Exhibit 10.1


    
      
        

      

    

    Exhibit
      10.1

     

    
 

    


     

    REVOLVING
      LINE OF CREDIT AGREEMENT

     

    by
      and
      between

     

    JPMORGAN
      CHASE BANK, N.A.,

    a
      national banking association,

     

    as
      Lender,

     

    and

     

    FRANKLIN
      COVEY CO.,

    a
      Utah
      corporation,

     

    as
      Borrower

     

    Dated
      as
      of March 14, 2007

     

    
 

    
      

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    REVOLVING
      LINE OF CREDIT AGREEMENT

     

    THIS
      REVOLVING
      LINE OF CREDIT AGREEMENT
      is made
      as of March 14, 2007, by and between FRANKLIN
      COVEY CO.,
      a Utah
      corporation (“Borrower”),
      whose
      address is 2200 West Parkway Blvd., Salt Lake City, Utah 84119, and JPMORGAN
      CHASE BANK, N.A.,
      a
      national banking association (“Lender”),
      whose
      mailing address is 80 West Broadway, Suite 200, Salt Lake City, Utah
      84101.

     

    RECITALS:

     

    A. Borrower
      has applied to Lender for a revolving line of credit loan to finance Borrower’s
      general corporate purposes, including Borrower’s working capital needs, the
      redemption of Borrower’s common or preferred stock, or other Borrower purposes,
      and for other uses approved by Lender, upon the terms and subject to the
      conditions set forth herein.

     

    B. Based
      on
      the foregoing and upon the terms and subject to the conditions set forth herein,
      Lender is willing to extend the requested revolving line of credit loan to
      Borrower.

     

    NOW,
      THEREFORE, in consideration of the covenants and conditions herein contained,
      the parties agree as follows:

     

    ARTICLE
      1  

     

    DEFINITIONS

     

    1.1  Definitions.
      As used
      herein, the following terms shall have the meanings set forth
      below:

     

    “Account
      Control Agreement”
means
      that certain Account Control Agreement of even date herewith by and among
      Borrower, Guarantor, Collateral Agent and Zions.

     

    “Advance”
means
      a
      disbursement of Loan proceeds.

     

    “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 managers of a Person, if the Person is
      a
      limited liability company or limited partnership.

     

    “Agreement”
means
      this Revolving Line of Credit Agreement, as the same may be amended and
      supplemented from time to time.

     

    “Authorized
      Representative”
means,
      for any Person, the person or persons designated by that Person to take any
      and
      all actions on the part of that Person under any of the Loan Documents or in
      connection with the Loan.

     

    “Average
      Quarterly Outstanding Balance”
means
      the aggregate sum of the outstanding and unpaid balance of the Loan for each
      day
      during a calendar quarter (or portion thereof) with respect to which the Unused
      Commitment Fee is being computed, divided by the number of days in that calendar
      quarter (or portion thereof).

     

    “Borrower”
has
      the
      meaning set forth in the introductory paragraph of this Agreement, together
      with
      its successors and permitted assigns.

     

    “Borrower
      Operating Documents”
means
      the Articles of Incorporation of Borrower, as filed with the predecessor filing
      office to the Utah Department of Commerce, Division of Corporations and
      Commercial Code on December 2, 1983, and the Amended and Restated Bylaws of
      Borrower, dated effective as of January 11, 2002, and all modifications and
      amendments to those documents, pursuant to which Borrower has been formed and
      exists.

     

    “Business
      Day”
means
      a
      day other than a Saturday, Sunday or any other day on which Lender’s branch
      located at 80 West Broadway, Salt Lake City, Utah is authorized or obligated
      to
      close.

     

    “Capital
      Expenditures”
means
      expenditures for fixed or capital assets as determined in accordance with
      GAAP.

     

    “Change
      of Control”
(a)
      means the closing of a sale or other disposition of all or substantially all
      of
      Borrower’s or Guarantor’s assets; (b) shall be deemed to have occurred at such
      time as a “person” or “group” (within the meaning of Sections 13(d) and 14(d)(2)
      of the Securities Exchange Act of 1934, as amended) becomes the “beneficial
      owner” (as defined in Rule 13d3 under the Securities Exchange Act of 1934, as
      amended), directly or indirectly, of more than fifty percent (50%) of the total
      voting power of all classes of stock then outstanding of Borrower entitled
      to
      vote in the election of directors; or (c) Borrower’s or Guarantor’s merger into
      or consolidation with any other entity, or any other reorganization or transfer,
      directly or indirectly, of the ownership interests in Borrower or Guarantor,
      in
      which the holders of the outstanding ownership interests in Borrower or
      Guarantor immediately prior to such transaction receive or retain, in connection
      with such transaction on account of their ownership interests, ownership
      interests representing less than fifty percent (50%) of the voting power of
      the
      entity surviving such transaction; provided,
      however,
      that a
      Change of Control shall not include a merger effected exclusively for the
      purpose of changing the domicile of Borrower or Guarantor or a merger of a
      Guarantor into Borrower or another Guarantor.

     

    “Closing
      Date”
means
      the date upon which Borrower, Guarantor and Lender have executed and delivered
      each of the Loan Documents and each of the conditions precedent and other
      requirements in Article 4
      have
      been satisfied or waived, as determined by Lender in its sole and absolute
      discretion.

     

    “Code”
means
      the Internal Revenue Code of 1986, as amended, and any successor statute
      promulgated in replacement thereof, together with all temporary, final and
      other
      Treasury Regulations promulgated under the Code.

     

    “Collateral”
means
      all of Borrower’s and Guarantor’s assets and proceeds thereof, including,
      without limitation, the personal property subject to the Security Agreement,
      including proceeds, products, interest on and investments thereof from time
      to
      time, and all other property, interests in property, and rights to property
      securing any or all of Borrower’s and Guarantor’s payment and other obligations
      under the Loan Documents from time to time.

     

    “Collateral
      Agent”
means
      JPMORGAN
      CHASE BANK, N.A.,
      a
      national banking association, not in its individual capacity, but solely as
      collateral agent for Lender and Zions.

     

    “Consolidated
      Entities”
means
      Borrower and any Subsidiaries thereof, including, without limitation,
      Guarantor.

     

    “Covenant
      Compliance Certificate”
means
      a
      Covenant Compliance Certificate in form and substance satisfactory to Lender,
      which shall be in substantially the form attached hereto as Exhibit
      A
      from
      Borrower to Lender certifying compliance with the financial covenants set forth
      in Section
      6.8
      of this
      Agreement, together with such other supporting documents and information as
      Lender may require from time to time in accordance herewith.

     

    “Default
      Interest Rate”
means
      a
      rate of interest equal to the lesser of (a) the aggregate of THREE PERCENT
      (3%)
      per annum plus the Interest Rate, or (b) the highest rate legally permissible
      under applicable Requirements of Law. The Default Interest Rate shall change
      from time to time as and when the Interest Rate changes.

     

    “Early
      Termination Fee”
means,
      as of the date of any early termination of the Loan by Borrower pursuant to
      Section
      2.6(c),
      an
      amount equal to the sum of (a) the Unused Commitment Fee for the portion of
      the
      calendar quarter that has passed as of such date and (b) using a discount rate
      of seven percent (7%), the net present value of the aggregate amount of future
      Unused Commitment Fees which would have been due (assuming an Average Quarterly
      Outstanding Balance of $0.00) for each calendar quarter (or portion thereof)
      remaining in the term of the Loan after the date Borrower terminates the
      Loan.

     

    “EBITDAR”
shall
      have the meaning given in Section
      6.8(a).

     

    “ERISA”
means
      the Employee Retirement Income Security Act of 1974, as amended, and any
      successor statute of similar import, together with the regulations thereunder,
      in each case as in effect from time to time. References to sections of ERISA
      shall be construed to also refer to any successor sections.

     

    “ERISA
      Affiliate”
means
      any corporation, partnership, or other trade or business (whether or not
      incorporated) that is, along with Borrower or Guarantor, a member of a
      controlled group of corporations or a controlled group of trades or businesses,
      as described in sections 414(b) and 414(c), respectively, of the Code or section
      4001 of ERISA, or a member of the same affiliated service group within the
      meaning of section 414(m) of the Code.

     

    “Event
      of Default”
means
      the occurrence of any of the events listed in Section
      7.1
      and the
      expiration of any applicable notice and cure period provided in said
      section.

     

    “Financing
      Statement”
means
      one or more UCC financing statements and/or addenda thereto, to be prepared
      by
      Collateral Agent, naming Borrower and/or Guarantor, as applicable, as debtor,
      in
      favor of Collateral Agent, as secured party, and perfecting Collateral Agent’s
      security interest in the Collateral now owned or hereafter acquired by Borrower
      and Guarantor, in form and substance satisfactory to Collateral Agent, to be
      filed with the Utah Department of Commerce, Division of Corporations and
      Commercial Code and in such other offices for recording or filing such
      statements in such jurisdictions as Collateral Agent shall desire to perfect
      Collateral Agent’s liens and security interest or reflect such interest in
      appropriate public records.

     

    “Franklin
      Covey Mexico”
      means
      FRANKLIN COVEY MEXICO, INC.,
      a Utah
      corporation.

     

    “GAAP” shall
      have the meaning given in Section
      1.3.

     

    “Governmental
      Authority”
means
      the government of the United States of America, any other nation or any
      political subdivision thereof, whether state or local, and any agency,
      authority, instrumentality, regulatory body, court, central bank or other entity
      exercising executive, legislative, judicial, taxing, regulatory or
      administrative powers or functions of or pertaining to government.

     

    “Guarantor”
means,
      individually and collectively, as the context requires, and jointly and
      severally, all present and future domestic Subsidiaries of Borrower, including,
      without limitation, FRANKLIN
      COVEY PRINTING, INC.,
      a Utah
      corporation (“Printing”),
      FRANKLIN
      DEVELOPMENT CORPORATION,
      a Utah
      corporation (“Development”),
      FRANKLIN
      COVEY TRAVEL, INC.,
      a Utah
      corporation (“Travel”),
      FRANKLIN
      COVEY CATALOG SALES, INC.,
      a Utah
      corporation (“Catalog”),
      FRANKLIN
      COVEY CLIENT SALES, INC.,
      a Utah
      corporation (“Client”),
      FRANKLIN
      COVEY PRODUCT SALES,
      a Utah
      corporation (“Product”),
      FRANKLIN
      COVEY SERVICES, L.L.C.,
      a Utah
      limited liability company (“Services”),
      and
FRANKLIN
      COVEY MARKETING, LTD.,
      a Utah
      limited partnership (“Marketing”).

     

    “Guarantor
      Loan Documents”
means
      the Guaranty and any other guaranties, agreements, documents, or instruments
      now
      or hereafter executed by Guarantor evidencing, guarantying, securing or
      otherwise related to the obligations of Guarantor or the Loan, as the Guaranty
      and such other guaranties, agreements, documents, and instruments may be
      amended, modified, extended, renewed, or supplemented from time to
      time.

     

    “Guarantor
      Operating Documents”
means
      the articles of incorporation, articles of organization, certificate of
      partnership, bylaws, operating agreements and limited partnership agreements
      of
      Guarantor, as applicable, and all modifications and amendments to those
      documents, pursuant to which Guarantor has been formed and exists.

     

    “Guaranty”
means
      that certain Repayment Guaranty executed by Guarantor, as the same may be
      amended, modified, supplemented and restated from time to time.

     

    “Indebtedness”
means,
      as to any Person (a) indebtedness created, issued, incurred or assumed by such
      Person for borrowed money or evidenced by bonds, debentures, notes or similar
      instruments; (b) all obligations of such Person to pay the deferred purchase
      price of property or services; (c) all indebtedness secured by a lien on any
      asset of such Person whether or not such indebtedness is assumed by such Person;
      (d) all obligations, contingent or otherwise, of such Person directly or
      indirectly guaranteeing any indebtedness or other obligation of any other Person
      or in any manner providing for the payment of any indebtedness or other
      obligation of any other Person or otherwise protecting the holder of such
      indebtedness against loss (excluding endorsements for collection or deposit
      in
      the ordinary course of business); (e) the amount of all reimbursement
      obligations and other obligations of such Person (whether due or to become
      due,
      contingent or otherwise) in respect of letters of credit, bankers’ acceptances,
      surety or other bonds (but excluding surety or other bonds in favor of
      Governmental Authorities) and similar instruments; (f) all obligations under
      leases capitalized in accordance with GAAP; and (g) all other obligations that
      would be included as liabilities on a balance sheet prepared in accordance
      with
      GAAP.

     

    “Intercreditor
      Agreement”
means
      that certain Intercreditor Agreement of approximately even date herewith by
      and
      among Collateral Agent, Lender and Zions, as the same may be amended, modified,
      supplemented or restated from time to time.

     

    “Interest
      Period”
means
      each period commencing on the first day of a calendar month and ending on the
      first day of the next succeeding calendar month; provided,
      however,
      that
      (i) the first Interest Period shall commence on the Closing Date; and (ii)
      any
      Interest Period that would otherwise extend past the Maturity Date shall end
      on
      the Maturity Date.

     

    “Interest
      Rate”
means
      a
      variable rate equal to the LIBO Rate in effect from time to time plus One and
      One-Tenth Percent (1.10%) per annum.

     

    “Lender”
means
      JPMORGAN
      CHASE BANK, N.A.,
      a
      national banking association whose address is as set forth in the introductory
      paragraph of this Agreement, its successors and assigns.

     

    “Letter
      of Credit”
means
      a
      written agreement by Lender to honor drafts or other demands for payment in
      compliance with the conditions specified in a letter of credit extended by
      Lender pursuant to this Agreement, on such form(s) of letter of credit as
      customarily issued by Lender and on such terms as Lender shall require in its
      reasonable discretion.

     

    “Letter
      of Credit Application and Agreement”
means
      Lender’s then-current form of Letter of Credit Application and Agreement or such
      other application form as Lender shall then require.

     

    “Letter
      of Credit Limit”
means
      the aggregate issued and committed amount of THREE MILLION AND NO/100 DOLLARS
      ($3,000,000.00).

     

    “Letter
      of Credit Interest Rate”
means
      the per annum interest rate set forth in the Letter of Credit Application and
      Agreement executed and delivered by Borrower in connection with any Letter
      of
      Credit.

     

    “LIBO
      Rate”
means,
      with respect to any Interest Period, the rate appearing on Page 3750 of the
      Dow
      Jones Market Service (or on any successor or substitute page of such Service,
      or
      any successor to or substitute for such Service, providing rate quotations
      comparable to those currently provided on such page of such Service, as
      determined by Lender from time to time for purposes of providing quotations
      of
      interest rates applicable to dollar deposits in the London interbank market)
      at
      approximately 11:00 a.m., London time, two (2) Business Days prior to the
      commencement of such Interest Period, as the rate for dollar deposits with
      a
      maturity comparable to such Interest Period. In the event that such rate is
      not
      available at such time for any reason, then the “LIBO
      Rate”
with
      respect to such Interest Period shall be the rate at which dollar deposits
      of
      $1,000,000 and for a maturity comparable to such Interest Period are offered
      by
      the principal London office of Lender in immediately available funds in the
      London interbank market at approximately 11:00 a.m., London time, two (2)
      Business Days prior to the commencement of such Interest Period.

     

    “Lien
      or Encumbrance”
and
      “Liens
      and Encumbrances”
means
      any assignment as security, conditional sale for security purposes, grant in
      trust, lien, mortgage, pledge, security interest, title retention arrangement,
      other encumbrance, or other interest or right securing the payment of money
      or
      the performance of any other liability or obligation, whether voluntarily or
      involuntarily created and whether arising by agreement, document, or instrument,
      under any law, ordinance, regulation, or rule (federal, state, or local), or
      otherwise.

     

    “Loan”
means
      the revolving line of credit loan from Lender to Borrower described in this
      Agreement.

     

    “Loan
      Amount”
means
      the amount of up to EIGHTEEN MILLION AND NO/100 DOLLARS ($18,000,000.00), plus
      any sum in addition thereto advanced by Lender in its sole and absolute
      discretion in accordance with the Loan Documents, to be disbursed pursuant
      to
      the terms and conditions of this Agreement.

     

    “Loan
      Documents”
means
      the documents described in Section
      4.1(i),
      any
      International Swap and Derivatives Association Master Agreement (and any
      confirmation related thereto and any other Swap Agreement), and any other
      guaranties, agreements, documents, or instruments now or hereafter evidencing,
      guarantying or securing the Obligations of Borrower hereunder, as this
      Agreement, the other documents described in Section
      4.1,
      and
      such other agreements, documents, and instruments may be amended, modified,
      extended, renewed, or supplemented from time to time.

     

    “Loan
      Party”
means
      Borrower, Guarantor and each other Person that from time to time is or becomes
      obligated to Lender or Collateral Agent under any Loan Document or grants any
      Lien or Encumbrance to Lender or Collateral Agent with respect to any
      Collateral.

     

    “Material
      Adverse Change”
means
      any change in the assets, liabilities, financial condition, or results of
      operations of Borrower or Borrower and Guarantor on an aggregate basis, or
      any
      other event or condition with respect to Borrower or Borrower and Guarantor
      together, that materially and adversely affects any of the following: (i) the
      likelihood of performance by Borrower or Borrower and Guarantor together of
      any
      Obligations or the ability of Borrower or Borrower and Guarantor together to
      perform such Obligations, (ii) the legality, validity or binding nature of
      any of the Obligations of Borrower or Guarantor, (iii) any Lien or Encumbrance
      securing any of such Obligations, or (iv) the priority of any Lien or
      Encumbrance securing any of such Obligations.

     

    “Maturity
      Date”
means
      the date which is exactly thirty-six (36) months from the date of the
      Note.

     

    “Multiemployer
      Plan”
means
      a
“multiemployer plan” as defined in Section 4001(a)(3) of ERISA which is
      maintained for employees of Borrower or Guarantor.

     

    “Note”
means
      the Secured Promissory Note of approximately even date herewith executed by
      Borrower and payable to Lender, as such note may be amended, modified, extended,
      renewed, supplemented or restated from time to time.

     

    “Obligations”
means,
      as the context requires, the duties and obligations of Borrower and/or Guarantor
      under the Loan Documents from time to time, including without limitation,
any
      and
      all obligations, contingent or otherwise, whether now existing or hereafter
      arising, of Borrower to Lender arising under or in connection with Swap
      Agreements.

     

    “Occupational
      Safety and Health Law”
means
      the Occupational Safety and Health Act of 1970, as amended, and any other
      federal, state or local statute, law, ordinance, code, rule, regulation, order
      or decree regulating, relating to or imposing liability or standards of conduct
      concerning employee health and/or safety.

     

    “Other
      Loans”
      means
      any loan, financing arrangement or extension of credit to Borrower or its
      Subsidiaries, including, without limitation, Guarantor, from Lender, any
      Affiliate of Lender, J.P. Morgan Chase & Co. or any of its Affiliates, or
      Zions or any of its Affiliates.

     

    “Payment
      Date”
means
      the first (1st)
      day of
      each calendar month after the Closing Date.

     

    “PBGC”
means
      the Pension Benefit Guaranty Corporation and any entity succeeding to any or
      all
      of its functions under ERISA.

     

    “Permitted
      Exceptions”
means
      the following: (a) the sale, transfer, or other disposition of any Collateral
      that is (i) consumed or worn out in ordinary usage and that is promptly replaced
      with similar items of equal or greater value or (ii) sold in the ordinary course
      of business; (b) the Loan Documents; (c) purchase money liens on items of the
      Collateral; (d) Liens or Encumbrances granted to Zions or Collateral Agent
      pursuant to the Zions Loan Documents in respect of which Lender or Collateral
      Agent shares or is otherwise granted a first priority security interest with
      Zions on a pari
      passu
      basis
      pursuant to and as set forth in the Intercreditor Agreement; (e) Liens and
      Encumbrances against Borrower or Guarantor set forth on Schedule
      5.6
      in
      effect on the Closing Date; (f) covenants, restrictions, rights,
      rights-of-way, easements and minor irregularities and encumbrances in title
      which do not materially interfere with the business or operations of Borrower
      or
      Guarantor as presently conducted; (g) Liens and Encumbrances arising by statute
      in connection with worker’s compensation and unemployment insurance (other than
      Liens and Encumbrances arising under ERISA), good faith cash deposits in
      connection with tenders, contracts or leases to which Borrower or Guarantor
      is a
      party or other cash deposits required to be made in the ordinary course of
      business (provided in each case that the obligation is not for borrowed money
      and that the obligation secured is not overdue or, if overdue, is being
      contested in good faith); (h) mechanics’, workmen’s, materialmen’s,
      landlords’, carriers’ or other similar Liens and Encumbrances arising in the
      ordinary course of Borrower’s or Guarantor’s business with respect to
      obligations which are not due or which are being contested in good faith; (i)
      the pledge of assets for the purpose of securing an appeal, stay or discharge
      in
      the course of any legal proceeding, provided that the aggregate amount of
      liabilities of Borrower and Guarantor secured by a pledge of Collateral,
      including interest and penalties thereon, if any, shall not be in excess of
      $2,000,000 at any one time outstanding; and (j) any interest or title of a
      lessor under any operating lease to Borrower or Guarantor.

     

    “Person”
means
      any natural person, any unincorporated association, any corporation, any
      partnership, any joint venture, any limited liability company, any trust, any
      other legal entity, or any Governmental Authority.

     

    “Pledged
      Securities”
means
      all of the shares of the common stock of Guarantor (other than Services and
      Marketing) owned and pledged by Borrower, together with all dividends therefrom
      (whether in cash or in equity securities), all stock splits or reissuances
      thereof, all distributions thereon or in respect thereof, all rights with
      respect thereto, including voting and appraisement rights, all investments
      thereof, interest thereon and proceeds thereof, all securities, cash or other
      assets in replacement thereof.

     

    “Quarterly
      Payment Date”
means
      the last day of each of March, June, September and December of each calendar
      year until the Maturity Date, unless any such day is not a Business Day, in
      which case the Quarterly Payment Date shall be the next succeeding Business
      Day.

     

    “Reimbursement
      Obligations” shall
      have the meaning given in Section
      3.2(a).

     

    “Reportable
      Event”
has
      the
      meaning given to such term in ERISA, but shall not include any event for which
      the thirty (30) day reporting requirement has been waived by the
      PBGC.

     

    “Request
      for Advance”
means
      a
      completed, written Request for Advance and Pledge in form and substance
      satisfactory to Lender, which shall be in substantially the form attached hereto
      as Exhibit
      B
      from
      Borrower to Lender requesting an Advance from Lender, together with such other
      documents and information as Lender may require from time to time in accordance
      herewith.

     

    “Requirements
      of Law” means
      (a)
      the organizational documents of an entity and (b) any law, regulation,
      ordinance, code, decree, treaty, ruling or determination of an arbitrator,
      court
      or other Governmental Authority, or any Executive Order issued by the President
      of the United States, in each case applicable to or binding upon such Person
      or
      to which such Person, any of its property or the conduct of its business is
      subject.

     

    “Security
      Agreement”
means
      that certain Security Agreement of even date herewith by and between Borrower
      and Guarantor, as debtor, and Collateral Agent, as secured party, with respect
      to all of the assets of Borrower and Guarantor.

     

    “Stock
      Pledge Agreement”
means
      that certain Pledge and Security Agreement of even date herewith by and between
      Borrower, as pledgor, and Collateral Agent, pledging all of the shares of each
      Guarantor other than Services and Marketing.

     

    “Subsidiary”
means,
      with respect to any Person (the “parent”)
      at any
      date, any corporation, limited liability company, partnership, association
      or
      other entity (a) of which securities or other ownership interests representing
      more than 50% of the equity or more than 50% of the ordinary voting power or,
      in
      the case of a partnership, more than 50% of the general partnership interests
      are, as of such date, owned, controlled or held, or (b) that is, as of such
      date, otherwise controlled, directly or indirectly, by the parent or one or
      more
      subsidiaries of the parent. As used in this definition, “control”
means
      the possession, directly or indirectly, of the power to direct or cause the
      direction of the management or policies of a Person, whether through the ability
      to exercise voting power, by contract or otherwise.

     

    “Swap
      Agreement”
      means
      any
      agreement between Borrower and Lender with respect to any swap, forward, future
      or derivative transaction or option or similar agreement involving, or settled
      by reference to, one or more rates, currencies, commodities, equity or debt
      instruments or securities, or economic, financial or pricing indices or measures
      of economic, financial or pricing risk or value or any similar transaction
      or
      any combination of these transactions.

     

    “Transfer”
means
      (a) the granting of any Lien or Encumbrance on the Collateral or any part
      thereof to any Person, except the security interests in favor of Lender or
      Collateral Agent, the Permitted Exceptions and other matters which have been
      approved in writing by Lender; (b) any sale, transfer, conveyance, lease or
      vesting of the Collateral or any part thereof or interest therein to or in
      any
      Person, whether voluntary, involuntary, by operation of law, or otherwise,
      except the Permitted Exceptions, which would result in a Material Adverse Change
      (without taking into consideration subsections (iii) and (iv) of the definition
      of Material Adverse Change); (c) any Change of Control; or (d) the execution
      of
      any agreements to do any of the foregoing, except the Permitted
      Exceptions.

     

    “Unused
      Commitment Fee”
means,
      with respect to each calendar quarter (or portion thereof) during the term
      of
      the Loan, an amount equal to (i) the Loan Amount minus
      (ii) the
      Average Quarterly Outstanding Balance for such calendar quarter (or portion
      thereof) with respect to which the Unused Commitment is being computed, with
      the
      resulting number being multiplied
      by
      ONE
      QUARTER OF ONE PERCENT (0.25%) per annum (i.e., 0.0625% per quarter). If the
      Unused Commitment Fee is being computed for less than a full calendar quarter,
      the percentage used in the preceding sentence will be computed on a daily basis
      for the number of days for which the fee is being computed.

     

    “Zions”
means
      ZIONS
      FIRST NATIONAL BANK,
      a
      national banking association.

     

    “Zions
      Account”
means
      an account established by Borrower with Zions into which Lender and Zions shall
      advance proceeds of the Loan and the Zions Loan, respectively.

     

    “Zions
      Loan”
means
      that certain revolving line of credit in the maximum principal amount of up
      to
      SEVEN MILLION AND NO/100 DOLLARS ($7,000,000.00).

     

    “Zions
      Loan Documents”
means
      any agreements, documents, instruments or guaranties, now or hereafter
      governing, evidencing, guarantying or securing the obligations of Borrower
      with
      respect to the Zions Loan, as such agreements, documents, instruments and
      guaranties may be amended, modified, extended, renewed, or supplemented from
      time to time.

     

    1.2  Interpretation.
      Unless
      the context of this Agreement otherwise clearly requires, the following rules
      of
      construction shall apply to this Agreement and each of the other Loan
      Documents:

     

    (a)  Number;
      Inclusion.
      References to the plural include the singular, the plural, the part and the
      whole; “or” has the inclusive meaning represented by the phrase “and/or”; and
“including” has the meaning represented by the phrase “including without
      limitation”.

     

    (b)  Documents
      Taken as a Whole.
      The
      words “hereof,” “herein,” “hereunder,” “hereto” and similar terms in this
      Agreement or any other Loan Document refer to this Agreement or such other
      Loan
      Document as a whole and not to any particular provision of this Agreement or
      such other Loan Document.

     

    (c)  Headings.
      The
      section and other headings contained in this Agreement or the other Loan
      Documents and the Table of Contents (if any) preceding this Agreement or the
      other Loan Documents are for reference purposes only and shall not control
      or
      affect the construction of this Agreement or the other Loan Documents or the
      interpretation thereof in any respect.

     

    (d)  Implied
      References to This Agreement.
      Article, section, subsection, clause, schedule and exhibit references are to
      this Agreement unless otherwise specified.

     

    (e)  Persons.
      Reference to any Person includes such Person’s successors and assigns but, if
      applicable, only if such successors and assigns are permitted by this Agreement
      or the other Loan Documents, as the case may be.

     

    (f)  Modifications
      to Documents.
      Reference to any agreement (including this Agreement and any other Loan Document
      together with the schedules and exhibits hereto or thereto), document or
      instrument means such agreement, document or instrument as amended, modified,
      replaced, substituted for, superseded or restated.

     

    1.3  Accounting
      Terms.
      For
      purposes of this Agreement, all accounting terms not otherwise defined herein
      or
      in the Recitals shall have the meanings assigned to them in conformity with
      generally accepted accounting practices and principles (“GAAP”),
      consistently applied. In the event that GAAP changes during the term of this
      Agreement such that the covenants contained in Section
      6.8
      would
      then be calculated in a different manner or with different components, (a)
      Borrower and Lender agree to amend this Agreement in such respects as are
      necessary to conform those covenants as criteria for evaluating the Consolidated
      Entities’ financial condition to substantially the same criteria as were
      effective prior to such change in GAAP and (b) the Consolidated
      Entities shall be deemed to be in compliance with the covenants contained
      in Section
      6.8
      following any such change in GAAP if and to the extent that the Consolidated
      Entities would have been (and would continue to be) in compliance therewith
      under GAAP as in effect immediately prior to such change.

     

    1.4  Actions
      by Lender.
      Unless
      otherwise expressly provided in this Agreement, all determinations, consents,
      approvals, disapprovals, calculations, requirements, requests, acts, actions,
      elections, selections, opinions, judgments, options, exercise of rights,
      remedies or indemnities, satisfaction of conditions or other decisions of or
      to
      be made by Lender under this Agreement or any of the other Loan Documents shall
      be made in the reasonable discretion of Lender. Any reference to Lender’s “sole
      and absolute discretion” or similar phrases has the meaning represented by the
      phrase “sole and absolute discretion, acting in good faith”.

     

    1.5  Knowledge
      of Borrower.
      As used
      herein and in any other Loan Document, the phrase “to the knowledge of
      Borrower,” “to the knowledge of Guarantor” or such similar phrases shall mean to
      the actual, conscious knowledge of Borrower’s Chief Executive Officer, Chief
      Financial Officer or Treasurer.

     

    ARTICLE
      2

     

    THE
      LOAN

     

    2.1  Agreement
      to Lend and Borrow.
      

     

    (a)  Agreement
      to Lend and Borrow.
      Subject
      to the terms and conditions of this Agreement and the other Loan Documents,
      Lender agrees to lend to Borrower, and Borrower agrees to borrow from Lender
      from time to time prior to the Maturity Date, Advances of the proceeds of the
      Loan up to the Loan Amount. Lender’s commitment to make Advances shall be
      decreased at the same time and in the same amount as the aggregate stated amount
      of any outstanding Letters of Credit.

     

    (b)  Revolving
      Nature of Loan.
      Prior
      to the Maturity Date, the Loan Amount may be drawn, repaid, and drawn again,
      on
      a revolving basis, in unlimited repetition so long as (i) the aggregate of
      all
      outstanding Advances does not exceed, at any time, the Loan Amount, and (ii)
      no
      Event of Default has occurred and is continuing. Although the outstanding
      principal balance of the Note may be zero from time to time, the Loan Documents
      will remain in full force and effect until the Maturity Date or all obligations
      of Borrower or Guarantor relating to the Loan are indefeasibly paid and
      performed in full, whichever is later. Borrower shall have the right to
      terminate the Loan upon Borrower’s specific written direction and attendant
      payment in full to Lender of all Obligations with respect to the Loan,
      including, without limitation, the Early Termination Fee. Upon the occurrence
      and during the continuance of any Event of Default, Lender may suspend or
      terminate its commitment to make Advances of the proceeds of the Loan without
      notice to Borrower or further act on the part of Lender.

     

    (c)  Use
      of
      Proceeds.
      The
      proceeds of the Loan may be used by Borrower for its general working capital
      purposes or other Borrower purposes and to repurchase shares of Borrower’s
      preferred and common stock.

     

    2.2  Procedures
      for Advances.

     

    (a)  Requests
      for Advances.
      Each
      request for an Advance shall be in writing and in the form of a Request for
      Advance. Lender, at its option, may set a cutoff time, after which all requests
      for Advances will be treated as having been requested on the next succeeding
      Business Day. In addition to complying with the other requirements of this
      Agreement, each Request for Advance shall specify the date (which shall be
      a
      Business Day) and the amount of the requested Advance.

     

    (b)  Timing
      of Disbursement of Advances.
      Provided the conditions for the making of Advances contained herein are
      satisfied, Lender shall disburse each Advance no later than the first Business
      Day following the date of the receipt by Lender of a valid Request for Advance.
      Upon acceptance of a Request for Advance made hereunder, Lender will make the
      amount of each Advance available to Borrower in immediately available funds
      by
      initiating a wire transfer to the Zions Account designated by Borrower in the
      Request for Advance.

     

    (c)  Authorized
      Persons.
      The
      persons initially authorized to request Advances are all Authorized
      Representatives of Borrower. At Lender’s request, Borrower shall provide Lender
      with documentation satisfactory to Lender indicating the names of those
      employees of Borrower authorized by Borrower to sign a Request for Advance
      and
      other documents, and Lender shall be entitled to rely upon such documentation
      until notified in writing by Borrower of any change(s) in the names of the
      employees so authorized.

     

    2.3  Conditions
      Precedent to Advances.
      The
      obligation of Lender to make Advances is subject to the fulfillment, to the
      satisfaction of Lender in its sole and absolute discretion, of each of the
      following conditions; provided,
      however,
      that
      Lender, in its sole and absolute discretion, may waive any of the following
      conditions:

     

    (a)  Lender
      shall have received a Request for Advance pursuant to Section
      2.2;

     

    (b)  No
      Event
      of Default shall exist and be continuing or shall result from such
      Advance;

     

    (c)  The
      amount of the requested Advance, together with the amount of all prior Advances
      then outstanding and the aggregate stated amount of all Letters of Credit then
      outstanding, shall not exceed the Loan Amount;

     

    (d)  The
      representations and warranties made by Borrower contained herein and in the
      other Loan Documents shall be true and correct in all material respects on
      and
      as of the date of such Advance with the same effect as if made on and as of
      the
      date of such Advance (except to the extent such representations and warranties
      expressly refer to an earlier date, in which case they shall be true and correct
      in all material respects as of such earlier date); and

     

    (e)  Borrower
      shall have provided such additional information and documents as Lender may
      reasonably request.

     

    Each
      Request for Advance submitted by Borrower hereunder shall constitute a
      representation and warranty by Borrower hereunder, as of the date of each such
      request and as of the date of each Advance, that the conditions in this
Section
      2.3
      are
      satisfied.

     

    2.4  Evidence
      of Indebtedness.
      The
      Loan shall be evidenced by the Note. Disbursements of the Loan shall be charged
      and funded under the Note. If there is any inconsistency between the Note and
      this Agreement, the provisions of this Agreement shall prevail.

     

    2.5  Interest.

     

    (a)  Rate.
      The
      advanced and unpaid balance of the Loan shall bear interest at the Interest
      Rate
      in effect from time to time. Each change in the Interest Rate will become
      effective for each Interest Period, without notice, on the date set forth in
      the
      definition of the term LIBO Rate set forth herein.

     

    (b)  Default
      Interest Rate.
      Upon the
      occurrence and during the continuance of an Event of Default hereunder or under
      any of the Loan Documents, at the option of Lender, the outstanding and unpaid
      principal balance of the Loan shall bear interest, payable on demand, at a
      rate
      per annum equal to the Default Interest Rate. Lender may also, at its option,
      from time to time, add any unpaid accrued interest to principal and such sum
      will bear interest therefrom until paid at the rate provided in this Agreement
      (including at the Default Interest Rate, as and when applicable). The
      application of the Default Interest Rate shall not be interpreted or deemed
      to
      extend any cure period set forth in this Agreement, or otherwise to limit any
      of
      Lender’s remedies under this Agreement or any of the other Loan
      Documents.

     

    (c)  Effective
      Rate.
      Borrower agrees to pay an effective rate of interest that is the sum of (i)
      the
      interest rate provided in this Agreement and (ii) any additional rate of
      interest resulting from any other charges or fees paid or to be paid in
      connection herewith that are determined to be interest or in the nature of
      interest. Any other provision of this Agreement or any of the other Loan
      Documents to the contrary notwithstanding, Lender and Borrower 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 Requirements of Laws of the State of Utah.
      In such event, if any holder of the Note shall collect monies which are deemed
      to constitute interest which would otherwise increase the effective interest
      rate on the Note to a rate in excess of the maximum rate permitted to be charged
      by applicable Requirements of Law, all such sums deemed to constitute interest
      in excess of such maximum rate shall, at the option of the holder, be credited
      to the payment of other amounts payable under the Loan Documents or returned
      to
      Borrower.

     

    (d)  Computation
      of Interest.
      Interest 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. 

     

    2.6  Payment
      of Principal and Interest; Application of Payments.

     

    (a)  Payments
      of Interest.
      Commencing on the Payment Date occurring in May, 2007, and continuing on each
      monthly Payment Date thereafter, installments of all accrued and outstanding
      interest shall be due and payable by Borrower to Lender.

     

    (b)  Payment
      at Maturity.
      The
      outstanding principal balance of the Loan, together with all unpaid accrued
      interest thereon, and all other amounts payable by Borrower with respect to
      the
      Note or pursuant to the terms of any other Loan Documents, shall be due and
      payable on the Maturity Date in lawful money of the United States of
      America.

     

    (c)  Early
      Termination.
      Borrower shall have the right to terminate the Loan at any time prior to the
      Maturity Date by (i) giving written notice of its intent to do so to Lender;
      (ii) paying the outstanding principal balance of the Loan, together with all
      unpaid accrued interest thereon, and all other amounts payable by Borrower
      with
      respect to the Note or pursuant to the terms of any other Loan Documents; and
      (iii) paying the Early Termination Fee.

     

    (d)  Application
      of Payments.
      Unless
      otherwise agreed to in writing or otherwise required by applicable Requirements
      of 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
      the occurrence and during the continuance of an Event of Default, Lender
      reserves the right to apply payments among principal, interest, late charges,
      collection costs and other charges at its sole and absolute
      discretion.

     

    (e)  No
      Deductions.
      All
      payments of principal or interest hereunder or under the Note shall be made
      (i)
      without deduction of any present and future taxes, levies, imposts, deductions,
      charges or withholdings, which amounts shall be paid by Borrower, and (ii)
      without any other set off. Borrower will pay the amounts necessary such that
      the
      gross amount of the principal and interest received by Lender is not less than
      that required hereby and by the Note.

     

    (f)  Late
      Charges.
      If any
      payment of interest or principal required pursuant to any provision of this
      Agreement is not received by Lender within ten (10) days after its due date,
      then, in addition to the other rights and remedies of Lender pursuant to this
      Agreement and the other Loan Documents, Borrower will be charged five percent
      (5.0%) of the regularly scheduled 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. Such late charge will
      be
      immediately due and payable and is in addition to any other costs, fees, and
      expenses that Borrower may owe as a result of such late payment.

     

    2.7  Manner
      and Time of Payment.
      All
      amounts payable by Borrower on or with respect to the Loan, or pursuant to
      the
      terms of any other Loan Documents, shall be paid without condition or
      reservation of right, in lawful money of the United States of America at 80
      West
      Broadway, Suite 200, Salt Lake City, Utah 84101, or at such other place as
      Lender may from time to time designate in writing, not later than 1:00 p.m.
      (Utah time), in same day funds, on the date due, and to such account of Lender
      as Lender may designate; funds received by Lender after that time shall be
      deemed to have been paid on the next succeeding Business Day. If any payment
      would otherwise be due on a day which is not a Business Day, the payment instead
      shall be due on the next succeeding Business Day and such extension of time
      shall be included in computing the interest due in respect of said
      payment.

     

    2.8  Guaranty.
      Payment
      of the Note and performance of Borrower’s obligations hereunder shall be
      unconditionally guaranteed by Guarantor pursuant to the Guaranty and secured
      by,
      among other things, the Security Agreement, which shall be a first priority
      security interest in and to all of the personal property assets of Borrower
      and
      Guarantor, as more fully described in the Security Agreement, subject to
      Permitted Exceptions.

     

    2.9  Security.
      Payment
      of the Note shall be secured by and/or guaranteed by, among other things, the
      following:

     

    (a)  the
      Guaranty;

     

    (b)  the
      Security Agreement, which shall secure the Obligations and the Guaranty and
      be a
      first priority security interest in and to all of the personal property assets
      of Borrower and Guarantor, as more fully described in the Security Agreement,
      subject to Permitted Exceptions; 

     

    (c)  the
      Stock
      Pledge Agreement, which shall secure the Obligations and be a first priority
      security interest in and to the Pledged Securities, subject to Permitted
      Exceptions; and

     

    (d)  the
      Account Control Agreement, which shall secure the Obligations and the Guaranty
      and perfect the security interest given to Collateral Agent in and to all of
      Borrower’s and Guarantor’s deposit accounts maintained with Zions.

     

    2.10  Fees
      and Expenses.

     

    (a)  Unused
      Commitment Fee.
      During
      the term hereof, Borrower shall pay to Lender the applicable Unused Commitment
      Fee on each Quarterly Payment Date. The Unused Commitment Fee shall be
      calculated on a quarterly basis and payable quarterly in arrears for the
      calendar quarter or portion thereof throughout the term of the Loan and on
      the
      Maturity Date.

     

    (b)  Early
      Termination Fee.
      As set
      forth in Section 2.6(c) above, Borrower shall pay to Lender the Early
      Termination Fee in the event Borrower elects to terminate the Loan prior to
      the
      Maturity Date.

     

    (c)  Additional
      Provisions Regarding Fees.
      The
      fees described in this Section
      2.10
      shall be
      payable in addition to, and not in lieu of, interest, expense reimbursements,
      indemnification and other Obligations. Borrower acknowledges that all fees
      and
      other amounts described in this Section 2.10
      have
      been fully earned by Lender at the time of payment and are non-refundable to
      Borrower in the event this Agreement is terminated or expires as provided
      herein. All fees specified or referred to in this Agreement shall bear interest,
      if not paid when due, at the Default Interest Rate. Borrower hereby authorizes
      Lender, at its sole option and direction, without prior notice to Borrower,
      to
      advance any of the fees provided for in this Section
      2.10 if
      not
      paid within ten (10) days of when due.

     

    ARTICLE
      3  

     

    LETTERS
      OF CREDIT

     

    3.1  Issuance
      of Letters of Credit.

     

    (a)  Issuance
      of Letters of Credit.
      Subject
      to the terms and conditions of this Agreement and the policies, procedures,
      and
      requirements of Lender for issuance of Letters of Credit in effect from time
      to
      time, Lender agrees to issue, from time to time on or before the Maturity Date,
      Letters of Credit upon request by and for the account of Borrower. Letters
      of
      Credit
      (i)
      will
      expire on the earlier of the
      date
      stated therein or thirty (30) days prior to the Maturity Date;
      and
      (ii)
      will not
      exceed, in the aggregate stated amount outstanding at any time, the lesser
      of
      (A) Letter of Credit Limit or (B) the difference between the Loan Amount and
      the
      then outstanding principal balance of the Loan. Each reference in this Agreement
      to “issue” or “issuance” or other forms of such words in relation to Letters of
      Credit will also include any extension or renewal of a Letter of Credit.
      Requests for the issuance of a Letter of Credit will be processed by Lender
      in
      accordance with its policies, procedures, and requirements then in effect.
      Upon
      the occurrence and during the continuance of an Event of Default, Lender may
      suspend or terminate its agreement to issue Letters of Credit
      hereunder.

     

    (b)  Issuance
      Procedures.
      Lender’s obligation to issue Letters of Credit is expressly conditioned upon the
      receipt and approval by Lender, in its sole and absolute discretion, of each
      of
      the following items and the satisfaction by Borrower of the following
      conditions:

     

    (i)  Borrower
      shall deliver to Lender the Letter of Credit Application and Agreement in form
      and content satisfactory to Lender, duly executed (and acknowledged where
      necessary) by the appropriate parties thereto.

     

    (ii)  The
      stated face amount of the requested Letter of Credit, when aggregated with
      the
      stated face amount of all Letters of Credit then issued and outstanding, will
      not exceed the Letter of Credit Limit.

     

    (iii)  The
      stated face amount of the requested Letter of Credit, when aggregated with
      (A)
      the stated face amount of all Letters of Credit then issued and outstanding
      and
      (B) the then outstanding principal balance of the Loan, will not exceed the
      Loan Amount.

     

    (iv)  The
      representations and warranties of Borrower contained in all of the Loan
      Documents shall be true and correct in all material respects on and as of the
      date of each issuance as though made on and as of that date (except to the
      extent such representations and warranties expressly refer to an earlier date,
      in which case they shall be true and correct in all material respects as of
      such
      earlier date) and no Event of Default shall have occurred and be continuing
      as
      of the date of issuance of the Letter of Credit or request
      therefor.

     

    3.2  Reimbursement
      Obligations.
      

     

    (a)  Borrower
      hereby agrees to pay to Lender the following (collectively, the “Reimbursement
      Obligations”):

     

    (i)  On
      the
      date of each drawing under a Letter of Credit, a sum equal to (A) the amount
      of
      such drawing under the Letter of Credit to the extent actually paid by Lender
      plus (B) any and all transaction charges or other charges and expenses which
      Lender may pay or incur relative to the drawing or Letter of
      Credit;

     

    (ii)  Upon
      the
      date incurred, any and all expenses incurred by Lender in enforcing any rights
      under this Agreement, any of the other Loan Documents, or under any agreement,
      document or instrument securing Lender’s rights under this Agreement;
      and

     

    (iii)  All
      payments or drawings due and owing to Lender which are related to any Letter
      of
      Credit shall bear interest payable from the date such amounts become payable
      (in
      the case of an amount payable on demand, from the date Lender is first entitled
      to demand payment, regardless as to whether a demand for payment is actually
      made) until payment in full, at an annual rate at all times equal to the Letter
      of Credit Interest Rate, but in no event above the maximum rate permitted by
      law. Interest accruing pursuant to this Section 3.2(a)(iii)
      shall be
      due and payable on the day on which amounts due hereunder are paid or earlier
      upon demand of Lender. All interest becoming due and payable under this
      Agreement shall be computed on the basis of the actual number of days elapsed
      and a year of 360 days.

     

    (b)  The
      Reimbursement Obligations shall be paid as herein provided without notice from
      or demand of Lender to Borrower. The Reimbursement Obligations and the other
      obligations from Borrower to Lender shall at all times be full recourse
      obligations of Borrower.

     

    (c)  Lender,
      in its sole and absolute discretion, is authorized, but not obligated, to make
      Advances under the Note without notice to Borrower or any Guarantor to satisfy
      any amounts owing to Lender by Borrower as a result of any drawing.

     

    3.3  Obligations
      Absolute.
      The
      Reimbursement Obligations of Borrower shall be absolute, unconditional and
      irrevocable, and shall be paid strictly in accordance with the terms of this
      Agreement and the Letter of Credit Application and Agreement, under all
      circumstances whatsoever, including, without limitation, the following
      circumstances:

     

    (a)  any
      lack
      of validity or enforceability of a Letter of Credit or any of the Loan
      Documents;

     

    (b)  any
      amendment or waiver of or any consent to or departure from a Letter of Credit
      or
      any of the Loan Documents;

     

    (c)  the
      existence of any claim, set-off, defense or other right which Borrower may
      have
      at any time against Lender, any holder of a Letter of Credit, or any other
      person or entity, whether in connection with this Agreement, the transactions
      contemplated herein or in any of the Loan Documents or any unrelated
      transactions; or

     

    (d)  any
      statement or any other document presented under or in connection with a Letter
      of Credit proving to be forged, fraudulent, invalid or insufficient in any
      respect or any statement therein being untrue or inaccurate in any respect
      whatsoever.

     

    3.4  Assumption
      of Risk and Liability.
      Borrower hereby assumes all risk of the acts or omissions of any holder of
      a
      Letter of Credit, and any beneficiary or transferee of a Letter of Credit with
      respect to its use of a Letter of Credit. Neither Lender nor any of its
      employees, officers, directors, agents or representatives shall be liable or
      responsible for:

     

    (a)  the
      use
      which may be made of a Letter of Credit or for any acts or omissions of Lender
      in connection therewith;

     

    (b)  the
      validity, sufficiency or genuineness of documents, or of any endorsements
      thereon, whether submitted in connection with a drawing under a Letter of
      Credit, or otherwise, even if such documents or endorsements should in fact
      prove to be in any or all respects invalid, insufficient, fraudulent, forged,
      inaccurate or untrue;

     

    (c)  payment
      by Lender against presentation of documents which do not strictly comply with
      the terms of a Letter of Credit, including failure of any such documents to
      bear
      reference or adequate reference to a Letter of Credit or the failure of any
      holder or beneficiary of a Letter of Credit to comply fully with conditions
      required in order to obtain honor of a drawing under a Letter of
      Credit;

     

    (d)  the
      validity or sufficiency of any instrument transferring or assigning or
      purporting to transfer or assign a Letter of Credit or the rights or benefits
      thereunder or proceeds thereof, in whole or in part, which may prove to be
      invalid or ineffective for any reason;

     

    (e)  omissions,
      interruptions, losses or delays in transmission or delivery of any messages
      by
      mail, cable, telegraph, telex, telephone, facsimile transmission or
      otherwise;

     

    (f)  any
      loss
      or delay in the transmission of any document or draft required in order to
      make
      a drawing under a Letter of Credit; or

     

    (g)  any
      other
      circumstances whatsoever in making or failing to make payment under a Letter
      of
      Credit.

     

    ARTICLE
      4  

     

    LOAN
      CLOSING; INITIAL ADVANCE

     

    4.1  Conditions
      Precedent.
      Lender’s obligation to close the Loan and to disburse the initial Advance and to
      perform the remainder of its obligations under this Agreement are expressly
      conditioned upon the receipt and approval by Lender, in its sole and absolute
      discretion, of each of the following items and the satisfaction by Borrower
      of
      the following conditions on or before the Closing Date unless otherwise waived
      by Lender in its sole and absolute discretion:

     

    (a)  Borrower’s
      payment of all fees and costs payable under this Agreement;

     

    (b)  Receipt,
      review and approval by Lender of copies of the Borrower Operating Documents
      and
      the Guarantor Operating Documents;

     

    (c)  The
      representations and warranties of Borrower and/or Guarantor in Article
      5
      and
      elsewhere in the Loan Documents shall be true and correct in all material
      respects;

     

    (d)  No
      Event
      of Default shall exist and be continuing;

     

    (e)  Receipt,
      review and approval by Lender, in its sole discretion, of such financial
      statements and tax returns for Borrower and/or Guarantor as Lender may
      require;

     

    (f)  A
      determination by Lender that the Collateral provides an adequate loan-to-value
      coverage ratio for the Loan and all Other Loans which are secured by the
      Collateral;

     

    (g)  The
      original certificates representing the Pledged Securities, together with blank
      transfer powers in form and substance acceptable to Lender shall have been
      delivered to Lender;

     

    (h)  Receipt,
      review and approval by Lender of the policies of insurance required under
Article
      6
      hereof;

     

    (i)  Borrower’s
      delivery to Lender of the following documents, in form and content satisfactory
      to Lender, duly executed (and acknowledged where necessary) by the appropriate
      parties thereto:

     

    (i)  This
      Agreement;

     

    (ii)  The
      Note;

     

    (iii)  The
      Guaranty;

     

    (iv)  The
      Security Agreement;

     

    (v)  The
      Stock
      Pledge Agreement;

     

    (vi)  The
      original certificates representing the Pledged Securities;

     

    (vii)  Blank
      stock transfer powers executed by the holders of all Pledged Securities in
      favor
      of Collateral Agent;

     

    (viii)  An
      acknowledgement and consent to the pledge of the Pledged Securities pursuant
      to
      the Stock Pledge Agreement from each issuer of the Pledged
      Securities;

     

    (ix)  The
      Account Control Agreement;

     

    (x)  The
      Financing Statements, which shall be duly filed with the Utah Department of
      Commerce, Division of Corporations and Commercial Code;

     

    (xi)  A
      closing
      certificate from Borrower and each Guarantor;

     

    (xii)  Resolutions
      of the directors, members, managers, or partners of Borrower and Guarantor,
      as
      applicable, approving the Loan Documents and the Guarantor Loan Documents;
      

     

    (xiii)  An
      opinion of legal counsel to Borrower and Guarantor;

     

    (xiv)  True
      and
      correct copies of the Zions Loan Documents;

     

    (xv)  The
      Intercreditor Agreement; and

     

    (xvi)  Such
      other documents that Lender may require in its sole and absolute
      discretion.

     

    ARTICLE
      5  

     

    REPRESENTATIONS
      AND WARRANTIES

     

    5.1  Consideration.
      As an
      inducement to Lender to execute this Agreement and to disburse the proceeds
      of
      the Loan, Borrower represents and warrants to Lender that the following
      statements set forth in this Article
      5 are
      true,
      correct and complete as of the date hereof and will be true, correct and
      complete as of the Closing Date.

     

    5.2  Organization,
      Powers, Good Standing and Subsidiaries.

     

    (a)  Organization
      and Powers.
      Each of
      Borrower and Guarantor is either a corporation, a limited liability company,
      or
      a limited partnership duly organized and validly existing under the laws of
      the
      State of Utah. Borrower and Guarantor have all requisite power and authority,
      rights and franchises to own and operate their properties, to carry on their
      businesses as now conducted and as proposed to be conducted, and to enter into
      and perform this Agreement and the other Loan Documents. The address of
      Borrower’s chief executive office and principal place of business is 2200 West
      Parkway Blvd., Salt Lake City, Utah 84119.

     

    (b)  Good
      Standing.
      Borrower and Guarantor have made all filings and each is in good standing in
      the
      State of Utah, and in each other jurisdiction in which the character of the
      property it owns or the nature of the business it transacts makes such filings
      necessary or where failure to make such filings would result in a Material
      Adverse Change.

     

    (c)  Organizational
      Identification Number.
      The
      organizational identification number of Borrower and each Guarantor, as defined
      and contemplated by the Utah Uniform Commercial Code, is as set forth in the
      Financing Statement.

     

    (d)  Subsidiaries.
      Schedule
      5.2(d)
      attached
      hereto sets forth a complete list of Borrower and each of its Subsidiaries,
      including the percentage of voting stock in each Subsidiary owned, directly
      or
      indirectly, by Borrower.

     

    5.3  Authorization
      of Loan Documents.

     

    (a)  Authorization.
      The
      execution, delivery and performance of the Loan Documents (to which Borrower
      or
      Guarantor, respectively, is a party) by (i) Borrower are within Borrower’s
      corporate powers and have been duly authorized by all necessary action by
      Borrower and its directors and shareholders; and (ii) Guarantor are within
      Guarantor’s corporate, limited liability company or partnership powers and have
      been duly authorized by all necessary action by Guarantor and its directors,
      shareholders, members, managers and partners, as applicable.

     

    (b)  No
      Conflict.
      The
      execution, delivery and performance of the Loan Documents by Borrower will
      not
      violate (i) the Borrower Operating Documents; (ii) any legal requirement
      affecting Borrower or any of its properties except where a violation of such
      requirement would not result in a Material Adverse Change; or (iii) any
      agreement to which Borrower is bound or to which it is a party, except where
      a
      violation of any such agreement would not result in a Material Adverse Change,
      and will not result in or require the creation (except as provided in or
      contemplated by this Agreement) of any Lien or Encumbrance upon any of such
      properties. The execution, delivery and performance of the Guarantor Loan
      Documents by Guarantor will not violate (1) any provision of the Guarantor
      Operating Documents; (2) any legal requirement affecting Guarantor or any of
      Guarantor’s respective properties except where a violation of such requirement
      would not result in a Material Adverse Change; or (3) any agreement to which
      Guarantor is bound or to which Guarantor is a party, except where a violation
      of
      any such agreement would not result in a Material Adverse Change, and will
      not
      result in or require the creation (except as provided in or contemplated by
      this
      Agreement) of any Lien or Encumbrance upon any of such properties.

     

    (c)  Governmental
      and Private Approvals.
      All
      governmental or regulatory orders, consents, permits, authorizations and
      approvals required for the present use and operation of the Borrower’s business
      and the Collateral have been obtained and are in full force and effect, except
      where failure to obtain such orders, consents, permits, authorizations or
      approvals would not result in a Material Adverse Change. To the knowledge of
      Borrower, no additional governmental or regulatory actions, filings or
      registrations with respect to the Borrower’s business and the Collateral, and no
      approvals, authorizations or consents of any trustee or holder of any
      Indebtedness or obligation of Borrower or Guarantor are required for the due
      execution, delivery and performance by Borrower or Guarantor of their respective
      duties and obligations under the Loan Documents or the Guarantor Loan
      Documents.

     

    (d)  Binding
      Obligations.
      This
      Agreement and the other Loan Documents have been duly executed by Borrower,
      and
      are legally valid and binding obligations of Borrower, enforceable against
      Borrower in accordance with their terms, except as enforceability may be limited
      by bankruptcy, insolvency, reorganization, moratorium or similar Requirements
      of
      Laws affecting creditors’ rights generally and by general principles of equity.
      The Guarantor Loan Documents have been duly executed by Guarantor, and are
      the
      legally valid and binding obligations of Guarantor, enforceable against
      Guarantor in accordance with their terms, except as enforceability may be
      limited by bankruptcy, insolvency, reorganization, moratorium or similar
      Requirements of Laws affecting creditors’ rights generally and by general
      principles of equity.

     

    5.4  No
      Material Defaults.
      There
      exists no material violation of or material default by Borrower and, to the
      knowledge of Borrower, no event has occurred which, upon the giving of notice
      or
      the passage of time, or both, would constitute a material default, which in
      each
      case, would result in a Material Adverse Change, with respect to the terms
      of
      (a) any instrument evidencing or securing any Indebtedness of Borrower or
      Guarantor, (b) any instrument evidencing or securing any Indebtedness secured
      by
      the Collateral, (c) any agreement affecting the Collateral, (d)
      any
      license, permit, statute, ordinance, Requirements of Law, judgment, order,
      writ,
      injunction, decree, rule, or regulation of any Governmental Authority, or any
      determination or award of any arbitrator, to which Borrower, Guarantor or the
      Collateral is a party or may be bound, or (e) any document, instrument, or
      agreement by which Borrower, or any of its properties, is bound and, with
      respect to this clause (e),
      (i)
      which
      involves any Loan Document,
      (ii)
      which
      involves the Collateral and is not adequately covered by insurance,
      (iii)
      which
      might materially and adversely affect the ability of Borrower or Guarantor
      to
      perform its respective obligations under any of the Loan Documents or any other
      material document, instrument, or agreement to which it is a party,
      or
      (iv)
      which,
      subject to the Permitted Exceptions, might adversely affect the first priority
      of the liens created by this Agreement, the Security Agreement or any of the
      other Loan Documents. 

     

    5.5  Litigation;
      Adverse Facts.
      Except
      as disclosed on Schedule
      5.5
      attached
      hereto, there is no action, suit, investigation, proceeding, or arbitration
      (whether or not purportedly on behalf of Borrower or Guarantor) at law or in
      equity or before or by any foreign or domestic court or other governmental
      entity (a “Legal
      Action”),
      pending or, to the knowledge of Borrower, threatened in writing against or
      affecting the Collateral, Borrower or Guarantor, individually or in the
      aggregate in excess of $500,000, which would result in any Material Adverse
      Change. Neither Borrower nor Guarantor is (a) in violation of any applicable
      Requirements of Law which violation would result in a Material Adverse Change,
      (b) subject to, or in default with respect to, any other legal requirement
      that
      would result in a Material Adverse Change, or (c) in default with respect to
      any
      agreement to which Borrower or Guarantor is a party or to which either is bound
      where such default would result in a Material Adverse Change. There is no Legal
      Action pending or, to the knowledge of Borrower or Guarantor, threatened in
      writing against or affecting Borrower or Guarantor questioning the validity
      or
      the enforceability of this Agreement or any of the other Loan
      Documents.

     

    5.6  Title
      to Properties; Liens.
      Each of
      Borrower and Guarantor has good, sufficient, and legal title to the Collateral
      and all other properties and assets reflected in its most recent balance sheet
      delivered to Lender, except (a) for assets disposed of in the ordinary course
      of
      business since the date of such balance sheet, (b) for Permitted Exceptions
      and
      (c) where failure to have such title would not result in a Material Adverse
      Change. Borrower and/or Guarantor, as applicable, is the sole owner of the
      Collateral, and the Collateral is free from any adverse Lien or Encumbrance,
      security interest, or encumbrance of any kind whatsoever, excepting only Liens
      or Encumbrances and security interests in favor of Lender or Collateral Agent,
      Permitted Exceptions and other matters which have been approved in writing
      by
      Lender in its sole and absolute discretion. All Liens and Encumbrances against
      Borrower or Guarantor in effect on the Closing Date (and which are included
      as
      Permitted Exceptions under clause (e) of the definition of Permitted Exceptions)
      are set forth on Schedule
      5.6
      attached
      hereto.

     

    5.7  Disclosure.
      To the
      knowledge of Borrower, there is no fact that would result in a Material Adverse
      Change which has not been disclosed in this Agreement or in other documents,
      certificates, and written statements furnished to Lender in connection
      herewith.

     

    5.8  Payment
      of Taxes.
      All tax
      returns and reports of Borrower and Guarantor which are required to be filed
      by
      Borrower or Guarantor have been timely filed, and all taxes, assessments, fees,
      and other governmental charges upon Borrower or Guarantor, and upon their
      respective properties, assets, income, and franchises which are due and payable
      have been paid when due and payable, except, in each case, where failure to
      do
      so would not result in a Material Adverse Change. Borrower knows of no proposed
      tax assessment against it that would result in a Material Adverse Change, and
      neither Borrower nor Guarantor has contracted with any government entity in
      connection with such taxes. To the knowledge of Borrower, all tax returns and
      reports of Guarantor required to be filed have been timely filed, and all taxes,
      assessments, fees, and other governmental charges upon Guarantor and upon its
      properties, assets, income, and franchises which are due and payable have been
      paid when due and payable, except, in each case, where failure to do so would
      not result in a Material Adverse Change.

     

    5.9  Securities
      Activities.
      Neither
      Borrower nor Guarantor is engaged principally, or as one of its important
      activities, in the business of extending credit for the purpose of purchasing
      or
      carrying any margin stock (as defined within Regulations G, T, and U of the
      Board of Governors of the Federal Reserve System), and not more than twenty-five
      percent (25.0%) of the value of Borrower’s and/or Guarantor’s assets consists of
      such margin stock. No part of the Loan will be used to purchase or carry any
      margin stock or to extend credit to others for that purpose or for any other
      purpose that violates the provisions of Regulations U or X of said Board of
      Governors. No portion of any Advance or of Loan proceeds shall be used directly
      or indirectly to purchase ineligible securities, as defined by applicable
      regulations of the Federal Reserve Board, underwritten by any affiliate of
      J.P.
      Morgan Chase & Co. during the underwriting period and for thirty (30) days
      thereafter.

     

    5.10  Government
      Regulations.
      Neither
      Borrower nor Guarantor is subject to regulation under the Investment Company
      Act
      of 1940, the Federal Power Act, the Public Utility Holding Company Act of 1935,
      or any other federal or state statute or regulation limiting its ability in
      incur Indebtedness for money borrowed.

     

    5.11  Rights
      to Property Agreements, Permits, and Licenses.
      Borrower and/or Guarantor is the true owner of all rights in and to all existing
      agreements, permits, and licenses relating to the Collateral, and will be the
      true owner of all rights in and to all future agreements, permits, and licenses
      relating to the Collateral, except, in each case, where failure to be such
      an
      owner would not result in a Material Adverse Change. Borrower’s and/or
      Guarantor’s interest in all such agreements, permits, and licenses is not
      subject to any present claim (other than the Permitted Exceptions, under the
      Loan Documents or as otherwise approved by Lender in its sole and absolute
      discretion), set-off, or deduction, other than in the ordinary course of
      business, which would result in a Material Adverse Change.

     

    5.12  Compliance
      with Laws.
      Borrower’s and Guarantor’s business does, and shall at all times, comply fully
      with all applicable Requirements of Law, except, in each case, where failure
      to
      comply would not result in a Material Adverse Change. The Collateral, and the
      uses to which the Collateral are and will be put, shall at all times comply
      fully with all applicable Requirements of Laws, except, in each case, where
      failure to comply would not result in a Material Adverse Change.

     

    5.13  Financial
      Condition.
      The
      financial statements and all financial data previously delivered to Lender
      in
      connection with the Loan or relating to Borrower or Guarantor are true, correct,
      and complete in all material respects. Such financial statements comply with
      the
      requirements of this Agreement and fairly present the financial position of
      the
      parties who are the subject thereof as of the date thereof. No Material Adverse
      Change has occurred and, except for this Loan and the Permitted Exceptions,
      no
      borrowings have been made by Borrower or Guarantor since the date thereof which
      are secured by, or might give rise to, a Lien or Encumbrance, security interest,
      or claim against the Collateral or the proceeds of the Loan or the Other
      Loans.

     

    5.14  Personal
      Property.
      Borrower and/or Guarantor is now, and shall continue to be, the sole owner
      of
      all personal property which constitutes a portion of the Collateral free from
      any adverse lien, security interest, or adverse claim of any kind whatsoever,
      except
      (a)
      Permitted Exceptions,
      (b)
      liens
      and security interests in favor of Lender or Collateral Agent, and
      (c)
      other
      matters which have been approved in writing by Lender in its sole and absolute
      discretion.

     

    5.15  Other
      Loan Documents.
      Each of
      the representations and warranties of Borrower or Guarantor contained in any
      of
      the other Loan Documents, the Guarantor Loan Documents or the agreements,
      guaranties, documents, or instruments now or hereafter evidencing, guarantying
      or securing the Indebtedness of Borrower or Guarantor under the Other Loans,
      as
      such agreements, guaranties, documents, and instruments may be amended,
      modified, extended, renewed, or supplemented from time to time, is true and
      correct in all material respects. All of such representations and warranties
      are
      incorporated herein for the benefit of Lender.

     

    5.16  Contracts;
      Labor Matters.
      Except
      as disclosed to Lender in writing (a) neither Borrower nor Guarantor is subject
      to any charge, corporate restriction, judgment, decree or order, which would
      result in a Material Adverse Change; (b) no labor contract to which Borrower
      or
      Guarantor is a party or is otherwise subject is scheduled to expire prior to
      the
      Maturity Date except to the extent that such expiration would not result in
      a
      Material Adverse Change; (c) neither Borrower nor Guarantor has, within the
      two-year period preceding the date of this Agreement, taken any action which
      would have constituted or resulted in a “plant closing” or “mass layoff” within
      the meaning of the Federal Worker Adjustment and Retraining Notification Act
      of
      1988 or any similar applicable federal, state or local Requirements of Law,
      and
      on the date hereof Borrower and Guarantor have no reasonable expectation that
      any such action is or will be required at any time prior to the initial Maturity
      Date; and (d) on the date of this Agreement (i) neither Borrower nor Guarantor
      is a party to any material labor dispute and (ii) there are no strikes or
      walkouts relating to any labor contracts to which Borrower or Guarantor is
      a
      party or is otherwise subject.

     

    5.17  ERISA.
      Each of
      Borrower and Guarantor is in compliance with ERISA in all material respects.
      No
      Reportable Event or Prohibited Transaction (as defined in ERISA) or termination
      of any Pension Plan has occurred and no written notice of termination has been
      filed with respect to any Pension Plan published or maintained by Borrower
      or
      Guarantor that is subject to ERISA. Neither Borrower nor Guarantor has incurred
      any material funding deficiency within the meaning of ERISA or any material
      liability to the PBGC in connection with any such plan established or maintained
      by Borrower or Guarantor. Neither Borrower nor Guarantor is a party to any
      Multiemployer Plan.

     

    5.18  Pension
      and Welfare Plans.
      Each
      Pension Plan of Borrower or Guarantor complies in all material respects with
      all
      applicable statutes and governmental rules and regulations; no Reportable Event
      has occurred and is continuing with respect to any Pension Plan; neither
      Borrower nor Guarantor nor any ERISA Affiliate has withdrawn from any
      Multiemployer Plan in a “complete withdrawal” or a “partial withdrawal” as
      defined in Sections 4203 or 4205 of ERISA, respectively; no steps have been
      instituted by Borrower or Guarantor to terminate any Pension Plan; no
      contribution failure has occurred with respect to any Pension Plan sufficient
      to
      give rise to a Lien or Encumbrance under Section 302(f) of ERISA; no condition
      exists or event or transaction has occurred in connection with any Pension
      Plan
      or Multiemployer Plan which could reasonably be expected to result in the
      incurrence by Borrower or Guarantor or any ERISA Affiliate of any material
      liability, fine or penalty; and neither Borrower nor Guarantor nor any ERISA
      Affiliate is a “contributing sponsor” as defined in Section 4001(a)(13) of ERISA
      of a “single-employer plan” as defined in Section 4001(a)(15) of ERISA which has
      two or more contributing sponsors at least two of whom are not under common
      control. Neither Borrower nor Guarantor has any contingent liability with
      respect to any Welfare Plan which covers retired or terminated employees and
      their beneficiaries.

     

    5.19  Occupational
      Safety and Health Matters.
      Except
      as disclosed to Lender in writing, Borrower and each property, operation and
      facility that Borrower may own, operate or control (a) complies in all respects
      with all applicable Occupational Safety and Health Laws, except to the extent
      the noncompliance would not result in a Material Adverse Change; (b) is not
      subject to any judicial or administrative proceeding alleging the violation
      of
      any Occupational Safety and Health Law; (c) has not received any written notice
      (i) that it may be in violation of any Occupational Safety and Health Law,
      (ii)
      threatening the commencement of any proceeding relating to allegedly unlawful,
      unsafe or unhealthy conditions, or (iii) alleging that it is or may be
      responsible for any response, cleanup, or corrective action, including but
      not
      limited to any remedial investigation/feasibility studies, under any
      Occupational Safety and Health Law; (d) to Borrower’s knowledge, is not the
      subject of federal or state investigation evaluating whether any investigation,
      remedial action or other response is needed to respond to any allegedly unsafe
      or unhealthful condition; (e) has not filed any notice under or relating to
      any
      Occupational Safety and Health Law indicating or reporting any potentially
      unsafe or unhealthful condition, and there exists no basis for such notice
      irrespective of whether or not such notice was actually filed; and (f) has
      no
      contingent liability in connection with any unsafe or unhealthful
      condition.

     

    5.20  Management
      Common Stock Loan Program.
      Schedule
      5.20
      attached
      hereto sets forth a description of Borrower’s management common stock loan
      program.

     

    ARTICLE
      6  

     

    COVENANTS
      OF BORROWER

     

    6.1  Consideration.
      As an
      inducement to Lender to execute this Agreement and to disburse the Loan Amount,
      Borrower hereby covenants as set forth in this Article
      6,
      which
      covenants shall remain in effect so long as the Note shall remain unpaid, unless
      otherwise waived by Lender in its sole and absolute discretion.

     

    6.2  No
      Encumbrances.
      Neither
      Borrower nor Guarantor will permit any Lien or Encumbrance to be made or filed
      against the Collateral, or any portion thereof, except for Permitted Exceptions,
      or permit any receiver, trustee, or assignee for the benefit of creditors to
      be
      appointed to take possession of the Collateral or any portion
      thereof.

     

    6.3  Compliance
      with Laws.
      Borrower will comply and, to the extent Borrower is able, will cause Guarantor
      to comply with all Requirements of Laws and requirements of all Governmental
      Authorities having jurisdiction over Borrower, Guarantor or the Collateral,
      except to the extent that noncompliance would not result in a Material Adverse
      Change.

     

    6.4  Lender
      Inspections.
      Upon
      reasonable prior notice, throughout the term of the Loan and during normal
      business hours, Borrower shall permit Lender or Collateral Agent and Lender’s or
      Collateral Agent’s representatives, inspectors, and consultants to enter upon
      the premises where any Collateral may be located and inspect the Collateral,
      to
      audit, examine, and copy all contracts, records (including, but not limited
      to,
      financial and accounting records pertaining to the Loan or the Collateral)
      which
      are kept at such premises or at Borrower’s offices, and to discuss the affairs,
      finances, and accounts of Borrower with representatives of Borrower and, to
      the
      extent Borrower is able, will cause others to provide access to Lender or
      Collateral Agent and Lender’s or Collateral Agent’s representatives, inspectors,
      and consultants to audit, examine, and copy all contracts, books, documents
      and
      records.

     

    6.5  Intentionally
      Omitted.
      

     

    6.6  Ownership
      of Collateral.
      Borrower and/or Guarantor is and will be the sole owner of the Collateral
      (except as described in Section
      5.6),
      whether acquired before or after the Closing Date, free from any adverse Lien
      or
      Encumbrance, security interest, or adverse claim of any kind whatsoever, except
      for Permitted Exceptions, security interests and Liens or Encumbrances in favor
      of the interest of a lessor pursuant to a lease of personal property approved
      by
      Lender and the Liens or Encumbrances and security interests approved by Lender
      pursuant to the Loan Documents.

     

    6.7  Information
      and Statements.
      Borrower shall deliver to Lender the following:

     

    (a)  Annual
      Financial Statements.
      Within
      one hundred twenty (120) days of the end of its fiscal year, the complete
      consolidated financial statements of the Consolidated Entities, which shall
      consist of a balance sheet, statements of income, cash flow and retained
      earnings, and a schedule of contingent liabilities as of the end of such annual
      period, such financial statements to be audited by an independent certified
      public accountant of recognized standing acceptable to Lender in its reasonable
      discretion. Lender consents to the engagement of KPMG.

     

    (b)  Quarterly
      Financial Statements.
      Within
      sixty (60) days of the end of each fiscal quarter (other than the final quarter
      of a fiscal year), the complete consolidated financial statements of the
      Consolidated Entities which shall consist of a balance sheet, statements of
      income, cash flow and retained earnings, and a schedule of contingent
      liabilities as of the end of each such quarterly period, such financial
      statements to be certified as true and correct by the president or chief
      financial officer of Borrower.

     

    (c)  Other
      Information.
      As soon
      as reasonably practicable, but in any event within thirty (30) days after a
      request therefor, such information concerning Borrower, Guarantor, any
      Subsidiaries thereof and the assets, business, financial condition, operations,
      property, prospects, and results of operations of Borrower, Guarantor and any
      other Subsidiaries thereof as Lender reasonably requests from time to
      time.

     

    (d)  Covenant
      Compliance Information.
      Notwithstanding anything in this Agreement to the contrary, Borrower will be
      required to timely deliver, as soon as reasonably practicable, but in any event
      within fifteen (15) days after a request therefor from Lender, such financial
      information as may be necessary to promptly and accurately calculate any
      financial ratio or covenant required under this Agreement, even if such
      information is not specifically enumerated herein. Any review of any
      Borrower-prepared financial statements used to test any financial ratio or
      covenant will not waive Lender’s rights to require further review or audit of
      such information or any rights if such further review or audit indicates
      financial information contrary to Borrower-prepared financial statements.
      Borrower agrees to deliver to Lender a Covenant Compliance Certificate at the
      same time as the delivery of the financial statements required pursuant to
      Sections
      6.7(a)
      and
(b).

     

    6.8  Financial
      Covenants.
      The
      Consolidated Entities shall not:

     

    (a)  Funded
      Debt to EBITDAR Ratio.
      Permit
      its ratio of (A) total liabilities, plus the net present value of payments
      under
      operating leases at a discount rate of seven percent (7%), but excluding (1)
      accounts arising from the purchase of goods and services in the ordinary course
      of business, (2) accrued expenses or losses, and (3) deferred revenues or gains,
      to (B) net income, plus amortization expense, depreciation expense, interest
      expense, income tax expense, and rents and operating lease payments, less
      extraordinary gains and losses (collectively, “EBITDAR”),
      for
      the twelve (12) month period then ending, to be greater than (x) 3.25 to 1.00
      as
      of the end of the fiscal quarter of Borrower ending on March 3, 2007, (y) 3.00
      to 1.00 as of the end of the fiscal quarter of Borrower ending on June 2, 2007,
      and (z) 2.75 to 1.00 as of the end of the fiscal quarter of Borrower ending
      on
      August 31, 2007 and each fiscal quarter thereafter.

     

    (b)  Fixed
      Charge Coverage Ratio.
      Permit
      its ratio of (A) net income before income tax expense, plus amortization
      expense, depreciation expense, interest expense, rent and operating lease
      payments, minus any distributions or dividends, for the twelve (12) month period
      then ending, to (B) prior period current maturities of long term debt and
      capital leases, interest expense, cash taxes paid, rent and operating lease
      payments, for the same such period, to be less than (x) 1.30 to 1.00 as of
      the
      end of the fiscal quarter of Borrower ending on March 3, 2007, (y) 1.35 to
      1.00
      as of the end of the fiscal quarter of Borrower ending on June 2, 2007, and
      (z)
      1.50 to 1.00 as of the end of the fiscal quarter of Borrower ending on August
      31, 2007 and each fiscal quarter thereafter.

     

    (c)  Capital
      Expenditures.
      Make
      Capital Expenditures, exclusive of curriculum development costs, in excess
      of
      (i) $11,000,000.00 for Borrower’s fiscal year ending on August 31, 2007 and (ii)
      $8,000,000.00 for each fiscal year of Borrower thereafter.

     

    (d)  Minimum
      Net Worth.
      Permit
      its Net Worth to be less than ONE HUNDRED THIRTY-THREE MILLION AND NO/100
      DOLLARS ($133,000,000.00); provided,
      however,
      the
      Consolidated Entities’ Net Worth may be less than such amount if Lender
      determines that the Consolidated Entities’ Net Worth has decreased to an amount
      less than $133,000,000.00 as a result of Borrower’s purchase of its outstanding
      common or preferred stock. As used in this Section
      6.8(d),
      the
      term “Net
      Worth”
means
      the Consolidated Entities’ total assets less
      total
      liabilities, in each case as determined in accordance with GAAP.

     

    Such
      covenant or any computations required to determine or test compliance with
      such
      covenant may be made by Lender at any time or times and in its sole and absolute
      discretion based on information available to Lender.

     

    6.9  Representations
      and Warranties.
      Until
      repayment of the Note and all other obligations secured by the Security
      Agreement, the representations and warranties of Article
      5
      shall
      remain true and complete in all material respects.

     

    6.10  Trade
      Names.
      Borrower and Guarantor shall promptly notify Lender in writing of any change
      in
      the legal, trade, or fictitious business names used by Borrower or Guarantor,
      or
      a change in the state of formation of Borrower or Guarantor, and shall, upon
      Lender’s request, authorize the preparation and filing of any additional
      financing statements and/or execute or cause to be executed any other
      certificates or documents necessary to reflect the change in legal, trade,
      or
      fictitious business names, or a change in state of formation.

     

    6.11  Intentionally
      Omitted.
      

     

    6.12  Notice
      of Litigation, Material Adverse Change or Event of Default.
      Borrower will give, or cause to be given, prompt written notice to Lender of
      (a)
      any action or proceeding which is instituted by or against Borrower or Guarantor
      in any federal or state court, or before any commission or other regulatory
      body, federal, state or local, foreign or domestic, or any such proceedings
      which are threatened in writing against Borrower or Guarantor which, if
      adversely determined, would result in a Material Adverse Change, (b) any
      other action, event, or condition of any nature which would result in a Material
      Adverse Change, and (c) any actions, proceedings, or written notices
      adversely affecting the Collateral, or Lender’s or Collateral Agent’s interest
      therein, except to the extent any such action, proceeding or notice would not
      result in a Material Adverse Change, and (d) the occurrence of an Event of
      Default.

     

    6.13  Intentionally
      Omitted.

     

    6.14  Maintenance
      of Business.
      Borrower and Guarantor shall maintain and preserve all rights and franchises
      material to their respective businesses.

     

    6.15  Material
      Agreements.
      Unless
      such actions would not result in a Material Adverse Change, Borrower shall
      not
      make, consent to, or permit any alteration, amendment, modification, release,
      waiver or termination of any material agreement to which it is a party without
      the prior written consent of Lender, which consent will not be unreasonably
      withheld or delayed.

     

    6.16  Right
      of Entry.
      Lender
      or Collateral Agent shall have the right, upon reasonable prior notice, to
      enter
      upon any portion of the premises where any Collateral may be located to verify
      compliance with the Loan Documents.

     

    6.17  Transfer
      of Assets.
      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), Borrower and Guarantor may sell, convey, transfer, assign or dispose
      of
      any properties or assets, or any right, title or interest therein, or any part
      thereof, or enter into any lease covering all or any portion thereof or an
      undivided interest therein, either voluntarily, involuntarily, or otherwise;
      provided,
      however,
      that
      neither Borrower nor Guarantor shall sell, transfer, lease, or otherwise dispose
      of all or any substantial part of the assets, business, operations, or property
      of Borrower or Guarantor, other than such a sale, transfer, lease or disposition
      to Borrower or another Guarantor.

     

    6.18  Dividends
      and Other Distributions.
      The
      Consolidated Entities may directly or indirectly declare or pay dividends to
      its
      shareholders, members, partners or others on or on account of any shares,
      membership interests, partnership interests or other securities of any of the
      Consolidated Entities, so long as no Event of Default has occurred and is
      continuing or would occur as a result of such declaration or
      payment.

     

    6.19  Change
      of Control.
      Without
      the prior written consent of Lender, which consent will not be unreasonably
      withheld or delayed, Borrower and Guarantor shall not cause, permit or suffer
      any Change of Control to occur.

     

    6.20  Loans,
      Investments, Guaranties, Subordinations.
      From
      and after the date hereof, unless an Event of Default has occurred and is
      continuing or would occur as a result of such action, and provided that at
      any
      time the amounts involved do not exceed $1,000,000 in any individual case or
      $5,000,000 in the aggregate, the Consolidated Entities may, directly or
      indirectly (a) make loans or advances to other Persons, (b) purchase or
      otherwise acquire capital stock or other securities of other Persons, limited
      liability company interests or partnership interests in other Persons, or
      warrants or other options or rights to acquire capital stock or securities
      of
      other Persons or limited liability company interests or partnership interests
      in
      other Persons, (c) make capital contributions to other Persons, (d) otherwise
      invest in or acquire interests in other Persons, (e) guaranty or otherwise
      become obligated in respect of Indebtedness of other Persons, (f) subordinate
      claims against, or obligations of other Persons to, the Consolidated Entities
      to
      any other indebtedness of such Person, or (g) incur Indebtedness;
provided,
      however,
      that,
      for the avoidance of doubt, (1) if an Event of Default has occurred and is
      continuing or would occur as a result of the taking of any of the foregoing
      actions, or if the amounts involved exceed the caps specified in this Section,
      the Consolidated Entities may not do or take any of the actions listed in this
      Section without the prior written consent of Lender and (2) (A) the line of
      credit in the maximum principal amount of £100,000.00 incurred by Franklin Covey
      Europe, Ltd., (B) the line of credit in the maximum principal amount of
      CAN$500,000.00 incurred by Franklin Covey Canada, Ltd., and (C) the mortgage
      loan in the maximum principal amount of CAN$895,253.00 incurred by Franklin
      Covey Canada, Ltd., in each case incurred prior to and outstanding as of the
      Closing Date (and any refinance thereof up to the amounts stated in the
      foregoing clauses (A), (B) and (C)) shall not be subject to the caps specified
      in this Section. Notwithstanding the foregoing, the prior written consent of
      Lender shall not be required for (y) intercompany transactions between or
      among the Consolidated Entities or (z) unsecured trade payables incurred by
      the
      Consolidated Entities in the ordinary course of business.

     

    6.21  Acquisition
      of All or Substantially All Assets.
      Unless
      an Event of Default has occurred and is continuing or would occur as a result
      of
      such action, and provided that the amounts involved do not exceed $1,000,000
      in
      any individual case or $5,000,000 in the aggregate, Borrower and Guarantor
      may,
      directly or indirectly, acquire by purchase, lease, or otherwise all or
      substantially all of the assets of any other Person; provided,
      however,
      that,
      for the avoidance of doubt, (1) if an Event of Default has occurred and is
      continuing or would occur as a result of the taking of any of the foregoing
      actions, or if the amounts involved exceed the caps specified in this Section,
      Borrower or Guarantor may not do or take any of the actions listed in this
      Section without the prior written consent of Lender and (2) the amounts of
      any
      transactions entered into by any of the Consolidated Entities within sixty
      (60)
      days prior to the Closing Date shall be subject to the caps specified in this
      Section.

     

    6.22  Government
      Regulation.
      Borrower shall not (a) be or become subject at any time to any law, regulation,
      or list of any government agency (including, without limitation, the U.S. Office
      of Foreign Asset Control list) that prohibits or limits Lender from making
      any
      advance or extension of credit to Borrower or from otherwise conducting business
      with Borrower, or (b) fail to provide documentary and other evidence of
      Borrower’s identity as may be requested by Lender at any time to enable Lender
      to verify Borrower’s identity or to comply with any applicable law or
      regulation, including, without limitation, Section 326 of the USA Patriot Act
      of
      2001, 31 U.S.C. Section 5318.

     

    6.23  Intentionally
      Omitted.

     

    6.24  Disposition
      of Franklin Covey Mexico.
      The
      sale of Franklin Covey Mexico (whether by asset sale, merger, or otherwise)
      shall have closed no later than the date which is nine (9) months after the
      Closing Date. Borrower agrees that if the foregoing has not occurred by such
      date, Borrower shall cause Franklin Covey Mexico to guaranty the Loan and to
      pledge all of its assets to Lender as security for such guaranty, and to deliver
      to Lender the equivalent of such agreements, documents, instruments,
      certificates and information as have been required to be delivered by each
      Guarantor as of the date hereof under any of the Loan Documents.

     

    6.25  Additional
      Guarantors.
      Upon
      the formation of any domestic Subsidiary of Borrower, Borrower shall cause
      such
      Subsidiary to be added as a Guarantor under the Guaranty.

     

    ARTICLE
      7  

     

    EVENTS
      OF DEFAULT AND REMEDIES

     

    7.1  Events
      of Default.
      The
      occurrence of any one or more of the following shall constitute an Event of
      Default under this Agreement:

     

    (a)  Failure
      by Borrower or Guarantor to pay any monetary amount within ten (10) days of
      the
      date when due under any Loan Document.

     

    (b)  Failure
      by Borrower or Guarantor to perform or comply with the provisions of
Sections
      6.2,
      6.6,
      6.7,
      6.8,
      6.10,
      6.17,
      6.18,
      6.19,
      6.20,
      6.21,
      or
6.24.

     

    (c)  Except
      as
      otherwise provided in this Section
      7.1,
      any
      failure by Borrower or Guarantor to perform any obligation not involving the
      payment of money, or to comply with any other term or condition applicable
      to
      Borrower or Guarantor under any Loan Document and the expiration of thirty
      (30)
      days after written notice of such failure by Lender to Borrower or
      Guarantor.

     

    (d)  The
      occurrence of a Material Adverse Change.

     

    (e)  Any
      representation or warranty by Borrower or Guarantor in any Loan Document is
      materially false, incorrect, or misleading as of the date made.

     

    (f)  Borrower
      or Guarantor (i) is unable or admits in writing Borrower’s or Guarantor’s
      inability to pay Borrower’s or Guarantor’s monetary obligations as they become
      due, (ii) fails to pay when due any monetary obligation, whether such obligation
      be direct or contingent, to any person in excess of $1,000,000, unless such
      obligation is being contested in good faith by Borrower or Guarantor, as
      determined by Lender in its reasonable discretion, (iii) makes a general
      assignment for the benefit of creditors, or (iv) applies for, consents to,
      or
      acquiesces in, the appointment of a trustee, receiver, or other custodian for
      Borrower or Guarantor or the property of Borrower or Guarantor or any part
      thereof, or in the absence of such application, consent, or acquiescence, a
      trustee, receiver, or other custodian is appointed for Borrower or Guarantor
      or
      the property of Borrower or Guarantor or any part thereof, and such appointment
      is not discharged within sixty (60) days.

     

    (g)  Commencement
      of any case under the Bankruptcy Code, Title 11 of the United State Code, or
      commencement of any other bankruptcy arrangement, reorganization, receivership,
      custodianship, or similar proceeding under any federal, state, or foreign
      Requirements of Law by or against Borrower or Guarantor and with respect to
      any
      such case or proceeding that is involuntary, and such case or proceeding is
      not
      dismissed with prejudice within sixty (60) days of the filing
      thereof.

     

    (h)  A
      final
      judgment or decree for monetary damages or a monetary fine or penalty (not
      subject to appeal or as to which the time for appeal has expired) is entered
      against Borrower or Guarantor by any Government Authority, which together with
      the aggregate amount of all other such judgments or decrees against Borrower
      or
      Guarantor that remain unpaid or that have not been discharged or stayed, exceeds
      $250,000, and such judgment or decree is not paid and discharged or stayed
      or
      appealed within thirty (30) days after the entry thereof.

     

    (i)  The
      dissolution of Borrower or Guarantor or the commencement of any action or
      proceeding which seeks as one of its remedies the dissolution of Borrower or
      Guarantor.

     

    (j)  All
      or
      any material part of the Collateral of Borrower or Guarantor is attached, levied
      upon, or otherwise seized by legal process, and such attachment, levy, or
      seizure is not quashed, stayed, or released within twenty (20) days of the
      date
      thereof.

     

    (k)  The
      occurrence of any Transfer, unless Lender delivers to Borrower its prior written
      consent to such Transfer.

     

    (l)  Guarantor
      shall take any action to repudiate its Guaranty, or the Guaranty shall otherwise
      cease to be in full force and effect.

     

    (m)  The
      occurrence of any default and the failure to cure such default during applicable
      cure periods, if any, or an Event of Default, as such term is defined in any
      other Loan Document.

     

    (n)  Any
      failure, breach or default under the Other Loans, it being the intention and
      agreement of Lender and Borrower to cross-default the Loan and the Other
      Loans.

     

    (o)  The
      occurrence or existence of any default, event of default or other similar
      condition or event (however described) with respect to a Swap
      Agreement.

     

    7.2  Remedies.

     

    (a)  Notwithstanding
      any provision to the contrary herein or in any of the other Loan Documents,
      upon
      the happening, and during the continuance, of any Event of Default under this
      Agreement, Lender’s obligation to make Advances or to issue Letters of Credit
      shall abate and Lender shall, at its option, have the remedies provided herein
      and in any other Loan Document, including, without limitation, the option to
      declare all outstanding indebtedness to be immediately due and payable without
      presentment, demand, protest or notice of any kind, and the following remedies:
      (i) Lender may, at its option, apply any of Borrower’s or Guarantor’s funds in
      its possession to the outstanding indebtedness under the Note whether or not
      such indebtedness is then due; (ii) Lender or Collateral Agent may exercise
      all
      rights and remedies available to them under any or all of the Loan Documents;
      and (iii) Lender shall have the right to perform Borrower’s obligations under
      this Agreement. All sums expended by Lender or Collateral Agent for such
      purposes shall be deemed to have been disbursed to and borrowed by Borrower
      and
      evidenced by the Note and secured by the Security Agreement.

     

    (b)  Borrower
      hereby constitutes and appoints Lender, or an independent contractor selected
      by
      Lender, during the continuance of an Event of Default, as its true and lawful
      attorney-in-fact with full power of substitution for the purposes of performance
      of Borrower’s obligations under this Agreement in the name of Borrower. It is
      understood and agreed that the foregoing power of attorney shall be deemed
      to be
      a power coupled with an interest which cannot be revoked until repayment of
      the
      Loan.

     

    (c)  In
      addition to any other rights and remedies of Lender, if an Event of Default
      exists and is continuing, Lender is authorized at any time and from time to
      time
      during the continuance of the Event of Default, without prior notice to Borrower
      (any such notice being waived by Borrower to the fullest extent permitted by
      law) to set-off and apply any and all deposits or deposit accounts (general
      or
      special, time or demand, provisional or final) at any time held by Lender to
      or
      for the credit or the account of Borrower against any and all obligations of
      Borrower under the Loan Documents, now or hereafter existing, irrespective
      of
      whether or not Lender shall have made demand under this Agreement or any other
      Loan Document and although such amounts owed may be contingent or unmatured.
      If
      Lender exercises such setoff right, Lender exercising such right agrees promptly
      to notify Borrower after any such setoff and application made by Lender;
provided,
      however,
      that
      the failure to give such notice shall not affect the validity of such setoff
      and
      application. 

     

    ARTICLE
      8  

     

    MISCELLANEOUS

     

    8.1  Assignment.
      Borrower shall not assign any of its rights under this Agreement.

     

    8.2  Notices.
      All
      notices, requests, demands and consents to be made hereunder to the parties
      hereto shall be in writing and shall be delivered by hand or sent by registered
      mail or certified mail, postage prepaid, return receipt requested (except for
      any notice address which is a post office box, in which case notice may be
      given
      by first class mail), through the United States Postal Service to the addresses
      shown below, or such other address which the parties may provide to one another
      in accordance herewith. Such notices, requests, demands and consents, if sent
      by
      mail, shall be deemed given two (2) Business Days after deposit in the United
      States mail, and if delivered by hand, shall be deemed given when
      delivered.

     

     

    
      	 	
              To
                Lender

            	
              or Collateral Agent: JPMorgan
                Chase Bank, N.A.

              80
                West Broadway, Suite 200

              Salt
                Lake City, Utah 84101

              Attn:
                Paul Sommer

            
	 	 	 
	 	with a copy to:	
              Snell & Wilmer L.L.P.

              Gateway
                Tower West

              15
                West South Temple, Suite 1200

              Salt
                Lake City, Utah 84101

              Attn:
                Brian D. Cunningham, Esq.

            
	 	 	 
	 	To Borrower:	
              Franklin Covey Co.

              2200
                West Parkway Blvd.

              Salt
                Lake City, Utah 84119

              Attn:
                Richard Putnam

            
	 	 	 
	 	with a copy to:	
              Dorsey & Whitney LLP

              170
                South Main Street, Suite 900

              Salt
                Lake City, Utah 84101

              Attn:
                Nolan S. Taylor, Esq.

            
	 	 	 
	 	 	 


    

     

    8.3  Intentionally
      Omitted.

     

    8.4  Inconsistencies
      with the Loan Documents.
      In the
      event of any inconsistencies between the terms of this Agreement and any terms
      of any of the Loan Documents, the terms of this Agreement shall govern and
      prevail.

     

    8.5  No
      Waiver.
      No
      waiver by Lender of any Event of Default or conditions or covenants contained
      herein (including, without limitation, with respect to the making of Advances)
      shall extend to any subsequent or other Event of Default or conditions or
      covenants contained herein or impair any consequence of such subsequent Event
      of
      Default or conditions or covenants contained herein.

     

    8.6  Lender
      Approval of Instruments and Parties.
      All
      proceedings taken in accordance with transactions provided for herein, and
      all
      surveys, appraisals, and documents required or contemplated by this Agreement
      and the persons responsible for the execution and preparation thereof shall
      be
      satisfactory to and subject to approval by Lender. Lender’s counsel shall be
      provided with copies of all documents which they may reasonably request in
      connection with the Agreement.

     

    8.7  Lender
      Determination of Facts.
      Lender
      shall at all times be free to establish independently, to its satisfaction,
      the
      existence or nonexistence of any fact or facts, the existence or nonexistence
      of
      which is a condition of this Agreement.

     

    8.8  Incorporation
      of Preamble, Recitals and Exhibits.
      The
      preamble, recitals, and exhibits hereto are hereby incorporated into this
      Agreement.

     

    8.9  Payment
      of Expenses.
      Borrower
      shall pay or cause to be paid all taxes and assessments and all expenses,
      charges, costs, and fees provided for in this Agreement or relating to the
      Loan
      or the Collateral, including, without limitation, any fees incurred for
      recording or filing any of the Loan Documents, fees of any consultants,
      reasonable fees and expenses of Lender’s or Collateral Agent’s counsel in
      negotiating, documenting, administering and enforcing the Loan, whether prior
      to
      or after the Closing Date, documentation and processing fees, printing,
      photostating and duplicating expenses, air freight charges, escrow fees, costs
      of inspections of the Collateral, and premiums of hazard insurance policies
      and
      surety bonds. Borrower hereby authorizes Lender to disburse the proceeds of
      the
      Loan to pay such expenses, charges, costs, and fees notwithstanding that
      Borrower may not have requested a disbursement of such amount. Lender may make
      such disbursements notwithstanding the fact that the Loan is not “in balance” or
      that Borrower is in default under the terms of this Agreement or any other
      Loan
      Document. Such disbursement shall be added to the outstanding principal balance
      of the Note. The authorization hereby granted shall be irrevocable, and no
      further direction or authorization from Borrower shall be necessary for Lender
      to make such disbursements. However, the provision of this Section
      8.9
      shall
      not prevent Borrower from paying such expense, charges, costs, and fees from
      its
      own funds. All such expenses, charges, costs, and fees shall be Borrower’s
      obligation regardless of whether or not Borrower has requested and met the
      conditions for an Advance. The obligations on the part of Borrower under this
      Section 8.9
      shall
      survive the closing of the Loan and the repayment thereof. Borrower hereby
      authorizes Lender, in its sole and absolute discretion, to pay such expenses,
      charges, costs, and fees at any time by a disbursement of the Loan.

     

    8.10  Disclaimer
      by Lender.
      Lender
      shall not be liable to any contractor, subcontractor, supplier, laborer,
      architect, engineer, or any other party for services performed or materials
      supplied in connection with the Collateral. Neither Lender nor Collateral Agent
      shall be liable for any debts or claims accruing in favor of any such parties
      against Borrower or others or against the Collateral. Borrower is not and shall
      not be an agent of Lender or Collateral Agent for any purpose. Neither Lender
      nor Collateral Agent is a joint venture partner with Borrower in any manner
      whatsoever. Prior to default by Borrower under this Agreement and the exercise
      of remedies granted herein, neither Lender nor Collateral Agent shall be deemed
      to be in privity of contract with any contractor or provider of services to
      the
      Collateral, nor shall any payment of funds directly to a contractor,
      subcontractor, or provider of services be deemed to create any third party
      beneficiary status or recognition of same by Lender or Collateral Agent.
      Approvals granted by Lender or Collateral Agent for any matters covered under
      this Agreement shall be narrowly construed to cover only the parties and facts
      identified in any written approval or, if not in writing, such approvals shall
      be solely for the benefit of Borrower.

     

    8.11  Indemnification.
      TO THE
      FULLEST EXTENT PERMITTED BY LAW, BORROWER AGREES TO PROTECT, INDEMNIFY, DEFEND
      AND SAVE HARMLESS LENDER OR COLLATERAL AGENT, THEIR DIRECTORS, OFFICERS, AGENTS,
      ATTORNEYS, AND EMPLOYEES FOR, FROM, AND AGAINST ANY AND ALL LIABILITY, EXPENSE,
      OR DAMAGE OF ANY KIND OR NATURE AND FOR, FROM, AND AGAINST ANY SUITS, CLAIMS,
      OR
      DEMANDS, INCLUDING REASONABLE ATTORNEY’S FEES AND EXPENSES ON ACCOUNT OF ANY
      MATTER OR THING OR ACTION, WHETHER IN SUIT OR NOT, ARISING OUT OF THIS
      AGREEMENT, OR IN CONNECTION HEREWITH, EXCLUDING HOWEVER, ANY MATTERS ARISING
      OUT
      OF AN INDEMNIFIED PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OR ANY MATTERS
      ARISING AFTER EITHER OF LENDER OR COLLATERAL AGENT HAS TAKEN TITLE TO OR
      POSSESSION OF THE COLLATERAL. Upon receiving knowledge of any suit, claim,
      or
      demand asserted by a third party that Lender or Collateral Agent believes is
      covered by this indemnity, Lender or Collateral Agent, as the case may be,
      shall
      give Borrower notice of the matter and an opportunity to defend it, at
      Borrower’s sole cost and expense, with legal counsel satisfactory to Lender or
      Collateral Agent, as the case may be. Lender or Collateral Agent, as the case
      may be, may also require Borrower to so defend the matter. The obligations
      on
      the part of Borrower under this Section
      8.11
      shall
      survive the closing of the Loan and the repayment thereof.

     

    8.12  Titles
      and Headings.
      The
      headings at the beginning of each section of this Agreement are solely for
      convenience and are not part of this Agreement. Unless otherwise indicated,
      each
      reference in this Agreement to a section or an exhibit is a reference to the
      respective section herein or exhibit hereto.

     

    8.13  Number
      and Gender.
      In this
      Agreement the singular shall include the plural and the masculine shall include
      the feminine and neuter gender and vice versa, if the context so
      requires.

     

    8.14  Brokers.
      Borrower and Lender represent to each other that neither of them knows of any
      brokerage commissions or finders’ fee due or claimed with respect to the
      transaction contemplated hereby. Borrower and Lender shall indemnify and hold
      harmless the other party for, from and against any and all loss, damage,
      liability, or expense, including costs and reasonable attorney fees, which
      such
      other party may incur or sustain by reason of or in connection with any
      misrepresentation by the indemnifying party with respect to the
      foregoing.

     

    8.15  Change,
      Discharge, Termination, or Waiver.
      No
      provision of this Agreement may be changed, discharged, terminated, or waived
      except in writing signed by the party against whom enforcement of the change,
      discharge, termination, or waiver is sought. No failure on the part of Lender
      to
      exercise, and no delay by Lender in exercising, any right or remedy under the
      Loan Documents or under the law shall operate as a waiver thereof.

     

    8.16  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 BORROWER AND LENDER 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.

     

    8.17  Disbursements
      in Excess of Loan Amount.
      In the
      event the total disbursements by Lender exceed the amount of the Loan, to the
      extent permitted by the laws of the State of Utah, the total of all
      disbursements shall be secured by the Collateral. All other sums expended by
      Lender pursuant to this Agreement or any other Loan Documents shall be deemed
      to
      have been paid to Borrower and shall be secured by, among other things, the
      Collateral.

     

    8.18  Participations;
      Assignments.
      Lender
      shall have the right at any time to sell, assign, transfer, negotiate, or grant
      participations in all or any part of the Loan or the Note to one or more
      participants. Borrower hereby acknowledges and agrees that any such disposition
      will give rise to a direct obligation of Borrower to each such participant.
      Lender may at any time, without the consent of Borrower, assign all or any
      portion of its rights under this Agreement and the Note to a Federal Reserve
      Bank. Borrower shall have the right, without any obligation to pay the Early
      Termination Fee, to terminate the Loan prior to the Maturity Date within ninety
      (90) days after receiving written notice from Lender that it intends to assign
      or grant participations in the Loan, provided that Borrower otherwise complies
      with the requirements of Section
      2.6(c)
      hereof.

     

    8.19  Counterparts.
      This
      Agreement may be executed in any number of counterparts each of which shall
      be
      deemed an original, but all such counterparts together shall constitute but
      one
      agreement. Borrower and Lender agree and acknowledge that facsimile signature
      pages will be acceptable and shall be conclusive evidence of execution of any
      Loan Document, resolution or other agreement relating to the Loan.

     

    8.20  Time
      is of the Essence.
      Time is
      of the essence of this Agreement.

     

    8.21  Attorneys’
      Fees.
      Borrower agrees to pay all costs of administration, enforcement and collection
      and preparation for any Event of Default or any action taken by Lender or
      Collateral Agent (including, without limitation, reasonable attorney’s fees),
      whether or not any action or proceeding is brought (including, without
      limitation, all such costs incurred in connection with any bankruptcy,
      receivership, or other court proceedings (whether at the trial or appellate
      level)), together with interest thereon from the date of demand at the Default
      Interest Rate.

     

    8.22  Jury
      Waiver.
      EACH
      PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
      ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
      INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
      CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).
      EACH
      PARTY HERETO (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.

     

    8.23  Waiver
      of Special Damages. TO
      THE
      EXTENT PERMITTED BY APPLICABLE LAW, BORROWER SHALL NOT ASSERT, AND HEREBY
      WAIVES, ANY CLAIM AGAINST LENDER, 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.

     

    8.24  MISCELLANEOUS
      WAIVERS.
      TO THE
      FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER HEREBY WAIVES ANY AND
      ALL
      RIGHTS TO REQUIRE MARSHALLING OF ASSETS BY LENDER. WITH RESPECT TO ANY SUIT,
      ACTION OR PROCEEDINGS RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS
      (EACH, A “PROCEEDING”),
      BORROWER 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
      LENDER 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. BORROWER 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
      BORROWER AT THE ADDRESS INDICATED BELOW, AND SERVICE SO MADE SHALL BE COMPLETE
      UPON RECEIPT; EXCEPT
      THAT IF
      BORROWER SHALL REFUSE TO ACCEPT DELIVERY, SERVICE SHALL BE DEEMED COMPLETE
      FIVE
      (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO MAILED.

     

    8.25  Integration.
      The
      Loan Documents contain the complete understanding and agreement of Borrower
      and
      Lender and supersede all prior representations, warranties, agreements,
      arrangements, understandings, and negotiations. PURSUANT
      TO UTAH
      CODE ANNOTATED
      SECTION 25-5-4, BORROWER IS NOTIFIED THAT THE
      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.

     

    8.26  Binding
      Effect.
      The
      Loan Documents will be binding upon, and inure to the benefit of, Borrower
      and
      Lender and their respective successors and assigns. Borrower may not delegate
      its obligations under the Loan Documents.

     

    8.27  Survival.
      The
      representations, warranties, and covenants of Borrower and the Loan Documents
      shall survive the execution and delivery of the Loan Documents and the making
      of
      the Loan.

     

    8.28  Exchange
      of Information.
      Borrower
      agrees that Lender may exchange financial information about Borrower or
      Guarantor with its affiliates and other related entities and its participants
      and prospective participants. Borrower agrees that Lender may provide any
      information Lender may have about Borrower, Guarantor or about any matter
      relating to this Agreement or any of the Loan Documents to J.P. Morgan Chase
      & Co., or any of its subsidiaries or affiliates or their successors, or to
      any one or more purchasers or potential purchasers of the Loan. Borrower agrees
      that Lender may at any time sell, assign, or transfer one or more interests
      or
      participations in all or any part of its rights or obligations in and to this
      Agreement and the other Loan Documents to one or more purchasers whether or
      not
      related to or affiliated with Lender. Borrower hereby authorizes Lender, at
      its
      sole discretion and without notice to or consent of Borrower or Guarantor,
      to
      disclose to Zions or Collateral Agent on a confidential basis any information,
      financial or otherwise, which it may possess concerning Borrower or
      Guarantor.

     

    8.29  Regulation
      FD.
      Lender
      acknowledges that it is aware, and Lender 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 Lender by Borrower
      or any Person acting on Borrower’s behalf. This Section
      8.29
      is a
      confidentiality agreement for purposes of Regulation FD promulgated under the
      Securities Exchange Act of 1934.

     

    8.30  USA
      PATRIOT ACT NOTIFICATION.
      Required Notice:

     

    USA
      PATRIOT ACT.
      The
      Lender hereby notifies Borrower that pursuant to the requirements of the USA
      Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001))
      (the “Act”),
      it is
      required to obtain, verify and record information that identifies Borrower,
      which information includes the name and address of Borrower and other
      information that will allow Lender to identify Borrower in accordance with
      the
      Act.

     

    8.31  Exhibits
      and Schedules.
      The
      following exhibits and schedules to this Agreement are fully incorporated herein
      as if set forth at length:

     

    Exhibit
      A
      - Form of Covenant Compliance Certificate

    Exhibit
      B
      - Form of Request for Advance

    Schedule
      5.2(d) - Subsidiaries

    Schedule
      5.5 - Litigation

    Schedule
      5.6 - Existing Liens and Encumbrances

    Schedule
      5.20 - Management Loan Program

     

    ARTICLE
      9  

     

    COLLATERAL
      RELEASES

     

    9.1  Full
      Release.
      Unless
      either of Lender or Collateral Agent otherwise consents in writing, the
      Collateral or any part thereof shall not be released from the Lien and
      Encumbrance of the Security Agreement until all Indebtedness and Obligations
      of
      Borrower and Guarantor under the Loan Documents have been indefeasibly paid
      and
      performed in full.

     

    [Remainder
      of Page Intentionally Left Blank]

     


    IN
      WITNESS WHEREOF, Lender and Borrower have caused this Agreement to be duly
      executed and delivered as of the date first above written.

     

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

              "Borrower"

            


    

     

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

              "Lender:

            


    

    
    

     

    
      
        
        

      

      
        
          

        

      

       

    



    EXHIBIT
      A

     

    FORM
      OF COVENANT COMPLIANCE CERTIFICATE


    COVENANT
      COMPLIANCE CERTIFICATE

     

    To: JPMORGAN
      CHASE BANK, N.A.

    80
      West
      Broadway, Suite 200

    Salt
      Lake
      City, Utah 84101

     

    For
      the
      [Quarter/Fiscal
      Year]
      Ending:
      _______________, 20___ (the “Reporting
      Period”).

     

    FRANKLIN
      COVEY CO.,
      a Utah
      corporation (“Borrower”),
      makes
      this certification to JPMORGAN
      CHASE BANK, N.A.,
      a
      national banking association (“Lender”),
      under
      that certain Revolving Line of Credit Agreement dated March 14, 2007 (the
“Loan
      Agreement”)
      by and
      between Borrower and Lender. Capitalized terms used herein without definition
      shall have the meanings given to such terms in the Loan Agreement.

     

    The
      undersigned hereby certifies to Lender that as reported on the most recent
      financial statements described below and submitted herewith to Lender, Borrower
      is in full and compliance with each and every financial covenant set forth
      in
      the Loan Agreement and each other covenant set forth in the Loan Agreement.
      The
      financial covenant requirements compared to the actual results are determined
      to
      be as follows, which results are further described on the Line of Credit
      Covenant Calculations set forth on Schedule
      1
      attached
      hereto, each of which Borrower certifies to be true and correct:

     

    Funded
      Debt to EBITDAR Ratio Covenant.
      The
      Consolidated Entities shall not permit its ratio of (A) total liabilities,
      plus
      the net present value of operating leases at a discount rate of seven percent
      (7%), but excluding (1) accounts arising from the purchase of goods and services
      in the ordinary course of business, (2) accrued expenses or losses, and (3)
      deferred revenues or gains, to (B) net income, plus amortization expense,
      depreciation expense, interest expense, income tax expense, and rents and
      operating lease payments, less extraordinary gains and losses (collectively,
      “EBITDAR”),
      for
      the twelve (12) month period then ending, to be greater than (x) 3.25 to 1.00
      as
      of the end of the fiscal quarter of Borrower ending on March 3, 2007, (y) 3.00
      to 1.00 as of the end of the fiscal quarter of Borrower ending on June 2, 2007,
      and (z) 2.75 to 1.00 as of the end of the fiscal quarter of Borrower ending
      on
      August 31, 2007 and each fiscal quarter thereafter.

     

    Maximum
      Ratio for Reporting Period:  

     

    
      
 

    Actual
      Ratio for Reporting Period:  

     

    
      
 

    In
      Compliance: Yes
       ̈ No
       ̈

     

    Fixed
      Charge Coverage Ratio Covenant.
      The
      Consolidated Entities shall not permit its ratio of (A) net income before income
      tax expense, plus amortization expense, depreciation expense, interest expense,
      rent and operating lease payments, minus any distributions or dividends, for
      the
      twelve (12) month period then ending, to (B) prior period current maturities
      of
      long term debt and capital leases, interest expense, cash taxes paid, rent
      and
      operating lease payments, for the same such period, to be less than (x) 1.30
      to
      1.00 as of the end of the fiscal quarter of Borrower ending on March 3, 2007,
      (y) 1.35 to 1.00 as of the end of the fiscal quarter of Borrower ending on
      June
      2, 2007, and (z) 1.50 to 1.00 as of the end of the fiscal quarter of Borrower
      ending on August 31, 2007 and each fiscal quarter thereafter.

     

    Minimum
      Ratio for Reporting Period =  

     

    Actual
      Ratio for Reporting Period =   

     

    In
      Compliance: Yes
       ̈ No
       ̈

     

    Capital
      Expenditures Covenant.
      The
      Consolidated Entities shall not make Capital Expenditures, exclusive of
      curriculum development costs, in excess of (i) $11,000,000.00 for Borrower’s
      fiscal year ending on August 31, 2007 and (ii) $8,000,000.00 for each fiscal
      year of Borrower thereafter.

     

    Maximum
      Capital Expenditures for Reporting Period: $ 

     

    
      
 

    Actual
      Capital Expenditures for Reporting Period: $ 

     

    
      
 

    In
      Compliance: Yes
       ̈ No
       ̈ N/A
       ̈

     

    Minimum
      Net Worth Covenant.
      The
      Consolidated Entities shall not permit its Net Worth to be less than ONE HUNDRED
      THIRTY-THREE MILLION AND NO/100 DOLLARS ($133,000,000.00); provided,
      however,
      the
      Consolidated Entities’ Net Worth may be less than such amount if Lender
      determines that the Consolidated Entities’ Net Worth has decreased to an amount
      less than $133,000,000.00 as a result of Borrower’s purchase of its outstanding
      common or preferred stock. As used in Section
      6.8(d) of
      the
      Loan Agreement, the term “Net
      Worth”
means
      the Consolidated Entities’ total assets less
      total
      liabilities, in each case as determined in accordance with GAAP.

     

    Minimum
      Net Worth as of End of Reporting Period: $ 

       

      
        

      

    

     

    Actual
      Net Worth as of End of Reporting Period: $ 

       

      
        

      

    

     

    In
      Compliance: Yes
       ̈ No
       ̈

     

    In
      addition, the undersigned certifies to Lender that, during the period covered
      by
      the financial statements and through the date of this
      Certification:

     

    A. No
      Event
      of Default has occurred and is continuing.

     

    B. Borrower
      has not pledged any of its assets except as permitted in the Loan
      Agreement.

     

    C. There
      has
      been no change in GAAP or in the application thereof to the Consolidated
      Entities’ financial statements since the date of the audited financial
      statements referred to in Section
      6.7
      of the
      Loan Agreement which were last delivered to Lender.

     

    Dated
      as
      of _______________, 20___.

     

    Very
      truly yours,

     

     

    
      	 	 	 
	 	FRANKLIN
              COVEY CO.
	 
 	 
 	 a
              Utah corporation
 
	 	By:  	 
	 	
              
Name
	 	Title 


    

    
    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    SCHEDULE
      1

    TO
      COVENANT COMPLIANCE CERTIFICATE

     

    LINE
      OF CREDIT COVENANT CALCULATIONS

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B

     

    FORM
      OF REQUEST FOR ADVANCE

     

    [insert
      date]

    


    JPMORGAN
      CHASE BANK, N.A.

    80
      West
      Broadway, Suite 200

    Salt
      Lake
      City, Utah 84101

     

    Request
      for Advance No.:_____________________

     

    Ladies/Gentlemen:

     

    Reference
      is made to the Revolving Line of Credit Agreement dated as of March 14, 2007
      (the “Loan
      Agreement”)
      between FRANKLIN
      COVEY CO.,
      a Utah
      corporation (“Borrower”),
      and
JPMORGAN
      CHASE BANK, N.A.,
      a
      national banking association (“Lender”).
      Capitalized terms used but not otherwise defined herein shall have the meaning
      given them in the Loan Agreement.

     

    In
      accordance with Section
      2.2(a)
      of the
      Loan Agreement, the undersigned Borrower hereby requests that Lender make an
      Advance to us in the amount of $____________________ [insert
      amount]
      by
      means of and to the account specified in Lender’s Commercial Banking Funds
      Transfer Request Form attached hereto as Schedule
      1 [complete
      and execute form].

     

    Borrower
      hereby certifies, as of the date hereof and as of the date the Advance requested
      hereby is made, that:

     

    (a) no
      Event
      of Default has occurred and is continuing nor will an Event of Default occur
      after giving effect to such Advance as a result of such Advance;

     

    (b) each
      of
      the representations and warranties made by Borrower in or pursuant to the Loan
      Documents is true and correct in all material respects on and as of such date
      as
      if made on and as of the date hereof (or, if any such representation or warranty
      is expressly stated to have been made as of a specific date, as of such specific
      date); and

     

    (c) Borrower
      has satisfied all conditions precedent and all other requirements for the
      Advance of the funds requested herein as provided in the Loan Agreement and
      other Loan Documents.

     

    Very
      truly yours,

     

    
      	 	 	 
	 	FRANKLIN
              COVEY CO.
	 
 	 
 	 a
              Utah corporation
 
	 	By:  	 
	 	
              
Name
	 	Title 


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      1

    TO
      REQUEST FOR ADVANCE

     

    JPMORGAN
      CHASE BANK, N.A.

    COMMERCIAL
      BANKING

    FUNDS
      TRANSFER REQUEST FORM

    

    


     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    SCHEDULE
      5.2(d)

     

    SUBSIDIARIES

     

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      5.5

     

    LITIGATION

     

    epicRealm
      Licensing, LLC v. Franklin Covey Co., et al.,
      Case
      No. 2:05-CV-00356-DF-CMC in the United States District Court for the Eastern
      District of Texas, Marshall Division (has been consolidated with Case No.
      2:05-CV-00163-DF-CMC). In August 2005, epicRealm Licensing, LLC (epicRealm)
      filed an action against Borrower for patent infringement. The action alleges
      that Borrower infringed upon two of epicRealm’s patents that cover systems and
      methods for managing dynamic Web page generation requests from clients to a
      Web
      server that in turn uses a page server to generate a dynamic Web page using
      content retrieved from a data source. Borrower denies the patent infringement
      and believes that the epicRealm claims are invalid. This litigation is currently
      in the discovery phase and Borrower intends to vigorously defend the
      matter.

     


    SCHEDULE
      5.6

     

    EXISTING
      LIENS AND ENCUMBRANCES

     

    
      	
              Debtor

               

            	
              Secured
                Party

               

            	
              Collateral

               

            	
              Jurisdiction

               

            	
              Filing
                Date

               

            	
              Filing
                No.

               

            
	
              Franklin
                Covey Corporation

               

            	
              Lease
                Operations

               

            	
              Equipment

               

            	
              Utah

               

            	
              04/10/2002

               

            	
              184734200241

               

            
	
              Franklin
                Covery Company

               

            	
              Inter-tel

               

              Leasing,
                Inc.

               

            	
              Equipment

               

            	
              Utah

               

            	
              06/27/2002

               

            	
              191497200239

               

            
	
              Franklin
                Covey Printing, Inc.

               

            	
              Heidelberg
                USA, Inc.

               

            	
              Equipment

               

            	
              Utah

               

            	
              10/30/2006

               

            	
              306412200696

               

            
	
              Franklin
                Covey Company, Inc.

               

            	
              IOS
                Capital, LLC

               

            	
              Leased
                Equipment

               

            	
              Utah

               

            	
              10/31/2002

               

            	
              201520200221

               

            
	
              Franklin
                Covey Printing, Inc.

               

            	
              Komori
                America Corporation

               

            	
              Equipment

               

            	
              Utah

               

            	
              01/10/2007

               

            	
              311178200706

               

            
	
              Franklin
                Covey Co.

               

            	
              Zions
                First National Bank

               

            	
              Account
                #2918002 with Zions First National Bank

               

            	
              Utah

               

            	
              01/24/2007

               

            	
              312076200702

               

            
	 	 	 	 	 	 


    

    


    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    



    SCHEDULE
      5.20

     

    MANAGEMENT
      COMMON STOCK LOAN PROGRAM

     

    During
      fiscal 2000, certain of our management personnel borrowed funds from an external
      lender, on a full-recourse basis, to acquire shares of our common stock. The
      loan program closed during fiscal 2001 with 3.825 million shares of common
      stock
      purchased by the loan participants for a total cost of $33.6 million, which
      was
      the market value of the shares acquired and distributed to loan participants.
      The Company initially participated on these management common stock loans as
      a
      guarantor to the lending institution. However, in connection with a new credit
      facility obtained during the fourth quarter of fiscal 2001, we acquired the
      loans from the external lender at fair value and are now the creditor for these
      loans. The loans in the management stock loan program historically accrued
      interest at 9.4 percent (compounded quarterly), are full-recourse to the
      participants, and were originally due in March 2005. Although interest accrues
      on the outstanding balance over the life of the loans, the Company ceased
      recording interest receivable (and related interest income) related to these
      loans during the third quarter of fiscal 2002. However, loan participants remain
      obligated to pay all accrued interest upon maturity of the
      loans.

     

    In
      May
      2004, our Board of Directors approved modifications to the terms of the
      management stock loans. While these changes had significant implications for
      most management stock loan program participants, the Company did not formally
      amend or modify the stock loan program notes. Rather, the Company chose to
      forego certain of its rights under the terms of the loans and granted
      participants the modifications described below in order to potentially improve
      their ability to pay, and the Company’s ability to collect, the outstanding
      balances of the loans. These modifications to the management stock loan terms
      applied to all current and former employees whose loans do not fall under the
      provisions of the Sarbanes-Oxley Act of 2002. Loans to the Company’s officers
      and directors (as defined by the Sarbanes-Oxley Act of 2002) were not affected
      by the approved modifications. During fiscal 2005 the Company collected $0.8
      million, which represented payment in full, from an officer and members of
      the
      Board of Directors that were required to repay their loans on the original
      due
      date of March 30, 2005.

     

    The
      May
      2004 modifications to the management stock loan terms included the
      following:

     

    
      	
               

            	
               

            	
              Waiver
                of Right to Collect
                - The
                Company will waive its right to collect the outstanding balance of
                the
                loans prior to the earlier of (a) March 30, 2008, or (b) the date
                after
                March 30, 2005 on which the closing price of the Company’s stock
                multiplied by the number of shares purchased equals the outstanding
                principal and accrued interest on the management stock loans (the
                Breakeven Date).

            
	
               

            	
               

            	
               

            
	
               

            	
               

            	
              Lower
                Interest Rate
                - Effective
                May 7, 2004, the Company prospectively waived collection of all interest
                on the loans in excess of 3.16 percent per annum, which was the “Mid-Term
                Applicable Federal Rate” for May 2004.

            
	
               

            	
               

            	
               

            
	
               

            	
               

            	
              Use
                of the Company’s Common Stock to Pay Loan
                Balances
                - The
                Company may consider receiving shares of our common stock as payment
                on
                the loans, which were previously only payable in cash.

            
	
               

            	
               

            	
               

            
	
               

            	
               

            	
              Elimination
                of the Prepayment Penalty
                - The
                Company will waive its right to charge or collect any prepayment
                penalty
                on the management common stock
                loans.

            


    

    


    These
      modifications, including the reduction of the loan program interest rate, were
      not applied retroactively and participants remain obligated to pay interest
      previously accrued using the original interest rate. Also during fiscal 2005,
      our Board of Directors approved loan modifications for a former executive
      officer and a former director substantially similar to loan modifications
      previously granted to other loan participants in the management stock loan
      program as described above.

     

    Prior
      to
      the May 2004 modifications, the Company accounted for the loans and the
      corresponding shares using a loan-based accounting model that included guidance
      found in SAB 102, Selected
      Loan Loss Allowance Methodology and Documentation Issues;
      SFAS
      No. 114, Accounting
      by Creditors for Impairment of A Loan - an Amendment of FASB Statements No.
      5
      and 15;
      and
      SFAS No. 5, Accounting
      for Contingencies.
      However, due to the nature of the May 2004 modifications, the Company
      reevaluated its accounting for the management stock loan program. Based upon
      guidance found in EITF Issue 00-23, Issues
      Related to the Accounting for Stock Compensation under APB Opinion No. 25 and
      FASB Interpretation No. 44,
      and
      EITF Issue 95-16, Accounting
      for Stock Compensation Agreements with Employer Loan Features under APB Opinion
      No. 25,
      we
      determined that the management common stock loans should be accounted for as
      non-recourse stock compensation instruments. While this accounting treatment
      does not alter the legal rights associated with the loans to the employees
      as
      described above, the modifications to the terms of the loans were deemed
      significant enough to adopt the non-recourse accounting model as described
      in
      EITF 00-23. As a result of this accounting treatment, the remaining carrying
      value of the notes and interest receivable related to financing common stock
      purchases by related parties, which totaled $7.6 million prior to the loan
      term
      modifications, was reduced to zero with a corresponding reduction in additional
      paid-in capital. Since the Company was unable to control the underlying
      management common stock loan shares, the loan program shares continued to be
      included in Basic earnings per share (EPS) following the May 2004
      modifications.

     

    We
      currently account for the management common stock loans as equity-classified
      stock option arrangements. Under the provisions of SFAS No. 123R, which we
      adopted on September 1, 2005, additional compensation expense will be recognized
      only if the Company takes action that constitutes a modification which increases
      the fair value of the arrangements. This accounting treatment also precludes
      us
      from reversing the amounts expensed as additions to the loan loss reserve,
      totaling $29.7 million, which were recognized in prior periods.

     

    During
      fiscal 2006, the Company offered participants in the management common stock
      loan program the opportunity to formally modify the terms of their loans in
      exchange for placing their shares of common stock purchased through the loan
      program in an escrow account that allows the Company to have a security interest
      in the loan program shares. The key modifications to the management common
      stock
      loans for the participants accepting the fiscal 2006 offer are as
      follows:

     

    


    
      	
               

            	
               

            	
              Modification
                of Promissory Note
                -
                The management stock loan due date was changed to be the earlier
                of (a)
                March 30, 2013, or (b) the Breakeven Date as defined by the May 2004
                modifications. The interest rate on the loans will increase from
                3.16
                percent compounded annually to 4.72 percent compounded
                annually.

            
	
               

            	
               

            	
               

            
	
               

            	
               

            	
              Redemption
                of Management Loan Program Shares
                -
                The Company will have the right to redeem the shares on the due date
                in
                satisfaction of the promissory notes as
                follows:

            


    

    


    
      	
               

            	
              ·

            	
              On
                the Breakeven Date, the Company has the right to purchase and redeem
                from
                the loan participants the number of loan program shares necessary
                to
                satisfy the participant’s obligation under the promissory note. The
                redemption price for each such loan program share will be equal to
                the
                closing price of the Company’s common stock on the Breakeven
                Date.

            
	
               

            	
               

            	
               

            
	
               

            	
              ·

            	
              If
                the Company’s stock has not closed at or above the breakeven price on or
                before March 30, 2013, the Company has the right to purchase and
                redeem
                from the participants all of their loan program shares at the closing
                price on that date as partial payment on the participant’s
                obligation.

            


    

    


    The
      fiscal 2006 modifications were intended to give the Company a measure of control
      of the outstanding loan program shares and to facilitate payment of the loans
      should the market value of the Company’s stock equal the principal and accrued
      interest on the management stock loans. If a loan participant declines the
      offer
      to modify their management stock loan, their loan will continue to have the
      same
      terms and conditions that were previously approved in May 2004 by the Company’s
      Board of Directors and their loans will be due at the earlier of March 30,
      2008
      or the Breakeven Date. Consistent with the May 2004 modifications, stock loan
      participants will be unable to realize a gain on the loan program shares unless
      they pay cash to satisfy the promissory note obligation prior to the due date.
      As of the closing date of the extension offer, which was substantially completed
      in June 2006, management stock loan participants holding approximately 3,508,000
      shares, or 94 percent of the remaining loan shares, elected to accept the
      extension offer and placed their management stock loan shares into the escrow
      account.

     

    As
      a
      result of this modification, the Company reevaluated its accounting treatment
      regarding the loan shares and their inclusion in Basic EPS. Since the management
      stock loan shares held in the escrow account continue to have the same income
      participation rights as other common shareholders, the Company has determined
      that the escrowed loan shares are participating securities as defined by EITF
      03-06, Participating
      Securities and the Two-Class Method under FASB Statement No.
      128.
      As a
      result, the management loan shares will be included in the calculation of Basic
      EPS in periods of net income and excluded from Basic EPS in periods of net
      loss
      beginning in the fourth quarter of fiscal 2006, which was the completion of
      the
      escrow agreement modification.

     

    As
      a
      result of these loan program modifications, the Company hopes to increase the
      total value received from loan participants; however, the inability of the
      Company to collect all, or a portion, of these receivables could have an adverse
      impact upon our financial position and future cash flows compared to full
      collection of the loans.