Exhibit 10.7 - 6-30-2014 10-K






SECOND AMENDMENT TO 
SPARTON CORPORATION
2010 LONG-TERM INCENTIVE PLAN




Sparton Corporation (Corporation) has previously adopted the Sparton Corporation 2010
Long-Term Incentive Plan (Plan) for the benefit of those individuals selected to participate in the
Plan.




SECTION 1
RECITALS




1.1       Amendment. The Corporation has reserved the right to amend the Plan as provided in Section 10(A) of the Plan.




1.2        Summary. The Corporation desires to amend the Plan to allow for the deferral of the payment of certain awards or grants which would be considered deferred and performance based compensation under Section 409A of the Code.


1.3       Effective Date. Except as otherwise provided, this amendment shall be effective for awards or grants made or issued on or after September 1, 2014.




SECTION 2
AMENDMENTS TO PLAN




2.1    Definitions. Section 2 is hereby amended by the addition of the following new
Section 2(X) and the re-lettering of the provisions appearing in Section 2 accordingly.




X.    "Performance Based Compensation" means compensation the amount of which, or the entitlement to which, is contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a Performance Period of at least twelve (12) consecutive months. Organizational or individual performance criteria shall be established by the Committee, in its sole discretion, in writing not later than ninety (90) days after the commencement of the  period of service  to which  the  criteria relate,  provided that  the outcome is substantially uncertain at the time  the criteria are established. Performance Based Compensation shall not include any amounts or portion of any amount that will be paid  regardless of performance or based  on a level  of performance that  is substantially certain to be met at the time the criteria is established. Performance Based Compensation may be based  on subjective performance criteria  provided that  the subjective criteria  are bona  fide  and  relate  to  the  performance of  the  Award Recipient, a group of Award Recipients that  includes the  Award Recipient, or a business unit  for which  the  Award Recipient  provides  services  (which  may   include  the   entire  organization)  and   the determination that any subjective performance criteria have been satisfied is not made by Award Recipient or  a family  member of the  Award  Recipient (as defined in Section 267(c)(4) of the Code, applied as if the family  





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of an Award Recipient includes the spouse of member of the family), or a person under  the effective control of the Award Recipient or such a family member, and no amount of the compensation of the person making such determination is effectively controlled, in whole or in part, the Award  Recipient or such a family member.




2.2       Deferral of Award or Grant. Section 6(G)(6) of the Plan is amended by deleting
Section 6(G)(6) and substituting the following in its place.




6.         Deferring Awards.  Except as otherwise provided in Section 8, under no circumstances may an Award Recipient elect to defer, until a time or times later than the exercise of an Option or a Stock Appreciation Right or the settlement or distribution of Shares or cash in respect of other Awards, receipt of all or a portion of the Shares or cash subject to such Award, or dividends and dividend equivalents payable thereon.




2.3    Application of Code Section 409A. The first paragraph lead in to Section 8 is deleted and the following substituted in its place.




A.        It is the intention  of the Corporation that  no Award  shall  be "deferred compensation" subject to Section 409A of the Code, unless and to the extent that the Committee  specifically  determines otherwise,  and  the Plan  and  the  terms  and conditions of  all  Awards  shall  be  interpreted accordingly.  If the  Committee determines that an Award is subject to Section 409A of the Code, then the Award shall  be  paid  or  settled   only  upon  the  Award   Recipient's   death,  Disability, Separation from Service, upon a Change of Control, upon such date(s) or pursuant to a schedule designated by the Committee, or pursuant to a deferral election made by an Award Recipient, as specified in the applicable  Award  Agreement, subject to the following provisions.




2.4       Deferral Election. Section 8 of the Plan is amended by the addition of the following
Section 8(A)(9) at the end thereof.




9.         Deferral Elections.  In the event  that  the Committee determines that  an Award is deferred compensation subject to Section 409A of the Code and would be otherwise  be considered Performance Based Compensation, then the Committee may, in its sole and  absolute  discretion,  permit  the Award  Recipient to make an election to change  the time, but  not the form, of payment under  the Award  in accordance with this subsection and the terms contained  in the Award.




(a)       Where the Award Recipient obtains a right to an Award subject to this subsection,  any election  to deferred must be made  no later than six (6) months before the end  of the Performance Period,  provided that  the Award  Recipient perform services continuously from the later of the beginning of the Performance





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Period or the date the performance criteria are established,  through the date the Award Recipient makes the election and no election can be made after the compensation has become readily ascertainable.


(b)       Any deferral election shall be irrevocable once made and shall be made on such forms as the Committee deems necessary.


SECTION 3
REAFFIRMATION OF PLAN


3.1            Affirmation of Plan. The Plan, as amended, is reaffirmed in all respects.


SECTION 4
EXECUTION


This Amendment is signed on the date indicated below but effective as provided in Section 1.3.


Sparton Corporation




By:     /s/ Larry Brand    
Larry Brand
Its:  Vice President
Dated:     As of August 20, 2014









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