Exhibit 10.1

AGREEMENT

This AGREEMENT (this “Agreement”) is entered into as of this 10th day of June,
2008, by and among The Red Oak Fund, LP, a Delaware limited partnership, and the
persons and entities affiliated with it and listed on the signature pages hereof
(“Red Oak”), and SMTC Corporation, a Delaware corporation (“SMTC” or the
“Company”).

WHEREAS, on the date hereof Red Oak is the beneficial owner of approximately 16%
of the outstanding shares of common stock of the Company, par value $0.01 per
share (the “Common Stock”);

WHEREAS, Red Oak has sent letters to the Company and filed a Schedule 13D with
the Securities and Exchange Commission on April 1, 2008, all detailing certain
proposals (the “Proposals”) Red Oak has requested the Company to undertake
related to the Company’s 2008 annual meeting of stockholders (the “2008 Annual
Meeting”), its board of directors (the “Board”), the charter (the “Charter”) and
the by-laws (the “By-laws”) of the Company and certain other matters;

WHEREAS, the Company is preparing its proxy statement (the “Proxy Statement”)
for the 2008 Annual Meeting, and it has agreed to certain changes set forth in
the Proposals which implicate the filing of the Proxy Statement; and

WHEREAS, the Company and Red Oak desire to enter into a global settlement to
memorialize their agreement relating to the Proposals and to expedite the filing
and delivery of the Proxy Statement.

NOW, THEREFORE, in consideration of the foregoing, the parties hereto agree as
follows:

1. Board Nominees. Red Oak hereby withdraws, and the Company acknowledges the
withdrawal of, Anthony Snow, Eric Pessagno, Rich Effress and Rahul Advani as
proposed nominees to the Board for purposes of the 2008 Annual Meeting.

2. Walker Appointment. The Company agrees that, subject to his acceptance, the
Board shall appoint Alex Walker to fill a vacancy on the Board in accordance
with the By-laws, which appointment shall take place prior to the date of the
2008 Annual Meeting.

3. Compensation Committee. The Company agrees that, at such time as Mr. Walker
is appointed to the Board and subject to his acceptance, Mr. Walker shall also
be appointed by the Board to serve on the Management Development and
Compensation Committee of the Board (the “Compensation Committee”) and along
with other directors shall be considered for appointment as chair of such
committee. The Company further agrees that, subject to his acceptance, the Board
shall appoint Thomas Cowan to serve on the Compensation Committee.

4. Audit Committee. The Company agrees that, at such time as Mr. Walker is
appointed to the Board and subject to his acceptance, Mr. Walker shall also be
appointed by the Board to serve on the Audit Committee of the Board (the “Audit
Committee”).

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5. Amendments to Charter in 2008. The Company agrees that the Board shall
(a) (i) amend the Charter to revise Articles VI, X, XII, XIII and XV to remove
all provisions granting privileges to any individual shareholder, whether named
or qualified by any particular ownership percentage and (ii) amend the relevant
provisions of the Charter relating to the classified Board to restructure the
Board into two classes, in each case as reflected in the form attached hereto as
Exhibit A (the “Amended Charter”) and (b) submit proposal(s) for approval of the
Amended Charter by the stockholders of the Company at the 2008 Annual Meeting
(the “2008 Charter Proposals”) and recommend that the stockholders approve the
2008 Charter Proposals.

6. Board Structure Following 2008 Annual Meeting. The Company agrees that if the
2008 Charter Proposals related to the amendment described in Section 5(a)(ii)
hereof are approved by the requisite number of stockholders of the Company at
the 2008 Annual Meeting, following the filing of the Amended Charter with the
Secretary of State of the State of Delaware, the Board shall take all such
actions necessary to cause Class I of the Board to be comprised of Wayne McLeod,
John Caldwell and Alex Walker (subject to Mr. Walker’s acceptance of his
appointment to the Board), which such Class I shall serve until the Company’s
2009 annual meeting of stockholders (the “2009 Annual Meeting”), and Class II of
the Board to be comprised of Thomas Cowan, William Brock and a third member to
be appointed by the Board, which such Class II shall serve until the 2010 annual
meeting of stockholders (the “2010 Annual Meeting”). The Company agrees that the
size of the Board shall be set at six members and not be increased prior to the
date of the 2010 Annual Meeting unless at any time prior thereto Red Oak’s
ownership of Common Stock shall be less than 10% of the Company’s Common Stock
outstanding.

7. Amendments to Charter in 2009. The Company agrees that, notwithstanding
Section 6 above, at a reasonable time prior to the 2009 Annual Meeting, the
Board shall (a) further amend the relevant provisions of the Amended Charter
relating to the classified Board to declassify the Board so that all directors
stand for re-election on an annual basis (the “Further Amended Charter”) and
(b) submit proposal(s) for approval of the Further Amended Charter by the
stockholders of the Company at the 2009 Annual Meeting (the “2009 Charter
Proposals”); provided, however, that if at any time prior to the mailing of the
proxy statement prepared by the Company in connection with the 2009 Annual
Meeting Red Oak’s ownership of Common Stock shall be less than 10% of the
Company’s Common Stock outstanding, the Company and the Board shall not be
required to take any of the actions set forth in this Section 7.

8. Voting Agreement. Red Oak hereby agrees to vote all of the shares of Common
Stock it owns or owned as of the record date either beneficially or as of record
for the 2008 Annual Meeting (a) in favor of each of those individuals nominated
as directors by the Board and standing for re-election at the 2008 Annual
Meeting and (b) in favor of the Charter Proposals and each other proposal
consistent with the terms hereof contained in the Proxy Statement in the manner
that the Board recommends in the Proxy Statement.

9. Changes to Nominating and Governance Committee Policy. The Company agrees to
revise the standing policy of the Nominating and Governance Committee (the
“Nominating Committee”), and the applicable provisions, if any, of the Charter
and the By-Laws (as provided in Section 10 hereof), to increase to three the
limit on the number of nominees a stockholder may recommend to the Board
annually and to remove the minimum stock ownership

 

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qualification for a stockholder to put forth any nominees (the “Nomination
Conditions”), and the Company shall not alter the Nomination Conditions on or
prior to the date of the 2010 Annual Meeting.

10. Amendments to By-laws. The Company agrees that the Board shall (a) amend the
By-laws to revise Section 7.2 thereof to remove all provisions granting
privileges to any individual shareholder, whether named or qualified by any
particular ownership percentage, (b) amend the relevant provisions of the
By-laws relating to the classified Board to restructure the Board into two
classes and (c) amend the By-laws to reflect the Nomination Conditions, in the
form attached hereto as Exhibit B (the “Revised By-laws”), provided, in the case
of clauses (a) and (b) of this paragraph 10, that the 2008 Charter Proposals are
approved by the requisite number of stockholders of the Company at the 2008
Annual Meeting.

11. Audit Committee Review. The Company agrees that the Audit Committee shall
use its commercially reasonable efforts to (a) review the external audit fees
incurred by the Company annually and take all actions designed to reduce such
fees to the extent such a reduction is reasonably practicable without a
diminution in the level of service provided by the Company’s external auditors
or the value of such services to the Company and (b) undertake a review with the
assistance of Company management of the procedures used to prepare quarterly and
annual financial reports with a goal to shorten the reporting period following
each quarter end.

12. Compensation Committee Review. The Company agrees that, consistent with its
obligations and past actions under its executive compensation policies as set
forth in its Annual Report on Form 10-K/A (Amendment No. 1) relating to its
fiscal year ended December 31, 2007 and filed with the Securities and Exchange
Commission, the Compensation Committee shall continue to periodically (a) review
and benchmark Board compensation and propose any changes to Board compensation
it deems appropriate as a result of such review, (b) review and benchmark the
executive officer compensation and enter into good faith discussions with such
executives to propose any changes to such compensation arrangements it deems
appropriate as a result of such review and (c) establish criteria and annual
targets for management annual incentive compensation.

13. Advice with Respect to Strategic Alternatives. The Company agrees that it
shall use its commercially reasonable efforts to continue to explore the
engagement of an advisor to provide advice to the Company on strategic
alternatives, including, but not limited to, refinancings, acquisitions,
mergers, joint ventures and the sale of all or a portion of the Company. The
Company shall make a reasonable good faith effort to contact Integris LLC and
such other firms as it deems suitable for the purpose and shall solicit
proposals from Integris and such other firms.

14. Credit Agreements. The Company agrees that it shall use its commercially
reasonable efforts to periodically review the terms of its outstanding credit
facilities and, where feasible, to undertake good faith negotiations with its
lenders to amend certain covenants to gain greater flexibility in its use of
cash, specifically including permitting stock repurchases from its stockholders.

 

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15. Release of Claims. Red Oak and the Company hereby release and forever
discharge each other, and their respective directors, officers, partners,
principals, employees and agents, from all claims and demands, rights and causes
of action of any kind arising out of the Proposals, the Annual Meetings, the
Amended Charter, the Further Amended Charter, the 2008 Charter Proposals, the
2009 Charter Proposals, the Revised By-laws and all other actions commenced, or
any claims, whether asserted or unasserted, known or unknown as of the date
hereof by or against the Company or Red Oak. Notwithstanding anything to the
contrary in this paragraph, the foregoing releases shall not affect, waive,
limit, modify or in any other way change in any manner any obligation or
liability of any party under this Agreement, any instrument or agreement
executed and delivered pursuant to this Agreement, or any breaches of fiduciary
duty or similar claims on or after the date of this Agreement.

16. Company Representations and Warranties. The Company represents and warrants
to Red Oak as follows:

 

  (a) The Company is a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Delaware. The Company has the
full power and authority to execute, deliver and carry out the terms and
provisions of this Agreement, and has taken all necessary action to authorize
the execution, delivery and performance of this Agreement; and

 

  (b) This Agreement has been duly and validly authorized by the Board, and
executed and delivered by the Company and constitutes a valid and binding
obligation of the Company, enforceable in accordance with its terms, and no
other proceeding on the part of the Company is necessary to authorize the
execution, delivery and performance of this Agreement.

17. Red Oak Representations and Warranties. Each member of Red Oak represents
and warrants to the Company as follows:

 

  (a) To the extent that Red Oak is an entity, it is duly organized, validly
existing and in good standing under the laws of the state in which it was
incorporated or organized. It has the full power and authority to execute,
deliver and carry out the terms and provisions of this Agreement, and has taken
all necessary action to authorize the execution, delivery and performance of
this Agreement; and

 

  (b) This Agreement has been duly and validly authorized by Red Oak’s governing
bodies, and executed and delivered by Red Oak and constitutes its valid and
binding obligation, enforceable against Red Oak in accordance with its terms,
and no other proceeding on its part is necessary to authorize the execution,
delivery and performance of this Agreement.

18. Standstill Agreement. Each member of Red Oak agrees that, until the date
that is thirty (30) days prior to the advance notice deadline for submitting
proposals for the 2009 Annual Meeting (the “Standstill Period”) and except as
provided in this Agreement, neither it nor any of its affiliates or associates
shall:

 

  (a) nominate any candidates for the Board of Directors of the Company;

 

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  (b) submit a shareholder proposal under Rule 14a-8 of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), or otherwise under the By-laws, as
in effect from time to time, directly or indirectly, to the Company;

 

  (c) file a proxy statement in opposition to the Company or otherwise solicit
proxies or consents from any shareholders of the Company, except in response to
a competing proxy solicitation initiated and maintained by a third party not
affiliated with Red Oak without the cooperation or encouragement of Red Oak;

 

  (d) effect or seek (including, without limitation, entering into any
discussions, negotiations, agreements or understandings with any third person),
offer or propose (whether publicly or otherwise) to effect, or cause or
participate in, or in any way, advise, assist or encourage any other persons in
connection with any of the foregoing;

 

  (e) request, directly or indirectly, any amendment or waiver of any provision
of this paragraph 18 (including this sentence) by the Company or any of its
agents or representatives.

19. Amendments and Waivers. No amendment or waiver of any provision of this
Agreement shall be valid and binding unless it is in writing and signed, in the
case of an amendment, by the Company and Red Oak, or in the case of a waiver, by
the party against whom the waiver is to be effective. No waiver by any party of
any breach or violation or, default under or inaccuracy in any representation,
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent breach, violation, default of, or inaccuracy
in, any such representation, warranty or covenant hereunder or affect in any way
any rights arising by virtue of any prior or subsequent such occurrence. No
delay or omission on the part of any party in exercising any right, power or
remedy under this Agreement shall operate as a waiver thereof.

20. Successors and Assigns. Except as otherwise provided herein, the terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective successors and permitted assigns of the parties. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.

21. Counterparts. This Agreement may be executed in any number of counterparts,
which may be exchanged by PDF or facsimile each of which shall be deemed an
original, but all of which together shall constitute but one and the same
instrument. This Agreement shall become effective when duly executed by each
party hereto.

 

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22. Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction. In the event that any provision hereof would, under
applicable law, be invalid or unenforceable in any respect, each party hereto
intends that such provision shall be construed by modifying or limiting it so as
to be valid and enforceable to the maximum extent compatible with, and possible
under, applicable law.

23. Governing Law. This Agreement, the rights of the parties and all actions
arising in whole or in part under or in connection herewith, shall be governed
by and construed in all respects, including validity, interpretation and effect,
in accordance with the laws of Delaware, applicable to contracts executed and to
be performed wholly within such state without giving effect to any choice or
conflict of law provision or rule that would cause the application of the laws
of any other jurisdiction. Each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of the state courts in New York, New York in
the event any dispute arises out of this Agreement or the transactions
contemplated by this Agreement, (b) agrees that it shall not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court, (c) agrees that it shall not bring any action relating to this
Agreement or the transactions contemplated by this Agreement in any court other
than the state or federal courts in New York, New York, (d) agrees to waive any
bonding requirement under any applicable law, in the case any other party seeks
to enforce the terms by way of equitable relief and (e) each of the parties
irrevocably consents to service of process by first class certified mail, return
receipt requested, postage prepaid, to the address of such parties’ principal
place of business or as otherwise provided by applicable law.

[Next page is the signature page.]

 

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IN WITNESS WHEREOF, the undersigned parties have duly executed this Agreement as
of the date first written above.

 

THE RED OAK FUND, LP

By:

  Red Oak Partners, LLC,   its general partner

By:

 

/s/ David Sandberg

Name:

  David Sandberg

Title:

  Managing Member

RED OAK PARTNERS, LLC

By:

 

/s/ David Sandberg

Name:

  David Sandberg

Title:

  Managing Member

DAVID SANDBERG

/s/ David Sandberg

SMTC CORPORATION

By:

 

/s/ John C. Caldwell

Name:

  John C. Caldwell

Title:

  Chief Executive Officer and President