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Exhibit 10.1

 
AGREEMENT

This Agreement (this “Agreement”), dated as of July 26, 2011, between Franklin
Covey Co., a Utah corporation (the “Company”), and Knowledge Capital Investment
Group, a Texas general partnership (the “Holder”).

The Holder is the owner of a Warrant to Purchase Common Stock (the “Warrant”) of
the Company dated March 8, 2005 entitling it to purchase up to 5,913,402 shares
of the Company’s common stock, par value $.05 per share (“Common Stock”), at an
exercise price of $8.00 per share, from time to time through March 8, 2013 (the
“Expiration Date”).  In addition, the Holder owns 1,015,002 shares of Common
Stock (such shares, together with shares of Common Stock acquired by Holder upon
exercise of the Warrant, the “Shares”).

In connection with the issuance of the Warrant, the Holder and the Company
entered into an Amended and Restated Registration Rights Agreement, dated as of
March 8, 2005 (the “Registration Rights Agreement”), under which, among other
things, the Holder has certain rights to cause the Company to file and cause to
become effective a registration statement relating to sales of Common Stock
owned by Holder, including shares issued upon exercise of the Warrant.

The Holder and the Company wish to enter into this Agreement to evidence their
agreement relating to the exercise of the Warrant and the sale of Common Stock
by Holder.

Accordingly, the parties hereto agree as follows:

1.  
Defined Terms.  Capitalized terms used herein but not defined have the meaning
assigned to them in the Warrant.

 
2.  
Exercise of Warrant.

 
(a)  
Simultaneously with the execution and delivery of this Agreement, the Company
will execute the Warrant with respect to 1,913,402 shares of Common Stock using
the net exercise method set forth in Section 1.2(b) of the Warrant. The Company
agrees that it will issue to the Holder 596,116 shares of Common Stock in
accordance with Section 1.2(b) of the Warrant and will not exercise its right
under Section 1.2(c) of the Warrant to pay Holder in the form of a cash payment.

 
(b)  
Holder agrees that it may only exercise the Warrant using the net exercise
method under Section 1.2(b) of the Warrant.  Accordingly, the Company agrees
that upon any subsequent exercise of the Warrant, the Company will issue to the
Holder the number of shares of Common Stock that is issuable under Section
1.2(b) of the Warrant and will not exercise its right under Section 1.2(c) of
the Warrant to pay Holder in the form of a cash payment.

 

 
 

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3.  
Sale of Common Stock.

 
(a)  
The Holder agrees that it will not exercise its right under the Registration
Rights Agreement to cause the Company to file a registration statement relating
to the sale of any of the Shares (including shares owned by Holder and not
purchased upon exercise of the Warrant) until the earlier of (i) the Expiration
Date or (ii) one year after the date on which the Warrant has been exercised in
full (such period, the “Stand-Off Period”).  The parties acknowledge that the
Company will not be required to maintain the effectiveness of the Series B
Registration Statement as provided in Section 2(a) of the Registration Rights
Agreement, it being understood that the Holder’s rights under Section 4(a) of
the Registration Rights Agreement if the Series B Registration Statement is no
longer effective shall not be affected by this Agreement following the end of
the Stand-Off Period.

 
(b)  
If the Holder intends to sell any of the Shares (including shares owned by
Holder and not purchased upon exercise of the Warrant) in the market during the
Stand-Off Period on an unregistered basis, the Holder will notify the Company in
writing of such intent (including the proposed maximum number of Shares to be
sold, the proposed manner of sale and the date on which it intends to begin such
sales) at least five trading days before commencing such sales, and, if
requested by the Company, the Holder will refrain from selling Shares for up to
120 days after the date the Holder intended to begin such sales in order to
permit the Company to arrange for an underwritten or other organized resale of
such Shares, including if applicable and required, filing with the Securities
and Exchange Commission and causing to become effective a registration statement
covering the sale of the Shares in the manner proposed by the Holder or as
otherwise agreed by the Holder and the Company. Sections 7 through 9 of the
Registration Rights Agreement will apply to any such registration statement.

 
(c)  
At the request of the Company during the Stand-Off Period, the holder agrees
that it will discuss with the Company any proposal that the Company may make to
purchase all or part of the Shares. This Section 3(c) does not create any
obligation on the part of the Holder or the Company to sell or purchase any
Shares, and does not affect any rights or obligations of the Holder or the
Company hereunder or otherwise.

 
4.  
Miscellaneous.

 
(a)  
Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing and will be deemed given in the manner and at
the times set forth in the Registration Rights Agreement.

 
(b)  
Expenses.  Except as otherwise provided herein or in the Warrant or the
Registration rights Agreement, all costs and expenses incurred in connection
with this Agreement will be paid by the party incurring such cost or expense.

 

 
 

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(c)  
Successors and Assigns.  (a) The provisions of this Agreement will be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns (including any assignee of all of any portion of the
Warrant); provided, however, that none of the parties may assign, delegate or
otherwise transfer any of their rights or obligations under this Agreement
without the written consent of the other parties hereto.  Neither this Agreement
nor any provision hereof is intended to confer upon any person or entity other
than the parties hereto any rights or remedies hereunder.

 
 
(b)  The Company hereby confirms that it is willing to offer to enter into an
agreement on substantially the terms set forth in this Agreement with the other
Warrant holders.

 
(d)  
Counterparts; Effectiveness.  This Agreement may be signed in any number of
counterparts, each of which will be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.  This Agreement
will become effective when each party hereto will have received a counterpart
hereof signed by the other party hereto.

 
(e)  
Entire Agreement.  This Agreement, the Warrant and the Registration Rights
Agreement constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements, understandings and
negotiations, both written and oral, between the parties with respect
thereto.  No representation, inducement, promise, understanding, condition or
warranty not set forth herein or therein has been made or relied upon by any of
the parties hereto.

 
(f)  
Waiver, Amendments and Headings.  This Agreement and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by both parties (either generally or in a particular instance and either
retroactively or prospectively).  The headings in this Agreement are for
purposes of reference only and shall not affect the meaning or construction of
any of the provisions hereof.

 
(g)  
Governing Law.  This Agreement shall be construed in accordance with and
governed by the laws of the State of Utah, without giving effect to the
principles of conflict of laws thereof.

 

 
 
[Signature page follows]

 

 
 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
 
FRANKLIN COVEY CO.
 
 
By:
 
/s/ Stephen D. Young
 
Name:
 
Stephen D. Young
 
Title:
 
Chief Financial Officer
 
KNOWLEDGE CAPITAL INVESTMENT GROUP
 
By:
Inspiration Investments Partners III, L.P.
Its:
Managing Partner
 
By:
Inspiration Investments GenPar III, L.P.
Its:
General Partner
 
By:
HH GenPar Partners
Its:
General Partner
 
By:
Hampstead Associates, Inc.
Its:
Managing General Partner
 
 
By:
 
/s/ Donald J. McNamara
 
Name:
 
Donald J. McNamara
 
Title
 
President