<PAGE>

                                                                    EXHIBIT 10.1

[LETTERHEAD OF ACT MANUFACTURING, INC.]


August 8, 2001

Mr. Narendra Pathipati
6214 82nd Avenue SE
Mercer Island, WA 98040

Dear Mr. Pathipati:

It is my pleasure to extend you an offer of employment for the position of
Executive Vice President and Chief Financial Officer with ACT Manufacturing,
Inc. (the "Company") reporting directly to me. We are excited about the prospect
of you joining our team, and look forward to the addition of your
professionalism and experience to help the Company achieve its goals.

Position and Duties: By signing below, you agree to serve as the Company's
Executive Vice President and Chief Financial Officer. You shall have such duties
and responsibilities as are incident to, or reasonably requested in connection
with, such positions. You shall perform and discharge faithfully, diligently and
to the best of your ability such duties and responsibilities on behalf of the
Company and any of its subsidiaries as are consistent with your position and as
may be designated from time to time. You shall devote all of your business time,
attention and energies to the business of the Company and shall not engage in
any other business activity or activities, whether or not such business activity
is pursued for gain, profit or other pecuniary advantage, that may conflict with
the proper performance of your duties to the Company.

Base Salary: Your base salary will be paid at an initial bi-weekly rate of
$11,538.46, which is the annual equivalent of $300,000.00. You will be paid in
accordance with the Company's normal payroll practices as established or
modified from time to time.

Performance Bonus: In addition to your Base Salary, you will be eligible for
annual performance bonus up to 50% of your Base Salary, at target. The bonus
shall be paid, if at all, on a quarterly basis, but administered yearly. The
amount of the bonus is determined in the Company's sole discretion, and will be
based on a set of mutually agreed upon goals. The Company will guarantee your
full quarterly bonus of $37,500 for each of 3rd and 4th quarter of 2001, only,
to be paid with the first regularly scheduled payroll in September and October,
2001.

Company Car: You will be eligible for a leased company car of your selection.
The negotiated purchase price of the vehicle to be put under lease is not to
exceed $65,000.00.

Benefits: You will also be eligible to participate in the Company's benefits
programs to the same extent as, and subject to the same terms, conditions and
limitations applicable to, other employees of the Company of similar rank and
tenure. These benefits presently include: vacation time, holidays, educational
reimbursement, life insurance, accidental death and dismemberment, short-term
and long-term disability, 401(k) and contributory health/dental insurance. For
a more


<PAGE>

detailed understanding of the benefits and the eligibility requirements, please
consult the summary plan descriptions for the programs, which will be made
available to you during your new hire orientation.

STOCK OPTION GRANT:  Subject to approval of the Company's Board of Directors
(the "Board"), you will be granted the option to purchase 100,000 shares of
Company common stock, at a price equal to the fair market value as of the date
of the grant. The options will be subject to and governed by the terms and
conditions of a stock option agreement between you and the Company and the
Company's Stock Option and Incentive Plan, which will include, among other
things, a five-year vesting schedule. Please consult the stock option agreement
and the Company's Stock Option Plan for further information.

TERMINATION OF EMPLOYMENT:  Your employment with the Company may be terminated
as follows:

     (a)  At your option.  You may terminate your employment, with or without
          --------------
     cause, at any time by giving at least 120 days' advance written notice to
     the Company. In the event of a termination at your option, the Company may
     accelerate your departure date and will have no obligation to pay you after
     your actual departure date. In the event of termination at your option, you
     shall be entitled to no payments, salary continuation, severance or other
     benefits, except for earned but unpaid Base Salary to the extent accrued
     through your departure date.

     (b)  At the election of the Company for Cause.  The Company may,
          ----------------------------------------
     immediately and unilaterally, terminate your employment for "Cause" at any
     time by giving thirty (30) days' advance notice to you. Termination by the
     Company shall constitute a termination for Cause if such termination is for
     one or more of the following reasons:

          (i)  Your failure or refusal to perform the duties of your position;
         (ii)  disloyalty, gross negligence, dishonesty, breach of fiduciary
               duty or breach of a material term of this Agreement or the other
               agreements executed in connection herewith;
        (iii)  the commission by you of an act of fraud, embezzlement or
               deliberate disregard of the rules or policies of the Company or
               the commission by you of any other action which injures the
               Company;
         (iv)  acts which, in the reasonable judgment of the Board of Directors,
               would tend to generate adverse publicity toward the Company;
          (v)  the conviction, or plea of nolo contendere, by you of a felony.

In the event of a termination for Cause pursuant to the provisions of clauses
(i) through (v) above, inclusive, you shall be entitled to no payments, salary
continuation, severance or other benefits, except for earned but unpaid Base
Salary to the extent accrued through your actual departure date.

     (c)  At the Election of the Company for Reasons Other than for Cause.  The
          ---------------------------------------------------------------
     Company may, immediately and unilaterally, terminate your employment at any
     time without Cause by giving ten (10) days' advance written notice to you
     of the Company's election to terminate. During such ten-day period, you
     will be available on a full-time basis for the benefit of the Company to,
     among other things, assist the Company in making the transition to a
     successor. The Company, at its option, may pay you your prorated Base
     Salary rate for ten (10) days in lieu of such notice. In the event the
     Company exercises its rights to terminate

<PAGE>

     you without Cause and subject to your execution of a comprehensive release
     in the form, and of a scope, acceptable to the Company, the Company shall
     pay you, within thirty (30) days of your termination, a lump sum severance
     payment equal to your then current base salary for a period of one (1)
     year. If, despite diligent efforts, you are unable to obtain employment
     with any other employer at any time prior to the one year anniversary of
     your termination date, the company shall continue to pay you severance
     equal to your base salary for the period of six (6) months, or until you
     obtain employment, whichever occurs first.

     (d) Termination Due to Death or Disability. If this Agreement terminates
         --------------------------------------
         due to your death or disability, you shall be entitled to no payments,
         salary continuation, severance or other benefits, except for earned but
         unpaid Base Salary and benefits to the extent accrued or vested through
         your last day of employment. For the purposes of this Agreement, you
         shall be deemed to have suffered physical incapacity or mental
         incompetence if you are unable to perform the essential functions of
         your job with reasonable accommodation for a period of 180 consecutive
         or cumulative days in any one year period. Any accommodation will not
         be deemed reasonable if it imposes an undue hardship on the Company.

CHANGE IN CONTROL: In the event your employment is terminated by the Company for
any reason within six (6) months of the consummation of a Change in Control (as
defined herein) and subject to your execution of a comprehensive release in the
form, and of a scope, acceptable to the Company, the Company shall pay you,
within thirty (30) days of your termination, a lump sum severance payment equal
to your then current base salary for a period of one (1) year. If, despite
diligent efforts, you are unable to obtain employment with any other employer at
any time prior to the one (1) year anniversary of your termination date, the
company shall continue to pay you severance equal to your base salary for the
period of six (6) months, or until you obtain employment, whichever occurs
first. For purposes of this section, a "Change in Control" shall mean (i) any
merger or consolidation after which the voting securities of the Company
outstanding immediately prior thereto represent (either by remaining outstanding
or by being converted into voting securities of the surviving or acquiring
entity) less than 50% of the combined voting power of the voting securities of
the Company or such surviving or acquiring entity outstanding immediately after
such event; or (ii) any sale of all or substantially all of the assets or
capital stock of the Company (other than in a spin-off, a transaction in which
the sole purpose is to change the Company's state of incorporation or create a
holding company, or similar transaction). Under no circumstances shall you be
eligible for payment of severance under both this provision and the provision
above, which provides for severance upon termination by the Company for reasons
other than for Cause.

RELOCATION: As you know, you will be required to relocate from Washington to
Massachusetts. Accordingly, the company will pay you a one time, relocation
reimbursement bonus of $75,000.00, to be paid with the first regularly scheduled
payroll in September, 2001.

In the event employee voluntarily resigns from employment prior to the first
anniversary of his employment, the Relocation Reimbursement Bonus must be repaid
to the company.

RESTRICTIVE COVENANTS: You will be required to sign an Employee Noncompetition,
Nondisclosure and Developments Agreement as a condition of your employment with
the Company. A copy of this agreement is attached hereto. In addition, the
Company requires you to verify that the performance of your position at ACT does
not and will not breach any agreement entered into by you prior to employment
with the Company (i.e., you have not entered into any agreements with previous
employers which are in conflict with your obligations to ACT).



<PAGE>

Arbitration: You agree that any controversy or dispute between you and the
Company arising out of, or related to, this agreement, including, but not
limited to, the interpretation, construction or application of any of the terms
of this agreement, shall be settled by arbitration in accordance with the
Employment Dispute Rules of the American Arbitration Association; provided,
however, that nothing herein shall be deemed to preclude the Company from
seeking immediate or equitable relief from any court of competent jurisdiction
for claims arising out of, or related to, a violation by you of any provision of
the Employee Noncompetition, Nondisclosure and Developments Agreement. The
location of the arbitration shall be Boston, Massachusetts unless the Company
and the Employee mutually agree that the arbitration shall be held in another
location in Massachusetts. The parties shall share equally in the cost of the
arbitration and each party shall bear their own costs and attorney fees incurred
in preparation for, and attendance at, the arbitration.

Moreover, please bring with you on your first day of employment for purposes of
completing the I-9 form sufficient documentation to demonstrate your eligibility
to work in the United States. This verification must occur by the third day of
your employment.

The above terms are a summary of our initial employment relationship and are
subject to later modification by the Company.

This letter is being sent to you in duplicate. Please execute both copies,
retaining one copy for your records, and return one copy to me.

Pat, I am extremely pleased at the prospect of you joining my team and am
looking forward to working with you.

With regards,

/s/ John A Pino
------------------------
John A. Pino
Chief Executive Officer

/s/ Narendra Pathipati                           Aug. 9, 2001
-----------------------                        ----------------
Offer accepted, Narendra Pathipati