Exhibit 10.1

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EMPLOYMENT AGREEMENT AMENDMENT

made this 10th day of November, 2010

BETWEEN:

SMTC MANUFACTURING CORPORATION OF CANADA, a corporation amalgamated under the
laws of Ontario

(hereinafter called the “Corporation”)

- and –

JOHN CALDWELL

(hereinafter called the “Executive”)

WHEREAS the Executive is currently employed by the Corporation pursuant to the
Employment Agreement between the Corporation and the Executive made as of the
16th day of May, 2007 (the “Employment Agreement);

AND WHEREAS unless otherwise provided herein, all terms used herein shall have
the same meaning as set out in the Employment Agreement;

AND WHEREAS the Corporation and the Executive have mutually agreed to amend the
Employment Agreement including providing incentives in order to facilitate the
retention of the Executive until the orderly transition and replacement of the
Executive by a successor yet to be determined;

NOW THEREFORE in consideration of the of the mutual covenants and agreements
contained herein, the Corporation and the Executive hereby agree to amend the
Employment Agreement as provided herein with effect on the date above (the
“Effective Date”):

ARTICLE 1 – TERM, POSITION AND DUTIES

 

1.1 Shall be deleted, and replaced with the following:

Term. The employment of the Executive shall continue on the terms and conditions
of the Employment Agreement, as amended herein until March 31, 2011, subject to
any subsequent written agreement between the Corporation and the Executive by
which it is agreed that the Executive’s employment is extended beyond March 31,
2011 on such terms as are thereby agreed in writing. Should the parties agree in
writing to extend the Executive’s employment beyond March 31, 2011, it is
currently contemplated that the Executive’s compensation during such extension
would be limited to his current base salary and current level of benefits only.

SMTC Corporation

 

Headquarters: 635 Hood Road, Markham, Ontario, Canada L3R 4N6

Telephone: 905-479-1810 Fax: 905-479-5326 Web Site: www.smtc.com

Toronto • San Jose • Mexico • China

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ARTICLE 2 – THE EXECUTIVE’S OBLIGATIONS

 

2.4 Shall be amended to add the following sentence:

Non-Disclosure of Confidential Information. For greater certainty, this
restrictive covenant shall survive any termination of the employment of the
Executive in perpetuity.

The following Sections 2.8 and 2.9 shall be added to Article 2:

 

2.8 Confirmation of Restrictive Covenants. For the consideration to be paid by
the Corporation to the Executive hereunder, the Executive hereby confirms and
acknowledges that he continues to be bound by the restrictive covenants
contained in Article 2 of the Employment Agreement, that such restrictions and
limitations are reasonable and necessary to protect the interests of the
Corporation, that such restrictions and limitations will not prevent the
Executive from earning a meaningful living, and that accordingly all defenses to
the enforcement thereof are hereby expressly waived.

 

2.9 The Executive shall prepare and submit to the Board for approval a short
term transition plan for the business pertaining to the period while the
Corporation is seeking a successor to replace the Executive. The transition plan
shall set out prioritized, strategic and operational initiatives to be
undertaken during such period and those initiatives which will not be undertaken
by the Executive without the prior approval of the Board of Directors.

ARTICLE 3 – COMPENSATION

 

3.2 Shall be amended to include the following final sentence:

The Executive shall not be eligible to participate in the 2011 short term
incentive plan.

 

3.3 Shall be amended to add the following final sentence:

The Executive shall not be eligible to receive any long term incentive plan
stock option grants for the years 2010 and 2011.

 

3.8 The following provision shall be added to Article 3:

Cancellation of and Release in respect of all DSUs. The Executive hereby
acknowledges and agrees that upon the Effective Date and for the consideration
and covenants set forth herein, any and all Deferred Share Units previously
awarded by the Corporation to the Executive are hereby surrendered and forever
cancelled and of no further force and effect, and the Executive shall have no
further entitlement to any such award of Deferred Share Units.

ARTICLE 4 – TERMINATION

 

4.2 Shall be deleted, and replaced by the following:

Termination Without Cause. The Corporation may, with the prior approval of a
majority of the independent members of the Board, terminate the Executive’s
employment without cause at any time prior to March 31, 2011 upon providing the
Executive with written notice of such termination and, in addition to satisfying
any other

 

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entitlements which the Executive may have under the Employment Agreement as
amended by this Employment Agreement Amendment, the Corporation shall, subject
to Section 4.13 hereof, make the immediate payment to the Executive of a lump
sum amount equal to (i) the Executive’s salary, vacation pay, automobile
allowance and the value of all benefits accrued and payable up to the date of
such termination plus (ii) the Executive’s salary, vacation pay, automobile
allowance and the value of all benefits which would but for the termination be
otherwise payable or provided to the Executive from the date of such termination
to March 31, 2011 or such later date to which the Executive and the Corporation
have agreed to extend the Executive’s employment pursuant to Section 1.1. In
addition, the Corporation shall pay the Executive the 2010 short term bonus
award, if any, in accordance with the Corporation’s approved 2010 short term
incentive plan which for greater certainty shall not be paid until after
completion by the Corporation of the audit and release of its 2010 financial
results and shall be based solely upon such actual audited results relative to
the applicable approved targets.

 

4.3 Shall be deleted, and replaced by the following:

Termination by the Executive. If prior to March 31, 2011 the Executive
terminates his employment by notice in writing or otherwise resigns from his
employment hereunder for any reason other than for “Good Reason” (as defined
below), the Executive shall not be entitled to receive any further remuneration
or payments of any kind or nature from the Corporation, save for any
compensation accrued and earned but unpaid as at the effective date of such
termination or resignation (excluding 2010 short term bonus award and save any
vested stock options including those vested pursuant to Section 4.11 below. For
greater certainty, in the event that the Executive provides advance written
notice of termination of his employment other than for Good Reason, the
Corporation may in its sole discretion waive all or a portion of such notice and
the effective date of such termination shall be the last day of employment of
the Executive as so determined. At the request of the Corporation, after such
termination or resignation by the Executive other than for Good Reason, the
Executive shall submit his written resignation as an employee of the Corporation
and his written resignations as a director and officer of the Corporation and
its Affiliates, as applicable. “Good Reason” wherever used in this Agreement
means any breach by the Corporation of the Employment Agreement as amended by
this Employment Agreement Amendment or any other reason that would constitute a
constructive dismissal of the Executive at common law; provided, however the
Executive acknowledges and agrees that the recruitment by the Corporation of a
successor to replace the Executive and the short term transition plan to be
implemented as provided for in Section 2.9 shall not constitute grounds for a
claim for constructive dismissal. The Executive shall provide the Corporation
with prior written notice of any claim that Good Reason exists, together with
the particulars thereof and the Corporation shall have ten (10) Business Days to
take steps to rectify the circumstances giving rise to such claim or to
otherwise dispute such claim.

 

4.4 Shall be amended to delete the first paragraph of Section 4.4 and add the
following:

Change of Control.

 

(i) In the event that at any time after the Effective Date and on or before the
later of March 31, 2011 and such date on which the Executive’s employment ceases
if his employment has been extended pursuant to Section 1.1 hereof, the
Corporation has been provided with a good faith and bona fide non-binding letter
of intent or other comparable term sheet or memorandum of understanding in
respect of a transaction which would constitute a “Change of Control” (as such
definition is amended hereby) (hereinafter called an “Expression of Interest”),
and such Change of Control transaction with such party (or affiliate) to the
Expression of Interest in fact closes on or before December 31, 2011, the
Corporation will provide the Executive with a lump sum payment, less applicable
statutory deductions, equal to two times his current aggregate Base Salary plus
the target bonus payable to the Executive under the 2010 Short Term Bonus Plan,
which shall be immediately payable upon closing of such Change of Control
transaction.

 

(ii)

In the event that at any time after the date hereof and on or before
December 31, 2010, the Corporation has been provided with an Expression of
Interest from an entity at any time agreed to in writing by the parties hereto
(“Agreed Party”) and such Change of Control transaction with such Agreed Party
(or any affiliate thereof) in fact closes on or before December 31, 2011, in
addition to the payment in paragraph

 

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  4.4(i) above, the Executive shall also be entitled to the compensation set out
in the last sentence of Section 4.10 hereof, which shall be immediately payable
upon closing of such Change of Control transaction.

 

(iii) For greater certainty and notwithstanding anything to the contrary
contained in the Employment Agreement, as amended hereby, in the event that the
Executive is terminated for cause or otherwise resigns from or terminates his
employment other than for Good Reason prior to March 31, 2011 or such later date
on which the Executive’s employment ceases if his employment has been extended
pursuant to Article 1.1 hereof, the Executive shall not be entitled to any
amounts otherwise payable hereunder as a result of a Change of Control
transaction.

 

(iv) For purposes hereof, the definition of “Change of Control” as defined in
Section 4.4 of the Employment Agreement is hereby amended to delete from
Section 4.4(b) the words “or other liquidation or dissolution” and insert in
their place the words “but expressly excluding by way of a forced liquidation or
any other distressed sale”.

The following provisions are added to Article 4 of the Employment Agreement:

4.10 Retention Incentive. Provided that the Executive does not resign from or
otherwise terminate his employment, other than for Good Reason, prior to
March 31, 2011 or the Executive has not been terminated for cause provided for
in Section 4.1 of the Employment Agreement prior to such date, the Executive
shall receive from the Corporation a retention incentive of US $708,000.00,
payable on the earliest of (i) March 31, 2011, (ii) the date the Board
terminates the Executive’s employment for any reason (other than for cause
pursuant to Section 4.1) and (iii) the date of closing of any Change of Control
transaction. For greater certainty, in the event of a closing of a Change of
Control transaction on or before December 31, 2011 with an Agreed Party,
provided the Board has received after the date hereof and on or before
December 31, 2010 an Expression of Interest from such Agreed Party the retention
incentive shall be increased by the sum of US $150,000.00, with such increase
payable by the Corporation to the Executive at closing of such Change of Control
transaction.

4.11 Vesting and Exercise of Stock Options. All outstanding unvested stock
options in the Corporation and in SMTC Corporation held by the Executive shall
automatically vest on the earliest of (i) the date that such stock options vest
in accordance with their terms; (ii) March 31, 2011; (iii) the date of the
appointment of new Chief Executive Officer; (iv) the date the Board has
terminated the Executive’s employment hereunder; or (v) the date that Good
Reason exists provided that it has not been rectified by the Board as provided
in Article 4.3 hereof. As a matter of record, the parties have listed on
Schedule “A” the current unvested stock options held by the Executive. The
Executive shall have one (1) year from the date of any termination of his
employment to exercise all unexercised vested options.

4.12 Release re Constructive Dismissal Claim. The Executive hereby acknowledges
and agrees that except in the event of the occurrence of Good Reason, the
Executive hereby waives any claim or cause of action for constructive
termination or dismissal of the Executive’s employment with the Corporation
arising solely from the negotiation and entering into of this Employment
Agreement Amendment.

4.13 Payment of Amounts Hereunder. Payment of any amounts to which the Executive
is entitled hereunder upon or following the termination of his employment (other
than any compensation accrued and earned but unpaid as of the date of the
termination of the Executive’s employment) shall be in consideration of, and
shall be conditioned upon, (i) the Executive providing a full and final release
in favour of the Corporation, its Affiliates and their respective directors and
officers in respect of any and all claims, actions, damages and obligations
arising from his employment and the cessation thereof in form customary for a
release of this nature and mutually acceptable to the parties acting reasonably
and (ii) the Executive submitting his written resignation as an employee of the
Corporation and his written resignations as a director and officer of the
Corporation and its Affiliates, as applicable, with effect as of the date of the
termination, resignation or expiration of the Executive’s employment hereunder.
Notwithstanding the foregoing, any such full and final release shall not apply
to any failure or refusal of the Corporation to pay to the Executive any amounts
to which the Executive is entitled under the Employment Agreement as amended
hereby.

 

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ARTICLE 5 – MISCELLANEOUS

The following provisions are added to Article 5:

5.13 Independent Legal Advice. The Executive hereby acknowledges that he has
been provided with an opportunity to seek and was not prevented nor discouraged
from seeking independent legal advice prior to the execution and delivery of
this Agreement. In the event he did not avail himself of that opportunity prior
to signing this Agreement, he did so voluntarily without any undue pressure and
agrees that the failure to obtain such advice shall not be used by him as a
defence to enforcement of the obligations and terms hereunder. The Executive
acknowledges that he has read and understood the terms hereof and has not relied
on any representation (oral or otherwise) by the Corporation other than those
explicitly stated in this Agreement.

5.14 Reimbursement for Executive’s Legal Fees. The Executive shall be entitled
to reimbursement for his reasonable legal fees and disbursements, plus HST,
incurred in connection with the negotiation and entering into of this Agreement,
up to a limit of CDN $15,000.

5.15 Employment Agreement. Except as expressly provided for herein, all other
terms and provisions contained in the Employment Agreement shall continue in
full force and effect; provided, however, in the event of a conflict between the
provisions hereof and the Employment Agreement, the provisions hereof shall
prevail. All references herein to Articles and Sections are to the Articles and
Sections of the Employment Agreement as amended herein or which are added to the
Employment Agreement as provided herein.

5.16 Confidentiality. Except as required by law, as otherwise agreed to in
writing, or for the purposes of obtaining financial, tax or legal advice, the
parties shall keep the contents of this Agreement confidential.

IN WITNESS WHEREOF the parties have executed this Agreement this 10th day of
November, 2010.

 

SMTC MANUFACTURING CORPORATION OF CANADA Per:   /S/ JOHN MARINUCCI   JOHN
MARINUCCI, Director SMTC Corporation

 

        }         }         }         }          }   /S/ JOHN E. CALDWELL
Witness     JOHN E. CALDWELL

 

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SCHEDULE A        UNVESTED STOCK OPTIONS AT NOVEMBER 10, 2010

 

Grant Date

   Total Number
of Options
Granted      Exercise
Price      Vesting
Pattern/Period      Total Number
of Unvested  Options
at November 10, 2010  

November 14, 2007

     115,000       $ 1.64         33/33/33         38,333   

November 10, 2008

     100,000       $ 0.70         33/33/33         33,333   

November 10, 2009

     100,000       $ 1.00         33/33/33         66,667                       
         315,000               138,333                           

 

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