PART A
                     REVISED EMPLOYMENT TERMS FOR KEN OLSEN

     1.   Ken Olsen will reduce his hours of work to 20 hours/week (instead of
          his current 40 hours/week) starting June 1, 2003 until December 31,
          2003 due to work slow down at the present time. During this time, Ken
          Olsen will maintain all the benefits he otherwise participated in with
          the Company as of June 1, 2003. The Company, however, retains the
          rights to recall Ken Olsen for increased or full time work at any time
          in future, if needed. In consideration of this right to recall, the
          Company will guarantee at least 20 hours/week work till December 31,
          2003, resulting in proportional adjustments (actual hours vs. 40
          hours/week) in compensation.

     2.   The Company may, at the end of the guaranteed period, elect to
          continue Ken Olsen's employment under the terms of the employment
          package as provided below in item C. This employment package may also
          be provided within the guarantee period with the mutual consent of Ken
          Olsen and the Company.

     3.   If Ken Olsen, however, does not agree to the recall to full-time
          status within fifteen (15) days from the date of recall, as defined in
          item 1 above, or decides to terminate employment of his own free will
          during the guarantee period, or terminates the employment on his own
          free will while employed full time (during, before or after the
          guarantee period) the employment package (see Item C below) will NOT
          be provided.

     4.   If Ken Olsen is not reinstated for full time work on or before January
          1, 2004, Ken Olsen may terminate any employment with the Company on
          his free will and still receive the benefits under Part C in a lump
          sum as a severance package.

     5.   Ken Olsen will be entitled to the balance of any unpaid compensation
          under Part C as a severance package, if his employment is terminated
          by the Company after January 1, 2004 for any reason other than a just
          cause involving misconduct of Ken Olsen.


                                     PART B
                            CERTAIN PRIOR AGREEMENTS

The Company acknowledges that Ken Olsen entered in to certain Agreements
regarding Repurchase of Stock and Employment/Compensation upon Change in Control
Event on August 20, 1997, as approved by the Board of Directors at the time.
None of the current outside Board Members were on the Board or part of the
Management of the Company at the time of the Agreements.  Therefore, those
agreements will remain as such without any considerations at present.


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                                     PART C
                    POST DECEMBER 31, 2003 EMPLOYMENT PACKAGE

In recognition of the outstanding contributions from Ken Olsen, the following
Employment Package is provided by the Board of Directors as pertaining to the
terms and conditions outlined above in the Section - Future Employment of Ken
Olsen:

     1.   Fifteen (15) months of full time salaried employment (pay rate
          equivalent to pay rate prior to this agreement, which is $96,900 per
          year), starting January 1, 2004. During the term of this agreement Ken
          Olsen will be available to APA Optics, and will not be employed
          elsewhere. Olsen also has the option to voluntarily resign from his
          employment and take any unused portion of the compensation under the
          employment package as a lump sum, if he chooses.

     2.   During the term of this employment package, Ken Olsen will not be
          provided any benefits at the Company's expense. However, Ken Olsen may
          participate in any standard benefit provided by the Company electing
          to so participate and by providing for a deduction from his
          compensation for the cost of the benefit or reimbursing the full
          amount of expenses incurred by the Company in providing the designated
          benefits.


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