SOLICITATION AGREEMENT

EXHIBIT 99.1
 

 
 
THIS SOLICITATION AGREEMENT (“Agreement”) is dated as of  July 1, 2008, by and between Arkados Group, Inc. (the “Company”) and Trident Partners, Ltd. (“Broker”).
 
RECITALS
 
WHEREAS, the Company desires to retain Broker to act as a nonexclusive Solicitation Agent in connection with the solicitation of an amendment  and waiver(“the Amendment”) to extend the due date of the Company’s outstanding 6% Convertible Notes due June 30, 2008 (“the Notes”) held by current customers of Broker (“Broker Customers”);
 
WHEREAS, there is $1,066,500 principal amount of the Notes outstanding;
 
WHEREAS, principal and interest on the Notes, as previously amended, was due on June 30, 2008 and the Compony’s failure to pay principal and interest, absent the Amendment, would suffer an “Event of Default” as defined in the Notes, if such principal and interest is not paid by July 7, 2008;
 
WHEREAS, at the same time as the Amendment, the Company proposes to convert 25% of the principal amount of the notes and related interest into shares of the Company’s common stock, $0.0001 par value (“Common Stock”), determined by multiplying the sum of the principal amount of the holder’s Note and the accrued and unpaid interest by 0.25 and dividing by $0.35, rounding up to the nearest whole share;
 
WHEREAS, the Amendment requires the consent of holders of $711,000 of the principal amount of the Notes to be effective with respect to all holders (the “Requisite Amount”);
 
WHEREAS, the Company desires Broker to act on behalf of the Company, and Broker is willing to do so in connection with the Amendment;
 
NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereto agree as follows:
 
1. Appointment of the Solicitation Agent. The Company hereby appoints Broker to act as a nonexclusive Solicitation Agent for the Company in connection with the Amendment and Broker hereby accepts such appointment. Broker shall, consistent with its obligations under applicable laws and the rules and regulations of the Financial Industry Regulatory Authority (“FINRA”) use its reasonable best efforts to maximize the number of Broker Customers to agree to the Amendment, including appropriate communications with the record owners and beneficial owners of the Notes, as well as with said owners’ brokers, agents or other representatives.
 
2. Solicitation Fee.
 
(a) Amount of Solicitation Fee. The Company shall pay Broker a fee in respect of the Broker Customers that consent to the Amendment by July 7, 2008 (“Consenting Holders”) for whom Broker delivers executed documentation evidencing their agreement to the Amendment (the “Solicitation Fee”), consisting of:
 
 
(i) $30,000 as a non-refundable fee at the first closing of the Company’s placement of securities (as to which Broker is not acting as agent); and
 
 
(ii) within five business days of the Broker obtaining the consent of the holders of the Requisite Amount:
 
 
(A)
$10,000; and
 
 
(B)
50,000 shares of restricted Common Stock,.
 
(b) Conditions to Payment of Solicitation Fee. The Company shall only be obligated to pay the Solicitation Fee to Broker if all of the following conditions are met: (i) the actions of Broker in soliciting the Amendments have been consistent with applicable federal and state securities laws, the guidelines of FINRA and applicable SEC rules and
 
 
 
 
regulations, including Regulation M; each in all material respects; and (ii) disclosure of the Company’s compensation arrangement with Broker is made by Broker in documents provided to the holders of the Notes.
 
(c) Entire Solicitation Fee. The consideration to be paid to Broker under Section 2(a) above represents the entire consideration payable by the Company to Broker, its agents, brokers or representatives in connection with the services described under Section 1 of this Agreement.
 
(d) Compliance.  Broker shall be responsible for compliance with applicable state securities and “blue sky” laws in connection with the solicitation of the Amendment. Broker shall notify the Company of the states of residence of holders of the Notes in which Broker intends to solicit the Amendment
 
3. Representations and Warranties of the Company. The Company represents and warrants as follows:
 
(a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has full corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. This Agreement constitutes the legal, valid and binding agreement and obligation of the Company, enforceable against it in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting creditors’ rights generally, including, without limitation laws regarding fraudulent or preferential transfers, or by the principles governing the availability of equitable remedies.
 
(b) Neither the execution and delivery of this Agreement by the Company nor the consummation of the transactions contemplated hereby will (i) conflict with or result in any breach of any provision of the Articles of Incorporation or Bylaws of the Company, each as amended to date; (ii) assuming the Broker Customers are accredited investors; require any consent, approval, authorization or permit from, or filing with or notification to, any United States or foreign governmental or regulatory authority or other third party, except for any such consents, approvals, authorizations, permits, filings or notifications, the absence of which would not have a material adverse effect on the Company; (iii) result in a breach of the terms, conditions or provisions of, constitute a default (or an event which, upon notice or lapse of time or both, would constitute a default) under or cause, permit or give rise to any right of termination, cancellation or acceleration under any of the terms, conditions or provisions of any material agreement or other material instrument or obligation to which the Company is a party or by which the Company is bound; or (iv) conflict with or result in a violation of any provision of (A) any statute, rule, regulation or ordinance which conflict or violation might have a material adverse impact on the Company or (B) any material order, writ, injunction, judgment, award, decree, permit or license applicable to the Company or any of the Company’s properties or assets.
 
4. Representations and Warranties of Broker. Broker represents and warrants as follows:
 
(a) Broker is a corporation or other entity duly organized, validly existing and in good standing under the laws of the state of its organization or incorporation and has full power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. All proceedings on the part of Broker necessary to authorize this Agreement and the transactions contemplated hereby have been duly and validly taken. This Agreement has been duly and validly authorized, executed and delivered by Broker, constitutes the legal, valid and binding agreement and obligation of Broker, enforceable against it in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting creditors’ rights generally, including, without limitation laws regarding fraudulent or preferential transfers, or by the principles governing the availability of equitable remedies.
 
(b) Neither the execution and delivery of this Agreement by Broker nor the consummation of the transactions contemplated hereby will (i) conflict with or result in any breach of any provision of the governing instruments of Broker, each as amended to date; (ii) require any consent, approval, authorization or permit from, or filing with or notification to, any United States or foreign governmental or regulatory authority or other third party, including the Securities and Exchange Commission, and FINRA by Broker; (iii) result in a breach of the terms, conditions or provisions of, constitute a default (or an event which, upon notice or lapse of time or both, would constitute a default) under or cause, permit or give rise to any right of termination, cancellation or acceleration under any of the terms, conditions or provisions of any material agreement or other material instrument or obligation to which Broker
 
 
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5. Termination . Notwithstanding anything in this Agreement to the contrary, this Agreement may be terminated by the Company at any time and for any reason effective the close of the Company’s next business day after delivery of written notice of termination to Broker in accordance with Section 6(e) herein. If this Agreement is terminated pursuant to this Section 6, this Agreement shall thereafter have no effect except for the Company’s obligation to pay the Solicitation Fee for Consenting Holders that are Broker Customers prior to the effectiveness of said termination which shall survive the termination of this Agreement.
 
6. Miscellaneous.
 
(a) Survival of Representations and Warranties. The parties’ respective representations and warranties contained in this Agreement shall survive until three years after the termination of this Agreement at which time they shall expire and be deemed terminated and thereafter neither party may claim any damage for breach thereof.
 
 
(c) Expenses. Except as otherwise provided in this Agreement, the Company and Broker shall pay their respective fees, commissions, costs, and other expenses, separately incurred in connection with the preparation and execution of this Agreement and the consummation of the transactions contemplated hereby.
 
(d) Entire Agreement. This Agreement contains the entire agreement between the Company and Broker with respect to the solicitation of the Amendment and the related transactions and supersedes all prior arrangements or understandings with respect thereto.
 
(e) Notices. All notices, consents, requests, instructions, approvals and other communications provided for herein shall be validly given, made or served, if in writing and delivered personally or sent by fax (except for legal process) or certified mail, postage prepaid, to:
 
     
 
  
Company:
   
 
  
 
  
000 Xxx Xxx Xxxxxxxxx Xxxx, Xxxxx 000
 
  
Xxxxxxxxxx, XX  00000
 
  
Attn: Xxxx Xxxxxxxx
 
  
Chief Executive Officer
 
  
Fax No: (000) 000-0000
   
 
  
With copies to:
   
 
  
Xxxxxx and Xxxxxxxxx LLP
 
  
000 Xxxxxxx Xxxxxx, Xxxxx 000
 
  
Xxxxxx Xxxx, XX 00000
 
  
Attn: Xxxxxxx X. Xxxxxx, Esq.
 
  
Fax No: (000) 000-0000
   
 
  
Company:
 
Trident Partners, Ltd
 
 
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000 Xxxxx Xxxxxxxx, Xxxxx 000
 
  
Xxxxxxx, Xxx Xxxx 00000
 
  
Fax No: (516) 000- 0000
 
  
  
 
  
With Copies to:
Morritt, Hock, Hamroff and Xxxxxxxx, LLP
000 Xxxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxx, XX 00000
Attn: Xxxxxx X. X’Xxxxxx, Esq.
Fax No: (000) 000-0000
 
or to such other address or fax number as any party hereto may, from time to time, designate in a written notice given in a like manner. Notice given by fax shall be deemed delivered on the day the sender receives confirmation that such notice was received at the fax number of the addressee, provided that if the faxed notice is transmitted by the sender after 5:00 p.m. (Eastern time), it shall be deemed to have been delivered the following day. Notice given by mail as set out above shall be deemed delivered three calendar days after the date the same is postmarked.
 
 
 
(h) Construction of Agreement. Each of the parties hereto acknowledges and agrees that no provision in this Agreement is to be interpreted for or against any party because that party or that party’s legal representative drafted the provision.
 
 
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date and year first above written.
 
       
 
     
By:
      
Name:
  
Xxxxxxx Xxxx-Xxxxx
  
Title:
  
Chief Financial Officer
  
   
TRIDENT PARTNERS, LTD.
  
     
By:
      
Name:
  
Xxxxx X. Xxxxxxx
  
Title:
  
President
  

 
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Filed: July 22nd, 2008
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