Exhibit 10.4

RESTRICTED STOCK AGREEMENT

This Agreement is made as of the 19th day of December, 2002, by and between
Valpey-Fisher Corporation (the “Company”) and Michael Ferrantino (the
“Employee”).
 
WHEREAS, the Employee has become an employee of the Company;
 
WHEREAS, as an inducement to becoming an employee of the Company, the Board of
Directors of the Company has authorized the issuance of 100,000 shares of Common
Stock of the Company par value $.05 per share, (the “Common Stock”) on the terms
and conditions set forth herein.
 
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the Company and the Employee
hereby agree as follows:
 
1.           a)           Promptly following receipt of the Purchase Price
hereinafter set forth the Company will cause to be issued to the Employee for a
purchase price of $.05 per share (the “Purchase Price”), 100,000 shares of
Common Stock (the “Restricted Stock”).
 
b)           The Employee hereby agrees to purchase the Restricted Stock and pay
the Purchase Price therefore promptly following execution hereof.
 
2.             Restrictions on Transfer of Restricted Stock.  Except as
otherwise provided pursuant to or in accordance with the terms and provisions of
this Agreement, the Restricted Stock shall be subject to the following
restrictions (the “Restrictions”); namely the Restricted Stock shall not be
sold, exchanged, assigned, transferred or permitted to be transferred,
voluntarily, involuntarily, or by operation of law, delivered, encumbered,
discounted, pledged, hypothecated, or otherwise disposed of for a period of 5
years (the “Restricted Period”) from October 23, 2002 (said October 23, 2002
herein referred to as “the Effective Date”) except in accordance with the
following provisions:
 
a)           Except as otherwise provided herein, the Restrictions will
terminate with respect to 20% of the Restricted Stock, upon each anniversary of
the Effective Date, so that all such Restrictions shall terminate on the fifth
anniversary of the Effective Date.  Upon the termination of the Restrictions
with respect to shares of Restricted Stock, whether through the passage of time
or as otherwise provided herein, the Employee shall be entitled to receive share
certificates with respect to such shares hereunder free of such Restrictions.
 
b)           Five stock certificates, each for 20,000 shares of Common Stock,
shall be issued to and registered in the name of the Employee, shall bear the
restrictive legend referred to in Section 2(e) and such other legends as may be
appropriate, and shall be subject to appropriate stop-transfer orders; provided,
however, that such certificates shall be deposited with and held in escrow with
the Escrow Agent as provided in Section 4 until the Restrictions relating
thereto otherwise terminate, and the Employee shall deliver to such Escrow Agent
stock powers endorsed in blank relating to the Restricted Stock.
 
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 c)               (i)           To the extent the Restrictions have not
otherwise terminated and the Restricted Stock has not otherwise been forfeited,
as provided in subsection (d) of this Section 2, such Restrictions shall
terminate (1) with respect to 20% of the Restricted Stock, upon the death of the
Employee after the first anniversary of the Effective Date, (other than on an
anniversary of the Effective Date, and (2) entirely, upon a Change of Control of
the Company.
 
(ii)           For the purposes of this Agreement a Change in Control of the
Company shall occur:
 
 (a)           if any “Person”, as such term is used in Section 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
(provided that the term “Person” shall not include Theodore Valpey, Jr., the
Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of stock in the Company), becomes the “beneficial owner” (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing 70% or more of the combined voting power of the
Company’s then outstanding securities;
 
 (b)           the stockholders of the Company approve a merger or consolidation
of the Company with any other corporation; other than (i) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) 30% or more of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation or (ii) a merger or consolidation effected to
implement a re-capitalization of the Company (or similar transaction) in which
no “Person” (as hereinabove defined) acquires 70% or more of the combined voting
power of the Company’s then outstanding securities; or
 
 (c)           the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company’s assets.
 
d)           To the extent the Restrictions have not otherwise terminated,
shares of Restricted Stock shall be forfeited and returned to the Company upon
cessation of the Employee’s employment with the Company.
  e)           During the Restricted Period certificates evidencing the
Restricted Stock shall bear the following additional legend:
“These shares are subject to forfeiture to Valpey-Fisher Corporation (the
“Company”) in accordance with the terms of an Agreement between the Company and
the person in whose name the certificate is registered.  These shares may not be
sold, pledged, exchanged, transferred, hypothecated or otherwise disposed of
except in accordance with the terms of said Agreement.”
 
 
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3.           Investment Representation. The Employee agrees that he is acquiring
the shares subject to this Agreement for his own account and not with a view to
distribution thereof and that the shares of Restricted Stock acquired by the
Employee will not be sold except pursuant to an effective registration statement
under the Act or pursuant to an exemption from registration under the Act.
 
4.           Deposit of Restricted Stock.  (a) The Employee consents to the
deposit with the Treasurer of the Company or his successor, of the certificates
evidencing the Restricted Stock, together with stock powers or other instruments
of transfer required by the Company or its counsel appropriately endorsed in
blank by him.  Such deposit shall remain in effect until the time the Company
reacquires the Restricted Stock under and pursuant to the terms and provisions
of this Agreement, or until said Restricted Stock shall be released from the
Restrictions under this Agreement.
 
(b)           The Employee consents to the appointment of the Treasurer of the
Company, and his successor, as escrow agent (the “Escrow Agent”) for said
certificates during the Restricted Period.  If during such Restricted Period,
shares of Restricted Stock are forfeited in accordance with this Agreement, the
Employee hereby authorizes the Escrow Agent to cause such certificates for such
stock to be canceled on the stock record books of the Company.  The Employee
agrees that the Escrow Agent is acting merely as a depository and shall have no
liability hereunder except as a depository to retain the shares of Restricted
Stock and to dispose of them in accordance with the terms of this Agreement.  If
the Escrow Agent is notified of any adverse claim or demand by any persons, he
is hereby authorized to hold such certificates until the dispute shall have been
settled by the parties and notice submitted to him by persons so interested, or
until the rights of the parties have been fully adjudicated in a court of
competent jurisdiction.  So long as the shares of Restricted Stock are held in
escrow, the Employee shall be entitled to all rights of a stockholder with
respect thereto, except as may be limited by the terms of this Agreement.
 
5.           Lapse of Restrictions.  Upon the termination of the Restrictions
with respect to shares pursuant to Section 2 as to which shares of Restricted
Stock have not before then been forfeited, the stock certificates for such
Restricted Stock and the related stock powers shall be delivered by the Escrow
Agent to the Employee, and such shares shall be free of all Restrictions and the
legend referred to in Section 2(e).
 
6.           Withholding and Section 83(b) Election.  (a) The Company shall
withhold all applicable taxes required by law upon any taxable event with
respect to the Restricted Stock; (b) Promptly following the issuance of the
Restricted Stock, Employee will execute and timely file an election pursuant to
Section 83(b) of the Internal Revenue Code of 1986 as amended, to include as
ordinary income the difference between the value of the Restricted Stock and the
aggregate Purchase Price, and concurrently deliver a copy of such election to
the Company, and for purposes of such election, will declare the value of the
Restricted Stock to be no less than $3.25 per share.
 
7.           Distributions with Respect to Stock.  Any cash dividends paid with
respect to shares of Restricted Stock shall be paid in cash to the Employee,
which payment shall be subject to any applicable withholding.  Any shares of
stock received as a stock dividend, or as a result of stock splits,
recapitalizations, combinations, exchanges of shares, reorganizations, mergers,
consolidations or otherwise, directly or indirectly, with respect to shares of
Restricted Stock shall have the same status, be subject to this Agreement, and
shall bear the same legend as the shares of Restricted Stock and shall be
delivered to the Escrow Agent to be held under the same terms and conditions as
the Restricted Stock.
 
 
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8.           Rights of Stockholder.  Subject to the terms and provisions of
applicable law and of this Agreement, the Employee shall have all rights of a
stockholder of the Company with respect to the Restricted Stock, including the
right to vote the Restricted Stock and to receive all dividends or other
distributions paid or made with respect thereto, subject to applicable
withholding requirements.
 
9.           No Right to Continued Employment.  Nothing herein shall obligate
the Company or any affiliate or subsidiary to continue the Employee’s employment
for any particular period.
 
10.           Burden and Benefit. The terms and provisions of this Agreement
shall be binding upon, and shall inure to the benefit of, the Company, and its
successors and assigns and the Employee and his executors or administrators,
heirs, and personal and legal representatives.
 
11.           Governing Law.  This Agreement shall be construed and enforced in
accordance with the laws of the State of Maryland without regard to the conflict
of laws principles thereof.
 
12.           Modifications.  No change or modification of this Agreement shall
be valid unless it is in writing and signed by the parties hereto.
 
13.           Entire Agreement.  This Agreement, sets forth all of the promises,
agreements, conditions, understandings, warranties and representations, oral or
written, express or implied, between the parties hereto with respect to this
Agreement.
 
14.           Genders.  The use of any gender herein shall be deemed to include
the other gender and the use of the singular herein shall be deemed to include
the plural and vice versa, wherever appropriate.
 
15.           Notices.  Any and all notices required herein shall be
addressed:  (a) if the Company, to the principal executive office of the
Company; and (b) if to the Employee, to his address as reflected in the stock
records of the Company.
 
16.           Invalid or Unenforceable Provisions.  The invalidity or
unenforceability of any particular provision of this Agreement shall not affect
the other provisions hereof, and this Agreement shall be construed in all
respects as if the invalid or unenforceable provisions were omitted.
 
IN WITNESS WHEREOF, the Company and the Employee have executed this Agreement as
of the day and year first above written.
 

 
VALPEY-FISHER CORPORATION
         
By: /s/ Ted Valpey, Jr.
         
/s/Michael Ferrantino
 
Michael Ferrantino

 
Accepted and Agreed as
Escrow Agent hereunder:

/s/ Michael J. Kroll
Michael J. Kroll, Treasurer
 
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