EX-10.2



 




Exhibit 10.2




PARK-OHIO HOLDINGS CORP.









ANNUAL CASH BONUS PLAN



     
1. Purpose. The purpose of the Annual Cash Bonus
Plan (the “Plan”) is to attract and retain key
executives for Park-Ohio Holdings Corp., an Ohio corporation
(the “Corporation”), and its Subsidiaries and to
provide such persons with incentives for superior performance.
Incentive Bonus payments made under the Plan are intended to
constitute qualified “performance-based compensation”
for purposes of Section 162(m) of the Internal Revenue Code
of 1986, as amended, and Section 1.162-27 of the Treasury
Regulations promulgated thereunder, and the Plan shall be
construed consistently with such intention.



     
2. Definitions. As used in this Plan;



     
“Board” means the Board of Directors of the
Corporation.



     
“Code” means the Internal Revenue Code of 1986, as
amended from time to time.



     
“Committee” means the Compensation Committee of the
Board or any other committee appointed by the Board to
administer the Plan; provided, however, that in any event the
Committee shall be comprised of not less than two directors of
the Corporation, each of whom shall qualify as an “outside
director” for purposes of Section 162(m) of the Code
and Section 1.162-27(e)(3) of the Regulations.



     
“Eligible Executive” means the Corporation’s
Chief Executive Officer and any other executive officer of the
Corporation designated by the Committee.



     
“Incentive Bonus” shall mean, for each Eligible
Executive, a bonus opportunity amount determined by the
Committee pursuant to Section 5 below.



     
“Management Objectives” means the achievement of a
performance objective or objectives established pursuant to this
Plan for Eligible Executives. Management Objectives may be
described in terms of Corporation-wide objectives or objectives
that are related to the performance of the individual Eligible
Executive or of the Subsidiary, division, department or function
within the Corporation or Subsidiary in which the Eligible
Executive is employed. The Management Objectives shall specify
certain levels of, growth in or relative peer company
performance in:




	 	 	 	 	 
	 	 	
    (i)	 	
    earnings per share;
	 	 	
    (ii)	 	
    return on invested capital;
	 	 	
    (iii)	 	
    return on total capital;
	 	 	
    (iv)	 	
    return on assets;
	 	 	
    (v)	 	
    return on equity;
	 	 	
    (vi)	 	
    total shareholder return;
	 	 	
    (vii)	 	
    revenue;
	 	 	
    (viii)	 	
    cash flow;
	 	 	
    (ix)	 	
    net income or operating profit; and/or
	 	 	
    (x)	 	
    productivity improvement.




     
“Regulations” mean the Treasury Regulations
promulgated under the Code, as amended from time to time.










 



     
“Subsidiary” means a corporation, partnership, joint
venture, unincorporated association or other entity in which the
Corporation has a direct or indirect ownership or other equity
interest.



     
3. Administration of the Plan. The Plan shall be
administered by the Committee, which shall have full power and
authority to construe, interpret and administer the Plan and
shall have the exclusive right to establish Management
Objectives and the amount of Incentive Bonus payable to each
Eligible Executive upon the achievement of the specified
Management Objectives.



     
4. Eligibility. Eligibility under this Plan is
limited to Eligible Executives designated by the Committee in
its sole and absolute discretion.



     
5. Awards.



     
(i) Not later than the 90th day of each fiscal year of
the Corporation, the Committee shall establish the Management
Objectives for each Eligible Executive and the amount of
Incentive Bonus payable (or formula for determining such amount)
upon full achievement of the specified Management Objectives.
The Committee may further specify in respect of the specified
Management Objectives a minimum acceptable level of achievement
below which no Incentive Bonus payment will be made and shall
set forth a formula for determining the amount of any payment to
be made if performance is at or above the minimum acceptable
level but falls short of full achievement of the specified
Management Objectives. The Committee may not modify any terms of
awards established pursuant to this section, except to the
extent that after such modification the Incentive Bonus would
continue to constitute qualified “performance-based
compensation” for purposes of Section 162(m) of the
Code.



     
(ii) The Committee retains the discretion to reduce the
amount of any Incentive Bonus that would be otherwise payable to
an Eligible Executive (including a reduction in such amount to
zero).



     
(iii) Notwithstanding any other provision of the Plan to
the contrary, in no event shall the Incentive Bonus paid to an
Eligible Executive under the Plan for a year exceed
$3.0 million.



     
6. Committee Certification. As soon as reasonably
practicable after the end of each fiscal year of the
Corporation, the Committee shall determine whether the
Management Objective has been achieved and the amount of the
Incentive Bonus to be paid to each Eligible Executive for such
fiscal year and shall certify such determinations in writing.



     
7. Payment of Incentive Bonuses. Subject to a valid
election made by an Eligible Executive with respect to the
deferral of all or a portion of his or her Incentive Bonus,
Incentive Bonuses shall be paid within 30 days after
written certification pursuant to Section 6, but in no
event later than two and a half months from the end of the
Corporation’s fiscal year.



     
8. No Right to Bonus or Continued Employment.
Neither the establishment of the Plan, the provision for or
payment of any amounts hereunder nor any action of the
Corporation, the Board or the Committee with respect to the Plan
shall be held or construed to confer upon any person
(a) any legal right to receive, or any interest in, an
Incentive Bonus or any other benefit under the Plan or
(b) any legal right to continue to serve as an officer or
employee of the Corporation or any Subsidiary of the Corporation.



     
9. Withholding. The Corporation shall have the right
to withhold, or require an Eligible Executive to remit to the
Corporation, an amount sufficient to satisfy any applicable
federal, state, local or foreign withholding tax requirements
imposed with respect to the payment of any Incentive Bonus.



     
10. Nontransferability. Except as expressly provided
by the Committee, the rights and benefits under the Plan shall
not be transferable or assignable other than by will or the laws
of descent and distribution.



 







 



     
11. Effective Date. Subject to its approval by the
shareholders, this Plan shall become effective March 31,
2006, and shall remain effective until the first
shareholders’ meeting in 2011, subject to any further
shareholder approvals (or reapprovals) mandated for
performance-based compensation under Section 162(m) of the
Code, and subject to the right of the Board to terminate the
Plan, on a prospective basis only, at any time.