The eReader format is a compiled PHTML file; the formatting comes from the tags within the database.
eReader pdb files are encrypted using "social DRM"; that is, the keys are your name and your credit card number. The idea is that if you are going to share the encrypted media, you'll only do so with a small circle of trusted friends and family. In the larger scheme of things, this is actually a fairly sensible approach to Digital Rights Management - but I digress. In the end, the files are still encrypted, and you're still stuck without a reader which will open the format.
Fortunately, the DRM is easy to strip with simple Python scripts (Python is a widely used scripting engine and language) - but bear in mind that in the U.S., stripping DRM from almost anything is illegal. I'll leave it to you to find the tools and means to extract the PHTML from your pdb files.
Once you have the PHTML extracted, conversion to ePub is also straight-forward using Calibre. As mentioned elsewhere in this thread, Calibre is an (excellent) open source (free, as in beer) ebook format converter. It also serves as a reader and library manager, and even if you're not trying to convert formats it's probably worth your time to check out.
It should be noted, however, that PHTLM isn't a flowed format (it won't repaginate from display to display), and that the conversion to ePub or other formats that support flowing (flexible pagination dependent upon screen resolution and font size) can be clunky. The resultant ePub is likely to have odd sentence, paragraph, and page breaks.
Unencrypted ePub files can be "side-loaded" on many (most?) ebook readers on the market today, including the Nook and Kobo readers, as well as numerous ebook readers for Android, iOS, WebOS, Blackberry, and Symbian.
I hope that helps.
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