Document:

<PAGE>

                                                                    EXHIBIT 10.3

                              1995 PECO II, INC.
                        NON-QUALIFIED STOCK OPTION PLAN

     PECO II, Inc. (the "Company") hereby adopts the 1995 PECO II, Inc. Non-
Qualified Stock Option Plan (the "Plan") for the benefit of certain key
employees of the Company. All options granted pursuant to the Plan shall be non-
qualified stock options and shall not be treated as incentive stock option as
defined in Section 422A of the Internal Revenue Code. The Plan shall be
established and administered in accordance with the terms and provisions set
forth below.

     1)   Definitions. The following terms shall have the meanings indicated
          -----------
below wherever such terms appear herein:

          a)   "Board of Directors" shall mean the Board of Directors of the
               Company.

          b)   "Option" shall mean the right to purchase Common Shares of the
               Company at a price and on the terms determined by the Option
               Committee.

          c)   "Option Committee" shall mean the committee responsible for
               administering the Plan pursuant to the authority set forth in
               Section 3 hereof. The Compensation Committee of the Board of
               Directors shall serve as the Option Committee.

          d)   "Optionee" shall mean an employee of the Company (or a business
               owned or controlled by the Company) to whom an option has been
               granted under the Plan.

          e)   "Option Price" shall be the purchase price for each Common Share.

     2)   Purpose of Plan. The purpose of the Plan is to provide key employees
          ---------------
of the Company with greater incentive to serve and promote the interests of the
Company and its shareholders. The premise of the Plan is that, if such key
employees acquire a proprietary interest in the Company, or increase the
proprietary interest they already hold, then the incentive to work toward the
Company's continued success will be commensurately increased.

                                       1
<PAGE>

Accordingly, the Company will, from time to time during the effective period of
the Plan, grant to certain key employees as may be selected to participate in
the Plan by the Option Committee, Options to purchase common shares of the
Company's common stock ("Common Shares"), subject to the terms and conditions
set forth in the Plan.

     3)   Effective Date of the Plan. The Plan shall become effective on July
          --------------------------
24, 1995. Options may thereafter be granted under the Plan from time to time in
accordance with the provisions set forth herein; provided, however, that under
no circumstances will Options be granted hereunder after July 24, 1998.

     4)   Administration. The Plan shall be administered by the Option
          --------------
Committee. The Option Committee shall have the authority to administer the Plan
and to exercise all the powers and authorities either specifically granted
hereunder or necessary or advisable in connection with the administration of the
Plan. The authority of the Option Committee shall include, without limitation,
the authority (i) to grant Options; (ii) to determine the purchase price of the
Common Shares subject to an Option; (iii) to determine the employees to whom,
and the times at which, Options shall be granted; (iv) to determine the number
of Common Shares to be covered by each Option and the terms and conditions
governing the ability of an employee to exercise such right; (v) to interpret
the Plan; (vi) to prescribe, amend and rescind rules and regulations relating to
the Plan; (vii) to determine the terms and provisions of the Option Agreements
between the Company and the Optionee in connection with the grant of Options
under the Plan; and (viii) to make all other determinations deemed necessary or
advisable for the administration of the Plan. All determination and
interpretations made by the Option Committee shall be final, conclusive and
binding on all persons, including Optionees and their legal representatives,
successors in interest or beneficiaries.

                                       2
<PAGE>

     5)   The Option Committee. The Option Committee shall consist of those
          --------------------
persons who from time to time comprise the Compensation Committee of the Board
of Directors. All determinations in connection with the Plan or Options granted
thereunder shall be made by a majority of the members of the Option Committee.
Although the Option Committee consists entirely of outside directors as of the
effective date of this Plan, the Board of Directors shall fill any future
vacancy in the Option Committee at its discretion. No member of the Option
Committee shall be liable for any act or omission with respect to his services
on the Option Committee, if he acts in good faith and in a manner he reasonably
believes to be in or not opposed to the best interests of the Company.

     6)   Persons Eligible to Receive Options. Options may be granted at the
          -----------------------------------
discretion of the Option Committee to selected key employees of the Company
(including employees of businesses owned or controlled by the Company). In
selecting employees to whom Options shall be granted, the Option Committee shall
take into consideration any factors it may deem relevant, including but not
limited to the duties and responsibilities of employees and the present and
potential contributions of such key employees to the success of the Company.

     7)   Common Shares Available for Options. The aggregate number of Common
          -----------------------------------
Shares for which Options may be granted under the Plan shall be 50,000. Common
Shares eligible for grant to employees under the Plan shall be authorized and
unissued Common Shares until the exercise of the Option therefore. Common Shares
which are the subject of any lapsed, expired or terminated Options shall be
available for subsequent grants of Options under the Plan.

     8)   Option Price. The price at which each Common Share subject to an
Option may be purchased (the "Option Price") shall be determined by the Option
Committee at the time such

                                       3
<PAGE>

Option is granted. However, the price per common share shall not be less than
Ten ($10.00) Dollars per common share.

     9)   Option Period. The date of grant of an Option shall be the date
          -------------
specified by the Option Committee. The period during which an Option may be
exercised shall be determined by the Option Committee, and may be subject to a
vesting schedule pursuant to which Options may be exercised only in increments
determined by the Option Committee, provided, however, that any such vesting
period shall not extend beyond the last date upon which an Option is otherwise
exercisable. All non-vested Options shall become null and void in the event of
the death, retirement, termination of employment or disability of the Optionee,
unless otherwise provided by the Company.

     10)  Exercise of Option and Payment. During the lifetime of the Optionee,
          ------------------------------
Option held by such Optionee shall be exercisable only by such Optionee or his
legal representative. An Optionee may exercise an Option as to any and all
Common Shares as to which such Option has become exercisable; provided, however,
that an Option may not be exercised for fewer than 100 Common Shares, or the
number of Common Shares remaining subject to such Option, whichever is smaller.
The Option shall be exercised by delivering to the Company written notice of
such exercise, setting forth the number of Common Shares to be purchased
together with a certified check, bank draft or money order, in the full amount
of the purchase price thereof, in each case payable to the order of the Company.

     11)  Effect of Termination of Employment on Options. An Option may only be
          ----------------------------------------------
exercised if the Optionee is then in the employ of the Company (or a business
owned or controlled thereby), and if such Optionee has remained continuously so
employed since the grant of an Option, except under the following circumstance:

                                       4
<PAGE>

          a)   In the event of termination of employment for any purpose,
including termination with or without cause or termination by action of the
Optionee, all Options which are vested and exercisable at the time of employment
termination, unless they shall have earlier terminated in accordance with their
terms, may be exercised by the Optionee within 90 days after the effective date
of such employment termination.

          b)   In the event an Optionee shall die at any time during which an
Option granted to such Optionee is exercisable, all Options which are
exercisable at the time of death, unless they shall have earlier terminated in
accordance with their terms, may be exercised by the Optionee's estate or by a
person who acquired the right to exercise such Option by bequest or inheritance
within one (1) year after the date of death; provided, however, that such right
shall not extend beyond the last date on which such Option is otherwise
exercisable.

     12)  Option Provides No Right to Employment. Nothing in this Plan or in any
          --------------------------------------
Option Agreement executed in connection with any Option granted pursuant to this
Plan shall confer or be deemed to confer on any individual any right to continue
in the employ of the Company or any business owned or controlled by the Company
or be deemed in any way to restrict the right of the Company or a business owned
or controlled by the Company to terminate his employment at any time, with or
without cause.

     13)  Restrictions on Transferability. The Common Shares issued to an
          -------------------------------
Optionee upon exercise of an Option shall be restricted from further transfer
for any period which may be required under applicable securities laws. No Option
shall be transferable by an Optionee other than by will or applicable laws of
descent and distribution without the consent of the Company.

     14)  Shareholders Agreement. Prior to the issuance of a stock certificate
          ----------------------
for Common Shares acquired pursuant to the exercise of an Option, an Optionee
may be required to execute a

                                       5
<PAGE>

Shareholders Agreement in the form attached to the Stock Option Agreement, if
such employee is not already a party thereto.

     15)  Stock Certificate Legend. The stock certificates issued in connection
          ------------------------
with the exercise of an Option shall contain a legend with a reference to the
transfer restrictions required under applicable securities laws or set forth in
the Shareholders Agreement.

     16)  Adjustments for Certain Changes in the Company's Capital Structure. In
          ------------------------------------------------------------------
the event of a reorganization, recapitalization, stock split, stock dividend,
combination of shares, merger, consolidation, rights offering, or any other
change in the corporate structure or Common Shares, the number of Common Shares
available for Options, the number of Common Shares covered by outstanding
Options, and/or the Option Price per share shall be proportionally adjusted by
the Board of Directors to reflect any increase or decrease in the number of
issued or outstanding Common Shares; provided, however, that any fractional
shares resulting from such adjustment shall be eliminated by rounding down to
the nearest whole number of Common Shares. The Board of Director's determination
of adjustments shall be final, binding and conclusive.

     17)  Sale, Liquidation, Dissolution or Merger. In the event of the sale of
          ----------------------------------------
all or substantially all of the Company's assets, or a merger of consolidation
in which the Company is not the surviving corporation, all Options granted
hereunder shall become fully vested fifteen (15) days prior to the contemplated
consummation date of the transaction. In the event of a proposed dissolution or
liquidation of the Company, or any consolidation or merger in which the Company
is the surviving corporation or in which there is a reclassification of the
Common Shares, all outstanding Options shall become fully vested upon the
Company's adoption of the plan or agreement related to such event. In connection
with the occurrence of the events

                                       6
<PAGE>

described in this Section, the Option Committee may provide that each Option
granted under the Plan shall terminate as of a date to be fixed by the Board of
Directors; provided, however, that not less than thirty (30) days written notice
of the date so fixed shall be given to each Optionee, who shall have the right,
during the period of thirty (30) days preceding such termination, to exercise
each Option as to all or any part of the Common Shares subject thereto.

     18)  Registration of Common Share and other Government Requirements. Each
          --------------------------------------------------------------
Option shall be subject to the requirement that if at any time the Board of
Directors or the Option Committee shall determine that the registration, listing
or qualification of the Common Shares subject thereto, upon any securities
exchange or under any federal or state law, or the consent or approval of any
regulatory body, is necessary or desirable as a condition of, or in connection
with, the granting of such Option or in the purchase of Common Shares
thereunder, no such Option may be exercised unless and until such registration,
listing, qualification, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Option Committee or Board of
Directors. The Company may require that any person exercising an Option shall
make such representations and agreements and furnish such information as the
Company deems appropriate to insure compliance with the foregoing or any other
applicable legal requirement.

     19)  Rights as a Shareholder. An Optionee shall have no rights as a
          -----------------------
shareholder of the Company with respect to any Common Shares arising as a result
of the grant of an Option until the date following the exercise of such Option
or on which a stock certificate has been issued by the Company to such Optionee
to evidence ownership of Common Shares.

     20)  Option Agreements. Each Option granted pursuant to the Plan shall be
          -----------------
evidenced by a written Option Agreement between the Company and the Optionee,
which agreement shall,

                                       7
<PAGE>

subject to the terms and conditions contained in each Plan, state: the number of
Common Shares to which the Option relates, the Option Price and such other
provisions as the Option Committee shall deem advisable. Although a form of
Option Agreement has been approved by the Board of Directors and is attached
hereto as Exhibit A, the form and substance of the Option Agreement shall be at
the discretion of the Option Committee, and Option Agreements, whether granted
at the same or different times, need not be identical.

     21)  Agreement by Optionee Regarding Withholding Taxes. If the Option
          -------------------------------------------------
Committee shall so require, each Optionee shall agree that as a condition of
exercise of an Option:

          a)   No later than the date of exercise of any Option granted
hereunder, the Optionee shall pay to the Company or make arrangements
satisfactory to the Option Committee regarding payment of any federal, state or
local taxes of any kind required by law to be withheld upon exercise of such
Option, and

          b)   The Company shall have the right to deduct from any payment of
any kind otherwise due to the Optionee, federal, state or local taxes of any
kind required by law to be withheld upon exercise of such Option or to retain
sufficient number of Common Shares to equal the amount of tax required to be
withheld with respect to the exercise of the Option or to require like payment
from optionee.

     22)  Amendment and Termination of the Plan. The Board of Directors may
          -------------------------------------
terminate, suspend, amend or modify the Plan at any time; provided, however,
that no amendment or modification to the Plan which eliminates or adversely
affects a right or privilege of an Optionee shall have any retroactive effect
unless required by law.

     23)  Other Actions. Nothing contained in the Plan shall be construed to
          -------------
limit the authority of the Company to exercise its corporate rights and powers,
including but not by way

                                       8
<PAGE>

of limitation, the right of the Company to grant, or assume options for proper
corporate purposes other than under the Plan with respect to any directors,
employee or other person, firm, corporation or association.

     24)  No Obligations Upon Optionee to Exercise Option. The granting of an
          -----------------------------------------------
Option shall impose no obligation upon an Optionee to exercise such Option. The
expense of administering the Plan shall be borne by the Company.

     25)  Investment Purposes. Each Option under the Plan shall be granted on
          -------------------
the condition that the purchase of Common Shares thereunder shall be for
investment purposes, and not with a view to resale or distribution.

     26)  Successors in Interest. The Plan shall be binding upon the successors
          ----------------------
and assigns of the Company.

     27)  Term of the Plan. Unless terminated by the Board of Directors prior to
          ----------------
such date, the Plan shall terminate on December 31, 2000 and thereafter no
Options shall be granted hereunder.

                                       9<PAGE>

                                                                    Exhibit 10.4

                              1997 PECO II, INC.
                        NON-QUALIFIED STOCK OPTION PLAN

     PECO II, Inc. (the "Company") hereby adopts the 1997 PECO II, Inc. Non-
Qualified Stock Option Plan (the "Plan") for the benefit of certain key
employees of the Company.  All options granted pursuant to the Plan shall be
non-qualified stock options and shall not be treated as incentive stock option
as defined in Section 422A of the Internal Revenue Code.  The Plan shall be
established and administered in accordance with the terms and provisions set
forth below.

     1)  Definitions.  The following terms shall have the meanings indicated
         -----------
below wherever such terms appear herein:
       (a) "Board of Directors" shall mean the Board of Directors
           of the Company.

       (b) "Option" shall mean the right to purchase Common Shares
           of the Company at a price and on the terms determined by
           the Option Committee.

       (c) "Option Committee" shall mean the committee responsible
           for administering the Plan pursuant to the authority set
           forth in Section 3 hereof.  The Compensation Committee
           of the Board of Directors shall serve as the Option
           Committee.

       (d) "Optionee" shall mean an employee of the Company (or a
           business owned or controlled by the Company) to whom
           an option has been granted under the Plan.

       (e) "Option Price" shall be the purchase price for each
           Common Share.

     2)  Purpose of Plan.  The purpose of the Plan is to provide key employees
         ---------------
of the Company with greater incentive to serve and promote the interests of the
Company and its
<PAGE>

shareholders. The premise of the Plan is that, if such key employees acquire a
proprietary interest in the Company, or increase the proprietary interest they
already hold, then the incentive to work toward the Company's continued success
will be commensurately increased. Accordingly, the Company will, from time to
time during the effective period of the Plan, grant to certain key employees as
may be selected to participate in the Plan by the Option Committee, Options to
purchase common shares of the Company's common stock ("Common Shares"), subject
to the terms and conditions set forth in the Plan.

     3)  Effective Date of the Plan.  The Plan shall become effective on July 1,
         --------------------------
1997.  Options may thereafter be granted under the Plan from time to time in
accordance with the provisions set forth herein; provided, however, that under
no circumstances will Options be granted hereunder after July 1, 2000.

     4)  Administration.  The Plan shall be administered by the Option
         --------------
Committee.  The Option Committee shall have the authority to administer the Plan
and to exercise all the powers and authorities either specifically granted
hereunder or necessary or advisable in connection with the administration of the
Plan.  The authority of the Option Committee shall include, without limitation,
the authority (i) to grant Options; (ii) to determine the purchase price of the
Common Shares subject to an Option; (iii) to determine the employees to whom,
and the times at which, Options shall be granted; (iv) to determine the number
of Common Shares to be covered by each Option and the terms and conditions
governing the ability of an employee to exercise such right; (v) to interpret
the Plan; (vi) to prescribe, amend and rescind rules and regulations relating to
the Plan; (vii) to determine the terms and provisions of the Option Agreements
between the Company and the Optionee in connection with the grant of Options
under the Plan; and (viii) to

                                     Page 2
<PAGE>

make all other determinations deemed necessary or advisable for the
administration of the Plan. All determination and interpretations made by the
Option Committee shall be final, conclusive and binding on all persons,
including Optionees and their legal representatives, successors in interest or
beneficiaries.

     5)  The Option Committee.  The Option Committee shall consist of those
         --------------------
persons who from time to time comprise the Compensation Committee of the Board
of Directors.  All determinations in connection with the Plan or Options granted
thereunder shall be made by a majority of the members of the Option Committee.
Although the Option Committee consists entirely of outside directors as of the
effective date of this Plan, the Board of Directors shall fill any future
vacancy in the Option Committee at its discretion.   No member of the Option
Committee shall be liable for any act or omission with respect to his services
on the Option Committee, if he acts in good faith and in a manner he reasonably
believes to be in or not opposed to the best interests of the Company.

     6)  Persons Eligible to Receive Options.  Options may be granted at the
         -----------------------------------
discretion of the Option Committee to selected key employees of the Company
(including employees of businesses owned or controlled by the Company).  In
selecting employees to whom Options shall be granted, the Option Committee shall
take into consideration any factors it may deem relevant, including but not
limited to the duties and responsibilities of employees and the present and
potential contributions of such key employees to the success of the Company.

     7)  Common Shares Available for Options.  The aggregate number of Common
         -----------------------------------
Shares for which Options may be granted under the Plan shall be 50,000.  Common
Shares eligible for grant to employees under the Plan shall be authorized and
unissued Common Shares until the

                                     Page 3
<PAGE>

exercise of the Option therefore. Common Shares which are the subject of any
lapsed, expired or terminated Options shall be available for subsequent grants
of Options under the Plan.

     8)  Option Price.  The price at which each Common Share subject to an
         ------------
Option may be purchased (the "Option Price") shall be determined by the Option
Committee at the time such Option is granted.  However, the price per common
share shall not be less than Ten ($10.00) Dollars per common share.

     9)  Option Period.  The date of grant of an Option shall be the date
         -------------
specified by the Option Committee.  The period during which an Option may be
exercised shall be determined by the Option Committee, and may be subject to a
vesting schedule pursuant to which Options may be exercised only in increments
determined by the Option Committee, provided, however, that any such vesting
period shall not extend beyond the last date upon which an Option is otherwise
exercisable.  All non-vested Options shall become null and void in the event of
the death, retirement, termination of employment or disability of the Optionee,
unless otherwise provided by the Company.

     10) Exercise of Option and Payment.  During the lifetime of the Optionee,
         ------------------------------
Option held by such Optionee shall be exercisable only by such Optionee or his
legal representative.  An Optionee may exercise an Option as to any and all
Common Shares as to which such Option has become exercisable; provided, however,
that an Option may not be exercised for fewer than 50 Common Shares, or the
number of Common Shares remaining subject to such Option, whichever is smaller.
The Option shall be exercised by delivering to the Company written notice of
such exercise, setting forth the number of Common Shares to be purchased
together with a certified

                                     Page 4
<PAGE>

check, bank draft or money order, in the full amount of the purchase price
thereof, in each case payable to the order of the Company.

     11)  Effect of Termination of Employment on Options.  An Option may only be
          ----------------------------------------------
exercised if the Optionee is then in the employ of the Company (or a business
owned or controlled thereby), and if such Optionee has remained continuously so
employed since the grant of an Option, except under the following circumstances:

        (a) In the event of termination of employment for any purpose, including
termination with or without cause or termination by action of the Optionee, all
Options which are vested and exercisable at the time of employment termination,
unless they shall have earlier terminated in accordance with their terms, may be
exercised by the Optionee within 90 days after the effective date of such
employment termination.

        (b) In the event an Optionee shall die at any time during which an
Option granted to such Optionee is exercisable, all Options which are
exercisable at the time of death, unless they shall have earlier terminated in
accordance with their terms, may be exercised by the Optionee's estate or by a
person who acquired the right to exercise such an Option by bequest or
inheritance within one (1) year after the date of death; provided, however, that
such right shall not extend beyond the last date on which such Option is
otherwise exercisable.

     12)  Option Provides No Right to Employment.  Nothing in this Plan or in
          --------------------------------------
any Option Agreement executed in connection with any Option granted pursuant to
this Plan shall confer or be deemed to confer on any individual any right to
continue in the employ of the Company or any business owned or controlled by the
Company or be deemed in any way to restrict the right

                                     Page 5
<PAGE>

of the Company or a business owned or controlled by the Company to terminate his
employment at any time, with or without cause.

     13)  Restrictions on Transferability.  The Common Shares issued to an
          -------------------------------
Optionee upon exercise of an Option shall be restricted from further transfer
for any period which may be  required under applicable securities laws.  No
Option shall be transferable by an Optionee other than by will or applicable
laws of descent and distribution without the consent of the Company.

     14)  Shareholders Agreement.  Prior to the issuance of a stock certificate
          ----------------------
for Common Shares acquired pursuant to the exercise of an Option, an Optionee
may be required to execute a Shareholders Agreement in the form attached to the
Stock Option Agreement, if such employee is not already a party thereto.

     15)  Stock Certificate Legend.  The stock certificates issued in connection
          ------------------------
with the exercise of an Option shall contain a legend with a reference to the
transfer restrictions required under applicable securities laws or set forth in
the Shareholders Agreement.

     16)  Adjustments for Certain Changes in the Company's Capital Structure.
          ------------------------------------------------------------------

         In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation, rights offering, or any
other change in the corporate structure or Common Shares, the number of Common
Shares available for Options, the number of Common Shares covered by outstanding
Options, and/or the Option Price per share shall be proportionally adjusted by
the Board of Directors to reflect any increase or decrease in the number of
issued or outstanding Common Shares; provided, however, that any fractional
shares resulting from such adjustment shall be eliminated by rounding down to
the nearest whole

                                     Page 6
<PAGE>

number of Common Shares. The Board of Director's determination of adjustments
shall be final, binding and conclusive.

     17)  Sale, Liquidation, Dissolution or Merger.   In the event of the sale
          ----------------------------------------
of all or substantially all of the Company's assets, or a merger or
consolidation in which the Company is not the surviving corporation, all Options
granted hereunder shall become fully vested fifteen (15) days prior to the
contemplated consummation date of the transaction.  In the event of a proposed
dissolution or liquidation of the Company, or any consolidation or merger in
which the Company is the surviving corporation or in which there is a
reclassification of the Common Shares, all outstanding Options shall become
fully vested upon the Company's adoption of the plan or agreement related to
such event.  In connection with the occurrence of the events described in this
Section, the Option Committee may provide that each Option granted under the
Plan shall terminate as of a date to be fixed by the Board of Directors;
provided, however, that not less than thirty (30) days written notice of the
date so fixed shall be given to each Optionee, who shall have the right, during
the period of thirty (30) days preceding such termination, to exercise each
Option as to all or any part of the Common Shares subject thereto.

     18)  Registration of Common Share and other Government Requirements.  Each
          --------------------------------------------------------------
Option shall be subject to the requirement that if at any time the Board of
Directors or the Option Committee shall determine that the registration, listing
or qualification of the Common Shares subject thereto, upon any securities
exchange or under any federal or state law, or the consent or approval of nay
regulatory body, is necessary or desirable as a condition of, or in connection
with, the granting of such Option or in the purchase of Common Shares
thereunder, no such Option may be exercised unless and until such registration,
listing, qualification, consent or

                                     Page 7
<PAGE>

approval shall have been effected or obtained free of any conditions not
acceptable to the Option Committee or Board of Directors. The Company may
require that any person exercising an Option shall make such representations and
agreements and furnish such information as the Company deems appropriate to
insure compliance with the foregoing or any other applicable legal requirement.

     19)  Rights as a Shareholder.  An Optionee shall have no rights as a
          -----------------------
shareholder of the Company with respect to any Common Shares arising as a result
of the grant of an Option until the date following the exercise of such Option
or on which a stock certificate has been issued by the Company to such Optionee
to evidence ownership of Common Shares.

     20)  Option Agreements.  Each Option granted pursuant to the Plan shall be
          -----------------
evidenced by a written Option Agreement between the Company and the Optionee,
which agreement shall, subject to the terms and conditions contained in the
Plan, state:  the number of Common Shares to which the Option relates, the
Option Price and such other provisions as the Option Committee shall deem
advisable.  Although a form of Option Agreement has been approved by the Board
of Directors and is attached hereto as Exhibit A, the form and substance of the
Option Agreement shall be at the discretion of the Option Committee, and Option
Agreements, whether granted at the same or different times, need not be
identical.

     21)  Agreement by Optionee Regarding Withholding Taxes.  If the Option
          -------------------------------------------------
Committee shall so require, each Optionee shall agree that as a condition of
exercise of an Option:

        (a)  No later than the date of exercise of any Option granted hereunder,
the Optionee shall pay to the Company or make arrangements satisfactory to the
Option Committee regarding

                                     Page 8
<PAGE>

payment of any federal, state or local taxes of any kind required by law to be
withheld upon exercise of such Option, and

        (b) The Company shall have the right to deduct from any payment of any
kind otherwise due to the Optionee, federal, state or local taxes of any kind
required by law to be withheld upon exercise of such Option or to retain
sufficient number of Common Shares to equal the amount of tax required to be
withheld with respect to the exercise of the Option or to require like payment
from optionee.

     22)  Amendment and Termination of the Plan.  The Board of Directors may
          -------------------------------------
terminate, suspend, amend or modify the Plan at any time; provided, however,
that no amendment or modification to the Plan which eliminates or adversely
affects a right or privilege of an Optionee shall have any retroactive effect
unless required by law.

     23)  Other Actions.  Nothing contained in the Plan shall be construed to
          -------------
limit the authority of the Company to exercise its corporate rights and powers,
including but not by way of limitation, the right of the Company to grant, or
assume options for proper corporate purposes other than under the Plan with
respect to any directors, employee or other person, firm, corporation or
association.

     24.  No Obligations Upon Optionee to Exercise Option.  The granting of an
          -----------------------------------------------
Option shall impose no obligation upon an Optionee to exercise such Option.  The
expense of administering the Plan shall be borne by the Company.

     25.  Investment Purposes.  Each Option under the Plan shall be granted on
          -------------------
the condition that the purchase of Common Shares thereunder shall be for
investment purposes, and not with a view to resale or distribution.

                                     Page 9
<PAGE>

     26.  Successors in Interest.  The Plan shall be binding upon the successors
          ----------------------
and assigns of the Company.

     27.  Term of the Plan.  Unless terminated by the Board of Directors prior
          ----------------
to such date, the Plan shall terminate on December 31, 2002 and thereafter no
Options shall be granted hereunder.

                                    Page 10

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