Exhibit 10.2

SYPRIS SOLUTIONS, INC.

INCENTIVE BONUS PLAN

JANUARY 1, 2008 – DECEMBER 31, 2008

 

1. ESTABLISHMENT OF PLAN.

Sypris Solutions, Inc., a Delaware corporation (the “Company”), established this
corporate bonus plan effective as of January 1, 2008 (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.

The Bonus Pool will be funded fifty percent (50%) from performance to annual
operating plan targets for Profit Before Tax (“PBT”) and fifty percent
(50%) from performance to annual operating plan targets for Free Cash Flow
(“FCF”) for the consolidated financial results for the Company.

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.

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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.

 

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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.

 

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

 

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