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+Proc-Type: 2001,MIC-CLEAR
+Originator-Name: webmaster@www.sec.gov
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+
+<SEC-DOCUMENT>0000886206-01-000004.txt : 20010123
+<SEC-HEADER>0000886206-01-000004.hdr.sgml : 20010123
+ACCESSION NUMBER:		0000886206-01-000004
+CONFORMED SUBMISSION TYPE:	10-K/A
+PUBLIC DOCUMENT COUNT:		1
+CONFORMED PERIOD OF REPORT:	20000831
+FILED AS OF DATE:		20010111
+
+FILER:
+
+	COMPANY DATA:	
+		COMPANY CONFORMED NAME:			FRANKLIN COVEY CO
+		CENTRAL INDEX KEY:			0000886206
+		STANDARD INDUSTRIAL CLASSIFICATION:	BLANKBOOKS, LOOSELEAF BINDERS & BOOKBINDING & RELATED WORK [2780]
+		IRS NUMBER:				870401551
+		STATE OF INCORPORATION:			UT
+		FISCAL YEAR END:			0831
+
+	FILING VALUES:
+		FORM TYPE:		10-K/A
+		SEC ACT:		
+		SEC FILE NUMBER:	001-11107
+		FILM NUMBER:		1507043
+
+	BUSINESS ADDRESS:	
+		STREET 1:		2200 W PKWY BLVD
+		CITY:			SALT LAKE CITY
+		STATE:			UT
+		ZIP:			84119-2331
+		BUSINESS PHONE:		8018177171
+
+	MAIL ADDRESS:	
+		STREET 1:		2200 W PARKWAY BLVD
+		CITY:			SALT LAKE CITY
+		STATE:			UT
+		ZIP:			84119
+
+	FORMER COMPANY:	
+		FORMER CONFORMED NAME:	FRANKLIN QUEST CO
+		DATE OF NAME CHANGE:	19940218
+</SEC-HEADER>
+<DOCUMENT>
+<TYPE>10-K/A
+<SEQUENCE>1
+<FILENAME>0001.txt
+<DESCRIPTION>AMENDMENT #1 TO FORM 10-K FOR FISCAL YEAR 2000
+<TEXT>
+
+
+                      SECURITIES AND EXCHANGE COMMISSION
+                            Washington, D.C. 20549
+
+                                 FORM 10-K/A
+
+                              AMENDMENT NO. 1 TO
+
+[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
+    EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED AUGUST 31, 2000
+
+[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
+    ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______________ TO ______________
+
+                               FRANKLIN COVEY CO.
+- --------------------------------------------------------------------------------
+             (Exact name of registrant as specified in its charter)
+
+         Utah                        1-11107                 87-0401551
+- --------------------------   ----------------------     ----------------------
+(State or other jurisdiction  (Commission File No.)         (IRS Employer
+   of incorporation)                                     Identification No.)
+
+                           2200 West Parkway Boulevard
+                         Salt Lake City, Utah 84119-2331
+- --------------------------------------------------------------------------------
+         (Address of principal executive offices, including zip code)
+
+         Registrant's telephone number, including area code:  (801) 817-1776
+
+         Securities registered pursuant to Section 12(b) of the Act:
+                                             Name of Each Exchange on Which
+           Title of Each Class                        Registered
+  -----------------------------------    ---------------------------------------
+      Common Stock, $.05 Par Value               New York Stock Exchange
+
+[ ]  Securities registered pursuant to Section 12(g) of the Act:   None
+
+     Indicate  by check mark  whether the  Registrant  (1) has filed all reports
+required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
+1934  during  the  preceding  12 months  (or for such  shorter  period  that the
+Registrant was required to file such reports),  and (2) has been subject to such
+filing requirements for the past 90 days. YES [X] NO [ ]
+
+     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
+405 of Regulation S-K is not contained herein, and will not be contained, to the
+best of Registrant's  knowledge,  in definitive proxy or information  statements
+incorporated by reference in Part III of this Form 10-K or any amendment to this
+Form 10-K. [ ]
+
+     The aggregate  market value of the Common Stock held by  non-affiliates  of
+the  Registrant  on November 1, 2000,  based upon the closing  sale price of the
+Common Stock of $8.25 per share on that date,  was  approximately  $140,803,583.
+Shares of the Common  Stock held by each officer and director and by each person
+who may be deemed to be an affiliate of the Registrant have been excluded.
+
+     As of November 1, 2000,  the  Registrant  had  20,643,182  shares of Common
+Stock outstanding.
+
+     Parts of the  Registrant's  Proxy  Statement  for the  Registrant's  Annual
+Meeting of Shareholders,  which is scheduled to be held on January 12, 2001, are
+incorporated    by    reference    in   Part    III   of   this    Form    10-K.
+- --------------------------------------------------------------------------------
+
+
+
+
+
+                                       1
+<PAGE>
+
+
+
+
+                                   FORM 10-K/A
+                                 AMENDMENT NO. 1
+
+
+     The  Registrant  hereby  includes  the  final  version  of  the  Employment
+Agreement, preliminarily filed as exhibit 10-21 to Form 10-K.
+
+
+
+
+
+
+
+                                       2
+
+<PAGE>
+
+
+
+                                  FORM 10-K/A
+                                AMENDMENT NO. 1
+
+
+
+     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
+registrant  has duly  caused  this  amendment  to be signed on its behalf by the
+undersigned, thereunto duly authorized.
+
+
+FRANKLIN COVEY
+
+By:  /s/ Val John Christensen
+     ------------------------------
+     Val John Christensen
+     Executive Vice President,
+     General Counsel and Secretary
+
+Date: January 11, 2001
+
+
+
+                                       3
+
+<PAGE>
+
+
+                                 FORM 10-K/A
+                               AMENDMENT NO. 1
+
+EXHIBIT 10.21
+
+
+
+                              EMPLOYMENT AGREEMENT
+
+
+     This Employment Agreement (the "Agreement"), dated as of September 1, 2000,
+is made and entered into by and between  Franklin Covey Co., a Utah  corporation
+(the "Company"), and Robert A. Whitman ("Executive").
+
+     WHEREAS, Executive has been serving as the Chairman of the Board, President
+and Chief Executive Officer
+of the Company;
+
+     WHEREAS,  in  order  to  induce  Executive  to  continue  to  serve in such
+positions,  the Company desires to provide Executive with compensation and other
+benefits on the terms and conditions set forth in this Agreement; and
+
+     WHEREAS,  Executive  is willing to  continue  such  employment  and perform
+services for the Company, on the terms and conditions hereinafter set forth;
+
+     NOW THEREFORE,  in  consideration  of the promises and the mutual covenants
+herein contained, it is agreed as follows:
+
+1.   EMPLOYMENT, POSITIONS AND DUTIES.
+
+     1.1 TERM.  The Company  hereby  agrees to employ  Executive  and  Executive
+hereby  agrees  to  undertake  employment  with the  Company  upon the terms and
+conditions set forth in this  Agreement.  Executive's  employment  will be for a
+term  beginning  on January 1, 2000,  and,  subject to earlier  expiration  upon
+Executive's  termination  under  Section 5,  expiring  on August  31,  2007 (the
+"Initial  Term"),  unless  the  Initial  Term  is  extended  on such  terms  and
+conditions  and for such  period of time as may be  agreed  upon in  writing  by
+Executive  and  the  Company.  The  Initial  Term,  as so  extended  or  earlier
+terminated, is referred to in this Agreement as the "Term."
+
+     1.2  POSITIONS AND DUTIES.  Throughout  the Term,  Executive  will serve as
+President and Chief Executive  Officer and/or Executive  Chairman of the Company
+and perform the duties of such positions  reporting to the Board of Directors of
+the  Company.  In  addition,  the  Company  will use its best  efforts  to cause
+Executive  to be elected as  Chairman of the Board of  Directors  of the Company
+(hereinafter  referred to as the "Board").  Executive will perform such services
+as are normally  delegated to such positions and such other additional  services
+as may be reasonably delegated to him from time to time by the Board.  Executive
+further  agrees to hold such  additional  positions  with the  Company as may be
+assigned to him from time to time by the Board. During the Term,  Executive will
+be the Company's  full-time employee and, except as may otherwise be approved in
+advance in writing by the Board,  and during  vacation  periods  and  reasonable
+periods  of  absence  due to  sickness,  personal  injury  or other  disability,
+Executive will devote  substantially  all of his working time and efforts to his
+duties under this Agreement.  Notwithstanding  the foregoing,  Executive may (i)
+subject to the approval of the Board,  serve as a director or advisory committee
+member of  noncompeting  for-profit  companies,  (ii) manage personal and family
+
+
+
+
+                                      4
+
+<PAGE>
+
+investments  and (iii)  serve as an  officer,  director,  trustee  or  otherwise
+participate in purely educational,  welfare, social,  charitable,  religious and
+civic  organizations.  In connection with his employment during the Term, unless
+otherwise  agreed by  Executive  and the Board,  Executive  will be based at the
+Company's  principal  executive offices in Salt Lake City, Utah.  Executive will
+undertake  normal  business  travel  on behalf of the  Company,  the  reasonable
+expenses of which will be paid by the Company pursuant to Section 4.
+
+     1.3  INDEMNIFICATION.  The Company will  provide to Executive  its standard
+indemnification for officers and directors of the Company.
+
+2. COMPENSATION.
+
+     2.1  SALARY. During the Term, the Company will pay Executive an annual base
+salary  ("Base  Salary") of  $500,000,  which will be  reviewed  annually by the
+Organization  and  Compensation   Committee  of  the  Board  (the  "Compensation
+Committee"), provided, however, that the Organization and Compensation Committee
+will not be required to review  Executive's Base Salary prior to the fiscal year
+of the Company  beginning  September 1, 2001. Base Salary may be increased,  but
+not  decreased,  and as so adjusted  will  constitute  "Base  Salary" under this
+Agreement. Base Salary will be payable at the times and in the manner consistent
+with  the  Company's  general  policies  regarding   compensation  of  executive
+officers.
+
+     2.2  ANNUAL   INCENTIVE   COMPENSATION.   Executive  will  be  eligible  to
+participate  in an annual  cash  incentive  program on terms  commensurate  with
+Executive's  position  and  level of  responsibility;  provided,  however,  that
+Executive's  annual target incentive  compensation will be not less than 100% of
+Base Salary  (prorated for any fiscal year of the Company in which  Executive is
+employed for less than 12 full months), with a potential pay-out range from zero
+to 150% of such Base  Salary  based on  Executive's  attainment  of  performance
+objectives as determined by the Compensation  Committee.  Except as set forth in
+the preceding sentence,  nothing in this Section 2.2 will guarantee to Executive
+any specific amount of incentive compensation.
+
+2.3  LONG-TERM INCENTIVE COMPENSATION.
+
+     2.3.1  The Company  will grant to  Executive,  pursuant to the terms of the
+Company's  1992 Stock  Incentive  Plan and the terms and conditions set forth in
+this Section  2.3.1,  an option to purchase  1,602,000  shares of the  Company's
+common  stock,  par value $.01 per  share,  at an  exercise  price of $14.00 per
+share.  Except as provided in Section 5, the option may be exercised  only while
+Executive is employed by the Company as either its Chief Executive Officer or as
+its Executive Chairman. The option will be fully exercisable on August 31, 2007,
+and will be  exercisable  prior to  August  31,  2007,  in  accordance  with the
+following schedule,  on or after any date that the average closing sale price of
+the Company's common stock for the preceding 90 consecutive  trading days equals
+or exceeds the average price set forth in the schedule:
+
+
+
+                                       5
+
+<PAGE>
+
+
+                                            Cumulative Number of
+            Average Closing                   Shares for which
+            Price Per Share                 Option is Exercisable
+            ---------------                 ---------------------
+                  $20                              801,000
+                  $25                              934,500
+                  $30                             1,068,000
+                  $35                             1,201,500
+                  $40                             1,335,000
+                  $45                             1,418,500
+              $50 or more                         1,602,000
+
+For purposes of this Agreement,  the closing sale price of the Company's  common
+stock will be the closing sale price in the principal market in which the common
+stock is traded at any relevant  time, and a trading day is a day on which there
+is a  sale  of the  Company's  common  stock  in  such  market.  To  the  extent
+unexercised,  the option will expire and cease to be  exercisable  on August 31,
+2010.
+
+     2.3.2 At Executive's  request, the Company will lend to Executive on a full
+recourse basis an amount equal to the aggregate  exercise price of any shares of
+common stock purchased on exercise of the option described in Section 2.3.1 plus
+the  aggregate  amount of  federal,  state and local  income  taxes  incurred by
+Executive  as a result  of such  exercise.  Any such loan  will  become  due and
+payable to the extent Executive sells or otherwise  disposes of shares of common
+stock  purchased with the loan proceeds and will become due and payable in full,
+without  regard to any such sales,  five years  after the date of the loan.  All
+other  terms and  conditions  of the loan will be  substantially  similar to the
+terms and conditions of loans to key employees in effect from time to time under
+the Company's Management Stock Purchase Loan Program.
+
+3.   EMPLOYEE BENEFITS.
+
+     3.1 EMPLOYEE BENEFIT  PROGRAMS,  PLANS AND PRACTICES.  During the Term, the
+Company will provide Executive and his eligible dependents, subject to the terms
+and conditions of the applicable plans as they may be amended from time to time,
+participation in all  Company-sponsored  employee  benefit plans,  including all
+employee  retirement  income and welfare benefit  policies,  plans,  programs or
+arrangements in which senior  executives of the Company  participate,  including
+the  Company's   health  and  disability   plans,   401(k)  plan  and  voluntary
+nonqualified  deferred  compensation plan, if any such plans are provided by the
+Company,  in a manner commensurate with his position and level of responsibility
+in the Company.
+
+     3.2 VACATION AND FRINGE  BENEFITS.  Executive will be entitled to six weeks
+vacation in accordance with the Company's vacation policy and to fringe benefits
+made  available  to  senior  executives  of the  Company  commensurate  with his
+position and level of responsibility in the Company.
+
+
+
+                                       6
+
+<PAGE>
+
+4. EXPENSES.  During the Term, the Company will promptly reimburse Executive for
+all travel and other business  expenses that  Executive  incurs in the course of
+performing  his  duties  under  this  Agreement  in a manner  commensurate  with
+Executive's  position  and  level  of  responsibility  with the  Company  and in
+accordance with the Company's  policies and rules relating to the  reimbursement
+of such expenses.
+
+5. TERMINATION OF EMPLOYMENT.  The termination of Executive's employment will be
+governed by the following provisions:
+
+     5.1 VOLUNTARY TERMINATION BY EXECUTIVE; DISCHARGE FOR CAUSE.
+
+          5.1.1  During  the  Term,   the  Company  may  terminate   Executive's
+     employment hereunder for Cause (as hereinafter  defined). In the event that
+     during the Term  Executive's  employment  is  terminated by the Company for
+     Cause or by  Executive  other than for Good  Reason (as  defined in Section
+     5.2.1)  or other  than as a  result  of  Executive's  total  and  permanent
+     disability (within the meaning of Section 5.2.1) or death, the Company will
+     pay as soon as  practicable  to  Executive  (i) the earned and unpaid  Base
+     Salary to which  Executive  is  entitled,  pursuant to Section 2.1, and any
+     other compensation  earned but not yet paid through the date of Executive's
+     termination,  which will include any amounts  payable with respect to prior
+     years (collectively, the "Compensation Payments") and (ii) any amounts owed
+     for  accrued  but  unused  vacation  days  (the  "Vacation  Payment"),  and
+     Executive  will be entitled to no other  compensation,  except as otherwise
+     due to him  under  applicable  law or the terms of any  applicable  plan or
+     program and except in settlement of deferred compensation arrangements,  if
+     any, in accordance with their terms. Executive will not be entitled,  among
+     other  things,  to the  payment of any  annual  incentive  compensation  in
+     respect of all or any portion of the fiscal year in which such  termination
+     occurs.
+
+          5.1.2 For purposes of this Agreement, the Company will have "Cause" to
+     terminate  Executive's  employment  hereunder  if (i)  Executive  has  been
+     convicted  by a court of  competent  jurisdiction  of the  commission  of a
+     felony  (other  than  a  traffic  violation  or as a  result  of  vicarious
+     liability), (ii) Executive has willfully and continuously failed to attempt
+     in good faith to perform his duties after written  notice from the Board of
+     such failure, (iii) Executive has willfully failed or refused to attempt in
+     good faith to comply  with a specific  and  proper  directive  of the Board
+     delivered to him in writing,  (iv) Executive engaged in willful  misconduct
+     with regard to the Company that is materially  injurious to the Company, or
+     (v) Executive  has committed a serious  breach of trust in disregard of the
+     Company's  interest or that is  undertaken  for personal  gain.  Any act or
+     failure to act by Executive  will be considered as "willful" if it was done
+     or omitted to be done by him not in good faith, and will exclude any act or
+     failure to act resulting from  Executive's  physical or mental  impairment.
+     Prior to taking any action,  the Board will provide  Executive  with notice
+     and an opportunity  to appear with counsel before a special  meeting of the
+     Board,  and  where  possible,  will  provide  Executive  with a  reasonable
+     opportunity to cure the act or failure to act that is alleged to constitute
+     "Cause."  Such Board action will be taken by a  resolution  duly adopted by
+     the Board.
+
+
+
+                                       7
+
+<PAGE>
+     5.2 INVOLUNTARY TERMINATION.
+
+          5.2.1  During  the  Term,  Executive's  employment  hereunder  may  be
+     terminated  by the Company  for any reason  other than Cause by delivery in
+     accordance  with Section 9.4 to Executive of a notice of termination  and a
+     copy of a resolution duly adopted by the Board; provided, however, that the
+     mere  failure  to  extend  the  Initial  Term  will not be  deemed  to be a
+     termination  of  Executive's  employment.  Executive  will be  treated  for
+     purposes of this Agreement as having been  involuntarily  terminated  other
+     than for Cause if, during the Term,  Executive  dies,  becomes  totally and
+     permanently  disabled (as hereinafter defined) or terminates his employment
+     with the Company  prior to  termination  for Cause for any of the following
+     reasons (each, a "Good Reason"):  (i) the Company's  breach of any material
+     provision of this  Agreement  which has not been cured within 30 days after
+     written  notice to the  Company of such  breach  from  Executive;  (ii) the
+     failure  to elect or  reelect  or  otherwise  to  maintain  Executive  as a
+     director of the Company or as  Chairman or Chief  Executive  Officer of the
+     Company; (iii) a material reduction in Executive's duties, responsibilities
+     or authority;  and (iv) the  relocation of Executive's  principal  place of
+     employment more than 50 miles from the Company's  current executive offices
+     in Salt Lake City,  Utah. For purposes of this Section 5.2,  Executive will
+     be totally and permanently disabled if he is disabled within the meaning of
+     the  Company's  long-term  disability  benefit  plan  or  insurance  policy
+     applicable to Executive and he remains so disabled for a period of at least
+     six months.
+
+          5.2.2 In the event  Executive's  employment is  terminated  during the
+     Term pursuant to Section  5.2.1,  the Company will pay to Executive as soon
+     as practicable (i) the Compensation Payments, (ii) an amount equal to 2 1/2
+     times Executive's Base Salary, (iii) the Vacation Payment,  (iv) the annual
+     incentive compensation under Section 2.2 at the target level of performance
+     in  respect  of  the  fiscal  year  of the  Company  in  which  Executive's
+     termination  occurs,  prorated  for the  number of days  until  Executive's
+     termination during such fiscal year, (v) an amount equal to 2 1/2 times the
+     average annual incentive compensation payment awarded to Executive pursuant
+     to  Section  2.2 for the  three  fiscal  years of the  Company  immediately
+     preceding the fiscal year in which  Executive's  employment is  terminated,
+     and (vi) such payments under  applicable  plans or programs,  including but
+     not limited to those  referred to in Section  3.1,  to which  Executive  is
+     entitled pursuant to the terms of such plans or programs. In addition,  (x)
+     Executive, his spouse and dependents will be entitled to continued medical,
+     dental and other health  benefits under the Company's  health benefit plans
+     or programs in which he  participated  at termination of employment in lieu
+     of COBRA continuation coverage, provided he pays the applicable premium for
+     such  coverage  charged  to  similarly  situated  active  employees  of the
+     Company,   (y)  all  stock  options  remain  exercisable,   to  the  extent
+     exercisable at Executive's termination of employment,  for a period of five
+     years  following the date of  Executive's  termination of employment or, if
+     less,  the  period  ending  on  August  31,  2010,  and  (z)  all  deferred
+     compensation arrangements, if any, will be settled in accordance with their
+     terms.
+
+
+
+                                       8
+
+<PAGE>
+     5.3 CHANGE IN CONTROL.
+
+          5.3.1 For purposes of this  Agreement,  "Change in Control"  means the
+     occurrence during the Term of any of the following events:
+
+               (i) the  acquisition by any  individual,  entity or group (within
+          the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
+          Act of  1934,  as  amended  (the  "Exchange  Act"))  (a  "Person")  of
+          beneficial  ownership  (within the  meaning of Rule 13d-3  promulgated
+          under the Exchange Act) of 20% or more of the combined voting power of
+          the  then  outstanding  voting  securities  ("Voting  Stock")  of  the
+          Company;  provided,  however, that the following acquisitions will not
+          constitute  a Change in Control:  (A) any  issuance of Voting Stock of
+          the  Company  directly  from  the  Company  that  is  approved  by the
+          Incumbent Board (as defined in Section 5.3.1(ii)), (B) any acquisition
+          by the Company of Voting Stock of the Company,  (C) any acquisition of
+          Voting Stock of the Company by any  employee  benefit plan (or related
+          trust) sponsored or maintained by the Company or any subsidiary of the
+          Company,  or (D) any acquisition of Voting Stock of the Company by any
+          Person pursuant to a Business  Combination  that complies with clauses
+          (A), (B) and (C) of Section 5.3.1(iii), or
+
+               (ii) individuals who, as of the date hereof, constitute the Board
+          (the "Incumbent Board"), cease for any reason to constitute at least a
+          majority of the Board; provided, however, that any individual becoming
+          a Director subsequent to the date hereof whose election, or nomination
+          for election by the Company's shareholders,  was approved by a vote of
+          at least  two-thirds of the Directors  then  comprising  the Incumbent
+          Board (either by a specific vote or by approval of the proxy statement
+          of the  Company  in  which  such  person  is named  as a  nominee  for
+          director, without objection to such nomination) will be deemed to have
+          been a member of the Incumbent Board; or
+
+               (iii) consummation of a reorganization,  merger or consolidation,
+          a sale or other  disposition of all or substantially all of the assets
+          of the Company, or other transaction (each, a "Business Combination"),
+          unless, in each case, immediately following such Business Combination,
+          (A) all or substantially  all of the individuals and entities who were
+          the beneficial owners of Voting Stock of the Company immediately prior
+          to such Business Combination beneficially own, directly or indirectly,
+          more than 50% of the  combined  voting  power of the then  outstanding
+          shares of Voting  Stock of the  entity  resulting  from such  Business
+          Combination  (including,  without  limitation,  an  entity  which as a
+          result of such  transaction  owns the Company or all or  substantially
+          all of the  Company's  assets  either  directly or through one or more
+          subsidiaries),  (B) no Person  (other  than the  Company,  such entity
+          resulting from such Business Combination, or any employee benefit plan
+          (or  related  trust)  sponsored  or  maintained  by the  Company,  any
+          subsidiary of the Company or such entity  resulting from such Business
+          Combination) beneficially owns, directly or indirectly, 20% or more of
+          the  combined  voting power of the then  outstanding  shares of Voting
+          Stock of the entity resulting from such Business Combination,  and (C)
+          at least a majority  of the members of the Board of  Directors  of the
+          entity  resulting from such Business  Combination  were members of the
+          Incumbent Board at the time of the execution of the initial  agreement
+          or of the action of the Board providing for such Business Combination;
+          or
+
+               (iv)  approval by the  shareholders  of the Company of a complete
+          liquidation  or  dissolution  of the  Company,  except  pursuant  to a
+          Business  Combination  that  complies with clauses (A), (B) and (C) of
+          Section 5.3.1(iii).
+
+
+
+                                       9
+
+<PAGE>
+
+          5.3.2 If (i) a Change in  Control  occurs  during  the Term,  (ii) the
+     Change in Control has not been  approved by the  Incumbent  Board and (iii)
+     during the  24-month  period  following  the date of the Change in Control,
+     Executive's  employment  is  terminated by the Company for any reason other
+     than  Cause  or by  Executive  for Good  Reason,  the  Company  will pay to
+     Executive the amounts set forth in Section 5.2.2 and will provide Executive
+     with the benefits set forth in such Section,  except that all stock options
+     held by Executive on the date of such  termination  of  employment  will be
+     fully  exercisable  without  regard to the  exercise  schedule set forth in
+     Section 2.3.1 or any applicable stock option agreement.
+
+          5.3.3 If a Change in Control occurs during the Term, and the Change in
+     Control has been approved by the  Incumbent  Board,  801,000  shares of the
+     Company's  common stock  subject to the stock  option  described in Section
+     2.3.1 (or if the  number  of shares  subject  to such  option  that are not
+     immediately  exercisable is less than 801,000 shares, such lesser number of
+     shares) will  immediately  become  exercisable on the date of the Change in
+     Control  without regard to the exercise  schedule set forth in that Section
+     or the vesting  provisions of any applicable  stock option  agreement.  If,
+     during the 24-month  period  following  the date of such Change in Control,
+     Executive's  employment is terminated by the Company for reasons other than
+     Cause or by Executive  for Good  Reason,  the Company will pay to Executive
+     the amounts set forth in Section 5.2.2 and will provide  Executive with the
+     benefits set forth in such Section.
+
+          5.3.4 Anything in this Agreement to the contrary  notwithstanding,  in
+     the event that it is determined (as hereinafter  provided) that any payment
+     (other than the Gross-Up  payments  provided for in this Section  5.3.4 and
+     Annex A) or  distribution  by the Company or any of its  affiliates  or any
+     other person in connection with the Change in Control to or for the benefit
+     of  Executive,  whether  paid or payable or  distributed  or  distributable
+     pursuant  to the terms of this  Agreement  or  otherwise  pursuant to or by
+     reason  of any other  agreement,  policy,  plan,  program  or  arrangement,
+     including without  limitation any stock option, or the lapse or termination
+     of any  restriction  on, or the  vesting  or  exercisability  of, any stock
+     option (a "Payment")  would be subject to the excise tax imposed by Section
+     4999 of the Internal  Revenue Code of 1986, as amended (the "Code") (or any
+     successor  provision  thereto)  or to any  similar  tax imposed by state or
+     local law, or any interest or penalties  with respect to such tax (such tax
+     or taxes,  together with any such interest and penalties,  being  hereafter
+     collectively  referred  to as the "Excise  Tax"),  then  Executive  will be
+     entitled  to receive an  additional  payment or payments  (collectively,  a
+     "Gross-Up  Payment").  The Gross-Up Payment will be in an amount such that,
+     after  payment  by  Executive  of all  taxes  (including  any  interest  or
+     penalties  imposed with respect to such  taxes),  including  any Excise Tax
+     imposed  upon the  Gross-Up  Payment,  Executive  retains  an amount of the
+     Gross-Up  Payment  equal to the Excise Tax imposed  upon the  Payment.  For
+     purposes of determining the amount of the Gross-Up Payment,  Executive will
+     be considered to pay (x) federal income taxes at the highest rate in effect
+     in the year in which the  Gross-Up  Payment  will be made and (y) state and
+     local  income  taxes at the highest rate in effect in the state or locality
+     in which the Gross-Up  Payment  would be subject to state or local tax, net
+     of the maximum  reduction in federal income tax that could be obtained from
+     deduction of such state and local taxes.  The obligations set forth in this
+     Section  5.3.4 will be subject to the  procedural  provisions  described in
+     Annex A.
+
+                                       10
+
+<PAGE>
+
+
+     5.4  NONDUPLICATION OF BENEFITS.  To the extent,  and only to the extent, a
+payment or benefit  that is paid or provided  under this Section 5 would also be
+paid or provided under the terms of any plan, program,  agreement or arrangement
+applicable to Executive, such applicable plan, program, agreement or arrangement
+will be deemed to have been  satisfied by the payment  made or benefit  provided
+under this Agreement.
+
+     5.5  RESIGNATIONS.  Except to the extent  requested by the Board,  upon any
+termination  of  Executive's   employment  with  the  Company,   Executive  will
+immediately  resign all positions and directorships with the Company and each of
+its subsidiaries and affiliates.
+
+     5.6 RELEASE.  The right of Executive  to receive  termination  payments and
+benefits under Section 5.3 is conditioned on (i) the execution by Executive of a
+mutual  general  release in a form  reasonably  satisfactory  to the Company and
+typically used in the context of the  termination  of an executive  officer that
+will provide only for a release of specific  claims  arising out of, or relating
+to, Executive's employment with the Company and will not provide for the release
+of any claims for payments and benefits under this Agreement (or under any other
+plan, policy or arrangement, including equity plans of the Company or any of its
+affiliates in which  Executive  participates or otherwise has rights) and rights
+of indemnification  provided to Executive by the Company and (ii) the expiration
+of any revocation  period  specified in such release.  6. Mitigation and Offset.
+Executive  will not be required to mitigate  the amount of any payment  provided
+for in this  Agreement by seeking other  employment  or otherwise,  nor will any
+profits,  income,  earnings or other benefits from any source  whatsoever create
+any  mitigation,  offset,  reduction  or any  other  obligation  on the  part of
+Executive hereunder or otherwise.
+
+7.   COVENANTS.
+
+     7.1 COMPETITIVE  ACTIVITY.  During the period of Executive's  employment by
+the  Company  and for a period of three years  thereafter,  Executive  will not,
+without the prior written consent of the Company,  which consent may be withheld
+for any reason or no reason,  directly or indirectly  engage in any  Competitive
+Activity.   For  this  purpose,   "Competitive   Activity"   means   Executive's
+participation  in the management of any business  enterprise if such  enterprise
+engages  in  substantial  and  direct  competition  with  the  Company  and such
+enterprise's  sales of any  product or service  competitive  with any product or
+service of the Company  amounted to 10% or more of such  enterprise's  net sales
+for its most  recently  completed  fiscal year and if the Company's net sales of
+said product or service  amounted to 10% or more of the  Company's net sales for
+its most recently completed fiscal year. "Competitive Activity" will not include
+(i) the mere ownership of securities in any such enterprise,  provided, however,
+in the case of publicly-traded enterprises, such ownership does not exceed 5% of
+the outstanding voting securities or units of such enterprise,  and the exercise
+of rights  appurtenant  thereto or (ii)  participation  in the management of any
+such enterprise other than in connection with the competitive operations of such
+enterprise.  The Company will  promptly and in good faith  respond in writing to
+any  request  made  by  Executive  as to  whether  an  activity,  engagement  or
+employment  contemplated  by  Executive  constitutes  Competitive  Activity  for
+purposes of this Agreement.
+
+                                       11
+
+<PAGE>
+
+
+     7.2  CONFIDENTIALITY.  During the Term,  the  Company  agrees  that it will
+disclose to Executive its confidential or proprietary information (as defined in
+this  Section  7.2) to the  extent  necessary  for  Executive  to carry  out his
+obligations to the Company.  Executive  hereby covenants and agrees that he will
+not,  without  the prior  written  consent  of the  Company,  during the Term or
+thereafter  disclose  to any  person  not  employed  by the  Company,  or use in
+connection with engaging in competition  with the Company,  any  confidential or
+proprietary information of the Company. For purposes of this Agreement, the term
+"confidential  or proprietary  information"  will include all information of any
+nature  and in any form that is owned by the  Company  and that is not  publicly
+available  (other than by  Executive's  breach of this Section 7.2) or generally
+known to  persons  engaged  in  businesses  similar  or  related to those of the
+Company.   Confidential  or  proprietary   information  will  include,   without
+limitation,  the Company's  financial matters,  customers,  employees,  industry
+contracts,  strategic business plans,  product development (or other proprietary
+product data),  marketing plans, and all other secrets and all other information
+of a  confidential  or  proprietary  nature.  For purposes of the  preceding two
+sentences,  the term  "Company"  will also include any subsidiary of the Company
+(collectively,  the "Restricted  Group").  The foregoing  obligations imposed by
+this  Section  7.2 will not apply (i)  during  the  Term,  in the  course of the
+business of and for the benefit of the  Company,  (ii) if such  confidential  or
+proprietary  information  has become,  through no fault of Executive,  generally
+known to the public or (iii) if Executive is required by law to make  disclosure
+(after  giving  the  Company   notice  and  an   opportunity   to  contest  such
+requirement).
+
+     7.3 NONSOLICITATION.  Executive hereby covenants and agrees that during the
+Term and for two years thereafter  Executive will not, except in connection with
+his duties  under  this  Agreement,  without  the prior  written  consent of the
+Company on behalf of  Executive  or on behalf of any  person,  firm or  company,
+directly or  indirectly,  attempt to solicit or hire, or assist any other person
+in so soliciting or hiring,  any employee of the Restricted Group, or any person
+who has received an offer of employment  from the Restricted  Group, to give up,
+or to not commence,  employment or a business  relationship  with the Restricted
+Group.
+
+     7.4  ENFORCEMENT.  Executive  and the  Company  agree  that  the  covenants
+contained in Sections 7.1, 7.2 and 7.3 are reasonable  under the  circumstances,
+and further agree that if in the opinion of any court of competent  jurisdiction
+any such  covenant is not  reasonable  in any respect,  such court will have the
+right,  power and  authority to excise or modify any  provision or provisions of
+such  covenants  as to the court will appear not  reasonable  and to enforce the
+remainder of the covenants as so amended. Executive acknowledges and agrees that
+the remedy at law available to the Company for breach of any of his  obligations
+under  Sections  7.1, 7.2 and 7.3 would be inadequate  and that damages  flowing
+from such a breach may not readily be  susceptible to being measured in monetary
+terms.  Accordingly,  Executive  acknowledges,  consents  and  agrees  that,  in
+addition to any other  rights or  remedies  that the Company may have at law, in
+equity or under this Agreement, upon adequate proof of his violation of any such
+provision  of  this  Agreement,  the  Company  will  be  entitled  to  immediate
+injunctive relief and may obtain a temporary order restraining any threatened or
+further breach, without the necessity of proof of actual damage.
+
+                                      12
+
+<PAGE>
+
+
+     7.5 POST-TERMINATION ASSISTANCE. Executive agrees that after his employment
+with the Company has terminated he will provide,  upon reasonable  notice and in
+coordination with his other  activities,  such information and assistance to the
+Company as may  reasonably  be requested by the Company in  connection  with any
+litigation  in which it or any of its  affiliates  is or may  become a party and
+that is  related to a matter  arising  during  the Term of which  Executive  has
+knowledge;  provided, however, that the Company agrees to reimburse Executive on
+an after-tax basis for any related out-of-pocket expenses,  including travel and
+legal expenses.
+
+8.  SURVIVAL.  The  expiration  or  termination  of the Term will not impair the
+rights or  obligations of any party hereto that accrue  hereunder  prior to such
+expiration or  termination,  except to the extent  specifically  stated  herein,
+without  limiting  the  survival  of any other  provisions.  In  addition to the
+foregoing, Executive's covenants contained in Sections 7.1, 7.2, 7.3 and 7.5 and
+the  Company's  obligations  under  Section 5, will  survive the  expiration  or
+termination of this Agreement or of Executive's employment.
+
+9.   MISCELLANEOUS PROVISIONS.
+
+     9.1 BINDING ON SUCCESSORS;  ASSIGNMENT. This Agreement will be binding upon
+and inure to the benefit of the Company,  Executive and each of their respective
+successors,   assigns,   personal   and   legal   representatives,    executors,
+administrators,  heirs,  distributees,  devisees,  and legatees,  as applicable;
+provided,  however,  that neither this  Agreement nor any rights or  obligations
+hereunder will be assignable or otherwise  subject to hypothecation by Executive
+(except by will or by operation of the laws of intestate  succession)  or by the
+Company,  except that the Company may assign  this  Agreement  to any  successor
+(whether by merger,  purchase or otherwise) to all or  substantially  all of the
+stock,  assets or businesses of the Company,  if such successor expressly agrees
+to  assume  the  obligations  of the  Company  hereunder  pursuant  to a written
+agreement delivered to Executive.
+
+     9.2 GOVERNING LAW. This Agreement will be governed, construed,  interpreted
+and  enforced  in  accordance  with the  substantive  laws of the State of Utah,
+without regard to conflicts of law principles.
+
+     9.3  SEVERABILITY.  Any provision of this Agreement that is deemed invalid,
+illegal or unenforceable in any jurisdiction will, as to that  jurisdiction,  be
+ineffective to the extent of such  invalidity,  illegality or  unenforceability,
+without   affecting  in  any  way  the  remaining   provisions  hereof  in  such
+jurisdiction  or  rendering  that or any  other  provisions  of  this  Agreement
+invalid,  illegal, or unenforceable in any other  jurisdiction.  If any covenant
+should  be  deemed  invalid,  illegal  or  unenforceable  because  its  scope is
+considered  excessive,  such  covenant will be modified so that the scope of the
+covenant is reduced only to the minimum extent  necessary to render the modified
+covenant valid, legal and enforceable.
+
+                                       13
+
+<PAGE>
+
+
+     9.4  NOTICES.  For all  purposes  of this  Agreement,  all  communications,
+including without limitation notices, consents, requests or approvals,  required
+or permitted to be given hereunder will be in writing and will be deemed to have
+been duly  given when hand  delivered  or  dispatched  by  electronic  facsimile
+transmission (with receipt thereof confirmed),  or upon actual receipt if mailed
+by United States mail or sent by overnight  courier service and addressed to the
+Company (to the  attention of the  Secretary  of the  Company) at its  principal
+executive office and to Executive at his principal  residence,  or to such other
+address  as any  party  may  have  furnished  to the  other  in  writing  and in
+accordance herewith.
+
+     9.5 COUNTERPARTS.  This Agreement may be executed in several  counterparts,
+each of which will be deemed to be an original,  but all of which  together will
+constitute one and the same Agreement.
+
+     9.6  ENTIRE  AGREEMENT.  Except  as  provided  in  the  Change  in  Control
+Agreement,  the terms of this  Agreement  are  intended by the parties to be the
+final  expression of their  agreement with respect to Executive's  employment by
+the  Company  and  may  not  be   contradicted  by  evidence  of  any  prior  or
+contemporaneous  agreement.  The parties further intend that this Agreement will
+constitute  the  complete  and  exclusive  statement  of its  terms  and that no
+extrinsic evidence whatsoever may be introduced in any judicial,  administrative
+or other legal proceeding to vary the terms of this Agreement.
+
+     9.7 AMENDMENTS;  WAIVERS.  This Agreement may not be modified,  amended, or
+terminated  except by an  instrument  in  writing,  approved  by the Company and
+signed by  Executive  and the  Company.  Failure on the part of either  party to
+complain of any action or  omission,  breach or default on the part of the other
+party,  no matter how long the same may  continue,  will never be deemed to be a
+waiver of any rights or remedies  hereunder,  at law or in equity.  Executive or
+the Company may waive  compliance  by the other party with any provision of this
+Agreement  that such other party was or is  obligated  to comply with or perform
+only through an executed writing;  provided,  however, that such waiver will not
+operate as a waiver of, or estoppel  with  respect  to, any other or  subsequent
+failure.
+
+     9.8 NO INCONSISTENT  ACTIONS. The parties will not voluntarily undertake or
+fail to undertake any action or course of action that is  inconsistent  with the
+provisions or essential intent of this Agreement.  Furthermore, it is the intent
+of the parties hereto to act in a fair and reasonable manner with respect to the
+interpretation and application of the provisions of this Agreement.
+
+     9.9 HEADINGS AND SECTION  REFERENCES.  The headings used in this  Agreement
+are  intended  for  convenience  or  reference  only and will not in any  manner
+amplify,   limit,   modify  or  otherwise  be  used  in  the   construction   or
+interpretation of any provision of this Agreement. All section references are to
+sections of this Agreement, unless otherwise noted.
+
+                                       14
+
+<PAGE>
+
+     9.10  BENEFICIARIES.  Executive will be entitled to select (and change,  to
+the extent permitted under any applicable law) a beneficiary or beneficiaries to
+receive any  compensation or benefit  payable  hereunder  following  Executive's
+death,  including  severance payments,  and may change such election,  in either
+case by giving the Company written notice  thereof.  In the event of Executive's
+death  or a  judicial  determination  of his  incompetence,  reference  in  this
+Agreement to "Executive" will be deemed, where appropriate,  to his beneficiary,
+estate or other legal representative.
+
+     9.11 WITHHOLDING. The Company will be entitled to withhold from payment any
+amount of withholding required by law.
+
+     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
+and year first above written.
+
+                         FRANKLIN COVEY CO.
+
+
+
+                         By:
+                                ----------------------------------------------
+                                Name:
+                                       ---------------------------------------
+                                Title:
+                                        --------------------------------------
+
+
+                         EXECUTIVE
+
+
+
+                                ----------------------------------------------
+                                Robert A. Whitman
+
+
+
+
+                                   15
+<PAGE>
+
+
+                                                                      ANNEX A
+
+                    EXCISE TAX GROSS-UP PROCEDURAL PROVISIONS
+
+
+     (1) Subject to the provisions of Paragraph (5) hereof,  all  determinations
+required to be made under Section 5.3.4 and Annex A, including whether an Excise
+Tax is payable by  Executive  and the  amount of such  Excise Tax and  whether a
+Gross-Up  Payment is  required to be paid by the  Company to  Executive  and the
+amount of such Gross-Up Payment, if any, will be made by a nationally recognized
+accounting  firm (the  "National  Firm")  selected  by the  Company  in its sole
+discretion,  which National Firm may be the Company's independent auditors.  The
+Company will direct the National Firm to submit its  determination  and detailed
+supporting  calculations  to both the Company and  Executive  within 60 calendar
+days after the date of Executive's termination of employment, and any such other
+time or times as may be requested by the Company or  Executive.  If the National
+Firm  determines  that any Excise Tax is payable by Executive,  the Company will
+pay the required  Gross-Up  Payment to Executive within five business days after
+receipt of such  determination  and calculations  with respect to any Payment to
+Executive.  If the  National  Firm  determines  that no Excise Tax is payable by
+Executive with respect to any material  benefit or amount (or portion  thereof),
+it will,  at the same time as it makes such  determination,  furnish the Company
+and Executive  with an opinion that Executive has  substantial  authority not to
+report any Excise Tax on his federal,  state or local income or other tax return
+with respect to such benefit or amount.  As a result of the  uncertainty  in the
+application  of  Section  4999  of the  Code  and  the  possibility  of  similar
+uncertainty  regarding  applicable  state  or  local  tax law at the time of any
+determination  by the National  Firm  hereunder,  it is possible  that  Gross-Up
+Payments  that will not have been made by the Company  should have been made (an
+"Underpayment"), consistent with the calculations required to be made hereunder.
+In the event that the Company exhausts or fails to pursue its remedies  pursuant
+to Paragraph (5) hereof and  Executive  thereafter is required to make a payment
+of any Excise Tax,  Executive  will direct the National  Firm to  determine  the
+amount of the Underpayment that has occurred and to submit its determination and
+detailed  supporting  calculations to both the Company and Executive as promptly
+as possible.  Any such  Underpayment will be promptly paid by the Company to, or
+for the benefit of,  Executive  within five  business days after receipt of such
+determination and calculations.
+
+     (2) The Company and Executive will each provide the National Firm access to
+and copies of any books,  records and documents in the possession of the Company
+or Executive, as the case may be, reasonably requested by the National Firm, and
+otherwise  cooperate with the National Firm in connection  with the  preparation
+and issuance of the  determinations  and calculations  contemplated by Paragraph
+(1)  hereof.  Any  determination  by the  National  Firm as to the amount of the
+Gross-Up Payment will be binding upon the Company and Executive.
+
+     (3) The  federal,  state and local  income  or other tax  returns  filed by
+Executive   will  be  prepared  and  filed  on  a  consistent   basis  with  the
+determination  of the  National  Firm with  respect to the Excise Tax payable by
+Executive.  Executive  will report and make proper  payment of the amount of any
+Excise Tax, and at the request of the  Company,  provide to the Company true and
+
+
+
+                                       16
+
+<PAGE>
+
+correct  copies (with any  amendments) of his federal income tax return as filed
+with the Internal Revenue Service and corresponding  state and local tax returns
+(with any irrelevant portions of such returns to be redacted),  if relevant,  as
+filed with the applicable taxing authority,  and such other documents reasonably
+requested by the Company,  evidencing  such  payment.  If prior to the filing of
+Executive's  federal  income tax  return,  or  corresponding  state or local tax
+return,  if  relevant,  the  National  Firm  determines  that the  amount of the
+Gross-Up Payment should be reduced, Executive will within five business days pay
+to the Company the amount of such reduction.
+
+     (4) The  fees  and  expenses  of the  National  Firm  for its  services  in
+connection with the  determinations  and calculations  contemplated by Paragraph
+(1) hereof will be borne by the Company.
+
+     (5)  Executive  will  notify  the  Company  in  writing of any claim by the
+Internal  Revenue  Service or any other taxing  authority  that, if  successful,
+would  require  the  payment  by  the  Company  of  a  Gross-Up  Payment.   Such
+notification  will be given as  promptly  as  practicable  but no later  than 10
+business  days  after  Executive  actually  receives  notice  of such  claim and
+Executive  will further  apprise the Company of the nature of such claim and the
+date on which such claim is  requested  to be paid (in each case,  to the extent
+known by  Executive).  Executive will not pay such claim prior to the expiration
+of the  30-calendar-day  period following the date on which he gives such notice
+to the Company or, if earlier,  the date that any payment of amount with respect
+to such claim is due. If the Company notifies  Executive in writing prior to the
+expiration of such period that it desires to contest such claim, Executive will:
+
+          (A) provide the Company  with any written  records or documents in his
+     possession relating to such claim reasonably requested by the Company;
+
+          (B) take such action in connection  with  contesting such claim as the
+     Company reasonably requests in writing from time to time, including without
+     limitation  accepting legal representation with respect to such claim by an
+     attorney competent in respect of the subject matter and reasonably selected
+     by the Company;
+
+          (C) cooperate  with the Company in good faith in order  effectively to
+     contest such claim; and
+
+          (D) permit the Company to participate in any  proceedings  relating to
+     such claim;
+
+provided,  however,  that the Company  will bear and pay  directly all costs and
+expenses  (including  interest and penalties)  incurred in connection  with such
+contest and will indemnify and hold harmless  Executive,  on an after-tax basis,
+for and against any Excise Tax or income or other tax,  including  interest  and
+penalties with respect thereto,  imposed as a result of such  representation and
+payment of costs and expenses. Without limiting the foregoing provisions of this
+Paragraph (5), the Company will control all proceedings taken in connection with
+the contest of any claim  contemplated  by this  Paragraph  (5) and, at its sole
+option,  may pursue or forego any and all administrative  appeals,  proceedings,
+hearings  and  conferences  with the taxing  authority  in respect of such claim
+
+
+
+                                       17
+
+<PAGE>
+
+
+(provided,  however,  that Executive may participate therein at his own cost and
+expense) and may, at its option,  either direct Executive to pay the tax claimed
+and sue for a refund  or  contest  the  claim  in any  permissible  manner,  and
+Executive  agrees to  prosecute  such  contest  to a  determination  before  any
+administrative  tribunal,  in a court of initial jurisdiction and in one or more
+appellate  courts, as the Company  determines;  provided,  however,  that if the
+Company  directs  Executive  to pay the tax  claimed  and sue for a refund,  the
+Company will advance the amount of such payment to Executive on an interest-free
+basis and will indemnify and hold  Executive  harmless,  on an after-tax  basis,
+from any Excise Tax or income or other tax, including interest or penalties with
+respect  thereto,  imposed with respect to such advance;  and provided  further,
+however, that any extension of the statute of limitations relating to payment of
+taxes for the taxable  year of  Executive  with  respect to which the  contested
+amount  is  claimed  to be due is  limited  solely  to  such  contested  amount.
+Furthermore,  the Company's  control of any such contested claim will be limited
+to issues with respect to which a Gross-Up  Payment  would be payable  hereunder
+and  Executive  will be entitled  to settle or contest,  as the case may be, any
+other  issue  raised  by  the  Internal  Revenue  Service  or any  other  taxing
+authority.
+
+     (6) If, after the receipt by Executive of an amount advanced by the Company
+pursuant to Paragraph (5) hereof,  Executive receives any refund with respect to
+such  claim,  Executive  will  (subject  to the  Company's  complying  with  the
+requirements of Paragraph (5) hereof)  promptly pay to the Company the amount of
+such refund (together with any interest paid or credited thereon after any taxes
+applicable  thereto),  less  any  taxes  Executive  is  required  to pay on such
+account. If, after the receipt by Executive of an amount advanced by the Company
+pursuant to Paragraph (5) hereof,  a determination is made that Executive is not
+entitled  to any refund  with  respect to such  claim and the  Company  does not
+notify Executive in writing of its intent to contest such denial or refund prior
+to the  expiration  of 30  calendar  days  after such  determination,  then such
+advance will be forgiven and will not be required to be repaid and the amount of
+any such  advance  will offset,  to the extent  thereof,  the amount of Gross-Up
+Payment  required  to be paid by the  Company to  Executive  pursuant to Section
+5.3.4 and this Annex A.
+
+
+
+
+                                       18
+
+<PAGE>
+
+</TEXT>
+</DOCUMENT>
+</SEC-DOCUMENT>
+-----END PRIVACY-ENHANCED MESSAGE-----