Execution Copy

 

CONSULTING AGREEMENT

 

THIS CONSULTING AGREEMENT (the “Agreement”) is effective as of the 1st day of
July, 2013 (the “Effective Date”) by and between ARKADOS GROUP, INC., a Delaware
corporation (hereinafter referred to collectively with its subsidiaries as the
“Company”) with its address at 211 Warren Street, Suite 320, Newark, New Jersey
07103, and MAT Research, LLC, an Oregon limited liability company with an
address at 15265 NW Perimeter Drive, Beaverton, Oregon 97006(sometimes referred
to hereinafter as “MAT” or the “Consultant”).

 

RECITALS

 

WHEREAS, Consultant has unique knowledge and expertise in the industry in which
the Company does business; and

 

WHEREAS, the Company desires to retain the services of the Consultant to provide
certain strategic advisory services to the Company, and the Consultant desires
to perform such services for the Company.

 

NOW THEREFORE, in consideration of the mutual covenants and promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged by the parties hereto, the parties agree as
follows:

 

1.          Engagement of Services

 

1.1.         Services. During the Consultation Period (as defined below), the
Consultant agrees to perform such consulting, advisory and related services to
and for the Company as may be reasonably requested from time to time by the
Company.

 

1.2.         Contract for Personal Services of Alan Pan. It is the intention
that any Services to be performed by Consultant pursuant to this Agreement shall
be performed by its principal, Alan Pan and shall not be delegated or assigned
to any other individual or entity without the express written consent of the
Company. In the event that Alan Pan is unable or unwilling to perform the
Services, this Agreement may be terminated by Company without penalty or further
obligation to Consultant.

 

2.          Compensation

 

2.1           Consulting Fees. The Company shall pay the Consultant in shares of
common stock of the Company a fee in the amount of 20,000,000 shares in
connection with the consummation of an agreement with a customer that produces
non-contingent material revenue to the Company, and in addition to such initial
bonus, for contributing to the growth of the Company’s gross revenue, the
amounts set forth in the table below. Each of the tiers is cumulative with the
previous tier and not independent of the others or intended to compound. For the
avoidance of doubt, and by way of example, achieving the second tier would
entitle Consultant to the amount stated next to that tier and not to the amount
for any previous tier.

 

Arkados Independent Consultant

 

 

 

 

Execution Copy

 

Cumulative Milestone
(Gross Revenue of Company)   Common Shares to be issued $500,000   30 million
$2,000,000   30 million $4,000,000   30 million

 

2.2           Reimbursement of Expenses. The Company shall reimburse the
Consultant for all reasonable and necessary expenses incurred or paid by the
Consultant in connection with, or related to, the performance of his services
under this Agreement. The Consultant shall submit to the Company itemized
monthly statements, in a form satisfactory to the Company, of such expenses
incurred in the previous month. The Company shall pay to the Consultant amounts
shown on each such statement within 30 days after receipt thereof.
Notwithstanding the foregoing, the Consultant shall not incur total expenses in
excess of $100 per month without the prior written approval of the Company.

 

2.3           Benefits. The Consultant shall not be entitled to any benefits,
coverages or privileges, including, without limitation, social security,
unemployment, medical or pension payments, made available to employees of the
Company.

 

2.4           Consultant shall not be entitled to any compensation other than as
specified in this Agreement.

 

3.          Independent Consultant Relationship

 

3.1           Nature of Relationship. Consultant’s relationship with Arkados
will be that of an independent contractor and nothing in this Agreement shall be
construed to create a partnership, joint venture, or employer-employee
relationship. Since Consultant will not be an employee of Arkados, Consultant
will not be entitled to any of the benefits which Arkados may make available to
its employees, such as group insurance, profit-sharing or retirement benefits.
Consultant is not the agent of Arkados and is not authorized to make any
warranty, representation, contract, or commitment on behalf of Arkados unless
specifically requested or authorized to do so by Arkados. Consultant will
indemnify, defend and hold harmless Arkados for claims of any third party
arising out of any unauthorized statements by Consultant. Consultant is
responsible for providing all facilities, tools and equipment that Consultant
may require to perform services for Arkados hereunder.

3.2           Consultant Responsible for Taxes and Records. Consultant
acknowledges and agrees that it will be solely responsible for and will file and
remit on a timely basis, all tax returns and payments required to be filed with
or made to any Federal, State or local tax authority, on behalf of Consultant
and/or Consultant’s employees, with respect to Consultant’s performance of
services and receipt of fees under this Agreement, including, without
limitation, amounts required to be paid for (i) social security, (ii) Federal,
State or any other employee payroll taxes, (iii) Federal unemployment taxes,
(iv) workers’ compensation, (v) disability insurance, and (vi) similar items. No
payments to Consultant will be subject to withholding by Arkados for the payment
of Taxes and Other Payments. Consultant will be solely responsible for and must
maintain adequate records of expenses incurred in the course of performing
services under this Agreement. Arkados will regularly report amounts paid to
Consultant by filing Form 1099 MISC with the Internal Revenue Service as
required by law.

 

Arkados Independent Consultant

 

2

 

 

Execution Copy

 

3.3           Risk Borne by Consultant. Consultant shall perform the services
hereunder entirely at the Consultant’s risk. Consultant assumes all
responsibility for the subject matter of this Agreement. Consultant shall be
solely liable for any acts made during Consultant’s performance under this
Agreement. Any assignment of Consultant’s duties or obligations hereunder is
hereby expressly prohibited. Any such assignment shall be deemed void and
without force or effect.

 

3.4           Compliance with Applicable Law. Consultant agrees that, in
performance of the services required under this Agreement, Consultant has full
and sole responsibility for compliance with all applicable laws, statutes,
ordinances and regulations. Additionally, Consultant has the sole responsibility
for compliance with all other matters in conjunction with the services to be
performed hereunder.

 

3.5           Indemnification. Consultant further agrees to indemnify, defend
and hold harmless Arkados from any and all claims, loss or liability incurred by
reason of any (a) unauthorized statements made while engaged in the service of
Arkados; (b) undisclosed conflict or by the alleged breach by Consultant of any
confidentiality, restrictive covenants or services agreement with anyone other
than Arkados; (c) any intentional act or omission or gross negligence while
engaged in services rendered to or on behalf of Arkados; (d) any breach of the
provisions of this Agreement.

 

4.          Restrictive Covenants; Company Property.

 

4.1           Confidential Information

 

(a)          Consultant agrees during the term of this Agreement and at all
times thereafter to take all steps necessary to hold in trust and confidence
Confidential Information of Arkados and its clients/customers, vendors/suppliers
and third parties disclosed to Consultant in the course of providing services to
Arkados. Consultant will not directly or indirectly use or disclose any
Confidential Information, for any purpose not specifically authorized by Arkados
in writing. “Confidential Information” includes, but is not limited to,
technical and business information (in any form whatsoever) and material
relating to products, trade secrets, research and development, production,
processes, policies, procedures, costs, profit or margin information, employee
information, finances, budgets, projections, investors, customers and customer
lists, addresses, contact information and similar information, marketing and
production and future business plans, documents, such as drawings, manuals,
letters, notes, notebooks, reports, sketches, memoranda, records, files, data
(in any form), vendor lists, addresses, contact information and similar
information.

 

(b)          Notwithstanding the other provisions of this Agreement, nothing
received by Consultant will be considered to be the Confidential Information if:
1) it has been published or is otherwise readily available to the public other
than by a breach of this Agreement; 2) it has been lawfully received by
Consultant from a third party without confidential limitations; 3) it has been
independently developed by or for Consultant by personnel or agents having no
access to the Confidential Information and same may be proven by documentary
evidence; or 4) it was known to Consultant prior to its receipt by Consultant in
the course of work performed for Arkados and may be proven by documentary
evidence.

 

(c)           In addition, nothing set forth herein shall prevent disclosure of
this Agreement by the Company as may be required to governmental agencies.

 

Arkados Independent Consultant

 

3

 

 

Execution Copy

 

4.2           Assignment of Works and Inventions.

 

(a)          Consultant acknowledges and agrees that anything produced by
Consultant in the course of performance of services pursuant to this Agreement
is a work made for hire. As such, Consultant hereby assigns to Arkados all
patent, copyright, and other intellectual property rights Consultant may have in
any Inventions or other protectable work created in the course of any services
performed for Arkados, whether such work was created solely by Consultant or
jointly with another. Consultant further agrees to execute, upon Arkados’
request, any documents reasonably necessary to perfect such rights in Arkados.
Inventions resulting from Consultant’s work for Arkados under this Agreement are
the exclusive property of Arkados.

 

(b)          For purposes of this Agreement, “Inventions” includes any and all
inventions, improvements, discoveries, technical developments, computer
programs, notes, sketches, drawings, reports or other works that Consultant,
solely or jointly with others, conceives or reduces to practice as a result of,
or in the course of, any services performed for Arkados. Consultant assigns to
Arkados Consultant’s entire right, and shall cause any employee who may be an
inventor of an Invention to assign his or her entire right to all such
Inventions. Consultant agrees to cooperate with Arkados or its designee(s), both
during and after the term of this Agreement, in the procurement and maintenance
of Arkados’ rights in the Inventions, and to sign (or its employees to sign) all
papers which Arkados may consider necessary and desirable for securing and
maintaining such rights on behalf of Arkados or its designee(s).

 

(c)          Arkados shall not have rights to any Invention conceived or reduced
to practice by Consultant for which no equipment, supplies, facility, or trade
secret information of Arkados was used and which was developed entirely on
Consultant’s own time except if 1) the Invention relates (i) to Arkados’
business or (ii) to Arkados’ actual or demonstrably anticipated research or
development, or 2) the Invention results from any services performed by
Consultant for Arkados.

(d)          Consultant agrees to assist Arkados in any reasonable manner to
obtain and enforce for Arkados’ benefit patents, copyrights, and other property
rights in any and all countries, and Consultant agrees to execute, when
requested, patent, copyright or similar applications and assignments to Arkados
and any other lawful documents deemed necessary by Arkados for the purposes of
this Agreement. Consultant further agrees that the obligations and undertakings
stated in this Section will continue beyond the termination of Consultant’s
service to Arkados. If called upon to render assistance under this Section,
Consultant will be entitled to reimbursement of expenses incurred at or upon
written request of Arkados.

 

4.3           Conflicts of Interest, Non-Competition, Non-Solicitation.
Consultant agrees during the term of this Agreement not to accept work or enter
into a contract or accept an obligation inconsistent or incompatible with
Consultant’s obligations under this Agreement or with the scope of services to
be rendered for Arkados. Consultant warrants that to the best of Consultant’s
knowledge, there is no other contract or duty on Consultant’s part now in
existence inconsistent with this Agreement. During the term of this Agreement
and for a period of two (2) years after expiration or termination for any reason
of this Agreement, Consultant agrees not to:

 

(a)          compete with the business of Arkados, whether individually or
through any entity, or to use (or permit the use of) any Confidential
Information, directly or indirectly, for the purpose of competing with the
business of Arkados; or

 

(b)          suggest to, induce or persuade any customer, client, vendor,
supplier, employee, Consultant or agent of Arkados to terminate or diminish its
relationship with Arkados.

 

Arkados Independent Consultant

 

4

 

 

Execution Copy

 

Subject to the limitation regarding use of Confidential Information of Arkados
set forth above, the foregoing is not intended to otherwise limit the employment
of Consultant in his profession.

 

4.4           Arkados Property. Consultant acknowledges that Arkados’ sole and
exclusive property includes all Arkados trademark, trade names, service marks,
copyrights, and Confidential Information (defined above), whether delivered to
Consultant by Arkados, made available to Consultant, or made by Consultant in
the performance of services under this Agreement, relating to the business
activities of Arkados or its customers or suppliers and containing any
information or data whatsoever. Upon expiration or termination of this Agreement
for any reason or in any manner, with the exception of any samples purchased by
Consultant (not on behalf of or at the direction of Arkados), Consultant agrees
to return to Arkados all property of Arkados then in Consultant’s possession,
except as Arkados may, by proper written permission, allow Consultant to retain.
Consultant further agrees that nothing contained herein shall be a deemed a
license to use any Arkados property, except as directed by Arkados in the course
of performing services hereunder.

 

4.5           Injunctive Relief for Breach. Consultant acknowledges and agrees
that the obligation and promises of Consultant under Sections 4.1, 4.2, 4.3, and
4.4 of this Agreement are of a unique, intellectual character that gives them
particular value. Consultant acknowledges and agrees that a breach of any of the
promises or agreements contained in this Agreement will result in immediate
irreparable and continuing damage to Arkados for which there will be no adequate
remedy at law, and, in the event of such breach, Arkados will be entitled to
injunctive relief and/or a decree for specific performance, and such other
relief as may be proper without the necessity of posting bond and which may be
taken cumulatively and not concurrently. Any action taken by Arkados pursuant to
this Section shall not be deemed an election of remedies.

 

5.          Term/Termination

 

5.1           Term. This Agreement shall be for a term of two (2) years from the
Effective Date but may be terminated earlier upon sixty (60) days advance notice
by either party.

 

5.2           Termination of this Agreement. If Consultant terminates prior to
completion of any project assignment and without having obtained from Arkados
advance approval for such termination, Consultant shall be liable to Arkados for
damages suffered as a result of said termination including, without limitation,
damages suffered by the Arkados client or customer and costs incurred by Arkados
in connection with hiring a new Consultant.

 

5.2           Survival of Provisions. The provisions set forth in Article 4,
Section 5.1(b) and Article 6 of this Agreement shall survive any termination or
expiration of this Agreement.

 

6.          General Provisions.

 

6.1           Governing Law. This Agreement shall be governed and construed in
accordance with the internal laws of the State of New Jersey without regard to
the conflicts of law provisions thereof. The Federal and State courts within the
State of New Jersey, County of Essex, shall have exclusive jurisdiction to
adjudicate any disputes arising out of or in connection with this Agreement, and
for any litigation adjudicating such disputes, venue shall lie in these courts.

 

Arkados Independent Consultant

 

5

 

 

Execution Copy

 

6.2           Entire Agreement. This Agreement sets forth the entire
understanding and agreement of the parties as to the subject matter of this
Agreement. It may not be amended except in writing, signed by both parties.

 

6.3           Severability; Waiver. If any provision, or any portion of such
provision, of this Agreement is held to be invalid or unenforceable for any
reason, the remaining provisions, or portion of such provision, will continue in
full force without being impaired in any way. Arkados and Consultant agree to
replace any invalid and unenforceable provision with a valid and enforceable
provision which most closely approximates the intent and economic effect of the
invalid or unenforceable provision. The waiver by Arkados of a breach of any
provision of this Agreement of Consultant will not operate or be interpreted as
a waiver of any other or subsequent breach by Consultant.

 

6.4           Successors and Assigns. Neither this Agreement nor any of the
rights or obligations of Consultant arising under this Agreement may be assigned
or transferred without Arkados’ prior written consent. This Agreement will be
for the benefit of Arkados’ successors and assigns, and will be binding on
Consultant’s heirs, successors and legal representatives.

 

6.5           Headings. Titles or headings to the sections and paragraphs of
this Agreement are not part of the terms of this Agreement, but are inserted
solely for convenience of reference.

 

6.6           Notices. All notices, requests and other communications under this
Agreement must be in writing, and must be mailed by registered or certified
mail, postage prepaid and return receipt requested, or delivered by hand to the
party to whom such notice is required or permitted to be given. If mailed, any
such notice will be considered to have been given three (3) business days after
it was mailed, as evidenced by the postmark. If delivered by hand, any such
notice will be considered to have been given when received by the party to whom
notice is given, as evidenced by written and dated receipt of the receiving
party. The mailing address for notice to either party will be the address in the
introductory paragraph of this Agreement. Either party may change its mailing
address by notice as provided by this Section 6.6.

 

6.7.          Miscellaneous.

 

6.7.1           No delay or omission by the Company in exercising any right
under this Agreement shall operate as a waiver of that or any other right. A
waiver or consent given by the Company on any one occasion shall be effective
only in that instance and shall not be construed as a bar or waiver of any right
on any other occasion.

 

6.7.2           The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.

 

6.7.3           In the event that any provision of this Agreement shall he
invalid, illegal or otherwise unenforceable, the validity, legality and
enforceability of the remaining provisions shall in no way he affected or
impaired thereby.

 

6.8.          Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.

 

Arkados Independent Consultant

 

6

 

 

Execution Copy

 

IN WITNESS WHEREOF, the parties have executed this Consulting Agreement as of
the date first above written.

 

  ARKADOS GROUP, INC.         By: /Terrence DeFranco/   Name: Terrence DeFranco
  Title: CEO       CONSULTANT:       MAT RESEARCH, LLC         By: /Tai Jee Pan/
  Name: Tai Jee Pan (aka Alan Pan)   Title: President

 

Arkados Independent Consultant

 

7