Exhibit 10.3


    
      

    

    Exhibit
      10.3

     

     

    

      SECURITY
        AGREEMENT

      


      


      THIS
        SECURITY
        AGREEMENT
        (“Agreement”)
        is
        made as of March 14, 2007, by and among FRANKLIN
        COVEY CO.,
        a Utah
        corporation (“Borrower”),
        FRANKLIN
        COVEY PRINTING, INC.,
        a Utah
        corporation, FRANKLIN
        DEVELOPMENT CORPORATION,
        a Utah
        corporation (“Development”),
        FRANKLIN
        COVEY TRAVEL, INC.,
        a Utah
        corporation, FRANKLIN
        COVEY CATALOG SALES, INC.,
        a Utah
        corporation, FRANKLIN
        COVEY CLIENT SALES, INC.,
        a Utah
        corporation (“Client”),
        FRANKLIN
        COVEY PRODUCT SALES, INC.,
        a Utah
        corporation, FRANKLIN
        COVEY SERVICES, L.L.C.,
        a Utah
        limited liability company (“Services”),
        and
FRANKLIN
        COVEY MARKETING, LTD.,
        a Utah
        limited partnership (“Marketing”)
        (individually and collectively, as the context requires, “Guarantor”
and,
        together with Borrower, individually and collectively, as the context requires,
        “Debtor”),
        JPMORGAN
        CHASE BANK, N.A.,
        a
        national banking association (“Collateral
        Agent”),
        not
        in its individual capacity, but solely as collateral agent for JPMORGAN
        CHASE BANK, N.A.,
        a
        national banking association (“Chase”),
        and
ZIONS
        FIRST NATIONAL BANK,
        a
        national banking association (“Zions”
and,
        together with Chase, individually and collectively, as the context requires,
        the
“Secured
        Party”),
        in
        conjunction with the Guaranty made by Guarantor in favor of Secured Party
        and
        the Loan made to Borrower by Secured Party pursuant to the Loan
        Agreement.

       

      WHEREAS,
        Guarantor has executed the Guaranty in favor of Secured Party, pursuant to
        which
        Guarantor has agreed to guaranty repayment of the Loan;

       

      WHEREAS,
        Borrower and Secured Party, as lender, have entered into the Loan Agreement,
        pursuant to which Secured Party, subject to the terms and conditions contained
        therein, is to make the Loan to Borrower;

       

      WHEREAS,
        it is a condition precedent to Secured Party’s making any loans or otherwise
        extending credit to Borrower under the Loan Agreement that Debtor execute
        and
        deliver to Secured Party a security agreement in substantially the form hereof
        encumbering all of the personal property assets of Debtor; and

       

      WHEREAS,
        Debtor wishes to grant a security interest in favor of Collateral Agent in
        all
        of Debtor’s personal property assets as herein provided.

       

      NOW,
        THEREFORE, in consideration of the promises contained herein and for other
        good
        and valuable consideration, the receipt and sufficiency of which are hereby
        acknowledged, the parties hereto agree as follows:

       

      1.  Definitions.
        All
        capitalized terms used herein without definitions shall have the respective
        meanings provided therefor in the Chase Loan Agreement. All terms defined
        in the
        Utah Uniform Commercial Code, Utah
        Code Annotated
        Sections
        70A-9a-101 et
        seq.,
        and
        used herein shall have the same definitions herein as specified therein.
        However, if a term is defined in Article 9a of the Utah Uniform Commercial
        Code
        differently than in another Article of the Utah Uniform Commercial Code,
        the
        term has the meaning specified in Article 9a. In addition to the foregoing,
        the
        following terms as used herein (including, without limitation, in the Recitals
        to this Agreement) are defined as follows:

       

      1.1  “Chase
        Guaranty”
means
        that certain Repayment Guaranty of even date herewith from Guarantor in favor
        of
        Chase, as the same may be amended or modified from time to time.

       

      1.2  “Chase
        Loan”
means
        the revolving line of credit extended by Chase to Borrower pursuant and subject
        to the Chase Note, the Chase Loan Agreement and the other Chase Loan
        Documents.

       

      1.3  “Chase
        Loan Agreement”
means
        that certain Revolving Line of Credit Agreement of even date herewith by
        and
        between Borrower and Chase, as the same may be amended or modified from time
        to
        time.

       

      1.4  “Chase
        Loan Documents”
means,
        collectively, the Chase Loan Agreement, the Chase Note, the Security Documents,
        the Intercreditor Agreement and all other documents that from time to time
        govern or evidence the Chase Obligations or secure payment or performance
        thereof, as such documents may be amended or modified from time to
        time.

       

      1.5  “Chase
        Note”
means
        that certain Secured Promissory Note of even date herewith executed by Borrower
        and payable to Chase in the maximum principal amount of $18,000,000, as the
        same
        may be amended or modified from time to time.

       

      1.6  “Chase
        Obligations”
means,
        collectively, (a) payment of the Chase Loan; (b) with respect to Guarantor,
        the
        payment of the Guarantor Obligations (as defined in the Chase Guaranty);
        (c) all
        of the terms, conditions, agreements, stipulations, covenants, and provisions
        of
        this Agreement, all other Chase Loan Documents, and any other agreement,
        document or instrument (and any and all renewals, replacements, amendments,
        modifications or extensions thereof), given by Debtor to Chase to evidence
        or to
        secure the indebtedness secured hereby; (d) all late charges, default interest,
        prepayment charges or premiums, loan fees, commitment fees and extension
        fees
        described in this Agreement and all other Chase Loan Documents and all costs
        of
        collecting the indebtedness or other amounts evidenced by this Agreement
        and all
        other Chase Loan Documents, including any and all costs and expenditures
        of a
        receiver in possession and reasonable attorneys’ fees; (e) payment of all sums
        advanced by Chase to protect the Personal Property, with interest thereon
        equal
        to the highest default interest rate as provided by the Chase Note; and (f)
        all
        modifications, extensions and renewals of any of the obligations secured
        hereby,
        however evidenced. This Agreement shall also secure the payment and performance
        of any additional loans that may hereafter be made by Chase to Debtor which
        are
        evidenced by a promissory note or notes or other writings stating that they
        are
        secured by this Agreement. This Agreement shall also secure all amounts,
        including costs of collection, payable under any guarantee(s) now or hereafter
        relating to the obligations secured hereby.

       

      1.7  “Event
        of Default”
means
        the failure of Debtor to pay or perform any of the Obligations as and when
        due
        to be paid or performed under the terms of the Loan Documents.

       

      1.8  “Guaranty”
means,
        individually and collectively, as the context requires, the Chase Guaranty
        and
        the Zions Guaranty.

       

      1.9       "Intercreditor
        Agreement" means that certain Intercreditor Agreement of even date
        herewith by and among Collateral Agent and Secured Party, as the same may
        be
        amended or modified from time to time.

      1.10  “Loan”
means,
        individually and collectively, as the context requires, the Chase Loan and
        the
        Zions Loan. 

       

      1.11  “Loan
        Agreement”
means,
        individually and collectively, as the context requires, the Chase Loan Agreement
        and the Zions Loan Agreement. 

       

      1.12  “Loan
        Documents”
means,
        individually and collectively, as the context requires, the Chase Loan Documents
        and the Zions Loan Documents. 

       

      1.13  “Note”
means,
        individually and collectively, as the context requires, the Chase Note and
        the
        Zions Note.

       

      1.14  “Obligations”
means,
        individually and collectively, as the context requires, the Chase Obligations
        and the Zions Obligations.

       

      1.15  “Personal
        Property”
means
        all right, title, and interest of Debtor in (i) all personal property now
        or
        hereafter owned by Debtor, (ii) all other rights and interests of Debtor
        now or
        hereafter held in personal property, including, without limiting the foregoing,
        all of Debtor’s present and future “Accounts,” “Cash Proceeds,” “Chattel Paper,”
“Collateral,” “Deposit Accounts,” “Electronic Chattel Paper,” “Equipment,”
“Fixtures,” “General Intangibles,” “Goods,” “Instruments,” “Inventory,”
“Investment Property,” “Letter-of-Credit Rights,” “Noncash Proceeds,” and
“Tangible Chattel Paper” (as such terms are defined in the Uniform Commercial
        Code as in effect from time to time in the State of Utah, or any other
        jurisdiction, as applicable (the “Uniform
        Commercial Code”)),
        (iii) all personal property and rights and interests in personal property
        of
        similar type or kind hereafter acquired by Debtor, (iv) all of Debtor’s right,
        title and interest in and to all deposit accounts maintained with Secured
        Party
        or any affiliate of Secured Party, (v) all appurtenances and additions thereto
        and substitutions or replacements thereof, and (vi) all proceeds thereof
        (as
        hereinafter provided).

       

      1.16  “Zions
        Guaranty”
means
        that certain Repayment Guaranty of even date herewith from Guarantor in favor
        of
        Zions, as the same may be amended or modified from time to time. 

       

      1.17  “Zions
        Loan”
means
        the revolving line of credit extended by Zions to Borrower pursuant and subject
        to the Zions Note, the Zions Loan Agreement and the other Zions Loan
        Documents.

       

      1.18     
"Zions
        Loan
        Agreement" means that certain Revolving Line of Credit Agreement of
        even date herewith by and between Borrower and Zions, as teh same may be
        amended
        or modified from time to time.

       

      1.19     
"Zions
        Loan
        Documents" means, collectively, the Zions Loan Agreement, the Zions
        Note, the Security Documents, the Intercreditor Agreement and all other
        documents that from time to time govern or evidence the Zions Obligations
        or
        secure payment of performance thereof, as such documents may be amended or
        modified from time to time.

       

      1.20     
"Zions
        Note" means
        that certain Secured Promissory Note of even date herewith executed by Borrower
        and payable to Zions in the maximum principal amount of $7,000,000, as the
        same
        may be amended or modified from time to time.

       

      1.21  “Zions
        Obligations”
means,
        collectively, (a) payment of the Zions Loan; (b) with respect to Guarantor,
        the
        payment of the Guarantor Obligations (as defined in the Zions Guaranty);
        (c) all
        of the terms, conditions, agreements, stipulations, covenants, and provisions
        of
        this Agreement, all other Zions Loan Documents, and any other agreement,
        document or instrument (and any and all renewals, replacements, amendments,
        modifications or extensions thereof), given by Debtor to Zions to evidence
        or to
        secure the indebtedness secured hereby; (d) all late charges, default interest,
        prepayment charges or premiums, loan fees, commitment fees and extension
        fees
        described in this Agreement and all other Zions Loan Documents and all costs
        of
        collecting the indebtedness or other amounts evidenced by this Agreement
        and all
        other Zions Loan Documents, including any and all costs and expenditures
        of a
        receiver in possession and reasonable attorneys’ fees; (e) payment of all sums
        advanced by Zions to protect the Personal Property, with interest thereon
        equal
        to the highest default interest rate as provided by the Zions Note; and (f)
        all
        modifications, extensions and renewals of any of the obligations secured
        hereby,
        however evidenced. This Agreement shall also secure the payment and performance
        of any additional loans that may hereafter be made by Zions to Debtor which
        are
        evidenced by a promissory note or notes or other writings stating that they
        are
        secured by this Agreement. This Agreement shall also secure all amounts,
        including costs of collection, payable under any guarantee(s) now or hereafter
        relating to the obligations secured hereby. 

       

      2.  Grant
        of Security Interest.
        Debtor
        hereby grants to Collateral Agent, to secure the payment and performance
        in full
        of all of the Obligations, a security interest in and so pledges and assigns
        to
        Collateral Agent all of the “Collateral” as described in the Loan Agreement,
        together with all of Debtor’s Personal Property and all other personal property
        assets of Debtor, wherever located, whether now owned or hereafter acquired
        or
        arising, and all proceeds and products thereof (all of the same being
        hereinafter called the “Collateral”),
        including, without limitation, “Accounts,” “Cash Proceeds,” “Chattel Paper,”
“Collateral,” “Deposit Accounts,” “Electronic Chattel Paper,” “Equipment,”
“Fixtures,” “General Intangibles,” “Goods,” “Instruments,” “Inventory,”
“Investment Property,” “Letter-of-Credit Rights,” “Noncash Proceeds,” and
“Tangible Chattel Paper,” as defined in the Uniform Commercial Code, as more
        particularly described on Exhibit
        A
        hereto,
        and all insurance claims and other proceeds or products thereof, whether
        now
        owned or existing or hereafter acquired or arising, wherever located and
        whether
        in Debtor’s possession and control or in the possession and control of a third
        party. Collateral Agent acknowledges that the attachment of its security
        interest in any additional commercial tort claim as original collateral is
        subject to Debtor’s compliance with Section
        4.7.

       

      3.  Authorization
        to File Financing Statements.
        Debtor
        hereby irrevocably authorizes Collateral Agent at any time and from time
        to time
        to file in any filing office in any Uniform Commercial Code jurisdiction
        any
        initial financing statements and amendments thereto that (a) indicate the
        Collateral (i) as all assets of Debtor or words of similar effect, regardless
        of
        whether any particular asset comprised in the Collateral falls within the
        scope
        of Article 9a of the Uniform Commercial Code, or (ii) as being of an equal
        or
        lesser scope or with greater detail, and (b) provide any other information
        required by part 5 of Article 9a of the Uniform Commercial Code, for the
        sufficiency or filing office acceptance of any financing statement or amendment,
        including (i) whether Debtor is an organization, the type of organization
        and
        any organizational identification number issued to Debtor and, (ii) in the
        case
        of a financing statement filed as a fixture filing or indicating Collateral
        as
        as-extracted collateral or timber to be cut, a sufficient description of
        real
        property to which the Collateral relates. Debtor agrees to furnish any such
        information to Collateral Agent promptly upon Collateral Agent’s request. Debtor
        also ratifies its authorization for Collateral Agent to have filed in any
        Uniform Commercial Code jurisdiction any like initial financing statements
        or
        amendments thereto if filed prior to the date hereof.

       

      4.  Other
        Actions.
        To
        further the attachment, perfection and first priority of, and the ability
        of
        Collateral Agent to enforce, Collateral Agent’s security interest in the
        Collateral, and without limitation on Debtor’s other obligations in this
        Agreement, Debtor agrees, in each case at Debtor’s expense, to take the
        following actions with respect to the following Collateral:

       

      4.1  Promissory
        Notes and Tangible Chattel Paper.
        If
        Debtor shall at any time hold or acquire any promissory notes or tangible
        chattel paper having an original principal amount of $100,000 or more (but
        excluding loans made pursuant to Borrower’s management common stock loan program
        (as described on Schedule 5.20 to the Chase Loan Agreement)), Debtor shall
        forthwith endorse, assign and deliver such promissory notes or tangible chattel
        paper to Collateral Agent, accompanied by such instruments of transfer or
        assignment duly executed in blank as Collateral Agent may from time to time
        specify.

       

      4.2  Deposit
        Accounts.
        For
        each deposit account that Debtor at any time opens or maintains, Debtor shall,
        at Collateral Agent’s request and option, pursuant to an agreement in form and
        substance satisfactory to Collateral Agent, either (a) cause the depositary
        bank
        to comply at any time with instructions from Collateral Agent to such depositary
        bank directing the disposition of funds from time to time credited to such
        deposit account, without further consent of Debtor, or (b) arrange for
        Collateral Agent to become the customer of the depositary bank with respect
        to
        the deposit account, with Debtor being permitted, only with the consent of
        Collateral Agent, to exercise rights to withdraw funds from such deposit
        account. Collateral Agent agrees with Debtor that Collateral Agent shall
        not
        give any such instructions or withhold any withdrawal rights from Debtor,
        unless
        an Event of Default has occurred and is continuing, or would occur, if effect
        were given to any withdrawal not otherwise permitted by the Loan Documents.
        The
        provisions of this paragraph shall not apply to (i) any deposit account for
        which Debtor, the depositary bank and Collateral Agent have entered into
        a cash
        collateral agreement specially negotiated among Debtor, the depositary bank
        and
        Collateral Agent for the specific purpose set forth therein, (ii) a deposit
        account for which Collateral Agent is the depositary bank and is in automatic
        control, and (iii) deposit accounts specially and exclusively used for payroll,
        payroll taxes and other employee wage and benefit payments to or for the
        benefit
        of Debtor’s salaried employees.

       

      4.3  Investment
        Property.
        If
        Debtor shall at any time hold or acquire any certificated securities in any
        Guarantor, Debtor shall forthwith endorse, assign and deliver the same to
        Collateral Agent, accompanied by such instruments of transfer or assignment
        duly
        executed in blank as Collateral Agent may from time to time specify. If any
        securities now or hereafter acquired by Debtor are uncertificated and are
        issued
        to Debtor or its nominee directly by the issuer thereof, Debtor shall promptly
        notify Collateral Agent thereof and, at Collateral Agent’s request and option,
        pursuant to an agreement in form and substance satisfactory to Collateral
        Agent,
        either (a) cause the issuer to agree to comply with instructions from Collateral
        Agent as to such securities, without further consent of Debtor or such nominee,
        or (b) arrange for Collateral Agent to become the registered owner of the
        securities. If any securities, whether certificated or uncertificated, or
        other
        investment property now or hereafter acquired by Debtor are held by Debtor
        or
        its nominee through a securities intermediary or commodity intermediary,
        Debtor
        shall promptly notify Collateral Agent thereof and, at Collateral Agent’s
        request and option, pursuant to an agreement in form and substance satisfactory
        to Collateral Agent, either (i) cause such securities intermediary or (as
        the
        case may be) commodity intermediary to agree to comply with entitlement orders
        or other instructions from Collateral Agent to such securities intermediary
        as
        to such securities or other investment property, or (as the case may be)
        to
        apply any value distributed on account of any commodity contract as directed
        by
        Collateral Agent to such commodity intermediary, in each case without further
        consent of Debtor or such nominee, or (ii) in the case of financial assets
        or
        other investment property held through a securities intermediary, arrange
        for
        Collateral Agent to become the entitlement holder with respect to such
        investment property, with Debtor being permitted, only with the consent of
        Collateral Agent, to exercise rights to withdraw or otherwise deal with such
        investment property. Collateral Agent agrees with Debtor that Collateral
        Agent
        shall not give any such entitlement orders or instructions or directions
        to any
        such issuer, securities intermediary or commodity intermediary, and shall
        not
        withhold its consent to the exercise of any withdrawal or dealing rights
        by
        Debtor, unless an Event of Default has occurred and is continuing, or, after
        giving effect to any such investment and withdrawal rights not otherwise
        permitted by the Loan Documents, would occur. Without the prior written consent
        of Lender, neither Borrower, Development, Client, Services nor Marketing
        shall
        (x) amend or cause to be amended the Guarantor Operating Documents of Services
        or Marketing to provide that the membership interests of Services or the
        partnership interests of Marketing are a security and are governed by Article
        8
        of the Uniform Commercial Code or (y) issue certificates evidencing the
        ownership of the membership or partnership interests of Services or Marketing,
        respectively. The provisions of this paragraph shall not apply to any financial
        assets credited to a securities account for which Collateral Agent is the
        securities intermediary.

       

      4.4  Collateral
        in the Possession of a Bailee.
        If any
        Collateral is at any time in the possession of a bailee, Debtor shall promptly
        notify Collateral Agent thereof and, at Collateral Agent’s request and option,
        shall promptly obtain an acknowledgement from the bailee, in form and substance
        satisfactory to Collateral Agent, that the bailee holds such Collateral for
        the
        benefit of Collateral Agent, and that such bailee agrees to comply, without
        further consent of Debtor, with instructions from Collateral Agent as to
        such
        Collateral. Collateral Agent agrees with Debtor that Collateral Agent shall
        not
        give any such instructions unless an Event of Default has occurred and is
        continuing or would occur after taking into account any action by Debtor
        with
        respect to the bailee.

       

      4.5  Electronic
        Chattel Paper and Transferable Records.
        If
        Debtor at any time holds or acquires an interest in any electronic chattel
        paper
        or any “transferable record,” as that term is defined in Section 201 of the
        federal Electronic Signatures in Global and National Commerce Act, or in
        Section
        16 of the Uniform Electronic Transactions Act as in effect in any relevant
        jurisdiction, Debtor shall promptly notify Collateral Agent thereof and,
        at the
        request and option of Collateral Agent, shall take such action as Collateral
        Agent may reasonably request to vest in Collateral Agent control, under Section
        9a-105 of the Uniform Commercial Code, of such electronic chattel paper or
        control under Section 201 of the federal Electronic Signatures in Global
        and
        National Commerce Act or, as the case may be, Section 16 of the Uniform
        Electronic Transactions Act, as so in effect in such jurisdiction, of such
        transferable record. Collateral Agent agrees with Debtor that Collateral
        Agent
        will arrange, pursuant to procedures satisfactory to Collateral Agent and
        so
        long as such procedures will not result in Collateral Agent’s loss of control,
        for Debtor to make alterations to the electronic chattel paper or transferable
        record permitted under Section 9a-105 of the Uniform Commercial Code or,
        as the
        case may be, Section 201 of the federal Electronic Signatures in Global and
        National Commerce Act or Section 16 of the Uniform Electronic Transactions
        Act
        for a party in control to make without loss of control, unless an Event of
        Default has occurred and is continuing or would occur after taking into account
        any action by Debtor with respect to such electronic chattel paper or
        transferable record.

       

      4.6  Letter-of-Credit
        Rights.
        If
        Debtor is at any time a beneficiary under a letter of credit, Debtor shall
        promptly notify Collateral Agent thereof and, at the request and option of
        Collateral Agent, Debtor shall, pursuant to an agreement in form and substance
        satisfactory to Collateral Agent, either (i) arrange for the issuer and any
        confirmer or other nominated person of such letter of credit to consent to
        an
        assignment to Collateral Agent of the proceeds of the letter of credit, or
        (ii)
        arrange for Collateral Agent to become the transferee beneficiary of the
        letter
        of credit.

       

      4.7  Commercial
        Tort Claims.
        If
        Debtor shall at any time hold or acquire a commercial tort claim, Debtor
        shall
        promptly notify Collateral Agent in a writing signed by Debtor of the
        particulars thereof and grant to Collateral Agent in such writing a security
        interest therein and in the proceeds thereof, all upon the terms of this
        Agreement, with such writing to be in form and substance satisfactory to
        Collateral Agent.

       

      4.8  Other
        Actions as to Any and All Collateral.
        Debtor
        further agrees, at the request and option of Collateral Agent, to take any
        and
        all other actions Collateral Agent may determine to be necessary or useful
        for
        the attachment, perfection and first priority of, and the ability of Collateral
        Agent to enforce, Collateral Agent’s security interest in any and all of the
        Collateral, including, without limitation, (a) executing, delivering and,
        where
        appropriate, filing financing statements and amendments relating thereto
        under
        the Uniform Commercial Code, to the extent, if any, that Debtor’s signature
        thereon is required therefor, (b) causing Collateral Agent’s name to be noted as
        secured party on any certificate of title for a titled good if such notation
        is
        a condition to attachment, perfection or priority of, or ability of Collateral
        Agent to enforce, Collateral Agent’s security interest in such Collateral, (c)
        complying with any provision of any statute, regulation or treaty of the
        United
        States as to any Collateral if compliance with such provision is a condition
        to
        attachment, perfection or priority of, or ability of Collateral Agent to
        enforce, Collateral Agent’s security interest in such Collateral, (d) using
        commercially reasonable efforts to obtain governmental and other third party
        waivers, consents and approvals in form and substance satisfactory to Collateral
        Agent, including, without limitation, any consent of any licensor, lessor
        or
        other person obligated on Collateral, (e) using commercially reasonable efforts
        to obtain waivers from mortgagees in form and substance satisfactory to
        Collateral Agent, (f) taking all actions under any earlier versions of the
        Uniform Commercial Code or under any other law, as reasonably determined
        by
        Collateral Agent to be applicable in any relevant Uniform Commercial Code
        or
        other jurisdiction, including any foreign jurisdiction, and (g) acknowledging
        the Intercreditor Agreement (but not any amendments or other modifications
        of
        the Intercreditor Agreement). Borrower shall use commercially reasonable
        efforts
        to cause to be delivered to Collateral Agent, within sixty (60) days after
        the
        Closing Date, a landlord waiver and consent in a form reasonably acceptable
        to
        Collateral Agent, from each of (a) Franklin SaltLake LLC, the landlord of
        the
        premises leased by Development pursuant to that certain Master Lease Agreement
        dated June 12, 2005, and (b) (i) CB Richard Ellis Investors, L.L.C.
        (“CBREI”),
        the
        master landlord of the premises leased by EDS Information Services L.L.C.
        (“EDS”)
        pursuant to that certain Lease Agreement dated as of June 26, 2001 with
        Development, the landlord’s interest under which was assigned to CBREI by
        Development pursuant to that certain Assignment of Lease dated as of June
        26,
        2001, and (ii) EDS, the sublandlord of the premises subleased by Borrower
        pursuant to that certain Sublease Agreement dated as of June 26, 2001. Upon
        the
        execution of each other real property lease to which Borrower or Guarantor
        is a
        party as a tenant, Borrower shall use commercially reasonable efforts to
        cause
        to be delivered to Collateral Agent a landlord waiver and consent from the
        landlord under each such lease, in a form reasonably acceptable to Collateral
        Agent.

       

      4.9  Contesting
        Liens.
        Borrower shall promptly discharge, or cause to be discharged, any liens or
        claims of lien filed or otherwise asserted in writing against the Collateral
        other than the Permitted Exceptions. If Borrower fails either to promptly
        discharge or contest any such liens or claims of lien, then Collateral Agent
        may, in its sole and absolute discretion, but shall not be required to, procure
        the release and discharge of any such lien and any judgment or decree thereon,
        and in furtherance thereof may, in its sole and absolute discretion, effect
        any
        settlement or compromise. All amounts expended by Collateral Agent in connection
        with the provisions of this Section shall be deemed to constitute an Advance
        under a Loan Agreement. In settling, compromising or arranging for the discharge
        of any liens under this Section, Collateral Agent shall not be required to
        establish or confirm the validity or amount of the lien. 

       

      5.  Relation
        to Other Loan Documents.
        The
        provisions of this Agreement supplement the provisions of any other Loan
        Documents granted by Debtor to Collateral Agent which secures the payment
        or
        performance of any of the Obligations. Nothing contained in the other Loan
        Documents shall derogate from any of the rights or remedies of Collateral
        Agent
        hereunder.

       

      6.  Intentionally
        Omitted.
        

       

      7.  Representations
        and Warranties Concerning Debtor’s Legal Status.
        If
        requested by Collateral Agent, Debtor shall complete and deliver to Collateral
        Agent a certificate signed by Debtor and entitled “Perfection Certificate” (the
“Perfection
        Certificate”).
        Debtor represents and warrants to Collateral Agent as follows: (a) Debtor’s
        exact legal name is that indicated in the introductory paragraph hereto and
        in
        the Perfection Certificate, if any, and on Exhibit
        B
        attached
        hereto, (b) Debtor is an organization of the type, and is organized in the
        jurisdiction set forth in the introductory paragraph hereto and in the
        Perfection Certificate, if any, and on Exhibit
        B
        attached
        hereto, (c) the Perfection Certificate, if any, and Exhibit
        B
        attached
        hereto accurately set forth Debtor’s organizational identification number or
        accurately state that Debtor has none, (d) the Perfection Certificate, if
        any,
        and Exhibit
        B
        attached
        hereto accurately set forth Debtor’s place of business or, if more than one, its
        chief executive office, as well as Debtor’s mailing address, if different, (e)
        all other information set forth on the Perfection Certificate, if any,
        pertaining to Debtor is accurate and complete as of the date on which it
        was
        executed by Debtor, and (f) Borrower will promptly notify Lender in writing
        of a
        change in any information provided in the Perfection Certificate since the
        date
        on which it was executed by Debtor.

       

      8.  Covenants
        Concerning Debtor’s Legal Status.
        Debtor
        covenants with Collateral Agent as follows: (a) without providing at least
        thirty (30) days’ prior written notice to Collateral Agent, Debtor will not
        change its name, its place of business or, if more than one, chief executive
        office, or its mailing address or organizational identification number if
        it has
        one, (b) if Debtor does not have an organizational identification number
        and
        later obtains one, Debtor shall forthwith notify Collateral Agent of such
        organizational identification number, and (c) Debtor will not change its
        type of
        organization, jurisdiction of organization or other legal
        structure.

       

      9.  Representations
        and Warranties Concerning Collateral, etc.
        Debtor
        further represents and warrants to Collateral Agent as follows: (a) Debtor
        is
        the owner of or has other rights in or power to transfer the Collateral,
        free
        from any right or claim or any person or any adverse Lien or Encumbrance
        or
        security interest, except for Liens or Encumbrances and security interests
        in
        favor of Collateral Agent, Permitted Exceptions and other Liens or Encumbrances
        permitted by the Loan Agreement, (b) none of the Collateral constitutes,
        or is
        the proceeds of, “farm products” as defined in Section 9-102(a)(34) of the
        Uniform Commercial Code, (c) Debtor holds no commercial tort claim except
        as
        indicated on the Perfection Certificate, or as Debtor has notified Collateral
        Agent in writing, (d) Debtor has at all times operated its business in
        compliance with all applicable provisions of the federal Fair Labor Standards
        Act, as amended, and with all applicable provisions of federal, state and
        local
        statutes and ordinances dealing with the control, shipment, storage or disposal
        of hazardous materials or substances except, in each case where failure to
        comply would not result in a Material Adverse Change, (e) all other information
        set forth on the Perfection Certificate, if any, pertaining to the Collateral
        is
        accurate and complete in all material respects as of the date of such
        certificate, and (f) the security interests granted herein are perfected
        and are
        of first priority, except to the extent of the Permitted
        Exceptions.

       

      10.  Covenants
        Concerning Collateral, etc.
        Debtor
        further covenants with Collateral Agent as follows except to the extent that
        failure to do so would not cause a Material Adverse Change: (a) the Collateral,
        to the extent not delivered to Collateral Agent pursuant to Section
        4,
        will be
        kept at those locations listed on the Perfection Certificate, if any, and
        on
Exhibit
        B
        attached
        hereto and Debtor will not remove the Collateral from such locations, other
        than
        in the ordinary course of business or as permitted under the Loan Agreement
        or
        the Guaranty, without providing at least thirty (30) days’ prior written notice
        to Collateral Agent, (b) except for the security interest herein granted
        and
        liens permitted by the Loan Documents, including without limitation the
        Permitted Exceptions, Debtor shall be the owner of or have other rights in
        the
        Collateral free from any right or claim of any other person, lien, security
        interest or other encumbrance, and Debtor shall defend the same against all
        claims and demands of all persons at any time claiming the same or any interests
        therein adverse to Collateral Agent, (c) Debtor shall not pledge, mortgage
        or
        create, or suffer to exist any right of any person in or claim by any person
        to
        the Collateral, or any security interest, lien or encumbrance in the Collateral
        in favor of any person, other than Collateral Agent, except for liens permitted
        by the Loan Documents, including without limitation the Permitted Exceptions,
        (d) Debtor will keep the Collateral in good order and repair, normal wear
        and
        tear excepted, and will not use the same in violation of law, (e) Debtor
        will
        permit Collateral Agent, or its designee, upon reasonable prior notice, to
        enter
        upon any portion of the premises where any Collateral may be located for
        purposes of inspection of the Collateral; provided,
        however,
        that
        inspection by Collateral Agent (or by Collateral Agent’s inspector) of the
        Collateral or any portion thereof is for the sole purpose of protecting the
        security of Collateral Agent and is not to be construed as a representation
        by
        Collateral Agent that there has been compliance with applicable law or any
        other
        requirement or condition and Debtor may make or cause to be made such other
        independent inspections as Debtor may desire for its own protection, and
        nothing
        contained herein shall be construed as requiring Collateral Agent to oversee
        or
        supervise the Collateral, (f) Debtor will pay promptly when due all taxes,
        assessments, governmental charges and levies upon the Collateral or incurred
        in
        connection with the use or operation of such Collateral or incurred in
        connection with this Agreement, (g) Debtor will continue to operate its business
        in compliance with all applicable provisions of the federal Fair Labor Standards
        Act, as amended, and with all applicable provisions of federal, state and
        local
        statutes and ordinances dealing with the control, shipment, storage or disposal
        of hazardous materials or substances, and (h) unless such action would result
        in
        a Material Adverse Change (without taking into consideration subsections
        (iii)
        and (iv) of the definition of Material Adverse Change), Debtor may sell or
        otherwise dispose, or offer to sell or otherwise dispose, of the Collateral
        or
        any interest therein except that Debtor shall not sell or otherwise dispose
        of,
        or offer to sell or otherwise dispose of, all or a substantial part of the
        Collateral other than to Borrower or a Guarantor.

       

      11.  Insurance.

       

      11.1  Maintenance
        of Insurance.
        Debtor
        will maintain with financially sound and reputable insurers insurance with
        respect to its properties and business against such casualties and contingencies
        as shall be in accordance with general practices of businesses engaged in
        similar activities in similar geographic areas. All such insurance policies
        shall (a) be in such minimum amounts that Debtor will not be deemed a co-insurer
        under applicable insurance laws, regulations and policies, (b) be issued
        by an
        insurance company licensed to do business in the state where the property
        is
        located having a rating of “A-” VIII or better by A.M. Best Co., in Best’s
        Rating Guide, (c) name “JPMorgan Chase Bank, N.A., any and all subsidiaries as
        their interest may appear” as additional insureds on all liability insurance,
        (d) be endorsed to show that Borrower’s insurance shall be primary and all
        insurance carried by Collateral Agent is strictly excess and secondary and
        shall
        not contribute with Borrower’s insurance, (e) be evidenced by a certificate of
        insurance to be provided to Collateral, (f) include either policy or binder
        numbers on the Accord form, and (g) otherwise shall be in such amounts, contain
        such terms, be in such forms and be for such periods as may be reasonably
        satisfactory to Collateral Agent. In addition, all such insurance shall be
        payable to Collateral Agent as loss payee. Without limiting the foregoing,
        Debtor will (x) keep all of its physical property insured with casualty or
        physical hazard insurance on an “all risks” basis, with broad form flood and
        earthquake coverages and electronic data processing coverage, with a full
        replacement cost endorsement and an “agreed amount” clause in an amount equal to
        100% of the full replacement cost of such property, (y) maintain all such
        workers’ compensation or similar insurance as may be required by law, and (z)
        maintain, in amounts and with deductibles equal to those generally maintained
        by
        businesses engaged in similar activities in similar geographic areas, general
        public liability insurance against claims of bodily injury, death or property
        damage occurring, on, in or about the properties of Debtor; and business
        interruption insurance.

       

      11.2  Insurance
        Proceeds.
        The
        proceeds of any casualty insurance in respect of any casualty loss of any
        of the
        Collateral shall, subject to the rights, if any, of other parties with an
        interest having priority in the property covered thereby, (a) so long as
        no
        Event of Default has occurred and is continuing, be disbursed to Debtor for
        direct application by Debtor solely to the repair or replacement of Debtor’s
        property so damaged or destroyed, and (b) in all other circumstances, be
        held by
        Collateral Agent as cash collateral for the Obligations. Collateral Agent
        may,
        at its reasonable option which option shall be exercised within ten (10)
        Business Days of receipt of such proceeds, disburse from time to time all
        or any
        part of such proceeds so held as cash collateral, upon such terms and conditions
        as Collateral Agent may reasonably prescribe, for direct application by Debtor
        solely to the repair or replacement of Debtor’s property so damaged or
        destroyed, or Collateral Agent may ratably distribute to each Secured Party
        all
        or any part of such proceeds for application to the Obligations.

       

      11.3  Continuation
        of Insurance.
        All
        policies of insurance shall provide for at least thirty (30) days’ prior written
        cancellation notice to Collateral Agent. In the event of failure by Debtor
        to
        provide and maintain insurance as herein provided, Collateral Agent may,
        at its
        option, provide such insurance and charge the amount thereof to Debtor. Debtor
        shall furnish Collateral Agent with certificates of insurance and policies
        evidencing compliance with the foregoing insurance provision.

       

      12.  Collateral
        Protection Expenses; Preservation of Collateral.

       

      12.1  Expenses
        Incurred by Collateral Agent or Secured Party.
        In
        Collateral Agent’s or any Secured Party’s sole and absolute discretion, if
        Debtor fails to do so, Collateral Agent or such Secured Party may discharge
        taxes and other encumbrances (other than Permitted Exceptions) at any time
        levied or placed on any of the Collateral, unless such taxes and encumbrances
        are being contested in good faith, maintain any of the Collateral, make repairs
        thereto and pay any necessary filing fees or insurance premiums. Debtor agrees
        to reimburse Collateral Agent or such Secured Party on demand for all
        expenditures so made. Neither Collateral Agent nor any Secured Party shall
        have
        any obligation to Debtor to make any such expenditures, nor shall the making
        thereof be construed as the waiver or cure of any Default or Event of
        Default.

       

      12.2  Collateral
        Agent’s Obligations and Duties.
        Anything herein to the contrary notwithstanding, Debtor shall remain obligated
        and liable under each contract or agreement comprised in the Collateral to
        be
        observed or performed by Debtor thereunder. Collateral Agent shall not have
        any
        obligation or liability under any such contract or agreement by reason of
        or
        arising out of this Agreement or the receipt by Collateral Agent of any payment
        relating to any of the Collateral, nor shall Collateral Agent be obligated
        in
        any manner to perform any of the obligations of Debtor under or pursuant
        to any
        such contract or agreement, to make inquiry as to the nature or sufficiency
        of
        any payment received by Collateral Agent in respect of the Collateral or
        as to
        the sufficiency of any performance by any party under any such contract or
        agreement, to present or file any claim, to take any action to enforce any
        performance or to collect the payment of any amounts which may have been
        assigned to Collateral Agent or to which Collateral Agent may be entitled
        at any
        time or times. Collateral Agent’s sole duty with respect to the custody, safe
        keeping and physical preservation of the Collateral in its possession, under
        Section 9a-207 of the Uniform Commercial Code or otherwise, shall be to deal
        with such Collateral in the same manner as Collateral Agent deals with similar
        property for its own account.

       

      13.  Securities
        and Deposits.
        Collateral Agent may at any time following and during the continuance of
        an
        Event of Default, at its sole option, transfer to itself or any nominee any
        securities constituting Collateral, receive any income thereon and hold such
        income as additional Collateral or apply it to the Obligations. Whether or
        not
        any Obligations are due, Collateral Agent may following and during the
        continuance of an Event of Default, demand, sue for, collect, or make any
        settlement or compromise which it deems desirable with respect to the
        Collateral. Regardless of the adequacy of Collateral or any other security
        for
        the Obligations and during the continuance of an Event of Default, any deposits
        or other sums at any time credited by or due from Collateral Agent to Debtor
        may
        at any time be applied to or set off against any of the Obligations. If
        Collateral Agent exercises such setoff right, Collateral Agent exercising
        such
        right agrees promptly to notify Debtor after any such setoff and application
        made by Collateral Agent; provided,
        however, that the failure to give such notice shall not affect the validity
        of
        such setoff and application. 

       

      14.  Notification
        to Account Debtors and Other Persons Obligated on Collateral.
        If an
        Event of Default shall have occurred and be continuing, Debtor shall, at
        the
        request and option of Collateral Agent, notify account debtors and other
        persons
        obligated on any of the Collateral of the security interest of Collateral
        Agent
        in any account, chattel paper, general intangible, instrument or other
        Collateral and that payment thereof is to be made directly to Collateral
        Agent
        or to any financial institution designated by Collateral Agent as Collateral
        Agent’s agent therefor, and Collateral Agent may itself, if an Event of Default
        shall have occurred and be continuing, without notice to or demand upon Debtor,
        so notify account debtors and other persons obligated on Collateral. After
        the
        making of such a request or the giving of any such notification, Debtor shall
        hold any proceeds of collection of accounts, chattel paper, general intangibles,
        instruments and other Collateral received by Debtor as trustee for Collateral
        Agent without commingling the same with other funds of Debtor and shall turn
        the
        same over to Collateral Agent in the identical form received, together with
        any
        necessary endorsements or assignments. Collateral Agent shall ratably distribute
        to each Secured Party the proceeds of collection of accounts, chattel paper,
        general intangibles, instruments and other Collateral received by Collateral
        Agent, for application by each Secured Party to the Obligations, such proceeds
        to be immediately credited after final payment in cash or other immediately
        available funds of the items giving rise to them.

       

      15.  Power
        of Attorney.

       

      15.1  Appointment
        and Powers of Collateral Agent.
        Debtor
        hereby irrevocably constitutes and appoints Collateral Agent and any officer
        or
        agent thereof, with full power of substitution, as its true and lawful
        attorney-in-fact with full irrevocable power and authority in the place and
        stead of Debtor or in Collateral Agent’s own name, for the purpose of carrying
        out the terms of this Agreement, to take any and all appropriate action and
        to
        execute any and all documents and instruments that may be necessary or useful
        to
        accomplish the purposes of this Agreement and, without limiting the generality
        of the foregoing, hereby gives said attorneys the power and right, on behalf
        of
        Debtor, without notice to or assent by Debtor, to do the following:

       

      (a)  upon
        the
        occurrence and during the continuance of an Event of Default, generally to
        sell,
        transfer, pledge, make any agreement with respect to or otherwise dispose
        of or
        deal with any of the Collateral in such manner as is consistent with the
        Uniform
        Commercial Code and as fully and completely as though Collateral Agent were
        the
        absolute owner thereof for all purposes, and to do, at Debtor’s expense, at any
        time, or from time to time, all acts and things which Collateral Agent deems
        necessary or useful to protect, preserve or realize upon the Collateral and
        Collateral Agent’s security interest therein, in order to effect the intent of
        this Agreement, all at least as fully and effectively as Debtor might do,
        including, without limitation, (i) the filing and prosecuting of registration
        and transfer applications with the appropriate federal, state, local or other
        agencies or authorities with respect to trademarks, copyrights and patentable
        inventions and processes, (ii) upon written notice to Debtor, the exercise
        of
        voting rights with respect to voting securities, which rights may be exercised,
        if Collateral Agent so elects, with a view to causing the liquidation of
        assets
        of the issuer of any such securities, and (iii) the execution, delivery and
        recording, in connection with any sale or other disposition of any Collateral,
        of the endorsements, assignments or other instruments of conveyance or transfer
        with respect to such Collateral; 

       

      (b)  to
        the
        extent that Debtor’s authorization given in Section
        3
        is not
        sufficient, to file such financing statements with respect hereto, with or
        without Debtor’s signature, or a photocopy of this Agreement in substitution for
        a financing statement, as Collateral Agent may deem appropriate and to execute
        in Debtor’s name such financing statements and amendments thereto and
        continuation statements which may require Debtor’s signature; and

       

      (c)  to
        file
        for record, at Borrower’s cost and expense and in Borrower’s name, any notices
        that Collateral Agent considers necessary or desirable to protect the
        Collateral.

       

      15.2  Ratification
        by Debtor.
        To the
        extent permitted by law, Debtor hereby ratifies all that said attorneys shall
        lawfully do or cause to be done by virtue hereof. This power of attorney
        is a
        power coupled with an interest and is irrevocable.

       

      15.3  No
        Duty on Collateral Agent.
        The
        powers conferred on Collateral Agent hereunder are solely to protect its
        interests in the Collateral and shall not impose any duty upon it to exercise
        any such powers. Collateral Agent shall be accountable only for the amounts
        that
        it actually receives as a result of the exercise of such powers, and neither
        it
        nor any of its officers, directors, employees or agents shall be responsible
        to
        Debtor for any act or failure to act, except for Collateral Agent’s own gross
        negligence or willful misconduct.

       

      16.  Rights
        and Remedies.
        If an
        Event of Default shall have occurred and be continuing, Collateral Agent,
        without any other notice to or demand upon Debtor, shall have in any
        jurisdiction in which enforcement hereof is sought, in addition to all other
        rights and remedies, the rights and remedies of a secured party under the
        Uniform Commercial Code and any additional rights and remedies which may
        be
        provided to a secured party in any jurisdiction in which Collateral is located,
        including, without limitation, the right to take possession of the Collateral,
        and for that purpose Collateral Agent may, so far as Debtor can give authority
        therefor, enter upon any premises on which the Collateral may be situated
        and
        remove the same therefrom. During continuance of an Event of Default, Collateral
        Agent may in its discretion require Debtor to assemble all or any part of
        the
        Collateral at such location or locations within the jurisdiction(s) of Debtor’s
        principal office(s) or at such other locations as Collateral Agent may
        reasonably designate. Unless the Collateral is perishable or threatens to
        decline speedily in value or is of a type customarily sold on a recognized
        market, Collateral Agent shall give to Debtor at least ten Business Days
        prior
        written notice of the time and place of any public sale of Collateral or
        of the
        time after which any private sale or any other intended disposition is to
        be
        made. Debtor hereby acknowledges that ten Business Days prior written notice
        of
        such sale or sales shall be reasonable notice. In addition, Debtor waives
        any
        and all rights that it may have to a judicial hearing in advance of the
        enforcement of any of Collateral Agent’s rights and remedies hereunder,
        including, without limitation, its right following an Event of Default to
        take
        immediate possession of the Collateral and to exercise its rights and remedies
        with respect thereto.

       

      17.  Standards
        for Exercising Rights and Remedies.
        To the
        extent that applicable law imposes duties on Collateral Agent to exercise
        remedies in a commercially reasonable manner, Debtor acknowledges and agrees
        that it is not commercially unreasonable for Collateral Agent (a) to fail
        to
        incur expenses reasonably deemed significant by Collateral Agent to prepare
        Collateral for disposition or otherwise to fail to complete raw material
        or work
        in process into finished goods or other finished products for disposition,
        (b)
        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, (c) to fail to exercise collection
        remedies against account debtors or other persons obligated on Collateral
        or to
        fail to remove liens or encumbrances on or any adverse claims against
        Collateral, (d) 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, (e) to advertise dispositions
        of
        Collateral through publications or media of general circulation, whether
        or not
        the Collateral is of a specialized nature, (f) to contact other persons,
        whether
        or not in the same business as Debtor, for expressions of interest in acquiring
        all or any portion of the Collateral, (g) to hire one or more professional
        auctioneers to assist in the disposition of Collateral, whether or not the
        collateral is of a specialized nature, (h) 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 capability of doing so, or that
        match
        buyers and sellers of assets, (i) to dispose of assets in wholesale rather
        than
        retail markets, (j) to disclaim disposition warranties, (k) to purchase
        insurance or credit enhancements to insure Collateral Agent against risks
        of
        loss, collection or disposition of Collateral or to provide to Collateral Agent
        a guaranteed return from the collection or disposition of Collateral, or
        (l) to
        the extent deemed appropriate by Collateral Agent, to obtain the services
        of
        other brokers, investment bankers, consultants and other professionals to
        assist
        Collateral Agent in the collection or disposition of any of the Collateral.
        Debtor acknowledges that the purpose of this Section
        17
        is to
        provide non-exhaustive indications of what actions or omissions by Collateral
        Agent would fulfill Collateral Agent’s duties under the Uniform Commercial Code
        or other law of the State of Utah or any other relevant jurisdiction in
        Collateral Agent’s exercise of remedies against the Collateral and that other
        actions or omissions by Collateral Agent shall not be deemed to fail to fulfill
        such duties solely on account of not being indicated in this Section
        17.
        Without
        limitation upon the foregoing, nothing contained in this Section
        17
        shall be
        construed to grant any rights to Debtor or to impose any duties on Collateral
        Agent that would not have been granted or imposed by this Agreement or by
        applicable law in the absence of this Section
        17.

       

      18.  No
        Waiver by Collateral Agent, etc.
        Collateral Agent shall not be deemed to have waived any of its rights or
        remedies in respect of the Obligations or the Collateral unless such waiver
        shall be in writing and signed by Collateral Agent. No delay or omission
        on the
        part of Collateral Agent in exercising any right or remedy shall operate
        as a
        waiver of such right or remedy or any other right or remedy. A waiver on
        any one
        occasion shall not be construed as a bar to or waiver of any right or remedy
        on
        any future occasion. All rights and remedies of Collateral Agent with respect
        to
        the Obligations or the Collateral, whether evidenced hereby or by any other
        instrument or papers, shall be cumulative and may be exercised singularly,
        alternatively, successively or concurrently at such time or at such times
        as
        Collateral Agent deems expedient.

       

      19.  Suretyship
        Waivers by Debtor.
        Debtor
        waives demand, notice, protest, notice of acceptance of this Agreement, notice
        of loans made, credit extended, Collateral received or delivered or other
        action
        taken in reliance hereon and all other demands and notices of any description.
        With respect to both the Obligations and the Collateral, Debtor assents to
        any
        extension or postponement of the time of payment or any other indulgence,
        to any
        substitution, exchange or release of or failure to perfect any security interest
        in any Collateral, to the addition or release of any party or person primarily
        or secondarily liable, to the acceptance of partial payment thereon and the
        settlement, compromising or adjusting of any thereof, all in such manner
        and at
        such time or times as Collateral Agent may deem advisable. Collateral Agent
        shall have no duty as to the collection or protection of the Collateral or
        any
        income therefrom, the preservation of rights against prior parties, or the
        preservation of any rights pertaining thereto beyond the safe custody thereof
        as
        set forth in Section
        12.2.
        Debtor
        further waives any and all other suretyship defenses.

       

      20.  Marshalling.
        Collateral Agent shall not be required to marshal any present or future
        collateral security (including but not limited to the Collateral) for, or
        other
        assurances of payment of, the Obligations or any of them or to resort to
        such
        collateral security or other assurances of payment in any particular order,
        and
        all of its rights and remedies hereunder and in respect of such collateral
        security and other assurances of payment shall be cumulative and in addition
        to
        all other rights and remedies, however existing or arising. To the extent
        that
        it lawfully may, Debtor hereby agrees that it will not invoke any law relating
        to the marshalling of collateral which might cause delay in or impede the
        enforcement of Collateral Agent’s rights and remedies under this Agreement or
        under any other instrument creating or evidencing any of the Obligations
        or
        under which any of the Obligations is outstanding or by which any of the
        Obligations is secured or payment thereof is otherwise assured, and, to the
        extent that it lawfully may, Debtor hereby irrevocably waives the benefits
        of
        all such laws.

       

      21.  Proceeds
        of Dispositions; Expenses.
        Debtor
        shall pay to Collateral Agent on demand any and all expenses, including
        reasonable attorneys’ fees and disbursements, incurred or paid by Collateral
        Agent in protecting, preserving or enforcing Collateral Agent’s rights and
        remedies under or in respect of any of the Obligations or any of the Collateral.
        After deducting all of said expenses, the residue of any proceeds of collection
        or sale or other disposition of the Collateral shall, to the extent actually
        received in cash, be distributed ratably to each Secured Party, which shall
        be
        applied to the payment of the Obligations in such order or preference as
        each
        Secured Party may determine, proper allowance and provision being made for
        any
        Obligations not then due. Upon the final payment and satisfaction in full
        of all
        of the Obligations and after making any payments required by Sections
        9-608(a)(1)(C) or 9a-615(a)(3) of the Uniform Commercial Code, any excess
        shall
        be returned to Debtor. In the absence of final payment and satisfaction in
        full
        of all of the Obligations, Debtor shall remain liable for any
        deficiency.

       

      22.  Overdue
        Amounts.
        Until
        paid, all amounts due and payable by Debtor hereunder shall be a debt secured
        by
        the Collateral and shall bear, whether before or after judgment, interest
        at the
        rate of interest for overdue principal set forth in the Loan
        Documents.

       

      23.  CHOICE
        OF LAW.
        THIS
        AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREUNDER 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 AGREEMENT AND THE OTHER LOAN
        DOCUMENTS MAY BE TRIED AND LITIGATED IN THE STATE AND FEDERAL COURTS LOCATED
        IN
        THE COUNTY OF SALT LAKE, STATE OF UTAH OR, IN ANY OTHER COURT IN WHICH A
        PARTY
        SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER
        JURISDICTION OVER THE MATTER IN CONTROVERSY. EACH OF DEBTOR AND COLLATERAL
        AGENT
        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 ANY STATE OR FEDERAL COURT LOCATED IN THE COUNTY
        OF
        SALT LAKE, STATE OF UTAH.

       

      24.  WAIVER
        OF JURY TRIAL.
        EACH OF
        DEBTOR AND COLLATERAL AGENT 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 AGREEMENT OR THE
        TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED UPON CONTRACT, TORT OR ANY
        OTHER
        THEORY). EACH OF DEBTOR AND COLLATERAL AGENT (A) CERTIFIES THAT NO
        REPRESENTATIVE, AGENT OR 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 AGREEMENT BY, AMONG OTHER
        THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

       

      25.  WAIVER
        OF SPECIAL DAMAGES. TO
        THE
        EXTENT PERMITTED BY APPLICABLE LAW, DEBTOR SHALL NOT ASSERT, AND HEREBY WAIVES,
        ANY CLAIM AGAINST COLLATERAL AGENT, 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 AGREEMENT
        OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY, THE TRANSACTIONS, THE
        LOAN
        OR THE USE OF THE PROCEEDS THEREOF.

       

      26.  MISCELLANEOUS
        WAIVERS.
        WITH
        RESPECT TO ANY SUIT, ACTION OR PROCEEDINGS RELATING TO THIS AGREEMENT (EACH,
        A
“PROCEEDING”),
        DEBTOR IRREVOCABLY (A) SUBMITS TO THE JURISDICTION OF THE STATE AND FEDERAL
        COURTS HAVING JURISDICTION IN THE CITY OF SALT LAKE, COUNTY OF SALT LAKE
        AND
        STATE OF UTAH, AND (B) WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME
        TO THE
        LAYING OF VENUE OF ANY PROCEEDING BROUGHT IN ANY SUCH COURT, WAIVES ANY CLAIM
        THAT ANY PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND FURTHER
        WAIVES
        THE RIGHT TO OBJECT, WITH RESPECT TO SUCH PROCEEDING, THAT SUCH COURT DOES
        NOT
        HAVE JURISDICTION OVER SUCH PARTY. NOTHING IN THIS AGREEMENT SHALL PRECLUDE
        COLLATERAL AGENT FROM BRINGING A PROCEEDING IN ANY OTHER JURISDICTION NOR
        WILL
        THE BRINGING OF A PROCEEDING IN ANY ONE OR MORE JURISDICTIONS PRECLUDE THE
        BRINGING OF A PROCEEDING IN ANY OTHER JURISDICTION. DEBTOR FURTHER AGREES
        AND
        CONSENTS THAT, IN ADDITION TO ANY METHODS OF SERVICE OF PROCESS PROVIDED
        FOR
        UNDER APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY PROCEEDING IN ANY UTAH
        STATE
        OR UNITED STATES COURT SITTING IN THE CITY OF SALT LAKE AND COUNTY OF SALT
        LAKE
        MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED
        TO DEBTOR AT THE ADDRESS INDICATED IN THE GUARANTY OR THE LOAN AGREEMENT,
        AS THE
        CASE MAY BE, AND SERVICE SO MADE SHALL BE COMPLETE UPON RECEIPT; EXCEPT
        THAT IF
        DEBTOR SHALL REFUSE TO ACCEPT DELIVERY, SERVICE SHALL BE DEEMED COMPLETE
        FIVE
        (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO MAILED.

       

      27.  Miscellaneous.
        The
        headings of each section of this Agreement are for convenience only and shall
        not define or limit the provisions thereof. This Agreement and all rights
        and
        obligations hereunder shall be binding upon Debtor and its respective successors
        and assigns, and shall inure to the benefit of Collateral Agent and its
        successors and assigns. If any term of this Agreement shall be held to be
        invalid, illegal or unenforceable, the validity of all other terms hereof
        shall
        in no way be affected thereby, and this Agreement shall be construed and
        be
        enforceable as if such invalid, illegal or unenforceable term had not been
        included herein. Debtor acknowledges receipt of a copy of this Agreement.
        All
        notices required or permitted hereunder shall be made in the manner required
        or
        permitted by the Uniform Commercial Code and otherwise in accordance with
        the
        terms and at the addresses set forth in the Chase Loan Agreement and the
        Chase
        Guaranty. Debtor hereby authorizes Collateral Agent, at its sole discretion
        and
        without notice to or consent of Debtor, to disclose to Zions or Chase on
        a
        confidential basis any information, financial or otherwise, which it may
        possess
        concerning Debtor. Collateral Agent acknowledges that it is aware, and
        Collateral Agent will advise its directors, officers, employees, agents and
        advisors (collectively, “Representatives”) who are informed as to the matters
        which are the subject of this Agreement, that the United States securities
        laws
        prohibit any Person who has received from an issuer material, non-public
        information concerning such issuer from purchasing or selling securities
        of such
        issuer or from communicating such information to any other Person under
        circumstances in which it is reasonably foreseeable that such Person is likely
        to purchase or sell securities. Lender further agrees that it will keep,
        and it
        will advise its Representatives of its obligations to keep, confidential
        any
        material non-public information disclosed to Collateral Agent by Borrower
        or any
        Person acting on Borrower’s behalf. This Section is a confidentiality agreement
        for purposes of Regulation FD promulgated under the Securities Exchange Act
        of
        1934.

       

      [Remainder
        of Page Intentionally Left Blank]

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       


      IN
        WITNESS WHEREOF, intending to be legally bound, Debtor has caused this Agreement
        to be duly executed as of the date first above written.

       

      
        	 	 	 
	 	FRANKLIN
                COVEY CO.
	 
 	 
 	a
                Utah
                corporation
 
	 	By:  	/s/
                RICHARD PUTNAM
	 	
                
Name:
                Richard Putnam
	 	Title:
                Treasurer and Vice President of Investor
                Relations


      

       

       

      
         

        
          	 	 	 
	 	FRANKLIN
                  COVEY PRINTING, INC.
	 
 	 
 	a
                  Utah
                  corporation
 
	 	By:  	 /s/ RICHARD PUTNAM
	 	
                  
Name:
                  Richard Putnam
	 	Title:
                  Treasurer


        

         

         

        
           

          
            	 	 	 
	 	FRANKLIN
                    DEVELOPMENT CORPORATION
	 
 	 
 	a
                    Utah
                    corporation
 
	 	By:  	 /s/ RICHARD PUTNAM
	 	
                    
Name:
                    Richard Putnam
	 	Title:Vice
                    President


          

           

           

          
             

            
              	 	 	 
	 	FRANKLIN
                      COVEY TRAVEL, INC.
	 
 	 
 	a
                      Utah
                      corporation
 
	 	By:  	 /s/ RICHARD PUTNAM
	 	
                      
Name:
                      Richard Putnam
	 	Title:
                      Treasurer


            

             

             

            
               

              
                	 	 	 
	 	FRANKLIN
                        COVEY CATALOG SALES, INC.
	 
 	 
 	a
                        Utah
                        corporation
 
	 	By:  	 /s/ RICHARD PUTNAM
	 	
                        
Name:
                        Richard Putnam
	 	Title:
                        Treasurer


              

               

               

              
                 

                
                  	 	 	 
	 	FRANKLIN
                          COVEY CLIENT SALES, INC
	 
 	 
 	a
                          Utah
                          corporation
 
	 	By:  	 /s/ RICHARD PUTNAM
	 	
                          
Name:
                          Richard Putnam
	 	Title:
                          Treasurer


                

                 

                 

                
                   

                  
                    	 	 	 
	 	FRANKLIN
                            COVEY PRODUCT SALES, INC.
	 
 	 
 	a
                            Utah
                            corporation
 
	 	By:  	 /s/ RICHARD PUTNAM
	 	
                            
Name:
                            Richard Putnam
	 	Title:
                            Treasurer


                  

                   

                   

                  
                     

                    
                      	 	 	 
	 	FRANKLIN
                              COVEY SERVICES, L.L.C.
	 
 	 
 	a
                              Utah
                              liability company
 
	 	By:  	
                              FRANKLIN
                                COVEY
                                SERVICES, L.L.C.

                                      a  Utah
                                corporation, its member

                               

                              /s/ RICHARD PUTNAM

                            
	 	
                              
Name:
                              Richard Putnam
	 	Title:
                              Treasurer


                    

                     

                     

                    
                       

                      
                        	 	 	 
	 	FRANKLIN
                                COVEY CO.
	 
 	 
 	a
                                Utah
                                corporation
 
	 	By:  	 /s/ RICHARD PUTNAM
	 	
                                
Name:
                                Richard Putnam
	 	Title:
                                Treasurer and Vice President of Investor
                                Relations


                      

                       

                       

                      
                         

                        
                          	 	 	 
	
                                  By:
                                     

                                	FRANKLIN
                                  COVEY DEVELOPMENT CORPORATION
	 
 	 
 	a
                                  Utah
                                  corporation, its member
 
	 	By:  	 /s/ RICHARD PUTNAM
	 	
                                  
Name:
                                  Richard Putnam
	 	Title:Vice
                                  President


                        

                         

                         

                        
                           

                          
                            	 	 	 
	 	FRANKLIN
                                    COVEY CO.
	 
 	 
 	a
                                    Utah
                                    corporation
 
	
                                    By:
                                       

                                  	FRANKLIN
                                    DEVELOPMENT CORPORATION
	 	 	a
                                    Utah corporation, its general partner
	 	 	 
	 	By:  	 /s/ RICHARD PUTNAM
	 	
                                    
Name:
                                    Richard Putnam
	 	
                                    Title:
                                      Vice President

                                    "Debtor"

                                  


                          

                           

                           

                          
                             

                            
                              	 	 	 
	 	JPMORGAN
                                      CHASE BANK, N.A.
	 
 	 
 	a national
                                      banking association
 
	 	By:  	 /s/ TONY C. NIELSEN
	 	
                                      
Name:
                                      Tony C. Nielsen
	 	
                                      Title:
                                        Senior Vice President

                                      "Collateral
                                        Agent"

                                    


                            

                             

                          

                        

                      

                    

                  

                

              

            

          

        

      

      


      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      



      EXHIBIT
        A

       

      DESCRIPTION
        OF PERSONAL PROPERTY

       

      All
        of
        Debtor’s assets, including, without limitation, “Accounts,” “Cash Proceeds,”
“Chattel Paper,” “Collateral,” “Deposit Accounts,” “Electronic Chattel Paper,”
“Equipment,” “Fixtures,” General Intangibles,” “Goods,” “Instruments,”
“Inventory,” “Investment Property,” “Letter-of-credit Rights,” “Noncash
        Proceeds,” and “Tangible Chattel Paper,” as defined in the Uniform Commercial
        Code. Such assets include, without limitation:

       

      (a)  All
        personal property, (including, without limitation, all goods, supplies,
        equipment, furniture, furnishings, fixtures, machinery, inventory, construction
        materials and software embedded in any of the foregoing) in which Debtor
        now or
        hereafter acquires an interest or right, together with any interest of Debtor
        in
        and to personal property which is leased or subject to any superior security
        interest, and all books, records, leases and other agreements, documents,
        and
        instruments of whatever kind or character, relating to such personal
        property;

       

      (b)  All
        fees,
        income, rents, issues, profits, earnings, receipts, royalties, and revenues
        which, after the date hereof and while any portion of the Obligations remains
        unpaid or unperformed, may accrue from such personal property or any part
        thereof, or which may be received or receivable by Debtor from any hiring,
        using, letting, leasing, subhiring, subletting, subleasing, occupancy,
        operation, or use thereof;

       

      (c)  All
        of
        Debtor’s present and future rights to receive payments of money, services, or
        property, including, without limitation, rights to receive capital contributions
        or subscriptions from Debtor’s partners or shareholders, amounts payable on
        account of the sale of partnership interests in Debtor or the capital stock
        of
        Debtor, accounts and other accounts receivable, deposit accounts, chattel
        paper
        (whether tangible or electronic), notes, drafts, contract rights, instruments,
        general intangibles, and principal, interest, and payments due on account
        of
        goods sold or leased, services rendered, loans made or credit extended, together
        with title to or interest in all agreements, documents, and instruments
        evidencing securing or guarantying the same;

       

      (d)  All
        other
        intangible property (and related software) and rights relating to the personal
        property described in Paragraph
        (a)
        above or
        the operation or use thereof, including, without limitation, all governmental
        and private contracts, agreements, permits, licenses, and approvals relating
        thereto, all names under or by which such property may at any time be sold,
        marketed, operated or known, all rights to carry on business under any such
        names, or any variant thereof, all trade names and trademarks, copyrights,
        patents, trademark, patent and copyright applications and registrations,
        patterns, designs, drawings, plans and specifications, other proprietary
        information and intellectual property, and royalties relating in any way
        thereto, and all goodwill and software in any way relating thereto;

       

      (e)  Debtor’s
        rights under all insurance policies covering the Personal Property, or any
        other
        part of the Collateral, and any and all proceeds, loss payments, and premium
        refunds payable regarding the same;

       

      (f)  All
        causes of action, claims, compensation, and recoveries for any damage to,
        destruction of, or condemnation or taking of the Personal Property, or any
        other
        part of the Collateral, or for any conveyance in lieu thereof, whether direct
        or
        consequential, or for any damage or injury to the Personal Property, or any
        other part of the Collateral, or for any loss or diminution in value of the
        Personal Property, or any other part of the Collateral;

       

      (g)  All
        Debtor’s rights in proceeds of the Loan evidenced by the Note; 

       

      (h)  All
        of
        Debtor’s rights under any agreements affecting the Personal Property, whether
        now existing or hereafter arising; and

       

      (i)  All
        proceeds from sale or disposition of any of the aforesaid
        collateral.

       

      As
        used
        in this Exhibit
        A
        the
        terms “Obligations,” “Note,” “Collateral,” and “Personal Property” shall have
        the meanings set forth in the Security Agreement to which this Exhibit
        A
        is
        attached.

       

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      
 

      EXHIBIT
        B

       

      FINANCING
        STATEMENT INFORMATION

       

      The
        Collateral Agent is:

       

      JPMorgan
        Chase Bank, N.A.

      80
        West
        Broadway, Suite 200

      Salt
        Lake
        City, Utah 84101

       

      The
        Debtor is:

       

      
        	
                Name,
                  Type of Organization and Jurisdiction

              	
                Address

              	
                Organizational
                  Identification No.

              	
                Employer
                  Identification No.

              
	
                FRANKLIN
                  COVEY CO., a
                  Utah corporation

              	
                2200
                  West Parkway Blvd.

                Salt
                  Lake City, Utah 84119

              	
                852657-0142

              	
                87-0401551

              
	
                FRANKLIN
                  COVEY PRINTING, INC., a
                  Utah corporation

              	
                2200
                  West Parkway Blvd.

                Salt
                  Lake City, Utah 84119

              	
                848770-0142

              	
                87-0401876

              
	
                FRANKLIN
                  DEVELOPMENT CORPORATION, a
                  Utah corporation

              	
                2200
                  West Parkway Blvd.

                Salt
                  Lake City, Utah 84119

              	
                976652-0142

              	
                87-0448924

              
	
                FRANKLIN
                  COVEY TRAVEL, INC., a
                  Utah corporation

              	
                2200
                  West Parkway Blvd.

                Salt
                  Lake City, Utah 84119

              	
                1303276-0142

              	
                87-0555873

              
	
                FRANKLIN
                  COVEY CATALOG SALES, INC., a
                  Utah corporation

              	
                2200
                  West Parkway Blvd.

                Salt
                  Lake City, Utah 84119

              	
                1318674-0142

              	
                87-0561599

              
	
                FRANKLIN
                  COVEY CLIENT SALES, INC., a
                  Utah corporation

              	
                2200
                  West Parkway Blvd.

                Salt
                  Lake City, Utah 84119

              	
                1318682-0142

              	
                87-0561601

              
	
                FRANKLIN
                  COVEY PRODUCT SALES, INC., a
                  Utah corporation

              	
                2200
                  West Parkway Blvd.

                Salt
                  Lake City, Utah 84119

              	
                1318690-0142

              	
                87-0561600

              
	
                FRANKLIN
                  COVEY SERVICES, L.L.C., a
                  Utah limited liability company

              	
                2200
                  West Parkway Blvd.

                Salt
                  Lake City, Utah 84119

              	
                2028086-0160

              	
                87-0563642

              
	
                FRANKLIN
                  COVEY MARKETING, LTD., a
                  Utah limited partnership

              	
                2200
                  West Parkway Blvd.

                Salt
                  Lake City, Utah 84119

              	
                2115011-0180

              	
                87-0563643

              


      

      


      The
        Collateral is the Personal Property described on Exhibit
        A
        to the
        Security Agreement.