PLACEMENT AGREEMENT

This PLACEMENT AGREEMENT (the “Agreement”) dated as of the ____ day of _____,
2007, by and between PARK CITY GROUP, INC., a Nevada corporation (the
“Company”), and TAGLICH BROTHERS, INC. (“Placement Agent”).

W I T N E S S E T H:

WHEREAS, in reliance upon the representations, warranties, terms and conditions
hereinafter set forth, the Placement Agent will use its best efforts to
privately place (the “Proposed Offering”) a minimum principal amount of
$1,000,000 (the “Minimum Amount”) and a maximum principal amount of $3,500,000
(the “Maximum Amount”) of the Company’s 5% convertible preferred stock, $0.01
par value per share (the “Preferred Stock” and the shares of Preferred issued
being herein called the “Shares”), at a purchase price (the “Purchase Price”)
equal to $10.00 per Share together with warrants to purchase 1,000 shares of
Common Stock for each $14,000 in Purchase Price of Shares (the “Investor
Warrants”) in one or more closings (each a “Closing”);

WHEREAS, the Shares are being issued pursuant to the Company’s Confidential
Private Placement Memorandum and exhibits thereto dated May 31, 2007, as the
same may be amended and/or supplemented from time to time, (collectively, the
“Memorandum”); and

WHEREAS, the Shares are being issued to the buyers thereof (the “Investors”)
pursuant to an exemption from the registration requirements of the Securities
Act of 1933, as amended (the “1933 Act”).

NOW, THEREFORE, in consideration of the premises and the respective promises
hereinafter set forth, the Company and the Placement Agent hereby agree as
follows:

1.

Agreement to Act as Placement Agent.

(a)          The Placement Agent shall act on a best efforts basis and does not
guarantee that it will be able to raise new capital in any prospective Offering.
The Company acknowledges that any advice given by the Placement Agent to the
Company is solely for the benefit and use of the Board of Directors of the
Company and may not be used, reproduced, disseminated, quoted or referred to
without the Placement Agent’s prior written consent.

(b)          The term of The Placement Agent’s non-exclusive engagement will end
at the end of the offering period as described in the Memorandum; however, the
Company may terminate the engagement at any time upon 30 days written notice to
the Placement Agent. Upon termination and thereafter, the Placement Agent will
be entitled to collect all amounts owed to it pursuant to Section 11.

2.                          Representations and Warranties of the Company. The
Company hereby represents and warrants to and covenants and agrees with the
Placement Agent, as of the date hereof and as of the date of each Closing, 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 is qualified and in
good standing as a foreign corporation in each jurisdiction in which the nature
of the business conducted by the Company or the property owned or leased by the
Company requires such qualification. Except as

 

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described in the Memorandum, the Company has no subsidiaries and does not own
any equity interest and has not made any loans or advances to or guarantees of
indebtedness to any person, corporation, partnership or other entity.

 

(b)

The capital structure of the Company is as described in the Memorandum.

(c)          The Company has the full right, power and authority to execute,
deliver and perform under this Agreement. This Agreement has been duly executed
by the Company and this Agreement and the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate action and each
constitute, the legal, valid and binding obligations of the Company, enforceable
in accordance with their respective terms.

(d)          All of the issued and outstanding shares of the Company’s Common
Stock (the “Common Stock”) have been duly and validly authorized and issued, are
fully paid and nonassessable (with no personal liability attaching to the
holders thereof or to the Company) and are free from preemptive rights or rights
of first refusal held by any person. All of the issued and outstanding shares of
Common Stock have been issued pursuant to either a current effective
registration statement under the 1933 Act or an exemption from the registration
requirements thereof, and were issued in accordance with all applicable Federal
and state securities laws.

(e)          The Shares to be issued at each Closing, and the shares of Common
Stock issuable upon conversion of such Shares, have been duly and validly
authorized for issuance and, when issued pursuant to this Agreement or pursuant
to such conversion, will be duly and validly authorized and issued, fully paid
and nonassessable and free from preemptive rights or rights of first refusal
held by any person.

(f)           The following financial statements of the Company (hereinafter
collectively, the “Financial Statements”) are included in the Memorandum: (i)
consolidated balance sheets as of June 30, 2005 and 2006, and consolidated
statements of operations, shareholders’ deficit and cash flows for the fiscal
years then ended, and the related notes thereto, which have been audited by HJ &
Associates, LLC (“HJ”), independent certified public accountants, and (ii)
unaudited consolidated balance sheet as of March 31, 2007, and consolidated
statements of operations and cash flows for the nine months ended March 31, 2006
and 2007, and the related notes thereto. The Financial Statements, which are
included in the Company’s Registration Statement on Form SB-2/A filed with the
SEC on January 18, 2007 and the Company’s Form 10QSB Quarterly Report for the
fiscal quarter ended March 31, 2007 (the “Form 10QSB”), were prepared in
accordance with generally accepted accounting principles consistently applied
and present and reflect fairly the financial position of the Company at the
respective balance sheet dates and the results of its operations and cash flows
for the periods then ended, provided, however, that the financial statements
included in the Form 10QSB are subject to normal year-end adjustments and lack
footnotes and other presentation items. During the period of HJ’s engagement as
the Company’s independent certified public accountants, there have been no
disagreements between the accounting firm and the Company on any matters of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure and no events required to be reported on a current report on
Form 8-K relating to the relationship between the Company and the accounting
firm. The Company has made and kept books and records and accounts which are in
reasonable detail and which fairly and accurately reflect the activities of the
Company, subject only to year-end adjustments.

 

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(g)          The Company has good and marketable title to all of its material
property and assets and, except as set forth in the Memorandum or the financial
statements of the Company (the “Financial Statements”), none of such property or
assets of the Company are subject to any lien, mortgage, pledge, encumbrance or
other security interest.

(h)                        Except as may be disclosed in the Memorandum, since
March 31, 2007, there has not been any material adverse change in the financial
condition or in the operations, business or prospects of the Company from that
shown in the Financial Statements or any damage or destruction, not covered by
insurance, which affects the business, property or assets of the Company.

(i)                         Except as set forth in the Exhibits to the
Memorandum, the Company has not filed any Current Reports on Form 8-K or other
reports filed with the Securities and Exchange Commission (the “SEC”) subsequent
to January 18, 2007.

(j)                          Neither the execution nor delivery of this
Agreement, the Investor Warrants or the Placement Agent Warrants (as defined
below) or the issuance and delivery of the Shares or the Common Stock issuable
upon exercise of the Investor Warrants and Placement Agent Warrants, by the
Company, nor the performance by the Company of the transactions contemplated by
this Agreement or the Investor Warrants and Placement Agent Warrants: (i)
requires the consent, waiver, approval, license or authorization of or filing
with or notice to any person, entity or public authority (except any filings
required by Federal or state securities laws, which filings have been or will be
made by the Company on a timely basis); (ii) violates or constitutes a default
under or breach of any law, rule or regulation applicable to the Company; or
(iii) conflicts with or results in a breach or termination of any provision of,
or constitutes a default under, or will result in the creation of any lien,
charge or encumbrance upon any of the property or assets of the Company with or
without the giving of notice, the passage of time or both, pursuant to (A) the
Company’s articles of incorporation (as amended) or by-laws, (B) any mortgage,
deed of trust, indenture, note, loan agreement, security agreement, contract,
lease, license, alliance agreement, joint venture agreement, or other agreement
or instrument, or (C) any order, judgment, decree, statute, regulation or any
other restriction of any kind or character to which the Company is a party or by
which any of the assets of the Company may be bound.

(k)          Except as described in the Memorandum, the Company does not have
any indebtedness to any officer, director, 5% stockholder or other Affiliate (as
defined in the Rules and Regulations of the SEC under the 1933 Act) of the
Company.

(l)           The Company is in compliance with all laws, rules and regulations
of all Federal, state, local and foreign government agencies having jurisdiction
over the Company or affecting the business, assets or properties of the Company,
except where the failure to comply has not and will not have a material adverse
effect on the business, financial condition or results of operations of the
Company, taken as a whole (a “Material Adverse Effect”). The Company possesses
all licenses, permits, consents, approvals and agreements (collectively,
“Licenses”) which are required to be issued by any and all applicable Federal,
state, local or foreign authorities necessary for the operation of its business
and/or in connection with its assets or properties, except where the failure to
possess such Licenses has not and will not have a Material Adverse Effect.

(m)         The Company is not in default under any note, loan agreement,
security agreement, mortgage, contract, franchise agreement, distribution
agreement, lease, alliance

 

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agreement, joint venture agreement, other agreement, license, permit, consent,
approval or instrument to which it is a party, and no event has occurred which,
with or without the lapse of time or giving of notice, or both, would constitute
such default thereof by the Company or would cause acceleration of any
obligation of the Company or would adversely affect the business, operations, or
financial condition of the Company, except where such default or event, whether
with or without the lapse of time or giving of notice, or both, has not and will
not have a Material Adverse Effect. To the best of the knowledge of the Company,
no party to any note, loan agreement, security agreement, mortgage, contract,
franchise agreement, distribution agreement, lease, alliance agreement, joint
venture agreement, other agreement, license, permit, consent, approval or
instrument with or given to the Company is in default thereunder and no event
has occurred with respect to such party, which, with or without the lapse of
time or giving of notice, or both, would constitute a default by such party or
would cause acceleration of any obligations of such party.

(n)          To the best of the Company’s knowledge, no officer, director or 5%
stockholder of the Company and no Affiliate of any such person either (i) holds
any interest in any corporation, partnership, business, trust, sole
proprietorship or any other entity which is engaged in a business similar to
that conducted by the Company (other than a passive immaterial interest in a
public company engaged in any such business) or (ii) engages in business with
the Company.

(o)          There are no material (i.e., involving an asserted liability in
excess of twenty-five thousand dollars ($25,000)) claims, actions, suits,
proceedings or labor disputes, inquiries or investigations (whether or not
purportedly on behalf of the Company), pending or, to the best of the Company’s
knowledge, threatened, against the Company, at law or in equity or by or before
any Federal, state, county, municipal or other governmental department, the SEC,
the National Association of Securities Dealers, Inc., board, bureau, agency or
instrumentality, domestic or foreign, whether legal or administrative or in
arbitration or mediation, nor is there any basis for any such action or
proceeding. Neither the Company, nor any of its assets are subject to, nor is
the Company in default with respect to, any order, writ, injunction, judgment or
decree that could adversely affect the financial condition, business, assets or
prospects of the Company.

(p)                        The accounts receivable of the Company represent
receivables generated from the sale of goods and services in the ordinary course
of business. The Company knows of no material disputes concerning accounts
receivable of the Company not disclosed in the Memorandum.

(q)                                       The accounts payable of the Company
represent bona fide payables to third parties incurred in the ordinary course of
business and represent bona fide debts for services and/or goods provided to the
Company.

(r)           Except as set forth in the Memorandum, the Company does not have
(i) any written employment contracts or oral employment contracts not terminable
at will by the Company with any 5% percent shareholder, officer or director of
the Company; (ii) any consulting agreement or other compensation agreement with
any 5% percent shareholder, officer or director of the Company; or (iii) any
agreement or contract with any 5% percent shareholder, officer or director of
the Company that will result in the payment by the Company or the creation of
any commitment or obligation (absolute or contingent), of the Company to pay any
severance,

 

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termination, “golden parachute,” or similar payment to any present or former
personnel of the Company following termination of employment. No director,
executive officer or other key employee of the Company has advised the Company
that he or she intends to resign as director and/or executive officer of the
Company or to terminate his or her employment with the Company.

(s)                         Except as set forth in the Memorandum, the Company
is not a party to a labor agreement with respect to any of its employees with
any labor organization, union, group or association and there are no employee
unions (nor any similar labor or employee organizations). There is no labor
strike or labor stoppage or slowdown pending, or, to the knowledge of the
Company, threatened against the Company, nor has the Company experienced in the
last five (5) years any work stoppage or other labor difficulty. The Company is
in compliance with all applicable laws, rules and regulations regarding
employment practices, employee documentation, terms or conditions of employment
and wage and hours and the Company is not engaged in any unfair labor practices,
except where the failure to comply has not and will not have a Material Adverse
Effect. There are no unfair labor practice charges or complaints against the
Company pending before the National Labor Relations Board or any other
governmental agency.

(t)                         Except as disclosed in the Memorandum, there is no
employee pension, retirement or other benefit plans, maintained, contributed to
or required to be contributed to by the Company covering any employee or former
employee of the Company. The Company has no material liability or obligation of
any kind or nature, whether accrued or contingent, matured or unmatured, known
or unknown, under any provision of the Employee Retirement Income Security Act
of 1974, as amended (“ERISA”) or any provision of the Internal Revenue Code of
1986, as amended, specifically relating to persons subject to ERISA.

(u)                        The Company has timely filed or will timely file with
the appropriate taxing authorities all returns in respect of taxes required to
be filed through the date hereof and has timely paid or will timely pay all
taxes that it is required to pay or has established an adequate reserve
therefore. There are no pending or, to the knowledge of the Company, threatened
audits, investigations or claims for or relating to any liability of the Company
in respect of taxes.

(v)          The Company has no liabilities of any kind or nature whether
accrued or contingent, matured or unmatured, known or unknown, except as set
forth in the Memorandum and those liabilities incurred by the Company in the
ordinary course of business since March 31, 2007.

(w)         There are no finder’s fees or brokerage commissions payable with
respect to the transactions contemplated by this Agreement due to the actions of
the Company, except as provided in Section 11 of this Agreement.

(x)                        Except as set forth in the Memorandum, the Company is
not currently and has not during the past six (6) months been engaged in
negotiations with respect to: (i) any merger or consolidation of the Company
where the Company would not be the surviving entity; or (ii) the sale of the
Company or any of its assets other than sales in the ordinary course of
business.

 

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(y)          The Company has the right to conduct its business in the manner in
which its business has been heretofore conducted. To the knowledge of the
Company, the conduct of such businesses by the Company does not violate or
infringe upon the patent, copyright, trade secret or other proprietary rights of
any third party, and the Company has not received any notice of any claim of any
such violation or infringement.

(z)                         The Company is currently in compliance in all
respects with all applicable Environmental Laws (as defined below), including,
without limitation, obtaining and maintaining in effect all permits, licenses,
consents and other authorizations required by applicable Environmental Laws, and
the Company is currently in compliance with all such permits, licenses, consents
and other authorizations, except where the failure to comply does not and will
not have a Material Adverse Effect. The Company has not received notice from any
property owner, landlord, tenant or Governmental Authority (as defined below)
that Hazardous Wastes (as defined below) are being improperly used, stored or
disposed of at any property currently or formerly owned or leased by the Company
or that any soil or ground water contamination has emanated from any such
property. For purposes hereof, the term “Environmental Laws” means,
collectively, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, the Superfund Amendments and Reauthorization
Act of 1986, as amended, the Resource Conservation and Recovery Act, as amended,
the Toxic Substances Act, as amended, the Clean Air Act, as amended, the Clean
Water Act, as amended, any other “Superfund” or “Superlien” law or any other
Federal, state or local statute, law, ordinance, code, rule, regulation, order
or decree regulating, relating to, or imposing liability or standards of conduct
concerning any hazardous, toxic or dangerous waste, substance, or material, as
now or at any time hereafter in effect. For purposes hereof, the term
“Governmental Authority” shall mean the Federal Government of the United States
of America, any state or any political subdivision of the Federal Government or
any state, including but not limited to courts, departments, commissions,
boards, bureaus, agencies, ministries or other instrumentalities. For purposes
hereof, the term “Hazardous Wastes” shall mean any regulated quantity of
hazardous substances as listed by the Environmental Protection Agency (the
“EPA”) and the list of toxic pollutants designated by the United States Congress
and/or the EPA or defined by any other Federal, state or local statute, law,
ordinance, code, rule, regulation, order, or decree regulating, relating to or
imposing liability for standard of conduct concerning any hazardous, toxic
substance or material.

(aa)        The information contained in the Memorandum, taken together,
describes in all material respects the business and financial condition of the
Company, and such material, taken together, does not contain any misstatement of
a material fact or omit to state a material fact necessary to make the
information not misleading. The Investors and the Placement Agent shall be
entitled to rely on such material notwithstanding any investigation they or any
of them may have made.

(bb)        The Financial Statements included in the Memorandum present fairly
the financial position of the Company as of the dates indicated and the results
of its operations for the periods specified. The historical financial
information included in the Memorandum has been derived from the accounting
records of the Company and presents fairly the information shown thereby.

(cc)        The Investor Warrants and Placement Agent Warrants have been
authorized for issuance to the Investors and the Placement Agent or its
designees, respectively.

 

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The shares of Common Stock issuable upon exercise of the Investor Warrants and
Placement Agent Warrants (the “Warrant Shares”), when issued and delivered
against payment therefor in accordance with the terms thereof, will be duly and
validly issued, fully paid, nonassessable and free of preemptive rights or
rights of first refusal held by any person, and all corporate action required to
be taken for the authorization and issuance of the Investor Warrants and
Placement Agent Warrants and the Warrant Shares has been validly and
sufficiently taken. The execution by the Company of the Investor Warrants and
Placement Agent Warrants has been duly authorized by all required action of the
Company and, when so executed and delivered, will constitute the valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors’ rights and to general equity principles.

3.

Representations, Warranties and Covenants of Placement Agent.

(a)                                       Placement Agent hereby represents and
warrants that it is duly authorized to execute this Agreement and perform its
duties hereunder, and the execution and delivery by Placement Agent of this
Agreement and the consummation of the transactions contemplated by this
Agreement have been authorized by all necessary corporate action and will not
result in any violation of, or be in conflict with, or constitute a default
under, Placement Agent’s Articles of Incorporation or By-Laws, any agreement or
instrument to which Placement Agent is a party or Placement Agent’s property is
bound, or any judgment, decree, order or any statute, rule or regulation
applicable to Placement Agent.

(b)                                       In offering the Shares for sale,
Placement Agent will not offer the Shares for sale, or solicit any offers to buy
any Shares, or otherwise negotiate with any person in respect of the Shares, on
the basis of any communications or documents relating to the Shares or any
investment therein or to the Company or investment therein, other than the
Memorandum and any other document satisfactory in form and substance to the
Company. Placement Agent will promptly deliver a copy of each amendment or
supplement to the Memorandum (i) to all offerees then being or thereafter
solicited by Placement Agent, and (ii) to each person who has subscribed for
Shares prior to the receipt by such person of such amendment or supplement.

(c)                                                      In offering the Shares
for sale, Placement Agent shall conduct such sales in the manner described in
the Memorandum.

4.

Covenants of the Company.

(a)          In connection with the Proposed Offering, the Company will at all
times comply with all requirements imposed upon it by the 1933 Act, as now and
hereafter amended, and by all applicable state securities laws and regulations,
to permit the continuance of offers and sales of the Units in accordance with
the provisions hereof and the Memorandum. During such period, the Company will
amend and supplement the Memorandum in order to make the Memorandum comply with
the requirements of the Act.

(b)          If at any time it is known or believed that any event occurred as a
result of which the Memorandum or any representation or warranty contained in
this section includes an untrue statement of a material fact or, in view of the
circumstances under which they were made, omits to state any material fact
necessary to make the statements therein not misleading, the

 

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Company will notify The Placement Agent and will prepare an amended or
supplemented Memorandum which will correct such statement or omission.

(c)          The Company will not make any offers or sales of any security
(other than the Shares) under circumstances that would cause the Proposed
Offering to fail to qualify for an exemption from the registration requirements
of applicable federal and state securities laws                         

 

.

(d)   The Company agrees at all times as long as the Investor Warrants or
Placement Agent Warrants may be exercised, to keep reserved from the authorized
and unissued Common Stock, such number of shares of Common Stock as may be, from
time to time, issuable upon exercise of the Investor Warrants and Placement
Agent Warrants.

(e)  For so long as at least twenty-five percent (25%) of the Shares are issued
and outstanding, the Company shall cause its board of directors to invite a
person designated by the Placement Agent to attend all meetings of the board of
directors and all committees of the board of directors as an observer of such
meetings and shall give such person the same notice of such meetings as it gives
to the directors.

5.                     Survival of Representations and Warranties and
Indemnification. The representations, warranties and covenants of the Company
and Placement Agent set forth in Sections 2, 3 and 4 of this Agreement shall
survive the execution and delivery of the Shares. The indemnification
obligations of the Company as set forth in the indemnification rider identified
as Appendix II (as amended or supplemented from time to time, the
“Indemnification Rider”) to that certain engagement letter between the Company
and the Placement Agent, dated May 7, 2007 (as amended or supplemented from time
to time) is hereby incorporated by reference in its entirety as if more fully
set forth herein, and the provisions of the Indemnification Rider shall apply
and be applicable to, among other things, all representations and warranties of
the Company.

6.                     Use of Proceeds. The net proceeds to the Company from the
sale of the Minimum Amount of Common Stock and the Maximum Amount of Common
Stock are estimated to be approximately 885,000 and 3,185,000, respectively,
after deducting the fees and expenses associated with the Private Placement
Offering. The net proceeds from the sale of the Shares will be used by the
Company as disclosed in the Offering Materials.

7.                     Unregistered Securities. None of the Shares or the
Warrant Shares have been registered under the 1933 Act, in reliance upon the
applicability of Section 4(2), 4(6) and/or Rule 506 of Regulation D of the 1933
Act to the transactions contemplated hereby. The certificates representing the
Shares and the Warrant Shares will bear an investment legend stating that they
are “restricted securities” (as defined in Rule 144 under the Securities Act)
and may only be publicly offered and sold pursuant to an effective registration
statement filed with the SEC or pursuant to an exemption from the registration
requirements.

8.                     Registration Rights. The Placement Agent shall be deemed
to be a party to, and entitled to the benefits of the registration rights set
forth in Section 3 of, that certain Stock Purchase Agreement executed and
delivered by the Company to the Investors, and the shares of Common Stock
issuable upon exercise of the Placement Agent Warrants shall be included as
Registrable Securities in said agreement.

 

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9.                     Conditions. The following obligations of the Company
shall be satisfied or fulfilled on or prior to the date of each Closing, unless
otherwise agreed to in writing by the Placement Agent:

(a)    The Company shall have delivered to the Placement Agent, at the Initial
Closing, (i) a currently-dated long-form good standing certificate or telegram
from the Secretary of State where the Company is incorporated and each other
jurisdiction in which the Company is qualified to do business as a foreign
corporation; (ii) the articles of incorporation (as amended) of the Company, as
currently in effect, certified by the Secretary of State of the state where the
Company is incorporated; (iii) by-laws of the Company certified by the secretary
of the Company; and (iv) certified resolutions of the Board of Directors of the
Company approving the execution and delivery of this Agreement, the Investor
Warrants and the Placement Agent Warrants, the issuance and sale of the Shares,
the issuance of Common Stock upon exercise of the Investor Warrants and
Placement Agent Warrants and the registration of the Registrable Securities.

(b)   There shall have occurred no event which has a Material Adverse Effect on
the Company or any of its businesses, assets, prospects or the Company’s
securities since the date of this Agreement.

(c)    No litigation or administrative proceeding shall have been threatened or
commenced against the Company which (i) seeks to enjoin or otherwise prohibit or
restrict the consummation of the transactions contemplated by this Agreement or
(ii) if adversely determined, would have a Material Adverse Effect on the
Company or the Company’s securities.

(d)   The Company shall have delivered to the Placement Agent a certificate of
its principal executive and financial officers as to the matters set forth in
paragraphs 9(a), (b) and (c) of this Agreement and to the further effect that
(i) the Company is not in default, in any respect, under any note, loan
agreement, security agreement, mortgage, deed of trust, indenture, contract,
alliance agreement, lease, license, joint venture agreement, other agreement or
other instrument to which it is a party, except as disclosed in the Financial
Statements or the Memorandum and except where such default has not and will not
have a Material Adverse Effect; (ii) the Company’s representations and
warranties contained in this Agreement are true and correct in all respects on
such date with the same force and effect as if made on such date, (iii) there
has been no amendment or changes to the Company’s articles of incorporation or
by-laws or authorizing resolutions from those delivered pursuant to Paragraph
9(a) of this Agreement; and (iv) no event has occurred which, with or without
the lapse of time or giving of notice, or both, would constitute a breach of
default thereof by the Company, or would cause acceleration of any obligation of
the Company, or could adversely affect the business, operations, financial
condition or prospects of the Company.

(e)    The Placement Agent shall have received the opinion of Cohne, Rappaport &
Segal, counsel for the Company, dated as of the Closing date in form and
substance reasonably satisfactory to the Placement Agent and its counsel.

(f)     The Company shall have prepared and filed or delivered to counsel for
filing with the SEC and any states in which such filing is required, a Form D
relating to the sale of the Common Stock and such other documents and
certificates as are required.

 

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(g)    Subscriptions for at least the Minimum Amount of Common Stock shall have
been accepted by the Company.

(h)  In addition to the right of the Placement Agent to terminate this Agreement
and not consummate the transactions contemplated by this Agreement as a result
of the failure of the Company to comply with any of its obligations set forth in
this Agreement, this Agreement may be terminated by the Placement Agent by
written notice to the Company at any time prior to the Initial Closing if, in
the Placement Agent’s sole judgment, (i) the Company shall have sustained a loss
that is material to the Company, whether or not insured, by reason of fire,
earthquake, flood, accident or other calamity, or from any labor dispute or
court or government action, order or decree; (ii) trading in securities on any
exchange or system shall have been suspended or limited either generally or
specifically with respect to the Common Stock; (iii) material governmental
restrictions have been imposed on trading in securities generally or
specifically with respect to the Common Stock (not in force and effect on the
date of this Agreement); (iv) a banking moratorium shall have been declared by
Federal or New York State authorities; (v) an outbreak of major international
hostilities or other national or international calamity shall have occurred;
(vi) the Congress of the United States or any state legislative body shall have
passed or taken any action or measure, or such bodies or any governmental body
or any authoritative accounting institute, or board, or any governmental
executive shall have adopted any orders, rules or regulations, which the
Placement Agent reasonably believes is likely to have a Material Adverse Effect
on the business, financial condition or financial statements of the Company or
the market for the Common Stock; (vii) the Common Stock shall have been delisted
from the exchange on which it currently listed, or the Company shall have
received notice from such exchange advising the Company of its intention to have
the Common Stock delisted from such exchange, whether conditional or otherwise,
or the Company shall fail to meet the requirements for continued listing on such
exchange; or (viii) there shall have been, in the Placement Agent’s judgment, a
material decline in the Dow Jones Industrial Index or the market price of the
Common Stock at any time subsequent to the date of this Agreement.

10.

Indemnification.

(a)    Indemnification by Company. The Company agrees to indemnify and hold
harmless Placement Agent, its officers, directors and agents from and against
any and all losses, liabilities, claims, damages and expenses (each a “Claim”
and, collectively, “Claims”) whatsoever arising out of (1) a breach or alleged
breach by the Company of any warranty set forth in Section 2, (2) failure or
alleged failure by the Company to comply with the provisions of Section 2, or
(3) any untrue statement or alleged untrue statement of a material fact
contained in the Memorandum or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided, however,
that the Company will not be liable in any such case to the extent that any such
Claim arises out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission contained in the material furnished to
the Company by Placement Agent on Placement Agent’s behalf, specifically for
inclusion therein, which relates to Placement Agent’s activities pursuant to
this Agreement.

(b)   Indemnification by Placement Agent. Placement Agent agrees to indemnify
and hold harmless the Company (its officers, directors and agents) and each
person, if any, who controls any of the foregoing within the meaning of the 1933
Act to the same extent as

 

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the indemnity from the Company described above against any and all Claims
whatsoever (or actions in respect thereto) arising out of or based upon any
misrepresentation or alleged misrepresentation, failure or alleged failure by
Placement Agent to comply with the covenants and agreements set forth in Section
3.

(c)    Any person entitled to indemnification under Section 10(a) or (b) of this
Agreement (an “indemnified party”) shall notify promptly the person obligated to
provide such indemnification (the “indemnifying party”) in writing of the
commencement of any any action or proceeding brought by a third person against
the indemnified party with respect to a Claim (a “Third Party Claim”) for which
the indemnified party may be entitled to indemnification from the indemnifying
party under this Section 10, but the omission of such notice shall not relieve
the indemnifying party from any liability which it may have to any indemnified
party under Section 10 of this Agreement, except to the extent that such failure
shall materially adversely affect any indemnifying party or its rights
hereunder. The indemnifying party shall be entitled to participate in, and, to
the extent that it chooses, to assume the defense of any Third Party Claim with
counsel reasonably satisfactory to the indemnified party; and, after notice from
the indemnifying party to the indemnified party that it so chooses, the
indemnifying party shall not be liable for any legal or other expenses or
disbursements subsequently incurred by the indemnified party in connection with
the defense thereof other than reasonable costs of investigation; provided,
however, that (i) if the indemnifying party fails to take reasonable steps
necessary to defend diligently the Third Party Claim within twenty (20) days
after receiving notice from the indemnified party that the indemnified party of
such Third Party Claim; (ii) if the indemnified party who is a defendant in such
Third Party Claim which is also brought against the indemnifying party
reasonably shall have concluded that there are legal defenses available to the
indemnified party which are not available to the indemnifying party; or (iii) if
representation of both parties by the same counsel is otherwise inappropriate
under applicable standards of professional conduct, the indemnified party shall
have the right to assume or continue its own defense as set forth above (but
with no more than one firm of counsel for all indemnified parties in each
jurisdiction, except to the extent any indemnified party or parties reasonably
shall have concluded that there are legal defenses available to such party or
parties which are not available to the other indemnified parties or to the
extent representation of all indemnified parties by the same counsel is
otherwise inappropriate under applicable standards of professional conduct) and
the indemnifying party shall be liable for any reasonable expenses therefor;
provided, that no indemnifying party shall be subject to any liability for any
settlement of a Third Party Claim made without its consent (which may not be
unreasonably withheld, delayed or conditioned). If the indemnifying party
assumes the defense of any Third Party Claim hereunder, such indemnifying party
shall not enter into any settlement without the consent of the indemnified party
if such settlement attributes liability to the indemnified party.

11.

Fees; Other Rights.

(a)    As disclosed in the Memorandum, a fee (“Success Fee”) equal to eight
percent (8%) of the gross proceeds through the sale of the Shares shall be
payable to the Placement Agent, except that such fee shall be four percent (4%)
for sales to purchasers that were not introduced to the Company by the Placement
Agent.

(b)   In addition to the sums payable to the Placement Agent as provided
elsewhere herein, the Placement Agent shall be entitled to receive at the
Closing, as additional compensation for its services, warrants (the “Placement
Agent Warrants”) with a five (5) year

 

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term for the purchase of an amount of Common Stock equal to ten percent (10.0%)
of the Common Stock into which the Preferred Shares sold in this Offering are
convertible. The exercise price of the Placement Agent Warrants will initially
be equal to one hundred ten percent (110%) of the Conversion Price of the
Preferred Stock.

(c)    The Company also agrees to pay to the Placement Agent, a cash fee equal
to eight (8.0%) percent of the gross proceeds, if any, received subsequent to
the termination of the Offering from any party introduced to the Company by the
Placement Agent during the Offering Period; provided that such proceeds are
received by the Company within one year of the date of such introduction and
that the Placement Agent has promptly notified the Company that such
introduction has been made

(d)   Upon closing, the Company will reimburse the Placement Agent for up to
$35,000 of its actual and reasonable out-of-pocket expenses incurred in
connection with Offering, including fees and expenses of its counsel.

(e)    The Company shall pay any fees required in connection with the
qualification of the sale of the Shares under the state securities or “blue sky”
laws of any state which the Placement Agent reasonably deems necessary.

(f)     All payments in connection with the sale of the Shares shall be made
pursuant to the terms and conditions of the escrow agreement between Placement
Agent and CSC Trust Company of Delaware, an executed copy of which has been
delivered to and acknowledged by the Company.

(g)    During the 12 months following the termination of this Agreement, if the
Company issues and sells securities to any person that the Placement Agent
introduced to the Company or with which the Placement Agent had discussions or
negotiations during the term of this Agreement on behalf of the Company
regarding the Company’s securities, then the Company shall pay the Placement
Agent upon such issuance and sale a cash fee equal to that which would have been
payable to the Placement Agent had such issuance and sale occurred during the
term of this Agreement.

(h)    If during the year following the completion of the Proposed Offering, the
Company shall propose to raise debt or equity through a public offering or
private placement (a “Subsequent Capital Raise”), other than senior secured
financing with a bank or other financial institution, the Company shall provide
written notice to the Placement Agent of the proposed terms of such Subsequent
Capital Raise, including any commissions, success, finders or other fees or any
similar compensation, including issuance of equity or warrants, options, rights
or other securities convertible into equity of the Company to be payable or
deliverable to any broker, placement or other agent, dealer or other similar
person in connection with the Subsequent Capital Raise. If the Company and the
Placement Agent shall not after commercially reasonable efforts negotiate and
agree to mutually acceptable terms for the involvement of the Placement Agent in
such Subsequent Capital Raise within thirty (30) days of such notice, the
Company shall have the right to proceed with such Subsequent Capital Raise, so
long as such Subsequent Capital Raise shall be consummated within one hundred
eighty days of such notice and the terms upon which any broker, placement or
other agent, dealer or other similar person shall participate in the Subsequent
Capital Raise shall be no more favorable to such broker, placement or other
agent, dealer or other similar person than the terms offered to the Placement
Agent in such notice or pursuant to such negotiations, unless such more
favorable terms shall

 

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first offer such more favorable terms to the Placement Agent pursuant to the
terms of this subsection (h).

12.                  Confidentiality. The Placement Agent and the Company
mutually agree that they will not disclose any confidential information received
from the other party to others, except with the written permission of the other
party or as such disclosure may be required by law.

13.                  Notices. All notices provided for in this Agreement shall
be in writing signed by the party giving such notice, and delivered personally
or sent by overnight courier or messenger against receipt thereof or sent by
registered or certified mail, return receipt requested, or by facsimile
transmission, if confirmed by mail as provided in this Section 12. Notices shall
be deemed to have been received on the date of personal delivery or facsimile
or, if sent by certified or registered mail, return receipt requested, shall be
deemed to be delivered on the third business day after the date of mailing.
Notices shall be sent to the following addresses:

 

To the Company:

 

PARK CITY GROUP

3160 Pinebrook Road

Park City, Utah 84098

Attention: Randy Fields

Facsimile: (435) 645-2010

 

With a copy to:

 

Cohne, Rappaport & Segal

257 East 200 South, 7th Floor

Salt Lake City, Utah 84111

Facsimile: (801) 355-1813

Attention: A.O. Headman Jr.

 

To Placement Agent:

 

TAGLICH BROTHERS, INC.

405 Lexington Avenue, 51st Floor

New York, NY 10174

Facsimile: (212) 661-6824

Attention: Robert Schroeder

 

With a copy to:

 

EDWARDS ANGELL PALMER & DODGE LLP

750 Lexington Avenue

New York, NY 10022

Facsimile: (212) 308-4844

Attention: Geoffrey Etherington, Esq.

 

 

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or to such other address as any party shall designate in the manner provided in
this Section 12.

 

14.

Miscellaneous.

(a)    This Agreement constitutes the entire agreement between the parties
relating to the subject matter hereof and supercedes any and all prior or
contemporaneous oral and prior written agreements and understandings. This
Agreement may not be modified or amended nor may any right be waived except by a
writing which expressly refers to this Agreement, states that it is a
modification, amendment or waiver and is signed by all parties with respect to a
modification or amendment or the party granting the waiver with respect to a
waiver. No course of conduct or dealing and no trade custom or usage shall
modify any provisions of this Agreement.

(b)   This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and to be performed
entirely within such state. Each party hereby consents to the exclusive
jurisdiction of the Federal and state courts situated in New York County, New
York in connection with any action arising out of or based upon this Agreement
and the transactions contemplated by this Agreement.

(c)    This Agreement shall be binding upon and inure to the benefit of the
parties hereto, and their respective personal representatives, successors and
permitted assigns.

(d)   In the event that any provision of this Agreement becomes or is declared
by a court of competent jurisdiction to be illegal, unenforceable or void, this
Agreement shall continue in full force and effect without said provision.

(e)    Each party shall, without payment of any additional consideration by any
other party, at any time on or after the date of any Closings take such further
action and execute such other and further documents and instruments as the other
party may request in order to provide the other party with the benefits of this
Agreement.

(f)     The captions and headings contained herein are solely for convenience
and reference and do not constitute a part of this Agreement.

(g)    All references to any gender shall be deemed to include the masculine,
feminine or neuter gender, the singular shall include the plural and the plural
shall include the singular.

(h)    This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same document.

 

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[Signature page follows]

 

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

 

PARK CITY GROUP, INC.

TAGLICH BROTHERS, INC.

 

 

 

 

 

 

By:

 

 

By:

 

 

Name:

Name:

Title:

Title: