Exhibit 10.3

+SPARTON CORPORATION
NONQUALIFIED STOCK OPTION AGREEMENT
THIS NONQUALIFIED STOCK OPTION AGREEMENT (Agreement) is made this [DATE],
between SPARTON CORPORATION (Company) and [NAME], an employee of the Company or
one of its subsidiaries (Employee), pursuant to Section 6.A. of the 2010 Sparton
Corporation Long Term Stock Option Incentive Plan (Plan). Capitalized terms used
but not defined herein have the meanings given such terms in the Plan.
IT IS AGREED AS FOLLOWS:
1.Grant of Option. Pursuant to the Plan, the Company hereby grants to the
Employee the option to purchase [NUMBER] shares of the Company’s common stock
(Option Shares), on the terms and conditions herein set forth in this Agreement
(Option). The Option Shares are not intended to be incentive stock options
(ISOs) qualifying under the provisions of Section 422 of the Internal Revenue
Code of 1986, as amended.
2.    Purchase Price. The purchase price of the shares covered by this Option
shall be [AMOUNT] per share. The Committee has determined that such price is
fair market value of a share of the Company’s common stock on this date.
3.    Term of Option. The term of this Option shall be for a period of 10 years,
subject to earlier termination as provided in subsequent paragraphs of this
Agreement.
4.    Employee’s Agreement. Employee’s employment by the Company shall be at the
sole discretion of the Company, and this Agreement shall not impose on the
Company any obligation to retain the Employee in its employ for any period. In
the event of the termination of Employee’s employment by the Company for any
reason prior to the one year anniversary of the date of this Agreement this
Option shall terminate, unless this Option becomes exercisable as provided in
paragraph 7 of this Agreement.
5.    Vesting and Exercise of Option.
(a)
Vesting Periods. The Option shall vest at a rate of 25% per year commencing on
the first anniversary of the date of the grant (described above) and 25% on each
subsequent date until 100% vested. Employee must be employeed on the date
vesting is to occur or any outstanding and unvested portion of the Option shall
be forfeited.

(b)
Exercise Periods. Subject to the terms and conditions of this Agreement and the
Plan (including, but not limited to, the conditions set forth in paragraph 7),
the Option Shares are exercisable as soon as they have vested under Paragraph
5(a).

(c)
Notice and Conditions. This Option may be exercised at any time during the term
of this Option, by written notice to the Company (Notice) as to any or all of
the vested Option Shares, but not as to less than 100 shares at any one time,
unless the number purchased is the total number of shares remaining to be
purchased under this Agreement. The Notice shall state the number of shares with
respect to which the Option is being exercised, shall be signed by the person
exercising this Option, and shall be accompanied by payment of the full purchase
price of the shares. This Agreement shall be submitted to the Company

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Exhibit 10.3

with the Notice for purposes of recording the shares being purchased, if
exercised in part, or for purposes of cancellation of this Agreement if all
shares then subject to this Agreement are being purchased. In the event this
Option shall be exercised pursuant to paragraph 7(c) hereof by any person other
than the Employee, such Notice shall be accompanied by appropriate proof of the
right of such person to exercise the Option.
(d)
Payment Terms. Payment of the purchase price shall be made by: (a) cash, check,
bank draft or money order, payable to the order of the Company; (b) the delivery
by the Employee of unencumbered shares of common stock of the Company (provided
that any shares acquired pursuant to the exercise of an option have been held by
Employee for a period of at least six consecutive months) with a fair market
value on the date of exercise equal to the total purchase price of the shares to
be purchased; (c) the delivery of the portion of the Option under this Agreement
with a fair market value on the date of exercise equal to the total purchase
price of shares to be purchased; or (d) a combination of (a), (b) and (c).
Subject to the conditions set forth in paragraphs 7(b) and 12, upon exercise of
all or a portion of this Option, the Company shall issue to the Employee a stock
certificate representing the number of shares with respect to which this Option
was exercised.

6.    Transferability of Option. Except as provided below, this Option shall not
be sold, transferred, assigned, pledged or hypothecated in any way, shall not be
assignable by operation of law, and shall not be subject to execution, levy,
attachment or similar process. Except as provided in this Agreement, any
attempted sale, transfer, assignment, pledge, hypothecation or other disposition
of this Option contrary to the terms hereof, and any execution, levy, attachment
or similar process upon the Option, shall be null and void and without effect.
7.    Termination of Employment, Retirement, Disability and Death.
(a)
Termination of Employment other than Retirement, Disability or Death. In the
event the Employee ceases to be employed by the Company for any reason other
than Retirement, Disability or Death, this Option shall, to the extent rights to
purchase shares hereunder have accrued at the date of such termination and shall
not have been fully exercised, be exercisable, in whole or in part, at any time
within a period of 90 days following cessation of the Employee’s employment,
subject, however, to prior expiration of the term of this Option and any other
limitations upon its exercise in effect at the date of exercise.

(b)
Retirement or Disability. In the event the Employee ceases to be employed by the
Company by reason of Retirement or Disability, this Option shall, to the extent
rights to purchase shares hereunder have accrued at the date of such Retirement
or Disability and have not been fully exercised, be exercisable, in whole or in
part, at any time within the period of three years following such termination of
employment, subject, however, to prior expiration of the term of this Option and
any other limitations upon its exercise in effect at the date of exercise. If
the Employee dies after such Retirement or Disability, this Option shall be
exercisable in accordance with paragraph 7(c) hereof.

(c)
Death. In the event of the Employee’s death, this Option shall, to the extent
rights to purchase shares hereunder have accrued at the date of death and shall
not have been fully exercised, be exercisable, in whole or in part, by the
personal representative of the Employee’s estate, by any person or persons who
shall have acquired this Option directly

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Exhibit 10.3

from the Employee by bequest or inheritance at any time during the following
periods: (i) if Employee dies while employed by the Company, at any time within
six months after the date of death, or (ii) if Employee dies during the extended
exercise period following termination of employment specified in paragraph 7(b),
at any time within the longer time of such extended period or six months after
the date of death, subject, however, in each case, to the prior expiration of
the term of this Option and any other limitations on the exercise of such Option
in effect at the date of exercise.
(d)
Termination of Option. If this Option is not exercised within whichever of the
exercise periods specified in paragraph 7(a), 7(b) or 7(c) is applicable, this
Option shall terminate upon earlier of the expiration of such exercise period or
the period specified in Paragraph 3.

(e)
Vesting. Upon Termination of Employment and Termination of the Option, vesting
shall cease and no additional share shall become vested after the date of the
Termination of Employment or Termination of the Option.

8.    Tax Withholding. The exercise of this Option is subject to the
satisfaction of withholding tax or other withholding liabilities, if any, under
federal, state and local laws in connection with such exercise or the delivery
or purchase of shares pursuant hereto. The exercise of this Option shall not be
effective unless applicable withholding shall have been effected or obtained in
the preceding manner or in any other manner acceptable to the Committee.
9.    Rights as a Shareholder. Employee shall have no rights as a shareholder
with respect to any shares covered hereby until Employee shall have become the
holder of record of such shares. No adjustment shall be made for dividends,
distributions or other rights for which the record date is prior to the date on
which Employee shall have become the holder of record thereof, except as
provided in paragraph 9.
10.    Modification, Extension and Renewal. Subject to the terms and conditions
and within the limitations of the Plan, the Committee, subject to approval of
the Board of Directors, may modify or renew this Option, or accept its surrender
(to the extent not theretofore exercised) and authorize the granting of a new
option or options in substitution therefor (to the extent not theretofore
exercised). Notwithstanding the foregoing, no modification shall, without the
consent of the Employee, alter or impair any rights or obligations hereunder.
11.    Postponement of Delivery of Shares and Representations. The Company, in
its discretion, may postpone the issuance and/or delivery of shares upon any
exercise of this Option until completion of such stock exchange listing, or
registration, or other qualification of such shares under any state and/or
federal law, rule or regulation as the Company may consider appropriate, and may
require any person exercising this Option to make such representations,
including a representation that it is the Employee’s intention to acquire shares
for investment and not with a view to distribution thereof, and furnish such
information as it may consider appropriate in connection with the issuance or
delivery of the shares in compliance with applicable laws, rules and
regulations. In such event, no shares shall be issued to such holder unless and
until the Company is satisfied with the accuracy of any such representations.
12.    Subject to Plan. This Option is subject to the terms and provisions of
the Plan. If any inconsistency exists between the provisions of this Agreement
and the Plan, the Plan shall govern.

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Exhibit 10.3

13.    Exempt from 409A. This Option is intended to be exempt from 409A under
the stock rights exemption, as described in Treasury Regulation
1.409A-1(b)(5)(i). This Option shall be interpreted in a manner consistent with
the intent that this Option be exempt from 409A.
[The rest of this page is intentionally blank. Signatures are on the following
page.]

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Exhibit 10.3

IN WITNESS WHEREOF, this Nonqualified Stock Option Agreement has been executed
the date first above written.

SPARTON CORPORATION

By:____________________________
Cary B. Wood
Its: Chief Executive Officer

EMPLOYEE

_______________________________
[NAME]

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Exhibit 10.3

RECORD OF EXERCISE

Date

Number of Shares

Price Per Share

Shares Subject  
to Option After Exercise

 
 
 
 
 
 
 
 
 
 
 
 

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