80 Proposals to Ratify Stock Purchase Plan Franklin Covey 2000 Annual Report Restrictions on Issuance and Transfer of  Common Stock Issuable Under the Purchase Plan The Company shall not be required to issue any Common Stock under the Purchase Plan unless and until the Committee reasonably determines that such issuance will be in compliance with the Securities Act of 1933, as amended and other governing securities laws. The Committee may impose and enforce any condition required by applicable securities law in connection with the issuance or transfer of any Common Stock issued or issuable under the Purchase Plan.  Under governing securities laws, no shares of Common Stock acquired under the Purchase Plan Plan may be offered or sold while the holder thereof is in possession of material nonpublic information. Violation of such prohibition may result in civil or criminal sanctions. The securities laws of the United States subject officers, directors and certain beneficial owners of 10 percent or more of the Common Stock (collectively, “Insiders”) to the reporting and liability provisions of Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  Section 16(b) Liability Provisions. Section 16(b) of the Exchange Act generally provides that any profit realized by an Insider from any purchase and sale, or any sale and purchase, of any equity security of the Company within six months is recoverable by the Company. Transactions by Insiders of the Company in Common Stock are subject to such short-swing liability provisions under Section 16(b), unless an exemption is available thereunder. Rule 16b-3 provides that a transaction pursuant to an employee stock purchase plan that satisfies certain requirements of Section 423 of the Code is exempt from the short-swing restrictions of Section 16(b). The Purchase Plan satisfies such requirements of Section 423 of the Code and, accordingly, the issuance of Common Stock Pursuant to Purchase Plan will be exempt (i.e., not counted as a purchase transaction) for purposes of the short-swing liability provisions of Section 16(b).  Even if a Registration Statement on Form S-8 is in effect with respect to shares of Common Stock issued under the Purchase Plan, shares of Common Stock issued to “affiliates” of the Company (a term which includes Insiders and other persons who are deemed to control the Company) pursuant to the Purchase Plan may not be resold unless the re-sale transaction is registered under the Securities Act or such shares are re-sold pursuant to an applicable exemption, including the exemption provided by Rule 144 under the Securities Act (“Rule 144”). Pursuant to Rule 144, an affiliate of the Company is entitled to sell, within any three-month period, a number of Common Shares that does not exceed the greater of one percent (1%) of the outstanding shares of such class or the average weekly trading volume of such shares during the four calendar The preceding summary of certain provisions of the securities laws of the United States is based upon the existing rules and regulations, which are subject to further change and interpretation, and does not purport to be a complete discussion of such securities laws. Participants who are Insiders of the Company are encouraged to consult with legal counsel with respect to the securities laws, rules and regulations applicable to any contemplated transaction under the Purchase Plan. Section 16(a) Reporting Requirements and Section 16(c) Derivative Trading Restrictions. The Rules promulgated under the Exchange Act also impose various reporting requirements pursuant to Section 16(a) for Insiders of the Company with respect to transactions under the Purchase Plan. Violations of such requirements could result in penalties, fines and disclosure of such violations in the Company’s Proxy Statement and Annual Report on Form 10-K. Section 16(c) of the Exchange Act continues to prohibit generally sales of an equity security by an Insider if he does not own the security or, if he owns the security, he does not deliver it within 20 days after sale.  Although receipt by an Insider of Common Stock under the Purchase Plan may be exempt from short-swing liability, as discussed above, the sale of such Common Stock by an Insider of the Company will generally not be exempt. Therefore, unless one of the limited number of exceptions applies, the sale to any party other than the Company of Common Stock acquired under the Purchase Plan may be matchable against any non-exempt purchase transaction occurring within six months before or after such sale. Insiders of the Company are advised to take appropriate measures to assure compliance with the provisions of Section 16. Conditions To Issuance of Common Stock  Restrictions on Transfer of Shares Held By Affiliates  Prohibitions on Trading While In Possession of Material Non-Public Information  Limitations on Transfer By Certain Insiders Subject to Section 16 of the Exchange Act