Proposals to Ratify Stock Purchase Plan 75 Franklin Covey 2000 Annual Report Under the terms of his agreement, Mr. Whitman is entitled to annual incentive compensation ranging from 0 percent to 150 percent of his base salary. This base salary, retroactively paid to December 31, 1999, is initially fixed at $500,000 per year, but will be reviewed annually by the Compensation Committee and may be increased during the term of the agreement. The employment agreement has an initial term through August 31, 2007, and may be extended beyond this term by the mutual agreement of the Company and Mr. Whitman. Mr. Whitman will be eligible to receive the incentive compensation only if he meets or exceeds performance standards established annually by the Compensation Committee. Fifty to seventy-five percent of the annual incentive compensation will be based on reaching or exceeding targets with respect to the Company’s earn- ings before interest, taxes depreciation and amortization (“EBITDA”) for each fiscal year. The remaining percen- tage of the annual incentive compensation will be based on meeting or exceeding target goals with respect to other aspects of the business of the Company identified by the Compensation Committee and may include such things as meeting target dates for development of specific projects, meeting sales goals for individual products or business areas, increasing revenues and/or market penetration associated with products or groups of products, successful development and introduction of new products, attracting and retaining key employees, implementing business strategies, identifying and negotiating business transactions, and other items that may be established by the Compensation Committee from time to time. The employment agreement also provides for the grant to Mr. Whitman of an option to purchase 1,602,000 shares of the Company’s common stock, with an exercise price of $14.00 per share. This option becomes exercis- able on a graduated basis, depending on increases in the market price for the Company’s common stock. If the closing sales price for the Company’s common stock exceeds $20.00 for 90 consecutive trading days, the option becomes exercisable with respect to 801,000 shares of stock. The option becomes exercisable for additional shares of stock for each subsequent $5.00 increase in the market price of the stock up to $50.00 at which point the option is exercisable for the entire The Franklin Covey Co. Amended and Restated 2000 Employee Stock Purchase Plan, as amended, (the “Purchase Plan”) was adopted by the Board of Directors (the “Board”) in March 1992 and approved by the Company’s shareholders in April 1992. The Purchase Plan was amended by the Board on June 29, 1992, in August, 1992 and on March 11, 1996. On May 11, 2000, the Board amended the Purchase Plan to extend the term of the Purchase Plan and increased the number of shares of the Company’s Common Stock, subject to the Purchase Plan by 1,000,000. This most recent amend- THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE  IN FAVOR OF THE PROPOSAL TO APPROVE THE PERFORMANCE AWARDS FOR THE CHIEF EXECUTIVE OFFICER OF THE COMPANY. In the event that Mr. Whitman elects to exercise the option to acquire shares of common stock, the Company has agreed to loan the exercise price, plus the aggregate amount of any federal, state, or local income tax payable as a result of such exercise, to Mr. Whitman. This loan will bear interest at a rate substantially similar to the interest on loans by the Company to key employees under its Management Sock Purchase Loan Program. The principal amount of the loan (or a pro rata portion thereof) will be payable at the time that Mr. Whitman’s sells or otherwise disposes of shares of common stock purchased with the loan proceeds. If not previously paid, the loan will be payable in full five years after the date of the advance by the Company. 1,602,000 shares. If it has not otherwise become exercis- able and if Mr. Whitman is still employed by the Company, the option will become fully exercisable on August 31, 2007. The option also becomes exercisable under certain conditions in the event the Company elects to terminate the employment agreement or there is a change of control of the Company, all as defined under the terms of the employment agreement. To the extent unexercised, the option will expire on August 31, 2010. Annual Incentive Compensation Option Grant General PROPOSAL TO RATIFY THE AMENDMENT OF THE EMPLOYEE STOCK PURCHASE PLAN