Demand Note between SMTC Manufacturing Corporation of Canada and Kilmer Electronics Group Limited

Summary

SMTC Manufacturing Corporation of Canada has issued a demand note to Kilmer Electronics Group Limited for $2,000,000. The note requires SMTC to repay the principal plus a lump sum interest of 3% and ongoing simple interest at 13.75% per year, payable in U.S. dollars. Repayment can be demanded at any time by holders of more than 50% of the outstanding principal. The agreement includes provisions for tax gross-up and indemnification. The note is governed by the laws of Ontario and Canada.

EX-4.13 13 0013.txt DEMAND NOTE OF SMTC EXHIBIT 4.13 DEMAND NOTE SMTC MANUFACTURING CORPORATION OF CANADA THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND MAY NOT BE SOLD, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING THE TRANSFER OR AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER THAT SUCH REGISTRATION UNDER THE ACT IS NOT REQUIRED. US $2,000,000.00 Markham, Ontario July 3, 2000 FOR VALUE RECEIVED, the undersigned SMTC Manufacturing Corporation of Canada., an Ontario corporation (the "Company"), hereby promises to pay to each of the payees set forth on Schedule 1 hereto or its registered assigns (each, a "Payee"), on demand at any time made by the Payees holding more than 50% of the aggregate principal amount then outstanding hereunder, the principal sum set forth opposite the name of such Payee on Schedule 1 hereto, together with interest of (i) a lump sum of 3% of such principal amount accruing on the date hereof and (ii) simple interest from the date hereof on such principal amount at a rate of 13.75% per annum, in lawful money of the United States of America in immediately available funds. Any and all payments by the Company under this Note shall be made free and clear of and without deduction for any and all present or future Taxes. If the Company shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder, (i) the sum payable shall be increased as much as shall be necessary so that after making all required deductions (including deductions applicable to additional sums payable hereunder) each Payee shall receive an amount equal to the sum it would have received had no such deductions been made, (ii) the Company shall make such deductions and (iii) the Company shall pay the full amount deducted to the relevant taxing or other authority in accordance with applicable law. Within thirty (30) days after the date of any payment of Taxes, the Company shall furnish to each Payee the original or certified copy of a receipt evidencing payment thereof. The Company shall indemnify and, within ten (10) days of demand therefor, pay each Payee for the full amount of Taxes (including any Taxes imposed by any jurisdiction on amounts payable hereunder) paid by such Payee, and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally asserted. Terms defined in the Note Purchase Agreement of even date herewith between the Company and the Payees and not otherwise defined herein are used herein with the meanings so defined. Demand Note Canada 2 The Company hereby waives diligence, presentment, demand, protest and notice of any kind whatsoever. The nonexercise by the holder of any of its rights hereunder in any particular instance shall not constitute a waiver thereof in that or any subsequent instance. This Note shall be construed in accordance with and governed by the laws of The Province of Ontario and the federal laws of Canada applicable therein without giving effect to principles of conflicts of laws. SMTC MANUFACTURING CORPORATION OF CANADA By: /s/ Paul Walker ------------------------- Name: Paul Walker Title: President Demand Note Canada 2 Schedule 1 ---------- Payee Principal Amount - ----- ---------------- Kilmer Electronics Group Limited US $2,000,000.00 Demand Note Canada 2