EXHIBIT 10.16
SYPRIS SOLUTIONS, INC.
INDEPENDENT DIRECTORS COMPENSATION PROGRAM
ADOPTED ON SEPTEMBER 1, 1995
AMENDED AND RESTATED ON APRIL 28, 1998
DESCRIPTION OF THE PROGRAM
NAME. The name of this benefit program shall be the "Independent Directors
Compensation Program."
PURPOSE. The purpose of the Independent 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 independent directors of other similarly-situated public
corporations in the United States.
ELIGIBILITY AND PARTICIPATION. Only "Independent 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 Independent
Directors Compensation Program. Any Independent Director on the Board as of
September 1, 1995 (the "Effective Date") and thereafter shall be eligible for
compensation under the Independent Directors Compensation Program.
COMPENSATION. Independent Directors shall be compensated as set forth below:
a) Stock Options Upon Election and Reelection to the Board. The
Company shall grant each Independent Director a nonstatutory stock option for
the purchase of up to 10,000 shares of the Company's common stock, $.01 par
value (the "Common Stock") at the time the Independent Director is initially
elected to serve on the Board and at each time he or she is subsequently
reelected by the shareholders to serve on the Board. In the event that an
Independent Director is initially elected to the Board at a time other than the
date of the Company's annual shareholders' meeting, he or she shall receive, at
the time he or she is elected, stock options for a pro rated number of shares to
be determined by multiplying 10,000 by a fraction, the numerator of which shall
be twelve (12) minus the number of full months which have elapsed since the date
of the Company's last annual shareholders' meeting and the denominator of which
shall be twelve (12). All such stock options shall be granted by the Company to
the Independent 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 Independent Directors is elected and reelected
to the Board, (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
Independent 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
Independent Directors.
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b) Annual Retainer.
(i) Amount. Each Independent Director elected to the Board at the
Company's annual shareholders' meeting shall receive an annual retainer in the
amount of $15,000.00 (the "Annual Retainer"). In the event that an Independent
Director is elected to the Board at a time other than the date of the Company's
annual shareholders' meeting, he or she shall receive a pro rated Annual
Retainer (the "Pro Rated Annual Retainer") the amount of which is to be
determined by multiplying $15,000.00 by a fraction, the numerator of which shall
be twelve (12) minus the number of full months which have elapsed since the date
of the Company's last annual shareholders' meeting and the denominator of which
shall be twelve (12).
(ii) Payment. The Annual Retainer or the Pro Rated Annual Retainer,
as applicable, shall be earned by the Independent Directors and paid by the
Company in equal quarterly installments for each Independent 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 Independent Director no later than the fifteenth (15th)
calendar day following the end of each of the Company's fiscal quarters during
which the respective Independent Director served on the Board. Alternatively,
pursuant to Paragraph d) below, each Independent Director may elect to receive
his or her Annual Retainer or Prorated Annual Retainer, together with any
attendance fees, in the form of nonstatutory stock options in lieu of cash.
c) Attendance Fees.
(i) Board Meetings. Each Independent Director shall receive the sum
of $1,000.00 for each meeting of the Board he or she attends in person or,
alternatively, the sum of $300.00 for each meeting of the Board which he or she
participates in by telephone (collectively, the "Board Meeting Attendance
Fees"). For purposes of the Independent Directors Compensation Program,
"attendance" shall not include execution of an action by written consent of the
Board. Board Meeting Attendance Fees earned by each Independent 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 fifteenth (15th) calendar day following the end of the fiscal quarter.
Alternatively, pursuant to Paragraph d) below, each Independent Director may
elect to receive his or her Board Meeting Attendance Fees in the form of
nonstatutory stock options in lieu of cash.
(ii) Committee Meetings. Independent Directors are entitled to
compensation for attending or participating in meetings of committees of the
Board only if such meetings are held on dates other than the dates of meetings
of the full Board. In the event that committee meetings are held on dates other
than the dates of meetings of the full Board, each Independent Director who
attends a committee meeting in person and serves as the chairperson of the
meeting shall receive the sum of $1,250.00 per meeting, and each of the other
Independent Directors who attend such a committee meeting in person shall
receive the sum of $1,000.00 per meeting. Alternatively, each Independent
Director who, as the chairperson or as a committee member, participates by
telephone in committee meetings of the Board which are held on dates other than
the dates of meetings of the full Board, shall receive the sum of $300.00 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 Independent Directors Compensation Program, "attendance" shall
not include execution of an action by written consent for any committee.
Committee Meeting Attendance Fees earned by each Independent 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
Independent Director no later than the fifteenth (15th) calendar day following
the end of the fiscal quarter. Alternatively, pursuant to Paragraph d) below,
each
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Independent Director may elect to receive his or her Committee Meeting
Attendance Fees in the form of nonstatutory stock options in lieu of cash.
d) Form of Payment. Each Independent 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 nonstatutory stock
options in lieu of cash. The election to receive stock options in lieu of cash
must be made by the Independent Director before each January 1 and shall apply
to the Annual Retainer, Prorated Annual Retainer, Board Meeting Attendance Fees
and Committee Meeting Attendance Fees (collectively, the "Fees") earned during
the following calendar year. Independent Directors initially elected to the
Board mid-calendar year shall make the election no later than ten (10) calendar
days after being elected to a term on the Board and such election shall apply to
Fees earned during the remainder of such calendar year. An Independent 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 Independent 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 Independent Director in lieu of cash
compensation shall be granted to the respective Independent Directors 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 Independent 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 Independent 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 Independent Directors.
EXPENSE REIMBURSEMENT. Each Independent Director shall be reimbursed for
travel and other expenses incurred in the performance of his or her duties.
ABILITY TO DEFER CASH COMPENSATION. Each Independent Director may elect to
participate in the Company's Management Deferred Compensation Plan. This plan,
which effectively enables each Independent Director to defer recognition of any
cash compensation earned hereunder, provides for a range of investment
alternatives, including mutual funds. Any election to defer Fees under the
Management Deferred Compensation Plan shall be made according to the election
procedures set forth in Paragraph d) above.
ADMINISTRATION. The Independent 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 Independent
Director shall cause such director to be ineligible to receive any amount of the
Annual Retainer or Prorated Annual Retainer
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installments not yet paid to him or her as of the date of resignation. Any
attendance fees which have been earned by the Independent 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.
To the extent the resigning director has opted to defer any cash compensation
under the Company's Management Deferred Compensation Plan, all such compensation
will be distributed to him or her in accordance with the provisions of the
Company's Management Deferred Compensation Plan as applicable to terminated or
resigning employees.
PROGRAM TERMINATION OR MODIFICATION. The Compensation Committee shall review
the Independent 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, provided, however, that the provisions of
the program shall not be changed, altered or modified more than once every six
months. Any change, alteration or modification shall be made by a written
instrument consented to by the Board. The Board may similarly terminate the
Independent 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 Independent Directors
Compensation Program to be executed in its name and on its behalf on April 28,
1998.
SYPRIS SOLUTIONS, INC.
By: /s/ Jeffrey T. Gill
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Jeffrey T. Gill
President and CEO
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