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                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                               ----------------

                                   FORM 10-K
(Mark One)

  [X] Annual Report Pursuant to Section 13 or 15(d) of The Securities
  Exchange Act of 1934.
                 For the Fiscal Year Ended: December 31, 2000
                                      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)

<TABLE>
<CAPTION>
                Massachusetts                                    04-2777507
<S>                                            <C>
       (State or other jurisdiction of             (I.R.S. Employer Identification Code)
       incorporation or organization)
</TABLE>

<TABLE>
<CAPTION>
                2 Cabot Road                                       01749
<S>                                            <C>
            Hudson, Massachusetts                                (Zip Code)
  (Address of principal executive offices)
</TABLE>

      Registrant's telephone number, including area code: (978) 567-4000

       Securities registered pursuant to Section 12(b) of the Act: None

          Securities registered pursuant to Section 12(g) of the Act:

                         Common Stock, $.01 par value
                               (Title of class)

  Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in part III of this Form 10-K or any
amendment to this Form 10-K. [X]

  The aggregate market value of the voting stock held by nonaffiliates of the
registrant as of March 22, 2001 (based on the closing sale price as quoted by
the Nasdaq National Market as of such date) was $141,592,661.

  As of March 22, 2001, 17,057,857 shares of the registrant's common stock
were outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

  Portions of registrant's definitive proxy statement for the annual meeting
of stockholders to be held on or about May 15, 2001 to be filed pursuant to
Regulation 14A are incorporated by reference into Part III of this Form 10-K.

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<PAGE>

                                    PART I

  Except for the historical information contained herein, the matters
discussed in this Annual Report on Form 10-K are forward-looking statements
that involve risks and uncertainties. ACT Manufacturing, Inc. makes such
forward-looking statements under the provision of the "Safe Harbor" section of
the Private Securities Litigation Reform Act of 1995. Any forward-looking
statements should be considered in light of the factors described below in
Item 7 under "Cautionary Statements." Actual results may vary materially from
those projected, anticipated or indicated in any forward-looking statements.
In this Annual Report on Form 10-K, the words "anticipates," "believes,"
"expects," "intends," "future," "could," "may," and similar words or
expressions (as well as other words or expressions referencing future events,
conditions or circumstances) identify forward-looking statements.

ITEM 1.  BUSINESS

  We are a leading global provider of value-added electronics manufacturing
services (or EMS) to original equipment manufacturers (or OEMs) in the
networking and telecommunications, high-end computer and industrial and
medical equipment markets. We provide OEMs with:

  . total system assembly and integration;

  . electro-mechanical sub-assembly;

  . complex printed circuit board assembly, primarily utilizing advanced
    surface mount technology; and

  . mechanical and molded cable and harness assembly.

  We target and have developed a particular expertise in serving both
established and emerging OEMs who require moderate volume production runs of
complex, leading-edge commercial market applications. The multiple
configurations and high printed circuit board densities that characterize
these applications generally require technologically-advanced and flexible
manufacturing processes as well as a high degree of other value-added
services. As an integral part of our offerings to customers, we provide the
following value-added services in all of our service offerings:

  . new product introduction services;

  . advanced manufacturing and test engineering;

  . flexible materials management;

  . comprehensive test services;

  . product diagnostics and repair;

  . packaging;

  . order fulfillment; and

  . distribution services.

  We conduct our North American operations primarily through our facilities in
the United States and Mexico and our international operations through ACT
Manufacturing France, ACT Manufacturing Thailand and ACT Manufacturing
Ireland.

  Since June 1999, we have completed four acquisitions that have enabled us to
strengthen our advanced engineering capabilities, expand our operations and
geographic presence, and diversify our customer base. Through these
acquisitions, we have added facilities in California, Mississippi, France,
Mexico and Thailand. Our August 2000 acquisitions of GSS Array Technology
Public Company Limited (referred to as "GSS Thailand" or "ACT Manufacturing
Thailand") and Bull Electronics Angers S.A. (referred to as "BEA" or "ACT
Manufacturing France"), as well as our July 1999 merger with CMC Industries,
Inc. (referred to as "CMC"), have enabled us to significantly increase our
scale of operations, expand our customer base and geographic presence, and
strengthen our management and engineering resources. In addition, the
acquisition of certain inventory and fixed assets of

                                       2
<PAGE>

GSS/Array Technology, Inc. (referred to as "GSS/Array") in October 1999
strengthened and expanded our California operations and considerably enhanced
our advanced engineering capabilities, in particular those related to high-end
radio frequency applications. We expect to continue to pursue other select
strategic acquisitions to enhance our growth, operations, geographic presence,
engineering capabilities and service offerings.

  We have developed strong customer relationships with a wide range of
companies in the networking and telecommunications and high-end computer
industries. Our customer base of over 150 customers includes large,
established OEMs such as Alcatel, EMC, Emerson Electric and Nortel Networks,
and emerging providers of next-generation technology products such as
Efficient Networks, Metro-Optix and Unisphere Solutions (Siemens). OEMs in the
networking and telecommunications segment of the electronics industry
represented approximately 69% of our net sales for fiscal 2000, while OEMs in
the high-end computer segment accounted for approximately 18% of our net sales
for the same period. These customers require our advanced engineering
capabilities and other value-added services to manufacture technologically-
complex products, such as wireless and ADSL modems, telecommunications and
Internet access switches, routers and mass storage systems. We establish
close, long-term relationships with our customers by offering them a complete
and flexible electronics manufacturing solution in order to accelerate their
time-to-market and time-to-volume production.

Recent Business and Asset Acquisitions

  On February 9, 2001, we entered into a non-binding agreement in principle
with Fisher-Rosemount Systems, the process management division of Emerson
Electric. As proposed, we will purchase the Leicester, England manufacturing
business of Fisher-Rosemount Systems and we will expand our customer
relationship with Fisher-Rosemount Systems. We expect to close this
transaction in the second quarter of 2001. However, the transaction remains
subject to a definitive agreement and various other conditions. We cannot
assure you that a definitive agreement will be reached or that any or all of
various other conditions will be satisfied. We therefore may not consummate
the arrangement with Fisher-Rosemount Systems on a timely basis or at all.

  On August 31, 2000, we purchased all of the issued shares of BEA. ACT
Manufacturing France provides value-added EMS to OEMs, including complex
printed circuit board and box-build systems assembly as well as associated
end-to-end value-added services. ACT Manufacturing France owns and operates an
approximately 230,000 square foot manufacturing facility in Angers, France. In
the four months ended December 31, 2000, the period since the date of
acquisition, the top three customers of ACT Manufacturing France were EMC,
NetGem and Groupe Bull.

  On August 2, 2000, we purchased 99.02% of the issued shares and outstanding
options of GSS Thailand. ACT Manufacturing Thailand operates a 240,000 square
foot manufacturing facility in Thailand and has a procurement office in
Singapore. The Thai operation provides value-added EMS to OEMs, including the
manufacturing of complex printed circuit board assemblies, electro-mechanical
sub-assembly, and total system assembly and integration. The Singapore
operation serves as an international purchasing operation. In the period from
August 2, 2000, the date of acquisition, through November 24, 2000, their
fiscal year end, the top three customers of ACT Manufacturing Thailand were
Spectrian, Cidco and Rosemount (Emerson). Robert E. Zinn, the former Chief
Executive Officer of GSS Thailand, has become our Executive Vice President of
European and Asian Pacific Operations, and James Menges, the former President
of GSS Thailand, has become our Senior Vice President of Operations for Asia.

  The acquisitions of ACT Manufacturing France and ACT Manufacturing Thailand
significantly increased our scale of operations, enhanced our customer
diversity, expanded our presence in Asia and Europe, increased our
manufacturing capabilities and capacity, and strengthened our managerial and
engineering resources, thereby enabling us to better compete for the business
of larger OEMs in the electronics industry.

  On October 12, 1999, we acquired certain inventory and fixed assets of
GSS/Array located in San Jose, California. GSS/Array was a subsidiary of GSS
Thailand. We also assumed on-going relationships with select

                                       3
<PAGE>

GSS/Array domestic customers and hired select employees. The GSS/Array asset
acquisition expanded our operations in northern California and also
considerably enhanced our advanced engineering capabilities, in particular our
radio frequency capabilities.

  On July 29, 1999, we completed our merger with CMC, a provider of EMS to
OEMs in the telecommunications, computer and electronics industries. As a
result of the merger, CMC became our wholly owned subsidiary. The merger with
CMC has provided us many benefits which enable us to compete more effectively
in the EMS industry, including:

  . the critical mass necessary to compete for the business of larger OEMs in
    the electronics industry;

  . enhanced customer diversity, reducing our reliance on specific major
    customers and enhancing our opportunity to sell additional value-added
    services to a larger customer base as a result of the lack of overlap
    between the ACT and CMC customer bases;

  . expanded geographic presence and broadened range of cost and volume
    production capabilities through the addition of high volume, low cost
    manufacturing production facilities in Corinth, Mississippi and
    Hermosillo, Mexico and a moderate volume facility in Santa Clara,
    California;

  . significant managerial, sales and engineering resources which has
    facilitated the expansion of our manufacturing capacity and has
    strengthened our advanced engineering capabilities; and

  . a procurement office in Taiwan as well as experienced purchasing
    personnel which has strengthened our component supply chains.

Our Services

  We utilize a business unit or cell approach to provide value-added services
to more effectively satisfy the needs of our customers. Within this
environment, we assign dedicated equipment, personnel and systems to specific
customers. Throughout the manufacturing organization, we use state-of-the-art
production performance, statistical process control and quality reporting
systems to provide accurate, timely and relevant management and customer
information.

Manufacturing of Electronic Assemblies

  We offer manufacturing capabilities for total system assembly and
integration, electro-mechanical sub-assembly, printed circuit board assembly,
and cable and harness assembly.

  Total System Assembly and Integration and Electro-Mechanical Sub-
Assembly. We integrate components, including our printed circuit board and
cable and harness assemblies, into higher level sub-assemblies and total
system assemblies. We maintain significant systems assembly capacity to meet
the increasing demands of our customers for total system assemblies. In
addition to product assemblies, we also provide the following services to
customers seeking to integrate manufacturing and distribution activities:

  . custom configuration;

  . documentation;

  . packaging; and

  . order fulfillment.

  Printed Circuit Board Assembly. Printed circuit boards are platforms on
which integrated circuits and other electronic components are mounted.
Semiconductor designs are complex and often require printed circuit boards
with many layers of narrow, densely-spaced wiring. Rapid technological
advances have occurred in the electronics industry in recent years that have
increased the speed and performance of components, while reducing their size.
These technological advances have caused printed circuit boards to become
smaller with components more densely attached to the board requiring
increasingly advanced surface mount manufacturing technologies, in addition to
traditional surface mount and pin-through-hole technology.


                                       4
<PAGE>

  In pin-through-hole production, components are attached by pins, also called
leads, inserted through and soldered to plated holes in the printed circuit
board. In traditional surface mount technology production, the leads on
integrated circuits and other electronic components are soldered to the
surface of the printed circuit board rather than inserted into holes. Surface
mount technologies can accommodate a substantially higher number of leads in a
given area than pin-through-hole production. As a result, surface mount
technologies allow the printed circuit board to interconnect a greater density
of integrated circuits. This density permits tighter component spacing and a
reduction in the printed circuit board dimensions. Additionally, surface mount
technologies allow components to be placed on both sides of the printed
circuit board to permit even greater density. The substantially finer lead-to-
lead spacing in surface mount technologies requires a manufacturing process
far more exacting than the pin-through-hole interconnect products. An advanced
surface mount technology called micro ball grid array (BGA) allows for even
greater densities than traditional surface mount technology. The BGA assembly
process uses small balls of solder, instead of leads that could bend and
break, located directly underneath the part, to interconnect the component and
circuit board. Because of their high number of leads, most complex or very
large scale integrated circuits are configured for surface mount technologies
production.

  We employ advanced surface mount technologies, primarily BGA, in our printed
circuit board assembly operations in addition to traditional surface mount
technologies. We also continue to support pin-through-hole technology and
related semi-automated and manual placement processes for existing and new
applications that require these technologies.

  We focus on low to moderate volume manufacturing of highly complex printed
circuit board assemblies. We manufacture these complex assemblies on a batch
basis and have developed expertise in quickly changing equipment set-up and
manufacturing capabilities in order to respond to our customers' changing
needs. We believe this capability provides our customers with optimal
flexibility in product design, while allowing for rapid turnaround of new or
highly complex but lower volume products. We also offer our customers high
volume manufacturing alternatives. In our Mexico, Mississippi and Thailand
facilities, we currently manufacture larger volume, less complex printed
circuit boards using a variety of surface mount technologies.

  As part of our comprehensive manufacturing process, we provide in-circuit,
functional and stress environmental testing services for substantially all
completed printed circuit board assemblies. In-circuit tests verify that:

  . the components have been attached properly;

  . the components meet functional standards; and

  . the electrical circuits have been completed properly.

  We perform these tests on industry standard testing equipment using
proprietary software developed either by the customer or our test engineers.
We also use specialized testing equipment designed and provided by the
customer or developed by our engineers to perform customized functional tests
designed to ensure that the printed circuit board assembly will perform its
intended functions. In addition, since defective components normally fail
after a relatively short period of use, we subject more complex printed
circuit board assemblies to controlled environmental stresses, typically
thermal or electrical stresses, based on customer requests.

  Cable and Harness Assembly. We offer a wide range of cable and harness
assembly services for molded and mechanical applications including:

  . custom manufactured ribbon assemblies;

  . multiconductor, co-axial and fiber optic cable assemblies; and

  . discrete wire harness assemblies.

  We use advanced and diverse manufacturing processes, in-line inspection and
test and dedicated work cells to minimize work-in-process time and focus on
process efficiencies and quality. We use both automated and semi-automated
preparation and insertion equipment, as well as manual assembly techniques to
accomplish the

                                       5
<PAGE>

cable and harness assembly process. We test substantially all of our cable and
harness assemblies using automated test equipment.

Value-Added Services

  Outsourcing allows OEMs to take advantage of the manufacturing expertise,
advanced technology, capital investments and overall cost benefits obtained by
EMS providers. In addition, OEMs outsource their manufacturing strategies to
accelerate their time-to-market and time-to-volume production, improve
inventory management and purchasing power, and improve the overall quality of
their products. In order for OEMs to fully achieve the benefits of
outsourcing, they seek a comprehensive manufacturing solution. To meet the
requirements of our OEM customers, we provide the following value-added
services across the full range of our EMS:

  New Product Introduction Services. We work with potential and existing
customers as early as possible in the new product development process to
optimize their products' design for manufacturing. Our new product
introduction services include design and layout, concurrent engineering, test
development and prototype engineering. Our new product introduction services
are designed to shorten customers' product development cycles by offering full
design and development services that complement the customers' in-house
capabilities.

  We believe that our new product introduction capabilities result in close
interactions with our customers and new business prospects which:

  . enhance responsiveness to customers;

  . enable us to stay at the forefront of technological innovations; and

  . strengthen our relationships with our existing and new customers.

  Advanced Manufacturing and Test Engineering. Our advanced manufacturing
engineers work closely with a customer's product designers at the early design
stage of a product. Our engineers:

  . evaluate the initial product design to identify potential
    manufacturability and testability issues;

  . review the layout of a board to determine if it has the optimal tool set-
    up and efficient component spacing and densities; and

  . participate in parts selection and materials utilization decisions.

  This early interaction with the customer enhances product manufacturability,
testability, and reliability. This participation also mitigates component
availability issues which might arise during the manufacturing cycle. Our
engineers also evaluate the ongoing manufacturing process and recommend
improvements to reduce manufacturing costs or lead times, or to increase the
quality of finished assemblies. Our engineering services help customers:

  . bring their products rapidly to the market;

  . meet the market's expectation for quality; and

  . take advantage of advances in manufacturing and testing technology and
    processes.

  Materials Management. We provide our customers optimal flexibility regarding
their production delivery and product mix requirements. We directly purchase
all or a substantial portion of the components necessary for our product
assemblies. We procure components from vendors which meet our standards for
timely delivery, high quality, cost-effectiveness, flexibility and compliance
with customer specifications. To help control inventory investment, we seek to
order components only when we have a customer forecast, purchase order or
commitment to purchase the completed assemblies. We use a materials
requirements planning system to plan and procure materials. We use electronic
data interchange systems to efficiently communicate with many of our vendors.
We use an Internet-based procurement tool to source components via the
Internet. Additionally, we use just-in-time inventory management techniques
and in-house stores programs and manage our materials pipelines

                                       6
<PAGE>

and vendor base to provide our customers flexibility to change their volume
requirements within established frameworks.

  Product Diagnostics and Repair. As OEMs outsource their manufacturing needs
and divest their internal manufacturing capabilities, they need EMS providers
that offer product diagnostic and repair services. If a product purchased by
an OEM's customer fails or breaks, an OEM that has outsourced its
manufacturing is not likely to have the equipment, facilities or trained
personnel available to identify and fix the problem. We use our engineering
and test capabilities to provide product diagnostic and repair for the
assemblies we manufacture and, in some instances, for other products of our
customers. We also offer our OEM customers revision control, lot tracking and
materials management services for their product revisions, upgrades and
repairs.

  Order Fulfillment and Distribution. To more rapidly respond to the market
demands of our customers, we offer delivery programs and capabilities designed
with the flexibility to ship products directly to an OEM's customers. Under
these programs, we package products to the customer's specification with
appropriate product documentation and manage the logistics of delivery. We
work closely with our customers to identify and offer additional services in
anticipation of future customer needs.

Our Suppliers

  Our OEM customers need us to:

  . assure the short and long term supply of materials and components to
    manufacture their products;

  . negotiate low prices for these materials;

  . secure high quality and reliable materials;

  . assure the on-time delivery of these materials; and

  . provide them with the flexibility to change their production requirements
    on short notice.

  To compete effectively in this business environment, we have developed a
materials procurement strategy whereby we maintain strong, long-term
relationships with a limited number of suppliers who conform to our high
standards. We seek to work with suppliers that consistently deliver the best
technology and quality materials at low total cost on short and flexible lead
times. We consistently evaluate all of our suppliers' performances and provide
them with suggestions for improving our relationships. When we do business
with a supplier at our customer's direction, we closely monitor the supplier's
performance and work with both the supplier and the customer to improve the
supplier's performance when necessary. We believe this strategy enables us to
provide optimal flexibility to our OEM customers and enables us to better
satisfy their EMS needs.

  Our team of materials acquisition professionals is responsible for all
materials procurement and planning. We have a strategic purchasing group that
develops our worldwide materials and commodity procurement strategy. We have
adopted a more direct supplier model that targets select high quality
suppliers from a more distributor-oriented procurement model. This strategic
group is responsible for understanding the needs of our customers and the
commodity supply market, evaluating the overall quality of suppliers and
negotiating and executing low cost commodity supply contracts with preferred
suppliers. We also have a group that focuses on the day-to-day tactical
execution of our materials procurement process to attempt to insure that
material or component costs or shortages do not prevent us from providing
optimal services to our customers. This group is responsible for proactively
managing inventory programs, evaluating day-to-day supplier performance and
co-ordinating customer plan production changes.

  We typically procure components when a purchase order or forecast is
received from a customer. Due to our utilization of just-in-time inventory
techniques, the timely availability of many components depends on our ability
to both develop accurate forecasts of customer requirements and manage our
materials supply chain. Given our direct component procurement strategy with
quality suppliers, we rely on a single or limited number of suppliers for many
proprietary and other components used in our assembly process. Although we
have strong

                                       7
<PAGE>

relationships with high quality suppliers, we do not have any long-term supply
agreements. Shortages of materials and components have occurred from time to
time and will likely occur in the future despite our development of select
long-term supplier relationships. We believe our direct procurement strategy
and the division of responsibility within our materials procurement team
enable us to better manage our supply chain in order to reduce the occurrence
and minimize the effect on our customers of materials or component shortages.

Our Customers and Markets

  We serve a wide range of customers from emerging growth companies to
established multinational corporations in a variety of markets, including
networking and telecommunications, high-end computer and industrial and
medical equipment. We currently provide services to over 150 customers
worldwide.

  Customers in the networking and telecommunications segment of the
electronics industry represented approximately 69% and 66% of our net sales
for fiscal 2000 and 1999, respectively, while OEMs in the high-end computer
segment accounted for approximately 18% and 25%, respectively, for each of the
same periods.

  For fiscal 2000 and 1999, our five largest customers accounted for
approximately 57% and 52%, respectively, of our net sales. For fiscal 2000,
Efficient Networks, EMC and Nortel Networks accounted for approximately 17%,
14% and 12% of our net sales, respectively. For fiscal 1999, Nortel Networks
and S-3 Incorporated (formerly Diamond Multimedia) accounted for 15% and 13%
of our net sales, respectively. We terminated our business with S-3
Incorporated in March 2000.

  The timing and level of orders from our customers varies substantially from
period to period. The historic level of net sales we have received from a
specific customer in one particular period is not necessarily indicative of
net sales we may receive from that customer in any future period. While we
focus on maintaining long term relationships with our customers, for various
reasons, including consolidation in our customers' industries, we have in the
past and will continue in the future to terminate or lose relationships with
customers. Customers may also significantly reduce the level of business they
do with us or delay the volume of manufacturing services they order from us.
Significant or numerous terminations, reductions or delays in our customers'
orders could negatively impact our operating results in future quarters. We
continue to focus on expanding and diversifying our customer base to reduce
dependence on any individual customer or market.

  In many cases, our customers utilize more than one EMS provider across their
product lines. Our goal is to be the primary EMS provider for our customers.
We seek to manufacture the high-value, leading-edge products of our customers
and target OEMs that require moderate volume production. Our high volume, low
cost facilities enable us to offer our customers a broad range of volume
production and cost alternatives. We believe that we are advantageously
positioned to be selected to provide manufacturing and value-added services
for our customers' new product offerings due to our:

  . close interaction with the design engineering personnel of our customers
    at the product development stage;

  . prototype production experience;

  . advanced manufacturing and engineering capabilities, such as radio
    frequency capabilities; and

  . established and dependable materials pipeline.

  We generally warrant that our products will be free from defects in
workmanship for twelve months. We also pass on to our customers any warranties
provided by component manufacturers and material suppliers to the extent
permitted under our arrangements with these parties. Our warranty provides
that during the warranty period we will take action to repair or replace
failed products. We test substantially all of our assemblies prior to
shipment. In addition, our customers generally test or have tested final
products on a sample basis prior to deployment in the field. Our warranty
costs have not been material to date.

                                       8
<PAGE>

Sales and Marketing

  We develop close, long-term relationships with our customers by working with
them throughout the development, manufacturing and distribution processes. EMS
providers generally face a long sales cycle and must perform satisfactorily on
a trial basis prior to capturing significant orders from an OEM. As a result,
we seek to develop these close relationships with customers during the initial
product design and development stage. We then support our existing customer
relationships through a comprehensive staff of program managers dedicated to
individual customer accounts. We assign each customer a program manager who
acts as the primary contact for the customer. Program managers are responsible
for the development of the manufacturing relationship between our company and
the customer and the assignment of our resources to meet the customer's
requirements.

  We market our services primarily through a direct sales force, and to a
lesser extent, through independent manufacturer representatives in the United
States, Asia, Canada and Europe. As we have grown, we have increasingly relied
on and developed our direct selling organization as opposed to utilizing
independent manufacturer representatives. We expect to continue to expand our
direct sales organization and marketing efforts in response to new customer
opportunities, our increased operations and our expanded customer base.

Competition

  The EMS industry is highly competitive. We compete against numerous EMS
providers with global operations, including Benchmark Electronics, Celestica,
Flextronics, Jabil Circuit, Plexus, Sanmina, SCI and Solectron. We also face
competition from a number of EMS providers that operate on a local or regional
basis. In addition, current and prospective customers continually evaluate the
merits of manufacturing products internally. Consolidation in the EMS industry
results in a continually changing competitive landscape. The consolidation
trend in the industry also results in larger and more geographically diverse
competitors who have significant combined resources with which to compete
against us.

  We believe that the principal competitive factors in the segments of the EMS
industry in which we operate are:

  . geographic location and coverage;

  . flexibility in adapting to customers' needs;

  . manufacturing capability;

  . price;

  . service;

  . technology;

  . quality;

  . reliability; and

  . timeliness in delivering finished products.

  We believe that we have developed a particular strength relative to some of
our major competitors in the manufacturing of complex, moderate volume,
leading-edge products. Competition from existing or potential competitors
could result in reduced prices, margins and market share which would
significantly and negatively impact our operating results.

Governmental Regulation

  Our operations in the U.S. are subject to certain federal, state and local
regulatory requirements relating to environmental compliance and site
cleanups, waste management and health and safety matters. In particular, we
are subject to regulations promulgated by:

  . the Occupational Safety and Health Administration pertaining to health
    and safety in the workplace;

                                       9
<PAGE>

  . the Environmental Protection Agency pertaining to the use, storage,
    discharge and disposal of hazardous chemicals used in the manufacturing
    processes; and

  . corresponding state agencies.

  Our operations in France are subject to certain regulatory requirements
relating to environmental compliance, waste management and health and safety
matters. In this respect, ACT Manufacturing France is subject to the law no.
76-663 of 19 July 1976 concerning activities listed for environmental
protection purposes. Our activities on-site are therefore subject to a site
permit which was issued on October 8, 1998 by the local representative of the
French government.

  Our operations in Thailand are also subject to certain governmental
regulations relating to environmental compliance and health and safety
matters. ACT Manufacturing Thailand holds a number of licenses and
certificates issued from the relevant Thai government agencies related to such
regulations.

  To date the costs of compliance and environmental remediation have not been
material to us. Nevertheless, additional or modified requirements may be
imposed in the future. If such additional or modified requirements are imposed
on us, or if conditions requiring remediation were found to exist, we may be
required to incur substantial additional expenditures.

Employees

  At December 31, 2000, we had approximately 8,800 permanent employees. To
provide manufacturing flexibility for our customers, we utilize the services
of temporary employees to meet short-term manufacturing capacity fluctuations.
The only employees represented by labor unions are those employees in our
Mexico operations and a portion of our French employees, although
substantially all of the employees of ACT Manufacturing France are represented
by a workers council. We have never experienced a labor stoppage or strike. We
consider our relations with our employees to be good.

                                      10
<PAGE>

ITEM 2. PROPERTIES

  Our manufacturing facilities are located in eleven facilities containing an
aggregate of approximately 1.5 million square feet. Our significant facilities
are as follows:

<TABLE>
<CAPTION>
                                 Approximate                Lease
   Location                      Square Feet Leased/Owned Expiration          Description
   --------                      ----------- ------------ ----------          -----------
   <C>                           <C>         <C>          <C>        <S>
   Hudson, MA..................     150,000     Leased       2007    Low-Moderate Volume Mfg.
                                                                     High-End Tech. Mfg.
   Hudson, MA (2 buildings)....      56,000     Leased       2003    Cable Assembly,
                                                                     Prototyping & Mfg.
   Marlborough, MA.............     126,000     Leased       2006    Low-Moderate Volume Mfg.
                                                                     Moderate-High Volume
                                                                     Mfg.
   Santa Clara, CA.............      75,000     Leased       2010    Low-Moderate Volume Mfg.
                                                                     High-End Tech. Mfg.
   Lawrenceville, GA...........      62,000     Leased       2005    Low-Moderate Volume Mfg.
   Corinth, MS.................     350,000     Leased       2060    Moderate-High Volume
                                                                     Mfg.
   Dublin, Ireland.............      55,000     Leased       2022    Low-Moderate Volume Mfg.
                                                                     Cable Assembly
   Angers, France..............     230,000      Owned       --      Low-Moderate Volume Mfg.
                                                                     High-End Tech. Mfg.
   Thailand....................     240,000      Owned       --      Low-Moderate Volume Mfg.
                                                                     Moderate-High Volume
                                                                     Mfg. High-End Tech. Mfg.
   Hermosillo, Mexico..........     110,000      Owned       --      Moderate-High Volume
                                                                     Mfg.
                                  ---------
   Total.......................   1,454,000
                                  =========
</TABLE>

  We lease two of the Hudson facilities from Re-Act Realty Trust, a
Massachusetts nominee trust, which is controlled by John A. Pino, our Chairman
of the Board, President and Chief Executive Officer, and the beneficial
interest of which is principally owned by Mr. Pino.

  Our manufacturing facility in Corinth, Mississippi is located on 64 acres of
land. The facility and land are leased from the Industrial Development Board
of Alcorn County, Mississippi under a lease which has options to renew until
2060. We also lease 20,000 square feet of warehouse space in Corinth,
Mississippi, international purchasing offices in Taiwan and Singapore and a
sales and procurement office in Huntsville, Alabama.

  We have consolidated the equipment and assets we purchased from GSS/Array
into our Santa Clara operations. Our Santa Clara facility's lease term expires
on October 31, 2010. We have signed a lease for a new 200,000 square foot
facility in San Jose, California that is under construction. We plan to move
our existing Santa Clara operations and equipment to this new facility and
expect to begin operating in this new facility in fiscal 2001. We plan on
subletting the Santa Clara facility once we move into our new facility in San
Jose. We have signed a lease for an additional 130,000 square foot building
that is under construction and is adjacent to our facility in Hermosillo,
Mexico. We have also signed a lease for a 100,000 square foot new products
introduction, prototype and manufacturing facility in Dallas, Texas. We expect
to begin operating in both new facilities in fiscal 2001.

  All of our manufacturing facilities have been certified to the ISO 9002
international quality standard except the Corinth, Mississippi facility which
is certified to both the ISO 9001 international quality standard and the TL
9000 international quality standard in the telecommunications industry.

  As of December 31, 2000, we operated 107 surface mount technology lines
located in the Americas (68), Europe (13) and Asia (26).


                                      11
<PAGE>

ITEM 3. LEGAL PROCEEDINGS

  In December 1993, CMC retained the services of a consultant to assist in
quantifying the potential exposure to CMC in connection with clean-up and
related costs of a former manufacturing site. This site is commonly known as
the ITT Telecommunications site in Milan, Tennessee. The consultant initially
estimated that the cost to remove and dispose of the contaminated soil would
be approximately $200,000. CMC subsequently entered into a voluntary agreement
to investigate the site with the Tennessee Department of Environment and
Conservation. In addition, CMC agreed to reimburse a tenant of the site
$115,000 for expenditures previously incurred to investigate environmental
conditions at the site. Environmental studies done in fiscal 1999 have
estimated assessment and remediation costs at between $750,000 and $3.5
million. CMC has not been named as a potentially responsible party. However,
Alcatel, Inc., a potentially responsible party named by the Tennessee
Department of Environment and Conservation, sought indemnification from CMC
under the purchase agreement by which CMC acquired the stock of one of the
operators of the facility. To date, Alcatel has not filed any legal
proceedings to enforce its indemnification claim. However, Alcatel could
initiate such proceedings and other third parties could assert claims against
us relating to remediation of the site. We have entered into an agreement with
Alcatel pursuant to which the statute of limitations on its indemnification
claim is tolled for a period of time. In the event any proceedings are
initiated or any claim is made, we would defend ourselves vigorously but
defense or resolution of this matter could have a negative impact on our
financial position and results of operations.

  On June 15, 1999, we received written notice from legal counsel for the
Lemelson Medical, Education & Research Foundation, Limited Partnership
alleging that we were infringing certain patents held by the Lemelson
Foundation Partnership and offering to license such patents to us. We entered
into a perpetual patent license agreement with the Lemelson Foundation
Partnership in February 2000.

  From time to time, we are also subject to claims or litigation incidental to
our business. We do not believe that any existing incidental claims or
litigation will have a material adverse effect on our results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

  No matters were submitted during the fourth quarter of the fiscal year ended
December 31, 2000 to a vote of security holders of ACT, through the
solicitation of proxies or otherwise.

                                      12
<PAGE>

                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

  Our common stock is quoted on the Nasdaq National Market under the symbol
"ACTM." The following table sets forth the high and low sales information for
the common stock as reported by Nasdaq for the periods indicated.

<TABLE>
<CAPTION>
                                                                    High   Low
                                                                   ------ ------
<S>                                                                <C>    <C>
2000
  First quarter................................................... $57.38 $29.75
  Second quarter..................................................  56.25  23.13
  Third quarter...................................................  72.25  32.00
  Fourth quarter..................................................  58.75  12.44
1999
  First quarter...................................................  19.25  12.88
  Second quarter..................................................  17.50  11.88
  Third quarter...................................................  28.38  13.50
  Fourth quarter..................................................  39.50  24.50
</TABLE>

  On March 22, 2001, the closing price of our common stock on the Nasdaq
National Market was $12.06 per share. As of March 22, 2001, there were
approximately 78 holders of record of our common stock, which does not include
stockholders for whom shares were held in a nominee or street name.

  We did not pay any cash dividends on our common stock during the periods
shown above. We presently do not anticipate paying any cash dividends in the
foreseeable future. We presently intend to retain future earnings, if any, to
finance the expansion and growth of our business. Our primary bank credit
facility prohibits the payment of cash dividends on our capital stock. See
note 5 of notes to our consolidated financial statements.

                                      13
<PAGE>

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

  The selected consolidated financial data set forth below for the fiscal
years ended December 31, 2000, 1999 and 1998 and the consolidated balance
sheet data as of December 31, 2000 and 1999 are derived from our audited
consolidated financial statements, which are included elsewhere in this Annual
Report on Form 10-K. The selected consolidated financial data for the fiscal
years ended December 31, 1997 and 1996 and the consolidated balance sheet data
as of December 31, 1998, 1997 and 1996 are derived from our audited
consolidated financial statements that are not included in this Annual Report
on Form 10-K. The fiscal 2000 consolidated statement of operations data
includes four months of operations of ACT Manufacturing Thailand and ACT
Manufacturing France which were both acquired in August 2000. The consolidated
balance sheet data as of December 31, 2000 includes ACT Manufacturing Thailand
and ACT Manufacturing France. You should read the data set forth below in
conjunction with "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations" and our consolidated financial statements
and the related notes appearing elsewhere in this Annual Report on Form 10-K.

<TABLE>
<CAPTION>
                                       Fiscal Year Ended December 31,
                              -------------------------------------------------
                                 2000      1999   1998(1)(2) 1997(1)   1996(1)
                              ---------- -------- ---------- --------  --------
                                   (in thousands, except per share data)
<S>                           <C>        <C>      <C>        <C>       <C>
Consolidated Statement of
 Operations Data:
  Net sales.................. $1,370,597 $696,282  $592,484  $479,139  $390,611
  Cost of goods sold.........  1,254,077  641,856   556,339   454,203   351,485
                              ---------- --------  --------  --------  --------
    Gross profit.............    116,520   54,426    36,145    24,936    39,126
  Selling, general and
   administrative expenses...     46,373   28,945    26,931    24,225    18,268
  Amortization of goodwill...      5,675      591       452       291       --
  Restructuring costs........        --       --        --        --        792
  Merger costs (3)...........        --     5,601       --        --        --
                              ---------- --------  --------  --------  --------
    Operating income.........     64,472   19,289     8,762       420    20,066
  Interest and other expense,
   net.......................     17,456    5,262     3,625     4,056     2,936
                              ---------- --------  --------  --------  --------
    Income (loss) before
     provision for income
     taxes...................     47,016   14,027     5,137   (3,636)    17,130
  Provision (benefit) for
   income taxes..............     18,077    7,793     2,044    (1,235)    6,868
                              ---------- --------  --------  --------  --------
    Net income (loss)........ $   28,939 $  6,234  $  3,093  $ (2,401) $ 10,262
                              ========== ========  ========  ========  ========
Net income (loss) per common
 share:
  Basic...................... $     1.72 $   0.47  $   0.24  $  (0.19) $   0.86
  Diluted.................... $     1.62 $   0.45  $   0.24  $  (0.19) $   0.84
Weighted-average shares
 outstanding:
  Basic......................     16,808   13,265    12,665    12,330    11,880
  Diluted....................     17,885   13,916    12,976    12,330    12,237

<CAPTION>
                                             As of December 31,
                              -------------------------------------------------
                                 2000      1999   1998(1)(2) 1997(1)   1996(1)
                              ---------- -------- ---------- --------  --------
                                               (in thousands)
<S>                           <C>        <C>      <C>        <C>       <C>
Consolidated Balance Sheet
 Data:
  Working capital............ $  350,857 $170,420  $ 86,059  $ 55,894  $ 92,005
  Total assets...............  1,067,803  402,326   238,294   208,573   175,029
  Long-term debt, less
   current portion...........    358,271   49,332    42,014     4,817    34,966
  Total debt (4).............    388,174   53,361    62,604    59,938    43,496
  Total stockholders'
   equity....................    220,244  178,129    91,460    84,103    78,234
</TABLE>
--------
(1)  Prior to our merger with CMC on July 29, 1999, CMC prepared its
     consolidated financial statements on the basis of a fiscal year ending
     July 31. The consolidated statement of operations data for each of the
     three years in the period ended December 31, 1998 (referred to as
     "fiscal" 1998, 1997 and 1996) reflect such

                                      14
<PAGE>

   information for ACT for the years then ended combined with such information
   for CMC for the years ended July 31, 1998, 1997 and 1996. The consolidated
   balance sheet data as of December 31, 1998, 1997 and 1996 reflects such
   information of ACT as of those dates combined with such information of CMC
   as of July 31, 1998, 1997 and 1996. The merger with CMC has been accounted
   for as a pooling of interests as described in note 1 to our consolidated
   financial statements appearing in this Annual Report on Form 10-K.
(2) As a result of ACT and CMC having different fiscal years, a summary of
    CMC's condensed consolidated results of operations for the five-month
    period from August 1, 1998 through December 31, 1998 is reported
    separately, as follows:

<TABLE>
   <S>                                                              <C>
   Condensed Consolidated Statement of Operations Data (in
    thousands):
     Net sales..................................................... $122,423
     Cost of sales.................................................  119,633
                                                                    --------
       Gross profit................................................    2,790
     Selling, general and administrative expenses..................    5,410
                                                                    --------
       Loss from operations........................................   (2,620)
     Interest expense..............................................      691
                                                                    --------
       Loss before taxes...........................................   (3,311)
     Income tax benefit............................................   (1,239)
                                                                    --------
       Net loss.................................................... $ (2,072)
                                                                    ========
</TABLE>

(3) Merger costs relating to the acquisition of CMC are comprised primarily of
    investment banking, legal, accounting, printing, integration and other
    fees and expenses directly related to the merger.

(4) Total debt consists of the current and long-term portions of bank debt,
    capital leases and convertible subordinated notes.

                                      15
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS

  You should read the following discussion and analysis together with our
consolidated financial statements and related notes included elsewhere in this
Annual Report on Form 10-K. This Annual Report on Form 10-K, including the
following discussion, contains trend analysis and other forward-looking
statements within the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Any statements in this Annual Report on Form
10-K that are not statements of historical facts are forward-looking
statements. These forward-looking statements are based on a number of
assumptions and involve risks and uncertainties. Our actual results may differ
materially from those indicated in such forward-looking statements as a result
of the factors set forth elsewhere in this Annual Report on Form 10-K,
including under "Cautionary Statements."

Overview

  We are a leading global provider of value-added EMS to OEMs in the
networking and telecommunications, high-end computer and industrial and
medical equipment markets. We provide OEMs with total system assembly and
integration, electro-mechanical sub-assembly, complex printed circuit board
assembly, primarily utilizing advanced surface mount technology, and
mechanical and molded cable and harness assembly. We target and have developed
a particular expertise in serving both established and emerging OEMs who
require moderate volume production runs of complex, leading-edge commercial
market applications. These applications are generally characterized by
multiple configurations and high printed circuit board densities. As a result,
they generally require technologically-advanced and flexible manufacturing
processes as well as a high degree of other value-added services. As an
integral part of our offerings to customers, we provide the following value-
added services: new product introduction services, advanced manufacturing and
test engineering, flexible materials management, comprehensive test services,
product diagnostics and repair, packaging, order fulfillment and distribution
services.

  Several customers have recently indicated the possibility of an economic
downturn in their industries, including the networking and telecommunications
market. Since customers in the networking and telecommunications segment of
the electronics industry represent a large portion of our net sales,
developments adverse to this segment of the industry could materially and
negatively impact us. A recessionary period or other event leading to excess
capacity affecting one or more segments of the electronics industry we serve
would likely result in intensified price competition, reduced margins and a
decrease in our net sales.

  We currently manufacture at eleven facilities having an aggregate of
approximately 1.5 million square feet. Of our leased manufacturing facilities,
four of the facilities are located in Massachusetts and one facility is
located in each of Santa Clara, California; Lawrenceville, Georgia; Corinth,
Mississippi; and Dublin, Ireland. We also own a 4.4-acre tract of land and a
110,000 square foot manufacturing facility on that property in Hermosillo,
Mexico, a 240,000 square foot manufacturing facility in Thailand, and an
approximately 230,000 square foot manufacturing facility in Angers, France.
All of our manufacturing facilities have been certified to the ISO 9002
international quality standard, except our Corinth, Mississippi facility which
has been certified to both the ISO 9001 international quality standard and the
TL 9000 international quality standard in the telecommunications industry. We
have signed a lease for a new 200,000 square foot facility in San Jose,
California that is under construction. We plan to move our existing Santa
Clara operations and equipment to this new facility. We expect to begin
operating in this new facility in fiscal 2001. We have signed a lease for an
additional 130,000 square foot building that is under construction and is
adjacent to our facility in Hermosillo, Mexico. We have also signed a lease
for a 100,000 square foot new products introduction, prototype and
manufacturing facility in Dallas, Texas. We expect to begin operating in both
new facilities in fiscal 2001. Our facilities contained 107 surface mount
technology lines as of December 31, 2000.

  We recognize revenue upon shipment to customers or otherwise, under certain
contracts, when title to and reward of ownership pass to the customer. We
generally do not obtain long-term purchase orders or commitments

                                      16
<PAGE>

from our customers. Instead, we work closely with our customers to anticipate
delivery dates and future volume of orders based on customer forecasts. The
level and timing of orders placed by our customers vary due to:

  . customer attempts to manage inventory;

  . changes in the customer's manufacturing strategy; and

  . variation in demand for customer products due to, among other things,
    introduction of new products, product life cycles, competitive conditions
    or industry or general economic conditions.

Recent Business and Asset Acquisitions

  On August 31, 2000, we purchased all of the issued shares of BEA for a
purchase price of approximately $56.6 million, plus a working capital
adjustment based on the August 31, 2000 closing balance sheet of BEA of
approximately $43.2 million. As of December 31, 2000, approximately $34.5
million of the working capital adjustment had been paid, while the remaining
$8.7 million was paid in the first quarter of fiscal 2001. ACT Manufacturing
France provides value-added EMS to OEMs, including complex printed circuit
board and box-build systems assembly as well as associated end-to-end value-
added services. ACT Manufacturing France owns and operates an approximately
230,000 square foot manufacturing facility in Angers, France. In the four
months ended December 31, 2000, the period since the date of acquisition, the
top three customers of ACT Manufacturing France were EMC, NetGem and Groupe
Bull.

  On August 2, 2000, we purchased 99.02% of the issued shares and outstanding
options of GSS Thailand for a purchase price of approximately $86.7 million.
ACT Manufacturing Thailand operates a 240,000 square foot manufacturing
facility in Thailand and has a procurement office in Singapore. The Thai
operation provides value-added EMS to OEMs, including the manufacturing of
complex printed circuit board assemblies, electro-mechanical sub-assembly, and
total system assembly and integration. In the period from August 2, 2000, the
date of acquisition, through November 24, 2000, their fiscal year end, the top
three customers of ACT Manufacturing Thailand were Spectrian, Cidco and
Rosemount (Emerson).

  The GSS Thailand and BEA acquisitions have both been accounted for under the
purchase method of accounting, and accordingly, the results of operations of
ACT Manufacturing Thailand and ACT Manufacturing France have been included in
our consolidated financial statements from the respective date of acquisition.
ACT Manufacturing Thailand will maintain its November 24 fiscal year end.
Accordingly, approximately four months (August-November 2000) of its
operations are included in our fiscal 2000 actual results. ACT Manufacturing
France's fiscal year end is December 31. Accordingly, four months (September-
December 2000) of its operations are included in our fiscal 2000 actual
results. The respective purchase prices have been allocated to the net assets
acquired based upon their fair values. For both the ACT Manufacturing Thailand
and ACT Manufacturing France acquisitions, the purchase price exceeded the
respective fair value of the assets acquired and liabilities assumed resulting
in goodwill being recorded. Such goodwill is being amortized over its
estimated useful life of ten years.

  On October 12, 1999, we acquired certain inventory and fixed assets of
GSS/Array located in San Jose, California, for approximately $12.9 million in
cash and the assumption of $0.6 million in liabilities. The purchase of these
assets did not constitute the acquisition of a business. GSS/Array was a
subsidiary of GSS Thailand. We assumed on-going relationships with select
GSS/Array domestic customers and hired select employees.

  On July 29, 1999, we completed our merger with CMC, a provider of EMS to
OEMs in the telecommunications, computer and electronics industries. CMC
operated manufacturing facilities in Santa Clara, California, Corinth,
Mississippi and Hermosillo, Mexico. As a result of the merger, CMC became our
wholly owned subsidiary. Under the terms of the merger agreement, each share
of CMC common stock was exchanged for 0.5 of a share of our common stock and
all CMC stock options were assumed by us. We issued approximately 3.9 million
shares of common stock, and reserved approximately 0.9 million shares of
common stock for future issuance under CMC's 1990 Equity Incentive Plan,
pursuant to the merger. The merger has been accounted for as a pooling of
interests. Accordingly, our consolidated financial statements for prior
periods have been restated to include the operating results and financial
position of CMC at the beginning of the earliest period presented.

  Prior to the merger, CMC prepared its consolidated financial statements on
the basis of a fiscal year ending July 31. The consolidated statements of
income and cash flows for the year ended December 31, 1998 (referred

                                      17
<PAGE>

to as "fiscal" 1998) reflect the results of operations and cash flows for ACT
for the year then ended combined with the results of operations and cash flows
for CMC for the year ended July 31, 1998. The consolidated statements of
income and cash flows for the years ended December 31, 2000 and 1999 and the
consolidated balance sheets as of December 31, 2000 and 1999 reflect the
results of operations, cash flows and financial position of ACT and CMC for
the periods then ended. As a result of ACT and CMC having different fiscal
years, CMC's condensed consolidated results of operations and cash flows for
the five-month period from August 1, 1998 through December 31, 1998 are
reported as a line item within the consolidated statement of stockholders'
equity.

Results of Operations

  The following table sets forth certain consolidated statement of operations
data as a percentage of net sales for each period indicated. The table and the
discussion below should be read in conjunction with our consolidated financial
statements and the related notes appearing elsewhere in this Annual Report on
Form 10-K.

<TABLE>
<CAPTION>
                                            Fiscal Year Ended December 31,
                                           ----------------------------------
                                              2000        1999        1998
                                           ----------  ----------  ----------
<S>                                        <C>         <C>         <C>
Net sales.................................      100.0%      100.0%      100.0%
Cost of goods sold........................       91.5        92.2        93.9
                                           ----------  ----------  ----------
  Gross profit............................        8.5         7.8         6.1
Selling, general and administrative
 expenses.................................        3.4         4.1         4.5
Amortization of goodwill..................        0.4         0.1         0.1
Merger costs..............................        --          0.8         --
                                           ----------  ----------  ----------
  Operating income........................        4.7         2.8         1.5
Interest and other expense, net...........        1.3         0.8         0.6
                                           ----------  ----------  ----------
  Income before provision for income
   taxes..................................        3.4         2.0         0.9
Provision for income taxes................        1.3         1.1         0.4
                                           ----------  ----------  ----------
  Net income..............................        2.1%        0.9%        0.5%
                                           ==========  ==========  ==========
</TABLE>

  We provide EMS to customers in the networking and telecommunications, high-
end computer and industrial and medical equipment markets. The percentage of
net sales by market for fiscal 2000, 1999 and 1998 is as follows:

<TABLE>
<CAPTION>
                                              Percentage of Net Sales
                                          ------------------------------------
                                           Fiscal Year Ended December 31,
                                          ------------------------------------
Market                                       2000         1999         1998
------                                    ----------   ----------   ----------
<S>                                       <C>          <C>          <C>
Networking and Telecommunications........         69%          66%          58%
High-End Computer........................         18           25           32
Industrial and Medical...................         13            9           10
                                          ----------   ----------   ----------
                                                 100%         100%         100%
                                          ==========   ==========   ==========
</TABLE>

Fiscal 2000 Compared to Fiscal 1999

  Our net sales increased $674.3 million or 96.8% to $1.37 billion in fiscal
2000 compared with $696.3 million in fiscal 1999. The increase was
attributable to a net expansion of $393.2 million in our pre-existing
operations, primarily from our North American operations, the inclusion of ACT
Manufacturing France net sales of $196.3 million for four months of operations
following its acquisition on August 31, 2000, and the inclusion of ACT
Manufacturing Thailand net sales of $84.8 million for approximately four
months of operations following its acquisition on August 2, 2000.

  Net sales in the systems and printed circuit board assembly service
offerings (including value-added services such as new product introduction,
engineering, test, repair and order fulfillment) as a percentage of net sales
was approximately 97% in fiscal 2000 compared to approximately 95% in fiscal
1999. Net sales in the cable and

                                      18
<PAGE>

harness assembly service offering accounted for approximately 3% of net sales
in fiscal 2000 compared to approximately 5% in fiscal 1999.

  Gross profit increased $62.1 million or 114.1% to $116.5 million in fiscal
2000 compared with $54.4 million in fiscal 1999. Gross profit as a percentage
of net sales (or gross margin) increased to 8.5% in fiscal 2000 from 7.8% in
fiscal 1999. In fiscal 2000, gross margin was 8.2% for North American
operations and 9.5% for international operations. Our gross margin increase
was primarily attributable to the growth in our sales volume, an increase in
sales with higher margins and higher margins at our ACT Manufacturing Thailand
and ACT Manufacturing France operations.

  Selling, general and administrative (or SG&A) expenses increased $17.4
million or 60.2% to $46.4 million, or 3.4% of net sales, in fiscal 2000
compared with $28.9 million, or 4.1% of net sales, in fiscal 1999. Although
SG&A expenses decreased as a percentage of net sales while sales volume
increased, these expenses increased in absolute dollars primarily due to the
inclusion of expenses of ACT Manufacturing France and ACT Manufacturing
Thailand, additional spending in corporate infrastructure to support our
global operations and increased personnel and professional costs reflecting
our expanded operations.

  Amortization of goodwill increased $5.1 million to $5.7 million in fiscal
2000 compared to $0.6 million in fiscal 1999. The increase is due to the
additional goodwill amortization resulting primarily from the purchases of ACT
Manufacturing Thailand and ACT Manufacturing France in fiscal 2000 and, to a
lesser extent, a full year of amortization on the GSS/Array acquisition.

  Merger costs of $5.6 million related to the July 29, 1999 merger with CMC
were recorded in fiscal 1999. These merger costs consisted primarily of
investment banking, legal, accounting, printing, and integration expenses and
other fees and expenses directly related to the merger.

  Operating income increased $45.2 million to $64.5 million, or 4.7% of net
sales, in fiscal 2000 compared with operating income of $19.3 million, or 2.8%
of net sales, in fiscal 1999 as a result of the above factors.

  Interest and other expense, net increased 231.7% to $17.5 million in fiscal
2000 compared to $5.3 million in fiscal 1999. This increase is due to the
issuance of $100.0 million in convertible subordinated notes in the second
quarter of fiscal 2000 in order to execute the ACT Manufacturing Thailand
acquisition, resulting in interest expense of $5.4 million, which includes
amortization of debt issue costs, offset in part by $2.5 million of interest
income earned on the reinvestment of the proceeds we received in connection
with the issuance of these notes. In addition, a $75.0 million term loan was
drawn in the third quarter of fiscal 2000 in order to finance the acquisition
of ACT Manufacturing France, which resulted in interest expense of $2.5
million. We also incurred $10.1 million of interest expense on our revolving
credit facility in fiscal 2000 compared with $3.8 million in fiscal 1999.

  We recorded a provision for income taxes of $18.1 million and $7.8 million
in fiscal 2000 and 1999, respectively. The effective income tax rate was 38%
in fiscal 2000 and 56% in fiscal 1999. The difference between the fiscal 2000
and fiscal 1999 effective income tax rates was primarily attributable to the
effects of non-deductible merger costs incurred in fiscal 1999 and, to a
lesser extent, the inclusion for a portion of fiscal 2000 of ACT Manufacturing
Thailand which is not subject to Thai income tax due to a "tax holiday" as
well as lower effective state tax rates. In Thailand, we currently operate
under a "tax holiday" that will expire in 2002 unless it is renewed. Upon the
expiration of the "tax holiday," we will become subject to taxation at a rate
of 30% per annum in Thailand. The rate at which income taxes will be provided
in future periods will depend on taxable income by tax jurisdiction. We have
not provided income tax expense on ACT Manufacturing Thailand's earnings in
fiscal 2000 as we consider those earnings permanently invested.

Fiscal 1999 Compared to Fiscal 1998

  Our net sales increased $103.8 million or 17.5% to $696.3 million in fiscal
1999 from $592.5 million for fiscal 1998. The increase was attributable to an
expansion of business in our printed circuit board assembly

                                      19
<PAGE>

service offering of $102.4 million, of which approximately $7.7 million
resulted from the GSS/Array acquisition. Approximately $71.5 million of the
net increase was from new customers and the remainder was due to increased
business from existing customers.

  Net sales in our systems and printed circuit board assembly service
offerings, including value-added services, as a percentage of net sales was
approximately 95% and 94% in fiscal 1999 and 1998, respectively. Net sales in
our cable and harness assembly service offering accounted for approximately 5%
and 6% in fiscal 1999 and 1998, respectively.

  Gross profit increased $18.3 million or 50.6% to $54.4 million in fiscal
1999 compared to $36.1 million for fiscal 1998. Gross profit as a percentage
of net sales, or gross margin, increased to 7.8% in fiscal 1999 from 6.1% in
fiscal 1998. The increase was primarily attributable to growth in sales
volume, an increase in sales with higher margins and an increase in absorption
of overhead in our Mexican facility.

  Selling, general and administrative expenses increased $2.0 million or 7.5%
to $28.9 million compared with $26.9 million for fiscal 1998. SG&A expenses as
a percentage of net sales decreased to 4.1% in fiscal 1999 from 4.5% in fiscal
1998. SG&A expenses increased primarily to support the larger revenue base and
anticipated revenue growth.

  Merger costs of $5.6 million related to the July 29, 1999 merger with CMC
were recorded in fiscal 1999. These merger costs consisted primarily of
investment banking, legal, accounting, printing, integration and other fees
and expenses directly related to the merger. Amortization of goodwill amounted
to $0.6 million in fiscal 1999 and $0.5 million in 1998.

  Operating income increased $10.5 million to $19.3 million, or 2.8% of net
sales, compared with operating income of $8.8 million, or 1.5% of net sales,
for fiscal 1998 as a result of the above factors.

  Interest and other expense, net increased $1.6 million to $5.3 million
compared to $3.7 million for fiscal 1998. The increase was due to higher
average working capital requirements resulting in higher average loan balances
in fiscal 1999, higher interest rates during fiscal 1999 and interest on
capital leases entered into in fiscal 1999.

  We recorded a provision for income taxes of $7.8 million and $2.0 million in
fiscal 1999 and 1998, respectively. The effective income tax rate was 56% in
fiscal 1999 and 40% in fiscal 1998. The increase in the fiscal 1999 effective
income tax rate was primarily attributable to the effects of non-deductible
merger costs.

CMC Results of Operations for the Five Months Ended December 31, 1998

  For the five months ended December 31, 1998, CMC generated gross profit of
$2.8 million on net sales of $122.4 million. The gross margin of 2.3% was
lower than CMC's historical gross margin primarily because of the loss of two
customers, Micron Electronics and Global Village Communications, offset by net
sales to new customers and expanded business with existing customers at lower
margins. Gross profit was also adversely affected by increases in
manufacturing overhead costs incurred in anticipation of higher sales volumes
and inefficiencies associated with the initiation of new manufacturing
projects. The net loss for the five months ended December 31, 1998 of $2.1
million did not include any one time, non-recurring charges.

                                      20
<PAGE>

Quarterly Results of Operations

  The following table sets forth, for the periods presented, certain data from
our consolidated statements of income. In the opinion of our management, the
unaudited quarterly consolidated statement of income data have been prepared
on substantially the same basis as our audited consolidated financial
statements and include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the financial information
for the periods presented. This information should be read in conjunction with
the consolidated financial statements and related notes included elsewhere in
this Annual Report on Form 10-K. The operating results in any quarter are not
necessarily indicative of the results that may be expected for any future
period.

  The consolidated operating results for the three-month period ended
September 30, 2000 include the results of operations for ACT Manufacturing
Thailand for the period August 2, the date of its acquisition, through August
24, 2000, the end of the third quarter of its fiscal 2000, and the results of
operations for ACT Manufacturing France for the one month period ended
September 30, 2000. The consolidated operating results for the three-month
period ended December 31, 2000 include the results of operations for ACT
Manufacturing France for the three months then ended and the results of
operations for ACT Manufacturing Thailand for the period August 25 through
November 24, 2000, its fiscal year end.

  Summarized quarterly financial data are as follows (in thousands, except per
share amounts):

<TABLE>
<CAPTION>
                                                  Fiscal 2000 Quarters
                                           ------------------------------------
                                            First    Second   Third     Fourth
                                           -------- -------- --------  --------
<S>                                        <C>      <C>      <C>       <C>
Net sales................................. $229,088 $252,970 $368,515  $520,024
Gross profit..............................   19,999   22,691   33,312    40,518
Net income................................ $  6,150 $  7,028 $  8,200  $  7,561
                                           ======== ======== ========  ========
Net income per share:
  Basic................................... $   0.37 $   0.42 $   0.48  $   0.44
  Diluted................................. $   0.35 $   0.40 $   0.45  $   0.43

<CAPTION>
                                                  Fiscal 1999 Quarters
                                           ------------------------------------
                                            First    Second   Third     Fourth
                                           -------- -------- --------  --------
<S>                                        <C>      <C>      <C>       <C>
Net sales................................. $145,947 $157,519 $180,105  $212,711
Gross profit..............................   10,436   11,060   14,822    18,108
Net income (loss)......................... $  1,850 $  1,028 $ (1,748) $  5,104
                                           ======== ======== ========  ========
Net income (loss) per share:
  Basic................................... $   0.14 $   0.08 $  (0.13) $   0.35
  Diluted................................. $   0.14 $   0.08 $  (0.13) $   0.33
</TABLE>

  Our third and fourth quarter fiscal 2000 net income reflects amortization of
goodwill related to the acquisitions of ACT Manufacturing France and ACT
Manufacturing Thailand of $1.2 million and $3.5 million, respectively. Our
third quarter fiscal 1999 net loss includes $5.6 million of non-tax deductible
merger costs incurred in connection with our merger with CMC.

Liquidity and Capital Resources

  We had working capital of $350.9 million at December 31, 2000 compared with
$170.4 million at December 31, 1999. Operating activities used $62.2 million
of cash in fiscal 2000 compared with cash used for operations of $48.9 million
in fiscal 1999. The primary uses of cash for operating activities in fiscal
2000 were increases in both inventory and accounts receivable. Inventory
increased $229.6 million to $401.3 million at December 31, 2000 from $171.8
million at December 31, 1999, of which $137.0 million is related to the
acquisitions of ACT Manufacturing France and ACT Manufacturing Thailand and
the remainder of which is primarily the result of supply chain conditions in
the electronics component market. Accounts receivable

                                      21
<PAGE>

increased $194.4 million to $355.3 million at December 31, 2000 from $160.8
million at December 31, 1999, of which $92.4 million is related to the
acquisitions of ACT Manufacturing France and ACT Manufacturing Thailand and
the remainder of which is due to our overall net sales growth, and
specifically to a large volume of sales occurring during the latter part of
the fourth quarter.

  These cash uses were offset, in part, by an increase in accounts payable, a
$50.0 million advance from a major customer and $28.9 million in net income
from operations for fiscal 2000. Accounts payable increased $183.6 million to
$337.4 million at December 31, 2000 from $153.8 million at December 31, 1999,
of which $127.3 million is related to the acquisitions of ACT Manufacturing
France and ACT Manufacturing Thailand and the remainder of which is reflective
of our inventory build-up attributable to revenue growth. In the second fiscal
quarter of 2000, a major customer advanced us $50.0 million to strengthen our
materials procurement capabilities and enhance the services we provide to this
customer. This advance is unsecured and non-interest bearing. The advance will
be repaid primarily through the offset against future invoices billed to the
customer beginning after April 1, 2001.

  On June 29, 2000, we revised our senior credit arrangements with a syndicate
of financial institutions led by The Chase Manhattan Bank, as administrative
agent, to increase our previous credit facilities. Our credit facility with
these lenders is secured by substantially all of our assets and certain of our
subsidiaries' assets. The Credit Agreement provides that the lenders will make
available to us up to $150.0 million of revolving loans (up to $20.0 million
of which we may use in a variety of currencies, and the balance of which we
may use in U.S. dollars) and up to $100.0 million of term loans ($75.0 million
of which we used to acquire ACT Manufacturing France and $25.0 million of
which we used to refinance a portion of the debt of ACT Manufacturing
Thailand). On December 27, 2000, we entered into an amendment to our Credit
Agreement, which makes available additional five-year term loans in the
aggregate amount of up to $100.0 million, subject to certain conditions. If
drawn, the term loan provides for repayment of substantially all of the
principal amount on June 28, 2006.

  At December 31, 2000, $140.0 million of the Credit Agreement was utilized
for revolving loans, $1.7 million was utilized for letters of credit and an
additional $8.3 million was available for use based upon the applicable
borrowing base. At December 31, 2000, $90.0 million of the revolving loans was
at an interest rate of 9.22% and the remaining $50.0 million was at an
interest rate of 9.17%. At December 31, 2000, $97.0 million was outstanding on
the initial term loan, of which $72.8 million was at an interest rate of 9.14%
and the remaining $24.2 million was at an interest rate of 11.0%.

  In April and May 2000, we received net proceeds of approximately $95.4
million from the sale of 7% convertible subordinated notes due April 15, 2007
in a private placement. A shelf registration statement was subsequently filed
in connection with these convertible subordinated notes. Interest payments are
due on these convertible subordinated notes on April 15 and October 15 of each
year. The proceeds of this convertible debt offering were used to fund the
acquisition of ACT Manufacturing Thailand. Prior to the acquisition, the net
proceeds of this offering were invested in short-term, interest-bearing,
investment grade securities. We recorded approximately $5.4 million in
interest expense incurred on the notes in fiscal 2000, which includes
amortization of debt issue costs, which was offset in part by $2.5 million of
interest income earned on the reinvestment of the proceeds from the
convertible subordinated notes during the same period.

  On August 2, 2000, we purchased 99.02% of the issued shares and outstanding
options of GSS Thailand for approximately $86.7 million. On November 24, 2000,
ACT Manufacturing Thailand had working capital credit facilities with various
financial institutions aggregating $34.1 million at interest rates ranging
from LIBOR plus 3% to LIBOR plus 4%. At its fiscal 2000 year end, $30.2
million was outstanding at interest rates ranging from 9.2% to 10.8%.

  ACT Manufacturing Thailand also has a loan outstanding denominated in Thai
baht. At its fiscal 2000 year end, the outstanding balance was baht 150.8
million ($3.6 million). The Thai baht loan requires monthly principal payments
of baht 4.6 million ($104,900) with the final payment due July 2003. Interest
on the Thai baht loan is payable monthly at a floating rate which equaled
7.75% at its fiscal 2000 year end.


                                      22
<PAGE>

  The ACT Manufacturing Thailand credit facilities and baht loan are secured
by a pledge of ACT Manufacturing Thailand's fixed deposits and by a mortgage
of its land, buildings, machinery and equipment. ACT Manufacturing Thailand's
debt to equity ratio exceeded that permitted under the working capital credit
facilities above, as well as the Thai baht loan above; however, the lenders
have given ACT Manufacturing Thailand a waiver of this covenant default
through March 31, 2002.

  ACT Manufacturing Thailand also had a loan outstanding in the amount of
$10.5 million throughout most of fiscal 2000 at an interest rate of LIBOR plus
3%. This loan was repaid in full in December 2000.

  We are currently in discussions with the financial institutions providing
credit facilities to ACT Manufacturing Thailand to renegotiate or refinance
the Thailand credit facilities.

  On August 31, 2000, we purchased all of the issued shares of BEA for
approximately $56.6 million, plus a working capital adjustment of
approximately $43.2 million based on the August 31, 2000 closing balance sheet
of BEA. As of December 31, 2000, approximately $34.5 million of the working
capital adjustment had been paid, while the remaining $8.7 million was paid in
the first quarter of fiscal 2001.

  On November 2, 2000, ACT Manufacturing France entered into a new credit
agreement with a syndicate of financial institutions led by Societe Generale.
The credit agreement provides that the lenders will make available to ACT
Manufacturing France up to approximately $16.2 million of revolving loans. The
credit agreement is unsecured and interest is payable monthly at an interest
rate based on the rates in the Eurocurrency market. As of December 31, 2000,
the outstanding balance was approximately $10.9 million and was at an interest
rate of 7.5%. The same credit agreement provides ACT Manufacturing France with
a credit line in the amount of approximately $9.8 million for sales of
accounts receivable, none of which was outstanding at December 31, 2000. In
addition, ACT Manufacturing France has a capital lease line of approximately
$7.4 million, of which approximately $3.3 million was utilized at December 31,
2000.

  We sold 575,000 shares of common stock of eOn Communications (formerly
Cortelco Systems), a related party, for net proceeds of approximately $6.4
million in the first quarter of 2000. We recognized a net gain on the eOn
investment of approximately $0.6 million, net of investment writedown, in
fiscal 2000.

  Capital expenditures of approximately $9.4 million in fiscal 2000 were
primarily for the acquisition of equipment and leasehold improvements related
to operations.

  We lease manufacturing facilities and certain equipment and computer
software used in our manufacturing operations under capital and operating
lease agreements that expire through 2007. As of December 31, 2000, we had
equipment lease lines of approximately $19.3 million available under capital
and operating leases for purchases of manufacturing equipment, computer
hardware and software and furniture. We have operating lease commitments of
$33.9 million, $30.5 million, $27.8 million, $19.9 million and $15.2 million
for fiscal 2001, 2002, 2003, 2004 and 2005, respectively.

  ACT Manufacturing France uses derivative financial instruments to hedge
certain non-functional currency-denominated assets and liabilities that are
primarily short-term trade accounts payable and receivable balances.
Derivative financial instruments are also used to hedge unrecognized but
firmly committed foreign-currency-denominated revenues and expenses. In all
cases, the maturities of hedging instruments does not usually exceed three to
four months. These instruments may involve elements of credit and market risk
in excess of the amounts recognized in the consolidated financial statements.
We monitor our positions and the credit quality of counterparties, consisting
primarily of major financial institutions, and do not anticipate
nonperformance by any counterparty.

  As discussed in Recently Issued Financial Accounting Standards below,
effective January 1, 2001, we adopted Statement of Financial Accounting
Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging
Activities." To the extent we enter into hedges that are effective, changes in
derivative fair values

                                      23
<PAGE>

will either be recognized in earnings as offsets to the changes in fair value
of related hedged assets, liabilities and unrecognized firmly committed
transactions (fair value hedging relationships), or for forecasted
transactions, deferred and recorded as a component of other accumulated
comprehensive income until the hedged transactions occur and are recognized in
earnings (cash flow hedging relationships). Amounts credited or charged to
other accumulated comprehensive income are expected to be reclassified to
earnings when the transactions occur and affect earnings.

  Our need for, cost of and access to funds are dependent in the long-term on
our future operating results as well as conditions external to us. We may
require additional capital to finance further acquisitions or other
enhancements to, or expansions of, our manufacturing capacity as well as to
finance working capital requirements. Although no assurance can be given that
any additional financing will be available on terms satisfactory to us, we may
seek additional funds from time to time through public or private debt or
equity offerings, or through further bank borrowings or through equipment
lease financings.

Recently Issued Financial Accounting Standards

  As discussed in note 1 to our consolidated financial statements, in June
1998, the Financial Accounting Standards Board (the FASB) issued SFAS No. 133,
subsequently amended by SFAS No. 137 and SFAS No. 138. SFAS No. 133 requires
us to record all derivatives on the balance sheet at fair value. To the extent
that the hedge is effective, changes in derivative fair values will either be
recognized in earnings as offsets to the changes in fair value of related
hedged assets, liabilities and unrecognized firmly committed transactions
(fair value hedging relationships), or for forecasted transactions, deferred
and recorded as a component of other accumulated comprehensive income until
the hedged transactions occur and are recognized in earnings (cash flow
hedging relationships). There may be an impact on earnings to the extent that
the hedging relationship is not 100% effective. If hedges do not qualify for
hedge accounting under SFAS No. 133 or if we elect not to designate a
derivative as a hedge under SFAS No. 133, then the derivative fair value
changes are recognized directly in earnings.

  We have adopted SFAS No. 133 and the corresponding amendments under SFAS No.
138 on January 1, 2001, as required. SFAS No. 133, as amended, is not expected
to have a material impact on our consolidated results of operations, financial
position or cash flows.

  In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial
Statements." SAB No. 101 provides guidance on applying generally accepted
accounting principles to revenue recognition issues in financial statements.
SAB No. 101 requires companies to report any changes in revenue recognition as
a cumulative effect from a change in accounting principles at the time of
adoption. We adopted SAB No. 101 on October 1, 2000, as required, and have
concluded that SAB No. 101 did not have any effect on our revenue recognition
policies and practices.

  In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities." SFAS
No. 140 provides accounting and reporting standards for transfers and
servicing of financial assets and extinguishments of liabilities. Under SFAS
No. 140, after a transfer of financial assets, an entity recognizes the
financial and servicing assets it controls and the liabilities it has
incurred, derecognizes financial assets when control has been surrendered, and
derecognizes liabilities when extinguished. SFAS No. 140 also provides
standards for distinguishing transfers of financial assets that are sales from
transfers that are secured borrowings. SFAS No. 140 is effective for certain
transactions and certain disclosures in the fiscal year ending December 31,
2001. We are currently evaluating the impact of SFAS No. 140 on our financial
statements and related disclosures, but as of December 31, 2000, did not
expect that any impact would be material.


                                      24
<PAGE>

Cautionary Statements

   The Private Securities Litigation Reform Act of 1995 (the Act) contains
certain safe harbors regarding forward-looking statements. From time to time,
information we provide or statements made by our employees may contain
forward-looking information. Any statements in this Annual Report on Form 10-K
that are not statements of historical fact are forward-looking statements. In
some cases you can identify these statements by forward-looking words such as
"anticipate," "believe," "could," "estimate," "expect," "intend," "may,"
"should," "will," and "would" or other similar words. You should read
statements that contain these words carefully because they discuss our future,
expectations, contain projections of our future results of operations or of
our financial position or state other forward-looking information. The
following cautionary statements should be considered carefully in evaluating
our business. The factors discussed in these cautionary statements, among
other factors, provide examples of risks, uncertainties and events that could
cause our actual results to differ materially from those contained in the
forward-looking statements made in this Annual Report on Form 10-K and
presented elsewhere by management from time to time. These cautionary
statements are being made pursuant to the provisions of the Act and with the
intention of obtaining the benefits of the safe harbor provisions of the Act.

                        Risks Related to Our Operations

Our business may suffer if the networking and telecommunications segments of
the electronics industry fail to grow and evolve.

  Our customer base has historically been concentrated in a limited number of
segments within the electronics industry. Net sales to customers within the
networking and telecommunications segments accounted for approximately 69% of
our net sales in fiscal 2000, 66% in fiscal 1999 and 58% in fiscal 1998.
Several customers have recently indicated the possibility of an economic
downturn in their industries, including the networking and telecommunications
market. Developments adverse to these industry segments could materially and
negatively impact us. These industry segments, and the electronics industry as
a whole, experience:

  . intense competition;

  . rapid technological changes resulting in short product life-cycles and
    consequent product obsolescence;

  . significant fluctuations in product demand;

  . economic cycles, including recessionary periods; and

  . consolidation.

  A recessionary period or other event leading to excess capacity affecting
one or more segments of the electronics industry we serve would likely result
in intensified price competition, reduced margins and a decrease in our net
sales.

The loss of major customers could adversely affect us.

  We depend on a small number of customers for a significant portion of our
business. Our five largest customers accounted for approximately 57% and 52%
of our net sales for fiscal 2000 and 1999, respectively.

  For fiscal 2000, Efficient Networks, EMC and Nortel Networks accounted for
approximately 17%, 14% and 12% of our net sales, respectively. For fiscal
1999, Nortel Networks and S-3 Incorporated (formerly Diamond Multimedia)
accounted for 15% and 13% of our net sales, respectively. The timing and level
of orders from our customers varies substantially from period to period. The
historic level of net sales we have received from a specific customer in one
particular period is not necessarily indicative of net sales we may receive
from that customer in any future period.

  Our results may depend on our ability to diversify our customer base and
reduce our reliance on particular customers. Our major customers may not
continue to purchase products and services from us at current levels or

                                      25
<PAGE>

at all. In particular, we terminated our business with S-3 Incorporated in
March 2000, and we terminated our business with Ascend, which was acquired by
Lucent Technologies, in the fourth quarter of fiscal 1999. For various
reasons, including consolidation in our customers' industries, we have in the
past and will continue in the future to terminate or lose relationships with
customers. We may not be able to expand our customer base to make up any sales
shortfalls from our major customers so as to increase overall net sales.
Because certain customers represent such a large part of our business, any of
the following could negatively impact our business:

  . the loss of one or more major customer;

  . a significant reduction or delay in purchases from any major customer;

  . discontinuance by any major customer of the sale of products we
    manufacture;

  . a reduction in demand for the products of major customers that we
    manufacture; or

  . the inability or unwillingness of a major customer to pay for products
    and services on a timely basis or at all.

Our customers do not enter into long-term purchase orders or commitments, and
cancellations, reductions or delays in customer orders would adversely affect
our profitability.

  The level and timing of orders placed by our customers vary due to:

  . customer attempts to manage inventory;

  . changes in the customers' manufacturing strategy, such as a decision by a
    customer to either diversify or consolidate the number of EMS providers
    used or to manufacture their products internally;

  . variation in demand for customer products; and

  . cyclical downturns in customers' industries.

  We generally do not obtain long-term purchase orders or commitments from our
customers. Instead, we work closely with our customers to anticipate delivery
dates and future volume of orders based on customer forecasts. We rely on our
estimates of anticipated future volumes when making commitments regarding:

  . the levels of business that we will seek and accept;

  . the timing of production schedules;

  . the purchase of materials;

  . the purchase or leasing of facilities and equipment; and

  . the levels and utilization of personnel and other resources.

  Customers may cancel, reduce or delay orders that were either previously
made or anticipated for a variety of reasons. Significant or numerous
terminations, reductions or delays in our customers' orders could negatively
impact our operating results. A customer's unwillingness or inability to
reimburse us for materials costs in the case of a significant variance from
forecast could adversely affect our operating results.

Increased competition may result in decreased demand or prices for our
services.

  The EMS industry is highly competitive. We compete against numerous EMS
providers with global operations, as well as those who operate on a local or
regional basis. In addition, current and prospective customers continually
evaluate the merits of manufacturing products internally. Consolidation in the
EMS industry results in a continually changing competitive landscape. The
consolidation trend in the industry also results in larger and more
geographically diverse competitors who have significant combined resources
with which to compete against us. Some of our competitors have substantially
greater managerial, manufacturing, engineering, technical, financial, systems,
sales and marketing resources than we do. These competitors may:

  . respond more quickly to new or emerging technologies;


                                      26
<PAGE>

  . have greater name recognition, critical mass and geographic and market
    presence;

  . be better able to take advantage of acquisition opportunities;

  . adapt more quickly to changes in customer requirements; and

  . devote greater resources to the development, promotion and sale of their
    services.

  We may be operating at a cost disadvantage compared to manufacturers who
have greater direct buying power from component suppliers, distributors and
raw material suppliers or who have lower cost structures. Our manufacturing
processes are generally not subject to significant proprietary protection, and
companies with greater resources or a greater geographic and market presence
may enter our market or increase their competition with us. Increased
competition from existing or potential competitors could result in price
reductions, reduced margins or loss of market share.

We may not be able to obtain raw materials or components for our assemblies on
a timely basis or at all.

  We rely on a single or limited number of third-party suppliers for many
proprietary and other components used in the assembly process. We do not have
any long-term supply agreements. Shortages of materials and components have
occurred from time to time and will likely occur in the future. Raw materials
or component shortages can result in shipping delays and increased prices
which could adversely affect our ability to manufacture products for our
customers on a timely basis or at acceptable cost. Moreover, the consolidation
trend in our suppliers' industry results in changes in supply relationships
and in the price, availability and quality of components and raw materials.
Due to our utilization of just-in-time inventory techniques, the timely
availability of many components is dependent on our ability to both develop
accurate forecasts of customer requirements and manage the materials supply
chain. If we fail to do either, our operating results may suffer.

Operating in foreign countries exposes us to increased risks.

  We have operations in France, Ireland, Mexico and Thailand and procurement
offices in Taiwan and Singapore. We expect to expand into other international
regions. We have limited experience in managing geographically dispersed
operations and in operating in Europe, Mexico or Asia. We also purchase a
significant number of components manufactured in foreign countries. Because of
the scope of our international operations, we are subject to the following
risks which could materially impact our results of operations:

  . economic or political instability;

  . transportation delays and interruptions;

  . foreign exchange rate fluctuations;

  . increased employee turnover and labor unrest;

  . longer payment cycles;

  . greater difficulty in collecting accounts receivable;

  . utilization of different systems and equipment;

  . difficulties in staffing and managing foreign personnel and diverse
    cultures; and

  . less developed infrastructures.

  In addition, changes in policies by the U.S. or foreign governments could
negatively affect our operating results due to:

  . increased regulatory requirements;

  . higher taxation;

  . currency conversion limitations;

  . restrictions on the transfer of funds;


                                      27
<PAGE>

  . the imposition of or increase in tariffs and duties; or
  . limitations on imports or exports.

  Also, we could be adversely affected if our host countries revise their
current policies encouraging foreign investment or foreign trade. In Thailand,
we currently operate under a "tax holiday" that will expire in 2002 unless it
is renewed. Upon the expiration of the "tax holiday," we will become subject
to taxation at a rate of 30% per annum in Thailand.

Our business could suffer if we lose the services of, or fail to attract, key
personnel.

  Our future success largely depends upon the skills and efforts of John A.
Pino, Chairman of the Board, President and Chief Executive Officer, our other
key executives and our managerial, manufacturing, sales and technical
employees. With the exception of Jack O'Rear, Executive Vice President of
Operations for the Americas, Robert E. Zinn, Executive Vice President of
European and Asian Pacific Operations and James Menges, Senior Vice President
of Operations for Asia, we have not entered into employment contracts or
noncompetition agreements with any of our senior management or other key
employees. We do not maintain or plan to acquire any key-man life insurance on
any of our key personnel. The loss of services of any of our executives or
other key personnel could negatively affect our business. We are currently
searching for a chief financial officer. Our continued growth will also
require us to attract, motivate, train and retain additional skilled and
experienced managerial, manufacturing, financial, sales and technical
personnel. We face intense competition for such personnel. We may not be able
to attract, motivate and retain personnel with the skills and experience
needed to successfully manage our business and operations.

We may not be able to maintain our technological and manufacturing process
expertise.

  The markets for our manufacturing services are characterized by rapidly
changing technology and evolving process development. The continued success of
our business will depend upon our ability to:

  . maintain and enhance our technological capabilities;

  . develop and market manufacturing services which meet changing customer
    needs; and

  . successfully anticipate or respond to technological changes in
    manufacturing processes on a cost-effective and timely basis.

  Although we believe that our operations utilize the assembly and testing
technologies, equipment and processes currently required by our customers, we
cannot be certain that we will develop capabilities required by our customers
in the future. Also, the emergence of new technologies, industry standards or
customer requirements may render our equipment, inventory or processes
obsolete or noncompetitive. In addition, we may have to acquire new assembly
and testing technologies and equipment to remain competitive. The acquisition
and implementation of new technologies and equipment may require significant
expense or capital investment. Our failure to anticipate and adapt to our
customers' changing technological needs and requirements would have an adverse
effect on our business.

We may incur significant liabilities if we fail to comply with environmental
regulations.

  We are subject to environmental regulations relating to the use, storage,
discharge, site cleanup, and disposal of hazardous chemicals used in our
manufacturing processes. If we fail to comply with present and future
regulations, or are required to perform site remediation, we could be subject
to future liabilities or the suspension of production. Present and future
regulations may also:

  . restrict our ability to expand our facilities;

  . require us to acquire costly equipment; or

  . require us to incur other significant costs and expenses.


                                      28
<PAGE>

Products we manufacture may contain design or manufacturing defects which
could result in reduced demand for our services and liability claims against
us.

  We manufacture products to our customers' specifications which are highly
complex and may at times contain design or manufacturing errors or failures.
Defects have been discovered in products we manufactured in the past and,
despite our quality control and quality assurance efforts, defects may occur
in the future. Defects in the products we manufacture, whether caused by a
design, manufacturing or component failure or error, may result in delayed
shipments to customers or reduced or cancelled customer orders. If these
defects occur in large quantities or too frequently, our business reputation
may also be impaired. In addition, these defects may result in liability
claims against us.

We anticipate that our net sales and operating results will fluctuate which
could affect our operating results in a given quarter.

  Our net sales and operating results have fluctuated and may continue to
fluctuate significantly from quarter to quarter. A substantial portion of our
net sales in a given quarter may depend on obtaining and fulfilling orders for
assemblies to be manufactured and shipped in the same quarter in which those
orders are received. Further, a significant portion of our net sales in a
given quarter may depend on assemblies configured, completed, packaged and
shipped in the final weeks of such quarter. In addition to the variability
resulting from the short-term nature of our customers' commitments, the
following factors may contribute to such fluctuations:

  . fluctuations in aggregate demand for our services or the products we
    manufacture;

  . shipment delays;

  . interruptions in manufacturing caused by earthquakes or other natural
    disasters;

  . effectiveness in controlling manufacturing costs;

  . changes in cost and availability of labor and components;

  . inefficiencies in managing inventory and accounts receivable, including
    inventory obsolescence and write-offs; and

  . the levels at which we utilize our manufacturing capacity.

  Our operating expenses are based on anticipated revenue levels and a high
percentage of our operating expenses are relatively fixed in the short term.
As a result, any unanticipated shortfall in revenue in a quarter would likely
adversely affect our operating results for that quarter. Also, changes in our
product assembly mix may cause our margins to fluctuate which could negatively
impact our results of operations for that period. Results of operations in any
period should not be considered indicative of the results to be expected for
any future period.

We may incur costs and liabilities related to potential or pending litigation.

  In December 1993, CMC retained the services of a consultant to assist in
quantifying the potential exposure to CMC in connection with clean-up and
related costs of a former manufacturing site. This site is commonly known as
the ITT Telecommunications site in Milan, Tennessee. The consultant initially
estimated that the cost to remove and dispose of the contaminated soil would
be approximately $200,000. CMC subsequently entered into a voluntary agreement
to investigate the site with the Tennessee Department of Environment and
Conservation. In addition, CMC agreed to reimburse a tenant of the site
$115,000 for expenditures previously incurred to investigate environmental
conditions at the site. CMC recorded a total provision of $320,000 based on
these estimates. Environmental studies done in fiscal 1999 have estimated
assessment and remediation costs at between $750,000 and $3.5 million. CMC has
not been named as a potentially responsible party. However, Alcatel, Inc., a
potentially responsible party named by the Tennessee Department of Environment
and Conservation, sought indemnification from CMC under the purchase agreement
by which CMC acquired the stock of one of the operators of the facility. To
date, Alcatel has not filed any legal proceedings to enforce its
indemnification claim. However, Alcatel could initiate such proceedings and
other third parties could assert

                                      29
<PAGE>

claims against us relating to remediation of the site. We have entered into an
agreement with Alcatel pursuant to which the statute of limitations on its
indemnification claim is tolled for a period of time. In the event any
proceedings are initiated or any claim is made, we would defend ourselves
vigorously but defense or resolution of this matter could have a negative
impact our financial position and results of operations.

John A. Pino has significant influence over our company.

  John A. Pino, Chairman of the Board, President and Chief Executive Officer,
and a number of trusts for his and his family's benefit, collectively
beneficially own approximately 30% of our common stock. As a result, Mr. Pino
is able to exert significant influence over us through his ability to
influence the election of directors and all other matters that require action
by our stockholders. The voting power of Mr. Pino and these trusts could have
the effect of preventing or delaying a change in control of our company which
Mr. Pino opposes.

          Risks Related to our Recent Acquisitions and our Expansion

We may not realize the expected benefits from the ACT Manufacturing Thailand
and ACT Manufacturing France acquisitions and their integration will divert
management's attention from our day-to-day operations.

  We completed the acquisitions of ACT Manufacturing Thailand and ACT
Manufacturing France with the expectation that the acquisitions will result in
certain benefits, including, without limitation:

  . cost savings related to redundant activities;

  . increased scale of operations and operating efficiencies;

  . revenue enhancements as well as geographic and customer diversity;

  . management and engineering enhancements; and

  . other synergies.

  We may not realize any of the anticipated benefits of the acquisitions.
Integrating the acquired operations and personnel is a complex and difficult
process and achieving the benefits of the acquisitions will depend in large
part upon the successful integration of the acquired businesses in an
efficient and timely manner. The diversion of the attention of our management
and any difficulties and related costs encountered in the process of combining
the operations of ACT, ACT Manufacturing France and ACT Manufacturing Thailand
could cause the disruption of, or a loss of momentum in, our activities. The
inability to successfully integrate the operations and personnel of ACT
Manufacturing Thailand and ACT Manufacturing France, or any significant delay
in achieving integration, could have a material adverse effect on our
business, financial condition and results of operations.

The ACT Manufacturing Thailand and ACT Manufacturing France acquisitions may
result in loss of customers, employees and suppliers.

  The completion of the acquisitions could cause certain of our or ACT
Manufacturing Thailand's or ACT Manufacturing France's customers to either
seek alternative sources of product supply and service, or delay or change
orders for products or services due to uncertainty over the integration of ACT
Manufacturing Thailand and ACT Manufacturing France. As a result, we may
experience some customer attrition. For the same reason, we may also see
certain suppliers ending their relationship with us. Difficulties in combining
operations, including the uncertainty related to organizational changes, could
also negatively affect employee morale and result in the loss of key employees
as a result of the acquisitions. Any steps taken by us to counter such
increased customer, supplier and employee attrition may not be effective.
Failure by us to control attrition could have a material adverse effect on our
business and results of operations.


                                      30
<PAGE>

We may fail to make additional acquisitions and may not successfully integrate
acquisitions we do make, which could impair our ability to compete and could
harm our operating results.

  In light of the consolidation trend in our industry, we intend to pursue
selective acquisitions of additional facilities, assets, businesses or
companies. We may compete for acquisition opportunities with entities having
significantly greater resources than us. As a result, we may not succeed in
acquiring some or all companies, facilities, assets or businesses that we seek
to acquire, including the Leicester, England manufacturing business of Fisher-
Rosemount Systems. Failure to consummate additional acquisitions may prevent
us from accumulating sufficient critical mass required by customers in this
consolidating industry. This failure could significantly impact our ability to
effectively compete in our targeted markets and could negatively affect our
results of operations.

  Moreover, acquisitions that we do complete may result in:

  . the potentially dilutive issuance of common stock or other equity
    instruments;

  . the incurrence of debt and amortization expenses related to goodwill and
    other intangible assets;

  . the incurrence of significant costs and expenses; or

  . the potentially dilutive impact on our earnings per share.

  Acquisition transactions also involve numerous business risks, including:

  . difficulties in assimilating the acquired operations, technologies,
    personnel and products;

  . difficulties in managing geographically dispersed and international
    operations;

  . difficulties in assimilating diverse financial reporting and management
    information systems;

  . the diversion of management's attention from other business concerns;

  . the potential disruption of our business; and

  . the potential loss of key employees, customers or suppliers.

Our operating results will depend on our ability to manage our growth.

  We have grown rapidly in recent years and we expect to continue to expand
our operations. This growth has placed, and will continue to place,
significant strain on our management, operations, technical, financial,
systems, sales, marketing and other resources. As our growth continues, we
will have to review and revise our security procedures and operating and
financial controls both domestically and internationally. We will have to
continue to invest in both our manufacturing infrastructure to expand capacity
and our operational, financial, and management information systems. We are
currently in the process of converting to a new global enterprise resource
planning system, which we currently plan to implement in all facilities, both
domestic and international, by the end of fiscal 2002. If we fail to
adequately manage the conversion to the new system, our operating results and
financial condition could be harmed. In addition, if we fail to manage our
expected growth effectively, the quality of our services and products and our
operating results could suffer significantly.

Expansion of our operations may negatively impact our business.

  We may expand our operations by establishing or acquiring new manufacturing
facilities or by expanding capacity in our current facilities. We may expand
both in geographical areas in which we currently operate and in new
geographical areas within the United States and internationally. We acquired
operations in France and Thailand in August 2000, began operations in an
additional facility in Massachusetts in January 2000 and have signed a lease
for a new facility in California which is currently under construction and
which will enable us to consolidate and expand our operations. We expect to
begin operations in this new California facility in fiscal 2001. We have
signed a lease for an additional 130,000 square foot building that is under
construction and is adjacent to our facility in Mexico. We have also signed a
lease for a 100,000 square foot new products introduction, prototype and
manufacturing facility in Dallas, Texas. We expect to begin operating in both
new

                                      31
<PAGE>

facilities in fiscal 2001. We may not be able to find additional suitable
facilities on a timely basis or on terms satisfactory to us. Moreover,
expanding existing and establishing new operations involves numerous business
risks, including:

  . the inability to successfully integrate additional facilities or capacity
    and to realize anticipated synergies, economies of scale or other value;

  . difficulties in the timing of expansions and new facilities, including
    delays in the implementation of construction and manufacturing plans;

  . the diversion of management's attention from other business areas during
    the planning and implementation of expansions and new facilities;

  . the strain placed on our operational, financial, management, technical
    and information systems and resources;

  . disruption in manufacturing operations;

  . the incurrence of significant costs and expenses; and

  . the inability to locate enough customers or employees to support the
    expansion or new facility.

Our results of operations could be adversely affected if the revenues
associated with new or expanded facilities are not sufficient to offset the
increased expenditures associated with the new facility or the expansion.

We may fail to secure necessary additional financing.

  We have made and will continue to make substantial capital expenditures to
expand our operations and remain competitive in the rapidly changing EMS
industry. Our future success depends in part on our ability to obtain
additional financing and capital to support our continued growth and
operations. We may seek to raise capital by:

  . issuing additional common stock or other equity instruments;

  . issuing debt securities;

  . obtaining additional lease financings;

  . increasing our lines of credit; or

  . obtaining off-balance sheet financing.

We may not be able to obtain additional capital when we want or need it, and
capital may not be available on satisfactory terms. Furthermore, any
additional capital may have terms and conditions that adversely affect our
business, such as financial or operating covenants.

The significant amount of our indebtedness after the acquisitions of ACT
Manufacturing Thailand and ACT Manufacturing France could adversely affect our
financial health.

  Our total senior debt as of December 31, 2000 was approximately $288.2
million. As of December 31, 2000, we also had $100.0 million of convertible
subordinated notes outstanding. Our leverage could have important adverse
consequences. For example, it could:

  . make it more difficult for us to satisfy our obligations with respect to
    the convertible subordinated notes or our other indebtedness;

  . increase our vulnerability to general adverse economic and industry
    conditions;

  . limit our ability to fund future working capital, capital expenditures,
    acquisitions and other general corporate requirements;

  . limit our flexibility in planning for, or reacting to, changes in our
    business and industry; and

  . limit our ability to borrow additional funds.

Any additional borrowings would further increase the amount of our leverage
and the associated risks.

                                      32
<PAGE>

We will require a significant amount of cash to service our indebtedness.

  Our ability to service our indebtedness and to fund planned capital
expenditures, development and operating costs will depend on our ability to
generate cash in the future through sales of our services. Our available
liquidity may not be sufficient to service our indebtedness, including the
convertible subordinated notes, or to fund our other cash needs. We may need
to refinance all or a portion of our indebtedness, including the convertible
subordinated notes, on or before maturity but we may not be able to do so on
satisfactory terms, or at all. Without sufficient funds to service our
indebtedness, we would have serious liquidity constraints and would need to
seek additional financing from other sources, which may not be available on
satisfactory terms.

The price of our common stock has been and may continue to be volatile.

  The trading price of our common stock has been and may continue to be
volatile. From January 1, 1999 through March 22, 2001, our stock price has
fluctuated between a low of $10.44 per share and a high of $72.25 per share.
On March 22, 2001, the closing price for our common stock was $12.06 per
share. The price of our common stock may fluctuate significantly in response
to a number of events and factors relating to our company, our competitors and
the market for our services, many of which are beyond our control, such as:

  . quarterly variations in our operating results;

  . announcements of new technological innovations, equipment or service
    offerings by us or our competitors;

  . announcements of new products, or sales forecasts or results by our
    customers;

  . changes in financial estimates and recommendations by securities
    analysts; and

  . news relating to trends in our markets.

  In addition, the stock market in general, and the market prices for
technology companies in particular, have experienced extreme volatility that
often has been unrelated to the operating performance of these companies.
These broad market and industry fluctuations may adversely affect the market
price of our common stock, regardless of our operating performance.

  When the market price of a stock has been volatile, holders of that stock
have often instituted securities class action litigation against the company
that issued the stock. We have been the subject of such a lawsuit. If any of
our stockholders brought another securities class action lawsuit against us,
we could incur substantial additional costs defending that lawsuit. The
lawsuit could also divert the time and attention of our management and an
adverse judgment could cause our financial condition or operating results to
suffer.

It may be difficult for a third party to acquire our company, and this could
depress the trading price of our common stock.

  Massachusetts corporate law, our articles of organization and by-laws and
the indenture related to our convertible subordinated notes contain provisions
that could have the effect of delaying, deferring or preventing a change in
control of our company or our management. These provisions could discourage
proxy contests and make it more difficult for you and other stockholders to
elect directors and take other corporate actions. These provisions could also
limit the price that investors might be willing to pay in the future for
shares of our common stock. These provisions:

  . authorize the issuance of "blank check" preferred stock, which is
    preferred stock that can be created and issued by our board of directors
    without prior stockholder approval, with rights senior to those of common
    stock;

  . provide for a staggered board of directors, so that it would take three
    successive annual meetings to replace all directors;

  . require unanimity for stockholder action by written consent;

  . establish advance notice requirements for submitting nominations for
    election to the board of directors and for proposing matters that can be
    acted upon by stockholders at a meeting; and

  . provide for change of control payments.

                                      33
<PAGE>

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

  We have a $150.0 million revolving loan which bears interest at variable
interest rates. We also have a $97.0 million term loan with an interest rate
based on either the Prime Rate or the Eurocurrency Rate. The effective
interest rate that the lenders will charge us under the term loan will vary
depending upon our financial condition. On November 24, 2000 (ACT
Manufacturing Thailand's fiscal year end), ACT Manufacturing Thailand had
credit facilities, substantially all of which are denominated in U.S. dollars,
aggregating $34.1 million which bear interest at variable rates. ACT
Manufacturing France also has an approximately $16.2 million revolving credit
facility which bears interest at variable rates based on the rates in the
Eurocurrency market. Our exposure related to adverse movements in interest
rates is primarily derived from the variable rate on our revolving and term
loans and other credit facilities. At December 31, 2000, $90.0 million of the
outstanding balance on the revolving loan was at an interest rate of 9.22% and
the remaining $50.0 million was at an interest rate of 9.17%. At December 31,
2000, the outstanding balance under the term loan was $97.0 million, of which
$72.8 million was at an interest rate of 9.14% and the remaining $24.2 million
was at an interest rate of 11.0%. At November 24, 2000, $30.2 million was
outstanding under the ACT Manufacturing Thailand credit facilities at interest
rates ranging from 9.2% to 10.8% and at December 31, 2000, $10.9 million was
outstanding under the ACT Manufacturing France credit facilities at an
interest rate of 7.5%. An adverse change of one percent in the interest rate
would cause a change in interest expense of approximately $2.8 million on an
annual basis based on fiscal year end balances outstanding.

  Substantially all of the business of our Mexico and Thailand operations are
conducted in U.S. dollar denominated transactions. The functional currency of
ACT Manufacturing France is the French franc, although some of that business
is conducted in Euro and other currency denominated transactions. The
functional currency of our operations in Ireland is the Irish punt, however,
these operations do not represent a significant portion of our net sales or
expenses. Expenses for our French and Irish operations are also paid in French
francs and Euros, and Irish punts, respectively. Although the functional
currency of our foreign operations, other than France and Ireland, is the U.S.
dollar, some of the expenses of our Thailand and Mexico operations are
denominated in Thai baht and Mexican pesos, respectively. We also operate
international purchasing offices in Singapore and Taiwan, where expenses are
paid in Singapore and Taiwan dollars, respectively.

  SFAS No. 107 requires disclosure about fair value of financial instruments.
Financial instruments consist of cash equivalents, accounts and notes
receivable, accounts payable and certain other short-term liabilities, and
current and long-term debt obligations. The fair value of these financial
instruments approximates their carrying amount, except for the 7% convertible
subordinated notes, at December 31, 2000. The fair market value of the
convertible subordinated notes was $57.4 million with a carrying amount of
$100.0 million.

  ACT Manufacturing France uses foreign exchange and option contracts to hedge
certain foreign currency denominated inventory purchase commitments and firmly
committed foreign currency revenues. Contracts are for periods consistent with
the terms of the underlying transactions, generally one to four months.
At December 31, 2000, the fair value of these contracts exceeded their
carrying value by approximately $3.2 million.

  In fiscal 1999, international operations did not represent a significant
portion of our net sales or net assets. Therefore, that exposure was not
considered material to us. We were exposed to changes in interest rates on our
$107.0 million credit facility in fiscal 1999 which, except for $17.0 million,
bore interest at variable rates. At that time, an adverse change of one
percent in the interest rate would have caused a change in interest expense of
approximately $243,000 on an annual basis based on December 31, 1999 balances
outstanding.


                                      34
<PAGE>

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES

  Our Consolidated Financial Statements and the Independent Auditors' Reports
thereon are presented in the following pages. The Consolidated Financial
Statements filed in Item 8 are as follows:

  Independent Auditors' Report

  Report of Independent Accountants

  Report of Independent Accountants

  Consolidated Balance Sheets as of December 31, 2000 and 1999

  Consolidated Statements of Income for the years ended December 31, 2000,
  1999 and 1998

  Consolidated Statements of Stockholders' Equity for the years ended
  December 31, 2000, 1999 and 1998

  Consolidated Statements of Cash Flows for the years ended December 31,
  2000, 1999 and 1998

  Notes to Consolidated Financial Statements

                                       35
<PAGE>

                         INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
ACT Manufacturing, Inc.:

  We have audited the consolidated balance sheets of ACT Manufacturing, Inc.
and subsidiaries as of December 31, 2000 and 1999, and the related
consolidated statements of income, stockholders' equity, and cash flows for
each of the three years in the period ended December 31, 2000. Our audits also
included the consolidated financial statement schedule listed in the index at
Item 14 (a)(2). These consolidated financial statements and consolidated
financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements and consolidated financial statement schedule based on
our audits. The consolidated financial statements give retroactive effect to
the merger of ACT Manufacturing, Inc. and CMC Industries, Inc. on July 29,
1999, which has been accounted for as a pooling of interests as described in
Note 1 to the consolidated financial statements. We did not audit the
statements of operations, stockholders' equity, and cash flows of CMC
Industries, Inc. for the year ended July 31, 1998 and the five months in the
period ended December 31, 1998, which statements reflect total revenues of
$301,955,000 and $122,423,000 for the year ended July 31, 1998 and the five
months in the period ended December 31, 1998, respectively. Those statements
were audited by other auditors whose reports have been furnished to us, and
our opinion, insofar as it relates to the amounts included for CMC Industries,
Inc. for 1998, is based solely on the reports of such other auditors.

  We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

  In our opinion, based on our audits and the reports of the other auditors,
the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of ACT Manufacturing, Inc. and
subsidiaries as of December 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 2000, in conformity with accounting principles generally
accepted in the United States of America. Also, in our opinion, such
consolidated financial statement schedule, when considered in relation to the
basic consolidated financial statements taken as a whole, presents fairly in
all material respects the information set forth therein.

/s/ Deloitte & Touche LLP

Boston, Massachusetts
March 12, 2001

                                      36
<PAGE>

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Stockholders of CMC Industries, Inc.

  In our opinion, the consolidated statements of income, of changes in
stockholders' equity and of cash flows of CMC Industries, Inc. and its
subsidiaries (not presented separately herein) present fairly, in all material
respects, their operations and their cash flows for the year ended July 31,
1998, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for the
opinion expressed above.

/s/ PricewaterhouseCoopers LLP ______
      PricewaterhouseCoopers LLP


Memphis, Tennessee
August 21, 1998, except as to
Note 14, which is as of
October 9, 1998

                                      37
<PAGE>

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Stockholders of CMC Industries, Inc.

  In our opinion, the consolidated statements of operations, of changes in
stockholders' equity and of cash flows of CMC Industries, Inc. and its
subsidiaries (not presented separately herein) present fairly, in all material
respects, their operations and their cash flows for the five months in the
period ended December 31, 1998, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of
the Company's management; our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit of these
statements in accordance with generally accepted auditing standards, which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.

  As discussed in Note 1, CMC Industries, Inc. merged with ACT Manufacturing,
Inc. on July 29, 1999. The merger was accounted for as a pooling of interests.

/s/ PricewaterhouseCoopers LLP ______
      PricewaterhouseCoopers LLP

Memphis, Tennessee
June 21, 1999, except as to
Note 13, which is as of
July 29, 1999

                                      38
<PAGE>

                    ACT MANUFACTURING, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

                           December 31, 2000 and 1999

<TABLE>
<CAPTION>
                                                             2000       1999
                                                          ----------  --------
                                                            (in thousands,
                                                                except
                                                              share data)
<S>                                                       <C>         <C>
                         ASSETS
Current Assets:
  Cash and cash equivalents.............................. $   48,298  $  4,558
  Accounts receivable--trade (less allowance for doubtful
   accounts of $10,078 in 2000 and $2,939 in 1999).......    351,925   153,422
  Accounts and notes receivable from related party.......      3,331     7,408
  Inventory..............................................    401,325   171,762
  Prepaid expenses and other assets......................     11,646     2,925
  Deferred tax asset.....................................      8,258     1,252
                                                          ----------  --------
    Total current assets.................................    824,783   341,327
Property and equipment--net..............................     77,888    38,047
Deferred tax asset.......................................      1,647       --
Goodwill--net............................................    144,250    10,334
Other assets--net........................................     19,235    12,618
                                                          ----------  --------
    Total................................................ $1,067,803  $402,326
                                                          ==========  ========
          LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Notes payable bank..................................... $   10,863  $    --
  Current portion of long-term debt......................     15,627     1,125
  Current portion of other long-term liabilities.........      3,481     2,972
  Accounts payable.......................................    337,407   153,764
  Advance from customer..................................     50,000       --
  Due to Bull SA.........................................      8,711       --
  Accrued compensation and related taxes.................      5,906     3,769
  Income tax payable.....................................      9,969     3,074
  Deferred taxes.........................................         45       253
  Accrued expenses and other.............................     31,917     5,950
                                                          ----------  --------
    Total current liabilities............................    473,926   170,907
Long-term debt-less current portion......................    255,517    46,933
Deferred taxes...........................................      8,143     2,735
Other long-term liabilities..............................      9,973     3,622
Convertible subordinated notes...........................    100,000       --
Commitments and contingencies (Notes 12 and 13)
Stockholders' Equity:
  Preferred stock--$.01 par value; authorized, 5,000,000
   shares; issued and outstanding, none..................        --        --
  Common stock--$.01 par value; authorized, 100,000,000
   shares; issued and outstanding, 17,040,142 shares in
   2000 and 16,465,771 shares in 1999....................        170       165
  Additional paid-in capital.............................    171,220   157,887
  Accumulated other comprehensive loss...................       (799)     (637)
  Retained earnings......................................     49,653    20,714
                                                          ----------  --------
    Total stockholders' equity...........................    220,244   178,129
                                                          ----------  --------
      Total.............................................. $1,067,803  $402,326
                                                          ==========  ========
</TABLE>

                See notes to consolidated financial statements.

                                       39
<PAGE>

                    ACT MANUFACTURING, INC. AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF INCOME

                  Years Ended December 31, 2000, 1999 and 1998

<TABLE>
<CAPTION>
                                                   2000       1999      1998
                                                ----------  --------  --------
                                                 (in thousands, except per
                                                        share data)
<S>                                             <C>         <C>       <C>
Net sales:
  Unrelated parties............................ $1,362,940  $671,061  $566,048
  Related parties..............................      7,657    25,221    26,436
                                                ----------  --------  --------
    Total net sales............................  1,370,597   696,282   592,484
                                                ----------  --------  --------
Cost of goods sold:
  Unrelated parties............................  1,249,065   618,653   532,018
  Related parties..............................      5,012    23,203    24,321
                                                ----------  --------  --------
    Total cost of goods sold...................  1,254,077   641,856   556,339
                                                ----------  --------  --------
Gross profit...................................    116,520    54,426    36,145
Selling, general and administrative expenses...     46,373    28,945    26,931
Amortization of goodwill.......................      5,675       591       452
Merger costs...................................        --      5,601       --
                                                ----------  --------  --------
Operating income...............................     64,472    19,289     8,762
                                                ----------  --------  --------
Other income (expense):
  Interest expense, net........................    (17,816)   (5,256)   (3,718)
  Other, net...................................        360        (6)       93
                                                ----------  --------  --------
    Total......................................    (17,456)   (5,262)   (3,625)
                                                ----------  --------  --------
Income before provision for income taxes.......     47,016    14,027     5,137
Provision for income taxes.....................     18,077     7,793     2,044
                                                ----------  --------  --------
Net income..................................... $   28,939  $  6,234  $  3,093
                                                ==========  ========  ========
Basic net income per common share.............. $     1.72  $   0.47  $   0.24
                                                ==========  ========  ========
Diluted net income per common share............ $     1.62  $   0.45  $   0.24
                                                ==========  ========  ========
Weighted-average shares outstanding--basic.....     16,808    13,265    12,665
                                                ----------  --------  --------
Weighted-average shares outstanding--diluted...     17,885    13,916    12,976
                                                ==========  ========  ========
</TABLE>

                See notes to consolidated financial statements.

                                       40
<PAGE>

                    ACT MANUFACTURING, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

          Years Ended December 31, 2000, 1999 and 1998 (in thousands)

<TABLE>
<CAPTION>
                           $.01
                           Par               Accumulated
                          Value  Additional     Other                   Total
                          Common  Paid-in   Comprehensive Retained  Stockholders'
                          Stock   Capital      (Loss)     Earnings     Equity
                          ------ ---------- ------------- --------  -------------
<S>                       <C>    <C>        <C>           <C>       <C>
Balance, January 1,
 1998....................  $125   $ 70,515     $    4     $13,459     $ 84,103
 Net proceeds from sale
  of stock...............     3      4,567        --          --         4,570
 Cancellation of common
  stock from acquisition
  escrow.................   --        (122)       --          --          (122)
 Comprehensive income:
  Net income.............   --         --         --        3,093        3,093
  Other comprehensive
   income-cumulative
   foreign currency
   translation
   adjustments...........   --         --        (184)        --          (184)
                                                                      --------
 Comprehensive income....   --         --         --          --         2,909
                           ----   --------     ------     -------     --------
Balance, December 31,
 1998....................   128     74,960       (180)     16,552       91,460
 CMC Industries, Inc. and
  subsidiaries for the
  five months ended
  December 31, 1998:
  Net loss...............   --         --         --       (2,072)      (2,072)
  Minimum pension
   liability adjustment..   --         --      (1,511)        --        (1,511)
  Net proceeds from the
   sale of stock.........     1        328        --          --           329
 Net proceeds from sale
  of stock...............    36     79,912        --          --        79,948
 Income tax benefit from
  employees' exercise of
  stock options..........   --       2,687        --          --         2,687
 Minimum pension
  liability adjustment...   --         --       1,511         --         1,511
 Comprehensive income:
  Net income.............   --         --         --        6,234        6,234
  Other comprehensive
   income--
  Cumulative foreign
   translation
   adjustments ..........   --         --        (457)        --          (457)
                                                                      --------
 Comprehensive income....   --         --         --          --         5,777
                           ----   --------     ------     -------     --------
Balance, December 31,
 1999....................   165    157,887       (637)     20,714      178,129
 Net proceeds from the
  sale of stock..........     5      6,096        --          --         6,101
 Non-cash stock
  compensation...........   --          69        --          --            69
 Income tax benefit from
  employees' exercise of
  stock options..........   --       7,168        --          --         7,168
 Comprehensive income:
  Net income.............   --         --         --       28,939       28,939
  Other comprehensive
   income--
  Minimum pension
   liability adjustment
   ......................   --         --      (2,598)        --        (2,598)
  Cumulative foreign
   translation
   adjustments...........   --         --       2,436         --         2,436
                                                                      --------
 Comprehensive income....   --         --         --          --        29,075
                           ----   --------     ------     -------     --------
Balance, December 31,
 2000....................  $170   $171,220     $ (799)    $49,653     $220,244
                           ====   ========     ======     =======     ========
</TABLE>

                See notes to consolidated financial statements.

                                       41
<PAGE>

                    ACT MANUFACTURING, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

          Years Ended December 31, 2000, 1999 and 1998 (in thousands)

<TABLE>
<CAPTION>
                                                    2000       1999     1998
                                                  ---------  --------  -------
<S>                                               <C>        <C>       <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income...................................... $  28,939  $  6,234  $ 3,093
 Adjustments to reconcile net income to net cash
  (used for) provided by operating activities:
  Depreciation and amortization..................    15,917     7,541    4,884
  Deferred income taxes..........................      (802)    2,119     (764)
  Provision for doubtful accounts................     4,887     3,957    1,945
  Gain on investment in affiliate, net...........      (609)      --       --
  Non-cash stock compensation....................        69       --       --
  Loss on disposal of fixed assets...............       367       --       132
  Increase (decrease) in cash from:
   Accounts receivable--trade....................  (141,709)  (44,086) (26,771)
   Inventory.....................................   (85,207)  (89,158)   4,239
   Prepaid expenses and other assets.............       629       636   (2,632)
   Accounts payable..............................    40,308    56,213   17,463
   Advance from customer.........................    50,000       --       --
   Accrued expenses and other....................    25,007     7,675   10,100
                                                  ---------  --------  -------
    Net cash (used for) provided by operating
     activities..................................   (62,204)  (48,869)  11,689
                                                  ---------  --------  -------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Acquisition of property and equipment...........    (9,367)   (6,729) (17,450)
 Proceeds from the sale of investment in
  affiliate .....................................     6,417       --       --
 Increase in other noncurrent assets.............    (5,916)   (3,135)    (182)
 Proceeds from the sale of property and
  equipment......................................       --        --       111
 Acquisitions, net of cash acquired..............  (170,573)  (12,875)     --
                                                  ---------  --------  -------
    Net cash used for investing activities.......  (179,439)  (22,739) (17,521)
                                                  ---------  --------  -------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Borrowings (repayments) under line-of-credit
  agreements, net................................   109,555   (13,363)   4,612
 Proceeds from the sale of convertible
  subordinated notes.............................   100,000       --       --
 Proceeds under term loan........................   100,325     7,000      --
 Payments under term loan........................   (20,250)     (250)     --
 Debt issue costs................................    (9,200)     (700)    (450)
 Principal payments on long-term debt............       --     (3,017)  (1,300)
 Changes in other long-term liabilities--net.....    (4,231)     (867)    (692)
 Receipt of deferred revenue.....................       --        540      483
    Net proceeds from sale of stock..............     6,101    79,948    4,570
                                                  ---------  --------  -------
    Net cash provided by financing activities....   282,300    69,291    7,223
                                                  ---------  --------  -------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
 EQUIVALENTS.....................................     3,083       469     (184)
                                                  ---------  --------  -------
NET INCREASE (DECREASE) IN CASH AND CASH
 EQUIVALENTS.....................................    43,740    (1,848)   1,207
NET DECREASE IN CASH, CMC INDUSTRIES, INC.
 AND SUBSIDIARIES FOR THE FIVE MONTHS
 ENDED DECEMBER 31, 1998.........................       --     (4,264)     --
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR.....     4,558    10,670    9,463
                                                  ---------  --------  -------
CASH AND CASH EQUIVALENTS, END OF YEAR........... $  48,298  $  4,558  $10,670
                                                  =========  ========  =======
</TABLE>

                See notes to consolidated financial statements.

                                       42
<PAGE>

                   ACT MANUFACTURING, INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Business and Summary of Significant Accounting Policies

  Nature of Business--ACT Manufacturing, Inc. and Subsidiaries (the "Company"
or "ACT") provide value-added electronics manufacturing services for original
equipment manufacturers in the networking and telecommunications, high-end
computer and industrial and medical equipment markets. The Company provides
original equipment manufacturers with total system assembly and integration,
electro-mechanical subassembly, complex printed circuit board assembly
primarily utilizing advanced surface mount technology, and mechanical and
molded cable and harness assembly.

  Principles of Consolidation and Basis of Presentation--The consolidated
financial statements include the accounts of ACT Manufacturing, Inc. and its
wholly owned subsidiaries. All significant intercompany balances and
transactions have been eliminated. On July 29, 1999 the Company completed a
merger with CMC Industries, Inc. ("CMC") in which CMC became a wholly owned
subsidiary of ACT Manufacturing, Inc. The merger has been accounted for as a
pooling of interests, and accordingly, the Company's consolidated financial
statements for prior periods have been restated to include the operating
results, financial position and cash flows of CMC at the beginning of the
earliest period presented. In connection with the pooling, ACT issued 0.5 of a
share of ACT common stock for each outstanding share of CMC common stock. A
total of 3.9 million shares of ACT common stock were issued in connection with
the merger, and approximately 0.9 million shares of ACT common stock were
reserved for the conversion of CMC's outstanding stock options. Approximately
$5.6 million in merger-related costs were charged to operations in the quarter
ended September 30, 1999.

  ACT prepares its consolidated financial statements on the basis of a fiscal
year ending December 31, and CMC prepared its consolidated financial
statements on the basis of a fiscal year ending July 31. The consolidated
statements of operations, stockholders' equity and cash flows for the year
ended December 31, 1998 (herein referred to as "fiscal" 1998) reflect the
results of operations, stockholders' equity and cash flows for ACT for the
year then ended combined with CMC for the year ended July 31, 1998.

  As a result of ACT and CMC having different fiscal years, CMC's condensed
consolidated results of operations for the five-month period from August 1,
1998 through December 31, 1998 are reported separately.

<TABLE>
   <S>                                                               <C>
   Condensed Consolidated Statement of Operations Data (in
    thousands):
   Net sales.......................................................  $122,423
   Cost of sales...................................................   119,633
                                                                     --------
    Gross profit...................................................     2,790
   Selling, general and administrative expenses....................     5,410
                                                                     --------
    Loss from operations...........................................    (2,620)
   Interest expense................................................       691
                                                                     --------
    Loss before taxes..............................................    (3,311)
   Income tax benefit..............................................    (1,239)
                                                                     --------
    Net loss.......................................................  $ (2,072)
                                                                     ========
</TABLE>

  Translation of Foreign Currency--The Company translates financial statements
denominated in foreign currency by translating balance sheet accounts at the
end of period exchange rate and statement of income accounts at the average
exchange rate for the period. Where the local currency is the functional
currency, translation gains and losses are recorded as a separate component of
stockholders' equity in accumulated other comprehensive income (loss) and
transaction gains and losses are reflected in other income (loss) in
determining net income. Where the U. S. dollar is the functional currency, all
foreign currency gains and losses are included in determining net income.

                                      43
<PAGE>

                   ACT MANUFACTURING, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


  Use of Estimates--The preparation of the Company's consolidated financial
statements in conformity with generally accepted accounting principles
necessarily requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the balance sheet dates. Estimates include such
items as reserves for accounts receivable and inventory, useful lives of other
assets, goodwill, property and equipment, investment in related party and
accrued liabilities. Actual results could differ from those estimates.

  Futures and Forward Contracts--Gains and losses on foreign currency exchange
and option contracts that qualify as hedges are deferred and recognized as an
adjustment of the carrying amount of the hedged asset or liability, or
identifiable foreign currency firm commitment.

  Fair Value of Financial Instruments--Statement of Financial Accounting
Standards ("SFAS") No. 107, "Disclosures About Fair Value of Financial
Instruments," requires disclosure of the fair value of certain financial
instruments. The carrying amounts of cash and cash equivalents, accounts
receivable, accounts payable and accrued expenses approximate fair value
because of their short-term nature. Certain of the Company's bank debt,
because it carries a variable interest rate, is stated at its approximate fair
market value. The fair value of the Company's 7% convertible subordinated
notes approximates $57.4 million.

  The Company uses foreign exchange and option contracts to hedge certain
foreign currency denominated inventory purchase commitments and firmly
committed foreign currency revenues. Contracts are for periods consistent with
the terms of the underlying transactions, generally one to four months. At
December 31, 2000, the Company had $88.0 million in open option contracts and
$77.0 million in foreign exchange forward contracts.

  Revenue Recognition--Revenue is recognized upon shipment of the product or
otherwise, under certain contracts, when title to and risks and reward of
ownership pass to the customer.

  Cash and Cash Equivalents--The Company considers all highly liquid debt
instruments purchased with original maturities of three months or less to be
cash equivalents.

  Inventory--Inventory is stated at the lower of cost or market. Cost has been
determined using the first-in, first-out ("FIFO") method for approximately 69%
and 72% of the inventories at the end of fiscal 2000 and 1999, respectively,
with the remaining balance determined using the last-in, first-out ("LIFO")
method or weighted average method.

  Property and Equipment--Purchased property and equipment is recorded at
cost. Capital lease property and equipment is recorded at the lesser of cost
or the present value of the minimum lease payments required. Depreciation of
fixed assets is provided using the straight-line method over the following
estimated useful lives:

<TABLE>
   <S>                                                               <C>
   Building......................................................... 30 years
   Leasehold Improvements........................................... lease term
   Computer Equipment............................................... 3-5 years
   Machinery & Equipment............................................ 5-7 years
   Furniture & Fixtures............................................. 5-7 years
   Motor Vehicles................................................... 5 years
</TABLE>

  Goodwill--Goodwill is being amortized on a straight-line basis over a period
of ten to twenty years. At the end of fiscal 2000 and 1999, the accumulated
amortization of goodwill was $7.2 million and $1.5 million, respectively.

  Other Assets--Other assets primarily include deferred financing costs and
prepaid licenses which are being amortized over five to seven years.


                                      44
<PAGE>

                   ACT MANUFACTURING, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

  Warranty--The Company generally warrants that its hardware assemblies will
be free from defects in workmanship for 12 months and passes on to the
customer any warranties provided by component manufacturers and material
suppliers to the extent permitted. Warranty costs have not been material to
date.

  Income Taxes--The Company accounts for income taxes under SFAS No. 109,
"Accounting for Income Taxes." This Statement requires recognition of deferred
tax liabilities and assets for the expected future tax consequences of events
that have been included in the Company's consolidated financial statements or
tax returns. Deferred tax liabilities and assets are determined based on the
difference between the financial statement carrying amounts and tax bases of
existing assets and liabilities, using enacted tax rates in effect in the
years in which the differences are expected to reverse.

  Stock-Based Compensation--As permitted by SFAS No. 123, "Accounting for
Stock-Based Compensation," the Company accounts for stock option grants using
the intrinsic value method in accordance with Accounting Principles Board
("APB") Opinion No. 25, "Accounting for Stock Issued to Employees."

  Net Income Per Common Share--Basic net income per common share is computed
by dividing net income available to common stockholders by the weighted
average number of common shares outstanding for the period. Diluted net income
per common share reflects the potential dilution if common equivalent shares
outstanding (common stock options, warrants and convertible debt) were
exercised or converted into common stock unless the effects of such equivalent
shares were antidilutive.

  A reconciliation of net income per common share and the weighted average
shares used in the earnings per share ("EPS") calculations for fiscal years
2000, 1999 and 1998 is as follows (in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                                          Per
                                               Net Income     Shares     Share
                                               (Numerator) (Denominator) Amount
                                               ----------- ------------- ------
<S>                                            <C>         <C>           <C>
2000
Basic.........................................   $28,939      16,808     $ 1.72
                                                 =======
Effect of stock options.......................                 1,077      (0.10)
                                                              ------     ------
Diluted.......................................   $28,939      17,885     $ 1.62
                                                 =======      ======     ======
1999
Basic.........................................   $ 6,234      13,265     $ 0.47
                                                 =======
Effect of stock options.......................                   651      (0.02)
                                                              ------     ------
Diluted.......................................   $ 6,234      13,916     $ 0.45
                                                 =======      ======     ======
1998
Basic.........................................   $ 3,093      12,665     $ 0.24
                                                 =======
Effect of stock options.......................                   311        --
                                                              ------     ------
Diluted.......................................   $ 3,093      12,976     $ 0.24
                                                 =======      ======     ======
</TABLE>

  Options to purchase 514,000, 229,000, and 757,000 shares of common stock
were outstanding during fiscal 2000, 1999 and 1998, respectively, but were not
included in the computation of diluted EPS because the options' exercise
prices were greater than the average market prices of the common stock, and
therefore, their effect would be antidilutive. Similarly, 2.3 million shares
related to the assumed conversion of the 7% convertible subordinated notes
were also excluded as this effect would be antidilutive.

                                      45
<PAGE>

                   ACT MANUFACTURING, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


  Supplemental Cash Flow Information--Selected cash payments and noncash
activities for fiscal 2000, 1999 and 1998 were as follows (in thousands):

<TABLE>
<CAPTION>
                                                          2000    1999   1998
                                                         ------- ------ ------
<S>                                                      <C>     <C>    <C>
Cash paid for interest.................................. $16,112 $5,176 $3,887
Cash paid for (refunded from) income taxes..............   5,428  1,537 (7,686)
Noncash investing and financing activities:
  Reduction of goodwill upon cancellation of common
   stock from acquisition escrow........................     --     --     122
  Capital lease obligations.............................   6,668    --     --
</TABLE>

  Impairment of Long-Lived Assets--At each balance sheet date, the Company
assesses whether there has been an impairment in the value of long-lived
assets by determining whether projected undiscounted cash flows generated by
the applicable asset exceeds its net book value as of the assessment date. At
the end of each of fiscal 2000 and 1999, there were no impairments of the
Company's assets.

  Comprehensive Income (Loss)--The Company adopted SFAS No. 130, "Reporting
Comprehensive Income" in fiscal 1998. SFAS No. 130 requires the reporting of
comprehensive income (loss), which in the case of the Company, is the
combination of reported net income, and the changes in the cumulative
translation adjustment, the fair market value of investments, and the minimum
pension liability, which is a component of stockholders' equity.

  Recently Issued Financial Accounting Standards--In June 1998, the Financial
Accounting Standards Board (the FASB) issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," subsequently amended by SFAS
No. 137 and SFAS No. 138. SFAS No. 133 requires the Company to record all
derivatives on the balance sheet at fair value. To the extent that the hedge
is effective, changes in derivative fair values will either be recognized in
earnings as offsets to the changes in fair value of related hedged assets,
liabilities and unrecognized firmly committed transactions (fair value hedging
relationships), or for forecasted transactions, deferred and recorded as a
component of other accumulated comprehensive income until the hedged
transactions occur and are recognized in earnings (cash flow hedging
relationships). There may be an impact on earnings to the extent that the
hedging relationship is not 100% effective. If hedges do not qualify for hedge
accounting under SFAS No. 133 or if the Company elects not to designate a
derivative as a hedge under SFAS No. 133, then the derivative fair value
changes are recognized directly in earnings.

  The Company's France subsidiary uses derivative financial instruments to
hedge certain non-functional currency-denominated assets and liabilities that
are primarily short-term trade accounts payable and receivable balances.
Derivative financial instruments are also used to hedge unrecognized but
firmly committed foreign-currency-denominated revenues and expenses. In all
cases, the maturities of hedging instruments does not usually exceed three to
four months. These instruments may involve elements of credit and market risk
in excess of the amounts recognized in the financial statements. The Company
monitors its positions and the credit quality of counterparties, consisting
primarily of major financial institutions, and does not anticipate
nonperformance by any counterparty.

  The Company adopted SFAS No. 133 and the corresponding amendments under SFAS
No. 138 on January 1, 2001, as required. SFAS No. 133, as amended, is not
expected to have a material impact on the Company's consolidated results of
operations, financial position or cash flows.

  In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements." SAB No. 101 provides guidance on applying

                                      46
<PAGE>

                   ACT MANUFACTURING, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

generally accepted accounting principles to revenue recognition issues in
financial statements. SAB No. 101 requires companies to report any changes in
revenue recognition as a cumulative effect from a change in accounting
principles at the time of adoption. The Company adopted SAB No. 101 on October
1, 2000, as required, and has concluded that SAB No. 101 did not have any
effect on the Company's revenue recognition policies and practices.

  In September 2000, FASB issued SFAS No. 140, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities." SFAS No.
140 provides accounting and reporting standards for transfers and servicing of
financial assets and extinguishments of liabilities. Under SFAS No. 140, after
a transfer of financial assets, an entity recognizes the financial and
servicing assets it controls and the liabilities it has incurred, derecognizes
financial assets when control has been surrendered, and derecognizes
liabilities when extinguished. SFAS No. 140 also provides standards for
distinguishing transfers of financial assets that are sales from transfers
that are secured borrowings. SFAS No. 140 is effective for certain
transactions and certain disclosures in the fiscal year ending December 31,
2001. The Company is currently evaluating the impact of SFAS No. 140 on its
financial statements and related disclosures, but does not expect that any
impact will be material.

2. Acquisitions of Businesses and Assets

 Business Acquisitions

  On August 2, 2000, the Company purchased 99.02% of the issued shares and
outstanding options of GSS Array Technology Public Company Limited ("GSS
Thailand" or "ACT Manufacturing Thailand") for a purchase price of
approximately $86.7 million. On August 31, 2000, the Company purchased all of
the issued shares of Bull Electronics Angers S.A. ("BEA" or "ACT Manufacturing
France") for a purchase price of approximately $99.8 million, of which $91.1
million was paid during 2000 and the remaining $8.7 million was paid in the
first quarter of 2001.

  The GSS Thailand and BEA acquisitions have both been accounted for under the
purchase method of accounting, and accordingly, the results of operations of
ACT Manufacturing Thailand and ACT Manufacturing France have been included in
our consolidated financial statements from the respective dates of
acquisition. ACT Manufacturing Thailand will maintain its November 24 fiscal
year end and its financial position at November 24, 2000 is included in the
Company's fiscal 2000 year end consolidated balance sheet; accordingly,
approximately four months (August-November 2000) of its operations are
included in the Company's fiscal 2000 actual results. ACT Manufacturing France
will maintain its December 31 fiscal year end; accordingly, four months
(September-December 2000) of its operations are included in the Company's
fiscal 2000 actual results. The respective purchase prices have been allocated
to the net assets acquired based upon their fair values. For both the GSS
Thailand and BEA acquisitions, the purchase price exceeded the respective fair
value of the assets acquired and liabilities assumed resulting in goodwill
being recorded. Such goodwill is being amortized over its estimated useful
life of ten years.

                                      47
<PAGE>

                   ACT MANUFACTURING, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


  Below are tables of the purchase price and purchase price allocation for ACT
Manufacturing Thailand and ACT Manufacturing France as of December 31, 2000.
The purchase price and purchase price allocations are subject to change.

<TABLE>
<CAPTION>
                                                ACT           ACT
                                           Manufacturing Manufacturing
                                             Thailand       France      Total
                                           ------------- ------------- --------
<S>                                        <C>           <C>           <C>
Purchase price (in thousands):
  Cash paid at closing....................    $86,692      $ 56,600    $143,292
  Working capital adjustment..............        --         43,211      43,211
  Transaction costs.......................      4,222         3,648       7,870
                                              -------      --------    --------
    Total purchase price..................    $90,914      $103,459    $194,373
                                              =======      ========    ========
Purchase price allocation (in thousands):
  Fair value of net assets acquired.......    $(8,131)     $ 64,046    $ 55,915
  Goodwill and other intangibles..........     99,045        39,413     138,458
                                              -------      --------    --------
    Total purchase price allocation.......    $90,914      $103,459    $194,373
                                              =======      ========    ========
</TABLE>

  The working capital adjustment represents additional purchase price based on
BEA's closing balance sheet. Goodwill and other intangibles includes the value
of workforce-in-place, amounting to $350,000 for ACT Manufacturing Thailand
and $1.3 million for ACT Manufacturing France.

  The following unaudited supplemental pro forma condensed combined financial
information is provided to reflect net sales, net income (loss) and diluted
net income (loss) per common share as if the consummation of the ACT
Manufacturing Thailand and ACT Manufacturing France acquisitions had taken
place at the beginning of each period presented below.

<TABLE>
<CAPTION>
                                             For the Year      For the Year
                                                 Ended             Ended
                                           December 31, 2000 December 31, 1999
                                           ----------------- -----------------
                                             (in thousands, except per share
                                                          data)
                                                       (unaudited)
<S>                                        <C>               <C>
Net sales.................................    $1,706,342        $1,159,585
Net income (loss).........................    $   14,444        $  (21,989)
                                              ==========        ==========
Diluted net income (loss) per common
 share....................................    $     0.81        $    (1.66)
                                              ==========        ==========
</TABLE>

 Asset Acquisition

  Effective October 12, 1999, the Company acquired certain inventory and fixed
assets of GSS/Array Technology, Inc. ("GSS/Array"), located in San Jose,
California, a subsidiary of GSS Thailand. Under the terms of the purchase
agreement, the Company assumed on going relationships with select GSS/Array
domestic customers.

  The Company paid approximately $12.9 million in cash and assumed $618,000 in
liabilities in connection with this asset purchase. The fair value of the
assets purchased was approximately $8.4 million. The Company recorded $5.1
million as the excess of the asset purchase price over the fair value of
assets purchased. The operating results following the Company's purchase of
the selected GSS/Array assets from the date of purchase are included in the
Company's consolidated statement of operations for fiscal 1999. Such goodwill
is being amortized over its estimated useful life of ten years.

                                      48
<PAGE>

                   ACT MANUFACTURING, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


3. Inventory

  Inventory consisted of the following at fiscal year end 2000 and 1999 (in
thousands):

<TABLE>
<CAPTION>
                                                                 2000     1999
                                                               -------- --------
<S>                                                            <C>      <C>
Raw materials................................................. $327,046 $125,869
Work in process...............................................   58,236   42,039
Finished goods................................................   16,043    3,854
                                                               -------- --------
  Total....................................................... $401,325 $171,762
                                                               ======== ========
</TABLE>

  The carrying value of inventory approximates replacement cost.

4. Property and Equipment

  Property and equipment consisted of the following at fiscal year end 2000
and 1999 (in thousands):

<TABLE>
<CAPTION>
                                                               2000      1999
                                                             --------  --------
<S>                                                          <C>       <C>
Land........................................................ $ 14,592  $    798
Building....................................................   10,384     4,922
Leasehold improvements......................................   15,400    11,234
Manufacturing equipment.....................................   76,765    35,696
Office furniture and equipment..............................   13,441     9,311
Vehicles....................................................      893       418
Construction-in-progress....................................    5,876     1,026
                                                             --------  --------
  Total property and equipment..............................  137,351    63,405
Less accumulated depreciation and amortization..............  (59,463)  (25,358)
                                                             --------  --------
  Property and equipment--net............................... $ 77,888  $ 38,047
                                                             ========  ========
</TABLE>

  Included in property and equipment are manufacturing facilities and certain
equipment held under capital leases with a net carrying value of $7.7 million
and $5.7 million at the end of fiscal 2000 and 1999, respectively.

  The Company has capitalized interest in the amount of $160,000 and $40,000
at the end of fiscal 2000 and 1999, respectively, related to the construction-
in-progress.

5. Indebtedness

  On June 29, 2000, the Company revised its senior credit arrangements with a
syndicate of financial institutions led by The Chase Manhattan Bank as
administrative agent, to increase the Company's previous credit facility. The
Company's Credit Agreement with these lenders ("Credit Agreement") provides
that the lenders will make available to the Company up to $150.0 million of
revolving loans (up to $20.0 million of which the Company may use in a variety
of currencies, and the balance of which the Company may use in U.S. dollars)
and up to $100.0 million of term loans.

  The revolving loans are subject to a borrowing base formula, under which the
Company may borrow up to specified percentages of the value of various
categories of its assets, including qualified accounts receivable, inventory,
machinery and equipment. Interest is payable either monthly or quarterly, at
the election of the Company, at an interest rate based on either the prime
rate of The Chase Manhattan Bank or the prevailing rates in the Eurocurrency
market. The Company must repay all revolving loans by June 28, 2005. The
Company is required to repay all term loans in quarterly installments from
December 31, 2000 through June 28, 2005.

                                      49
<PAGE>

                   ACT MANUFACTURING, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


  On December 27, 2000, we entered into an amendment to our Credit Agreement
which makes available additional five year term loans in the aggregate amount
of up to $100.0 million, subject to certain conditions. If drawn, the term
loan provides for repayment of substantially all of the principal amount on
June 28, 2006.

  The Credit Agreement requires the Company to meet certain financial
conditions, including net worth and the ratio of total debt, senior secured
debt and interest and other fixed charges, to earnings. The credit facility is
secured by substantially all of the assets of the Company and certain of its
subsidiaries. In addition, the Credit Agreement limits the Company's ability,
among other things, to incur debt, grant liens, dispose of its properties, pay
dividends, make capital expenditures or investments or enter into mergers or
acquisitions.

  At December 31, 2000, $140.0 million of the Credit Agreement was utilized
for revolving loans, $1.7 million was utilized for letters of credit and an
additional $8.3 million was available for use based upon the applicable
borrowing base. At December 31, 2000, $90.0 million of the revolving loan was
at an interest rate of 9.22% and the remaining $50.0 million was at an
interest rate of 9.17%. At December 31, 2000, $97.0 million was outstanding on
the term loan. At December 31, 2000, $72.8 million of the term loan was at an
interest rate of 9.14% and the remaining $24.2 million was at an interest rate
of 11.0%.

  On November 24, 2000, ACT Manufacturing Thailand had working capital credit
facilities with various financial institutions aggregating $34.1 million at
interest rates ranging from LIBOR plus 3% to LIBOR plus 4%. At its fiscal 2000
year end, $30.2 million was outstanding at interest rates ranging from 9.2% to
10.8%.

  ACT Manufacturing Thailand also has a loan outstanding denominated in Thai
baht. At its fiscal 2000 year end, the outstanding balance was baht 150.8
million ($3.6 million). The Thai baht loan requires monthly principal payments
of baht 4.6 million ($104,900) with the final payment due July 2003. Interest
on the Thai baht loan is payable monthly at a floating rate which equaled
7.75% at its fiscal 2000 year end.

  The ACT Manufacturing Thailand credit facilities and Thai baht loan are
secured by a pledge of ACT Manufacturing Thailand's fixed deposits and by a
mortgage of its land, buildings, machinery and equipment. ACT Manufacturing
Thailand's debt to equity ratio exceeded that permitted under the working
capital credit facilities above, as well as the Thai baht loan above; however,
the lenders have given ACT Manufacturing Thailand a waiver of this covenant
default through March 31, 2002.

  On November 2, 2000, ACT Manufacturing France entered into a new Credit
Agreement with a syndicate of financial institutions led by Societe Generale.
The Credit Agreement provides that the lenders will make available to ACT
Manufacturing France up to approximately $16.2 million of revolving loans. The
Credit Agreement is unsecured and interest is payable monthly at an interest
rate based on the rates in the Eurocurrency market. As of December 31, 2000,
the outstanding balance was approximately $10.9 million and was at an interest
rate of 7.5%. The same credit agreement provides ACT Manufacturing France with
a credit line in the amount of approximately $9.8 million for sales of
accounts receivable, none of which was outstanding at December 31, 2000. In
addition, ACT Manufacturing France has a capital lease line of approximately
$7.4 million, of which approximately $3.3 million was utilized at December 31,
2000.

  Prior to the June 29, 2000 Credit Agreement, the Company was party to a
credit agreement dated July 29, 1999 which provided for a $107.0 million
senior secured credit facility with a group of banks led by The Chase
Manhattan Bank as agent. This credit facility provided for a $7.0 million,
five-year Term Loan and a $100.0 million, five-year line of credit, both of
which were secured by substantially all of the assets of the Company.

  The Company entered into a $17.0 million interest rate swap agreement in
fiscal 1998 which provided for payments by the Company at a fixed rate of
interest of 6.76%. The fair value of the interest rate swap at December 31,
1999 was approximately $(56,000) since the fixed rate of interest of 6.76% was
higher than the floating rate. The interest rate swap agreement was settled in
full in fiscal 2000.

                                      50
<PAGE>

                   ACT MANUFACTURING, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


  The aggregate annual maturities of long-term debt at the end of fiscal 2000
are as follows (in thousands):

<TABLE>
   <S>                                                                  <C>
   2001................................................................ $ 26,490
   2002................................................................   49,507
   2003................................................................   23,510
   2004................................................................   27,500
   2005................................................................  155,000
   Thereafter..........................................................  100,000
                                                                        --------
     Total............................................................. $382,007
                                                                        ========
</TABLE>

 Convertible Subordinated Notes

  In April and May 2000, the Company received net proceeds of approximately
$95.4 million from the sale of 7% Convertible Subordinated Notes due April 15,
2007 (the "Notes") in a private placement. The Notes are general unsecured
obligations of the Company and are subordinated in right of payment to all the
Company's existing and future senior indebtedness. Interest payments are due
on the Notes on April 15 and October 15 of each year. The proceeds of this
convertible debt offering were used to fund the acquisition of ACT
Manufacturing Thailand (see Note 2). Until allocated for specific use, the net
proceeds from this offering were invested in short-term, interest-bearing,
investment grade securities. The Notes were subsequently registered on a
Registration Statement on Form S-3, File No. 333-41406, effective August 4,
2000.

6. Other Long-Term Liabilities

  Other long-term liabilities consisted of the following at fiscal year end
2000 and 1999 (in thousands):

<TABLE>
<CAPTION>
                                                                   2000   1999
                                                                  ------ ------
   <S>                                                            <C>    <C>
   Noncompete covenant........................................... $  160 $  245
   Deferred revenue..............................................    752  1,023
   Capital leases................................................  6,167  5,303
   Other noncurrent liabilities..................................  6,375     23
                                                                  ------ ------
     Total....................................................... 13,454  6,594
   Less current portion..........................................  3,481  2,972
                                                                  ------ ------
     Other long-term liabilities................................. $9,973 $3,622
                                                                  ====== ======
</TABLE>

  Noncompete Covenant--In 1993, the Company entered into an agreement with its
former sole stockholder, which provides for monthly payments over a ten-year
period, in return for a promise not to compete. The liability is recorded at
the present value of the required future payments at an interest rate of 8%.

  Deferred Revenue--The Company received grants of $0 and $540,000 in fiscal
2000 and 1999, respectively, under an agreement with the Ireland Industrial
Development Agency. These payments have been recorded as deferred revenue at
the end of fiscal 2000 and 1999 since the Company will be required to return
the grants if certain conditions, including employment levels, are not met by
December 31, 2002.

  Facility and Equipment Leases--The Company leases manufacturing facilities
and certain equipment and computer software used in its manufacturing
operations under capital lease agreements that expire through 2004.

                                      51
<PAGE>

                   ACT MANUFACTURING, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


  Other long-term liabilities at the end of fiscal 2000 are due as follows (in
thousands):

<TABLE>
<CAPTION>
                                      Noncompete Capital Deferred
                                       Covenant  Leases  Revenue  Other  Total
                                      ---------- ------- -------- ------ ------
<S>                                   <C>        <C>     <C>      <C>    <C>
2001.................................    $ 93    $3,815    $--    $  --  $3,908
2002.................................     100     1,360     752      --   2,212
2003.................................     --      1,079     --       --   1,079
2004.................................     --        729     --       --     729
2005.................................     --        --      --     6,375  6,375
                                         ----    ------    ----   ------ ------
  Total..............................     193     6,983     752    6,375 14,303
Less amount representing interest....      33       816     --       --     849
                                         ----    ------    ----   ------ ------
Present value of minimum payments....     160     6,167     752    6,375 13,454
Less current portion.................      68     3,413     --       --   3,481
                                         ----    ------    ----   ------ ------
  Other long-term liabilities........    $ 92    $2,754    $752   $6,375 $9,973
                                         ====    ======    ====   ====== ======
</TABLE>

7. Income Taxes

  Income before provision for income taxes for fiscal years 2000, 1999 and
1998 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                         2000    1999     1998
                                                        ------- -------  ------
   <S>                                                  <C>     <C>      <C>
   Domestic............................................ $30,814 $15,100  $6,040
   Foreign.............................................  16,202  (1,073)   (903)
                                                        ------- -------  ------
   Total............................................... $47,016 $14,027  $5,137
                                                        ======= =======  ======
</TABLE>

  The provision (benefit) for income taxes for fiscal years 2000, 1999 and
1998 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                        2000     1999    1998
                                                       -------  ------  -------
   <S>                                                 <C>      <C>     <C>
   Current taxes:
     Federal.......................................... $11,610  $5,538  $ 2,221
     State............................................   2,312     926      586
     Foreign..........................................   5,265     --       --
                                                       -------  ------  -------
                                                        19,187   6,464    2,807
   Deferred taxes:
     Federal..........................................  (2,043)   (763)   1,387
     State............................................    (213)  2,092   (2,150)
     Foreign..........................................   1,146     --       --
                                                       -------  ------  -------
                                                        (1,110)  1,329     (763)
       Total.......................................... $18,077  $7,793  $ 2,044
                                                       =======  ======  =======
</TABLE>

                                      52
<PAGE>

                   ACT MANUFACTURING, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


  Deferred income tax assets (liabilities) are attributable to the following
for fiscal years 2000 and 1999 (in thousands):

<TABLE>
<CAPTION>
                                                               2000     1999
                                                              -------  -------
   <S>                                                        <C>      <C>
   Accounts receivable....................................... $ 1,918  $   918
   Inventory.................................................     (92)    (980)
   Depreciation..............................................  (1,962)  (2,287)
   Accrued liabilities.......................................   1,054      868
   Pension...................................................    (700)    (576)
   Foreign...................................................   1,198      --
   Other.....................................................     301      321
                                                              -------  -------
     Net deferred income tax asset (liability)............... $ 1,717  $(1,736)
                                                              =======  =======

  The net deferred income tax asset (liability) is classified as follows at
the end of the fiscal years 2000 and 1999 (in thousands):

<CAPTION>
                                                               2000     1999
                                                              -------  -------
   <S>                                                        <C>      <C>
   Current asset............................................. $ 8,258  $ 1,252
   Long term asset...........................................   1,647      --
   Current liability.........................................     (45)    (253)
   Long term liability.......................................  (8,143)  (2,735)
                                                              -------  -------
                                                              $ 1,717  $(1,736)
                                                              =======  =======
</TABLE>

  No valuation allowance is required as the deferred tax assets are expected
to be fully realized.

  The Company has not provided income tax expense of approximately $1.4
million on ACT Manufacturing Thailand's earnings in fiscal 2000 as those
earnings are considered permanently invested.

  A reconciliation of the expected tax rate at the U.S. statutory rate to the
effective tax rate for the fiscal years indicated is as follows:

<TABLE>
<CAPTION>
                                                                  2000  1999  1998
                                                                  ----  ----  ----
   <S>                                                            <C>   <C>   <C>
   Federal statutory rate........................................  35%   35%   34%
   State income taxes, net of federal benefit....................   3     9     6
   Nondeductible merger costs....................................  --    14    --
   Adjustments to prior year tax liability.......................  --    --     1
   Goodwill......................................................   1    --    --
   Foreign.......................................................  (2)   --    --
   Other.........................................................   1    (2)   (1)
                                                                  ---   ---   ---
     Effective rate..............................................  38%   56%   40%
                                                                  ===   ===   ===
</TABLE>

8. Capital Stock

 Stock Option Plans

  The Company has a 1995 Stock Plan, which provides for the grant of incentive
and nonqualified stock options to purchase up to an aggregate of 2.25 million
shares. The Company has a 1995 Non-Employee Director

                                      53
<PAGE>

                   ACT MANUFACTURING, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Stock Option Plan that provides for the grant of options to purchase a maximum
of 100,000 shares to nonemployee directors of the Company. The Company also
has the 1993 Incentive Stock Option Plan under which options for up to 690,664
shares of common stock may be granted at an exercise price not less than fair
market value at the date of grant. CMC's 1990 Equity Incentive Plan provides
for the granting of options to purchase a maximum of 950,052 shares. Options
granted under CMC's 1990 Equity Incentive Plan were converted to ACT options
in conjunction with the pooling. Such activity is incorporated in the activity
below. Stock option activity for the fiscal years indicated was as follows:

<TABLE>
<CAPTION>
                                                            Weighted- Weighted-
                                                             Average   Average
                                                 Number of  Exercise    Fair
                                                  Options     Price     Value
                                                 ---------  --------- ---------
<S>                                              <C>        <C>       <C>
Outstanding at Beginning of Fiscal 1998......... 1,328,772   $ 15.06
  Granted....................................... 1,246,750     12.92   $ 6.95
  Exercised.....................................   (42,290)     8.08
  Forfeited.....................................  (571,578)    23.67
                                                 ---------
Outstanding at End of Fiscal 1998............... 1,961,654     11.38
  Net CMC activity August 1 to December 31,
   1998.........................................    47,630     11.33
  Granted.......................................   498,000     16.91    12.95
  Exercised.....................................  (491,455)    11.84
  Forfeited.....................................  (255,839)    13.52
                                                 ---------
Outstanding at End of Fiscal 1999............... 1,759,990     12.11
  Granted....................................... 1,079,499     39.95    29.31
  Exercised.....................................  (583,286)    10.49
  Forfeited.....................................  (225,980)    14.91
                                                 ---------
Outstanding at End of Fiscal 2000............... 2,030,223   $ 26.72
                                                 =========   =======
</TABLE>

<TABLE>
<CAPTION>
                     Options Outstanding              Options Exercisable
               ------------------------------- ---------------------------------
                              Weighted Average
   Number of      Range of     Remaining Life  Weighted Average Number Currently
    Options    Exercise Price    (In Years)     Exercise Price    Exercisable
   ---------   -------------- ---------------- ---------------- ----------------
   <S>         <C>            <C>              <C>              <C>
      33,600    $       0.48          2             $ 0.48           33,600
      38,266      3.70- 3.96          2               4.76           38,266
     215,040      7.88- 8.00          8              12.83          114,421
     181,394      8.75-12.25          7              11.20           98,846
     378,923     13.94-19.50          8              11.28          132,747
     179,000     20.74-26.75          8              22.02           41,950
     807,000     27.13-39.88         10              27.13            3,600
     197,000           52.00         10              52.00              --
   ---------                                                        -------
   2,030,223                                                        463,430
   =========                                                        =======
</TABLE>

  The options generally vest over three- to five-year periods.

  The Company has reserved shares for future grants of common stock for
issuance pursuant to the 1993 Incentive Stock Option Plan, 1995 Non-Employee
Director Stock Option Plan, the 1995 Stock Plan and the 1990 Equity Incentive
Plan for 450,800, 56,000, 226,400 and 227,580 shares, respectively.

  In January 1998 the Board of Directors approved a vote to reprice 516,500
employee stock options. The options were originally issued between March 1997
and October 1997 and had original grant prices ranging

                                      54
<PAGE>

                   ACT MANUFACTURING, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

between $14.44 and $39.25. The grant price for these options was lowered to
$13.94, which reflects the market value of the stock as of the reprice date.
The repriced options continue to vest according to the original grant date. No
compensation expense was required to be recorded in the Consolidated
Statements of Income.

  As described in Note 1, the Company uses the intrinsic value method to
measure compensation expense associated with grants of stock options to
employees. Had the Company used the fair value method to measure compensation
for grants made after fiscal 1995 (including the repricing described above),
pro forma net income (loss) and diluted net income (loss) per share for fiscal
years indicated would have been as follows (in thousands, except per share
data):

<TABLE>
<CAPTION>
                                                          2000    1999   1998
                                                         ------- ------ ------
   <S>                                                   <C>     <C>    <C>
   Net income (loss).................................... $25,881 $4,167 $ (966)
                                                         ======= ====== ======
   Diluted net income (loss) per common share........... $  1.45 $ 0.30 $(0.07)
                                                         ======= ====== ======
</TABLE>

  The fair value of options on their grant date was measured using the
Black/Scholes option-pricing model. Key assumptions used to apply this pricing
model for the fiscal years indicated are as follows:

<TABLE>
<CAPTION>
                                                 2000       1999       1998
                                               ---------  ---------  ---------
   <S>                                         <C>        <C>        <C>
   Risk-free interest rate....................       4.4%       5.9%       5.5%
   Expected life of option grants............. 3-5 years  3-5 years  3-5 years
   Expected volatility of underlying stock....        93%        98%       102%
</TABLE>

  It should be noted that the option-pricing model used was designed to value
readily tradable stock options with relatively short lives. The options
granted to employees are not tradable and have contractual lives of up to ten
years. However, management believes that the assumptions used to value the
options and the model applied yield a reasonable estimate of the fair value of
the grants made under the circumstances.

 Private Placement

  In 1998, CMC issued 250,000 shares of stock to two members of the board of
directors in a private placement. Proceeds from the issuance totaled $3.6
million. The purchase price equaled the fair market value of the stock issued.

 Stock Purchase Plan

  On November 15, 1996, CMC's stockholders approved the Employee Stock
Purchase Plan ("ESPP"). The ESPP allowed eligible employees the right to
purchase common stock on a semi-annual basis at the lower of 85% of the market
price at the beginning or end of each offering period. This plan was
terminated as a result of the merger of ACT and CMC on July 29, 1999.

 Common Stock and Stock Option Plan Amendments

  On May 15, 2000, the Company's shareholders approved an amendment to the
Second Restated Articles of Organization of ACT Manufacturing, Inc. to
increase the number of authorized shares of the Company's common stock, $0.01
par value, from 50.0 million to 100.0 million.

  On July 29, 1999, the Company's shareholders approved an amendment to the
Restated Articles of Organization of ACT Manufacturing, Inc. to increase the
number of authorized shares of the Company's common stock, $0.01 par value,
from 30.0 million to 50.0 million.

                                      55
<PAGE>

                   ACT MANUFACTURING, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


  Also on July 29, 1999, the Company's shareholders approved an amendment to
the 1995 Stock Plan increasing the aggregate number of shares which may be
issued from 1.25 million to 2.25 million shares.

9. Employee Benefit Plans

 Retirement Benefits

  In fiscal 1999, the Company adopted SFAS No. 132, "Employers' Disclosures
about Pension and Other Postretirement Benefits." The provisions of SFAS No.
132 provide new disclosure requirements for pensions and other postretirement
benefit plans, but do not change the measurement or recognition of these
plans. SFAS No. 132 standardizes the disclosure requirements for pensions and
other postretirement benefits to the extent practicable and requires
additional information on the changes in benefit obligations and fair values
of plan assets.

  CMC maintains a defined benefit pension plan (the "Pension Plan") which
covers certain hourly employees at one plant. Retirement benefits under the
Pension Plan are based on an employee's length of service and a benefit
formula based on year of hire. The benefit formula does not include a
provision for increases in further compensation levels. Contributions to the
Pension Plan are primarily based on the projected unit actuarial cost method.
The Pension Plan's assets consist principally of short-term U.S. government
instruments and pooled fixed income, debt and equity investment funds with
several financial institutions. Effective June 1, 1994, the Company terminated
the future service payments for employees; accordingly, salary increase
assumptions are not applicable.

  The components of net periodic pension cost and related assumptions for
fiscal years 2000, 1999 and 1998 were as follows (in thousands):

<TABLE>
<CAPTION>
                                                            2000   1999   1998
                                                            -----  -----  -----
   <S>                                                      <C>    <C>    <C>
   Service cost............................................ $ --   $ --   $ --
   Interest cost...........................................   637    642    612
   Return on plan assets...................................   208   (688)  (671)
   Net amortization and deferral...........................  (896)   157    157
                                                            -----  -----  -----
   Net periodic pension (income) expense................... $ (51) $ 111  $  98
                                                            =====  =====  =====
   Discount rate...........................................  7.50%  8.00%  8.25%
   Long-term rate of return................................  9.00%  9.00%  8.00%
</TABLE>

                                      56
<PAGE>

                   ACT MANUFACTURING, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


  The following table sets forth changes in the projected benefit obligation
and changes in the value of Plan assets at fiscal year end (in thousands):

<TABLE>
<CAPTION>
                                                                 2000    1999
                                                                ------  -------
<S>                                                             <C>     <C>
Changes in projected benefit obligation:
Benefit obligation at beginning of year........................ $8,359  $ 7,712
CMC net activity August 1 to December 31, 1998.................    --     1,731
Service cost...................................................    --       --
Interest cost..................................................    637      642
Benefits paid..................................................   (605)    (754)
Revaluation loss (gain)........................................    335     (972)
                                                                ------  -------
  Benefit obligation at end of year............................ $8,726  $ 8,359
                                                                ======  =======
Changes in plan assets:
Fair value of plan assets at beginning of year................. $8,434  $ 7,881
CMC net activity August 1 to December 31, 1998.................    --       (36)
Actual return on plan assets...................................   (208)     949
Employer contributions.........................................    303      394
Benefits paid..................................................   (605)    (754)
                                                                ------  -------
  Fair value of plan assets at end of year..................... $7,924  $ 8,434
                                                                ======  =======
Funded status.................................................. $ (802) $    75
                                                                ======  =======
Reconciliation of Funded Status:
Funded status.................................................. $ (802) $    75
Unrecognized loss..............................................  2,598    1,368
                                                                ------  -------
Prepaid pension cost prior to additional liability.............  1,796    1,443
Additional liability........................................... (2,598)     --
                                                                ------  -------
  (Accrued) prepaid pension cost............................... $ (802) $ 1,443
                                                                ======  =======
</TABLE>

  Under SFAS No. 87, the portion of deferred gains and losses in excess of 10%
of the projected benefit obligation is amortized as a component of net
periodic pension cost. If amortization is required, the period used is the
average remaining service period of active employees, which was approximately
12 years as of December 31, 2000.

  ACT Manufacturing France maintains various pre-retirement plans that offer
indemnities to certain eligible employees who cease working prior to the legal
retirement age. The employer and the French government pay these indemnities
jointly. The Company's liability for such payments was $3.8 million at
December 31, 2000. There was no expense for these plans in fiscal 2000. ACT
Manufacturing France also maintains a pension plan in accordance with certain
collective bargaining agreements. The payments are based on an employee's
length of service, compensation and job grade. The Company's liability for
such payments was $1.7 million at December 31, 2000. The expense for this
pension plan was $38,000 in fiscal 2000.

 Savings Plans

  During fiscal 1994, the Company adopted a savings plan for its employees
pursuant to Section 401(k) of the Internal Revenue Code. Substantially all
employees are eligible to participate, and the plan allows a deferral ranging
from a minimum of 1% to the maximum percentage of compensation permitted by
law. Company contributions to the plan are at the discretion of the Board of
Directors. The Company made no contributions to the Plan in fiscal 2000, 1999
and 1998.

  CMC had a profit sharing savings plan (the "Savings Plan") for employees of
CMC. Under the terms of the Savings Plan, employees may contribute from 2% to
16% of compensation and an additional elective amount.

                                      57
<PAGE>

                   ACT MANUFACTURING, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Effective June 30, 1994, the Company terminated matching employee
contributions. The Company may also elect to make an additional discretionary
profit sharing contribution. Effective January 1, 1996, the Savings Plan
eligibility requirements were amended to include all full-time employees with
one hour of service. The Company recorded no contributions in fiscal 2000,
1999 and 1998.

 Medical Care and Disability Benefit Plans

  The Company is self-insured with respect to certain medical care and
disability benefit plans for a percentage of its employees. The costs for such
plans are charged against earnings in the period incurred. The liability for
healthcare claims was $1.1 million and $605,000 at fiscal year end 2000 and
1999, respectively, and the related expense incurred was $7.7 million, $4.8
million, and $4.3 million for fiscal 2000, 1999 and 1998, respectively. The
Company does not provide benefits under these plans to retired employees.

10. Major Customers and Segment Reporting

 Customers

  In fiscal 2000, Efficient Networks, EMC and Nortel Networks accounted for
approximately 17%, 14% and 12%, respectively, of the Company's net sales.
Sales to Nortel Networks and S-3 Corporation (formerly Diamond Multimedia)
were 15% and 13%, respectively, of the Company's fiscal 1999 net sales. In
fiscal 1998, sales to Nortel Networks and Micron Electronics were each
approximately 12% of the Company's net sales. All such sales relate to the
printed circuit board assembly service offering of the Company's business.

 Segment Reporting

  Management operates the Company in two segments, North America and
International. The chief decision maker regularly evaluates the operations
management team on their ability to generate sales and gross profit in these
two segments. Selling, general and administration functions, as well as the
treasury operations, are administered on a global basis and these expenses,
including interest, are currently recorded where disbursed. As such, the
Company does not currently allocate these expenses across its two segments.

  A summary of the Company's operating results and assets, by segment, for
fiscal years 2000, 1999 and 1998 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                     2000      1999      1998
                                                  ---------- --------  --------
<S>                                               <C>        <C>       <C>
Net Sales
  North America.................................. $1,075,799 $686,220  $586,916
  International..................................    294,798   10,062     5,568
                                                  ---------- --------  --------
    Total........................................ $1,370,597 $696,282  $592,484
                                                  ========== ========  ========
Gross Profit
  North America.................................. $   88,367 $ 54,896  $ 37,350
  International..................................     28,153     (470)   (1,205)
                                                  ---------- --------  --------
    Total........................................    116,520   54,426    36,145
Corporate Expenses...............................     87,581   48,192    33,052
                                                  ---------- --------  --------
Net Income....................................... $   28,939 $  6,234  $  3,093
                                                  ========== ========  ========
Segment Assets
  North America.................................. $  667,043 $393,560  $230,262
  International..................................    400,760    8,766     8,032
                                                  ---------- --------  --------
    Total........................................ $1,067,803 $402,326  $238,294
                                                  ========== ========  ========
</TABLE>

                                      58
<PAGE>

                   ACT MANUFACTURING, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


  A summary of the net sales for the Company's principal service offerings for
fiscal 2000, 1999 and 1998 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                      2000      1999     1998
                                                   ---------- -------- --------
<S>                                                <C>        <C>      <C>
Systems and printed circuit boards................ $1,324,648 $658,749 $556,348
Cable and harness.................................     45,949   37,533   36,136
                                                   ---------- -------- --------
                                                   $1,370,597 $696,282 $592,484
                                                   ========== ======== ========
</TABLE>

 Geographic Information

  The Company operates manufacturing facilities in the United States, Mexico,
Ireland, France and Thailand. Geographic data for net sales and long-lived
assets (which consist mainly of property, plant and equipment and intangibles)
were as follows for the periods set forth below (in thousands):

<TABLE>
<CAPTION>
                                                       2000      1999     1998
                                                    ---------- -------- --------
<S>                                                 <C>        <C>      <C>
Net Sales
  North America.................................... $1,075,799 $686,220 $586,916
  Europe...........................................    209,976   10,062    5,568
  Asia.............................................     84,822      --       --
                                                    ---------- -------- --------
    Total.......................................... $1,370,597 $696,282 $592,484
                                                    ========== ======== ========
Long-Lived Assets
  North America.................................... $   63,951 $ 51,492 $ 38,335
  Europe...........................................     64,077    3,073    3,803
  Asia.............................................    113,270      --       --
                                                    ---------- -------- --------
    Total.......................................... $  241,298 $ 54,565 $ 42,138
                                                    ========== ======== ========
</TABLE>

11. Transactions With Related Parties

  The Company leases certain facilities and equipment from a realty trust
controlled by its principal stockholder under leases that expire in fiscal
2003. These commitments are included in Note 12. The Company pays all
operating costs of the building. Total payments to the realty trust were
approximately $388,000 in each of fiscal 2000, 1999 and 1998.

  In fiscal 1993, the Company entered into a ten-year agreement with one of
its directors for future consulting services. Payments under the agreement
were approximately $326,000, $302,000 and $280,000 in fiscal 2000, 1999 and
1998, respectively. Future commitments under this agreement are approximately
$352,000 in fiscal 2001, $381,000 in fiscal 2002 and $232,000 in fiscal 2003.
The agreement expires in fiscal 2003. A noncompete agreement was also entered
into with the same individual (see Notes 1 and 6). Payments under this
agreement were $85,000, $79,000 and $73,000 in fiscal 2000, 1999 and 1998,
respectively, with future payments totaling $193,000. All of these payments
were charged to the statement of income in the year they were incurred.

  In August 1993, CMC transferred certain assets and related liabilities
associated with its telephone business to Cortelco Systems Holding Corporation
("Cortelco"). Under a manufacturing services agreement that expired in fiscal
1998, CMC provided manufacturing services to Cortelco on a turnkey basis with
prices based on cost plus 8% for telephone products and cost plus 10% for
telecommunications systems products. Included in net sales for fiscal 2000,
1999 and 1998 were sales to Cortelco totaling $7.7 million, $25.2 million and
$26.4 million, respectively. Total cost of sales for the same periods relating
to these sales to Cortelco were $5.0 million,

                                      59
<PAGE>

                   ACT MANUFACTURING, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

$23.2 million and $24.3 million, respectively. CMC continues to provide
services to Cortelco with prices negotiated on a per contract basis.

  In July of 1998, CMC converted certain accounts receivable from Cortelco
totaling $2.0 million into a note receivable. Under the terms of the note,
Cortelco agrees to pay the balance over a three-year term with monthly
payments of $50,000 plus interest. Interest accrues on the note at a rate of
9.0% per annum. CMC continues to provide credit for manufacturing services
sold to Cortelco in the form of trade receivables.

  In connection with the August 1993 transfer of assets and related
liabilities to Cortelco, CMC received preferred stock in Cortelco. The
Cortelco preferred stock was non-voting, had a liquidation preference of
$12.50 per share and entitled the Company to dividends which were non-
cumulative until August 1995 and thereafter cumulative at $0.75 per share for
each year in which Cortelco earned net income of $2.0 million or more. The
Company could, subject to certain restrictions, require Cortelco to redeem the
preferred stock, on a pro rata basis, over a five-year period beginning August
1999. The Company recorded the preferred stock at fair value, $5.9 million in
1995, based on the discounted cash flow of the redemption requirements. The
excess cost basis of the net assets over the fair value of the preferred
shares received was recorded as a distribution of capital to CMC's
stockholders.

  In March 1999, the Company consented to a restructuring of certain assets of
Cortelco. In connection with this restructuring, Cortelco distributed common
stock of Cortelco Systems, Inc. to its stockholders on a pro rata basis.
Pursuant to this distribution, CMC received its pro rata share which was equal
to 6.1 million shares of common stock of Cortelco Systems.

  During the fourth quarter of 1999, Cortelco Systems effected a 1-for-10
reverse stock split. The Company's investment in Cortelco was 612,530 shares
as a result of this stock split. Also in the fourth quarter of 1999, Cortelco
Systems changed its corporate name to eOn Communications Corporation ("eOn")
and filed a Form S-1 for the initial public offering of common stock.

  On February 4, 2000, eOn completed an initial public offering of its common
stock and the Company sold 575,000 shares of common stock in eOn for
approximately $6.4 million. The gain of $0.6 million, net of investment
writedown, on the eOn investment has been recorded in the fiscal 2000
financial statements.

12. Operating Lease Commitments

  The Company leases various plant and office equipment under noncancelable
operating leases expiring through 2010. Rent expense in fiscal 2000, 1999 and
1998 was approximately $29.9 million, $17.6 million and $14.3 million,
respectively. The future minimum rental payments under these leases over the
next five years are approximately as follows (in thousands):

<TABLE>
<CAPTION>
                                                 Related-
                                                   Party       Other
                                                Commitments Commitments  Total
                                                ----------- ----------- --------
<S>                                             <C>         <C>         <C>
2001...........................................    $364      $ 33,497   $ 33,861
2002...........................................     364        30,144     30,508
2003...........................................     196        27,612     27,808
2004...........................................     --         19,931     19,931
2005...........................................     --         15,185     15,185
                                                   ----      --------   --------
  Total........................................    $924      $126,369   $127,293
                                                   ====      ========   ========
</TABLE>

                                      60
<PAGE>

                   ACT MANUFACTURING, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


  As of December 31, 2000, the Company had equipment lease lines of
approximately $19.3 million available for purchases of manufacturing
equipment, computer hardware and software and furniture.

13. Contingencies

  On June 15, 1999, the Company received written notice from legal counsel for
the Lemelson Medical, Education & Research Foundation, Limited Partnership
alleging that the Company was infringing certain patents held by the Lemelson
Foundation Partnership and offering to license such patents to the Company.
The Company entered into a perpetual patent license agreement with the
Lemelson Foundation Partnership in February 2000.

  In December 1993, CMC retained the services of a consultant to assist in
quantifying the potential exposure to CMC in connection with clean-up and
related costs of a former manufacturing site. This site is commonly known as
the ITT Telecommunications site in Milan, Tennessee. The consultant initially
estimated that the cost to remove and dispose of the contaminated soil would
be approximately $200,000. CMC subsequently entered into a voluntary agreement
to investigate the site with the Tennessee Department of Environment and
Conservation. In addition, CMC agreed to reimburse a tenant of the site
$115,000 for expenditures previously incurred to investigate environmental
conditions at the site. Environmental studies done in 1999 have estimated
assessment and remediation costs at between $750,000 and $3.5 million. CMC has
not been named as a potentially responsible party. However, Alcatel, Inc., a
potentially responsible party named by the State of Tennessee's Department of
Environment and Conservation, sought indemnification from CMC under the
purchase agreement by which CMC acquired the stock of one of the operators of
the facility. To date, Alcatel has not filed any legal proceedings to enforce
its indemnification claim. However, Alcatel could initiate such proceedings
and other third parties could assert claims against the Company relating to
remediation of the site. The Company has entered into an agreement with
Alcatel pursuant to which the statute of limitations on its indemnification
claim is tolled for a period of time. In the event any proceedings are
initiated or any claims made, the Company would defend itself vigorously but
defense or resolution of this matter could have a negative impact on the
Company's financial position and results of operations.

  In connection with a fiscal 1996 staff reduction by CMC, a number of
terminated employees subsequently claimed that CMC had engaged in age
discrimination in their dismissal and sought damages of varying amounts. As a
result of these events and the significant ongoing costs to defend these
claims, in October 1998, CMC concluded that its interest would be best served
to settle all such matters. CMC reserved $975,000 to resolve all such claims,
which represented its best estimate of funds to ultimately be paid to such
claimants. This charge was recorded in CMC's fiscal year ended July 31, 1998.

  From time to time, the Company is also subject to claims or litigation
incidental to its business. The Company does not believe that any incidental
claims or litigation will have a material adverse effect on its results of
operations.

                                   * * * * *

                                      61
<PAGE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

  Not applicable.

                                   PART III

  Anything herein to the contrary notwithstanding, in no event are the
sections entitled "Stock Performance Graph," "Compensation Committee and Stock
Option Committee Report on Executive Compensation" and "Audit Committee
Report" to be incorporated by reference herein from the Company's definitive
proxy statement for the Company's 2001 Annual Meeting of Stockholders which
will be filed with the Commission within 120 days after the close of the
fiscal year (the "Definitive Proxy Statement").

ITEM 10. DIRECTORS AND OFFICERS OF THE REGISTRANT

  Certain information concerning the directors of the Company is incorporated
by reference herein from the information contained under the heading "Election
of Directors" in the Company's Definitive Proxy Statement.

  Certain information concerning directors and executive officers of the
Company is incorporated by reference herein from the information contained
under the heading "Occupations of Directors and Executive Officers" in the
Company's Definitive Proxy Statement.

  The information concerning compliance with Section 16(a) of the Exchange Act
required under this item is incorporated herein by reference from the
information contained under the heading "Section 16 Reporting" in the
Company's Definitive Proxy Statement.

ITEM 11. EXECUTIVE COMPENSATION

  Certain information concerning executive compensation is incorporated by
reference herein from the information contained under the heading
"Compensation and Other Information Concerning Directors and Executive
Officers" in the Company's Definitive Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

  Certain information concerning security ownership of certain beneficial
owners and management is incorporated by reference herein from the information
contained under the heading "Securities Ownership of Certain Beneficial Owners
and Management" in the Company's Definitive Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

  Certain information concerning certain relationships and related
transactions is incorporated by reference herein from the information
contained under the heading "Certain Relationships and Related Transactions"
in the Company's Definitive Proxy Statement.

                                      62
<PAGE>

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES AND REPORTS ON FORM 8-K

(a)(1) Index To Consolidated Financial Statements

  The following Consolidated Financial Statements of the Registrant are filed
as part of this report:

    Independent Auditors' Report

    Report of Independent Accountants

    Report of Independent Accountants

    Consolidated Balance Sheets as of December 31, 2000 and 1999

    Consolidated Statements of Income for the years ended December 31,
    2000, 1999 and 1998

    Consolidated Statements of Stockholders' Equity for the years ended
    December 31, 2000, 1999 and 1998

    Consolidated Statements of Cash Flows for the years ended December 31,
    2000, 1999 and 1998

    Notes to Consolidated Financial Statements

(a)(2) Index to Consolidated Financial Statement Schedule

  The following Consolidated Financial Statement Schedule of the Registrant is
filed as part of this report:

<TABLE>
<CAPTION>
                                                                   Page
                                                                   ----
      <S>                                                          <C>
      Schedule II--Valuation and Qualifying Accounts and Reserves  S-1
</TABLE>

  Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the
accompanying consolidated financial statements or notes thereto.

(a)(3) Index to Exhibits

<TABLE>
<CAPTION>
   Exhibit No.                            Description
   -----------                            -----------
   <C>         <S>
    3.1(1)     --Second Restated Articles of Organization of the Company.
    3.2(2)     --Amended and Restated By-Laws of the Company.
    3.3(7)     --Articles of Amendment to the Second Restated Articles of
                Organization of the Company.
    3.4(13)    --Articles of Amendment to the Second Restated Articles of
                Organization of the Company.
    4.1(2)     --Specimen certificate representing the Common Stock.
    4.2        --Second Restated Articles of Organization of the Company (see
                Exhibit 3.1).
    4.3        --Amended and Restated By-Laws of the Company (see Exhibit 3.2).
    4.4        --Articles of Amendment to the Second Restated Articles of
                Organization of the Company (see Exhibit 3.3).
    4.5        --Articles of Amendment to the Second Restated Articles of
                Organization of the Company (see Exhibit 3.4).
               --Indenture for the 7% Convertible Subordinated Notes due April
    4.6(13)    15, 2007.
   10.1(2)     --1995 Non-Employee Director Stock Option Plan.
   10.2(2)     --Stock Option Plan dated April 15, 1993.
   10.3(2)     --Stock Option Plan of Automated Component Technologies, Inc.
                dated April 15, 1993.
   10.4(2)     --Registration Rights Agreement dated February 8, 1995 by and
                among the Company, John A. Pino and certain other stockholders
                named therein.
</TABLE>

                                      63
<PAGE>

<TABLE>
<CAPTION>
   Exhibit No.                            Description
   -----------                            -----------
   <C>         <S>
   10.5(2)     --Lease dated April 1, 1985 between Re-Act Realty Trust and the
                Company, as amended by the First Amendment thereto dated
                October 25, 1988, the Second Amendment thereto dated August 4,
                1993 and the Third Amendment thereto dated February 7, 1995.
   10.6(2)     --Lease dated October 1, 1988 between Re-Act Realty Trust, as
                amended by the First Amendment thereto dated August 4, 1993 and
                the Second Amendment thereto dated February 7, 1995.
   10.7(2)     --Stock Purchase Agreement dated as of January 1, 1993 between
                Donald G. Polich, John A. Pino, the Company and Automated
                Component Technologies, Inc., as amended by the First Amendment
                dated February 8, 1995.
   10.8(2)     --Consulting Agreement dated as of August 4, 1993 between the
                Company and Re-Act Consulting as amended by the First Amendment
                thereto dated February 8, 1995.
   10.9(2)     --Consulting Agreement dated as of August 4, 1993 between
                Automated Component Technologies, Inc. and Re-Act Consulting as
                amended by the First Amendment thereto dated February 8, 1995.
   10.10(2)    --Noncompetition Agreement dated as of January 1, 1993 between
                the Company, John A. Pino and Donald G. Polich.
   10.11(2)    --Noncompetition Agreement dated as of January 1, 1993 between
                Automated Component Technologies, Inc., John A. Pino and Donald
                G. Polich as amended by the First Amendment thereto dated
                February 8, 1995.
   10.12(2)    --Letter Agreement dated as of January 1, 1993 from the Company
                and Automated Component Technologies, Inc. to Donald G. Polich,
                as amended by the First Amendment thereto dated February 8,
                1995.
   10.13(3)    --Lease dated January 31, 1996 between Mansfield/Forbes Ltd.
                Partnership and the Company.
   10.14(4)    --Split-Dollar Life Insurance Agreement Dated September 5, 1996
                by and between the John A. Pino and Janet M. Pino Family
                Maintenance Trust and the Company.
   10.15(5)    --Lease Agreement dated May 26, 1998 between Highwoods/Forsyth
                Limited Partnership and ACT Manufacturing, Inc.
   10.16(6)    --Share Pledge Agreement dated October 14, 1998 between the
                Company and The Chase Manhattan Bank, as agent.
   10.17(6)    --ISDA Master Agreement dated October 14, 1998 between the
                Company and The Chase Manhattan Bank.
   10.18(6)    --Stock Purchase Agreement dated October 13, 1998 between the
                Company and Advanced Component Technologies Limited.
   10.19(6)    --Subordinated Loan Agreement dated October 13, 1998 between the
                Company and Advanced Component Technologies Limited.
   10.20(6)    --Restated Second Amendment to Agreement of Lease dated November
                6, 1998 between the Company and John A. Pino, Trustee of Re-Act
                Realty Trust.
   10.21(6)    --Restated Lease Amendment and Third Amendment to Agreement of
                Lease dated November 6, 1998 between the Company and John A.
                Pino, Trustee of Re-Act Realty Trust.
   10.22(6)    --Letter Agreement dated October 14, 1998 between the Company
                and BancBoston Leasing.
   10.23(6)    --Letter Agreement dated October 14, 1998 between the Company
                and Citizens Leasing.
   10.24(8)    --Development Agreement dated August 18, 1997 between Citiwest
                Limited, SignMax Limited and ACT Manufacturing, Inc.
</TABLE>

                                       64
<PAGE>

<TABLE>
<CAPTION>
   Exhibit No.                            Description
   -----------                            -----------
   <C>         <S>
   10.25(8)    --Option Agreement dated August 18, 1997 between Citiwest
                Limited, SignMax Limited and ACT Manufacturing, Inc.
   10.26(8)    --Lease Agreement dated August 18, 1997 between Irish Life
                Assurance PLC, SignMax Limited and ACT Manufacturing, Inc.
   10.27(8)    --Agreement dated May 25, 1998 between Industrial Development
                Agency (Ireland) and Advanced Component Technologies Limited.
   10.28(8)    --Master Lease Agreement dated February 22, 1999 between Heller
                Financial Leasing, Inc. and the Company.
   10.29(8)    --Lease Agreement dated February 26, 1999 between Amplicon, Inc.
                and the Company.
   10.30(9)    --Global Master Rental Agreement dated May 1, 1998 between the
                Company and Comdisco, Inc.
   10.31(7)    --Amended and Restated 1995 Stock Plan.
   10.32(7)    --Amended and Restated 1990 Equity Incentive Plan (assumed from
                CMC Industries, Inc.)
   10.33(10)   --Amended and Restated Security Agreement dated July 29, 1999
                between the Company, CMC Industries, Inc., ACT Manufacturing
                Securities Corporation and The Chase Manhattan Bank, as agent.
   10.34(10)   --Amended and Restated Pledge Agreement dated July 29, 1999
                between the Company, CMC Industries, Inc. and The Chase
                Manhattan Bank, as agent.
   10.35(10)   --Mexican Stock Pledge Agreement dated July 29, 1999 between the
                Company, CMC Industries, Inc., and The Chase Manhattan Bank, as
                agent.
   10.36(11)   --Employment Agreement dated as of July 29, 1999 between the
                Company and Jack O'Rear.
   10.37(12)   --Lease Agreement dated February 22, 1999 between the Company
                and American Technologies Credit, Inc.
   10.38(12)   --Master Lease Agreement dated April 30, 1999 between the
                Company and General Electric Capital Corporation.
   10.39(12)   --Second Assignment of Sublease dated December 17, 1999 between
                the Company and Mack Technologies, Inc.
   10.40(12)   --Sublease Agreement dated October 16, 1992 between Loral
                Infrared & Imaging Systems, Inc. and Stratus Computer, Inc.
   10.41(12)   --Lease dated March 15, 2000 between the Company and Mission
                West Properties, L.P.
   10.42(13)   --Credit Agreement among ACT Manufacturing, Inc., The Several
                Lenders from Time to Time Parties Thereto, 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.
   10.43(14)   --Guarantee and Collateral Agreement among ACT Manufacturing,
                Inc., Certain of its Subsidiaries and The Chase Manhattan Bank
                dated as of June 29, 2000.
   10.44(14)   --Form of Term Note.
   10.45(14)   --Form of Multi-Currency Revolving Credit Note.
   10.46(14)   --Form of U.S. Dollar Revolving Credit Note.
   10.47(14)   --Master Equipment Lease Agreement No. 35018 between Fleet
                Capital Corporation and ACT Manufacturing, Inc. dated June 6,
                2000.
   10.48(15)   --First Amendment to Credit Agreement dated September 26, 2000
                among the Company, The Several Lenders from Time to Time
                Parties, Thereto Credit Suisse First Boston as Syndication
                Agent, Societe Generale as Documentation Agent and The Chase
                Manhattan Bank as Administrative Agent.
</TABLE>

                                       65
<PAGE>

<TABLE>
<CAPTION>
   Exhibit No.                            Description
   -----------                            -----------
   <C>         <S>
   10.49(15)   --Assumption Agreement to the Credit Agreement dated August 31,
                2000 made by ACT Manufacturing US Holding LLC.
   10.50(15)   --Employment Agreement between the Company and Robert Zinn dated
                August 2, 2000.
   10.51*      --Second Amendment to Credit Agreement dated December 27, 2000
                among the Company, The Several Lenders from Time to Time
                Parties, Thereto Credit Suisse First Boston as Syndication
                Agent, Societe Generale as Documentation Agent and The Chase
                Manhattan Bank as Administrative Agent.
   10.52*      --Lease dated September 14, 2000 between Industrial Developments
                International (Texas), L.P. and the Company.
   10.53*      --Lease dated March 15, 2001 between Fraccionadora Dinamica del
                Pacifico S.A. de C.V. and CMC Industrias Hermosillo S.A. de
                C.V.
   21.1(15)    --Subsidiaries of Registrant.
   23.1*       --Consent of Deloitte & Touche LLP.
   24.1        --Power of Attorney (see Page 68 of this Form 10-K).
</TABLE>
--------
 (1) Incorporated herein by reference to the exhibits to the Company's Annual
     Report on Form 10-K for the year ended December 31, 1995.
 (2) Incorporated herein by reference to the exhibits to the Company's
     Registration Statement on Form S-1 (File No. 33-89532), as amended.
 (3) Incorporated herein by reference to the exhibits to the Company's
     Quarterly Report on Form 10-Q for the period ended June 30, 1996.
 (4) Incorporated herein by reference to the exhibits to the Company's
     Quarterly Report on Form 10-Q for the period ended September 30, 1996.
 (5) Incorporated herein by reference to the exhibits to the Company's
     Quarterly Report on Form 10-Q for the period ended June 30, 1998.
 (6) Incorporated herein by reference to the exhibits to the Company's
     Quarterly Report on Form 10-Q for the period ended September 30, 1998.
 (7) Incorporated herein by reference to the exhibits to the Company's
     Registration Statement on Form S-8 (File No. 333-84231).
 (8) Incorporated herein by reference to the exhibits to the Company's Annual
     Report on Form 10-K for the year ended December 31, 1998.
 (9) Incorporated herein by reference to the exhibits to the Company's
     Quarterly Report on Form 10-Q for the period ended March 31, 1999.
(10) Incorporated herein by reference to the exhibits to the Company's
     Quarterly Report on Form 10-Q for the period ended June 30, 1999.
(11) Incorporated herein by reference to the exhibits to the Company's
     Quarterly Report on Form 10-Q for the period ended September 30, 1999.
(12) Incorporated herein by reference to the exhibits to the Company's Annual
     Report on Form 10-K for the year ended December 31, 1999.
(13) Incorporated herein by reference to the exhibits to the Company's
     Registration Statement on Form S-3 dated July 14, 2000 (File No. 333-
     41406).
(14) Incorporated herein by reference to the exhibits to the Company's
     Quarterly Report on Form 10-Q for the period ended June 30, 2000.
(15) Incorporated herein by reference to the exhibits to the Company's
     Quarterly Report on Form 10-Q for the period ended September 30, 2000.
  * Filed herewith.

  (b) REPORTS ON FORM 8-K

  Not applicable.

  (c) EXHIBITS

                                      66
<PAGE>

  The Company hereby files as part of this Annual Report on Form 10-K the
exhibits listed in Item 14(a)(3) above. Exhibits which are incorporated herein
by reference can be inspected and copied at the public reference facilities
maintained by the Commission, 450 Fifth Street, NW, Room 1024, Washington,
D.C. and at the Commission's regional offices at 219 South Dearborn Street,
Room 1204, Chicago, Illinois; 26 Federal Plaza, Room 1102, New York, New York
and 5757 Wilshire Boulevard, Suite 1710, Los Angeles, California. Copies of
such material can also be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, NW, Washington, D.C. 20549, at prescribed rates.

  (d) FINANCIAL STATEMENT SCHEDULE

  The Company hereby files as part of this Annual Report on Form 10-K the
consolidated financial statement schedule listed in Item 14(a)(2) above.

                                      67
<PAGE>

                                  SIGNATURES

  Pursuant to the requirements of Section 13 or 15(d) 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.

Date: March 30, 2001
                                                     /s/  John A. Pino
                                          By: _________________________________
                                                        John A. Pino
                                               President and Chief Executive
                                                          Officer

                               POWER OF ATTORNEY

  KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints John A. Pino and Christopher L. Gorgone,
jointly and severally, his attorney-in-fact, each with the power of
substitution, for him in any and all capacities, to sign any amendments to
this Annual Report on Form 10-K and to file same, with exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said attorneys-
in-fact, or his substitute or substitutes, may do or cause to be done by
virtue hereof.

  Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
              Signature                          Title                   Date
              ---------                          -----                   ----

<S>                                    <C>                        <C>
           /s/ John A. Pino            President, Chief Executive   March 30, 2001
______________________________________  Officer and Director
             John A. Pino               (Principal Executive
                                        Officer)

      /s/ Christopher L. Gorgone       Interim Chief Financial      March 30, 2001
______________________________________  Officer, Vice President
        Christopher L. Gorgone          of Administration,
                                        Treasurer and Clerk
                                        (Principal Financial and
                                        Accounting Officer)

         /s/ Edward T. Cuddy           Director                     March 30, 2001
______________________________________
           Edward T. Cuddy

         /s/ Bruce R. Gardner          Director                     March 30, 2001
______________________________________
           Bruce R. Gardner

         /s/ Frederick Gibbs           Director                     March 30, 2001
______________________________________
           Frederick Gibbs

           /s/ David S. Lee            Director                     March 30, 2001
______________________________________
             David S. Lee

         /s/ Donald G. Polich          Director                     March 30, 2001
______________________________________
           Donald G. Polich
</TABLE>


                                      68
<PAGE>

                                  SCHEDULE II

                            ACT MANUFACTURING, INC.

                 Valuation and Qualifying Accounts and Reserves
              For the years ended December 31, 2000, 1999 and 1998

<TABLE>
<CAPTION>
                                                Additions
                                     Balance    Charged to                 Balance
                                   at Beginning Costs and  Deductions and  at End
                                    of Period    Expenses   Adjustments   of Period
                                   ------------ ---------- -------------- ---------
                                                    (in thousands)
<S>                                <C>          <C>        <C>            <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
For the year ended December 31,
 1998.............................   $ 2,105     $ 1,945      $ 2,817      $ 1,233
For the year ended December 31,
 1999.............................     1,233       3,957        2,251        2,939
For the year ended December 31,
 2000(1)..........................     2,939      12,026        4,887       10,078

INVENTORY RESERVE:
For the year ended December 31,
 1998.............................     2,744         845          946        2,643
For the year ended December 31,
 1999.............................     2,643         204          675        2,172
For the year ended December 31,
 2000(2)...............................2,172.     15,281        4,882       12,571
</TABLE>
--------
(1) Amounts purchased via acquisitions of $7,191,000 are included in additions.
(2) Amounts purchased via acquisitions of $9,232,000 are included in additions.


                                       69
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.51
<SEQUENCE>2
<FILENAME>dex1051.txt
<DESCRIPTION>2ND AMENDMENT TO CREDIT AGREEMENT
<TEXT>

<PAGE>

                                                                   Exhibit 10.51

                                                                  EXECUTION COPY

                                SECOND AMENDMENT



          SECOND AMENDMENT, dated as of December 27, 2000 (this "Amendment"), to
                                                                 ---------
the Credit Agreement, dated as of June 29, 2000 (as the same may be further
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").
     --------------------


                                  WITNESSETH:
                                  ----------

          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 the Credit Agreement. The Credit Agreement is hereby
          ----------------------------------
amended as follows:


               (a)  Amendments to Section 1 of the Credit Agreement.
                    -----------------------------------------------

                    (i)   Section 1.1 of the Credit Agreement is hereby amended
     by adding the following definitions:

               " 'Additional Term Commitment': as to any Lender, the obligation
                  --------------------------
of such Lender, if any, to make an Additional Term Loan to the Borrowers
hereunder in a principal amount not to exceed the amount set forth under the
heading "Additional Term Commitment"
<PAGE>

opposite such Lender's name on Schedule 1.1A. The original aggregate amount of
the Additional Term Commitments is $100,000,000."

               " 'Additional Term Lender': each Lender that has an Additional
                  ----------------------
Term Commitment or that holds Additional Term Loans."

               " 'Additional Term Loan Closing Date': the date on which the
                  ---------------------------------
Additional Term Loans shall be made."

               " 'Additional Term Loan Prepayment Amount': as defined in Section
                  --------------------------------------
2.9(e)."

               " 'Additional Term Loans': as defined in Section 2.1(c)."
                  ---------------------

               " 'Additional Term Percentage': as to any Additional Term Lender
                  --------------------------
at any time, the percentage which such Additional Term Lender's Additional Term
Commitment then constitutes of the aggregate amount of Additional Term
Commitments.

               " 'French Term Percentage': as to any French Term Lender at any
                  ----------------------
time, the percentage which such French Term Lender's French Term Commitment then
constitutes of the aggregate amount of French Term Commitments."

               " 'Indenture': the indenture pursuant to which the Subordinated
                  ---------
Notes are issued."

               " 'Local Thai Term Loans': the term loans to be made by certain
                  ---------------------
local lenders to the Thai Target in respect of the refinancing of the Existing
Thai Facilities."

               " 'Mandatory Prepayment Date': as defined in Section 2.9(e)."
                  -------------------------

               " 'Prepayment Option Notice': as defined in Section 2.9(e)."
                  ------------------------

               " 'Second Amendment Effective Date': the date on which the Second
                  -------------------------------
Amendment, dated as of December 27, 2000, to this Agreement became effective in
accordance with its terms."

               " 'Subordinated Note Documents': the collective reference to the
                  ---------------------------
Indenture, the Subordinated Notes and all other documents executed in connection
therewith."

               " 'Subordinated Notes': the unsecured subordinated notes issued
                  ------------------
pursuant to the Indenture."

               " 'Thai Term Percentage': as to any Thai Term Lender at any time,
                  --------------------
the percentage which such Thai Term Lender's Thai Term Commitment then
constitutes of the aggregate amount of Thai Term Commitments."

                    (ii)  Section 1.1 of the Credit Agreement is hereby amended
          by deleting in its entirety the definition of "Applicable Margin" and
          substituting, in lieu thereof, the following:
<PAGE>

               " 'Applicable Margin': (a) for Alternate Base Rate Loans which
                  -----------------
are (i) Revolving Loans, French Term Loans or Thai Term Loans, 1.50% per annum
and (ii) Additional Term Loans, 2.50% per annum and (b) for Eurocurrency Loans
which are (i) Revolving Loans, French Term Loans or Thai Term Loans, 2.50% per
annum and (ii) Additional Term Loans, 3.50% per annum; provided, that on and
                                                       --------
after the date which is six months after the Initial Closing Date, the
Applicable Margin with respect to Revolving Loans, French Term Loans and Thai
Term Loans will be determined pursuant to the Pricing Grid."

                    (iii) Section 1.1 of the Credit Agreement is hereby amended
     by deleting in its entirety the definition of "Term Commitment" and
     substituting, in lieu thereof, the following:

               " 'Term Commitment': as to any Lender, the sum of (a) such
                  ---------------
Lender's French Term Commitment, (b) such Lender's Thai Term Commitment and (c)
such Lender's Additional Term Commitment."

                    (iv)  Section 1.1 of the Credit Agreement is hereby amended
     by deleting in its entirety the definition of "Term Loans" and
     substituting, in lieu thereof, the following:

               " 'Term Loans': the collective reference to the French Term
                  ----------
Loans, the Thai Term Loans and the Additional Term Loans."

                    (v)   Section 1.1 of the Credit Agreement is hereby amended
     by deleting in its entirety the definition of "Thai Term Commitment" and
     substituting, in lieu thereof, the following:

               " 'Thai Term Commitment': as to any Lender, the obligation of
                  --------------------
such Lender, if any, to make a Thai Term Loan to the Borrowers hereunder in a
principal amount not to exceed the amount set forth under the heading "Thai Term
Commitment" opposite such Lender's name on Schedule 1.1A. The original aggregate
amount of the Thai Term Commitments is $25,000,000."

                    (vi)  Section 1.1 of the Credit Agreement is hereby amended
     by deleting in its entirety the definition of "Subsidiary Borrower" and
     substituting, in lieu thereof, the following:

               " 'Subsidiary Borrower': Bull Electronics Angers or any entity
                  -------------------
successor thereto."

                    (vii) Section 1.1 of the Credit Agreement is hereby further
     amended by inserting the following sentence after the last sentence of the
     definition of "Consolidated EBITDA" therein:

               "For purposes of calculating the Consolidated Leverage Ratio, the
Senior Secured Leverage Ratio and the Consolidated Fixed Charge Coverage Ratio,
each as set forth in Sections 7.1(a), (b) and (c), respectively, Consolidated
EBITDA shall be calculated (i) for the period ending December 31, 2000 by
multiplying the Consolidated EBITDA for the fiscal quarter then ended by four;
(ii) for the period ending March 31, 2001 by adding the Consolidated EBITDA
<PAGE>

for the fiscal quarter then ended and for the fiscal quarter ended December 31,
2000 and multiplying such total by two; (iii) for the period ending June 30,
2001 by adding the Consolidated EBITDA for the fiscal quarter then ended and for
the fiscal quarters ended March 31, 2001 and December 31, 2000, respectively,
and multiplying such total by a fraction the numerator of which is four and the
denominator of which is three."

                    (vii) Section 1.1 of the Credit Agreement is hereby further
     amended by inserting the following sentence after the last sentence of the
     definition of "Consolidated Interest Expense" therein:

               "For purposes of calculating the Consolidated Fixed Charge
Coverage Ratio as set forth in Section 7.1(c), Consolidated Interest Expense
shall be calculated (i) for the period ending December 31, 2000 by multiplying
the Consolidated Interest Expense for the fiscal quarter then ended by four;
(ii) for the period ending March 31, 2001 by adding the Consolidated Interest
Expense for the fiscal quarter then ended and for the fiscal quarter ended
December 31, 2000 and multiplying such total by two; (iii) for the period ending
June 30, 2001 by adding the Consolidated Interest Expense for the fiscal quarter
then ended and for the fiscal quarters ended March 31, 2001 and December 31,
2000, respectively, and multiplying such total by a fraction the numerator of
which is four and the denominator of which is three."

               (b)  Amendments to Section 2 of the Credit Agreement.
                    -----------------------------------------------

                    (i)   Section 2.1 of the Credit Agreement is hereby amended
     by adding, as Section 2.1(c), the following language after Section 2.1(b)
     thereof:

               "(c) Subject to the terms and conditions hereof, each Additional
Term Lender severally agrees to make a term loan (an "Additional Term Loan") to
                                                      --------------------
the Parent Borrower on the Additional Term Loan Closing Date in an amount not to
exceed the amount of the Additional Term Commitment of such Lender. The
Additional Term Loans may from time to time be Eurocurrency Loans or Alternate
Base Rate Loans, as determined by the Parent Borrower and notified to the
Administrative Agent in accordance with Sections 2.2 and 2.10."

                    (ii)  Section 2 of the Credit Agreement is hereby amended by
     deleting in its entirety Section 2.2 and substituting, in lieu thereof, the
     following:

               "2.2 Procedure for Term Loan Borrowing. The Parent Borrower shall
                    ---------------------------------
give the Administrative Agent irrevocable notice (which notice must be received
by the Administrative Agent prior to 10:00 A.M., New York City time, one
Business Day prior to the anticipated French Closing Date, Thai Closing Date or
Additional Term Loan Closing Date, as the case may be) requesting that the Term
Lenders make the Term Loans on the French Closing Date, the Thai Closing Date or
the Additional Term Loan Closing Date, as the case may be, and specifying the
amount to be borrowed. The Term Loans made on each of the French Closing Date,
the Thai Closing Date and the Additional Term Loan Closing Date shall initially
be Alternate Base Rate Loans and, unless otherwise agreed by the Administrative
Agent in its sole discretion, no Term Loan may be 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 French Closing Date, the Thai Closing Date or
the Additional Term Loan Closing Date, as the case may be. Upon receipt of
<PAGE>

such notice the Administrative Agent shall promptly notify each Term Lender
thereof. Not later than 12:00 Noon, New York City time, on the French Closing
Date, the Thai Closing Date or the Additional Term Loan Closing Date, as the
case may be, each Term Lender shall make available to the Administrative Agent
at the Funding Office an amount in immediately available funds equal to the Term
Loan or Term Loans to be made by such Lender. The Administrative Agent shall
credit the account of the Parent Borrower on the books of such office of the
Administrative Agent with the aggregate of the amounts made available to the
Administrative Agent by the Term Lenders in immediately available funds."

               (iii) Section 2 of the Credit Agreement is hereby amended by
     deleting in its entirety Section 2.3 and substituting, in lieu thereof, the
     following:

          "2.3 Repayment of Term Loans. (a) The French Term Loans of each French
               -----------------------
     Term Lender shall mature in 19 consecutive quarterly installments,
     commencing on December 31, 2000, and ending on the date that is five years
     after the Initial Closing Date in an aggregate amount for each of which
     shall be in an amount equal to such Lender's French Term Percentage
     multiplied by the aggregate amount of French Term Commitments, multiplied
     by the percentage set forth below opposite such installment:

          Installment:                     Principal Percentage Amount:
          -----------                      ---------------------------

          December 31, 2000                3% of French Term Loans
          March 31, 2001                   3% of French Term Loans
          June 30, 2001                    3% of French Term Loans
          September 30, 2001               4% of French Term Loans
          December 31, 2001                4% of French Term Loans
          March 31, 2002                   4% of French Term Loans
          June 30, 2002                    4% of French Term Loans
          September 30, 2002               5% of French Term Loans
          December 31, 2002                5% of French Term Loans
          March 31, 2003                   5% of French Term Loans
          June 30, 2003                    5% of French Term Loans
          September 30, 2003               6.25% of French Term Loans
          December 31, 2003                6.25% of French Term Loans
          March 31, 2004                   6.25% of French Term Loans
          June 30, 2004                    6.25% of French Term Loans
          September 30, 2004               7.5% of French Term Loans
          December 31, 2004                7.5% of French Term Loans
          March 31, 2005                   7.5% of French Term Loans
          June 28, 2005                    7.5% of French Term Loans


          (b) The Thai Term Loans of each Thai Term Lender shall mature in 19
     consecutive quarterly installments, commencing on December 31, 2000, and
     ending on the date that is five years after the Initial Closing Date in an
     aggregate amount for each of which shall be in an amount equal to such
     Lender's Thai Term Percentage multiplied by
<PAGE>

     the aggregate amount of Thai Term Commitments, multiplied by the percentage
     set forth below opposite such installment:

          Installment:                         Principal Percentage Amount:
          -----------                          ---------------------------

          December 31, 2000                    3% of Thai Term Loans
          March 31, 2001                       3% of Thai Term Loans
          June 30, 2001                        3% of Thai Term Loans
          September 30, 2001                   4% of Thai Term Loans
          December 31, 2001                    4% of Thai Term Loans
          March 31, 2002                       4% of Thai Term Loans
          June 30, 2002                        4% of Thai Term Loans
          September 30, 2002                   5% of Thai Term Loans
          December 31, 2002                    5% of Thai Term Loans
          March 31, 2003                       5% of Thai Term Loans
          June 30, 2003                        5% of Thai Term Loans
          September 30, 2003                   6.25% of Thai Term Loans
          December 31, 2003                    6.25% of Thai Term Loans
          March 31, 2004                       6.25% of Thai Term Loans
          June 30, 2004                        6.25% of Thai Term Loans
          September 30, 2004                   7.5% of Thai Term Loans
          December 31, 2004                    7.5% of Thai Term Loans
          March 31, 2005                       7.5% of Thai Term Loans
          June 28, 2005                        7.5% of Thai Term Loans


          (c) The Additional Term Loans of each Additional Term Lender shall
     mature in 19 consecutive quarterly installments, commencing on December 31,
     2001, and ending on the date that is six years after the Initial Closing
     Date in an aggregate amount for each of which shall be in an amount equal
     to such Lender's Additional Term Percentage multiplied by the aggregate
     amount of Additional Term Commitments, multiplied by the percentage set
     forth below opposite such installment:

          Installment:                        Principal Percentage Amount:
          -----------                         ---------------------------

          December 31, 2001                   0.25% of Additional Term Loans
          March 31, 2002                      0.25% of Additional Term Loans
          June 30, 2002                       0.25% of Additional Term Loans
          September 30, 2002                  0.25% of Additional Term Loans
          December 31, 2002                   0.25% of Additional Term Loans
          March 31, 2003                      0.25% of Additional Term Loans
          June 30, 2003                       0.25% of Additional Term Loans
          September 30, 2003                  0.25% of Additional Term Loans
          December 31, 2003                   0.25% of Additional Term Loans
          March 31, 2004                      0.25% of Additional Term Loans
          June 30, 2004                       0.25% of Additional Term Loans
          September 30, 2004                  0.25% of Additional Term Loans
<PAGE>

          December 31, 2004                   0.25% of Additional Term Loans
          March 31, 2005                      0.25% of Additional Term Loans
          June 30, 2005                       0.25% of Additional Term Loans
          September 30, 2005                  0.25% of Additional Term Loans
          December 31, 2005                   0.25% of Additional Term Loans
          March 31, 2006                      0.25% of Additional Term Loans
          June 28, 2006                       95.5% of Additional Term Loans


          (d) To the extent the maturity date of any Term Loan extends beyond
     the maturity date of any subordinated debt of the Parent Borrower existing
     on the date hereof, such maturity date shall be adjusted to be 90 days
     prior to the maturity date of such subordinated debt."

              (iv) Section 2.9 of the Credit Agreement is hereby amended by
     adding, as Section 2.9(e), the following language after Section 2.9(d)
     thereof:

          "(e) Notwithstanding anything to the contrary in Section 2.9(d), with
respect to the amount of any mandatory prepayment described in Section 2.9 that
is allocated to Additional Term Loans (such amounts, the "Additional Term Loan
                                                          --------------------
Prepayment Amount") at any time when either French Term Loans or Thai Term Loans
-----------------
remain outstanding, the Parent Borrower will, in lieu of applying such amount to
the prepayment of Additional Term Loans, as provided in paragraph (d) above, on
the date specified in Section 2.9 for such prepayment, give the Administrative
Agent telephonic notice ( promptly confirmed in writing) requesting that the
Administrative Agent prepare and provide to each Additional Term Lender a notice
(each, a "Prepayment Option Notice") as described below. As promptly as
          ------------------------
practicable after receiving such notice from the Borrower, the Administrative
Agent will send to each Additional Term Lender a Prepayment Option Notice, which
shall be in the form of Exhibit J and shall include an offer by the Parent
Borrower to prepay on the date (each a "Mandatory Prepayment Date") that is 10
                                        -------------------------
Business Days after the date of the Prepayment Option Notice, the relevant
French Term Loans and Thai Term Loans of such lender by an amount equal to the
portion of the Prepayment Amount indicated in such Lender's Prepayment Option
Notice as being applicable to such Lender's Additional Term Loans. On the
Mandatory Prepayment Date, (i) the Parent Borrower shall pay to the relevant
Additional Term Lenders the aggregate amount necessary to prepay that portion of
the outstanding relevant Additional Term Loans in respect of which such
Additional Term Lenders have accepted prepayment as described above and (ii) the
Parent Borrower shall pay to the French Term Lenders and the Thai Term Lenders
an amount equal to the portion of the Additional Term Loan Prepayment Amount not
accepted by the relevant Additional Term Lenders, and such amount shall be
applied to the prepayment of the French Term Loans and Thai Term Loans."

          (c)  Amendment to Section 4 of the Credit Agreement. Section 4.16 of
               ----------------------------------------------
the Credit Agreement is hereby amended by deleting such Section in its entirety
and substituting, in lieu thereof, the following:
<PAGE>

          "4.16 Use of Proceeds. The proceeds of the French Term Loans shall be
                ---------------
used to finance the French Acquisition and to pay related fees and expenses. The
proceeds of the Thai Term Loans, the Additional Term Loans, the Revolving Loans
and the Letters of Credit shall be used to pay certain fees and expenses, to
refinance certain existing indebtedness of the Parent Borrower, its Subsidiaries
and the Thai Target and to finance the working capital needs of the Parent
Borrower and its Subsidiaries in the ordinary course of business."

          (d)  Amendment to Section 5 of the Credit Agreement. Section 5.3(a) of
               ----------------------------------------------
the Credit Agreement is hereby amended by adding "and" at the end of clause (ii)
thereof, deleting "; and" at the end of clause (iii) thereof and substituting,
in lieu thereof, "." and deleting in its entirety clause (iv) thereof.

          (e)  Amendment to Section 6 of the Credit Agreement. Section 6.9 of
               ----------------------------------------------
the Credit Agreement is hereby amended by deleting such Section in its entirety
and substituting, in lieu thereof, the following:

          "6.9 Interest Rate Protection. In the case of the Parent Borrower, no
               ------------------------
later than June 29, 2001, enter into, and thereafter maintain, Hedge Agreements
to the extent necessary to provide that at least the aggregate principal amount
of the Term Loans or $100,000,000, whichever amount is less, is subject to
either a fixed interest rate or interest rate protection for a period of not
less than three years, which Hedge Agreements shall have terms and conditions
reasonably satisfactory to the Administrative Agent."

          (f)  Amendments to Section 7 of the Credit Agreement.
               -----------------------------------------------

               (i)   Section 7.1(a) of the Credit Agreement is hereby amended by
     deleting from the table thereunder the Consolidated Leverage Ratio values
     corresponding to the Fiscal Quarters "09/30/01" through "12/31/01" and
     substituting, in lieu thereof, the following values:

                 "09/30/01                        3.50:1.00
                  12/31/01                        3.25:1.00"

               (ii)  Section 7.1(b) of the Credit Agreement is hereby amended by
     deleting from the table thereunder the Consolidated Senior Secured Leverage
     Ratio values corresponding to the Fiscal Quarters "06/30/01," "09/30/01"
     and "12/31/01" and substituting, in lieu thereof, the following values:

                 "06/30/01                        2.75:1.00
                  09/30/01                        2.75:1.00
                  12/31/01                        2.50:1.00"

               (iii) Section 7.2(b) of the Credit Agreement is hereby amended by
     deleting such Section in its entirety and substituting, in lieu thereof,
     the following:

          "(b) Indebtedness of the Parent Borrower to any Subsidiary, the
Subsidiary Borrower to the Parent Borrower or to any other Subsidiary and of any
Wholly Owned Subsidiary Guarantor or of the Thai Target to the Parent Borrower
or to any other Subsidiary (in
<PAGE>

the case of Indebtedness of the Thai Target, subject to the limitations set
forth in clauses (g) and (i) of this subsection)."

               (iv) Section 7.2(c) of the Credit Agreement is hereby amended by
     deleting such Section in its entirety and substituting, in lieu thereof,
     the following:

          "(c) Guarantee Obligations incurred in the ordinary course of business
by the Parent Borrower or any of its Subsidiaries of obligations of any Wholly
Owned Subsidiary Guarantor, the Subsidiary Borrower or the Thai Target (in the
case of the Subsidiary Borrower, subject to the limitation set forth in clause
(i) of this subsection and, in the case of the Thai Target, subject to the
limitations set forth in clauses (g) and (i) of this subsection)."

               (v) Section 7.2(g) of the Credit Agreement is hereby amended by
     adding the following proviso before the ";" at the end thereof:

               "; provided that any such Indebtedness shall be applied first to
                  --------
reduce the Local Thai Term Loans."

               (vi) Section 7.2 of the Credit Agreement is hereby further
     amended by deleting "and" at the end of clause (i) thereof, by deleting "."
     at the end of clause (j) thereof and substituting, in lieu thereof, "; and"
     and by adding the following new clause (k) thereto:

          "(k) Guarantee Obligations incurred pursuant to the Subordinated Note
Documents."

               (vii) Section 7.8(g) of the Credit Agreement is hereby amended by
     deleting such section in its entirety and substituting, in lieu thereof,
     the following:

          "(g) intercompany Investments by the Parent Borrower in any of its
Wholly Owned Subsidiaries or in the Thai Target, provided that all such
                                                 --------
intercompany Indebtedness shall be evidenced by promissory notes pledged
pursuant to the Guarantee and Collateral Agreement and such intercompany
Indebtedness shall be subordinated in right of payment to the payment in full of
the Obligations hereunder;"

               (viii) Section 7.9 of the Credit Agreement is hereby amended by
     deleting the words "convertible subordinated debt" immediately preceding
     the parenthetical therein and substituting, in lieu thereof, the words
     "subordinated debt".

               (ix) Section 7.14 of the Credit Agreement is hereby amended by
     deleting in its entirety the language immediately following "(a)" therein
     and immediately preceding "(b)" therein and substituting, in lieu thereof,
     the following language:

          "make Restricted Payments in respect of any Capital Stock of such
Subsidiary (other than the prohibition on Restricted Payments made by the Thai
Target pursuant to the Local Thai Term Loans until the Local Thai Term Loans
outstanding have been reduced to $10,500,000 or less) held by, or pay any
Indebtedness owed to, the Parent Borrower or any other Subsidiary of the Parent
Borrower,"
<PAGE>

          (g)  Amendment to Annex A of the Credit Agreement. The Credit
               --------------------------------------------
Agreement is hereby further amended by deleting in its entirety Annex A thereto
and substituting, in lieu thereof, Annex I attached hereto as the new Annex A.

          (h)  Amendment to Schedule 1.1A of the Credit Agreement. The Credit
               --------------------------------------------------
Agreement shall be further amended by adding to Schedule 1.1A thereof an
additional heading entitled "Additional Term Commitment" and inserting
thereunder the Additional Term Commitment of each Additional Term Lender prior
to any borrowing by the Parent Borrower of any Additional Term Loans.

     3. Limited Waiver. Each of the Lenders parties hereto agree that, for the
        --------------
period from the Amendment Effective Date to the Section 3 Termination Date (as
defined below), any Default or Event of Default arising under Section 8(e) of
the Credit Agreement by virtue of the existence of any breach or payment default
(the aggregate principal amount of such payment default not to exceed
$10,500,000) under any of the Existing Thai Facilities is hereby waived. The
"Section 3 Termination Date" shall be the earliest of (i) March 31, 2001 or (ii)
the date on which all defaults under any of the Existing Thai Facilities have
been cured or waived, through amendments to the Existing Thai Facilities or
otherwise or (iii) the date on which a notice of acceleration under any of the
Existing Thai Facilities has been delivered to the Company.

     4. Effectiveness. This Amendment shall become effective on the date (the
        -------------
"Amendment Effective Date") on which the following conditions precedent shall
 ------------------------
have been satisfied or waived:

          (a)  This Amendment shall have been (i) executed by the Parent
Borrower, the Administrative Agent and the Required Lenders and (ii)
acknowledged and consented to by the other Loan Parties, each in accordance with
the terms of the Credit Agreement;

          (b)  If any breach or default under any of the Existing Thai
Facilities shall not have been cured or waived pursuant to Section 3 hereof, the
Parent Borrower (i) shall obtain, or shall cause the appropriate Subsidiary to
obtain, forbearance agreements in connection with all breaches or defaults under
any of the Existing Thai Facilities and (ii) shall deliver to the Administrative
Agent evidence of such forbearance agreements, in form and substance
satisfactory to the Administrative Agent;

          (c)  An amendment fee shall have been paid to the Administrative
Agent, for the ratable account of the Lenders which execute and deliver this
Amendment on or prior to 5:00 p.m. (New York City time) on December 22, 2000 (or
such later date as the Administrative Agent and the Parent Borrower shall
agree), in an amount equal to a percentage, to be determined, of the amount of
the Commitments then in effect and the aggregate then outstanding principal
amount of the Loans;

          (d)  The Administrative Agent shall have received, with a counterpart
for each Lender, the executed legal opinion of Testa Hurwitz & Thibeault, LLP,
counsel to the Parent Borrower (and its Subsidiaries), covering such matters
incident to the transactions contemplated by this Amendment as the
Administrative Agent may require;
<PAGE>

          (e)  The Administrative Agent shall have received a certificate of the
Parent Borrower, satisfactory in form and substance to the Administrative Agent
and its counsel, which shall (i) certify as to the incumbency and signature of
the officers of the Parent Borrower executing and delivering on behalf of the
Parent Borrower this Amendment and any other certificate or document to be
delivered by the Parent Borrower pursuant to this Amendment and (ii) attach
thereto, and certify as true and correct, the resolutions of the Board of
Directors of the Parent Borrower authorizing the execution, delivery and
performance of this Amendment and any borrowing contemplated hereunder; and

          (f)  No Default or Event of Default, other than as waived herein,
shall have occurred and be continuing on the Amendment Effective Date after
giving effect to this Amendment.

     5. Representations and Warranties. The Parent Borrower hereby represents
        ------------------------------
and warrants to the Administrative Agent and to each Lender party to the Credit
Agreement that each of the representations and warranties made by each Loan
Party in or pursuant to the Loan Documents shall be, after giving effect to this
Amendment, true and correct as if made on and as of the date hereof.

     6. Continuing Effect of Credit Agreement. Except as expressly amended
        -------------------------------------
hereby, the provisions of the Credit Agreement are and shall remain in full
force and effect.

     7. Counterparts. This Amendment may be executed in any number of
        ------------
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of a signature page to this Amendment by telecopier shall be
effective as delivery of a manually executed counterpart of this Amendment.

     8. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
        -------------
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

     9. Expenses. The Parent Borrower agrees to pay or reimburse the
        --------
Administrative Agent for all of its reasonable out-of-pocket costs and expenses
incurred in connection with the preparation, negotiation and execution of this
Amendment, including, without limitation, the reasonable fees and disbursements
of counsel to the Administrative Agent.
<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed and delivered by their duly authorized officers as of the date first
written above.



                                        ACT MANUFACTURING, INC.




                                        By:  /s/ John A. Pino
                                             --------------------------
                                               Name:  John A. Pino
                                               Title: Chief Executive Officer
<PAGE>

                                           THE CHASE MANHATTAN BANK, as
                                           Administrative Agent and as a Lender




                                           By: /s/ James M. Dailey
                                              -----------------------------
                                                Name:  James M. Dailey
                                                Title: Vice President
<PAGE>

                                            CITICORP USA, INC.




                                            By:  /s/ Suzanne Crymes
                                                 -------------------------------
                                                  Name:  Suzanne Crymes
                                                  Title: Vice President
<PAGE>

                                          CREDIT SUISSE FIRST BOSTON




                                          By:  /s/ Robert Hetu
                                               ---------------------------------
                                                 Name:  Robert Hetu
                                                 Title: Vice President



                                          By:  /s/ Lalita Advani
                                               ---------------------------------
                                                 Name:  Lalita Advani
                                                 Title: Assistant Vice President
<PAGE>

                             DEBIS FINANCIAL SERVICES, INC.




                             By:  /s/ James M. Vandervalk
                                  ----------------------------------------------
                                   Name:  James M. Vandervalk
                                   Title: President, Asset Based Lender Division
<PAGE>

                                              FLEET CAPITAL CORPORATION




                                              By:  /s/ Mark G. Schafer
                                                   -----------------------------
                                                     Name:  Mark G. Schafer
                                                     Title: Vice President
<PAGE>

                                         GMAC COMMERCIAL CREDIT LLC




                                         By:  /s/ Anthony Marsicano
                                              ----------------------------------
                                               Name: Anthony Marsicano
                                               Title:  Executive Vice President
<PAGE>

                                           HARRIS TRUST AND SAVINGS BANK




                                           By:  /s/ Kirby M. Law
                                                --------------------------------
                                                  Name:  Kirby M. Law
                                                  Title: Vice President
<PAGE>

                                            IBJ WHITEHALL BUSINESS CREDIT
                                            CORPORATION




                                            By:  /s/ Bruce Kasper
                                                 -------------------------------
                                                   Name:  Bruce Kasper
                                                   Title: Vice President
<PAGE>

                                          NATIONAL BANK OF CANADA



                                          By:  /s/ A. Keith Broyles
                                               ---------------------------------
                                                 Name:  A. Keith Broyles
                                                 Title: Vice President & Manager



                                          By:  /s/ Peter F. Smith
                                               ---------------------------------
                                                 Name:  Peter F. Smith
                                                 Title: Vice President
<PAGE>

                                            THE PROVIDENT BANK




                                            By: /s/ Jose V. Garde
                                                -------------------------------
                                                 Name:  Jose V. Garde
                                                 Title: Vice President
<PAGE>

                                            SOVEREIGN BANK




                                            By:  /s/ Robert E. Cook
                                                 -------------------------------
                                                  Name:  Robert E. Cook
                                                  Title: Vice President
<PAGE>

                                            SUMMIT BANK




                                            By: /s/ Charles E. Kirschner
                                                -------------------------------
                                                 Name: Charles E. Kirschner
                                                 Title: Vice President
<PAGE>

          The undersigned Loan Parties do hereby consent and agree to the
foregoing Amendment and acknowledge and agree that (i) all obligations of the
Parent Borrower under the Credit Agreement, as amended by the foregoing
Amendment, are Obligations which are secured and guaranteed by the Security
Documents to which each is a party, (ii) all references to the Credit Agreement
in the Security Documents refer to the Credit Agreement, as amended from time to
time (including pursuant to the foregoing Amendment) and (iii) all references to
Loans in the Security Documents refer to the Loans under the Credit Agreement,
as amended by the foregoing Amendment.


                             ACT MANUFACTURING SECURITIES CORPORATION


                             By:  /s/ John A. Pino
                                  ----------------------------------------------
                                  Name: John A. Pino
                                  Title: Chief Executive Officer and President


                             ACT MANUFACTURING US HOLDINGS, LLC


                             By:  /s/ John A. Pino
                                  ----------------------------------------------
                                  Name: John A. Pino
                                  Title: Chief Executive Officer and President



                             CMC INDUSTRIES, INC.


                             By:  /s/ John A. Pino
                                  ----------------------------------------------
                                  Name: John A. Pino
                                  Title: Chief Executive Officer and President
<PAGE>

                                                                      Annex I to
                                                                Second Amendment

                                                                         Annex A
                                                                         -------

              PRICING GRID FOR REVOLVING LOANS, FRENCH TERM LOANS,
                       THAI TERM LOANS AND COMMITMENT FEES

<TABLE>
<CAPTION>
===================================================================================================

    Consolidated                                     Applicable Margin for
      Leverage      Applicable Margin for             Alternate Base Rate         Commitment Fee
       Ratio         Eurocurrency Loans                     Loans                      Rate

---------------------------------------------------------------------------------------------------
<S>                             <C>                          <C>                      <C>
Greater than or                 3.00%                        2.00%                    0.500%
equal to 4.00:1.00
---------------------------------------------------------------------------------------------------
Greater than or                 2.75%                        1.75%                    0.500%
equal to 3.50:1.00
but less than
4.00:1.00
---------------------------------------------------------------------------------------------------
Greater than or
equal to 3.00:1.00
but less than                   2.50%                        1.50%                    0.500%
3.50:1.00
---------------------------------------------------------------------------------------------------
Greater than or
equal to 2.50:1.00
but less than                   2.25%                        1.25%                    0.500%
3.00:1.00
---------------------------------------------------------------------------------------------------
Greater than or
equal to  2.00:1.00             2.00%                        1.00%                    0.500%
by less than
2.50:1.00
---------------------------------------------------------------------------------------------------
Less than
2.00:1.00                       1.75%                        0.75%                    0.375%
===================================================================================================
</TABLE>

     Changes in the Applicable Margin resulting from changes in the Consolidated
Leverage Ratio shall become effective on the date (the "Adjustment Date") that
                                                        ---------------
is three Business Days after the date on which financial statements are
delivered to the Lenders pursuant to Section 6.1 and shall remain in effect
until the next change to be effected pursuant to this paragraph. If any
financial statements referred to above are not delivered within the time periods
specified in Section 6.1, then, until the date that is three Business Days after
the date on which such financial statements are delivered, the highest rate set
forth in each column of the Pricing Grid shall apply. In addition, at all times
while an Event of Default shall have occurred and be continuing, the highest
rate set forth in each column of the Pricing Grid shall apply. Each
determination of the Consolidated Leverage Ratio pursuant to the Pricing Grid
shall be made in a manner consistent with the determination thereof pursuant to
Section 7.1.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.52
<SEQUENCE>3
<FILENAME>dex1052.txt
<DESCRIPTION>LEASE DATED SEPTEMBER 14, 2000
<TEXT>

<PAGE>

                                                                   Exhibit 10.52

                                 BUILD TO SUIT
                           INDUSTRIAL LEASE AGREEMENT

                                    BETWEEN
              INDUSTRIAL DEVELOPMENTS INTERNATIONAL (TEXAS), L.P.
                                  AS LANDLORD
                                      AND
                            ACT MANUFACTURING, INC.
                                   AS TENANT
<PAGE>

                                  LEASE INDEX
                                  -----------

<TABLE>
<CAPTION>
               Section                        Subject
               -------  ---------------------------------------------------
<C>                     <S>
                     1  Basic Lease Provisions
                     2  Demised Premises
                     3  Term
                     4  Base Rent
                     5  Intentionally Omitted
                     6  Additional Rent
                     7  Use of Demised Premises
                     8  Insurance
                     9  Utilities
                    10  Taxes and Other Impositions
                    11  Maintenance and Repairs
                    12  Tenants' Personal Property; Indemnity
                    13  Tenant's Fixtures
                    14  Signs
                    15  Landlord's Lien
                    16  Governmental Regulations
                    17  Environmental Matters
                    18  Construction of Demised Premises
                    19  Tenant Alterations and Additions
                    20  Services by Landlord
                    21  Fire and Other Casualty
                    22  Condemnation
                    23  Tenant's Default
                    24  Landlord's Right of Entry
                    25  Lender's Rights
                    26  Estoppel Certificate and Financial Statement
                    27  Landlord Liability
                    28  Notices
                    29  Brokers
                    30  Assignment and Subleasing
                    31  Termination or Expiration
                    32  Late Payments
                    33  Rules and Regulations
                    34  Dispute Resolution Procedure
                    35  Miscellaneous
                    36  Special Stipulations
                    37  Lease Date
                    38  Authority
                    39  No Offer Until Executed
</TABLE>

                                       i
<PAGE>

     Exhibit "A"    Legal Description
     Exhibit "A- I" Site Plan
     Exhibit "A-2"  Floor Plan
     Exhibit "A-311 Elevation Plan
     Exhibit "A-4"  Preliminary Construction Specifications
     Exhibit "B"    Permitted Encumbrances
     Exhibit "C"    Rules and Regulations
     Exhibit "D"    Protective Covenants
     Exhibit "E"    Special Stipulations
     Exhibit `IF"   Certificate of Authority
     Exhibit "G"    Signage Criteria

                                      ii
<PAGE>

                                 BUILD TO SUIT
                                 -------------
                           INDUSTRIAL LEASE AGREEMENT
                           --------------------------

     THIS LEASE AGREE (this "Lease") is made as of the Lease Date (as defined in
Section 37) by and between INDUSTRIAL DEVELOPMENTS INTERNATIONAL (TEXAS), L.P.,
a Georgia limited partnership ("Landlord"), and ACT MANUFACTURING, INC., a
Delaware corporation ("Tenant") (the words "Landlord" and "Tenant" to include
their respective legal representatives, successors and permitted assigns where
the context requires or permits).

                                  WITNESSETH:

     1.  Basic Lease Provisions.  The following constitute the "Basic Lease
Provisions" of this Lease:

          (a) Demised Premises:    Exhibit "A" attached hereto

          (b) Building Square Footage: approximately 100,000 sq. ft.

          (c)  Annual Base Rent:

               Lease Years 1 - 5 $836,004.00 (as may be adjusted pursuant to
Special Stipulation l(d))

               Lease Years 6 - 10 $962,004.00 (as may be adjusted pursuant to
Special Stipulation l(d))

          (d)  Monthly Base Rent Installments

               Lease Years 1 - 5    $69,667.00

               Lease Years 6 - 10   $80,167.00

          (e) Lease Commencement Date: The later to occur of Substantial
          Completion, as defined in Section 3 (b) or March 21, 2001

          (f) Base Rent Commencement Date: same as above

          (g)  Primary Term: 10 years

          (h)  Security Deposit: $0.00

          (i)  Reserved

          (j) Permitted Use: Office, research and development, light
          manufacturing and warehouse uses and other uses reasonably incidental
          thereto, all as permitted by applicable laws, rules and regulations
<PAGE>

          (k)  Addresses for notice:

              Landlord:  Industrial Developments International
                         (Texas), L.P.
                         c/o Industrial Developments International, Inc.
                         3424 Peachtree Road, N.E., Suite 1500
                         Atlanta, Georgia 30326
                         Attn:  Manager - Lease Administration

                Tenant:  ACT Manufacturing, Inc.
                         2 Cabot Road
                         Hudson, Massachusetts 01749
                         Attn: Chief Financial Officer

               with a copy to the Demised Premises

          (l)  Address for rental payments:

                         Industrial Developments International (Texas), L.P.
                         c/o IDI Services Group, Inc,
                         P. 0. Box 281464
                         Atlanta, Georgia 30384-1464

          (m)  Broker(s):  Grubb & Ellis
                           Spaulding & Slye

     2. Demised Premises. For and in consideration of the rent hereinafter
reserved and the mutual covenants hereinafter contained, Landlord does hereby
lease and demise unto Tenant, and Tenant does hereby hire, lease and accept,
from Landlord, that certain parcel of real property more particularly described
in Exhibit "A" attached hereto and by this reference made a part hereof (the
"Land") situated in Plano Business Park (the "Project"), located in Collin
County, Texas, together with and including all buildings, structures, driveways,
parking lots, walkways, landscaping and other appurtenances thereto and all
other improvements, with the consent of Tenant, at anytime during the term of
this Lease erected, or situated thereon including specifically, but, without
limitation, a building (the "Building") to be constructed containing
approximately 100,000 square feet (measured on a "drip-line" basis from the
outside of the exterior walls of the Building) of office and warehouse space, of
which approximately 14,800 square feet shall be office space and to be located
on the Land as shown on Exhibit "A- 1" attached hereto, and all other
improvements including all driveways, parking lots, walkways, landscaping and
other appurtenances thereto (collectively, the "Demised Premises") subject only
to the matters on Exhibit "B" attached hereto and the Protective Covenants
attached hereto as Exhibit "D", which will be amended following the Lease Date
to include the Property (herein referred to collectively as "Permitted
Encumbrances"), all upon the terms and conditions hereinafter set forth. The
Demised Premises including the Building shall be developed and constructed by
Landlord substantially in accordance with the Preliminary Drawings prepared by

                                       2
<PAGE>

MacGregor Associates Architects and/or Goodwin & Marshall, Inc., attached hereto
as Exhibit "A-1" (herein, the "Site Plan"); Exhibit "A-2" (herein, the "Floor
Plan") and Exhibit "A-3" (herein, the "Elevation Plan"), and the construction
specifications attached hereto as Exhibit "A-4" (herein "Preliminary
Construction Specifications"), (the plans and specifications as shown on
Exhibits "A-1" through "A-4" are herein, collectively the "Preliminary Plans")
and in accordance with the terms of Section 18 hereof. The Building and
improvements comprising the Demised Premises shall be located substantially as
shown on the Site Plan. [see Special Stipulation l(d)]

     3.  Term.

          (a) To have and to hold the Demised Premises for

          (i) a preliminary term (the "Preliminary Term") which shall commence
on the Lease Date and shall expire on the Lease Commencement Date, as defined
herein; and

          (ii) a primary term (the "Primary Term") which shall commence on the
Lease Commencement Date and shall expire one hundred twenty (120) calendar
months thereafter (the Preliminary Term, the Primary Term, and any and all
extensions thereof, herein referred to as the "Term").  The Term shall end on
the final day thereof without the requirement of notice from either party to the
other.

          (b) For purposes of this Lease, the term "Substantial Completion" or
any grammatical variation thereof shall mean sufficient completion of
construction of the Demised Premises in accordance with the Plans and
Specifications (as defined in Section 18), so that Tenant can lawfully occupy
the Demised Premises, as evidenced by the delivery by Landlord to Tenant of (i)
a Certificate of Occupancy or its equivalent (or Temporary Certificate of
Occupancy or its equivalent) for the Building issued by the appropriate
governmental authority if so required by applicable law, and (ii) a Certificate
of Substantial Completion on standard AIA Form G-704 certified by the project
architect, MacGregor Associates Architects (the "Architect").  In the event
completion to such extent is delayed because of Tenant Delay, as defined herein,
then Substantial Completion shall be deemed to mean the date when the Demised
Premises would have been completed to such extent but for such Tenant Delay, as
determined by the Architect.  In the event Tenant shall dispute the
determination of such date by the Architect, the parties shall utilize the
Dispute Resolution Procedure as defined in Section 34, with Qualified Architects
serving as Officials.  For purposes of this Lease, the Architect shall be deemed
a "Qualified Architect" for Landlord.

          (c) The Lease Commencement Date and the Expiration Date, when
determined as herein provided, shall be evidenced by a supplemental agreement to
be executed upon the request of either party to the other party hereto.

          (d) The term "Lease Year", as used in this Lease, shall mean the
twelve (12)-month period commencing on the Base Rent Commencement Date, and each
twelve (12)-month period thereafter during the Term; provided, however, that (i)
the first Lease Year will include

                                       3
<PAGE>

the period between the Lease Commencement Date and the Base Rent Commencement
Date, if applicable, and (ii) if the Base Rent Commencement Date is a day other
than the first day of a calendar month, the first Lease Year shall include the
period between the Base Rent Commencement Date and the end of the calendar month
in which the Base Rent Commencement Date occurs and shall extend through the end
of the twelfth (12th) full calendar month following the Base Rent Commencement
Date.

     4.  Base Rent.  Tenant shall pay to Landlord at the address set forth in
Section 1(1) as base rent for the Demised Premises, commencing on the Base Rent
Commencement Date and continuing throughout the Term in lawful money of the
United States the annual amount set forth in Section 1(c) payable in equal
monthly installments as set forth in Section l(d) (the "Base Rent"), payable in
advance, without demand and without abatement, reduction, set-off or deduction,
on the first day of each calendar month during the Term.  If the Base Rent
Commencement Date shall fall on a day other than the first day of a calendar
month, the Base Rent shall be apportioned pro rata on a per them basis (i) for
the period between the Base Rent Commencement Date and the first day of the
following calendar month (which pro rata payment shall be due and payable on the
Base Rent Commencement Date), and (ii) for the last partial month of the Term,
if applicable.  No payment by Tenant or receipt by Landlord of rent hereunder
shall be deemed to be other than on account of the amount due, and no
endorsement or statement on any check or any letter accompanying any check or
payment of rent shall be deemed an accord and satisfaction, and Landlord may
accept such check as payment without prejudice to Landlord's right to recover
the balance of such installment or payment of rent or pursue any other remedies
available to Landlord.

     5.  Intentionally Omitted.

     6.  Additional Rent.  Any amounts required to be paid by Tenant under this
Lease (in addition to Base Rent) and any charges or expenses incurred by
Landlord on behalf of Tenant under the terms of this Lease, including, without
limitation, any expenses incurred for taxes, insurance, maintenance, repairs,
replacements, management fees (not to exceed one percent (1%) of Base Rent),
owner's association dues and assessments, landscaping, utilities and other
charges assessed against or attributed to the Demised Premises which are the
obligation of Tenant hereunder, shall be considered additional rent (herein,
"Additional Rent") payable in the same manner and upon the same terms and
conditions as Base Rent reserved hereunder except as expressly set forth herein
to the contrary.  Additional Rent shall include, and Tenant shall and does
hereby agree to pay directly, or to reimburse Landlord upon demand for, as
Landlord may direct any and all (i) management fees (not to exceed one percent
(1%) of Base Rent), (ii) owner's association dues, assessments and/or fees
assessed against or attributed to the Demised Premises pursuant to any
applicable easements, covenants, restrictions, agreements, declaration of
protective covenants or development standards, (iii) landscape maintenance and
utilities costs and charges, and (iv) all other such charges or costs paid by
Landlord with respect to or imposed or assessed upon or against the Demised
Premises from time to time throughout that portion of the Term (and any
extension thereof) commencing with the Lease Commencement Date.  Any failure on
the part of Tenant to pay such Additional Rent when due shall entitle Landlord
to the remedies available to it for non-payment of Base Rent, including, without
limitation, late charges and interest thereon at the Interest Rate (as herein
defined) pursuant to Section 32 hereof.

                                       4
<PAGE>

Tenant's obligations for payment of Additional Rent shall begin to accrue on the
Lease Commencement Date regardless of the Base Rent Commencement Date.
Notwithstanding anything to the contrary contained herein, the term "Additional
Rent" shall not include (i) controllable expenses incurred through the use of
parties affiliated with Landlord, to the extent such expenses exceed market
rates, (ii) expenses attributable to items covered by Landlord's Warranty
(hereinafter defined) or which are otherwise covered by warranty, (iii) expenses
attributable to a breach of Landlord's representations contained in paragraph
18(h) hereof, and (iv) costs of capital improvements unless such costs are
incurred for the purpose of causing a material decrease in Additional Rent or
are made with respect to improvements to comply with laws, ordinances or
regulations, and then only to the extent of the amortization of such
expenditures over the useful life of such capital item.

     7.  Use of Demised Premises.

          (a) The Demised Premises shall be used for the Permitted Use set
forth in Section 1(j) and for no other purpose.

          (b) Tenant will permit no liens arising by, through or under Tenant to
attach or exist against the Demised Premises, and shall not commit any waste.

          (c) The Demised Premises shall not be used for any illegal purposes,
and Tenant shall not allow, suffer, or permit any vibration, noise, odor, light
or other effect to occur within or around the Demised Premises that could
constitute a nuisance or trespass for any tenant of Landlord occupying an
adjoining building, its customers, agents, licensees or invitees.  Upon notice
by Landlord to Tenant that any of the aforesaid prohibited uses are occurring,
Tenant agrees to promptly remove or control the same.

          (d) Tenant shall not in any way violate any law, ordinance or any
restrictive covenant affecting the Demised Premises as shown by and included in
the Permitted Encumbrances, including specifically, but without limitation, the
Protective Covenants (as defined in Section 33), and shall not in any manner use
the Demised Premises so as to cause cancellation of, or prevent the use of the
fire and extended coverage insurance policy required hereunder.  Landlord makes
no (and does hereby expressly disclaim any) covenant, representation or warranty
as to the Permitted Use being allowed by or being in compliance with any
applicable laws, rules, ordinances or restrictive covenants now or hereafter
affecting the Demised Premises, and any zoning letters, copies of zoning
ordinances or other information from any governmental agency or other third
party provided to Tenant by Landlord or any of Landlord's agents or employees
shall be for informational purposes only, Tenant hereby expressly acknowledging
and agreeing that Tenant shall conduct and rely solely on its own due diligence
and investigation with respect to the compliance of the Permitted Use with all
such applicable laws, rules, ordinances and restrictive covenants, including
specifically, but without limitation, the Protective Covenants, and not on any
such information provided by Landlord or any of its agents or employees.

                                       5
<PAGE>

     8. Insurance

          (a) Tenant covenants and agrees that from and after the Lease
Commencement Date or any earlier date upon which Tenant enters or occupies the
Demised Premises or any portion thereof, Tenant will carry and maintain, at its
sole cost and expense, the following types of insurance, in the amounts
specified and in the form hereinafter provided for:

          (i) Liability insurance in the Commercial General Liability form (or
reasonable equivalent thereto) covering the Demised Premises and Tenant's use
thereof against claims for bodily injury or death, property damage and product
liability occurring upon, in or about the Demised Premises, such insurance to be
written on an occurrence basis (not a claims made basis), to be in combined
single limits amounts not less than Three Million Dollars ($3,000,000.00) and to
have general aggregate limits of not less than Five Million Dollars
($5,000,000.00) for each policy year, provided, however, such amounts can be met
in combination with umbrella insurance coverage, provided (x) Landlord and any
other parties in interest from time to time designated by Landlord to Tenant
shall be named as an additional insured under such umbrella policy as their
interests may appear, (y) such umbrella policy contains a "per location
aggregate" endorsement, and (z) the requirements set forth in Section 8 of the
Lease are otherwise satisfied.  The insurance coverage required under this
Section 8(a)(i) shall, in addition, extend to any liability of Tenant arising
out of the indemnities provided for in Section 12 and, if necessary, the policy
shall contain a contractual endorsement to that effect.

          (ii) (A) insurance on the "All-Risk" or equivalent form on a
Replacement Cost Basis against loss or damage to the Building and all other
improvements now or hereafter located on the Land, having a deductible not
greater than Fifty Thousand Dollars ($50,000.00); and in an amount sufficient to
prevent Landlord or Tenant from becoming a co-insurer of any loss, but in any
event in amounts not less than 100% of the actual replacement value of such
Building and improvements.  Landlord shall have the right to require from
Tenant, not more often than once every twelve (12) months, reasonable evidence
of the agreed upon replacement cost value of the Building;

               (B) insurance on the "All-Risk" or equivalent form against
abatement or loss of rental by reason of the occurrences covered by the
insurance described in clause (A) above and by reason of any service
interruptions in an amount equal to Base Rent and all Additional Rent for at
least twelve (12) months following the occurrence of such casualty;

               (C) if applicable, boiler and machinery insurance covering losses
to or from any steam boilers, pressure vessels or similar apparatus requiring
inspection under applicable state or municipal laws or regulations which are
located at the Demised Premises or on any other building systems for which such
coverage is available, in amounts determined by Tenant to be appropriate or for
such higher amounts as may at any time be reasonably required by Landlord and
having a deductible of not more than Fifty Thousand Dollars ($50,000.00);
coverage shall be on a broad form comprehensive basis including loss of income
with a limit of at least an amount which is reasonably acceptable to Landlord;
and

                                       6
<PAGE>

               (D) worker's compensation insurance to the extent required by the
laws of the state in which the Demised Premises are located and employees
liability insurance in the amount of at least $ 1,000,000.00.

          (b) All policies of the insurance provided for in Section 8(a) shall
be issued in form acceptable to Landlord by insurance companies with a rating of
not less than "A+," and financial size of not less than Class XII, in the most
current available "Best's Insurance Reports", and licensed to do business in the
state in ,which the Building is located.  Tenant shall have the right to
increase the deductible amounts under the policies of insurance required by
Sections 8(a)(ii)(A) and (C) above, subject to the approval of Landlord, such
approval not to be unreasonably withheld; provided, however, that Landlord shall
be entitled to withhold such approval unless Tenant is able to demonstrate that
the requested increase in any such deductible is commercially reasonable for
improvements comparable to the Building.  Each and every such policy:

          (i) shall name Landlord as well as Landlord's Lender, as defined in
Section 25, and any other party reasonably designated by Landlord, as an
additional insured.  In addition, the coverage described in Section 8(a)(ii)
shall also name Landlord as "loss payee";

          (ii) shall be delivered to Landlord, in the form of an insurance
certificate acceptable to Landlord as evidence of such policy, prior to delivery
of possession of the Demised Premises to Tenant and thereafter within fifteen
(15) days prior to the expiration of each such policy, and, as often as any such
policy shall expire or terminate.  Renewal or additional policies shall be
procured and maintained by Tenant in like manner and to like extent;

          (iii)  shall contain a provision that the insurer waives any right of
subrogation against Landlord on account of any loss or damage occasioned to
Tenant, its property, the Demised Premises or its contents arising from any risk
covered by all risks fire and extended coverage insurance of the type and amount
required to be carried hereunder;

          (iv) shall contain a provision that the insurer will give to Landlord
and such other parties in interest at least fifteen (15) days notice in writing
in advance of any material change, cancellation, termination or lapse, or the
effective date of any reduction in the amounts of insurance; and

          (v) shall be written as a primary policy which does not contribute to
and is not in excess of coverage which Landlord may carry.

          (c) Any insurance provided for in Section 8(a) may be maintained by
means of a policy or policies of blanket insurance, covering additional items or
locations or insureds; provided, however, that:

          (i) Landlord and any other parties in interest from time to time
designated by Landlord to Tenant shall be named as an additional insured
thereunder as its interest may appear;

                                       7
<PAGE>

          (ii) the coverage afforded Landlord and any such other parties in
interest will not be reduced or diminished by reason of the use of such blanket
policy of insurance;

          (iii)  any such policy or policies shall specify therein the amount of
the total insurance allocated to the Tenant's improvements and property; and

          (iv) the requirements set forth in this Section 8 are otherwise
satisfied.

          (d) In the event that Tenant shall fail to carry and maintain the
insurance coverages set forth in this Section 8, Landlord may upon thirty (30)
days notice to Tenant (unless such coverages will lapse in which event no such
notice shall be necessary) procure such policies of insurance and Tenant shall
promptly reimburse Landlord therefor.

          (e) Each party may, at any time, but not more than one (1) time in any
twelve (12) month period, require a review of the insurance coverage and limits
of liability set forth in Section 8 to determine whether the coverage and the
limits are reasonable and adequate in the then existing circumstances.  The
review shall be undertaken on a date and at a time set forth in a party's notice
requesting a review and shall be conducted at the Demised Premises.  If the
parties are, after a review, unable to agree on either the coverage or the
limits, then the parties shall employ the Dispute Resolution Procedure (as
defined in Section 34) with insurance advisors having at least ten (10) years
experience in insurance for commercial and industrial properties serving as
Officials.  In rendering the decision the Officials shall consider the
requirements of Section 8; the cost of the insurance to be obtained, inflation,
changes in condition, and the insurance then being carried by similar industrial
use developments in the area of the Project.

     9.  Utilities.  Commencing on the Lease Commencement Date (or such earlier
date-as Tenant physically occupies all or any portion of the Demised Premises,
regardless of whether or not Tenant conducts business operations during such
period of occupancy) and continuing through the remainder of the Term, Tenant
shall be responsible for maintaining the portion of the utility lines located
between the Land boundary line and the Building and Tenant shall promptly pay as
billed to Tenant all rents and charges for water and sewer services and all
costs and charges for gas, steam, electricity, fuel, light, power, telephone,
heat and any other utility or service used or consumed in or servicing the
Demised Premises and all other costs and expenses involved in the care,
management and use thereof to the extent charged by the applicable utility
companies.  If Tenant fails to pay any utility bills or charges, Landlord may,
at its option and upon reasonable notice to Tenant, pay the same and in such
event, the amount of such payment, together with interest thereon at the
Interest Rate as defined in Section 32 from the date of such payment by
Landlord, will be added to tenants next due payment, as Additional Rent.

     10.  Taxes and Other Impositions.

          (a) Commencing on the Lease Commencement Date and continuing through
the remainder of the Term, Tenant shall be solely obligated for the costs of all
real estate taxes and other impositions for the Demised Premises, including the
Building and the Land, and Tenant agrees to pay all installments of such
imposition which accrue during the Term.  If any real estate taxes or other
impositions for the Demised Premises are payable in arrears, Tenant

                                       8
<PAGE>

agrees to pay to Landlord Tenant's share of such taxes attributable to the last
year of the Term within thirty (30) days after Tenant receives from Landlord
evidence of the actual amount due for such last year. This provision shall
expressly survive the expiration or termination of this Lease in order to settle
up Tenant's pro rata share of such taxes for the final Lease Year of the Term.

          (b) Real estate taxes and other impositions shall mean all ad valorem
taxes, water and sanitary taxes, assessments, liens, licenses and permit fees or
any other taxes imposed, assessed or levied against the Land and the Demised
Premises, and all other charges, impositions or burdens of whatever kind and
nature, whether or not particularized by name, and whether general or special,
ordinary or extraordinary, foreseen or unforeseen, which at any time during the
Term may be created, assessed, confirmed, adjudged, imposed or charged upon or
with respect to the Demised Premises, the Land, or any improvements made
thereto, or on any part of the foregoing or any appurtenances thereto, or
directly upon this Lease or the rent payable hereunder or amounts payable by any
subtenants or other occupants of the Demised Premises, or upon this transaction
or any documents to which Tenant is a party or successor-in-interest, or against
Landlord because of Landlord's estate or interest herein, by any governmental
authority, or under any law, including among others, all rental, sales, use,
inventory or other similar taxes and any special tax bills and general, special
or other assessments and liens or charges made on local or general improvements
or any governmental or public power or authority whatsoever.

          (c) Notwithstanding the foregoing, if any imposition shall be created,
levied, assessed, adjudged, imposed, charged or become a lien with respect to a
period of time which commences before the Lease Commencement Date or ends after
the expiration date of the Term (other than an expiration date of the Term by
reason of breach of any of the terms hereof by Tenant), then Tenant shall only
be required to pay that portion of such imposition which is equal to the
proportion of said period which falls within the Term.  If Tenant is permitted
to pay (by the assessing and collecting authorities) and elects to pay any
imposition in installments, Tenant shall nevertheless pay any and all
installments thereof which are due prior to the expiration of the Term or sooner
termination of the Term.  Nothing contained in this Lease shall require Tenant
to pay any income or excess profits or taxes assessed against Landlord, or any
corporation, capital stock and franchise taxes imposed upon Landlord.  Landlord
agrees to deliver to Tenant copies of all such notices of real estate taxes and
impositions which Landlord receives.

          (d) Landlord and Tenant shall cooperate in attempting to have the tax
bills for the Demised Premises sent directly to Tenant.  Landlord shall forward
tax bills and all notices with respect thereto related to the Demised Premises
to Tenant promptly after Landlord's receipt thereof Tenant shall furnish
Landlord evidence of the payment of all real estate taxes and impositions
related to the Demised Premises at least ten (10) days before the last day upon
which they may be paid without any fine, penalty, interest or additional cost.
If Tenant fails to pay the real estate taxes and impositions related to the
Demised Premises when due and Landlord elects to pay the real estate taxes and
impositions related to the Demised Premises, Tenant agrees to pay Landlord such
real estate taxes and impositions attributable to the Demised Premises so paid
by Landlord, within thirty (30) days after receipt of written notice from
Landlord.

                                       9
<PAGE>

     11.  Maintenance and Repairs.

          (a) Tenant's Obligations.  From and after the Lease Commencement Date
and throughout the Term, Tenant shall, at its own cost and expense, except as
provided in Section 11(b) below, maintain the Demised Premises, including but
not limited to the electrical systems, heating, air conditioning and ventilation
systems, plate glass, windows and doors, sprinkler and plumbing systems.  During
the Term, Tenant shall maintain in full force and effect a service contract for
the heating, ventilation and air conditioning systems with an entity reasonably
acceptable to Landlord.  Tenant shall deliver to Landlord (i) a copy of said
service contract prior to the Lease Commencement Date, and (ii) thereafter, a
copy of a renewal or substitute service contract within thirty (30) days prior
to the expiration of the existing service contract.  Tenant's obligations to
repair and maintain the Demised Premises shall also include, without limitation,
repair, maintenance and replacement of all plumbing and sewage facilities within
and about the Demised Premises (excluding however, the portion of water and
sewer lines between the boundary of the Land and Building, which shall be
Landlord's responsibility), fixtures, interior walls, floors (including floor
slabs), ceilings, windows, doors, storefronts, painting and caulking, plate
glass, skylights, all electrical facilities and equipment including, without
limitation, lighting fixtures, lamps, fans and any exhaust equipment and
systems, electrical motors, and all other appliances and equipment of every kind
and nature located in, upon or about the Demised Premises including, without
limitation, exterior lighting and fencing, and any sidewalks, parking areas and
access ways (including, without limitation, curbs and striping) upon the Demised
Premises and the landscaping and grounds surrounding the Building.  All glass,
both interior and exterior, is at the sole risk of Tenant; and any broken glass
shall be promptly replaced at Tenant's expense by glass of like kind, size and
quality.  Unless the same is caused solely by the negligent action or inaction
of Landlord, Landlord shall not be liable to Tenant or to any other person for
any damage occasioned by failure in any utility system or by the bursting or
leaking of any vessel or pipe in or about the Demised Premises, or for any
damage occasioned by water coming into the Demised Premises or arising from the
acts or neglects of occupants of adjacent property or the public.

          (b) Landlord's Obligations.  Landlord shall, at its own cost and
expense, maintain in good condition and repair the roof, foundation (beneath the
floor slab) and structural frame of the Building.  Landlord's obligation shall
exclude the cost of any maintenance or repair required because of the act or
negligence of Tenant, Tenant's employees, agents or any other party acting on
behalf of Tenant, the cost of which shall be the responsibility of Tenant.
Landlord shall also be responsible for maintaining the landscaping at the
Demised Premises, but shall pass all costs reasonably and actually (i.e. with no
mark up) incurred in connection therewith to Tenant, which Tenant agrees to pay
as Additional Rent hereunder.

     12.  Tenant's Personal Property, Indemnity.  All of Tenant's personal
property in the Demised Premises shall be and remain at Tenant's sole risk, and
Landlord shall not be liable for, and Tenant hereby releases Landlord from, any
and all liability for theft thereof or any damage thereto occasioned by any acts
or negligence of any third persons, or any act of God, other than Landlord.  As
to bodily injury or property damage (including personal property of Tenant),
Landlord shall not be liable for any injury to the person or property of Tenant
or other persons in or about the Demised Premises, Tenant expressly agreeing to
indemnify and save Landlord

                                      10
<PAGE>

harmless in all such cases, except to the extent occasioned by any negligence of
Landlord, its agents, employees or contractors. Tenant further agrees to
reimburse Landlord for any reasonable costs or expenses, including without
limitation, reasonable attorneys' fees which Landlord may actually and
reasonably incur in investigating, handling or litigating any such claim against
Landlord by a third person. Tenant shall have the option to defend Landlord with
counsel selected by Tenant and reasonably acceptable to Landlord. Landlord
agrees to indemnify and save Tenant harmless from any liability, cost or
expenses arising from or occasioned by any negligence or willful misconduct of
Landlord, its agents, employees or contractors. The provisions of this Section
12 shall survive the expiration or termination of this Lease with respect to any
damage, injury, or death occurring before such expiration or termination.

     13.  Tenant Fixtures.  Tenant shall have the right to install in the
Demised Premises trade fixtures required by Tenant or used by it in its
business, and if installed by Tenant, to remove any or all such trade fixtures
from time to time during and upon termination or expiration of this Lease,
provided Tenant is not then in default under the terms of this Lease and any
applicable grace period has not expired with the default having not been cured;
provided, however, that prior to the expiration of the Term, Tenant shall remove
said trade fixtures from the Demised Premises and repair and restore any damage
or injury to the Demised Premises (to the condition in ,which the Demised
Premises existed prior to such installation) caused by the installation and/or
removal thereof.

     14.  Signs.  No sign, advertisement or notice shall be inscribed, painted,
affixed, or displayed on the windows or exterior walls of the Demised Premises
or on any public area of the Building,, except in such places, numbers, sizes,
colors and styles as are approved in advance in writing by Landlord, ,which
approval shall not be unreasonably withheld or delayed and which conform to all
applicable laws and/or ordinances and the Protective Covenants and to the
Signage Criteria attached hereto as Exhibit G. Any and all signs installed or
constructed by or on behalf of Tenant pursuant hereto shall be installed,
maintained and removed by Tenant, at Tenant's sole cost and expense.

     15.  Landlord's Lien.  Notwithstanding any other provision hereof to the
contrary, Tenant does hereby grant to Landlord, and Landlord shall have at all
times, a security interest in and valid first lien upon all of the personal
property and trade fixtures of Tenant situated in and upon the Demised Premises
to secure the obligations of Tenant for all Base Rent, Additional Rent and other
sums to become due hereunder and the performance by Tenant of each and all of
Tenant's other covenants and obligations hereunder.  The security interest and
lien herein granted may be foreclosed in the manner and form provided by law for
the foreclosure of chattel mortgages or in any other manner provided or
permitted by law.  Upon the written request of Tenant, Landlord agrees to
subordinate its Landlord's liens to any lender not affiliated with Tenant
providing inventory, equipment or operating capital financing.

     16.  Governmental Regulations.  Tenant shall promptly comply throughout the
Term of this Lease, at Tenant's sole cost and expense, with all present and
future laws, ordinances and regulations of all applicable governing authorities
relating to all or any part of the Demised Premises, foreseen or unforeseen,
ordinary as well as extraordinary, or to the use or manner

                                      11
<PAGE>

of use of the Demised Premises or to the sidewalks, parking areas, curbs and
access ways adjoining the Demised Premises. In the event that such law,
ordinance or regulation requires a renovation, improvement or replacement to the
Demised Premises, then Tenant shall be required to make such renovation,
improvement or replacement at Tenant's sole cost and expense and in compliance
with Section 19 hereof Tenant shall also observe and comply with the
requirements of all policies of public liability, fire and other policies of
insurance at any time in force with respect to the Demised Premises.

     17.  Environmental Matters.
          ---------------------

          (a)  For purposes of this Lease:

          (i) "Contamination" as used herein means the uncontained or
uncontrolled presence of or release of Hazardous Substances (as hereinafter
defined) into any environmental media from, upon, within, below, into or on any
portion of the Demised Premises, the Building, or the Project so as to require
remediation, cleanup or investigation under any applicable Environmental Law (as
hereinafter defined).

          (ii) "Environmental Laws" as used herein means all federal, state, and
local laws, regulations, orders, permits, ordinances or other requirements,
which exist now or as may exist hereafter, concerning protection of human
health, safety and the environment, all as may be amended from time to time.

          (iii)  "Hazardous Substances" as used herein means any hazardous or
toxic substance, material, chemical, pollutant, contaminant or waste as those
terms are defined by any applicable Environmental Laws (including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. 9601 et seq. ("CERCLA") and the Resource Conservation and
Recovery Act, 42 U.S.C. 6901 et seq. ["RCRA"]) and any solid wastes,
polychlorinated biphenyls, urea formaldehyde, asbestos, radioactive materials,
radon, explosives, petroleum products and oil.

          (b) Landlord represents that, except as set forth in environmental
reports delivered by Landlord to Tenant (i) to Landlord's actual knowledge,
Landlord has not treated, stored or disposed of any Hazardous Substances upon or
within the Demised Premises and (ii) to Landlord's actual knowledge, no
Hazardous Substances are present on or under the Land as of the date of this
Lease.

          (c) Tenant represents that all its activities on the Demised Premises
or the Project during the course of this Lease will be conducted in compliance
with Environmental Laws.  Tenant warrants that to the best of its knowledge it
is currently in compliance with all applicable Environmental Laws and that there
are no pending or overtly threatened notices in writing of deficiency, notices
of violation, orders, or judicial or administrative actions involving alleged
violations by Tenant of any Environmental Laws.  Tenant, at Tenant's sole cost
and expense, shall be responsible for obtaining all permits or licenses or
approvals under Environmental Laws necessary for Tenant's operation of its
business on the Demised Premises and shall make all notifications and
registrations required by any applicable Environmental


                                      12
<PAGE>

Laws. Tenant, at Tenant's sole cost and expense, shall at all times comply with
the terms and conditions of all such permits, licenses, approvals, notifications
and registrations and with any other applicable Environmental Laws affecting in
any way the Demised Premises. Tenant warrants that it will obtain all such
permits, licenses or approvals and make all such notifications and registrations
required by any applicable Environmental Laws necessary for Tenant's operation
of its business on the Demised Premises.

          (d) Tenant shall not cause or permit any Hazardous Substances to be
brought upon, kept, stored or used in or about the Demised Premises, the
Building, or the Project without the prior written consent of Landlord, which
consent shall not be unreasonably withheld or delayed; provided, however, that
the consent of Landlord shall not be required for the use at the Demised
Premises of cleaning supplies, toner for photocopying machines and other similar
materials, in containers and quantities reasonably necessary for and consistent
with normal and ordinary use by Tenant, at the Demised Premises, in the routine
operation or maintenance of Tenant's office equipment or in the routine
janitorial service, cleaning and maintenance for the Demised Premises.

          (e) Tenant shall not cause or permit the release of any Hazardous
Substances by Tenant or any of its subsidiaries or affiliates, or any of
Tenant's or such subsidiaries' or affiliates' agents, contractors, employees,
licensees or invitees (collectively, "Tenant's Affiliates") into any
environmental media such as air, water or land, or into or on the Demised
Premises, the Building or the Project in any manner that violates any
Environmental Laws.  If such release shall occur, Tenant shall (i) take all
steps-reasonably necessary to contain and control such release and any
associated Contamination, (ii) clean up or otherwise remedy such release and any
associated Contamination to the extent required by, and take any and all other
actions required under, applicable Environmental Laws and (iii) notify and keep
Landlord reasonably informed of such release and response.

          (f) Regardless of any consents granted by Landlord pursuant to Section
17(d) allowing Hazardous Substances upon the Demised Premises, Tenant shall
under no circumstances whatsoever cause or permit (i) any activity on the
Demised Premises which would cause the Demised Premises to become subject to
regulation as a hazardous waste treatment, storage or disposal facility under
RCRA or the regulations promulgated thereunder; (ii) the discharge of Hazardous
Substances into the storm sewer system serving the Project; or (iii) the
installation of any underground storage tank or underground piping on or under
the Demised Premises.

          (g) Tenant shall and hereby does indemnify Landlord and hold and
defend Landlord harmless from and against any and all reasonable and actual
expense, loss, and liability suffered by Landlord (except to the extent that
such expenses, losses, and liabilities arise out of Landlord's own negligence or
willful act), by reason of the storage, generation, handling, treatment,
transportation, disposal, or arrangement for transportation or disposal, of any
Hazardous Substances (whether accidental, intentional, or negligent) by Tenant
or Tenant's Affiliates or by reason of Tenant's breach of any of the provisions
of this Section 17.  Such expenses, losses and liabilities shall include,
without limitation, (i) any and all expenses that Landlord may incur to comply
with any Environmental Laws; (ii) any and all costs that Landlord

                                      13
<PAGE>

may incur in studying or remedying any Contamination at or arising from the
Demised Premises; (iii) any and all costs that Landlord may incur in studying,
removing, disposing or otherwise addressing any Hazardous Substances; (iv) any
and all fines, penalties or other sanctions assessed upon Landlord; and (v) any
and all reasonable legal and professional fees (to the extent the same are
reasonable) and costs incurred by Landlord in connection with the foregoing. The
indemnity contained herein shall survive the expiration or earlier termination
of this Lease.

     18.  Construction of Demised Premises.

          (a) Within thirty (30) days after the date hereof, Landlord shall
prepare, at Landlord's sole cost and expense, and submit to Tenant a set of
plans and specifications (collectively, the "Plans and Specifications") based
upon the Preliminary Plans, covering all work to be performed by Landlord in
constructing the Building and other improvements which shall be a part of the
Demised Premises.  Tenant shall have five (5) days after receipt of the Plans
and Specifications in which to review and to give to Landlord in original also
written notice of its approval of the Plans and Specifications or its requested
changes to the Plans and Specifications. Tenant shall have no right to request
any changes to the Plans and Specifications which would materially alter either
the size of the Demised Premises or the exterior appearance or basic nature of
the Building, as the same are contemplated by the Preliminary Plans. If Tenant
fails to approve or request changes to the Plans and Specifications by five (5)
days after its receipt thereof, then Tenant shall be deemed to have approved the
Plans and Specifications and the same shall thereupon be final. If Tenant
requests any changes to the Plans and Specifications, Landlord shall make those
changes which are reasonably requested by Tenant and shall within ten (10) days
of its receipt of such request submit the revised portion of the Plans and
Specifications to Tenant. Tenant may not thereafter disapprove the revised
portions of the Plans and Specifications unless Landlord has unreasonably failed
to incorporate reasonable comments of Tenant and, subject to the foregoing, the
Plans and Specifications as modified by said revisions, shall be deemed to be
final upon the submission of said revisions to Tenant. Tenant shall at all times
in its review of the Plans and Specifications, and of any revisions thereto, act
reasonably and in good faith. After Tenant has approved the Plans and
Specifications or the Plans and Specifications have otherwise been finalized
pursuant to the procedures set forth hereinabove, any subsequent changes to the
Plans and Specifications requested by Tenant (herein referred to as a "Change
Order") shall be at Tenant's sole cost and expense and subject to Landlord's
written approval, which approval shall not be unreasonably withheld, conditioned
or delayed. If after the Plans and Specifications have been finalized pursuant
to the procedures set forth hereinabove Tenant requests any Change Order and, as
a result thereof, completion of construction of the Improvements is delayed
beyond the Lease Commencement Date, the Term and Tenant's obligation to pay Base
Rent hereunder shall nevertheless begin on the Lease Commencement Date. Tenant
may by Change Order replace the materials called for in the Plans and
Specifications with comparable materials, or with materials of a higher grade,
but Tenant shall have no right to change the materials to materials which, in
Landlord's sole opinion, are of an inferior grade or quality to those called for
in the Plans and Specifications. The aggregate cost of all such Change Orders in
excess of the costs reflected in the Plans and Specifications shall be paid in
cash by Tenant to Landlord upon Landlord's submission to Tenant of written
request for payment of such additional cost and not later than the Lease
Commencement Date. The cost to Tenant for preparing and administering Change
Orders shall be Landlord's cost.

                                      14
<PAGE>

          (b) Landlord shall, at its sole cost and expense, construct the
Building and other improvements pursuant to the Plans and Specifications, and in
accordance with the terms and conditions of this Lease ("Landlord's Work").
Landlord shall make no changes to the Plans and Specifications without Tenant's
written consent, with the exception of immaterial details which will not affect
Tenant's use and occupancy of the Building and other improvements.  Landlord
shall have the final Plans and Specifications sealed by the Architect, obtain
all required building permits, certificates and licenses and thereafter, in
accordance with all applicable law and insurance requirements, perform
Landlord's Work in a diligent and good workmanlike manner, subject to Ordinary
Delay and Tenant Delay (as those terms are defined below).

          (c) Landlord shall use reasonable speed and diligence to achieve
Substantial Completion, at Landlord's sole cost and expense, on or before March
21, 2001.  In the event that Landlord is unable to Substantially Complete the
Demised Premises for occupancy by Tenant on or before March 21, 2001, as
extended by Ordinary Delay and Tenant Delay (as defined below), the Lease
Commencement Date, the Base Rent Commencement Date and the Expiration Date shall
be postponed one day for each day Substantial Completion is delayed until the
Demised Premises are Substantially Complete, unless the Delay was a Tenant Delay
(as defined below) in which event no adjustment shall be made for the number of
days of Tenant Delay.  In addition, in the event that Landlord is unable to
achieve Substantial Completion on or before March 22, 2001, as extended by
Ordinary Delay and Tenant Delay (as defined below) (the "Penalty Date"), then
from and after the adjusted Rent Commencement Date, Tenant shall receive a
credit against Base Rent equal to two (2) days of Base Rent for each day of
Delay (excluding Tenant Delay) beyond the Penalty Date until said credit is
fully realized by Tenant, as its sole remedy.

          (d)  Reserved

          (e) The Substantial Completion target date of March 21, 2001 and the
Penalty Date shall be extended for one (1) day for each day that Substantial
Completion is delayed:

          (i) as a result of the failure by Tenant to timely approve or
disapprove the Plans and Specifications, or as a result of Change Orders or
other changes requested by Tenant in the Plans and Specifications after the
Tenant's approval thereof (collectively referred to herein as "Tenant Delay");
or

          (ii) due to national strikes or other national labor troubles not
specific to the Demised Premises, war or other national emergency, accidents,
floods, fire, damage or other casualties, abnormal weather or acts or omissions
of Tenant, or delays by utility companies in bringing utility lines to the
Demised Premises (collectively referred to herein as "Ordinary Delay").  The
inability or refusal of Landlord to make any monetary payment shall not
constitute or result in an Ordinary Delay.

          (f) On or prior to the date of Substantial Completion of the Demised
Premises; a representative of Landlord and a representative of Tenant together
shall inspect the Demised Premises and, within fifteen (15) days thereafter,
generate a punchlist of defective or uncompleted items relating to the
completion of construction of the improvements within the

                                      15
<PAGE>

Demised Premises (the "Punchlist"), which Punchlist shall indicate the
estimation by the parties of the cost of each item. Landlord shall, within a
reasonable time after the Punchlist is prepared and agreed upon by Landlord and
Tenant, complete such incomplete work and remedy such defective work as are set
forth on the Punchlist.

          (g) Upon the Lease Commencement Date, Tenant shall execute and deliver
to Landlord a letter confirming (i) the Lease Commencement Date, the Base Rent
Commencement Date and the Expiration Date of this Lease, (ii) that Tenant
accepts the Demised Premises subject only to Landlord's completion of the items
listed on the Punchlist.

          (h) Landlord hereby warrants to Tenant that the materials and
equipment furnished by Landlord's contractors in the completion of Landlord's
Work will be of good quality and new and in conformity with all applicable laws,
ordinances, rules and regulations, that such work will conform to the Plans and
Specifications and that during the one (1) year period following the date of
Substantial Completion of Landlord's Work, such materials and equipment and the
work of such contractors shall be free from defects not inherent in the quality
required or permitted hereunder (the foregoing referred, to herein as
"Landlord's Warranty").  This warranty shall exclude damages or defects caused
by abuse by Tenant and Tenant's Affiliates, improper or insufficient
maintenance, improper operation, or normal wear and tear under normal usage.

     19.  Tenant Alterations and Additions.

          (a) Except as to any nonstructural alterations, improvements, or
additions to the Demised Premises (collectively a "Tenant Change"), ,which
Tenant Changes individually cost less than $25,000, Tenant shall not make or
permit to be made any other Tenant Change without first obtaining on each
occasion Landlord's prior written consent (which consent Landlord agrees not to
unreasonably withhold or delay) and Lender's prior written consent (if such
consent is required).  With respect to any such Tenant Change requiring
Landlord's prior written consent, Landlord may require that Tenant furnish
Landlord with a full set of plans and specifications for any such Tenant Change
prior to the commencement thereof together with an original builder's risk
policy of insurance in form and amount of coverage reasonably acceptable to
Landlord, showing Tenant as named insured, and Landlord and Lender (if
applicable) as loss payees.  If Landlord, at the time of giving its approval to
any Tenant Change, notifies Tenant that approval is conditioned upon
restoration, then upon written request of Landlord, Tenant shall, at its sole
cost and expense and upon the termination of this Lease, remove the same and
restore the Demised Premises to its condition prior to such Tenant Change.

          (b) All Tenant Changes shall be performed in accordance with all legal
requirements applicable thereto and in a good and workmanlike manner with
firstclass materials and, upon completion of any Tenant Change, Tenant shall
furnish to Landlord "as-built" drawings showing the location and type thereof.
No Tenant Change shall impair the structural strength of the Building or reduce
its value, Tenant shall take or cause to be taken all steps that are required or
permitted by law in order to avoid the imposition of any materialmen's or
mechanics' liens upon the Building or the Demised Premises, and Tenant shall pay
the fall cost of any Tenant Change and Tenant shall give Landlord such
reasonable security as may be

                                      16
<PAGE>

requested by Landlord to insure payment of such cost. Except as otherwise
provided herein and in Section 12 hereof, all Tenant Changes and all repairs and
all other property attached to or installed on the Demised Premises by or on
behalf of Tenant shall immediately upon completion or installation thereof be
and become part of the Demised Premises and the property of Landlord without
payment therefor by Landlord and shall be surrendered to Landlord upon the
expiration or earlier termination of the Term. With respect to any Tenant
Change, whether or not requiring Landlord's prior consent, Landlord shall have
no duty or obligation to make any replacement or repair thereto, whether
interior or exterior, structural or non-structural, ordinary or extraordinary or
as required to comply with any law.

          (c) To the extent permitted by law, all of Tenant's contracts and
subcontracts for such Tenant Changes shall provide that no lien shall attach to
or be claimed against the Demised Premises or any interest therein other than
Tenant's leasehold interest in the Demised Premises, and that all subcontracts
let thereunder shall contain the same provision.  Whether or not Tenant
furnishes the foregoing, Tenant agrees to hold Landlord harmless against all
liens, claims and liabilities of every kind, nature and description which may
arise out of or in any way be connected with such work.  Tenant shall not permit
the Demised Premises to become subject to any mechanics', laborers' or
materialmen's lien on account of labor, material or services furnished to Tenant
or claimed to have been furnished to Tenant in connection with work of any
character performed or claimed to have been performed for the Demised Premises
by, or at the direction or sufferance of Tenant and if any such liens are filed
against the Demised Premises, Tenant shall promptly discharge the same;
provided, however, that Tenant shall have the right to contest, in good faith
and with reasonable diligence, the validity of any such lien or claimed lien if
Tenant shall give to Landlord, within fifteen days after demand, such security
as may be reasonably satisfactory to landlord to assure payment thereof and to
prevent any sale, foreclosure, or forfeiture of Landlord's interest in the
Demised Premises by reason of non-payment thereof; provided further that on
final determination of the lien or claim for lien, Tenant shall immediately pay
any judgment rendered, with all proper costs and charges, and shall have the
lien released and any judgment satisfied.  If Tenant fails to post such security
or does not diligently contest such lien, Landlord may, without investigation of
the validity of the lien claim, discharge such lien and Tenant shall reimburse
Landlord upon demand for all costs and expenses incurred in connection
therewith, which expenses shall include any reasonable attorneys' fees,
reasonable paralegals' fees and any and all costs associated therewith,
including litigation through all trial and appellate levels and any costs in
posting bond to effect a discharge or release of the lien.  Nothing contained in
this Lease shall be construed as a consent on the part of Landlord to subject
the Demised Premises to liability under any lien law now or hereafter existing
of the state in which the Demised Premises are located.

     20.  Services by Landlord.  From and after the Lease Commencement Date,
Landlord shall be responsible for providing no services to the Demised Premises
whatsoever, except for the services for which Landlord is specifically obligated
pursuant to Section 18 (f) and (h) or as otherwise specifically provided for
herein.

                                      17
<PAGE>

     21.  Fire and Other Casualty.

          (a) If the Building or other improvements on the Land shall be damaged
or destroyed by fire or other casualty, Tenant, at Tenant's sole cost and
expense, shall promptly and diligently proceed to adjust the loss with the
insurance companies (subject to the approval of the Lender (if applicable) and
of Landlord) and arrange for the disbursement of insurance proceeds, and repair,
rebuild or replace such Building and other improvements, so as to restore the
Demised Premises to the condition in which they were immediately prior to such
damage or destruction.  The net proceeds of any insurance recovered by reason of
such damage or destruction in excess of the cost of adjusting the insurance
claim and collecting the insurance proceeds (such excess being referred to
herein as the "Net Insurance Proceeds") shall be held by the Lender (provided
that such Lender is a bank, savings association, insurance company or other
similar institutional lender; herein called "Institutional Lender"), or, if no
Institutional Lender then holds a Mortgage on the Demised Premises, by any
national or state chartered bank which is reasonably acceptable to Landlord and
Tenant; and the Net Insurance Proceeds shall be released for the purpose of
paying the fair and reasonable cost of restoring such Building and other
improvements.  Such Net Insurance Proceeds shall be released to Tenant, or to
Tenant's contractors, from time to time as the work progresses, pursuant to such
requirements and limitations as may be reasonably acceptable to Landlord and
Lender (if the Lender so requires), including, without limitation, lien waivers
from each of the contractors, subcontractors, materialmen and suppliers
performing the work.  If the Net Insurance Proceeds (less any applicable
deductible) are insufficient to restore the Demised Premises Tenant shall be
obligated to pay such deficiency and the amount of any such deductible.
Notwithstanding the foregoing, if the Net Insurance Proceeds are less than
Twenty-Five Thousand Dollars ($25,000.00), and if the Lender agrees in writing,
such Net Insurance Proceeds may be held by Tenant and used by Tenant to pay the
fair and reasonable cost of restoring such Demised Premises and other
improvements.  If the Net Insurance Proceeds exceed the full cost of the repair,
rebuilding or replacement of the damaged Building or other improvements, then
the amount of such excess Net Insurance Proceeds shall be paid to Tenant upon
the completion of such repair, rebuilding or replacement.  Landlord agrees not
unreasonably to withhold or delay any approvals required to be obtained by
Tenant from Landlord pursuant to the provisions of this Section 21 (a).

          (b) Whenever Tenant shall be required to carry out any work or repair
and restoration pursuant to this Section 21, Tenant, prior to the commencement
of such work, shall deliver to Landlord for Landlord's prior approval (which
shall not be unreasonably withheld or delayed) a full set of the plans and
specifications therefor, together with a copy of all approvals and permits which
shall be required from any governmental authority having jurisdiction.  After
completion of any major repair or restoration, Tenant shall, as soon as
reasonably possible, obtain and deliver to Landlord a Certificate of Substantial
Completion from the inspecting architect and a permanent Certificate of
Occupancy (or amended Certificate of Occupancy), if required by applicable laws,
issued by the appropriate authority with respect to the use of the Demised
Premises, as thus repaired and restored.  Any such work or repair and
restoration, in all cases, shall be carried out by Tenant in a good and
workmanlike manner with materials at least equal in quality to the original
materials used therefor prior to the damage or destruction.  If, after a default
by Tenant that is continuing, Landlord shall carry out any such work or repair
and restoration pursuant to the provisions of this Section 21, then Landlord
shall be entitled to

                                      18
<PAGE>

withdraw monies held for application to the costs of such work from time to time
as such costs are incurred.

     22.  Condemnation.

          (a) If all of the Demised Premises is taken or condemned for a public
or quasi-public use, this Lease shall terminate as of the earlier of the date
title to the condemned real estate vests in the condemnor and the date on which
Tenant is deprived of possession of all of the Demised Premises.  In such event,
the Base Rent herein reserved and all Additional Rent and other sums payable
hereunder shall be apportioned and paid in full by Tenant to Landlord to that
date, all Base Rent, Additional Rent and other sums payable hereunder prepaid
for periods beyond that date shall forthwith be repaid by Landlord to Tenant,
and neither party shall thereafter have any liability hereunder, except that any
obligation or liability of either party, actual or contingent, under this Lease
which has accrued on or prior to such termination date shall survive.

          (b) In the event of a taking of "Substantially All of the Demised
Premises" (as herein defined), Tenant may, at its option, upon thirty (30) days'
written notice to Landlord, which shall be given no later than sixty (60) days
following the taking, have the right to terminate this Lease.  All Base Rent and
other sums payable by Tenant hereunder shall be apportioned and paid through and
including the date of taking, and neither Landlord nor Tenant shall have any
rights in any compensation or damages payable to the other in connection with
such condemnation.  For purposes of this provision, "Substantially All of the
Demised Premises" shall mean (i) so much of the Demised Premises as, when taken,
leaves the untaken portion unsuitable, in the reasonable opinion of Tenant, for
the continued feasible and economic operation of the Demised Premises by Tenant
for the same purposes as immediately prior to such taking or as contemplated
herein, (ii) so many of the parking spaces on the Land are taken as to reduce
the parking ratio below that which is required by the zoning ordinance
applicable to the Project, and Landlord's failure to provide substantially
similar alternative parking adjacent to the Demised Premises reasonably
acceptable to Tenant within sixty (60) days after such taking, or (iii) so much
of the Demised Premises is taken that access to the Demised Premises is
materially impeded, as reasonably determined by Tenant.

          (c) If only part of the Demised Premises is taken or condemned for a
public or quasi-public use and this Lease does not terminate pursuant to Section
22(b) above, Tenant shall restore, using all reasonable speed and diligence, the
Demised Premises to a condition and to a size as nearly comparable as reasonably
possible to the condition and size thereof immediately prior to the taking and
Landlord, to the extent of the award Landlord receives in excess of the costs of
collecting the award and value of the Land taken (herein, the "Net Condemnation
Proceeds"), shall release the Net Condemnation Proceeds to Tenant for that
purpose and Tenant shall have the right to participate in any proceeding
relating to the awarding of restoration damages.  There shall be an equitable
abatement of the Base Rent and Additional Rent based on the actual loss of use
of the Demised Premises suffered by Tenant from the taking.  Determination of
such loss of use of the Demised Premises after a partial taking shall be
mutually agreed to by the parties within sixty (60) days from the date of the
taking and if the parties can not so agree, then such loss of use shall be
determined in accordance with the Dispute

                                      19
<PAGE>

Resolution Procedure (as defined in Section 34), with real estate appraisers
having at least ten (10) years experience appraising commercial real estate,
including build-to-suit leases, serving as Officials. Pending such
determination, Tenant shall continue to pay the Base Rent and Additional Rent as
herein originally specified, and upon such determination, if Tenant is entitled
to a refund because of an overpayment of Base Rent or Additional Rent, Landlord
shall make the same promptly, or in lieu thereof credit the amount thereof to
future installments of Base Rent or Additional Rent as they become due.

          (d) Landlord shall be entitled to receive the entire award in any
proceeding with respect to any taking provided for in this Section 22, without
deduction therefrom for any estate vested in Tenant by this Lease, and, subject
to Section 22(c) above, Tenant shall receive no part of such award.  Nothing
herein contained shall be deemed to prohibit Tenant from making a separate
claim, against the condemnor, to the extent permitted by law, for the value of
the unamortized tenant improvements (installed in accordance with Section 19 at
Tenant's expense), Tenant's moveable trade fixtures, machinery and moving
expenses, provided that, in any case, the making of such claim shall not and
does not adversely affect or diminish Landlord's award.

     23.  Tenant's Default.

          (a) The occurrence of any one or more of the following events shall
constitute an event of default (herein referred to as an "Event of Default") of
Tenant under this Lease:

          (i) if Tenant fails to pay Base Rent or any Additional Rent hereunder
as and when such rent becomes due and such failure shall continue for more than
five (5) days after receipt of written notice from Landlord of such failure;

          (ii) if Tenant fails to pay Base Rent or any Additional Rent on time
more than three (3) times in any period of twelve (12) months, notwithstanding
that such payments have been made within the applicable cure period;

          (iii)  if the Demised Premises become abandoned for more than ten (1O)
consecutive days or if Tenant fails to take possession of the Demised Premises
on the Lease Commencement Date (or within a reasonable time thereafter);

          (iv) if Tenant permits to be done anything which creates a lien upon
the Demised Premises and fails either (A) to discharge, (B) bond such lien, or
(C) post security with Landlord acceptable to Landlord, within thirty (30) days
after receipt by Tenant of ,written notice thereof;

          (v) if Tenant violates the provisions of Section 30 of this Lease by
attempting to make an unpermitted assignment or sublease;

          (vi) if Tenant fails to maintain in force all policies of insurance
required by this Lease and such failure shall continue for more than ten (10)
days after Landlord gives Tenant notice of such failure;

                                      20
<PAGE>

          (vii)  if any petition is filed by or against Tenant or any guarantor
of this Lease under any present or future section or chapter of the Bankruptcy
Code, or under any similar law or statute of the United States or any state
thereof (which, in the case of an involuntary proceeding, is not permanently
discharged, dismissed, stayed, or vacated, as the case may be, within sixty (60)
days of commencement), or if any order for relief shall be entered against
Tenant or any guarantor of this Lease in any such proceedings;

          (viii)  if Tenant or any guarantor of this Lease is adjudicated
insolvent or makes a transfer in fraud of creditors or makes an assignment for
the benefit of creditors;

          (ix) if a receiver, custodian, or trustee is appointed for the Demised
Premises or for all or substantially all of the assets of Tenant or of any
guarantor of this Lease, which appointment is not vacated within sixty (60) days
following the date of such appointment; or

          (x) if Tenant fails to perform or observe any other term of this Lease
and such failure shall continue for more than thirty (30) days after Landlord
gives Tenant notice of such failure, or, if such failure cannot be corrected
within such thirty (30) day period, if Tenant does not commence to correct such
default within said thirty (30) day period and thereafter diligently prosecute
the correction of same to completion within a reasonable time.

          (b) Upon the occurrence of any one or more of the aforesaid Events of
Default, or upon the occurrence of any other default or defaults by Tenant under
this Lease, Landlord may, at Landlord's option, without any demand or notice
whatsoever (except as expressly required in this Section 23):

          (i) Terminate this Lease by giving Tenant notice of termination, in
which event this Lease shall expire and terminate on the date specified in such
notice of termination with the same force and effect as though the date so
specified were the date herein originally fixed as the termination date of the
Term, and all rights of Tenant under this Lease and in and to the Demised
Premises shall expire and terminate and subject to any duty of Landlord to
mitigate its damages imposed by then-applicable laws, Tenant shall remain liable
for all obligations under this Lease arising up to the date of such termination,
and Tenant shall surrender the Demised Premises to Landlord on the date
specified in such notice, and if Tenant fails to so surrender Landlord shall
have the right, without notice, to enter upon and take possession of the Demised
Premises and to expel or remove Tenant and its effects without being liable for
prosecution or any claim for damages therefor; or

          (ii) Terminate this Lease as provided in Section 23(b)(i) hereof and
recover from Tenant all damages Landlord may incur by reason of Tenant's
default, including, without limitation, a sum which, at the date of such
termination, is calculated as follows: (1) the value of the excess, if any, of
(A) the Base Rent, Additional Rent and all other sums which would have been
payable hereunder by Tenant for the period commencing with the day following the
date of such termination and ending with the expiration date of the original
Term (or any applicable extension or renewal term then in effect) had this Lease
not been terminated

                                      21
<PAGE>

(the "Remaining Term"), over (B) the aggregate reasonable rental value of the
Demised Premises for the Remaining Term (which excess, if any, shall be
discounted to present value at the "Treasury Yield" [as defined below] rate for
the Remaining Term), plus (2) the costs of recovering possession of the Demised
Premises and all other expenses incurred by Landlord due to Tenant's default,
including, without limitation, reasonable attorney's fees, plus (3) the unpaid
Base Rent and Additional Rent earned as of the date of termination plus any
interest and late fees due hereunder, plus other sums of money and damages owing
on the date of termination by Tenant to Landlord under this Lease or in
connection with the Demised Premises, all of which excess sum shall be deemed
immediately due and payable; provided, however, that such payments shall not be
deemed a penalty but shall merely constitute payment of liquidated damages, it
being understood and acknowledged by Landlord and Tenant that actual damages to
Landlord are extremely difficult, if not impossible, to ascertain. "Treasury
Yield" shall mean the rate of return in percent per annum of Treasury Constant
Maturities for the length of time specified as published in document H. 15(519)
(presently published by the Board of Governors of the U.S. Federal Reserve
System titled "Federal Reserve Statistical Release") for the calendar week
immediately preceding the calendar week in which the termination occurs. If the
rate of return of Treasury Constant Maturities for the calendar week in question
is not published on or before the business day preceding the date of the
Treasury Yield in question is to become effective, then the Treasury Yield shall
be based upon the rate of return of Treasury Constant Maturities for the length
of time specified for the most recent calendar week for which such publication
has occurred. If no rate of return for Treasury Constant Maturities is published
for the specific length of time specified, the Treasury Yield for such length of
time shall be the weighted average of the rates of return of Treasury Constant
Maturities most nearly corresponding to the length of the applicable period
specified. If the publishing of the rate of return of Treasury Constant
Maturities is ever discontinued, then the Treasury Yield shall be based upon the
index which is published by the Board of Governors of the U.S. Federal Reserve
System in replacement thereof or, if no such replacement index is published, the
index which, in Landlord's reasonable determination, most nearly corresponds to
the rate of return of Treasury Constant Maturities. In determining the aggregate
reasonable rental value pursuant to subparagraph (ii)(1)(B) above, the parties
hereby agree that, at the time Landlord, seeks to enforce this remedy, all
relevant factors should be considered, including, but not limited to, (a) the
length of time remaining in the Term, (b) the then current market conditions in
the general area in which the Building is located, (c) the likelihood of
reletting the Demised Premises for a period of time equal to the Remaining Term,
(d) the net effective rental rates then being obtained by landlords for similar
type space of similar size in similar type buildings in the general area in
which the Building is located, (e) the vacancy levels in the general area in
which the Building is located, (o current levels of new construction that will
be completed during the remainder of the Term and how this construction will
likely affect vacancy rates and rental rates and (g) inflation; or

          (iii)  Without terminating this Lease, and with or without notice to
Tenant, Landlord may in its own name but as agent for Tenant enter into and upon
and take possession of the Demised Premises or any part thereof, and, at
Landlord's option, remove persons and property therefrom and such property, if
any, may be removed and stored in a warehouse or elsewhere at the cost of, and
for the account of Tenant, all without being deemed guilty of trespass or
becoming liable for any loss or damage which may be occasioned thereby,

                                      22
<PAGE>

and, subject to any duty of Landlord to mitigate its damages imposed by then-
applicable laws, Landlord may rent the Demised Premises or any portion thereof
as the agent of Tenant with or without advertisement, and by private
negotiations and for any term upon such terms and conditions as Landlord may
deem necessary or desirable in order to relet the Demised Premises. Subject to
any duty of Landlord to mitigate its damages imposed by then-applicable laws,
Landlord shall in no way be responsible or liable for any failure to rent the
Demised Premises or any part thereof, or for any failure to collect any rent due
upon such reletting. Upon each such reletting, all rentals received by Landlord
from such reletting shall be applied: first, to the payment of any indebtedness
(other than any rent due hereunder) from Tenant to Landlord; second, to the
payment of any costs and expenses of such reletting, including, without
limitation, brokerage fees and attorney's fees and costs of alterations and
repairs; third, to the payment of rent and other charges then due and unpaid
hereunder; and the residue, if any, shall be held by Landlord to the extent of
and for application in payment of future rent, if any becomes owing, as the same
may become due and payable hereunder. In reletting the Demised Premises as
aforesaid, Landlord may grant rent concessions and Tenant shall not be credited
therefor. If such rentals received from such reletting shall at any time or from
time to time be less than sufficient to pay to Landlord the entire sums then due
from Tenant hereunder, Tenant shall pay any such deficiency to Landlord. Such
deficiency shall, at Landlord's option, be calculated and paid monthly.
Notwithstanding any such reletting without termination, Landlord may at any time
thereafter elect to terminate this Lease for any such previous default provided
same has not been cured and proceed under subsections 23(b)(i) or 23(b)(ii)
above; or

          (iv) Without terminating this Lease, and with or without notice to
Tenant, Landlord may enter into and upon the Demised Premises and without being
liable for prosecution or any claim for damages therefor, maintain the Demised
Premises and repair or replace any damage thereto or do anything or make any
payment for which Tenant is responsible hereunder.  Tenant shall reimburse
Landlord immediately upon demand for any expenses ,which Landlord incurs in thus
effecting Tenant's compliance under this Lease, and Landlord shall not be liable
to Tenant for any damages with respect thereto; or

          (v) Without liability to Tenant or any other party and without
constituting a constructive or actual eviction, suspend or discontinue
furnishing or rendering to Tenant any property, material, labor, utilities or
other service, wherever Landlord is obligated to furnish or render the same so
long as Tenant is in default under this Lease; or

          (vi) To the extent permitted by then-applicable law, allow the Demised
Premises to remain unoccupied and collect rent from Tenant as it comes due; or

          (vii)  Foreclose any security interest in the property of Tenant which
Landlord may have under the laws of the state where the Building is located or
under this Lease, including the immediate taking of possession of all property
on or in the Demised Premises; or

         (viii) Pursue such other remedies as are available at law or in equity.

          (c) If this Lease shall terminate as a result of or while there exists
a default hereunder, any funds of Tenant held by Landlord may be applied by
Landlord to any damages

                                      23
<PAGE>

payable by Tenant whether provided for herein or by law) as a result of such
termination or default.

          (d) Neither the commencement of any action or proceeding, nor the
settlement thereof, nor entry of judgment thereon shall bar Landlord from
bringing subsequent actions or proceedings from time to time, nor shall the
failure to include in any action or proceeding any sum or sums then due be a bar
to the maintenance of any subsequent actions or proceedings for the recovery of
such sum or sums so omitted.

          (e) If any statute or rule of law shall limit any of Landlord's
remedies as hereinabove set forth, Landlord shall nonetheless be entitled to any
and all other remedies hereinabove set forth.

          (f) No agreement to accept a surrender of the Demised Premises and no
act or omission by Landlord or Landlord's agents during the Term shall
constitute an acceptance or surrender of the Demised Premises unless made in
writing and signed by Landlord.  No re-entry or taking possession of the Demised
Premises by Landlord shall constitute an election by Landlord to terminate this
Lease unless a written notice of such intention is given to Tenant.

          (g) No provision of this Lease shall be deemed to have been waived by
either party unless such waiver is in writing and signed by the party making
such waiver.  Landlord's acceptance of Base Rent or Additional Rent following an
Event of Default hereunder shall not be construed as a waiver of such Event of
Default.  No custom or practice which may grow up between the parties in
connection with the terms of this Lease shall be construed to waive or lessen
either party's right to insist upon strict performance of the terms of this
Lease, without a written notice thereof the other party.

          (h) The rights granted to Landlord in this Section 23 shall be
cumulative of every other right or remedy provided in this Lease or which
Landlord may otherwise have at law or in equity or by statute, and the exercise
of one or more rights or remedies shall not prejudice or impair the concurrent
or subsequent exercise of other rights or remedies or constitute a forfeiture or
waiver of Base Rent, Additional Rent or damages accruing to Landlord by reason
of any Event of Default.  If an Event of Default shall occur, Tenant shall pay
to Landlord, on demand, all expenses incurred by Landlord as a result thereof,
including reasonable attorneys' fees, court costs and expenses.  Other than in
connection with a claim arising from the negligence or intentional misconduct of
Landlord, its employees, agents or representatives, if Landlord shall be made a
party to any litigation commenced against Tenant as a result of this Lease,
Landlord's ownership of the Demised Premises or the relationship of Landlord and
Tenant arising by virtue of this Lease, Tenant shall pay all costs and
reasonable attorneys' fees incurred by Landlord in connection with such
litigation.  Notwithstanding anything to the contrary contained herein, in the
event any third party prevails in any action to which Landlord is made a party
and it is ultimately determined that there was no negligence or intentional
misconduct on the part of Landlord, Tenant shall pay all costs and reasonable
attorneys' fees incurred by Landlord in connection with such litigation.

                                      24
<PAGE>

     24.  Landlord's Right of Entry.  Tenant agrees to permit Landlord and the
authorized representatives of Landlord and of the Lender to enter upon the
Demised Premises at all reasonable times for the purposes of (a) inspecting the
Demised Premises, (b) making any necessary repairs thereto pursuant to Section
18(f),and (c) performing any work therein that may be necessary by reason of
Tenant's failure to make such repairs or perform any such work required of
Tenant under this Lease; provided that, except in the case of an emergency,
Landlord shall give the Tenant reasonable prior notice not less than two (2)
days in advance of Landlord's intended entry into the Building.  Nothing herein
shall imply any duty upon the part of Landlord to do any of the work described
in clause (c) above, and the performance thereof by Landlord shall not
constitute a waiver of Tenant's default in failing to perform such work.
Landlord shall not be liable for inconvenience, annoyance, disturbance or other
damage to Tenant by reason of making such repairs or the performance of such
work in the Demised Premises or on account of bringing materials, supplies and
equipment into or through the Demised Premises during the course thereof, and
the obligations of Tenant under this Lease shall not thereby be affected;
provided, however, that Landlord shall use reasonable efforts not to disturb or
otherwise interfere with Tenant's operations in the Demised Premises in making
such repairs or performing such work.  Landlord also shall have the right to
enter the Demised Premises at all reasonable times to exhibit the Demised
Premises to any prospective purchaser, mortgagee or tenant.

     25.  Lender's Rights.

          (a)  For purposes of this Lease:

          (i) "Lender" as used herein means the holder of a Mortgage;

          (ii) "Mortgage" as used herein means any or all mortgages, deeds
to secure debt, deeds of trust or other instruments in the nature thereof which
may now or hereafter affect or encumber Landlord's title to the Demised
Premises, and any amendments, modifications, extensions or renewals thereof.

          (b) This Lease and all rights of Tenant hereunder are and shall be
subject and subordinate to the lien and security title of any Mortgage.  Tenant
recognizes and acknowledges the right of Lender to foreclose or exercise the
power of sale against the Demised Premises under any Mortgage.

          (c) Tenant shall, in confirmation of the subordination set forth in
Section 25(b) and notwithstanding the fact that such subordination is self-
operative, and no further instrument or subordination shall be necessary, upon
demand, at any time or times, execute, acknowledge, and deliver to Landlord or
to Lender any and all instruments requested by either of them to evidence such
subordination.

          (d) If requested by Lender, Tenant shall, upon demand, at any time or
times, execute, acknowledge, and deliver to Lender, any and all instruments that
may be necessary to make this Lease superior to the lien of Lender's Mortgage.

                                      25
<PAGE>

          (e) If Lender (or Lender's nominee, or other purchaser at foreclosure)
shall hereafter succeed to the rights of Landlord under this Lease, whether
through possession or foreclosure action or delivery of a new lease, Tenant
shall, if requested by such successor, attorn to and recognize such successor as
Tenant's landlord under this Lease without change in the terms and provisions of
this Lease, and Tenant shall promptly execute and deliver any instrument that
may be necessary to evidence such attornment, provided that such successor shall
not be bound by (i) any payment of Base Rent or Additional Rent for more than
one month in advance, except prepayments in the nature of security for the
performance by Tenant of its obligations under this Lease, and then only if such
prepayments have been deposited with and are under the control of such
successor, or (ii) any provision of any amendment to the Lease to which Lender
has not consented, (iii) the defaults of any prior landlord under this Lease
which are not continuing, (iv) any offset rights arising out of the defaults of
any prior landlord under this Lease.  Upon such attornment, this Lease shall
continue in full force and effect as a direct lease between each successor
landlord and Tenant, subject to all of the terms, covenants and conditions of
this Lease.

          (f) In the event there is a Mortgage at any time during the Term,
Landlord shall cause the Lender to enter into a subordination, nondisturbance
and attornment agreement with Tenant reasonably satisfactory to Tenant and
consistent with this Section 25 (an "SNDA"), and Tenant's agreement (i) to
attorn to Lender and (ii) that the Lease is subordinate to such Mortgage, is
conditioned upon Tenant's receipt of such SNDA.

     26.  Estoppel Certificate and Financial Statement.

          (a) Landlord and Tenant agree, at any time, and from time to time,
within fifteen (15) days after written request of the other, to execute,
acknowledge and deliver to the requesting party, a statement in writing in
recordable form certifying that: (i) this Lease is unmodified and in full force
and effect (or, if there have been modifications, that the same is in full force
and effect, as modified) and (ii) the dates to which Base Rent, Additional Rent
and other charges have been paid, (iii) whether or not, to the best knowledge of
the signer of such certificates, there exists any failure by Landlord to perform
any term, covenant or condition contained in this Lease, and, if so, specifying
each such failure of which the signer may have knowledge, (iv) (if such be the
case) the Tenant has unconditionally accepted the Demised Premises and is
conducting its business therein, (v) and as to such additional matters as may be
reasonably requested, it being intended that any such statement delivered
pursuant hereto may be relied upon by the requesting party and by any purchaser
of title to the Demised Premises or by any Lender or any assignee thereof or any
party to any sale-leaseback of the Demised Premises, or the landlord under a
ground lease affecting the Demised Premises.

          (b) If Landlord desires to finance, refinance, or sell the Building,
Industrial Center or any part thereof, Tenant and all Guarantors shall deliver
to any potential lender or purchaser designated by Landlord such financial
statements of Tenant and such Guarantors as may be reasonably required by such
lender or purchaser, including but not limited to Tenant's financial statements
for the past 3 years.  All such financial statements shall be received by
Landlord and such lender or purchaser in confidence and shall be used only for
the purposes herein set forth.

                                      26
<PAGE>

     27.  Landlord Liability.  No owner of the Demised Premises, whether or not
named herein, shall have liability hereunder after it ceases to hold title to
the Demised Premises.  Neither Landlord nor any officer, director, shareholder,
partner or principal of Landlord, whether disclosed or undisclosed, shall be
under any personal liability with respect to any of the provisions of this
Lease, and if Landlord is in breach or default with respect to Landlord's
obligations or otherwise under this Lease, Tenant shall look solely to the
equity of Landlord in the Demised Premises for the satisfaction of Tenant's
remedies.  It is expressly understood and agreed that Landlord's liability under
the terms, covenants, conditions, warranties and obligations of this Lease shall
in no event exceed the loss of Landlord's equity interest in the Demised
Premises.

     28.  Notices.  Any notice required or permitted to be given or served by
either party to this Lease shall be deemed given when made in writing and either
(i) personally delivered, (ii) deposited with the United States Postal Service,
postage prepaid, by registered or certified mail, return receipt requested, or
(iii) delivered by overnight delivery service providing proof of delivery,
properly addressed to the address set forth in Section 1(k) (as the same may be
changed by giving written notice of the aforesaid in accordance with this
Section 28).  If any notice mailed is properly addressed with appropriate
postage but returned for any reason, such notice shall be deemed to be effective
notice and to be given on the date of mailing.

     29.  Brokers.  Tenant represents and warrants to Landlord that, except for
those parties set forth in Section 1(m) (the "Brokers"), Tenant has not engaged
or had any conversations or negotiations with any broker, finder or other third
party concerning the leasing of the Demised Premises to Tenant who would be
entitled to any commission or fee based on the execution of this Lease.  Tenant
hereby further represents and warrants to Landlord that Tenant is not receiving
and is not entitled to receive any rebate, payment or other remuneration, either
directly or indirectly, from the Brokers, and that it is not otherwise sharing
in or entitled to share in any commission or fee paid to the Brokers by Landlord
or any other party in connection with the execution of this Lease, either
directly or indirectly.  Tenant hereby indemnities Landlord against and from any
claims for any brokerage commissions arising by, through or under Tenant (except
those payable to the Broker, all of which are payable by Landlord pursuant to a
separate agreement) and all costs, expenses and liabilities in connection
therewith, including, without limitation, reasonable attorneys' fees and
expenses, for any breach of the foregoing.  The foregoing indemnification shall
survive the expiration or termination of the Lease for any reason.

     30.  Assignment and Subleasing.

          (a) Tenant may not assign, mortgage, pledge, encumber or otherwise
transfer this Lease, or any interest hereunder, or sublet the Demised Premises,
in whole or in part, without on each occasion first obtaining the prior express
written consent of Landlord, which consent Landlord shall not unreasonably
withhold.  Any change in control of Tenant resulting from a merger,
consolidation, stock transfer or asset sale shall be considered an assignment or
transfer which requires Landlord's prior written consent.  For purposes of this
Section 29, by way of example and not limitation, Landlord shall be deemed to
have reasonably withheld consent if Landlord reasonably determines (i) that the
prospective assignee or subtenant is not of

                                      27
<PAGE>

a financial strength to satisfy its obligations under such assignment or
sublease, (ii) that the proposed use of the Demised Premises by such prospective
assignee or subtenant (including, without limitation, a use involving the use or
handling of Hazardous Substances) will negatively affect the value or
marketability of the Building, or the Project or (iii) that the prospective
assignee or subtenant is a current tenant in the Project or is a bona-fide
third-party prospective tenant.

          (b) If Tenant desires to assign this Lease or sublet the Demised
Premises or any part thereof, Tenant shall give Landlord written notice no later
than forty-five (45) days in advance of the proposed effective date of any
proposed assignment or sublease, specifying (i) the name and business of the
proposed assignee or sublessee, (ii) the amount and location of the space within
the Demised Premises proposed to be subleased, (iii) the proposed effective date
and duration of the assignment or subletting and (iv) the proposed rent or
consideration to be paid to Tenant by such assignee or sublessee.  Tenant shall
promptly supply Landlord with financial statements and other information as
Landlord may reasonably request to evaluate the proposed assignment or sublease.
Landlord shall have a period of fifteen (15) days following receipt of such
notice and other information requested by Landlord within which to notify Tenant
in writing that Landlord elects: (i) to permit Tenant to assign or sublet such
space; provided, however, that, if the rent rate agreed upon between Tenant and
its proposed subtenant is greater than the rent rate that Tenant must pay
Landlord hereunder for that portion of the Demised Premises, or if any
consideration shall be promised to or received by Tenant in connection with such
proposed assignment or sublease (in addition to rent), then one half (1/2) of
such excess rent and other consideration (after payment of brokerage
commissions, attorneys' fees and other disbursements reasonably incurred by
Tenant for such assignment and subletting if acceptable evidence of such
disbursements is delivered to Landlord) shall be considered Additional Rent owed
by Tenant to Landlord, and shall be paid by Tenant to Landlord, in the case of
excess rent, in the same manner that Tenant pays Base Rent and, in the case of
any other consideration, within ten (10) business days after receipt thereof by
Tenant; or (ii) to refuse, in Landlord's reasonable discretion (taking into
account all relevant factors including, without limitation, the factors set
forth in the Section 29(a) above), to consent to Tenant's assignment or
subleasing of such space (in which event Landlord shall specify the particular
reason(s) why Landlord refused such request) and to continue this Lease in full
force and effect as to the entire Demised Premises.  If Landlord should fail to
notify Tenant in writing of such election within the aforesaid fifteen (15) day
period, Landlord shall be deemed to have elected option (ii) above.  Tenant
agrees to reimburse Landlord for reasonable legal fees and any other reasonable
costs incurred by Landlord in connection with any requested assignment or
subletting, and such payments shall not be deducted from the Additional Rent
owed to Landlord pursuant to subsection (ii) above.  Tenant shall deliver to
Landlord copies of all documents executed in connection with any permitted
assignment or subletting, which documents shall be in form and substance
reasonably satisfactory to Landlord and which shall require such assignee to
assume performance of all terms of this Lease on Tenant's part to be performed.

          (c) No acceptance by Landlord of any rent or any other sum of money
from any assignee, sublessee or other category of transferee shall be deemed to
constitute Landlord's consent to any assignment, sublease, or transfer.
Permitted subtenants or assignees shall become liable directly to Landlord for
all obligations of Tenant hereunder, without, however, relieving

                                      28
<PAGE>

Tenant of any of its liability hereunder. No such assignment, subletting,
occupancy or collection shall be deemed the acceptance of the assignee, tenant
or occupant, as Tenant, or a release of Tenant from the further performance by
Tenant of Tenant's obligations under this Lease. Any assignment or sublease
consented to by Landlord shall not relieve Tenant (or its assignee) from
obtaining Landlord's consent to any subsequent assignment or sublease.

     31.  Termination or Expiration.

          (a) No termination of this Lease prior to the normal ending thereof,
by lapse of time or otherwise, shall affect Landlord's right to collect rent for
the period prior to termination thereof.

          (b) At the expiration or earlier termination of the Term, Tenant shall
surrender the Demised Premises and all improvements, alterations and additions
thereto, and keys therefor to Landlord, clean and neat, and in the same
condition as at the Lease Commencement Date, ordinary wear and tear only
excepted.

          (c) If Tenant remains in possession of the Demised Premises after
expiration of the Term, with or without Landlord's acquiescence and without any
express agreement of the par-ties, Tenant shall be a tenant-at-sufferance at the
greater of (i) one hundred fifty percent (150%) of the Base Rent in effect at
the end of the Term or (ii) one hundred fifty percent (150%) of the then current
fair market rental value of the Demised Premises.  Tenant shall also continue to
pay all other Additional Rent due hereunder, and there shall be no renewal of
this Lease by operation of law.  In addition to the foregoing, Tenant shall be
liable for all damages, direct and consequential, incurred by Landlord as a
result of such holdover.  No receipt of money by Landlord from Tenant after the
termination of this Lease or Tenant's right of possession of the Demised
Premises shall reinstate, continue or extend the Term or Tenant's right of
possession.

     32.  Late Payments.  In the event any installment of rent, inclusive of
Base Rent, or Additional Rent or other sums due hereunder, if any, is not paid
(i) within five (5) days after Tenant's receipt of written notice of such
failure to pay on the first two occasions during any twelve (12) month period,
or (ii) as and when due with respect to any subsequent late payments in any
twelve (12) month period, Tenant shall pay an administrative fee equal to five
percent (5%) of such past due amount, plus interest on the amount past due at a
rate equal to the lesser of (X) fifteen percent (15%) per annum or (Y) the
maximum interest rate allowed under applicable law (the "Interest Rate") to
defray the additional expenses incurred by Landlord in processing such payment.

     33.  Rules and Regulations.  Tenant agrees to abide by the Rules and
Regulations set forth on Exhibit "C" attached hereto, as well as other rules and
regulations reasonably promulgated by the Landlord from time to time, and the
declaration of protective covenants for the Project, attached hereto as Exhibit
"D", as it may be amended from to time, including to add the Property thereto
(herein, the "Protective Covenants"), which Protective Covenants shall run with
the Land and be binding on Tenant, its successors and assigns.

                                      29
<PAGE>

     34.  Dispute Resolution Procedure.

          (a) In the event that a dispute arises between Landlord and Tenant
under the Lease, and the Lease specifically provides that the dispute resolution
procedure outlined in this Section 34 (herein referred to as the "Dispute
Resolution Procedure") shall be utilized, the par-ties shall proceed as follows:

          (i) The party electing to proceed under the procedures outlined herein
(the "Electing Party") shall give written notice of such election to the other
party (the "Other Party"), and shall designate in writing the Electing Party's
selection of an individual with the qualifications outlined in the section of
the Lease giving rise to this remedy (the "Official") who shall act on the
Electing Party's behalf in determining the disputed fact.

          (ii) Within twenty (20) days after the Other Party's receipt of the
Electing Party's selection of an Official, the Other Party, by written notice to
the Electing Party, shall designate an Official who shall act on the Other
Party's behalf in determining the disputed fact.

          (iii)  Within twenty (20) days of the selection of the Other Party's
Official, the two (2) Officials shall render a joint written determination of
the disputed fact.  If the two (2) Officials are unable to agree upon a joint
written determination within such twenty (20) day period, each Official shall
render his or her own written determination and the two Officials shall select a
third Official within such twenty (20) day period.  In the event the two
Officials are unable to select a third Official within such twenty (20) day
period, then either party may apply to a court of original jurisdiction in
Collin County, Texas for appointment by such court of such third Official.

          (iv) Within twenty (20) days after the appointment of the third
Official, the third Official shall select one of the determinations of the two
(2) Officials originally selected, without modification or qualification.

          (v) If either Landlord or Tenant fails or refuses to select an
Official, the Official selected shall alone determine the disputed fact.
Landlord and Tenant agree that they shall be bound by the determination of
disputed fact pursuant to this subsection.  Landlord shall bear the fee and
expenses of its Official, Tenant shall bear the fee and expenses of its
Official, and Landlord and Tenant shall share equally the fee and expense of the
third Official, if any.

     35.  Miscellaneous.

          (a) The parties hereto hereby covenant and agree that any present or
future law to the contrary notwithstanding, this Lease shall not terminate,
except as herein specifically provided, and Landlord shall receive the Base Rent
and Additional Rent and all other sums payable by Tenant hereinabove provided as
net income from the Demised Premises, without any abatement, reduction, set-off,
counterclaim, defense or deduction and not diminished by (i) any imposition of
any public authority of any nature whatsoever during the Term, notwithstanding,
any changes in the method of taxation or raising, levying or assessing any
imposition, or any

                                      30
<PAGE>

changes in the name of any imposition, or (ii) any expenses or charges required
to be paid by Tenant to maintain, restore or replace the Demised Premises or to
protect Landlord's ownership of the Demised Premises, other than payments under
any Mortgage now existing or hereafter created by Landlord. The obligations of
Tenant hereunder shall not be affected by reason of any damage to or destruction
of the Demised Premises except as expressly otherwise provided to the contrary
in this Lease. Tenant shall remain obligated under this Lease in accordance with
its terms and shall not take any action to terminate, rescind or void this
Lease, solely as a result of any bankruptcy, insolvency, reorganization,
liquidation, dissolution or other proceeding affecting Landlord or any assignee
of Landlord.

          (b) If any clause or provision of this Lease is determined to be
illegal, invalid or unenforceable under present or future laws effective during
the Term, then and in that event, it is the intention of the parties hereto that
the remainder of this Lease shall not be affected thereby, and that in lieu of
such illegal, invalid or unenforceable clause or provision there shall be
substituted a clause or provision as similar in terms to such illegal, invalid
or unenforceable clause or provision as may be possible and be legal, valid and
enforceable.  If such invalidity is essential to the rights of either or both
parties, then the affected party shall have the right to terminate this Lease on
written notice to the other.

          (c) All rights, powers, and privileges conferred hereunder upon the
parties hereto shall be cumulative, but not restrictive to those given by law.

          (d) TIME IS OF THE ESSENCE OF THIS AGREEMENT.

          (e) No failure of Landlord or Tenant to exercise any power given
Landlord or Tenant hereunder or to insist upon strict compliance by Landlord or
Tenant with its obligations hereunder, and no custom or practice of the parties
at variance with the terms hereof shall constitute a waiver of Landlord's or
Tenant's rights to demand exact compliance with the terms hereof.

          (f) This Lease contains the entire agreement of the parties hereto as
to the subject matter of this Lease and no prior representations, inducements,
promises, letters of intent or agreements, oral or otherwise, between the
parties not embodied herein shall be of any force and effect.  Any future
amendment to this Lease must be in writing and signed by the parties hereto.
The masculine (or neuter) pronoun, singular number shall include the masculine,
feminine and neuter gender and the singular and plural number.

          (g) This contract shall create the relationship of landlord and tenant
between Landlord and Tenant; no estate shall pass out of Landlord; Tenant has a
usufruct, not subject to levy and sale, and not assignable by Tenant except as
expressly set forth herein.

          (h) Landlord and Tenant agree to execute, upon request of the other, a
short form memorandum of this Lease in recordable form and the requesting party
shall pay the costs and charges for the recording of such short form memorandum
of lease.  Under no circumstances shall Tenant have the right to record this
Lease (other than a short form memorandum of Lease, as approved by Landlord),
and should Tenant do so, Tenant shall be in default hereunder.

                                      31
<PAGE>

          (i) The captions of this Lease are for convenience only and are not a
part of this Lease, and do not in any way define, limit, describe or amplify the
terms or provisions of this Lease or the scope or intent thereof.

          (j) This Lease may be executed in multiple counterparts, each of which
shall constitute an original, but all of which taken together shall constitute
one and the same agreement.

          (k) This Lease shall be interpreted under the laws of the State in
which the Demised Premises is located.

          (l) The parties acknowledge that this Lease is the result of
negotiations between the parties, and in construing any ambiguity hereunder no
presumption shall be made in favor of either party.  No inference shall be made
from any item which has been stricken from this Lease other than the deletion of
such item.

          (m) All of the covenants, agreements, conditions and undertakings
contained in this Lease shall extend and inure to and be binding upon the
parties hereto and their permitted successors and assigns.

          (n) None of the covenants, terms or conditions of this Lease to be
kept and performed by either party shall in any manner be altered, waived,
modified, changed or abandoned, except by a written instrument, duly signed and
delivered by both parties.

          (o) To the extent permitted by law, each of Tenant and Landlord hereby
expressly waives any right to trial by jury of any action, cause of action,
claim, demand, or proceeding arising under or with respect to this Lease, or in
any way connected with, related to, or incidental to the dealings of Landlord
and Tenant with respect to this Lease, in each case whether now existing or
hereafter arising, and whether sounding in contract, tort, or otherwise.  To the
extent permitted by law, each of Tenant and Landlord hereby agrees that any such
action, cause of action, claim, demand or proceeding shall be decided by a court
trial without a jury and that Tenant or Landlord may file a copy of this Lease
with any court or other tribunal as written evidence of the consent of each of
Tenant and Landlord to the waiver of its right to trial by jury.

     36.  Special Stipulations.  The Special Stipulations, if any, attached
hereto as Exhibit E, are incorporated herein and made a part hereof, and to the
extent of any conflict between the foregoing provisions and the Special
Stipulations, the Special Stipulations shall govern and control.

     37.  Lease Date.  For purposes of this Lease, the terms "Lease Date", "date
of this Lease" or similar terms used herein shall mean the later date upon which
this Lease is signed by Landlord and Tenant.

     38.  Authority.  If Tenant is not a natural person, Tenant shall cause its
corporate secretary or general partner, as applicable, to execute the
certificate attached hereto as Exhibit F.


                                      32
<PAGE>

Tenant is authorized by all required corporate or partnership action to enter
into this Lease and the individual(s) signing this Lease on behalf of Tenant are
each authorized to bind Tenant to its terms.

     39.  No Offer Until Executed.  The submission of this Lease to Tenant for
examination or consideration does not constitute an offer to lease the Demised
Premises and this Lease shall become effective, if at all, only upon the
execution and delivery thereof by Landlord and Tenant.
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have hereunto set their hands under
seals, the day and year first above written.


                                 LANDLORD:

Date:  September 14, 2000    INDUSTRIAL DEVELOPMENTS INTERNATION (TEXAS), L.P.,
     --------------------
                                 a Georgia limited partnership

                                 By:  ID International (Texas), Inc., a Georgia
                                     corporation, its sole general partner

                                     By: /s/ Timothy J. Gunter
                                        ----------------------
                                        Name:  Timothy J. Gunter
                                             -------------------
                                        Title:  Secretary
                                              -----------

                                     Attest: /s/ Gregory J. Ryan
                                            --------------------
                                          Name:  Gregory J. Ryan
                                               -----------------
                                          Title:  Assistant Secretary
                                                ---------------------

                                              [CORPORATE SEAL]


                                 TENANT:

Date:  September 5, 2000    ACT MANUFACTURING, INC., a Delaware corporation
     -------------------


                                 By: /s/ John A. Pino
                                    -----------------
                                    Name:  John A. Pino
                                         --------------
                                    Title:  President & CEO
                                          -----------------


                                 Attest: /s/ Jeffrey B. Lavin
                                       ----------------------
                                     Name:  Jeffrey B. Lavin
                                          ------------------
                                     Title:  VP Finance
                                           ------------

                                              [CORPORATE SEAL]

                                      34
<PAGE>

                                  ATTESTATION
Landlord:
--------

STATE OF GEORGIA

COUNTY OF FULTON

     BEFORE ME, a Notary Public in and for said County, personally appeared Tim
Gunter and Greg Ryan, known to me to be the person(s) who, as Secretary and
Assistant Secretary, respectively, of ID International (Texas), Inc., a Georgia
corporation, the corporation which executed the foregoing instrument in its
capacity as general partner of Landlord, signed the same, and acknowledged to me
that they did so sign said instrument in the name and upon behalf of said
corporation, in its capacity as general partner of Landlord, that the same is
their free act and deed and they were duly authorized thereunto by the
corporation and the partnership.

IN TESTIMONY WHEREOF, I have hereunto subscribed my name, and affixed my
official seal, this 14th day of September, 2000.

                              /s/ Bonnie E. Monocel
                              ---------------------
                              Notary Public
                              My Commission Expires:
Tenant:
------

STATE OF MASSACHUSETTS

COUNTY OF MIDDLESEX

     BEFORE ME, a Notary Public in and for said County, personally appeared John
A. Pino and Jeffrey B. Lavin, known to me to be the person(s) who, as President
and CEO and VP of Finance, respectively, of ACT Manufacturing, Inc., the
corporation which executed the foregoing instrument in its capacity as Tenant,
signed the same, and acknowledged to me that they did so sign said instrument in
the name and upon behalf of said corporation as officers of said corporation,
that the same is their free act and deed as such officers, respectively, and
they were duly authorized thereunto by its board of directors; and that the seal
affixed to said instrument is the corporate seal of said corporation.

IN TESTIMONY WHEREOF, I have hereunto subscribed my name, and affixed my
official seal, this 5th day of September, 2000.

                              /s/ Page A. McCoy
                              -----------------
                              Notary Public
                              My Commission Expires:

                                      35
<PAGE>

                                   EXHIBIT A
                                   ---------

                              PROPERTY DESCRIPTION

STATE OF TEXAS:
COUNTY OF COLLIN:

BEING a tract of land situated in the J.T. McCullough Survey, Abstract No. 633
and the James Ledbetter Survey, Abstract No. 545, City of Plano, Collin County,
Texas, being a portion of that same tract of land (Tract No. 2) as described in
deed to ASG Plano Industrial, Ltd., recorded in County Clerk's File No. 95-
0060322 of the Real Property Records of Collin County, Texas and being more
particularly described as follows:

COMMENCING at a 1" iron rod found at the intersection of the northerly line of
Plano Parkway (Variable width R.O.W. per Cabinet F, Slide 18 and Cabinet F,
Slide 119 of the Plat Records of Collin County, Texas (PRCCT)), with the west
line of Los Rios Boulevard (110' R.O.W. per Cabinet F, Slide 18, PRCCT), same
being the southeast corner of said ASG Plano Industrial, Ltd. Tract No. 2, from
which a 5/8" iron rod found at the intersection of the northerly line of said
Plano Parkway, with the east line of said Los Rios Boulevard bears S 77
(degrees) 42'00" E, 111.62 feet;

THENCE along the northerly line of said Plano Parkway and the south line of said
ASG Plano Industrial, Ltd. Tract No. 2, the following:

    N 77 (degrees) 42'00" W, a distance of 596.70 feet (Deed & Plat 596.80 feet)
    to a 1/2" iron rod with a plastic cap set at the point of a curvature of a
    circular curve to the left, having a radius of 905.00 feet;

    Northwesterly, along said circular curve to the left, through a central
    angle of 12 (degrees) 30'30", an arc distance of 197.57 feet and having a
    chord that bears N 83 (degrees) 57'1 5" W, 197.18 feet to a 1/2" iron rod
    with a plastic cap set at the point of tangency;

    S 89 (degrees) 47'30" W, a distance of 381.57 feet to a 1/2" iron rod with a
    plastic cap set at the POINT OF BEGINNING of the herein described tract of
    land;

    S 89 (degrees) 47'30" W, a distance of 396.00 feet to a cut "x" in concrete
    set previously at an angle point in the north line of said Plano Parkway
    (Per Cabinet K, Slide 362, PRCCT);

THENCE N 00 (degrees) 12'30" W, departing the south line of said ASG Plano
Industrial, Ltd. Tract No. 2, along an offset in the north line of said Plano
Parkway, at a distance of 5.00 feet passing a cut "x" in concrete set previously
at an angle point in the north line of said Plano Parkway and the southeast
corner of Lot 3, Block 1 of Replat of Lots 3 & 4, Block 1, Plano Business Park,
an addition to the City of Plano, Collin County, Texas as recorded in Cabinet L,
Slide 645, PRCCT, departing the north line of said Plano Parkway, along the east
line of said Lot 3, at a distance of 400.00 feet passing a 1/2 iron rod set
previously at the northeast corner of said Lot 3 and the easterly most southeast
corner of Replat Lot 2R, Block 1, Plano Business Park, an addition to the City
of Plano, Collin County, Texas as recorded in Cabinet L, Slide 937, PRCCT,
continuing

                                      A-1
<PAGE>

along the east line of said Lot 2R, a total distance of 846.07 feet to a City of
Plano monument set previously in the north line of said ASG Plano Industrial,
Ltd. Tract No.-2 and the southerly line of a 100' Right-of-Way described in deed
to Dallas Area Rapid Transit Property Acquisition Corporation (D.A.R.T.) as
recorded in Volume 3424, Page 126 of the Deed Records, Collin County, Texas, at
the northeast corner of said Lot 2R, from which a 1" iron rod found at the
intersection of the southerly line of said D.A.R.T. tract, with the east line of
Shiloh Road (140 R.O.W. per Cabinet F, Slide 18, PRCCT) bears N 79 (degrees)
32'43" W, 1474.68 feet;

 THENCE S 79 (degrees) 32'43" E, along the southerly line of said D.A.R.T. tract
 and the north line of said ASG Plano Industrial, Ltd. Tract No. 2, a distance
 of 402.96 feet to a 1/2" iron rod with a plastic cap set at the northeast
 corner of the herein described tract of -land, from which a I" iron rod found
 at the intersection of the south line of said D.A.R.T. tract, with the east
 line of said Los Rios Boulevard bears S 79 (degrees) 32'43" E, 1323.39 feet;

 THENCE S 00 (degrees) 12'30" E, departing the south line of said D.A.R.T.
 tract, traversing said ASG Plano Industrial, Ltd. Tract No. 2, parallel to and
 396.00 feet east of the east line of said Lot 2R, Block 1 and Lot 3, Block 1, a
 distance of 771.51 feet to the POINT OF BEGINNING and containing 320,281 square
 feet or 7.353 acres of land.

                                      A-2
<PAGE>

                                 Exhibit "A-1"
                                  [Site Plan]
<PAGE>

                                 Exhibit "A-2"
                                  [Floor Plan]
<PAGE>

                                 Exhibit "A-3"
                                [Elevation Plan]
<PAGE>

                                   EXHIBIT B
                             Permitted Encumbrances


 Easement granted by The Southwestern Town Lot Corporation to City of Plano,
 dated March 20, 1978, filed for record on May 3, 1978 and recorded in Volume
 1107, Page 312, Deed Records, Collin County, Texas as shown on survey dated
 July 20, 2000, prepared by Goodwin And Marshall, Inc.  (Affects Tracts 1 and 2)

 Terms, provisions, easements and conditions contained in Reciprocal Driveway
 Easement executed by and between Industrial Development International (Texas)
 L.P. and ASG Plano Industrial, Ltd., a Texas limited partnership, dated June 2,
 1997, filed for record on June 4, 1997 and recorded in Volume 3925, Page 652,-
 Land Records, Collin County, Texas. (Affects Tract 1)

 Easement granted by ASG Plano Industrial, Ltd., a Texas limited partnership to
 City of Plano, dated May 30, 1997, filed for record on June 4, 1997 and
 recorded in Volume 3925, Page 630, Land Records, Collin County, Texas. (Affects
 Tract 1)

 Easement granted by ASG Plano Industrial, Ltd., a Texas limited partnership to
 City of Plano, dated May 30, 1997, filed for record on June 4, 1997 and
 recorded in Volume 3925, Page 638, Land Records, Collin County, Texas. (Affects
 Tract 1)

 Easement granted by ASG Plano Industrial, Ltd., a Texas limited partnership to
 City of Plano, dated May 30, 1997, filed for record on June 4, 1997 and
 recorded in Volume 3925, Page 645, Land Records, Collin County, Texas. (Affects
 Tract 1)

 Terms, provisions, easements and conditions contained in Easement Agreement
 executed by and between Industrial Developments International L.P. and Cabot
 industrial Properties, L.P., dated December 9, 1999, filed for record on
 December 9, 1999 and recorded in Volume 4559, Page 1402, Land Records, Collin
 County, Texas. (Affects Tract 1)

All of the oil, gas and other minerals and all other elements not considered a
part of the surface estate are excepted herefrom, not insured herein nor
guaranteed hereunder, all having been reserved in instrument recorded in Volume
1322, Page 377, Deed Records, Collin County, Texas. (Affects Tract 1 and 2)

                                      B-1
<PAGE>

                                   EXHIBIT C
                                   ---------

                             RULES AND REGULATIONS

These Rules and Regulations have been adopted by Landlord for the mutual benefit
and protection of all the tenants of Buildings in the Project in order to insure
the safety, care and cleanliness of the Project and the preservation of order
therein.

     1.  The sidewalks, entrances, passages, corridors or halls shall not be
obstructed or used for any purpose other than ingress and egress.  Except to
comply with Tenant's maintenance and repair obligations set forth in the Lease,
no tenant and no employees of any tenant shall go upon the roof of any Building
without the consent of Landlord.

     2.  No awnings or other projections shall be attached to the outside walls
of any Building.

     3.  The washroom partitions, mirrors, washbasins and other plumbing
fixtures shall not be used for any purpose other than those for which they were
constructed, and no sweepings, rubbish, rags or other substances, including
Hazardous Substances shall be thrown therein.

     4.  No tenant shall cause or permit any objectionable or offensive odors to
be emitted from any Building, other than odors which are customary in connection
with the Permitted Use, and then only to the extent the same are in compliance
with all applicable laws.

     5.  No Building, or any portion thereof, shall be used for lodging or
sleeping or for any immoral or illegal purposes.

     6.  No tenant of any Building shall make, or permit to be made any unseemly
or disturbing noises, sounds or vibrations or disturb or interfere with tenants
of this or neighboring buildings or premises or those having business with them.

     7.  Each tenant must, upon the termination of this tenancy, restore to the
Landlord all keys of stores, offices, and rooms, either furnished to, or
otherwise procured by, such tenant, and in the event of the loss of any keys so
furnished, such tenant shall pay to the Landlord the cost of replacing the same
or of changing the lock or locks opened by such lost key if Landlord shall deem
it necessary to make such change.

     8.  If any tenant shall employ one or more persons to do janitorial or
other similar work in its demised premises, that tenant shall, while such
persons are outside the Demised Premises, follow such directions as the manager
of the Building may prescribe with respect to the control of such persons, and
such tenant shall be responsible for all acts of such persons.

     9.  Canvassing, soliciting and peddling in the Project are prohibited and
each tenant shall cooperate to prevent such activity.

                                      C-1
<PAGE>

     10.  Landlord will direct electricians as to where and how telephone or
telegraph wires are to be introduced.  Except for alterations which are
otherwise permitted under the Lease without Landlord's consent, no boring or
cutting for wires or stringing of wires will be allowed without written consent
of Landlord.  The location of telephones, call boxes and other office equipment
affixed to any portion of any building within the Project shall be subject to
the approval of Landlord.

     11.  Parking spaces associated with any Building are intended for the
exclusive use of passenger automobiles.  Except for intermittent deliveries, no
vehicles other than passenger automobiles may be parked in a parking space
without the express ,written permission of Landlord.  Trucks and tractor
trailers may only be parked at designated areas of the Building.  Trucks and
tractor trailers shall not block access to the Building.

     12.  No tenant shall use any area of the Project for storage purposes other
than the interior of its Demised Premises.

                                      C-2
<PAGE>

                                   EXHIBIT D
                              PROTECTIVE COVENANTS

     That certain Declaration of Protective Covenants, Agreements, Easements,
Charges and Liens for Plano Business Park dated May 24, 1999 and recorded in
Volume 4426, Page 1803, Deed Records, Collin County, Texas, as amended

                                      D-1
<PAGE>

                                   EXHIBIT E
                              SPECIAL STIPULATIONS

     The Special Stipulations set forth herein are hereby incorporated into the
body of the lease to which these Special Stipulations are attached (the
"Lease"), and to the extent of any conflict between these Special Stipulations
and the preceding language, these Special Stipulations shall govern and control.

     1.  Construction of Demised Premises.

          (a) Notwithstanding the provisions of Section 18 of this Lease,
     Landlord shall be responsible for the cost of the construction of the
     interior improvements within the Demised Premises only up to an amount
     equal to $2,000,000.00 (the "Tenant Allowance").  Upon substantial
     completion of said interior improvements, Landlord shall deliver to Tenant
     a bill for all amounts in excess of the Tenant Allowance.  Tenant agrees to
     pay such bill in fall. to Landlord within thirty (30) calendar days
     following receipt of such bill.

          (b) For purposes of this Special Stipulation, the cost of the
     construction of said interior improvements shall be deemed to include, but
     not be limited to, the cost of the Plans and Specifications, permits and
     all tenant buildout, including, without limitation, demising walls,
     utilities, and the heating, ventilating and air conditioning system;
     provided however that Landlord agrees that the first $ 1 0,000.00 spent on
     architectural and construction plans and drawings shall be at Landlord's
     sole cost and expense and shall not be included within the cost of
     construction of the interior improvements for purposes of the Tenant
     Allowance.

          (c) Nothing contained herein shall relieve Landlord of its obligation
     to construct the shell Building, in accordance with agreed upon Plans and
     Specifications, at Landlord's sole cost and expense and not as a component
     of the Tenant Allowance.

          (d) Within thirty (30) calendar days after Substantial Completion of
     the Building, either party may have the Building measured by an architect
     using accepted BOMA Standards, based on a "drip-line" measurement from the
     outside of the exterior walls of the Building.  The architect is subject to
     the other party's prior approval, which approval will not be unreasonably
     withheld or delayed.  The square footage so certified by such architect
     shall conclusively determine the Building Square Footage for all purposes
     under this Lease.  If the Building Square Footage is less than the amount
     set forth in Section I (b) of the Lease by more than 300 square feet, the
     Annual Base Rent and Monthly Base Rent Installments shall be adjusted
     downwards on the basis of the square footage of the Building so certified
     by such architect, using the annual rental rates per square foot of $8.36
     per square foot during Lease Years I through 5 and $9.62 per square foot
     during Lease Years 6 through 10.  If neither party elects to have the
     Demised Premises and Building measured in accordance with this paragraph,
     then the square footage of the Building shall be deemed to be as set forth
     in Section I (b) of the Lease.
                                      E-1
<PAGE>

     2.  Option to Extend Term.

          (a) Landlord hereby grants to Tenant two (2) options to extend the
     Term for a period of five (5) years, each such option to be exercised by
     Tenant giving written notice of its exercise to Landlord in the manner
     provided in this Lease at least one hundred eighty (I 80) days prior to
     (but not more than two hundred ten (2 1 0) days prior to) the expiration of
     the Term, as it may have been previously extended.  No extension option may
     be exercised by Tenant if an Event of Default has occurred and is then
     continuing or any facts or circumstances then exist which, with the giving
     of notice or the passage of time, or both, would constitute an Event of
     Default either at the time of exercise of the option or at the time the
     applicable Term would otherwise have expired if the applicable option had
     not been exercised.

          (b) If Tenant exercises its options to extend the Term, Landlord
     shall, within thirty (30) days after the receipt of Tenants notice of
     exercise, notify Tenant in writing of Landlord's reasonable determination
     of the Base Rent for the Demised Premises, which amount shall be based on
     (i) ninety-five percent (95%) of the market rate for such space (with
     respect to the first five (5) year option), and (ii) one hundred percent
     (100%) of the market rate for such space (with respect to the second five
     (5) year option).  Tenant shall have thirty (30) days from its receipt of
     Landlord's notice to notify Landlord in writing that Tenant does not agree
     with Landlord's determination of the Base Rent and that Tenant elects to
     determine the Prevailing Market Rate (as defined and calculated below).  If
     Tenant does not notify Landlord of such election within thirty (30) days of
     its receipt of Landlord's notice, Base Rent for the Demised Premises for
     the applicable extended term shall be the Base Rent set forth in Landlord's
     notice to Tenant.  The phrase "Prevailing Market Rate" shall mean ninety-
     five percent (95%) of the then prevailing market rate for base minimum
     rental calculated on a per square foot basis for leases covering buildings
     comparable to the Building (as adjusted for any variances between such
     buildings and t ` he Building) located in the area of Collin County, Texas
     (hereinafter referred to as the "Market Area").  The Prevailing Market Rate
     shall be determined by an appraisal procedure as follows:

          In the event that Tenant notifies Landlord that Tenant disagrees with
          Landlord's determination of the market rate and that Tenant elects to
          determine the Prevailing Market Rate, then Tenant shall specify, in
          such notice to Landlord, Tenant's selection of a real estate appraiser
          who shall act on Tenant's behalf in determining the Prevailing Market
          Rate.  Within twenty (20) days after Landlord's receipt of Tenant's
          selection of a real estate appraiser, Landlord, by written notice to
          Tenant, shall designate a real estate appraiser, who shall act on
          Landlord's behalf in the determination of the Prevailing Market Rate.
          Within twenty (20) days of the selection of Landlord's appraiser, the
          two (2) appraisers shall render a joint written determination of the
          Prevailing Market Rate, which determination shall take into
          consideration any differences between the Building and those buildings
          comparable to the Building located in the Market Area, including
          without limitation age, location, setting and type of building.  If
          the two (2) appraisers are unable to agree upon a joint written
          determination within said twenty (20) day period, the two appraisers
          shall select a third appraiser within such twenty (20) day

                                      E-2
<PAGE>

          period. Within twenty (20) days after the appointment of the third
          appraiser, the third appraiser shall render a written determination of
          the Prevailing Market Rate by selecting, without change, the
          determination of one (1) of the original appraisers as to the
          Prevailing Market Rate and such determination shall be final,
          conclusive and binding. All appraisers selected in accordance with
          this subparagraph shall have at least ten (10) years prior experience
          in the commercial leasing market of the Market Area and shall be
          members of the American Institute of Real Estate Appraisers or similar
          professional organization. If either Landlord or Tenant fails or
          refuses to select an appraiser, the other appraiser shall alone
          determine the Prevailing Market Rate. Landlord and Tenant agree that
          they shall be bound by the determination of Prevailing Market Rate
          pursuant to this paragraph. Landlord shall bear the fee and expenses
          of its appraiser; Tenant shall bear the fee and expenses of its
          appraiser; and Landlord and Tenant shall share equally the fee and
          expenses of the third appraiser, if any.

          (c) Except for the Base Rent, which shall be determined as set forth
     in subparagraph (b) above, leasing of the Demised Premises by Tenant for
     the applicable extended term shall be subject to all of the same terms and
     conditions set forth in this Lease, including Tenant's obligation to pay
     Additional Rent as provided in this Lease; provided, however, that any
     improvement allowances, rent abatements or other concessions applicable to
     the Demised Premises during the initial Term shall not be applicable during
     any such extended term, nor shall Tenant have any additional extension
     options unless expressly provided for in this Lease.  Landlord and Tenant
     shall enter into an amendment to this Lease to evidence Tenant's exercise
     of its renewal option.

     3.  Lease Contingency.  This Lease, and all obligations of Landlord and
Tenant hereunder, are made expressly contingent on Landlord acquiring fee simple
title to the Land on or before the date which is thirteen (13) business days
following the date Landlord (or its legal counsel) receives original
counterparts of the Lease as executed by Tenant.  Landlord and Tenant
acknowledge that Landlord is currently under contract to purchase the Land from
ASG Plano Industrial, Ltd., the current record title holder thereof ("Seller").
Landlord represents and warrants to Tenant that Landlord's obligations to
purchase the Land from Seller are not subject to any specific contingency
related to Landlord's ability to obtain financing for the acquisition of the
Land.  Landlord agrees that simultaneously with its execution of the Lease,
Landlord will deliver to Seller notice of Landlord's intent and desire to close
on the acquisition of the Land as soon as possible, in the time prescribed by
the terms of the contract between Landlord and Seller.  In the event that
Landlord, for whatever reason, does not acquire fee simple title to the Land on
or before the date set forth above, then, (i) Landlord will promptly notify
Tenant thereof and (ii) at either Landlord's or Tenant's option, this Lease will
terminate and be of no further force or effect except for any obligations which,
by the terms hereof, expressly survive any such termination.

     4.  Environmental Matters.  If and only if Tenant complies with all of the
following conditions and with Section 17 of this Lease, Tenant may use and store
the substances in the Demised Premises of the type and in the quantities
described on Exhibit E-1 attached hereto:

                                      E-3
<PAGE>

(i) Tenant uses and stores all such substances in accordance with all applicable
Environmental Laws; (ii) Tenant obtains all necessary permits and uses and
stores such substances in compliance with those permits; (iii) Tenant uses and
stores all such substances in accordance with the Materials Safety Data Sheets
("MSDS Sheets") which Tenant has provided to Landlord, (iv) Tenant does not use
or store any of such substances (or any other substances) in a manner that would
cause the Demised Premises to become subject to regulation as a hazardous waste
treatment, storage or disposal facility under RCRA or the regulations
promulgated thereunder; and (v) Tenant shall not use or store such substances
(or any other substances) in a manner as to cause Tenant to become regulated as
a generator under RCRA other than as a Conditionally Exempt Small Quantity
Generator as defined by RCRA. "Conditionally Exempt Small Quantity Generator"
shall mean the current RCRA definition of a generator of not more than 100 kg.
of hazardous wastes per month. For purposes of this weight limitation item only,
"hazardous wastes" means only those materials defined as "hazardous wastes" upon
the effective date of this Lease.

                                      E-4
<PAGE>

                                  EXHIBIT E-1

                                 SMT CHEMICALS


The following items are the chemicals that will be predominately used in the SMT
process.  The brief explanation with each chemical is based on equipment and
processes that are planned to be in use.

     -  Solder ( Raw Bar Stock)     SEE MSDS 822 rev 08/03/93
        ------

     The raw bar solder is to be used in the wave solder application- Small
     amounts of solder dross will accumulate on top of the wave.  This dross
     will be removed about twice per shift, Precautions will be put in place to
     ensure dross is handled properly.  The dross is fully recyclable via the
     solder vendor selected.

          (No hazards associated when following proper procedures)

     -  Solder Paste                SEE MSDS 637 rev 04/29/94
        ------------

     The solder paste will be the most widely used chemical in the SMT area.
     It's a Formulation of tiny solder spheres and flux held together with a
     binding agent.  Most of the solder paste will be reflowed leaving behind
     flux compounds.  These flux residues will be washed off by the aqueous
     cleaning system.  The aqueous cleaning system is closed looped, ( the water
     used will be recycled) and not sent to drain.  The flux compounds will be
     captured in a series of carbon and resin beds.  When the beds become
     saturated they will be sent to an approved vendor for regeneration.

     The solder paste that is not reflowed (miss printed boards and solder
     stencils) will be washed off with the stencil cleaner.  The stencil cleaner
     in mind uses D.I. water and a mild detergent in conjunction with
     ultrasonics.  The stencil cleaner effectively cleans until the point where
     the solution becomes saturated with pastes.  At the point of saturation the
     waste water is pumped to an evaporator, which is part of the entire stencil
     cleaner system.  The water is evaporated off and the remaining waste can be
     handled as hazardous waste or, may possibly be recycled.

          (No hazards associated when following proper procedures)

     -  Flux  SEE MSDS 354 rev 12/27/90
        ----

    Most of the fluxes used will be a water soluble type that will be cleaned
    off in the closed loop water cleaner.  The highest percentage of flux will
    be sprayed on boards in the wave solder Machine.  The wave is equipped with
    a fire suppression system (CO2 charged) in the extreme case a fire should
    occur.

          (No hazards associated when following proper procedures)

                                      E-1
<PAGE>

     -  Nitrogen                    SEE MSDS AIRCO NITROGEN, GAS

    Some of the equipment used in the SMT area will utilize nitrogen as an
    inerting gas.  A pad outside of the plant will -need to be poured to support
    a tank of approximately 11000 gallons.  The actual tank Size will more than
    likely be in the range of 3000 - 6000 gallons, but the pad size should be
    sized for a larger tank for, upgrading to a larger tank is more cost
    effective than pouring a new pad.  The tank will be installed by a licensed
    team supplied by the nitrogen vendor we choose.  The nitrogen will also need
    to be plumbed from the tank to the equipment.  Safety requirements will need
    to be adhered to ensure that no liquid nitrogen reaches the equipment.  The
    levels of nitrogen are such that it will not asphyxiate personnel.

          (No hazards associated when following proper procedures)


     -  SMT Adhesive                SEE MSDS 874 REV 01/18/95
        ------------

    An adhesive for attaching parts to the bottom side of boards will be used.
    The adhesive has not been selected at this time but, there are no known
    safety issues with many of the adhesives used for this application.

          (No hazards associated when following proper procedures)


                                      E-2
<PAGE>

                                   EXHIBIT F

                            CERTIFICATE OF AUTHORITY
                                  CORPORATION

     The undersigned, Secretary of ACT Manufacturing, Inc., a Delaware
corporation ("Tenant"), hereby certifies as follows to Industrial Developments
International (Texas), L.P., a Georgia limited partnership ("Landlord"), in
connection with Tenant's proposed lease of Building E, at Plano Business Park,
Collin County, Texas (the "Premises"):

     1.  Tenant is duly organized, validly existing and in good standing under
the laws of the State of Delaware, and duly qualified to do business in the
State of Texas.

     2.  That the following named persons, acting individually, are each
authorized and empowered to negotiate and execute, on behalf of Tenant, a lease
of the Premises and that the signature opposite the name of each individual is
an authentic signature:

<TABLE>
<CAPTION>
John A. Pino                                       CEO/President                          /s/ John A. Pino
------------------------------------  ---------------------------------------  ---------------------------------------
<S>                                      <C>                                     <C>
               (name)                                 (title)                                (signature)


------------------------------------  ---------------------------------------  ---------------------------------------
               (name)                                 (title)                                (signature)


------------------------------------  ---------------------------------------  ---------------------------------------
               (name)                                 (title)                                (signature)

</TABLE>
     3.  That the foregoing authority was conferred upon the person(s) named
above by the Board of Directors of Tenant, at a duly convened meeting held
September 5, 2000.


                                                  /s/ Jeffrey B. Lavin
                                                  --------------------
                                                  Secretary

                                                       [CORPORATE SEAL]

                                      F-1
<PAGE>

                                   EXHIBIT G
                                   ---------


                     INDUSTRIAL DEVELOPMENTS INTERNATIONAL
                                SOUTHWEST REGION
                                SIGNAGE CRITERIA
                                ----------------

All signs, including temporary signs, must be approved in writing by the
Landlord prior to installation. The location, size, color and construction of
signs will be in keeping with the character of IDI' Southwest region. Unless
otherwise approved in writing by the Landlord, only one (1) sign shall be
permitted for each occupant. Except as set forth in subsection c below, only
signs identifying the occupant shall be permitted. All signs must be either
attached to the building or ground mounted and adhere to the following
guidelines:

a.  Building Mounted Signs:

(1)  Shall be installed by Landlord, at the expense of Tenant, so as to be
     parallel to and contiguous with the building wall.

(2)  Shall not project more than ten (10) inches from the building wall.

(3)  Shall have a maximum mounting height equal to three-fourths (3/4) the
     height of the building surface on which it is placed or as designated by
     Landlord.

(4)  Shall have all capital letters constructed as separate pieces of individual
     construction.

(5)  The maximum height of each letter shall be 24" on a single line sign and
     18" maximum on a double line sign.

(6)  Shah be a design and material compatible with the building design and
     materials. The lettering color and material at your project, shall be of a
     matte finished black plex. face, or color approved by Landlord.

(7)  A logo sign and/or a sign identifying products or services shall be allowed
     on the door or on the storefront glass panel adjacent to the door. Such
     logo and lettering shall be of vinyl construction and not cover more than
     25% of the door or adjacent glass panel. These signs must be approved in
     writing by Landlord prior to installation,

b.   Ground Mounted Signs:

(1)  Shall not be closer than ten (10) feet from any property line.

(2)  Shall not be closer than three (3) feet from a driveway or parking area.

(3)  Shall not have a gross surface area of more than forty (40) square feet.


                                      G-1
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.53
<SEQUENCE>4
<FILENAME>dex1053.txt
<DESCRIPTION>LEASE DATED MARCH 2000
<TEXT>

<PAGE>

                                                                   Exhibit 10.53


           TRANSLATION. ONLY FOR REFERENTIAL/INFORMATIONAL PURPOSES.
                         FROM FINAL, EXECUTED VERSION.

                                LEASE AGREEMENT

                                    BETWEEN

          FRACCIONADORA DINAMICA DEL PACIFICO S.A. DE C.V., Landlord

                                      AND

                CMC INDUSTRIAS HERMOSILLO S.A. DE C.V., Tenant


                               Premises Address:
                               -----------------

                   Carretera Internacional Hermosillo-Nogales
                   Kilometer 8.7, Hermosillo, Sonora, Mexico






                                  Page 1 of 30
<PAGE>

                                LEASE AGREEMENT
                                ---------------

                     Industrial/Warehouse - Single Tenant
                  [Carretera Internacional Hermosillo-Nogales
                  Kilometer 8.7, Hermosillo, Sonora, Mexico]

     THIS LEASE AGREEMENT (THIS "LEASE") is made as of this 15th day of March
of 2001, by and between FRACCIONADORA DINAMICA DEL PACIFICO S.A. DE C.V.
(hereinafter "LANDLORD"), a Mexican commercial corporation, having a principal
place of business in Hermosillo, Sonora, Mexico, and  represented herein by
Jose Maria Aguirre Ramos in his capacity as its legal representative, and
CMC INDUSTRIAS HERMOSILLO S.A. DE C.V. (hereinafter "TENANT"), a Mexican
commercial corporation, having a principal place of business in Hermosillo,
Sonora, Mexico, and represented herein by Simon Perez Gonzalez as its legal
representative.

                           W  I  T  N  E  S  E  T  H:

A.  Landlord hereby states, represents and warrants that:

    (a)  Landlord is a Mexican commercial corporation, duly incorporated and
         existing as a "sociedad anonima de capital variable" pursuant to
         applicable Mexican laws.

    (b)  As evidenced in EXHIBIT C executed by the Land Owners, Landlord has
         proper and sufficient legal right and authority to grant to Tenant the
         use and possession of the Premises for the term, pursuant to the terms
         of this lease agreement.

    (c)  The Premises will have, no later than at the Commencement Date or
         within 90 (ninety) calendar days after the Commencement Date, an
         authorized zoning designation and a land use license that shall allow
         light o low impactindustrial use (as may be applicable to the
         industrial activities of manufacture of electronic components that the
         Tenant intends to carry out at the Building and of which Landlord is
         fully aware)in accordance with the city plan of the municipality of
         Hermosillo, State of Sonora, Mexico ("Programa Municipal de Desarrollo
         Urbano del Centro de Poblacion de Hermosillo, Actualizacion 2000").

    (d)  Landlord wishes to grant to Tenant the temporary use and possession of
         the Premises pursuant to the terms and conditions contained herein.

    (e)  Landlord has the necessary authority to execute this Lease. Said
         authority has not been limited or revoked in any manner whatsoever.

                                 Page 2 of 30
<PAGE>

B.  Tenant hereby states, represents and warrants that:

    (a)  Tenant is Mexican commercial corporation, duly incorporated and
         existing as a "sociedad anonima de capital variable" pursuant to
         applicable Mexican laws.

    (b)  Tenant wishes to accept from Landlord the use and possession of the
         Premises for the terms and conditions contained herein.

    (c)  Tenant has the necessary authority to execute this Lease. Said
         authority has not been limited or revoked in any manner whatsoever.

C.  Both parties state that this Lease is being executed free from any and all
    consensual defects.

For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto,  for themselves, their heirs,
executors, administrators, legal representative, successors and assigns, hereby
covenant and agree as follows:

                                C L A U S E S :

1.  DEFINITIONS.  The following terms shall have the meanings set forth below.

"Base Rent" shall mean the base rent payable by Tenant during the Term, as
     follows (amounts set forth below are in currency of the United States of
     America):

<TABLE>
<CAPTION>
                                                    PAYMENTS    MONTHLY/PER
DATES                                 ANNUAL        MONTHLY     SQUARE FOOT
-----                                 ------        -------     -----------
<S>                                  <C>           <C>           <C>
Years one (1) through five(5)        $823,938      $68,661.50      $0.53
                                      -------      ----------      -----
Years six (6) through seven (7)      $917,214      $76,434.50      $0.59
                                     --------      ----------      -----
</TABLE>

"Building" shall mean that certain building and other improvements [to be
     constructed by Landlord at the Land in  accordance with this Lease],
     having a street address of Carretera Internacional Hermosillo-Nogales,
     Kilometer 8.7, Hermosillo, Sonora, Mexico and [to contain/containing]
     approximately 129,550  square feet.

"Commencement Date"  shall mean the date of Substantial Completion. Landlord and
     Tenant shall confirm the Commencement Date, Expiration Date and Term in
     writing (in the form of EXHIBIT B attached hereto) immediately upon the
     determination thereof.

                                  Page 3 of 30
<PAGE>

"Expiration Date" shall mean  the last day of the calendar month in which the
     seventh anniversary of the Commencement Date occurs; provided, however,
     that if the Commencement Date occurs on the first day of a calendar month,
     the Expiration Date shall be the last day of the calendar month immediately
     preceding the calendar month in which the seventh  anniversary of the
     Commencement Date occurs.

"Guarantor"  shall mean ACT Manufacturing, Inc.

"Guaranty" shall mean the guaranty of Tenant's obligations under this Lease
     executed and delivered by Guarantor simultaneously with the execution and
     delivery of this Lease, which guaranty is in the form of EXHIBIT D attached
     hereto.

"Land" shall mean that certain real property on which the Building is or will be
     situated, located in the City of Hermosillo and State of Sonora, the area,
     measures, and boundaries of which are shown in the plan that is attached
     hereto as EXHIBIT A. The Land Owners' title over the Land is evidenced in
     public instrument number 51,408, volume 1,412, executed before Carlos
     Cabrera Fernandez, Esq., notary public number eleven commissioned in
     Hermosillo, Sonora, and registered with the Public Registry of Property and
     Commerce of said place under number 227,471, volume 1,558, real estate
     Clause, book one, on September 11, 1997.

"Land Owners"  shall mean Mrs. Yolanda del Carmen Soto Cubillas and Mrs.
     Patricia de Fatima Garcia Martinez, who are the legal owners of the Land.

"Laws" shall mean all applicable laws, statutes, codes, orders and regulations
     and with any related directive, and with all rules, orders, regulations or
     requirements of any board of fire underwriters or any other similar body
     with respect to the Premises or the use or occupancy thereof.

"Licencia de Uso de Suelo" shall mean the land use license that Landlord hereby
     undertakes to apply for and obtain, at its sole expense, no later than at
     the Commencement Date or within 90 (ninety) calendar days after the
     Commencement Date as provided in Section 5 paragraph (I), which license
     shall allow light o low impact industrial use (as may be applicable to the
     industrial activities of manufacture of electronic components that the
     Tenant intends to carry out at the Building and of which Landlord is fully
     aware) in accordance with the city plan of the municipality of Hermosillo,
     State of Sonora, Mexico ("Programa Municipal de Desarrollo Urbano del
     Centro de Poblacion de Hermosillo, Actualizacion 2000").

"Plant" shall mean the portion of the Building that will be used by Tenant for
     the installation and operation of its production lines, warehouses, and
     shipping and receiving areas for materials and products, as shown in
     EXHIBIT "F" hereto.

                                  Page 4 of 30
<PAGE>

"Offices" shall mean the portions of the Building other than the Plant, as shown
     in Exhibit "F" hereto.

"Parking Spaces" shall mean the parking spaces included at the Premise's parking
     facility.

"Permitted Uses" shall mean non-contaminating manufacturing, warehouse and
     office uses to the extent same are permitted under the "Licensia de Uso de
     Suelo".

"Premises" shall mean, collectively, the Land, the Building, and any other
     building or improvements now or hereafter constructed on the Land.

"Rent Payment Account" shall mean the account number 0631581022, ABA 091000019,
     in the name of Fraccionadora Dinamica del Pacifico S.A. de C.V., maintained
     with Wells Fargo Bank, branch number 1255, in Nogales, Arizona, United
     States of America. Tenant shall pay rent by means of wire or intra or
     inter-bank transfer of funds within the Mexican banking system or check
     drawn on an account in a Mexican bank.

"Substantial Completion of the Plant" shall mean that (with the exception of
     punch-list items which at Tenant's sole discretion would not prevent the
     use or occupancy by Tenant of the Plant  for the Permitted Uses, as
     contemplated in Clause five (5) paragraphs (C) and (E)]) the following
     three conditions have been met: (i) The work to be performed by Landlord in
     accordance with Clause five (5), as far as the Plant is concerned and as
     contemplated in such Clause, has been completed at Tenant's satisfaction;
     (ii) the Tenant  has full use and access to the Plant s;  and (iii) the
     Landlord has obtained a certificate from Landlord's architect specifying
     the Landlord's work at the Plant has been completed in accordance with the
     drawings and specifications as defined in Clause 5(A).

"Substantial Completion of the Offices" shall mean that [with the exception of
     punch-list items which at Tenant's sole discretion would not prevent the
     use or occupancy by Tenant of the Offices  for the Permitted Uses, as
     contemplated in Clause five (5) paragraph (G)] the following three
     conditions have been met: (i) The work to be performed by Landlord in
     accordance with Clause five (5), as far as the Offices is concerned and as
     contemplated in such Clause five (5) paragraphs (C) and (G), has been
     completed at Tenant's satisfaction;  (ii) the Tenant  has full use and
     access to the Offices;  and (iii) the Landlord has obtained a certificate
     from Landlord's architect specifying the Landlord's work at the Offices has
     been completed in accordance with the drawings and specifications as
     defined in Clause 5(A).

"Term" shall mean the period commencing on the Commencement Date and ending on
     the Expiration Date, being approximately seven (7) years.

                                 Page 5 of 30
<PAGE>

2.  PREMISES AND TERM.

Premises and Term.   Subject to the terms, covenants and conditions contained in
this Lease, Landlord hereby grants to Tenant the use and possession of the
Premises for the Term and Tenant hereby accepts same for the Term.  The Premises
shall be used and occupied by Tenant solely for the Permitted Uses and for no
other purpose without Landlord's prior written consent.  If Tenant takes
possession or enters into occupancy of the Premises prior to the Commencement
Date, such possession or occupancy shall be pursuant to all the terms, covenants
and conditions of this Lease.  The Premises is demised subject to (a) the
existing state of title as of the commencement of the Term, (b) any state of
facts which an accurate survey or physical inspection thereof might show, and
(c) all zoning regulations, restrictions, rules and ordinances, building
restrictions and other laws and regulations now in effect or hereafter adopted
by any governmental authority having jurisdiction.  Landlord has not made, does
not make, and has not authorized anyone else to make any representation as to
the present or future physical condition, operation, or any other matter or
thing pertaining to the Premises except as expressly set forth herein.

3. BASE RENT.

Tenant shall deposit monthly installments of Base Rent, along with applicable
value added tax, directly into the Rent Payment Account or at such other place
designated by Landlord by written notice given to Tenant to that effect,
monthly, in advance, on the first day of each calendar month during the Term,
without notice or demand and without any setoff, abatement or counterclaim,
unless otherwise provided hereunder.  Deposits of rent will be made by Tenant
directly into the Rent Payment Account by, at the election of Tenant, wire
transfer or intra-or inter-bank transfer of funds within the Mexican banking
system or by check drawn on an account in a Mexican bank.  Landlord agrees to
deliver  to Tenant monthly rental invoices which shall comply with all
applicable legal and tax requirements and include a breakdown of the value added
tax.  Said rental invoices shall be issued and delivered on the date rent is
paid and shall contain the amount of rent paid in Dollars of the United States
of America.  If the Commencement Date does not occur on the first day of a
calendar month or if the Term does not expire or terminate on the last day of a
calendar month, rent payable hereunder shall be prorated for such partial month
on the basis of a thirty (30) day month.  In addition to all other rights and
remedies provided Landlord, all amounts payable hereunder which remain unpaid
for five (5) days after their respective due dates shall bear interest from the
date that the same became due and payable to and including the date of payment,
whether or not demand is made therefor, at the rate of twelve percent (12%) per
annum.

4.  TAXES AND UTILITIES; NET LEASE.

(A)  Taxes.  Tenant covenants to reimburse Landlord the legally determined
     amount of property tax ("impuesto predial") applicable to the Premises
     during the Term.

                                 Page 6 of 30
<PAGE>

(B)  Utilities.  Tenant shall directly contract for all utilities of every type
     and nature required by it in its use of the Premises and shall pay or cause
     to be paid, when due, all bills for water, sewerage, heat, gas, electricity
     and other utilities, if any, used on, in connection with, or chargeable
     against the Premises directly to the appropriate provider.  Tenant shall
     pay all deposits, substation contribution fees and connection fees with
     respect to the delivery of utilities to the Premises.

(C)  Net Lease.   It is the purpose and intent of Landlord and Tenant that the
     rent payable hereunder shall be absolutely net to Landlord so that this
     Lease shall yield, net to Landlord, the rent specified herein in each year
     during the Term.  To the extent applicable, value added tax will be paid by
     Tenant on all Landlord reimbursements required to be paid hereunder, as
     indicated in the applicable invoice from Landlord to Tenant.

5.  LANDLORD'S WORK.

(A)  Attached hereto as EXHIBIT E are plans and outline specifications
including, without limitation, working drawings, construction drawings, and
electrical, mechanical and plumbing drawings necessary to construct the Building
(collectively, the "Drawings and Specifications" which Landlord and Tenants have
approved.

(B)  Changes to the Drawings and Specifications shall only be made by written
change orders ("Change Order(s)") signed by Landlord and Tenant.  In the event
Tenant wishes to make changes to the Drawings and Specifications, Tenant shall
submit a written request to Landlord stating with specificity the requested
modifications. Tenant will pay for any increase in Landlord's cost of
construction as well as any additional costs incurred in revising the Drawings
and Specifications on account of such requested modification.  Landlord shall l
provide to Tenant, within ten (10) days from the date on which Landlord receives
the respective change request from Tenant, a good faith estimate of any such
additional costs and of the delay (the "Modifications Delay(s)"), if any, to be
caused by the requested change, and after receiving such estimate, Tenant shall
have the right to decline to proceed with such modifications by notice given
within three (3) days after receipt of such estimate (with Tenant obligated to
pay, within five (5) business days after receipt of an invoice, the reasonable
costs incurred by or on behalf of Landlord in preparing such estimate).  If
Tenant accepts to proceed with the requested modifications after having reviewed
the Landlord's aforesaid estimate, it shall so notify it to Landlord in writing
within three (3) days after receipt of such estimate, and Landlord shall be
obligated to make the requested modifications.  Any Modification Delay will not
extend the Commencement Date, unless the parties expressly agree otherwise in
the applicable Change Order.

(C)  Landlord shall, at its sole cost and expense, construct or cause the
construction of the Building in strict accordance with the Drawings and
Specifications, in a good and workmanlike manner, in compliance with all
applicable laws, codes, ordinances and

                                 Page 7 of 30
<PAGE>

regulations, and shall cause (i) Pre-Completion of the Plant by February 28th,
2001 (two thousand and one), (ii) Substantial Completion of the Plant no later
than on March 15th, 2001 (two thousand and one), and (iii) Substantial
Completion of the Offices no later than on June 15th, 2001 (two thousand and
one). The dates of Pre-Completion and the Substantial Completion Date will each
be subject to extension, on a day for day basis, for the period of any
Modification Delays . The Commencement Date will not be delayed on account of
any delay in Substantial Completion attributable to any negligence or willful
misconduct of Tenant or any agent, contractor or representative of Tenant.

(D)  "Pre-Completion of the Plant" shall mean that the Plant is sufficiently
complete for Tenant to install at the Plant Tenant's fixtures, machinery and
equipment. From and after the date of Pre-Completion of the Plant, upon
reasonable prior notice to Landlord (for construction scheduling purposes),
Tenant shall be permitted access to the Plant for such installations. It is
expressly understood and acknowledged by the parties that such access will be
subject to all of terms and conditions of this Lease on the part of Tenant to be
performed or observed except that (i) rent shall not be payable during such
period and (ii) Landlord's indemnification obligations under Clause 11 shall not
be in force during such period.

(E)  On March 15th, 2001 (two thousand and one), Tenant shall meet with Landlord
to inspect the work at the Plant and determine whether or not Substantial
Termination of the Plant has taken place. Within five (5) days after Tenant's
inspection of the work, and provided any incomplete items are such that at
Tenant's sole discretion do not prevent Tenant from using or occupying the Plant
for the Permitted Uses, Tenant shall (i) submit to Landlord a punch-list
("Punch-list of the Plant") of incomplete items whose lack of completion do not
prevent Tenant from using or occupying the Plant for the Permitted Uses, and
(ii) take possession of the Plant. Landlord shall complete at its sole cost and
expense such punch-list items within 60 (sixty) days after receipt of the Punch-
List. Tenant's possession of the Plant shall be effective for the purposes of
this Agreement upon Tenant's written acceptance and acknowledgement, made within
the aforesaid five-day period, that the Plant is in the condition required by
the Drawings and Specifications, except as to incomplete items as set forth on
the Punch-list of the Plant. Said acceptance and acknowledgement shall be
evidenced by the execution of EXHIBIT "B".

(F)  If from the inspection referred to in the immediately preceding paragraph
(E) of this Clause it turns out that the incomplete items are such that at
Tenant's sole discretion do prevent Tenant from using or occupying the Plant for
the Permitted Uses, Tenant shall indicate to the Landlord, in writing, what the
incomplete items are and shall grant to Landlord 15 (fifteen) additional
calendar days beginning on March 15th, 2001 (two thousand and one) for Landlord
to complete or correct said items, as the case may be, in the shortest time
possible within the granted extension and making to that effect its best efforts
in good faith, it being understood that during the said extension Tenant shall
not be obligated to pay rent. If after the elapsing of said extension of

                                 Page 8 of 30
<PAGE>

15 (fifteen) days the Plant continues to be, at Tenant's discretion, unfit for
being used or occupied by Tenant for the Permitted Uses, then Tenant shall be
entitled to, at its sole discretion, (i) terminate this Agreement without any
liability for Tenant, by giving written notice thereof to Landlord, or
(ii) grant Landlord a second extension of the Substantial Completion Date of
the Plant of up to 30 (thirty) calendar days beginning on March 30th, 2001
(two thousand and one), without Tenant being obligated to pay rent during such
second extension, in which case Landlord shall be obligated to complete the
Plant in the shortest time possible within the granted extension and making to
that effect its best efforts in good faith. Tenant's possession of the Plant
shall be effective for the purposes of this Agreement upon Tenant's written
acceptance of the Plant and written acknowledgement that the Plant is in the
condition required by the Drawings and Specifications, except as to incomplete
items as set forth on the Punch-list of the Plant. Said acceptance and
acknowledgement shall be evidenced by the execution of Exhibit "B".

(G)  On June 15th,  2001 (two thousand and one), Tenant shall meet with Landlord
to inspect the work at the Offices and determine whether or not Substantial
Termination of the Offices has taken place.  Within five (5) days after Tenant's
inspection of the work, and provided any incomplete items are such that at
Tenant's sole discretion do not prevent Tenant from using or occupying the
Offices for the Permitted Uses, Tenant shall (i) submit to Landlord a punch-list
("Punch-list of the Offices") of incomplete items whose lack of completion do
not prevent Tenant from using or occupying the Offices  for the Permitted Uses,
and (ii) take possession of the Offices.   Landlord shall complete at its sole
cost and expense such punch-list items within 30 (thirty) days after receipt of
the Punch-List for the Offices.  Tenant's possession of the Offices shall be
effective for the purposes of this Agreement  upon Tenant's written acceptance
of the Offices and writeen acknowledgement that the Offices are  in the
condition required by the Drawings and Specifications, except as to incomplete
items as set forth on the Punch-list  of the Offices.

(H)  Landlord undertakes to deliver to Tenant, no later than on August 15th,
2001 (two thousand and one) a certified copy of the certificate of termination
of works and consent for the occupation and use (or "certificado de terminacion
de obra y anuencia para uso y ocupacion") issued by the government of the City
of Hermosillo in connection with the Premises, it being understood that the non-
performance of such obligation by Landlord shall entitle Tenant to withhold
payment of the rents that may become payable during said lack of performance by
Landlord.

(I)  Landlord undertakes to apply for and obtain, at its own expense, and to
deliver to Tenant no later than on the Commencement Date or within 90 calendar
days after the Commencement Date, a certified copy of the construction and Land
Use License issued by the City Government of Hermosillo in connection with the
Premises.  Landlord's non-performance of the aforesaid obligation shall entitle
Tenant to early terminate this Agreement without any liability for Tenant
derived from said termination, by written notice to that effect given to
Landlord at any moment after the elapsing of the aforesaid 90-day period.

                                 Page 9 of 30
<PAGE>

6.  PARKING; SECURITY.

Tenant shall have the exclusive use of the Parking Spaces located within the
parking facilities included as part of the Premises.  Landlord shall not be
liable for any damage to, or any theft of, vehicles, or contents thereof, within
the parking facility, nor shall Landlord have any other obligation to provide
security or security measures at the Premises, all of which shall be Tenant's
responsibility.

7.  REPAIRS AND MAINTENANCE.

(A)  Landlord's Obligations.   Landlord, at its expense, shall maintain and
repair the foundations, structure, exterior walls,and roof of the Building
provided that Tenant shall reimburse Landlord for the cost of any repairs or
maintenance performed by Landlord if caused by the negligence or criminal or
willful misconduct of Tenant or its agents, employees, contractors, invitees and
licensees. Landlord may enter the Premises at any time in an emergency, or at
all reasonable times for any purpose permitted hereunder, including, without
limitation, showing the Premises, during the last twelve (12) months of the
Term, to prospective tenants, purchasers or lender. Landlord shall use
reasonable efforts to minimize interference with Tenant's conduct of business in
connection with Landlord's performance of any work described in this Clause 7
(seven). Tenant agrees to notify Landlord promptly of any defective condition
known to Tenant which Landlord is obligated to repair. Except as provided
herein, Landlord shall not be obligated to provide any maintenance, repairs or
services to Tenant or the Premises.

(B) Tenant's Obligations.   Except for Landlord's obligations set forth above,
Tenant, at its sole cost and expense, shall keep, repair and maintain the
Building and all fixtures and equipment therein, including, without limitation,
all plumbing, heating, air-conditioning, electrical, gas, water, sewerage and
similar systems, fixtures and equipment as well as the interior of the Building
(including interior walls, ceiling and floor coverings), window glass, loading
docks, exterior steps, doors and signs of Tenant on the outside of the Building,
as well as all areas at the Premises outside of the Building (including, without
limitation, parking facilities, driveways and landscaping) in good repair, order
and condition and in accordance with all Laws.  Tenant shall keep the Premises
clean and in good order and shall arrange and pay for all garbage and refuse
removal.  All repairs, maintenance and replacements to be made or performed by
Tenant shall be performed in a good and workmanlike manner in accordance with
applicable laws and regulations and the provisions of this Lease and shall be at
least the same quality and design as the original work or item.

                                 Page 10 of 30
<PAGE>

8.   ASSIGNMENT AND SUBLEASING.

Only with the prior written approval of Landlord, Tenant may assign or convey
this Agreement or any rights hereunder, or allow the use or occupation of the
Premises by any other individuals or corporations, or wholly or partially
sublease the Premises.

9.  TENANT'S INSURANCE.

Tenant shall maintain throughout the Term, at its expense, the following
insurance:  (i)  Fire and extended coverage insurance, naming Landlord as
insured and beneficiary, covering the Premises (hereinafter the "Improvements")
against loss or damage by fire, flood, windstorm, hail, earthquake, explosion,
riot, damage from aircraft and vehicles, smoke damage, vandalism, malicious
mischief and such other risks as are from time to time covered under "extended
coverage" endorsements and special extended coverage endorsements commonly known
as "all-risk" endorsements in an amount equal to the full replacement value of
the  Building (which value is presently  determined to be Six Million Dollars of
the United States of America [US$6,000,000]) and containing the waiver of
subrogation required in this Clause 9 (nine), (ii) commercial general liability
insurance on an occurrence basis providing coverage for bodily injury (including
death), property damage and products liability insurance (where such exposure
exists) containing a broad form contractual liability endorsement with a
combined single limit of at least [One Million Dollars of the United States of
America (US$1,000,000) per occurrence and Two Million Dollars of the United
States of America (US$2,000,000) in the aggregate for all occurrences within any
policy year]. The foregoing policies shall name Landlord and any party
designated by Landlord as an additional insured as their respective interests
may appear.

All insurance shall be placed with reputable companies licensed to do business
in accordance with applicable law and reasonably approved by Landlord and shall
be written as primary policies with annual deductibles not to exceed Ten
Thousand Dollars of the United States of America (US$10,000), and with any other
policies shall serve as excess coverage.  Tenant shall deliver original
certificates of all such policies prior to the Commencement Date and each
anniversary date thereafter, which shall provide that no cancellation or non-
renewal of such policies shall be effective without thirty (30) days prior
written notice from the insurer to Landlord.  Each party shall obtain a waiver
of subrogation or consent to a waiver of right of recovery against the other
party, and each hereby agrees that it will not make any claim against or seek to
recover from the other party for any loss or damage covered by its fire and
extended coverage insurance.  Tenant shall not do any act or thing in the
Premises or store anything therein except as now or hereafter permitted by any
fire department, board of fire underwriters, or insurance rating organization
having jurisdiction or other authority having jurisdiction and then only in such
quantity and manner of storage as not to increase the existing rate of, or
adversely affect, or cause a cancellation of, any insurance policies covering
the Premises.

                                 Page 11 of 30
<PAGE>

10.  EMINENT DOMAIN AND CASUALTY.

(A)  Eminent Domain.   If all or substantially all of the Premises is taken by a
public authority pursuant to the exercise of the power of eminent domain, this
Lease shall terminate on the date on which the condemning authority takes
possession of the Premises ("Date of Such Taking"). If part of the Premises is
taken such that, in Landlord's opinion, the Premises cannot be restored to an
economically viable condition, or if the holder of any mortgage encumbering the
Premises requires application of the condemnation proceeds to the reduction of
the mortgage indebtedness, Landlord may terminate this Lease upon thirty (30)
days prior written notice to Tenant. If Landlord does not terminate this Lease
and the condemnation renders all or a substantial portion of the Premises
untenantable, Tenant may terminate this Lease effective on the Date of Such
Taking by written notice given no later than fifteen (15) days after the Date of
Such Taking. Upon a partial taking which does not result in a termination of
this Lease: (i) rent shall be adjusted to reflect the reduced amount of rentable
area in the Building and (ii) Landlord shall restore the Premises, but only to
the extent of funds available to Landlord from the consideration paid for such
taking. Landlord shall not be obligated to replace or restore any improvements
or alterations to the Premises made by or on behalf of Tenant, or any of
Tenant's leasehold improvements, personal property, furniture, fixtures or
equipment. Upon any taking, Landlord shall be entitled to any resulting damages,
awards or any interest therein, and Tenant shall have no claim for the value of
any unexpired term of the Lease or otherwise. Tenant may independently claim for
the value of its furniture, fixtures and equipment or moving expenses, provided
that such claim shall not diminish Landlord's claim.

(B)  Casualty.   If the Premises or a substantial portion thereof is rendered
untenantable by fire, an act of God or force majeure, or any other cause and
Landlord reasonably determines (based on the determination of an independent
architect or engineer) that the damage cannot be repaired within one hundred
twenty (120) days after Landlord is notified of the casualty, then either
Landlord or Tenant may, within thirty (30) days after such determination (which
shall be provided to Tenant), give the other notice of termination of this
Lease, and the Term shall expire thirty (30) days after such notice is given,
with rent being apportioned as of the date of Lease termination. If either
Landlord or Tenant have not elected to terminate as herein provided, Landlord
shall repair the Premises, but only to the extent of the insurance proceeds
actually received by Landlord, with Tenant obligated to pay any deductible. If
such repair is not completed within one hundred eighty (180) days, the Tenant
shall have the right to terminate this lease by giving written notice to
Landlord which termination shall be effective thirty (30) days after such notice
is given. If insurance proceeds paid to Landlord are not sufficient to complete
the required repairs and Landlord elects not to complete same, Landlord shall
notify Tenant and Tenant shall have the right to terminate the Lease. During any
period Tenant is not able to occupy the Premises on account of any repair or
restoration, Tenant will have no obligation to pay rent or other amounts due
hereunder. Tenant shall give Landlord prompt written notice of any damage to the
Premises by fire or other casualty. Landlord's obligations to restore are
strictly limited to the replacement of the basic Building area. Landlord shall
not be obligated to restore any alterations, personal property, furniture,
fixtures or equipment.

                                 Page 12 of 30
<PAGE>

11.  INDEMNIFICATION AND COMPLIANCE WITH LAWS.

(A)  Tenant shall defend, indemnify and hold Landlord and its officers,
directors, employees, attorneys and agents (collectively, the "Indemnities")
harmless from and against any and all demands, cause of action, judgements,
costs, expenses, losses, damages, claims, or liability for any damage to any
property or injury, illness or death of any person (i) arising out of or in any
way related to claims for labor performed or materials furnished to Tenant or
the performance of any work done by or for the account of Tenant, whether or not
Tenant obtained Landlord's permission to have such work done, labor performed or
materials furnished (excluding the Landlord's work); or (ii) arising out of or
in any way related to any breach of a covenant or condition in the Lease to be
performed by Tenant. The provisions of this paragraph shall survive the
expiration or sooner termination of this Lease.

(B)  Landlord or its agents shall not be liable to Tenant for any claims with
respect to (i) any death or injury suffered by Tenant or any employee,
contractor, licensee, invitee, guest, agent or customer of Tenant (each, a
"Tenant Party") or any other person, from any causes whatsoever, other than as a
result of Landlord's negligence or willful misconduct, or ii) any loss or damage
or injury to any property within the Premises belonging to Tenantor any other
person, other than as a result of Landlord's negligence or willful misconduct
and only up to Twenty Thousand Dollars of the United States of America
(US$20,000). In addition, Landlord or its agents shall not be liable for
interference with any utility, service, or ventilation, or any loss or damage
for which Tenant is required to insure or resulting from any construction,
alterations or repair required or permitted to be Performed by Tenant hereunder.
Notwithstanding the foregoing, if any utility or service provided to the
Premises is interrupted or diminished by any reason (including the public
interest), which interruption is not caused by the negligence or willful
misconduct of the Tenant, for more than five (5) days, the obligation to pay
rent shall be suspended until such utility or service is restored. In the event
such interruption continues for more than thirty (30) days, the Tenant shall
have the right to terminate this lease at any time prior to the restoration of
such utility or service, provided the interruption is the result of the
Landlord's negligence of willful misconduct.

(C)  Tenant, at its expense, shall comply with all Laws, including, without
limitations, any Laws relating to any material that is prohibited, limited or
regulated as a toxic or hazardous substance, health or environmental hazard or
pollutant under any Laws ("Hazardous Materials"). Neither Tenant nor any Tenant
Party shall use, generate, store, treat, transport, dispose of or release any
Hazardous Materials at the Premises other than non-material and non-reportable
quantities of Hazardous Materials used in connection with the Permitted Uses and
only if property and legally used and stored and disposed of at Tenant's cost.
Landlord and Tenant each warrant to the other that it

                                 Page 13 of 30
<PAGE>

is now complying with, and agrees, at all times during the term of this Lease or
any extension hereof, to comply with those provisions of the social security of
such other laws of the municipality and the state within which they operate,
which require them to provide social security for their workers. Tenant shall
not be responsible for any hazardous materials or the presence of hazardous
materials on the Land or the Building occurring prior to the commencement date.

12. QUIET ENJOYMENT AND SUBORDINATION.

(A) Landlord covenants and agrees that, upon Tenant's performance of all the
terms, covenants and conditions hereof on Tenant's part to be performed, Tenant
shall have,  hold and enjoy the Premises, subject to the terms, covenants and
conditions of this Lease.

(B) This Lease is subject and subordinate to any mortgage, deed of trust or deed
to secure debt (each, a "Mortgage"); any easement agreements; all ground and
underlying leases; and to any renewals, modifications, extensions, replacements,
and substitutions of any of the foregoing, now or hereafter affecting the
Premises.  This provision shall be self-operative and no further instrument of
subordination shall be required; provided, however, that upon request, Tenant
shall execute and deliver instrument(s) in recordable form confirming this
subordination.  The parties acknowledge that, pursuant to the Civil Code for the
State in which the Premises is located, this Lease shall survive any foreclosure
of any Mortgage.  Landlord may assign the rents and its interest in this Lease
to the holder of any Mortgage.

13.  EVENTS OF DEFAULT.

In addition to any other event specified in this Lease as an event of default,
the occurrence of any one or more of the following events during the Term (each,
as "Event of Default") shall constitute a breach of this Lease by Tenant, and
Landlord may exercise the rights set forth is Clause 14 (fourteen) or as
otherwise provided at law:  (1) Tenant fails to pay any sum payable hereunder
within ten (10) days after written notice thereof from Landlord to Tenant; or
(2) Tenant fails to perform any of the other covenants, terms or conditions of
this Lease to be performed by Tenant (other than any monetary default), and,
unless expressly provided elsewhere in this Lease, such default shall continue
for thirty (30) days after written notice thereof from Landlord to Tenant, or,
in the case of a default which cannot with due diligence be cured within thirty
(30) days, Tenant fails to commence such cure promptly within such thirty (30)
day period and thereafter diligently prosecute such cure to completion; or (3)
Tenant files a voluntary petition in bankruptcy or becomes insolvent within the
meaning of any applicable bankruptcy code (the "Code"), or a petition is filed
against Tenant or Guarantor under the Code and is not dismissed with the
prejudice within sixty (60) days after filing, or Tenant seeks or consents to
the appointment of a receiver or other custodian for any substantial part of the
Tenant's properties or any part of the Premises, or (4) a lien or claim is filed
against the Premises arising out of any work

                                 Page 14 of 30
<PAGE>

performed by or on behalf Tenant and Tenant fails to discharge, or provide
appropriate surety bond for such lien or remedy such claim within thirty (30)
days after receiving notice of the filing thereof.

14.  LANDLORD'S REMEDIES.

Upon the occurrence of an Event of Default, Landlord may pursue any remedies
available to Landlord under Laws including, without limitation, the right of
specific performance or     payment of damages to the extent permitted by Laws.
Upon the occurrence of an Event of Default, Landlord may give Tenant written
notice of its election to rescind this Lease, whereupon Tenant's right to
possessions of the Premises shall cease on the day specified therein, and this
Lease shall be terminated.

15.  HOLDING OVER.

If Tenant remains in possession of the Premises after the expiration or other
termination of the Term, or after the expiration of the legally provided one-
year extension, as the case may be, then, at Landlord's option, Tenant shall be
deemed to be occupying the Premises as a non-fixed term ("tacita reconduccion")
tenant pursuant to Laws, at a monthly rental equal to one hundred fifty percent
(150%) of the monthly rent  payable hereunder during the last month of the Term,
along with the value added tax.  Tenant shall defend, indemnify and hold
Landlord harmless from and against all claims, losses and liabilities for
damages resulting from failure to surrender possession upon the Expiration Date
or sooner termination of the Term, and such obligations shall survive the
expiration or sooner termination of this Lease.  Tenant expressly waives, for
itself and for any person claiming through or under Tenant, any rights which
Tenant or such person may have under applicable law to obtain an equitable stay
in connection with any holdover summary proceedings instituted by Landlord.

16.  NOTICES.


All notices, communications and notifications which are required from or
permitted to the parties with respect to this Agreement shall be addressed to
the persons indicated below and delivered at the domiciles indicated below,
unless the parties establish any other address at least 15 (fifteen) calendar
days prior to the date on which such change is to become effective:


(A)  If to Landlord:

Fraccionadora Dinamica del Pacifico S.A. de C.V.
Bulevard Rodriguez # 74
Hermosillo, Sonora, Mexico
To the attention of: Mr. Jose Maria Aguirre Ramos

                                 Page 15 of 30
<PAGE>

(B)  If to Tenant:

CMC Industrias Hermosillo S.A. de C.V.
Carretera Internacional Hermosillo-Nogales
Kilometro 8.5
Hermosillo, Sonora
To the attention of: Mr. Simon Perez Gonzalez

with a copy to:  Lizarraga, Robles, Tapia y Cabrera S.C.
To the attention of: Messrs. Eduardo Robles Elias
and Jose Joaquin Cabrera Ochoa
Boulevard Miguel Hidalgo 64
Colonia Centenario
Hermosillo, Sonora, Mexico 83260

(C)  If to Guarantor:

ACT Manufacturing, Inc.
2 Cabot Road
Hudson, Massachusetts, U.S.A. 01749
To the attention of: President

with a copy to: Testa, Hurwitz & Thibeault, LLP
125 High Street - Oliver Street Tower
Boston, Massachusetts, U.S.A. 02110
To the attention of:  Real Estate Department

Notices, communications and notifications shall be deemed effective on the
business day following that on which they were effectively delivered to any
person of legal age at the aforementioned addresses, notwithstanding they are
actually and effectively received or not received by the addressee.  If sent by
mail, notices communications and notifications shall always be sent by certified
mail with acknowledgment of receipt.

If such notices, notifications or communications are not addressed to the
attention of the aforementioned parties, they shall not be used against the
sending party, which may invoke them to its own benefit.


17.  BROKERS.

Tenant represents and warrants to Landlord that it has not dealt with any broker
in connection   with the negotiation and/or execution of this Lease. Tenant
shall defend, indemnify and hold Landlord harmless from and against any and all
liability, loss, damage, expense, claim, action, demand, suit or obligation
arising out of or relating to a breach by Tenant of this representation and such
obligations shall survive the expiration or sooner termination of this Lease.

                                 Page 16 of 30
<PAGE>

18.  FORCE MAJEURE.

Any obligation of Landlord which is delayed or not performed due to acts of God,
strike, riot, shortages of labor or materials, war, acts of terrorism,
governmental laws or action, or lack thereof, inaction by any governmental
authority with respect to the issuance of any licenses or permits necessary to
perform an act of Landlord hereunder or any other causes of any kind whatsoever
which are beyond Landlords reasonable control (each, a "Force Majeure"), shall
not  constitute a default hereunder and shall be performed within a reasonable
time after the end of such cause for delay or nonperformance.

19. NO SETOFF.

Unless otherwise provided hereunder, all agreements, covenants and activities to
be performed by Tenant hereunder shall be at Tenant's expense and without any
abatement of rent, and  Tenant shall not be entitled to any setoff, offset or
abatement of any rent due Landlord hereunder if Landlord fails to perform its
obligations hereunder.  In no event shall Landlord, any holder of a mortgage be
responsible for any consequential damages incurred by Tenant resulting from a
default by Landlord, as consequential damages are  known in the American legal
system, it being understood, however, that Landlord shall be responsible for
damages and losses as provided for in the Mexican "Codigo Civil Federal" and in
the "Codigo Civil para el Estado de Sonora", as one or the other may be
applicable, but only up to Twenty Thousand Dollars of the United States of
America (US$20,000).

Notwithstanding the foregoing, Tenant shall have the right to setoff and/or
deduct from its rent obligation any and all amounts which Tenant pays, and/or
any damages incurred by Tenant and/or by any parent or subsidiary of Tenant,
including the Guarantor, which directly or indirectly result from Landlord's
failure to fulfill its obligations under any financing arrangement Landlord may
currently or in the future have with a lender or other financial institution
inside or outside Mexico.

20.  LIMITATION OF LANDLORD LIABILITY.

(A)  The term "Landlord" as used herein shall mean only the owner of the
     Premises. Upon a transfer of title or lease of the Premises, the transferor
     shall be relieved of all covenants and obligations of Landlord hereunder
     and Tenant shall look solely to the successor in interest of the transferor
     as Landlord hereunder.  Tenant agrees to attorn to the transferee or
     assignee, such attornment to be self-operative.

(B)  In no event shall Landlord be liable to Tenant for any failure of other
     tenants in the Premises, if any, to operate their businesses, or for any
     loss or damage caused by

                                 Page 17 of 30
<PAGE>

     the acts or omissions of any other tenants. Notwithstanding anything to the
     contrary contained herein, neither Landlord, nor any general or limited
     partner in or of Landlord, whether direct or indirect, nor any direct or
     indirect partners in such partners, nor any disclosed or undisclosed
     officers, shareholders, principals, directors, employees, partners,
     servants or agents of Landlord, nor any of the foregoing, nor nay
     investment adviser or other holder of any equity interest in Landlord,
     their successors, assigns, agents, or any mortgagee in possession shall
     have any personal liability with respect to any provisions of this Lease.

21. ESTOPPEL CERTIFICATE.

Tenant shall deliver within, twenty (20) days after Landlord's written request
therefor, a certificate to the party designated to such request, in the form
supplied, certifying that (1) this Lease is unmodified and in full force and
effect (or stating any modifications then in effect), (2) that there are no
defenses or offsets thereto (or stating those claimed by Tenant), (3) the dates
to which rent has been paid, and (4) as to any other information reasonably
requested.

22.  MISCELLANEOUS.

(A) Landlords failure to exercise its rights with respect to a breach of any
term, covenant or condition contained herein shall not be a waiver of such term,
covenant or condition or any subsequent breach of the same or any other term,
covenant or condition contained herein.

(B) Tenant acknowledges that it has not relied on any representations or
agreements except those expressed herein, and that this Lease contains the
entire agreement of the parties.  No modifications of this Lease shall be
binding or valid unless in writing and executed and delivered by both parties.
Except as otherwise specifically provided herein, the terms, covenants and
conditions contained in this Lease, including the stipulation of the Term, shall
bind and inure to the benefit of the respective heirs, successors, executors,
administrators and assigns of each of the parties hereto.

(C)  The submission of this document for review does not constitute an option,
offer or agreement to lease space. This document shall be effective only upon
Landlord's and Tenant's execution.. Except as expressly contained herein,
neither Landlord nor Landlord's agent has made representations, warranties or
promises with respect to the Premises or this Lease. Landlord and Tenant each
acknowledge that each has been represented by independent counsel and has
executed this Lease after being fully advised by said counsel as to its effect
and significance.

(D)  This Lease shall be construed in accordance with the laws applicable in the
Mexican state in which the Premises is located. Unless herein waived, Landlord
and Tenant acknowledge that all of the applicable statutes of such state are
superimposed on the rights, duties and obligations of Landlord and Tenant
hereunder.

                                 Page 18 of 30
<PAGE>

(E)  Where Tenant is required by this Lease to pay any sum of money or to do any
act within an indicated period or by a particular date, it is understood that
time is of the essence.

(F)  If any term or provision of this Lease shall, to any extent, be illegal,
invalid or unenforceable, the remainder of this Lease shall not be affected
thereby, and all other terms and provisions of this Lease shall be valid and
enforceable to the fullest extent permitted by law.

(G)  The parties acknowledge that pursuant to applicable Mexican law, this
Agreement shall be filed and recorded with the Public Registry of Property and
Commerce of Hermosillo, Sonora, Mexico, for which purpose either party may
request that this Agreement be notarized ("protocolizado") by a Mexican notary
public. Tenant hereby authorizes Messrs. Eduardo Robles Elias, Jose Joaquin
Cabrera Ochoa, and Ivan Moreno Torrescano to, jointly or severally, request and
obtain said notarization on its behalf, and request and obtain the aforesaid
recordation also on behalf of Tenant.

(H)  Unless otherwise stipulated in this Agreement, all references to days shall
be understood as made to calendar and not to working days.

23.  ARBITRATION.

Any disputes or differences arising under this agreement between the Landlord
and the Tenant, including any disputes regarding the legal effect, performance
and interpretation hereof and the compliance with any obligations hereunder,
shall be  resolved or settled through an arbitration decision according to the
following rules:

(A)  Rules of the Arbitration.

The arbitration shall be governed by the rules established in Book Five, Title
IV (four) of the Mexican Commercial Code (as for that which has not been
modified by this clause) and the rules set forth in this clause. The arbitration
decision shall be rendered pursuant to all such rules.

(B)  Place of arbitration.
Arbitration shall be conducted in Hermosillo, Sonora, at the offices agreed by
the arbitration court.

Without prejudice to what is set forth in the foregoing paragraph, the
arbitration court may hold meetings in any place or office it deems appropriate
for its members to deliberate, hearing the parties, witnesses or experts, and
examining properties or documents.

                                 Page 19 of 30
<PAGE>

(C)  Arbitration Court.

The arbitration court shall consist of three members. One arbitrator shall be
appointed by the plaintiff, a second arbitrator shall be appointed by the
arbitrators and the third arbitrator shall be appointed by the arbitrators
designated by the plaintiff and the defendant.

If the defendant does not appoint its corresponding arbitrator within 10 (ten)
calendar days from the date of receipt of the plaintiff's request to refer the
dispute to arbitration and for the defendant to appoint an arbitrator, then, at
the request of the plaintiff, such appointment shall be made a competent state
or federal judge of Hermosillo, Sonora, whose resolution shall be unappealable
or irrefutable by any other means, including a proceedings to protect
constitutional rights.

The plaintiff's request referred to in the foregoing paragraph must also
indicate the arbitrator appointed by the plaintiff.

In the event the two arbitrators appointed by the parties fail to reach an
agreement as regards the appointment of the third arbitrator within 10 (ten)
calendar days from the date on which the defendant appointed its arbitrator,
then, at the request of any of the parties or arbitrators, the third arbitrator
shall be appointed by a competent federal or state judge of the city of
Hermosillo, Sonora, whose resolution shall be unappealable or irrefutable by any
other means, including a proceeding to protect constitutional rights.

Arbitrators must be individuals of legal age, legally qualified, morally
reliable, independent and impartial, with experience in commercial disputes and,
preferably, attorneys at law.

The arbitrators may also be companies or entities specialized in arbitration
services. However, in any case, any individual who respectively represents such
companies must fulfill the requirements specified in the immediately preceding
paragraph.

All decisions rendered by the arbitration court, including the arbitration award
and any kind of resolution must be made by majority of votes.

(D)  Arbitration Language.

Arbitration shall be conducted in the Spanish language. This rule is applicable
to all written documents by the parties, all hearings and any award, decision or
communication of any other kind rendered by the arbitration court.

(E)  Applicable Substantive Law.

Differences or disputes shall be resolved or settled through the application of
the Mexican substantive law, including its rules regarding the determination of
the applicable law.

                                 Page 20 of 30
<PAGE>

(F)  Applicable Procedural Law.

Arbitration proceedings shall be governed by what is determined by the
arbitration court in accordance with article 1,435 (one thousand four hundred
thirty five), second paragraph of the Commercial Code, seeking (i) the
prevalence of material truth over formal truth, (ii) the equality of the
parties, and (iii) their full opportunity to offer and furbish evidence and
exercise their rights.

(G)  Arbitration Award.

A process for the annulment of the arbitration award can only be initiated
before a judge or court legally qualified to hear its acknowledgement or
enforcement. The resolution of annulment of the arbitration award can only be
appealed through a proceeding to protect constitutional rights.

The resolution of acknowledgement and enforcement of the arbitration award can
only be appealed through a proceeding to protect constitutional rights.

(H)  Reiteration of the arbitration commitment and express waiver of other
     procedures.

The parties clearly, precisely and irrevocably waive any other procedure for the
settlement of disputes they would be entitled to under the law in the absence of
the arbitration agreement object of this clause, including any mercantile
executory proceeding.

(I)  Precautionary Measures.

Notwithstanding what is set forth in this clause, the parties may request
precautionary measures from the competent state or federal courts, and such
request shall not be construed as a waiver or abandonment of the right to solve
or settle definite matters as stipulated in this clause.

(J)  Costs of the arbitration and attorneys' fees.

The parties shall pay the costs of the arbitration, including the arbitrator's
fees, by equal portions. Each party shall pay the fees and the costs of their
respective attorneys.

(K)  Judicial remedies.

This clause shall not be interpreted as prohibiting the requesting from
competent tribunals of judicial actions in support of the arbitration,
including, without being limited thereto, motions to submit to arbitration,
motions to stay judicial proceedings pending the completion of arbitration
proceedings, or motions to issue interlocutory injunctions to do or to refrain
from doing, or to repossess, attach, or other similar measures that may be
necessary to prevent irreparable damages or losses to one party pending the
completion of the arbitration proceedings.

                                 Page 21 of 30
<PAGE>

(L)  Waiver of remedies.

The arbitration award shall be recognized and its execution ordered by any
competent court. The parties hereby waive any right that they may have to
challenge or appeal, before the Mexican tribunals or before any other tribunals,
with respect to any juridical issue that may arise during the arbitration
proceedings.

(M)  Notices and notifications.

The parties agree that the delivery of any notices or notifications in
connection with any arbitration proceedings at their respective addresses
designated in this agreement (or at those designated in the future in writing)
shall be valid and sufficient.

This Clause on arbitration shall not apply to the Guarantor.

24.  TRANSLATION.   Except for Exhibit "D", this Lease has been prepared both in
English and in  Spanish, and . in case of conflict, the Spanish version will
control.  Exhibit "D" has been drafted and executed in English only.

IN WITNESS WHEREOF,  Landlord and Tenant have executed this Lease as of the date
set forth above, in two copies that shall be considered one for all legal
purposes

                                   Landlord:


                         /s/ Jose Maria Aguirre Ramos,
                         ----------------------------
                Fraccionadora Dinamica del Pacifico S.A. de C.V.
                    represented by Jose Maria Aguirre Ramos
                            Title: Attorney-in-fact
                         Date executed: March 16, 2001

                                    Tenant:


                           /s/ Simon Perez Gonzalez,
                           ------------------------
                    CMC Industrias Hermosillo S.A. de C.V.,
                      represented by Simon Perez Gonzalez
                            Title: Attorney-in-fact
                         Date executed: March 16, 2001


EXHIBITS
--------

A.  PLAN OF LAND
B.  TERM CONFIRMATION LETTER
C.  DOCUMENT EVIDENCING LANDLORD'S LEGAL RIGHT TO ENTER INTO AGREEMENT ON BEHALF
    OF LAND OWNERS
D.  GUARANTY
E.  DRAWINGS AND SPECIFICATIONS OF PLANT AND OFFICES

                                 Page 22 of 30
<PAGE>

                                   EXHIBIT A
                                   ---------

                                 Plan Of Land

                               [Graphic Omitted]

                                 Page 23 of 30

<PAGE>

                                   EXHIBIT B

                                                      Date: March 15th, 2001

RE:   Lease Agreement (the "Lease") dated March 15th, 2001

     Between Fraccionadora Dinamica del Pacifico S.A. de C.V. ("Landlord") and
CMC Industrias Hermosillo S.A. de C.V. ("Tenant")

     Premises: Land and Building (Premises) located at Carretera Internacional
Hermosillo-Nogales, kilometer 8.7, Hermosillo, Sonora, Mexico

     The undersigned hereby confirm as of the date set forth above, the
following:

   1.  Tenant has accepted possession of the Plant  on March 15th, 2001, and is
       currently Occupying same.

   2.  The Commencement Date and Expiration Date, as each is defined in the
       Lease, are as follows:

       Commencement Date: March 15th, 2001

       Expiration Date: March 31st, 2008

   3.  The obligation to commence the payment of rent commenced or will commence
       on March 15th, 2001.

   4.  All construction, alterations and improvements required to be performed
       by Landlord pursuant to the terms of the Lease to cause Substantial
       Completion of the Plant (as defined in the Lease) have been satisfactory
       completed, except for the items mentioned in the Punch List of the Plant
       referenced in Clause 5 (five) of the Lease.

                         Landlord:

                         By:  ____________________________________

                         Title:  ____________________________________


                         Tenant:

                         By:  ____________________________________

                         Title:  ____________________________________

                                 Page 24 of 30
<PAGE>

                                   Exhibit C
                                   ----------

Document Evidencing Landlarod's Legal Right to Enter Into Agreement on Behalf of
Land Owners

                                   [Omitted]


                                 Page 25 of 30



<PAGE>

                                   EXHIBIT D
                                   ---------


                               GUARANTY OF LEASE
                               -----------------


     In consideration of, and as an inducement to Fraccionadora Dinamica del
Pacifico S.A. de C.V. ("Landlord")  to enter that certain lease of even date
herewith (the "Lease") with CMC Industrias Hermosillo S.A. de C.V.("Tenant") for
the premises having an address of Carretera Internacional Hermosillo-Nogales,
Kilometer 8.7, Hermosillo, Sonora, Mexico and in further consideration of the
premises and other good and valuable consideration, the receipt of which is
hereby acknowledged, the undersigned, (the "Guarantor"), hereby guarantees,
absolutely and unconditionally, to Landlord the full and prompt performance of
all terms, covenants, conditions and agreements to be performed and observed by
Tenant under the Lease and any and all amendments, modifications and other
instruments relating thereto, whether now or hereafter existing, and the full
and prompt payment of all damages, costs and expenses which shall at any time be
recoverable by Landlord from Tenant by virtue of the Lease and any amendments,
modifications and other instruments relating thereto, (hereinafter called
"Liabilities of Tenant"); and Guarantor hereby covenants and agrees to and with
Landlord, its successors and assigns, that if Tenant, its successors and
assigns, shall default at any time in the payment of Base Rent (as defined in
the Lease) or any other sums or charges payable by Tenant under the Lease or in
the performance of any of the terms, covenants, provisions or conditions
contained in the Lease, Guarantor will forthwith pay to Landlord, its successors
and assigns, such Base Rent and other sums and charges and will forthwith
faithfully perform and fulfill all of such terms, covenants, conditions and
provisions of the Lease and will forthwith pay to Landlord all damages that may
arise in consequence of any such default by Tenant.

     Guarantor agrees that, upon notice and demand, Guarantor will reimburse
Landlord, to the extent that such reimbursement is not made by Tenant, for all
expenses (including reasonable attorneys fees and disbursements) incurred by
Landlord in connection with any default by Tenant under the Lease  or the
default by Guarantor under is Guaranty.

     All moneys available to Landlord for application in payment or reduction of
the Liabilities of Tenant may be applied by Landlord, in such manner and in such
amounts as it may see fit, to the payment or reduction of such of the
Liabilities of Tenant as Landlord may reasonably elect.

     This Guaranty shall be a continuing guaranty, and the liability of the
Guarantor hereunder shall in no way be affected, modified or diminished by
reason that any security for the Liabilities of Tenant is exchanged,
surrendered, or compromised, waived or released in whole or in part, or that any
default with respect thereto is

                                 Page 26 of 30
<PAGE>

waived, whether or not notice thereof is given to Guarantor, and it is
understood and agreed that Landlord may fail to set off and may release, in
whole or in part, any credit on its books in favor of Tenant, and may extend
further credit in any manner whatsoever to Tenant, generally deal with Tenant or
any such security as Landlord may see fit; and Guarantor shall remain bound
under this Guaranty notwithstanding any such exchange, surrender, release,
change, alteration, renewal, extension, continuance, compromise, waiver,
inaction, extension of further credit or other dealing.

     Notwithstanding any provision  to the contrary contained herein, Guarantor
hereby unconditionally and irrevocably waives (a) any and all rights of
subrogation to the claims, whether existing now or arising hereafter, Landlord
may have against Tenant, but only until such time as the Liabilities of Tenant
shall have been fully discharged, and (b) any and all rights of reimbursement,
contribution, or indemnity against Tenant which may have heretofore arisen or
may hereafter arise in connection with any guaranty or pledge or grant of any
lien or security interest made in connection with the Lease.  Guarantor hereby
acknowledges that the waiver contained in the preceding sentence (the
"Subrogation Waiver") is given as an inducement to Landlord to enter into the
Lease and, in consideration of Landlords willingness to enter into the Lease,
Guarantor agrees not to amend or modify in any way the Subrogation Waiver
without Landlord's prior written consent.  If any amount shall be paid to
Guarantor by Tenant on account of any claim set forth at any time when all the
Liabilities of Tenant shall not have been paid in full, such amount shall be
held in trust by Guarantor for Landlords benefit, shall be segregated from the
other funds of Guarantor and shall forthwith be paid over to Landlord to be
applied in whole or in part by Landlord against the Liabilities of Tenant,
whether matured or unmatured.  Nothing herein contained is intended or shall be
construed to give Guarantor any rights of subrogation or right to participate in
any way in Landlords right title or interest in the Lease, notwithstanding any
payments made by Guarantor to or toward any payments due from Guarantor under
this Guaranty, all such rights of subrogation and participation being hereby
expressly waived and released.

     Guarantor hereby expressly waives notice of acceptance of this Guaranty and
Guarantor hereby expressly agrees that the validity of this Guaranty and the
obligations of Guarantor hereunder shall not be terminated, affected or impaired
by reason of the assertion or the failure to assert by Landlord against Tenant,
or Tenants successors and assigns, of any of the rights or remedies reserved to
Landlord pursuant to provisions of the Lease.

     This is an absolute and unconditional guaranty of payment and not of
collection and Guarantor further waives any right to require that any action be
brought against Tenant or any other person or entity or to require that resort
be had to any security or to any balance of any deposit account or credit on the
books of Landlord in favor of Tenant or any other person or entity.  Successive
recoveries may be had hereunder.

                                 Page 27 of 30
<PAGE>

     Each reference herein to Landlord shall be deemed to include it successors
and assigns, in whose favor the provisions of this Guaranty shall also inure.
Each reference herein to Guarantor shall be deemed to include the heirs,
distributees, executors, administrators, legal representatives, successors and
assigns of Guarantor, all of whom shall be bound by the provisions of this
Guaranty.

     No delay on the part of Landlord in exercising any rights hereunder or
failure to exercise the same shall operate as a waiver of such rights; nor in
any event shall any modifications or waiver of the provisions of this Guaranty
nor any termination hereof effective unless in writing signed by Landlord, nor
shall any waiver be applicable except in the specific instance for which given.

     This Guaranty shall continue to be effective or be reinstated, as the case
may be, if any payment of Guarantor on account of the Liabilities of Tenant must
be returned by Landlord upon the insolvency, bankruptcy or reorganization of
Tenant, Guarantor, or otherwise, as though such payment had not been made.


     This Guaranty is, and shall be deemed to be, a contract entered into under
and pursuant to the laws of the Commonwealth of Massachusetts, U.S.A. and shall
be in all respects governed, construed, applied and enforced in accordance with
the laws of such State; and no defense given or allowed by the laws of any other
State or Country shall be interposed in any action or proceeding hereon unless
such defense is also given or allowed by the laws of the Commonwealth of
Massachusetts, U.S.A.  In any action or proceeding arising out of this Guaranty,
Guarantor agrees to submit to personal jurisdiction in the Commonwealth of
Massachusetts, U.S.A.  Guarantor hereby appoints Testa, Hurwitz & Thibeault, LLP
as its agent for service of process in any such action or proceeding.  Guarantor
agrees to pay all costs and expenses, including, without limitation, reasonable
attorneys fees, which are incurred by Landlord in the enforcement of this
Guaranty.

     This Guaranty may be executed in one or more counterparts, each of which
counterparts shall be an original.  If Guarantor is a corporation, partnership,
joint venture or unincorporated association, each individual executing this
Guaranty on behalf of such entity represents and warrants that he or she is duly
authorized to execute and deliver this Guaranty on behalf of such entity and
that this Guaranty is binding upon such entity in accordance with its terms.

     All of Landlords rights and remedies under the Lease or under this Guaranty
are intended to be distinct, separate and cumulative and no such right and
remedy therein or herein mentioned is intended to be in exclusion of or a waiver
of any of the others.

     As a further inducement to Landlord to accept the Lease and in
consideration thereof, Landlord and Guarantor covenant and agree that in any
action or proceeding brought on, under or by virtue of this Guaranty, Landlord
and the Guarantor shall and do hereby waive trial by jury.

                                 Page 28 of 30
<PAGE>

     Any notices which either party herein may desire to give to the other shall
be made in writing and shall be given by certified or registered mail, postage
prepaid, return receipt requested, or by a nationally recognized overnight
courier or be facsimile and shall be deemed to be given on the third (3rd)
business day after the date of posting in a United States Post Office or branch
post office or one day after delivery to the overnight courier upon receipt of
confirmation if by facsimile, and shall be delivered to Landlord, at Bulevard
Rodriquez #74, Hermosillo, Sonora, Mexico.

Notices for Guarantor (s) shall be sent to the address(es) set forth below.
Either party may, by notice as aforesaid actually received, designate a
different address or addresses for communications intended for it.

     IN WITNESS WHEREOF, the undersigned has executed this Guaranty as of the
_____day of December, 2000.

                                   Guarantor:

                            ACT MANUFACTURING, INC.


                            By: ___________________________

                           Name:___________________________

                           Title: _________________________

                     Date executed: _______________________


                                 Page 29 of 30
<PAGE>

                                   Exhibit E

               Drawings and Specifications of Plant and Offices

                                   [Omitted]

                              Page 30 of 30 Pages

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>5
<FILENAME>dex231.txt
<DESCRIPTION>CONSENT OF DELOITTE TOUCHE LLP
<TEXT>

<PAGE>

                                                                    Exhibit 23.1


                         INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in Registration Statements
No. 33-91964, No. 333-36751 and No. 333-83241 of ACT Manufacturing, Inc. and
subsidiaries on Form S-8 and Registration Statement No. 333-41406 on Form S-3 of
our report dated March 12, 2001, appearing in this Annual Report on Form 10-K of
ACT Manufacturing, Inc. for the year ended December 31, 2000.


/s/ Deloitte & Touche LLP
Boston, Massachusetts
March 28, 2001
</TEXT>
</DOCUMENT>
</SUBMISSION>
