Document:

f8ka1063007ex10i_somerset.htm

    STOCK
      PURCHASE AGREEMENT

     

    THIS
      STOCK PURCHASE AGREEMENT (this "Agreement"), which is effective as of
      June 30, 2007, is executed on the day last set forth below, by and among Secure
      System, Inc., a New Jersey corporation (hereinafter "Secure" or
      the "Buyer"), a wholly owned subsidiary of Somerset
      International Group, Inc., a Delaware corporation (hereinafter
"Somerset") and Keith Kesheneff, an individual, and Kathryn
      Kesheneff, an individual, being all of the shareholders of Meadowlands
      (hereinafter collectively "Sellers" and each individually, a
"Seller").

     

    RECITALS:

     

    The
      Sellers are the record and beneficial owners of one hundred percent (100%)
      of
      the issued and outstanding capital stock of Meadowlands Fire, Security &
Electrical Supply Co., Inc., a New Jersey corporation ("MFS"), and Vanwell
      Electronics, Inc., a New Jersey corporation, ("Vanwell"). MFS and Vanwell are
      collectively referred to herein as "Meadowlands". The combined
      outstanding capital stock of MFS and Vanwell owned by the Sellers shall be
      referred to herein as "the Meadowlands Shares".

     

    The
      Buyer
      desires to purchase from the Sellers, and the Sellers desire to sell to the
      Buyer, the Meadowlands Shares on the terms and conditions set forth in this
      Agreement.

     

    In
      consideration of the foregoing and the mutual covenants and agreements of the
      parties hereinafter set forth, and for other good and valuable consideration,
      the receipt and sufficiency of which are hereby acknowledged, the parties agree
      as follows:

     

    1.     Definitions
      and
      Index of Defined Terms

     

    (a)  Capitalized
      Terms. Capitalized terms used in this Agreement and not otherwise defined
      shall, unless expressly stated otherwise, have the meanings specified in this
      Section 1.1. The single shall include the plural and the masculine shall
      include the feminine and neuter, and vice versa.

     

    (b)  Index
      of
      Defined Terms.

    
       

      
        	
                 

              	
                (i)

              	
                "Adjusted
                  EBITDA" means the audited EBITDA (as defined below) adjusted upwards
                  by the cost of any audit required by this Agreement to be conducted
                  by
                  Meadowlands, plus CEO Expenses (as defined below), plus any non-recurring
                  transactional expenses incurred in connection with the sale of
                  the
                  Meadowlands shares pursuant to this
                  Agreement.

              

      

    

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
      
         

        
          	
                   

                	
                  (ii)

                	
                  
                    "Affiliate"
                      means, as applied to any person, any other person directly
                      or indirectly
                      controlling, controlled by, or under common control with, that
                      person. For
                      purposes of this definition, "control" (including with correlative
                      meanings, the terms "controlling", "controlled by", and "under
                      common
                      control with") as applied to any person, means the possession,
                      directly or
                      indirectly, of the power to direct or cause the direction of
                      the
                      management or policies of that person or entity, whether through
                      the
                      ownership of voting securities, by contract, or
                      otherwise.

                  

                

        

      

       

      
        
          
             

            
              	
                       

                    	
                      (iii)

                    	
                      
                        "Assets"
                          means all of the assets of Meadowlands, with the exception
                          of the
                          Excluded Assets (as of the Closing), including, without
                          limitation, the
                          following:

                      

                    

            

          

           

        

      

    

    
      	
              (1)  

            	
              the
                business of Meadowlands as a going concern (the "Business"), the
                goodwill
                pertaining thereto and all of Meadowlands' right, title and interest
                in
                and to the name "Meadowlands Fire, Security, and Electrical Supply
                Co.", "Meadowlands Electronics", "Vanwell Electronics, Inc. ", and
                all other fictitious names, trade names, trademarks, service marks,
                logos,
                and/or other identifying names used by
                Meadowlands;

            

    

     

    
      	
              (2)  

            	
              all
                items of inventory owned by Meadowlands including, without limitation,
                all
                raw materials, work-in-progress and finished products of
                Meadowlands;

            

    

     

    
      	
              (3)  

            	
              all
                vehicles, machinery, equipment, furniture, fixtures, computers and
                other
                office equipment, and supplies of Meadowlands, including containers,
                packaging and shipping material, tools and spare parts and other
                similar
                tangible personal property owned by
                Meadowlands;

            

    

     

    
      	
              (4)  

            	
              
                all
                  Rights (as defined
                  below);

              

            

    

     

    
      
        	
                (5)  

              	
                
                  
                    all
                      books and records of Meadowlands (including corporate and tax
                      records)
                      including all in-house mailing lists, other customer and supplier
                      lists,
                      trade correspondence, production and purchase records, promotional
                      literature, data storage tapes and computer disks, computer
                      software,
                      order forms, accounts payable records (including invoices,
                      correspondence
                      and all related documents), accounts receivable ledgers, all
                      documents
                      relating to uncollected
                      invoices;

                  

                

              

      

       

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

       

    

    
      
        	
                (6)  

              	
                
                  
                    all
                      contracts, agreements (including, without limitation, any confidentiality
                      and non-disclosure agreements between Meadowlands and its employees)
                      and
                      purchase and sale orders for goods and services; all corporate
                      opportunities under discussion and related to the Business,
                      including any
                      documentation related
                      thereto;

                  

                

              

      

       

    

    
      	
              (7)  

            	
              all
                cash, cash equivalent items, deposit accounts, investments, lease
                security, utility and other deposits and trade receivables of Meadowlands
                and all advance payments, prepaid items, rights to offset and credits
                of
                all kinds of Meadowlands;

            

    

     

    
      	
              (8)  

            	
              all
                tangible personal property owned by Meadowlands which is not specifically
                included in, or specifically excluded by, the foregoing subsections
                (1)
                through (7);

            

    

     

    
      	
              (9)  

            	
              all
                real property owned or leased by Meadowlands, together with all
                fixtures attached thereto;

            

    

     

    
      	
              (10)  

            	
              all
                rights under or pursuant to all warranties, representations and guarantees
                made by suppliers in connection with the Assets, all claims, causes
                of
                action, rights of recovery and rights of set-off of any kind against
                any
                person or entity relating to the Assets or the Business;
                and

            

    

     

    
      	
              (11)  

            	
              any
                and all other assets, properties and rights of Meadowlands including
                those
                reflected as such under Assets on the Financial Statements provided
                to
                Buyer, with such additions thereto and deletions therefrom as have
                occurred or shall occur in the ordinary course of business between
                the
                date of the said Financial Statements and the
                Closing.

            

    

     

    
      	
                  (iv)
                 

            	
              "Closing"
                has the meaning set forth in Section 3 of this
                Agreement.

            

    

     

    
      
        	
                    (v)
                   

              	
                "Closing
                  Date" has the meaning set forth in Section 3 of this
                  Agreement.

              

      

       

    

    
      	
              (vi)  

            	
              "Commitments"
                shall mean all agreements, indentures, mortgages, plans, policies,
                arrangements, and other instruments, including all amendments thereto
                (or
                where they are verbal, written summaries of the material terms thereof),
                fixed or contingent, required to be disclosed on Schedule
                5(q).

            

    

     

    
      	
              (vii)  

            	
              "Convertible
                Note" shall mean a promissory note made by Somerset International
                Group, Inc. that is convertible, either wholly or partially, at the
                option
                of the holder thereof, into shares of Somerset common stock at
                a conversion price of $0.40 per share. The Convertible Note shall
                be in
                substantially the same form as Exhibit
                A.

            

    

    

     

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    
      	
              (viii)  

            	
              "Employee
                Benefit Plans" has the meaning set forth in Section 5(y) of this
                Agreement.

            

    

     

    
      	
              (ix)  

            	
              "Environmental
                Claim" shall mean any written demand, claim, governmental notice or
                threat of litigation or the actual institution of any action, suit
                or
                proceeding which asserts that an Environmental Condition constitutes
                a
                violation of any statute, ordinance, regulation, or other governmental
                requirement relating to the emission, discharge, or release of any
                Hazardous Substance into the environment or the generation, treatment,
                storage, transportation, or disposal of any Hazardous Substance,
                prior to
                the Closing Date in each case in contravention of any applicable
                laws or
                regulations.

            

    

     

    
      	
              (x)  

            	
              "Environmental
                Condition" shall mean the presence on any real property during the
                period from the date such real property was first owned, leased or
                used by
                Meadowlands, or any predecessor in interest, to the Closing Date,
                in
                surface water, ground water, drinking water supply, land surface,
                subsurface strata or ambient air of any Hazardous Substance arising
                out of
                or otherwise related to the operations or other activities of the
                Company,
                conducted or undertaken prior to the Closing Date, and in each case
                in
                contravention of any applicable laws or
                regulations.

            

    

     

    
      	
              (xi)  

            	
              "Equipment"
                has the meaning set forth in Section 5(o) of this Agreement.

            

    

     

    
      	
              (xii)  

            	
              "EBITDA"
                shall mean Meadowlands' combined annualized earnings before interest,
                income taxes, depreciation, and amortization for the trailing period
                specified by the paragraph in which this term is
                used;

            

    

     

    
      	
              (xiii)  

            	
              "EBITDA
                Adjustment Note" has the meaning set forth in Section 4(b)(iv)
                of this Agreement.

            

    

     

    
      	
              (xiv)  

            	
              "EBITDA
                Closing Deviation" has the meaning set forth in Section 4(b)(i)
                of this Agreement.

            

    

     

    
      	
              (xv)  

            	
              "Excluded
                Assets" means those assets set forth on Schedule 1
                (a)(xii).

            

    

     

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    
      
        
          	
                  (xvi) 

                	
                  
                    
                      "CEO
                        Expenses" means those expenses associated with the current Chief
                        Executive Officer and his or her spouse including, without
                        limitation,
                        salary and associated taxes, benefits, and
                        perquisites.

                    

                  

                

        

         

      

    

    
      
        	
                (xvii) 

              	
                
                  
                    
                      "Financial
                        Statements" has the meaning set forth in Section 5(j) of this
                        Agreement. 

                    

                  

                

              

      

       

    

    
      
        	
                (xviii) 

              	
                
                  "GAAP"
                    shall mean generally accepted accounting principles as used
                    in the
                    United States and applied on a consistent basis both as to classification
                    of items and
                    amounts.

                

              

      

       

    

    
      	
              (xix)  

            	
              "Hazardous
                Substance" shall mean any substance defined in the manner set forth in
                Section 101(14) of the U.S. Comprehensive Environmental Response,
                Compensation and Liability Act of 1980 ("CERCLA"), as amended, as
                applicable on the Closing Date, and shall include any additional
                substances designated under Section 102(a) thereof prior to the Closing
                Date.

            

    

     

    
      	
              (xx)  

            	
              "Knowledge
                of the Sellers" in a representation or warranty of the Sellers means
                the actual knowledge of the Sellers with respect to which such
                representation or warranty is made, but does not include, except
                as
                specifically provided hereafter, constructive knowledge. Notwithstanding
                the foregoing, such phrase requires that Seller: (A) undertake a
                reasonable examination of their and Meadowlands' files and the assets
                relating to the Business to ascertain whether such files or asset
                examination reveal facts relevant to the representation or warranty
                in
                question, and (B) make a reasonable inquiry of the other employees
                or
                agents of Meadowlands who they reasonably believe may have knowledge
                relating to the facts relevant to such representation or
                warranty.

            

    

     

    
      
        	
                (xxi)  

              	
                "Leases"
                  has the meaning set forth in Section 5(n)(ii) of this
                  Agreement.

              

      

       

      
        	
                (xxii)  

              	
                "Lien"
                  means any security interest, mortgage, pledge, lien, claim,
                  encumbrance or other third party
                  claim.

              

      

       

      
        	
                (xiii)  

              	
                "NCA
                  Note"  the meaning set forth in Section 4(b)(iii) of this
                  Agreement.

              

      

       

      
        	
                (xiv)  

              	
                "Net
                  Current Assets" shall mean current assets minus total liabilities as
                  shown on Meadowlands' balance sheet, provided however, that no
                  more than
                  thirty (30%) percent of Meadowlands' current assets shall be comprised
                  of
                  inventory, and the cost of any audit conducted to comply with SEC
                  requirements shall not be included in Meadowlands' total
                  liabilities.

              

      

    

     

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    
       

      
        	
                (xxv)  

              	
                
                  "Person"
                    shall mean a corporation, partnership, limited liability company,
                    joint
                    venture, trust, unincorporated organization, government or a
                    department or
                    agency thereof, or any other entity, and, where the context permits,
                    an
                    individual.

                

              

      

       

    

    
      	
              (xxvi)  

            	
              
                "Person"
                  shall mean a corporation, partnership, limited liability company,
                  joint venture, trust, unincorporated organization, government or
                  a
                  department or agency thereof, or any other entity, and, where the
                  context
                  permits, an individual."Premises" has the meaning set forth in
                  Section 5(n)(ii) of this
                  Agreement.

              

            

    

     

    
      	
              (xxvii)  

            	
              
                "Purchase
                  Price" has the meaning set forth in Section 4(a) of
                  thisAgreement.

              

            

    

     

    
      
        	
                (xxviii)  

              	
                "Rights"
                  means all of Meadowlands' right, title and interest in and
                  to the
                  United States and foreign rights with respect to any copyrights,
                  licenses,
                  patents, trademarks, trademark rights, trade names, service marks,
                  service
                  right marks, trade secrets, shop rights, know-how, technical information
                  (including, without limitation, all software owned or utilized
                  by
                  Meadowlands in connection with the Business), techniques, discoveries,
                  designs, proprietary rights and non-public information and registrations,
                  reissues and extensions thereof and applications and licenses therefor,
                  owned or used, or proposed to be used in the
                  Business.

              

      

      
         

        
          	
                  (xxviv)  

                	
                  "SEC"
                    means the United States Securities and Exchange
                    Commission.

                

        

         

      

    

    
      	
              (xxv)  

            	
              
                "Valid
                  Accounts Receivable" shall mean the combined gross accounts receivable
                  shown on the June 30, 2007 balance sheets of MFS and Vanwell, minus
                  the
                  reserve for bad debts shown on the same balance
                  sheets.

              

            

    

     

    2.   Sale
      of
      Stock.

     

    (a)  Purchase
      and Sale of Stock. In exchange for the consideration specified herein, and
      subject to the terms and conditions of this Agreement, the Buyer agrees to
      purchase, acquire and assume from the Sellers, and the Sellers agree to sell,
      assign, transfer, convey and deliver to the Buyer, all right, title and interest
      in and to the Meadowlands Shares.

     

    (b)  Delivery
      of Possession and Instruments of Transfer. At the Closing, the Sellers shall
      each deliver to the Buyer possession of all certificates representing the
      Meadowlands Shares, duly endorsed in blank or accompanied by duly executed
      stock
      powers with signatures notarized, and such other instruments of transfer
      reasonably requested by and satisfactory to the Buyer and its counsel for
      consummation of the transactions contemplated under this Agreement and as are
      necessary to vest in the Buyer, all right, title and interest in and
to
      the
      Meadowlands Shares, free and clear of any lien, encumbrance, security agreement,
      equity, option, claim, charge or restriction, other than restrictions imposed
      by
      federal or state securities laws.

     

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    (c)
      Satisfaction of Certain Liabilities. Notwithstanding anything to the
      contrary contained herein, Sellers acknowledge that although Buyer is acquiring
      all of the outstanding capital stock of Meadowlands, Sellers have agreed that
      upon the Closing Date Meadowlands shall have no liabilities other than the
      following (the "Assumed Liabilities"):

     

    
      	
              (i)  

            	
              Except
                for the Excluded Liabilities (as defined below), all liabilities
                set forth
                on the Financial Statements or arising thereafter in the ordinary
                course
                of business; and

            

    

     

    
      	
              (ii)  

            	
              "Excluded
                Liabilities" shall mean any outstanding loans or indebtedness, other
                than
                trade payables incurred in the ordinary course of business, due to
                Sellers
                or to any third parties.

            

    

     

    3.  Closing.
      The closing (the "Closing") of the purchase and sale provided
      for
      in this Agreement shall take place at the offices of Picinich & McClure, 139
      Harristown Road, Suite 101, Glen Rock, New Jersey, or such other place as the
      parties may agree, on July 6, 2007 (the "Closing Date"). The Closing shall
      be
      effective as of June 30, 2007.

     

    4.  Purchase
      Price and Payment/Adjustments.

     

    (a)  
Purchase
      Price

     

    The
      purchase price is $1,600,000, subject to adjustment pursuant to Section 4(b)
      below ("Purchase Price"). The Purchase Price will be paid as indicated
      below:

     

    
      	
              (i)  

            	
              A
                total of $1,250,000 payable by bank checks or wire transfer of immediately
                available funds at Closing to the Sellers;
                and

            

    

     

    
      	
              (ii)  

            	
              A
                total of $250,000, as adjusted pursuant to paragraph (b) of this
                Section,
                memorialized by the Convertible Note made by Somerset in favor of
                the
                Sellers. Somerset's obligations under the Convertible Note shall
                be
                unconditionally guaranteed by Buyer and said guaranty shall be secured
                by
                a pledge of fifty (50%) percent of the issued and outstanding equity
                in
                Vanwell all as more specifically set forth in the Corporate Guaranty
                and
                Stock Pledge Agreement to be executed by Buyer in favor of Sellers
                attached hereto as Exhibit B.

            

    

     

    
      	
              (iii) 
                

            	
               666,666
                unregistered shares of Somerset common stock representing $100,000
                of
                consideration, valued at the average "bid" and "ask" prices per share
                for
                registered and free-trading Somerset common stock during the five
                (5)
                business days preceding the
                Closing.

            

    

     

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    (b)    Purchase
      Price Adjustments.

     

    
      	
              (i)  

            	
              If
                Meadowlands' audited Adjusted EBITDA, which shall be twelve times
                the
                average monthly EBITDA for the eighteen (18) month trailing period
                as of
                the close of business on the Closing Date, is more or less than $726,000
                (the "EBITDA Closing Deviation"), there shall be an adjustment to
                the
                Purchase Price made by adding or subtracting (as appropriate) $2.00
                for
                each $1.00 of EBITDA Closing
                Deviation.

            

    

     

    
      	
              (ii)  

            	
              If
                Meadowlands' Net Current Assets as disclosed on the audited June
                30, 2007
                balance sheets to be received pursuant to Section 4(c)(i) are more
                or less
                than $710,000 (the "Net Current Asset Deviation"), there shall be
                an
                adjustment to the Purchase Price which shall be made by adding or
                subtracting (as appropriate) one dollar for every dollar of Net Current
                Asset Deviation.

            

    

     

    
      	
              (iii)  

            	
              Any
                Purchase Price credit for a positive Net Current Asset Deviation
                shall be
                evidenced by a promissory note made by Somerset in favor of the Sellers,
                payable in twelve (12) equal monthly installments, without interest,
                commencing on the first day of the thirteenth month following the
                closing
                (the "NCA Note"). The form of the NCA Note is attached hereto and
                made a
                part hereof as Exhibit C. Somerset's obligations under the NCA Note
                shall
                be included in the Corporate Guaranty and Stock Pledge Agreement.
                A
                Purchase Price adjustment for a negative Net Current Asset Deviation
                shall
                be treated as a reduction in the then outstanding principal balance
                of the
                Convertible Note. The credit shall be applied in the inverse order
                of
                principal payments.

            

    

     

    
      	
              (iv)  

            	
              Any
                Purchase Price credit for a positive EBITDA Closing Deviation shall
                be
                paid by Buyer to the Sellers in a single lump sum payment no later
                than
                270 days after the Closing. Such obligation shall be evidenced by
                a
                promissory note made by Somerset in favor of the Sellers (the "EBITDA
                Adjustment Note"). The form of EBITDA Adjustment Note is attached
                hereto
                and made a part hereof as Exhibit D. Somerset's obligations under
                the
                EBITDA Adjustment Note shall be included in the Corporate Guaranty
                and
                Stock Pledge Agreement. Any Purchase Price adjustment for a negative
                EBITDA Closing Deviation shall be treated as a reduction in the then
                outstanding principal balance of the Convertible Note. The credit
                shall be
                applied in the inverse order of principal
                payments.

            

    

     

    (c)           Purchase
      Price Reconciliation.

     

    
      
        	
                (i)  

              	
                
                  Within
                    sixty (60) days after the Closing, the Buyer shall provide to
                    Sellers a
                    written reconciliation showing the Net Current Asset Deviation
                    and EBIDTA
                    Closing Deviation, which shall disclose the manner of calculation
                    of
                    same.

                

              

      

       

    

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    
       

      
        
          	
                  (ii)  

                	
                  
                    
                      Unless
                        the Sellers shall serve the Buyer with an objection as to
                        the calculation
                        of either the Net Current Asset Deviation and/or EBIDTA Closing
                        Deviation
                        within ten (10) business days after receipt of the reconciliation,
                        then
                        the Purchase Price adjustments shall be considered effective
                        and binding
                        on the
                        parties.

                    

                  

                

        

         

      

    

    
      	
              (iii)  

            	
              In
                the event that Sellers serve Buyer with a written objection per
                subparagraph (ii) above, the Sellers, Buyer and their respective
                accountants shall attempt in good faith to resolve such matters within
                30
                days after receipt of the same by Buyer, and if unable to do so,
                within
                ten (10) business days thereafter Buyer and the Sellers shall instruct
                their respective accountants to select a third certified public accountant
                (the "Independent Accounting Firm"). All three accountants shall
                then meet
                to resolve the remaining dispute concerning the Purchase Price adjustment
                not more than 45 days after service of the written dispute upon the
                Buyer
                per subparagraph (ii) above. The agreement of two of the three accountants
                shall be final and binding on the parties. The fees and expenses
                of the
                Independent Accounting Firm associated with resolving disputes concerning
                the Purchase Price adjustments shall be borne by the party (the Sellers,
                on the one hand, or the buyer, on the other hand) against which the
                Independent Accounting Firm shall rule, or allocated as deemed appropriate
                by such Independent Accounting
                Firm.

            

    

     

    5.     Representations
      and Warranties of the Sellers. As an inducement for Buyer to enter
      into this Agreement and perform its obligations hereunder, each Seller hereby
      represents and warrants, jointly and severally, to the Buyer as set forth below.
      Each of such representations and warranties are, to the Sellers' Knowledge,
      correct and complete as of the date hereof and shall be correct and complete
      as
      of the Closing, with the same effect as if said representations and warranties
      had been made at and as of the Closing Date. Notwithstanding anything set forth
      elsewhere in this Agreement, the following representations and warranties are
      individually and collectively made to the Sellers' Knowledge:

     

    (a)           Organization,
      Good Standing, Power, Etc. Each of MFS and Vanwell is a corporation duly
      organized, validly existing, and in good standing under the laws of the State
      of
      New Jersey. Each of MFS and Vanwell is authorized or licensed to do business
      as
      a foreign corporation and is in good standing in each jurisdiction in which
      the
      conduct of the Business requires such qualification, except where the failure
      to
      so qualify would not have a material adverse effect on the
      Business.

     

    (b)           Capital
      Stock. MFS has authorized capital stock consisting solely of 1000 shares of
      common stock, no par value, of which 100 are issued and outstanding, and all
      of
      which are duly authorized, validly issued, fully paid, non-assessable, free
      of
      preemptive rights. Vanwell has authorized capital stock consisting solely of
      2500 shares of common stock, no par value, of which 190 are issued and
      outstanding, and all of which are duly authorized, validly issued, fully paid,
      non-assessable, free of preemptive rights. The Sellers own the Meadowlands
      Shares
      free and clear of all liens, charges, encumbrances or claims of any kind
      whatsoever, except for restrictions imposed by federal or applicable state
      securities laws.

     

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    (c)  Warrants,
      Options, Etc. There are no outstanding offers, options, warrants, rights,
      calls, commitments, obligations (verbal or written), conversion rights, plans
      or
      other agreements (conditional or unconditional) of any character provided for,
      required or permitting the sale, purchase or issuance of any shares of capital
      stock or any other securities of Meadowlands that are reserved for issuance
      or
      are outstanding. There are no agreements, restrictions or encumbrances
      (including, without limitation, rights of first refusal, rights of first offer,
      proxies or voting agreements) with respect to any shares of capital stock of
      Meadowlands (whether outstanding or issuable upon conversion or exercise of
      outstanding securities).

     

    (d)  Subsidiaries,
      Divisions and Affiliates. Meadowlands has no subsidiaries or divisions, and
      the Business has been conducted solely by Meadowlands and not through any
      Affiliate, joint venture, or other entity, person or under any other
      name.

     

    (e)  Equity
      Investments. Meadowlands does not own or have any rights to any equity
      interest, directly or indirectly, in any other corporation, partnership, joint
      venture, firm or entity.

     

    (f)  Authorization.
      Meadowlands has full power and authority and has taken all action necessary
      to own, lease and operate the Assets, to carry on the Business and to enter
      into
      this Agreement and to carry out the transactions contemplated hereby. The
      Sellers and Meadowlands have taken all action required by law, by Meadowlands'
      Articles of Incorporation and By-laws, or otherwise to be taken by them to
      authorize the execution and delivery of this Agreement and the consummation
      of
      the transactions contemplated hereby. This Agreement has been duly executed
      and
      delivered by Meadowlands and the Sellers and is a legal, valid and binding
      obligation of Meadowlands and the Sellers, enforceable against each in
      accordance with its terms except that (i) such enforcement may be subject to
      bankruptcy, insolvency, reorganization, moratorium or other similar laws now
      or
      hereafter in effect relating to creditors' rights; and (ii) the remedy of
      specific performance and injunctive and other forms of equitable relief may
      be
      subject to equitable defenses and to the discretion of a Court before which
      any
      proceeding therefore may be brought.

     

    (g)    Effect
      of Agreement. The performance of this Agreement by Meadowlands and the
      Sellers and the consummation by Meadowlands and the Sellers of the transactions
      contemplated hereby, will not, with or without the giving of notice and the
      lapse of time, or both, (i) violate any provision of law, statute, rule,
      regulation or executive order to which Meadowlands, the Sellers or the Business
      are subject; (ii) violate any judgment, order, writ or decree of any court
      applicable to Meadowlands, the Sellers or the Business; or (iii) result in
      the
      breach of or conflict with any covenant, condition or provision of, or,
      constitute a default under, or result in the creation or imposition of any
      lien,
      security interest, charge or encumbrance upon any of the Assets or the
      Meadowlands Shares pursuant to any corporate charter, by-law, commitment,
      contract or other agreement or instrument, including any of the Commitments,
      to
      which Meadowlands or the Sellers are a party or by which any of the Assets
      or
      the Meadowlands Shares are or may be bound or affected or from which the
      Business derives benefits.

     

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    (h)  Restrictions.
      Neither Meadowlands nor the Sellers are a party to any contract, commitment
      or agreement, nor are any of them or the Assets or the Meadowlands Shares
      subject to, or bound or affected by, any provision of the charter documents
      of
      Meadowlands, or any order, judgment, decree, law, statute, ordinance, rule,
      regulation or other restriction of any kind or character, which would,
      individually or in the aggregate, materially adversely affect the Business,
      the
      Meadowlands Shares, or any of the Assets.

     

    (i)  Governmental
      and Other Consents. No notice to, consent, authorization or approval of, or
      exemption by, any governmental or public body or authority is required in
      connection with the execution, delivery and performance by Meadowlands or the
      Sellers of this Agreement or any of the instruments or agreements herein
      referred to, or the taking of any action herein contemplated; and (ii) no notice
      to, consent, authorization or approval of, any Person under any agreement,
      arrangement or commitment of any nature which Meadowlands or the Sellers are
      party to or which the Meadowlands Shares or the Assets are bound by or subject
      to, or from which Meadowlands receive or are entitled to receive a benefit,
      is
      required in connection with the execution, delivery and performance by
      Meadowlands or the Sellers of this Agreement or any of the instruments or
      agreements herein referred to, or the taking of any action herein
      contemplated.

     

    (j)  Financial
      Statements. The financial statements for the twelve (12) months ended
      December 31, 2006 that have been provided to the Buyer (the "Financial
      Statements") fairly and accurately present the results of operations of
      Meadowlands for the periods covered thereby and the financial condition of
      Meadowlands as of the dates thereof, and comply with the books and records
      of
      Meadowlands. All items that could reasonably have a material adverse effect
      on
      the willingness of a prospective Buyer to acquire the Meadowlands Shares have
      been disclosed in the Financial Statements or in the Schedules to this
      Agreement. There are no liabilities, obligations or claims of any nature of
      or
      against the Sellers or Meadowlands (whether, to the Sellers' Knowledge
      threatened, accrued, contingent, absolute, unliquidated, asserted or otherwise,
      whether due or to become due) as of the respective dates of the Financial
      Statements which were not disclosed or reflected fully on the Balance Sheets
      included in the Financial Statements, and there are no such liabilities,
      obligations or claims of or against the Sellers or Meadowlands, other than
      those
      disclosed or reflected in the Financial Statements other than those incurred
      in
      the ordinary course of business since such date. Since the date of the most
      recent Financial Statement supplied to the Buyer, the Sellers and Meadowlands
      have operated in the ordinary course of business, and through the Closing Date,
      the Sellers and Meadowlands will continue to operate only in the ordinary course
      of business on the same basis as heretofore. Since the date of the most recent
      financial statement supplied to the Buyer, there has been no materially adverse
      change in the financial condition of the Sellers or Meadowlands, and the Sellers
      knows of no such pending change.

     

    (k)  No
      Undisclosed Liabilities. As of the date of the most recent Financial
      Statement supplied to the Buyer, there were no liabilities, obligations or
      claims of any nature of or against Meadowlands (whether to the Sellers'
      Knowledge threatened, accrued, contingent, absolute, unliquidated, asserted
      or
      otherwise, whether due or to become due) which were not disclosed or reflected
      fully on the said financial statement ("Undisclosed Liabilities"). As of the
      date hereof, Meadowlands has no liabilities of any nature other than those
      disclosed in the Financial
      Statements or which arose since such date in the ordinary course of business
      consistent with past practice.

     

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    (l)  Absence
      of Certain Changes or Events. Since the date of the most recent Financial
      Statement provided to the Buyer, Meadowlands has not: (i) suffered any adverse
      change in, or the occurrence of any events which, individually or in the
      aggregate, has or have had, or might reasonably be expected to have, a material
      adverse effect on the financial condition or results of operations of
      Meadowlands; (ii) incurred damage to or destruction of any material Asset or
      Assets individually or in the aggregate having a replacement cost in excess
      of
      $25,000, whether or not covered by insurance; (iii) incurred any obligation
      or
      liability (fixed or contingent) not in the ordinary course of business; (iv)
      made or entered into contracts or commitments to make any capital expenditures
      in excess of $25,000; (v) mortgaged, pledged or subjected to lien or any other
      encumbrance any of the Assets; (vi) sold, transferred or leased any material
      Asset or Assets individually or in the aggregate having a replacement cost
      in
      excess of $25,000, or canceled or compromised any debt or material claims,
      except in each case, in the ordinary course of business; (vii) sold, assigned,
      transferred or granted any rights under or with respect to any licenses,
      agreements, patents, software, inventions, trademarks, trade names, copyrights
      or formulae or with respect to know-how or any other intangible asset including,
      but not limited to, the Rights; (viii) amended or terminated any contracts
      agreements, leases or arrangements which would have a material adverse financial
      impact on Meadowlands; (ix) waived or released any other rights of material
      value; (x) declared or paid any dividend on their capital stock, or set apart
      any money for distribution to or for their shareholders; (xi) redeemed any
      portion of their capital stock; (xii) entered into, or amended the terms of,
      any
      employment or consulting agreement not terminable on no more than 30-days notice
      without liability to Meadowlands or the Business; (xiii) incurred any
      indebtedness for borrowed money or guaranteed any such indebtedness of another
      entity or individual, or entered into any other arrangement having the economic
      effect of any of the foregoing; or (xiv) entered into any transactions not
      in
      the ordinary course of business.

     

    (m)  Title
      to Assets; Absence of Liens and Encumbrances. Meadowlands has good title to,
      and owns, leases or licenses, as applicable, the Assets, free and clear of
      all
      mortgages, claims, liens, charges, encumbrances, security interests,
      restrictions on use or transfer or other defects as to title other than those
      disclosed in the most recent balance sheets of MFS and Vanwell that were
      included in the Financial Statements provided to the Buyer. The leases and
      other
      agreements or instruments under which MFS and Vanwell hold, lease, or are
      entitled to the use of any real or personal property included in the Assets
      are
      in full force and effect and all rentals, royalties or other payments due and
      payable thereunder prior to the date hereof have been duly paid. Meadowlands
      enjoys peaceful and undisturbed possession under all such leases, and the
      changes in ownership of the capital stock of Meadowlands will not adversely
      affect such leases, other agreements and instruments. All Assets are in
      conformance with all applicable zoning and other laws, ordinances, rules and
      regulations; and no notice of violation of any law, ordinance, rule or
      regulation thereunder has been received by Meadowlands or the
      Sellers.

     

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    (n)     Property.
      Meadowlands does not own real property. Schedule 5(n) contains a complete
      and correct list and description of all of Meadowlands' leases (whether oral
      or
      written) with respect to real property (the "Leases"), including a description
      of all buildings, structures,
      improvements (collectively, the "Premises"), and all licensing arrangements
      and
      leases of personal property relating to the Business ("Personal Property
      Leases"), to which a Company is a party (either as lessor, lessee, licensor
      or
      licensee). The Sellers have heretofore furnished to the Buyer true and complete
      copies of all Leases and Personal Property Leases. All buildings, structures,
      appurtenances and material items of machinery, equipment and other material
      tangible assets used by Meadowlands in the conduct of the Business are in good
      operating condition and repair, reasonable wear and tear excepted, are usable
      in
      the ordinary course of business, are adequate and suitable for the uses to
      which
      they are being put and, to Sellers' Knowledge conform in all material respects
      to all applicable statutes, laws, regulations, ordinances, codes, rules,
      judgments, orders, decrees, agreements or governmental restrictions relating
      to
      their construction, use and operation. The Assets are sufficient to operate
      and
      conduct the Business as presently conducted. All such leases and licensing
      agreements are valid and effective in accordance with their respective terms
      and, to Sellers' Knowledge, there are no existing defaults or events of default
      or events which with notice or lapse of time or both would constitute defaults
      or which would interfere with the enjoyment by Meadowlands or any assignee
      of
      the benefits of such instrument or their use and enjoyment of the real or
      personal property. No consents are required in order to transfer any of the
      Leases, Personal Property Leases or licenses to the Buyer, except for the
      consent of landlord of the Premises, which consent has been previously delivered
      to Buyer.

     

    All
      activities and operations conducted by Meadowlands on the Premises, and all
      structures, improvements and fixtures of Meadowlands on the Premises, conform
      to
      any and all applicable federal, state and local laws, ordinances and
      regulations, including, without limitation, zoning and building ordinances
      and
      health, environmental and safety laws, ordinances and regulations, and the
      Premises are zoned for the various purposes for which the Premises are currently
      being used.

     

    There
      is
      no condition resulting from the activities of the Business which would adversely
      affect or impair the use of any of the Premises for the purposes for which
      Meadowlands is currently using the same, or which could result in the imposition
      of liability on the Buyer or Meadowlands.

     

    There
      are
      no existing, pending or threatened condemnations or violations of governmental
      regulations giving rise to pending or threatened governmental or administrative
      actions that will materially adversely affect or impair the use of any of the
      Premises.

     

    (o)     Equipment.
      Set forth on Schedule 5(o) is a correct and complete list as of the
      date of this Agreement of all items of equipment used in the Business having
      a
      cost basis in excess of $1,000.00 (the "Equipment"), indicating for each piece
      of Equipment whether it is owned or leased. Except as set forth on Schedule
      5(o), none of the Equipment has been disposed of since the date of the most
      recent Financial Statements. Except as noted on Schedule 5(o), all of the
      Equipment and all other equipment used in the conduct of the Business (i) is
      in
      good working condition, with no material defects, and generally has been
      suitable for the uses for which it was designed or has been employed in the
      Business and (ii) conforms in all material respects with any laws, ordinances,
      regulations, orders or other similar governmental requirements relating to
      its
      use, as the same are currently in effect.

     

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    (p)  Insurance.
      There is now and there will be as of the Closing, in full force and effect
      with a reputable insurance company fire and extended insurance coverage with
      respect to all material tangible Assets in reasonable commercial amounts. On
      Schedule 5(p) is set forth a correct and complete list of (i) all
      currently effective insurance policies and bonds covering the Assets or the
      Business, and their respective annual premiums (as of the last renewal or
      purchase of new insurance), and (ii) since the inception of the Business, (A)
      all accidents, casualties or damage occurring on or to the Assets or relating
      to
      the Business which resulted in claims individually in excess of $10,000, and
      (B)
      claims for product liability, damages, contribution or indemnification and
      settlements (including pending settlement negotiations) resulting therefrom
      which individually are in excess of $10,000. Except as set forth on Schedule
      5(p), as of the date hereof there are no disputes with underwriters of any
      such policies or bonds, and all premiums due and payable have been paid. There
      are no pending or threatened terminations or premium increases with respect
      to
      any of such policies or bonds and there is no condition or circumstance known
      to
      the Sellers applicable to the Business, other than the sale of the Meadowlands
      Shares pursuant to this Agreement, which may result in such termination or
      increase. Meadowlands is in compliance with all material conditions contained
      in
      such policies or bonds, except for noncompliance which, individually or in
      the
      aggregate, would not have a material adverse effect on the Business, the
      Meadowlands Shares, or the Assets.

     

    (q)  Agreements,
      Arrangements, Etc.:

     

    
      	
               

            	
              (i)

            	
              Except
                as set forth on Schedule 5(q), Meadowlands is not a party to, nor
                are Meadowlands, the Assets, or the Meadowlands Shares subject to
                or bound
                by, any:

            

    

     

    
      	
              (A)  

            	
              lease
                agreement (whether as lessor or lessee), where the obligation of
                exceeds
                $5,000;

            

    

     

    
      	
              (B)  

            	
              license
                agreement, assignment or contract (whether as licensor or licensee,
                assignor or assignee) relating to software (other than
                "off­the-shelf’
                licenses),
                trademarks, trade names, patents, or copyrights (or applications
                therefor), unpatented designs or processes, formulae, know-how or
                technical assistance, or other proprietary
                rights;

            

    

     

    
      	
              (C)  

            	
              employment
                or other contract or agreement with an employee or independent contractor
                which (1) may not be terminated without liability to Meadowlands
                upon
                notice to the employee or independent contractor of not more than
                30 days,
                or (2) provides payments (contingent or otherwise) of more than $50,000
                per year (including all salary, bonuses and
                commissions);

            

    

     

    
      
        	
                (D)  

              	
                
                  agreement,
                    contract or order with any buying agent, supplier or other individual
                    or
                    entity who assists, provides or is otherwise involved in the
                    acquisition,
                    supplying or providing Assets or other goods to the
                    Business;

                

              

      

       

    

    
      
         

        
          
             

          

          
            14

            
              

            

          

          
             

          

        

         

        
          	
                  (E)  

                	
                  
                    
                      non-competition,
                        secrecy or confidentiality
                        agreements;

                    

                  

                

        

         

        
          
            	
                    (F)  

                  	
                    agreement
                      or other arrangement for the sale of goods or services to any
                      third party
                      (including the government or any other governmental
                      authority);

                  

          

           

          
            	
                    (G)  

                  	
                    agreement
                      with any labor union;

                  

          

           

          
            	
                    (H)  

                  	
                    agreement
                      or contract with any distributor, dealer, leasing company,
                      sales agent or
                      representative, other than contracts or orders for the purchase,
                      sale or
                      license of goods made in the usual and ordinary course of business
                      at an
                      aggregate price per contract of not more than $25,000 and for
                      a term of no
                      more than six months and which agreements, in all cases, can
                      be terminated
                      within thirty (30) days after the Closing Date without payment
                      of any
                      premium or penalty by the Buyer;

                  

          

           

          
            	
                    (I)  

                  	
                    agreement,
                      contract or order with any manufacturer, leasing company, supplier
                      or
                      customer (including those agreements which allow discounts
                      or allowances
                      or extended payment terms), of more than
                      $5,000;

                  

          

           

          
            	
                    (J)  

                  	
                    joint
                      venture or partnership agreement with any other person or
                      entity;

                  

          

           

          
            	
                    (K)  

                  	
                    agreement
                      guaranteeing, indemnifying or otherwise becoming liable for
                      the
                      obligations or liabilities of
                      another;

                  

          

           

          
            	
                    (L)  

                  	
                    agreement
                      with any banks or other persons, for the borrowing or lending
                      of money or
                      payment or repayment of draws on letters of credit or currency
                      swap or
                      exchange agreements (other than purchase money security interests
                      which
                      may, under the terms of invoices from their suppliers, be granted
                      to
                      suppliers with respect to goods so
                      purchased);

                  

          

           

          
            	
                    (M)  

                  	
                    agreement
                      with any bank, finance company or similar organization which
                      acquires from
                      Meadowlands receivables or contracts for sales on
                      credit;

                  

          

           

          
            	
                    (N)  

                  	
                    agreement
                      granting any person a lien, security interest or mortgage on
                      any of the
                      Assets, including, without limitation, any factoring or other
                      agreement
                      for the assignment of receivables or
                      inventory;

                  

          

        

         

        
          
            	
                    (O)  

                  	
                    
                      agreement
                        for the incurrence of any capital expenditure in excess of
                        $2,000;

                    

                  

          

           

        

         

        
          
             

          

          
            15

            
              

            

          

          
             

          

        

         

         

      

    

    
      	
              (P)  

            	
              advertising,
                publication or printing agreement;

            

    

     

    
      	
              (Q)  

            	
              agreement
                which restricts Meadowlands from doing business anywhere in the
                world;

            

    

     

    
      	
              (R)  

            	
              agreement
                or statute or regulation giving any party the right to renegotiate
                or
                require a reduction in prices or the repayment of any amount previously
                paid; or

            

    

     

    
      	
              (S)  

            	
              other
                agreement or contract, not included in or expressly excluded from
                the
                terms of the foregoing clauses (A) through (R), materially affecting
                the
                Assets, the Meadowlands Shares, or the Business, except contracts
                or
                purchase orders for the purchase or sale of goods or services made
                in the
                usual and ordinary course of
                business.

            

    

     

    
      	
              (ii)  

            	
              Correct
                and complete copies of all items required to be shown on Schedule 5(q)
                have been separately delivered to the Buyer prior to the date
                hereof.

            

    

     

    
      	
              (iii)  

            	
              Each
                of the Commitments is valid, in fill force and effect and enforceable
                in
                accordance with their terms.

            

    

     

    
      	
               

            	
              (iv) 
                

            	
              Meadowlands
                has fulfilled, or have taken all action reasonably necessary to enable
                Meadowlands to fulfill when due, all of its obligations under the
                Commitments, except where the failure to do so would not, individually
                or
                in the aggregate, have a material adverse affect on the Business
                or the
                Assets or where no such action is yet required. Furthermore, there
                has not
                occurred any default or any event which, with the lapse of time or
                the
                election of any person other than Meadowlands, will become a default
                under
                any of the Commitments, except for such defaults, if any, which have
                not
                resulted and will not result in any material loss to or liability
                of
                Meadowlands. Meadowlands is not in arrears in any material respect
                with
                respect to the performance or satisfaction of the terms or conditions
                to
                be performed or satisfied by it under any of the Commitments and
                no waiver
                or variance has been granted by any of the parties
                hereto.

            

    

     

    (r)           Business
      Names; Patents, Trademarks, Copyrights, Etc. Neither the Sellers nor
      Meadowlands have sold, assigned, transferred, licensed, sub-licensed or conveyed
      the Rights, or any of them, or any interest in the Rights, or any of them,
      to
      any person, and Meadowlands has the entire right or right, title and interest
      (free and clear of all security interests, liens and encumbrances of every
      nature) in and to the Rights owned by or used in the conduct of the Business
      as
      currently being conducted; neither has the validity of such items been, nor
      is
      the validity of such items, nor the use thereof by Meadowlands, the subject
      of
      any pending or threatened opposition, interference, cancellation, nullification,
      conflict, concurrent use, litigation or other proceeding. The conduct of the
      Business as currently operated, and the use of the Assets does not and will
      not
      conflict with, or infringe, legally enforceable rights of third parties.
      There is no infringement of any proprietary right owned or licensed by
      Meadowlands.

     

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    (s)  Permits,
      Licenses, Etc. Meadowlands has all permits, licenses, registrations,
      memberships, orders or approvals of governmental or administrative authorities
      required to permit them to carry on the Business as currently
      conducted.

     

    (t)  Compliance
      with Applicable Laws. The conduct by Meadowlands of the Business does not
      violate or infringe, and there is no basis for any claims of violation or
      infringement of, any law, statute, ordinance, regulation or executive order
      (including, without limitation, the Occupational Safety and Health Act and
      the
      Foreign Corrupt Practices Act and the respective regulations thereunder and
      similar applicable state laws and regulations) currently in effect, except
      in
      each case for violations or infringements which do not and will not,
      individually or in the aggregate, have a material adverse affect on the Assets,
      the Meadowlands Shares, or the Business. Meadowlands have received no notice
      of
      default and Meadowlands is not in default under any governmental or
      administrative registration, membership or license issued to it, under any
      governmental or administrative order or demand directed to it, or with respect
      to any order, writ, injunction or decree of any court which, in any case,
      materially adversely affects the financial condition or results of operations
      of
      the Business or the value of the Assets.

     

    (u)  Litigation.
      There is no claim, action, suit, proceeding, arbitration, reparation,
      investigation or hearing or notice of hearing, pending or threatened, before
      any
      court or governmental, administrative or other competent authority or private
      arbitration tribunal against the Sellers or Meadowlands, or relating to or
      affecting (directly or indirectly, including by way of indemnification), the
      Business or the Assets, or the transactions contemplated by this Agreement;
      nor
      are any facts known to the Sellers which could reasonably give rise to any
      such
      claim, action, suit, proceeding, arbitration, investigation or hearing, which
      may have any material adverse affect, individually or in the aggregate, upon
      the
      Business, the value of the Assets or the transactions contemplated by this
      Agreement. Neither the Sellers nor Meadowlands have waived any statute of
      limitations or other affirmative defense with respect to any of the aforesaid
      matters. There is no continuing order, injunction or decree of any court,
      arbitrator or governmental, administrative or other competent authority to
      which
      the Sellers or Meadowlands are a party, or to which the Sellers, Meadowlands,
      the Assets or the Business is subject. Neither the Sellers nor Meadowlands
      nor
      any current officer, director, or employee of the Sellers or Meadowlands has
      been permanently or temporarily enjoined or barred by order, judgment or decree
      of any court or other tribunal or any agency or other body from engaging in
      or
      continuing any conduct or practice in connection with the Business.

     

    (v)  No
      Interest in Competitors. No officer, director or shareholder of Meadowlands
      or any Affiliate of any of the foregoing, or any Seller directly or indirectly,
      owns more than a five percent (5%) interest in or controls or is an employee,
      officer or director of or participant in (but only to the extent such a
      participation exceeds five percent (5%)), or consultant to any corporation,
      partnership, limited partnership, joint venture, association or other entity
      which is a competitor, or current supplier or customer of the Business or has
      any type of business or professional relationship with the
      Business.

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

     

    (w)  Customers,
      Suppliers, Distributors and Agents. No customer, client, distributor,
      supplier or any other person or entity with material business dealings with
      Meadowlands, will or may cease to continue such relationship, or will or may
      substantially reduce the extent of such relationship, at any time prior to
      or
      after the Closing Date. Except for common public information relating to
      macroeconomic issues, no (i) other existing or contemplated material and adverse
      modification or change in the business relationship of Meadowlands with, or
      (ii)
      existing condition or state of facts which has affected adversely, will
      adversely affect (in a material manner), or has a reasonable likelihood of
      adversely affecting the business relationship of Meadowlands with their
      customers, clients, suppliers or other persons or entities with material
      business dealings with Meadowlands or which has prevented or will prevent the
      business from being carried on under its new ownership after the Closing in
      essentially the same manner as it is currently carried on.

     

    (x)  Books
      and Records. The books of account and other financial and corporate records
      of Meadowlands are in all material respects complete, correct and up to date,
      with all necessary signatures, and are in all material respects accurately
      reflected in the Financial Statements.

     

    (y)            Employee
      Benefit Plans. Except as described in Schedule 5(y), Meadowlands does
      not have any hospitalization, health insurance, pension, retirement, profit
      sharing, stock option or similar plans (the "Employee Benefits Plans"). For
      each
      such employee pension plan, multi-employer plan or welfare plan as those terms
      are defined in Section 3 of the Employee Retirement Income Security Act of
      1974,
      as amended ("ERISA"), and for each Employee Benefit Plan with respect to which
      Meadowlands is a "party in interest" as defined in Section 3 of ERISA, or a
      "disqualified person" as defined in Section 4975 of the Code, the Sellers have
      delivered to the Buyer complete and accurate copies of (i) all Employee Benefit
      Plans and all amendments thereto; (ii) the trust instrument or insurance
      contract, if any, forming a part of the plans, and all amendments thereto;
      (iii)
      the most recent and preceding year's Internal Revenue Service Form 5500 and
      all
      schedules thereto; (iv) the most recent Internal Revenue Service determination
      letter, or if no letter has been issued, any pending application to the Internal
      Revenue Service for a determination letter regarding qualified status; (v)
      any
      bond required by Section 412 of ERISA; and (vi) the summary plan description.
      Meadowlands has complied in all material respects with all of the rules and
      regulations governing each of the Employee Benefit Plans maintained for the
      benefit of its employees, including, without limitation, rules and regulations
      promulgated pursuant to ERISA and the Internal Revenue Code, by the Department
      of Treasury, Department of Labor, and the Pension Benefit Plans Guaranty
      Corporation, and each of the Employee Benefit Plans now operated has since
      its
      inception been operated in accordance with its provisions and is in compliance
      with such rules and regulations. Neither Meadowlands nor any Employee Benefit
      Plans maintained by Meadowlands or any fiduciaries thereof have engaged in
      any
      prohibited transaction, as that term is defined in Section 406 of ERISA or
      Section 4975 of the Code, nor have any of them committed any breach of fiduciary
      responsibility with respect to any of the Employee Benefit Plans.

     

    
      
         

      

      
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    (z)            Powers
      of Attorney. No person has any power of attorney to act on behalf of
      Meadowlands or the Sellers in connection with any of Meadowlands' properties
      or
      business affairs other than such powers to so act as normally pertain to the
      officers of Meadowlands.

     

    (aa)            Sufficiency
      of Assets and Commitments. The Assets constitute all of the property and
      Rights necessary for the continuation of the Business on a basis consistent
      with
      past operations.

     

    (bb)            Labor
      Disputes, Unfair Labor Practices. Meadowlands represents that it has not
      engaged in any unfair labor practice which would have a material adverse effect
      on the Assets or the Business. There is no pending or threatened (i) unfair
      labor practice complaint, charge, labor dispute, strike, slowdown, walkout
      or
      work stoppage before the National Labor Relations Board or any other authority
      or (ii) grievance or arbitration proceeding arising out of or under a collective
      bargaining agreement involving employees of the Business. There have been no
      strikes, labor disputes, slow-downs, walkouts, or work stoppages involving
      employees of the Business. Meadowlands has not received notice from any of
      their
      employees of such employee's intent to terminate his or her employment or bring
      any action for any reason related to the transactions contemplated by this
      Agreement or for any other reason.

     

    (cc)            Past
      Due Obligations. No past due obligations over $5,000 have given rise or
      shall give rise within five (5) days after the Closing Date to any additional
      liability to the Buyer on account of their being past due.

     

    (dd)            Environmental
      Matters. Except as set forth on Schedule 5(dd), (i) Meadowlands is in
      compliance with all environmental laws, regulations, permits and orders
      applicable to it, and with all laws, regulations, permits and orders governing
      or relating to asbestos removal and abatement; (ii) Meadowlands has not
      transported, stored, treated or disposed, or arranged for any third parties
      to
      transport, store, treat or dispose, of any Hazardous Substances to or at any
      location other than a site lawfully permitted to receive such Hazardous
      Substances for such purposes, or had performed or arranged for any method or
      procedure for such transportation, storage, treatment or disposal in
      contravention of any laws or regulations nor has Meadowlands disposed of, or
      arranged for any third parties to dispose of, Hazardous Substances upon property
      owned or leased by it in contravention of any applicable laws or regulations;
      (iii) there has not occurred, nor is there presently occurring, a release of
      any
      Hazardous Substance by Meadowlands on, into or beneath the surface of any parcel
      of real property in which Meadowlands has an ownership interest or any leasehold
      interest in contravention of any applicable laws or regulations; (iv)
      Meadowlands has not transported or disposed of, or allowed or arranged for
      any
      third parties to transport or dispose of, any Hazardous Substance to or at
      a
      site which, pursuant to the U.S. Comprehensive Environmental Response,
      Compensation and Liability Act of 1980, as amended ("CERCLA"), has been placed
      on the National Priorities List or its New Jersey equivalent; (v) Meadowlands
      has not received notice and has no actual knowledge of any facts which could
      give rise to substantive notice, that Meadowlands is a potentially responsible
      party for a federal or state environmental cleanup site or for corrective action
      under CERCLA or notice of any other Environmental Claim; (vi) Meadowlands has
      not undertaken (or been requested to undertake) any response or remedial
actions
      or cleanup actions of any kind at the request of any federal, state or local
      governmental entity, or at the request of any other person or entity; and (vii)
      there are no laws, regulations, ordinances, licenses, permits or orders relating
      to environmental matters requiring any work, repairs, construction or capital
      expenditures with respect to the Assets.

     

     

    
      
         

      

      
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    (ee)     
Tax
      and Other Returns and
      Reports.

     

    
      	
              (i)  

            	
              Meadowlands
                has timely filed or will file all Tax Returns and information returns
                required to be filed and has paid all Taxes due and payable in connection
                with the Business for all periods ending on or before the date hereof.
                Adequate provision has been made in the books and records of Meadowlands
                and in the Financial Statements for all Taxes whether or not due
                and
                payable and whether or not disputed. Schedule 5(ee) lists the date
                or
                dates through which any governmental entity has examined any Tax
                Return of
                Meadowlands. All required Tax Returns or extensions, including amendments
                to date, have been prepared in good faith without willful
                misrepresentation and are complete and accurate in all material respects.
                Except as set forth in Schedule 5(ee), no governmental entity has
                examined
                or is in the process of examining any Tax Returns or extensions of
                Meadowlands. Except as set forth on Schedule 5(ee), no governmental
                entity
                has proposed (tentatively or definitively), asserted or assessed
                or
                threatened to propose or assert, any deficiency, assessment, lien,
                or
                other claim for Taxes and there would be no basis for any such
                delinquency, assessment, lien or claim. There are no agreements,
                waivers
                or other arrangements providing for an extension of time with respect
                to
                the assessment of any Taxes or deficiency against Meadowlands or
                with
                respect to any Tax Return filed or to be filed by
                Meadowlands.

            

    

     

    
      	
              (ii)  

            	
              Certain
                Tax Definitions. For purposes of this Agreement, the term "Taxes"
                means all taxes, including without limitation all Federal, state,
                local,
                foreign and other income, franchise, sales, use, property, payroll,
                withholding, environmental, alternative or add-on minimum and other
                taxes,
                assessments, charges, duties, fees, levies or other governmental
                charges
                in the nature of tax, and all estimated taxes, deficiency assessments,
                additions to tax, penalties, and interest, and any contractual or
                other
                obligation to indemnify or reimburse any person with respect to any
                such
                assessment. For purposes of this Agreement, the term "Tax Return"
                shall
                mean any report, statement, return, declaration of estimated tax
                or other
                information required to be supplied by or on behalf of Meadowlands
                to a
                taxing authority in connection with Taxes, or with respect to grants
                of
                tax exemption, including any consolidated, combined, unitary, joint
                or
                other return filed by any person that properly includes the income,
                deductions or other tax information concerning
                Meadowlands.

            

    

     

     

    
      
         

      

      
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    (ff)            Inventory.
      All of Meadowlands' inventory consists of items of a quality usable,
      marketable or saleable in the normal course of the Business. Meadowlands'
      inventory has been stated at the lower of cost or market in each of their
      Financial Statements .

     

    (gg)          Purchase
      and Sale Obligations. All purchases, sales and orders and all other
      commitments for purchases, sales and orders made by or on behalf of Meadowlands
      have been made in the usual and ordinary course of its business in accordance
      with normal practices. On the Closing Date, Meadowlands shall deliver to the
      Buyer Schedule 5(gg) including all such uncompleted contracts and other
      commitments with respect to any of Meadowlands' obligations as of a date not
      earlier than ten (10) days prior to the Closing .

     

    (hh)          Other
      Information. None of the representations and warranties contained in this
      Agreement (including the Schedules hereto) or any ancillary document or any
      certificate or instrument delivered or to be delivered by or on behalf of
      Meadowlands or the Sellers in connection with the transactions contemplated
      hereby, does or will contain any untrue statement of a material fact or omit
      a
      material fact necessary to make the information contained herein or therein
      not
      misleading.

     

    (ii)            Accounts
      Receivable. All accounts receivable of Meadowlands arose from bona fide
      transactions made in the ordinary course of business and represent services
      rendered in the ordinary course of business. All such accounts receivable are
      fairly presented in the [Financial Statements and are the
      result of arms-length transactions with third parties. The collectibility of
      the
      accounts receivable will not be impaired by any statute of limitations, right
      of
      set-off, counterclaim or defense.

     

    (jj)            Brokers
      and Finders. Except as set forth on Schedule 5(jj), neither the Sellers nor
      Meadowlands, or any of their officers, directors, members or employees, has
      employed any broker or finder or incurred any liability for any brokerage fees,
      commissions or finders' fees in connection with the transactions contemplated
      by
      this Agreement. The Sellers agree to indemnify and hold the Buyer harmless
      from
      any liability, loss, cost, claim and/or demand that any broker or finder may
      have in connection with this transaction as a result of actions taken by
      Meadowlands or the Sellers.

     

    (kk)          Personnel.
      Schedule 5(kk) sets forth a true and complete list of Meadowlands'
      employees, which list shall contain the following information with respect
      to
      each such employee: (i) whether such employee is union or non-union; and (ii)
      the position, age, current base rate, total 2005 and 2006 compensation, time
      of
      service, and geographical work location.

     

    (ll)            Insider
      Interests. Neither the Sellers nor any officer or director of Meadowlands
      are presently a party to any transaction with Meadowlands including, without
      limitation, any contract, agreement or arrangement (i) providing for the
      furnishing of services; (ii) providing for the rental of real or personal
      property or (iii) otherwise requiring payments to any such person, trust,
      corporation or entity to which such person has any interest including in any
      property, real or personal, tangible, including without limitation, inventions,
      patents,

    trademarks
      or trade names, used in or pertaining to the Business.

     

     

    
      
         

      

      
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    (mm)         Bank
      Accounts. "Schedule 5 (mm)" sets forth the names and locations of all banks,
      trust companies, savings and loan associations and other financial institutions
      at which Meadowlands maintains safe deposit boxes, lock boxes or accounts of
      any
      nature.

     

    (nn)          Documents
      Relating to Business. The Sellers have furnished or made available to the
      Buyer every material agreement, instrument, letter, pleading, consent, waiver,
      notice, note and every document of whatever nature relating to the Business,
      and
      there is no other document or instrument of any kind that Meadowlands has failed
      to furnish that would or might affect the truth, accuracy or completeness of
      the
      representations and warranties contained herein. No representation or warranty
      by the Sellers in this Agreement or any Exhibit, Schedule or related agreement
      contains or will contain any untrue statement of a material fact nor omits
      or
      will omit to state a material fact necessary to make the statements contained
      therein not misleading.

     

    (oo)     Books
      and
      Records. The records of Meadowlands are complete and accurate in all
      material respects. The financial books and records of Meadowlands are accurate
      and complete in all material respects.

     

    6.Representations
      and Warranties of the Buyer and Somerset.

     

    As
      an
      inducement for the Sellers to enter into this Agreement and perform their
      obligations hereunder, each of the Buyer and Somerset, jointly and severally,
      hereby represents and warrants to the Sellers as set forth below. Each of such
      representations and warranties are correct and complete as of the date hereof
      and shall be correct and complete as of the Closing, with the same effect as
      if
      said representations and warranties had been made at and as of the Closing
      Date:

     

    (a)  Organization,
      Standing and Authority. Buyer is a corporation duly incorporated, validly
      existing and in good standing under the laws of the State of New Jersey.
      Somerset is a corporation duly incorporated, validly existing and in good
      standing under the laws of the State of Delaware. Buyer and Somerset have full
      corporate power and authority to conduct their respective businesses as
      presently conducted, and to enter into and perform this Agreement, and to carry
      out the transactions contemplated by this Agreement.

     

    (b)  SEC
      Filings. The Report on Form 10-QSB filed by Somerset with respect to the
      period ended March 31, 2007 is true and accurate, and complied in all respects
      with the applicable Rules of the SEC.

     

    (c)    
      Capitalization of Somerset. There are 300,000,000 shares of Somerset's
      capital stock authorized, consisting of 200,000,000 shares of common stock,
      $0.001 par value per share and 100,000,000 shares of preferred stock (the
      "Somerset Shares"). As of the date of this Agreement, there were 7,228,376
      issued and outstanding shares of Somerset common stock and 3,883,298 issued
      and
      outstanding shares of Somerset Series A Convertible Preferred stock. Except
      as
      set forth in Schedule 6(c), no Somerset Shares have been reserved for issuance
      to any person,
      and there are no outstanding rights, warrants, options or agreements for the
      purchase of Somerset Shares or Somerset preferred stock. The Somerset Shares
      have been issued in compliance with all applicable laws.

     

     

    
      
         

      

      
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    (d)  Financial
      Statements. The financial statements of Somerset and Buyer contained in the
      most recent filings with the SEC were prepared in accordance with GAAP applied
      on a consistent basis throughout the periods involved (except as may be
      indicated in the notes thereto). Such financial statements fairly present the
      financial position of Somerset and the Buyer as at the dates thereof and the
      results of its operations and its cash flows for the periods then
      ended.

     

    (e)  No
      Adverse Changes. To the best knowledge of the Buyer and Somerset, except as
      disclosed in the Somerset Financial Statements, there has been no material
      adverse change in the financial condition, operations or business of Somerset
      or
      the Buyer since March 31, 2007.

     

    (f)  Compliance
      With Applicable Laws. To the best knowledge of Buyer and Somerset, the
      business of the Buyer has not been, and is not being, conducted in violation
      of
      any applicable law, except for possible violations which individually or in
      the
      aggregate have not had and are not reasonably likely to have a material adverse
      effect on the Buyer. To the knowledge of the Buyer, no investigation or review
      by any governmental entity with respect to the Buyer is pending or threatened,
      nor has any governmental entity indicated an intention to conduct the same,
      except for investigations or reviews which individually or in the aggregate
      would not have, nor be reasonably likely to have, a material adverse effect
      on
      the Buyer.

     

    (g)  No
      Undisclosed Liabilities. Except as may be set forth in its Quarterly Report
      on Form 1 0-QSB for the period ended March 31, 2007, there are no liabilities
      or
      debts of Somerset of any kind whatsoever, whether accrued, contingent, absolute,
      determined, determinable or otherwise, and there is no existing condition,
      situation or set of circumstances which could reasonably be expected to result
      in such a liability or debt.

     

    (h)  Conflicts.
      Neither the execution nor delivery of this Agreement, nor the performance
      of
      Somerset or the Buyer in consummating the transactions contemplated by this
      Agreement will conflict with or result in a violation or breach of, or default
      under, any terms or provisions of the corporate charter or bylaws of either
      Somerset or the Buyer or of any terms or provisions of any agreement or
      instrument to which Somerset and/or the Buyer is a party or by which it is
      bound.

     

    (i)  Brokers
      and Finders. Except as set forth on Schedule 6(k), neither Somerset, the
      Buyer, nor any of their officers, directors, or employees, has employed any
      broker or finder or incurred any liability for any brokerage fees, commissions
      or finders' fees in connection with the transactions contemplated by this
      Agreement. Somerset and the Buyer agree to indemnify and hold the Sellers
      harmless from any liability, loss, cost, claim, and/or demand that any other
      broker or finder may have in connection with this transaction as a result of
      actions taken by Somerset or the Buyer.

     

     

     

    
      
         

      

      
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    (j)          Governmental
      and Other Consents. No notice to, consent, authorization or approval of, or
      exemption by, any governmental or public body or authority is required in
      connection with the execution, delivery and performance by the Buyer of this
      Agreement or any of the instruments or agreements herein referred to, or the
      taking of any action herein contemplated; and (ii) no notice to, consent,
      authorization or approval of, any Person under any agreement, arrangement or
      commitment of any nature which the Buyer is party to or subject to, is required
      in connection with the execution, delivery and performance by the Buyer of
      this
      Agreement or any of the instruments or agreements herein referred to, or the
      taking of any action herein contemplated.

     

    7.      
      Conditions Precedent to the Buyer's Obligation to Close.
      All obligations of the Buyer to close under this Agreement are
      subject to the fulfillment of each of the following conditions, prior to or
      at
      the Closing:

     

    (a)  The
      representations and warranties made by the Sellers contained herein shall be
      true and correct at and as of the time of the Closing, with the same effect
      as
      though such representations and warranties were made at and as of such time,
      except in respects not materially adverse to Meadowlands. As used herein, the
      phrase "in respects not materially adverse to Meadowlands" shall mean in
      respects not materially adverse to the overall financial condition, business
      or
      prospects of the Business.

     

    (b)  The
      Sellers and Meadowlands, on or before the Closing, shall have performed and
      complied with all terms, covenants and conditions required by this Agreement
      to
      be performed or complied with at or before the Closing.

     

    (c)  No
      order,
      ruling or regulation (general or specific) of any governmental authority shall
      have been issued or promulgated, and no judicial or administrative action shall
      have been taken and shall have not been rescinded, canceled or reversed, which
      action has the purpose or would have the effect of prohibiting the transactions
      herein contemplated or the effect of interfering with or materially affecting
      the right or ability of any party to this Agreement to consummate any of the
      transactions contemplated hereby.

     

    (d)  The
      Sellers shall have delivered to the Buyer a certificate, dated the Closing
      Date
      and signed by the Sellers, certifying (i) as to the fulfillment of the
      conditions set forth in subsections (a), (b) and (c) of this Section 7 and
      (ii)
      that Sellers are not aware of any material omissions or facts that would
      materially alter any of the Financial Statements, nor are Sellers aware of
      any
      facts or factors that are reasonably likely to occur, or if known to other
      parties, that could have a material adverse effect on the financial condition,
      business, operations, assets, liabilities, management or prospects of the
      Business.

     

    (e)
      All
      consents and approvals and waivers of third parties contemplated by this
      Agreement, and consents, permits and approvals of all regulatory agencies or
      other authorities having jurisdiction over the transactions contemplated by
      this
      Agreement shall have been procured and delivered to the Buyer, and all other
      requirements prescribed by law shall have been satisfied.

     

     

    
      
         

      

      
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    (f)  No
      suit,
      action or other proceeding shall be pending or directly threatened by any
      federal or state governmental agency having jurisdiction or authority over
      either the Sellers, Meadowlands or the Buyer in which it is sought to restrain
      or prohibit consummation of the transactions contemplated by this
      Agreement.

     

    (g)  All
      intercompany or affiliate loans shall have been eliminated.

     

    (h)  There
      shall not have been commenced, threatened or received any proceeding, or notice
      thereof, which results or could result in the citation of the Sellers or the
      Business for violation of zoning ordinances in connection with the use of the
      principal office of the Business or requiring the cessation of such
      use.

     

    (i)  There
      shall have been no material adverse changes in the financial condition,
      Business, operations, Assets, liabilities or management of
      Meadowlands.

     

    (j)     The
      Sellers shall have delivered all consents, approvals and waivers required under
      any contracts, licenses, leases (including the Leases) or other agreements
      material to the Business or shall have executed and delivered assignments of
      all
      such instruments.

     

    (k)  The
      Sellers shall have delivered to the Buyer the certificates representing the
      Meadowlands Shares, duly executed for transfer or accompanied by duly executed
      stock powers.

     

    (l)  Keith
      Kesheneff shall have entered into the Employment, Consulting, Confidentiality,
      Non-Competition and Sales Representation Agreement annexed hereto as "Exhibit
      E".

     

    (m)  Kathryn
      Kesheneff shall have entered into the Non-Competition Agreement annexed hereto
      as "Exhibit F".

     

    (n)  If
      Meadowlands' current lease agreement shall require the landlord's consent to
      any
      of the transactions contemplated by this Agreement, such consents shall have
      been obtained in writing.

     

    8.   
Conditions
      Precedent
      to the Sellers' Obligation to Close. All obligations of the Sellers
      to close under this Agreement are subject to the fulfillment of each of the
      following conditions prior to or at the Closing:

     

    (a)      
      The representations and warranties made by Somerset and the Buyer contained
      herein shall be true and correct at and as of the time of the Closing, with
      the
      same effect as though such representations and warranties were made at and
      as of
      such time, except in respects not materially adverse to Somerset and the Buyer.
      As used herein, the phrase "in respects not materially adverse to Somerset
      and
      the Buyer" shall mean in respects not materially adverse to the overall
      financial condition or business of Somerset and the Buyer.

     

     

    
      
         

      

      
        25

        
          

        

      

      
         

      

    

     

    (b)  Somerset
      and the Buyer, on or before the Closing, shall have performed and complied
      with
      all terms, covenants and conditions required by this Agreement to be performed
      or complied with at or before the Closing.

     

    (c)  Somerset
      and the Buyer shall have delivered to the Sellers a certificate, dated the
      Closing Date and signed by the appropriate officers of Somerset and the Buyer,
      certifying as to the fulfillment of the conditions set forth in Subsections
      (a)
      and (b) of this Section 8.

     

    (d)  No
      order,
      ruling or regulation (general or specific) of any governmental authority shall
      have been issued or promulgated, and no judicial or administrative action shall
      have been taken and shall have not been rescinded, canceled or reversed, which
      action has the purpose or would have the effect of prohibiting the transactions
      herein contemplated or the effect of interfering with or materially affecting
      the right or ability of any party to this Agreement to consummate any of the
      transactions contemplated hereby.

     

    (e)  All
      consents and approvals contemplated by this Agreement, and consents and
      approvals of all regulatory agencies or other authorities having jurisdiction
      over the transactions contemplated by this Agreement, shall have been procured,
      and all other requirements prescribed by law shall have been
      satisfied.

     

     
      (f)     No suit, action or other proceeding shall be
      pending or directly threatened by any federal or state governmental agency
      having jurisdiction or authority over either the Sellers, Somerset, or the
      Buyer
      in which it is sought to restrain or prohibit consummation of the transactions
      contemplated by this Agreement.

     

    9.    Access.

     

    (a)  Prior
      to
      the Closing, the Sellers and/or Meadowlands will give to the Buyer and Buyer's
      counsel, accountant or other representatives full access (during normal business
      hours) to all properties, documents, contracts, books, records and other data
      of
      the Business; provided, however, that all information received by the Buyer,
      Buyer's counsel, accountants or other representatives shall be held wholly
      confidential by each of them and that in taking advantage of such access, none
      of them shall interfere with the operation of the Business, and, provided
      further, that if the transaction contemplated hereby shall not be consummated,
      all data of every kind and nature and all copies of documents taken by any
      of
      said persons shall upon request be returned to the Sellers and not otherwise
      utilized by the Buyer.

     

    (b)  From
      and
      after the Closing, the Sellers will give to the Buyer, Buyer's counsel,
      accountants or other representatives full access (during normal business hours)
      to all books and records of the Sellers relating to the Business with respect
      to
      the period ending on the Closing Date.

     

     

    
      
         

      

      
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    10.         Affirmative
      Covenants of the Sellers. Except as otherwise consented to by the
      Buyer, each Seller, Meadowlands covenant, jointly and severally, that,
      throughout the period commencing on the date hereof and ending on the Closing
      Date, Meadowlands will:

     

    (a)             Conduct
      of Business. Conduct the Business only in the ordinary course, consistent
      with prior practice;

     

    (b)             Maintenance
      of Property. Maintain and keep the material properties, machinery and
      equipment of the Business in as good repair and condition in all material
      respects as at present, except for depreciation due to ordinary wear and
      tear;

     

    (c)             Insurance.
      Maintain in full force and effect insurance at least as great as the amounts
      and comparable in scope of coverage to that now maintained by the Business
      as
      described on Schedule 5(p) hereto;

     

    (d)             Performance
      of Obligations. Consistent with past business practices, perform
      all material obligations under material contracts, leases and documents relating
      to or affecting the material assets, properties and business of the
      Business;

     

    (e)             Maintenance
      and Preservation of Business. Consistent with their past practices, use
      their best efforts to (i) maintain and preserve the Business the present
      business organization of Meadowlands, (ii) keep available the services of the
      present employees of Meadowlands, and (iii) preserve the current business
      relationships of Meadowlands with customers, clients, suppliers, distributors
      and other having business dealings with it;

     

    (f)             Risk
      of Loss. Bear the risk of loss or damage to the tangible assets being
      purchased hereunder on and prior to the Closing Date where such risk of loss
      is
      not the legal obligation of another, and maintain all properties necessary
      for
      the conduct of the Business, whether owned or leased;

     

    (g)             Maintenance
      of Books and Records. Maintain the books, records and accounts of
      Meadowlands in the usual, regular and ordinary manner, on the basis consistent
      with prior periods;

     

    (h)             Compliance
      with Laws. Comply with and perform all material obligations and duties
      imposed upon it by all federal and state laws and all rules, regulations and
      orders imposed by federal or state governmental authorities;

     

    (i)             Notice
      of Certain Events. By written notice to the Buyer, notify the Buyer of the
      commencement of any litigation against Meadowlands or the Business involving
      an
      amount exceeding $5,000 in each instance or of the existence of adverse business
      conditions threatening the continued, normal business operations of the
      Business;

     

    (j)             Satisfaction
      of Conditions. Use commercially reasonable efforts to assure, as
      soon
      as is reasonably practicable, the satisfaction of the conditions to the
      effectiveness of the transactions
      contemplated in this Agreement and grant Buyer reasonable access to the Business
      and the Premises to permit familiarization therewith; and

     

     

    
      
         

      

      
        27

        
          

        

      

      
         

      

    

     

    (k)              
      Good Standing. Sellers shall maintain Meadowlands' existence as a
corporation
      validly existing and in good standing under the laws of the State of New
      Jersey.

     

    11.        
      Negative Covenants of the Sellers. Each Seller
      covenants, jointly and severally, that, throughout the period commencing on
      the
      date hereof and ending on the Closing Date, unless the Buyer shall have
      otherwise consented in writing, Meadowlands will not:

     

    (a)           Material
      Commitments. Enter into or institute any material Commitment or any material
      employment contract or other agreement not in the normal course of the Business
      or, except as required by applicable law or regulation, renew, amend or modify
      any such contract or agreement now in existence; and

     

    (b)           Inconsistent
      Agreements. Enter into any agreement, understanding or commitment, written
      or oral, with any other person which is in any material respect inconsistent
      with the obligations of Meadowlands or the Sellers arising under this
      Agreement.

     

    (c)           Character
      of Business. (i) Amend the Articles of Incorporation or By-Laws of
      Meadowlands; (ii) merge with or into, consolidate, amalgamate or otherwise
      combine with, any other entity; nor (iii) change the character of the
      Business;

     

    (d)           No
      Additional Liens. (i) Encumber, mortgage, or voluntarily subject to lien any
      of the Meadowlands Shares or existing Assets; (ii) transfer, sell, lease,
      license or otherwise dispose of any of, or any part of, the Assets (other than
      in the ordinary course of business); (iii) convey, transfer or acquire any
      material Asset or property to, for or on behalf of Meadowlands other than in
      the
      ordinary course of business; (iv) enter into any arrangement, agreement or
      undertaking, with respect to any of the employees relating to the payment of
      bonus, severance, profit-sharing or special compensation or any increase in
      the
      compensation payable or to become payable to any obligation, including, without
      limitation incur any indebtedness for borrowed money, or enter into any other
      arrangement having the economic effect of any of the foregoing, or enter into
      any agreement, commitment, contract or other transaction or arrangement relating
      to the Business, Meadowlands Shares or the Assets;

     

    (e)           No
      Dividends. Make any distributions or dividends of cash, Assets or
      securities, not agree to make or make any sales of their securities including
      the issuance of any additional capital stock or rights or options or contracts
      to acquire, or instruments convertible into, capital stock;

     

    (f)           No
      Change to Material Obligations. Modify, change nor terminate any of their
      material obligations other than in the ordinary course of business, nor grant
      any power of attorney with respect to the Business, Shares or the Assets to
      any
      party except Buyer; and

     

    (g)          
Employees.
Grant
      any
      increase in salary payable or to become payable by it
      to any
      employee, not increase benefits payable to any employee under any bonus or
      pension plan
      or
      other contract or commitment, in each case, other than for historical annual
      increase in salary granted in the ordinary course of business.

     

     

    
      
         

      

      
        28

        
          

        

      

      
         

      

    

     

     12.
      Affirmative Covenants of the Buyer. Except as
      otherwise consented to by the Sellers, Somerset and the Buyer covenant that,
      throughout the period commencing on the date hereof and ending on the Closing
      Date, they will:

     

    (a)  Good
      Standing. Maintain their respective existence as corporations validly
      existing and in good standing under the laws of the States of Delaware and
      New
      Jersey;

     

    (b)  Satisfaction
      of Conditions. Use their best efforts to assure, as soon as is reasonably
      practicable, the satisfaction of the conditions to the effectiveness of the
      transactions contemplated in this Agreement;

     

    (c)  Compliance
      with Laws. Comply with and perform all material obligations and duties
      imposed upon them by all federal and state laws and all rules, regulations
      and
      orders imposed by federal or state governmental authorities, except in respects
      not materially adverse to their financial condition or business.

     

    (d)  Registration
      Statement. Not later than 120 days after the Closing, Somerset shall prepare
      and file with the SEC a registration statement with respect to the maximum
      number of shares of Somerset common stock as to which the Sellers would then
      be
      entitled to receive upon conversion of all the outstanding principal then due
      under the Convertible Note, plus the 666,666 shares being issued to Seller
      pursuant to the Section 4(a)(iii) of this Agreement. Upon the filing of such
      registration statement, Somerset shall use its best efforts to cause same to
      become effective.

     

    13.
      Termination.

     

     (a)     Grounds
      for Termination.  Notwithstanding anything
      in this
      Agreement to the contrary, this Agreement may be terminated by written notice
      of
      termination at any time before the Closing Date only as follows:

     

    
      	
              (i)  

            	
              by
                mutual consent of the Sellers and the Buyer;
                or

            

    

     

    
      	
              (ii)  

            	
              by
                a non-breaching party hereto, if another party shall have misstated
                any
                representation or been in material breach of any warranty, covenant,
                undertaking or restriction contained herein and such misrepresentation
                or
                breach has not been cured within ten (10) days' after notice from
                the
                non-breaching party; or

            

    

     

    
      
        	
                (iiI)  

              	
                
                  if
                    a condition to Closing applicable to it hereunder has not been
                    satisfied
                    by the Closing Date (or such earlier date as specified herein)
                    and has not
                    been waived in writing by such
                    party.

                

              

      

       

    

     

    
      
         

      

      
        29

        
          

        

      

      
         

      

    

     

    (b)     Consequences
      of
      Termination.   In the event of the termination and abandonment
      hereof pursuant to the provisions of this Section, this Agreement shall become
      void and have no effect, and no party hereto shall have any liability or further
      obligation to any other party to this Agreement, except as provided in Sections
      15 and 16 (which shall survive the termination of this Agreement), and except
      for such legal and equitable rights and remedies which any party may have by
      reason of any breach or violation of this Agreement by any other party. The
      foregoing not to the contrary, the terms and conditions set forth in that
      certain Escrow Agreement made on or about June 6, 2007 by and among the parties
      hereto, attached hereto as Exhibit G, shall remain in full force and effect
      and
      shall be legally binding on the parties thereto.

     

    14.  Further
      Assurances. At any time and from time to time after the Closing, at
      the request of any party and without further consideration, the other party
      will
      execute and deliver such other instruments of sale, transfer, conveyance,
      assignment and confirmation and take such action as the requesting party may
      reasonably deem necessary or desirable in order to more effectively transfer,
      convey and assign the properties transferred hereunder and to effectuate the
      terms hereof.

     

    15.  Expenses.
      The Buyer and the Sellers will each pay their respective counsel,
      accountants and other expenses incurred in connection with the negotiation
      and
      consummation of the transactions contemplated herein.

     

    16.  Nondisclosure
      of Confidential Information. The Buyer, Meadowlands, and the
      Sellers each agree that if for any reason whatsoever the transactions
      contemplated by this Agreement shall not be consummated, all information
      disclosed to the other parties pursuant to Section 9 or otherwise shall remain
      confidential and each party shall not use or furnish or divulge the same to
      any
      other person.

     

    17.  Survival
      of Representations and Warranties.

     

    (a)  All
      representations, covenants and warranties made by the parties under this
      Agreement in connection with the transactions contemplated hereby or in any
      Exhibit, Schedule, certificate, list or other instrument delivered pursuant
      hereto shall survive the Closing for a period of one (1) year.

     

    (b)  Notwithstanding
      any rights of each of the parties to fully investigate the respective affairs
      of
      the others relating to all material obligations and representations contained
      herein, and notwithstanding any knowledge of facts determined or determinable
      by
      the parties pursuant to such investigation, or right of investigation, the
      parties shall nevertheless have the right to rely fully upon the
      representations, warranties, covenants and agreements contained in this
      Agreement and/or in any document delivered or to be delivered pursuant to this
      Agreement by any party, or by any party's authorized representative, in
      connection with the transactions contemplated by this Agreement. Each warranty,
      representation, agreement and covenant contained herein is independent of all
      warranties, representations, agreements and covenants contained herein or in
      any
      Exhibit, Schedule, certificate, list or other instrument or documents
(whether
      or not covering identical or related subject matter) and must be independently
      and separately complied with and satisfied.

     

     

    
      
         

      

      
        30

        
          

        

      

      
         

      

    

     

    18.    Indemnification.

     

    (a)   Each
      Seller, jointly and
      severally, hereby indemnifies the Buyer and agrees to hold the Buyer harmless
      from and against any and all damages, losses, costs and expenses (including
      reasonable counsel fees and expenses in connection with the contest of any
      claim) ("Damages") paid or incurred by the Buyer and arising out of (i) any
      and
      all misrepresentations or breaches of covenant or warranty made by the Sellers
      or Meadowlands under this Agreement in connection with the transactions
      contemplated herein or in any Exhibit, Schedule, certificate, list or other
      instrument delivered pursuant hereto or (ii) any claim against Buyer or
      Meadowlands arising out of or relating to the Undisclosed
      Liabilities.

     

    (b)   The
      Buyer and Somerset,
      jointly and severally, hereby indemnify the Sellers and their respective heirs,
      successors and assigns, and agrees to hold the Sellers and their respective
      heirs, successors and assigns harmless from and against any and all Damages
      paid
      or incurred by the Sellers and arising out of any and all misrepresentations
      or
      breach of covenant or warranty made by the Buyer and/or Somerset under this
      Agreement in connection with the transactions contemplated hereby or in any
      Exhibit, Schedule, certificate, list or other instrument delivered pursuant
      hereto.

     

    (c)  Promptly
      after receipt by an indemnified party of notice of the commencement of any
      action which would give rise to Damages, such indemnified party shall give
      written notice thereof to the indemnifying party. Upon receipt of such notice,
      the indemnifying party shall have the option of either assuming the defense
      of
      such action (and the cost thereof) with counsel reasonably satisfactory to
      both
      the indemnified and the indemnifying parties or participating in the defense
      of
      such action at the sole expense, however, of the indemnifying party. In the
      event of the indemnifying party's assumption of the defense of such action,
      counsel selected by the indemnified party may at the election of the indemnified
      party participate in any such defense, at the sole expense, however, of the
      indemnified party. No settlement or compromise to be paid by the indemnifying
      party shall be entered into without the written consent of the indemnified
      party, which consent shall not be unreasonably conditioned, delayed or
      withheld.

     

    (d)  The
      indemnity provided in Section 18 shall be limited in time, in that no party
      may
      assert a claim in respect of such indemnity at any time after one (1) year
      after
      the Closing Date.

     

    (e)   Notwithstanding
      anything
      herein to the contrary, no party shall assert a claim for indemnity pursuant
      to
      Section 18 unless the aggregate of all such claims by such indemnified party
      against such indemnifying party shall exceed $25,000, in which event the
      indemnifying party's obligation shall apply to all indemnified losses. The
      aggregate liability of the indemnifying party(ies) hereunder shall in all events
      be limited to One Million ($1,000,000) Dollars.

     

     

    
      
         

      

      
        31

        
          

        

      

      
         

      

    

     

    19.  Notices.     All
      notices and communications shall be in writing and delivered as follows (or
      to
      such other address as any party may furnish to the other in writing in
      accordance with the terms of this Section):

     

    If
      to the
      Buyer:

     

    Somerset
      International Group, Inc.

    90
      Washington Valley Road

    Bedminster,
      NJ 07921

    Attn:
      John X. Adiletta, Chief Executive Officer

     

    with
      a
      copy to:

     

    Picinich
      & McClure, Esqs.

    139
      Harristown Road

    Suite
      101

    Glen
      Rock, New Jersey 07542 Attn: William R. McClure, Esq.

     

    If
      to the
      Sellers:

     

    Mr
&
      Mrs. Keith Kesheneff

    57
      Yacht
      Club Drive

    Lake
      Hopatcong, New Jersey 07849 with a copy to:

     

    Brown,
      Moskowitz & Kallen, P.C. 75 Main Street

    Suite
      203

    Millburn,
      New Jersey 07041

    Attn:
      Stuart M. Brown, Esq.

     

    Any
      notices and communications pursuant to this Agreement, shall be sent by hand,
      by
      registered or certified first-class mail, postage prepaid, or by such other
      form
      of delivery as shall provide the sender with documentary evidence of delivery,
      and shall be deemed to be delivered when sent.

     

    20.  Miscellaneous.

     

    (a)
      Severability. If any term or provision of this Agreement shall to any
      extent be invalid or unenforceable, the remainder of this Agreement shall not
      be
      affected thereby, and each term and provision of the Agreement shall be valid
      and enforced to the fullest extent permitted by law, unless to do so would
      clearly violate the present legal and valid intention of the parties
      hereto.

     

     

     

    
      
         

      

      
        32

        
          

        

      

      
         

      

    

     

     

    (b)  Assignment.
      Neither the Buyer, Somerset nor the Sellers may assign this Agreement or
      any
      rights hereunder prior to the Closing without the prior written consent of
      the
      other parties; provided, however, that the Buyer may assign this Agreement
      or
      any of its rights hereunder to any Affiliate thereof, and further provided
      that
      upon any such assignment by Buyer (and such Affiliate's acceptance of the
      assignment) the representations and warranties of Buyer hereunder shall then
      be
      deemed to have been made by such Affiliate and Buyer shall then be deemed the
      unconditional guarantor of such representations, warranties and obligations
      of
      Affiliate hereunder. Such assignment shall not impact the liquidity contemplated
      in Section 4(a)(iii). After the Closing, the terms, provisions, covenants and
      conditions of this Agreement shall bind and benefit the parties hereto and
      their
      respective heirs, successors, personal representatives and assigns.

     

    (c)  Counterparts.
      This Agreement may be executed in two or more counterparts, each of which,
      when so executed and delivered, shall be an original instrument, but such
      counterparts, together, shall constitute a single agreement.

     

    (d)  No
      Waiver. No waiver of any breach or default under this Agreement shall be
      considered valid unless in writing and signed by the party giving such waiver,
      and no such waiver shall be deemed a waiver of any contemporaneous or subsequent
      breach or default of the same or similar nature. Any party hereto may, at or
      before the Closing, waive any conditions to its obligations hereunder which
      are
      not fulfilled.

     

    (e)  Entire
      Agreement; Amendments. This Agreement, including the Exhibits and Schedules
      referred to herein which are a part hereof, together with a Closing Memorandum
      of even date herewith, contains the entire understanding of the parties hereto
      with respect to the subject matter contained herein and may be amended only
      by a
      written instrument executed by the Sellers and the Buyer or their respective
      successors or assigns. There are no restrictions, promises, warranties,
      covenants or undertakings other than those expressly set forth
      herein.

     

    (f)  Governing
      Law. This Agreement shall be governed by and construed in accordance with
      the laws of the State of New Jersey, without reference to the choice of law
      doctrine of such state.

     

    (g)  Headings.
      Headings are inserted for convenience and do not form part of the
      Agreement.

     

    (h)  Public
      Announcements. No party shall issue a press release, make publicly available
      any document or make any public announcement concerning this Agreement, the
      terms hereof or the transactions contemplated hereby without obtaining the
      prior
      written consent of the other party, which consent shall not be unreasonably
      withheld or delayed.

     

     

    
      
         

      

      
        33

        
          

        

      

      
         

      

    

     

    (i)  Arbitration.
      Except for disputes concerning Purchase Price adjustments, In the event
      that
      there shall be a dispute among the parties arising out of or relating to this
      Agreement, including, without limitation, the indemnities provided in Article
      18, or the breach thereof, the parties agree that such dispute shall be resolved
      by final and binding arbitration before
      one arbitrator if such dispute involves an amount of less than $100,000 and
      if
      such dispute involves an amount equal to or in excess of $100,000 then before
      a
      panel of three arbitrators, in either case, in Somerset County, New Jersey
      administered by the American Arbitration Association ("AAA"), in accordance
      with
      AAA's commercial rules of practice then in effect or such other procedures
      as
      the parties may agree to prior to the Closing. Any award issued as a result
      of
      such arbitration shall be final and binding between the parties thereto, and
      shall be enforceable by any court having jurisdiction over the party against
      whom enforcement is sought. The arbitrator shall have the authority in his
      or
      her discretion to award to the prevailing party the fees and expenses of such
      arbitration (including reasonable attorneys' fees) or any action to enforce
      an
      arbitration award.

     

    (j)             Singular.
      Plural. The singular and plural form shall be interchangeable

     

    herein
      except where specific contextual reference is otherwise required.

     

    IN
      WITNESS WHEREOF, the parties have executed this Stock Purchase Agreement on
      July
      5, 2007, to be effective as of the date first set forth above.

     

    
      	
              ATTEST:

            	
              Secure
                System, Inc.

            
	
              By:

            	 
	
              Name:
                John X. Adiletta

            	
              Name:
                John X. Adiletta

            
	
              Title:
                Secretary

            	
              Title:
                Chief Executive Officer

            
	
              Keith
                Kesheneff

            	
              Kathryn
                Kesheneff

            
	
              Attest:

            	
              Somerset
                International Group, Inc.

            
	
              By:

            	 
	
              John
                X. Adiletta, Secretary

            	
              John
                X. Adiletta, Presidentf8ka1063007ex10ii_somerset.htm

    THIS
      NOTE AND THE SHARES OF COMMON STOCK 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

     

    
      	
              ***$250000.00***

            	 	
              BEDMINSTER
                NJ

            
	 	 	
              July
                5, 2007

            

    

     

    FOR
      VALUE
      RECEIVED, the undersigned, SOMERSET INTERNATIONAL GROUP, INC., a Delaware
      corporation (the "Corporation"), agrees and promises to pay to the order of
      Keith Kesheneff and Kathryn Kesheneff (the "Holder") at 57 Yacht Club Drive,
      Lake Hopatcong, New Jersey 07849, or at such other place or places as the Holder
      may designate in writing, the principal amount of TWO HUNDRED AND FIFTY THOUSAND
      ($250,000) DOLLARS, with interest, if applicable as hereinafter provided, in
      legal tender of the United States of America, in immediately available funds,
      as
      follows:

     

    (a)  Commencing
      on August 1, 2007, and continuing on the first (1st) day
      of each
      consecutive month thereafter until July 1, 2008 (the "Maturity Date"), the
      Corporation shall make equal payments calculated so as to directly reduce the
      principal amount to zero as of the Maturity Date.

     

    (b)  In
      the
      event that any principal payment due on or after March 1, 2008 is not paid
      within three (3) business days after same is due, then interest shall begin
      to
      accrue at an annual rate of eight (8.00%) percent on the then outstanding
      principal balance. Interest, which shall be calculated in arrears based upon
      a
      360 day year, shall be due and payable in full with each subsequent monthly
      principal installment.

     

    (c)  The
      entire unpaid principal of this Note, together with interest, if applicable,
      shall be due and payable on the Maturity Date.

     

    (d)  The
      Corporation may at its option prepay this Note, in whole or in part, at any
      time
      prior to the Maturity Date, without penalty. Any prepayment shall first be
      applied to any outstanding interest due and payable, then to the principal
      balance in the inverse order of payment.

     

    (e)           The
      Corporation's obligations under this Note shall be secured by a pledge of a
      portion of the outstanding shares of common stock of Vanwell Electronics, Inc.,
      pursuant to the terms of a Stock Pledge and Escrow Agreement dated of even
      date
      herewith.

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

     

    1.             Convertibility.
      This Note is issued with conversion rights pursuant to the terms of a Stock
      Purchase Agreement (the "SPA") executed on July 5, 2007 and effective as of
      June
      30, 2007. Reference is made to the SPA for a description of the agreement among
      the parties. A copy of the SPA is available for review by any holder at the
      office of the Corporation. The Holder shall be bound by the terms of the SPA,
      except if such terms are inconsistent with the terms hereof. All terms which
      are
      not defined in this Note shall be as defined in the SPA.

     

    2.             Place
      and Manner of Payment. All sums due under this Note are payable not later
      than 1 2:30p.m. Eastern time, in legal tender of the United States of America,
      in immediately available funds, without offset or setoff. Any payments in excess
      of $50,000 shall be made, at the option of the Holder, by wire transfer to
      a
      bank account designated in writing to the Corporation by the Holder not less
      than five (5) days prior to the time such payment is due and, if no such
      designation has been made by the Holder, by check mailed by certified or
      registered mail to the address of the Holder designated in accordance with
      Section 14. Any remittances by check sent via mail shall be postmarked not
      later
      than three (3) business days prior to the due date, such payment to be subject
      to the condition that any such check may be handled for collection in accordance
      with the practice of the collecting bank or banks, and any acceptance of a
      check
      by the Holder shall be void unless the amount due is actually received by the
      Holder.

     

    3.             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:

     

    (a)  The
      failure to pay any principal or interest installments due under this Note within
      ten (10) days after the day on which any such payment is due, if such failure
      occurs more than twice during the term of this Note;

     

    (b)  any
      default by the Corporation under a certain "EBITDA Adjustment Note" executed
      by
      the Corporation pursuant to Section 4(iv) of the SPA;

     

    (c)  any
      default by the Corporation under a certain "NCA Note" executed by the
      Corporation pursuant to Section 4(iii) of the SPA;

     

    (d)  any
      default by the Corporation or any other party except the Holder, under a certain
      "Covenants Agreement" executed by the Corporation and the Holder, inter alia,
      of
      even date herewith;

     

    (e)     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;

     

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

     

    (f)           if
      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.

     

        
      4.   
Default
      Rate of Interest. 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 the Conversion Price
      specified in Section 8 hereof shall be reduced to $.20 per share of Common
      Stock.

     

      
      5.    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.

     

    6.    Waiver
      of Presentment, Etc.  THE CORPORATION WAIVES
PRESENTMENT, DEMAND, NOTICE OF DISHONOR, PROTEST
      AND NOTICE OF
      NONPAYMENT AND PROTEST.

     

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

     

    8.           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 $0.40 or $.20 in the event of a Default as defined in
      paragraph 3(ii) (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. 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 12 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. Any partial conversion shall be treated as a prepayment
      in part and shall be applied to the principal balance in the inverse order
      of
      payments.

     

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    9.  
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.

     

    10.    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 10, 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 10 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). 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 10) 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.

     

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

     

    11.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 the holder, 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 this Note. 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 outstanding shares
                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).

     

    12.  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 12 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.

     

    13.  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.

     

    14.     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

     

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    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:

     

    Mr
&
      Mrs. Keith Kesheneff

    57
      Yacht
      Club Drive

    Lake
      Hopatcong, New Jersey 07849

     

    with
      a
      copy to:

     

    Brown,
      Moskowitz & Kallen, P.C. 75 Main Street

    Suite
      203

    Millburn,
      New Jersey 07041

    Attn:
      Stuart M. Brown, Esq.

     

    (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.

     

    15.        Governing
      Law; Venue; Jurisdiction. This Note shall be governed by and construed in
      accordance with the internal laws of the State of Delaware. The Corporation
      hereby irrevocably submits to the exclusive jurisdiction of the federal or
      state
      court sitting in New Jersey over any dispute arising out of or relating to
      this
      Note. The Corporation hereby irrevocably waives, to the fullest extent permitted
      by applicable law, any objection which it may now or hereafter have to the
      laying of venue of any such dispute brought in such court or any defense of
      inconvenient forum for the maintenance of such dispute. The Corporation agrees
      that a judgment in any such dispute may be enforced in other jurisdictions
      by
      suit on the judgment or in any other manner provided by law. The Corporation
      consents to process being served in any suit, action or proceeding hereunder
      by
      the mailing of a copy thereof in accordance with the notice provisions of this
      Note.

     

    16.        Modification.
      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.

     

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

     

     

    17.           No
      Waiver; Cumulative Remedies. No failure on the part of Holder to exercise
      and no delay in exercising, and no course of dealing with respect to, any right,
      power, or privilege under this Note shall operate as a waiver thereof, nor
      shall
      any single or partial exercise of any right, power, or privilege under this
      Note
      preclude any other or further exercise thereof or the exercise of any other
      right, power, or privilege. To the fullest extent permitted by applicable laws,
      the rights and remedies provided for in this Note are cumulative and not
      exclusive of any rights and remedies provided by law.

     

    Attest:                                                                         
Somerset
      International Group, Inc.

     

     

    By:                                         

    John
      X.
      Adiletta,
      Secretary                                                                   John
      X. Adiletta, President

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