Document:

EX-10.1

Exhibit 10.1

Obligor #8452124486

Obligation #0095739967

MODIFICATION AGREEMENT

THIS MODIFICATION AGREEMENT (“Modification”) is dated as of June 15, 2009 (and is effective as of
June 15, 2009), by and between SPARTON CORPORATION, an Ohio corporation (“Borrower”) and NATIONAL
CITY BANK, a national banking association (“Lender”).

WHEREAS, Lender agreed to lend to Borrower an amount not to exceed the sum of Twenty Million and
00/100 Dollars ($20,000,000.00) (“Loan”), which Loan was evidenced by a certain Promissory Note
dated January 22, 2008 (as extended, amended or otherwise modified to date, the “Note”) (the said
Note and any other instrument or document given in connection with or to secure the Loan being
collectively referred to as “Loan Documents”); and

WHEREAS, the parties hereto desire to modify the Note as hereinafter provided.

NOW, THEREFORE, in consideration of the foregoing promises and the covenants contained herein, the
parties hereto agree as follows:

	1.	 	Liability of Borrower. Borrower hereby ratifies and reconfirms Borrower’s
obligations and all liability to Lender under the terms and conditions of the Loan Documents
and acknowledges that Borrower has no defenses to or rights of set-off against Borrower’s
obligations and all liability to Lender thereunder. Borrower further acknowledges that Lender
has performed all of Lender’s obligations under the Loan Documents.
	 
	2.	 	Modification. (a) The principal amount outstanding under the Note as of the
effective date of this Modification is Fifteen Million Five Hundred Thousand and 00/100
Dollars ($15,500,000.00).
	 
	 	 	(b) The Note is hereby modified to extend the maturity date from June 15, 2009, to August 15,
2009.
	 
	 	 	(c) The next payment is due July 15, 2009, and payments are due monthly thereafter as set
forth in the Note. Payments prior to the first scheduled payment above have been made as
evidenced by the books and records of Lender.
	 
	3.	 	Ratification of Loan Documents. The Loan Documents are in all respects ratified and
confirmed by the parties hereto and incorporated by reference herein, and each of the Loan
Documents and this Modification shall be read, taken and construed as one and the same
instrument. Capitalized terms used herein and not otherwise defined shall have the meanings
given to them in the Loan Documents. In the event of any conflict between the terms and
provisions of this Modification and the terms and provisions of the Loan Documents, the terms
and provisions of this Modification shall control.

(SIGNATURES ARE CONTAINED ON THE NEXT FOLLOWING PAGE)

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IN WITNESS WHEREOF, the undersigned have caused this Modification to be executed as of the day and
year first above written.

	 	 	 	 	 
	 	SPARTON CORPORATION,

an Ohio corporation

 	 
	 	By:  	/s/ Gregory A. Slome
 	 
	 	 	Gregory A. Slome 	 
	 	 	Its: Senior Vice President/CFO 	 
	 
	 	NATIONAL CITY BANK,

a national banking association

 	 
	 	By:  	/s/ John McManus
 	 
	 	 	John McManus 	 
	 	 	Its: Regional President 	 
	 

-2-Exhibit 10.1

Exhibit 10.1

EXECUTIVE EMPLOYMENT CONTRACT

THIS EXECUTIVE EMPLOYMENT CONTRACT (this “AGREEMENT”) made as of June 17, 2009 by and between
PMC Commercial Trust, a Texas Real Estate Investment Trust with its principal place of business in
Dallas, Collin County, Texas, hereinafter referred to as the “COMPANY,” and                     ,
hereinafter referred to as “EXECUTIVE.”

WITNESSETH THAT:

In consideration of the promises herein contained, the parties hereto mutually agree as
follows:

	 	1.	 	Employment: The Company hereby employs the Executive as its
                     with such powers and duties as may be specified by the Board of Trust
Managers (the “Board”). The Executive hereby accepts employment upon the terms and
conditions as hereinafter set forth.

	 	2.	 	Term: Subject to the terms and conditions set forth in this Agreement,
the term of this Agreement shall begin on the date hereof and continue until June 30,
2012 (the “Term”). Upon the expiration of the Term of this Agreement, this Agreement
shall be automatically renewed for consecutive one-year periods unless either party
provides a written notice of non-renewal for any reason at least sixty (60) days prior
to the end of the Term or any additional one-year renewal period (the “Renewal Period”)
(the Term and any Renewal Periods shall be referred to collectively herein as the
“Employment Period”); provided, however, notwithstanding the foregoing, the Employment
Period shall terminate on the Executive’s seventieth (70th) birthday.

	 	3.	 	Compensation: For all services rendered by the Executive under this
Agreement, the Executive shall be paid an annual base salary at a minimum at the annual
rate for the Executive effective as of July 1, 2009 (the “Minimum Rate”). The Minimum
Rate may be increased by the Board at its discretion. The annual base salary is
payable pursuant to the normal payroll practices of the Company.

	 
	 	 	 	The Board may consider bonus compensation for the Executive if the performance of the
Company and the Executive justifies such bonus compensation.

	 	4.	 	Authorized Expenses: The Executive is authorized to incur reasonable
expenses for the promotion of the business of the Company. The Company will reimburse
the Executive for all such reasonable expenses upon the presentation by the Executive,
from time to time, of an itemized account of such expenditures.

	 
	 	 	 	The Executive shall be entitled to such additional and other fringe benefits as the
Board shall from time to time authorize, including but not limited to: A) health
insurance coverage for the Executive, his wife and dependent children; and B) a monthly
automotive allowance of $550, which the Executive is to use to obtain an automobile to
be available for company needs. All operating expenses such as maintenance, insurance
and fuel (excluding fuel for company travel) will be the responsibility and expense of
the Executive.

	 	5.	 	Extent of Services: The Executive shall devote a substantial portion
of business time, attention and energies to the business of the Company, and shall not,
during the term of this Agreement, engage in additional gainful employment of any kind
or undertake any role or position, whether or not for compensation, with any person or
entity during the Employment Period without advance written approval of the Board.
This provision is not meant to prevent him from A) devoting reasonable time to civic or
philanthropic activities or B) investing his assets in such form or manner providing
that it does not require any substantial services on the part of the Executive that
will interfere with the Executive’s employment pursuant to this Agreement. Executive’s
employment is considered as full-time.

 

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	 	6.	 	Working Facilities: The Executive shall be furnished with such
facilities and services suitable to his position and adequate for the performance of
his duties.

	 	7.	 	Duties: The Executive is employed in an executive and supervisory
capacity and shall perform such duties consistent herewith as the Board of the Company
shall from time to time specify. Subject to the provisions of Section 14 hereof, the
precise services of the Executive may be extended or curtailed, from time to time, at
the discretion of the Board of the Company.

	 	8.	 	Disclosure of Information: The Executive recognizes and acknowledges
that the Company’s operating procedures or service techniques are valuable, special and
unique assets of the Company’s business. The Executive will not, during or after the
term of his employment, disclose the list of the Company’s customer base or service
techniques to any person, firm, Company, association or other entity for any reason or
purpose whatsoever. In the event of breach or threatened breach by the Executive of
the provisions of this paragraph, the Company shall be entitled to an injunction
restraining any such breach. Nothing herein shall be construed as prohibiting the
Company from pursuing any other remedies available to the Company for such breach or
threatened breach, including the recovery of damages from the Executive.

	 	9.	 	Vacations: The Executive shall be entitled each year to a vacation in
accordance with the vacation contract addendum dated effective July 1, 1999.

	 	10.	 	Disability: If the Executive is unable to perform his services by
reason of illness or total incapacity, based on standards similar to those utilized by
the U.S. Social Security Administration, he shall receive his full salary for one (1)
year of said total incapacity through coordination of benefits with any existing
disability insurance program provided by the Company (a reduction in salary by that
amount paid by any Company provided insurance). Should said Executive be totally
incapacitated beyond a one-year period, so that he is not able to devote full time to
his employment with said Company, then this Agreement shall terminate.

	 	11.	 	Death During Employment: If the Executive dies during the term of
employment and has not attained the age of seventy years, the Company and/or any third
party insurance provided by the Company, through a coordination of benefits, shall pay
the estate of the Executive a death benefit equal to two times the Executive’s annual
salary. In the event the Executive receives death benefits payable under any group
life insurance policy issued to the Company, the Company’s liability under this clause
will be reduced by the amount of the death benefit paid under such policy. The Company
shall pay any remaining death benefits to the estate of the Executive over the course
of twelve (12) months in the same manner and under the same terms as the Executive
would have been paid if he had still been working for the Company. No later than one
(1) month from the date of death, the estate of the Executive will also be paid any
accumulated vacation pay. Such payments pursuant to this paragraph shall constitute
the full compensation of said Executive and he and his estate shall have no further
claim for compensation by reason of his employment by the Company.

	 	12.	 	Assignment: The acts and obligations of the Company under this
Agreement shall inure to the benefit of and be binding upon the successors and assigns
of the Company.

	 	13.	 	Invalidity: If any paragraph or part of this Agreement is invalid, it
shall not affect the remainder of this Agreement but the remainder shall be binding and
effective against all parties.

	 
	 	14.	 	Additional Compensation: Additional compensation is due as follows:

	 	(a)	 	If during the Employment Period,

	 	(i)	 	this Agreement is terminated by the Company (other than
pursuant to the provisions of Section 17 hereof) or

	 
	 	(ii)	 	this Agreement is terminated by the Executive due to
“Constructive Discharge,” or

	 
	 	(iii)	 	a Control Change Severance Payment is due,

the Executive shall receive termination pay in an amount equal to 2.99 times the
average of the last three years compensation (the “Termination Pay”).

 

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	 	(b)	 	For purposes of this Agreement, “Constructive Discharge” shall mean:

(i) Any reduction in salary below the Minimum Rate in effect on the date of
this Agreement;

(ii) A material change diminishing the Executive’s job function, authority,
duties or responsibilities, or a similar change deteriorating Executive’s working
conditions that would not be in accordance with the spirit of this Agreement;

(iii) A required relocation of Executive of more than 35 miles from
Executive’s current job location; or requires Executive to travel away from
Executive’s office in the course of discharging Executive’s responsibilities in
excess of that typically required of executives in similar positions; or

(iv) Any breach of any of the terms of this Agreement by the Company, which is
not cured within 14 days following written notice thereof by Executive to the
Company.

(c) The amount payable by the Company pursuant to this Section 14 shall be made in one
lump sum cash payment payable to the Executive no later than 30 days following
termination of this Agreement.

	 	15.	 	Decision by the Company not to Extend the Agreement: Other than in
connection with a termination for Cause in accordance with the provisions of Section 17
of this Agreement, in the event the Company elects not to renew this Agreement by
giving written notice to the Executive in accordance with Section 2 hereof, the
Executive shall be entitled to receive, at such time notice of the election not to
renew is given or on the anniversary date of this Agreement, at the sole option of the
Company, a lump sum cash payment equal to his annual base salary, at the Minimum Rate
in effect on the date written notice of the election not to renew is given to the
Executive.

	 
	 	16.	 	Change in Control:

(a) Change in Control. For purposes of this Agreement, a “Change in Control”
shall mean any of the following events:

(i) the ownership or acquisition (whether by a merger or otherwise) by any
Person (other than a Qualified Affiliate), in a single transaction or a series of
related or unrelated transactions, of Beneficial Ownership of more than fifty
percent (50%) of the Company’s then outstanding voting securities (the “Outstanding
Voting Securities”);

(ii) the merger or consolidation of the Company with or into any other Person
(other than a Qualified Affiliate), if, immediately following the effectiveness of
such merger or consolidation, Persons who did not Beneficially Own Outstanding
Voting Securities immediately before the effectiveness of such merger or
consolidation directly or indirectly Beneficially Own more than fifty percent (50%)
of the outstanding shares of voting stock of the surviving entity of such merger or
consolidation (including for such purpose in both the numerator and denominator,
 shares of voting stock issuable upon the exercise of then outstanding rights
(including conversion rights), options or warrants) (“Resulting Voting Securities”),
provided that, for purposes of this subsection, if a Person who Beneficially Owned
Outstanding Voting Securities immediately before the merger or consolidation
Beneficially Owns a greater number of the Resulting Voting Securities immediately
after the merger or consolidation than the number the Person received solely as a
result of the merger or consolidation, that greater number will be treated as held
by a Person who did not Beneficially Own Outstanding Voting Securities before the
merger or consolidation, and provided further that such merger or consolidation
would also constitute a Change in Control if it would satisfy the foregoing test if
rights, options and warrants were not included in the calculation;

(iii) any one or a series of related sales or conveyances to any Person or
Persons (including a liquidation) other than any one or more Qualified Affiliates of
all or substantially all of the assets of the Company;

(iv) the complete liquidation or dissolution of the Company; or

 

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(v) Incumbent Trust Managers cease to be a majority of the members of the
Board of Trust managers where an “Incumbent Trust Manager” is (1) an individual who
is a member of the Board of Trust Managers on the date of this Agreement or (2) any
new trust manager whose appointment by the Board of Trust Managers was approved by a
majority of the persons who were already Incumbent Trust Managers at the time of
such appointment, election or approval, other than any individual who assumes office
initially as a result of an actual or threatened election contest with respect to
the election or removal of trust managers or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board of Trust
Managers or as a result of an agreement to avoid or settle such a contest or
solicitation.

	 	(b)	 	Certain Benefits upon a Change in Control. In the event of a
Change in Control, all of the Executive’s outstanding options, restricted share
awards and any other equity rights granted by the Company to the Executive shall
continue to be governed by the applicable grant agreement and related plan.

	 
	 	(c)	 	Termination of Executive. If (i) there is a Change in Control
during the Employment Period, and within 12 months following the Change in Control,
the Company (or its successor) terminates the Executive’s employment without Cause
or the Executive terminates his employment due to Constructive Discharge, (ii) the
Company terminates the Executive’s employment without Cause while the Company is
negotiating a transaction that reasonably could result in a Change in Control, or
(iii) the Company terminates the Executive’s employment without Cause and a Change
in Control occurs within three (3) months following the Date of Termination, the
Executive shall be entitled to receive the compensation referenced in Section 14,
the “Control Change Severance Payment”).

	 
	 	(d)	 	Definitions. For purposes of this Agreement, the following
definitions shall apply:

(i) “Beneficial Ownership,” “Beneficially Owned” and “Beneficially Owns” shall
have the meanings provided in Exchange Act Rule 13d-3;

(ii) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended;

(iii) “Person” shall mean any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Exchange Act), including any natural person,
corporation, trust, association, company, partnership, joint venture, limited
liability company, legal entity of any kind, government, or political subdivision,
agency or instrumentality of a government, as well as two or more Persons acting as
a partnership, limited partnership, syndicate or other group for the purpose of
acquiring, holding or disposing of the Company’s securities; and

(iv) “Qualified Affiliate” shall mean (i) any directly or indirectly wholly
owned subsidiary of the Company, (ii) any employee benefit plan (or related trust)
sponsored or maintained by the Company or by any entity controlled by the Company,
or (iii) any Person controlled by the Executive or one or more individuals who are
then the Company’s Chief Executive Officer or any other named executive officer (as
defined in Item 402 of Regulation S-K under the Securities Act of 1933) of the
Company as indicated in its most recent securities filing made before the date of
the transaction. For purposes of this definition, “controlled by” shall mean having
possession, directly or indirectly, of the power to direct or cause the direction of
the management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.

	 	17.	 	Termination: The Company cannot terminate this Agreement except
for the following reasons (each of which is referred to herein as “Cause”): 1) the
intentional, unapproved material misuse of corporate funds, 2a) professional
incompetence (i.e. the intentional refusal to perform or the inability to perform the
duties associated with Executive’s position with the Company in a competent manner,
which is not cured within 15 days following written notice to Executive) or 2b) willful
neglect of duties or responsibilities in either case not otherwise related to or
triggered by the occurrence of any event or events described in or prescribed by Section 14 hereof.

 

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	 	18.	 	Application of Section 409A of the Code.

(a)  General. To the extent applicable, it is intended that this Agreement
comply with the provisions of Section 409A of the Code, so as to prevent inclusion in
gross income of any amounts payable or benefits provided hereunder in a taxable year
that is prior to the taxable year or years in which such amounts or benefits would
otherwise actually be distributed, provided or otherwise made available to the
Executive. This Agreement shall be construed, administered, and governed in a manner
consistent with this intent and the following provisions of this paragraph shall
control over any contrary provisions of this Agreement.

(b) Restrictions on Specified Executives. If the Company determines that the
Executive is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of
the Code and delayed payment of any amount or commencement of any benefit under this
Agreement is required to avoid a prohibited distribution under Section 409A(a)(2) of
the Code, then, to such extent as required, deferred compensation payable hereunder in
connection with the Executive’s termination of employment will be delayed and paid,
with interest at the short term applicable federal rate as in effect as of the
termination date, in a single lump sum six months and one day thereafter (or if
earlier, the date of the Executive’s death). The Compensation Committee of the Board
shall determine whether the Executive is a “specified employee” based on the
procedures adopted by the Company in writing, which procedures shall comply with the
applicable limitations under Section 409A of the Code, and the rules prescribed in
Treasury Regulation §1.409A-1(i).

(c) Separation from Service. Amounts payable hereunder upon the Executive’s
termination or severance of employment with the Company that constitute deferred
compensation under Section 409A of the Code shall not be paid prior to the Executive’s
“separation from service” within the meaning of Section 409A of the Code.

(d) Installments. For purposes of Section 409A of the Code, any right to a
series of installment payments under this Agreement shall be treated as a right to a
series of separate payments so that each payment is designated as a separate payment
for purposes of Section 409A of the Code.

(e) Reimbursements. All reimbursements and in-kind benefits provided under
this Agreement which constitute a payment of nonqualified deferred compensation under
Section 409A of the Code, shall be made or provided in accordance with the
requirements of Section 409A of the Code, including, where applicable, the
requirements that:

(i) any reimbursement is for expenses incurred during an extended period of
time following termination of employment;

(ii) the amount of expenses eligible for reimbursement, or in-kind benefits
provided, during a calendar year may not affect the expenses eligible for
reimbursement, or in-kind benefits to be provided, in any other calendar year;

(iii) the reimbursement of an eligible expense will be made on or before the
last day of the calendar year following the year in which the expense is incurred;
and

(iv) the right to reimbursement or in kind benefits is not subject to
liquidation or exchange for another benefit.

(f) References to Section 409A. References in this Agreement to Section
409A of the Code include both that section of the Code itself and any guidance
promulgated thereunder.

(g) Application of Section 409A. The Company makes no representation or
warranty and shall have no liability to the Executive or any other person if any
provisions of this Agreement are determined to constitute deferred compensation
subject to Section 409A of the Code but do not satisfy an exemption from, or the
conditions of, such section.

 

[5]

 

	 	19.	 	Indemnification: The Company hereby agrees to indemnify and hold the
Executive harmless from any loss for any Company undertaking, as contemplated in
Section 7 hereof, whereby a claim, allegation or cause of action shall be made against
the Executive in the performance of his contractual duties except for willful illegal
misconduct. Said indemnification shall include but not be limited to reasonable cost
incurred in defending the Executive in his faithful performance of contractual duties.

	 	20.	 	Entire Agreement: This Agreement may only be changed by a written
agreement signed by both parties. This Agreement embodies the whole agreement between
the parties hereto in respect of the subject matter contained herein and there are no
inducements, promises, terms, conditions or obligations made or entered into by the
Company or the Executive other than contained herein. This Agreement supersedes and
replaces that certain Executive Employment Contract dated June 16, 2008 between the
Company and the Executive.

	 	21.	 	Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

	 	22.	 	Binding Effect. This Agreement shall be binding on and inure to the
benefit of the parties hereto and their respective permitted successors and assigns.

IN WITNESS WHEREOF, the parties here hereunto signed and sealed this Agreement the date first above
written.

	 	 	 
	Signed, Sealed and Delivered

	 	“COMPANY”
	In the presence of:

	 	PMC Commercial Trust
	 
	 	 
	 

	 	 
	 

	 	By:
	 
	 	 
	 
	 	 
	 

	 	“EXECUTIVE”
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	By:
	 
	 	 
	 
	 	 
	(CORPORATE SEAL)
	 	 

 

[6]

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