EXHIBIT 10.1

 

[LETTERHEAD OF SMTC CORPORATION]

 

June 26, 2003

 

Stanley Plzak

415 South Olde Oneida, #305

Appleton, WI 54911

 

Dear Mr. Plzak:

 

As we have discussed, your employment with SMTC Corporation (the “Company”) and
each of its affiliates with which you have an employment relationship, including
SMTC Manufacturing Corporation of Wisconsin, will end on June 29, 2003 (the
“Separation Date”). The purpose of this letter is to confirm the agreement
between you and the Company concerning your severance arrangements and other
matters related to the termination of your employment with the Company, as
follows:

 

1.    Final Salary and Vacation Pay. You will receive pay for all work you have
performed for the Company through the Separation Date, as well as pay, at your
final base rate of pay of $200,000 per annum, for twenty-five (25) vacation days
you had earned, but not used, as of the Separation Date.

 

2.    Severance Benefits. In consideration of your acceptance of this Agreement
and subject to your meeting in full your obligations under it and under
paragraphs 5 and 6 of the agreement between you and the Company dated July 27,
2000, as modified by paragraph 9(a) hereof (the “Letter Agreement”), the Company
will provide you the following severance pay and benefits:

 

(a)    The Company will continue to pay you your salary, at your final base rate
of pay of $200,000 per annum, for the period of twenty-six (26) weeks following
the Separation Date (the “Severance Pay Period”); provided, however, that if at
any point during the twenty-six week period following the Separation Date you
voluntarily decline to receive payments under this paragraph 2(a), the Severance
Pay Period shall be deemed to terminate as of the date upon which you notify the
Company of such voluntary declination, and you shall not be entitled to receive,
and the Company shall be under no obligation to make, any additional payments
hereunder. Payments will be made in the form of salary continuation and will
begin on the next regular Company payday following the Effective Date (as
defined below). The first payment will be retroactive to the day following the
Separation Date.

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(b)    You shall be entitled to continue to use the 2003 Cadillac CTS provided
to you by the Company (the “Car”) during the Severance Pay Period; provided,
however, that you will reimburse the Company for all of its costs incurred in
leasing the Car and for all of its costs incurred in maintaining insurance on
the Car during the period from the Separation Date to the date upon which you
surrender the Car to the Company, payable in arrears on such date; and provided,
further, that you will be responsible for payment of all gas, repair and
maintenance costs on and for the Car as they are incurred. You agree to maintain
and keep the car in good working condition. You agree that you shall not permit
any person other than yourself to operate the Car. You agree that you shall
surrender the Car to the Company in good working condition no later than the
last day of the Severance Pay Period. As an additional condition to permitting
your continued use of the Car, you hereby agree to indemnify and hold harmless,
to the full extent lawful, the Company and its Affiliates from and against all
losses, claims, damages, liabilities and expenses (including fees and
disbursements of legal counsel) incurred or suffered by the Company or any of
its Affiliates in any way, directly or indirectly, arising out of, related to or
in connection with your custody, use or operation of the Car to the extent not
covered by insurance maintained by the Company on the Car.

 

3.    Status of Employee Benefits. You will be notified of your right to elect
to continue your participation in the Company’s group health and dental
insurance plans, and that of your eligible dependents, for a limited period of
time at your own expense, in accordance with the provisions of the federal law
known as “COBRA.” Your participation in all benefit plans of the Company will
terminate as of the Separation Date, in accordance with the terms of those
plans, except as expressly provided in this paragraph 3. You will not continue
to earn vacation or other paid time off after the Separation Date.

 

4.    Stock Options. As of the Separation Date, you will be vested in 8,750
options to purchase the Company’s common stock (the “Exercisable Options”). The
Exercisable Options will remain exercisable for ninety (90) days following the
Separation Date. Any Exercisable Options not exercised in during that time
period shall be forfeited and shall terminate. Except as otherwise expressly
provided in this paragraph 4, your rights and obligations with respect to the
Exercisable Options shall remain unchanged and shall be governed by the terms of
the applicable stock option plan, stock option grants, any agreements or other
documents applicable to the Exercisable Options, and any other restrictions or
provisions generally applicable to options granted to Company employees. All
stock options previously granted to you that have not vested as of the
Separation Date are forfeited and will be cancelled as of the Separation Date.

 

5.    Withholding. All payments made by the Company under this Agreement shall
be reduced by any tax or other amounts required to be withheld by the Company
under applicable law and all other deductions authorized by you.

 

6.    Acknowledgement of Full Payment. You acknowledge and agree that the
payments provided under paragraph 1 of this Agreement are in complete
satisfaction of any and all compensation due to you from the Company, whether
for services provided to the Company or otherwise, through the Separation Date
and that, except as expressly provided under this Agreement, no further
compensation is owed to you.

 

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7.    Confidentiality and Non-Disparagement. You agree that you will not
disclose this Agreement or any of its terms or provisions, directly or by
implication, except to members of your immediate family and to your legal and
tax advisors, and then only on condition that they agree not to further disclose
this Agreement or any of its terms or provisions to others. You also agree that,
during the Severance Pay Period and thereafter, you will not disparage or
criticize the Company, its business, its management or its products, and that
you will not otherwise do or say anything that could disrupt the good morale of
Company employees or harm its interests or reputation.

 

8.    Return of Company Documents and Other Property. In signing this Agreement,
you agree that you will return to the Company, no later than the Separation
Date, any and all documents, materials and information (whether in hard copy, on
electronic media or otherwise) related to the business of the Company or any of
its Affiliates (whether present or otherwise) and all keys, access cards, credit
cards, computer hardware and software, telephones and telephone-related
equipment and all other property of the Company and its Affiliates in your
possession or control, except as such materials, property or information have
been furnished to you in your capacity as a director of the Company. Further,
you represent and warrant that you will not retain any copy of any Company
documents, materials or information (whether in hardcopy, on electronic media or
otherwise), except as such documents, materials or information have been
furnished to you in your capacity as a director of the Company, beyond the
Separation Date. Recognizing that your employment with the Company has ended,
you agree that after the Separation Date, you will not attempt to access or use
any computer or computer network or system of the Company or any of its
Affiliates, including without limitation the electronic mail systems, except in
your service as a director of the Company to the extent all Company directors
are granted similar access or use. Further, you acknowledge that you will
disclose to the Company, no later than the Separation Date, all passwords
necessary or desirable to enable the Company to access all information which you
have password-protected on any of its computer equipment or on its computer
network or system. For purposes of this Agreement, “Affiliates” are all persons
and entities directly or indirectly controlling, controlled by or under common
control with the Company, where control may be by management authority or equity
interest.

 

9.    Other Agreements.

 

(a)    You and the Company agree that as of the Separation Date, the Letter
Agreement is terminated and of no further force and effect, except that
paragraphs 5 and 6 thereof shall survive such termination and shall remain in
full force and effect in accordance with their terms, as amended herein. You and
the Company further agree that the restrictions on your activities set forth in
paragraphs 6(a) and 6(b) of the Letter Agreement shall apply only during the
Severance Pay Period as defined in paragraph 2(a) of this Agreement.

 

(b)    Nothing in this Agreement shall be construed to amend, modify, waive or
discharge any of your obligations under the Stock Purchase Agreement dated as of
May 23, 2000 among the Company, Pensar Corporation and the Selling Stockholders
(as defined in the Stock Purchase Agreement) (the “Stock Purchase Agreement”),
which shall continue in full force and effect in accordance with its terms.

 

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10.    Employee Cooperation. You agree to cooperate with the Company and its
Affiliates hereafter with respect to all matters arising during or related to
your employment, including, but not limited to, all matters in connection with
any litigation or other proceeding which may have arisen or which may arise
following the signing of this Agreement. The Company will reimburse your
out-of-pocket expenses incurred in complying with Company requests hereunder,
provided such expenses are authorized by the Company in advance.

 

11.    Release of Claims.

 

(a)    In exchange for the special severance pay and benefits provided you under
this Agreement, to which you would not otherwise be entitled, on your own behalf
and that of your heirs, executors, administrators, beneficiaries, personal
representatives and assigns, you agree that this Agreement shall be in complete
and final settlement of any and all causes of action, rights or claims that you
have had in the past, now have, or might now have, including, but not limited
to, any causes of action, rights or claims in any way related to, connected with
or arising out of your employment or its termination or pursuant to Title VII of
the Civil Rights Act, the Americans with Disabilities Act, the Age
Discrimination in Employment Act, the fair employment practices statutes of the
state or states in which you have provided services to the Company or any of its
Affiliates or any other federal, state or local law, regulation or other
requirement and you hereby release and forever discharge the Company and its
Affiliates and all of their respective past and present directors, shareholders,
investors, officers, employees, agents and representatives, their successors and
assigns, and all others connected with any of them, both individually and in
their official capacities, from any and all such causes of action, rights or
claims.

 

(b)    This Agreement, including the release of claims set forth in this
paragraph 11, creates legally binding obligations and the Company encourages you
to seek the advice of an attorney before signing this Agreement. In signing this
Agreement, you give the Company assurance that you have signed it voluntarily
and with a full understanding of its terms; that you have had sufficient
opportunity, before signing this Agreement, to consider its terms and to consult
with an attorney, if you wished to do so, or to consult with any other of those
persons to whom reference in made in the first sentence of paragraph 7 above;
and that, in signing this Agreement, you have not relied on any promises or
representations, express or implied, that are not set forth expressly in this
Agreement.

 

12.    Directorship. Nothing in this Agreement shall be construed to operate as
a resignation of your seat on the Board of Directors of the Company. You shall
continue to serve on the Board of Directors of the Company, and in that
capacity, you agree that at least through August 31, 2003, you shall make
yourself reasonably available to management of the Company and its Affiliates to
assist with the development, evaluation and implementation of business
initiatives and projects.

 

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13.    Miscellaneous.

 

(a)    This Agreement constitutes the entire agreement between you and the
Company and supersedes all prior and contemporaneous communications, agreements
and understandings, whether written or oral, with respect to your employment,
its termination and all related matters, excluding only paragraphs 5 and 6 of
the Letter Agreement, as amended herein, the Stock Purchase Agreement, and your
obligations with respect to the securities of the Company, all of which shall
remain in full force and effect in accordance with their terms.

 

(b)    This Agreement may not be modified or amended, and no breach shall be
deemed to be waived, unless agreed to in writing by you and the Chief Executive
Officer of the Company or his expressly authorized designee. The captions and
headings in this Agreement are for convenience only and in no way define or
describe the scope or content of any provision of this Agreement.

 

(c)    The obligation of the Company to make payments to you or on your behalf
under this Agreement is expressly conditioned upon your continued full
performance of your obligations under this Agreement and under paragraphs 5 and
6 of the Letter Agreement, as amended herein.

 

(d)    The Company may assign this Agreement to any of its subsidiaries or
Affiliates, to any successor of the Company by reorganization, merger,
consolidation or liquidation or to any transferee of all or substantially all of
the business or assets of the Company. You may not assign this Agreement, which
is personal to you.

 

If the terms of this Agreement are acceptable to you, please sign, date and
return it to me within twenty-one days of the date you receive it. You may
revoke this Agreement at any time during the seven-day period immediately
following the date of your signing. If you do not revoke it, then, at the
expiration of that seven-day period, this letter will take effect as a
legally-binding agreement between you and the Company on the basis set forth
above (the “Effective Date”). The enclosed copy of this letter, which you should
also sign and date, is for your records.

 

Sincerely,

 

SMTC CORPORATION

By:

 

/s/    PAUL WALKER

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Name: Paul Walker

Title: President and Chief Executive Officer

 

Accepted and agreed: Signature:    /s/    STANLEY PLZAK

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Date:    6/29/03

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