<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
__________
FORM 10-Q
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended September 30, 1996
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Transition Period From __________ To __________
Commission File Number: 0-25560
ACT Manufacturing, Inc.
-----------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-2777507
------------- ----------
(State or other jurisdiction of (IRS Employer ID NO.)
incorporation or organization)
108 Forest Avenue
Hudson, Massachusetts 01749
--------------------- -----
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (508) 562-1200
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock 8,800,000 Shares
- - ------------ ----------------------
(Class) (Outstanding on November 8, 1996)
<PAGE>
ACT Manufacturing, Inc.
INDEX TO FORM 10-Q
Page No.
--------
PART I. FINANCIAL INFORMATION
ITEM 1 - Financial Statements:
- - ------------------------------
Condensed Consolidated Statements of Income for the three and nine months ended
September 30, 1996 and September 30, 1995.
Condensed Consolidated Balance Sheets as of September 30, 1996 and December
31, 1995.
Condensed Consolidated Statements of Cash Flows for the nine months ended
September 30, 1996 and September 30, 1995.
Notes to Condensed Consolidated Financial Statements.
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
- - ------------------------------------------------------------------------
Results of Operations
---------------------
PART II. OTHER INFORMATION
ITEM 6 - Exhibits and Reports on Form 8-K
- - -----------------------------------------
Signatures
Exhibit Index
Exhibit 10.1
Exhibit 10.2
Exhibit 10.3
Exhibit 10.4
Exhibit 10.5
Exhibit 10.6
Exhibit 11
Exhibit 27
2
<PAGE>
ACT MANUFACTURING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended September 30:
--------------------------------
1996 1995
--------------- ---------------
<S> <C> <C>
Net Sales $ 63,893 $ 25,339
Cost of goods sold 55,785 22,874
---------- ----------
Gross profit 8,108 2,465
Selling, general and administrative expenses 2,719 1,781
---------- ----------
Operating income 5,389 684
Interest and other (income) expense, net 443 (74)
---------- ----------
Income before provision for income taxes 4,946 758
Provision for income taxes 1,979 306
---------- ----------
Net income $ 2,967 $ 452
========== ==========
Net income per common share $ .33 $ .05
---------- ----------
Weighted average shares outstanding 9,043,743 8,979,498
---------- ----------
Nine Months Ended September 30:
-------------------------------
1996 1995
---------- ----------
Net Sales $ 156,563 $ 85,478
Cost of goods sold 137,159 74,443
---------- ----------
Gross profit 19,404 11,035
Selling, general and administrative expenses 7,185 4,885
---------- ----------
Operating income 12,219 6,150
Interest and other (income) expense, net 815 114
---------- ----------
Income before provision for income taxes 11,404 6,036
Provision for income taxes 4,562 1,366
---------- ----------
Net income $ 6,842 $ 4,670
========== ==========
PRO FORMA
(Note 3)
Income before provision for income taxes $ 11,404 $ 6,036
Provision for income taxes $ 4,562 $ 2,438
---------- ----------
Net income $ 6,842 $ 3,598
========== ==========
Net income per common share $ .76 $ .45
---------- ----------
Weighted average shares outstanding 9,011,100 7,971,507
---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
ACT MANUFACTURING, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
September 30, 1996 December 31, 1995
------------------ -----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 5,889 $ 7,097
Accounts receivable, net 37,544 19,585
Inventory 51,172 30,387
Deferred taxes 490 505
Prepaid expenses and other assets 616 265
-------- -------
Total current assets 95,711 57,839
-------- -------
PROPERTY AND EQUIPMENT - Net 3,733 2,696
OTHER ASSETS 667 560
-------- -------
TOTAL $100,111 $61,095
======== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $ 71 $ 71
Accounts payable 22,886 20,488
Accrued expenses 5,243 2,210
-------- -------
Total current liabilities 28,200 22,769
-------- -------
LONG-TERM DEBT - Less current portion 29,091 2,638
-------- -------
STOCKHOLDERS' EQUITY
Common stock 88 87
Additional paid-in capital 32,203 31,914
-------
Retained earnings 10,529 3,687
-------- -------
Total stockholders' equity 42,820 35,688
-------- -------
TOTAL $100,111 $61,095
======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
ACT MANUFACTURING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended September 30:
-------------------------------
1996 1995
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income......................................... $ 6,842 4,670
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Deferred taxes................................ 15 (348)
Depreciation and amortization................. 757 580
Increase (decrease) in cash from:
Accounts receivable - trade................. (17,959) (2,454)
Inventory................................... (20,785) (5,745)
Prepaid expenses and other assets........... (351) 133
Accounts payable............................ 2,398 4,722
Accrued expenses............................ 3,033 794
-------- --------
Total adjustments.................................... (32,892) (2,318)
-------- --------
Net cash provided by (used for) operating activities. (26,050) 2,352
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment......... (1,794) (1,906)
(Increase) decrease in other assets........... (107) 149
Purchase of marketable securities............. - (5,963)
-------- --------
Net cash used for investing activities............... (1,901) (7,720)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under line-of credit agreements.... 107,521 32,239
Repayments under line-of-credit agreements.... (80,978) (42,035)
Repayments of long-term debt.................. (90) (469)
S Corporation distributions paid.............. - (11,425)
Net proceeds from sale of stock............... 290 31,700
-------- --------
Net cash provided by financing activities............ 26,743 10,010
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS. (1,208) 4,642
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR......... 7,097 191
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD............. $ 5,889 $ 4,833
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
ACT MANUFACTURING, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The unaudited interim condensed consolidated financial statements furnished
herein reflect all adjustments, which in the opinion of management are of a
normal recurring nature, necessary to fairly state the Company's financial
position, cash flows and the results of operations for the periods presented and
have been prepared on a basis substantially consistent with the audited
financial statements.
The results of operations for the interim periods are not necessarily indicative
of the results of operations to be expected for the fiscal year. These
condensed consolidated interim financial statements should be read in
conjunction with the Company's Annual Report on Form 10-K for the year ending
December 31, 1995 filed with the Securities and Exchange Commission.
2. Inventory consisted of the following at:
<TABLE>
<CAPTION>
(in thousands) September 30, 1996 December 31, 1995
------------------ -----------------
<S> <C> <C>
Raw material $33,992 $22,602
Work in process 16,873 7,693
Finished goods 307 92
------- -------
TOTAL $51,172 $30,387
======= =======
</TABLE>
3. The pro forma adjustments reflect what the effects on historical net income
would have been if the Company had not elected to be taxed as a Subchapter S
Corporation for part of 1995. The adjustments include a provision for state and
federal income taxes at an effective rate of approximately 40%, as if the
Company were subject to such taxes. In connection with its initial public
offering, the Company terminated its status as an S Corporation on March 29,
1995.
Net income per share is based on the weighted average number of common and
dilutive common equivalent shares (common stock options) outstanding. Common
equivalent shares are not included in the per share calculations where the
effect of their inclusion would be antidilutive, except in accordance with
Securities and Exchange Commission Staff Accounting Bulletin No. 83.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Management's Discussion and Analysis of Financial Condition and Results of
Operations should be read in conjunction with the accompanying financial
statements for the periods specified and the associated notes. Further
reference should be made to the Company's Annual Report on Form 10-K for the
year ending December 31, 1995.
Overview
- - --------
The Company provides value-added, turnkey contract manufacturing services for
emerging and major Original Equipment Manufacturers ("OEM's") in the commercial
electronics industry. The Company's manufacturing services include complex
printed circuit board ("PCB") assemblies, mechanical and molded cable and
harness assemblies, electromechanical sub-assemblies and total system assembly
and integration. As an integral part of its service to OEM customers, the
Company provides advanced manufacturing and test engineering and materials
management across the full range of the Company's assembly services.
The Company's principal manufacturing facilities are located in four leased
facilities in Massachusetts containing an aggregate of 204,000 square feet.
As of September 30, 1996, the Company had 730 employees, including 672 in
manufacturing and related activities and 58 in sales, marketing and
administrative services.
Three Months Ended September 30, 1996 and 1995
- - ----------------------------------------------
Net sales increased 152% to $63.9 million for the three months ended September
30, 1996 from $25.3 million for the same period in 1995. This increase was
attributable principally to increased PCB assembly sales to new and existing
customers in 1996.
Gross profit increased by $5.6 million, to $8.1 million for the three months
ended September 30, 1996 compared to $2.5 million for the same period in 1995.
Gross margin increased to 12.7% for the three months ended September 30, 1996
from 9.7% for the same period in 1995 due primarily to increased absorption of
manufacturing overhead associated with the Company's PCB assembly operation.
Selling, general and administrative expenses increased 53% to $2.7 million, or
4.3% of net sales for the three months ended September 30, 1996 compared to $1.8
million, or 7.0% of net sales for the three months ended September 30, 1995.
This decrease as a percentage of net sales reflects the results of the continued
growth in the Company's business which allowed for higher absorption of fixed
costs. The increase in dollars reflects investment in the Company's Sales,
Marketing and Program Management functions, as well as the Information Systems
and Human Resources groups needed to support the Company's growth.
7
<PAGE>
Operating income increased to $5.4 million, or 8.4% of net sales for the three
months ended September 30, 1996 compared to $0.7 million, or 2.7% of net sales
for the three months ended September 30, 1995 as a result of the above factors.
Interest and other expense, net was $443,000 for the three months ended
September 30, 1996 compared to ($74,000) for the three months ended September
30, 1995. Interest and other expenses consisted principally of fees and interest
payable to the Company's bank lenders. Interest income consists of the proceeds
from the investment of the Company's cash and cash equivalents and marketable
securities. The change resulted from borrowings on the Company's line of credit
used to finance working capital growth.
Nine Months Ended September 30, 1996 and 1995
- - ---------------------------------------------
Net sales for the nine months ended September 30, 1996 increased 83% to $156.6
million from $85.5 million for the same period in 1995. This increase was
attributable principally to increased PCB assembly sales to new and existing
customers in 1996.
Gross margin decreased to 12.4% for the nine months ended September 30, 1996
from 12.9% for the same period in 1995 as a result of a shift in the Company's
sales mix toward PCB assemblies.
Selling, general and administrative expenses decreased as a percentage of sales
from 5.7% in 1995 to 4.6% in 1996. This decrease as a percentage of net sales
reflects the results of the continued growth in the Company's business which
allowed for higher absorption of fixed costs. The increase in dollars reflects
investment in the Company's Sales, Marketing and Program Management functions,
as well as the Information Systems and Human Resources groups needed to support
the Company's growth.
Interest and other expense increased to $815,000 in 1996 from $114,000 in 1995
as a result of additional borrowings on the Company's line of credit.
Liquidity and Capital Resources
- - -------------------------------
Traditionally, the Company has financed its growth and operations through
earnings and borrowings. The Company has experienced a significant increase in
working capital as the business has grown. At September 30, 1996, the Company
had working capital of $67.5 million compared to $35.1 million at December 31,
1995. The net increase was due to the growth in accounts receivable and
inventories associated with an increase in sales offset by growth in accounts
payable. The change in accounts receivable and inventory balances reflects
increased sales and shifts in product shipments required to meet customer
demand.
The Company has recently increased its revolving credit facility from $ 28.0
million to $32.0 million. As of September 30, 1996, there was $28.9 outstanding
under the available credit facility. The Company anticipates that its cash
requirements for at least the next twelve months will be satisfied by cash flows
from operations and the use of the Company's existing bank credit and equipment
lease facilities.
8
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
10.1 Letter Agreement dated June 1996 by and among The First National Bank
of Boston, State Street Bank and Trust Company, Citizen's Bank of
Massachusetts and ACT Manufacturing, Inc.
10.2 Revolving Credit Note dated December 16, 1994, as amended and
restated, by ACT Manufacturing, Inc. in favor of The First National
Bank of Boston.
10.3 Third Amendment dated July 1, 1996 to the Amended and Restated Loan
and Security Agreement by and among The First National Bank of
Boston, State Street Bank and Trust Company, Citizen's Bank of
Massachusetts and ACT Manufacturing, Inc.
10.4 Fourth Amendment dated August 16, 1996 to the Amended and Restated
Loan and Security Agreement by and among The First National Bank of
Boston, State Street Bank and Trust Company, Citizen's Bank of
Massachusetts and ACT Manufacturing, Inc.
10.5 Fifth Amendment dated October 1, 1996 to the Amended and Restated
Loan and Security Agreement by and among The First National Bank of
Boston, State Street Bank and Trust Company, Citizen's Bank of
Massachusetts and ACT Manufacturing, Inc.
10.6 Split-Dollar Life Insurance Agreement dated September 5, 1996 by and
between the John A. Pino and Janet M. Pino Family Maintenance Trust
and ACT Manufacturing, Inc.
11 Weighted Shares Used in Computation of Earnings per Share.
27 Financial Data Schedule
(b) Reports on Form 8-K:
The registrant did not file any reports on From 8-K during the quarter
ended September 30, 1996.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ACT MANUFACTURING, INC.
November 12, 1996 /s/ John A. Pino
----------------
John A. Pino
President and Chief Executive Officer
(Principal Executive Officer)
November 12, 1996 /s/ Douglass C. Greenlaw
------------------------
Douglass C. Greenlaw
Vice President of Finance and
Administration and Chief Financial Officer
(Principal Financial and Accounting Officer)
10
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Page No.
- - ----------- --------
<S> <C> <C>
10.1 Letter Agreement dated June 1996 by and among The
First National Bank of Boston, State Street Bank and
Trust Company, Citizen's Bank of Massachusetts and
ACT Manufacturing, Inc.
10.2 Revolving Credit Note dated December 16, 1994, as
amended and restated, by ACT Manufacturing, Inc. in
favor of The First National Bank of Boston.
10.3 Third Amendment dated July 1, 1996 to the Amended and
Restated Loan and Security Agreement by and among The
First National Bank of Boston, State Street Bank and
Trust Company, Citizen's Bank of Massachusetts and ACT
Manufacturing, Inc.
10.4 Fourth Amendment dated August 16, 1996 to the Amended
and Restated Loan and Security Agreement by and among
The First National Bank of Boston, State Street Bank
and Trust Company, Citizen's Bank of Massachusetts and
ACT Manufacturing, Inc.
10.5 Fifth Amendment dated October 1, 1996 to the Amended
and Restated Loan and Security Agreement by and among
The First National Bank of Boston, State Street Bank
and Trust Company, Citizen's Bank of Massachusetts and
ACT Manufacturing, Inc.
10.6 Split-Dollar Life Insurance Agreement dated September 5, 1996
by and between the John A. Pino and Janet M. Pino Family
Maintenance Trust and ACT Manufacturing, Inc.
11 Weighted Shares Used in Computation of Earnings per Share
27 Financial Data Schedule
</TABLE>
11
<PAGE>
Exhibit 10.1
ACT MANUFACTURING, INC.
June, 1996
The First National Bank of Boston
Mechanic's Bank Tower
Front Street - Floor 20
Worcester, Massachusetts 01698
Attention: Mr. George Mandt
Director
Re: Request For Waiver
Dear Sir:
Reference is made to the Amended and Restated Loan and Security Agreement
effective April 6, 1995, as amended (the "Loan Agreement"), between the
undersigned (the "Borrower") on the one hand and you, as the "Agent" (in such
capacity, so referred to herein) for the ratable benefit of the "Lenders" being
you, State Street Bank and Trust Company, and Citizens Bank of Massachusetts,
N.A.
The Borrower hereby requests that the Agent waive the Borrower's compliance
with Section 9-11 of the Loan Agreement insofar as said Section prohibits the
ratio of the Borrower's Total Debt to Net Worth, as of June 30, 1996, to exceed
that permitted, for that date, pursuant to the Loan Agreement.
As an inducement for the Lenders to instruct the Agent to waive such
compliance, the Borrower hereby represents that, but for the Borrower's breach
of that covenant as of said date, no event has occurred which is or which, but
for the giving of notice or the expiry of any applicable grace period, would be,
an Event of Default within the meaning of the Loan Agreement.
Very truly yours,
ACT MANUFACTURING, INC.
By /s/ Daniel Modelane
----------------------
<PAGE>
Lenders' Instructions to Agent
In reliance upon the Borrower's representations, above, the Lenders hereby
instruct the Agent to provide the above waiver requested by the Borrower.
The "Lenders"
THE FIRST NATIONAL BANK OF BOSTON STATE STREET BANK AND
TRUST COMPANY
By /s/ George Mandt By /s/ F. Andrew Beise
-------------------------------- --------------------------------
Its Vice President Its Vice President
------------------------------- -------------------------------
CITIZENS BANK OF MASSACHUSETTS
By /s/ Kathryn Bacastow
---------------------------------
Its Senior Vice President
--------------------------------
Agent's Waiver
The First National Bank, as Agent, in accordance with the foregoing
instructions from the Lenders, hereby waives the Borrower's compliance with
Section 9-11 of the Loan Agreement insofar as said Section prohibits the ratio
of the Borrower's Total Debt to Net Worth, as of June 30, 1996, to exceed that
permitted, for that date, by the Loan Agreement.
THE FIRST NATIONAL BANK OF
BOSTON, Agent
By /s/ George Mandt
-----------------------------
<PAGE>
Exhibit 10.2
================================================================================
REVOLVING CREDIT NOTE THE FIRST NATIONAL BANK
OF BOSTON
================================================================================
Boston, Massachusetts December 16, 1994
$16,800,000.00 As Amended and Restated.
FOR VALUE RECEIVED, the undersigned, ACT Manufacturing, Inc., a
Massachusetts corporation with its principal executive offices at 108 Forest
Avenue, Hudson, Massachusetts (the "Borrower") promises to pay to the order of
The First National Bank of Boston (the "Lender"), a national banking association
with offices at 100 Federal Street, Boston, Massachusetts (hereinafter, with any
subsequent holder, the "Lender") at the head office of The First National Bank
of Boston (which head office presently is 100 Federal Street, Boston,
Massachusetts) as Agent as described below, the following:
PRINCIPAL: On the Termination Date, the Lender's ratable portion of
---------
the aggregate unpaid principal amount of Revolving Credit Loans made or
deemed made pursuant to the Loan and Security Agreement (herein, as amended
and restated effective April 6, 1995 and as amended from time to time
hereafter, the "Loan Agreement") initially executed on December 16, 1994
between the Borrower, on the one hand, and The First National Bank of
Boston (in such capacity, hereinafter the "Agent"), as agent for the
ratable benefit of The First National Bank of Boston, State Street Bank and
Trust Company, and Citizens Bank of Massachusetts and by each such Lender
on the other.
INTEREST: Interest on the principal balance hereof from time to time
--------
outstanding from the date hereof through and including the date on which
such principal amount is paid in full, at the times and rates, and in the
manner, provided in the Loan Agreement.
This Note is a "Revolving Credit Note" which has been executed and
delivered in accordance with Section 1-7 of the Loan Agreement. Reference is
made to the Loan Agreement for a description of the benefits to which the Lender
(and the successors and assigns of the Lender) are entitled on account hereof
and for reference to the mortgage, security, and other collateral interests
which secure the Liabilities. Terms used herein which are defined in the Loan
Agreement are used as so defined.
<PAGE>
The within Note may be prepaid in whole and in part, and shall be so
prepaid, all as provided in the Loan Agreement.
Upon the occurrence of any Event of Default, all of the Liabilities,
including, without limitation, the entire unpaid principal balance of the within
Note and all accrued and unpaid interest hereon, may become or be declared due
and payable in the manner and with the effect provided in the Loan Agreement.
The Borrower, and each endorser and guarantor of this Note, respectively
waives presentment, demand, notice, and protest, and also waives any delay on
the part of the holder hereof. Each assents to any extension or other indulgence
(including, without limitation, the release or substitution of collateral)
permitted by the Lender with respect to this Note and/or any collateral given to
secure this Note or any extension or other indulgence with respect to any other
liability or any collateral given to secure any other liability of the Borrower
or any other person obligated on account of this note.
This Note shall be binding upon the Borrower, and each endorser and
guarantor hereof, and upon their respective heirs, successors, assigns, and
representatives, and shall inure to the benefit of the Lender and its
successors, endorsees, and assigns.
This Note shall be governed by the laws of The Commonwealth of
Massachusetts and shall take effect as a sealed instrument.
The Borrower makes the following waiver knowingly, voluntarily, and
intentionally, and understands that the Lender, in the establishment and
maintenance of the Lender's relationship with the Borrower contemplated by the
within Note, is relying thereon. THE BORROWER, TO THE EXTENT ENTITLED THERETO,
WAIVES ANY PRESENT OR FUTURE RIGHT OF THE BORROWER, OR OF ANY GUARANTOR OR
- - ------
ENDORSER OF THE BORROWER OR OF ANY OTHER PERSON LIABLE TO THE LENDER ON ACCOUNT
OF OR IN RESPECT TO THE LIABILITIES, TO A TRIAL BY JURY IN ANY CASE OR
CONTROVERSY IN WHICH THE LENDER IS OR BECOMES A PARTY (WHETHER SUCH CASE OR
CONTROVERSY IS INITIATED BY OR AGAINST THE LENDER OR IN WHICH THE LENDER IS
JOINED AS A PARTY LITIGANT), WHICH CASE OR CONTROVERSY ARISES OUT OF, OR IS IN
RESPECT TO, ANY RELATIONSHIP AMONGST OR BETWEEN THE BORROWER, ANY SUCH PERSON,
AND THE LENDER.
ACT MANUFACTURING, INC.
The ("Borrower")
<PAGE>
By: /s/ Douglass Greenlaw
-------------------------
<PAGE>
Exhibit 10.3
================================================================================
THIRD AMENDMENT TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
156575.1
================================================================================
July 1, 1996
THIS THIRD AMENDMENT IS made to the Amended and Restated Loan and Security
Agreement (the "Loan Agreement"), which Amended and Restated Loan and Security
Agreement took effect on April 6, 1995 as an amendment and restatement of the
December 16, 1994 Loan and Security Agreement made between
The First National Bank of Boston, a national banking association
with offices at 100 Federal Street, Boston, Massachusetts, as agent for the
ratable benefit of the "Lenders" being:
The First National Bank of Boston;
and
State Street Bank and Trust Company, a Massachusetts trust
company with offices at 225 Franklin Street, Boston, Massachusetts
02110;
and
Citizens Bank of Massachusetts, a Massachusetts savings bank
with offices at 55 Summer Street, Boston, Massachusetts 02110
and
ACT Manufacturing, Inc., a Massachusetts corporation with its
principal executive offices at 108 Forest Avenue, Hudson, Massachusetts
01749
in consideration of the mutual covenants contained herein and benefits to be
derived herefrom,
WITNESSETH:
<PAGE>
1.. AGREEMENT TO AMEND
------------------
Provided each of those "Conditions to Amendment" set forth in Section 2,
below, is satisfied on or before ................., 1996, the Loan Agreement
shall be amended, as set forth below, such amendment to take effect as of
.................... 1996.
Section 1-1(b) of the Loan Agreement (Definition of "Loan Cap") is amended
to read as follows:
"Loan Cap": $28,000,000.00 Minus the then aggregate Stated Amount of all
L/C's.
Article 3 is amended by the amendment of the following definitions,
included therein, to read as follows:
"Commitment and Commitment Percentage": the following amounts and
Percentages during the periods indicated:
<TABLE>
<CAPTION>
=======================================================================
REVOLVING CREDIT:
COMMITMENTS AND PERCENTAGE COMMITMENTS
=======================================================================
<S> <C> <C>
LENDER
- - -----------------------------------------------------------------------
DOLLAR COMMITMENT COMMITMENT
TO PERCENTAGE OF
REVOLVING CREDIT REVOLVING CREDIT
LOANS LOANS
($ MILLIONS)/*/
=======================================================================
THE FIRST NATIONAL 16.8 60 %
BANK OF BOSTON
- - -----------------------------------------------------------------------
CITIZENS 5.6 20
- - -----------------------------------------------------------------------
STATE STREET 5.6 20
- - -----------------------------------------------------------------------
TOTALS.............. $28.0 100 %
=======================================================================
</TABLE>
"Termination Date": February 28, 1998.
<PAGE>
EXHIBIT 9-11 (Net Worth Requirement) of the Loan Agreement is amended
to read as follows:
1. Net Worth: The Borrower's Net Worth shall not be less than the
following on the date indicated:
<TABLE>
<CAPTION>
========================================================
Date Minimum Net Worth
========================================================
<S> <C>
December 31, 1994 $ 6,000,000.00
========================================================
Immediately after IPO 28,000,000.00
========================================================
September 30, 1995 to May 31, 1996 31,414,000.00
========================================================
June 1, 1996 and thereafter 35,000,000.00
========================================================
</TABLE>
2. CONDITIONS TO EFFECTIVENESS OF AMENDMENT
----------------------------------------
The within Amendment shall be effective if each of the following
conditions is satisfied on or before ........................, 1996 and on the
date on which such amendment is to take effect, no Suspension Event (as defined
in the Loan Agreement) is extant:
(a) Receipt by the Agent of a Certificate setting forth the text
of the resolutions adopted by the Directors of the Borrower authoritizing the
Borrower's execution of the within Amendment, and attesting to the authority of
the persons who executed the within Amendment on behalf of the Borrower.
(b) Receipt by the Agent of a Certificate, executed by the
Borrower's President and its Chief Financial Officer, respectively confirming
that no Suspension Event is then extant.
(c) Receipt by the Agent of an opinion of counsel to the Borrower
as to the due execution and effectiveness of the within Amendment (which opinion
is subject only to the same qualifications as had been included in the opinion
delivered by that counsel at the initial execution of the Loan Agreement).
The Borrower hereby represents that, at the execution of the within
Agreement, no Suspension Event has occurred.
<PAGE>
Except as amended hereby, or by the First or the Second Amendment to the
Loan Agreement, all terms and conditions of the Loan Agreement shall remain in
full force and effect.
ACT MANUFACTURING, INC.
(The "Borrower")
By /s/ Douglass C. Greenlaw
--------------------------------
Its Chief Financial Officer
-------------------------------
THE FIRST NATIONAL BANK OF BOSTON
("Agent")
By /s/ George Mandt
--------------------------------
Its Vice President
-------------------------------
The "Lenders"
THE FIRST NATIONAL BANK OF BOSTON STATE STREET BANK AND TRUST COMPANY
By /s/ George Mandt By /s/ F. Andrew Beise
-------------------------------- --------------------------------
Its Vice President Its Vice President
------------------------------- --------------------------------
CITIZENS BANK OF MASSACHUSETTS
By /s/ Kathryn Bacastow
--------------------------------
Its Senior Vice President
-------------------------------
<PAGE>
Exhibit 10.4
================================================================================
FOURTH AMENDMENT TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
165336.1
================================================================================
Dated and Effective August 16, 1996
THIS FOURTH AMENDMENT IS made to the Amended and Restated Loan and Security
Agreement (the "Loan Agreement"), which Amended and Restated Loan and Security
Agreement took effect on April 6, 1995 as an amendment and restatement of the
December 16, 1994 Loan and Security Agreement made between
The First National Bank of Boston, a national banking association
with offices at 100 Federal Street, Boston, Massachusetts, as agent for the
ratable benefit of the "Lenders" being:
The First National Bank of Boston;
and
State Street Bank and Trust Company, a Massachusetts trust
company with offices at 225 Franklin Street, Boston, Massachusetts
02110;
and
Citizens Bank of Massachusetts, a Massachusetts savings bank with
offices at 55 Summer Street, Boston, Massachusetts 02110
and
ACT Manufacturing, Inc., a Massachusetts corporation with its
principal executive offices at 108 Forest Avenue, Hudson, Massachusetts
01749
in consideration of the mutual covenants contained herein and benefits to be
derived herefrom,
<PAGE>
WITNESSETH:
1. AGREEMENT TO AMEND
------------------
Provided each of those "Conditions to Amendment" set forth in Section 2,
below, is satisfied on or before September 13, 1996, the Loan Agreement shall be
amended, as set forth below, such amendment to take effect as of August 16,
1996.
EXHIBIT 9-11 (Total Debt to Net Worth Requirement) of the Loan Agreement
is amended to read as follows:
2. Total Debt to Net Worth: The Borrower shall not permit the ratio
of its Total Debt to Net Worth to exceed the following on the date indicated:
<TABLE>
<CAPTION>
======================================================
Date Maximum Ratio:
Total Debt / Net
Worth
======================================================
<S> <C>
December 31, 1994 3.75
======================================================
Immediately after IPO 1.20
- - ------------------------------------------------------
June 30, 1996 and thereafter 1.60
======================================================
</TABLE>
2. CONDITIONS TO EFFECTIVENESS OF AMENDMENT
----------------------------------------
The within Amendment shall be effective if each of the following
conditions is satisfied on or before September 13, 1996 and on the date on
which such amendment is to take effect, no Suspension Event (as defined in the
Loan Agreement) is extant:
(a) Receipt by the Agent of a Certificate setting forth the
text of the resolutions adopted by the Directors of the Borrower authoritizing
the Borrower's execution of the within Amendment, and attesting to the authority
of the persons who executed the within Amendment on behalf of the Borrower.
(b) Receipt by the Agent of a Certificate, executed by the
Borrower's President and its Chief Financial Officer, respectively confirming
that no Suspension Event is then extant.
<PAGE>
(c) Receipt by the Agent of an opinion of counsel to the
Borrower as to the due execution and effectiveness of the within Amendment
(which opinion is subject only to the same qualifications as had been included
in the opinion delivered by that counsel at the initial execution of the Loan
Agreement).
The Borrower hereby represents that, at the execution of the within
Agreement, no Suspension Event has occurred.
Except as amended hereby, or by the First or the Second Amendment to the
Loan Agreement, all terms and conditions of the Loan Agreement shall remain in
full force and effect.
ACT MANUFACTURING, INC.
(The "Borrower")
By /s/ Douglass C. Greenlaw
--------------------------------
Its Chief Financial Officer
-------------------------------
THE FIRST NATIONAL BANK OF BOSTON
("Agent")
By /s/ George Mandt
--------------------------------
Its Vice President
-------------------------------
The "Lenders"
THE FIRST NATIONAL BANK OF BOSTON STATE STREET BANK AND
TRUST COMPANY
By /s/ George Mandt By /s/ F. Andrew Beise
-------------------------------- --------------------------------
Its Vice President Its Vice President
------------------------------- -------------------------------
CITIZENS BANK OF MASSACHUSETTS
By /s/ Kathryn Bacastow
--------------------------------
Its Senior Vice President
-------------------------------
<PAGE>
Exhibit 10.5
================================================================================
FIFTH AMENDMENT TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
169784.4
================================================================================
October 1, 1996
Effective: September 4, 1996
THIS FIFTH AMENDMENT IS made to the Amended and Restated Loan and Security
Agreement (the "Loan Agreement"), which Amended and Restated Loan and Security
Agreement took effect on April 6, 1995 as an amendment and restatement of the
December 16, 1994 Loan and Security Agreement made between
The First National Bank of Boston, a national banking association
with offices at 100 Federal Street, Boston, Massachusetts, as agent for the
ratable benefit of the "Lenders" being:
The First National Bank of Boston;
and
State Street Bank and Trust Company, a Massachusetts trust
company with offices at 225 Franklin Street, Boston,
Massachusetts 02110;
and
Citizens Bank of Massachusetts, a Massachusetts savings bank
with offices at 55 Summer Street, Boston, Massachusetts 02110
and
ACT Manufacturing, Inc., a Massachusetts corporation with its
principal executive offices at 108 Forest Avenue, Hudson, Massachusetts
01749
in consideration of the mutual covenants contained herein and benefits to be
derived herefrom,
WITNESSETH:
<PAGE>
1. AGREEMENT TO AMEND
------------------
Provided each of those "Conditions to Amendment" set forth in Section 2,
below, is satisfied on or before September 24, 1996, the Loan Agreement shall be
amended, as set forth below, such amendment to take effect as of September 4,
1996.
Section 1-1 of the Loan Agreement (Section Preceeding Section 1-1(a) is
amended to read as follows:
The Lenders hereby severally (and not jointly) establish a revolving line
of credit (hereinafter, the "Revolving Credit") in the Borrower's favor pursuant
to which each Lender, subject to, and in accordance with, the within Agreement,
and acting through the Agent, shall make loans and advances (each, a "Revolving
Credit Loan") to and for the account of the Borrower as provided herein, in each
instance equal to that Lender's Commitment Percentage (defined below) of the
subject Tranche of the Revolving Credit up to the maximum amount of that
Lender's Commitment (defined below) applicable to that Tranche. The amount of
the Revolving Credit shall be determined by the Agent by reference to
Availability (as defined below), as determined by the Agent from time to time
hereafter. All loans made by the Lenders under this Agreement, and all of the
Borrower's other Liabilities (as defined below) to the Lenders under or pursuant
to this Agreement, are payable as provided herein.
Section 1-1(d) of the Loan Agreement (Definition of "Loan Cap") is amended
to read as follows:
<TABLE>
<CAPTION>
"Loan Cap": The following amount between the dates indicated, then
aggregate Stated Minus, in each instance, the Amount of all L/C's:
- - --------------------------------------------------------------------------------
From To Loan Cap
- - --------------------------------------------------------------------------------
<S> <C> <C>
September 4, 1996 October 18, 1996 $32,000,000.00
- - --------------------------------------------------------------------------------
October 19, 1996 Termination Date $28,000,000.00
- - --------------------------------------------------------------------------------
</TABLE>
Section 1-1 of the Loan Agreement is amended by the addition of the
following Section:
(e) During the period September 4, 1996 to October 18, 1996, the
Revolving Credit shall be divided into two tranches, as follows:
"Tranche A": The first $28,000,000.00.
"Tranche B": In excess of $28,000,000.00 to the Loan Cap.
<PAGE>
Section 1-8 of the Loan Agreement is amended by the addition of the
following Section:
(e) All repayments of principal made pursuant to this Section shall be
applied first to any unpaid principal balance of Tranche B and then to any
unpaid principal balance of Tranche A.
Article 3 is amended by the amendment of the following definitions,
included therein, to read as follows:
"Commitment and Commitment Percentage": the following amounts and
Percentages during the periods indicated:
<TABLE>
<CAPTION>
================================================================================
REVOLVING CREDIT:
COMMITMENTS AND PERCENTAGE COMMITMENTS
================================================================================
LENDER
================================================================================
DOLLAR COMMITMENT COMMITMENT
TO REVOLVING CREDIT PERCENTAGE OF
LOANS REVOLVING
($ MILLIONS) CREDIT LOANS
===================================================
Tranche A Tranche B Tranche A Tranche B
- - -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
THE FIRST NATIONAL BANK 16.8 3.0 60% 75%
OF BOSTON
- - -------------------------------------------------------------------------------
STATE STREET 5.6 1.0 20% 25%
- - -------------------------------------------------------------------------------
CITIZENS 5.6 -0- 20% -0-
- - -------------------------------------------------------------------------------
TOTALS..................... $28.0 $4.0 100%
===============================================================================
</TABLE>
2. CONDITIONS TO EFFECTIVENESS OF AMENDMENT
----------------------------------------
The within Amendment shall be effective if each of the following conditions
is satisfied on or before September 24, 1996 and on the date on which such
amendment is to take effect, no Suspension Event (as defined in the Loan
Agreement) is extant:
(a) Receipt by the Agent of a Certificate setting forth the text of the
resolutions adopted by the Directors of the Borrower authorizing the
<PAGE>
Borrower's execution of the within Amendment, and attesting to the authority of
the persons who executed the within Amendment on behalf of the Borrower.
(b) Receipt by the Agent of a Certificate, executed by the Borrower's
President and its Chief Financial Officer, respectively confirming that no
Suspension Event is then extant.
(c) Receipt by the Agent of an opinion of counsel to the Borrower as to
the due execution and effectiveness of the within Amendment (which opinion is
subject only to the same qualifications as had been included in the opinion
delivered by that counsel at the initial execution of the Loan Agreement).
(d) Receipt by the Agent of an Amendment Fee of $7,500.00, which fee,
the Agent shall distribute to the Lenders in accordance with the terms of the
Agency Agreement, as amended, between the Lenders, on the one hand, and the
Agent, on the other.
The Borrower hereby represents that, at the execution of the within
Agreement, no Suspension Event has occurred.
<PAGE>
Except as amended hereby, or by the First, Second, Third, and Fourth
Amendments to the Loan Agreement, all terms and conditions of the Loan Agreement
shall remain in full force and effect.
ACT MANUFACTURING, INC.
(The "Borrower")
By /s/ Douglass C. Greenlaw
--------------------------------
Its Chief Financial Officer
-------------------------------
THE FIRST NATIONAL BANK OF BOSTON
("Agent")
By /s/ George Mandt
--------------------------------
Its Vice President
-------------------------------
The "Lenders"
THE FIRST NATIONAL BANK STATE STREET BANK
OF BOSTON AND TRUST COMPANY
By /s/ George Mandt By /s/ F. Andrew Beise
-------------------------------- --------------------------------
Its Vice President Its Vice President
------------------------------- -------------------------------
CITIZENS BANK OF MASSACHUSETTS
By /s/ Anne Forbes Van Nest
--------------------------------
Its Vice President
-------------------------------
<PAGE>
EXHIBIT 10.6
SPLIT-DOLLAR LIFE INSURANCE AGREEMENT
AGREEMENT, made and entered into this 5th day of September, 1996, by and
between ACT Manufacturing, Inc. a Corporation duly organized and existing under
the laws of the Commonwealth of Massachusetts and having its usual place of
business at Hudson, Massachusetts (hereinafter sometimes called the
"Corporation"), and the JOHN A. PINO AND JANET M. PINO FAMILY MAINTENANCE TRUST
under instrument dated August 16, 1996 (hereinafter called "Owner");
WITNESSETH THAT:
WHEREAS, John A. Pino (hereinafter called "Employee") is the Corporation's
Chairman and Chief Executive Officer and is presently employed by the
Corporation in the position of President; and
WHEREAS, in his various capacities his services have contributed to the
successful operation of the Corporation, and the Corporation and its Board of
Directors believe it is in the best interest of the Corporation to retain the
services of the Employee; and
WHEREAS, the Employee and his wife are also the owners of a sufficiently
large number of shares of common stock of the Corporation that a sale of the
maximum number of such shares permitted by law to be made during the nine (9)
months after the death of the survivor of them to provide funds for payment of
death taxes would significantly increase the trading volume in the Corporation's
stock, and could adversely impact the value of such stock; and
WHEREAS, through the within "split-dollar" arrangement it is possible for
the Corporation to advance funds to assist the Employee and his wife in
acquiring life insurance as a
<PAGE>
source of payment of these future tax liabilities, while the Corporation
acquires rights in such insurance hereunder to protect its interest; and
WHEREAS, in light of all the above the Corporation is desirous of assisting
the Employee in paying for life insurance on his life and/or on the joint lives
of his wife and himself by entering into this "split-dollar" agreement with the
Owner; and
WHEREAS, the Owner is applying for the insurance policies listed on
Schedule A attached hereto (each such policy being referred to herein as the
"Policy" and collectively the "Policies" and the issuing insurance company of
each such policy being referred to herein as "Insurer" and collectively
''Insurers") on the life of the Employee and/or on the joint lives of the
Employee and his wife;
NOW, THEREFORE, in consideration of the premises, and for other good and
valuable consideration, receipt and adequacy of which are hereby acknowledged,
the Corporation and the Owner hereby mutually covenant and agree as follows:
ARTICLE I
Payment of Premiums
-------------------
1.01 As long as this agreement is in force (and subject to the termination
provisions contained elsewhere in this agreement), the Owner and the Corporation
agree that the Corporation will pay, subject to annual review and approval by
the Board of Directors of the Corporation, so much of the premium on each Policy
for each policy year as is equal to the total premium cost on each Policy for
each such year less the corresponding amount equal to the value of the economic
benefit of insurance protection attributable to the Employee under such policy
as set forth in pertinent IRS revenue rulings. The Corporation will make such
payment directly to the Insurers and will furnish Owner with evidence of such
payment upon request. The Owner
-2-
<PAGE>
will pay the balance of the premiums due on each Policy. The parties acknowledge
that this arrangement may give rise to an "economic benefit" that will be
taxable to the Employee in accordance with Revenue Rulings 64-328, 1964-2 C.B.
11, and 66-110, 1966-1 C.B. 12, and subsequent relevant legal authority, and
that this arrangement is intended to constitute a split-dollar arrangement
within the meaning of such Rulings and authority (and the parties agree to make
any amendment to this Agreement that may be reasonably required in the future to
effectuate this intention).
ARTICLE II
Policy Ownership and Dividend Application
-----------------------------------------
2.01 The Corporation's payment of premiums hereunder shall constitute
advances to Owner subject to repayment from the Policies as provided herein.
The Owner agrees to assign the Policies to the Corporation as collateral for the
amounts advanced to the Owner under this agreement, and the Corporation shall
have those rights granted to it under said assignment (the "assignment") and
this agreement. In addition, the Owner and the Corporation understand that in
the event that the Corporation would have to recognize a loss for financial
statement reporting purposes as a result of the premium payments exceeding the
increase in the net cash surrender value for the then relevant financial
statement reporting period, the Owner or the Employee may pledge additional
assets, which may be stock of the Corporation, in an amount so that the
Corporation will not have to recognize such loss. If in future reporting
periods the increase in net cash surrender value exceeds the premium payments
for such period, and a release of such additional pledged assets will not
adversely impact the Corporation's financial reports, such pledged assets will
be released to the extent such adverse impact can be avoided. As between the
Owner and the Corporation, this agreement shall take precedence over any
provisions of the
-3-
<PAGE>
assignment in case of a conflict between the terms of this agreement and the
assignment. Subject to the foregoing, the Owner shall retain all incidents of
ownership in the Policies (including, without limitation, the right to assign
such incidents), provided, however, that the Owner shall not borrow against,
surrender (in whole or in part) or terminate any Policy without the written
consent of the Corporation.
2.02 As long as this agreement is in force the Corporation will not borrow
against or surrender (in whole or in part) any of the Policies or exercise any
right under the assignment which would reduce or compromise the death benefit
otherwise payable to the Owner's beneficiary under Article III; the Corporation
acknowledges that it does not have the right to borrow against or surrender any
of the Policies under the assignment.
2.03 Dividends payable under each Policy will be applied as provided in
the application for such Policy or as the Owner may later duly elect pursuant to
applicable provisions of such Policy.
ARTICLE III
Beneficiary Provisions
----------------------
3.01 If the Employee dies while this agreement is in force, the death
benefit of each Policy on his life alone will be divided as follows:
(a) The Corporation will be entitled to receive an amount equal to the
aggregate premiums paid by it with respect to such Policy as of the date of
the Employee's death, less any repayment previously made to the
Corporation. If the Corporation has paid additional premiums attributable
to a rider providing for waiver of premium in the event of the disability
of the insured, "premiums" as used in this Article will not include any
premiums waived pursuant to the terms of such rider while this Agreement is
in force. If the Corporation has paid the principal of or interest on any
loans incurred against such Policy by the Owner with the consent of the
Corporation, then the Corporation shall be entitled to receive an
additional amount equal to the total of such interest and principal
repayments.
-4-
<PAGE>
(b) The beneficiary or beneficiaries then in effect under such Policy
specified by the Owner shall receive the balance of such Policy's death
benefit.
3.02 If the survivor of the Employee and his said wife (the "Survivor")
dies while this agreement is in force, the death benefit of each Policy on the
joint lives of the Employee and his said wife will be divided as follows:
(a) The Corporation will be entitled to receive an amount equal to the
aggregate premiums paid by it with respect to such Policy as of the date of
the Survivor's death, less any repayment previously made to the
Corporation. If this Corporation has paid additional premiums attributable
to a rider providing for waiver of premium in the event of the disability
of the insured, "premiums" as used in this Article will not include any
premiums waived pursuant to the terms of such rider while this Agreement is
in force. If the Corporation has paid the principal of or interest on any
loans incurred against such Policy by the Owner with the consent of the
Corporation, then the Corporation shall be entitled to receive an
additional amount equal to the total of such interest and principal
repayments.
(b) The beneficiary or beneficiaries then in effect under such Policy
specified by the Owner shall receive the balance of such Policy's death
benefit.
3.03 Upon the death of the Employee or the Survivor while this agreement
is in force, the Corporation agrees to take such action as may be necessary to
obtain payment from each Insurer of the amounts payable under its Policy to the
beneficiaries designated therein, including (but not limited to) providing the
Insurer with an affidavit as to the amount to which the Corporation shall be
entitled hereunder.
ARTICLE IV
Termination of Agreement
------------------------
4.01 This agreement shall terminate upon the happening of any of the
following events:
(a) Death of the Employee (such termination to occur only with respect
to the Policies on the Employee's life alone, however), or death of the
Survivor, subject in either case, however, to the provisions of Article
III, above.
-5-
<PAGE>
(b) Express termination by agreement in writing between the Owner and
the Corporation.
(c) Termination by thirty (30) days written notice given by either
party to the other at any time more than ten (10) years after the execution
of this agreement.
(d) Termination by ninety (90) days written notice given by the
Corporation, with the approval of at least two-thirds (2/3) of its Board of
Directors, to the Owner at any time more than three (3) and less than ten
(10) years after the execution of this agreement: provided however, that
either:
(i) the Corporation's auditors shall have first rendered a
written opinion that the Corporation has insufficient funds to
continue premium payments, or
(ii) the Corporation shall first have suffered a sustained loss
resulting in the issuance by such auditors of a "qualified statement"
citing payment of the Corporation's share of premiums under this
agreement as impairing the Corporation's ability to do business.
(e) Termination upon written notice given by the Corporation to the
Owner at any time, provided that either:
(i) the Owner (or its successor in interest) shall have failed to
pay its required share hereunder of any premium on any Policy and such
failure shall have continued through the end of such Policy's grace
period, or
(ii) the percentage of the total issued and outstanding shares of
the Corporation's common stock held (in the aggregate) by John A. Pino
and/or Janet M. Pino, individually or jointly (including stock held in
the name of a trust or in any other name to the extent such stock (I)
remains includible in either of their estates for federal estate tax
purposes or (II) was placed in such trust or other name as a result of
the death of the first of them to die) shall have fallen below five
percent (5%).
(f) Termination upon written notice given by the Owner to the
Corporation at any time, provided that either of the following has
occurred:
(i) the sale, merger or consolidation of the Corporation
which results in the Corporation not being the surviving entity, or
(ii) the Employee ceases to be employed by the Corporation
for any reason, whether due to his voluntary or involuntary
termination.
-6-
<PAGE>
4.02 In the event of a termination under Section 4.01(b), (c), (d), (e) or
(f) above, the Owner may within seventy-five (75) days after such termination
remit to the Corporation an amount equal to the aggregate amount the Corporation
would have been entitled to receive as a death benefit under Article III,
determined as of the date of such termination as if the Employee (in the case of
Policies on the Employee's life alone then subject to this agreement) and the
Survivor (in the case of joint life Policies then so subject) had died upon such
date. Upon receipt of payment from the Owner, the Corporation will release the
assignment and the Owner shall become sole owner of the Policies free of all
provisions and restrictions of the assignment and this Agreement. If the
parties agree in writing, then in lieu of the Owner's making all or part of the
payment described above directly to the Corporation, the Corporation may obtain
all or part of such payment by making a loan or withdrawal against any Policy or
Policies prior to releasing the assignment. Any such loan or withdrawal shall
be considered a payment from the Owner for purposes of this Section and Section
4.03.
4.03 If upon expiration of the seventy-five (75) day period described in
Section 4.02 above, full payment of said aggregate amount is not received by the
Corporation pursuant to said Section, then until full payment is made the
Corporation shall remain as a collateral assignee of the Policies as long as the
Policies remain in force, and notwithstanding any other provision of this
agreement may exercise all rights and privileges under the assignment including
the right to surrender any Policy or Policies in accordance with the terms
thereof. If a Policy is subsequently surrendered or the insured Employee or
Survivor (as the case may be) later dies, the Corporation shall be entitled to
full payment (from the surrender proceeds or death benefit, as the case may be),
of so much of the aggregate amount described in Section 4.02 above, as remains
unpaid at the time of such surrender or death.
-7-
<PAGE>
ARTICLE V
Assignment; Reorganization
--------------------------
5.01 The Corporation agrees that it will not assign or transfer any of its
rights or obligations under any Policy or under this agreement to anyone other
than (a) the Owner or (b) another corporation or organization with which the
Corporation is merged or consolidated and which expressly assumes the rights and
obligations of the Corporation herein set forth.
ARTICLE VI
Governing Law; Entire Agreement; Successors
-------------------------------------------
6.01 This agreement will be governed by and construed in accordance with
the laws of Massachusetts, where it is made and is to be performed. It sets
forth the entire agreement between the parties concerning the subject matter
thereof. This Agreement will bind and benefit the parties and their legal
representatives, successors and assigns.
ARTICLE VII
Not a Contract of Employment
----------------------------
7.01 This agreement shall not be deemed to constitute a contract of
employment between the parties, nor shall any provision restrict the right of
the Corporation to discharge the Employee, or restrict the right of the Employee
to terminate employment. This agreement shall continue in force regardless of
any change in the employment status of the Employee, unless otherwise expressly
agreed in writing by the parties.
-8-
<PAGE>
ARTICLE VIII
Amendment
---------
8.01 No beneficiary under any Policy shall obtain any vested right to have
this agreement continued in full and it may be amended or modified in whole or
in part by the Owner and the Corporation in writing at any time.
ARTICLE IX
Special Provisions
------------------
The following provisions are part of this plan and are intended to meet the
requirement of the Employee Retirement Income Security Act of 1974:
(a) The named fiduciary: The Corporation.
(b) The funding policy under this plan is that all premiums on the
policies be remitted to the Insurers when due.
(c) Direct payment by the Insurers are the basis of payment of benefits
under this plan, with those benefits in turn being based on the
payment of premiums as provided in the plan.
(d) For claims procedure purposes, the "Claims Manager" shall be: The
Secretary/Clerk of the Corporation.
(1) If for any reason a claim for benefits under this plan is denied
by the Corporation, the Claims Manager shall deliver to the
claimant a written explanation setting forth the specific reasons
for the denial, pertinent references to the plan section on which
the denial is based, such other data as may be pertinent and
information on the procedures to be followed by the claimant in
obtaining a review of his claim, all written in a manner
calculated to be understood by the claimant. For this purpose:
(A) The claimant's claim shall be deemed filed when presented
orally or in writing to the Claims Manager.
(B) The Claims Manager's explanation shall be in writing
delivered to the claimant within 90 days of the date the
claim is filed.
-9-
<PAGE>
(2) The claimant shall have 60 days following his receipt of the
denial of the claim to file with the Claims Manager a written
request for review of the denial. For such review, the claimant
or his representative may submit pertinent documents and written
issues and comments.
(3) The Claims Manager shall decide the issue on review and furnish
the claimant with a copy within 60 days of receipt of the
claimant's request for review of his claim. The decision on
review shall be in writing and shall include specific reasons for
the decision, written in a manner calculated to be understood by
the claimant, as well as specific references to the pertinent
plan provisions on which the decision is based. If a copy of the
decision is not so furnished to the claimant within such 60 days,
the claim shall be deemed denied on review.
ARTICLE X
Notice
------
Any notice which may or is required to be given under this agreement shall
be by mailing by registered or certified mail, return receipt requested, and
shall be effective upon such mailing (postage prepaid) as follows: in the case
of notice to the Corporation, addressed to ACT Manufacturing, Inc., 108 Forest
Avenue, Hudson, MA 01749, Attn: President, and in the case of notice to the
Owner, addressed to Douglas R. Ederle, Esq., Testa, Hurwitz & Thibeault, 125
High Street, Boston, MA 02110 with a duplicate copy to Rita J. Pino, 12 Heritage
Lane, Milton, MA 02186, or in the case of either party to such other address or
addresses as may from time to time hereafter be designated by such party by like
notice.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals this
5th day of September, 1996.
OWNER: TRUSTEES OF THE JOHN A. PINO AND JANET M. PINO
FAMILY MAINTENANCE TRUST
/s/ Rita J. Pino
By: ______________________________________________
Rita J. Pino, as Trustee and not individually
/s/ Douglas R. Ederle
By: ______________________________________________
Douglas R. Ederle, as Trustee and not individually
CORPORATION: ACT MANUFACTURING, INC.
/s/ Douglass Greenlaw
By: ______________________________________________
Douglass Greenlaw, Chief Financial Officer
-10-
<PAGE>
SCHEDULE A
----------
Policy on life of John A. Pino
- - ------------------------------
Policies on joint lives of John A. Pino and Janet M. Pino:
- - ---------------------------------------------------------
John Hancock Variable Life Insurance Company
Policy No. 20009361
-11-
<PAGE>
EXHIBIT 11
----------
ACT MANUFACTURING, INC.
Weighted Shares Used in Computation of Earnings per Share
Shares used in the net income per common share computation are the
weighted average number of common shares outstanding plus common share
equivalents.
<TABLE>
<CAPTION>
Quarter ended September 30,
-------------------------------
1996 1995
--------------- --------------
<S> <C> <C>
( in thousands)
Weighted average number of
common shares outstanding 8,772 8,644
Common share equivalents 272 335
----- -----
TOTAL 9,044 8,979
===== =====
Nine Months ended
-----------------
September 30,
-----------------
1996 1995
--------------- -------------
( in thousands)
Weighted average number of
common shares outstanding 8,739 7,649
Common share equivalents 272 323
----- -----
TOTAL 9,011 7,972
===== =====
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 5,889
<SECURITIES> 0
<RECEIVABLES> 37,544
<ALLOWANCES> 212
<INVENTORY> 51,172
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0
0
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</TABLE>
