Third Amendment To The Credit Agreement

Exhibit 10.1


EXECUTION COPY


THIRD AMENDMENT


THIRD AMENDMENT, dated as of July 31, 2001 (this "Amendment"), to the Credit Agreement, dated as of June 29, 2000 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among ACT MANUFACTURING, INC., a Massachusetts corporation (the "Parent Borrower"), the several banks and other financial institutions or entities from time to time parties thereto (the "Lenders"), CREDIT SUISSE FIRST BOSTON, as syndication agent (in such capacity, the "Syndication Agent"), SOCIETE GENERALE, as documentation agent (in such capacity, the "Documentation Agent") and THE CHASE MANHATTAN BANK, as administrative agent (in such capacity, the "Administrative Agent").


W I T N E S S E T H:


WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make, and have made, certain loans and other extensions of credit to the Parent Borrower; and


WHEREAS, the Parent Borrower has requested, and, upon this Amendment becoming effective, the Lenders have agreed, that certain provisions of the Credit Agreement be modified in the manner provided for in this Amendment;


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


1. Defined Terms. Unless otherwise defined herein, capitalized terms used herein which are defined in the Credit Agreement are used herein as therein defined.


2. Amendments to Section 1 of the Credit Agreement. Section 1 of the Credit Agreement is hereby amended as follows:


(a) Section 1.1 of the Credit Agreement is hereby amended by adding
the following new definitions in the appropriate alphabetical order:


""Allowable Foreign Debt": Indebtedness of Foreign Subsidiaries,
other than Indebtedness already permitted by this Agreement, of up to
$25,000,000.


"Field Examination": as defined in Section 6.6.


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"Foreign Subsidiary Collateral Sublimit": the lesser of (A) the sum
of (x) 65% of the Qualified Accounts owed to any Foreign Subsidiary, (y)
35% of Qualified Inventory owned by any Foreign Subsidiary, and (z) 40% of
the appraised orderly liquidation value of Qualified Machinery and
Equipment owned by any Foreign Subsidiary; and (B) the lesser of (x)
$25,000,000 minus an amount (the "Reduction Amount") equal to $2,500,000
times the number of quarters that have begun since December 31, 2001 and
(y) $25,000,000 minus the amount of any outstanding Allowable Foreign
Debt; provided, however, that the Foreign Subsidiary Collateral Sublimit
shall be zero Dollars after March 31, 2003.


"Third Amendment Effective Date": the date on which the Third
Amendment, dated as of July 31,2001, to this Agreement became effective
in accordance with its terms."


(b) Section 1.1 of the Credit Agreement is hereby amended by deleting the following definitions and substituting, in lieu thereof, the following:


""Applicable Margin": (a) for Alternate Base Rate Loans, 2.50% per
annum, and (b) for Eurocurrency Loans, 3.50% per annum; provided, that, on
and after the date that the financial statements described in Section
6.1(b) for the quarterly period ending March 31, 2002 are delivered, the
Applicable Margin shall be determined pursuant to the Pricing Grid."


""Borrowing Base": the sum in United States Dollars of the following
determined as of the latest Borrowing Base Certificate delivered to the
Administrative Agent:


(a) the sum of:


(i) 80% of the aggregate amount of Qualified Accounts owed
to the Parent Borrower or any Domestic Subsidiary; plus


(ii) 50% of the aggregate amount of Qualified Inventory owned
by the Parent Borrower or any Domestic Subsidiary; plus


(iii) 80% of the appraised orderly liquidation value of
Qualified Machinery and Equipment owned by the Parent
Borrower or any Domestic Subsidiary; provided that,
after January 1, 2002, the amount shall be the lesser
of (i) 80% of the appraised orderly liquidation value of
Qualified Machinery and Equipment owned by the Parent
Borrower or any Domestic Subsidiary and (ii) $10,115,768
minus an amount equal to $168,596 times the number of
months that have begun since December 31, 2001; plus


(iv) the Foreign Subsidiary Collateral Sublimit;


minus


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(b) the sum of:


(i) the then outstanding principal balance of the Term
Loans; plus


(ii) the aggregate amount of the L/C Obligations; plus


(iii) the amount of any foreign exchange exposure; plus


(iv) the amount of the Borrowers' liability under any Hedge
Agreement;


in each case as calculated by the Administrative Agent from time to time;
provided, however, that the Administrative Agent, in its sole discretion,
may on reasonable prior written notice to the Borrowers redetermine the
Borrowing Base including, but not limited to, reducing the percentages of
Qualified Accounts, Qualified Inventory, Qualified Machinery and Equipment
included in the Borrowing Base."


"Facility": each of (a) the Term Commitments and the Term Loans made
thereunder (the "Term Facility") and (b) the US Dollar Revolving
Commitments and the extensions of credit made thereunder (the "US Dollar
Revolving Facility").


"Revolving Commitment": as to any Lender, such Lender's US Dollar
Revolving Commitments.


"Revolving Facility": the US Dollar Revolving Facility.


(c) Section 1.1 of the Credit Agreement is hereby amended by deleting the following defined terms:


Calculation Date
Designated Foreign Currency
Dollar Equivalent
Exchange Rate
Multi-Currency
Multi-Currency Payment Agent
Multi-Currency Revolving Commitment
Multi-Currency Revolving Lender
Multi-Currency Revolving Loans
Multi-Currency Revolving Percentage
Total Multi-Currency Revolving Commitment


(d) Section 1.1 of the Credit Agreement is hereby amended by deleting the last sentence of the definition of "US Dollar Revolving Commitment".


3. Amendments to Section 2 of the Credit Agreement. Section 2 of the Credit Agreement is hereby amended as follows:


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(a) Sections 2.4, 2.5 and 2.8 are hereby deleting in their entirety and the following new sections are hereby substituted in lieu thereof:


"2.4 Revolving Commitments. (a) Subject to the terms and conditions
hereof, each US Dollar Revolving Lender severally agrees to make revolving
credit loans to the Parent Borrower and to the Subsidiary Borrower in US
Dollars ("US Dollar Revolving Loans") from time to time during the
Revolving Commitment Period in an aggregate principal amount at any one
time outstanding which, when added to such US Dollar Lender's Revolving
Percentage of the sum of the L/C Obligations then outstanding, does not
exceed the amount of such Lender's US Dollar Revolving Commitment (the
"Revolving Loans"). Notwithstanding the above, in no event shall any
Revolving Loan be made or Letter of Credit be issued, if, after giving
effect to such making or issuance and the use of proceeds thereof as
directed by the Parent Borrower or the Subsidiary Borrower, as the case
may be, the Total Revolving Extensions of Credit would exceed the lesser
of (i) the Total Revolving Commitments or (ii) the Borrowing Base as of
the date of the most recent Borrowing Base Certificate furnished to the
Administrative Agent pursuant to Section 5.1(m) or Section 6.2(f) hereof.
During the Revolving Commitment Period, the Borrowers may use the
Revolving Commitments by borrowing, prepaying the Revolving Loans in whole
or in part, and reborrowing, all in accordance with the terms and
conditions hereof. The Revolving Loans may from time to time be
Eurocurrency Loans or Alternate Base Rate Loans, as determined by the
Parent Borrower or the Subsidiary Borrower, as the case may be, and
notified to the Administrative Agent in accordance with Sections 2.5 and
2.10.


(b) The Borrowers shall repay all outstanding Revolving Loans on the
Revolving Termination Date. To the extent the Revolving Termination Date
extends beyond the maturity date of any subordinated debt of the Parent
Borrower existing on the date hereof, such Revolving Termination Date
shall be adjusted to be 90 days prior to the maturity date of such
subordinated debt.


(c) Up to an aggregate principal amount of $40,000,000 of the
Revolving Facility will be available for borrowings by the Subsidiary
Borrower.


2.5 Procedure for Revolving Loan Borrowing: Calculation of Borrowing
Base. (a) The Parent Borrower and the Subsidiary Borrower, as the case may
be, may borrow under the Revolving Commitments during the Revolving
Commitment Period on any Business Day, provided that such Borrower shall
give the Administrative Agent irrevocable notice (which notice must be
received by the Administrative Agent prior to 12:00 Noon, New York City
time, (a) three Business Days prior to the requested Borrowing Date, in
the case of Eurocurrency Loans, or (b) on the requested Borrowing Date, in
the case of Alternate Base Rate Loans), specifying (i) the amount and Type
of Revolving Loans to be borrowed, (ii) the requested Borrowing Date and
(iii) in the case of Eurocurrency Loans, the amounts of each Loan and the
lengths of the initial Interest Period therefor. Any US Dollar Revolving
Loans made on the Initial Closing Date shall initially be Alternate Base
Rate Loans and, unless otherwise agreed by the Administrative


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Agent in its sole discretion, no Revolving Loan may be made as, converted
into or continued as a Eurocurrency Loan having an Interest Period in
excess of one month prior to the date that is 60 days after the Initial
Closing Date. Each borrowing under the Revolving Commitments shall be in
an amount equal to (x) in the case of Alternate Base Rate Loans, $1 or a
whole multiple thereof and (y) in the case of Eurocurrency Loans,
$5,000,000 or a whole multiple of $1,000,000 in excess thereof. Upon
receipt of any such notice from the Parent Borrower or the Subsidiary
Borrower, as the case maybe, the Administrative Agent shall promptly
notify each Revolving Lender thereof. Each US Dollar Revolving Lender will
make the amount of its pro rata share of each borrowing available to the
Administrative Agent for the account of such Borrower at the Funding
Office prior to 3:00 p.m., New York City time, on the Borrowing Date
requested by such Borrower in funds immediately available to the
Administrative Agent. Such borrowing will then be made available to such
Borrower by the Administrative Agent crediting the account of such
Borrower on the books of such office with the aggregate of the amounts
made available to the Administrative Agent by the US Dollar Revolving
Lenders and in like funds as received by the Administrative Agent.


(b) The Administrative Agent shall calculate from time to time the
amount of the Borrowing Base, based upon the most recent Borrowing Base
Certificate, and such amount shall be the "Borrowing Base" hereunder;
provided, however, that the Administrative Agent, in its sole reasonable
discretion, may on reasonable prior written notice to the Borrowers,
establish additional reserves against the Borrowing Base.


2.8 Optional Prepayments. Any Borrower may at any time and from time
to time prepay such Borrower's Loans, in whole or in part, without premium
or penalty, upon irrevocable notice of the amount of the Loan to be
prepaid and of the requested prepayment date delivered to the
Administrative Agent at least three Business Days prior thereto in the
case of Eurocurrency Loans and at least one Business Day prior thereto in
the case of Alternate Base Rate Loans, which notice shall specify the date
and amount of prepayment and whether the prepayment is of Eurocurrency
Loans or Alt ...