Item 1.02 Termination of a Material Definitive Agreement.
On March 12, 2009, Sparton Corporation, an Ohio corporation ("Sparton" or the
"Company"), and Honeywell International, Inc. ("Honeywell") agreed to settle
certain outstanding claims and to terminate certain Long Term Commercial and
Military Contracts dated as of January 2, 2007 between Sparton and Honeywell
(collectively, the "Contracts"). Sparton and Honeywell have agreed to a final
schedule of purchase orders, at existing prices, to be completed by Sparton,
subject to adjustments for materials and capacity issues. In addition, Honeywell
will pay Sparton $450,000 per month for the months of March through June 2009,
with such payments being contingent on, among other things, Sparton providing
support to Honeywell for an expeacted transition. In connection with the
settlement and termination, Honeywell agreed to pay Sparton $500,000 as a
recovery for certain costs incurred by Sparton in February 2009. Additionally,
Honeywell has agreed to purchase certain excess inventory from Sparton and to
refrain from imposing penalties against Sparton in connection with the winding
down of the relationship. The parties intend to discharge their respective
obligations to each other by June 30, 2009 and, in any event, not later than
September 1, 2009.
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