VALPEY-FISHER CORPORATION 2001 STOCK OPTION PLAN,

Exhibit 10.3

VALPEY-FISHER CORPORATION

2001 STOCK OPTION PLAN,

AS AMENDED

The Plan is intended to expand and improve the profitability and prosperity of MATEC Corporation for the benefit of its stockholders by permitting the Corporation to grant to officers and other key employees of, and consultants and advisers to, the Corporation and its Subsidiaries, options to purchase shares of the Corporation’s Common Stock.  These grants are intended to provide additional incentive to such persons by offering them a greater stake in the Corporation’s continued success.  The Plan is also intended as a means of reinforcing the commonality of interest between the Corporation’s stockholders and such persons, and as an aid in attracting and retaining the services of individuals of outstanding and specialized skills.

For Plan purposes, except where the context otherwise indicates, the following terms shall have the meanings which follow:

(a)           “Agreement” shall mean a written instrument executed and delivered on behalf of the Corporation which specifies the terms and conditions of a Stock Option granted to a Participant.

(b)           “Beneficiary” shall mean the person or persons who may be designated by a Participant from time to time in writing to the Committee, to receive, if the Participant dies, any Option exercise rights held by the Participant.

(c)           “Board” shall mean the Board of Directors of the Corporation.

(d)           “Code” shall mean the Internal Revenue Code of 1986, as it may be amended from time to time, and the rules and regulations promulgated thereunder.

(e)           “Committee” shall mean a Committee of the Board composed of two or more persons which shall be designated by the Board to administer the Plan.  Each member of the Committee, while serving as such, shall be a member of the Board and shall be a “non-employee director” within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934.

(f)           “Common Stock” shall mean the Common Stock of the Corporation having a par value of $0.05 per share.

(g)           “Corporation” shall mean MATEC Corporation, a Maryland corporation.

(h)           “Employee” shall mean any person who is employed by the Corporation or any Subsidiary corporation.

(i)           “Exercise Price” shall mean the per share price for which a Participant upon exercise of a Stock Option may purchase a share of Common Stock.

(j)           “Fair Market Value” shall mean the value of a share of Common Stock to be determined by, and in accordance with procedures established by, the Committee.  Such fair market value shall be deemed conclusive upon the determination of the Committee made in good faith.  The preceding notwithstanding, so long as the Common Stock is listed on a national stock exchange, the “Fair Market Value” shall mean with respect to any given day, the mean between the highest and lowest reported sales prices of the Common Stock on the principal national stock exchange on which the Common Stock is listed, or if such exchange was closed on such day or if it was open but the Common Stock was not traded on such day, then on the next preceding day that the Common Stock was traded on such exchange, as reported by a responsible reporting service.

(k)           “Incentive Stock Option” shall mean a Stock Option which is intended to meet and comply with the terms and conditions for an “incentive stock option” as set forth in Section 422 of the Code, or any other form of tax qualified stock option which may be incorporated and defined in the Code as it may from time to time be amended.

(l)           “Non-Qualified Option” shall mean a Stock Option which does not meet the requirements of Section 422 of the Code or the terms of which provide that it will not be treated as an Incentive Stock Option.

(m)           “Participant” shall mean any person who is granted a Stock Option under the Plan.

(n)           “Plan” shall mean the MATEC Corporation 2001 Stock Option Plan as set forth herein and as amended from time to time.

(o)           “Stock Option” or “Option” shall mean a right to purchase a stated number of shares of Common Stock subject to such terms and conditions as are set forth in the Plan and an Agreement.

(p)           “Subsidiary corporation” or “Subsidiary” shall mean any corporation which is a “subsidiary corporation” of the Corporation as defined in Section 424(f) of the Code.

(a)           The Committee shall administer the Plan and, accordingly, it shall have full power to grant Stock Options under the plan, to construe and interpret the Plan, and to establish rules and regulations and perform all other acts it believes reasonable and proper, including the authority to delegate responsibilities to others to assist in administering the Plan.

(b)           The determination of those eligible to receive Stock Options, and the amount, type and terms and conditions of each Stock Option shall rest in the sole discretion of the Committee, subject to the provisions of the Plan.

(c)           The Committee may permit the voluntary surrender of all or a portion of any Option granted under the Plan to be conditioned upon the granting to the Participant of a new Option for the same or a different number of shares as the Option surrendered, or may require such voluntary surrender as a condition precedent to a grant of a new Option to such Participant.  Such new Option shall be exercisable at the price, during the period and in accordance with any other terms or conditions specified by the Committee at the time the new Option is granted, all determined in accordance with the provisions of the Plan without regard to the price, period of exercise, or any other terms or conditions of the Option surrendered.

The total number of shares of Common Stock which may be issued on exercise of Stock Options shall not exceed 200,000 shares, subject to adjustment in accordance with Paragraph 9 of the Plan.  Shares issued under the Plan may be, in whole or in part, as determined by the Committee, authorized but unissued or treasury shares of Common Stock.  If any Options granted under the Plan shall expire or terminate without having been exercised, the shares subject to such Options shall be added back to the number of shares of Common Stock which may be issued on exercise of Stock Options.

(a)           Consistent with Plan objectives, the following persons shall be eligible to become Participants in the Plan: officers and other key Employees and consultants and advisers to the Corporation or any Subsidiary corporation, provided that members of the Board who are not Employees shall not be eligible.

(b)           The foregoing subparagraph (a) notwithstanding, Incentive Stock Options shall be granted only to officers and other key Employees, and no Incentive Stock Options shall be granted to an Employee who owns more than 10% of the Common Stock determined in accordance with the provisions of Section 422(b)(6) of the Code, unless the Option meets the requirements of Section 422(c)(5) of the Code.

(c)           Options shall be granted to consultants and advisers only for bona fide services rendered other than in connection with the offer or sale of securities.

All Stock Options granted under the Plan shall be evidenced by Agreements which shall contain such provisions as shall be required by the Plan together with such other provisions as the Committe