Mexican Stock Pledge Agreement

EXHIBIT 10.16


MEXICAN STOCK PLEDGE AGREEMENT


This MEXICAN STOCK PLEDGE AGREEMENT, dated as of July 29, 1999, between ACT MANUFACTURING, INC. ("ACT"), and CMC INDUSTRIES, INC. ("CMC", and together with ACT, the "Pledgors"), and THE CHASE MANHATTAN BANK ("Chase"), individually and as a collateral agent for the Lenders under the Credit Agreement defined below, having an address at One Chase Square, Rochester, New York 14643 (the "Collateral Agent" and together with the Lenders, the "Secured Parties");


W I T N E S S E T H:


WHEREAS, The Pledgors and ACT Manufacturing Securities Corporation, are entering into an Amended and Restated Credit Agreement of even date herewith (as the same may be modified, amended, supplemented or restated from time to time, the "Credit Agreement"), with Chase, as administrative, documentation, collateral and syndication agent, and the Lenders from time to time parties thereto;


WHEREAS, ACT and the Collateral Agent are currently parties to a Pledge Agreement dated as of October 14, 1998 with the Collateral Agent (the "Existing Pledge Agreement"), and the Pledgors and the Collateral Agent are entering into an AMENDED AND RESTATED PLEDGE AGREEMENT, in which, among other things, CMC appears as an additional "pledgor" under the Existing Pledge Agreement.


WHEREAS, a pledge constituted on Mexican stock is subject to certain non-waivable rules of law, the Pledgors and the Collateral Agent desire to execute a separate agreement, in addition to the AMENDED AND RESTATED PLEDGE AGREEMENT, governing the pledges to be constituted on Mexican stock owned by CMC.


WHEREAS, in connection with the execution and delivery of the Credit Agreement, the Collateral Agent has requested that the Pledgors, and the Pledgors have agreed to, enter into this Mexican Stock Pledge Agreement, pursuant to which the Pledgors are pledging and granting a security interest in the Pledged Collateral of Mexican Subsidiaries (as defined below) in favor of the Collateral Agent for the benefit of the Secured Parties.


NOW, THEREFORE, in consideration of the willingness of the Secured Parties to enter into the Credit Agreement and of the Lenders to agree, subject to the terms and conditions set forth therein, to make the Loans and issue Letters of Credit to the Borrowers pursuant thereto, and for other good and valuable consideration, receipt of which is hereby acknowledged, it is hereby agreed as follows:


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ARTICLE I


DEFINITIONS


Except as otherwise expressly defined herein, all capitalized terms shall have the meaning ascribed to them in the Credit Agreement.


1.1. Industrias. "Industrias" shall mean CMC Industrias Hermosillo, S.A. de C.V., a subsidiary of CMC Industries, Inc.


1.2. Inmuebles. "Inmuebles" shall mean CMC Inmuebles, S.A. de C.V., a subsidiary of CMC Industries, Inc.


1.3. Mexican Subsidiaries. "Mexican Subsidiaries" shall mean Industrias, Inmuebles and Servicios. For purposes of the Credit Agreement, it shall be understood that the Mexican Subsidiaries form part of the Foreign Subsidiaries (as defined in the Credit Agreement).


1.4. Servicios. "Servicios" shall mean Servicios y Administracion de Sonora, S.A. de C.V., a subsidiary of CMC Industries, Inc.


ARTICLE II


SECURITY INTEREST


The Pledgors hereby as depositors deposit with, and as pledgors pledge to, the Collateral Agent, for the benefit of the other Secured Parties, with all the responsibilities of a depositary: (a) the shares of capital stock as listed on Schedule I hereto (the "Pledged Stock of the Mexican Subsidiaries") of the Mexican Subsidiaries listed on Schedule I hereto, (b) the instruments, agreements and other documents in favor of either Pledgor as listed on Schedule II hereto (the "Pledged Debt Documents of the Mexican Subsidiary"), and (c) any and all other additional investment property, securities, instruments and chattel paper which may from time to time be pledged by the Pledgors to the Collateral Agent for the benefit of the Secured Parties (hereinafter referred to collectively as the "Pledged Collateral of Mexican Subsidiaries").


ARTICLE III


SECURED OBLIGATIONS


The security interest hereby granted shall secure the due and punctual payment and performance of the following liabilities and obligations of the Pledgors (herein called the "Secured Obligations"):


(a) Principal of and premium, if any, and interest on, and fees, charges and other amounts due in respect of the Loans and any Letter of Credit;


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(b) Any and all other obligations of the Pledgors to the Secured Parties under the Credit Agreement or under any agreement or instrument relating thereto, all as amended from time to time, including without limitation any Interest Rate Protection Agreements; and


(c) Any and all other obligations and Indebtedness of the Pledgors to the Secured Parties or any of them, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter arising, including without limitation any and all other fees, premiums, and penalties owing by the Pledgors to the Secured Parties or any of them.


ARTICLE IV


SPECIAL WARRANTIES AND COVENANTS OF THE PLEDGORS


The Pledgors hereby warrant and covenant to the Secured Parties that:


(a) The Pledged Collateral of Mexican Subsidiaries is duly and validly pledged to the Collateral Agent, in favor of the Collateral Agent for the benefit of the Secured Parties, and each Pledgor warrants and will defend the Collateral Agent against all claims and demands of all Persons whomsoever.


(b) The Pledgors have good title to the Pledged Collateral of Mexican Subsidiaries, free and clear of all Liens of every nature whatsoever except as expressly set forth or permitted under the Credit Agreement.


(c) All of the Pledged Collateral of Mexican Subsidiaries has been duly and validly issued and is fully paid and nonassessable.


(d) If any additional share of capital stock of any class of the Mexican Subsidiaries or if any promissory notes of the Mexican Subsidiaries or other securities of the Mexican Subsidiaries are acquired by any Pledgor after the date hereof, the same shall constitute Pledged Collateral of Mexican Subsidiaries and shall be deposited with and pledged to the Collateral Agent for itself and for the benefit of the other Secured Parties as provided in Article II hereof simultaneously with such acquisition; provided, however, that such Pledge shall be constituted in the current pledge proportion, that is: 324:500 (Number of Shares that are to be pledged of each of the Mexican Subsidiary versus Number of Outstanding Shares Capital Stock of each of the Mexican Subsidiaries). The Pledgors will promptly notify the Collateral Agent of the date and amount of any loans made from time to time by either Pledgor to the Mexican Subsidiaries as permitted by the Credit Agreement.


(e) No Pledgor will sell, convey or otherwise dispose of any of the Pledge Stock of the Mexican Subsidiaries, nor will any Pledgor create, incur or permit to exist any Lien whatsoever with respect to any of the Pledged Collateral of Mexican Subsidiaries, other than Liens on or in the Pledged Collateral of Mexican Subsidiaries created hereby or which are otherwise required or permitted under the Credit Agreement.


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