Exhibit 10.9


 


NEITHER THE ISSUANCE NOR SALE
OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE
FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
SECURED BY THE SECURITIES.


      


	Principal Amount: $______________	Issue Date: May 1, 2017


 


PROMISSORY NOTE


 


FOR VALUE
RECEIVED, ARKADOS GROUP, INC., a Delaware corporation (hereinafter called the “Borrower”), hereby promises
to pay to the order of ______________, or registered assigns (the “Holder”) the principal sum of $______________
(the “Principal Amount”), together with interest at the rate of nine percent (9%) per annum, at maturity or upon acceleration
or otherwise, as set forth herein (the “Note”). The consideration to the Borrower from the Holder for this Note is
$______________ (the “Consideration”) (with the understanding that Buyer shall withhold $12,000.00 for its legal fees)
in United States currency, due to the original issuance discount of $______________. The maturity date shall be six (6) months
from the Issue Date (the “Maturity Date”), and is the date upon which the principal sum, as well as any accrued and
unpaid interest and other fees, shall be due and payable. This Note may not be prepaid in whole or in part except as otherwise
explicitly set forth herein. Any amount of principal or interest on this Note, which is not paid by the Maturity Date, shall bear
interest at the rate of the lesser of (i) twenty four percent (24%) per annum or (ii) the maximum amount allowed by law, from the
due date thereof until the same is paid (“Default Interest”). Interest shall commence accruing on the date that the
Note is fully paid and shall be computed on the basis of a 365-day year and the actual number of days elapsed. All payments due
hereunder (to the extent not converted into the Borrower’s common stock (the “Common Stock”) in accordance with
the terms hereof) shall be made in lawful money of the United States of America. All payments shall be made at such address as
the Holder shall hereafter give to the Borrower by written notice made in accordance with the provisions of this Note. Whenever
any amount expressed to be due by the terms of this Note is due on any day which is not a business day, the same shall instead
be due on the next succeeding day which is a business day and, in the case of any interest payment date which is not the date on
which this Note is paid in full, the extension of the due date thereof shall not be taken into account for purposes of determining
the amount of interest due on such date. As used in this Note, the term “business day” shall mean any day other than
a Saturday, Sunday or a day on which commercial banks in the city of New York, New York are authorized or required by law or executive
order to remain closed.     


 






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This Note is
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 Borrower and will not impose personal liability upon the holder thereof.


 


The following additional terms shall
also apply to this Note:


 


ARTICLE I. CONVERSION RIGHTS


 


1.1         Conversion
Right. The Holder shall have the right at any time on or after an Event of Default, (as defined herein) (which shall
continue uncured for five (5) business days after the Holder has delivered notice of such Event of Default to the Company
except with respect to any Event of Default under Sections 3.1 or 3.2 under the Note) under the Note occurs, to convert all
or any part of the outstanding and unpaid principal amount and accrued and unpaid interest of this Note into fully paid and
non-assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or any shares of capital stock or other
securities of the Borrower into which such Common Stock shall hereafter be changed or reclassified at the conversion price
(the “Conversion Price”) determined as provided herein (a “Conversion”); provided, however,
that in no event shall the Holder be entitled to convert any portion of this Note in excess of that portion of this Note upon
conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates
(other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of
the Notes or the unexercised or unconverted portion of any other security of the Borrower subject to a limitation on
conversion or exercise analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable
upon the conversion of the portion of this Note with respect to which the determination of this proviso is being made, would
result in beneficial ownership by the Holder and its affiliates of more than 9.99% of the outstanding shares of Common Stock.
For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance
with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Regulations 13D-G
thereunder, except as otherwise provided in clause (1) of such proviso. The number of shares of Common Stock to be issued
upon each conversion of this Note shall be determined by dividing the Conversion Amount (as defined below) by the applicable
Conversion Price then in effect on the date specified in the notice of conversion, in the form attached hereto as Exhibit A
(the “Notice of Conversion”), delivered to the Borrower by the Holder in accordance with Section 1.4 below;
provided that the Notice of Conversion is submitted by facsimile or e-mail (or by other means resulting in, or reasonably
expected to result in, notice) to the Borrower before 6:00 p.m., New York, New York time on such conversion date (the
“Conversion Date”). The term “Conversion Amount” means, with respect to any conversion of this Note,
the sum of (1) the principal amount of this Note to be converted in such conversion plus (2) at the Holder’s option,
accrued and unpaid interest, if any, on such principal amount at the interest rates provided in this Note to the Conversion
Date, plus (3) at the Holder’s option, Default Interest, if any, on the amounts referred to in the immediately
preceding clauses (1) and/or (2) plus (4) at the Holder’s option, any amounts owed to the Holder pursuant to Sections
1.3 and 1.4(g) hereof.


 






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1.2         Conversion
Price.





 


(a)            Calculation
of Conversion Price. The Conversion Price shall be the Variable Conversion Price (as defined herein) (subject to adjustment
as further described herein). The "Variable Conversion Price" shall mean 60% multiplied by the Market Price (as defined
herein) (representing a discount rate of 40%). “Market Price” means the lowest one (1) Trading Prices (as defined
below) for the Common Stock during the thirty (30) Trading Day period ending on the last complete Trading Day prior to the Conversion
Date. “Trading Prices” means, for any security as of any date, the lowest traded price on the Over-the-Counter Pink
Marketplace, OTCQB, or applicable trading market (the “OTCQB”) as reported by a reliable reporting service (“Reporting
Service”) designated by the Holder (i.e. www.Nasdaq.com) or, if the OTCQB is not the principal trading market for such security,
on the principal securities exchange or trading market where such security is listed or traded or, if the lowest intraday trading
price of such security is not available in any of the foregoing manners, the lowest intraday price of any market makers for such
security that are quoted on the OTC Markets. If the Trading Prices cannot be calculated for such security on such date in the
manner provided above, the Trading Prices shall be the fair market value as mutually determined by the Borrower and the holders
of a majority in interest of the Notes being converted for which the calculation of the Trading Prices are required in order to
determine the Conversion Price of such Notes. “Trading Day” shall mean any day on which the Common Stock is tradable
for any period on the OTCQB, or on the principal securities exchange or other securities market on which the Common Stock is then
being traded. Each time an Event of Default (as defined herein) occurs while this Note is outstanding, an additional discount
of five percent (5%) shall be factored into the Variable Conversion Price. Holder shall be entitled to deduct $500.00 from the
conversion amount in each Notice of Conversion to cover Holder’s deposit fees associated with each Notice of Conversion.







 


Each time, while
this Note is outstanding, the Borrower enters into a Section 3(a)(9) Transaction (as defined herein) (including but not limited
to the issuance of new promissory notes or of a replacement promissory note), or Section 3(a)(10) Transaction (as defined herein),
in which any 3rd party has the right to convert monies owed to that 3rd
party (or receive shares pursuant to a settlement or otherwise) at a discount to market greater than the Variable Conversion
Price in effect at that time (prior to all other applicable adjustments in the Note), then the Variable Conversion Price shall
be automatically adjusted to such greater discount percentage (prior to all applicable adjustments in this Note) until this Note
is no longer outstanding. Each time, while this Note is outstanding, the Borrower enters into a Section 3(a)(9) Transaction (including
but not limited to the issuance of new promissory notes or of a replacement promissory note), or Section 3(a)(10) Transaction,
in which any 3rd party has a look back period greater than the look back period in effect
under the Note at that time (currently a thirty (30) Trading Day look back period as described in this Section 1.2(a) applies),
then the Holder’s look back period shall automatically be adjusted to such greater number of days until this Note is no longer
outstanding. The Borrower shall give written notice to the Holder, with the adjusted Variable Conversion Price and/or adjusted
look back period (each adjustment that is applicable due to the triggering event), within one (1) business day of an event that
requires any adjustment described in the two immediately preceding sentences.


 






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(b)            Authorized
Shares. The Borrower covenants that during the period the conversion right exists, the Borrower will reserve from its authorized
and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of Common Stock
upon the full conversion of this Note. The Borrower is required at all times to have authorized and reserved three times the number
of shares that is actually issuable upon full conversion of the Note (based on the Conversion Price of the Notes in effect from
time to time)(the “Reserved Amount”). The Reserved Amount shall be increased from time to time in accordance with the
Borrower’s obligations hereunder. The Borrower represents that upon issuance, such shares will be duly and validly issued,
fully paid and non- assessable. In addition, if the Borrower shall issue any securities or make any change to its capital structure
which would change the number of shares of Common Stock into which the Notes shall be convertible at the then current Conversion
Price, the Borrower shall at the same time make proper provision so that thereafter there shall be a sufficient number of shares
of Common Stock authorized and reserved, free from preemptive rights, for conversion of the outstanding Notes. The Borrower (i)
acknowledges that it has irrevocably instructed its transfer agent to issue certificates for the Common Stock issuable upon conversion
of this Note, and agrees that its issuance of this Note shall constitute full authority to its officers and agents who are charged
with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Common Stock in accordance
with the terms and conditions of this Note.


 


If, at any time the Borrower does
not maintain the Reserved Amount it will be considered an Event of Default under Section 3.2 of the Note.


 






1.3         Method
of Conversion.







 


(A)            Mechanics of Conversion.
Subject to Section 1.1, this Note may be converted by the Holder in whole or in part at any time solely on or after the occurrence
of an Event of Default under the Note, by submitting to the Borrower a Notice of Conversion (by facsimile, e-mail or other reasonable
means of communication dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time) and (B) subject to Section
1.4(b), surrendering this Note at the principal office of the Borrower.


 


(a)            Surrender
of Note Upon Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion of this Note in accordance
with the terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower unless the entire unpaid
principal amount of this Note is so converted. The Holder and the Borrower shall maintain records showing the principal amount
so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Borrower,
so as not to require physical surrender of this Note upon each such conversion. In the event of any dispute or discrepancy, such
records of the Borrower shall, prima facie, be controlling and determinative in the absence of manifest error. Notwithstanding
the foregoing, if any portion of this Note is converted as aforesaid, the Holder may not transfer this Note unless the Holder first
physically surrenders this Note to the Borrower, whereupon the Borrower will forthwith issue and deliver upon the order of the
Holder a new Note of like tenor, registered as the Holder (upon payment by the Holder of any applicable transfer taxes) may request,
representing in the aggregate the remaining unpaid principal amount of this Note. The Holder and any assignee, by acceptance of
this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this
Note, the unpaid and unconverted principal amount of this Note represented by this Note may be less than the amount stated on the
face hereof.


 






    	 	 4	 



     


    

 


(b)            Payment
of Taxes. The Borrower shall not be required to pay any tax which may be payable in respect of any transfer involved in the
issue and delivery of shares of Common Stock or other securities or property on conversion of this Note in a name other than that
of the Holder (or in street name), and the Borrower shall not be required to issue or deliver any such shares or other securities
or property unless and until the person or persons (other than the Holder or the custodian in whose street name such shares are
to be held for the Holder’s account) requesting the issuance thereof shall have paid to the Borrower the amount of any such
tax or shall have established to the satisfaction of the Borrower that such tax has been paid.


 


(c)            Delivery
of Common Stock Upon Conversion. Upon receipt by the Borrower from the Holder of a facsimile transmission or e-mail (or other
reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in this Section
1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates for
the Common Stock issuable upon such conversion within three (3) business days after such receipt (the “Deadline”) (and,
solely in the case of conversion of the entire unpaid principal amount hereof, surrender of this Note) in accordance with the terms
hereof.


 


(d)            Obligation
of Borrower to Deliver Common Stock. Upon receipt by the Borrower of a Notice of Conversion, the Holder shall be deemed to
be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the amount of accrued
and unpaid interest on this Note shall be reduced to reflect such conversion, and, unless the Borrower defaults on its obligations
under this Article I, all rights with respect to the portion of this Note being so converted shall forthwith terminate except the
right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such conversion. If the Holder
shall have given a Notice of Conversion as provided herein, the Borrower’s obligation to issue and deliver the certificates
for Common Stock shall be absolute and unconditional, irrespective of the absence of any action by the Holder to enforce the same,
any waiver or consent with respect to any provision thereof, the recovery of any judgment against any person or any action to enforce
the same, any failure or delay in the enforcement of any other obligation of the Borrower to the holder of record, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of any obligation to the Borrower,
and irrespective of any other circumstance which might otherwise limit such obligation of the Borrower to the Holder in connection
with such conversion. The Conversion Date specified in the Notice of Conversion shall be the Conversion Date so long as the Notice
of Conversion is received by the Borrower before 6:00 p.m., New York, New York time, on such date.


 






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(e)            Delivery
of Common Stock by Electronic Transfer. In lieu of delivering physical certificates representing the Common Stock issuable
upon conversion, provided the Borrower is participating in the Depository Trust Company (“DTC”) Fast Automated Securities
Transfer (“FAST”) program, upon request of the Holder and its compliance with the provisions contained in Section 1.1
and in this Section 1.3, the Borrower shall use its best efforts to cause its transfer agent to electronically transmit the Common
Stock issuable upon conversion to the Holder by crediting the account of Holder’s Prime Broker with DTC through its Deposit
Withdrawal Agent Commission (“DWAC”) system.


 


(f)            Failure
to Deliver Common Stock Prior to Deadline. Without in any way limiting the Holder’s right to pursue other remedies, including
actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable upon conversion of this
Note is not delivered by the Deadline (other than a failure due to the circumstances described in Section 1.3 above, which failure
shall be governed by such Section) the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the Deadline
that the Borrower fails to deliver such Common Stock (unless such failure results from war, acts of terrorism, an epidemic, or
natural disaster). Such cash amount shall be paid to Holder by the fifth day of the month following the month in which it has accrued
or, at the option of the Holder (by written notice to the Borrower by the first day of the month following the month in which it
has accrued), shall be added to the principal amount of this Note, in which event interest shall accrue thereon in accordance with
the terms of this Note and such additional principal amount shall be convertible into Common Stock in accordance with the terms
of this Note. The Borrower agrees that the right to convert is a valuable right to the Holder. The damages resulting from a failure,
attempt to frustrate, interference with such conversion right are difficult if not impossible to qualify. Accordingly the parties
acknowledge that the liquidated damages provision contained in this Section 1.3(f) are justified.


 


1.4         Concerning
the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless (i) such
shares are sold pursuant to an effective registration statement under the Act or (ii) the Borrower or its transfer agent shall
have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel
in comparable transactions) to the effect that the shares to be sold or transferred may be sold or transferred pursuant to an exemption
from such registration or (iii) such shares are sold or transferred pursuant to Rule 144 under the Act (or a successor rule) (“Rule
144”) or (iv) such shares are transferred to an “affiliate” (as defined in Rule 144) of the Borrower who agrees
to sell or otherwise transfer the shares only in accordance with this Section 1.4 and who is an Accredited Investor. Except as
otherwise provided (and subject to the removal provisions set forth below), until such time as the shares of Common Stock issuable
upon conversion of this Note have been registered under the Act or otherwise may be sold pursuant to Rule 144 without any restriction
as to the number of securities as of a particular date that can then be immediately sold, each certificate for shares of Common
Stock issuable upon conversion of this Note that has not been so included in an effective registration statement or that has not
been sold pursuant to an effective registration statement or an exemption that permits removal of the legend, shall bear a legend
substantially in the following form, as appropriate:


 






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“NEITHER THE ISSUANCE AND
SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR
FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”


 


The legend set
forth above shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer legend
if (i) the Borrower or its transfer agent shall have received 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 Common Stock may be made without
registration under the Act, which opinion shall be accepted by the Borrower so that the sale or transfer is effected or (ii) in
the case of the Common Stock issuable upon conversion of this Note, such security is registered for sale by the Holder under an
effective registration statement filed under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to
the number of securities as of a particular date that can then be immediately sold. In the event that the Borrower does not accept
the opinion of counsel provided by the Holder with respect to the transfer of Securities pursuant to an exemption from registration,
such as Rule 144 or Regulation S, at the Deadline, it will be considered an Event of Default pursuant to Section 3.2 of the Note.


 


1.5         Status
as Shareholder. Upon submission of a Notice of Conversion by a Holder, (i) the shares covered thereby (other than the shares,
if any, which cannot be issued because their issuance would exceed such Holder’s allocated portion of the Reserved Amount
or Maximum Share Amount) shall be deemed converted into shares of Common Stock and (ii) the Holder’s rights as a Holder of
such converted portion of this Note shall cease and terminate, excepting only the right to receive certificates for such shares
of Common Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure
by the Borrower to comply with the terms of this Note. Notwithstanding the foregoing, if a Holder has not received certificates
for all shares of Common Stock prior to the tenth (10th) business day after the expiration of the Deadline with respect to a conversion
of any portion of this Note for any reason, then (unless the Holder otherwise elects to retain its status as a holder of Common
Stock by so notifying the Borrower) the Holder shall regain the rights of a Holder of this Note with respect to such unconverted
portions of this Note and the Borrower shall, as soon as practicable, return such unconverted Note to the Holder or, if the Note
has not been surrendered, adjust its records to reflect that such portion of this Note has not been converted. In all cases, the
Holder shall retain all of its rights and remedies (including, without limitation, (i) the right to receive Conversion Default
Payments pursuant to Section 1.3to the extent required thereby for such Conversion Default and any subsequent Conversion Default
and (ii) the right to have the Conversion Price with respect to subsequent conversions determined in accordance with Section 1.3)
for the Borrower’s failure to convert this Note.


 






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ARTICLE II. CERTAIN COVENANTS


 


2.1         Distributions
on Capital Stock. So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the
Holder’s written consent (a) pay, declare or set
apart for such payment, any dividend or other distribution (whether in cash, property or other securities) on shares of
capital stock other than dividends on shares of Common Stock solely in the form of additional shares of Common Stock or (b)
directly or indirectly or through any subsidiary make any other payment or distribution in respect of its capital stock
except for distributions pursuant to any shareholders’ rights plan which is approved by a majority of the
Borrower’s disinterested directors.


 


2.2         Restriction
on Stock Repurchases. So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the
Holder’s written consent redeem, repurchase or otherwise acquire (whether for cash or in exchange for property or other securities
or otherwise) in any one transaction or series of related transactions any shares of capital stock of the Borrower or any warrants,
rights or options to purchase or acquire any such shares.


 


ARTICLE III. EVENTS OF DEFAULT


 


If any of the following events of default
(each, an “Event of Default”) shall occur:


 


3.1         Failure
to Pay Principal or Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether
at maturity, upon acceleration or otherwise, and such breach continues for a period of five (5) days.


 






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3.2         Conversion
and the Shares. The Borrower fails to reserve a sufficient amount of shares of common stock as required under the terms of
this Note (including Section 1.2(b) of this Note)(and such breach continues for a period of five (5) days from the time the Borrower
should have known about the breach), fails to issue shares of Common Stock to the Holder (or announces or threatens in writing
that it will not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in accordance
with the terms of this Note, fails to transfer or cause its transfer agent to transfer (issue) (electronically or in certificated
form) shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by
this Note, the Borrower directs its transfer agent not to transfer or delays, impairs, and/or hinders its transfer agent in transferring
(or issuing) (electronically or in certificated form) shares of Common Stock to be issued to the Holder upon conversion of or otherwise
pursuant to this Note as and when required by this Note, or fails to remove (or directs its transfer agent not to remove or impairs,
delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions
in respect thereof) on any shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as
and when required by this Note (or makes any written announcement, statement or threat that it does not intend to honor the obligations
described in this paragraph) and any such failure shall continue uncured (or any written announcement, statement or threat not
to honor its obligations shall not be rescinded in writing) for three (3) business days after the Holder shall have delivered a
Notice of Conversion. It is an obligation of the Borrower to remain current in its obligations to its transfer agent. It shall
be an event of default of this Note, if a conversion of this Note is delayed, hindered or frustrated due to a balance owed by the
Borrower to its transfer agent. If at the option of the Holder, the Holder advances any funds to the Borrower’s transfer
agent in order to process a conversion, such advanced funds shall be paid by the Borrower to the Holder within five (5) business
days, either in cash or as an addition to the balance of the Note, and such choice of payment method is at the discretion of the
Borrower.


 


3.3         Breach
of Covenants. The Borrower breaches any material covenant or other material term or condition contained in this Note and such
breach continues for a period of five (5) days after written notice thereof to the Borrower from the Holder or after ten (10) days
after the Borrower should have been aware of the breach.


 


3.4         Breach
of Representations and Warranties. Any representation or warranty of the Borrower made herein or in any agreement, statement
or certificate given in writing pursuant hereto or in connection herewith, shall be false or misleading in any material respect
when made and the breach of which has (or with the passage of time will have) a material adverse effect on the rights of the Holder
with respect to this Note.


 


3.5         Receiver
or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors, or apply
for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such
a receiver or trustee shall otherwise be appointed.


 


3.6         Judgments.
Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary of the Borrower or
any of its property or other assets for more than $100,000, and shall remain unvacated, unbonded or unstayed for a period of ten
(10) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.


 


3.7         Bankruptcy.
Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under
any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary of the
Borrower.


 


3.8         Delisting
of Common Stock. The Borrower shall fail to maintain the listing or quotation of the Common Stock on the OTCQB, OTC Pink, any
equivalent replacement exchange or marketplace, the Nasdaq Global Market, the Nasdaq Capital Market, the New York Stock Exchange,
or the NYSE MKT.


 






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3.9         Failure
to Comply with the Exchange Act. The Borrower shall fail to comply with the reporting requirements of the Exchange Act (including
but not limited to becoming delinquent in its filings), and/or the Borrower shall cease to be subject to the reporting requirements
of the Exchange Act.


 


3.10       Liquidation.
Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.


 


3.11       Cessation
of Operations. Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to pay its debts
as such debts become due, provided, however, that any disclosure of the Borrower’s ability to continue as a “going
concern” shall not be an admission that the Borrower cannot pay its debts as they become due.


 


3.12       Financial
Statement Restatement. The Borrower replaces its auditor, or any restatement of any financial statements filed by the Borrower
with the SEC for any date or period from two years prior to the Issue Date of this Note and until this Note is no longer outstanding,
if the result of such restatement would, by comparison to the unrestated financial statement, have constituted a material adverse
effect on the rights of the Holder with respect to this Note.


 


3.13       Reverse
Splits. The Borrower effectuates a reverse split of its Common Stock without twenty (20) days prior written notice to the Holder.


 


3.14       Replacement
of Transfer Agent. In the event that the Borrower replaces its transfer agent, and the Borrower fails to provide prior to the
effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions (including but not limited to the
provision to irrevocably reserve shares of Common Stock in the Reserved Amount) signed by the successor transfer agent to Borrower
and the Borrower that reserves the total amount of shares previously held in reserve for the Note with the Borrower’s immediately
preceding transfer agent.


 


3.15       Cross-Default.
Notwithstanding anything to the contrary contained in this Note or the other related or companion documents, a breach or default
by the Borrower of any covenant or other term or condition contained in any of the other financial instrument, including but not
limited to all convertible promissory notes, currently issued, or hereafter issued, by the Borrower, to the Holder or other 3rd
party (the “Other Agreements”), after the passage of all applicable notice and cure or grace periods, shall, at the
option of the Holder, be considered a default under this Note, in which event the Holder shall be entitled to apply all rights
and remedies of the Holder under the terms of this Note by reason of a default under said Other Agreement or hereunder, provided,
however, that if the respective 3rd party has rights in the Other Agreements that are senior to that of the Holder (each a “Senior
Creditor”), and the Senior Creditor has fully waived the applicable breach or default, then such event shall not be considered
a default under this Note.


 






    	 	 10	 



     


    

 


3.16       Inside
Information. Any attempt by the Borrower or its officers, directors, and/or affiliates to transmit, convey, disclose, or any
actual transmittal, conveyance, or disclosure by the Borrower or its officers, directors, and/or affiliates of, material non-public
information concerning the Borrower, to the Holder or its successors and assigns, which is not immediately cured by Borrower’s
filing of a Form 8-K pursuant to Regulation FD on that same date.


 


3.17       No bid.
At any time while this Note is outstanding, the lowest Trading Prices on the OTCQB or other applicable principal trading market
for the Common Stock is equal to or less than $0.0001.


 


3.18       No shop.
So long as this Note is outstanding, the Borrower shall not enter into any transaction or arrangement with any party other than
the Holder, structured in accordance with, based upon, or related or pursuant to, in whole or in part, Section 3(a)(9) of the Securities
Act (a “3(a)(9) Transaction”), without prior written consent of the Holder.


 


3.19       Failure
to Repay Upon Qualified Offering. The Borrower fails to repay the Note, in its entirety, pursuant to the terms of the Note,
with funds received from its next completed offering of $3,000,000.00 or more in gross proceeds to the Company (consummated on
or after the Issue Date).


 


Upon
the occurrence and during the continuation of any Event of Default specified in Sections 3.1, 3.2, 3.3, 3.4, 3.5, 3.6, 3.7,
3.8, 3.9, 3.10, 3.11, 3.12, 3.13, 3.14, 3.15, 3.16, 3.17, 3.18 and/or 3.19, the Note shall become immediately due and payable
and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to 140% (plus an
additional 10% per each additional Event of Default that occurs hereunder) multiplied by the then outstanding entire
balance of the Note (including principal and accrued and unpaid interest) plus Default Interest, if any, plus any
amounts owed to the Holder pursuant to Sections 1.3(f) hereof (collectively, in the aggregate of all of the above, the
“Default Sum”), and all other amounts payable hereunder shall immediately become due and payable, all without
demand, presentment or notice, all of which hereby are expressly waived, together with all costs, including, without
limitation, legal fees and expenses, of collection, and the Holder shall be entitled to exercise all other rights and
remedies available at law or in equity.


 


If the Borrower
fails to pay the Default Amount within five (5) business days of written notice that such amount is due and payable, then the Holder
shall have the right at any time, so long as the Borrower remains in default (and so long and to the extent that there are sufficient
authorized shares), to require the Borrower, upon written notice, to immediately issue, in lieu of the Default Amount, the number
of shares of Common Stock of the Borrower equal to the Default Amount divided by the Conversion Price then in effect, subject to
issuance in tranches due to the beneficial ownership limitations contained in this Note.


 






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ARTICLE IV. MISCELLANEOUS


 


4.1         Failure
or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privileges. All rights and remedies existing hereunder are cumulative
to, and not exclusive of, any rights or remedies otherwise available.


 


4.2         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, facsimile, or electronic mail 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, upon electronic mail 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:


 


If to the Borrower, to:


 


ARKADOS GROUP, INC.


211 Warren Street, Suite 320


Newark, NJ 07103


e-mail: info@arkadosgroup.com


 


If to the Holder:


 


_____________________


_____________________


_____________________


 


4.3         Amendments.
This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and the Holder. The term
“Note” and all reference thereto, as used throughout this instrument, shall mean this instrument as originally executed,
or if later amended or supplemented, then as so amended or supplemented.


 






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4.4         Assignability.
This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit of the Holder and
its successors and assigns. Each transferee of this Note must be an “accredited investor” (as defined in Rule 501(a)
of the 1933 Act). Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral in connection with
a bona fide margin account or other lending arrangement.


 


4.5         Cost of
Collection. If default is made in the payment of this Note, the Borrower shall pay the Holder hereof costs of collection, including
reasonable attorneys’ fees.


 


4.6         Governing
Law. This Note shall be governed by and construed in accordance with the laws of the State of New York without regard to principles
of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Note
shall be brought only in the state and/or federal courts of Johnson County, Kansas. The parties to this Note 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 Borrower and Holder 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 Note 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.


 


4.7         Certain
Amounts. Whenever pursuant to this Note the Borrower is required to pay an amount in excess of the outstanding principal amount
(or the portion thereof required to be paid at that time) plus accrued and unpaid interest plus Default Interest on such interest,
the Borrower and the Holder agree that the actual damages to the Holder from the receipt of cash payment on this Note may be difficult
to determine and the amount to be so paid by the Borrower represents stipulated damages and not a penalty and is intended to compensate
the Holder in part for loss of the opportunity to convert this Note and to earn a return from the sale of shares of Common Stock
acquired upon conversion of this Note at a price in excess of the price paid for such shares pursuant to this Note. The Borrower
and the Holder hereby agree that such amount of stipulated damages is not plainly disproportionate to the possible loss to the
Holder from the receipt of a cash payment without the opportunity to convert this Note into shares of Common Stock.


 






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


 


4.9         Prepayment.
Notwithstanding anything to the contrary contained in this Note, the Borrower may prepay the amount outstanding under this Note,
at any time during the initial 60 day period after the Issue Date, by making a payment to the Holder of an amount in cash equal
to 115% multiplied by the total outstanding amount owed under the Note at such time of prepayment. Notwithstanding anything to
the contrary contained in this Note, the Borrower may prepay the amount outstanding under this Note, at any time after the initial
60 day period after the Issue Date, by making a payment to the Holder of an amount in cash equal to 130% multiplied by the total
outstanding amount owed under the Note at such time of prepayment. In order to prepay this Note, the Borrower shall provide notice
to the Holder ten (10) business days prior to such respective prepayment date, and the Holder must receive such prepayment within
twelve (12) business days of the Holder’s receipt of the respective prepayment notice, but not sooner than ten (10) business
days from the date of notice (the “Prepayment Period”).


 


4.10       Section
3(a)(10) Transactions. If at any time while this Note is outstanding, the Borrower enters into a transaction structured in
accordance with, based upon, or related or pursuant to, in whole or in part, Section 3(a)(10) of the Securities Act (a “3(a)(10)
Transaction”), then a liquidated damages charge of 100% of the outstanding principal balance of this Note at that time, will
be assessed and will become immediately due and payable to the Holder, either in the form of cash payment, an addition to the balance
of the Note, or a combination of both forms of payment, as determined by the Holder.


 


4.11       [Intentionally
Omitted].


 


4.12       Restriction
on Section 3(a)(9) Transactions. So long as this Note is outstanding, the Borrower shall not enter into any 3(a)(9) Transaction
with any party other than the Holder, without prior written consent of the Holder. In the event that the Borrower does enter into,
or makes any issuance of Common Stock related to a 3(a)(9) Transaction while this Note is outstanding, a liquidated damages charge
of 25% of the outstanding principal balance of this Note, but not less than $15,000, will be assessed and will become immediately
due and payable to the Holder at its election in the form of cash payment or addition to the balance of this Note.


 






    	 	 14	 



     


    

 


4.13       Piggyback
Registration Rights. The Borrower shall include on the next registration statement the Borrower files with SEC (or on the subsequent
registration statement if such registration statement is withdrawn), except with respect to the Borrower’s next underwritten
public offering, all shares issuable upon conversion of this Note. Failure to do so will result in liquidated damages of 25% of
the outstanding principal balance of this Note, but not less than $15,000, being immediately due and payable to the Holder at its
election in the form of cash payment or addition to the balance of this Note.


 


4.14       Terms
of Future Financings.  So long as this Note is outstanding, upon any issuance by the Borrower or any of its subsidiaries
of any security with any term more favorable to the holder of such security or with a term in favor of the holder of such security
that was not similarly provided to the Holder in this Note, then the Borrower shall notify the Holder of such additional or more
favorable term and such term, at Holder’s option, shall become a part of the transaction documents with the Holder.  The
types of terms contained in another security that may be more favorable to the holder of such security include, but are not limited
to, terms addressing conversion discounts, prepayment rate, conversion look back periods, interest rates, original issue discounts,
stock sale price, private placement price per share, and warrant coverage.


 


[signature page to follow]


 




    	 	 15	 



     


    

 


IN WITNESS WHEREOF, Borrower has caused
this Note to be signed in its name by its duly authorized officer this May 1, 2017.


 


	ARKADOS GROUP, INC.	 


 


	By:	/s/ Terrence DeFranco	 
	Name:	Terrence DeFranco	 
	Title:	Chief Executive Officer	 


 




    	 	 16	 



     


    

 


EXHIBIT A — NOTICE OF CONVERSION


 


The
undersigned hereby elects to convert $
                  principal amount
of the Note (defined below) into that number of shares of Common Stock to be issued pursuant to the conversion of the Note
(“Common Stock”) as set forth below, of ARKADOS GROUP, INC., a Delaware corporation (the “Borrower”)
according to the conditions of the convertible note of the Borrower dated as of May 1, 2017 (the “Note”), as of
the date written below. No fee will be charged to the Holder for any conversion, except for transfer taxes, if any.


 


Box Checked as to applicable instructions:


 


		 ̈	The Borrower shall electronically transmit
the Common Stock issuable pursuant to this Notice of Conversion to the account of the undersigned or its nominee with DTC through
its Deposit Withdrawal Agent Commission system (“DWAC Transfer”).



 


Name of DTC Prime Broker: Account Number:


 


		 ̈	The undersigned hereby requests that the
Borrower issue a certificate or certificates for the number of shares of Common Stock set forth below (which numbers are based
on the Holder’s calculation attached hereto) in the name(s) specified immediately below or, if additional space is necessary,
on an attachment hereto:



 


_____________________________


_____________________________


_____________________________


_____________________________


 


	Date of Conversion:	_____________
	Applicable Conversion Price:	$_____________
	Number of Shares of Common Stock to be Issued	 
	  Pursuant to Conversion of the Notes:	_________________
	Amount of Principal Balance Due remaining	 
	  Under the Note after this conversion:	__________________


 


[_____________________________]


 


	By:	 	 
	Name:	 	        
	Title:	 	 
	Date:	 	 


 








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