Exhibit 10.26

AMENDMENT TO

REVOLVING CREDIT AND SECURITY AGREEMENT

THIS AMENDMENT TO REVOLVING CREDIT AND SECURITY AGREEMENT (this “Amendment”)
made as of May 19, 2008 among PNC BANK, NATIONAL ASSOCIATION (“Lender” or
“PNC”), and FRANKLIN ELECTRONIC PUBLISHERS, INC., a Pennsylvania corporation
(“Franklin Inc.”); FRANKLIN ELECTRONIC PUBLISHERS (EUROPE) LTD., a United
Kingdom corporation (“Franklin Ltd.”) and FRANKLIN ELECTRONIC PUBLISHERS
(DEUTSCHLAND) GMBH, a German corporation (“Franklin GmbH”) (Franklin Inc.,
Franklin Ltd. and Franklin GmbH are referred to herein collectively as
“Borrowers”, and individually as “Borrower”).

WITNESSETH

A. Lender and Borrowers have previously entered into a commercial lending
relationship in accordance with the terms and conditions of a Revolving Credit
and Security Agreement dated December 7, 2004, as amended by a First Amendment
to Revolving Credit and Security Agreement dated December 29, 2005, an Amendment
to Loan Documents dated December 22, 2006, an Amendment to Loan Documents dated
March 30, 2007, an Amendment to Loan Documents dated as of December 7, 2007,
Letter of Extension dated March 4, 2008 and Letter of Extension dated May 6,
2008, as such has been further amended, supplemented or otherwise modified from
time to time (the “Agreement”) pursuant to which Lender agreed to make certain
extensions of credit to Borrowers on a secured basis and Borrowers have agreed
to repay same, all upon the terms and subject to the conditions set forth
herein;

B. Borrowers have requested Lender and Lender has agreed to extend the term for
a three year period, amend certain covenants and definitions as set forth in the
Loan Agreement, and to document such other amendments as have been approved by
the Lender.

C. Lender is willing to make such waivers and to make such other amendments,
upon the terms and subject to the conditions set forth below in this Amendment.

NOW THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:

1. Capitalized terms used in this Amendment shall have the same meanings given
them in the Agreement, unless otherwise defined herein.

2. The term “Agreement”, as defined in the preamble to the Agreement, shall be
deemed to include any amendments, supplements or other modifications made
thereto from time to time (including, without limitation, pursuant to this
Amendment).

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3. Subsection (q) of the definition of “Eligible Receivables” in Subsection 1.2
is hereby amended to read as follows:

“(q) such Receivable in the case of Franklin Ltd. are in amounts not to exceed
$500,000 in the aggregate and such Receivable in the case of Franklin GmbH are
in amounts not to exceed $2,500,000 in the aggregate, with the total borrowings
from Franklin Ltd. and Franklin GmbH not exceeding the aggregate of $3,000,000
or twenty-five percent (25%) of Eligible Receivables, whichever is less;”

4. The definition of “Maximum Revolving Advance Amount” is hereby amended to
read as follows:

“Maximum Revolving Advance Amount” shall mean $20,000,000 with sublimits of
$1,000,000 for Letters of Credit, $500,000 for foreign currency borrowings and
$10,000.000 for acquisitions provided Borrowers have given evidence satisfactory
to Lender, in its sole discretion, that Funded Debt to EBITDA is less than 2.25;

5. Section 1.2 is hereby amended to add the following definition:

“Unused Line Fee” has the meaning set forth in Section 3.8;

6. Section 2.12 entitled “Use of Proceeds” is hereby amended to read as follows:

“2.12 Use of Proceeds Borrowers shall apply the proceeds of Advances to (i) pay
fees and expenses relating to this transaction, (ii) to provide for its working
capital needs and other reasonable needs for corporate purposes (which shall not
include the purchase of Borrowers’ common stock) and (iii) provide cash advance
not to exceed $10,000,000 to be used for acquisitions provided Borrowers have
given evidence satisfactory to Lender, in its sole discretion, that Funded Debt
to EBITDA is less than 2.25.

7. Article III is hereby amend to add the following Section 3.8:

“3.8 Unused Line Fee Borrowers shall unconditionally pay to Lender a fee
(“Unused Line Fee”) equal to one-eighth of one percent per annum of the unused
portion of the Maximum Revolving Advance Amount. The unused portion of the
Maximum Revolving Advance Amount shall be the difference between (a) the Maximum
Revolving Advance Amount and (b) (i) the average daily outstanding balance of
the Revolving Advances during each month (or portion thereof), plus (ii) 100% of
the average daily undrawn amount of all Letters of Credit issued and outstanding
during each month (or portion thereof), which fee shall be calculated and
payable quarterly, in arrears, and shall be due and payable on the first
Business Day of each quarter.”

8. Section 6.5 is hereby amended to read as follows:

“6.5 Minimum Tangible Net Worth. Maintain at all times a minimum Tangible Net
Worth of 80% of Tangible Net Worth as of March 31, 2007 plus 50% of positive net
income adjusted at the last day of each fiscal year end thereafter.”

 

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9. Section 6.8 is hereby amended to read as follows:

“6.8 Clean Down Requirement During each twelve month period, Borrowers will be
required to clean the Revolving Advance down to zero amount outstanding for a
consecutive 30 day period.”

10. Section 7.4 (e) is hereby amended to read as follows:

“With the prior written consent of Lender, acquisitions of subsidiary companies
or minority interest for which the sole consideration is common stock of
Franklin, Inc. or acquisitions of subsidiary companies or minority interests, in
which cash is consideration provided cash does not exceed $10,000,000.00 and at
no time shall the aggregate cash used in such acquisitions exceed $10,000,000.00
without the prior written consent of the Lender and provided further Borrowers
have given evidence satisfactory to Lender, in its sole discretion, that Funded
Debt to EBITDA is less than 2.25.

11. Section 9.8 is hereby amended to add the following:

“Borrowers shall also furnish Lender prior to the commencement of the following
fiscal year, annual projections and quarterly projections, together with balance
sheets and income statements.”

12. Section 13.1 entitled “Term” is hereby amend to substitute the date of
December 7, 2010 for the current date of December 7, 2007.

13. The form of the Borrowing Base Certificate set forth in Exhibit A to the
Agreement is hereby amended to substitute the Dilution Reserve of 12.7% for the
current Dilution Reserve of 6.2%

14. Representations. In order to induce Lender to enter into this Amendment,
each Borrower hereby represents and warrants to Lender that:

(a) no Event of Default, or any event which, with the giving of notice, the
lapse of time, or both or the occurrence of any other condition, would
constitute an Event of Default, has occurred and is continuing;

(b) the Agreement, Revolving Credit Note and each of the Other Documents, after
giving effect to this Amendment and the transactions contemplated hereby,
continue to be in fully force and effect and to constitute the legal, valid and
binding obligations of each Borrower that is a party thereto, enforceable
against each Borrower in accordance with their respective terms;

(c) the representations and warranties made by each Borrower in or pursuant to
the Agreement or any Other Document, or which are contained in any certificate,
document or financial or other statement furnished at any time under or in
connection herewith or therewith, are each true and correct in all material
respects on and as of the date hereof as though made as of such date;

(d) no Company has amended its Certificate of Incorporation, Bylaws or other
governing documents subsequent to December 7, 2004.

 

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15. Conditions Precedent. This Amendment shall become effective upon the
satisfaction of the following conditions:

(a) Lender shall have received a copy of this Amendment, duly executed and
delivered on behalf of each Borrower;

(b) Lender shall have received a copy of the resolutions of the Board of
Directors of each Borrower authorizing the execution, delivery and performance
of this Amendment and the Agreement as amended hereby (including, without
limitation, the borrowings provided for herein) certified by the Secretary or an
Assistant Secretary of such Borrower, as of the date of this Amendment, which
certificate shall state that the resolutions thereby certified have not been
amended, modified, revoked or rescinded as of the date of this Amendment;

(c) Lender shall have received a certificate of the Secretary or an Assistant
Secretary of each Borrower, dated the date of this Amendment, as to the
incumbency and signature of each officer signing this Amendment and any other
certificate or other document to be delivered pursuant hereto, together with
evidence of the incumbency of such Secretary or Assistant Secretary; and

(d) Borrowers shall pay to Lender, simultaneously with the execution of this
Amendment by Borrowers, a facility fee equal to $5,000; and

(e) the Borrowers shall have paid all expenses of Lender, including, without
limitation, reasonable counsel fees, in connection with the preparation,
execution and delivery of this Amendment and all other documents and instruments
to be executed and delivered pursuant hereto or in connection herewith, and the
transactions contemplated hereby.

16. Inconsistency. This Amendment is deemed incorporated into the Agreement. To
the extent that any terms or provision of this Amendment is or may be deemed
expressly inconsistent with any term or provision in the Agreement, the terms
and provisions hereof shall control.

17. Counterparts. This Amendment may be executed in several counterparts, each
of which, when executed and delivered, shall be deemed an original, and all of
which together shall constitute one agreement.

18. New Jersey Law. This Amendment shall be governed by and construed and
interpreted in accordance with the laws of the State of New Jersey, without
giving effect to principles of conflicts law.

19. Enforceability. Except as amended and otherwise modified by this Amendment,
the Agreement and the Other Documents shall remain in full force and effect in
accordance with their respective terms.

20. Successors and Assigns. This Amendment will be binding upon and inure to the
benefit of the Borrowers and the Lender and their respective heirs, executors
administrators, successors and assigns.

 

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21. Amendment. Except as amended hereby, the terms and provisions of the
Agreement remain uncharged and in full force and effect. Except as expressly
provided herein, this Amendment shall be not constitute an amendment, waiver,
consent or release with respect to any provision of the Agreement, a waiver of
any default or Event of Default thereunder, or a waiver reserved). THE BORROWERS
IRREVOCABLY WAIVE ANY AND ALL RIGHTS THE BORROWERS MAY HAVE TO A TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR CLAIM OF ANY NATURE RELATING TO THIS AMENDMENT OR
THE AGREEMENT AND ANY DOCUMENTS EXECUTED IN CONNECTION WITH THIS AMENDMENT OR
THE AGREEMENT OR ANY TRANSACTION CONTEMPLATED IN ANY SUCH DOCUMENTS. THE
BORROWERS ACKNOWLEDGE THAT THE FOREGOING WAIVER IS KNOWING ABOUT VOLUNTARY.

22. Headings. The headings as used in this Amendment are inserted solely for
convenience of reference and shall not constitute a part of this Amendment nor
affect its meaning, construction or effect.

23. No Defense to Payment. Borrowers waive and forever release and discharge
Lender, its officers, agents and employees, successors and assigns from any and
all claims, actions, causes of action, suits, counterclaims, set-offs, rights
and defenses against Lender (its officers, directors, agents and employees,
successors and assigns), which Borrowers its successors or assigns have or
hereafter can, shall or may have, for, upon, or by reason of any matter, cause
or thing whatsoever up to and including the date of this Amendment; and
Borrowers represent and warrant to Lender that Borrowers have no defenses to the
repayment of any or all of the Obligations and has no claims, rights of set-off
or causes of action against Lender.

 

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FRANKLIN ELECTRONIC PUBLISHERS, INC.     ATTEST:     /s/ Barbara Anderson    
By:    /s/ Frank A. Musto Barbara Anderson     Name:   Frank A. Musto Assistant
Treasurer           FRANKLIN ELECTRONIC PUBLISHERS (EUROPE) LTD. ATTEST:     /s/
Barbara Anderson     By:    /s/ Frank A. Musto Barbara Anderson     Name:  
Frank A. Musto Assistant Treasurer           FRANKLIN ELECTRONIC PUBLISHERS
(DEUTSCHLAND) GMBH ATTEST:     /s/ Barbara Anderson     By:    /s/ Frank A.
Musto Barbara Anderson     Name:   Frank A. Musto Assistant Treasurer          
PNC BANK, NATIONAL ASSOCIATION     By:    /s/ Michael Raynor     Name:   Michael
Raynor, Senior Vice President

 

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