SEC Filing | Sypris Solutions, Inc.

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SCHEDULE 14A Information

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [_]

Check the appropriate box:

[_] Preliminary Proxy Statement

[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))

[X] Definitive Proxy Statement

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12

Sypris Solutions, Inc.
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(Name of Registrant as Specified In Its Charter)

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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

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pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):

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[_] Fee paid previously with preliminary materials.

[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
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Notes:

[LOGO] SYPRIS
SOLUTIONS

101 Bullitt Lane, Suite 450
Louisville, Kentucky 40222

To Our Stockholders:

You are cordially invited to attend the Annual Meeting of the
Stockholders of Sypris Solutions, Inc. (the "Company"), to be held at 101
Bullitt Lane, Lower Level Seminar Room, Louisville, Kentucky 40222 on Tuesday,
May 7, 2002, at 10:00 a.m., local time.

Matters to be considered and acted upon at the Annual Meeting include:

1. A proposal to approve an amendment to Article Fifth of the Company's
Certificate of Incorporation to increase the Company's authorized
common stock from 20,000,000 shares to 30,000,000 shares;

2. A proposal to approve an amendment to Article Sixth of the Company's
Certificate of Incorporation to create a classified Board of Directors;

3. A proposal to approve an amendment to Article Eighth of the Company's
Certificate of Incorporation to eliminate stockholder action by
written consent and increase the percentage of stockholders required
to call a special meeting;

4. The election of three (3) Class I directors for a term of one (1)
year, three (3) Class II directors for a term of two (2) years, and
two (2) Class III directors for a term of three (3) years;

5. A proposal to approve an amendment to the Company's 1994 Stock Option
Plan for Key Employees to increase the number of shares authorized for
issuance thereunder from 2,500,000 to 4,000,000;

6. A proposal to approve an amendment to the Company's Independent
Directors' Stock Option Plan to increase the number of shares
authorized for issuance thereunder from 500,000 to 750,000; and

7. Such other matters as may properly come before the meeting or any
adjournment thereof, including matters incident to its conduct.

Information concerning the matters to be considered and voted upon at the
Annual Meeting is set forth in the enclosed Proxy Statement. We encourage you
to review this material carefully.

It is important that your shares be represented and voted at the meeting,
whether or not you plan to attend in person. You can vote your shares by
completing and returning the proxy card sent to you. Most stockholders can also
vote their shares over the Internet or by telephone. If Internet or telephone
voting is available to you, voting instructions are printed on the proxy card
sent to you. A proxy may be revoked at any time prior to its exercise at the
meeting by following the instructions in the accompanying Proxy Statement and
will not affect your right to vote in person in the event that you decide to
attend the meeting.

/s/ Jeffrey T. Gill /s/ Robert E. Gill

Jeffrey T. Gill Robert E. Gill

President and Chief Executive Officer Chairman of the Board

SYPRIS SOLUTIONS, INC.
101 Bullitt Lane, Suite 450
Louisville, Kentucky 40222
(502) 329-2000

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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, MAY 7, 2002

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To the Stockholders of Sypris Solutions, Inc.:

Notice is hereby given that the Annual Meeting of Stockholders of Sypris
Solutions, Inc. (the "Company") will be held on Tuesday, May 7, 2002, at 10:00
a.m., local time, at 101 Bullitt Lane, Lower Level Seminar Room, Louisville,
Kentucky 40222, for the following purposes:

1. A proposal to approve an amendment to Article Fifth of the Company's
Certificate of Incorporation to increase the Company's authorized
common stock from 20,000,000 shares to 30,000,000 shares;

2. A proposal to approve an amendment to Article Sixth of the Company's
Certificate of Incorporation to create a classified Board of Directors;

4. The election of three (3) Class I directors for a term of one (1)
year, three (3) Class II directors for a term of two (2) years, and
two (2) Class III directors for a term of three (3) years;

5. A proposal to approve an amendment to the Company's 1994 Stock Option
Plan for Key Employees to increase the number of shares authorized for
issuance thereunder from 2,500,000 to 4,000,000;

6. A proposal to approve an amendment to the Company's Independent
Directors' Stock Option Plan to increase the number of shares
authorized for issuance thereunder from 500,000 to 750,000; and

7. Such other matters as may properly come before the meeting or any
adjournment thereof, including matters incident to its conduct.

The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. Only stockholders of record at the close of
business on March 19, 2002 are entitled to notice of and to vote at the meeting
and any adjournment thereof. A proxy may be revoked at any time prior to its
exercise at the meeting by following the instructions in this Proxy Statement
and will not affect your right to vote in person in the event that you decide
to attend the meeting.

By Order of the Board of Directors
/s/ Richard L. Davis
Richard L. Davis
Secretary

Louisville, Kentucky
March 28, 2002

IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AND VOTED AT THE MEETING,
WHETHER OR NOT YOU PLAN TO ATTEND IN PERSON. YOU CAN VOTE YOUR SHARES BY
COMPLETING AND RETURNING THE PROXY CARD SENT TO YOU. MOST STOCKHOLDERS CAN ALSO
VOTE THEIR SHARES OVER THE INTERNET OR BY TELEPHONE. IF INTERNET OR TELEPHONE
VOTING IS AVAILABLE TO YOU, VOTING INSTRUCTIONS ARE PRINTED ON THE PROXY CARD
SENT TO YOU.

SYPRIS SOLUTIONS, INC.
101 Bullitt Lane, Suite 450
Louisville, Kentucky 40222
(502) 329-2000

PROXY STATEMENT

INFORMATION CONCERNING SOLICITATION AND VOTING

General

The enclosed Proxy is solicited on behalf of Sypris Solutions, Inc. (the
"Company"), for use at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held on Tuesday, May 7, 2002, at 10:00 a.m., local time, or at
any adjournment or postponement thereof, for the purposes set forth herein and
in the accompanying Notice of Annual Meeting of Stockholders. The Annual
Meeting will be held at 101 Bullitt Lane, Lower Level Seminar Room, Louisville,
Kentucky 40222. The Company's telephone number is (502) 329-2000.

These proxy solicitation materials were mailed on or about March 28, 2002
to all stockholders entitled to notice of and to vote at the Annual Meeting and
any adjournment thereof. A copy of the Annual Report for the Company for the
fiscal year ended December 31, 2001, including financial statements, was sent
to the stockholders concurrently with this Proxy Statement.

As of January 1, 2002, the Company changed the name of its four major
operating subsidiaries as part of a comprehensive branding initiative. The new
names of the four subsidiaries are Sypris Data Systems, Inc., formerly
Metrum-Datatape, Inc.; Sypris Electronics, LLC, formerly Group Technologies
Corporation; Sypris Technologies, Inc., formerly Tube Turns Technologies, Inc.;
and Sypris Test & Measurement, Inc., formerly Bell Technologies, Inc.

Record Date and Share Ownership

Stockholders of record at the close of business on March 19, 2002 (the
"Record Date") of the Company's common stock, par value $.01 per share (the
"Common Stock"), are entitled to notice of and to vote at the Annual Meeting
and any adjournment thereof. At the Record Date, 9,945,953 shares of Common
Stock were issued and outstanding. For information regarding security ownership
by management and by the beneficial owners of 5% or more of the Company's
Common Stock, see "Security Ownership of Certain Beneficial Owners and
Management."

Proxies and Voting Procedures

Most stockholders have a choice of voting over the Internet, using a
toll-free telephone number or completing a proxy card and mailing it in the
postage-paid envelope provided. Please refer to your proxy card or the
information forwarded by your bank, broker or other holder of record to see
which options are available to you. Please be aware that if you vote over the
Internet, you may incur costs such as telephone and Internet access charges for
which you will be responsible. The Internet and telephone voting facilities for
eligible stockholders of record will close at 12:00 Midnight (EST) on May 6,
2002. The Internet and telephone voting procedures are designed to authenticate
stockholders by use of a control number and to allow you to confirm that your
instructions have been properly recorded. Each stockholder is assigned a unique
control number that the stockholder may use as the stockholder's "signature" to
appoint a proxy over the telephone or Internet. The control number and detailed
instructions to be followed are set forth on the proxy card.

You can revoke your proxy at any time before it is exercised by timely
delivery of a properly executed, later-dated proxy (including an Internet or
telephone vote), by delivering instructions to the Secretary of the Company at
101 Bullitt Lane, Suite 450, Louisville, Kentucky 40222, or by voting by ballot
at the Annual Meeting.

The method by which you vote will in no way limit your right to vote at
the meeting if you later decide to attend in person. If your shares are held in
the name of a bank, broker or other holder of record, you must obtain a proxy,
executed in your favor, from the holder of record, to be able to vote at the
meeting.

All shares entitled to vote and represented by properly completed proxies
received prior to the Annual Meeting, and not revoked, will be voted at the
Annual Meeting in accordance with your instructions. If you do not indicate how
your shares should be voted on a matter, the shares represented by your
properly completed proxy will be voted as the Board of Directors recommends. If
any other matter, not known or determined at the time of solicitation of
proxies, properly comes before the Annual Meeting, the proxies will be voted in
accordance with the discretion of the person or persons voting the proxies.

Stockholders Entitled to Vote; Vote Required

Each holder of Common Stock is entitled to one vote for each share of
Common Stock on each matter properly brought before the Annual Meeting.
Stockholders do not have the right to cumulate their votes in the election of
directors.

The presence, in person or by proxy, of the holders of a majority of the
shares entitled to vote is necessary to constitute a quorum at the meeting.
Abstentions and broker "non-votes" are counted as present and entitled to vote
for purposes of determining whether a quorum exists. A broker "non-vote" occurs
when a nominee holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary voting
power with respect to that item and has not received voting instructions from
the beneficial owner.

The affirmative vote of a plurality of the votes duly cast is required
for the election of directors (that is, the nominees receiving the greatest
number of votes will be elected). The approval and adoption of the proposals to
approve amendments to Articles Fifth, Sixth and Eighth of the Company's
Certificate of Incorporation require the affirmative vote of a majority of the
outstanding stock entitled to vote thereon. The approval and adoption of the
proposals to amend the Company's 1994 Stock Option Plan for Key Employees and
the Company's Independent Directors' Stock Option Plan and each other item to
be voted on at the Annual Meeting require, in each case, the affirmative vote
of the majority of shares present in person or represented by proxy at the
Annual Meeting and entitled to vote thereon. Abstentions and broker "non-votes"
are not counted as votes cast on any matter to which they relate.

In accordance with Delaware law, a list of stockholders entitled to vote
at the Annual Meeting will be available at the location of the Annual Meeting
on May 7, 2002 and for 10 days prior to the Annual Meeting at our headquarters
located at 101 Bullitt Lane, Suite 450, Louisville, Kentucky 40222, between the
hours of 8:30 a.m. and 5:30 p.m. EST.

As of the Record Date, GFP, Ltd., Gill Family Capital Management, Inc.,
Robert E. Gill, Virginia G. Gill, Jeffrey T. Gill and R. Scott Gill
(collectively, the "Gill Family") beneficially owned an aggregate of 8,441,611
shares of the Company's Common Stock or approximately 84.2% of the shares of
the Company's Common Stock outstanding on such date. The members of the Gill
Family have indicated their intention to vote their shares of the Company's
Common Stock for the election of the director nominees named herein and in
favor of approval and adoption of each of the other proposals.

A Note About Our Common Stock Offering. On February 21, 2002, we filed a
Registration Statement on Form S-2 for the sale of 3,000,000 shares of Common
Stock, plus up to an additional 450,000 shares to cover over-allotments (the
"Offering"). The Offering has not been completed and the results of the
Offering are not reflected in our disclosures in this Proxy Statement. If you
purchase shares in the Offering, you will not have owned those shares on the
Record Date of the Annual Meeting (March 19, 2002), and you, therefore, do not
have the right to vote those shares at the Annual Meeting.

Cost of Proxy Solicitation

The cost of soliciting proxies will be borne by the Company. In addition,
the Company may reimburse brokerage firms and other persons representing
beneficial owners of shares for expenses incurred in forwarding solicitation
materials to such beneficial owners. Proxies may be solicited by certain of the
Company's directors, officers and regular employees, without additional
compensation, personally or by telephone, telegram, letter or facsimile.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information with respect to
beneficial ownership of Common Stock as of March 19, 2002, including beneficial
ownership by: (i) each person who is known by the Company to own beneficially
more than 5% of each class of stock; (ii) each of the Company's directors who
owns shares; (iii) each of the Named Officers reflected in the Summary
Compensation Table; and (iv) all current directors and executive officers as a
group. Except as otherwise indicated, the persons named in the table have sole
voting and investment power with respect to all shares of the Common Stock
shown as beneficially owned by them.

Shares Beneficially Owned
------------------------
Common Stock
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Number Percent
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Robert E. Gill (1).............................................. 3,275,666 32.9%
253 Canton Avenue East
Winter Park, Florida 32789

Virginia G. Gill (2)............................................ 3,275,666 32.9%
253 Canton Avenue East
Winter Park, Florida 32789

Jeffrey T. Gill (3)............................................. 6,047,906 60.6%
101 Bullitt Lane, Suite 450
Louisville, Kentucky 40222

R. Scott Gill (4)............................................... 5,667,371 56.8%
1209 North Astor Street
Chicago, Illinois 60610

GFP, Ltd.(5).................................................... 3,274,666 32.9%
101 Bullitt Lane, Suite 450
Louisville, Kentucky 40222

Gill Family Capital Management, Inc.(6)......................... 3,274,666 32.9%
101 Bullitt Lane, Suite 450
Louisville, Kentucky 40222

Henry F. Frigon (7)............................................. 87,320 *
William L. Healey (8)........................................... 40,500 *
Roger W. Johnson (9)............................................ 81,694 *
Sidney R. Petersen (10)......................................... 103,361 1.0%
Robert Sroka (11)............................................... 80,013 *
James G. Cocke (12)............................................. 4,125 *
John M. Kramer (13)............................................. 59,470 *
David D. Johnson (14)........................................... 63,770 *
Richard L. Davis (15)........................................... 70,493 *
Current directors and executive officers as a group (15 persons) 9,171,127 86.5%

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* less than 1%.

(1) Includes 500 shares beneficially owned by Virginia G. Gill, his wife.
Robert E. Gill shares voting and investment power with his spouse with
respect to these shares. Also includes 3,274,666 shares of the Common
Stock of the Company owned by GFP, Ltd., a Kentucky limited partnership,
of which Robert E. Gill is a limited partner holding a 45.31% ownership
interest and of which Virginia G. Gill is a limited partner holding a
46.20% ownership interest. On the basis of certain provisions of the
limited partnership agreement of GFP, Ltd. (the "Partnership Agreement"),
Robert E. Gill and Virginia G. Gill may be deemed to beneficially own
shares of Common Stock that are attributable to such limited partnership
interests. Mr. Gill is also a director and executive officer of the
Company.

(2) Includes 500 shares beneficially owned by Robert E. Gill, her husband.
Virginia G. Gill shares voting and investment power with her spouse with
respect to these shares. Also includes 3,274,666 shares held by GFP, Ltd.
See footnote (1) above for certain information concerning GFP, Ltd.

(3) Includes 40,000 shares issuable under currently exercisable stock options
and 23,975 shares owned by Patricia G. Gill, his wife. Jeffrey T. Gill
shares voting and investment power with his spouse with respect to these
shares. Also includes 3,274,666 shares held by GFP, Ltd., of which Jeffrey
T. Gill is a limited partner holding a 0.64% ownership interest, of which
Patricia G. Gill is a limited partner holding a 0.64% ownership interest,
and of which trusts for the benefit of Jeffrey T. Gill's children, of
which Jeffrey T. Gill is trustee, are limited partners holding an
aggregate of 3.07% ownership interest. Gill Family Capital Management,
Inc., a Kentucky corporation (the "General Partner"), is the general
partner of GFP, Ltd., with a 0.96% ownership interest in GFP, Ltd. Jeffrey
T. Gill is the Co-President and Treasurer of the General Partner, is one
of two directors of the General Partner, and is a 50% shareholder of the
General Partner. On the basis of Jeffrey T. Gill's positions with the
General Partner, and pursuant to certain provisions of the Partnership
Agreement, Jeffrey T. Gill may be deemed to beneficially own shares of
Common Stock attributable to the General Partner. Mr. Gill is also a
director and executive officer of the Company and was a Named Officer
during the fiscal year ended December 31, 2001.

(4) Includes 40,000 shares issuable under currently exercisable stock options.
Includes 3,274,666 shares owned by GFP, Ltd., of which R. Scott Gill is a
limited partner holding a 3.18% ownership interest. R. Scott Gill is the
Co-President and Secretary of the General Partner, is one of two directors
of the General Partner, and is a 50% shareholder of the General Partner.
On the basis of R. Scott Gill's positions with the General Partner, and
pursuant to certain provisions of the Partnership Agreement, R. Scott Gill
may be deemed to beneficially own shares of Common Stock attributable to
the General Partner. Mr. Gill is also a director of the Company.

(5) Voting and investment power is exercised through the General Partner. See
footnotes (3) and (4).

(6) In its capacity as General Partner. See footnotes (3) and (4).

(7) Includes 86,070 shares issuable under currently exercisable stock options.

(8) Includes 40,000 shares issuable under currently exercisable stock options.

(9) Includes 81,694 shares issuable under currently exercisable stock options.

(10) Includes 102,736 shares issuable under currently exercisable stock
options, and 625 shares held by a family trust of which Mr. Petersen is a
trustee. Mr. Petersen shares voting and investment power with respect to
the shares held by the family trust.

(11) Includes 79,013 shares issuable under currently exercisable stock options.

(12) Includes 4,125 shares issuable under currently exercisable stock options.
Mr. Cocke was a Named Officer during the fiscal year ended December 31,
2001.

(13) Includes 21,570 shares issuable under currently exercisable stock options.
Mr. Kramer was a Named Officer during the fiscal year ended December 31,
2001.

(14) Includes 48,500 shares issuable under currently exercisable stock options.
Mr. Johnson was a Named Officer during the fiscal year ended December 31,
2001.

(15) Includes 42,516 shares issuable under currently exercisable stock options.
Mr. Davis was a Named Officer during the fiscal year ended December 31,
2001.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires that the
Company's directors, executive officers and persons who beneficially owned more
than 10% of the Company's Common Stock file certain reports with the Securities
and Exchange Commission ("SEC") with regard to their beneficial ownership of
the Common Stock. The Company is required to disclose in this Proxy Statement
any failure to file or late filings of such reports. Based solely upon its
review of reports furnished to the Company of ownership on Form 3 and changes
in ownership on Forms 4 and 5 filed with the SEC by the Company's officers,
directors and certain beneficial owners, or written representations furnished
to the Company by such persons, the Company believes that all filing
requirements applicable to its directors, executive officers and 10% beneficial
owners were satisfied.

Certain Relationships and Related Transactions

During 2001, the Company did not engage in any transactions in which any
director, officer or 5% stockholder of the Company had any material interest,
except as described below.

G. Darrell Robertson, Vice President of the Company and President and
Chief Executive Officer of Sypris Data Systems, Inc., is currently indebted to
the Company in the principal amount of $60,000, represented by his promissory
note (originally in the principal amount of $100,000) bearing interest at 8%
per annum, the principal and accrued interest on which is forgiven in five
equal annual installments of $20,000 each, beginning February 28, 2001, so long
as Mr. Robertson remains employed by the Company. This indebtedness arose in
connection with Mr. Robertson's initial employment, pursuant to the terms of
which he was granted a loan by the Company for relocation purposes.

Effective March 11, 2002, William L. Healey, a director of the Company
and a member of the Compensation Committee, was employed as President and Chief
Executive Officer of Cal Quality Electronics, Inc. The Company purchases
circuit card assemblies from Cal Quality Electronics, Inc. under supply
contracts. The Company paid approximately $258,000 to Cal Quality Electronics,
Inc. during 2001 and estimates payments may exceed $2,000,000 during 2002.

THE CHARTER PROPOSALS

On October 23, 2001, the Board of Directors of the Company adopted
resolutions proposing and recommending that the stockholders of the Company
approve amendments to Article Sixth and Article Eighth of the Certificate of
Incorporation. At the same meeting, the Board of Directors adopted a
stockholders' rights plan, discussed below. The amendment to Article Sixth
would, among other things: (i) authorize the Board of Directors to determine
the number of directors, within a range of three and twelve directors; (ii)
establish a classified Board of Directors having three classes with staggered
three-year terms; (iii) provide that any vacancy on the Board of Directors be
filled only by a vote of the majority of directors then in office; (iv) require
the affirmative vote of the holders of at least 80% of the shares of the
capital stock of the Company issued and outstanding and entitled to vote to
remove a director; and (v) require the affirmative vote of the holders of at
least 80% of the shares of the capital stock of the Company issued and
outstanding and entitled to vote to amend or repeal or adopt any provision
inconsistent with Article Sixth. The amendment to Article Eighth would: (i)
eliminate the ability of the stockholders of the Company to take action by
written consent without a meeting of the stockholders of the Company; (ii)
provide that special meetings of the stockholders of the Company may be called
only by the Board of Directors pursuant to a resolution adopted by a majority
of the Board of Directors in writing, or by the holders of not less than 80% of
all shares entitled to cast votes at the meeting (with the notice of any
special meeting to include a description of the purpose or purposes for which
the meeting is called); and (iii) require the affirmative vote of the holders
of at

least 80% of the shares of the capital stock of the Company issued and
outstanding and entitled to vote to amend or repeal or adopt any provision
inconsistent with Article Eighth. On February 26, 2002, the Board of Directors
of the Company also adopted resolutions proposing and recommending that the
stockholders of the Company approve an amendment to Article Fifth increasing
the authorized shares of Common Stock from 20,000,000 shares to 30,000,000
shares. The amendments to Articles Fifth, Sixth and Eighth are sometimes
referred to collectively in this Proxy Statement as the "Charter Proposals."

If any Charter Proposal is not approved, the related article of the
Certificate of Incorporation will remain in effect without amendment. If all of
the Charter Proposals are approved, the Company intends to amend the
Certificate of Incorporation by filing a certificate of amendment in
substantially the form attached hereto as Appendix A (the "Certificate of
Amendment") reflecting each of the Charter Proposals. The Charter Proposals
would become effective upon the filing of the Certificate of Amendment with the
Secretary of State of the State of Delaware. Under Delaware law, the Company's
stockholders are not entitled to dissenter's rights with respect to any of the
proposed amendments to the Certificate of Incorporation. Stockholders are urged
to read carefully Appendix A and the descriptions and discussions of the
Charter Proposals that follow before voting on the Charter Proposals.

Under Article Tenth of the Certificate of Incorporation, the Board of
Directors has the power and authority to amend the bylaws of the Company (the
"Bylaws"). On October 23, 2001, the Board of Directors approved amendments to
the Company's Bylaws, subject to stockholder approval of the amendments to
Articles Sixth and Eighth, to more closely follow and complement the amendment
to Articles Sixth and Eighth of the Certificate of Incorporation. A copy of the
amended Bylaws that will be in effect, if the amendments to Articles Sixth and
Eighth are approved at the Annual Meeting, is attached hereto as Appendix B
(the "Restated Bylaws").

Reasons for the Charter Proposals. While the Company's management is not
aware of any specific efforts to accumulate capital stock or to remove
incumbent management, the Charter Proposals may be characterized as
anti-takeover measures. The Board of Directors believes it to be prudent to
guard against the use of certain coercive takeover tactics, including the
substantial accumulation of common stock positions, which may precede a
threatened takeover or corporate restructuring, proxy contest and/or partial
tender offer and the related use of "two-tiered" pricing. The adoption of the
Charter Proposals may render more difficult or discourage certain transactions
such as a merger, tender offer or proxy contest or assumption of control by a
holder of a large block of the Company's securities and the removal of
incumbent management, but the Board of Directors believes that encouraging
potential acquirors to negotiate with the Board of Directors on a potential
acquisition is in the best interests of the Company.

The Board of Directors believes that the Charter Proposals, together with
the Company's anti-takeover devices already in place and described below, will
encourage persons seeking to acquire control of the Company to initiate an
acquisition through negotiations with the Board of Directors under
circumstances in which the Board of Directors can effectively have time and
information to evaluate an acquisition proposal, rather than through a hostile
bid. If the Charter Proposals are adopted, they could provide leverage to the
Board of Directors to attempt to maximize the price obtained in an acquisition
transaction.

Existing Anti-Takeover Devices

Certificate of Incorporation. The Company's Certificate of Incorporation
currently authorizes 20,000,000 shares of Common Stock, not all of which have
been reserved or issued, and 10,000,000 shares of nonvoting common stock, none
of which have been reserved or issued (the "Nonvoting Stock"). These shares of
authorized and available Common Stock and Nonvoting Stock could, within the
limits imposed by applicable law and the rules of the Nasdaq National Market,
be issued by the Company as a means to discourage a potential acquiror from
seeking control of the Company by diluting public ownership of the Company.

The Certificate of Incorporation also authorizes the issuance of up to
1,000,000 shares of preferred stock, par value $.01 per share, of the Company
in one or more series, none of which have been issued. The Board of Directors
is authorized, without any further action by the stockholders, to divide any or
all such shares into series, and to fix as to each series the powers and other
rights, and the terms and conditions thereof. Pursuant to this

provision, the Board of Directors adopted a stockholders' rights plan on
October 23, 2001. The Board of Directors initially designated 11,000 shares of
preferred stock in connection with the adoption of the stockholders' rights
plan. The Board of Directors implemented the stockholders' rights plan by
declaring a dividend of one right (a "Right") for each outstanding share of
Common Stock of the Company. The dividend was payable to all stockholders of
record on November 7, 2001. In the event the Company issues additional shares
of Common Stock in the future, the Company will issue one Right for each of
those shares as well, subject to the terms and conditions of the rights plan.
The description and terms of the Rights are set forth in a Rights Agreement
between the Company and LaSalle Bank National Association as rights agent.

Each Right will entitle the holder of the Right to purchase a fractional
share (1/1000) of the Company's Series A Preferred Stock for $63.00, subject to
adjustment. The Rights will not become exercisable until: (i) the tenth
business day after a person or group, other than an "exempted person," acquires
beneficial ownership of 15% or more of the Company's Common Stock without the
prior approval of the Board of Directors; or (ii) the tenth business day after
a person or group, other than an "exempted person," begins or announces its
intention or action to begin a tender or exchange offer to acquire beneficial
ownership of 15% or more of the Company's Common Stock without the prior
approval of the Board of Directors. The Board of Directors retains the
discretionary right to extend these ten-day waiting periods. An "exempted
person" generally means Robert E. Gill, Virginia G. Gill, Jeffrey T. Gill, R.
Scott Gill, GFP, Ltd. and Gill Family Capital Management, Inc.

When the Rights become exercisable, the Rights will "flip-in" and holders
of the Rights (other than the 15% holder) will be entitled to purchase the
Series A Preferred Stock from the Company at a 50% discount from the then
current market price, thereby providing stockholders with the ability to
purchase that number of 1/1000 of a share of Series A Preferred Stock having a
market value of two times the purchase price. As an alternative, the Board of
Directors may elect to exchange each Right for consideration per Right
consisting of one-half of the securities that would be issuable at the time
upon exercise of one Right (or equivalent value in cash, Common Stock or other
securities).

In the event the person or group who initially acquired 15% or more of
the Company's Common Stock is publicly traded and proceeds to merge or enter
into certain other transactions with the Company, the Rights will "flip-over"
and entitle holders of the Rights (other than the 15% holder) to purchase
shares of the acquiring company's common stock having a market value of two
times the purchase price. The plan also contains provisions to address a
similar situation with a privately held company. No fractional shares of Series
A Preferred Stock will be issued, other than multiples of 1/1000 of a share.

The Rights will be redeemable by the Board of Directors at a redemption
price of $0.01 per Right at any time prior to the earlier of the (i) tenth
business day (unless otherwise extended by the Board of Directors) after a
person or group has triggered the 15% threshold discussed above, or (ii) the
expiration of the Rights Agreement on October 23, 2011.

The terms of the Rights Agreement may be amended in any respect without
the approval of any holder of Rights at any time prior to the Rights becoming
exercisable, with the exception that the redemption price may not be reduced
and the expiration date of the Rights Agreement may not be changed to reflect
an earlier date.

Until a Right is exercised, the Rights holder will have no rights as a
stockholder, including any voting rights. The terms of the Series A Preferred
Stock have been designed so that each 1/1000 of a share is entitled to
participate in dividends and other distributions, and to vote, on an equivalent
basis with one whole share of the Common Stock. In addition, the Series A
Preferred Stock has certain minimum dividend and liquidation rights.

Rights agreements generally provide a significant deterrent to attempts
to acquire control of a corporation without the approval of the board of
directors. The Rights would cause substantial dilution to a person or group
that attempts to acquire control without approval of the Board of Directors.
The Rights, however, should not affect any prospective offeror willing to make
an offer for all outstanding shares of the Common Stock at a fair price and
otherwise in the best interest of the Company and its stockholders, as
determined by the Board of Directors, or affect any prospective offeror willing
to negotiate with the Board of Directors.

The Company's Certificate of Incorporation currently provides that
stockholders must comply with a detailed notice procedure with regard to the
nomination by stockholders of candidates for election as directors. Nominations
of persons for election to the Board of Directors may be made by a stockholder
who has given timely prior written notice to the Secretary of the Company prior
to the meeting. To be timely, notice for nominations must be received by the
Company not later than the close of business on the tenth day following the day
on which notice of the date of the meeting was mailed, or public disclosure of
the date of the meeting was made, whichever occurs first.

The notice to the Company from a stockholder who proposes to nominate a
person at a meeting for election as a director must include certain information
about the stockholder making the nomination, including name, address and age,
and a representation that such person is a stockholder of record. The notice
must also include information concerning the nominee, including name, age,
addresses and principal occupation, and the consent of such person to be
nominated and such other information as would be required to be included in a
proxy statement soliciting proxies for the election of the proposed nominee.

By requiring advance notice of stockholder nominations, the Certificate
of Incorporation provision on stockholder nominations provides the Board of
Directors with an opportunity to consider the qualifications of the proposed
nominee and, if deemed necessary or desirable, to inform stockholders about the
nominee's qualifications. Under the advance notice procedure, the Board of
Directors does not approve or disapprove of stockholder nominees, but the
advance notice provision could be considered to make it more difficult for a
stockholder to make a nomination for the election of directors because of the
procedural requirements of the provision.

The Company's Certificate of Incorporation also currently provides in
Article Eighth that special meetings of stockholders may be called only by the
Board of Directors or by holders of at least 50% of shares entitled to vote at
the meeting. This provision is proposed to be amended, as set forth in Proposal
Three.

Delaware Law. Section 203 of the Delaware General Corporation Law
("DGCL"), which is applicable to the Company, may be deemed to have certain
anti-takeover effects by prescribing certain voting requirements in instances
in which there is a transaction between a publicly held Delaware corporation
and an "interested stockholder" (defined generally as a person owning 15% or
more of a corporation's outstanding voting stock) during the three-year period
following the time such person became an interested stockholder.

Although Section 214 of the DGCL provides that a corporation's
certificate of incorporation may provide for cumulative voting for directors,
the Company's Certificate of Incorporation does not provide for cumulative
voting. As a result, the holders of a majority of the shares of Common Stock
have the ability to elect all of the directors being elected at any annual
meeting of stockholders.

Anti-Takeover Effects of the Charter Proposals

The adoption of the Charter Proposals may render more difficult or
discourage certain transactions such as a tender offer or proxy contest, but
the Board of Directors believes that encouraging potential acquirors to
negotiate with the Board of Directors on any potential acquisition is in the
best interest of the Company. The Board of Directors believes that in the
context of a takeover, stockholder interests will best be protected in a
negotiated transaction where the Board of Directors can carefully consider the
proposed terms of the transaction, including the price to be paid to
stockholders, the form of consideration paid and tax effects of the transaction.

The Charter Proposals are not in response to any effort, of which the
Company is aware, to accumulate Common Stock or to obtain control of the
Company. However, the Board of Directors believes that coercive takeover
tactics, such as partial tender offers, may be used to place undue pressure on
a corporation's board of directors and stockholders to act quickly and without
complete information. The Board of Directors has observed that these coercive
tactics can be highly disruptive to a corporation and could divert valuable
corporate resources. These tactics can also result in unfair and disparate
treatment of stockholders, depending upon whether a stockholder acts
immediately in response to a takeover, acts later or not at all.

While the Board of Directors believes that the Charter Proposals, viewed
together with the Company's Rights Agreement and other existing anti-takeover
provisions, would help to protect the Company's stockholders, they may also
have the effect of impeding a merger, tender offer or proxy contest, or delay
the assumption of control by a holder of a large block of Common Stock and the
removal of incumbent directors and management, even if such events may be
beneficial to some or all of the Company's stockholders.

The Board of Directors has carefully considered the potential adverse
effects of the Charter Proposals and has concluded that these effects are
substantially outweighed by the benefits that the Charter Proposals would
provide the Company and its stockholders. Accordingly, the Board of Directors
unanimously recommends that stockholders vote FOR the approval and adoption of
each of the Charter Proposals. The Board of Directors has no current intention
to propose other additional anti-takeover measures, and, except for the filing
of the Certificate of Amendment and the adoption of the Restated Bylaws, both
as discussed above, the Board of Directors has no current intention to
otherwise adopt any other anti-takeover measures.

PROPOSAL ONE

APPROVAL OF AN AMENDMENT TO ARTICLE FIFTH OF THE COMPANY'S CERTIFICATE OF
INCORPORATION TO INCREASE THE AUTHORIZED COMMON STOCK
FROM 20,000,000 TO 30,000,000 SHARES

The Company's Board of Directors has adopted and recommended to the
stockholders a proposal to amend the Company's Certificate of Incorporation to
increase the number of authorized shares of Common Stock from 20,000,000 to
30,000,000 shares. On March 19, 2002, there were 9,945,953 shares of Common
Stock outstanding. If the amendment to Article Fifth is adopted, approximately
17,054,047 shares of Common Stock would be authorized and unissued, assuming
the sale of all 3,000,000 shares of Common Stock proposed to be sold by the
Company in the Offering. At March 19, 2002, there were also 2,620,287 shares of
Common Stock reserved for issuance pursuant to the existing stock option plans
of the Company. In addition, 172,526 shares are reserved for issuance pursuant
to the employee stock purchase plan of the Company. There are no preemptive
rights relating to the Common Stock. The Company may issue shares of Common
Stock reserved therefor pursuant to its stock purchase and stock option plans
and desires to have such shares available for future issuances as the need may
arise. No further stockholder approval would be required prior to the issuance
of the additional shares authorized by this amendment subject, however, to the
rules of the Nasdaq National Market which require stockholder approval of
certain share issuances.

The Board of Directors' purpose in proposing the increase in the number
of authorized shares of Common Stock is to have shares available for future
issuances and splits from time to time, as and when the Board of Directors
determines that such issuances and splits may be desirable. The additional
shares of Common Stock could be used to dilute the stock ownership of a person
seeking to obtain control of the Company, or could be privately placed with
purchasers who would support the Board of Directors in opposing a hostile
takeover attempt. While this proposal to amend the Certificate of Incorporation
is not a response to any effort of which the Company is aware to accumulate
Common Stock or obtain control of the Company, this proposal may have the
effect, particularly when considered together with the other Charter Proposals
and the Rights Agreement, of impeding or discouraging efforts by potential
bidders to obtain control of the Company.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE THE
AMENDMENT TO ARTICLE FIFTH OF THE CERTIFICATE OF INCORPORATION. PROXIES
SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED IN FAVOR OF THE PROPOSAL
UNLESS STOCKHOLDERS SPECIFY OTHERWISE.

PROPOSAL TWO

APPROVAL OF AN AMENDMENT TO ARTICLE SIXTH OF THE COMPANY'S CERTIFICATE OF
INCORPORATION TO CREATE A CLASSIFIED BOARD OF DIRECTORS

On October 23, 2001, the Board of Directors adopted a resolution to amend
Article Sixth of the Certificate of Incorporation to provide for a classified
Board of Directors. Under such proposal, the Board of Directors would have
three classes of directors with staggered three-year terms, with the effect
that approximately one-third of the Board of Directors would be elected each
year. The Board of Directors would consist of not fewer than three nor more
than twelve members, the number to be set by the directors as provided in the
Bylaws. The Company's current Certificate of Incorporation does not contain any
provisions relating to the classification of directors.

Under the proposal, the Board of Directors would be divided into three
classes of directors, with the number of directors in each class to be as
nearly equal as possible, and with each class to be elected for a three-year
term on a staggered basis. Directors elected at subsequent annual meetings
would serve three-year terms, and the term of one class would expire each year.
If the proposal were adopted, a stockholder holding a majority of the
outstanding Common Stock would need two annual meetings of stockholders, rather
than one meeting, to elect a majority of the Board of Directors. Under the
DGCL, unless a corporation's certificate of incorporation specifically provides
otherwise, if a corporation has a classified board of directors, the directors
of the corporation may only be removed by the stockholders for cause. Article
Sixth, as proposed to be amended, will not have a provision allowing removal of
directors other than for cause. In addition, Article Sixth, as amended, would
provide that the directors of the Company may be removed by the affirmative
vote of the holders of not less than 80% of the shares of capital stock of the
Company issued and outstanding and entitled to vote.

Article Sixth, as proposed to be amended, would also require that any
vacancies be filled by vote of a majority of the directors then in office, even
if less than a quorum. Any director so elected to fill a vacancy would become a
member of the same class as the director succeeded and would hold office for
the remainder of the term of that class and until a successor is elected. The
proposal to amend Article Sixth also provides that whenever the holders of any
series of preferred stock shall have the right, voting separately by series, to
elect directors at an annual or special meeting of stockholders, the election,
term of office, filling of vacancies and other features of such directorships
will be governed by the terms of the series of preferred stock as fixed by the
Board of Directors, and such directors will not be divided into classes
pursuant to Article Sixth, unless expressly provided by the terms of such
series. Article Sixth, as proposed to be amended, would also require the
affirmative vote of the holders of not less than 80% of the shares of the
capital stock of the Company to amend or repeal Article Sixth, or to adopt any
provision inconsistent with Article Sixth.

If the stockholders approve the proposed amendment to Article Sixth, the
directors in Class I and Class II will initially hold office for one and
two-year terms, respectively. The directors in Class I, who will initially
serve a one-year term, will be eligible for re-election to a full three-year
term at the annual meeting of stockholders to be held in 2003. The directors in
Class II, who will initially serve two-year terms, will be eligible for
re-election for full three-year terms at the annual meeting of stockholders to
be held in 2004. The directors in Class III, who will initially serve full
three-year terms, will be eligible for re-election for new three-year terms at
the annual meeting of stockholders to be held in 2005. Each director will serve
until a successor is elected or until his earlier death, resignation or
removal. If the proposed amendment to Article Sixth is approved and the
incumbent directors are re-elected, Henry F. Frigon, Robert E. Gill and William
L. Healey will be elected as Class I directors, R. Scott Gill, Roger W. Johnson
and Robert Sroka will be elected as Class II directors, and Jeffrey T. Gill and
Sidney R. Petersen will be elected as Class III directors.

The Board of Directors believes that the proposal implementing a
staggered board of directors can enhance the continuity and stability of
management. While the Company has not experienced problems with continuity and
stability of management, the Board of Directors believes that a classified
board of directors will help attract and retain qualified management.

Since an outside group or individual cannot gain control of the Board of
Directors at any one election with a classified board of directors, the Board
of Directors believes the proposal encourages a potential acquiror to initiate
any attempt to acquire control of the Company through arm's length negotiations
with the Board of Directors.

The classified board of directors provisions do not provide for the
removal of directors "without cause," and under the proposal, vacancies may be
filled only by the directors and an 80% stockholder vote is required for
removal of directors. These provisions inhibit a third party from removing
incumbent directors and filling newly created vacancies with hand-picked
designees of a bidder who would be more willing to approve the terms of a
merger or other business combination on terms that might be less favorable to
the other stockholders of the corporation than those which would have been
approved by the removed directors.

The implementation of a classified board of directors through the
adoption of the amendment to Article Sixth may delay or impede changes in
control of the Board of Directors or the approval of certain stockholder
proposals, even if the holders of a majority of the Common Stock believe such
actions would be in their best interests. Classification of the Board of
Directors would impede rapid changes in the composition of the Board of
Directors. If the amendment to Article Sixth is approved, the classified board
of directors provision would be applicable to every election of directors,
rather than only an election occurring after a change in control.

At this time, the Board of Directors does not know of any offer to
acquire control of the Company, nor does it know of any effort to remove any
director, either for cause or without cause.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE THE
AMENDMENT TO ARTICLE SIXTH OF THE CERTIFICATE OF INCORPORATION. PROXIES
SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED IN FAVOR OF THE PROPOSAL
UNLESS STOCKHOLDERS SPECIFY OTHERWISE.

PROPOSAL THREE

APPROVAL OF AN AMENDMENT TO ARTICLE EIGHTH OF THE COMPANY'S CERTIFICATE OF
INCORPORATION TO ELIMINATE STOCKHOLDER ACTION BY WRITTEN CONSENT AND
INCREASE THE PERCENTAGE OF STOCKHOLDERS REQUIRED TO CALL A SPECIAL MEETING

Under the DGCL, unless otherwise provided in a Delaware corporation's
certificate of incorporation, any action required or permitted to be taken by
stockholders of a corporation may be taken without a meeting and without a
stockholder vote if a written consent setting forth the action to be taken is
signed by the holders of shares of outstanding stock having the requisite
number of votes that would be necessary to authorize such action at a meeting
of stockholders and is delivered in accordance with the procedures set forth
under the DGCL. The Company's Certificate of Incorporation is silent on the
matter of stockholder action by written consent. Accordingly, Delaware law
would permit the holders of a majority of the Common Stock to take such action,
and the Company's Bylaws as currently in effect likewise permit action by
written consent.

Article Eighth of the Certificate of Incorporation currently allows a
special meeting of the Company's stockholders to be called by the Board of
Directors or by the holders of not less than 50% of shares entitled to vote.

On October 23, 2001, the Board of Directors adopted a resolution
proposing to amend Article Eighth of the Certificate of Incorporation to
eliminate the right of stockholders to take action by written consent, to
increase to 80% the percentage of stockholders required to call a special
meeting of the Company's stockholders, and to require the affirmative vote of
the holders of at least 80% of all shares of capital stock entitled to vote to
amend or repeal such provisions.

The proposal to amend Article Eighth, if adopted, would eliminate action
by stockholders by written consent and would ensure that all stockholders would
have advance notice of any proposed major corporate action by stockholders, and
allow the Company to set a record date for any stockholder voting, thereby
reducing the possibility of disputes or confusion regarding the validity of
purported stockholder action. The Board of Directors believes that eliminating
stockholder action by written consent and increasing the percentage of
stockholders required to call a special meeting would encourage a potential
acquiror to negotiate directly with the Board of Directors.

The Board of Directors believes that the elimination of stockholder
action by written consent would help to avoid any ill-advised stockholder
action in a context that might not permit the stockholders to have the full
benefit of the participation of the Company's management and Board of
Directors. The Board of Directors believes that this proposal would promote
negotiations concerning any proposed acquisition of the Company. In the context
of a proposed acquisition of the Company, the Board of Directors believes that
it would be in the long-term best interests of the Company and its stockholders
for the Company and any proposed acquirors to carefully negotiate the terms of
the acquisition.

However, provisions in the Certificate of Incorporation which effectively
require a potential acquiror to negotiate with the Board of Directors on any
potential acquisition could be characterized as increasing the ability of
management and the Board of Directors to retain their positions and to
discourage a transaction which may be deemed attractive to the stockholders.
The adoption of this proposed amendment may render more difficult or discourage
certain transactions such as a tender offer or proxy contest, but the Board of
Directors believes that encouraging potential acquirors to negotiate with the
Board of Directors is in the best interest of the Company.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE THE
AMENDMENT TO ARTICLE EIGHTH OF THE CERTIFICATE OF INCORPORATION. PROXIES
SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED IN FAVOR OF THE PROPOSAL
UNLESS STOCKHOLDERS SPECIFY OTHERWISE.

PROPOSAL FOUR

ELECTION OF DIRECTORS

The Board of Directors of the Company presently consists of eight (8)
persons: Henry F. Frigon, Robert E. Gill, Jeffrey T. Gill, R. Scott Gill,
William L. Healey, Roger W. Johnson, Sidney R. Petersen and Robert Sroka.
Subject to the adoption by the stockholders of the amendment to the Company's
Certificate of Incorporation contained in Proposal Two, the Board of Directors
has nominated eight (8) persons for election to the Board of Directors with
three (3) directors to be Class I directors, three (3) directors to be Class II
directors, and two (2) directors to be Class III directors. Each of the
nominees is currently a director of the Company whose current term expires at
the Annual Meeting. If elected, each nominee has consented to serve as a
director for the terms set forth below, and the Company knows of no reason why
any of the listed nominees would be unavailable to serve.

At the Annual Meeting and assuming the stockholders approve the amendment
to the Certificate of Incorporation contained in Proposal Two, the Class I
nominees will be elected to hold office until the 2003 Annual Meeting or until
successors are elected and have qualified, the Class II nominees will be
elected to hold office until the 2004 Annual Meeting or until successors are
elected and have qualified, and the Class III nominees will be elected to hold
office until the 2005 Annual Meeting or until successors are elected and have
qualified. Beginning with the 2003 Annual Meeting and continuing at each Annual
Meeting thereafter, the directors standing for election in that year shall be
elected for three-year terms. In the event that the amendment contained in
Proposal Two is not adopted by the stockholders, all of the nominees shall be
elected to hold office until the 2003 Annual Meeting or until successors are
elected and qualified.

All shares represented by proxies will be voted "FOR" the election of the
foregoing nominees (to the Class indicated below) unless otherwise instructed.
If any nominee should withdraw or otherwise become unavailable for reasons not
presently known, the proxies which would have otherwise been voted for such
nominee will be voted for such substitute nominee as may be selected by the
Board of Directors. It is not expected that any nominee will be unable or will
decline to serve as a director.

NOMINEES FOR DIRECTOR

Class I Directors Class II Directors Class III Directors
(One-Year Initial Term) (Two-Year Initial Term) (Three-Year Initial Term)
----------------------- ----------------------- -------------------------
Henry F. Frigon R. Scott Gill Jeffrey T. Gill
Robert E. Gill Roger W. Johnson Sidney R. Petersen
William L. Healey Robert Sroka

The following table contains certain information, which has been
furnished to the Company by the individuals named, concerning the nominees, all
of whom are currently serving as directors.

Name Age Position and Principal Occupation
- ---- --- ---------------------------------

Robert E. Gill 76 Director; Chairman of the Board of the Company
Jeffrey T. Gill 46 Director; President and Chief Executive Officer of the Company
R. Scott Gill 43 Director; Managing Broker, Koenig & Strey GMAC Real Estate
Henry F. Frigon 67 Director; Private Investor and Consultant; Chairman of CARSTAR, Inc.;
Former President and Chief Executive Officer of BATUS, Inc.; Former
Executive Vice President and Chief Financial Officer of Hallmark
Cards, Inc.
William L. Healey 57 Director; President and Chief Executive Officer of Cal Quality
Electronics, Inc.; Former Chairman, President and Chief Executive
Officer of Smartflex Systems, Inc.
Roger W. Johnson 67 Director; Chairman and Chief Executive Officer of Collectors Universe;
Former Chief Executive Officer of YPO International; Former
Administrator of U.S. General Services Administration; Former
Chairman and Chief Executive Officer of Western Digital Corporation
Sidney R. Petersen 71 Director; Retired; Former Chairman and Chief Executive Officer of
Getty Oil, Inc.
Robert Sroka 52 Director; Managing Partner, Lighthouse Partners, LLC; Former
Managing Director of J.P. Morgan

The following is a brief summary of the business experience of each of
the nominees.

Robert E. Gill has served as chairman of the Board of the Company and
Chairman of the Board of the Company's predecessor since 1983, and served as
President and Chief Executive Officer of the Company's predecessor from 1983 to
1992. Prior to 1983, Mr. Gill served in a number of senior executive positions,
including Chairman, President and Chief Executive Officer of Armor Elevator
Company, Vice President of A.O. Smith Corporation and President of Elevator
Electric Company. Mr. Gill holds a BS degree in Electrical Engineering from the
University of Washington and an MBA from the University of California at
Berkeley. Robert E. Gill is the father of Jeffrey T. Gill and R. Scott Gill.

Jeffrey T. Gill has served as a director of the Company and as a director
of the Company's predecessor since 1983 and as the Chief Executive Officer of
the Company and the Company's predecessor since 1992. He served as Executive
Vice President of the Company's predecessor from 1983 to 1992. Mr. Gill holds a
BS degree in Business Administration from the University of Southern California
and an MBA from Dartmouth College. Jeffrey T. Gill is the son of Robert E. Gill
and the brother of R. Scott Gill.

R. Scott Gill has served as a director of the Company and as a director
of the Company's predecessor since 1983. Mr. Gill currently serves as a
Managing Broker with Koenig & Strey GMAC Real Estate, a residential real estate
firm, and served as an Associate from 1999 to 2001. Mr. Gill served as a
Project Manager with IA Chicago, P.C., an architectural design firm, from 1998
to 1999, as the Company's Senior Vice President and Secretary from 1997 to 1998
and as the Vice President and Secretary of the Company and the Company's
predecessor from 1983 to 1998. R. Scott Gill is the son of Robert E. Gill and
the brother of Jeffrey T. Gill.

Henry F. Frigon has served as a director of the Company since 1977. Mr.
Frigon served as a director of Sypris Electronics, LLC from 1994 until its
merger with the Company in 1998. From 1994 to the present, he has been a
private investor and business consultant. Mr. Frigon currently serves as
Chairman of CARSTAR, a national provider of collision repair services, and
served as its President and Chief Executive Officer from 1998 to 2001. He
served as Executive Vice President-Corporate Development and Strategy and Chief
Financial Officer of Hallmark Cards from 1990 through 1994. He retired as
President and Chief Executive Officer of BATUS in 1990, after serving with that
company for over 10 years. Mr. Frigon currently serves as a director of H&R
Block, Buckeye Technologies, Dimon, Tuesday Morning and Packaging Corporation
of America.

William L. Healey has served as a director of the Company since 1997. On
March 11, 2002, Mr. Healey was named President and Chief Executive Officer of
Cal Quality Electronics, Inc., an electronics manufacturing company. From 1999
to March 2002, he was a private investor and consultant. Mr. Healey served as a
Director of Smartflex Systems, Inc., an electronics technology manufacturing
company, from 1993 to 1999, as its Chairman of the Board from 1996 to 1999, and
as its President and Chief Executive Officer from 1989 to 1999. Prior to
joining Smartflex, Mr. Healey served in several executive positions with
Silicon Systems, including Senior Vice President of Operations.

Roger W. Johnson has served as a director of the Company since 1997. Mr.
Johnson served as a director of Sypris Electronics, LLC from 1996 until its
merger with the Company in 1998. He has served as Chairman and Chief Executive
Officer of Collectors Universe, a provider of services to dealers and
collectors of high-end collectibles, since October 2001. Mr. Johnson served as
Chief Executive Officer of YPO International (the Young Presidents
Organization) from 1998 to 2000, Administrator of the United States General
Services Administration from 1993 to 1996, and as Chairman and Chief Executive
Officer of Western Digital Corporation from 1982 through 1993. He currently
serves as a director of the Needham Funds, Inc., Insulectro, Collectors
Universe, Maxtor Corporation and Computer Access Technology Corporation.

Sidney R. Petersen has served as a director of the Company since 1997.
Mr. Petersen served as a director of Sypris Electronics, LLC from 1994 until
its merger with the Company in 1998. Mr. Petersen retired as Chairman of the
Board and Chief Executive Officer of Getty Oil in 1984, where he served in a
variety of increasingly responsible management positions since 1955. Mr.
Petersen currently serves as a director of Avery Dennison Corporation.

Robert Sroka has served as a director of the Company since 1997. Mr.
Sroka has served as the Managing Partner of Lighthouse Partners, LLC, a private
investment and business consulting company, since 1998. Mr. Sroka served as
Managing Director of Investment Banking-Mergers and Acquisitions for J.P.
Morgan from 1994 to 1998, and in a variety of senior executive positions at
J.P. Morgan, including Vice President-Investment Banking and Vice
President-Corporate Finance, from 1985 to 1994. Mr. Sroka currently serves as a
director of Avado Brands.

MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES LISTED ABOVE

Board of Directors and Committees of the Board of Directors

The Board of Directors held a total of six regularly scheduled meetings
and one special meeting during the fiscal year ended December 31, 2001. All
incumbent directors attended at least 75% of the meetings of the Board of
Directors and the respective committees of which they are members, except for
Roger W. Johnson and Sidney R. Petersen. The Board of Directors currently has
four standing committees as described below.

The Audit and Finance Committee of the Board of Directors consists solely
of independent directors (as defined in Rule 4200(a)(14) of the National
Association of Securities Dealers, Inc.) and currently consists of Roger W.
Johnson, Sidney R. Petersen and Robert Sroka. During the fiscal year ended
December 31, 2001, the Audit and Finance Committee consisted of Roger W.
Johnson, William L. Healey and Robert Sroka. On February 26, 2002, William L.
Healey resigned from the Audit and Finance Committee, and the Board of
Directors appointed Sidney R. Petersen to the Audit and Finance Committee
effective February 26, 2002. The Company's Board of Directors has adopted a
written charter for the Audit and Finance Committee which sets out the
Committee's specific functions and responsibilities. The Audit and Finance
Committee has responsibility for: (i) consultation with Company officers
regarding the retention or replacement of independent auditors and making
recommendations to the Board of Directors for any such retention or
replacement; (ii) establishing, reviewing and evaluating activities of the
independent auditors and the Company's internal audit function; (iii) reviewing
annual financial statements and quarterly financial results with management;
(iv) consulting with independent auditors regarding the conduct of audits and
reviews; (v) reviewing recommendations of the independent auditors; (vi)
reviewing the Company's financial reporting, loss exposure and asset control;
(vii) discussing the auditor's independence from management; (viii) overseeing
special investigations; (ix) reviewing debt-equity ratios, coverage of fixed
charges and other financial ratios; (x) reviewing Company debt and credit
arrangements; (xi) assisting with the development of financing strategies;
(xii) reviewing investment banking relationships; (xiii) preparing required
Securities and Exchange Commission reports; and (xiv) annually reviewing and
assessing its charter. The Audit and Finance Committee held six meetings during
the fiscal year ended December 31, 2001.

The Compensation Committee of the Board of Directors currently consists
of Henry F. Frigon, William L. Healey and Sidney R. Petersen. The functions
performed by the Compensation Committee include: (i) overseeing executive
compensation (including compensation for the chief executive officer); (ii)
reviewing the Company's overall compensation programs and administering certain
of the Company's incentive compensation programs; (iii) overseeing director
compensation, Company benefit plans and any loans to executive officers of the
Company; (iv) overseeing Company programs for attraction and retention of
senior management; and (v) annually reviewing and assessing its charter. The
Compensation Committee held four meetings during the fiscal year ended December
31, 2001.

The Executive Committee of the Board of Directors currently consists of
Robert E. Gill, Jeffrey T. Gill, R. Scott Gill and Henry F. Frigon. Except for
certain powers which under Delaware law may only be exercised by the full Board
of Directors, the Executive Committee has and exercises the powers of the Board
of Directors in monitoring the management of the business of the Company
between meetings of the Board of Directors. The Executive Committee held no
meetings during the fiscal year ended December 31, 2001.

The Nominating and Governance Committee of the Board of Directors
currently consists of William L. Healey, Roger W. Johnson and Robert Sroka.
During the fiscal year ended December 31, 2001, the Nominating and Governance
Committee consisted of Sidney R. Petersen, Roger W. Johnson and Robert Sroka.
On February 26, 2002, Sidney R. Petersen resigned from the Nominating and
Governance Committee, and the Board of Directors appointed William L. Healey to
the Nominating and Governance Committee effective February 26, 2002. The
Nominating and Governance Committee has responsibility for: (i) establishing
the criteria for and reviewing the effectiveness of the Board of Directors and
the executive officers of the Company; and (ii) providing oversight with regard
to the Company's various programs regarding management succession, business
ethics and other governance issues. The Nominating and Governance Committee
held two meetings during the fiscal year ended December 31, 2001. The
Nominating and Governance Committee will not consider nominations recommended
by security holders.

Compensation of Directors

Independent (i.e., non-employee) directors (currently Henry F. Frigon, R.
Scott Gill, William L. Healey, Roger W. Johnson, Sidney R. Petersen and Robert
Sroka) are paid an annual retainer of $15,000, a fee of $1,000 for attending
each meeting of the Board of Directors ($300 if attendance is by phone), a fee
of $1,250 for acting in the capacity of chairman for each Committee meeting
($300 if attendance is by phone) and a fee of $1,000 for attending

each Committee meeting ($300 if attendance is by phone). Committee fees are
only earned if the Committee meetings are held on a date other than a Board of
Directors' meeting date. Independent directors may elect to receive their
annual retainer and meeting fees in the form of stock options granted pursuant
to the Sypris Solutions, Inc. Independent Directors' Stock Option Plan in lieu
of cash, the number of options determined by dividing the annual retainer and
fee amount by 33% of the fair market value of the Common Stock on the date of
grant. The options are granted at fair market value on the grant date and are
immediately exercisable. During 2001, Mr. Johnson, Mr. Petersen and Mr. Sroka
elected to receive their annual retainer and meeting fees in the form of stock
options, and a total of 29,344 options were granted to those independent
directors in payment of director fees. Independent directors also receive
initial and annual grants of stock options for each elected term as a director
under the Company's Independent Directors' Stock Option Plan. Each independent
director was granted an option to purchase 10,000 shares upon his election to
the Board of Directors on May 1, 2001. The period during which an option must
be exercised is 10 years from the date of grant. No director exercised stock
options in 2001. All directors are reimbursed for travel and related expenses
incurred by them in attending meetings of the Board of Directors and
Committees. Directors who are employees of the Company or any of its affiliates
are not eligible to receive compensation for services rendered as a director.

Executive Officers

The executive officers of the Company, their ages and their positions
with the Company are as follows:

Name Age Position with the Company
- ---- --- -------------------------

Robert E. Gill 76 Chairman of the Board
Jeffrey T. Gill 46 President and Chief Executive Officer
James G. Cocke 54 Vice President; President and Chief Executive Officer of Sypris
Electronics, LLC
John M. Kramer 59 Vice President; President and Chief Executive Officer of Sypris
Technologies, Inc.
G. Darrell Robertson 59 Vice President; President and Chief Executive Officer of Sypris Data
Systems, Inc.
Henry L. Singer II 56 Vice President; President and Chief Executive Officer of Sypris Test &
Measurement, Inc.
David D. Johnson 46 Vice President, Chief Financial Officer and Treasurer
Richard L. Davis 48 Senior Vice President and Secretary
Anthony C. Allen 43 Vice President, Controller and Assistant Secretary

James G. Cocke has served as Vice President of the Company since December
2000 and as President and Chief Executive Officer of the Company's Sypris
Electronics, LLC subsidiary since August 2000. Mr. Cocke served

as Vice President of Finance, Contracts and Program Management for Sypris
Electronics, LLC from 1997 to 2000, and as Manager of Services Division of the
Company's Sypris Test & Measurement, Inc. subsidiary from 1995 to 1997. Prior
to 1995, Mr. Cocke held senior financial positions at SAIC, CAE Link
Corporation, Smiths Industries and E-Systems. Mr. Cocke holds a BS degree in
Business and an MS in Accounting from Roosevelt University.

John M. Kramer has served as Vice President of the Company since December
2000, as President and Chief Executive Officer of the Company's Sypris
Technologies, Inc. subsidiary since 1985, and in various executive positions at
Sypris Technologies, Inc. from 1977 to 1985. Mr. Kramer holds a BS degree in
Management from the University of Louisville.

G. Darrell Robertson has served as Vice President of the Company since
December 2000 and as President and Chief Executive Officer of the Company's
Sypris Data Systems, Inc. subsidiary since February 2000. Mr. Robertson served
as an Executive Consultant for Atlantic Management Associates and as Managing
Partner for TMT Acquisition, both small business consulting firms, from 1998 to
2000, as President of Aydin Telemetry, an electronics instrumentation and
products company, from 1997 to 1998, and as Vice President of Controlotron
Corporation from 1994 to 1996. Prior to 1994, Mr. Robertson served in a variety
of senior executive positions with Republic Electronics Corporation and
Aeroflex Laboratories. Mr. Robertson holds BS and MS degrees in Electrical
Engineering from Purdue University.

Henry L. Singer II has served as Vice President of the Company since
December 2000 and as President and Chief Executive Officer of the Company's
Sypris Test & Measurement, Inc. subsidiary since March 1998. Mr. Singer served
as President of Powers Process Controls, a manufacturer of specialty commercial
and industrial plumbing products, from 1991 to 1998, and in a variety of senior
management positions with Powers Process Controls from 1975 to 1991. Mr. Singer
holds a BS degree in Mechanical Engineering from Vanderbilt University and an
MBA from Emory University.

David D. Johnson has served as the Company's Vice President and Chief
Financial Officer and Treasurer since September 1997. Mr. Johnson served as a
Vice President and Chief Financial Officer of Sypris Electronics, LLC from 1996
until its merger with the Company in 1998. Mr. Johnson served as Financial
Director, Far East South for Molex Inc. from 1993 to 1996, and in various
management positions for Molex from 1984 to 1993. Prior to 1984, Mr. Johnson
served as a senior manager for KPMG Peat Marwick. Mr. Johnson holds a BA degree
in Economics from Stanford University.

Richard L. Davis has served as Senior Vice President of the Company since
September 1997 and as Secretary of the Company since June 1998. He served as a
Vice President and Chief Financial Officer of the Company's predecessor from
1985 to 1997. Prior to 1985, Mr. Davis served as Corporate Controller for Armor
Elevator Company and as an Audit Supervisor for Coopers and Lybrand. Mr. Davis
holds a BS degree in Business Administration from Indiana University and an MBA
from the University of Louisville. Mr. Davis is a certified public accountant
in the state of Kentucky.

Anthony C. Allen has served as the Company's Vice President, Controller
and Assistant Secretary since September 1997. He served as Vice President of
Finance of the Company's predecessor from 1994 to 1998, and as a Vice President
and Controller of the Company's predecessor from 1987 to 1994. Prior to 1987,
Mr. Allen served as General Accounting Manager for Armor Elevator Company. Mr.
Allen holds a Bachelors degree in Business Administration from Eastern Kentucky
University and an MBA from Bellarmine University. Mr. Allen is a certified
public accountant in the state of Kentucky.

Officers are appointed by the Board of Directors and serve at the
discretion of the Board of Directors.

Executive Compensation

The following table sets forth the remuneration paid during the last
three (3) fiscal years by the Company to (i) Jeffrey T. Gill, the President and
Chief Executive Officer of the Company, and (ii) each of the Company's four (4)
most highly compensated executive officers in fiscal year 2001 (collectively,
the "Named Officers").

SUMMARY COMPENSATION TABLE

Long Term
Annual Compensation Compensation Awards
----------------------------- --------------------
Other Restricted Securities All
Annual Stock Underlying Other
Name and Principal Position Year Salary Bonus Compensation Awards Options/SARs Compensation
- --------------------------- ---- -------- ------- ------------ ---------- ------------ ------------

Jeffrey T. Gill 2001 $341,169 -- -- -- -- $10,740(1)(2)
President and Chief Executive 2000 310,550 -- -- -- -- 7,971(3)(4)
Officer 1999 274,327 -- -- -- 100,000(5) 7,492(6)

James G. Cocke 2001 $217,308 -- -- -- 10,000(5) $ 5,666(1)(2)
Vice President; President and 2000 176,977 $39,638 -- -- 55,000(7)(8) 5,192(3)(4)//
Chief Executive Officer of Sypris Electronics, 1999 147,308 42,000 -- -- -- 5,541(6)(9)
LLC

John M. Kramer 2001 $213,577 -- -- -- 40,000(5) $ 719(2)
Vice President; President and 2000 185,962 $21,412 -- -- 15,000(5) 637(4)
Chief Executive Officer of Sypris 1999 168,269 52,834 -- -- -- 711(9)
Technologies, Inc

David D. Johnson 2001 $200,423 -- -- -- 25,000(5) $10,499(1)(2)
Vice President, Chief Financial 2000 185,846 $26,950 -- -- 10,000(5) 8,668(3)(4)
Officer and Treasurer 1999 177,308 29,248 -- -- -- 7,314(6)

Richard L. Davis 2001 $196,108 -- -- -- 40,000(5) $10,238(1)(2)
Senior Vice President and 2000 185,884 26,950 -- -- 10,000(5) 8,114(3)(4)
Secretary 1999 174,077 29,248 -- -- -- 8,000(6)

- --------

(1) Includes contributions to 401(k) Retirement Plan ($10,200 for Mr. Gill,
$5,181 for Mr. Cocke, $10,200 for Mr. Johnson, and $10,200 for Mr. Davis).

(2) Includes amounts paid on Group Term Life Insurance policies ($540 for Mr.
Gill, $485 for Mr. Cocke, $719 for Mr. Kramer, $299 for Mr. Johnson, and
$38 for Mr. Davis).

(3) Includes contributions to 401(k) Retirement Plan ($7,650 for Mr. Gill,
$4,716 for Mr. Cocke, $7,650 for Mr. Johnson, and $7,650 for Mr. Davis).

(4) Includes amounts paid on Group Term Life Insurance policies ($321 for Mr.
Gill, $476 for Mr. Cocke, $637 for Mr. Kramer, $1,018 for Mr. Johnson, and
$464 for Mr. Davis).

(5) Options pursuant to 1994 Stock Option Plan for Key Employees.

(6) Includes contributions to 401(k) Retirement Plan ($7,492 for Mr. Gill,
$5,134 for Mr. Cocke, $7,314 for Mr. Johnson, and $8,000 for Mr. Davis).

(7) Includes 35,000 options pursuant to 1994 Stock Option Plan for Key
Employees.

(8) Includes eight (8) performance-based options to purchase 2,500 shares of
Common Stock each at the higher of the target share price ("Target Share
Price") of $15, $20, $25, $30, $35, $40, $45 and $50, respectively, the
fair market value of the Common Stock on the date the performance-based
options are granted, or the fair market value of the Common Stock on the
first business day following the calendar quarter in which the average
daily fair market value of the Common Stock equals or exceeds the Target
Share Price for the preceding calendar quarter. The options vest in equal
annual amounts of 20%, commencing with the second anniversary of the date
the Target Share Price is achieved.

(9) Includes amounts paid on Group Term Life Insurance policies ($407 for Mr.
Cocke and $711 for Mr. Kramer).

The following table shows grants of options to purchase our Common Stock
to the Named Officers during the year ended December 31, 2001:

Option/SAR Grants in Last Fiscal Year

Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term (2)
------------------------------------------------ ----------------------
Percent of
Number of Total
Securities Options/SARs
Underlying Granted to
Options/SARs Employees in Exercise or Expiration
Name Granted Fiscal Year Base Price Date 5% 10%
- ---- ------------ ------------ ----------- ---------- -------- --------

Jeffrey T. Gill. -- -- -- -- -- --
James G. Cocke.. 10,000(1) 1.8% $6.25 02/26/09 $ 29,841 $ 71,474
John M. Kramer.. 40,000(1) 7.4 6.25 02/26/09 119,364 285,897
David D. Johnson 25,000(1) 4.6 6.25 02/26/09 74,602 178,686
Richard L. Davis 40,000(1) 7.4 6.25 02/26/09 119,364 285,897

- --------
(1) These options, pursuant to the Sypris Solutions, Inc. 1994 Stock Option
Plan for Key Employees, are exercisable in five equal annual installments,
commencing February 27, 2003.
(2) Potential realizable value calculated based upon the market price of the
underlying securities on the date of grant of $6.25.

The following table contains information with respect to the Named
Officers concerning aggregated option exercises during the year ended December
31, 2001 and the value of unexercised options held as of December 31, 2001.

Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values

Number of Securities Value of Unexercised
Underlying Unexercised in-the-money
Options/SARs at Options/SARS at
Shares Fiscal Year-End Fiscal Year-End (1)
Acquired on Value ------------------------- -------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------- ----------- -------------

Jeffrey T. Gill. -- -- 20,000 80,000 $112,900 $451,600
James G. Cocke.. -- -- 12,500 97,500 100,250 276,775
John M. Kramer.. 20,354 $ 67,575 18,750 95,000 93,682 308,600
David D. Johnson -- -- 39,750 95,250 232,695 278,105
Richard L. Davis 34,516 275,313 38,516 96,000 407,111 321,620

- --------
(1) Value of in-the-money options is based on the excess of the closing price
of the Common Stock of the Company on December 31, 2001 ($13.02) over the
exercise price of the options, multiplied by the number of shares
underlying the options.

Employment Contracts and Termination, Severance and Change of Control
Arrangements

Sypris Data Systems, Inc. entered into an employment agreement in
February 2000 with G. Darrell Robertson, its President and Chief Executive
Officer. Subject to certain conditions, the term of the employment agreement
extended from February 28, 2000 through February 27, 2001. During the term of
the agreement, Mr. Robertson received a base salary of $185,000, which amount
was subject to adjustment by Sypris Data Systems, Inc. at its sole discretion.
The agreement also provided that if Sypris Data Systems, Inc. terminated Mr.
Robertson without cause or for other than certain specified reasons, Mr.
Robertson would have received pay continuance for a period of one year from the
date of termination, along with customary medical and dental benefits and life
insurance coverage for a period of one year from the date of termination. Mr.
Robertson agreed to certain nonsolicitation and noncompetition provisions which
were subject to the term of the agreement, and he also agreed to certain
confidentiality provisions which shall remain in force beyond the term of the
agreement and survive its termination.

COMPENSATION COMMITTEE REPORT

Executive Compensation

Executive Compensation Philosophy. The Company's executive compensation
policy is based on principles designed to insure that an appropriate
relationship exists between executive pay and corporate performance, while at
the same time motivating and retaining executive officers. The Compensation
Committee of the Board of Directors (the "Compensation Committee") is composed
entirely of outside directors. The Compensation Committee is responsible for
setting and administering the policies and programs that govern both annual
compensation and stock option programs for the executive officers of the
Company.

Executive Compensation Components. The key components of the Company's
compensation program are: (i) base salary; (ii) an annual cash incentive award;
and (iii) long-term incentive by means of equity participation through stock
options. These components are administered with the goals of providing total
compensation that is competitive in the marketplace, rewarding successful
financial performance and aligning the interests of executive officers with
those of stockholders. The Compensation Committee reviews each component of
executive compensation on an annual basis.

Base Salary. Base salaries for executive officers are set near the
average levels believed by the Compensation Committee to be sufficient to
attract and retain qualified executive officers. Base salary adjustments are
provided to executive officers based upon an evaluation of each executive's
performance, as well as the performance of the Company as a whole. While the
Compensation Committee does not establish a specific formula or target to
determine base salaries, the Compensation Committee does review detailed survey
data from a number of independent sources and services regarding the base
salaries of executive officers in companies of similar size and in similar
industries. In this regard, the Compensation Committee also considers the
relative financial performance of these companies, especially with regard to
growth in earnings and return on equity. The Compensation Committee also
considers the success of the executive officers in developing and executing the
Company's strategic plans, developing management employees and demonstrating
leadership.

Annual Incentive Award. The Compensation Committee believes that a
significant proportion of total cash compensation for executive officers should
be subject to the attainment of specific Company objectives, as well as the
attainment of specific individual objectives that are established annually with
each of the executive officers. This approach creates a direct incentive for
executive officers to achieve desired performance goals and places a
significant percentage of each officer's compensation at risk. Consequently, at
the beginning of each year, the Compensation Committee establishes potential
bonuses for executive officers based upon their ability to achieve planned
profit and working capital targets and the achievement of specific operational
objectives.

For 2001, the Compensation Committee established a cash bonus potential
for the Company's executive officers of approximately 46% to 54% of base
salaries and a stock option grant potential of 12,750 shares to 24,000 shares.
The Compensation Committee established the potential bonuses based upon its
judgment that the cash and stock option bonus potential should be tied to the
achievement of planned profit and working capital targets. For 2001, six
executive officers qualified for cash bonuses of between 5% and 34% of base
salaries and stock option grants of between 1,700 shares and 9,000 shares. Such
bonuses were based upon the achievement of planned profit and working capital
targets in 2001 and also included a discretionary component. The cash bonuses
were determined and will be paid during 2002. The stock option grants were
determined and granted in March 2002.

Equity Participation Through Stock Options. The Compensation Committee
believes that equity participation through stock options (including
performance-based options) is a key component of its executive compensation
program. The use of such awards provides a long-term link between the results
achieved for the Company's stockholders and the reward provided to executive
officers. Stock options are granted to executive officers primarily based on
the officer's actual and potential contribution to the Company and the
practices of other companies of similar size and in similar industries. Option
grants are designed to retain executive officers and motivate them to enhance
stockholder value by aligning the financial interests of the executive officers
with those of the Company's stockholders. Stock options also provide an
effective incentive for management to create

stockholder value over the long term since the full benefit of the compensation
package cannot be realized unless an appreciation in the price of the Company's
stock occurs over a number of years.

Options to purchase a total of 160,000 shares of the Company's Common
Stock were granted to executive officers in 2001 with an exercise price equal
to the fair market value of the underlying Common Stock on the date of grant.
No performance-based options were granted either to the President and Chief
Executive Officer or other executive officers in 2001.

Compensation of Chief Executive Officer. Consistent with the executive
compensation policy and components described above, the Compensation Committee
determined the salary and bonus received by Jeffrey T. Gill, the President and
Chief Executive Officer of the Company, for services rendered in 2001. Mr. Gill
received a base salary of $341,169 for 2001. Mr. Gill's salary, as increased in
2001, was not tied to specific performance criteria, but the Compensation
Committee determined such salary to be appropriate based upon its survey of
salaries paid to peers, attainment of non-financial corporate objectives and
other factors. Mr. Gill qualified for, but elected not to receive, a bonus for
2001. The Compensation Committee did not grant any stock options to Mr. Gill in
2001.

Section 162(m) of the Internal Revenue Code

Section 162(m) of the Code generally limits the corporate deduction for
compensation paid to certain executive officers to one million dollars
($1,000,000), unless the compensation is performance-based. It is the
Compensation Committee's intention that, so long as it is consistent with its
overall compensation objectives, virtually all executive compensation shall be
deductible for federal income tax purposes. It is the Compensation Committee's
opinion that the stockholders' interest will be better served over the longer
term by preserving the deductibility of its executive officers' compensation.

Members of the Compensation Committee

Henry F. Frigon

William L. Healey

Sidney R. Petersen

Compensation Committee Interlocks and Insider Participation

The Compensation Committee is composed of Henry F. Frigon, William L.
Healey and Sidney R. Petersen. None of the current members of the Compensation
Committee are employees of the Company. The Company is unaware of any
relationships during the fiscal year ended December 31, 2001 among its officers
and directors which would require disclosure under this caption. See also the
discussion above under Certain Relationships and Related Transactions.

AUDIT AND FINANCE COMMITTEE REPORT

The responsibilities of the Audit and Finance Committee, which are set
forth in the Audit and Finance Committee Charter adopted by the Board of
Directors, include providing oversight of the Company's financial reporting
process through periodic meetings with the Company's independent auditors,
internal auditors and management to review accounting, auditing, internal
controls and financial reporting matters. The management of the Company is
responsible for the preparation and integrity of the financial reporting
information and related systems of internal controls. The Audit and Finance
Committee, in carrying out its role, relies on the Company's senior management,
including senior financial management, and its independent auditors.

The Audit and Finance Committee reviewed and discussed with management
and with Ernst & Young LLP, the Company's independent auditors, the Company's
audited financial statements included in the 2001 Annual

Report to Stockholders. Management has confirmed to the Audit and Finance
Committee that such financial statements: (i) have been prepared with integrity
and objectivity and are the responsibility of management; and (ii) have been
prepared in conformity with generally accepted accounting principles.

The Audit and Finance Committee discussed with Ernst & Young LLP the
matters required to be discussed by Statement on Auditing Standards No. 61
("SAS 61") (Communications with Audit Committees). SAS 61 requires the
Company's independent auditors to provide the Audit and Finance Committee with
additional information regarding the scope and results of their audit of the
Company's financial statements, including with respect to: (i) their
responsibility under generally accepted auditing standards; (ii) significant
accounting policies; (iii) management judgments and estimates; (iv) any
significant audit adjustments; (v) any disagreements with management; and (vi)
any difficulties encountered in performing the audit.

The Audit and Finance Committee received from Ernst & Young LLP written
disclosures and a letter required by Independence Standards Board Standard No.
1 (Independence Discussions with Audit Committees) with respect to any
relationships between Ernst & Young LLP and the Company that, in their
professional judgment, may reasonably be thought to bear on independence. The
Audit and Finance Committee has discussed with Ernst & Young LLP their
independence, and Ernst & Young LLP has confirmed by letter that, in its
professional judgment, it is independent of the Company within the meaning of
the federal securities laws.

As specified in the Charter of the Audit and Finance Committee, it is not
the duty of the Audit and Finance Committee to plan or conduct audits or to
determine that the Company's financial statements are complete and accurate and
in accordance with generally accepted accounting principles. That is the
responsibility of management and the Company's independent auditors. The Audit
and Finance Committee discussed with management and the independent auditors
the quality and adequacy of the Company's internal controls and the internal
audit function's organization, responsibilities, budget and staffing. The Audit
and Finance Committee reviewed with the independent auditors their audit plans,
audit scope and identification of audit risks. In giving its recommendation to
the Board of Directors, the Audit and Finance Committee relied on: (i)
management's representation that such financial statements have been prepared
with integrity and objectivity and in conformity with generally accepted
accounting principles; and (ii) the report of the Company's independent
auditors with respect to such financial statements.

Based on the review and discussions described above, the Audit and
Finance Committee recommended to the Board of Directors (and the Board of
Directors has approved) that the Company's audited financial statements be
included in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2001.

Members of the Audit and Finance Committee

Roger W. Johnson

William L. Healey*

Robert Sroka

*William L. Healey resigned from the Audit and Finance Committee effective
February 26, 2002. On that date, the Board of Directors appointed
Sidney R. Petersen to fill the vacancy on the Audit and Finance Committee.

PERFORMANCE GRAPH

The following graph shows a comparison of the cumulative total
stockholder return, calculated on a dividend reinvestment basis, from December
31, 1996 through December 31, 2001. Since March 30, 1998, the Company's Common
Stock has been traded on the Nasdaq National Market under the symbol "SYPR."
Prior to that date, the common stock of Sypris Electronics, LLC (formerly Group
Technologies Corporation) was traded on the Nasdaq National Market under the
symbol "GRTK." In the performance graph, the cumulative total stockholder
return of the Company is compared to the Russell 2000 Index and the S&P
SmallCap 600 Index. The S&P SmallCap 600 Index has been selected as a basis of
comparison since the Company believes the S&P SmallCap 600 Index appropriately
tracks the performance of multi-industry businesses at the Company's level of
market capitalization.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*

Among Sypris Solutions, Inc., The S&P SmallCap 600 Index and The Russell 2000
Index

[Graph]

*$100 INVESTED ON 12/31/96 IN STOCK OR INDEX - INCLUDING REINVESTMENT
OF DIVIDENDS, FISCAL YEAR ENDING DECEMBER 31.

Sypris Solutions, Inc.
Proxy Performance Graph
Year Ended 12/31/01

12/96 12/97 3/98 12/98 12/99 12/00 12/01
----- ----- ---- ----- ----- ----- -----

Sypris Solutions, Inc. 100 281 263 149 225 172 326
S&P SmallCap 600 Index 100 125 138 122 136 151 160
Russell 2000 Index.... 100 122 135 119 145 140 144

PROPOSAL FIVE

APPROVAL OF AN AMENDMENT TO THE SYPRIS SOLUTIONS, INC.
1994 STOCK OPTION PLAN FOR KEY EMPLOYEES TO INCREASE THE NUMBER OF SHARES
AUTHORIZED FOR ISSUANCE THEREUNDER FROM 2,500,000 TO 4,000,000

The Sypris Solutions, Inc. 1994 Stock Option Plan for Key Employees (the
"Key Employees Plan") was adopted by the Board of Directors and approved at the
1995 annual meeting of stockholders of Group Technologies Corporation. On March
30, 1998, the Company became the successor to Group Technologies Corporation
pursuant to a reincorporation merger of Group Technologies Corporation with and
into the Company (the "Reorganization"). On March 30, 1998, the Key Employees
Plan was amended and restated to reflect said Reorganization. In April 1998,
the Board of Directors adopted a proposal to amend the Key Employees Plan to
increase the aggregate number of shares of Common Stock reserved for issuance
under the Key Employees Plan from 1,250,000 shares to 2,500,000 shares, which
proposal was approved by the Company's stockholders in April 1998. The Key
Employees Plan was further amended, effective July 1, 1998, to provide for the
grant of performance-based options under the Key Employees Plan. The Board of
Directors adopted a proposal on February 26, 2002 to amend the Key Employees
Plan to increase the aggregate number of shares of Common Stock reserved for
issuance thereunder from 2,500,000 shares to 4,000,000 shares. The proposal to
amend the Key Employees Plan is subject to stockholder approval and, if not
approved, the amendment will not become effective. The Key Employees Plan
provides for the grant of incentive stock options (which satisfy the
requirements of Section 422(b) of the Code) ("ISOs") and nonqualified stock
options (which do not satisfy such requirements) ("NSOs"), and
performance-based options to key employees of the Company, including directors
of the Company who are also employees.

As of March 19, 2002, there were stock options outstanding covering
1,591,730 shares of Common Stock held by 176 persons, of which 416,000 are
performance-based options for which the target share price levels have not been
achieved, and only 75,057 shares of Common Stock remained available for future
awards under the Key Employees Plan. The number of shares available for future
grant may be reduced by 162,350 shares related to stock options that may be
subject to future grant under certain of the Company's incentive plans, based
upon the achievement of certain financial targets and individual performance
objectives and action by the Company's Board of Directors. The purpose of the
proposal is to increase the aggregate number of shares of Common Stock that may
be issued under the Key Employees Plan by 1,500,000 shares. This proposal is
expected to provide for sufficient shares under the Key Employees Plan through
the year 2004. In addition, if the proposal is adopted, the key employees of
the Company who are eligible to participate in the Key Employees Plan,
including the Company's President and Chief Executive Officer, who is also a
member of the Company's Board of Directors, could receive more benefits under
the Key Employees Plan than they could if the proposal is not adopted.

The following constitutes a brief discussion of the material features of
the Key Employees Plan and is qualified in its entirety by reference to the
full text of the Key Employees Plan, as amended and as proposed to be amended,
a copy of which is attached as Appendix C to this Proxy Statement.

The purpose of the Key Employees Plan 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 to use their best efforts in its behalf, and to aid
the Company in attracting, maintaining, and developing capable personnel by
offering such persons an opportunity to acquire or increase their proprietary
interest in the Company. Subject to the authority vested in the full Board of
Directors, the Compensation Committee generally administers the Key Employees
Plan. No director of the Company who is not also an employee of the Company or
a subsidiary is eligible to receive options under the Key Employees Plan. An
employee is selected to receive options under the Key Employees Plan at the
discretion of the full Board of Directors based upon the employee's past
contributions to the Company or the Board of Directors' expectations of the
employee's ability to contribute materially in the future to the successful
performance of the Company. The Board of Directors also determines the number
of shares subject to each option, fixes the period during which each option may
be exercised and fixes the prices at which shares subject to options may be
purchased. The aggregate fair market value (determined as of the date the
option is granted) of Common

Stock for which ISOs will first become exercisable by a grantee in any calendar
year under all ISO plans of the Company and its subsidiaries can not exceed
$100,000. Either the Compensation Committee or the Board of Directors will make
any other determinations necessary or advisable for the administration of the
Key Employees Plan.

While the Board of Directors intends to continue the Key Employees Plan
in effect until the scheduled termination date on October 27, 2004, the Board
of Directors may modify, amend, or terminate the Key Employees Plan without a
vote of the stockholders. The terms of the Key Employees Plan require
stockholder approval for certain modifications and amendments to the Key
Employees Plan. The Board of Directors may also seek stockholder approval of
material amendments to the Key Employees Plan in order to qualify the options
issued as ISOs under the Code and/or to meet the requirements for inclusion on
the Nasdaq National Market or listing on any exchange on which the Company's
securities are or may be listed.

The Key Employees Plan, as amended, will authorize the issuance of up to
4,000,000 shares of Common Stock. Currently the Key Employees Plan has
2,500,000 shares of Common Stock authorized for issuance. The shares to be
issued under the Key Employees Plan will be currently authorized but unissued
shares or shares held by the Company in its treasury. The number of shares of
Common Stock available under the Key Employees Plan will be subject to
adjustment by either the Compensation Committee or the Board of Directors to
prevent dilution in the event of a stock split, reorganization, merger,
consolidation, combination, exchange of shares, stock dividend or certain other
events. Shares of Common Stock subject to unexercised options that expire or
are terminated prior to the end of the period during which options may be
granted will be restored to the number of shares available for issuance under
the Key Employees Plan.

Each option granted under the Key Employees Plan will be evidenced by an
agreement which will establish the period in which the option may be exercised.
Except in the case of a performance-based option, the maximum term of each
option is ten years, except for an ISO granted to an employee beneficially
owning 10% of Common Stock ("10% Owner"). The exercise period for ISOs granted
to a 10% Owner may not exceed five years from the date of grant. The exercise
price of all ISOs and NSOs granted under the Key Employees Plan must be 100% of
the fair market value of such shares on the date of grant or, in the case of an
ISO granted to a 10% Owner, 110% of the fair market value of such shares.

The exercise price for a performance-based option must be the greater of
(i) the fair market value on the date of grant; (ii) the target share price set
by the Board of Directors in the option agreement that establishes the point at
which a performance-based option vests (the "Target Share Price"); or (iii) the
fair market value of the Common Stock on the first business day following the
calendar quarter in which the average daily fair market value of the Common
Stock equals or exceeds the Target Share Price for the preceding calendar
quarter. Performance-based options vest in equal 20% annual installments over a
five-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 on the sixth anniversary of the date the Target
Share Price has been achieved.

Performance-based options expire at the earliest of the following times:
(i) the failure to achieve the applicable Target Share Price within the time
period designated by the Board of Directors in the option agreement; (ii) on
the eighth anniversary date of the date the applicable Target Share Price is
achieved in the case of performance-based options granted as NSOs (or, in the
case of performance-based options granted as ISOs, the earlier of the eighth
anniversary of the date the Target Share Price is achieved or ten years from
the date of grant of the option); or (iii) any earlier time provided by the
Board of Directors in the option agreement. In addition, performance-based
options will expire thirty days after the Board of Directors makes a
determination that the optionee is no longer a "key employee."

No part of any option may be exercised to the extent that the exercise
would cause the grantee to have compensation from the Company in any year in
excess of $1,000,000 and which is nondeductible to the Company pursuant to
Section 162(m) of the Internal Revenue Code (the "Code") and regulations issued
thereunder. The purchase price of the shares to be paid to the Company at the
time of exercise may be paid in cash or in such other consideration as the
Board of Directors deems appropriate, including Common Stock already owned by
the grantee.

Options granted pursuant to the Key Employees Plan are not transferable except
upon the death of a grantee, in which event they may be transferred only in
accordance with and to the extent provided for in the laws of descent and
distribution. If a grantee's employment with the Company terminates for any
reason other than death, disability or retirement, all rights to exercise
options terminate at the date of such termination of employment. If a grantee
dies while employed by the Company or within three (3) months after termination
of employment due to a disability, the grantee's options may be exercised by
the person to whom the grantee's options have passed by will or applicable law,
at the earlier of the expiration date of the options or one year after the
grantee's death. If the grantee's employment is terminated because of a
disability and the grantee has not died within the three months following
termination, the grantee may exercise options at the earlier of the expiration
date or one year after termination of employment. If the grantee's employment
terminates by reason of retirement, generally the right to exercise options
terminates at the earlier of the expiration date of the options or three months
after the termination of employment. However, in certain cases, the Board of
Directors, pursuant to the provisions of the Key Employees Plan, has authorized
the Company to extend the amount of time that a grantee has to exercise an
option after employment termination.

Tax Consequences. The following is a summary of the principal federal
income tax consequences of transactions under the Key Employees Plan based on
current federal income tax laws. This summary does not describe state, local or
foreign tax consequences.

ISOs granted under the Key Employees Plan are intended to be "incentive
stock options" as defined by Section 422 of the Code. Under present law, the
grantee of an ISO will not realize taxable income upon the grant or the
exercise of the ISO. The Company will not receive an income tax deduction at
either of such times. If the grantee does not dispose of the shares of Common
Stock acquired upon exercising an ISO within either (i) two (2) years after the
date of grant of the ISO, or (ii) one (1) year after the date shares of Common
Stock are transferred to the grantee pursuant to the exercise of the ISO, the
gain upon a subsequent disposition of the shares will be taxed at capital gain
rates. If the grantee, within either of the above periods, disposes of the
shares of Common Stock acquired upon the exercise of an ISO, the grantee will
recognize as ordinary income in the year of disposition an amount equal to the
difference between the exercise price and the fair market value of the shares
on the date of exercise. In such event, the Company would be entitled to a
corresponding income tax deduction equal to the amount recognized as ordinary
income by the grantee. The gain in excess of such amount recognized by the
grantee as ordinary income would be taxed as a long-term capital gain or
short-term capital gain (subject to the holding period requirements for
long-term or short-term capital gain treatment).

The exercise of an ISO will result in the inclusion of the excess of the
stock's fair market value on the date of exercise over the exercise price in
the grantee's alternative minimum taxable income. Liability for the alternative
minimum tax is complex and depends upon an individual's overall tax situation.

Upon exercise of an NSO granted under the Key Employees Plan or upon the
exercise of an ISO that does not qualify for the tax treatment described above,
the grantee must recognize ordinary income in an amount equal to the excess of
the fair market value of the shares of Common Stock received over the exercise
price of such shares, which is subject to applicable income and employment tax
withholding. That amount increases the grantee's basis in the stock acquired
pursuant to the exercise of the NSO or ISO not qualifying for the tax treatment
described above. Upon a subsequent sale of the stock, the grantee will
recognize short-term or long- term capital gain or loss depending on his
holding period for the stock and upon the stock's subsequent appreciation or
depreciation in value. The Company will be allowed a federal income tax
deduction for the amount recognized as ordinary income by the grantee upon the
grantee's exercise of the option.

Options Granted in 2001. The following options were granted under the Key
Employees Plan during the year ended December 31, 2001. The options become
exercisable over various periods ranging from one year to eight years from the
date of grant and have terms ranging from five years to ten years from the date
of grant.

Number of Weighted Average Value of Options at
Name Options Granted Exercise Price March 19, 2002(1)
- ---- --------------- ---------------- -------------------

Jeffrey T. Gill.......................................... -- -- --
James G. Cocke........................................... 10,000 $6.25 $ 77,800
John M. Kramer........................................... 40,000 6.25 311,200
David D. Johnson......................................... 25,000 6.25 194,500
Richard L. Davis......................................... 40,000 6.25 311,200
All current executive officers as a group (9 persons).... 160,000 6.25 1,244,800
All employees, including all current officers who are not
executive officers as a group (111 persons)............ 383,475 6.31 2,960,576

- --------

(1) Based on the closing price of Common Stock as reported in the Nasdaq
National Market on March 19, 2002 of $14.03 per share. The actual value of
these options, if any, will depend on the excess of the stock price over
the exercise price on the date the option is exercised.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE THE
AMENDMENT TO THE 1994 STOCK OPTION PLAN FOR KEY EMPLOYEES. PROXIES SOLICITED BY
THE BOARD OF DIRECTORS WILL BE VOTED IN FAVOR OF THE PROPOSAL UNLESS
STOCKHOLDERS SPECIFY OTHERWISE.

PROPOSAL SIX

APPROVAL OF AN AMENDMENT TO THE SYPRIS SOLUTIONS, INC.
INDEPENDENT DIRECTORS' STOCK OPTION PLAN TO INCREASE THE NUMBER OF SHARES
AUTHORIZED FOR ISSUANCE THEREUNDER FROM 500,000 TO 750,000

The Sypris Solutions, Inc. Independent Directors' Stock Option Plan (the
"Independent Directors' Plan") was adopted by the Board of Directors of Group
Technologies Corporation on October 27, 1994, and was approved by the
stockholders of Group Technologies Corporation at the annual meeting of
stockholders held in April 1995. The Independent Directors' Plan was further
amended in February 1996 and was also amended in March 1998 to reflect the
Reorganization. The Board of Directors adopted a proposal on February 23, 1999
to further amend the Independent Directors' Plan to increase the aggregate
number of shares of Common Stock reserved for issuance thereunder from 250,000
to 500,000 shares, which proposal was approved by the stockholders of the
Company at the annual meeting of stockholders held in April 1999. The Board of
Directors adopted a proposal on February 26, 2002 to amend the Independent
Directors' Plan to further increase the aggregate number of shares of Common
Stock reserved for issuance thereunder from 500,000 shares to 750,000 shares.
The proposal to amend the Independent Directors' Plan is subject to stockholder
approval and, if not approved, the amendment will not become effective. The
Independent Directors' Plan provides for the grant of stock options to
directors of the Company who are not employed by the Company or its
subsidiaries or affiliates thereof.

As of March 19, 2002 there were stock options outstanding covering
429,513 shares of Common Stock held by six (6) persons and only 70,487 shares
of Common Stock remained available for future awards under the Independent
Directors' Plan. The proposed amendment is expected to provide a sufficient
number of additional shares under the Independent Directors' Plan for awards
thereunder through the year 2004, and if adopted, the directors who are not
employed by the Company or its subsidiaries or any affiliates thereof, could
receive more benefits under the Independent Directors' Plan than they could if
the proposal is not adopted.

The following constitutes a brief discussion of the material features of
the Independent Directors' Plan and is qualified in its entirety by reference
to the full text of the Independent Directors' Plan, as amended and as proposed
to be amended, a copy of which is attached as Appendix D to this Proxy
Statement.

The purpose of the Independent Directors' Plan is to promote the
interests of the Company by affording an incentive, in the form of an
opportunity for stock ownership, to certain persons not employed by the Company
and its subsidiaries or an affiliate thereof, to serve as directors of the
Company in order to capitalize on the additional expertise and business
judgment they provide to the Company.

The Independent Directors' Plan is administered by the Compensation
Committee of the Board of Directors. The Compensation Committee has full power
and authority to construe, interpret and administer the Independent Directors'
Plan and to adopt rules and regulations for carrying out the Independent
Directors' Plan as it may deem proper and in the best interests of the Company.
The full Board of Directors has the full and final authority in its discretion
to select the independent (i.e., non-employee) directors to whom options will
be granted under the Independent Directors' Plan, the number of shares of
Common Stock subject to each option, the times when options will be granted,
the manner in which each option will be exercisable, the duration of the
exercise period and such other provisions as the Board of Directors deems
necessary or desirable consistent with the provisions of the Independent
Directors' Plan. Either the Board of Directors or the Compensation Committee
has full and final authority in its discretion to determine all other questions
relating to the administration of the Independent Directors' Plan, subject to
the terms and conditions thereof. The Board of Directors has the right, at any
time, to amend, suspend or terminate the Independent Directors' Plan, provided
that no amendment shall make any changes in an outstanding option which would
adversely affect the rights of an optionee without such optionee's consent. The
Independent Directors' Plan will terminate October 26, 2004, unless terminated
sooner by the Board of Directors.

Only directors who are independent directors are eligible to receive
options under the Independent Directors' Plan. An independent director is a
director of the Company who is not an employee of the Company or its
subsidiaries or an affiliate thereof. An independent director is selected to
receive options under the Independent Directors' Plan at the discretion of the
full Board of Directors based upon his or her material contributions or
expected contributions to the past, present and future successful performance
of the Company and its subsidiaries.

As of March 19, 2002, there were six (6) persons who would be eligible to
participate in the Independent Directors' Plan. The Independent Directors'
Plan, as amended, will authorize the issuance of up to 750,000 shares of Common
Stock of the Company. The maximum number of shares of Common Stock of the
Company that may currently be issued pursuant to the Independent Directors'
Plan is 500,000 shares, subject to adjustment upon possible future changes in
the capital structure of the Company. Authorized but unissued shares or
treasury shares or both may be issued pursuant to the Independent Directors'
Plan. If an option expires or terminates for any reason prior to being
exercised, the shares subject to, but not delivered, pursuant to such option
may be transferred to the same director or another independent director without
decreasing the aggregate number of shares of Common Stock that may be granted
under the Independent Directors' Plan.

Each option granted under the Independent Directors' Plan will be
evidenced by an agreement which sets forth the terms and conditions of the
grant of the option as well as the period in which the option may be exercised.
The exercise period cannot exceed ten (10) years from the date of grant. The
exercise price of all options granted under the Independent Directors' Plan
must be 100% of the fair market value of the shares on the date the option is
granted.

Options granted pursuant to the Independent Directors' Plan are
nontransferable and may be exercised only by the independent director to whom
the options were granted. In the event an independent director dies, all
options held by such independent director shall remain effective and may be
exercised by the estate of such independent director or the persons entitled to
such options by will or by the applicable laws of descent and distribution
until the expiration of the applicable option period.

Tax Consequences. The following is a summary of the principal federal
income tax consequences of transactions under the Independent Directors' Plan
based on current federal income tax laws. This summary does not describe state,
local or foreign tax consequences.

The grant of an option under the Independent Directors' Plan will not
result in income to the grantee or in a deduction for the Company. Upon the
exercise of any option granted under the Independent Directors' Plan, the
grantee must recognize ordinary income in an amount equal to the excess of the
fair market value of the shares of Common Stock received over the exercise
price of such shares, which is subject to applicable income and employment tax
withholding. That amount increases the grantee's basis in the stock acquired
pursuant to the exercise of the option. Upon a subsequent sale of the stock,
the grantee will recognize short-term or long-term capital gain or loss
depending on his or her holding period for the stock and upon the stock's
subsequent appreciation or depreciation in value. The Company will be allowed a
federal income tax deduction for the amount recognized as ordinary income by
the grantee upon the grantee's exercise of the option.

Options Granted in 2001. The following options were granted pursuant to
the Independent Directors' Plan during the year ended December 31, 2001. The
options were fully vested and immediately exercisable on the date of grant. The
number of such options granted with respect to Independent Directors is set
forth below:

Number of Weighted Average Value of Options at
Name Options Granted Exercise Price March 19, 2002(1)
- ---- --------------- ---------------- -------------------

Henry F. Frigon.................. 10,000 $4.75 $ 92,800
R. Scott Gill.................... 10,000 4.75 92,800
William L. Healey................ 10,000 4.75 92,800
Roger W. Johnson................. 19,152 5.58 161,782
Sidney R. Petersen............... 19,605 5.56 166,012
Robert Sroka..................... 20,587 5.58 174,022
All current directors who are not
executive officers as a group.. 89,344 5.30 780,217

- --------

(1) Based on the closing price of Common Stock as reported in the Nasdaq
National Market on March 19, 2002 ($14.03 per share). The actual value of
these options, if any, will depend on the excess of the stock price over
the exercise price on the date the option is exercised.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE THE
AMENDMENT TO THE 1994 INDEPENDENT DIRECTORS' STOCK OPTION PLAN. PROXIES
SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED IN FAVOR OF THE PROPOSAL
UNLESS STOCKHOLDERS SPECIFY OTHERWISE.

INDEPENDENT AUDITORS

At its meeting held on February 26, 2002, the Board of Directors adopted
the recommendation of the Audit and Finance Committee and selected Ernst &
Young LLP to serve as the Company's independent public accountants and auditors
for the fiscal year ended December 31, 2002. Ernst & Young LLP has served as
the Company's independent public accountants and auditors since and including
the Company's fiscal year ended December 31, 1989. Representatives of Ernst &
Young LLP are expected to be present at the Annual Meeting, will be available
to respond to appropriate questions and will have the opportunity to make a
statement if they desire to do so.

Audit Fees. The aggregate fees billed for professional services rendered
by Ernst & Young LLP for the audit of the Company's annual financial statements
for the year ended December 31, 2001 and for Ernst & Young LLP's review of the
financial statements included in the Company's filings with the Securities and
Exchange Commission on Form 10-Q are $205,200, all of which has been billed
through February 19, 2002.

Financial Information Systems Design and Implementation Fees. Ernst &
Young LLP did not render any services related to financial information systems
design and implementation for the fiscal year ended December 31, 2001.

All Other Fees. The aggregate fees billed for all other services rendered
by Ernst & Young LLP for the fiscal year ended December 31, 2001 are $181,322,
primarily for accounting and advisory services on acquisition activities,
follow-on offering registration statement procedures and tax planning and
compliance services. The Audit and Finance Committee reviewed the provision of
these non-audit services by Ernst & Young LLP for the fiscal year ended
December 31, 2001 and determined the provision of such services to be
compatible with maintaining such auditor's independence within the meaning of
federal securities laws.

OTHER MATTERS

The Board of Directors does not intend to bring any other matter before
the Annual Meeting and has not been informed that any other matter is to be
presented by others. If any other matter properly comes before the Annual
Meeting, the proxies will be voted in accordance with the discretion of the
person or persons voting the proxies.

You are cordially invited to attend the Annual Meeting. Regardless of
whether you plan to attend the Annual Meeting, you are urged to complete, date,
sign and return the enclosed proxy in the accompanying envelope at your
earliest convenience, or vote by telephone or over the Internet.

Multiple Stockholders Sharing the Same Address

In December 2000, the Securities and Exchange Commission adopted new
rules that permit companies and intermediaries (e.g., brokers) to satisfy the
delivery requirements for proxy statements with respect to two or more
stockholders sharing the same address by delivering a single proxy statement
addressed to those stockholders. This process, which is commonly referred to as
"householding," potentially means extra convenience for stockholders and costs
savings for companies.

This year, one or more brokers with accountholders who are Sypris
Solutions, Inc. stockholders will be "householding" our proxy materials. A
single Proxy Statement and Annual Report will be delivered to multiple
stockholders sharing an address unless contrary instructions have been received
from the affected stockholder. Once you have received notice from your broker
that they will be "householding" communications to your address, "householding"
will continue until you are notified otherwise or until you revoke your
consent. If, at any time, you no longer wish to participate in "householding"
and would prefer to receive a separate Proxy Statement, please notify your
broker, direct your written request to Sypris Solutions, Inc., Richard L.
Davis, Secretary, 101 Bullitt Lane, Suite 450, Louisville, Kentucky 40222, or
contact Mr. Davis at (502) 329-2000. We will deliver promptly, upon written or
oral request in the manner provided above, a separate copy of the Proxy
Statement and Annual Report to a stockholder at a shared address to which a
single copy was delivered. If your broker is not currently householding (i.e.,
you received multiple copies of the Company's Proxy Statement), and you would
like to request delivery of a single copy, you should contact your broker.

Availability of Report on Form 10-K

The Company's 2001 Report on Form 10-K may be obtained without charge by
writing to Richard L. Davis, Secretary, Sypris Solutions, Inc., 101 Bullitt
Lane, Suite 450, Louisville, Kentucky 40222.

DEADLINE FOR RECEIPT OF AND NOTICE OF STOCKHOLDER PROPOSALS

Proposals of stockholders of the Company which are intended to be
presented by such stockholders at the Company's Annual Meeting to be held in
2003 must be received by the Company no later than November 28, 2002, in order
to be considered for inclusion in the proxy statement and form of proxy
relating to that meeting.

Stockholder proposals received after February 11, 2003 will be considered
untimely, and the proxies solicited by the Company for next year's Annual
Meeting may confer discretionary authority to vote on any such matters without
a description of them in the proxy statement for that meeting.

By Order of the Board of Directors

/s/ Richard L. Davis
Richard L. Davis
Secretary
Louisville, Kentucky
March 28, 2002

APPENDIX A

CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
SYPRIS SOLUTIONS, INC.

Sypris Solutions, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"),

DOES HEREBY CERTIFY:

FIRST: That at meetings of the Board of Directors of the Corporation,
resolutions were duly adopted by the Board of Directors of the Corporation
pursuant to Section 242 of the General Corporation Law of the State of
Delaware, setting forth amendments to Articles Fifth, Sixth and Eighth of the
Certificate of Incorporation of the Corporation and declaring said amendments
to be advisable, and submitting said amendments to the stockholders of the
Corporation for consideration thereof. The resolutions setting forth the
proposed amendments are as follows:

RESOLVED, that the Board of Directors hereby authorizes and approves the
following amendment to Article Fifth of the Certificate of Incorporation
of this Corporation, the text of such article, as so amended, to read in
its entirety as follows:

"FIFTH: Capital Stock.

I. Authorized Capital Stock. The total number of shares which are
authorized to be issued by the Corporation is 30,000,000 shares of common
stock having a $.01 par value per share ("Common Stock"), 10,000,000
shares of nonvoting common stock having a $.01 par value per share
("Nonvoting Common Stock"), and 1,000,000 shares of preferred stock
having a $.01 par value per share ("Preferred Stock").

A description of the foregoing classes of stock of the Corporation
and a statement of the voting powers, preferences and relative rights and
the qualifications, limitations or restrictions granted to or imposed
upon the shares of each class is as follows:

II. Preferred Stock

A. Authority is hereby vested in the Board of Directors, by
resolution, to divide any or all of the authorized shares of Preferred
Stock into series and, within the limitations imposed by law and this
Certificate of Incorporation, to fix and determine as to each such series:

[1] The voting rights and powers, if any, of the holders of
shares of such series;

[2] The number of shares and designation of such series;

[3] The annual dividend rate;

[4] The prices at, and the terms and conditions on which,
shares of such series may be redeemed;

[5] The amounts payable on shares of such series in the
event of any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Corporation;

A-1

[6] The terms, if any, upon which shares of such series may
be convertible into, or exchangeable for, shares of any other
class or classes or of any other series of the same or any other
class or classes, including the price or prices and the rate of
conversion or exchange, any adjustments thereof, and all other
terms and conditions;

[7] The sinking fund provisions, if any, for the redemption
or purchase of shares of such series; and

[8] Such other provisions as may be fixed by the Board of
Directors of the Corporation pursuant to the Delaware General
Corporation Law.

B. All shares of any one series of Preferred Stock shall be
identical with each other in all respects, except that shares of any one
series issued at different times may differ as to the dates from which
dividends thereon shall be cumulative.

C. The Corporation may at any time permitted by the resolution
adopted by the Board of Directors providing for the issue of any series
of Preferred Stock and at the redemption price or prices and on the terms
and conditions stated in said resolution, redeem the whole or any part of
the shares of any series of Preferred Stock at the time outstanding.

D. Except when otherwise herein or by statute specifically
provided, or except as provided by the resolution adopted by the Board of
Directors providing for the issue of any series, the holders of shares of
Preferred Stock shall not be entitled to vote at the election of
directors or on any question arising at any meeting of stockholders of
the Corporation.

E. To the extent permitted by the Delaware General Corporation
Law, the shares of Preferred Stock shall be convertible into other shares
of the capital stock of this Corporation upon such terms and conditions
and at such rates of conversion or exchange as may be provided by the
resolution adopted by the Board of Directors providing for the issue of
any series.

III. Common Stock and Nonvoting Common Stock. The Common Stock and
Nonvoting Common Stock are identical, in all respects, except as follows:

A. Each share of Common Stock entitles the holder thereof to one
vote on each matter submitted to a stockholders' vote, while no shares of
Nonvoting Common Stock shall have any voting rights, except for those
voting rights required by the Delaware General Corporation Law.

B. Subject to the limitations prescribed herein, holders of the
Common Stock and Nonvoting Common Stock shall participate equally in any
dividends (payable in cash, stock or property) and stock splits, when and
as declared by the Board of Directors, out of assets of the Corporation
legally available therefor; provided, however, that, in the event of a
stock split, or a pro rata stock dividend of like shares declared on
outstanding shares, the holders of Common Stock shall receive shares of
Common Stock and the holders of Nonvoting Common Stock shall receive
shares of Nonvoting Common Stock.

C. In the event the Corporation is liquidated, dissolved or wound
up, whether voluntarily or involuntarily, the holders of the Common Stock
and Nonvoting Common Stock shall participate equally in any distribution.
A merger or consolidation of the Corporation with or into any other
corporation or a sale or conveyance of all or any part of the assets of
the Corporation (which shall not in fact result in the liquidation of the
Corporation and the distribution of assets to stockholders) shall not be
deemed to be a voluntary or involuntary liquidation or dissolution or
winding up of the Corporation within the meaning of this paragraph.

D. If at any time while there are shares of Common Stock and
Nonvoting Common Stock issued and outstanding, it shall be determined by
the Board of Directors, in its sole discretion, that legislation or
regulations are enacted or any judicial or administrative determination
is made which would prohibit the quotation, listing, or trading of the
Corporation's Common Stock or Nonvoting Common Stock on the New

A-2

York Stock Exchange, the American Stock Exchange or the National
Association of Securities Dealers Automated Quotation System, or would
otherwise have a material adverse effect on the Corporation, in any such
case due to the Corporation having more than one class of common shares
outstanding, then the Board of Directors may by reversion convert all
outstanding Nonvoting Common Stock into Common Stock on a share-for-share
basis. To the extent practicable, notice of such conversion of Nonvoting
Common Stock specifying the date fixed for said conversion shall be
mailed, postage prepaid, at least 10 days but not more than 30 days prior
to said conversion date to the holders of record of shares of Common
Stock and Nonvoting Common Stock at their respective addresses as the
same shall appear on the books of the Corporation; provided, however,
that no failure or inability to provide such notice shall limit the
authority or ability of the Board of Directors to convert all outstanding
Nonvoting Common Stock into Common Stock. Immediately prior to the close
of business on said conversion date (or, if said conversion date is not a
business day, on the next succeeding business day) each outstanding share
of Nonvoting Common Stock shall thereupon automatically be converted into
a share of Common Stock and each certificate theretofore representing
shares of Nonvoting Common Stock shall thereupon and thereafter represent
a like number of shares of Common Stock.

IV. General.

A. No holder of shares of the Corporation of any class, as such,
shall have any preemptive right to subscribe for stock, obligations,
warrants, subscription rights or other securities of the Corporation of
any class, regardless of when authorized.

B. For the purposes of this Article FIFTH and of any resolution of
the Board of Directors providing for the issue of any series of Preferred
Stock or of any certificate of amendment filed with the Secretary of
State of the State of Delaware (unless otherwise expressly provided in
any such resolution or certificate), any class or classes of stock of the
Corporation shall be deemed to rank junior to any other class or classes
if the rights of the holders thereof shall be subject or subordinate to
the rights of the holders of shares of such other class or classes in
respect of the receipt of dividends or of amounts distributable upon
liquidation, dissolution, or winding up."

RESOLVED, that the Board of Directors hereby authorizes and approves the
following amendments to Articles Sixth and Eighth of the Certificate of
Incorporation of this Corporation, the texts of such articles, as so
amended, to read in their entirety as follows:

"SIXTH: Directors.

A. The affairs of the Corporation are to be conducted by a Board
of Directors of not fewer than three (3) nor more than twelve (12)
members, the number to be set by the directors as provided in the Bylaws
of the Corporation. The directors shall be divided into three classes as
nearly equal in number as possible. Class I directors shall be elected
initially for a term expiring at the annual meeting of stockholders held
in 2003, Class II directors shall be elected initially for a term
expiring at the annual meeting of stockholders held in 2004, and Class
III directors shall be elected initially for a term expiring at the
annual meeting of stockholders held in 2005. Thereafter, directors chosen
to succeed those whose terms expire at such annual meeting shall be
elected for a term of office expiring at the third succeeding annual
meeting of stockholders following their election. In the event of any
increase or decrease in the number of authorized directorships, the newly
created or eliminated directorships shall be apportioned by the Board of
Directors among the classes as equally as possible. All directors shall
hold office until the expiration of the term for which elected, and until
their respective successors are elected, except in the case of the death,
resignation or removal of any director. Whenever a vacancy occurs on the
Board of Directors, a majority of the remaining directors, although less
than a quorum, shall have the power to fill the vacancy by electing a
successor director to fill that portion of the unexpired term resulting
from the vacancy. Directors elected to fill a vacancy shall hold office
until the term of the Class to which they shall have been elected expires.

B. Notwithstanding the foregoing, whenever the holders of any
series of Preferred Stock issued by the Corporation shall have the right,
voting separately by series, to elect directors at an annual or special

A-3

meeting of stockholders, the election, term of office, filling of
vacancies and other features of such directorships shall be governed by
the terms of such series of Preferred Stock as fixed by the Board of
Directors, and such directors so elected shall not be divided into
classes pursuant to this Article Sixth unless expressly provided by the
terms of such series.

C. Directors of the Corporation may be removed by the affirmative
vote of the holders of not less than eighty percent (80%) of the shares
of the capital stock of the Corporation issued and outstanding and
entitled to vote.

D. Notwithstanding any other provision of law, this Certificate of
Incorporation or the Bylaws of the Corporation, and notwithstanding the
fact that a lesser percentage may be specified by law, the affirmative
vote of the holders of not less than eighty percent (80%) of all shares
of capital stock of the Corporation issued and outstanding and entitled
to vote shall be required to amend or repeal, or to adopt any provision
inconsistent with this Article Sixth."

"EIGHTH: Stockholder Action; Call of Special Meetings of
Stockholders.

A. No action required or permitted to be taken by the stockholders
of the Corporation at any duly called annual or special meeting of
stockholders of the Corporation may be taken without a meeting, and the
power of stockholders to consent in writing, without a meeting, to the
taking of any action is specifically denied.

B. Special meetings of the stockholders of the Corporation may be
called only by the Board of Directors pursuant to a resolution adopted by
a majority of the Directors in writing, or by the holders of not less
than eighty percent (80%) of all shares entitled to cast votes at the
meeting. Notice of a special meeting must include a description of the
purpose or purposes for which the meeting is called.

C. Notwithstanding any other provision of law, this Certificate of
Incorporation or the Bylaws of the Corporation, and notwithstanding the
fact that a lesser percentage may be specified by law, the affirmative
vote of the holders of not less than eighty percent (80%) of all shares
of capital stock of the Corporation issued and outstanding and entitled
to vote shall be required to amend or repeal, or to adopt any provision
inconsistent with this Article Eighth."

SECOND: That thereafter, pursuant to resolutions of its Board of
Directors, the annual meeting of the stockholders of the Corporation was held,
upon notice in accordance with Section 222 of the General Corporation Law of
the State of Delaware, at which meeting the necessary number of shares as
required by statute were voted in favor of each of the foregoing amendments.

THIRD: That each of the foregoing amendments was duly adopted in
accordance with the provisions of Section 242 of the General Corporation Law of
the State of Delaware.

IN WITNESS WHEREOF, said Corporation has caused this certificate to be
signed by Jeffrey T. Gill, its President and Chief Executive Officer, as of
this day of , 2002.

SYPRIS SOLUTIONS, INC.

By:
-----------------------------------
Jeffrey T. Gill, President and
Chief Executive Officer

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APPENDIX B

AMENDED AND RESTATED
BYLAWS OF
SYPRIS SOLUTIONS, INC.

ARTICLE I.

OFFICES

The registered office of the corporation shall be in the City of
Wilmington, County of New Castle, State of Delaware. The principal office of
the corporation shall be located in Louisville, Kentucky. The corporation may
have such other offices as the business of the corporation may require from
time to time.

ARTICLE II.

STOCKHOLDERS

SECTION 1. ANNUAL MEETING. The annual meeting of the stockholders shall
be held between January 1st and December 31st of each year, beginning with the
year 1998, on such date and at such hour as may be specified in the Notice of
Meeting or in a duly executed waiver of notice thereof, for the purpose of
electing directors and for the transaction of such other business as may come
before the meeting. If the day fixed for the annual meeting shall be a legal
holiday, such meeting shall be held on the next business day which is not a
legal holiday. If the election of directors shall not be held on the day
designated for any annual meeting, or at any adjournment thereof, the Board of
Directors shall cause the election to be held at a special meeting of the
stockholders to be held as soon thereafter as may be convenient.

SECTION 2. SPECIAL MEETINGS. Special meetings of the stockholders of
the corporation may be called in accordance with the corporation's certificate
of incorporation.

SECTION 3. PLACE OF MEETING. The Board of Directors may designate any
place within or without the State of Delaware as the place of meeting for any
annual meeting, or any place either within or without the State of Delaware as
the place of meeting for any special meeting called by the Board of Directors.

If no designation is made, or if a special meeting be called by other
than the Board of Directors, the place of meeting shall be the principal office
of the corporation in the State of Kentucky, except as provided in Section 5 of
this Article.

SECTION 4. NOTICE OF MEETINGS. Written or printed notice stating the
place, day and hour of the meeting and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered not
less than ten (10) nor more than sixty (60) days before the date of the
meeting, either personally or by telegraph, teletype or other form of wire or
wireless communication, electronic transmission or by mail or private carrier,
by or at the direction of the president, or the secretary, or the officer or
persons calling the meeting, to each stockholder of record entitled to vote at
such meeting, except when a longer period of time is required by statute. If
mailed, such notice shall be deemed to be delivered when deposited in the
United States mail in a sealed envelope addressed to the stockholder at his
address as it appears on the records of the corporation, with first class
postage thereon prepaid.

SECTION 5. MEETING OF ALL STOCKHOLDERS. If all of the stockholders
shall meet at any time and place, either within or without the State of
Delaware, and consent to the holding of a meeting, such meeting shall be valid
without call or notice, and at such meeting any corporate action may be taken.

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SECTION 6. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. If no
record date is fixed for the determination of stockholders entitled to notice
of or to vote at a meeting of stockholders, or stockholders entitled to receive
payment of a dividend, the date on which notice of the meeting is mailed or the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of stockholders.
When a determination of stockholders entitled to vote at any meeting of
stockholders has been made as provided herein, such determination shall apply
to any adjournment thereof unless the meeting is adjourned to a date more than
one hundred twenty (120) days after the date fixed for the original meeting, in
which case the Board of Directors shall fix a new record date.

SECTION 7. VOTING LISTS AND SHARE LEDGER. The secretary shall prepare
and make, at least ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof and may be inspected by any stockholder who is present. The stock
ledger shall be the only evidence as to who are the stockholders entitled to
examine the stock ledger, the list of stockholders or the books of the
corporation, or to vote in person or by proxy at any meeting of stockholders.

SECTION 8. QUORUM. A majority of the outstanding shares entitled to
vote, represented in person or by proxy, shall constitute a quorum at any
meeting of stockholders. The stockholders present at a duly organized meeting
can continue to do business for the remainder of the meeting and for any
adjournment thereof until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum, unless a new record date is or must
be set for that adjourned meeting.

SECTION 9. PROXIES. At all meetings of stockholders, a stockholder may
vote by proxy executed in writing (or by the transmission of an electronic
submission or in such manner allowed by the Delaware General Corporation Law)
by the stockholder or by his duly authorized attorney-in-fact. Such proxy shall
be filed with the secretary of the corporation before or at the time of the
meeting. A stockholder may revoke his proxy at any time prior to the
establishment of a quorum at any meeting of stockholders. Such revocation shall
be in writing (or by the transmission of an electronic submission or in such
manner allowed by the Delaware General Corporation Law) and delivered to the
secretary of the corporation prior to the time the presence of a quorum has
been determined and declared.

ARTICLE III.

DIRECTORS

SECTION 1. GENERAL POWERS. The business and affairs of the corporation
shall be managed under the direction of a Board of Directors.

SECTION 2. NUMBER AND TENURE OF DIRECTORS. The number of directors of
the corporation shall be not less than three (3) nor more than twelve (12). The
Board of Directors may from time to time designate the number of directors
which shall constitute the whole Board within the limitation specified in the
preceding sentence. The number of directors shall initially be eight (8). The
directors shall be divided into three classes as nearly equal in number as
possible. Each director shall hold office for an initial term as set forth in
Article Sixth of the Corporation's Certificate of Incorporation, and
thereafter, shall hold office for a term of three (3) years. In the event of
any increase or decrease in the number of authorized directorships, the newly
created or eliminated directorships shall be apportioned by the Board of
Directors among the classes as equally as possible. All directors shall hold
office until the expiration of the term for which elected, and until their
respective successors are elected, except in the case of the death, resignation
or removal of any director.

B-2

SECTION 3. REGULAR MEETINGS. A regular meeting of the Board of
Directors shall be held without notice other than this bylaw, immediately
after, and at the same place as, the annual meeting of stockholders. The Board
of Directors may provide, by resolution, the time and place, either within or
without the State of Delaware, for the holding of additional regular meetings
without other notice than such resolution.

SECTION 4. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by or at the request of the chairman of the board or a majority
of the directors. The person or persons authorized to call special meetings of
the Board of Directors may fix any place, either within or without the State of
Delaware, as the place for holding any special meeting of the Board of
Directors called by them.

SECTION 5. NOTICE. Notice of any special meeting shall be given at
least two (2) days prior thereto by telephone, by written notices delivered
personally or mailed to each director at his address on file with the
corporation, or by telegram or other form of electronic communication. If
mailed, such notice shall be deemed to be delivered when deposited in the
United States mail in a sealed envelope so addressed, with postage thereon
prepaid. If notice be given by telegram, such notice shall be deemed to be
delivered when the telegram is delivered to the telegraph company. Any director
may waive notice of any meeting. The attendance of a director at any meeting
shall constitute a waiver of notice of such meeting, unless the director at the
beginning of the meeting (or promptly upon his arrival) objects to the
transaction of any business at the meeting and does not thereafter vote for or
assent to action taken at the meeting. Neither the business to be transacted
at, nor the purpose of, any regular or special meeting of the Board of
Directors need be specified in the notice or waiver of notice of such meeting.

SECTION 6. QUORUM. A majority of the Board of Directors shall
constitute a quorum for the transaction of business at any meeting of the Board
of Directors, provided that if less than a majority of the directors are
present at said meeting, a majority of the directors present may adjourn the
meeting from time to time without further notice.

SECTION 7. MANNER OF ACTING. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors; provided, however, that the Board of Directors, by resolution
adopted by a majority of the full Board of Directors, may designate from among
its members an executive and one or more other committees, including, without
limitation, an audit committee and a compensation committee, each of which, to
the extent provided in such resolution, shall have and may exercise all the
authority of the Board of Directors to the extent permitted by the Delaware
General Corporation Law, but no such committee shall have the authority of the
Board of Directors to [a] approve or recommend to stockholders actions or
proposals required by Delaware law to be approved by the stockholders; [b] fill
vacancies on the Board of Directors or on any of its committees; [c] adopt,
amend or repeal bylaws; [d] authorize or approve reacquisition of shares unless
pursuant to a general formula or method specified by the Board of Directors; or
[e] authorize or approve the issuance or sale or contract for sale of shares or
determine the designation and relative rights, preferences and limitations of a
voting group, except that the Board of Directors may authorize a committee (or
senior executive officer of the corporation) to do so within limits
specifically prescribed by the Board of Directors.

SECTION 8. VACANCIES. Any vacancy occurring on the Board of Directors
may be filled by the affirmative vote of a majority of the remaining directors,
although less than a quorum. A director elected to fill a vacancy shall hold
office until the term of the Class to which he shall have been elected expires,
subject to the election and qualification of his successor and to his earlier
death, resignation or removal.

SECTION 9. COMPENSATION. The Board of Directors shall have authority to
fix the compensation of directors.

SECTION 10. ACTION BY CONSENT OF DIRECTORS. Any action required or
permitted to be taken at a meeting of the Board of Directors or at a meeting of
a committee, may be taken without a meeting if a consent, in writing, setting
forth the action so taken shall be signed by all of the directors, or all of
the members of the committee, as the case may be, and included in minutes or
filed with the corporate records.

B-3

ARTICLE IV.

OFFICERS

SECTION 1. DESIGNATION OF OFFICERS. The officers of the corporation
shall be a president, one or more vice presidents, a treasurer, a secretary,
and such other officers, including, without limitation, a chairman of the
board, a chief executive officer, one or more assistant treasurers and one or
more assistant secretaries, as may be provided by the Board of Directors and
elected in accordance with the provisions of this article.

SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the corporation
shall be elected annually by the Board of Directors at the first meeting of the
Board of Directors held after each annual meeting of stockholders. If the
election of officers shall not be held at such meeting, such election shall be
held as soon thereafter as convenient. Vacancies may be filled or new offices
created and filled at any meeting of the Board of Directors. Each officer shall
hold office until his or her successor shall have been duly elected and shall
have qualified or until his or her death or until he or she shall resign or
shall have been removed from office in the manner hereinafter provided.

SECTION 3. REMOVAL. Any officer elected by the Board of Directors may
be removed by the Board of Directors, with or without cause, whenever in its
judgment the best interest of the corporation would be served thereby, but such
removal shall be without prejudice to the contract rights, if any, of the
person so removed. Election or appointment of an officer or agent shall not of
itself create contract rights.

SECTION 4. CHAIRMAN OF THE BOARD. The Board of Directors shall appoint
one of its members to be chairman of the board to serve at the pleasure of the
Board. He shall preside at all meetings of the Board of Directors and at all
meetings of the stockholders. The chairman of the board shall supervise the
carrying out of the policies adopted or approved by the Board. He shall have
general executive powers, as well as the specific powers conferred by these
bylaws. He shall also have and may exercise such further powers and duties as
from time to time may be conferred upon, or assigned to him by the Board of
Directors.

SECTION 5. PRESIDENT. The Board of Directors shall appoint the
president of the corporation. The president may sign, with the secretary, or
any other proper officer of the corporation thereunto authorized by the Board
of Directors, certificates for shares of the corporation, any deeds, mortgages,
bonds, contracts, or other instruments which the Board of Directors has
authorized to be executed except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors or by these
bylaws to some other officer or agent of the corporation, or shall be required
by law to be otherwise signed or executed; he shall have authority to vote all
shares of stock in other corporations owned by the corporation, unless the
Board of Directors designates and appoints another person as proxy for the
corporation; and in general shall perform all duties incident to the office of
president and such other duties as may be prescribed by the Board of Directors
from time to time. In the event the Board does not appoint a chief executive
officer or in his absence or in the event of his inability or refusal to act,
the
president shall perform the duties of chief executive officer. The Board in its
discretion may appoint the same member to the office of chairman of the board
and president. When the member of the Board holds the office of chairman of the
board and president, a vice chairman of the board shall be appointed to preside
at any meeting of the Board at which the chairman is not present.

SECTION 6. CHIEF EXECUTIVE OFFICER. The chief executive officer shall
be the principal executive officer of the corporation and shall in general
supervise and control all of the business affairs of the corporation and in
general shall perform all duties incident to the office of chief executive
officer and such other duties as may be prescribed by the Board of Directors
from time to time. The Board in its discretion may appoint the same member to
the office of chief executive officer and chairman of the board and/or
president.

SECTION 7. VICE PRESIDENT. The Board shall appoint as many vice
presidents as it deems necessary and may designate one or more vice presidents
as senior vice president of the corporation. Such senior vice president (or in
the event no senior vice president is appointed, the vice president in the
order designated at the time of their election or, in the absence of any
designation, then in the order of their appointment) shall, in the absence of
the president and chief executive officer or in the event of his or their
inability or refusal to act, perform

B-4

the duties of such office(s) and, when so acting, shall have all the powers of
and be subject to all the restrictions upon such office(s). Any vice president
may sign, with the secretary or an assistant secretary, certificates for shares
of the corporation and shall perform such other duties as from time to time may
be assigned to them by the president or by the Board of Directors.

SECTION 8. TREASURER. If required by the Board of Directors, the
treasurer shall give a bond for the faithful discharge of his duties in such
sum and with such surety or sureties as the Board of Directors shall determine.
He shall: [a] have charge and custody of and be responsible for all funds and
securities of the corporation; receive and give receipts for moneys due and
payable to the corporation from any source whatsoever, and deposit all such
moneys in the name of the corporation in such banks, trust companies or other
depositories as shall be selected in accordance with the provisions of these
bylaws; [b] in general, perform all the duties incident to the office of
treasurer and such other duties as from time to time may be assigned to him by
the president or the Board of Directors.

SECTION 9. SECRETARY. The secretary shall: [a] keep the minutes of the
stockholders' and of the Board of Directors' meetings in one or more books
provided for that purpose; [b] see that all notices are duly given in
accordance with the provisions of these bylaws or as required by law; [c] be
custodian of the corporate records and of the seal of the corporation and see
that the seal of the corporation is affixed to all certificates for shares
prior to the issue thereof and to all documents, the execution of which on
behalf of the corporation under its seal is duly authorized in accordance with
the provisions of these bylaws; [d] keep a register of the post office address
of each stockholder which shall be furnished to the secretary by such
stockholder; [e] in general, perform all duties incident to the office of
secretary and such other duties as from time to time may be assigned to him by
the president or by the Board of Directors. The secretary may also be
designated as registrar of the corporation. Both the secretary and the
registrar of the corporation shall have authority to sign with the president,
or vice president, certificates for shares of the corporation, the issue of
which shall have been authorized by resolution of the Board of Directors, have
general charge of the stock transfer books of the corporation and take all
actions necessary for transfer of shares on the books of the corporation.

SECTION 10. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. The
assistant treasurers shall respectively, if required by the Board of Directors,
give bonds for the faithful discharge of their duties in such sums and with
such sureties as the Board of Directors shall determine. The assistant
secretaries, as and if authorized by the Board of Directors, may sign with the
president or vice president certificates for shares of the corporation, the
issue of which shall have been authorized by a resolution of the Board of
Directors. The assistant treasurers and assistant secretaries in general shall
perform such duties as shall be assigned to them by the treasurer or the
secretary, respectively, or by the president or the Board of Directors.

ARTICLE V.

CONTRACTS, LOANS, CHECKS AND DEPOSITS

SECTION 1. CONTRACTS. The Board of Directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute and deliver
any instruments in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.

SECTION 2. LOANS. No loans shall be contracted on behalf of the
corporation, and no evidences of indebtedness shall be issued in its name
unless authorized in advance or by ratification, by a resolution of the Board
of Directors. Such authority may be general or confined to specific instances.

SECTION 3. CHECKS, DRAFTS, ORDERS, ETC. All checks, drafts, or other
orders for the payment of money, notes or other evidences of indebtedness
issued in the name of the corporation shall be signed by such officer or
officers, agent or agents, of the corporation and in such manner as shall from
time to time be determined by resolution of the Board of Directors.

B-5

SECTION 4. DEPOSITS. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the corporation
in such banks, trust companies, or other depositories as the Board of Directors
may select.

ARTICLE VI.

CERTIFICATES FOR SHARES AND THEIR TRANSFER

SECTION 1. CERTIFICATES FOR SHARES. Certificates representing shares of
the corporation shall be in such form as may be determined by the Board of
Directors. Such certificates shall be signed by the president or vice president
and by the secretary or an assistant secretary (including by facsimile
signature) and may be sealed with the seal of the corporation or a facsimile
thereof. All certificates surrendered to the corporation for transfer shall be
cancelled, and no new certificate shall be issued until the former certificate
for a like number of shares shall have been surrendered and cancelled, except
that in case of a lost, destroyed or mutilated certificate, a new one may be
issued therefor upon such terms and indemnity to the corporation as the Board
of Directors may prescribe.

SECTION 2. TRANSFER OF SHARES. Transfer of shares of the corporation
shall be made only on the books of the corporation by the registered holder
thereof or by his attorney thereunto authorized by power of attorney duly
executed and filed with the secretary of the corporation, and on surrender for
cancellation of the certificate for such shares. The person in whose name
shares stand on the books of the corporation shall be deemed the owner thereof
for all purposes as regards the corporation.

ARTICLE VII.

FISCAL YEAR

The fiscal year of the corporation shall begin on the first day of
January and end on the last day of December of each calendar year.

ARTICLE VIII.

WAIVER OF NOTICE

Whenever any notice whatever is required to be given under the provisions
of these bylaws, or under the provisions of the Certificate of Incorporation,
or under the provisions of the corporation laws of the State of Delaware,
waiver thereof in writing, signed by the person, or persons, entitled to such
notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice.

ARTICLE IX.

AMENDMENT OF BYLAWS

The Board of Directors may alter, amend or rescind the bylaws, subject to
the rights of stockholders to replace or modify such actions.

ARTICLE X.

AUDITORS

The corporation's books of account shall be examined annually by an
independent firm of public accountants whose selection shall be made by the
Board of Directors after recommendation by management. Upon completion of the
examination by the auditors, a report shall be prepared and submitted to the
Board of Directors.

B-6

APPENDIX C

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

AS AMENDED AND RESTATED EFFECTIVE FEBRUARY 26, 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; and (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.

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.

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.

C-1

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.

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.

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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. 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.

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].

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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

[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

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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.

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.

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.

C-5

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 occurring 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.

[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

C-6

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.

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

C-7

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 26th day of February, 2002.

SYPRIS SOLUTIONS, INC.

/S/ JEFFREY T. GILL

By: _______________________________
Jeffrey T. Gill
President and Chief Executive
Officer

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APPENDIX D

SYPRIS SOLUTIONS, INC.
INDEPENDENT DIRECTORS' STOCK OPTION PLAN
ADOPTED ON OCTOBER 27, 1994

AS AMENDED AND RESTATED EFFECTIVE FEBRUARY 26, 2002

PREAMBLE

The Sypris Solutions, Inc. Independent Directors' Stock Option Plan is a
restatement of the Group Technologies Corporation Independent Directors' Stock
Option Plan 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 common 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) on
March 30, 1998 to reflect the changes caused by the merger; (ii) effective
February 23, 1999, for the purpose of increasing the number of shares
authorized for issuance under the Plan from 250,000 to 500,000 shares; and
(iii) effective February 26, 2002, for the purpose of increasing the number of
shares authorized for issuance under the Plan from 500,000 to 750,000 shares,
as set forth herein.

1. Purpose. The purpose of the Sypris Solutions, Inc. Independent
Directors' Stock Option Plan is to promote the interests of the Company by
affording an incentive to certain persons not affiliated with the Company and
its Subsidiaries to serve as a director of the Company in order to bring
additional expertise and business judgment to the Company through the
opportunity for stock ownership offered under this Plan.

2. Definitions.

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

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

C. "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.

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

E. "Compensation Committee" means the Compensation Committee of
the Board that administers the Plan pursuant to Section 4.

F. "Independent Director" means an individual serving as a
director on the Company's Board of Directors and who is not otherwise
employed by the Company or its Subsidiaries or an affiliate thereof.

G. "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.

H. "Optionee" means an Independent Director to whom options have
been granted under the Plan.

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

D-1

J. "Plan" means the Sypris Solutions, Inc. Independent Directors'
Stock Option Plan, as set forth herein, and as amended from time to time.

K. "Subsidiary" means 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.

L. "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).

3. Shares Subject to Plan.

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 five hundred thousand
(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 seven hundred fifty
thousand (750,000) 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, such option shall
become available for any lawful corporate purpose, including for transfer
pursuant to other options granted to the same Optionee or other Optionees
without decreasing the aggregate number of shares of Common Stock that
may be granted under the Plan.

5. Grant of Options. 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 Independent Directors to whom options shall be granted; (ii) to
determine the number of shares of Common Stock subject to each option; (iii) to
determine the time or times when options will be granted, the manner in which
each option shall be exercisable, and the duration of the exercise period; and
(iv) to fix such other provisions of the option agreement as it may deem
necessary or desirable consistent with the terms of the Plan. Subject to the
terms, provisions and conditions of the Plan, either the Board or the
Compensation Committee shall have full and final authority in its discretion to
determine all other questions relating to the administration of the Plan. 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.

6. Eligibility. Independent Directors of the Company shall be eligible
to receive options under the Plan. No Company director who is also a Company
employee or a Subsidiary employee shall be entitled to receive an option under
the Plan. Independent Directors to whom options may be granted under the Plan
will be those selected 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.

D-2

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. 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. Options granted under the Plan shall be
exercisable immediately and, if not exercised, shall lapse at the
earliest of the following times:

(i) ten (10) years from the date of grant; or

(ii) the date set by the grant and specified in the
applicable option agreement.

B. Option Price. The Option Price per share of Common Stock shall
be 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.

C. Fair Market Value. The fair market value of the Common Stock
on any given measurement date shall be determined as follows:

(i) if the Common Stock is traded on the over-the-counter
market, the 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

(ii) 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

(iii) 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 the Company's Common Stock
("Mature Shares") which would cover the amount of the purchase 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.

D-3

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 as 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 the Optionee, deliver to
the Optionee a certificate for such shares of the Common Stock. If the
Optionee fails to accept delivery of the Common Stock, the Optionee's
rights to exercise the applicable portion of the option shall terminate.

F. 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.

G. Exercise in the Event of Death or Termination of Service. Upon
termination of service as an Independent Director, for whatever reason,
any and all stock options held by the Optionee shall remain effective and
may be exercised by the Optionee or the Optionee Representative until the
expiration of the applicable option term.

H. Transferability of Options. An option granted under the Plan
may not be transferable and may be exercised only by the Optionee during
the Optionee's lifetime, or by the Optionee Representative in the event
of the Optionee's death, to the extent the option was exercisable by the
Optionee at the date of his or her death.

I. No Rights as Shareholder. No Optionee or Optionee
Representative shall have any rights as a shareholder with respect to
Common Stock subject to his or her option before the date of transfer to
Optionee of a certificate or certificates for such shares.

J. 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 Mature Shares which would
cover the amount of the purchase price, and/or (iii) shares of Common
Stock previously acquired. 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.

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

D-4

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 will 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: (i) 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, (ii) 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 exercise price at which the Optionee could have acquired all of
the shares of Common Stock of the Company theretofore optioned to the
Optionee.

C. No Effect on Company's Rights. The granting of an option
pursuant to the Plan shall not affect 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. Notwithstanding
the foregoing, without the consent of the Optionee, no amendment shall make any
changes in an outstanding option which would adversely affect the rights of the
Optionee.

11. Effective Date, Term and Approval. The Plan is effective 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.

D-5

Dated this 26th day of February, 2002.

SYPRIS SOLUTIONS, INC.

/S/ JEFFREY T. GILL

By: _______________________________
Jeffrey T. Gill
President and Chief Executive
Officer

D-6

Sypris Solutions, Inc.
Suite 450
101 Bullitt Lane
Louisville, Kentucky 40222

Revocable Proxy for Annual Meeting of Stockholders to be held on May 7, 2002

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF SYPRIS SOLUTIONS, INC.

The undersigned hereby appoints Robert E. Gill and Jeffrey T. Gill, and each of
them, as proxies for the undersigned, with full power of substitution to vote
all shares the undersigned is entitled to vote at the Annual Meeting of
Stockholders of Sypris Solutions, Inc. (the "Company") to be held at 101 Bullitt
Lane, Lower Level Seminar Room, Louisville, Kentucky on Tuesday, May 7, 2002, at
10:00 a.m. local time, or any adjournment thereof, as follows, hereby revoking
any proxy previously given.

To vote by telephone or Internet, please see the reverse of this card. To vote
by mail, please sign and date this card on the reverse, tear off at the
perforation, and mail promptly in the enclosed postage-paid envelope.

[_] Please mark your votes as in this example.

Shares represented by this proxy will be voted as directed by the stockholder.
If no direction is supplied, the proxy will be voted "FOR" proposal 1, "FOR"
proposal 2, "FOR" proposal 3, "FOR" all the nominees listed in proposal 4, "FOR"
proposal 5 and "FOR" proposal 6. Please sign, date and return this proxy
promptly in the enclosed envelope.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
"FOR" PROPOSALS 1, 2, 3, 4, 5 and 6

1. Proposal to approve the amendment to Article Fifth of the Company's
Certificate of Incorporation. (Proposal 1)

[_] FOR [_] AGAINST [_] ABSTAIN

2. Proposal to approve the amendment to Article Sixth of the Company's
Certificate of Incorporation. (Proposal 2)

[_] FOR [_] AGAINST [_] ABSTAIN

3. Proposal to approve the amendment to Article Eighth of the Company's
Certificate of Incorporation. (Proposal 3)

[_] FOR [_] AGAINST [_] ABSTAIN

4. Election of directors. (Proposal 4) Unless authority is withheld, this proxy
will be voted for the election of all nominees.

[_] FOR [_] WITHHELD

NOMINEES:
- --------------------------------------------------------------------------------
Class I Class II Class III
- --------------------------------------------------------------------------------
01 Henry F. Frigon 04 R. Scott Gill 07 Jeffrey T. Gill
- --------------------------------------------------------------------------------
02 Robert E. Gill 05 Roger W. Johnson 08 Sidney R. Petersen
- --------------------------------------------------------------------------------
03 William L. Healey 06 Robert Sroka
- --------------------------------------------------------------------------------

For, except vote withheld from the following nominee(s):

- --------------------------------

INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name and number on the space provided above.

5. Proposal to approve the amendment to the Sypris Solutions, Inc. 1994 Stock
Option Plan for Key Employees. (Proposal 5)

[_] FOR [_] AGAINST [_] ABSTAIN

6. Proposal to approve the amendment to the Sypris Solutions, Inc. Independent
Directors' Stock Option Plan. (Proposal 6)

[_] FOR [_] AGAINST [_] ABSTAIN

7. In their discretion, the proxies are authorized to vote upon such other
business as may properly be brought before the meeting or any adjournment
thereof.

Please sign exactly as name
appears hereon. When shares
are held by joint tenants,
both should sign. When
signing as attorney,
executor, administrator,
trustee, or guardian,
please give full title as
such. If a corporation,
please sign full corporate
name by President or other
authorized officer. If a
partnership, please sign in
partnership name by
authorized person.

--------------------------------------

--------------------------------------
SIGNATURE(S) DATE

Voter Control Number:

[SYPRIS LOGO]

Sypris Solutions, Inc. offers you two convenient ways by which you can vote your
shares - either by telephone or through the Internet.

- --By Telephone. On a touch-tone telephone call toll free 1-877-PRX-VOTE
(1-877-779-8683) to transmit your voting instructions up until 12:00 Midnight
(EST) on May 6, 2002. Please have your proxy card in hand when you call. Listen
to the recorded instructions, use the Voter Control Number printed in the box
above to access the system, and use your telephone key pad to vote.

- --Through the Internet. Access the World Wide Web site www.eproxyvote.com/syp
and follow the instructions posted on the web site to transmit your voting
instructions up until 12:00 Midnight (EST) on May 6, 2002. Have your proxy card
in hand when you access the Web site. You will be prompted to enter your Voter
Control Number printed in the box above to obtain your records and to create an
electronic voting form.

Your vote by telephone or through the Internet authorizes the proxies named on
the front of this proxy card in the same manner as if you marked, signed, dated
and returned the proxy card.

If you have voted by telephone or Internet, please do not return the proxy card.

YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.