WWW.EXFILE.COM, INC. -- 888-775-4789 -- ARKADOS GROUP, INC. -- EXHIBIT 4.2 TO FORM 8-K


    EXHIBIT
      4.2


     

    NEITHER
      THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE
      BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
      COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
      THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
      MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
      STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
      OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
      SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
      EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
      SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
      COMPANY.  THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF
      THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
      OR
      OTHER LOAN SECURED BY SUCH SECURITIES.

    


    COMMON
      STOCK PURCHASE WARRANT

    


    To
      Purchase ______ Shares of Common Stock of

     

    ARKADOS
      GROUP, INC.

     

    THIS
      COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value
      received, ________________ (the “Holder”), is entitled, upon the terms
      and subject to the limitations on exercise and the conditions hereinafter set
      forth, at any time on or after the date hereof (the “Initial Exercise
      Date”) and on or prior to the close of business on the December 28, 2012
      (the “Termination Date”) but not thereafter, to subscribe for and
      purchase from Arkados Group, Inc. (formerly CDKNet.com, Inc.), a Delaware
      corporation (the “Company”), up to _________ shares (the “Warrant
      Shares”) of Common Stock, par value $.0001 per share, of the Company (the
“Common Stock”).  The purchase price of one share of Common
      Stock under this Warrant shall be equal to the Exercise Price, as defined in
      Section 2(b).

     

    Section
      1.              Definitions.  Capitalized
      terms used and not otherwise defined herein shall have the meanings set forth
      in
      that certain Securities Purchase Agreement, dated ________ 1 (the “Purchase Agreement”),
      among the Company and the purchasers signatory thereto.

     

    Section
      2.               Exercise.

     

    a)  Exercise
      of Warrant.  Exercise of the purchase rights represented by this
      Warrant may be made, in whole or in part, at any time or times on or after
      the
      Initial Exercise Date and on or before the Termination Date by delivery to
      the
      Company of a duly executed facsimile copy of the Notice of Exercise Form
      annexed  hereto (or such 

     

    
      

    

    1
      December 28, 2005
      or June 30, 2006, as the case may be.


    
      
         

      

      
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    other
      office or agency of the Company as it may designate by notice in writing to
      the
      registered Holder at the address of such Holder appearing on the books of the
      Company); provided, however, within 5 Trading Days of the date
      said Notice of Exercise is delivered to the Company, if this Warrant is
      exercised in full, the Holder shall have surrendered this Warrant to the Company
      and the Company shall have received  payment of the aggregate Exercise
      Price of the shares thereby purchased by wire transfer or cashier’s check drawn
      on a United States bank.  Notwithstanding anything herein to the
      contrary, the Holder shall not be required to physically surrender this Warrant
      to the Company until the Holder has purchased all of the Warrant Shares
      available hereunder and the Warrant has been exercised in
      full.  Partial exercises of this Warrant resulting in purchases of a
      portion of the total number of Warrant Shares available hereunder shall have
      the
      effect of lowering the outstanding number of Warrant Shares purchasable
      hereunder in an amount equal to the applicable number of Warrant Shares
      purchased.  The Holder and the Company shall maintain records showing
      the number of Warrant Shares purchased and the date of such
      purchases.  The Company shall deliver any objection to any Notice of
      Exercise Form within 1 Business Day of receipt of such notice.  In the
      event of any dispute or discrepancy, the records of the Holder shall be
      controlling and determinative in the absence of manifest error. The Holder
      and
      any assignee, by acceptance of this Warrant, acknowledge and agree that, by
      reason of the provisions of this paragraph, following the purchase of a portion
      of the Warrant Shares hereunder, the number of Warrant Shares available for
      purchase hereunder at any given time may be less than the amount stated on
      the
      face hereof.

     

    b)  Exercise
      Price.  The exercise price of the Common Stock under this Warrant
      shall be $0.85, subject to adjustment hereunder (the
“Exercise Price”).

     

    c)  Cashless
      Exercise.  This Warrant may also be exercised, at the option of
      the Holder by means of a “cashless exercise” in which the Holder shall be
      entitled to receive a certificate for the number of Warrant Shares equal to
      the
      quotient obtained by dividing [(A-B) (X)] by (A), where:

     

    
      	
            	
               

            	
                (A)
                = the VWAP on the Trading Day immediately preceding the date of such
                election;

            


    

    


    
      	
               

            	
               
                (B) =  the Exercise Price of this Warrant, as adjusted;
                and

            


    

    


    
      	
            	
               

            	
              (X)
                = the number of Warrant Shares issuable upon exercise of this Warrant
                in
                accordance with the terms of this Warrant by means of a cash exercise
                rather than a cashless exercise.

            


    

    


    Notwithstanding
      anything herein to the contrary, on the Termination Date, this Warrant shall
      be
      automatically exercised via cashless exercise pursuant to this Section
      2(c).

    


    d)  Exercise
      Limitations.  The Company shall not effect any exercise of this
      Warrant, and a  Holder shall not have the right to exercise any
      portion of this Warrant, pursuant to Section 2(c) or otherwise, to the extent
      that after giving effect to such

     

    
      
         

      

      
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    issuance
      after exercise, such Holder (together with such Holder’s affiliates, and any
      other person or entity acting as a group together with such Holder or any of
      such Holder’s affiliates), as set forth on the applicable Notice of Exercise,
      would beneficially own in excess of the Beneficial Ownership Limitation (as
      defined below).  For purposes of the foregoing sentence, the number of
      shares of Common Stock beneficially owned by such Holder and its affiliates
      shall include the number of shares of Common Stock issuable upon exercise of
      this Warrant with respect to which the determination of such sentence is being
      made, but shall exclude the number of shares of Common Stock which would be
      issuable upon (A) exercise of the remaining, nonexercised portion of this
      Warrant beneficially owned by such Holder or any of its affiliates and (B)
      exercise or conversion of the unexercised or nonconverted portion of any other
      securities of the Company (including, without limitation, any
      other  Debentures or Warrants) subject to a limitation on conversion
      or exercise analogous to the limitation contained herein beneficially owned
      by
      such Holder or any of its affiliates.  Except as set forth in the preceding
      sentence, for purposes of this Section 2(d), beneficial ownership shall be
      calculated in accordance with Section 13(d) of the Exchange Act and the rules
      and regulations promulgated thereunder, it being acknowledged by a Holder that
      the Company is not representing to such Holder that such calculation is in
      compliance with Section 13(d) of the Exchange Act and such Holder is solely
      responsible for any schedules required to be filed in accordance
      therewith.   To the extent that the limitation contained in this
      Section 2(d) applies, the determination of whether this Warrant is exercisable
      (in relation to other securities owned by such Holder) and of which a portion
      of
      this Warrant is exercisable shall be in the sole discretion of a Holder, and
      the
      submission of a Notice of Exercise shall be deemed to be each Holder’s
      determination of whether this Warrant is exercisable (in relation to other
      securities owned by such Holder) and of which portion of this Warrant is
      exercisable, in each case subject to such aggregate percentage limitation,
      and
      the Company shall have no obligation to verify or confirm the accuracy of such
      determination.   In addition, a determination as to any group
      status as contemplated above shall be determined in accordance with Section
      13(d) of the Exchange Act and the rules and regulations promulgated
      thereunder.  For purposes of this Section 2(d), in determining the
      number of outstanding shares of Common Stock, a Holder may rely on the number
      of
      outstanding shares of Common Stock as reflected in (x) the Company’s most recent
      Form 10-QSB or Form 10-KSB, as the case may be, (y) a more recent public
      announcement by the Company or (z) any other notice by the Company or the
      Company’s Transfer Agent setting forth the number of shares of Common Stock
      outstanding.  Upon the written or oral request of a Holder, the Company
      shall within two Trading Days confirm orally and in writing to such Holder
      the
      number of shares of Common Stock then outstanding.  In any case, the number
      of outstanding shares of Common Stock shall be determined after giving effect
      to
      the conversion or exercise of securities of the Company, including this Warrant,
      by such Holder or its affiliates since the date as of which such number of
      outstanding shares of Common Stock was reported.  The “Beneficial
      Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock
      outstanding immediately after giving effect to the issuance of shares of Common
      Stock issuable upon exercise of this Warrant.  The Beneficial
      Ownership Limitation provisions of this Section 2(d) may be waived by such
      Holder, at the election of such Holder, upon not less than 61 days’ prior notice
      to the Company to change the Beneficial Ownership Limitation to 

     

     

    
      
         

      

      
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    9.99%
      of
      the number of shares of the Common Stock outstanding immediately after giving
      effect to the issuance of shares of Common Stock upon exercise of this Warrant,
      and the provisions of this Section 2(d) shall continue to apply.  Upon
      such a change by a Holder of the Beneficial Ownership Limitation from such
      4.99%
      limitation to such 9.99% limitation, the Beneficial Ownership Limitation may
      not
      be waived by such Holder.  The provisions of this paragraph shall be
      implemented in a manner otherwise than in strict conformity with the terms
      of
      this Section 2(d) to correct this paragraph (or any portion hereof) which may
      be
      defective or inconsistent with the intended Beneficial Ownership Limitation
      herein contained or to make changes or supplements necessary or desirable to
      properly give effect to such limitation. The limitations contained in this
      paragraph shall apply to a successor holder of this Warrant.

     

    e)  Mechanics
      of Exercise.

     

    i.  Authorization
      of Warrant Shares.  The Company covenants that all Warrant Shares
      which may be issued upon the exercise of the purchase rights represented by
      this
      Warrant will, upon exercise of the purchase rights represented by this Warrant,
      be duly authorized, validly issued, fully paid and nonassessable and free from
      all taxes, liens and charges in respect of the issue thereof (other than taxes
      in respect of any transfer occurring contemporaneously with such
      issue).

     

    ii.  Delivery
      of Certificates Upon Exercise.  Certificates for shares purchased
      hereunder shall be transmitted by the transfer agent of the Company to the
      Holder by crediting the account of the Holder’s prime broker with the Depository
      Trust Company through its Deposit Withdrawal Agent Commission (“DWAC”)
      system if the Company is a participant in such system, and otherwise by physical
      delivery to the address specified by the Holder in the Notice of Exercise within
      3 Trading Days from the delivery to the Company of the Notice of Exercise Form,
      surrender of this Warrant (if required) and payment of the aggregate Exercise
      Price as set forth above (“Warrant Share Delivery Date”).  This
      Warrant shall be deemed to have been exercised on the date the Exercise Price
      is
      received by the Company.  The Warrant Shares shall be deemed to have
      been issued, and Holder or any other person so designated to be named therein
      shall be deemed to have become a holder of record of such shares for all
      purposes, as of the date the Warrant has been exercised by payment to the
      Company of the Exercise Price and all taxes required to be paid by the Holder,
      if any, pursuant to Section 2(e)(vii) prior to the issuance of such shares,
      have
      been paid.

     

    iii.  Delivery
      of New Warrants Upon Exercise.  If this Warrant shall have been
      exercised in part, the Company shall, at the request of a Holder and upon
      surrender of this Warrant certificate, at the time of delivery of the
      certificate or certificates representing Warrant Shares, deliver to Holder
      a new
      Warrant evidencing the rights of Holder to purchase the unpurchased Warrant
      Shares called for by this Warrant, 

     

    
      
         

      

      
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    which
      new
      Warrant shall in all other respects be identical with this Warrant.

     

    iv.  Rescission
      Rights.  If the Company fails to cause its transfer agent to
      transmit to the Holder a certificate or certificates representing the Warrant
      Shares pursuant to this Section 2(e)(iv) by the Warrant Share Delivery Date,
      then the Holder will have the right to rescind such exercise.

     

    v.  Compensation
      for Buy-In on Failure to Timely Deliver Certificates Upon
      Exercise.  In addition to any other rights available to the
      Holder, if the Company fails to cause its transfer agent to transmit to the
      Holder a certificate or certificates representing the Warrant Shares pursuant
      to
      an exercise on or before the Warrant Share Delivery Date, and if after such
      date
      the Holder is required by its broker to purchase (in an open market transaction
      or otherwise) shares of Common Stock to deliver in satisfaction of a sale by
      the
      Holder of the Warrant Shares which the Holder anticipated receiving upon such
      exercise (a “Buy-In”), then the Company shall (1) pay in cash to the
      Holder the amount by which (x) the Holder’s total purchase price (including
      brokerage commissions, if any) for the shares of Common Stock so purchased
      exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares
      that the Company was required to deliver to the Holder in connection with the
      exercise at issue times (B) the price at which the sell order giving rise to
      such purchase obligation was executed, and (2) at the option of the Holder,
      either reinstate the portion of the Warrant and equivalent number of Warrant
      Shares for which such exercise was not honored or deliver to the Holder the
      number of shares of Common Stock that would have been issued had the Company
      timely complied with its exercise and delivery obligations
      hereunder.  For example, if the Holder purchases Common Stock having a
      total purchase price of $11,000 to cover a Buy-In with respect to an attempted
      exercise of shares of Common Stock with an aggregate sale price giving rise
      to
      such purchase obligation of $10,000, under clause (1) of the immediately
      preceding sentence the Company shall be required to pay the Holder $1,000.
      The
      Holder shall provide the Company written notice indicating the amounts payable
      to the Holder in respect of the Buy-In, together with applicable confirmations
      and other evidence reasonably requested by the Company.  Nothing
      herein shall limit a Holder’s right to pursue any other remedies available to it
      hereunder, at law or in equity including, without limitation, a decree of
      specific performance and/or injunctive relief with respect to the Company’s
      failure to timely deliver certificates representing shares of Common Stock
      upon
      exercise of the Warrant as required pursuant to the terms hereof.

     

    vi.  No
      Fractional Shares or Scrip.  No fractional shares or scrip
      representing fractional shares shall be issued upon the exercise of this
      Warrant.  As to any fraction of a share which Holder would otherwise
      be

     

    
      
         

      

      
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    entitled
      to purchase upon such exercise, the Company shall pay a cash adjustment in
      respect of such final fraction in an amount equal to such fraction multiplied
      by
      the Exercise Price.

     

    vii.  Charges,
      Taxes and Expenses.  Issuance of certificates for Warrant Shares
      shall be made without charge to the Holder for any issue or transfer tax or
      other incidental expense in respect of the issuance of such certificate, all
      of
      which taxes and expenses shall be paid by the Company, and such certificates
      shall be issued in the name of the Holder or in such name or names as may be
      directed by the Holder; provided, however, that in the event
      certificates for Warrant Shares are to be issued in a name other than the name
      of the Holder, this Warrant when surrendered for exercise shall be accompanied
      by the Assignment Form attached hereto duly executed by the Holder; and the
      Company may require, as a condition thereto, the payment of a sum sufficient
      to
      reimburse it for any transfer tax incidental thereto.

     

    viii.  Closing
      of Books.  The Company will not close its stockholder books or
      records in any manner which prevents the timely exercise of this Warrant,
      pursuant to the terms hereof.

     

    f)           Redemption
      at Election of Holder.  If the Company shall agree to sell
      substantially all of its assets in one or more transactions in which the
      consideration consists solely of cash, cash equivalents, assumption of
      indebtedness, or any combination thereof, the Holder shall have the right to
      require the Company, by written notice to the Company, to redeem this Warrant,
      in full and in cash, at the closing of such sale of assets.   The
      aggregate amount payable in full redemption of the Warrants required to be
      redeemed upon such sale of assets shall be equal to the Warrant Cash Sale
      Redemption Amount (as defined below).  In the event that the Company
      fails to pay the Warrant Cash Sale Redemption Amount within three business
      days
      of the closing of the sale transaction, interest shall accrue on the unpaid
      Warrant Cash Redemption Amount at the rate of 18% per annum, or such lower
      maximum amount of interest permitted to be charged under applicable law, until
      the Warrant Cash Sale Redemption Amount is paid in full.  Concurrently
      with the payment in full of the Warrant Cash Sale Redemption Amount, the Holder
      shall surrender this Warrant to or as directed by the Company (or the successor
      company).    The Holder may elect to exercise this Warrant
      pursuant to Sections 2(a) or 2(c) hereof prior to actual payment in cash for
      the
      redemption.

    


    g)           Definitions
      Applicable to Section 2(f).  For the purposes of Section
      2(f):

    


    i.           “Warrant
      Cash Sale Redemption Amount”  shall equal the sum of
      (i)  all unexercised Warrant Shares underlying this Warrant if the
      Warrants were issued pursuant to a cashless exercise exercised on the date
      the
      redemption right hereunder is exercised based on the Effective Price (as defined
      below) and (ii) all other amounts, costs, expenses and liquidated damages due
      in
      respect of this Debenture  The “Effective Price” shall be the
      cash consideration paid by the acquirer in such event (less the amount paid
      in
      redemption of the Debentures in

     

    
      
         

      

      
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    clause
      (i) of the definition of Cash Sale Redemption Amount set forth therein) divided
      by the sum of; (x) the issued and outstanding shares of Common Stock of the
      Company then outstanding and (y) the shares of Common Stock into which the
      outstanding Debentures may be converted on the day immediately preceding the
      record date fixed for determining the holders of shares of Common Stock eligible
      to receive a distribution (or if no such date has been fixed, the date of the
      day immediately preceding the closing of the transaction) and (z) the number
      of
      shares deemed issuable to the Warrant holders pursuant to the mandatory
      redemption provisions in this and the other Warrants which take effect upon
      sale
      of assets for cash consideration whether or not any Warrant holder shall have
      elected to have their Warrants Redeemed; provided,
however, that the number of shares of Common Stock
      issuable on conversion of the Debentures and issuable upon exercise of the
      Warrants for this purpose shall be determined on a fully converted or exercised
      basis and ignoring any conversion or exercise limitations therein.

     

    Section
      3.               CertainAdjustments.

     

    a)  Stock
      Dividends and Splits. If the Company, at any time while this Warrant is
      outstanding: (A) pays a stock dividend or otherwise make a distribution or
      distributions on shares of its Common Stock or any other equity or equity
      equivalent securities payable in shares of Common Stock (which, for avoidance
      of
      doubt, shall not include any shares of Common Stock issued by the Company
      pursuant to this Warrant), (B) subdivides outstanding shares of Common Stock
      into a larger number of shares, (C) combines (including by way of reverse stock
      split) outstanding shares of Common Stock into a smaller number of shares,
      or
      (D) issues by reclassification of shares of the Common Stock any shares of
      capital stock of the Company, then in each case the Exercise Price shall be
      multiplied by a fraction of which the numerator shall be the number of shares
      of
      Common Stock (excluding treasury shares, if any) outstanding immediately before
      such event and of which the denominator shall be the number of shares of Common
      Stock outstanding immediately after such event and the number of shares issuable
      upon exercise of this Warrant shall be proportionately adjusted.  Any
      adjustment made pursuant to this Section 3(a) shall become effective immediately
      after the record date for the determination of stockholders entitled to receive
      such dividend or distribution and shall become effective immediately after
      the
      effective date in the case of a subdivision, combination or
      re-classification.

     

    b)  Subsequent
      Equity Sales.

     

    i.  If
      the
      Company or any Subsidiary thereof, as applicable, at any time while this Warrant
      is outstanding, shall (except for an Exempt Issuance) offer, sell, grant any
      option to purchase or offer, sell or grant any right to reprice its securities,
      or otherwise dispose of or issue (or announce any offer, sale, grant or any
      option to purchase or other disposition) any Common Stock or Common Stock
      Equivalents entitling any Person to acquire shares of Common Stock, at an
      effective price per share less than the then Exercise Price (such lower price,
      the “Base Share Price” and such issuances collectively, a “Dilutive
      Issuance”), as 

     

     

    
      
         

      

      
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    adjusted
      hereunder (if the holder of the Common Stock or Common Stock Equivalents so
      issued shall at any time, whether by operation of purchase price adjustments,
      reset provisions, floating conversion, exercise or exchange prices or otherwise,
      or due to warrants, options or rights per share which is issued in connection
      with such issuance, be entitled to receive shares of Common Stock at an
      effective price per share which is less than the Exercise Price, such issuance
      shall be deemed to have occurred for less than the Exercise Price on such date
      of the Dilutive Issuance), then the Exercise Price shall be reduced and only
      reduced to equal the Base Share Price and the number of Warrant Shares issuable
      hereunder shall be increased such that the aggregate Exercise Price payable
      hereunder, after taking into account the decrease in the Exercise Price, shall
      be equal to the aggregate Exercise Price prior to such adjustment.

     

    ii.  If
      the
      Company or any Subsidiary there, as applicable, at any time while this Warrant
      is outstanding, shall offer, sell, grant any option to purchase or offer, sell
      or grant any right to reprice its securities, or otherwise dispose of or issue
      (or announce any offer, sale, grant or any option to purchase or other
      disposition) any Common Stock or Common Stock Equivalents entitling any Person
      to acquire shares of Common Stock, at an effective price per share less than
      the
      VWAP on either the Trading Day immediately prior to the date agreements for
      such
      issuance are entered into or the date such issuance is consummated, whichever
      results in a higher VWAP, but more than the then effective Exercise Price (which
      is addressed in 3(b)(i) above) (such lower price, the “Market Base Price”
and such issuances collectively, a “Market Dilutive Issuance”), as
      adjusted hereunder (if the holder of the Common Stock or Common Stock
      Equivalents so issued shall at any time, whether by operation of purchase price
      adjustments, reset provisions, floating conversion, exercise or exchange prices
      or otherwise, or due to warrants, options or rights per share which is issued
      in
      connection with such issuance, be entitled to receive shares of Common Stock
      at
      an effective price per share which is less than the Exercise Price, such
      issuance shall be deemed to have occurred for less than the Exercise Price
      on
      such date of the Market Dilutive Issuance) then the Exercise Price shall be
      reduced to a price determined by multiplying the then effective Exercise Price
      by a fraction, the numerator of which is the number of shares of Common Stock
      issued and outstanding immediately prior to the Market Dilutive Issuance plus
      the number of shares of Common Stock which the aggregate offering price for
      such
      Market Dilutive Issuance would purchase at the then Market Base Price, and
      the
      denominator of which shall be the sum of the number of shares of Common Stock
      issued and outstanding immediately prior to the Market Dilutive Issuance plus
      the number of shares of Common Stock so issued or issuable in connection with
      the Market Dilutive Issuance and the number of Warrant Shares issuable hereunder
      shall be increased such that the aggregate Exercise Price payable hereunder,
      after taking into account the decrease in the Exercise Price, shall be equal
      to
      the aggregate Exercise Price prior to such adjustment..

    


    iii.  Such
      adjustments shall be made whenever such Common Stock or Common Stock Equivalents
      are issued.  Notwithstanding the foregoing, no 

     

     

    
      
         

      

      
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    adjustments
      shall be made, paid or issued under this Section 3(b) in respect of an Exempt
      Issuance.  The Company shall notify the Holder in writing, no later
      than the Trading Day following the issuance of any Common Stock or Common Stock
      Equivalents subject to this section, indicating therein the applicable issuance
      price, or of applicable reset price, exchange price, conversion price and other
      pricing terms (such notice the “Dilutive Issuance
      Notice”).  For purposes of clarification, whether or not the
      Company provides a Dilutive Issuance Notice pursuant to this Section 3(b),
      upon
      the occurrence of any Dilutive Issuance or Market Dilutive Issuance, as
      applicable, after the date of such Dilutive Issuance or Market Dilutive
      Issuance, as applicable, the Holder is entitled to receive a number of Warrant
      Shares based upon the Base Share Price or the price determined pursuant to
      3(b)(ii), as applicable, regardless of whether the Holder accurately refers
      to
      the Base Share Price or such price determined pursuant to 3(b)(ii) in the Notice
      of Exercise.

     

    c)  Pro
      Rata Distributions.  If the Company, at any time prior to the
      Termination Date, shall distribute to all holders of Common Stock (and not
      to
      Holders of the Warrants) evidences of its indebtedness or assets (including
      cash
      and cash dividends) or rights or warrants to subscribe for or purchase any
      security other than the Common Stock (which shall be subject to Section 3(b)),
      then in each such case the Exercise Price shall be adjusted by multiplying
      the
      Exercise Price in effect immediately prior to the record date fixed for
      determination of stockholders entitled to receive such distribution by a
      fraction of which the denominator shall be the VWAP determined as of the record
      date mentioned above, and of which the numerator shall be such VWAP on such
      record date less the then per share fair market value at such record date of
      the
      portion of such assets or evidence of indebtedness so distributed applicable
      to
      one outstanding share of the Common Stock as determined by the Board of
      Directors in good faith.  In either case the adjustments shall be
      described in a statement provided to the Holder of the portion of assets or
      evidences of indebtedness so distributed or such subscription rights applicable
      to one share of Common Stock.  Such adjustment shall be made whenever
      any such distribution is made and shall become effective immediately after
      the
      record date mentioned above.

     

    d)  Fundamental
      Transaction. If, at any time while this Warrant is outstanding, (A) the
      Company effects any merger or consolidation of the Company with or into another
      Person, (B) the Company effects any sale of all or substantially all of its
      assets in one or a series of related transactions, (C) any tender offer or
      exchange offer (whether by the Company or another Person) is completed pursuant
      to which holders of Common Stock are permitted to tender or exchange their
      shares for other securities, cash or property, or (D) the Company effects any
      reclassification of the Common Stock or any compulsory share exchange pursuant
      to which the Common Stock is effectively converted into or exchanged for other
      securities, cash or property (in any such case, a “Fundamental
      Transaction”), then, upon any subsequent exercise of this Warrant, the
      Holder shall have the right to receive, for each Warrant Share that would have
      been issuable upon such exercise immediately prior to the occurrence of such
      Fundamental Transaction, at the option of the Holder, (a) upon exercise of
      this
      Warrant, the number of shares of Common Stock of the successor or acquiring
      corporation or of the Company, if 

     

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    it
      is the
      surviving corporation, and any additional consideration (the “Alternate
      Consideration”) receivable upon or as a result of such reorganization,
      reclassification, merger, consolidation or disposition of assets by a Holder
      of
      the number of shares of Common Stock for which this Warrant is exercisable
      immediately prior to such event or (b) if the Company is acquired in an all
      cash
      transaction, cash equal to the value of this Warrant as determined in accordance
      with the Black-Scholes option pricing formula.  For purposes of any
      such exercise, the determination of the Exercise Price shall be appropriately
      adjusted to apply to such Alternate Consideration based on the amount of
      Alternate Consideration issuable in respect of one share of Common Stock in
      such
      Fundamental Transaction, and the Company shall apportion the Exercise Price
      among the Alternate Consideration in a reasonable manner reflecting the relative
      value of any different components of the Alternate Consideration.  If
      holders of Common Stock are given any choice as to the securities, cash or
      property to be received in a Fundamental Transaction, then the Holder shall
      be
      given the same choice as to the Alternate Consideration it receives upon any
      exercise of this Warrant following such Fundamental Transaction.  To
      the extent necessary to effectuate the foregoing provisions, any successor
      to
      the Company or surviving entity in such Fundamental Transaction shall issue
      to
      the Holder a new warrant consistent with the foregoing provisions and evidencing
      the Holder’s right to exercise such warrant into Alternate Consideration. The
      terms of any agreement pursuant to which a Fundamental Transaction is effected
      shall include terms requiring any such successor or surviving entity to comply
      with the provisions of this Section 3(d) and insuring that this Warrant (or
      any
      such replacement security) will be similarly adjusted upon any subsequent
      transaction analogous to a Fundamental Transaction.

     

    e)  Calculations.
      All calculations under this Section 3 shall be made to the nearest cent or
      the
      nearest 1/100th of a share, as the case may be. For purposes of this Section
      3,
      the number of shares of Common Stock deemed to be issued and outstanding as
      of a
      given date shall be the sum of the number of shares of Common Stock (excluding
      treasury shares, if any) issued and outstanding.

     

    f)  Voluntary
      Adjustment By Company. The Company may at any time during the term of this
      Warrant reduce the then current Exercise Price to any amount and for any period
      of time deemed appropriate by the Board of Directors of the
      Company.

     

    g)  Notice
      to Holders.

     

    i.  Adjustment
      to Exercise Price. Whenever the Exercise Price is adjusted pursuant to this
      Section 3, the Company shall promptly mail to each Holder a notice setting
      forth
      the Exercise Price after such adjustment and setting forth a brief statement
      of
      the facts requiring such adjustment. If the Company issues a variable rate
      security, despite the prohibition thereon in the Purchase Agreement, the Company
      shall be deemed to have issued Common Stock or Common Stock Equivalents at
      the
      lowest possible conversion or exercise price at which such securities may be
      converted or exercised in the case of a Variable Rate Transaction (as defined
      in
      the Purchase Agreement).

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    ii.  Notice
      to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or
      any other distribution) on the Common Stock; (B) the Company shall declare
      a
      special nonrecurring cash dividend on or a redemption of the Common Stock;
      (C)
      the Company shall authorize the granting to all holders of the Common Stock
      rights or warrants to subscribe for or purchase any shares of capital stock
      of
      any class or of any rights; (D) the approval of any stockholders of the Company
      shall be required in connection with any reclassification of the Common Stock,
      any consolidation or merger to which the Company is a party, any sale or
      transfer of all or substantially all of the assets of the Company, of any
      compulsory share exchange whereby the Common Stock is converted into other
      securities, cash or property; (E) the Company shall authorize the voluntary
      or
      involuntary dissolution, liquidation or winding up of the affairs of the
      Company; then, in each case, the Company shall cause to be mailed to the Holder
      at its last address as it shall appear upon the Warrant Register of the Company,
      at least 20 calendar days prior to the applicable record or effective date
      hereinafter specified, a notice stating (x) the date on which a record is to
      be
      taken for the purpose of such dividend, distribution, redemption, rights or
      warrants, or if a record is not to be taken, the date as of which the holders
      of
      the Common Stock of record to be entitled to such dividend, distributions,
      redemption, rights or warrants are to be determined or (y) the date on which
      such reclassification, consolidation, merger, sale, transfer or share exchange
      is expected to become effective or close, and the date as of which it is
      expected that holders of the Common Stock of record shall be entitled to
      exchange their shares of the Common Stock for securities, cash or other property
      deliverable upon such reclassification, consolidation, merger, sale, transfer
      or
      share exchange; provided that the failure to mail such notice or any defect
      therein or in the mailing thereof shall not affect the validity of the corporate
      action required to be specified in such notice.  The Holder is
      entitled to exercise this Warrant during the 20-day period commencing on the
      date of such notice to the effective date of the event triggering such
      notice.

     

    Section
      4.               Transfer
      of Warrant.

     

    a)  Transferability.  Subject
      to compliance with any applicable securities laws and the conditions set forth
      in Sections 5(a) and 4(d) hereof and to the provisions of Section 4.1 of the
      Purchase Agreement, this Warrant and all rights hereunder are transferable,
      in
      whole or in part, upon surrender of this Warrant at the principal office of
      the
      Company, together with a written assignment of this Warrant substantially in
      the
      form attached hereto duly executed by the Holder or its agent or attorney and
      funds sufficient to pay any transfer taxes payable upon the making of such
      transfer.  Upon such surrender and, if required, such payment, the
      Company shall execute and deliver a new Warrant or Warrants in the name of
      the
      assignee or assignees and in the denomination or denominations specified in
      such
      instrument of assignment, and shall issue to the assignor a new Warrant
      evidencing the portion of this Warrant not so assigned, and this Warrant


     

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    shall
      promptly be cancelled.  A Warrant, if properly assigned, may be
      exercised by a new holder for the purchase of Warrant Shares without having
      a
      new Warrant issued.

     

    b)  New
      Warrants. This Warrant may be divided or combined with other Warrants upon
      presentation hereof at the aforesaid office of the Company, together with a
      written notice specifying the names and denominations in which new Warrants
      are
      to be issued, signed by the Holder or its agent or attorney.  Subject
      to compliance with Section 4(a), as to any transfer which may be involved in
      such division or combination, the Company shall execute and deliver a new
      Warrant or Warrants in exchange for the Warrant or Warrants to be divided or
      combined in accordance with such notice.

     

    c)  Warrant
      Register. The Company shall register this Warrant, upon records to be
      maintained by the Company for that purpose (the “Warrant Register”), in
      the name of the record Holder hereof from time to time.  The Company
      may deem and treat the registered Holder of this Warrant as the absolute owner
      hereof for the purpose of any exercise hereof or any distribution to the Holder,
      and for all other purposes, absent actual notice to the contrary.

     

    d)  Transfer
      Restrictions. If, at the time of the surrender of this Warrant in connection
      with any transfer of this Warrant, the transfer of this Warrant shall not be
      registered pursuant to an effective registration statement under the Securities
      Act and under applicable state securities or blue sky laws, the Company may
      require, as a condition of allowing such transfer (i) that the Holder or
      transferee of this Warrant, as the case may be, furnish to the Company a written
      opinion of counsel (which opinion shall be in form, substance and scope
      customary for opinions of counsel in comparable transactions) to the effect
      that
      such transfer may be made without registration under the Securities Act and
      under applicable state securities or blue sky laws, (ii) that the holder or
      transferee execute and deliver to the Company an investment letter in form
      and
      substance acceptable to the Company and (iii) that the transferee be an
“accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or
      (a)(8) promulgated under the Securities Act or a qualified institutional buyer
      as defined in Rule 144A(a) under the Securities Act.

     

    Section
      5.               Miscellaneous.

     

    a)  Title
      to Warrant.  Prior to the Termination Date and subject to
      compliance with applicable laws and Section 4 of this Warrant, this Warrant
      and
      all rights hereunder are transferable, in whole or in part, at the office or
      agency of the Company by the Holder in person or by duly authorized attorney,
      upon surrender of this Warrant together with the Assignment Form annexed hereto
      properly endorsed.  The transferee shall sign an investment letter in
      form and substance reasonably satisfactory to the Company.

     

    b)  No
      Rights as Shareholder Until Exercise.  This Warrant does not
      entitle the Holder to any voting rights or other rights as a shareholder of
      the
      Company prior to the exercise hereof.  Upon the surrender of this
      Warrant and the payment of the aggregate Exercise Price (or by means of a
      cashless exercise), the Warrant Shares so purchased shall be and be deemed
      to be
      issued to such Holder as the record owner of such shares as of the close of
      business on the later of the date of such surrender or payment.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    c)  Loss,
      Theft, Destruction or Mutilation of Warrant. The Company covenants that upon
      receipt by the Company of evidence reasonably satisfactory to it of the loss,
      theft, destruction or mutilation of this Warrant or any stock certificate
      relating to the Warrant Shares, and in case of loss, theft or destruction,
      of
      indemnity or security reasonably satisfactory to it (which, in the case of
      the
      Warrant, shall not include the posting of any bond), and upon surrender and
      cancellation of such Warrant or stock certificate, if mutilated, the Company
      will make and deliver a new Warrant or stock certificate of like tenor and
      dated
      as of such cancellation, in lieu of such Warrant or stock
      certificate.

     

    d)  Saturdays,
      Sundays, Holidays, etc.  If the last or appointed day for the
      taking of any action or the expiration of any right required or granted herein
      shall be a Saturday, Sunday or a legal holiday, then such action may be taken
      or
      such right may be exercised on the next succeeding day not a Saturday, Sunday
      or
      legal holiday.

     

    e)  Authorized
      Shares.

     

    The
      Company covenants that during the period the Warrant is outstanding, it will
      reserve from its authorized and unissued Common Stock a sufficient number of
      shares to provide for the issuance of the Warrant Shares upon the exercise
      of
      any purchase rights under this Warrant.  The Company further covenants
      that its issuance of this Warrant shall constitute full authority to its
      officers who are charged with the duty of executing stock certificates to
      execute and issue the necessary certificates for the Warrant Shares upon the
      exercise of the purchase rights under this Warrant.  The Company will
      take all such reasonable action as may be necessary to assure that such Warrant
      Shares may be issued as provided herein without violation of any applicable
      law
      or regulation, or of any requirements of the Trading Market upon which the
      Common Stock may be listed.

     

    Except
      and to the extent as waived or consented to by the Holder, the Company shall
      not
      by any action, including, without limitation, amending its certificate of
      incorporation or through any reorganization, transfer of assets, consolidation,
      merger, dissolution, issue or sale of securities or any other voluntary action,
      avoid or seek to avoid the observance or performance of any of the terms of
      this
      Warrant, but will at all times in good faith assist in the carrying out of
      all
      such terms and in the taking of all such actions as may be necessary or
      appropriate to protect the rights of Holder as set forth in this Warrant against
      impairment.  Without limiting the generality of the foregoing, the
      Company will (a) not increase the par value of any Warrant Shares above the
      amount payable therefor upon such exercise immediately prior to such increase
      in
      par value, (b) take all such action as may be necessary or appropriate in order
      that the Company may validly and legally issue fully paid and nonassessable
      Warrant Shares upon the exercise of this Warrant, and (c) use commercially
      reasonable efforts to obtain all such authorizations, exemptions or consents
      from any public regulatory body having jurisdiction thereof as may be necessary
      to enable the Company to perform its obligations under this
      Warrant.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    Before
      taking any action which would result in an adjustment in the number of Warrant
      Shares for which this Warrant is exercisable or in the Exercise Price, the
      Company shall obtain all such authorizations or exemptions thereof, or consents
      thereto, as may be necessary from any public regulatory body or bodies having
      jurisdiction thereof.

     

    f)  Jurisdiction.
      All questions concerning the construction, validity, enforcement and
      interpretation of this Warrant shall be determined in accordance with the
      provisions of the Purchase Agreement.

     

    g)  Restrictions.  The
      Holder acknowledges that the Warrant Shares acquired upon the exercise of this
      Warrant, if not registered, will have restrictions upon resale imposed by state
      and federal securities laws.

     

    h)  Nonwaiver
      and Expenses.  No course of dealing or any delay or failure to
      exercise any right hereunder on the part of Holder shall operate as a waiver
      of
      such right or otherwise prejudice Holder’s rights, powers or remedies,
      notwithstanding the fact that all rights hereunder terminate on the Termination
      Date.  If the Company willfully and knowingly fails to comply with any
      provision of this Warrant, which results in any material damages to the Holder,
      the Company shall pay to Holder such amounts as shall be sufficient to cover
      any
      costs and expenses including, but not limited to, reasonable attorneys’ fees,
      including those of appellate proceedings, incurred by Holder in collecting
      any
      amounts due pursuant hereto or in otherwise enforcing any of its rights, powers
      or remedies hereunder.

     

    i)  Notices.  Any
      notice, request or other document required or permitted to be given or delivered
      to the Holder by the Company shall be delivered in accordance with the notice
      provisions of the Purchase Agreement.

     

    j)  Limitation
      of Liability.  No provision hereof, in the absence of any
      affirmative action by Holder to exercise this Warrant or purchase Warrant
      Shares, and no enumeration herein of the rights or privileges of Holder, shall
      give rise to any liability of Holder for the purchase price of any Common Stock
      or as a stockholder of the Company, whether such liability is asserted by the
      Company or by creditors of the Company.

     

    k)  Remedies.  Holder,
      in addition to being entitled to exercise all rights granted by law, including
      recovery of damages, will be entitled to specific performance of its rights
      under this Warrant.  The Company agrees that monetary damages would
      not be adequate compensation for any loss incurred by reason of a breach by
      it
      of the provisions of this Warrant and hereby agrees to waive the defense in
      any
      action for specific performance that a remedy at law would be
      adequate.

     

    l)  Successors
      and Assigns.  Subject to applicable securities laws, this Warrant
      and the rights and obligations evidenced hereby shall inure to the benefit
      of
      and be binding upon the successors of the Company and the successors and
      permitted assigns of Holder.  The provisions of this Warrant are
      intended to be for the benefit of all Holders from time to time of this Warrant
      and shall be enforceable by any such Holder or holder of Warrant
      Shares.

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    m)  Amendment.  This
      Warrant may be modified or amended or the provisions hereof waived with the
      written consent of the Company and the Holders of  [60%] of the then
      outstanding Warrants.

     

    n)  Severability.  Wherever
      possible, each provision of this Warrant shall be interpreted in such manner
      as
      to be effective and valid under applicable law, but if any provision of this
      Warrant shall be prohibited by or invalid under applicable law, such provision
      shall be ineffective to the extent of such prohibition or invalidity, without
      invalidating the remainder of such provisions or the remaining provisions of
      this Warrant.

     

    o)  Headings.  The
      headings used in this Warrant are for the convenience of reference only and
      shall not, for any purpose, be deemed a part of this Warrant.

     

    


    ********************

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
 

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
      officer thereunto duly authorized.

     

    


    Dated:  __________________

    
 

     

     

    
      	 	ARKADOS
              GROUP, INC.	 
	 	 	 
	 	 	 	 
	
               

            	
              By:
                

            	/s/ 	 
	 	 	Name:   Barbara
              Kane-Burke	 
	 	 	Title:    
              Chief Financial Officer	 
	 	 	 	 


    

     

     

     

     

     

     

     

     

     

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    NOTICE
      OF EXERCISE

    


    TO:           ARKADOS
      GROUP, INC.

    


    (1)  The
      undersigned hereby elects to purchase ________ Warrant Shares of the Company
      pursuant to the terms of the attached Warrant (only if exercised in full),
      and
      tenders herewith payment of the exercise price in full, together with all
      applicable transfer taxes, if any.

     

    (2)  Payment
      shall take the form of (check applicable box):

     

    [  ]
      in lawful money of the United States; or

     

    [
      ] the
      cancellation of such number of Warrant Shares as is necessary, in accordance
      with the formula set forth in subsection 2(c), to exercise this Warrant with
      respect to the maximum number of Warrant Shares purchasable pursuant to the
      cashless exercise procedure set forth in subsection 2(c).

     

    (3)  Please
      issue a certificate or certificates representing said Warrant Shares in the
      name
      of the undersigned or in such other name as is specified below:

     

    _______________________________

    


    


    The
      Warrant Shares shall be delivered to the following:

    


    _______________________________

    


    _______________________________

    


    _______________________________

    


    (4)    
      Accredited Investor.  The undersigned is an “accredited
      investor” as defined in Regulation D promulgated under the Securities Act of
      1933, as amended.

    


    [SIGNATURE
      OF HOLDER]

    


    Name
      of
      Investing Entity:
      _______________________________________________________________________

    Signature
      of Authorized Signatory of Investing Entity:
      _________________________________________________

    Name
      of
      Authorized Signatory:
      ___________________________________________________________________

    Title
      of
      Authorized Signatory:
      ____________________________________________________________________

    Date:
      _______________________________________________________________________________________

    


    


    


     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ASSIGNMENT
      FORM

    


    (To
      assign the foregoing warrant, execute

    this
      form
      and supply required information.

    Do
      not
      use this form to exercise the warrant.)

    


    


    


    FOR
      VALUE
      RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby
      assigned to

     

    


    _______________________________________________
      whose address is

    


    _______________________________________________________________.

    


    


    


    _______________________________________________________________

    
 

    Dated:  ______________,
      _______

    


    


    Holder’s
      Signature:              _____________________________

    


    Holder’s
      Address:               _____________________________

    


    _____________________________

    


    


    


    Signature
      Guaranteed:  ___________________________________________

    


    


    NOTE:  The
      signature to this Assignment Form must correspond with the name as it appears
      on
      the face of the Warrant, without alteration or enlargement or any change
      whatsoever, and must be guaranteed by a bank or trust
      company.  Officers of corporations and those acting in a fiduciary or
      other representative capacity should file proper evidence of authority to assign
      the foregoing Warrant.