SPARTON CORPORATION
EMPLOYMENT AGREEMENT
1. Parties; Effective Date. This Employment Agreement
(“ Agreement ”), dated as of
March 30, 2009, is between Sparton Corporation, an Ohio
corporation, located at 2400 East Ganson St, Jackson, Michigan
49202 (the “ Company ”) and Greg Slome
(“ Executive ” or “
you ”). This Agreement shall be effective as of
April 1, 2009 (the “Effective Date”).
2. Title;
Nature of Employment.
2.1 The Executive
shall be the Senior Vice President and Chief Financial Officer,
shall report to the Chief Executive Officer, and shall perform such
duties and exercise such powers as may be delegated, from time to
time, by the Company’s CEO.
2.2 You agree to
devote your full business time and best efforts to the Company
while employed by the Company. You shall not provide services
similar to those of the Company (either directly or through any
other company), except on behalf of the Company. While employed by
the Company, you shall not engage in any activity that will have an
adverse effect upon your ability to perform the obligations under
this Agreement.
2.3 The Company
shall employee you on an at-will basis.
3. Compensation; Company Policies. For all of the
services rendered by Executive under this Agreement, the Company
will provide Executive with the compensation described in this
Section 3.
3.1 Salary
. The Executive’s base salary shall be $235,000 per year,
payable as and when the standard Company payroll is made. The
Company may from time to time increase or decrease your
salary.
3.2 Annual
Performance Bonus . Executive will be eligible for an annual
performance bonus with a target opportunity equal to thirty-five
(35%) of Executive’s base salary (the “Bonus”).
The amount of the Bonus shall be determined by the Company in its
discretion based on the Company’s performance and the
Executive’s accomplishment of objectives mutually established
by the Company and Executive on an annual basis. The Bonus shall
also be subject to the terms of the Company’s annual short
term incentive plan as approved by the Company’s Board of
Directors. The Bonus shall be paid no later than the
September 15 th following the end of the fiscal year to which
the Bonus relates.
3.3 Long-Term
Incentive Plan . Executive shall be eligible for the
Company’s long-term incentive plan under the terms and
conditions set forth in that plan.
3.4 Restricted
Stock . On the Effective Date, the Company shall grant and
issue to Executive 20,000 shares of the Company’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 Company’s standard Award Agreement and the
Amended and Restated Sparton Corporation Stock Incentive Plan. In
addition, the Restricted Stock Award shall vest as follows:
(i) seventeen percent (17%) (rounded down to the nearest whole
number) shall vest six (6) months after the Effective Date;
(ii) sixteen percent (16%) of the shares (rounded down to the
nearest whole number) shall vest on the first anniversary of the
Effective Date; (iii) thirty-three percent
(33%) of the
shares (rounded down to the nearest whole number) shall vest on the
second anniversary of the Effective Date; and (iv) the
remainder of the shares shall vest on the third anniversary of the
Effective Date. The grant of the Restricted Stock Award is
expressly conditioned upon the Executive’s execution of the
Award Agreement.
3.5
Policies . You are subject to current Company policies and
policies relating to benefits, terms and conditions of employment,
and any terms relating to or affecting the operation of the
Company, including rules, procedures and regulations required by
the federal or state governments or their agencies. You agree that
compliance with those policies, terms and conditions is a condition
of continued employment with the Company.
4. Benefits. The Executive shall receive the following
benefits, upon the terms and conditions set forth in the relevant
plan documentation:
4.1 Two
(2) weeks paid vacation time as established by Company
policy.
4.2 Participation
in any health, dental and vision insurance plans, long and short
term disability plans, and life insurance plan maintained by the
Company for its executives.
4.3 Participation
in any 401(k), pension or profit-sharing plan maintained by the
Company for its executives.
4.4 A monthly car
allowance in the amount of $800.00.
4.5 During his
employment, the Executive shall be reimbursed for all travel,
meals, entertainment, and other out-of-pocket expenses reasonably
incurred by him on behalf of or in connection with the performance
of his duties and the business of the Company, pursuant to the
normal standards and guidelines followed from time to time by the
Company; provide that an expense reimbursement shall under no
circumstances occur later than ninety (90) days after the date
on which the expense is incurred. The Company, in its sole
discretion, shall determine what are reasonable and necessary
business expenses.
4.6 The Company
shall reimburse Executive for reasonable relocation costs and
moving expenses related to moving his residence to the Detroit
metropolitan area in accordance with its Relocation Policy and
subject to the approval of the CEO. Executive agrees that he must
submit all relocation expenses for which he is seeking
reimbursement within twelve (12) months of the Effective Date
or expenses will not be eligible for reimbursement. Executive
further agrees that if he voluntarily leaves his employment with
Employer within (12) months of the Effective Date for any
reason other than a Change in Control or material change in his
title or responsibilities, Employee will repay/reimburse Employer
for all of the relocation expenses Executive received from the
Company.
5. Termination of Employment.
5.1 The
Executive’s employment under this Agreement may be
terminated:
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(i)
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by
either the Executive or the Company at any time for any reason
whatsoever or for no reason upon not less than thirty
(30) days written
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notice, but
Company may excuse Executive’s further service immediately
and elect to pay Executive during the thirty (30) day notice
period;
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(ii)
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by
the Company at any time for “Cause” as defined below,
without prior notice;
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(iii)
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by
the Company upon the Executive’s “Disability” (as
defined below) upon not less than thirty (30) days written
notice;
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(iv)
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by
the Executive because of and no later than sixty (60) days
after a Change in Control;
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(v)
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by
the Executive because of and no later than sixty (60) days
after a material change in Executive’s title or
responsibilities that continues uncured for a period of twenty
(20) days after Company’s receipt of written notice of
objection to such material change from Executive; and
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(vi)
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upon the Executive’s
death.
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5.2 For the
purpose of this Agreement, “Cause” means any of the
following: (i) a material breach of any provision of this
Agreement by Executive; (ii) a good faith finding by the
Company of Executive’s failure or refusal to perform his
assigned duties for the Company; (iii) Executive’s
commission of fraud, embezzlement or theft, or a crime constituting
moral turpitude, in any case, whether or not involving Company,
that in the reasonable good faith judgment of the Company, renders
Executive’s continued employment harmful to the Company;
(iv) Executive’s misappropriation of Company assets or
property, including, without limitation, obtaining reimbursement
through fraudulent vouchers or expense reports; (v) a good
faith finding by the Company of a breach of any material provision
of the Company’s Code of Business Conduct and Ethics or other
policies and procedures, provided that the breach is not cured
within twenty (20) days after a written demand for cure is
received by the Executive from the Board of Directors of the
Company which specifically identifies the manner in which the Board
of Directors believes the Executive has breached a material
provision of the Company’s Code of Business Conduct and
Ethics or other policies and procedures; or
(vi) Executive’s conviction or the entry of a plea of
guilty or no contest by Executive with respect to any felony or
other crime that, in the reasonable good faith judgment of the
Company, adversely affects the Company or its reputation or
business.
5.3 For the
purpose of this Agreement, “Disability” means the
inability of Executive to perform the essential duties of the
Executive’s position by reason of mental or physical illness,
incapacity or disability for more than three (3) consecutive
months, or five (5) months in the aggregate in any twelve
(12) month period.
5.4 For the
purposes of this Agreement, “Change in Control” means
the occurrence of any of the following events: (i) any
“person” (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) becomes
the “beneficial owner” (as defined in Rule 13d-3 of the
Securities Exchange Act), directly or indirectly, of securities of
the Company representing fifty percent (50%) of the total voting
power represented by the Company’s then outstanding voting
securities; (ii) the consummation of the sale or disposition
by the Company of all or substantially all of the Company’s
assets to a person, or (iii) the
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consummation of
a merger or consolidation of the Company with any other person
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
or its parent at outstanding or by being converted into voting
securities of the surviving entity or its parent) at least fifty
percent (50%) of the total voting power represented by the voting
securities of the Company or such surviving entity or its parent
outstanding immediately after such merger
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