Exhibit 10.1

SYPRIS SOLUTIONS, INC.
INCENTIVE BONUS PLAN
JANURY 1, 2007 – DECEMBER 31, 2007

1.
Establishment of Plan.

 
Sypris Solutions, Inc., a Delaware corporation (the “Company”), established this
corporate bonus plan effective as of January 1, 2007 (the “Plan”), to provide a
financial incentive for employees of the Company and its subsidiaries to advance
the growth and prosperity of the Company.
 
2.           Eligibility.
 
Employees of the Company and its subsidiaries 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 Bonus Target.
 
The bonus target for each participant will be established and approved by the
Compensation Committee.  Each participant will be provided with a copy of this
Plan, which will include an exhibit that lists the participant’s full name,
salary, bonus potential based upon the current operating budget, and his or her
objectives for the current year.
 
4.           Bonus Pool.
 
4.1           PBT Contribution.  Bonus dollars will begin to accumulate once the
consolidated financial result of the company achieves eighty percent (80%) of
the PBT target in its annual operating plan.  For each percentage point of
achievement greater than eighty percent (80%) of the PBT target in its annual
operating plan, the bonus pool will be increased in accordance with the attached
schedule.
 
4.2           FCF Contribution.  Additional bonus dollars will begin to
accumulate once the consolidated financial result of the company achieves eighty
percent (80%) of the FCF target in its annual operating plan.  For each
percentage point of achievement greater than eighty (80%) of the FCF target in
its annual operating plan, the bonus pool will be increased in accordance with
the attached schedule.
 
5.           Bonus Award.
 
Each qualified participant will be eligible for a Bonus Award that is equal to
the bonus target, subject to the provisions of Sections 8.1, 8.2, 8.3 and the
following:
 
5.1           Management Objectives.  Each participant will have Management
Objectives for the Plan year, each of which will be specific with regard to (i)
the expected outcome, (ii) the date or dates by which the objective must be
achieved and a weighting, the total of which for all objectives will be equal to
one hundred percent (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 or decrease the actual amount of the awards
to be 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.
 
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           Caps and Limitations.  There will be a cap that limits the earning
of additional bonus budget dollars at the time that the PBT or FCF targets reach
150% of the original target.
 
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 neither 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 PBT and FCF 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
 

 
03/12/07
  2
 

--------------------------------------------------------------------------------

 

approved by the Compensation Committee and signed by a duly authorized
representative of the Company.
 

 

SYPRIS SOLUTIONS, INC.     PARTICIPANT  
 
 
   
 
 
Jeffrey T. Gill
   
 
 
President and CEO
   
 
 

 

 
                                                                                                
 
 

 

 
03/12/07
3 
 

--------------------------------------------------------------------------------