Exhibit 10.2

 

SYPRIS SOLUTIONS, INC.

DIRECTORS COMPENSATION PROGRAM

ADOPTED ON SEPTEMBER 1, 1995

 

AMENDED AND RESTATED ON FEBRUARY 24, 2004

 

Description of the Program

 

Name. The name of this benefit program shall be the “Directors Compensation
Program.”

 

Purpose. The purpose of the Directors Compensation Program is to enable Sypris
Solutions, Inc. (the “Company”) to attract, retain and motivate experienced
directors by providing compensation that is competitive with compensation
offered to directors of other similarly-situated public corporations in the
United States.

 

Eligibility and Participation. Only “Eligible Directors,” defined as those
members of the Board of Directors of the Company (the “Board”) who are not
otherwise employed by the Company, its subsidiaries or any affiliate of the
Company in any other capacity, are eligible to participate in the Directors
Compensation Program. Any Eligible Director on the Board as of September 1, 1995
(the “Effective Date”) and thereafter shall be eligible for compensation under
the Directors Compensation Program.

 

Compensation. Eligible Directors shall be compensated as set forth below:

 

(a) Initial Election Grants and Annual Grants of Stock Options. The Company
shall grant each Eligible Director a nonqualified stock option for the purchase
of: (i) up to 10,000 shares of the Company’s common stock, $.01 par value (the
“Common Stock”) at the time the Eligible Director is initially elected to serve
on the Board (the “Initial Election Grant”); and (ii) up to 4,500 shares of the
Company’s Common Stock at each annual stockholders’ meeting thereafter (the
“Annual Grant”), so long as a Director is continuing to serve as a Director on
the date of said annual stockholders’ meeting. In the event that an Eligible
Director is initially elected to the Board at a time other than the date of the
Company’s annual stockholders’ meeting, he or she shall receive an Annual Grant
at the subsequent annual stockholders’ meeting for a pro rated number of shares
to be determined by multiplying 4,500 by a fraction, the numerator of which
shall be the number of full months which have elapsed since the date of the
Director’s initial election and the next annual stockholders’ meeting and the
denominator of which shall be 12. All such stock options shall be granted by the
Company to the Eligible Directors pursuant to the Company’s Independent
Directors’ Stock Option Plan (the “Option Plan”). Each of the options shall be:
(i) granted on the dates each of the respective Eligible Directors is initially
elected and on the date of each annual stockholders’ meeting; (ii) priced at the
fair market value of the Company’s common stock, as determined in accordance
with Section 7.C. of the Option Plan, on the respective date of grant; (iii)
immediately exercisable by each of the Eligible Directors on the respective
dates of grant; and (iv) subject to the terms and conditions of the Option Plan
and any other terms and conditions which, in accordance with the Option Plan,
are specified in the applicable Stock Option Agreement entered into by and
between the Company and each of the Eligible Directors.

 

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(b) Annual Retainer.

 

(i) Amount. Each Eligible Director shall receive an annual retainer in the
amount of $19,000 (the “Annual Retainer”). In the event that an Eligible
Director is initially elected to the Board at a time other than the date of the
Company’s annual stockholders’ meeting, he or she shall receive a prorated
Annual Retainer (the “Prorated Annual Retainer”) the amount of which is to be
determined by multiplying $19,000 by a fraction, the numerator of which shall be
the number of full months which have elapsed since the date of the Director’s
initial election to the Board and the next annual stockholders’ meeting and the
denominator of which shall be 12.

 

(ii) Payment. The Annual Retainer or the Prorated Annual Retainer, as
applicable, shall be earned by the Eligible Directors and paid by the Company in
equal quarterly installments for each Eligible Director. The quarterly
installments of the Annual Retainer or Prorated Annual Retainer shall be
payable, together with any attendance fees (defined below), in arrears by checks
issued to each Eligible Director no later than the 15th calendar day following
the end of each of the Company’s fiscal quarters during which the respective
Eligible Director served on the Board. Alternatively, pursuant to Paragraph (d)
below, each Eligible Director may elect to receive his or her Annual Retainer or
Prorated Annual Retainer, together with any attendance fees, in the form of
nonqualified stock options in lieu of cash.

 

(c) Attendance Fees.

 

(i) Board Meetings. Each Eligible Director shall receive the sum of $1,450 for
each meeting of the Board he or she attends in person or, alternatively, the sum
of $300 for each meeting of the Board in which he or she participates by
telephone (collectively, the “Board Meeting Attendance Fees”). For purposes of
the Directors Compensation Program, “attendance” shall not include execution of
an action by written consent of the Board. Board Meeting Attendance Fees earned
by each Eligible Director during a fiscal quarter shall be payable, together
with the quarterly installment of the Annual Retainer or Prorated Annual
Retainer, by a check issued no later than the 15th calendar day following the
end of the fiscal quarter. Alternatively, pursuant to Paragraph (d) below, each
Eligible Director may elect to receive his or her Board Meeting Attendance Fees
in the form of nonqualified stock options in lieu of cash.

 

(ii) Committee Meetings. Eligible Directors are entitled to compensation for
attending or participating in meetings of committees of the Board. Each Eligible
Director who attends a committee meeting in person and serves as the chairperson
of the meeting shall receive the sum of $1,400 per meeting, and each of the
other Eligible Directors who attend such a committee meeting in person shall
receive the sum of $1,000 per meeting. Alternatively, each Eligible Director
who, as the chairperson or as a committee member, participates by telephone in
committee meetings of the Board shall receive the sum of $300 per meeting. (All
of the aforementioned fees in this subparagraph shall hereafter be collectively
referred to as the “Committee Meeting Attendance Fees”). For purposes of the
Directors Compensation Program, “attendance” shall not include execution of an
action by written consent for any committee. Committee Meeting Attendance Fees
earned by each Eligible Director during a fiscal quarter shall be payable,
together with the Annual Retainer or Prorated Annual Retainer and the Board
Meeting Attendance Fees, by a check issued to the Eligible Director no later
than the 15th calendar day following the end of the fiscal quarter.
Alternatively, pursuant to Paragraph (d) below, each Eligible Director may elect
to receive his or her Committee Meeting Attendance Fees in the form of
nonqualified stock options in lieu of cash.

 

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(d) Form of Payment. Each Eligible Director may elect to receive his or her
Annual Retainer or Prorated Annual Retainer, Board Meeting Attendance Fees and
Committee Meeting Attendance Fees in the form of nonqualified stock options in
lieu of cash. The election to receive stock options in lieu of cash must be made
by the Eligible Director before each January 1 and shall apply to the sum of the
Annual Retainer, Prorated Annual Retainer, Board Meeting Attendance Fees and
Committee Meeting Attendance Fees (collectively, the “Fees”) earned during the
following calendar year. Eligible Directors initially elected to the Board other
than at an annual stockholders’ meeting shall make the election no later than 10
calendar days after being elected to the Board and such election shall apply to
Fees earned during the remainder of such calendar year. An Eligible Director who
fails to make a timely election for the first calendar year such director is
eligible to make an election shall be deemed to have elected to receive Fees in
cash. An Eligible Director who fails to make an election for any subsequent
calendar year shall be deemed to have made the same election such director made
for the immediately preceding calendar year. Such elections, including deemed
elections, shall be irrevocable for the calendar year for which made.

 

Any stock options issued to an Eligible Director in lieu of cash compensation
shall be granted to the respective Eligible Director pursuant to the Option Plan
on a quarterly basis, with each grant to be made on the first day following the
end of each of the Company’s fiscal quarters (the “Date of Grant”). The number
of shares to be granted under such options shall be determined by dividing the
total of the quarterly installment of the Annual Retainer or Prorated Annual
Retainer, as applicable, plus any Board Meeting Attendance Fees and any
Committee Meeting Attendance Fees earned by the respective Eligible Director
during the previous fiscal quarter by 33% of the fair market value of the
Company’s Common Stock, as determined in accordance with Section 7.C. of the
Option Plan, on the Date of Grant. The options shall be: (i) priced at the fair
market value of the Company’s Common Stock, as determined in accordance with
Section 7.C. of the Option Plan, on the Date of Grant; (ii) immediately
exercisable by each of the Eligible Directors on the respective date of grant;
and (iii) subject to the terms and conditions of the Option Plan and any other
terms and conditions which, in accordance with the Option Plan, are specified in
the applicable Stock Option Agreement entered into by and between the Company
and each of the Eligible Directors.

 

Expense Reimbursement. Each Eligible Director shall be reimbursed for travel and
other expenses incurred in the performance of his or her duties.

 

Administration. The Directors Compensation Program is administered by the
Compensation Committee of the Board. The Committee members are selected by the
Board and have no specific term of office.

 

Resignation from the Board of Directors. The resignation of any Eligible
Director shall cause such director to be ineligible to receive any amount of the
Annual Retainer or Prorated Annual Retainer installments not yet paid to him or
her as of the date of resignation. Any attendance fees which have been earned by
the Eligible Director in accordance with Paragraph (c) above prior to the date
of resignation shall be paid in the same form and according to the same
timetables described in Paragraph (c) above.

 

Program Termination or Modification. The Compensation Committee shall review the
Directors Compensation Program on at least an annual basis and may make changes,
alterations or modifications to the program which are deemed to be in the
Company’s best interest. Any change, alteration or modification shall be made by
a written instrument consented to by the Board. The Board may similarly

 

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terminate the Directors Compensation Program at any time if, in the judgment of
the Board, such termination is in the Company’s best interest.

 

IN WITNESS WHEREOF, the Company has caused this Directors Compensation Program
to be executed in its name and on its behalf on February 24, 2004.

 

SYPRIS SOLUTIONS, INC.

By:

 

/s/ Jeffrey T. Gill

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Jeffrey T. Gill

President and CEO

 

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