Document:

Execution Copy

 

CONSULTING AGREEMENT

 

THIS CONSULTING AGREEMENT (the “Agreement”)
is effective as of the 4th day of March, 2014 (the “Effective Date”) by and between ARKADOS GROUP, INC., a Delaware
corporation (hereinafter referred to collectively with its subsidiaries as the “Company”) with its address at 211 Warren
Street, Suite 320, Newark, New Jersey 07103, and SENTEGRITY LLC, a New York limited liability company with an address at 3131 NE
188th Ste. 2701 Aventura FL 33180 (sometimes referred to hereinafter as “Consultant”).

 

RECITALS

 

WHEREAS, Consultant
has unique knowledge and expertise in the industry in which the Company does business; and

 

WHEREAS, the Company
desires to retain the services of the Consultant to provide certain sales and marketing services to the Company, and the Consultant
desires to perform such services for the Company.

 

NOW THEREFORE, in
consideration of the mutual covenants and promises contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the parties hereto, the parties agree as follows:

 

		1.	Engagement of Services

 

During the Term (as
defined below), the Consultant agrees to perform such sales and marketing and related services to and for the Company as may be
reasonably requested from time to time by the Company.

 

 

		2.	Compensation

                    
 

2.1Consulting Fees. The Company shall
compensate the Consultant on the last business day of each month during the Term, as payment for services rendered, as follows:

 

		2.1.1.	Cash (check) in the amount of Three Thousand Five Hundred Dollars ($3,500.00); and

		2.1.2.	a warrant to acquire 250,000 shares of common stock of the Company at $0.04 per share, in the form attached hereto as Exhibit
“A.” The failure by the Company to issue the physical warrant timely during the Term shall not preclude Consultant’s
rights pursuant to the warrant, nor alter the expirations thereof, which shall accrue as of the date earned (that is, on the last
business day of each month during the Term).

 

2.2Reimbursement
of Expenses. The Company shall reimburse the Consultant for all reasonable and necessary expenses incurred or paid by the Consultant
in connection with, or related to, the performance of his services under this Agreement. The Consultant shall submit to the Company
itemized monthly statements, in a form satisfactory to the Company, of such expenses incurred in the previous month. The Company
shall pay to the Consultant amounts shown on each such statement within 30 days after receipt thereof. Notwithstanding the foregoing,
the Consultant shall not incur total expenses in excess of $100 per month without the prior written approval of the Company.

 

    	 

    	 

    

 

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2.3No Other Benefits.
The Consultant shall not be entitled to any benefits, coverages or privileges, including, without limitation, social security,
unemployment, medical or pension payments, made available to employees of the Company.

 

2.4Consultant
shall not be entitled to any compensation other than as specified in this Agreement.

 

		3.	Independent Consultant Relationship

 

3.1Nature of Relationship. Consultant’s
relationship with Arkados will be that of an independent contractor and nothing in this Agreement shall be construed to create
a partnership, joint venture, or employer-employee relationship. Since Consultant will not be an employee of Arkados, Consultant
will not be entitled to any of the benefits which Arkados may make available to its employees, such as group insurance, profit-sharing
or retirement benefits. Consultant is not the agent of Arkados and is not authorized to make any warranty, representation, contract,
or commitment on behalf of Arkados unless specifically requested or authorized to do so by Arkados. Consultant will indemnify,
defend and hold harmless Arkados for claims of any third party arising out of any unauthorized statements by Consultant. Consultant
is responsible for providing all facilities, tools and equipment that Consultant may require to perform services for Arkados hereunder.

 

3.2Consultant Responsible for Taxes
and Records. Consultant acknowledges and agrees that it will be solely responsible for and will file and remit on a timely
basis, all tax returns and payments required to be filed with or made to any Federal, State or local tax authority, on behalf of
Consultant and/or Consultant’s employees, with respect to Consultant’s performance of services and receipt of fees
under this Agreement, including, without limitation, amounts required to be paid for (i) social security, (ii) Federal, State or
any other employee payroll taxes, (iii) Federal unemployment taxes, (iv) workers’ compensation, (v) disability insurance,
and (vi) similar items. No payments to Consultant will be subject to withholding by Arkados for the payment of Taxes and Other
Payments. Consultant will be solely responsible for and must maintain adequate records of expenses incurred in the course of performing
services under this Agreement. Arkados will regularly report amounts paid to Consultant by filing Form 1099 MISC with the Internal
Revenue Service as required by law.

 

3.3Risk Borne by Consultant.
Consultant shall perform the services hereunder entirely at the Consultant’s risk. Consultant assumes all responsibility
for the subject matter of this Agreement. Consultant shall be solely liable for any acts made during Consultant’s performance
under this Agreement. Any assignment of Consultant’s duties or obligations hereunder is hereby expressly prohibited. Any
such assignment shall be deemed void and without force or effect.

 

3.4Compliance with Applicable Law.
 Consultant agrees that, in performance of the services required under this Agreement, Consultant has full and sole responsibility
for compliance with all applicable laws, statutes, ordinances and regulations. Additionally, Consultant has the sole responsibility
for compliance with all other matters in conjunction with the services to be performed hereunder.

 

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3.5 Indemnification. Consultant
further agrees to indemnify, defend and hold harmless Arkados from any and all claims, loss or liability incurred by reason of
any (a) unauthorized statements made while engaged in the service of Arkados; (b) undisclosed conflict or by the alleged breach
by Consultant of any confidentiality, restrictive covenants or services agreement with anyone other than Arkados; (c) any intentional
act or omission or gross negligence while engaged in services rendered to or on behalf of Arkados; (d) any breach of the provisions
of this Agreement.

 

		4.	Restrictive Covenants; Company Property.

 

4.1Confidential Information

 

(a)Consultant agrees during the term of this Agreement
and at all times thereafter to take all steps necessary to hold in trust and confidence Confidential Information of Arkados and
its clients/customers, vendors/suppliers and third parties disclosed to Consultant in the course of providing services to Arkados.
Consultant will not directly or indirectly use or disclose any Confidential Information, for any purpose not specifically authorized
by Arkados in writing. “Confidential Information” includes, but is not limited to, technical and business information
(in any form whatsoever) and material relating to products, trade secrets, research and development, production, processes, policies,
procedures, costs, profit or margin information, employee information, finances, budgets, projections, investors, customers and
customer lists, addresses, contact information and similar information, production, marketing and, sales, current and future business
plans, documents, such as drawings, manuals, letters, notes, notebooks, reports, sketches, memoranda, records, files, data (in
any form), vendor lists, addresses, contact information, similar information and all extracts of any of the foregoing.

 

(b)Notwithstanding the other provisions of this Agreement,
nothing received by Consultant will be considered to be the Confidential Information if: 1) it has been published or is otherwise
readily available to the public other than by a breach of this Agreement; 2) it has been lawfully received by Consultant from a
third party without confidential limitations; 3) it has been independently developed by or for Consultant by personnel or agents
having no access to the Confidential Information and same may be proven by documentary evidence; or 4) it was known to Consultant
prior to its receipt by Consultant in the course of work performed for Arkados and may be proven by documentary evidence.

 

(c) In addition, nothing set forth herein
shall prevent disclosure of this Agreement by the Company as may be required to governmental agencies.

 

4.2Assignment of Works and Inventions.

 

(a)Consultant acknowledges and
agrees that anything produced by Consultant in the course of performance of services pursuant to this Agreement is a work made
for hire. To the extent any works performed by Consultant are not deemed a work made for hire, Consultant hereby assigns to Arkados
all patent, copyright, and other intellectual property rights Consultant may have in any Inventions or other protectable work
created in the course of any services performed for Arkados, whether such work was created solely by Consultant or jointly with
another. Consultant further agrees to execute, upon Arkados’ request, any documents reasonably necessary to perfect such
rights in Arkados. Inventions resulting from Consultant’s work for Arkados under this Agreement are the exclusive property
of Arkados.

 

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(b)For purposes of this Agreement, “Inventions”
includes any and all inventions, improvements, discoveries, technical developments, computer programs, notes, sketches, drawings,
reports or other works that Consultant, solely or jointly with others, conceives or reduces to practice as a result of, or in
the course of, any services performed for Arkados. Consultant assigns to Arkados Consultant’s entire right, and shall cause
any employee who may be an inventor of an Invention to assign his or her entire right to all such Inventions. Consultant agrees
to cooperate with Arkados or its designee(s), both during and after the term of this Agreement, in the procurement and maintenance
of Arkados’ rights in the Inventions, and to sign (or its employees to sign) all papers which Arkados may consider necessary
and desirable for securing and maintaining such rights on behalf of Arkados or its designee(s).

 

(c)Arkados shall not have rights
to any Invention conceived or reduced to practice by Consultant for which no equipment, supplies, facility, or trade secret information
of Arkados was used and which was developed entirely on Consultant’s own time except if 1) the Invention relates (i)
to Arkados’ business or (ii) to Arkados’ actual or demonstrably anticipated research or development, or 2) the Invention
results from any services performed by Consultant for Arkados.

 

(d)Consultant agrees to assist Arkados in any reasonable
manner to obtain and enforce for Arkados’ benefit patents, copyrights, and other property rights in any and all countries,
and Consultant agrees to execute, when requested, patent, copyright or similar applications and assignments to Arkados and any
other lawful documents deemed necessary by Arkados for the purposes of this Agreement. Consultant further agrees that the obligations
and undertakings stated in this Section will continue beyond the termination of Consultant’s service to Arkados. If called
upon to render assistance under this Section, Consultant will be entitled to reimbursement of expenses incurred at or upon written
request of Arkados.

 

4.3Conflicts of Interest, Non-Competition, Non-Solicitation.
Consultant agrees during the term of this Agreement not to accept work or enter into a contract or accept an obligation inconsistent
or incompatible with Consultant’s obligations under this Agreement or with the scope of services to be rendered for Arkados.
Consultant warrants that to the best of Consultant’s knowledge, there is no other contract or duty on Consultant’s
part now in existence inconsistent with this Agreement. During the term of this Agreement and for a period of two (2) years after
expiration or termination for any reason of this Agreement, Consultant agrees not to:

 

		(a)	compete with the business of Arkados, whether individually or through any entity, or to use (or permit the use of) any Confidential
Information, directly or indirectly, for the purpose of competing with the business of Arkados; or

 

		(b)	suggest to, induce or persuade any customer, client, vendor, supplier, employee, Consultant or agent of Arkados to terminate
or diminish its relationship with Arkados.

 

Subject to the limitation regarding use
of Confidential Information of Arkados set forth above, the foregoing is not intended to otherwise limit the employment of Consultant
in his profession.

 

4.4Arkados Property. Consultant
acknowledges that Arkados’ sole and exclusive property includes all Arkados trademark, trade names, service marks, copyrights,
and Confidential Information (defined above), whether delivered to Consultant by Arkados, made available to Consultant, or made
by Consultant in the performance of services under this Agreement, relating to the business activities of Arkados or its customers
or suppliers and containing any information or data whatsoever. Upon expiration or termination of this Agreement for any reason
or in any manner, with the exception of any samples purchased by Consultant (not on behalf of or at the direction of Arkados),
Consultant agrees to return to Arkados all property of Arkados then in Consultant’s possession, except as Arkados may, by
proper written permission, allow Consultant to retain. Consultant further agrees that nothing contained herein shall be a deemed
a license to use any Arkados property, except as directed by Arkados in the course of performing services hereunder.

 

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4.5Injunctive Relief for Breach. Consultant acknowledges
and agrees that the obligation and promises of Consultant under Sections 4.1, 4.2, 4.3, and 4.4 of this Agreement are of a unique,
intellectual character that gives them particular value. Consultant acknowledges and agrees that a breach of any of the promises
or agreements contained in this Agreement will result in immediate irreparable and continuing damage to Arkados for which there
will be no adequate remedy at law, and, in the event of such breach, Arkados will be entitled to injunctive relief and/or a decree
for specific performance, and such other relief as may be proper without the necessity of posting bond and which may be taken cumulatively
and not concurrently. Any action taken by Arkados pursuant to this Section shall not be deemed an election of remedies.

 

		5.	Term/Termination

 

5.1Term. This Agreement shall
be for a term of one (1) year from the Effective Date but may be terminated earlier upon sixty (60) days advance written notice
by either party.

 

5.2Survival
of Provisions. The provisions set forth in Article 4, Section 5.1(b) and Article 6 of this Agreement shall survive any termination
or expiration of this Agreement.

 

		6.	General Provisions.

 

6.1Governing Law. This Agreement
shall be governed and construed in accordance with the internal laws of the State of New Jersey without regard to the conflicts
of law provisions thereof. The Federal and State courts within the State of New Jersey, County of Essex, shall have exclusive jurisdiction
to adjudicate any disputes arising out of or in connection with this Agreement, and for any litigation adjudicating such disputes,
venue shall lie in these courts.

 

6.2Entire Agreement. This Agreement
sets forth the entire understanding and agreement of the parties as to the subject matter of this Agreement. It may not be amended
except in writing, signed by both parties.

 

6.3Severability; Waiver. If any
provision, or any portion of such provision, of this Agreement is held to be invalid or unenforceable for any reason, the remaining
provisions, or portion of such provision, will continue in full force without being impaired in any way. Arkados and Consultant
agree to replace any invalid and unenforceable provision with a valid and enforceable provision which most closely approximates
the intent and economic effect of the invalid or unenforceable provision. The waiver by Arkados of a breach of any provision of
this Agreement of Consultant will not operate or be interpreted as a waiver of any other or subsequent breach by Consultant.

 

6.4Successors and Assigns. Neither
this Agreement nor any of the rights or obligations of Consultant arising under this Agreement may be assigned or transferred without
Arkados’ prior written consent. This Agreement will be for the benefit of Arkados’ successors and assigns, and will
be binding on Consultant’s heirs, successors and legal representatives.

 

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6.5Headings. Titles or headings
to the sections and paragraphs of this Agreement are not part of the terms of this Agreement, but are inserted solely for convenience
of reference.

 

6.6Notices. All notices, requests
and other communications under this Agreement must be in writing, and must be mailed by registered or certified mail, postage prepaid
and return receipt requested, or delivered by hand to the party to whom such notice is required or permitted to be given. If mailed,
any such notice will be considered to have been given three (3) business days after it was mailed, as evidenced by the postmark.
If delivered by hand, any such notice will be considered to have been given when received by the party to whom notice is given,
as evidenced by written and dated receipt of the receiving party. The mailing address for notice to either party will be the address
in the introductory paragraph of this Agreement. Either party may change its mailing address by notice as provided by this Section
6.6.

 

6.7.Miscellaneous.

 

6.7.1No delay
or omission by the Company in exercising any right under this Agreement shall operate as a waiver of that or any other right. A
waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed
as a bar or waiver of any right on any other occasion.

 

6.7.2The captions
of the sections of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance
of any section of this Agreement.

 

6.7.3In the event
that any provision of this Agreement shall he invalid, illegal or otherwise unenforceable, the validity, legality and enforceability
of the remaining provisions shall in no way he affected or impaired thereby.

 

6.8. Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together
shall constitute one and the same instrument.

  

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IN WITNESS
WHEREOF, the parties have executed this Consulting Agreement as of the date first above written.

 

	 	ARKADOS GROUP, INC. 
	 	 
	 	By: /s/ Terrence DeFranco 
	 	Name: Terrence DeFranco
	 	Title:  Chief Executive Officer
	 	 
	 	CONSULTANT:
	 	 
	 	SENTEGRITY LLC
	 	 
	 	By: /s/ James Largotta
	 	Name: James Largotta
	 	 

 

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Execution Copy

 

EXHIBIT A

Form of Warrant

(see attached)

 

    	822nd CENTURY GROUP, INC.

2014 OMNIBUS INCENTIVE PLAN

RESTRICTED STOCK AWARD AGREEMENT

 

	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	Dear		:	 

 

You have been granted an award of restricted
shares of the common stock of 22nd Century Group, Inc. (the “Company”) constituting a Restricted Stock Award
(this “Award”) under the Company’s 2014 Omnibus Incentive Plan (the “Plan”). This Award
is granted under and governed by the terms and conditions of the Plan and this Award Agreement. Additional provisions regarding
this Award and definitions of capitalized terms used and not defined in this Award Agreement can be found in the Plan.

 

	Grant Date:	 	_____________ ___, 20__
	 	 	 
	Number of Shares of 

Restricted Stock	 	___________
	(“Restricted Shares”):	 	 
	 	 	 
	Vesting Schedule and/or Performance Requirements:	 	 
	 	 	_____________
	 	 	 
	 	 	Except as otherwise provided above, upon your termination of employment with, or cessation of services to, the Company prior to the date the Restricted Shares are vested, you will forfeit the unvested Restricted Shares.
	 	 	 
	Certificate:	 	Until the Restricted Shares vest, the Company may, at the Administrator’s discretion, issue one or more certificates representing such Restricted Shares, with an appropriate restrictive legend, and/or maintain possession of the certificate representing the Restricted Shares (with or without a legend) and/or take any other action that the Administrator deems necessary or advisable to enforce the limitations under this Award Agreement and the Plan.  The following is an example of an appropriate legend:
	 	 	 
	 	 	The sale or other transfer of the shares of Stock represented by this certificate, whether voluntary or by operation of law, is subject to certain restrictions set forth in a Restricted Stock Award Agreement, dated as of ___________, 20__, by and between 22nd Century Group, Inc. and the registered owner hereof.  A copy of such Agreement may be obtained from the Secretary of 22nd Century Group, Inc.
	 	 	 

 

    	 

    	 

    

 

	 	 	After (i) a Restricted Share vests and, if applicable, the Administrator certifies that performance goals have been achieved; (ii) the receipt by the Company from you of the certificate with legend representing such Restricted Share (if such a certificate had been issued to you); and (iii) any applicable tax requirements under this Award Agreement and the Plan are met, the Company will deliver to you a certificate representing such Restricted Share, free of any legend pertaining to any restrictions on transfer, or instruct its transfer agent to remove any applicable stop-transfer orders, and such Restricted Share shall thereupon be free of all transfer restrictions other than those imposed by law or other regulatory standards.  Notwithstanding the foregoing, the Company will not be obligated to issue or deliver any certificates unless and until the Company is advised by its counsel that the issuance and delivery of the certificates are in compliance with all applicable laws, regulations of governmental authorities and the requirements of any securities exchange upon which the Stock is traded.
	 	 	 
	Transferability of

Restricted Shares:	 	You may not sell, transfer or otherwise alienate or hypothecate any of your Restricted Shares until they are vested.  In addition, by accepting this Award, you agree not to sell any Shares acquired under this Award other than as set forth in the Plan and at a time when applicable laws, Company policies or an agreement between the Company and its underwriters do not prohibit a sale.  The Company also may require you to enter into a shareholder’s agreement that will include additional restrictions on the transfer of Shares acquired under this Award that will remain effective after such Shares have vested.
	 	 	 
	Voting and Dividends:	 	Subject to the terms of the Plan, you will have all the rights of a shareholder of the Company with respect to voting and receipt of dividends and other distributions on the Restricted Shares.
	 	 	 
	Transferability of Award:	 	You may not transfer or assign this Award for any reason, other than as set forth in the Plan.  Any attempted transfer or assignment will be null and void.
	 	 	 
	Market Stand-Off:	 	In connection with any underwritten public offering by the Company of its equity securities pursuant to an effective registration statement filed under the Securities Act of 1933, as amended, you agree that you shall not directly or indirectly sell, make any short sale of, loan, hypothecate, pledge, offer, grant or sell any option or other contract for the purchase of, purchase any option or other contract for the sale of, or otherwise dispose of or transfer or agree to engage in any of the foregoing transactions with respect to, any Shares acquired under this Award without the prior written consent of the Company and the Company’s underwriters.  Such restriction shall be in effect for such period of time following the date of the final prospectus for the offering as may be determined by the Company.  In no event, however, shall such period exceed one hundred eighty (180) days.
	 	 	 
	Tax Withholding:	 	You understand that you (and not the Company or any Affiliate) shall be responsible for your own federal, state, local or foreign tax liability and any other tax consequences that may arise as a result of the transactions contemplated by this Award.  You shall rely solely on the determinations of your tax advisors or your own determinations, and not on any statements or representations by the Company or any of its agents, with regard to all such tax matters.  You understand that you may alter the tax treatment of the Shares subject to this Award by filing an election under Section 83(b) of the Internal Revenue Code of 1986, as amended (the “Code”).  Such election must be filed within thirty (30) days after the date of this Award to be effective.  You should consult with your tax advisor to determine the tax consequences of acquiring the Shares and the advantages and disadvantages of filing the Code Section 83(b) election.  You acknowledge that it is your sole responsibility, and not the Company’s, to file a timely election under Code Section 83(b), even if you request the Company or its representatives to make this filing on your behalf.
	 	 	 

 

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	 	 	To the extent that the receipt or the vesting of the Restricted Shares, or the payment of dividends on the Restricted Shares, results in income to you for federal, state or local income tax purposes, you shall deliver to the Company at the time the Company is obligated to withhold taxes in connection with such receipt, vesting  or payment, as the case may be, such amount as the Company requires to meet its withholding obligation under applicable tax laws or regulations.  If you fail to do so, the Company has the right and authority to deduct or withhold from other compensation payable to you an amount sufficient to satisfy its withholding obligations or to delay delivery of the shares.
	 	 	 
	Miscellaneous:	 	·         This Award Agreement may be amended only by written consent signed by both you and the Company, unless the amendment is not to your detriment or the amendment is otherwise permitted without your consent by the Plan.
	 	 	 
	 	 	·         The
failure of the Company to enforce any provision of this Award Agreement at any time shall in no way constitute a waiver of such
provision or of any other provision hereof.
	 	 	 
	 	 	·         In
the event any provision of this Award Agreement is held illegal or invalid for any reason, such illegality or invalidity shall
not affect the legality or validity of the remaining provisions of this Award Agreement, and this Award Agreement shall be construed
and enforced as if the illegal or invalid provision had not been included in this Award Agreement.
	 	 	 
	 	 	·         As
a condition to the grant of this Award, you agree (with such agreement being binding upon your legal representatives, guardians,
legatees or beneficiaries) that this Award shall be interpreted by the Administrator and that any interpretation by the Administrator
of the terms of this Award Agreement or the Plan, and any determination made by the Administrator pursuant to this Award Agreement
or the Plan, shall be final, binding and conclusive.
	 	 	 
	 	 	·         This
Award may be executed in counterparts.

 

BY SIGNING
BELOW AND ACCEPTING THIS RESTRICTED STOCK AWARD AGREEMENT, YOU AGREE TO ALL OF THE TERMS AND
CONDITIONS DESCRIBED HEREIN AND IN THE PLAN. YOU ALSO ACKNOWLEDGE HAVING READ THIS AGREEMENT AND THE PLAN.

 

	22nd CENTURY GROUP, INC.	 	 
	 	 	 	 
	By:	 	 	 
	 	[Name of Authorized Officer]	 	[Name of Recipient]

 

	Date:	 	 

 

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