Summary of PECO II INC - Yahoo! Finance

Material Modification to Rights of Security Holders, Change in Directors or Principal

Item 3.03 Material Modification to Rights of Security Holders.

On May 6, 2008, PECO II, Inc. (the "Company") filed a Certificate of Amendment to its Articles of Incorporation to effectuate a one-for-ten reverse split of the Company's common shares as of 12:01 a.m., Eastern time, May 7, 2008 (the "Reverse Split"). The Company's common shares began trading on the NASDAQ Capital Market under the symbol "PIIID" on May 7, 2008, and are expected to resume trading under the symbol "PIII" on Thursday, June 5, 2008.

Each shareholder will hold approximately the same percentage of common shares outstanding after the Reverse Split as held immediately prior to the Reverse Split, subject to adjustment for fractional shares. No fractional shares will be issued as a result of the Reverse Split. Shareholders entitled to receive a fractional share interest following the Reverse Split will instead receive a cash payment determined by multiplying (i) the closing sale price of the Company's common shares on May 6, 2008 as reported on the NASDAQ Capital Market, or $0.40, by (ii) the number of common shares held by the shareholder that would otherwise have been exchanged for the fractional share interest.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On May 6, 2008, the Compensation Committee of the Board of Directors of the Company approved and adopted the Company's Non-Equity Incentive Compensation Plan for the fiscal year ending December 31, 2008 (the "2008 IC Plan"). A description of the material terms of the 2008 IC Plan with respect to the Company's "named executive officers" (as defined by Item 402(a)(3) of Regulation S-K) is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Item 7.01 Regulation FD Disclosure.

A copy of the Company's press release, entitled "PECO II Shareholders Approve Reverse Split of Common Shares" is attached as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.     Description
10.1            Description of the Material Terms of PECO II, Inc.'s Non-Equity
                Incentive Compensation Plan for Fiscal 2008

99.1            Press Release, dated May 6, 2008, entitled "PECO II Shareholders
                Approve Reverse Split of Common Shares."