<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[X] Definitive Proxy Statement RULE 14C-5(D)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Franklin Electronic Publishers, Inc.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Franklin Electronic Publishers, Inc.
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
(2) Aggregate number of securities to which transaction applies:
N/A
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
N/A
(4) Proposed maximum aggregate value of transaction:
N/A
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
N/A
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
FRANKLIN ELECTRONIC PUBLISHERS, INCORPORATED
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------
The annual meeting of shareholders of FRANKLIN ELECTRONIC PUBLISHERS,
INCORPORATED (the "Company"), a Pennsylvania corporation, will be held at the
offices of The Chase Manhattan Corporation, 270 Park Avenue, 11th Floor Room
A, New York, New York, on Wednesday, July 24, 1996, at 10:00 A.M., for the
following purposes:
(1) To elect nine directors of the Company to serve for a term of one
year;
(2) To consider and act upon a proposal to approve an amendment to the
Company's 1988 Stock Option Plan providing for the grant of options to non-
employee directors of the Company who perform services for the Company and
who are not members of the Stock Option and Compensation Committee;
(3) To ratify the appointment of auditors of the Company to serve until
the next annual meeting of shareholders; and
(4) To consider and act upon such other matters as may properly come
before the meeting.
Only shareholders of record at the close of business on June 14, 1996 are
entitled to vote at the meeting.
You are requested to fill in, date and sign the enclosed proxy, which is
solicited by the Board of Directors of the Company, and to mail it promptly in
the enclosed envelope.
By order of the Board of Directors,
GREGORY J. WINSKY,
Secretary
Burlington, New Jersey
June 24, 1996
<PAGE>
FRANKLIN ELECTRONIC PUBLISHERS, INCORPORATED
----------------
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
JULY 24, 1996
----------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of FRANKLIN ELECTRONIC PUBLISHERS,
INCORPORATED (the "Company") to be used at the annual meeting of shareholders
of the Company which will be held at the offices of The Chase Manhattan
Corporation, 270 Park Avenue, 11th Floor Room A, New York, New York, on
Wednesday, July 24, 1996, at 10:00 A.M., and at any adjournments thereof.
Shareholders who execute proxies retain the right to revoke them at any time
by notice in writing to the Secretary of the Company, by revocation in person
at the meeting or by presenting a later dated proxy. Unless so revoked, the
shares represented by proxies will be voted at the meeting. The shares
represented by the proxies solicited by the Board of Directors of the Company
will be voted in accordance with the directions given therein. Shareholders
vote at the meeting by casting ballots (in person or by proxy) which are
tabulated by a person who is appointed by the Board of Directors before the
meeting to serve as inspector of election at the meeting and who has executed
and verified an oath of office. Abstentions and broker "non-votes" are
included in the determination of the number of shares present at the meeting
for quorum purposes but broker "non-votes" are not counted in the tabulations
of the votes cast on proposals presented to shareholders. A broker "non-vote"
occurs when a nominee holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary voting
power with respect to that item and has not received instructions from the
beneficial owner. There are no proposals at this meeting which involve broker
non-votes.
The principal executive offices of the Company are located at One Franklin
Plaza, Burlington, New Jersey 08016-4907. The approximate date on which this
Proxy Statement and the enclosed form of proxy were first sent or given to
shareholders is June 28, 1996.
Shareholders of record at the close of business on June 14, 1996 will be
entitled to one vote for each share of common stock, no par value (the "Common
Stock"), of the Company then held. There were outstanding on such date
7,888,231 shares of Common Stock.
ELECTION OF DIRECTORS
Nine directors will be elected at the meeting for a term of one year and
until their respective successors shall have been elected and shall qualify.
The election of directors requires the affirmative vote of a plurality of the
shares of Common Stock present in person or by proxy at the meeting. EACH
PROXY RECEIVED WILL BE VOTED FOR THE ELECTION OF THE NOMINEES NAMED BELOW
UNLESS OTHERWISE SPECIFIED IN THE PROXY. At this time, the Board of Directors
of the Company knows of no reason why any nominee might be unable to serve.
There are no arrangements or understandings between any director or nominee
and any other person pursuant to which such person was selected as a director
or nominee, except that the Company has agreed, pursuant to the terms of the
employment agreement between the Company and Morton E. David, to nominate Mr.
David for election to the Board of Directors.
<PAGE>
<TABLE>
<CAPTION>
YEAR
BECAME A
NAME OF NOMINEE PRINCIPAL OCCUPATION AGE DIRECTOR
--------------- -------------------- --- --------
<C> <S> <C> <C>
Edward H. Cohen............. Partner, Rosenman & Colin LLP 57 1987
Morton E. David............. Chairman of the Board and 59 1984
Chief Executive Officer of the
Company
Bernard Goldstein........... Managing Director, Broadview 65 1989
Associates, L.P.
Leonard M. Lodish........... Professor of Marketing, Wharton 52 1987
School of the University
of Pennsylvania
Howard L. Morgan............ President, Arca Group, Inc. 50 1981
Jerry R. Schubel............ President, New England Aquarium 60 1991
James H. Simons............. Chairman of the Board, 58 1981
Renaissance
Technologies Corp.
Michael R. Strange.......... Executive Vice President of the 48 1984
Company
William H. Turner........... Vice Chairman, 56 1994
The Chase Manhattan Bank
</TABLE>
No family relationship exists between any director and executive officer of
the Company.
Mr. Cohen is, and for more than the past five years has been, a partner in
the New York City law firm of Rosenman & Colin LLP. Mr. Cohen is a director of
Phillips-Van Heusen Corporation. See "Certain Relationships and Related
Transactions."
Mr. David joined the Company in May 1984 as Chairman of the Board of
Directors and Chief Executive Officer. He is a director of Standard Motor
Products, Inc., a supplier of automotive parts.
Mr. Goldstein is, and for more than the past five years has been, managing
director of Broadview Associates, L.P., an investment banking firm that
provides services to the information technology industry. He is a director of
Apple Computer, Inc., SPSS, Inc., a statistical software firm, Enterprise
Systems, Inc., a provider of health care information services to hospitals,
and Sungard Data Systems, Inc., a company that provides disaster recovery and
financial information services. See "Certain Relationships and Related
Transactions."
Mr. Lodish is the Samuel R. Harrell Professor of Marketing at the Wharton
School of the University of Pennsylvania. He has been a Professor of Marketing
since 1976, and was Chairman of the Marketing Department of the Wharton School
from 1984 to 1988. He is a director of Information Resources, Inc., a
marketing research and decision support systems firm, Bogen Communications
International, Inc., a manufacturer of electronic products, and J&J Snack
Foods, Inc., a producer and marketer of specialty foods.
Mr. Morgan is, and for more than the past five years has been, President of
Arca Group, Inc., a consulting and investment management firm. He is a
director of Quarterdeck Corp., a software company, Integrated Circuit Systems,
Inc., a semiconductor manufacturer, Unitronix Corp., a software supplier, HDS
Network Systems, Inc., a provider of network terminals, Cylink Corp., a
developer of software for secure communications, Segue Software, Inc., a
developer of automated software systems, Infonautics Corp., a provider of
online information, Kentek Information Systems, Inc., a manufacturer of laser
printers, and Metatools Inc., a developer of computer graphics software. See
"Certain Relationships and Related Transactions."
Mr. Schubel became President and Chief Executive Officer of New England
Aquarium in 1994. From 1974 to 1994, Mr. Schubel was the Director of the
Marine Sciences Research Center of the State University of New York at
Stonybrook, New York.
2
<PAGE>
Mr. Simons has been Chairman of the Board and President of Renaissance
Technologies Corp., an investment advisory firm, since 1982. He is also
Chairman of the Board, President and the sole shareholder of Renaissance
Ventures Ltd., an investment advisory firm. Mr. Simons is a director of Numar
Corp., a manufacturer of nuclear magnetic resonance oil well logging tools,
Kentek Information Systems, Cylink Corp., and Segue Software, Inc. See
"Certain Relationships and Related Transactions."
Mr. Strange has been Executive Vice President of the Company since 1985.
Mr. Turner is Vice Chairman of The Chase Manhattan Bank. For more than the
past thirty years, Mr. Turner has held a variety of positions at Chemical
Banking Corporation prior to its merger with Chase Manhattan Bank. Mr. Turner
is a director of Standard Motor Products, Inc.
The Board of Directors of the Company has two standing committees: an Audit
Committee, consisting of Messrs. Simons, Cohen and Turner; and a Stock Option
and Compensation Committee (the "Compensation Committee"), consisting of
Messrs. Simons, Cohen, Goldstein and Morgan. The Audit Committee is charged
with recommending annually to the Board of Directors the independent auditors
to be retained by the Company, reviewing the audit plan with the auditors and
reviewing the results of the audit with the officers of the Company and its
auditors. The Audit Committee held two meetings during the fiscal year ended
March 31, 1996. The Compensation Committee is charged with administering the
Company's 1988 Employee Stock Option Plan (the "Option Plan") and fixing the
compensation, including salaries and bonuses, of all officers of the Company.
The Compensation Committee held two meetings during the fiscal year ended
March 31, 1996.
During the fiscal year ended March 31, 1996, there were four regularly
scheduled meetings of the Board of Directors and no special meetings. Each of
the directors attended at least 75 percent of the aggregate number of meetings
of the Board and of any Committees of the Board on which he serves except Mr.
Richard E. Snyder (who is not standing for re-election) who attended 50% of
the Board meetings.
The Company will consider for election to the Board of Directors a nominee
recommended by a shareholder if the recommendation is made in writing and
includes (i) the qualifications of the proposed nominee to serve on the Board
of Directors, (ii) the principal occupation and employment of the proposed
nominee during the past five years, (iii) each directorship currently held by
the proposed nominee and (iv) a statement that the proposed nominee has
consented to the nomination. The recommendation should be addressed to the
Secretary of the Company.
3
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Common Stock as of June 14, 1996 by (i) all those known by the Company
to be the beneficial owners of more than five percent of the Common Stock,
(ii) all directors and nominees for director, (iii) each executive officer of
the Company named in the Summary Compensation Table on page 6 hereof and (iv)
all executive officers and directors of the Company as a group. Unless
otherwise indicated, each of the shareholders has sole voting and investment
power with respect to the shares listed as beneficially owned by such
shareholder.
<TABLE>
<CAPTION>
AMOUNT
BENEFICIALLY PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED CLASS
- ------------------------------------ ------------ ----------
<S> <C> <C>
Bermuda Trust Company Ltd., Trustee(1).................. 1,260,000 15%
Front Street
Hamilton, Bermuda
Morton E. David(2)...................................... 394,978 5%
Franklin Electronic Publishers, Inc.
One Franklin Plaza
Burlington, New Jersey 08016
Michael R. Strange...................................... 45,475 *
Franklin Electronic Publishers, Inc.
One Franklin Plaza
Burlington, New Jersey 08016
Howard L. Morgan(3)..................................... 43,250 *
Arca Group, Inc.
764 Mt. Moro Road
Villanova, Pennsylvania 19085
James H. Simons(4)...................................... 41,555 *
Renaissance Technologies Corp.
800 Third Avenue
New York, New York 10022
Bernard Goldstein....................................... 32,308 *
Broadview Associates, L.P.
1 Bridge Plaza
Ft. Lee, New Jersey 07024
Edward H. Cohen......................................... 31,503 *
Rosenman & Colin LLP
575 Madison Avenue
New York, New York 10022
Leonard M. Lodish....................................... 31,000 *
The Wharton School
University of Pennsylvania
Philadelphia, Pennsylvania 19022
Jerry R. Schubel........................................ 30,047 *
New England Aquarium
Central Wharf
Boston, Massachusetts 02110
William H. Turner....................................... 10,500 *
Chemical Banking Corporation
270 Park Avenue
New York, New York 10017
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
AMOUNT
BENEFICIALLY PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED CLASS
- ------------------------------------ ------------ ----------
<S> <C> <C>
Richard E. Snyder(5)................................... 6,250 *
Golden Books Family Entertainment, Inc.
850 Third Avenue
New York, New York 10022
Gregory J. Winsky...................................... 53,533 *
Franklin Electronic Publishers, Inc.
One Franklin Plaza
Burlington, New Jersey 08016
Kenneth H. Lind........................................ 37,816 *
Franklin Electronic Publishers, Inc.
One Franklin Plaza
Burlington, New Jersey 08016
Michael Kemp........................................... 26,332 *
Franklin Electronic Publishers (UK) Ltd.
7 Windmill Business Village
Sunbury-on-Thames
Middlesex, TW16 7DY
United Kingdom
All executive officers and directors as a group (15
persons).............................................. 823,345 10%
</TABLE>
- --------
*less than 1%
(1) Held by Bermuda Trust Company Ltd. as trustee of a trust of which James H.
Simons and members of his immediate family are beneficiaries. Includes
92,305 shares which that trust has a right to acquire within sixty days
upon the exercise of warrants.
(2) Includes 77,200 shares owned by certain trusts for Mr. David's children
over which Mr. David has investment power and 7,692 shares which two of
such trusts have the right to acquire within sixty days upon the exercise
of warrants. Also includes 3,846 shares which a trust for Mr. David's
benefit has the right to acquire within sixty days upon the exercise of
warrants.
(3) Includes 5,250 shares held for the benefit of Mr. Morgan's children.
(4) Includes 7,851 shares held by or for the benefit of members of Mr. Simons'
immediate family and 53 shares held by Renaissance Ventures Ltd., of which
Mr. Simons is the chairman and sole shareholder. Also includes 7,692
shares which may be acquired upon the exercise of warrants held for the
benefit of members of Mr. Simons' immediate family, which warrants are
exercisable within sixty days.
(5) Richard E. Snyder will not stand for re-election as a director at the
meeting.
The foregoing table also includes shares which the following directors have
the right to acquire within sixty days upon the exercise of options: Mr.
David, 11,111 shares; Mr. Strange, 29,999 shares; Mr. Morgan, 6,000 shares;
Mr. Simons, 25,959 shares; Mr. Goldstein, 15,959 shares; Mr. Cohen, 25,959
shares; Mr. Lodish, 6,000 shares; Mr. Schubel, 15,959 shares; and Mr. Turner,
7,500 shares. The foregoing table also includes shares which the following
directors have the right to acquire within sixty days upon the exercise of
warrants: Mr. David, 46,152 shares; and Mr. Cohen, 1,538 shares. The foregoing
table also includes 105,663 shares which all executive officers who are not
directors, as a group, have the right to acquire within sixty days upon the
exercise of options.
Based upon a review of the filings furnished to the Company pursuant to Rule
16a-3(e) promulgated under the Securities Exchange Act of 1934 and on
representations from its executive officers and directors and persons who
beneficially own more than 10 percent of the Common Stock, all filing
requirements of Section 16(a) of the Securities Exchange Act of 1934 were
complied with in a timely manner during the fiscal year ended March 31, 1996.
5
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes all plan and non-plan compensation awarded
to, earned by, or paid to the Company's chief executive officer and its four
most highly compensated executive officers, other than the chief executive
officer (together, the "Named Executive Officers"), who were serving as
executive officers of the Company or one of its subsidiaries or divisions
during and at the end of the Company's last fiscal year, for services rendered
in all capacities to the Company and its subsidiaries for each of the
Company's last three fiscal years:
<TABLE>
<CAPTION>
ANNUAL LONG-TERM ALL OTHER
COMPENSATION COMPENSATION COMPENSATION
------------------------- ------------ ------------
AWARDS
OTHER ------------
ANNUAL SECURITIES
COMPEN- UNDERLYING
SALARY BONUS SATION OPTIONS
NAME AND PRINCIPAL POSITION YEAR $ $ $ # $
- --------------------------- ---- -------- -------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Morton E. David(1)....... 1996 $550,000 $363,478 $20,000 100,000 $65,570
Chairman and 1995 500,000 284,000 20,000 0 68,050
Chief Executive Officer 1994 450,000 186,096 20,000 0 10,530
Michael R. Strange....... 1996 175,000 70,000 0 8,000 0
Executive Vice 1995 162,500 65,000 0 8,000 0
President 1994 155,000 60,000 0 12,000 0
Gregory J. Winsky........ 1996 172,500 70,000 0 6,000 0
Senior Vice President 1995 162,500 65,000 0 8,000 0
1994 155,000 60,000 0 12,000 0
Kenneth H. Lind.......... 1996 170,000 70,000 0 8,000 0
Vice President, 1995 157,500 65,000 0 8,000 0
Finance, and Treasurer 1994 150,000 60,000 0 12,000 0
Michael Kemp(2).......... 1996 158,969 80,000 0 8,000 5,637
Managing Director 1995 147,160 75,000 0 19,000 5,600
Franklin Electronic 1994 101,745 75,000 0 10,000 5,418
Publishers (Europe) Ltd.
</TABLE>
- --------
(1) In May 1993, the Company purchased Mr. David's house for a price of
$925,000. See "Employment Contracts, Termination of Employment and Change-
in-Control Arrangements." The Other Annual Compensation amounts represent
payments made in connection with relocation. The All Other Compensation
amount for the 1994 fiscal year represents payment of insurance premiums
for life insurance. The All Other Compensation amount for the 1995 fiscal
year represents payment of insurance premiums for life insurance and
$56,000 accrued by the Company in respect of post-retirement payments to
be made to Mr. David pursuant to the terms of his employment agreement.
Such amount represents one-tenth of the $560,000 accrued by the Company in
fiscal 1995 in respect of such payments for the ten years of Mr. David's
employment by the Company. The All Other Compensation amount for the 1996
fiscal year represents payment of insurance premiums for life insurance,
and $55,520 of pension accrual to be made to Mr. David pursuant to the
terms of his employment agreement.
(2) The All Other Compensation amounts represent payment of insurance premiums
for life insurance and payments in connection with retirement benefits.
No stock appreciation rights, long-term restricted stock awards or long-term
incentive plan payouts (as defined in the proxy regulations of the Securities
and Exchange Commission) were awarded to, earned by, or paid to the Named
Executive Officers during any of the Company's last three fiscal years.
6
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to grants of stock
options to purchase Common Stock pursuant to the Option Plan granted to the
Named Executive Officers during the fiscal year ended March 31, 1996.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------
POTENTIAL
REALIZABLE VALUE
PERCENT OF AT ASSUMED ANNUAL
NUMBER OF TOTAL RATES STOCK PRICE
SECURITIES OPTIONS APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM
OPTIONS EMPLOYEES EXERCISE EXPIRA- -------------------------
GRANTED(1) IN FISCAL PRICE TION 5% 10%
NAME # YEAR $/SH DATE $ $
- ---- ---------- ---------- -------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Morton E. David......... 100,000 44.8% $27.75 4/10/2005 $ 1,745,183 $ 4,422,635
Michael R. Strange...... 8,000 3.6% 27.75 4/10/2005 139,615 353,811
Gregory J. Winsky....... 6,000 2.7% 27.75 4/10/2005 104,711 265,358
Kenneth H. Lind......... 8,000 3.6% 27.75 4/10/2005 139,615 353,811
Michael Kemp............ 8,000 3.6% 27.75 4/10/2005 139,615 353,811
All Shareholders(2)..... 121,750,687 308,540,144
</TABLE>
- --------
(1) Options with respect to one-third of the shares become exercisable on each
of the first, second and third anniversaries of the date of grant except
for the option granted to Mr. David, which is exercisable with respect to
up to 11,111, 33,333, 66,666, 88,888 and 100,000 shares on the first,
second, third, fourth and fifth anniversaries, respectively, of the date
of the grant.
(2) These figures were calculated assuming that the price of the 7,861,715
shares of Common Stock outstanding on March 31, 1996 increased from
$24.625 per share at compound rates of 5% and 10% per year for ten years.
The purpose of including this information is to indicate the potential
realizable value at the assumed annual rates of stock price appreciation
for the option term for all of the Company's shareholders.
AGGREGATE OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information with respect to each exercise of
stock options during the fiscal year ended March 31, 1996 by the Named
Executive Officers and the value at March 31, 1996 of unexercised stock
options held by the Named Executive Officers.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS IN-THE-MONEY
SHARES ACQUIRED VALUE AT FISCAL OPTIONS AT
ON EXERCISE REALIZED(1) YEAR-END(#) FISCAL YEAR-END ($)1
NAME # $ EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- --------------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Morton E. David......... 6,250 $233,594 25,000/100,000 $ 268,750/0
Michael R. Strange...... 15,000 530,625 20,666/17,334 278,908/104,842
Gregory J. Winsky....... 0 0 32,666/15,334 478,408/104,842
Kenneth H. Lind......... 22,000 784,500 10,667/17,334 102,658/104,842
Michael Kemp............ 15,000 285,000 12,999/24,001 137,866/192,009
</TABLE>
- --------
(1) Fair market value of securities underlying the options minus the exercise
price of the options at exercise or fiscal year end, as the case may be.
7
<PAGE>
COMPENSATION OF DIRECTORS
Each director of the Company who is not an employee of the Company or any of
its subsidiaries receives, for his services as a director of the Company, an
annual grant of options under the Option Plan to purchase 3,000 shares of
Common Stock. No cash payment is made to any non-employee director of the
Company for service as a director nor do directors receive any fees from the
Company for attending meetings of the Board of Directors.
On January 30, 1996, the Board of Directors unanimously approved an
amendment to the Option Plan providing for the grant of options to non-
employee directors of the Company who perform services for the Company and who
are also not members of the Compensation Committee. See "Amendment to the
Company's Stock Option Plan."
EMPLOYMENT CONTRACTS, TERMINATION OF
EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company has an employment agreement with Morton E. David (the
"Employment Agreement") which provides, among other things, for Mr. David's
continued employment as Chief Executive Officer of the Company until March
2001 at an annual salary of $550,000 for the fiscal year ending March 31,
1997. The Employment Agreement provides that Mr. David's annual salary
thereafter shall not be less than $550,000. The Employment Agreement also
provides for payment of an annual cash bonus to Mr. David of two percent of
the Company's consolidated pre-tax earnings. In May 1993, the Company
purchased Mr. David's prior residence in accordance with the terms of Mr.
David's then current employment agreement for a price of $925,000. Upon
expiration of the term (the "Employment Term") of the Employment Agreement,
the Company has agreed to retain Mr. David as a consultant for a sixty month
period at a monthly fee of $2,000.
Upon termination of the Employment Agreement due to Mr. David's injury or
illness, the Company is required to pay Mr. David his salary and annual bonus
for the balance of the Employment Term; upon termination of the Employment
Agreement due to Mr. David's death, the Company is required to pay to Mr.
David's estate his salary and annual bonus for the balance of the Employment
Term. If the Employment Agreement is terminated without cause by the Company,
the Company is required to make a lump sum payment to Mr. David in an amount
equal to his then current salary for the balance of the Employment Term or for
two years, whichever is less, and up to two times the average bonus paid to
Mr. David for the two fiscal years immediately preceding the termination of
the Employment Agreement. The Employment Agreement also provides that Mr.
David shall have the right to terminate the Agreement if he suffers a
diminution in his authority in connection with his employment by the Company
which shall be deemed to occur, should the Company be acquired by or merged
into any other entity; in such event, the Company is required to pay Mr. David
his salary and annual bonus for the balance of the Employment Term.
The Employment Agreement includes a retirement plan pursuant to which the
Company will pay Mr. David an annual amount equal to $7,500 times the number
of years of service as defined under the Employment Agreement. Such amount
would be payable to either Mr. David or his beneficiaries on a monthly basis
after the end of the Employment Term; such payments are to be made until the
later to occur of Mr. David's death or the date that 120 monthly payments have
been made to Mr. David and/or his beneficiaries.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The members of the Compensation Committee for the fiscal year ended March
31, 1996 were Edward H. Cohen, Bernard Goldstein, Howard Morgan and James
Simons.
8
<PAGE>
The law firm of Rosenman & Colin LLP, of which Mr. Cohen is a partner, was
engaged as the Company's outside general counsel in the fiscal year ended
March 31, 1996 and will continue to be so engaged for the fiscal year ending
March 31, 1997.
The investment banking firm of Broadview Associates, L.P., of which Mr.
Goldstein is the managing director, provided investment banking services to
the Company in prior years and may continue to provide such services to the
Company in the fiscal year ending March 31, 1997.
Mr. Morgan provided consulting services to the Company in the fiscal year
ended March 31, 1996 and may continue to provide such services to the Company
in the fiscal year ending March 31, 1997.
The investment advisory firm of Renaissance Technologies Inc., of which Mr.
Simons is Chairman of the Board and sole shareholder, provided certain
administrative services to the Company in the fiscal year ended March 31, 1996
and will continue to provide such services to the Company in the fiscal year
ending March 31, 1997.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The responsibilities of the Compensation Committee include administering the
Option Plan and fixing the compensation, including salaries and bonuses, of
all officers of the Company.
Overall Policy
The Compensation Committee believes that the Company's officers have been
largely responsible for the Company's success. Based on this belief, the
Compensation Committee has structured the Company's compensation program (i)
to compensate its executive officers on an annual basis with a cash salary at
a sufficient level to retain and motivate these officers, (ii) to link a
portion of executive compensation by means of annual bonuses to the Company's
current performance and (iii) to link a portion of executive compensation to
appreciation of the Company's stock price by means of stock options. The
objectives of this strategy are to attract and retain effective and highly
qualified executives, to motivate executives to achieve the goals inherent in
the Company's business strategy and to link executive and shareholder interest
through stock options.
Base Salaries
Annual base salaries for the officers are determined by evaluating the
performance of the individuals and their contributions to the performance of
the Company and are based on the recommendation of Mr. David as chief
executive officer. Financial results, as well as non-financial measures such
as the magnitude of responsibility of the position, individual experience, and
the Compensation Committee's knowledge of compensation practices for
comparable positions at other companies are considered.
In establishing Mr. David's annual base salary of $550,000 for the fiscal
year ending March 31, 1997 (which was established in 1994 in conjunction with
the execution of the Employment Agreement), the Compensation Committee took
into account the Company's achievements in fiscal 1991 and 1992, its
assessment of Mr. David's individual performance, as well as base salaries for
chief executive officers at companies of comparable size and complexity, both
public and private, known to members of the Compensation Committee. The
Compensation Committee also took into account Mr. David's contribution to the
Company's growth and diversity and his future anticipated contributions to the
Company.
In connection with the execution of the Employment Agreement, the
Compensation Committee also awarded Mr. David a retirement plan pursuant to
which payments will be made to Mr. David upon his retirement. See "Employment
Contracts, Termination of Employment and Change-in-Control Arrangements."
9
<PAGE>
Bonus Plan
The Company's bonus plan is intended to focus the executives' attention on
short-term or annual business results and to award executives each year based
on their contributions to the profits of the Company. Six percent of the
Company's consolidated pre-tax earnings are set aside for distribution under
the bonus plan, in the form of cash bonuses, to employees other than Mr. David
(for whom an additional two percent of such earnings is set aside for cash
bonuses pursuant to the Employment Agreement). The participants in the bonus
plan and their level of participation are determined by the Compensation
Committee in its discretion, based on the recommendation of Mr. David, and are
based on an evaluation of the performance, level of responsibility and
leadership of the individual executives in relation to corporate results.
Long-term Incentives
Under the Option Plan, stock options are granted to executives of the
Company. Stock options are designed to focus the executives' attention on
stock values and to align the interests of executives with those of the
shareholders. Stock options are customarily granted at prices equal to the
fair market value at the date of grant, are not exercisable until the first
anniversary of the date of grant and do not become fully exercisable until the
third anniversary of the date of grant. The options generally remain
exercisable during employment until the tenth anniversary of the date of
grant. This approach provides an incentive to executives to increase
shareholder value over the long term since the full benefit of the options
cannot be realized unless stock price appreciation occurs over a number of
years. Options are generally granted to Mr. David based on the Compensation
Committee's assessment of his individual performance and to executive officers
based on the recommendation of Mr. David.
COMPENSATION COMMITTEE
Edward H. Cohen Howard Morgan
Bernard Goldstein James Simons
10
<PAGE>
PERFORMANCE GRAPH
The following performance graph is a line graph comparing the yearly change
in the cumulative total shareholder return on the Common Stock against the
cumulative return of the Russell 3000 companies, and a line of business index
comprised of the Russell 3000 Publishing companies for the five fiscal years
ended March 31, 1996.
[LINE GRAPH APPEARS HERE]
VALUE OF $100.00 INVESTED OVER FIVE YEARS:
<TABLE>
<S> <C>
Franklin Electronic Publishers Incorporated Common Stock......... $679.31
Russell 3000 companies........................................... $202.13
Russell 3000 Publishing companies................................ $164.92
</TABLE>
AMENDMENT TO THE COMPANY'S STOCK OPTION PLAN
The Company currently has in effect the Option Plan, which was adopted as of
July 31, 1988. Under the Option Plan, the Company may grant to eligible
individuals incentive stock options, as defined in Section 422(b) of the
Internal Revenue Code of 1986 (the "Code"), and non-incentive stock options.
Only employees of the Company and its subsidiary operations are eligible to
receive incentive stock options under the Option Plan. Directors who are not
employees of the Company receive, in lieu of a fee for service as director, a
non-discretionary annual grant of non-incentive stock options to purchase
3,000 shares of Common Stock.
The Option Plan currently authorizes the Company to grant options to
purchase an aggregate of 2,250,000 shares of Common Stock.
In January 1996, the Board unanimously approved an amendment to the Option
Plan to provide for the grant of options to non-employee directors of the
Company who provide services to the Company and who are not members of the
Compensation Committee. The Board believes that such amendment will grant the
Company flexibility with respect to compensation to be provided to such non-
employee directors.
11
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOREGOING AMENDMENT TO THE
OPTION PLAN.
If the proposed amendment to the Option Plan is not approved, the Option
Plan will continue to remain in effect in its present form.
NATURE AND PURPOSE OF THE OPTION PLAN
The purpose of the Option Plan is to induce employees and directors of and
consultants to the Company and its subsidiaries to remain in the employ or
service of the Company and its subsidiaries, to attract new employees,
directors and consultants and to encourage such individuals to secure or
increase on reasonable terms their stock ownership in the Company. The Board
believes that the Option Plan will promote continuity of management and
increased incentive and personal interest in the welfare of the Company by
those who are or may become primarily responsible for shaping and carrying out
the long range plans of the Company and securing its continued growth and
financial success. The approximate number of persons eligible to participate
in the Option Plan is 100.
The Option Plan also provides that the Compensation Committee appointed by
the Board of Directors to administer the Option Plan may grant options to
employees and other personnel of another corporation which is acquired by the
Company in exchange for any outstanding options to purchase securities of the
acquired corporation. The price at which such options are granted and the time
at which such options may be exercised are to be determined by the
Compensation Committee based upon the terms of the assumed options and of the
acquisition.
DURATION AND MODIFICATIONS
The Option Plan will terminate not later than April 25, 1998. The Board may
at any earlier time terminate the Option Plan or make such modifications to
the Option Plan as it may deem advisable. However, except in certain limited
circumstances, the Board may not, without further approval by the
shareholders, increase the number of shares of Common Stock as to which
options may be granted under the Option Plan, change the class of persons
eligible to participate in the Option Plan, change the manner of determining
option prices which would result in a decrease in the option prices, or extend
the period during which an option may be granted or exercised.
ADMINISTRATION OF THE OPTION PLAN
The Option Plan is administered by the Compensation Committee. The
Compensation Committee consists of two or more persons appointed by the Board
of Directors, all of whom must be "disinterested persons" within the meaning
of Rule 16b-3(c)(2)(i) promulgated under the Securities Exchange Act of 1934.
The members of the Compensation Committee must also be "outside directors"
within the contemplation of Section 162(m)(4) of the Code. The members of the
Compensation Committee are appointed annually by, and serve at the pleasure
of, the Board. The present members of the Compensation Committee are Messrs.
Cohen, Simons, Morgan and Goldstein. The Compensation Committee has discretion
to determine the participants under the Option Plan, the time and price at
which options will be granted, the period during which options will be
exercisable, the number of shares subject to each option and whether an option
shall be an incentive stock option, a non-incentive stock option or a
combination thereof, but does not have the discretion to determine any of the
foregoing with respect to the annual grant of non-incentive options to non-
employee directors, which are non-discretionary in nature. The members of the
Compensation Committee do not receive additional compensation for service in
connection with the administration of the Option Plan.
DESCRIPTION OF OPTIONS
Under the Option Plan, the per share exercise price of any option which is
an incentive stock option shall not be less than the fair market value of a
share of Common Stock on the date of grant, and the per share exercise price
of any option which is a non-incentive stock option shall not be less than 75%
of such fair market value. No non-incentive option may be granted to any
persons who are or may reasonably become "covered employees" under Section
162(m) of the Code at a price below fair market value on the date of grant.
Options
12
<PAGE>
granted to non-employee directors are granted at a per share exercise price
equal to the fair market value of a share of Common Stock on the date of
grant. The aggregate fair market value of the shares of Common Stock for which
a participant may be granted incentive stock options which are exercisable for
the first time in any calendar year may not exceed $100,000.
An option granted under the Option Plan is generally exercisable to the
extent of one-third of the shares of Common Stock covered thereby after the
first anniversary of the date of grant, two-thirds after the second
anniversary of the date of grant, and in full after the third anniversary of
the date of grant. An option granted to a non-employee director is generally
exercisable six months after the date of grant. However, the Compensation
Committee at the time of grant may provide that an option may be exercised in
whole or in part prior to the time that it would otherwise be exercisable
under the Option Plan, provided, however, that no option may be exercisable
until six months after the date of grant. Upon the exercise of an option, the
option price must be paid in cash or, if the Compensation Committee so
determines at the time of the grant of the option, in shares of Common Stock.
Any such shares tendered in payment of the exercise price of an option must
have been held by the optionee for a period of not less than six months. An
option may not be granted for a period in excess of ten years from the date of
grant. The Compensation Committee also has the authority to implement
procedures to allow a broker-dealer selected by an optionee to make payment of
all or any portion of the option price upon exercise of an option and receive
on behalf of such optionee all or a portion of the shares of Common Stock
issuable upon exercise.
In the event of the death, permanent disability or retirement of an optionee
after his or her sixty-fifth birthday, all options theretofore granted shall
become immediately exercisable and, if not exercised, shall terminate,
generally within six months of such optionee's death, permanent disability or
retirement. In all other cases, in the event an optionee leaves the employ or
services of the Company or any of its subsidiaries, any options previously
granted to but not exercised by such optionee shall terminate, generally
within 90 days after the termination of such optionee's service to, or
employment with, the Company. Options are not transferable except upon the
death of the optionee.
If the fair market value of the Common Stock declines below the option price
of any option (other than the annual options granted to non-employee
directors), the Compensation Committee (with the prior approval of the Board)
may cancel and regrant such option or take any similar action it deems to be
for the benefit of the optionee in light of such declining value.
The number of shares reserved for issuance under the Option Plan and the
number of shares covered by each option granted under the Option Plan will be
adjusted in the event of a stock dividend, reorganization, recapitalization,
stock split-up, combination of shares, sale of assets, merger or consolidation
in which the Company is the surviving corporation. In the event of the
dissolution or liquidation of the Company, or a merger, reorganization or
consolidation in which the Company is not the surviving corporation, all
outstanding options shall terminate.
SECURITIES SUBJECT TO THE OPTION PLAN
The market value of the Common Stock, as of June 14, 1996, was $23.625 per
share.
FEDERAL INCOME TAX CONSEQUENCES OF ISSUANCE AND EXERCISE OF OPTIONS
The following discussion of the federal income tax consequences of the
granting and exercise of options under the Option Plan, and the sale of Common
Stock acquired as a result thereof, is based on an analysis of the Code, as
currently in effect, existing laws, judicial decisions and administrative
rulings and regulations, all of which are subject to change. In addition to
being subject to the federal income tax consequences described below, an
optionee may also be subject to state and/or local income tax consequences in
the jurisdiction in which he or she works and/or resides.
13
<PAGE>
Non-Incentive Stock Options
No income will be recognized by an optionee at the time a non-incentive
stock option is granted.
Ordinary income will be recognized by an optionee at the time a non-
incentive stock option is exercised, and the amount of such income will be
equal to the excess of the fair market value on the exercise date of the
shares issued to the optionee over the option price. In the case of an
employee of the Company, this ordinary income will also constitute wages
subject to the withholding of income tax and the Company will be required to
make whatever arrangements are necessary to ensure that the amount of the tax
required to be withheld is available for payment in money.
Capital gain or loss on a subsequent sale or other disposition of the shares
acquired upon the exercise of a non-incentive stock option will be measured by
the difference between the amount realized on the disposition and the tax
basis of such shares. The tax basis of the shares acquired upon the exercise
of any non-incentive stock option will be equal to the sum of the exercise
price of such non-incentive stock option and the amount included in income
with respect to such option.
If an optionee makes payment of the option price by delivering shares of
Common Stock, the optionee generally will not recognize any gain as a result
of such delivery, but the amount of gain, if any, which is not so recognized
will be excluded from his or her basis in the new shares received.
The Company will be entitled to a deduction for federal income tax purposes
at such time and in the same amount as the amount included in ordinary income
by the optionee upon exercise of his or her non-incentive stock option,
subject to the usual rules as to reasonableness of compensation and provided
that the Company timely complies with the applicable information reporting
requirements.
Incentive Stock Options
In general, neither the grant nor the exercise of an incentive stock option
will result in taxable income to an optionee or a deduction to the Company.
The sale of Common Stock received pursuant to the exercise of an incentive
stock option which satisfies the holding period rules will result in capital
gain to an optionee and will not result in a tax deduction to the Company. To
receive incentive stock option treatment as to the shares acquired upon
exercise of an incentive stock option, an optionee must neither dispose of
such shares within two years after such incentive stock option is granted nor
within one year after the exercise of such incentive stock option. In
addition, an optionee generally must be an employee of the Company (or of a
subsidiary of the Company) at all times between the date of grant and the date
three months before exercise of such incentive stock option.
If the holding period rules are not satisfied, the portion of any gain
recognized on the disposition of the shares acquired upon the exercise of an
incentive stock option that is equal to the lesser of (a) the fair market
value of the shares on the date of exercise minus the option price or (b) the
amount realized on the disposition minus the option price, will be treated as
ordinary income, with any remaining gain being treated as capital gain. The
Company will be entitled to a deduction equal to the amount of such ordinary
income.
If an optionee makes payment of the option price by delivering shares of
Common Stock, the optionee generally will not recognize any gain as a result
of such delivery, but the amount of gain, if any, which is not so recognized
will be excluded from his or her basis in the new shares received. However,
the use by an optionee of shares previously acquired pursuant to the exercise
of an incentive stock option to exercise an incentive stock option will be
treated as a taxable disposition if the transferred shares are not held by the
optionee for the requisite holding period.
For purposes of the alternative minimum tax, an incentive stock option is
treated as if it were a non-incentive stock option. This means, among other
things, that the spread on the exercise of an incentive stock option will be
considered as part of the optionee's income for purpose of the alternative
minimum tax.
14
<PAGE>
CERTAIN INFORMATION WITH RESPECT TO OPTIONS GRANTED
The following table sets forth, with respect to the Named Executive
Officers, all executive officers as a group, all non-employee directors as a
group, and all employees as a group, the number of shares of Common Stock
subject to options granted during the year ended March 31, 1996 and certain
related information.
<TABLE>
<CAPTION>
NAME OF INDIVIDUAL CAPACITIES NUMBER OF SHARES
INDIVIDUAL OR IN WHICH SUBJECT TO AVERAGE PER SHARE
IDENTITY OF GROUP SERVED OPTION EXERCISE PRICE
------------------ ---------- ---------------- -----------------
<S> <C> <C> <C>
Morton E. David......... Chairman and Chief 100,000 $27.75
Executive Officer
Michael R. Strange...... Executive Vice 8,000 27.75
President
Gregory J. Winsky....... Senior Vice 6,000 27.75
President
Kenneth H. Lind......... Vice President, 8,000 27.75
Finance, and
Treasurer
Michael Kemp............ Managing Director, 8,000 27.75
Franklin Electronic
Publishers (UK)
Ltd.
All executive officers
as a group (7
persons)............... 136,000 27.75
All non-employee
directors as a group
(8 persons)............ 36,050 30.194
All employees (except
executive officers) as
a group (56 persons)... 87,000 28.013
</TABLE>
Approval of the amendment to provide for the grant of options under the
Option Plan to outside directors who perform services for the Company and who
are not members of the Compensation Committee as discussed above requires the
affirmative vote of the holders of a majority of the shares of Common Stock
present in person or by proxy at the meeting. PROXIES RECEIVED IN RESPONSE TO
THIS SOLICITATION WILL BE VOTED FOR THE AMENDMENT DISCUSSED ABOVE UNLESS
OTHERWISE SPECIFIED IN THE PROXY.
SELECTION OF AUDITORS
The Audit Committee has recommended to the Board of Directors, and the Board
of Directors has selected, Feldman Radin & Co., P.C., independent auditors, as
auditors of the Company for the fiscal year ending March 31, 1997. Although
shareholder ratification of the Board of Directors' action in this respect is
not required, the Board considers it desirable for shareholders to pass upon
the selection of auditors and, if the shareholders disapprove of the
selection, intends to select other auditors for the fiscal year ending March
31, 1997.
It is expected that representatives of Feldman Radin & Co., P.C. will be
present at the meeting, will have an opportunity to make a statement if they
so desire and will be available to respond to appropriate questions from
shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT
OF THE AUDITORS. PROXIES RECEIVED IN RESPONSE TO THIS SOLICITATION WILL BE
VOTED FOR THE APPOINTMENT OF THE AUDITORS UNLESS OTHERWISE SPECIFIED IN THE
PROXY.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The law firm of Rosenman & Colin LLP, of which Mr. Cohen is a partner, was
engaged as the Company's general outside counsel in the fiscal year ended
March 31, 1996 and will continue to be so engaged for the fiscal year ending
March 31, 1997. Payments for such services amounted to approximately $115,000
for the fiscal year ended March 31, 1996.
15
<PAGE>
The investment banking firm of Broadview Associates, L.P., of which Mr.
Goldstein is the managing director, provided investment banking services to
the Company in prior years and may continue to provide such services to the
Company. The Company did not make any payments in connection with such
services during the fiscal year ended March 31, 1996.
Mr. Morgan provided consulting services to the Company in the fiscal year
ended March 31, 1996 and will continue to provide such services to the Company
in the fiscal year ending March 31, 1997. Payments for such services amounted
to approximately $22,000 for the fiscal year ended March 31, 1996.
The firm of Renaissance Technologies Inc., of which Mr. Simons is Chairman
of the Board and sole shareholder, provided certain administrative services to
the Company in the fiscal year ended March 31, 1996 and will continue to
provide such services to the Company in the fiscal year ending March 31, 1997.
Payments for such services amounted to approximately $6,000 for the fiscal
year ended March 31, 1996.
MISCELLANEOUS
Any proposal of an eligible shareholder intended to be presented at the next
annual meeting of shareholders must be received by the Company for inclusion
in its proxy statement and form of proxy relating to that meeting no later
than March 1, 1997.
The Board of Directors of the Company does not intend to present, and does
not have any reason to believe that others intend to present, any matter of
business at the meeting other than those set forth in the accompanying Notice
of Annual Meeting of Shareholders. However, if other matters properly come
before the meeting, it is the intention of the persons named in the enclosed
form of proxy to vote any proxies in accordance with their judgment.
The Company will bear the cost of preparing, assembling and mailing the
enclosed form of proxy, this Proxy Statement and other material which may be
sent to shareholders in connection with this solicitation. Solicitation may be
made by mail, telephone, telegraph and personal interview. The Company may
reimburse persons holding shares in their names or in the names of nominees
for their expense in sending proxies and proxy material to their principals.
Copies of the 1996 Annual Report to Shareholders, which includes the
Company's Annual Report to the Securities and Exchange Commission (Form 10-K),
are being mailed to shareholders simultaneously with this Proxy Statement.
By order of the Board of Directors,
GREGORY J. WINSKY
Secretary
Burlington, New Jersey
June 24, 1996
16
<PAGE>
REVOCABLE PROXY
FRANKLIN ELECTRONIC PUBLISHERS, INCORPORATED
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
JULY 24, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints MORTON E. DAVID and GREGORY J. WINSKY, or
either of them, attorneys and proxies, with power of substitution and
revocation, to vote, as designated below, all shares of stock which the
undersigned is entitled to vote, with all powers which the undersigned would
possess if personally present, at the Annual Meeting of Shareholders (including
all adjournments thereof) of FRANKLIN ELECTRONIC PUBLISHERS, INCORPORATED to be
held on Wednesday, July 24, 1996 at 10:00 A.M at the offices of The Chase
Manhattan Corporation, 270 Park Avenue, 11th Floor Room A, New York, New York.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1,2 AND 3.
Please be sure to sign and date -----------------------------
this Proxy in the box below. Date
- ----------------------------------------------------------------
- --Shareholder sign above ---- Co-holder (if any) sign above ----
WITH- FOR ALL
FOR HOLD EXCEPT
1. ELECTION OF DIRECTORS [_] [_] [_]
EDWARD H. COHEN, MORTON E. DAVID, BERNARD GOLDSTEIN, LEONARD M. LODISH,
HOWARD L. MORGAN, JERRY R. SCHUBEL, JAMES H. SIMONS, MICHAEL R. STRANGE AND
WILLIAM H. TURNER.
SHAREHOLDERS MAY WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S) BY MARKING "FOR
ALL EXCEPT" AND BY WRITING THE NAME OF THAT NOMINEE IN THE SPACE PROVIDED
BELOW.
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. APPROVAL of the amendment of the Company's 1988 [_] [_] [_]
Stock Option Plan to provide for the grant of options
under the plan to outside directors who perform services for the Company and
who are not members of the Stock Option and Compensation Committee as set
forth in the accompanying Proxy Statement.
FOR AGAINST ABSTAIN
3. APPROVAL of the appointment of auditors as set [_] [_] [_]
forth in the accompanying Proxy Statement.
4. The proxy is authorized to transact such other business as may properly come
before the meeting.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is given, this proxy will
be voted FOR items 1,2 and 3 and in the discretion of said proxy on any other
matter which may come before the meeting or any adjournments thereof.
+ +
DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
FRANKLIN ELECTRONIC PUBLISHERS, INCORPORATED
- --------------------------------------------------------------------------------
NOTE: When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee, custodian, guardian or corporate
officer, please give your full title as such. If a corporation, please sign full
corporate name by authorized officer. If a partnership, please sign in
partnership name by authorized person.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
- --------------------------------------------------------------------------------
