Edgar Filing: SPARTON CORP

SCHEDULE 14A
(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
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[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11c or Section 240.14a-12

SPARTON CORPORATION
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(Name of Registrant as Specified In Its Charter)

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(Name of Person(s) Filing Proxy Statement)

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[SPARTON CORPORATION LOGO]

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

To Our Shareholders:

Notice is hereby given that a Special Meeting of Shareholders of Sparton
Corporation will be held at the offices of the Company, 2400 East Ganson Street,
Jackson, Michigan 49202, on Friday, September 24, 2004, at 2:00 p.m., Eastern
Daylight Savings Time, for the following purposes:

(1) To consider and vote upon a proposal to eliminate cumulative voting
in the election of directors.

(2) To consider and vote upon a proposal to require timely written
notice of shareholder nominations for the election of directors.

(3) To transact such other business as may properly come before the
meeting or at any adjournments thereof.

Only holders of Common Stock of record at the close of business on August
9, 2004, are entitled to notice of and to vote at the meeting.

By Order of the Board of Directors

JOSEPH S. LERCZAK,
Secretary

Jackson, Michigan
August 16, 2004

IMPORTANT

ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. WHETHER OR NOT YOU
PLAN TO ATTEND IN PERSON, YOU ARE URGED TO SIGN AND DATE THE PROXY ENCLOSED AND
RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED, OR USE OUR TELEPHONE OR INTERNET
VOTING SYSTEM AS PROMPTLY AS POSSIBLE. This will assure your representation and
a quorum for the transaction of business at the meeting. If you do attend the
meeting in person, the Proxy will not be used if you so request by revoking it
as described in the Proxy Statement.

SPARTON CORPORATION
2400 EAST GANSON STREET
JACKSON, MICHIGAN 49202

PROXY STATEMENT

FOR THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON SEPTEMBER 24, 2004

SOLICITATION

This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of SPARTON CORPORATION, an Ohio corporation (the
"Company"), of proxies for use at the Special Meeting of Shareholders of the
Company (the "Special Meeting") to be held at the offices of the Company, 2400
East Ganson Street, Jackson, Michigan 49202, on September 24, 2004 at 2:00 p.m.,
Eastern Daylight Savings Time, and at any and all adjournments thereof. The cost
of solicitation will be paid by the Company. The Company has retained Morrow &
Company, Inc. to assist in the solicitation of proxies at an estimated cost of
$17,500, plus expenses, which will be paid by the Company. In addition, officers
and employees of the Company and its subsidiaries may solicit proxies
personally, by telephone, facsimile, email or other means, without additional
compensation. This Proxy Statement and the form of Proxy are being mailed to
shareholders on or about August 16, 2004.

At the meeting, the Company's shareholders will be asked to (i) consider a
proposal to amend the Company's Amended Articles of Incorporation to eliminate
cumulative voting in the election of directors, (ii) consider a proposal to
amend the Company's Code of Regulations to require timely written notice of
shareholder nominations for the election of directors, and (iii) transact such
other business as may properly come before the meeting.

OUTSTANDING STOCK AND VOTING RIGHTS

In accordance with the Code of Regulations of the Company, the Board of
Directors has fixed the close of business on August 9, 2004, as the record date
for determination of shareholders entitled to notice of, and to vote at, the
Special Meeting. Only shareholders of record on that date will be entitled to
vote. As of August 9, 2004, the record date for the Special Meeting, the Company
had outstanding 8,351,538 shares of Common Stock, each entitled to one vote at
the Special Meeting. Votes will be counted by Illinois Stock Transfer Company,
the inspectors of election appointed by the Company.

VOTING BY PROXY:

If a stockholder is a corporation or partnership, the accompanying proxy
card should be signed in the full corporate or partnership name by a duly
authorized person. If the proxy card is

signed pursuant to a power of attorney or by an executor, administrator, trustee
or guardian, the signer's full title should be given and a certificate or other
evidence of appointment should be furnished. If shares are owned jointly, each
joint owner should sign the proxy card.

You can vote in one of four ways. You can vote by mail, you can authorize
the voting of your shares over the Internet, you can authorize the voting of
your shares by telephone or you can vote in person at the Special Meeting.

If you choose to vote by mail, you may vote by completing and signing the
proxy card that accompanies this Proxy Statement and promptly mailing it in the
enclosed postage-prepaid envelope. You do not need to put a stamp on the
enclosed envelope if you mail it in the United States. The shares you own will
be voted according to the instructions on the proxy card you mail. If you return
the proxy card, but do not give any instructions on a particular matter
described in this Proxy Statement, the shares you own will be voted in
accordance with the recommendations of the Company's Board of Directors. If you
choose to vote by mail, your duly signed proxy card must be received by 2:00
p.m. Eastern Daylight Savings Time on September 24, 2004.

If you choose to vote by telephone or the Internet, instructions for a
stockholder of record to vote by telephone or the Internet are set forth on the
enclosed proxy card. The telephone and Internet voting procedures are designed
to authenticate votes cast by use of a personal identification number that
appears on the proxy card. These procedures, which comply with Ohio law, allow
stockholders to appoint a proxy to vote their shares and to confirm that their
instructions have been properly recorded. If you vote by telephone or the
Internet, you do not have to mail in your proxy card, but your vote must be
received by 11:59 p.m. Central Daylight Savings Time on September 23, 2004.

If you participate in the Company's 401(k) Plan and hold shares in your
plan account, you may give voting instructions as to the number of shares
credited to your account as of the record date. Only the trustee of the 401(k)
Plan may vote your plan shares. You may provide voting instructions to the plan
trustee through any of the voting methods described above, except that you may
not vote your plan shares in person at the Special Meeting. Your voting
instructions must be received before 11:59 p.m. Central Daylight Savings Time on
September 22, 2004.

If you are not the record holder of the shares you own because they are
held in "street name" by a bank or brokerage firm, your bank or brokerage firm
is required to vote your shares according to your instructions. In order to vote
your shares, you will need to follow the directions your bank or brokerage firm
provides you. Many banks and brokerage firms also offer the option of voting
over the Internet or by telephone, instructions for which would be provided by
your bank or brokerage firm on your vote instruction form. Under the rules of
the New York Stock Exchange, if you do not give instructions to your bank or
brokerage firm, it will still be able to vote your shares with respect to
certain "discretionary" items, but it will not be allowed to vote your shares
with respect to certain "non-discretionary" items. In the case of
non-discretionary items, for which no instructions are received, the shares will
be treated as "broker non-votes" and will have the effect of a vote against the
first two proposals described in this Proxy Statement.

Any proxy duly given pursuant to this solicitation may be revoked by the
stockholder, at any time prior to voting, by written notice to the Secretary of
the Company, by a later-dated proxy either signed and returned by mail or
transmitted using the telephone or Internet voting procedures before the Special
Meeting, or by attending the Special Meeting and voting in person. Attendance at
the Special Meeting will not in and of itself constitute a revocation of a
proxy. Participants in the Company's 401(k) Plan who hold shares in their plan
account and desire to revoke their voting instructions must do so before 11:59
p.m. Central Daylight Savings Time on September 23, 2004.

PRINCIPAL SHAREHOLDERS:

As of June 30, 2004, the persons named in the following table were known
by management to be the beneficial owners of more than 5% of the Company's
outstanding Common Stock:

NAME AND ADDRESS AMOUNT AND NATURE
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP PERCENT OF CLASS
--------------------- ----------------------- ----------------

John J. Smith Trust 1,019,921 (1) 12.2% (1)

Bradley O. Smith
6043 N. Gatehouse, SE
Grand Rapids, MI 49546 1,184,812 (2) 14.2% (2)

Dimensional Fund Advisors, Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401 485,063 (3) 5.8% (3)

Lawndale Capital Management, LLC
591 Redwood Highway
Suite 2345
Mill Valley, CA 94941 633,477 (4) 7.6% (4)

Judith A. Sare
4302 Channel Drive
Akron, OH 44319 490,416 (5) 5.9% (5)

(1) Bradley O. Smith is a co-trustee and a beneficiary of the John J. Smith
Trust and shares voting and investment power over the shares held by the
trust.

(2) Includes 575,278 shares owned individually by Mr. Bradley O. Smith,
197,549 shares owned by Mr. Smith jointly with his wife, Sharon A. Smith,
and 112,324 shares owned by the Lawson K. Smith Trust of which Mr. Smith
is the beneficiary of 56,162 shares and for which he serves as the trustee
with sole voting and investment power over such shares. Also includes
286,790 shares held by the Lawson and Margaret Smith Irrevocable Trust, of
which Mr. Smith is a beneficiary, and has sole voting and investment power
and 12,225 shares owned by Mr. Smith's wife, Sharon A. Smith. Also
includes 646 shares which are held in his account in the Company's 401(k)
plan. Does

not include 18,441 shares which Mr. Smith has the right to acquire
pursuant to options exercisable within 60 days, or the 1,019,921 shares
owned by the John J. Smith Trust, discussed above, the voting and
investment powers for which are shared by Mr. Smith as a co-trustee.

(3) Shares presented are according to information included in the Form 13G
Report filed on February 6, 2004, by Dimensional Fund Advisors Inc.
("Dimensional"), a registered investment advisor. Dimensional is deemed to
have beneficial ownership of 485,063 shares of Common Stock, all of which
shares are held in portfolios of investment companies, commingled group
trusts or separate accounts for which Dimensional Fund Advisors Inc.
serves as investment advisor or manager. Dimensional possesses sole voting
and investment power over all such shares. Dimensional disclaims
beneficial ownership of all such shares. The 5.8% of class is based on
Dimensional's reporting of shares held at December 31, 2003, and shares
outstanding as of June 30, 2004.

(4) According to information in the Form 13D Report filed on August 10, 2004
by Lawndale Capital Management, LLC ("Lawndale"), a registered investment
advisor, Andrew E. Shapiro, the sole manager of Lawndale, and Diamond A.
Partners, L.P., a fund managed by Lawndale, Lawndale is deemed to have
beneficial ownership of 633,477 shares of common stock. Does not include
1,102 shares owned by Mr. Shapiro. The 7.6% of class is based on
Lawndale's reporting of shares held at August 10, 2004, and shares
outstanding as of June 30, 2004.

(5) According to the information in the Form 13G Report dated as of August 3,
2004, by Judith A. Sare, Mrs. Sare is deemed to have beneficial ownership
of 490,416 shares of common stock. This includes 318,030 shares owned
individually by Mrs. Sare and 172,386 shares owned by Mrs. Sare and/or her
husband Paul W. Sare. Does not include 56,162 shares owned by the Lawson
K. Smith Trust of which Mrs. Sare is the beneficiary but for which Bradley
O. Smith serves as the trustee with sole voting and investment power over
such shares. Judith A. Sare is the sister of Bradley O. Smith. The 5.9% of
class is based on Mrs. Sare's reporting of shares and shares outstanding
as of June 30, 2004.

SECURITY OWNERSHIP OF MANAGEMENT:

As of June 30, 2004, the following table shows the shares of the Company's
Common Stock beneficially owned (except as noted) by the Company's Chief
Executive Officer and its four next most highly compensated executive officers,
by each of the directors of the Company and by all officers and directors of the
Company as a group. Unless otherwise indicated by footnote, each individual has
sole voting power and owns the shares directly, or shares voting and investment
power with his spouse or other family members under joint ownership.

NAME OF AMOUNT AND NATURE
BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP PERCENT OF CLASS (1)
---------------- ----------------------- --------------------

James N. DeBoer 6,182 (2) *
James D. Fast 2,687 (2) *
David W. Hockenbrocht 489,984 (3) 5.7%
Richard J. Johns, M.D. 814 (4) *
Douglas E. Johnson 33,017 (5) *

Richard L. Langley 61,690 (6) *
David P. Molfenter 2,467 (2) *
William I. Noecker 1,365 (2) *
W. Peter Slusser 2,467 (2) *
Bradley O. Smith 1,203,253 (7) 14.0%
Michael D. Sobolewski 6,513 (8) *
Charles A. Stranko 7,741 (9) *
All Officers and Directors 2,899,212 (10) 33.8%

* Denotes a percentage of less than 1%.

(1) Calculation is based on total shares outstanding plus an assumption that
the shares subject to options exercisable within 60 days have been
acquired and are outstanding.

(2) Includes 1,365 shares, which Messrs. DeBoer, Fast, Molfenter, Noecker and
Slusser each have the right to acquire pursuant to options exercisable
within 60 days.

(3) Includes 74,288 shares, which Mr. Hockenbrocht has the right to acquire
pursuant to options exercisable within 60 days. The amount also includes
351,807 shares held by one of the Company's retirement plans, as to which
Mr. Hockenbrocht holds voting and investment power in his capacity as
Chief Executive Officer of the Company. Although Mr. Hockenbrocht is a
participant in the plan, he disclaims beneficial ownership of the shares
held by the plan. Finally, 1,928 shares are included which are held in his
account in the Company's 401(k) plan.

(4) Includes 814 shares, which Mr. Johns has the right to acquire pursuant to
options exercisable within 60 days.

(5) Includes 26,184 shares, which Mr. Johnson has the right to acquire
pursuant to options exercisable within 60 days. Also includes 1,321
shares, which are held in his account in the Company's 401(k) plan.

(6) Includes 44,363 shares, which Mr. Langley has the right to acquire
pursuant to options exercisable within 60 days. Also includes 1,121
shares, which are held in his account in the Company's 401(k) plan.

(7) Includes 18,441 shares, which Mr. Smith has the right to acquire pursuant
to options exercisable within 60 days. Reference should also be made to
note (2) under the heading "Principal Shareholders."

(8) Includes 5,644 shares, which Mr. Sobolewski has the right to acquire
pursuant to options exercisable within 60 days. Also includes 869 shares,
which are held in his account in the Company's 401(k) plan.

(9) Includes 6,810 shares, which Mr. Stranko has the right to acquire pursuant
to options exercisable within 60 days. Also includes 931 shares, which are
held in his account in the Company's 401(k) plan.

(10) Includes 231,013 shares under options held by all officers and directors
exercisable within 60 days, 10,227 shares which are held in the Company's
401(k) Plan, and 1,019,921 shares held by the John J. Smith Trust of which
Bradley O. Smith is co-trustee. Mr. Smith shares voting and investment
power over the shares held by the trust.

I. APPROVAL OF THE PROPOSAL TO ELIMINATE CUMULATIVE VOTING

A. GENERAL

The Board of Directors has been engaged in a comprehensive review of the
Company's governance structure, pursuant to which it has updated and
strengthened its Corporate Governance Guidelines, applicable primarily to the
Board, and its Code of Business Conduct and Ethics, applicable primarily to and
communicated to all employees. In addition, the Company has adopted formal
charters for its Board committees, and provided that all of the members of the
Audit, Compensation and Nominating/Corporate Governance Committees will be
independent directors. The Company has also separated the positions of Chairman
of the Board and Chief Executive Officer and established a formal communications
process for shareholders to use in communicating with the Board or management.
The proposal to eliminate cumulative voting in the election of directors is
believed to be another step that will improve the Company's corporate governance
structure.

Section 1701.55 of the Ohio General Corporation Law provides that, unless
otherwise eliminated in a corporation's articles of incorporation, shareholders
have the right to cumulate their votes in the election of directors. The current
Amended Articles of Incorporation of the Company do not eliminate the right of
shareholders to cumulate their votes in this manner. The Board of Directors,
believes, however, that cumulative voting is not a desired method of electing
directors. See "Reasons for the Elimination of Cumulative Voting." Accordingly,
the Board is submitting for shareholder approval, and is also recommending, an
amendment to the Company's Amended Articles of Incorporation to eliminate
cumulative voting.

B. EXPLANATION OF CUMULATIVE VOTING

Cumulative voting in the election of directors may currently be invoked by
any shareholder of the Company by complying with certain statutory requirements
in the Ohio General Corporation Law. Under cumulative voting in an election of
directors, holders of the Company's Common Stock are entitled to a number of
votes per share equal to the number of directors to be elected. Holders of
shares may cast all of their votes for a single director candidate or distribute
them among two or more director candidates. All directors are voted upon
simultaneously.

As a consequence of cumulative voting, shareholders representing a
relatively small number of the voting shares have the power to nominate and
elect one or more directors. For example, if three directors were to be elected
at an annual meeting, shareholders holding slightly more than 25% of the shares
voted could nominate and elect one director by cumulating and casting their
three votes per share for a single candidate. The election of this candidate
would be achieved even if shareholders holding almost 75% of the shares voted
were opposed to the election of that candidate and cast their votes to elect
three other candidates. If only 80% of the shares are voted, shareholders
holding slightly more than 20% of the shares voted could elect their candidate.

Without cumulative voting, directors are elected by a plurality of votes
and shareholders are entitled to only one vote per share in the election of each
director. Consequently, the only director candidates who can be elected are
those who receive support from shareholders holding the greatest number of
voting shares. Accordingly, cumulative voting has no effect unless more
candidates are nominated than the number of directors to be elected.

C. REASONS FOR THE ELIMINATION OF CUMULATIVE VOTING

The Board of Directors believes that approval of the proposal to eliminate
cumulative voting is in the best interests of the Company and its shareholders,
and is more consistent with the principle of "one share-one vote."

The Board believes that every director of a publicly-held corporation
should represent the interests of all of its shareholders. It believes that
directors elected by a minority shareholder or group of shareholders through
cumulative voting are likely to be partisans of the particular interest group
which elected them, rather than representatives of all shareholders. Such
partisanship could disrupt the management of the Company and prevent it from
operating in the most effective manner for the benefit of all shareholders.
Further, the election of directors who view themselves as representing only a
particular minority constituency could introduce an element of discord on the
Board of Directors, thereby impairing the ability of the directors to work
effectively and discouraging qualified independent individuals from serving as
directors.

If adopted the proposed amendment will apply to the 2004 Annual Meeting of
Shareholders.

D. FUTURE PROXIES IF CUMULATIVE VOTING IS NOT ELIMINATED

The section of the Ohio General Corporation Law referred to in A. above,
provides that each shareholder has the right to vote cumulatively in the
election of directors, if any shareholder gives notice in compliance with
statutory requirements that he or she desires that voting be cumulative.
Cumulative voting has not been used in any recent election of directors of the
Company. In the past, no provision has been included in the Board's proxy for
such elections to authorize the named proxy voters to vote the shares of each
shareholder cumulatively.

If the proposed resolution eliminating cumulative voting is not approved,
it is the intention of the Board to submit proxies to be used in future
elections of directors which add discretionary authority to the named proxy
voters to vote the shares of each shareholder cumulatively, if any shareholder
has properly elected cumulative voting.

E. ANTI-TAKEOVER EFFECTS

Approval of the proposal to eliminate cumulative voting may make more
difficult any attempt by a holder or group of holders of a significant minority
of the shares of Common Stock to monitor, change or influence the management or
policies of the Company. In addition, under certain circumstances, the proposal
to eliminate cumulative voting, along with other measures that may be viewed as
having anti-takeover effects, may discourage a takeover or business

combination involving the Company that a shareholder might consider to be in
such shareholder's best interests, including a takeover or business combination
that might result in a premium over the market price of the Common Stock. For
example, the proposal to eliminate cumulative voting may discourage the
accumulation of large minority shareholdings (as a prelude to a takeover or
business combination proposal or otherwise) by persons who would not make that
acquisition without being assured of representation on the Board of Directors.

AN EFFECT OF THE ELIMINATION OF CUMULATIVE VOTING WOULD BE BOTH (A) TO
PERMIT A MAJORITY OF A QUORUM OF THE VOTING POWER IN THE ELECTION OR REMOVAL OF
DIRECTORS TO ELECT OR REMOVE EVERY DIRECTOR AND (B) TO PRECLUDE A MINORITY OF A
QUORUM OF THE VOTING POWER IN THE ELECTION OR REMOVAL OF DIRECTORS FROM ELECTING
OR PREVENTING THE REMOVAL OF ANY DIRECTOR.

F. RECOMMENDATION

After considering the advantages and disadvantages of the proposal to
eliminate cumulative voting described above, the Board of Directors believes
that the proposal to eliminate cumulative voting is in the best interests of the
Company and its shareholders as it preserves the fundamental principle of "one
share-one vote." The Board of Directors of the Company recommends that each of
its shareholders vote to approve the proposal to eliminate cumulative voting.

G. TEXT OF THE PROPOSED AMENDMENT

The proposed amendment will be effected by adoption of a shareholders'
resolution, which, if approved, will add a new second sentence to Article V of
the Company's Amended Articles of Incorporation to read as follows:

No holder of shares of the Corporation of any class may vote
cumulatively in the election of Directors.

H. VOTE REQUIRED FOR APPROVAL OF THE PROPOSED AMENDMENT

The proposal to amend the Company's Amended Articles of Incorporation will
require the affirmative vote of at least two-thirds of the Company's issued and
outstanding shares of Common Stock entitled to vote at the Special Meeting.
Proxies solicited by management for which no specific direction is included will
be voted "FOR" the amendment to eliminate cumulative voting. The inspectors will
treat abstentions and broker non-votes as shares that are present for purposes
of determining the presence of a quorum, but such abstentions and broker
non-votes will have the effect of a vote against the amendment to eliminate
cumulative voting.

THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSAL

II. APPROVAL OF THE PROPOSAL TO REQUIRE TIMELY NOTICE OF DIRECTOR
NOMINATIONS.

A. GENERAL

The Board of Directors has been engaged in a comprehensive review of
the Company's corporate governance structure, and has recently amended the
Charter of its Nominating/Corporate Governance Committee to ensure that the
Committee has adequate time and information to evaluate all candidates for
election as directors of the Company, including those candidates nominated by
shareholders. The Company's Code of Regulations, however, does not have parallel
provisions, so that it would be possible for a shareholder to nominate at a
meeting of shareholders an individual whose qualifications to serve had not been
reviewed and considered by the Committee. Accordingly, the Board is submitting
for shareholder approval an amendment to the Company's Code of Regulations to
conform the notice requirements for the nomination of directors at a meeting of
shareholders to those included in the Charter of the Nominating/Corporate
Governance Committee, and thereby to require timely written notice of director
nominations by shareholders.

B. REASONS FOR THE REQUIREMENT OF TIMELY NOTICE

The Board of Directors believes that approval of the proposal to
require timely written notice for the shareholder nomination of directors is in
the best interests of the Company and its shareholders. The Board believes that
every director of a publicly-held corporation should be considered on the basis
of his or her qualifications, including such information as would be required to
be included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission. The procedures of the Nominating/Corporate
Governance Committee permit an appropriate evaluation of those and other matters
relevant to the qualifications of nominees for directors presented to that
Committee, and the Board believes that the Company's Code of Regulations should
be amended to require the same information to be available with respect to
individuals nominated directly by a shareholder. The purpose of this amendment
is to afford the Board of Directors the time and opportunity necessary to
properly consider and evaluate the qualifications of any proposed nominee and,
to the extent deemed appropriate by the Board, to inform shareholders about
these qualifications and its evaluation. The Board believes that these
provisions will further the Board's objective of identifying candidates for
director who have the character, integrity, training, dedication, experience and
proven accomplishments to offer the promise of significant contribution to the
responsible and profitable conduct of the Company's business.

The amendment has not been proposed as a result of any specific
efforts of which the Company is aware to nominate or elect any director, to
accumulate shares or to obtain control of the Company by means of a merger,
tender offer, solicitation in opposition to management or otherwise. The
amendment is being proposed because the Board considers it advantageous to be
able to consider in advance the qualifications of any proposed nominee, as
opposed to being confronted with a surprise nomination at or shortly prior to a
meeting of shareholders. While the amendment would not give the Board of
Directors any power to approve or disapprove any shareholder nomination, it
would preclude a shareholder nomination from the floor of a meeting of
shareholders if the proper procedures were not followed. Although the Board does
not believe

that the proposed amendment would have a significant impact on any attempt by a
third party to obtain control of the Company, it is possible that the amendment
might deter a third party from conducting a solicitation of proxies to elect its
own slate of directors or otherwise attempting to obtain control of the Company
or effect a change in the Company's Board or management. The law of Ohio, the
jurisdiction in which the Company is incorporated, contains no notice provisions
similar to that set forth in the proposed amendment.

If adopted, the proposed amendment would not apply to the 2004
Annual Meeting of Shareholders, but would apply to subsequent meetings of
shareholders.

C. RECOMMENDATION

After considering the proposal to require timely notice described
above, the Board of Directors believes that the proposal is in the best
interests of the Company and its shareholders. The Board of Directors of the
Company recommends that each of its shareholders vote to approve the proposal to
require timely written notice for the shareholder nomination of directors.

D. TEXT OF THE PROPOSED AMENDMENT

The proposed amendment will be effected by adoption of a
shareholders' resolution, which, if approved, will add a new second paragraph to
Article VIII of the Company's Code of Regulations to read as follows:

Nominations of persons for election to the Board of Directors of the
Company may be made at a meeting of shareholders by or at the direction of
the Board of Directors or by any shareholder of the Company entitled to
vote for the election of directors at the meeting who complies with the
notice procedures set forth herein. Such nominations, other than those
made by or at the direction of the Board of Directors, shall be made
pursuant to timely notice in writing to the Secretary of the Company. To
be timely, a shareholder shall provide the Company with written notice of
the shareholder's intent to nominate the person (a "Notice of Intent"),
either by personal delivery or by United States mail, postage prepaid, and
received by the Company (i) with respect to an election to be held at an
annual meeting of shareholders, not later than sixty (60) days in advance
of the date of such meeting, and (ii) with respect to an election to be
held at a special meeting of shareholders called for that purpose, not
later than the close of business on the tenth (10th) day following the
date on which notice of the special meeting was first mailed to the
shareholders by the Company. The shareholder's Notice of Intent shall set
forth (i) the name and address of the shareholder and of the person or
persons to be nominated, (ii) a representation that the shareholder (A) is
a holder of record of stock of the Company entitled to vote at the meeting
at which the nomination will be made, (B) will continue to hold such stock
through the date on which the meeting is held, and (C) intends to appear
in person or by proxy at the meeting to nominate the person or persons
specified in the Notice of Intent, (iii) a description of all arrangements
or understandings between the shareholder and each nominee and any other
person or persons (naming such

person or persons) pursuant to which the nomination is to be made by the
shareholder, (iv) appropriate biographic information and a statement as to
the individual's qualifications, (v) such other information regarding each
nominee proposed by such shareholder as would be required to be in a proxy
statement filed pursuant to the proxy rules of the Securities and Exchange
Commission had the nominee been nominated by the Board of Directors, and
(vi) the consent of each nominee to serve as a director of the Company if
so elected. No person shall be eligible for election as a director of the
Company unless nominated in accordance with the procedures set forth
herein. The Chairman of the meeting shall, if the facts warrant, determine
and declare to the meeting that a nomination was not made in accordance
with the procedures prescribed herein, and if he or she should so
determine, he or she shall so declare to the meeting and the defective
nomination shall be disregarded.

E. VOTE REQUIRED FOR APPROVAL OF THE PROPOSED AMENDMENT

The proposal to amend the Company's Code of Regulations will require
the affirmative vote of at least a majority of the Company's issued and
outstanding shares of Common Stock entitled to vote at the Special
Meeting. Proxies solicited by management for which no specific direction
is included will be voted "FOR" the amendment to require timely written
notice of director nominations by shareholders. The inspectors will treat
abstentions and broker non-votes as shares that are present for purposes
of determining the presence of a quorum, but such abstentions and broker
non-votes will have the effect of a vote against the amendment to require
timely written notice of director nominations by shareholders.

THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSAL

III. OTHER MATTERS

The Board of Directors knows of no other matters which may be
presented for consideration at the Special Meeting. However, if any other
matters properly come before the Special Meeting, the persons named in the
enclosed proxy will vote in their discretion on such matters.

IV. SHAREHOLDER PROPOSALS -- 2004 ANNUAL MEETING

Shareholder proposals intended to be included in the Proxy Statement
and the Proxy for the 2004 Annual Meeting of Shareholders of the Company
must have been received by the Company not later than May 30, 2004, at its
principal executive offices, 2400 East Ganson Street, Jackson, Michigan
49202, Attention: Secretary. Shareholder proposals to be presented at the
2004 Annual Meeting which are not to be included in the Company's Proxy
Statement must have been received by the Company at this address no later
than August 12, 2004. No proposals were received by either of those dates
from shareholders for presentation at the 2004 Annual Meeting.

By Order of the Board of Directors

JOSEPH S. LERCZAK,
Secretary

Sparton Corporation
2400 East Ganson Street
Jackson, Michigan 49202
517.787.8600
FAX: 517.787.1822
http://www.sparton.com

August 16, 2004

[SPARTON CORPORATION LOGO]

Dear Shareholder:

A Special Meeting of your Company will be held at 2:00 p.m., Eastern
Daylight Savings Time, on September 24, 2004 at the offices of the Company, 2400
East Ganson Street, Jackson, Michigan 49202. At this meeting, we will be
considering proposals to eliminate cumulative voting in the election of
directors, and to require timely notice of director nominations, all as more
fully described in the Proxy Statement.

These proposals arise out of the Company's continuing review of its
corporate governance structure in response to the Sarbanes-Oxley Act of 2002 and
new rules adopted by the Securities and Exchange Commission and the New York
Stock Exchange. We have previously adopted formal charters for our various Board
committees, and provided that the Audit, Compensation and Nominating/Corporate
Governance Committees will be comprised solely of Independent Directors. We have
updated and strengthened our Corporate Governance Guidelines and our Code of
Business Conduct and Ethics. We have also separated the positions of Chairman of
the Board and Chief Executive Officer, and established a formal communications
process for all shareholders to use in communicating with the Board or
management of the Company. The proposals described in the Proxy Statement are
designed to further improve our corporate governance structure, and we hope that
you will take the time to consider them.

Both of us would ask for your support by a "Yes" vote. Please sign, date
and return the attached proxy card in the postage paid envelope, or take
advantage of our telephone or Internet voting system, as soon as possible. Your
vote is important, regardless of the number of shares that you own.

If your shares are held in the name of a bank or brokerage firm, only that
firm can execute a proxy on your behalf. Please contact the person responsible
for your account with your voting instructions.

Very truly yours,

/s/ Bradley O. Smith /s/ David W. Hockenbrocht
--------------------------- -------------------------------------
Bradley O. Smith David W. Hockenbrocht
Chairman Chief Executive Officer and President

[SPARTON CORPORATION LOGO]

Special Meeting of Shareholders
September 24, 2004, 2:00 p.m. Eastern Daylight Savings Time
Sparton Corporation
2400 East Ganson Street
Jackson, Michigan 49202

YOU CAN VOTE IN ONE OF THREE WAYS: 1) BY MAIL, 2) BY PHONE, 3) BY INTERNET.
See the reverse side of this sheet for instructions.

IF YOU ARE NOT VOTING BY TELEPHONE OR BY INTERNET, COMPLETE BOTH SIDES OF
PROXY CARD, DETACH AND RETURN IN THE ENCLOSED ENVELOPE TO:

Illinois Stock Transfer Co.
209 West Jackson Boulevard, Suite 903
Chicago, Illinois 60606

IMPORTANT

Please complete both sides of the PROXY CARD, sign, date, DETACH ATTENDANCE CARD HERE
DETACH PROXY CARD HERE detach and return in the enclosed envelope. AND MAIL WITH PROXY CARD

This proxy, when properly executed, will be voted in the manner directed
hereinby the undersigned shareholder and as described in the Proxy Statement. IF
NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE AMENDMENT TO ELIMINATE
CUMULATIVE VOTING AS DESCRIBED IN ITEM 1, AND "FOR" THE AMENDMENT TO REQUIRE
TIMELY NOTICE AS DESCRIBED IN ITEM 2.

VOTER CONTROL NUMBER
ABOVE NAME HERE

COMMON
Dated ____________________________
__________________________________
__________________________________
(Please sign here)

Please sign your name as it appears above. If executed by a corporation, a duly
authorized officer should sign. Executors, administrators, attorneys, guardians
and trustees should so indicate when signing.

TO VOTE BY MAIL

To vote by mail, complete both sides, sign and date the proxy card below. Detach
the card below and return it in the envelope provided.

TO VOTE BY TELEPHONE

Your telephone vote is quick, confidential and immediate. Just follow these easy
steps:

1. Read the accompanying Proxy Statement.

2. Using a Touch-Tone telephone, call Toll Free 1-800-555-8140 and follow the
instructions.

3. When asked for your Voter Control Number, enter the number printed just
above your name on the front of the proxy card below.

Please note that all votes cast by telephone must be COMPLETED and SUBMITTED
prior to Thursday, September 23, 2004 at 11:59 p.m. Central Time. Your telephone
vote authorizes the named proxies to vote your shares to the same extent as if
you marked, signed, dated and returned the proxy card.

If You Vote By TELEPHONE Please Do Not Return Your Proxy Card By Mail

TO VOTE BY INTERNET

Your Internet vote is quick, confidential and your vote is immediately
submitted. Just follow these easy steps:

1. Read the accompanying Proxy Statement.

2. Visit our Internet voting Site at HTTP://WWW.EPROXYVOTE.COM/IST-SSTCM/ and
follow the instructions on the screen.

3. When prompted for your Voter Control Number, enter the number printed just
above your name on the front of the proxy card.

Please note that all votes cast by Internet must be COMPLETED AND SUBMITTED
prior to Thursday, September 23, 2004 at 11:59 p.m. Central Time. Your Internet
vote authorizes the named proxies to vote your shares to the same extent as if
you marked, signed, dated and returned the proxy card.

THIS IS A "SECURED" WEB PAGE SITE. YOUR SOFTWARE AND/OR INTERNET PROVIDER MUST
BE "ENABLED" TO ACCESS THIS SITE. PLEASE CALL YOUR SOFTWARE OR INTERNET PROVIDER
FOR FURTHER INFORMATION IF NEEDED.

If You Vote By INTERNET, Please Do Not Return Your Proxy Card By Mail

REVOCABLE PROXY
SPARTON CORPORATION COMMON

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF SPARTON
CORPORATION

Bradley O. Smith, David W. Hockenbrocht and Joseph S. Lerczak, and each of them,
are hereby appointed proxies of the undersigned with full power of substitution,
to represent the undersigned at the Special Meeting of the Shareholders of
SPARTON CORPORATION on September 24, 2004, at 2:00 p.m. Eastern Daylight Savings
Time, and any and all adjournments thereof, and to vote thereas as designated on
this Proxy, all the shares of said Corporation which the undersigned would be
entitled to vote if personally present.

The Board of Directors recommends a vote "FOR" the amendment to eliminate
cumulative voting and recommends a vote "FOR" the amendment to require timely
notice of the nomination of directors.

1. Amendment to Eliminate Cumulative Voting [ ] FOR [ ] AGAINST [ ] ABSTAIN

2. Amendment to Require Timely Notice for the Nomination of Directors
[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. To transact such other business as may properly come before the meeting or at
any adjournments thereof.

IMPORTANT
THE PROMPT RETURN OF PROXIES WILL SAVE THE CORPORATION THE
EXPENSE OF FURTHER REQUESTS FOR PROXIES.

(to be signed on the other side)

[SPARTON CORPORATION LOGO]

Special Meeting of Shareholders
September 24, 2004, 2:00 p.m. Eastern Daylight Savings Time
Sparton Corporation
2400 East Ganson Street
Jackson, Michigan 49202

YOU CAN VOTE IN ONE OF THREE WAYS: 1) BY MAIL, 2) BY PHONE, 3) BY INTERNET.
See the reverse side of this sheet for instructions.

IF YOU ARE NOT VOTING BY TELEPHONE OR BY INTERNET, COMPLETE BOTH SIDES OF
PROXY CARD, DETACH AND RETURN IN THE ENCLOSED ENVELOPE TO:

Illinois Stock Transfer Co.
209 West Jackson Boulevard, Suite 903
Chicago, Illinois 60606

IMPORTANT

Please complete both sides of the PROXY CARD, sign, date, DETACH ATTENDANCE CARD HERE
DETACH PROXY CARD HERE detach and return in the enclosed envelope. AND MAIL WITH PROXY CARD

VOTER CONTROL NUMBER
ABOVE NAME HERE

401K
Dated ____________________________
__________________________________
__________________________________
(Please sign here)

TO VOTE BY MAIL

To vote by mail, complete both sides, sign and date the proxy card below. Detach
the card below and return it in the envelope provided.

TO VOTE BY TELEPHONE

Your telephone vote is quick, confidential and immediate. Just follow these easy
steps:

1. Read the accompanying Proxy Statement.

2. Using a Touch-Tone telephone, call Toll Free 1-800-555-8140 and follow the
instructions.

3. When asked for your Voter Control Number, enter the number printed just
above your name on the front of the proxy card below.

Please note that all votes cast by telephone must be COMPLETED and SUBMITTED
prior to Wednesday, September 22, 2004 at 11:59 p.m. Central Time. Your
telephone vote authorizes the named proxies to vote your shares to the same
extent as if you marked, signed, dated and returned the proxy card.

If You Vote By TELEPHONE Please Do Not Return Your Proxy Card By Mail

TO VOTE BY INTERNET

Your Internet vote is quick, confidential and your vote is immediately
submitted. Just follow these easy steps:

1. Read the accompanying Proxy Statement.

2. Visit our Internet voting Site at HTTP://WWW.EPROXYVOTE.COM/IST-SSTCM/ and
follow the instructions on the screen.

3. When prompted for your Voter Control Number, enter the number printed just
above your name on the front of the proxy card.

Please note that all votes cast by Internet must be COMPLETED AND SUBMITTED
prior to Wednesday, September 22, 2004 at 11:59 p.m. Central Time. Your Internet
vote authorizes the named proxies to vote your shares to the same extent as if
you marked, signed, dated and returned the proxy card.

THIS IS A "SECURED" WEB PAGE SITE. YOUR SOFTWARE AND/OR INTERNET PROVIDER MUST
BE "ENABLED" TO ACCESS THIS SITE. PLEASE CALL YOUR SOFTWARE OR INTERNET PROVIDER
FOR FURTHER INFORMATION IF NEEDED.

If You Vote By INTERNET, Please Do Not Return Your Proxy Card By Mail

REVOCABLE PROXY
SPARTON CORPORATION 401K

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF SPARTON
CORPORATION

The Board of Directors recommends a vote "FOR" the amendment to eliminate
cumulative voting and recommends a vote "FOR" the amendment to require timely
notice of the nomination of directors.

1. Amendment to Eliminate Cumulative Voting [ ] FOR [ ] AGAINST [ ] ABSTAIN

2. Amendment to Require Timely Notice for the Nomination of Directors
[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. To transact such other business as may properly come before the meeting or at
any adjournments thereof.

IMPORTANT
THE PROMPT RETURN OF PROXIES WILL SAVE THE CORPORATION THE
EXPENSE OF FURTHER REQUESTS FOR PROXIES.

(to be signed on the other side)