Contract
THIS
WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT
AND
THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO SOMERSET INTERNATIONAL GROUP, INC. THAT SUCH REGISTRATION IS
NOT
REQUIRED.
Issue
Date: June 15,
2007
Somerset
International Group, Inc, a corporation organized under the laws of the State
of
Delaware (the “Company”), hereby certifies that, for value received, under the
terms of a Convertible Promissory Note Agreement dated June 7,
2007, Xxxxxx Xxxxxx, an individual, with an address at 00 Xxxxxx
Xxxx, Xxxxx Xxxxxx Xxxxx, Xxx Xxxxxx, or her assigns (the “Holder”), is
entitled, subject to the terms set forth below, to purchase from the Company
at
any time after the Issue Date up to 5:00 p.m., E.S.T on June 14, 2010 (the
“Expiration Date”), up to fifty thousand (50,000) fully paid and nonassessable
shares of the common stock of the Company (the “Common Stock”), $.001 par value
per share, at a per share purchase price of $.12. The aforedescribed
purchase price per share, as adjusted from time to time as herein provided,
is
referred to herein as the "Purchase Price."
As
used
herein the following terms, unless the context otherwise requires, have the
following respective meanings:
(a) The
term “Company” shall include Somerset International Group, Inc. and any
corporation which shall succeed or assume the obligations of Somerset
International Group, Inc. hereunder.
(b) The
term “Common Stock” includes (a) the Company's Common Stock, $.001 par
value per share, as authorized on the date of the Convertible Note Agreement,
and (b) any other securities into which or for which any of the securities
described in (a) may be converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or
otherwise.
(c) The
term “Other Securities” refers to any stock (other than Common Stock) and other
securities of the Company or any other person (corporate or otherwise) which
the
holder of the Warrant at any time shall be entitled to receive, or shall have
received, on the exercise of the Warrant, in lieu of or in addition to Common
Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities pursuant
to
Section 4 or otherwise.
1. Exercise
of Warrant.
1.1. Number
of Shares Issuable upon Exercise. From and after the Issue Date
through and including the Expiration Date, the Holder hereof shall be entitled
to receive, upon exercise of this Warrant in whole in accordance with the terms
of subsection 1.2 or upon exercise of this Warrant in part in accordance
with subsection 1.3, shares of Common Stock of the Company, subject to
adjustment pursuant to Section 4.
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1.2. Full
Exercise. This Warrant may be exercised in full by the Holder
hereof by delivery of an original or facsimile copy of the form of subscription
attached as Exhibit A hereto (the “Subscription Form") duly executed by
such Holder and surrender of the original Warrant within seven (7) days of
exercise, to the Company at its principal office or at the office of its Warrant
Agent (as provided hereinafter), accompanied by payment, in cash, wire transfer
or by certified or official bank check payable to the order of the Company,
in
the amount obtained by multiplying the number of shares of Common Stock for
which this Warrant is then exercisable by the Purchase Price then in
effect.
1.3. Partial
Exercise. This Warrant may be exercised in part (but not for a
fractional share) by surrender of this Warrant in the manner and at the place
provided in subsection 1.2 except that the amount payable by the Holder on
such partial exercise shall be the amount obtained by multiplying (a) the
number of whole shares of Common Stock designated by the Holder in the
Subscription Form by (b) the Purchase Price then in effect. On
any such partial exercise, the Company, at its expense, will forthwith issue
and
deliver to or upon the order of the Holder hereof a new Warrant of like tenor,
in the name of the Holder hereof or as such Holder (upon payment by such Holder
of any applicable transfer taxes) may request, the whole number of shares of
Common Stock for which such Warrant may still be exercised.
1.4. Company
Acknowledgment. The Company will, at the time of the exercise of the
Warrant, upon the request of the Holder hereof acknowledge in writing its
continuing obligation to afford to such Holder any rights to which such Holder
shall continue to be entitled after such exercise in accordance with the
provisions of this Warrant. If the Holder shall fail to make any such request,
such failure shall not affect the continuing obligation of the Company to afford
to such Holder any such rights.
1.5. Trustee
for Warrant Holders. In the event that a bank or trust company shall have
been appointed as trustee for the Holder of the Warrants pursuant to
Subsection 3.2, such bank or trust company shall have all the powers and
duties of a warrant agent (as hereinafter described) and shall accept, in its
own name for the account of the Company or such successor person as may be
entitled thereto, all amounts otherwise payable to the Company or such
successor, as the case may be, on exercise of this Warrant pursuant to this
Section 1.
1.6. Delivery
of Stock Certificates, etc. on Exercise. The Company agrees that the shares
of Common Stock purchased upon exercise of this Warrant shall be deemed to
be
issued to the Holder hereof as the record owner of such shares as of the close
of business on the date on which this Warrant shall have been surrendered and
payment made for such shares as aforesaid. As soon as practicable after the
exercise of this Warrant in full or in part, and in any event within five (5)
days thereafter, the Company at its expense (including the payment by it of
any
applicable issue taxes) will cause to be issued in the name of and delivered
to
the Holder hereof, or as such Holder (upon payment by such Holder of any
applicable transfer taxes) may direct in compliance with applicable securities
laws, a certificate or certificates for the number of duly and validly issued,
fully paid and nonassessable shares of Common Stock (or Other Securities) to
which such Holder shall be entitled on such exercise, plus, in lieu of any
fractional share to which such Holder would otherwise be entitled.
2. Adjustment
for Reorganization, Consolidation, Merger, etc.
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2.1. Reorganization,
Consolidation, Merger, etc. In case at any time or from time to
time, the Company shall (a) effect a reorganization, (b) consolidate
with or merge into any other person or (c) transfer all or substantially
all of its properties or assets to any other person under any plan or
arrangement contemplating the dissolution of the Company, then, in each such
case, as a condition to the consummation of such a transaction, proper and
adequate provision shall be made by the Company whereby the Holder of this
Warrant, on the exercise hereof as provided in Section 1, at any time after
the consummation of such reorganization, consolidation or merger or the
effective date of such dissolution, as the case may be, shall receive, in lieu
of the Common Stock (or Other Securities) issuable on such exercise prior to
such consummation or such effective date, the stock and other securities and
property (including cash) to which such Holder would have been entitled upon
such consummation or in connection with such dissolution, as the case may be,
if
such Holder had so exercised this Warrant, immediately prior thereto, all
subject to further adjustment thereafter as provided in
Section 4.
2.2. Dissolution. In
the event of any dissolution of the Company following the transfer of all or
substantially all of its properties or assets, the Company, prior to such
dissolution, shall at its expense deliver or cause to be delivered the stock
and
other securities and property (including cash, where applicable) receivable
by
the Holder of the Warrants after the effective date of such dissolution pursuant
to this Section 3 to a bank or trust company (a "Trustee") having its
principal office in New York, NY, as trustee for the Holder of the
Warrants.
2.3. Continuation
of Terms. Upon any reorganization, consolidation, merger or
transfer (and any dissolution following any transfer) referred to in this
Section 3, this Warrant shall continue in full force and effect and the
terms hereof shall be applicable to the Other Securities and property receivable
on the exercise of this Warrant after the consummation of such reorganization,
consolidation or merger or the effective date of dissolution following any
such
transfer, as the case may be, and shall be binding upon the issuer of any Other
Securities, including, in the case of any such transfer, the person acquiring
all or substantially all of the properties or assets of the Company, whether
or
not such person shall have expressly assumed the terms of this Warrant as
provided in Section 4. In the event this Warrant does not
continue in full force and effect after the consummation of the transaction
described in this Section 3, then only in such event will the Company's
securities and property (including cash, where applicable) receivable by the
Holder of the Warrants be delivered to the Trustee as contemplated by
Section 3.2.
2.4 Extraordinary
Events Regarding Common Stock. In the event that the Company
shall (a) subdivide its outstanding shares of Common Stock, or
(b) combine its outstanding shares of the Common Stock into a smaller
number of shares of the Common Stock, then, in each such event, the Purchase
Price shall, simultaneously with the happening of such event, be adjusted by
multiplying the then Purchase Price by a fraction, the numerator of which shall
be the number of shares of Common Stock outstanding immediately prior to such
event and the denominator of which shall be the number of shares of Common
Stock
outstanding immediately after such event, and the product so obtained shall
thereafter be the Purchase Price then in effect. The Purchase Price, as so
adjusted, shall be readjusted in the same manner upon the happening of any
successive event or events described herein in this
Section 2.4. The number of shares of Common Stock that the
Holder of this Warrant shall thereafter, on the exercise hereof as provided
in
Section 1, be entitled to receive shall be adjusted to a number determined
by multiplying the number of shares of Common Stock that would otherwise (but
for the provisions of this Section 2) be issuable on such exercise by a
fraction of which (a) the numerator is the Purchase Price that would
otherwise (but for the provisions of this Section 2) be in effect, and
(b) the denominator is the Purchase Price in effect on the date of such
exercise.
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3. Certificate
as to Adjustments. In each case of any adjustment or readjustment
in the shares of Common Stock (or Other Securities) issuable on the exercise
of
the Warrants, the Company at its expense will promptly cause its Chief Financial
Officer or other appropriate designee to compute such adjustment or readjustment
in accordance with the terms of the Warrant and prepare a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon
which
such adjustment or readjustment is based, including a statement of (a) the
consideration received or receivable by the Company for any additional shares
of
Common Stock (or Other Securities) issued or sold or deemed to have been issued
or sold, (b) the number of shares of Common Stock (or Other Securities)
outstanding or deemed to be outstanding, and (c) the Purchase Price and the
number of shares of Common Stock to be received upon exercise of this Warrant,
in effect immediately prior to such adjustment or readjustment and as adjusted
or readjusted as provided in this Warrant. The Company will forthwith mail
a
copy of each such certificate to the Holder of the Warrant and any Warrant
Agent
of the Company.
4. Reservation
of Stock, etc. Issuable on Exercise of Warrant; Financial
Statements. The Company will at all times reserve and keep
available, solely for issuance and delivery on the exercise of the Warrants,
all
shares of Common Stock (or Other Securities) from time to time issuable on
the
exercise of the Warrant. This Warrant entitles the Holder hereof to
receive copies of all financial and other information distributed or required
to
be distributed to the holders of the Company's Common Stock.
5. Assignment;
Exchange of Warrant. Subject to compliance with applicable
securities laws, this Warrant, and the rights evidenced hereby, may be
transferred by any registered holder hereof (a "Transferor"). On the surrender
for exchange of this Warrant, with the Transferor's endorsement in the form
of
Exhibit B attached hereto (the “Transferor Endorsement Form") and together
with an opinion of counsel reasonably satisfactory to the Company that the
transfer of this Warrant will be in compliance with applicable securities laws,
the Company at its expense, twice, only, but with payment by the Transferor
of
any applicable transfer taxes, will issue and deliver to or on the order of
the
Transferor thereof a new Warrant or Warrants of like tenor, in the name of
the
Transferor and/or the transferee(s) specified in such Transferor Endorsement
Form (each a "Transferee"), calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock called for on the face or
faces
of the Warrant so surrendered by the Transferor.
6. Replacement
of Warrant. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and,
in
the case of any such loss, theft or destruction of this Warrant, on delivery
of
an indemnity agreement or security reasonably satisfactory in form and amount
to
the Company or, in the case of any such mutilation, on surrender and
cancellation of this Warrant, the Company at its expense, twice only, will
execute and deliver, in lieu thereof, a new Warrant of like tenor.
7. Maximum
Exercise. The Holder shall not be entitled to exercise this
Warrant on an exercise date, in connection with that number of shares of Common
Stock which would be in excess of the sum of (i) the number of shares of
Common Stock beneficially owned by the Holder and its affiliates on an exercise
date, and (ii) the number of shares of Common Stock issuable upon the
exercise of this Warrant with respect to which the determination of this
limitation is being made on an exercise date, which would result in beneficial
ownership by the Holder and its affiliates of more than 4.99% of the outstanding
shares of Common Stock on such date. For the purposes of the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934,
as amended, and Regulation 13d-3 thereunder. Subject to the
foregoing, the Holder shall not be limited to aggregate exercises which would
result in the issuance of more than 4.99%. The restriction described
in this paragraph may be revoked upon and effective after sixty-one (61)
days prior notice from the Holder to the Company. The Holder may
allocate which of the equity of the Company deemed beneficially owned by the
Purchaser shall be included in the 4.99% amount described above and which shall
be allocated to the excess above 4.99%.
8. Transfer
on the Company's Books. Until this Warrant is transferred on the
books of the Company, the Company may treat the registered holder hereof as
the
absolute owner hereof for all purposes, notwithstanding any notice to the
contrary.
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9. Notices. All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice
is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice
is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The
addresses for such communications shall be: (i) if to the Company to: Somerset
International Group, Inc., 00 Xxxxxxxxxx Xxxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxxxx
00000, Xxxx X. Xxxxxxxx, Director and CFO, facsimile: 000-000-0000, with a
copy
by facsimile only to: Xxxxxx & Jaclin, LLP, 000 Xxxxx 0 Xxxxx, Xxxxx 000,
Xxxxxxxxx, Xxx Xxxxxx 00000, Attn: Xxxxx Xxxxxx, Esq., facsimile: (000)
000-0000, and (ii) if to the Holder, to the address listed on the first
paragraph of this Warrant.
10. Miscellaneous. This
Warrant and any term hereof may be changed, waived, discharged or terminated
only by an instrument in writing signed by the party against which enforcement
of such change, waiver, discharge or termination is sought. This Warrant shall
be construed and enforced in accordance with and governed by the laws of New
Jersey. Any dispute relating to this Warrant shall be adjudicated in
Somerset County in the State of New Jersey. The headings in this
Warrant are for purposes of reference only, and shall not limit or otherwise
affect any of the terms hereof. The invalidity or unenforceability of
any provision hereof shall in no way affect the validity or enforceability
of
any other provision.
IN
WITNESS WHEREOF, the Company has executed this Warrant as of the date first
written above.
|
SOMERSET
INTERNATIONAL GROUP, INC.
By:
/s/ Xxxx X. Xxxxxxxx
Xxxx
X. Xxxxxxxx
President
|
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Exhibit A
FORM
OF
SUBSCRIPTION
(to
be
signed only on exercise of Warrant)
TO: Somerset
International Group, Inc.
The
undersigned, pursuant to the provisions set forth in the attached Warrant hereby
irrevocably elects to purchase:
___________
shares of the Common Stock covered by such Warrant.
The
undersigned herewith makes payment of the full purchase price for such shares
at
the price per share provided for in such Warrant, which is
$___________. Such payment takes the form of lawful money of the United
States.
The
undersigned requests that the certificates for such shares be issued in the
name
of, and delivered to _____________________________________________________whose
address is:
The
undersigned represents and warrants that all offers and sales by the undersigned
of the securities issuable upon exercise of the within Warrant shall be made
pursuant to registration of the Common Stock under the Securities Act of 1933,
as amended (the "Securities Act"), or pursuant to an exemption from registration
under the Securities Act.
|
Dated:___________________
|
(Signature must conform to name of holder as specified on the face of the Warrant) (Address) |
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Exhibit B
FORM
OF
TRANSFEROR ENDORSEMENT
(To
be
signed only on transfer of Warrant)
For
value received, the undersigned
hereby sells, assigns, and transfers unto the person(s) named below under the
heading "Transferees" the right represented by the within Warrant to purchase
the percentage and number of shares of Common Stock of [company name] to which
the within Warrant relates specified under the headings "Percentage Transferred"
and "Number Transferred," respectively, opposite the name(s) of such person(s)
and appoints each such person Attorney to transfer its respective right on
the
books of [company name] with full power of substitution in the
premises.
|
Transferees
|
Percentage
Transferred
|
Number
Transferred
|
|
Dated: ______________,
___________
Signed
in the presence of:
(Name) ACCEPTED
AND AGREED:
[TRANSFEREE]
(Name) |
(Signature
must conform to name of holder as specified on the face of the
warrant)
(address) (address) |
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