Document:

ex104_071108.htm

     

     

     

    
      

      

    

    Exhibit
10.4

     

     

    
 

     

     

    AMENDED
AND RESTATED OPERATING AGREEMENT

    

    OF

    

    FRANKLIN
COVEY PRODUCTS, LLC

     

     

     

     

     

     

     

     

     

    

    

    
      
         

      

      
         

        
          

          

        

        
          

        

      

      
         

      

    

    AMENDED
AND RESTATED OPERATING AGREEMENT

    

    OF

     

    FRANKLIN
COVEY PRODUCTS, LLC

     

    THIS
AMENDED AND RESTATED OPERATING AGREEMENT (this “Agreement”), is dated as of July
7, 2008 but effective as of July 5, 2008 at 11:59 pm Mountain Daylight Time (the
“Effective Date”), by and among FRANKLIN COVEY PRODUCTS, LLC, a Utah limited
liability company (“Franklin Covey Products”), PETERSON PARTNERS V, L.P., a
Delaware limited partnership (“Peterson”), FRANKLIN COVEY CLIENT SALES, INC., a
Utah corporation (“FC”), SARAH MERZ, an individual, GORDON WILSON, an
individual, RICK WOODEN, an individual, JEFF ANDERSON, an individual, BOB
SUMBOT, an individual, KENT FROGLEY, an individual, MIKE CONNELLY, an
individual, BRYAN WILDE, an individual and ERIC BRIGHT, an individual, as
members of the Company (the “Members”) and JORDAN CLEMENTS, an individual, JAMES
B. NELSON, an individual, ROBERT A. WHITMAN, an individual, and SARAH MERZ, an
individual, as managers of the Company (the “Managers”).

     

    For the
consideration of their mutual covenants hereinafter set forth, the Company and
the Members and Managers hereby agree as follows:

     

    RECITALS

     

    WHEREAS, the Company was
formed upon the filing of Articles of Organization on May 22, 2008 and entered
into that certain Operating Agreement of the Company dated May 22, 2008 (the
“Original Operating Agreement”);

     

    WHEREAS, the Company entered
into the Asset Purchase Agreement and the Ancillary Agreements to purchase and
otherwise acquire the Business;

     

    WHEREAS, in connection with
the Closing, Peterson and certain other Members are contributing certain amounts
to the Company in exchange for Class A Units, as further described in this
Agreement;

     

    WHEREAS, in connection with
the Closing, FC is contributing a certain amount to the Company in exchange for
Class B Units, as further described in this Agreement;

     

    WHEREAS, in connection with
the Closing, FC is also contributing one million dollars ($1,000,000) for which
no additional Units will be issued to FC but with respect to which FC shall be
entitled to the FC Preferred Return and a priority distribution as set forth in
this Agreement;

     

    WHEREAS, the Company desires
to issue the Profits Interest Units as further described in this Agreement to
certain key executives of the Company, and the key executive desire to receive
such Profits Interest Units; and

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    WHEREAS, on the date hereof or
soon thereafter, the Company shall file amended and restated Articles of
Organization with the Division to reflect the current Managers.

     

    NOW, THEREFORE, in consideration of
mutual representations, warranties, and agreements contained in this Amended and
Restated Operating Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties amend and
restate the Original Agreement, and agree as follows:

     

    ARTICLE
I 

     

    DEFINITIONS

     

    1.1 Definitions.  Appendix
1 hereof sets forth the definitions of certain terms relating to the maintenance
of Capital Accounts and accounting rules.  In addition, the following
terms used in this Agreement shall have the following meanings:

     

    “Acquired Assets” is
defined in the Asset Purchase Agreement.

     

    “Act” means the Utah
Revised Limited Liability Company Act, Utah Code Ann. § 48-2c-101, et seq., as amended from time
to time.

     

    “Affiliate” means any
Person directly or indirectly controlling, controlled by, or under common
control with another Person. “Control,” “controlled” and “controlling” means the
power to direct or cause the direction of the management and policies of a
Person and shall be deemed to exist if any Person directly or indirectly owns,
controls, or holds the power to vote fifty percent (50%) or more of the voting
securities of such other Person.

     

    “Agreement” means the
Amended and Restated Operating Agreement as set forth in paragraph one of this
Agreement, as amended from time to time.

     

    “Ancillary Agreements”
means as defined in the Asset Purchase Agreement, provided that for the purpose
of this Agreement the term shall not include this Agreement.

     

    “Asset Purchase
Agreement” means the Asset Purchase Agreement, dated as of May 22, 2008,
among the Company and Franklin Covey Co., a Utah corporation, Franklin Covey
Canada, Ltd., a Canadian corporation, Franklin
Covey de Mexico S. de R.L. de C.V., a Mexican company, Franklin Covey Europe,
Ltd., a UK registered company, FC, Franklin Covey Catalog Sales, Inc., a Utah
corporation, Franklin Covey Product Sales, Inc., a Utah corporation, and
Franklin Covey Printing, Inc., a Utah corporation, as the same may be amended
from time to time in accordance with its terms.

     

    “Assumed Liabilities”
means as defined in the Asset Purchase Agreement.

     

    “Business” is defined
in the Asset Purchase Agreement.

     

    “Capital Contribution”
means any contribution to the capital of the Company whenever
made.  The initial Capital Contribution of each Member is listed in
Exhibit A.

     

    
      
         

      

      
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    “Cause” shall mean any
one or more of the following: (A) a Restricted Member or Manager’s continued
willful failure, neglect, or refusal to perform his duties with respect to the
Company which continues beyond thirty (30) days after a written demand for
substantial performance is delivered to such Restricted Member or Manager by the
Company; (B) conduct by a Restricted Member or Manager involving fraud, material
dishonesty or breach of trust in connection with such Restricted Member or
Manager’s performance of his duties to the Company as reasonably determined by
the Management Board; (C) the conviction of a Restricted Member or Manager of a
crime involving theft, dishonesty or moral turpitude (or upon such Restricted
Member or Manager’s entry of a guilty plea to or entry of a nolo contendere plea
to a criminal charge involving theft, dishonesty or moral turpitude); (D) a
Restricted Member or Manager’s willful and continued failure or refusal to
follow lawful and material directions of the Management Board or any other
substantial and continued acts of insubordination by such Restricted Member or
Manager as reasonably determined by the Management Board; or (E) any other act
or omission that (in the reasonable determination by the Management Board) has
caused or is likely to cause detrimental notoriety or other comparable material
harm to the Company, monetarily or otherwise.

     

    “Change of Control”
means (i) the acquisition of the Company by a successor entity by means of any
transaction or series of transactions (including, without limitation, any
acquisition, recapitalization, conversion, reorganization, merger or
consolidation) other than a transaction or series of related transactions in
which the holders of the voting securities of the Company outstanding
immediately prior to such transaction retain, immediately after such transaction
or series of transactions, at least a majority of the total voting power
represented by the outstanding voting securities of the Company or such other
surviving or resulting entity (or if the Company or such other surviving or
resulting entity is a wholly owned subsidiary immediately following such
acquisition, its parent); or (ii) a sale or other disposition of all or
substantially all of the assets of the Company and its subsidiaries taken as a
whole by means of any transaction or series of related transactions, except
where such sale or other disposition is to a wholly owned subsidiary of the
Company.

     

    “Class A Member” means
a Member holding Class A Units.

     

    “Class A Preferred
Return” means a sum equal to eight percent (8%) per annum, determined on
the basis of a year of 365 or 366 days, as the case may be, for the actual
number of days occurring in the period for which the Class A Preferred Return is
being determined, cumulative and compounded annually to the extent not
distributed in any Fiscal Year pursuant to Section 5.1(c) or Section 12.2(d), of
the average daily balance of a Class A Members’ Class A Unreturned Contribution
Balances, from to time, during the period to which the Class A Preferred Return
relates, commencing on the date each Class A Member first makes a Capital
Contribution.

     

    “Class A Unit” means a
Class A Unit of the Company having the rights described herein and otherwise
governed by the terms and conditions of this Agreement and any other Equity
Securities into which such Class A Units may be exchanged or converted in
accordance with this Agreement.

     

    
      
         

      

      
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    “Class A Unreturned
Contribution Balance” means the total amount of Capital Contributions
made to the Company by a Class A Member less the amount of distributions made to
such Class A Member in accordance with Section 5.1(d) and Section 12.2(e) of
this Agreement.

     

    “Class B Member” means
a Member holding Class B Units.

     

    “Class B Unit” means a
Class B of the Company having the rights described herein and otherwise governed
by the terms and conditions of this Agreement and any other Equity Securities
into which such Class B Units may be exchanged or converted in accordance with
this Agreement.

     

    “Class B Unreturned
Contribution Balance” means the total amount of Capital Contributions
made to the Company by the Class B Member other than the FC Priority
Contribution less the amount of distributions made to such Member in accordance
with Section 5.1(e) and Section 12.2(f) of this Agreement.

     

    “Class C Member” means
a Member holding Class C Units.

     

    “Class C Unit” means a
Class C Unit of the Company having the rights described herein and otherwise
governed by the terms and conditions of this Agreement and any other Equity
Securities into which such Class C Units may be exchanged or converted in
accordance with this Agreement.

     

    “Closing” means the
“Closing” under the Asset Purchase Agreement.

     

    “Code” means the
Internal Revenue Code of 1986, as amended from time to time.  All
references herein to sections of the Code shall include any corresponding
provision or provisions of succeeding law.

     

    “Company” means
Franklin Covey Products, LLC, a Utah limited liability company.

     

    “Covered Person” means
(i) a Member, a Manager or an Officer, (ii) an Affiliate of a Member, a Manager
or an Officer, and, (iii) directly or indirectly, the respective officers,
directors, shareholders, partners, managers, members, trustees, beneficiaries,
employees, representatives or agents of a Member, a Manager or an Officer, or an
Affiliate of a Member, a Manager or an Officer.

     

    “Disabling Conduct”
means an admission in writing or conviction of fraud, a willful violation of
this Agreement after notice and an opportunity to cure, commission of a felony
or other crime involving moral turpitude, or gross negligence or willful
misconduct in the performance of duties.

     

    “Division” means the
Utah Department of Commerce, Division of Corporations and Commercial
Code.

     

    
      
         

      

      
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    “Equity Securities”
means (i) any Units, (ii) any options, warrants or other rights to acquire any
Units and any other securities convertible into or exercisable or exchangeable
for (or entitling the holder thereof to subscribe for) Units, (iii) any equity
securities distributed in respect of the Units pursuant to dissolution of the
Company or otherwise, and (iv) any securities issued directly or indirectly with
respect to the foregoing securities by way of a split, dividend, or other
division of securities, or in connection with an exchange or combination of
securities, recapitalization, merger, consolidation or other
reorganization.

     

    “FC Preferred Return”
means a sum equal to ten percent (10%) per annum, determined on the basis of a
year of 365 or 366 days, as the case may be, for the actual number of days
occurring in the period for which the FC Preferred Return is being determined
cumulative and compounded to the extent not distributed in any Fiscal Year
pursuant to Section 5.1(a) or Section 12.2(c) of the average daily balance of
the FC Unreturned Priority Contribution, commencing on the date FC first makes
the FC Priority Contribution.

     

    “FC Priority
Contribution” means the amount of one million dollars ($1,000,000)
contributed by FC to the Company on the Effective Date with respect to which FC
shall not receive any additional Units from the Company, but with respect to
which FC shall be entitled to the FC Preferred Return and a priority
distribution as set forth in this Agreement.

     

    “FC Unreturned Priority
Contribution” means the FC Priority Contribution less any amounts
distributed to FC by the Company that is designated by the Management Board as a
return of the FC Priority Contribution in accordance with Section 3.12 and
Section 4.2(bb) hereof, including, but not limited to, any distributions made to
FC in accordance with Section 5.1(b).

     

    “Fiscal Year” means
the Company’s taxable year, which shall be a calendar year except as otherwise
required by law.

     

    “Governmental Body”
means any government, any governmental or quasi-governmental entity or
authority, including any department, commission, board, bureau, branch, agency
or instrumentality thereof, any administrative or regulatory body obtaining
authority from any of the foregoing, any contractor acting on behalf of any of
the foregoing, and any court, tribunal, judicial or arbitral body, mediation or
conciliation or self-regulatory authority, in each case whether federal, state,
regional, county, city or of any other political subdivision, whether domestic
or foreign.

     

    “Initial Capital
Contributions” means any Capital Contributions made pursuant to Section
3.1 upon the formation of the Company.

     

    “Initial Members”
means Peterson, FC, Sarah Merz, Gordon Wilson, Rick Wooden, Jeff Anderson, Bob
Sumbot, Kent Frogley, Mike Connelly, Bryan Wilde and Eric Bright.

     

    “Law” means any
treaty, code, statute, law (including common law), rule, regulation, convention,
ordinance, Order, legally binding regulatory policy statement or similar legally
binding guidance, binding directive or decree of any kind of any Governmental
Body, as well as any common law.

     

    
      
         

      

      
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    “Liquidity Event”
means (i) the acquisition of the Company by a successor entity by means of any
transaction or series of transactions (including, without limitation, any
acquisition, recapitalization, conversion, reorganization, merger or
consolidation but excluding any sale of equity securities for capital raising
purposes) other than a transaction or series of related transactions in which
the holders of the voting securities of the Company outstanding immediately
prior to such transaction retain, immediately after such transaction or series
of transactions, at least ten percent (10%) of the total voting power
represented by the outstanding voting securities of the Company or such other
surviving or resulting entity (or if the Company or such other surviving or
resulting entity is a wholly owned subsidiary immediately following such
acquisition, its parent); or (ii) a sale or other disposition of all or
substantially all of the assets of the Company and its subsidiaries taken as a
whole by means of any transaction or series of related transactions, except
where such sale or other disposition is to a wholly owned subsidiary of the
Company.

     

    “Majority Vote” means
the written consent or affirmative vote of (i) Members holding more than fifty
percent (50%) of the outstanding Units entitled to vote held by all Members, in
connection with action by the Members; or (ii) more than fifty percent (50%) of
the Managers then in office in connection with action by the Management Board,
each Manager being entitled to one vote.

     

    “Management Board”
means the five (5) individuals appointed in accordance with the provisions of
Section 4.1.  The initial Managers shall be JORDAN CLEMENTS, JAMES B.
NELSON, ROBERT A. WHITMAN, SARAH MERZ and a Manager to be appointed by
Peterson.

     

    “Manager” shall be any
individual serving on the Management Board.  The initial Managers
shall be JORDAN CLEMENTS, JAMES B. NELSON, ROBERT A. WHITMAN, SARAH MERZ and a
Manager to be appointed by Peterson.

     

    “Master License
Agreement” is defined in the Asset Purchase Agreement.

     

    “Material Competitor”
means any Person that, directly or indirectly through Affiliates, is engaged in
the marketing, distribution or sale of Training-Oriented Products or
Training-Oriented Services.  The following terms used in this
definition of “Material Competitor” shall have the following
meanings:  (i) “Training-Oriented Product” means any good, product or
thing in any tangible form (including software) that is designed to teach
individuals or organizations Individual Effectiveness, Management/Leadership
and/or Organizational Execution Skills; (ii) “Training-Oriented Service” means
any seminar, session, online course, webinar, consultation or similar
interaction, whether or not for a fee, where the subject matter of such service
relates to or includes Individual Effectiveness, Management/Leadership and/or
Organizational Execution Skills; and (iii)  “Individual Effectiveness,
Management/Leadership and/or Organizational Execution Skills” means any and all
organizational, management, leadership or personal effectiveness skills and the
techniques and strategies for attaining such skills including, without
limitation, executive coaching, management coaching, performance review,
trust-building (in or out of an organizational setting), execution-related
skills, personal time management, personal performance, personal goal-setting
(including personal time-management, performance and goal setting in any
academic or educational environment), family

     

    
      
         

      

      
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    effectiveness,
family organization, family goal-setting, family values, personal fitness,
wellness and life balance, and any other form of training.

     

    “Member” means (a)
each Initial Member until such time, if any, that any such Person becomes a
Withdrawn Member, (b) any Person acquiring Units directly from the Company in
accordance with this Agreement until such time, if any, that any such Person
becomes a Withdrawn Member, and (c) any Person who acquires Units in the Company
in a Permitted Transfer and who is deemed, or is admitted as, a Substitute
Member until such time, if any, that such Person becomes a Withdrawn
Member.

     

    “Net Available Cash
Flow” means, with respect to any period, the Company’s gross cash
receipts derived from any source whatsoever, excluding Capital Contributions,
reduced by the portion thereof used to pay or establish reasonable reserves for
all Company expenses, debt payments and accrued interest (including principal
and interest payments on loans made to the Company by non-Members and by the
Members), contingencies, and proposed acquisitions, as determined by the
Management Board.  “Net Available Cash Flow” shall not be reduced by
depreciation, amortization, cost recovery deductions, or similar
allowances.

     

    “Officer” means as set
forth in Section 4.10.  The initial Officers of the Company are as
follows:

     

    Chairman
of the Management
Board:                                 Robert
A. Whitman

     

    Chief
Executive Officer and
President:                               Sarah
Merz

     

    Chief
Financial
Officer:                                                          Robert
Sumbot

     

    “Order” means any
judgment, writ, decree, directive, decision, injunction, ruling, stipulation,
award, order (including any consent decree or cease and desist order) or
determination of kind issued, promulgated or entered by or with any Governmental
Body.

     

    “Original Operating
Agreement” is defined in the Recitals.

     

    “Percentage Interest”
means, at any particular time, the percentage interest of each Member or Unit
Holder of the Company and determined with respect to a particular Member or Unit
Holder at any particular time by dividing the number of Units owned by such
Member or Unit Holder by the aggregate number of outstanding Units.

     

    “Person” means any
individual, firm, corporation, partnership, limited liability company, trust,
estate, association or other legal entity.

     

    “Priority Members”
means the Class A Members and the Class B Members.

     

    “Profits” means the
profits of the Company as defined in Section A1 of Appendix 1.

     

    “Public Offering”
means any underwritten sale of any Equity Securities pursuant to an effective
registration statement under the Securities Act filed with the SEC on Form S-1
(or a successor form) after which such Equity Securities are (i) listed on a
national securities

     

    
      
         

      

      
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    exchange
and (ii) registered under the Securities Exchange Act; provided that the
following shall not be considered a Public Offering: (A) any issuance of Equity
Securities as consideration or financing for a merger or acquisition and (B) any
issuance of Equity Securities or rights to acquire Equity Securities to
employees as part of an incentive or compensation plan.

     

    “Quorum” shall mean
(i) at least fifty percent (50%) of the Managers then in office, in the case of
a meeting of the Management Board; or (ii) Members who own, in the aggregate, a
majority of the outstanding Units held by all Members entitled to vote at the
meeting, in the case of a meeting of the Members.

     

    “Regulations” mean the
Income Tax Treasury Regulations promulgated under the Code as such Regulations
may be amended and in effect from time to time (including corresponding
provisions of succeeding Regulations).

     

    “Reset Ratio” is
defined in the Master License Agreement.

     

    “SEC” means the U.S.
Securities and Exchange Commission and any Governmental Body or agency
succeeding to the functions thereof.

     

    “Securities Act” means
the Securities Act of 1933.

     

    “Securities Exchange
Act” means the Securities Exchange Act of 1934.

     

    “Selling Companies” is
defined in the Asset Purchase Agreement.

     

    “Substitute Member”
means a Person who acquires Units from a Member and who satisfies all of the
conditions of Section 11.5.

     

    “Taxing Jurisdiction”
means any state, local, or foreign government that collects tax, interest, and
penalties, however designated, on any Member’s share of income or gain
attributable to the Company.

     

    “Tax Matters Partner”
means the Person so designated in Section 9.4(b).

     

    “Transfer” means, when
used as a noun, any voluntary or involuntary sale, assignment, gift, transfer,
or other disposition and, when used as a verb, voluntarily or involuntarily to
sell, assign, gift, dispose, or otherwise transfer.

     

    “Unanimous Consent”
means the written consent of all of the Members.

     

    “Unit” means the
economic interest in the Company acquired by a Member or Unit Holder
representing the economic rights of a Member or Unit Holder and the Member’s or
Unit Holder’s permitted assignees and successors to share in distributions of
cash and other property from the Company pursuant to the Act and this Agreement,
together with the Member’s or Unit Holder’s distributive share of the Company’s
Profits and Losses and shall include the Class A Units, the Class B Units, and
the Class C Units.

     

    
      
         

      

      
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    “Unit Holder” means a
Person who owns Units of the Company but who is not a Member including, except
as otherwise provided herein, a Member who becomes a Withdrawn
Member.

     

    “Unsuitable
Transferee” means any Person that, directly or indirectly through
Affiliates, engages in any of the following
activities:  (i) publishing or promoting indecent or pornographic
materials, (ii) deriving a substantial portion of revenue from gaming activities
or the promotion or sale of alcoholic beverages, tobacco products or firearms,
(iii) having as a primary purpose the advocacy of a particular political or
moral position or (iv) illegal activities.

     

    “Withdrawal Notice”
means as set forth in Section 10.4(a).

     

    “Withdrawal Event”
means the occurrence of any of the following events:  (1) the Member
voluntarily withdraws from the Company; (2) the Member is expelled as a member,
as provided in the Act; (3) the Member does any of the following: (a) makes an
assignment for the benefit of creditors; (b) files a voluntary petition in
bankruptcy; (c) is adjudicated as bankrupt or insolvent; (d) files a petition or
answer seeking for itself or himself any reorganization, arrangement,
composition, readjustment, liquidation or similar relief under any statute, law
or rule; (e) files an answer or other pleading admitting or failing to contest
the material allegations of a petition filed against it or him in a bankruptcy,
insolvency, reorganization or similar proceeding; (f) seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator of the Member
or of all or any substantial part of its or his property; (4) if a Member is a
natural person: (a) his death; (b) the entry of an order or judgment by a court
of competent jurisdiction adjudicating him incompetent to manage his person or
his estate; (5) if a Member is acting as a Member by virtue of being a trustee
of a trust, the termination of the trust but not merely the substitution of a
new trustee; (6) if a Member is a general or limited partnership, the
dissolution and commencement of winding up of the partnership; (7) if a Member
is a corporation, the filing of a certificate of dissolution or its equivalent
for the corporation or revocation of its charter; (8) if a Member is an estate,
the distribution by the fiduciary of the estate’s entire interest in the
Company; (9) if a Member is another foreign or domestic limited liability
company, the filing of articles of dissolution or termination or their
equivalent for the foreign or domestic limited liability company and (10) the
Member ceases to be a member of the Company for any other reason pursuant to
Section 708 of the Act.

     

    “Withdrawn Member”
means a Member following the occurrence of a Withdrawal Event with respect to
such Member.

     

    The
following terms not defined above are defined in the sections indicated
below:

     

    
      	
              Definition

            	
              Defined

            
	
              Additional
      Capital Shortfall

            	
              3.2(b)

            
	
              Capital
      Account

            	
              Sec.
      A1, App. 1

            
	
              Claims

            	
              8.2(a)

            
	
              Contributing
      Member

            	
              3.2(b)

            
	
              CPR
      Institute

            	
              13.2

            

    

    
      
         

      

      
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              Damages

            	
              8.2(a)

            
	
              Depreciation

            	
              Sec.
      A1, App. 1

            
	
              Designated
      Office

            	
              2.4

            
	
              Disposing
      Member

            	
              11.4(b)

            
	
              Disposition
      Notice

            	
              11.4(b)

            
	
              Dispute
      Notice

            	
              3.10(a)

            
	
              Drag-Along
      Notice

            	
              11.8(a)

            
	
              Drag-Along
      Right

            	
              11.8

            
	
              Expenses

            	
              14.14

            
	
              FC
      Manager

            	
              4.1(b)

            
	
              Gross
      Asset Value

            	
              Sec.
      A1, App. 1

            
	
              Losses

            	
              Sec.
      A1, App. 1

            
	
              Management
      Services Agreements

            	
              4.15

            
	
              Noncontributing
      Member

            	
              3.2(b)

            
	
              Non-Disposing
      Members

            	
              11.4(b)

            
	
              Notice
      Period

            	
              11.4(b)

            
	
              Offered
      Units

            	
              11.9(a)

            
	
              Performance-Based
      Restricted Units

            	
              3.9(c)(ii)

            
	
              Permitted
      Transfer

            	
              11.2

            
	
              Peterson
      Managers

            	
              4.1(b)

            
	
              Peterson/FC
      Manager

            	
              4.1(b)

            
	
              Presumed
      Tax Liability

            	
              5.7

            
	
              Proceeding

            	
              8.2(a)

            
	
              Profits
      Interest Grant Letter

            	
              3.4(e)(i)

            
	
              Profits
      Interest Pool

            	
              3.4(e)(i)

            
	
              Profits
      Interest Units

            	
              3.9

            
	
              Proposed
      Transfer

            	
              11.9(a)

            
	
              Purchase
      Option

            	
              10.4(b)

            
	
              Purchase
      Option Notice

            	
              10.4(c)

            
	
              Redemption
      Date

            	
              3.9(b)

            
	
              Remaining
      Member

            	
              11.9

            
	
              Repurchase
      Notice

            	
              3.10(a)

            
	
              Repurchase
      Price

            	
              3.10(a)

            
	
              Restricted
      Member

            	
              3.4(e)(ii)

            
	
              Restricted
      Unit

            	
              3.4(e)(ii)

            
	
              Safe
      Harbor

            	
              3.4(v)(A.2)

            
	
              Safe
      Harbor Election

            	
              3.4(v)(A.2)

            
	
              Successor
      Corporation

            	
              2.9

            
	
              Tag-Along
      Demand

            	
              11.9(c)

            
	
              Tag-Along
      Rights

            	
              11.9(a)

            
	
              Tax
      Advances

            	
              5.8

            
	
              Tax
      Distribution

            	
              5.7

            
	
              Time
      Vested Restricted Units

            	
              3.9(c)(i)

            
	
              Transferring
      Member

            	
              11.8

            
	
              Withdrawal
      Notice

            	
              10.4(a)

            
	
              Withdrawn
      Member

            	
              10.4(e)

            

    

    

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    

    ARTICLE
II

     

    FORMATION
OF THE LIMITED LIABILITY COMPANY

     

    2.1 General.  The
Company has been formed pursuant to the Act and the terms of the Original
Operating Agreement, effective upon the filing of the Articles of Organization
on May 22, 2008.  The Members shall execute and acknowledge any and
all certificates and instruments and do all filing, recording, and other acts as
may be necessary or appropriate to comply with the requirements of the Act
relating to the formation, operation, and maintenance of the Company in
accordance with the terms of this Agreement.

     

    2.2 Name.  The
name of the Company is “Franklin Covey Products, LLC,” and the business of the
Company shall be carried on in this name with such variations and changes as the
Management Board deems necessary or appropriate to comply with requirements of
the jurisdiction(s) in which the Company’s operations shall be
conducted.

     

    2.3 Purposes and
Powers.  The business purpose of the Company shall be to
transact any lawful business as may be authorized under the
Act.  Without limiting the foregoing, the purposes for which the
Company is formed are (i) to operate the Business, directly or indirectly
through subsidiaries, and in connection therewith to enter into the Ancillary
Agreements, and (ii) such other purposes as may be approved by the Majority Vote
of the Managers consistent with the Company’s Articles of
Organization.

     

    2.4 Designated
Office.  The designated office of the Company (the “Designated
Office”) shall be located at 2250 West Parkway Blvd., Salt Lake City, Utah
84119.  The Management Board shall be authorized to change the
location of the designated office of the Company; provided, however, that such
change is authorized under the Act, the Management Board provides written notice
of such change to all of the Members, and the Managers deliver a statement of
change to the Division.

     

    2.5 Registered Agent; Registered
Office.  The registered agent for service of process on the
Company in the State of Utah is Robert Sumbot and the registered office of the
Company shall be located at the same address as the Designated
Office.  

     

    2.6 Term.  The
term of the Company commenced on the filing of the Articles of Organization for
the Company and shall not expire except in accordance with the provisions of
Article XII hereof or in accordance with the Act.

     

    2.7 Company
Classification.  The Members intend that, until such time, if
any, as the Company is converted to a corporation in accordance with this
Agreement, the Company always be operated in a manner consistent with its
treatment as a “partnership” for federal and state income tax
purposes.  The Members also intend that the Company not be operated or
treated as a “partnership” for purposes of Section 303 of the Federal Bankruptcy
Code.  None of the Management Board, the Managers, or the Members may
take any action inconsistent with the express intent of the parties
hereto.  The Company is not a “partnership” for purposes of the Utah
General and Limited Liability Partnerships (Utah Code Ann. § 48-1-1 et seq.) or
the Utah

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    Revised
Uniform Limited Partnership Act (Utah Code Ann. § 48-2a-101 et seq.) and the
Members are not partners for the purposes of such provisions.

     

    2.8 Qualification in Other
Jurisdictions.  The Management Board, or any employee of the
Company designated by the Management Board as an officer of the Company, shall
cause the Company to be qualified or registered under foreign entity or assumed
or fictitious name statutes or similar Laws in any jurisdiction in which the
Company owns property or transacts business to the extent such qualification or
registration is necessary or advisable in order to protect the limited liability
of the Members or to permit the Company lawfully to own property or transact
business.  In connection with the foregoing, any Manager or any such
officer, acting alone, may execute, deliver and file any certificates (and any
amendments and/or restatements thereof) necessary for the Company to qualify to
do business in a jurisdiction in which the Company may wish to conduct
business.

     

    2.9 Conversion to
Corporation.  The Management Board may elect to cause the
Company to be converted from a limited liability company to a corporation (the
“Successor Corporation”).  All of the rights, privileges, and powers
of the Company and all property and assets of the Company shall remain vested in
the Successor Corporation, and all debts, liabilities, and duties of the Company
shall remain attached to the Successor Corporation, all as more provided by
applicable Law.  Upon consummation of the conversion: (a) all Members
shall be issued such class or series and amount of preferred or common stock or
other securities in the Successor Corporation which reflects their relative
economic interests in the Company with respect to the class or series of Equity
Securities owned by them prior to the conversion and whose terms best preserve
the rights, privileges, preferences, restrictions and limitations of such
applicable class or series of Equity Securities as provided under this
Agreement, including but, not limited to, the rights to receive those dollar
amounts that would be allocated to each class or series of Equity Securities if
the Company were to be liquidated in accordance with this Agreement at the time
of such conversion, and (b) the Members shall enter into, and cause the
Successor Corporation to enter into, a shareholders agreement with respect to
the equity securities of the Successor Corporation setting forth rights and
obligations of the parties equivalent to those set forth in this
Agreement.  Any such shareholders agreement shall also include
substantially equivalent demand and piggy back registration rights for the
benefit of the Priority Members (and excluding the Members holding Class C
Units) on customary terms and conditions.

     

    2.10 Statutory
Compliance.  The Members shall make all filings and disclosures
required by, and shall otherwise comply with, all Laws in connection with this
Agreement or the Business.  The Members shall execute, file and record
in the appropriate records any assumed or fictitious name certificate required
by Law to be filed or recorded in connection with the formation of the Company
and shall execute, file and record such other documents and instruments as may
be necessary or appropriate with respect to the formation of, and conduct of
business by, the Company.  Each Member shall, and shall cause its
Affiliates to, cooperate reasonably with the other Member with respect to all
filings that the Company or a Member is required or otherwise elects to make
under Law in connection with this Agreement or the
Business.   

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    ARTICLE
III

     

    CAPITAL
CONTRIBUTIONS

     

    3.1 Initial Capital
Contributions.  As of the Effective Date, the Initial Members
of the Company shall contribute property as set forth in Exhibit A to the
Company in exchange for their Units.  In addition, FC shall contribute
the FC Priority Contribution with respect to which FC shall not be issued any
additional Units.

     

    3.2 Additional Capital
Contributions by the Members.

     

    (a) The
Management Board may, from time to time, determine that Capital Contributions in
addition to the Members’ prior Capital Contributions are needed to enable the
Company to conduct its business.  Upon making such a determination,
notice shall be given to all Members in writing at least thirty (30) days before
the date on which the Members may make such additional Capital
Contributions.  The notice shall set forth the amount of additional
Capital Contribution needed, the purpose for which it is needed, and the date by
which the Members may contribute such additional amounts.  No Member
shall be required to make an additional Capital
Contribution.  However, each Member shall be given the opportunity to
make such additional Capital Contribution in proportion to such Member’s
Percentage Interest in relation to Units then held by all
Members.  Upon payment of the additional Capital Contribution, the
Company shall issue a new Class of Units to each contributing Member, each new
Unit having a value as determined by the Management Board, provided, however, that the
Company shall not issue any Units with superior rights to the Class A Units or
the Class B Units without the written consent of a majority of the issued and
outstanding Class A Units and the Class B Units, voting together as a single
class and not as a separate class.  The value of the Units shall be
reasonably determined by the Management Board after consultation with
knowledgeable professionals based on the then current value of the Company;
provided, however, that unless required by the Management Board, the Company
shall not be required to obtain an appraisal of the Company.

     

    (b) If a
Member fails to make an additional Capital Contribution, which such Member has
an option to make under Section 3.2(a), at the time specified in the notice (a
“Noncontributing Member”), the Management Board shall, within five (5) days
after said failure, notify each other Member which has made its additional
Capital Contribution in full (a “Contributing Member”) in writing of the total
amount of Noncontributing Member Capital Contributions not made (the “Additional
Capital Shortfall”), and shall specify a number of days within which each
Contributing Member may make an additional Capital Contribution, which Capital
Contribution shall not be less than an amount bearing the same ratio to the
amount of Additional Capital Shortfall as the Contributing Member’s Units bear
to the total Units of all Contributing Members.  If the total amount
of Additional Capital Shortfall is not contributed, the Management Board may use
any reasonable method to provide Members the opportunity to make additional
Capital Contributions until the Additional Capital Shortfall is as fully
contributed as possible.

     

    (c) Immediately
before the issuance of additional Units, the Company shall adjust the Capital
Accounts of the Members who own Units in the Company before the issuance of the
additional Units in Section 1.704-1(b)(2)(iv)(f) of the
Regulations.  Further, following the

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    issuance
of the additional Units, if necessary, the Management Board shall re-compute the
Percentage Interests of the Members based on the total number of Units held by
each Member after the issuance of the additional Units.

     

    3.3 Additional Funding;
Borrowing.  Before or after the expenditure or commitment of
Company capital, the Management Board may, but shall not be obligated to, obtain
or provide additional financing for Company activities by any method which it
believes to be appropriate under the circumstances, including issuance of
additional Units or borrowing funds for or loaning funds to the Company,
provided, however, that the Company shall not issue any Units with superior
rights to the Class A Units or the Class B Units without the written consent,
respectively, of a majority of the Class A Members with respect to the Class A
Units and a majority in interest of the Class B Members with respect to the
Class B Units.  The Company may borrow, at the discretion of the
Management Board, from banks, lending institutions, or other unrelated third
parties, or from Affiliates of the Company or any Member, Manager or Officer,
and may pledge Company properties or any income therefrom to secure or provide
for the repayment of any such loans.  In the event the Company elects
to borrow funds from one or more Members, each Priority Member shall have the
right, but not the obligation, to loan to the Company his or its proportionate
share of the aggregate principal amount of funds borrowed from the Member or
Members, which amount shall be based upon such Member’s Percentage Interest
(taking into account only the Percentage Interests of the Priority
Members).

     

    3.4 Units.

     

    (a) General.  The total
number of outstanding Units of the Company as of the Effective Date is one
hundred thousand (100,000) Units.  The name and address of each
Initial Member and the initial number of Units and the class of Units held by
each Initial Member is set forth on Exhibit A.  Exhibit A shall
reflect any additional Units issued by the Company, any Units transferred in
accordance with this Agreement, and any Person admitted as a
Member.  Members or Unit Holders who change their addresses following
the issuance of Units shall advise the Company of any such change of
address.  Any reference to Exhibit A in this Agreement means Exhibit A
as amended to reflect any changes in the information specified
herein.  The Managers shall be authorized, but not obligated, to issue
certificates reflecting the number of Units held by each Member of the
Company.

     

    (b) Class A Units. There shall be
a class of Units that shall be designated as “Class A Units” that shall have the
respective voting and economic rights set forth in this Agreement, including the
right to receive distributions pursuant to Section 5.1(c), Section 12.2(d), and
Section 12.2(e).  As of the date hereof, the Company has issued and
outstanding 64,357.73 Class A Units, the number of which are held by certain
Members in exchange for a cash Capital Contribution as follows:

     

    
      	
              No. of Class A
      Units

            	
              Member

            	
              Capital
      Contributions

            
	
              60,804.49

            	
              Peterson

            	
              $6,845,000

            
	
              1,776.61

            	
              Sarah
      Merz

            	
              $200,000

            
	
              888.31

            	
              Rick
      Wooden

            	
              $100,000

            
	
              222.08

            	
              Gordon
      Wilson

            	
              $25,000

            
	
              222.08

            	
              Jeff
      Anderson

            	
              $25,000

            

    

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    

    
      	
              222.08

            	
              Bob
      Sumbot

            	
              $25,000

            
	
              222.08

            	
              Kent
      Frogley

            	
              $25,000

            

    

     

    (c) Class B Units. There shall be
a class of Units that shall be designated as “Class B Units” that shall have the
respective voting and economic rights set forth in this Agreement, including the
right to receive distributions pursuant to Section 12.2(f).  As of the
date hereof, the Company has issued and outstanding 15,600 Class B Units held by
FC in exchange for a Capital Contribution in the amount of $1,755,000 by
FC.

     

    (d) Additional Units. Subject to
the other terms and conditions of this Agreement, including Section 3.2 of this
Agreement, the Management Board may from time to time by its Majority Vote cause
the Company to issue Additional Units to existing Members or new Members, provided, however, that the
Company shall not issue any Additional Units with superior rights to the Class A
Units or the Class B Units without the written consent of a majority of the
issued and outstanding Class A Units and the Class B Units, voting together as a
single class and not as a separate class.

     

    (e) Class C Units/Profits Interest
Pool.

     

    i. The
Company is authorized to issue up to 20,000 profits interest units (“Profits
Interest Units”) in the form of Class C Units (the “Profits Interest Pool”), of
which 18,400 shall be issued as of the Effective Date to the individuals
identified in Exhibit A, and 1,600 of which shall be issued after the Effective
Date.  The Profits Interest Units in the Profits Interest Pool shall
be issued pursuant to a profits interest grant letter in substantially the form
attached hereto as Exhibit B (with such modifications as the Management Board
may determine, the “Profits Interest Grant Letter”).  The Company
intends that the Profits Interest Units be treated as “profits interests” under
Revenue Procedure 93-27, 1993-2 CB 343, and, if applicable, Revenue Procedure
2001-43, 2001-2 CB 191, or any similar provisions of any future IRS guidance or
applicable law, including Treasury Regulations under Code §83.

     

    ii. Each
Member who receives Profits Interest Units (each such Member, a “Restricted
Member” and such Profits Interest Units, the “Restricted Units”) is willing to
subject the Restricted Units to the terms and conditions of this Agreement,
including Section 3.9 and Section 3.10 and the Profits Interest Grant
Letter.

     

    iii. Unless
otherwise set forth in this Agreement or the Profits Interest Grant Letter, each
holder of Profits Interest Units shall be treated as a Member and shall be
subject to all of the rights and obligations of a Member under this
Agreement.  Without limiting the generality of the foregoing, the
holder of a Profits Interest Unit shall be entitled to receive all allocations
of Profits and Loss with respect to any holder of Profits Interest Units
pursuant to this Agreement, and shall be entitled to all distributions with
respect to any holder of Profits Interest Units in accordance with this
Agreement, until such time as such holder of Profits Interest Units ceases to be
a Member pursuant to this Agreement.

     

    iv. The
Company shall adjust the Capital Accounts of all Members effective immediately
before any issuance of Profits Interest Units contemplated in this Section
3.4(e) pursuant to Treas. Reg. §1.704-1(b)(iv)(f) to reflect the fair market
value of the Company’s

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    assets at
the time of such adjustment.  In addition, following the issuance of
Profits Interest Units, if necessary, the Management Board shall re-compute the
Percentage Interests of the Members based on the total number of Units held by
each Member after the issuance of such additional Units.

     

    v. The IRS
has issued proposed Treasury Regulations Section 1.83-3(l) providing that
subject to such additional conditions, rules, and procedures that the IRS may
prescribe, a partnership and all of its partners may elect a safe harbor under
which the fair market value of a partnership interest that is transferred in
connection with the performance of services will be treated as being equal to
the liquidation value of that interest (the “Safe Harbor”).  Such
proposed Treasury Regulations may become effective on the date the final
Treasury Regulations are published in the federal register.  Each
Member, by executing this Agreement, hereby agrees to the
following:

     

    A.1 The
Company and each Member shall report the fair market value of each Profits
Interest Unit that is transferred in connection with the performance of services
as being equal to the liquidation value of that interest.

     

    A.2 The
Company is authorized and directed to elect the Safe Harbor, in accordance with
proposed Treasury Regulations Section 1.83-3(l) and the proposed revenue
procedure thereunder (once such regulations and revenue procedure become
effective and, in such case, immediately before issuing any Profits Interest
Units) (the “Safe Harbor Election”), provided that if the final Treasury
Regulations issued pursuant to Section 1.83-3(l) and the proposed revenue
procedure thereunder are different in any material way than the current proposed
regulations, then the Management Board shall determine whether to make such
election.

     

    A.3 The
Company and each Member (including any Person to whom a Profits Interest Unit is
transferred in connection with the performance of services) agree to comply with
all requirements of the Safe Harbor Election with respect to all Profits
Interest Units transferred in connection with the performance of services while
the Safe Harbor Election remains in effect, including the requirement that all
relevant U.S. federal income tax items be reported consistently with the Safe
Harbor Election as in effect at the time of the election.

     

    A.4 The
effective date of the Safe Harbor Election shall be the earliest date that a
Profits Interest Unit is issued by the Company after such election is permitted
under the applicable regulations and revenue procedure, once effective, and the
Safe Harbor Election shall continue to apply until such time (if ever) as the
Board agree, and cause the Company, to terminate the Safe Harbor
Election.

     

    A.5 To the
extent required under then-applicable law, the Tax Matters Partner, at the
discretion of the Management Board, shall cause the Company to file all such
forms and documents that are required to have the Safe Harbor Election apply
irrevocably with respect to all Profits Interest Units transferred in connection
with the performance of services while the Safe Harbor Election is in
effect.

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    A.6 The
Company shall comply with any applicable record keeping requirements for the
Safe Harbor Election, and the Company and the Members shall take all other
actions, if any, required to comply with the requirements of such Safe Harbor
Election as ultimately promulgated, to the extent practicable.

     

    A.7 The
Members authorize the Management Board to amend this Agreement, in a manner
reasonably determined by the Board to be necessary to meet the requirements of
the final Treasury Regulations, provided, however, that no
amendment pursuant to this Section 3.4(e)(v) shall be effective if such
amendment adversely affects the economic interest of Units held by any
Member.  For purposes of the preceding sentence, the reduction in or
minimization of a compensation deduction of the Company as a result of such
amendment will not be treated as adversely affecting the economic interest of
Units held by any Member.

     

    vi. Each
Member acknowledges that any applicable transfer restrictions under this
Agreement with respect to certain Restricted Members may result in adverse tax
consequences to such Members that may be avoided or mitigated by filing an
election under Code §83(b).  Such election must be filed within the
timing requirements of Code §83(b), which generally requires that such election
be made within 30 days from the issuance of the Profits Interest Units subject
to the transfer restrictions.  Each Member receiving any Profits
Interest Unit(s) acknowledges and agrees (i) that a Code Section 83(b) election
shall be timely made by such Person, and (ii) that the making of such election
is such Person’s sole responsibility, and not the Company’s, even if such Person
requests the Company or its representatives to make this filing on such Person’s
behalf.

     

    vii. This
Section 3.4(e) shall constitute a written compensation plan and agreement within
the meaning of Rule 701 under the Securities Act and under Utah law with respect
to the issuance of Profits Interest Units.

     

    3.5 Use of Capital
Contributions.  All Capital Contributions shall be expended
only in furtherance of the business purpose of the Company as set forth in
Section 2.3 hereof.

     

    3.6 No Unauthorized Withdrawals
of Capital Contributions.  No Member or Unit Holder shall have
the right to withdraw or to be repaid any of such Member or Unit Holder’s
Capital Contributions, except as specifically provided in this
Agreement.

     

    3.7 Return of
Capital.  Except as otherwise provided in this Agreement, no
Member or Unit Holder shall be entitled to the return of the Member or the Unit
Holder’s Capital Contributions to the Company.

     

    3.8 Third Party
Rights.  Nothing contained in this Agreement is intended or
will be deemed to benefit any creditor of the Company, nor will any creditor of
the Company be entitled to require the Management Board to solicit or demand
Capital Contributions from any Member.  

     

    3.9 Automatic
Redemption.

     

    (a) Each
Restricted Member is willing to subject his Restricted Units to the automatic
redemption provisions of this Section 3.9.

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

     

    (b) In the
event that a Restricted Member voluntarily terminates his services to the
Company or the Company terminates such Restricted Member’s services to the
Company for any or no reason, with or without Cause, the Restricted Units held
by such Restricted Member shall, upon the date of such termination (the
“Redemption Date”), be automatically redeemed by the Company for no
consideration (other than any Tax Distribution to which such Restricted Member
is entitled with respect to the Restricted Units in accordance with Section 5.7
following the allocation of Profits and Losses through the Redemption Date).
Upon the automatic redemption of any Restricted Units, the Company shall become
the legal and beneficial owner of the Restricted Units so redeemed and all
rights and interest therein or related thereto without further action by the
Restricted Member.

     

    (c) The
Restricted Units shall be released from automatic redemption pursuant to Section
3.9(b) in the following manner:

     

    i. One third
(1/3rd) of the
Restricted Units shall be considered “Time Vested Restricted
Units”.  One third (1/3rd) of the
Time Vested Restricted Units shall be automatically released from automatic
redemption pursuant to Section 3.9(b), and shall no longer be treated as
Restricted Units for purposes of this Section 3.9, on each of the first three
annual anniversaries of the date of the grant of such Profits Interest
Units.

     

    ii. Two
thirds (2/3rd) of the
Restricted Units shall be considered “Performance-Based Restricted
Units”.

     

    A.1 All of
the Performance-Based Restricted Units shall be released from automatic
redemption pursuant to Section 3.9(b), and shall no longer be treated as
Restricted Units for purposes of this Section 3.9, if (x) the Company’s average
12-month EBITDA for the 24 months preceding a Liquidity Event is above $19
million; and (y) the Company’s 12-month EBITDA for the second 12 months
preceding a Liquidity Event is at least 95% of the 12-month EBITDA for the first
12 months preceding the Liquidity Event.

     

    A.2 Only
three fourths (3/4th) of the
Performance-Based Restricted Units shall be released from automatic redemption
pursuant to Section 3.9(b), and shall no longer be treated as Restricted Units
for purposes of this Section 3.9, if (x) the Company’s average 12-month EBITDA
for the 24 months preceding a Liquidity Event is above $18 million and up to $19
million; and (y) the Company’s 12-month EBITDA for the second 12 months
preceding a Liquidity Event is at least 95% of the 12-month EBITDA for the first
12 months preceding the Liquidity Event.

     

    A.3 Only one
half (1/2) of the Performance-Based Restricted Units shall be released from
automatic redemption pursuant to Section 3.9(b), and shall no longer be treated
as Restricted Units for purposes of this Section 3.9, if (x) the Company’s
average 12-month EBITDA for the 24 months preceding a Liquidity Event is above
$14 million and up to $18 million; and (y) the Company’s 12-month EBITDA for the
second 12 months preceding a Liquidity Event is at least 95% of the 12-month
EBITDA for the first 12 months preceding the Liquidity Event.

     

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    

     

    A.4 Only one
fourth (1/4th) of the
Performance-Based Restricted Units shall be released from automatic redemption
pursuant to Section 3.9(b), and shall no longer be treated as Restricted Units
for purposes of this Section 3.9, if (x) the Company’s average 12-month EBITDA
for the 24 months preceding a Liquidity Event is above $13 million and up to $14
million; and (y) the Company’s 12-month EBITDA for the second 12 months
preceding a Liquidity Event is at least 95% of the 12-month EBITDA for the first
12 months preceding the Liquidity Event.

     

    A.5 None of
the Performance-Based Restricted Units shall be released from automatic
redemption pursuant to Section 3.9(b) if he Company’s average 12-month EBITDA
for the 24 months preceding a Liquidity Event is $13 million or
less.

     

    A.6 If the
Company sells or otherwise divests a portion of the Business, then “average
12-month EBITDA” and the “12-month EBITDA” used to determine the percentage of
the Performance-Based Restricted Units that shall be released under Section
3.9(b) shall be automatically adjusted downwards based on the same Reset Ratio
as used in Section 6.1(a) of the Master License Agreement.

     

    Any
Restricted Units released from the automatic redemption provisions of this
Section 3.9 shall continue to be subject to the other restrictions on transfer
and the other provisions set forth in this Agreement.

     

    (d) In the
event of a recapitalization or a similar transaction affecting the Company’s
outstanding securities without receipt of consideration, any new, substituted or
additional securities or other property that by reason of such transaction are
distributed with respect to any Restricted Units or into which such Restricted
Units thereby become convertible shall immediately be subject to the provisions
of this Section 3.9.  Appropriate adjustments to reflect the
distribution of such securities or property shall be made to the Restricted
Units.

     

    (e) Upon the
automatic redemption of any Restricted Units pursuant to the provisions of this
Section 3.9, the Restricted Member shall no longer have any rights as a holder
of the Restricted Units so redeemed and Exhibit A shall be
restated to reflect the Restricted Units, if any, held by such Restricted
Member.

     

    3.10 Company Repurchase
Right.

     

    (a) Termination without Cause or
Voluntary Termination by the Restricted Member.  In the event
that the Company terminates a Restricted Member’s services to the Company
without Cause or a Restricted Member voluntarily terminates his services to the
Company, the Company shall have the right to repurchase such Restricted Member’s
Restricted Units that are not subject to the automatic redemption set forth
above in Section 3.9 for a period of 270 days following such termination upon at
least ten (10) days prior written notice to such Restricted Member (the
“Repurchase Notice”).  Subject to Article 3.10(b), the repurchase
price for such Restricted Units shall be a cash amount equal to the fair market
value (as determined by the Company’s Management Board) of such Restricted
Units, taking into account discounts for lack of marketability and lack of
control, to the extent applicable (the “Repurchase Price”). The Repurchase
Notice shall include the proposed Repurchase Price.  If the Restricted
Member

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    disputes
the proposed Repurchase Price, such Restricted Member shall deliver written
notice of such dispute to the Company within twenty (20) days of receipt of the
Repurchase Notice (the “Dispute Notice”). If such Restricted Member fails to
deliver a Dispute Notice to the Company within such 20-day period, such
Restricted Member shall be deemed to have agreed with and shall be bound by the
Repurchase Price proposed in the Repurchase Notice. If such Restricted Member
delivers a Dispute Notice to the Company within such 20-day period, the Company
and such Restricted Member shall select a reputable valuation firm to determine
the fair market value of such Restricted Units.  In the event that the
Company and such Restricted Member do not agree upon a valuation firm within
sixty (60) days of the date the Company delivered the Repurchase Notice to such
Restricted Member, the Company and such Restricted Member shall each select a
reputable valuation firm and instruct the valuation firms to select a third
reputable valuation firm. The fair market value of such Restricted Units shall
then be determined by such third valuation firm. The fees and costs of the
valuation firms engaged pursuant to this Article 3.9 shall be borne equally
between the Company and such Restricted Member.

     

    (b) Termination for
Cause.  Notwithstanding anything herein to the contrary, in the
event that the Company terminates a Restricted Member’s services to the Company
for Cause, all of such Restricted Member’s Restricted Units, including those
Restricted Units previously released from automatic redemption pursuant to
Section 3.9(c), shall, upon the date of such termination, be automatically
redeemed by the Company for no consideration (other than any Tax Distribution to
which such Restricted Member is entitled with respect to the Restricted Units in
accordance with Section 5.7 following the allocation of Profits and Losses
through the Redemption Date). Upon the redemption of any Restricted Units, the
Company shall become the legal and beneficial owner of such Restricted Units so
redeemed and all rights and interest therein or related thereto without further
action by the Restricted Member.

     

    3.11 Purchase of Assets by the
Company.  Effective as of the Closing, in exchange for cash in
the amount of $32,000,000 (as adjusted pursuant to Section 2.10 of the Asset
Purchase Agreement) and the assumption of the Assumed Liabilities, the Company
shall purchase from the Selling Companies the Acquired Assets.  The
cash that is to be used to purchase the Acquired Assets may include funds
borrowed by the Company, as described in the Purchase Agreement, and the parties
agree that they shall not apply Treasury Regulation section 1.707-5(b)(1) or
1.707-4(d) to reduce the portion of the assets treated as sold to the Company
for the consideration identified in this 3.11.  

     

    3.12 The FC Preferred Return and
the FC Priority Contribution.  As of the Effective Date, FC
shall contribute the FC Priority Contribution with respect to which FC shall not
be issued any additional Units, but with respect to which FC shall be entitled
to the FC Preferred Return and the FC Priority Contribution in accordance with
Section 5.1(a), Section 5.1(b) and Section 12.2(c), provided, however, that the
Company may, with unanimous consent of the Management Board, determine to make a
distribution of part or all of the FC Preferred Return or the FC Priority
Contribution before the dissolution and liquidation of the Company.

     

    ARTICLE
IV

     

    MANAGEMENT

     

    
      
         

      

      
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    4.1 Management by Management
Board.

     

    (a) The
Managers shall collectively comprise the Management Board.  The
Management Board shall function substantially the same manner as a board of
directors of a Utah corporation.  In addition to those actions set
forth in Section 4.2 and otherwise in this Agreement, all actions by the Company
that would require board of directors or stockholder approval or for which it
would be customary, using good corporate practice, to obtain board of director
or stockholder approval if the Company were a Utah corporation shall require
Management Board approval.

     

    (b) The
number of Managers to serve on the Management Board shall be five (5) and may be
increased from time to time by the Management Board by Majority
Vote.  The initial members of the Management Board are:  (i)
three individuals appointed by Peterson (or Peterson’s transferee in the event
of a Transfer of Units by Peterson) (the “Peterson Managers”), who shall
initially be (A) JORDAN CLEMENTS, (B) JAMES B. NELSON, and (C) a Manager to be
appointed by Peterson; (ii) one individual appointed by FC (the “FC Manager”),
who shall initially be ROBERT A. WHITMAN; and (iii) one individual appointed by
the unanimous consent of the Peterson Managers and the FC Manager (the
“Peterson/FC Manager”), who shall initially be SARAH MERZ.

     

    (c) Robert A.
Whitman shall serve as the Chairman of the Management Board and serve in that
capacity for a minimum of three (3) years unless earlier (A) he resigns as the
FC Manager; (B) he is removed for Cause; (C) he is no longer the Chief Executive
Officer of Franklin Covey Co., a Utah corporation; or (D) the Percentage
Interest held by FC (or an Affiliate of FC) is 50% or less than the Percentage
Interest held by FC as of the Effective Date.  If Mr. Whitman’s
service as the FC Manager and the Chairman terminates for any reason prior to
the termination of such three-year period, then, as long as the Percentage
Interest held by FC (or an Affiliate of FC) is greater than 50% of the
Percentage Interest held by FC as of the Effective Date, the person who replaces
Mr. Whitman as the FC Manager shall serve as the Chairman of the Management
Board and serve in that capacity until the expiration of such three-year
period.  Any successor Chairman thereafter shall be appointed by the
Management Board and shall serve in that capacity until his successor shall have
been appointed by the Management Board or until his earlier
resignation.

     

    (d) Each
Manager shall sign a counterpart to this Agreement in his capacity as a
Manager.

     

    (e) Each
Manager shall hold office until his successor shall have been appointed or until
his earlier resignation.

     

    (f) The
Management Board may hold regular meetings at a time and place determined by the
Management Board.  Any Manager may call a special meeting of the
Management Board by giving at least forty-eight (48) hours notice of the special
meeting and the time, place, and purpose for such meeting.  Managers
may waive the forty eight (48)-hour notice requirement by attending the meeting
or by waiving the notice requirement in writing.  Any Manager may
participate in a regular or special meeting by, or conduct the meeting through
the use of, any means of communication by which all Managers participating may
simultaneously

     

    
      
         

      

      
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    hear each
other during the meeting, in which case, any required notice of the meeting may
generally describe the arrangements (rather than or in addition to the place)
for the holding thereof.  A Manager participating in a meeting by this
means is deemed to be present in person at this meeting.  At any
meeting of the Management Board, a Quorum of the Managers must exist in order to
transact business at such meeting.

     

    (g) Unless
otherwise required by the Act or otherwise specified in this Agreement, any and
all actions taken by the Management Board shall require the approval of at least
a Majority Vote of the Managers.  Any action which may be taken by the
Management Board at a special or regularly scheduled meeting may be taken
without a meeting if the Managers then in office unanimously consent to the
action in writing.  The Managers may not vote by proxy.

     

    4.2 Authority of
Officers.  The business and affairs of the Company shall be
managed by its Officers.  Subject to Section 4.1, the Management Board
hereby delegates to the Officers full, exclusive, and complete discretion,
power, and authority, to manage, control, administer, and operate the day-to-day
business and affairs of the Company for the purposes herein
stated.  The Officers have full and complete authority, power and
discretion to make any and all decisions affecting such day-to-day business and
affairs, and to do any and all things that the Officers shall deem to be
necessary or appropriate to accomplish the business objectives of the Company,
except as otherwise (i) provided in this Agreement, (ii) specifically required
by the non-waivable provisions of the Act, (iii) directed by the Management
Board; or (iv) provided in this Section 4.2.  Notwithstanding anything
to the contrary in this Agreement, the following actions shall require the
consent of the Management Board:

     

    (a) acquire
by purchase, lease, or otherwise, any real or personal property, tangible or
intangible in excess of $500,000;

     

    (b) construct,
operate, maintain, finance, and improve, and to own, sell, convey, assign,
mortgage, or lease any real estate and any personal property in excess of
$250,000;

     

    (c) sell,
dispose, trade, or exchange Company assets in the ordinary course of the
Company’s business in excess of $250,000;

     

    (d) sell,
dispose, trade, or exchange any of the Company subsidiaries;

     

    (e) enter
into agreements and contracts and to give receipts, releases, and discharges for
products and/or services in excess of $1,000,000;

     

    (f) purchase
liability and other insurance to protect the Company’s properties and
business;

     

    (g) borrow
money in excess of $250,000 for and on behalf of the Company, and, in connection
therewith, execute and deliver instruments authorizing the confession of
judgment against the Company;

     

    
      
         

      

      
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    (h) execute
or modify leases, with respect to any part of all of the assets of the Company,
in excess of $250,000;

     

    (i) increase,
modify, accelerate, refinance or extend any existing loan or existing
indebtedness of the Company;

     

    (j) pledge,
mortgage, grant a security interest in or encumber or otherwise encumber any
asset or property of the Company other than in the ordinary course of
business;

     

    (k) prepay,
in whole or in part, refinance, amend, modify, or extend any mortgages or deeds
of trust which may affect any asset of the Company and in connection therewith
to execute for and on behalf of the Company any extensions, renewals, or
modifications of such mortgages or deeds of trust;

     

    (l) invest
and reinvest Company reserves in anything other than short-term instruments or
money market funds;

     

    (m) take any
action which would make it impossible to carry on the ordinary business or
accomplish the purposes of the Company, except as otherwise provided in this
Agreement;

     

    (n) take any
action which would cause the termination of the Company for federal income tax
purposes or the dissolution of the Company under the Act or this Agreement or
cause the Company to be classified as an “association” taxable as a corporation
under the Code;

     

    (o) change or
reorganize the Company into any other legal form;

     

    (p) amend or
terminate any agreement or arrangement that was required to be approved by the
consent of the Management Board at the time such agreement or arrangement was
entered into;

     

    (q) authorize
or approve the sale, transfer, assignment, exchange or other disposition of all
or substantially all of the assets of the Company;

     

    (r) initiate
any lawsuit or other judicial proceeding or arbitration in the name of the
Company;

     

    (s) commence
bankruptcy, insolvency, liquidation or similar proceedings with respect to the
Company or any of its subsidiaries;

     

    (t) lend any
money to a Member, Manager or Officer or a Affiliate thereof;

     

    (u) confess a
judgment against the Company or settle any proceeding brought against the
Company in an amount in excess of $250,000;

     

    (v) change
the nature of the business of the Company or enter into any business other than
or in addition to that contemplated by this Agreement;

     

    
      
         

      

      
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    (w) make any
investment in an entity (other than in short-term temporary investments of
working capital);

     

    (x) cause the
formation of any entity to be owned or controlled by the Company;

     

    (y) authorize
or approve the merger, consolidation or other combination of the Company with or
into another entity;

     

    (z) convert
the Company into a corporation or otherwise change the form of the entity in
which the Company does business;

     

    (aa) issue any
additional Units or Equity Securities of the Company;

     

    (bb) make a
distribution of the FC Preferred Return or the FC Priority Contribution except
as set forth in Section 5.1(a) and Section 5.1(b) before the dissolution and
liquidation of the Company in accordance with Section 12.2, which action shall
require the unanimous consent of the Management Board;

     

    (cc) enter
into any agreement, arrangement or understanding, written or oral, to do any of
the foregoing; or

     

    (dd) take
actions which, pursuant to this Agreement, specifically require action by, or
the consent of, the Management Board.

     

    4.3 Independent
Activities.  Except to the extent otherwise provided in this
Article IV and the Act, (i) a Member, a Manager, or any Affiliate of a Member or
Manager may engage in whatever activities such Person chooses without having or
incurring any obligation to offer any interest in such activities to the Company
or to any other Member or Manager; and (ii) neither this Agreement nor any
obligation undertaken pursuant hereto shall prevent a Member, a Manager, or any
Affiliate of a Member or Manager from engaging in such activities, or require a
Member, Manager, or any Affiliate of a Member or Manager to permit the Company
or any other Member or Manager to participate in any such activities, and as a
material part of the consideration for the execution of this Agreement by the
Members and the Managers and the admission of each Member, each Member and each
Manager hereby waives, relinquishes, and renounces any such right or claim of
participation.

     

    4.4 Fiduciary
Responsibilities.  Notwithstanding Section 4.3, each Manager
and Member shall, in all events, account to the Company and to the Members for
any benefit, and hold, as trustee for the Company and the Members, any benefit
or profits derived by such Manager or Member without the prior consent of the
Members, by Majority Vote, from any transaction connected with the formation,
conduct or liquidation and winding up of the Company or from any use by such
Manager or Member of Company property, including, but not limited to,
confidential or proprietary information of the Company or other matters
entrusted to such Person in his or its capacity as a Manager or a Member, and
such duty extends to the personal representatives of any deceased Manager or
Member involved in the liquidation and winding up of the Company.  All
management, investments, accountings, and distributions shall be conducted by
the Managers or Members, as the case may be, subject to good faith
and

     

    
      
         

      

      
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    fiduciary
responsibility.  However, no Manager or Member shall be liable for any
loss or depreciation in the value of the Company or any of its assets or
business occurring by reason of error of judgment in making any sale, any
investment or reinvestment, or any management, investment or business decision
whatsoever, provided such loss or depreciation in value has not occurred through
the Disabling Conduct of such Manager or Member.  Good faith and
fiduciary responsibility shall be required of the Managers and
Members.

     

    4.5 Permitted
Transactions.  Except as otherwise provided in this Article IV
including, but not limited, to Section 4.4, the fact that any Manager or Member,
or any Affiliate of a Manager or a Member, or any employee, partner, officer, or
officer of either an Manager or Member or an Affiliate of a Manager or Member,
is employed by, or is directly or indirectly interested in or connected with,
any person employed by the Company or any Affiliate of the Company to render or
perform a service, or from or through whom the Company or any Affiliate of the
Company may make any sale or purchase, or from whom the Company or any Affiliate
of the Company may borrow, shall not prohibit the Company or any Affiliate of
the Company from engaging in any transaction with such person, or create any
duty of legal justification additional to that which would exist if such person
were not so related to the Company, and neither the Company nor any other
Manager or Member shall have any right in or to any benefits derived from such
transaction by such Manager or Member or Person.

     

    4.6 Time and Attention Required
of Managers or Members.  The parties understand that the
Managers and Members may have other business activities that take a substantial
portion of their time and attention.  Accordingly, the Managers and
Members are required to devote to the business of the Company only the time and
attention that they in their sole discretion shall deem necessary.

     

    4.7 No Guaranty of Return of
Capital or Distribution of Cash.  The Company does not in any
way guarantee the return of the Members’ capital contributions or the
realization of a profit from their investment in the Company.  There
is no guarantee of the distribution of any particular amount of cash to Members
at any particular time.

     

    4.8 Prohibited
Acts.  The Officers and Managers shall not knowingly perform
any act that contravenes the provisions of this Agreement.

     

    4.9 Reliance Upon Actions by the
Managers.  Any Person dealing with the Company may rely without
any duty of inquiry upon any action taken by the Managers on behalf of the
Company.  Any and all deeds, bills of sale, assignments, mortgages,
deeds of trust, security agreements, promissory notes, leases, and other
contracts, agreements or instruments executed by at least two (2) Managers on
behalf of the Company pursuant to the requirements of this Agreement, shall be
binding upon the Company, and all Members agree that a copy of this provision
may be shown to the appropriate parties in order to confirm the
same.  Without limiting the generality of the foregoing, any Person
dealing with the Company may rely upon a certificate or written statement signed
by at least two (2) Managers as to:

     

    (a) The
identity of any Manager, Officer or Member;

     

    
      
         

      

      
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    (b) The
existence or nonexistence of any fact or facts that constitute a condition
precedent to acts by the Managers or that are in any other manner germane to the
affairs of the Company;

     

    (c) The
Persons who are authorized to execute and deliver any instrument or documents on
behalf of the Company; or

     

    (d) Any act
or failure to act by the Company on any other matter whatsoever involving the
Company or any Member.

     

    4.10 Officers.  The
Company may have such officers as are appointed from time to time by the
Management Board (each, an “Officer”).  Without limiting the
generality of the foregoing, the Company may have a Chairman, a President, a
Chief Executive Officer, and a Chief Financial Officer, each of whom shall,
unless otherwise directed by the Management Board, have the powers normally
associated with such officers of a Utah corporation, provided the Chairman shall
preside at all meetings of the Management Board.  Any number of
offices may be held by the same person, as the Management Board may
determine.  Sarah Merz shall serve as the initial President and Chief
Executive Officer, and Robert Sumbot shall serve as the initial Chief Financial
Officer.  In addition, Robert A. Whitman or his successor as the FC
Manager shall serve as the Chairman of the Management Board for a minimum of
three (3) years as more specifically set forth in Section
4.1(c).  Unless otherwise provided in this Agreement regarding the
appointment of any Officer, each Officer shall be chosen for a term which shall
continue until such Officer’s successor shall have been chosen and qualified or
such Officer’s earlier resignation or removal by a Majority Vote of the
Management Board.

     

    4.11 Resignation.  A
Manager may resign at any time by delivering written notice to the Management
Board.  The resignation of a Manager shall take effect upon receipt of
notice thereof or at such later time as shall be specified in such notice; and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.  Such resignation shall not affect
the Manager’s rights and liabilities as a Member, if applicable, except to the
extent otherwise specifically provided in this Agreement.

     

    4.12 Removal.  A
Manager may be removed for Cause by the Company upon a determination that Cause
exists.  Further, (i) the Peterson Managers may be removed with or
without Cause by Peterson, (ii) the FC Manager may be removed with or without
Cause by FC, and (iii) the Peterson/FC Manager may be removed with the unanimous
consent of the Peterson Managers and the FC Manager.

     

    4.13 Vacancies.  Any
vacancy occurring for any reason in the office of (i) the Peterson Managers may
be filled by Peterson, (ii) the FC Manager may be filled by FC, and (iii) the
Peterson/FC Manager may be filled with the unanimous consent of the Peterson
Managers and the FC Manager.

     

    4.14 Manager
Compensation.  Peterson and FC shall be compensated for making
their employees available to the Company to serve as
Managers.  Further, the Managers shall be reimbursed for expenses
reasonably incurred in carrying out such role.  The total management
fee payable to Peterson and FC shall be $125,000, which shall be paid (i)
$101,250 to Peterson, and

     

    
      
         

      

      
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    (ii)
$23,750 to FC.  In addition, the Peterson/FC Manager shall be entitled
to compensation as reasonably determined by the Management Board in the event
that such Peterson/FC Manager is not an employee of the Company.  Each
Manager who is an employee of the Company shall be compensated only in
accordance with an employment agreement with the Company containing terms and
conditions acceptable to such Manager and a Majority Vote of the
Managers.

     

    ARTICLE
V

     

    PAYMENTS
AND DISTRIBUTIONS

     

    5.1 Distributions of Net
Available Cash Flow.  Except as provided in Article XII in
connection with the dissolution of the Company, after any Tax Distributions to
be made pursuant to Section 5.7, Net Available Cash Flow shall be distributed on
a quarterly basis, or more frequently as determined by a Majority Vote of the
Management Board, to the Members in the following order and
priority:

     

    (a) First, to
FC an amount equal to the FC Preferred Return until FC has received cumulative
distributions pursuant to this Section 5.1(a) equal to the FC Preferred
Return;

     

    (b) Second,
to FC an amount equal to the FC Unreturned Priority Contribution until FC has
received cumulative distributions pursuant to this Section 5.1(b) equal to the
FC Priority Contribution;

     

    (c) Third, to
the Class A Members in proportion to each Class A Member’s unpaid Class A
Preferred Return, until each Class A Member has received cumulative
distributions pursuant to this Section 5.1(c) equal to such Class A Member’s
Class A Preferred Return;

     

    (d) Fourth,
to the Class A Members, pro rata based on the Class A Unreturned Contribution
Balance of each Class A Member, an amount equal to the Class A Unreturned
Contribution Balance;

     

    (e) Fifth, to
the Class B Member, an amount equal to the Class B Unreturned Contribution
Balance; and

     

    (f) Thereafter,
to the Members in proportion to their respective Percentage
Interests.

     

    5.2 Distributions in
Kind.  The Company, at the discretion of and by the Majority
Vote of the Management Board, may make distributions in kind.  All
Members must accept distributions in kind.  At the time of any
distribution in kind, the Gross Asset Value of the Company’s assets will be
adjusted pursuant to Appendix 1.

     

    5.3 Distributions in
Liquidation.  Following the dissolution of the Company and the
commencement of winding up and the liquidation of its assets, distributions to
the Members shall be governed by Section 12.2.

     

    
      
         

      

      
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    5.4 Amounts
Withheld.  All amounts withheld pursuant to the Code or any
provisions of state or local tax law with respect to any payment or distribution
to the Members from the Company shall be treated as amounts distributed to the
relevant Member(s) for all purposes of this Agreement.

     

    5.5 State Law Limitation on
Distributions.  Notwithstanding any provision to the contrary
contained in this Agreement, the Company shall not make a distribution to any
Member on account of such Member’s Units if such distribution would violate the
Act or other applicable law.

     

    5.6 Liability For Repayment of
Distributions.  The Members acknowledge and agree that pursuant
to Section 1006 of the Act, a member of a limited liability company who receives
a distribution from a limited liability company by mistake or in violation of
the articles of organization, the operating agreement or the Act, is liable for
a period of five (5) years following such distribution to return the wrongful
distribution to the limited liability company if an action to recover such
distribution is commenced prior to the expiration of such five (5)-year period,
and an adjudication of liability is made against such member in such
action.  The Management Board does not intend to make a distribution
of Net Available Cash Flow to the Members if any such distribution would be
required to be returned by the Members in accordance with the
foregoing.  However, there may be circumstances in which claims of
creditors might have been unanticipated or the extent of such claims may have
been difficult to calculate and, accordingly, the Members are aware that there
may be circumstances in which distributions from the Company may be required to
be repaid to the Company by the distributee Members.

     

    5.7 Tax
Distributions.  

     

    (a) For each
Fiscal Year, the Company will during such Fiscal Year use its reasonable efforts
to distribute to each Member, with respect to such Fiscal Year, a distribution
in an amount equal to such Member’s Presumed Tax Liability for such Fiscal Year
(a “Tax Distribution”), which Tax Distribution will be offset by the amount of
Tax Advances for such Member for such Fiscal Year, as provided in Section
5.8.  Such Tax Distributions shall be made to the Members on a
quarterly basis in the manner set forth in Section 5.7(c).

     

    (b) For
purposes of this Section 5.7, “Presumed Tax Liability” for any Member for a
Fiscal Year shall mean an amount equal to the product of (i) the amount of
taxable income (including any items required to be separately stated under
Section 703 of the Code and taking into account any allocations under Section
704(c)) allocated to such Member for that Fiscal Year, and (ii) the combined
effective federal and state income tax rate, adjusted for the federal deduction
for state income taxes, applicable during a Fiscal Year for computing regular
ordinary income tax liabilities (without reference to minimum taxes, alternative
minimum taxes, or income tax surcharges) of a natural person residing in Utah in
the highest bracket of taxable income.

     

    (c) The
Company shall reasonably estimate the Presumed Tax Liability of each Member with
respect to each quarter of the applicable Fiscal Year, and shall make a Tax
Distribution to each Member no less than ten (10) days prior to the quarterly
federal estimated income tax payment due dates for individual
taxpayers.

     

    
      
         

      

      
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    (d) The
amount to be distributed to a Member as a Tax Distribution pursuant to this
Section 5.7 shall be computed as if any distributions made pursuant to Section
5.1(f) during such quarter were a Tax Distribution in respect of such
quarter.  Further, any Tax Distribution made pursuant to this Section
5.7 shall be considered an advance against the next distribution(s) payable to
the applicable Member pursuant to Section 5.1(f) and Section 12.2, and shall
reduce such distribution(s) on a dollar-for-dollar basis.

     

    5.8 Withholding and Tax
Advances.  To the extent the Company is required by any Laws of
any Taxing Jurisdiction to withhold or to make tax payments on behalf of or with
respect to a Member (e.g., (i) backup withholding, (ii) withholding with respect
to Members who are neither citizens nor residents of the United States, or (iii)
withholding with respect to Members who are not residents of any state requiring
withholding) (“Tax Advances”), the Company may withhold such amounts and make
such tax payments to the appropriate taxing jurisdiction as may be
required.  Further, all amounts withheld or required to be withheld
pursuant to the Code or any provision of any state, local, or foreign tax law
with respect to any payment, distribution, or allocation to the Company or
Members and treated by the Code (whether or not withheld pursuant to the Code)
or any such tax law as amounts payable by or in respect of any Member or any
Person owning an interest, directly or indirectly, in such Member shall be
treated as an advance to the Member and shall be credited against the Tax
Distribution such Member would otherwise receive for the applicable period
pursuant to Section 5.7.  The Company is authorized to withhold from
distributions, or with respect to allocations, to the Members and to pay over to
any federal, state, local or foreign government any amounts required to be so
withheld pursuant to the Code or any provisions of any other federal, state,
local, or foreign law and shall allocate any such amounts to the Members with
respect to which such amount was withheld.  If the amount of the Tax
Advances with respect to any Fiscal Year payable to the Member are not
sufficient to offset the Tax Advances with respect to such Fiscal Year, then the
Company shall reduce the amount of any other distributions payable to the Member
or, at the discretion of the Managers, require the Member to immediately repay
the Company any remaining balance until the Tax Advances amount is repaid by the
Member.

     

    5.9 Inclusion of Unit
Holder.  Except as otherwise provided herein, the term “Member”
for purposes of this Article V shall include a Unit Holder.

     

    ARTICLE
VI

     

    ALLOCATION
OF PROFITS AND LOSSES

     

    6.1 Profit
Allocations.  After making any special allocations required
under Appendix 1, Profits for each Fiscal Year (and each item of income and gain
entering into the computation thereof) shall be allocated among the Members (and
credited to their respective Capital Accounts) in the following order and
priority:

     

    (a) First, to
FC until the cumulative Profits allocated pursuant to this Section 6.1(a) are
equal to the cumulative Losses, if any, previously allocated to FC pursuant to
Section 6.2(f) for all prior periods;

     

    (b) Second,
to FC until the cumulative Profits allocated pursuant to this

     

    
      
         

      

      
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    Section
6.1(b) are equal to the cumulative Losses, if any, previously allocated to FC
pursuant to Section 6.2(e) for all prior periods;

     

    (c) Third, to
FC, an amount equal to the cumulative accrued FC Preferred Return for the
current taxable year and all prior taxable years until the cumulative Profits
allocated pursuant to this Section 6.1(c) are equal to the cumulative accrued FC
Preferred Return for the current taxable year and all prior taxable
years;

     

    (d) Fourth,
to the Class A Members, pro rata based on the amount of Losses being offset,
until the cumulative Profits allocated pursuant to this Section 6.1(d) are equal
to the cumulative Losses, if any, previously allocated to the Class A Members
pursuant to Section 6.2(d) for all prior periods;

     

    (e) Fifth, to
the Class A Members, pro rata based on the accrued Class A Preferred Return of
the Class A Members, an amount equal to the cumulative accrued Class A Preferred
Return for the current taxable year and all prior taxable years;

     

    (f) Sixth, to
each Class A Members, pro rata based on the amount of Losses being offset, until
the cumulative Profits allocated pursuant to this Section 6.1(f) are equal to
the cumulative Losses, if any, previously allocated to the Class A Members
pursuant to Section 6.2(c) for all prior periods;

     

    (g) Seventh,
to the Class B Members, until the cumulative Profits allocated pursuant to this
Section 6.1(g) are equal to the cumulative Losses, if any, previously allocated
to the Members pursuant to Section 6.2(b) for all prior periods;

     

    (h) Eighth,
to the Members, pro rata based on the amount of Losses being offset, until the
cumulative Profits allocated pursuant to this Section 6.1(h) are equal to the
cumulative Losses, if any, previously allocated to the Members pursuant to
Section 6.2(h) for all prior periods in proportion to the Members’ respective
shares of the Losses being offset;

     

    (i) Ninth, to
the Members, pro rata based on the amount of Losses being offset, until the
cumulative Profits allocated pursuant to this Section 6.1(i) are equal to the
cumulative Losses, if any, previously allocated to the Members pursuant to
Section 6.2(g) for all prior periods; and

     

    (j) Tenth, to
the Members in accordance with their Percentage Interests.

     

    6.2 Loss
Allocations.  After making any special allocations required
under Appendix 1,
Losses for each fiscal year (and each item of loss and deduction entering into
the computation thereof) shall be allocated among the Members (and charged to
their respective Capital Accounts) in the following order and
priority:

     

    (a) First, to
the Members, pro rata based on the amount of Profits being offset, until the
cumulative Losses allocated pursuant to this Section 6.2(a) are equal to the
cumulative Profits, if any, previously allocated to the Members pursuant to
Section 6.1(i) and Section 6.1(j) for all prior periods in proportion to the
Members’ respective shares of the Profits being offset;

     

    
      
         

      

      
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    (b) Second,
to the Class B Members, pro rata in accordance with its Class B Unreturned
Contribution Balance as of the end of the period to which the allocation of
Losses under this Section 6.2(b) relates reduced by any Losses previously
allocated to such Class B Member pursuant to this Section 6.2(b), until the
cumulative Losses allocated pursuant to this Section 6.2(b) to each Class B
Member equal the Unreturned Contribution Balance of each such Class B Member as
of the end of the period to which the allocation of Losses under this Section
6.2(b) relates plus the total Profits allocated to each Class B Member pursuant
to Section 6.1(g).

     

    (c) Third, to
the Class A Members, pro rata based upon the Profits being offset, until the
cumulative Losses allocated pursuant to this Section 6.2(c) are equal to the
cumulative Profits, if any, previously allocated to the Class A Member pursuant
to Section 6.1(e) and Section 6.1(f) for all prior periods;

     

    (d) Fourth,
to the Class A Members, pro rata based upon the Class A Unreturned Contribution
Balances of the Class A Members as of the end of the period to which the
allocation of Losses under this Section 6.2(d) relates reduced by any Losses
previously allocated to such Class A Members pursuant to this Section 6.2(d),
until the cumulative Losses allocated pursuant to this Section 6.2(d) to each
Class A Member equals the Class A Unreturned Contribution Balance of such Class
A Member as of the end of the period to which the allocation of Losses under
this Section 6.2(d) relates plus the total Profits allocated to each Class A
Member pursuant to Section 6.1(d);

     

    (e) Fifth, to
FC until the cumulative Losses allocated pursuant to this Section 6.2(e) are
equal to the cumulative Profits, if any, previously allocated to FC pursuant to
Section 6.1(b) and Section 6.1(c) for all prior periods;

     

    (f) Sixth, to
FC until the cumulative Losses allocated pursuant to this Section 6.2(f) to FC
equals the FC Unreturned Priority Contribution as of the end of the period to
which the allocation of Losses under this Section 6.2(f) relates plus the total
Profits allocated to FC pursuant to Section 6.1(a);

     

    (g) Seventh,
to the Members in accordance with their Percentage Interests.

     

    (h) Losses
allocated in accordance with subparagraphs (a) through (g) of this Section 6.2
to the Capital Account of any Member shall not exceed the maximum amount of
Losses that can be so allocated without creating an Adjusted Capital Account
Balance deficit with respect to such Capital Account.  This limitation
shall be applied individually with respect to each Member in order to permit the
allocation pursuant to this Section 6.2(h) of the maximum amount of Losses
permissible under Regulations Section 1.704-1(b)(2)(ii)(d).  All
Losses in excess of the limitations set forth in this Section 6.2(h) shall be
allocated solely to those Members that bear the economic risk for such
additional Losses within the meaning of Code Section 704(b) and the Regulations
thereunder.  If it is necessary to allocate Losses under the preceding
sentence, the Managers shall, in accordance with the Regulations promulgated
under Code Section 704(b), determine those Members that bear the economic risk
for such additional Losses.

     

    
      
         

      

      
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    6.3 Tax
Allocations.

     

    (a) Except as
otherwise provided in Section 6.2(b) hereof, for income tax purposes, all items
of income, gain, loss, deduction and credit of the Company for any tax period
shall be allocated among the Members in accordance with the allocation of
Profits and Losses prescribed in this Article VI and Appendix 1
hereto.

     

    (b) In
accordance with Code Section 704(c) and the Regulations thereunder, income,
gain, loss and deduction with respect to any property contributed to the capital
of the Company shall, solely for tax purposes, be allocated among Members so as
to take account of any variation between the adjusted basis of such property to
the Company for federal income tax purposes and its initial Gross Asset Value in
the same manner as under Code Section 704(c) and the Regulations thereunder;
provided, however, that unless otherwise determined by Management Board, the
Company shall not adopt the Traditional Method with Curative Allocations as
defined under Regulations Section 1.704-3(c) or the Remedial Allocation Method
as defined in Regulations Section 1.704-3(d) that would require any Member to
report any item of income or gain for Code Section 704(c) purposes that differs
in amount or timing from the taxable income that the Company allocates to such
Member under Code Section 704(b).  In the event the Gross Asset Value
of any Company asset is adjusted pursuant to Section A1 of Appendix 1 hereto,
subsequent allocations of income, gain, loss and deduction with respect to such
asset shall take account of any variation between the adjusted basis of such
asset for federal income tax purposes and its Gross Asset Value in the same
manner as under Code Section 704(c) and the Regulations thereunder; provided,
however, that unless otherwise determined by Management Board, the Company shall
not adopt the Traditional Method with Curative Allocations as defined under
Regulations Section 1.704-3(c) or the Remedial Allocation Method as defined in
Regulations Section 1.704-3(d) that would require any Member to report any item
of income or gain for Code Section 704(c) purposes that differs in amount or
timing from the taxable income that the Company allocates to such Member under
Code Section 704(b).  Allocations pursuant to this Section 6.2 are
solely for purposes of federal, state and local taxes and shall not affect, or
in any way be taken into account in computing, any Member’s Capital Account or
share of Profits, Losses or other items or distributions pursuant to any
provision of this Agreement.

     

    (c) The
Members are aware of the income tax consequences of the allocations made by this
Article VI and Appendix 1 hereto and hereby agree to be bound by the provisions
of this Article VI and Appendix 1 hereto in reporting their distributive shares
of the Company’s taxable income and loss for income tax purposes.

     

    6.4 Transferor – Transferee
Allocations.  Income, gain, loss, deduction or credit
attributable to any Units which have been transferred shall be allocated between
the transferor and the transferee under any method allowed under Code Section
706 and the Regulations thereunder as agreed by the transferor and the
transferee.

     

    6.5 Rights of Unit
Holders.  If any Person who is not a Member acquires ownership
of one or more Units, the term “Member” shall be construed to include such Unit
Holder for purposes of this Article VI.

     

    
      
         

      

      
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    ARTICLE
VII

     

    LIABILITIES,
RIGHTS AND OBLIGATIONS OF MEMBERS

     

    7.1 Limitation of
Liability.  Each Member’s liability for Company debts and
obligations shall be limited as set forth in the Act and other applicable
law.  This Section 7.1 shall not be deemed to limit in any way the
Member’s liabilities to the Company and to the other Members arising from a
breach of this Agreement.

     

    7.2 Access to Company
Records.  Upon a Member’s written request, the Managers shall
permit such Member, at a reasonable time to both the Managers and the Member, to
inspect and copy the Company records required to be maintained pursuant to
Section 9.1, as more specifically provided in Section 9.1.

     

    7.3 Waiver of Action for
Partition.  Each Member irrevocably waives during the term of
the Company any right that such Member may have to maintain any action for
partition with respect to Company property or other Company assets.

     

    7.4 Cooperation With Tax Matters
Partner.  Each Member agrees to cooperate with the Tax Matters
Partner and to do or refrain from doing any or all things reasonably required by
the Tax Matters Partner in connection with the conduct of any proceedings
involving the Tax Matters Partner.

     

    7.5 Acknowledgment of Liability
for State and Local Taxes.  To the extent that the laws of any
Taxing Jurisdiction require, each Member requested to do so by any other Member
shall submit an agreement indicating that the Member shall make timely income
tax payments to the Taxing Jurisdiction and that the Member accepts personal
jurisdiction of the Taxing Jurisdiction regarding the collection of income
taxes, interest, and penalties attributable to the Member’s
income.  If a Member fails to provide such agreement upon request, the
Company may withhold or pay over to such Taxing Jurisdiction the amount of tax,
penalty, and interest determined under the laws of the Taxing Jurisdiction with
respect to such income.  Any such payments shall be treated as
distributions for purposes of Article V.

     

    7.6 Limitation On Bankruptcy
Proceedings.  No Member, without the Majority Vote of the
Members, shall file or cause to be filed any action in bankruptcy involving the
Company.

     

    7.7 Voting
Rights.  The Priority Members shall have the right to vote on
the matters specifically reserved for their approval or consent set forth in
this Agreement.  The Class C Units are non-voting and shall have no
right to vote under this Agreement.

     

    7.8 Annual Member
Meeting.  The Members shall not be required to hold an annual
meeting. Notwithstanding the foregoing sentence, an annual meeting of the
Members may be held each year on the date, at the time, and at the place, fixed
by the Management Board for the purpose of electing Managers for vacant Manager
positions, if any, and for the transaction of such other business as may come
before the meeting.

     

    7.9 Special Member
Meetings.  Special meetings of the Members may be called, for
any purposes described in the notice of the meeting, by the Management Board,
and shall be

     

    
      
         

      

      
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    called by
the Management Board promptly upon the request of Members holding not less than
fifteen percent (15%) of the outstanding Units entitled to vote at the
meeting.

     

    7.10 Notice of Member
Meeting.

     

    (a) Required
Notice.  Written notice stating the place, day, and hour of any
annual or special Member meeting shall be delivered not less than five (5) nor
more than sixty (60) days before the date of the meeting, either personally,
orally, by mail or by electronic mail, by or at the direction of the person or
group calling the meeting, to each Member of record entitled to vote at such
meeting.  Notice shall be deemed to be effective as provided in
Section 14.1, or when received if delivered orally.

     

    (b) Adjourned
Meeting.  If any Member meeting is adjourned to a different
date, time, or place, notice need not be given of the new date, time, or place,
if the new date, time, or place is announced at the meeting before
adjournment.

     

    (c) Contents of
Notice.  Notice of any special meeting of the Members shall
include a description of the purpose or purposes for which the meeting is
called.  Notice of an annual meeting of the Members need not include a
description of the purpose or purposes for which the meeting is
called.

     

    (d) Waiver of Notice of
Meeting.  Any Member may waive notice of a meeting by a writing
signed by the Member which is delivered to the Company (either before or after
the date and time stated in the notice as the date or time when any action will
occur or has occurred) for inclusion in the minutes or filing with the Company’s
records.

     

    (e) Effect of Attendance at
Meeting.  A Member’s attendance at a meeting:

     

    i. Waives
objection to lack of notice or defective notice of the meeting, unless the
Member at the beginning of the meeting objects to holding the meeting or
transacting business at the meeting; and

     

    ii. Waives
objection to consideration of a particular matter at the meeting that is not
within the purpose or purposes described in the meeting notice, unless the
Member objects to considering the matter when it is presented.

     

    7.11 Member Voting
Requirements.

     

    (a) Approval of
Actions.  If a Quorum of the Members exists at a meeting of the
Members, action on a matter is approved if the votes required by this Agreement,
unless a greater number of affirmative votes are required under the Act, are
voted in favor of such matter.  Except as otherwise provided in this
Agreement, or as otherwise required by the Act, the Priority Members shall vote
together as a single class on any matter requiring the approval or consent of
the Members.  If less than a Quorum of the Members exists, the meeting
may be adjourned by the Chairman to a later date, time and place, and the
meeting may be held as adjourned without further notice.

     

    
      
         

      

      
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    (b) Effect of
Representation.  Once a Unit is represented for any purpose at
a meeting, including the purpose of determining that a Quorum of the Members
exists, it is deemed present for quorum purposes for the remainder of the
meeting and for any adjournment of that meeting, unless a new record date is or
must be set for that adjourned meeting.

     

    7.12 Proxies.  At
all meetings of the Members, a Member may vote the Units the Member is entitled
to vote in person or by a proxy executed in any lawful manner under the
Act.  Such proxy shall be filed with the Company before or at the time
of the meeting.  No proxy shall be valid after eleven months from the
date of its execution unless otherwise provided in the proxy.

     

    7.13 Voting of
Units.  Unless otherwise provided in the Articles of
Organization or this Agreement, each outstanding Unit entitled to vote shall be
entitled to one vote, and each fractional share shall be entitled to a
corresponding fractional vote, upon each matter submitted to a vote at a meeting
of Members.

     

    7.14 Informal Action by
Members.

     

    (a) Written Consent. Any
action which may be taken at any annual or special meeting of Members may be
taken without a meeting and without prior notice if one or more consents in
writing, setting forth the action so taken, are signed by the holders of
outstanding Units having not less than the minimum number of votes necessary to
authorize or take the action under this Agreement (unless a greater number of
affirmative votes are required under the Act).  Unless the written
consents of all Members entitled to vote have been obtained, notice of any
Member approval without a meeting shall be given at least five (5) days before
the consummation of the transaction, action, or event authorized by the Member
action to those Members entitled to vote who have not consented in
writing.  The notice must contain or be accompanied by a description
of the transaction, action or event.  If the Company has received
written consents as contemplated by this Section 7.14(a) signed by all Members
entitled to vote with respect to the action, the effective date of the action
may be any date that is specified in all of the written consents.  Any
consent or writing may be received by the Company by any electronically
transmitted or other form of communication that provides the Company with a
complete copy thereof, including the signature thereto.  Any Member or
an authorized representative of that Member may revoke a consent by a signed
writing describing the action and stating that the Member’s prior consent is
revoked, if the writing is received by the Company prior to the effective date
and time of the action.  A member action taken pursuant to this
Section 7.14(a) is not effective unless all written consents on which the
Company relies for taking an action pursuant to this Section 7.14(a) are
received by the Company within a 60-day period and not revoked pursuant to this
Section 7.14(a).

     

    (b) Effect of Action Without a
Meeting.  Action taken under this Section 7.14 has the same
effect as action taken at a meeting of Members and may be so described in any
document.

     

     

    ARTICLE
VIII

     

    LIABILITY,
EXCULPATION AND INDEMNIFICATION

     

    
      
         

      

      
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    8.1 Liability.  Except
as otherwise provided by the Act or pursuant to any agreement, the debts,
obligations and liabilities of the Company, whether arising in contract, tort or
otherwise, shall be solely the debts, obligations and liabilities of the
Company, and no Covered Person shall be obligated personally for any such debt,
obligation or liability of the Company solely by reason of being a Covered
Person.

     

    8.2 Exculpation.  No
Covered Person shall be liable to the Company or any Member for any act or
omission taken or suffered by such Covered Person in good faith and in the
reasonable belief that such act or omission is in or is not contrary to the best
interest of the Company and is within the scope of authority granted to such
Covered Person by this Agreement; provided, however, that such act or omission
is not in violation of this Agreement and does not constitute Disabling Conduct
by the Covered Person.

     

    8.3 Indemnification.

     

    (a) The
Company shall, to the fullest extent permitted by applicable Law (but subject to
the limitations set forth in this Article VIII), indemnify, hold harmless and
release each Covered Person from and against all claims, demands, liabilities,
costs, expenses, damages, losses, suits, proceedings and actions, whether
judicial, administrative, investigative or otherwise, of whatever nature, known
or unknown, liquidated or unliquidated (“Claims”), that may accrue to or be
incurred by any Covered Person, or in which any Covered Person may become
involved, as a party or otherwise, or with which any Covered Person may be
threatened, relating to or arising out of the business and affairs of, or
activities undertaken in connection with, the Company, including, but not
limited to, amounts paid in satisfaction of judgments, in compromise, or as
fines or penalties and counsel fees and expenses incurred in connection with the
preparation for or defense or disposition of any investigation, action, suit,
arbitration or other proceeding (a “Proceeding”), whether civil or criminal (all
of such Claims and amounts covered by this Section 8.3 and all expenses referred
to in Section 8.3(e), are referred to as “Damages”), except to the extent that
it is ultimately determined that such Damages arose from Disabling Conduct of
such Covered Person.  The termination of any Proceeding by settlement
shall not, of itself, create a presumption that any Damages relating to such
settlement arose from a material violation of this Agreement by, or Disabling
Conduct of, any Covered Person.  Members shall not indemnify any
Covered Person.

     

    (b) Notwithstanding
anything to the contrary in this Section 8.3, and as provided in Section 1802(1)
of the Act, the Company shall not indemnify a Covered Person made a party to a
Proceeding against liability incurred in the Proceeding unless:

     

    i. the
Covered Person’s conduct was in good faith;

     

    ii. the
Covered Person reasonably believed that such Covered Person’s conduct was in, or
not opposed to, the Company’s best interests; and

     

    iii. in the
case of any criminal proceeding, the Covered Person had no reasonable cause to
believe such Covered Person’s conduct was unlawful.

     

    
      
         

      

      
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    The
termination of a Proceeding by judgment, order, settlement, conviction, or upon
a plea of nolo contendere or its equivalent is not, of itself, determinative
that the Covered Person did not meet the standard of conduct described in this
Section 8.3(b).

    

    (c) Notwithstanding
anything to the contrary in this Section 8.3, and as provided in Section 1802(4)
of the Act, the Company shall not indemnify a Covered Person under this Section
8.3:

     

    i. in
connection with a Proceeding by or in the right of the Company in which the
Covered Person was adjudged liable to the Company; or

     

    ii. in
connection with any other Proceeding charging that the Covered Person derived an
improper personal benefit, whether or not involving action in such Covered
Person’s official capacity, in which proceeding such Covered Person was adjudged
liable on the basis that such Covered Person derived an improper personal
benefit.

     

    (d) The
determination regarding whether the Covered Person has met the standards and
requirements set forth in this Section 8.3, and is therefore entitled to
indemnification and the advancement of expenses pursuant to Section 8.3(e),
shall be made in accordance with Section 1806 of the Act.

     

    (e) Expenses
incurred by a Covered Person in defense or settlement of any Claim that may be
subject to a right of indemnification hereunder shall be advanced by the Company
prior to the final disposition thereof if (i) the Covered Person furnishes the
Company a written affirmation of such Covered Person’s good faith belief that
such Covered Person has met the applicable standard of conduct described in this
Section 8.3, (ii) upon receipt of a written undertaking by or on behalf of the
Covered Person to repay such amount if it is ultimately determined that the
Covered Person is not entitled to be indemnified hereunder, and (iii) a
determination is made that the facts then known to those making the
determination would not preclude indemnification under this Section 8.3, as
provided in the Act.

     

    (f) The right
of any Covered Person to the indemnification provided herein shall be cumulative
with, and in addition to, any and all rights to which such Covered Person may
otherwise be entitled by contract or as a matter of law or equity and shall
extend to such Covered Person’s heirs, personal representatives, successors and
assigns.

     

    (g) Promptly
after receipt by a Covered Person of notice of the commencement of any
Proceeding, such Covered Person shall, if a claim for indemnification in respect
thereof is to be made against the Company, give written notice to the Company of
the commencement of such Proceeding, provided that the failure of any Covered
Person to give notice as provided herein shall not relieve the Company of its
obligations under this Section 8.3 except to the extent that the Company is
actually prejudiced by such failure to give notice.  In case any such
Proceeding is brought against a Covered Person (other than a derivative suit in
right of the Company), the Company will be entitled to participate in and to
assume the defense thereof to the extent that the Company may wish, with counsel
reasonably satisfactory to such Covered Person.  After notice from the
Company to such Covered Person of the Company’s election to assume the defense
thereof, the Company will not be liable for expenses subsequently

     

    
      
         

      

      
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    incurred
by such Covered Person in connection with the defense thereof.  The
Company will not consent to entry of any judgment or enter into any settlement
that (i) does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Covered Person a release from all liability in
respect to such Claim, or (ii) requires any action (or inaction) by the Covered
Person other than the payment of money, but only to the extent that the Company
is required to indemnify the Covered Person for such payment.

     

     

    ARTICLE
IX

     

    BOOKS AND
RECORDS, REPORTS, TAX ACCOUNTING, BANKING

     

    9.1 Books and
Records.  The Managers, at the Company’s expense, shall keep or
cause to be kept adequate books and records for the Company, which contain an
accurate account of all business transactions arising out of and in connection
with the conduct of the Company, as required by the Act.  After first
giving the Company written notice of the demand at least five (5) business days
before the inspection is to occur, any current or former Member or Manager, or
his or its designated representative, shall have the right, at any reasonable
time, to have access to and may inspect and copy the contents of such books or
records for any proper purpose, as defined by the Act.  The cost of
such inspection and copying shall be borne by the Member or Manager seeking such
inspection.  The following records are those that the Managers shall
cause to be maintained at the Company’s Designated Office:

     

    (a) An
alphabetical list of the full name and last known business, residence, or
mailing address of each Member, each Manager and each Officer, both past and
present;

     

    (b) A copy of
the stamped Articles of Organization for the Company, and all certificates of
amendment thereto, together with a copy of all signed powers of attorney
pursuant to which the Company’s Articles of Organization or any amendment has
been signed;

     

    (c) A copy of
the writing required of an organizer under Section 401(2) of the Act setting
forth the name and address of each Member of the Company and each
Manager;

     

    (d) A copy of
the Company’s currently effective Agreement and all amendments thereto, copies
of any prior operating agreements no longer in effect, and copies of any
writings permitted or required with respect to a Member’s obligation to
contribute cash, property, or services;

     

    (e) Copies of
the Company’s federal, state, and local income tax returns and reports, if any,
for the three (3) most recent years;

     

    (f) Copies of
Company financial statements, if any, for the three (3) most recent
years;

     

    (g) Copies of
the minutes, if any, of every meeting of the Members and any written consents
obtained from the Members;

     

    (h) Copies of
minutes, if any, of every meeting of the Management Board, and any written
consents obtained from the Managers;

     

    
      
         

      

      
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    (i) Copies of
any consents or approvals for actions by the Managers; and

     

    (j) Except to
the extent already set forth in this Agreement, a written statement setting
forth:  (i) the amount of cash and a description and statement of the
agreed value of the other property or services contributed and agreed to be
contributed by each Member; (ii) the times at which, or events on the happening
of which, any additional contributions agreed to be made by each Member are to
be made; (iii) any right of a Member to receive distributions; (iv) any date or
event upon the happening of which a Member is entitled to payment in redemption
of the Member’s interests in the Company; and (v) any date or event upon the
happening of which the Company is to be dissolved and its affairs wound
up.

     

    9.2 Reports to
Members.  Within twenty (20) days after the end of each Fiscal
Year, within fifteen (15) days after the end of each of the first three fiscal
quarters thereof, and within fifteen (15) days after the end of each calendar
month other than March, June, September and December, the Chief Executive
Officer shall cause the Management Board and the Members to be furnished with a
copy of the balance sheet of the Company as of the last day of the applicable
period and a statement of income or loss for the Company for such
period.  Quarterly and annual statements shall also include a
statement of the Members’ Capital Accounts and changes therein for such Fiscal
quarter or Fiscal Year, as applicable.  Annual statements shall be
audited by the Company’s accountants, and shall be in such form as shall enable
the Members to comply with all reporting requirements applicable to either of
them or their Affiliates under the Securities Exchange Act of 1934, as
amended.  The audited financial statements of the Company shall be
furnished to the Members within fifty (50) days after the end of each Fiscal
Year. 

     

    9.3 Tax
Matters.  The Members intend that the Company shall be operated
in a manner consistent with its treatment as a partnership for federal and state
income tax purposes.  The Members shall not take any action
inconsistent with this expressed intent.  The Tax Matters Partner
shall take no action to cause the Company to elect to be taxed as a corporation
pursuant to Regulations Section 301.7701-3(a) or any counterpart under state
law.  Each Member agrees not to make any election for the Company to
be excluded from the application of the provisions of Subchapter K of the
Code.

     

    9.4 Tax
Returns.  The Management Board shall cause the Company
accountants to prepare and timely file all tax returns required to be filed by
the Company pursuant to the Code and all other tax returns deemed necessary and
required in each jurisdiction in which the Company does business.  The
Management Board shall instruct Company accountants to use commercially
reasonable efforts to prepare and deliver all Forms K-1 (and similar forms under
state and local law) to each Member by March 1 of each Fiscal
Year.  

     

    (a) The
Management Board may, where permitted by the rules of any Taxing Jurisdiction,
file a composite, combined, or aggregate tax return reflecting Company income,
and pay the tax, interest, and penalties of some or all Members on such income
to the Taxing Jurisdiction.  In such case the Company shall inform the
Members of the amount of such tax, interest, and penalties so paid.

     

    (b) The
Management Board shall designate one Manager that is a Member to be the
Company’s “tax matters partner” pursuant to Code Section 6231(a)(a)(7) (the
“Tax

     

    
      
         

      

      
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    Matters
Partner”), provided, however, that if there is only one Manager that is a
Member, such Manager shall be the Tax Matters Partner, and provided further
that, if there is no Manager that is a Member, the Tax Matters Partner shall be
a Member that is designated as such by a Majority Vote of the
Members.  Any Person so designated as the Tax Matters Partner shall
receive no compensation (other than compensation, if any, otherwise specified in
this Agreement) from the Company or its Members for its services in that
capacity.  Sarah Merz is hereby designated as the initial Tax Matters
Partner of the Company and shall be authorized and required to represent the
Company in connection with all examinations of the Company’s affairs by tax
authorities (Federal, State and local), including resulting administrative and
judicial proceedings, and to expend Company funds for professional services and
costs associated therewith.  To the extent permitted by the Code, the
Tax Matters Partner may be removed by the Management Board.  The Tax
Matters Partner shall, on a timely basis, keep all Members fully informed of the
progress of any examinations, audits or other proceedings, and all Priority
Members shall have the right to participate in any such examinations, audits or
other proceedings.  Notwithstanding the foregoing, the Tax Matters
Partner shall not settle or otherwise compromise any issue in any such
examination, audit or other proceeding without first obtaining the approval of
the Management Board.

     

    (c) At the
request of a Majority Vote of the Members, the Managers may make the election
provided under Code Section 754 and any corresponding provision of applicable
state law.

     

    (d) If a
Member reports a Company item on the Member’s income tax return in a manner
inconsistent with the Company income tax return, the Member shall notify the
Management Board of such treatment before filing the Member’s income tax
return.  If a Member fails to report such inconsistent reporting, the
Member shall be liable to the Company and the other Members for any expenses,
including professionals’ fees, tax, interest, penalties, or litigation costs,
that may arise as a consequence of such inconsistent reporting, such as an audit
by a Taxing Jurisdiction.

     

    9.5 Bank
Accounts.  The Company shall maintain checking or other
accounts in such bank or banks as the Managers shall determine and all funds
received by the Company shall be deposited therein and withdrawn therefrom under
such general or specific authority as this Agreement, the Act, or the Management
Board shall grant to the Managers.  Company funds shall not be
commingled with the funds of any other Person.  Checks shall be drawn
upon the Company account or accounts only for Company purposes and shall be
signed by authorized Persons on the Company’s behalf.

     

     

    ARTICLE
X

     

    ADMISSIONS
AND WITHDRAWALS

     

    10.1 Admission of
Member.  Persons may be admitted as Members as a result of the
issuance of Units only with a Majority Vote of the Members, provided, however,
that a third party may become a Member through conversion rights granted to such
third party by an instrument approved by the Management Board.  Except
as specifically set forth herein, no

     

    
      
         

      

      
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    Person
shall be admitted as a Member of the Company after the date of formation of the
Company as a result of a Transfer of Units, except in accordance with Section
11.5.

     

    10.2 Right to
Withdraw.  A Member may withdraw from the Company at any time
by mailing or delivering a written notice of withdrawal to the
Managers.  If the withdrawing Member is a Manager, such Member may
withdraw by mailing or delivering a written notice of withdrawal to the Company
and to the other Members at their last known addresses set forth in Exhibit
A.

     

    10.3 Rights of Withdrawn
Member.  Except to the extent set forth in this Agreement with
respect to a Restricted Member, upon the occurrence of a Withdrawal Event with
respect to a Member, the Withdrawn Member (or the Withdrawn Member’s personal
representative or other successor if applicable) shall cease to have any rights
of a Member, except the right to receive distributions and allocations of
Profits and Losses occurring at the times and equal in amounts to those
distributions and allocations of Profits and Losses the Withdrawn Member would
otherwise have received if a Withdrawal Event had not occurred.  In
addition, the Units held by the Withdrawn Member shall be subject to the
Purchase Option.  If there are no remaining Members, distributions to
any Withdrawn Member shall be governed by Section 12.2.

     

    10.4 Option to Purchase the
Interest of a Member upon a Withdrawal Event.

     

    (a) Within
thirty (30) days from the occurrence of a Withdrawal Event with respect to a
Member, the Withdrawn Member (or the Withdrawn Member’s personal representative
or other successor if applicable) shall provide the Company with written notice
of the Withdrawal Event (“Withdrawal Notice”).

     

    (b) Following
a Withdrawal Event, the Company shall then have the option to purchase all of
the Withdrawn Member’s Units (“Purchase Option”) in the place of making
distributions to the Withdrawn Member (or the Withdrawn Member’s personal
representative or other successor if applicable) as set forth in Section
10.3.

     

    (c) The
Purchase Option shall be exercisable at any time during the thirty (30) day
period following the Company’s receipt of the Withdrawal Notice (or if no
Withdrawal Notice is delivered, within the thirty (30)-day period following the
date on which the Company becomes aware of the Withdrawal Event) by delivery of
written notice (the “Purchase Option Notice”) to the Withdrawn Member (or the
Withdrawn Member’s personal representative or other successor if
applicable).

     

    (d) The
Purchase Option Notice shall indicate the date the purchase is to be effected
(such date to be not less than five (5) business days, nor more than ten (10)
business days, after the date of the Purchase Option Notice).

     

    (e) The
purchase price for the Withdrawn Member’s Units shall be an amount equal to the
fair market value (as determined by the Company’s Management Board) of such
Units, taking into account discounts for lack of marketability and lack of
control, to the extent applicable. The Purchase Option Notice shall include the
proposed purchase price.  If the Withdrawn Member disputes the
proposed purchase price, such Withdrawn Member shall deliver written notice of
such dispute to the Company within twenty (20) days of receipt of
the

     

    
      
         

      

      
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    repurchase
notice (the “Withdrawn Member Notice”). If such Withdrawn Member fails to
deliver a Withdrawn Member Notice to the Company within such 20-day period, such
Withdrawn Member shall be deemed to have agreed with and shall be bound by the
purchase price proposed in the Purchase Option Notice. If such Withdrawn Member
delivers a Withdrawn Member Notice to the Company within such 20-day period, the
Company and such Withdrawn Member shall select a reputable valuation firm to
determine the fair market value of the Withdrawn Member’s Units.  In
the event that the Company and such Withdrawn Member do not agree upon a
valuation firm within sixty (60) days of the date the Company delivered the
Purchase Option Notice to such Withdrawn Member, the Company and such Withdrawn
Member shall each select a reputable valuation firm and instruct the valuation
firms to select a third reputable valuation firm. The fair market value of the
Withdrawn Member’s Units shall then be determined by such third valuation firm.
The fees and costs of the valuation firms engaged pursuant to this Section
10.4(e) shall be borne by the Withdrawn Member, provided, however, that the
Company shall bear the fees and costs of the valuation firm if the fair market
value of the Withdrawn Member’s Units determined by the valuation firm is more
than ten  percent (10%) below the fair market value determined by the
Management Board.

     

    (f) The
purchase price for the Withdrawn Member’s interests shall be payable in cash or
a promissory note with mutually agreeable terms.

     

    (g) In the
case of a Restricted Member, Section 3.9 and Section 3.10 shall apply in place
of this Section 10.4 with respect to Restricted Units only.

     

     

    ARTICLE
XI

     

    TRANSFERABILITY

     

    11.1 General.  No
Member shall be authorized to Transfer all or a portion of such Member’s Units
unless the Transfer constitutes a Permitted Transfer.

     

    11.2 Permitted
Transfers.  Subject to the conditions and restrictions set
forth in Section 11.3, a Transfer of a Member’s Units shall constitute a
Permitted Transfer provided that:

     

    (a) The
Transfer is made to another Member or an Affiliate of any Member (provided,
however, that if such transferee ceases to be an Affiliate of the Member, then
such event shall constitute a Withdrawal Event unless the Affiliate first
Transfers all of the Units held by such Person to the transferor);
or

     

    (b) To the
extent applicable, the Transfer is made following compliance with the terms of
the (A) right of first refusal set forth in Section 11.4; and (B) the Tag-Along
Rights set forth in Section 11.9.

     

    11.3 Conditions to Permitted
Transfer.  A Transfer shall not be treated as a Permitted
Transfer unless all of the following conditions are satisfied:

     

    (a) The
Members consent to the Transfer by a Majority Vote of the Members, (A) which
consent will not be unreasonably withheld, conditioned, or delayed with respect
to the Class B Units, (B) which consent may be granted or withheld, conditioned,
or delayed, for any

     

    
      
         

      

      
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    or no
reason with respect to any Class C Units, and (C) which consent requirement
under this Section 11.3(a) shall not apply to a Priority Member holding a
majority of the Class A Units;

     

    (b) Unless
otherwise determined by a Majority Vote of the Management Board, the Units are
not Profits Interest Units;

     

    (c) The
Transfer is not to a Material Competitor or Unsuitable Transferee;

     

    (d) The
Transfer does not cause the Company to become a “publicly traded partnership”
within the meaning of Code Section 7704(b);

     

    (e) The Units
which are the subject of the Transfer are registered under the Securities Act as
amended, and any applicable state securities laws; or, alternatively, Company
counsel furnishes an opinion that such Transfer is exempt from all applicable
registration requirements or that such Transfer will not violate any applicable
securities laws; and

     

    (f) The
transferor and the transferee agree to execute such documents and instruments
necessary or appropriate in the Managers’ discretion to confirm such
Transfer.

     

    11.4 Right of First
Refusal.  At any time it holds a majority of the Class A Units,
Peterson shall not be subject to the obligations of a Disposing Member (as
defined below) set forth in Sections 11(a) – 11(g).

     

    (a) General.  If
any Member (other than a Priority Member holding a majority of the Class A
Units) desires to Transfer all or a portion of the Member’s Units to any Person,
such Transfer shall not constitute a Permitted Transfer unless such Member shall
afford the Company and the Priority Members a right of first refusal pursuant to
this Section 11.4.

     

    (b) Notice.  A
Member desiring to Transfer Units shall first provide to the Company and the
Priority Members at least one hundred twenty (120) days’ prior written notice of
the Member’s intention to make a Transfer of Units (the “Disposition Notice”),
provided, however, that a Disposition Notice may be issued to the Company and
the Priority Members by a Member only after such Member has received a bona-fide
offer from an unrelated third-party relating to the Transfer of the Units that
the Member desires to Transfer.  The one hundred twenty (120) day time
frame following the Company and the Priority Members’ receipt of the Disposition
Notice shall be termed the “Notice Period”.  The Member desiring to
Transfer Units shall be known as the “Disposing Member” and the Priority Members
(other than the Disposing Member) shall be known as the “Non-Disposing Members”
for purposes of this Agreement.  In the Disposition Notice, the
Disposing Member shall specify the price at which the Units are proposed to be
purchased in the bona-fide offer, the portion of the Disposing Member’s Units to
be sold or transferred, the identity of the proposed purchaser or transferee,
and the terms and conditions of the proposed Transfer as set forth in the
bona-fide offer.

     

    (c) Option to
Company.  The Company may elect with Majority Vote of the
Managers within the first sixty (60) days of the Notice Period, to purchase some
or all of the Units proposed to be transferred by the Disposing Member at the
proposed price as contained in the Disposition Notice.  The terms and
conditions of the purchase by the Company shall be the terms and conditions of
the proposed Transfer as set forth in the Disposition
Notice.  Any

     

    
      
         

      

      
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    purchase
by the Company shall be made in cash any day between and including the
ninety-first (91st) and including the one hundredth (100th) day of
the Notice Period.

     

    (d) Options to
Members.  If the Company does not purchase all of the Disposing
Member’s Units covered by the Disposition Notice, the remaining Units may be
purchased by the Non-Disposing Members on the same terms and at the same price
available to the Company.  Each Non-Disposing Member shall have the
option to purchase that portion of the Disposing Member’s Units that is
necessary to maintain the Member’s Percentage Interest vis-à-vis the other
Non-Disposing Members (not taking into account the Percentage Interest of the
Class C Members).  If any Non-Disposing Member does not purchase the
portion of the Units available to such Member within the time frame stated in
Section 11.4(e), the remaining Units will then be available for purchase by the
other Non-Disposing Members in proportion to their respective Percentage
Interests.

     

    (e) Timing.  If
the Company decides to purchase less than all of the Units offered by the
Disposing Member (including a decision to purchase none of such Units), within
thirty (30) days after the Company reaches such decision, and, in any event, by
the end of the first sixty (60) days of the Notice Period, the Company shall so
notify each Non-Disposing Member.  The notice shall state that the
Company did not exercise its option to purchase all of the Disposing Member’s
Units offered pursuant to the Disposition Notice and shall contain appropriate
information concerning each Non-Disposing Member’s option to purchase all
remaining Units offered by the Disposing Member.  Each Non-Disposing
Member must give written notice to the Disposing Member and the other
Non-Disposing Members of the exercise of such Member’s option to acquire the
Member’s portion of such Units within the first eighty (80) days of the Notice
Period.  Such Member must then pay for such Units in cash by the end
of the first ninety (90) days of the Notice Period.  If any
Non-Disposing Member does not elect to purchase, and pay the purchase price for,
all of the Units available to such Member within the required time period, the
remaining Non-Disposing Members shall be entitled to purchase any remaining
Units vis-à-vis such Non-Disposing Members’ Percentage Interests (not taking
into account the Percentage Interest of the Class C Members) by giving written
notice to the Disposing Member and the other Non-Disposing Members within the
first ninety (90) days of the Notice Period.  Any purchase by the
remaining Non-Disposing Members shall be made in cash within the first one
hundred (100) days of the Notice Period.

     

    (f) Transfer to Third
Party.  If the Company and the Non-Disposing Members have not
collectively purchased all of the Disposing Members’ Units covered by the
Disposition Notice within the first one hundred (100) days of the Notice Period,
the Disposing Member may, provided the conditions of Section 11.3 are satisfied,
sell its or his remaining Units to Persons other than the Company and the
Non-Disposing Members, provided that any disposition must be made on the terms
and conditions and to the party specified in the Disposition Notice and must be
consummated within the one hundred twenty (120) day Notice Period, but after any
time provided above for the Company and/or Non-Disposing Members to elect to
purchase and consummate the purchase of such Units.

     

    (g) Transfer of Rights to
Assignee.  If the Transfer entails the Transfer of all of
Disposing Member’s Units and there shall be only one Non-Disposing Member, such
Member

     

    
      
         

      

      
        44

        
          

        

      

      
         

      

    

    shall
have the right to assign to any Person the rights otherwise available to the
Non-Disposing Member pursuant to this Section 11.4.

     

    (h) Transfer by Peterson of
Class A Units.  In the event that Peterson desires to Transfer
all or a portion of its Class A Units, such Transfer shall not constitute a
Permitted Transfer unless Peterson shall afford the Class B Member a right of
first refusal pursuant to this Section 11.4(h).  If Peterson desires
to Transfer Class A Units, it shall first provide to the Class B Member written
notice of Peterson’s intention to make a Transfer of its Class A Units (the
“Peterson Notice”), which notice shall specify (i) the estimated price at which
Peterson proposes to Transfer the Class A Units, and (ii) the terms and
conditions of the proposed Transfer.  The Class B Member may elect to
purchase all (but not less than all) of the Class A Units proposed to be
transferred by Peterson at the estimated purchase price contained in the
Peterson Notice.  Within fifteen (15) days following the Class B
Member’s receipt of the Peterson Notice, the Class B Member must provide written
notice to Peterson of its election to acquire Peterson’s Class A Units on the
terms and conditions of the proposed Transfer set forth in the Peterson
Notice.  Upon receipt of such notice from the Class B Member, Peterson
and the Class B Member will enter into exclusive negotiations for the purchase
of the Class A Units proposed to be transferred on terms and conditions
substantially similar to those terms and conditions set forth in the Peterson
Notice.  If within thirty (30) days of Peterson’s receipt of the Class
B Member’s election notice Peterson and the Class B Member have not entered into
a definitive agreement for the purchase of the Class A Units proposed to be
Transferred, then Peterson’s obligations to exclusively negotiate with the Class
B Member will automatically terminate and Peterson may negotiate the Transfer of
its Class A Units to one or more third-parties on the terms and conditions
substantially similar to those set forth in the Peterson Notice; provided, however,
that no Transfer of any of Peterson’s Class A Units shall be made to any
third-party at a purchase price of less than 90% of the estimated purchase price
contained in the Peterson Notice without a new notice of intention to Transfer
to the Class B Member and full compliance with the requirements of this Section
11.4(h).

     

    11.5 Admission as Substitute
Member.

     

    (a) A
transferee of Units who is not a Member shall be admitted to the Company as a
Substitute Member only upon satisfaction of the following
conditions:

     

    i. The Units
with respect to which the transferee is being admitted were acquired by means of
a Permitted Transfer;

     

    ii. The
transferee becomes a party to this Agreement and executes such documents and
instruments as the Management Board determines are necessary or appropriate to
confirm such transferee as a Member and such transferee’s agreement to be bound
by the terms of this Agreement; and

     

    iii. The
Members (defined for this purpose by excluding the Disposing Member) consent to
the admission of the transferee as a Substitute Member by a Majority Vote of
such Members, provided, however, that the
consent requirement under this Section 11.5(a)(iii) shall not apply to any
transferee of Units from a Priority Member.

     

    
      
         

      

      
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    (b) A
transferee of Units in a Permitted Transfer under Sections 11.2(a) shall
automatically become a Substitute Member with regard to the Transferred Units
unless the transferor directs in writing to the contrary.

     

    (c) If the
transferee of Units in a Permitted Transfer shall not become a Substitute
Member, the transferee shall have only the rights set forth in Section 11.6
hereof.

     

    11.6 Rights as
Assignee.  A non-Member who acquires Units (and any Member if
the transferor directs in writing to the contrary as provided in Section
11.5(b)) and who is not admitted to the Company as a Substitute Member shall
have only the right to receive the distributions and allocations of Profits and
Losses to which such Person would have been entitled under this Agreement with
respect to the transferred Units, but shall have no right to participate in
Company management, no right to inspect Company books and records, and no other
rights accorded Members under this Agreement.  Any distributions to
such purported transferee may be applied (without limiting any other legal or
equitable rights of the Company) to satisfy any debts, obligations, or
liabilities for damages that the transferor or transferee may have to the
Company.

     

    11.7 Prohibited
Transfers.  Any purported Transfer of Units that is not a
Permitted Transfer shall be null and void and of no force and effect
whatsoever.  In the case of an attempted Transfer that is not a
Permitted Transfer, the Persons engaging in or attempting to engage in such
Transfer shall be liable to and shall indemnify and hold harmless the Company
from all loss, cost, liability and damages that the Company and/or any Member
incurs as a result of such attempted Transfer.

     

    11.8 Drag-Along
Right.  If a Class A Member (“Transferring Member”) intends to
sell Class A Units to a third party purchaser that would result in such third
party purchaser acquiring control over more than fifty percent (50%) of all
outstanding Class A Units and otherwise result in a Change of Control, after
taking into account the sale of Units by the Members pursuant to the provisions
of this Section 11.8, in which the Transferring Member (together with any
affiliates of the Transferring Member) would not retain a controlling interest
in the Company, then the Transferring Member shall have the right (the
“Drag-Along Right”) to require each remaining Members to sell some or all of its
or his or her Units to the third party in a proportionate amount and on the same
terms and conditions as the Transferring Member (taking into account Section
11.8(f)) in accordance with the terms and conditions of this Section 11.8 and
otherwise in accordance with the following provisions:

     

    (a) The
Drag-Along Right may only be exercised by written notice (the “Drag-Along
Notice”) from the Transferring Member and the third party purchaser to the
remaining Members.

     

    (b) The
Drag-Along Notice shall:

     

    i. state the
name of the third party purchaser, the purchase price for the Units of the
Transferring Member(s) and the purchase price proposed to be paid for the Units
of the remaining Members (in accordance with Section 11.8(f)) and the time, date
and place of completion of such sale and purchase; and

     

    
      
         

      

      
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    ii. be given
no later than fifteen (15) business days before the date fixed for completion of
the sale by the Transferring Member of its or his or her Units to the third
party.

     

    (c) The
delivery of the Drag-Along Notice to a Member shall constitute an irrevocable
and binding obligation of the Member to sell, and the third party to purchase,
some or all of the Member’s Units in a proportionate amount and on the same
terms and conditions, taking into account Section 11.8(f) and subject to Section
11.8(e), as are applicable to the sale by the Transferring Member of its Units
to the third party as set forth in the Drag-Along Notice (subject to such terms
being accurately reflected in the Drag-Along Notice).

     

    (d) At or
before the time of completion of the sale of the Units of each Member to the
third party purchaser, each such Member shall (i) use its best efforts to cause
to be discharged any and all encumbrances of, and security interests in, its or
his or her Units and provide written evidence of such discharges to the third
party purchaser, and (ii) execute and deliver to the third party purchaser,
against payment for such Units, all certificates or other documents representing
such Units, duly endorsed for transfer or with duly executed assignment forms
attached.

     

    (e) Notwithstanding
any provision of this Section 11.8, (i) no Member shall be under any obligation
to sell any Units unless (A) such sale occurs concurrently with or subsequent to
the sale of Units by the Transferring Member in a proportionate amount on the
same terms and conditions (taking into account Section 11.8(f)), (B) the sale of
Units by the Transferring Member shall qualify as a Permitted Transfer under
Section 11.2 and meets the conditions to a Permitted Transfer set forth in
Section 11.3 to the extent applicable, and (C) such sale results in a third
party purchaser acquiring control over more than fifty percent (50%) of all
outstanding Class A Units and otherwise result in a Change of Control, after
taking into account the sale of Units by the Members pursuant to the provisions
of this Section 11.8, in which the Transferring Member (together with any
affiliates of the Transferring Member) would not retain a controlling interest
in the Company and (ii) nothing in such sale of Units shall require a Member
subject to this Section 11.8 to do any of the following, unless all Members
similarly situated (e.g., of a similar class or Series of Units) and the
Transferring Member are required to do the same:  (w) enter into any
agreement or make any covenant, (x) make any representation, or warranty other
than related to authority, ownership and the ability to convey title to such
Units, (y) be liable for the inaccuracy of any representation or warranty made
by any person or entity in connection with the sale other than himself or itself
and the Company, or (z) be liable in any way other than severally in proportion
to the amount of consideration paid to such Member in connection with such sale
and such liability not exceed the aggregate consideration received by such
Member in such sale.

     

    (f) Notwithstanding
that a sale pursuant to this Section 11.8 may provide for, or result in,
different per Unit consideration for different classes or series of Units, such
sale shall be deemed to be for the same terms and conditions regarding
consideration if the proceeds of such sale are allocated in the manner that
would result if such consideration were distributed to the Members as if the
Company were hypothetically liquidated pursuant to the rights and preferences
set forth in Section 12.2 (taking into account Section 12.3) as in effect
immediately prior to such sale as long as the nature of that consideration
(e.g., cash, promissory notes, or other

     

    
      
         

      

      
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    property)
is received among the various classes or series of Units in the same
proportionate amounts received by the Transferring Member.

     

    11.9 Tag-Along
Right.  

     

    (a) If any
Disposing Member desires to Transfer all or a portion of the Member’s Units to
any Person (the “Offered Units”), such Transfer (a “Proposed Transfer”) shall
not constitute a Permitted Transfer unless such Member shall afford the Priority
Members the tag-along rights set forth in this Section 11.9 (the “Tag-Along
Rights”).

     

    (b) Any
Disposition Notice delivered to a Priority Member pursuant to Section 11.4(b)
shall also serve as notice of such Priority Member’s Tag-Along Rights under this
Section 11.9.

     

    (c) Each
Priority Member that is not the Disposing Member (a “Remaining Member”) shall
have forty-five (45) days after receipt of the Disposition Notice to deliver to
the Disposing Member a demand (a “Tag-Along Demand”) invoking the provisions of
this Section 11.9.  The Tag-Along Demand shall indicate the maximum
number of Units that each Remaining Member wishes to sell (including the number
of such Units he or she or it would sell if one or more Remaining Members do not
elect to participate in the sale).

     

    (d) The
Disposing Member and each Remaining Member shall have the right to sell a
portion of his or her or its Units pursuant to the Proposed Transfer which is
equal to or less than the product obtained by multiplying (i) the total number
of Offered Units by (ii) a fraction, the numerator of which is
(x) the total number of Units held by such Disposing Member or Remaining Member
on the date of the Tag-Along Demand and the denominator of which
is (y) the total number of Units then held by the Disposing Member and by the
Remaining Members on the date of the Tag-Along Demand.  To the extent
one or more Remaining Members elect not to exercise their Tag-Along Rights or
the transferee agrees to purchase a number of Units greater than the Offered
Units, then the rights of the Disposing Member and the rest of the Remaining
Members (who exercise their Tag-Along Rights) to sell Units shall be increased
proportionately based on their relative holdings by the full amount of (A) Units
which the non-electing Remaining Members were entitled to sell pursuant to this
Section 11.9(d); and/or (B) the additional number of Units that the transferee
is willing to purchase, if any.

     

    (e) Within
five (5) days of receiving a notice from the Company or, as applicable, the
Non-Disposing Members as set forth in Section 11.4(e), the Disposing Member
shall notify each Remaining Member in writing (i) whether the Company or, as
applicable, any Non-Disposing Member, has elected to purchase none, some or all
of the Offered Units in accordance with Section 11.4(c) or Section 11.4(d) and
(ii) if the Company or any Non-Disposing Member has elected to purchase some or
all of the Offered Units, the number of Units held by such Remaining Member that
may be included in the sale, subject to the revocation rights set forth below in
this Section 11.4(e).  If the Company and the Non-Disposing Members
have elected to purchase none or some but not all of the Offered Units, then,
only if a Remaining Member elects to exercise his or her or its rights to
purchase his or her or its allocated portion of the remaining Offered Units in
accordance with Sections 11.4(d) and (e), then such Remaining Member may,
concurrently with delivering the required notice of such election pursuant
to

     

    
      
         

      

      
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    Section
11.4(e), deliver written notice to the Disposing Member, the other Remaining
Members and the Company that such Remaining Member has revoked his or her or its
prior election to exercise his or her or its Tag-Along Rights pursuant to this
Section 11.9.  By the ninetieth (90th) day of
the Notice Period, the Disposing Member shall notify each Remaining Member in
writing if there has been any change in the number of Units that will be
included in the sale and the date on which the Proposed Sale with the purchasing
party(ies) (whether a third party, the Company, or the Remaining Members) is
anticipated to be consummated in accordance with the provisions of Section
11.4.

     

    (f) Notwithstanding
the provisions of Sections 11.9(d) and (e), if the Disposing Member is a Class A
Member and the Proposed Transfer would result in a third party purchaser
acquiring control over more than fifty percent (50%) of all outstanding Class A
Units and otherwise result in a Change of Control, after taking into account the
sale of Units by the Members pursuant to the provisions of this Section 11.9,
then the third party purchaser shall purchase a proportionate amount of the
Units (in the same percentage of the number of Class A Units that the Class A
Member is proposing to transfer as compared to the overall number of Class A
Units held by the Class A Member) requested to be purchased by any Remaining
Member pursuant to a Tag-Along Demand.

     

    (g) The
delivery of a Tag-Along Demand by a Remaining Member, subject to the revocation
rights set forth in Section 11.9(e), shall constitute an irrevocable and binding
obligation of such Remaining Member to sell the specified number of Units in
such Remaining Member’s Tag-Along Demand, as such number may be adjusted as set
froth in Section 11.9(e), to the third party on the same terms and conditions,
taking into account Section 11.9(j), as set forth in the Disposition Notice
(subject to such terms being accurately reflected in the Disposition Notice) and
on such other applicable terms and conditions as are set forth in this Section
11.9.

     

    (h) The
Disposing Member shall not complete the sale of his or her or its Units to the
third party unless he or she or it has fully complied with its obligations set
forth in Section 11.4 and this Section 11.9 and the third party purchaser (and
any other purchasing parties pursuant to Section 11.4 and this Section 11.9) has
completed the purchase of all Units in respect of which each applicable
Tag-Along Demand has been delivered within the prescribed time.

     

    (i) The
completion of the sale to the third party purchaser of the Units of each
Remaining Member that provides a Tag-Along Demand within the prescribed time
shall take place no later than concurrently with the sale of the Disposing
Member(s)’ Units to the third party.

     

    (j) At or
before the time of completion of the sale of his or her or its Units, each
Remaining Member that provided a Tag-Along Demand within the prescribed time
shall (i) cause to be discharged any and all encumbrances of, and security
interests in, its Units and provide written evidence of such discharges, and
(ii) execute and deliver to the purchasing party(ies), against payment for such
Units, all certificates or other documents representing such Units, duly
endorsed for transfer or with duly executed assignment forms
attached.

     

    
      
         

      

      
        49

        
          

        

      

      
         

      

    

     

    (k) Notwithstanding
that a sale pursuant to this Section 11.9 may provide for, or result in,
different per Unit consideration for different classes or series of Units, such
sale shall be deemed to be for the same terms and conditions regarding
consideration if the proceeds of such sale are allocated in the manner that
would result if such consideration were distributed to the Members as if the
Company were hypothetically liquidated pursuant to the rights and preferences
set forth in Section 12.2 (taking into account Section 12.3) as in effect
immediately prior to such sale as long as the nature of that consideration
(e.g., cash, promissory notes, or other property) is received among the various
classes or series of Units in the same proportionate amounts received by the
Disposing Member.

     

    11.10 Change of
Control.  Notwithstanding any other provision of this
Agreement, the Company is prohibited from completing a Change of Control (a)
without a prior Majority Vote of the Members and (b) in which any party to the
Change of Control is a Material Competitor or Unsuitable
Transferee.  

     

    11.11 Legends.  Each
Member agrees that the following legend shall be placed upon any counterpart of
this Agreement or any other instrument or document evidencing ownership of a
Unit:

     

    THE UNITS
REPRESENTED BY THIS DOCUMENT HAVE NOT BEEN REGISTERED UNDER ANY SECURITIES LAWS
AND THE TRANSFERABILITY OF SUCH UNITS IS RESTRICTED.  SUCH UNITS MAY
NOT BE SOLD, ASSIGNED, GIFTED, TRANSFERRED OR OTHERWISE DISPOSED, NOR WILL THE
VENDEE, ASSIGNEE, BENEFICIARY, OR TRANSFEREE BE RECOGNIZED AS HAVING ACQUIRED
SUCH UNITS FOR ANY PURPOSES, UNLESS (A) A REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AS AMENDED, WITH RESPECT TO SUCH UNITS SHALL THEN BE IN EFFECT
AND SUCH HAS BEEN QUALIFIED UNDER ALL APPLICABLE STATE SECURITIES LAWS, OR (B)
THE AVAILABILITY OF AN EXEMPTION FROM SUCH REGISTRATION AND QUALIFICATION SHALL
BE ESTABLISHED TO THE SATISFACTION OF COUNSEL FOR THE COMPANY.

     

    THE UNITS
REPRESENTED BY THIS DOCUMENT ARE SUBJECT TO FURTHER RESTRICTION AS TO THEIR
SALE, TRANSFER, HYPOTHECATION, OR ASSIGNMENT AS SET FORTH IN THE AMENDED AND
RESTATED OPERATING AGREEMENT OF THE COMPANY AND AGREED TO BY EACH MEMBER OF THE
COMPANY.  SAID RESTRICTION PROVIDES, AMONG OTHER THINGS, THAT
GENERALLY NO UNITS MAY BE TRANSFERRED TO ANY PERSON WHO IS NOT A MEMBER WITHOUT
FIRST OFFERING SUCH UNITS TO THE COMPANY AND THE PRIORITY MEMBERS, AND THAT
GENERALLY NO BENEFICIARY,

     

    
      
         

      

      
        50

        
          

        

      

      
         

      

    

    TRANSFEREE,
OR ASSIGNEE SHALL HAVE THE RIGHT TO BECOME A “SUBSTITUTE MEMBER” WITHOUT THE
CONSENT OF ALL OTHER MEMBERS.

     

    11.12 Distributions in Respect of
Transferred Units.  If any Units are transferred in compliance
with this Article XI, all distributions on or before the date of such Transfer
shall be made to the transferor, and all distributions thereafter shall be made
to the transferee.

     

    ARTICLE
XII

     

    DISSOLUTION
AND TERMINATION

     

     

    12.1 Dissolution.  The
Company shall be dissolved upon the first to occur of any of the following
events:

     

    (a) The
Majority Vote of the Members;

     

    (b) The entry
of a decree of judicial dissolution under Section 1213 of the Act;

     

    (c) The sale,
exchange, or other disposition of all or substantially all Company
assets;

     

    (d) Failure
by the Company to have at least one (1) Member;

     

    (e) When the
Company is not the successor company in the merger or consolidation of the
Company with or into any other entity or entities; or

     

    (f) Upon
administrative dissolution under Section 1207 of the Act, subject to the right
of reinstatement under Section 1208 of the Act.

     

    The
Company shall not be dissolved upon the occurrence of a Withdrawal Event with
respect to any Manager or Member unless there is no remaining Member, taking
into consideration for this purpose Sections 402(2)(c) and 1201(2) of the
Act.  Provided, however, that the Company shall be dissolved at the
expiration of the Company’s period of duration, as set forth in the Company’s
Articles of Organization or, if no period of duration is set forth in the
Company’s Articles of Organization, the date which is 99 years from the date the
Articles of Organization were filed with the Division.

     

    12.2 Liquidation, Winding Up and
Distribution of Assets.  The Managers shall, upon the Company’s
dissolution, proceed to liquidate Company assets and properties, discharge
Company obligations, and wind up the Company’s business and affairs as promptly
as is consistent with obtaining the fair value thereof.  The proceeds
from liquidating Company assets, to the extent available, shall be applied and
distributed as follows:

     

    (a) First, to
the payment and discharge of all Company debts and liabilities (other than debts
and liabilities owing to the Members) or to the establishment of any
reasonable

     

    
      
         

      

      
        51

        
          

        

      

      
         

      

    

    reserves
for contingent or unliquidated debts and liabilities, in the order of priority
as provided by law;

     

    (b) Second,
to the payment of any liabilities to Members in their capacities as creditors,
in the order of priority as provided by law;

     

    (c) Third, to
FC an amount equal to the FC Unreturned Priority Contribution and the FC
Preferred Return;

     

    (d) Fourth,
to the Class A Members, pro rata based on the unpaid Class A Preferred Return
payable to each Class A Member, an amount equal to the Class A Members’ unpaid
Class A Preferred Return;

     

    (e) Fifth, to
the Class A Members, pro rata based on the Class A Unreturned Contribution
Balance of each Class A Member, an amount equal to the Class A Unreturned
Contribution Balance;

     

    (f) Sixth, to
the Class B Member, an amount equal to the Class B Unreturned Contribution
Balance; and

     

    (g) Thereafter,
in accordance with the positive balance of each Member’s Capital Account as
determined after taking into account all Capital Account adjustments for the
Company’s taxable year during which the liquidation occurs, including any
distributions pursuant to Sections 12.2(c) through (f) and any Capital Account
adjustments associated with the allocation of Profits and Losses with respect to
any sale, transfer or other taxable disposition of any Company
property.  Any such distributions to the Members in respect of their
Capital Accounts shall be made within the time requirements of Regulations
Section 1.704-1(b)(2)(ii)(b)(2).  If for any reason the amount
distributable pursuant to this Section 12.2(g) shall be more than or less than
the sum of all the positive balances of the Members’ Capital Accounts, then the
proceeds distributable pursuant to this Section 12.2(g) shall be distributed
among the Members in accordance with the ratio by which the positive Capital
Account balance of each Member bears to the sum of all positive Capital Account
balances.  Distributions required by this Section 12.2(g) may be
distributed to a trust established for the benefit of the Members for the
purposes of liquidating Company property, collecting amounts owed to the
Company, and paying any contingent or unforeseen liabilities or obligations of
the Company or of the Managers arising out of or in connection with the
Company.  In such case, the assets of such trust shall be distributed
to the Members from time to time, in the discretion of the Managers, in the same
proportions as the amount distributed to such trust by the Company would
otherwise have been distributed to the Members pursuant to this
Agreement.

     

    12.3 Allocations Relating to Last
Fiscal Year.

     

    (a) Notwithstanding
Section 6.1 and Section 6.2, if upon the dissolution and termination of the
Company pursuant to Article XII and after all other allocations provided for in
Section 6.1 and Section 6.2 have been tentatively made as if this Section 12.3
were not in this Agreement, a distribution to the Company under Section 12.2
would be different from a distribution pursuant to the distribution priorities
set forth in Section 12.3(b), then Profits (and items thereof) and Losses (and
items thereof) for the Fiscal Year in which the Company dissolves

     

    
      
         

      

      
        52

        
          

        

      

      
         

      

    

    and
terminates pursuant to Article XII shall be allocated among the Members in a
manner such the Capital Account of each Member, immediately after giving effect
to such allocation, is, as near as possible, equal (proportionately) to the
amount of the distributions that would be made to such Member during such Fiscal
Year if the Company was making its distributions pursuant to Section
12.3(b).  The Management Board, may, in its discretion, (A) apply the
principles of this Section 12.3 to any Fiscal Year preceding the Fiscal Year in
which the Company dissolves and terminates if delaying the application of the
principles of this Section 12.3 would likely result in distributions under
Article XII that are materially different from distributions under Section
12.3(b) in the Fiscal Year in which the Company dissolves and terminates, or (B)
allocate items of gross income, gain, deduction, loss, or credit with respect to
any Fiscal Years that are open for tax purposes (i.e., Fiscal Years for which
either tax returns have not yet been filed or, if filed, an amended tax return
may still be timely filed), if the Management Board determines, in the Fiscal
Year in which the Company dissolves and terminates, that allocation of Profits
and Losses will result in distributions under Article XII that are materially
different from distributions under Section 12.3(b).

     

    (b) The
distribution priority under this Section 12.3(b) is as follows:

     

    i. First, to
FC an amount equal to the FC Unreturned Priority Contribution and the unpaid FC
Preferred Return;

     

    ii. Second,
to the Class A Members, pro rata based on the unpaid Class A Preferred Return
payable to each Class A Member, an amount equal to each Class A Member’s unpaid
Class A Preferred Return;

     

    iii. Third, to
the Class A Member, pro rata based on the Class A Unreturned Contribution
Balance of each Class A Member, an amount equal to each Class A Member’s Class A
Unreturned Contribution Balance;

     

    iv. Fourth,
to the Class B Member, an amount equal to the Class B Unreturned Contribution
Balance; and

     

    v. Thereafter,
to the Members in according with the Members’ Percentage Interest in the
Company, provided,
however, that, in order to comply with the Profit Interest Revenue
Procedures, liquidating distributions pursuant to Section 12.3(b)(iv) shall be
made in a manner that accounts for the differences in Capital Accounts of the
Profits Interest Unit holders versus the other Members resulting from the
adjustments made to the Capital Accounts of the Members pursuant to Section
1.704-1(b)(2)(iv)(f) of the Regulations at the time that any Profits Interest
Unit is granted.

     

    12.4 Deficit Capital
Accounts.  No Member shall have any obligation to contribute or
advance any funds or other property to the Company by reason of any negative or
deficit balance in such Member’s Capital Account during or upon completion of
winding up or at any other time except to the extent that a deficit balance is
directly attributable to a distribution of cash or other property in violation
of this Agreement.

     

    12.5 Certificate of
Cancellation.  When all the remaining property and assets have
been applied and distributed in accordance with Section 12.2 hereof, the
Managers (or such other

     

    
      
         

      

      
        53

        
          

        

      

      
         

      

    

    Person
designated by the Members) shall cause a Certificate of Cancellation to be filed
with the Division in accordance with Section 1202 of the Act.

     

    12.6 Return of Contribution
Non-Recourse to Other Members.  Except as provided by law, upon
dissolution, each Member shall look solely to the Company assets for the return
of the Member’s Capital Contributions.  If any Company property
remaining after payment or discharge of Company debts and liabilities is
insufficient to return the cash or other property contribution of one or more
Member(s), such Member(s) shall have no recourse against the Managers, the
Management Board or any other Member.

     

    12.7 In Kind
Distributions.  A Member shall have no right to demand and
receive any distribution from the Company in any form other than
cash.  However, a Member may be compelled to accept a distribution of
an asset in kind if the Company is unable to dispose of all of its assets for
cash.

     

    12.8 Inclusion of Unit
Holder.  Except as otherwise provided herein, the term “Member”
for purposes of this Article XII shall include a Unit Holder.

     

     

    ARTICLE
XIII

     

    DISPUTE
RESOLUTION; BUY-SELL 

     

    13.1 Good Faith
Negotiations.  Subject to Section 13.4, any dispute between the
Members arising out of or relating to this Agreement that the Members cannot
resolve through good faith negotiations between their respective representatives
within forty-five (45) days after written notice of such dispute is first given
by one Member to the other Member(s) shall be resolved in accordance with the
procedures described in this Article XIII, which shall be the sole and exclusive
procedures for resolution of any such dispute.

     

    13.2 Non-Binding
Mediation.  The Members shall use reasonable, good faith
efforts to settle any dispute through non-binding mediation before a mutually
acceptable, neutral, third-party mediator.  The mediation shall be
held in Salt Lake City, Utah and administered by the CPR Institute for Dispute
Resolution (the “CPR Institute”) under the CPR Mediation Procedure then in
effect.  Unless otherwise agreed, the parties shall jointly select a
single mediator from the CPR Panels of Distinguished Neutrals based on a list of
mediator candidates supplied by the CPR Institute.  If, within
fourteen (14) days after any Member makes a written request for mediation under
this Section 13.2, the Members have not reached agreement on the selection of a
mediator, the mediator shall be selected in accordance with the CPR Mediation
Procedure currently in effect.  A good faith attempt at mediation
shall be a condition precedent to the commencement of arbitration, but is not a
condition precedent to any court action for injunction or other interim relief
pending the outcome of mediation.

     

    13.3 Binding
Arbitration.  If the Members who are parties to a dispute are
unable to resolve the dispute by mediation in a timely manner (which, in any
case, shall not exceed sixty (60) days from the first notice of mediation), the
dispute shall be resolved through final, binding arbitration held in Salt Lake
City, Utah in accordance with the CPR Rules for Non-Administered Arbitration
then in effect by three arbitrators of whom the Member or Members, as
applicable, on

     

    
      
         

      

      
        54

        
          

        

      

      
         

      

    

    each side
of the dispute shall appoint one in accordance with the “screened” appointment
procedure provided by the CPR Rules for Non-Administered Arbitration currently
in effect, and of whom the third arbitrator shall be selected by mutual
agreement of the two arbitrators selected by the Members.  The
Arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1-16,
and judgment on the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof.  The Members shall cause the
arbitrators to render their decision within one hundred twenty (120) days after
the designation of the arbitrators, and the Members shall cooperate with each
other and the arbitrators in the conduct of the arbitration to permit such
timing.  Any award of the arbitrators shall be final, conclusive and
binding on the Members; provided, however, that any Members to the dispute may
seek to vacate, modify or correct the arbitrators’ decision or award as provided
under Section 10 and Section 11 of the Federal Arbitration Act.  The
arbitrators shall be bound to follow the laws of the State of Utah, decisional
and statutory, in reaching any decision and making any award and shall deliver a
written award, including written findings of fact and conclusions of law, with
respect to the dispute to each of the Members who are parties to the dispute,
who shall promptly act in accordance therewith.  In no event shall the
arbitrators have the power to award damages in connection with any dispute in
excess of actual compensatory damages.  In particular, the arbitrators
may not multiply actual damages or award consequential, indirect, special or
punitive damages, including damages for lost profits or loss of business
opportunity.  Any Member who is a party to the dispute may enforce any
award rendered pursuant to the arbitration provisions of this Section 13.3 by
bringing suit in any court of competent jurisdiction.  All costs and
expenses attributable to the arbitrators shall be allocated between the Members
who are parties to the dispute in such manner as the arbitrators determine to be
appropriate under the circumstances.  Any Member who is a party to the
dispute may file a copy of this Section 13.3 with any arbitrator or court as
written evidence of the knowing, voluntary and bargained agreement among the
Members with respect to the subject matter of this Section 13.3. 

     

     

    ARTICLE
XIV

     

    MISCELLANEOUS
PROVISIONS

     

    14.1 Notices.  Except
as otherwise provided herein, any notice, demand, or communication required or
permitted to be given to a Member by any provision of this Agreement shall be
deemed to have been sufficiently given or served for all purposes if (i)
delivered personally to the Member, (ii) sent by facsimile or electronic mail
transmission or (iii) sent by registered or certified mail, postage prepaid,
addressed to the Member’s address set forth in Exhibit A.  Except as
otherwise provided herein, any such notice shall be deemed to be given on the
date on which the same was personally delivered, on the date on which it was
transmitted by facsimile or electronic transmission if confirmation thereof is
obtained or, if sent by registered or certified mail, on the third (3rd) day
after such notice was deposited in the United States mail addressed as
aforesaid.

     

    14.2 Governing
Law.  This Agreement and the rights of the parties hereunder
will be governed by, interpreted, and enforced in accordance with the laws of
the State of Utah.

     

    14.3 Entire Agreement;
Amendments.  This Agreement constitutes the entire agreement
between the Members concerning the matters set forth herein, and may not
be

     

    
      
         

      

      
        55

        
          

        

      

      
         

      

    

    amended
except by Majority Vote of the Members provided, however, any amendment that
adversely affects the rights (economic or otherwise) set forth in this Agreement
of any Priority Member shall not be effective without the prior written consent
of such Priority Member.  Notwithstanding the foregoing, the Managers
shall be authorized to make any amendments to this Agreement that are approved
by the Management Board and that counsel to the Company opines are necessary to
maintain the Company’s status as a partnership for federal and state income tax
purposes provided, however, that no such
amendment shall be effective if such amendment adversely affects the economic
interest of Units held by any Member.  If any conflict exists between
the provisions of this Agreement, any employment or repurchase agreement with
any Member, Manager or Officer, or the provisions of any oral or prior agreement
between the Members, Managers or Officers, the provisions of this Agreement
shall prevail.

     

    14.4 Additional Documents and
Acts.  Each Member agrees to execute and deliver such
additional documents and instruments and to perform such additional acts as may
be necessary or appropriate to effectuate, carry out and perform all of the
terms, provisions and conditions of this Agreement and the transactions
contemplated hereby.

     

    14.5 Headings.  The
headings in this Agreement are inserted for convenience only and are in no way
intended to describe, interpret, define, or limit the scope, extent, or intent
of this Agreement or any provision hereof.

     

    14.6 Severability.  If
any provision of this Agreement is held to be illegal, invalid or unenforceable
under the present or future laws effective during the term of this Agreement,
such provision will be fully severable and the remaining provisions of this
Agreement will remain in full force and effect.

     

    14.7 Heirs, Successors, and
Assigns.  Each and all of the covenants, terms, provisions, and
agreements herein contained shall be binding upon and inure to the benefit of
the parties hereto and, to the extent permitted by this Agreement and by
applicable law, the parties’ respective heirs, legal representatives,
successors, and assigns.

     

    14.8 Creditors and Other Third
Parties.  None of the provisions of this Agreement shall be for
the benefit of, or enforceable, by any Company creditors or any other third
parties.

     

    14.9 Section, Other
References.  Except to the extent provided to the contrary,
references to the terms “Section,” “Schedule,” “Exhibit,” or “Appendix” mean to
the corresponding Sections, Schedules, Exhibits, or Appendices attached to or
referred to in this Agreement. Any reference to an Exhibit to this Agreement
contained herein shall be deemed to include any Schedule(s) to such
Exhibit.  Each Appendix, Exhibit and Schedule referred to in this
Agreement is hereby incorporated by reference in this Agreement as if such
Appendix, Exhibit or Schedule were set out in full in the text of this
Agreement.  Any reference in this Agreement to a statute shall be to
such statute, as amended from time to time, and to the rules and regulations
promulgated thereunder.  Any reference to any agreement, document or
instrument means such agreement, document or instrument as amended or otherwise
modified from time to time in accordance with its terms.  Unless the
context otherwise requires, (i) all references made in this Agreement to an
Article,  Section, Clause, Schedule or an Exhibit are to an Article,
Section, Clause, Schedule or an Exhibit of or to this Agreement, (ii) “or” is
disjunctive

     

    
      
         

      

      
        56

        
          

        

      

      
         

      

    

    but not
necessarily exclusive, (iii) “will” shall be deemed to have the same meaning as
the word “shall”, (iv) words in the singular include the plural and vice versa
and (v) use of the masculine, feminine or neutral gender herein shall not limit
any provision of this Agreement.  Whenever the words “include”,
“includes” or “including” are used in this Agreement, they shall be deemed to be
followed by the words “without limitation”, whether or not so
followed.  All references to “$” or dollar amounts are to lawful
currency of the United States of America, unless otherwise expressly
stated.

     

    14.10 Authority to Adopt
Agreement.  By execution hereof, each Member represents and
covenants as follows:

     

    (a) The
Member has full legal right, power, and authority to deliver this Agreement and
to perform the Member’s obligations hereunder;

     

    (b) This
Agreement constitutes the legal, valid, and binding obligation of the Member
enforceable in accordance with its terms, except as the enforcement thereof may
be limited by bankruptcy and other laws of general application relating to
creditors’ rights or general principles of equity;

     

    (c) This
Agreement does not violate, conflict with, result in a breach of the terms,
conditions or provisions of, or constitute a default or an event of default
under any other agreement of which the Member is a party; and

     

    (d) The
Member’s investment in Units is made for the Member’s own account for investment
purposes only and not with a view to the resale or distribution of such
Units.

     

    14.11 No
Encumbrances.  No Member or Unit Holder may pledge, lien or
otherwise encumber such Member’s or Unit Holder’s interest or Units for any
purpose unless approved by a Majority Vote of the Members.

     

    14.12 Independent
Counsel.  Each Member, Officer and Manager acknowledges that
each of them has had the opportunity to review this Agreement with independent
legal counsel.

     

    14.13 Counterparts.  This
Agreement may be executed in one or more counterparts each of which shall for
all purposes be deemed an original, and all of such counterparts, taken
together, shall constitute one and the same Agreement.

     

    14.14 Expenses.  Except
as otherwise expressly provided for herein or in the Asset Purchase Agreement or
the Ancillary Agreements, each of the parties hereto shall be responsible for
all expenses directly incurred by them in connection with the transactions
contemplated by such agreements; provided that the
Company will reimburse Peterson for its reasonable documented
expenses.

     

    By
execution below, each of the undersigned agrees to the terms and provisions of
this Amended and Restated Operating Agreement for Franklin Covey Products,
LLC.

     

    
      
         

      

      
        57

        
          

        

      

      
         

      

    

    

     

    
      	
              MEMBERS

               

            
	
              PETERSON
      PARTNERS V, L.P., a Delaware

                   limited
      partnership

               

            
	
              By:

            	
              Peterson
      Partners V, LLC

            
	
              Its:

               

               

              By:

            	
              General
      Partner

               

               

                /s/
      James B. Nelson

            
	
               

            	
              James
      B. Nelson, Partner

               

               

            
	
              FRANKLIN
      COVEY CLIENT SALES, INC.,

              a
      Utah corporation

            
	
               
      

               

            	
               
      

               

                /s/ Steve Young

            
	
              By:

            	 
      Steve Young
	
              Its:

            	
               
      Chief Financial Officer

            
	 	
               

               

                /s/ Sarah Merz

            
	
               

               

            	
              SARAH
      MERZ

               

               
      /s/ Gordon Wilson

            
	
               

               

            	
              GORDON
      WILSON

               

                /s/
      Rick Wooden

            
	
               

               

            	
              RICK
      WOODEN

               

                /s/ Jeff
      Anderson  

            
	
               

               

            	
              JEFF
      ANDERSON

               

               
      /s/ Bob Sumbot  

            
	
               

               

            	
              BOB
      SUMBOT

               

                /s/
      Kent Frogley  

            
	
               

               

            	
              KENT
      FROGLEY

               

                /s/
      Mike Connelly

            
	
               

               

            	
              MIKE
      CONNELLY

                

            

    

    
      
         

      

      
        58

        
          

        

      

      
         

      

    

    

    
      	 	 
      /s/ Bryan Wilde 
	
               

               

            	
              BRYAN
      WILDE

                

                /s/ Eric Bright

            
	
               

            	ERIC
      BRIGHT

                

            
	
               

               

              COMPANY

               

            
	
              FRANKLIN
      COVEY PRODUCTS, LLC

               

                /s/
      James B. Nelson

            
	
              By:

            	
              James
      B. Nelson

            
	
              Its:

            	
              Manager

            
	
               

              MANAGERS

               

            
	 	 
      /s/ Sarah Merz
	
               

            	

              SARAH
      MERZ

               

                /s/
      Jordan Clements

            
	
               

               

            	
              JORDAN
      CLEMENTS

               

                /s/
      James B. Nelson

            
	
               

               

            	
              JAMES
      B. NELSON

               

                /s/
      Robert A. Whitman

            
	
               

               

            	
              ROBERT
      A. WHITMAN

               

            

    

    
      
         

      

      
        59ex105_071108.htm

     

     

     

    
      

      

    

    Exhibit
10.5

     

     

    
 

    

    Sublease
Agreement

     

    Between

     

    FRANKLIN
DEVELOPMENT CORPORATION

     

    as
Sublandlord

     

    and

     

    FRANKLIN
COVEY PRODUCTS, LLC

     

    as
Tenant

     

     

     

     

    
 

    
      
         

      

      
         

        
          

          

        

        
          

        

      

      
         

      

    

    
    

    Table of Contents

    

    
      
        
          
            	 
      	 
      	
                    Page

                     

                  
	
                    ARTICLE I

                  	
                    BASIC LEASE PROVISIONS AND DEFINITIONS

                  	
                    1

                     

                  
	 
      	
                    1.1

                  	
                    Building and the Properties

                  	
                    1

                  
	 
      	
                    1.2

                  	
                    Premises

                  	
                    1

                  
	 
      	
                    1.3

                  	
                    Lease Term

                  	
                    1

                  
	 
      	
                    1.4

                  	
                    Base Rent

                  	
                    1

                  
	 
      	
                    1.5

                  	
                    Tenant’s Share of Other Charges and Property
      Taxes

                  	
                    2

                  
	 
      	
                    1.6

                  	
                    Adjustment to Base Rent

                  	
                    2

                  
	 
      	
                    1.7

                  	
                    Permitted Uses

                  	
                    2

                  
	 
      	
                    1.8

                  	
                    Definition of Sublandlord’s Agents and Tenant’s
      Agents

                  	
                    2

                     

                  
	
                    ARTICLE II

                  	
                    PREMISES

                  	
                    3

                     

                  
	 
      	
                    2.1

                  	
                    Lease of the Premises; Work Letter

                  	
                    3

                  
	 
      	
                    2.2

                  	
                    Condition of the Premises

                  	
                    3

                  
	 
      	
                    2.3

                  	
                    Signs

                  	
                    3

                  
	 
      	
                    2.4

                  	
                    Net Rentable Area

                  	
                    3

                  
	 
      	
                    2.5

                  	
                    Relocation

                  	
                    3

                     

                  
	
                    ARTICLE III

                  	
                    COMMENCEMENT DATE

                  	
                    3

                     

                  
	 
      	
                    3.1

                  	
                    Commencement Date

                  	
                    3

                  
	 
      	
                    3.2

                  	
                    Holding Over

                  	
                    4

                     

                  
	
                    ARTICLE IV

                  	
                    RENT

                  	
                    4

                     

                  
	 
      	
                    4.1

                  	
                    Payment

                  	
                    4

                  
	 
      	
                    4.2

                  	
                    Base Rent

                  	
                    4

                  
	 
      	
                    4.3

                  	
                    Tenant’s Share of Other Charges

                  	
                    4

                  
	 
      	
                    4.4

                  	
                    Tenant’s Share of Property Taxes

                  	
                    5

                  
	 
      	
                    4.5

                  	
                    Other Impositions

                  	
                    6

                  
	 
      	
                    4.6

                  	
                    Tax Protest

                  	
                    6

                     

                  
	
                    ARTICLE V

                  	
                    SUBLANDLORD’S SERVICES

                  	
                    7

                     

                  
	 
      	
                    5.1

                  	
                    Electricity

                  	
                    7

                  
	 
      	
                    5.2

                  	
                    Air-Conditioning

                  	
                    7

                  
	 
      	
                    5.3

                  	
                    Heat

                  	
                    7

                  
	 	
                    5.4

                  	
                    Janitorial Services

                  	
                    7

                  
	 
      	
                    5.5

                  	
                    Water

                  	
                    8

                  
	 
      	
                    5.6

                  	
                    No Liability

                  	
                    8

                  

          

          
            
              
                 

              

              
              

            

            
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                    5.7

                  	
                    Utility Deregulation

                  	
                    8

                     

                  
	
                    ARTICLE VI

                  	
                    TENANT’S CARE OF PREMISES

                  	
                    9

                     

                  
	 
      	
                    6.1

                  	
                    Waste

                  	
                    9

                  
	 
      	
                    6.2

                  	
                    Alterations, Additions or Improvements

                  	
                    9

                  
	 
      	
                    6.3

                  	
                    No Overloading

                  	
                    10

                  
	 
      	
                    6.4

                  	
                    No Liens

                  	
                    10

                  
	 
      	
                    6.5

                  	
                    Property and Improvements at Tenant’s Risk

                  	
                    10

                  
	 
      	
                    6.6

                  	
                    Flammables, Explosives or Toxic Substances

                  	
                    10

                  
	 
      	
                    6.7

                  	
                    Hazardous Materials Defined

                  	
                    11

                  
	 
      	
                    6.8

                  	
                    Environmental Regulations Defined

                  	
                    11

                  
	 	
                    6.9

                  	
                    Compliance; Environmental Compliance

                  	
                    11

                  
	 
      	
                    6.10

                  	
                    Termination and Surrender

                  	
                    12

                  
	 
      	
                    6.11

                  	
                    Tenant’s Supplemental Security Measures

                  	
                    12

                     

                  
	
                    ARTICLE VII

                  	
                    TRANSFER OF INTEREST, PRIORITY OF LIEN

                  	
                    13

                     

                  
	 
      	
                    7.1

                  	
                    Assignment and Sublease

                  	
                    13

                  
	 
      	
                    7.2

                  	
                    Right of First Refusal

                  	
                    13

                  
	 
      	
                    7.3

                  	
                    Subordination

                  	
                    14

                  
	 
      	
                    7.4

                  	
                    Sublandlord’s Lien

                  	
                    15

                     

                  
	
                    ARTICLE VIII

                  	
                    DAMAGE AND DESTRUCTION; EMINENT DOMAIN

                  	
                    15

                     

                  
	 
      	
                    8.1

                  	
                    Damage and Destruction

                  	
                    15

                  
	 
      	
                    8.2

                  	
                    Eminent Domain

                  	
                    15

                     

                  
	
                    ARTICLE IX

                  	
                    LIABILITY; INDEMNIFICATION; INSURANCE

                  	
                    16

                     

                  
	 
      	
                    9.1

                  	
                    Waiver of Claims

                  	
                    16

                  
	 
      	
                    9.2

                  	
                    Indemnification

                  	
                    16

                  
	 
      	
                    9.3

                  	
                    Insurance Requirements

                  	
                    17

                  
	 
      	
                    9.4

                  	
                    General Provisions with Respect to Tenant’s
      Insurance

                  	
                    18

                  
	 
      	
                    9.5

                  	
                    Waiver of Subrogation

                  	
                    18

                  
	 
      	
                    9.6

                  	
                    Notice

                  	
                    18

                     

                  
	
                    ARTICLE X

                  	
                    ACCESS TO THE PREMISES

                  	
                    18

                     

                  
	 
      	
                    10.1

                  	
                    Access to the Premises

                  	
                    18

                     

                  
	
                    ARTICLE XI

                  	
                    FAILURE TO PERFORM, DEFAULTS, REMEDIES

                  	
                    18

                     

                  
	 
      	
                    11.1

                  	
                    Defaults

                  	
                    18

                  
	 
      	
                    11.2

                  	
                    Remedies

                  	
                    19

                  
	 
      	
                    11.3

                  	
                    Breach by Tenant or Sublandlord

                  	
                    20

                  

          

          
            
              
                 

              

              
              

            

            
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                    11.4

                  	
                    Sublandord’s Default; Tenant’s Remedies

                  	
                    20

                  
	 
      	
                    11.5

                  	
                    Payments

                  	
                    21

                  
	 
      	
                    11.6

                  	
                    Mediation

                  	
                    21

                  
	 
      	
                     

                  	
                     

                  	
                     

                  
	
                    ARTICLE XII

                  	
                    QUIET ENJOYMENT; RESERVATIONS BY SUBLANDLORD; NO
      CONSTRUCTIVE EVICTION; REPRESENTATIONS AND WARRANTIES OF
      SUBLANDLORD

                  	
                    21

                     

                     

                  
	 
      	
                    12.1

                  	
                    Quiet Enjoyment

                  	
                    21

                  
	 
      	
                    12.2

                  	
                    Reservations by Sublandlord

                  	
                    22

                  
	 
      	
                    12.3

                  	
                    Attornment

                  	
                    22

                  
	 
      	
                    12.4

                  	
                    Surrender of the Premises

                  	
                    22

                  
	 
      	
                    12.5

                  	
                    Master Lease

                  	
                    22

                  
	 
      	
                    12.6

                  	
                    Representation and Warranties of
    Sublandlord

                  	
                    23

                  
	 
      	
                    12.7

                  	
                    Representations and Warranties of Tenant

                  	
                    23

                     

                  
	
                    ARTICLE XIII

                  	
                    RULES AND REGULATIONS

                  	
                    23

                     

                  
	 
      	
                    13.1

                  	
                    Rules and Regulations

                  	
                    23

                     

                  
	
                    ARTICLE XIV

                  	
                    COMMUNICATIONS

                  	
                    24

                     

                  
	 
      	
                    14.1

                  	
                    Communications

                  	
                    24

                  
	 
      	
                    14.2

                  	
                    Notice Addresses

                  	
                    24

                     

                  
	
                    ARTICLE XV

                  	
                    MISCELLANEOUS PROVISIONS

                  	
                    25

                     

                  
	 
      	
                    15.1

                  	
                    Tenant Estoppel Certificates

                  	
                    25

                  
	 
      	
                    15.2

                  	
                    Termination Option

                  	
                    25

                  
	 
      	
                    15.3

                  	
                    Telecommunications

                  	
                    26

                  
	 
      	
                    15.4

                  	
                    Brokerage Fees

                  	
                    26

                  
	 
      	
                    15.5

                  	
                    Attorney’s and Professional’s Fees

                  	
                    26

                  
	 	
                    15.6

                  	
                    Liability of Sublandlord and Tenant

                  	
                    26

                  
	 
      	
                    15.7

                  	
                    Tenant’s Authority

                  	
                    27

                  
	 
      	
                    15.8

                  	
                    Parking

                  	
                    27

                  
	 
      	
                    15.9

                  	
                    Sublandlord Approval

                  	
                    27

                  
	 
      	
                    15.10

                  	
                    Unenforceability/Joint and Several
    Liability

                  	
                    27

                  
	 
      	
                    15.11

                  	
                    Headings, Miscellaneous

                  	
                    27

                  
	 
      	
                    15.12

                  	
                    Force Majeure

                  	
                    27

                  
	 
      	
                    15.13

                  	
                    Entire Agreement

                  	
                    27

                  
	 
      	
                    15.14

                  	
                    Governing Law

                  	
                    27

                  

          

          
            
              
                 

              

              
              

            

            
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                    15.15

                  	
                    Forum Selection; Jury Trial Waiver

                  	
                    27

                  
	 
      	
                    15.16

                  	
                    Memorandum of Lease

                  	
                    28

                  
	 
      	
                    15.17

                  	
                    Not Binding Lease

                  	
                    28

                  
	 
      	
                    15.18

                  	
                    Successors and Assigns

                  	
                    28

                  
	 
      	
                    15.19

                  	
                    Non-Waiver

                  	
                    28

                  
	 
      	
                    15.20

                  	
                    Counterparts

                  	
                    28

                  
	 
      	
                    15.21

                  	
                    Time is of the Essence

                  	
                    28

                  
	 
      	
                    15.22

                  	
                    Survival of Obligations

                  	
                    28

                  

          

          

           

          

           

          

          SCHEDULE OF
EXHIBITS

          

          EXHIBIT
A           OUTLINE OF
THE PREMISES

          EXHIBIT
B            RULES
AND REGULATIONS

          EXHIBIT
C            TENANT
IMPROVEMENT ALLOWANCE

          EXHIBIT
D            LEASE
EXTENSION ADDENDUM

          EXHIBIT
E             MASTER
LEASE

          
            
              
                 

              

              
              

            

            
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    SUBLEASE
AGREEMENT

     

    THIS
SUBLEASE AGREEMENT (the “Lease” or “Agreement”) is entered into as of
the 7th day of July, 2008, to be effective as of July 5, 2008, 11:59 P.M.,
Mountain Standard Time, by and between FRANKLIN DEVELOPMENT CORPORATION, a Utah
corporation (“Sublandlord”), and FRANKLIN COVEY PRODUCTS, a Utah limited
liability company (“Tenant”).

     

    Sublandlord
is the tenant under that certain Lease Agreement by and between Sublandlord and
Franklin SaltLake, LLC, a Utah limited liability company (“Prime Landlord”)
dated June 12, 2005 (the “Master Lease”).  Pursuant to the rights
granted to Sublandlord under the Master Lease, Sublandlord hereby leases to
Tenant and Tenant hereby rents from Sublandlord the Premises (as defined in
Section 1.2).  This Lease has been executed and delivered pursuant to
the Master Asset Purchase Agreement dated May 22, 2008 among Franklin Covey
Canada, Ltd., a Canadian corporation,  Franklin Covey de Mexico S. de
R.L. de C.V., a Mexican company, Franklin Covey Europe, Ltd., a UK registered
company, Franklin Covey Client Sales, Inc., a Utah corporation, Franklin Covey
Catalog Sales, Inc., a Utah corporation, Franklin Covey Product Sales, Inc., a
Utah corporation, and Franklin Covey Printing, Inc., a Utah corporation
(collectively, the “Selling Parties”), and Tenant, as amended (the “Purchase
Agreement”).  Sublandlord is a related entity to the Selling Parties
and will receive a real and material benefit as a result of this
Sublease.  Capitalized terms used but not defined herein have the
meanings ascribed to them in the Purchase Agreement.  Intending to be
legally bound under this Lease and in consideration of the agreements herein
made, and other good and valuable consideration, Sublandlord and Tenant hereby
agree as follows:

     

    ARTICLE I

     

    BASIC LEASE PROVISIONS AND
DEFINITIONS

     

    1.1 Building and the
Properties.  The premises leased hereunder are comprised of
portions of the following buildings: Franklin, Washington, Jefferson, Patrick
Henry and Adams buildings located in the office park commonly known as 2650
South Decker Lake Boulevard, Salt Lake City, Utah (collectively, the
“Building”).  As used herein, the term “Properties” shall mean and
refer to that certain real property upon which each of the buildings identified
in the foregoing sentence are located, and as further defined in the Master
Lease.

     

    1.2 Premises.  The
“Premises” are depicted on attached Exhibit A and
incorporated by reference and are deemed to consist of approximately 54,676
square feet of Net Rentable Area (defined in Section 2.4).  The
parties acknowledge that the Net Rentable Area is broken down into the following
areas, which areas are further depicted in Exhibit A: (a) 53,701
rentable square feet (“Office Space”); (b) 975 rentable square feet (“Computer
Room”); and (c) 23,280 rentable square feet (“Shared Space”).  As to
the Office Space and the Computer Room, Tenant shall have the exclusive right to
these areas.  With respect to the Shared Space, Tenant and Sublandlord
shall have equal access and rights to such space and shall use such space in
common (but to the exclusion of any other persons).  With respect to
the Shared Space, Tenant shall only be responsible for rent on 11,640 rentable
square feet (or 50%) thereof, as further specified herein.  The
following areas shall not be included as Net Rentable Area; however, Tenant and
its employees shall have the right to use (i) the wellness center serving the
Premises, pursuant to the same arrangement (including but not limited to, fees,
membership qualifications, and limitations on use) to which Sublandlord is a
party; and (ii) any corridors, elevator lobbies, ground floor lobbies,
vestibules, service and freight areas, restrooms, elevator and mechanical rooms,
telephone and electrical closets, and other similar

     

    
      
        
        

      

      
         

        
          

        

      

      
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    facilities
provided for the benefit of all tenants of the Building, visitors to the
Building, or Sublandlord (such areas collectively defined as “Common
Areas”).  Tenant and Tenant’s Agents rights in the Common Areas shall
be only to the same extent as those of Sublandlord under the Master
Lease.  

     

    1.3 Lease
Term.  The “Lease Term” shall commence on the Closing Date (as
defined under the Purchase Agreement) (the “Commencement Date”), and shall end
at midnight on June 30, 2025 (the “Termination Date”), unless terminated earlier
in accordance with the terms of this Lease.  The Lease Term may be
extended, at Tenant’s option, in accordance with the Lease Extension Addendum
attached as Exhibit
D.

     

    1.4 Base
Rent.  “Base Rent” is collectively the Office Space Base Rent,
the Computer Room Base Rent and the Shared Space Base Rent.  Base Rent
is to be paid from the Commencement Date through the Termination Date, and is
payable on the first day of each month in advance in the amounts set forth below
and subject to adjustment as provided in Section 1.6.  Base Rent for
any partial month shall be prorated based on the number of days in that
month.

     

    
      	
               
      

            	
              1.4.1

            	
              “Office
      Space Base Rent” is $9.00 per rentable square foot, $40,275.75 per month,
      and $483,309 per year;

            

    

     

    
      	
               
      

            	
              1.4.2

            	
              “Computer
      Room Base Rent” is $12.00 per rentable square foot, $975.00 per month, and
      $11,700.00 per year; and

            

    

     

    
      	
               
      

            	
              1.4.3

            	
              “Shared
      Space Base Rent” is $9.00 per rentable square foot for shared space in the
      Adams, Jefferson, Washington and Patrick Henry buildings, and $12.00 per
      rentable square foot in the Franklin Building, $10,003.75 per month, and
      $120,045.00 per year.

            

    

     

    1.5 Tenant’s Share of Other
Charges and Property Taxes.  (a) “Tenant’s Share” of
“Other Charges” (defined in Section 4.3) is 21.27% of such costs as further
specified in Section 4.3 below, and (b) “Tenant’s Share” of “Property
Taxes” (defined in Section 4.4) is 17.8% of such taxes.  Tenant’s
Share is subject to adjustment due to re-measurement of the Net Rentable Area,
provided such re-measurement is performed in accordance with the ANSI/BOMA
Z65.1-1996 Standard, if any be performed, and documentation evidencing the same
is provided to Tenant.

     

    1.6 Adjustment to Base
Rent.  Commencing on July 1, 2010 and each July 1 thereafter,
Base Rent shall be increased by two percent (2%) of the Base Rent in effect
immediately prior to the date of increase.  If Tenant exercises any of
the options to extend this Lease, Base Rent shall be increased by the same
percentages set forth in the Master Lease.  

     

    1.7 Permitted
Uses.  The parties acknowledge and agree that Tenant is
acquiring this leasehold interest in accordance with the Purchase Agreement, and
that as such, Tenant’s predecessor-in-interest has been using the Premises to
effectuate the goals and purposes of Tenant’s business.  Tenant may
use the Premises in any manner that is consistent with the historical use of the
Premises for a period of twenty-four months prior to the Commencement Date,
including without limitation, general office use, a photo lab, graphics art
production, and a call center (the “Permitted Use”).  Tenant shall not
use the Premises for any purpose other than the Permitted Use.  Except
as expressly allowed as a Permitted Use, Tenant’s use of the Premises shall be
subject to all terms and provisions of the Master Lease, including but not
limited to, the obligation to comply with any restrictive covenants applicable
to the Premises.  Tenant’s and Sublandlord’s use of the

     

    
      
        
        

      

      
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    Premises
are subject to the “Rules and Regulations” set forth on attached Exhibit B, as
modified and enforced in accordance with Section 13.1.  

     

    1.8 Definition of Sublandlord’s
Agents and Tenant’s Agents.  “Sublandlord’s Agents” includes
any asset manager, property manager, agent, managing agent, affiliate,
contractor, employee, director, officer, partner, or servant of Sublandlord, or
any corporate or other legal entity affiliated with Sublandlord or third party
operator and owner of the Building, and “Tenant’s Agents” includes any agent,
officer, employee, servant, partner, independent contractor, licensee, invitee,
or visitor of Tenant.

     

    ARTICLE II

     

    PREMISES

     

    2.1 Lease of the Premises; Work
Letter.  Sublandlord leases the Premises to Tenant, and Tenant
leases the Premises from Sublandlord complete with any improvements thereto,
together with the right-in-common to the use of any of the Common Areas (which
shall include the wellness center) within the Properties.  Sublandlord
agrees to provide the tenant improvement allowance described in Exhibit C (the
“Tenant Improvement Allowance”), but has no obligation to construct any
improvements in the Premises.  

     

    2.2 Condition of the
Premises.  Except as otherwise provided in this Lease, by
occupying the Premises, Tenant:  (a) acknowledges that it has had
full opportunity to examine the Building, including the Premises, and accepts
the same in its as-is, where-is condition, without representation or warranty of
any kind, and (b) accepts the Premises and acknowledges that the Premises must
comply with all requirements imposed upon Sublandlord under the Master
Lease.  This Lease does not grant any right to light or air over or
about the Premises or Building.  

     

    2.3 Signs.  Without
the prior written consent of Sublandlord, Tenant shall not erect or install on
the exterior of the Building, on any window, or in any lobby, hallway or door
therein located, any sign or other type display.  Notwithstanding the
foregoing, Sublandlord will provide and install identification letters or
numerals on doors of the Premises in the building standard fonts at Tenant’s
expense.  Tenant may not use any other signage or lettering without
Sublandlord’s prior written consent.  Sublandlord has provided a
location in the lobby of the Building a directory of tenant names and
locations.  At Tenant’s cost, Sublandlord will provide and install
directory strips.  

     

    2.4 Net Rentable
Area.  The term “Net Rentable Area” means the sum of the net
useable area, which is computed by measuring to the inside finish of the
Building’s exterior glass line, to the exterior side of partitions that separate
the Premises from the Building’s interior non-rentable areas not within the
Premises, and to the center of partitions that separate the Premises from
adjoining rentable areas.  The parties stipulate that the Net Rentable
Area of the Premises is that stated in Section 1.2.

     

    2.5 Relocation.  [INTENTIONALLY
DELETED.]

     

    
      
        
        

      

      
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    ARTICLE III

     

    COMMENCEMENT
DATE

     

    3.1 Commencement
Date.  Sublandlord shall make the Premises available for
occupancy on the Commencement Date.

     

    3.2 Holding
Over.  If Tenant remains in possession of the Premises after
the expiration or earlier termination of the Lease Term without the execution of
a new lease or an extension hereof, Tenant’s occupancy will be from
month-to-month at 110% of the Base Rent due for the last full calendar month
during the holdover period plus all other sums due under this Lease and subject
to all other provisions and obligations of this Lease that are applicable to a
month-to-month tenancy.  The holdover period may be canceled by
Sublandlord upon seven (7) days notice to Tenant, and such holdover is a
material default hereunder.

     

     

    ARTICLE IV

     

    RENT

     

    4.1 Payment.  Tenant
shall pay Rent to Sublandlord in advance in legal tender of the United States of
America, without any notice, demand, set-off or deduction, at the following
address:  Franklin Development Corporation, 2200 West Parkway
Boulevard, Salt Lake City, Utah 84119, Attn:  Accounts Receivable, or
at such place or to such of Sublandlord’s Agents as Sublandlord from time to
time designates in writing.  Any Rent payment due hereunder is
delinquent if not received by Sublandlord by the due
date.  Sublandlord may accept any partial payment of Rent without
prejudice to any of Sublandlord’s rights or remedies.  The term “Rent”
includes, without limitation, (a) Base Rent, (b) Tenant’s Share of
Other Charges, (c) Tenant’s Share of Property Taxes, and (d) other
charges and reimbursable costs payable by Tenant in accordance with this
Lease.  Items (b), (c) and (d) above may sometimes herein be referred
to collectively as “Additional Rent.”  Notwithstanding anything in
this Lease to the contrary, all amounts payable by Tenant to Sublandlord as
Rent, shall constitute rent for the purpose of Section 502(b)(7), as it may be
amended, of the Bankruptcy Code, 11 U.S.C. §§101 et seq. (the “Bankruptcy
Code”).

     

    4.2 Base
Rent.  Tenant shall pay (with or without receipt of a written
statement from Sublandlord) the Base Rent in advance, promptly upon the first
day of every month of the Lease Term.  If the initial or final month
is less than a full calendar month, the Base Rent for such month will be reduced
proportionately.  It is the intent of both parties that the Base Rent
herein shall be absolutely net to Sublandlord throughout the Lease Term, and
that all costs, expenses and obligations relating to the Building and/or the
Premises which may arise or become due during the Lease Term shall be paid by
Tenant as hereafter provided.

     

    4.3 Tenant’s Share of Other
Charges.  Except for calendar year 2008, Tenant shall pay
Tenant’s Share of Other Charges (as defined under the Master
Lease).  For the avoidance of doubt, “Other Charges” shall include,
without limitation, all management office expenses; all applicable sales and use
taxes; expenses incurred for heat, cooling and other utilities; cost of
insurance; cost of janitorial and cleaning services, trash collection services,
pest control and security services; salaries, wages and other personnel costs of
engineers, superintendents, watchpersons, and all other employees of the
Building, including any sales tax imposed upon their service; charges under
maintenance and service contracts for elevators, chillers, boilers (if
applicable) and controls; window cleaning; building and grounds maintenance;
management fees; permits and licenses; all

     

    
      
        
        

      

      
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    maintenance
and repair expenses and supplies, including replacement of light bulbs and
ballasts in lighting fixtures; costs (including finance charges) of improvements
to the Building, equipment or capital items that are designed to increase
safety, improve energy efficiency, accurately process date and/or time data or
expand telecommunications service; amortization, depreciation and replacement
costs, interest and other expenses incurred with respect to equipment purchased
to replace existing equipment, systems or other capital expenditures purchased
to comply with the directives of a governing body; costs of complying with all
governmental regulations, including, without limitation, the disposal of
chlorofluorocarbons and compliance with Title III of the Americans with
Disabilities Act of 1990 (“ADA”), or any other similar laws of the State of Utah
(the “Utah Act”); costs of independent contractors; fees; owner’s association
assessments; and all other costs and expenses properly incurred in the operation
and maintenance of an office building, to the extent that any of the foregoing
are Sublandlord’s responsibility pursuant to the Master Lease.  During
the calendar year 2008 (the “Initial Year”), Tenant’s Share of Other Charges
shall be deemed to be five dollars and two cents ($5.02) per rentable square
foot in the Premises (“Initial Basic Other Charges”), and such amount shall not
be subject to adjustment.  Notwithstanding the Master Lease to the
contrary, for purposes of this Lease, “Other Charges” shall exclude the cost of
any alterations to any portion of the Building not leased by Tenant (except for
Common Areas); lease commissions; payment of principal and interest on mortgages
of Sublandlord; and costs of Sublandlord of any work or service performed for
any tenant at the cost of such tenant.

     

    (a) Except
for the Initial Year, prior to the last day of each calendar year during the
Lease Term, Sublandlord will provide Tenant with a statement of estimated Other
Charges for the upcoming calendar year (based on Sublandlord’s reasonable
estimate of anticipated costs).  Beginning January 1 of the upcoming
calendar year, Tenant shall pay in twelve (12) equal monthly installments, based
on Sublandlord’s estimate, Tenant’s Share of Other Charges.  If
Sublandlord reasonably determines that the Other Charges are greater than the
estimate, then Sublandlord may deliver to Tenant on the first day of March,
June, September or December, the revised amount of Tenant’s Share of Other
Charges.  Tenant shall pay to Sublandlord within twenty (20) days of
notification of the revised amount, the difference between the previous estimate
and the revised estimate for the expired portion of the current calendar
year.  Monthly installments of Tenant’s Share of Other Charges will be
increased for the months following Tenant’s receipt of the revised estimate to
one-twelfth (1/12) of the revised estimate of Tenant’s Share of Other
Charges.

     

    (b) Not more
than one hundred eighty (180) days following the last day of each calendar year,
Sublandlord will provide Tenant with a written comparison of the amount of the
estimated Tenant’s Share of Other Charges paid for the calendar year (or partial
calendar year) just ended to Tenant’s Share of Other Charges actually incurred
for such calendar year, along with back-up documentation supporting and
verifying the actual Other Charges, to the extent the same is in Sublandlord’s
possession or control.  If Tenant inquires regarding back-up
documentation, Sublandlord shall reasonably cooperate with Tenant in obtaining
any further back-up documentation requested by Tenant.  If the amount
of the estimated Tenant’s Share of Other Charges charged to Tenant for such
prior calendar year (or partial calendar year): (A) exceeds the amount Tenant
should have been charged, Sublandlord shall give Tenant a credit toward the next
Base Rent and Additional Rent (applicable to Other Charges) (or if in the last
year of the Lease Term, refund the excess) due, and such credit shall continue
until such time as it has been used in its entirety, (B) is less than the amount
Tenant should have been charged, Tenant shall pay Sublandlord, as Additional
Rent, the difference (provided, however, that such amount shall not exceed the
cap provided under subsection (c) below) within twenty (20) days following
Tenant’s receipt of such written comparison and back-up documentation, to the
extent the same is in Sublandlord’s possession or control.  If Tenant
inquires regarding back-up documentation,

     

    
      
        
        

      

      
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     Sublandlord
shall reasonably cooperate with Tenant in obtaining any further back-up
documentation requested by Tenant.  For purposes of determining the
adequacy of the back-up documentation submitted by Sublandlord, for any Other
Charges that are the result of a charge under the Master Lease, then the extent
of documentation received by Sublandlord from Prime Landlord shall be deemed
sufficient to satisfy such requirement.  Any delay or failure of
Sublandlord in billing any Other Charge escalation is not a waiver of and does
not impair the continuing obligation of Tenant to pay such
escalation.  Tenant is not entitled to a refund or credit if Other
Charges for any calendar year are less than the Initial Basic Other
Charges.

     

    (c) Notwithstanding
anything to the contrary in this Section 4.3, (i) the percentage increase in
Tenant’s Share of Other Charges from one calendar year to the next shall be
limited to the lesser of the Other Charges incurred by Sublandlord or the
percentage increase in “CPI” (as defined below), during the same period, and
(ii) under no circumstances shall Tenant be required or obligated to pay for any
Other Charges that are not a pass-through expense being charged by Prime
Landlord under the Master Lease or a direct monetary obligation imposed against
Sublandlord pursuant to the Master Lease for which Tenant is responsible under
this Lease.  Sublandlord and Tenant acknowledge and agree that it is
the intent of the parties and this Sublease that Tenant shall only be liable for
Tenant’s Share of actual costs incurred by Sublandlord in connection with the
Master Lease and that there shall be no mark-up or profit relative to Rent
charged under this Lease.  For the purposes of calculating the cap in
Other Charges increase, the parties shall use the Consumer Price Index for All
Urban Consumers (CPI-U): U.S. city average, by expenditure category and
commodity and service group, 1982-84=100, All items (“CPI”).

     

    4.4 Tenant’s
Share of Property Taxes.  Tenant shall pay Tenant’s Share of
Property Taxes (as defined under the Master Lease).  Notwithstanding
the foregoing, “Property Taxes” does not include any interest or penalties paid
by Sublandlord as a result of Sublandlord’s failure to pay Property Taxes when
due and payable, any net income, franchise or capital gains tax, inheritance tax
or estate tax imposed or constituting a lien upon Sublandlord or all or
any part of the Properties.

     

    (a) Prior to
the last day of each calendar year during the Lease Term, Sublandlord will
provide Tenant with a statement of estimated Property Taxes for the upcoming
calendar year (based upon Sublandlord’s reasonable estimate of anticipated
Property Taxes).  Beginning January 1 of the upcoming calendar year,
Tenant shall pay in twelve (12) equal monthly installments, based on
Sublandlord’s estimate, Tenant’s Share of Property Taxes.  If, at any
time during the calendar year, Sublandlord determines in its reasonable
discretion that the Property Taxes are greater than the estimate, then
Sublandlord may deliver to Tenant the revised amount of Tenant’s Share of
Property Taxes.  Tenant shall pay to Sublandlord within twenty (20)
days of notification of the revised amount, the difference between the previous
estimate and the revised estimate for the expired portion of the current
calendar year.  Monthly installments of Tenant’s Share of Property
Taxes will be increased for the months following Tenant’s receipt of the revised
estimate to one-twelfth (1/12) of the revised estimate of Tenant’s Share of
Property Taxes.

     

    (b) Not more
than one hundred eighty (180) days following the last day of each calendar year,
Sublandlord will provide Tenant with a written comparison of the amount of the
estimated Tenant’s Share of Property Taxes paid for the calendar year (or
partial calendar year) just ended to Tenant’s Share of Property Taxes actually
incurred for such calendar year.  If the amount of the estimated
Tenant’s Share of Property Taxes charged to Tenant for such prior calendar year
(or partial calendar year): (A) exceeds the amount Tenant should have been
charged, Sublandlord will give Tenant a credit toward the next Base Rent and
Additional Rent (or if in the last year of the

     

    
      
        
        

      

      
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    Lease
Term, refund the excess within twenty (20) days following preparation of the
written comparison) due, whichever is sooner due, and such credit shall continue
until such time as it has been extinguished or used in its entirety, (B) is less
than the amount Tenant should have been charged, Tenant shall pay Sublandlord,
as Additional Rent, the difference within twenty (20) days following Tenant’s
receipt of such written comparison.  Any delay or failure of
Sublandlord in billing any excess Property Taxes escalation is not a waiver of
and does not impair the continuing obligation of Tenant to pay such
escalation.

     

    (c) Notwithstanding
any provision of this Section 4.4 to the contrary, under no circumstances shall
Tenant be required or obligated to pay all or any portion of Tenant’s Share of
Property Taxes that are not a pass-through being charged by Prime Landlord under
the Master Lease or a direct monetary obligation imposed against Sublandlord
pursuant to the Master Lease for which Tenant is responsible under this
Lease.

     

    4.5 Other
Impositions.  Together with related interest and penalties,
Tenant shall:  (a) reimburse Sublandlord for any increase in ad
valorem taxes that Sublandlord becomes obligated to pay where such ad valorem
tax pertains directly to the Premises, (b) pay all license and permit fees
and all taxes levied or assessed by governmental authorities by virtue
of:  (i) any leasehold improvements to the Premises made at
Tenant’s direction or which Sublandlord is required to make (either hereunder or
under the Master Lease) and during Tenant’s occupancy of the Premises (excluding
improvements identified in the Work Letter), (ii) Tenant conducting
business or operating the Premises, (iii) Tenant’s Agents or Tenant’s
employees or contractors, (iv) Tenant’s personal property, and
(v) Tenant’s assets or sales, and (c) pay the cost of any additional
electronic security badges requested by Tenant, as the same are required for
access to the Building.  Notwithstanding the foregoing to the
contrary, Tenant shall not be responsible for the payment of any expenses or
costs where such expenses or costs arose as the result of Sublandlord’s failure
to pay a tax, fee, assessment or similar expense when due and payable, or any
net income, franchise or capital gains tax, inheritance tax or estate tax
imposed or constituting a lien upon Sublandlord or all or any part of the
Properties.

     

    4.6 Tax
Protest.  To the extent permitted by law: (a) Tenant hereby
waives any right it may have under Utah law to protest or appeal Property Taxes
or the value of the Building; and (b) Tenant hereby assigns to Sublandlord any
rights of Tenant to appeal or protest Property Taxes or the value of the
Building.  Notwithstanding the foregoing, Sublandlord shall provide
Tenant with written notice of any application, filing or other written protest
Sublandlord makes or submits relating to Property Taxes prior to the filing or
submission of such notice and, upon a successful outcome of such protest,
Sublandlord will reimburse Tenant’s Share of such refund, less any reasonable
costs or expenses incurred in connection with such
protest.  Sublandlord shall not suffer or permit any action in
protesting the Property Taxes to result in Tenant’s loss of its right to quiet
enjoyment of the Premises.  

     

     

    ARTICLE V

     

    SUBLANDLORD’S
SERVICES

     

    5.1 Electricity.  So
long as Tenant is not in Default, Sublandlord will furnish or cause to be
furnished electricity for normal business usage.  Tenant’s use of
electricity in the Premises may not at any time exceed the capacity of the
electrical conductors and equipment serving the Premises.  In
addition, Tenant shall not, without the prior written consent of Sublandlord,
use any apparatus or device which causes a material increase in the amount of
electricity usually furnished

     

    
      
        
        

      

      
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    above and
beyond the Permitted Use.  Without Sublandlord’s prior written
consent, Tenant may not:  (i) connect electrical equipment that
consumes more than that permitted by the building standard specifications or
(ii) make any material alteration or addition to the electrical system of
the Premises.  If Sublandlord grants consent, Tenant shall be
responsible for the cost of additional risers or other required
equipment.  For any electricity used by Tenant that is not separately
metered and is in excess of the average monthly use for the twelve (12) month
period immediately prior to the Commencement Date (the “Baseline Period”),
Tenant shall be responsible for the cost of such excess usage where Tenant is
the sole cause of such excess usage and Sublandlord has reasonably determined
the cost of such excess usage based on a comparison relating to the Baseline
Period.  If the electricity is separately metered, then in such event
Tenant shall be responsible for payment of any excess usage over and above the
average monthly use for the Baseline Period.

     

    5.2 Air-Conditioning.  So
long as Tenant is not in Default, Sublandlord will furnish or cause to be
furnished to the Premises Monday through Friday from 7:30 a.m. to 6:00 p.m.
(but, not on Saturdays, Sundays, or federal or state holidays) (“Business
Hours”) air-conditioning at reasonable temperatures to provide reasonably
comfortable occupancy of the Premises under Normal Business Conditions (defined
below) (excepting any areas that develop excessive heat from machines, lights,
sun, overcrowding or other sources).  “Normal Business Conditions” for
maintaining reasonably comfortable temperatures are those conditions in
existence during the twelve (12) month period immediately prior to the
Commencement Date.  Tenant shall be allowed to access the controls to
turn on the air-conditioning to the Premises outside of Business Hours to the
extent of Sublandlord’s access to such controls in accordance with the Master
Lease.  

     

    5.3 Heat.  So
long as Tenant is not in Default, Sublandlord will furnish or cause to be
furnished to the Premises during Business Hours during times of the year that
heating is necessary to heat the Premises at reasonable temperatures to provide
reasonably comfortable occupancy of the Premises under Normal Business
Conditions.  Tenant shall be allowed access to the controls to turn on
the heating to the Premises outside of Business Hours to the extent of
Sublandlord’s access to such controls in accordance with the Master
Lease.  

     

    5.4 Janitorial
Services.  So long as Tenant is not in Default, Sublandlord
will furnish or cause to be furnished to the Premises janitorial services
adequate to keep the Premises, including the Common Areas, in a neat, clean and
orderly fashion at the same standard as during the twelve (12) month period
immediately prior to the Commencement Date.  Tenant shall pay
Sublandlord for the actual cost incurred by Landlord for janitorial services to
the Premises (so long as such costs are not being charged in connection with the
Other Charges).

     

    5.5 Water.  So
long as Tenant is not in Default, Sublandlord will furnish or cause to be
furnished to the Common Areas and the Premises water for drinking, lavatory
(including warm water at reasonable temperatures) and toilet
purposes.  Tenant will not install any equipment that uses water
without Sublandlord’s prior written consent.  Tenant shall not use any
water above and beyond what would be reasonably expected considering the
Permitted Use of the Premises.  Sublandlord reserves the right to
install a water meter for the Premises, and thereafter Tenant shall pay for
water based upon its usage.  Tenant shall reimburse Sublandlord the
actual cost of installation of the water meter within twenty (20) days after
demand and receipt of back-up documentation.

     

    5.6 No
Liability.  Unless caused by the negligence of Sublandlord, no
interruption or malfunction of any utility or telephone service is a breach by
Sublandlord, an eviction or disturbance of Tenant, release Tenant from any
obligation, or grant Tenant any right to offset or

     

    
      
        
        

      

      
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    rent
abatement, and neither Sublandlord nor Sublandlord’s Agents shall be liable for
damages (consequential or otherwise) in such event.

     

    5.7 Utility
Deregulation.  Sublandlord has advised Tenant that presently
PacifiCorp, d/b/a Utah Power (“Electric Service Provider”) is the utility
company selected by Sublandlord to provide electric service for the
Building.  Notwithstanding the foregoing, if permitted by law,
Sublandlord has the right at any time and from time to time during the Lease
Term to either contract for service from a different company or companies
providing electric service (each such company is hereinafter referred to as an
“Alternate Service Provider”) or continue to contract for service from the
Electric Service Provider.

     

    (a) Tenant
will cooperate with Sublandlord, the Electric Service Provider, and any
Alternate Service Provider at all times, and, as reasonably necessary, shall
allow Sublandlord, Electric Service Provider and any Alternate Service Provider
reasonable access to the electric lines, feeders, risers, wiring, and any other
machinery within the Premises; provided, however, that such access shall not
unreasonably interfere with Tenant’s business operations or shall be conducted
in such a way as to minimize interference with Tenant’s business
operations.

     

    (b) Sublandlord
is in no way liable or responsible for any loss, damage, or expense that Tenant
may sustain or incur by reason of any change, failure, interference, disruption,
or defect in the supply or character of the electric energy furnished to the
Premises, unless caused by Sublandlord’s gross negligence or willful misconduct,
or if the quantity or character of the electric energy supplied by the Electric
Service Provider or any Alternate Service Provider is no longer available or
suitable for Tenant’s requirements (collectively, an “Electrical Disruption”),
and no such Electrical Disruption will constitute an actual or constructive
eviction, in whole or in part, nor will it entitle Tenant to any abatement or
diminution of Rent, or relieve Tenant from any of its obligations under the
Lease unless such Electrical Disruption is caused by Sublandlord’s willful
misconduct or gross negligence.

     

    5.8 Utility
Costs.  Except as otherwise provided herein, all utility costs
provided for in this Section 5 shall be considered part of the Other Charges and
passed through to Tenant as part of Tenant’s Share.

     

     

    ARTICLE VI

     

    TENANT’S CARE OF
PREMISES

     

    6.1 Waste.  Neither
Tenant nor Tenant’s Agents will commit waste, and Tenant will keep the Premises
and the fixtures therein in good repair.  Tenant shall be responsible
for maintenance and repair of appliances and shall pay for unstopping any drains
or water closets in the Premises.  If: (a) Tenant fails to make
repairs to the Premises, or (b) any act or neglect of Tenant or Tenant’s
Agents results in damage to the Premises or the Building, Sublandlord may repair
such damage, and within ten (10) days of receipt of Sublandlord’s invoice,
Tenant shall reimburse Sublandlord for the actual cost
thereof.  Neither Tenant nor Tenant’s Agents will deface or injure the
Building, and Tenant will pay the cost of repairing any damage or injury done to
the Building or any part thereof by Tenant or Tenant’s Agents.  Tenant
will participate in any Sublandlord required recycling program; provided,
however, that Sublandlord shall credit Tenant’s Share of any receipts or income
from the recycling program against Tenant’s Share of Other Charges.

     

    
      
        
        

      

      
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    6.2 Alterations, Additions or
Improvements.  Tenant may not make any alterations,
improvements, door lock changes or other modifications to the Premises or move
Tenant’s furnishings, equipment or other property into or out of the Premises or
Building without the prior written consent of Sublandlord, which consent shall
not be unreasonably withheld, conditioned or delayed.  Any requests by
Tenant to alter the Premises shall be in writing and in sufficient detail to
allow Sublandlord to determine the extent of the alteration to be
made.  Tenant shall give Sublandlord notice sufficient to allow
Sublandlord to file a Notice of Non-responsibility or to take any other similar
action in advance of the commencement of any alterations.  All
alterations, additions or improvements (including, but not limited to carpets,
drapes and anything bolted, nailed or otherwise secured in a manner customarily
deemed to be permanent) are fixtures, not subject to attachment of a mechanic’s
or materialman’s lien, and will become the property of Sublandlord and remain in
the Premises at the end of the Lease Term, unless such alterations, additions or
improvements constitute Trade Fixtures.  As used herein, “Trade
Fixtures” shall mean and refer to property placed on or annexed to rented real
estate by Tenant for the purpose of the conduct of Tenant’s business particular
to its Permitted Use.  To the extent required by law, Tenant shall use
union labor to perform Tenant’s construction or repair work, and comply with any
collective bargaining or labor agreement to which Sublandlord is a
party.  If Sublandlord shall be damaged as a result of any breach by
Tenant of this covenant, Tenant agrees to pay to Sublandlord the amount of such
damage.  Except for Trade Fixtures, all alterations, additions or
improvements made in or upon the Premises, either by Sublandlord or Tenant in
order to comply with Title III of the Americans with Disabilities Act of 1990
(“ADA”), or any other similar laws of the State of Utah (the “Utah Act”) are
Sublandlord’s property on termination of this Lease and shall remain on the
Premises without compensation to Tenant.  Sublandlord may require
Tenant to remove any Trade Fixtures upon the termination or expiration of this
Lease.  If Sublandlord requires removal of a Trade Fixture in
accordance with the foregoing sentence, and Tenant fails to comply with such
request within twenty (20) days after written notice from Sublandlord,
Sublandlord may remove the Trade Fixture at Tenant’s cost, and Tenant shall pay
Sublandlord upon demand all costs incurred by Sublandlord in removing the Trade
Fixture.

     

    Notwithstanding
anything to the contrary herein, with respect to the portion of the Premises
located in the Adams building and used for retail purposes as of the
Commencement Date (the “Retail Portion”), upon the expiration or sooner
termination of this Lease, Tenant shall remove all of its equipment, fixtures,
and Trade Fixtures therefrom, together with any personal property of Tenant, and
shall repair all damage caused by such removal, all at Tenant’s sole cost and
expense.  Such repairs shall include, but not be limited to, repairing
damage to walls and floors resulting from the removal of shelving, and
repainting the walls and resurfacing the floors.  In addition to the
required removal and repairs, the Retail Portion shall otherwise be surrendered
in as good a condition as it currently exists, reasonable wear and tear
excepted.

     

    Tenant’s
performance of its obligations to maintain, repair and remove the Tenant’s
furnishings, equipment or other property may be conducted only by contractors
and subcontractors approved in writing by Sublandlord, and Sublandlord shall not
unreasonably withhold its approval of such contractors and
subcontractors.  The contractors and/or subcontractors shall carry
insurance in amounts and with companies as customarily required in connection
with the work to be performed by such contractors or
subcontractors.  Such contractors and subcontractors must provide
Sublandlord with certificates of insurance prior to commencement of work, and
such certificates shall list Sublandlord and its asset manager, property
manager, managing agent and any other designee of Sublandlord as additional
insureds.

     

    
      
        
        

      

      
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    6.3 No
Overloading.  Tenant will not overload the floors of the
Premises.  Tenant shall not place a load upon the floor of the
Premises exceeding the load per square foot that such floor was designed to
carry, as determined by Sublandlord or its structural
engineer.  Partitions shall be considered as part of the
load.  Sublandlord may prescribe the weight and position of all safes,
files and heavy equipment that Tenant desires to place in the Premises, so as to
distribute their weight properly.  Tenant’s business machines and
mechanical equipment shall be installed and maintained so as not to transmit
noise or vibration to the Building structure or to any other space in the
Building.  Tenant shall be responsible for the cost of all structural
engineering required to determine structural load and all acoustical engineering
required to address any noise or vibration caused by
Tenant.  

     

    6.4 No
Liens.  Sublandlord’s title is and always will be paramount to
the title of Tenant, and Tenant will not do any act which encumbers
Sublandlord’s title or subjects the Premises or the Building or any part of
either to any lien, unless Tenant is making an alteration, improvement or
modification as permitted in connection with Section 6.2.  Tenant must
immediately remove any and all liens or encumbrances which are filed against the
Premises or the Building as a result of any act or omission of Tenant or
Tenant’s Agents.  If Tenant fails to remove any such lien within
thirty (30) days of receipt of notice thereof, then Sublandlord may, but is not
obligated to, remove such lien, and Tenant shall pay all reasonable costs of
removal or bonding the lien, plus interest at the Default Rate, to Sublandlord
upon demand.

     

    6.5 Property and Improvements at
Tenant’s Risk.  All personal property, betterments and
improvements in the Premises, the Building, parking areas or related facilities,
whether owned, leased or installed by Sublandlord, Tenant or any other person,
are at Tenant’s sole risk, and neither Sublandlord nor Sublandlord’s Agents will
be liable for any damage thereto or loss thereof from any cause, including but
not limited to theft, misappropriation, casualty, overflowing or leaking of the
roof, the bursting or leaking of water, sewer or steam pipes, or from heating or
plumbing fixtures, unless caused by Sublandlord’s or Sublandlord’s Agent’s
negligence.

     

    6.6 Flammables, Explosives or
Toxic Substances.  Except for household cleaners in quantities
typically used in connection with office use, Tenant will not use or permit in
the Premises or the Building any flammable or explosive material, toxic
substances, environmentally hazardous materials (as defined below) or other
items hazardous to persons or property.  Tenant will not use the
Premises in a manner that (a) invalidates or is in conflict with fire,
insurance, life safety or other policies covering the Building or the Premises,
or (b) increases the rate of fire or other insurance on the Building or the
Premises.  If any insurance premium is higher than it otherwise would
be due to Tenant’s failure to comply with this section, Tenant shall reimburse
Sublandlord as Additional Rent, that part of Sublandlord’s insurance premiums
that are charged because of Tenant’s failure.

     

    6.7 Hazardous Materials
Defined.  “Hazardous Materials” means:  (a) any
“hazardous waste” as defined by the Resource Conservation and Recovery Act of
1976 (42 U.S.C. § 6901 et seq.) (“RCRA”), as amended from time to time, and
regulations promulgated thereunder; (b) any “hazardous substance” being
“released” in “reportable quantity” as such terms are defined by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. § 9601 et seq.) (“CERCLA”), as amended from time to time, and regulations
promulgated thereunder; (c) asbestos; (d) polychlorinated biphenyls;
(e) urea formaldehyde insulation; (f) “hazardous chemicals” or “extremely
hazardous substances”, in quantities sufficient to require reporting,
registration, notification or special treatment or handling under the Emergency
Planning and Community Right-to-Know Act of 1986 (42 U.S.C. §§ 11001, et seq.)
(“EPCRA”), as amended from time to time and regulations promulgated thereunder;
(g) any “hazardous chemicals” in levels

     

    
      
        
        

      

      
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    that
would result in exposures greater than those allowed by permissible exposure
limits established pursuant to the Occupational Safety and Health Act of 1970
(29 U.S.C. § 651 et seq.) (“OSHA”), as amended from time to time and regulations
promulgated thereunder; (h) any substance which requires reporting,
registration, notification, removal, abatement or special treatment, storage,
handling or disposal under Section 6, 7 or 8 of the Toxic Substances Control Act
(15 U.S.C. §§ 2601 et seq.) (“TSCA”) as amended from time to time and
regulations promulgated thereunder; (i) any toxic or hazardous chemicals
described in the Occupational Safety and Health Standards (29 C.F.R.
1910.1000-1047) in levels which would result in exposures greater than those
allowed by the permissible exposure limits pursuant to such regulations;
(j) the contents of any storage tanks, whether above or below ground;
(k) medical wastes; (l) materials related to those described in
subparagraphs (a) through (k) hereof; and (m) anything defined as hazardous
or toxic under any now existing or hereinafter enacted statute.

     

    6.8 Environmental Regulations
Defined.  “Environmental Regulations” means any law, statute,
regulation, order or rule now or hereafter promulgated by any Governmental
Authority, whether local, state or federal, relating to air pollution, water
pollution, noise control or transporting, storing, handling, discharge, disposal
or recovery of on-site or off-site hazardous substances or materials, as same
may be amended from time to time, including without limitation, the following:
(a) the Clean Air Act (42 U.S.C. §§ 7401 et seq.); (b) Marine
Protection, Research and Sanctuaries Act (33 U.S.C. §§ 1401-1445); (c) the
Clean Water Act (33 U.S.C. §§ 1251 et seq.); (d) RCRA, as amended by the
Hazardous and Solid Waste Amendments of 1984 (42 U.S.C. § 6901 et seq.); (e)
CERCLA, as amended by the Superfund Amendments and Reauthorization Act of 1986
(42 U.S.C. §§ 9601 et seq.); (f) TSCA; (g) the Federal Insecticide,
Fungicide and Rodenticide Act, as amended (7 U.S.C. §§ 136 et seq.);
(h) the Safe Drinking Water Act (42 U.S.C. §§ 300(f) et seq.);
(i) OSHA; (j) the Hazardous Liquid Pipeline Safety Act (49 U.S.C. §§
2001 et seq.); (k) the Hazardous Materials Transportation Act (49 U.S.C. §§
1801 et seq.); (l) the Noise Control Act of 1972 (42 U.S.C. §§ 4901 et
seq.); (m) EPCRA; (n) National Environmental Policy Act (42 U.S.C. §§
4321-4347); and (o) Medical Waste Tracking Act of 1988 (42 U.S.C.
§6992).

     

    6.9 Compliance; Environmental
Compliance.  Tenant will observe and comply promptly with all
present and future legal requirements of governmental authorities and insurance
requirements relating to or affecting the Premises, any Tenant sign, or the use
and occupancy of the Premises or incident to Tenant’s occupancy of the Building
and its use thereof.  Nothing contained in this Lease is intended to
prevent or prohibit compliance by either party with ADA or the Utah Act, nor is
any provision of this Lease intended to violate ADA, and any provision that does
so is hereby modified to allow compliance or deleted as
necessary.  Tenant will not use or permit the Premises to be used in
violation of any Environmental Regulations.  Tenant assumes sole and
full responsibility for, and will remedy at its cost, all such violations,
provided that Tenant must first obtain Sublandlord’s written approval of any
remedial actions, which approval Sublandlord may not unreasonably
withhold.  Except for household cleaners in quantities typically used
in connection with office use, Tenant will not use, generate, release, store,
treat, dispose of, or otherwise deposit, in, on, under or about the Premises,
any Hazardous Materials, nor will Tenant permit or allow any third party to do
so, without Sublandlord’s prior written consent.  Sublandlord’s
election to conduct inspections of the Premises is not approval of Tenant’s use
of the Premises or any activities conducted thereon, and is not an assumption by
Sublandlord of any responsibility regarding Tenant’s use of the Premises or
Hazardous Materials.  Tenant’s compliance with the terms of this
Section 6.9 and with all Environmental Regulations is at Tenant’s sole
cost.  Tenant will pay or reimburse Sublandlord for any costs or
expenses incurred by Sublandlord, including reasonable attorneys’, engineers’,
consultants’ and other experts’ fees and disbursements incurred or
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    to
determine, review, approve, consent to or monitor the requirements for
compliance with Environmental Regulations, including, without limitation, above
and below ground testing.  Sublandlord and Sublandlord’s Agents are
hereby authorized to enter upon the Premises for such
purposes.  Tenant will supply Sublandlord with historical and
operational information regarding the Premises, including without limitation,
all reports required to be filed with governmental agencies, as may be
reasonably requested by Sublandlord to facilitate site assessment, and will make
available for meetings with Sublandlord or Sublandlord’s Agents, appropriate
personnel having knowledge of such matters.  If Tenant fails to comply
with the provisions of this Section 6.9, or if Sublandlord receives notice or
information asserting the existence of any Hazardous Materials, Sublandlord has
the right, but not the obligation, without in any way limiting Sublandlord’s
other rights and remedies, to enter upon the Premises or to take such other
actions Sublandlord deems necessary or advisable to clean up, remove, resolve,
or minimize the impact of any Hazardous Materials on or affecting the
Premises.  Tenant shall pay to Sublandlord on demand as Additional
Rent all reasonable costs and expenses paid or incurred by Sublandlord in the
exercise of any such rights.  Tenant will notify Sublandlord in
writing, immediately upon the discovery, notice (from a governmental authority
or other entity) or reasonable grounds to suspect, by Tenant, Tenant’s Agents,
its successors or assigns the presence in the Premises or the Building of any
Hazardous Materials or conditions that result in a violation of or could
reasonably be expected to violate this Section 6.9, together with a full
description thereof.  Breach of this Section 6.9 is a Default under
this Lease.

     

    6.10 Termination and
Surrender.  Upon termination of this Lease, Tenant
must:  (a) surrender any keys, electronic ID cards, and other
access devices to Sublandlord at the place then fixed for the payment of rent,
(b) remove all Trade Fixtures from the Premises, unless Tenant elects to
leave a Trade Fixture(s) and Sublandlord consents to the non-removal of the
Trade Fixture, (c) surrender the Premises in “broom clean” condition,
(d) except for reasonable wear and tear resulting from normal use in light
of the Permitted Use, surrender the Premises and fixtures in the condition in
which Tenant received them, and (e) deliver the Premises to Sublandlord
free of any and all Hazardous Materials not delivered or brought to the Premises
by Tenant or Tenant’s Agents.  Tenant shall surrender the Premises
free and clear of all mechanic’s or materialmen’s liens, and this obligation
shall survive the termination of the Lease.

     

    6.11 Tenant’s Supplemental
Security Measures.  Subject to the terms of Section 6.2 above
and this Section 6.11, Tenant shall be permitted to install its own supplemental
security measures at the Premises.

     

    (a) Tenant
agrees that all of its supplemental security measures shall be subject to
Sublandlord’s prior written approval, which approval shall not be unreasonably
withheld.  Sublandlord shall not grant approval to any supplemental
security measures that interfere or are incompatible with Sublandlord’s security
measures for the Building or consist of armed guards.

     

    (b) If Tenant
elects to install any supplemental security measures at the Premises, Tenant
agrees to use reasonable efforts to coordinate its security functions with
Sublandlord and cooperate to develop procedures with Sublandlord to implement
Tenant’s supplemental security measures in an efficient and effective
manner.

     

    (c) Tenant
will keep and maintain, in good working order, condition, and repair, its
supplemental security measures, and will make all repairs and replacements
thereto.  Tenant agrees to pay all costs and expenses of its
supplemental security measures, including, but not limited to, installation,
maintenance, repair, and replacement costs.

     

    
      
        
        

      

      
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    (d) Tenant
agrees that in no event shall Sublandlord, or its agents and employees, have any
liability or responsibility for the effectiveness of any of Tenant’s
supplemental security measures.

     

     

    ARTICLE VII

     

    TRANSFER OF INTEREST,
PRIORITY OF LIEN

     

    7.1 Assignment and
Sublease.  Tenant may assign this Lease or sublet all or a
portion of the Premises without the prior written consent of Sublandlord in the
following instances: (i) the assignment or sublease is to an affiliate or
subsidiary of Tenant; (ii) the assignment or sublease occurs jointly and
concurrently with or to the same assignee or affiliate of the assignee under or
in connection with that certain Master License Agreement dated as of the
Commencement Date, to which Tenant and Sublandlord are parties (the “Master
License Agreement”), and such assignee or sublessee expressly agrees in writing
to assume all of the obligations of Tenant hereunder; or (iii) Tenant has
obtained the consent of Landlord to a sublease of all or a portion of the
Premises.  Notwithstanding that Sublandlord’s consent is not required
for transfers pursuant to clauses (i)-(iii) above, each such assignment or
sublease shall only be made upon the obtaining of the prior written consent of
Landlord as required in connection with the Master Lease (and Sublandlord agrees
to cooperate to obtain such consents, if required, from
Landlord).  Except as provided in the foregoing sentence, Tenant shall
not, and shall not have the right to, assign, sell, transfer, delegate or
otherwise dispose of, whether voluntarily or involuntarily, by operation of law
or otherwise, this Lease or any of its rights or obligations under this Lease
without the prior written consent of Sublandlord, which consent shall not be
unreasonably conditioned, withheld or delayed.

     

    7.2 Right of First
Refusal.  Unless such assignment or subletting is being made in
accordance with items (i), (ii) or (iii) above, if Tenant shall desire to assign
this Lease or to further sublet all or any portion of the Premises, Tenant shall
give Sublandlord notice thereof (the “Marketing Notice”), which shall be
accompanied by:

     

    (a) If a
sublease of an entire floor or floors, a notice identifying such floor or floors
and if a sublease of less than an entire floor or floors, a description of the
portion of the Premises that Tenant proposes to sublet, together with a floor
plan thereof; and

     

    (b) A notice
of all of the material and economic terms and conditions of the proposed
assignment or sublease (other than the identity of the proposed assignee or
subtenant if not yet known to Tenant), including:

     

    (i) The
proposed commencement date;

     

    (ii) The term
of the proposed sublease;

     

    (iii) The fixed
rent;

     

    (iv) All
regularly scheduled items of additional rent;

     

    (v) The base
year for all escalations;

     

    (vi) Any
rental concession;

     

    
      
        
        

      

      
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    (vii) The
amount of any tenant improvement allowance in connection with the
sublease;

     

    (viii) Any work
to be performed by Tenant to prepare the Premises for occupancy by the proposed
subtenant or assignee;

     

    (ix) Any
consideration to be paid for the acquisition of the Premises by reason of such
assignment or sublease, or for the acquisition of the leasehold improvements,
fixtures or Tenant’s furniture or equipment;

     

    (x) Any
takeover obligation;

     

    (xi) Any
options to be granted to the proposed subtenant;

     

    (xii) The
nature and character of the business of the proposed assignee or subtenant and
its proposed use of the Premises; and

     

    (xiii) Any
banking, financial, or other credit information with respect to the proposed
assignee or subtenant reasonably sufficient to determine the financial
responsibility of the proposed assignee or subtenant.

     

    (c) Such
Marketing Notice shall be deemed an offer from Tenant to Sublandlord whereby
Sublandlord shall then have the option (the “Recapture Option”), which may be
exercised by notice (the “Recapture Notice”) given to Tenant within fifteen (15)
days after Sublandlord’s receipt of the Marketing Notice.

     

    If
Sublandlord does not timely deliver the Recapture Notice to Tenant, Tenant shall
be free to sublease the Premises or assign this Lease to any third party,
subject to the restrictions set forth in Section 7.1 above.

     

    7.3 Subordination.  Tenant
agrees to be bound by the provisions of Section 21.1, 21.2 and 21.3
(“Subordination Provisions”) of the Master Lease; provided, however, that
Sublandlord agrees to afford to Tenant any of the rights provided to Sublandlord
in connection with the Subordination Provisions.  The parties
acknowledge that in connection with the Purchase Agreement, certain consents,
estoppels and non-disturbance agreements are being sought from Landlord and
Landlord’s lender(s).

     

    7.4 Sublandlord’s
Lien.  In addition to any statutory lien and security interest,
in consideration of the mutual benefits arising under this Lease, Tenant hereby
grants to Sublandlord a lien and security interest (“Sublandlord’s Lien”) in all
of Tenant’s personal property and all Trade Fixtures now or hereafter placed in
the Premises (“Tenant’s Property”) to secure payment of Rent and other sums that
become due under this Lease.  The provisions of this section
constitute a security agreement under the Uniform Commercial Code (the “Code”)
so that Sublandlord has and may enforce a security interest on Tenant’s
Property.  Tenant authorizes Sublandlord to file a financing statement
describing the above collateral.  In addition to any other remedies
provided by law or under this Lease, Sublandlord is entitled to all the rights
and remedies afforded a secured party under the Code with respect to Tenant’s
Property.  Sublandlord’s Lien shall terminate upon (i) the termination
of this Lease, or (ii) the assignment or sublease of all or a portion of the
Premises, provided that any assignee or sublessee shall have first agreed to
subject its personal property located or to be located on the Premises to
Sublandlord’s Lien and the provisions of this Section 7.4.  With
respect to any sublease of a portion of the Premises, Sublandlord’s Lien shall
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    released
with respect to Tenant’s Property located in that portion of the Premises being
subleased.  Sublandlord agrees to execute any documentation reasonably
requested by Tenant within five (5) business days thereof to evidence the
termination or partial termination of Sublandlord’s Lien in accordance with the
provisions of this Section 7.4.  Tenant shall not be deemed to be in
violation of this Section 7.4 or Section 6.2 for any of Tenant’s Property that
is moved, sold or transferred from the Premises in the ordinary course of
business.

     

     

    ARTICLE VIII

     

    DAMAGE AND DESTRUCTION;
EMINENT DOMAIN

     

    8.1 Damage and
Destruction.  If the Building is totally destroyed by fire,
tornado or other casualty or if the Premises or the Building are so damaged that
rebuilding or repairs cannot be completed within ninety (90) days after the date
of such damage, Sublandlord may at their option terminate this Lease, and Rent
will abate for the unexpired portion of the Lease Term effective as of the date
of such damage.  If the Building or the Premises are damaged by fire,
tornado or other casualty covered by Sublandlord’s insurance, and rebuilding or
repairs can be completed within ninety (90) days after the date of such damage,
or if the damage is more serious and Sublandlord do not elect to terminate this
Lease, within sixty (60) days after the date of such damage, Sublandlord will
commence to rebuild or repair the Building and the Premises and will proceed
with reasonable diligence to restore the Building and Premises to substantially
the same condition that existed immediately prior to the casualty; provided,
however, Sublandlord will not rebuild, repair or replace Tenant’s furniture,
fixtures, equipment or the improvements where Sublandlord is not entitled to
receipt of insurance proceeds allocated for such furniture, fixtures, equipment
or improvements.  Sublandlord will allow Tenant a fair diminution of
Base Rent during the time and to the extent that the Premises are unfit for
Tenant’s use in the ordinary conduct of Tenant’s business, which abatement will
continue only until the earlier of (a) thirty (30) days following the
completion of Sublandlord’s restoration of the Building and Premises as herein
provided and receipt of a certificate of occupancy for the Premises or
(b) the completion of Tenant’s repairs.  Any insurance carried by
Sublandlord or Tenant against loss or damage to the Building or to the Premises
is for the sole benefit of the party carrying such insurance and under its sole
control, and Sublandlord’s obligation to rebuild or restore hereunder is limited
to the extent of recoverable insurance proceeds available
therefor.  If any mortgagee under a deed of trust, security agreement
or mortgage on the Building requires the insurance proceeds to be used to retire
debt, Sublandlord will have no obligation to rebuild, and this Lease will
terminate upon notice to Tenant.

     

    8.2 Eminent
Domain.  If the whole Premises are taken or condemned, or
purchased in lieu thereof, by any government authority for any public or
quasi-public use or purpose, then, this Lease will terminate from the time when
the possession is required for such use or purpose.  The Rent will be
prorated to the date when the possession is required.  If any part of
the Premises, including the Common Areas, are taken, Sublandlord will notify
Tenant in writing, and Tenant will have the option to cancel this Lease, by
giving Sublandlord written notice within twenty (20) days after receipt of such
notice from Sublandlord.  If Tenant exercises the option, then
cancellation will be effective and the Rent will be pro-rated to the date when
Tenant vacates the Premises.  If Tenant is not entitled to cancel the
Lease or, if it is entitled to do so, but does not exercise its option, as of
the date when possession is required, the Rent will be reduced in the proportion
that the Net Rentable Area contained in the remaining Premises bears to the Net
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    Premises
before the taking.  Any award of proceeds resulting from a
condemnation or sale in lieu thereof of the whole or part of the Premises will
belong solely to Sublandlord and Tenant hereby waives any right to make any
claim therefor as the result of this Lease.  Provided, however, that
Sublandlord is not entitled to any award for relocation expenses and the taking
Tenant’s Property specifically awarded to Tenant.

     

     

    ARTICLE IX

     

    LIABILITY; INDEMNIFICATION;
INSURANCE

     

    9.1 Waiver of
Claims.  To the extent permitted by law, Sublandlord will not
be liable for, and Tenant releases Sublandlord and Sublandlord’s Agents from and
waives all claims for, damage to person or property that Tenant or any occupant
of the Building or Premises sustains resulting from:  (a) any
part of the Building or Premises or any equipment or appurtenances becoming out
of repair which is not required to be maintained by Sublandlord, (b) any
accident in or about the Building which is not the result of Sublandlord’s
negligence, or (c) directly or indirectly any act or neglect of Tenant,
Tenant’s Agents, any occupant of the Building or of any other person, including
Sublandlord and Sublandlord’s Agents.  Subject to the foregoing
sentence and subject to Section 6.5, the liability of Sublandlord and
Sublandlord’s Agents for any injury, loss or damage to any person or property on
or about the Premises will be limited to those directly and solely caused by the
negligence, gross negligence or willful misconduct of Sublandlord or
Sublandlord’s Agents.  To the extent permitted by law, Tenant will not
be liable for, and Sublandlord releases Tenant and Tenant’s Agents from and
waives all claims for, damage to person or property that Sublandlord or any
occupant of the Building or Premises sustains resulting
from:  (a) any part of the Building or Premises or any equipment
or appurtenances becoming out of repair which is not required to be maintained
by Tenant, (b) any accident in or about the Building which is not the
result of Tenant’s negligence, or (c) directly or indirectly any act or
neglect of Sublandlord, Sublandlord’s Agents, any occupant of the Building or of
any other person, including Tenant and Tenant’s Agents.  Subject to
the foregoing sentence and subject to Section 6.5, the liability of Tenant and
Tenant’s Agents for any injury, loss or damage to any person or property on or
about the Premises will be limited to those directly and solely caused by the
negligence, gross negligence or willful misconduct of Tenant or Tenant’s
Agents.

     

    9.2 Indemnification.

     

    (a) Tenant
indemnifies Sublandlord and Sublandlord’s Agents from any loss, cost or
expense:  (i) due to injury to or destruction of life or property
directly or indirectly arising out of Tenant’s use and occupancy of the
Building, (ii) due to damage to or destruction of the Building structure,
or any part thereof, or of any abutting real property caused by or attributable
to the act, omission or negligence of Tenant or Tenant’s Agents, or (iii) caused
by or attributable to Tenant’s failure to perform its obligations under this
Lease.  Tenant will employ counsel reasonably satisfactory to
Sublandlord, or at Sublandlord’s option, Sublandlord may retain its own counsel
at the expense of Tenant, to prosecute, negotiate and defend any such claim,
action or cause of action; provided, however, that Tenant shall only be required
to reimburse the foregoing expenses so long as they are
reasonable.  Sublandlord has the right to compromise or settle any
such claim, action or cause of action without admitting liability; provided,
however, that Tenant’s consent shall first be obtained, such consent not to be
unreasonably withheld, conditioned, or delayed.  Tenant shall pay any
indebtedness arising under the indemnity to Sublandlord together with interest
thereon at the Default Rate, from the date such indebtedness arises until
paid.

     

    
      
        
        

      

      
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    (b) Sublandlord
indemnifies Tenant and Tenant’s Agents from any loss, cost or expense from any
matter or thing arising from any breach or default in the performance of any
obligation on Sublandlord’s part or to be performed under the terms of this
Sublease or the Master Lease.  Sublandlord will employ counsel
reasonably satisfactory to Tenant, or at Tenant’s option, Tenant may retain its
own counsel at the expense of Sublandlord, to prosecute, negotiate and defend
any such claim, action or cause of action; provided, however, that Sublandlord
shall only be required to reimburse the foregoing expenses so long as they are
reasonable.  Tenant has the right to compromise or settle any such
claim, action or cause of action without admitting liability and without
Tenant’s consent; provided, however, that Tenant’s consent shall first be
obtained, such consent not to be unreasonably withheld, conditioned or
delayed.  Sublandlord shall pay any indebtedness arising under the
indemnity to Sublandlord together with interest thereon at the Default Rate,
from the date such indebtedness arises until paid. 

     

    (c) The
foregoing indemnities of Sublandlord and Tenant shall survive termination of
this Lease.

     

    9.3 Insurance
Requirements.  Tenant will provide and maintain a Commercial
General Liability Policy of insurance (occurrence form) with respect to the
Premises with a minimum per occurrence coverage limit of One Million and No/100
Dollars ($1,000,000.00), with a minimum General Aggregate of Two Million and
No/100 Dollars ($2,000,000.00), including bodily injury, property damage,
personal and advertising injury, products and completed operations and
professional liability (when and where applicable), and with deductible or
self-insured retention, if any, not to exceed Five Thousand and No/100 Dollars
($5,000.00) per occurrence without Sublandlord’s approval.  The policy
shall name Sublandlord as an additional insured.  The coverage of such
policy will extend beyond the Premises to portions of the Common Area which
Tenant or Tenant’s Agents use from time to time for promotional or other
exclusive uses.

     

    (a) If it
becomes customary for a significant number of tenants of office buildings of
similar size in the area in which the Building is located to be required to
provide liability insurance policies with limits higher than the foregoing
limits, within thirty (30) days after Sublandlord’s request therefor Tenant will
provide Sublandlord with an insurance policy whose limits are not less than the
then customary limits.

     

    (b) Tenant
will carry “All Risk” or “Special Form” coverage (or other comparable coverage),
including vandalism and malicious mischief insurance covering the Improvements
and all other improvements (whether existing or installed by Tenant or
Sublandlord), stock in trade, fixtures, furniture, furnishings, removable floor
coverings, trade equipment, signs and all other decorations in the Premises for
one hundred percent (100%) of their full replacement cost.

     

    (c) Tenant
will also carry adequate worker’s compensation insurance in no less than
statutorily required amounts, covering its employees in the Premises containing
a waiver of subrogation in favor of Sublandlord, Sublandlord’s Agents and any
designee of Sublandlord, and Tenant hereby indemnifies, agrees to hold harmless,
and at Sublandlord’s option defend, Sublandlord, Sublandlord’s Agents and any
designee of Sublandlord from and against all claims arising out of any loss
suffered by any of Tenant’s Agents at the Building which would have been or is
covered by an appropriate worker’s compensation insurance policy.

     

    9.4 Sublandlord’s
Insurance.  Sublandlord covenants to Tenant that on or before
the Commencement Date Sublandlord will name Tenant as an additional insured on
the commercial general liability policy maintained by Sublandlord pursuant to
Subsection 17 of the Master Lease,

     

    
      
        
        

      

      
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    provide
Tenant with reasonable evidence thereof, and shall at all time throughout the
Lease Term maintain such insurance and Tenant’s additional insured
status.

     

    9.5 General Provisions with
Respect to Tenant’s Insurance.  On or before Tenant or Tenant’s
Agents enter the Premises for any reason, and again before any insurance policy
expires, Tenant will deliver to Sublandlord an original certificate of
insurance.  Any insurance required to be carried under this Lease may
be carried under a blanket policy covering the Premises and other locations of
Tenant.

     

    (a) All
insurance policies required to be carried under this Lease by or on behalf of
Tenant will provide (and any certificate evidencing the existence of any
insurance policies, will certify) that unless Sublandlord is given ten (10) days
written notice:  (i) the insurance will not be canceled, and
(ii) no material change may be made in the insurance policies.

     

    (b) If Tenant
fails to comply with any of the Insurance Requirements stated in this Lease,
Sublandlord may obtain such insurance and keep the same in effect and Tenant
shall pay to Sublandlord the premium cost thereof upon demand.

     

    (c) All
policies of insurance required to be carried by Tenant under this Lease shall
(i) be written by good and solvent insurance companies satisfactory to
Sublandlord with minimum ratings in Best’s Key Rating Guide published by A.M.
Best Company of A\XII, (ii) include Cross Liability coverage, and
(iii) be primary and non-contributing with any other insurance available
to, or carried by, Sublandlord or Sublandlord’s Agents.

     

    9.6 Waiver of
Subrogation.  Each party hereby waives every right or cause of
action for the events which occur or accrue during the Lease Term for any and
all loss of, or damage to, any of its property (whether or not such loss or
damage is caused by the fault or negligence of the other party or anyone for
whom said other party may be responsible), which loss or damage is covered by
valid and collectible fire, extended coverage, “All Risk” or similar policies
covering real property, personal property or business interruption insurance
policies, to the extent that such loss or damage is recovered under said
insurance policies.  Said waivers are in addition to, and not in
limitation or derogation of, any other waiver or release contained in this Lease
with respect to any loss or damage to property of the parties
hereto.  Each party will give its insurance carrier written notice of
the terms of such mutual waiver, and the insurance policies will be properly
endorsed, if necessary, to prevent the invalidation of coverage by reason of
said waiver.

     

    9.7 Notice.  Tenant
shall give immediate notice to Sublandlord in case of fire or any accident in
the Premises or in the Building and of any defects therein or in any fixtures or
equipment.

     

     

    ARTICLE X

     

    ACCESS TO THE
PREMISES

     

    10.1 Access to the
Premises.  Sublandlord and Sublandlord’s Agents shall have the
right to enter the Premises upon the same terms and conditions provided for in
connection with Section 17 of the Master Lease and as otherwise permitted under
the Master Lease.  

     

    
      
        
        

      

      
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    ARTICLE XI

     

    FAILURE TO PERFORM,
DEFAULTS, REMEDIES

     

    11.1 Defaults.  Each
of the following is a “Default” by Tenant under this Lease:

     

    (i) Tenant
fails to pay any installment of Rent or other amount due more than five (5) days
after such Rent is due (provided however, that Tenant shall be entitled to at
least one written notice during a twelve month period if such Rent is not timely
paid).

     

    (ii) Tenant
fails to comply with any provision of this Lease (including the Rules and
Regulations), other than the payment of Rent, and does not cure or commence to
cure such failure within twenty (20) days after written notice to
Tenant.  If such default is reasonably expected to take more than
twenty (20) days to cure, Tenant must diligently proceed to cure the default
through completion.  The notice of default will specify the provision
of this Lease that has been breached or allegedly breached.

     

    (iii) The
filing or execution or occurrence of:  a petition in bankruptcy or
other insolvency proceeding by or against Tenant or any guarantor of Tenant’s
obligations; an assignment for the benefit of creditors; a petition or other
proceeding by or against Tenant or any guarantor of Tenant’s obligations for the
appointment of a trustee, receiver or liquidator of Tenant or any guarantor of
Tenant’s obligations or any of Tenant’s or such guarantor’s property; or a
proceeding by any governmental authority for the dissolution or liquidation of
Tenant or any guarantor of Tenant’s obligations.

     

    (iv) Tenant
abandons or vacates any substantial portion of the Premises.

     

    (v) Tenant
petitions for or suffers its interest under this Lease to be taken under a writ
of execution.

     

    (vi) Tenant
defaults under any other lease with Sublandlord, now existing or hereafter
entered into.

     

    (b) If a
Default occurs, Tenant’s liability under all of the provisions of this Lease
will continue notwithstanding any expiration and surrender, and notwithstanding
any re-entry or repossession or dispossession under the terms of this
Lease.  Further, Tenant shall pay any reasonable legal fees and costs
and expenses incurred by Sublandlord as a result of Tenant’s Default to
Sublandlord upon demand.

     

    11.2 Remedies.  If
a Default by Tenant occurs, Sublandlord may, at its option and without waiving
any other right or remedy available to it:

     

    (a) Terminate
this Lease by providing written notice of such termination to Tenant, in which
case neither Sublandlord nor Tenant shall have any further rights or obligations
under this Lease as of the date of termination, except with respect to those
amounts Tenant was obligated to pay to Sublandlord prior to the date of such
termination; or terminate Tenant’s possessory rights, without terminating this
Lease, in which case Sublandlord shall have the rights described
below.  If Sublandlord elects to terminate the Lease, Sublandlord
shall have the immediate right, after complying with all applicable legal
requirements or with Tenant’s consent in lieu thereof, to enter and take
possession of the Property, and remove all persons, furniture,

     

    
      
        
        

      

      
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    fixtures
and equipment from the Property, at Tenant’s sole expense, in order to recover
at once, full and exclusive possession of the Property.  Regardless of
whether Sublandlord elects to terminate this Lease or terminate Tenant’s
possessory rights, Tenant shall pay to Sublandlord all costs and damages arising
out of Tenant’s Default, including, without limitation, costs of recovering
possession, costs of reletting, and attorneys’ fees.

     

    (b) If
Sublandlord elects to terminate Tenant’s possessory rights without terminating
this Lease, Sublandlord shall have the right, after complying with all
applicable legal requirements or with Tenant’s consent in lieu thereof, to enter
and take possession of the Property and remove all persons, furniture, fixtures
and equipment from the Property, at Tenant’s sole expense, in order to recover
at once, full and exclusive possession of the Property.  Should
Sublandlord elect to terminate Tenant’s possessory rights without terminating
this Lease, Sublandlord shall undertake to relet the Property or any part
thereof for such term or terms and at such rental or rentals and upon such other
terms and conditions as are reasonable under the circumstances, and Sublandlord
shall have the right to remodel or make alterations and repairs to the Premises
as part of the reletting process.  Any rentals received by Sublandlord
from any such reletting shall be applied as follows: first, to the payment of
any remodeling of, or alterations and repairs to, the Property; second, to the
payment of any other costs associated with the reletting, including but not
limited to brokerage commissions; third, to the payment of the Base Rent,
Additional Rent, and other charges under this Lease; and the residue, if any,
shall be held by Sublandlord and applied in payment of future Base Rent,
Additional Rent, and other charges under this Lease.  Should such
rentals received from such reletting by Sublandlord (after deducting all costs
of associated with the reletting of the Property) during any month be less than
the Base Rent, Additional Rent, and other charges under this Lease, including
but not limited to increases in operating expenses, then Tenant shall, upon
receipt of a statement from Sublandlord specifying the amount, pay the
difference to Sublandlord.  Such difference shall be calculated and
paid monthly.

     

    (c) Cure the
Default at the expense of Tenant, in which event Tenant shall reimburse
Sublandlord for any amount expended by Sublandlord in connection with the cure,
plus interest at the Default Rate (defined in Section 11.4).

     

    Sublandlord
may remove and store in any warehouse, at Tenant’s cost, or, in Sublandlord’s
sole discretion, Sublandlord may deem abandoned by Tenant and dispose of
accordingly, any property belonging to Tenant, or otherwise found upon the
Premises at the time of re-entry, termination of this Lease or termination of
Tenant’s right to the Premises.  Pursuit of any of the foregoing
remedies is not a forfeiture or waiver of any Rent due to Sublandlord hereunder
or of any damages accruing to Sublandlord by reason of the violation of any of
the provisions herein contained.  Tenant shall pay all Rent and
Additional Rent to Sublandlord without any set-off or counterclaim.

     

    The
foregoing rights and remedies are cumulative and in addition to any other rights
granted to Sublandlord by law, and the exercise of any of them is not an
election excluding the exercise by Sublandlord at any time of a different or
inconsistent remedy.  The failure of Sublandlord at any time to
exercise any right or remedy is not a waiver of its right to exercise such right
or remedy at any other future time.

     

    11.3 Breach by Tenant or
Sublandlord.  In the event of any breach or threatened breach
by either party of any covenants, agreements, terms or conditions in this Lease,
the non-breaching party shall be entitled to enjoin such breach or threatened
breach and, in addition to the rights and remedies provided hereunder, will have
any other right or remedy allowed at law or equity, by

     

    
      
        
        

      

      
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    statute
or otherwise.  The provisions of this article will be construed
consistent with Utah law, so that remedies of either party herein described are
available to the full extent but only to the extent that they are not invalid or
unenforceable under Utah law.

     

    11.4 Sublandord’s Default;
Tenant’s Remedies.  Sublandlord’s failure to perform any of its
covenants, agreements or obligations hereunder or under the Master Lease within
twenty (20) days after receipt of written notice thereof from Tenant shall be
deemed an event of default of Sublandlord.  If such default is
reasonably expected to take more than twenty (20) days to cure, Sublandlord must
diligently proceed to cure the default through completion.  If
Sublandlord does not cure or does not commence to cure such default, Tenant may
effect such a cure at Sublandlord’s expense.  Any sums incurred by
Tenant in effecting such a cure shall be paid by Sublandlord within thirty (30)
days after receipt of demand therefor, together with documentation evidencing
such expense(s), to the reasonable satisfaction of Sublandlord.  The
foregoing shall not limit any rights or remedies available to Tenant at law or
in equity.

     

    11.5 Payments.  Except
as elsewhere provided herein, including, without limitation, as provided in
Section 1.4 regarding the payment of Base Rent, all amounts Tenant owes to
Sublandlord are due and payable within five business (5) days from the date that
Tenant receives a statement therefor.  If any payment of Base Rent or
any other sum due from Tenant to Sublandlord under this Lease is not received
within five business (5) days of when due, Tenant shall pay to Sublandlord on
demand a late charge of One Hundred and No/100 Dollars ($100.00) plus Ten and
No/100 Dollars ($10.00) for each day elapsing thereafter prior to Sublandlord’s
receipt of such payment, to cover Sublandlord’s cost for administration fees and
expenses incurred in conjunction with the collection of late
payments.  All amounts (including Rent) not paid when due will bear
interest from the date originally due until the date fully paid at the lesser of
(i) the “prime rate” published in the Wall Street Journal
on the date as of which the interest in question commences to accrue plus two
percent (2%), or, if the name publication is not then in print, that financial
news publication (if any) with the largest U.S. circulation, or (ii) the
highest lawful rate (the “Default Rate”).  If Tenant fails to timely
pay three (3) installments of Rent during any consecutive twelve-month period,
Sublandlord may terminate this Lease. 

     

    11.6 Mediation.  The
parties shall attempt in good faith to resolve any dispute or claim arising out
of or relating to this Lease promptly by confidential mediation under the CPR
Mediation Procedure in effect on the Commencement Date, before resorting to
litigation.  If such dispute or claim is not settled by the parties
through mediation within forty-five (45) days after the first meeting of the
parties with the mediator to discuss the matter, or if the parties agree to
terminate mediation sooner, then either party may initiate a litigation action
subject to all of the terms and conditions of this Lease.

     

     

    ARTICLE XII

     

    QUIET ENJOYMENT;
RESERVATIONS BY SUBLANDLORD;

    NO CONSTRUCTIVE EVICTION;
REPRESENTATIONS AND WARRANTIES OF SUBLANDLORD

     

    
      
        
        

      

      
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    12.1 Quiet
Enjoyment.  So long as Tenant is not in Default, Tenant will
have peaceful and quiet possession of the Premises against all parties claiming
adversely thereto by or under Sublandlord.

     

    12.2 Reservations by
Sublandlord.  In addition to other rights conferred by this
Lease or by law, Sublandlord reserves the right, to be exercised in
Sublandlord’s reasonable discretion, to:  (a) change the name of
the Building; (b) change entrances and exits to the Building and to the
parking structure adjacent to the Building; (c) install and maintain a sign
or signs on the exterior or interior of the Building; (d) change the street
address of the Building; (e) designate all sources furnishing signs, sign
painting and lettering; (f) take all measures as may be necessary or
desirable for the safety and protection of the Premises or of the Building;
(g) have pass keys to the Premises; (h) repair, alter, add to,
improve, build additional stories on, or build adjacent to the Building;
(i) run necessary pipes, conduits and ducts through the Premises;
(j) carry on any work, repairs, alterations or improvements in, on or about
the Building or in the vicinity thereof and, during the continuance of any such
work, to temporarily close doors, entryways, public space and corridors in the
Building; (k) interrupt or temporarily suspend Building services and facilities;
(l) change the arrangement and location of entrances or passageways, doors
and doorways, corridors, elevators, stairs, toilets, or other public parts of
the Building; and (m) grant to anyone the exclusive right to conduct any
business or render any service in or to the Building, provided such exclusive
right shall not operate to exclude Tenant from the Permitted
Use.  Tenant hereby waives any claim to damage or inconvenience caused
by such work.  This paragraph is not to be construed to diminish the
obligations of Tenant provided herein, nor to create or increase any obligation
on the part of Sublandlord with respect to repairs or
improvements.  Neither Sublandlord nor Sublandlord’s Agents will be
liable to Tenant or Tenant’s Agents for any inconvenience, interference or
annoyance resulting from work done in or upon the Premises or any portion of the
Building or adjacent grounds.  Notwithstanding anything in this
Section 12.2 to the contrary, the exercise of any of the rights set forth in
this Section 12.2 by Sublandlord shall be conducted so as to minimize any
interference with Tenant’s business operations at the Premises, shall be subject
to compliance with Tenant’s reasonable instructions and security requirements,
and shall not materially alter or adversely affect the rights or obligations of
Tenant under this Lease.

     

    12.3 Attornment.  Any
sale, assignment, or transfer of Sublandlord’s interest under this Lease, or in
the Premises shall be subject to this Lease, and Tenant shall attorn to
Sublandlord’s successor and assigns and shall recognize such successor or
assigns as Sublandlord under this Lease, regardless of any rule of law to the
contrary or absence of contractual privity, and Sublandlord shall ensure that in
the event of such sale, assignment, or transfer, the party attorned to has been
given notice of the Lease and the terms hereof and that such party agrees to
abide by the terms of this Lease.

     

    12.4 Surrender of the
Premises.  No agreement to accept surrender of the Premises is
valid unless in writing signed by Sublandlord, and no employee of Sublandlord or
Sublandlord’s Agents has any power to accept such surrender prior to the
termination of the Lease.  Tenant’s delivery of keys to any employee
of Sublandlord or Sublandlord’s Agents is not a termination of the Lease or a
surrender of the Premises.

     

    12.5 Master
Lease.  Sublandlord and Tenant acknowledge and agree that
Tenant shall, to the fullest extent possible, be entitled to the rights,
benefits and protections afforded to Sublandlord under the Master Lease to the
extent that such rights, benefits and protections relate to the occupancy or
possession of the Premises, notwithstanding the failure of Sublandlord and
Tenant to

     

    
      
        
        

      

      
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    enumerate
in this Lease all of such obligations, rights, benefits and protections and to
specifically allocate as between Sublandlord and Tenant such
obligations.  Sublandlord covenants and agrees that it
shall:

     

    (a) promptly
and completely fulfill all of its obligations to Prime Landlord under the Master
Lease;

     

    (b) use
reasonable efforts to cause Prime Landlord, under the Master Lease, to perform
all of the obligations of Prime Landlord thereunder to the extent the
obligations apply to the Premises and Tenant’s use thereof and of the Common
Areas; and

     

    (c) in the
event of any default or failure by Prime Landlord to perform its obligations as
contemplated by the immediately preceding subparagraph (b), Sublandlord shall,
upon notice from Tenant, make demand upon Prime Landlord to perform its
obligations under the Master Lease within ten days of notice from Tenant and/or
enter into negotiations with Prime Landlord regarding the event of default or
failure by Prime Landlord; provided, however, that Sublandlord shall have no
obligation to commence litigation against Prime Landlord.

     

    12.6 Representation and
Warranties of Sublandlord.  Sublandlord represents and warrants
to Tenant that, to its knowledge, (i) a true and correct copy of the Master
Lease is attached as Exhibit E, and that there are no other agreements, letter
agreements, side agreements, amendments, modifications, waivers, writings or
other matters amending, modifying, waiving, changing or otherwise affecting the
Lease or any term or provision thereof; (ii) the Master Lease is, as of the date
of this Lease, in full force and effect; (iii) any information provided
regarding actual or estimated Other Charges or that has been provided or
delivered to Tenant is true and accurate and does not fail to disclose any
material fact relating to the Other Charges; (iv) as of the date of this Lease,
there exists no Event of Default (as defined in the Master Lease); (v) except as
otherwise disclosed in writing to Tenant, Sublandlord has not received any
written notice from a governmental entity of a claim that the Building or the
Common Areas do not comply with all laws applicable thereto; (vi) Sublandlord is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, with all requisite power and authority to
enter into and carry out its obligations under this Lease and such other
agreements and instruments to be executed and delivered by Sublandlord in
connection herewith; (vii) each officer who executes this Lease and such other
agreements and instruments has been duly authorized to so act by all requisite
action on its part; (viii) Sublandlord has caused no mortgages, trust deeds or
contracts for sale to encumber the leasehold interest in the Premises other than
those that have been disclosed in writing to Tenant; and (ix) no proceedings are
presently pending or, to the knowledge of Sublandlord, threatened, for the
taking by exercise of the power of eminent domain, or in any other manner for a
public or quasi-public purpose, of all or any part of the
Building.  All of the representations and warranties made in this
subsection shall survive the execution of this Lease for the Term.

     

    12.7 Representations and
Warranties of Tenant.  Tenant represents and warrants to
Sublandlord that (i) it is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, with all requisite power
and authority to enter into and carry out its obligations under this Lease and
such other agreements and instruments to be executed and delivered by Tenant in
connection herewith; and (ii) each officer who executes this Lease and such
other agreements and instruments has been duly authorized to so act by all
requisite action on its part.

     

    
      
        
        

      

      
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    ARTICLE XIII

     

    RULES AND
REGULATIONS

     

    13.1 Rules and
Regulations.  Tenant shall observe and abide by the Rules and
Regulations set forth on Exhibit
B.  Sublandlord may revise the Rules and Regulations or adopt
new ones for the reputation, safety, care or cleanliness of the Building or
Premises, or the operations and maintenance thereof and the equipment therein,
or for the comfort of Tenant and the other tenants of the Building; provided,
however, that any revisions to the Rules and Regulations or the adoption of any
new Rules and Regulations shall not alter any of Tenant’s rights or increase its
obligations under this Lease.  Notwithstanding any provision herein to
the contrary, Tenant shall not be bound by the Rules and Regulations unless
Sublandlord and any other tenants within the Properties are bound by the Rules
and Regulations (including that Tenant shall have the right to enforce such
Rules and Regulations against Sublandlord) and such Rules and Regulations are
not arbitrarily enforced.

     

     

    ARTICLE XIV

     

    COMMUNICATIONS

     

    14.1 Communications.  No
notice, request, consent, approval, waiver or other communication under this
Lease is effective unless the same is in writing and is hand delivered, sent via
nationally recognized overnight courier or mailed by registered or certified
mail, postage prepaid, or sent via facsimile (with electronic or telephonic
verification of receipt and copy by regular mail, certified mail or overnight
courier) addressed as follows:

     

    (a) If
intended for Sublandlord, a communication is effective if mailed to the address
designated as Sublandlord’s Notice Address in Section 14.2 or to such other
address as Sublandlord designates by giving notice to Tenant (or sent via
facsimile to the facsimile number with verification as provided above), with a
copy to the address designated as Sublandlord’s Notice Copy Address in Section
14.2 (or sent via facsimile to the facsimile number with verification as
provided above), or to such other person or party as Sublandlord shall designate
by notice to Tenant.

     

    (b) If
intended for Tenant, a communication is effective if mailed to the address
designated as Tenant’s Notice Address in Section 14.2 or to such other address
as Tenant designates by notice to Sublandlord (or sent via facsimile to the
facsimile number with verification as provided above) with a copy to the address
designated as Tenant’s Notice Copy Address in Section 14.2 (or sent via
facsimile to the facsimile number with verification as provided above), or to
such other person or party as Tenant designates by notice to
Sublandlord.  Notice may be given to Tenant by Sublandlord or
Sublandlord’s attorney acting as Sublandlord’s authorized agent.

     

    Any
notice given by certified mail is effective when the return receipt is signed or
refusal to accept the notice is noted thereon.  Any notice given by
overnight courier or hand delivery is effective upon receipt or refusal to
accept.  Any notice given by facsimile is effective upon electronic or
telephonic verification so long as a copy is also sent via regular mail,
certified mail or overnight courier.

     

    14.2 Notice
Addresses.

     

    (a) Sublandlord’s
Notice Address:

     

    
      
        
        

      

      
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    Franklin Development
Corporation

    2200 West Parkway
Boulevard

    Salt Lake City, Utah 84119

    Attn:  Stephen D.
Young

    facsimile: (801) 817-8747

    

    (b)   Tenant’s
Notice Address:

     

    Franklin Covey Products,
LLC

    2250 West Parkway
Boulevard

    Salt Lake City, Utah 84119

    Attn:  Sarah
Merz

    facsimile: (801) 817-8069

    telephone: (801)
801-817-4022

    

    (c)   Tenant’s
Notice Copy Address:

     

    Snell & Wilmer, LLP

    15 West South Temple, Suite
1200

    Beneficial Tower

    Salt Lake City, UT 84101

    Attn: John Weston, Esq.

    facsimile: (801)257-1900

    telephone: (801)257-1800

    

    

    ARTICLE XV

     

    MISCELLANEOUS
PROVISIONS

     

    15.1 Tenant Estoppel
Certificates.  Tenant agrees, at any time and from time to
time, upon not less than five (5) days prior written notice by Sublandlord, to
execute, acknowledge and deliver to Sublandlord a written statement containing
the following information: (a) certification that this Lease is unmodified
and in full force and effect (or if there have been modifications, that the
Lease is in full force and effect as modified and stating the modifications),
(b) a statement regarding the dates to which Tenant has paid the rent and
other charges hereunder, (c) a statement as to whether to the best of
Tenant’s knowledge, Sublandlord is in Default in the performance of any
covenant, agreement or condition contained in this Lease, and, if so, a
specification of each such Default of which Tenant may have knowledge,
(d) a statement of the amount of monthly rent plus rent increases, if any,
(e) a statement of the amount of the security deposit, if any, (f) a
statement of the address to which notices to Tenant should be sent; and (g) any
other information reasonably requested by Sublandlord.  Any such
statement delivered pursuant hereto may be relied upon by any owner of the
Building, any prospective purchaser of the Building, and any present or
prospective mortgagee, deed of trust holder or trustee for bond holders with
respect to the Building or of Sublandlord’s interest.  If Tenant fails
to furnish an Estoppel Certificate within ten business days (10) days after
request therefor, such failure shall be deemed a default hereunder and,
moreover, it shall be conclusively presumed that: (a) this Lease is in full
force and effect without modification in accordance with the terms set forth in
the request; (b) that there are no breaches or defaults on the part of
Sublandlord; and (c) no more than one month’s rent has been paid in
advance.  

     

    
      
        
        

      

      
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    15.2 Termination
Option.  Tenant may, at its option, terminate this Lease with
respect to the Call Center Space.  For the purposes of this Section
15.2, the “Call Center Space” consists of approximately 15,426 rentable square
feet on the first floor and 4,914 rentable square feet on the second floor of
the Patrick Henry building.  In order to exercise this option, Tenant
shall deliver written notice of its exercise at least six (6) months prior to
the desired termination date, which notice shall be accompanied by a termination
fee equal to six (6) months’ Base Rent at the rates that would be in effect for
the Call Center Space had the option not been exercised.  Such
termination fee is in consideration for Tenant’s right to partially terminate
this Lease and is not an advance payment of Rent.  Tenant shall
continue to pay Rent for the Call Center Space until the effective date of such
termination, which date shall be specified in the notice of
exercise.  Upon the effective date of such termination, the Net
Rentable Area shall be deemed reduced by 20,340 square feet, Tenant’s Share
shall be deemed reduced accordingly, and Tenant shall have no further liability
or obligation with respect to the Call Center Space under this Lease or
otherwise.  Tenant shall remove all fixtures and equipment from the
Call Center Space upon termination.  The parties agree to execute an
amendment to this Lease to effectuate the intent of this Subsection 15.2 upon
Tenant’s notice of exercise.

     

    15.3 Telecommunications.  Subject
to applicable law, Sublandlord reserves to itself the exclusive right to
(a) place antennae and related facilities and other equipment for the
provision of telecommunications services (the “Telecommunications Equipment”) on
the rooftop or in other portions of the Building designated by Sublandlord for
such use, and (b) enter into license agreements or leases for the use of
such areas by commercial and other providers of telecommunications services (the
“Telecommunications Agreements”).  As used in this Article XV,
“telecommunications services” shall mean the implementation, provision,
facilitation and maintenance of voice, data, video or other communication
services (or any combination of the foregoing) including, without limitation:
(a) the provision and resale of point-to-point telephone communications
(including dedicated long distance service), (b) video communications
service, (c) 800-number service, (d) telephone credit or debit card
service, (e) audio or video conferencing, paging, voice mail and message
centers, (f) data transmission service, (g) access to computer
“internet” or other networked computer-based communications, (h) satellite
or cable television, (i) wideband digital networks, (j) security
services, and (k) provision of telephone, video communication or other
telecommunication equipment to consumers of such services; whether now existing
or subsequently developed and however provided, including, without limitation,
wireless transmission and reception of communication
signals.  Sublandlord shall be entitled to any and all fees or other
charges payable by any such provider of telecommunications services on account
of any Telecommunications Agreements.

     

    15.4 Brokerage
Fees.  Except as listed below, Tenant and Sublandlord represent
and warrant that neither has incurred any liability for commissions or similar
compensation to third parties in connection with this Lease, and each party
indemnifies the other against any liability arising from any claims for a breach
of the foregoing representation and warranty.

     

    15.5 Attorney’s and
Professional’s Fees.  Tenant and Sublandlord agree to reimburse
each other upon demand for reasonable attorney’s fees incurred related to a
Tenant or Sublandlord Default.  In the event of litigation concerning
this Lease, the prevailing party is entitled to reimbursement of its costs
respecting such suit, or settlement thereof, including reasonable attorney’s
fees, expert fees, and fees of consultants, auditors, appraisers and other
similar professionals, such reimbursement to be paid by the unsuccessful
party.

     

    
      
        
        

      

      
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    15.6 Liability of Sublandlord and
Tenant.  If Sublandlord, on the one hand, or Tenant, on the
other (in either case, the “Liable Party”), is held or found to be liable to
Tenant, on the one hand, or Sublandlord, on the other (the “Recipient Party”),
for any claim, liability, loss or expense (a “Loss”) relating to or arising from
a breach of any representation or warranty contained in this Lease, whether
based on an action or claim in contract, negligence, tort or otherwise, the
amount of damages recoverable for such Loss by the Recipient Party from the
Liable Party will not exceed $3,200,000 minus the sum of (A) the aggregate
amount of Losses arising under this Agreement and paid by the Liable Party to
the Recipient Party, and (B) the aggregate amount of any liabilities for damages
arising from a breach of any representation or warranty contained in any
Transaction Agreement paid by the Liable Party to the Recipient
Party.  “Transaction Agreements” means the Purchase Agreement and the
Ancillary Agreements identified in the Purchase Agreement.

     

    15.7 Tenant’s
Authority.  Tenant agrees that if Tenant is a corporation
(including any form of professional association or corporation) or partnership
(general or limited): (i) the individual executing this Lease is duly
authorized to execute and deliver this Lease on behalf of Tenant in accordance
with Tenant’s organizational documents; (ii) this Lease is binding upon
Tenant; (iii) Tenant is duly organized and legally existing in the state of
its organization and is qualified to do business in the state in which the
Building is located; and (iv) upon Sublandlord’s request Tenant will
provide Sublandlord satisfactory evidence of such authority.

     

    15.8 Parking.  Tenant
shall have the non-exclusive right to use a proportionate share of the number of
parking spaces serving the Building equal to Tenant’s Share as set forth in
Section 1.5 above.  Sublandlord may adopt reasonable rules and
regulations applicable to all parking areas from time to time, which Tenant
shall follow and cause its employees, guests, agents and invitees to follow.

     

    15.9 Sublandlord
Approval.  Sublandlord’s approval when required under the Lease
is non-technical and non-legal in nature, and Tenant remains responsible for all
technical and legal aspects of any item requiring Sublandlord’s
approval.

     

    15.10 Unenforceability/Joint and
Several Liability.  The invalidity or unenforceability of any
provision hereof will not affect or impair any other provision.  If
Tenant consists of more than one person or entity, the obligations of each are
joint and several.

     

    15.11 Headings,
Miscellaneous.  The headings of the several articles,
paragraphs and sections contained herein are for convenience only and do not
define, limit or construe the contents of such articles, paragraphs and
sections.  All negotiations, considerations, representations and
understandings between the parties are incorporated herein and are superseded
hereby.  There are no terms, obligations, covenants, statements,
representations, warranties or conditions relating to the subject matters hereof
other than those specifically contained herein.  This Lease may not be
amended or modified by any act or conduct of the parties or by oral agreements
unless reduced and agreed to in writing signed by both Sublandlord and
Tenant.  No waiver of any of the terms of this Lease is binding upon
Sublandlord unless reduced to writing and signed by Sublandlord.

     

    15.12 Force
Majeure.  If Sublandlord or Tenant are prevented or delayed in
the performance of any of their covenants or obligations hereunder by
circumstances beyond their control (including, but not limited to governmental
regulations or prohibitions) such delay or nonperformance will not be a default
hereunder and will be deemed waived and accepted by the other
party.

     

    
      
        
        

      

      
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    15.13 Entire
Agreement.  This Lease, the exhibits and any addendum attached
hereto (which are hereby incorporated into this Lease by this reference) set
forth the entire agreement between Sublandlord and Tenant, and there are no
other oral or written agreements between them.  All prior oral or
written agreements are merged herein and superseded by this Lease.

     

    15.14 Governing
Law.  This Lease is governed by the laws of the State of
Utah.

     

    15.15 Forum Selection; Jury Trial
Waiver.  Tenant hereby knowingly, intentionally, and
irrevocably agrees that Sublandlord may bring any action or claim to enforce or
interpret the provisions of this Lease in the State and County where the
Property is located, and that Tenant irrevocably consents to personal
jurisdiction in such State for the purposes of any such action or
claim.  Nothing in this Section 15.14 shall be deemed to preclude or
prevent Sublandlord from bringing any action or claim to enforce or interpret
the provisions of this Lease in any other appropriate place or
forum.  Tenant further agrees that any action or claim brought by
Tenant to enforce or interpret the provisions of this Lease, or otherwise
arising out of or related to this Lease or to Tenant’s use and occupancy of the
Property, regardless of the theory of relief or recovery and regardless of
whether third parties are involved in the action, may only be brought in the
State and County where the Property is located, unless otherwise agreed in
writing by Sublandlord prior to the commencement of any such
action.

     

    IN THE
INTEREST OF OBTAINING A SPEEDIER AND LESS COSTLY ADJUDICATION OF ANY DISPUTE,
SUBLANDLORD AND TENANT HEREBY KNOWINGLY, INTENTIONALLY, AND IRREVOCABLY WAIVE
THE RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION, PROCEEDING, CLAIM, OR
COUNTERCLAIM BROUGHT BY EITHER OF THEM AGAINST THE OTHER ON ALL MATTERS ARISING
OUT OF OR RELATED TO THIS LEASE OR THE USE AND OCCUPANCY OF THE
PROPERTY.

     

    15.16 Memorandum of
Lease.  Tenant may not record this Lease without Sublandlord’s
prior written consent.  

     

    15.17 Not Binding
Lease.  The submission of this Lease to Tenant is not an
offer.  This instrument is not effective as a Lease or otherwise
unless and until executed by and distributed to both Sublandlord and
Tenant.

     

    15.18 Successors and
Assigns.  This Lease is binding upon and inure to the
respective parties herein, their heirs, executors, administrators, successors
and permitted assigns whomever.

     

    15.19 Non-Waiver.  Neither
Sublandlord’s failure to enforce or require strict performance of any provision
of this Lease, nor Sublandlord’s acceptance of Rent with knowledge of a breach
is a waiver of such breach or any future breach.

     

    15.20 Counterparts.  This
Lease may be executed in counterparts, each of which shall be deemed an
original, and all of which taken together shall constitute one and the same
Lease.

     

    15.21 Time is of the
Essence.  Time is of the essence in both Sublandlord’s and
Tenant’s performance of their obligations under this
Lease.  

     

    15.22 Survival of
Obligations.  Any obligations of the parties specified to
survive the termination of this Lease shall so survive.

     

     

    
      
        
        

      

      
        29

        
          

        

      

      
        Table of Contents

      

    

     

     (Signature
page to follow)

     

    
      
        
        

      

      
        30

        
          

        

      

      
        Table of Contents

      

    

    IN
WITNESS WHEREOF, the parties hereto have caused this Lease to be executed by
their respective representatives thereunto duly authorized, as of the date first
above written.

     

    

     

    
      	
              SUBLANDLORD:

               

            
	
              FRANKLIN
      DEVELOPMENT CORPORATION,

              a
      Utah corporation

               

            
	
              By:

            	 
      /s/ Robert A. Whitman
	
              Its:

            	 
      President
	
               

               

              TENANT:

               

            
	
              FRANKLIN
      COVEY PRODUCTS, LLC

              a
      Utah limited liability company

               

            
	
              By:

            	 
      /s/ Sarah Merz
	
              Name:

            	 
      Sarah Merz
	
              Title:

            	 
      Chief Executive Officer and
President

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