FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 1, 2000
-------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission file number 0-362
FRANKLIN ELECTRIC CO., INC.
---------------------------
(Exact name of registrant as specified in its charter)
INDIANA 35-0827455
------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 EAST SPRING STREET
BLUFFTON, INDIANA 46714
----------------- -----
(Address of principal executive offices) (Zip Code)
(219) 824-2900
--------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
--------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
OUTSTANDING AT
CLASS OF COMMON STOCK MAY 11, 2000
--------------------- ------------
$.10 par value 5,407,020 shares
Page 1 of 3
<PAGE> 2
FRANKLIN ELECTRIC CO., INC.
Index
Page
PART I. FINANCIAL INFORMATION Number
- --------------------------------- ------
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
as of April 1, 2000 (Unaudited)
and January 1, 2000 (Unaudited)............... 3
Condensed Consolidated Statements of
Income for the Three Months Ended
April 1, 2000 (Unaudited) and
April 3, 1999 (Unaudited) .................... 4
Condensed Consolidated Statements of
Cash Flows for the Three Months Ended
April 1, 2000 (Unaudited)and
April 3, 1999 (Unaudited) .................... 5
Notes to Condensed Consolidated
Financial Statements (Unaudited).............. 6-8
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations......................... 9-10
Item 3. Quantitative and Qualitative Disclosures
About Market Risk............................. 10
PART II. OTHER INFORMATION
- -----------------------------
Item 4. Submission of Matters to a Vote of
Security Holders............................ 11
Item 6. Exhibits and Reports on Form 8-K.............. 11-12
Signatures................................................ 13
- ---------
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
- -----------------------------
FRANKLIN ELECTRIC CO., INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands) April 1, January 1,
2000 2000
- ---- ----
ASSETS
Current assets:
Cash and equivalents.................... $ 10,540 $ 27,844
Marketable securities................... - 8,968
Receivables, less allowances of
$1,342 and $1,333, respectively....... 21,895 17,995
Inventories (Note 2).................... 50,535 39,717
Other current assets (including
deferred income taxes of $7,956
and $7,934, respectively.............. 9,762 9,719
------- -------
Total current assets.................. 92,732 104,243
Property, plant and equipment,
net (Note 3)............................ 57,409 57,047
Deferred and other assets (including
deferred income taxes of $1,519
and $1,530, respectively)............... 14,466 14,811
------- -------
Total assets.............................. $164,607 $176,101
======== ========
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Current maturities of long-term
debt and short-term borrowings........ $ 1,017 $ 1,018
Accounts payable........................ 9,639 20,669
Accrued expenses........................ 21,392 23,558
Income taxes............................ 3,838 2,112
------- -------
Total current liabilities............. 35,886 47,357
Long-term debt............................ 17,054 17,057
Employee benefit plan obligations......... 12,145 11,892
Other long-term liabilities............... 3,543 3,502
Shareowners' equity:
Common stock (Note 5)................... 540 541
Additional capital...................... 18,672 17,695
Retained earnings....................... 83,695 84,242
Loan to ESOP Trust...................... (1,594) (1,827)
Accumulated other comprehensive
loss (Note 7)......................... (5,334) (4,358)
------- -------
Total shareowners' equity............. 95,979 96,293
------- -------
Total liabilities and shareowners' equity. $164,607 $176,101
======== ========
See Notes to Condensed Consolidated Financial Statements.
<PAGE> 4
FRANKLIN ELECTRIC CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended
------------------
April 1, April 3
2000 1999
- ---- ----
Net sales................................. $66,051 $58,014
Costs and expenses:
Cost of sales........................... 48,864 42,576
Selling and administrative expenses..... 10,309 9,759
Interest expense........................ 285 326
Other expense/(income), net............. 316 (166)
------ ------
59,774 52,495
Income before income taxes................ 6,277 5,519
Income taxes.............................. 2,374 2,042
------ ------
Net income................................ $ 3,903 $ 3,477
======= =======
Per share data (Note 6):
Net income per common share............. $ .72 $ .63
======= =======
Net income per common share,
assuming dilution..................... $ .69 $ .59
======= =======
Dividends per common share.............. $ .20 $ .17
======= =======
See Notes to Condensed Consolidated Financial Statements.
<PAGE> 5
FRANKLIN ELECTRIC CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands) Three Months Ended
------------------
April 1, April 3,
2000 1999
- ---- ----
Cash flows from operating activities:
Net income................................ $ 3,903 $ 3,477
Adjustments to reconcile net income to net
cash flows from operating activities:
Depreciation and amortization........... 2,514 1,731
Loss on disposals of plant and
equipment............................. 42 -
Changes in assets and liabilities:
Receivables........................... (4,249) (3,618)
Inventories........................... (11,579) (10,872)
Other assets.......................... (61) (117)
Accounts payable and other accrued
expenses............................ (11,033) (2,371)
Employee benefit plan obligations..... 307 (36)
Other long-term liabilities........... 52 915
------ ------
Net cash flows from
operating activities.............. (20,104) (10,891)
------ ------
Cash flows from investing activities:
Additions to plant and equipment.......... (2,932) (2,529)
Proceeds from sale of plant and
equipment............................... 22 -
Additions to deferred assets.............. (353) -
Proceeds from maturities of marketable
securities ............................. 8,968 27,921
------ ------
Net cash flows from
investing activities.................. 5,705 25,392
------ ------
Cash flows from financing activities:
Borrowing on line of credit............... - 366
Repayment of line of credit............... - (174)
Proceeds from issuance of common stock.... 981 401
Purchase of common stock.................. (3,367) (1,043)
Reduction of stock subscriptions.......... - (324)
Reduction of loan from ESOP Trust......... 233 232
Dividends paid............................ (1,088) (948)
------ ------
Net cash flows from
financing activities.................. (3,241) (1,490)
------ ------
Effect of exchange rate changes on cash..... 336 173
------ ------
Net change in cash and equivalents.......... (17,304) 13,184
Cash and equivalents at
beginning of period....................... 27,844 17,034
------ ------
Cash and equivalents at end of period....... $10,540 $30,218
======= =======
See Notes to Condensed Consolidated Financial Statements.
<PAGE> 6
FRANKLIN ELECTRIC CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1: Condensed Consolidated Financial Statements
- ----------------------------------------------------
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the three
months ended April 1, 2000 are not necessarily indicative of the results that
may be expected for the year ending December 30, 2000. For further
information, refer to the consolidated financial statements and footnotes
thereto included in Franklin Electric Co., Inc.'s annual report on Form 10-K
for the year ended January 1, 2000.
Note 2: Inventories
- --------------------
Inventories consist of the following:
(In thousands) April 1, January 1,
2000 2000
---- ----
Raw Materials........................ $ 15,829 $ 15,749
Work in Process...................... 6,242 6,101
Finished Goods....................... 38,952 28,239
LIFO Reserve......................... (10,488) (10,372)
------- -------
Total Inventory...................... $ 50,535 $ 39,717
======== ========
Note 3: Property, Plant and Equipment
- --------------------------------------
Property, plant and equipment, at cost, consists of the following:
(In thousands) April 1, January 1,
2000 2000
- ---- ----
Land and Buildings................... $ 22,627 $ 22,145
Machinery and Equipment.............. 114,246 113,452
------- -------
136,873 135,597
Allowance for Depreciation........... 79,464 78,550
------- -------
$ 57,409 $ 57,047
======== ========
<PAGE> 7
Note 4: Tax Rates
- ------------------
The effective tax rate on income before income taxes in 2000 and 1999 varies
from the United States statutory rate of 35 percent principally due to the
effect of state and foreign income taxes.
Note 5: Shareowners' Equity
- ----------------------------
The Company had 5,403,720 shares of common stock (25,000,000 shares
authorized, $.10 par value) outstanding as of April 1, 2000.
During the first quarter of 2000, pursuant to the stock repurchase program
authorized by the Company's Board of Directors, the Company repurchased a
total of 41,300 shares for $2.7 million. All repurchased shares were retired.
During the first quarter of 2000, under terms of a Company stock option plan,
a participant remitted 10,000 shares of company common stock as consideration
for stock issued upon the exercise of stock options. The total exercise price
of the respective stock options was $0.7 million, and the shares remitted to
the Company were subsequently retired.
Note 6: Earnings Per Share
- ---------------------------
Following is the computation of basic and diluted earnings per share:
(In thousands, Three Months Ended
------------------
except per share amounts) April 1, April 3,
2000 1999
- ---- ----
Numerator:
Net Income.......................... $3,903 $3,477
====== ======
Denominator:
Basic
Weighted average common shares..... 5,424 5,553
Diluted
Effect of dilutive securities:
Employee and director incentive
stock options and awards........ 234 362
----- -----
Adjusted weighted average common
shares.......................... 5,658 5,915
====== ======
Basic earnings per share.............. $ .72 $ .63
====== ======
Diluted earnings per share............ $ .69 $ .59
====== ======
<PAGE> 8
Note 7: Other Comprehensive Income
- -----------------------------------
Comprehensive income is as follows:
(In thousands) Three Months Ended
------------------
April 1, April 3,
2000 1999
- ---- ----
Net income.................................. $ 3,903 $ 3,477
Other comprehensive loss:
Foreign currency translation adjustments.. (976) (1,255)
------ ------
Comprehensive income, net of tax............ $ 2,927 $ 2,222
======= =======
Accumulated other comprehensive loss consists of the following:
(In thousands) April 1, January 1,
2000 2000
- ---- ----
Cumulative translation adjustment........... $(5,039) $(4,063)
Minimum pension liability adjustment,
net of tax................................ (295) (295)
------ ------
$(5,334) $(4,358)
======= =======
Note 8: Accounting Pronouncements
- ----------------------------------
Accounting for Derivative Instruments and Hedging Activities: SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" was issued in
June 1998 and, as amended by SFAS No. 137, is effective in the first quarter
of the Company's fiscal year ending December 29, 2001. SFAS No. 133
establishes a new model for accounting for derivatives in the balance sheet as
either assets or liabilities and measures them at fair value. Certain
disclosures concerning the designation and assessment of hedging relationships
are also required. The adoption of SFAS No. 133 is not expected to have a
material impact on the Company's financial position or its results of
operations.
<PAGE> 9
Item 2. Management's Discussion And Analysis Of Financial Condition And
- ------------------------------------------------------------------------
Results Of Operations
- ---------------------
Operations
- ----------
Net sales for the first quarter of 2000 were $66.1 million, a 14.0 percent
increase from 1999 first quarter net sales of $58.0 million. The increased
sales resulted primarily from higher volume of submersible water systems
motors and increased sales of fractional horsepower motors. A portion of the
growth is from supply agreements entered into in December 1998. The increases
were partially offset by lower sales of submersible petroleum motor systems.
Net income for the first quarter of 2000 was $3.9 million, or $.69 per diluted
share, compared to net income of $3.5 million, or $.59 per diluted share, for
the same period a year ago.
Cost of sales as a percentage of net sales for the first quarter of 2000 was
74.0 percent compared to 73.4 percent for the same period in 1999. The
increase is primarily a result of higher material costs in key commodities.
Selling and administrative expenses as a percent of net sales for the first
quarter of 2000 was 15.6 percent compared to 16.8 percent for the same period
in 1999. The decrease is primarily due to modest increases in fixed expenses
while sales increased at a higher rate.
Interest expense was $0.3 million for both the first quarter of 2000 and 1999.
Included in other income, net, for the first quarter of 2000 was $0.4 million
of interest income and $0.6 million of foreign currency losses. The increase
in the foreign currency transaction loss in 2000 was primarily due to the
strengthening dollar relative to the German mark. Interest income was $0.5
million and foreign currency losses were $0.3 million for the same period in
1999. Interest income was attributable to amounts invested principally in
short-term US treasury and agency securities.
Capital Resources and Liquidity
- -------------------------------
Cash, cash equivalents and marketable securities decreased $26.3 million
during the first quarter of 2000. The principal use of cash for operating
activities was the typical seasonal increase in inventories and changes in
accounts payable. Working capital did not change during the first quarter of
2000. The current ratio was 2.6 and 2.2 at April 1, 2000, and January 1,
2000, respectively.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
- -----------------------------------------------------------------------------
1995
- ----
Any forward looking statements contained herein involve risks and
uncertainties, including but not limited to, general economic and currency
conditions, various conditions specific to the Company's business and
industry, market demand, competitive factors, supply constraints, technology
factors, government and regulatory actions, the Company's accounting policies,
<PAGE> 10
future trends, and other risks which are detailed in the Company's Securities
and Exchange Commission filings. These risks and uncertainties may cause
actual results to differ materially from those indicated by the forward
looking statements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
- -------------------------------------------------------------------
The Company is subject to market risk associated with changes in foreign
currency exchange rates and interest rates. Foreign currency exchange rate
risk is mitigated through several means: maintenance of local production
facilities in the markets served, invoicing of customers in the same currency
as the source of the products, prompt settlement of intercompany balances
utilizing a global netting system and limited use of foreign currency
denominated debt. The Company does not use derivative contracts. Interest
rate exposure is principally limited to any marketable U.S. treasury and
agency securities owned by the Company ($0.0 at April 1, 2000), and is
mitigated by the short-term, generally less than 6 months, nature of these
investments.
<PAGE> 11
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
The 2000 Annual Meeting of Shareholders of the Company was held on April 14,
2000 for the following purposes: 1) To elect three directors for terms
expiring at the 2003 Annual Meeting of Shareholders; 2) To approve the Amended
and Restated 1996 Nonemployee Director Stock Option Plan; 3) To approve the
Key Employee Performance Incentive Stock Plan; and 4) To ratify the
appointment of Deloitte & Touche LLP as independent auditors for the 2000
fiscal year.
The results were:
1) Nominees for Director For Withhold Authority
--------------------- --- ------------------
Jerome D. Brady 4,932,689 8,851
Robert H. Little 4,932,897 8,643
Patricia Schaefer 4,932,738 8,802
For Against Abstain
--- ------- -------
2) Amended and Restated
1996 Nonemployee Director
Stock Option Plan 3,453,075 820,095 36,585
3) Key Employee Performance
Incentive Stock Plan 3,376,086 897,602 36,015
4) Ratification of
Deloitte & Touche LLP 4,918,919 3,150 10,410
Total shares represented at the Annual Meeting in person or by proxy were
4,941,540 of a total of 5,430,420 shares outstanding. This represented 91
percent of Company common stock and constituted a quorum. Total broker non-
votes related to the approval of the Amended and Restated 1996 Director Stock
Option Plan, Key Employee Performance Incentive Stock Plan and the
ratification of Deloitte & Touche LLP were 631,785, 631,837 and 9,061 shares,
respectively.
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits (Filed with this quarterly report)
10(i) Franklin Electric Co., Inc. Amended and Restated 1996
Nonemployee Director Stock Option Plan.
10(ii) Franklin Electric Co., Inc. Key Employee Performance
Incentive Stock Plan.
10(iii) Franklin Electric Co., Inc. Nonemployee Directors'
Deferred Compensation Plan.
<PAGE> 12
(b) Reports on Form 8-K
None.
<PAGE> 13
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this quarterly report to be signed on its behalf by
the undersigned thereunto duly authorized.
FRANKLIN ELECTRIC CO., INC.
---------------------------
Registrant
Date May 11, 2000 By /s/ William H. Lawson
---------------------- --------------------------
William H. Lawson, Chairman
and Chief Executive Officer
(Principal Executive Officer)
Date May 11, 2000 By /s/ Gregg C. Sengstack
---------------------- --------------------------
Gregg C. Sengstack, Vice
President and Chief Financial
Officer (Principal Financial
and Accounting Officer)
5
<PAGE> 14
EXHIBIT 3(i)
FRANKLIN ELECTRIC CO., INC.
AMENDED AND RESTATED 1996 NONEMPLOYEE
DIRECTOR STOCK OPTION PLAN
ARTICLE 1.
ESTABLISHMENT, PURPOSE, AND DURATION
1.1. Establishment of the Plan. Franklin Electric Co., Inc., an Indiana
corporation (hereinafter referred to as the "Company"), hereby amends and
restates its incentive compensation plan to be known as the "Amended and
Restated 1996 Franklin Electric Co., Inc. Nonemployee Director Stock Option
Plan" (hereinafter referred to as the "Plan"), as set forth in this document.
The Plan permits the grant of Nonqualified Stock Options to Nonemployee
Directors, subject to the terms and provisions set forth herein.
Upon approval by the Board of Directors of the Company, subject to
ratification within twelve (12) months by an affirmative vote of a majority of
Shares of the Common Stock present and entitled to vote at the Annual Meeting
at which a quorum is present, the Plan shall become effective as of February
11, 2000 (the "Effective Date"), and shall remain in effect as provided in
Section 1.3 herein.
1.2. Purpose of the Plan. The purpose of the Plan is to promote the
achievement of long-term objectives of the Company by linking the personal
interests of Nonemployee Directors to those of Company shareholders, and to
attract and retain Nonemployee Directors of outstanding competence.
1.3. Duration of the Plan. The Plan shall commence on February 11, 2000, and
shall remain in effect, subject to the right of the Board of Directors to
amend or terminate the Plan at any time pursuant to Article 8.1 herein, until
all Shares subject to it shall have been purchased or acquired according to
the Plan's provisions. However, in no event may an Award be granted under the
Plan on or after March 30, 2006.
ARTICLE 2.
DEFINITIONS AND CONSTRUCTION
2.1. Definitions. Whenever used in the Plan, the following terms shall have
the meanings set forth below and, when the meaning is intended, the initial
letter of the word is capitalized:
"Award" means a grant of Nonqualified Stock Options under the Plan.
"Award Agreement" means an agreement entered into by the Company and each
Participant setting forth the terms and provisions applicable to Awards
granted under the Plan.
"Beneficial Owner" shall have the meaning ascribed to such term in Rule 13d-3
of the General Rules and Regulations under the Exchange Act.
<PAGE> 15
"Board" or "Board of Directors" means the Board of Directors of the Company,
and includes any committee of the Board of Directors designated by the Board
to administer part or all of the Plan.
"Change in Control" of the Company shall be deemed to have occurred if the
conditions set forth in any one or more of the following paragraphs shall have
been satisfied:
(i) Any Person (other than the Person in control of the Company on the
Effective Date, or other than a trustee or other fiduciary holding securities
under an employee benefit plan of the Company, or a corporation owned directly
or indirectly by the stockholders of the Company in substantially the same
proportions as their ownership of Shares of the Company), is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company's then
outstanding securities; or
(ii) The election to the Board of Directors of the Company, without the
recommendation or approval of a majority of the incumbent Board of Directors,
of the lesser of (a) three directors, or (b) directors constituting a majority
of the numbers of directors then in office; or
(iii) The stockholders of the Company approve (a) a plan of complete
liquidation of the Company; or (b) an agreement for the sale or disposition of
all or substantially all the Company's assets; or (c) a merger or
consolidation of the Company with any other corporation, other than a merger
or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 50% of the combined voting securities of the
Company (or such surviving entity) outstanding immediately after such merger
or consolidation.
However, in no event shall a Change in Control be deemed to have occurred,
with respect to a Participant, if that Participant is part of a purchasing
group which consummates the Change in Control transaction. A Participant shall
be deemed "part of a purchasing group" for purposes of the preceding sentence
if the Participant is an equity participant or has agreed to become an equity
participant in the purchasing company or group (except for (i) passive
ownership of less than 3% of the Shares of the purchasing company; or (ii)
ownership of equity participation in the purchasing company or group which is
otherwise not deemed to be significant, as determined prior to the Change in
Control by a majority of the disinterested Directors).
"Code" means the Internal Revenue Code of 1986, as amended, in effect at the
time of reference, or any successor revenue Code that may hereafter be adopted
in lieu thereof, and references to any specific provisions of the Code shall
refer to the corresponding provisions of the Code as it may hereafter be
amended or replaced.
"Company" means Franklin Electric Co., Inc., an Indiana corporation, and the
Company's subsidiaries, as well as any successor to any such entities, as
provided in Section 9.3 herein.
"Director" means any individual who is a member of the Board of Directors of
the Company.
"Disability" means a permanent and total disability, within the meaning of
Code Section 22(e)(3), as determined by the Board in good faith.
<PAGE> 16
"Employee" means any full-time, nonunion, salaried employee of the Company.
For purposes of the Plan, an individual whose only employment relationship
with the Company is as a Director, shall not be deemed to be an Employee.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from time
to time, or any successor Act thereto.
"Fair Market Value" means the closing sale price of a Share on the principal
securities exchange on which the Shares are publicly traded, or if there is no
such sale on the relevant date, then on the last previous day on which a sale
was reported.
"Nonemployee Director" means any individual who is a member of the Board of
Directors of the Company, but is not, as of the date of the grant of an Award
hereunder, an Employee of the Company.
"Nonqualified Stock Option" or "NQSO" means an option to purchase Shares,
granted under Article 6 herein, which is not intended to meet the requirements
of Code Section 422.
"Option" means a Nonqualified Stock Option granted under the Plan.
"Participant" means a Nonemployee Director of the Company who has an
outstanding Award granted under the Plan.
"Person" shall have the meaning ascribed to such term in Section 3(a)(9) of
the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a
"group" as defined in Section 13(d).
"Shares" means the $.10 par value common stock of the Company.
"Subsidiary" means any corporation, partnership, joint venture, affiliate, or
other entity in which the Company has a majority voting interest, and which
the Committee designates as a participating entity in the Plan.
2.2. Gender and Number. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
2.3. Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
ARTICLE 3.
ADMINISTRATION
3.1. The Board of Directors. The Plan shall be administered by the Board of
Directors of the Company.
3.2. Administration by the Board. The Board shall have the full power,
discretion, and authority to interpret and administer the Plan in a manner
which is consistent with the Plan's provisions. However, in no event shall the
Board have the sole and exclusive power to determine Plan eligibility, or to
determine the number, the Option Price, the vesting period, or the frequency
and timing of Awards to be made under the Plan to any Participant (all such
determinations are automatic pursuant to the provisions of the Plan).
<PAGE> 17
3.3. Decisions Binding. All determinations and decisions made by the Board
pursuant to the provisions of the Plan and all related orders or resolutions
of the Board shall be final, conclusive, and binding on all Persons, including
the Company, its stockholders, employees, Participants, and their estates and
beneficiaries.
ARTICLE 4.
SHARES SUBJECT TO THE PLAN
4.1. Number of Shares. Subject to adjustment as provided in Section 4.3
herein, no more than three hundred thousand (300,000) Shares shall be eligible
for purchase by Participants pursuant to Options granted under the Plan.
4.2. Lapsed Awards. If any Option granted under the Plan terminates, expires,
or lapses for any reason, any Shares subject to purchase pursuant to such
Option again shall be available for the grant of an Option under the Plan.
4.3. Adjustment in Available Shares. Any increase in the number of
outstanding Shares of the Company occurring through stock splits or stock
dividends after the adoption of the Plan shall be reflected proportionately in
an increase in the aggregate number of Shares then available for issuance
under the Plan. Any fractional Shares resulting from such adjustments shall be
eliminated. If changes in capitalization other than those considered above
shall occur, the Board shall make such adjustment in the number and class of
Shares which may thereafter be issued, as the Board in its discretion may
consider appropriate, and all such adjustments shall be conclusive upon all
persons.
ARTICLE 5.
ELIGIBILITY AND PARTICIPATION
5.1. Eligibility. Persons eligible to participate in the Plan are limited to
Nonemployee Directors.
5.2. Actual Participation. Subject to the provisions of Article 6 of the
Plan, all Nonemployee Directors shall receive grants of Options upon election
and/or reelection to serve on the Board of Directors.
ARTICLE 6.
NONQUALIFIED STOCK OPTIONS
6.1. Grants of Options. Subject to the limitation on the number of Shares
subject to the Plan, each person who is a Nonemployee Director following each
Annual Meeting of the Shareholders shall automatically be granted an Option to
purchase five thousand (5,000) Shares.
6.2. Limitation on Grant of Options. Other than those grants of Options set
forth in Section 6.1, no additional Options shall be granted under the Plan.
6.3. Award Agreement. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the duration of the Option, and
the number of Shares available for purchase under the Option as set forth in
the Plan.
<PAGE> 18
6.4. Option Price. The Option Price per Share available for purchase under an
Option shall be equal to the Fair Market Value of such Share on the date the
Option is granted.
6.5. Duration of Options. Each Option shall expire on the tenth (10th)
anniversary date of its grant.
6.6. Vesting of Shares Subject to Option. Participants shall be entitled to
exercise Options at any time and from time to time, within the time period
beginning one (1) year after grant of the Option, and ending ten (10) years
after grant of the Option, and according to the following vesting schedule:
one-third of the Options shall vest on each of the first, second, and third
anniversaries of the date of grant of the Options.
6.7. Payment. A Participant may exercise an Option by delivery of a written
notice, specifying the number of Shares with respect to which the Option is
being exercised, accompanied by payment in full of the Option Price of any
Shares to be purchased (in the form of a cashier's or certified check). No
Shares shall be issued upon exercise of an Option until full payment has been
made therefor. Notwithstanding the preceding sentence, the Board may permit a
Participant to pay the Option Price of the Shares to be purchased (i) in
Shares valued at their Fair Market Value at the date of exercise, (ii) by
agreeing to surrender Options then exercisable by him valued at the excess of
the aggregate Fair Market Value of the Shares subject to such Options on the
date of exercise over the aggregate Option Price of such Shares, (iii) by
directing the Company to withhold such number of Shares otherwise issuable
upon exercise of such Options having an aggregate Fair Market Value on the
date of exercise equal to the Option Price of the Option, or (iv) by such
other medium of payment as the Board, in its discretion, shall authorize, or
by any combination of the aforementioned methods of payment. Shares issued
upon exercise of an Option shall be issued only in the name of the
Participant. All notices shall be delivered to the Secretary of the Company
and shall become effective when received.
6.8. Termination of Service on Board of Directors Due to Death or Disability.
In the event the service of a Participant on the Board is terminated by reason
of death, Disability, or retirement on or after attaining the age of seventy
(70), any outstanding Options granted to that Participant that are not
exercisable as of the date of death (or as of the date that the definition of
Disability is satisfied, or the date of retirement, as applicable) shall
immediately become exercisable.
To the extent an Option is exercisable by reason of death, as of the date that
the definition of Disability is satisfied, or retirement on or after attaining
the age of seventy (70), as applicable, such Option shall remain exercisable
at any time prior to its expiration date, or for two (2) years after the date
of death, or the date that the definition of Disability is satisfied, or the
date of retirement, as applicable, whichever period is shorter, by the
Participant or such person or persons as shall have been named as the
Participant's legal representative or beneficiary, or by such persons that
have acquired the Participant's rights under the Option by will or by the laws
of descent and distribution.
6.9. Termination of Service on Board of Directors for Other Reasons. If the
service of the Participant on the Board shall terminate for any reason other
than for death, Disability, or retirement on or after attaining the age of
seventy (70), any outstanding Options held by the Participant that are not
exercisable as of the date of termination immediately shall be forfeited to
the Company (and shall once again become available for grant under the Plan).
<PAGE> 19
To the extent an Option is exercisable as of the date of termination of the
Participant's service on the Board, it shall remain exercisable at any time
prior to its expiration date, or for six (6) months after the date the
Participant's service on the Board terminates, whichever period is shorter.
6.10. Nontransferability of Options. No Option granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution. Further, all
Options granted to a Participant under the Plan shall be exercisable during
his or her lifetime only by such Participant.
Notwithstanding the preceding provisions of this Section, a Participant, at
any time prior to his or her death, may assign all or any portion of an Option
granted to him or her to (i) his or her spouse or lineal descendant, (ii) the
trustee of a trust established for the primary benefit of his or her spouse or
lineal descendant, (iii) a partnership of which his or her spouse and lineal
descendants are the only partners, or (iv) a tax-exempt organization as
described in Section 501(c)(3) of the Code. In such event, the spouse, lineal
descendants, trustee, partnership or tax-exempt organization, will be entitled
to all the rights of the Participant with respect to the assigned portion of
such Option, and such portion of the Option will continue to be subject to all
of the terms, conditions and restrictions applicable to the Option as set
forth herein immediately prior to the effective date of the assignment. Any
such assignment will be permitted only if (i) the Participant does not receive
any consideration therefor, and (ii) the assignment is expressly approved by
the Board. Any such assignment shall be evidenced by an appropriate written
document executed by the Participant and a copy thereof shall be delivered to
the Board on or prior to the effective date of the assignment.
6.11. Restrictions on Share Transferability. The Board may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option
under the Plan, as it may deem advisable, including, without limitation,
restrictions under applicable Federal securities laws, under the requirements
of any Stock exchange or market upon which such Shares are then listed and/or
traded, and under any blue sky or state securities laws applicable to such
Shares.
ARTICLE 7.
CHANGE IN CONTROL
In the event of a Change in Control of the Company, all Options granted under
the Plan that are still outstanding and not yet vested and exercisable, shall
become immediately one hundred percent (100%) vested in and exercisable by
each Participant, as of the first date that the definition of Change in
Control has been fulfilled, and shall remain as such for the remaining life of
the Option, as such life is provided herein, and within the provisions of the
related Award Agreements. All Options that are exercisable as of the Change in
Control shall remain as such for the remaining life of the Options.
ARTICLE 8.
AMENDMENT, MODIFICATION, AND TERMINATION
8.1. Amendment, Modification, and Termination. The Board, without further
action on the part of the Company's shareholders, may at any time terminate,
suspend or modify the Plan to the extent permitted by law, regulation or stock
exchange requirements. No termination or amendment of the Plan, or amendment
of any Option, shall adversely affect any right acquired by any Participant
<PAGE> 20
under an Option granted before the date of such termination or amendment,
unless such Participant shall consent; but it shall be conclusively presumed
that any adjustments in capitalization as provided in Section 4.3 above does
not adversely affect any such right.
8.2. Options Previously Granted. Unless required by law, no termination,
amendment, or modification of the Plan shall in any manner adversely affect
any Option previously granted under the Plan, without the written consent of
the Participant holding the Option.
ARTICLE 9.
MISCELLANEOUS
9.1. Indemnification. Each individual who is or shall have been a member of
the Board shall be indemnified and held harmless by the Company against and
from any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by him or her in connection with or resulting from any
claim, action, suit, or proceeding to which he or she may be a party or in
which he or she may be involved by reason of any action taken or failure to
act under the Plan and against and from any and all amounts paid by him or her
in settlement thereof, with the Company's approval, or paid by him or her in
satisfaction of any judgment in any such action, suit, or proceeding against
him or her, provided he or she shall give the Company an opportunity, at its
own expense, to handle and defend the same before he or she undertakes to
handle and defend it on his or her own behalf.
The foregoing right of indemnification shall not be exclusive of any other
rights of indemnification to which such individuals may be entitled under the
Company's Certificate of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold
them harmless.
9.2. Beneficiary Designation. Each Participant under the Plan may, from time
to time, name any beneficiary or beneficiaries (who may be named contingently
or successively) to whom any benefit under the Plan is to be paid in the event
of his or her death. Each designation will revoke all prior designations by
the same Participant, shall be in a form prescribed by the Board, and will be
effective only when filed by the Participant in writing with the Board during
his or her lifetime. In the absence of any such designation, or if all
beneficiaries predecease the Participant, benefits remaining unpaid at the
Participant's death shall be paid to the Participant's estate.
9.3. Successors. All obligations of the Company under the Plan, with respect
to Awards granted hereunder, shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation, or otherwise, of all or substantially all of
the business and/or assets of the Company.
9.4. Requirements of Law. The granting of Options under the Plan shall be
subject to all applicable laws, rules, and regulations, and to such approvals
by any governmental agencies or national securities exchanges as may be
required.
9.5. Governing Law. To the extent not preempted by Federal law, the Plan, and
all agreements hereunder, shall be construed in accordance with and governed
by the laws of the State of Indiana.
5
<PAGE> 21
EXHIBIT 3 (ii)
FRANKLIN ELECTRIC CO., INC.
KEY EMPLOYEE PERFORMANCE INCENTIVE STOCK PLAN
PREAMBLE
Employees of the Company who are from time to time materially responsible for
the management, growth and protection of a material part or all of the
business or major product lines or major functions of the Company are eligible
to be granted Restricted Shares under the Plan.
At the time of the grant a Committee of the Board of Directors will establish
at least two criteria for employees to earn the shares granted. First, the
Committee will establish a Restriction Period. Second, the Committee will also
set performance goals for the employees to achieve during the restriction
period. These goals will be based on financial and other metrics that are
recognized as measures of the enhancement of shareholder value.
At the end of a Restriction Period, the Committee, in its own discretion,
shall determine (i) whether and to what extent the Company has achieved the
Performance Objectives and satisfied any other terms, conditions or
restrictions established for the Restriction Period, and (ii) the number of
Shares of Restricted Stock with respect to which the restrictions imposed
should lapse.
If at the end of the Restriction Period the Committee determines that the
Company failed to achieve the Performance Objectives or otherwise failed to
satisfy any other restrictions, terms or conditions set by the Committee, then
to the extent provided in the Restricted Stock Agreement or otherwise by the
Committee, the Shares of Restricted Stock shall be forfeited by the
Participant and returned to the Company, and all rights of the Participant in
such Shares shall terminate without any further obligation on the part of the
Company.
SECTION 1.
ESTABLISHMENT, PURPOSE AND EFFECTIVE DATE
1.1. Establishment. Franklin Electric Co., Inc. (the "Company") hereby
establishes an incentive stock plan for certain employees, as described
herein, which shall be known as the FRANKLIN ELECTRIC CO., INC. KEY EMPLOYEE
PERFORMANCE INCENTIVE STOCK PLAN (the "Plan").
1.2. Purpose. The purposes of the Plan are as follows: (i) to advance the
interests of the Company by providing the additional incentives inherent in
stock ownership to those employees of the Company materially responsible, now
and in the future, for the management, growth and protection of some part or
all of the business of the Company and thereby to bring them into closer
identity with the future of the Company; (ii) to aid the Company in attracting
and retaining employees in key management positions; and (iii) to enable the
Company to compete effectively with other enterprises for the services of new
employees as may be needed for the continued success of the Company. The Plan
seeks to accomplish such purposes by providing to such employees an equity
interest in the Company.
1.3. Effective Date. This Plan shall become effective upon its adoption by
the Board of Directors of the Company and the effective date of any grant of
Restricted Stock shall be the day on which it is granted to the Participant
hereunder; provided, however, that the validity of the Plan and any Restricted
<PAGE> 22
Stock provided hereunder is subject to approval of the Plan at the next
shareholders meeting following its adoption by the Board of Directors of the
Company and the approval must be by a majority of the votes entitled to vote
at a duly held meeting of the shareholders. If the shareholders fail to timely
approve the Plan, the Plan and any Restricted Stock that may be issued
hereunder shall be null and void.
SECTION 2.
DEFINITIONS
2.1. Definitions. Whenever used herein, the following terms shall have the
meanings set forth below:
"Board" means the Board of Directors of the Company.
"Change in Control" of the Company shall be deemed to have occurred if the
conditions set forth in any one or more of the following paragraphs shall have
been satisfied:
(i) Any Person (other than the Person in control of the Company on the
Effective Date, or other than a trustee or other fiduciary holding securities
under an employee benefit plan of the Company, or a corporation owned directly
or indirectly by the stockholders of the Company in substantially the same
proportions as their ownership of Shares of the Company), is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company's then
outstanding securities; or
(ii) The election to the Board of Directors of the Company, without the
recommendation or approval of a majority of the incumbent Board of Directors,
of the lesser of (a) three directors, or (b) directors constituting a majority
of the numbers of directors then in office; or
(iii) The stockholders of the Company approve (a) a plan of complete
liquidation of the Company; or (b) an agreement for the sale or disposition of
all or substantially all the Company's assets; or (c) a merger or
consolidation of the Company with any other corporation, other than a merger
or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 50% of the combined voting securities of the
Company (or such surviving entity) outstanding immediately after such merger
or consolidation.
However, in no event shall a Change in Control be deemed to have occurred,
with respect to a Participant, if that Participant is part of a purchasing
group which consummates the Change-in-Control transaction. A Participant shall
be deemed "part of a purchasing group" for purposes of the preceding sentence
if the Participant is an equity participant or has agreed to become an equity
participant in the purchasing company or group (except for (i) passive
ownership of less than 3% of the Shares of the purchasing company; or (ii)
ownership of equity participation in the purchasing company or group which is
otherwise not deemed to be significant, as determined prior to the Change in
Control by a majority of the disinterested Directors).
"Code" means the Internal Revenue Code of 1986, as amended, in effect at the
time of reference, or any successor Code that may hereafter be adopted in lieu
thereof, and references to any specific provisions of the Code shall refer to
<PAGE> 23
the corresponding provisions of the Code as it may hereinafter be amended or
replaced.
"Committee" means a committee of the Board consisting of two or more members
of the Board who are "outside directors," as defined under section 162(m) of
the Code and the regulations thereunder.
"Disability" means a permanent and total disability, within the meaning of
Code Section 22(e)(3), as determined by the Board in good faith.
"Employee" means any person (including officers who are directors of the
Company) employed by the Company on a full-time salaried basis.
"Normal Retirement" means termination of employment on or after a
Participant's sixty-fifth birthday under the Company's Basic Retirement Plan
as may be amended from time to time.
"Participant" means any individual designated by the Committee to participate
in the Plan.
"Performance Objectives" means the performance goals set by the Committee
based on one or more of the following: (i) net income growth; (ii) average
return on equity; (iii) net income as a percentage of sales; (iv) sales
growth; (v) return on assets; (vi) earnings per share; and (vii) Common Stock
price.
"Restriction Period" means that period of time determined by the Committee
during which the transfer of Shares of Restricted Stock are restricted and are
subject to forfeiture.
"Restricted Stock" means Stock granted to a Participant pursuant to Section 7
of the Plan.
"Stock," "Shares," and "Restricted Stock" mean the common shares of the
Company.
2.2. Gender and Number. Except when otherwise indicated by the context, words
in the masculine gender when used in this Plan also shall include the feminine
and neuter genders, the singular shall include the plural, and the plural
shall include the singular.
SECTION 3.
ELIGIBILITY AND PARTICIPATION
3.1. Eligible Employees. The officers and other employees of the Company who,
in the opinion of the Committee, are from time to time materially responsible
for the management, growth and protection of a material part or all of the
business or major product lines or major functions of the Company shall be
eligible to be granted Shares of Restricted Stock under the Plan.
SECTION 4.
ADMINISTRATION
4.1. Administration. The Committee shall be responsible for the
administration and interpretation of the Plan. Without limiting other rights
or powers delegated to the Committee elsewhere under the Plan, the Committee,
<PAGE> 24
in administering and interpreting the Plan, and consistent with the express
provisions of the Plan, is hereby authorized and empowered as follows:
(a) The Committee shall determine the identity of the Participant of the
Plan and the number of Shares of Restricted Stock to be granted to
Participants.
(b) The Committee shall determine the Restriction Period, the Performance
Objectives, and any other restrictions, terms or conditions with respect to
the granting of any Restricted Stock.
(c) The Committee may prescribe, award, and rescind rules or regulations
relating to the Plan.
(d) The Committee may make all other determinations necessary or advisable
for the administration or interpretations of the Plan.
(e) The Committee shall prescribe the terms and conditions of the Restricted
Stock Agreements.
(f) The Committee may require that all Stock certificates issued in
connection with Shares of Restricted Stock be held by the Company or in escrow
or otherwise pursuant to such terms and conditions that the Committee may
require until all the restrictions have lapsed and the Restricted Stock is
freely transferable.
SECTION 5.
STOCK SUBJECT TO PLAN
5.1. Number. The total number of Shares of Restricted Stock that may be
granted under the Plan may not exceed one hundred thousand (100,000), subject
to the adjustment as provided in Section 5.3. Those Shares of Restricted Stock
granted may consist, in whole or in part, of authorized but unissued Stock or
Shares of Stock reacquired by the Company, including Shares purchased in the
open market and not reserved for any other purpose.
5.2. Unused Stock. In the event any Shares of Restricted Stock granted under
the Plan are forfeited and reacquired by the Company, such reacquired Shares
again shall become available for issuance under the Plan.
5.3. Adjustment in Available Shares. Any increase in the number of
outstanding Shares of the Company occurring through Stock splits or Stock
dividends after the adoption of the Plan shall be reflected proportionately in
an increase in the aggregate number of Shares then available for issuance
grant under the Plan. Any fractional share of Restricted Stock resulting from
such adjustments shall be eliminated. If changes in capitalization other than
those considered above shall occur, the Board shall make such adjustment in
the number and class of Restricted Stock which may thereafter be issued, as
the Board in its discretion may consider appropriate, and all such adjustments
shall be conclusive upon all persons.
SECTION 6.
TERMINATION OF THE PLAN
6.1. Termination of the Plan. Subject to the Board's right to earlier
terminate the Plan pursuant to Section 10.1 hereof, the Plan shall terminate
not later than ten (10) years after the date of adoption of the Plan by the
<PAGE> 25
Board of Directors and no Restricted Stock shall be granted after termination
of the Plan; provided, however, that termination of the Plan will not
adversely affect Shares of Restricted Stock granted prior to termination of
the Plan.
SECTION 7.
RESTRICTED STOCK
7.1. Selection of Participants and Grant of Restricted Stock. Subject to the
terms of the Plan, from time to time the Committee may select eligible
employees to be Participants under the Plan and to receive the opportunity to
earn grants of Restricted Stock. Grants will generally be made at the
beginning of a Restriction Period, but may, in the Committee's discretion, be
made during the term of a Restriction Period. The Committee shall determine
the number of Shares of Restricted Stock which will be granted to a
Participant.
7.2. Restriction Period. At the time of the grant of Shares of Restricted
Stock, the Committee shall select the Restriction Period to apply to the
Shares of Restricted Stock.
7.3. Performance Objectives. At the time of the grant of the Restricted Stock
(which generally will be prior to the beginning of the Restriction Period),
Performance Objectives designed to enhance shareholder value shall be
established by the Committee. Subject to the provisions of this Plan, the
degree of achievement of the Performance Objectives may determine the number
of Shares (if any) of Restricted Stock that ultimately shall be free of any
restrictions at the end of the Restriction Period.
7.4. Nontransferability of Restricted Stock. Prior to the lapse of
restrictions as provided in Section 7.6, Shares of Restricted Stock may not be
sold, exchanged, transferred, pledged, assigned, or otherwise alienated or
hypothecated, whether voluntarily or involuntarily. Notwithstanding the
preceding provisions of this Section, a Participant, at any time prior to his
or her death, may assign all or any Shares of Restricted Stock granted to him
to (i) his or her spouse or lineal descendant, (ii) the trustee of a trust
established for the primary benefit of his or her spouse or lineal descendant,
(iii) a partnership of which his or her spouse and lineal descendants are the
only partners, or (iv) a tax-exempt organization as described in Section
501(c)(3) of the Code. In such event, the spouse, lineal descendants, trustee,
partnership or tax-exempt organization, will be entitled to all the rights of
the Participant with respect to the assigned Shares of such Restricted Stock,
and such portion of the grant will continue to be subject to all of the terms,
conditions and restrictions applicable to the Restricted Stock as set forth
herein immediately prior to the effective date of the assignment. Any such
assignment will be permitted only if (i) the Participant does not receive any
consideration therefor, and (ii) the assignment is expressly approved by the
Board. Any such assignment shall be evidenced by an appropriate written
document executed by the Participant and a copy thereof shall be delivered to
the Board on or prior to the effective date of the assignment.
7.5. Forfeiture and Return of Restricted Stock to the Company.
(a) Failure to Achieve Performance Objective or Other Conditions. If at the
end of the Restriction Period the Committee determines that the Company failed
to achieve the Performance Objectives or otherwise failed to satisfy any other
restrictions, terms or conditions set by the Committee, then to the extent
provided in the Restricted Stock Agreement or otherwise by the Committee, the
<PAGE> 26
Shares of Restricted Stock shall be forfeited by the Participant and returned
to the Company, and all rights of the Participant in such Shares shall
terminate without any further obligation on the part of the Company. Pursuant
to the Plan, the Restricted Stock Agreement or otherwise, the Committee may
determine that some but not all of a Participant's Shares of Restricted Stock
shall be forfeited. The Committee shall have the exclusive authority to
determine whether the Company has achieved its Performance Objectives and the
level or extent of achievement, whether any other terms, conditions or
restrictions have been satisfied, and the number of Shares of Restricted Stock
which shall be forfeited.
(b) Termination of Employment for Reasons Other than Death, Disability, or
Normal Retirement Prior to End of Restricted Period. If during the Restricted
Period a Participant's employment with the Company is terminated for any
reason other than death, Disability, or Normal Retirement, including without
limitation termination by the Company, then all Shares of Restricted Stock of
the Participant (excluding any Shares for which any restrictions have
previously lapsed under Section 7.6) shall be forfeited by the Participant and
returned to the Company and all rights of the Participant in such Shares shall
terminate without any further obligation on the part of the Company.
7.6. Lapse of Restrictions.
(a) Achievement of Performance Objectives and Other Conditions. At the end of
a Restriction Period, the Committee, in its discretion, shall determine (i)
whether and to what extent the Company has achieved the Performance Objectives
and satisfied any other terms, conditions or restrictions established for the
Restriction Period, and (ii) the number of Shares of Restricted Stock with
respect to which the restrictions imposed should lapse. If the Committee
determines that the restrictions imposed pursuant to this Plan should lapse,
then the restrictions with respect to those Shares shall lapse, and the
Committee shall so notify the Participant. A lapse of restrictions shall occur
on the date the Committee notifies the Participant in writing of the lapse.
(b) Termination of Employment as a Result of Death, Disability, or Normal
Retirement Prior to the End of the Restriction Period. If a Participant
terminates his or her employment because of death, Disability, or Normal
Retirement during the Restriction Period, the restrictions applicable to the
Shares of Restricted Stock shall lapse and terminate (regardless of whether
Performance Objectives or any other terms, conditions or restrictions have
been satisfied) with respect to that number of Shares (rounded to the nearest
whole number) equal to the total number of Shares of Restricted Stock granted
to such Participant multiplied by a fraction, the numerator of which is equal
to the number of full months which have elapsed since the date of grant to the
date of termination of employment, and the denominator is the maximum number
of full months of the Restriction Period. The Committee shall so notify the
Participant or his or her representative of the number of Shares with respect
to which the restrictions have lapsed. All remaining Shares shall be forfeited
and returned to the Company, and all rights of the Participant in such Shares
shall terminate without any further obligations on the part of the Company;
provided, however, that the Committee may, in its sole discretion, waive the
restrictions remaining on any or all such remaining Shares.
7.7. Certificate Legend. In addition to any legends placed on certificates
pursuant to Subsection 7.8 hereof, each certificate representing Shares of
Restricted Stock granted pursuant to the Plan shall bear the following legend:
<PAGE> 27
"The sale or other transfer of the Shares of stock represented by this
certificate, whether voluntary, involuntary, or by operation of law, is
subject to certain restrictions on transfer set forth in The Franklin Electric
Co., Inc. Key Employee Performance Incentive Stock Plan, rules of
administration adopted pursuant to such Plan, and a Restricted Stock Agreement
dated _________. A copy of the Plan, such rules, and the Restricted Stock
Agreement may be obtained from the Secretary of Franklin Electric Co., Inc."
7.8. Other Restrictions. The Committee may impose such other restrictions on
any Shares granted pursuant to this Plan as it may deem advisable including,
without limitation, restrictions under applicable Federal or state securities
laws, and may legend the certificates representing Restricted Stock to give
appropriate notice of such restrictions.
7.9. Voting Rights and Dividends with Respect to Restricted Stock. With
respect to Shares of Restricted Stock, prior to the lapse of restrictions
under Section 7.6, each Participant shall generally have the rights and
privileges of a shareholder, including the right to vote the Shares and to
receive dividends or other distributions made with respect to the Shares;
provided, however, that the Shares of Restricted Stock shall be subject to all
the terms, conditions and restrictions of the Plan and the Restricted Stock
Agreement, including without limitation the provisions of Section 7.4
(restrictions on transfer), Section 7.5 (forfeiture), and Section 4.1(f)
(escrow of certificates). If any dividends are paid on Restricted Stock in the
form of Shares of Stock, the Stock dividends shall be treated as Restricted
Stock and subject to the same restrictions, terms and conditions as the Shares
of Restricted Stock with respect to which they were paid.
SECTION 8.
RIGHTS OF EMPLOYEES
8.1. Employment. Nothing in the Plan or in any Restricted Stock Agreement
shall in any manner be construed to limit or restrict in any way the right of
the Company to terminate any Participant's employment at any time and without
regard to the effect of such termination to the Participant under the Plan,
nor confer upon any Participant any right to continue in the employ of the
Company.
8.2. Participation. No employee shall have a right to be selected as a
Participant, or, having been so selected, to be selected again as a
Participant.
SECTION 9.
MERGER, CONSOLIDATION, OR ACQUISITION
9.1. Treatment of Restricted Stock Shares. Without limiting the authority of
the Committee as provided in Section 9.2, in the event of a dissolution or a
liquidation of the Company or a merger or consolidation in which the Company
is not the surviving corporation, at the time of the grant of the Restricted
Stock, the Committee may provide in the Restricted Stock Agreement or
otherwise that all the restrictions with respect to some or all of the
outstanding Shares of Restricted Stock shall lapse in a manner similar to the
provisions of Section 7.6.
9.2. Change in Control. The Committee, at the time of the grant of Restricted
Stock, may provide in the Restricted Stock Agreement or otherwise that upon a
<PAGE> 28
Change in Control of the Company, all the restrictions with respect to some or
all of the outstanding Shares of Restricted Stock shall lapse in a manner
similar to the provisions of Section 7.6.
9.3. Limitation on Payments. The Committee may provide that if the receipt of
any payment (or lapse of restrictions) under this Section by any Participant
shall, in the opinion of independent tax counsel of recognized standing
selected by the Company, result in the loss of a tax deduction to the Company
or the payment by such Participant of any excise tax, provided for in Section
280G and Section 4999 of the Code, then the amount of such payment (or lapse
of restrictions) shall be reduced or modified to the extent required, in the
opinion of independent tax counsel selected as aforesaid, to prevent such loss
of deduction and the imposition of such excise tax.
SECTION 10.
AMENDMENT AND TERMINATION
10.1. Amendment and Termination. The Board, without further action on the
part of the Company's shareholders, may at any time terminate, suspend or
modify the Plan to the extent permitted by law, regulation or stock exchange
requirements. No termination or amendment of the Plan, or amendment of any
grant, shall adversely affect any right acquired by any Participant under a
grant before the date of such termination or amendment, unless such
Participant shall consent; but it shall be conclusively presumed that any
adjustment for changes in capitalization as provided in Section 5.3 above does
not adversely affect any such right.
SECTION 11.
TAX WITHHOLDING
11.1. Tax Withholding. The Company, as appropriate, shall have the right to
deduct from all payments any Federal, state, or local taxes required by law to
be withheld with respect to such payments and, in the case of awards paid in
Stock, the Participant or other person receiving such Stock may be required to
pay to the Company, as appropriate, the amount of any such taxes which the
Company is required to withhold with respect to such Stock.
SECTION 12.
GOVERNING LAW
12.1. Governing Law. The Plan, and all grants and other documents delivered
hereunder, shall be construed in accordance with and governed by the laws of
Indiana.
SECTION 13.
EXPENSE OF PLAN
13.1. Expense of Plan. The expenses of administering the Plan shall be borne
by the Company.
<PAGE> 29
SECTION 14.
RESTRICTED STOCK AGREEMENT
14.1. Restricted Stock Agreement. Each grant of Shares of Restricted Stock
shall be evidenced by a written agreement ("Restricted Stock Agreement"),
executed by the Participant and the Company, which shall contain such
restrictions, terms or conditions as the Committee may require.
5
<PAGE> 30
EXHIBIT 3 (iii)
FRANKLIN ELECTRIC CO., INC.
NONEMPLOYEE DIRECTORS' DEFERRED COMPENSATION PLAN
SECTION 1.
INTRODUCTION
Franklin Electric Co., Inc., an Indiana corporation (the "Company')
hereby establishes a plan to be known as the Nonemployee Directors' Deferred
Compensation Plan (the "Plan") for members of its Board of Directors (the
"Board"), who are not employees of the Company or an affiliate of the Company
(the 'Nonemployee Directors"). The Plan is effective as of February 11, 2000
(the "Effective Date").
SECTION 2.
SHARES SUBJECT TO THE PLAN
(a) Number of Shares. Subject to adjustment as provided in Section II
(b) herein, the total number of Shares available for issuance under the Plan
shall be twenty-five (25,000) shares of common stock. Such shares of common
stock may be either authorized but unissued, reacquired or a combination
thereof.
(b) Adjustment in Available Shares of Common Stock. Any increase in
the number of outstanding shares of common stock of the Company occurring
through stock splits or stock dividends after the adoption of the Plan shall
be reflected proportionately in an increase in the aggregate number of shares
of common stock then available for issuance under the Plan. Any fractional
shares of common stock resulting from such adjustments shall be eliminated.
If changes in capitalization other than those considered above shall occur,
the Board shall make such adjustment in the number and class of shares of
common stock which may thereafter be issued, as the Board in its discretion
may consider appropriate, and all such adjustments shall be conclusive upon
all persons.
SECTION 3.
PLAN PARTICIPANTS
Each Nonemployee Director shall become a Participant under the Plan by
filing the written Election Form described in Section IV below with the Plan
Administrator appointed by the Personnel and Compensation Committee of the
Board (the "Committee") with respect to the Retainers payable to each
Participant for his or her services as a member of the Board.
SECTION 4.
DEFERRAL ELECTIONS
(a) Each Participant shall make the following election with respect to
his or her Retainer:
<PAGE> 31
(i) The Participant may elect to defer receipt of his or her
entire Retainer until the date on which his or her service on the Board
terminates for any reason, and have the cash value of such Retainer
credited to the Stock Unit Account established for him or her under the
Plan and converted to Stock Units, pursuant to the provisions of
paragraph (a) of Section V below; or
(ii) If an election is not made pursuant to clause (i) above, a
Participant shall receive, at the Participant's option, cash equal to
the Retainer, or a distribution of a number of shares of common stock of
the Company ("Common Stock") equal to the cash value of his or her
Retainer divided by the Fair Market Value (as defined in paragraph (b)
of Section IX) of a share of Common Stock on the date on which such
Retainer is payable. Such stock distribution shall be evidenced by a
certificate representing the applicable number of shares of Common
Stock, registered in the name of the Participant, and distributed to the
Participant as soon as practicable after the date on which such Retainer
is payable.
(b) Each election with respect to a Retainer for a calendar year shall
be set forth on an Election Form provided by the Plan Administrator. Such
Election Form shall be in writing and shall specify the elections described
above with respect to Retainers.
(c) An Election Form effective for a calendar year shall be delivered
to the Plan Administrator prior to the first day of such calendar year. An
Election Form shall remain in effect for subsequent calendar years until a
written notice to revise the Election Form is delivered to the Plan
Administrator on or before the first day of the calendar year in which the
revision is to become effective. Except as provided in paragraph (d) below,
an initial Election Form or a revised Election Form shall only apply to a
Retainer otherwise payable to a Participant after the end of the calendar year
in which such initial or revised Election Form is delivered to the Plan
Administrator. Any Election Form delivered by a Participant shall be
irrevocable with respect to any Retainer covered by the elections set forth
therein. If an Election Form is not in effect for a Nonemployee Director for
a calendar year, he or she shall be deemed to have elected the cash
distribution option specified in clause (ii) of paragraph (a) of this Section
for such calendar year.
(d) Notwithstanding the preceding provisions of this Section:
(i) An election by a Participant with respect to a Retainer
payable on or after April 1, 2000 may be made pursuant to an Election
Form delivered to the Plan Administrator prior to March 31, 2000; and
(ii) An election made by a Participant in the calendar year in
which he or she first becomes eligible to participate in the Plan may be
made pursuant to an Election Form delivered to the Plan Administrator
within thirty (30) days after the date on which he or she initially
becomes eligible to participate, and such Election Form shall be
effective with respect to Retainers earned from and after the date such
Election Form is delivered to the Plan Administrator.
<PAGE> 32
SECTION 5.
PARTICIPANT ACCOUNTS
(a) (i) A Retainer of a Participant deferred pursuant to clause (i) of
paragraph (a) of Section IV shall be credited as a dollar amount to the
Participant's Stock Unit Account as of the date on which payment of such
Retainer otherwise would have been paid, and shall be converted as of such
date into Stock Units equivalent to Common Stock. Such conversion shall be
determined by dividing the dollar balance of the payment of such Retainer by
the Fair Market Value of a share of Common Stock on such payment date. The
number of Stock Units for full shares of Common Stock so determined shall be
credited to the Participant's Stock Unit Account and the aggregate value
thereof shall be charged to the cash balance of his or her Stock Unit Account.
Any cash balance remaining in the Participant's Stock Unit Account after such
conversion, together with other subsequent credits of deferred Retainers
thereto and credits thereto pursuant to clause (ii) next below, shall be
converted into Stock Units on the next conversion date.
(ii) Additional credits shall be made to a Participant's Stock Unit
Account in dollar amounts equal to the cash dividends (or the fair market
value of dividends paid in property other than Common Stock) that the
Participant would have received had he or she been the owner on each record
date of a number of shares of Common Stock equal to the number of Stock Units
in his or her Stock Unit Account on such date. In the case of a dividend in
Common Stock or a Common Stock split, additional credits will be made to a
Participant's Stock Unit Account of a number of Stock Units equal to the
number of full shares of Common Stock that the Participant would have received
had he or she been the owner on each record date of a number of shares of
Common Stock equal to the number of Stock Units in his or her Stock Unit
Account on such date. Any cash dividends (or dividends paid in property other
than Common Stock) shall be converted into Stock Units at the next conversion
date as set forth in clause (i) of this paragraph.
(b) Each Stock Unit Account shall be maintained on the books of the
Company until full payment of the balance thereof has been made to the
applicable Participant (or the beneficiaries of a deceased Participant). No
funds shall be set aside or earmarked for any Stock Unit Account, which shall
be purely a bookkeeping device.
SECTION 6.
DISTRIBUTION OF ACCOUNTS
(a) The entire balance of a Participant's Stock Unit Account shall be
paid to him or her (or to his or her beneficiaries in the event of his or her
death) in a single lump sum as of the January 31 next following the date the
Participant's service on the Board terminates for any reason.
(b) The balance of a Participant's Stock Unit Account shall be
distributed in shares of Common Stock or in cash as designated by the
Participant (or his or her beneficiaries in the event of his or her death) by
written notice delivered to the Plan Administrator prior to the applicable
January 31 distribution date. If a timely designation is not received by the
Plan Administrator, distribution shall be made in cash or in Common Stock as
the Company shall decide. In the event of a distribution in Common Stock, a
certificate representing a number of shares of Common Stock equal to the
number of Stock Units in the Participant's Stock Unit Account, registered in
the name of the Participant (or his or her beneficiaries), and any remaining
<PAGE> 33
cash in the Stock Unit Account, shall be distributed to the Participant (or
his or her beneficiaries). In the event of a cash distribution, the
Participant (or his or her beneficiaries) shall receive an amount in cash
equal to the aggregate of (i) the number of Stock Units in the Stock Unit
Account multiplied by the Fair Market Value of a share of Common Stock on the
applicable January 31, and (ii) any remaining cash in the Stock Unit Account.
(c) If a Participant's service on the Board shall terminate by reason
of his or her death, or if he shall die after becoming entitled to
distribution hereunder, but prior to receipt of his or her entire
distribution, all cash or Common Stock then distributable hereunder with
respect to him or her shall be distributed to such beneficiary or
beneficiaries as such Participant shall have designated by an instrument in
writing last filed with the Committee prior to his or her death, or in the
absence of such designation or of any living beneficiary, to his or her
spouse, or if not then living, to his or her then living descendants, per
stirpes, or if none is then living, to the personal representative of his or
her estate, in the same manner as would have been distributed to the
Participant had he or she continued to live.
(d) In the written discretion of the Plan Administrator, and at the
written request of a Participant, up to 100% of the balance in his or her
Stock Unit Account, determined as of the last day of the calendar month prior
to the date of distribution, may be distributed to a Participant in a lump sum
in the case of an Unforeseeable Emergency, subject to the limitations set
forth below. For purposes of this paragraph an Unforeseeable Emergency is a
severe financial hardship of the Participant resulting from a sudden and
unexpected illness or accident of the Participant or of a dependent (as
defined in Section 152(a) of the Internal Revenue Code of 1986, as amended) of
the Participant, loss of the Participant's property due to casualty or other
similar, extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant. The circumstances that will
constitute an Unforeseeable Emergency will depend upon the facts of each case,
as determined by the Plan Administrator in its discretion, but in any case
payment may not be made to the extent that such hardship is or may be
relieved:
(i) Through reimbursement or compensation by insurance or
otherwise;
(ii) By liquidation of the Participant's assets to the extent the
liquidation of such assets would not itself cause severe
financial hardship; or
(iii) By cessation of deferrals under the Plan.
Withdrawal of amounts because of an Unforeseeable Emergency shall be permitted
only to the extent reasonably needed to satisfy the Unforeseeable Emergency.
SECTION 7.
ADMINISTRATION OF THE PLAN
(a) The Employee Benefits Committee of the Company, consisting of one
or more employees of the Company, shall act as the Plan Administrator. The
Plan Administrator shall be responsible for the general operation and
administration of the Plan, and shall have such powers as are necessary to
discharge its duties under the Plan, including, without limitation, the
following:
<PAGE> 34
(i) To construe and interpret the Plan, to decide all questions
of eligibility, to determine the amount, manner and time of
payment of any benefits hereunder, to prescribe rules and
procedures to be followed by Participants and their
beneficiaries under the Plan, and to otherwise carry out the
purposes of the Plan; and
(ii) To appoint or employ individuals to assist in the
administration of the Plan and any other agents deemed
advisable.
The decisions of the Plan Administrator shall be binding and conclusive upon
all Participants, beneficiaries and other persons.
(b) Any Participant claiming a benefit, requesting an interpretation or
ruling, or requesting information, under the Plan, shall present the request
in writing to the Plan Administrator, which shall respond in writing as soon
as practicable. If the claim or request is denied, the written notice of
denial shall state the following:
(i) The reasons for denial, with specific reference to the Plan
provisions upon which the denial is based;
(ii) A description of any additional material or information
required and an explanation of why it is necessary; and
(iii) An explanation of the Plan's review procedure.
The initial notice of denial shall normally be given within ninety (90) days
after receipt of the claim. If special circumstances require an extension of
time, the claimant shall be so notified and the time limit shall be one
hundred eighty (180) days. Any person whose claim or request is denied, or
who has not received a response within thirty (30) days, may request review by
notice in writing to the Plan Administrator. The original decision shall be
reviewed by the Plan Administrator, which may, but shall not be required to,
grant the claimant a hearing. On review, whether or not there is a hearing,
the claimant may have representation, examine pertinent documents and submit
issues and comments in writing. The decision on review shall ordinarily be
made within sixty (60) days. If an extension of time is required for a
hearing or other special circumstances, the claimant shall be so notified and
the time limit shall be extended to one hundred twenty (120) days. The
decision on review shall be in writing and shall state the reasons and the
relevant Plan provisions. All decisions on review shall be final and bind all
parties concerned.
SECTION 8.
AMENDMENT OR TERMINATION
(a) The Company intends the Plan to be permanent but reserves the right
to amend or terminate the Plan when, in the sole opinion of the Company, such
amendment or termination is advisable. Any such amendment or termination
shall be made pursuant to a resolution of the Board without further action on
the part of the Company's shareholders to the extent permitted by law,
regulation or stock exchange requirements, and shall be effective as of the
date of such resolution or such later date as the resolution may expressly
state.
<PAGE> 35
(b) No amendment or termination of the Plan shall (i) directly or
indirectly deprive any current or former Participant or his or her
beneficiaries of all or any portion of his or her Stock Unit Account as
determined as of the effective date of such amendment or termination, or (ii)
directly or indirectly reduce the balance of any Account held hereunder as of
the effective date of such amendment or termination. Upon termination of the
Plan, distribution of balances in all Accounts shall be made to Participants
or their beneficiaries in the manner and at the time described in Section VI
as if each Participant's service on the Board had then terminated. No
additional deferred Retainers shall be credited to the Stock Unit Accounts of
Participants after termination of the Plan, but the Company shall continue to
credit earnings, gains and losses to Stock Unit Accounts pursuant to Section
VI until the balances of such Stock Unit Accounts have been fully distributed
to Participants or their beneficiaries.
(c) No such amendment, modification or termination of the Plan may
occur without the approval of the stockholders of the Company, if stockholder
approval for such amendment, modification or termination is required by the
federal securities laws, any national securities exchange or system on which
the Shares are then listed or reported, or a regulatory body having
jurisdiction with respect thereto.
SECTION 9.
GENERAL PROVISIONS
(a) The Plan at all times shall be entirely unfunded and no provision
shall at any time be made with respect to segregating any assets of the
Company for payment of any benefits hereunder. The right of a Participant or
his or her beneficiary to receive a benefit hereunder shall be an unsecured
claim against the general assets of the Company, and neither the Participant
nor a beneficiary shall have any rights in or against any specific assets of
the Company. All amounts credited to Stock Unit Accounts shall constitute
general assets of the Company.
(b) For all purposes of the Plan, the Fair Market Value of a share of
Common Stock as of a given date shall be the closing sale price of a share of
common stock on the principal securities exchange on which the shares of
common stock are publicly traded, or if there is no such sale on the relevant
date, then on the last previous day on which a sale was reported.
(c) Shares of Common Stock distributed under the Plan may be treasury
shares of the Company or shares purchased by the Company in the open market.
The Company shall reserve such number of shares of Common Stock as may be
issuable under the Plan.
(d) Nothing contained in the Plan shall constitute a guaranty by the
Company, the Committee, the Plan Administrator, or any other person or entity,
that the assets of the Company will be sufficient to pay any benefit
hereunder. No Participant or beneficiary shall have any right to receive a
distribution under the Plan except in accordance with the terms of the Plan.
(e) Establishment of the Plan shall not be construed to give any
Participant the right to be retained as a member of the Board.
(f) No interest of any person or entity in, or right to receive a
distribution under, the Plan, shall be subject in any manner to sale,
transfer, assignment, pledge, attachment, garnishment, or other alienation or
encumbrance of any kind; nor may such interest or right to receive a
<PAGE> 36
distribution be taken, either voluntarily or involuntarily, for the
satisfaction of the debts of, or other obligations or claims against, such
person or entity, including claims for alimony, support, separate maintenance
and claims in bankruptcy proceedings.
(g) The Plan shall be construed and administered under the laws of the
State of Indiana, except to the extent preempted by federal law.
(h) If any person entitled to a payment under the Plan is deemed by the
Company to be incapable of personally receiving and giving a valid receipt for
such payment, then, unless and until claim therefor shall have been made by a
duly appointed guardian or other legal representative of such person, the
Company may provide for such payment or any part thereof to be made to any
other person or institution that is contributing toward or providing for the
care and maintenance of such person. Any such payment shall be a payment for
the account of such person and a complete discharge of any liability of the
Company, the Committee, the Plan Administrator and the Plan therefor.
(i) The Plan shall be continued, following a transfer or sale of assets
of the Company, or following the merger or consolidation of the Company into
or with any other corporation or entity, by the transferee, purchaser or
successor entity, unless the Plan has been terminated by the Company pursuant
to the provisions of Section VIII prior to the effective date of such
transaction.
(j) Each Participant or beneficiary shall keep the Plan Administrator
informed of his or her current address. The Plan Administrator shall not be
obligated to search for the whereabouts of any person. If the location of a
Participant is not made known to the Plan Administrator within three (3) years
after the date on which payment of the Participant's benefits under the Plan
may first be made, payment may be made as though the Participant had died at
the end of the three-year period. If, within one (1) additional year after
such three-year period has elapsed, or, within three (3) years after the
actual death of a Participant, the Plan Administrator is unable to locate any
beneficiary of the Participant, then the Company shall have no further
obligation to pay any benefit hereunder to such Participant, or beneficiary
or any other person and such benefit shall be forfeited. If such Participant,
or his or her beneficiary or any other person, subsequently makes a valid
claim for distribution of the amount forfeited, such amount, without gains or
earnings thereon, shall be distributed to such Participant or his or her
beneficiary or such other person pursuant to Section VI.
(k) Notwithstanding any of the preceding provisions of the Plan, none
of the Company, any member of the Committee, any Plan Administrator or any
individual acting as an employee or agent of the Company, the Committee or the
Plan Administrator, shall be liable to any Participant, former Participant, or
any beneficiary or other person for any claim, loss, liability or expense
incurred by such Participant, or beneficiary or other person in connection
with the Plan.
(l) Notwithstanding anything to the contrary contained in the Plan, if
(a) the Internal Revenue Service prevails in a claim by it that amounts
credited to a Participant's Account, and/or earnings thereon, constitute
taxable income to the Participant or his or her beneficiary for any taxable
year of his, prior to the taxable year in which such credits and/or earnings
are distributed to him or (b) legal counsel satisfactory to the Company, and
the applicable Participant or his or her beneficiary, renders an opinion that
<PAGE> 37
the Internal Revenue Service would likely prevail in such a claim, the balance
of such Participant's Account shall be immediately distributed to the
Participant or his or her beneficiary. For purposes of this paragraph, the
Internal Revenue Service shall be deemed to have prevailed in a claim if such
claim is upheld by a court of final jurisdiction, or if the Company, or a
Participant or beneficiary, based upon an opinion of legal counsel
satisfactory to the Company and the Participant or his or her beneficiary,
fails to appeal a decision of the Internal Revenue Service, or a court of
applicable jurisdiction, with respect to such claim, to an appropriate
Internal Revenue Service appeals authority or to a court of higher
jurisdiction, within the appropriate time period.
(m) Any notice under the Plan shall be in writing, or by electronic
means, and shall be received when actually delivered, or mailed postage paid
as first class U.S. Mail. Notices shall be directed to the Company at its
principal business office at 400 East Spring Street, Bluffton, Indiana 46714,
to a Participant at the address stated in his or her Election Form, and to a
beneficiary entitled to benefits at the address stated in the Participant's
beneficiary designation, or to such other addresses any party may specify by
notice to the other parties.
5
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORM
10-Q FOR THE PERIOD ENDED APRIL 1, 2000 AND IS QUALIFIED IN ITS ENTIRETY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-2000
<PERIOD-END> APR-01-2000
<CASH> 10540
<SECURITIES> 0
<RECEIVABLES> 23237
<ALLOWANCES> 1342
<INVENTORY> 50535
<CURRENT-ASSETS> 92732
<PP&E> 136873
<DEPRECIATION> 79464
<TOTAL-ASSETS> 164607
<CURRENT-LIABILITIES> 35886
<BONDS> 0
0
0
<COMMON> 540
<OTHER-SE> 95439
<TOTAL-LIABILITY-AND-EQUITY> 164607
<SALES> 66051
<TOTAL-REVENUES> 66051
<CGS> 48864
<TOTAL-COSTS> 59774
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 285
<INCOME-PRETAX> 6277
<INCOME-TAX> 2374
<INCOME-CONTINUING> 3903
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3903
<EPS-BASIC> .72
<EPS-DILUTED> .69
</TABLE>
