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Exhibit 10.2

 
SECURED PROMISSORY NOTE
 

$18,000,000.00 
Salt Lake City, Utah
 
March 14, 2007

 
1. PROMISE TO PAY.
 
FOR VALUE RECEIVED, FRANKLIN COVEY CO., a Utah corporation (“Maker”), with a
business address of 2200 West Parkway Blvd., Salt Lake City, Utah 84119,
promises to pay to the order of JPMORGAN CHASE BANK, N.A., a national banking
association (“Holder”), at its office at 80 West Broadway, Suite 200, Salt Lake
City, Utah, 84101, or at such other place as Holder may from time to time
designate in writing, the principal sum of up to EIGHTEEN MILLION AND NO/100
DOLLARS ($18,000,000.00), or so much thereof as shall from time to time be
disbursed under that certain Revolving Line of Credit Agreement (as it may be
amended, modified, extended, and renewed from time to time, the
“Loan Agreement”) of even date herewith between Maker and Holder, together with
accrued interest from the date of disbursement on the unpaid principal at the
applicable rate as set forth in Section 5 hereof. This Secured Promissory Note
(as it may be amended, modified, extended, and renewed from time to time, the
“Note”) is issued pursuant to, entitled to the benefits of, and referred to as
the “Note” in the Loan Agreement. In the event of any inconsistency between the
provisions of this Note and the provisions of the Loan Agreement, the Loan
Agreement shall control.
 
2. DEFINITIONS.
 
The following terms shall have the following meanings when used herein.
Capitalized terms used herein without definition shall have the meanings set
forth in the Loan Agreement.
 
“Affiliate” of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For the purposes of this definition, “control,” when used with
respect to any Person, means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms “controlling” and
“controlled” have meanings correlative to the foregoing. The term “Affiliate”
does not include the officers, directors, or employees of a Person, if the
Person is a corporation, and does not include the employees or members of a
Person, if the Person is a limited liability company or limited partnership.
 
“Business Day” means a day other than a Saturday, Sunday or any other day on
which Holder’s branch located at 80 West Broadway, Salt Lake City, Utah is
authorized or obligated to close.
 
“Default Interest Rate” means a rate of interest equal to the lesser of (a) the
aggregate of THREE PERCENT (3.0%) per annum plus the Interest Rate and (b) the
highest rate legally permissible under applicable law. The Default Interest Rate
shall change from time to time as and when the Interest Rate changes.
 
“Interest Rate” means an interest rate equal to the Interest Rate, as defined in
Section 1.1 of the Loan Agreement.
 
“Loan Documents” has the meaning given to such term in the Loan Agreement.
 
“Maturity Date” means March 14, 2010.
 
“Payment Date” means the first (1st) day of each calendar month.
 
3. MATURITY DATE.
 
Absent the occurrence and continuance of an Event of Default hereunder or under
any of the Loan Documents, the unpaid principal balance hereof, together with
all unpaid interest accrued thereon, and all other amounts payable by Maker
under the terms of the Loan Documents, shall be due and payable on the Maturity
Date. If the Maturity Date should fall (whether by acceleration or otherwise) on
a day that is not a Business Day, payment of the outstanding principal shall be
made on the next succeeding Business Day and such extension of time shall be
included in computing the interest included in such payment.
 
4. REVOLVING LINE OF CREDIT.
 
The Loan evidenced hereby is a revolving line of credit and Maker shall be
entitled to reborrow amounts prepaid prior to the Maturity Date. Although the
outstanding principal balance of this Note may be zero from time to time, this
Note and the other Loan Documents will remain in full force and effect until the
Maturity Date or until all obligations of Maker or Guarantor relating to the
Loan are indefeasibly paid and performed in full, whichever is later. Upon the
occurrence, and continuance, of any Event of Default, Holder may suspend or
terminate its commitment to make Advances of the proceeds hereof without notice
to Maker or further act on the part of Holder.
 
5. INTEREST.
 

 
(a)
Absent a continuing Event of Default hereunder or under any of the Loan
Documents, each Advance made hereunder shall bear interest at the Interest Rate
in effect from time to time as determined in accordance with the Loan Agreement,
subject to the limitations of Section 15 of this Note. Interest on this Note
shall be computed by applying the ratio of the annual Interest Rate over a year
of three hundred sixty (360) days, multiplied by the outstanding principal
balance, multiplied by the actual number of days the principal balance is
outstanding.

 

 
(b)
All payments of principal and interest due hereunder shall be made (i) without
deduction of any present and future taxes, levies, imposts, deductions, charges
or withholdings, which amounts shall be paid by Maker, and (ii) without any
other set off. Maker will pay the amounts necessary such that the gross amount
of the principal and interest received by Holder is equal to that required by
this Note.

 

 
(c)
Interest accruing hereunder shall be payable by Maker to Holder monthly, the
first of which interest payments shall be payable on the Payment Date occurring
in May 2007, and on each Payment Date thereafter as provided in the Loan
Agreement. If any payment of interest to be made by Maker hereunder shall become
due on a day which is not a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time shall be included in
computing the interest in such payment.

 
6. LAWFUL MONEY.
 
Principal and interest are payable in lawful money of the United States of
America.
 
7. APPLICATION OF PAYMENTS; LATE CHARGE; DEFAULT RATE.
 

 
(a)
Unless otherwise agreed to, in writing, or otherwise required by applicable law,
payments will be applied first to accrued, unpaid interest, then to any unpaid
collection costs, late charges and other charges, and any remaining amount to
principal; provided however, upon a continuing Event of Default, Holder reserves
the right to apply payments among principal, interest, late charges, collection
costs and other charges at its discretion. All prepayments shall be applied to
the indebtedness owing hereunder in such order and manner as Holder may from
time to time determine in its reasonable discretion.

 

 
(b)
If any payment required under this Note is not paid within ten (10) days after
such payment is due, then, at the option of Holder, Maker shall pay a late
charge equal to five percent (5.0%) of the amount of such payment or Twenty-Five
and No/100 Dollars ($25.00), whichever is greater, up to the maximum amount of
One Thousand Five Hundred and No/100 Dollars ($1,500.00) per late charge to
compensate Holder for administrative expenses and other costs of delinquent
payments. This late charge may be assessed without notice, shall be immediately
due and payable and shall be in addition to all other rights and remedies
available to Holder.

 

 
(c)
Upon a continuing Event of Default or upon maturity by acceleration, Holder, at
its option, may also, if permitted under applicable law, do one or both of the
following, in addition to any other right or remedy available to Holder: (i)
increase the applicable interest rate on this Note to the Default Interest Rate,
and (ii) add any unpaid accrued interest to principal and such sum will bear
interest therefrom until paid at the rate provided in this Note (including any
increased rate). The interest rate hereunder will not exceed the maximum rate
permitted by applicable law. Application of the Default Interest Rate will not
cure any Event of Default.

 
8. SECURITY; GUARANTY.
 
This Note is secured by one or more liens and security interests upon the
Collateral, as more particularly set forth in the Loan Agreement and other Loan
Documents, and payments hereunder are unconditionally guaranteed by Guarantor
pursuant to the Guaranty.
 
9. EVENT OF DEFAULT.
 
The occurrence of any of the following shall be deemed to be an event of default
(“Event of Default”) hereunder:
 

 
(a)
Failure by Maker to pay any monetary amount within ten (10) days of when due
under any Loan Document; or

 

 
(b)
The occurrence of any event of default under any of the other Loan Documents.

 
10. REMEDIES.
 
Upon the occurrence, and during the continuance, of an Event of Default, then at
the option of Holder, the entire balance of principal together with all accrued
interest thereon, and all other amounts payable by Maker under the Loan
Documents shall, without demand or notice, immediately become due and payable.
Upon the occurrence of an Event of Default (and so long as such Event of Default
shall continue), without notice or demand, the entire balance of principal
hereof, together with all accrued interest thereon, all other amounts due under
the Loan Documents, and any judgment for such principal, interest, and other
amounts shall bear interest at the Default Interest Rate. Maker may also, at its
election, add any unpaid accrued interest to principal and such sum will bear
interest therefrom until paid at the Default Interest Rate. The Interest Rate
under this Note will not exceed the maximum rate permitted by applicable law
under any circumstances. No delay or omission on the part of Holder in
exercising any right under this Note or under any of the other Loan Documents
hereof shall operate as a waiver of such right and no application of the Default
Interest Rate or addition of interest to principal shall constitute an election
of remedies by Holder nor shall any such exercise of any right cure any Event of
Default under the Loan Documents.
 
11. WAIVER.
 

 
(a)
Maker, endorsers, guarantors, and sureties of this Note hereby waive diligence,
demand for payment, presentment for payment, protest, notice of nonpayment,
notice of protest, notice of intent to accelerate, notice of acceleration,
notice of dishonor, and notice of nonpayment, and all other notices or demands
of any kind (except notices specifically provided for in the Loan Documents) and
expressly agree that, without in any way affecting the liability of Maker,
endorsers, guarantors, or sureties, Holder may extend any maturity date or the
time for payment of any installment due hereunder, otherwise modify the Loan
Documents, accept additional security, release any Person liable, and release
any security or guaranty. Maker, endorsers, guarantors, and sureties waive, to
the full extent permitted by law, the right to plead any and all statutes of
limitations as a defense.

 

 
(b)
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, MAKER SHALL NOT ASSERT, AND
HEREBY WAIVES, ANY CLAIM AGAINST HOLDER, ON ANY THEORY OF LIABILITY, FOR
SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR
ACTUAL DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF THIS NOTE
OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY, THE LOAN OR THE USE OF THE
PROCEEDS THEREOF.

 
12. CHANGE, DISCHARGE, TERMINATION, OR WAIVER.
 
No provision of this Note may be changed, discharged, terminated, or waived
except in a writing signed by the party against whom enforcement of the change,
discharge, termination, or waiver is sought. No failure on the part of Holder to
exercise and no delay by Holder in exercising any right or remedy under this
Note or under the law shall operate as a waiver thereof.
 
13. ATTORNEYS’ FEES.
 
If this Note is not paid when due or if any Event of Default occurs, Maker
promises to pay all costs of enforcement and collection and preparation
therefor, including, but not limited to, reasonable attorneys’ fees, whether or
not any action or proceeding is brought to enforce the provisions hereof
(including, without limitation, all such costs incurred in connection with any
bankruptcy, receivership, or other court proceedings (whether at the trial or
appellate level)) or with regard to any arbitration or other dispute resolution
proceeding.
 
14. SEVERABILITY.
 
If any provision of this Note is unenforceable, the enforceability of the other
provisions shall not be affected and they shall remain in full force and effect.
 
15. INTEREST RATE LIMITATION.
 
Maker hereby agrees to pay an effective rate of interest that is the sum of the
interest rate provided for herein, together with any additional rate of interest
resulting from any other charges of interest or in the nature of interest paid
or to be paid in connection with the Loan, including without limitation, the
Origination Fee and any other fees to be paid by Maker pursuant to the
provisions of the Loan Documents. Holder and Maker agree that none of the terms
and provisions contained herein or in any of the Loan Documents shall be
construed to create a contract for the use, forbearance or detention of money
requiring payment of interest at a rate in excess of the maximum interest rate
permitted to be charged by the laws of the State of Utah. In such event, if any
holder of this Note shall collect monies which are deemed to constitute interest
which would otherwise increase the effective interest rate on this Note to a
rate in excess of the maximum rate permitted to be charged by the laws of the
State of Utah, all such sums deemed to constitute interest in excess of such
maximum rate shall, at the option of Holder, be credited to the payment of other
amounts payable under the Loan Documents or returned to Maker.
 
16. NUMBER AND GENDER.
 
In this Note the singular shall include the plural and the masculine shall
include the feminine and neuter gender, and vice versa.
 
17. HEADINGS.
 
Headings at the beginning of each numbered section of this Note are intended
solely for convenience and are not part of this Note.
 
18. CHOICE OF LAW.
 
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF UTAH WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES. THE PARTIES
AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS NOTE AND
THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND
FEDERAL COURTS LOCATED IN THE COUNTY OF SALT LAKE, STATE OF UTAH OR, AT THE SOLE
OPTION OF HOLDER, IN ANY OTHER COURT IN WHICH HOLDER SHALL INITIATE LEGAL OR
EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER
IN CONTROVERSY. EACH OF MAKER AND HOLDER WAIVES, TO THE EXTENT PERMITTED UNDER
APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 18.
 
19. INTEGRATION.
 
The Loan Documents contain the complete understanding and agreement of Holder
and Maker and supersede all prior representations, warranties, agreements,
arrangements, understandings, and negotiations. PURSUANT TO UTAH CODE ANNOTATED
SECTION 25-5-4, MAKER IS NOTIFIED THAT THIS NOTE AND OTHER WRITTEN LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF ANY ALLEGED PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
 
20. COUNTERPARTS.
 
This document may be executed and acknowledged in counterparts, all of which
executed and acknowledged counterparts shall together constitute a single
document.
 
21. BINDING EFFECT.
 
The Loan Documents will be binding upon, and inure to the benefit of, Holder,
Maker, and their respective successors and assigns. Maker may not delegate its
obligations hereunder or under the Loan Documents.
 
22. TIME OF THE ESSENCE.
 
Time is of the essence with regard to each provision of the Loan Documents as to
which time is a factor.
 
22. SURVIVAL.
 
The representations, warranties, and covenants of Maker in the Loan Documents
shall survive the execution and delivery of the Loan Documents and the making of
the Loan.
 
[Remainder of Page Intentionally Left Blank]
 
 

IN WITNESS WHEREOF, Maker has executed and delivered this Note as of the day and
year first above written.
 

        FRANKLIN COVEY CO.  
   
   a Utah corporation
    By:   /s/ RICHARD PUTNAM  

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Name: Richard Putnam  
Title: Treasurer and Vice President of Investor Relations
"Maker"