1996 NONEMPLOYEE 
DIRECTOR STOCK OPTION PLAN 
 
Franklin Electric Co., Inc. 
 
November 1995 
 
 
 
 
 
CONTENTS 
 
 
 
Article 1. Establishment, Purpose, and Duration 
 
Article 2. Definitions and Construction 
 
Article 3. Administration 
 
Article 4. Shares Subject to the Plan 
 
Article 5. Eligibility and Participation 
 
Article 6. Nonqualified Stock Options 
 
Article 7. Change in Control 
 
Article 8. Amendment, Modification, and Termination 
 
Article 9. Miscellaneous 
 
 
 
 
FRANKLIN ELECTRIC CO., INC. 
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 establishes an incentive compensation plan to be known as the  
"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 April 1, 1996 (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 April 1,  
1996 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: 
 
     (a)  "Award" means a grant of Nonqualified Stock Options under  
this Plan. 
 
     (b)  "Award Agreement" means an agreement entered into by the  
Company and each Participant setting forth the terms and provisions  
applicable to Awards granted under this Plan. 
 
     (c)  "Beneficial Owner" shall have the meaning ascribed to such  
term in Rule 13d-3 of the General Rules and Regulations under the  
Exchange Act. 
 
     (d)  "Board" or "Board or Directors" means the Board of  
Directors of Franklin Electric Co., Inc., and includes any committee  
of the Board of Directors designated by the Board to administer part  
or all of this Plan. 
 
     (e)  "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). 
 
     (f)  "Code" means the Internal Revenue Code of 1986, as amended  
from time to time. 
 
     (g)  "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. 
 
     (h)  "Director" means any individual who is a member of the  
Board of Directors of the Company. 
 
     (i)  "Disability" means a permanent and total disability, within  
the meaning of Code Section 22(e)(3), as determined by the Board in  
good faith. 
 
     (j)  "Employee" means any full-time, nonunion, salaried employee  
of the Company. For purposes of this Plan, an individual whose only  
employment relationship with the Company is as a Director, shall not  
be deemed to be an Employee. 
 
     (k)  "Exchange Act" means the Securities Exchange Act of 1934,  
as amended from time to time, or any successor Act thereto. 
 
     (l)  "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. 
 
     (m)  "Nonemployee Director" means any individual who is a member  
of the Board of Directors of the Company, but who has never otherwise  
been an Employee of the Company. 
 
     (n)  "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. 
 
     (o)  "Option" means a Nonqualified Stock Option granted under  
this Plan. 
 
     (p)  "Participant" means a Nonemployee Director of the Company  
who has outstanding an Award granted under the Plan. 
 
     (q)  "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). 
 
     (r)  "Shares" means the $.10 par value common stock of the  
Company. 
 
     (s)  "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, subject to the restrictions  
set forth in this Plan. 
 
     3.2.  ADMINISTRATION BY THE BOARD. The Board shall have the full  
power, discretion, and authority to interpret and administer this  
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  
purchase price, the vesting period, or the frequency and timing of  
Awards to be made under the Plan to any Participant (all such  
determinations are automatic pursuant to the provisions of this  
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 ninety thousand (90,000) Shares  
shall be eligible for purchase by Participants pursuant to Options  
granted under this Plan. 
 
     4.2.  LAPSED AWARDS. If any Option granted under this 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.  ADJUSTMENTS IN AUTHORIZED SHARES. In the event of any  
merger, reorganization, consolidation, recapitalization, separation,  
liquidation, stock dividend, split-up, Share combination, or other  
change in the corporate structure of the Company affecting the  
Shares, such adjustment shall be made in the number and class of  
and/or price of Shares subject to outstanding Options granted under  
this Plan, as may be determined to be appropriate and equitable by  
the Board, in its sole discretion, to prevent dilution or enlargement  
of rights; and provided that the number of Shares subject to any  
Option shall always be a whole number. 
 
ARTICLE 5. ELIGIBILITY AND PARTICIPATION 
     5.1.  ELIGIBILITY. Persons eligible to participate in this Plan  
are limited to Nonemployee Directors. 
 
     5.2.  ACTUAL PARTICIPATION. Subject to the provisions of Article  
6 of this 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 this Plan, each individual who is not an  
Employee and who is elected or reelected during the term of this Plan  
by the stockholders of the Company to serve on the Board of  
Directors, shall be granted an Option to purchase three thousand  
(3,000) Shares upon each such election and/or reelection to serve on  
the Board. 
 
     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 this Plan. 
 
     6.3.  AWARD AGREEMENT. Each Option grant shall be evidenced by  
an Award Agreement that shall specify the Option Price, the duration  
of the Option, and the number of Shares available for purchase under  
the Option as set forth in this Plan. 
 
     6.4.  OPTION PRICE. The purchase 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. Options shall be exercised by the delivery of a  
written notice of exercise to the Secretary of the Company, setting  
forth the number of Shares with respect to which the Option is to be  
exercised, accompanied by full payment for the Shares. 
 
     The Option Price upon exercise of any Option shall be payable to  
the Company in full in cash or its equivalent. 
 
     As soon as practicable after receipt of a written notification  
of exercise and full payment, the Company shall deliver to the  
Participant, in the Participant's name, Share certificates in an  
appropriate amount based upon the number of Shares purchased pursuant  
to the exercise of the Option. 
 
     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 or Disability, 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, as applicable) 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 death  
(or as of the date that the definition of Disability is satisfied, as  
applicable), it 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, as applicable),  
whichever period is shorter, by the Participant or such person or  
persons as shall have been named as the Participant's legal  
representative or beneficiary, or by such persons that have acquired  
the Participant's rights under the Option by will or by the laws of  
descent and distribution. 
 
     6.9.  TERMINATION OF SERVICE ON BOARD OF DIRECTORS FOR OTHER  
REASONS. If the service of the Participant on the Board shall  
terminate for any reason other than for death or Disability, 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 this 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 this Plan shall be exercisable during his or her  
lifetime only by such Participant. 
 
          6.11.  RESTRICTIONS ON SHARE TRANSFERABILITY. The Board may  
impose such restrictions on any Shares acquired pursuant to the  
exercise of an Option under this 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 this Plan that are still outstanding and not yet vested  
and exercisable, shall become immediately one hundred percent (100%)  
vested and exercisable in each Participant, as of the first date that  
the definition of Change in Control has been fulfilled, and shall  
remain as such for the remaining life of the Option, as such life is  
provided herein, and within the provisions of the related Award  
Agreements. All Options that are exercisable as of the Change in  
Control shall remain as such for the remaining life of the Options. 
 
ARTICLE 8. AMENDMENT, MODIFICATION, AND TERMINATION 
     8.1.  AMENDMENT, MODIFICATION, AND TERMINATION. The Board may at  
any time and from time to time alter, amend, suspend, or terminate  
the Plan in whole or in part; provided, however, that no amendment  
which fails to comply with the exemptions available under Rule 16b-3  
of the Exchange Act, including any successor to the Rule, shall be  
effective. 
 
          8.2.  OPTIONS PREVIOUSLY GRANTED. Unless required by law,  
no termination, amendment, or modification of this Plan shall in any  
manner adversely affect any Option previously granted under this  
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  
this 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 this Plan  
may, from time to time, name any beneficiary or beneficiaries (who  
may be named contingently or successively) to whom any benefit under  
this 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 this  
Plan, with respect to Awards granted hereunder, shall be binding on  
any successor to the Company, whether the existence of such successor  
is the result of a direct or indirect purchase, merger,  
consolidation, or otherwise, of all or substantially all of the  
business and/or assets of the Company. 
 
     9.4.  REQUIREMENTS OF LAW. The granting of Options under this  
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,  
this Plan, and all agreements hereunder, shall be construed in  
accordance with and governed by the laws of the State of Indiana.