Exhibit 10.4

      

CONVERTIBLE NOTE

 

UNLESS PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE HOLDER OF THIS
SECURITY MUST NOT TRADE THIS SECURITY IN OR TO A PERSON IN CANADA BEFORE
SEPTEMBER 2, 2017.

 

THIS NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES
LAWS OF ANY STATE. THIS NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS
NOTE MAY BE OFFERED OR SOLD ONLY IF REGISTERED UNDER APPLICABLE SECURITIES LAWS
OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. THIS NOTE IS SUBJECT TO
CERTAIN ADDITIONAL RESTRICTIONS ON TRANSFER SET FORTH IN THE NOTE PURCHASE
AGREEMENT.

 

ARKADOS GROUP, INC

10% SECURED CONVERTIBLE NOTE

NOTE NUMBER 2017-001

 

Issue Date:  May 1, 2017 Principal Amount:  U.S. $[               ]

 

For value received, Arkados Group, Inc. (the "Issuer"), having a principal place
of business at 211 Warren Street, Suite 320, Newark, New Jersey 07103, promises
to pay on or before May 1, 2018, to ______________. (together with its
successors and assigns, the "Holder"), or any other bona fide holder of this
Note, the Principal Amount specified above plus the amount of interest specified
in Section 1 below, payable in arrears on each Interest Payment Date (as defined
below).

 

This Note is issued under a Note Purchase Agreement dated as of May 1, 2017 (as
amended, restated, supplemented or otherwise modified from time to time, the
"Note Purchase Agreement"), between the Issuer, AIP Asset Management Inc., in
its capacity as Security Agent (as defined therein), and AIP Canadian Enhanced
Income Class, AIP Global Macro Class, and AIP Global Macro Fund L.P., and any
other parties that become Holders from time to time, as holders (together with
their successors and assigns, collectively, the "Holders"). Unless otherwise
defined, all capitalized terms used herein have the meanings specified in the
Note Purchase Agreement. The Issuer’s obligations under this Note are secured
pursuant to that certain Security Agreement dated as of May 1, 2017, made by and
among Issuer, Arkados, Inc., Arkados Energy Solutions, LLC, and AIP Asset
Management Inc., in its capacity as security agent for the Holders.

 

The total consideration payable by Holder to Issuer for this Note pursuant to
the Note Purchase Agreement is U.S. $__________, payable by wire transfer of
immediately available funds. The Issuer acknowledges that the Principal Amount
of this Note exceeds the total consideration payable pursuant to the Note
Purchase Agreement and that such $__________ excess is a 15 percent original
issue discount and shall be fully earned and charged to the Issuer upon the
execution of this Note, and shall be paid to the Holder as part of the
outstanding Principal Amount of this Note.

 

   

 

 

1.           Interest. Interest shall accrue on the Principal Amount of this
Note from the date of transferring the funds to escrow until repayment in full.
The interest shall accrue from day to day at the applicable Interest Rate, both
before and after default, demand, maturity and judgment, and shall be calculated
on the basis of the actual number of days elapsed and on the basis of a year of
365 or 366 days, as applicable.

 

The Notes shall bear interest at rate per annum equal to 10% plus, if an Event
of Default has occurred, 10% per annum, while such Event of Default continues
(the "Interest Rate"). Interest shall be calculated and payable monthly, in
advance on the first day of each month (each, an "Interest Payment Date") until
the entire Principal Amount of this Note has been repaid in full, provided that
interest for the first month this Note is outstanding shall be payable by the
Issuer to the Holder, in advance, on the date of issuance of this Note out of
the proceeds of the purchase price of this Note.

 

2.           Payments. All payments made pursuant to this Note (in respect of
principal, interest or otherwise) shall be made in full without set-off or
counterclaim, and free of and without deduction or withholding for any present
or future Taxes, other than Excluded Taxes.

 

3.           Conversion. This Note may be converted into the shares or
Membership Interests of the Issuer in accordance with the terms of the Note
Purchase Agreement.

 

4.           Assignments and Transfers. This Note may not be assigned or
transferred by the Issuer except in accordance with the Note Purchase Agreement.

 

5.           Note Register. The Holder, acting as the agent of the Issuer, shall
maintain a register on which it enters the name and address of any transferee of
an interest in this Note (each, a "Transferee"), and the commitment, principal
amount and stated interest of each such Transferee's interest in the Note (the
"Note Register"). The entries in the Note Register shall be conclusive, and both
the Holder and the Issuer shall treat each Person whose name is recorded in the
Note Register as the owner of the interest transferred to a Transferee for all
purposes, notwithstanding any notice to the contrary. This Note is intended to
be treated as a registered obligation for United States federal income tax
purposes. Any right or title in or to the Note (including with respect to the
principal amount and any interest thereon) may only be assigned or otherwise
transferred through the Note Register. This provision shall be construed so that
the Note is at all times maintained in "registered form" within the meaning of
Sections 163(f), 165(g), 871(h)(2), and 881(c)(2) of the U.S. Internal Revenue
Code and Section 5f.103-1(c) of the U.S. Treasury Regulations.

 

6.           Severability. In the event that one or more of the provisions of
this Note is for any reason held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Note, but this Note shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.

 

7.           Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of New York without the application of any
choice of laws provisions thereof.

 

   

 

 

ARKADOS GROUP, INC.         /s/ Terrence DeFranco   By: Terrence DeFranco  
Title: Chief Executive Officer         Sworn to before me this 1st day of May,
2017.         /s/ Lino M. Lopez   Notary Public