Exchange Agent Agreement

EXHIBIT 10.1


EXCHANGE AGENT AGREEMENT


Rev. 5/2004MD

THIS EXCHANGE AGENT AGREEMENT (this " Agreement" ) between SMTC Corporation, a Delaware corporation (the " Company" ), and Mellon Investor Services LLC., a New Jersey limited liability company (" Mellon" or the " Exchange Agent" )), is dated as of October 1, 2004.

1 . Appointment.

(a) The Company hereby appoints Mellon to act as exchange agent with respect to the surrender of certificates for shares of its Common Stock, $ 0.01 par value per share (the " Old Shares" ), in exchange, per Old Share, for 0.20 share of Common Stock of the Company, $0.01 par value per share (the " New Shares" ), as set forth in a Certificate of Amendment to the Company' s Amended and Restated Certificate of Incorporation filed with the Delaware Secretary of State on September , 2004 (the " Reverse Stock Split Amendment" ). Mellon hereby accepts such appointment in accordance with and subject to the terms and conditions set forth in this Agreement.

(b) A reverse stock split within certain ranges was approved by the Company' s stockholders at the Annual Meeting of Stockholders of the Company held on May 20, 2004. The Board of Directors of the Company approved and authorized a reverse stock split at a rate of one New Share per Five Old Shares (the " Reverse Stock Split" ) on September 22, 2004. The Reverse Stock Split is expected to become effective on October 4, 2004 (the " Effective Time" ). On September 23, 2004, the Company' s counsel informed Mellon in writing of the Effective Time.


(c) The Company has furnished Mellon, or will furnish Mellon prior to the Effective Time, with copies of the following documents:


(i) a letter of John E. Caldwell, President and Chief Executive Officer of the Company, to holders of the Old Shares, announcing the effectiveness of the Reverse Split;

(ii) The Letter of Transmittal to accompany certificates for Shares when surrendered for exchange, W9 Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9;


(ii) The Target' s Proxy Statement dated April 26, 2004 relating to the Reverse Split and (as an Exhibit thereto) the Reverse Stock Split Amendment; and


(iii) A copy of a letter dated October 4, 2004 from John E. Caldwell of the Company to the transfer agent for the Old Shares, which is Mellon (the " Transfer Agent" ), instructing the Transfer Agent (i) to close the transfer books for the Old Shares at the Effective Time and (ii) if the Company should authorize the Transfer Agent retroactively to reopen the transfer books for a special transaction, to send a copy of the transaction journal covering that transaction to Mellon as exchange agent.


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Mellon will mail or cause to be mailed to holders of record of the Old Shares the documents described in clauses (i) above, together with (x) a Letter of Transmittal to accompany certificates for Old Shares when surrendered for exchange and W9 Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 and (y) a return envelope.


(d) In its capacity as exchange agent, Mellon shall receive certificates from holders of the Old Shares representing Old Shares surrendered in exchange for certificates for the New Shares. Subject to the terms and conditions of this Agreement, Mellon is authorized to accept such certificates for Old Shares and to exchange them for certificates for New Shares in accordance with the Letters of Transmittal.


2. Procedure for Discrepancies. Mellon shall follow its regular procedures to attempt to reconcile any discrepancies between the number of Old Shares that any Letter of Transmittal may indicate are owned by a surrendering stockholder and the number that the Record Stockholders List indicates such stockholder owned of record as of the Effective Time. This procedure involves conferring with the issuing agent and making any necessary corrections to the transfer books. In any instance where Mellon cannot reconcile such discrepancies by following such procedures, Mellon will consult with the Company for instructions as to the number of Old Shares, if any, Mellon is authorized to accept for exchange. In the absence of such instructions, Mellon is authorized not to accept any such Old Shares for exchange and will return to the surrendering stockholder (at Mellon' s option by either first class mail under a blanket surety bond or insurance protecting Mellon and the Company from losses or liabilities arising out of the non-receipt or non-delivery of Old Shares or by registered mail insured separately for the value of such Old Shares) to such stockholder' s address as set forth in the Letter of Transmittal any certificates for Old Shares surrendered in connection therewith, the related Letters of Transmittal and any other documents received with such Old Shares.


3. Treasury Shares. The Company shall, at or prior to the Effective Time, provide to Mellon a written list of all outstanding treasury shares to be cancelled in accordance with the Reverse Stock Split, indicating whether such treasury shares are physical or book-entry. The Company shall promptly deliver all physical certificates representing any such treasury shares to Mellon for proper cancellation. If any such treasury shares are registered through a brokerage account, the Company shall instruct its broker to deliver such shares to Mellon for cancellation. The Company hereby authorizes and instructs Mellon to cancel all such treasury shares delivered to Mellon hereunder or maintained by Mellon in book-entry.

4. Issuance of Balance Account Shares. The Company hereby instructs Mellon to create a balance account as of the Effective Time for the number of New Shares to be issued for exchange of the Old Shares outstanding at the Effective Time. Mellon will issue these shares in an account registered to Mellon Investor Services for the benefit of unexchanged holders. Subject to the terms and conditions of this Agreement, Mellon will issue certificates evidencing the appropriate number of New Shares as required from time to time in order to make the exchange.


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5. Fractional Shares. No fractional shares of the New Shares will be issued in the Reverse Stock Split. In lieu thereof, any holder of Old Shares who would otherwise have been entitled to receive fractional shares of New Shares will be paid an amount based on the average of the closing bid prices of the Old Shares as reported on The Nasdaq National Market during each of the five (5) trading days preceding the date of the Effective Time. The Company will inform Mellon in writing of this amount on the date of the Effective Time.

6. Lost Certificates. If any holder of Old Shares as of the Effective Time reports to Mellon that his or her failure to surrender a certificate representing any Old Shares registered in his or her name at the Effective Time according to the Record Stockholders List is due to the theft, loss or destruction of such certificate, upon receipt from such stockholder of an affidavit of such theft, loss or destruction and a bond of indemnity, both in form and substance satisfactory to Mellon and compliance with any other applicable requirements, Mellon will effect issuance of certificates for New Shares to the former stockholder as though the certificate for Old Shares had been surrendered.

7. Treatment of Restricted Legends. Any certificate representing New Shares issued in exchange for a certificate representing Old Shares that contained restrictive legends shall evidence the same restrictive legends as the certificate for the Old Shares.


8. Procedure for Deficient Items .


(a) Mellon shall examine the Letter of Transmittal and certificates for the Old Shares received by it as Exchange Agent to ascertain whether they appear to have been completed and executed in accordance with the instructions set forth in the Letter of Transmittal. In the event Mellon determines that any Letter of Transmittal does not appear to have been properly completed or executed, or where the certificates representing Old Shares do not appear to be in proper form for surrender, or any other deficiency in connection with the surrender appears to exist, Mellon will follow, where possible, its regular procedures to attempt to cause such irregularity to be corrected, including contacting the presenter by telephone and/or in writing Mellon is not authorized to waive any deficiency in connection with the surrender, unless the Company provides written authorization to waive the deficiency.

(b) If an exchange of Old Shares is required to be made to a person other than the person in whose name a surrendered certificate is registered, Mellon will issue no certificate for New Shares until the ce ...