FRANKLIN ELECTRIC CO INC, DEF 14A, 2000-03-03

FRANKLIN ELECTRIC CO INC
DEF 14A, 2000-03-03
MOTORS & GENERATORS

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SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF
THE COMMISSION ONLY (AS
PERMITTED BY RULE 14A-6
(E) (2))

[X] Definitive Proxy Statement

[ ] Definitive Additional Materials

[ ] Soliciting Material pursuant to Section 240.14a-11 (e) or
Section 240.14a-12

FRANKLIN ELECTRIC CO., INC.
- ------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- ------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required

[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):

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(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.

(1) Amount Previously Paid:

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(2) Form, Schedule or Registration Statement No.:

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(4) Date Filed:

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<PAGE>

FRANKLIN ELECTRIC

400 East Spring Street
Bluffton, Indiana 46714

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held
April 14, 2000 at 10:00 A.M., E.S.T.

To the Shareholders of
Franklin Electric Co., Inc.

THE ANNUAL MEETING OF SHAREHOLDERS OF FRANKLIN ELECTRIC CO., INC. (THE
"COMPANY"), AN INDIANA CORPORATION, WILL BE HELD AT THE PRINCIPAL OFFICE OF
THE COMPANY, 400 EAST SPRING STREET, BLUFFTON, INDIANA, ON FRIDAY, APRIL 14,
2000, AT 10:00 A.M., E.S.T., FOR THE FOLLOWING PURPOSES:

1. To elect three directors for terms expiring at the 2003 Annual Meeting of
Shareholders;

2. To approve the Franklin Electric Co., Inc. Amended and Restated 1996
Nonemployee Director Stock Option Plan;

3. To approve the Franklin Electric Co., Inc. Key Employee Performance
Incentive Stock Plan;

4. To ratify the appointment of Deloitte & Touche LLP as independent auditors
for the 2000 fiscal year; and

5. To transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.

Only shareholders of record at the close of business on February 25, 2000
will be entitled to notice of and to vote at the Annual Meeting.

You are urged to sign and return the enclosed proxy in the envelope
provided, whether or not you plan to attend the Annual Meeting. If you do
attend, you may nevertheless vote in person which will revoke any previously
executed proxy.

By order of the Board of Directors.
Dean W. Pfister, Secretary

Bluffton, Indiana
March 3, 2000

<PAGE>

FRANKLIN ELECTRIC CO., INC.
400 EAST SPRING STREET
BLUFFTON, INDIANA 46714
-----------------------

PROXY STATEMENT
---------------

ANNUAL MEETING OF SHAREHOLDERS

April 14, 2000

GENERAL INFORMATION

This Proxy Statement and the enclosed proxy are furnished to shareholders
in connection with the solicitation of proxies by the Board of Directors of
Franklin Electric Co., Inc. (the "Company"), 400 East Spring Street,
Bluffton, Indiana, for use at the Annual Meeting of Shareholders to be held on
April 14 2000 or any adjournment or postponement thereof. This Proxy
Statement, together with the Company's Annual Report to shareholders,
including financial statements contained therein, is being mailed to
shareholders on or about March 3, 2000. Neither the Annual Report nor the
financial statements contained therein are to be considered part of this
soliciting material.

Shareholders are asked to sign and return the enclosed proxy, whether or
not they plan to attend the Annual Meeting. If the enclosed proxy is properly
signed and returned, the shares represented thereby will be voted in the
manner specified in the proxy. If a shareholder does not specify the manner
in which the proxy shall be voted, the shares represented thereby will be
voted FOR the election of the nominees for director as set forth in this Proxy
Statement, FOR the approval of the amended and restated 1996 Nonemployee
Director Stock Option Plan, FOR the approval of the Key Employee Performance
Incentive Stock Plan, FOR the ratification of the appointment of Deloitte &
Touche LLP as independent auditors for the 2000 fiscal year, and in accordance
with the recommendations of management with respect to other matters that may
properly come before the Annual Meeting. A shareholder who has executed a
proxy has the power to revoke it at any time before it is voted by (i)
delivering written notice of such revocation to Mr. Dean W. Pfister,
Secretary, 400 East Spring Street, Bluffton, Indiana 46714, (ii) by executing
and delivering a subsequently dated proxy, or (iii) by attending the Annual
Meeting and voting in person.

The expenses of solicitation, including the cost of printing and mailing,
will be paid by the Company. Officers and employees of the Company, without
additional compensation, may solicit proxies personally, by telephone or by
facsimile. Arrangements will also be made with brokerage firms and other
custodians, nominees and fiduciaries to forward proxy solicitation material to
the beneficial owners of shares held of record by such persons, and the
Company will reimburse such entities for reasonable out-of-pocket expenses
incurred by them in connection therewith.

<PAGE>

SHAREHOLDERS ENTITLED TO VOTE AND SHARES OUTSTANDING

The Board of Directors of the Company fixed the close of business on
February 25, 2000 as the record date (the "Record Date") for determining
shareholders entitled to notice of and to vote at the Annual Meeting. As of
the Record Date, there were 25,000,000 shares of common stock, $.10 par value
(the "Common Stock"), authorized, of which 5,430,420 shares were outstanding.
Each share of Common Stock is entitled to one vote on each matter submitted to
a vote of the shareholders of the Company. Votes cast by proxy or in person
at the Annual Meeting will be tabulated by the inspectors of election
appointed for the Annual Meeting and will be counted as present for purposes
of determining whether a quorum is present. A majority of the outstanding
shares of Common Stock, present in person or represented by proxy, will
constitute a quorum for the transaction of business at the Annual Meeting.
Abstentions and broker non-votes will be counted for purposes of determining
the presence or absence of a quorum but will not be counted as votes cast on
any matter submitted to shareholders. As a result, abstentions and broker
non-votes will not have any effect on the voting results with respect to any
of the matters scheduled to be submitted to shareholders at the Annual
Meeting.

SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

The following table shows the persons known by the Company to be the
beneficial owners of more than 5 percent of the Company's Common Stock as of
February 25, 2000, unless otherwise noted. The nature of beneficial ownership
is sole voting and investment power, unless otherwise noted.

NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS

National City Bank 531,132 (1) 9.78
Suite 690 S.
101 W. Washington Street
Indianapolis, IN 46204-3405

Patricia Schaefer 483,021 (2) 8.88
5400 Deer Run Court
Muncie, IN 47304

Diane D. Humphrey 462,021 8.51
2279 East 250 North Road
Bluffton, IN 46714

Marvin C. Schwartz 401,546 (3) 7.39
c/o Neuberger & Berman
605 Third Avenue
New York, NY 10158

Norwest Bank Minnesota, N.A. 303,515 (4) 5.59
Midwest Plaza, West Tower
Suite 700
801 Nicolette Mall
Minneapolis, MN 55479-0065

<PAGE>

NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS

Ruane, Cunniff & Co., Inc. 286,044 (5) 5.27
767 5th Avenue, Suite 4701
New York, NY 10153

(1) National City Bank holds these shares as Trustee under the Company's
Employee Stock Ownership Plan (the "ESOP") and Directed Investment
Salary Plan (the "401(k) Plan"). Share information is from January 2000
Trust records provided by National City Bank. The shares held in the
ESOP and 401(k) Plan will be voted pursuant to the direction of the
participants to the extent these shares are allocated to participants'
accounts. Unallocated shares and shares for which no direction is
received from participants will be voted by the Trustee in accordance
with the direction of the Employee Benefits Committee of the Company.
The Employee Benefits Committee is appointed by the Company's Board of
Directors to oversee the Company's employee benefit plans. In the
absence of any direction from the Employee Benefits Committee, such
shares will be voted by the Trustee in the same proportion that the
allocated shares were voted, unless inconsistent with the Trustee's
fiduciary obligations.
(2) Includes 12,000 shares issuable pursuant to stock options exercisable
within 60 days after February 25, 2000.
(3) According to a Schedule 13D filed with the SEC on January 13, 1994,
Marvin C. Schwartz beneficially owned 507,160 shares of the Company's
Common Stock, of which he had sole investment and sole voting power with
respect to 422,570 shares, shared investment power with respect to
84,590 shares and no shared voting power. Subsequent to this Schedule
13D filing, Mr. Schwartz made further purchases and sales of the
Company's Common Stock. As a result, the Company believes that Mr.
Schwartz beneficially owns 401,546 shares of the Company's Common Stock
of which he has sole investment and sole voting power with respect to
316,160 shares, shared investment power with respect to 85,386 shares
and no shared voting power.
(4) Norwest Bank Minnesota, N.A. holds these shares as Trustee under the
Company's defined benefit pension plans. These shares will be voted
pursuant to the direction of the Employee Benefits Committee of the
Company. Norwest Bank does not have investment power over any of these
shares.
(5) According to a Schedule 13G filed with the SEC on February 11, 2000,
Ruane, Cunniff & Co., Inc. has sole investment power with respect to
286,044 shares, sole voting power with respect to 67,832 shares and no
shared voting or investment power.

<PAGE>

The following table shows the number of shares of Common Stock
beneficially owned by directors, nominees, each of the executive officers
named in the "Summary Compensation Table" below, and all executive officers
and directors as a group, as of February 25, 2000. The nature of beneficial
ownership is sole voting and investment power, unless otherwise noted.

NAME OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS

Patricia Schaefer 483,021 (1) 8.88

William H. Lawson 246,600 (1) (2) (3) 4.40

John B. Lindsay 178,575 (2) 3.29

Donald J. Schneider 44,526 (1) *

Jess B. Ford 39,491 (1) (2) *

Kirk M. Nevins 21,463 (1) (2) *

Peter-Christian Maske 19,000 (1) *

Robert H. Little 15,962 (1) *

Juris Vikmanis 13,000 (1) *

Howard B. Witt 7,200 (1) *

Jerome D. Brady 200 *

R. Scott Trumbull 200 *

All directors and 1,201,846 (1) (2) 20.84
executive officers as
a group (16 persons)

* Less than 1 percent of class

(1) Includes shares issuable pursuant to stock options exercisable within 60
days after February 25, 2000 as follows: Ms. Schaefer, 12,000; Mr.
Lawson, 180,000; Mr. Schneider, 11,000; Mr. Ford, 39,000; Mr. Nevins,
16,000; Mr. Maske, 3,000; Mr. Little, 9,000; Mr. Vikmanis, 8,000; Mr.
Witt, 7,000; and all directors and executive officers as a group,
337,400.
(2) Includes shares held by the ESOP Trustee as to which the individuals do
not have investment power as follows: Mr. Lawson, 1,716; Mr. Lindsay,
1,125; Mr. Ford, 297; Mr. Nevins, 1,215; and all directors and executive
officers as a group, 8,683.
(3) Pursuant to the Company's Board authorized stock repurchase program, on
July 23, 1999, the Company purchased 130,000 shares of the Company's
Common Stock in a privately negotiated, Board authorized transaction at a
price of $71.50 per share from William H. Lawson (Chairman of the Board
and Chief Executive Officer of the Company) for total consideration of
$9,295,000.

<PAGE>

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, officers and greater than 10 percent shareholders of a
registered class of the Company's equity securities to file with the SEC
initial reports of ownership and reports of changes in ownership of Common
Stock of the Company and to furnish the Company with copies of all Section
16(a) reports they file. Based solely on a review of the copies of these
reports furnished to the Company and written representations that no other
reports were required to be filed, the Company believes that its directors,
officers and greater than 10 percent shareholders complied with all applicable
Section 16(a) filing requirements applicable to them during 1999.

ELECTION OF DIRECTORS

The Company's Board of Directors consists of nine directors divided into
three classes of three directors each. Each year, the directors of one of the
three classes are to be elected to serve terms of three years and until their
successors have been elected and qualified. Three directors are to be elected
at the Annual Meeting this year. The election of a director requires the
affirmative vote of a majority of the shares voted.

Jerome D. Brady, Robert H. Little and Patricia Schaefer have been
nominated to serve as directors of the Company. Mr. Brady, Mr. Little and Ms.
Schaefer are currently directors of the Company. All three nominees have
indicated their willingness to serve as a director if elected. If, however,
any nominee is unwilling or unable to serve as a director, it is the intention
of management to nominate such other person as a director as it may in its
discretion determine, in which event the shares represented by the proxies
will be voted for such other person.

<PAGE>

INFORMATION CONCERNING NOMINEES AND DIRECTORS

The ages, principal occupations during the past five years and certain
other affiliations of the director nominees and the continuing directors, and
the years in which they first became directors of the Company, are as follows:

NOMINEES FOR TERMS EXPIRING IN 2003
DIRECTOR
NAME AND POSITION AGE PRINCIPAL OCCUPATION SINCE

Jerome D. Brady, 56 President & Chief Executive 1998
Director of the Company Officer of C&K Components
since 1997, a manufacturer
of electro-mechanical switches.
Formerly Chairman, President
and Chief Executive Officer
of AM International from
1994-1997; prior thereto,
Vice President & General
Manager of FMC, Food Machinery
Group 1992-1994.

Robert H. Little, 64 Retired in 1997; Formerly 1987
Director of the Company President, Waddle Manufacturing
Inc., a producer of precision
fabrications for the
electronics and medical
device industries.

Patricia Schaefer, 69 Retired; Director Muncie Public 1982
Director of the Company Library; Muncie, Indiana

<PAGE>

CONTINUING DIRECTORS
- --------------------

DIRECTORS WHOSE TERMS EXPIRE IN 2001
DIRECTOR
NAME AND POSITION AGE PRINCIPAL OCCUPATION SINCE

William H. Lawson, 63 Chairman of the Board and 1985
Chairman of the Board Chief Executive Officer of the
and Chief Executive Company. Director of Skyline
Officer Corporation and Sentry
Insurance, a Mutual Company.

Donald J. Schneider, 64 President of Schneider National 1988
Director of the Company Inc., an asset based logistics
company. Director of Green Bay
Packers and St. Norbert College.

R. Scott Trumbull, 51 Executive Vice President 1998
Director of the Company International Operations &
Corporate Development,
Owens-Illinois, a manufacturer of
glass & plastic packaging, since
August 1998; prior thereto, Vice
President International
Operations, Owens-Illinois.

DIRECTORS WHOSE TERMS EXPIRE IN 2002
DIRECTOR
NAME AND POSITION AGE PRINCIPAL OCCUPATION SINCE

John B. Lindsay, 57 Retired in February 2000; 1996
Vice Chairman of the Formerly President of the
Board of the Company Company from 1995; prior thereto,
Executive Vice President of the
Company from 1993 to 1995.

Juris Vikmanis, 62 Retired in 1993; Formerly Vice 1988
Director of the Company President, Aerospace Operations,
Amphenol Corporation from 1992
to 1993, an aerospace company;
formerly Corporate Senior Vice
President, Square D Company until
the sale of that company in 1991;
prior thereto, Executive Vice
President, Square D Company from
1989 to 1990.

Howard B. Witt, 59 Chairman of the Board, President 1994
Director of the Company and Chief Executive Officer,
Littelfuse, Inc.; a
manufacturer of electronic,
electrical and automotive fuses.
Director, Artisan Funds, Inc.

<PAGE>

INFORMATION ABOUT THE BOARD AND ITS COMMITTEES

In 1999, Directors who were not employees of the Company were paid a
director's fee of $22,500 plus a fee of $1,000 for each regular Board or Board
committee meeting attended. Each committee chairman received an additional
fee of $2,500 in 1999. In 2000, the directors' fee will be $30,000 plus a fee
of $1,500 for each regular Board or Board committee meeting attended. Each
committee chairman will receive an additional fee of $3,500 in 2000. Directors
who are employees of the Company receive no additional compensation for
serving on the Board or Board committees.

Nonemployee directors participate in the 1996 Nonemployee Director Stock
Option Plan (the "1996 Director Plan"). This Plan provides for the automatic
grant on the date of the annual meeting of shareholders of a nonqualified
stock option to purchase 3,000 shares of Common Stock to each nonemployee
director who is then elected or re-elected as a director by the shareholders.
On April 16, 1999, Juris Vikmanis and Howard B. Witt each received upon their
re-election to the Board at the 1999 Annual Meeting an option to purchase
3,000 shares at an exercise price of $63.9375 per share.

The Company has a Consulting Directors' Plan (the "Plan"), for
nonemployee directors who retire from Board service at age 70 or older. Under
the Plan, a retiring director may enter into a consulting agreement with the
Company under the terms of which the consulting director agrees to be
available for consultation from time to time and is entitled to receive an
annual fee for such services equal to the director's fee in effect at
retirement. The consulting director can receive this fee up to the same
number of years that were served as director. During 1999, Dr. N. A. Lamberti,
Mr. William W. Keefer and Mr. Gerard E. Veneman, who retired in 1988, 1996 and
1998, with 19, 28 and 29 years of service, respectively, participated in this
Plan. Mr. Lamberti received an annual fee of $15,000 in 1999. Messrs. Keefer
and Veneman each received an annual fee of $20,000 in 1999.

The Board held five (5) regularly scheduled meetings during 1999. The
board held one special meeting by conference call on November 22, 1999.

The committees of the Board are: the Audit Committee and the Personnel
and Compensation Committee.

AUDIT COMMITTEE. Members of the Audit Committee currently are Robert H.
Little (Chairman), Jerome D. Brady, Patricia Schaefer and Juris Vikmanis. It
is the responsibility of the Audit Committee to advise and make
recommendations to the Board of Directors in all matters regarding the
Company's accounting methods and internal control procedures. Specific duties
of the Audit Committee include: (i) the review of the scope of the annual
audit by the Company's independent public accountants and the procedures to be
employed and estimated compensation to be paid therefor, (ii) the review of
the audit results and financial statements with the independent public
accountants and the chief financial officer of the Company, (iii) the review
of changes in accounting policies having a significant effect on the Company's
reports, (iv) the preparation and presentation to the Board of a report
summarizing recommendations with respect to retention or discharge of the
independent public accountants, (v) the review of letters of recommendation
from the independent public accountants and determining that management has
adequately considered or implemented, or both, such recommendations, (vi)
meeting periodically with the Company's financial staff to assure that the
internal auditing staff is able to express its concerns, either directly to
the Audit Committee or through the independent public accountants, and to
<PAGE>

review the scope of the internal accounting and auditing procedures, (vii) the
review of the results and administration of the Company's defined benefit and
defined contribution plans, (viii) the review of the Company's legal and
regulatory compliance policies and programs, and (ix) the review of officer
expense reimbursements. The Audit Committee held four (4) meetings in 1999.

PERSONNEL AND COMPENSATION COMMITTEE. Members of the Personnel and
Compensation Committee (the "Compensation Committee") currently are Donald J.
Schneider (Chairman), R. Scott Trumbull and Howard B. Witt. The Compensation
Committee determines and approves the annual salary, bonus and other benefits
of the chief executive officer and the other executive officers and directors
of the Company; reviews and submits to the Board of Directors recommendations
concerning stock plans; and periodically reviews the Company's policies in the
area of management benefits. The Compensation Committee also oversees the
Company's management development and organization structure. The Compensation
Committee also initiates nominations of directors, submitting recommendations
to the Board for approval. Nominations for the election of directors may also
be made by any shareholder entitled to vote in the election of directors,
provided that written notice of intent to make a nomination is given to the
Secretary of the Company not later than ninety (90) days prior to the
anniversary date of the immediately preceding annual meeting of shareholders.
Such notice shall set forth: (i) information regarding the proposed nominee
as would be required to be included in a proxy statement filed pursuant to the
proxy rules of the SEC, and (ii) the consent of such nominee to serve as a
director of the Corporation if so elected. The Personnel and Compensation
Committee held four (4) meetings in 1999.

<PAGE>

COMPENSATION COMMITTEE REPORT

It is the philosophy of the Compensation Committee to maintain a
compensation program to attract and retain executive officers who can
successfully build the Company's long-term strategic capability. The
Compensation Committee has retained a compensation consulting firm to provide
information on compensation packages of firms of similar size and industries
to aid in the design of its package for the Company's executive officers. The
Committee encourages superior performance through the use of annual
performance targets for the purpose of determining cash bonuses as well as
stock incentive vehicles designed to closely align the executive's reward to
that of the shareholders. THE CHIEF EXECUTIVE OFFICER DOES NOT PARTICIPATE IN
THE COMMITTEE'S DETERMINATION OF HIS COMPENSATION PACKAGE.

For the Chief Executive Officer, the current compensation package
includes a base salary, an annual incentive cash bonus and stock options. The
Compensation Committee believes the combined value of base salary plus
incentive cash bonus approximates the market value of compensation provided to
similarly situated executives as reflected in published market surveys. The
Compensation Committee believes, however, that a significant portion of
executive officer compensation, including the Chief Executive Officer, should
be dependent upon corporate performance. Accordingly, base salaries have been
established somewhat below market levels, while a greater than average annual
incentive cash bonus may be achieved.

The Compensation Committee fixed a benchmark to determine the level, if
any, of the annual incentive cash bonus to be paid. The benchmark used was
pre-tax return on assets. Considering this ratio and other qualitative
measures, a bonus percentage of base salary was then determined. The
Committee awarded the Chief Executive Officer an incentive cash bonus of 70
percent of base salary for 1999.

As an additional incentive, the Committee makes grants and awards under
the Company's shareholder-approved stock option plans as well as offering
officers the opportunity to purchase shares under the shareholder-approved
stock purchase plan. The purpose of these plans is to encourage elective
stock ownership, offer long-term performance incentive and to more closely
align the executive's compensation with the return received by the Company's
shareholders. Using information, observations and recommendations on
incentive compensation programs provided by an outside consultant, the
Committee reviews annually the financial incentives to officers under prior
grants and awards and determines whether additional grants or awards are
appropriate. In 1999, the Committee made a stock option grant to the Senior
Vice President, Operations as a part of his compensation package.

The annual compensation of the other executive officers includes a base
salary and an annual incentive cash bonus, determined similarly to that
described above for the Chief Executive Officer.

Section 162(m) of the Internal Revenue Code, which sets limitations on
the deductibility of executive compensation, did not affect compensation paid
to any executive officer in 1999 and is not expected to have an effect on
compensation payable in 2000.

D. J. Schneider H. B. Witt R. S. Trumbull

<PAGE>

STOCK PERFORMANCE GRAPH

The following graph compares the cumulative total shareholder return on
an investment in (1) the Company's Common Stock (including reinvestment of
dividends), (2) the Standard & Poor's 500 Stock Index (including reinvestment
of dividends), and (3) the Russell 2000 Stock Index (including reinvestment of
dividends) for the period December 31, 1994 through December 31, 1999. In each
case, the graph assumes the investment of $100 on December 31, 1994.

$400

351<F2>

$300 290<F2>

226<F2> 219<F1>
208<F1> 214<F3>
$200 196<F1>
183<F3>
169<F2> 178<F3>
150<F3>
138<F2> 136<F1>
128<F3>
$100 98<F1>

$ 0
1994 1995 1996 1997 1998 1999
YEAR

<F1> FRANKLIN ELECTRIC
<F2> S & P 500
<F3> RUSSELL 2000

<PAGE>

SUMMARY COMPENSATION TABLE

The following table sets forth compensation information for the years
1997 through 1999 for the Company's Chief Executive Officer and the Company's
other four most highly compensated executive officers who served as executive
officers of the Company at the end of and/or during 1999.

ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
------------------- -----------------------------
BONUS SECURITIES
(PERFORMANCE UNDERLYING
NAME AND BASED OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY INCENTIVE) (# OF SHARES) COMPENSATION<F1>
- ------------------ ---- ------ --------- ----------- ------------
<S> <C> <C> <C> <C> <C>
William H. Lawson, 1999 $414,000 $290,000 - $20,981
Chairman of the 1998 414,000 331,000 - 19,415
Board and Chief 1997 414,000 290,000 - 19,548
Executive Officer

John B. Lindsay, 1999 $270,000 $189,000 - $ 8,062
President, Director 1998 270,000 216,000 - 6,574
1997 270,000 189,000 - 15,229

Jess B. Ford, 1999 $200,000 $140,000 - $ 5,600
Sr. Vice President 1998 175,000 140,000 - 5,600
1997 175,000 123,000 - 5,600

Peter-Christian Maske,1999 $177,000 $124,000 50,000 $13,410
Sr. Vice President,
Operations<F2>

Kirk M. Nevins, 1999 $145,000 $101,500 - $ 6,458
Vice President, 1998 135,000 108,000 - 6,861
Sales 1997 135,000 95,000 - 5,600

<FN>

<F1> All Other Compensation for 1999 reflects (i) Company matching
contributions to employee benefit plans of $5,600 for Mr. Lawson, Mr.
Lindsay, Mr. Ford and Mr. Nevins, respectively, and $5,800 for Mr.
Maske; (ii) reimbursement of $4,279, $2,462 and $858 of taxes paid for
Mr. Lawson, Mr. Lindsay and Mr. Nevins, respectively; (iii) premiums
incurred by the Company in the amount of $11,102 in connection with Mr.
Lawson's executive split-dollar insurance arrangements that restore his
benefits to the level in effect when he was first employed by the
Company adjusted for benefit increases, if any, awarded to all covered
employees; (iv) a fair value of $4,903 estimated for the personal use of
a Company car by Mr. Maske while serving as the Managing Director of the
Company's European operations, and (v) an anniversary bonus of $2,708
for Mr. Maske under the Company's policy to reward all employees who
achieve twenty-five years of service with a payment equal to one week's
base pay.
<F2> Mr. Maske was elected an executive officer of the Company in October
1999.

</FN>
</TABLE>

<PAGE>

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL
YEAR-END OPTION VALUES

Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Shares Options at Options at
Acquired Fiscal Fiscal
on Value Year-End (#) Year-End($)
Exercise Realized(1) Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable(2)
- ---- -------- ----------- ------------- -------------

William H. Lawson 64,180 $3,658,260 180,000/ 0 $7,413,750/$ 0

John B. Lindsay - - 25,000/ 0 $1,092,188/$ 0

Jess B. Ford - - 39,000/ 6,000 $1,399,313/$169,125

Peter-Christian
Maske 16,000 $ 556,625 3,000/56,000 $ 84,563/$169,125

Kirk M. Nevins - - 16,000/ 4,000 $ 606,000/$112,750

(1) Based on the excess of the fair market value of the Common Stock on the
date of exercise over the option exercise price.
(2) Based on the excess of the fair market value of the Common Stock of
$70 3/16 on January 1, 2000 over the option exercise price.

<PAGE>

PENSION PLANS

The Company has three pension plans in which executive officers
participate: the Franklin Electric Co., Inc. Basic Retirement Plan, the
Franklin Electric Co., Inc. Contributory Retirement Plan, and the Franklin
Electric Co., Inc. Pension Restoration Plan (collectively referred to herein
as the "Pension Plans").

The following table illustrates the approximate combined annual pension
benefit payable upon retirement at age 65 under the Pension Plans, after
integration with social security. In the table, Annual Compensation is based
on the highest thirty-six consecutive months' compensation which includes
salary and bonus.

COMBINED ANNUAL PENSION AMOUNT, INCLUDING SOCIAL SECURITY

ANNUAL
COMPEN- YEARS OF SERVICE
SATION 10 15 20 25 30 35
- ------------------------------------------------------------------------

$150,000 $ 52,500 $ 60,000 $ 67,500 $ 75,000 $ 86,200 $ 97,900
200,000 70,000 80,000 90,000 100,000 107,200 122,400
250,000 87,500 100,000 112,500 125,000 128,200 146,900
300,000 105,000 120,000 135,000 150,000 150,000 171,400
350,000 122,500 140,000 157,500 175,000 175,000 195,900
400,000 140,000 160,000 180,000 200,000 200,000 220,400
450,000 157,500 180,000 202,500 225,000 225,000 244,900
500,000 175,000 200,000 225,000 250,000 250,000 269,400
550,000 192,500 220,000 247,500 275,000 275,000 293,900
600,000 210,000 240,000 270,000 300,000 300,000 318,400
650,000 227,500 260,000 292,500 325,000 325,000 342,900
700,000 245,000 280,000 315,000 350,000 350,000 367,400
750,000 262,500 300,000 337,500 375,000 375,000 391,900

Estimated years of service for the named executive officers eligible to
receive the foregoing pension amounts are as follows: Mr. Lawson, 14 years;
Mr. Lindsay, 22 years; Mr. Ford, 4 years; Mr. Maske, 0 years; and Mr. Nevins,
27 years.

<PAGE>

AGREEMENTS

The Company has employment agreements with William H. Lawson, Chairman
and Chief Executive Officer, and Jess B. Ford, Senior Vice President (the
"Employees"). The agreements may be terminated by either the Company or the
Employees upon 90 days advance written notice. Under the agreements, the
Company, depending on the reason for termination of employment, may be
required to pay the Employees their annual compensation, including bonus, for
a period of one year after termination and all stock options and stock
appreciation rights held by the Employees may become immediately exercisable.
If termination is effected in connection with a change in control of the
Company, the Company may be required to pay Mr. Lawson and Mr. Ford their
annual compensation for up to three years and two years, respectively, from
the date of termination or change in control, whichever is earlier, and to
continue to provide them with certain benefits under the Company's benefit
plans in which they were a participant at the time of their termination of
employment.

APPROVAL OF THE FRANKLIN ELECTRIC CO., INC.
AMENDED AND RESTATED 1996 NONEMPLOYEE DIRECTOR
STOCK OPTION PLAN

GENERAL

In the opinion of the Board, the Company and its shareholders benefit
substantially from having directors acquire shares of its Common Stock through
options granted under a stock option plan. Options provide a strong incentive
for stock ownership which can contribute markedly to the success and growth of
the Company. An option plan aids the Company in attracting and retaining
directors.

In 1996, the Company adopted the Nonemployee Director Stock Option Plan
(the "1996 Plan") following the expiration of a prior option plan for
nonemployee directors. On February 11, 2000, the Board adopted the Amended and
Restated 1996 Nonemployee Director Stock Option Plan (the "Amended Plan"),
subject to shareholder approval at the 2000 Annual Meeting.

Under the Amended Plan, each person who is a nonemployee director of the
Board following each Annual Meeting shall be granted an option to purchase
5,000 shares at an option price equal to the fair market value of the
Company's Common Stock on the date the option is granted. The market price of
the Company's Common Stock on February 25, 2000, was $66.00 per share.

The following is a summary of the major provisions of the Amended Plan.
This summary is qualified in its entirety by reference to the full text of the
Amended Plan and is included in this Proxy Statement as Exhibit A. As
described herein, the principal amendments made to the 1996 Plan by the
Amended Plan are: (i)an increase in the number of shares available to 300,000
from 90,000; (ii)an increase in the annual grant to each nonemployee director
to 5,000 shares from 1,000 shares; and (iii) a provision allowing a
participant under certain limited circumstances to assign options to family
members.

<PAGE>

ADMINISTRATION

The Amended Plan is to be administered by the Board subject to the
restrictions set forth in the Amended Plan. The Board shall not have the
discretionary power to determine eligibility, the number, option price,
vesting period or the frequency and timing of awards. All such determinations
are made automatically pursuant to the provisions of the Amended Plan.

DURATION OF THE PLAN

The Amended Plan shall remain in effect until all shares subject to it
have been purchased or acquired. However, in no event may an award be granted
on or after March 30, 2006. The Board, however, can terminate the Amended Plan
at any time prior to that date so long as such termination does not adversely
affect the rights of participants in the Amended Plan without their consent.

TYPES OF AWARDS

The Amended Plan permits the use of stock options only. A stock option is
the right to purchase shares of the Company's Common Stock at a fixed price
for a fixed period of time in the future. Participants in the Amended Plan
shall be eligible to exercise their options within the time period beginning
one(1) year after grant of the option, and ending ten (10) years after the
grant of the option according to the following schedule: one-third of the
options shall vest on each of the first, second and third anniversaries of the
date of the grant of the options. Under the Amended Plan, the purchase price
of the shares subject to any option must be equal to the fair market value of
the shares on the date of the grant.

NONTRANSFERABILITY OF OPTIONS

No option granted under the Amended 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 above, however, 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 descendent, (ii) the trustee of a trust
established for the primary benefit of his or her spouse or lineal descendent,
(iii) a partnership of which his or her spouse and lineal descendents are the
only partners, or (iv) a tax-exempt organization. In such event, the spouse,
lineal descendents, trustee, partnership or tax-exempt organization, will be
entitled to all 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 in the Plan immediately prior to the effective date of the assignment.
Any such assignment will be permitted only if expressly approved by the Board.

<PAGE>

ALLOCATED SHARES

A total of 300,000 shares will be allocated to the Amended Plan. This
constitutes approximately six percent of the currently outstanding shares. All
shares available under the Amended Plan are subject to adjustments to be made
by the Board for a merger, recapitalization, stock dividend, stock split or
other similar change affecting the number of outstanding shares of the
Company's Common Stock. Unpurchased shares subject to an option that lapses or
terminates without exercise are available for future awards.

EXERCISE OF OPTIONS AND PURCHASE PRICE

Upon the exercise of options, participants must deliver to the Company
the full option price of the shares being exercised with such purchase price
being paid in either cash or in shares of the Company's Common Stock or
otherwise as permitted by the Board under the Award Agreement.

TERMINATION FROM BOARD OF DIRECTORS

In the event the service of a participant on the Board is terminated by
reason of death, disability or retirement after the age of seventy, any
outstanding options granted under the Amended Plan to that participant that
are not exercisable as of the date of death, disability or retirement
immediately shall be exercisable upon such occurrence.

To the extent an option is exercisable as of the date of death,
disability or retirement, the option shall remain exercisable at any time
prior to its expiration date, or for two years after the date of death,
disability or retirement after the age of seventy, whichever period is
shorter.

If the service of the participant on the Board shall terminate for any
reason other than for death, disability or retirement after the age of
seventy, any outstanding options under the Amended Plan held by the
Participant that are not exercisable as of the date of termination shall
immediately be forfeited to the Company.

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 months after the date the
Participant's service on the Board terminates, whichever period is shorter.

CHANGE IN CONTROL

In order to protect a participant's rights in the event of a "Change in
Control" of the Company (as defined in the Amended Plan), the Amended Plan
provides for the immediate vesting of all outstanding options.

FEDERAL TAX CONSEQUENCES

Options granted under the Amended Plan are nonqualified stock options. A
participant receiving a nonqualified stock option is not subject to federal
income tax upon grant of the option. A participant will, however, realize
ordinary income at the time of the exercise to the extent that the then fair
market value of the Company's Common Stock at the date of exercise, exceeds
the exercise price. The Company will be entitled to a federal tax deduction in
an amount equal to the ordinary income realized by the participant in
connection with the stock option exercise.

<PAGE>

The foregoing discussion of federal income tax consequences is a summary
only and is not intended to be a comprehensive analysis of the subject matter.

MODIFICATION OF THE PLAN

Subject to any requirements for shareholder approval under applicable
law, the Board may amend the Amended Plan at any time subject to certain
restrictions as set forth in the Amended Plan. No modification of the Amended
Plan that would adversely affect the rights of participants with respect to
outstanding options may be made without their consent.

EFFECTIVE DATE AND VOTE

The Amended Plan was approved by the Board on February 11, 2000, and
subject to shareholder approval, is effective as of February 11, 2000.

The affirmative vote of a majority of the shares of the Company's Common
Stock present in person or represented by proxy and entitled to vote at the
Annual Meeting is necessary for approval of the Amended Plan.

The Board recommends a vote for the approval of the Amended Plan.

APPROVAL OF THE FRANKLIN ELECTRIC CO., INC.
KEY EMPLOYEE PERFORMANCE INCENTIVE STOCK PLAN

GENERAL

In the opinion of the Board of Directors (the "Board"), the Company and
its shareholders benefit substantially from having key employees have the
opportunity to earn shares of the Company's common stock if the employees
achieve performance goals that are set above industry or equity market median
benchmarks. Achievement of those goals should enhance shareholder value.
Ownership of shares by key employees furthers the identity of interest between
such employees and the Company and its shareholders and provides an additional
incentive to the key employees. Affording the Company's key employees the
opportunity to earn shares under a performance incentive program also enables
the Company to attract, retain and reward the employees responsible for the
continued success of the Company.

In 1988, the Company established the 1988 Stock Incentive Award Plan.
That Plan expired by its terms in 1998. On February 11, 2000, the Board,
subject to shareholder approval, adopted a new plan under which key employees
have the opportunity to earn shares of the Company's Common Stock. Under the
Franklin Electric Co., Inc. Key Employee Performance Incentive Stock Plan (the
"Plan"), key employees will be granted "restricted shares" of the Company.
These shares will vest to the employees if the employees attain certain
performance goals established by a Committee of "outside directors" of the
Board (the "Committee") in advance of the grants being made.

The Plan is intended to meet the requirements for "performance-based"
compensation under Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"). As such, compensation under the Plan will be fully
deductible by the Company for federal income taxes notwithstanding the
limitation otherwise imposed by Section 162(m) on certain compensation paid to
the chief executive officer and the four other most highly compensated
executive officers of the Company. The following is a summary of the major
provisions of the Plan including the "material terms of the performance goals"
under section 162(m)of the Code. This summary is qualified in its entirety by
<PAGE>

reference to the full text of the Plan, which is included in this Proxy
Statement as Exhibit B.

BASIS OF AWARDS

At the time of the grant the Committee will establish at least two
criteria for employees to earn the shares granted. First, the Committee will
establish a "restriction period". The restriction period for grants under the
prior plan has typically been five years. Second, the Committee will also set
performance goals for the employees to achieve during the restriction period.
These goals will be based upon financial metrics that are recognized as
measures of shareholder value, including 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. If the performance goals established by the
Committee are not satisfied, the employee would forfeit some or all of the
restricted shares back to the Company even though he or she continued to be
employed by the Company during the entire restriction period.

ALLOCATED SHARES

A total of 100,000 common shares will be subject to awards under the
Plan. The shares used for the Plan may be authorized, but not issued shares,
or shares acquired by the Company and held in its treasury. The number of
shares available under the Plan is subject to adjustment for a merger,
recapitalization, stock dividend, stock split or other similar change
affecting the number of outstanding common shares of the Company. If any award
granted under the Plan terminates or lapses, the corresponding shares will
again be available for the grant of an award under the terms of the Plan.

ELIGIBLE EMPLOYEES

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. These key employees (including
the executive officers) would be currently eligible to receive restricted
shares under the Plan. No awards have been made under the Plan, and any future
awards will be made at the discretion of the Committee. The maximum number of
shares to be granted to any key employee under the Plan will not exceed
100,000 shares subject to adjustment as provided in the Plan.

ADMINISTRATION

The Plan is to be administered by the Committee, which consists 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.

TYPES OF AWARDS

The only type of award available under the Plan is the grant of
restricted shares to eligible employees. A "Restricted Share" is a share of
the Company's common stock which is issued to the eligible employee with
certain conditions or restrictions on the employee's ownership of the share.

At the time of the grant, the Committee will establish a "restriction
period" for the restricted shares granted. Prior to the termination of the
restriction period, the employee will not be entitled to sell, transfer,
assign, pledge or otherwise alienate or hypothecate the shares except,

<PAGE>

however, the employee may, subject to approval by the Board, assign their
restricted shares to a spouse, lineal descendent, trust or partnership for the
primary benefit of a spouse or lineal descendent, or a tax-exempt
organization. In addition, the employee will be entitled to vote the
restricted shares granted to him or her, and he or she will receive all
dividends paid on the shares.

In addition to establishing a restriction period for those restricted
shares granted pursuant to the Plan, the Committee will also place
performance-related restrictions on the shares. Under these restrictions, an
employee's unrestricted ownership of the shares will be conditioned upon the
performance goals set by the Committee. These goals will be set above industry
or equity market median benchmarks and their achievement should enhance
shareholder value. If the performance goals established by the Committee are
not satisfied, the employee would forfeit some or all of the restricted shares
back to the Company even though he or she continued to be employed by the
Company during the entire restricted period.

Restricted shares will be issued to the eligible employees without
requiring any payment for the shares by the employee. The Committee will
decide whether to grant restricted shares to an eligible employee. The
Committee will also determine the number of restricted shares to be granted to
any eligible employee, the length of the restriction period, the nature of any
performance goals and all other terms and conditions of the restricted shares
not specified under the Plan.

TERMINATION OF EMPLOYMENT

Unless the Committee determines otherwise, an employee will forfeit all
rights in restricted shares upon termination of employment for any reason,
other than death, disability or retirement on or after an employee's sixty-
fifth birthday, prior to the expiration or termination of the restriction
period and the satisfaction of the performance goals set by the Committee. In
the case of death, disability or retirement of an employee on or after an
employee's sixty-fifth birthday, the employee will forfeit only a portion of
the restricted shares awarded to him or her. The number of restricted shares
to which the employee will be entitled will be determined by the Committee in
accordance with the terms and conditions of the Plan.

DISSOLUTION, MERGER OR CONSOLIDATION

The Committee has the discretion under the Plan to provide for the lapse
of restrictions in the event of a dissolution or liquidation of the Company or
a merger or consolidation in which its Company is not the surviving
corporation. The Committee also has the option of providing for the lapse of
restrictions upon a "Change in Control" of the Company (as defined in the
Plan).

FEDERAL INCOME TAX CONSEQUENCES

The following is a summary of the federal income tax consequences to the
employee and the Company resulting from its grant of restricted shares and
restricted units.

An employee generally will not realize taxable income upon the grant of
restricted shares and the Company will not be entitled to any deduction upon
the grant. When the shares are no longer subject to a substantial risk of
forfeiture or become transferable, the employee will realize ordinary income
<PAGE>

in an amount equal to the fair market value of the shares at that time and the
Company will be entitled to a deduction in the same amount, provided it
complies with applicable withholding requirements.

Under Section 83(b) of the Internal Revenue Code, an employee has the
option of altering the foregoing federal income tax consequences. Under that
section, an employee may elect to realize taxable ordinary income in the year
the restricted shares are awarded in an amount equal to their fair market
value at that time, determined without regard to the restrictions. In that
event, the Company will be entitled to a deduction in that year in the same
amount, provided it complies with applicable withholding requirements. Any
gain or loss realized by the employee upon the subsequent disposition of the
restricted shares will be capital gain or loss and will not result in any
further deduction to the Company. If the employee elects to be taxed on the
restricted shares on the date of grant and the employee subsequently forfeits
the shares, the employee is not entitled to a deduction as a consequence of
such forfeiture and the Company must include as ordinary income the amount
previously deducted in the year of the grant with respect to the shares.

Any dividends received with respect to the restricted shares which are
paid or made available to an employee (who has not elected to be taxed on the
date of the grant) while the shares remain forfeitable are treated as
additional compensation taxable as ordinary income to the employee and
deductible to the Company when paid. If the election under Section 83(b) has
been made with respect to the shares, the dividends represent ordinary
dividend income to the employee which are not deductible to the Company.

MODIFICATION OF THE PLAN

The Board, without further action on the part of the Shareholders, may at
any time terminate, suspend or modify the Plan to the extent permitted by law.
However, no termination or amendment of the Plan, or amendment of any grants,
shall adversely affect any rights of a participant of the Plan, unless the
participant consents.

EFFECTIVE DATE AND DURATION

The Plan was approved by the Board on February 11, 2000, and subject to
shareholder approval, is effective as of February 11, 2000.

The Board recommends a vote for the approval of the Plan.

RATIFICATION OF THE APPOINTMENT
OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS

The Board of Directors has appointed, subject to ratification by the
shareholders, the firm of Deloitte & Touche LLP as independent auditors for
the 2000 fiscal year. Although shareholder ratification is not legally
required, the Board of Directors believes it advisable to submit its decision
to the shareholders. Deloitte & Touche LLP has acted as auditor for the
Company since 1988.

Representatives of Deloitte & Touche LLP are expected to be present at
the Annual Meeting with the opportunity to make a statement if they desire to
<PAGE>

do so, and to be available to respond to questions relating to their
examinations of the Company's financial statements.

SHAREHOLDER PROPOSALS

November 3, 2000 is the date by which proposals of shareholders intended
to be presented at the next annual meeting must be received by the Company to
be considered for the inclusion in the Company's proxy statement for the 2001
Annual Meeting. Also, other proposals intended to be presented at the next
Annual Meeting but not included in the Company's proxy statement must be
received by the Company no later than January 14, 2001 to be considered for
presentation at that meeting.

OTHER BUSINESS

Management has no knowledge of any other matters to be presented for
action by the shareholders at the 2000 Annual Meeting. The enclosed proxy
gives discretionary authority to the persons designated as proxies therein to
vote on any additional matters that should properly and lawfully be presented.

By order of the Board of Directors
Dated: March 3, 2000

Dean W. Pfister, Secretary

<PAGE>

EXHIBIT A

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.

"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.

<PAGE>

"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>

"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

<PAGE>

(all such determinations are automatic pursuant to the provisions of the
Plan).

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.

<PAGE>

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.

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.

<PAGE>

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).
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.

<PAGE>

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
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

<PAGE>

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.

<PAGE>

EXHIBIT B

FRANKLIN ELECTRIC CO., INC.
KEY EMPLOYEE PERFORMANCE INCENTIVE STOCK PLAN

PREAMBLE

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 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.

<PAGE>

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
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:

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)

<PAGE>

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
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

<PAGE>

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,
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.

(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

<PAGE>

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
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 Objective 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

<PAGE>

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
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

<PAGE>

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:

"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. 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.

<PAGE>

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 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

<PAGE>

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.

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.

<PAGE>

APPENDIX 1

FRANKLIN ELECTRIC PROXY

Franklin Electric Co., Inc.
400 East Spring Street
Bluffton, IN 46714

This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints William H. Lawson and Jess B. Ford as Proxies,
and each of them, with full power of substitution, with all power the
undersigned would possess if personally present, and to vote all shares of
common stock of Franklin Electric Co., Inc. held of record by the undersigned
on February 25, 2000, which the undersigned would be entitled to vote at the
Annual Meeting of Shareholders to be held on April 14, 2000 or any adjournment
or postponement thereof.

1. ELECTION OF DIRECTORS. Proposal to elect Jerome D. Brady, Robert H.
Little and Patricia Schaefer as directors to serve until the 2003 Annual
Meeting of Shareholders,
FOR all nominees[ ] WITHHOLD AUTHORITY to vote for all nominees[ ]

(INSTRUCTION: To withhold authority to vote for any individual nominee strike
a line through the nominee's name in the list below.)
Jerome D. Brady Robert H. Little Patricia Schaefer

2. APPROVAL OF AMENDED AND RESTATED NONEMPLOYEE DIRECTOR STOCK OPTION PLAN.
Proposal to approve the Franklin Electric Co., Inc. Amended and Restated 1996
Nonemployee Director Stock Option Plan.
[ ]FOR [ ]AGAINST [ ]ABSTAIN

3. APPROVAL OF KEY EMPLOYEE PERFORMANCE INCENTIVE STOCK PLAN. Proposal to
approve the Franklin Electric Co., Inc. Key Employee Performance Incentive
Stock Plan.
[ ]FOR [ ]AGAINST [ ]ABSTAIN

4. APPOINTMENT OF INDEPENDENT AUDITORS. Proposal to ratify the appointment
of Deloitte & Touche LLP as independent auditors for the 2000 fiscal year.
[ ]FOR [ ]AGAINST [ ]ABSTAIN

5. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting, or any adjournment or
postponements thereof.

<PAGE>

This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this proxy
will be voted FOR proposals 1, 2, 3 and 4.

Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.

DATED________________________________, 2000

___________________________________________
Signature

___________________________________________
Signature if held jointly

PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.