Document:

Form of Warrant

 Exhibit 4.2 
  
 THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), OR THE SECURITIES LAWS OF ANY JURISDICTION OF THE UNITED STATES. THE SECURITIES MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND UNDER THE APPLICABLE STATE SECURITIES LAWS OR
PURSUANT TO AN OPINION OF COUNSEL TO THE COMPANY OR OTHER COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, IF REQUESTED BY THE COMPANY, THAT THERE IS AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS;

  
 THE CERTIFICATE, THE STOCK OF THE CORPORATION EVIDENCED THEREBY AND THE
RIGHTS OF THE HOLDER THEREOF ARE SUBJECT TO ALL RESTRICTIONS AND ORDERS PRESENTLY OR HEREAFTER IMPOSED BY THE NEVADA GAMING CONTROL ACT AND THE REGULATIONS OF THE NEVADA GAMING COMMISSION AND THE STATE GAMING CONTROL BOARD ISSUED PURSUANT THERETO,
AS MAY BE, IN EFFECT FROM TIME TO TIME; AND 
  
 BENEFICIAL OWNERS OF THE
VOTING SECURITIES ISSUED BY THIS CORPORATION ARE SUBJECT TO THE REGULATORY PROVISIONS OF THE NEVADA GAMING CONTROL ACT (NRS 463.010 ET SEQ.) AND THE REGULATION OF THE NEVADA GAMING COMMISSION. IF AT ANY TIME THE NEVADA GAMING COMMISSION FINDS A
BENEFICIAL OWNER OF SUCH SECURITIES TO BE UNSUITABLE TO HOLD SUCH SECURITIES, THE BENEFICIAL OWNER MUST DISPOSE OF THE SECURITIES. THE LAWS AND GAMING REGULATIONS OF THE STATE OF NEVADA RESTRICT THE RIGHTS OF A BENEFICIAL OWNER UNDER CERTAIN
CIRCUMSTANCES (I) TO RECEIVE ANY DIVIDEND OR INTEREST UPON SUCH SECURITIES, OR (II) TO EXERCISE DIRECTLY OR INDIRECTLY ANY VOTING RIGHTS CONFERRED BY SUCH SECURITIES; OR (III) TO RECEIVE ANY REMUNERATION IN ANY FORM FROM THE CORPORATION FOR SERVICES
RENDERED OR OTHERWISE. 
  
 WARRANT TO PURCHASE COMMON STOCK

  

			
	Holder:	 	 
	Company:	 	The Sands Regent, a Nevada corporation
	Class of Stock:	 	Common Stock
	Exercise Price:	 	$10.66
	Issue Date:	 	November     , 2004
	Expiration Date:	 	November     , 2009
	Number of Shares:	 	 

  
 THIS WARRANT
CERTIFIES THAT, for acknowledged good and valuable consideration,                     , and each transferee and assignee (collectively, the
“Holder”) is entitled to purchase the number of fully paid and nonassessable shares, as stated in Section 1.2 below, of the above specified Class of Stock of The Sands Regent, a Nevada corporation (the “Company”) at
the exercise price per share of $10.66 (the “Warrant Exercise Price”) and as adjusted pursuant to Article 1 and Article 2 of this Warrant, subject to the provisions and upon the terms and conditions set forth in this Warrant. This
Warrant is being issued pursuant to that certain Stock Purchase Agreement dated as of November     , 2004 by and among the Company and Holder. 
  
 ARTICLE 1. 
 EXERCISE PRICE 
  
 Section 1.1. Commencement of
Warrant Exercise Period and Price. Except as provided in Section 1.2, this Warrant is exercisable beginning 6 months after the Closing until the Expiration Date and shall entitle the Holder to purchase shares of common stock, par value $0.10 per
share, of the Company (the “Common Stock”). November     , 2004 is the “Effective Date.” The period beginning on the Effective Date and through the Expiration Date is the “Exercise
Period.” 
  

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 Section 1.2. Number of Shares. The Holder shall be entitled to purchase
                     (            ) shares of Common Stock under this
Warrant, provided, that: 
  
 (i) in no event shall
the Holder be entitled to exercise this Warrant for a number of Shares such that the aggregate beneficial ownership by the Holder of the Company’s Common Stock is greater than 4.99% (calculated pursuant to Rule 13d-3 of the Securities Exchange
Act of 1934, as amended) then outstanding. To the extent that the limitation contained in this Section 1.2(i) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder) and of which
portion of this Warrant is exercisable shall be in the sole discretion of such Holder, and the submission of a Notice of Exercise shall be deemed to be such Holder’s determination of whether this Warrant is exercisable (in relation to other
securities owned by such Holder) and of which portion of this Warrant is exercisable, in each case subject to such aggregate percentage limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. The
provisions of this Section 1.2(i) may be waived by the Holder upon, at the election of the Holder, not less than 61 days’ prior notice to the Company, and the provisions of this Section 1.2(i) shall continue to apply until such 61st day (or such later date, as determined by the Holder, as may be specified in such notice of waiver); and 
  
 (ii) in the event that the Holder is not properly licensed with the Nevada
Gaming Commission, that the Holder shall not be entitled to exercise this Warrant, and purchase any shares of Common Stock hereunder, if, after giving effect to such exercise and purchase, the Holder would beneficially own greater than 9.9% of the
outstanding shares of Common Stock or any other series of capital stock of the Company until such time as the Holder has become properly licensed and continued to be licensed, unless Holder delivers an opinion of counsel reasonably acceptable to the
Company stating that the Holder is exempt from the applicable licensing requirement. 
  
 Section 1.3. Method of Exercise. During the Exercise Period, Holder may exercise this Warrant by delivering to the principal office of the Company a duly executed Notice of Exercise in substantially the form
attached hereto as Appendix 1. Holder shall receive, without the payment by the Holder of any additional consideration, shares equal to the value of this Warrant or any portion hereof by the surrender of this Warrant or such portion to the
Company, together with notice of such election, at the principal executive offices of the Company. Thereupon, the Company shall issue to the Holder the shares of Common Stock computed using the following formula: 
  
 X = Y (A-B) 
       A 
  
 where: X = the number of shares of Common Stock to be issued to the Holder. 
  
 Y = the number of shares of Common Stock covered by this Warrant in respect of which the exchange election is made pursuant to this Section 1.3 (not to
exceed the number of shares of Common Stock then issuable upon exercise of this Warrant). 
  

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 A = the fair market value of a share of Common Stock, as determined in accordance with the provisions of
this Section 1.3. 
  
 B = the Exercise Price in effect under this
Warrant at the time the exchange election is made pursuant to this Section 1.3. 
  
 For the purposes of this Section 1.3, the “fair market value” per share of Common Stock shall mean: 
  
 (i) If the Common Stock is traded on a national securities exchange or admitted to unlisted trading privileges on such an exchange, or is listed on the
Nasdaq or other over-the-counter quotation system, the fair market value shall be the last reported sale price of the Common Stock on such exchange or on the Nasdaq on the last business day before the effective date of exercise of this Warrant or if
no such sale is made on such day; and 
  
 (ii) If the Common Stock
is not so listed or admitted to unlisted trading privileges and bid and ask prices are not reported, the fair market value shall be the price per share which the Company could obtain from a willing buyer for shares sold by the Company from
authorized but unissued shares, as such price shall be determined by the Company’s Board of Directors acting in good faith. 
  
 This Warrant may not be exercised on a cash payment basis. 
  
 Section 1.4. Delivery of Certificate and New Warrant. Promptly after Holder exercises this Warrant, the Company shall deliver to Holder a
certificate or certificates representing the shares of Common Stock acquired and, if this Warrant has not been fully exercised and has not expired, a new Warrant exercisable into the remaining shares of Common Stock not so acquired. 
  
 Section 1.5. Replacement of Warrants. On receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company or,
in the case of mutilation, or surrender and cancellation of this Warrant, the Company at its expense shall execute and deliver, in lieu of and in substitution for this Warrant, a new warrant of like tenor. The original Warrant so replaced shall
thereupon be null and void, and of no force or effect. 
  
 ARTICLE
2. 
 ADJUSTMENTS TO THE SHARES. 
  
 Section 2.1. Stock Dividends. If at any time while this Warrant remains outstanding and unexpired, the Company pays a dividend or makes a
distribution with respect to Common Stock, then lawful provision shall be made so that the Holder shall thereafter be entitled to receive, upon exercise of this Warrant, during the period specified in this Warrant, that number of shares of Common
Stock or other securities resulting from such dividend or distribution to which a holder of the securities deliverable upon exercise of this Warrant would have been entitled if this Warrant had been exercised immediately prior to such dividend or
distribution. Appropriate adjustment should be made in the application of the provisions of this Warrant with 
  

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 respect to the rights and interests of the Holder after the dividend or distribution to the end that the provisions of
this Warrant shall be applicable after such dividend or distribution, as near as reasonably may be, in relation to any shares deliverable after the dividend or distribution upon exercise of this Warrant. 
  
 Section 2.2. Mergers or Consolidations. If at any time while this
Warrant remains outstanding and unexpired, there shall be a capital reorganization of the shares of the Company’s capital stock (other than a combination, reclassification, exchange or subdivision otherwise provided for herein), or a merger or
consolidation of the Company with or into another corporation in which the Company is not the surviving corporation (collectively, a “Corporate Transaction”), then lawful provision shall be made so that the Holder shall thereafter
be entitled to receive, upon exercise of this Warrant, during the period specified in this Warrant, (A) the number of shares of stock or other securities or property of the successor corporation resulting from such Corporate Transaction to which a
holder of the securities deliverable upon exercise of this Warrant would have been entitled under the provisions of the agreement in such Corporate Transaction if this Warrant had been exercised immediately prior to such Corporate Transaction or (B)
cash equaling the value of the number of shares of stock or other securities or property of the successor corporation resulting from such Corporate Transaction to which a holder of the securities deliverable upon exercise of this Warrant would have
been entitled under the provisions of the agreement in such Corporate Transaction if this Warrant had been exercised immediately prior to such Corporate Transaction. Appropriate adjustment (as determined in good faith by the Company’s Board of
Directors) shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Holder after the Corporate Transaction to the end that the provisions of this Warrant shall be applicable after the
Corporate Transaction, as near as reasonably may be, in relation to any shares or other property deliverable after the Corporate Transaction upon exercise of this Warrant. 
  
 Section 2.3. Reclassification, Subdivision or Combination of Shares. If the Company at any time shall, by
subdivision, combination or reclassification or securities or otherwise, change any of the securities issuable under this Warrant into the same or a different number of securities of any other class or classes, this Warrant shall thereafter
represent the right to acquire such number and kind of securities as would have been issuable as a result of such change with respect to the securities issuable under this Warrant immediately prior to such subdivision, combination, reclassification
or other change. 
  
 Section 2.4. Fractional Shares. No
fractional shares of Common Stock shall be issued in connection with any exercise of this Warrant. In lieu of the issuance of such fractional share, the Company shall make a cash payment equal to the then fair market value of such fractional share
as determined by Section 1.4. 
  
 Section 2.5. Notice of
Adjustments. Whenever the number of securities purchasable under the terms of this Warrant at that Warrant Exercise Price shall be adjusted pursuant to Section 2 hereof, the Company shall promptly notify the Warrantholder in writing of such
adjustment, setting forth in reasonable detail the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated (including a description of the basis on which the Company’s Board of Directors
made any determination hereunder), and the number of shares of Warrant Stock or other securities exercisable after giving effect to such adjustment. 
  

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 ARTICLE 3. 
 REPRESENTATIONS AND COVENANTS OF THE COMPANY. 
  
 Section 3.1 Authority; Enforceability. This Warrant has been duly authorized and executed by the Company and is a valid and binding obligation of the Company enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting the enforcement of creditors’ rights. 
  
 Section 3.2. Representation Concerning Securities. The Company hereby represents and warrants to Holder that all the shares of Common Stock which
may be issued upon exercise of the right to purchase represented by this Warrant shall, upon issuance, be duly authorized, validly issued, fully paid and nonassessable and free of any liens and encumbrances except for restrictions provided herein or
under applicable federal and state securities laws. During the Exercise Period, the Company at all times will have authorized, and reserved for the purpose of the issue upon the exercise of this Warrant, a sufficient number of shares of Common Stock
to provide for the exercise of the purchase rights evidenced by this Warrant. 
  
 Section 3.3. Shareholder Rights. Upon exercising the Warrant, Holder shall be entitled to the same rights, preferences, privileges and restrictions granted to any other holders of Common Stock. 
  
 Section 3.4 Impairment. The Company shall not, by amendment or
alteration of its corporate documents or through a reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the
terms to be observed or performed under this Warrant by the Company, but shall at all times in good faith assist in carrying out of all the terms of this Warrant and in taking all such action as may be necessary or appropriate to protect
Holder’s rights under this Article against impairment. 
  
 ARTICLE 4. 
 REPRESENTATIONS AND WARRANTIES OF HOLDER. 
  
 Section 4.1. Purchase for Own Account. Holder represents and warrants that it is acquiring the Warrant and the Common
Stock (collectively, the “Securities”) solely for its own account for investment and not with a view to, or for resale in connection with, any distribution thereof within the meaning of the Securities Act of 1933, as amended (the
“Securities Act”). Holder further represents that it does not have any present intention of selling, offering to sell or otherwise disposing of or distributing the Securities or any portion thereof and that the entire legal and
beneficial interest of the Securities it is acquiring is being acquired for, and will be held for the account of, Holder only and neither in whole nor in part for any other person. 
  
 Section 4.2. Accredited Investor; Informed and Knowledgeable Decision. Holder is an accredited investor as defined in
Rule 501(a) of Regulation D promulgated under the Securities Act. Holder hereby agrees, represents and warrants that it is aware of the Company’s business 
  

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 affairs and financial condition and has acquired sufficient information about the Company to reach an informed and
knowledgeable decision to acquire the Securities. Holder further represents and warrants that it has discussed the Company and its plans, operations and financial condition with its officers, has received all such information as he deems necessary
and appropriate to enable it to evaluate the financial risk inherent in making an investment in the Securities. 
  
 Section 4.3. Company Disclosure. Holder hereby agrees, represents and warrants that the Company has disclosed to Holder that the Securities have
not been registered under the Securities Act or under any state securities laws and must be held indefinitely unless a transfer of it is subsequently registered under the Securities Act or an exemption from such registration is available.

  
 Section 4.4. Rule 144. The Holder hereby agrees,
represents and warrants that the Holder is aware of the provisions of Rule 144, promulgated under the Securities Act. 
  
 ARTICLE 5. 
 MISCELLANEOUS. 

 
 Section 5.1. Term. This Warrant is exercisable, in whole or in
part, at any time during the Exercise Period. 
  
 Section 5.2.
Legends. This Warrant and the certificate(s) representing shares of Common Stock issuable upon exercise of this Warrant shall be imprinted with a legend in substantially the following form: 
  
 THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY JURISDICTION OF THE UNITED STATES. THE SECURITIES MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT
AND UNDER THE APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN OPINION OF COUNSEL TO THE COMPANY OR OTHER COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, IF REQUESTED BY THE COMPANY, THAT THERE IS AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND SUCH LAWS. 
  
 THE
CERTIFICATE, THE STOCK OF THE CORPORATION EVIDENCED THEREBY AND THE RIGHTS OF THE HOLDER THEREOF ARE SUBJECT TO ALL RESTRICTIONS AND ORDERS PRESENTLY OR HEREAFTER IMPOSED BY THE NEVADA GAMING CONTROL ACT AND THE REGULATIONS OF THE NEVADA GAMING
COMMISSION AND THE STATE GAMING CONTROL BOARD ISSUED PURSUANT THERETO, AS MAY BE, IN EFFECT FROM TIME TO TIME; AND 
  
 BENEFICIAL OWNERS OF THE VOTING SECURITIES ISSUED BY THIS CORPORATION ARE SUBJECT TO THE REGULATORY PROVISIONS OF THE NEVADA GAMING CONTROL ACT (NRS
463.010 ET SEQ.) AND THE REGULATION OF THE NEVADA GAMING COMMISSION. IF AT ANY TIME THE NEVADA GAMING COMMISSION FINDS A BENEFICIAL OWNER OF SUCH SECURITIES TO BE UNSUITABLE TO HOLD SUCH SECURITIES, THE BENEFICIAL OWNER MUST DISPOSE OF THE
SECURITIES. THE LAWS AND GAMING REGULATIONS OF THE STATE OF NEVADA RESTRICT THE RIGHTS OF A BENEFICIAL OWNER UNDER CERTAIN CIRCUMSTANCES (I) TO RECEIVE ANY DIVIDEND OR INTEREST UPON SUCH SECURITIES, OR (II) TO EXERCISE DIRECTLY OR INDIRECTLY ANY
VOTING RIGHTS CONFERRED BY SUCH SECURITIES; OR (III) TO RECEIVE ANY REMUNERATION IN ANY FORM FROM THE CORPORATION FOR SERVICES RENDERED OR OTHERWISE. 
  
 Section 5.3. Registration. Pursuant to the terms of the Stock Purchase Agreement by and between the Holder and the Company entered into as of the
date hereof, the Company shall prepare and file a registration statement under the Act covering the resale of the shares issuable upon exercise of this Warrant by the Holder. 
  

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 Section 5.4. Compliance with Securities Laws on Transfer. The Securities may not be transferred or
assigned in whole or in part without compliance with applicable federal and state securities laws by the transferor and the transferee (including, without limitation, the delivery of investment representation letters and legal opinions of both
transferor and transferee reasonably satisfactory to the Company, as reasonably requested by the Company). 
  
 Section 5.5. Transfer Restrictions. Holder may not transfer or assign this Warrant in whole or in part without the prior written consent of the
Company. 
  
 Section 5.6. Notices. All notices and other
communications from the Company to Holder, or vice versa, shall be deemed delivered and effective when a fax is received, when given personally or 5 days after mailing by first-class registered or certified mail, postage prepaid, at such address and
fax number as may have been furnished to the Company or Holder, as the case may be, in writing by the Company or Holder from time to time. 
  
 Section 5.7. Waiver. This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by
the party against which enforcement of such change, waiver, discharge or termination is sought. 
  
 Section 5.9. Costs and Expenses. If any party to this Warrant brings an action to enforce its rights under this Warrant, the prevailing party shall
be entitled to recover its reasonable out-of-pocket costs and expenses, including without limitation reasonable attorneys’ fees, incurred in connection with such action, including any appeal of such action. 
  
 Section 5.10. Dispute. Any provision of this Warrant which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of
such provision in any other jurisdiction. This Warrant shall not be construed so as to confer any right or benefit upon any person other than the Company and the Holder and each of their respective successors and permitted assigns. This Warrant
contains the whole and entire agreement of the parties with respect to the subject matter contained herein, superseding any and all prior or contemporaneous agreements or understandings. 
  
 Section 5.11. Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State
of Nevada, without giving effect to its principles regarding conflicts of law. 
  

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	COMPANY:
	
	 THE SANDS REGENT,
 a Nevada
corporation

		
	By:	 	  

	 	 	Ferenc B. Szony
	 	 	President and Chief Executive Officer

  
  
 SIGNATURE PAGE TO THE SANDS REGENT WARRANT 

 APPENDIX 1 
  
 NOTICE OF EXERCISE 
  
 1. The undersigned hereby elects to purchase              shares of the Common Stock of
The Sands Regent pursuant to the terms of the attached Warrant. 
  
 2. Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name, and such legal title as is specified below: 
  

					
			
	 	 	
	 	 
	 	 	(Name)	 	 
			
	 	 	
	 	 
			
	 	 	
	 	 
			
	 	 	
	 	 
			
	 	 	
	 	 
	 	 	(Address)	 	 

  
 3. The undersigned
represents it is acquiring the shares solely for its own account and not as a nominee for any other party and not with a view toward the resale or distribution thereof except in compliance with applicable securities laws. 
  

					
			
	 	 	 	 	

	 	 	 	 	(Signature)
	 	 	 	 	 
	
	 	 	 	 
	(Date)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 certificate for Old Shares so surrendered has been properly endorsed (or otherwise put in proper form for transfer).

  
 (c) If any such deficiency is neither corrected nor waived,
Mellon shall 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. 
  

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 9. Cancellation of Old Shares. As of the Effective Time, Mellon will become the sole recordkeeping agent
for the Old Shares, and shall maintain such records in accordance with its standard practices. Upon the exchange of Old Shares, the certificates representing such Old Shares will be physically canceled by Mellon, posted to the records Mellon
maintains, and the certificate for the New Shares will be issued to the appropriate holder(s) and cash for any fractional shares shall be distributed to the appropriate holder(s). 
  
 10. Dividends and Distributions on Unexchanged Old Shares. No dividends or other distributions that are declared after the
Effective Time on New Shares and payable to holders of records thereof after the Effective Time will be paid to persons entitled by reason of the Reverse Stock Split to receive New Shares until such persons surrender their certificates formerly
representing Old Shares. Upon such surrender, Mellon shall pay to the person in whose name the New Shares are issued any dividends or other distributions having a record date after the Effective Time and payable with respect to such New Shares
between the Effective Time and the surrender. In no event shall any interest on such dividends or other distributions be payable by Mellon. The Company shall deposit, or cause to be deposited with Mellon, federal or other immediately available
funds, sufficient to pay for dividends and distributions on all unexchanged certificates formerly representing Old Shares and Mellon will hold such funds for payment or distribution to the holders of such unexchanged certificates. 
  
 11. Report of Exchange Activity. Mellon will periodically (and at any time upon
the Company’s request) forward to the Company a report of the number of Old Shares represented by certificates surrendered during the exchange and the number of New Shares issued in exchange therefor. 
  
 12. Tax Reporting. 
  
 (a) On or before January 31st of the year following the year the
“cash-in-lieu” payment is made, Mellon shall prepare and mail to each stockholder who received cash in lieu of fractional shares of New Shares, other than stockholders who demonstrate their status as nonresident aliens in accordance with
United States Treasury Regulations (“Foreign Stockholders”), a Form 1099-B reporting the amount of such cash, in accordance with Treasury Regulations. Mellon shall prepare and file copies of such Forms 1099-B by magnetic tape with the
Internal Revenue Service on or before February 28th of the year following the year of the payment, in accordance with Treasury Regulations. 
  
 (b) On or before January 31st of the year following the year of the dividend payment is made, Mellon shall prepare and mail to each stockholder who
received any dividends held pending exchange of the Old Shares, other than stockholders who demonstrate their status as Foreign Stockholders, a Form 1099-DIV reporting the amount of such cash, in accordance with Treasury Regulations. Mellon shall
also prepare and file copies of such Forms 1099-DIV by magnetic tape with the Internal Revenue Service on or before February 28th of the year following the year of the payment, in accordance with Treasury Regulations. 
  

 5 

 
(c) Should any issue arise regarding federal income tax reporting or withholding, Mellon shall take such reasonable action as the Company may reasonably
request in writing. Such action may be subject to additional fees. 
  
 13.
Unexchanged Stockholders. No later than six months after the Effective Time, Mellon shall mail a follow-up letter to all stockholders who did not surrender their Old Share certificates for exchange or supply an affidavit and bond of
indemnity pursuant to Section 8 of this Agreement. The follow-up letter will be mailed with a Letter of Transmittal, return envelope, and W-9 Guidelines. 
  
 14. Escheatment. Mellon shall identify, report and deliver all unexchanged securities and related unclaimed property to all states and jurisdictions for the
Company in accordance with the applicable abandoned property law. 
  
 15.
Authorizations and Protection. As agent for the Company hereunder, Mellon: 
  
 (a) may rely on and shall be fully authorized and protected in acting upon any certificate, instrument, opinion, notice, letter, telegram, telex, facsimile transmission or other document or security delivered to
Mellon and believed by Mellon to be genuine and to have been signed by the proper party or parties; 
  
 (b) may rely on and shall be fully authorized and protected in acting upon the written, telephonic and oral instructions of any authorized representative
of the Company with respect to any matter relating to Mellon acting as Exchange Agent pursuant to this Agreement; 
  
 (c) may perform any of its duties hereunder either directly or by or through agents or attorneys and Mellon shall not be liable or responsible for any
intentional misconduct or gross negligence on the part of any agent or attorney appointed with reasonable care hereunder; and may consult with counsel satisfactory to Mellon (including internal counsel), and the advice of such counsel shall be full
and complete authorization and protection in respect of any action taken, suffered, or omitted by Mellon hereunder in good faith and in accordance with the advice of such counsel; 
  
 (d) shall be regarded as making no representations and having no responsibilities as to the validity, sufficiency, value, or
genuineness of any certificates or the Old Shares represented thereby surrendered hereunder or New Shares issued in exchange therefor, and will not be required to or be responsible for and will make no representations as to, the validity,
sufficiency, value or genuineness of the Reverse Stock Split; 
  
 (e) shall not be liable or responsible for any failure on the part of the Company or any other party to comply with any of its obligations relating to the Reverse Stock Split, including without limitation obligations under applicable
securities laws; 
  
 (f) shall have no obligation to make any
exchange unless the Company shall have provided a sufficient number of certificates for New Shares, or to make any payment for fractional shares unless the Company shall have provided the necessary federal or immediately available funds to pay in
full amounts due and payable with respect thereto; 
  

 6 

 (g) shall not be liable to a holder of Old Shares for any New Shares or dividends thereon or, if
applicable, cash in lieu of fractional interests, delivered to a public official pursuant to applicable abandoned property law; 
  
 (h) shall not be obligated to take any legal action hereunder; if, however, Mellon determines to take any legal action hereunder, and where the taking of
such action might, in Mellon’s judgment, subject or expose it to any expense or liability, Mellon shall not be required to act unless it shall have been furnished with an indemnity satisfactory to it; 
  
 (i) shall have no duties or obligations other than those specifically set
forth herein or as may subsequently be agreed to in writing by Mellon and the Company; 
  
 (j) shall not be authorized, and shall have no obligation, to pay any brokers, dealers, or soliciting fees to any person. 
  
 16. Indemnification. The Company covenants to indemnify Mellon for, and hold Mellon harmless from and against, any loss,
liability, claim or expense (“Loss”) arising out of or in connection with its duties under this Agreement or this appointment, including the costs and expenses of defending itself against any Loss or enforcing this Agreement, except to the
extent such Loss shall have been determined by a court of competent jurisdiction to be a result of Mellon’s gross negligence or intentional misconduct. 
  
 17. Limitation of Liability. 
  
 (a) In the absence of gross negligence or intentional misconduct on its part, Mellon shall not be liable for any action taken, suffered, or omitted by it
or for any error of judgment made by it in the performance of its duties under this Agreement. Anything in this agreement to the contrary notwithstanding, in no event shall Mellon be liable for special, indirect, incidental or consequential loss or
damage of any kind whatsoever (including but not limited to lost profits), even if Mellon has been advised of the possibility of such damages and regardless of the form of action. Any liability of Mellon will be limited to the amount of fees paid by
the Company hereunder. 
  
 (b) In the event any question or
dispute arises with respect to the proper interpretation of this Agreement or Mellon’s duties hereunder or the rights of the Company or of any stockholders surrendering certificates for Old Shares in the exchange, Mellon shall not be required
to act and shall not be held liable or responsible for refusing to act until the question or dispute has been judicially settled (and Mellon may, if it deems it advisable, but shall not be obligated to, file a suit in interpleader or for a
declaratory judgment for such purpose) by final judgment rendered by a court of competent jurisdiction, binding on all stockholders and parties interested in the matter which is no longer subject to review or appeal, or settled by a written document
in form and substance satisfactory to Mellon and executed by the Company and each such stockholder and party. In addition, Mellon may require for such purpose, but shall not be obligated to require, the execution of such written settlement by all
the stockholders and all other parties that may have an interest in the settlement. 
  

 7 

 18. Representations, Warranties and Covenants. The Company represents, warrants and covenants that (a) it
is duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation, (b) the execution, delivery and performance of the transactions contemplated hereby (including without limitation this Agreement) have
been duly authorized by all necessary corporate action and will not result in a breach of or constitute a default under the certificate of incorporation or bylaws of the Company or any indenture, agreement or instrument to which it is a party or is
bound, (c) this Agreement has been duly executed and delivered by the Company and constitutes the legal, valid, binding and enforceable obligation of it, (d) the Reverse Stock Split will comply in all material respects with all applicable
requirements of law and (e) to the best of its knowledge, there is no material litigation pending or threatened as of the date hereof in connection with the Reverse Stock Split. 
  
 19. Notices. All notices, demands and other communications given pursuant to
the terms and provisions hereof shall be in writing, shall be deemed effective on the date of receipt, and may be sent by facsimile, overnight delivery services, or by certified or registered mail, return receipt requested to: 
  
  

			
	 If to the Company:
	  	with an additional copy to:
		
	SMTC Corporation	  	Ropes & Gray LLP
	635 Hood Road	  	One International Place
	Markham, Ontario	  	Boston, MA 02110
	Canada L3R 4N6	  	Attn: Alfred O. Rose, Esq.
	Attn: Chief Financial Officer	  	Tel: 617-951-7000
	Tel: 905-479-1810	  	Fax: 617-951-7050
	Fax: 905-479-5326	  	 

  

			
	If to Mellon:	  	with an additional copy to:
		
	Mellon Investor Services LLC	  	Mellon Investor Services LLC
	Overpeck Centre	  	Overpeck Centre
	85 Challenger Road	  	85 Challenger Road
	Ridgefield Park, NJ 07660	  	Ridgefield Park, NJ 07660
	Attn: Cheryl Smith	  	Attn: Legal Department
	Tel: 201-329-8846	  	Tel: 201-373-7155
	Fax: 201-296-4774	  	Fax: 201-373-7166

  
 20. Specimen Signatures.
Set forth in Exhibit A hereto is a list of the names, titles and specimen signatures of the persons authorized to act for the Company under this Agreement. 
  

 8 

 21. Fees. The Company shall pay to Mellon compensation in accordance with the fee schedule
(Appendix B of the Letter of Intent) hereto, together with reimbursement for out-of-pocket expenses, including reasonable fees and disbursements of counsel, regardless of whether any Old Shares are surrendered to Mellon, for Mellon’s services
as Exchange Agent hereunder. All amounts owed to Mellon hereunder are due upon receipt of the invoice. Delinquent payments are subject to a late payment charge of one and one half percent commencing sixty days from the invoice date. 
  
 22. Termination. The Company may terminate this Agreement at any time by so
notifying Mellon in writing. Mellon may terminate this Agreement upon 30 days’ prior notice to the Company. Upon any such termination, Mellon shall be relieved and discharged of any further responsibilities with respect to its duties hereunder.
Subject to payment of all outstanding fees and expenses due to Mellon hereunder, Mellon will forward to the Company or its designee promptly any certificate for Old Shares, Letter Of Transmittal or other document that Mellon may receive after its
appointment has so terminated. 
  
 23.
Miscellaneous. 
  
 (a) This Agreement
shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to conflict of laws rules or principles. 
  
 (b) No provision of this Agreement may be amended, modified or waived, except in a written document signed by both parties. 
  
 (c) In the event that any claim of inconsistency between this Agreement and
the terms of the Reverse Stock Split arise, as they may from time to time be amended, the terms of the Reverse Stock Split shall control, except with respect to the duties, liabilities and rights, including compensation and indemnification of Mellon
as Exchange Agent, which shall be controlled by the terms of this Agreement. 
  
 (d) If any provision of this Agreement shall be held illegal, invalid, or unenforceable by any court, this Agreement shall be construed and enforced as if such provision had not been contained herein and shall be
deemed binding and enforceable to the full extent permitted by applicable law. 
  
 (e) This Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the respective successors and assigns of the parties hereto. 
  
 (f) This Agreement may not be assigned by either party without prior written consent of both parties. 
  
 (g) Mellon shall not be liable for any failure or delay arising out of
conditions beyond its reasonable control including, but not limited to, work stoppages, fires, civil disobedience, riots, rebellions, storms, electrical, mechanical, computer or communications facilities failures, acts of God or similar occurrences.

  

 9 

 (h) Sections 13, 14, 15, 16, 17 and 22 hereof shall survive termination of this Agreement. 
  
 IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their duly
authorized officers as of the day and year above written. 
  

			
	SMTC CORPORATION
		
	By:	 	 /s/ John Caldwell

	Name:	 	John Caldwell
	Title:	 	President and Chief Executive Officer
	
	MELLON INVESTOR SERVICES LLC
		
	By:	 	 /s/ Cheryl Smith

	Name:	 	Cheryl Smith
	Title:	 	Senior Event Manager

  

			
	Exhibit A	 	List of Authorized Representatives
	Exhibit B	 	Terms and Fee Schedule

  

 10 

 EXHIBIT A 
  

LIST OF AUTHORIZED REPRESENTATIVES 
  

					
	 Name

	 	 Title

	 	 Specimen Signature

			
	  

	 	  

	 	  

			
	  

 	 	  

 	 	  

 
			
	  

 	 	  

 	 	  

 
			
	  

 	 	  

 	 	  

 

  

 11 

 EXHIBIT B 
  

Terms 
  
 Mellon Investor Services (MIS) has prepared the following pricing information in response to your request for services. This proposal is based on the following terms: 
  

	•	A Reverse Split for all outstanding shares of SMTC Corporation. 

  

	•	The transaction is expected to go effective in the 2nd or 3rd quarter of 2004. 

  

	•	Approximately, 85 registered shareholders are eligible for the exchange. 

  

	•	SMTC Corp. has no unexchanged classes or issues eligible for the reverse split exchange 

  

	•	The reverse exchange rate has been not been set. 

  

	•	Fractional shares will be paid in cash in lieu of fractions (CIL) 

  

	•	MIS Call Center hours of operation are 9:00am to 7:00pm EST 

  

	•	MIS will handle the Special Meeting services associated with the reverse split. 

  

	•	MIS will handle the printing of ancillary documents pertaining to the exchange. 

  

	•	Standard LT package to include LT, cover letter, and return envelope. 

  

	•	The fees stated in Appendix B must be paid before the effective date in order to commence processing of the reverse split. 

  

	•	Our standard LT format and procedures will be adhered to. 

  

	•	MIS will provide shareholder location and escheat services. 

  

	•	Our services will be retained until the exchange is either completed or escheated. 

  

 12

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