Earn Out Agreement

Exhibit 10.2

EARN OUT AGREEMENT

This Agreement is made by and among the parties listed below and is effective as of the Effective Date as set forth below.

Parties :

Franklin Electronic Publishers, Inc., a company established and existing under the laws of Pennsylvania (USA), with its principal place of business at One Franklin Plaza, Burlington, New Jersey 08016-4907 (USA) (" Franklin" );

Mr. Hans Kreutzfeldt born on January 30, 1942, resident at Am Hasenkamp 33, 22457 Hamburg, Germany (" HK" ); Ms. Nina Kreutzfeldt, born on December 5, 1971, resident at Stresemannstradfe 332, 22761 Hamburg, Germany (" NK" ); Mr. Simon Kreutzfeldt, born on October 7, 1974, resident at Spanische Furt 21, 22459 Hamburg, Germany (" SK" ). (HK, NK, and SK are collectively referred to herein as the " Sellers" ).

The Effective Date is the date that that Agreement concerning the sale and assignment of shares in a GmbH (limited liability company) (" Share Purchase Agreement" ) between the parties concerning the sale and assignment to Franklin of all shares in Kreutzfeldt Electronic Publishing GmbH (" KEP" ) (in which company all shares are held by the Sellers) is properly executed and delivered.

Background : The parties intend to enter into the Share Purchase Agreement by which Franklin will obtain ownership of all shares of KEP from Sellers. This Agreement is intended to set forth the terms and conditions under which Franklin shall provide consideration to Sellers for the transfer of such shares in addition to that set forth in the Share Purchase Agreement, which additional consideration shall depend (i) on the realization of certain cost savings by Franklin in its business that are expected by reason of its acquisition of KEP and (ii) on the earnings of KEP on a going forward basis as a wholly owned subsidiary of Franklin.

Terms and Conditions : 1. Definitions:

a. Annual Savings means the difference between (i) the Base Amount and (ii) the sum of (x) the aggregate amount due from Franklin to KEP for data conversion services, including data conversion Quality Assurance services, rendered in a Calendar Year, (y) Franklin' s personnel costs (salaries plus fringe benefits) for data services in such Calendar Year, which amount shall not include personnel costs of Franklin' s Quality Assurance Department, and (z) any other out of pocket costs relating to data services expended by Franklin in such Calendar Year, such as, but without limitation, any third party consulting fees or travel expenses.

b. Base Amount means $780,118; provided, however, that such amount may be decreased or increased for a Calendar Year as follows: (a) in a Calendar Year in which Franklin completes or has completed for it more than thirty (30) data services projects (these projects do not include any work for mmc-cards) the Base Amount shall be increased by $26,000 for each data services project so completed in excess of thirty (30) such projects; or b) in any Calendar Year in which Franklin completes or has completed for it fewer than thirty (30) data services projects, the Base Amount shall be decreased by the product of (x) $26,000 and (y) the difference between thirty (30) and the number of such projects completed by of for Franklin in such calendar year.

c. Calendar Year means the calendar year beginning January 1, 2007 or the calendar year beginning January 1, 2008 and Calendar Years means both such years.

d. Earn Out Period means the period beginning on 1 April 2007 and running through March 31, 2017, except if one of the Kreutzfeldts voluntarily terminates his employment contract or it is terminated for good cause (except for health reaso ...