Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On March 30, 2009, Sparton Corporation ("Sparton" or the "Company") entered
into an employment agreement (the "Employment Agreement") with Greg Slome
pursuant to which Mr. Slome will serve as the Company's Senior Vice President
and Chief Financial Officer. The Employment Agreement provides for at-will
employment and has an effective date of April 1, 2009 (the "Effective Date").
Under the terms of the Employment Agreement, the Company will pay Mr. Slome an
annual base salary of $235,000. In addition, Mr. Slome is eligible to receive an
annual bonus of up to 35% of his annual salary. Sparton will also reimburse
Mr. Slome for reasonable relocation costs and moving expenses in accordance with
the Company's Relocation Policy and as approved by the Chief Executive Officer.
Mr. Slome is entitled to certain employee benefits, including two (2) weeks paid
vacation; health, dental, vision, disability and life insurance; participation
in any 401(k), pension or profit-sharing plan maintained by the Company; a
monthly car allowance; and reimbursement of out-of-pocket business expenses.
Mr. Slome's employment under the Employment Agreement may be terminated:
(i) by either Mr. Slome or the Company for any reason upon thirty (30) days
prior written notice to the other party; (ii) by the Company at any time for
cause; (iii) by the Company upon the death or disability of Mr. Slome; (iv) by
Mr. Slome in the event of a material change in his title or responsibilities;
and (v) by Mr. Slome upon a change in control of Sparton. If the Company
terminates Mr. Slome's employment for any reason other than his death,
disability or for cause, or if Mr. Slome terminates his employment under (iv) or
(v) above, the Company will pay Mr. Slome severance in an amount equal to six
(6) months of his current salary and will pay six (6) months of COBRA premiums
for medical insurance for Mr. Slome and/or his dependents if he so elects. Under
the Employment Agreement, Mr. Slome has agreed not to: (i) disclose confidential
information of the Company during or after his employment with the Company;
(ii) solicit Company customers and employees during the term of his employment
and for two (2) years after termination; or (iii) directly or indirectly compete
with the Company during the term of his employment and for one (1) year after
termination.
Pursuant to the terms of the Employment Agreement, Mr. Slome shall be
eligible to participate in the Company's long-term incentive plan. Additionally,
Mr. Slome was granted twenty thousand (20,000) shares of the Company's common
stock as restricted stock pursuant to the Company's standard Award Agreement and
the Amended and Restated Sparton Corporation Stock Incentive Plan. The
restricted stock will vest as follows: (i) seventeen percent (17%) of the shares
will vest six (6) months after the Effective Date; (ii) sixteen percent (16%) of
the shares will vest on the first (1st) anniversary of the Effective Date;
(iii) thirty three percent (33%) of the shares will vest on the second (2nd)
anniversary of the Effective Date; and (iv) the remainder of the shares will
vest on the third (3rd) anniversary of the Effective Date.
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.
Mr. Slome, age 46, most recently served from June 2000 to October 2007 as
Director of Treasury and International Finance at U.S. Robotics Corporation,
located in Schaumburg, Illinois. Mr. Slome has been serving as a consultant to
Sparton since January of 2009 and previously served as a consultant to Ingenient
Technologies, Inc. from April of 2008 through August of 2008. Mr. Slome is not a
director of the Company or any other registered company. There are no familial
relationships between
Mr. Slome and any director or executive officer of the Company. In connection
with his appointment, Mr. Slome entered into the Employment Agreement with the
Company.
Effective April 1, 2009, Richard Langley shall cease to be the President of
Sparton. The Company and Mr. Langley are negotiating a Retirement Agreement,
which will be filed upon execution. Additionally, effective April 1, 2009, Cary
Wood was appointed President, in addition to Chief Executive Officer.
Effective April 1, 2009, Joseph S. Lerczak shall cease to be the Chief
Financial Officer of the Company and will transition to a role as a Group
Controller. Prior to his appointment as Chief Financial Officer on April 25,
2008, Mr. Lerczak was the interim Chief Financial Officer beginning on March 10,
2008. Prior to his appointment as interim Chief Financial Officer, Mr. Lerczak
was the Corporate Controller for seven years and Secretary of the Company for
six years. No familial relationship exists between Mr. Lerczak and any other
executive officer or director of the Company. Since the beginning of the
Company's last fiscal year, Mr. Lerczak has not engaged in or proposed to engage
in any related party transaction as described in Item 404(a) of Regulation S-K.
Mr. Lerczak is not a director of the Company or any other registered company.
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 7.01. Regulation FD Disclosure.
Sparton is holding a call on Friday, April 3, 2009 at 11:00 EDT to update
interested parties regarding the Company's turnaround actions taken to date, and
the impact they will have on Sparton's future performance. The Company will also
briefly address its 2009 financial performance as of the second quarter and
provide an update as to the Company's status with the New York Stock Exchange
listing standards. Interested parties may participate in the conference call by
dialing +1 (800) 741-4871 (domestic), participant code: 2674058 ten minutes
before the call is scheduled to begin and asking to be connected to the Sparton
conference call. International callers should use the applicable phone number
found at the following link:
https://g8.cfer.com/g8.jsp?an=8005048071&ac=2674058&login=login
The webcast link for the slide presentation that will be referenced during
the call is:
https://www.livemeeting.com/cc/gc_min_pro_usa/join?id=2KM974&role=attend
The slide presentation and a replay of the live conference call will be
available on the Company's website at www.sparton.com under the heading
"Investor Relations" and, subsequently "April 3rd Investor & Analyst Call," for
a period of two (2) years after the date of the live call.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit 10.1 - Employment Agreement dated March 30, 2009 by and between Sparton
Corporation and Greg Slome.
Exhibit 99.1 - Press release dated March 31, 2009.
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