Exhibit 99.1
SECURITIES PURCHASE
AGREEMENT
PARK CITY GROUP,
INC.
SECURITIES PURCHASE
AGREEMENT (as amended or
supplemented from time to time, this "AGREEMENT"), dated as of
January 12, 2009, between Park City Group, Inc., a Nevada
corporation, with its principal offices at 3160 Pinebrook Rd, Park
City, Utah 84098 (the “Company”) and the undersigned
(the “Subscriber”).
WITNESSETH:
WHEREAS
, the Company desires to issue, in a
private placement subordinated promissory notes in an aggregate
principal amount of up to One Million Five Hundred Thirty-Eight
Thousand Two Hundred Forty Four Dollars ($1,538,244) in the form
annexed hereto as Exhibit A (each a “NOTE” and,
collectively, the “NOTES”), together with Three Hundred
Forty-Four Thousand Two Hundred Seventy-Two (344,272) shares of the
Company’s common stock (the “COMMON
STOCK”);
WHEREAS
, the parties desire that, upon the
terms and subject to the conditions contained herein, the Company
shall issue and sell to the Subscriber, and the Subscriber shall
purchase from the Company, a Note in the principal amount indicated
on the signature page hereto together with such number of shares of
the Company’s Common Stock based upon the number of shares of
Series E Preferred Stock of Prescient (the “Series E
Preferred Stock”) as are indicated on the signature page
hereto (the “Shares”). The Notes and
Shares will be issued in units each of which shall consist of a
Note in the principal amount of $4,021.30 and 900 Shares (a
“UNIT”) with a Unit being issued with respect to each
share of Series E Preferred Stock. The Note and the
Shares to be issued pursuant hereto are collectively referred to
herein as the "SECURITIES"; and
WHEREAS
, the Company and the Subscriber are
executing and delivering this Agreement in reliance upon an
exemption from the registration requirements of the Securities Act
of 1933, as amended (the “1933 ACT”) afforded by the
provisions of Section 4(2), Section 4(6) and/or Regulation D
("REGULATION D") as promulgated by the United States Securities and
Exchange Commission (the "COMMISSION") under the 1933
Act.
NOW, THEREFORE
, in consideration of the mutual
covenants and other agreements contained in this Agreement the
Company and the Subscriber hereby agree as follows:
1.
SUBSCRIPTION FOR SECURITIES .
(a) Upon execution
and delivery of this Agreement, and subject to the terms and
conditions hereof, including the satisfaction of the conditions
described in subsection (b) below, the Company shall deliver the
original executed Note and the certificates for the Shares to the
Subscriber, each registered in the name of the Subscriber, against
receipt of an amount equal to one share of Series E Preferred Stock
for each Unit which the Subscriber is subscribing.
(b) Subscriber’s
obligation to purchase the Note and the Shares is subject to the
fulfillment (or written waiver by the Placement Agent) of each of
the following conditions:
(i) The representations and warranties of the
Company contained in this Agreement shall be true and correct on
and as of the date of such purchase;
(ii) The Company shall have performed and complied
with all covenants, conditions and agreements required by this
Agreement to be performed or complied with by them on or prior to
the date of such purchase;
(iii) There shall be in effect no injunction,
writ, preliminary restraining order or any order of any nature
directing that the transactions contemplated by this Agreement,
including without limitation the purchase of the Note and the
Shares, not be consummated as herein
provided.
2.
COMPANY REPRESENTATIONS, WARRANTIES AND COVENANTS . The
Company represents and warrants to and agrees with Subscriber that,
except as set forth in the Company's Form 10-K for the year ended
June 30, 2008 and all periodic reports filed with the Commission
thereafter (hereinafter referred to collectively as the "SEC
REPORTS"), including the Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended September 30, 2008 (the "FIRST QUARTER
2008 FORM 10-Q") or as set forth on the disclosure schedule dated
the date hereof delivered by the Company to the Subscriber (the
“DISCLOSURE SCHEDULE”):
(a) DUE
INCORPORATION . The Company and each of its Subsidiaries is a
corporation (or in the case of a Subsidiary the type of entity
described in the Disclosure Schedule) duly organized, validly
existing and in good standing under the laws of the jurisdiction of
its incorporation or organization and has the requisite corporate
or other power to own its properties and to carry on its business
as disclosed in the SEC Reports. The Company and each of its
Subsidiaries is duly qualified as a foreign corporation (or in the
case of a Subsidiary the type of entity described in the Disclosure
Schedule) to do business and is in good standing in each
jurisdiction where the nature of the business conducted or property
owned by it makes such qualification necessary, other than those
jurisdictions in which the failure to so qualify would not have a
Material Adverse Effect. For purpose of this Agreement, a "MATERIAL
ADVERSE EFFECT" shall mean a material adverse effect on the
financial condition, results of operations, properties or business
of the Company and its Subsidiaries taken as a whole. For purposes
of this Agreement, "SUBSIDIARY" means, with respect to any entity
at any date, any corporation, limited or general partnership,
limited liability company, trust, estate, association, joint
venture or other business entity) of which more than 50% of (i) the
outstanding capital stock having (in the absence of contingencies)
ordinary voting power to elect a majority of the board of directors
or other managing body of such entity, (ii) in the case of a
partnership or limited liability company, the interest in the
capital or profits of such partnership or limited liability company
or (iii) in the case of a trust, estate, association, joint venture
or other entity, the beneficial interest in such trust, estate,
association or other entity business is, at the time of
determination, owned or controlled directly or indirectly through
one or more intermediaries, by such entity. The Company’s
Subsidiaries are named in the SEC Reports.
(b)
AUTHORITY. 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.
(c) OUTSTANDING
SECURITIES. All of the issued and outstanding shares of the
Company’s Common Stock and Series A Convertible Preferred
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 and Series A Convertible Preferred 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.
(d) ENFORCEABILITY .
This Agreement, the Note, and any other agreements delivered
together with this Agreement or in connection herewith
(collectively "TRANSACTION DOCUMENTS") have been duly authorized,
executed and delivered by the Company and are valid and binding
agreements, enforceable against the Company in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights generally
and to general principles of equity regardless of whether
enforcement is sought in a court of law or equity). The Company has
full corporate power and authority necessary to enter into and
deliver the Transaction Documents and to perform its obligations
thereunder.
(e)
CONSENTS . No consent, approval, authorization, filing with
or notice to any person, entity or public authority, or order of
any court, governmental agency or body or arbitrator having
jurisdiction over the Company or any of its Subsidiaries, or the
Company's stockholders is required for the execution by the Company
of the Transaction Documents and compliance and performance by the
Company of its obligations under the Transaction Documents,
including, without limitation, the issuance and sale of the
Securities, other than filings required by Federal or state
securities laws, which filings have been or will be made by the
Company on a timely basis.
(f) NO
VIOLATION OR CONFLICT . Assuming the representations and
warranties of the Subscribers in Section 3 are true and correct,
neither the issuance and sale of the Securities nor the performance
of the Company's obligations under this Agreement and all other
agreements entered into by the Company relating thereto by the
Company will:
(i) violate, conflict with, result in a breach of,
or constitute a default (or an event which with the giving of
notice or the lapse of time or both would be reasonably likely to
constitute a default in any material respect) under (A) the
certificate of incorporation or bylaws of the Company, each as
amended as of the date hereof, (B) to the Company's knowledge, any
decree, judgment, order, law, treaty, rule, regulation or
determination applicable to the Company or any of its Subsidiaries
of any court, governmental agency or body, or arbitrator having
jurisdiction over the Company or such Subsidiary or over the
properties or assets of the Company or such Subsidiary, or (C) the
terms of any bond, debenture, note or any other evidence of
indebtedness, or any agreement, stock option or other similar plan,
indenture, lease, mortgage, deed of trust or other instrument to
which the Company or such Subsidiary is a party, or by which the
Company or such Subsidiary is bound, or to which any of
the properties of the Company or such Subsidiary is subject, except
the violation, conflict, breach, or default of which would not have
a Material Adverse Effect; or
(ii) result in the creation or imposition of any
lien, charge or encumbrance upon the Securities or any of the
assets of the Company or any of its Subsidiaries.
(g) THE
SECURITIES . The Securities upon issuance:
(i) will be free and clear of any security
interests, liens, claims or other encumbrances, subject to
restrictions upon transfer under the 1933 Act and any applicable
state securities laws;
(ii) have been duly and validly authorized and
duly and validly issued, and upon payment of the purchase price
specified in this Agreement the Shares will be fully paid and
non-assessable (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; provided Subscriber's
representations herein are true and accurate and Subscribers take
no actions or fail to take any actions required for their purchase
of the Securities to be in compliance with all applicable laws and
regulations; and
(iii) will
have been issued in reliance upon an exemption from the
registration requirements of and will not result in a violation of
Section 5 under the 1933 Act.
(h)
LITIGATION . There is no pending or, to the best knowledge
of the Company, threatened action, suit, proceeding or
investigation before any court, governmental agency or body, or
arbitrator having jurisdiction over the Company or any of its
Subsidiaries that would affect the execution by the Company or the
performance by the Company of its obligations under the Transaction
Documents. There is no pending or, to the knowledge of the Company,
threatened action, suit, proceeding or investigation before any
court, governmental agency or body, or arbitrator having
jurisdiction over the Company or any of its Subsidiaries, which
litigation if adversely determined would have a Material Adverse
Effect.
(i) REPORTING
COMPANY . The Company is a publicly-held company subject to
reporting obligations pursuant to Section 13 of the Securities
Exchange Act of 1934 (the "1934 ACT") and the Company’s
common stock is registered pursuant to Section 12(g) of the 1934
Act.
(j) INFORMATION
CONCERNING COMPANY . The SEC Reports contain all material
information relating to the Company and its operations and
financial condition as of their respective dates and all the
information required to be disclosed therein. Since the last day of
the fiscal year of the most recent audited financial statements
included in the SEC Reports ("LATEST FINANCIAL DATE"), there has
been no Material Adverse Event relating to the Company's business,
financial condition or affairs not disclosed in the SEC Reports.
The SEC Reports do not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in light
of the circumstances in which made. The Company has not provided to
the Subscribers any material non-public information.
(k) FINANCIAL
STATEMENTS. The consolidated financial statements of the
Company and its Subsidiaries included in the Reports (hereinafter
collectively, the “Financial Statements”), were
prepared in accordance with generally accepted accounting
principles consistently applied and present and reflect fairly the
financial position of the Company and its Subsidiaries 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 First Quarter 2008
Form 10-Q are subject to normal year-end adjustments and lack
footnotes and other presentation items. During the
period of HJ & Associates LLC’s engagement as the
Company’s independent certified public accountants, there has
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.
(l) NO
UNDISCLOSED LIABILITIES. Neither the Company nor any of its
Subsidiaries has any liabilities of any kind or nature, whether
accrued or contingent, matured or unmatured, known or unknown,
which are material, individually or in the aggregate, which are not
disclosed in the SEC Reports, other than those incurred in the
ordinary course of the Company's or such Subsidiary’s
businesses since the Latest Financial Date, and which, individually
or in the aggregate, would reasonably be expected to have a
Material Adverse Effect.
(m) NO UNDISCLOSED EVENTS
OR CIRCUMSTANCES. Since the Latest Financial Date, no event or
circumstance has occurred or exists with respect to the Company or
any of its Subsidiaries or their respective businesses, properties,
operations or financial condition, that, under applicable law, rule
or regulation, requires public disclosure or announcement prior to
the date hereof by the Company but which has not been so publicly
announced or disclosed in the SEC Reports.
(n)
DEFAULTS. Neither the Company nor any of its Subsidiaries is
in violation of its certificate of incorporation or bylaws. Neither
the Company nor any of its Subsidiaries is in default under or in
violation of 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 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 such Subsidiary
or would cause acceleration of any obligation of the Company or
such Subsidiary 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 or any of its Subsidiaries 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. The Company and its
Subsidiaries are (i) not subject to nor in default with respect to
any order of any court, arbitrator or governmental body or subject
to or party to any order of any court or governmental authority
arising out of any action, suit or proceeding under any statute or
other law respecting antitrust, monopoly, restraint of trade,
unfair competition or similar matters, or (ii) to the Company's
knowledge, not in violation of any statute, rule or regulation of
any governmental authority which violation would have a Material
Adverse Effect. 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 or such Subsidiary), pending or, to the best of the
Company's knowledge, threatened, against the Company or such
Subsidiary, at law or in equity or by or before any Federal, state,
county, municipal or other governmental department, the Commission,
the Financial Industry Regulatory Authority, 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.
(o)
INDEBTEDNESS TO AFFILIATES . Except as described in the SEC
Reports, the Company does not have any
indebtedness to any officer, director, 5% stockholder or other
Affiliate (as defined in Rule 405 of the Rules and Regulations of
the Commission under the 1933 Act) of the Company.
(p) COMPLIANCE
WITH LAWS. The Company and each of its
Subsidiaries 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. The Company and each of its Subsidiaries
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.
(q)
TRANSACTIONS WITH AFFILATED PARTIES. Except as set forth in
the SEC Reports, 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.
(r) ACCOUNTS
RECEIVABLE. The accounts receivable of the Company and each
Subsidiary 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 or any such Subsidiary not disclosed in
the SEC Reports.
(s) ACCOUNTS
PAYABLE. The accounts payable of the Company and each
Subsidiary 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 or such
Subsidiary.
(t) EMPLOYMENT
AND SEVERANCE AGREEMENTS. Except as set forth in the SEC
Reports, neither the Company nor any of its Subsidiaries has (i)
any written employment contracts or oral employment contracts not
terminable at will by the Company or such Subsidiary 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 such Subsidiary or the creation of any commitment or
obligation (absolute or contingent), of the Company to pay any
severance, termination, “golden parachute,” or similar
payment to any present or former personnel of the Company or such
Subsidiary 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.
(u) LABOR
AGREEMENTS AND EMPLOYEE RELATIONS. Neither the Company nor any
of its Subsidiaries is 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 or any of its Subsidiaries,
nor has the Company nor any of its Subsidiaries experienced in the
last five (5) years any work stoppage or other labor
difficulty. The Company and each of its Subsidiaries 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 neither the Company
nor any Subsidiary is 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 or any of its
Subsidiaries pending before the National Labor Relations Board or
any other governmental agency.
(v) ERISA AND
EMPLOYEE PLANS. Except as set forth in the SEC Reports, there
is no employee pension, retirement or other benefit plans,
maintained, contributed to or required to be contributed to by the
Company or any of its Subsidiaries covering any employee or former
employee of the Company or such Subsidiary. Neither the
Company nor any Subsidiary has any 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.
(w) TAXES. The Company
and each of its Subsidiaries 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 or any of its Subsidiaries in respect of taxes.
(x)
ENVIRONMENTAL LAWS. The Company and each of its Subsidiaries
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 and each of its Subsidiaries 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. Neither
the Company nor any of its Subsidiaries has 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 such Subsidiary 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.
(y)
INTELLECTUAL PROPERTY RIGHTS. The Company and each of its
Subsidiaries 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 and each of its Subsidiaries does not violate or infringe
upon the patent, copyright, trade secret or other proprietary
rights of any third party, and neither the Company nor any of its
Subsidiaries has received any notice of any claim of any such
violation or infringement.
(z)
PROPERTIES. The Company and each of its Subsidiaries has
good and marketable title to all of its material property and
assets and, except as set forth in the SEC Reports, none of such
property or assets of the Company or any such Subsidiary are
subject to any lien, mortgage, pledge, encumbrance or other
security interest.
(aa) NOT AN INTEGRATED
OFFERING. Neither the Company, nor any person acting on its
behalf, has knowingly, either directly or indirectly made any
offers or sales of any security or solicited any offers to buy any
secu
