General

In July of 2002, Congress passed sweeping legislation known as the Sarbanes-Oxley Act of 2002 aimed at restoring shareholders confidence and the integrity of the financial markets.  Section 301 of the Act requires the American Stock Exchange to prohibit the listing of any security of any issuer the audit committee of which has not established procedures to receive, retain and treat complaints regarding accounting, internal accounting controls, or auditing matters and for the confidential, anonymous submission by employees of concerns.

 The Audit Committee of Franklin Electronic Publishers, Incorporated (“Franklin” or the “Company”) has designated Howard Morgan, a director of the Company, as its Corporate Compliance Officer to collect information of this nature on their behalf and promptly report directly to the Audit Committee. 

 In order to ensure anonymity and confidentiality, Franklin has elected to outsource this requirement. The Fraud, Abuse and Waste Hotline (the “Whistleblower’s Hotline”) can be reached via telephone # 1-866-257-5335, Email at fep@openboard.info or www.openboard.info/fep/ and  Franklin’s Intranet.

 The Whistleblower Hotline is the confidential communication for the reporting of information regarding accounting, internal accounting controls, or auditing matters, questionable accounting or auditing matters and fraud, waste and abuse to Franklin’s Audit Committee. The Corporate Compliance Officer is the only person that has access to the information received via the Hotline and shall maintain the confidentiality of persons making calls to the hotline. The Corporate Compliance Officer will respond to any concerns where the caller’s identity is made known, and in any event will investigate complaints received (including anonymous complaints) as appropriate.  The telephone number and or email address of the person communicating with to Hotline is not revealed unless the caller voluntarily chooses to disclose it.

Franklin is a company governed by the highest standards of business conduct and ethics. Our reputation, integrity and profitability ultimately depend on each individual employee’s commitment to these standards.  Our first line of defense is to encourage all employees to communicate directly with their manager or supervisor when they have knowledge of any instance of accounting, internal accounting controls, or auditing matters, questionable accounting or auditing matters and fraud, abuse and waste.  Any knowledge of accounting, internal accounting controls, or auditing matters, questionable accounting or auditing matters and fraud, abuse and waste should be reported to the Corporate Compliance Officer as soon as possible by the supervisor of the employee or by the employee if reporting it to a supervisor is not possible or feasible (including by reason of the supervisor participating in the accounting, internal accounting controls, or auditing matters, questionable accounting or auditing matters and fraud, abuse and waste).  Employees can call Barry J. Lipsky, Chief Executive Officer at (609) 386-2500 to report any knowledge of the foregoing activities involving the Corporate Compliance Officer or the Chief Financial Officer.  Employees can also contact Edward H. Cohen, Chairman of the Audit Committee at 212-940-6382 to report any knowledge of the foregoing activities involving the Chief Executive Officer or the Chief Financial Officer.  

 What is the Hotline?

The Hotline is a toll-free 1-866 voice mail,  email and web  facility,  where anyone either inside or outside the Company can ANONYMOUSLY report activities involving suspected cases of  fraud, abuse and waste anywhere in the Company and its subsidiaries.

 Why was the Hotline established?

The Hotline has been established by Franklin to deter fraud, abuse and waste and preserve the integrity of the Company and its subsidiaries.

 How does it work?

Callers may call the toll-free number, email or interface through the web to  provide details, including description of the activity, names, place, date, time and any other information to support an investigation of the matter. Full detailed information is critical to perform a proper investigation.

 Who reviews the voice messages?

All cases of suspected fraud, abuse and waste reported through the Hotline will be reviewed by the Corporate Compliance Officer, investigated if warranted and resolved with appropriate action.

 Will my communication remain confidential?

Yes. The Hotline is ANONYMOUS.  The voice mail messages are digitally converted to a WAV file that provides audio distortion of the caller’s voice, email communications have the sender’s address deleted and web form is encrypted for anonymity.  All communication will remain confidential, unless the caller voluntarily chooses to disclose it.  Any investigation conducted will be done in such a way as to maintain confidentiality to the extent practical under the circumstance.