SOLICITATION AGREEMENT
EXHIBIT
99.1
THIS
SOLICITATION AGREEMENT (“Agreement”) is dated as of July 3, 2007, 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 (“the Amendment”) to extend
the due date of the Company’s outstanding 6% Convertible Notes due June 30 and
July 7, 2007 (“the Notes”) held by current customers of Broker (“Broker
Customers”); and
WHEREAS,
there is $1,066,500 principal amount of the notes outstanding; and
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;
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 National Association of Securities Dealers (“NASD”), 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 6, 2007
(“Consenting Holders”) for whom Broker delivers executed documentation
evidencing their agreement to the Amendment (the “Solicitation Fee”), consisting
of:
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(i)
a non-refundable cash payment of $25,000, payable on or
before July
13, 2007; and
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(ii)
that number of three year warrants to acquire shares of
the
Company’s common stock substantially in the form annexed hereto as Exhibit
A (the “Warrants”) determined by multiplying the principal amount held by
Consenting Holders that are Broker Customers by
100%.
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(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 exercise of
the Amendments have been consistent with applicable federal and state securities
laws, the guidelines of the NASD and applicable SEC rules and regulations,
including Regulation M; 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)
Timing of Payment of Solicitation Fee. Within five (5) days after
the effective date of the Amendment, the Company will delver a notice to Broker
setting forth the names of the Broker Customers that are Consenting Holders
and
the principal amount of the Notes that they each hold for which Broker has
solicited in accordance with this Agreement, together with payment of the
Solicitation Fee with respect to the Amendments delivered by
Broker.
(d)
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.
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(e)
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 the National Association of Securities
Dealers 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 is a party or by which Broker 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 Broker, including the Rules of the
National Association of Securities Dealers and the Rules and Regulations of
the
Commission or (B) any material order, writ, injunction, judgment, award,
decree, permit or license applicable to Broker or any of Broker’s properties or
assets.
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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.
(b)
Amendment and Waiver. Any term or provision of this Agreement may be
waived at any time by the party which is entitled to the benefits thereof,
but
only in a writing signed by such party, and this Agreement may be amended or
supplemented at any time, but only by written agreement of the Company and
Broker. Any such waiver with respect to a failure to observe any such provision
shall not operate as a waiver of any subsequent failure to observe such
provision unless otherwise expressly provided in such waiver.
(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:
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Company:
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000
Xxx Xxx Xxxxxxxxx Xxxx, Xxxxx 000
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Xxxxxxxxxx,
XX 00000
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Attn:
Xxxx Xxxxxxxx
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Chief
Executive Officer
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Fax
No: (000) 000-0000
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With
copies to:
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Xxxxxx
and Xxxxxxxxx LLP
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000
Xxxxxxx Xxxxxx, Xxxxx 000
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Xxxxxx
Xxxx, XX 00000
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Attn:
Xxxxxxx X. Xxxxxx, Esq.
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Fax
No: (000) 000-0000
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Company:
Trident
Partners, Ltd
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000
Xxxxx Xxxxxxxx, Xxxxx 000
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Xxxxxxx,
Xxx Xxxx 00000
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Fax
No: (516) 000- 0000
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With
Copies to:
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0
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Xxxxxxx,
Xxxx, Xxxxxxx and Xxxxxxxx, LLP
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000
Xxxxxx Xxxx Xxxxx, Xxxxx 000
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Xxxxxx
Xxxx, XX 00000
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Attn:
Xxxxxx X. X’Xxxxxx, Esq.
Fax
No: (000)000-0000
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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.
(f)
Assignment. Except as provided in the following sentence, this Agreement
may not be assigned, by operation of law or otherwise, and any attempt to do
so
shall be void. This Agreement shall be binding upon and inure to the benefit
of
successors and assigns of the parties hereto.
(g)
Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to
conflicts of laws.
(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.
(i)
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.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date and year first above written.
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By:
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/s/ Xxxx Xxxxxxxx | |
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Name:
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Xxxx
Xxxxxxxx
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Title:
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Chief
Executive Officer
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TRIDENT
PARTNERS, LTD.
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By:
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Name:
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Xxxxx
X. Xxxxxxx
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Title:
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President
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