<PAGE>  8
                                                                EXHIBIT 10.12



                             SYPRIS SOLUTIONS, INC.
                    1994 STOCK OPTION PLAN FOR KEY EMPLOYEES
                           ADOPTED ON OCTOBER 27,1994

               AS AMENDED AND RESTATED EFFECTIVE DECEMBER 18, 2002


                                    PREAMBLE

         The Sypris  Solutions,  Inc.  Stock Option Plan for Key  Employees is a
restatement of the Group Technologies Corporation 1994 Stock Option Plan for Key
Employees adopted by Group Technologies  Corporation effective October 27, 1994.
On March  30,  1998,  Sypris  Solutions,  Inc.  became  the  successor  to Group
Technologies   Corporation  pursuant  to  a  reincorporation   merger  of  Group
Technologies  Corporation with and into Sypris  Solutions,  Inc. (the "merger").
Pursuant  to the  provisions  of the  merger  and the plan,  Group  Technologies
Corporation  stock  subject to the plan and  outstanding  options under the plan
were automatically by virtue of the merger converted into and replaced by Sypris
Solutions,  Inc. common stock. The plan was amended and restated:  (i) effective
March 1, 1998,  to reflect the changes  caused by the merger and to increase the
shares to be issued  under the Plan from  1,250,000 to  2,500,000  shares;  (ii)
effective July 1, 1998, to provide for the granting of performance-based options
under the Plan;  (iii)  effective  February 26, 2002,  as set forth  herein,  to
increase  the  number of  authorized  shares  to be  issued  under the Plan from
2,500,000 to 4,000,000  shares;  and (iv)  effective  December 18, 2002,  as set
forth herein,  to provide for delegation of stock option granting  authority for
administrative granting purposes.


         1.    PURPOSE.  The purpose of the Sypris  Solutions,  Inc.  1994 Stock
Option  Plan for Key  Employees  is to promote the  interests  of the Company by
affording an  incentive to certain key  employees to remain in the employ of the
Company and its  Subsidiaries and to use their best efforts in its behalf and to
aid the Company and its Subsidiaries in attracting,  maintaining, and developing
capable  personnel of a caliber required to ensure the continued  success of the
Company  and its  Subsidiaries  by  means  of an  offer  to such  persons  of an
opportunity  to acquire or increase  their  proprietary  interest in the Company
through the granting of incentive stock options,  nonstatutory  stock options or
performance-based  options to purchase the Company's stock pursuant to the terms
of the Plan.

         2.    DEFINITIONS.

                  A.     "BOARD" means the Company's Board of Directors.

                  B.     "CODE" means the Internal Revenue Code of 1986,
         as amended.

                  C.     "COMMITTEE" means the Compensation Committee of the
         Board that administers the Plan, pursuant to Section 4.

                  D.     "COMMON STOCK" means the Company's  common  stock, $.01
         par value, or the common stock or  securities of a  Successor that have
         been substituted theretofore pursuant to Section 9.

                  E.     "COMPANY" means Sypris Solutions, Inc., a Delaware
         corporation,  with its principal place of business at 101 Bullitt Lane,
         Suite 450, Louisville, Kentucky 40222.

<PAGE>   9


                  F.     "DISABILITY" means, as  defined by and to  be construed
         in accordance with Code Section  22(e)(3),  any medically  determinable
         physical or mental  impairment  that can be expected to result in death
         or that has lasted or can be expected to last for a  continuous  period
         of not less than twelve (12) months,  and that renders  Optionee unable
         to engage in any substantial gainful activity. An Optionee shall not be
         considered to have a Disability unless Optionee  furnishes proof of the
         existence  thereof in such form and  manner,  and at such time,  as the
         Committee may require.

                  G.     "ISO" means an option to purchase Common Stock which at
         the time the option is granted under the Plan qualifies as an incentive
         stock option within the meaning of Code Section 422.

                  H.     "NSO" means a  nonstatutory  stock  option  to purchase
         Common  Stock  which at the time the option is  granted  under the Plan
         does not qualify as an ISO.

                  I.     "OPTION  PRICE" means the price to  be paid  for Common
         Stock  upon  the  exercise  of an  option  granted  under  the  Plan in
         accordance with Section 7.B.

                  J.     "OPTIONEE" means  an employee to whom options have been
         granted under the Plan.

                  K.     "OPTIONEE  REPRESENTATIVE"  means the Optionee's estate
         or the person or persons entitled thereto by will or by applicable laws
         of descent and distribution.

                  L.     "PERFORMANCE-BASED OPTION"  means  an  option   granted
         pursuant to the provisions of Section 7.O.

                  M.     "PLAN" means  the  Sypris Solutions,  Inc.  1994  Stock
         Option Plan for Key Employees, as set forth herein, and as amended from
         time to time.

                  N.     "SUBSIDIARY" shall  mean  any  corporation which at the
         time an option is granted  under the Plan  qualifies as a subsidiary of
         the Company under the definition of "subsidiary  corporation" contained
         in Code Section 424(f), or any similar provision thereafter enacted.

                  O.     "SUCCESSOR" means  the  entity  surviving  a  merger or
         consolidation  with the Company,  or the entity that  acquires all or a
         substantial  portion of the  Company's  assets or  outstanding  capital
         stock (whether by merger, purchase or otherwise).

                  P.     "TARGET SHARE PRICE"  means  the  price  per  share  of
         Common Stock set by the Board in the option  agreement that establishes
         the point at which a Performance-Based  Option vests in accordance with
         Section 7.O.

                  Q.     "TEN PERCENT SHAREHOLDER" means an employee who, at the
         time an option is granted,  owns stock possessing more than ten percent
         (10%) of the total combined voting power of all classes of stock of the
         Company or Subsidiary  employing the Optionee or of its parent  (within
         the meaning of Code Section  424(e)) or subsidiary  (within the meaning
         of Code Section 424(f)) corporation.

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         3.     SHARES SUBJECT TO PLAN.

                A.     AUTHORIZED  UNISSUED OR TREASURY SHARES.  Subject  to the
provisions  of Section 9, the shares to be  delivered  upon  exercise of options
granted under the Plan shall be made available,  at the discretion of the Board,
from the authorized unissued shares or treasury shares of Common Stock.

                B.     AGGREGATE NUMBER OF SHARES.  Subject  to  adjustments and
substitutions made pursuant to the provisions of Section 9, the aggregate number
of shares  that may be issued upon  exercise of all options  that may be granted
under the Plan shall not exceed two million five hundred thousand (2,500,000) of
the Company's  authorized shares of Common Stock.  Effective  February 26, 2002,
but subject to approval by  shareholders  of the Company holding not less than a
majority  of the  votes  represented  and  entitled  to be voted at a duly  held
meeting of the Company's  shareholders,  the aggregate number of shares shall be
increased to four million  (4,000,000)  of the  Company's  authorized  shares of
Common Stock.

                C.     SHARES SUBJECT TO EXPIRED OPTIONS.  If any option granted
under  the Plan  expires  or  terminates  for any  reason  without  having  been
exercised in full in accordance with the terms of the Plan, the shares of Common
Stock subject to, but not delivered under, the option shall become available for
any lawful corporate  purpose,  including for transfer pursuant to other options
granted to the same employee or other employees without decreasing the aggregate
number of shares of Common Stock that may be granted under the Plan.

         4.     ADMINISTRATION.   The Plan  shall  be  administered  by  the
Compensation  Committee of the Board. The Compensation Committee shall have full
power and authority to construe, interpret, and administer the Plan and to adopt
such rules and  regulations  for carrying out the Plan as it may deem proper and
in the best interests of the Company.

         5.     GRANT OF OPTIONS.

                A. BOARD AUTHORITY.   Subject  to   the  terms,  provisions  and
conditions  of the Plan,  the Board shall have full and final  authority  in its
discretion:  (i) to select the employees to whom options shall be granted;  (ii)
to  authorize  the  granting  of ISOs,  NSOs,  Performance-Based  Options,  or a
combination of ISOs, NSOs and Performance-Based  Options; (iii) to determine the
number of shares of Common Stock  subject to each option;  (iv) to determine the
time or times when  options  shall be  granted,  the manner in which each option
shall be exercisable,  and the duration of the exercise period;  (v) to fix such
other  provisions of the option  agreement as it may deem necessary or desirable
consistent with the terms of the Plan; and (vi) to determine all other questions
relating to the  administration  of the Plan. Except to the extent prohibited by
applicable law or the applicable  rules of a stock  regulatory body or exchange,
the Board and the  Compensation  Committee  may  allocate  any  portion of their
responsibilities  and  powers  to one or more  persons  selected  by them.  Such
allocation  or  delegation  may be  revoked  by the Board  and the  Compensation
Committee  at any time.  The  interpretation  of any  provisions  of the Plan by
either the Board or the Compensation Committee shall be final,  conclusive,  and
binding upon all persons and the officers of the Company shall place into effect
and  shall  cause the  Company  to  perform  its  obligations  under the Plan in
accordance with the determinations of the Board or the Compensation Committee in
administering the Plan.

                B. $100,000 ISO LIMITATION.  Notwithstanding  the foregoing, the
aggregate fair market value (determined as of the date the option is granted) of
the Common Stock for which ISOs shall first become exercisable by an Optionee in
any calendar year under all ISO plans of the Company and its Subsidiaries  shall
not exceed $100,000. Options in excess of this limitation shall constitute NSOs.

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         6.     ELIGIBILITY.  Key employees  of the Company and its subsidiaries
including officers and directors, shall be eligible to receive options under the
Plan. No director of the Company who is not also an employee of the Company or a
Subsidiary  shall be entitled to receive an option under the Plan. Key employees
to whom  options  may be granted  under the Plan  shall be those  elected by the
Board  from  time to  time  who,  in the  sole  discretion  of the  Board,  have
contributed  in the past or who may be expected to contribute  materially in the
future to the successful performance of the Company and its Subsidiaries.

         7.     TERMS AND CONDITIONS OF OPTIONS.  Each  option granted under the
Plan shall be evidenced by an option  agreement  signed by the Optionee and by a
member  of the  Board on  behalf  of the  Company.  An  option  agreement  shall
constitute a binding  contract  between the Company and the Optionee,  and every
Optionee, upon acceptance of such option agreement,  shall be bound by the terms
and restrictions of the Plan and of the option  agreement.  Such agreement shall
be subject to the following express terms and conditions and to such other terms
and conditions  that are not  inconsistent  with the Plan and that the Board may
deem appropriate.

                A. OPTION PERIOD.   Each  option  agreement  shall  specify  the
period for which the option  thereunder  is granted and shall  provide  that the
option shall expire at the end of such period.  The Board may extend such period
provided  that,  in the  case of an ISO,  such  extension  shall  not in any way
disqualify  the option as an ISO without the Optionee's  consent.  Except in the
case of a Performance-Based  Option, such period, including any such extensions,
shall not exceed ten (10) years from the date of grant, provided,  however, that
in the  case  of an ISO  granted  to a Ten  Percent  Stockholder,  such  period,
including  extensions,  shall not exceed  five (5) years from the date of grant.
The option period in the case of a Performance-Based Option shall be as provided
in Section 7.O[4] and [5].

                B.     OPTION PRICE.

                       [1] ISOS AND NSOS.  The  Option  Price  for ISOs and NSOs
                shall be: (i) the fair market  value of the Common  Stock on the
                date  the  option  is  granted,  or (ii)  in the  case of an ISO
                granted to a Ten  Percent  Shareholder,  one hundred ten percent
                (110%) of the fair market  value of the Common Stock on the date
                the option is granted  and shall be  subject to  adjustments  in
                accordance with the provisions of Section 9.

                       [2] PERFORMANCE-BASED OPTIONS.  The  Option  Price  for a
                Performance-Based  Option  shall be the greater of: (i) the fair
                market  value of the  Common  Stock on the  date the  option  is
                granted as provided in Section 7.B[1];  or (ii) the Target Share
                Price; or (iii) the fair market value of the Common Stock on the
                date the Target Share Price is deemed to have been achieved,  as
                determined in accordance with Section 7.C and 7.O[3].

                  C. FAIR MARKET VALUE. The fair market value of Common Stock on
any given measurement date shall be determined as follows:

                       [1] if the Common Stock is traded on the over-the-counter
                market,  the  closing  sale  price for the  Common  Stock in the
                over-the-counter market on the measurement date (or if there was
                no sale of the  Common  Stock on such date,  on the  immediately
                preceding  date on which there was a sale of the Common  Stock),
                as reported by the National  Association  of Securities  Dealers
                Automated Quotation System; or

                       [2] if  the  Common  Stock  is   listed   on  a  national
                securities exchange, the closing sale price for the Common Stock
                on the Composite Tape on the measurement date; or


                                        4

<PAGE>  12

                       [3] if  the  Common  Stock  is  neither   traded  on  the
                over-the-counter  market  nor  listed on a  national  securities
                exchange,  such  value  as  the  Board,  in  good  faith,  shall
                determine.

                  D.   PAYMENT OF OPTION PRICE.  Each  option shall provide that
the purchase price of the shares as to which an option shall be exercised  shall
be paid to the Company at the time of  exercise  either in cash or in such other
consideration as the Board deems  acceptable,  and which other  consideration in
the Board's sole discretion may include: (i) Common Stock of the Company already
owned by the Optionee  having a total fair market value on the date of exercise,
determined in accordance with Section 7.C.,  equal to the purchase  price,  (ii)
Common  Stock of the  Company  issuable  upon the  exercise of a Plan option and
withheld  by the  Company  having  a total  fair  market  value  on the  date of
exercise,  determined  in accordance  with Section  7.C.,  equal to the purchase
price,  as long as the Optionee can produce  evidence of ownership  for at least
six  months of a  sufficient  number of  shares of Common  Stock of the  Company
("Mature  Shares")  which  would  cover the option  exercise  price,  or (iii) a
combination of cash and Common Stock of the Company (either shares already owned
by the  Optionee or shares  being  withheld  upon the exercise of a Plan option,
with evidence of Mature  Shares) having a total fair market value on the date of
exercise,  determined in accordance with Section 7.C, equal to the amount of the
purchase price not paid in cash.

                  E.     MANNER OF EXERCISE. Subject to the terms and conditions
of any  applicable  option  agreement,  any option granted under the Plan may be
exercised  in whole or in part.  To initiate  the process for the exercise of an
option: (i) the Optionee shall deliver to the Company,  or to a broker-dealer in
the  Common  Stock  with the  original  copy to the  Company  a  written  notice
specifying  the number of shares as to which the option is being  exercised and,
if determined by counsel for the Company to be necessary, representing that such
shares are being acquired for  investment  purposes only and not for the purpose
of resale or distribution;  and (ii) the Optionee,  or the broker-dealer,  shall
pay for the  exercise  price of such  shares  with cash,  or if the Board in its
discretion  agrees to so accept,  by delivery to the Company of Common  Stock of
the  Company  (either  shares  already  owned by the  Optionee  or shares  being
withheld upon the exercise of a Plan option, with evidence of Mature Shares), or
in some  combination of cash and such Common Stock  acceptable to the Board.  If
payment of the Option Price is made with Common  Stock,  the value of the Common
Stock used for such  payment  shall be the fair market value of the Common Stock
on the date of exercise,  determined in accordance with Section 7.C. The date of
exercise of a stock option shall be determined under  procedures  established by
the Board,  but in no event shall the date of exercise precede the date on which
both the written  notice of intent to exercise an option and full payment of the
exercise  price for the  shares as to which the option is being  exercised  have
been  received by the Company.  Promptly  after  receiving  full payment for the
shares  as to  which  the  option  is being  exercised  and,  provided  that all
conditions  precedent  contained in the Plan are  satisfied,  the Company shall,
without  transfer  or issuance  tax or other  incidental  expenses to  Optionee,
deliver to Optionee a  certificate  for such shares of the Common  Stock.  If an
Optionee fails to accept delivery of the Common Stock, the Optionee's  rights to
exercise the applicable portion of the option shall terminate.

                  F.     EXERCISES  CAUSING  LOSS OF COMPENSATION DEDUCTION.  No
part of an option may be exercised  to the extent the  exercise  would cause the
Optionee to have compensation from the Company and its affiliated  companies for
any year in excess of $1 million and which is  nondeductible  by the Company and
its  affiliated  companies  pursuant  to Code  Section  162(m).  Any  option not
exercisable  because of this limitation  shall continue to be exercisable in any
subsequent  year in which the exercise would not cause the loss of the Company's
or its affiliated companies  compensation tax deduction,  provided such exercise
occurs  before lapse of the option,  and  otherwise  complies with the terms and
conditions of the Plan and option agreement.

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<PAGE>  13


                  G.     INVESTMENT  REPRESENTATION.   Each   option   agreement
may  provide  that,  upon  demand by the Board  for such a  representation,  the
Optionee or Optionee  Representative  shall  deliver to the Board at the time of
any exercise of an option or portion thereof a written  representation  that the
shares to be acquired upon such exercise are to be acquired for  investment  and
not for resale or with a view to the  distribution  thereof.  Upon such  demand,
delivery of such  representation  before  delivery of Common  Stock  issued upon
exercise  of an option and before  expiration  of the option  period  shall be a
condition  precedent to the right of the Optionee or Optionee  Representative to
purchase Common Stock.

                  H.     ISOS.  Each  option  agreement  which  provides for the
grant of an ISO to an  employee,  including a  Performance-Based  Option that is
intended to be an ISO,  shall  contain  such terms and  provisions  as the Board
deems necessary or desirable to qualify such option as an ISO within the meaning
of Code Section 422.

                  I.     EXERCISE IN THE  EVENT  OF  DEATH  OR  TERMINATION   OF
EMPLOYMENT. Unless the Board, in its sole discretion,  provides otherwise in the
option agreement,  these conditions shall apply to the ability of an Optionee to
exercise his or her options:

                         [1] If an Optionee  dies;  (i) while an employee of the
                  Company or a Subsidiary, or (ii) within three (3) months after
                  termination  of  employment  with the Company or a  Subsidiary
                  because  of  a  Disability,  the  Optionee's  options  may  be
                  exercised by Optionee  Representative,  to the extent that the
                  Optionee  shall  have  been  entitled  to do so on the date of
                  death  or  employment  termination,  but not  later  than  the
                  expiration date specified in Section 7.A or one (1) year after
                  the Optionee's death, whichever date is earlier.

                         [2] If an  Optionee's  employment  by the  Company or a
                  Subsidiary terminates because of the Optionee's Disability and
                  the  Optionee  has not died  within  the  following  three (3)
                  months,  the Optionee may exercise his or her options,  to the
                  extent that he or she shall have been entitled to do so at the
                  date of employment  termination,  at any time, or from time to
                  time,  but not later than the  expiration  date  specified  in
                  Section 7.A or one (1) year after  termination  of employment,
                  whichever date is earlier.

                         [3] If  an  Optionee's  employment terminates by reason
                  of retirement  in  accordance  with the terms of the Company's
                  tax-qualified  retirement  plans  or with the  consent  of the
                  Board,  all  right  to  exercise  his  or  her  options  shall
                  terminate at the  expiration  date specified in Section 7.A or
                  three (3) months after employment termination,  whichever date
                  is earlier.

                         [4] If  an  Optionee's  employment  terminates  for any
                  reason other than death, Disability, or retirement, all rights
                  to exercise his or her options shall  terminate on the date of
                  employment termination.

                  J.     LEAVES OF ABSENCE.  The  Board  may, in its discretion,
treat all or any portion of any period  during  which an Optionee is on military
or on an approved  leave of absence from the Company or a Subsidiary as a period
of  employment  of such  Optionee by the Company or  Subsidiary  for purposes of
accrual of the Optionee's rights under the Plan.  Notwithstanding the foregoing,
if a  leave  of  absence  exceeds  ninety  (90)  days  and  reemployment  is not
guaranteed by contract or statute, the Optionee's employment by the Company or a
Subsidiary  for the purposes of the Plan shall be deemed to have  terminated  on
the 91st day of the leave.


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<PAGE>  14



                  K.     TRANSFERABILITY  OF  OPTIONS.  An option granted  under
the Plan may not be  transferred  by the Optionee  otherwise than by will or the
laws of descent and  distribution,  and during the  lifetime of the  Optionee to
whom granted, may be exercised only by the Optionee.

                  L.     NO RIGHTS AS  SHAREHOLDER.   No   Optionee  or Optionee
Representative  shall have any rights as a  shareholder  with  respect to Common
Stock  subject  to option  before  the date of  transfer  to the  Optionee  of a
certificate or certificates for the shares.

                  M.     NO RIGHTS TO CONTINUED EMPLOYMENT.   The  Plan  and any
option  granted under the Plan shall not confer upon any Optionee any right with
respect to continuance of employment by the Company or any Subsidiary, nor shall
it interfere in any way with the right of the Company or any Subsidiary by which
an Optionee is employed to terminate employment at any time.

                  N.     TAX WITHHOLDING.  To  the extent required by applicable
law, the Optionee shall, on the date of exercise, make arrangements satisfactory
to the Company for the  satisfaction of any  withholding  tax  obligations  that
arise by reason of an option  exercise or any sale of shares.  The Board, in its
sole  discretion,  may permit these  obligations  to be satisfied in whole or in
part with: (i) cash paid by the Optionee or by a broker-dealer  on behalf of the
Optionee,  (ii)  shares of Common  Stock that  otherwise  would be issued to the
Optionee  upon  exercise  of the  option,  as long as the  Optionee  can produce
evidence of  ownership  of Mature  Shares,  and/or  (iii) shares of Common Stock
already owned by the Optionee. The Company shall not be required to issue shares
for the exercise of an option until such tax  obligations  are satisfied and the
Company  may, to the extent  permitted by law,  deduct any such tax  obligations
from any payment of any kind otherwise due to the Optionee.

                  O.     PERFORMANCE-BASED OPTIONS.    The   Board   may   grant
Performance-Based  Options  under the Plan  subject to the  following  terms and
conditions  and such other  terms and  conditions  provided  by the Board in the
option agreement that are not inconsistent with the Plan:

                         [1]  ISOS AND NSOS. The  option  agreement  shall state
                  whether the Performance-Based  Options are intended to be NSOs
                  or ISOs.

                         [2]  VESTING.  Performance-Based Options  shall vest in
                  equal twenty percent (20%) annual installments over a five (5)
                  year  period,   beginning   with  vesting  of  the  first  20%
                  installment  on the second  anniversary of the date the Target
                  Share Price has been achieved, with full vesting of the option
                  occuring on the sixth anniversary of the date the Target Share
                  Price has been achieved.

                         [3] ACHIEVEMENT OF TARGET SHARE PRICE. The Target Share
                  Price  shall be  deemed  to have  been  achieved  on the first
                  business  day  following  the  calendar  quarter  in which the
                  average   daily  fair  market  value  of  the  Common   Stock,
                  determined in accordance with Section 7.C.,  equals or exceeds
                  the Target Share Price for the preceding calendar quarter. The
                  Board will confirm the  achievement  of the Target Share Price
                  and the Option Price as soon as  administratively  practicable
                  after the Target Share Price has been achieved.

                         [4] NSO OPTION PERIOD. Performance-Based Options issued
                  as NSOs  shall  expire  and  cease  to be  exercisable  at the
                  earliest of the  following  times:  (i) failure to achieve the
                  Target  Share Price within such time period as  designated  by
                  the  Board  in the  option  agreement;  or (ii) on the  eighth
                  anniversary of the date the Target Share Price is achieved; or
                  (iii) the date  provided  in Section  7.I; or (iv) thirty (30)
                  days after the Board makes a  determination  that the optionee
                  is  no  longer  a "key  employee";  or (v)  any  earlier  time
                  provided by the Board in the option agreement.




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<PAGE>  15


                         [5] ISO OPTION PERIOD. Performance-Based Options issued
                  as ISOs  shall  expire  and  cease  to be  exercisable  at the
                  earliest of the  following  times:  (i) failure to achieve the
                  Target  Share Price within such time period as  designated  by
                  the Board in the option agreement;  or (ii) the earlier of ten
                  (10)  years from the date of grant of the option or the eighth
                  anniversary of the date the Target Share Price is achieved; or
                  (iii) the date  provided  in Section  7.I; or (iv) thirty (30)
                  days after the Board makes a  determination  that the optionee
                  is no  longer  a "key  employee";  or  (v)  any  earlier  time
                  provided by the Board in the option agreement.

         8.     COMPLIANCE WITH OTHER LAWS AND REGULATIONS.  The Plan, the grant
and exercise of options  thereunder,  and the  obligation of the Company to sell
and deliver Common Stock under such options,  shall be subject to all applicable
federal and state  laws,  rules and  regulations  and to such  approvals  by any
government  or  regulatory  agency as may be required.  The Company shall not be
required to issue or deliver any certificates  for Common Stock before:  (i) the
listing of the Common Stock on any stock exchange or over-the-counter  market on
which  the  Common  Stock  may then be  listed  and (ii) the  completion  of any
registration or qualification of any governmental  body which the Company shall,
in its sole  discretion,  determine to be necessary or advisable.  To the extent
the Company meets the then  applicable  requirements  for the use thereof and to
the extent the Company may do so without  undue cost or expense,  and subject to
the  determination  by the Board of Directors of the Company that such action is
in the best  interest  of the  Company,  the  Company  intends to  register  the
issuance  and  sale of such  Common  Stock  by the  Company  under  federal  and
applicable state  securities laws using a Form S-8 registration  statement under
the Securities Act of 1933, as amended,  or such successor Form as shall then be
available.

         9.     CAPITAL ADJUSTMENTS AFFECTING STOCK, MERGERS AND CONSOLIDATIONS.

                A.     CAPITAL ADJUSTMENTS. In the event of a capital adjustment
in  the  Common   Stock   resulting   from  a  stock   dividend,   stock  split,
reorganization,  merger, consolidation,  or a combination or exchange of shares,
the  number  of shares of Common  Stock  subject  to the Plan and the  number of
shares under option  shall be  automatically  adjusted to take into account such
capital  adjustment.  By virtue of such a capital  adjustment,  the price of any
share  under  option  shall be  adjusted so that there shall be no change in the
aggregate purchase price payable upon exercise of any such option.

                B.     MERGERS AND CONSOLIDATIONS.   In  the  event  the Company
merges or consolidates with another entity,  or all or a substantial  portion of
the  Company's  assets or  outstanding  capital  stock are acquired  (whether by
merger,  purchase or  otherwise)  by a  Successor,  the kind of shares of Common
Stock that shall be subject to the Plan and to each  outstanding  option  shall,
automatically  by  virtue  of such  merger,  consolidation  or  acquisition,  be
converted  into and replaced by shares of common  stock,  or such other class of
securities  having  rights and  preferences  no less  favorable  than the Common
Stock, of the Successor,  and the number of shares subject to the option and the
purchase  price per share upon  exercise of the option shall be  correspondingly
adjusted, so that, by virtue of such merger, consolidation or acquisition,  each
Optionee  shall have the right to  purchase  (a) that number of shares of common
stock of the  Successor  that have a book  value  equal,  as of the date of such
merger,  conversion or  acquisition,  to the book value,  as of the date of such
merger, conversion or acquisition,  of the shares of Common Stock of the Company
theretofore subject to the Optionee's option, (b) for a purchase price per share
that,  when  multiplied by the number of shares of common stock of the Successor
subject to the  option,  shall  equal the  aggregate  Option  Price at which the
Optionee  could have  acquired  all of the shares of Common Stock of the Company
theretofore optioned to the Optionee.


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<PAGE>  16


                C.     NO EFFECT ON THE COMPANY'S RIGHTS.   The  granting  of an
option  pursuant  to the Plan shall not effect in any way the right and power of
the Company to make adjustments, reorganizations,  reclassifications, or changes
of its  capital  or  business  structure  or to  merge,  consolidate,  dissolve,
liquidate, sell or transfer all or any part of its business or assets.

         10.     AMENDMENT, SUSPENSION, OR TERMINATION. The Board shall have the
right, at any time, to amend,  suspend or terminate the Plan in any respect that
it may deem to be in the best  interests  of the Company,  except that,  without
approval by  shareholders of the Company holding not less than a majority of the
votes  represented  and  entitled  to be voted  at a duly  held  meeting  of the
Company's shareholders, no amendment shall be made that would:

                 A.     increase  the maximum  number of shares of Common  Stock
         which may be delivered under the Plan, except as provided in Section 9;

                 B.     change  the  Option Price for an ISO, except as provided
         in Section 9;

                 C.     extend  the  period during which an ISO may be exercised
         beyond the period provided in Section 7.A;

                 D.     make any changes in any  outstanding option, without the
         consent of the Optionee, which would adversely affect the rights of the
         Optionee; or

                E.      extend the termination date of the Plan.

         11.    EFFECTIVE DATE, TERM AND APPROVAL.  The  effective  date  of the
Plan is October 27, 1994 (the date of Board adoption of the Plan).  The Plan was
approved by  stockholders of the Company holding not less than a majority of the
shares present and voting at its 1995 annual meeting on April 21, 1995. The Plan
shall  terminate  ten (10)  years  after the  effective  date of the Plan and no
options may be granted  under the Plan after such time,  but any option  granted
prior thereto may be exercised in accordance with its terms.

         12.     GOVERNING LAW; SEVERABILITY.  The Plan shall be governed by the
laws of the  State  of  Delaware.  The  invalidity  or  unenforceability  of any
provision  of the Plan or any  option  granted  pursuant  to the Plan  shall not
affect the validity and  enforceability of the remaining  provisions of the Plan
and the options granted hereunder,  and such invalid or unenforceable  provision
shall  be  stricken  to the  extent  necessary  to  preserve  the  validity  and
enforceability of the Plan and the options granted hereunder.

         Dated this 18th day of December, 2002.



                                       SYPRIS SOLUTIONS, INC.




                                       By:/S/ JEFFREY T. GILL
                                          Jeffrey T. Gill
                                          President and Chief Executive Officer


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