8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): September 8, 2003

SMTEK INTERNATIONAL, INC.

(Exact Name of Registrant as Specified in Charter)

Delaware	1-08101	33-0213512
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

200 Science Drive Moorpark, California	93021
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code:    (805) 532-2800

Not Applicable

 (Former Name or Former Address, if Changed Since Last Report)

Item 5.              Other Events and Required FD Disclosure.

Aspreviously announced, SMTEK International, Inc. (the “Company”) received notice from Nasdaq of its decision to continue listing the Company’s common stock on The Nasdaq SmallCap Market via an exception to a number of listing requirements.  The terms of this temporary exception require that the Company satisfy a number of conditions.  One of the conditions requires that the Company, on or before September 8, 2003, demonstrate a closing bid price of at least $1.00 per share, and, immediately thereafter, maintain a closing bid price of at least $1.00 per share for a minimum of 10 consecutive trading days.  Nasdaq has notified the Company that it has demonstrated compliance with this closing bid price requirement.  Another condition under the temporary exception also requires that the Company, on or before September 8, 2003, publicly file an unaudited balance sheet with the Securities and Exchange Commission (the “SEC”) evidencing stockholders’ equity of at least $2,500,000.  The Company is furnishing the information provided under Item 9 solely in response to this condition for continued listing as required by Nasdaq pursuant to the terms of the temporary exception.  In addition, the terms of the temporary exception require that the Company file its Form 10-K for the fiscal year ending June 27, 2003 with the SEC on or before September 25, 2003.

In connection with increasing stockholders’ equity, on September 8, 2003, the Company sold 250,000 shares of Series A Preferred Stock in a private transaction with an unaffiliated third party investor.  The Series A Preferred Stock is convertible into common stock on a one-for-one basis initially.  In connection with such sale, the Company entered into a registration rights agreement with the investor and filed an amendment to its certificate of incorporation.  A copy of the Certificate of Designations, which designates the rights and preferences of the Series A Preferred Stock, is filed as Exhibit 4.1 hereto.  A copy of the Series A Preferred Stock Purchase Agreement is filed as Exhibit 10.1 hereto, and a copy of the Registration Rights Agreement is filed as Exhibit 10.2 hereto.

Item 7.              Financial Statements and Exhibits.

Exhibit Number	Description
4.1	Certificate of Designations.
10.1	Series A Preferred Stock Purchase Agreement, dated as of September 8, 2003, by and between the Company and The Gene Haas Trust.
10.2	Registration Rights Agreement, dated as of September 8, 2003, by and between the Company and The Gene Haas Trust.

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Item 9.              Regulation FD Disclosure.

The following unaudited condensed consolidated pro forma balance sheet for the month ended August 22, 2003 reflects the actual unaudited condensed consolidated balance sheet at August 22, 2003 and pro forma adjustments for certain transactions which occurred subsequent to August 22, 2003 as if they had occurred on August 22, 2003.

In aggregate, the pro forma balance sheet reflects an increase in total stockholders’ equity of $1,237,000 consisting of the following transactions which have occurred subsequent to August 22, 2003: (1) the Company’s settlement of obligations to former officers, employees and directors under consulting and deferred fee agreements resulting in a $407,000 net reduction in debt and a corresponding recognition of gain on extinguishment of debt; (2) the Company’s settlement with certain sub-debt holders resulting in a $350,000 net reduction in debt and a corresponding gain from extinguishment of debt; and (3) the Company’s sale of 250,000 shares of Series A Preferred Stock with proceeds of $480,000 net of an estimate of $20,000 in transaction costs.  The gross settlement payments required under (1) and (2) above of $401,000 and $170,000, respectively, were funded through additional borrowings under the Company's working capital line of credit.

The information in Item 9 of this Current Report is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of such section.  The information in Item 9 of this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.

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SMTEK INTENATIONAL, INC.

Condensed Consolidated Balance Sheet

(Unaudited)

(In thousands)

	Actual August 22, 2003			Pro Forma Adjustments			Pro Forma August 22, 2003
	(unaudited)
ASSETS
Current Assets
Cash	$	460		$	480		$	940	(3)
Short-term investments	300						300
Accounts receivable, net	12,909						12,909
Inventory	9,657						9,657
Other current assets	871						871
Total current assets	24,197			480			24,677
Fixed assets, net	5,406						5,406
Other assets	427						427
Total assets	$	30,030		$	480		$	30,510
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Current portion-long term debt	$	2,465		$	(808	)	$	1,657	(1)
Accounts payable and accruals	11,951						11,951
Other current liabilities	2,237						2,237
Total current liabilities	16,653			(808		)	15,845
Long-term debt	11,979			(520		)			(2)
				571			12,030		(1)(2)
Stockholders’ Equity
Capital stock and additional paid in capital	37,050			480			37,530		(3)
Retained earnings	(35,652		)	757			(34,895		)(1)(2)
Total stockholders’ equity	1,398			1,237			2,635
Total liabilities and stockholders’ equity	$	30,030		$	480		$	30,510

(1) (2)  Debt retirement, payoff increasing long-term line of credit, gain increasing retained earnings

(3) Net proceeds from issuance of preferred stock

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:  September 8, 2003

SMTEK INTERNATIONAL, INC.

By:		/s/ Kirk A. Waldron
Name:	Kirk A. Waldron
Its:	Senior Vice President
	Chief Financial Officer

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EX-4.1

EXHIBIT 4.1

CERTIFICATE OF DESIGNATIONS

OF

SERIES A PREFERRED STOCK

(Par Value $1.00 Per Share)

OF

SMTEK INTERNATIONAL, INC.

Pursuant to Section 151 of the
General Corporation Law of the State of Delaware

SMTEK International, Inc., a Delaware corporation (the “Corporation”), certifies that pursuant to the authority conferred upon the Board of Directors of the Company (the “Board of Directors”) by Article Four of the Certificate of Incorporation of the Corporation (the “Certificate of Incorporation”), and in accordance with the provisions of Section 151 of the General Corporation Law of the State of Delaware, as amended, the Board of Directors, on September 4, 2003, adopted the following resolution creating a series of its preferred stock, par value $1.00 per share (“Preferred Stock”):

RESOLVED, that (1) pursuant to the authority conferred upon the Board of Directors by the Certificate of Incorporation, the Board of Directors hereby designates 250,000 shares of the Preferred Stock of the Corporation as “Series A Preferred Stock,” and the voting powers, designations, preferences, rights of the Series A Preferred Stock and the qualifications, limitations and restrictions thereof, be, and they hereby are, as set forth below (the “Certificate of Designations”) and (2) in connection therewith, the officers of the Corporation be, and each of them hereby is, authorized and empowered on behalf of the Corporation and in its name to execute and file the Certificate of Designations with the Delaware Secretary of State:

Section 1.  Designation and Amount.  The shares of such series shall be designated as “Series A Preferred Stock” and the number of shares constituting such series so designated shall be 250,000 (the “Series A Preferred Stock”).  Such number of shares may be increased or decreased by resolution of the Board of Directors; provided, however, that no decrease shall reduce the number of shares of Series A Preferred Stock to a number less than the number of shares of Series A Preferred Stock then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into Series A Preferred Stock.  All shares of Series A Preferred Stock shall in all respects be equal, and shall have the voting powers, designations, preferences and relative, participating, optional, redemption, and other special rights, and limitations, restrictions and qualifications thereof, hereinafter set forth.  Except as otherwise

indicated herein, capitalized terms shall have the meaning set forth in Section 11 hereof.

Section 2.  Dividends and Distributions.

(a)Subject to the rights of the holders of any Senior Preferred Stock, the holders of Series A Preferred Stock shall be entitled to receive, on January 1 of each year (each, a “Dividend Payment Date”), out of any assets legally available therefor, payable when, as and if declared by the Board, prior and in preference to any declaration or payment of any dividend on Junior Securities, dividends at the rate of 9% of the Purchase Price plus any accrued and unpaid dividends per annum (or portion thereof from the issuance date of such Series A Preferred Stock to the next Dividend Payment Date) on each outstanding share of Series A Preferred Stock (the “Annual Preference Dividend Amount”).  Such dividends shall accrue annually in arrears whether or not declared by the Board of Directors and shall be cumulative.  If dividends declared in respect of any previous or current annual dividend period shall have not been paid on all shares of Series A Preferred Stock at the Annual Preference Dividend Amount, the deficiency shall first be fully paid before any dividend or other distribution shall be paid on or declared and set apart for any holders of shares of Junior Securities.

(b)In addition to the Annual Preference Dividend Amount, if the Corporation declares and pays dividends or distributions on the Common Stock, then, in that event, the holders of shares of Series A Preferred Stock shall be entitled to share in such dividends or distributions on a pro rata basis, as if their shares had been converted into shares of Common Stock pursuant to Section 6 immediately prior to the record date for determining the stockholders of the Corporation eligible to receive such dividends or distributions.

Section 3.  Voting Rights.

(a)Except as provided herein or by law, each share of Series A Preferred Stock shall entitle the holder thereof on the record date to the number of votes, on all matters submitted to a vote of the Company’s stockholders, that equals the number of shares of Common Stock (including fractions of a share) into which such share of Series A Preferred Stock is convertible immediately prior to the record date for determining the stockholders of the Corporation eligible to vote on such matters.

(b)Except as otherwise provided herein, in the Certificate of Incorporation, in any other certificate of designations creating a series of Preferred Stock or any similar stock or by law, the holders of shares of Series A Preferred Stock and the holders of shares of Common Stock and any other capital stock of the Corporation having general voting rights shall vote together as one class on all matters submitted to a vote of the stockholders of the Corporation.

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(c)Except as expressly set forth herein, or as otherwise provided by law, holders of Series A Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action.

Section 4.  Reacquired Shares.  Any shares of Series A Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof.  All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock subject to the conditions and restrictions on issuance set forth herein, in the Certificate of Incorporation, in any other certificate of designations creating a series of Preferred Stock or any similar stock or as otherwise required by law.

Section 5.  Liquidation, Dissolution or Winding Up.

(a)Subject to the rights of the holders of any Senior Preferred Stock, upon the occurrence of a Liquidation, the holders of shares of Series A Preferred Stock shall be entitled to be paid, pari passu with any payment due to the holders of Parity Stock, out of, but only to the extent of, the assets of the Corporation legally available for distribution to its stockholders, an amount equal to 150% of the Purchase Price (the “Liquidation Preference”) plus all accrued and unpaid dividends, if any, with respect to each share of Series A Preferred Stock, before any payment or distribution is made to any Junior Stock.  If the assets of the Corporation available for distribution to the holders of Series A Preferred Stock and any Parity Stock shall be insufficient to permit payment in full to such holders of the sums which such holders are entitled to receive in such case, then all of the assets available for distribution to holders of the Series A Preferred Stock and any Parity Stock shall be distributed among and paid to such holders ratably in proportion to the amounts that would be payable to such holders if such assets were sufficient to permit payment in full.

(b)After the holders of all shares of Series A Preferred Stock shall have been paid in full the amounts to which they are entitled in Section 5(a), the shares of Series A Preferred Stock shall not be entitled to any further participation in any distribution of assets of the Corporation.

Section 6.  Conversion.

(a)Subject to the provisions of this Section 6, each share of Series A Preferred Stock shall be convertible, at any time and from time to time after the date of issuance of such Series A Preferred Stock until one day prior to the Redemption Date, if any, for such share of Series Preferred Stock, into fully paid and nonassessable shares of Common Stock (i) at the option of the holder thereof, or (ii) automatically upon the election of holders of at least a majority of the then outstanding Series A Preferred Stock to so convert.

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(b)Upon conversion, the number of shares of Common Stock into which each share of Series A Preferred Stock shall be convertible equals the (a) Purchase Price plus all accrued and unpaid dividends, divided by (b) the Conversion Price.  No accrued and unpaid Annual Preference Dividend Amount will be payable upon shares of Series A Preferred Stock that are converted.

(c)No fractional shares of Common Stock shall be issued upon conversion of the Series A Preferred Stock.  In lieu of any fractional share to which a holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the Conversion Price.  Before any holder of Series A Preferred Stock shall be entitled to convert the same into full shares of Common Stock and to receive certificates therefor, such holder shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Corporation or of any transfer agent for the Series A Preferred Stock and shall give written notice to the Corporation that such holder elects to convert the same.  The Corporation shall, as soon as practicable thereafter, issue and deliver to such holder of Series A Preferred Stock a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled hereunder and a check payable to the holder in the amount of any cash amounts payable as the result of a conversion into a fractional share of Common Stock.  Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender to the Corporation of the shares of Series A Preferred Stock to be converted, with all required documentation, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date.

(d)The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock solely for the purpose of effecting the conversion of the shares of the Series A Preferred Stock such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Series A Preferred Stock, and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Series A Preferred Stock, in addition to such other remedies as shall be available to the holder of such Series A Preferred Stock, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes.

(e)The Corporation will pay any and all documentary, stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Common Stock on the conversion of shares of Series A Preferred Stock pursuant to this Section 6; provided, however, that the Corporation shall not be required to pay any tax that may be payable in respect of any registration of transfer involved in the issue or delivery of shares of Common Stock in a name other than that of the registered holder of Series A Preferred Stock converted or to be converted, and no such issue or delivery shall be made unless and until the person requesting such

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issue has paid to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax has been paid.

(f)If the Corporation at any time subdivides (by any stock split, stock dividend, recapitalization or otherwise) its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision shall be proportionately reduced, and if the Corporation at any time combines (by reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such subdivision shall be proportionately increased.

(g)If the Corporation at any time subdivides (by any stock split, stock dividend, recapitalization or otherwise) its outstanding shares of Series A Preferred Stock into a greater number of shares, the Purchase Price in effect immediately prior to such subdivision shall be proportionately reduced, and if the Corporation at any time combines (by reverse stock split or otherwise) one or more classes of its outstanding shares of Series A Preferred Stock into a smaller number of shares, the Purchase Price in effect immediately prior to such subdivision shall be proportionately increased.

(i)(i)All calculations under this Section 6 shall be made to the nearest cent or to the nearest one hundredth (1/100) of a share, as the case may be.

(ii)No adjustment in the Conversion Price or Purchase Price need be made if such adjustment would result in a change in such Conversion Price or Purchase Price, as applicable, of less than $0.01.  Any adjustment of less than $0.01 which is not made shall be carried forward and shall be made at the time of and together with any subsequent adjustment which, on a cumulative basis, amounts to an adjustment of $0.01 or more in such Conversion Price or Purchase Price, as applicable.

Section 7.  Reorganization, Reclassification, Consolidation or Merger.  Any recapitalization, reorganization, reclassification, consolidation, merger or other transaction, in each case which, pursuant to state law, approval of the Board of Directors is required before any such recapitalization, reorganization, reclassification, consolidation, merger or other transaction can occur and which is effected in such a manner that the holders of Common Stock are entitled to receive (either directly or upon subsequent Liquidation) stock, securities or assets with respect to or in exchange for Common Stock, is referred to herein as an “Organic Change”.  Subject to the Corporation’s right of redemption under Section 8, prior to the consummation of any Organic Change, the Corporation shall make appropriate provisions to insure that each of the holders of Series A Preferred Stock shall thereafter have the right to acquire and receive, in lieu of or in addition to (as the case may be) the shares of Common Stock immediately theretofore acquirable and receivable upon the conversion of such holder’s Series A Preferred Stock, such

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shares of stock, securities or assets as such holder would have received in connection with such Organic Change if such holder had converted its Series A Preferred Stock, immediately prior to such Organic Change.  In each such case, the Corporation shall also make appropriate provisions to insure that the provisions of Section 6, to the extent applicable, shall thereafter be applicable to any stock or securities received by the holders of Series A Preferred Stock in such Organic Change.  The Corporation shall not effect any such Organic Change, unless prior to the consummation thereof, the successor entity (if other than the Corporation) whose capital stock or assets the holders of Common Stock are entitled to receive as a result of such Organic Change, shall assume by written instrument, the obligation to deliver to each such holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, such holder may be entitled to acquire.

Section 8.  Redemption.

(a)Subject to any legal restrictions on the Corporation’s redemption of shares, at any time after the date that is 180 days after the Date of Issuance, the Corporation may from time to time redeem any or all of the outstanding shares of Series A Preferred Stock upon 20 days’ prior written notice to the record holders of the shares of Series A Preferred Stock (each, a Redemption Date”).

(b)The redemption price for each share of Series A Preferred Stock shall be the Liquidation Preference, plus all accrued but unpaid dividends thereon to the Redemption Date.

Section 9.  Protective Provisions.  So long as any shares of Series A Preferred Stock are outstanding, the Corporation will not, without first obtaining the approval of holders of the shares of Series A Preferred Stock holding at least 51% of the shares of Series A Preferred Stock then outstanding, take any action set forth below:

(a)amend, alter or repeal any provision of the Certificate of Incorporation or bylaws of the Corporation which would adversely affect any right, preference, privilege or voting power of the Series A Preferred Stock or the holders thereof; or

(b)authorize, establish, create or issue any series of Senior Preferred Stock.

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Section 10.  Notices.  Notice to a holder of shares of Series A Preferred Stock is duly given if in writing and delivered in person or mailed by first class mail (registered or certified, return receipt requested), facsimile or overnight air courier guaranteeing next day delivery, to the address of such holder as shown on the books of the Corporation.

Section 11.  Definitions.

(a)“Common Stock” means the Corporation’scommon stock, $0.01 par value per share.

(b)“Conversion Price” shall initially be $2.00 per share of Series A Preferred Stock, as the same may be amended pursuant to the terms hereof.

(c)“Date of Issuance” means the date on which the Corporation initially issues any share of Series A Preferred Stock, regardless of the number of times a transfer of such share is made on the stock records maintained by or for the Corporation and regardless of the number of certificates which may be issued to evidence such share.

(d)“Junior Securities” means, collectively, the Common Stock and any other class or series of capital stock of the Corporation hereafter created which does not expressly rank pari passu with or senior to the Series A Preferred Stock.

(e)“Liquidation” means a voluntary or involuntary liquidation under applicable bankruptcy or reorganization laws, or the dissolution or winding up of the Corporation.

(f)“Parity Stock” means any capital stock of the Corporation which expressly ranks pari passu with the Series A Preferred Stock.

(g)“Purchase Price” means $2.00 per share of Series A Preferred Stock, as the same may be amended from time to time pursuant to the terms hereof.

(h)“Senior Preferred Stock” means any Preferred Stock which would have a preference over the Series A Preferred Stock with respect to dividends or upon Liquidation.

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IN WITNESS WHEREOF, SMTEK International, Inc. has caused this Certificate of Designations to be duly executed on September 5, 2003.

SMTEK INTERNATIONAL, INC.
By:	/s/  Kirk A. Waldron
Name:		Kirk A. Waldron
Title:		Senior Vice President and Chief Financial Officer

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EX-10.1

EXHIBIT 10.1

SMTEK INTERNATIONAL, INC.

SERIES A PREFERRED STOCK PURCHASE AGREEMENT

THIS SERIES A PREFERRED STOCK PURCHASE AGREEMENT (this “Agreement”) is made as of September 8, 2003, by and between SMTEK International, Inc., a Delaware corporation (the “Company”), and The Gene Haas Trust DTD 3-9-99 (“Investor”).

In consideration of the mutual promises herein contained, the parties hereto hereby agree as follows:

1.Purchase and Sale of Stock.

1.1Sale and Issuance of Series A Preferred Stock.

(a)The Company shall adopt and file with the Secretary of State of the State of Delaware on or before the Closing (as defined below) the Certificate of Designations in substantially the form attached hereto as Exhibit A (the “Certificate of Designations”).

(b)Subject to the terms and conditions of this Agreement, Investor agrees to purchase at the Closing and the Company agrees to sell and issue to Investor at the Closing 250,000 shares of the Company’s Series A Preferred Stock (as hereinafter defined) at a price equal to $2.00 per share (the “Shares”) for an aggregate purchase price of $500,000 (the “Purchase Price”).  On and as of the date upon which the Certificate of Designations is accepted for filing by the Secretary of State of the State of Delaware, the Shares shall have the rights, preferences and privileges as provided in the Certificate of Designations.

1.2Closing.  The purchase and sale of the Shares shall take place at the offices of Gibson, Dunn & Crutcher LLP, 4 Park Plaza, Irvine, California, at 10:00 a.m., on September 8, 2003, or at such other time and place as the Company and Investor shall mutually agree, either orally or in writing (the “Closing”).  At the Closing, the Company shall deliver to Investor a certificate representing the Shares against delivery of the Purchase Price by bank check or wire transfer of immediately available funds.

2.Representations and Warranties of the Company.  Except as disclosed in (i) the Company SEC Reports (as defined below) publicly available prior to the date of this Agreement, or (ii) the disclosure schedule delivered by the Company to Investor with this Agreement (the “Company Disclosure Schedule”), Company hereby represents and warrants to Investor as follows:

2.1Capitalization of Company and its Subsidiaries.

(a)The authorized capital stock of the Company consists solely of 3,750,000 shares of common stock, $.01 par value per share (the “Common Stock”) and 1,000,000 shares of preferred stock, par value $1.00 per share (the “Preferred Stock”).

(i)At the close of business on September 5, 2003 (i) 2,284,343 shares of Common Stock were issued and outstanding, (ii) 890,000 shares of Common Stock were reserved for issuance, pursuant to Company Plans (as defined below), including 864,592 shares of which were issuable upon or otherwise deliverable in connection with the exercise of outstanding options issued pursuant to Company Plans and (iii) no shares of Preferred Stock were outstanding.  All of the outstanding shares of Common Stock have been validly issued and are fully paid and nonassessable and were issued free of preemptive rights or any right of first refusal.

(ii)Except as set forth in this Section 2.1(a) or in Section 2.1(a) of the Company Disclosure Schedule or issuances of shares of Common Stock under the Company Plans, since September 5, 2003, there are outstanding (A) no shares of capital stock or other voting securities of the Company, (B) no securities of the Company or its subsidiaries convertible into or exchangeable for shares of capital stock or voting securities of the Company, (C) no options or other rights to acquire from the Company and no obligations of the Company to issue any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of the Company, and (D) no equity equivalent interests in the ownership or earnings of the Company or other similar rights (collectively, “Company Securities”).  There are no outstanding obligations of the Company or its subsidiaries to repurchase, redeem or otherwise acquire any Company Securities.

(b)(i)All of the outstanding capital stock of the Company’s subsidiaries (A) is owned by the Company, directly or indirectly, free and clear of any Lien, and (B) has been validly issued and is fully paid and nonassessable and was issued free of preemptive rights or any right of first refusal.

(ii)Except as set forth above in this Section 2.1(b) or in Section 2.1(b) of the Company Disclosure Schedule, there are outstanding (A) no shares of capital stock or other voting securities of any of the subsidiaries of the Company, (B) no securities of the Company or its subsidiaries convertible into or exchangeable for shares of capital stock or voting securities of the Company’s subsidiaries, (C) no options or other rights to acquire from the Company or its subsidiaries, and no obligations of the Company or its subsidiaries to issue any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of any subsidiary of the Company, and (D) no equity equivalent interests in the ownership or earnings of any subsidiary of the Company or other similar rights (collectively, “Subsidiary Securities”).  There are no outstanding obligations of the Company or its subsidiaries to repurchase, redeem or otherwise acquire any Subsidiary Securities.

(c)(i)“Company Plans” mean collectively the Company’s 1993 Stock Incentive Plan, as amended, the Amended and Restated 1996 Stock Incentive Plan and the Amended and Restated 1998 Non-Employee Directors Stock Plan.

(ii)“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest, conditional sale agreement, title retention agreement, claim, easement, license, right-of-way, or encumbrance of any kind or nature in respect of such asset, except for restrictions on transfer resulting from federal or state securities laws.

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2.2Registration Rights.  Except as provided in the Registration Rights Agreement in substantially the form attached hereto as Exhibit B (the “Registration Rights Agreement” and, together with this Agreement, the “Transaction Agreements”), the Company is not obligated to register under the Securities Act of 1933, as amended (the “Securities Act”) any of its currently outstanding securities or any of its securities that may subsequently be issued.

2.3Issuance of Preferred Stock.  The Series A Preferred Stock, created upon filing of the Certificate of Designations (the “Series A Preferred Stock”), that is being purchased by Investor hereunder, when issued, sold and delivered in accordance with the terms of this Agreement for the consideration expressed herein, will be duly and validly issued, fully paid and nonassessable and, based in part upon the representations of Investor in this Agreement, will be issued in compliance with federal and California securities laws.  The Common Stock issuable upon conversion of the Shares will be duly and validly reserved for issuance and, upon issuance in accordance with the terms of the Certificate of Designations, will be duly and validly issued, fully paid and nonassessable.

2.4Authority Relative to this Agreement.

(a)The Company has all necessary corporate power and authority to execute and deliver this Agreement and the Registration Rights Agreement to consummate the transactions contemplated hereby and thereby.  The execution and delivery of this Agreement and the Registration Rights Agreement and the consummation of the transactions contemplated hereby and thereby (including the sale and delivery of the Shares and the Common Stock issuable upon conversion thereof) have been duly and validly authorized by the Board of Directors of the Company (the “Company Board”) or will be prior to the Closing, and no other corporate proceedings on the part of the Company or its stockholders are necessary to authorize this Agreement, the Registration Rights Agreement or to consummate the transactions contemplated hereby or thereby.

(b)(i) This Agreement has been duly executed and delivered by the Company and, assuming that this Agreement constitutes a valid and binding agreement of Investor, constitutes a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, and (ii) when the Registration Rights Agreement has been duly executed and delivered by the Company and, assuming that the Registration Rights Agreement will constitute upon execution and delivery a valid and binding agreement of Investor, will constitute a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, in each case subject to the effect of (A) any bankruptcy, insolvency, reorganization, moratorium, arrangement or similar laws affecting the rights and remedies of creditors generally, including the effect of statutory or other laws regarding fraudulent transfers or preferential transfers and (B) general principles of equity, including without limitation concepts of materiality , reasonableness, good faith and fair dealing and the possible unavailability of specific performance, injunctive relief or other equitable remedies (regardless of whether enforceability is considered in a proceeding at law or in equity).

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2.5Organization; Good Standing; Qualification.

(a)The Company has been duly incorporated and is a validly existing corporation in good standing under the laws of the State of Delaware, with corporate power and authority to own its properties and carry on its business as now conducted; and the Company is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be so qualified would not reasonably be expected to, individually or in the aggregate, have a material adverse effect on the financial condition, business, properties or results of operations of the Company and its subsidiaries, taken as a whole (a “Material Adverse Effect”).

(b)Each subsidiary of the Company has been duly incorporated and is a validly existing corporation in good standing under the laws of the jurisdiction of its organization, with corporate power and authority to own its properties and carry on its business as now conducted; and each subsidiary of the Company is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification.

2.6SEC Reports; Financial Statements.

(a)Since January 1, 2000, the Company has filed all required forms, reports and documents (collectively, the “Company SEC Reports”) with the Securities and Exchange Commission (the “SEC”).  As of their respective dates, or if amended prior to the date hereof, as of the date of such amendment, the Company SEC Reports complied in all material respects with all applicable requirements of the Securities Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as the case may be, and the rules and regulations of the SEC promulgated thereunder applicable to such Company SEC Reports, each as in effect on the dates such forms, reports and documents were filed.  None of the Company SEC Reports, including, without limitation, any financial statements or schedules included or incorporated by reference therein, contained when filed, or if amended prior to the date hereof, as of the date of such amendment, any untrue statement of a material fact or omitted to state a material fact required to be stated or incorporated by reference therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

(b)The consolidated financial statements of the Company included in the Company SEC Reports, as amended, publicly available prior to the date hereof, comply in all material respects with applicable accounting requirements and published rules and regulations of the SEC, have been prepared in accordance with generally accepted accounting principles (except in the case of unaudited quarterly statements, as permitted by Form 10-Q under the Exchange Act) applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto) and fairly present in all material respects the consolidated financial position of the Company and its subsidiaries as of the dates thereof and their consolidated results of operations and statement of cash flows for the periods indicated (subject, in the case of unaudited quarterly financial statements, to normal year-end audit adjustments).

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(c)The Company believes that the unaudited financial statements of the Company as of June 30, 2003, as such financial statements were provided to Investor (the “June 2003 Financial Statements”) have been prepared in accordance with generally accepted accounting principals consistently followed by the Company throughout the periods indicated, and fairly present the financial position of the Company.  Notwithstanding the foregoing, the June 2003 Financial Statements are unaudited as of the date hereof and are subject to change as may be required by the Company’s independent auditors.

2.7Consents and Approvals; No Violations.

(a)No filing with or notice to, and no material permit, authorization, consent or approval of, any United States or foreign court or tribunal, or administrative, governmental or regulatory body, agency or authority (each a “Governmental Entity”) is required to be obtained or made by the Company for the execution and delivery of the Transaction Agreements by the Company or the consummation of the transactions contemplated thereby by the Company, except for (i) filings, permits, authorizations, consents and approvals as may be required under, and other applicable requirements of, the Securities Act, the Exchange Act and state securities or blue sky laws, (ii) the filing of the Certificate of Designations as required by the DGCL, (iii) filings with or notice to the Nasdaq National Market, and (iv) any other filings, permits, authorizations, consents and approvals, the failure of which to make or obtain, individually or in the aggregate, would not be reasonably expected to have a Material Adverse Effect.

(b)Except as set forth in Section 2.7 of the Company Disclosure Schedule, neither the execution, delivery and performance of the Transaction Agreements by the Company, nor the consummation by the Company of the transactions contemplated hereby, will:

(i)conflict with or result in any breach of any provision of the respective charter or bylaws of the Company or any of its subsidiaries;

(ii)result in a violation or breach of or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, amendment, cancellation or acceleration), or impair the rights of the Company or its subsidiaries under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation (each, a “Contract”) to which the Company or any of its subsidiaries is a party or by which they are bound that is material to the Company and its subsidiaries, taken as a whole (each a “Material Agreement”); or

(iii)violate any order, writ, injunction, decree, judgment, directive, award or settlement, whether civil, criminal or administrative (each, a “Judgment”), or any law, statute, rule or regulation applicable to the Company or any of its subsidiaries or any of their respective properties or assets which violation, in each case, would reasonably be expected to have a Material Adverse Effect.

2.8No Default.  None of the Company or any of its subsidiaries is in breach, default or violation (and no event has occurred that, with notice or the lapse of time or both, would constitute a breach, default or violation) of any term, condition or provision of (a) its

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charter or bylaws, (b) any Contract to which the Company or any of its subsidiaries is now a party or by which any of them or any of their respective properties or assets is bound, or (c) any Judgment or any law, statute, rule or regulation applicable to the Company or any of its subsidiaries or any of their respective properties or assets except, in the case of (b) or (c), for violations, breaches or defaults that would not reasonably be expected to have a Material Adverse Effect.

2.9No Undisclosed Liabilities; Absence of Changes.

(a)Except as reflected in the June 2003 Financial Statements, none of the Company or its subsidiaries has any liabilities or obligations of any nature, whether or not accrued, contingent or otherwise, that would be required by generally accepted accounting principles to be reflected on a consolidated balance sheet of the Company (including the notes thereto), other than those incurred in the ordinary course of business consistent with past practice since June 30, 2003.  Notwithstanding the foregoing, Investor acknowledges that the June 2003 Financial Statements are unaudited as of the date hereof and are subject to change as may be required by the Company’s independent auditors.

(b)Without limiting the generality of the foregoing, except as set forth in the Company SEC Reports publicly available prior to the date hereof or in Section 2.9 of the Company Disclosure Schedule, since June 30, 2003, the Company and its subsidiaries have conducted their respective businesses and operations in, and have not engaged in any transaction other than according to, the ordinary and usual course of business consistent with past practice, and there has not occurred any:

(i)event, change, condition or occurrence which, individually or in the aggregate, has had or would be reasonably expected to have a Material Adverse Effect; or

(ii)change by the Company or any of its subsidiaries in its accounting principles, practices or methods, except as required by generally accepted accounting principles.

2.10Litigation.

(a)(i) There are no investigations, reviews, audits, hearings, claims, actions, suits, litigation or proceedings (at law or in equity), whether civil, criminal or administrative and whether formal or informal (each, a “Claim”) pending or, to the knowledge of the Company, threatened against the Company or any of its subsidiaries or any of their respective properties or assets before any Governmental Entity or arbitrator, and (ii) none of the Company or its subsidiaries is subject to any outstanding Judgment, that, in each case, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

(b)As used in this Agreement, “knowledge” with respect to the Company means the actual knowledge of the officers of the Company after reasonable inquiry.

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2.11Compliance with Applicable Law.

(a)The Company and its subsidiaries are in compliance with all laws, ordinances or regulations of Governmental Entities applicable to the Company or its subsidiaries, except for violations of any laws, ordinances or regulations that do not and would not reasonably be expected to have a Material Adverse Effect.  No investigation or review by any Governmental Entity with respect to the Company or its subsidiaries is pending or, to the knowledge of the Company, threatened, nor, to the knowledge of the Company, has any Governmental Entity indicated an intention to conduct the same.

(b)The Company and its subsidiaries hold all material permits, licenses, variances, exemptions, orders and approvals of all Governmental Entities (“Permits”) necessary for the lawful conduct of their respective businesses.  The Company and its subsidiaries are in compliance with the terms of all such Permits, except for violations that do not and would not reasonably be expected to have a Material Adverse Effect.

2.12Intellectual Property.

(a)For purposes of this Agreement, the terms below shall have the following meanings:

(i)“Intellectual Property” means all intellectual property rights of any nature or forms of protection of a similar nature or having equivalent or similar effect, including (A) all inventions, discoveries, processes, designs, techniques, developments, technology, and related improvements, whether or not patentable, (B) all patents, patent applications, divisionals, continuations, reissues, renewals, registrations, confirmations, re-examinations, certificates of inventorship, extensions, and the like, and any provisional applications of any such patents or patent applications, and any foreign or international equivalent of any of the foregoing, (C) any proprietary word, name, symbol, color, designation or device or any combination thereof, including any trademark, trade dress, service mark, service name, trade name, brand name, logo, Internet domain name or business symbol and any foreign or international equivalent of any of the foregoing and all goodwill associated therewith, and (D) technical, scientific, and other know-how and information, trade secrets, knowledge, technology, means, methods, processes, practices, formulas, instructions, skills, techniques, procedures, experiences, ideas, technical assistance, designs, drawings, assembly procedures, computer programs, apparatuses.

(ii)“infringe” means to infringe, dilute, impair, misuse, misappropriate or otherwise violate the rights of any other person in Intellectual Property.

(b)The Company has valid ownership rights in, or holds a valid license or similar legal right with respect to, all Intellectual Property necessary to conduct its business as now conducted without any conflict with, or infringement of, the rights of others.

(c)No Claim is pending or, to the knowledge of the Company, threatened before any Governmental Entity or arbitrator alleging that Company’s or its subsidiaries’ ownership or use of any Intellectual Property material to the operations of the Company and its subsidiaries, taken as a whole (collectively, the “Material Intellectual

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Property”) infringes the rights of others.  None of Company or its subsidiaries is subject to any outstanding Judgment involving any Material Intellectual Property owned or used by any person.

(d)None of the Company or its subsidiaries has threatened or initiated any Claim against any person before any Governmental Entity or arbitrator alleging that the actions of such person infringes the Company’s or such subsidiary’s rights with respect to any Material Intellectual Property.

2.13Assets.  The assets and properties of the Company and its subsidiaries, considered as a whole, constitute all of the assets and properties that are reasonably required for the business and operations of the Company and its subsidiaries as currently conducted.  The Company or its subsidiaries have good and marketable title to or a valid leasehold estate in all personal properties and assets reflected on the Company’s balance sheet at June 30, 2003, except (i) for properties or assets subsequently sold in the ordinary course of business consistent with past practice and (ii) as would not reasonably be expected to have a Material Adverse Effect, in each case, free and clear of all Liens, other than the Liens set forth in Section 2.13 of the Company Disclosure Schedule or as would not reasonably be expected to have a Material Adverse Effect.

2.14Employees; Employee Compensation.  There is no strike or labor dispute or union organization activities pending, threatened, or, to the Company’s knowledge, contemplated between the Company and its employees.  None of the Company’s employees belongs to any union or collective bargaining unit.  The Company has complied in all material respects with all applicable state and federal equal opportunity and other laws related to employment.

2.15Brokers.  No broker, finder or investment banker, is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement, based upon arrangements made by or on behalf of Company.

2.16Use of Proceeds.  The Company will use the net proceeds from the sale of the Shares for working capital and debt extinguishment.

3.Representations, Warranties and Covenants of Investor.  Investor hereby represents, warrants and covenants to the Company as follows:

3.1Authority Relative to this Agreement.

(a)Investor has all necessary power and authority to execute and deliver this Agreement and the Registration Rights Agreement to consummate the transactions contemplated hereby and thereby.  The execution and delivery of this Agreement and the Registration Rights Agreement and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary action of Investor.

(b)(i) This Agreement has been duly executed and delivered by Investor and, assuming that this Agreement constitutes a valid and binding agreement of the Company, constitutes a valid and binding agreement of Investor, enforceable against Investor in accordance with its terms, and (ii) when the Registration Rights Agreement has been duly

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executed and delivered by Investor and, assuming that the Registration Rights Agreement will constitute upon execution and delivery a valid and binding agreement of the Company, will constitute a valid and binding agreement of Investor, enforceable against Investor in accordance with its terms, in each case subject to the effect of (A) any bankruptcy, insolvency, reorganization, moratorium, arrangement or similar laws affecting the rights and remedies of creditors generally, including the effect of statutory or other laws regarding fraudulent transfers or preferential transfers and (B) general principles of equity, including without limitation concepts of materiality , reasonableness, good faith and fair dealing and the possible unavailability of specific performance, injunctive relief or other equitable remedies (regardless of whether enforceability is considered in a proceeding at law or in equity).

3.2Consents and Approvals; No Violations.

(a)No filing with or notice to, and no material permit, authorization, consent or approval of, any Governmental Entity is required to be obtained or made by Investor for the execution and delivery of the Transaction Agreements by Investor or the consummation of the transactions contemplated thereby by Investor.

(b)Neither the execution, delivery and performance of the Transaction Agreements by Investor, nor the consummation by Investor of the transactions contemplated hereby, will:

(i)conflict with or result in any breach of any provision of the respective trust instrument of Investor;

(ii)result in a violation or breach of or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, amendment, cancellation or acceleration), or impair the rights of Investor under any of the terms, conditions or provisions of any Contract to which Investor is a party or by which it is bound that is material to Investor, taken as a whole; or

(iii)violate any Judgment, or any law, statute, rule or regulation applicable to Investor or any of its respective properties or assets.

3.3Investment Representations.

(a)The Shares and the Common Stock issuable upon conversion thereof (collectively, the “Securities”), will be acquired for investment for Investor’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that Investor has no present intention of selling, granting any participation in, or otherwise distributing the same.  Investor does not have any Contract with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of the Securities.  As of the date hereof, Investor does not beneficially own any equity securities of the Company.

(b)Investor understands that the Shares have not, and any Common Stock acquired on conversion thereof at the time of issuance may not be, registered under the Securities Act on the grounds that the sale provided for in this Agreement and the issuance of

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securities hereunder is exempt from registration under the Securities Act pursuant to section 4(2) and Regulation D thereof, and that the Company’s reliance on such exemptions is based on Investor’s representations set forth herein.  Investor realizes that the basis for the exemption may not be present if, notwithstanding such representations, Investor has in mind merely acquiring the Securities for a fixed or determinable period in the future, or for a market rise, or for sale if the market does not rise.  Investor has no such intention.

(c)Investor acknowledges that an investment in the Company involves an extremely high degree of risk, and that Investor may lose Investor’s entire investment in the Securities.  Without limiting the foregoing, Investor has read the information contained in the Company SEC Reports, including the information under the heading “Risk Factors.”

(d)Investor has received all information it considers necessary or appropriate for deciding whether to purchase the Securities. Investor has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Securities and the business, properties, prospects and financial condition of the Company and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify the accuracy of any information furnished to it or to which it had access.

(e)Investor is experienced in evaluating and investing in securities of companies comparable to the Company and acknowledges that Investor is able to fend for itself, can bear the economic risk of its investment, and Investor and the trustee of Investor have such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the investment in the Shares.  Investor has not been organized for the purpose of acquiring the Securities.

(f)Investor is an accredited investor as defined in Rule 501(a)(7) of Regulation D promulgated under the Securities Act.  As such, Investor has total assets in excess of $5,000,000 and the purchase of the Securities is being directed by a “sophisticated person” as described in Rule 506(b)(2)(ii) of the Securities Act.

(g)The principal office of Investor is located in the State of California.

(h)Investor understands that the Shares (and any Common Stock issued on conversion thereof) may not be sold, transferred or otherwise disposed of without registration under the Securities Act or an exemption therefrom, and that in the absence of an effective registration statement covering the Shares (or the Common Stock issued on conversion thereof) or an available exemption from registration under the Securities Act, the Shares (and any Common Stock issued on conversion thereof) must be held indefinitely.  In particular, Investor is aware that the Shares (and any Common Stock issued on conversion thereof) may not be sold pursuant to Rule 144 promulgated under the Securities Act unless all of the conditions of that Rule are met.

(i)Investor has not received any general solicitation or general advertising concerning the Securities, nor is Investor aware of any such solicitation or advertising.

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(j)To the extent applicable, each certificate or other document evidencing any of the Shares or any Common Stock issued upon conversion thereof shall be endorsed with the legend set forth below, and Investor covenants that, except to the extent such restrictions are waived by the Company, Investor shall not transfer the shares represented by any such certificate without complying with the restrictions on transfer described in the legend endorsed on such certificate:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS PROVIDED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT REGISTRATION AND QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED.”

3.4Brokers. There are no contracts, agreements or understandings between Investor and any person that would give rise to a valid claim against Investor or the Company for a brokerage commission, finder’s fee or other like payment in connection with this Agreement or the issuance and sale of the Securities.

4.Conditions of Investor’s Obligations to Close.  The obligations of Investor under Section 1.1(b) hereof are subject to the fulfillment on or before the Closing of each of the following conditions, the waiver of which shall not be effective against Investor unless it consents in writing thereto:

4.1Representations and Warranties.  The representations and warranties of the Company contained in Section 2 hereof shall be true on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the date of the Closing.

4.2Performance.  The Company shall have performed and complied with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing.

4.3Board Approval.  The Company Board has approved the Transaction Agreements and the transactions contemplated thereby.

4.4Compliance Certificate.  The chief executive officer or chief financial officer of the Company shall deliver to Investor at the Closing a certificate certifying that the conditions specified in Sections 4.1, 4.2, 4.3 and 4.5 hereof have been fulfilled.

4.5Qualifications.  All authorizations, approvals or permits, if any, of any Governmental Entity or the consents of any other person that are required to be obtained before Closing in connection with the lawful issuance and sale of the Series A Preferred Stock pursuant to this Agreement shall be duly obtained and effective as of the Closing.

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4.6Proceedings and Documents.  All corporate and other proceedings in connection with the transactions contemplated at the Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to Investor.

4.7Registration Rights Agreement.  The Company shall have entered into the Registration Rights Agreement.

5.Conditions of the Company’s Obligations to Close.  The obligations of the Company to Investor under this Agreement are subject to the fulfillment on or before the Closing of each of the following conditions by Investor:

5.1Representations and Warranties.  The representations and warranties of Investor contained in Section 3 hereof shall be true on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the Closing.

5.2Performance.  Investor shall have performed and complied with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing.

5.3Board Approval.  The Company Board has approved the Transaction Agreements and the transactions contemplated thereby.

5.4Compliance Certificate.  The Trustee of Investor shall deliver to the Company at the Closing a certificate certifying that the conditions specified in Sections 5.1, 5.2, and 5.5 hereof have been fulfilled.

5.5Qualifications.  All authorizations, approvals or permits, if any, of any Governmental Entity that are required in connection with the lawful issuance and sale of the Shares pursuant to this Agreement shall be duly obtained and effective as of the Closing.

5.6Registration Rights Agreement.  Investor shall have entered into the Registration Rights Agreement.

5.6Closing Date.  The Closing shall have occurred on or before September 8, 2003.

5.7Stock Price.  The closing bid price of the Common Stock on the business day prior to the date of the Closing shall not be greater than $2.00 per share.

6.Confidentiality.  Investor shall maintain in confidence, and shall not use or disclose without the prior written consent of the Company, any confidential information provided by the Company to Investor (including, without limitation, all information set forth in the June 2003 Financial Statements and all other financial statements, budget and other information) in connection with the negotiation and execution of the Transaction Agreements and the consummation of the transactions contemplated hereby and thereby.  Investor shall return to the Company upon request all tangible materials that include any such information that was obtained by Investor in connection herewith.  Investor shall have no further obligation under this

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Section 6 with respect to confidential information which is or becomes publicly available without breach of this Agreement by Investor or its representatives.

7.Indemnification.  Each party (including its officers, directors, employees, affiliates, agents, successors and assigns) (each an “Indemnified Party”) shall be indemnified and held harmless by the other party hereto (each an “Indemnifying Party”) for any and all liabilities, losses, damages, claims, costs and expenses, interest, awards, judgments and penalties (including, without limitation, reasonable attorneys’ fees and expenses) actually suffered or incurred by them (collectively, “Losses”), arising out of or resulting from the breach of any representation or warranty made by an Indemnifying Party contained in this Agreement. Notwithstanding the foregoing, the aggregate liability of the Company under this Section 7 shall in no event exceed the Purchase Price.

8.Miscellaneous.

8.1Entire Agreement.  The Transaction Agreements constitute the entire agreement among the parties hereto with respect to the subject matter hereof and supersede all prior agreements and understandings both written and oral and all contemporaneous oral agreements and understandings between the parties with respect to the subject matter hereof.  Except for the express representations, warranties and covenants of the Company and Investor contained herein, there are no representations, warranties or covenants whatsoever by or on behalf of the Company to Investor or Investor to the Company.

8.2Survival of Warranties.  The warranties, representations and covenants of the Company and Investor contained in or made pursuant to this Agreement shall survive until the first anniversary of the Closing.

8.3Successors and Assigns.  Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties (including permitted transferees of any Shares sold hereunder or any Common Stock issued upon conversion thereof).  Nothing in this Agreement, express or implied, is intended to confer upon any Person other than the parties hereto or their respective successors and assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

8.4Governing Law.  This Agreement shall be governed by and construed under the laws of the State of California as applied to agreements among California residents entered into and to be performed entirely within California.

8.5Submission to Jurisdiction.  Each of the parties irrevocably agrees that any legal action or proceeding arising out of or related to this Agreement or for recognition and enforcement of any judgment in respect hereof brought by any other party hereto or its successors or assigns may be brought and determined in the federal courts located in the County of Venture, California or the courts of the State of California located in the County of Ventura, and each of the parties hereby irrevocably submits to the exclusive jurisdiction of the aforesaid courts for itself and with respect to its property, generally and unconditionally, with regard to any such action or proceeding arising out of or relating to this Agreement and the transactions

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contemplated hereby (and agrees not to commence any action, suit or proceeding relating thereto except in such courts).  Each of the parties agrees further to accept service of process in any manner permitted by such courts.  Each of the parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any action or proceeding arising out of or related to this Agreement or the transactions contemplated hereby, (a) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason other than the failure lawfully to serve process, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise), (c) to the fullest extent permitted by law, that (i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts and (d) any right to a trial by jury.

8.6Waiver of Jury Trial.  EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

8.7Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one instrument.

8.8Notices.  All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed given upon personal delivery or three business days after being mailed by certified or registered mail, postage prepaid, return receipt requested, or one business day after being sent via a nationally recognized overnight courier service if overnight courier service is requested from such service or upon receipt of electronic or other confirmation of transmission if sent via facsimile, to the parties, their successors in interest or their assignees at the following addresses and telephone numbers, or at such other addresses or telephone numbers as the parties may designate by written notice in accordance with this Section 8.8:

if to the Company to:	SMTEK International, Inc.
	200 Science Drive
	Moorpark, CA  93021
	Facsimile:  (805) 532-1608
	Attention:  Kirk A. Waldron
with a copy to:	Gibson, Dunn & Crutcher LLP
	4 Park Plaza
	Irvine, CA  92614
	Facsimile:  (949) 451-4220
	Attention:  Mark W. Shurtleff

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if to Investor:	The Gene Haas Trust DTD 3-9-99
	2800 Sturgis Road
	Oxnard, CA 93030
	Facsimile:  (805) 278-0506
	Attention:  Denis Dupuis
with a copy to:	Case, Knowlson, Jordan & Wright
	2049 Century Park East, Ste 3350
	Los Angeles, CA 90067
	Facsimile:  (310) 552-3229
	Attention:  Mark Eastman

8.9Expenses.  Each of the parties shall bear all of their respective costs and expenses incurred in connection with the negotiation, execution, delivery and performance of the Transaction Agreements, except that if the Closing is effected, the Company shall reimburse the reasonable fees of one counsel to Investor incurred in connection with the negotiation and execution of the Transaction Agreements, not to exceed $15,000.

8.10Attorneys’ Fees.  In the event that any dispute among the parties to this Agreement should result in litigation, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this Agreement, including without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals.

8.11Amendments and Waivers.  Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the parties hereto.

8.12Severability.  If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future law, and if the rights or obligations of any party hereto under this Agreement will not be materially and adversely affected thereby, (i) such provision will be fully severable, (ii) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, (iii) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom and (iv) in lieu of such illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible.

8.13Interpretation.  When a reference is made in this Agreement to a Section, Exhibit or Schedule, such reference shall be to a Section, Exhibit or Schedule of this Agreement unless otherwise indicated.  The headings contained in this Agreement are for convenience of reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.  All words used in this Agreement will be construed to be of such gender or number

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as the circumstances require.  Unless the context clearly requires otherwise “or” is not exclusive, and “includes” means “includes, but is not limited to.”  The inclusion of any matter in the disclosure schedules in connection with any representation, warranty, covenant or agreement that is qualified as to materiality or “Material Adverse Effect” shall not be an admission by Company that such matter is material or would have a Material Adverse Effect.

8.14Public Announcements.  Investor shall not issue any such press release or make any such public statement relating to the Transaction Agreements or the transactions contemplated thereby prior to consultation with the Company, except as may be required by applicable law, by court process.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

SMTEK INTERNATIONAL, INC.
By:	/s/ Kirk A. Waldron
Name:			Kirk A. Waldron
Title:		SVP, CFO
TRUSTEE OF THE GENE HAAS TRUST DTD 3-9-99
By:	/s/ Gene Haas
	Gene Haas, as Trustee of The Gene Hass Trust DTD 3-9-99

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EXHIBIT A

FORM OF

CERTIFICATE OF DESIGNATIONS

18

EXHIBIT B

FORM OF

REGISTRATION RIGHTS AGREEMENT

19

EX-10.2

EXHIBIT 10.2

SMTEK INTERNATIONAL, INC.

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made as of September 8, 2003, (the “Effective Date”), by and between SMTEK International, Inc., a Delaware corporation (the “Company”), and The Gene Haas Trust DTD 3-9-99 (“Investor”).

A.The Company and Investor have entered into that certain Series A Preferred Stock Purchase Agreement of even date herewith (the “Purchase Agreement”), and, upon the terms and subject to the conditions set forth in the Purchase Agreement, the Company has agreed to issue and sell to Investor an aggregate of 250,000 shares (the “Shares”) of the Company’s Series A Preferred Stock, $1.00 par value per share (the “Preferred Stock”), which shall be convertible into shares of common stock, $0.01 par value per share (the “Common Stock”), of the Company (as converted, the “Conversion Shares”).

B.To induce Investor to execute and deliver the Purchase Agreement, the Company has agreed to provide certain registration rights to Investor under the Securities Act of 1933, as amended, and the rules and regulations thereunder (the “Securities Act”), and applicable state securities laws.

NOW THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1.Definitions.

1.1Definitions.  As used in this Agreement, the following terms shall have the following meanings:

“Business Day” means any day other than Saturday, Sunday or any other day on which commercial banks in the State of California are required by law to remain closed.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.

“Holder” means Investor, for so long as it holds Registrable Securities, and any transferees or assignees holding Registrable Securities who agree to become bound by the provisions of this Agreement in accordance with Section 6.

“Person” means any individual, firm, corporation, partnership, limited liability company, unincorporated association, trust, Governmental Entity.

“Register,” “registered,” and “registration” refer to a registration effected by preparing and filing a Registration Statement in compliance with the Securities Act and the declaration or ordering of effectiveness of such Registration Statement by the SEC.

“Registrable Securities” means (i) the Conversion Shares issued upon conversion of the Shares and (ii) shares of Common Stock issued with respect to the Shares or the Conversion Shares by way of a stock dividend or stock split.  As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (i) a Registration Statement registering such securities under the Securities Act has been declared effective and such securities have been sold or otherwise transferred by the holder thereof pursuant to such effective Registration Statement or (ii) such securities may be sold to the public in accordance with Rule 144.

“Registration Expenses” means all expenses incurred by the Company in complying with Sections 2.1 and 2.2 hereof, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel and independent public accountants for the Company, fees and expenses (including reasonable counsel fees) incurred in connection with complying with state securities or “blue sky” laws, fees of the National Association of Securities Dealers, Inc., the reasonable fees and expenses of one counsel to the Holders incurred in connection with the exercise of the Holders’ rights hereunder, and fees of transfer agents and registrars, but excluding any Selling Expenses.

“Registration Statement” means a registration statement of the Company under the Securities Act.

“Requisite Amount” means 51% of the Conversion Shares issuable upon conversion of the Shares as of the date hereof.

“Rule 144” means Rule 144 promulgated under the Securities Act, or any successor provision.

“SEC” means the Securities and Exchange Commission.

“Selling Expenses” means all underwriting discounts and selling commissions, selling or placement agent or broker fees and commissions and transfer taxes, if any, applicable to the sale of Registrable Securities.

1.2Capitalized Terms.  Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Purchase Agreement.

2.Registration.

2.1Demand Registration.

(a)Holders of the Requisite Amount of Registrable Securities in aggregate shall be entitled to make a written request of the Company (such request being a “Demand”) for registration under the Securities Act, of all or part of the Registrable Securities (a “Demand Registration”).  The Demand shall specify: (i) the aggregate number of Registrable Securities requested to be registered; and (ii) the intended method of distribution in connection with the Demand Registration to the extent then known.  The Demand shall not be effective or impose any obligation upon the Company unless the Demand shall request the registration of not less than the Requisite Amount of Registrable Securities.  Within 10 days after receipt of the

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Demand, the Company shall give written notice of the Demand to all other Holders and, subject to the terms of this Agreement, shall include in such registration all Registrable Securities of each Holder with respect to which the Company has received a written request for inclusion therein within 20 days after the receipt by such Holder of the Company’s notice required by this Section 2.1(a).  The Holders shall be entitled to one Demand Registration.

(b)A registration shall not be treated as a Demand Registration until (i) the Registration Statement under the Securities Act has been filed with the SEC with respect to the Demand Registration and been declared effective and (ii) such Registration Statement shall have been maintained continuously effective for a period 60 days after the effective date of such Registration Statement, or such shorter period when all Registrable Securities included therein have been sold thereunder.  Notwithstanding the foregoing, if the Company is eligible to file a Registration Statement on Form S-3, the Holders of the Requisite Amount may request that, pursuant to Rule 415 under the Securities Act, the Registration Statement be maintained continuously effective until two (2) years after the Effective Date, or such shorter period when all Registrable Securities included therein have been sold thereunder or the Company is no longer eligible to use Form S-3.

(c)The Company may include in the Demand Registration other securities held by security holders of the Company, provided that such securities are of the same class as the Registrable Securities with respect to which the Demand Registration has been made.

(d)If, in connection with the Demand Registration, any managing underwriter advises the Company and the Holders of the Registrable Securities sought to be included in such Demand Registration that, in its judgment, marketing or other factors dictate that limiting the securities to be included in the Registration Statement is necessary to facilitate public distribution of the Registrable Securities ultimately to be included therein, then the Company shall include in the Registration Statement only such limited portion of the Registrable Securities as the underwriter shall advise in accordance with this Section 2.1(d).  Any exclusion of Registrable Securities shall be made pro rata among the Holders seeking to include Registrable Securities, in proportion to the number of Registrable Securities sought to be included by such Holders; provided, however, that the Company shall not exclude any Registrable Securities unless the Company has first excluded all outstanding securities other than the Registrable Securities.  If the Holders of a majority of the Registrable Securities sought to be registered in the Demand Registration request that such Demand Registration be an underwritten offering and the parties hereto deem it commercially reasonable, then, provided that a nationally recognized underwriter is willing to accept such engagement, the Company shall select a nationally recognized underwriter to manage and administer such offering (which underwriter shall be reasonably acceptable to Holders of a majority of the Registrable Securities sought to be registered in the Demand Registration).

(e)If, in connection with a Demand, if the Company or its subsidiaries (other than in connection with employee benefit and similar plans) has commenced preparations for a registration or the Company has received on behalf of any other security holder of the Company holding a demand registration right a notice of the exercise of such demand registration right prior to the receipt of the Demand (collectively, a “Company Offering”) with respect to which the Company furnishes the Holders of the Registrable Securities sought to be

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registered in the Demand Registration a certificate signed by the chief executive officer or chief financial officer of the Company to such effect (the “Transaction Delay Notice”) promptly after such receipt of the Demand, the Company shall not be required to effect the Demand Registration until the earliest of (i) 90 days after the completion of such Company Offering, (ii) promptly after the abandonment of such Company Offering or (iii) 180 days after the date of the Transaction Delay Notice; provided, however, that in any event the Company shall not be required to effect any Demand Registration prior to the termination or waiver of any “blackout period” applicable to the Holders pursuant to Section 2.3 or the Company, if any, in connection with the Company Offering.

(f)With respect to any Registration Statement to be filed in connection with a Demand Registration, (i) if the Company’s Board of Directors determines in its good faith judgment that the filing of a Registration Statement (or the effectiveness of such Registration Statement) would require the Company to disclose material non-public information or would materially interfere with any proposal or plan with respect to any material financing, acquisition, corporate reorganization or merger or other transaction involving the Company or any of its subsidiaries and the Company’s Board of Directors concludes, as a result of such potential disclosure or interference, that it is in the best interests of the Company to defer the filing or effectiveness of such Registration Statement at such time and (ii) the Company shall furnish to the Holders of the Registrable Securities sought to be registered in the Demand Registration a Transaction Delay Notice stating that in the good faith judgment of the Company’s Board of Directors, it would be materially detrimental to the Company for such Registration Statement to be filed or declared effective in the near future and that it is, therefore, in the best interests of the Company to defer the filing or effectiveness of such Registration Statement, then the Company shall have the right to defer such filing or effectiveness; provided, however, that such deferral shall not continue for a period of more than 90 days.  The Company shall not be required to state in any Transaction Delay Notice delivered pursuant to this Section 2.1(f), the nature of any event or circumstance constituting the basis for the Transaction Delay Notice.

(g)In the event the Company delivers the Holders of Registrable Securities sought to be registered in the Demand Registration a Transaction Delay Notice, Holders of a majority of the Registrable Securities making the Demand will be entitled for a period of 60 days, or if earlier, notice from the Company of its intention to commence preparation to file the Registration Statement, to withdraw the Demand and, if the Demand is withdrawn, such registration will not count as the Demand Registration hereunder.

2.2Piggy-Back Registrations.

(a)If the Company proposes to file with the SEC a Registration Statement (a “Piggyback Registration Statement”) relating to an offering for its own account or the account of others under the Securities Act of any of its Common Stock (except for Registration Statements registering convertible debt securities, which only includes Common Stock issuable upon conversion, repurchase or payment therefor, Registration Statements on Form S-4 or Form S-8 or any successor forms or any other form not available for registering resales of the Registrable Securities), then prior to such filing, the Company shall send to each Holder written notice of such determination and, if within fifteen (15) days after the date of such notice, a Holder shall so request in writing, the Company shall include in such Registration

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Statement all or any part of the Registrable Securities such Holder requests to be registered, provided that the Company shall not be obligated to include Registrable Securities if such Registrable Securities are covered by a Registration Statement pursuant to Section 2.1.

(b)Notwithstanding the foregoing, if, in connection with any such offering for the account of the Company or for the account of others, the managing underwriter(s) thereof shall impose a limitation on the number of shares of Common Stock which may be included in the Registration Statement because, in such underwriter(s)’ judgment, marketing, or other factors dictate that such limitation is necessary to facilitate public distribution, then the Company shall be obligated to include in such Registration Statement only such limited portion of the Registrable Securities with respect to which such Holder has requested inclusion hereunder as the underwriter(s) shall deem advisable.  Any exclusion of Registrable Securities shall be made pro rata among the Holders seeking to include Registrable Securities, in proportion to the number of Registrable Securities sought to be included by such Holders; provided, however, that the Company shall not exclude any Registrable Securities unless the Company also proportionately excludes all outstanding securities, the holders of which did not initiate the filing of such Registration Statement pursuant to so-called “demand” registration rights (it being agreed that the Holders’ rights under this Section 2.2 shall be at least co-equal with the rights of any other holder of “piggy-back” registration rights granted by the Company); and provided further, however, that, after giving effect to the immediately preceding proviso, any exclusion of Registrable Securities shall be made pro rata with holders of other securities having the right to include such securities in the Registration Statement on the basis of the number of securities such holders have requested to include in such Registration Statement.  No right to registration of Registrable Securities under this Section 2.2 shall be construed to limit the right of Holders of the Requisite Amount of Registrable Securities to Demand one Demand Registration under Section 2.1 hereof.  Notwithstanding anything contained in this Section 2.2 to the contrary, the Company shall not be required to exclude any Common Stock to be sold by the Company in the Registration Statement prior to excluding shares of Registrable Securities.

(c)If an offering in connection with which a Holder is entitled to registration under this Section 2.2 is an underwritten offering, then each Holder whose Registrable Securities are included in such Registration Statement shall, unless otherwise agreed by the Company, offer and sell such Registrable Securities in an underwritten offering using the same underwriter or underwriters and, subject to the provisions of this Agreement, on the same terms and conditions as other shares of Common Stock included in such underwritten offering.

(d)The Company may withdraw any Registration Statement referred to in this Section 2.2 without incurring any liability to the Holders.

2.3Holdback.

(a)Subject to Section 2.3(b), each Holder shall not file or cause to be effected any other registration of or effect any public sale or distribution of equity securities of the Company, or any securities convertible into or exchangeable or exercisable for such securities, during the 10 days prior to and the 90-day period beginning on the effective date of any underwritten public offering of Common Stock for the account of the Company or for the account of others (except as part of such underwritten registration, if permitted by Section 2.2 or

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otherwise permitted) unless the underwriters managing the registered public offering otherwise agree and such sale or distribution otherwise complies with Regulation M of the Exchange Act.

(b)Notwithstanding the foregoing, the Holders will not be subject to the foregoing holdback for any period or periods in the aggregate which are in excess of 150 days during any 365-day period.

3.Registration Procedures.

3.1Company Obligations.  If and whenever the Company is required by the provisions of Sections 2.1 or 2.2 to effect the registration of any shares of Registrable Securities under the Securities Act, the Company will use its reasonable efforts to as expeditiously as possible:

(a)prepare and file with the SEC a Registration Statement with respect to such securities and use its reasonable efforts to cause such Registration Statement to become and remain effective for the period contemplated hereby; provided, however, at least five Business Days before the filing of any Registration Statement, the Company will furnish the Holder of Registrable Securities covered by such Registration Statement, the underwriters, if any, and any attorney, accountant or other agent retained by any such Holders or underwriters a copy of all such documents proposed to be filed, which documents will be subject to review and reasonable comments of such Holders, their counsel and underwriters, if any;

(b)prepare and file with the SEC such amendments and supplements to such Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement effective for the period specified in subsection (a) above and to comply with the provisions of the Securities Act;

(c)furnish to each Holder of Registrable Securities covered by such Registration Statement and to each underwriter such number of copies of the Registration Statement and the prospectus included therein (including each preliminary prospectus) as such Persons reasonably may request in order to facilitate the public sale or other disposition of the Registrable Securities covered by such Registration Statement;

(d)use its reasonable efforts to register or qualify the Registrable Securities covered by such Registration Statement under the securities or “blue sky” laws of such jurisdictions as the Holders of Registrable Securities covered thereby, or, in the case of an underwritten public offering, the managing underwriter reasonably shall request; provided, however, that the Company shall not for any such purpose be required to qualify generally to transact business as a foreign corporation in any jurisdiction where it is not so qualified, to subject itself to taxation in any such jurisdiction, or to consent to general service of process in any such jurisdiction;

(e)use its reasonable efforts to list for quotation the Registrable Securities covered by such Registration Statement with any market on which the Common Stock of the Company is then listed;

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(f)immediately notify each Holder of Registrable Securities covered by such Registration Statement and each underwriter under such Registration Statement, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event of which the Company has knowledge as a result of which the prospectus contained in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing and, subject to Sections 3.2 and 3.3(e), at the request of any such Holder, prepare and furnish to such Holder a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such shares, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or incomplete in the light of the circumstances then existing;

(g)if the offering is underwritten, at the request of any Holder of Registrable Securities covered by such Registration Statement and the underwriters, (i) use its reasonable efforts to furnish on the date that the Registrable Securities are delivered to the underwriters for sale pursuant to such registration, an opinion dated such date of counsel representing the Company for the purposes of such registration, addressed to the underwriters in customary form and covering such matters as are customarily covered by such opinionsdelivered to underwriters in such underwritten offerings, and (ii) use its reasonable efforts to furnish on the date that the Registrable Securities are delivered to the underwriters for sale pursuant to such registration, a letter dated such date from the independent public accountants retained by the Company, addressed to the underwriters, in customary form and covering such matters as are customarily covered by “comfort” letters delivered to underwriters in such underwritten offerings;

(h)to the extent applicable, make available for inspection by a Holder of Registrable Securities covered by such Registration Statement designated by a majority of the Registrable Securities covered thereby, any underwriter participating in any distribution pursuant to such Registration Statement, and any attorney, accountant or other agent retained by such Holder or underwriter, at the offices where normally kept, during reasonable business hours, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company’s officers, directors and employees to supply all information, in each case, as is reasonably requested by such Holder, underwriter, attorney, accountant or agent in connection with such Registration Statement, as shall be necessary, in the opinion of their respective counsel, to conduct a reasonable investigation under Section 11 of the Securities Act; provided, however, that the foregoing shall not require the Company to provide access to (or copies of) any competitively sensitive information relating to the Company or its subsidiaries or their respective businesses; provided further, however that such Holder and the underwriters and their respective counsel, accountants and other agents shall use their reasonable best efforts to minimize the disruption to the Company’s business and coordinate any such investigation of the books, records and properties of the Company and any discussions with the Company’s officers and accountants so that all such investigations occur at the same time and all such discussions occur at the same time; and provided, further that any non-public information that is delivered to the Holder or the underwriters or their respective counsel, accountants and other agents hereunder shall be kept confidential by the Holder or any such underwriter, attorney, accountant or agent

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unless (i) disclosure of such information is required by court or administrative order, (ii) disclosure of such information, in the opinion of counsel to any such inspecting Person, is required by law or (iii) such information becomes generally available to the public other than as a result of a disclosure or failure to safeguard by any such inspecting Person, and provided further that each Person provided access hereunder agrees that is shall, upon learning that disclosure of such information is sought in or by a court or other Governmental Entity of competent jurisdiction, give prompt notice to the Company and allow the Company, at its expense, too undertake appropriate action to prevent such disclosure of, or to obtain a protective order for, such information;

(i)use its reasonable efforts to obtain the withdrawal of any stop order or other order suspending the effectiveness of any Registration Statement or sales thereunder at the earliest possible time;

(j)provide a transfer agent and registrar for all Registrable Securities registered pursuant to such Registration Statement not later than the effective date of such Registration Statement;

(k)otherwise use its reasonable efforts to comply with all applicable rules and regulations of the SEC, and make available to its security holders, as soon as reasonably practicable, an earnings statement satisfying the provisions of Section 11(a) of the Securities Act (including Rule 158 of the Securities Act);

(l)permit any underwriter or any Holder, which in its reasonable judgment, might be deemed to be an underwriter or a controlling person of the Company, to participate in the preparation of such Registration Statement and to include therein any material, furnished to the Company in writing, which in the reasonable judgment of such underwriter or Holder and their respective counsel should be included (which material shall be reasonably acceptable to the Company);

(m)promptly (but in any event, within five Business Days) notify the Holders of Registrable Securities covered by such Registration Statement, their counsel and the underwriters, if any, and, if requested, confirm such notice in writing, with respect to the following:

(i)when a prospectus or any supplement or post-effective amendment to such prospectus has been filed, and with respect to a Registration Statement or any post-effective amendment thereto when the same has become effective;

(ii)of any request to the Company by the SEC or any other Governmental Entity for amendments or supplements to an effective Registration Statement or related prospectus or for additional information;

(iii)of the issuance to the Company by the SEC of any stop order suspending the effectiveness of a Registration Statement or of any order preventing or suspending the use of any prospectus or the initiation of any proceedings by any Person for that purpose;

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(iv)of the receipt by the Company of any notification with respect to (A) the suspension of the qualification or exemption from qualification of a Registration Statement or any of the Registrable Securities for offer or sale under the securities of blue sky laws of any jurisdiction or (B) the contemplation, initiation or threatening, of any proceeding for such purpose; and

(v)of the Company’s reasonable determination that a post-effective amendment to a Registration Statement would be appropriate;

(n)cooperate with the Holders of Registrable Securities covered by such Registration Statement and the underwriters, if any, to facilitate the timely preparation and delivery of certificates representing the Registrable Securities sold pursuant to such Registration Statement without restrictive legends and cause such Registrable Securities to be in such denominations and registered in such names as the underwriters, if any, or Holders of such Registrable Securities may request at least two Business Days prior to any sale of Registrable Securities pursuant to the Registration Statement;

(o)cooperate with all reasonable requests of each Holder of Registrable Securities covered by such Registration Statement and each underwriter, if any, participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings to be made with the National Association of Securities Dealers, Inc; and

(p)enter into and perform its obligations under any underwriting agreement, in usual and customary form, reasonably acceptable to the Company with the underwriters of such offering.

3.2Suspension of Use of Registration Statement.  At any time, when a Registration Statement effected pursuant to Sections 2.1 or 2.2 relating to Registrable Securities is effective and a prospectus relating thereto is required to be delivered under the Securities Act, that the Company becomes aware that the prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Company shall promptly provide the Holders written notice thereof, and the Holders shall suspend sales of Registrable Securities pursuant to such Registration Statement until the date upon which the Company notifies the Holders the prospectus included in such Registration Statement, as then supplemented or amended, no longer includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.  In such event, the Company shall promptly make such disclosure as necessary to enable such continued sales under the Registration Statement, provided, however, that if the Company, in good faith determines that such amendment or supplement would require disclosure of material information which the Company has a bona fide business purpose for preserving as confidential the Company may delay making such amendment or supplement for up to 90 days.

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3.3Holders’ Obligations.  In connection with the registration of the Registrable Securities, a Holder shall have the following obligations:

(a)such Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it, other securities of the Company held by it, its affiliations with broker-dealers, and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect the registration of such Registrable Securities and such Holder shall execute such documents in connection with such registration as the Company may reasonably request;

(b)each Holder, shall cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of the Registration Statements, unless such Holder has notified the Company in writing of such Holder’s election to exclude all of such Holder’s Registrable Securities from the applicable Registration Statement, in which case such Holder is not required to cooperate in connection with such preparation and filing until it notifies the Company of its desire to include Registrable Securities in a Registration Statement;

(c)each Holder whose Registrable Securities are included in a Registration Statement understands that the Securities Act may require delivery of a prospectus relating thereto in connection with any sale thereof pursuant to such Registration Statement, and each such Holder shall comply with the applicable prospectus delivery requirements of the Securities Act in connection with any such sales;

(d)each Holder shall notify the Company promptly, but in any event within five Business Days after the date on which all Registrable Securities covered by a Registration Statement which are owned by such Holder have been sold by such Holder, if such date is prior to the expiration of the Registration Period;

(e)each Holder, upon receipt of written notice from the Company of the happening of any event of the kind described in Section 3.2, shall immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until such Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 3.2 and, if so directed by the Company, such Holder shall deliver to the Company (at the expense of the Company) or destroy (and deliver to the Company a certificate of destruction) all copies in such Holder’s possession (other than a limited number of permanent file copies), of the prospectus covering such Registrable Securities current at the time of receipt of such notice;

(f)no Holder may participate in any underwritten distribution pursuant to a Registration Statement under Sections 2.1 or 2.2 unless such Holder (i) agrees to sell such Holder’s Registrable Securities on the basis provided in any underwriting arrangements in usual and customary form entered into by the Company, (ii) delivers the Registrable Securities and completes, executes and delivers all documents reasonably required under the terms of such underwriting arrangements, and (iii) agrees to pay its pro rata share of all Selling Expense and any Registration Expenses in excess of those payable by the Company pursuant to Section 3.4.

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3.4Expenses of Registration.

(a)The Company will pay all Registration Expenses in connection with each Registration Statement under Sections 2.1 and 2.2.

(b)All Selling Expenses in connection with each Registration Statement under Sections 2.1 and 2.2 shall be borne by the participating Holders and such other participating security holders other than the Company (except to the extent the Company shall be a seller) in proportion to the number of shares sold by each under the Registration Statement.

4.Indemnification and Contribution.

4.1Indemnification by the Company. In the event of a registration of any of the Registrable Securities under the Securities Act pursuant to Sections 2.1 and 2.2, the Company will indemnify and hold harmless each Holder of Registrable Securities included in such Registration Statement, each underwriter of such Registrable Securities thereunder and each other Person, if any, who controls such Holder or underwriter within the meaning of the Securities Act, against any losses, claims, damages or liabilities, to which such Holder, underwriter or controlling Person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement under which such Registrable Securities were registered under the Securities Act pursuant to Sections 2.1 or 2.2, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each such Holder, each such underwriter and each such controlling Person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case (i) if and to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by any such Holder, any such underwriter or any such controlling Person in writing specifically pertaining to such Holder, underwriter or controlling Person for use in such Registration Statement or prospectus or (ii) such untrue statement or alleged untrue statement or omission or alleged omission was contained in a preliminary prospectus and corrected in a final or amended prospectus, and such Holder, underwriter or controlling Person failed to deliver a copy of the final or amended prospectus at or prior to the confirmation of the sale of Registrable Securities to the Person asserting any such loss, claim, damage or liability in any case where such delivery is required by the Securities Act or any state securities laws.

4.2Indemnification by the Holders.  In the event of a registration of any of the Registrable Securities under the Securities Act pursuant to Sections 2.1 and 2.2, each Holder of Registrable Securities covered by such Registration Statement, severally and not jointly, will indemnify and hold harmless the Company and its affiliates, directors, officers, agents and employees and each Person, if any, who controls the Company within the meaning of the Securities Act and the affiliates, directors, officers, agents or employees of such controlling

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Persons, each underwriter and each Person who controls any underwriter within the meaning of the Securities Act, against all losses, claims, damages or liabilities, joint or several, to which the Company or such officer, director, underwriter or controlling Person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement under which such Registrable Securities were registered pursuant to Sections 2.1 or 2.2 hereof, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case, to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with information pertaining to such Holder, furnished in writing to the Company by such Holder specifically for use in such Registration Statement or prospectus, and will reimburse the Company and each such officer, director, underwriter and controlling Person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the liability of each Holder hereunder shall be limited to the proportion of any such loss, claim, damage, liability or expense which is equal to the proportion that the public offering price of the shares sold by such Holder under such Registration Statement bears to the total public offering price of all securities sold thereunder, but not in any event to exceed the proceeds received by such Holder from the sale of Registrable Securities covered by such Registration Statement.

4.3Procedures.

(a)Promptly after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof, but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to such indemnified party other than under this Section 4 and shall only relieve it from any liability which it may have to such indemnified party under this Section 4 if and to the extent the indemnifying party is materially prejudiced by such omission.

(b)Subject to Section 4.3(c), in case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel reasonably satisfactory to such indemnified party, and, after notice from the indemnifying party to such indemnified party of its election so to assume and undertake the defense thereof, the indemnifying party shall not be liable to such indemnified party under this Article 4 for any expenses subsequently incurred by such indemnified party in connection with the defense thereof.

(c)Any indemnified party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the indemnified party unless (i) the employment of such counsel shall have been specifically authorized in writing by the indemnifying party, (ii) the indemnifying party shall have failed to assume the defense of such action, or (iii) the named

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parties to any such action (including any impleaded parties) include both the indemnified party and the indemnifying party, and the indemnified party shall have been advised by such counsel that there are conflicts of interest between such indemnified party and the indemnifying party (in which case the indemnifying party shall not have the right to assume the defense of such action on behalf of the indemnified party).  In any such case, the indemnifying party shall not, in connection with any one action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for all indemnified parties and all such fees and expenses shall be reimbursed as they are incurred.

(d)Whether or not such defense is assumed by the indemnifying party, such indemnifying party will not be subject to any liability for any settlement made without its consent (which consent shall not be unreasonably withheld or delayed).  No indemnifying party shall, without the consent of the indemnified party (which consent shall not be unreasonably withheld or delayed), consent to entry of any judgment or enter into any settlement which (i) does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation for which such indemnified party would be entitled to indemnification hereunder, or (ii) provides for other than monetary damages.

4.4Contribution.  If the indemnification provided for in this Article 4 is unavailable to or insufficient to hold harmless an indemnified party under Sections 4.1 or 4.2 in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then, except to the extent that contribution is not permitted under the Securities Act, each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), the relative benefits received by each party from the offering of the Registrable Securities (taking into account the portion of the proceeds received by each), as well as any other relevant equitable considerations.  The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such indemnifying party or by such indemnified party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim.  No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

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5.Reports Under the Exchange Act.  With a view to making available to the Holders the benefits of Rule 144, the Company agrees that so long as the Registrable Securities remain outstanding:

(a)the Company shall use its reasonable efforts to timely file all reports required to be filed with the SEC pursuant to the Exchange Act, and the Company shall not terminate its status as an issuer required to file reports under the Exchange Act even if the Exchange Act or the rules and regulations thereunder would permit such termination;

(b)the Company shall use its reasonable efforts to file with the SEC in a timely manner and make and keep available all reports and other documents required of the Company under the Securities Act and the Exchange Act to the extent that the filing and availability of such reports and other documents is required for the Holders to sell Registrable Securities under Rule 144; and

(c)the Company shall furnish to each Holder, promptly upon request, (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents filed by the Company with the SEC, and (iii) such other publicly available information as may be reasonably requested to permit the Holders to sell such securities pursuant to Rule 144.

6.Assignment of Registration Rights.  The rights of the Holders hereunder, including the right to have the Company register Registrable Securities pursuant to this Agreement, shall be automatically assigned by each Holder to any transferee of all or any portion of the Registrable Securities (other than pursuant to a Registration Statement or in reliance on Rule 144) provided the transferee or assignee agrees in writing for the benefit of the Company to be bound by all of the provisions contained herein.

7.Amendment of Registration Rights.  Provisions of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively) only with written consent of the Company and Holders who then hold a majority of the Registrable Securities.  Any amendment or waiver effected in accordance with this Section 7 shall be binding upon each Holder and the Company.  Notwithstanding the foregoing, (i) no such amendment, modification or waiver shall be effective against a particular Holder without such Holder’s consent, if such amendment, modification or waiver would adversely affect such Holder’s rights under this Agreement in a manner disproportionate (in relation to such Holder’s proportional ownership of Registrable Securities) to the effect of such amendment, modification or waiver on other Holders, and (ii) the provisions of this Section 7 shall not be amended or modified without the written consent of each of the Holders.

8.Miscellaneous.

8.1Record Holder.  A Person is deemed to be a Holder whenever such Person owns of record such Registrable Securities.  If the Company receives conflicting instructions, notices or elections from two or more Persons with respect to the same Registrable Securities,

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the Company shall act upon the basis of instructions, notice or election received from the registered owner of such Registrable Securities.

8.2Entire Agreement.  This Agreement and the Purchase Agreement constitute the entire agreement among the parties hereto with respect to the subject matter hereof and supersede all prior agreements and understandings both written and oral and all contemporaneous oral agreements and understandings between the parties with respect to the subject matter hereof.  Except for the express representations, warranties and covenants contained herein, there are no representations, warranties or covenants by or on behalf of the parties hereto.

8.3No Third Party Beneficiaries.  Except as expressly set forth in Section 4, nothing in this Agreement, express or implied, is intended to confer upon any Person other than the parties hereto or their respective successors and assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement.

8.4Governing Law.  This Agreement shall be governed by and construed under the laws of the State of California as applied to agreements among California residents entered into and to be performed entirely within California.

8.5Submission to Jurisdiction.  Each of the parties irrevocably agrees that any legal action or proceeding arising out of or related to this Agreement or for recognition and enforcement of any judgment in respect hereof brought by any other party hereto or its successors or assigns may be brought and determined in the federal courts located in the County of Ventura, California or the courts of the State of California located in the County of Ventura, and each of the parties hereby irrevocably submits to the exclusive jurisdiction of the aforesaid courts for itself and with respect to its property, generally and unconditionally, with regard to any such action or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby (and agrees not to commence any action, suit or proceeding relating thereto except in such courts).  Each of the parties agrees further to accept service of process in any manner permitted by such courts.  Each of the parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any action or proceeding arising out of or related to this Agreement or the transactions contemplated hereby, (a) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason other than the failure lawfully to serve process, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise), (c) to the fullest extent permitted by law, that (i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts and (d) any right to a trial by jury.

8.6Waiver of Jury Trial.  EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

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8.7Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one instrument.

8.8Notices.  All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed given upon personal delivery or three Business Days after being mailed by certified or registered mail, postage prepaid, return receipt requested, or one Business Day after being sent via a nationally recognized overnight courier service if overnight courier service is requested from such service or upon receipt of electronic or other confirmation of transmission if sent via facsimile, to the parties, their successors in interest or their assignees at the following addresses and telephone numbers, or at such other addresses or telephone numbers as the parties may designate by written notice in accordance with this Section 8.8:

if to the Company to:	SMTEK International, Inc. 200 Science Drive Moorpark, CA  93021 Facsimile:  (805) 532-1608 Attention:  Kirk A. Waldron
with a copy to:	Gibson, Dunn & Crutcher LLP 4 Park Plaza Irvine, CA  92614 Facsimile:  (949) 451-4220 Attention:  Mark W. Shurtleff
if to a Holder:	to such Holder’s address as it appears on the Company’s records.

8.9Attorneys’ Fees.  In the event that any dispute among the parties to this Agreement should result in litigation, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this Agreement, including without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals.

8.10Severability.  If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future law, and if the rights or obligations of any party hereto under this Agreement will not be materially and adversely affected thereby, (i) such provision will be fully severable, (ii) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, (iii) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom and (iv) in lieu of such illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible.

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8.11Interpretation.  When a reference is made in this Agreement to a Section, such reference shall be to a Section of this Agreement unless otherwise indicated.  The headings contained in this Agreement are for convenience of reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.  All words used in this Agreement will be construed to be of such gender or number as the circumstances require.  Unless the context clearly requires otherwise “or” is not exclusive, and “includes” means “includes, but is not limited to.”

8.12Termination. The obligations of the Company under this Agreement shall terminate on the second anniversary of the Effective Date.

8.13Further Assurances.  Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

8.14Additional Registration Rights.  The Company shall not enter into any registration rights or comparable agreement which provides rights or restrictions which are inconsistent with this Agreement.  In the event the registration requirements under the Securities Act are amended or eliminated to accommodate a “company registration” or similar approach, this Agreement shall be deemed amended to the extent necessary to reflect such changes and the intent of the parties hereto with respect to the benefits and obligations of the parties, and in such connection, the Company shall use its best efforts to provide the Holders with equivalent benefits to those provided hereunder.

[Signature page follows.]

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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first above written.

SMTEK INTERNATIONAL, INC.
By:		/s/ Kirk A. Waldron
Name:				Kirk A. Waldron
Title:			Senior Vice President, CFO
TRUSTEE OF THE GENE HAAS TRUST DTD 3-9-99
By:	/s/ Gene Haas
Gene Haas, as Trustee of The Gene Haas Trust DTD 3-9-99

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