Exhibit 10.1

 

SMTEK International, Inc.

Executive Bonus Plan

 

The purpose of the SMTEK Executive Bonus Plan is to attract and retain highly
qualified individuals; to align employee compensation levels with the success of
the business; to obtain from each participant the best possible performance; and
to underscore the importance to them of achieving particular business objectives
established for SMTEK International, Inc.

 

Bonus Factor /
Category

 

Weighting
Factor

 

 

 

 

 

Total Bonus Pool

 

100

%

 

 

 

 

1) Discretionary

 

50

%

2) Operating Income

 

50

%

 

•      Eligibility:

•                  SMTEK’s Executive team: Chief Executive, President, Chief
Financial Officer, Vice President Operations and Vice President Sales;

•                  Executive must be currently employed by SMTEK as of the
Company’s fiscal year end (and/or such earlier other date(s) during the fiscal
year as the Compensation Committee may establish from time to time) and as of
the date of pay-out or pay-outs.

 

•      Bonus Factors / Categories:

•                  Operating Income - quarterly operating income as percentage
of net revenues and inventory turns:  total cost of goods sold (Q4 annualized) /
inventory balance (average of 3rd month inventory balance of most recent two
quarter-end balances, or average of Q3 and Q4 inventory balance)

•                  set-aside consideration of materials vs. total cost of goods
sold, consignment, etc. for current fiscal year calculation.

•                  Discretionary:  progress vs. strategic plan; cash conversion;
team upgrades / gap fills; balance sheet (ROA / ROE, debt repayment ), momentum
from prior fiscal year, etc.

 

•      Achievement:

•                  Milestone achievements / pay-outs are not inter-dependent
among categories for current fiscal year

•                  i.e.: achieving operating income threshold not a
pre-requisite to earn inventory turn bonus;

•                  Minimum thresholds for base-line objective achievements for
inventory turns and operating income.

•                  Bonus earnings above minimum thresholds / floor based on
inventory turns and operating income.

 

•      Bonus Payout:

•                  To be approved by Compensation Committee of Board of
Director’s based upon final audit report by SMTEK’s independent auditors for
applicable fiscal year end;

•                  Executive meeting Eligibility attributes to be paid ratable
percentage of bonus pay-out based upon time employed / effective during current
fiscal year

•                  Bonuses to be paid upon issuance of annual audit report by
SMTEK’s independent auditors, provided however, that the Compensation Committee
may alter the bonus factors, criteria and payment schedule to accelerate bonus
payments hereunder based on unaudited financial statements and other relevant
discretionary criteria determined in the Compensation Committee in

 

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its sole and absolute discretion and may also adjust the percentage of any of
the bonuses paid out hereunder so that a portion of the bonuses are paid at
varying times during the fiscal year with any remainder paid out after
completion of the fiscal year.

 

The Compensation Committee shall have the power to implement, interpret and
construe this plan and any bonuses and bonus agreements hereunder, to define the
rights and obligations of the Company and recipients hereunder and thereunder,
to determine all questions arising hereunder and thereunder, and to adopt and
amend such rules and regulations for the administration hereof and thereof as it
may deem desirable. The interpretation and construction by the Compensation
Committee of any provisions of this plan or of any bonus or bonus agreement, and
any action taken by, or inaction of, the Compensation Committee relating to this
plan or any bonus or bonus agreement, shall be within the discretion of the
Compensation Committee and shall be conclusive and binding upon all persons.

 

During each fiscal year, the Compensation Committee shall establish the maximum
amount available for bonuses under this plan.

 

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