a5925473ex10_7.htm


    Exhibit
10.7

    


    


    


    


    September
10, 2002

    


    


    


    Mr.
Michael Ferrantino

    12
Martingale Lane

    Andover,
MA  01810

    


    Dear
Mike:

    


    I am pleased to offer you the position
of President and CEO of Valpey-Fisher Corporation.  I will nominate
you for election as a Director of the Company.  As you are aware,
MATEC and Valpey-Fisher have merged and MATEC is the survivor with a name change
to Valpey-Fisher Corporation.

    


    Your base salary will be $200,000.00
with a performance bonus of 50% of base salary (Management Incentive Plan) based
on a set of objectives determined by the Board of Directors beginning for the
2003 calendar year.  The current status of our industry and the
company’s current performance, of course, will be taken into
account.

    


    Valpey-Fisher Corporation will make the
premium payments for a portion of policy year six and full payment of $45,481
each of year 7, 8, 9 and 10, or a lesser period if employment ceases on the
American General Life-Corporate American Insurance/Retirement
Plan.  Valpey-Fisher Corporation understands there may be no recovery
of the premiums paid and you understand there may be withholding and tax
reporting requirements. You will, of course, get your own tax counsel on this
matter.  You will be eligible to participate in the group insurance,
profit sharing-401K plan and other “fringe” benefits provided for
Valpey-Fisher’s salaried employees, subject to the terms and conditions of such
benefits.  A description of the current “fringe” benefits is
enclosed.

    


    As an inducement essential to your
becoming an employee of Valpey-Fisher, Valpey-Fisher, subject to Board of
Directors approval, will grant you a five-year vesting restricted stock
plan.  The company will grant you 100,000 shares at the current
market, but not less than book value.  You will pay $.05 per share of
the purchase price or $5,000.00.  The company will pay you a
tax-offset bonus approximating the tax due on the grant, which is currently
estimated to be $175,000.  You would file an 83B
election.  My understanding is your future appreciation would be
long-term capital gain if held one year or more. You will, of course, get your
own tax counsel on this matter.

     

    
      
         

      

      
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                    Mr.
      Michael Ferrantino

                  	
                    9/10/02

                  
	
                    Andover,
      MA  01810

                  	
                    Page
      2

                  


          

           

           

        

      

    

    Subject to Board of Directors approval,
you will be granted an incentive stock option for 200,000 shares of common stock
at the greater of current market or book value pursuant to the company’s 1992,
1999 and 2001 stock option plans.  Immediately $100,000 worth, or
approximately 28,000 shares, will be vested that you may
purchase.  The balance of approximately 172,000 shares will vest over
five years.

    


    In the event of sale of the company,
all shares will become fully vested.  The company will use its best
efforts to register the resale of the restricted shares and keep in effect its
existing registration statements on form S8 with respect to the 1992, 1999 and
2001 stock option plans.  Also, in the event of the sale of
Valpey-Fisher within the next five years, you will be paid a 2x base salary
severance should you not be offered a position of President and CEO of the new
entity immediately following a sale.

    


    Our industry is undergoing a very
difficult period; however, we believe it also presents a great opportunity for
Valpey-Fisher with its history, strong balance sheet and publicly traded
stock.  Your objectives will be to stabilize the current operations,
continue with new product development, improve customer response time, improve
staffing and teamwork, and get a good grasp of the crystal oscillator
market.  You will also work with the undersigned in planning strategy
and expansion by a product or business acquisition.

    


    You understand that the above
description is an outline of the key terms only and will be superceded by the
definitive restrictive stock and stock options agreements to be entered into
between you and Valpey-Fisher Corporation.

    


    Your signature indicates acceptance of
this proposed employment offer subject to clarification and counsel’s review as
needed.

     

    
      
        
          
            	 
      	
                    Sincerely,

                  
	 
      	 
      
	 
      	 
      
	 
      	
                    /s/ Ted Valpey, Jr.

                  
	 
      	
                    Ted
      Valpey, Jr.

                  
	 
      	
                    Chairman

                  


          

        

      

    

     

     

    Agreed and
Accepted:

    


    /s/ Michael
Ferrantino                                                      

    Michael
Ferrantino

     

     

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