Exhibit 10.17

 

SYPRIS SOLUTIONS, INC.

INCENTIVE BONUS PLAN

2004 FISCAL YEAR

 

1. ESTABLISHMENT OF PLAN.

 

Sypris Solutions, Inc., a Delaware corporation (the “Company”), established this
corporate bonus plan effective as of January 1, 2004 (the “Plan”), to provide a
financial incentive for employees of the Company to advance the growth and
prosperity of the Company.

 

2. ELIGIBILITY.

 

Employees of the Company who are specifically designated by the Compensation
Committee of the Board of Directors of the Company (the “Compensation
Committee”) for participation during the current year shall be eligible to
participate in the Plan.

 

3. PARTICIPANT’S PERCENTAGE SHARE.

 

The bonus potential for each participant will be established as a percent of the
bonus pool and approved by the Compensation Committee at the beginning of each
Plan year. Each participant will be provided with a copy of this Plan, which
will include an exhibit that lists the participant’s full name, salary,
percentage share of the bonus pool (“Percentage Share”), bonus potential based
upon the current year’s operating budget, and his or her objectives for the
current year.

 

4. BONUS POOL.

 

The Bonus Pool will be funded by a portion of the increase in the economic value
added (“EVA”) generated by the Company during the current Plan Year from the EVA
generated by the Company during its Base Year.

 

4.1 EVA Defined. The EVA for the Company during any Plan Year will be defined as
its net operating profit after taxes, less a charge for the Company’s cost of
capital.

 

4.2 Base Year EVA. The Base Year EVA for 2004 will be equal to the EVA generated
by the Company during 2003. In future years, the Base Year EVA will be
determined as follows:

 

(a) In the event EVA increased during the year prior to the Plan Year, the EVA
for that year will serve as the new Base Year EVA.

 

(b) In the event EVA decreased during the year prior to the Plan Year, the EVA
for the preceding Plan Year will serve as the new Base Year EVA.

 

4.3 Bonus Pool Funding. The Bonus Pool will be funded with (i) 15% of each
dollar of improvement in EVA from the Base Year when the Base Year EVA is a
negative number and (ii) 30% of each dollar of improvement in EVA when the Base
Year EVA is a positive number. For instances in which the Base Year EVA is a
negative number and the final EVA for the Plan Year is a positive number, the
Bonus Pool will be funded with 15% of each dollar of improvement in EVA from the
Base Year up to a value of zero and 30% of each dollar of improvement in EVA
thereafter.

 

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5. BONUS AWARD.

 

Each qualified participant will be eligible for a Bonus Award that is equal to
the product of his or her Percentage Share times the actual dollar value of the
Bonus Pool, subject to the provisions of Sections 8.1, 8.2 and the following:

 

5.1 Management Objectives. Each participant will have from three to five
Management Objectives for the Plan year, each of which will be specific with
regard to (i) the expected outcome, (ii) the expected financial impact on the
Company and (iii) the date or dates by which the objective must be achieved.
Each objective will receive a weighting, the total of which for all objectives
will be equal to 100%. The chief executive officer of the Company will have the
responsibility to review and determine each participant’s performance to
objectives and to assign each individual a percentage that will be used as a
factor to determine the actual amount of the awards to be distributed.

 

5.2 Discretionary Review. The chief executive officer of the Company will have
the discretion to increase the actual amount of the awards to be distributed by
up to 20% of the participant’s bonus potential, based upon the individual’s
specific performance and contribution to the Company. Such discretion will be
used sparingly and will generally be limited to the recognition of extenuating
circumstances and/or exceptional accomplishments that may or may not have been
captured by the Management Objectives.

 

5.3 Approval of the Compensation Committee. The Bonus Award for each participant
will be subject to the review of and approval by the Compensation Committee. As
a matter of policy, the Compensation Committee will not approve the award of any
bonus that would otherwise lead or contribute to an operating loss as reported
on the consolidated financial statements of Sypris Solutions, Inc.

 

5.4 Qualification. Awards will be payable to each eligible participant as soon
as administratively practicable after release of the audited annual financial
statements of the Company and the approval of the Compensation Committee;
provided, however, that the Plan shall be in effect as of the date of payment
and such employee shall be employed by the Company as of the date of payment. NO
EMPLOYEE SHALL HAVE ANY RIGHT TO PAYMENT OF AN AWARD UNLESS THE PLAN IS IN
EFFECT AND THE EMPLOYEE IS EMPLOYED BY THE COMPANY AS OF THE DATE OF PAYMENT.

 

5.5 Payment and Holdback. Subject to the conditions listed above, each
participant will receive an amount that is equal to Eighty percent (80%) of his
or her approved Bonus Award for the current Plan Year. The balance of the Bonus
Award will be retained by the Company and paid to the participant upon the
completion of the next annual audit, subject to (a) the absence of a decline in
EVA from the previous year and (b) the provisions of Sections 5 and 8. In the
event the EVA declines during the following year, the twenty percent (20%)
holdback will be forfeited. No employee shall have any right to payment of the
retained balance of his or her Bonus Award unless the plan is in effect and the
employee is employed by the Company as of the date of payment.

 

5.6 Caps and Limitations. There will be no caps or other such limitations
established with regard to the amount of individual potential Bonus Awards,
other than the provisions of Sections 4 and 5, which could result in Bonus
Awards that are less in value than those listed on the attached Exhibit A.

 

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6. METHOD OF DISTRIBUTION.

 

Cash awards shall be payable by check in lump sum. All such payments will be
subject to withholding for income, social security or other such payroll taxes
as may be appropriate.

 

7. ADMINISTRATION.

 

The Compensation Committee shall administer this Plan. The decisions of the
Compensation Committee in interpreting and applying the Plan shall be final.

 

8. MISCELLANEOUS.

 

8.1 Employment Rights. The adoption and maintenance of this Plan is not an
employment agreement between the Company and any employee. Nothing herein
contained shall be deemed to give any employee the right to be retained in the
employ of the Company nor to interfere with the right of the Company to
discharge any employee at any time.

 

8.2 Acquisitions and Divestitures. The variables to be used in the calculation
of EVA will be prorated for any acquisition and/or divestiture to reflect the
timing of such event or events during the current Plan year at the time of such
acquisition or divestiture.

 

8.3 Amendment and Termination. The Company may, without the consent of any
employee or beneficiary, amend or terminate the Plan at any time and from
time-to-time.

 

8.4 Governing Law. This Plan shall be governed by and construed in accordance
with the laws of the State of Delaware.

 

8.5 Construction. The headings and subheadings of this Plan have been inserted
for convenience for reference only and are to be ignored in any construction of
the provisions hereof. The masculine shall be deemed to include the feminine,
the singular shall include the plural, and the plural shall include the singular
unless the context otherwise requires. The invalidity or unenforceability of any
provision hereunder shall not affect the validity or enforceability of the
balance hereof. This Plan represents the entire undertaking by the Company
concerning its subject matter and supersedes all prior undertakings with respect
thereto. No provision hereof may be waived or discharged except by a written
document approved by the Compensation Committee and signed by a duly authorized
representative of the Company.

 

The parties indicate their acknowledgement of the terms and conditions of this
Plan as of the date first written above.

 

SYPRIS SOLUTIONS, INC.       PARTICIPANT            

Robert E. Gill

Chairman

                   

Jeffrey T. Gill

President and CEO

       

 

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