Credit Agreement

Exhibit 10.1


EXECUTION COPY


$250,000,000


CREDIT AGREEMENT


among


ACT MANUFACTURING, INC.,
as Parent Borrower,


The Several Lenders
from Time to Time Parties Hereto,


CREDIT SUISSE FIRST BOSTON,
as Syndication Agent,


SOCIETE GENERALE,
as Documentation Agent


and


THE CHASE MANHATTAN BANK,
as Administrative Agent


Dated as of June 29, 2000


CHASE SECURITIES INC., as Lead Arranger, Sole Book Manager and Exclusive Advisor


CHASE BUSINESS CREDIT CORPORATION, as Exclusive Co-Advisor


TABLE OF CONTENTS
-----------------


Page SECTION 1. DEFINITIONS................................................................... 1
1.1 Defined Terms................................................................... 1
1.2 Other Definitional Provisions................................................... 26


SECTION 2. AMOUNT AND TERMS OF COMMITMENTS............................................... 27
2.1 Term Commitments................................................................ 27
2.2 Procedure for Term Loan Borrowing............................................... 27
2.3 Repayment of Term Loans......................................................... 27
2.4 Revolving Commitments........................................................... 28
2.5 Procedure for Revolving Loan Borrowing; Calculation of Borrowing Base........... 29
2.6 Commitment Fees, etc............................................................ 30
2.7 Termination or Reduction of Revolving Commitments............................... 30
2.8 Optional Prepayments............................................................ 31
2.9 Mandatory Prepayments........................................................... 31
2.10 Conversion and Continuation Options............................................ 32
2.11 Limitations on Eurocurrency Tranches........................................... 33
2.12 Interest Rates and Payment Dates............................................... 33
2.13 Computation of Interest and Fees............................................... 33
2.14 Inability to Determine Interest Rate........................................... 34
2.15 Pro Rata Treatment and Payments................................................ 34
2.16 Requirements of Law............................................................ 36
2.17 Taxes.......................................................................... 37
2.18 Indemnity...................................................................... 39
2.19 Change of Lending Office....................................................... 39
2.20 Replacement of Lenders......................................................... 39
2.21 Currency Fluctuations, etc..................................................... 40
2.22 Judgment Currency.............................................................. 40


SECTION 3. LETTERS OF CREDIT............................................................. 41
3.1 L/C Commitment.................................................................. 41
3.2 Procedure for Issuance of Letter of Credit...................................... 41
3.3 Fees and Other Charges.......................................................... 41
3.4 L/C Participations.............................................................. 42
3.5 Reimbursement Obligation of the Borrowers....................................... 43
3.6 Obligations Absolute............................................................ 43
3.7 Letter of Credit Payments....................................................... 43
3.8 Applications.................................................................... 44


SECTION 4. REPRESENTATIONS AND WARRANTIES................................................ 44
4.1 Financial Condition............................................................. 44
4.2 No Change....................................................................... 44
4.3 Corporate Existence; Compliance with Law........................................ 44
4.4 Corporate Power; Authorization; Enforceable Obligations......................... 45
4.5 No Legal Bar.................................................................... 45


Page
4.6 Litigation...................................................................... 45
4.7 No Default...................................................................... 45
4.8 Ownership of Property; Liens.................................................... 46
4.9 Intellectual Property........................................................... 46
4.10 Taxes.......................................................................... 46
4.11 Federal Regulations............................................................ 46
4.12 Labor Matters.................................................................. 46
4.13 ERISA.......................................................................... 47
4.14 Investment Company Act; Other Regulations...................................... 47
4.15 Subsidiaries................................................................... 47
4.16 Use of Proceeds................................................................ 47
4.17 Environmental Matters.......................................................... 47
4.18 Accuracy of Information, etc................................................... 48
4.19 Security Documents............................................................. 49
4.20 Solvency....................................................................... 49
4.21 Certain Documents.............................................................. 49


SECTION 5. CONDITIONS PRECEDENT.......................................................... 49
5.1 Conditions to Initial Extension of Credit....................................... 49
5.2 Conditions to French Term Loans................................................. 52
5.3 Conditions to Thai Term Loans................................................... 54
5.4 Conditions to Each Extension of Credit.......................................... 56


SECTION 6. AFFIRMATIVE COVENANTS......................................................... 56
6.1 Financial Statements............................................................ 56
6.2 Certificates; Other Information................................................. 57
6.3 Payment of Obligations.......................................................... 59
6.4 Maintenance of Existence; Compliance............................................ 59
6.5 Maintenance of Property; Insurance.............................................. 59
6.6 Inspection of Property; Books and Records;...................................... 59
6.7 Notices......................................................................... 59
6.8 Environmental Laws.............................................................. 60
6.9 Interest Rate Protection........................................................ 60
6.10 Additional Collateral, etc..................................................... 60
6.11 Lock Box Operation; Cash Management............................................ 62


SECTION 7. NEGATIVE COVENANTS............................................................ 62
7.1 Financial Condition Covenants................................................... 62
7.2 Indebtedness.................................................................... 64
7.3 Liens........................................................................... 65
7.4 Fundamental Changes............................................................. 66
7.5 Disposition of Property......................................................... 66
7.6 Restricted Payments............................................................. 67
7.7 Capital Expenditures............................................................ 67
7.8 Investments..................................................................... 67
7.9 Optional Payments and Modifications of Certain Debt Instruments................. 68
7.10 Transactions with Affiliates................................................... 68


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Page
7.11 Sales and Leasebacks........................................................... 69
7.12 Changes in Fiscal Periods...................................................... 69
7.13 Negative Pledge Clauses........................................................ 69
7.14 Clauses Restricting Subsidiary Distributions................................... 69
7.15 Lines of Business.............................................................. 69
7.16 Amendments to Acquisition Documents............................................ 69
7.17 Minimum Borrowing Base......................................................... 70


SECTION 8. EVENTS OF DEFAULT............................................................. 70


SECTION 9. THE ADMINISTRATIVE AGENT...................................................... 74
9.1 Appointment..................................................................... 74
9.2 Delegation of Duties............................................................ 74
9.3 Exculpatory Provisions.......................................................... 74
9.4 Reliance by Administrative Agent................................................ 75
9.5 Notice of Default............................................................... 75
9.6 Non-Reliance on Administrative Agent and Other Lenders.......................... 75
9.7 Indemnification................................................................. 76
9.8 Administrative Agent in Its Individual Capacity................................. 76
9.9 Successor Administrative Agent.................................................. 77
9.10 Multi-Currency Payment Agent................................................... 77


SECTION 10. MISCELLANEOUS................................................................ 77
10.1 Amendments and Waivers......................................................... 77
10.2 Notices........................................................................ 78
10.3 No Waiver; Cumulative Remedies................................................. 79
10.4 Survival of Representations and Warranties..................................... 80
10.5 Payment of Expenses and Taxes.................................................. 80
10.6 Successors and Assigns; Participations and Assignments......................... 81
10.7 Adjustments; Set-off........................................................... 84
10.8 Counterparts................................................................... 84
10.9 Severability................................................................... 85
10.10 Integration................................................................... 85
10.11 GOVERNING LAW................................................................. 85
10.12 Submission To Jurisdiction; Waivers........................................... 85
10.13 Acknowledgments............................................................... 86
10.14 Releases of Guarantees and Liens.............................................. 86
10.15 Confidentiality............................................................... 86
10.16 WAIVERS OF JURY TRIAL......................................................... 87
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ANNEX: - -----


A Pricing Grid


SCHEDULES: - ---------


1.1A Commitments 4.1 Financial Condition 4.4 Consents, Authorizations, Filings and Notices 4.6 Litigation 4.10 Taxes 4.15 Subsidiaries 4.17 Environmental Matters 4.18 Accuracy of Information, etc. 4.19 Filings and Other Actions Required to Perfect Security Interests 7.2(d) Existing Indebtedness 7.3(f) Existing Liens


EXHIBITS: - --------


A Form of Guarantee and Collateral Agreement B Form of Compliance Certificate C Form of Closing Certificate D Form of Assignment and Acceptance E-1 Form of Term Note E-2 Form of Revolving Credit Note F Form of Legal Opinion of Testa, Hurwitz & Thibeault, LLP G Form of Exemption Certificate H Form of Borrowing Base Certificate I Form of Authorization Letter


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CREDIT AGREEMENT, dated as of June 29, 2000, among ACT


MANUFACTURING, INC., a Massachusetts corporation (the "Parent Borrower"), the
--------------- several banks and other financial institutions or entities from time to time parties to this Agreement (the "Lenders"), CREDIT SUISSE FIRST BOSTON, as
------- syndication agent (in such capacity, the "Syndication Agent"), SOCIETE GENERALE,
----------------- as documentation agent (the "Documentation Agent") and THE CHASE MANHATTAN BANK,
------------------- as administrative agent (in such capacity, the "Administrative Agent").
--------------------


The parties hereto hereby agree as follows:


SECTION 1. DEFINITIONS


1.1 Defined Terms. As used in this Agreement, the terms listed in
------------- this Section 1.1 shall have the respective meanings set forth in this Section 1.1.


"Account": any account receivable or right of the Borrowers or their
------- Subsidiaries to payment for goods sold or leased or for services rendered, regardless of how such right is evidenced and whether or not it has been by performance, whether secured or unsecured, now existing or hereafter arising, and the proceeds thereof.


"Acquisition Agreements": the collective reference to the French
---------------------- Acquisition Agreement and the Thai Acquisition Agreement.


"Acquisition Documentation": collectively, the Acquisition Agreements
-------------------------- and all schedules, exhibits and annexes thereto and all side letters and agreements affecting the terms thereof or entered into in connection therewith, in each case as amended, supplemented or otherwise modified from time to time in accordance with Section 7.16.


"Acquisitions": the collective reference to the French Acquisition and
------------ the Thai Acquisition.


"Adjustment Date": as defined in the Pricing Grid.
---------------


"Administrative Agent": The Chase Manhattan Bank, together with its
-------------------- affiliates, as the arranger of the Commitments and as the administrative agent for the Lenders under this Agreement and the other Loan Documents, together with any of its successors.


"Affiliate": as to any Person, any other Person that, directly or
--------- indirectly, is in control of, is controlled by, or is under common control with such Person. For purposes of this definition, "control" of a Person means the power, directly or indirectly, either to (a) vote 10% or more of the securities having ordinary voting power for the election of directors (or persons performing similar functions) of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.


"Aggregate Exposure": with respect to any Lender at any time, an
------------------ amount equal to: (a) until the Initial Closing Date, the aggregate amount of such Lender's Commitments at such time and (b) thereafter, the sum of (i) the aggregate then unpaid principal amount of such Lender's Term Loans plus such Lender's unused Term Commitments and (ii) the amount of such Lender's


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Revolving Commitment then in effect or, if the Revolving Commitments have been terminated, the amount of such Lender's Revolving Extensions of Credit then outstanding.


"Aggregate Exposure Percentage": with respect to any Lender at any
----------------------------- time, the ratio (expressed as a percentage) of such Lender's Aggregate Exposure at such time to the Aggregate Exposure of all Lenders at such time.


"Agreement": this Credit Agreement, as amended, supplemented or
--------- otherwise modified from time to time.


"Alternate Base Rate": for any day, a rate per annum (rounded upwards,
------------------- if necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean the rate of interest per annum
---------- publicly announced from time to time by the Reference Lender as its prime rate in effect at its principal office in New York City (the Prime Rate not being intended to be the lowest rate of interest charged by the Reference Lender in connection with extensions of credit to debtors); "Base CD Rate" shall mean the
------------ sum of (a) the product of (i) the Three-Month Secondary CD Rate and (ii) a fraction, the numerator of which is one and the denominator of which is one minus the C/D Reserve Percentage and (b) the C/D Assessment Rate; and "Three-
------ Month Secondary CD Rate" shall mean, for any day, the secondary market rate for - ----------------------- three-month certificates of deposit reported as being in effect on such day (or, if such day shall not be a Business Day, the next preceding Business Day) by the Board through the public information telephone line of the Federal Reserve Bank of New York (which rate will, under the current practices of the Board, be published in Federal Reserve Statistical Release H.15(519) during the week following such day), or, if such rate shall not be so reported on such day or such next preceding Business Day, the average of the secondary market quotations for three-month certificates of deposit of major money center banks in New York City received at approximately 10:00 A.M., New York City time, on such day (or, if such day shall not be a Business Day, on the next preceding Business Day) by the Reference Lender from three New York City negotiable certificate of deposit dealers of recognized standing selected by it. Any change in the Alternate Base Rate due to a change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds Effective Rate shall be effective as of the opening of business on the effective day of such change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds Effective Rate, respectively.


"Alternate Base Rate Loans": Loans the rate of interest applicable to
------------------------- which is based upon the Alternate Base Rate.


"Applicable Margin": for Alternate Base Rate Loans, 1.5% per annum and
----------------- for Eurocurrency Loans, 2.5%; provided, that on and after the date which is six
-------- months after the Initial Closing Date, the Applicable Margin with respect to Revolving Loans and Term Loans will be determined pursuant to the Pricing Grid.


"Application": an application, in such form as the Issuing Lender may
----------- specify from time to time, requesting the Issuing Lender to open a Letter of Credit.


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"Approved Fund": with respect to any Lender that is a fund that
------------- invests in commercial loans, any other fund that invests in commercial loans and is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor.


"Asset Sale": any Disposition of property or series of related
---------- Dispositions of property (excluding any such Disposition permitted by Section 7.2(h) or Section 7.5) that yields gross proceeds to the Parent Borrower or any of its Subsidiaries (valued at the initial principal amount thereof in the case of non-cash proceeds consisting of notes or other debt securities and valued at fair market value in the case of other non-cash proceeds) in excess of $1,000,000.


"Assignee": as defined in Section 10.6(c).
--------


"Assignment and Acceptance": an Assignment and Acceptance,
------------------------- substantially in the form of Exhibit D.


"Assignor": as defined in Section 10.6(c).
--------


"Available Revolving Commitment": as to any Revolving Lender at any
------------------------------ time, an amount equal to the excess, if any, of (a) such Lender's Revolving Commitment then in effect over (b) such Lender's Revolving Extensions of Credit
---- then outstanding.


"Average Excess Availability": the daily average for the preceding
--------------------------- month of the amount by which the lesser of the Total Revolving Commitments or the Borrowing Base exceeds the Total Revolving Extensions of Credit.


"Benefitted Lender": as defined in Section 10.7(a).
-----------------


"Board": the Board of Governors of the Federal Reserve System of the
----- United States (or any successor).


"Borrowers": the collective reference to the Parent Borrower and the
--------- Subsidiary Borrower.


"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; plus


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(iv) 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; or (B) $25,000,000 (the "Foreign Subsidiary
------------------
Collateral Sublimit");
-------------------


minus


(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 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.


"Borrowing Base Certificate": a Borrowing Base Certificate,
-------------------------- substantially in the form of Exhibit H.


"Borrowing Date": any Business Day specified by the Parent Borrower or
-------------- the Subsidiary Borrower as a date on which such Borrower requests the relevant Lenders to make Loans hereunder.


"Business": as defined in Section 4.17(b).
--------


"Business Day": a day other than a Saturday, Sunday or other day on
------------ which commercial banks in New York City are authorized or required by law to close, provided, that with respect to notices and determinations in connection
-------- with, and payments of principal and interest on, Eurocurrency Loans, such day is also a day for trading by and between banks in Dollar deposits in the interbank Eurocurrency market.


"Calculation Date": any Business Day as the Administrative Agent shall
---------------- elect, but in any event, at least once each calendar month. So long as no Event of Default has occurred and is continuing, the Administrative Agent shall, to the extent practicable, select the first day of each Interest Period applicable
----- to Multi-Currency Revolving Loans as Calculation Dates.


"Capital Expenditures": for any period, with respect to any Person,
-------------------- the aggregate of all expenditures by such Person and its Subsidiaries for the acquisition or leasing (pursuant to a


5


capital lease) of fixed or capital assets or additions to equipment (including replacements, capitalized repairs and improvements during such period) that should be capitalized under GAAP on a consolidated balance sheet of such Person and its Subsidiaries.


"Capital Lease Obligations": as to any Person, the obligations of such
------------------------- Person to pay rent ...