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


 

















 


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.