Document:

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                                                                    EXHIBIT 10.2

                          AMENDED AND RESTATED

                                  SMTC (HTM)

                          1998 EQUITY INCENTIVE PLAN

                                  ARTICLE I

                                Purpose of Plan

     This Amended and Restated SMTC (HTM) 1998 Equity Incentive Plan (the
"Plan") of SMTC Corporation, a Delaware corporation (the "Company"), adopted by
the Board of Directors and stockholders of the Company and effective as of
September 30, 1999 amends and restates the SMTC (HTM) 1998 Equity Incentive
Plan adopted by the Board of Directors and stockholders of the Company as of
July 30, 1999. This Plan is intended to advance the best interests of the
Company by providing directors, executive officers and other key employees of
the Company and its Subsidiaries who have substantial responsibility for the
management and growth of the Company with additional incentives by allowing such
employees to acquire an ownership interest in the Company. The Plan is a
compensatory benefit plan within the meaning of Rule 701 under the Securities
Act of 1933 (the "Securities Act"). The issuance of Common Stock pursuant to the
Plan is intended to qualify for the exemption from registration under the
Securities Act provided by Rule 701.

                                  ARTICLE II

                                  Definitions

     For purposes of the Plan the following terms have the indicated meanings:

     "Board" means the Board of Directors of the Company.

     "Cause"  means cause as defined in a Participant's written employment
agreement with the Company or, if no written employment agreement exists, shall
mean (i) a Participant's willful and repeated failure to comply with the lawful
directives of the Board or such Participant's supervisory personnel, (ii) any
criminal act or act of dishonesty, disloyalty, misconduct or moral turpitude by
a Participant that is injurious in any significant respect to the property,
operations, business or reputation of the Company or any subsidiary thereof,
(iii) a Participant's failure to exercise good faith efforts to discharge such
Participant's assigned duties as an employee, or (iv) material breach by a
Participant of his or her written employment agreement (if any) with the Company
after notice by the Company and reasonable opportunity to cure.

     "Class A-1 Common Stock" means the Class A-1 Common Stock, $.001 par value
per share, of the Company.

     "Class L Common Stock" means the Class L Common Stock, $.001 par value per
share, of the Company.
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     "Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute.

     "Committee" means the Compensation Committee or such other committee of the
Board as the Board may designate to administer the Plan or, if for any reason
the Board has not designated such a committee, the Board.

     "Common Stock" means the common stock of the Company, including without
limitation the Class A-1 Common Stock and the Class L Common Stock.

     "Fair Market Value" of any share of Common Stock as of any date means the
fair market value of such share of Common Stock as of such date, as determined
in good faith by the Committee based on the consolidated results of operations,
financial condition and future prospects of the Company and such other factors
as the Committee may deem appropriate or, in the event that the Common Stock is
listed on a national securities exchange or traded in the NASDAQ National Market
System, the average of the closing sales prices of such Common Stock for the ten
trading days preceding the date of determination.  Fair Market Value shall be
determined without regard to any restriction on transferability of any share of
Common Stock other than any such restriction which by its terms will never
lapse.

     "Option Shares" means any Common Stock purchased pursuant to Options which
Common Stock is not, pursuant to the terms of the written agreement embodying
such Options, Restricted Stock.

     "Participant" means any executive or other key employee of the Company or
any Subsidiary who has been selected to participate in the Plan by the Committee
or the Board.

     "Restricted Stock" shall mean Common Stock purchased pursuant to Options,
which Common Stock is subject to restrictions under the Plan requiring that such
stock be redelivered to the Company if specified conditions are not satisfied.
The conditions to be satisfied in connection with any Restricted Stock, the
terms on which such stock must be redelivered to the Company, and all other
terms shall be determined by the Committee.

     "Sale of the Company" means the acquisition of a majority or more of the
outstanding voting securities of the Company by any person or "group" (as that
term is used in Regulation 13D under the Securities Exchange Act of 1934) other
than the stockholders of the Company as of the date hereof and their respective
affiliates.

     "Subsidiary" means any subsidiary corporation (as such term is defined in
Section 424(f) of the Code) of the Company.

                                 ARTICLE III

                                Administration

                                      -2-

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     The Plan shall be administered by the Committee. Subject to the limitations
of the Plan, the Committee acting in good faith shall have the sole and complete
authority to: (i) select Participants, (ii) grant stock purchase options
("Options") to Participants in such forms and amounts as it shall determine,
(iii) impose such limitations, restrictions and conditions upon such Options
and/or shares of Common Stock issued upon exercise thereof as it shall deem
appropriate, (iv) interpret the Plan and adopt, amend and rescind administrative
guidelines and other rules and regulations relating to the Plan, (v) correct any
defect or omission or reconcile any inconsistency in the Plan or in any Option
granted under the Plan and (vi) make all other determinations and take all other
actions necessary or advisable for the implementation and administration of the
Plan. The Committee's determinations on matters within its authority shall be
conclusive and binding upon the Participants, the Company and all other persons.
All expenses associated with the administration of the Plan shall be borne by
the Company. The Committee may, as approved by the Board and to the extent
permissible by law, delegate any of its authority hereunder to such persons or
entities as it deems appropriate.

                                  ARTICLE IV

                             Limitation on Shares

     The number of shares of Common Stock with respect to which Options may be
granted under the Plan shall not exceed 165,000 shares of Class A-1 Common Stock
and 4,000 shares of Class L Common Stock, respectively, subject to adjustment in
accordance with paragraph 6.5 herein. To the extent any Options expire
unexercised or are canceled, terminated or forfeited in any manner without the
issuance of Common Stock or to the extent that Restricted Stock or Option Shares
are repurchased by the Company, such shares of Common Stock shall again be
available under the Plan. The shares of Common Stock available under the Plan
may consist of authorized and unissued shares, treasury shares of a combination
thereof, as the Committee shall determine.

                                   ARTICLE V

                                    Awards

     5.1. Grant of Options.  The Committee may grant Options to Participants
          ----------------
from time to time in accordance with this Article V.  Options granted under the
Plan may be nonqualified stock options or "incentive stock options" within the
meaning of Section 422 of the Code or any successor provision, as specified by
the Committee; provided, however, that no Option intended as an incentive stock
option shall so qualify unless such Option satisfies all of the requirements of
Section 422 of the Code.  Options shall have a term not to exceed ten years from
the date of grant as specified by the Committee, and shall be exercisable at
such time or times as the Committee shall determine.

                                      -3-
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     5.2. Exercise Procedure.
          ------------------

          (a)  Time and Manner of Exercise.  Unless the Committee expressly
               ---------------------------
provides otherwise, an Option will not be deemed to have been exercised until
the Company receives a written notice of exercise (in form acceptable to the
Committee) signed by the appropriate person and accompanied by payment in full
of the applicable exercise price.

          (b)  Payment of Exercise Price.  Payment of such exercise price may be
               -------------------------
made (i) in cash (including check, bank draft or money order), (ii) at the
discretion of the Committee, by delivery of a full recourse promissory note
bearing interest at a rate not less than the applicable federal rate determined
pursuant to Section 1274 of the Code as of the date of purchase or exercise (a
"Note"), (iii) in shares of Common Stock valued at their Fair Market Value as of
the date of exercise, or (iv) a combination of the foregoing.

     5.3. Conditions and Limitations on Exercise.  At the discretion of the
          --------------------------------------
Committee, Options may be made exercisable, in one or more installments, upon
(i) the happenings of certain events, (ii) the passage of a specified period of
time, (iii) the fulfillment of certain conditions, or (iv) the achievement by
the Company or any Subsidiary of certain performance goals.  As a condition to
the exercise of any Options, the Participant shall agree to be bound by the
Stockholders Agreement dated July 30, 1999 among the Company, EMSIcon
Investments, LLC and the other equity security holders of the Company, with the
shares issued under the Options constituting "Management Shares" for purposes of
such Stockholders Agreement.  In the event of a Sale of the Company, the
Committee may provide, in its discretion, that the outstanding Options shall
become immediately exercisable and/or that such Options shall terminate if not
exercised as of the date of the Sale of the Company or any other designated date
or that such Options shall thereafter represent only the right to receive the
excess of the consideration per share of Common Stock offered in such Sale of
the Company over the exercise price of such Options.

     5.4. Expiration of Options.
          ---------------------

          (a) Normal Expiration.  In no event shall any part of any Option be
              -----------------
exercisable after the tenth anniversary of the date of grant or earlier stated
date of expiration thereof.

          (b) Early Expiration Upon Termination of Employment.  Except as
              -----------------------------------------------
otherwise provided by the Committee at the time of grant of such Options, upon
termination for any reason of a Participant's employment by the Company and its
Subsidiaries

              (i)   all Options or portions thereof held by such Participant
     that are not vested and exercisable on the date of such termination shall
     expire and be forfeited as of such date and all vested Options held by such
     Participant shall expire to the extent not exercised within 90 days
     following the date of such termination or, in the case of termination due
     to the Participant's death or disability, within one year following the
     date of such termination. Notwithstanding the foregoing, in the event of
     termination of

                                      -4-
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     a Participant's employment by the Company for Cause, all Options held by
     such Participant (whether or not vested) shall expire on the date of such
     termination;

              (ii)  all Restricted Stock held by the Participant at the time of
     such termination must be transferred to the Company (and, in the event the
     certificates representing such Restricted Stock are held by the Company,
     such Restricted Stock will be so transferred without any further action by
     the Participant, provided that except in the event the reason for such
     termination is the death of the Participant, the Participant shall deliver
     a duly executed stock power at such time) in consideration of the payment
     by the Company of an amount equal to the applicable Exercise Price for each
     share of Restricted Stock and will be deemed for all purposes to have been
     so transferred when the Company has tendered such payment.

     5.5. Repurchase Rights.  In the event of termination of a Participant's
          -----------------
employment with the Company and its subsidiaries for any reason, the Company
shall have the right, exercisable by delivery of written notice to the
Participant within 90 days after the date of such termination, to repurchase all
or any portion of the Restricted Stock as to which restrictions have lapsed, the
Option Shares and vested Options then held by such Participant at a repurchase
price in cash equal to Fair Market Value (over the applicable per-share Exercise
Price in the case of vested Options) or, in the case of termination of the
Participant's employment for Cause, at a repurchase price equal to the
applicable Exercise Price.  The closing of such repurchase shall occur within 30
days after delivery of the Company's notice of exercise.

                                  ARTICLE VI

                              General Provisions

     6.1. Written Agreement. Each Option granted hereunder shall be embodied in
          -----------------
a written agreement in substantially the form attached hereto (with such
modifications thereto as may be approved by the Committee) which shall be signed
by the Participant to whom the Option is granted and shall be subject to the
terms and conditions set forth herein.

     6.2. Listing, Registration and Legal Compliance.  If at any time the
          ------------------------------------------
Committee determines, in its discretion, that the listing, registration or
qualification of the shares subject to Options upon any securities exchange or
under any state or federal securities or other law or regulation, or the consent
or approval of any governmental regulatory body, is necessary or desirable as a
condition to or in connection with the granting of Options or the purchase or
issuance of shares thereunder, no Options may be granted or exercised, in whole
or in part, unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Committee.  The holders of such Options will supply the
Company with such certificates, representations and information as the Company
shall request and shall otherwise cooperate with the Company in obtaining such
listing, registration, qualification, consent or approval.  In the case of
officers and other persons subject to Section

                                      -5-
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16(b) of the Securities Exchange Act of 1934, as amended, the Committee may at
any time impose any limitations upon the exercise of Options that, in the
Committee's discretion, are necessary or desirable in order to comply with such
Section 16(b) and the rules and regulations thereunder. If the Company, as part
of an offering of securities or otherwise, finds it desirable because of federal
or state regulatory requirements to reduce the period during which any Options
may be exercised, the Committee may, in its discretion and without the
Participant's consent, so reduce such period on not less than 20 days' prior
written notice to the holders thereof.

     6.3. Options Not Transferable.  Options may not be transferred other than
          ------------------------
by will or the laws of descent and distribution and, during the lifetime of the
Participant to whom they were granted, may be exercised only by such Participant
(or his or her legal guardian or legal representative).  In the event of the
death of a Participant, exercise of Options granted hereunder to such
Participant may be made only by the executor or administrator of such
Participant's estate or the person or persons to whom such Participant's rights
under the Option will pass by will or the laws of descent and distribution.

     6.4. Withholding of Taxes.  The Company may, if necessary or desirable,
          --------------------
withhold from any amounts due and payable by the Company to any Participant (or
secure payment from such Participant in lieu of withholding) the amount of any
withholding or other tax due from the Company with respect to any issuance or
exercise of Options granted under the Plan to such Participant, and the Company
may defer such issuance or exercise unless indemnified to its satisfaction
against the payment of any such amount.

     6.5. Adjustments.  In the event of a reorganization, recapitalization,
          -----------
merger in which there is no Sale of the Company, stock dividend or stock split,
or combination or other change in the shares of Common Stock, the Committee
shall, in order to prevent the dilution or enlargement of rights under
outstanding Options, make such adjustments in the number and type of shares
authorized by the Plan, the number and type of shares covered by outstanding
Options and the exercise prices specified therein as may be determined to be
appropriate and equitable. In the event of any stock split or reverse stock
split effected in connection with the initial public offering and sale of Common
Stock for cash pursuant to an effective registration statement Form S-1 (or any
successor form) under the Securities Act of 1933, as in effect from time to
time, if any adjustment of the number of shares covered by any outstanding
Option pursuant to the immediately preceding sentence results in such Option
becoming exercisable for a fractional number of shares, the number of shares
issuable upon exercise of such Option shall be rounded to the nearest number of
whole shares.

     6.6. Rights of Participants.  Nothing in the Plan shall interfere with or
          ----------------------
limit in any way the right of the Company or any Subsidiary to terminate any
Participant's employment at any time (with or without cause), or confer upon any
Participant any right to continue in the employ of the Company or any Subsidiary
for any period of time or to continue to receive such Participant's current (or
other) rate of compensation.  No employee shall have a right to be selected as a
Participant or, having been so selected, to be selected again as a Participant.

     6.7. Amendment, Suspension and Termination of Plan. The Committee may
          ---------------------------------------------
suspend or terminate the Plan or any portion thereof at any time and may amend
it from time to time in such respects as the Committee may deem advisable
provided, however, that no such amendment shall be made without stockholder
approval to the extent such approval is required by law, agreement or the rules
of any exchange upon which the Common Stock is listed, and no such amendment,
suspension or termination shall impair the rights of Participants under
outstanding Options

                                      -6-
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without the consent of the Participants affected thereby, except as provided
below. No Options shall be granted hereunder after the tenth anniversary of the
approval of the Plan by the stockholders of the Company.

     6.8.  Amendment of Outstanding Options.  The Committee may amend or modify
           --------------------------------
any Option in any manner to the extent that the Committee would have had the
authority under the Plan initially to grant such Option; provided that, except
as expressly contemplated elsewhere herein or in any agreement evidencing such
Option, no such amendment or modification shall impair the rights of any
Participant under any outstanding Option without the consent of such
Participant.

     6.9.  Indemnification.  In addition to such other rights of indemnification
           ---------------
as they may have as members of the Board or the Committee, the members of the
Committee shall be indemnified by the Company against all costs and expenses
reasonably incurred by them in connection with any action, suit or proceeding to
which they or any of them may be party by reason of any action taken or failure
to act under or in connection with the Plan or any Option granted under the
Plan, and against all amounts paid by them in settlement thereof (provided such
settlement is approved by independent legal counsel selected by the Company) or
paid by them in satisfaction of a judgment in any such action, suit or
proceeding; provided, however, that any such Committee member shall be entitled
to the indemnification rights set forth in this paragraph 6.9 only if such
member has acted in good faith and in a manner that such member reasonably
believed to be in or not opposed to the best interests of the Company and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
that such conduct was unlawful, and further provided that upon the institution
of any such action, suit or proceeding a Committee member shall give the Company
written notice thereof and an opportunity to handle and defend the same before
such Committee member undertakes to handle and defend it on his own behalf.

     6.10. Restrictive Legend.
           ------------------

           (a) All stock certificates representing Common Stock issued pursuant
to an Option shall, unless otherwise determined by the Company, have affixed
thereto a legend substantially in the following form, in addition to any other
legend required by the Stockholders Agreement:

     "THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A PRIVATE
     PLACEMENT, WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
     AMENDED (THE "ACT"), AND MAY NOT BE SOLD, ASSIGNED, PLEDGED OR OTHERWISE
     TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION UNDER THE ACT
     COVERING THE TRANSFER OR AN OPINION OF COUNSEL, SATISFACTORY TO THE ISSUER,
     THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED."

                                      -7-
<PAGE>

           (b) All stock certificates representing Restricted Stock shall,
unless otherwise determined by the Company, have affixed thereto a legend
substantially in the following form, in addition to any other legend required by
the Stockholders Agreement or any Pledge Agreement:

     "THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED SECURITIES
     AND ARE SUBJECT TO FORFEITURE UNDER CERTAIN PROVISIONS OF THAT CERTAIN SMTC
     (HTM) 1998 EQUITY INCENTIVE PLAN OF THE COMPANY AND THAT CERTAIN GRANT OF
     STOCK OPTION AGREEMENT DATED JULY 30, 1999 BETWEEN THE COMPANY AND
     ______________________, A COPY OF WHICH MAY BE INSPECTED AT THE PRINCIPAL
     OFFICE OF THE COMPANY."

     6.11. Governing Law.  All questions concerning the construction,
           -------------
interpretation and validity of this Plan shall be governed by and construed and
enforced in accordance with the domestic laws of the State of Delaware, without
giving effect to any choice or conflict of law provision or rule (whether in the
State of Delaware or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Delaware.  In furtherance
of the foregoing, the internal law of the State of Delaware will control the
interpretation and construction of this Plan, even if under such jurisdiction's
choice of law or conflict of law analysis, the substantive law of some other
jurisdiction would ordinarily apply.

                                      -8-
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                               SMTC CORPORATION
                                 635 HOOD ROAD
                       MARKHAM, ONTARIO, CANADA, L3R 4N6

As of September 30, 1999

[Participant's Name]
[Business Address]

Re:  Grant of Stock Purchase Options

Dear [Participant]:

SMTC Corporation, a Delaware corporation (the "Company"), is pleased to advise
                                               -------
you that you have been granted options under the Amended and Restated SMTC (HTM)
1998 Equity Incentive Plan (the "Plan") as provided below (the "Agreement").
                                 ----                           ---------
Capitalized terms used and not defined herein have the meaning set forth in the
Plan (copy attached).

1.   Option Terms.
     ------------

     (a) Grant.  On the terms and subject to the conditions of this Agreement,
         -----
you hereby are granted an option to purchase up to ___________ shares of the
Company's Class A-1 Common Stock, $.001 par value (the "Option Shares"), at an
                                                        -------------
exercise price of $19.6792 per share (the "Exercise Price") (the "Option").
                                           --------------         ------
Your Option will expire at the close of business on September 30, 2009 (the
"Expiration Date"), subject to earlier expiration in connection with the
 ---------------
termination of your employment as provided below.  The Option is intended to be
a nonqualified option.

     (b) Vesting. Your Option will be exercisable only to the extent it has
         -------
vested.  The Option will be vested with respect to 25% of your total Option
Shares on each of the first, second and third anniversaries of September 30,
1999, and will become 100% vested on September 30, 2003, in each case if and
only if you have been continuously employed by the Company and/or its
subsidiaries from the date of the Agreement through such dates; provided,
however, that in the event of a Sale of the Company during the term of your
employment with the Company and/or its subsidiaries, your Option will
automatically become 100% vested.  In connection with any Sale of the Company,
the Company may provide on not less than 20 days' notice to you that any portion
of your Option which has not been exercised prior to or in connection with the
Sale of the Company will be forfeited.  In lieu of requiring such exercise,

                                      -9-

<PAGE>

the Company may provide for the cancellation of your Option in exchange for
payment equal to the excess (if any) of the consideration per share of the
Option Shares receivable in connection with such Sale of the Company over the
Exercise Price.

     (c) Termination of Options.  In no event shall any part of your Option be
         ----------------------
exercisable after the Expiration Date set forth in paragraph 1(a).  If your
employment with the Company and/or subsidiaries is terminated by the Company for
Cause, all of your Option not previously exercised shall expire and be forfeited
whether or not vested.  If your employment with the Company and/or its
subsidiaries terminates for any other reason, that portion of your Option that
is not vested and exercisable on the date of termination of your employment
shall expire and be forfeited, and the portion of your Option that is vested and
exercisable on the date of such termination shall expire, to the extent not
theretofore exercised, 90 days following such date of termination.

2.   Procedure for Purchase or Exercise.
     ----------------------------------

     (a) You may exercise all or any portion of your Option in any of the
methods described in Section 5.2 of the Plan, including the delivery of a full
recourse promissory note in form and substance satisfactory to the Company for
the product of the Exercise Price multiplied by the number of Option Shares that
you elect to purchase and a pledge agreement, executed by you, pledging your
Option Shares as collateral for the full recourse promissory note.

     (b) As a condition to any exercise of your Option, you agree to be bound by
the provisions of the Stockholders Agreement dated July 30, 1999 among the
Company and the stockholders signatory thereto, with the Option Shares
constituting "Management Stock" as defined therein.  In addition, you will
permit the Company to deliver to you all financial and other information
regarding the Company that the Company deems necessary to enable you to make an
informed investment decision, and you will make all customary investment
representations which the Company requires.

3.   Securities Law Restrictions.  You represent that when you exercise your
     ---------------------------
Option you will be purchasing the Common Stock covered thereby for your own
account and not on behalf of others.  You may not sell, transfer or dispose of
any Common Stock issued or purchased pursuant to this Agreement (except pursuant
to an effective registration statement under the Securities Act of 1933) without
first delivering to the Company an opinion of counsel reasonably acceptable in
form and substance to the Company that registration under the Securities Act or
any applicable state securities laws is not required in connection with such
transfer.  You further understand that the certificates for any Common Stock you
purchase will bear such legends as are required by the Plan or as the Company
deems necessary or desirable. In connection with an IPO, you agree to execute a
customary "holdback" agreement (not to exceed 180 days) in the form requested by
the underwriters for such offering.

                                      -10-
<PAGE>

4.   Restriction on Transfer.  Your Option and Option Shares are personal to you
     -----------------------
and are not transferable by you other than by will or the laws of descent and
distribution.  During your lifetime, only you (or your guardian or legal
representative) may exercise your Option.  In the event of your death, your
Option may be exercised only by the executor or administrator of your estate or
the person or persons to whom your rights under the Option shall pass by will or
the laws of intestate succession.  Your Option Shares are subject to certain
repurchase rights set forth in the Plan.

5.   Conformity with Plan.  Your Option is intended to conform in all respects
     --------------------
with, and is subject to all applicable provisions of, the Plan, which is
incorporated herein by reference. Inconsistencies between this Agreement and the
Plan shall be resolved in accordance with the terms of the Plan.  By executing
and returning the enclosed copy of this Agreement, you acknowledge your receipt
of this Agreement and the Plan and agree to be bound by all of the terms of this
Agreement and the Plan.

6.   Rights of Participants.  Nothing in this Agreement shall interfere with or
     ----------------------
limit in any way the right of the Company and/or its subsidiaries to terminate
your employment at any time (with or without Cause), or confer upon you any
right to continue in the employ of the Company and/or its subsidiaries for any
period of time or to continue to receive your current (or other) rate of
compensation.  Nothing in this Agreement shall confer upon you any right to be
selected to receive additional options under the Plan.

7.   Withholding of Taxes.  The Company may, if necessary or desirable, withhold
     --------------------
from any amounts due and payable by the Company to you (or secure payment from
you in lieu of withholding) the amount of any withholding or other tax due from
the Company with respect to the issuance or exercise of your Option, and the
Company may defer such issuance, exercise or conversion unless indemnified by
you to its satisfaction against the payment of any such amount.

8.   Adjustments.  In the event of a reorganization, recapitalization, merger in
     -----------
which there is no Sale of the Company, stock dividend or stock split, or
combination or other change in the shares of Common Stock, the Company may, in
order to prevent the dilution or enlargement of rights under your Options, make
such adjustments in the number and type of shares authorized by the Plan, the
number and type of shares covered by your Option and the Exercise Price
specified herein as may be determined to be appropriate and equitable.  In the
event of any stock split or reverse stock split effected in connection with the
initial public offering and sale of Common Stock for cash pursuant to an
effective registration statement on Form S-1 (or any successor form) under the
Securities Act of 1933, as in effect from time to time, if any adjustment of the
number of shares covered by your Option pursuant to the immediately preceding
sentence results in your Option becoming exercisable for a fractional number of
shares, the number of shares issuable upon exercise of your Option shall be
rounded to the nearest number of whole shares.

                                      -11-
<PAGE>

9.   Entire Agreement.  This Agreement and the documents referenced herein
     ----------------
constitute the entire understanding and agreement of the parties hereto with
respect to the subject matter hereof and thereof and supersede all prior and
contemporaneous agreements or understandings, inducements or conditions, express
or implied, written or oral, between the parties with respect hereto and
thereto.

                                    *******

                                      -12-
<PAGE>

Please execute a copy of this Agreement in the space below and return it to the
Company's Secretary at its executive offices to confirm your understanding and
acceptance of the agreements contained in the Agreement.

                                    Very Truly Yours,

                                    SMTC Corporation

                                    By____________________
                                    Name:
                                    Title:

The undersigned hereby acknowledges that he or she has read this Agreement and
the Plan and hereby agrees to be bound by all provisions set forth herein and
therein.

                                    [Participant]

                                    ________________________

Dated as of:  September 30, 1999

                                      -13-<PAGE>

EXHIBIT 10.3                                                      Execution Copy
                                                                  --------------

                             Management Agreement

     This Management Agreement (this "Agreement") dated as of July 30, 1999
                                      ---------
among SMTC Corporation, a Delaware corporation (the "Company"), Bain Capital
                                                     -------
Partners VI, L.P., a Delaware limited partnership ("Bain"), Celerity Management
                                                    ----
Co., Inc., a Delaware corporation ("Celerity") and Kilmer Electronics Group
                                    --------
Limited, an Ontario corporation ("KEGL").
                                  ----

          WHEREAS, pursuant to the Reorganization and Merger Agreement dated as
     of July 26, 1999 among The Surface Mount Technology Centre Inc, an Ontario
     corporation, the Company, HTM Holdings, Inc., a Delaware corporation
     ("HTM") and their respective stockholders (the "Merger Agreement"), HTM is
       ---                                           ----------------
     to be merged into a newly organized subsidiary of the Company;

          WHEREAS, funds (the "Bain Funds") affiliated with Bain and Celerity
                               ----------
     EMSIcon, LLC (the "Celerity Fund"), an affiliate of Celerity will provide
                        -------------
     equity financing in connection with the transactions contemplated by the
     Merger Agreement and the Bain Funds, the Celerity Fund and KEGL each,
     directly or indirectly, will be holders of equity interests in the Company
     upon consummation of such transactions;

          WHEREAS, subject to the terms and conditions of this Agreement, the
     Company desires to retain each of Bain, Celerity and KEGL (each a "Service
                                                                        -------
     Provider" and collectively, the "Service Providers") to provide certain
     --------                         -----------------
     management and advisory services to the Company, and each of Bain, Celerity
     and KEGL desire to provide such services;

     NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:

1.   Services. Each Service Provider hereby severally agrees that, during the
     term of this Agreement (the "Term"), it will:
                                  ----

     a.   provide the Company with advice in connection with the negotiation and
          consummation of agreements, contracts, documents and instruments
          necessary to provide the Company with financing from banks or other
          financial institutions or other entities on terms and conditions
          satisfactory to the Company; and
<PAGE>

     b.   provide the Company with financial, managerial and operational advice
          in connection with its day-to-day operations, including, without
          limitation:

          i.   advice with respect to the investment of funds; and

          ii.  advice with respect to the development and implementation of
               strategies for improving the operating, marketing and financial
               performance of the Company.

2.   Payment of Fees. The Company hereby agrees to:

     a.   during the Term, pay to each Service Provider (or, in each case, an
          affiliate designated by it) a management fee in an amount equal to its
          Pro Rata Share of $625,000 per annum in exchange for the services
          provided to the Company by such Service Provider, as more fully
          described in Section 1 of this Agreement, such fee being payable by
          the Company quarterly in advance, the first such payment to be made on
          the Merger Closing Date (as defined in the Merger Agreement); and

     b.   during the Term, allow each Service Provider to participate in the
          negotiation and consummation of senior financing for any acquisition
          transactions by the Company or any of its direct or indirect
          subsidiaries, and pay to each Service Provider (or, in each case, an
          affiliate designated by it) a fee in connection therewith equal to its
          Pro Rata Share of one percent (1%) of the gross purchase price of the
          transaction (including all liabilities assumed or otherwise included
          in the transaction), such fee to be due and payable for the foregoing
          services at the closing of such transaction, whether or not any such
          senior financing is actually committed or drawn upon.

     For purposes of this Agreement, Bain's "Pro Rata Share" shall be equal to
     40%, Celerity's "Pro Rata Share" shall be equal to 40% and KEGL's "Pro Rata
     Share" shall be equal to 20%.

     The Company further agrees to pay on demand all expenses incurred by the
     Service Providers in connection with this Agreement and any out-of-pocket
     expenses incurred by the Service Providers in connection with the provision
     of services hereunder.

     Each payment made to a Service Provider pursuant to this Section 2 shall be
     paid by wire transfer of immediately available federal funds to the account
     specified on Schedule 1 hereto, or to such other account(s) as such Service
     Provider may specify to the Company in writing prior to such payment.

                                      -2-
<PAGE>

3.   Term. This Agreement shall continue in full force and effect with respect
     to each Service Provider for so long as such Service Provider (or any
     successor or permitted assign, as the case may be) continues to carry on
     the business of providing services of the type described in Section 1
     above; provided, however, that (a) this Agreement shall terminate upon the
            --------  -------
     earlier of (i) a Change of Control (as defined in the Stockholders
     Agreement dated as of the date hereof among the Company and the
     stockholders listed on the signature pages thereto, as amended or otherwise
     modified from time to time) and (ii) the fifth anniversary of the Merger
     Closing Date (as defined in the Merger Agreement), (b) the Company may
     terminate this Agreement with respect to any Service Provider following a
     material breach of the terms of this Agreement by such Service Provider and
     a failure to cure such breach within 30 days following written notice
     thereof and (c) each Service Provider may terminate this Agreement with
     respect to itself (i) following a material breach of this Agreement by the
     Company and failure to cure such breach within 30 days following written
     notice thereof or (ii) at any time upon not less than 60 days written
     notice to the Company; and provided further that each of (x) the
                                -------- -------
     obligations of the Company under Section 4 below, (y) any and all accrued
     and unpaid obligations of the Company owed under Section 2 above and (z)
     the provisions of Section 7 shall survive any termination of this Agreement
     to the maximum extent permitted under applicable law.

4.   Indemnification. In consideration of the execution and delivery of this
     Agreement by each Service Provider, the Company hereby agrees to indemnify,
     exonerate and hold each of Bain, Bain Capital, Inc., each Bain Fund,
     Celerity, the Celerity Fund and KEGL, and each of their respective
     partners, shareholders, members, affiliates, directors, officers,
     fiduciaries, employees and agents and each of the partners, shareholders,
     members, affiliates, directors, officers, fiduciaries, employees and agents
     of each of the foregoing (collectively, the "Indemnitees") free and
                                                  -----------
     harmless from and against any and all actions, causes of action, suits,
     losses, liabilities and damages, and expenses in connection therewith,
     including without limitation reasonable attorneys' fees and disbursements
     (collectively, the "Indemnified Liabilities"), incurred by the Indemnitees
                         -----------------------
     or any of them as a result of, or arising out of, or relating to the
     execution, delivery, performance, enforcement or existence of this
     Agreement or the provision of services hereunder except for any such
     Indemnified Liabilities arising on account of such Indemnitee's gross
     negligence or willful misconduct, and if and to the extent that the
     foregoing undertaking may be unenforceable for any reason, the Company
     hereby agrees to make the maximum contribution to the payment and
     satisfaction of each of the Indemnified Liabilities which is permissible
     under applicable law.

5.   Assignment, etc. Except as provided below, no party shall have the right
     to assign this Agreement. Each Service Provider acknowledges that its
     services under this Agreement are unique. Accordingly, any purported
     assignment by a Service Provider (other than as provided below) shall be
     void. Notwithstanding the foregoing, (a) a

                                      -3-
<PAGE>

     Service Provider may assign all or part of its rights and obligations
     hereunder to any affiliate of such Service Provider which provides services
     similar to those called for by this Agreement, in which event such Service
     Provider shall be released of all of its rights and obligations hereunder
     and (b) the provisions hereof for the benefit of the Bain Funds and the
     Celerity Fund shall inure to the benefit of their successors and assigns.

6.   Amendments and Waivers.  No amendment or waiver of any term, provision or
     condition of this Agreement shall be effective as against any party, unless
     in writing and executed such party.  No waiver on any one occasion shall
     extend to or effect or be construed as a waiver of any right or remedy on
     any future occasion.  No course of dealing of any person nor any delay or
     omission in exercising any right or remedy shall constitute an amendment of
     this Agreement or a waiver of any right or remedy of any party hereto.

7.   Miscellaneous.

     a.   Freedom to Pursue Opportunities, Etc. In anticipation that the
          Company and one or more of the Service Providers (or one or more of
          their respective affiliates, associated investment funds or portfolio
          companies, or clients) may engage in the same or similar activities or
          lines of business and have an interest in the same areas of corporate
          opportunities, and in recognition of the benefits to be derived by the
          Company under this Agreement and in recognition of the difficulties
          which may confront any advisor who desires and endeavors fully to
          satisfy such advisor's duties in determining the full scope of such
          duties in any particular situation, the provisions of this clause (a)
          are set forth to regulate, define and guide the conduct of certain
          affairs of the Company as they may involve any Service Provider.
          Except as any Service Provider may otherwise agree in writing (solely
          as to itself), after the date hereof:

          i.    each Service Provider shall have the right to, and shall have no
                duty (contractual or otherwise) not to, directly or indirectly:
                (A) engage in the same or similar business activities or lines
                of business as the Company, including those competing with the
                Company and (B) do business with any client or customer of the
                Company;

          ii.   No Service Provider nor any officer, director, employee,
                partner, affiliate or associated entity thereof shall be liable
                to the Company or its affiliates for breach of any duty
                (contractual or otherwise) by reason of any such activities of
                or of such person's participation therein; and

          iii   In the event that any Service Provider acquires knowledge of a
                potential transaction or matter that may be a corporate
                opportunity for both the

                                      -4-
<PAGE>

               Company and one or more Service Providers or any other person,
               such Service Provider shall have no duty (contractual or
               otherwise) to communicate or present such corporate opportunity
               to the Company and, notwithstanding any provision of this
               Agreement to the contrary, shall not be liable to the Company or
               its affiliates for breach of any duty (contractual or otherwise)
               by reason of the fact that Bain directly or indirectly pursues or
               acquires such opportunity for itself, directs such opportunity to
               another person, or does not present such opportunity to the
               Company.

     b.   Limitation of Liability. In no event will any party hereto be liable
          to any other party hereto for any indirect, special, incidental or
          consequential damages, including lost profits or savings, whether or
          not such damages are foreseeable, or for any third party claims
          (whether based in contract, tort or otherwise), relating to the
          services to be provided by any Service Provider hereunder.

     c.   Choice of Law. This Agreement shall be governed by and construed in
          accordance with the domestic substantive laws of the State of Delaware
          without giving effect to any choice or conflict of law provision or
          rule that would cause the application of the domestic substantive laws
          of any other jurisdiction.

     d.   Consent to Jurisdiction. Each of the parties agrees that all actions,
          suits or proceedings arising out of or based upon this Agreement or
          the subject matter hereof shall be brought and maintained exclusively
          in the federal and state courts of the State of Delaware. Each of the
          parties hereto by execution hereof (i) hereby irrevocably submits to
          the jurisdiction of the federal and state courts in the State of
          Delaware for the purpose of any action, suit or proceeding arising out
          of or based upon this Agreement or the subject matter hereof and (ii)
          hereby waives to the extent not prohibited by applicable law, and
          agrees not to assert, by way of motion, as a defense or otherwise, in
          any such action, suit or proceeding, any claim that it is not subject
          personally to the jurisdiction of the above-named courts, that it is
          immune from extraterritorial injunctive relief or other injunctive
          relief, that its property is exempt or immune from attachment or
          execution, that any such action, suit or proceeding may not be brought
          or maintained in one of the above-named courts, that any such action,
          suit or proceeding brought or maintained in one of the above-named
          courts should be dismissed on grounds of forum non conveniens, should
                                                   ----- --- ----------
          be transferred to any court other than one of the above-named courts,
          should be stayed by virtue of the pendency of any other action, suit
          or proceeding in any court other than one of the above-named courts,
          or that this Agreement or the subject matter hereof may not be
          enforced in or by any of the above-named courts.  Each of the parties
          hereto hereby consents to service of process in any such suit, action
          or proceeding in any manner permitted by the laws of the State of
          Delaware,

                                      -5-
<PAGE>

          agrees that service of process by registered or certified mail, return
          receipt requested, at the address specified in or pursuant to Section
          9 is reasonably calculated to give actual notice and waives and agrees
          not to assert by way of motion, as a defense or otherwise, in any such
          action, suit or proceeding any claim that service of process made in
          accordance with Section 9 does not constitute good and sufficient
          service of process. The provisions of this Section 7(b) shall not
          restrict the ability of any party to enforce in any court any judgment
          obtained in a federal or state court of the State of Delaware.

     e.   Waiver of Jury Trial.  TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW
          WHICH CANNOT BE WAIVED, EACH OF THE PARTIES HERETO HEREBY WAIVES, AND
          COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT, OR
          OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY
          ISSUE, CLAIM, DEMAND, CAUSE OF ACTION, ACTION, SUIT OR PROCEEDING
          ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER
          HEREOF, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND
          WHETHER IN CONTRACT OR TORT OR OTHERWISE. Each of the parties hereto
          acknowledges that it has been informed by each other party that the
          provisions of this Section 7(c) constitute a material inducement upon
          which such party is relying and will rely in entering into this
          Agreement and the transactions contemplated hereby.  Any of the
          parties hereto may file an original counterpart or a copy of this
          Agreement with any court as written evidence of the consent of each of
          the parties hereto to the waiver of its right to trial by jury.

8.   Merger/Entire Agreement.  This Agreement contains the entire understanding
     of the parties with respect to the subject matter hereof and supersedes any
     prior communication or agreement with respect thereto.

9.   Notice. All notices, demands, and communications of any kind which any
     party may require or desire to serve upon any other party under this
     Agreement shall be in writing and shall be served upon such other party and
     such other party's copied persons as specified below by personal delivery
     to the address set forth for it below or to such other address as such
     party shall have specified by notice to each other party or by mailing a
     copy thereof by certified or registered mail, or by Federal Express or any
     other reputable overnight courier service, postage prepaid, with return
     receipt requested, addressed to such party and copied persons at such
     addresses. In the case of service by personal delivery, it shall be deemed
     complete on the first business day after the date of actual delivery to
     such address. In case of service by mail or by overnight courier, it shall
     be deemed complete, whether or not received, on the third day after the
     date of mailing as shown by the registered or certified mail receipt or
     courier service receipt. Notwithstanding the foregoing, notice to any party
     or copied person of change

                                      -6-
<PAGE>

     of address shall be deemed complete only upon actual receipt by an officer
     or agent of such party or copied person.

     If to the Company, to it at:

          SMTC Corporation
          c/o EMSIcon Investments, LLC
          Two Copley Place, 7th Floor
          Boston, Massachusetts 02116
          Attention:  David Dominik
                      Prescott Ashe

          with a copy to:

          The Surface Mount Technology Centre Inc.
          625 Hood Road
          Markham, Ontario L3R 4N6
          Canada
          Attention:  President

     If to Bain, to it at:

          Two Copley Place, 7th Floor
          Boston, Massachusetts 02116
          Attention:  David Dominik
                      Prescott Ashe

          with a copy to:

          Ropes & Gray
          One International Place
          Boston, Massachusetts 02110
          Attention:  Alfred O. Rose

     If to Celerity, to it at:

          Celerity Management Co., Inc.
          11111 Santa Monica Boulevard, Suite 1111
          Los Angeles, CA 90025
          Attention:  Stephen E. Adamson

                                      -7-
<PAGE>

          with a copy to:

          Brownstein, Hyatt & Farber, P.C.
          410 Seventeenth Street, Suite 2200
          Denver, CO 80202-4437
          Attention:  Jacquelyn Kilmer

     If to KEGL, to it at:

          50 Ashwarren Road
          Downsview, Ontario M3J 1Z5
          Canada
          Attention:  Michael Griffiths

          with a copy to:

          McMillian Binch
          Royal Bank Plaza South Tower
          Suite 3800
          Toronto, Ontario M5J 2J7
          Canada
          Attention:  Ted Scott

10.  Severability. If in any judicial or arbitral proceedings a court or
     arbitrator shall refuse to enforce any provision of this Agreement, then
     such unenforceable provision shall be deemed eliminated from this Agreement
     for the purpose of such proceedings to the extent necessary to permit the
     remaining provisions to be enforced. To the full extent, however, that the
     provisions of any applicable law may be waived, they are hereby waived to
     the end that this Agreement be deemed to be valid and binding agreement
     enforceable in accordance with its terms, and in the event that any
     provision hereof shall be found to be invalid or unenforceable, such
     provision shall be construed by limiting it so as to be valid and
     enforceable to the maximum extent consistent with and possible under
     applicable law.

11.  Counterparts. This Agreement may be executed in any number of counterparts
     and by each of the parties hereto in separate counterparts, each of which
     when so executed shall be deemed to be an original and all of which
     together shall constitute one and the same agreement.

                                      -8-
<PAGE>

     IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf as an instrument under seal as of the date first above
written by its officer or representative thereunto duly authorized.

The Company:                  SMTC CORPORATION

                              By /s/ Prescott Ashe
                                 ____________________________
                                  Title:

Bain:                         Bain Capital Partners VI, L.P.

                              By  Bain Capital Investors VI, Inc.,
                                  its general partner

                              By /s/ David Dominik
                                 ____________________________
                                  Title:

Celerity:                     Celerity Management Co., Inc.

                              By /s/ Stephen Adamson
                                 ____________________________
                                  Title: President

KEGL:                         Kilmer Electronics Group Limited

                              By /s/ Michael Griffiths
                                 ____________________________
                                  Title:
<PAGE>

                                                                   Schedule 1 to
                                                            Management Agreement
                                                            --------------------

                    Wire Transfer Instructions for
                    Bain Capital Partners VI, L.P.
                    Citibank N.A.
                    ABA # 021 000 089
                    For Brown Brothers Harriman
                    Account # 09250276
                    To Further Credit:
                    Bain Capital Partners VI, L.P.
                    Acct. # 610276-8

                    Wire Instructions for
                    Celerity Management Co., INC.
                    City National Bank
                    400 North Roxbury Drive
                    Beverly Hills, CA 90210
                    ABA # 122 016 066
                    For credit to the account of:  Celerity Management Co., Inc.
                    Account:  101 113 531

                    Wire Instructions for
                    Kilmer Electronics Group Limited
                    Bank of Montreal
                    100 King St. West
                    Toronto, Ontario
                    M5X 1A3
                    Bank Code: 001
                    Transit #: 00022
                    Account #: 1286108
                    SWIFT #: BOFMCAM2
                    Beneficiary #: 21027937

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