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Exhibit 10.2

PLEDGE AND SECURITY AGREEMENT
 

THIS PLEDGE AND SECURITY AGREEMENT (as it may be amended, restated, supplemented
or otherwise modified from time to time, this “Security Agreement”) is entered
into as of August 7, 2019, by and among Franklin Covey Co., a Utah corporation
(“Borrower”), Franklin Development Corporation, a Utah corporation
(“Development”), Franklin Covey Travel, Inc., a Utah corporation (“Travel”),
Franklin Covey Client Sales, Inc., a Utah corporation (“Client Sales”), and any
additional entities which become parties to this Security Agreement by executing
a Security Agreement Supplement hereto in substantially the form of Annex I
hereto (such additional entities, together with Borrower, Development, Travel
and Client Sales, each a “Grantor”, and collectively, the “Grantors”), and
JPMorgan Chase Bank, N.A. (the “Lender”), on behalf of the Lender and the other
Secured Parties.
 
PRELIMINARY STATEMENT
 
The Grantors and the Lender are entering into a Credit Agreement dated as of the
date hereof (as it may be amended, restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”).  Each Grantor is entering into this
Security Agreement in order to induce the Lender to enter into and extend credit
to the Borrower under the Credit Agreement and to secure the Secured Obligations
that it has agreed to guarantee pursuant to Article IX of the Credit Agreement.
 
ACCORDINGLY, the Grantors and the Lender, on behalf of the Secured Parties,
hereby agree as follows:
 
ARTICLE I

DEFINITIONS
 
1.1            Terms Defined in Credit Agreement.  All capitalized terms used
herein and not otherwise defined shall have the meanings assigned to such terms
in the Credit Agreement.
 
1.2            Terms Defined in UCC.  Terms defined in the UCC which are not
otherwise defined in this Security Agreement are used herein as defined in the
UCC.
 
1.3            Definitions of Certain Terms Used Herein.  As used in this
Security Agreement, in addition to the terms defined in the first paragraph
hereof and in the Preliminary Statement, the following terms shall have the
following meanings:
 
“Accounts” shall have the meaning set forth in Article 9 of the UCC.
 
“Article” means a numbered article of this Security Agreement, unless another
document is specifically referenced.
 
“Chattel Paper” shall have the meaning set forth in Article 9 of the UCC.
 
“Collateral” shall have the meaning set forth in Article II.
 
“Collateral Access Agreement” means any landlord waiver or other agreement, in
form and substance satisfactory to the Lender, between the Lender and any third
party (including any bailee, consignee, customs broker, or other similar Person)
in possession of any Collateral or any landlord of any real property where any
Collateral is located, as such landlord waiver or other agreement may be
amended, restated, supplemented or otherwise modified from time to time.
 
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“Collateral Report” means any certificate (including any borrowing base
certificate), report or other document delivered by any Grantor to the Lender
with respect to the Collateral pursuant to any Loan Document.
 
“Commercial Tort Claims” means the commercial tort claims as defined in Article
9 of the UCC, including each commercial tort claim specifically described on
Exhibit I.
 
“Control” shall have the meaning set forth in Article 8 or, if applicable, in
Section 9-104, 9-105, 9-106 or 9-107 of Article 9 of the UCC.
 
“Copyrights” means, with respect to any Person, all of such Person’s right,
title, and interest in and to the following:  (a) all copyrights, rights and
interests in copyrights, works protectable by copyright, copyright
registrations, and copyright applications; (b) all renewals of any of the
foregoing; (c) all income, royalties, damages, and payments now or hereafter due
and/or payable under any of the foregoing, including, without limitation,
damages or payments for past or future infringements for any of the foregoing;
(d) the right to sue for past, present, and future infringements of any of the
foregoing; and (e) all rights corresponding to any of the foregoing throughout
the world.
 
“Copyright Security Agreement” means any Copyright Security Agreement among any
of the Grantors and the Lender, as the same may be amended, restated,
supplemented or otherwise modified from time to time.
 
“Default” means any event or condition which constitutes an Event of Default or
which upon notice, lapse of time or both would, unless cured or waived, become
an Event of Default.
 
“Deposit Account Control Agreement” means an agreement, in form and substance
satisfactory to the Lender, among any Loan Party, a banking institution holding
such Loan Party’s funds, and the Lender with respect to collection and control
of all deposits and balances held in a deposit account maintained by such Loan
Party with such banking institution.
 
“Deposit Accounts” shall have the meaning set forth in Article 9 of the UCC.
 
“Documents” shall have the meaning set forth in Article 9 of the UCC.
 
“Equipment” shall have the meaning set forth in Article 9 of the UCC.
 
“Event of Default” means an event described in Section 5.1.
 
“Excluded Account” means a Deposit Account or Securities Account (i)
constituting a withholding tax account (including any sales tax account) used
exclusively for such purposes and maintained for the benefit of unaffiliated
third parties, (ii) exclusively used for payroll, payroll taxes, workers’
compensation, and other employee wages and benefit payments to or for any
Grantor’s or its Subsidiaries’ employees, (iii) held by any Grantor solely in
connection with employee stock option plans, or in trust for any director,
officer or employee of any Grantor pursuant to any benefit plan maintained by
any Grantor (including any 401(k)), (iv) which is a zero-balance disbursement
account, (v) which is not otherwise subject to the other provisions of this
definition that does not hold, when combined with all other Deposit Accounts and
Securities Accounts not otherwise subject to the provisions of this definition,
more than $50,000 in the aggregate at any time and (vi) agreed to in writing by
Lender in its sole discretion.
 
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“Excluded Collateral” means (a) any of the outstanding Equity Interests in a
foreign subsidiary (i) in excess of 65% of the voting power of all classes of
Equity Interests of such foreign subsidiary entitled to vote in the election of
directors or other similar body of such foreign subsidiary, or (ii) to the
extent that the pledge thereof is prohibited by the laws of the jurisdiction of
such foreign subsidiary organization; (b) any lease, license, contract, property
rights or agreement to which a Grantor is a party or any of such Grantor’s
rights or interest thereunder, if, and for so long as and to the extent that,
the grant of the security interest would constitute or result in (A) the
abandonment, invalidation or unenforceability of any material right, title or
interest of such Grantor therein, or (B) a breach or termination pursuant to the
terms of, or a default under, any such lease, license, contract, property rights
or agreement, but only, with respect to the prohibitions in (A) and (B), to the
extent that, and for as long as, such prohibition is not terminated or rendered
unenforceable or otherwise deemed ineffective by the UCC or any other
requirement of law; (c) any application to register any Trademark prior to the
filing under applicable law of a verified statement of use (or the equivalent)
for such Trademark to the extent the creation of a security interest therein
would invalidate such Trademark; and (d) Excluded Accounts; provided, however,
that “Excluded Collateral” shall not include any proceeds, products,
substitutions or replacements of Excluded Collateral (unless such proceeds,
products, substitutions or replacements would otherwise constitute Excluded
Collateral).
 
“Exhibit” refers to a specific exhibit to this Security Agreement, unless
another document is specifically referenced.
 
“Fixtures” shall have the meaning set forth in Article 9 of the UCC.
 
“General Intangibles” shall have the meaning set forth in Article 9 of the UCC.
 
“Goods” shall have the meaning set forth in Article 9 of the UCC.
 
“Instruments” shall have the meaning set forth in Article 9 of the UCC.
 
“Intellectual Property Security Agreements” means, collectively, the Copyright
Security Agreement, Patent Security Agreement, and Trademark Security Agreement.
 
“Inventory” shall have the meaning set forth in Article 9 of the UCC.
 
“Investment Property” shall have the meaning set forth in Article 9 of the UCC.
 
“Letter-of-Credit Rights” shall have the meaning set forth in Article 9 of the
UCC.
 
“Licenses” means, with respect to any Person, all of such Person’s right, title,
and interest in and to (a) any and all licensing agreements or similar
arrangements in and to its Patents, Copyrights, or Trademarks, (b) all income,
royalties, damages, claims, and payments now or hereafter due or payable under
and with respect thereto, including, without limitation, damages and payments
for past and future breaches thereof, and (c) all rights to sue for past,
present, and future breaches thereof.
 
“Patents” means, with respect to any Person, all of such Person’s right, title,
and interest in and to:  (a) any and all patents and patent applications; (b)
all inventions and improvements described and claimed therein; (c) all reissues,
divisions, continuations, renewals, extensions, and continuations-in-part
thereof; (d) all income, royalties, damages, claims, and payments now or
hereafter due or payable under and with respect thereto, including, without
limitation, damages and payments for past and future infringements thereof; (e)
all rights to sue for past, present, and future infringements thereof; and (f)
all rights corresponding to any of the foregoing throughout the world.
 
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“Patent Security Agreement” means any Patent Security Agreement among any of the
Grantors and the Lender, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
 
“Pledged Collateral” means all Instruments, Securities and other Investment
Property of the Grantors, whether or not physically delivered to the Lender
pursuant to this Security Agreement.
 
“Receivables” means the Accounts, Chattel Paper, Documents, Investment Property,
Instruments and any other rights or claims to receive money which are General
Intangibles or which are otherwise included as Collateral.
 
“Section” means a numbered section of this Security Agreement, unless another
document is specifically referenced.
 
“Secured Parties” shall have the meaning set forth in the Credit Agreement.
 
“Security” shall have the meaning set forth in Article 8 of the UCC.
 
“Securities Account” shall have the meaning set forth in Article 9 of the UCC.
 
“Security Agreement Supplement” shall mean any Security Agreement Supplement to
this Security Agreement in substantially the form of Annex I hereto executed by
an entity that becomes a Grantor under this Security Agreement after the date
hereof.
 
 “Stock Rights” means all dividends, instruments or other distributions and any
other right or property which the Grantors shall receive or shall become
entitled to receive for any reason whatsoever with respect to, in substitution
for or in exchange for any Equity Interest constituting Collateral, any right to
receive an Equity Interest and any right to receive earnings, in which the
Grantors now have or hereafter acquire any right, issued by an issuer of such
Equity Interest.
 
“Supporting Obligations” shall have the meaning set forth in Article 9 of the
UCC.
 
“Trademarks” means, with respect to any Person, all of such Person’s right,
title, and interest in and to the following:  (a) all trademarks (including
service marks), trade names, trade dress, and trade styles and the registrations
and applications for registration thereof and the goodwill of the business
symbolized by the foregoing; (b) all licenses of the foregoing, whether as
licensee or licensor; (c) all renewals of the foregoing; (d) all income,
royalties, damages, and payments now or hereafter due or payable with respect
thereto, including, without limitation, damages, claims, and payments for past
and future infringements thereof; (e) all rights to sue for past, present, and
future infringements of the foregoing, including the right to settle suits
involving claims and demands for royalties owing; and (f) all rights
corresponding to any of the foregoing throughout the world.
 
“Trademark Security Agreement” means any Trademark Security Agreement among any
of the Grantors and the Lender, as the same may be amended, restated,
supplemented or otherwise modified from time to time.
 
“UCC” means the Uniform Commercial Code, as in effect from time to time, of the
State of Utah or of any other state the laws of which are required as a result
thereof to be applied in connection with the attachment, perfection or priority
of, or remedies with respect to, Lender’s Lien on any Collateral.
 
The foregoing definitions shall be equally applicable to both the singular and
plural forms of the defined terms.
 
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ARTICLE II

GRANT OF SECURITY INTEREST
 
Each Grantor hereby pledges, assigns and grants to the Lender, on behalf of and
for the benefit of the Secured Parties, a security interest in all of its right,
title and interest in, to and under all personal property and other assets,
whether now owned by or owing to, or hereafter acquired by or arising in favor
of such Grantor (including under any trade name or derivations thereof), and
whether owned or consigned by or to, or leased from or to, such Grantor, and
regardless of where located (all of which will be collectively referred to as
the “Collateral”), including:
 
(i)             all Accounts;
(ii)           all Chattel Paper;
(iii)         all Copyrights, Patents and Trademarks;
(iv)         all Documents;
(v)           all Equipment;
(vi)         all Fixtures;
(vii)       all General Intangibles;
(viii)     all Goods;
(ix)         all Instruments;
(x)           all Inventory;
(xi)         all Investment Property;
(xii)       all cash or cash equivalents;
(xiii)     all letters of credit, Letter-of-Credit Rights and Supporting
Obligations;
(xiv)     all Deposit Accounts with any bank or other financial institution;
(xv)       all Commercial Tort Claims; and

(xvi)
all accessions to, substitutions for and replacements, proceeds (including Stock
Rights), insurance proceeds and products of the foregoing, together with all
books and records, customer lists, credit files, computer files, programs,
printouts and other computer materials and records related thereto and any
General Intangibles at any time evidencing or relating to any of the foregoing;

to secure the prompt and complete payment and performance of the Secured
Obligations; provided that “Collateral” shall not include Excluded Collateral of
any Grantor; provided further, however, that if and when any property shall
cease to be Excluded Collateral, a Lien on and security in such property shall
be deemed granted therein. Each Grantor hereby represents and warrants that the
Excluded Collateral, when taken as a whole, is not material to the business
operations or financial condition of the Grantors taken as a whole.
 
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ARTICLE III

REPRESENTATIONS AND WARRANTIES
 
Each Grantor represents and warrants, as to itself as of the Closing Date, and
each Grantor that becomes a party to this Security Agreement pursuant to the
execution of a Security Agreement Supplement represents and warrants (after
giving effect to supplements, if any, to each of the Exhibits hereto with
respect to such Grantor as attached to such Security Agreement Supplement), to
the Lender and the Secured Parties that:
 
3.1            Title, Authorization, Validity, Enforceability, Perfection and
Priority.  Such Grantor has good and valid rights in or the power to transfer
the Collateral and title to the Collateral with respect to which it has
purported to grant a security interest hereunder, free and clear of all Liens
except for Liens permitted under Section 4.1(e), and has full power and
authority to grant to the Lender the security interest in the Collateral
pursuant hereto.  The execution and delivery by such Grantor of this Security
Agreement has been duly authorized by proper corporate proceedings of such
Grantor, and this Security Agreement constitutes a legal valid and binding
obligation of such Grantor and creates a security interest which is enforceable
against such Grantor in all Collateral it now owns or hereafter acquires,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors’ rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.  When financing statements have been filed in the appropriate offices
against such Grantor in the locations listed on Exhibit H, the Lender will have
a fully perfected first priority security interest in that Collateral of such
Grantor in which a security interest may be perfected by filing a financing
statement, subject only to Liens permitted under Section 4.1(e).
 
3.2            Type and Jurisdiction of Organization, Organizational and
Identification Numbers.  The type of entity of such Grantor, its state of
organization, the organizational number issued to it by its state of
organization and its federal employer identification number are set forth on
Exhibit A.
 
3.3            Principal Location.  Such Grantor’s mailing address, which shall
be its address for notices and other communications provided for herein and the
location of its place of business (if it has only one) or its chief executive
office (if it has more than one place of business), is disclosed in Exhibit A;
such Grantor has no other places of business except those set forth in
Exhibit A.
 
3.4            Collateral Locations.  All of such Grantor’s locations where
Collateral is located are listed on Exhibit A.  All of said locations are owned
by such Grantor except for locations (i) which are leased by the Grantor as
lessee and designated in Part VII(b) of Exhibit A and (ii) at which Inventory is
held in a public warehouse or is otherwise held by a bailee or on consignment as
designated in Part VII(c) of Exhibit A.
 
3.5            Deposit Accounts.  All of such Grantor’s Deposit Accounts,
including those which are designated by such Grantor as Excluded Accounts, are
listed on Exhibit B.
 
3.6            Exact Names.  Such Grantor’s name in which it has executed this
Security Agreement is the exact name as it appears in such Grantor’s
organizational documents, as amended, as filed with such Grantor’s jurisdiction
of organization.  Such Grantor has not, during the past five years, been known
by or used any other corporate or fictitious name, or been a party to any merger
or consolidation, or been a party to any acquisition.
 
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3.7            Letter-of-Credit Rights and Chattel Paper.  Exhibit C lists all
Letter-of-Credit Rights and Chattel Paper, in each case, with a face amount in
excess of $100,000, of such Grantor.  All action by such Grantor necessary or
desirable to protect and perfect the Lender’s Lien on each item listed on
Exhibit C (including the delivery of all originals and the placement of a legend
on all Chattel Paper as required hereunder) has been duly taken.  The Lender
will have a fully perfected first priority security interest in the Collateral
listed on Exhibit C, subject only to Liens permitted under Section 4.1(e).
 
3.8            Accounts and Chattel Paper.
 
(a)            The names of the obligors, amounts owing, due dates and other
information with respect to its Accounts and Chattel Paper are and will be
correctly stated in all material respects in all records of such Grantor
relating thereto and in all invoices and Collateral Reports with respect thereto
furnished to the Lender by such Grantor from time to time.  As of the time when
each Account or each item of Chattel Paper arises, such Grantor shall be deemed
to have represented and warranted that such Account or Chattel Paper, as the
case may be, and all records relating thereto, are genuine and in all respects
what they purport to be.
 
(b)            With respect to its Accounts, except as disclosed on the most
recent Collateral Report, (i) all Accounts represent bona fide sales of
Inventory or rendering of services to Account Debtors in the ordinary course of
such Grantor’s business and are not evidenced by a judgment, Instrument or
Chattel Paper; (ii) to such Grantor’s knowledge, there are no setoffs, claims or
disputes existing or asserted with respect thereto and such Grantor has not made
any agreement with any Account Debtor for any extension of time for the payment
thereof, any compromise or settlement for less than the full amount thereof, any
release of any Account Debtor from liability therefor, or any deduction
therefrom except a discount or allowance allowed by such Grantor in the ordinary
course of its business for prompt payment and disclosed to the Lender; (iii) to
such Grantor’s knowledge, there are no facts, events or occurrences which in any
way impair the validity or enforceability thereof or could reasonably be
expected to reduce the amount payable thereunder as shown on such Grantor’s
books and records and any invoices, statements and Collateral Reports with
respect thereto; (iv) such Grantor has not received any notice of proceedings or
actions which are threatened or pending against any Account Debtor which might
result in any adverse change in such Account Debtor’s financial condition; and
(v) such Grantor has no knowledge that any Account Debtor has become insolvent
or is generally unable to pay its debts as they become due.
 
(c)            In addition, with respect to all of its Accounts, (i) the amounts
shown on all Collateral Reports, invoices and statements with respect thereto
are actually and absolutely owing to such Grantor as indicated thereon and are
not in any way contingent, and (ii) to such Grantor’s knowledge, all Account
Debtors have the capacity to contract.
 
3.9            Inventory.  With respect to any of its Inventory scheduled or
listed on the most recent Collateral Report, (a) such Inventory (other than
Inventory in transit) is located at one of such Grantor’s locations set forth on
Exhibit A, (b) no Inventory (other than Inventory in transit) is now, or shall
at any time or times hereafter be stored at any other location except as
permitted by Section 4.1(g), (c) such Grantor has good, indefeasible and
merchantable title to such Inventory and such Inventory is not subject to any
Lien or security interest or document whatsoever except for the security
interest granted to the Lender hereunder, for the benefit of the Lender and the
Secured Parties, and Permitted Encumbrances, (d) except as may be disclosed in
the most recent Collateral Report, to such Grantor’s knowledge, such Inventory
is of good and merchantable quality, free from any defects, (e) such Inventory
is not subject to any licensing, patent, royalty, trademark, trade name or
copyright agreements with any third parties which would require any consent of
any third party upon sale or disposition of that Inventory or the payment of any
monies to any third party upon such sale or other disposition, except as such
agreements are set forth on Exhibit D or Inventory which, in the aggregate, if
such consents are not received, would not have a material adverse effect on such
Grantor’s business, (f) to such Grantor’s knowledge, such Inventory has been
produced in accordance with the Federal Fair Labor Standards Act of 1938, as
amended, and all rules, regulations and orders thereunder, and (g) the
completion of manufacture, sale or other disposition of such Inventory by the
Lender following an Event of Default shall not require the consent of any Person
and shall not constitute a breach or default under any contract or agreement to
which such Grantor is a party or to which such property is subject.
 
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3.10            Intellectual Property.  To each Grantor’s knowledge, such
Grantor does not have any interest in, or title to, any Patent, Trademark or
Copyright except as set forth in Exhibit D.  This Security Agreement is
effective to create a valid and continuing Lien and, upon filing of appropriate
financing statements in the offices listed on Exhibit H and Intellectual
Property Security Agreements with the United States Copyright Office and the
United States Patent and Trademark Office, as applicable, fully perfected first
priority security interests in favor of the Lender on such Grantor’s Patents,
Trademarks and Copyrights, such perfected security interests are enforceable as
such as against any and all creditors of and purchasers from such Grantor; and
all action necessary or desirable to protect and perfect the Lender’s Lien on
such Grantor’s Patents, Trademarks or Copyrights shall have been duly taken.
 
3.11            Filing Requirements.  None of its Equipment is covered by any
certificate of title, except for the vehicles described in Part I of Exhibit E. 
None of the Collateral owned by it is of a type for which security interests or
liens may be perfected by filing under any federal statute except for (a) the
vehicles described in Part II of Exhibit E and (b) Patents, Trademarks and
Copyrights held by such Grantor and described in Exhibit D.  The legal
description, county and street address of each property on which any Fixtures
are located is set forth in Exhibit F together with the name and address of the
record owner of each such property.
 
3.12            No Financing Statements, Security Agreements.  No financing
statement or security agreement describing all or any portion of the Collateral
which has not lapsed or been terminated (by a filing authorized by the secured
party in respect thereof) naming such Grantor as debtor has been filed or is of
record in the State of Utah, or, to the knowledge of such Grantor, in any other
jurisdiction, except for financing statements or security agreements (a) naming
the Lender as the secured party and (b) in respect to other Liens permitted
under Section 6.02 of the Credit Agreement.
 
3.13            Pledged Collateral.
 
(a)            Exhibit G sets forth a complete and accurate list of all of the
Pledged Collateral owned by such Grantor.  Such Grantor is the direct, sole
beneficial owner and sole holder of record of the Pledged Collateral listed on
Exhibit G as being owned by it, free and clear of any Liens, except for the
security interest granted to the Lender hereunder and Permitted Encumbrances. 
Such Grantor further represents and warrants that (i) all Pledged Collateral
owned by it constituting an Equity Interest has been (to the extent such
concepts are relevant with respect to such Pledged Collateral) duly authorized,
validly issued, are fully paid and non assessable, (ii) with respect to any
certificates delivered to the Lender representing an Equity Interest, either
such certificates are Securities as defined in Article 8 of the UCC as a result
of actions by the issuer or otherwise, or, if such certificates are not
Securities, such Grantor has so informed the Lender so that the Lender may take
steps to perfect its security interest therein as a General Intangible, (iii)
all such Pledged Collateral held by a securities intermediary is covered by a
control agreement among such Grantor, the securities intermediary and the Lender
pursuant to which the Lender has Control and (iv) all Pledged Collateral which
represents Indebtedness owed to such Grantor has been duly authorized,
authenticated or issued and delivered by the issuer of such Indebtedness, is the
legal, valid and binding obligation of such issuer and such issuer is not in
default thereunder.
 
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(b)            In addition, (i) none of the Pledged Collateral owned by it has
been issued or transferred in violation of the securities registration,
securities disclosure or similar laws of any jurisdiction to which such issuance
or transfer may be subject, (ii) no options, warrants, calls or commitments of
any character whatsoever (A) exist relating to such Pledged Collateral or (B)
obligate the issuer of any Equity Interest included in the Pledged Collateral to
issue additional Equity Interests, and (iii) no consent, approval,
authorization, or other action by, and no giving of notice, filing with, any
governmental authority or any other Person is required for the pledge by such
Grantor of such Pledged Collateral pursuant to this Security Agreement or for
the execution, delivery and performance of this Security Agreement by such
Grantor, or for the exercise by the Lender of the voting or other rights
provided for in this Security Agreement or for the remedies in respect of the
Pledged Collateral pursuant to this Security Agreement, except as may be
required in connection with such disposition by laws affecting the offering and
sale of securities generally.
 
(c)            Except as set forth in Exhibit G, such Grantor owns 100% of the
issued and outstanding  Equity Interests which constitute Pledged Collateral
owned by it and none of the Pledged Collateral which represents Indebtedness
owed to such Grantor is subordinated in right of payment to other Indebtedness
or subject to the terms of an indenture.
 
ARTICLE IV

COVENANTS
 
From the date of this Security Agreement and thereafter until this Security
Agreement is terminated pursuant to the terms hereof, each Grantor party hereto
as of the date hereof agrees, and from and after the effective date of any
Security Agreement Supplement applicable to any Grantor (and after giving effect
to supplements, if any, to each of the Exhibits hereto with respect to such
subsequent Grantor as attached to such Security Agreement Supplement) and
thereafter until this Security Agreement is terminated pursuant to the terms
hereof, each such additional Grantor agrees that:
 
4.1            General.
 
(a)            Collateral Records.  Such Grantor will maintain complete and
accurate books and records with respect to the Collateral owned by it, and
furnish to the Lender such reports relating to such Collateral as the Lender
shall from time to time reasonably request.
 
(b)            Authorization to File Financing Statements; Ratification.  Such
Grantor hereby authorizes the Lender to file, and if requested will deliver to
the Lender, all financing statements and other documents and take such other
actions as may from time to time be reasonably requested by the Lender in order
to maintain a first perfected security interest in and, if applicable, Control
of, the Collateral owned by such Grantor.  Any financing statement filed by the
Lender may be filed in any filing office in any UCC jurisdiction and may (i)
indicate such Grantor’s Collateral (1) as all assets of the Grantor or words of
similar effect, regardless of whether any particular asset comprised in the
Collateral falls within the scope of Article 9 of the UCC of such jurisdiction,
or (2) by any other description which reasonably approximates the description
contained in this Security Agreement, and (ii) contain any other information
required by part 5 of Article 9 of the UCC for the sufficiency or filing office
acceptance of any financing statement or amendment, including (A) whether such
Grantor is an organization, the type of organization and any organization
identification number issued to such Grantor, and (B) in the case of a financing
statement filed as a fixture filing or indicating such Grantor’s Collateral as
as-extracted collateral or timber to be cut, a sufficient description of real
property to which the Collateral relates.  Such Grantor also agrees to furnish
any such information described in the foregoing sentence to the Lender promptly
upon request.  Such Grantor also ratifies its authorization for the Lender to
have filed in any UCC jurisdiction any initial financing statements or
amendments thereto if filed prior to the date hereof.
 
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(c)            Further Assurances.  Such Grantor will, if so requested by the
Lender, furnish to the Lender, as often as the Lender reasonably requests,
statements and schedules further identifying and describing the Collateral owned
by it and such other reports and information in connection with its Collateral
as the Lender may reasonably request, all in such detail as the Lender may
specify.  Such Grantor also agrees to take any and all actions reasonably
necessary to defend title to the Collateral against all persons and to defend
the security interest of the Lender in its Collateral and the priority thereof
against any Lien not expressly permitted hereunder.
 
(d)            Disposition of Collateral.  Such Grantor will not sell, lease or
otherwise dispose of the Collateral except for dispositions specifically
permitted pursuant to Section 6.05 of the Credit Agreement.
 
(e)            Liens.  Such Grantor will not create, incur, or suffer to exist
any Lien on the Collateral except (i) the security interest created by this
Security Agreement, and (ii) other Liens permitted under Section 6.02 of the
Credit Agreement.
 
(f)            Other Financing Statements.  Such Grantor will not authorize the
filing of any financing statement naming it as debtor covering all or any
portion of the Collateral owned by it, except for financing statements (i)
naming the Lender as the secured party, and (ii) in respect to other Liens
permitted under Section 6.02 of the Credit Agreement.  Such Grantor acknowledges
that it is not authorized to file any financing statement or amendment or
termination statement with respect to any financing statement without the prior
written consent of the Lender, which consent shall not be unreasonably withheld
or delayed, subject to such Grantor’s rights under Section 9-509(d)(2) of the
UCC.
 
(g)            Locations.  Such Grantor will not (i) maintain any Collateral
owned by it at any location other than those locations listed on Exhibit A or
disclosed to Lender pursuant to clause (ii) of this Section, (ii) otherwise
change, or add to, such locations without the Lender’s prior written consent as
required by the Credit Agreement (and if the Lender gives such consent, such
Grantor will concurrently therewith obtain a Collateral Access Agreement for
each such location to the extent required by the Credit Agreement), or (iii)
change its principal place of business or chief executive office from the
location identified on Exhibit A, other than as permitted by the Credit
Agreement.
 
(h)            Compliance with Terms.  Such Grantor will perform and comply with
all obligations in respect of the Collateral owned by it and all agreements to
which it is a party or by which it is bound relating to such Collateral.
 
4.2            Receivables.
 
(a)            Certain Agreements on Receivables.  Such Grantor will not make or
agree to make any discount, credit, rebate or other reduction in the original
amount owing on a Receivable or accept in satisfaction of a Receivable less than
the original amount thereof, except that, prior to the occurrence of an Event of
Default, such Grantor may reduce the amount of Accounts arising from the sale of
Inventory in accordance with its present policies and in the ordinary course of
business.
 
(b)            Collection of Receivables.  Except as otherwise provided in this
Security Agreement, such Grantor will collect and enforce, at such Grantor’s
sole expense, all amounts due or hereafter due to such Grantor under the
Receivables owned by it.
 
(c)            Delivery of Invoices.  Such Grantor will deliver to the Lender
immediately upon its request after the occurrence and during the continuation of
an Event of Default duplicate invoices with respect to each Account owned by it
bearing such language of assignment as the Lender shall specify.
 
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(d)            Disclosure of Counterclaims on Receivables.  If (i) any material
discount, credit or agreement to make a rebate or to otherwise reduce the amount
owing on any Receivable owned by such Grantor exists or (ii) if, to the
knowledge of such Grantor, any material dispute, setoff, claim, counterclaim or
defense exists or has been asserted or threatened with respect to any such
Receivable, such Grantor will promptly disclose such fact to the Lender in
writing.
 
(e)            Electronic Chattel Paper.  Such Grantor shall take all steps
necessary to grant the Lender Control of all electronic chattel paper in
accordance with the UCC and all “transferable records” as defined in each of the
Uniform Electronic Transactions Act and the Electronic Signatures in Global and
National Commerce Act.
 
4.3            Inventory and Equipment.
 
(a)            Maintenance of Goods.  Such Grantor will do all things reasonably
necessary to maintain, preserve, protect and keep its Inventory and the
Equipment in good repair and working and saleable condition, except for damaged
or defective goods arising in the ordinary course of such Grantor’s business and
except for ordinary wear and tear in respect of the Equipment.
 
(b)            Returned Inventory.  In the event any Account Debtor returns
Inventory to such Grantor when an Event of Default exists, such Grantor, upon
the request of the Lender, shall: (i) hold the returned Inventory in trust for
the Lender; (ii) segregate all returned Inventory from all of its other
property; (iii) dispose of the returned Inventory solely according to the
Lender’s written instructions; and (iv) not issue any credits or allowances with
respect thereto without the Lender’s prior written consent.  All returned
Inventory shall be subject to the Lender’s Liens thereon.
 
(c)            Equipment.  Such Grantor shall not permit any Equipment with a
fair market value in excess of $300,000 in the aggregate to become a fixture
with respect to real property or to become an accession with respect to other
personal property with respect to which real or personal property the Lender
does not have a Lien.  Such Grantor will not, without the Lender’s prior written
consent, alter or remove any identifying symbol or number on any of such
Grantor’s Equipment constituting Collateral.
 
4.4            Delivery of Instruments, Securities, Chattel Paper and
Documents.  Such Grantor will (a) deliver to the Lender promptly upon execution
of this Security Agreement the originals of all Chattel Paper, Securities and
Instruments constituting Collateral owned by it (if any then exist), (b) hold in
trust for the Lender upon receipt and promptly thereafter deliver to the Lender
any Chattel Paper, Securities and Instruments constituting Collateral, (c) upon
the Lender’s request, deliver to the Lender (and thereafter hold in trust for
the Lender upon receipt and promptly deliver to the Lender) any Document
evidencing or constituting Collateral.
 
4.5            Uncertificated Pledged Collateral; Control of Pledged
Collateral.  Such Grantor will permit the Lender from time to time, upon the
Lender’s request, to cause the appropriate issuers (and, if held with a
securities intermediary, such securities intermediary) of uncertificated
securities or other types of Pledged Collateral owned by it not represented by
certificates to mark their books and records with the numbers and face amounts
of all such uncertificated securities or other types of Pledged Collateral not
represented by certificates and all rollovers and replacements therefor to
reflect the Lien of the Lender granted pursuant to this Security Agreement. 
Such Grantor will, upon the Lender’s request, (a) with respect to any
uncertificated securities which are Pledged Collateral, use commercially
reasonable efforts to take such actions which are necessary to cause the issuers
of such uncertificated securities to cause the Lender to have and retain Control
over such uncertificated securities, and (b) with respect to any Pledged
Collateral held with a securities intermediary, cause such securities
intermediary to enter into a control agreement with the Lender, in form and
substance satisfactory to the Lender, giving the Lender Control.
 
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4.6            Pledged Collateral.
 
(a)            Changes in Capital Structure of Issuers.  Such Grantor will not
(i) permit or suffer any issuer of an Equity Interest constituting Pledged
Collateral owned by it to dissolve, merge, liquidate, retire any of its Equity
Interests or other Instruments or Securities evidencing ownership, reduce its
capital, sell or encumber all or substantially all of its assets (except for
Permitted Encumbrances and sales of assets permitted pursuant to Section 4.1(d))
or merge or consolidate with any other entity, or (ii) vote any such Pledged
Collateral in favor of any of the foregoing.
 
(b)            Issuance of Additional Securities.  Such Grantor will not permit
or suffer the issuer of an Equity Interest constituting Pledged Collateral owned
by it to issue additional Equity Interests, any right to receive the same or any
right to receive earnings, except to such Grantor.
 
(c)            Registration of Pledged Collateral.  Such Grantor will permit any
registerable Pledged Collateral to be registered in the name of the Lender or
its nominee at any time at the option of the Lender.
 
(d)            Exercise of Rights in Pledged Collateral.
 
(i)

 
Without in any way limiting the foregoing and subject to clause (ii) below, such
Grantor shall have the right to exercise all voting rights or other rights
relating to the Pledged Collateral owned by it for all purposes not inconsistent
with this Security Agreement, the Credit Agreement or any other Loan Document;
provided however, that no vote or other right shall be exercised or action taken
which would have the effect of impairing the rights of the Lender in respect of
such Pledged Collateral.

(ii)
 
Such Grantor will permit the Lender or its nominee at any time after the
occurrence of an Event of Default, without notice, to exercise all voting rights
or other rights relating to the Pledged Collateral owned by it, including,
without limitation, exchange, subscription or any other rights, privileges, or
options pertaining to any Equity Interest or Investment Property constituting
Pledged Collateral as if it were the absolute owner thereof.

(iii)
 
Such Grantor shall be entitled to collect and receive for its own use all cash
dividends and interest paid in respect of the Pledged Collateral owned by it to
the extent not in violation of the Credit Agreement other than any of the
following distributions and payments (collectively referred to as the “Excluded
Payments”): (A) dividends and interest paid or payable other than in cash in
respect of such Pledged Collateral, and instruments and other property received,
receivable or otherwise distributed in respect of, or in exchange for, any
Pledged Collateral;  (B) dividends and other distributions paid or payable in
cash in respect of such Pledged Collateral in connection with a partial or total
liquidation or dissolution or in connection with a reduction of capital, capital
surplus or paid-in capital of an issuer; and (C) cash paid, payable or otherwise
distributed, in respect of principal of, or in redemption of, or in exchange
for, such Pledged Collateral; provided however, that until actually paid, all
rights to such distributions shall remain subject to the Lien created by this
Security Agreement; and

(iv)
 
All Excluded Payments and all other distributions in respect of any of the
Pledged Collateral owned by such Grantor, whenever paid or made, shall be
delivered to the Lender to hold as Pledged Collateral and shall, if received by
such Grantor, be received in trust for the benefit of the Lender, be segregated
from the other property or funds of such Grantor, and be forthwith delivered to
the Lender as Pledged Collateral in the same form as so received (with any
necessary endorsement).

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(e)            Interests in Limited Liability Companies and Limited
Partnerships.  Each Grantor agrees that no ownership interests in a limited
liability company or a limited partnership which are included within the
Collateral owned by such Grantor shall at any time constitute a Security under
Article 8 of the UCC of the applicable jurisdiction.
 
4.7            Intellectual Property.
 
(a)            Such Grantor will use its best efforts to secure all consents and
approvals necessary or appropriate for the assignment to or benefit of the
Lender of any License material to such Grantor’s business held by such Grantor
and to enforce the security interests granted hereunder.
 
(b)            Such Grantor shall notify the Lender promptly if it knows or has
reason to know that any application or registration relating to any Patent,
Trademark or Copyright that such Grantor makes use of at such time (now or
hereafter existing) may become abandoned or dedicated, or of any adverse
determination or development (including the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any court) regarding
such Grantor’s ownership of any Patent, Trademark or Copyright, its right to
register the same, or to keep and maintain the same.
 
(c)            In accordance with Section 5.01(d) of the Credit Agreement, such
Grantor shall deliver, concurrently with the delivery of the annual financial
statements pursuant to Section 5.01(a) of the Credit Agreement, a complete list
of all Patent and Trademark registrations received and applications filed by
such Grantor with the United States Patent and Trademark Office and all
Copyright registrations received and applications filed by such Grantor with the
United States Copyright Office during the prior fiscal year together with all
other Patents, Trademarks and Copyrights otherwise acquired during the prior
fiscal year, and, upon request of the Lender, such Grantor shall, except with
respect to Excluded Collateral, execute and deliver any and all security
agreements as the Lender may request to evidence the Lender’s first priority
security interest on such Patent, Trademark or Copyright, and the General
Intangibles of such Grantor relating thereto or represented thereby, including
any Intellectual Property Security Agreement or supplements thereto.
 
(d)            Such Grantor shall take all actions necessary or requested by the
Lender to maintain and pursue each application, to obtain the relevant
registration and to maintain the registration of each of its Patents, Trademarks
and Copyrights (now or hereafter existing), including the filing of applications
for renewal, affidavits of use, affidavits of noncontestability and opposition
and interference and cancellation proceedings, unless such Grantor shall
reasonably determine that such Patent, Trademark or Copyright is not material to
the conduct of such Grantor’s business.  For each of the Copyrights listed on
Exhibit D attached hereto which are not currently held in the name of a Grantor,
the Grantors shall, within one hundred twenty (120) days after the date hereof,
take all actions necessary to cause the records of the United States Copyright
Office to reflect the name of a Grantor as the copyright claimant for each of
such Copyrights.
 
(e)            Such Grantor shall, unless it shall reasonably determine that
such Patent, Trademark or Copyright is in no way material to the conduct of its
business or operations, promptly sue for infringement, misappropriation or
dilution and to recover any and all damages for such infringement,
misappropriation or dilution, and shall take such other actions as the Lender
shall deem appropriate under the circumstances to protect such Patent, Trademark
or Copyright.  In the event that such Grantor institutes suit because any of its
Patents, Trademarks or Copyrights constituting Collateral is infringed upon, or
misappropriated or diluted by a third party, such Grantor shall comply with
Section 4.8.
 
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4.8            Commercial Tort Claims.  Such Grantor shall promptly, and in any
event within two (2) Business Days after the same is acquired by it, notify the
Lender of any commercial tort claim (as defined in the UCC) acquired by it and,
unless the Lender otherwise consents, such Grantor shall enter into an amendment
to this Security Agreement, in the form of Exhibit J hereto, granting to Lender
a first priority security interest in such commercial tort claim.
 
4.9            Letter-of-Credit Rights.  If such Grantor is or becomes the
beneficiary of a letter of credit with a face value in excess of $100,000, it
shall promptly, and in any event within two (2) Business Days after becoming a
beneficiary, notify the Lender thereof and cause the issuer and/or confirmation
bank to (i) consent to the assignment of any Letter-of-Credit Rights to the
Lender and (ii) agree to direct all payments thereunder to a Deposit Account at
the Lender or subject to a Deposit Account Control Agreement for application to
the Secured Obligations, in accordance with Section 4.01(i) of the Credit
Agreement, all in form and substance reasonably satisfactory to the Lender.
 
4.10            Federal, State or Municipal Claims.  Such Grantor will promptly
notify the Lender of any Collateral which constitutes a claim against the United
States government or any state or local government or any instrumentality or
agency thereof, the assignment of which claim is restricted by federal, state or
municipal law.
 
4.11            No Interference.  Such Grantor agrees that it will not interfere
with any right, power and remedy of the Lender provided for in this Security
Agreement or now or hereafter existing at law or in equity or by statute or
otherwise, or the exercise or beginning of the exercise by the Lender of any one
or more of such rights, powers or remedies.
 
4.12            Insurance.
 
(a)            In the event any Collateral is located in any area that has been
designated by the Federal Emergency Management Agency as a “Special Flood Hazard
Area”, such Grantor shall purchase and maintain flood insurance on such
Collateral (including any personal property which is located on any real
property leased by such Loan Party within a “Special Flood Hazard Area”).  The
amount of flood insurance required by this Section shall at a minimum comply
with applicable law, including the Flood Disaster Protection Act of 1973, as
amended.
 
(b)            All insurance policies required hereunder and under Section 5.10
of the Credit Agreement shall name the Lender as an additional insured or as
lender’s loss payee, as applicable, and shall contain lender loss payable
clauses or mortgagee clauses, through endorsements in form and substance
satisfactory to the Lender, which provide that: (i) all proceeds thereunder with
respect to any Collateral shall be payable to the Lender; (ii) no such insurance
shall be affected by any act or neglect of the insured or owner of the property
described in such policy; and (iii) such policy and lender loss payable or
mortgagee clauses may be canceled, amended, or terminated only upon at least
thirty (30) days’ prior written notice given to the Lender.
 
(c)            All premiums on any such insurance shall be paid when due by such
Grantor, and, upon request from the Lender, copies of the policies delivered to
the Lender.  If such Grantor fails to obtain or maintain any insurance as
required by this Section, the Lender may obtain such insurance at the Borrower’s
expense.  By purchasing such insurance, the Lender shall not be deemed to have
waived any Default arising from the Grantor’s failure to maintain such insurance
or pay any premiums therefor.
 
4.13            Collateral Access Agreements.  If required by the Lender,
Grantor shall use commercially reasonable efforts to obtain a Collateral Access
Agreement from the lessor of each leased property, mortgagee of owned property
or bailee or consignee with respect to any warehouse, processor or converter
facility or other location where Collateral is stored or located, which
agreement or letter shall provide access rights, contain a waiver or
subordination of all Liens or claims that the landlord, mortgagee, bailee or
consignee may assert against the Collateral at that location, and shall
otherwise be reasonably satisfactory in form and substance to the Lender.
 
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4.14            Deposit Account Control Agreements.  Such Grantor will provide
to the Lender upon the Lender’s request, a Deposit Account Control Agreement
duly executed on behalf of each financial institution holding a Deposit Account
of such Grantor that is not an Excluded Account as set forth in this Security
Agreement.
 
4.15            Perfection of Vehicles and Other Titled Property.  If required
by Lender, upon the occurrence of an Event of Default, such Grantor shall note
the Lender’s Lien on the certificate of title of any vehicle or other property
covered by any certificate of title and take such other actions as necessary to
perfect the Lender’s Lien on such Collateral.
 
4.16            Change of Name or Location; Change of Fiscal Year.  Such Grantor
shall not (a) change its name as it appears in official filings in the state of
its incorporation or organization, (b) change its chief executive office,
principal place of business, mailing address, corporate offices or warehouses or
locations at which Collateral is held or stored, or the location of its records
concerning the Collateral as set forth in this Security Agreement, (c) change
the type of entity that it is, (d) change its organization identification
number, if any, issued by its state of incorporation or other organization, or
(e) change its state of incorporation or organization, in each case, unless the
Lender shall have received at least thirty (30) days’ prior written notice of
such change, provided that, any new location shall be in the continental U.S. 
Such Grantor shall not change its fiscal year, which currently ends on August
31, unless such Grantor shall have given the Lender at least 60 days’ written
notice of such change.
 
ARTICLE V

EVENTS OF DEFAULT AND REMEDIES
 
5.1            Events of Default.  The occurrence of any one or more of the
following events shall constitute an Event of Default hereunder:
 
(a)            Any representation or warranty made by or on behalf of any
Grantor under or in connection with this Security Agreement shall be materially
false as of the date on which made.
 
(b)            Any Grantor shall fail to observe or perform any of the terms or
provisions of Article IV.
 
(c)            Any Grantor shall fail to observe or perform any of the terms or
provisions of this Security Agreement (other than a breach which constitutes an
Event of Default under any other Section of this Article V), and such failure
shall continue unremedied for a period of ten (10) days after the earlier of
knowledge of such breach or notice thereof from the Lender.
 
(d)            The occurrence of any “Event of Default” under, and as defined
in, the Credit Agreement.
 
(e)            Any Equity Interest which is included within the Collateral shall
at any time constitute a Security or the issuer of any such Equity Interest
shall take any action to have such interests treated as a Security unless (i)
all certificates or other documents constituting such Security have been
delivered to the Lender and such Security is properly defined as such under
Article 8 of the UCC of the applicable jurisdiction, whether as a result of
actions by the issuer thereof or otherwise, or (ii) the Lender has entered into
a control agreement with the issuer of such Security or with a securities
intermediary relating to such Security and such Security is defined as such
under Article 8 of the UCC of the applicable jurisdiction, whether as a result
of actions by the issuer thereof or otherwise.
 
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5.2            Remedies.
 
(a)            Upon the occurrence of an Event of Default, the Lender may
exercise any or all of the following rights and remedies:
 
(i)
 
those rights and remedies provided in this Security Agreement, the Credit
Agreement, or any other Loan Document; provided that, this Section 5.2(a) shall
not be understood to limit any rights or remedies available to the Lender and
the other Secured Parties prior to an Event of Default;

(ii)
 
those rights and remedies available to a secured party under the UCC (whether or
not the UCC applies to the affected Collateral) or under any other applicable
law (including, without limitation, any law governing the exercise of a bank’s
right of setoff or bankers’ lien) when a debtor is in default under a security
agreement;

(iii)
give notice of sole control or any other instruction under any Deposit Account
Control Agreement or and other control agreement with any securities
intermediary and take any action therein with respect to such Collateral;

(iv)
 
without notice (except as specifically provided in Section 8.1 or elsewhere
herein), demand or advertisement of any kind to any Grantor or any other Person,
enter the premises of any Grantor where any Collateral is located (through
self-help and without judicial process) to collect, receive, assemble, process,
appropriate, sell, lease, assign, grant an option or options to purchase or
otherwise dispose of, deliver, or realize upon, the Collateral or any part
thereof in one or more parcels at public or private sale or sales (which sales
may be adjourned or continued from time to time with or without notice and may
take place at any Grantor’s premises or elsewhere), for cash, on credit or for
future delivery without assumption of any credit risk, and upon such other terms
as the Lender may deem commercially reasonable; and

(v)
 
concurrently with written notice to the applicable Grantor, transfer and
register in its name or in the name of its nominee the whole or any part of the
Pledged Collateral, exchange certificates or instruments representing or
evidencing Pledged Collateral for certificates or instruments of smaller or
larger denominations, exercise the voting and all other rights as a holder with
respect thereto, collect and receive all cash dividends, interest, principal and
other distributions made thereon and to otherwise act with respect to the
Pledged Collateral as though the Lender was the outright owner thereof.

(b)            The Lender, on behalf of the Lender and the other Secured
Parties, may comply with any applicable state or federal law requirements in
connection with a disposition of the Collateral and compliance will not be
considered to adversely affect the commercial reasonableness of any sale of the
Collateral.
 
(c)            The Lender shall have the right upon any such public sale or
sales and, to the extent permitted by law, upon any such private sale or sales,
to purchase for the benefit of the Lender and the other Secured Parties, the
whole or any part of the Collateral so sold, free of any right of equity
redemption, which equity redemption the Grantor hereby expressly releases.
 
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(d)            Until the Lender is able to effect a sale, lease, or other
disposition of Collateral, the Lender shall have the right to hold or use
Collateral, or any part thereof, to the extent that it deems appropriate for the
purpose of preserving Collateral or its value or for any other purpose deemed
appropriate by the Lender.  The Lender may, if it so elects, seek the
appointment of a receiver or keeper to take possession of Collateral and to
enforce any of the Lender’s remedies (for the benefit of the Lender and the
other Secured Parties), with respect to such appointment without prior notice or
hearing as to such appointment.
 
(e)            If, after the Credit Agreement has terminated by its terms and
all of the Obligations have been paid in full, there remain Swap Agreement
Obligations outstanding, the Lender may exercise the remedies provided in this
Section 5.2 upon the occurrence of any event which would allow or require the
termination or acceleration of any Swap Agreement Obligations pursuant to the
terms of the Swap Agreement.
 
(f)            Notwithstanding the foregoing, neither the Lender nor any other
Secured Party shall be required to (i) make any demand upon, or pursue or
exhaust any of its rights or remedies against, any Grantor, any other obligor,
guarantor, pledgor or any other Person with respect to the payment of the
Secured Obligations or to pursue or exhaust any of its rights or remedies with
respect to any Collateral therefor or any direct or indirect guarantee thereof,
(ii) marshal the Collateral or any guarantee of the Secured Obligations or to
resort to the Collateral or any such guarantee in any particular order, or (iii)
effect a public sale of any Collateral.
 
(g)            Each Grantor recognizes that the Lender may be unable to effect a
public sale of any or all the Pledged Collateral and may be compelled to resort
to one or more private sales thereof in accordance with clause (a) above.  Each
Grantor also acknowledges that any private sale may result in prices and other
terms less favorable to the seller than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall not
be deemed to have been made in a commercially unreasonable manner solely by
virtue of such sale being private.  The Lender shall be under no obligation to
delay a sale of any of the Pledged Collateral for the period of time necessary
to permit any Grantor or the issuer of the Pledged Collateral to register such
securities for public sale under the Securities Act of 1933, as amended, or
under applicable state securities laws, even if the applicable Grantor and the
issuer would agree to do so.
 
5.3            Grantor’s Obligations Upon Default.  Upon the request of the
Lender after the occurrence of a Default, each Grantor will:
 
(a)            assemble and make available to the Lender the Collateral and all
books and records relating thereto at any place or places specified by the
Lender, whether at a Grantor’s premises or elsewhere;
 
(b)            permit the Lender, by the Lender’s representatives and agents, to
enter, occupy and use any premises where all or any part of the Collateral, or
the books and records relating thereto, or both, are located, to take possession
of all or any part of the Collateral or the books and records relating thereto,
or both, to remove all or any part of the Collateral or the books and records
relating thereto, or both, and to conduct sales of the Collateral, without any
obligation to pay the applicable Grantor for such use and occupancy;
 
(c)            prepare and file, or cause an issuer of Pledged Collateral to
prepare and file, with the Securities and Exchange Commission or any other
applicable government agency, registration statements, a prospectus and such
other documentation in connection with the Pledged Collateral as the Lender may
request, all in form and substance satisfactory to the Lender, and furnish to
the Lender, or cause an issuer of Pledged Collateral to furnish to the Lender,
any information regarding the Pledged Collateral in such detail as the Lender
may specify;
 
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(d)            take, or cause an issuer of Pledged Collateral to take, any and
all actions necessary to register or qualify the Pledged Collateral to enable
the Lender to consummate a public sale or other disposition of the Pledged
Collateral; and
 
(e)            at its own expense, cause the independent certified public
accountants then engaged by each Grantor to prepare and deliver to the Lender,
at any time, and from time to time, promptly upon the Lender’s request, the
following reports with respect to the applicable Grantor: (i) a reconciliation
of all Accounts; (ii) an aging of all Accounts; (iii) trial balances; and (iv) a
test verification of such Accounts.
 
5.4            Grant of Intellectual Property License.  For the purpose of
enabling the Lender to exercise the rights and remedies under this Article V at
such time as the Lender shall be lawfully entitled to exercise such rights and
remedies, each Grantor hereby (a) grants to the Lender, for the benefit of
itself and the other Secured Parties, a nonexclusive license (exercisable
without payment of royalty or other compensation to any Grantor and only after
the occurrence and during the continuation of an Event of Default) to use,
license or sublicense any intellectual property rights now owned or hereafter
acquired by such Grantor, and wherever the same may be located, and including in
such license access to all media in which any of the licensed items may be
recorded or stored and to all computer software and programs used for the
compilation or printout thereof and (b) irrevocably agrees that the Lender may
sell any of such Grantor’s Inventory directly to any person, including without
limitation persons who have previously purchased the Grantor’s Inventory from
such Grantor and in connection with any such sale or other enforcement of the
Lender’s rights under this Security Agreement, may sell Inventory which bears
any Trademark owned by or licensed to such Grantor and any Inventory that is
covered by any Copyright owned by or licensed to such Grantor and the Lender may
finish any work in process and affix any Trademark owned by or licensed to such
Grantor and sell such Inventory as provided herein.
 
ARTICLE VI

ACCOUNT VERIFICATION; ATTORNEY IN FACT; PROXY
 
6.1            Account Verification.  The Lender may at any time after the
occurrence of an Event of Default, in the Lender’s own name, in the name of a
nominee of the Lender, or in the name of any Grantor communicate (by mail,
telephone, facsimile or otherwise) with the Account Debtors of any such Grantor,
parties to contracts with any such Grantor and obligors in respect of
Instruments of any such Grantor to verify with such Persons, to the Lender’s
satisfaction, the existence, amount, terms of, and any other matter relating to,
Accounts, Instruments, Chattel Paper, payment intangibles and/or other
Receivables.
 
6.2            Authorization for Lender to Take Certain Action.
 
(a)            Each Grantor irrevocably authorizes the Lender at any time and
from time to time in the sole discretion of the Lender and appoints the Lender
as its attorney-in-fact (i) to endorse and collect any cash proceeds of the
Collateral, (ii) to file any financing statement with respect to the Collateral
and to file any other financing statement or amendment of a financing statement
(which does not add new collateral or add a debtor) in such offices as the
Lender in its sole discretion deems necessary or desirable to perfect and to
maintain the perfection and priority of the Lender’s security interest in the
Collateral, (iii) to contact and enter into one or more agreements with the
issuers of uncertificated securities which are Pledged Collateral or with
securities intermediaries holding Pledged Collateral as may be necessary or
advisable to give the Lender Control over such Pledged Collateral, (iv) to
discharge past due taxes, assessments, charges,
 
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fees or Liens on the Collateral (except for such Liens that are permitted under
Section 6.02 of the Credit Agreement), (v) to contact Account Debtors for any
reason, (vi) to demand payment or enforce payment of the Receivables in the name
of the Lender or such Grantor and to endorse any and all checks, drafts, and
other instruments for the payment of money relating to the Receivables, (vii) to
sign such Grantor’s name on any invoice or bill of lading relating to the
Receivables, drafts against any Account Debtor of the Grantor, assignments and
verifications of Receivables, (viii) to exercise all of such Grantor’s rights
and remedies with respect to the collection of the Receivables and any other
Collateral, (ix) to settle, adjust, compromise, extend or renew the Receivables,
(x) to settle, adjust or compromise any legal proceedings brought to collect
Receivables, (xi) to prepare, file and sign such Grantor’s name on a proof of
claim in bankruptcy or similar document against any Account Debtor of such
Grantor, (xii) to prepare, file and sign such Grantor’s name on any notice of
Lien, assignment or satisfaction of Lien or similar document in connection with
the Receivables, (xiii) to change the address for delivery of mail addressed to
such Grantor to such address as the Lender may designate and to receive, open
and dispose of all mail addressed to such Grantor, and (xiv) to do all other
acts and things necessary to carry out this Security Agreement; and such Grantor
agrees to reimburse the Lender on demand for any payment made or any expense
incurred by the Lender in connection with any of the foregoing; provided that,
this authorization shall not relieve such Grantor of any of its obligations
under this Security Agreement or under the Credit Agreement.
 
(b)            All acts of said attorney or designee are hereby ratified and
approved.  The powers conferred on the Lender, for the benefit of the Lender and
the other Secured Parties, under this Section 6.2 are solely to protect the
Lender’s and the other Secured Parties’ interests in the Collateral and shall
not impose any duty upon the Lender or any other Secured Party to exercise any
such powers.  The Lender agrees that, except for the powers granted in Section
6.2(a)(i)-(iv) and Section 6.2(a)(xiv), it shall not exercise any power or
authority granted to it unless an Event of Default has occurred and is
continuing.
 
6.3            Proxy.  EACH GRANTOR HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS
THE LENDER AS ITS PROXY AND ATTORNEY-IN-FACT (AS SET FORTH IN SECTION 6.2 ABOVE)
OF THE GRANTOR WITH RESPECT TO ITS PLEDGED COLLATERAL, INCLUDING THE RIGHT TO
VOTE SUCH PLEDGED COLLATERAL, WITH FULL POWER OF SUBSTITUTION TO DO SO. IN
ADDITION TO THE RIGHT TO VOTE ANY SUCH PLEDGED COLLATERAL, THE APPOINTMENT OF
THE LENDER AS PROXY AND ATTORNEY-IN-FACT SHALL INCLUDE THE RIGHT TO EXERCISE ALL
OTHER RIGHTS, POWERS, PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF SUCH PLEDGED
COLLATERAL WOULD BE ENTITLED (INCLUDING GIVING OR WITHHOLDING WRITTEN CONSENTS
OF SHAREHOLDERS, CALLING SPECIAL MEETINGS OF SHAREHOLDERS AND VOTING AT SUCH
MEETINGS). SUCH PROXY SHALL BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE
NECESSITY OF ANY ACTION (INCLUDING ANY TRANSFER OF ANY SUCH PLEDGED COLLATERAL
ON THE RECORD BOOKS OF THE ISSUER THEREOF) BY ANY PERSON (INCLUDING THE ISSUER
OF SUCH PLEDGED COLLATERAL OR ANY OFFICER OR AGENT THEREOF), UPON THE OCCURRENCE
OF A DEFAULT.
 
6.4            Nature of Appointment; Limitation of Duty.  THE APPOINTMENT OF
THE LENDER AS PROXY AND ATTORNEY-IN-FACT IN THIS Article VI IS COUPLED WITH AN
INTEREST AND SHALL BE IRREVOCABLE UNTIL THE DATE ON WHICH THIS SECURITY
AGREEMENT IS TERMINATED IN ACCORDANCE WITH SECTION 7.14.  NOTWITHSTANDING
ANYTHING CONTAINED HEREIN, NONE OF THE LENDER, ANY OTHER SECURED PARTY, ANY OF
THEIR RESPECTIVE AFFILIATES, OR ANY OF THEIR OR THEIR AFFILIATES’ RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES SHALL HAVE ANY DUTY TO
EXERCISE ANY RIGHT OR POWER GRANTED HEREUNDER OR OTHERWISE OR TO PRESERVE THE
SAME AND SHALL NOT BE LIABLE FOR ANY FAILURE TO DO SO OR FOR ANY DELAY IN DOING
SO, EXCEPT  IN RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO SUCH PARTY’S OWN GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY DETERMINED BY A COURT OF COMPETENT
JURISDICTION; PROVIDED THAT, IN NO EVENT SHALL THEY BE LIABLE FOR ANY PUNITIVE,
EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.
 
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ARTICLE VII

GENERAL PROVISIONS
 
7.1            Waivers.  Each Grantor hereby waives notice of the time and place
of any public sale or the time after which any private sale or other disposition
of all or any part of the Collateral may be made.  To the extent such notice may
not be waived under applicable law, any notice made shall be deemed reasonable
if sent to Grantors, addressed as set forth in Article VIII, at least ten days
prior to (i) the date of any such public sale or (ii) the time after which any
such private sale or other disposition may be made.  To the maximum extent
permitted by applicable law, each Grantor waives all claims, damages, and
demands against the Lender or any other Secured Party arising out of the
repossession, retention or sale of the Collateral, except such as arise solely
out of the gross negligence or willful misconduct of the Lender or such Secured
Party as finally determined by a court of competent jurisdiction.  To the extent
it may lawfully do so, each Grantor absolutely and irrevocably waives and
relinquishes the benefit and advantage of, and covenants not to assert against
the Lender or any other Secured Party, any valuation, stay, appraisal,
extension, moratorium, redemption or similar laws and any and all rights or
defenses it may have as a surety now or hereafter existing which, but for this
provision, might be applicable to the sale of any Collateral made under the
judgment, order or decree of any court, or privately under the power of sale
conferred by this Security Agreement, or otherwise.  Except as otherwise
specifically provided herein, each Grantor hereby waives presentment, demand,
protest or any notice (to the maximum extent permitted by applicable law) of any
kind in connection with this Security Agreement or any Collateral.
 
7.2            Limitation on the Lender’s Duty with Respect to the Collateral. 
The Lender shall have no obligation to clean-up or otherwise prepare the
Collateral for sale. The Lender shall use reasonable care with respect to the
Collateral in its possession or under its control.  The Lender shall not have
any other duty as to any Collateral in its possession or control or in the
possession or control of any agent or nominee of the Lender, or any income
thereon or as to the preservation of rights against prior parties or any other
rights pertaining thereto.  To the extent that applicable law imposes duties on
the Lender to exercise remedies in a commercially reasonable manner, each
Grantor acknowledges and agrees that it is commercially reasonable for the
Lender (i) to fail to incur expenses deemed significant by the Lender to prepare
Collateral for disposition or otherwise to transform raw material or work in
process into finished goods or other finished products for disposition, (ii) to
fail to obtain third party consents for access to Collateral to be disposed of,
or to obtain or, if not required by other law, to fail to obtain governmental or
third party consents for the collection or disposition of Collateral to be
collected or disposed of, (iii) to fail to exercise collection remedies against
Account Debtors or other Persons obligated on Collateral or to remove Liens on
or any adverse claims against Collateral, (iv) to exercise collection remedies
against Account Debtors and other Persons obligated on Collateral directly or
through the use of collection agencies and other collection specialists, (v) to
advertise dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized nature, (vi) to
contact other Persons, whether or not in the same business as such Grantor, for
expressions of interest in acquiring all or any portion of such Collateral,
(vii) to hire one or more professional auctioneers to assist in the disposition
of Collateral, whether or not the Collateral is of a specialized nature, (viii)
to dispose of Collateral by utilizing internet sites that provide for the
auction of assets of the types included in the Collateral or that have the
reasonable capacity of doing so, or that match buyers and sellers of assets,
(ix) to dispose of assets in wholesale rather than retail markets, (x) to
disclaim disposition warranties, such as title, possession or quiet enjoyment,
(xi) to purchase insurance or credit enhancements to insure the Lender against
risks of loss, collection or disposition of Collateral or to provide to the
Lender a guaranteed return from the collection or disposition of Collateral, or
(xii) to the extent deemed appropriate by the Lender, to obtain the services of
other brokers, investment bankers, consultants and other professionals to assist
the Lender in the collection or disposition of any of the Collateral.  The
Grantor acknowledges that the purpose of this Section 7.2 is to provide
non-exhaustive indications of what actions or omissions by the Lender would be
commercially reasonable in the Lender’s exercise of remedies against the
Collateral and that other actions or omissions by the Lender shall not be deemed
commercially unreasonable solely on account of not being indicated in this
Section 7.2.  Without limitation upon the foregoing, nothing contained in this
Section 7.2 shall be construed to grant any rights to the Grantor or to impose
any duties on the Lender that would not have been granted or imposed by this
Security Agreement or by applicable law in the absence of this Section 7.2.
 
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7.3            Compromises and Collection of Collateral.  The Grantors and the
Lender recognize that setoffs, counterclaims, defenses and other claims may be
asserted by obligors with respect to certain of the Receivables, that certain of
the Receivables may be or become uncollectible in whole or in part and that the
expense and probability of success in litigating a disputed Receivable may
exceed the amount that reasonably may be expected to be recovered with respect
to a Receivable.  In view of the foregoing, each Grantor agrees that the Lender
may at any time and from time to time, if an Event of Default has occurred and
is continuing, compromise with the obligor on any Receivable, accept in full
payment of any Receivable such amount as the Lender in its sole discretion shall
determine or abandon any Receivable, and any such action by the Lender shall be
commercially reasonable so long as the Lender acts in good faith based on
information known to it at the time it takes any such action.
 
7.4            Secured Party Performance of Debtor Obligations.  Without having
any obligation to do so, the Lender may perform or pay any obligation which any
Grantor has agreed to perform or pay in this Security Agreement and the Grantors
shall reimburse the Lender for any amounts paid by the Lender pursuant to this
Section 7.4.  The Grantors’ obligation to reimburse the Lender pursuant to the
preceding sentence shall be a Secured Obligation payable on demand.
 
7.5            Specific Performance of Certain Covenants.  Each Grantor
acknowledges and agrees that a breach of any of the covenants contained in
Sections 4.1(d), 4.1(e), 4.4, 4.5, 4.7, 4.8, 4.9, 4.10, 4.12, 4.13, 4.14, 4.16,
5.3, or 7.7 will cause irreparable injury to the Lender and the other Secured
Parties, that the Lender and the other Secured Parties have no adequate remedy
at law in respect of such breaches and therefore agrees, without limiting the
right of the Lender to seek and obtain specific performance of other obligations
of the Grantors contained in this Security Agreement, that the covenants of the
Grantors contained in the Sections referred to in this Section 7.5 shall be
specifically enforceable against the Grantors.
 
7.6            Dispositions Not Authorized.  No Grantor is authorized to sell or
otherwise dispose of the Collateral except as set forth in Section 4.1(d) and
notwithstanding any course of dealing between any Grantor and the Lender or
other conduct of the Lender, no authorization to sell or otherwise dispose of
the Collateral (except as set forth in Section 4.1(d)) shall be binding upon the
Lender or any other Secured Party unless such authorization is in writing signed
by the Lender.
 
7.7            No Waiver; Amendments; Cumulative Remedies.  No failure or delay
by the Lender or any other Secured Party to exercise any right or power under
this Security Agreement shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power.  The
rights and remedies of the Lender and the other Secured Parties hereunder are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have.  No waiver of any provision of this Security Agreement or
consent to any departure by the Grantor therefrom shall in any event be
effective unless in writing signed by the Lender and then only to the extent in
such writing specifically set forth.
 
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7.8            Limitation by Law; Severability of Provisions.  All rights,
remedies and powers provided in this Security Agreement may be exercised only to
the extent that the exercise thereof does not violate any applicable provision
of law, and all the provisions of this Security Agreement are intended to be
subject to all applicable mandatory provisions of law that may be controlling
and to be limited to the extent necessary so that they shall not render this
Security Agreement invalid, unenforceable or not entitled to be recorded or
registered, in whole or in part.  Any provision in this Security Agreement held
to be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions thereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction, and to this end the provisions of this Security Agreement are
declared to be severable.
 
7.9            Reinstatement.  This Security Agreement shall remain in full
force and effect and continue to be effective should any petition be filed by or
against any Grantor for liquidation or reorganization, should any Grantor become
insolvent or make an assignment for the benefit of any creditor or creditors or
should a receiver or trustee be appointed for all or any significant part of any
Grantor’s assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Secured Obligations,
or any part thereof (including a payment effected through exercise of a right of
setoff), is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the Secured Obligations,
whether as a “voidable preference,” “fraudulent conveyance,” or otherwise
(including pursuant to any settlement entered into by a Secured Party in its
discretion), all as though such payment or performance had not been made.  In
the event that any payment, or any part thereof (including a payment effected
through exercise of a right of setoff), is rescinded, reduced, restored or
returned, the Secured Obligations shall be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or returned.
 
7.10            Benefit of Agreement.  The terms and provisions of this Security
Agreement shall be binding upon and inure to the benefit of the Grantors, the
Lender, the other Secured Parties and their respective successors and assigns
(including all persons who become bound as a debtor to this Security Agreement),
except that no Grantor shall have the right to assign its rights or delegate its
obligations under this Security Agreement or any interest herein, without the
prior written consent of the Lender.  No sales of participations, assignments,
transfers, or other dispositions of any agreement governing the Secured
Obligations or any portion thereof or interest therein shall in any manner
impair the Lien granted to the Lender, for the benefit of the Lender and the
other Secured Parties, hereunder.
 
7.11            Survival of Representations.  All representations and warranties
of the Grantors contained in this Security Agreement shall survive the execution
and delivery of this Security Agreement.
 
7.12            Taxes and Expenses.  Any taxes (including income taxes) payable
or ruled payable by Federal or State authority in respect of this Security
Agreement shall be paid by the Grantors, together with interest and penalties,
if any.  The Grantors shall reimburse the Lender for any and all out-of-pocket
expenses and internal charges (including reasonable attorneys’, auditors’ and
accountants’ fees and reasonable time charges of attorneys, paralegals, auditors
and accountants who may be employees of the Lender) paid or incurred by the
Lender in connection with the preparation, execution, delivery, administration,
collection and enforcement of this Security Agreement and, to the extent
provided in the Credit Agreement in the audit, analysis, administration,
collection, preservation or sale of the Collateral (including the expenses and
charges associated with any periodic or special audit of the Collateral).  Any
and all costs and expenses incurred by the Grantors in the performance of
actions required pursuant to the terms hereof shall be borne solely by the
Grantors.
 
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7.13            Headings.  The title of and section headings in this Security
Agreement are for convenience of reference only, and shall not govern the
interpretation of any of the terms and provisions of this Security Agreement.
 
7.14            Termination.  This Security Agreement shall continue in effect
(notwithstanding the fact that from time to time there may be no Secured
Obligations outstanding) until (i) the Credit Agreement has terminated pursuant
to its express terms and (ii) all of the Secured Obligations other than
contingent indemnification obligations as to which no claim has been made have
been indefeasibly paid and performed in full (or with respect to any outstanding
Letters of Credit, a cash deposit or at the discretion of the Lender, a back-up
standby Letter of Credit satisfactory to the Lender has been delivered to the
Lender as required by the Credit Agreement) and no commitments of the Lender
which would give rise to any Secured Obligations are outstanding.
 
7.15            Entire Agreement.  This Security Agreement and the other Loan
Documents embody the entire agreement and understanding between the Grantors and
the Lender relating to the Collateral and supersedes all prior agreements and
understandings between the Grantors and the Lender relating to the Collateral.
 
7.16            CHOICE OF LAW.  THIS SECURITY AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AND NOT THE LAW OF
CONFLICTS) OF THE STATE OF UTAH, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO
NATIONAL BANKS.
 
7.17            CONSENT TO JURISDICTION.  EACH GRANTOR HEREBY IRREVOCABLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NON EXCLUSIVE JURISDICTION OF ANY
U.S. FEDERAL OR UTAH STATE COURT SITTING IN SALT LAKE CITY, UTAH IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR ANY OTHER
LOAN DOCUMENT OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH
GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT
OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND
IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND
EFFECTIVELY DO SO, ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT
IS AN INCONVENIENT FORUM. EACH OF THE PARTIES HERETO AGREES THAT A FINAL
JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE LENDER TO BRING
PROCEEDINGS AGAINST ANY GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION.  ANY
JUDICIAL PROCEEDING BY ANY GRANTOR AGAINST THE LENDER OR ANY AFFILIATE OF THE
LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT
SHALL BE BROUGHT ONLY IN A COURT IN SALT LAKE CITY, UTAH.
 
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7.18            WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS SECURITY AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE OR OTHER AGENT
(INCLUDING ANY ATTORNEY) OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES
HERETO HAVE BEEN INDUCED TO ENTER INTO THIS SECURITY AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
 
7.19            Indemnity.  Each Grantor hereby agrees to indemnify the Lender,
the other Secured Parties and their respective successors, assigns, agents and
employees, from and against any and all liabilities, damages, penalties, suits,
fees, costs, and expenses of any kind and nature (including, without limitation,
all expenses of litigation or preparation therefor whether or not the Lender or
any other Secured Party is a party thereto) imposed on, incurred by or asserted
against the Lender or any other Secured Party, or their respective successors,
assigns, agents and employees, in any way relating to or arising out of this
Security Agreement, or the manufacture, purchase, acceptance, rejection,
ownership, delivery, lease, possession, use, operation, condition, sale, return
or other disposition of any Collateral (including, without limitation, latent
and other defects, whether or not discoverable by any Secured Party or any
Grantor, and any claim for Patent, Trademark or Copyright infringement).
 
7.20            Counterparts.  This Security Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one
agreement, and any of the parties hereto may execute this Security Agreement by
signing any such counterpart.  Delivery of an executed counterpart of a
signature page of this Security Agreement by facsimile or other electronic
transmission shall be effective as delivery of a manually executed counterpart
of this Security Agreement.
 
ARTICLE VIII

NOTICES
 
8.1            Sending Notices.  Any notice required or permitted to be given
under this Security Agreement shall be sent in accordance with Section 8.01 of
the Credit Agreement, provided that notices to a Grantor shall be sent to such
Grantor at its mailing address set forth in Exhibit A hereto.
 
8.2            Change in Address for Notices.  Each of the Grantors and the
Lender may change the address for service of notice upon it by a notice in
writing to the other parties.
 
[Signature Page Follows]

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IN WITNESS WHEREOF, the Grantors and the Lender have executed this Security
Agreement as of the date first above written.
 
                        
 
                       
                        GRANTORS:

FRANKLIN COVEY CO.
a Utah corporation

By: /s/ Stephen D. Young
Name: Stephen D. Young
Title: Executive Vice President, Chief Financial Officer, and Corporate
Secretary

FRANKLIN DEVELOPMENT CORPORATION
a Utah corporation

By: /s/ Stephen D. Young
Name: Stephen D. Young
Title: President

FRANKLIN COVEY TRAVEL, INC.
a Utah corporation

By: /s/ Stephen D. Young
Name: Stephen D. Young
Title: President

FRANKLIN COVEY CLIENT SALES, INC.
a Utah corporation

By: /s/ Stephen D. Young
Name: Stephen D. Young
Title: President

LENDER:

JPMORGAN CHASE BANK, N.A.

By: /s/ Kristin Gubler
Name: Kristin Gubler
Title: Authorized Signer