Document:

exhibit10-4.htm

    
      Exhibit 10.4: Asset Assignment
Agreement

       

      ASSET ASSIGNMENT
AGREEMENT

       

      This
ASSET ASSIGNMENT AGREEMENT (“Agreement”) is made and entered into as of
this 1st day
of June, 2009, by and between SARS Corporation, a Nevada corporation (“Seller”)
and The Clarence Group, LLC, a Missouri limited liability company
(“Creditor”).

       

      RECITALS:

       

      A.  Seller
operates an asset-tracking company with its principal place of business located
at 601 108th Avenue
NE, Suite 1908, Bellevue, Washington 98004;

      

      B.           Creditor
is a secured creditor of Seller under that certain (i) Secured Convertible
Promissory Note from Seller to Creditor dated July 1, 2008 (“Secured
Promissory Note”), (ii) Security Agreement dated July 1, 2008 (“Security
Agreement”), and (iii) UCC-1 Financing Statement filed October 27, 2008
(“UCC-1”) (Secured Promissory Note, Security Agreement and UCC-1 collectively
attached hereto as “Exhibit
A”);

      

      C. Seller
is in default under the Secured Promissory Note and Security Agreement;
and

       

      D. Creditor
wishes to foreclose upon its security interest referenced above and take
possession of the collateral under said security interest, and Seller desires to
cooperate with Creditor taking possession of assets of Seller, upon the terms
and conditions and subject to the provisions hereinafter set forth in this
Agreement.

       

      NOW,
THEREFORE, in consideration of the covenants, conditions and mutual agreements
herein set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties do hereby agree as
follows:

       

      1.           Assignment

       

      1.1           Seller
shall transfer and assign to Creditor and Creditor shall acquire from Seller,
the assets, properties and rights of the Seller, identified in the Security
Agreement and UCC-1 as the collateral securing the Secured Promissory Note (the
“Collateral”) and listed or otherwise described on “Exhibit B” attached hereto and
incorporated herein.

       

      2.           Obligations

       

      2.1           Creditor
shall not assume any liabilities of Seller. Creditor shall not assume, and
Seller and/or Seller’s relevant and appropriate subsidiary corporations or other
entities shall remain liable for, any and all liabilities, obligations, claims
and commitments of or against Seller, whether the same are known or unknown,
existing, contingent upon future events or circumstances, accrued, by operation
of law or otherwise.

       

      3.           Closing

       

      3.1.           The
closing of the transactions contemplated by this Agreement (the “Closing”) shall
be held on June 10, 2009 (the “Closing Date”), or on such date as mutually
agreed upon by the parties, at the office of Creditor. Seller shall perform any
and all of its obligations and conditions under this Agreement at or prior to
Closing to the full and complete satisfaction of Creditor, and if the same is
not accomplished, Creditor shall have the cumulative right to immediately pursue
any and all remedies provided under this Agreement, as well as any and all
remedies provided under the terms of the Secured Promissory Note, Security
Agreement, and/or UCC-1.

       

      3.2.           The
following deliveries will be made at Closing:

       

      3.2.1                      Deliveries
by
Seller.                                                      The
Seller shall deliver to Creditor:

       

      (i)           A
Bill of Sale in substantially the form attached hereto as “Exhibit C,” duly executed by Seller;
and

       

      (ii)           Possession,
whether by physical delivery or otherwise so Creditor has complete control of
the same, of the Collateral listed on Exhibit B, in working and usable
order.

       

      4.           Representations
and Warranties of the
Seller.                                                                                                           The
Seller represents and warrants to the Creditor as follows, and acknowledges and
confirms that Creditor is relying upon such representations and warranties in
connection with the execution, delivery and performance of this
Agreement:

       

      4.1.           Execution, Delivery and
Performance of this Agreement.  Seller has full legal right and
power and all authority and approval required to enter into, execute and deliver
this Agreement and to perform fully its obligations hereunder.  This
Agreement has been duly executed and delivered by Seller and is its valid and
binding obligation enforceable in accordance with its provisions. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby by Seller does not and will not in any way (i)
conflict with, result in a breach of, or constitute a default under the terms of
any contract, agreement, lease, commitment or other instrument to which Seller
is a party or by which any of its property is bound; or (ii) constitute a
violation of any statute, judgment, order, decree, regulation or rule of any
court, governmental authority or arbitrator having jurisdiction over or relating
to Seller or any of its property.

       

      4.2.           Title to
Assets.  The Seller has good and marketable title to all of the
Collateral, such assets are free of any encumbrance, including but not limited
to that certain security interest in favor of Otto Capital, LLC, and Saratoga
Capital Partners, LLC, with the exception of Creditor’s security interest, and
upon Closing Creditor will own and have good and marketable title to all of the
Collateral free and clear of any lien or other encumbrance with the exception of
Creditor’s security interest.

       

                 4.3.                                Seller
is aware of no security interests whatsoever possessed, or claimed to be
possessed in any of the Collateral, with the only exceptions being Creditor,
Otto Capital, LLC, and Saratoga Capital Partners, LLC.

       

      5.           Covenants
of Seller. The Seller covenants to the Creditor as follows, and
acknowledges and confirms that Creditor is relying upon such covenants in
connection with the execution, delivery and performance of this
Agreement:

       

      5.1.           Cooperation.                                Seller
covenants and agrees that Seller will cooperate in accomplishing the timely and
immediate transfer of all Collateral and all other terms of this Agreement, as
well as all reasonable intermediate steps attendant to completing the same,
including but not limited to, executing documentation reasonably required by
Creditor to accomplish the transactions described herein.

       

      5.2.           Seller
will provide all documentation, descriptions, passwords, access
information, location information, and accounting information for all
intellectual property of Seller and its subsidiaries relating to the Collateral
existing throughout the world, including, but not limited to:

       

       

      (a)                 all
rights, title, and interest in all computer software, program formats and
databases used in SARS Corporation’s and its subsidiaries’ business, including
but not limited to the source codes, scripts, HTML versions of all the text and
literary content thereof;

       

       

      (b)                 patents,
patent applications, utility models, design registrations, and certificates of
invention and other governmental grants for the protection of inventions or
industrial designs (including all related continuations, continuations-in-part,
divisionals, reissues and reexaminations);

       

       

      (c)                 registered
trademarks and service marks, logos, internet domain names, corporate names,
domain names, and doing business designations and all registrations and
applications for registration of the foregoing, common law trademarks and
service marks and trade dress, and all goodwill in the foregoing;

       

       

      (d)                 copyrights,
designs, data, and database rights and registrations and applications for
registration thereof, including moral rights of authors;

       

       

      (e)                 inventions,
invention disclosures, statutory invention registrations, trade secrets and
confidential business information, know-how, manufacturing and product processes
and techniques, research and development information, financial, marketing and
business data, pricing and cost information, business and marketing plans and
customer and supplier lists and information, whether patentable or
non-patentable, whether copyrightable or non-copyrightable and whether or not
reduced to practice;

       

       

      (f)                 other
proprietary rights relating to any of the foregoing (including remedies against
infringement thereof and rights of protection of interest therein under the laws
of all jurisdictions); and

       

       

      (g)                 all
goodwill associated with any of the foregoing;

       

                5.3.                      Extinguishment of
Security
Interests upon Collateral. The
Seller will deliver to Creditor at Closing a letter in the form attached hereto
as “Exhibit D,” from both Otto Capital,
LLC, and Saratoga Capital Partners, LLC, evidencing each such entity has agreed
to waive, relinquish, and extinguish any security interests whatsoever
possessed, or claimed to be possessed, in any of the Collateral, and shall
further deliver to Creditor a UCC-3 release of any security interest in any of
the Collateral. The Creditor shall deliver at Closing a letter evidencing
that the Creditor has agreed to waive, relinquish, and extinguish any security
interests whatsoever possessed, or claimed to be possessed, in any of the
Collateral, in the form of “Exhibit E,” attached hereto,
and shall further deliver to Creditor a UCC-3 release of any security interest
in any of the Collateral.

       

                5.4.                      Information Provided to
Creditor. For and in consideration of that certain reduction in the
principal amount of the Secured Promissory Note referenced below at Paragraph
6.1, Seller will deliver each and every one of the following to Creditor within
three (3) days of execution of this Agreement by Seller, with a continuing
obligation to supplement the same: (1) current customer list of Seller; (2)
accounts receivable list of Seller with a full aging history as to each account;
(3) vendor and supplier list of Seller with name, address, and contact name of
each vendor or supplier of Seller; and (4) any and all reasonable information
requested by Creditor and connected therewith any of the foregoing three
items.

       

      6.           Secured Promissory
Note and
Agreement to Stay Commencing Any Litigation

      

      6.1.           At
Closing, Creditor shall cancel the previously executed Secured Promissory Note
dated July 1, 2008.

      

      6.2.                      At
Closing, Creditor shall be provided a new Unsecured Promissory Note to
reflect an unsecured principal balance of $275,000, a copy of which attached
hereto as “Exhibit F.”

      

      6.3.                      Provided
that Seller timely and completely complies with all of its obligations contained
in this Agreement and the Exhibits attached hereto, Creditor agrees to cease
from filing any legal proceeding against Seller in court for a time period of
thirty (30) days from the date of this Agreement, provided however that at the
sole discretion of Creditor, if at any time after entering this Agreement Seller
ceases to fully uphold its obligations herein, including but not limited to the
duty to cooperate, Creditor may then immediately proceed to file any legal
proceeding against Seller in court without regard to the above-stated standstill
provision.

      

      7.           Miscellaneous.

      

      7.1.           Governing
Law.  This Agreement shall be governed according to the laws of
the State of Missouri.

       

      7.2.           Binding
Effect.  This Agreement shall be binding and inure to the
benefit of the parties and their respective heirs, successors, assigns and legal
representatives.

       

      7.3.            Press Releases and
Announcements.  Any and all press releases, announcements, or other
release of information as to any of the transactions contemplated by this
Agreement shall be made only after exchange of mutual written consent of all
parties to this Agreement.

      

       

      This
Agreement may be executed by facsimile, electronically, and in two (2) or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute the same instrument.

      

      IN
WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed on the day and year first above written.

       

      

       

      SELLER                                                                                     CREDITOR

       

      SARS
Corporation                                                                                                The
Clarence Group, LLC

       

      

      

      

      By:                                                                By:                                                      

           Geoff
Meagher, Chief Executive
Officer                                                                                                                          William
L. Bates, Manager

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      EXHIBIT
A

      

      Secured
Promissory Note, Security Agreement, and UCC-1

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      EXHIBIT B

      

      Collateral

       

      
        	
                ·  

              	
                (1)
      All accounts receivable of SARS Corporation and its
      subsidiaries;

              

      

       

       

      
        	
                ·  

              	
                (2)
      All inventory of SARS Corporation and its
  subsidiaries;

              

      

       

       

      
        	
                ·  

              	
                (3)
      All intellectual property of SARS Corporation and its subsidiaries
      existing throughout the world, including, but not limited
    to:

              

      

       

       

      (a)                 all
rights, title, and interest in all computer software, program formats and
databases used in SARS Corporation’s and its subsidiaries’ business, including
but not limited to the source codes, scripts, HTML versions of all the text and
literary content thereof;

       

       

      (b)                 patents,
patent applications, utility models, design registrations, and certificates of
invention and other governmental grants for the protection of inventions or
industrial designs (including all related continuations, continuations-in-part,
divisionals, reissues and reexaminations);

       

       

      (c)                 registered
trademarks and service marks, logos, internet domain names, corporate names,
domain names, and doing business designations and all registrations and
applications for registration of the foregoing, common law trademarks and
service marks and trade dress, and all goodwill in the foregoing;

       

       

      (d)                 copyrights,
designs, data, and database rights and registrations and applications for
registration thereof, including moral rights of authors;

       

       

      (e)                 inventions,
invention disclosures, statutory invention registrations, trade secrets and
confidential business information, know-how, manufacturing and product processes
and techniques, research and development information, financial, marketing and
business data, pricing and cost information, business and marketing plans and
customer and supplier lists and information, whether patentable or
non-patentable, whether copyrightable or non-copyrightable and whether or not
reduced to practice;

       

       

      (f)                 other
proprietary rights relating to any of the foregoing (including remedies against
infringement thereof and rights of protection of interest therein under the laws
of all jurisdictions); and

       

       

      (g)                 all
goodwill associated with any of the foregoing; and

       

       

      
        	
                ·  

              	
                (4)
      all proceeds received by SARS Corporation (whether in cash, cash
      equivalents, tangible or intangible property) upon the sale or disposition
      of those assets set forth in Nos. 1 through 3
  above.

              

      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      

       

      EXHIBIT C

      

      Bill of
Sale

      

      KNOW ALL MEN BY THESE
PRESENTS, that SARS Corporation, a Nevada corporation (“Seller”), for and
in consideration that certain good and valuable consideration as stated in that
certain Asset Assignment Agreement of even date herewith, do hereby BARGAIN AND
SELL to The Clarence Group, LLC, a Missouri limited liability company
(“Creditor”), the following property (the “Collateral”):

       

      All
accounts receivable of SARS Corporation and its subsidiaries; all inventory of
SARS Corporation and its subsidiaries; all intellectual property of SARS
Corporation and its subsidiaries existing throughout the world, including, but
not limited to: (a) all rights, title, and interest in all computer software,
program formats and databases used in SARS Corporation’s and its subsidiaries’
business, including but not limited to the source codes, scripts, HTML versions
of all the text and literary content thereof; (b) patents, patent applications,
utility models, design registrations, and certificates of invention and other
governmental grants for the protection of inventions or industrial designs
(including all related continuations, continuations-in-part, divisionals,
reissues and reexaminations);  (c) registered trademarks and service marks,
logos, internet domain names, corporate names, domain names, and doing business
designations and all registrations and applications for registration of the
foregoing, common law trademarks and service marks and trade dress, and all
goodwill in the foregoing;  (d) copyrights, designs, data, and database
rights and registrations and applications for registration thereof, including
moral rights of authors; (e) inventions, invention disclosures, statutory
invention registrations, trade secrets and confidential business information,
know-how, manufacturing and product processes and techniques, research and
development information, financial, marketing and business data, pricing and
cost information, business and marketing plans and customer and supplier lists
and information, whether patentable or non-patentable, whether copyrightable or
non-copyrightable and whether or not reduced to practice; (f) other proprietary
rights relating to any of the foregoing (including remedies against infringement
thereof and rights of protection of interest therein under the laws of all
jurisdictions); and (g) all goodwill associated with any of the foregoing;
and All proceeds received by SARS Corporation (whether in cash, cash
equivalents, tangible or intangible property) upon the sale or disposition of
those assets set forth in Nos. 1 through 3 above, of Seller, which are
substantially those listed in Exhibit 1 hereto (the
“Collateral”).

       

      The
Seller hereby represents that it is the owner of the Collateral and has full
right and title thereto, and authority to sell and dispose of it, and that the
above described property is now free and clear of all liens and encumbrance of
Seller and anyone claiming under or through Seller, with the only exception
being any liens held by Creditor.

      

      TO HAVE AND TO HOLD all of
said Collateral hereby sold, assigned, transferred and conveyed to Creditor and
its successors and assigns, to itself and to its and their own use and benefit
forever.

      

      This Bill of Sale is executed and
delivered pursuant to that certain Asset Assignment Agreement of even date
herewith, and reference to the Asset Assignment Agreement is hereby made for a
complete description of the terms on which the Collateral is being
conveyed.  In the event of a conflict between any term of this
instrument and a term of the Asset Assignment Agreement, the relevant provision
of the Asset Assignment Agreement shall control. This Bill of Sale shall be
governed by the laws of the State of Missouri.

      

      

      THIS BILL
OF SALE is dated June 1, 2009.

      

      

      SELLER

       

      SARS
Corporation

      

      

      By:                                                                

           Geoff
Meagher, Chief Executive Officer

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      EXHIBIT
1

      TO BILL OF
SALE

      COLLATERAL

       

      
        	
                ·  

              	
                (1)
      All accounts receivable of SARS Corporation and its
      subsidiaries;

              

      

       

       

      
        	
                ·  

              	
                (2)
      All inventory of SARS Corporation and its
  subsidiaries;

              

      

       

       

      
        	
                ·  

              	
                (3)
      All intellectual property of SARS Corporation and its subsidiaries
      existing throughout the world, including, but not limited
    to:

              

      

       

       

      (a)                 all
rights, title, and interest in all computer software, program formats and
databases used in SARS Corporation’s and its subsidiaries’ business, including
but not limited to the source codes, scripts, HTML versions of all the text and
literary content thereof;

       

       

      (b)                 patents,
patent applications, utility models, design registrations, and certificates of
invention and other governmental grants for the protection of inventions or
industrial designs (including all related continuations, continuations-in-part,
divisionals, reissues and reexaminations);

       

       

      (c)                 registered
trademarks and service marks, logos, internet domain names, corporate names,
domain names, and doing business designations and all registrations and
applications for registration of the foregoing, common law trademarks and
service marks and trade dress, and all goodwill in the foregoing;

       

       

      (d)                 copyrights,
designs, data, and database rights and registrations and applications for
registration thereof, including moral rights of authors;

       

       

      (e)                 inventions,
invention disclosures, statutory invention registrations, trade secrets and
confidential business information, know-how, manufacturing and product processes
and techniques, research and development information, financial, marketing and
business data, pricing and cost information, business and marketing plans and
customer and supplier lists and information, whether patentable or
non-patentable, whether copyrightable or non-copyrightable and whether or not
reduced to practice;

       

       

      (f)                 other
proprietary rights relating to any of the foregoing (including remedies against
infringement thereof and rights of protection of interest therein under the laws
of all jurisdictions); and

       

       

      (g)                 all
goodwill associated with any of the foregoing; and

       

       

      
        	
                ·  

              	
                (4)
      all proceeds received by SARS Corporation (whether in cash, cash
      equivalents, tangible or intangible property) upon the sale or disposition
      of those assets set forth in Nos. 1 through 3
  above.

              

      

       

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      

      EXHIBIT D

      

      Otto
Capital, Saratoga Release

      

      May 29,
2009

      

      

      Mr.
William L. Bates

      Manager

      The
Clarence Group, LLC

      17797
Westhampton Woods

      St.
Louis, MO 63005

      

      Dear Mr.
Bates:

      

      This will
confirm on behalf of Saratoga Capital Partners, LLC, I have reviewed the Asset
Assignment Agreement to be entered between SARS Corporation and The Clarence
Group, LLC. I have full legal right and power and all authority and approval
required to enter into, execute, perform, and deliver this letter on behalf
of Saratoga Capital Partners, LLC.

      

      Accordingly,
this letter will serve as Exhibit D to the Asset Assignment Agreement to be
entered between SARS Corporation and The Clarence Group, LLC, in that it
evidences that Saratoga Capital Partners, LLC hereby agrees to waive,
relinquish, and extinguish any and all security interests whatsoever possessed,
or claimed to be possessed, by Saratoga Capital Partners, LLC in any of the
Collateral of SARS Corporation listed at Exhibit B of the Asset Assignment
Agreement, which include each of the following:

       

      
        	
                ·  

              	
                (1)
      All accounts receivable of SARS Corporation and its
      subsidiaries;

              

      

       

       

      
        	
                ·  

              	
                (2)
      All inventory of SARS Corporation and its
  subsidiaries;

              

      

       

       

      
        	
                ·  

              	
                (3)
      All intellectual property of SARS Corporation and its subsidiaries
      existing throughout the world, including, but not limited
    to:

              

      

       

       

      (a)                 all
rights, title, and interest in all computer software, program formats and
databases used in SARS Corporation’s and its subsidiaries’ business, including
but not limited to the source codes, scripts, HTML versions of all the text and
literary content thereof;

       

       

      (b)                 patents,
patent applications, utility models, design registrations, and certificates of
invention and other governmental grants for the protection of inventions or
industrial designs (including all related continuations, continuations-in-part,
divisionals, reissues and reexaminations);

       

       

      (c)                 registered
trademarks and service marks, logos, internet domain names, corporate names,
domain names, and doing business designations and all registrations and
applications for registration of the foregoing, common law trademarks and
service marks and trade dress, and all goodwill in the foregoing;

       

       

      (d)                 copyrights,
designs, data, and database rights and registrations and applications for
registration thereof, including moral rights of authors;

       

       

      (e)                 inventions,
invention disclosures, statutory invention registrations, trade secrets and
confidential business information, know-how, manufacturing and product processes
and techniques, research and development information, financial, marketing and
business data, pricing and cost information, business and marketing plans and
customer and supplier lists and information, whether patentable or
non-patentable, whether copyrightable or non-copyrightable and whether or not
reduced to practice;

       

       

      (f)                 other
proprietary rights relating to any of the foregoing (including remedies against
infringement thereof and rights of protection of interest therein under the laws
of all jurisdictions); and

       

       

      (g)                 all
goodwill associated with any of the foregoing; and

       

       

      
        	
                ·  

              	
                (4)
      all proceeds received by SARS Corporation (whether in cash, cash
      equivalents, tangible or intangible property) upon the sale or disposition
      of those assets set forth in Nos. 1 through 3
  above.

              

      

       

      Accordingly,
Saratoga Capital Partners, LLC attaches hereto a UCC-3, Exhibit A, to
formally evidence that Saratoga Capital Partners, LLC hereby agrees to waive,
relinquish, and extinguish any and all security interests whatsoever possessed,
or claimed to be possessed, by Saratoga Capital Partners, LLC in any of the
Collateral of SARS Corporation listed at Exhibit B of the Asset Assignment
Agreement, which include each of the foregoing four categories.

      

      

      Sincerely
Yours,

      

      Saratoga
Capital Partners, LLC

      

      

      

      

      By:                      _________________________

      Print
Name:                                Pete
T. Cangany, Jr.

      Title:                                Manager

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
A

      

      UCC-3

      May 29,
2009

      

      

      Mr.
William L. Bates

      Manager

      The
Clarence Group, LLC

      17797
Westhampton Woods

      St.
Louis, MO 63005

      

      Dear Mr.
Bates:

      

      This will
confirm on behalf of Otto Capital, LLC, I have reviewed the Asset Assignment
Agreement to be entered between SARS Corporation and The Clarence Group, LLC. I
have full legal right and power and all authority and approval required to enter
into, execute, perform, and deliver this letter on behalf of Otto Capital,
LLC.

      

      Accordingly,
this letter will serve as Exhibit D to the Asset Assignment Agreement to be
entered between SARS Corporation and The Clarence Group, LLC, in that it
evidences that Otto Capital, LLC hereby agrees to waive, relinquish, and
extinguish any and all security interests whatsoever possessed, or claimed to be
possessed, by Otto Capital, LLC in any of the Collateral of SARS Corporation
listed at Exhibit B of the Asset Assignment Agreement, which include each
of the following:

       

      
        	
                ·  

              	
                (1)
      All accounts receivable of SARS Corporation and its
      subsidiaries;

              

      

       

       

      
        	
                ·  

              	
                (2)
      All inventory of SARS Corporation and its
  subsidiaries;

              

      

       

       

      
        	
                ·  

              	
                (3)
      All intellectual property of SARS Corporation and its subsidiaries
      existing throughout the world, including, but not limited
    to:

              

      

       

       

      (a)                 all
rights, title, and interest in all computer software, program formats and
databases used in SARS Corporation’s and its subsidiaries’ business, including
but not limited to the source codes, scripts, HTML versions of all the text and
literary content thereof;

       

       

      (b)                 patents,
patent applications, utility models, design registrations, and certificates of
invention and other governmental grants for the protection of inventions or
industrial designs (including all related continuations, continuations-in-part,
divisionals, reissues and reexaminations);

       

       

      (c)                 registered
trademarks and service marks, logos, internet domain names, corporate names,
domain names, and doing business designations and all registrations and
applications for registration of the foregoing, common law trademarks and
service marks and trade dress, and all goodwill in the foregoing;

       

       

      (d)                 copyrights,
designs, data, and database rights and registrations and applications for
registration thereof, including moral rights of authors;

       

       

      (e)                 inventions,
invention disclosures, statutory invention registrations, trade secrets and
confidential business information, know-how, manufacturing and product processes
and techniques, research and development information, financial, marketing and
business data, pricing and cost information, business and marketing plans and
customer and supplier lists and information, whether patentable or
non-patentable, whether copyrightable or non-copyrightable and whether or not
reduced to practice;

       

       

      (f)                 other
proprietary rights relating to any of the foregoing (including remedies against
infringement thereof and rights of protection of interest therein under the laws
of all jurisdictions); and

       

       

      (g)                 all
goodwill associated with any of the foregoing; and

       

       

      
        	
                ·  

              	
                (4)
      all proceeds received by SARS Corporation (whether in cash, cash
      equivalents, tangible or intangible property) upon the sale or disposition
      of those assets set forth in Nos. 1 through 3
  above.

              

      

       

      Accordingly,
Otto Capital, LLC attaches hereto a UCC-3, Exhibit A, to
formally evidence that Otto Capital, LLC hereby agrees to waive, relinquish, and
extinguish any and all security interests whatsoever possessed, or claimed to be
possessed, by Otto Capital, LLC in any of the Collateral of SARS Corporation
listed at Exhibit B of the Asset Assignment Agreement, which include each
of the foregoing four categories.

      

      

      Sincerely
Yours,

      

      

      Otto
Capital, LLC

      

      

      

      By:                      _________________________

      Print
Name:        David M. Otto

      Title:                   Member

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
A

      

      UCC-3

       

       

       

       

       

       

       

       

       

       

       

       

       

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT E

      

      Letter Acknowledging
Extinguishment of Any Security Interest Claimed

      in Collateral listed at
Exhibit B

      

      

      June 1,
2009

      

      Mr. Geoff
Meagher

      Chief
Executive Officer

      SARS
Corporation

      601
108th Ave NE,
Suite 1908

      Bellevue,
WA 98004

      

      Dear Mr.
Meagher:

      

      This will
confirm on behalf of The Clarence Group, LLC (“Clarence”), I have reviewed the
Asset Assignment Agreement to be entered between SARS Corporation and Clarence.
I have full legal right and power and all authority and approval required to
enter into, execute, perform, and deliver this Letter on behalf
of Clarence.

      

      Accordingly,
this letter will serve as Exhibit E to the Asset Assignment Agreement to be
entered between SARS Corporation and Clarence, in that it evidences that
Clarence hereby agrees to waive, relinquish, and extinguish any and all security
interests whatsoever possessed, or claimed to be possessed, by Clarence in any
of the Collateral of SARS Corporation listed at Exhibit B of the Asset
Assignment Agreement, which include each of the following:

       

      
        	
                ·  

              	
                (1)
      All accounts receivable of SARS Corporation and its
      subsidiaries;

              

      

       

       

      
        	
                ·  

              	
                (2)
      All inventory of SARS Corporation and its
  subsidiaries;

              

      

       

       

      
        	
                ·  

              	
                (3)
      All intellectual property of SARS Corporation and its subsidiaries
      existing throughout the world, including, but not limited
    to:

              

      

       

       

      (a)                 all
rights, title, and interest in all computer software, program formats and
databases used in SARS Corporation’s and its subsidiaries’ business, including
but not limited to the source codes, scripts, HTML versions of all the text and
literary content thereof;

       

       

      (b)                 patents,
patent applications, utility models, design registrations, and certificates of
invention and other governmental grants for the protection of inventions or
industrial designs (including all related continuations, continuations-in-part,
divisionals, reissues and reexaminations);

       

       

      (c)                 registered
trademarks and service marks, logos, internet domain names, corporate names,
domain names, and doing business designations and all registrations and
applications for registration of the foregoing, common law trademarks and
service marks and trade dress, and all goodwill in the foregoing;

       

       

      (d)                 copyrights,
designs, data, and database rights and registrations and applications for
registration thereof, including moral rights of authors;

       

       

      (e)                 inventions,
invention disclosures, statutory invention registrations, trade secrets and
confidential business information, know-how, manufacturing and product processes
and techniques, research and development information, financial, marketing and
business data, pricing and cost information, business and marketing plans and
customer and supplier lists and information, whether patentable or
non-patentable, whether copyrightable or non-copyrightable and whether or not
reduced to practice;

       

       

      (f)                 other
proprietary rights relating to any of the foregoing (including remedies against
infringement thereof and rights of protection of interest therein under the laws
of all jurisdictions); and

       

       

      (g)                 all
goodwill associated with any of the foregoing; and

       

       

      
        	
                ·  

              	
                (4)
      all proceeds received by SARS Corporation (whether in cash, cash
      equivalents, tangible or intangible property) upon the sale or disposition
      of those assets set forth in Nos. 1 through 3
  above.

              

      

       

      Accordingly,
Clarence attaches hereto a UCC-3 which was filed by Clarence, to formally
evidence that Clarence hereby agrees to waive, relinquish, and extinguish any
and all security interests whatsoever possessed, or claimed to be possessed, by
Clarence in any of the Collateral of SARS Corporation listed at Exhibit B of
the Asset Assignment Agreement, which include each of the foregoing four
categories.

      

      Sincerely
Yours,

      

      

      

      The
Clarence Group, LLC

      

      

      

      

      By:_________________________

      Print
Name: William L. Bates

      Title:
Manager

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      EXHIBIT
F

      

      Form
of Promissory Note

      

      THE
SECURITIES REPRESENTED BY THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR UNDER THE
PREVISIONS OF ANY APPLICABLE STATE SECURITIES LAWS, BUT HAVE BEEN ACQUIRED BY
THE REGISTERED HOLDER HEREOF FOR PURPOSES OF INVESTMENT AND IN RELIANCE ON
STATUTORY EXEMPTIONS UNDER THE 1933 ACT, AND UNDER ANY APPLICABLE STATE
SECURITIES LAWS.  THESE SECURITIES MAY NOT BE SOLD, PLEDGED,
TRANSFERRED OR ASSIGNED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER THE
PROVISIONS OF THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR PRUSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT.

      

      CONVERTIBLE
PROMISSORY NOTE

      

      St.
Louis, Missouri

      Date
Effective: [Closing Date]

      

      FOR VALUE RECEIVED, SARS Corporation, a
Nevada Corporation (“SARS” or the “Promisor”) hereby
promises to pay to the order of The Clarence Group, LLC, a Missouri limited
liability company (the “Holder”), the maximum
aggregate total sum of Two Hundred Seventy Five
Thousand Dollars ($275,000.00) which may be loaned from Holder to Promisor from
time to time upon the mutual agreement of both Promisor and Holder pursuant to
the terms of this Convertible Promissory Note (the “Note”).

      

      1.           Interest.  Beginning
on the date first above written, the date of the initial Loan (the “Effective Date”), the
outstanding principal balance of the Loans advanced hereunder shall accrue
interest at a rate of ten percent (10%) per annum (the “Interest”) until paid
in full to Holder.  Notwithstanding, upon the occurrence of an Event
of Default (as hereafter defined) and for so long as such Event of Default
continues, Interest shall accrue on the outstanding Note amount at the rate of
twelve percent (12%) per annum, or the maximum interest rate permitted by law,
whichever is less (the “Default Interest
Rate”).

      

      2.           Payments.  Promisor
shall make quarterly payments on all accrued but unpaid Interest on the first
day of each fiscal quarter beginning September 1, 2009 until January 1, 2012, at
which time the entire principal balance of all Loans made under the Note,
together with any accrued but unpaid Interest and any other sums due hereunder
shall be immediately due in payable in full.

      

      3.           Application of
Payments.

      

      3.1.           Except
as otherwise expressly provided herein, payments under this Note shall be
applied: (i) first to the repayment of any sums incurred by Holder for the
payment of any expenses in enforcing the terms of this Note; (ii) then to the
payment of the Default Interest Rate; (iii) then to the payment of Interest then
accrued and due on the unpaid principal balance; and (iv) then to the reduction
of principal.

      

      3.2.           Promisor
may prepay all or any part of the principal without penalty.

      

      3.3.           Upon
payment in full of the Note and applicable accrued and unpaid Interest thereon,
this Note shall be marked “Paid in Full” and returned to the
Promisor.

      

      4.           Note Convertible to Stock of
Promisor.  At any time following the execution of this Note,
Holder shall have the right to convert all or any portion of the outstanding
principal balance of the Loans advanced under this Note and all accrued but
unpaid Interest thereon into common stock of Promisor, par value $0.001, (the
“Common Stock”)
at the rate of twenty five cents ($0.25) per share.  To exercise
Holder’s right to convert the debt evidenced hereunder into Common Stock, Holder
shall deliver to the Company at its principal office, (a) a written notice
clearly evidencing Holder’s exercise of its conversion rights (“Election Notice”),
and (b) this Note with all applicable exhibits. The Company shall as promptly as
practicable, and in any event within twenty (20) days after delivery to the
Company of the Exercise Notice and this Note, execute and deliver or cause to be
executed and delivered, in accordance with such notice, a certificate or
certificates representing the aggregate number of shares of Common Stock
converted hereunder.  No fractional shares shall be issued upon the
exercise, in whole or in part, of Holder’s conversion rights. If any exercise in
whole or in part of Holder’s conversion rights would result in the issuance of a
fraction of a share of Common Stock, the Company shall, in lieu of issuing any
fractional share, pay the Holder the unconverted balance of any amount owed
under this Note by Company check. At any time or times the Common Stock issuable
is changed into the same or a different number of shares of any class or classes
of the Company’s stock, whether by recapitalization, combination, consolidation,
reclassification or otherwise (“Reclassification”), the conversion rate shall
adjust proportionately to the issued and outstanding Common Stock to maintain
the same percentage of common stock ownership that would be deliverable upon
conversion prior to, and following, such Reclassification.

      

      5.           Waiver of Notice. The
Promisor hereby waives diligence, notice, presentment, protest and notice of
dishonor.

      

      6.           Transfer.  This
Note may not be transferred by Holder at any time without the written consent of
Promisor, such consent not to be unreasonably withheld.  This Note may
not be transferred by Promisor without the written consent of Holder, which
consent may be withheld in Holder’s discretion.

      

      7.           Events of
Default.   The occurrence of any of the following events
(each an “Event of
Default”), not cured in any applicable cure period, shall constitute an
Event of Default of the Promisor:

      

      7.1           a
payment is received by Holder more than five (5) days after its due
date;

      

      7.2           a
breach of any representation, warranty, covenant or other provision of this Note
by Promissory which is not cured within five (5) days following the written
notice thereof by Holder to the Promisor;

      

      7.3           a
breach of the Security Agreement by Promissory which is not cured within five
(5) days following the written notice thereof by Holder to the Promisor;
and

      

      7.4           the
application for the appointment of a receiver or custodian for the Promisor or
the property of the Promisor, (ii) the entry of an order for relief from he
filing of a petition by or against the Promisor under the provisions of any
bankruptcy or insolvency law, (iii) any assignment for the benefit of creditors
by or against the Promisor, or (iv) the insolvency of the Promisor.

      

      Upon the occurrence of any Event of
Default that is not cured within any applicable cure period, if any, the Holder
may elect, by written notice delivered to the Promisor, to take at any time any
or all of the following actions: (i) declare this Note to be forthwith due and
payable, whereupon the entire unpaid Note, together with all accrued and unpaid
Interest thereon, shall become forthwith due and payable, without presentment,
demand, protest or any other notice of any kind, all of which are hereby
expressly waived by the Promisor, anything contained herein to the contrary
notwithstanding; (ii) exercise Holder’s rights under the Security Agreement; and
(iii) exercise any and all other remedies provided hereunder or available at law
or in equity.

      

      If an Event of Default occurs by
Promisor, Promisor agrees to pay, in addition to the amount of the Note,
reasonable attorneys’ fees and any other reasonable costs incurred by Holder in
connection with its pursuit of its remedies under this Note.

      

      8.           Miscellaneous.

      

      8.1           Successors and
Assigns.  Subject to the exceptions specifically set forth in
this Note, the terms and conditions of this Note shall inure to the benefit of
and be binding upon the respective executors, administrators, heirs, successors
and permitted assigns of the parties.  This Note (or a portion hereof)
may be assigned by Holder without the consent of Promisor.

      

      8.2.           Loss or Mutilation of
Note.  Upon receipt by Promisor of evidence satisfactory to
Promisor of the loss, theft, destruction or mutilation of this Note, together
with indemnity reasonably satisfactory to Promisor, in the case of loss, theft
or destruction, or the surrender and cancellation of this Note, in the case of
mutilation, Promisor shall execute and deliver to Holder a new promissory note
of like tenor and denomination as this Note.

      

      8.3           Notices.  Any
notice, demand, offer, request or other communication required or permitted to
be given pursuant to the terms of this Note shall be in writing and shall be
deemed effectively given the earlier of, (i) when received, (ii) when delivered
personally, (iii) one business day after being delivered by facsimile (with
receipt of appropriate confirmation), (iv) one (1) business day after being
deposited with an overnight courier service, or (v) four (4) days after being
deposited in the Global Priority Mail with postage prepaid, and addressed to the
recipient at the addresses set forth below unless another address is provided to
the other party in writing:

      

      If to SARS,
to:

      

      601 108th Ave NE,
Suite 1908

      Bellevue, WA 98004

      Attn:       Geoff
Meagher

      Fax:        425-943-6160

      

      with a copy
to:

      

      The Otto Law Group, PLLC

      601 Union Street, Suite
4500

      Seattle, WA 98101

      Attn:        David
M. Otto

      Fax:        206-262-9513

      

      If to the Holder,
to:

      

      The
Clarence Group, LLC

      17797 Westhampton Woods
Drive

      Wildwood,
MO  63005

      Attn:  William L. Bates,
Manager

      

      with a copy
to:

      

      Moline & Mehan, LLC

      The Berkley Building

      801 S. Forsyth Boulevard

      St. Louis, MO 63105

      Attn:       Don
Mehan

      Fax:        314-725-3275

      

      8.4.           Governing
Law.  This Note shall be governed in all respects by the laws
of the State of Missouri as applies to agreements entered into and performed
entirely within the State of Missouri by residents thereof, without regard to
any provisions thereof relating to conflicts of laws among different
jurisdictions.

      

      8.5           Waiver and
Amendment.  Any term of this Note may be amended, waived or
modified only with the written consent of Promisor and Holder.

      

      8.6           Remedies; Costs of
Collection; Attorney’s Fees.  No delay or omission by Holder in
exercising any of its rights, remedies, powers or privileges hereunder, or at
law or in equity and no course of dealing between Holder and the undersigned or
any other person shall be deemed a waiver by Holder of any such rights,
remedies, powers or privileges, even if such delay or omission is continuous or
repeated, nor shall any single or partial exercise of any right, remedy, power
or privilege preclude any other or further exercise thereof by the Holder or the
exercise of any other right, remedy, power or privilege by
Holder.  The rights and remedies of Holder described herein shall be
cumulative and not restrictive of any other rights or remedies available under
any other instrument, at law or in equity.  If an Event of Default
occurs, Promisor agrees to pay, in addition to the principal and any Interest
payable thereon, reasonable attorneys’ fees and any other reasonable costs
incurred by Holder in connection with its pursuit of its remedies under this
Note.

      

      [Signature
Page Follows]

      

      

      IN
WITNESS WHEREOF, SARS Corporation has executed this Note in favor of The
Clarence Group, LLC as of the Effective Date.

      

      

      SARS Corporation

      

      _______________________________

      Name: Geoff Meagher

      Title: Chief Executive
Officerexhibit4_1.htm

    Exhibit
4.1

    
       

      NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.  THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF
THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER LOAN SECURED BY SUCH SECURITIES

       

       

      COMMON
STOCK PURCHASE WARRANT

       

      To
Purchase 50,000 Shares of Common Stock of

       

      Park
City Group, Inc.

       

      THIS
COMMON STOCK PURCHASE WARRANT CERTIFIES that, for value received, Taglich
Brothers, Inc. (the “Holder”), is
entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after January 12, 2009 (the
“Initial Exercise
Date”) and on or prior to the close of business on the Termination Date
(as defined below) but not thereafter, to subscribe for and purchase from Park
City Group, Inc., a corporation incorporated in the State of Nevada (the “Company”), up to
50,000 shares (the “Warrant Shares”) of
Common Stock, of the Company (the “Common
Stock”).  The purchase price of one share of Common Stock (the
“Exercise
Price”) under this Warrant shall be $1.80, subject to adjustment
hereunder.  The Exercise Price and the number of Warrant Shares for
which the Warrant is exercisable shall be subject to adjustment as provided
herein.  As used herein “Termination Date” shall mean December 31,
2013.

       

      1. Title to
Warrant.  Prior to the Termination Date and subject to
compliance with applicable laws and Section 7 of this Warrant, this Warrant and
all rights hereunder are transferable, in whole or in part, at the office or
agency of the Company by the Holder in person or by duly authorized attorney,
upon surrender of this Warrant together with the Assignment Form annexed hereto
properly endorsed.  The transferee shall sign an investment letter in
form and substance reasonably satisfactory to the Company.

       

      2. Authorization of
Shares.  The Company covenants that all Warrant Shares which
may be issued upon the exercise of the purchase rights represented by this
Warrant will, upon exercise of the purchase rights represented by this Warrant,
be duly authorized, validly issued, fully paid and nonassessable and free from
all taxes, liens and charges in respect of the issue thereof (other than taxes
in respect of any transfer occurring contemporaneously with such
issue).

      
        
           

        

        
          -1-

          
            

          

        

        
           

        

      

      

      3. Exercise of
Warrant.

       

      (a)  Except
as provided in Section 4 herein, exercise of the purchase rights represented by
this Warrant may be made at any time or times on or after the Initial Exercise
Date and on or before the Termination Date by the surrender of this Warrant and
the Notice of Exercise Form annexed hereto duly executed, at the office of the
Company (or such other office or agency of the Company as it may designate by
notice in writing to the registered Holder at the address of such Holder
appearing on the books of the Company) and upon payment of the Exercise Price of
the shares thereby purchased by wire transfer or cashier’s check drawn on a
United States bank, the Holder shall be entitled to receive a certificate for
the number of Warrant Shares so purchased.  Certificates for shares
purchased hereunder shall be delivered to the Holder within fifteen (15) Trading
Days after the date on which this Warrant shall have been exercised as
aforesaid. This Warrant shall be deemed to have been exercised and such
certificate or certificates shall be deemed to have been issued, and the Holder
or any other person so designated to be named therein shall be deemed to have
become a holder of record of such shares for all purposes, as of the date the
Warrant has been exercised by payment to the Company of the Exercise Price and
all taxes required to be paid by the Holder, if any, pursuant to Section 5 prior
to the issuance of such shares, have been paid.  “Trading Day” means a
day on which the NASDAQ Stock Market is open for the transaction of
business.

      

      (b) If this
Warrant shall have been exercised in part, the Company shall, at the time of
delivery of the certificate or certificates representing Warrant Shares, deliver
to Holder a new Warrant evidencing the rights of Holder to purchase the
unpurchased Warrant Shares called for by this Warrant, which new Warrant shall
in all other respects be identical with this Warrant.

       

      (c) If the
Company fails to deliver to the Holder a certificate or certificates
representing the Warrant Shares pursuant to Section 3(a) of this Warrant by the
close of business on the fifteenth Trading Day after the date of exercise, then
the Holder will have the right to rescind such exercise.

       

      4. No Fractional Shares or
Scrip.  No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant.  As to any
fraction of a share which Holder would otherwise be entitled to purchase upon
such exercise, the Company shall pay a cash adjustment in respect of such final
fraction in an amount equal to such fraction multiplied by the Exercise
Price.

       

      5. Charges, Taxes and
Expenses.  Issuance of certificates for Warrant Shares shall be
made without charge to the Holder for any issue or transfer tax or other
incidental expense in respect of the issuance of such certificate, all of which
taxes and expenses shall be paid by the Company, and such certificates shall be
issued in the name of the Holder or in such name or names as may be directed by
the Holder; provided, however, that in the
event certificates for Warrant Shares are to be issued in a name other than the
name of the Holder, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the Holder;
and the Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto.

       

      6. Closing of
Books.  The Company will not close its stockholder books or
records in any manner which prevents the timely exercise of this Warrant,
pursuant to the terms hereof.

       

      
        
           

        

        
          -2-

          
            

          

        

        
           

        

      

      

      7. Transfer, Division and
Combination.

       

      (a) Subject
to compliance with any applicable securities laws and the conditions set forth
in Sections 1 and 7(e) hereof and to the provisions of Section 4.1 of the
Purchase Agreement, this Warrant and all rights hereunder are transferable, in
whole or in part, upon surrender of this Warrant at the principal office of the
Company, together with a written assignment of this Warrant substantially in the
form attached hereto duly executed by the Holder or its agent or attorney and
funds sufficient to pay any transfer taxes payable upon the making of such
transfer.  Upon such surrender and, if required, such payment, the
Company shall execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denomination or denominations specified in such
instrument of assignment, and shall issue to the assignor a new Warrant
evidencing the portion of this Warrant not so assigned, and this Warrant shall
promptly be cancelled.  A Warrant, if properly assigned, may be
exercised by a new holder for the purchase of Warrant Shares without having a
new Warrant issued.

       

      (b) This
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the Holder or its agent or attorney.  Subject to compliance
with Section 7(a), as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice.

      

      (c) The
Company shall prepare, issue and deliver at its own expense (other than transfer
taxes) the new Warrant or Warrants under this Section 7.

      

      (d) The
Company agrees to maintain, at its aforesaid office, books for the registration
and the registration of transfer of the Warrants.

       

      (e) If, at the time of
the surrender of this Warrant in connection with any transfer of this Warrant,
the transfer of this Warrant shall not be registered pursuant to an effective
registration statement under the Securities
Act and under applicable state securities
or blue sky laws, the Company may require, as a condition of allowing such
transfer (i) that the Holder or transferee of this Warrant, as the case may be,
furnish to the Company a written opinion of counsel (which opinion shall be in
form, substance and scope customary for opinions of counsel in comparable
transactions) to the effect that such transfer may be made without
registration under the Securities Act and under
applicable state securities or blue sky laws, (ii) that the holder or transferee
execute and deliver to the Company an investment letter in form and substance
acceptable to the Company and (iii) that the transferee be an "accredited
investor" as defined in Rule 501(a) promulgated under the Securities
Act.

       

      8. No Rights as Shareholder
until Exercise.  This Warrant does not entitle the Holder to
any voting rights or other rights as a shareholder of the Company prior to the
exercise hereof.  Upon the surrender of this Warrant and the payment
of the aggregate Exercise Price (or by means of a cashless exercise), the
Warrant Shares so purchased shall be and be deemed to be issued to such Holder
as the record owner of such shares as of the close of business on the later of
the date of such surrender or payment.

       

      
        
           

        

        
          -3-

          
            

          

        

        
           

        

      

      

      9. Loss, Theft, Destruction or
Mutilation of Warrant.  The Company covenants that upon receipt
by the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant or any stock certificate relating to
the Warrant Shares, and in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it (which, in the case of the Warrant, shall
not include the posting of any bond), and upon surrender and cancellation of
such Warrant or stock certificate, if mutilated, the Company will make and
deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of such Warrant or stock certificate.

       

      10. Saturdays, Sundays,
Holidays, etc.  If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall be a
Saturday, Sunday or a legal holiday, then such action may be taken or such right
may be exercised on the next succeeding day not a Saturday, Sunday or legal
holiday.

       

      11. Adjustments of Exercise
Price and Number of Warrant Shares.  The number and kind of
securities purchasable upon the exercise of this Warrant and the Exercise Price
shall be subject to adjustment from time to time upon the happening of any of
the following.  In case the Company shall (i) declare a dividend or
other distribution in shares of Common Stock or other securities or property of
the Company to holders of its outstanding Common Stock, (ii) subdivide its
outstanding shares of Common Stock into a greater number of shares, (iii)
combine its outstanding shares of Common Stock into a smaller number of shares
of Common Stock, or (iv) issue any shares of its capital stock in a
reclassification of the Common Stock, then the number of Warrant Shares
purchasable upon exercise of this Warrant immediately prior thereto shall be
adjusted so that the Holder shall be entitled to receive the kind and number of
Warrant Shares or other securities of the Company which it would have owned or
have been entitled to receive had such Warrant been exercised in advance
thereof.  Upon each such adjustment of the kind and number of Warrant
Shares or other securities of the Company which are purchasable hereunder, the
Holder shall thereafter be entitled to purchase the number of Warrant Shares or
other securities resulting from such adjustment at an Exercise Price per Warrant
Share or other security obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of Warrant Shares purchasable
pursuant hereto immediately prior to such adjustment and dividing by the number
of Warrant Shares or other securities of the Company that are purchasable
pursuant hereto immediately after such adjustment.  An adjustment made
pursuant to this paragraph shall become effective immediately after the
effective date of such event retroactive to the record date, if any, for such
event.

      
        
           

        

        
          -4-

          
            

          

        

        
           

        

      

      

      12. Reorganization,
Reclassification, Merger, Consolidation or Disposition of
Assets.  In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is a change in or distribution with respect to the Common Stock of the Company),
or sell, transfer or otherwise dispose of its property, assets or business to
another corporation and, pursuant to the terms of such reorganization,
reclassification, merger, consolidation or disposition of assets, shares of
common stock of the successor or acquiring corporation, or any cash, shares of
stock or other securities or property of any nature whatsoever (including
warrants or other subscription or purchase rights) in addition to or in lieu of
common stock of the successor or acquiring corporation (“Other Property”), are
to be received by or distributed to the holders of Common Stock of the Company,
then the Holder shall have the right thereafter to receive upon exercise of this
Warrant, the number of shares of Common Stock of the successor or acquiring
corporation or of the Company, if it is the surviving corporation, and Other
Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a Holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event.  In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and all
the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate (as determined in good faith by resolution of the Board of
Directors of the Company) in order to provide for adjustments of Warrant Shares
for which this Warrant is exercisable which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 12.  For
purposes of this Section 12, “common stock of the successor or acquiring
corporation” shall include stock of such corporation of any class which is not
preferred as to dividends or assets over any other class of stock of such
corporation and which is not subject to redemption and shall also include any
evidences of indebtedness, shares of stock or other securities which are
convertible into or exchangeable for any such stock, either immediately or upon
the arrival of a specified date or the happening of a specified event and any
warrants or other rights to subscribe for or purchase any such
stock.  The foregoing provisions of this Section 12 shall similarly
apply to successive reorganizations, reclassifications, mergers, consolidations
or disposition of assets.

       

      13. Notice of
Adjustment.  Whenever the number of Warrant Shares or number or
kind of securities or other property purchasable upon the exercise of this
Warrant or the Exercise Price is adjusted, as herein provided, the Company shall
give notice thereof to the Holder, which notice shall state the number of
Warrant Shares (and other securities or property) purchasable upon the exercise
of this Warrant and the Exercise Price of such Warrant Shares (and other
securities or property) after such adjustment, setting forth a brief statement
of the facts requiring such adjustment and setting forth the computation by
which such adjustment was made.

       

      14. Notice of Corporate
Action.  If at any time:

       

      (a)           the
Company shall take a record of the holders of its Common Stock for the purpose
of entitling them to receive a dividend or other distribution, or any right to
subscribe for or purchase any evidences of its indebtedness, any shares of stock
of any class or any other securities or property, or to receive any other right,
or

      

      (b)           there
shall be any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any consolidation or
merger of the Company with, or any sale, transfer or other disposition of all or
substantially all the property, assets or business of the Company to, another
corporation or,

      

      (c)           there
shall be a voluntary or involuntary dissolution, liquidation or winding up of
the Company;

      
        
           

        

        
          -5-

          
            

          

        

        
           

        

      

       

      then, in
any one or more of such cases, the Company shall give to Holder (i) at least 10
calendar days’ prior written notice of the date on which a record date shall be
selected for such dividend, distribution or right or for determining rights to
vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, liquidation or winding up, and (ii)
in the case of any such reorganization, reclassification, merger, consolidation,
sale, transfer, disposition, dissolution, liquidation or winding up, at least 30
calendar days’ prior written notice of the date when the same shall take
place.  Such notice in accordance with the foregoing clause also shall
specify (i) the date on which any such record is to be taken for the purpose of
such dividend, distribution or right, the date on which the holders of Common
Stock shall be entitled to any such dividend, distribution or right, and the
amount and character thereof, and (ii) the date on which any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up is to take place and the
time, if any such time is to be fixed, as of which the holders of Common Stock
shall be entitled to exchange their Warrant Shares for securities or other
property deliverable upon such disposition, dissolution, liquidation or winding
up.  Each such written notice shall be sufficiently given if addressed
to Holder at the last address of Holder appearing on the books of the Company
and delivered in accordance with Section 17(d).

       

      15. Authorized
Shares.  The Company covenants that during the period the
Warrant is outstanding, it will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of the Warrant
Shares upon the exercise of any purchase rights under this
Warrant.  The Company further covenants that its issuance of this
Warrant shall constitute full authority to its officers who are charged with the
duty of executing stock certificates to execute and issue the necessary
certificates for the Warrant Shares upon the exercise of the purchase rights
under this Warrant.  The Company will take all such reasonable action
as may be necessary to assure that such Warrant Shares may be issued as provided
herein without violation of any applicable law or regulation, or of any
requirements of the Trading Market upon which the Common Stock may be
listed.

       

      Except and to the extent as waived or
consented to by the Holder, the Company shall not by any action, including,
without limitation, amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of Holder as set forth in this Warrant against
impairment.  Without limiting the generality of the foregoing, the
Company will (a) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase in
par value, (b) take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant, and (c) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as may be necessary
to enable the Company to perform its obligations under this
Warrant.

      

      Before taking any action which would
result in an adjustment in the number of Warrant Shares for which this Warrant
is exercisable or in the Exercise Price, the Company shall obtain all such
authorizations or exemptions thereof, or consents thereto, as may be necessary
from any public regulatory body or bodies having jurisdiction
thereof.

      
        
           

        

        
          -6-

          
            

          

        

        
           

        

      

      

      16. Miscellaneous.

       

      (a) Jurisdiction.  All
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be determined in accordance with the provisions of the
Purchase Agreement.

       

      (b) Restrictions.  The
Holder acknowledges that the Warrant Shares acquired upon the exercise of this
Warrant, if not registered, will have restrictions upon resale imposed by state
and federal securities laws.

       

      (c) Nonwaiver and
Expenses.  No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of
such right or otherwise prejudice Holder’s rights, powers or remedies,
notwithstanding all rights hereunder terminate on the Termination
Date.  If the Company willfully and knowingly fails to comply with any
provision of this Warrant, which results in any material damages to the Holder,
the Company shall pay to Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys’ fees,
including those of appellate proceedings, incurred by Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its rights, powers
or remedies hereunder.

       

      (d) Notices.  Any
notice, request or other document required or permitted to be given or delivered
to the Holder by the Company shall be delivered in accordance with the notice
provisions of the Purchase Agreement; provided upon any permitted assignment of
this Warrant, the assignee shall promptly provide the Company with its contact
information.

       

      (e) Limitation of
Liability.  No provision hereof, in the absence of any
affirmative action by Holder to exercise this Warrant or purchase Warrant
Shares, and no enumeration herein of the rights or privileges of Holder, shall
give rise to any liability of Holder for the purchase price of any Common Stock
or as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.

       

      (f) Remedies.  Holder,
in addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Warrant.  The Company agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of the provisions of this Warrant and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be
adequate.

       

      (g) Successors and
Assigns.  Subject to applicable securities laws, this Warrant
and the rights and obligations evidenced hereby shall inure to the benefit of
and be binding upon the successors of the Company and the successors and
permitted assigns of Holder.  The provisions of this Warrant are
intended to be for the benefit of all Holders from time to time of this Warrant
and shall be enforceable by any such Holder or holder of Warrant
Shares.

       

      (h) Amendment.  This
Warrant may be modified or amended or the provisions hereof waived with the
written consent of the Company and the Holder.

      
        
           

        

        
          -7-

          
            

          

        

        
           

        

      

      

      (i) Severability.  Wherever
possible, each provision of this Warrant shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Warrant shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Warrant.

       

      (j) Headings.  The
headings used in this Warrant are for the convenience of reference only and
shall not, for any purpose, be deemed a part of this Warrant.

       

      ********************

      

      

      IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized.

       

      

      Dated:  January
12, 2009

      

      Park
City Group, Inc.

      

      

      By:  /s/ Randall K.
Fields

      Name:  Randall
K. Fields

      Title:  Chief
Executive Officer

       

      
        
           

        

        
          -8-

          
            

          

        

        
           

        

      

      

      NOTICE
OF EXERCISE

      

      To:           Park
City Group, Inc.

      

      (1) The
undersigned hereby elects to purchase ________ Warrant Shares of Park City
Group, Inc. pursuant to the terms of the attached Warrant (only if exercised in
full), and tenders herewith payment of the exercise price in full, together with
all applicable transfer taxes, if any.

       

      (2) Payment
shall be in the form of lawful money of the United States.

       

      (3) Please
issue a certificate or certificates representing said Warrant Shares in the name
of the undersigned or in such other name as is specified below:

       

      _______________________________

      

      

      The
Warrant Shares shall be delivered to the following:

      

      _______________________________

      

      _______________________________

      

      _______________________________

      

      (4)  Accredited
Investor.  The undersigned is an “accredited investor” as
defined in Regulation D promulgated under the Securities Act of 1933, as
amended.

      

      [PURCHASER]

      

      

      By:
______________________________

            Name:

            Title:

      

      Dated:  ________________________

       

      
        
           

        

        
          -9-

          
            

          

        

        
           

        

      

       

      ASSIGNMENT
FORM

      

      (To
assign the foregoing warrant, execute

      this form
and supply required information.

      Do not
use this form to exercise the warrant.)

      

      

      

      FOR VALUE
RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby
assigned to

       

      

      _______________________________________________
whose address is

      

      _______________________________________________________________.

      

      

      

      _______________________________________________________________

      

      Dated:  ______________,
_______

      

      

      Holder's
Signature:                                           _____________________________

      

      Holder's
Address:                                           _____________________________

      

                                
_____________________________

      

      

      

      Signature
Guaranteed:  ___________________________________________

      

      

      NOTE:  The
signature to this Assignment Form must correspond with the name as it appears on
the face of the Warrant, without alteration or enlargement or any change
whatsoever, and must be guaranteed by a bank or trust
company.  Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.

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