasonably satisfactory to the Company that the
      transfer of this Warrant will be in compliance with applicable securities laws,
      the Company at its expense, twice, only, but with payment by the Transferor
      of
      any applicable transfer taxes, will issue and deliver to or on the order of
      the
      Transferor thereof a new Warrant or Warrants of like tenor, in the name of
      the
      Transferor and/or the transferee(s) specified in such Transferor Endorsement
      Form (each a "Transferee"), calling in the aggregate on the face or faces
      thereof for the number of shares of Common Stock called for on the face or
      faces
      of the Warrant so surrendered by the Transferor.

     

    6.           Replacement
      of Warrant.  On receipt of evidence reasonably satisfactory to the
      Company of the loss, theft, destruction or mutilation of this Warrant and,
      in
      the case of any such loss, theft or destruction of this Warrant, on delivery
      of
      an indemnity agreement or security reasonably satisfactory in form and amount
      to
      the Company or, in the case of any such mutilation, on surrender and
      cancellation of this Warrant, the Company at its expense, twice only, will
      execute and deliver, in lieu thereof, a new Warrant of like tenor.

     

    7.           Maximum
      Exercise.  The Holder shall not be entitled to exercise this
      Warrant on an exercise date, in connection with that number of shares of Common
      Stock which would be in excess of the sum of (i) the number of shares of
      Common Stock beneficially owned by the Holder and its affiliates on an exercise
      date, and (ii) the number of shares of Common Stock issuable upon the
      exercise of this Warrant with respect to which the determination of this
      limitation is being made on an exercise date, which would result in beneficial
      ownership by the Holder and its affiliates of more than 4.99% of the outstanding
      shares of Common Stock on such date.  For the purposes of the
      immediately preceding sentence, beneficial ownership shall be determined in
      accordance with Section 13(d) of the Securities Exchange Act of 1934,
      as amended, and Regulation 13d-3 thereunder.  Subject to the
      foregoing, the Holder shall not be limited to aggregate exercises which would
      result in the issuance of more than 4.99%.  The restriction described
      in this paragraph may be revoked upon and effective after sixty-one (61)
      days prior notice from the Holder to the Company.  The Holder may
      allocate which of the equity of the Company deemed beneficially owned by the
      Purchaser shall be included in the 4.99% amount described above and which shall
      be allocated to the excess above 4.99%.

     

    8.           Transfer
      on the Company's Books.  Until this Warrant is transferred on the
      books of the Company, the Company may treat the registered holder hereof as
      the
      absolute owner hereof for all purposes, notwithstanding any notice to the
      contrary.

     

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

     

    9.           Notices.  All
      notices, demands, requests, consents, approvals, and other communications
      required or permitted hereunder shall be in writing and, unless otherwise
      specified herein, shall be (i) personally served, (ii) deposited in the mail,
      registered or certified, return receipt requested, postage prepaid, (iii)
      delivered by reputable air courier service with charges prepaid, or (iv)
      transmitted by hand delivery, telegram, or facsimile, addressed as set forth
      below or to such other address as such party shall have specified most recently
      by written notice.  Any notice or other communication required or
      permitted to be given hereunder shall be deemed effective (a) upon hand delivery
      or delivery by facsimile, with accurate confirmation generated by the
      transmitting facsimile machine, at the address or number designated below (if
      delivered on a business day during normal business hours where such notice
      is to
      be received), or the first business day following such delivery (if delivered
      other than on a business day during normal business hours where such notice
      is
      to be received) or (b) on the second business day following the date of mailing
      by express courier service, fully prepaid, addressed to such address, or upon
      actual receipt of such mailing, whichever shall first occur.  The
      addresses for such communications shall be: (i) if to the Company to: Somerset
      International Group, Inc., 90 Washington Valley Road, Bedminster, New Jersey
      07921, John X. Adiletta, Director and CFO, facsimile: 908-953-0797, with a
      copy
      by facsimile only to: Anslow & Jaclin, LLP, 195 Route 9 South, Suite 204,
      Manalapan, New Jersey 07726, Attn: Gregg Jaclin, Esq., facsimile: (732)
      409-1212, and (ii) if to the Holder, to the address listed on the first
      paragraph of this Warrant.

     

    10.           Miscellaneous.  This
      Warrant and any term hereof may be changed, waived, discharged or terminated
      only by an instrument in writing signed by the party against which enforcement
      of such change, waiver, discharge or termination is sought. This Warrant shall
      be construed and enforced in accordance with and governed by the laws of New
      Jersey.  Any dispute relating to this Warrant shall be adjudicated in
      Somerset County in the State of New Jersey.  The headings in this
      Warrant are for purposes of reference only, and shall not limit or otherwise
      affect any of the terms hereof.  The invalidity or unenforceability of
      any provision hereof shall in no way affect the validity or enforceability
      of
      any other provision.

     

    IN
      WITNESS WHEREOF, the Company has executed this Warrant as of the date first
      written above.

     

    
      	 	 	
              SOMERSET
                INTERNATIONAL GROUP, INC.

               

               

              By:  
                /s/  John X. Adiletta                                                  

              John
                X. Adiletta

                          
                  President

               

            

    

    

    

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    

    

    

    Exhibit A

    

    FORM
      OF
      SUBSCRIPTION

    (to
      be
      signed only on exercise of Warrant)

    TO:  Somerset
      International Group, Inc.

     

    The
      undersigned, pursuant to the provisions set forth in the attached Warrant hereby
      irrevocably elects to purchase:

    

    ___________
      shares of the Common Stock covered by such Warrant.

     

    The
      undersigned herewith makes payment of the full purchase price for such shares
      at
      the price per share provided for in such Warrant, which is
      $___________.  Such payment takes the form of lawful money of the United
      States.

    

    

    The
      undersigned requests that the certificates for such shares be issued in the
      name
      of, and delivered to _____________________________________________________whose
      address is: 

     

    
      
        

      

      
        

      

    The
      undersigned represents and warrants that all offers and sales by the undersigned
      of the securities issuable upon exercise of the within Warrant shall be made
      pursuant to registration of the Common Stock under the Securities Act of 1933,
      as amended (the "Securities Act"), or pursuant to an exemption from registration
      under the Securities Act.

    

    
      	
              Dated:___________________

            	
               

              
                

                (Signature must conform to name of holder as specified on the face
                of the
                Warrant)

               

               

              
                

                

                (Address)

            

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    Exhibit B

    

    

    FORM
      OF
      TRANSFEROR ENDORSEMENT

    (To
      be
      signed only on transfer of Warrant)

    For
      value received, the undersigned
      hereby sells, assigns, and transfers unto the person(s) named below under the
      heading "Transferees" the right represented by the within Warrant to purchase
      the percentage and number of shares of Common Stock of [company name] to which
      the within Warrant relates specified under the headings "Percentage Transferred"
      and "Number Transferred," respectively, opposite the name(s) of such person(s)
      and appoints each such person Attorney to transfer its respective right on
      the
      books of [company name] with full power of substitution in the
      premises.

     

    

    
      	
              Transferees

            	
              Percentage
                Transferred

            	
              Number
                Transferred

            
	 	 	 
	 	 	 
	 	 	 

    

    

    

    
      	
              Dated:  ______________,
                ___________

               

               

               

              Signed
                in the presence of:

               

               

              
                

                (Name)

               

              ACCEPTED
                AND AGREED:

              [TRANSFEREE]

               

               

               

              
                

                (Name)

               

            	
               

              (Signature
                must conform to name of holder as specified on the face of the
                warrant)

               

               

               

               

               

              
                

                

                (address)

               

               

               

              
                

                

                (address)

            

    

    

    
7

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