On June 30, 2009, Franklin Covey Co. (the Company) entered into a second modification agreement with JPMorgan Chase Bank, N.A. (the Lender) on its line of credit facility (the Second Modification Agreement). The Lender also provides the majority of the Company's day-to-day banking services. Under terms of the Second Modification Agreement, the Company's borrowing capacity will reduced as follows (dollars in thousands):

 Effective Date      Borrowing Capacity
  June 30, 2009     $             20,000
 August 31, 2009                  18,000
November 30, 2009                 13,500

In addition, any payments made to the Company by Franklin Covey Products, LLC from the working capital settlement and reimbursable costs associated with the sale transaction note receivable are required to be paid on the line of credit and will also reduce the available borrowing capacity as shown above by the amount of the payments. For example, a $2.0 million payment received from Franklin Covey Products, LLC prior to August 31, 2009 would reduce the borrowing capacity on the line of credit at August 31, 2009 to $16.0 million.

The Second Modification Agreement also increases the effective interest rate on the line of credit facility from LIBOR plus 1.50 percent to LIBOR plus 2.00 percent, effective on the date of the Second Modification Agreement.

In addition to customary non-financial terms and conditions, the line of credit requires the Company to be in compliance with specified financial covenants, including: (i) a funded debt to earnings ratio; (ii) a fixed charge coverage ratio; (iii) a limitation on annual capital expenditures; and (iv) a defined amount of minimum net worth. In the event of noncompliance with these financial covenants and other defined events of default, the Lender is entitled to certain remedies, including acceleration of the repayment of amounts outstanding on the line of credit. The Second Modification Agreement also modified the funded debt to earnings ratio and fixed charged coverage ratio over the quarterly periods ended August 2009 and November 2009.

The foregoing description of the Second Modification Agreement does not purport to be complete and is qualified in its entirety by reference to the text of the Second Modification Agreement, which is filed as Exhibit 10.1 attached hereto.

The original credit agreements with the Lender are described in further detail, and the corresponding agreements are attached as exhibits to the Form 8-K filed with the Securities and Exchange Commission on March 19, 2007.

On June 30, 2009, the Company entered into a second modification agreement with the Lender on its line of credit facility as described above in Item 1.01. The information in Item 1.01 is incorporated by reference herein.

(d) Exhibits:

10.1 Second Modification Agreement by and among Franklin Covey Co. and JPMorgan Chase Bank, N.A., dated June 30, 2009.