Unassociated Document


    EXHIBIT
10.1

     

    
 

    THIS
NOTE AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGIS­TERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT
BE TRANSFERRED IN VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS THEREUNDER OR
ANY STATE SECURITIES LAWS OR THE PROVISIONS OF THIS NOTE. 

     

    


    ARKADOS
GROUP, INC.

    


    8%
SENIOR SUBORDINATED NOTE

    DUE
APRIL 30, 2010

    


     

    Number:             -001-          
                                

     

    Principal:
 $    
-$60,000-      
                                 

    


    Original
Issue Date:   
     December 23, 2010      
                                           

    


    Registered
Holder:      
    Cooper
Barrons           
                                

                  
    (name)

     

    Arkados
Group, Inc., a Delaware corporation (the “Company”) with
principal offices at 220 Old New Brunswick Road, Suite 202, Piscataway,
NJ  08854, for value received, hereby promises to pay the registered
holder hereof (the “Holder”) the principal sum set forth above on March 31, 2010
(the “Maturity
Date”), in such coin or currency of the United States of America as at
the time of payment shall be the legal tender for the payment of public and
private debts, and to pay interest, less any amounts required by law to be
deducted or withheld, computed on the basis of a 365-day year, on the unpaid
principal balance hereof from the date hereof (the “Original Issue
Date”), at the rate of 8% per year, until such principal sum shall have
become paid.  All references herein to dollar amounts refers to U.S.
dollars.

    


    By acceptance and purchase of this
Note, the registered holder hereof agrees with the Company that the Note shall
be subject to the following terms and conditions:

    


    1.           Authorization of
Notes.  The Company has authorized the issue and sale of a 8%
Senior Subordinated Note due April 30, 2010 (the “Note”). such term
includes any notes which may be issued in exchange or in replacement thereof in
the aggregate principal amount of not more than U.S. $60,000.

    


    2,           Prepayment.

    


    2.1           Voluntary.  The
Company shall have the right, at any time, to prepay the Loan, in whole or in
part, without premium or penalty, upon at least three Business Days irrevocable
notice to Holder specifying (i) the amount to be repaid and (ii) the date of
such prepayment. If any such notice is given, the Company shall make the
prepayment specified therein, and such prepayment shall be due and payable as
specified therein.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


    2.2           Mandatory.  The
Company will make additional prepayments of principal in and amount equal to of
50% of the amount by which the sum of the net proceeds of bridge financing and
other cash receipts of the Company (from sales, service revenue, sales of tax
credits, etc.) exceeds the monthly amounts set aside for critical payments (on a
cumulative basis) set forth on the monthly budgets for critical payments
previously delivered to the Holder the second business day following the date
the Company receives such proceeds (“Mandatory Prepayments”). Concurrently with
each Mandatory Prepayment, the Company will pay interest (whether or not
capitalized) associated with such Mandatory Prepayment.

    


    3.           Transfer or
Exchange.  Prior to due presentation to the Company for
transfer of this Note, the Company and any agent of the Company may treat the
person in whose name this Note is duly registered on the Company’s Note Register
as the owner hereof for the purpose of receiving payment as herein provided and
for all other purposes.

    .

     

    4.           Restrictions on
Transferability.  The Note shall not be transferred,
hypothecated or assigned before satisfaction of the conditions specified in this
Section 5, which conditions are intended to ensure compliance with the
provisions of the Securities Act with respect to the Transfer of any
Note.  Holder, by acceptance of this Note, agrees to be bound by the
provisions of this Section 5.

     

    4.1           Restrictive
Legend.  The Holder by accepting this Note agrees that this
Note may not be assigned or otherwise transferred unless and until (i) the
Company has received an opinion of counsel for the Holder that such securities
may be sold pursuant to an exemption from registration under the Securities Act
or (ii) a registration statement relating to such securities has been filed by
the Company and declared effective by the Commission.

     

    Except as otherwise provided in this
Sec­tion 4, the Note shall be stamped or otherwise imprinted with a
legend in substantially the following form:

     

    “This
Note and the securities represented hereby have not been regis­tered under
the Securities Act of 1933, as amended, or any state securities laws and may not
be transferred in violation of such Act, the rules and regulations thereunder or
any state securities laws or the provisions of this Note.”

     

    4.2           Notice of Proposed
Transfers.  Prior to any Transfer or attempted Transfer of any
Note, the Holder shall give five (5) days’ prior written notice (a “Transfer
Notice”) to the Company of Holder’s intention to effect such Transfer,
describing the manner and circumstances of the proposed Transfer, and obtain
from counsel to Holder an opinion that the proposed Transfer of such Note may be
effected without registration under the Securities Act or state securities
laws.  After the Company’s receipt of the Transfer Notice and opinion,
such Holder shall thereupon be entitled to Transfer such Note, in accordance
with the terms of the Transfer Notice.  Each Note issued upon such
Transfer shall bear the restrictive legends set forth in Section 4.1, unless in
the opinion of such counsel such legend is not required in order to ensure
compliance with the Securities Act.

     

    4.3           Termination of
Restrictions.  Notwithstand­ing the foregoing provisions of
Section 4, the restrictions imposed by this Section upon the transferability of
the Notes, and the legend requirements of Section 4.1 shall terminate as to any
particular Note (i) when and so long as such security shall have been
effectively registered under the Securities Act and applicable state securities


    
      
         

      

      
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    laws and
disposed of pursuant thereto or (ii) when the Company shall have received
an opinion of counsel that such shares may be transferred with­out
registration thereof under the Securities Act and applicable state securities
laws.  Whenever the restrictions imposed by Section 5 shall terminate
as to this Note, as hereinabove provided, the Holder hereof shall be entitled to
receive from the Company upon written request of the Holder, at the expense of
the Company, a new Note bearing the following legend in place of the restrictive
legend set forth above or the Note stamped with the following
legend:

     

    “THE
RESTRICTIONS ON TRANSFERABIL­ITY OF THE WITHIN NOTE CONTAINED IN SECTION 5
HEREOF TERMINATED ON ___________, 20__, AND ARE OF NO FURTHER FORCE AND
EFFECT.”

     

    All Notes
issued upon registration of transfer, division or combination of, or in
substitution for, any Note or entitled to bear such legend shall have a similar
legend endorsed thereon.  Whenever the restrictions imposed by this
Section shall terminate as to any share of Restricted Common Stock, as
hereinabove provided, the holder thereof shall be entitled to receive from the
Company, at the Company’s expense, a new certificate representing such Common
Stock not bearing the restrictive legends set forth in Section 5.1.

     

    5.           Subordination. Any
right of the Holder to payment of principal or interest from the Company shall
be subordinated to the claims and rights of the holders of the  Senior
Debt (“Senior Debt Holders”). “Senior Debt” means all Indebtedness of the
Company to financial institutions or secured debt other than the Notes, whether
outstanding on the date of execution of this Note or thereafter created,
incurred or assumed, except (x) any such Indebtedness that by the terms of the
instrument or instruments by which such Indebtedness was created, assumed or
incurred expressly provides that it (i) is junior in right of payment to the
Notes or (ii) ranks
pari passu in right of payment with the Notes and (y) any amendments,
modifications or supplements to, or any renewals, extensions, deferrals,
refinancing and refunding of, any of the foregoing.  Any cash payment
of principal or interest to the Holder shall be collected, enforced or received
by the Holder as trustee for the Senior Debt Holders and paid over to the Senior
Debt Holders. The Holder agrees that in the event of any payment of principal or
interest by the Company to the Holder by reason of any receivership, insolvency
or bankruptcy proceeding, or proceeding for reorganization or readjustment of
the Company or its properties, or otherwise, then, in any such event, the Senior
Debt Holders shall be preferred in the payment of their claims over the claim of
the Holder to payment of principal or interest against the Company or its
properties, and the claims of the Senior Debt Holders shall be first paid and
satisfied in full before any payment or distribution of any kind or character,
whether in cash or property, shall be made to the Holder. Provided, however,
that this Section 5 shall not apply to any payment of principal or interest made
to the Holder while the Company is solvent and not in default with respect to
its Senior Debt.

    


    6.           Replacement of Note
Certificate. Upon receipt of evidence satisfactory to the Company of the
certificate loss, theft, destruction or mutilation of the Note certificate and,
in the case of any such loss, theft or destruction, upon delivery of a bond of
indemnity satisfactory to the Company, or, in the case of any such mutilation,
upon surrender and cancellation of the Note certificate, the Company will issue
a new Note certificate, of like tenor, in lieu of such lost, stolen, destroyed
or mutilated Note certificate.

    


    7.           Default. If any of
the following events (herein called “Events of Default”) shall
occur:

    
      
         

      

      
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              (a)

            	
              if
      the Company shall default in the payment or prepayment of any part of the
      principal of any of the Notes after the same shall become due and payable,
      whether at maturity or at a date fixed for prepayment or by acceleration
      or otherwise, and such default shall continue for more than 30 days;
      or

            


    

     

    
      	
               
      

            	
              (b)

            	
              if
      the Company shall default in the payment of any installment of interest on
      any of the Notes for more than 30 days after the same shall become due and
      payable; or

            


    

     

    
      	
               
      

            	
              (c)

            	
              if
      the Company shall make an assignment for the benefit of creditors;
      or

            


    

     

    
      	
               
      

            	
              (d)

            	
              if
      the Company shall dissolve; terminate its existence; become insolvent on a
      balance sheet basis; commence a voluntary case under the federal
      bankruptcy laws or under any other federal or state law relating to
      insolvency or debtor’s relief; permit the entry of a decree or order for
      relief against the Company in an involuntary case under the federal
      bankruptcy laws or under any other applicable federal or state law
      relating to insolvency or debtor’s relief; permit the appointment or
      consent to the appointment of a receiver, trustee, or custodian of the
      Company or of any of the Company’s property; make an assignment for the
      benefit of creditors; or

            


    

    


    
      	
               
      

            	
              (e)

            	
              if
      the Company shall default in the performance of or compliance with any
      agreement, condition or term contained in this Note or any of the other
      Notes and such default shall not have been cured within 30 days after such
      default,

            


    

    


    


    then and
in any such event the Holder of this Note shall have the option (unless the
default shall have theretofore been cured) by written notice to the Company to
declare the Note to be due and payable, whereupon the Note shall forthwith
mature and become due and payable, at the applicable prepayment price on the
date of such notice, without presentment, demand, protest or further notice of
any kind, all of which are hereby expressly waived, anything contained in this
Note to the contrary notwithstanding. Upon the occurrence of an Event of
Default, the Company shall promptly notify the Holder of this Note in writing
setting out the nature of the default in reasonable detail.

     

    8.           Remedies on
Default.

    


    8.1           Acceleration of
Maturity.  If any Event of Default shall have occurred and be
continuing, the Holder or Holders of at least 50.1% in aggregate principal
amount of outstanding Notes may, by notice to the Company, declare the entire
outstanding principal balance of the Notes, premium, if any, and all accrued and
unpaid interest thereon, to be due and payable immediately, and upon any such
declaration the entire outstanding principal balance of the Notes, premium, if
any, and said accrued and unpaid interest shall become and be immediately due
and payable, without presentment, demand, protest or other notice whatsoever,
all of which are hereby expressly waived, anything in the Notes (except as set
forth in Section 11 hereof) to the contrary notwithstanding.

    


    8.2           Conduct no Waiver,
Collection Expenses.  No course of dealing on the part of any
Holder, nor any delay or failure on the part of any Holder to exercise any of
its rights, shall operate as a 

    
      
         

      

      
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    waiver of
such right or otherwise prejudice such Holder's rights, powers and remedies. If
the Company fails to pay, when due, the principal or the premium, if any, or the
interest on any Note, the Company will pay to each Holder, to the extent
permitted by law, on demand, all costs and expenses incurred by such Holder in
the collection of any amount due in respect of any Note hereunder, including
reasonable legal fees incurred by such Holder in enforcing its rights
hereunder.

    


    8.3           Annulment of
Acceleration.  If a declaration is made in accordance with
Section 8.1, then and in-every such case, the Holder or Holders of at least
50.1% in aggregate principal amount of outstanding Notes may, by an instrument
delivered to the Company, annul such declaration and the consequences thereof,
provided that
at the time such declaration is annulled:

    


    (i)      
      no judgment or decree has been entered for the
payment of any monies due on the Notes or pursuant to this
Agreement;

    


    (ii)       
    all arrears of interest on the Notes and all other sums
payable on the Notes and pursuant to this Agreement (except any principal of or
interest or premium on the Notes which has become due and payable by reason of
such declaration) shall have been duly paid; and

    


    (iii)           every
other Event of Default shall have been duly waived or otherwise made good or
cured.

    


    9.           Amendments. With the
consent of the Holders of more than 50.1% in aggregate principal amount of the
Notes at the time outstanding, the Company, when authorized by a resolution of
its Board of Directors, may enter into a supplementary agreement for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Note or of any supplemental agreement or modifying in any
manner the rights and obligations of the holders of Notes or Common Stock issued
upon conversion of the Notes, and of the Company, provided, however, that no
such supplemental agreement shall (a) extend the fixed maturity of any Note, or
reduce the principal amount thereof, or reduce the rate or extend the time of
payment of interest thereon, or alter or impair the right to convert the same
into Common Stock at the rates and upon the terms provided in this Note, without
the consent of the Holder of each of the Notes so affected, or (b) reduce the
aforesaid percentage of Notes, the Holders of which are required to consent to
any supplemental agreement, without the consent of the Holders of all Notes then
outstanding.

    


    10.         Severability.  If
any provision of this Note is invalid, illegal or unenforceable, the balance of
this Note shall remain in effect, and if any provision is inapplicable to any
person or circumstance, it shall nevertheless remain applicable to all other
persons and circumstances.  If it shall be found that any interest or
other amount deemed interest due hereunder violates applicable laws governing
usury, the applicable rate of interest due hereunder shall automatically be
lowered to equal the maximum permitted rate of interest. The Company covenants
(to the extent that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law or other law which would prohibit or
forgive the Company from paying all or any portion of the principal of or
interest on this Note as contemplated herein, wherever enacted, now or at any
time hereafter in force, or which may affect the covenants or the performance of
this indenture, and the Company (to the extent it may lawfully do so) hereby
expressly waives all benefits or advantage of any such law, and covenants that
it will not, by resort to any such law, hinder, delay or impeded the


    
      
         

      

      
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    execution
of any power herein granted to the Holder, but will suffer and permit the
execution of every such as though no such law has been enacted.

    


    11.         Changes, Waivers.
etc.  Neither this Note nor any provisions hereof may be
changed, waived, discharged or terminated orally, but only by a statement in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, except to the extent provided in Section 9
of this Note.

    


    12.         Entire Agreement.
This Note embodies the entire agreement and understanding between the Holder and
the Company and supersedes all prior agreements and understandings relating to
the subject matter hereof.

    


    13.         Governing Law, Jurisdiction,
etc.

    


    
      	
               
      

            	
              (a)

            	
              GOVERNING LAW.
      THIS AGREEMENT AND THE NOTES SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
      WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE
      STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH
      STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION
      OTHER THAN SUCH STATE.

            


    

    


    
      	
               
      

            	
              (b)

            	
              Submission to
      Jurisdiction. Each of the parties hereto hereby irrevocably and
      unconditionally consents to submit to the exclusive jurisdiction of the
      courts of the State of New York and of the United States of America, in
      each case located in the County of New York, for any action, proceeding or
      investigation in any court or before any governmental authority
      ("Litigation") arising out of or relating to the Note and the transactions
      contemplated thereby (and agrees not to commence any Litigation relating
      thereto except in such courts), and further agrees that service of any
      process, summons, notice or document by U.S. registered mail to its
      respective address set forth in the Letter Subscription Agreement shall be
      effective service of process for any Litigation brought against it in any
      such court. Each of the parties hereto hereby irrevocably and
      unconditionally waives any objection to the laying of venue of any
      Litigation arising out of the Note or the transactions contemplated hereby
      in the courts of the State of New York or the United State of America, in
      each case located in the County of New York, and hereby further
      irrevocably and unconditionally waives and agrees not to plead or claim in
      any such court that any such Litigation brought in any such court has been
      brought in an inconvenient forum.

            


    

    


    
      	
               
      

            	
              (c)

            	
              Service of
      Process.  Nothing herein shall affect the right of any
      holder of a Note to serve process in any other manner permitted by law or
      to commence legal proceedings or otherwise proceed against the Company in
      any other jurisdiction.

            


    

    


    
      	
               
      

            	
              (d)

            	
              WAIVER OF JURY
      TRIAL.  THE COMPANY HEREBY WAIVES ANY RIGHT IT MAY HAVE
      TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR LITIGATION
      DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH ANY OF
      THE NOTES.

            


    

    


    
      
         

      

      
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              (e)

            	
              In
      the event of any dispute, question, controversy or claim arising among the
      parties hereto which shall arise out of or in connection with this Note,
      the parties shall keep the proceeding related to such controversy in
      strict confidence and shall not disclose the nature of said dispute, the
      status of the proceeding or any testimony, documents or information
      obtained or exchanged in the course of said proceeding without the express
      written consent of all parties to such
dispute.

            


    

     

     

    
      
        	 	ARKADOS
      GROUP, INC.	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Larry
      Crawford	 
	 	 	Larry
      Crawford, CFO 	 
	 	 	 	 
	 	 	 	 


      

    

    
       


    

     

    
      Number:             -001-          
                                

       

      Principal:
 $    
-$60,000-      
                                 

      


      Original
Issue Date:     
     March 3, 2010       
    
                                           

      


      Registered
Holder:      
    Cooper
Barrons           
                                

                    
    (name)

    

     

     

    
      
         


      

      
        -7-