ex102_071108.htm


    

      
        

        

      

       

      Exhibit
10.2

       

       

       

      
        SUPPLY
AGREEMENT

        


        BETWEEN

        


        FRANKLIN
COVEY PRODUCTS, LLC

        


        AND

        


        FRANKLIN
COVEY PRODUCT SALES, INC.

        


        MADE
EFFECTIVE AS OF

        


        JULY 5,
2008, 11:59 P.M., MOUNTAIN DAYLIGHT TIME

      

       

      


      


      


      


      


      


      


      



      
        
          
          

        

        
           


          
            

            

          

          
            

          

        

        
          Table of Contents

        

      


      TABLE OF CONTENTS

       

      
        	 
      	
                Page

              
	
                ARTICLE I. DEFINITIONS

                 

              	
                1

              
	 
      	
                1.1

              	
                Definitions

              	
                1

                 

              
	
                ARTICLE II. MANUFACTURE AND SUPPLY

                 

              	
                6

              
	 
      	
                2.1

              	
                Manufacture and Supply

              	
                6

              
	 
      	
                2.2

              	
                Purchase Orders

              	
                6

              
	 
      	
                2.3

              	
                Acceptance of Purchase Orders

              	
                7

              
	 
      	
                2.4

              	
                Purchase Order Adjustments

              	
                8

              
	 
      	
                2.5

              	
                Cancellations

              	
                8

              
	 
      	
                2.6

              	
                Forecasts

              	
                8

              
	 
      	
                2.7

                2.8

              	
                Vendor Quality Standards

                Quality
Standards

              	
                9

                9

                 

              
	
                ARTICLE III. SUPPLY OF PRODUCTS

                 

              	
                9

              
	 
      	
                3.1

              	
                Products Supplied

              	
                9

              
	 
      	
                3.2

              	
                Exclusivity

              	
                9

              
	 
      	
                3.3

              	
                Right of First Offer

              	
                9

                 

              
	
                ARTICLE IV. DELIVERY AND ACCEPTANCE

                 

              	
                10

              
	 
      	
                4.1

              	
                Shipment

              	
                10

              
	 
      	
                4.2

              	
                Timely Delivery

              	
                10

              
	 
      	
                4.3

              	
                Acceptance

              	
                11

              
	 
      	
                4.4

              	
                Rejection

              	
                11

                 

              
	
                ARTICLE V. PRICE AND PAYMENT

                 

              	
                11

              
	 
      	
                5.1

              	
                Prices of Products Supplied by FC Products
    LLC

              	
                11

              
	 
      	
                5.2

              	
                Prices of Products Supplied by FC Sales Inc

              	
                12

              
	 
      	
                5.3

              	
                Invoices

              	
                12

              
	 
      	
                5.4

              	
                Payment

              	
                12

              
	 
      	
                5.5

              	
                Taxes

              	
                12

                 

              
	
                ARTICLE VI. RECORD-KEEPING; AUDITS; RECALLS

                 

              	
                12

              
	 
      	
                6.1

              	
                Record-Keeping

              	
                12

              
	 
      	
                6.2

              	
                Inspections

              	
                13

              
	 
      	
                6.3

              	
                Records; Audit

              	
                13

              
	 
      	
                6.4

              	
                Recalls

              	
                13

              


      


      
        
          
          

        

        
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                ARTICLE VII. GOVERNANCE

              	
                13

                 

              
	 
      	
                7.1

              	
                Supply Relationship Managers

              	
                13

              
	 
      	
                7.2

              	
                Strategic Relationship Committee

              	
                14

                 

              
	
                ARTICLE VIII. EFFECTIVENESS, TERM AND
      TERMINATION

              	
                14

                 

              
	 
      	
                8.1

              	
                Effectiveness; Term

              	
                14

              
	 
      	
                8.2

              	
                Termination

              	
                14

              
	 
      	
                8.3

              	
                Termination of a Purchase Order; Partial
      Termination

              	
                15

              
	 
      	
                8.4

              	
                Effect of Termination

              	
                15

              
	 
      	
                8.5

              	
                Survival

                 

              	
                15

              
	
                ARTICLE IX. INDEMNIFICATION

                 

              	
                16

              
	 
      	
                9.1

              	
                Indemnification by FC Products LLC

              	
                16

              
	 
      	
                9.2

              	
                Indemnification by FC Sales Inc.

              	
                16

              
	 
      	
                9.3

              	
                Procedures

                 

              	
                16

              
	
                ARTICLE X. WARRANTIES, LIMITATION OF WARRANTIES AND
      LIABILITY

                 

              	
                17

              
	 
      	
                10.1

              	
                Warranties

              	
                17

              
	 
      	
                10.2

              	
                Damages

                 

              	
                17

              
	
                ARTICLE XI. CONFIDENTIAL INFORMATION

                 

              	
                18

              
	 
      	
                11.1

              	
                Definition

              	
                18

              
	 
      	
                11.2

              	
                Restrictions on Use

              	
                18

              
	 
      	
                11.3

              	
                Nonsolicitation

                 

              	
                18

              
	
                ARTICLE XII. MISCELLANEOUS

                 

              	
                18

              
	 
      	
                12.1

              	
                Assignment

              	
                18

              
	 
      	
                12.2

              	
                Injunctive Relief

              	
                19

              
	 
      	
                12.3

              	
                Severability

              	
                19

              
	 
      	
                12.4

              	
                Interpretation

              	
                19

              
	 
      	
                12.5

              	
                Amendment and Waiver

              	
                20

              
	 
      	
                12.6

              	
                Governing Law

              	
                20

              
	 
      	
                12.7

              	
                Consent to Jurisdiction

              	
                20

              
	 
      	
                12.8

              	
                Independent Contractors

              	
                21

              
	 
      	
                12.9

              	
                Notices

              	
                21

              
	 
      	
                12.10

              	
                Publicity

              	
                22

              
	 
      	
                12.11

              	
                Complete Agreement

              	
                22

              
	 
      	
                12.12

              	
                Signatures, Counterparts

              	
                22

              
	 
      	
                12.13

              	
                Construction

              	
                23

              


      

      


       

      Exhibit
A    Standard
Spread

       


      
        
          
          

        

        
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        SUPPLY
AGREEMENT

         

        This
SUPPLY AGREEMENT (this
“Agreement”) between
Franklin Covey Products, LLC, a Utah limited liability company (“FC Products LLC”), and
Franklin Covey Product Sales, Inc., a Utah corporation (“FC Sales Inc.”), dated July
7, 2008 is made effective as of July 5, 2008, 11:59 P.M. Mountain Daylight
Time.

         

        Recitals

         

        WHEREAS, Franklin Covey Co., a
Utah corporation (“Franklin
Covey Co.”), certain Affiliates of Franklin Covey Co., FC Sales Inc., and
FC Products LLC are parties to a Master Asset Purchase Agreement dated as of May
22, 2008, as amended (the “Asset Purchase Agreement”), a
Master License Agreement made effective as of July 5, 2008, 11:59 P.M. Mountain
Daylight Time (the “License
Agreement”), a Master Shared Services Agreement made effective as of July
5, 2008, 11:59 P.M. Mountain Daylight Time (the “Shared Services Agreement”),
a Sublease Agreement between Franklin Development Corporation and FC Products
LLC (the “Lease
Agreement”) and a Sub-sublease Agreement between FC Products LLC and
Franklin Covey Co. (the “Sub-sublease Agreement”)
(collectively the “Ancillary
Agreements”); and

         

        WHEREAS, the parties wish to
supply Products and to receive Products to fulfill the purposes of the License
Agreement, subject to the terms and conditions hereof.

         

        NOW, THEREFORE, in
consideration of the mutual promises and covenants set forth herein, the parties
hereto agree as follows:

         

      

       

      ARTICLE I.  DEFINITIONS

       

      1.1    Definitions.  All capitalized terms used in this
Agreement have the meanings set forth below, unless the context clearly
indicates otherwise.

       

      “Affiliate” means, when used
with reference to any Person, any other Person that directly, or indirectly
through one or more intermediaries, has control of the first Person, or of which
the first Person has control, or which is under common control with the first
Person.

       

      “Agreement” has the meaning
set forth in the Preamble.

       

      “Ancillary Agreements” has the
meaning set forth in the Recitals.

       

      “Asset Purchase Agreement” has
the meaning set forth in the Recitals.

       

      “Assigned Software” means the
Software assigned to FC Products LLC pursuant to the Asset Purchase Agreement
and includes the Forms Wizard, Address/Phone and Confidant software
products.

       

      “Assigned Trademarks” means
the Trademarks listed on Exhibit B of the License Agreement.

       


      
        
          
          

        

        
           


          
            

          

        

        
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      “Binders And Totes” means
those products sold by FC Products LLC (i) that can be used to organize and
manage Planners and other Paper-Based Products or (ii) that are used to
carry materials, including bags, cases and satchels.

       

      “Boxed PlanPlus Software”
means the planning and organizational Software currently known as PlanPlus for
Outlook, PlanPlus for Windows, PlanOne, TasksPlus and ProjectsPlus.

       

      “Business Day” means any day,
other than Saturday or Sunday, on which commercial banks in the United States of
America are open for business.

       

      “Confidential Information” has
the meaning set forth in Section 11.1.

       

      “Content-Rich Media” means
content created, prepared, commissioned or licensed by Licensor and presented in
books, audio books, videos, audiotapes, CDs, DVDs and similar media (other than
Software), including each of the foregoing that is delivered in downloadable
format, not including the 7 Habits Interactive Product.

       

      “Corporate Gift Items” means
those objects typically given as gifts in a corporate setting, including,
without limitation, paperweights, desk sets and similar items.

       

      “Delivery Date” means the date
on which the parties agree to deliver any Product subject to a Purchase
Order.

       

      “Discloser” has the meaning
set forth in Section 11.1.

       

      “EBITDA” means earnings before
interest, taxes, depreciation and amortization.  Depreciation expense
generated in the production of inventory shall be included in inventory’s
standard cost and the amortization of certain costs directly associated with the
generation of revenue may be included in the EBITDA calculation (i.e. will lower
EBITDA).  Examples of these costs include the depreciation of
equipment specifically used for the production of inventory or the amortization
of a prepaid author royalty.

       

      “Education Planner” means a
Planner that is designed to be used by educators or students and that contains
training or Execution-Related Materials.

       

      “Effective Date” has the
meaning set forth in Section 8.1.

       

      “Execution-Related Materials”
means information included in a Planner that assists an individual in performing
tasks required or recommended by an employer, client or similar
entity.  As an example and without limitation, execution-related
materials include information in a Planner for a retail manager that sets out
steps to be followed in preparation for the peak retail selling
season.

       

      “FC Sales Inc. Change of
Control” means (i) the acquisition of FC Sales Inc. by a third party by
means of any transaction or series of transactions (including, without
limitation, any acquisitions, recapitalization, conversion, reorganization,
stock purchase, merger or consolidation); (ii) a sale or other disposition of
all or substantially all the assets of FC Sales Inc.; (iii) any of the foregoing
transactions involving the parent corporation of FC Sales Inc.; or (iv) the
acquisition of equity securities by a Person or Persons acting as a

       


      
        
          
          

        

        
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      group,
which together with equity securities already held by such Person or Persons,
constitutes more than 50% of the total voting power of the parent corporation of
FC Sales Inc.

       

      “Indemnified Party” has the
meaning set forth in Section 9.3.

       

      “Indemnifying Party” has the
meaning set forth in Section 9.3.

       

      “Individual Effectiveness,
Management/Leadership and/or Organizational Execution Skills” means any
and all organizational, management, leadership or personal effectiveness skills
and the techniques and strategies for attaining such skills including, without
limitation, executive coaching, management coaching, performance review,
trust-building (in or out of an organizational setting), execution-related
skills, personal time management, personal performance, personal goal-setting
(including personal time-management, performance and goal setting in any
academic or educational environment), family effectiveness, family organization,
family goal-setting, family values, personal fitness, wellness and life balance,
and any other form of training.

       

      “Lease Agreement” has the
meaning set forth in the Recitals.

       

      “License Agreement” has the
meaning set forth in the Recitals.

       

      “Licensed Copyrights” means
the copyrights and copyrighted materials, whether registered or not, that are
listed on Exhibit C of the License Agreement.

       

      “Licensed Materials” means the
Licensed Trademarks and the Licensed Copyrights as set forth and defined in the
License Agreement.

       

      “Licensed Products” means
those products listed on Exhibit D of the License Agreement.

       

      “Licensed Trademarks” means
those trademarks listed on Exhibit A of the License Agreement.

       

      “MFN Pricing” means the party
purchasing the good shall receive a price no less favorable than the price
available to other similarly situated purchasers for the same good at the time
of the sale.

       

      “Mobile PlanPlus Software”
means the planning and organizational Software for use by customers through
cellular telephones or similar personal device and currently known as Mobile
PlanPlus.

       

      “Motivational Artwork” means
any print, artwork or other display-worthy media that incorporates Licensed
Trademarks and/or Licensed Copyrights.

       

      “New Licensed Product” means a
new product that is not substantially similar to an existing Licensed Product
and that uses Licensed Materials.

       


      
        
          
          

        

        
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      “New Non-Licensed Product”
means a new product that is not substantially the same as an existing Licensed
Product and that does not use Licensed Materials.

       

      “New Product” means any New
Licensed Product, New Non-Licensed Product or an extension of a Specialty
Product that differs significantly from the Specialty Product.

       

      “Online PlanPlus Software”
means the planning and organizational Software currently known as the Basic,
Sales, Business and Project editions of PlanPlus Online.

       

      “Ordering Party” has the
meaning given in Section 2.1.

       

      “Paper-Based Products” means
all Planners and any additional paper-based Products produced by FC Products
LLC, including forms, tabs, journals, loose paper, fillers and like
products.

       

      “Person” means an individual,
corporation, partnership, limited partnership, limited liability company,
unincorporated association, trust, joint venture, union or other organization or
entity, including a governmental entity.

       

      “Planner” means any
paper-based product (i) bearing Trademarks of Franklin Covey Co. or its
Affiliates and (ii) organized consecutively by date so that its user may
organize, plan and schedule events and tasks, along with ancillary pages that
serve a related purpose, including, by way of example, pages to organize
addresses and phone numbers and pages to take notes at meetings.

       

      “Price Competitive” has the
meaning set forth in Section 3.2.

       

      “Price List” has the meaning
set forth in Section 5.1(a).

       

      “Products” means the goods
available for supply under this Agreement and, with respect to FC Products LLC,
means any Licensed Product available to FC Sales Inc. pursuant to the License
Agreement (including without limitation all Planners), New Products, Assigned
Software and Boxed PlanPlus Software and, with respect to FC Sales Inc., means
Content-Rich Media, the 7 Habits Interactive Product, Supplied Software and
Training-Oriented Products.

       

      “Prohibited Activity” means
(i) publishing or promoting indecent or pornographic materials,
(ii) deriving a substantial portion of revenue from gaming activities or
the promotion or sale of alcoholic beverages, tobacco products or firearms,
(iii) having as a primary purpose the advocacy of a particular political or
moral position or (iv) illegal activities.

       

      “Prohibited Party” means any
Person that, directly or indirectly through Affiliates, engages in a Prohibited
Activity.

       

      “Purchase Order” has the
meaning given in Section 2.2.

       

      “Recipient” has the meaning
set forth in Section 11.1.

       

      “Revised Purchase Order” has
the meaning set forth in Section 2.4.

       


      
        
          
          

        

        
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      “Shared Services Agreement”
has the meaning set forth in the Recitals.

       

      “Software” means computer
programs or data, whether in object code or source code, regardless of the media
format of such Software, and all documentation relating thereto.

       

      “Specialty Products” means
those categories of products listed on Exhibit K of the License Agreement
that are sold by FC Products LLC as of the Effective Date so long as they do not
use the Licensed Materials.

       

      “Specifications” means any
specific requirements included in a Purchase Order placed by FC Sales Inc. for
the purchase of any Training Planner, Education Planner, or any other Product
where special instructions are required.

       

      “Standard Planner” means a
Planner in the general form available to the general public in retail channels
as of the Effective Date and not including training or Execution-Related
Materials.  For the avoidance of doubt, the content contained in
Planners available to the general public in retail channels as of the Effective
Date shall not be deemed “training or Execution-Related Materials.”

       

      “Standard Spread” has the
meaning set forth in Exhibit A.

       

      “Strategic Relationship
Committee” means the committee established pursuant to the License
Agreement.

       

      “Sub-sublease Agreement” has
the meaning set forth in the Recitals.

       

      “Supply Relationship Manager”
has the meaning given in Section 7.1.

       

      “Supplying Party” has the
meaning given in Section 2.1.

       

      “Supplied Software” means
Online PlanPlus Software and Mobile PlanPlus Software.

       

      “Tailored Planner” means a
Planner that has been customized according to the specifications of an
Organizational Client or other organizational customer to contain logos,
employee directory information, a listing of company holidays and any other
information approved by Franklin Covey or its Affiliates not including and
training or Execution-Related Materials.

       

      “Testing Period” has the
meaning set forth in Section 4.3.

       

      “Trademark” means rights in
trademarks, trade names, service marks, service names, design marks, logos,
trade dress, or similar rights with respect to identification of origin, whether
registered or unregistered, as well as rights in internet domain names, uniform
resource locators and e-mail addresses.

       

      “Training-Oriented Product”
means any good, product or thing in any tangible form (including Software) that
is designed to teach individuals or organizations Individual Effectiveness,
Management/Leadership and/or Organizational Execution Skills.

       


      
        
          
          

        

        
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      “Training-Oriented Service”
means any seminar, session, online course, webinar, consultation or similar
interaction, whether or not for a fee, where the subject matter of such service
relates to or includes Individual Effectiveness, Management/Leadership and/or
Organizational Execution Skills.

       

      “Training Planner” means a
Planner that has been customized according to the specifications of an
Organizational Client or other organizational customer and that does contain
training and/or Execution-Related Materials.  A Training Planner may
include logos, employee director information, a listing of company holidays and
other information supplied by the Organizational Client or other organizational
customer.

       

      ARTICLE II.  MANUFACTURE AND SUPPLY

       

      2.1    Manufacture and Supply. 
The
Supplying Party agrees that it will manufacture and supply, directly or through
Affiliates or other third parties, the Products that the Ordering Party may
order hereunder, in accordance with all of terms and conditions of this
agreement.  “Supplying Party” means the
party supplying Products pursuant to this Agreement.  “Ordering Party” means a party
to this Agreement or any of its Affiliates that orders Products pursuant to this
Agreement.

       

      2.2    Purchase Orders. 
The
Ordering Party may order Products by submitting a Purchase Order (as further
described in Section 2.2(c), a “Purchase Order”) from time to
time to the Supplying Party by means of a mailed, couriered, electronic or
facsimile communication.  The Supplying Party shall be deemed to have
received a Purchase Order on the date of its electronic or electronically
confirmed facsimile receipt or upon its delivery to the Supplying Party by mail
or courier service.

       

      (a) Purchase
Orders for Products supplied by FC Products LLC in small quantities that are
intended as a special accommodation for FC Sales Inc.’s or its Affiliates’
customers shall be placed at least five (5) Business Days prior to the Delivery
Date, subject to the FC Products LLC’s inventory.  FC Products LLC
agrees to use commercial best efforts to accept Purchase Orders on a shorter
time frame for such accommodation orders.  Purchase Orders for
Products supplied by FC Products LLC in large quantities shall be submitted
prior to the required Delivery Date as follows:

       

      (i) The
Purchase Order for Paper-Based Products shall be placed at least sixty (60)
calendar days prior to the Delivery Date.

       

      (ii) The
Purchase Order for Binders And Totes shall be placed at least one hundred twenty
(120) calendar days prior to the Delivery Date.

       

      (iii) The
Purchase Order for Boxed PlanPlus Software shall be placed at least thirty (30)
calendar days prior to the Delivery Date.

       

      (iv) The
Purchase Order for Specialty Products shall be placed at least thirty (30)
calendar days prior to the Delivery Date.

       


      
        
          
          

        

        
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      (b) Purchase
Orders for Products supplied by FC Sales Inc. shall be placed at least thirty
(30) Business Days prior to the Delivery Date, subject to FC Sales Inc.’s
inventory.

       

      (c) Each
Purchase Order shall include:

       

      (i) a unique
Purchase Order number;

       

      (ii) the
delivery address;

       

      (iii) the
bill-to address;

       

      (iv) the date
of the Purchase Order;

       

      (v) terms for
payment;

       

      (vi) mode of
shipment;

       

      (vii) terms for
title transfer of shipment (e.g. FOB [Location]);

       

      (viii) a
description of the Products;

       

      (ix) Specifications,
if applicable; and

       

      (x) the
Delivery Date(s).

       

      (d) This
Agreement shall govern each Purchase Order, and any conflict or inconsistency
between the terms of this Agreement and a Purchase Order shall be resolved in
favor of this Agreement. No additional or conflicting terms in any
acknowledgement or acceptance from the Supplying Party shall
govern.

       

      (e) Except as
provided in Sections 2.7, 3.2 and 3.3, nothing in this Agreement shall restrict
a Supplying Party from procuring the Products from any third party.

       

      2.3    Acceptance
of Purchase Orders.  

       

      (a) The
Supplying Party shall notify the Ordering Party within five (5) Business Days of
receipt of any Purchase Order setting forth either (i) its acceptance of
the Purchase Order; or (ii) any proposed amendments to the Delivery
Date(s), quantities and/or Specifications for the Products
ordered.  Failure by the Supplying Party to notify the Ordering Party
within five (5) Business Days of receipt of a Purchase Order shall be deemed a
rejection of the Purchase Order.

       

      (b) If the
Supplying Party responds pursuant to 2.3(a)(ii) above, the Ordering
Party and the Supplying shall negotiate in good faith and in a timely manner
such Delivery Dates, quantities and Specifications, if
applicable.  Upon agreement of the parties, an authorized
representative of each party shall execute the Purchase Order and upon the date
of the Supplying Party’s execution the Purchase Order shall be deemed
accepted.

       


      
        
          
          

        

        
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      (c) If FC
Products LLC is the Supplying Party and the price of any Product ordered as
calculated according to the terms of this Agreement is higher than the price of
such Product on the Price List, FC Products LLC shall include the current price
in its notification under Section 2.3(a), after which notice FC Sales Inc. shall
have an additional two (2) Business Days to reject the Purchase Order by giving
FC Products LLC written notice of its intent to reject the Purchase
Order.  Failure by FC Sales Inc. to provide such written notice after
a price change notification shall be deemed acceptance of all the terms of the
Purchase Order, including price.

       

      (d) Each
Purchase Order shall become binding upon the parties upon
acceptance.

       

      2.4    Purchase Order Adjustments. 
The
Ordering Party may at any time request a change in a Purchase Order (including
in any Specifications), by submitting written notice by means of a mailed,
couriered, electronic or facsimile communication to the Supplying Party
detailing the nature, extent and proposed manner of performance of the proposed
change, and estimated scheduling, pricing and cost information relating
thereto.  The Supplying Party shall evaluate each such request, and
submit to the Ordering Party a written response, unless otherwise agreed by the
parties, to each such request within five (5) Business Days following receipt
thereof.  The Supplying Party’s written response shall address any
impact the proposed changes will have on the Purchase Order.  The
parties shall negotiate the desired changes in good faith.  If the
parties agree to the changes, the Ordering Party shall prepare a written
description of the agreed changes (a “Revised Purchase Order”),
which will become effective when accepted in writing by the Supplying
Party.  Upon acceptance by the Supplying Party, the Revised Purchase
Order will replace the original Purchase Order and will prevail over any
inconsistent terms of the original Purchase Order.  The Supplying
Party agrees to implement such agreed changes in an expeditious and commercially
prudent manner.  If the parties do not agree to the changes requested
via the Revised Purchase Order within five (5) Business Days of first receipt by
the Supplying Party of written notice of the changes, the Ordering Party may
terminate the Purchase Order to which the changes relate, in whole or in part,
with written notice to Supplying Party.  The Ordering Party shall
reimburse the Supplying Party for the actual costs incurred by the Supplying
Party that are directly related to the cancelled Purchase Order and that cannot
be mitigated by the Supplying Party through returns, reuse or other commercially
reasonable measures.

       

      2.5     Cancellations. 
A
Purchase Order may be canceled, in whole or in part, upon written notice by
Ordering Party at any time prior to thirty (30) days before the applicable
Delivery Date(s), provided that Purchase Orders for Binders and Totes must be
cancelled at least sixty (60) days prior to the applicable Delivery
Date(s).  The Ordering Party shall reimburse the Supplying Party for
the actual costs incurred by the Supplying Party that are directly related to
the cancelled Purchase Order and that cannot be mitigated by the Supplying Party
through returns, reuse or other commercially reasonable measures.  In
no event shall an Ordering Party be liable for any incidental, special,
consequential or punitive damages for cancellation of any Purchase Orders
submitted under this Agreement.

       

      2.6    Forecasts. 
FC
Sales Inc. shall provide FC Products LLC with a written forecast setting forth
estimated orders FC Sales Inc. expects to place for all Planners at least twelve
(12) months prior to the start date of such Planners.  Eight (8)
months prior to the

       


      
        
          
          

        

        
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      start
date for any January 1 Planner and six (6) months prior to the start date of any
other Planner, FC Sales Inc. shall confirm its estimated orders, as adjusted, in
a written confirmation.  FC Sales Inc. commits to purchase, and shall
submit Purchase Orders for, at least 75 percent of the estimated orders of each
type of Planner stated in such written confirmations.  As used in this
Section 2.6, “start date” means the first dated page contained in the
Planner.

       

      2.7    Vendor Quality Standards. 
The
Supplying Party shall not engage any third party to manufacture or supply
Products pursuant to this Agreement that is a Prohibited Party or that would
damage or derogate from the goodwill, image and reputation of FC Products LLC,
FC Sales Inc. or any Licensed Trademarks or Assigned Trademarks.

       

      2.8    Quality Standards. 
In
addition to all the terms and conditions of the License Agreement, Products
delivered by the Supplying Party pursuant to this Agreement shall be of the same
quality as like products sold by the Supplying Party in its usual channels of
commerce.

       

      ARTICLE III.  SUPPLY OF PRODUCTS

       

      3.1    Products Supplied. 
Subject
to the terms and conditions of this Agreement and the License Agreement, each
party shall manufacture, directly or indirectly, and supply the other party with
its Products as set forth in any Purchase Order.

       

      3.2    Exclusivity. 


       

      (a) FC Sales
Inc. shall purchase all Products available for supply from FC Products LLC under
this Agreement exclusively from FC Products LLC so long as the prices of such
Products are price competitive (as described in the next sentence, “Price
Competitive”).  A price will be deemed Price Competitive if the
invoice price prepared by FC Products LLC for such Product (excluding delivery
and overhead costs such as freight and warehouse expenses) is at least as good
as the invoice price FC Sales Inc. could obtain by sourcing the same product at
the same quality and quantity levels and under the same time constraints in
other channels, taking into account the totality of the business relationship
provided by FC Sales Inc.; provided that prices supplied by a prospective vendor
that are below the actual cost of production of the product (a loss leader)
shall not be used for comparison.

       

      (b) If FC
Sales Inc. determines that any Product supplied by FC Products LLC subject to
this Section 3.2 is no longer Price Competitive, FC Sales Inc. shall have
the right to purchase such Product from a third party, subject to the
restrictions of Section 2.7.  If at any time FC Sales Inc.
determines in good faith that FC Products LLC is no longer Price Competitive in
the aggregate, FC Sales Inc. may solicit a bid or bids from third parties for
all of the business it conducts under this Agreement or a substantial portion
thereof.  FC Products LLC shall have the right to match the bid and
retain the business.

       

      3.3    Right of First
Offer.

       

      (a) FC Sales
Inc. agrees that it will purchase the Products listed in this Section 3.3
subject to a right of first offer to FC Products LLC to manufacture such
Products.  FC Products LLC shall have the exclusive right to
manufacture any product subject to this

       


      
        
          
          

        

        
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      Section 3.3
if FC Products LLC meets FC Sales Inc.’s cost, quality and timeliness
requirements as contained in the Purchase Order issued by FC Sales Inc.
(including any Specifications).

       

      (b) The
following Products are subject to the right of first offer of this
Section 3.3:

       

      (i) Tailored
Planners;

       

      (ii) Training
Planners;

       

      (iii) Education
Planners; and

       

      (iv) Training-Oriented
Products.

       

      (c) If FC
Products LLC declines to provide the Products listed in Section 3.3(b) on
the terms and conditions provided by FC Sales Inc., FC Sales Inc. shall not
source the same Product or Products from any third party on terms more favorable
to such third party.

       

      ARTICLE IV.  DELIVERY AND ACCEPTANCE

       

      4.1    Shipment.  The
Supplying Party shall ship Products in accordance with each binding Purchase
Order.  Products shall be marked for shipment to the Ordering Party,
and delivered to a carrier designated by Ordering Party, F.O.B. the Supplying
Party’s facility.

       

      4.2    Timely Delivery.

       

      (a) Delivery
of all shipments to the Ordering Party shall be at a minimum 95% on time on the
Delivery Date (up to two days late).  At its option, the Ordering
Party (i) may, by notice to Manufacturer, cancel a Purchase Order, in whole
or in part, for any Products which are not timely delivered, or (ii) may
require a late shipment discount, as set forth in
Section 4.2(b).

       

      (b) Ordering
Party’s late shipment discounts are as follows:

       

      (i) If the
date on which the Ordering Party takes delivery of a Product is between three
(3) and five (5) Business Days after the Delivery Date on the Purchase Order,
the Ordering Party may take a five percent (5%) discount off the invoice price
of such Product.

       

      (ii) If the
date on which the Ordering Party takes delivery of a Product is between six (6)
and ten (10) Business Days after the Delivery Date on the Purchase Order, the
Ordering Party may take a seven percent (7%) discount off the invoice price of
such Product.

       

      (iii) If the
date on which the Ordering Party takes delivery of a Product is eleven (11) or
more Business Days after the Delivery Date on the Purchase Order, the Ordering
Party may take a ten percent (10%) discount off the invoice price of such
Product.

       

      
        
          
          

        

        
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      4.3    Acceptance.  Notwithstanding
any written confirmation from the Supplying Party, any Product manufactured or
supplied hereunder shall be received by the Ordering Party subject to inspection
and performance testing in a commercially reasonable manner.  The
Ordering Party shall have five (5) Business Days from the date of receipt of
each shipment of Products to determine to its reasonable satisfaction whether
the Products are of the correct count and conform in all material respects to
the applicable Specifications (the “Testing
Period”).  The Ordering Party’s failure to provide notice of
acceptance or rejection (pursuant to Section 4.4 below) to the Supplying
Party prior to the end of the applicable Testing Period shall be deemed
acceptance.  The acceptance of any Product shall in no way limit the
Ordering Party’s rights under any warranty or for indemnification
hereunder.

       

      4.4    Rejection.  If the
Ordering Party reasonably determines that the Products (or any of them) are not
of the correct count or do not conform to the Specifications, if applicable, or,
to the quality standards set forth in Section 2.8, the Ordering Party may, at
its option, reject the same by giving the Supplying Party written notice thereof
by no later than the close of business on the last day of the applicable Testing
Period.  The Ordering Party may hold for the Supplying Party or return
any rejected Products to the Supplying Party for credit for the full price of
the rejected Products.  Any exceptions to the foregoing sentence, in
the form of replacement of rejected Products with reworked or new Products, will
be negotiated by both parties.  At the mutual agreement of the
parties, the Supplying Party may recommend a remedy or workaround to cure any
faults in the Products so that such Products are acceptable to the Ordering
Party.  All costs of return or destruction of rejected Products shall
be borne by the Supplying Party.

       

      ARTICLE V.  PRICE AND PAYMENT

       

      5.1    Prices of Products Supplied by FC Products
LLC.  FC
Products LLC shall supply its Products to FC Sales Inc. at the prices set forth
in this Section 5.1.

       

      (a) At least
once a year, FC Products LLC shall provide FC Sales Inc. with a list of prices
applicable to all Products under this Agreement (the “Price List”), which FC
Products LLC may, at its option, update from time to time.  Prices on
the Price List will apply to Products ordered pursuant to a Purchase Order,
provided that FC Products LLC may indicate that a price has increased as
provided in Section 2.3.

       

      (b) Products
purchased pursuant to the right of first offer in Section 3.3 of this
Agreement shall be supplied at the price agreed upon by the
parties.

       

      (c) Products
that are special orders because the requested Delivery Date does not comply with
Section 2.2 or for some other reason shall be supplied at the price agreed upon
by the parties.

       

      (d) Assigned
Software shall be supplied at MFN Pricing.

       

      (e) Boxed
PlanPlus Software shall be supplied at Standard Spread if to be used in
connection with the Training-Oriented Products or Training-Oriented Services of
an Affiliate of FC Sales Inc. and at MFN Pricing for all other
uses.

       


      
        
          
          

        

        
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      (f) Except as
otherwise provided in this Section 5.1, all Products supplied by FC
Products LLC shall be supplied at Standard Spread.

       

      5.2   Prices of Products Supplied by FC Sales
Inc.  FC Sales
Inc. shall supply its Products to FC Products LLC at the prices set forth in
this Section 5.2.

       

      (a) Content-Rich
Media that is available to FC Products LLC as of the Effective Date and that is
listed on Exhibit R of the License Agreement, other than downloadable versions
of such Content-Rich Media, shall be supplied to FC Products LLC at Standard
Spread.

       

      (b) There
shall be no direct charge to FC Products LLC by FC Sales Inc. for sales of Boxed
PlanPlus Software, and the parties agree that all charges payable by FC Products
LLC shall be made directly to the software developer.

       

      (c) For each
unit of Online PlanPlus Software and Mobile PlanPlus Software sold by FC
Products LLC in the three-year period following the Effective Date, FC Products
LLC shall pay to FC Sales Inc. the Standard Spread for so long as FC Products
LLC has received, in the then-current fiscal year, EBITDA contribution from such
sales of less than $3,020,000; and FC Products LLC shall pay MFN Pricing for
each unit sold thereafter for the remainder of such fiscal year.  For
each unit of Online PlanPlus Software and Mobile PlanPlus Software sold by FC
Products LLC after the initial three-year period following the Effective Date,
FC Products LLC shall pay to FC Sales Inc. MFN Pricing.

       

      (d) Except as
otherwise provided in Section 5.2 and subject to the terms and conditions
of the License Agreement, all Products supplied by FC Sales Inc., including, for
the avoidance of doubt, the 7 Habits Interactive Product, all downloadable
versions of Content-Rich Media, and all Content-Rich Media created after the
Effective Date, shall be supplied at MFN Pricing.

       

      5.3    Invoices.  The
Supplying Party shall invoice the Ordering Party for the Product price upon
shipment of Products under each Purchase Order.  The Supplying Party
shall invoice the Ordering Party for any other amounts due hereunder within five
(5) days of the end of the month in which such amounts arose.

       

      5.4    Payment.  Undisputed
payment for Products shall be due forty five (45) days from the date of receipt
by the Ordering Party of invoice; provided, that if the Ordering Party rejects
such Products pursuant to Section 4.4, and the parties agree to delivery of
replacement products therefore, then payment shall be due for such replacement
Products within forty five (45) days after receipt by the Ordering Party of
invoice for replacement Products.

       

      5.5    Taxes.  All
amounts due hereunder are inclusive of all taxes, duties, sales taxes, value
added taxes, assessments, and similar taxes and duties relating to the
Products.

       

      ARTICLE VI.  RECORD-KEEPING; AUDITS; RECALLS

       

      6.1    Record-Keeping. 
The
Supplying Party shall maintain adequate records concerning the manufacturing,
packaging and labeling of Products supplied pursuant to this
Agreement.  The Supplying Party agrees that Ordering Party may review
and obtain copies of

       


      
        
          
          

        

        
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      such
records from the Supplying Party upon reasonable notice for the purposes of:
(a) confirming that Products were manufactured in compliance with this
Agreement and the License Agreement, and (b) that the prices charged to the
Ordering Party pursuant to Article VI were calculated correctly.

       

      6.2    Inspections.  FC
Products LLC and FC Sales Inc. shall cooperate, in a commercially reasonable
manner, to ensure that the quality standards applicable to the Products are met
by permitting the party requesting access and its agents, subject to a mutually
acceptable confidentiality agreement, to inspect all manufacturing and other
facilities related to the manufacture of such Products, no more than once per
calendar year, during normal working hours, upon reasonable written notice to
the other party of no less than five (5) Business Days, and then, only to the
extent that FC Products LLC or FC Sales Inc., as applicable, is authorized to
provide such access and subject to all applicable safety rules and regulations
governing such manufacturing and other facilities.

       

      6.3    Records; Audit. 
To assure
compliance with the payment requirements of this Agreement, each of FC Products
LLC and FC Sales Inc., through its independent auditors or agents, and subject
to a confidentiality agreement, may, upon no less than five (5) Business Days’
written notice, inspect the other party’s applicable records at the requesting
party’s expense from time to time, and no more frequently than
annually.  If any inspection of the other party’s records indicates an
underpayment by an amount equal to or greater than five percent (5%) of any
amounts due hereunder, such party shall promptly reimburse the other party for
all reasonable expenses associated with such inspection along with the deficient
amounts and interest calculated thereon at a simple annual rate of ten percent
(10%).  At the reasonable request of the other party, each party shall
also undertake, at its own expense, an annual audit of such applicable records
by a certified public accounting firm of national reputation reasonably
satisfactory to the other party and shall provide such party with the findings
thereof within thirty (30) days after the closing of FC Products LLC’s or FC
Sales Inc.’s books, as applicable, upon fiscal year end.  Each of FC
Products LLC and FC Sales Inc. shall maintain, or cause to be maintained, all
records necessary to confirm that the prices charged by such party as Supplying
Party pursuant to this Agreement were correctly calculated.

       

      6.4    Recalls.  If either
party is required (or voluntarily decides) to initiate a recall of any Products,
whether or not such recall has been requested or ordered by any federal, state
or foreign agency, the parties shall cooperate in good faith to manage the
recall and to allocate the costs of the recall.

       

      ARTICLE VII.  GOVERNANCE

       

      7.1    Supply Relationship Managers. 
For a
two-year period after the Effective Date, each of FC Sales Inc. and FC Products
LLC shall appoint a relationship manager who shall serve as its primary point of
contact for the other in all matters relating to this Agreement (each, a “Supply Relationship
Manager”).  Any Supply Relationship Manager may be removed by
the party appointing such person by providing two (2) Business Days written
notice to the other party.  The Supply Relationship Managers shall
participate in regular meetings to review the parties’ performance hereunder, to
resolve any issues arising out of the Agreement, and to otherwise manage the
parties’ relationship under this Agreement.

       

      
        
          
          

        

        
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      7.2    Strategic Relationship
Committee.  Issues
arising under this Agreement may be referred to the Strategic Relationship
Committee.  Among other things, as mutually agreed by the parties, the
Strategic Relationship Committee shall be responsible for resolving disputes on
an informal basis.

       

      ARTICLE VIII.  EFFECTIVENESS, TERM AND
TERMINATION

       

      8.1    Effectiveness; Term. 
This
Agreement shall become effective immediately upon the closing of the
transactions contemplated in the Asset Purchase Agreement, which shall be the
date first set forth above (the “Effective Date”), and shall
continue in full force and effect unless and until terminated as provided in
this Article VIII.

       

      8.2    Termination. 


       

      (a) Each
party shall have the right to terminate this Agreement effective immediately
upon the termination of the License Agreement.

       

      (b) FC Sales
Inc. shall have the right to terminate this Agreement if FC Sales Inc. or any
Affiliate agrees to purchase FC Products LLC or any Affiliate pursuant to the
Right of First Negotiation contained in the License Agreement, which termination
shall be effective as of the effective date of the transaction.

       

      (c) Each
party shall have the right to terminate this Agreement effective immediately
upon:

       

      
        
          	
                  (i)

                	
                  the
      filing by the other party of a petition in bankruptcy or
      insolvency;

                   

                
	
                  (ii)

                	
                  any
      adjudication that the other party is bankrupt or insolvent;

                   

                
	
                  (iii)

                	
                  the
      filing by the other party of any legal action or document seeking
      reorganization, readjustment or arrangement of such party’s business under
      any law relating to bankruptcy or insolvency;

                   

                
	
                  (iv)

                	
                  the
      appointment of a receiver for all or substantially all of the property of
      the other party;

                   

                
	
                  (v)

                	
                  the
      making by the other party of any assignment for the benefit of creditors;
      or

                   

                
	
                  (vi)

                	
                  sixty
      (60) days after the institution of any proceedings for the liquidation or
      winding up of the business of, or for the termination of the corporate
      charter of, the other party if such proceedings are not dismissed such
      sixty (60) day period.

                


        



      
        
          
          

        

        
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      8.3    Termination of a Purchase Order; Partial
Termination.  

       

      (a) A
Purchase Order may be terminated early by a non-breaching party with notice to
the other party if the other party is in breach of any of its material
obligations under a Purchase Order and fails to remedy that breach within thirty
(30) days after receipt of written notice of such breach from the non-breaching
party.

       

      (b) Upon a
material breach of this Agreement by FC Products LLC that is not cured within
ninety (90) days after FC Sales Inc. provides written notice to FC Products LLC
of the breach, FC Sales Inc. shall be released of its obligations under Sections
3.2 and 3.3.  At any time during the ninety (90)-day period, FC
Products LLC may elect to commence non-binding arbitration as provided in
Section 12.7(d) with respect to question of whether either (i) the alleged
breach by FC Products LLC gives rise to the right of partial termination or (ii)
whether the material breach has been cured.  The running of the ninety
(90) day period shall stop if and when FC Products LLC elects to commence
non-binding arbitration.  Immediately upon the delivery of the written
opinion of the arbitrator, if unfavorable to FC Products LLC, the running of the
ninety (90) day cure period shall resume and shall expire at the end of the 90th
day so counted or at the end of the 10th Business Day after the ninety (90) day
cure period resumed, whichever is later.  FC Products LLC may exercise
its option to use non-binding arbitration only once for each incident or series
of related incidents giving rise to a claim for partial
termination.

       

      8.4    Effect of Termination. 


       

      (a) Upon any
termination of this Agreement, in addition to the parties’ other rights and
remedies at law and in equity, the parties shall have the following rights and
obligations:

       

      (i) the
parties shall negotiate in good faith the delivery and payment of any Products
under any outstanding binding Purchase Orders; and

       

      (ii) except to
the extent necessary to complete performance pursuant to Section 8.4(a) of
this Agreement and to exercise the rights to sell termination inventory as set
forth in Sections 8.5 and 8.6 in the License Agreement: (A) any license
granted hereunder shall immediately terminate; and (B) each party shall
return to the other party any of the other party’s Confidential Information in
such party’s possession or control.

       

      (b) Upon any
termination of a Purchase Order pursuant to Section 8.3, the Ordering Party
may return any Products purchased under such Purchase Order in return for
reimbursement by the Supplying Party for all amounts paid for such
Products.  If the Ordering Party exercises its rights pursuant to the
previous sentence, the Supplying Party shall refund any amounts paid by the
Ordering Party for which no Products have been received by the Ordering Party,
and the Ordering Party shall have no further obligations under the terminated
Purchase Order.  The Supplying Party shall pay for all costs of
delivering Products returned pursuant to this Section 8.4(b).

       

      8.5    Survival.  The
following provisions of this Agreement shall survive termination of this
Agreement for any reason:  Articles I, VIII, IX, X, XI and
XII.

       


      
        
          
          

        

        
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      Termination
of this Agreement by a party shall be without prejudice to any other right or
remedy of such party under this Agreement or applicable law.

       

      ARTICLE IX.  INDEMNIFICATION

       

      9.1    Indemnification by FC Products
LLC.  FC
Products LLC shall, at its own expense, indemnify, defend, and hold harmless FC
Sales Inc. and its Affiliates, and their respective officers, directors,
employees and representatives, from and against any claim, demand, cause of
action, liability, expense (including attorney’s fees and costs), or damages to
the extent arising from a third-party claim with respect to:

       

      (a) Products
supplied by FC Products LLC, including any claim alleging product liability,
injury to property or person or infringement of intellectual property rights
(except to the extent that FC Sales Inc. is obligated to provide indemnification
for such infringement claim under the License Agreement or Asset Purchase
Agreement);

       

      (b) any
breach by FC Products LLC of this Agreement;

       

      (c) any
material violation by FC Products LLC of a domestic or international law or
regulation relating to relating to the manufacturing, import or export of
Products; and

       

      (d) any
negligence or willful misconduct of FC Products LLC or its agents, employees,
directors or officers.

       

      9.2    Indemnification by FC Sales Inc. 
FC Sales
Inc. shall, at its own expense, indemnify, defend, and hold harmless FC Products
LLC and its Affiliates, and their respective officers, directors, employees and
representatives, from and against any claim, demand, cause of action, liability,
expense (including attorney’s fees and costs), or damages to the extent arising
from a third-party claim with respect to:

       

      (a) Products
supplied by FC Sales Inc., including any claim alleging product liability,
injury to property or person or infringement of intellectual property
rights;

       

      (b) any
breach by FC Sales Inc. of this Agreement;

       

      (c) any
material violation by FC Sales Inc. of a domestic or international law or
regulation relating to relating to the manufacturing, import or export of
Products; and

       

      (d) any
negligence or willful misconduct of FC Sales Inc. or its agents, employees,
directors or officers.

       

      9.3    Procedures. 
The party
seeking to be indemnified pursuant to this Article IX (as applicable, the “Indemnified Party”) shall be
entitled to indemnification hereunder only (i) if it gives written notice
to the party obligated to provide such indemnification hereunder (the “Indemnifying Party”) of any
claims, suits or proceedings by third parties which may give rise to a claim for
indemnification with reasonable promptness after receiving written notice of
such claim (or, in the case of a proceeding, is served in such proceeding);
provided, however, that failure to give such notice shall not relieve the
Indemnifying Party of its

       


      
        
          
          

        

        
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      obligation
to provide indemnification, except if and to the extent that the Indemnifying
Party is actually and materially prejudiced thereby, and (ii) once the
Indemnifying Party confirms in writing to the Indemnified Party that it is
prepared to assume its indemnification obligations hereunder, the Indemnifying
Party has sole control over the defense of the claim, at its own cost and
expense; provided, however, that the Indemnified Party shall have the right to
be represented by its own counsel at its own cost in such
matters.  Notwithstanding the foregoing, the Indemnifying Party shall
not settle or dispose of any such matter in any manner which would require the
Indemnified Party to make any admission, or to take any action (except for
ceasing use or distribution of the items subject to the claim) without the prior
written consent of the Indemnified Party, which shall not be unreasonably
withheld or delayed.  Each party shall reasonably cooperate with the
other party and its counsel in the course of the defense of any such suit, claim
or demand, such cooperation to include using reasonable efforts to provide or
make available documents, information and witnesses and to mitigate
damages.

       

      ARTICLE X.  WARRANTIES, LIMITATION OF WARRANTIES AND
LIABILITY

       

      10.1    Warranties.  

       

      (a) FC
Products LLC warrants to FC Sales Inc. that the Products supplied by FC Products
LLC shall (i) conform to the Specifications, if applicable, and to the
quality standards set forth in Section 2.8; (ii) meet and be manufactured
in conformity with the License Agreement and Section 2.7 of this Agreement;
(iii) be free and clear of any lien or encumbrance; (iv) be
merchantable; and (v) be new.

       

      (b) FC Sales
Inc. warrants to FC Products LLC that the Products supplied by FC Sales Inc.
shall (i) conform to the quality standards set forth in Section 2.8;
(ii) be manufactured in conformity with Section 2.7 of this Agreement;
(iii) be free and clear of any lien or encumbrance; (iv) be
merchantable; and (v) be new.

       

      (c) EXCEPT AS
SET FORTH IN SECTION 10.1(a) AND (b), THE PARTIES HEREBY SPECIFICALLY
DISCLAIM ANY WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, VALIDITY,
ENFORCEABILITY, TITLE AND NON-INFRINGEMENT OF THIRD-PARTY RIGHTS, AND ANY
WARRANTIES THAT MAY ARISE DUE TO COURSE OF PERFORMANCE, COURSE OF DEALING OR
USAGE OF TRADE, WHETHER RELATED TO THE LICENSED MATERIALS OR
OTHERWISE.

       

      10.2    Damages.  NOTWITHSTANDING
ANYTHING ELSE IN THIS AGREEMENT, IN NO EVENT SHALL FC PRODUCTS LLC, FC SALES
INC., THEIR AFFILIATES, OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS,
EMPLOYEES, LICENSORS, LICENSEES, SUPPLIERS OR OTHER REPRESENTATIVES BE LIABLE
FOR ANY INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL OR PUNITIVE LIABILITY, OR
LIABILITY FOR LOSS OF PROFITS, BUSINESS INTERRUPTION, DIMINUTION IN VALUE, OR
LOSS OF GOODWILL ARISING FROM OR RELATING TO THIS AGREEMENT, THE
LICENSED

       


      
        
          
          

        

        
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      MATERIALS
OR THE ASSIGNED TRADEMARKS, EVEN IF THE OTHER PARTY IS EXPRESSLY ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.

       

      ARTICLE XI.  CONFIDENTIAL INFORMATION

       

      11.1    Definition.  “Confidential Information”
means all information disclosed by one party (the “Discloser”) to any other
party (the “Recipient”)
(in writing, orally or in any other form) that is designated, at or before the
time of disclosure, as confidential.  Confidential Information does
not include information or material that (a) is now, or hereafter becomes,
through no act or failure to act on the part of the Recipient, generally known
or available; (b) is or was known by the Recipient at or before the time
such information or material was received from the Discloser, as evidenced by a
contemporaneous writing; (c) is furnished to the Recipient by a third party
that is not under an obligation of confidentiality to the Discloser with respect
to such information or material; or (d) is independently developed by the
Recipient, as evidenced by a contemporaneous writing.

       

      11.2    Restrictions on Use. 
The
Recipient shall hold Confidential Information in confidence and shall not
disclose to third parties or use such information for any purpose whatsoever
other than as necessary in order to fulfill its obligations or exercise its
rights under this Agreement.  The Recipient shall take all reasonable
measures to protect the confidentiality of the other party’s Confidential
Information in a manner that is at least protective as the measures it uses to
maintain the confidentiality of its own Confidential Information of similar
importance.  Notwithstanding the foregoing, the Recipient may disclose
the other party’s Confidential Information (a) to employees and consultants
that have a need to know such information, provided that each such employee and
consultant is under a duty of nondisclosure that is consistent with the
confidentiality and nondisclosure provisions herein, and (b) to the extent
the Recipient is legally compelled to disclose such Confidential Information,
provided that the Recipient shall give advance notice of such compelled
disclosure to the other party, and shall cooperate with the other party in
connection with any efforts to prevent or limit the scope of such disclosure or
use of the Confidential Information.

       

      11.3    Nonsolicitation. 
During
the term of this Agreement, neither party shall, directly or indirectly,
(a) solicit or hire, or assist any other Person in soliciting or hiring
(i) any person who is then, or within the previous twelve (12) month period
was, employed by the other party or (ii) any person who is then in the
process of being recruited by FC Sales Inc., or (b) induce any such
employee to terminate his or her employment with the other party.

       

      ARTICLE XII.  MISCELLANEOUS

       

      12.1    Assignment.  

       

      (a) FC
Products LLC shall have no right to assign, sell, transfer, delegate or
otherwise dispose of, whether voluntarily or involuntarily, by operation of law
or otherwise, this Agreement, in whole or in part, except to (i) a wholly owned
subsidiary of FC Products LLC or (ii) a Person who jointly and concurrently
receives a valid assignment of the License Agreement as a valid assignee subject
to all of the terms and conditions of the License

       


      
        
          
          

        

        
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      Agreement
and any such assignee receiving the assignment (whether under clause (i) or
(ii)) expressly agrees in writing to assume all of the obligations of FC
Products LLC under this Agreement.

       

      (b) FC Sales
Inc. may assign this Agreement without FC Products LLC’s consent to (i) a wholly
owned subsidiary of FC Sales Inc., the parent corporation of FC Sales Inc., or a
wholly owned subsidiary of the parent corporation of FC Sales Inc., or (ii)
pursuant to an FC Sales Inc. Change of Control transaction, provided that that
any such assignee receiving the assignment (whether under clause (i) or (ii))
expressly agrees in writing to assume all of the obligations of FC Sales Inc.
under this Agreement.

       

      (c) Except as
provided herein, any purported assignment, sale, transfer, delegation or other
disposition hereunder shall be null and void.

       

      12.2    Injunctive Relief.  Each
party acknowledges that a breach by it of its obligations under this Agreement,
including its obligations set forth in Article XI would cause the other party
irreparable damage.  Accordingly, each party agrees that in the event
of such breach or threatened breach, in addition to remedies at law, the other
party shall have the right to injunctive or other equitable relief, without the
necessity of posting any bond or other security, to prevent the other’s
violations of its obligations hereunder, in addition to any other remedy to
which they may be entitled, at law or in equity.

       

      12.3    Severability. 
If any
provision of this Agreement, or the application thereof to any Person, place or
circumstance, are held by a court of competent jurisdiction to be invalid, void
or otherwise unenforceable, such provision shall be enforced to the maximum
extent possible so as to effect the intent of the parties, or, if incapable of
such enforcement, shall be deemed to be deleted from this Agreement, and the
remainder of this Agreement and such provisions as applied to other Persons,
places and circumstances shall remain in full force and effect.

       

      12.4    Interpretation. 
Unless
otherwise indicated to the contrary in this Agreement by the context or use
thereof:  (a) the words “herein,” “hereto,” “hereof” and words of
similar import refer to this Agreement as a whole and not to any particular
Section, Article or paragraph hereof; (b) references in this Agreement to
Sections, Articles or paragraphs refer to sections, articles or paragraphs of
this Agreement; (c) headings of Sections are provided for convenience only
and shall not affect the construction or interpretation of this Agreement;
(d) words importing the masculine gender shall also include the feminine
and neutral genders, and vice versa; (e) words importing the singular shall
also include the plural, and vice versa; (f) the words “include”,
“includes” and “including” shall be deemed to be followed in each case by the
phrase “without limitation”; (g) any reference to a statute refers to the
statute, any amendments or successor legislation, and all regulations
promulgated under or implementing the statute, as in effect from time to time;
(h) any reference to an agreement, contract or other document as of a given
date means the agreement, contract or other document as amended, supplemented
and modified from time to time through such date; (i) “$” and “Dollars”
mean the lawful currency of the United States of America and any threshold set
in Dollars herein shall be deemed to refer to the equivalent amount in any other
currency, as the context may require; and (j) “or” shall include the
meanings “either” or “both.”

       


      
        
          
          

        

        
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      12.5    Amendment and Waiver. 
This
Agreement may not be amended, a provision of this Agreement or any default,
misrepresentation or breach of warranty or agreement under this Agreement may
not be waived, and a consent may not be rendered, except in a writing executed
by the party against which such action is sought to be
enforced.  Neither the failure nor any delay by any Person in
exercising any right, power or privilege under this Agreement will operate as a
waiver of such right, power or privilege, and no single or partial exercise of
any such right, power or privilege will preclude any other or further exercise
of such right, power or privilege or the exercise of any other right, power or
privilege.  In addition, no course of dealing between or among any
Persons having any interest in this Agreement will be deemed effective to modify
or amend any part of this Agreement or any rights or obligations of any Person
under or by reason of this Agreement.  The rights and remedies of the
parties to this Agreement are cumulative and not alternative.

       

      12.6    Governing Law. 
The
domestic law, without regard to conflicts of laws principles, of the State of
Utah will govern all questions concerning the construction, validity and
interpretation of this Agreement and the performance of the obligations imposed
by this Agreement.

       

      12.7    Consent to Jurisdiction. 


       

      (a) Each of
the parties and all their Affiliates submit to the exclusive jurisdiction of any
state or federal court sitting in Salt Lake City, Utah, in any action or
proceeding arising out of or relating to this Agreement and agrees that all
claims in respect of the action or proceeding may be heard and determined in any
such court.  Each party and all of their Affiliates also agree not to
bring any action or proceeding arising out of or relating to this Agreement in
any other court.  Each of the parties and all of their Affiliates
waive any defense of inconvenient forum to the maintenance of any action or
proceeding so brought and waives any bond, surety or other security that might
be required of any other party with respect to any such action or
proceeding.

       

      (b) Each
party further agrees that service of any process, summons, notice or document by
U.S. registered mail to such person’s respective address set forth above shall
be effective service of process for any action, suit or proceeding in the state
and federal courts located in the State Utah with respect to any matters to
which it has submitted to jurisdiction as set forth above in the immediately
preceding clause (a).  In addition, each party irrevocably and
unconditionally waives application of the procedures for service of process
pursuant to the Hague Convention for Service Abroad of Judicial and
Extrajudicial Documents in Civil or Commercial Matters.

       

      (c) EACH
PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS
AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE
IT IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT.  EACH PARTY CERTIFIES AND ACKNOWLEDGES
THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT

       


      
        
          
          

        

        
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      SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER, (II) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH
WAIVER, (III) IT MAKES SUCH WAIVER VOLUNTARILY AND (IV) IT HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER
AND CERTIFICATIONS IN THIS SECTION.

       

      (d) Either
party may refer any of the disputes described in Section 8.3(b) as subject
to possible arbitration to non-binding arbitration by a single arbitrator in
accordance with the CPR Rules for Non-Administered Arbitration then currently in
effect.  The arbitrator shall deliver a written ruling on the disputed
question or questions within one hundred twenty (120) days from the date on
which the arbitration is commenced.  If either party disagrees with
the opinion delivered by the arbitrator, such party may initiate litigation
subject to all of the terms and conditions of this
Agreement.  Notwithstanding the foregoing, nothing in this
Section 12.7 shall limit a party’s right to bring any action for injunctive
relief under Section 12.2 at any time.

       

      12.8    Independent Contractors. 
Each
party is an independent contractor and neither party’s personnel are employees
or agents of the other party for federal, state or other taxes or any other
purposes whatsoever, and are not entitled to compensation or benefits of the
other.  Except for the specific obligations set forth in this
Agreement, nothing hereunder shall be deemed to constitute, create, give effect
to or otherwise recognize a joint venture, partnership or business entity of any
kind, nor shall anything in this Agreement be deemed to constitute either party
the agent or representative of the other.

       

      12.9    Notices.  All
notices, demands and other communications to be given or delivered under or by
reason of the provisions of this Agreement will be in writing and will be deemed
to have been given (i) when delivered if personally delivered by hand,
(ii) when received if sent by a nationally recognized overnight courier
service (receipt requested), (iii) five (5) business days after being
mailed, if sent by first class mail, return receipt requested, or (iv) when
receipt is acknowledged by an affirmative act of the party receiving notice, if
sent by facsimile, telecopy or other electronic transmission device (provided
that such an acknowledgement does not include an acknowledgment generated
automatically by a facsimile or telecopy machine or other electronic
transmission device).  Notices, demands and communications to FC
Products LLC and FC Sales Inc. will, unless another address is specified in
writing, be sent to the address indicated below:

       

      
        	
                
                          If to
      Franklin Covey Product Sales Inc.:

                

              	
                 

              


      

       

      
        	
                 
      

              	
                Franklin
      Covey Product Sales Inc.

              


      

      
        	
                 
      

              	
                2200
      West Parkway Blvd.

              


      

      
        	
                 
      

              	
                Salt
      Lake City, Utah 84119

              


      

      
        	
                 
      

              	
                Attn:  Bill
      Bennett

              


      

      
        	
                 
      

              	
                Facsimile
      No.:  (801) 817-8069

              


      

       


      
        
          
          

        

        
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                          With a
      copy to (which shall not constitute notice):

                

              	
                 

              


      

       

      
        	
                 
      

              	
                Dorsey &
      Whitney LLP

              


      

      
        	
                 
      

              	
                136
      South Main Street, Suite 1000

              


      

      
        	
                 
      

              	
                Salt
      Lake City, Utah 84010

              


      

      
        	
                 
      

              	
                Attn:  Nolan S.
      Taylor

              


      

      
        	
                 
      

              	
                Facsimile
      No.:  (801) 933-7373

                 

              


      

      
        	
                
                          If to
      Franklin Covey Products, LLC:

                

              	
                 

              


      

       

      
        	
                 
      

              	
                Franklin
      Covey Products, LLC

              


      

      
        	
                 
      

              	
                2250
      West Parkway Blvd.

              


      

      
        	
                 
      

              	
                Salt
      Lake City, Utah 84119

              


      

      
        	
                 
      

              	
                Attn:  Jeff
      Anderson

              


      

      
        	
                 
      

              	
                Facsimile
      No.: (801) 817-0280

                 

              


      

      
        	
                
                          With a
      copy to (which shall not constitute notice):

                

              	
                 

              


      

       

      
        	
                 
      

              	
                Snell &
      Wilmer L.L.P.

              


      

      
        	
                 
      

              	
                15
      West South Temple, Suite 1200

              


      

      
        	
                 
      

              	
                Salt
      Lake City, Utah 84101

              


      

      
        	
                 
      

              	
                Attn:  John G.
      Weston

              


      

      
        	
                 
      

              	
                Facsimile
      No.:  (801) 257-1800

              


      

       

      12.10    Publicity.  The
parties shall use reasonable efforts to cooperate in issuing a joint press
release upon execution of this Agreement and in issuing further press releases
related to this Agreement.  If at any time disclosure regarding this
Agreement is required under public reporting requirements of applicable
securities laws and the parties are not able to agree on the content and manner
of issuing such disclosure, FC Sales Inc. will be authorized to issue a sole
release.  Prior to issuing such a sole release, FC Sales Inc. shall
provide FC Products LLC with an opportunity to review and comment on a draft of
such release and will consider in good faith any comments that FC Products LLC
communicates in a timely fashion on such draft press release.

       

      12.11    Complete Agreement. 
This
Agreement and all Exhibits attached hereto and, when executed and delivered, the
Ancillary Agreements, contain the complete agreement between the parties and
supersede any prior understandings, agreements or representations by or between
the parties, written or oral.  FC Products LLC acknowledges that FC
Sales Inc. has made no representations, warranties, agreements, undertakings or
promises except for those expressly set forth in this Agreement or in agreements
referred to herein that survive the execution and delivery of this
Agreement.

       

      12.12    Signatures, Counterparts. 
This
Agreement may be executed in one or more counterparts, any one of which need not
contain the signatures of more than one party, but all such counterparts taken
together will constitute one and the same instrument.  A facsimile
signature will be considered an original signature.

       


      
        
          
          

        

        
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      12.13    Construction. 
The
parties and their respective counsel have participated jointly in the
negotiation and drafting of this Agreement.  In addition, each of the
parties acknowledges that it is sophisticated and has been advised by
experienced counsel and, to the extent it deemed necessary, other advisors in
connection with the negotiation and drafting of this Agreement.  The
parties intend that each representation, warranty and agreement contained in
this Agreement will have independent significance.  If any party has
breached any representation, warranty or agreement in any respect, the fact that
there exists another representation, warranty or agreement relating to the same
subject matter (regardless of the relative levels of specificity) that the party
has not breached will not detract from or mitigate the fact that the party is in
breach of the first representation, warranty or agreement.  The
headings preceding the text of articles and sections included in this Agreement
and the headings to the schedules and exhibits are for convenience only and are
not be deemed part of this Agreement or given effect in interpreting this
Agreement.  References to sections, articles, schedules or exhibits
are to the sections, articles, schedules and exhibits contained in, referred to
or attached to this Agreement, unless otherwise specified.  The word
“including” means “including without limitation.”  A statement that an
action has not occurred in the past means that it is also not presently
occurring.  The use of the masculine, feminine or neuter gender or the
singular or plural form of words will not limit any provisions of this
Agreement.  A statement that an item is listed, disclosed or described
means that it is correctly listed, disclosed or described, and a statement that
a copy of an item has been delivered means a true and correct copy of the item
has been delivered.

       

       

       

       

       

       

       

       

       

       

       

      [Remainder
of page left intentionally blank.]

       


      
        
          
          

        

        
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      IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed as of the date first
set forth above.

       

      
        	
                FRANKLIN
      COVEY PRODUCT

                SALES,
      INC.

              	
                FRANKLIN
      COVEY PRODUCTS, LLC                                      

              


      

      

        
          	
                  By:

                	 
      /s/ Steve Young	 
      	
                  By:

                	 
      /s/ Sarah Merz
	
                  Name:

                	 
      Steve Young	 
      	
                  Name:

                	 
      Sarah Merz
	
                  Title:

                	 
      Chief Financial Officer	 
      	
                  Title:

                	 
      Chief Executive Officer and
President


        

      

       

       

      Exhibit
A     Standard Spread

       

       

       

       

       

       

       

       


      
        
          
          

          
          

        

        
           


          
            

          

        

        
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      EXHIBIT A

       

      STANDARD
SPREAD

       

      


       

      1.           Standard
Spread shall be calculated in the following manner.

       

      2.           Definitions

       

      
        	
                 
      

              	
                (a)

              	
                “Paper-Based Products”
      means any paper-based Product manufactured or supplied by FC Products LLC,
      including without limitation all
Planners.

              


      

       

      
        	
                 
      

              	
                (b)

              	
                “Non-Paper Products”
      means (i) with respect to FC Products LLC, any Product other than a
      Paper-Based Product that is sourced or purchased by FC Products LLC and
      supplied to FC Sales Inc., including binders, specialty products,
      technology and other categories, and (ii) with respect to FC Sales Inc.,
      any Content-Rich Media that is listed on Exhibit R of the License
      Agreement other than downloadable versions of such Content-Rich Media, any
      Online PlanPlus Software, and any Mobile PlanPlus Software supplied by FC
      Sales Inc.

              


      

       

      
        	
                 
      

              	
                (c)

              	
                “Direct Acquisition
      Cost” means (i) for a Paper-Based Product directly
      manufactured by FC Products LLC, the allocated cost of the materials to
      manufacture such Product; (ii) for a Paper-Based Product supplied by
      FC Products LLC through a third-party manufacturer, the price listed on
      the invoice and paid by FC Products LLC plus the cost of shipping the
      Product to FC Sales Inc.’s facilities; and (iii) for Non-Paper
      Products, the price listed on the invoice and paid by the Supplying Party
      for the Product plus the cost of shipping the Product to the Supplying
      Party’s facilities.

              


      

       

      
        	
                 
      

              	
                (d)

              	
                “Paper Production
      Margin” means the Direct Acquisition Cost of the Paper-Based
      Product multiplied by 21.8 percent.

              


      

       

      
        	
                 
      

              	
                (e)

              	
                “Overhead Charge” means
      (i) for Paper-Based Products, the product of 5 percent multiplied by
      the sum of (A) the Direct Acquisition Cost and (B) the Paper
      Production Margin, and (ii) for Non-Paper Products, the product of 8
      percent multiplied by the Direct Acquisition
  Cost.

              


      

       

      
        	
                 
      

              	
                (f)

              	
                “Surcharge” means an
      International Surcharge (as defined below) and/or a Back of Room Sales
      Surcharge (as defined below).

              


      

       

      3.           Base
Formulas

       

      
        	
                 
      

              	
                (a)

              	
                For
      Paper-Based Products, Standard Spread equals the sum of (i) Direct
      Acquisition Cost, (ii) the Paper Production Margin, (iii) the
      Overhead Charge and (iv) any applicable
  Surcharge.

              


      

       


      
        
          
             

          

          
          

        

        
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                (b)

              	
                For
      Non-Paper Products, Standard Spread equals the sum of (i) the Direct
      Acquisition Cost, (ii) the Overhead Charge and (iii) any
      applicable Surcharge.

              


      

       

      4.           Surcharges

       

      
        	
                 
      

              	
                (a)

              	
                Surcharges
      shall be applied to the result of the formulas set forth above if FC
      Products LLC must (i) ship the Product outside of the United States
      (an “International
      Surcharge”) or (ii) provide the Product for Back of Room Sales
      (a “Back of Room Sales
      Surcharge”).

              


      

       

      
        	
                 
      

              	
                (b)

              	
                For
      all Products supplied at Standard Spread, the International Surcharge is
      the product of the base formula multiplied by 15
  percent.

              


      

       

      
        	
                 
      

              	
                (c)

              	
                For
      all Products supplied at Standard Spread, the Back of Room Sales Surcharge
      is the product of the base formula multiplied by fifty percent
      (50%).  If a Product is supplied to a Back of Room Sale outside
      the United States, the Back of Room Surcharge is calculated after adding
      in the International Surcharge.

              


      

       


      
        
          
             

          

          
          

        

        
          A-2