Document:

fy092q_vaughanagreement.htm

    

      EMPLOYMENT
AGREEMENT

      

      This
Agreement is entered into effective as of the 15th day of
December 2008, by and between Sonic Corp. (the “Corporation”), a Delaware
corporation, and Stephen C. Vaughan (the “Employee”).

      

      RECITALS

      

      Whereas,
the Employee is currently serving as the Executive Vice President and Chief
Financial Officer of the Corporation and is an integral part of its management;
and

      

      Whereas,
the Employee and the Corporation acknowledge that they previously entered into
an Employment Agreement dated October 18, 2007, which is hereby canceled and
superseded in its entirety by this Agreement; and

      

      Whereas,
the Corporation’s Board of Directors (the “Board”) has determined that it is
appropriate to support and encourage the attention and dedication of certain key
members of the Corporation’s management, including Employee, to their assigned
duties without distraction and potentially disturbing circumstances arising from
the possibility of a Change in Control (herein defined) of the Corporation;
and

      

      Whereas,
the Corporation desires to continue the services of Employee, whose experience,
knowledge and abilities with respect to the business and affairs of the
Corporation will be extremely valuable to the Corporation; and

      

      Whereas,
the parties hereto desire to enter into this Agreement setting forth the terms
and conditions of the employment relationship of the Corporation and
Employee.

      

      Now,
therefore, it is agreed as follows:

      

      ARTICLE
I

      Term of
Employment

      

      1.1           Term of
Employment.  The Corporation shall employ Employee for a period
of one year from the date hereof (the “Initial Term”).

      

      1.2           Extension of Initial
Term.  Upon each annual anniversary date of this Agreement,
this Agreement shall be extended automatically for successive terms of one year
each, unless either the Corporation or the Employee gives contrary written
notice to the other not later than the annual anniversary date.  As used herein,
“Term” shall mean the Initial
Term together with any renewal term(s) pursuant to this Section
1.2.  

      

      1.3           Termination of Agreement and
Employment.  The Corporation may terminate this Agreement and
the Employee’s employment at any time effective upon written notice to the
Employee.  The Employee may terminate this Agreement and the
Employee’s employment only after at least 30 days’ written notice to the
Corporation, unless otherwise agreed by the Corporation.

      

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      ARTICLE
II

      Duties of the
Employee

      

      Employee
shall serve as the Executive Vice President and Chief Financial Officer of the
Corporation.  Employee shall do and perform all services, acts, or
things necessary or advisable to manage and conduct the business of the
Corporation consistent with such position subject to such policies and
procedures as may be established by the Board.

      

      ARTICLE
III

      Compensation

      

      3.1           Salary.  For
Employee’s services to the Corporation as the Executive Vice President and Chief
Financial Officer, Employee shall be paid a salary at the annual rate of
$315,000 (herein referred to as “Salary”), payable in twenty-four equal
installments on the first and fifteenth day of each month.  On the
first day of each calendar year during the term of this Agreement with the
Corporation, Employee shall be eligible for an increase in Salary based on an
evaluation of Employee’s performance during the past year with the
Corporation.  During the term of this Agreement, the Salary of the
Employee shall not be decreased at any time from the Salary then in effect
unless agreed to in writing by the Employee.

      

      3.2           Bonus.  The Employee
shall be entitled to participate in an equitable manner with other officers of
the Corporation in discretionary cash bonuses as authorized by the
Board.  Such bonuses shall be
paid not later than the 15th day of the third month following the later of
the end of the Corporation’s tax year or the
Employee’s tax year in which the bonuses are no longer subject to
a substantial risk of forfeiture (within the meaning of Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”).

      

      ARTICLE
IV

      Employee
Benefits

      

      4.1           Use
of Automobile. The Corporation shall
provide Employee with either the use of an automobile for business and personal
use or a cash car allowance in accordance with the established company car
policy of the Corporation.  The Corporation shall pay all expenses of
operating, maintaining and repairing the automobile provided by the Corporation
and shall procure and maintain automobile liability insurance in respect
thereof, with such coverage insuring each Employee for bodily injury and
property damage.  Reimbursement
of automobile-related expenses shall be made as soon as practicable after the
request for reimbursement is submitted, but in no event later than the last day
of the calendar year next following the calendar year in which such expense was incurred.  Additionally,
neither the provision of in-kind benefits nor the reimbursement of expenses in
any one calendar year shall affect the level or amount of in-kind benefits to be
provided, or the expenses eligible for reimbursement, in any other
calendar year.  The Employee’s right to
reimbursement or in-kind benefits under this Section 4.1 is not subject to
liquidation or exchange for another benefit.

      

      4.2           Medical, Life and Disability
Insurance Benefits.  The Corporation shall provide Employee
with medical, life and disability insurance benefits in accordance with the
established benefit policies of the Corporation.

       

       

      
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      4.3           Working
Facilities.  Employee shall be provided adequate office space,
secretarial assistance, and such other facilities and services suitable to
Employee’s position and adequate for the performance of Employee’s
duties.

      

      4.4           Business
Expenses.  Employee shall be authorized to incur reasonable
expenses for promoting the business of the Corporation, including expenses for
entertainment, travel, and similar items.  The Corporation shall
reimburse Employee for all such expenses upon the presentation by Employee, from
time to time, of an itemized account of such expenditures. Reimbursement shall be
made as soon as practicable after the request
for reimbursement is submitted, but in no event later than the last day of the
calendar year next following the calendar year in which such expense was
incurred.  Additionally, the
reimbursement of expenses in any one calendar year shall not affect the expenses eligible for reimbursement
in any other calendar year.  The Employee’s right to
reimbursement under this Section 4.4 is not subject to liquidation or exchange
for another benefit.

      

      4.5           Vacations.  Employee
shall be entitled to an annual paid vacation commensurate with the Corporation’s
established vacation policy for officers.  The timing of paid
vacations shall be scheduled in a reasonable manner by the
Employee.

      

      4.6           Disability
Benefit.  Upon disability (as defined herein) of the Employee,
the Employee shall be entitled to receive up to six months’ of Employee’s Salary
(less any deductions required by law) payable in twelve equal installments of
1/24 of the Salary, with the first installment occurring on the first regularly
scheduled payroll date following the determination of disability and the
remaining installments occurring on a semi-monthly basis thereafter, provided
that such disability payments shall continue only so long as the disability
continues, and provided further that each such disability payment shall be
reduced by any benefit payment the Employee is entitled to receive under the
Corporation’s group disability insurance plans during the corresponding payroll
period.

      

      4.7           Term Life
Insurance.  The Corporation shall purchase term life insurance
on the life of the Employee having a face value of four times the Employee’s
Salary (to be changed as salary adjustments are made) or the face value of life
insurance that can be purchased based upon the Employee’s health history with
the Corporation paying the standard premium rate for term insurance under its
then current insurance program at the Employee’s age and assuming good health,
whichever amount is lesser, provided that such insurance can be obtained by the
Corporation in a manner which meets the requirements for deductibility by the
Corporation under Section 79 of the Code.

      

      4.8           Compensation
Defined.  Compensation shall be defined as all monetary
compensation and all benefits described in Articles III and IV hereunder (as
adjusted during the term hereof).

      

      ARTICLE
V

      Termination

      

      5.1           Separation from
Service.  For purposes of this
Agreement, the terms “terminate,”
“terminated” and “termination” with
respect to the Employee’s employment mean a termination of the Employee’s employment that
constitutes a “separation from
service” within the meaning of the default
rules of Section 409A of the Code.

       

       

      
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      5.2           Death.  Employee’s
employment hereunder shall be terminated upon the Employee’s death.

      

      5.3           Disability.  The
Corporation may terminate Employee’s employment hereunder in the event Employee
is disabled and such disability continues for more than 180
days.  “Disability” shall be
defined as the inability of Employee to render the services required of him
under this Agreement, with or without a reasonable accommodation, as a result of
physical or mental incapacity.

      

      5.4           Cause.

      

      (a)           The
Corporation may terminate Employee’s employment hereunder for
Cause.  For the purpose of this Agreement, “Cause” shall mean (i) the
willful and intentional failure by Employee to substantially perform Employee’s
duties hereunder, other than any failure resulting from Employee’s incapacity
due to physical or mental incapacity, or (ii) commission by Employee, in
connection with Employee’s employment by the Corporation, of an illegal act or
any act (though not illegal) which is not in the ordinary course of the
Employee’s responsibilities and exposes the Corporation to a significant level
of undue liability.  For purposes of this paragraph, no act or failure
to act on Employee’s part shall be considered to have met either of the
preceding tests unless done or omitted to be done by Employee without a
reasonable belief that Employee’s action or omission was in the best interest of
the Corporation.

      

      (b)           Notwithstanding
the foregoing, Employee shall not be deemed to have been terminated for cause
unless such action is ratified by the affirmative vote of not less than
two-thirds of the entire membership of the Board at a meeting held within 30
days of such termination (after reasonable notice to Employee and an opportunity
for Employee to be heard by members of the Board) confirming that Employee was
guilty of the conduct set forth in this Section 5.4.  Ratification by
the Board will be effective as of the original date of termination of
Employee.

      

      5.5           Compensation Upon
Termination for Cause or Upon Resignation By Employee.  Except
as otherwise set forth in Section 5.8 hereof, if Employee’s employment shall be
terminated for Cause or if Employee shall resign Employee’s position with the
Corporation, the Corporation shall pay Employee’s Compensation only through the
last day of Employee’s employment by the Corporation.  The Corporation
shall then have no further obligation to Employee under this
Agreement.  If the Board, pursuant to Section 5.4(b), votes to
classify Employee’s termination as “not for cause,” then Employee shall be
compensated pursuant to Section 5.6 below.

      

      5.6           Compensation Upon
Termination Other Than For Cause Or Disability.  Except as
otherwise set forth in Section 5.8 hereof, if the Corporation shall terminate
Employee’s employment other than for Cause or Disability, the Corporation shall
continue to be obligated to pay 12 months’ of
Employee’s Salary (payable in 24 equal
installments,
with the first installment occurring on the first regularly scheduled payroll
date following the date of termination, and the remaining
installments occurring on a semi-monthly basis thereafter), but shall not
be obligated to provide any other benefits described in Articles III and IV
hereof, except to the extent required by law.

       

      
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      5.7           Compensation
Upon Non-Renewal of Agreement.  Except as
otherwise set forth in Section 5.8 hereof, if the Corporation shall give notice to Employee in
accordance with Section 1.2 hereof that this Agreement will not be renewed but
Employee’s employment is not terminated, the Corporation shall continue to be obligated to pay
Employee’s Salary for a period of 12 months
beginning on the date notice of non-renewal is given, on regularly
scheduled payroll dates, but shall not be obligated to provide any other
benefits described in Articles III and IV hereof, except to the extent required
by law. 

      

      5.8           Termination of Employee or
Resignation by Employee for Good Reason Following
a
Change in Control.  If at any
time within the first twelve months subsequent to a Change in Control, the
Employee’s employment with the Corporation is terminated other than as provided
for in Section 5.2, 5.3 or 5.4 hereof, or the Corporation
violates any provision of this Agreement or Employee shall resign
Employee’s employment for
Good Reason (as defined herein), the Corporation shall be obligated to pay to
Employee a severance
payment in an amount
equal to two times the Employee’s compensation payable under paragraph 5.6
above, but in no event to exceed an amount equal to $1.00 less than three times
the mean average annual compensation paid to Employee by the Corporation and any
of its subsidiaries during the five calendar years ending before the date on
which the Change in Control occurred (or if Employee was not employed for that
entire five year period, then the mean average annual compensation paid to
employee during such shorter period, with the Employee’s compensation annualized
for any calendar year during which the employee was not employed for the entire
calendar year); provided, however, that if the severance payment under this
Section 5.8, either alone or together with any other payments or compensation
which Employee has a right to receive from the Corporation, would constitute a
“parachute payment” (as defined in Section 280G (or any equivalent term defined
in any successor or equivalent provision) of the Code), then such severance
payment shall be reduced to the largest amount as will result in no portion of
the severance payment under this Section 5.8 being subject to the excise tax
imposed by Section 4999 (or any successor or equivalent provision) of the
Code.  For the purpose of this Section 5.8, the Employee’s annual
compensation from the Corporation and its subsidiaries for a given year shall
equal Employee’s compensation as reflected on Employee’s Form W-2 for that year
(unless the Employee was not employed for the entire calendar year, in which
case Employee’s Form W-2 compensation for such year shall be
annualized).  The determination of any reduction in severance payment
under this Section 5.8 pursuant to the foregoing provision shall be conclusive
and binding on the Corporation.

      

      If the Change in Control implicated by this Section
5.8 is also a “change in control event” within the meaning of the default rules of the final
regulations promulgated under Section 409A(a)(2)(A)(v) of the Code, then the
severance payment due under this Section 5.8 shall be made in a lump sum,
payable no later than the 15th day of the third
month following the later of the end of the Corporation’s tax year or the
Employee’s tax year in which occurs the Employee’s effective date
of termination under this Section 5.8.  If the Change in Control is
not a “change in control event”
within the meaning of the default rules of the final regulations promulgated
under Section 409A(a)(2)(A)(v) of the Code, the severance payment contemplated
by this Section 5.8 shall be made in twelve semi-monthly installment payments,
beginning on the first regularly scheduled payroll date
following the Employee’s effective date of termination under this Section
5.8.  For purposes of this Section 5.8, the Employee’s effective date
of termination shall mean, as applicable, (x) the effective date of such
termination of employment by the Corporation or (y) the effective date of the
Employee’s resignation for Good Reason, which date shall be
stated in the Employee’s written notice to the Corporation of his resignation
for Good Reason and shall be no later than 60 days following the date of such
notice. 

       

      
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      “Good
Reason” shall mean any of the following which occur during the term of this
Agreement without Employee’s express written consent:

      

      In the
Event of a Change in Control:

       

      (a)           the
assignment to Employee of duties inconsistent with Employee’s position, office,
duties, responsibilities and status with the Corporation immediately prior to a
Change in Control; or, a change in Employee’s titles or offices as in effect
immediately prior to a Change in Control; or, any removal of Employee from or
any failure to reelect Employee to any such position or office, except in
connection with the termination of Employee’s employment by the Corporation for
Disability or Cause or as a result of Employee’s death or by Employee other than
for Good Reason as set forth in this Section 5.8(a); or

       

      (b)          a
reduction by the Corporation in Employee’s Salary as in effect as of the date of
this Agreement or as the same may be increased from time-to-time during the term
of this Agreement or the Corporation’s failure to increase (within twelve months
of the Employee'’s last increase in Salary) Employee’s Salary
after a Change in Control in an amount which at least equals, on a percentage
basis, the highest percentage increase in salary for all officers of the
Corporation or any parent or affiliated company effected in the preceding twelve
months; or

       

      (c)           the
failure of the Corporation to provide Employee with the same fringe benefits
(including, without limitation, life insurance plans, medical or disability
plans, retirement plans, incentive plans, stock option plans, stock purchase
plans, stock ownership plans, or bonus plans) that were provided to Employee
immediately prior to the Change in Control, or with a package of fringe benefits
that, if one or more of such benefits varies from those in effect immediately
prior to such Change in Control, is in Employee’s sole judgment substantially
comparable in all material respects to such fringe benefits taken as a whole;
or

       

      (d)           relocation
of the Corporation’s principal executive offices to a location outside of
Oklahoma City, Oklahoma, or Employee’s relocation to any place other than the
location at which Employee performed Employee’s duties prior to a Change in
Control, except for required travel by Employee on the Corporation’s business to
an extent substantially consistent with Employee’s business travel obligations
at the time of the Change in Control; or

       

      (e)           any
failure by the Corporation to provide Employee with the same number of paid
vacation days to which Employee is entitled at the time of the Change in
Control; or

       

      (f)           the
failure of a successor to the Corporation to assume the obligation of this
Agreement as set forth in Section 7.1 herein.

      

      5.9           Change in
Control.  For the purposes of this Agreement, the phrase
“change in control” shall mean any of the following events:

       

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      (a)           Any
consolidation or merger of the Corporation in which the Corporation is not the
continuing or surviving corporation or pursuant to which shares of the
Corporation’s capital stock would convert into cash, securities or other
property, other than a merger of the Corporation in which the holders of the
Corporation’s capital stock immediately prior to the merger have the same
proportionate ownership of capital stock of the surviving corporation
immediately after the merger;

      
        (b)           Any
sale, lease, exchange or other transfer (whether in one transaction or a series
of related transactions) of all or substantially all of the assets of the
Corporation;

         

      

      
        (c)           The
stockholders of the Corporation approve any plan or proposal for the liquidation
or dissolution of the Corporation;

         

      

      
        (d)           Any
person (as used in Section 13(d) and 14(d)(2) of the Securities and Exchange Act
of 1934, as amended (the “Exchange Act”)) becomes the beneficial owner (within
the meaning of Rule 13D-3 under the Exchange Act) of 50% or more of the
Corporation’s outstanding capital stock;

        (e)           During
any period of two consecutive years, individuals who at the beginning of that
period constitute the entire Board of Directors of the Corporation cease for any
reason to constitute a majority of the Board of Directors unless the election or
the nomination for election by the Corporation’s stockholders of each new
director received the approval of the Board of Directors by a vote of at least
two-thirds of the directors then and still in office and who served as directors
at the beginning of the period; or

         

        (f)           The
Corporation becomes a subsidiary of any other corporation.

      

      

      ARTICLE
VI

      Obligation
to Mitigate Damages; No Effect

      on Other Contractual
Rights

      

      6.1           Mitigation.  The
Employee shall not have any obligation to mitigate damages or the amount of any
payment provided for under this Agreement by seeking other employment or
otherwise. However, all payments required under the terms of this Agreement
shall cease 30 days after the acceptance by the Employee of employment by
another employer; provided that, this limitation shall not apply to payments due
under paragraph 5.8, above.

      

      6.2           Other Contractual
Rights.  The provisions of this Agreement, and any payment
provided for hereunder shall not reduce any amount otherwise payable, or in any
way diminish Employee’s existing rights, or
rights which would accrue solely as a result of passage of time under any
employee benefit plan or other contract, plan or arrangement of which Employee
is a beneficiary or in which Employee participates.

      

      

      ARTICLE
VII

      Successors to the
Corporation

      

      7.1           Assumption.  The
Corporation will require any successor or assignee (whether direct or indirect,
by purchase, merger, consolidation or otherwise) of all or substantially all of
the 

       

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      business
and/or assets of the Corporation, by agreement in form and substance reasonably
satisfactory to Employee, to expressly, absolutely and unconditionally assume
and agree to perform this Agreement in the same manner and to the same extent
that the Corporation would be required to perform it if no such succession or
assignment had taken place.  Any failure by the Corporation to obtain
such agreement prior to the effectiveness of any such succession or assignment
shall be a material breach of this Agreement.

      

      7.2           Employee’s Successors and
Assigns.  This Agreement shall inure to the benefit of and be
enforceable by Employee’s personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees.  If Employee should die while any amounts are still payable
to Employee hereunder, all such amounts, unless otherwise provided herein, shall
be paid in accordance with the terms of this Agreement to Employee’s devisee,
legatee or other designee or, if there is no such designee, to Employee’s
estate.

      

      ARTICLE
VIII

      Restrictions on
Employee

      

      8.1           Confidential
Information.  During the term of the Employee’s employment and
for a period of twelve months thereafter, the Employee shall not divulge or make
accessible to any party any Confidential Information, as defined below, of the
Corporation or any of its subsidiaries, except to the extent authorized in
writing by the Corporation or otherwise required by law.  The phrase
“Confidential Information” shall mean the unique, proprietary and confidential
information of the Corporation and its subsidiaries, consisting of: (1)
confidential financial information regarding the Corporation or its
subsidiaries, (2) confidential recipes for food products; (3) confidential and
copyrighted plans and specifications for interior and exterior signs, designs,
layouts and color schemes; (4) confidential methods, techniques, formats,
systems, specifications, procedures, information, trade secrets, sales and
marketing programs; (5) knowledge and experience regarding the operation and
franchising of Sonic drive-in restaurants; (6) the identities and locations of
Sonic’s franchisees, Sonic drive-in restaurants, and suppliers to Sonic’s
franchisees and drive-in restaurants; (7) knowledge, financial information, and
other information regarding the development of franchised and company-store
restaurants; (8) knowledge, financial information, and other information
regarding potential acquisitions and dispositions; and (9) any other
confidential business information of the Corporation or any of its subsidiaries.
The Employee shall give the Corporation written notice of any circumstances in
which Employee has actual notice of any access, possession or use of the
Confidential Information not authorized by this Agreement.

      

      8.2           Restrictive
Covenant.  During the term of Employee’s employment, the
Employee shall not retain in or have any interest, directly or indirectly, in
any business competing with the business being conducted by the Corporation or
any of its subsidiaries, without the Corporation’s prior written
consent.  For the six month period immediately following the
termination of Employee’s employment, the Employee shall not engage in or have
any interest, directly or indirectly, in any fast food restaurant business that
has a menu similar to that of a Sonic drive-in restaurant (such as hamburgers,
hot dogs, onion rings and similar items customarily sold by Sonic drive-in
restaurants), or which has an appearance similar to that of a Sonic drive-in
restaurant (such as color pattern, use of canopies, use of speakers and menu
housings for ordering food, or other items that are customarily used by a Sonic
drive-in restaurant), and which operates such restaurants within a three mile
radius of any Sonic drive-in restaurant.

       

      
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      ARTICLE
IX

      Miscellaneous

      

      9.1           Indemnification.  To
the full extent permitted by law, the Board shall authorize the payment of
expenses incurred by or shall satisfy judgments or fines rendered or levied
against Employee in any action brought by a third-party against Employee
(whether or not the Corporation is joined as a party defendant) to impose any
liability or penalty on Employee for any act alleged to have been committed by
Employee while employed by the Corporation unless Employee was acting with gross
negligence or willful misconduct.  Payments authorized hereunder shall
include amounts paid and expenses incurred in settling any such action or
threatened action.

      

      9.2           Resolution of
Disputes.  The following provisions shall apply to any
controversy between the Employee and the Corporation and its subsidiaries and
the Employee (including any director, officer, employee, agent or affiliate of
the Corporation and its subsidiaries) whether or not relating to this
Agreement.

      

       (a)          Arbitration. The
parties shall resolve all controversies by final and binding arbitration in
accordance with the Rules for Commercial Arbitration (the “Rules”) of the
American Arbitration Association in effect at the time of the execution of this
Agreement and pursuant to the following additional provisions:

      

      (1)           Applicable
Law.  The Federal Arbitration Act (the “Federal Act”), as
supplemented by the Oklahoma Arbitration Act (to the extent not inconsistent
with the Federal Act), shall apply to the arbitration and all procedural matters
relating to the arbitration.

      

      (2)           Selection of
Arbitrators.  The parties shall select one arbitrator within 10
days after the filing of a demand and submission in accordance with the
Rules.  If the parties fail to agree on an arbitrator within that
10-day period or fail to agree to an extension of that period, the arbitration
shall take place before an arbitrator selected in accordance with the
Rules.

      

      (3)           Location of
Arbitration.  The arbitration shall take place in Oklahoma
City, Oklahoma, and the arbitrator shall issue any award at the place of
arbitration.  The arbitrator may conduct hearings and meetings at any
other place agreeable to the parties or, upon the motion of a party, determined
by the arbitrator as necessary to obtain significant testimony or
evidence.

      

      (4)           Enforcement of
Award.  The prevailing party shall have the right to enter the
award of the arbitrator in any court having jurisdiction over one or more of the
parties or their assets.  The parties specifically waive any right
they may have to apply to any court for relief from the provisions of this
Agreement or from any decision of the arbitrator made prior to the
award.

      

       (b)          Attorneys’ Fees and
Costs.  The prevailing party to the arbitration shall have the
right to an award of its reasonable attorneys’ fees and costs (including the cost of the
arbitrator) incurred after the filing of the demand and
submission.  If the Corporation or any of its subsidiaries prevails,
the award shall include an amount for that portion of the 

       

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      administrative overhead reasonably allocable to the time devoted
by the in-house legal staff of the Corporation or any subsidiary. 

       

       (c)           Excluded
Controversies.  At the election of the Corporation or its
subsidiaries, the provisions of this Section 9.2 shall not apply to any
controversies relating to the enforcement of the covenant not to compete or the
use and protection of the trademarks, service marks, trade names, copyrights,
patents, confidential information and trade secrets of the Corporation or its
subsidiaries, including (without limitation) the right of the Corporation or its
subsidiaries to apply to any court of competent jurisdiction for appropriate
injunctive relief for the infringement of the rights of the Corporation or its
subsidiaries.

      

       (d)           Other
Rights.  The provisions of this Section 9.2 shall not prevent
the Corporation, its subsidiaries, or the Employee from exercising any of their
rights under this agreement, any other agreement, or under the common law,
including (without limitation) the right to terminate any agreement between the
parties or to end or change the party’s legal relationship.

      

      9.3           Entire
Agreement.  This Agreement constitutes the entire agreement of
the parties with regard to the subject matter of this Agreement and replaces and
supersedes all other written and oral agreements and statements of the parties
relating to the subject matter of this Agreement.

      

      9.4           Notices.  Any
notices required or permitted to be given under this Agreement shall be
sufficient if in writing and sent by mail to Employee’s residence, in the case
of Employee, or to its principal office, in the case of the
Corporation.

      

      9.5           Waiver of
Breach.  The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by any party.

      

      9.6           Amendment.  No
amendment or modification of this Agreement shall be deemed effective unless or
until executed in writing by the parties hereto.

      

      9.7           Validity.  This
Agreement, having been executed and delivered in the State of Oklahoma, its
validity, interpretation, performance and enforcement will be governed by the
laws of that state.

      

      9.8           Section
Headings.  Section and other headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

      

      9.9           Counterpart
Execution.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.

      

      9.10         Exclusivity.  Specific
arrangements referred to in this Agreement are not intended to exclude
Employee’s participation in any other benefits available to executive personnel
generally or to preclude other compensation or benefits as may be authorized by
the Board from time to time.

       

      10

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      9.11         Partial
Invalidity.  If any provision in this Agreement is held by a
court of competent jurisdiction to be invalid, void, or unenforceable, the
remaining provisions shall nevertheless continue in full force without being
impaired or invalidated in any way.

       

      9.12         Section 409A of the
code.

       

       (a)        
Notwithstanding anything herein to the contrary, if, at
the time of the Employee’s termination of employment with the Corporation, the
Employee is a “specified
employee” within the meaning of Section
409A of the Code, as determined under the Corporation’s established
methodology for determining specified employees, then, solely to the extent
necessary to avoid the imposition of additional taxes, penalties or interest
under Section 409A of the Code, any payments to the Employee hereunder
which provide for the deferral of compensation, within the
meaning of Section 409A of the Code (which shall not include any compensation
that is exempt from Section 409A of the Code), and which are scheduled to be
made as a result of the Employee’s termination
of
employment during the period beginning on the date of the Employee’s date of
termination and ending on the six-month anniversary of such date shall be
delayed and not paid to the Participant until the first business day following
such sixth month anniversary date, at which time such delayed amounts will be
paid to the Employee in a cash lump sum.  If the Employee dies on or
after the date of the Employee’s date of termination and prior to the payment of the
delayed amounts pursuant to this Section 9.12, any amount delayed
pursuant to this Section 9.12 shall be paid to the Employee’s estate within 30
days following the Employee’s death.  

      

       (b)        
To the extent this Agreement is subject to Section
409A of the Code, the Corporation and Employee intend all payments under this Agreement to comply with the requirements
of such section, and this Agreement shall, to the extent reasonably practicable,
be operated and administered to effectuate such
intent.  

      

      In
witness whereof, the Corporation has caused this Agreement to be executed and
its seal affixed hereto by its officers thereunto duly authorized; and the
Employee has executed this Agreement, as of the day and year first above
written.

       

       

      
        	
                
                  The Corporation:  

                   

                   

                   

                   

                  The
      Employee:   

                

              	
                
                  Sonic Corp. 

                   

                  
                    By:  /s/ W. Scott
      McLain

                           
      Name:  W. Scott
      McLain

                           
      Title:    President
                                                                  

                  /s/ Stephen C.
      Vaughan

                  Name:  Stephen C.
      Vaughan

              

11ex10_1.htm

    
 

     

    
      

      

    

     

    Exhibit
10.1

     

    
 

     

    

     

    ASSET
PURCHASE AGREEMENT

     

    by
and among

    

    COVEY/LINK,
LLC,

    

    COVEYLINK
WORLDWIDE LLC,

    

    FRANKLIN
COVEY CO.,

    

    and

    

    FRANKLIN
COVEY CLIENT SALES, INC.

    

    dated

    

    December
31, 2008

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    

    
      
        
           

        

        
           

          
            

            

          

          
            

          

        

        
           

        

      

    

    

    TABLE OF CONTENTS

     

    
      
        
          
            
              	
                      RECITALS

                    	
                      1

                    
	
                      I.

                    	
                      Definitions and Usage

                    	
                      2

                    
	 
      	
                      1.1

                    	
                      Definitions

                    	
                      2

                    
	 
      	
                      1.2

                    	
                      Usage

                    	
                      11

                    
	
                      II.

                    	
                      Sale and Transfer of Assets; Closing

                    	
                      12

                    
	 
      	
                      2.1

                    	
                      Assets
      to be Sold

                    	
                      12

                    
	 
      	
                      2.2

                    	
                      Excluded
      Assets

                    	
                      13

                    
	 
      	
                      2.3

                    	
                      Consideration

                    	
                      14

                    
	 
      	
                      2.4

                    	
                      Liabilities

                    	
                      14

                    
	 
      	
                      2.5

                    	
                      Allocation

                    	
                      16

                    
	 
      	
                      2.6

                    	
                      Closing

                    	
                      17

                    
	 
      	
                      2.7

                    	
                      Closing
      Obligations

                    	
                      17

                    
	 
      	
                      2.8

                    	
                      Earnout

                    	
                      18

                    
	 
      	
                      2.9

                    	
                      Tax
      Withholding

                    	
                      21

                    
	
                      III.

                    	
                      Representations and Warranties of Seller

                    	
                      21

                    
	 
      	
                      3.1

                    	
                      Organization
      and Good Standing

                    	
                      21

                    
	 
      	
                      3.2

                    	
                      Enforceability;
      Authority; No Conflict

                    	
                      21

                    
	 
      	
                      3.3

                    	
                      Financial
      Statements

                    	
                      22

                    
	 
      	
                      3.4

                    	
                      Sufficiency
      of Assets

                    	
                      23

                    
	 
      	
                      3.5

                    	
                      Title
      to Assets; Encumbrances

                    	
                      23

                    
	 
      	
                      3.6

                    	
                      Condition
      of Tangible Personal Property

                    	
                      23

                    
	 
      	
                      3.7

                    	
                      Accounts
      Receivable

                    	
                      23

                    
	 
      	
                      3.8

                    	
                      Inventories

                    	
                      24

                    
	 
      	
                      3.9

                    	
                      No
      Undisclosed Liabilities

                    	
                      24

                    
	 
      	
                      3.10

                    	
                      Taxes

                    	
                      24

                    
	 
      	
                      3.11

                    	
                      No
      Material Adverse Change

                    	
                      26

                    
	 
      	
                      3.12

                    	
                      Employees

                    	
                      26

                    
	 
      	
                      3.13

                    	
                      Employee
      Benefits

                    	
                      27

                    
	 
      	
                      3.14

                    	
                      Compliance
      with Legal Requirements; Governmental Authorizations

                    	
                      28

                    
	 
      	
                      3.15

                    	
                      Legal
      Proceedings; Orders

                    	
                      29

                    
	 
      	
                      3.16

                    	
                      Absence
      of Certain Changes and Events

                    	
                      30

                    
	 
      	
                      3.17

                    	
                      Contracts;
      No Defaults

                    	
                      31

                    
	 
      	
                      3.18

                    	
                      Insurance

                    	
                      33

                    
	 
      	
                      3.19

                    	
                      Environmental
      Matters

                    	
                      35

                    
	 
      	
                      3.20

                    	
                      Brokers
      or Finders

                    	
                      35

                    
	 
      	
                      3.21

                    	
                      Solvency

                    	
                      35

                    
	 
      	
                      3.22

                    	
                      Disclosure

                    	
                      35

                    
	
                      IV.

                    	
                      Representations and Warranties of CoveyLink

                    	
                      36

                    
	 
      	
                      4.1

                    	
                      Organization
      and Good Standing

                    	
                      36

                    
	 
      	
                      4.2

                    	
                      Enforceability;
      Authority; No Conflict

                    	
                      36

                    
	
                      V.

                    	
                      Representations and Warranties of Buyer and
      Parent

                    	
                      37

                    
	 
      	
                      5.1

                    	
                      Organization
      and Good Standing

                    	
                      37

                    

            

          

        

      

    

    

    
      
        
           

        

        
          i

          
            

          

        

        
           

        

      

    

    

    

    
      
        	 
      	
                5.2

              	
                Authority;
      No Conflict

              	
                37

              
	 
      	
                5.3

              	
                Certain
      Proceedings

              	
                38

              
	 
      	
                5.4

              	
                Brokers
      or Finders

              	
                38

              
	
                VI.

              	
                Additional Covenants

              	
                38

              
	 
      	
                6.1

              	
                Employees
      and Employee Benefits

              	
                38

              
	 
      	
                6.2

              	
                Payment
      of Other Retained Liabilities

              	
                40

              
	 
      	
                6.3

              	
                Restrictions
      on Seller Dissolution and Distributions

              	
                40

              
	 
      	
                6.4

              	
                Removing
      Excluded Assets

              	
                40

              
	 
      	
                6.5

              	
                Reports
      and Returns

              	
                41

              
	 
      	
                6.6

              	
                Assistance
      in Proceedings

              	
                41

              
	 
      	
                6.7

              	
                Modification
      of International Licensee Agreements

              	
                41

              
	 
      	
                6.8

              	
                Noncompetition,
      Nonsolicitation and Nondisparagement

              	
                41

              
	 
      	
                6.9

              	
                Customer
      and Other Business Relationships

              	
                43

              
	 
      	
                6.10

              	
                Retention
      of and Access to Records

              	
                43

              
	 
      	
                6.11

              	
                Further
      Assurances

              	
                43

              
	
                VII.

              	
                Indemnification; Remedies

              	
                43

              
	 
      	
                7.1

              	
                Survival

              	
                43

              
	 
      	
                7.2

              	
                Indemnification
      and Reimbursement by Seller and CoveyLink

              	
                44

              
	 
      	
                7.3

              	
                Indemnification
      and Reimbursement by Buyer

              	
                44

              
	 
      	
                7.4

              	
                Setoff

              	
                45

              
	 
      	
                7.5

              	
                Third-Party
      Claims

              	
                47

              
	 
      	
                7.6

              	
                Other
      Claims

              	
                48

              
	 
      	
                7.7

              	
                Indemnification
      in Case of Strict Liability or Indemnitee Negligence

              	
                48

              
	
                VIII.

              	
                General Provisions

              	
                49

              
	 
      	
                8.1

              	
                Expenses

              	
                49

              
	 
      	
                8.2

              	
                Public
      Announcements

              	
                49

              
	 
      	
                8.3

              	
                Notices

              	
                49

              
	 
      	
                8.4

              	
                Jurisdiction;
      Service of Process

              	
                50

              
	 
      	
                8.5

              	
                Enforcement
      of Agreement

              	
                51

              
	 
      	
                8.6

              	
                Waiver;
      Remedies Cumulative

              	
                51

              
	 
      	
                8.7

              	
                Entire
      Agreement and Modification

              	
                51

              
	 
      	
                8.8

              	
                Assignments,
      Successors and No Third-Party Rights

              	
                51

              
	 
      	
                8.9

              	
                Severability

              	
                52

              
	 
      	
                8.10

              	
                Construction

              	
                52

              
	 
      	
                8.11

              	
                Time
      of Essence

              	
                52

              
	 
      	
                8.12

              	
                Governing
      Law

              	
                52

              
	 
      	
                8.13

              	
                Execution
      of Agreement

              	
                52

              
	 
      	
                8.14

              	
                CoveyLink  and
      Parent Obligations

              	
                52

              

      

    

    

    
      
        
           

        

        
          ii

          
            

          

        

        
           

        

      

    

    

      ASSET
PURCHASE AGREEMENT

       

      This
ASSET PURCHASE AGREEMENT
(“Agreement”) is dated
December 31, 2008 (the “Closing Date”), by and among
Franklin Covey Client Sales, Inc., a Utah corporation (“Buyer”), and Franklin Covey
Co., a Utah corporation (“Parent”), and CoveyLink
Worldwide LLC, a Utah limited liability company (“Seller”), and Covey/Link,
LLC, a Utah limited liability company (“CoveyLink” ).

       

       

      RECITALS

       

      WHEREAS, Seller and CoveyLink
are Affiliates.

       

      WHEREAS, Buyer and Parent are
Affiliates.

       

      WHEREAS, the board of managers
of the Seller has authorized the sale of certain assets to Buyer pursuant to the
terms of this Agreement, and the members of each of Seller have approved such
sale.

       

      WHEREAS, CoveyLink owns
certain intellectual property assets (as described in the License Agreement)
relating to the book entitled The SPEED of Trust (“The SPEED of Trust”)
(collectively, the “Licensed
Intellectual Property”);

       

      WHEREAS, Seller licenses the
Licensed Intellectual Property from CoveyLink and produces and sells training
programs and materials based on The SPEED of Trust and the
Licensed Intellectual Property (the “Business”).

       

      WHEREAS, Seller desires to
sell, and Buyer desires to buy, the assets of the Business on the terms and
subject to the conditions set forth in this Agreement.

       

      WHEREAS, Parent has licensed
the Licensed Intellectual Property pursuant to a non-exclusive, worldwide
license with CoveyLink effective as of January 1, 2006, and concurrently with
the Closing, Parent and CoveyLink will enter into an Amended and Restated
License Agreement pursuant to which CoveyLink will grant Buyer an exclusive,
perpetual, worldwide license to the Licensed Intellectual Property in the form
attached to this Agreement as Exhibit 2.7(b)(i) (the “License
Agreement”).

       

      WHEREAS, Stephen M. R. Covey
and Greg Link are each concurrently entering into speaker services agreements
with Buyer to be effective upon the Closing in the form attached to this
Agreement as Exhibit 2.7(b)(iii) (each a “Speaking
Agreement”).

       

      WHEREAS, Stephen M. R. Covey
and Greg Link (collectively, the “Practice Leaders”) are each
concurrently entering into consulting agreements with Buyer to be effective upon
the Closing in the form attached to this Agreement as Exhibit 2.7(b)(ii)
(each a “Practice Leader
Consulting Agreement”).

       

      
        
          
          

        

        
           

          
            

          

        

        
          Table of Contents

        

      

      WHEREAS, the Practice Leaders
will be responsible for managing the business of the Parent to The SPEED of Trust (the
“Practice”) following
the Closing.

       

      NOW, THEREFORE, in
consideration of the foregoing recitals and the mutual representations,
warranties and agreements contained in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, agree as
follows:

       

      I. Definitions and Usage

       

      1.1 Definitions.

      For
purposes of this Agreement, the following terms and variations thereof have the
meanings specified or referred to in this Section 1.1:

       

      “Accounts
Receivable”—(a) all trade accounts receivable, including interest
charges, and other rights to payment from customers of Seller (including Buyer)
and the full benefit of all security for such accounts or rights to payment,
including all trade accounts receivable representing amounts receivable in
respect of goods shipped or products sold or services rendered to customers of
Seller, (b) all other accounts or notes receivable of Seller and the full
benefit of all security for such accounts or notes and (c) any claim, remedy or
other right related to any of the foregoing.

       

      “Affiliate”—has
the meaning set forth in Rule 12b-2 under the Exchange Act.

       

      “Agreement” —as
defined in the first paragraph of this Agreement.

       

      “Annual Earnout
Payment”—as defined in Section 2.8(a).

       

      “Assets”—as
defined in Section 2.1.

       

      “Assignment and
Assumption Agreement”—as defined in Section 2.7(a)(ii).

       

      “Assumed
Liabilities”—as defined in Section 2.4.

       

      “Best
Efforts”—the efforts that a prudent Person acting diligently and desirous
of achieving a result would use in similar circumstances to achieve that result
as expeditiously as reasonably practicable.

       

      “Bill of
Sale”—as defined
in Section 2.7(a)(i).

       

      “Breach”—any
breach of, or any inaccuracy in, any representation or warranty or any breach
of, or failure to perform or comply with, any covenant or obligation, in or of
this Agreement or any other Contract, or any event which with the passing of
time or the giving of notice, or both, would constitute such a breach,
inaccuracy or failure.

       

      “Business”—as
defined in the Recitals to this Agreement.

       

      “Business
Day”—any day other than (a) Saturday or Sunday or (b) any other day on
which banks in Salt Lake City, Utah are permitted or required to be
closed.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          Table of Contents

        

      

      “Buyer”—as
defined in the first paragraph of this Agreement.

       

      “Buyer Indemnified
Persons”—as defined in Section 7.2.

       

      “Closing”—as
defined in Section 2.6.

       

      “Closing
Date”—as defined in the first paragraph of this Agreement.

       

      “Closing
Payment”—as defined in Section 2.3(b).

       

      “Code”—the
U.S. Internal Revenue Code of 1986, as amended.

       

      “Consent”—any
approval, consent, ratification, waiver or other authorization.

       

      “Consulting
Agreement”—as defined in the Recitals to this Agreement.

       

      “Contemplated
Transactions”—all of the transactions contemplated by this Agreement,
including the License Agreement, the Practice Leader Consulting Agreements, and
the Speaking Agreements.

       

      “Contract”—any
agreement, contract, Lease, consensual obligation, promise or undertaking
(whether written or oral and whether express or implied), whether or not legally
binding.

       

      “CoveyLink”—as
defined in the first paragraph of this Agreement.

       

      “Damages”—as
defined in Section 7.2.

       

      “Down
Payment”—as defined in Section 2.3(a).

       

      “Employee
Plans”—every plan, fund, contract, program and arrangement (whether
written or not) for the benefit of present or former employees, including those
intended to provide (i) medical, surgical, health care, hospitalization, dental,
vision, workers’ compensation, life insurance, death, disability, legal
services, severance, sickness or accident benefits (whether or not defined in
Section 3(1) of ERISA), (ii) pension, profit sharing, stock bonus, retirement,
supplemental retirement or deferred compensation benefits (whether or not tax
qualified and whether or not defined in Section 3(2) of ERISA) or (iii) salary
continuation, unemployment, supplemental unemployment, severance, termination
pay, change-in-control, vacation or holiday benefits (whether or not defined in
Section 3(3) of ERISA), (w) that is maintained or contributed to by Seller, (x)
that Seller has committed to implement, establish, adopt or contribute to in the
future, (y) for which Seller is or may be financially liable as a result of the
direct sponsor’s affiliation with Seller, an ERISA Affiliate, or Seller’s
equityholders (whether or not such affiliation exists at the date of this
Agreement and notwithstanding that the Employee Plan is not maintained by Seller
for the benefit of its employees or former employees) or (z) for or with respect
to which Seller is or may become liable under any common law successor doctrine,
express successor liability provisions of law, provisions of a collective
bargaining agreement, labor or employment law or agreement with a
predecessor

       

      
        
          
          

        

        
          3

          
            

          

        

        
          Table of Contents

        

      

      employer.  Employee
Plan does not include any arrangement that has been terminated and completely
wound up prior to the date of this Agreement and for which Seller has no present
or potential liability.

       

      “Encumbrance”—any
charge, claim, community or other marital property interest, condition,
equitable interest, lien, option, pledge, security interest, mortgage, right of
way, easement, encroachment, servitude, right of first option, right of first
refusal or similar restriction, including any restriction on use, voting (in the
case of any security or equity interest), transfer, receipt of income or
exercise of any other attribute of ownership.

       

      “Environment”—soil,
land surface or subsurface strata, surface waters (including navigable waters
and ocean waters), groundwaters, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life and any other
environmental medium or natural resource.

       

      “Environmental,
Health and Safety Liabilities”—any cost, damages, expense, liability,
obligation or other responsibility arising from or under any Environmental Law
or Occupational Safety and Health Law, including those consisting of or relating
to:

       

      (a)           any
environmental, health or safety matter or condition (including on-site or
off-site contamination, occupational safety and health and regulation of any
chemical substance or product);

       

      (b)           any
fine, penalty, judgment, award, settlement, legal or administrative proceeding,
damages, loss, claim, demand or response, remedial or inspection cost or expense
arising under any Environmental Law or Occupational Safety and Health
Law;

       

      (c)           financial
responsibility under any Environmental Law or Occupational Safety and Health Law
for cleanup costs or corrective action, including any cleanup, removal,
containment or other remediation or response actions (“Cleanup”) required by any
Environmental Law or Occupational Safety and Health Law (whether or not such
Cleanup has been required or requested by any Governmental Body or any other
Person) and for any natural resource damages; or

       

      (d)           any
other compliance, corrective or remedial measure required under any
Environmental Law or Occupational Safety and Health Law.

       

      The terms
“removal,” “remedial” and “response action” include the types of activities
covered by the United States Comprehensive Environmental Response, Compensation
and Liability Act of 1980 (CERCLA), as amended.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          Table of Contents

        

      

      “Environmental
Law”—any Legal Requirement that relates to the Environment and that
requires or relates to:

       

      (a)           advising
appropriate authorities, employees or the public of intended or actual Releases
of pollutants or hazardous substances or materials, violations of discharge
limits or other prohibitions and the commencement of activities, such as
resource extraction or construction, that could have significant impact on the
Environment;

       

      (b)           preventing
or reducing to acceptable levels the Release of pollutants or hazardous
substances or materials into the Environment;

       

      (c)           reducing
the quantities, preventing the Release or minimizing the hazardous
characteristics of wastes that are generated;

       

      (d)           assuring
that products are designed, formulated, packaged and used so that they do not
present unreasonable risks to human health or the Environment when used or
disposed of;

       

      (e)           protecting
resources, species or ecological amenities;

       

      (f)           reducing
to acceptable levels the risks inherent in the transportation of hazardous
substances, pollutants, oil or other potentially harmful
substances;

       

      (g)           cleaning
up pollutants that have been Released, preventing the Threat of Release or
paying the costs of such clean up or prevention; or

       

      (h)           making
responsible parties pay private parties, or groups of them, for damages done to
their health or the Environment or permitting self-appointed representatives of
the public interest to recover for injuries done to public assets.

       

      “ERISA”—the
Employee Retirement Income Security Act of 1974, as amended.

       

      “ERISA
Affiliate”—each
trade or business (whether or not incorporated) that is part of the same
controlled group under, common control with, or part of an affiliated service
group that includes Seller, within the meaning of Code Section 414(b), (c), (m)
or (o).

       

      “Estimated Working
Capital”—as defined in Section 2.3(b).

       

      “Estimated Working
Capital Adjustment Amount”—as defined in Section 2.3(b).

       

      “Exchange
Act”—the Securities Exchange Act of 1934, as amended.

       

      “Excluded
Assets”—as defined in Section 2.2.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          Table of Contents

        

      

      “Facilities”—any
leasehold interest of Seller, including the Tangible Personal Property used or
operated by Seller at the respective locations of the real property specified in
Section 3.5(a).

       

      “GAAP”—generally
accepted accounting principles for financial reporting in the United States,
applied on a basis consistent with the basis on which the Interim Balance Sheet
and the other financial statements referred to in Section 3.3 were
prepared.

       

      “Governing
Documents”—with respect to any particular entity, (a) if a corporation,
the articles or certificate of incorporation and the bylaws; (b) if a general
partnership, the partnership agreement and any statement of partnership; (c) if
a limited partnership, the limited partnership agreement and the certificate of
limited partnership; (d) if a limited liability company, the articles of
organization and operating agreement; (e) if another type of Person, any other
charter or similar document adopted or filed in connection with the creation,
formation or organization of the Person; (f) all equityholders’ agreements,
voting agreements, voting trust agreements, joint venture agreements,
registration rights agreements or other agreements or documents relating to the
organization, management or operation of any Person or relating to the rights,
duties and obligations of the equityholders of any Person; and (g) any amendment
or supplement to any of the foregoing.

       

      “Governmental
Authorization”—any Consent, license, registration or permit issued,
granted, given or otherwise made available by or under the authority of any
Governmental Body or pursuant to any Legal Requirement.

       

      “Governmental
Body”—any:

       

      (a)           nation,
state, county, city, town, borough, village, district or other
jurisdiction;

       

      (b)           federal,
state, local, municipal, foreign or other government;

       

      (c)           governmental
or quasi-governmental authority of any nature (including any agency, branch,
department, board, commission, court, tribunal or other entity exercising
governmental or quasi-governmental powers);

       

      (d)           multinational
organization or body;

       

      (e)           body
exercising, or entitled or purporting to exercise, any administrative,
executive, judicial, legislative, police, regulatory or taxing authority or
power; or

       

      (f)           official
of any of the foregoing.

       

      “Hired Active
Employees”—as
defined in Section 6.1(b)(i).

       

      “Indemnified
Person”—as defined in Section 7.3(e).

       

      
        
          
          

        

        
          6

          
            

          

        

        
          Table of Contents

        

      

      “Indemnifying
Person”—as defined in Section 7.5.

       

      “Interim Balance
Sheet”—as defined in Section 3.3.

       

      “Inventories”—all
inventories of Seller, wherever located, including all finished goods, work in
process, raw materials, spare parts and all other materials and supplies to be
used or consumed by Seller in the production of finished goods, including copies
of The SPEED of Trust and training and any other materials related to the
Business.

       

      “IRS”—the
United States Internal Revenue Service and, to the extent relevant, the United
States Department of the Treasury.

       

      “Knowledge”—an
individual will be deemed to have Knowledge of a particular fact or other matter
if that individual is actually aware of that fact or matter.  A Person
(other than an individual) will be deemed to have Knowledge of a particular fact
or other matter if any individual who is serving, or who has at any time served,
as a director, officer, partner, executor or trustee of that Person (or in any
similar capacity) has, or at any time had, Knowledge of that fact or other
matter, and any such individual (and any individual party to this Agreement)
will be deemed to have conducted a reasonable investigation regarding the
accuracy of the representations and warranties made herein by that Person or
individual.

       

      “Lease”—any
Real Property Lease or any lease or rental agreement, license, right to use or
installment and conditional sale agreement to which Seller is a party and any
other Seller Contract pertaining to the leasing or use of any Tangible Personal
Property.

       

      “Legal
Requirement”—any federal, state, local, municipal, foreign,
international, multinational or other constitution, law, ordinance, principle of
common law, code, regulation, statute or treaty.

       

      “Liability”—with
respect to any Person, any liability or obligation of such Person of any kind,
character or description, whether known or unknown, absolute or contingent,
accrued or unaccrued, disputed or undisputed, liquidated or unliquidated,
secured or unsecured, joint or several, due or to become due, vested or
unvested, executory, determined, determinable or otherwise, and whether or not
the same is required to be accrued on the financial statements of such
Person.

       

      “License
Agreement”—as defined in the Recitals to this Agreement.

       

      “Licensed
Intellectual Property”—as defined in the Recitals to this
Agreement.

       

      “Occupational
Safety and Health Law”—any Legal Requirement designed to provide safe and
healthful working conditions and to reduce occupational safety and health
hazards, including the Occupational Safety and Health Act, and any program,
whether governmental or private (such as those promulgated or sponsored by
industry associations and insurance companies), designed to provide safe and
healthful working conditions.

       

      
        
          
          

        

        
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      “Order”—any
order, injunction, judgment, decree, ruling, assessment or arbitration award of
any Governmental Body or arbitrator.

       

      “Ordinary Course
of Business”—an action taken by a Person will be deemed to have been
taken in the Ordinary Course of Business only if that action:

       

      (a)           is
consistent in nature, scope and magnitude with the past practices of such Person
and is taken in the ordinary course of the normal, day-to-day operations of such
Person;

       

      (b)           does
not require authorization by the board of directors or equityholders of such
Person (or by any Person or group of Persons exercising similar authority) and
does not require any other separate or special authorization of any nature;
and

       

      (c)           is
similar in nature, scope and magnitude to actions customarily taken, without any
separate or special authorization, in the ordinary course of the normal,
day-to-day operations of other Persons that are in the same line of business as
such Person.

       

      “Parent”—as
defined in the first paragraph of this Agreement.

       

      “Permitted
Encumbrances”—as defined in Section 3.5.

       

      “Person”—an
individual, partnership, corporation, business trust, limited liability company,
limited liability partnership, joint stock company, trust, unincorporated
association, joint venture or other entity or a Governmental Body.

       

      “Practice”—as
defined in the Recitals to this Agreement.

       

      “Practice
Leaders”—as defined in the Recitals to this Agreement.

       

      “Proceeding”—any
action, arbitration, audit, hearing, investigation, litigation or suit (whether
civil, criminal, administrative, judicial or investigative, whether formal or
informal, whether public or private) commenced, brought, conducted or heard by
or before, or otherwise involving, any Governmental Body or
arbitrator.

       

      “Purchase
Price”—as defined in Section 2.3.

       

      “Real Property
Lease”—as defined in Section 3.5(a).

       

      “Record”—information
that is inscribed on a tangible medium or that is stored in an electronic or
other medium and is retrievable in perceivable form.

       

      “Related
Person”—

       

      With
respect to a particular individual:

       

      (a)           each
other member of such individual’s Family;

       

      
        
          
          

        

        
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      (b)           any
Person that is directly or indirectly controlled by any one or more members of
such individual’s Family;

       

      (c)           any
Person in which members of such individual’s Family hold (individually or in the
aggregate) a Material Interest; and

       

      (d)           any
Person with respect to which one or more members of such individual’s Family
serves as a director, officer, partner, executor or trustee (or in a similar
capacity).

       

      With
respect to a specified Person other than an individual:

       

      (a)           any
Person that directly or indirectly controls, is directly or indirectly
controlled by or is directly or indirectly under common control with such
specified Person;

       

      (b)           any
Person that holds a Material Interest in such specified Person;

       

      (c)           each
Person that serves as a director, officer, partner, executor or trustee of such
specified Person (or in a similar capacity);

       

      (d)           any
Person in which such specified Person holds a Material Interest;
and

       

      (e)           any
Person with respect to which such specified Person serves as a general partner
or a trustee (or in a similar capacity).

       

      For
purposes of this definition, (a) “control” (including “controlling,” “controlled
by,” and “under common control with”) means the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities, by contract or
otherwise, and shall be construed as such term is used in the rules promulgated
under the Securities Act; (b) the “Family” of an individual includes (i) the
individual, (ii) the individual’s spouse, (iii) any other natural person who is
related to the individual or the individual’s spouse within the second degree
and (iv) any other natural person who resides with such individual; and (c)
“Material Interest” means direct or indirect beneficial ownership (as defined in
Rule 13d-3 under the Exchange Act) of voting securities or other voting
interests representing at least ten percent (10%) of the outstanding voting
power of a Person or equity securities or other equity interests representing at
least ten percent (10%) of the outstanding equity securities or equity interests
in a Person.

       

      “Release”—any
release, spill, emission, leaking, pumping, pouring, dumping, emptying,
injection, deposit, disposal, discharge, dispersal, leaching or migration on or
into the Environment or into or out of any property.

       

      “Representative”—with
respect to a particular Person, any director, officer, manager, employee, agent,
consultant, advisor, accountant, financial advisor, legal counsel or other
representative of that Person.

       

      
        
          
          

        

        
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      “Retained
Liabilities”—as defined in Section 2.4(b).

       

      “Schedule”—a
part of this Agreement which provides information required by a specific Section
or Subsection of this Agreement.

       

      “Seller”—as
defined in the first paragraph of this Agreement.

       

      “Seller
Contract”—any Contract (a) under which Seller has or may acquire any
rights or benefits; (b) under which Seller has or may become subject to any
obligation or liability; or (c) by which Seller or any of the assets owned or
used by Seller is or may become bound, including any Contract, agreement or
purchase order relating to the delivery of training services or other products
of Seller.

       

      “Speaking
Agreement”—as defined in the Recitals to this Agreement.

       

      “Special
Accountants”—Tanner LC, as defined in Section 2.3(c).

       

      “Subsidiary”—with
respect to any Person (the “Owner”), any corporation or
other Person of which securities or other interests having the power to elect a
majority of that corporation’s or other Person’s board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred), are held by the Owner or one or more of its
Subsidiaries.

       

      “Tangible Personal
Property”—all machinery, equipment, tools, furniture, office equipment,
computer hardware, supplies, materials, vehicles and other items of tangible
personal property (other than Inventories) of every kind owned or leased by
Seller (wherever located and whether or not carried on Seller’s books), together
with any express or implied warranty by the manufacturers or sellers or lessors
of any item or component part thereof and all maintenance records and other
documents relating thereto.

       

      “Target Working
Capital”—as defined in Section 2.3(b).

       

      “Tax”—any
income, gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, property, environmental, windfall profit, customs, vehicle,
airplane, boat, vessel or other title or registration, capital stock, franchise,
employees’ income withholding, foreign or domestic withholding, social security,
unemployment, disability, real property, personal property, sales, use,
transfer, value added, alternative, add-on minimum and other tax, fee,
assessment, levy, tariff, charge or duty of any kind whatsoever, including any
liability for taxes of a predecessor entity and the recapture of any tax items,
and any interest, penalty, addition or additional amount thereon imposed,
assessed or collected by or under the authority of any Governmental Body,
whether disputed or not and including any obligation to indemnify or otherwise
assume or succeed to the tax liability of other persons, or with respect to any
information reporting requirements imposed by any Governmental
Body.

       

      
        
          
          

        

        
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      “Tax
Return”—any return (including any information return), report, statement,
schedule, notice, form, declaration, claim for refund or other document or
information filed with or submitted to, or required to be filed with or
submitted to, any Governmental Body in connection with the determination,
assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of or compliance with any Legal
Requirement relating to any Tax.

       

      “The SPEED of
Trust”—as defined in the Recitals to this Agreement.

       

      “Third
Party”—a Person that is not a party to this Agreement.

       

      “Third-Party
Claim”—any claim against any Indemnified Person by a Third Party, whether
or not involving a Proceeding.

       

      “Threat of
Release”—a reasonable likelihood of a Release that may require action in
order to prevent or mitigate damage to the Environment that may result from such
Release.

       

      “WARN
Act”—as defined
in Section 6.1(c)(i).

       

      “Working Capital
Adjustment Amount”—as defined in Section 2.3(c).

       

      1.2 Usage.

       

      (a) Interpretation.  In
this Agreement, unless a clear contrary intention appears:

       

      (i) the
singular number includes the plural number and vice versa;

       

      (ii) reference
to any Person includes such Person’s successors and assigns but, if applicable,
only if such successors and assigns are not prohibited by this Agreement, and
reference to a Person in a particular capacity excludes such Person in any other
capacity or individually;

       

      (iii) reference
to any gender includes each other gender;

       

      (iv) reference
to any agreement, document or instrument means such agreement, document or
instrument as amended or modified and in effect from time to time in accordance
with the terms thereof;

       

      (v) reference
to any Legal Requirement means such Legal Requirement as amended, modified,
codified, replaced or reenacted, in whole or in part, and in effect from time to
time, including rules and regulations promulgated thereunder, and reference to
any section or other provision of any Legal Requirement means that provision of
such Legal Requirement from time to time in effect and constituting the
substantive amendment, modification, codification, replacement or reenactment of
such section or other provision;

       

      
        
          
          

        

        
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      (vi) “hereunder,”
“hereof,” “hereto,” and words of similar import shall be deemed references to
this Agreement as a whole and not to any particular Article, Section or other
provision hereof;

       

      (vii) “including”
(and with correlative meaning “include”) means including without limiting the
generality of any description preceding such term;

       

      (viii) “or” is
used in the inclusive sense of “and/or”;

       

      (ix) with
respect to the determination of any period of time, “from” means “from and
including” and “to” means “to but excluding”; and

       

      (x) references
to documents, instruments or agreements shall be deemed to refer as well to all
addenda, exhibits, schedules or amendments thereto.

       

      (b) Accounting Terms and
Determinations.  Unless otherwise specified herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with GAAP.

       

      (c) Legal Representation of the
Parties.  This Agreement was negotiated by the parties with the
benefit of legal representation, and any rule of construction or interpretation
otherwise requiring this Agreement to be construed or interpreted against any
party shall not apply to any construction or interpretation hereof.

       

      II. Sale and Transfer of Assets; Closing

       

      2.1 Assets to be
Sold.

       

      Upon the
terms and subject to the conditions set forth in this Agreement, at the Closing,
Seller shall sell, convey, assign, transfer and deliver to Buyer, and Buyer
shall purchase and acquire from Seller, free and clear of any Encumbrances other
than Permitted Encumbrances, all of the right, title and interest in and to all
of the property and assets, real, personal or mixed, tangible and intangible, of
Seller relating to the Business of every kind and description, wherever located,
including the following (but excluding the Excluded Assets):

       

      (a) all Real
Property Leases described on Schedule 2.1(a);

       

      (b) all
Tangible Personal Property, including those items described on Schedule
2.1(b);

       

      (c) all
Inventories of Seller;

       

      (d) all
Accounts Receivable of Seller;

       

      (e) all
Seller Contracts listed on Schedule 2.1(e), and all outstanding offers or
solicitations made by or to Seller to enter into any Contract;

       

      (f) all
Governmental Authorizations of Seller and all pending applications therefor or
renewals thereof, in each case to the extent transferable to Buyer, listed on
Schedule 2.1(f);

       

      
        
          
          

        

        
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      (g) all data
and Records related to the operations of Seller, including client and customer
lists and Records, referral sources, research and development reports and
Records, production reports and Records, service and warranty Records, equipment
logs, operating guides and manuals, financial and accounting Records, creative
materials, advertising materials, promotional materials, studies, reports,
correspondence and other similar documents and Records and, subject to Legal
Requirements, copies of all personnel Records and other Records described in
Section 2.2(c);

       

      (h) all of
the intangible rights and property of Seller, (excluding all intellectual
property, goodwill associated with trademarks, and the Licensed Intellectual
Property), including the going concern value, goodwill not associated with
trademarks, telephone, facsimile and e-mail addresses and listings and those
items listed on Schedule 2.1(h);

       

      (i) all
insurance benefits of Seller, including rights and proceeds, arising from or
relating to the Assets or the Assumed Liabilities prior to the Closing Date,
unless expended in accordance with this Agreement;

       

      (j) all
claims of Seller against third parties relating to the Assets, whether choate or
inchoate, known or unknown, contingent or noncontingent, including all such
claims listed on Schedule 2.1(j);

       

      (k) all
rights of Seller relating to deposits and prepaid expenses, claims for refunds
and rights to offset in respect thereof that are not excluded under Section
2.2(d); and

       

      (l) the
property and assets expressly designated on Schedule 2.1(l).

       

      All of
the property and assets to be transferred to Buyer hereunder are herein referred
to collectively as the “Assets.”

       

      Notwithstanding
the foregoing, the transfer of the Assets pursuant to this Agreement shall not
include the assumption of any Liability related to the Assets unless Buyer
expressly assumes that Liability pursuant to Section 2.4.

       

      2.2 Excluded
Assets

       

      All
assets of Seller and CoveyLink, other than the Assets, are not part of the sale
and purchase contemplated hereunder (collectively, the “Excluded
Assets”).  For avoidance of doubt, the following Excluded
Assets shall remain the property of Seller or CoveyLink, as applicable, after
the Closing:

       

      (a) all
minute books;

       

      (b) all
insurance policies and rights thereunder (except to the extent specified in
Section 2.1(i) and (j));

       

      (c) all
personnel Records and other Records that Seller is required by law to retain in
its possession;

       

      (d) all
claims for refund of Taxes and other governmental charges of whatever
nature;

       

      
        
          
          

        

        
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      (e) all
rights in connection with and assets of the Employee Plans;

       

      (f) all
rights of Seller under this Agreement and the Assignment and Assumption
Agreement;

       

      (g) the
domain names SpeedofTrust.com and
CoveyLink.com;

       

      (h) all
intellectual property, including the goodwill associated with trademarks, and
the Licensed Intellectual Property; and

       

      (i) the
property and assets expressly designated on Schedule 2.2(i).

       

      2.3 Consideration.

       

      (a) Purchase
Price.  The consideration for the Assets (the “Purchase Price”) will be (i)
$1,000,000 (the “Down
Payment”), (ii) plus or
minus any Working Capital Adjustment Amount pursuant to Section 2.3(c) below,
(iii) plus any Earnout Amount, and (iv) the assumption of the Assumed
Liabilities.

       

      (b) Closing
Payment.  In accordance with Section 2.7(b), at the Closing,
Buyer shall deliver to Seller the Closing Payment.  The “Closing Payment” shall be
equal to the Down Payment plus or minus the Estimated Working Capital Adjustment
Amount.  The “Estimated Working Capital Adjustment
Amount” shall be equal to the difference between the Estimated Working
Capital and the Target Working Capital.  On the Closing Date, Seller
shall provide to Buyer an estimate of Seller’s net working capital as of the
Closing Date (the “Estimated
Working Capital”).  The “Target Working Capital” shall
be equal to $300,000.  The Closing Payment shall be delivered by Buyer
to Seller by wire transfer.

       

      (c) Working Capital
Adjustment.  The Purchase Price shall be adjusted by the amount
(the “Working Capital
Adjustment Amount”) that when added to or subtracted from Seller’s net
working capital as of the Closing Date will produce the Target Working
Capital.  As soon as reasonably practicable (and in any event within
60 days after the Closing Date (the “Determination Period”),
Seller and Buyer shall use their Best Efforts and shall work together in good
faith to finalize the determination of Seller’s net working capital as of the
Closing Date.  Promptly following the determination of the Working
Capital Adjustment Amount, Seller shall refund to Buyer (in the case of a
shortfall) or Buyer shall pay to Seller (in the case of an excess) the
difference between the Working Capital Adjustment Amount and the Estimated
Working Capital Adjustment Amount.  If Seller and Buyer are unable to
finalize the Working Capital Adjustment Amount during such 60 day period, then
Seller and Buyer shall submit the matter to Tanner LC (the “Special Accountants”) for
resolution.  The determination of the Special Accountants shall be
binding and conclusive upon the parties.  Seller and Buyer shall each
bear 50% of the fees and costs of the Special Accountants.

       

      2.4 Liabilities.

       

      (a) Assumed
Liabilities.  As of the Closing Date, Buyer shall assume and
agree to discharge only the following Liabilities of Seller (the “Assumed
Liabilities”):

       

      
        
          
          

        

        
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      (i) any trade
account payable reflected on the Interim Balance Sheet (other than a trade
account payable to any Related Person of Seller) that remains unpaid at and is
not delinquent as of the Closing Date;

       

      (ii) any trade
account payable (other than a trade account payable to any Related Person of
Seller) incurred by Seller in the Ordinary Course of Business between the date
of the Interim Balance Sheet and the Closing Date that remains unpaid at and is
not delinquent as of the Closing Date;

       

      (iii) any
Liability arising after the Closing Date under the Seller Contracts described on
Schedule 2.1(e) (other than any Liability arising under the Seller Contracts
described on Schedule 2.4(a)(iii) or arising out of or relating to a Breach that
occurred prior to the Closing Date); and

       

      (iv) any
Liability of Seller described on Schedule 2.4(a)(iv).

       

      (b) Retained
Liabilities.  The Retained Liabilities shall remain the sole
responsibility of and shall be retained, paid, performed and discharged solely
by Seller.  “Retained Liabilities” shall
mean every Liability of Seller other than the Assumed Liabilities,
including:

       

      (i) any
Liability arising out of or relating to products of Seller to the extent
manufactured or sold prior to the Closing Date other than to the extent assumed
under Section 2.4(a)(iii);

       

      (ii) any
Liability under any Contract assumed by Buyer pursuant to Section 2.4(a)(iii)
that arises after the Closing Date but that arises out of or relates to any
Breach that occurred prior to the Closing Date;

       

      (iii) any
Liability for Taxes, including (A) any Taxes arising as a result of Seller’s
operation of its business or ownership of the Assets prior to the Closing Date,
(B) any Taxes that will arise as a result of the sale of the Assets pursuant to
this Agreement and (C) any deferred Taxes of any nature;

       

      (iv) any
Liability under any Contract not assumed by Buyer under Section 2.4, including
any Liability arising out of or relating to Seller’s credit facilities or any
security interest related thereto;

       

      (v) any
Environmental, Health and Safety Liabilities arising out of or relating to the
operation of Seller’s business or Seller’s leasing or operation of real
property;

       

      (vi) any
Liability under the Employee Plans or relating to payroll, vacation, sick leave,
workers’ compensation, unemployment benefits, pension benefits, employee stock
option or profit-sharing plans, health care plans or benefits or any other
employee plans or benefits of any kind for Seller’s employees or former
employees or both;

       

      (vii) any
Liability under any employment, severance, retention or termination agreement
with any employee of Seller or any of its Related Persons;

       

      
        
          
          

        

        
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      (viii) any
Liability arising out of or relating to any employee grievance whether or not
the affected employees are hired by Buyer;

       

      (ix) any
Liability of Seller to CoveyLink or to any Related Person of Seller or of
CoveyLink, except for Liabilities owed to CoveyLink for speaking engagements
that have been performed but for which payment has not yet been
received;

       

      (x) any
Liability to indemnify, reimburse or advance amounts to any officer, director,
employee or agent of Seller;

       

      (xi) any
Liability to distribute to any of Seller’s equityholders or otherwise apply all
or any part of the consideration received hereunder;

       

      (xii) any
Liability arising out of any Proceeding pending as of the Closing
Date;

       

      (xiii) any
Liability arising out of any Proceeding commenced after the Closing Date and
arising out of or relating to any occurrence or event happening prior to the
Closing Date;

       

      (xiv) any
Liability arising out of or resulting from Seller’s compliance or noncompliance
with any Legal Requirement or Order of any Governmental Body;

       

      (xv) any
Liability of Seller under this Agreement or any other document executed in
connection with the Contemplated Transactions; and

       

      (xvi) any
Liability of Seller based upon Seller’s acts or omissions occurring after the
Closing Date.

       

      2.5 Allocation.

       

      The
Purchase Price and those Assumed Liabilities, costs and other items included in
“consideration” for purposes of Code Section 1060 (the “Section 1060 Consideration”)
shall be allocated among the Assets in accordance with this Section 2.5
(the “Allocation”).  The
Allocation shall be based on the fair market values of the Assets as of the
Closing Date as determined and allocated in accordance with Code Section 1060
and the United States Treasury Regulations thereunder, with the fair market
values of the Accounts Receivable and Inventory included in the Assets
determined in accordance with GAAP such that tangible assets in these categories
are valued at book value as of the Closing Date.  As soon as
reasonably practicable (and in any event within one hundred twenty (120) days)
after the Closing Date, Seller and Buyer shall work together in good faith to
finalize the Allocation to reflect the final determinations of the fair market
values of assets as of the Closing Date and any changes to the Section 1060
Consideration, and the Allocation as so finalized shall become the “Final Allocation”, which
shall be final and binding upon all the parties.  If Seller and Buyer
are unable to finalize the Allocation during such one hundred twenty (120) day
period, then Seller and Buyer shall submit only those disputed items that have
not been resolved to an independent accountant mutually chosen by Seller and
Buyer for determination, provided, however, that the
basis for dispute shall not include any objection to the methodology used to
determine the fair market value of the Accounts Receivable and
Inventory.  The independent accountant’s determination as to each item
of dispute shall be binding on the parties, and the Allocation
shall

       

      
        
          
          

        

        
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      be
amended in accordance with the independent accountants’ determination (as to the
disputed items) and the agreement of Seller and Buyer (as to the items that are
not disputed) and shall become the Final Allocation.  If any adjustment is
subsequently made to the Section 1060 Consideration pursuant to the terms of
this Agreement, Buyer and Seller shall agree to an amended Allocation in
accordance with the above procedures, and such amended allocation (the “Amended Allocation”) shall
replace the Final Allocation.  Within fifteen (15) days after the
Allocation has been determined in accordance with this Section 2.5, Buyer
shall cause to be prepared and delivered to Seller IRS Forms 8594 and any
required exhibits thereto, and any similar forms required under applicable
state, local or foreign Legal Requirement governing Taxes, which shall conform
to the Final Allocation, and Seller and Buyer shall each timely file: (a) the
applicable Form(s) 8594 with the IRS in accordance with the requirements of Code
Section 1060; and (b) such other forms with the applicable Governmental Body in
accordance with the requirements of the applicable Legal
Requirement.  Any subsequent adjustment to the Section 1060
Consideration reflected in an Amended Allocation shall be reflected in one or
more amended Forms 8594 and applicable state, local or foreign Tax forms that
Buyer shall cause to be prepared and delivered to Seller within fifteen (15)
days after determination of an Amended Allocation. Seller and Buyer shall,
and shall cause their respective Affiliates to, each report, act, and file Tax
Returns in all respects and for all purposes (including for purposes of Code
Section 704(c)) consistent with the Final Allocation (or Amended Allocation, as
applicable).  The parties agree that they will not take, nor will they
permit any of their respective Affiliates to take, for Tax purposes, any
position (whether in audits, Tax Returns or otherwise) that is inconsistent with
such allocations unless required to do so by applicable Legal
Requirement.

       

      2.6 Closing.

       

      The
purchase and sale provided for in this Agreement (the “Closing”) will take place at
the Salt Lake City offices of Dorsey & Whitney, at 10:00 a.m. Mountain
Daylight Time on December 31, 2008, unless Buyer and Seller otherwise
agree.

       

      2.7 Closing
Obligations.

       

      In
addition to any other documents to be delivered under other provisions of this
Agreement, at the Closing:

       

      (a) Seller
shall deliver to Buyer:

       

      (i) a bill of
sale for all of the Assets that are Tangible Personal Property in the form of
Exhibit 2.7(a)(i) (the “Bill
of Sale”) executed by Seller;

       

      (ii) an
assignment of all of the Assets that are intangible personal property (but
excluding all intellectual property) in the form of Exhibit 2.7(a)(ii),
including Contracts and Real Property Leases, which assignment shall also
contain Buyer’s undertaking and assumption of the Assumed Liabilities (the
“Assignment and Assumption
Agreement”) executed by Seller;

       

      (iii) such
other deeds, bills of sale, assignments, certificates of title, documents and
other instruments of transfer and conveyance as may reasonably be requested by
Buyer, each in form and substance satisfactory to Buyer and its legal counsel
and executed by Seller;

       

      
        
          
          

        

        
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      (iv) a
certificate of a Manager of Seller certifying, as complete and accurate as of
the Closing, attached copies of the Governing Documents of Seller, certifying
and attaching all requisite resolutions or actions of Seller’s board of managers
approving the execution and delivery of this Agreement and the consummation of
the Contemplated Transactions and certifying to the incumbency and signatures of
the Managers of Seller executing this Agreement and any other document relating
to the Contemplated Transactions.

       

      (b) Buyer
shall execute and deliver to CoveyLink and CoveyLink shall execute and deliver
to Buyer (or cause to be executed and delivered to Buyer):

       

      (i) the
License Agreement in the form of Exhibit 2.7(b)(i);

       

      (ii) Practice
Leader Consulting Agreements in the form of Exhibit 2.7(b)(ii), executed by
Stephen M.R. Covey and Greg Link; and

       

      (iii) Speaking
Agreements in the form of Exhibit 2.7(b)(iii), executed by Stephen M.R. Covey
and Greg Link.

       

      (c) Buyer
shall deliver to Seller:

       

      (i) The
Closing Payment by wire transfer to an account specified by Seller in a writing
delivered to Buyer at least three Business Days prior to the Closing
Date;

       

      (ii) the
Assignment and Assumption Agreement executed by Buyer;

       

      (iii) a
certificate of the Secretary of Buyer certifying, as complete and accurate as of
the Closing, attached copies of the Governing Documents of Buyer and certifying
and attaching all requisite resolutions or actions of Buyer’s board of directors
approving the execution and delivery of this Agreement and the consummation of
the Contemplated Transactions and certifying to the incumbency and signatures of
the officers of Buyer executing this Agreement and any other document relating
to the Contemplated Transactions.

       

      2.8 Earnout.

       

      (a) Earnout
Payment.

       

      (i) Buyer
shall make a payment to Seller (an “Annual Earnout Payment”) for five
successive periods commencing on the first day of Parent’s second quarter of a
given fiscal year and ending on the last day of Parent’s first quarter of the
subsequent fiscal year (each an “Earnout
Period”).  The first Earnout Period shall commence on
November 30, 2008, the first day of the second quarter for Parent’s 2009
fiscal year.  The Annual Earnout Payment shall be for an amount equal
to (A) three times the Incremental EBITDA (as defined below) of the Practice for
such Earnout Period, minus (B) the aggregate amount of any Annual Earnout
Payments paid to Seller in all previous Earnout Periods.  The Annual
Earnout Payment, together with interest thereon at a rate of one and one half
percent (1.5%) per month from the end of the third month following the close
of

       

      
        
          
          

        

        
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      the
Earnout Period, will be paid promptly, but in no case more than two weeks,
following the issuance of a review by the Company’s independent registered
public accounts for the quarter ended on November 30 of each year.

       

      (ii) Incremental
EBITDA.    For
purposes of this Agreement, “Incremental EBITDA” shall
mean the amount by which the EBITDA of the Practice for any Earnout Period
exceeds the Baseline EBITDA (as defined below).

       

      (iii) Baseline
EBITDA.

       

      (A) Within 60
days following the Closing Date, the parties, acting together in good faith,
shall establish the “Baseline
EBITDA” for the Practice for the 12 months ended on November 29,
2008.  The Baseline EBITDA shall be consistent with the sample EBITDA
calculation set forth on Exhibit 2.8(a)(ii), and shall include (I) a gross margin equal to
62% of gross revenues, (II) total sales field costs
equal to 33% of gross revenues (which sales field costs shall include variable
costs equal to 25% of gross revenues and fixed costs equal to 8% of gross
revenues (such amount, the “Fixed Sales Costs”)), and (III) actual selling, general,
and administrative expenses of Seller for the 12 months ended on
November 30, 2008; provided, however, that in no
case shall the EBITDA of the Seller for the 12 months ended on November 30,
2008, which is used as a component of the Baseline EBITDA and is calculated in a
manner consistent with the sample EBITDA calculation set forth on Exhibit
2.8(a)(ii), be less than $206,000.

       

      (B) If the
parties cannot agree to a Baseline EBITDA within the 60 day period, the
determination of the Baseline EBITDA shall be submitted to the Special
Accountants for determination, whose determination shall be binding and
conclusive on the parties.  The parties shall equally divide and pay
the Special Accountants’ fees, costs and expenses.

       

      (b) Computation of
EBITDA.

       

      (i) Manner of
Computation.  In general, for purposes of this Agreement, the
“EBITDA” of the
Practice for any Earnout Period shall mean the earnings of the Practice from
operations before interest, taxes, depreciation and amortization, including any
revenues from FC Derivative Works (as defined in the License Agreement) that the
parties agree, after negotiating in good faith on a case-by-case basis for each
such FC Derivative Work, to allocate to the EBITDA of the Practice (for the
avoidance of doubt, revenues from the programs entitled “Leadership: Great
Leaders, Great Teams, Great Results,” “Leadership: Great Leaders, Great Teams,
Great Results for the Public Sector,” “Leadership Foundations,” and “Executive
Leadership Summit” are not included in the EBITDA of
the Practice), calculated as if the Practice were being operated as a separate
and independent division of the Company.  Except as provided in this
Section 2.8(b), the EBITDA of the Practice shall be determined in accordance
with GAAP and using assumptions consistent with the sample EBITDA calculation as
set forth on Exhibit 2.8(a)(ii).  For the purposes of determining the
EBITDA of the Practice and the Annual Earnout Payment:

       

      
        
          
          

        

        
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      (A)           EBITDA
shall be computed without regard to “extraordinary items” of gain or loss as
that term shall be defined in GAAP;

       

      (B)           EBITDA
shall not include any gains, losses or profits realized from the sale of any
assets other than in the Ordinary Course of Business;

       

      (C)           EBITDA
shall include any revenues, reimbursements and expenses, of whatever kind or
nature, related to speaking engagements of the Practice Leaders as provided for
in the Speaking Agreements;

       

      (D)           No
deduction shall be made for any sales field costs, management fees, accounting
costs, general overhead expenses, commission costs payable to Buyer’s
consultants, employees and independent contractors, or other intercompany
charges otherwise charged by Parent to the Practice; but, in lieu thereof,
EBITDA shall include the following for each Earnout Period:  (I) variable sales field costs
equal to 25% of the gross revenues for such Earnout Period, (II) fixed sales field costs
equal to the Fixed Sales Costs incorporated into the Baseline EBITDA pursuant to
Section 2.8(a)(ii), increased and compounded at the rate of 3% for each
subsequent Earnout Period, and (III) the direct selling,
general, and administrative expenses of the Practice, consistent with the sample
EBITDA calculation set forth on Exhibit 2.8(a)(ii), for such Earnout Period,
including, upon mutual agreement between Parent and the Practice Leaders, the
Practice’s share of any such expenses that Parent, or any of its Affiliates,
have agreed to bear that would otherwise have been borne directly by the
Practice; and

       

      (E)           No
deduction shall be made with respect to any portion of the Purchase Price for
legal or accounting fees and expenses incurred in connection with the
calculation of the Annual Earnout Payment, or for the preparation of this
Agreement, or for any matter arising out of this Agreement.

       

      (ii) Time of Determinati
(A) The
EBITDA of the Practice and the Annual Earnout Payment shall be determined
promptly after the close of each Earnout Period by Buyer.  Copies of
its report setting forth its computation of the EBITDA of the Practice and the
Annual Earnout Payment shall be submitted in writing to Seller and, unless
Seller notifies Buyer within forty-five (45) days after receipt of the report
that it objects to the computation of the EBITDA of the Practice and the Annual
Earnout Payment set forth therein, the report and the Annual Earnout Payment
shall be binding and conclusive for the purposes of this
Agreement.  Seller shall have access to the books and records of the
Practice and to Buyer’s Accountants’ workpapers during regular business hours to
audit and to verify the computation of EBITDA of the Practice and the Annual
Earnout Payment made by Buyer.

       

      (B) If Seller
notifies Buyer in writing within forty-five (45) days after receipt of Buyer’s
report that it objects to Buyer’s computation of EBITDA of the Practice and the
Annual Earnout Payment, the Annual Earnout Payment shall be

       

      
        
          
          

        

        
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      determined
by negotiation between Seller and Buyer.  If Seller and Buyer are
unable to reach agreement within thirty (30) Business Days after such
notification, the determination of the Annual Earnout Payment for the Earnout
Period in question shall be submitted to the Special Accountants for
determination, whose determination shall be binding and conclusive on the
parties. If the Special Accountants determine that the Annual Earnout Payment
has been understated by five percent or more, then Buyer shall pay the Special
Accountants’ fees, costs and expenses.  If the Annual Earnout Payment
has not been understated or has been understated by less than five percent, then
Seller shall pay the Special Accountants’ fees, costs and expenses.

       

      2.9 Tax
Withholding.

       

      Upon
prior written notice to Seller, Buyer shall be entitled to deduct, withhold and
payover from any amounts otherwise payable pursuant to this Agreement to Seller
such amounts, if any, as it is required to deduct, withhold and payover to any
Governmental Body pursuant to the Code or any other Legal
Requirement.  To the extent that amounts are thus withheld and paid
over by Buyer, such amounts shall be treated for all purposes of this Agreement
as having been paid to Seller.

       

      III. Representations and Warranties of Seller

       

      Seller
represents and warrants to Buyer as of the Closing Date as follows:

       

      3.1 Organization and Good
Standing.

       

      (a) Seller is
a limited liability company duly organized, validly existing and in good
standing under the laws of Utah, with full power and authority to conduct its
business as it is now being conducted, to own or use the properties and assets
that it purports to own or use, and to perform all its obligations under the
Seller Contracts.  Seller is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each state or
other jurisdiction in which either the ownership or use of the properties owned
or used by it, or the nature of the activities conducted by it, requires such
qualification.

       

      (b) Complete
and accurate copies of the Governing Documents of Seller, as currently in
effect, are attached to Schedule 3.1(b).

       

      (c) Seller
has no Subsidiary and, except as disclosed on Schedule 3.1(c), does not own any
shares of capital stock or other securities of any other Person.

       

      3.2 Enforceability; Authority;
No Conflict.

       

      (a) This
Agreement constitutes the legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms.  Upon the
execution and delivery by Seller of each agreement to be executed or delivered
by Seller at the Closing (collectively, the “Seller’s Closing Documents”), each
of Seller’s Closing Documents will constitute the legal, valid and binding
obligation of Seller, enforceable against Seller.  Seller has the
absolute and unrestricted right, power and authority to execute and deliver this
Agreement and Seller’s Closing Documents to which it is a party and to perform
its obligations under this Agreement

       

      
        
          
          

        

        
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      and the
Seller’s Closing Documents, and such action has been duly authorized by all
necessary action by Seller’s members and board of managers.

       

      (b) Except as
set forth on Schedule 3.2(b), neither the execution and delivery of this
Agreement nor the consummation or performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time):

       

      (i) Breach
(A) any provision of any of the Governing Documents of Seller or (B) any
resolution adopted by the board of managers or the members of
Seller;

       

      (ii) Breach or
give any Governmental Body or other Person the right to challenge any of the
Contemplated Transactions or to exercise any remedy or obtain any relief under
any Legal Requirement or any Order to which Seller or CoveyLink, or any of the
Assets, may be subject;

       

      (iii) contravene,
conflict with or result in a violation or breach of any of the terms or
requirements of, or give any Governmental Body the right to revoke, withdraw,
suspend, cancel, terminate or modify, any Governmental Authorization that is
held by Seller or that otherwise relates to the Assets or to the business of
Seller;

       

      (iv) cause
Buyer to become subject to, or to become liable for the payment of, any
Tax;

       

      (v) Breach
any provision of, or give any Person the right to declare a default or exercise
any remedy under, or to accelerate the maturity or performance of, or payment
under, or to cancel, terminate or modify, any Seller Contract;

       

      (vi) result in
the imposition or creation of any Encumbrance upon or with respect to any of the
Assets; or

       

      (vii) result in
any member of the Seller having the right to exercise dissenters’ appraisal
rights.

       

      (c) Except as
set forth on Schedule 3.2(c), neither Seller nor CoveyLink is required to give
any notice to or obtain any Consent from any Person in connection with the
execution and delivery of this Agreement or the consummation or performance of
any of the Contemplated Transactions.

       

      3.3 Financial
Statements.

       Seller
has delivered to Buyer: (a) an unaudited compiled balance sheet of Seller as at
December 31st in each
of the fiscal years 2006 and 2007, and the related unaudited compiled statements
of income, changes in equityholders’ equity and cash flows for each of the
fiscal years then ended; and (b) an unaudited compiled balance sheet of Seller
as at November 30, 2008 (the “Interim Balance Sheet”), and
the related unaudited compiled statements of income for the eleven months then
ended certified by Seller’s Manager.  Such financial statements fairly
present the financial condition and the results of operations, changes in
equityholders’ equity and cash flows of Seller as at the respective dates of and
for the periods referred to in such financial statements, all in accordance with
GAAP.  The financial statements referred to in this Section 3.3
reflect the consistent application of such accounting

       

      
        
          
          

        

        
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      principles
throughout the periods involved, except as disclosed in the notes to such
financial statements.  The financial statements have been and will be
prepared from and are in accordance with the accounting Records of
Seller.

       

      3.4 Sufficiency of
Assets.

       

      Except as
set forth on Schedule 3.4, the Assets, together with the Licensed Intellectual
Property, (a) constitute all of the assets, tangible and intangible, of any
nature whatsoever, necessary to operate Seller’s business in the manner operated
by Seller immediately prior to the Closing and (b) include all of the operating
assets of Seller.

       

      3.5 Title to Assets;
Encumbrances.

       

      (a) As of the
Closing, the real property demised by the Leases listed on Schedule 2.1(a) (each
a “Real Property
Lease”) constitute all of the real property leased (whether or not
occupied and including any Leases assigned or leased premises sublet for which
the Company remains liable), used or occupied by the Seller relating exclusively
to the Business.

       

      (b) Seller
has a valid and existing leasehold interest in the real property listed on
Schedule 2.1(a), free and clear of any Encumbrances, other than those
Encumbrances described on Schedule 3.5(b) (“Real Estate
Encumbrances”).

       

      (c) Seller
owns good and transferable title to all of the other Assets free and clear of
any Encumbrances other than those Encumbrances described on Schedule 3.5(c) (the
“Non-Real Estate
Encumbrances” and, together with the Real Estate Encumbrances, “Permitted
Encumbrances”).  Seller warrants to Buyer that, at the time of
Closing, all other Assets shall be free and clear of all Non-Real Estate
Encumbrances other than those identified on Schedule 3.5(c) as acceptable to
Buyer.

       

      (d) Each of
Seller’s Representatives, members, subsidiaries and Related Persons have
transferred or assigned all of their right, title and interest in and to the
Assets.

       

      3.6 Condition of Tangible
Personal Property.

       

      Each item
of Tangible Personal Property is in good repair and good operating condition,
ordinary wear and tear excepted, is suitable for immediate use in the Ordinary
Course of Business and is free from latent and patent defects.  No
item of Tangible Personal Property is in need of repair or replacement other
than as part of routine maintenance in the Ordinary Course of
Business.  Except as disclosed on Schedule 3.6, all Tangible Personal
Property used in the Business is in the possession of Seller.

       

      3.7 Accounts
Receivable.

       

      All
Accounts Receivable that are reflected on the Interim Balance Sheet or on the
accounting Records of Seller as of the Closing represent or will represent valid
obligations arising from sales actually made or services actually performed by
Seller in the Ordinary Course of Business.  Such Accounts Receivable
are or will be as of the Closing current and collectible net of the respective
reserves shown on the Interim Balance Sheet or on the accounting Records of
Seller as of the Closing (which reserves are adequate and calculated consistent
with past practice and, in the case of the reserve on the accounting Records of
Seller as of the Closing, will not represent a greater percentage of the
Accounts Receivable reflected on the accounting Records of Seller as of the
Closing than the reserve reflected on the Interim Balance Sheet represented of
the Accounts Receivable reflected thereon and will not represent a material
adverse change in the composition of such Accounts Receivable in terms of
aging).  To

       

      
        
          
          

        

        
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      Seller’s
Knowledge, subject to such reserves, each of such Accounts Receivable either has
been or will be collected in full, without any setoff, within 90 days after the
day on which it first becomes due and payable.  There is no contest,
claim, defense or right of setoff, other than returns in the Ordinary Course of
Business of Seller, under any Contract with any account debtor of an Account
Receivable relating to the amount or validity of such Account
Receivable.  Schedule 3.7 contains a complete and accurate list of all
Accounts Receivable as of the date of the Interim Balance Sheet, which list sets
forth the aging of each such Account Receivable.

       

      3.8 Inventories.

       

      All items
included in the Inventories consist of a quality and quantity usable and, with
respect to finished goods, saleable, in the Ordinary Course of Business of
Seller except for obsolete items and items of below-standard quality, all of
which have been written off or written down to net realizable value in the
Interim Balance Sheet or on the accounting Records of Seller as of the Closing
Date, as the case may be.  Seller is not in possession of any
inventory not owned by Seller, including goods already
sold.  Inventories now on hand that were purchased after the date of
the Interim Balance Sheet were purchased in the Ordinary Course of Business of
Seller at a cost not exceeding market prices prevailing at the time of
purchase.  The quantities of each item of Inventories (whether raw
materials, work-in-process or finished goods) are not excessive but are
reasonable in the present circumstances of Seller.  Work-in-process
Inventories are now valued, and will be valued on the Closing Date, according to
GAAP.

       

      3.9 No Undisclosed
Liabilities.

       

      Except as
set forth on Schedule 3.9, Seller has no Liability except for Liabilities
reflected or reserved against in the Interim Balance Sheet and current
liabilities incurred in the Ordinary Course of Business of Seller since the date
of the Interim Balance Sheet.

       

      3.10 Taxes.

       

      (a) Tax Returns Filed and Taxes
Paid.  Seller has duly and timely filed or caused to be filed,
or will have duly and timely filed prior to the Closing Date, all Tax Returns
with respect to Taxes that are or were required to be filed by it pursuant to
applicable Legal Requirements.  All Tax Returns and reports filed by
Seller are true, correct and complete.  Seller has paid, or made
provision for the payment of, all Taxes that have or may have become due for all
periods covered by the Tax Returns or otherwise, or pursuant to any assessment
received by Seller, except such Taxes, if any, as are listed on Schedule 3.10(a)
and are being contested in good faith and as to which adequate reserves
(determined in accordance with GAAP) have been provided in the Interim Balance
Sheet.  Except as provided on Schedule 3.10(a), Seller currently is
not the beneficiary of any extension of time within which to file any Tax
Return.  No claim has ever been made or is expected to be made by any
Governmental Body in a jurisdiction where Seller does not file Tax Returns that
it is or may be subject to taxation by that jurisdiction.  There are
no Encumbrances on any of the Assets or the Business that arose in connection
with any failure (or alleged failure) to pay any Tax, and Seller has no
Knowledge of any basis for assertion of any claims attributable to Taxes which,
if adversely determined, would result in any such Encumbrance.

       

      
        
          
          

        

        
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      (b) Delivery of Tax Returns and
Information Regarding Audits and Potential Audits.  Seller has
delivered or made available to Buyer copies of, and Schedule 3.10(b) contains a
complete and accurate list of, all Tax Returns filed since December 31,
2006.  As of the date of this Agreement, no deficiency for any Taxes
has been proposed, asserted or assessed against Seller that has not been
resolved and paid in full, and there is no Tax Proceeding currently pending or
threatened against Seller.  To the extent that Seller has been or is
subject to any such Tax Proceeding, Schedule 3.10(b) contains a complete and
accurate list of all Tax Returns of Seller that have been or are the subject of
any such Tax Proceeding and accurately describes any deficiencies or other
amounts that were paid or are currently being contested.  Seller has
delivered, or made available to Buyer, copies of any examination, reports,
statements or deficiencies or similar items with respect to any such Tax
Proceedings.  Schedule 3.10(b) contains a list of all Tax Returns for
which the applicable statute of limitations has not run.  Except as
described on Schedule 3.10(b), Seller has not given or been requested to give
waivers or extensions (or is or would be subject to a waiver or extension given
by any other Person) of any statute of limitations relating to the payment of
Taxes of Seller or for which Seller may be liable.

       

      (c) Proper
Accrual.  The charges, accruals and reserves with respect to
Taxes on the Interim Balance Sheet or other Records of Seller are adequate
(determined in accordance with GAAP) and are at least equal to Seller’s
liability for Taxes.

       

      (d) Specific Potential Tax
Liabilities and Tax Situations.

       

      (i) Withholding.  All
Taxes that Seller is or was required by Legal Requirements to withhold, deduct
or collect have been duly withheld, deducted and collected and, to the extent
required, have been paid to the proper Governmental Body or other
Person.

       

      (ii) Tax Sharing or Similar
Agreements.  There is no tax sharing agreement, tax allocation
agreement, tax indemnity obligation or similar written or unwritten agreement,
arrangement, understanding or practice with respect to Taxes (including any
advance pricing agreement, closing agreement or other arrangement relating to
Taxes) that will require any payment by Seller.

       

      (iii) Entity
Status.  At all times since its formation, Seller has been and
until immediately prior to the Closing Date will continue to be properly treated
as a partnership for United States federal income Tax purposes, and for the
income Tax purposes of any state where Seller conducts any amount of
business.

       

      (iv) Successor
Liability.  Seller has no liability for Taxes of any person
(other than Seller) under any federal, state, local or foreign law, as a
transferee or successor by contract or otherwise.

       

      (v) Substantial Understatement
Penalty.  Seller has disclosed on its federal income Tax
Returns all positions taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of Code Section
6662.

       

      
        
          
          

        

        
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      (e) Certain
Transactions.  Seller has not engaged in any “listed
transaction” or “reportable transaction” within the meaning of United States
Treasury Regulation Section 1.6011-4.

       

      3.11 No Material Adverse
Change.

       

      Since the
date of the Interim Balance Sheet, there has not been any material adverse
change in the business, operations, prospects, assets, results of operations or
condition (financial or other) of Seller, and no event has occurred or
circumstance exists that may result in such a material adverse
change.

       

      3.12 Employees.

       

      (a) Except as
disclosed on Schedule 3.12(a), Seller has not
experienced and, to the Knowledge of Seller, there has not been threatened, any
strike, work stoppage, slowdown, lockout, picketing, leafleting, boycott, other
labor dispute, union organization attempt, demand for recognition from a labor
organization or petition for representation under the National Labor Relations
Act or applicable state or other Legal Requirement related to employees of
Seller.  Except as disclosed in Schedule 3.12(a), no Proceeding
is pending or, to the Knowledge of Seller, threatened respecting or involving
any applicant for employment, any current employee or any former employee, or
any class of the foregoing of Seller.  There are no workers’
compensation claims pending against the Seller, nor is the Seller aware of any
facts, illnesses or injuries that will or reasonably could give rise to such
claims.  Except as disclosed on Schedule 3.12(a), none of Seller’s
employees are on leave of absence or are otherwise not actively at work for any
reason.

       

      (b) No
employee of Seller is covered by any collective bargaining agreement, and no
collective bargaining agreement is being negotiated.  The employment
relationship between the Seller and each of the individuals employed by the
Seller is “employment at will.”  The Seller has delivered to Buyer
true and correct copies of all existing employee handbooks, summary plan
descriptions, policy manuals and/or written policies applicable to Seller’s
employees.

       

      (c) Seller
has paid in full to all employees all wages, salaries, bonuses and commissions
due and payable to such employees and has fully reserved in its Records all
amounts for wages, salaries, bonuses and commissions due but not yet payable to
such employees.  No director, officer or individual employed by the
Seller is a party to any employment or other agreement that entitles him or her
to compensation or other consideration upon the acquisition.

       

      (d) Except
for layoffs in the Ordinary Course of Business, and other layoffs or reductions
noted in Schedule 3.12(d), there has been no lay-off of employees of Seller or
work reduction program undertaken by or on behalf of Seller in the past two
years, and no such program has been adopted by Seller or publicly
announced.  The Seller has not given notice of termination to or
received notice of resignation from any employee having total annual
compensation of more than $50,000.

       

      (e) Each
employee of the Seller, hired since its date of organization (February 26,
2006), and employed in the United States, has completed and the Seller has
retained an Immigration and Naturalization Service Form I-9 in accordance with
applicable rules and

       

      
        
          
          

        

        
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      regulation.  No
employee of Seller is (a) a non-immigrant employee whose status would terminate
or otherwise be affected by the business transaction consummated by this
Agreement, or (b) an alien who is authorized to work in the United States in
non-immigration  status.

       

      3.13 Employee
Benefits.

       

      (a)   Schedule 3.13(a)
lists all Employee Plans by name and provides a brief description
identifying (i) the type of Employee Plan, (ii) the funding
arrangements for the Employee Plan, (iii) the sponsorship of the Employee
Plan, (iv) the participating employers in the Employee Plan and (v)
any one or more of the following characteristics that may apply to such Employee
Plan: (A) defined contribution plan as defined in Section 3(34)
of ERISA or Section 414(i) of the Code, (B) defined benefit plan
as defined in Section 3(35) of ERISA or Section 414(j) of the
Code, (C) plan that is or is intended to be tax qualified under
Section 401(a) or 403(a) of the Code, (D) plan that is or is
intended to be an employee stock ownership plan as defined in
Section 4975(e)(7) of the Code (and whether or not such plan has entered
into an exempt loan), (E) nonqualified deferred compensation
arrangement, (F) employee welfare benefit plan as defined in
Section 3(1) of ERISA, (G) multiemployer plan as defined in
Section 3(37) of ERISA or Section 414(f) of the Code, (H)
multiple employer plan maintained by more than one employer as defined in
Section 413(c) of the Code, (I) plan providing benefits after
separation from service or termination of employment, (J) plan that owns
any Seller or other employer securities as an investment, (K) plan
that provides benefits (or provides increased benefits or vesting) as a result
of a change in control of Seller, (L) plan that is maintained pursuant to
collective bargaining and (M) plan that is funded, in whole or in
part, through a voluntary employees’ beneficiary association exempt from Tax
under Section 501(c)(9) of the Code.

       

      (b)           Except
as listed on Schedule 3.13(b), neither Seller nor any ERISA Affiliate has
ever maintained or contributed to any pension plan that is subject to
Title IV of ERISA or Section 412 of the Code.  Except as
listed on Schedule 3.13(b), neither Seller nor any ERISA Affiliate sponsors
an Employee Plan that promises or provides health, life or other welfare
benefits to retirees or former employees of Seller and/or its ERISA Affiliates,
or which provide severance benefits to Employees, except as otherwise required
by Section 4980B of the Code or comparable state statute which provides for
continuing health care coverage.  None of the Assets is subject to any
lien under Section 412(n) of the Code or Section 4068
of ERISA.  Seller has no unsatisfied liabilities, or is
reasonably expected to incur any liabilities, that could become a liability of
Buyer with respect to any Employee Plan, and, with respect to each such Employee
Plan, full payment has been made of all amounts that Seller is required, under
the terms of each such Employee Plan, to have paid as contributions to that
Employee Plan.  Each Employee Plan to which Seller contributes on
behalf of its employees that is intended to be a tax qualified Employee Plan
under Section 401(a) of the Code is in fact so qualified and the Employee
Plan provider has received a determination letter from the IRS as to the
tax qualified status of the prototype documents upon which the Employee Plan is
based.  Each Employee Plan is in material compliance with ERISA,
the Code and the terms of such Employee Plan as to both form and
operation.

       

      (c)           Schedule
3.13(c) lists each employee of Seller who is (i) absent from active
employment due to short or long term disability, (ii) absent from
active employment on a leave

       

      
        
          
          

        

        
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      pursuant
to the Family and Medical Leave Act or a comparable Legal
Requirement, (iii) absent from active employment or any other leave or
approved absence (together with the reason for each leave or absence)
or (iv) absent from active employment due to military service (under
conditions that give the employee rights to re-employment).

       

      (d)           Except
as disclosed in Schedule 3.13(d), full payment has been made of all amounts that
are required under the terms of each Employee Plan to be paid as contributions
with respect to all periods prior to and including the last day of the most
recent fiscal year of such Employee Plan ended on or before the date of this
Agreement and all periods thereafter prior to the Closing Date, and no
accumulated funding deficiency or liquidity shortfall (as those terms are
defined in Section 302 of ERISA and Section 412 of the Code) has been incurred
with respect to any such Employee Plan, whether or not waived.  The
value of the assets of each Employee Plan exceeds the amount of all benefit
liabilities (determined on a plan termination basis using the actuarial
assumptions established by the PBGC as of the Closing Date) of such Employee
Plan.  Seller is not required to provide security to an Employee Plan
under Section 401(a)(29) of the Code.  The funded status of each
Employee Plan that is a Defined Benefit Plan is disclosed on Schedule 3.13(d) in
a manner consistent with the Statement of Financial Accounting Standards No.
87.  Seller has paid in full all required insurance premiums, subject
only to normal retrospective adjustments in the ordinary course, with regard to
the Employee Plans for all policy years or other applicable policy periods
ending on or before the Closing Date.

       

      3.14 Compliance with Legal
Requirements; Governmental Authorizations.

       

      (a) Except as
set forth on Schedule 3.14(a):

       

      (i) Seller
is, and at all times since January 1, 2006, has been, in full compliance with
each Legal Requirement that is or was applicable to it or to the conduct or
operation of its business or the ownership or use of any of its
assets;

       

      (ii) no event
has occurred or circumstance exists that (with or without notice or lapse of
time) (A) may constitute or result in a violation by Seller of, or a failure on
the part of Seller to comply with, any Legal Requirement or (B) may give rise to
any obligation on the part of Seller to undertake, or to bear all or any portion
of the cost of, any remedial action of any nature; and

       

      (iii) Seller
has not received, at any time since January 1, 2006, any notice or other
communication (whether oral or written) from any Governmental Body or any other
Person regarding (A) any actual, alleged, possible or potential violation of, or
failure to comply with, any Legal Requirement or (B) any actual, alleged,
possible or potential obligation on the part of Seller to undertake, or to bear
all or any portion of the cost of, any remedial action of any
nature.

       

      (b) Schedule
2.1(f) contains a complete and accurate list of each Governmental Authorization
that is held by Seller or that otherwise relates to Seller’s business or the
Assets.  Each Governmental Authorization listed or required to be
listed on Schedule 2.1(f) is valid and in full force and
effect.  Except as set forth on Schedule 2.1(f):

       

      
        
          
          

        

        
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      (i) Seller
is, and at all times since January 1, 2006, has been, in full compliance with
all of the terms and requirements of each Governmental Authorization identified
or required to be identified on Schedule 2.1(f);

       

      (ii) no event
has occurred or circumstance exists that may (with or without notice or lapse of
time) (A) constitute or result directly or indirectly in a violation of or a
failure to comply with any term or requirement of any Governmental Authorization
listed or required to be listed on Schedule 2.1(f) or (B) result directly or
indirectly in the revocation, withdrawal, suspension, cancellation or
termination of, or any modification to, any Governmental Authorization listed or
required to be listed on Schedule 2.1(f);

       

      (iii) Seller
has not received, at any time since January 1, 2006, any notice or other
communication (whether oral or written) from any Governmental Body or any other
Person regarding (A) any actual, alleged, possible or potential violation of or
failure to comply with any term or requirement of any Governmental Authorization
or (B) any actual, proposed, possible or potential revocation, withdrawal,
suspension, cancellation, termination of or modification to any Governmental
Authorization; and

       

      (iv) all
applications required to have been filed for the renewal of the Governmental
Authorizations listed or required to be listed on Schedule 2.1(f) have been duly
filed on a timely basis with the appropriate Governmental Bodies, and all other
filings required to have been made with respect to such Governmental
Authorizations have been duly made on a timely basis with the appropriate
Governmental Bodies.

       

      The
Governmental Authorizations listed on Schedule 2.1(f) collectively constitute
all of the Governmental Authorizations necessary to permit Seller to lawfully
conduct and operate its business in the manner in which it currently conducts
and operates such business and to permit Seller to own and use its assets in the
manner in which it currently owns and uses such assets.

       

      3.15 Legal Proceedings;
Orders.

       

      (a) Except as
set forth on Schedule 3.15(a), there is no pending or, to Seller’s Knowledge,
threatened Proceeding:

       

      (i) by or
against Seller or that otherwise relates to or may affect the business of, or
any of the assets owned or used by, Seller; or

       

      (ii) that
challenges, or that may have the effect of preventing, delaying, making illegal
or otherwise interfering with, any of the Contemplated
Transactions.

       

      To the
Knowledge of Seller, no event has occurred or circumstance exists that is
reasonably likely to give rise to or serve as a basis for the commencement of
any such Proceeding.  Seller has delivered to Buyer copies of all
pleadings, correspondence and other documents relating to each Proceeding listed
on Schedule 3.15(a).  There are no Proceedings listed or required to
be listed on Schedule 3.15(a) that could have a material adverse effect on the
business, operations, assets, condition or prospects of Seller or upon the
Assets.

       

      
        
          
          

        

        
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      (b) Except as
set forth on Schedule 3.15(b):

       

      (i) there is
no Order to which Seller, its business or any of the Assets is subject;
and

       

      (ii) to the
Knowledge of Seller, no officer, director, agent or employee of Seller is
subject to any Order that prohibits such officer, director, agent or employee
from engaging in or continuing any conduct, activity or practice relating to the
business of Seller.

       

      (c) Except as
set forth on Schedule 3.15(c):

       

      (i) Seller
is, and, at all times since January 1, 2008, has been in compliance with all of
the terms and requirements of each Order to which it or any of the Assets is or
has been subject;

       

      (ii) no event
has occurred or circumstance exists that is reasonably likely to constitute or
result in (with or without notice or lapse of time) a violation of or failure to
comply with any term or requirement of any Order to which Seller or any of the
Assets is subject; and

       

      (iii) Seller
has not received, at any time since January 1, 2008, any notice or other
communication (whether oral or written) from any Governmental Body or any other
Person regarding any actual, alleged, possible or potential violation of, or
failure to comply with, any term or requirement of any Order to which Seller or
any of the Assets is or has been subject.

       

      3.16 Absence of Certain Changes
and Events.

       

      Except as
set forth on Schedule 3.16, since the date of the Interim Balance Sheet, Seller
has conducted its business only in the Ordinary Course of Business and there has
not been any:

       

      (a) amendment
to the Governing Documents of Seller;

       

      (b) payment
(except in the Ordinary Course of Business) or increase by Seller of any
bonuses, salaries or other compensation to any equityholder, director, officer
or employee or entry into any employment, severance or similar Contract with any
director, officer or employee;

       

      (c) adoption
of, amendment to or increase in the payments to or benefits under, any Employee
Plan;

       

      (d) damage to
or destruction or loss of any Asset, whether or not covered by
insurance;

       

      (e) entry
into, termination of or receipt of notice of termination of (i) any license,
distributorship, dealer, sales representative, joint venture, credit or similar
Contract to which Seller is a party, or (ii) any Contract or transaction
involving a total remaining commitment by Seller of at least
$10,000;

       

      
        
          
          

        

        
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      (f) sale
(other than sales of Inventories in the Ordinary Course of Business), lease or
other disposition of any Asset or property of Seller or the creation of any
Encumbrance on any Asset;

       

      (g) cancellation
or waiver of any claims or rights with a value to Seller in excess of
$10,000;

       

      (h) indication
by any customer or supplier of an intention to discontinue or change the terms
of its relationship with Seller;

       

      (i) change in
the Tax or financial accounting methods, principles, practices, elections, or
periods from those utilized in the preparation of the most recently filed Tax
Returns or the Interim Balance Sheet, except as required by GAAP or a Legal
Requirement; or

       

      (j) Contract
by Seller to do any of the foregoing.

       

      3.17 Contracts; No
Defaults.

       

      (a) Schedule
2.1(e) contains an accurate and complete list, and Seller has delivered to Buyer
accurate and complete copies, of:

       

      (i) each
Seller Contract that involves performance of services or delivery of goods or
materials by Seller of an amount or value in excess of $10,000;

       

      (ii) each
Seller Contract that involves performance of services or delivery of goods or
materials to Seller of an amount or value in excess of $10,000;

       

      (iii) each
Seller Contract that was not entered into in the Ordinary Course of Business and
that involves expenditures or receipts of Seller in excess of
$10,000;

       

      (iv) each
Seller Contract affecting the ownership of, leasing of, title to, use of or any
leasehold or other interest in any real or personal property (except personal
property leases and installment and conditional sales agreements having a value
per item or aggregate payments of less than $10,000 and with a term of less than
one year);

       

      (v) each
Seller Contract with any labor union or other employee representative of a group
of employees relating to wages, hours and other conditions of
employment;

       

      (vi) each
Seller Contract (however named) involving a sharing of profits, losses, costs or
liabilities by Seller with any other Person;

       

      (vii) each
Seller Contract containing covenants that in any way purport to restrict
Seller’s business activity or limit the freedom of Seller to engage in any line
of business or to compete with any Person;

       

      (viii) each
Seller Contract providing for payments to or by any Person based on sales,
purchases or profits, other than direct payments for goods;

       

      
        
          
          

        

        
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      (ix) each
power of attorney of Seller that is currently effective and
outstanding;

       

      (x) each
Seller Contract entered into other than in the Ordinary Course of Business that
contains or provides for an express undertaking by Seller to be responsible for
consequential damages;

       

      (xi) each
Seller Contract for capital expenditures in excess of $10,000;

       

      (xii) each
Seller Contract not denominated in U.S. dollars;

       

      (xiii) each
written warranty, guaranty and/or other similar undertaking with respect to
contractual performance extended by Seller other than in the Ordinary Course of
Business; and

       

      (xiv) each
amendment, supplement and modification (whether oral or written) in respect of
any of the foregoing.

       

      Schedule
2.1(e) sets forth reasonably complete details concerning such Contracts,
including the parties to the Contracts, the amount of the remaining commitment
of Seller under the Contracts and the location of Seller’s office where details
relating to the Contracts are located.

       

      (b) Except as
set forth on Schedule 3.17(b):

       

      (i) each
Contract identified or required to be identified on Schedule 2.1(e) and which is
to be assigned to or assumed by Buyer under this Agreement is in full force and
effect and is valid and enforceable in accordance with its terms;

       

      (ii) each
Contract identified or required to be identified on Schedule 2.1(e) and which is
being assigned to or assumed by Buyer is assignable by Seller to Buyer without
the consent of any other Person; and

       

      (iii) to the
Knowledge of Seller, no Contract identified or required to be identified on
Schedule 2.1(e) and which is to be assigned to or assumed by Buyer under this
Agreement will upon completion or performance thereof have a material adverse
affect on the business, assets or condition of Seller or the business to be
conducted by Buyer with the Assets.

       

      (c) Except as
set forth on Schedule 3.17(c):

       

      (i) Seller
is, and at all times since January 1, 2008, has been, in compliance with all
applicable terms and requirements of each Seller Contract which is being assumed
by Buyer;

       

      (ii) each
other Person that has or had any obligation or liability under any Seller
Contract which is being assigned to Buyer is, and at all times since January 1,
2008,

       

      
        
          
          

        

        
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      has been,
in full compliance with all applicable terms and requirements of such
Contract;

       

      (iii) no event
has occurred or circumstance exists that (with or without notice or lapse of
time) may contravene, conflict with or result in a Breach of, or give Seller or
other Person the right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or payment under, or to cancel,
terminate or modify, any Seller Contract that is being assigned to or assumed by
Buyer;

       

      (iv) no event
has occurred or circumstance exists under or by virtue of any Contract that
(with or without notice or lapse of time) would cause the creation of any
Encumbrance affecting any of the Assets; and

       

      (v) Seller
has not given to or received from any other Person, at any time since January 1,
2008, any notice or other communication (whether oral or written) regarding any
actual, alleged, possible or potential violation or Breach of, or default under,
any Contract which is being assigned to or assumed by Buyer.

       

      (d) There are
no renegotiations of, attempts to renegotiate or outstanding rights to
renegotiate any material amounts paid or payable to Seller under current or
completed Contracts with any Person having the contractual or statutory right to
demand or require such renegotiation and no such Person has made written demand
for such renegotiation.

       

      (e) Each
Contract relating to the sale, design, manufacture or provision of products or
services by Seller has been entered into in the Ordinary Course of Business of
Seller and has been entered into without the commission of any act alone or in
concert with any other Person, or any consideration having been paid or
promised, that is or would be in violation of any Legal
Requirement.

       

      3.18 Insurance.

       

      (a) Seller
has delivered to Buyer:

       

      (i) accurate
and complete copies of all policies of insurance (and correspondence relating to
coverage thereunder) to which Seller is a party or under which Seller is or has
been covered at any time since January 1, 2007, a list of which is included on
Schedule 3.18(a);

       

      (ii) accurate
and complete copies of all pending applications by Seller for policies of
insurance; and

       

      (iii) any
statement by the auditor of Seller’s financial statements or any consultant or
risk management advisor with regard to the adequacy of Seller’s coverage or of
the reserves for claims.

       

      (b) Schedule
3.18(b) describes:

       

      
        
          
          

        

        
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      (i) any
self-insurance arrangement by or affecting Seller, including any reserves
established thereunder;

       

      (ii) any
Contract or arrangement, other than a policy of insurance, for the transfer or
sharing of any risk to which Seller is a party or which involves the business of
Seller; and

       

      (iii) all
obligations of Seller to provide insurance coverage to Third Parties (for
example, under leases or service agreements) and identifies the policy under
which such coverage is provided.

       

      (c) Schedule
3.18(c) sets forth, by year, for the current policy year and each of the two
preceding policy years:

       

      (i) a summary
of the loss experience under each policy of insurance;

       

      (ii) a
statement describing each claim under a policy of insurance for an amount in
excess of $10,000, which sets forth:

       

      (A) the name
of the claimant;

       

      (B) a
description of the policy by insurer, type of insurance and period of coverage;
and

       

      (C) the
amount and a brief description of the claim; and

       

      (iii) a
statement describing the loss experience for all claims that were self-insured,
including the number and aggregate cost of such claims.

       

      (d) Except as
set forth on Schedule 3.18(d):

       

      (i) all
policies of insurance to which Seller is a party or that provide coverage to
Seller:

       

      (A) are
valid, outstanding and enforceable;

       

      (B) are
issued by an insurer that is financially sound and reputable;

       

      (C) taken
together, provide adequate insurance coverage for the Assets and the operations
of Seller for all risks to which Seller is normally exposed; and

       

      (D) are
sufficient for compliance with all Legal Requirements and Seller
Contracts;

       

      (ii) Seller
has not received (A) any refusal of coverage or any notice that a defense will
be afforded with reservation of rights or (B) any notice of cancellation or any
other indication that any policy of insurance is no longer in full force or
effect or that the issuer of any policy of insurance is not willing or able to
perform its obligations thereunder;

       

      
        
          
          

        

        
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      (iii) Seller
has paid all premiums due, and has otherwise performed all of its obligations,
under each policy of insurance to which it is a party or that provides coverage
to Seller; and

       

      (iv) Seller
has given notice to the insurer of all claims that may be insured
thereby.

       

      3.19 Environmental
Matters.

       

      To
Seller’s Knowledge, Seller is and has at all times been in material compliance
with all Environmental Laws.  There are no claims, Encumbrances or
other restrictions of any nature resulting from any Environmental, Health and
Safety Liabilities or arising under or pursuant to any Environmental Law with
respect to or affecting any Facility or any other property or asset (whether
real, personal or mixed) in which Seller has or had an interest that are pending
or, to the Knowledge of Seller, threatened against Seller.  To the
Knowledge of Seller, there are no past or present actions, activities,
circumstances, conditions, events or incidents that could reasonably form the
basis of any Environmental, Health and Safety Liability of
Seller.  Seller has delivered to Buyer all reports, authorizations,
disclosures and other documents of which they are aware relating in any way to
the status of any property demised by the Leases or otherwise relating to Seller
with respect to any Environmental Law.

       

      3.20 Brokers or
Finders.

       

      Neither
Seller nor any of its Representatives have incurred any obligation or liability,
contingent or otherwise, for brokerage or finders’ fees or agents’ commissions
or other similar payments in connection with the sale of Seller’s business or
the Assets or the Contemplated Transactions.

       

      3.21 Solvency.

       

      (a) Seller is
not now insolvent and will not be rendered insolvent by any of the Contemplated
Transactions.  As used in this section, “insolvent” means that the sum
of the debts and other probable Liabilities of Seller exceeds the present fair
saleable value of Seller’s assets.

       

      (b) Immediately
after giving effect to the consummation of the Contemplated
Transactions:  (i) Seller will be able to pay its Liabilities as they
become due in the usual course of its business; (ii) Seller will not have
unreasonably small capital with which to conduct its present or proposed
business; (iii) Seller will have assets (calculated at fair market value) that
exceed its Liabilities; and (iv) taking into account all pending and threatened
litigation, final judgments against Seller in actions for money damages are not
reasonably anticipated to be rendered at a time when, or in amounts such that,
Seller will be unable to satisfy any such judgments promptly in accordance with
their terms (taking into account the maximum probable amount of such judgments
in any such actions and the earliest reasonable time at which such judgments
might be rendered) as well as all other obligations of Seller.  The
cash available to Seller, after taking into account all other anticipated uses
of the cash, will be sufficient to pay all such debts and judgments promptly in
accordance with their terms.

       

      3.22 Disclosure.

       

      (a) No
disclosure, representation or warranty or other statement made by Seller in this
Agreement, any Schedule, the certificates delivered pursuant to Section 2.7(a)
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      connection
with the Contemplated Transactions contains any untrue statement or omits to
state a material fact necessary to make any of them, in light of the
circumstances in which it was made, not misleading.

       

      (b) Seller
does not have Knowledge of any fact that has specific application to Seller
(other than general economic or industry conditions) and that may materially
adversely affect the assets, business, prospects, financial condition or results
of operations of Seller that has not been set forth in this Agreement or one of
the Schedules.

       

      IV. Representations and Warranties of CoveyLink

       

      CoveyLink  represents
and warrants to Seller as of the Closing Date as follows:

       

      4.1 Organization and Good
Standing.

       

      (a) CoveyLink
is a limited liability company duly organized, validly existing and in good
standing under the laws of Utah, with full power and authority to conduct its
business as it is now being conducted and to own or use the properties and
assets that it purports to own or use.  CoveyLink is duly qualified to
do business as a foreign corporation and is in good standing under the laws of
each state or other jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities conducted by it,
requires such qualification.

       

      (b) Complete
and accurate copies of the Governing Documents of CoveyLink, as currently in
effect, are attached to Schedule 4.1(b).

       

      (c) CoveyLink
has no Subsidiary and, except as disclosed on Schedule 3.1(c), does not own any
shares of capital stock or other securities of any other Person.

       

      4.2 Enforceability; Authority;
No Conflict.

       

      (a) This
Agreement constitutes the legal, valid and binding obligation of CoveyLink,
enforceable against CoveyLink in accordance with its terms.  Upon the
execution and delivery by CoveyLink of each agreement to be executed or
delivered by CoveyLink at the Closing (collectively, the “CoveyLink’s Closing
Documents”), each of CoveyLink’s Closing Documents will constitute the legal,
valid and binding obligation of CoveyLink, enforceable against
CoveyLink.  CoveyLink has the absolute and unrestricted right, power
and authority to execute and deliver this Agreement and CoveyLink’s Closing
Documents to which it is a party and to perform its obligations under this
Agreement and CoveyLink’s Closing Documents, and such action has been duly
authorized by all necessary action by CoveyLink’s members and board of
managers.

       

      (b) Except as
set forth on Schedule 4.2(b), neither the execution and delivery of this
Agreement nor the consummation or performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time):

       

      (i) Breach
(A) any provision of any of the Governing Documents of CoveyLink or (B) any
resolution adopted by the board of managers or the members of
CoveyLink;

       

      
        
          
          

        

        
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      (ii) Breach or
give any Governmental Body or other Person the right to challenge any of the
Contemplated Transactions or to exercise any remedy or obtain any relief under
any Legal Requirement or any Order to which CoveyLink, or any of the Assets, may
be subject;

       

      (iii) contravene,
conflict with or result in a violation or breach of any of the terms or
requirements of, or give any Governmental Body the right to revoke, withdraw,
suspend, cancel, terminate or modify, any Governmental Authorization that is
held by CoveyLink or that otherwise relates to the Assets or to the business of
CoveyLink;

       

      (iv) cause
Buyer to become subject to, or to become liable for the payment of, any
Tax;

       

      (v) Breach
any provision of, or give any Person the right to declare a default or exercise
any remedy under, or to accelerate the maturity or performance of, or payment
under, or to cancel, terminate or modify, any CoveyLink Contract;
or

       

      (vi) result in
the imposition or creation of any Encumbrance upon or with respect to any of the
Assets.

       

      Except as
set forth on Schedule 4.2(b), CoveyLink is not required to give any notice to or
obtain any Consent from any Person in connection with the execution and delivery
of this Agreement or the consummation or performance of any of the Contemplated
Transactions

       

      V.  epresentations and Warranties of Buyer and
Parent

       

      Buyer and
Parent jointly and severally represent and warrant to Seller and CoveyLink as of
the Closing Date as follows:

       

      5.1 Organization and Good
Standing.

       

      Buyer is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Utah, with full corporate power and authority to conduct
its business as it is now conducted.  Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Utah, with full corporate power and authority to conduct its business as it is
now conducted.

       

      5.2 Authority; No
Conflict.

       

      (a) This
Agreement constitutes the legal, valid and binding obligation of both Buyer and
Parent, enforceable against Buyer and Parent in accordance with its
terms.  Upon the execution and delivery by Buyer or Parent, as
applicable, of the Assignment and Assumption Agreement, the Consulting
Agreements, the Speaking Agreements and each other agreement to be executed or
delivered by Buyer or Parent at Closing (collectively, the “FranklinCovey Closing
Documents”), each of the FranklinCovey Closing Documents will constitute
the legal, valid and binding obligation of Buyer and Parent, as applicable,
enforceable against Buyer or Parent, as applicable, in accordance with its
respective terms.  Buyer and Parent each have the absolute and
unrestricted right, power and authority to execute and deliver this Agreement
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      FranklinCovey
Closing Documents and to perform their obligations under this Agreement and the
FranklinCovey Closing Documents, and such actions have been duly authorized by
all necessary corporate action by each of Buyer and Parent.

       

      (b) Neither
the execution and delivery of this Agreement by Buyer or Parent, nor the
consummation or performance of any of the Contemplated Transactions by Buyer or
Parent, will give any Person the right to prevent, delay or otherwise interfere
with any of the Contemplated Transactions pursuant to:

       

      (i) any
provision of Buyer’s or Parent’s Governing Documents;

       

      (ii) any
resolution adopted by the board of directors or the equityholders of Buyer and
Parent;

       

      (iii) any Legal
Requirement or Order to which Buyer or Parent may be subject; or

       

      (iv) any
Contract to which either Buyer or Parent is a party or by which either Buyer or
Parent may be bound.

       

      Neither
Buyer nor Parent is or will be required to obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions.

       

      5.3 Certain
Proceedings.

       

      There is
no pending Proceeding that has been commenced against Buyer or Parent and that
challenges, or may have the effect of preventing, delaying, making illegal or
otherwise interfering with, any of the Contemplated Transactions.  To
Buyer’s or Parent’s Knowledge, no such Proceeding has been
threatened.

       

      5.4 Brokers or
Finders.

       

      Neither
Buyer, Parent nor any of its Representatives have incurred any obligation or
liability, contingent or otherwise, for brokerage or finders’ fees or agents’
commissions or other similar payment in connection with the Contemplated
Transactions.

       

      VI.  Additional Covenants

       

      6.1 Employees and Employee
Benefits.

       

      (a) Information on Active
Employees.  For the purpose of this Agreement, the term “Active
Employees” shall mean all employees employed on the Closing Date by Seller for
its business who are employed exclusively in Seller’s business as currently
conducted, including employees on temporary leave of absence, including family
medical leave, military leave, temporary disability or sick leave, but excluding
employees on long-term disability leave.

       

      (b) Employment of Active
Employees by Buyer.

       

      (i) Buyer has
provided Seller with a list of Seller’s employees to whom Buyer has made an
offer of employment that has been accepted to be effective on the
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      Date (the
“Hired Active
Employees”).  Effective immediately before the Closing, Seller
agrees that the employment of all of its Hired Active Employees is
terminated.

       

                   
(ii)   Neither
Seller nor its Related Persons shall solicit the continued employment of any
Hired Active Employee after the Closing.

       

       
(iii)          Buyer
shall offer employment to the Hired Active Employees to work in the
Practice.

       

      (c) Salaries and
Benefits.

       

      (i) Seller
shall be responsible for (A) the payment of all wages and other remuneration due
to Active Employees with respect to their services as employees of Seller
through the close of business on the Closing Date, including pro rata bonus
payments and all vacation pay earned prior to the Closing Date; (B) the payment
of any termination or severance payments and the provision of health plan
continuation coverage in accordance with the requirements of COBRA and Sections
601 through 608 of ERISA; and (C) any and all payments to employees required
under the Worker Adjustment and Retraining Notification Act (the “WARN Act”) or any similar
state or local Legal Requirement.  Any liability incurred as a result
of the forgoing shall be solely the Seller’s obligation and the Seller agrees to
fully indemnify the Buyer on any such claims, complaints or
disputes.

       

      (ii) Seller
shall be liable for any claims made or incurred by Active Employees and their
beneficiaries through the Closing Date under the Employee Plans.  For
purposes of the immediately preceding sentence, a charge will be deemed
incurred, in the case of hospital, medical or dental benefits, when the services
that are the subject of the charge are performed and, in the case of other
benefits (such as disability or life insurance), when an event has occurred or
when a condition has been diagnosed that entitles the employee to the
benefit.

       

      (d) Seller’s Retirement and
Savings Plans. 

       

      All Hired
Active Employees who are participants in Seller’s retirement plans shall retain
their accrued benefits under Seller’s retirement plans as of the Closing Date,
and Seller (or Seller’s retirement plans) shall retain sole liability for the
payment of such benefits as and when such Hired Active Employees become eligible
therefor under such plans.  All Hired Active Employees shall become
fully vested in their accrued benefits under Seller’s retirement plans as of the
Closing Date, and Seller will so amend such plans if necessary to achieve this
result.  Seller shall cause the assets of each Employee Plan to equal
or exceed the benefit liabilities of such Employee Plan on a plan-termination
basis as of the Closing Date.

       

      (e) General Employee
Provisions.

       

      (i) Seller
and Buyer shall give any notices required by Legal Requirements and take
whatever other actions with respect to the plans, programs and policies
described in this Section 6.1 as may be necessary to carry out the arrangements
described in this Section 6.1.

       

      
        
          
          

        

        
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      (ii) Seller
and Buyer shall provide each other with such plan documents and summary plan
descriptions, employee data or other information as may be reasonably required
to carry out the arrangements described in this Section 6.1.

       

      (iii) If any of
the arrangements described in this Section 6.1 are determined by the IRS or
other Governmental Body to be prohibited by law, Seller and Buyer shall modify
such arrangements to as closely as possible reflect their expressed intent and
retain the allocation of economic benefits and burdens to the parties
contemplated herein in a manner that is not prohibited by law.

       

      (iv) Seller
shall provide Buyer with completed I-9 forms and attachments with respect to all
Hired Active Employees, except for such employees as Seller certifies in writing
to Buyer are exempt from such requirement.

       

      (v) Buyer
shall not have any responsibility, liability or obligation, whether to Active
Employees, former employees, their beneficiaries or to any other Person, with
respect to any employee benefit plans, practices, programs or arrangements
(including the establishment, operation or termination thereof and the
notification and provision of COBRA coverage extension) maintained by
Seller.

       

      6.2 Payment of Other Retained
Liabilities.

       

      Seller
shall pay, or make adequate provision for the payment, in full all of the
Retained Liabilities and other Liabilities of Seller under this
Agreement.  If any such Liabilities are not so paid or provided for,
or if Buyer reasonably determines that failure to make any payments will impair
Buyer’s use or enjoyment of the Assets or conduct of the business previously
conducted by Seller with the Assets, Buyer may, at any time after the Closing
Date, elect to make all such payments directly (but shall have no obligation to
do so) and set off and deduct the full amount of all such payments from any
Annual Earnout Payment payable to Buyer pursuant to Section 2.8.

       

      6.3 Restrictions on Seller
Dissolution and Distributions.

       

      Seller
shall not dissolve, or make any distribution of the proceeds received pursuant
to this Agreement, until the later of (a) 30 days after the completion of all
Purchase Price adjustment procedures contemplated by Section 2.8; (b) Seller’s
payment, or adequate provision for the payment, of all of its obligations
pursuant to Section 6.2; or (c) the lapse of more than five years after the
Closing Date.

       

      6.4 Removing Excluded
Assets.

       

      On or
before the Closing Date, Seller and CoveyLink shall remove all Excluded Assets
from all Facilities and other real property to be occupied by
Buyer.  Such removal shall be done in such manner as to avoid any
damage to the Facilities and other properties to be occupied by Buyer and any
disruption of the business operations to be conducted by Buyer after the
Closing.  Any damage to the Assets or to the Facilities resulting from
such removal shall be paid by Seller and CoveyLink at the
Closing.  Should Seller and CoveyLink fail to remove the Excluded
Assets as required by this Section, Buyer shall have the right, but not the
obligation, (a) to remove the Excluded Assets at Seller’s sole cost and expense;
(b) to store the Excluded Assets and to charge Seller all storage costs
associated therewith; (c) to treat the Excluded Assets as unclaimed and to
proceed to dispose of the same under the laws governing unclaimed property; or
(d) to exercise any other right or remedy conferred by this Agreement or
otherwise available at law or in equity.  Seller and

       

      
        
          
          

        

        
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      CoveyLink
shall promptly reimburse Buyer for all costs and expenses incurred by Buyer in
connection with any Excluded Assets not removed by Seller or CoveyLink on or
before the Closing Date.

       

      6.5 Reports and
Returns.

       

      Seller
and CoveyLink shall have sole responsibility for all filings with a Governmental
Body relating to any bulk sale notification, application for tax clearance
certificate or other similar filing in connection with the transfer of the
Assets to Buyer, whether such filings are due prior to, on or after the Closing
Date, in compliance with applicable Legal Requirements.  After the
Closing, Seller and CoveyLink shall duly and timely prepare and file all Tax
Returns or other reports required by Legal Requirements relating to the Business
as conducted using the Assets up to and including the Closing Date.

       

      6.6 Assistance in
Proceedings.

       

      Seller
and CoveyLink will cooperate with Buyer and its counsel in the contest or
defense of, and make available its personnel and provide any testimony and
access to its books and Records in connection with, any Proceeding involving or
relating to (a) any Contemplated Transaction or (b) any action, activity,
circumstance, condition, conduct, event, fact, failure to act, incident,
occurrence, plan, practice, situation, status or transaction on or before the
Closing Date involving Seller, CoveyLink or the Business.

       

      6.7 Modification of
International Licensee Agreements.

       

      Buyer
will use commercially reasonable efforts to renegotiate, within six months
following the Closing and on terms reasonably acceptable to Seller, Buyer’s
license and distribution agreements (collectively, the “International Licenses”) with
its international licensees and distributors (collectively, the “International Licensees”) to
allow the Practice Leaders to promote the growth of the Practice in the
geographical territories that are the subject of such International
Licenses.  If Buyer is unable to renegotiate any International
Licenses on terms reasonably acceptable to Seller within six months following
the Closing, Buyer will (a) promptly return, at no cost to Seller, all of the
Assets related to the Business conducted in the geographical territory that is
the subject of such International Licenses, and (b) immediately forfeit any
exclusive rights Buyer may have, pursuant to the License Agreement or otherwise,
to use, develop, commercialize, sell or distribute training programs or other
products related to The SPEED
of Trust in the geographical territory that is the subject of such
International Licenses that are not renegotiated.

       

      6.8 Noncompetition,
Nonsolicitation and Nondisparagement.

       

      (a)           Noncompetition.  For
a period of 5 years after the Closing Date, except as provided in Section 6.7,
Seller and CoveyLink shall not, anywhere in the world, directly or indirectly
invest in, own, manage, operate, finance, control, advise, render services to or
guarantee the obligations of any Person engaged in or planning to become engaged
in a competing Business (“Competing Business”), provided, however, that,
subject to the obligations of Stephen M. R. Covey and Greg Link under the
Consulting Agreements, CoveyLink may continue to consult with Human Performance
Institute on matters unrelated to The SPEED of Trust and Seller and CoveyLink
may purchase or otherwise acquire up to (but not more than) one percent of any
class of the securities of any Person (but may not otherwise participate in the
activities of such Person) if such securities are listed on any national or
regional securities exchange or have been registered under Section 12(g) of the
Exchange Act.  Notwithstanding the foregoing provisions, the
obligations of Seller and CoveyLink under this Section 5.8 shall

       

      
        
          
          

        

        
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      terminate
upon the occurrence of a Buyer Material Breach that is not cured within the
number of days specified below, after Seller or CoveyLink provides written
notice to Buyer of the alleged Buyer Material Breach.  A “Buyer
Material Breach” means a breach of any of Buyer’s payment obligations in this
Agreement (and such breach is not cured within thirty (30) days); provided,
however, that Buyer’s failure to make any payment that is the subject of a
good-faith, bona fide dispute shall not be a Buyer Material Breach.

       

      (b)           Nonsolicitation.  For
a period of 5 years after the Closing Date, Seller and CoveyLink shall not,
directly or indirectly:

       

      (i) solicit
the business of any Person who is a customer of Buyer;

       

      (ii) cause,
induce or attempt to cause or induce any customer, supplier, licensee, licensor,
franchisee, employee, consultant or other business relation of Buyer to cease
doing business with Buyer, to deal with any competitor of Buyer or in any way
interfere with its relationship with Buyer;

       

      (iii) cause,
induce or attempt to cause or induce any customer, supplier, licensee, licensor,
franchisee, employee, consultant or other business relation of Seller or
CoveyLink on the Closing Date or within the year preceding the Closing Date to
cease doing business with Buyer, to deal with any competitor of Buyer or in any
way interfere with its relationship with Buyer; or

       

      (iv) hire,
retain or attempt to hire or retain any employee or independent contractor of
Buyer or in any way interfere with the relationship between Buyer and any of its
employees or independent contractors.

       

      (c)           Nondisparagement.  After
the Closing Date, Seller and CoveyLink will not disparage Buyer or any of
Buyer’s shareholders, directors, officers, employees or agents.

       

      (d)           Modification of
Covenant.  If a final judgment of a court or tribunal of
competent jurisdiction determines that any term or provision contained in
Section 5.8(a) through (c) is invalid or unenforceable, then the parties agree
that the court or tribunal will have the power to reduce the scope, duration or
geographic area of the term or provision, to delete specific words or phrases or
to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision.  This
Section 6.8 will be enforceable as so modified after the expiration of the time
within which the judgment may be appealed.  This Section 6.8 is
reasonable and necessary to protect and preserve Buyer’s legitimate business
interests and the value of the Assets and to prevent any unfair advantage
conferred on Seller.

       

      (e)           Remedies.  If
Seller or CoveyLink breaches the covenants set forth in this Section 6.8, Buyer
will be entitled to the following remedies:

       

      (i) Damages
from Seller or CoveyLink, as applicable; and

       

      (ii) In
addition to its right to damages and any other rights it may have, to obtain
injunctive or other equitable relief to restrain any breach or threatened breach
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      otherwise
to specifically enforce the provisions of this Section 6.8, it being agreed that
money damages alone would be inadequate to compensate the Buyer and would be an
inadequate remedy for such breach.

       

      6.9 Customer and Other Business
Relationships.

       

      After the
Closing, Seller will cooperate with Buyer in its efforts to continue and
maintain for the benefit of Buyer those business relationships of Seller
existing prior to the Closing and relating to the business to be operated by
Buyer after the Closing, including relationships with lessors, employees,
regulatory authorities, licensors, customers, suppliers and others, and Seller
will satisfy the Retained Liabilities in a manner that is not detrimental to any
of such relationships.  Seller will refer to Buyer all inquiries
relating to such business.  Neither Seller nor any of its officers,
employees, agents or equityholders shall take any action that would tend to
diminish the value of the Assets after the Closing or that would interfere with
the business of Buyer to be engaged in after the Closing, including disparaging
the name or business of Buyer.

       

      6.10 Retention of and Access to
Records.

       

      After the
Closing Date, Buyer shall retain for a period consistent with Buyer’s
record-retention policies and practices those Records of Seller delivered to
Buyer.  Buyer also shall provide Seller and CoveyLink and their
Representatives reasonable access thereto, during normal business hours and on
at least three days’ prior written notice, to enable them to prepare financial
statements or Tax Returns, or use in connection with any Tax
Proceedings.  After the Closing Date, Seller and CoveyLink shall
provide Buyer and its Representatives reasonable access to Records that are
Excluded Assets, during normal business hours and on at least three days’ prior
written notice, for any reasonable business purpose specified by Buyer in such
notice.

       

      6.11 Further
Assurances.

       

      The
parties shall cooperate reasonably with each other and with their respective
Representatives in connection with any steps required to be taken as part of
their respective obligations under this Agreement, and shall (a) furnish upon
request to each other such further information; (b) execute and deliver to each
other such other documents; and (c) do such other acts and things, all as the
other party may reasonably request for the purpose of carrying out the intent of
this Agreement and the Contemplated Transactions.

       

      VII. Indemnification; Remedies

       

      7.1 Survival.

       

      All
representations, warranties, covenants and obligations in this Agreement,
including all of the Schedules, the certificates delivered pursuant to Section
2.7 and any other certificate or document delivered pursuant to this Agreement
shall survive the Closing and the consummation of the Contemplated
Transactions.  The right to indemnification, reimbursement or other
remedy based upon such representations, warranties, covenants and obligations
shall not be affected by any investigation (including any environmental
investigation or assessment) conducted with respect to, or any Knowledge
acquired (or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or the Closing Date, with respect to
the accuracy or inaccuracy of or compliance with any such representation,
warranty, covenant or obligation.  The waiver of any condition based
upon the accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect the right to
indemnification, reimbursement or other remedy based upon such representations,
warranties, covenants and obligations.

       

      
        
          
          

        

        
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      7.2 Indemnification and
Reimbursement by Seller and CoveyLink.

       

      Seller
and CoveyLink, jointly and severally, will indemnify and hold harmless Buyer,
and its Representatives, shareholders, subsidiaries and Related Persons
(collectively, the “Buyer
Indemnified Persons”), and will reimburse the Buyer Indemnified Persons
for any loss, liability, claim, damage, expense (including costs of
investigation and defense and reasonable attorneys’ fees and expenses) or
diminution of value, whether or not involving a Third-Party Claim (collectively,
“Damages”), arising
from or in connection with:

       

      (a) any
Breach of any representation or warranty made by Seller or CoveyLink in
(i) this Agreement, including the Schedules, (ii) the certificates
delivered pursuant to Section 2.7 (iii) any transfer instrument, (iv) the
License Agreement, (v) the Consulting Agreements, (vi) the Speaking Agreements,
or (vii) any other agreement, certificate, document, writing or instrument
delivered by either Seller or CoveyLink pursuant to this Agreement;

       

      (b) any
Breach of any covenant or obligation of Seller or CoveyLink in this Agreement or
in any other certificate, document, writing or instrument delivered by Seller or
CoveyLink pursuant to this Agreement;

       

      (c) any
Liability arising out of the ownership or operation of the Assets prior to the
Closing Date other than the Assumed Liabilities;

       

      (d) any
brokerage or finder’s fees or commissions or similar payments based upon any
agreement or understanding made, or alleged to have been made, by any Person
with Seller or CoveyLink (or any Person acting on their behalf) in connection
with any of the Contemplated Transactions;

       

      (e) any
product or component thereof manufactured by or shipped, or any services
provided by, Seller, in whole or in part, prior to the Closing;

       

      (f) any
liability under the WARN Act or any similar state or local Legal Requirement
that may result from an “Employment Loss”, as defined by 29 U.S.C. sect.
2101(a)(6), caused by any action of Seller prior to the Closing or by Buyer’s
decision not to hire previous employees of Seller;

       

      (g) any
Employee Plan established or maintained by Seller; or

       

      (h) any
Retained Liabilities.

       

      7.3 Indemnification and
Reimbursement by Buyer.

       

      Buyer
will indemnify and hold harmless Seller, and will reimburse Seller, for any
Damages arising from or in connection with:

       

      (a) any
Breach of any representation or warranty made by Buyer in this Agreement or in
any certificate, document, writing or instrument delivered by Buyer pursuant to
this Agreement;

       

      
        
          
          

        

        
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      (b) any
Breach of any covenant or obligation of Buyer in this Agreement or in any other
certificate, document, writing or instrument delivered by Buyer pursuant to this
Agreement;

       

      (c) any claim
by any Person for brokerage or finder’s fees or commissions or similar payments
based upon any agreement or understanding alleged to have been made by such
Person with Buyer (or any Person acting on Buyer’s behalf) in connection with
any of the Contemplated Transactions;

       

      (d) any
obligations of Buyer with respect to bargaining with the collective bargaining
representatives of Hired Active Employees subsequent to the Closing;
or

       

      (e) any
Assumed Liabilities.

       

      7.4 Time
Limitations.

       

      (a) Seller
and CoveyLink will have liability (for indemnification or otherwise) with
respect to any Breach of a representation or warranty (other than those in
Section 3.10, as to which a claim may be made at any time prior to the
applicable statute of limitations), only if on or before the fifth anniversary
of the Closing Date the applicable Buyer Indemnified Person notifies Seller or
CoveyLink of a claim specifying the factual basis of the claim in reasonable
detail to the extent then known by such Buyer Indemnified Person.

       

      (b) Buyer
will have liability (for indemnification or otherwise) with respect to any
Breach of a representation or warranty, only if on or before the fifth
anniversary of the Closing Date Seller notifies Buyer of a claim specifying the
factual basis of the claim in reasonable detail to the extent then known by such
Seller.

       

      7.5 Setoff.

       

      (a) Right of
Setoff.  Acting in good faith, and subject to the requirements
of this Section 7.5, Buyer may set off any amount to which any Buyer Indemnified
Party may be entitled under this Article VII against amounts otherwise payable
by Buyer hereunder or under the License Agreement.  Neither the
exercise of nor the failure to exercise such right of setoff will constitute an
election of remedies or limit Buyer in any manner in the enforcement or pursuit
of any other remedies that may be available to it.  Any set off
against an Annual Earnout Payment hereunder or other reduction to the Purchase
Price on account of Seller’s or CoveyLink’s indemnification obligations under
this Agreement shall be treated, for Tax purposes, to the extent permitted by
law, as an adjustment to the Purchase Price.

       

      (b) Notice of
Claims.  Promptly after the Buyer makes a good faith
determination that any Buyer Indemnified Party is entitled to any amount under
this Article VII, Buyer shall deliver to CoveyLink written notice (a “Notice of Claim”): specifying
in reasonable detail the Damages and the amount that the Buyer or any Buyer
Indemnified Party has paid or properly accrued or reasonably anticipates that it
will have to pay or accrue relating to such Damages, the date each such amount
was paid or properly accrued, or the basis for such anticipated liability, and
the nature of the misrepresentations, breaches of warranties or claims to which
such Damages are related.  CoveyLink shall notify Buyer in writing
within 10 days following delivery of the of

       

      
        
          
          

        

        
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      the
Notice of Claim if CoveyLink objects to any aspect of the claim made in the
Notice of Claim (an “Objection
Notice”).  If CoveyLink does not provide an Objection Notice
within such 10 day period, Buyer shall be entitled to offset the amount
specified in the Notice of Claim as provided in Section 7.5(a).

       

      (c) Resolution of
Conflicts.  If CoveyLink provides an Objection Notice to Buyer
pursuant to Section 7.5(b), the Chief Executive Officer of CoveyLink and the
Chief Executive Officer of Parent shall attempt in good faith to agree upon the
rights of the respective parties with respect to the claim set forth in the
Notice of Claim.  If no such agreement can be reached after good faith
negotiation for a period of 30 days after CoveyLink delivers its Objection
Notice, either Buyer or CoveyLink may demand arbitration of the matter unless
the claim is at issue in pending litigation with a third party, in which event
arbitration shall not be commenced until either the litigation is resolved or
both CoveyLink and Buyer agree to arbitration.

       

      (d) Arbitration.

       

      (i) In the
event that a party demands arbitration pursuant to Section 7.5(c), such dispute
shall be finally settled by binding arbitration in Salt Lake City, Utah under
the Commercial Arbitration Rules of the American Arbitration Association (the
“Rules”) by one
arbitrator appointed in accordance with said Rules.  Judgment on the
award rendered by the arbitrator may be entered in any court having jurisdiction
thereof.

       

      (ii) The
arbitrator shall apply the laws of the State of Utah to the merits of the
particular dispute, without reference to rules of conflict of
law.  The arbitration proceedings shall be governed by the Rules,
without reference to any state arbitration law.

       

      (iii) Either of
the parties may apply to any court of competent jurisdiction for a temporary
restraining order, preliminary injunction, or other interim or conservatory
relief, as necessary, without breach of this arbitration provision and without
any abridgment of the powers of the arbitrator.  The arbitrator may,
in its discretion, award to the prevailing party, if any, as determined by the
arbitrator, all of its costs and fees, including, without limitation,
administrative fees, arbitrator’s fees, attorneys’ fees, experts’ fees,
witnesses’ fees, travel expenses, and out-of-pocket expenses (including, without
limitation, such expenses as copying, telephone, facsimile, postage, and courier
fees); otherwise, the costs of the arbitration, including administrative and
arbitrator’s fees, shall be borne by the parties to the particular arbitration
in proportion their relative success, as determined by the arbitrator, in
connection with the resolution of the disputed claims, and each party shall bear
the cost of its own attorneys’ fees and expert witness fees.  The
parties agree that, any provision of applicable law notwithstanding, they will
not request, and the arbitrator shall have no authority to award, punitive or
exemplary damages against any party.

       

      (iv) The
decision of the arbitrator as to the validity and amount of any claim in such
Notice of Claim shall be binding and conclusive upon the
parties.  Such decision shall be written and shall be supported by
written findings of fact and conclusions which shall set forth the award,
judgment, decree or order awarded by the arbitrator(s).

       

      
        
          
          

        

        
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      (v) The
requirements of this Section 7.5(d) will apply only to disputes raised pursuant
to this Section 7.3(e).

       

      7.6 Third-Party
Claims.

       

      (a) Promptly
after receipt by a Person entitled to indemnity under Section 7.2 or 7.3 (an
“Indemnified Person”)
of notice of the assertion of a Third-Party Claim against it, such Indemnified
Person shall give notice to the Person obligated to indemnify under such Section
(an “Indemnifying
Person”) of the assertion of such Third-Party Claim, provided that the
failure to notify the Indemnifying Person will not relieve the Indemnifying
Person of any liability that it may have to any Indemnified Person, except to
the extent that the Indemnifying Person demonstrates that the defense of such
Third-Party Claim is prejudiced by the Indemnified Person’s failure to give such
notice.

       

      (b) If an
Indemnified Person gives notice to the Indemnifying Person pursuant to Section
7.6(a) of the assertion of a Third-Party Claim, the Indemnifying Person shall be
entitled to participate in the defense of such Third-Party Claim and, to the
extent that it wishes (unless (i) the Indemnifying Person is also a Person
against whom the Third-Party Claim is made and the Indemnified Person determines
in good faith that joint representation would be inappropriate or (ii) the
Indemnifying Person fails to provide reasonable assurance to the Indemnified
Person of its financial capacity to defend such Third-Party Claim and provide
indemnification with respect to such Third-Party Claim), to assume the defense
of such Third-Party Claim with counsel satisfactory to the Indemnified
Person.  After notice from the Indemnifying Person to the Indemnified
Person of its election to assume the defense of such Third-Party Claim, the
Indemnifying Person shall not, so long as it diligently conducts such defense,
be liable to the Indemnified Person under this Article VII for any fees of other
counsel or any other expenses with respect to the defense of such Third-Party
Claim, in each case subsequently incurred by the Indemnified Person in
connection with the defense of such Third-Party Claim, other than reasonable
costs of investigation.  If the Indemnifying Person assumes the
defense of a Third-Party Claim, (i) such assumption will conclusively establish
for purposes of this Agreement that the claims made in that Third-Party Claim
are within the scope of and subject to indemnification, and (ii) no compromise
or settlement of such Third-Party Claims may be effected by the Indemnifying
Person without the Indemnified Person’s Consent unless (A) there is no finding
or admission of any violation of Legal Requirement or any violation of the
rights of any Person; (B) the sole relief provided is monetary damages that are
paid in full by the Indemnifying Person; and (C) the Indemnified Person shall
have no liability with respect to any compromise or settlement of such
Third-Party Claims effected without its Consent.  If notice is given
to an Indemnifying Person of the assertion of any Third-Party Claim and the
Indemnifying Person does not, within 10 days after the Indemnified Person’s
notice is given, give notice to the Indemnified Person of its election to assume
the defense of such Third-Party Claim, the Indemnifying Person will be bound by
any determination made in such Third-Party Claim or any compromise or settlement
effected by the Indemnified Person.

       

      (c) Notwithstanding
the foregoing, if an Indemnified Person determines in good faith that there is a
reasonable probability that a Third-Party Claim may adversely affect it or its
Related Persons other than as a result of monetary damages for which it would be
entitled to indemnification under this Agreement, the Indemnified Person may, by
notice to the

       

      
        
          
          

        

        
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      Indemnifying
Person, assume the exclusive right to defend, compromise or settle such
Third-Party Claim, but the Indemnifying Person will not be bound by any
determination of any Third-Party Claim so defended for the purposes of this
Agreement or any compromise or settlement effected without its Consent (which
may not be unreasonably withheld).

       

      (d) Notwithstanding
the provisions of Section 8.4, Seller and CoveyLink hereby consent to the
nonexclusive jurisdiction of any court in which a Proceeding in respect of a
Third-Party Claim is brought against any Buyer Indemnified Person for purposes
of any claim that a Buyer Indemnified Person may have under this Agreement with
respect to such Proceeding or the matters alleged therein and agree that process
may be served on Seller and CoveyLink with respect to such a claim anywhere in
the world.

       

      (e) With
respect to any Third-Party Claim subject to indemnification under this Article
VII:  (i) both the Indemnified Person and the Indemnifying Person, as
the case may be, shall keep the other Person fully informed of the status of
such Third-Party Claim and any related Proceedings at all stages thereof where
such Person is not represented by its own counsel, and (ii) the parties agree
(each at its own expense) to render to each other such assistance as they may
reasonably require of each other and to cooperate in good faith with each other
in order to ensure the proper and adequate defense of any Third-Party
Claim.

       

      (f) With
respect to any Third-Party Claim subject to indemnification under this Article
VII, the parties agree to cooperate in such a manner as to preserve in full (to
the extent possible) the confidentiality of all confidential information and the
attorney-client and work-product privileges.  In connection therewith,
each party agrees that:  (i) it will use its Best Efforts, in respect
of any Third-Party Claim in which it has assumed or participated in the defense,
to avoid production of confidential information (consistent with applicable law
and rules of procedure), and (ii) all communications between any party hereto
and counsel responsible for or participating in the defense of any Third-Party
Claim shall, to the extent possible, be made so as to preserve any applicable
attorney-client or work-product privilege.

       

      7.7 Other
Claims.

       

      A claim
for indemnification for any matter not involving a Third-Party Claim may be
asserted by notice to the party from whom indemnification is sought and shall be
paid promptly after such notice.

       

      7.8 Indemnification in Case of
Strict Liability or Indemnitee Negligence.

       

      THE
INDEMNIFICATION PROVISIONS IN THIS ARTICLE VII SHALL BE ENFORCEABLE REGARDLESS
OF WHETHER THE LIABILITY IS BASED UPON PAST, PRESENT OR FUTURE ACTS, CLAIMS OR
LEGAL REQUIREMENTS (INCLUDING ANY PAST, PRESENT OR FUTURE BULK SALES LAW,
ENVIRONMENTAL LAW, FRAUDULENT TRANSFER ACT, OCCUPATIONAL SAFETY AND HEALTH LAW
OR PRODUCTS LIABILITY, SECURITIES OR OTHER LEGAL REQUIREMENT) AND REGARDLESS OF
WHETHER ANY PERSON (INCLUDING THE PERSON FROM WHOM INDEMNIFICATION IS SOUGHT)
ALLEGES OR PROVES THE SOLE, CONCURRENT, CONTRIBUTORY OR COMPARATIVE NEGLIGENCE
OF THE PERSON SEEKING INDEMNIFICATION OR THE SOLE OR CONCURRENT STRICT LIABILITY
IMPOSED UPON THE PERSON SEEKING INDEMNIFICATION.

       

      
        
          
          

        

        
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      VIII.  General Provisions

       

      8.1 Expenses.

       

      Except as
otherwise provided in this Agreement, each party to this Agreement will bear its
respective fees and expenses incurred in connection with the preparation,
negotiation, execution and performance of this Agreement and the Contemplated
Transactions, including all fees and expense of its
Representatives.  If this Agreement is terminated, the obligation of
each party to pay its own fees and expenses will be subject to any rights of
such party arising from a Breach of this Agreement by another
party.

       

      8.2 Public
Announcements.

       

      Any
public announcement, press release or similar publicity with respect to this
Agreement or the Contemplated Transactions will be issued, if at all, at such
time and in such manner as Seller and Buyer determine by mutual agreement;
provided, however, that the Company may make any disclosure announcements that
the Company determines, in its sole discretion, that it is required to make
pursuant to any Legal Requirement.

       

      8.3 Notices.

       

      All
notices, Consents, waivers and other communications required or permitted by
this Agreement shall be in writing and shall be deemed given to a party when (a)
delivered to the appropriate address by hand or by nationally recognized
overnight courier service (costs prepaid); (b) sent by facsimile or e-mail with
confirmation of transmission by the transmitting equipment; or (c) received or
rejected by the addressee, if sent by certified mail, return receipt requested,
in each case to the following addresses, facsimile numbers or e-mail addresses
and marked to the attention of the person (by name or title) designated below
(or to such other address, facsimile number, e-mail address or person as a party
may designate by notice to the other parties):

       

      
        
          
            	
                    Seller:

                     

                    CoveyLink
      Worldwide LLC

                    175
      West Canyon Crest Road, Suite 100

                    Alpine,
      UT 84004

                    Attention:  Greg
      Link

                    Fax
      no.:  (801) 880-7744

                    E-mail
      address:  link@coveylink.com

                  
	
                    with
      a copy to:

                     

                    Stephen
      M.R. Covey

                    175
      West Canyon Crest Road, Suite 100

                    Alpine,
      UT 84004

                    E-mail
      address:  covey@coveylink.com

                     

                    Hill
      Johnson & Schmutz, LC

                    4844
      North 300 West, Suite 300

                    Provo,
      UT 84604

                    Attention:
      Richard L. Hill

                    Fax
      no.: (801) 375-3865

                    E-mail
      address:
rhill@hjslaw.com

                  

          

        

      

      
        
          
          

        

        
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                  CoveyLink:

                  175
      West Canyon Crest Road, Suite 100

                  Alpine,
      UT 84004

                  Attention:  Greg
      Link

                  Fax
      no.:  (801) 880-7744

                  E-mail
      address: link@coveylink.com

                   

                  with
      a copy to:

                   

                  Stephen
      M.R. Covey

                  175
      West Canyon Crest Road, Suite 100

                  Alpine,
      UT 84004

                  E-mail
      address:  covey@coveylink.com

                   

                  Hill
      Johnson & Schmutz, LC

                  4844
      North 300 West, Suite 300

                  Provo,
      UT 84604

                  Attention:
      Richard L. Hill

                  Fax
      no.: (801) 375-3865

                  E-mail
      address: rhill@hjslaw.com

                
	
                  Buyer
      or Parent:

                  Franklin
      Covey Co.

                  2200
      West Parkway Blvd.

                  Salt
      Lake City, UT  84119

                  Attention:  Robert
      A. Whitman

                  Fax
      no.:  (801) 817-8069

                  E-mail
      address:  bob.whitman@franklincovey.com

                
	
                  with
      a copy to:

                   

                  Dorsey
      & Whitney, LLP

                  136
      S. Main Street, Suite 1000

                  Salt
      Lake City, UT  84101

                  Attention:  Nolan
      S. Taylor, Esq.

                  Fax
      no.:  (801) 933-7373

                  E-mail
      address:  taylor.nolan@dorsey.com

                

        

      

       

      8.4 Jurisdiction; Service of
Process.

       

      Each of
the parties submits to the exclusive jurisdiction and venue 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
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      not to
bring any action or proceeding arising out of or relating to this Agreement in
any other court.  Each of the parties waives 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.

       

      8.5 Enforcement of
Agreement.

       

      Seller
and CoveyLink acknowledge and agree that Buyer would be irreparably damaged if
any of the provisions of this Agreement are not performed in accordance with
their specific terms and that any Breach of this Agreement by Seller or
CoveyLink could not be adequately compensated in all cases by monetary damages
alone.  Accordingly, in addition to any other right or remedy to which
Buyer may be entitled, at law or in equity, it shall be entitled to enforce any
provision of this Agreement by a decree of specific performance and to
temporary, preliminary and permanent injunctive relief to prevent Breaches or
threatened Breaches of any of the provisions of this Agreement, without posting
any bond or other undertaking.

       

      8.6 Waiver; Remedies
Cumulative.

       

      The
rights and remedies of the parties to this Agreement are cumulative and not
alternative.  Neither any failure nor any delay by any party in
exercising any right, power or privilege under this Agreement or any of the
documents referred to in 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.  To
the maximum extent permitted by applicable law, (a) no claim or right arising
out of this Agreement or any of the documents referred to in this Agreement can
be discharged by one party, in whole or in part, by a waiver or renunciation of
the claim or right unless in writing signed by the other party; (b) no waiver
that may be given by a party will be applicable except in the specific instance
for which it is given; and (c) no notice to or demand on one party will be
deemed to be a waiver of any obligation of that party or of the right of the
party giving such notice or demand to take further action without notice or
demand as provided in this Agreement or the documents referred to in this
Agreement.

       

      8.7 Entire Agreement and
Modification.

       

      This
Agreement, together with the Contemplated Transactions, supersede all prior
agreements, whether written or oral, between the parties with respect to its
subject matter and constitutes (along with the Schedules, exhibits and other
documents delivered pursuant to this Agreement) a complete and exclusive
statement of the terms of the agreement between the parties with respect to the
subject matter covered thereby.  This Agreement may not be amended,
supplemented, or otherwise modified except by a written agreement executed by
the party to be charged with the amendment.

       

      8.8 Assignments, Successors and
No Third-Party Rights.

       

      No party
may assign any of its rights or delegate any of its obligations under this
Agreement without the prior written consent of the other parties, except that
Buyer may assign any of its rights and delegate any of its obligations under
this Agreement to any Subsidiary of Buyer and may collaterally assign its rights
hereunder to any financial institution providing financing in connection with
the Contemplated Transactions.  Subject to the preceding sentence,
this Agreement will apply to, be binding in all respects upon and inure to the
benefit of the successors and permitted assigns of the
parties.  Nothing expressed or referred to in this Agreement will be
construed to give any Person other than the parties to this Agreement any legal
or equitable right, remedy or claim

       

      
        
          
          

        

        
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      under or
with respect to this Agreement or any provision of this Agreement, except such
rights as shall inure to a successor or permitted assignee pursuant to this
Section 7.8.

       

      8.9 Severability.

       

      If any
provision of this Agreement is held invalid or unenforceable by any court of
competent jurisdiction, the other provisions of this Agreement will remain in
full force and effect.  Any provision of this Agreement held invalid
or unenforceable only in part or degree will remain in full force and effect to
the extent not held invalid or unenforceable.

       

      8.10 Construction.

       

      The
headings of Articles and Sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation.  All
references to “Articles” and “Sections” refer to the corresponding Articles and
Sections of this Agreement.

       

      8.11 Time of
Essence.

       

      With
regard to all dates and time periods set forth or referred to in this Agreement,
time is of the essence.

       

      8.12 Governing
Law.

       

      This
Agreement will be governed by and construed under the laws of the State of Utah
without regard to conflicts-of-laws principles that would require the
application of any other law.

       

      8.13 Execution of
Agreement.

       

      This
Agreement may be executed in one or more counterparts, each of which will be
deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same
agreement.  The exchange of copies of this Agreement and of signature
pages by facsimile transmission shall constitute effective execution and
delivery of this Agreement as to the parties and may be used in lieu of the
original Agreement for all purposes.  Signatures of the parties
transmitted by facsimile shall be deemed to be their original signatures for all
purposes.

       

      8.14 CoveyLink  and
Parent Obligations.

       

      The
liability of CoveyLink hereunder shall be joint and several with
Seller.  Without limiting the generality of the foregoing, Seller and
CoveyLink shall be jointly and severally liable for (a) any Breach by either
Seller or CoveyLink and (b) the indemnities set forth in Article
VII.  The liability of Parent hereunder shall be joint and several
with Buyer.  Without limiting the generality of the foregoing, Buyer
and Parent shall be jointly and severally liable for (a) any Breach by either
Buyer or Parent and (b) the indemnities set forth in Article VII.

       

       

       

      [Signature Page
Follows]

       

       

       

      
        
          
          

        

        
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      IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date first written
above.

      

 

      
        
          
            
              	 
      	
                      BUYER:

                       

                      FRANKLIN
      COVEY CLIENT SALES, INC.

                       

                    
	
                      By:

                    	
                      /s/
      Stephen D. Young

                    
	
                      Name:

                    	
                      Stephen
      D. Young

                    
	
                      Title:

                    	
                      President

                    
	 
      	 
      
	 
      	
                      PARENT:

                       

                      FRANKLIN
      COVEY CO.

                       

                    
	
                      By:

                    	
                      /s/
      Robert A. Whitman

                    
	
                      Name:

                    	
                      Robert
      A. Whitman

                    
	
                      Title:

                    	
                      President
      and CEO

                    
	 
      	 
      
	 
      	
                      SELLER:

                       

                      COVEYLINK
      WORLDWIDE LLC

                       

                    
	
                      By:

                    	 
      
	
                      Name:

                    	 
      
	
                      Title:

                    	 
      
	 
      	 
      
	 
      	
                      COVEY/LINK:

                       

                       

                      COVEY/LINK,
      LLC

                    
	
                      By:

                    	 
      
	
                      Name:

                    	 
      
	
                      Title:

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