SYPRIS SOLUTIONS, INC.
INCENTIVE BONUS PLAN
JULY 1, 2005 – DECEMBER 31, 2005

1.     ESTABLISHMENT OF PLAN.

        Sypris Solutions, Inc., a Delaware corporation, on behalf of itself and
its key subsidiaries (the “Company”), established this corporate bonus plan
effective as of July 1, 2005 (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 target for each participant will be established and approved
by the Compensation Committee. Each participant will be provided with a copy of
this Plan, and with the participant’s salary, bonus potential based upon the
current operating budget, and his or her objectives for the current year. In
general, unless modified by the Committee in order to comply with any applicable
Rules or as otherwise determined to be in the Company’s best interests, Bonus
Awards shall be allocated as follows among (a) cash awards and (b) restricted
shares of the Company’s common stock, valued as of the date of grant, vesting on
the second anniversary of such grant date and issued under the 2004 Sypris
Equity Plan on Terms established by the Committee, subject to any such Rules
(“Restricted Shares”):

  Executive Officers Other Participants               Restricted Shares: 70% 30%
        Cash Awards: 30% 70%

4.     Financial Performance Goals.

        No Bonus Awards shall be payable for any subsidiary employee or any
corporate employee, unless such subsidiary or the Company on a consolidated
basis, has achieved 100% of its, respective, 2005 target for profit before tax
(before bonus accrual) (“PBT”).

5.     Bonus Award.

        Each qualified participant will be eligible for a Bonus Award that is
equal to his or her 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 at least three
Management Objectives for 2005, 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 any Bonus Award to be
distributed by up to 20% of the participant’s bonus target, based upon the
participant’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 and Discretion of the Compensation Committee. The Bonus
Award for each participant will be subject to the review of and final approval
by the Compensation Committee. Any Pool or Award may be reduced in the sole
discretion of the Committee, in light of the Company’s other compensation
programs or other relevant factors.

        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 for 2005 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.

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 in accordance with applicable Rules. All Awards of
Restricted Shares shall be made solely under the 2004 Sypris Equity Plan, in
accordance with Terms established by the Committee, subject to any applicable
Rules.

7.      ADMINISTRATION.

        The Compensation Committee shall administer this Plan. The Compensation
Committee shall have complete authority to interpret the Plan or any Award, to
prescribe, amend and rescind rules and regulations relating thereto, and to make
all other determinations necessary or advisable for the administration of the
Plan or any Award Agreements (including to establish or amend any rules
regarding the Plan that are necessary or advisable to comply with, or qualify
under, any applicable law, listing requirement, regulation or policy of any
entity, agency, organization, governmental entity, or the Company, in the
Compensation Committee’s sole discretion (“Rule”)). The decisions of the
Compensation Committee in interpreting and applying the Plan shall be final.

8.     MISCELLANEOUS.

        8.1 Employment Rights.  Participation in the Plan shall not be construed
as giving an employee any future right of employment with the Company or any
irrevocable right to receive any Bonus Award or other benefit from the Company.
Subject to applicable Rules, acceptance of any Award shall constitute acceptance
of the Company’s right to terminate employment at will, and acceptance of all
provisions of the Plan.

  2 06/27/05

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

        8.2 Acquisitions and Divestitures.  The variables to be used in the
calculation of PBT 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      

  3 06/27/05