EMPLOYMENT AGREEMENT
 
This EMPLOYMENT AGREEMENT (this “Agreement”) is entered into this 10th day of
November, 2011, with an effective date of November 2, 2011 (the “Effective
Date”), by and between The LGL Group, Inc., a Delaware corporation (the
“Company”), and Gregory P. Anderson (“Executive”, and together with the Company,
the “Parties”).
 
W I T N E S S E T H:
 
WHEREAS, the Company currently employs Executive as its President and Chief
Executive Officer pursuant to the terms of that certain employment agreement,
dated June 29, 2009, by and between the Company and Executive (the “Original
Employment Agreement”); and
 
WHEREAS, the Company desires to employ Executive as its President and Chief
Executive Officer for the period provided in this Agreement, and the Parties
desire to enter into this Agreement embodying the terms of such employment.
 
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
promises of the Parties contained herein, the Parties, intending to be legally
bound, hereby agree as follows:
 
1. Title and Job Duties.
 
(a) Upon the terms and conditions set forth in this Agreement, commencing on the
Effective Date, the Company continues the employment of Executive as its
President and Chief Executive Officer.  In this capacity, Executive shall have
the duties, authorities and responsibilities as are inherent in such positions
and specified in the Company’s By-Laws, and such other duties, authorities and
responsibilities as the Board of Directors of the Company (the “Board”) shall
designate from time to time that are not inconsistent with Executive’s
positions. Executive shall report directly to the Board and the Chairman of the
Board.  All employees of the Company shall report directly to Executive or his
designee.
 
(b) Executive accepts such employment and agrees, during the term of his
employment, to devote his full business and professional time and energy to the
Company.  Executive agrees to carry out and abide by all lawful directions of
the Board and the Chairman of the Board that are consistent with his positions.
 

 
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(c) Without limiting the generality of the foregoing, Executive shall not,
without the written approval of the Board, render services of a business or
commercial nature on his own behalf or on behalf of any other person, firm, or
corporation, whether for compensation or otherwise, during his employment
hereunder; provided, however, the foregoing shall not prevent Executive from the
following, so long as such activities in the aggregate do not materially
interfere or conflict with Executive’s duties hereunder or create a potential
business or fiduciary conflict: (i) serving on the boards of directors of
non-profit organizations and, with the prior written approval of the Board,
other for profit companies; (ii) participating in charitable, civic,
educational, professional, community or industry affairs; and (iii) managing
Executive’s passive personal investments.
 
(d) Executive may own passive investments (including, but not limited to,
indirect investments through mutual funds) in the securities of Competing
Businesses (as defined below), provided such securities are publicly traded and
Executive does not own or control more than 1.0% of the outstanding voting
rights or equity of the Competing Business.  “Competing Business” means any
corporation, partnership, limited liability company, university, government
agency or other entity or person (other than the Company) that is engaged in the
development, manufacture, marketing, distribution or sale of, or research
directed to electronic components used to control the frequency or timing of
signals in electronic circuits.
 
(e) Throughout the Term, Executive shall maintain his Department of Defense
Secret Clearance.
 
2. Salary and Additional Compensation.
 
(a) Base Salary.  The Company shall pay to Executive an annual base salary of
$200,000, less applicable withholdings and deductions, in accordance with the
Company’s normal payroll procedures.  The Board may increase Executive’s annual
base salary from time to time in its sole and absolute discretion.
 
(b) Bonus.  Executive shall be eligible for an annual bonus based upon the
achievement of certain management objectives to be determined by the
Compensation Committee of the Board each year.
 
               (c) Future Equity Awards.  Executive shall be eligible to
participate in future grants pursuant to the Company’s 2011 Incentive Plan, as
adopted by the Board (the “2011 Incentive Plan”), and any other performance
incentive plans extended to senior executives of the Company generally, at
levels commensurate with Executive’s positions.
 

 
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(d) Ownership of Stock.  During the Term, and in addition to any other
requirements imposed by applicable securities laws, Executive shall not make
sales of shares of the Company’s stock if, after giving effect to such sales, he
would own stock with a market value (determined with reference to the price of
such stock on the principal stock exchange or interdealer quotation system on
which such stock is traded) that is less than Executive’s then base salary.
 
3. Expenses.  In accordance with Company standard expense reimbursement policy,
the Company shall reimburse Executive for all reasonable business expenses
properly and reasonably incurred and paid by Executive in the performance of his
duties under this Agreement upon his presentment of detailed receipts in the
form required by the Company’s standard expense reimbursement policy.
 
4. Benefits.
 
(a) Vacation.  Executive shall be entitled to vacation in accordance with the
Company’s standard vacation policy extended to senior executives of the Company
generally, at a level commensurate with Executive’s positions.
 
(b) Health Insurance and Other Plans.  Executive shall be eligible to
participate in the Company’s medical, dental, long term incentive plan, and
other employee benefit programs, if any, that are provided by the Company for
its employees generally, at levels commensurate with Executive’s positions, in
accordance with the provisions of any such plans, as the same may be in effect
from time to time.
 
(c) Term Life Insurance.  The Company shall obtain and maintain during the Term
(paying all applicable premiums) term life insurance on the life of Executive,
providing for the payment upon the death of Executive of the sum of $2
million.  Executive shall submit to such medical or other exams as the insurer
under such policy shall reasonably require.  Upon the termination of Executive’s
employment by the Company, if Executive shall so request of the Company in a
written notice given within 30 days after such termination, the Company shall
use its reasonable commercial efforts to cause such policy to be assigned to
Executive, whereupon Executive shall be responsible for the payment of all
premiums and other charges thereunder.
 
(d) Disability Insurance.  The Company shall obtain and maintain during the Term
(paying all applicable premiums) disability insurance on behalf of Executive, at
a level mutually agreeable to Executive and the Company, providing for payments
to Executive in the event of his termination by the Company as a result of his
Disability (as defined below).  Executive shall submit to such medical or other
exams as the insurer under such policy shall reasonably require.  Upon the
termination of Executive’s employment by the Company, if Executive shall so
request of the Company in a written notice given within 30 days after such
termination, the Company shall use its reasonable commercial efforts to cause
such policy to be assigned to Executive, whereupon Executive shall be
responsible for the payment of all premiums and other charges thereunder.
 

 
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5. Term.  The terms set forth in this Agreement shall commence on the Effective
Date and remain in effect for two years (the “Term”), except as otherwise
provided herein.
 
6. Termination.
 
(a) Termination at the Company’s Election.
 
(i) For Cause.  At the election of the Company, Executive’s employment may be
terminated for Cause (as defined below) upon written notice to Executive.  For
purposes of this Agreement, “Cause” shall mean that Executive: (A) pleads
“guilty” or “no contest” to, or is indicted or convicted for, a felony under
federal or state law or a crime under federal or state law that involves fraud
or dishonesty; (B) in carrying out his duties, engages in conduct that
constitutes gross negligence or willful misconduct; (C) engages in misconduct
that causes material harm to the reputation of the Company; (D) materially fails
to meet individual and/or Company performance goals set forth in any performance
incentive plan adopted by the Board and applicable to Executive; or (E)
materially breaches any term of this Agreement or written policy of the Company,
provided that if the breach reasonably may be cured, the Company has given
Executive prior written notice of such breach and at least 30 days after such
notice is given to cure such breach in the reasonable judgment of the Board.
 
(ii) Upon Disability or Death.  At the election of the Company, Executive’s
employment may be terminated should Executive become physically or mentally
unable to perform his duties for the Company hereunder and such incapacity has
continued for a total of 90 consecutive days or any 180 days in a period of 365
consecutive days (a “Disability”).  Executive’s employment shall be terminated
automatically upon Executive’s death.
 
(iii) Without Cause.  At the election of the Company, Executive’s employment may
be terminated for any reason or no reason upon written notice to Executive.
 

 
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(b) Termination at Executive’s Election.
 
(i) For Good Reason.  At Executive’s election, Executive’s employment may be
terminated for Good Reason (as defined below) upon 30 days’ written notice to
the Company.  For purposes of this Agreement, “Good Reason” shall mean that one
or more of the following actions occurred without Executive’s consent: (A) a
material diminution in Executive’s base salary and/or a material adverse change
in the terms of his participation in the Company’s performance incentive plans
viewed in the aggregate; (B) a material diminution in Executive’s authority,
duties or responsibilities under this Agreement, provided this will not apply if
there is a substantial change in what constitutes the core of the Company’s
operating business and Executive is employed in substantially equivalent
positions of a substantially equivalent company (publicly or privately held); or
(C) any other action or inaction that constitutes a material breach of the terms
of this Agreement by the Company.  In the event any of the occurrences in (A),
(B) or (C) above have occurred, Executive may give written notice to the Company
of Executive’s intention to terminate his employment in accordance with this
Section 6(b)(i), such notice to state in detail the particular acts or failures
to act that constitute the grounds on which the proposed termination for Good
Reason is based and to be given within 60 days after the first occurrence of
such acts or failures to act, whereupon the Company shall have 30 days following
receipt of such notice to cure such acts or failures to act in all material
respects.  If the Company has not cured such acts or failures to act in all
material respects within the 30-day cure period, then Executive’s employment
shall be terminated immediately for Good Reason.  Following a Change in Control,
if Executive is offered continued employment, Executive shall have ten (10) days
to choose whether to accept the offer of continued employment.  Should Executive
decline the offer of continued employment within ten (10) days of a Change in
Control, and agrees to continue his employment with the Company or the Company’s
successor for a period of up to nine (9) months following the Change in Control
(the “Transition Period”), his employment shall terminate at the end of the
Transition Period, such termination shall be deemed a termination for Good
Reason and Executive shall be eligible for the applicable payments and benefits
set forth in Section 7(c) at such time.  Should Executive accept the offer, and
should the offer of continued employment contain terms that result in the
occurrence of (A) or (B) above, Executive shall, by his acceptance of such
offer, waive his right to terminate his employment for Good Reason based upon
the terms of the offer.
 
(ii) Voluntary Resignation.  At Executive’s election, notwithstanding anything
contained elsewhere in this Agreement to the contrary, Executive may terminate
his employment hereunder at any time and for any reason whatsoever or for no
reason at all in Executive’s sole discretion upon 30 days’ written notice to the
Company.
 
 

 
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7. Payments Upon Termination of Employment.
 
(a) Termination by the Company for Cause or by Executive Without Good
Reason.  If, prior to the expiration of the Term, Executive’s employment is
terminated by the Company for Cause in accordance with Section 6(a)(i) or by
Executive in accordance with Section 6(b)(ii), Executive shall be entitled to
the following amounts only: (A) payment of his base salary accrued up to and
including the date of termination, to be paid within 30 days following the date
of termination, (B) payment in lieu of any accrued but unused vacation time, in
accordance with the Company’s vacation policy, to be paid within 30 days
following the date of termination, and (C) payment of any unreimbursed expenses
in accordance with the Company’s business reimbursement policy (collectively,
the “Accrued Obligations”).
 
(b) Termination upon Disability or Death.  If Executive’s employment is
terminated upon Executive’s Disability or death in accordance with Section
6(a)(ii), Executive or his heirs, executors, and assigns, as applicable, shall
be entitled to the Accrued Obligations and any annual bonus earned but unpaid
with respect to the fiscal year ending on or preceding the date of termination,
to be paid in accordance with the terms of the such annual bonus as determined
by the Compensation Committee of the Board.
 
(c) Termination Without Cause or for Good Reason, or Expiration of the Term.  If
Executive’s employment is terminated by the Company in accordance with Section
6(a)(iii) or by Executive for Good Reason in accordance with Section 6(b)(i), or
if Executive’s employment terminates upon the expiration of the Term, Executive
shall be entitled to receive the Accrued Obligations, to be paid in the same
manner and at the same times as set forth in Section 7(a), and the following
severance payments and benefits: (i) subject to Section 19, the sum of $100,000,
of which $50,000 shall be payable in three equal monthly installments during the
first three months after termination of employment and the remaining $50,000
shall be payable six months after the date of termination (the “Severance
Payments”); (ii) the vesting of any shares of the Company’s common stock held by
Executive that are unvested as of the date of termination (the “Restricted
Shares”) such that half of the Restricted Shares shall vest six months after the
date of termination and the remaining Restricted Shares shall vest one year
after the date of termination; and (iii) the partial vesting (as hereinafter
provided) of any options granted under the 2011 Incentive Plan or any other
performance incentive plan that the Compensation Committee of the Board
determines were earned by Executive prior to the date of termination or
expiration of the Term, such determination to be made as soon as reasonably
practicable following the third anniversary of the grant date of such options in
accordance with the terms of the 2011 Incentive Plan or other performance
incentive plan, as applicable, and such options to expire on the fifth
anniversary of the grant date.  For purposes of clause (iii) above, the portion
of the option determined to have been earned shall be multiplied by a fraction,
the numerator of which is the number of whole months in the Term prior to the
termination of Executive’s employment or the expiration of the Term, as
applicable, and the denominator of which is 36. Notwithstanding the foregoing,
the payments and other benefits provided under clauses (i) through (iii) above
shall be subject to Executive’s execution and delivery of an agreement and
release (that is no longer subject to revocation under applicable law) of the
Company, its parents, subsidiaries and affiliates and each of their officers,
directors, employees, agents, successors and assigns, in the form attached
hereto as Exhibit A (the “General Release”) and the Company shall begin to make
the payments above within sixty (60) days following the termination of
Executive’s employment, but if the sixty (60) day period begins in one calendar
year and ends in the second calendar year, payment will be made on the first day
in the second calendar year.
 

 
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(d) Change in Control.  For purposes of this Agreement, “Change in Control”
shall mean (i) the merger or consolidation of the Company with or into another
entity, whether or not the Company is the surviving entity, unless the
stockholders of the Company immediately prior to such merger or consolidation
own, directly or indirectly, more than 50% of the total combined voting power of
the surviving entity’s outstanding securities having a right to vote in the
election of directors immediately after such merger or consolidation, (ii) the
sale, transfer or other disposition of all or substantially all of the Company’s
assets, (iii) the acquisition, directly or indirectly, by any person or related
group of persons of the beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended) of securities
having more than 50% of the total combined voting power of the Company’s
outstanding securities having a right to vote in the election of directors, or
(iv) a change in the composition of the Board over a period of 12 consecutive
months or less such that members of the Board at the beginning of such period
(the “Existing Directors”) cease, for any reason, to constitute a majority of
the Board members immediately preceding such election, provided that if the
election or nomination for election of any new director was approved by a vote
of at least 50% of the Existing Directors, such new director shall be considered
an Existing Director.
 
(e) No Mitigation; No Set-Off.  The Company’s obligation to pay Executive the
amounts provided and to make the arrangements provided hereunder shall not be
subject to set-off, counterclaim or recoupment of amounts owed by Executive to
the Company or its affiliates.  Executive shall not be required to mitigate the
amount of any payment provided for pursuant to this Agreement by seeking other
employment, and no amounts otherwise earned shall be set-off against the amounts
due hereunder.
 
8. Confidentiality Agreement and Assignment of Intellectual Property.
 
(a) Executive understands that during the Term, he may have access to
unpublished and otherwise confidential information both of a technical and
non-technical nature, relating to the business of the Company and any of its
parents, subsidiaries, divisions, affiliates (collectively, “Affiliated
Entities”), or clients, including without limitation any of their actual or
anticipated business, research or development, any of their technology or the
implementation or exploitation thereof, including without limitation information
Executive and others have collected, obtained or created, information pertaining
to clients, accounts, vendors, prices, costs, materials, processes, codes,
material results, technology, system designs, system specifications, materials
of construction, trade secrets and equipment designs, including information
disclosed to the Company by others under agreements to hold such information
confidential (collectively, the “Confidential Information”).  The Company’s
success is dependent on the development and protection of its intellectual
property, including but not limited to the Confidential Information. Executive
understands and acknowledges the importance of maintaining the confidentiality
of the Confidential Information to the Company’s continued success.  Executive
agrees to observe all Company policies and procedures concerning such
Confidential Information.  Executive further agrees not to disclose or use,
either during his employment or at any time thereafter, any Confidential
Information for any purpose, including without limitation any competitive
purpose, unless authorized to do so by the Company in writing, except that he
may disclose and use such information in the good faith performance of his
duties for the Company.  Executive’s obligations under this Agreement will
continue with respect to Confidential Information, whether or not his employment
is terminated, until such information becomes generally available from public
sources through no fault of Executive or any representative of
Executive.  Notwithstanding the foregoing, however, Executive shall be permitted
to disclose Confidential Information as may be required by a subpoena or other
governmental order, provided that he first notifies the Company of such
subpoena, order or other requirement and such that the Company has the
opportunity to obtain a protective order or other appropriate remedy.
 

 
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(b) During Executive’s employment, upon the Company’s request, or upon the
termination of his employment for any reason, Executive will promptly deliver to
the Company all documents, records, files, notebooks, manuals, letters, notes,
reports, customer and supplier lists, cost and profit data, e-mail, apparatus,
computers, blackberries or other PDAs, hardware, software, drawings, blueprints,
and any other material of the Company or any of its Affiliated Entities or
clients, including all materials pertaining to Confidential Information
developed by Executive or others, and all copies of such materials, whether of a
technical, business or fiscal nature, whether on the hard drive of a laptop or
desktop computer, in hard copy, disk or any other format, that are in his
possession, custody or control.  Executive may retain Executive’s rolodex and
similar address books, provided, that such items only include contact
information.
 
(c) Executive will promptly disclose to the Company any idea, invention,
discovery or improvement, whether patentable or not (“Creations”), conceived or
made by him alone or with others at any time during his employment.  Executive
agrees that the Company owns any such Creations, conceived or made by Executive
alone or with others at any time during his employment, and Executive hereby
assigns and agrees to assign to the Company all rights he has or may acquire
therein and agrees to execute any and all applications, assignments and other
instruments relating thereto which the Company deems necessary or
desirable.  These obligations shall continue beyond the termination of his
employment with respect to Creations and derivatives of such Creations conceived
or made during his employment with the Company.  The Company and Executive
understand that the obligation to assign Creations to the Company shall not
apply to any Creation that is developed entirely on his own time without using
any of the Company’s equipment, supplies, facilities, and/or Confidential
Information, unless such Creation (i) relates in any way to the business or to
the current or anticipated research or development of the Company or any of its
Affiliated Entities or (ii) results in any way from Executive’s work at the
Company.
 

 
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(d) Executive will not assert any rights to any invention, discovery, idea or
improvement relating to the business of the Company or any of its Affiliated
Entities or to his duties hereunder as having been made or acquired by Executive
prior to his work for the Company, except for the matters, if any, described in
Exhibit B to this Agreement.
 
(e) During the Term, if Executive incorporates into a product or process of the
Company or any of its Affiliated Entities anything listed or described in
Exhibit B, the Company is hereby granted and shall have a non-exclusive,
royalty-free, irrevocable, perpetual, worldwide license (with the right to grant
and authorize sublicenses) to make, have made, modify, use, sell, offer to sell,
import, reproduce, distribute, publish, prepare derivative works of, display,
perform publicly and by means of digital audio transmission and otherwise
exploit as part of or in connection with any product, process or machine.
 
(f) Executive agrees to cooperate fully with the Company, both during and after
his employment with the Company, with respect to the procurement, maintenance
and enforcement of copyrights, patents, trademarks and other intellectual
property rights (both in the United States and foreign countries) relating to
such Creations.  Executive shall sign all papers, including, without limitation,
copyright applications, patent applications, declarations, oaths, formal
assignments, assignments of priority rights and powers of attorney, that the
Company may deem necessary or desirable in order to protect its rights and
interests in any Creations.  Executive further agrees that if the Company is
unable, after reasonable effort, to secure Executive’s signature on any such
papers, any officer of the Company shall be entitled to execute such papers as
his agent and attorney-in-fact and Executive hereby irrevocably designates and
appoints each officer of the Company as his agent and attorney-in-fact to
execute any such papers on his behalf and to take any and all actions as the
Company may deem necessary or desirable in order to protect its rights and
interests in any Creations, under the conditions described in this Section 8.
 
9. Restrictive Covenants.
 
(a) During the Term and, in the event that Executive’s employment is terminated
for any reason (including for the purposes of this Section 9 the expiration of
the Term in accordance with Section 5), during the 12-month period following
such termination, Executive will not directly or indirectly (as a director,
officer, executive employee, manager, consultant, independent contractor,
advisor or otherwise) engage in competition with, or own any interest in,
perform any services for, participate in or be connected with any Competing
Business; provided, however, that the provisions of this Section 9(a) shall not
be deemed to prohibit Executive’s ownership of not more than 1.0% of the
outstanding voting rights or equity of any publicly held company.
 

 
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(b) In the event that Executive’s employment is terminated for any reason
(including for the purposes of this Section 9 the expiration of the Term in
accordance with Section 5), during the 12-month period following such
termination, Executive will not directly or indirectly hire, solicit, retain,
compensate or otherwise induce or attempt to induce any individual who is or was
at any time during the six months prior to Executive’s termination an employee
of any of the Affiliated Entities to leave the employ of the Affiliated Entities
or in any way interfere with the relationship between any of the Affiliated
Entities and any employee thereof.
 
(c) During the Term and, in the event that Executive’s employment is terminated
for any reason (including for the purposes of this Section 9 the expiration of
the Term in accordance with Section 5), during the 12-month period following
such termination, Executive will not directly or indirectly solicit, hire,
engage, send any work to, place orders with, or in any manner be associated with
any customer, supplier, contractor, subcontractor or other business relation of
any of the Affiliated Entities if such action by Executive would have a material
adverse effect on the business, assets or financial condition of any of the
Affiliated Entities, or materially interfere with the relationship between any
such person or entity and any of the Affiliated Entities.
 
10. Legitimate Business Interests of the Company.
 
(a) The parties hereto acknowledge and agree that the matters set forth above in
Sections 8 and 9 constitute the “legitimate business interests” of the Company
within the meaning of Florida Statutes 542.335 and are hereby conclusively
agreed to be legally sufficient to support such covenants.  Such “legitimate
business interests” include but are not necessarily limited to trade secrets;
valuable confidential business or professional information that does not legally
qualify as trade secrets; substantial relationships with specific prospective or
existing customers or clients; customer or client good will associated with an
ongoing business in a specific geographic location and a specific marketing
area; and extraordinary or specialized training.  It is further acknowledged and
agreed that all such restrictive covenants set forth above are reasonably
necessary to protect the legitimate business interests of the Company and are
not overbroad or unreasonable.  It is acknowledged and agreed that the Company
is specifically relying upon the foregoing statements in entering into this
Agreement.
 
(b) Executive acknowledges that a remedy at law for any breach or threatened
breach of the provisions of Sections 8 or 9 would be inadequate, that the
Company would be irreparably injured by such breach and that, therefore, the
Company shall be entitled to injunctive relief in addition to any other
available rights and remedies in case of any such breach or threatened breach
 
11. Representation and Warranty.  Executive represents and warrants to the
Company that he is not subject to any agreement restricting his ability to enter
into this Agreement and fully carry out his duties and responsibilities
hereunder.
 

 
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12. Notice.  Any notice or other communication required or permitted to be given
to the Parties shall be deemed to have been given if personally delivered, if
sent by nationally recognized overnight courier or if mailed by certified or
registered mail, return receipt requested, first class postage prepaid, and
addressed as follows:
 
If to Executive, to:

the address shown on the records of the Company.
 
If to the Company, to:

 
The LGL Group, Inc.
2525 Shader Rd.
Orlando, Florida 32804
Attention: Chairman of the Board
with a copy to:

 
Olshan Grundman Frome Rosenzweig & Wolosky LLP
Park Avenue Tower
65 East 55th Street
New York, New York 10022
Attention: Robert H. Friedman, Esq.
 
13. Severability.  If any provision of this Agreement is declared void or
unenforceable by a court of competent jurisdiction, all other provisions shall
nonetheless remain in full force and effect.
 
14. Governing Law and Consent to Jurisdiction.  This Agreement shall be governed
by, and construed and enforced in accordance with, the laws of the State of
Florida, without regard to the conflict of laws provisions thereof.  Each of the
parties hereto hereby irrevocably submits to the exclusive jurisdiction of the
Florida state court, or the United States District Court, Middle District of
Florida, in each case sitting in Orange County, Florida, over any action or
proceeding arising out of or relating to this Agreement and each of the parties
hereto hereby irrevocably agrees that all claims in respect of such action or
proceeding shall be heard and determined in such Florida state or Federal
court.  Each of the parties hereto hereby irrevocably waives, to the fullest
extent legally possible, the defense of an inconvenient forum to the maintenance
of such action or proceeding.
 
15. Indemnification and Liability Insurance.  The Company shall indemnify
Executive pursuant to the terms of that certain indemnification agreement, dated
March 14, 2011, by and between the Company and Executive, and shall provide
Executive with liability insurance to the extent extended to senior executives
of the Company generally.
 

 
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16. Waiver.  The waiver by either Party of a breach of any provision of this
Agreement shall not be, or be construed as, a waiver of any subsequent
breach.  The failure of a Party to insist upon strict adherence to any provision
of this Agreement on one or more occasions shall not be considered a waiver or
deprive that Party of the right thereafter to insist upon strict adherence to
that provision or any other provision of this Agreement.  Any waiver must be in
writing.
 
17. Assignment.  This Agreement is a personal contract and Executive may not
sell, transfer, assign, pledge or hypothecate his rights, interests and
obligations hereunder.  Except as otherwise herein expressly provided, this
Agreement shall be binding upon and shall inure to the benefit of Executive and
his personal representatives and shall inure to the benefit of and be binding
upon the Company and its successors and assigns, including without limitation,
any corporation or other entity into which the Company is merged or that
acquires all or substantially all of the assets of the Company.
 
18. Entire Agreement.  This Agreement (together with the Exhibits attached
hereto) embodies all of the representations, warranties, and agreements between
the Parties relating to Executive’s employment with the Company.  Except for the
Original Employment Agreement, no other representations, warranties, covenants,
understandings, or agreements exist between the Parties relating to Executive’s
employment.  On the Execution Date, this Agreement shall supersede the Original
Employment Agreement and any other prior agreements, written or oral, relating
to Executive’s employment.  This Agreement may not be amended or modified except
by a writing signed by the Parties.
 
19. Section 409A Compliance.
 
(a) The intent of the parties is that payments and benefits under this Agreement
comply with, or be exempt from, Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”), and the regulations and guidance promulgated
thereunder (collectively, “Section 409A”), and accordingly, to the maximum
extent permitted, this Agreement shall be interpreted to be in compliance
therewith.  If Executive notifies the Company (with specificity as to the reason
therefor) that Executive believes that as a result of subsequent published
guidance issued by the Internal Revenue Service upon which taxpayers generally
rely, any provision of this Agreement (or of any award of compensation,
including equity compensation or benefits) would cause Executive to incur any
additional tax or interest under Section 409A and the Company concurs with such
belief or the Company independently makes such determination, the Company shall,
after consulting with Executive, reform such provision to try to comply with
Section 409A through good faith modifications to the minimum extent reasonably
appropriate to conform with Section 409A, and to the extent applicable, Internal
Revenue Service Notice 2010-6.  To the extent that any provision hereof is
modified in order to comply with Section 409A, such modification shall be made
in good faith and shall, to the maximum extent reasonably possible without
violating the provisions of Section 409A, maintain the original intent and
economic benefit to Executive and the Company and is tax neutral to the Company.
 

 
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(b) A termination of employment shall not be deemed to have occurred for
purposes of any provision of this Agreement providing for the payment of any
amounts or benefits upon or following a termination of employment that are
considered “nonqualified deferred compensation” under Section 409A unless such
termination is also a “separation from service” within the meaning of Section
409A and, for purposes of any such provision of this Agreement, references to a
“termination”, “termination of employment” or like terms shall mean “separation
from service”.  If Executive is deemed on the date of termination to be a
“specified employee” within the meaning of that term under Section
409A(a)(2)(B), then with regard to any payment that is considered non-qualified
deferred compensation under Section 409A payable on account of a “separation
from service”, such payment or benefit shall be made or provided at the date
that is the earlier of (A) the expiration of the six-month period measured from
the date of such “separation from service” of Executive, and (B) 30 days from
the date of Executive’s death (the “Delay Period”).  Upon the expiration of the
Delay Period, all payments and benefits delayed pursuant to this Section 19
(whether they would have otherwise been payable in a single sum or in
installments in the absence of such delay) shall be paid or reimbursed to
Executive in a lump sum with interest at the prime rate as published in The Wall
Street Journal on the first business day of the Delay Period, and any remaining
payments and benefits due under this Agreement shall be paid or provided in
accordance with the normal payment dates specified for them herein.
 
(c) With regard to any provision herein that provides for reimbursement of costs
and expenses or in-kind benefits, except as permitted by Section 409A, (i) the
right to reimbursement or in-kind benefits shall not be subject to liquidation
or exchange for another benefit, (ii) the amount of expenses eligible for
reimbursement, or in-kind benefits, provided during any taxable year shall not
affect the expenses eligible for reimbursement, or in-kind benefits to be
provided, in any other taxable year, provided that this clause shall not be
violated without regard to expenses reimbursed under any arrangement covered by
Section 105(b) of the Code solely because such expenses are subject to a limit
related to the period the arrangement is in effect, and (iii) such payments
shall be made on or before the last day of Executive’s taxable year following
the taxable year in which the expense occurred.  Any tax gross-up payment as
provided herein shall be made in any event no later than the end of the calendar
year immediately following the calendar year in which Executive remits the
related taxes, and any reimbursement of expenses incurred due to a tax audit or
litigation shall be made no later than the end of the calendar year immediately
following the calendar year in which the taxes that are the subject of the audit
or litigation are remitted to the taxing authority, or, if no taxes are to be
remitted, the end of the calendar year following the calendar year in which the
audit or litigation is completed.
 
(d) For purposes of Section 409A, Executive’s right to receive any installment
payments pursuant to this Agreement shall be treated as a right to receive a
series of separate and distinct payments.  Whenever a payment under this
Agreement specifies a payment period with reference to a number of days (e.g.,
“within 30 days following the date of termination”), the actual date of payment
within the specified period shall be within the sole discretion of the Company.
 

 
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20. Limitation on Benefits.  Notwithstanding anything to the contrary contained
in this Agreement, to the extent that any of the payments and benefits provided
for under this Agreement or any other agreement or arrangement between the
Company and Executive, or any arrangement or agreement with any person whose
actions result in a change of ownership of effective control or a change in
ownership of a substantial portion of the assets of the Company covered by
Section 280G(b)(2) of the Code (collectively, the “Payments”) constitute a
“parachute payment” within the meaning of Section 280G of the Code and but for
this Section 20, would be subject to the excise tax imposed by Section 4999 of
the Code, then the Payments shall be payable either (a) in full or (b) as to
such lesser amount that would result in no portion of such Payments being
subject to the excise tax under Section 4999 of the Code; whichever of the
foregoing amounts, taking into account the applicable federal, state and local
income taxes, payroll taxes and the excise tax imposed by Section 4999, results
in Executive’s receipt on an after-tax basis, of the greater amount of payment
and benefits. Any reduction under clause (b) of the preceding sentence shall be
done first by reducing any cash severance payments with the last payment reduced
first; next any equity or equity derivatives that are included at full value
rather than accelerated value shall be reduced with the highest value reduced
first; and next any equity or equity derivatives based on acceleration value
shall be reduced with the highest value reduced first.  Notwithstanding the
foregoing, to the extent that the Company and Executive agree that it would not
violate Section 409A or impact the ability of the parties to reduce the amounts
receivable, Executive may prescribe a different order of reduction.  Unless
Executive and the Company otherwise agree in writing, any determination required
under this Section 20 shall be made in writing by the Company’s independent
public accountants (the “Accountants”), whose determination shall be conclusive
and binding upon Executive and the Company for all purposes.  For purposes of
making the calculations required by this Section 20, the Accountants may make
reasonable assumptions and approximations concerning applicable taxes and may
rely in reasonable, good faith interpretations concerning the application of
Section 280G and 4999 of the Code.  The Company and Executive shall furnish to
the Accountants such information and documents as the Accountants may reasonably
request in order to make a determination under this Section 20.  The Company
shall bear all costs the Accountants may reasonably incur in connection with any
calculations contemplated by this Section 20.  If the limitation set forth in
this Section 20 is applied to reduce an amount payable to Executive, and the
Internal Revenue Service successfully asserts that, despite the reduction,
Executive has nonetheless received payments that are in excess of the maximum
amount that could have been paid to Executive without being subjected to any
excise tax, then, unless it would be unlawful for the Company to make such a
loan or similar extension of credit to Executive, Executive may repay such
excess amount to the Company as though such amount constitutes a loan to
Executive made at the date of payment of such excess amount, bearing interest at
120% of the applicable federal rate (as determined under Section 1274(d) of the
Code in respect of such loan), provided that if the recalculation of the higher
amount was then redone based on the Internal Revenue Service position and
Executive would net more if no reduction took place, such reduction shall
be  cancelled and the full amount paid to Executive in a lump sum within 30 days
of the Internal Revenue Service assessment becoming final, unless this proviso
would negate the ability to use the reduction if this was not implemented or
caused a violation of Section 409A, in which case this proviso shall be null and
void.
 
 
[Signature Page Follows]
 

 
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[Signature Page to Anderson Employment Agreement]
 

 
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed
and delivered on the date above.
 

 

 
THE LGL GROUP, INC.
             
By:
/s/ R. LaDuane Clifton
 
Name:
LaDuane Clifton
 
Title:
Chief Accounting Officer
   
Agreed to and Accepted:
         
/s/ Gregory P. Anderson
 
GREGORY P. ANDERSON
 

 
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