Exhibit 10.11

AMENDED AND RESTATED GENERAL SECURITY AGREEMENT

This Amended and Restated General Security Agreement dated August 10, 2007 is
made by SMTC Nova Scotia Company, a company incorporated under the laws of the
Province of Nova Scotia (the “Guarantor”) in favour of Wachovia Capital Finance
Corporation (Canada) (formerly, Congress Financial Corporation (Canada)
(“Congress”)), an Ontario corporation, for and on behalf of itself and as agent
(in such capacity, together with its successors and assigns, the “Agent”) for
Monroe Capital Management Advisors LLC, a Delaware limited liability company (in
such capacity and together with any successors and assigns, if any, the “Tranche
B Agent”) and the lenders that from time to time are party to the Loan Agreement
(as defined below) (collectively, the “Lenders”) pursuant to the Loan Agreement.

WITNESSETH

WHEREAS Congress has entered into certain financing arrangements with Borrower
(as defined below) and its affiliates as set out in a loan agreement dated as of
June 1, 2004 (as amended pursuant to a first amending agreement dated March 31,
2005, a second amending agreement dated August 17, 2005, a third amending
agreement dated June 12, 2006, an extension letter dated August 1, 2006 and a
fourth amending agreement dated September 20, 2006, collectively, the “Original
Loan Agreement”) pursuant to which Congress made loans and provided other
financial accommodations to Borrower and its affiliates;

WHEREAS Guarantor is an affiliate of Borrower and as such has derived direct and
indirect economic benefits from the making of the loans and other financial
accommodations which have been provided to Borrower pursuant to the Original
Loan Agreement;

WHEREAS Guarantor has executed and delivered a guarantee dated as of June 1,
2004 (the “Original Guarantee”) and a general security agreement dated as of
June 1, 2004 (the “Original GSA”) in favour of Congress in respect of all
obligations, liabilities and indebtedness of any kind, nature and description of
Borrower to Congress;

WHEREAS Borrower, Tranche B Agent and Lenders have agreed to amend and restate
the Original Loan Agreement pursuant to an amended and restated loan agreement
dated as of the date hereof (as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced, the “Loan
Agreement”), to amend and restate the Original Guarantee pursuant to an amended
and restated guarantee dated as of the date hereof (as the same now exists or
may hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced, the “Guarantee”) and to amend and restate the Original GSA pursuant to
this Amended and Restated General Security Agreement (the “Agreement”); and

WHEREAS, in order to induce Agent, Tranche B Agent and Lenders to enter into the
Loan Agreement and the other Financing Agreements (as defined below) and to make
the loans under the Loan Agreement, and as a condition precedent thereto, Agent,
Tranche B Agent and Lenders require that Guarantor shall have executed and
delivered this Agreement to secure the obligations of Guarantor to Agent,
Tranche B Agent and Lenders under the Guarantee.

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NOW THEREFORE, in consideration of the mutual conditions and agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:

SECTION 1

DEFINITIONS

All terms used herein which are defined in the PPSA (as such term is defined
below) shall have the meanings given therein unless otherwise defined in this
Agreement. All references to the plural herein shall also mean the singular and
to the singular shall also mean the plural unless the context otherwise
requires. All references to Borrower, Agent, Tranche B Agent, Lender, Guarantor
or to any other person herein, shall include their respective successors and
assigns. The words “hereof”, “herein”, “hereunder”, “this Agreement” and words
of similar import when used in this Agreement shall refer to this Agreement as a
whole and not any particular provision of this Agreement and as this Agreement
now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced. The word “including” when used in this Agreement
shall mean “including, without limitation”. References herein to any statute or
any provision thereof include such statute or provision as amended, revised,
re-enacted and/or consolidated from time to time and any successor statute
thereto. An Event of Default (as such term is defined below) shall exist or
continue or be continuing until such Event of Default is waived in accordance
with the applicable agreement. “Canadian Dollars” and the sign “$” mean lawful
money of Canada. “US Dollars” and the sign “US$” mean lawful money of the United
States of America. For purposes of this Agreement, the following terms shall
have the respective meanings given to them below:

1.1 “Accounts” shall mean all present and future rights of the Guarantor to
payment for goods sold or leased or for services rendered, which are not
evidenced by instruments or chattel paper, and whether or not earned by
performance.

1.2 “Agent” shall have the meaning set forth in the Recitals hereto.

1.3 “BIA” means the Bankruptcy and Insolvency Act (Canada) as it may from time
to time be amended, supplemented, re-enacted or succeeded by successor
legislation of comparable effect.

1.4 “Borrower” shall mean SMTC Manufacturing Corporation of Canada/Societe de
Fabrication SMTC du Canada, an Ontario corporation, and its successors and
assigns.

1.5 “Business Day” shall mean a day (other than a Saturday, Sunday or statutory
holiday in Ontario, Illinois or New York) on which Agent’s Toronto office and
banks in Chicago, Toronto and New York City are open for business in the normal
course.

1.6 “CCAA” means the Companies’ Creditors Arrangement Act (Canada) as it may
from time to time be amended, supplemented, re-enacted or succeeded by successor
legislation of comparable effect.

1.7 “Collateral” shall have the meaning set forth in Section 2.1 hereof.

 

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1.8 “Equipment” shall mean all of Guarantor’s now owned and hereafter acquired
equipment, machinery, computers and computer hardware and software (whether
owned or licensed), vehicles, tools, furniture, fixtures, all attachments,
accessions and property now or hereafter affixed thereto or used in connection
therewith, and substitutions and replacements thereof, wherever located.

1.9 “Event of Default” shall have the meaning set forth in Section 6.1 hereof.

1.10 “Financing Agreements” shall mean, collectively, the Loan Agreement, the
Guarantee, this Agreement and all notes, guarantees, security agreements and
other agreements, documents and instruments now or at any time hereafter
executed and/or delivered by Borrower, Guarantor or any Obligor in connection
with the Loan Agreement, as the same now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.

1.11 “GAAP” shall mean generally accepted accounting principles in Canada as in
effect from time to time as set forth in the opinions and pronouncements of the
relevant Canadian public and private accounting boards and institutes which are
applicable to the circumstances as of the date of determination consistently
applied.

1.12 “Guarantee” shall have the meaning set forth in the Recitals hereto.

1.13 “Guarantor” shall have the meaning set forth in the Recitals hereto.

1.14 “Information Certificate” shall mean the Information Certificate of
Guarantor constituting Exhibit A hereto containing material information with
respect to Guarantor, its business and assets provided by or on behalf of
Guarantor to Agent in connection with the preparation of this Agreement and the
other Financing Agreements and the financing arrangements provided for herein.

1.15 “Inventory” shall mean all of Guarantor’s now owned and hereafter existing
or acquired raw materials, work in process, finished goods and all other
inventory of whatsoever kind or nature, wherever located.

1.16 “Lenders” shall have the meaning set forth in the Recitals hereto.

1.17 “Loan Agreement” shall have the meaning set forth in the Recitals hereto.

1.18 “Obligations” shall mean any and all obligations, liabilities and
indebtedness of every kind, nature and description owing by Guarantor to Agent,
Tranche B Agent, Lenders and/or their affiliates, including principal, interest,
charges, fees, costs and expenses, however evidenced, whether as principal,
surety, endorser, guarantors or otherwise, whether arising under the Loan
Agreement, the Guarantee, this Agreement, the Financing Agreements, any
guarantee or otherwise, whether now existing or hereafter arising, whether
arising before, during or after the initial or any renewal term of the Loan
Agreement or after the commencement of any case with respect to Guarantor or any
of its affiliates under the BIA, CCAA or any similar statute in

 

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any jurisdiction (including the payment of interest and other amounts which
would accrue and become due but for the commencement of such case, whether or
not such amounts are allowed or allowable in whole or in part in such case),
whether direct or indirect, absolute or contingent, joint or several, due or not
due, primary or secondary, liquidated or unliquidated, secured or unsecured, and
however acquired by Agent, Tranche B Agent, Lenders and/or their affiliates.

1.19 “Obligor” shall mean any other guarantors, endorser, acceptor, surety or
other person liable on or with respect to the Obligations or who is the owner of
any property which is security for the Obligations, other than Guarantor.

1.20 “Original Financing Agreements” shall mean collectively the Original Loan
Agreement, the Original Guarantee, the Original GSA and all notes, guarantees,
security agreements and other agreements, documents and instruments now or at
any time hereafter executed and/or delivered by Borrower, Guarantor or any
Obligor in connection with the Original Loan Agreement.

1.21 “Records” shall mean all of Guarantor’s present and future books of account
of every kind or nature, purchase and sale agreements, invoices, ledger cards,
bills of lading and other shipping evidence, statements, correspondence,
memoranda, credit files and other data relating to the Collateral or any account
debtor, together with the tapes, disks, diskettes and other data and software
storage media and devices, file cabinets or containers in or on which the
foregoing are stored (including any rights of Guarantor with respect to the
foregoing maintained with or by any other person).

1.22 “SMTC Corporation” shall mean SMTC Corporation, a Delaware corporation, and
its successors and assigns.

1.23 “Tranche B Agent” shall have the meaning set forth in the Recitals hereto.

SECTION 2

GRANT OF SECURITY INTEREST

2.1 To secure payment and performance of all Obligations, Guarantor hereby
grants to Agent for itself and for the ratable benefit of Tranche B Agent and
Lenders a continuing security interest in, a lien upon, and a right of set-off
against, and hereby assigns to Agent for itself and for the ratable benefit of
Tranche B Agent and Lenders as security, the following property and interests in
property of Guarantor, whether now owned or hereafter acquired or existing, and
wherever located (collectively, the “Collateral”):

 

  (a) Accounts;

 

  (b) all present and future contract rights, general intangibles (including tax
and duty refunds, registered and unregistered patents, trademarks, service
marks, copyrights, trade names, applications for the foregoing, trade secrets,
goodwill, processes, drawings, blueprints, customer lists, licenses, whether as
licensor or licensee, chooses in action and other claims and existing and future
leasehold interests in equipment, real estate and fixtures), chattel paper,
documents, instruments, securities and other investment property, letters of
credit, bankers’ acceptances and guarantees;

 

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  (c) all present and future monies, securities, credit balances, deposits,
deposit accounts and other property of Guarantor now or hereafter held or
received by or in transit to Agent or its affiliates or at any other depository
or other institution from or for the account of Guarantor whether for
safekeeping, pledge, custody, transmission, collection or otherwise, and all
present and future liens, security interests, rights, remedies, title and
interest in, to and in respect of Accounts and other Collateral, including:

 

  (i) rights and remedies under or relating to guaranties, contracts of
suretyship, letters of credit and credit and other insurance related to the
Collateral;

 

  (ii) rights of stoppage in transit, replevin, repossession, reclamation and
other rights and remedies of an unpaid vendor, lienor or secured party;

 

  (iii) goods described in invoices, documents, contracts or instruments with
respect to, or otherwise representing or evidencing, Accounts or other
Collateral, including returned, repossessed and reclaimed goods; and

 

  (iv) deposits by and property of account debtors or other persons securing the
obligations of account debtors;

 

  (d) Inventory;

 

  (e) Equipment;

 

  (f) Records; and

 

  (g) all products and proceeds of the foregoing, in any form, including
insurance proceeds and any claims against third parties for loss or damage to or
destruction of any or all of the foregoing.

2.2 Notwithstanding the foregoing, Collateral shall not include:

 

  (a) the last day of the term of any lease (but upon the enforcement of Agent’s
rights hereunder, Agent shall stand possessed of such last day in trust to
assign the same to any person acquiring such term); or

 

  (b) any Consumer Goods.

 

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SECTION 3

COLLATERAL COVENANTS

3.1 Accounts Covenants

 

  (a) Agent shall have the right at any time or times, in Agent’s name or in the
name of a nominee of Agent, to verify the validity, amount or any other matter
relating to any Account or other Collateral, by mail, telephone, facsimile
transmission or otherwise.

 

  (b) Guarantor shall deliver or cause to be delivered to Agent, with
appropriate endorsement and assignment, with full recourse to Guarantor, all
chattel paper and instruments which Guarantor now owns or may at any time
acquire immediately upon Guarantor’s receipt thereof, except as Agent may
otherwise agree.

 

  (c) Agent may, at any time or times that an Event of Default exists or has
occurred and is continuing:

 

  (i) notify any or all account debtors that the Accounts have been assigned to
Agent and that Agent has a security interest therein and Agent may direct any or
all accounts debtors to make payment of Accounts directly to Agent;

 

  (ii) extend the time of payment of, compromise, settle or adjust for cash,
credit, return of merchandise or otherwise, and upon any terms or conditions,
any and all Accounts or other obligations included in the Collateral and thereby
discharge or release the account debtor or any other party or parties in any way
liable for payment thereof without affecting any of the Obligations;

 

  (iii) demand, collect or enforce payment of any Accounts or such other
obligations, but without any duty to do so, and Agent shall not be liable for
its failure to collect or enforce the payment thereof nor for the negligence of
its agents or attorneys with respect thereto; and

 

  (iv) take whatever other action Agent may deem necessary or desirable for the
protection of its interests.

At any time that an Event of Default exists or has occurred and is continuing,
at Agent’s request, all invoices and statements sent to any account debtor shall
state that the Accounts and such other obligations have been assigned to Agent
and are payable directly and only to Agent and Guarantor shall deliver to Agent
such originals of documents evidencing the sale and delivery of goods or the
performance of services giving rise to any Accounts as Agent may require.

 

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3.2 Inventory Covenants. With respect to the Inventory:

 

  (a) Guarantor shall at all times maintain inventory records reasonably
satisfactory to Agent, keeping correct and accurate records itemizing and
describing the kind, type, quality and quantity of Inventory, Guarantor’s cost
therefore;

 

  (b) Guarantor shall not remove any Inventory from the locations set forth or
permitted herein, without the prior written consent of Agent, except for sales
of Inventory in the ordinary course of Guarantor’s business and except to move
Inventory directly from one location set forth or permitted herein to another
such location;

 

  (c) Guarantor shall produce, use, store and maintain the Inventory, with all
reasonable care and caution and in accordance with applicable standards of any
insurance and in conformity with applicable laws;

 

  (d) Guarantor assumes all responsibility and liability arising from or
relating to the production, use, sale or other disposition of the Inventory;

 

  (e) Guarantor shall keep the Inventory in good and marketable condition; and

 

  (f) Guarantor shall not, without prior written notice to Agent, acquire or
accept any Inventory on consignment or approval.

3.3 Equipment Covenants. With respect to the Equipment:

 

  (a) upon Agent’s request, Guarantor shall, at its expense, at any time or
times as Agent may request on or after an Event of Default, deliver or cause to
be delivered to Agent written reports or appraisals as to the Equipment in form,
scope and methodology acceptable to Agent and by appraiser acceptable to Agent;

 

  (b) Guarantor shall keep the Equipment in good order, repair, running and
marketable condition (ordinary wear and tear excepted);

 

  (c) Guarantor shall use the Equipment with all reasonable care and caution and
in accordance with applicable standards of any insurance and in conformity with
all applicable laws;

 

  (d) the Equipment is and shall be used in Guarantor’s business and not for
personal, family, household or farming use;

 

  (e) Guarantor shall not remove any Equipment from the locations set forth or
permitted herein, except to the extent necessary to have any Equipment repaired
or maintained in the ordinary course of the business of Guarantor or to move
Equipment directly from one location set forth or permitted herein to another
such location and except for the movement of motor vehicles used by or for the
benefit of Borrower in the ordinary course of business;

 

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  (f) the Equipment is now and shall remain personal property and Guarantor
shall not permit any of the Equipment to be or become a part of or affixed to
real property; and

 

  (g) Guarantor assumes all responsibility and liability arising from the use of
the Equipment.

3.4 Power of Attorney. Guarantor hereby irrevocably designates and appoints
Agent for itself and for the ratable benefit of Tranche B Agent and Lenders (and
all persons designated by Agent) as Guarantor’s true and lawful
attorney-in-fact, and authorizes Agent, in Guarantor’s or Agent’s name, to:

 

  (a) at any time an Event of Default or event which with notice or passage of
time or both would constitute an Event of Default exists or has occurred and is
continuing:

 

  (i) demand payment on Accounts or other proceeds of Collateral;

 

  (ii) enforce payment of Accounts by legal proceedings or otherwise;

 

  (iii) exercise all of Guarantor’s rights and remedies to collect any Account
or other Collateral;

 

  (iv) sell or assign any Account upon such terms, for such amount and at such
time or times as the Agent deems advisable;

 

  (v) settle, adjust, compromise, extend or renew an Account,

 

  (vi) discharge and release any Account;

 

  (vii) prepare, file and sign Guarantor’s name on any proof of claim in
bankruptcy or other similar document against an account debtor,

 

  (viii) notify the post office authorities to change the address for delivery
of Guarantor’s mail to an address designated by Agent, and open and dispose of
all mail addressed to Guarantor; and

 

  (ix) do all acts and things which are necessary, in Agent’s determination, to
fulfill Guarantor’s obligations under this Agreement and the other Financing
Agreements; and

 

  (b) at any time to

 

  (i) take control in any manner of any item of payment or proceeds thereof;

 

  (ii) have access to any lockbox or postal box into which Guarantor’s mail is
deposited;

 

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  (iii) endorse Guarantor’s name upon any items of payment or proceeds thereof
and deposit the same in the Agent’s account for application to the Obligations;

 

  (iv) endorse Guarantor’s name upon any chattel paper, document, instrument,
invoice, or similar document or agreement relating to any Account or any goods
pertaining thereto or any other Collateral;

 

  (v) sign Guarantor’s name on any verification of Accounts and notices thereof
to account debtors; and

 

  (vi) execute in Guarantor’s name and file any PPSA or other financing
statements or amendments thereto.

Guarantor hereby releases Agent and its officers, employees and designees from
any liabilities arising from any act or acts under this power of attorney and in
furtherance thereof, whether of omission or commission, except as a result of
Agent’s own gross negligence or willful misconduct as determined pursuant to a
final non-appealable order of a court of competent jurisdiction.

3.5 Right to Cure. Agent may, at its option:

 

  (a) cure any default by Guarantor under any agreement with a third party or
pay or bond on appeal any judgment entered against Guarantor;

 

  (b) discharge taxes, liens, security interests or other encumbrances at any
time levied on or existing with respect to the Collateral; and

 

  (c) pay any amount, incur any expense or perform any act which, in Agent’s
judgment, is necessary or appropriate to preserve, protect, insure or maintain
the Collateral and the rights of Agent with respect thereto.

Agent may add any amounts so expended to the Obligations and charge Guarantor’s
account therefor, such amounts to be repayable by Guarantor on demand. Agent
shall be under no obligation to effect such cure, payment or bonding and shall
not, by doing so, be deemed to have assumed any obligation or liability of
Guarantor. Any payment made or other action taken by Agent under this Section
shall be without prejudice to any right to assert an Event of Default hereunder
and to proceed accordingly.

3.6 Access to Premises. From time to time as requested by Agent, at the cost and
expense of Guarantor;

 

  (a) Agent or its designee shall have complete access to all of Guarantor’s
premises during normal business hours and after notice to Guarantor, or at any
time and without notice to Guarantor if an Event of Default exists or has
occurred and is continuing, for the purposes of inspecting, verifying and
auditing the Collateral and all of Guarantor’s books and records, including the
Records;

 

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  (b) Guarantor shall promptly furnish to Agent such copies of such books and
records or extracts therefrom as Agent may request; and

 

  (c) use during normal business hours such of Guarantor’s personnel, equipment,
supplies and premises as may be reasonably necessary for the foregoing and if an
Event of Default exists or has occurred and is continuing for the collection of
Accounts and realization of other Collateral.

SECTION 4

REPRESENTATIONS AND WARRANTIES

Guarantor hereby represents and warrants to Agent, Tranche B Agent and Lenders
the following (which shall survive the execution and delivery of this
Agreement):

4.1 Corporate Existence, Power and Authority; Subsidiaries. Guarantor is a
corporation duly incorporated, validly existing and duly organized under the
laws of its jurisdiction of incorporation and is duly qualified as a foreign or
extra-provincial corporation in all provinces, states or other jurisdictions
where the nature and extent of the business transacted by it or the ownership of
assets makes such qualification necessary, except for those jurisdictions in
which the failure to so qualify would not have a material adverse effect on
Guarantor’s financial condition, results of operation or business or the rights
of Agent in or to any of the Collateral. The execution, delivery and performance
of this Agreement, the other Financing Agreements and the transactions
contemplated hereunder and thereunder are all within Guarantor’s corporate
powers, have been duly authorized and are not in contravention of law or the
terms of Guarantor’s certificate of incorporation, by-laws, or other
organizational documentation, or any indenture, agreement or undertaking to
which Guarantor is a party or by which Guarantor or its property is bound. This
Agreement and the other Financing Agreements constitute legal, valid and binding
obligations of Guarantor enforceable in accordance with their respective terms.
Guarantor does not have any subsidiaries except as set forth on the Information
Certificate.

4.2 Financial Statements; No Material Adverse Change. All financial statements
relating to Guarantor which have been or may hereafter be delivered by Guarantor
to Agent have been prepared in accordance with GAAP and fairly present the
financial condition and the results of operation of Guarantor as at the dates
and for the periods set forth therein. Except as disclosed in any interim
financial statements furnished by Guarantor to Agent prior to the date of this
Agreement, there has been no material adverse change in the assets, liabilities,
properties and condition, financial or otherwise, of Guarantor, since the date
of the most recent audited financial statements furnished by Guarantor to Agent
prior to the date of this Agreement.

4.3 Chief Executive Office; Collateral Locations. The chief executive office of
Guarantor and Guarantor’s Records concerning Accounts are located only at the
address set forth below and its only other places of business and the only other
locations of Collateral, if any, are the addresses set forth in the Information
Certificate, subject to the right of Guarantor to establish new locations in
accordance with Section 5.2 below. The Information Certificate correctly
identifies any locations which are not owned by Guarantor and sets forth the
owners and/or operators thereof, and to the best of Guarantor’s knowledge, the
holders of any mortgages on such locations.

 

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4.4 Priority of Liens; Title to Properties. The security interests and liens
granted to Agent under this Agreement and the other Financing Agreements
constitute valid and perfected first priority liens and security interests in
and upon the Collateral subject only to the liens indicated on Schedule 4.4
hereto (except to the extent that Agent requires discharge thereof) and the
other liens permitted under Section 5.8 hereof. Guarantor has good and
marketable title to all of its properties and assets subject to no liens,
mortgages, pledges, security interests, hypothecs, encumbrances or charges of
any kind, except those granted to Agent and such others as are specifically
listed on Schedule 4.4 hereto (except to the extent that Agent requires the
discharge thereof) or permitted under Section 5.8 hereof.

4.5 Tax Returns. Guarantor has filed, or caused to be filed, in a timely manner
all tax returns, reports and declarations which are required to be filed by it
(without requests for extension except as previously disclosed in writing to
Agent). All information in such tax returns, reports and declarations is
complete and accurate in all material respects. Guarantor has paid or caused to
be paid all taxes due and payable or claimed due and payable in any assessment
received by it, except taxes the validity of which are being contested in good
faith by appropriate proceedings diligently pursued and available to Guarantor
and with respect to which adequate reserves have been set aside on its books.
Adequate provision have been made for the payment of all accrued and unpaid
Federal, Provincial, municipal, local, foreign and other taxes whether or not
yet due and payable and whether or not disputed.

4.6 Litigation. Except as set forth on the Information Certificate, there are no
present investigations by any governmental agency pending, or to the best of
Guarantor’s knowledge threatened, against or affecting Guarantor, its assets or
business and there are no actions, suits, proceedings or claims by any Person
pending, or to the best of Guarantor’s knowledge threatened, against Guarantor
or its assets or goodwill, or against or affecting any transactions contemplated
by this Agreement, which if adversely determined against Guarantor would result
in any material adverse change in the assets, business or prospects of Guarantor
or which would impair the ability of Guarantor to perform its obligations
hereunder or under any of the other Financing Agreements to which it is a party
or of Agent to enforce the Obligations or realize upon any Collateral.

4.7 Compliance with Other Agreements and Applicable Laws. Guarantor is not in
default in any material respect under, or in violation in any material respect
of any of the terms of, any agreement, contract, instrument, lease or other
commitment to which it is a party or by which it or any of its assets are bound
and Guarantor is in compliance in all material respects with all applicable
provisions of laws, rules, regulations, licenses, permits, approvals and orders
of any foreign, Federal, Provincial or local governmental authority.

4.8 Bank Accounts. All of the deposit accounts, investment accounts or other
accounts in the name of or used by Guarantor maintained at any bank or other
financial institution are set forth on Schedule 4.8 hereto, subject to the right
of Guarantor to establish new accounts in accordance with Section 5.13 below.

 

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4.9 Accuracy and Completeness of Information. All information furnished by or on
behalf of Guarantor in writing to Agent in connection with this Agreement or any
of the other Financing Agreements or any transaction contemplated hereby or
thereby, including all information on the Information Certificate are true and
correct in all material respects on the date as of which such information is
dated or certified and does not omit any material fact necessary in order to
make such information not misleading. No event or circumstance has occurred
which has had or could reasonably be expected to have a material adverse affect
on the business, assets or prospects of Guarantor, which has not been fully and
accurately disclosed to Agent in writing.

4.10 Survival of Warranties; Cumulative. All representations and warranties
contained in this Agreement or any of the other Financing Agreements shall
survive the execution and delivery of this Agreement and shall be deemed to have
been made again to Agent on the date of each additional borrowing or other
credit accommodation under the Loan Agreement and shall be conclusively presumed
to have been relied on by Agent regardless of any investigation made or
information possessed by Agent. The representations and warranties set forth
herein shall be cumulative and in addition to any other representations or
warranties which Guarantor shall now or hereafter give, or cause to be given, to
Agent.

SECTION 5

AFFIRMATIVE AND NEGATIVE COVENANTS

5.1 Maintenance of Existence. Guarantor shall at all times preserve, renew and
keep in full, force and effect its corporate existence and rights and franchises
with respect thereto and maintain in full force and effect all permits,
licenses, trademarks, tradenames, approvals, authorizations, leases and
contracts necessary to carry on the business as presently or proposed to be
conducted. Guarantor shall give Agent thirty (30) days prior written notice of
any proposed change in its corporate name, which notice shall set forth the new
name and Guarantor shall deliver to Agent a certified copy of the Articles of
Amendment of Guarantor providing for the name change immediately following its
filing.

5.2 New Collateral Locations. Guarantor may open any new location within Canada
provided Guarantor: (a) gives Agent thirty (30) days prior written notice of the
intended opening of any such new location; and (b) executes and delivers, or
causes to be executed and delivered, to Agent such agreements, documents, and
instruments as Agent may deem reasonably necessary or desirable to protect its
interests in the Collateral at such location, including PPSA and other financing
statements and such other evidence as Agent may require of the perfection of
Agent’s first priority security interests and liens where required by Agent.

5.3 Compliance with Laws, Regulations, Etc. Guarantor shall, at all times,
comply in all material respects with all laws, rules, regulations, licenses,
permits, approvals and orders applicable to it and duly observe all requirements
of any Federal, Provincial or local governmental authority, including, without
limitation, all statutes, rules, regulations, orders, permits and stipulations
relating to environmental pollution and employee health and safety.

5.4 Payment of Taxes and Claims. Guarantor shall duly pay and discharge all
taxes, assessments, contributions and governmental charges upon or against it or
its properties or

 

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assets, except for taxes the validity of which are being contested in good faith
by appropriate proceedings diligently pursued and available to Guarantor and
with respect to which adequate reserves have been set aside on its books.
Guarantor shall be liable for any tax or penalties imposed on Agent as a result
of the financing arrangements provided for herein and Guarantor agrees to
indemnify and hold Agent harmless with respect to the foregoing, and to repay to
Agent on demand the amount thereof, and until paid by Guarantor such amount
shall be added and deemed part of the Obligations, provided, that, nothing
contained herein shall be construed to require Guarantor to pay any income or
franchise taxes attributable to the income of Agent from any amounts charged or
paid hereunder to Agent. The foregoing indemnity shall survive the payment of
the Obligations, the termination of this Agreement and the termination or
non-renewal of the Loan Agreement.

5.5 Insurance. Guarantor shall, at all times, maintain with financially sound
and reputable insurers insurance with respect to the Collateral against loss or
damage and all other insurance of the kinds and in the amounts customarily
insured against or carried by corporations of established reputation engaged in
the same or similar businesses and similarly situated. Said policies of
insurance shall be satisfactory to Agent as to form, amount and insurer.
Guarantor shall furnish certificates, policies or endorsements to Agent as Agent
shall require as proof of such insurance, and, if Guarantor fails to do so,
Agent is authorized, but not required, to obtain such insurance at the expense
of Guarantor. All policies shall provide for at least thirty (30) days prior
written notice to Agent of any cancellation or reduction of coverage and that
Agent may act as attorney for Guarantor in obtaining, and at any time an Event
of Default exists or has occurred and is continuing, adjusting, settling,
amending and canceling such insurance. Guarantor shall cause Agent to be named
as a loss payee and an additional insured (but without any liability for any
premiums) under such insurance policies and Guarantor shall obtain
non-contributory Agent’s loss payable endorsements to all insurance policies in
form and substance satisfactory to Agent. Such Agent’s loss payable endorsements
shall specify that the proceeds of such insurance shall be payable to Agent as
its interests may appear and further specify that Agent shall be paid regardless
of any act or omission by Guarantor or any of its affiliates. At its option,
Agent may apply any insurance proceeds received by Agent at any time to the cost
of repairs or replacement of Collateral and/or to payment of the Obligations,
whether or not then due, in any order and in such manner as Agent may determine
or hold such proceeds as cash collateral for the Obligations.

5.6 Financial Statements and Other Information.

 

  (a)

Guarantor shall keep proper books and records in which true and complete entries
shall be made of all dealings or transactions of or in relation to the
Collateral and the business of Guarantor and its subsidiaries (if any) in
accordance with GAAP and Guarantor shall furnish or cause to be furnished to
Agent: (i) within twenty (20) days after the end of each fiscal month or within
thirty (30) days after the end of a fiscal month that is the month end of a
fiscal quarter of SMTC Corporation, monthly unaudited consolidated financial
statements and, if Guarantor has any subsidiaries, unaudited consolidating
financial statements (including in each case balance sheets, statements of
income and loss, statements of cash flow and statements of shareholders’
equity), all in reasonable detail, fairly presenting the financial position and
the results of the operations of Guarantor and its

 

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subsidiaries as of the end of and through such fiscal month; and (ii) within
ninety (90) days after the end of each fiscal year, audited consolidated
financial statements and, if Guarantor has any Subsidiaries, consolidating
financial statements of Guarantor and its subsidiaries (including in each case
balance sheets, statements of income and loss, statements of cash flow and
statements of shareholders’ equity), and the accompanying notes thereto, all in
reasonable detail, fairly presenting the financial position and the results of
the operations of Guarantor and its subsidiaries as of the end of and for such
fiscal year, together with the unqualified opinion of independent chartered
accountants, which accountants shall be an independent accounting firm selected
by Guarantor and reasonably acceptable to Agent, that such financial statements
have been prepared in accordance with GAAP, and present fairly the results of
operations and financial condition of Guarantor and its subsidiaries as of the
end of and for the fiscal year then ended.

 

  (b) Guarantor shall promptly notify Agent in writing of the details of:
(i) any loss, damage, investigation, action, suit, proceeding or claim relating
to the Collateral or any other property which is security for the Obligations or
which would result in any material adverse change in Guarantor’s business,
properties, assets, goodwill or condition, financial or otherwise; and (ii) the
occurrence of any Event of Default or event which, with the passage of time or
giving of notice or both, would constitute an Event of Default.

 

  (c) Guarantor shall promptly after the sending or filing thereof furnish or
cause to be furnished to Agent copies of all reports which Guarantor sends to
its shareholders generally and copies of all reports and registration statements
which Guarantor files with any provincial securities commission or securities
exchange.

 

  (d) Guarantor shall furnish or cause to be furnished to Agent such budgets,
forecasts, projections and other information respecting the Collateral and the
business of Guarantor, as Agent may, from time to time, reasonably request.
Agent is hereby authorized to deliver a copy of any financial statement or any
other information relating to the business of Guarantor to: (i) any court or
other government agency as required or requested by such court or other
government agency or if Agent reasonably believes it is compelled to do so by
court decree, subpoena or legal administrative order or process; or (ii) to any
participant or assignee or prospective participant or assignee provided such
prospective participant or assignee agrees to maintain such information
confidential and not disclose it to any other Person pursuant to the terms of a
confidentiality agreement satisfactory to Agent and entered into between Agent
and such prospective participant or assignee. Guarantor hereby irrevocably
authorizes and directs all accountants or auditors to deliver to Agent, at
Guarantor’s expense, copies of the financial statements of Guarantor and any
reports or management letters prepared by such accountants or auditors on behalf
of Guarantor and to disclose to Agent such information as they may have
regarding the business of Guarantor. Any documents, schedules, invoices or other
papers delivered to Agent may be destroyed or otherwise disposed of by Agent one
(1) year after the same are delivered to Agent, except as otherwise designated
by Guarantor to Agent in writing.

 

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5.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. Guarantor shall
not, directly or indirectly: (a) amalgamate with any other Person or permit any
other Person to amalgamate with it; or (b) sell, assign, lease, transfer,
abandon or otherwise dispose of any shares or indebtedness to any other Person
or any of its assets to any other Person (except for: (i) sales of Inventory in
the ordinary course of business; and (ii) the disposition of worn-out or
obsolete Equipment or Equipment no longer used in the business of Guarantor so
long as: (A) if an Event of Default exists or has occurred and is continuing,
any proceeds are paid to Agent; and (B) such sales do not involve Equipment
having an aggregate fair market value in excess of US$25,000 for all such
Equipment disposed of in any fiscal year of Guarantor); or (c) form or acquire
any subsidiaries; or (d) wind up, liquidate or dissolve; or (e) agree to do any
of the foregoing.

5.8 Encumbrances. Guarantor shall not create, incur, assume or suffer to exist
any security interest, mortgage, pledge, lien, charge or other encumbrance of
any nature whatsoever on any of its assets or properties, including the
Collateral, except: (a) liens and security interests of Agent; (b) liens
securing the payment of taxes, either not yet overdue or the validity of which
are being contested in good faith by appropriate proceedings diligently pursued
and available to Guarantor and with respect to which adequate reserves have been
set aside on its books; (c) non-consensual statutory liens (other than liens
securing the payment of taxes) arising in the ordinary course of Guarantor’s
business to the extent: (i) such liens secure indebtedness which is not overdue;
or (ii) such liens secure indebtedness relating to claims or liabilities which
are fully insured and being defended at the sole cost and expense and at the
sole risk of the insurer or being contested in good faith by appropriate
proceedings diligently pursued and available to Guarantor, in each case prior to
the commencement of foreclosure or other similar proceedings and with respect to
which adequate reserves have been set aside on its books; (d) zoning
restrictions, easements, licenses, covenants and other restrictions affecting
the use of real property which do not interfere in any material respect with the
use of such real property or ordinary conduct of the business of Guarantor as
presently conducted thereon or materially impair the value of the real property
which may be subject thereto; (e) purchase money security interests in Equipment
(including capital leases) and purchase money mortgages on real estate not to
exceed US$50,000 in the aggregate at any time outstanding so long as such
security interests and mortgages do not apply to any property of Guarantor other
than the Equipment or real estate so acquired, and the indebtedness secured
thereby does not exceed the cost of the Equipment or real estate so acquired, as
the case may be; and (f) the security interests and liens set forth on Schedule
4.4 hereto.

5.9 Indebtedness. Guarantor shall not incur, create, assume, become or be liable
in any manner with respect to, or permit to exist, any obligations or
indebtedness, except: (a) the Obligations; (b) trade obligations and normal
accruals in the ordinary course of business not yet due and payable, or with
respect to which the Guarantor is contesting in good faith the amount or
validity thereof by appropriate proceedings diligently pursued and available to
Guarantor, and with respect to which adequate reserves have been set aside on
its books; (c) purchase money indebtedness (including capital leases) to the
extent not incurred or secured by liens (including capital leases) in violation
of any other provision of this Agreement; and (d) the indebtedness set forth on
Schedule 5.9 hereto; provided, that: (i) Guarantor may only make regularly
scheduled

 

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15

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payments of principal and interest in respect of such indebtedness in accordance
with the terms of the agreement or instrument evidencing or giving rise to such
indebtedness as in effect on the date hereof; (ii) Guarantor shall not, directly
or indirectly, (A) amend, modify, alter or change the terms of such indebtedness
or any agreement, document or instrument related thereto as in effect on the
date hereof, or (B) redeem, retire, decease, purchase or otherwise acquire such
indebtedness, or set aside or otherwise deposit or invest any sums for such
purpose, and (iii) Guarantor shall furnish to Agent all notices or demands in
connection with such indebtedness either received by Guarantor or on its behalf,
promptly after the receipt thereof, or sent by Guarantor or on its behalf,
concurrently with the sending thereof, as the case may be.

5.10 Loans, Investments, Guarantee, Etc. Guarantor shall not, directly or
indirectly, make any loans or advance money or property to any person, or invest
in (by capital contribution, dividend or otherwise) or purchase or repurchase
the stock or indebtedness or all or a substantial part of the assets or property
of any person, or guarantee, assume, endorse, or otherwise become responsible
for (directly or indirectly) the indebtedness, performance, obligations or
dividends of any Person or agree to do any of the foregoing, except: (a) the
endorsement of instruments for collection or deposit in the ordinary course of
business; (b) investments in: (i) short-term direct obligations of the Canadian
Government; (ii) negotiable certificates of deposit issued by any bank
satisfactory to Agent, payable to the order of the Guarantor or to bearer and
delivered to Agent; and (iii) commercial paper rated A1 or P1; provided, that,
as to any of the foregoing, unless waived in writing by Agent, Guarantor shall
take such actions as are deemed necessary by Agent to perfect the security
interest of Agent in such investments; and (c) the loans, advances and
guarantees set forth on Schedule 5.10 hereto; provided, that, as to such loans,
advances and guarantees; (i) Guarantor shall not, directly or indirectly,
(A) amend, modify, alter or change the terms of such loans, advances or
guarantees or any agreement, document or instrument relating thereto, or (B) as
to such guarantees, redeem, retire, defease, purchase or otherwise acquire the
obligations arising pursuant to such guarantees, or set aside or otherwise
deposit or invest any sums for such purpose; and (ii) Guarantor shall furnish to
Agent all notices or demands in connection with such loans, advances or
guarantees or other indebtedness subject to such guarantees either received by
Guarantor or on its behalf, promptly after the receipt thereof, or sent by
Guarantor or on its behalf, concurrently with the sending thereof, as the case
may be.

5.11 Dividends and Redemptions. Guarantor shall not, directly or indirectly,
declare or pay any dividends on account of any shares of class of capital stock
of Guarantor now or hereafter outstanding, or set aside or otherwise deposit or
invest any sums for such purpose, or redeem, retire, defease, purchase or
otherwise acquire any shares of any class of capital stock (or set aside or
otherwise deposit or invest any sums for such purpose) for any consideration
other than common stock or apply or set apart any sum, or make any other
distribution (by reduction of capital or otherwise) in respect of any such
shares or agree to do any of the foregoing.

5.12 Transactions with Affiliates. Guarantor shall not, directly or indirectly:

 

  (a) purchase, acquire or lease any property from, or sell, transfer or lease
any property to, any officer, director, agent or other person affiliated with
Guarantor, except in the ordinary course of and pursuant to the reasonable
requirements of Guarantor’s business and upon fair and reasonable terms no less
favorable to Guarantor than Guarantor would obtain in a comparable arm’s length
transaction with an unaffiliated person; or

 

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  (b) make any payments of management, consulting or other fees for management
or similar services, or of any indebtedness owing to any officer, employee,
shareholder, director or other person affiliated with Guarantor except
reasonable compensation to officers, employees and directors for services
rendered to Guarantor in the ordinary course of business.

5.13 Additional Bank Accounts. Guarantor shall not, directly or indirectly,
open, establish or maintain any deposit account, investment account or any other
account with any bank or other financial institution, other than the accounts
set forth in Schedule 4.8 hereto, except: (a) as to any new or additional
accounts which contain any Collateral or proceeds thereof, with the prior
written consent of Agent and subject to such conditions thereto as Agent may
establish; and (b) as to any accounts used by Guarantor to make payments of
payroll, taxes or other obligations to third parties, after prior written notice
to Agent.

5.14 Intentionally Deleted.

5.15 Costs and Expenses. Guarantor shall pay to Agent on demand all costs,
expenses, filing fees and taxes paid or payable in connection with the
preparation, negotiation, execution, delivery, recording, administration,
collection, liquidation, enforcement and defense of the Obligations, Agent’s
rights in the Collateral, this Agreement, the other Financing Agreements and all
other documents related hereto or thereto, including any amendments, supplements
or consents which may hereafter be contemplated (whether or not executed) or
entered into in respect hereof and thereof, including:

 

  (a) all costs and expenses of filing or recording (including PPSA financing
statement and other similar filing and recording fees and taxes, documentary
taxes, intangibles taxes and mortgage recording taxes and fees, if applicable);

 

  (b) insurance premiums, appraisal fees and search fees;

 

  (c) costs and expenses of preserving and protecting the Collateral;

 

  (d) costs and expenses paid or incurred in connection with obtaining payment
of the Obligations, enforcing the security interests and liens of Agent, selling
or otherwise realizing upon the Collateral, and otherwise enforcing the
provisions of this Agreement and the other Financing Agreements or defending any
claims made or threatened against Agent arising out of the transactions
contemplated hereby and thereby (including preparations for and consultations
concerning any such matters); and

 

  (e) the fees and disbursements of counsel (including legal assistants) to
Agent in connection with any of the foregoing.

5.16 Further Assurances. At the request of Agent at any time and from time to
time, Guarantor shall, at its expense, duly execute and deliver, or cause to be
duly executed and

 

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delivered, such further agreements, documents and instruments, and do or cause
to be done such further acts as may be necessary or proper to evidence, perfect,
maintain and enforce the security interests and the priority thereof in the
Collateral and to otherwise effectuate the provisions or purposes of this
Agreement or any of the other Financing Agreements. Where permitted by law,
Guarantor hereby authorizes Agent to execute and file one or more PPSA financing
statements or notices signed only by Agent or Agent’s representative.

SECTION 6

EVENTS OF DEFAULT AND REMEDIES

6.1 Events of Default. The occurrence or existence of any Event of Default under
the Loan Agreement is referred to herein individually as an “Event of Default”,
and collectively as “Events of Default”.

6.2 Remedies.

 

  (a) At any time an Event of Default exists or has occurred and is continuing,
Agent shall have all rights and remedies provided in this Agreement, the other
Financing Agreements, the PPSA and other applicable law, all of which rights and
remedies may be exercised without notice to or consent by Guarantor or any
Obligor, except as such notice or consent is expressly provided for hereunder or
required by applicable law. All rights, remedies and powers granted to Agent
hereunder, under any of the other Financing Agreements, the PPSA or other
applicable law, are cumulative, not exclusive and enforceable, in Agent’s
discretion, alternatively, successively, or concurrently on any one or more
occasions, and shall include, without limitation, the right to apply to a court
of equity for an injunction to restrain a breach or threatened breach by
Guarantor of this Agreement or any of the other Financing Agreements. Agent may,
at any time or times, proceed directly against Guarantor or any Obligor to
collect the Obligations without prior recourse to the Collateral or any
collateral at any time granted by Guarantor to Agent.

 

  (b) Without limiting the foregoing, at any time an Event of Default exists or
has occurred and is continuing, Agent may for itself and the ratable benefit of
Tranche B Agent and Lenders subject to the terms of the Loan Agreement, in its
discretion and without limitation:

 

  (i) accelerate the payment of all Obligations and demand immediate payment
thereof to Agent (provided, that, upon the occurrence of any Event of Default
described in Sections 9.1(g) and 9.1(h) of the Loan Agreement, all Obligations
shall automatically become immediately due and payable);

 

  (ii) with or without judicial process or the aid or assistance of others,
enter upon any premises on or in which any of the Collateral may be located and
take possession of the Collateral or complete processing, manufacturing and
repair of all or any portion of the Collateral;

 

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  (iii) require Guarantor, at Guarantor’s expense, to assemble and make
available to Agent any part or all of the Collateral at any place and time
designated by Agent;

 

  (iv) collect, foreclose, receive, appropriate, set-off and realize upon any
and all Collateral;

 

  (v) remove any or all of the Collateral from any premises on or in which the
same may be located for the purpose of effecting the sale, foreclosure or other
disposition thereof or for any other purpose; and/or

 

  (vi) sell, lease, transfer, assign, deliver or otherwise dispose of any and
all Collateral (including entering into contracts with respect thereto, public
or private sales at any exchange, broker’s board, at any office of Agent or
elsewhere) at such prices or terms as Agent may deem reasonable, for cash, upon
credit or for future delivery, with the Agent having the right to purchase the
whole or any part of the Collateral at any such public sale, all of the
foregoing being free from any right or equity of redemption of Guarantor, which
right or equity of redemption is hereby expressly waived and released by
Guarantor.

If any of the Collateral is sold or leased by Agent upon credit terms or for
future delivery, the Obligations shall not be reduced as a result thereof until
payment therefor is finally collected by Agent. If notice of disposition of
Collateral is required by law, five (5) days prior notice by Agent to Guarantor
designating the time and place of any public sale or the time after which any
private sale or other intended disposition of Collateral is to be made, shall be
deemed to be reasonable notice thereof and Guarantor waives any other notice. In
the event Agent institutes an action to recover any Collateral or seeks recovery
of any Collateral by way of prejudgment remedy, Guarantor waives the posting of
any bond which might otherwise be required.

 

  (c) Agent shall apply the cash proceeds of Collateral actually received by
Agent from any sale, lease, foreclosure or other disposition of the Collateral
to payment of the Obligations, in whole or in part and in accordance with the
Loan Agreement. Guarantor shall remain liable to Agent for the payment of any
deficiency with interest at the highest rate provided for in the Loan Agreement
and all costs and expenses of collection or enforcement, including attorneys’
fees and legal expenses.

SECTION 7

JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW

7.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.

 

  (a)

The validity, interpretation and enforcement of this Agreement and the other
Financing Agreements and any dispute arising out of the relationship between the

 

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19

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parties hereto, whether in contract, tort, equity or otherwise, shall be
governed by the internal laws of the Province of Ontario and the federal laws of
Canada applicable therein (without giving effect to principles of conflicts of
law).

 

  (b) Guarantor irrevocably consents and submits to the non-exclusive
jurisdiction of the Superior Court of Justice (Ontario) and waives any
objections based on venue or forum non conveniens with respect to any action
instituted therein arising under this Agreement or any of the other Financing
Agreements or in any way connected or related or incidental to the dealings of
Guarantor and Agent in respect of this Agreement or the other Financing
Agreements or the transactions related hereto or thereto, in each case whether
now existing or hereafter arising, and whether in contract, tort, equity or
otherwise, and agree that any dispute with respect to any such matters shall be
heard only in the courts described above (except that Agent shall have the right
to bring any action or proceeding against Guarantor or its property in the
courts of any other jurisdiction which Agent deems necessary or appropriate in
order to realize on the Collateral or to otherwise enforce its rights against
Guarantor or its property).

 

  (c) To the extent permitted by law, Guarantor hereby waives personal service
of any and all process upon it and consents that all such service of process may
be made by certified mail (return receipt requested) directed to the addresses
set forth on the signature pages hereof and service so made shall be deemed to
be completed five (5) days after the same shall have been so deposited in the
Canadian mails, or, at Agent’s option, by service upon Guarantor in any other
manner provided under the rules of any such courts. Within thirty (30) days
after such service, Guarantor shall appear in answer to such process, failing
which Guarantor shall be deemed in default and judgment may be entered by Agent
against Guarantor for the amount of the claim and other relief requested.

 

  (d) GUARANTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER
FINANCING AGREEMENTS OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL
TO THE DEALINGS OF GUARANTOR AND AGENT IN RESPECT OF THIS AGREEMENT OR ANY OF
THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN
EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT,
TORT, EQUITY OR OTHERWISE. GUARANTOR HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY AND THAT GUARANTOR OR AGENT MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF
THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF GUARANTOR
AND AGENT TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

  (e)

Agent shall not have any liability to Guarantor (whether in tort, contract,
equity or

 

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20

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otherwise) for losses suffered by Guarantor in connection with, arising out of,
or in any way related to the transactions or relationships contemplated by this
Agreement, or any act, omission or event occurring in connection herewith,
unless it is determined by a final and non-appealable judgment or court order
binding on Agent that the losses were the result of acts or omissions
constituting gross negligence or willful misconduct. In any such litigation,
Agent shall be entitled to the benefit of the rebuttable presumption that it
acted in good faith and with the exercise of ordinary care in the performance by
it of the terms of this Agreement and the other Financing Agreements.

 

  (f) Guarantor hereby expressly waives all rights of notice and hearing of any
kind prior to the exercise of rights by Agent from and after the occurrence of
an Event of Default to repossess the Collateral with judicial process or to
replevy, attach or levy upon the Collateral or other security for the
Obligations. Guarantor waives the posting of any bond otherwise required of
Agent in connection with any judicial process or proceeding to obtain possession
of, replevy, attach or levy upon the Collateral or other security for the
Obligations, to enforce any judgment or other court order entered in favour of
Agent, or to enforce by specific, performance, temporary restraining order,
preliminary or permanent injunction, this Agreement or any other Financing
Agreement.

7.2 Waiver of Notices. Guarantor hereby expressly waives demand, presentment,
protest and notice of protest and notice of dishonour with respect to any and
all instruments and commercial paper, included in or evidencing any of the
Obligations or the Collateral, and any and all other demands and notices of any
kind or nature whatsoever with respect to the Obligations, the Collateral and
this Agreement, except such as are expressly provided for herein. No notice to
or demand on Guarantor which Agent may elect to give shall entitle Guarantor to
any other or further notice or demand in the same, similar or other
circumstances.

7.3 Amendments and Waivers. Neither this Agreement nor any provision hereof
shall be amended, modified, waived or discharged orally or by course of conduct,
but only by a written agreement signed by an authorized officer of Agent, and as
to amendments, as also signed by an authorized officer of Guarantor. Agent shall
not, by any act, delay, omission or otherwise be deemed to have expressly or
impliedly waived any of its rights, powers and/or remedies unless such waiver
shall be in writing and signed by an authorized officer of Agent. Any such
waiver shall be enforceable only to the extent specifically set forth therein. A
waiver by Agent of any right, power and/or remedy on any one occasion shall not
be construed as a bar to or waiver of any such right, power and/or remedy which
Agent would otherwise have on any future occasion, whether similar in kind or
otherwise.

7.4 Waiver of Counterclaims. Guarantor waives all rights to interpose any
claims, deductions, setoffs or counterclaims of any nature (other then
compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom or
relating hereto or thereto.

7.5 Indemnification. Guarantor shall indemnify and hold Agent, and its
directors, agents, employees and counsel, harmless from and against any and all
losses, claims, damages,

 

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liabilities, costs or expenses imposed on, incurred by or asserted against any
of them in connection with any litigation, investigation, claim or proceeding
commenced or threatened related to the negotiation, preparation, execution,
delivery, enforcement, performance or administration of this Agreement, any
other Financing Agreements, or any undertaking or proceeding related to any of
the transactions contemplated hereby or any act, omission, event or transaction
related or attendant thereto, including amounts paid in settlement, court costs,
and the fees and expenses of counsel. To the extent that the undertaking to
indemnify, pay and hold harmless set forth in this Section may be unenforceable
because it violates any law or public policy, Guarantor shall pay the maximum
portion which it is permitted to pay under applicable law to Agent in
satisfaction of indemnified matters under this Section. The foregoing indemnity
shall survive the payment of the Obligations, the termination of this Agreement
and the termination or non-renewal of the Loan Agreement.

SECTION 8

MISCELLANEOUS

8.1 Notices. All notices, requests and demands hereunder shall be in writing
and:

 

  (a) made to Agent at 141 Adelaide Street West, Suite 1500, Toronto, Ontario
M5H 3L9 and to Guarantor at the chief executive office set forth below, or to
such other address as either party may designate by written notice to the other
in accordance with this provision; and

 

  (b) deemed to have been given or made: if delivered in person, immediately
upon delivery; if by facsimile transmission, immediately upon sending and upon
confirmation of receipt; if by nationally recognized overnight courier service
with instructions to deliver the next Business Day, one (1) Business Day after
sending; and if by certified mail, return receipt requested, five (5) days after
mailing.

8.2 Judgment Currency. To the extent permitted by applicable law, the
obligations of Guarantor in respect of any amount due under this Agreement and
other Financing Agreements to which Guarantor is a party shall, notwithstanding
any payment in any other currency (the “Other Currency”) (whether pursuant to a
judgment or otherwise), be discharged only to the extent of the amount in the
currency in which it is due (the “Agreed Currency”) that Agent, may, in
accordance with normal banking procedures, purchase with the sum paid in the
Other Currency (after any premium and costs of exchange) on the Business Day
immediately after the day on which Agent, receives the payment. If the amount in
the Agreed Currency that may be so purchased for any reason falls short of the
amount originally due, Guarantor shall pay all additional amounts, in the Agreed
Currency, as may be necessary to compensate for the shortfall. Any obligation of
Guarantor not discharged by that payment shall, to the extent permitted by
applicable law, be due as a separate and independent obligation and, until
discharged as provided in this Section, continue in full force and effect.

8.3 Partial Invalidity. If any provision of this Agreement is held to be invalid
or unenforceable, such invalidity or unenforceability shall not invalidate this
Agreement as a whole, but this Agreement shall be construed as though it did not
contain the particular provision held to be invalid or unenforceable and the
rights and obligations of the parties shall be construed and enforced only to
such extent as shall be permitted by applicable law.

 

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8.4 Successors. This Agreement, the other Financing Agreements and any other
document referred to herein or therein shall be binding upon Guarantor and its
successors and assigns and inure to the benefit of and be enforceable by Agent
and its successors and assigns, except that Guarantor may not assign its rights
under this Agreement, the other Financing Agreements and any other document
referred to herein or therein without the prior written consent of Agent.

8.5 Entire Agreement. This Agreement, the other Financing Agreements, any
supplements hereto or thereto, and any instruments or documents delivered or to
be delivered in connection herewith or therewith represents the entire agreement
and understanding concerning the subject matter hereof and thereof between the
parties hereto, and supersede all other prior agreements, understandings,
negotiations and discussions, representations, warranties, commitments,
proposals, offers and contracts concerning the subject matter hereof, whether
oral or written. In the event of any inconsistency between the terms of this
Agreement and any schedule or exhibit hereto, the terms of this Agreement shall
govern.

8.6 No Novation. This Agreement does not discharge or release the obligations
under the Original Loan Agreement and the other Original Financing Agreements or
the Lien (as such term is defined in the Loan Agreement) or priority of any
mortgage, pledge, security agreement or any other security therefor. Nothing
herein contained shall be construed as a substitution or novation of the
obligations outstanding under the Original Loan Agreement and the other Original
Financing Agreements or instruments securing the same, which shall remain in
full force and effect, except as modified hereby or by instruments executed
concurrently herewith. Nothing expressed or implied in this Agreement shall be
construed as a release or other discharge of Borrower or any Obligor under the
Original Financing Agreements from any of its obligations and liabilities as
“Borrower” or “Obligor” thereunder. The undersigned hereby (i) confirms and
agrees that each Original Financing Agreement to which it is a party is, and
shall continue to be, in full force and effect and is hereby ratified and
confirmed in all respects except that on and after the date hereof all
references in any such Original Financing Agreement to “the Original Loan
Agreement,” “thereto,” “thereof,” “thereunder” or words of like import referring
to the Original Financing Agreements shall mean the Original Financing Agreement
as amended and restated by the respective Financing Agreement and (ii) confirms
and agrees that to the extent that any such Financing Agreement purports to
assign or pledge to the Agent a security interest in or Lien (as such term is
defined in the Loan Agreement) on, any collateral as security for the
obligations of the Borrower or any Obligors from time to time existing in
respect of the Original Financing Agreements, such pledge, assignment and/or
grant of the security interest or Lien (as such term is defined in the Loan
Agreement) is hereby ratified and confirmed in all respects.

8.7 Attachment. The security interest created hereby is intended to attach when
this Agreement is executed by Guarantor and delivered to Agent.

8.8 Headings. The division of this agreement into Sections and the insertion of
headings are for convenience only and shall not affect the construction or
interpretation of this Agreement.

8.9 Acknowledgement. Guarantor acknowledges receipt of a copy of this Agreement.

 

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8.10 Facsimile. This Agreement may be executed and delivered by facsimile
transmission and Agent may rely on all such facsimile signatures as though such
facsimile signatures were original signatures.

 

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IN WITNESS WHEREOF, Guarantor has executed and delivered this Amended and
Restated General Security Agreement as of the date first written above.

 

SMTC NOVA SCOTIA COMPANY Per:  

 

Name:   Title:   Per:  

 

Name:   Title:    

Chief Executive Office

635 Hood Road

Markham, Ontario L3R 4N6

Fax: (905) 479-5326

 

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EXHIBIT A

INFORMATION CERTIFICATE

 

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SCHEDULE 4.4

LIENS

Nil.

 

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SCHEDULE 4.8

BANK ACCOUNTS

Nil.

 

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SCHEDULE 5.9

INDEBTEDNESS

Nil.

 

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SCHEDULE 5.10

LOANS, ADVANCES AND GUARANTEES

Nil.