EXHIBIT 10.6

UNDERWRITING AGREEMENT

March 3, 2004

SMTC Corporation

- and -

SMTC Manufacturing Corporation of Canada

635 Hood Road

Markham, Ontario

Canada L3R 4N6

Dear Sirs/Mesdames:

The undersigned, Orion Securities Inc. (the “Lead Underwriter”), CIBC World Markets Inc., GMP Securities Limited and RBC Dominion Securities Inc. (the Lead Underwriter, CIBC World Markets Inc., GMP Securities Limited and RBC Dominion Securities Inc. are hereinafter collectively referred to as the “Underwriters” and each individually, an “Underwriter”) understand that SMTC Manufacturing Corporation of Canada (the “Company”), an indirect wholly-owned subsidiary of SMTC Corporation (“SMTC”), proposes to create, issue, offer and sell 33,350,000 special warrants (the “Special Warrants”), subject to the terms and conditions set out below, at a price of Cdn. $1.20 (the “Issue Price”) per Special Warrant (the “Offering”). The total gross proceeds of the Offering to the Company will be Cdn. $40,020,000.

The Special Warrants will be issued pursuant to the provisions of a special warrant indenture and escrow agreement to be dated the date hereof (the “Special Warrant Indenture”) and made between the Company and CIBC Mellon Trust Company (the “Trustee”). The specific attributes of the Special Warrants will be set forth in the Special Warrant Indenture. The Special Warrant Indenture will provide, among other things, that holders of Special Warrants will be entitled to receive for each Special Warrant held, upon the conversion thereof and without payment of any additional consideration, one unit (and including any amounts forming part of a Penalty Unit (as defined below), a “Unit”) comprised of one exchangeable share in the capital of the Company (including any such shares forming part of a Penalty Unit, a “Special Warrant Share”) and one-half of one exchangeable share purchase warrant (each whole warrant, a “Warrant”) for each Special Warrant held, subject to adjustment as described in Section 5 and in certain other circumstances specified in the Special Warrant Indenture. The Special Warrant Indenture will otherwise be in such form and contain such terms as may be approved by the Underwriters, the Company, SMTC and their respective counsel. The Special Warrants will be exercisable by the holders thereof, at any time on or before 5:00 p.m. (Toronto time) on the date (the “Special Warrant Expiry Date”) that is the earlier of: (i) the sixth Business Day (as defined below) after the date that a receipt is issued by the securities regulatory authority in the Qualifying Jurisdiction (as defined below) in which the holder is resident

(holders of Special Warrants resident outside of Canada will be deemed to be residents of the Province of Ontario for these purposes) for a (final) prospectus qualifying the distribution of the Units issuable upon exercise of the Special Warrants (the “Prospectus Qualification Date”); and (ii) the first Business Day following the date that is 12 months after the Closing Date (as defined below). Special Warrants not exercised prior to the Special Warrant Expiry Date will be deemed to have been exercised by the Trustee on behalf of the holders thereof, without any further action on the part of the holders, at 4:59 p.m. (Toronto time) on the Special Warrant Expiry Date.

The exchangeable shares in the capital of the Company are referred to herein as “Exchangeable Shares”; the Exchangeable Shares issuable upon the conversion of the Warrants are referred to herein as “Warrant Shares”; the common shares in the capital of SMTC are referred to herein as “Common Shares”; and the Common Shares issuable upon the exchange of the Exchangeable Shares are referred herein as “Underlying Common Shares”.

The Warrants will be issued pursuant to the provisions of a warrant indenture to be dated the date hereof (the “Warrant Indenture”) and made between the Company and the Trustee. The specific attributes of the Warrants will be set forth in the Warrant Indenture. The Warrant Indenture will provide, among other things, that each whole Warrant will entitle the holder thereof to acquire one Exchangeable Share for each Warrant held, subject to adjustment in certain other circumstances specified in the Warrant Indenture, and will be exercisable by the holders thereof at any time on or before 5:00 p.m. (Toronto time) on the date (the “Warrant Expiry Date”) that is the first Business Day following the date that is five years after the Closing Date at a price of Cdn. $1.85 per Warrant Share, subject to adjustment in certain circumstances specified in the Warrant Indenture. The Warrant Indenture shall otherwise be in such form and contain such terms as may be approved by the Underwriters, the Company, SMTC and their respective counsel.

Each Special Warrant Share and Warrant Share will be exchangeable at the option of the holder for one Underlying Common Share, subject to adjustment in certain circumstances specified in the Support Agreement. On or after July 27, 2015, subject to acceleration in certain circumstances, the Company or one of its affiliates will redeem all of the outstanding Exchangeable Shares by delivering Common Shares to holders of the Exchangeable Shares on a one-for-one basis, subject to adjustment in certain circumstances.

Based on the foregoing and subject to the terms and conditions set out below, the Underwriters offer to purchase severally in the respective percentages set out in Section 17, and by its acceptance hereof the Company hereby agrees to issue and sell to the Underwriters, all but not less than all of, the Special Warrants at the Closing Time (as defined below).

In consideration of the Underwriters’ agreement to purchase the Special Warrants that will result from acceptance by the Company and SMTC of this offer, and in consideration of the other services to be rendered by the Underwriters in connection therewith, including assisting in preparing documentation relating to the Special Warrants, including the Preliminary Prospectus and the Prospectus (each as defined below), and performing administrative work in connection with the distribution of the Special Warrants, the Company and SMTC, jointly and severally, agree to pay to the Underwriters at the Closing Time a cash fee (the “Underwriters’ Fee”) of $2,401,200, representing $0.072 (exclusive of federal goods and services tax, if applicable) for each Special Warrant issued and sold at the Closing Time.

- 2 -

It is acknowledged and agreed that the Underwriters may arrange for substituted purchasers (the “Substituted Purchasers”) to purchase Special Warrants on their behalf, it being agreed and understood that to the extent that the Underwriters do not arrange for Substituted Purchasers the purchase obligations hereunder shall continue to be obligations of the Underwriters and if, and only to the extent that, Substituted Purchasers purchase Special Warrants at the Closing Time, the obligations of the Underwriters to do so will be reduced, rateably in accordance with the respective percentages set out in Section 17, by the number of Special Warrants purchased from the Company by Substituted Purchasers. It is acknowledged and agreed that the Underwriters will be permitted to appoint other registered dealers (or other dealers duly qualified in their respective jurisdictions) (a “Selling Firm”) as their agents to assist in the Offering of Special Warrants to Substituted Purchasers and the Underwriters may determine the remuneration to such other dealers appointed by them, provided that any remuneration payable to any Selling Firm shall be for the account of the Underwriters and the Company and SMTC shall not be required to pay to the Underwriters more than the Underwriters’ Fee.

TERMS AND CONDITIONS

The following are additional terms and conditions of this Agreement.

“affiliate” means an affiliated entity for purposes of section 1.2 of Ontario Securities Commission Rule 45-501 under the Securities Act (Ontario), as constituted at the date of this Agreement;

“Agreement” means the agreement resulting from the acceptance by the Company and SMTC of the terms of the offer set forth herein;

“Alternative Business Transaction” means (a) the issuance of equity securities of the Company or SMTC or securities of the Company or SMTC convertible or exchangeable into equity securities of the Company or SMTC resulting in the issuance in excess of 10% of the aggregate number of Exchangeable Shares and Common Shares outstanding on February 17, 2004 on a fully diluted basis (without duplication and other than (i) pursuant to SMTC’s stock option plan or share purchase plan, and (ii) any instrument outstanding on February 17, 2004 that is convertible into or exchangeable for voting securities of SMTC) or (b) a business transaction involving a change in the control of SMTC including a merger, amalgamation, arrangement, take-over bid, insider bid, reorganization, joint venture, or sale of all or substantially all of the assets of SMTC (which, for greater certainty, excludes any such business transaction that is an internal reorganization currently contemplated in SMTC’s business plans). An

- 3 -

Alternative Business Transaction will not include a restructuring of SMTC’s existing bank debt (i) without third party equity capital; or (ii) that is on terms and conditions and that provides SMTC’s existing lenders with consideration that in aggregate is less favourable than as provided in Exhibit “B”;

“Amendment” means any amendment to the Preliminary Prospectus or the Prospectus;

“Auditors” means KPMG LLP, the firm of chartered accountants duly appointed as auditors of the Company and SMTC for the time being;

“Business Day” means any day except Saturday, Sunday or a day on which chartered banks are not open for business in Toronto, Ontario;

“Canadian Securities Laws” means, the applicable securities laws of the Qualifying Jurisdictions and the respective rules and regulations made and forms prescribed thereunder, together with all applicable published policy statements, blanket orders and rulings of the Securities Commissions and all discretionary orders or rulings, if any, of the Securities Commissions made in connection with the transactions contemplated by this Agreement;

“Closing Date” means the date hereof;

“Closing Time” means 10:00 a.m. (Toronto time) on the Closing Date or such other time on the Closing Date as the Company and the Lead Underwriter may agree;

“Debt Restructuring Agreement” means an agreement between the Company, HTM Holdings Inc., SMTC, Lehman Commercial Paper Inc., The Bank of Nova Scotia, General Electric Capital Corporation, IBM Credit Corporation, Silver Point Capital L.P., Royal Bank of Canada, Comerica Bank, AMMC CDO I Limited and AMMC CDO II Limited dated February 17, 2004 with respect to the financial restructuring of the Company and SMTC;

“Disclosure Letter” means the letter dated the date hereof from the Company and SMTC to the Underwriters in respect of the representations and warranties related to the Company and SMTC contained in this Agreement, in form satisfactory to the Underwriters, and which letter forms an integral part of this Agreement;

“distribution” means distribution or distribution to the public, as applicable, for the purposes of the Canadian Securities Laws or any of them;

“Escrow Agent” means CIBC Mellon Trust Company and its successors and assigns;

“Insolvency Event” means the occurrence of any of the following:

(i) SMTC or the Company (a) applies for or consents to the appointment of, or the taking of possession by, a receiver, custodian, administrator, trustee, liquidator

- 4 -

or other similar official for itself or for all or substantially all of its assets (b) makes a general assignment for the benefit of creditors or a proposal under the United States Bankruptcy Code, the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act (Canada) or the Winding-up and Restructuring Act (Canada) or a similar law of any applicable jurisdiction, (c) institutes any proceeding seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, dissolution, winding-up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any statute, rule or regulation relating to bankruptcy, insolvency, reorganization, relief or protection of debtors; or

(ii) any proceeding against the Company or SMTC has been commenced to: (a) adjudicate it a bankrupt or insolvent; (b) result in the liquidation, dissolution winding-up, reorganization, arrangement, adjustment, protection or relief or composition of it or its debts under any statute, rule or regulation relating to bankruptcy, insolvency, reorganization, relief or protection of debtors; or (c) result in the appointment of a receiver, custodian, administrator, trustee, liquidator or other similar official for it or for all or any material part of its assets, and, in each case, such proceeding remains undismissed or unstayed for a period of 45 days or any of the actions sought in such proceeding shall occur;

“Lock-up Agreements” means the voting/lock-up agreement dated February 17, 2004 made by Bain Capital, Inc. and Celerity EMSIcon, LLC, as the managers of EMSIcon Investments, LLC, a stockholder of SMTC;

“Material Agreements” means each of the following documents:

(i) this Agreement;

(ii) the Subscription Agreements;

(iii) the U.S. Subscription Agreements;

(iv) the Special Warrant Indenture;

(v) the Warrant Indenture;

(vi) the Lock-Up Agreements;

(vii) the Support Agreement; and

(viii) the Voting and Exchange Agreement;

“material change” means a material change for the purposes of the Canadian Securities Laws or any of them or where undefined under the applicable securities laws of a jurisdiction means a change in the business, operations or capital of the Company or any of its subsidiaries that would reasonably be expected to have a significant effect on the market price or value of any of the Company’s securities, and includes a decision to implement such a change made by the board of directors or senior management of the Company;

- 5 -

“material fact” means a material fact for the purposes of the Canadian Securities Laws or any of them or, where undefined under the applicable securities laws of a jurisdiction, means a fact that significantly affects, or would reasonably be expected to have a significant effect on, the market price or value of the Company’s securities;

“misrepresentation” means a misrepresentation for the purposes of the Canadian Securities Laws or any of them or, where undefined under the applicable Canadian Securities Laws of a jurisdiction, means: (i) an untrue statement of a material fact, or (ii) an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in the light of the circumstances in which it was made;

“MRRS” means the mutual reliance review system procedures provided for under National Policy 43-201 “Mutual Reliance Review System for Prospectuses and Annual Information Forms” among the securities commissions and other securities regulatory authorities in each of the provinces and territories of Canada;

“NASDAQ” means The NASDAQ Stock Market, Inc. and its successor and assigns;

“Person” means any individual, partnership, limited partnership, joint venture, sole proprietorship, company or corporation, trust, trustee, unincorporated organization, a government or an agency or political subdivision thereof and every other form of legal or business entity of any nature or kind whatsoever;

“Preliminary Prospectus” means the preliminary prospectus of the Company which qualifies the distribution of the Units upon the conversion of the Special Warrants and, unless the context otherwise requires, includes any Amendments or supplements thereto;

“Prospectus” means the (final) prospectus of the Company which qualifies the distribution of the Units upon the conversion of the Special Warrants and, unless the context otherwise requires any Amendments or supplements thereto;

“Prospectus Qualification Deadline” means 5:00 p.m. (Toronto time) on the date that is 90 consecutive days after the Closing Date;

“Qualification” means obtaining a receipt for the Prospectus under applicable Canadian Securities Laws;

“Qualifying Jurisdictions” means each of the provinces of Canada;

“Registration Qualification Deadline” means 5:00 pm. (Toronto time) on the date that is 120 consecutive days after the Closing Date;

- 6 -

“Registration Statement” means a registration statement on Form S-1 relating to the Underlying Common Shares filed with the SEC pursuant to subsection 7(d);

“SEC” means the United States Securities and Exchange Commission;

“Securities Commissions” means the Securities Commissions of the Qualifying Jurisdictions;

“Subscription Agreements” means the subscription agreements entered into between the Company and the Substituted Purchasers with respect to the Special Warrants, in such form as may be agreed to by the Company and the Lead Underwriter;

“Subsidiaries” means all of the direct and indirect subsidiaries of SMTC, including each of the following:

(i) SMTC Nova Scotia Company;

(ii) SMTC Manufacturing Corporation of Canada;

(iii) 940862 Ontario Inc.;

(iv) HTM Holdings, Inc.;

(v) SMTC Manufacturing Corporation of California;

(vi) SMTC Manufacturing Corporation of Texas;

(vii) SMTC Manufacturing Corporation of North Carolina;

(viii) SMTC Manufacturing Corporation of Colorado;

(ix) SMTC Manufacturing Corporation of Massachusetts;

(x) SMTC Mex Holdings;

(xi) SMTC de Chihuahua S.A. de C.V.;

(xii) SMTC Ireland Company;

(xiii) SMTC Teoranta;

(xiv) SMTC R & D Teoranta;

(xv) SMTC Manufacturing Corporation of Wisconsin;

(xvi) Qualtron Inc.

and “Subsidiary” means any of them;

- 7 -

“subsidiary” means a subsidiary entity for purposes of section 1.2 of Ontario Securities Commission Rule 45-501 under the Securities Act (Ontario), as constituted at the date of this Agreement and, for greater certainty, includes the Subsidiaries;

“Supplementary Material” means, collectively, all supplemental or additional or ancillary material, information, evidence, return, report, application, statement or document related to the Preliminary Prospectus, the Prospectus, any Amendment or the Registration Statement or each of them;

“Support Agreement” means the exchangeable share support agreement dated as of July 27, 2000 between the Company, SMTC and SMTC Nova Scotia Company;

“TSX” means the Toronto Stock Exchange and its successors and assigns;

“Underlying Securities” means, collectively, the Special Warrant Shares and the Warrants;

“Underwriters’ Disclosure” means, in respect of a document, information and statements relating solely to the Underwriters, or any of them, and furnished by them specifically for use in such document;

“United States” means the United States of America, its territories and possessions, any state of the United States, and the District of Columbia.

“U.S. GAAP” means United States generally accepted accounting principles;

“Voting and Exchange Agreement” means the voting and exchange trust agreement dated as of July 27, 2000 between the Company, SMTC, SMTC Nova Scotia Company and CIBC Mellon Trust Company, for and on behalf of the holders of Exchangeable Shares;

- 8 -

- 9 -

be held in escrow pursuant to the terms of the Special Warrant Indenture. The Trustee will hold the Escrowed Funds in trust for the holders of Special Warrants and disburse and deal with the same all on the terms of the Special Warrant Indenture. Until the Escrow Conditions (as defined below) are met, the Escrowed Funds will not become the property of the Company. Upon the Trustee having been provided with satisfactory evidence that (i) the Shareholder Approval (as defined below) and approval of the Debt Restructuring Agreement have been obtained, and (ii) no Insolvency Event has occurred and is continuing, and (iii) the Lead Underwriter is satisfied in its sole discretion, acting reasonably, that the terms of the Debt Restructuring Agreement have been complied with and simultaneously with the closing under the Debt Restructuring Agreement (collectively the “Escrow Conditions”), all Escrowed Funds, together with any interest thereon, will be released by the Trustee to the Company. If such evidence is not delivered to the Trustee within 90 days following the Closing, all Escrowed Funds then held by the Trustee, together with interest thereon, will be released by the Trustee to the holders of the Special Warrants pro rata to their holdings of Special Warrants.

- 10 -

Underwriter. Upon furnishing such notice, such Underwriter will be committed to purchase and the Company will be committed to sell in accordance with and subject to the terms of this Agreement the number of Reduced Special Warrants indicated in the notice. Delivery of, and payment for, any Reduced Special Warrants will be made at the offices of Goodmans LLP, Toronto, Ontario at 8:00 a.m. (Toronto time) on the third Business Day after the Option Exercise Date. The Company and SMTC will, within one Business Day of the date on which the Shareholders Meeting is held deliver to each Underwriter and Substituted Purchaser written notice as to whether the Shareholders Approval has been obtained. Without limiting the generality of the foregoing, the Company will deliver to the Lead Underwriter a copy of each document delivered by the Company to the Trustee pursuant to section 3.3 or section 6.1(j) of the Special Warrant Indenture concurrently with the delivery of the document to the Trustee.

If (i) the Offering is cancelled by the Company and SMTC and an Alternative Business Transaction is completed on or prior to February 17, 2005, the Company and SMTC will pay to the Lead Underwriter, in addition to amounts paid or payable to Lead Underwriter hereunder in reimbursement of the Lead Underwriter’s expenses, Cdn. $900,000 on completion of such Alternative Business Transaction, or (ii) the Offering is completed and SMTC fails to obtain the Shareholder Approval on or before the Shareholder Approval Deadline, as applicable, and an Alternative Business Transaction is completed on or prior to February 17, 2005, the Company and SMTC will jointly and severally pay to each Underwriter or Substituted Purchaser, as applicable, (with respect to the number of Exchangeable Shares included in Special Warrants that were held in escrow for the benefit of such Underwriter or Substituted Purchaser (or its assignees) at the time the shareholders of SMTC declined to approve the Offering minus the number of Exchangeable Shares purchased by such Underwriter or Substituted Purchaser (or its assignees) pursuant to the Option) an amount equal to one-half of the difference between (A) the average market price of the Exchangeable Shares based on the closing price of the Exchangeable Shares on the TSX for the period that is ten trading days leading up to the date of the Shareholders Meeting called to approve the Offering, and (B) Cdn. $1.20, such payment to be made in immediately available funds on completion of such Alternative Business Transaction.

If (i) the Prospectus Qualification Date does not occur on or before the Prospectus Qualification Deadline, or (ii) the date on which the Registration Statement becomes effective does not occur on or before the Registration Qualification Deadline, each Special Warrant exercised after the Prospectus Qualification Deadline will entitle the holder thereof to receive 1.1 Units without payment of additional consideration (in lieu of one Unit otherwise receivable, provided that the number of Units issuable on the conversion of a Special Warrant in such circumstances will be rounded to the nearest whole number, without any compensation therefor) (with the additional Units issuable in such circumstance being referred to herein as the “Penalty Units”) and each of the Company and SMTC will continue to use its commercially reasonable best efforts to (i) file, clear, and obtain a receipt for the Prospectus in the Qualifying Jurisdictions and (ii) file, and have declared effective, the Registration Statement; provided that the Company and SMTC will not be required to continue such efforts on or after July 4, 2004.

- 11 -

Each of the Underwriters severally, but not jointly or jointly and severally, represents, warrants, covenants and agrees with the Company and SMTC that:

- 12 -

Each of the Company and SMTC, jointly and severally, covenant and agree with each Underwriter and each Substituted Purchaser that:

- 13 -

compliance with all applicable Canadian Securities Laws and the applicable securities laws of the United States to enable the Special Warrants to be offered for sale and sold to Substituted Purchasers in the Qualifying Jurisdictions and the United States pursuant to Rule 903 or Rule 904 under the Securities Act and with the understanding that the Underwriter will comply with its covenants in Section 6 hereto;

- 14 -

actual, anticipated or threatened against the Company, in the financial condition, ownership, assets, liabilities (contingent or otherwise), business, affairs, prospects, capital or operations of SMTC, the Company or any Subsidiary, (ii) any adverse change (and, after date of issuance of a receipt for the Prospectus by the Securities Commissions, of any change) in any material fact contained or referred to in the Preliminary Prospectus, the Prospectus, any Amendment or any Supplementary Material, and (iii) the existence of any material fact which is, or may be, of such a nature as to render the Preliminary Prospectus, the Prospectus, any Amendment or any Supplementary Material untrue, false or misleading or result in a misrepresentation, it being understood and agreed that if the Company or SMTC determines, after consultation with the Underwriters, that an adverse material change or change in a material fact (and, after the date of issuance of a receipt for the Prospectus by the Securities Commissions, any material change or change in a material fact) has occurred which makes untrue or misleading any statement of a material fact contained in the Preliminary Prospectus, the Prospectus, any Amendment or any Supplementary Material, the Company and SMTC will:

- 15 -

restricting the offering, issuance of sale of the Special Warrants or the issuance or distribution of the Warrants, the Special Warrant Shares, the Warrant Shares or the Underlying Common Shares in the Qualifying Jurisdictions or the United States. Each of the Company or SMTC will use its commercially reasonable best efforts to prevent the issuance of any such stop order or such other order or ruling or, if issued, to obtain its lifting as soon as possible;

- 16 -

on a consolidated basis or in respect of any partial ownership interests in material properties, whether held through partnerships, co-ownerships, corporations or otherwise, incurred any material liabilities or obligations (absolute, accrued, contingent or otherwise) or entered into any material transaction not in the ordinary course of business; there has been no material change (financial or otherwise) in the consolidated assets, financial position, voting control, business, affairs or results of operations of SMTC and the Subsidiaries on a consolidated basis, and there has occurred no event and no state of facts exists that, under the Canadian Securities Laws or the securities laws of the United States, is required to be publicly disclosed that has not been so publicly disclosed;

- 17 -

The Company and SMTC will cause to be delivered to the Underwriters:

- 18 -

- 19 -

Warrants, the Special Warrant Shares, the Warrant Shares or the Underlying Common Shares and none of the Company, SMTC nor any of its subsidiaries is aware of any existing grounds on which such action, suit, proceeding or inquiry might be commenced;

- 20 -

- 21 -

federal, provincial, municipal, foreign or other governmental or quasi-governmental department, commission, board, bureau or agency which has resulted in, or may result in, a Material Adverse Change, or which affects or may affect the distribution of any of the Special Warrants, the Warrants, the Special Warrant Shares, the Warrant Shares and the Underlying Common Shares and neither the Company nor SMTC is aware of any existing grounds on which such action, suit, proceeding or inquiry might be commenced;

- 22 -

used herein, a “Repayment Event” means any event or condition which gives the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by SMTC or any subsidiary thereof;

- 23 -

- 24 -

- 25 -

groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws and regulations relating to the release or threatened release of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum or petroleum products (collectively, “Hazardous Materials”) or to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials (collectively, “Environmental Laws”), (B) SMTC and its subsidiaries have all permits, authorizations and approvals required under any applicable Environmental Laws and are each in compliance with their requirements, (C) there are no pending or, to the knowledge of SMTC, threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of non-compliance or violation, investigation or proceedings relating to any Environmental Laws against SMTC or any of its subsidiaries, and (D) there are no events or circumstances that would reasonably be expected to form the basis of an order for clean-up or remediation, or an action, suit or proceeding by any private party or governmental body or agency, against or affecting the Company or any of its subsidiaries relating to Hazardous Materials or any Environmental Laws;

- 26 -

- 27 -

- 28 -

all in form and substance satisfactory to the Underwriters, acting reasonably;

- 29 -

The obligation of the Underwriters to execute the Underwriters’ certificates to be contained in the Preliminary Prospectus, the Prospectus and any Amendments thereto shall be conditional upon:

- 30 -

- 31 -

except (a) in an offshore transaction in accordance with Rule 903 of Regulation S or (b) pursuant to an available exemption from the registration requirements of the Securities Act. Accordingly, the Special Warrants will be offered or sold in the United States as provided in paragraphs (ii) through (xii) below and neither the Underwriter nor any of its affiliates nor any persons acting on its behalf, has made or will make (except as permitted in paragraphs (ii) through (xii) below) (A) any offer to sell or any solicitation of an offer to buy, any Special Warrants to any person in the United States or a U.S. Person, (B) any sale of Special Warrants to any purchaser unless, at the time the buy order was or will have been originated, the purchaser was outside the United States and not a U.S. Person, or such Underwriter, affiliate or person acting on behalf of either, reasonably believed that such purchaser was outside the United States and not a U.S. Person, or (C) any Directed Selling Efforts in the United States with respect to any of the Special Warrants;

- 32 -

- 33 -

- 34 -

- 35 -

If any matter or thing contemplated by this Section 14 shall be asserted against any Person in respect of which indemnification is or might reasonably be considered to be provided, such Person (the “Indemnified Person”) shall notify the party from whom indemnity is being sought (the “Indemnifying Party”) as soon as possible of the nature of such claim, and the Indemnifying Party shall be entitled, but not required, to assume the defence of any suit brought to enforce such claim; provided, however, that the defence shall be through legal counsel reasonably acceptable to the Indemnified Person. The omission to so notify the Indemnifying Party will not relieve it from liability which it may have to any Indemnified Person provided that the Indemnifying Party is not materially prejudiced by such omission.

in which event such fees and disbursements shall be paid on an on-going basis by the Indemnifying Party to the extent that such fees have been reasonably incurred provided that in no event shall the Company or SMTC be responsible for the fees and expenses of more than one separate legal counsel in respect of all Indemnified Persons.

- 36 -

The relative benefits received by the Indemnifying Party on the one hand and the Underwriters on the other hand shall be deemed to be in the proportion that the total proceeds received from the distribution of the Special Warrants (net of the Underwriters’ Fee) is to the Underwriters’ Fee in respect of the sale of the Special Warrants. The amount paid or payable by an Indemnified Person as a result of such losses, claims, damages, liabilities, costs or expenses (or claims, actions, suits or proceedings in respect thereof) referred to above shall be deemed to include any legal or other expenses reasonably incurred by such Indemnified Person in connection with investigating or defending any such losses, claims,. damages, liabilities, costs or expenses (or claims, actions, suits or proceedings in respect thereof), whether or not resulting in any such action, suit, proceeding or claim.

- 37 -

Whether or not the purchase and sale of the Special Warrants shall be completed as contemplated by this Agreement, all reasonable costs and expenses of or incidental to the issue and delivery of the Special Warrants to the Substituted Purchasers and of or incidental to all matters in connection with the transactions set out in this Agreement shall be borne by the Company and SMTC, including, without limitation, expenses payable in connection with the qualification of the Special Warrant Shares, the Warrant Shares and the Underlying Common Shares for distribution in the Qualifying Jurisdictions and the United States in which Special Warrants have been sold by the Underwriters on behalf of the Company and SMTC, the fees and expenses of legal counsel to the Company and SMTC and any local counsel, and all costs incurred in connection with the preparation and printing of the Preliminary Prospectus, the Prospectus, the Registration Statement, any Amendment, any Supplementary Material and the certificates representing the Special Warrants. The Company and SMTC shall be jointly responsible for and pay the Underwriters’ reasonable out-of-pocket costs and expenses, and the reasonable fees and disbursements of the Underwriters’ legal counsel and any Selling Firms. All reasonable costs and expenses incurred by the Underwriters prior to the Closing Date shall be deducted from the gross proceeds of the Offering at the Time of Closing. All reasonable costs and expenses incurred by the Underwriters on or after the Closing Date, including the reasonable fees and disbursements of the Underwriters’ legal counsel in connection with the Prospectus and related due diligence, shall be reimbursed by the Company and SMTC within 15 days of receiving an invoice therefore.

If, prior to the Closing Time, there should occur any material change or a change in any material fact (including the discovery by the Underwriters of any material fact that was not disclosed previously by the Company or SMTC) in the business, operations, capital, affairs or prospects of the Company or SMTC or any of their affiliates, which results or, in the opinion of any of the Underwriters, might reasonably be expected to result to a materially adverse effect on the market price or value of the Exchangeable Shares or Common Shares, any of the Underwriters shall be entitled, at its option, in accordance with subsection 16, to terminate its obligations under this Agreement by written notice to that effect given to the other Underwriters and the Company at any time prior to the Closing Time.

- 38 -

If any inquiry, action, suit, investigation or other proceeding (whether formal or informal) is commenced, announced or threatened or any order is made by any federal, provincial or other governmental department, commission, board, bureau, agency or instrumentality including, without limitation, the TSX or the NASDAQ or any securities regulatory authority (other than any such inquiry, action, suit investigation or other proceeding or order relating solely to any of the Underwriters) or any law or regulation is enacted or changed which in the reasonable opinion of the Underwriters operates to prevent or restrict the trading of the Exchangeable Shares or the Common Shares or materially and adversely affects or could be expected to materially and adversely affect the market price or value of the Exchangeable Shares or the Common Shares, any of the Underwriters shall be entitled, at its option and in accordance with subsection 16, to terminate its obligations under this Agreement by notice to that effect given to the other Underwriters and the Company at any time prior to the Closing Time.

If there should develop, occur or come into effect or existence any event, action, state, condition or major financial occurrence of national or international consequence, any acts of terrorism or hostilities or escalation thereof or other calamity or crises, or any law or regulation which in the reasonable opinion of any Underwriter, materially adversely affects, or could be expected to materially adversely affect, the financial markets in Canada or the United States or the business, operations, capital, affairs or prospects of SMTC and the Subsidiaries taken as a whole, any of the Underwriters shall be entitled at its option, in accordance with subsection 16, to terminate its obligations under this Agreement by written notice to that effect given to the other Underwriters, the Company and SMTC at any time prior to the Closing Time.

Each of the Company and SMTC agree that all material terms and conditions of this Agreement shall be construed as conditions and complied with so far as they relate to acts to be performed or caused to be performed by it, that it will use its commercially reasonable best efforts to cause such conditions to be complied with, and that any breach or failure by the Company or SMTC to comply with any such conditions shall entitle any of the Underwriters to terminate their obligations to purchase the Special Warrants or to refuse to sign the certificate of Underwriters in the Prospectus (provided that, for greater clarity, failure to comply with any such material term or condition entitles such Underwriter to so refuse pursuant to Section 12 of this Agreement), by notice to that effect given to the other Underwriters, the Company and SMTC at or prior to the Closing Time, unless otherwise expressly provided in this Agreement. The Underwriters may waive, in whole or in part, or extend the time for compliance with, any terms and conditions without prejudice to their rights in respect of any other of such terms and conditions or any other or subsequent breach or non-compliance, provided that any such waiver or extension shall be binding upon the Underwriters only if such waiver or extension is in writing and signed by all of the Underwriters.

- 39 -

The rights of termination contained in subsections 16(a), 16(b), 16(c) and 16(d) may be exercised by any of the Underwriters and are in addition to any other rights or remedies any of the Underwriters may have in respect of any default, act or failure to act or non-compliance by the Company or SMTC in respect of any of the matters contemplated by this Agreement or otherwise. Subject to Section 19, in the event of any such termination, there shall be no further obligations on the part of the Underwriters to the Company or SMTC or on the part of the Company and SMTC to the Underwriters except in respect of any liability which may have arisen or may arise after such termination under Section 16. A notice of termination given by an Underwriter under subsections 16(a), 16(b), 16(c) and 16(d) shall not be binding upon any other Underwriter.

- 40 -

Each of the Company and SMTC agrees that for a period of 120 days following the Closing Date, it will not sell or issue, or enter into any agreement to sell or issue, any of their respective equity securities (or securities convertible into such equity securities) in excess of 5% of the total value or number of such securities outstanding following completion of the offering (other than the grant of options pursuant to either corporation’s stock option plans or stock purchase plan or the issuance of securities on the exercise of previously granted options, warrants or other securities of such corporation or in connection with any acquisition, strategic investments or strategic alliance involving the Company or SMTC) (the “Standstill Provision”) without the prior written consent of the Lead Underwriter, such consent not to be unreasonably withheld or delayed. SMTC hereby agrees that it will cause its other Subsidiaries to comply with the Standstill Provision contemplated herein. For greater certainty, this provision will no longer apply if the Offering is not completed or if the Shareholder Approvals are not obtained.

All of the representations, warranties, covenants and agreements of the Company and SMTC herein contained or contained in documents delivered pursuant to or in connection with this Agreement shall survive the issue and sale of the Special Warrants and shall continue in full force and effect for the benefit of the Underwriters for a period of two years from the Closing Date.

All steps which must or may be taken by the Underwriters in connection herewith, with the exception of matters relating to any of Sections 14, 15, 16 or 17 may be taken by the Lead Underwriter on behalf of itself and the execution of this Agreement by the Company and SMTC shall constitute the authority and obligation of the Company and SMTC for accepting notification of any such steps from, and for delivering the definitive documents constituting the Special Warrants to or to the order of, the Lead Underwriter. The Lead Underwriter shall first consult with the other Underwriters with respect to all notices, extensions or communications to or with the Company.

Any notice or other communication required or permitted to be given hereunder shall be in writing and may be personally delivered or sent by facsimile on a Business Day to the following addresses:

- 41 -

- 42 -

The Company or SMTC, or any of the Underwriters may change its address for notice by notice given in the manner aforesaid. Any such notice or other communication shall be deemed to have been given on the day on which it was delivered or sent by facsimile if received during normal business hours, otherwise it shall be deemed to have been received by 9:00 a.m. on the next Business Day.

The parties hereto confirm their express wish that this Agreement and all documents and agreements directly or indirectly relating thereto be drawn up in the English language.

Les parties reconnaissent leur volonté express que la présente entente ainsi que tous les documents et contrats s’y rattachant directement ou indirectement soient rédigées en anglais.

Time shall be of the essence of this Agreement.

The parties agree that, with respect to the subject matter of this Agreement, this Agreement supersedes all prior understandings and communications between the parties or any of them, oral or written, and constitutes the entire agreement between the parties.

This Agreement shall be governed by and construed in accordance with the laws of the Qualifying Jurisdictions and the laws of Canada applicable therein and the courts of such province shall have non-exclusive jurisdiction over any dispute hereunder.

- 43 -

This Agreement, once executed, may be delivered by facsimile transmission and may be considered by the Company and SMTC to be an original executed copy. In addition, this Agreement may be executed in counterparts, each of which shall be deemed to be an original and all of which shall constitute one and the same document.

(the balance of this page was intentionally left blank)

- 44 -

If the foregoing is in accordance with your understanding and is agreed to by you, will you please confirm your acceptance by signing the enclosed copies of this letter at the place indicated and returning the same to the undersigned.

Yours truly,

Accepted and agreed to as of the 3rd day of March, 2004.

- 45 -