8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 8, 2012

SPARTON CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Ohio	1-1000	38-1054690
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)
425 Martingale Road Suite 2050 Schaumburg, Illinois		60173-2213
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (800) 772-7866

N/A

(Former Name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

Effective November 8, 2012, Mark Schlei was appointed as the Company’s Chief Financial Officer. Mr. Schlei, age 51, most recently served, from November 2011 to February 2012, as the Chief Financial Officer at Paperworks Industries, Inc. located in Philadelphia, Pennsylvania, engaged in the business of packaging solutions. Previously, Mr. Schlei served as the Chief Financial Officer at Thetford Corporation, located in Ann Arbor, Michigan, engaged in the business of manufacturing mobile sanitation and refrigeration products, from 2004 to 2011. In connection with his appointment, Mr. Schlei entered into an employment agreement (the “Employment Agreement”) with the Company, effective as of November 8, 2012 (the “Effective Date”).

The Employment Agreement is for at-will employment without a set term. Under the terms of the Employment Agreement, the Company will pay Mr. Schlei an annual base salary of $270,000. In addition, Mr. Schlei is eligible to receive an annual bonus of up to 40% of his annual salary, based upon the Company’s Short Term Incentive Plan program, provided certain target objectives have been attained. Mr. Schlei’s employment may be terminated: (i) by the Company or Mr. Schlei at any time for any reason; (ii) by the Company for “just cause” (as such term is defined in the Employment Agreement) and (iii) by the Company upon the disability of Mr. Schlei. If the Company terminates Mr. Schlei’s employment for any reason other than for just cause, death or disability, the Company will: (i) pay Mr. Schlei severance in an amount equal to nine (9) months of his current salary; (ii) pay Mr. Schlei nine (9) months of COBRA premiums for medical insurance for Mr. Schlei and/or his dependents if he so elects; and (iii) pay for outplacement services for Mr. Schlei in an amount not to exceed $25,000. However, if Mr. Schlei is involuntarily terminated within twelve (12) months of a Change in Control (as such term is defined in the Employment Agreement), the Company will pay Mr. Schlei severance in an amount equal to twelve (12) months of his current salary and twelve (12) months of COBRA premiums for medical insurance for Mr. Schlei and/or his dependents if he so elects. In order to receive such benefits Mr. Schlei must enter into a customary separation and release agreement.

Pursuant to the terms of the Employment Agreement, Mr. Schlei shall be eligible to participate in the Company’s long-term incentive plan. Mr. Schlei was granted 15,000 shares of restricted stock pursuant to the Company’s standard Award Agreement and the Amended and Restated Sparton Corporation Stock Incentive Plan (the “LTIP”). The restricted stock will vest in four equal annual amounts based on achievement of certain performance criteria for fiscal years 2013-2016, and subject to the terms of the LTIP. For the shares to vest, Mr. Schlei must be an employee of the Company when the annual report on Form 10-K is filed for the applicable year. The award is performance based in that vesting is dependent upon whether a value index is achieved.

Under the Employment Agreement, Mr. Schlei agrees: (i) not to disclose Company confidential information during the term and at all times thereafter; (ii) not to compete with the Company during the term and for a period of eighteen months thereafter; and (iii) not to solicit employees or customers during the term and for a period of eighteen months thereafter.

The description of the Employment Agreement herein is qualified in its entirety by the terms of the Employment Agreement filed as Exhibit 10.1 to this Current Report on Form 8-K.

As of the Effective Date, Gregory A. Slome’s employment as Chief Financial Officer of the Company ceased. In 2009, at the beginning of the Company’s turnaround, Mr. Slome had agreed to serve as a financial consultant to the Company and, as time went on, he agreed to stay on as the Chief Financial Officer. Mr. Slome’s departure from the Company will be on terms consistent with his Employment Agreement with the Company. We appreciate his efforts toward the Company’s turnaround. Mr. Slome will serve as a financial consultant to the Company after his departure as Chief Financial Officer.

A copy of the press release issued by the Company announcing these matters is attached hereto as Exhibit 99.1 and incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit No.	Description
Exhibit 10.1	Employment Agreement between the Company and Mark Schlei
Exhibit 99.1	Press release dated November 13, 2012.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	SPARTON CORPORATION
Dated: November 13, 2012	By:	/s/ Cary B. Wood
	Cary B. Wood, President and Chief Executive Officer

Index to Exhibits

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit No.	Description
Exhibit 10.1	Employment Agreement between the Company and Mark Schlei
Exhibit 99.1	Press release dated November 13, 2012.

EX-10.1

Exhibit 10.1

Sparton Corporation

425 North Martingale Road

Suite 2050

Schaumburg, Illinois 60173

800.772.7866

www.sparton.com

EXECUTIVE EMPLOYMENT AGREEMENT

THIS AGREEMENT shall be effective as of the first day of employment which will be agreed upon by both parties (“the Effective Date”), and is made between SPARTON CORPORATION, an Ohio corporation, whose headquarters are located at 425 N. Martingale Road, Suite 2050, Schaumburg, IL 60173, hereafter called “the Corporation,” as the employer, and Mark Schlei, hereafter called “the Executive,” as the employee.

WHEREAS:

(a) The Corporation wishes to retain the services of the Executive in the capacity of a Chief Financial Officer (“CFO”); and

(b) The Executive wishes to be employed by the Corporation in that capacity; and

(c) The parties desire to set forth the terms and conditions of the employment of the Executive by the Corporation in writing;

NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

ARTICLE I

EMPLOYMENT AND DUTIES

1.1 The Corporation hereby agrees to employ the Executive as CFO, and the Executive agrees to such employment, all in accordance with the express terms, conditions, duties and obligations set forth in this Agreement. The parties agree that the relationship between the Corporation and the Executive created by this Agreement is that of employer and employee.

1.2 The Executive shall be based at the Corporation’s headquarters located in Schaumburg, IL, although significant travel will be required during the course of performing assigned job duties. However, it is agreed upon by both parties that the Executive’s main place of employment shall be the Corporation’s headquarters located in Schaumburg, IL.

1.3 The Executive shall, during the term of this Agreement:

(a) Perform all duties and responsibilities assigned to him as CFO, and shall report directly to the Chief Executive Officer (“CEO”). The Executive also will be required to perform such other related duties and responsibilities as may be assigned to the Executive by the CEO, or his or her designee, from time to time, which related duties and responsibilities shall be in keeping with the general nature of the duties of CFO or other leadership responsibilities as assigned.

(b) Devote the whole of his working time, attention and ability to the performance of his employment duties and responsibilities as set out herein, and truly and faithfully serve the best interests of the Corporation at all times. Executive’s duties may include providing services for both the Corporation and its affiliates.

(c) The Executive understands and agrees that his duties will include his providing personal services to customers of the Corporation and the affiliates. The Executive understands and agrees that, as a condition of performing services for such customers, it may be necessary to agree to reasonable restrictions imposed for the protection of the customer (including, without limitation, confidentiality restrictions), and agrees to abide by such reasonable restrictions

(d) The Executive acknowledges and agrees that he owes a duty of loyalty, fidelity, and allegiance under the laws of Ohio and applicable federal law to act at all times in the best interests of the Corporation. In keeping with these duties, the Executive shall make full disclosure to the Corporation of all business opportunities pertaining to the Corporation’s business and shall not appropriate for the Executive’s own benefit any such opportunities.

1.4 The Executive agrees to comply with all applicable laws and the Corporation’s written policies or rules, exercise the utmost degree of integrity, honesty, fidelity and good faith, and perform his duties with the utmost degree of expertise, care and ability that may be expected of a person having the education, training and experience equivalent to the education, training and experience of the Executive.

ARTICLE II

TERM

2.1 The Executive’s employment shall be “at will” employment, with no set term. The employment relationship may be terminated by either the Executive or the Corporation at any time, for any reason or for no reason, as is further set forth herein.

ARTICLE III

COMPENSATION

3.1 The Executive shall be paid a base salary of two hundred seventy thousand dollars ($270,000) per year, (the “Base Salary”) subject to all applicable statutory withholding of which shall be paid in accordance with the Corporation’s regular payroll periods. The compensation payable to the Executive as contemplated by this Agreement shall be subject to annual review by the CEO.

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3.2 In addition to the Base Salary provided for in Article 3.1 above, the Executive will be eligible for:

(a) A performance bonus target of forty percent (40%) of Executive’s Base Salary based upon the Corporation’s Short Term Incentive Plan (STIP) program provided certain target objectives, which will be established by the CEO, have been attained. The bonus will be paid after a determination has been made regarding whether the required objectives were met, but in any event not later than ninety (90) days after the end of the particular fiscal year for which the bonus is being paid. No bonus shall be due or payable to Executive if he is not continuously employed by the Corporation through and on the payment date of the bonus.

(b) The Corporation’s Long Term Incentive Plan (LTIP) under the terms and conditions set forth in that plan. On the Effective Date, the Corporation shall grant and issue to Executive 15,000 shares of the Corporation’s common stock (the “Restricted Stock Award”). The grant of the Restricted Stock Award shall be subject to the terms and conditions contained in the Corporation’s standard Award Agreement and the Amended and Restated Sparton Corporation Stock Incentive Plan. The grant of the Restricted Stock Award is expressly conditioned upon the Executive’s execution of the Award Agreement.

3.3 The Corporation agrees before, during and after the Agreement Term to indemnify and hold harmless Executive (and advance him expenses) to the fullest extent permitted by the Corporation’s articles of incorporation and/or by-laws, or if greater, in accordance with applicable law for actions or inactions of the Executive as an officer, director, employee or agent of the Corporation or any affiliate or as a fiduciary of any benefit plan of any of the foregoing or as otherwise set forth in the applicable document. Notwithstanding the foregoing, however, the Corporation’s obligation to defend, indemnify and hold harmless contained in this Section 3.3 shall not apply to claims between the Corporation and the Executive (including the Executive’s heirs, estate, executors and administrators) including, without limitation, disputes arising out of Article VII Confidentiality and Covenant-Not-To-Compete. The Corporation also agrees to provide the Executive with directors’ and officers’ liability insurance coverage both during and, with regard to matters occurring during, employment or while serving as a director of the Corporation or any affiliate, which coverage will be at a level at least equal to the level being maintained at such time for the then current officers and directors and shall continue until such time as suits can no longer be brought against the Executive as a matter of law; provided, however, that the Corporation shall not be required to maintain such insurance coverage unless the Board determines that it is obtainable at reasonable cost.

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3.4 The provisions of this Agreement relating to compensation will be subject to the recovery policies established by the Board, consistent with and pursuant to applicable federal law, the rules of the Securities and Exchange Commission (“SEC”) and any stock exchange on which stock of the of the Corporation is traded, and the requirements of section 954 of the Dodd–Frank Wall Street Reform and Consumer Protection Act and final rules issued by the SEC thereunder (or implementing such provisions).

ARTICLE IV

BENEFITS

4.1 The Executive shall be entitled to receive or to participate in all employee benefits offered to the salaried employees of the Corporation for which he qualifies, under the same terms and subject to the same conditions as are then in effect for other salaried employees, and as such benefits may exist from time to time during the period of his employment, including, without limitation, the Corporation’s medical, dental, vision, life/AD&D, disability plans, 401K plan, and any applicable incentive programs. Nothing in this Section shall be construed to prevent the Corporation from revising the benefits generally provided to executives from time to time.

ARTICLE V

PAID TIME OFF

5.1 The Executive is eligible for Paid Time Off (PTO) as described in the Corporation’s PTO policy. Eligibility for additional PTO in future years will be in accordance with Corporation’s PTO policy. Any accrued but unused PTO remaining at the end of each calendar year shall also be subject to the provisions of the Corporation’s PTO policy.

ARTICLE VI

TERMINATION

6.1 Either the Executive or the Corporation shall be entitled, upon written notice to the other party, to terminate this Agreement at any time, for any reason or for no reason, as the Executive’s employment is “at will.” The Executive’s employment with the Corporation also may be terminated by the Corporation at any time for “just cause”. For the purposes of this Agreement “just cause” shall mean any of the following: (a) gross negligence; (b) the commission by the Executive of any willful or intentional act which could reasonably be expected to injure the reputation, business or business relationships of the Corporation or which could reasonably be expected to bring the Executive or the Corporation into disrepute, or the commission of any act which is a breach of the Executive’s fiduciary duties to the Corporation; (c) conviction or commission of or the entry of a guilty plea or pleas of no contest to any felony, or to any other crime involving moral turpitude, dishonesty, theft, unethical or unlawful conduct; (d) breach of applicable confidentiality, nonsolicitation or noncompetition provisions to which he is subject, including such provisions under this Agreement; (e) unsatisfactory performance; (f) a breach of any material provision of the Corporation’s Code of Business Conduct and Ethics or other policies and procedures; (g)

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use of alcohol or drugs to the extent such use adversely affects the Executive’s ability to perform his duties or adversely affects the business reputation of the Executive or the Corporation; (h) use of illegal drugs; or (i) failure or refusal to substantially perform Executive’s duties and responsibilities to the Corporation as reasonably determined from time to time by the CEO or the CEO’s designee.

For any termination pursuant to subsections (e), (f) or (i) above, the Corporation shall first give written notice of the breach to the Executive, and if the breach is susceptible to a cure, the Corporation shall give the Executive a reasonable opportunity to promptly (within 30 days) cure the breach.

6.2 In the event of the death or Disability of the Executive, the Corporation shall be entitled to terminate this Agreement. Upon such termination, the Corporation shall pay to the Executive, or in the event termination is due to death, to his legal personal representative, that portion of the Executive’s Base Salary owed up to and including the date of termination. This payment will be made within thirty (30) days following termination of employment. Following such payment, the Corporation shall have no further obligation to the Executive or his heirs and beneficiaries, under this Agreement. For the purposes of this Agreement, Disability shall be defined as the inability of the Executive to effectively perform his duties due to physical or mental illness or injury, in the sole judgment of the Corporation, for a total of ninety (90) days out of any one hundred eighty (180) day period. Eligibility for any benefits which may be available to the Executive or his survivors through any employee plans or benefit programs of the Corporation due to death or disability will be determined in accordance with the terms of such plans or programs.

6.3 If the Corporation terminates the Executive’s employment for any reason other than “just cause”, death, or disability, the Corporation shall provide Executive with the following Separation Benefits:

(a) A one-time, Severance Payment equivalent to nine (9) months of current Base Salary. If, however, the Executive is involuntarily terminated within twelve (12) months of a “Change in Control,” the Severance Payment shall be equivalent to twelve (12) months of current Base Salary. This Severance Payment will be made as a part of the Corporation’s standard payroll over the applicable nine (9) or twelve (12) month period and shall be subject to standard payroll deductions and all other legal requirements. The Severance Payment shall commence on the first pay period after the sixtieth (60th) day following Executive’s date of termination.

(b) Payment of nine (9) months of COBRA premiums or, in the event of an involuntary termination within twelve (12) months of a Change in Control only, twelve (12) months of COBRA premiums for medical insurance for Executive and/or his dependents if, and only if, Executive timely elects coverage for COBRA continuation.

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(c) Payment of outplacement services in an amount not to exceed twenty-five thousand dollars ($25,000.00).

(d) Executive agrees that in order to receive the Separation Benefits, Executive must execute a separation agreement and general waiver and release of claims (“Release”) in a form satisfactory to the Corporation and he must return to the Corporation any property belonging to the Corporation which is in the Executive’s possession or under his control. If Executive fails to return the Release to Corporation in sufficient time so that it becomes irrevocable within sixty (60) days after the date of termination, Executive shall forfeit his right to the Separation Benefits. Executive further agrees that in the event he violates Article VII, the Corporation may terminate the Separation Benefits and Executive will repay any Separation Benefits he has received and any COBRA premiums paid by Corporation.

(e) For purpose of this Article 6.3, the term “Change in Control” means: (i) any one person, or more than one person acting as a group, acquires ownership of stock of the Corporation that, together with stock held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Corporation; (ii) any one person, or more than one person acting as a group, acquires (or has acquired during any twelve (12) month period) ownership of stock of the Corporation possessing thirty percent (30%) or more of the total voting power of the stock of the Corporation; (iii) a majority of the members of the Board of Directors is replaced during any twelve (12) month period by directors whose appointment is not endorsed by a majority of the members of the Board of Directors before the date of appointment or election; or (iv) any one person, or more than one person acting as a group, acquires (or has acquired during any twelve (12) month period) assets from the Corporation that have a total gross fair market value equal to or more than forty percent (40%) of the total gross fair market value of all of the assets of the Corporation immediately before such acquisition or acquisitions.

(f) This Section 6.3 is intended to satisfy the requirements of the exemption from the application of Code Section 409A for separation pay plans under Treasury Regulation Section 1.409A-1(b)(9). To the extent the aggregate payments due hereunder do not satisfy such exception, any excess payments shall be subject to the provisions of Article X.

6.4 Unless otherwise consented to by the Corporation in writing, the Executive shall be entitled, upon thirty (30) days written notice to the Corporation, to terminate this Agreement and his employment with the Corporation for any reason or for no reason, and in the event of such termination the Corporation shall only be required to pay the Executive, on a pro-rata basis, his Base Salary which has accrued up to the date of termination.

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6.5 Upon termination of this Agreement for whatever reason, the Executive shall immediately deliver to the Corporation all property of the Corporation which the Executive has in his possession or under his control.

ARTICLE VII

CONFIDENTIALITY AND COVENANT-NOT-TO-COMPETE

7.1 The Executive will execute the confidentiality agreement(s) and any such other agreements as are normally required to be executed by other Corporation salaried employees. During the period of his employment and thereafter, the Executive will abide by the terms of the said agreements and keep confidential all confidential information pertaining to the Corporation which the Executive learned while employed by the Corporation, as such confidential information is defined in the applicable confidentiality agreement(s). The promises, rights and obligations stated in Article VII shall survive the termination of Executive’s employment or this Agreement.

7.2 The Executive shall not, directly or indirectly, within the territory comprising the United States and Canada, during his employment and for a period of eighteen (18) months following the date of termination of his employment for whatever reason, either individually or in partnership or jointly or in conjunction with any person or persons, firm, association, joint venture, syndicate, company or corporation as principal, agent, shareholder, employee, or consultant, engage in any of the same business endeavors engaged in by Corporation and any of its subsidiaries, or:

(a) induce or attempt to influence or induce any of the employees of the Corporation (including its subsidiaries) to leave their employment;

(b) hire, employ or utilize the services of any employee of the Corporation (including its subsidiaries); or

(c) contact any Corporation customer (or prospective customer that Corporation is actively soliciting) for the purposes of: (i) inducing them to terminate their business relationship with Corporation, (ii) discouraging them from doing business with Corporation, or (iii) offering products or services that are similar to or competitive with those of Corporation. “Contact” with any customer includes responding to contact initiated by the customer.

7.3 It is agreed between the parties that the terms of this Article are reasonable and that the Executive has received adequate consideration for the covenants and obligations undertaken by him, as contained herein. Executive further agrees that this Article is reasonably necessary for the protection of the Corporation’s confidential information as defined in the applicable confidentiality agreement(s). The Executive further acknowledges that a breach or threatened breach by the Executive of the provisions of this Article may result in the Corporation suffering irreparable harm which cannot be calculated or fully or adequately compensated by recovery of damages alone. Accordingly, the Executive agrees that the Corporation shall be entitled to interim or permanent injunctive relief without

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having to prove damages or post a bond or other security, specific performance and other equitable remedies, in addition to any other relief to which the Corporation may become entitled, in the event of any such breach. Additionally, if Executive violates this Article, in addition to all other remedies available to the Corporation at law, in equity, and under contract, Executive agrees that he is obligated to pay all the Corporation’s costs of enforcement of this Article, including attorneys’ fees and expenses.

ARTICLE VIII

COOPERATION

8.1 Executive agrees that after the termination of his employment, Executive may have to cooperate with Corporation with respect to matters of which Executive may have knowledge due to Executive’s employment, including but not limited to any transition of Executive’s work responsibilities and any defense of any claims, causes of action, or charges brought against Corporation. Executive agrees to cooperate fully with Corporation, including talking to and/or meeting with Corporation representatives, employees, agents and attorneys and providing, if necessary, testimony in any forum. Corporation in turn agrees to provide reasonable notice to Executive should Executive’s cooperation in any matter be required. To the extent Corporation requires assistance and cooperation after Executive has received his last Separation Payment, Corporation agrees to reasonably compensate Executive for his time; provided, however, Corporation shall not have to compensate Executive, if Corporation terminated him with just cause, or for his assistance with litigation, including his testimony in any forum. Corporation will make all reasonable efforts to insure that such assistance and cooperation will not materially interfere with Executive’s employment and business responsibilities. Executive agrees that any failure to provide such cooperation as may be required shall be a breach of a material term of this Agreement.

8.2 Executive shall be entitled to reimbursement of any reasonable out-of-pocket expenses for travel, lodging, meals and other transportation incurred by him in relation to any cooperation supplied by Executive as described in this Section 8, subject to the Corporation’s regular business expense policies and procedures.

ARTICLE IX

NOTICE

9.1 Any notice required to be given hereunder shall be in writing and may be delivered personally or sent by facsimile transmission or other means of recorded electronic communications or sent by registered mail to the parties hereto at the following addresses:

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To the Corporation:

Sparton Corporation

425 N. Martingale Road

Suite 2050

Schaumburg, IL 60173

Attention: Larry Brand

Vice President, Human Resources

To the Executive:

Mark Schlei

1836 Baybrook Court

Naperville, IL 60564

Any notice given shall be deemed to have been given and received on the business day on which it was so delivered, and if not a business day, then on the business day next following the day of delivery, and, if sent by electronic communications or facsimile shall be deemed to have been received on the next business day following the date of transmission and if mailed, shall be deemed to have been given and received on the fifth day following the day on which it was so mailed.

9.2 Either party may change their address for notice in the aforesaid manner.

ARTICLE X

CODE SECTION 409A

10.1 To the extent a payment hereunder is, or shall become, subject to the application of Code Section 409A, the following shall apply:

(a) The Corporation may delay payment hereunder only upon such events and conditions as the IRS may permit in generally applicable published regulatory or other guidance under Code Section 409A, including, without limitation, payments that the Corporation reasonably anticipates will be subject to the application of Code Section 162(m), or will violate Federal securities laws or other applicable law; provided that any such delayed payment will be made at the earliest date at which the Corporation reasonably anticipates that the making of the payment would not cause such a violation;

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(b) The time or schedule of payment hereunder may be accelerated only upon such events and conditions as the IRS may permit in generally applicable published regulatory or other guidance under Code Section 409A, including, without limitation, payment to a person other than the Executive to the extent necessary to fulfill the terms of a domestic relations order (as defined in Code Section 414(p)(1)(B)) or payment of the amount required to be included in income for the Executive as a result of failure of this Agreement at any time to meet the requirements of Code Section 409A with respect to the Executive;

(c) If, as of the date Executive’s employment terminates, (1) any stock of the Corporation is publicly traded on an established securities market or otherwise; and (2) a payment is payable under this Agreement due to a termination of employment which is considered to be a “separation from service” for purposes of the rules under Treasury Regulation Section 1.409A-3(i)(2) (payments to specified employees upon a separation from service); and (3) the Executive is determined to be a “specified employee” (as determined under Treasury Regulation Section 1.409A-1(i)), then the payment shall be delayed until a date that is six (6) months after the date Executive’s employment terminates to the extent necessary to comply with the requirements of Code Section 409A and related Treasury Regulations; provided, however, that the payments to which the Executive would have been entitled during such six (6) month period, but for this Section 10.1(c), shall be accumulated and paid to the Executive on the first (1^st) day of the seventh (7^th) month following the date Executive’s employment terminates; and

(d) This Agreement is intended to comply with the requirements of Code Section 409A and the Treasury Regulations and other guidance issued thereunder, as in effect from time to time. To the extent a provision of this Agreement is contrary to or fails to address the requirements of Code Section 409A and related Treasury Regulations, this Agreement shall be construed and administered as necessary to comply with such requirements to the extent allowed under applicable Treasury Regulations until this Agreement is appropriately amended to comply with such requirements.

ARTICLE XI

DISPUTES

11.1 In any action or proceeding relating to this Agreement or otherwise arising out of or in connection with the Executive’s employment by the Corporation, the parties agree that they shall be resolved by a bench trial and not a jury trial, and the parties agree that no damages other than compensatory damages shall be sought or claimed by either party and each party waives any right to a jury trial and any claim, right or entitlement to punitive, exemplary, statutory or consequential damages, or any other damages.

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ARTICLE XII

GENERAL

12.1 Time shall be of the essence in the performance of this Agreement.

12.2 This Agreement constitutes the entire agreement between the parties hereto with respect to the matters contained herein and supersedes and replaces any previous agreements, contracts, oral understandings or discussions. This Agreement may not be amended or modified in any respect except by written instrument signed by the parties hereto.

12.3 This Agreement shall be construed and enforced in accordance with the laws of the State of Illinois, without regard to choice of law or conflicts of laws principles, and the parties hereby irrevocably consent to the jurisdiction of the Courts of the County of Cook County, Illinois, or for those matters which would be properly brought in federal court, to the jurisdiction of the U.S. District Court for the Northern District of Illinois.

12.4 This language of this Agreement reflects the mutual intent of the parties and shall not be strictly construed against either party; therefore no rule of strict construction shall apply in construing the terms of this Agreement.

12.5 This Agreement shall be for the benefit of and shall be binding upon Corporation, its successors and assigns and, at the discretion of the Corporation, upon any person, firm or corporation with which Corporation may be merged or consolidated or which may acquire all or substantially all of Corporation’s assets through sale, lease, liquidation or otherwise. The rights and benefits of Executive are personal to him and no such rights or benefits shall be subject to assignment or transfer by Executive.

12.6 This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, legal personal representatives, successors and permitted assigns.

12.7 If for any reason, any provision or part of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions or part provisions of this Agreement shall not in any way be affected or impaired thereby.

12.8 The waiver by either party of any breach of the provisions of this Agreement shall not operate or be construed as a waiver by that party of any other breach of the same or any other provision of this Agreement.

12.9 Except as specifically altered in this Agreement, nothing in this Agreement shall detract from, alter, modify or amend any obligations or duties owed by the Executive to the Corporation, pursuant to any statute, regulation, or at common law or equity.

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12.10 This Agreement may be executed in any number of counter-parts, all of which when taken together, shall constitute one original Agreement.

IN WITNESS WHEREOF the parties hereto acknowledge and agree that they have read and understand the terms of this Agreement, and that they have executed this Agreement of their own free act, on the dates set forth below, to be effective as of the Effective Date set forth herein.

	SPARTON CORPORATION:
	By:
Date: 11/6/2012	/s/ Larry Brand
	Larry Brand
	Vice President, Human Resources
	EXECUTIVE:
Date: 11/6/2012	/s/ Mark Schlei
	Mark Schlei

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EX-99.1

Exhibit 99.1

Media Contact:	Mike Osborne
	Sparton Corporation
	Email: mosborne@sparton.com
	Office: (847) 762-5814
Investor Contact:	John Nesbett/Jennifer Belodeau
	Institutional Marketing Services
	Email: jnesbett@institutionalms.com
	Office: (203) 972-9200

FOR IMMEDIATE RELEASE

Sparton Corporation Announces New CFO

SCHAUMBURG, ILLINOIS – November 13, 2012 – Sparton Corporation (NYSE: SPA) announced today that Mark Schlei has been appointed as the Company’s new Chief Financial Officer, effective immediately.

Mr. Schlei most recently served as CFO at Paperworks Industries where he was engaged in the business of packaging solutions. Previously, he served as CFO at Thetford Corporation, a manufacturer of mobile sanitation and refrigeration products. Mr. Schlei has also served as CFO for Lake City Industries, Corporate Controller for Littelfuse, Inc. and held various financial roles at Newell Company.

Mr. Schlei has experience in areas including capital raising, controls and compliance, IT/ERP leadership, mergers and acquisition, and financial planning and analysis. He earned his Bachelor of Business Administration in Accounting from the University of Wisconsin-Whitewater and is a Certified Public Accountant.

“We are pleased to welcome Mark to our Company,” said Cary Wood, President and CEO of Sparton. “Mark has held several challenging financial leadership roles and has excelled in many diverse areas. He is distinctly qualified to serve as Sparton’s CFO and we are looking forward to leveraging his expertise for both the day-to-day financial operations of the Company and long-term strategic planning.”

Mr. Schlei replaces Greg Slome who is leaving Sparton to pursue other career opportunities.

“I want to personally thank Greg for his efforts during the turnaround of our Company. We appreciate his many contributions and wish him the best of luck in all of his future endeavors,” Mr. Wood concluded.

About Sparton Corporation

Sparton Corporation (NYSE:SPA), now in its 113th year, is a provider of complex and sophisticated electromechanical devices with capabilities that include concept development, industrial design, design and manufacturing engineering, production, distribution, field service, and refurbishment. The primary markets served are Medical, Military & Aerospace, and Industrial & Instrumentation. Headquartered in Schaumburg, IL, Sparton currently has five manufacturing locations worldwide. Sparton’s Web site may be accessed at www.sparton.com.

Safe Harbor and Fair Disclosure Statement

Safe Harbor statement under the Private Securities Litigation Reform Act of 1995: To the extent any statements made in this release contain information that is not historical, these statements are essentially forward-looking and are subject to risks and uncertainties, including the difficulty of predicting future results, the regulatory environment, fluctuations in operating results and other risks detailed from time to time in Sparton’s filings with the Securities and Exchange Commission (SEC). The matters discussed in this press release may also involve risks and uncertainties concerning Sparton’s services described in Sparton’s filings with the SEC. In particular, see the risk factors described in Sparton’s most recent Form 10K and Form 10Q. Sparton assumes no obligation to update the forward-looking information contained in this press release.

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