Exhibit 10.2

 

SERVICE AGREEMENT

 

between

 

Franklin Electronic Publishers (Deutschland) GmbH, represented by its sole
shareholder. Franklin Electronic Publishers Euro-Holdings B.V., Rotterdam,
represented by its singly representing Director, Mr. Mike Kemp, (hereinafter
called the “Company”)

 

and

 

Mr. Walter Schillings,

RotwandstraBe 11, D-82041 Oberhaching

 

I. Position and Duties

 

(1) The Company will employ Mr. Schillings and Mr. Schillings shall serve the
Company as Managing Director with the principal responsibility of developing the
Company, producing a business plan and developing sales contacts with the major
potential customers in Germany, Austria, and Switzerland. Mr. Schillings will be
empowered to represent the company solely subject to the conditions as set forth
under Subsect. (2).

 

(2) Mr. Schillings is aware that the Company at any time during his employment
shall be entitled to appoint one or more other Managing Directors to act jointly
with him in the above stated capacity or in any other capacity in which he is
then employed, and to require him to report to any other director or officer of
the shareholder or any related company.

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(3) Mr. Schillings shall perform his duties and services consistent with the
capacity in which he is employed, with the guidelines and instructions which may
be forthcoming from the shareholders’ meeting from time to time, and all
statutory provisions and the provisions of the statutes of the Company.

 

(4) The Company may require Mr. Schillings as part of his duties to perform and
render duties and services to any related company and, at the company’s
discretion, to accept office as a director (without any additional
remuneration). Such duties would not include any requirement to relocate without
prior written agreement between the company and Mr. Schillings.

 

(5) Mr. Schillings shall provide adequate information to the shareholders’
meeting concerning all material aspects of the business.

 

(6) Except during holidays permitted under section VI below, or when prevented
by ill health or accident, Mr. Schillings shall devote his whole time and
attention to the Company and to his duties under this Agreement. He shall
promote the interests of the Company and the shareholder and use his best
endeavours to promote the businesses of the company and the shareholder. Mr.
Schillings shall not (without the prior written consent of the Company, such
consent to be withheld only so far as may be reasonable and necessary to protect
the legitimate interests of the Company), during the term of this Service
Agreement engage in any additional occupations against remuneration or
participation in any other business of any kind.

 

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He shall not directly or indirectly be interested or concerned in any firm
carrying on business in electronic publishing within Germany or any country in
the European Community in which the Company operates. This shall not prevent Mr.
Schillings from being the holder or beneficial owner of any shares in any
company if such shares do not provide him with any influence on the company’s
representatives.

 

II. Duration and Termination of the Agreement

 

(1) This agreement shall come into force on and with effect from March 11, 1996.

 

(2) Subject to the terms and conditions of this agreement, the Company shall
continue to employ Mr. Schillings as a full-time Managing Director until his
employment hereunder shall be determined by either party giving to the other at
any time not less than three calendar months’ notice in writing at any time
during the first two years of employment. Thereafter the notice required by
either party will be increased by one month per year to a maximum of six months
after five years of employment. This does not affect each party’s right to
terminate this Agreement for good cause.

 

(3) Upon notice (irrespective of which party shall have given it) the Company
shall be entitled to release Mr. Schillings from his duties whilst continuing to
pay his contractual salary. Such period of release shall be offset against Mr.
Schillings’ remaining vacation entitlement.

 

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(4) This Service Agreement shall he terminated without prior notice at the end
of the month in which Mr. Schillings will reach the age of 65.

 

(5) Notwithstanding any claims for remuneration by Mr. Schillings, the
shareholders’ meeting is entitled to withdraw Mr. Schillings’ appointment as
Managing Director at any time.

 

(6) In any of the following events this Agreement may be terminated forthwith by
the Company, that is to say:

 

  •   if the Purchase Agreement between Franklin Electronic Publishers, Inc. and
Mr. Schillings as to the shares of Systech Gesellschaft for mobile Datensystems
mbH does not come into force before 1 May 1996;

 

  •   if Mr. Schillings becomes bankrupt or enters into any deed of arrangement
with his creditors;

 

  •   if he shall be convicted of a criminal offence, other than a motoring
offence not involving custodial sentence;

 

  •   if he commits a serious or persistent breach of the terms of this
Agreement or fails to adequately perform his duties under this Agreement; or

 

  •   if he is guilty of conduct which tends to bring himself or any of his held
by him or the Company or any related company into disrepute.

 

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(7) Any notice given under or in connection with this Agreement shall be
regarded as duly given if delivered by Mr. Schillings to the registered office
of the mother company or if delivered by the Company or the shareholder to the
address of Mr. Schillings last known to the Company. Notice given by fax shall
be deemed as duly given and shall meet the prerequisites of form if followed by
mail within a period of 14 days.

 

III. Salary

 

(1) The Company shall pay Mr. Schillings by way of remuneration for his service
under this agreement a gross salary at the rate of DM 155.250,—(Deutsch Marks
one hundred and fifty-five thousand two hundred and fifty) per annum paid
monthly in arrears, but not earlier than April 1, 1996.

 

(2) The annual salary of DM 155.250,— shall be divided by a factor of 13.5. The
salary therefore will be paid monthly in rates of DM 11.500,—. This monthly
salary will be increased up to DM 17.250,— for the month of June and up to DM
23.000,—for the month of November.

 

(3) The shareholders’ meeting shall review the salary annually (which in any
event shall not be before April 1, 1997) and any increase shall be at the entire
descretion of the shareholder.

 

(4) The company will additionally pay a premium of up to DM 3.000,— annually for
Mr. Schillings life insurance. The tax on this premium has to be borne by Mr.
Schillings.

 

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IV. Annual Bonus

 

Mr. Schillings will participate in a bonus scheme with the beginning of the
fiscal year commencing in April 1996. Any bonus paid by the Company to Mr.
Schillings as an addition to his remuneration in any year or other period will
be decided upon at the discretion of a Compensation Committee of Franklin
Electronic Publishers, Inc., USA. There will be no bonus in fiscal years where
the Company or Franklin Electronic Publishers, Inc., USA incurred a pre-tax
loss.

 

V. Company Car

 

(1) The Company shall provide and maintain a Mercedes C 180 until October 1997.
Thereafter a replacement car of Mr. Schillings’ choice shall be provided up to a
maximum payment by the Company of DM 15.000,— per annum (plus VAT, if
applicable) in respect of the lease/purchase of such car, which may also be used
for private purpose. This amount is subject to further review by the company to
ensure that an equivalent car has to be provided. The Company shall procure the
provision of any parent company guarantee as reasonably be requested by any
lessor of such car.

 

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(2) The Company shall pay all running expenses in connection therewith (taxes,
insurances, repairs, maintenance, gasoline, and oil) in so far as they are
properly and reasonably incurred by Mr. Schillings in the performance of his
duties and subject to such restrictions and upon such conditions at the Company
may, in its sole discretion, think proper. The Company shall not pay expenses in
connection with foreign holiday travel.

 

(3) Mr. Schillings has to return the car within a three weeks period after he
has been released from his duties. In any case, the company car has to be
returned at the end of the notice period. Any right of retention is excluded.

 

(4) Mr. Schillings agrees to pay the taxes which accrue form the monetary value
of the benefit of having the company car for private use according to German tax
provisions.

 

VI. Holidays

 

(1) Mr. Schillings will be entitled to thirty working days holiday with pay in
respect of any calendar year (in addition to public holidays) to be taken at
such time or times as may be approved by the shareholder. He shall coordinate
his holiday with other members of management, if in excess of three working
days.

 

(2) Any entitlement to holiday remaining at the end of any holiday year may be
carried forward to the next succeeding year but no further up to March 31.

 

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VII. Hours of Work

 

The normal hours of work will be based upon 40 hours a week. Mr. Schillings
shall conform to such hours of work that may be necessary to effectively perform
his duties in responsibility. He shall not be entitled to remuneration for work
outside the normal working hours.

 

VIII. Expenses

 

Mr. Schillings shall be entitled, against production of vouchers or other
evidence, to reimbursement by the Company of the amount of all reasonable
out-of-pocket expenses incurred by him in the course of his employment,
including travel and subsistence.

 

IX. Incapacity

 

Mr. Schillings shall be entitled to be paid in full during any period of absence
from work due to sickness or accident not negligently caused by him not
exceeding ninety consecutive days, subject to the production of satisfactory
medical evidence in respect of any period absence in excess of three consecutive
days. Remuneration will, however, not continue after determination of this
agreement.

 

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X. Confidentiality

 

Mr. Schillings undertakes to maintain confidentiality with respect to all
business matters coming to his attention, and not to allow third party access to
the Company’s documents. The foregoing remains valid also after the termination
of this employment under this Agreement.

 

XI. Books and Records

 

(1) Mr. Schillings will honestly and faithfully keep all documentation in
connection with the duties of his employment.

 

(2) All documentation which may have come or hereafter comes into the possession
of Mr. Schillings during his employment with the Company or in his capacity as a
director of the Company and which relates to the business of the Company or any
related company, shall remain the property of the Company or, as the case may
be, the related company.

 

(3) All documentation in his possession or under his control shall be returned
by Mr. Schillings to the Company or the related company concerned at any time on
demand. Any right of retention is excluded.

 

(4) The provisions of the paragraphs above shall also apply to any credit cards,
cheque cards, cheque-books or other similar items provided to Mr. Schillings in
the course of his employment.

 

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XII. Inventions

 

The German Act of Employee Inventions is applicable mutatis mutandis. Any
possible allowance for inventions are compensated with the remuneration
mentioned in section III.

 

XIII. Non-Competition

 

(1) Mr. Schillings shall not perform for a period of one year after the
termination of this agreement any services for any firm or company carrying on
business in electronic publishing within Germany or other country in the
European community, in which the Company operates as at the date or termination
which is or is likely to be in competition with any business carried on or
proposed to be carried on at the date of such determination by the Company or by
any other related company. He shall not carry on business with those competitors
on his own or on behalf of any other person and shall not acquire any shares in
those companies that carry on business in competition with the Company.

 

(2) For the period mentioned under paragraph (1) above, the Company undertakes
to pay Mr. Schillings a compensation amounting to 50 percent of his last monthly
paid salary. This compensation will be due at the end of each month.

 

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(3) Those remunerations that Mr. Schillings will receive during the
above-mentioned period or which he fails to receive by fault have to be offset
against the compensation to be paid under paragraph (2) as far as such
remuneration together with the compensation will exceed Mr. Schillings former
remuneration under this Service Agreement for more than 10 percent. Mr.
Schillings undertakes to give the Company notice of those remunerations on first
demand.

 

(4) The Company can release Mr. Schillings from the obligations under paragraph
(1) prior to the end of this agreement. In this case, the Company shall not be
enforced to pay the compensation as mentioned in paragraph (2) for a period of
more than six months after the notification under sentence 1. Any party who is
entitled to terminate this Agreement forthwith for good cause shall be entitled
to terminate any non-competition obligations by notifying the other party in
writing within a one month period after the notice of termination.

 

(5) If Mr. Schillings fails to meet the requirement of the provisions contained
under paragraph (1) he undertakes to pay a compulsory damage amounting to the
average monthly salary that he has received under the provisions of section III
during the last twelve months of his employment. There will be no claim for
compensation under paragraph (2) as long as Mr. Schillings is in breach of his
obligations under paragraph (1).

 

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If the breach of the contract shall last for a longer period, the compulsory
damage set forth under sentence 1 shall be repeatedly due in every accrued
calendar month. Notwithstanding the above provision the Company shall be
entitled to claim for compensation of any damage suffered from Mr. Schillings’
breach of his obligations under paragraph (1).

 

XIV. Forfeiture

 

All claims which may arise from this Agreement must be raised in writing within
a period of three months after the termination of the employment and in case of
refusal, such claims must be asserted by action in court within a period of six
months. Claims raised in violation of these provisions will forfeit.

 

XV. Final Provisions

 

(1) If any provision of this Agreement shall be or become legally invalid in
total or in parts this shall at no means effect the validity of the remaining
provisions. The parties hereof are enforced to replace such invalid provision by
any other appropriate provision which comes as close as possible to the economic
meany and the intention that were pursued by the contractual parties or which
would have been pursued, if the parties had been aware of the invalidity of such
provision.

 

(2) Amendments and additions of this Agreement must be in writing. This is also
true for the amendment or cancelling of this clause.

 

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(3) This Agreement replaces any and all prior understandings with respect to the
employment by and between the contracting parties.

 

(4) Should any problems arise concerning the interpretation of the above
provisions, the German version shall prevail.

 

Date: 8.3.96

       

/s/

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/s/ Walter Schillings

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Franklin Electronic Publishers (Deutschland) GmbH, represented by Franklin
Electronic Publishers Euro-Holdings B.V., represented by Mike Kemp      

Walter Schillings

 

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