Exhibit 10.15

 

SECURITIES PURCHASE AGREEMENT

This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of the 23rd day
of July, 2015, by and between ARKADOS GROUP, INC., a Delaware corporation, with
headquarters located at 211 Warren Street, Suite 320, Newark, NJ 07103 (the
“Company”), and the undersigned with principal address set forth on the
Purchaser Signature and Subscription Page hereto (the “Purchaser”).

 

WHEREAS:

 

A.   The Company and the Purchaser are executing and delivering this Agreement
in reliance upon the Regulation S or Regulation D exemption from securities
registration afforded by the rules and regulations as promulgated by the United
States Securities and Exchange Commission (the “SEC”) under the Securities Act
of 1933, as amended (the “1933 Act”), or under Section 4(a)(2) of the 1933 Act;

 

B.   Purchaser desires to purchase, and the Company desires to issue and sell,
upon the terms and conditions set forth in this Agreement, such number of shares
of common stock, par value $0.0001 of the Company (the “Common Stock”) set forth
on the Purchaser Signature and Subscription Page for the aggregate purchase
price stated on the Purchaser Signature and Subscription Page (the “Purchase
Price), as well as a warrant to acquire such equal number of shares of common
stock at an exercise price of $2.00 per share (the “Warrant”). The Common Stock
together with the Warrant shall be referred to hereinafter as the “Offered
Units”).

 

NOW THEREFORE, the Company and the Purchaser severally (and not jointly) hereby
agree as follows:

 

1.           Closing.

 

a.   On or before the Closing Date (as defined below), (i) the Purchaser shall
pay to the Company by wire transfer of immediately available funds in accordance
with the Company’s written wiring instructions, the Purchase Price. The Company,
upon confirmation of the receipt of funds, but in no event later than the
Closing Date, shall deliver instructions to its transfer agent to issue the
Common Stock to Purchaser and shall likewise promptly issue the Warrants
accompanying such purchased Common Stock to Purchaser.

 

b.   Subject to the satisfaction (or written waiver) of the conditions thereto
set forth in Section 5 and Section 6 below, the date and time of the issuance
and sale of the Offered Units pursuant to this Agreement (the “Closing Date”)
shall be 5:00 p.m., Eastern Daylight Time on or about May 15, 2015, or such
other mutually agreed upon time. The closing of the transactions contemplated by
this Agreement (the “Closing”) shall occur on the Closing Date at such location
as may be agreed to by the parties.

 

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2.          Purchaser’s Representations and Warranties. The Purchaser represents
and warrants to the Company that:

 

a.   Investment Purpose. As of the date hereof, the Purchaser is purchasing the
Offered Units for its own account and not with a present view towards the public
sale or distribution thereof, except pursuant to sales registered or exempted
from registration under the 1933 Act; provided, however, that by making the
representations herein, the Purchaser does not agree to hold any of the Offered
Units for any minimum or other specific term and reserves the right to dispose
of the Offered Units at any time in accordance with or pursuant to a
registration statement or an exemption under the 1933 Act

 

b.   Accredited Investor Status. The Purchaser is an “accredited investor” as
that term is defined in Rule 501(a) of Regulation D (an “Accredited Investor”).

 

c.   Reliance on Exemptions. The Purchaser understands that the Offered Units
are being offered and sold to it in reliance upon specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of, and the Purchaser’s
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Purchaser set forth herein in order to determine the
availability of such exemptions and the eligibility of the Purchaser to acquire
the Offered Units.

 

d.   Information. The Purchaser and its advisors, if any, have been furnished a
copy of the Company’s most recent annual report on Form 10-K, the most recent
interim quarterly report on Form 10-Q and any interim report on Form 8-K filed
by the Company since its last Annual Report, as well as an Executive Summary
describing the terms of the purchase and sale of the Offered Units. The
Purchaser and its advisors, if any, have been afforded the opportunity to ask
questions of the Company and to promptly receive answers to those questions.
Notwithstanding the foregoing, the Company has not disclosed to the Purchaser
any material nonpublic information and will not disclose such information unless
such information is disclosed to the public prior to or promptly following such
disclosure to the Purchaser, or unless Purchaser enters into a non-disclosure
agreement with the Company agreeing to maintain the confidentiality of the such
information. Neither such inquiries nor any other due diligence investigation
conducted by Purchaser or any of its advisors or representatives shall modify,
amend or affect Purchaser’s right to rely on the Company’s representations and
warranties contained in Section 3 below. The Purchaser understands that its
investment in the Offered Units iinvolves a significant degree of risk.

 

e.   Governmental Review. The Purchaser understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the purchase or sale of
the Offered Units.

 

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f.   Transfer or Re-sale. The Purchaser understands that (i) the sale or re-sale
of the Common Stock and the Warrants has not been and is not being registered
under the 1933 Act or any applicable state securities laws, and the Offered
Units may not be transferred unless (a) the Common Stock or the Warrants are
sold pursuant to an effective registration statement under the 1933 Act, (b) the
Purchaser shall have delivered to the Company, at the cost of the Purchaser, an
opinion of counsel that shall be in form, substance and scope customary for
opinions of counsel in comparable transactions to the effect that the Offered
Units to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration, which opinion shall be reasonably acceptable
to the Company, (c) the Offered Units are sold or transferred to an “affiliate”
(as defined in Rule 144 promulgated under the 1933 Act (or a successor rule)
(“Rule 144”)) of the Purchaser who agrees to sell or otherwise transfer the
Offered Units only in accordance with this Section 2(g) and who is an Accredited
Investor, (d) the Offered Units are sold pursuant to Rule 144, or (e) the
Offered Units are sold pursuant to Regulation S under the 1933 Act (or a
successor rule) (“Regulation S”), and the Purchaser shall have delivered to the
Company, at the cost of the Purchaser, an opinion of counsel that shall be in
form, substance and scope customary for opinions of counsel in corporate
transactions, which opinion shall be reasonably acceptable to the Company; (ii)
any sale of such Offered Units made in reliance on Rule 144 may be made only in
accordance with the terms of said Rule and further, if said Rule is not
applicable, any re-sale of such Offered Units under circumstances in which the
seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 1933 Act) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (iii) neither the Company nor any other person is under any
obligation to register such Offered Units under the 1933 Act or any state
securities laws or to comply with the terms and conditions of any exemption
thereunder (in each case). Notwithstanding the foregoing or anything else
contained herein to the contrary, the Offered Units may be pledged as collateral
in connection with a bona fide margin account or other lending arrangement.

 

g.   Legends. The Purchaser understands that the Offered Units may only be sold
pursuant to Rule 144, or Regulation S without any restriction as to the number
of securities as of a particular date that can then be immediately sold and the
shares of Common Stock and the Warrant may bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of the certificates for such securities):

 

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT
AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AND WITH RESPECT TO THE SHARES OR AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF SAID ACT THAT IS THEN APPLICABLE TO THE
SHARES, AS TO WHICH A PRIOR OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER OR
TRANSFER AGENT MAY BE REQUIRED.”

 

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The legend set forth above shall be removed, and the Company shall issue a
certificate without such legend to the holder of any Security upon which it is
stamped, if, unless otherwise required by applicable state securities laws, (a)
such Security is registered for sale under an effective registration statement
filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or
Regulation S without any restriction as to the number of securities as of a
particular date that can then be immediately sold, or (b) such holder provides
the Company with an opinion of counsel, in form, substance and scope customary
for opinions of counsel in comparable transactions, to the effect that a public
sale or transfer of such Security may be made without registration under the
1933 Act, which opinion shall be reasonably acceptable to the Company so that
the sale or transfer is effected.

 

h.   Authorization; Enforcement. This Agreement has been duly and validly
authorized. This Agreement has been duly executed and delivered on behalf of the
Purchaser, and this Agreement constitutes a valid and binding agreement of the
Purchaser enforceable in accordance with its terms.

 

i.   Residency. The Purchaser is a resident of the jurisdiction set forth
immediately below the Purchaser’s name on the signature pages hereto.

 

3.         Representations and Warranties of the Company. The Company represents
and warrants to the Purchaser that:

 

a.   Organization and Qualification. The Company and each of its Subsidiaries
(as defined below), if any, is a corporation duly organized, validly existing
and in good standing under the laws of Delaware, with full power and authority
(corporate and other) to own, lease, use and operate its properties and to carry
on its business as and where now owned, leased, used, operated and conducted.
The Company and each of its Subsidiaries is duly qualified as a foreign
corporation to do business and is in good standing in every jurisdiction in
which its ownership or use of property or the nature of the business conducted
by it makes such qualification necessary except where the failure to be so
qualified or in good standing would not have a Material Adverse Effect.
“Material Adverse Effect” means any material adverse effect on the business,
operations, assets, financial condition or prospects of the Company or its
Subsidiaries, if any, taken as a whole, or on the transactions contemplated
hereby or by the agreements or instruments to be entered into in connection
herewith. “Subsidiaries” means any corporation or other organization, whether
incorporated or unincorporated, in which the Company owns, directly or
indirectly, any equity or other ownership interest.

 

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b.   Authorization; Enforcement. (i) The Company has all requisite corporate
power and authority to enter into and perform this Agreement, and to consummate
the transactions contemplated hereby and thereby and to issue the Offered Units,
in accordance with the terms hereof, (ii) the execution and delivery of this
Agreement, the Offered Units by the Company and the consummation by it of the
transactions contemplated hereby and thereby (including without limitation, the
issuance of the Offered Units) have been duly authorized by the Company’s Board
of Directors, (iii) this Agreement has been duly executed and delivered by the
Company by its authorized representative, and such authorized representative is
the true and official representative with authority to sign this Agreement and
the other documents executed in connection herewith and bind the Company
accordingly, and (iv) this Agreement constitutes, and upon execution and
delivery by the Company of the Offered Units, each of such instruments will
constitute, a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms.

 

c.   Capitalization. As of the date hereof, the authorized capital stock of the
Company consists of: (i) 600,000,000 shares of Common Stock, $0.0001 par value
per share, of which 5,624,383 shares are issued and outstanding, and for which
8,782,119 shares are issuable for derivative securities outstanding and
approximately 535,861 shares are intended to settle outstanding pre-2010
unsecured debt obligations; and (ii) 5,000,000 shares of Preferred Stock,
$0.0001 par value per share, of which no shares are issued and outstanding; All
of such outstanding shares of capital stock are, or upon issuance will be, duly
authorized, validly issued, fully paid and non-assessable. No shares of capital
stock of the Company are subject to preemptive rights or any other similar
rights of the shareholders of the Company or any liens or encumbrances imposed
through the actions or failure to act of the Company. As of the effective date
of this Agreement, except for those disclosed in the Company’s filed reports
with the SEC and options that may be issued to executives of the Company (i)
there are no other outstanding options, warrants, scrip, rights to subscribe
for, puts, calls, rights of first refusal, agreements, understandings, claims or
other commitments or rights of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for any shares of capital
stock of the Company or any of its Subsidiaries, or, with the exception of
pending obligations to issue incentive options to executive officers of the
Company pursuant to employment contracts, no arrangements by which the Company
or any of its Subsidiaries is or may become bound to issue additional shares of
capital stock of the Company or any of its Subsidiaries that are not mentioned
here, (ii) there are no agreements or arrangements under which the Company or
any of its Subsidiaries is obligated to register the sale of any of its or their
securities under the 1933 Act and (iii) there are no anti-dilution or price
adjustment provisions contained in any security issued by the Company (or in any
agreement providing rights to security holders) that will be triggered by the
issuance of the Offered Units that are not contained here. The Company has made
available to the Purchaser true and correct copies of the Company’s Certificate
of Incorporation as in effect on the date hereof (“Certificate of
Incorporation”), and the Company’s By-laws, as in effect on the date hereof (the
“By-laws”)..

 

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d.   Issuance of Shares. The Common Stock is duly authorized and will be validly
issued, fully paid and non-assessable, and free from all taxes, liens, claims
and encumbrances with respect to the issue thereof and shall not be subject to
preemptive rights or other similar rights of shareholders of the Company and
will not impose personal liability upon the holder thereof.

 

e.   No Conflicts. The execution, delivery and performance of this Agreement,
the Offered Units by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby will not (i) conflict with or
result in a violation of any provision of the Certificate of Incorporation or
By-laws, or (ii) violate or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which with notice or lapse of
time or both could become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture, patent, patent license or instrument to which the Company or any of
its Subsidiaries is a party, or (iii) result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations and regulations of any self-regulatory organizations to
which the Company or its securities are subject) applicable to the Company or
any of its Subsidiaries or by which any property or asset of the Company or any
of its Subsidiaries is bound or affected (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect). Neither
the Company nor any of its Subsidiaries is in violation of its Certificate of
Incorporation, By-laws or other organizational documents and neither the Company
nor any of its Subsidiaries is in default (and no event has occurred which with
notice or lapse of time or both could put the Company or any of its Subsidiaries
in default) under, and neither the Company nor any of its Subsidiaries has taken
any action or failed to take any action that would give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries is a
party or by which any property or assets of the Company or any of its
Subsidiaries is bound or affected. The Company and its Subsidiaries are unaware
of any facts or circumstances which might give rise to any of the foregoing.
There are no required consents, authorizations or orders of, or filings or
registrations with, any court, governmental agency, regulatory agency, self
regulatory organization or stock market or any third party in order for it to
execute, deliver or perform any of its obligations under this Agreement, to
issue the Common Stock. All consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date hereof.

 

f.   SEC Documents; Financial Statements. The Company is subject to the
reporting requirements of the 1934 Act. The Company is current on its reporting
obligations with the SEC pursuant to the Securities Exchange Act of 1934, as
amended (the “1934 Act”). As of their respective dates, any reports filed within
the last fiscal year, as amended, complied in all material respects with the
requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of such
reports, as amended, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. As of their respective dates, the financial
statements of the Company included in the SEC Documents complied as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto. Such financial statements
have been prepared in accordance with United States generally accepted
accounting principles, consistently applied, during the periods involved and
fairly present in all material respects the consolidated financial position of
the Company and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments).

 

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g.   Absence of Certain Changes. Since November 30, 2013, there has been no
material adverse change and no material adverse development in the assets,
liabilities, business, properties, operations, financial condition, results of
operations, of the Company or any of its Subsidiaries.

 

h.   Absence of Litigation. There is no action, suit, claim, proceeding, inquiry
or investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the Company
or any of its Subsidiaries, threatened against or affecting the Company or any
of its Subsidiaries, or their officers or directors in their capacity as such,
that could have a Material Adverse Effect. The Company and its Subsidiaries are
unaware of any facts or circumstances which might give rise to any of the
foregoing.

 

i.   Patents, Copyrights, etc. The Company and each of its Subsidiaries owns or
possesses the requisite licenses or rights to use all patents, patent
applications, patent rights, inventions, know-how, trade secrets, trademarks,
trademark applications, service marks, service names, trade names and copyrights
(“Intellectual Property”) necessary to enable it to conduct its business as now
operated (and, as presently contemplated to be operated in the future); there is
no claim or action by any person pertaining to, or proceeding pending, or to the
Company’s knowledge threatened, which challenges the right of the Company or of
a Subsidiary with respect to any Intellectual Property necessary to enable it to
conduct its business as now operated (and, as presently contemplated to be
operated in the future); to the best of the Company’s knowledge, the Company’s
or its Subsidiaries’ current and intended products, services and processes do
not infringe on any Intellectual Property or other rights held by any person;
and the Company is unaware of any facts or circumstances which might give rise
to any of the foregoing. The Company and each of its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value
of their Intellectual Property.

 

j.   No Materially Adverse Contracts, Etc. Neither the Company nor any of its
Subsidiaries is subject to any charter, corporate or other legal restriction, or
any judgment, decree, order, rule or regulation which in the judgment of the
Company’s officers has or is expected in the future to have a Material Adverse
Effect. Neither the Company nor any of its Subsidiaries is a party to any
contract or agreement which in the judgment of the Company’s officers has or is
expected to have a Material Adverse Effect.

 

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k.   Tax Status. The Company and each of its Subsidiaries has made or filed all
federal, state and foreign income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its Subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provisions reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. With the exception of taxes due the State of New Jersey
for fiscal year ended May 31, 2011 in the approximate amount of $65,000, there
are no unpaid taxes claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Company know of no basis for any such
claim. The Company has not executed a waiver with respect to the statute of
limitations relating to the assessment or collection of any foreign, federal,
state or local tax. None of the Company’s tax returns is presently being audited
by any taxing authority, nor is the Company subject to any tax investigation by
any governmental agency.

 

l.   Certain Transactions. Except for arm’s length transactions pursuant to
which the Company or any of its Subsidiaries makes payments in the ordinary
course of business upon terms no less favorable than the Company or any of its
Subsidiaries could obtain from third parties and other than the grant of stock
options to officers of the Company, none of the officers, directors, or
employees of the Company is presently a party to any transaction with the
Company or any of its Subsidiaries (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director,
trustee or partner.

 

m.   Disclosure. All information relating to or concerning the Company or any of
its Subsidiaries set forth in this Agreement and provided to the Purchaser
pursuant to Section 2(e) hereof and otherwise in connection with the
transactions contemplated hereby is true and correct in all material respects
and the Company has not omitted to state any material fact necessary in order to
make the statements made herein or therein, in light of the circumstances under
which they were made, not misleading. No event or circumstance has occurred or
exists with respect to the Company or any of its Subsidiaries or its or their
business, properties, prospects, operations or financial conditions, which,
under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed (assuming for this purpose that the Company’s reports filed under the
1934 Act are being incorporated into an effective registration statement filed
by the Company under the 1933 Act).

 

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n.   Acknowledgment Regarding Purchase of Securities. The Company acknowledges
and agrees that the Purchaser is acting solely in the capacity of arm’s length
purchaser with respect to this Agreement and the transactions contemplated
hereby. The Company further acknowledges that the Purchaser is not acting as a
financial advisor or fiduciary of the Company (or in any similar capacity) with
respect to this Agreement and the transactions contemplated hereby and any
statement made by the Purchaser or any of its respective representatives or
agents in connection with this Agreement and the transactions contemplated
hereby is not advice or a recommendation and is merely incidental to the
Purchaser’s purchase of the Offered Units. The Company further represents to the
Purchaser that the Company’s decision to enter into this Agreement has been
based solely on the independent evaluation of the Company and its
representatives.

 

o.   No Integrated Offering. Neither the Company, nor any of its affiliates, nor
any person acting on its or their behalf, has directly or indirectly made any
offers or sales in any security or solicited any offers to buy any security
under circumstances that would require registration under the 1933 Act of the
issuance of the Offered Units to the Purchaser. The issuance of the Offered
Units to the Purchaser will not be integrated with any other issuance of the
Company’s securities (past, current or future) for purposes of any shareholder
approval provisions applicable to the Company or its securities.

 

p.   No Brokers. The Company has taken no action which would give rise to any
claim by any person for brokerage commissions, transaction fees or similar
payments relating to this Agreement or the transactions contemplated hereby.

 

q.   Permits; Compliance. The Company and each of its Subsidiaries is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted (collectively, the “Company Permits”), and there is
no action pending or, to the knowledge of the Company, threatened regarding
suspension or cancellation of any of the Company Permits. Neither the Company
nor any of its Subsidiaries is in conflict with, or in default or violation of,
any of the Company Permits, except for any such conflicts, defaults or
violations which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. Since November 30, 2013, neither the
Company nor any of its Subsidiaries has received any notification with respect
to possible conflicts, defaults or violations of applicable laws, except for
notices relating to possible conflicts, defaults or violations, which conflicts,
defaults or violations would not have a Material Adverse Effect.

 

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r.   Environmental Matters.

 

(i)          There are, to the Company’s knowledge, with respect to the Company
or any of its Subsidiaries or any predecessor of the Company, no past or present
violations of Environmental Laws (as defined below), releases of any material
into the environment, actions, activities, circumstances, conditions, events,
incidents, or contractual obligations which may give rise to any common law
environmental liability or any liability under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 or similar federal, state,
local or foreign laws and neither the Company nor any of its Subsidiaries has
received any notice with respect to any of the foregoing, nor is any action
pending or, to the Company’s knowledge, threatened in connection with any of the
foregoing. The term “Environmental Laws” means all federal, state, local or
foreign laws relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of
chemicals, pollutants contaminants, or toxic or hazardous substances or wastes
(collectively, “Hazardous Materials”) into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder.

 

(ii)         Other than those that are or were stored, used or disposed of in
compliance with applicable law, no Hazardous Materials are contained on or about
any real property currently owned, leased or used by the Company or any of its
Subsidiaries, and no Hazardous Materials were released on or about any real
property previously owned, leased or used by the Company or any of its
Subsidiaries during the period the property was owned, leased or used by the
Company or any of its Subsidiaries, except in the normal course of the Company’s
or any of its Subsidiaries’ business.

 

(iii)        There are no underground storage tanks on or under any real
property owned, leased or used by the Company or any of its Subsidiaries that
are not in compliance with applicable law.

 

s.   Title to Property. The Company and its Subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them which is material to the business
of the Company and its Subsidiaries, in each case free and clear of all liens,
encumbrances and defects or such as would not have a Material Adverse Effect.
Any real property and facilities held under lease by the Company and its
Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as would not have a Material Adverse Effect.

 

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t.   Insurance. The Company and each of its Subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in such
amounts as management of the Company believes to be prudent and customary in the
businesses in which the Company and its Subsidiaries are engaged. Neither the
Company nor any such Subsidiary has any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not have a Material Adverse Effect.
Upon written request the Company will provide to the Purchaser true and correct
copies of all policies relating to directors’ and officers’ liability coverage,
errors and omissions coverage, and commercial general liability coverage.

 

u.   Internal Accounting Controls. The Company and each of its Subsidiaries
maintain a system of internal accounting controls sufficient, in the judgment of
the Company’s board of directors, to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.

 

v.   Foreign Corrupt Practices. Neither the Company, nor any of its
Subsidiaries, nor any director, officer, agent, employee or other person acting
on behalf of the Company or any Subsidiary has, in the course of his actions
for, or on behalf of, the Company, used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or is
in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977,
as amended, or made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment to any foreign or domestic government official or
employee.

 

w.   Solvency. The Company (after giving effect to the transactions contemplated
by this Agreement) is solvent (i.e., its assets have a fair market value in
excess of the amount required to pay its probable liabilities on its existing
debts as they become absolute and matured) and currently the Company has no
information that would lead it to reasonably conclude that the Company would
not, after giving effect to the transaction contemplated by this Agreement, have
the ability to, nor does it intend to take any action that would impair its
ability to, pay its debts from time to time incurred in connection therewith as
such debts mature. The Company did not receive a qualified opinion from its
auditors with respect to its most recent fiscal year end and, after giving
effect to the transactions contemplated by this Agreement, does not anticipate
or know of any basis upon which its auditors might issue a qualified opinion in
respect of its current fiscal year.

 

 11 

 

 

x.   No Investment Company. The Company is not, and upon the issuance and sale
of the Offered Units as contemplated by this Agreement will not be an
“investment company” required to be registered under the Investment Company Act
of 1940 (an “Investment Company”). The Company is not controlled by an
Investment Company.

 

y.   Use of Proceeds. The Company shall use the net proceeds from the sale of
Offered Units hereunder for working capital purposes.

 

4.   COVENANTS.

 

a.   Best Efforts. The parties shall use their best efforts to satisfy timely
each of the conditions described in Section 5 and 6 of this Agreement.

 

b.   Form D; Blue Sky Laws. Unless it believes it is exempt from any such
filings, the Company agrees to file a Form D with respect to the Offered Units
as required under Regulation D and to provide a copy thereof to the Purchaser
promptly after such filing. The Company shall, on or before the Closing Date,
take such action as the Company shall reasonably determine is necessary to
qualify the Offered Units for sale to the Purchaser at the applicable closing
pursuant to this Agreement under applicable securities or “blue sky” laws of the
states of the United States (or to obtain an exemption from such qualification),
and shall provide evidence of any such action so taken to the Purchaser on or
prior to the Closing Date.

 

c.   Use of Proceeds. The Company shall use the proceeds for general working
capital purposes, including legal and accounting expenses related to SEC
filings.

d.   Listing. The Company will comply in all respects with the Company’s
reporting, filing and other obligations under the bylaws or rules to maintain
listing on the OTCQB or any equivalent replacement exchange, as applicable. .

 

e.   No Integration. The Company shall not knowingly make any offers or sales of
any security (other than the Offered Units) under circumstances that would
require registration of the ssecurities being offered or sold hereunder under
the 1933 Act or cause the offering of the ssecurities to be integrated with any
other offering of securities by the Company for the purpose of any stockholder
approval provision applicable to the Company or its securities.

 

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5.   Conditions to the Company’s Obligation to Sell. The obligation of the
Company hereunder to issue the Offered Units to the Purchaser at the Closing is
subject to the satisfaction, at or before the Closing Date of each of the
following conditions thereto, provided that these conditions are for the
Company’s sole benefit and may be waived by the Company at any time in its sole
discretion:

 

a.   The Purchaser shall have executed this Agreement and delivered the same to
the Company.

 

b.   The Purchaser shall have delivered the Purchase Price in accordance with
Section 1(b) above.

 

c.   The representations and warranties of the Purchaser shall be true and
correct in all material respects as of the date when made and as of the Closing
Date as though made at that time (except for representations and warranties that
speak as of a specific date), and the Purchaser shall have performed, satisfied
and complied in all material respects with the covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Purchaser at or prior to the Closing Date.

 

d.   No litigation, statute, rule, regulation, executive order, decree, ruling
or injunction shall have been enacted, entered, promulgated or endorsed by or in
any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.

 

6.   Conditions to The Purchaser’s Obligation to Purchase. The obligation of the
Purchaser hereunder to loan the Purchase Price to the Company at the Closing is
subject to the satisfaction, at or before the Closing Date of each of the
following conditions, provided that these conditions are for the Purchaser’s
sole benefit and may be waived by the Purchaser at any time in its sole
discretion:

 

a.   The Company shall have executed this Agreement and delivered the same to
the Purchaser.

 

b.   The representations and warranties of the Company shall be true and correct
in all material respects as of the date when made and as of the Closing Date as
though made at such time (except for representations and warranties that speak
as of a specific date), and the Company shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Company at or prior to the Closing Date. The Purchaser shall have received a
certificate or certificates, executed by the chief executive officer of the
Company, dated as of the Closing Date, to the foregoing effect and as to such
other matters as may be reasonably requested by the Purchaser including, but not
limited to certificates with respect to the Company’s Certificate of
Incorporation, By-laws and Board of Directors’ resolutions relating to the
transactions contemplated hereby.

 

 13 

 

 

c.   No litigation, statute, rule, regulation, executive order, decree, ruling
or injunction shall have been enacted, entered, promulgated or endorsed by or in
any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.

 

d.   No event shall have occurred which could reasonably be expected to have a
Material Adverse Effect on the Company including but not limited to a change in
the 1934 Act reporting status of the Company or the failure of the Company to be
timely in its 1934 Act reporting obligations.

 

7.   Miscellaneous.

 

a.   Replacement of Securities. If any certificate or instrument evidencing any
securities is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
thereof, or in lieu of and substitution therefor, a new certificate or
instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The holder/applicant(s) for a new certificate or
instrument under such circumstances shall also pay any reasonable third-party
costs associated with the issuance of such replacement securities.

 

b.   Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey without regard to principles
of conflicts of laws. Any action brought by either party against the other
concerning the transactions contemplated by this Agreement shall be brought only
in the state courts of New Jersey or in the federal courts located in the state.
The parties to this Agreement hereby irrevocably waive any objection to
jurisdiction and venue of any action instituted hereunder and shall not assert
any defense based on lack of jurisdiction or venue or based upon forum non
conveniens. The Company and Purchaser waive trial by jury. The prevailing party
shall be entitled to recover from the other party its reasonable attorney's fees
and costs. In the event that any provision of this Agreement or any other
agreement delivered in connection herewith is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such provision which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of any agreement. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any suit, action or proceeding in connection with this Agreement or
any other Transaction Document by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any other manner permitted by law.

 

 14 

 

 

c.   Counterparts. This Agreement may be executed by facsimile and in one or
more counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party.

 

d.   Headings. The headings of this Agreement are for convenience of reference
only and shall not form part of, or affect the interpretation of, this
Agreement.

 

e.   Severability. In the event that any provision of this Agreement is invalid
or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any provision hereof which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision hereof.

 

f.   Entire Agreement; Amendments. This Agreement and the instruments referenced
herein contain the entire understanding of the parties with respect to the
matters covered herein and therein and, except as specifically set forth herein
or therein, neither the Company nor the Purchaser makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived or amended other than by an instrument in writing
signed by the majority in interest of the Purchaser.

 

g.   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) hand delivered, (ii) deposited in the
mail, registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable national courier service with charges prepaid, or (iv)
transmitted by 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:

 

 15 

 

 

If to the Company, to:

Arkados Group, Inc.

Attn: Terrence DeFranco

211 Warren Street, Suite 320

Newark, NJ 07103

 

With a copy by fax only to (which copy shall not constitute notice):

 

Kenneth R. Vennera

General Counsel

211 Warren Street, Suite 320

Newark, NJ 07103

Fax: 610-272-1562

 

If to the Purchaser:

To the address first set forth in the Purchaser Signature and Subscription Page

of this Agreement

 

Each party shall provide notice (in accordance with the requirements of this
provision) to the other party of any change in address.

 

h.   Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and assigns. Neither the Company
nor the Purchaser shall assign this Agreement or any rights or obligations
hereunder without the prior written consent of the other.

 

i.   Third Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns, and is
not for the benefit of, nor may any provision hereof be enforced by, any other
person.

 

j.   Survival. The representations and warranties of the Company and the
agreements and covenants set forth in this Agreement shall survive the closing
hereunder notwithstanding any due diligence investigation conducted by or on
behalf of the Purchaser. The Company agrees to indemnify and hold harmless the
Purchaser and all their officers, directors, employees and agents for loss or
damage arising as a result of or related to any breach or alleged breach by the
Company of any of its representations, warranties and covenants set forth in
this Agreement or any of its covenants and obligations under this Agreement,
including advancement of expenses as they are incurred.

 

k.   Publicity. The Company shall have the right to make, without prior
approval, any SEC, OTCBB or FINRA filings, or any other public statements with
respect to the transactions contemplated hereby as is required by applicable law
and regulations.

 

 16 

 

 

l.   Further Assurances. Each party shall do and perform, or cause to be done
and performed, all such further acts and things, and shall execute and deliver
all such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

 

m.   No Strict Construction. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.

 

n.   Remedies. Each of the parties acknowledges that a breach by it of its
obligations hereunder will cause immediate and irreparable harm to the other
party by vitiating the intent and purpose of the transaction contemplated
hereby. Accordingly, each party acknowledges that the remedy at law for a breach
of its obligations under this Agreement will be inadequate and agrees, in the
event of a breach or threatened breach by a party of the provisions of this
Agreement, that the other party shall be entitled, in addition to all other
available remedies at law or in equity, to an injunction or injunctions
restraining, preventing or curing any breach of this Agreement and to enforce
specifically the terms and provisions hereof, without the necessity of showing
economic loss and without any bond or other security being required.

 

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK

SIGNATURE PAGES FOLLOW]

 

 17 

 

 

COMPANY SIGNATURE PAGE

TO ARKADOS SECURITIES PURCHASE AGREEMENT

 

IN WITNESS WHEREOF, the undersigned Purchaser and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.

 

COMPANY:
ARKADOS GROUP, INC.

 

By: /s/ Terrence DeFranco     Terrence DeFranco     President and Chief
Executive Officer  

 

[PURCHASER SIGNATURE AND SUBSCRIPTION PAGE TO FOLLOW]

 

 18 

 

 

PURCHASER SIGNATURE AND SUBSCRIPTION PAGE

TO ARKADOS SECURITIES PURCHASE AGREEMENT

 

IN WITNESS WHEREOF, each of the undersigned has caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

 

Instructions: Please complete Section 1 through Section 4 below.

 

PURCHASER:

 

Section 1

INVESTOR INFORMATION AND SUBSCRIPTION:

(choose one alternative by placing “X” in box):

 

¨ (if entity):

 

Entity Name: ____________________________________ (must be exact legal name)

 

By:_____________________________________________

                                      (Signature)

 

Name(Printed): ___________________________________

 

Title:____________________________________________

 

Entity Taxpayer Identification Number: ______________________________________

 

Email Address of Authorized
contact:________________________________________________

 

¨ (if individual):   ¨ (if joint ownership with individual named):       By:    
By:   (Signature)   (Signature)       Name(Printed):     Name(Printed):        
SSN:     SSN:  

 

 19 

 

 

Section 2:

ADDRESS, FACSIMILE, EMAIL FOR NOTICE (SECTION 7(G)) TO PURCHASER:

 

         

 

Section 3:

ADDRESS FOR DELIVERY OF SECURITIES TO PURCHASER (if different from Section 2
above):

 

         

 

Section 4:

AGGREGATE SUBSCRIPTION AMOUNT:

 

Aggregate Number of Shares Purchased:         Aggregate Purchase Price: $  

 

 20 

 

 

Annex A

 

CLOSING STATEMENT

 

All funds will be wired into the account listed below. All funds will be
disbursed in accordance with this Closing Statement.

 

Disbursement Date: upon receipt by the Company

 

I. PURCHASE PRICE             Gross Proceeds to be Received  $1,500,000.00    
    II. DISBURSEMENTS             Fees  $5,000.00         Total Amount Disbursed
to Company:  $ 1,495,000.001

 

1does not include commissions of up to ten percent (10%) of gross proceeds
received from investors introduced by these broker dealers

 

WIRE INSTRUCTIONS:

Arkados Group, Inc.

211 Warren Street

Suite 320

Newark, NJ 07103

 

Bank Information:

JPMorgan Chase

360 Park Avenue

New York, NY 10022

 

Account Number: 000000949188122

ABA/Routing Number: 021000021

Swift Code: CHASUS33

 

 21