-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QyAzWQ8oHWCxro1+MI+lr1a4EkcsFBMmFaf1+dPue6+WJqQurdYnCGa1uPaO+bDB 4iaI9sRCcBqcGXF2KUZ+jw== 0001193125-03-082156.txt : 20031114 0001193125-03-082156.hdr.sgml : 20031114 20031114171713 ACCESSION NUMBER: 0001193125-03-082156 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 21 CONFORMED PERIOD OF REPORT: 20030930 FILED AS OF DATE: 20031114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DDI CAPITAL CORP/DYNAMIC DETAILS INC CENTRAL INDEX KEY: 0001050119 STANDARD INDUSTRIAL CLASSIFICATION: PRINTED CIRCUIT BOARDS [3672] IRS NUMBER: 330780382 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-41187 FILM NUMBER: 031005952 BUSINESS ADDRESS: STREET 1: 1230 SIMON CIRCLE CITY: ANAHEIM STATE: CA ZIP: 92806 BUSINESS PHONE: 7146304077 MAIL ADDRESS: STREET 1: 1231 SIMON CIRCLE CITY: ANAHEIM STATE: CA ZIP: 92806 FORMER COMPANY: FORMER CONFORMED NAME: DETAILS CAPITAL CORP DATE OF NAME CHANGE: 19971121 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DDI CORP CENTRAL INDEX KEY: 0001104252 STANDARD INDUSTRIAL CLASSIFICATION: PRINTED CIRCUIT BOARDS [3672] IRS NUMBER: 061576013 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-30241 FILM NUMBER: 031005951 BUSINESS ADDRESS: STREET 1: 1220 SAMON CIRCLE CITY: AHAMEIM STATE: CA ZIP: 92806 BUSINESS PHONE: 7145887200 MAIL ADDRESS: STREET 1: 1220 SIMON CIRCLE CITY: AHAHEIM STATE: CA ZIP: 92806 10-Q 1 d10q.htm FORM 10-Q FOR DDI CORPORATION Form 10-Q for DDi Corporation
Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2003

 

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 Numbers:

DDi Corp.

  000-30241

DDi Capital Corp.

  333-41187

 

DDi CORP.

DDi CAPITAL CORP.


(Exact name of registrants as specified in their charters)

 

Delaware

California


 

06-1576013

33-0780382


(State or other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

1220 Simon Circle

Anaheim, California                92806


(Address of principal executive offices)  (Zip code)

 

(714) 688-7200


(Registrants’ telephone number, including area code)

 

Not Applicable


(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether DDi Corp. and DDi Capital Corp.: (1) have 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 registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days:

 

x  Yes    ¨  No

 

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

 

¨  Yes    x  No

 

As of November 5, 2003, DDi Corp. had 49,526,136 shares of common stock, par value $0.01 per share, outstanding and DDi

Capital Corp. had 1,000 shares of common stock, par value $0.01 per share, outstanding. As of November 5, 2003, all of the voting stock of DDi Capital Corp. was held by DDi Intermediate Holdings Corp., and all of the voting stock of DDi Intermediate Holdings Corp. was held by DDi Corp.

 

This Quarterly Report on Form 10-Q is a combined quarterly report being filed separately by two registrants: DDi Corp. (“DDi Corp.” f/k/a DDi Holdings Corp.) and DDi Capital Corp. (“DDi Capital”). Except where the context clearly indicates otherwise, any references in this report to “DDi Corp.” includes all subsidiaries of DDi Corp. including DDi Capital. DDi Capital makes no representation as to the information contained in this report in relation to DDi Corp. and its subsidiaries other than DDi Capital.

 



Table of Contents

DDi CORP.

DDi CAPITAL CORP.

FORM 10-Q

 

TABLE OF CONTENTS

 

          Page No.

PART I

   FINANCIAL INFORMATION     

Item 1.

   Financial Statements    4
     Condensed Consolidated Balance Sheets as of September 30, 2003 and December 31, 2002    4
     Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2003 and 2002    5
     Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2003 and 2002    7
     Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2003 and 2002    9
     Notes to Condensed Consolidated Financial Statements    11

Item 2

   Management’s Discussion and Analysis of Financial Condition and Results of Operations    26

Item 3

   Quantitative and Qualitative Disclosures about Market Risk    39

Item 4.

   Controls and Procedures    40

PART II

   OTHER INFORMATION     

Item 1.

   Legal Proceedings    41

Item 3.

   Default Upon Senior Securities    41

Item 6.

   Exhibits and Reports on Form 8-K    42
Signatures    43

 

2


Table of Contents

FORWARD-LOOKING STATEMENTS

 

A number of the matters and subject areas discussed in this Form 10-Q are forward-looking in nature. The discussion of such matters and subject areas is qualified by the inherent risks and uncertainties surrounding future expectations generally, and also may differ materially from our actual future experience involving any one or more of such matters and subject areas. The Company cautions readers that all statements other than statements of historical facts included in this quarterly report on Form 10-Q regarding our financial position and business strategy may constitute forward-looking statements. All of these forward-looking statements are based upon estimates and assumptions made by our management, which although believed to be reasonable, are inherently uncertain. Therefore, undue reliance should not be placed on such estimates and statements. No assurance can be given that any of such estimates or statements will be realized and it is likely that actual results will differ materially from those contemplated by such forward-looking statements. Factors that may cause such differences include:

 

Bankruptcy-Related Factors

 

  risks associated with confirmation of our plan of reorganization and the implementation of the consensual restructuring contemplated therein relating to the voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code filed with the Bankruptcy Court (the “Chapter 11 Cases”) by DDi Corp. and DDi Capital Corp. (the “Debtors”);
  risks associated with third parties seeking to propose and confirm one or more plans;
  risks associated with completion of the out-of-court restructuring of our other indebtedness;
  risks associated with the termination of the support agreements with our senior lenders, convertible subordinated note holders and senior discount note holders;
  the potential adverse impact of the filed Chapter 11 cases on our liquidity or results of operations;
  our ability to maintain contracts that are critical to our operations during the Chapter 11 Cases;
  our ability to obtain court approval with respect to motions filed by the Debtors from time to time in the Chapter 11 cases; and
  our ability to continue as a going concern.

 

General Factors

 

  changes in general economic conditions in the markets in which we may compete and fluctuations in demand in the electronics industry;
  our ability to sustain historical margins as the industry develops;
  increased competition and costs;
  our ability to retain key members of management; and
  adverse state, federal or foreign legislation or regulation or adverse determinations by regulators.

 

The ultimate results of the forward looking statements and the terms of any reorganization plan ultimately confirmed, can affect the value of our various pre-petition liabilities, DDi Corp. common stock, DDi Corp. 5.25% and 6.25% Convertible Subordinated Notes, and DDi Capital Corp. 12.5% Senior Discount Notes and other securities. No assurance can be given as to what values, if any, will be ascribed in the bankruptcy proceedings to each of these constituencies. A plan of reorganization could result in holders of the liabilities and/or the securities of DDi Corp or DDi Capital Corp. receiving no value, minimal value or speculative value for their interests. Because of such possibilities, the value of these liabilities and/or securities is highly speculative. Accordingly, we urge that caution be exercised with respect to existing and future investments in any of these liabilities and/or securities.

 

We have attempted to identify, in context, certain of the factors that we currently believe may cause actual future experiences to differ from our current expectations regarding the relevant matter or subject area. In addition to the items specifically discussed above, our business and results of operations are subject to the risks and uncertainties described herein in Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations under the heading “Factors That May Affect Future Results;” however, the operations and results of our business also may be subject to the effect of other risks and uncertainties. Such risks and uncertainties not currently known to us include, but are not limited to, items described from time-to-time in our registration statements and periodic reports filed with the Securities and Exchange Commission. The Company assumes no obligation to update forward-looking information disclosed in this report or elsewhere to reflect actual results or changes in the factors affecting such forward-looking information.

 

3


Table of Contents

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

DDi CAPITAL CORP. AND DDi CORP.

(Debtors-in-Possession)

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

     DDi Capital

              DDi Corp.

 
     September 30,
2003


    December 31,
2002


              September 30,
2003


    December 31,
2002


 
Assets                                           

Current assets:

                                          

Cash and cash equivalents

   $ 6,767     $ 28,145               $ 6,773     $ 28,934  

Marketable securities - available for sale

     —         115                 —         115  

Cash, cash equivalents and marketable securities - restricted

     —         6,250                 —         6,250  

Accounts receivable, net

     24,165       28,013                 39,989       41,986  

Inventories

     14,255       16,988                 24,915       28,240  

Prepaid expenses and other

     2,772       2,674                 4,426       3,963  
    


 


           


 


Total current assets

     47,959       82,185                 76,103       109,488  

Property, plant and equipment, net

     46,803       54,301                 73,399       83,139  

Debt issuance costs, net

     3,542       3,524                 9,248       10,141  

Goodwill

     —         —                   14,280       13,982  

Cash, cash equivalents and marketable securities - restricted

     7,500       3,142                 7,500       3,142  

Other

     788       1,242                 868       1,300  
    


 


           


 


Total assets

   $ 106,592     $ 144,394               $ 181,398     $ 221,192  
    


 


           


 


Liabilities and Stockholders’ Equity (Deficit)                                           

Liabilities Not Subject to Compromise:

                                          

Current liabilities:

                                          

Current maturities of long-term debt and capital lease obligations

   $ 66,988     $ 70,054               $ 90,985     $ 275,137  

Revolving credit facilities

     —         —                   9,833       4,246  

Accounts payable

     11,240       14,062                 26,791       27,457  

Accrued expenses and other

     19,076       15,553                 26,647       28,093  

Income taxes payable

     642       235                 766       68  
    


 


           


 


Total current liabilities

     97,946       99,904                 155,022       335,001  

Long-term debt and capital lease obligations

     1,488       18,846                 1,608       38,509  

Deferred income tax liability

     262       226                 492       2,464  

Notes payable and other

     5,740       9,078                 5,740       9,078  
    


 


           


 


Total liabilities not subject to compromise

     105,436       128,054                 162,862       385,052  
    


 


           


 


 

Liabilities Subject to Compromise

     17,918       —                   228,557       —    
    


 


           


 


Total liabilities

     123,354       128,054                 391,419       385,052  
    


 


           


 


 

Commitments and contingencies

                                          
 

Stockholders’ equity (deficit):

                                          

Common stock, additional paid-in-capital and other

     628,454       628,951                 542,289       542,266  

Accumulated other comprehensive income (loss)

     534       (5,739 )               2,748       (3,215 )

Stockholder receivables

     —         —                   (630 )     (618 )

Accumulated deficit

     (645,750 )     (606,872 )               (754,428 )     (702,293 )
    


 


           


 


Total stockholders’ equity (deficit)

     (16,762 )     16,340                 (210,021 )     (163,860 )
    


 


           


 


Total liabilities and stockholders’ equity (deficit)

   $ 106,592     $ 144,394               $ 181,398     $ 221,192  
    


 


           


 


 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

4


Table of Contents

DDi CAPITAL CORP.

(Debtor-in-Possession)

Condensed Consolidated Statements of Operations

(In thousands)

(Unaudited)

 

    

Three Months Ended

September 30,


   

Nine Months Ended

September 30,


 
     2003

    2002

    2003

    2002

 

Net sales

   $ 38,150     $ 44,876     $ 115,123     $ 139,230  

Cost of sales

     33,440       39,176       105,008       123,673  

Restructuring-related inventory impairment

     —         —         1,736       3,397  
    


 


 


 


Gross profit

     4,710       5,700       8,379       12,160  

Operating expenses:

                                

Sales and marketing

     3,412       4,765       11,068       16,133  

General and administration

     2,250       2,423       6,849       8,385  

Goodwill impairment

     —         7,000       2,000       52,000  

Restructuring and other related charges

     (800 )     8,733       2,629       22,542  

Reorganization expenses

     2,009       —         7,148       —    
    


 


 


 


Operating loss

     (2,161 )     (17,221 )     (21,315 )     (86,900 )

Loss on interest rate swap termination

     —         —         5,621       —    

Interest expense (net) and other expense (net)

     2,148       2,445       6,967       6,561  
    


 


 


 


Loss before reorganization proceeding expenses

                                

and income taxes

     (4,309 )     (19,666 )     (33,903 )     (93,461 )

Reorganization proceeding expenses

     4,299       —         4,299       —    
    


 


 


 


Loss before income taxes

     (8,608 )     (19,666 )     (38,202 )     (93,461 )

Income tax benefit (expense)

     (279 )     4,934       (676 )     7,267  
    


 


 


 


Net loss

   $ (8,887 )   $ (14,732 )   $ (38,878 )   $ (86,194 )
    


 


 


 


 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

5


Table of Contents

DDi CORP.

(Debtor-in-Possession)

Condensed Consolidated Statements of Operations

(In thousands, except share and per share data)

(Unaudited)

 

    

Three Months Ended

September 30,


    

Nine Months Ended

September 30,


 
     2003

    2002

     2003

     2002

 

Net sales

   $ 59,445     $ 60,349      $ 177,329      $ 184,949  

Cost of sales

     52,864       53,919        162,588        166,000  

Restructuring-related inventory impairment

     —         —          1,736        3,465  
    


 


  


  


Gross profit

     6,581       6,430        13,005        15,484  

Operating expenses:

                                  

Sales and marketing

     4,233       5,267        13,634        17,676  

General and administration

     4,180       3,989        12,539        12,940  

Goodwill impairment

     427       12,000        2,427        72,000  

Restructuring and other related charges

     (800 )     9,051        2,995        23,485  

Reorganization expenses

     2,257       —          8,285        —    
    


 


  


  


Operating loss

     (3,716 )     (23,877 )      (26,875 )      (110,617 )

Loss on interest rate swap termination

     —         —          5,621        —    

Interest expense (net) and other expense (net) (contractual interest for the three and nine months ended September 30, 2003, was $5,385 and $17,646, respectively)

     4,427       6,218        16,688        15,968  
    


 


  


  


Loss before reorganization proceeding expenses and income taxes

     (8,143 )     (30,095 )      (49,184 )      (126,585 )

Reorganization proceeding expenses

     4,299       —          4,299        —    
    


 


  


  


Loss before income taxes

     (12,442 )     (30,095 )      (53,483 )      (126,585 )

Income tax benefit

     267       6,738        1,343        11,668  
    


 


  


  


Net loss

   $ (12,175 )   $ (23,357 )    $ (52,140 )    $ (114,917 )
    


 


  


  


Net loss per share - basic and diluted

   $ (0.25 )   $ (0.48 )    $ (1.06 )    $ (2.39 )
    


 


  


  


Weighted average shares used to compute loss per share:

                                  

Basic and diluted

     49,526,136       48,340,220        49,319,330        48,105,572  
    


 


  


  


 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

6


Table of Contents

DDi CAPITAL CORP.

(Debtor-in-Possession)

Consolidated Statements of Comprehensive Loss

(In thousands)

(Unaudited)

 

     Three Months Ended

    Nine Months Ended

 
     September 30,     September 30,  
     2003

    2002

    2003

    2002

 

Net loss

   $ (8,887 )   $ (14,732 )   $ (38,878 )   $ (86,194 )

Other comprehensive loss:

                                

Foreign currency translation adjustments

     23       (148 )     821       165  

Unrealized net loss for the period on interest rate swaps, net of income tax effect

     —         (1,131 )     (165 )     (6,144 )

Reclassification adjustment for loss on interest rate

                                

swap included in net loss

     —         —         5,621       —    

Unrealized holding loss on marketable securities - available for sale

     (8 )     (10 )     (4 )     (39 )
    


 


 


 


Comprehensive loss

   $ (8,872 )   $ (16,021 )   $ (32,605 )   $ (92,212 )
    


 


 


 


 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

7


Table of Contents

DDi CORP.

(Debtor-in-Possession)

Consolidated Statements of Comprehensive Loss

(In thousands)

(Unaudited)

 

     Three Months Ended

    Nine Months Ended

 
     September 30,     September 30,  
     2003

    2002

    2003

    2002

 

Net loss

   $ (12,175 )   $ (23,357 )   $ (52,140 )   $ (114,917 )

Other comprehensive loss:

                                

Foreign currency translation adjustments

     99       1,416       511       5,473  

Unrealized net loss for the period on interest rate swaps, net of income tax effect

     —         (1,025 )     (165 )     (5,855 )

Reclassification adjustment for loss on interest rate swap included in net loss

     —         —         5,621       —    

Unrealized holding loss on marketable

                                

securities - available for sale

     (8 )     (37 )     (4 )     (39 )
    


 


 


 


Comprehensive loss

   $ (12,084 )   $ (23,003 )   $ (46,177 )   $ (115,338 )
    


 


 


 


 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

8


Table of Contents

DDi CAPITAL CORP. AND DDi CORP.

(Debtors-in-Possession)

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

     DDi Capital

    DDi Corp.

 
     Nine Months Ended
September 30,


    Nine Months Ended
September 30,


 
     2003

    2002

    2003

    2002

 

Cash flows from operating activities:

                                

Net cash provided by (used in) operating activities before reorganization proceeding items

   $ (9,090 )   $ 3,623     $ (12,929 )   $ (3,589 )

Net cash used by reorganization proceeding items

     (4,299 )     —         (4,299 )     —    
    


 


 


 


Net cash provided by (used in) operating activities

     (13,389 )     3,623       (17,228 )     (3,589 )
    


 


 


 


Cash flows from investing activities:

                                

Purchases of property, plant and equipment

     (3,572 )     (6,672 )     (4,346 )     (8,315 )

Proceeds from sale of fixed assets

     70       163       81       212  

Purchases of marketable securities

     (64 )     —         (64 )     (18,730 )

Proceeds from sales of marketable securities

     175       19,626       175       37,905  

Investment in restricted assets

     (7,500 )     (12,500 )     (7,500 )     (12,500 )

Proceeds from investment in restricted assets

     9,392       —         9,392       —    

Acquisition related cash outflows, net

     (750 )     (516 )     (750 )     (729 )
    


 


 


 


Net cash provided by (used in) investing activities

     (2,249 )     101       (3,012 )     (2,157 )
    


 


 


 


Cash flows from financing activities:

                                

Principal payments on long-term debt

     (2,620 )     (64,653 )     (3,808 )     (64,653 )

Net payments on revolving credit facilities

     —         —         —         (3,030 )

Proceeds from issuance of convertible subordinated notes

     —         —         —         100,000  

Net borrowings on DDi Europe Facilities Agreement

     —         —         5,247       —    

Payments on other notes payable

     —         (458 )     —         (458 )

Principal payments on capital lease obligations

     (1,713 )     (1,241 )     (1,966 )     (1,942 )

Payment of debt issuance costs

     (1,286 )     (1,142 )     (1,286 )     (5,392 )

Capital contribution from Parent, net

     8       87,404       —         —    

Repayment of stockholder receivable

     —         —         —         110  

Payment of pro-rata portion of deferred swap liability

     —         (3,761 )     —         (3,761 )

Issuance of common stock through Employee

                                

Stock Purchase Plan

     —         —         23       193  

Proceeds from exercise of stock options

     —         —         —         154  
    


 


 


 


Net cash provided by (used in) financing activities

     (5,611 )     16,149       (1,790 )     21,221  
    


 


 


 


Effect of exchange rate changes on cash

     (129 )     (69 )     (131 )     55  
    


 


 


 


Net increase (decrease) in cash and cash equivalents

     (21,378 )     19,804       (22,161 )     15,530  

Cash and cash equivalents, beginning of year

     28,145       17,569       28,934       23,629  
    


 


 


 


Cash and cash equivalents, end of period

   $ 6,767     $ 37,373     $ 6,773     $ 39,159  
    


 


 


 


 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

9


Table of Contents

DDi CAPITAL CORP. AND DDi CORP.

(Debtors-in-possession)

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

Supplemental disclosure of cash flow information:

 

Non-cash operating activities:

During the nine months ended September 30, 2003, depreciation expense was approximately $10.2 million for DDi Capital and approximately $14.1 million for DDi Corp., goodwill impairment was $2.0 million and $2.4 million for DDi Capital and DDi Corp., respectively, and non-cash restructuring and reorganization charges were approximately $6.1 million for DDi Capital and $6.4 million for DDi Corp.

 

During the nine months ended September 30, 2002, depreciation expense was approximately $11.6 million for DDi Capital and approximately $15.4 million for DDi Corp., goodwill impairment was $52.0 million for DDi Capital and $72.0 million for DDi Corp., and non-cash restructuring charges were $23.6 million for DDi Capital and $24.2 million for DDi Corp.

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

10


Table of Contents

DDi CAPITAL CORP. AND DDi CORP.

(Debtors-in-possession)

Notes to the Condensed Consolidated Financial Statements

September 30, 2003

(Unaudited)

 

NOTE 1. BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS

 

Basis of Presentation

 

The unaudited condensed consolidated financial statements for DDi Corp. (“DDi Corp.”) include the accounts of its wholly-owned subsidiaries, DDi Intermediate Holdings Corp. (“Intermediate”) and DDi Europe Limited (“DDi Europe” f/k/a MCM Electronics Limited (“MCM”)) and the direct and indirect subsidiaries of Intermediate. The unaudited condensed consolidated financial statements for DDi Capital Corp. (“DDi Capital”), a wholly-owned subsidiary of Intermediate, include the accounts of its wholly-owned subsidiary Dynamic Details, Incorporated and its subsidiaries (“Dynamic Details”). Collectively, DDi Corp. and its subsidiaries are referred to as the “Company.”

 

The unaudited condensed consolidated financial statements of DDi Corp. include the results of Kamtronics Limited (“Kamtronics”) commencing October 24, 2002, the date of the acquisition of Kamtronics assets (see Note 10). All intercompany transactions have been eliminated in consolidation.

 

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary (consisting only of normal recurring adjustments) to present fairly the financial position of DDi Capital and DDi Corp. as of September 30, 2003, the results of operations for the three and nine months ended September 30, 2003 and 2002 and cash flows for the nine months ended September 30, 2003 and 2002. The results of operations for such interim periods are not necessarily indicative of results of operations to be expected for the full year.

 

These financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such regulations, although the Company believes the disclosures provided are adequate to prevent the information presented from being misleading. This report on Form 10-Q for the quarter ended September 30, 2003 should be read in conjunction with the audited financial statements presented in DDi Capital’s and DDi Corp.’s Annual Report on Form 10-K for the year ended December 31, 2002.

 

Description of Business

 

The Company is a leading provider of time-critical, technologically advanced, electronics manufacturing services. Headquartered in Anaheim, California, the Company offers fabrication and assembly services to customers on a global basis, from its facilities located across North America and in England.

 

NOTE 2. VOLUNTARY REORGANIZATION UNDER CHAPTER 11

 

Proceedings under Chapter 11 of the Bankruptcy Code

 

On August 20, 2003, DDi Corp. and DDi Capital (collectively, the “Debtors”), filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code (collectively, the “Chapter 11 Cases”) with the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). DDi Corp.’s other direct and indirect wholly-owned subsidiaries, including Intermediate, DDi Europe and Dynamic Details are not parties to the Chapter 11 Cases.

 

Out-of-Court Restructuring of Indebtedness

 

The Company anticipates restructuring the Dynamic Details senior credit facility (the “Senior Credit Facility,” or “Senior Indebtedness”) and DDi Europe’s outstanding credit facility with the Bank of Scotland (the “DDi Europe Facilities Agreement”) outside the Chapter 11 Cases.

 

11


Table of Contents

DDi CAPITAL CORP. AND DDi CORP.

(Debtors-in-possession)

Notes to the Condensed Consolidated Financial Statements

September 30, 2003

(Unaudited)

 

Support Agreements

 

In connection with the Chapter 11 Cases, the Debtors entered into (a) a Restructuring Support Agreement with 100% of the lenders under the Senior Credit Facility with respect to the terms of the Debtors’ plan of reorganization and the out-of-court restructuring of the Senior Indebtedness; (b) a Plan Support Agreement with holders holding approximately 63% of the outstanding principal amount (the “Convertible Subordinated Note Holders”) of the DDi Corp. 5.25% and 6.25% convertible subordinated notes (collectively, the “Convertible Subordinated Notes”) with respect to the terms of the Debtors’ plan of reorganization; and (c) a Senior Discount Noteholder Plan Support Agreement with holders of approximately 71.5% of the aggregate principal amount of the Senior Discount Notes (the “Consenting Senior Discount Note Holders”) with respect to the terms of the Debtors’ plan of reorganization. Pursuant to the Restructuring Support Agreement, the Plan Support Agreement and the Senior Discount Noteholder Plan Support Agreement, the holders of the Senior Indebtedness, the Convertible Subordinated Note Holders and the Consenting Senior Discount Note Holders respectively, agreed to support the Debtors’ plan of reorganization as long as the respective Restructuring Support Agreement, Plan Support Agreement and Senior Discount Noteholder Plan Support Agreement remain in effect. As is commonly the case in this type of restructuring, the holders of the Senior Indebtedness, the Convertible Subordinated Note Holders and the Consenting Senior Discount Note Holders will not be required to continue to support the plan of reorganization and the out-of-court restructuring of the Senior Indebtedness if certain events occur. Such events include, but are not limited to, the modification of the plan in a manner not agreed to by the holders of the Senior Indebtedness, the Convertible Subordinated Note Holders and the Consenting Senior Discount Note Holders, the appointment of a bankruptcy trustee or other receiver, the plan not being confirmed by the Bankruptcy Court by December 15, 2003, and the plan not being effective by January 8, 2004.

 

Terms of the Out-of-Court Restructuring

 

Dynamic Details anticipates restructuring its senior credit facility outside the Chapter 11 bankruptcy proceedings. As of September 30, 2003, the Senior Credit Facility consists of a Tranche A term facility of approximately $16.2 million, a Tranche B term facility of approximately $49.7 million; and a revolving line of credit of up to $25 million including revolving credit loans, letters of credit and swing line loans (access to the full amount is subject to conditions set forth in the agreement and is currently limited to $1.2 million which is reserved for letters of credit). In addition, as of September 30, 2003, Dynamic Details has a $5.8 million liability resulting from the interest rate swap termination (see Note 6). The Senior Credit Facility, the interest rate swap agreement liability and all accrued interest and fees will be restructured pursuant to an out-of-court agreement as follows:

 

  The Tranche A Revolving and Term Loan Facility shall be in an aggregate amount of $15.0 million which shall be available as a revolving loan until June 30, 2005 at which time any outstanding amounts under such facility shall be converted to a Tranche A Term Loan with a maturity date of April 15, 2008. The Tranche A Revolving and Term Loan Facility will have $13.8 million outstanding and $1.2 million reserved for letters of credit after restructuring. The Tranche B Term Loan shall consist of $57.9 million. The Tranche B Term Loan will mature on April 15, 2008. No significant amortization under either Tranche will be due until 2005.

 

  The holders of the restructured senior secured credit facility will receive warrants representing 10% of DDi Corp.’s common stock, on a fully diluted basis. The warrants will be held in escrow and will be exercisable after the twenty-four month anniversary of the effective date of the restructuring, but will be subject to cancellation in whole or in part if the Company meets certain conditions involving the permanent prepayment of the restructured senior credit facility on or before such anniversary date.

 

The Company is negotiating with the European lender in an effort to restructure the DDi Europe Facilities Agreement. For a further discussion of DDi Europe Facilities Agreement, see Note 5 herein.

 

12


Table of Contents

DDi CAPITAL CORP. AND DDi CORP.

(Debtors-in-possession)

Notes to the Condensed Consolidated Financial Statements

September 30, 2003

(Unaudited)

 

Terms of the Plan of Reorganization

 

The Debtors filed a pre-arranged plan of reorganization and related disclosure statement with the Bankruptcy Court on August 20, 2003, and an amendment to the plan of reorganization on November 5, 2003. The principal terms of the plan of reorganization, as amended, are as follows:

 

5.25% Convertible Subordinated Notes.  Each holder of the 5.25% convertible subordinated notes of DDi Corp., of which $100 million in principal amount is currently outstanding, will receive a pro rata share of (a) 43.2% of the new outstanding common stock of DDi Corp., subject to dilution for issuance of new common stock in connection with the exercise of the new stock options to be issued under DDi Corp.’s new management equity incentive plan, which is described below, and the new senior lender warrants, and (b) shares of a new class of preferred stock of DDi Corp., with an annual dividend of 15% and an aggregate liquidation preference of $7.5 million. The existing 5.25% convertible subordinated notes will be cancelled pursuant to the plan.

 

6.25% Convertible Subordinated Notes.  Each holder of 6.25% convertible subordinated notes of DDi Corp., of which $100 million in principal amount is currently outstanding, will receive a pro rata share of (a) 50.8% of the new outstanding common stock of DDi Corp., subject to dilution for issuance of new common stock in connection with the exercise of the new stock options to be issued under DDi Corp.’s new management equity incentive plan, which is described below, and the new senior lender warrants, and (b) shares of a new class of preferred stock of DDi Corp., with an annual dividend of 15% and an aggregate liquidation preference of $7.5 million. The existing 6.25% convertible subordinated notes will be cancelled pursuant to the plan as of the date of this filing.

 

DDi Capital Senior Discount Notes.  Each holder of the Senior Discount Notes, of which $16.09 million in principal amount and accrued interest of $1.83 million is currently outstanding as of September 30, 2003, will receive restructured DDi Capital senior discount notes with a maturity date of January 1, 2009. Payment-in-kind interest on such restructured senior discount notes would accrue at 16%, which would transition to cash pay at 14%, subject to certain terms and conditions. The holders of the Senior Discount Notes also will receive warrants representing 2.5% of DDi Corp.’s common stock, subject to dilution for issuance of new common stock in connection with the exercise of the new stock options to be issued under DDi Corp.’s new management equity incentive plan, which is described below, and the new senior lender warrants. The warrants will be held in escrow and will be exercisable after the twenty-four month anniversary of the effective date of the restructuring, but will be subject to forfeiture if the Company meets certain conditions involving the permanent prepayment of the restructured Senior Discount Notes on or before such anniversary date.

 

Management Equity Incentive Plan.  The Company will establish a new management equity incentive plan. Under the new management equity incentive plan, DDi Corp. will issue shares of restricted stock equaling five percent (5%) of the reorganized Company’s common stock to the Company’s management, and DDi Corp. may issue options for up to an additional ten percent (10%) of DDi Corp.’s common stock for members of the Company’s management.

 

Current Equity.  On the effective date of the plan of reorganization, the current common equity holders of DDi Corp. will receive 1% of the new common stock of restructured DDi Corp., subject to dilution for issuance of new common stock in connection with the exercise of DDi Corp.’s new stock options to be issued in connection with DDi Corp.’s new management equity incentive plan and new senior lender warrants following the restructuring.

 

Effects of Chapter 11 Cases

 

The Debtors have and will continue to conduct their business through their non-debtor operating subsidiaries, Dynamic Details and DDi Europe. The Debtors have and will manage their properties as debtors-in-possession during the pendency of the Chapter 11 Cases. The Chapter 11 Cases are expected to only minimally affect the operating businesses of the Debtors’ non-debtor affiliates. Because the terms of the proposed plan of reorganization and the out-of-court restructuring of the Senior Indebtedness have been agreed upon by holders holding approximately 63% of the outstanding principal amount of the Convertible Subordinated Notes and the holders of approximately 72% of the outstanding principal amount of the Senior Discount Notes, and are supported by the holders of 100% of the Senior Indebtedness, the Company believes there is a strong likelihood that the proposed restructuring will be confirmed. The Company currently estimates that the Debtors will emerge from bankruptcy within 90 to 120 days after the filing of the voluntary petitions.

 

13


Table of Contents

DDi CAPITAL CORP. AND DDi CORP.

(Debtors-in-possession)

Notes to the Condensed Consolidated Financial Statements

September 30, 2003

(Unaudited)

 

Accounting for Reorganization

 

Following the filing of the Chapter 11 Cases, there is no assurance that the carrying amounts of assets will be realized or that liabilities will be settled for amounts recorded. Based on negotiations with various parties in interest, DDi Corp. and DDi Capital have filed a pre-arranged plan of reorganization with the Bankruptcy Court to reorganize DDi Corp.’s and DDi Capital’s businesses and to restructure their obligations. It is anticipated that this plan of reorganization will change the amounts reported in the financial statements and cause a material change in the carrying amount of assets and liabilities. These and future financial statements will be prepared in accordance with AICPA’s Statement of Position 90-7 (“SOP 90-7”), “Financial Reporting by Entities in Reorganization under the Bankruptcy Code.” SOP 90-7 requires, under certain circumstances, that entities adopt fresh-start reporting upon emergence from Chapter 11. Fresh-start reporting involves allocating the reorganization value of the entity (which generally approximates fair value) to the entity’s assets and liabilities. SOP 90-7 also requires the debtor to segregate pre-petition liabilities that are subject to compromise and identify all transactions and events that are directly associated with the reorganization of the debtor. Accordingly, all pre-petition liabilities subject to compromise have been segregated in the unaudited Condensed Consolidated Balance Sheet and classified as Liabilities Subject to Compromise, at the estimated amount of allowable claims. Liabilities not subject to compromise are separately classified as current and non-current. Expenses directly resulting from the reorganization proceedings are reported separately as Reorganization Proceeding Expenses in the unaudited Condensed Consolidated Statement of Operations; cash used for reorganization proceeding items is disclosed separately in the unaudited Condensed Consolidated Statement of Cash Flows; and, after the August 20, 2003 filing date, of the Chapter 11 Cases, interest has no longer been recorded on the 5.25% and 6.25% Convertible Subordinated Notes of DDi Corp. because it is anticipated that such interest will not be paid.

 

Included in the Condensed Consolidated Financial Statements are the financial position and results of operations of subsidiaries of the Company that are not parties to the Chapter 11 Cases.

 

Reorganization Proceeding Expenses

 

In the third quarter of 2003, the Company recorded reorganization charges relating to the Chapter 11 Cases of $4.3 million for both DDi Capital and DDi Corp. All of these charges relate to professional fees directly associated with the Chapter 11 Cases.

 

Continued Existence

 

The accompanying financial statements have been prepared assuming the Company will continue as a going-concern, which assumes continuity of operations and realization of assets and satisfaction of liabilities in the ordinary course of business. The Company has incurred losses of approximately $52.1 million for the nine months ended September 30, 2003, and at September 30, 2003 has negative working capital of approximately $78.9 million, primarily attributable to the classification of approximately $65.9 million of debt, currently in default, and $23.8 million of debt, expected to be in default, as current liabilities, and has a stockholders’ deficit of approximately $210.0 million. The Company is in default under the Senior Credit Facility, the Convertible Subordinated Notes and the Senior Discount Notes. In addition, the Debtors have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The accompanying unaudited consolidated financial statements do not include adjustments that might result should the Company be unable to continue as a going concern.

 

Condensed Combined Financial Statements

 

The Company’s Consolidated Condensed Financial Statements include entities that are in reorganization as well as entities that are not in reorganization. Therefore, according to SOP 90-7, the Condensed Combined Financial Statements for the entities in reorganization must be shown separately. The following Condensed Combined Financial Statements have been prepared on the same basis as the Consolidated Condensed Financial Statements.

 

14


Table of Contents

DDi CAPITAL CORP. AND DDi CORP.

(Debtors-in-possession)

Notes to the Condensed Consolidated Financial Statements

September 30, 2003

(Unaudited)

 

DDi Capital Corp. and DDi Corp.

(Debtors-in-Possession)

Condensed Combined Balance Sheets

(In thousands)

(Unaudited)

 

     DDi Capital

              DDi Corp.

 
    

September 30,

2003


   

December 31,

2002


             

September 30,

2003


   

December 31,

2002


 
Assets                                           

Current assets:

                                          

Cash and cash equivalents

   $ —       $ —                 $ 6     $ 789  
    


 


           


 


Total current assets

     —         —                   6       789  

Investment in Subsidiaries

     772       32,248                 12,441       47,953  

Loan fees, net

     384       433                 6,089       7,052  
    


 


           


 


Total assets

   $ 1,156     $ 32,681               $ 18,536     $ 55,794  
    


 


           


 


Liabilities and Stockholders’ Deficit                                           

Liabilities Not Subject to Compromise:

                                          

Current Liabilities:

                                          

Accrued Expenses

     —         251                 —         3,564  
    


 


           


 


Total current liabilities

     —         251                 —         3,564  
 

Long-term debt and capital lease obligations

     —         16,090                 —         216,090  
    


 


           


 


Total liabilities not subject to compromise

     —         16,341                 —         219,654  
    


 


           


 


 

Liabilities Subject to Compromise

     17,918       —                   228,557       —    
    


 


           


 


Total liabilities

     17,918       16,341                 228,557       219,654  
    


 


           


 


 

Commitments and contingencies

                                          
 

Stockholders’ deficit:

                                          

Common stock, additional paid-in-capital and other

     628,988       623,212                 544,407       538,433  

Accumulated deficit

     (645,750 )     (606,872 )               (754,428 )     (702,293 )
    


 


           


 


Total stockholders’ deficit

     (16,762 )     16,340                 (210,021 )     163,860  
    


 


           


 


Total liabilities and stockholders’ deficit

   $ 1,156     $ 32,681               $ 18,536     $ 55,794  
    


 


           


 


 

15


Table of Contents

DDi CAPITAL CORP. AND DDi CORP.

(Debtors-in-possession)

Notes to the Condensed Consolidated Financial Statements

September 30, 2003

(Unaudited)

 

DDi Capital Corp.

(Debtor-in-Possession)

Condensed Combined Statements of Operations

(In thousands)

(Unaudited)

 

     Three Months Ended
September 30,
   

Nine Months Ended

September 30,

 
     2003

     2002

    2003

     2002

 

Loss in investment in subsidiaries

   $ (8,298 )    $ (14,419 )   $ (37,247 )    $ (85,275 )

Interest expense (net) and other expense (net)

     589        486       1,631        1,425  
    


  


 


  


Loss before income taxes

     (8,887 )      (14,905 )     (38,878 )      (86,700 )

Income tax benefit

     —          173       —          506  
    


  


 


  


Net loss

   $ (8,887 )    $ (14,732 )   $ (38,878 )    $ (86,194 )
    


  


 


  


 

DDi Corp.

(Debtor-in-Possession)

Condensed Combined Statements of Operations

(In thousands)

(Unaudited)

 

 
    

Three Months Ended

September 30,

   

Nine Months Ended

September 30,

 
     2003

     2002

    2003

     2002

 

Loss in investment in subsidiaries

   $ (9,818 )    $ (21,011 )   $ (42,277 )    $ (108,570 )

Interest expense (net) and other expense (net)

     2,357        3,638       9,863        9,840  

Loss before income taxes

     (12,175 )      (24,649 )     (52,140 )      (118,410 )

Income tax benefit

     —          1,292       —          3,493  
    


  


 


  


Net loss

   $ (12,175 )    $ (23,357 )   $ (52,140 )    $ (114,917 )
    


  


 


  


 

16


Table of Contents

DDi CAPITAL CORP. AND DDi CORP.

(Debtors-in-possession)

Notes to the Condensed Consolidated Financial Statements

September 30, 2003

(Unaudited)

 

DDi Capital Corp. and DDi Corp.

(Debtors-in-Possession)

Condensed Combined Statements of Cash Flows

(In thousands)

(Unaudited)

 

     DDi Capital

            DDi Corp.

 
    

Nine Months Ended

September 30,

           

Nine Months Ended

September 30,

 
             2003        

   2002

                    2003        

    2002

 

Net cash provided by (used in) operating activities

   $ —      $ (11 )           $ 370     $ (6,537 )
    

  


         


 


Cash flows from investing activities:

                                       

Purchases of marketable securities

     —        —                 —         (18,779 )

Proceeds from sales of marketable securities

     —        —                 —         18,328  
    

  


         


 


Net cash provided by (used in) investing activities

     —        —                 —         (451 )
    

  


         


 


Cash flows from financing activities:

                                       

Proceeds from issuance of convertible subordinated notes

     —        —                 —         100,000  

Payment of debt issuance costs

     —        —                 —         (4,250 )

Capital contribution from Parent, net

     —        (9,201 )             (1,176 )     (96,043 )

Repayment of stockholder receivable

     —        —                 —         110  

Issuance of common stock through Employee Stock Purchase Plan

     —        —                 23       193  

Proceeds from exercise of stock options

     —        —                 —         154  
    

  


         


 


Net cash provided by (used in) financing activities

     —        (9,201 )             1,153       164  
    

  


         


 


Effect of exchange rate changes on cash

     —        —                 —         (25 )
    

  


         


 


Increase (decrease) in cash

     —        (9,212 )             783       (6,849 )
    

  


         


 


CASH    Beginning

     —        9,212               789       6,060  
    

  


         


 


Ending

   $ —      $ —               $ 6     $ 789  
    

  


         


 


 

NOTE 3. INVENTORIES

 

Inventories are stated at the lower of cost (determined on a first-in, first-out basis) or market and consist of the following (in thousands):

 

     DDi Capital

            DDi Corp.

    

September 30,

2003


  

December 31,

2002


           

September 30,

2003


  

December 31,

2002


Raw materials

   $ 6,666    $ 8,964             $ 12,965    $ 15,376

Work-in-process

     5,857      5,759               7,858      8,536

Finished goods

     1,732      2,265               4,092      4,328
    

  

           

  

Total

   $ 14,255    $ 16,988             $ 24,915    $ 28,240
    

  

           

  

 

17


Table of Contents

DDi CAPITAL CORP. AND DDi CORP.

(Debtors-in-possession)

Notes to the Condensed Consolidated Financial Statements

September 30, 2003

(Unaudited)

 

NOTE 4. LIABILITIES SUBJECT TO COMPROMISE

 

Under bankruptcy law, actions by creditors to collect indebtedness the Debtors owed prior to the date of filing the Chapter 11 Cases are stayed and certain other pre-petition contractual obligations may not be enforced against the Debtors. Liabilities subject to compromise refer to the liabilities of the Debtors incurred prior to the filing of the Chapter 11 Cases. All of the Debtors’ pre-petition liabilities have been classified as Liabilities Subject to Compromise in the unaudited Condensed Consolidated Balance Sheets. Adjustments to the liabilities subject to compromise may result from negotiations, actions of the Bankruptcy Court, rejection of executory contracts including leases, implementation of the Plan, or other events.

 

The following table summarizes the components of the Liabilities Subject to Compromise in the unaudited Condensed Consolidated Balance Sheet as of September 30, 2003 (in thousands):

 

     DDi Capital

   DDi Corp

     September 30,
2003


   September 30,
2003


5.25% Convertible Subordinated Notes

   $ —      $ 100,000

6.25% Convertible Subordinated Notes

     —        100,000

12.5% Senior Discount Notes

     16,090      16,090

Accrued Interest

     1,828      12,467
    

  

Total Liabilities Subject to Compromise

   $ 17,918    $ 228,557
    

  

 

5.25% and 6.25% Convertible Subordinated Notes

 

The Company is currently in default under the Convertible Subordinated Notes, and does not expect that the Convertible Subordinated Notes will be repaid in accordance with their stated terms. DDi Corp. filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code on August 20, 2003 in order to restructure this debt. Accordingly, the Company classified this debt as Liabilities Subject to Compromise at September 30, 2003 and as current liabilities at December 31, 2002.

 

DDi Capital Senior Discount Notes

 

The Company is currently in default under the Senior Discount Notes and does not expect that that the Senior Discount Notes will be repaid in accordance with their stated terms. DDi Capital filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code on August 20, 2003 in order to restructure this debt. Accordingly, the Company classified this debt as Liabilities Subject to Compromise at September 30, 2003 and as current liabilities at December 31, 2002.

 

Other Liabilities

 

Pursuant to an order of the Bankruptcy Court, the Debtors mailed notices to all known creditors that the deadline for filing proofs of claim with the Bankruptcy Court was October 7, 2003. An estimated 74 claims were filed as of October 7, 2003, out of an estimated 5,795 notices sent to constituents. Until the process is complete, the ultimate number and amount of allowable claims cannot be ascertained.

 

NOTE 5. LONG TERM DEBT AND CAPITAL LEASES NOT SUBJECT TO COMPROMISE

 

As of September 30, 2003, the Debtors’ pre-petition debt, which include the 5.25% and 6.25% Convertible Subordinated Notes and the 12.5% Senior Discount Notes, are classified as Liabilities Subject to Compromise in the unaudited Condensed Consolidated Balance Sheets as of September 30, 2003 (see Note 4). The Company’s operating subsidiaries, DDi Europe

 

18


Table of Contents

DDi CAPITAL CORP. AND DDi CORP.

(Debtors-in-possession)

Notes to the Condensed Consolidated Financial Statements

September 30, 2003

(Unaudited)

 

and Dynamic Details are not parties to the Chapter 11 Cases and therefore the following long-term debt and capital lease obligations of DDi Europe and Dynamic Details have been classified as liabilities not subject to compromise (in thousands):

 

     DDi Capital

         DDi Corp.

 
     September 30,
2003


    December 31,
2002


         September 30,
2003


    December 31,
2002


 

Senior Term Facility (a)

   $ 65,925     $ 68,545          $ 65,925     $ 68,545  

6.25% Convertible Subordinated Notes (c)

     —         —              —         100,000  

5.25% Convertible Subordinated Notes (c)

     —         —              —         100,000  

12.5% Senior Discount Notes (c)

     —         16,090            —         16,090  

DDi Europe Facilities Agreement (b)

     —         —              23,756       24,146  

Capital lease obligations

     2,551       4,265            2,912       4,865  
    


 


      


 


Sub-total

     68,476       88,900            92,593       313,646  

Less current maturities

     (66,988 )     (70,054 )          (90,985 )     (275,137 )
    


 


      


 


Total

   $ 1,488     $ 18,846          $ 1,608     $ 38,509  
    


 


      


 


 

(a) The Senior Term Facility, together with the Revolving Credit Facility, comprise the Senior Credit Facility. Interest rates are LIBOR-based. The effective interest rate as of September 30, 2003, was 5.06%.
(b) Interest rates are LIBOR-based. The effective interest rate as of September 30, 2003, was 5.23%.
(c) The 5.25% and 6.25% Convertible Subordinated Notes and the 12.5% Senior Discount Notes have been classified as Liabilities Subject to Compromise as of September 30, 2003 (see Note 4).

 

Senior Credit Facility

 

Dynamic Details and Dynamic Details Incorporated, Silicon Valley entered into the Senior Credit Facility with a syndicate of banks, including JPMorgan Chase Bank, as Collateral, Co-Syndication and Administrative Agent (formerly Chase Manhattan Bank, N.A.) and Bankers Trust Company, as Documentation and Co-Syndication Agent. Borrowings under the Senior Credit Facility consist of a senior term facility (the “Senior Term Facility”) and a revolving credit facility. The Senior Credit Facility is jointly and severally guaranteed by Intermediate and DDi Capital and substantially all of the indirect subsidiaries of DDi Capital, and is collateralized by (a) pledges of all of the capital stock of Dynamic Details and of substantially all of its subsidiaries and (b) liens upon substantially all of the assets of Dynamic Details and of substantially all of its subsidiaries. The Senior Credit Facility expires in April 2005. Under the terms of this agreement, Dynamic Details must comply with certain restrictive covenants, which include the requirement that Dynamic Details meet certain financial tests. The Company is in default of certain covenants under the Senior Credit Facility.

 

During the second quarter of 2003, Dynamic Details amended its Senior Credit Facility, effective June 27, 2003. The amendment modified the payment date for the principal payment due on June 30, 2003 to August 1, 2003. On August 1, 2003, Dynamic Details further amended its Senior Credit Facility. The amendment defers all remaining principal amortization payments in 2003, including the one due on August 1, 2003, to January 30, 2004, subject to earlier acceleration upon the occurrence of a termination event as defined in the Restructuring Support Agreement. Interest and fees remain payable currently.

 

As there are no long-term forbearance arrangements in place, the Company has classified approximately $65.9 million and $68.5 million, respectively, of indebtedness relating to the Senior Credit Facility as current liabilities at September 30, 2003 and December 31, 2002. Dynamic Details is restricted from making certain payments, including dividend payments to its corporate parents, which, in turn, has the effect of not allowing (a) DDi Corp. to pay dividends to its stockholders and interest payments to convertible subordinated note holders and (b) DDi Capital to pay interest payments to its senior discount note holders.

 

On August 1, 2003, the holders of our Senior Credit Facility, as a condition to their consenting to the restructuring, entered into control agreements with us to monitor and control the use of the Company’s cash and cash equivalents held in the Company’s three principal bank accounts, described below, during the restructuring period prior to Bankruptcy Court approval of the plan of reorganization. Substantially all of the Company’s domestic cash, cash equivalents and marketable securities available for sale has been deposited into these accounts. The Company’s general operating account is

 

19


Table of Contents

DDi CAPITAL CORP. AND DDi CORP.

(Debtors-in-possession)

Notes to the Condensed Consolidated Financial Statements

September 30, 2003

(Unaudited)

 

maintained at JPMorgan Chase Bank and is under the sole control of JPMorgan Chase Bank, as collateral agent under the Senior Credit Facility. The Company has no right to issue instructions or any other right or ability to access or withdraw or transfer funds from the operating account without the consent of JPMorgan Chase Bank. The senior lenders also required the Company to establish a reserve account and maintain a minimum of $7.5 million in such account at all times. Under certain circumstances, the Company has access only to the interest earned on the funds in the reserve account. The Debtors also established a restructuring account for use in administering the costs and expenses associated with the restructuring, which will be funded by Dynamic Details pursuant to an agreement with the senior lenders unless specified events occur. Under certain circumstances, the holders of our Senior Credit Facility can take control of all of the above-referenced accounts.

 

In the event the Company is unable to enter into a satisfactory arrangements with the Senior Credit Facility lenders, the lenders could elect to declare all amounts outstanding together with accrued interest, to be immediately due and payable. Such event would jeopardize the Chapter 11 Cases (see Note 2).

 

DDi Europe Facilities Agreement

 

DDi Europe maintains a separate European debt facility made up of £18.5 million ($30.8 million) in term loans and a working capital facility having a maximum borrowing limit of £10.0 million ($16.7 million) for its European operations. Any amounts drawn under the working capital facility are repayable upon demand by the lender. Currently, the term loan is fully drawn.

 

Based upon current and expected market conditions for the DDi Europe operations, the European lender has stated its desire that DDi Europe not draw down more than £7.0 million ($11.7 million) of the working capital facility. As of September 30, 2003, an aggregate of £5.9 million, or $9.8 million, was outstanding under the DDi Europe working capital facility. Due to persistent softened economic conditions in Europe, the drawn balance under the revolving line of credit has grown during 2003. The Company believes that unless the European debt facility is restructured, or business trends change, DDi Europe may exceed the £7.0 million ($11.7 million) overdraft limit on its working capital facility and thereby default under such facility within the next 90 days.

 

If the European lender demands payment of the entire drawn balance of the working capital facility, funds would not be available for such payment from either the Company or DDi Europe. Failure to make such payment could give rise to a default of the European debt facility. Under such circumstances, the European lender will then have the ability to accelerate the term loans and amounts outstanding under the revolver and exercise all of their remedies with respect to such debt. Accordingly, the Company has elected to classify as a current liability the entire amount of principal of $23.8 million outstanding under that credit facility in the accompanying condensed consolidated balance sheet as of September 30, 2003. Management is negotiating with the European lender in an effort to restructure that credit facility. Although there can be no assurance that management’s efforts to restructure the debt will be successful, if management’s efforts are successful, then the Company will reclassify the debt based upon its contractual maturities.

 

NOTE 6. DERIVATIVES

 

The Company’s interest rate swap agreement represented an effective cash flow hedge of the variable rate of interest (1-month LIBOR) paid under the Senior Term Facility, mitigating exposure to increases in interest rates related to this debt. On April 25, 2003, pursuant to notification by the counter-party of their intent to exercise their right to terminate the interest rate swap agreement, the agreement was terminated at a cost of $5.8 million, the fair market value of the liability at termination. In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 133, “Accounting for Derivative Instruments and Hedging Activities,” since it is probable, as determined by EITF 02-04, “Determining Whether a Debtor’s Modification or Exchange of Debt Instruments is within the Scope of FASB Statement No. 15,” and EITF 96-19, “Debtor’s Accounting for a Modification or Exchange of Debt Instruments,” that terms of the Senior Term Facility will be modified and will not be repaid in accordance with its currently stated terms, the amount of net unrealized losses on the interest rate swap reported in accumulated other comprehensive income has been realized and thus has been reclassified into the Company’s net loss. The net realized loss of $5.6 million related to the termination of the interest rate swap

 

20


Table of Contents

DDi CAPITAL CORP. AND DDi CORP.

(Debtors-in-possession)

Notes to the Condensed Consolidated Financial Statements

September 30, 2003

(Unaudited)

 

agreement has been reclassified into loss on interest rate swap termination, a component of non-operating expenses, during the quarter ended June 30, 2003.

 

NOTE 7. EARNINGS PER SHARE

 

Basic and diluted earnings per share – SFAS No. 128, “Earnings Per Share,” requires DDi Corp. to report both basic net income (loss) per share, which is based on the weighted average number of common shares outstanding and diluted net income (loss) per share, which is based on the weighted average number of common shares outstanding and dilutive potential common shares outstanding.

 

For the three and nine months ended September 30, 2003 and 2002, potentially dilutive shares from the exercise of stock options and warrants and the conversion of the convertible subordinated debt were not included in diluted earnings per share because to do so would be anti-dilutive. The number of potentially dilutive shares for the three months ended September 30, 2003 and 2002, were 12,616,856 and 12,578,639, respectively, and for the nine months ended September 30, 2003 and 2002, were 12,823,662 and 12,914,830, respectively.

 

NOTE 8. STOCK OPTIONS

 

The Company uses the intrinsic value method prescribed by Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” to account for employee stock options and other stock-based compensation. Under this method, because the exercise price of the Company’s employee stock options equals the market price of the underlying stock on the date of the grant, no compensation expense is recognized. Accordingly, there is no compensation expense for stock-based employee compensation in the condensed consolidated financial statements for the three and nine months ended September 30, 2003 or 2002.

 

In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation—Transition and Disclosure—an Amendment to SFAS No. 123.” SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. The Company has adopted the disclosure only provisions of SFAS No. 123 and, accordingly, the implementation of SFAS No. 148 has not had a material effect on the Company’s consolidated financial position or results of operations.

 

The Company determined its pro forma results below using the alternate fair value method as prescribed by SFAS No. 123. Under the fair value based method of accounting for stock-based employee compensation, the fair value of each option grant is estimated at the date of grant using the Black-Scholes option pricing model and recognized over the vesting period, generally four years. Pricing model assumptions included an expected term of four years; and a risk-free interest rate, dividend yield, and volatility assumptions consistent with the expected term and particular grant date. Had compensation cost for all stock-based compensation plans been determined consistent with SFAS No. 123, DDi Corp.’s net loss and net loss per share would have been the following (amounts in millions, except per share data):

 

     Three Months Ended September 30,

         Nine Months Ended September 30,

 
     2003

    2002

         2003

    2002

 

Net loss:

                                     

As Reported

   $ (12.2 )   $ (23.4 )        $ (52.1 )   $ (114.9 )

Pro Forma

   $ (18.0 )   $ (31.5 )        $ (57.9 )   $ (123.0 )

Net loss per share - basic and diluted:

                                     

As Reported

   $ (0.25 )   $ (0.48 )        $ (1.06 )   $ (2.39 )

Pro Forma

   $ (0.35 )   $ (0.65 )        $ (1.17 )   $ (2.56 )

 

21


Table of Contents

DDi CAPITAL CORP. AND DDi CORP.

(Debtors-in-possession)

Notes to the Condensed Consolidated Financial Statements

September 30, 2003

(Unaudited)

 

NOTE 9. PRIVATE OFFERING

 

On April 2, 2002, DDi Corp. completed its private offering of $100.0 million aggregate principal amount of 6.25% Convertible Subordinated Notes due April 1, 2007. These notes are convertible at any time prior to maturity into shares of common stock at a conversion price of $11.04 per share, subject to certain adjustments. These notes generated proceeds of $95.8 million, net of underwriting discounts. Approximately $47.9 million of the net proceeds from the sale were used to repay a portion of the Senior Term Facility, $12.5 million was placed in a restricted account and the remainder has been and is being used for working capital and general corporate purposes.

 

NOTE 10. ACQUISITION OF KAMTRONICS LIMITED

 

On October 24, 2002, DDi Europe completed the acquisition of Kamtronics Limited (“Kamtronics”), a market leader in sourcing printed circuit boards for European customers, based in Calne, England, for approximately $4.2 million plus contingent consideration based on earnings in each of the two years following the date of acquisition. The total purchase price has been allocated to underlying assets acquired and liabilities assumed based upon their respective fair market value at the date of acquisition. During the quarter ended September 30, 2003, contingent consideration of $0.4 million was earned and capitalized as additional purchase price to goodwill. However, due to evolving financial factors affecting the Company’s business and based on business valuations that indicated the book value of goodwill was in excess of its fair value, the Company recorded goodwill impairment charges of $0.4 million for DDi Corp. during the quarter ended September 30, 2003.

 

As the historical financial statements of Kamtronics are not material to the Company’s consolidated financial statements, pro forma financial information has not been presented.

 

NOTE 11. SEGMENT REPORTING

 

SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information” established standards for reporting information about operating segments in annual financial statements and requires selected information about operating segments in interim financial reports issued to stockholders. It also established standards for related disclosures about products and services, geographic areas and major customers. Operating segments are defined as components of an enterprise that engage in business activities from which it may earn revenues and incur expenses whose separate financial information is available and is evaluated regularly by the Company’s chief operating decision makers, or decision making group, to perform resource allocations and performance assessments.

 

The Company’s chief operating decision maker is the Chief Executive Officer. Based on the evaluation of the Company’s financial information, management believes that the Company operates in one reportable segment which designs, develops, manufactures, assembles and tests complex printed circuit boards, back panels and related electronic products. The Company operates in two geographical areas, domestic (U.S.A.) and international. Revenues are attributed to the country to which the product is sold. Revenues by product and service are not reported as it is impracticable to do so

 

The following summarizes net sales for DDi Corp. and DDi Capital by geographic area (in thousands):

 

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Table of Contents

DDi CAPITAL CORP. AND DDi CORP.

(Debtors-in-possession)

Notes to the Condensed Consolidated Financial Statements

September 30, 2003

(Unaudited)

 

     DDi Capital

   DDi Corp.

     Three Months Ended
September 30,
   Nine Months Ended
September 30,
   Three Months Ended
September 30,
   Nine Months Ended
September 30,
     2003

   2002

   2003

   2002

   2003

   2002

   2003

   2002

Net sales:

                                                       

Domestic

   $ 33,329    $ 41,620    $ 104,419    $ 130,588    $ 33,329    $ 41,620    $ 104,419    $ 130,588

Europe (a)

     1,492      99      2,040      653      22,787      15,572      64,246      46,372

Other

     3,329      3,157      8,664      7,989      3,329      3,157      8,664      7,989
    

  

  

  

  

  

  

  

Total

   $ 38,150    $ 44,876    $ 115,123    $ 139,230    $ 59,445    $ 60,349    $ 177,329    $ 184,949
    

  

  

  

  

  

  

  

 

(a) Sales to the United Kingdom represent the majority of the sales to Europe.

 

The following summarizes long-lived assets for DDi Corp. and DDi Capital by geographic area (in thousands):

 

     DDi Capital

   DDi Corp.

     September 30,
2003


   December 31,
2002


   September 30,
2003


   December 31,
2002


Long-lived assets:

                           

Domestic

   $ 54,122    $ 58,556    $ 59,827    $ 65,173

Europe

     —        —        40,957      42,878

Canada

     4,511      3,653      4,511      3,653
    

  

  

  

Total

   $ 58,633    $ 62,209    $ 105,295    $ 111,704
    

  

  

  

 

NOTE 12. GOODWILL AND INTANGIBLES

 

On January 1, 2002, the Company adopted SFAS Nos. 141 and 142. SFAS No. 141, “Business Combinations,” requires that the purchase method of accounting be used for all business combinations, establishes specific criteria for recognizing intangible assets separately from goodwill and requires certain disclosures regarding reasons for a business combination and the allocation of the purchase price paid. SFAS No. 142, “Goodwill and Other Intangible Assets,” establishes that goodwill and certain intangible assets will not be amortized and the amortization period of certain intangible assets will no longer be limited to forty years. In addition, SFAS No. 142 requires that goodwill and intangible assets that are not amortized be tested for impairment at least annually. The Company will complete its annual impairment test in the fourth quarter of its fiscal year. The Company also performs quarterly impairment tests if circumstances related to the Company’s business deem it necessary.

 

In adopting these pronouncements, the Company evaluated its identifiable intangible assets for recognition apart from goodwill. At the date of adoption, identifiable intangible assets consisted of developed technologies, assembled workforce and customer relationships. Such assets were not deemed to be separable from goodwill. Accordingly, the balances of these intangible assets at January 1, 2002, with an aggregate net carrying amount of $45.6 million (consisting of a gross cost of $90.8 million and associated accumulated amortization of $45.2 million), were reclassified to goodwill. In addition, the Company also reclassified approximately $16.6 million of deferred tax liabilities associated with these intangible assets to goodwill. In accordance with SFAS No. 142, as of the date of adoption, the Company prospectively ceased amortization of goodwill and instead conducts periodic tests of impairment.

 

The Company operates in one reportable segment (see Note 11). The Company separately monitors the financial performance of its North American and European operations. Further, each of these operations generally serves a distinct customer base. Based upon these facts, the Company considers the North American and European operations its reporting units for the assignment of goodwill. The Company’s European operations consist of entities acquired in conjunction with the MCM Electronics purchase transaction in 2000; the Thomas Walter purchase transaction in 2001 and the Kamtronics purchase transaction in 2002. The amount of goodwill attributable to the European operations was the amount generated in

 

23


Table of Contents

DDi CAPITAL CORP. AND DDi CORP.

(Debtors-in-possession)

Notes to the Condensed Consolidated Financial Statements

September 30, 2003

(Unaudited)

 

the purchase transactions, net of related amortization through December 31, 2001 and the associated reclassifications of deferred tax liabilities to goodwill. All other goodwill was related to the Company’s North American operations.

 

Based on the Company’s initial transition impairment testing during the first quarter of 2002, no impairment was recognized. However, due to a continued stock price decline during both the second and third quarters of 2002, tests of impairment were performed in each of these quarters. The analyses indicated that the book value of goodwill during each quarter was in excess of its fair value, as determined by the Company’s market capitalization. After assessing the goodwill impairment at a reporting unit level, the Company calculated and recorded goodwill impairment charges of $45.0 million and $7.0 million, respectively, for DDi Capital and $60.0 million and $12.0 million, respectively, for DDi Corp. in the quarters ended June 30 and September 30, 2002, respectively. In addition, due to evolving financial factors affecting the Company’s business, primarily the Company’s then current discussions with its senior lenders, convertible subordinated noteholders and other stakeholders, and based on business valuations that indicated the book value of goodwill was in excess of its fair value at December 31, 2002, the Company calculated and recorded goodwill impairment charges during the fourth quarter of 2002 of $76.7 million and $127.0 million for DDi Capital and DDi Corp., respectively.

 

In the second quarter of 2003, the Company amended the contingent consideration relating to a prior purchase transaction and replaced it with a settlement of $2.0 million to be paid over the next three years. This amount was originally capitalized as additional purchase price to goodwill. However, due to evolving financial factors affecting the Company’s business, primarily the Company’s recent discussions with its senior lenders, convertible subordinated noteholders and other stakeholders, and based on business valuations that indicated the book value of goodwill was in excess of its fair value, the Company recorded goodwill impairment charges of $2.0 million for DDi Capital and DDi Corp. during the quarter ended June 30, 2003.

 

In the third quarter of 2003, the Company accrued contingent consideration relating to a prior purchase transaction of $0.4 million (see Note 10). This amount was originally capitalized as additional purchase price to goodwill. However, due to evolving financial factors affecting the Company’s business and based on business valuations that indicated the book value of goodwill was in excess of its fair value, the Company recorded goodwill impairment charges of $0.4 million for DDi Corp. during the quarter ended September 30, 2003.

 

SFAS No. 142 requires a second step analysis whenever a reporting unit’s book value exceeds its estimated fair value. This analysis requires the Company to estimate the fair value of the reporting unit’s individual assets and liabilities to complete this analysis to determine if any adjustments to the estimated goodwill impairment charges recorded are necessary. The Company expects to complete this analysis in the quarter ending December 31, 2003.

 

Goodwill for DDi Corp. is $14.3 million and $14.0 million as of September 30, 2003 and December 31, 2002, respectively, which represents the goodwill of DDi Europe.

 

NOTE 13. RESTRUCTURING AND OTHER RELATED CHARGES

 

In 2001, management and the Company’s Board of Directors approved a plan to close its Garland, Texas and Marlborough, Massachusetts facilities. In 2002, management and the Company’s Board of Directors approved a plan to close its Dallas, Texas and Moorpark, California facilities and selected design centers and to restructure various European operations. In addition to these facility closures during 2002, management and the Company’s Board of Directors also approved a plan in 2002 to write-down unutilized assets, streamline certain manufacturing facilities, eliminate certain sales offices, including the office based in Tokyo, and to scale down its Anaheim, California facility. The various facility closures and other restructuring initiatives was effectively complete by December 31, 2002.

 

In the first quarter of 2003, DDi Capital and DDi Corp. recorded charges totaling $0.4 million and $0.5 million, respectively, which were classified as “Restructuring and other related charges.” Such charges primarily represent revision of estimates from previously recorded restructuring charges and consisted of $0.2 million in accrued restructuring expenses for both DDi Capital and DDi Corp. and $0.2 million and $0.3 million in severance and other exit costs for DDi Capital and DDi Corp., respectively. The accrued restructuring expenses of $0.2 million relate to other exit costs for both DDi Capital and DDi Corp.

 

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Table of Contents

DDi CAPITAL CORP. AND DDi CORP.

(Debtors-in-possession)

Notes to the Condensed Consolidated Financial Statements

September 30, 2003

(Unaudited)

 

In the second quarter of 2003, DDi Capital and DDi Corp. recorded charges totaling $4.7 million and $5.0 million, respectively, which were classified as “Restructuring and other related charges.” Such charges consist of $1.7 million relating to impairment of inventory which are reflected as a component of cost of goods sold, $1.0 relating to impairment of net property, plant and equipment primarily related to the Dallas-based electronics enclosure operations the Company sold, $0.3 million in severance and related expenses, $0.1 million in other exit costs and $1.3 million in accrued restructuring expenses for DDi Capital. The charges recorded in the second quarter for DDi Corp. were the same as DDi Capital except severance and related expenses which were $0.6 million for DDi Corp.

 

“Restructuring and other related charges” recorded in the third quarter of 2003 totaled ($0.8) million for DDi Capital and DDi Corp. Such charges consist of a non-cash credit of $0.8 million resulting principally from a reduction in estimated net lease exit costs recorded as part of its operational restructuring initiatives undertaken in 2002.

 

Total accrued restructuring expenses at September 30, 2003 were $1.8 million and $1.9 million for DDi Capital and DDi Corp., respectively. These accrued restructuring expenses represented $1.4 million and $1.5 million in estimated facilities closure costs for DDi Capital and DDi Corp., respectively, $0.2 million for severance and related expenses, and $0.2 million in other exit costs for both DDi Capital and DDi Corp.

 

NOTE 14. REORGANIZATION EXPENSES

 

During the fourth quarter of 2002, the Company initiated plans to restructure debt and retain employees. These efforts resulted in reorganization charges of $5.1 million and $6.0 million in DDi Capital and DDi Corp., respectively, for the first half of 2003. Of these amounts, $3.7 million and $3.9 million is related to professional fees and $1.4 million and $2.1 million for DDi Capital and DDi Corp., respectively, is related to personnel retention costs under the Dynamic Details Key Employee Retention Program (“KERP”).

 

In the third quarter of 2003, the Company recorded reorganization charges of $2.0 million and $2.3 million in DDi Capital and DDi Corp., respectively. Of these amounts, $1.3 million and $1.6 million for DDi Capital and DDi Corp., respectively, relates to professional fees and other costs associated with the reorganization. The charges also include $0.7 million for DDi Capital and DDi Corp. related to personnel retention costs under the Dynamic Details KERP and is included in accrued expenses at September 30, 2003. The maximum remaining commitment as of September 30, 2003, dependent on future service and therefore not accrued in the consolidated financial statements, related to each of the remaining installment payments under the KERP are estimated to be $0.6 million and $0.8 million for DDi Capital and DDi Corp., respectively.

 

Total accrued reorganization expenses at September 30, 2003 were $0.7 million for DDi Capital and DDi Corp. All of these accrued reorganization expenses represent the personnel retention costs under the Dynamic Details KERP.

 

NOTE 15. COMPREHENSIVE LOSS

 

SFAS No. 130, “Reporting Comprehensive Income,” establishes requirements for reporting and disclosure of comprehensive income (loss) and its components. Comprehensive loss includes unrealized holding gains and losses and other items that have previously been excluded from net loss and reflected instead in stockholders’ equity. Comprehensive loss for DDi Capital and DDi Corp. consists of net loss plus the effect of foreign currency translation adjustments, unrealized holding gains (losses) on marketable securities classified as available-for-sale and unrealized net gains on interest rate swaps and related unrealized net tax impact.

 

As a result of the termination of the Company’s interest rate swap agreement (see Note 6), the Company reclassified the amount of net unrealized losses on interest rate swaps reported in accumulated other comprehensive income into operations during the quarter ended June 30, 2003.

 

25


Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

Overview

 

DDi Corp. provides technologically advanced, time-critical electronics design, development and manufacturing services to original equipment manufacturers and other electronics manufacturing service providers. Operating through our primary operating subsidiaries, Dynamic Details, Incorporated (“Dynamic Details”) and DDi Europe Limited (“DDi Europe”), we target customers that have new product development programs demanding the rapid application of advanced technology and design.

 

As used herein, the “Company,” “we,” “us,” or “our” means DDi Corp. and its wholly-owned subsidiaries, including DDi Capital Corp. (“DDi Capital”), Dynamic Details and DDi Europe.

 

This discussion and analysis should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations set forth in DDi Capital’s and DDi Corp.’s Annual Report on Form 10-K for the year ended December 31, 2002.

 

Chapter 11 Proceedings

 

On August 20, 2003, DDi Corp. and DDi Capital (collectively, the “Debtors”), filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code (collectively, the “Chapter 11 Cases”) with the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). DDi Corp.’s other direct and indirect wholly-owned subsidiaries, including Intermediate DDi Europe and Dynamic Details are not parties to the Chapter 11 Cases. For further information regarding these petitions, see Note 2 to the unaudited condensed consolidated financial statements entitled “Voluntary Reorganization Under Chapter 11.”

 

The Debtors have and will continue to conduct their business through their non-debtor operating subsidiaries, Dynamic Details and DDi Europe. The Debtors have and will manage their properties as debtors-in-possession during the pendency of the Chapter 11 Cases. The Chapter 11 Cases are expected to only minimally affect the operating businesses of the Debtors’ non-debtor affiliates. Because the terms of the proposed plan of reorganization and the out-of-court restructuring of the Senior Indebtedness have been agreed upon by holders holding approximately 63% of the outstanding principal amount of the Convertible Subordinated Notes and the holders of approximately 72% of the outstanding principal amount of the Senior Discount Notes, and are supported by the holders of 100% of the Senior Indebtedness, the Company believes there is a strong likelihood that the proposed restructuring will be confirmed. The Company currently estimates that the Debtors will emerge from bankruptcy within 90 to 120 days after the filing of the voluntary petitions.

 

Continued Existence

 

Our financial statements have been prepared assuming the Company will continue as a going-concern, which assumes continuity of operations and realization of assets and satisfaction of liabilities in the ordinary course of business. The Company has incurred losses of approximately $52.1 million for the nine months ended September 30, 2003, and at September 30, 2003 has negative working capital of approximately $78.9 million, primarily attributable to the classification of approximately $65.9 million of debt, currently in default, and $23.8 million of debt, expected to be in default, as current liabilities, and has a stockholders’ deficit of approximately $210.0 million. The Company is in default under the Senior Credit Facility, the Convertible Subordinated Notes and the Senior Discount Notes and DDi Corp. and DDi Capital have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The Company’s accompanying unaudited consolidated financial statements do not include adjustments that might result should the Company be unable to continue as a going concern.

 

Results of Operations

 

Three Months Ended September 30, 2003 Compared to the Three Months Ended September 30, 2002

 

Net Sales

DDi Capital net sales decreased $6.7 million (15%) to $38.2 million for the three months ended September 30, 2003, from $44.9 million for the same period in 2002. Such decrease in net sales reflects the disposition of several non-core facilities during the latter part of 2002 and in April 2003, reducing sales by approximately $2.4 million, and the Company’s decision to be more selective in accepting orders, focusing on higher margin opportunities. DDi Corp. net sales decreased $0.9 million (1%) to $59.4 million for the three months ended September 30, 2003, from $60.3 million for the same period in

 

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2002. The decrease in DDi Corp. net sales is due to the net decrease in DDi Capital net sales discussed above mitigated by the acquisition of Kamtronics in October 2002 which contributed approximately $5 million to net sales in the third quarter of 2003.

 

Gross Profit

DDi Capital gross profit decreased $1.0 million (17%) to $4.7 million for the three months ended September 30, 2003, from $5.7 million for the same period in 2002. DDi Capital’s gross profit was 12% for the three months ended September 30, 2003 compared to 13% for the three months ended September 30, 2002. DDi Corp. gross profit for the third quarter of 2003 was $6.6 million, an increase of $0.2 million (3%), compared with gross profit of $6.4 million for the comparable period in 2002. Gross profit for DDi Corp. was 11% of net sales in each period.

 

Sales and Marketing Expenses

DDi Capital sales and marketing expenses decreased $1.4 million (28%) to $3.4 million for the three months ended September 30, 2003, from $4.8 million for the same period in 2002. Such decreases in sales and marketing expenses resulted from various cost control initiatives implemented throughout 2002 and 2003 and from the lower level of net sales generated in 2003. DDi Corp. sales and marketing expenses decreased $1.1 million (20%) to $4.2 million for the three months ended September 30, 2003, from $5.3 million for the same period in 2002. Such decreases in sales and marketing expenses resulted from various cost control initiatives implemented throughout 2002 and 2003.

 

General and Administration Expenses

DDi Capital general and administration expenses decreased $0.2 million (7%) to $2.2 million for the three months ended September 30, 2003, from $2.4 million for the same period in 2002. The decrease in general and administration expenses resulted from various cost control initiatives implemented throughout 2002 and 2003. DDi Corp. general and administration expenses increased $0.2 million (5%) to $4.2 million for the three months ended September 30, 2003, from $4.0 million for the same period in 2002. The increase in general and administrative expenses was due to the acquisition of Kamtronics by DDi Europe during the fourth quarter of 2002 (see Note 10 to the Condensed Consolidated Financial Statements), mitigated by the Company’s continued cost control efforts.

 

Goodwill Impairment

Goodwill impairment was $0 and $0.4 million for DDi Capital and DDi Corp., respectively, for the three months ended September 30, 2003, compared to $7.0 million for DDi Capital and $12.0 million for DDi Corp. for the three months ended September 30, 2002. The impairment charge for 2003 relates to the additional purchase price for a prior acquisition initially capitalized in the third quarter of 2003 (see Note 10 to the condensed consolidated financial statements). The impairment charge for 2002 was incurred because the book value of goodwill was in excess of its fair value, as determined by the Company’s market capitalization as of September 30, 2002.

 

Restructuring and Other Related Charges

Restructuring and related charges were ($0.8) million for DDi Capital and DDi Corp. for the three months ended September 30, 2003, compared to $8.7 million for DDi Capital and $9.1 million for DDi Corp. for the three months ended September 30, 2002. Such charges in the current quarter represent a non-cash credit of $0.8 million resulting principally from a reduction in estimated net lease exit costs recorded as part of its operational restructuring initiatives undertaken in 2002. Charges for the three months ended September 30, 2002, represent additional costs incurred in connection with management’s decision to close various facilities, eliminate additional overhead, and remove underutilized assets from productive service.

 

Reorganization Expenses

Reorganization expenses were $2.0 million for DDi Capital and $2.3 million for DDi Corp., respectively, for the three months ended September 30, 2003. Such charges represent $1.3 million and $1.6 million for DDi Capital and DDi Corp., respectively, related to professional fees and other costs associated with the reorganization of our debt structure. The charges also include $0.7 million for DDi Capital and DDi Corp. related to personnel retention costs under the Dynamic Details Key Employee Retention Program and is included in accrued expenses at September 30, 2003 (see Note 14 to the condensed consolidated financial statements).

 

Reorganization Proceeding Expenses

Reorganization proceeding expenses were $4.3 million for DDi Capital and DDi Corp. for the three months ended September 30, 2003. Such charges represent professional fees directly associated with the Chapter 11 reorganization proceeding (see Note 2 to the condensed consolidated financial statements).

 

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Net Interest Expense

DDi Capital net interest expense decreased $0.3 million to $2.1 million for the three months ended September 30, 2003, from $2.4 million for the same period in 2002. The decrease in the interest expense for DDi Capital was caused by a significant decrease in the LIBOR-based interest rate on the Senior Term Facility. DDi Corp. net interest expense decreased $1.8 million to $4.4 million for the three months ended September 30, 2003, from $6.2 million for the same period in 2002. The decrease in net interest expense reflects the decrease in the DDi Capital net interest expense as well as the cessation of periodic interest charges on the Company’s 5.25% and 6.25% Convertible Subordinated Notes since August 20, 2003, the date of the filing of the Chapter 11 Cases (see Note 2 to the condensed consolidated financial statements).

 

Income Taxes

The DDi Capital effective tax expense rate was approximately 3.2% for the three months ended September 30, 2003 compared to a benefit rate of 33.5% for the same period in 2002. The DDi Corp. effective income tax benefit rate decreased to 2.1% for the three months ended September 30, 2003, as compared to 28.8% for the same period in 2002. During the three months ended September 30, 2003, the Company’s effective tax rates reflect the impact of valuation allowances on U.S. federal and state deferred tax assets generated in the current period. During the three months ended September 30, 2002, the Company’s effective tax rates reflect the impact of substantial non-deductible items, primarily the goodwill impairment and valuation allowances relating to certain state deferred tax assets, including state tax credits.

 

Nine Months Ended September 30, 2003 Compared to the Nine Months Ended September 30, 2002

 

Net Sales

DDi Capital net sales decreased $24.1 million (17%) to $115.1 million for the nine months ended September 30, 2003, from $139.2 million for the same period in 2002. Such decrease in net sales reflects the disposition of several non-core facilities during the latter part of 2002 and April 2003. DDi Corp. net sales decreased $7.6 million (4%) to $177.3 million for the nine months ended September 30, 2003, from $184.9 million for the same period in 2002. The decrease in DDi Corp. net sales is due to the net decrease in DDi Capital net sales discussed above, partially offset by the acquisition of Kamtronics in October 2002 which contributed approximately $14 million in revenue in the first nine months of 2003.

 

Gross Profit

DDi Capital gross profit decreased $3.8 million (31%) to $8.4 million for the nine months ended September 30, 2003, from $12.2 million for the same period in 2002. DDi Corp. gross profit decreased $2.5 million (16%) to $13.0 million for the nine months ended September 30, 2003, from $15.5 million for the same period in 2002. The decreases in the Company’s gross profit resulted from both the softness in the end-market demand and the restructuring related inventory impairment (see Note 13 to the condensed consolidated financial statements).

 

Sales and Marketing Expenses

DDi Capital sales and marketing expenses decreased $5.0 million (31%) to $11.1 million for the nine months ended September 30, 2003, from $16.1 million for the same period in 2002. DDi Corp. sales and marketing expenses decreased $4.0 million (23%) to $13.6 million for the nine months ended September 30, 2003, from $17.6 million for the same period in 2002. Such decreases in sales and marketing expenses are largely due to the Company’s continued cost control efforts and, to a lesser extent, due to the decrease in net sales.

 

General and Administration Expenses

DDi Capital general and administration expenses decreased $1.5 million (18%) to $6.8 million for the nine months ended September 30, 2003, from $8.3 million for the same period in 2002. DDi Corp. general and administration expenses decreased $0.4 million (3%) to $12.5 million for the nine months ended September 30, 2003, from $12.9 million for the same period in 2002. Such decreases in general and administration expenses resulted from various cost control initiatives implemented throughout 2002 and 2003 partially offset by the acquisition of Kamtronics Limited in the fourth quarter of 2002.

 

Goodwill Impairment

Goodwill impairment for DDi Capital was $2.0 million and was $2.4 million for DDi Corp. the nine months ended September 30, 2003, compared to $52.0 million for DDi Capital and $72.0 million for DDi Corp. for the nine months ended September 30, 2002. The impairment charges for 2003 relate to the additional purchase price for prior acquisitions capitalized and also impaired in the second and third quarters of 2003 (see Notes 10 and 12 to the condensed consolidated financial statements). The impairment charge for 2002 was incurred because the book value of goodwill was in excess of its fair value, as determined by the Company’s market capitalization as of September 30, 2002.

 

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Restructuring and Other Related Charges

Restructuring and related charges were $2.6 million for DDi Capital and $3.0 million for DDi Corp. for the nine months ended September 30, 2003, compared to $22.5 million for DDi Capital and $23.5 million for DDi Corp. for the nine months ended September 30, 2002. Such charges in the current year represent the costs associated with the sale of certain assets of the Company’s Dallas-based electronic enclosure operations and the down-sizing of its Virginia and Anaheim, California workforces (see Note 13 to the condensed consolidated financial statements). Charges for the nine months ended September 30, 2002, represent incremental costs incurred in connection with management’s decision to close various facilities, eliminate additional overhead, and remove underutilized assets from productive service.

 

Reorganization Expenses

Reorganization expenses were $7.1 million for DDi Capital and $8.3 million for DDi Corp., respectively. Such charges represent $5.0 million for DDi Capital and $5.5 million for DDi Corp. of costs relating to professional fees incurred in connection with our efforts to effect a plan of reorganization to restructure our debt, $2.1 million for DDi Capital and $2.8 million of costs relating to our Key Employee Retention Plan (see Note 14 to the condensed consolidated financial statements).

 

Reorganization Proceeding Expenses

Reorganization proceeding expenses were $4.3 million for DDi Capital and DDi Corp. for the nine months ended September 30, 2003. Such charges represent professional fees directly associated with the Chapter 11 reorganization proceeding.

 

Loss on Interest Rate Swap Termination

DDi Capital and DDi Corp. recorded a loss on the termination of the interest rate swap agreement of $5.6 million for the nine months ended September 30, 2003. The loss relates to the termination of the interest rate swap agreement related to the senior term facility (see Note 6 to the condensed consolidated financial statements).

 

Net Interest Expense

DDi Capital net interest expense increased $0.4 million to $6.9 million for the nine months ended September 30, 2003, from $6.5 million for the same period in 2002. The increase in net interest expense for DDi Capital is due to the net non-cash credits resulting from a write-off of debt issuance costs in connection with the prepayment of a portion of the Dynamic Details senior term facility and the modification of the interest rate swap agreement related to the senior term facility recorded in 2002. DDi Corp. net interest expense increased $0.8 million to $16.7 million for the nine months ended September 30, 2003, from $15.9 million for the same period in 2002. The increase in net interest expense reflects the increase in net interest expense incurred by DDi Capital, and the interest expense incurred on the DDi Corp. 6.25% convertible subordinated notes issued in April 2002 offset by the cessation of periodic interest charges on the DDi Corp. 5.25% and 6.25% convertible subordinated notes since August 20, 2003, the date of the filing of the Chapter 11 cases (see Note 2 to the condensed consolidated financial statements).

 

Income Taxes

The effective tax rate for DDi Capital decreased to a tax rate of approximately 1.8% for the nine months ended September 30, 2003, from a benefit rate of 8.4% for the same period in 2002. The DDi Corp. effective income tax rate decreased to a benefit rate of approximately 2.5% for the nine months ended September 30, 2003, as compared to a benefit rate of 10.2% for the same period in 2002. During the nine months ended September 30, 2003, the Company’s effective tax rates reflect the impact of valuation allowances on U.S. federal and state deferred tax assets generated in the current period. During the nine months ended September 30, 2002, the Company’s effective tax rates reflect the impact of substantial non-deductible items, primarily the goodwill impairment and valuation allowances relating to certain state deferred tax assets, including state tax credits.

 

Liquidity and Capital Resources

 

Proceedings under Chapter 11 of the Bankruptcy Code and Out-of-Court Restructuring of Indebtedness

 

On August 20, 2003, DDi Corp. and DDi Capital (collectively, the “Debtors”), filed the Chapter 11 Cases. DDi Corp.’s other direct and indirect wholly-owned subsidiaries, including Intermediate DDi Europe and Dynamic Details are not parties to the Chapter 11 Cases. The Debtors have and will continue to conduct their business through their non-debtor operating subsidiaries, Dynamic Details and DDi Europe. The Debtors have and will manage their properties as debtors-in-possession during the pendency of the Chapter 11 Cases. The Company anticipates restructuring the Dynamic Details senior credit facility (the “Senior Credit Facility,” or “Senior Indebtedness”) and DDi Europe’s outstanding credit facility with the Bank of Scotland (the “DDi Europe Facilities Agreement”) the outside the Chapter 11 Cases.

 

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Support Agreements

 

In connection with the Chapter 11 Cases, the Debtors entered into (a) a Restructuring Support Agreement with 100% of the lenders under the Senior Credit Facility with respect to the terms of the Debtors’ plan of reorganization and the out-of-court restructuring of the Senior Indebtedness; (b) a Plan Support Agreement with holders holding approximately 63% of the outstanding principal amount (the “Convertible Subordinated Note Holders”) of the DDi Corp. 5.25% and 6.25% convertible subordinated notes (collectively, the “Convertible Subordinated Notes”) with respect to the terms of the Debtors’ plan of reorganization; and (c) a Senior Discount Noteholder Plan Support Agreement with holders of approximately 71.5% of the aggregate principal amount of the Senior Discount Notes (the “Consenting Senior Discount Note Holders”) with respect to the terms of the Debtors’ proposed plan of reorganization. Pursuant to the Restructuring Support Agreement, the Plan Support Agreement and the Senior Discount Noteholder Plan Support Agreement, the holders of the Senior Indebtedness, the Convertible Subordinated Note Holders and the Consenting Senior Discount Note Holders respectively, agreed to support the Debtors’ plan of reorganization as long as the respective Restructuring Support Agreement, Plan Support Agreement and Senior Discount Noteholder Plan Support Agreement remain in effect.

 

As is commonly the case in this type of restructuring, the holders of the Senior Indebtedness, the Convertible Subordinated Note Holders and the Consenting Senior Discount Note Holders will not be required to continue to support the plan of reorganization and the out-of-court restructuring of the Senior Indebtedness if certain events occur. Such events include, but are not limited to, the modification of the plan in a manner not agreed to by the holders of the Senior Indebtedness, the Convertible Subordinated Note Holders or the Consenting Senior Discount Note Holders, the appointment of a bankruptcy trustee or other receiver, the plan not being confirmed by the Bankruptcy Court by December 15, 2003, and the plan not being effective by January 8, 2004.

 

Out-of-Court Restructuring Plans

 

Dynamic Details anticipates restructuring of its senior credit facility outside the Chapter 11 bankruptcy proceedings. The full principal amount of the Senior Credit Facility (which consists of $1.2 million in letters of credit and $71.7 million senior term loans comprising the outstanding balance of the senior term loans of $65.9 million at September 30, 2003 and the outstanding liability resulting from the interest rate swap termination (see Note 6) of $5.8 million), and all accrued interest and fees will be restructured, pursuant to an out-of-court agreement as follows:

 

  The Tranche A Revolving and Term Loan Facility shall be in an aggregate amount of $15 million which shall be available as a revolving loan until June 30, 2005 at which time any outstanding amounts under such facility shall be converted to a Tranche A Term Loan with a maturity date of April 15, 2008. The Tranche A Revolving and Term Loan Facility will have $13.8 million outstanding and $1.2 million reserved for letters of credit after restructuring. The Tranche B Term Loan shall consist of $57.9 million. The Tranche B Term Loan will mature on April 15, 2008. No significant amortization under either Tranche will be due until 2005.

 

  The holders of the restructured senior secured credit facility will receive warrants representing 10% of DDi Corp.’s common stock, on a fully diluted basis. The warrants will be held in escrow and will be exercisable after the twenty-four month anniversary of the effective date of the restructuring, but will be subject to cancellation in whole or in part if the Company meets certain conditions involving the permanent prepayment of the restructured senior credit facility on or before such anniversary date.

 

The Company is negotiating with the European lender in an effort to restructure the DDi Europe Facilities Agreement.

 

Terms of the Plan of Reorganization

 

The Debtors filed a pre-arranged plan of reorganization and related disclosure statement with the Bankruptcy Court on August 20, 2003, and an amendment to the plan of reorganization on November 5, 2003. The principal terms of the plan of reorganization, as amended, are as follows:

 

5.25% Convertible Subordinated Notes. Each holder of the 5.25% convertible subordinated notes, of which $100 million in principal amount is currently outstanding, will receive a pro rata share of (a) 43.2% of the new outstanding common stock of DDi Corp., subject to dilution for issuance of new DDi Corp. common stock in connection with the exercise of the new stock options to be issued under DDi Corp.’s new management equity incentive plan, which is described below, and the new senior lender warrants, and (b) shares of a new class of preferred stock of DDi Corp. with an

 

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annual dividend of 15% and an aggregate liquidation preference of $7.5 million. The existing 5.25% convertible subordinated notes will be cancelled pursuant to the plan.

 

6.25% Convertible Subordinated Notes. Each holder of DDi Corp.’s of 6.25% convertible subordinated notes, of which $100 million in principal amount is currently outstanding, will receive a pro rata share of (a) 50.8% of the new outstanding common stock of DDi Corp., subject to dilution for issuance of new DDi Corp. common stock in connection with the exercise of the new stock options to be issued under DDi Corp.’s new management equity incentive plan, which is described below, and the new senior lender warrants, and (b) shares of a new class of preferred stock of DDi Corp. with an annual dividend of 15% and an aggregate liquidation preference of $7.5 million. The existing 6.25% convertible subordinated notes will be cancelled pursuant to the plan.

 

DDi Capital Senior Discount Notes. Each holder of the Senior Discount Notes, of which $16.09 million in principal amount is currently outstanding, will receive restructured DDi Capital senior discount notes with a maturity date of January 1, 2009. Payment-in-kind interest on such restructured senior discount notes would accrue at 16%, which would transition to cash pay at 14%, subject to certain terms and conditions. The holders of the Senior Discount Notes also will receive warrants representing 2.5% of new DDi Corp.’s common stock, subject to dilution for issuance of new common stock in connection with the exercise of the new stock options to be issued under DDi Corp.’s new management equity incentive plan, which is described below, and the new senior lender warrants. The warrants will be held in escrow and will be exercisable after the twenty-four month anniversary of the effective date of the restructuring, but will be subject to forfeiture if the Company meets certain conditions involving the permanent prepayment of the restructured Senior Discount Notes on or before such anniversary date.

 

Management Equity Incentive Plan. The Company will establish a new management equity incentive plan. Under the new management equity incentive plan, DDi Corp. will issue shares of restricted stock equaling five percent (5%) of the reorganized Company’s new common stock to the Company’s management, and DDi Corp. may issue options for up to an additional ten percent (10%) of DDi Corp.’s new common stock for members of the Company’s management.

 

Current Equity. On the effective date of the plan of reorganization, the current common equity holders of DDi Corp. will receive 1% of the new DDi Corp. common stock, subject to dilution for issuance of new DDi Corp. common stock issuable in connection with the exercise of DDi Corp.’s new stock options to be issued in connection with DDi Corp.’s new management equity incentive plan and new senior lender warrants following the restructuring.

 

Current Indebtedness of the Company

 

Dynamic Details Incorporated Senior Credit Facility

 

Dynamic Details and Dynamic Details Incorporated, Silicon Valley entered into the Senior Credit Facility with a syndicate of banks, including JPMorgan Chase Bank, as Collateral, Co-Syndication and Administrative Agent (formerly Chase Manhattan Bank, N.A.) and Bankers Trust Company, as Documentation and Co-Syndication Agent. Borrowings under the Senior Credit Facility consist of a senior term facility (the “Senior Term Facility”) and a revolving credit facility. The Senior Credit Facility is jointly and severally guaranteed by Intermediate and DDi Capital and substantially all of the indirect subsidiaries of DDi Capital, and is collateralized by (a) pledges of all of the capital stock of Dynamic Details and of substantially all of its subsidiaries and (b) liens upon substantially all of the assets of Dynamic Details and of substantially all of its subsidiaries. The Senior Credit Facility expires in April 2005. Under the terms of this agreement, Dynamic Details must comply with certain restrictive covenants, which include the requirement that Dynamic Details meet certain financial tests. The Company is in default of certain covenants under the Senior Credit Facility.

 

During the second quarter of 2003, Dynamic Details amended its Senior Credit Facility, effective June 27, 2003. The amendment modified the payment date for the principal payment due on June 30, 2003 to August 1, 2003. On August 1, 2003, Dynamic Details further amended its Senior Credit Facility. The amendment defers all remaining principal amortization payments in 2003, including the one due on August 1, 2003, to January 30, 2004, subject to earlier acceleration upon the happening of specified events. Interest and fees remain payable currently.

 

As there are no long-term forbearance arrangements in place, the Company has classified approximately $65.9 million and $68.5 million, respectively, of indebtedness relating to the Senior Credit Facility as current liabilities at September 30, 2003 and December 31, 2002. Dynamic Details is restricted from making certain payments, including dividend payments to its corporate parents, which, in turn, has the effect of not allowing (a) DDi Corp. to pay dividends to its stockholders and interest payments to convertible subordinated note holders and (b) DDi Capital to pay interest payments to its senior discount note holders.

 

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In the event the Company is unable to enter into a satisfactory arrangements with the Senior Credit Facility lenders, the lenders could elect to declare all amounts outstanding together with accrued interest, to be immediately due and payable. Such event would jeopardize the Chapter 11 Cases.

 

DDi Corp. 5.25% and 6.25% Convertible Subordinated Notes

 

The Company is currently in default under the Convertible Subordinated Notes, and does not expect that the Convertible Subordinated Notes will be repaid in accordance with their stated terms. DDi Corp. filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code on August 20, 2003 in order to restructure this debt. Accordingly, the Company classified this debt as Liabilities Subject to Compromise at September 30, 2003 and as current liabilities at December 31, 2002.

 

DDi Capital Senior Discount Notes

 

The Company is currently in default under the Senior Discount Notes and does not expect that that the Senior Discount Notes will be repaid in accordance with their stated terms. DDi Capital filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code on August 20, 2003 in order to restructure this debt. Accordingly, the Company classified this debt as Liabilities Subject to Compromise at September 30, 2003 and as current liabilities at December 31, 2002.

 

DDi Europe Facilities Agreement

 

DDi Europe maintains a separate European debt facility made up of £18.5 million ($30.8 million) in term loans and a working capital facility having a maximum borrowing limit of £10.0 million ($16.7 million) for its European operations. Any amounts drawn under the working capital facility are repayable upon demand by the lender. Currently, the term loan is fully drawn.

 

Based upon current and expected market conditions for the DDi Europe operations, the European lender has stated its desire that DDi Europe not draw down more than £7.0 million ($11.7 million) of the working capital facility. As of September 30, 2003, an aggregate of £5.9 million, or $9.8 million, was outstanding under the DDi Europe working capital facility. Due to persistent softened economic conditions in Europe, the drawn balance under the revolving line of credit has grown during 2003. The Company believes that unless the European debt facility is restructured, or business trends change, DDi Europe may exceed the £7.0 million ($11.7 million) overdraft limit on its working capital facility and thereby default under such facility within the next 90 days.

 

If the European lender demands payment of the entire drawn balance of the working capital facility, funds would not be available for such payment from either the Company or DDi Europe. Failure to make such payment could give rise to a default of the European debt facility. Under such circumstances, the European lender will then have the ability to accelerate the term loans and amounts outstanding under the revolver and exercise all of their remedies with respect to such debt. Accordingly, the Company has elected to classify as a current liability the entire amount of principal of $23.8 million outstanding under that credit facility in the accompanying condensed consolidated balance sheet as of September 30, 2003. Management is negotiating with the European lender in an effort to restructure that credit facility. Although there can be no assurance that management’s efforts to restructure the debt will be successful, if management’s efforts are successful, then the Company will reclassify the debt based upon its contractual maturities.

 

Current Financial Condition and Cashflows

 

Net cash provided by (used in) operating activities for the nine months ended September 30, 2003 was $(13.4) million for DDi Capital and $(17.2) million for DDi Corp., compared to $3.6 million for DDi Capital and $(3.6) million for DDi Corp. for the nine months ended September 30, 2002. The decline in operating cash flows is due primarily to lower levels of earnings and the impact of restructuring, reorganization and reorganization proceeding expenses.

 

Net cash provided by (used in) investing activities for the nine months ended September 30, 2003 was $(2.2) million for DDi Capital and $(3.0) million for DDi Corp., compared to $0.1 million for DDi Capital and $(2.2) million for DDi Corp. for the nine months ended September 30, 2002. The increase in cash used in investing activities for DDi Capital and DDi Corp. is due primarily to a decrease in proceeds from sales of marketable securities during the nine months ended September 30, 2003.

 

Net cash provided by (used) in financing activities for the nine months ended Sept 30, 2003 was $(5.6) million for DDi Capital and $(1.8) million for DDi Corp., compared to $16.1 million for DDi Capital and $21.2 million for DDi Corp. for

 

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the nine months ended September 30, 2002. The decrease in cash provided by financing activities for DDi Capital is due primarily to a contribution from DDi Corp. during the nine months ended September 30, 2002, partially offset by a paydown of long-term debt. The decrease in cash provided by financing activities for DDi Corp. is due primarily to the issuance of the Convertible Subordinated Notes during the nine months ended September 30, 2002, partially offset by a paydown of long-term debt by DDi Capital.

 

Capital expenditures for the nine months ended September 30, 2003 were $3.6 million for DDi Capital and $4.3 million for DDi Corp., compared to $6.7 million for DDi Capital and $8.3 million for DDi Corp. for the nine months ended September 30, 2002. Capital expenditures decreased because the Company did not require as much investment in property, plant and equipment in 2003.

 

As of September 30, 2003, cash, cash equivalents and marketable securities were $14.2 million for DDi Capital and for DDi Corp., which included $7.5 million in restricted cash, cash equivalents and marketable securities, compared to $34.5 million for DDi Capital and $35.3 million for DDi Corp. at December 31, 2002. As a result of the Company’s current defaults under the Senior Credit Facility and its other indebtedness, the Company is currently unable to borrow any additional funds under the Senior Credit Facility. As of September 30, 2003, DDi Europe had $9.8 million outstanding under its revolving credit facility and had $1.9 million available for borrowing under its revolving credit facility.

 

Our principal sources of liquidity to fund North American ongoing operations are unrestricted cash, cash equivalents and marketable securities available for sale and with respect to DDi Europe, borrowings available under the DDi Europe facilities agreement. On August 1, 2003, the holders of our Senior Indebtedness, as a condition to their consenting to the restructuring, entered into control agreements with us to monitor and control the use of the Company’s cash and cash equivalents held in the Company’s three principal bank accounts, described below, during the restructuring period prior to Bankruptcy Court approval of the plan of reorganization. Substantially all of our domestic cash, cash equivalents and marketable securities available for sale has been deposited into these accounts. The Company’s general operating account is maintained at JPMorgan Chase Bank and is under the sole control of JPMorgan Chase Bank, as collateral agent under the Senior Credit Facility. The Company has no right to issue instructions or any other right or ability to access or withdraw or transfer funds from the operating account without the consent of JPMorgan Chase Bank. The senior lenders also required the Company to establish a reserve account and maintain a minimum of $7.5 million in such account at all times. Under certain circumstances, the Company has access only to the interest earned on the funds in the reserve account. The Debtors also established a restructuring account for use in administering the costs and expenses associated with the restructuring, which will be funded by Dynamic Details pursuant to an agreement with the senior lenders unless specified events occur. Under certain circumstances, the holders of our Senior Credit Facility can take control of all of the above-referenced accounts.

 

We believe that the deferral of principal payments due under the Senior Credit Facility, along with our current cash position, should provide us with sufficient liquidity to meet our liquidity needs through the completion of the Chapter 11 Cases. Assuming the reorganization is confirmed as currently contemplated and we are successful in restructuring our other debt out-of-court, we believe, based upon the current level of operations, that cash generated from operations, available cash, cash equivalents and marketable securities and amounts available under our the restructured Senior Credit Facility and restructured DDi Europe Facility Agreement will be adequate to meet our debt service requirements, capital expenditures and working capital needs for the foreseeable future, although no assurance can be given in this regard. Accordingly, there can be no assurance that our business will generate sufficient cash flow from operations or that future borrowings will be available to enable us to service our indebtedness. We remain leveraged and our future operating performance and ability to service or refinance our indebtedness will be subject to future economic conditions and to financial, business and other factors, certain of which are beyond our control.

 

Contractual Cash Obligations and Commercial Commitments

 

The following table shows our contractual cash obligations and commercial commitments as of September 30, 2003:

 

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Payments Due by Period

(in millions)

 

     DDi Capital

    

For the Three Months

Ending December 31,


   Year Ending December 31,

Commitments


   2003

       2004    

       2005    

       2006    

       2007    

   Thereafter

       Total    

Long-Term Debt (a)

   $ 82.0    $ —      $ —      $ —      $ —      $ —      $ 82.0

Capital Lease Obligations

     0.3      1.1      1.2      —        —        —        2.6

Operating Leases

     1.7      5.9      6.0      4.9      3.3      8.5      30.3
    

  

  

  

  

  

  

Total Commitments

   $ 83.9    $ 7.0    $ 7.2    $ 4.9    $ 3.3    $ 8.5    $ 114.8
    

  

  

  

  

  

  

     DDi Corp.

    

For the Three Months

Ending December 31,


   Year Ending December 31,

Commitments


   2003

       2004    

       2005    

       2006    

       2007    

   Thereafter

       Total    

Long-Term Debt (a)

   $ 286.2    $ 4.8    $ 4.8    $ 4.8    $ 4.9    $ —      $ 305.5

Capital Lease Obligations

     0.4      1.4      1.3      —        —        —        3.1

Operating Leases

     2.4      8.5      8.2      6.9      5.3      26.7      58.0
    

  

  

  

  

  

  

Total Commitments

   $ 288.9    $ 14.7    $ 14.3    $ 11.7    $ 10.2    $ 26.7    $ 366.5
    

  

  

  

  

  

  

 

(a) The Long-Term Debt balances for DDi Capital and DDi Corp. include Liabilities Subject to Compromise of $16.1 million and $216.1 million, respectively.

 

Factors That May Affect Future Results

 

There are significant uncertainties relating to our bankruptcy proceedings

 

Our future results are dependent upon the successful confirmation and implementation of a plan or plans of reorganization and out of court restructuring. Although we filed voluntary petitions for reorganization and submitted a plan of reorganization to the Bankruptcy Court for approval, we cannot make any assurances that we will be able to obtain any such approval in a timely manner. In addition, due to the nature of the reorganization process, actions may be taken by creditors or other parties in interest that may have the effect of preventing or unduly delaying confirmation of a plan or plans of reorganization in connection with the Chapter 11 proceeding. Our ability to obtain financing to fund our operations and our relations with our customers and suppliers may be harmed by protracted bankruptcy proceedings. Further, we cannot predict the ultimate amount of our liabilities that will be subject to a plan of reorganization.

 

Other negative consequences that could arise as a result of the bankruptcy proceedings include:

 

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

 

  the incurrence of significant costs associated with our reorganization;

 

  potential impacts on our relationship with suppliers and customers;

 

  limiting our ability to borrow additional funds; and

 

  negatively impacting our ability to attract, retain and compensate key employees.

 

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Once a plan of reorganization is finalized, approved and implemented, our operating results may be adversely affected by the possible reluctance of prospective lenders, customers and suppliers to do business with a company that recently emerged from bankruptcy proceedings.

 

We face uncertainty with respect to treatment of our liabilities

 

Upon the filing of the Chapter 11 Cases, in general, all pending litigation against us has been stayed and no party may take any action to realize on their pre-petition claims except pursuant to further order of the Bankruptcy Court. In addition, we may reject pre-petition executory contracts and unexpired lease obligations, and parties affected by these rejections may file claims with the Bankruptcy Court. While we anticipate substantially all liabilities as of the petition date will be dealt with in accordance with our plan of reorganization, there can be no assurance that all the liabilities will be handled in this manner.

 

We have substantial debt and are highly leveraged

 

We have a substantial amount of debt outstanding which could adversely affect our financial health. As of September 30, 2003, DDi Corp. and DDi Capital had approximately $308.7 million and $84.6 million, respectively, of debt outstanding of which $216.1 million and $16.1 million, respectively, are classified as Liabilities Subject to Compromise. We are currently in default under our existing Senior Credit Facility, the Convertible Subordinated Notes and the Senior Discount Notes. In addition to the existing defaults, a filing for reorganization under Chapter 11 represented an event of default under each of the respective financing arrangements. Currently, DDi Corp. and DDi Capital are not permitted to make scheduled principal and interest payments with respect to their pre-petition debt (namely, the DDi Corp. 5.25% and 6.25% Convertible Subordinated Notes and the DDi Capital Corp. 12.5% Senior Discount Notes) unless specifically ordered by the Bankruptcy Court. This leveraged position could have adverse consequences, including:

 

  limiting our ability to obtain additional financing, if needed, for working capital, capital expenditures, debt service requirements or other purposes;

 

  increasing our vulnerability to adverse economic and industry conditions;

 

  requiring us to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for operations, future business opportunities or other purposes;

 

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

 

  placing us at a competitive disadvantage compared to our competitors that have less leverage.

 

We have and, following our bankruptcy proceedings, expect to have liens on all of our assets, which will limit our ability to raise additional incremental senior secured financing in the future.

 

We believe our equity holders will receive little value for their interests under a plan or plans of reorganization

 

Under the plan of reorganization that we filed, if approved and implemented, our equity holders will receive little value for their interests. The value of our capital stock is highly speculative and any investment in such capital stock would pose a high degree of risk. Our common stock was delisted from Nasdaq in April 2003 and later began trading on the OTCBB. As a result, a liquid public market for our common stock does not exist, which may make it difficult for you to sell our common stock. In addition, there may be very limited demand for our common stock.

 

Our reorganization will require substantial effort by management.

 

Our senior management have been, and may continue to be, required to expend a substantial amount of time and effort with respect to structuring and having confirmed our plan of reorganization, which could have a disruptive impact on management’s ability to focus on the operation of our business.

 

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Our independent accountants’ report that accompanies our audited financial statements for the year ended December 31, 2002 expresses substantial doubt about our ability to continue as a going concern.

 

Our independent accountants have expressed a substantial doubt about our ability to continue as a going concern. Following the filing of the Chapter 11 Cases, the Company’s ability to realize assets and liquidate liabilities is subject to uncertainty.

 

Restrictions Imposed by Bankruptcy Proceeding

 

The Debtors have and will continue to conduct their business through their non-debtor operating subsidiaries, Dynamic Details and DDi Europe. The Debtors have and will manage their properties as debtors-in-possession during the pendency of the Chapter 11 Cases. The Chapter 11 Cases are expected to only minimally affect the operating businesses of the Debtors’ non-debtor affiliates.

 

As a debtor-in-possession, management is authorized to operate the business, but may not engage in transactions outside the ordinary course of business without Court approval. Under bankruptcy law, actions by creditors to collect pre-petition indebtedness owed by DDi Corp. and DDi Capital at the filing date are stayed and other pre-petition contractual obligations may not be enforced against DDi Corp. or DDi Capital without further order of the Bankruptcy Court.

 

Although the Company expects to emerge from the Chapter Cases prior to January 2004, due to material uncertainties inherent in bankruptcy proceedings in general and the Chapter Cases specifically, it is not possible to predict the length of time DDi Corp. and DDi Capital will operate under Chapter 11 protection, the outcome of the proceedings in general, whether DDi Corp. and DDi Capital will continue to operate under its current organizational structure, the effect of the proceedings on the DDi Corp.’s and DDi Capital’s businesses or the recovery by creditors and equity holders of DDi Corp. and DDi Capital.

 

Business Cycles of the End Markets We Serve

 

The end markets into which we sell printed circuit boards and electronic manufacturing services (including communications and networking equipment; computers and peripherals; medical, automotive, industrial and test equipment; and aerospace equipment) have their own business cycles. Some of these cycles show predictability from year to year. However, other cycles are unpredictable in commencement, depth and duration. If certain industries take a downturn, or if events leading to additional excess capacity occur, we will experience a negative impact on our revenues, gross margins and operating margins.

 

Technological Change and Process Development

 

The market for our products and services is characterized by rapidly changing technology and continuing process development. The future success of our business will depend in large part upon our ability to maintain and enhance our technological capabilities, to develop and market products and services that meet changing customer needs, and to successfully anticipate or respond to technological changes on a cost-effective and timely basis. Research and development expenses are expected to increase as manufacturers make demands for products and services requiring more advanced technology on a quicker turnaround basis. We are more leveraged than some of our principal competitors, and therefore may not be able to respond to technological changes as quickly as these competitors.

 

In addition, the electronics manufacturing services industry could in the future encounter competition from new or revised technologies that render existing technology less competitive or obsolete or that reduce the demand for our services. We cannot assure you that we will effectively respond to the technological requirements of the changing market. To the extent that we determine that new technologies and equipment are required to remain competitive, the development, acquisition and implementation of such technologies and equipment may require us to make significant capital investments. There can be no assurance that we will be able to obtain capital for these purposes in the future or that any investments in new technologies will result in commercially viable technological processes, particularly in light of the bankruptcy proceeding.

 

Dependence on a Core Group of Significant Customers

 

Although we have a large number of customers, net sales to our largest customer accounted for approximately 5% of net sales for the quarter ended September 30, 2003 and the year ended December 31, 2002. Net sales to our ten largest customers accounted for approximately 26% of net sales during the same two periods. We may depend upon a core group of customers for a material percentage of our respective net sales in the future. Substantially all of our sales are made on the basis of purchase orders rather than long-term agreements. We cannot assure you that significant customers will order services from us in the future or that they will not reduce or delay the amount of services ordered. Any reduction or delay in orders could negatively impact revenues. In addition, we generate significant accounts receivable in connection with providing services to customers. If one or more

 

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significant customers were to become insolvent or otherwise were unable to pay us for the services provided, results of operations would be adversely affected.

 

Variability of Orders

 

Our operating results fluctuate because we sell on a purchase-order basis rather than pursuant to long-term contracts and we expect these fluctuations to continue in the future. We are, therefore, sensitive to variability in demand by our customers. Because we time our expenditures in anticipation of future sales, our operating results may be less than we estimate if the timing and volume of customer orders do not match expectations. Furthermore, we may not be able to capture all potential revenue in a given period if our customers’ demand for quick-turnaround services exceeds our capacity during that period. Because a significant portion of our operating expenses are fixed, even a small revenue shortfall can have a disproportionate adverse effect on operating results.

 

Competition

 

The printed circuit board industry is highly fragmented and characterized by intense competition. We principally compete with independent and captive manufacturers of complex quick-turn and longer-lead printed circuit boards. Our principal competitors include independent small private companies, two small public companies and integrated subsidiaries of more broadly based volume producers that also manufacture multilayer printed circuit boards and other electronic assemblies. Some of our principal competitors are less highly-leveraged than us and may have greater financial and operating flexibility.

 

The barriers to entry in our niche are considerable. In order to survive in the quick-turn sector, a competitor must have a very large customer base, a large staff of sales and marketing personnel, considerable engineering resources, and proper tooling and equipment to permit fast turnaround of small lots on a daily basis.

 

Intellectual Property

 

Our success depends in part on proprietary technology and manufacturing techniques. Currently, we do not place significant reliance on patent protection to safeguard these proprietary techniques but rely primarily on trade secret protection. Litigation may be necessary to protect our technology and determine the validity and scope of the proprietary rights of competitors. Intellectual property litigation could result in substantial costs and diversion of our management and other resources. If any infringement claim is asserted against us, we may seek to obtain a license of the other party’s intellectual property rights. We cannot assure you that a license would be available on reasonable terms or at all.

 

Environmental Matters

 

Our operations are regulated under a number of federal, state and foreign environmental and safety laws and regulations that govern, among other things, the discharge of hazardous materials into the air and water, as well as the handling, storage and disposal of such materials. These laws and regulations include the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, and the Comprehensive Environmental Response, Compensation and Liability Act, as well as analogous state and foreign laws. Compliance with these environmental laws is a major consideration for us because we use in our manufacturing process materials classified as hazardous such as ammoniacal etching solutions, copper and nickel. In addition, because we are a generator of hazardous wastes, we may be subject to potential financial liability for costs associated with an investigation and any remediation of sites at which we have arranged for the disposal of hazardous wastes if such sites become contaminated. Even if we fully comply with applicable environmental laws and are not directly at fault for the contamination, we may still be liable. The wastes we generate include spent ammoniacal etching solutions, solder stripping solutions and hydrochloric acid solution containing palladium; waste water which contains heavy metals, acids, cleaners and conditioners; and filter cake from equipment used for on-site waste treatment. Violations of environmental laws could subject us to revocation of our effluent discharge permits. Any such revocations could require us to cease or limit production at one or more of our facilities, thereby negatively impacting revenues and potentially causing the market price of DDi Corp.’s common stock to decline.

 

Dependence on Key Management

 

We depend on the services of our senior executives, including Bruce D. McMaster, President and Chief Executive Officer. We cannot assure you that we will be able to retain him and other executive officers and key personnel or attract additional qualified management in the future. Mr. McMaster is not a party to an employment agreement with us. Our business also depends on our ability to continue to recruit, train and retain skilled employees, particularly engineering and sales

 

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personnel, due to our focus on the technologically advanced and time-critical segment of the electronics manufacturing services industry. In addition, our ability to successfully integrate acquired companies depends in part on our ability to retain key management and existing employees at the time of the acquisition. Effective December 19, 2002, the Company adopted a plan to retain employees under the Key Employee Retention Program (“KERP”). The KERP is a discretionary retention bonus program which is scheduled to pay a stay bonus in three installments, on December 31, 2002, July 1, 2003, and January 1, 2004. Each of our senior executives, including Mr. McMaster, have received retention bonuses under the KERP. There can be no assurance that the KERP will be successful in retaining key personnel.

 

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

Interest Rate Risk

 

The DDi Europe Facilities Agreement and the Senior Credit Facility bear interest at a floating rate; the Senior Discount Notes and Convertible Subordinated Notes bear interest at fixed rates.

 

The Dynamic Details revolving credit facility bears interest at (a) 3.75% per annum plus the applicable LIBOR or (b) 2.00% per annum plus the federal reserve reported overnight funds rate plus 0.5% per annum. As of September 30, 2003, we had no amounts outstanding under the revolving credit facility and the revolving credit facility is not currently available. Therefore, a 10% change in interest rates during the twelve months ending September 30, 2004 will not affect the interest expense to be incurred on this facility during such period.

 

The term loan facility portion of the Senior Credit Facility bears interest based on one-month LIBOR. As of September 30, 2003, one-month LIBOR was 1.12%. If one-month LIBOR increased by 10% to 1.23%, interest expense related to the term loan facility portion would increase by approximately $0.1 million. The overall effective interest rate for the term loans as of September 30, 2003, was 5.06%.

 

The DDi Europe Facilities Agreement bears interest based on three-month U.K. LIBOR plus a margin of 1.50%. Based upon our anticipated utilization of the DDi Europe revolving credit facility through the period ending September 30, 2004, a 10% change in interest rates is not expected to materially affect the interest expense to be incurred on this facility during such period. As of September 30, 2003, three-month U.K. LIBOR was 3.73%. If three-month U.K. LIBOR increased by 10% to 4.10%, interest expense related to the term loan facility would increase approximately $0.1 million. The overall effective interest rate for the term loan facilities, as of September 30, 2003, was 5.23%.

 

A change in interest rates would not have an effect on our interest expense on the Senior Discount Notes or Convertible Subordinated Notes because these instruments bear a fixed rate of interest.

 

Foreign Currency Exchange Risk

 

Sales and expenses and financial results of DDi Europe and of our Canadian operations are denominated in British pounds and Canadian dollars, respectively. We have foreign currency translation risk equal to our net investment in those operations. However, since nearly all of our sales are denominated in local currency or in U.S. dollars, we have relatively little exposure to foreign currency transaction risk with respect to sales made. Based upon annualizing the most recent quarter’s results, the effect of an immediate 10% change in exchange rates would have an annual net impact on our operating results of approximately $(0.4) million. We do not use forward exchange contracts to hedge exposures to foreign currency denominated transactions and do not utilize any other derivative financial instruments for trading or speculative purposes.

 

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Item 4. Controls and Procedures.

 

Based on an evaluation of the effectiveness of DDi Corp.’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Act of 1934, as amended), DDi Corp.’s Chief Executive Officer and Chief Financial Officer have concluded that such controls and procedures were effective as of the end of the period covered by this report. In connection with such evaluation, no change in DDi Corp.’s internal control over financial reporting occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, DDi Corp.’s internal control over financial reporting.

 

Based on an evaluation of the effectiveness of DDi Capital’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Act of 1934, as amended), DDi Capital’s Chief Executive Officer and Chief Financial Officer have concluded that such controls and procedures were effective as of the end of the period covered by this report. In connection with such evaluation, no change in DDi Capital’s internal control over financial reporting occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, DDi Capital’s internal control over financial reporting.

 

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PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

On August 20, 2003, DDi Corp. and DDi Capital (collectively, the “Debtors”), filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code (collectively, the “Chapter 11 Cases”) with the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”), under case number 03-15261. DDi Corp.’s other direct and indirect wholly-owned subsidiaries, including Intermediate, DDi Europe and Dynamic Details are not parties to the Chapter 11 Cases. The Debtors will continue to manage the Company’s properties and operate its business as a “debtor-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with Sections 1107(a) and 1108 of Chapter 11. As a result of the Chapter 11 filings, attempts to collect, secure or enforce remedies with respect to most pre-petition claims against the Debtors are subject to the automatic stay provisions of Section 362(a) of Chapter 11. The description of the bankruptcy proceedings appearing in this Report at Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview, is incorporated herein by reference.

 

On October 1, 2003, a purported class action lawsuit was filed against the following persons: Joseph P. Gisch, Bruce D. McMaster, Charles Dimick, Gregory Halvorson, and John Peters. Mr. Gisch is a director and officer of DDi Capital and an officer of DDi Corp., Mr. McMaster is a director and officer of DDi Capital and DDi Corp., Mr. Dimick is a former director and officer of DDi Corp. and Messrs. Halvorson and Peters are former officers of DDi Corp. The complaint was filed in the United States District Court for the Central District of California, Western Decision, Case No. LACV 03-7063 MMM (SHx), by Raymond Ferrari, an individual claiming to be one of our shareholders. In the complaint, plaintiff alleges, among other things, that the defendants misrepresented and omitted material facts with respect to DDi Corp.’s financial results and operations included in DDi Corp.’s press releases. The complaint seeks a declaration that the action is a proper class action pursuant to Federal Rules of Civil Procedure 23, unspecified compensatory damages, interest and costs as well such equitable relief as the court may deem proper.

 

On October 31, 2003, a second purported class action lawsuit was commenced against the same persons referenced above. This complaint was filed in the United States District Court for the Central District of California, Western Division, Case No. LACV 03-7883 JSL (PJWx) by Jason T. Sunderland, an individual claiming to be one of our shareholders. This lawsuit makes substantially identical allegations and seeks substantially identical relief as the purported class action lawsuit filed by Raymond Ferrari as described above.

 

On November 5, 2003, a third purported class action lawsuit was commenced against the same persons referenced above. This complaint was filed in the United States District Court for the Central District of California, Western Division, Case No. LACV 03-7999 R (MANx), by Herbert Rodewald, an individual claiming to be one of our shareholders. This lawsuit makes substantially identical allegations and seeks substantially identical relief as the purported class actions lawsuits filed by Raymond Ferrari and Jason T. Sunderland as described above.

 

On or about October 31, 2003, Messrs. Gisch, McMaster, Dimick, Halvorson and Peters entered into a stipulation with Raymond Ferrari, providing, among other things, that they would not need to respond to the Ferrari complaint until upon consolidation of any related actions, if necessary, and the appointment of a lead plaintiff by the Court. The parties instead agreed that any appointed lead plaintiff would have 60 days to file a consolidated complaint after his, her or its appointment, and that the defendants would thereafter have 45 days to respond to the consolidated complaint. Accordingly, the defendants have not yet responded to the Ferrari complaint.

 

Our Board of Directors believes that each of the lawsuits described above is without merit and intends to vigorously defend each action. However, no assurances can be made that we will be successful in defending the actions.

 

Item 3. Defaults Upon Senior Securities.

 

We have been in default of certain financial covenants under the Senior Credit Facility since December 31, 2002.

 

As a result of the defaults under the Senior Credit Facility, we were not permitted to pay our interest obligations under the DDi Corp. 5.25% convertible subordinated notes on March 1, 2003 and the DDi Corp. 6.25% convertible subordinated notes on April 1, 2003. Since the interest payments on the Convertible Subordinated Notes were not made within the 30 day grace period provided under the respective agreements, the Convertible Subordinated Notes are in default and the holders of those instruments are able to exercise all of their respective rights and remedies under the terms of the respective agreements. The total amount of interest on the DDi Corp. 5.25% convertible subordinated notes and the DDi Corp. 6.25% convertible subordinated notes, in arrears on the date of this report is approximately $5.9 million and $7.0 million, respectively.

 

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We did not pay our interest obligations due on May 15, 2003 under the Senior Discount Notes. Failure to make such interest payments within 30 days of their due date has resulted in a default. The Company’s current expectation is that the Senior Discount Notes will not be repaid in accordance with their stated terms. As a result, the Company has classified all indebtedness relating to the Senior Discount Notes, $16.1 million in the aggregate, as current liabilities at September 30, 2003. The total amount of interest on the Senior Discount Notes in arrears on the date of this report is approximately $2.0 million.

 

Item 6. Exhibits and Reports on Form 8-K.

 

(a) Exhibits.
Exhibit No.

  

Description


10.1    Plan Support Agreement dated as of August 8, 2003 by and among DDi Corp., DDi Intermediate Holdings, Inc., Dynamic Details, Incorporated, DDi Capital Corp., Dynamic Details Incorporated, Silicon Valley, certain 5 1/4% Subordinated Noteholders and certain 6 1/4% Convertible Subordinated Noteholders.
10.2    First Amendment to Plan Support Agreement dated August 8, 2003 by and among DDi Corp., DDi Intermediate Holdings, Inc., Dynamic Details, Incorporated, DDi Capital Corp., Dynamic Details Incorporated, Silicon Valley, certain 5 1/4% Subordinated Noteholders and certain 6 1/4% Convertible Subordinated Noteholders.
10.3    Second Amendment to Plan Support Agreement dated August 8, 2003 by and among DDi Corp., DDi Intermediate Holdings, Inc., Dynamic Details, Incorporated, DDi Capital Corp., Dynamic Details Incorporated, Silicon Valley, certain 5 1/4% Subordinated Noteholders and certain 6 1/4% Convertible Subordinated Noteholders.
10.4    Restructuring Support Agreement dated as of August 1, 2003 by and among DDi Corp., DDi Intermediate Holdings, Inc., Dynamic Details, Incorporated, DDi Capital Corp., Dynamic Details Incorporated, Silicon Valley, the Administrative Agent and certain Consenting Lenders.
10.5    First Amendment to Restructuring Support Agreement dated as of August 1, 2003 by and among DDi Corp., DDi Intermediate Holdings, Inc., Dynamic Details, Incorporated, DDi Capital Corp., Dynamic Details Incorporated, Silicon Valley, the Administrative Agent and certain Consenting Lenders.
10.6    Senior Discount Noteholder Plan Support Agreement dated as of August 8, 2003 by and among DDi Corp., DDi Intermediate Holdings, Inc., Dynamic Details, Incorporated, DDi Capital Corp., Dynamic Details Incorporated, Silicon Valley, and certain Senior Discount Noteholders.
10.7    Waiver No. 1, dated as of August 18, 2003, with respect to the Plan Support Agreement dated as of August 8, 2003 by and among DDi Corp., DDi Intermediate Holdings, Inc., Dynamic Details, Incorporated, DDi Capital Corp., Dynamic Details Incorporated, Silicon Valley, certain 5 1/4% Subordinated Noteholders and certain 6 1/4% Convertible Subordinated Noteholders.
10.8    Waiver No. 1 dated August 19, 2003, with respect to the Restructuring Support Agreement dated as of August 1, 2003 by and among DDi Corp., DDi Intermediate Holdings, Inc., Dynamic Details, Incorporated, DDi Capital Corp., Dynamic Details Incorporated, Silicon Valley, the Administrative Agent and certain Consenting Lenders.
10.9    Budget and Funding Agreement dated as of August 1, 2003 by and among DDi Corp., DDi Intermediate Holdings, Inc., Dynamic Details, Incorporated, DDi Capital Corp., Dynamic Details Incorporated, Silicon Valley, the Administrative Agent and certain Consenting Lenders.
10.10    Eighth Amendment, dated as of August 1, 2003, to the Credit Agreement, dated as of July 23, 1998, among (i) DDi Capital Corp., formerly known as Details Capital Corp.; (ii) Dynamic Details, Incorporated, formerly known as Details, Inc.; (iii) Dynamic Details Incorporated, Silicon Valley, formerly known as Dynamic Circuits, Inc.; (iv) the several banks and other financial institutions from time to time parties thereto; (v) Bankers Trust Company; and (vi) The Chase Manhattan Bank. (Previously filed with the Commission on August 18, 2003 as Exhibit 10.2 to DDi Corp.’s and DDi Capital’s Form 10-   for the Quarterly Period Ending June 30, 2003, which is incorporated herein by reference.)
31.1    Certification of Chief Executive Officer of DDi Corp., Pursuant to Rule 13a-14 of the Securities Exchange Act.
31.2    Certification of Chief Financial Officer of DDi Corp., Pursuant to Rule 13a-14 of the Securities Exchange Act.
31.3    Certification of Chief Executive Officer of DDi Capital Corp., Pursuant to Rule 13a-14 of the Securities Exchange Act.
31.4    Certification of Chief Financial Officer of DDi Capital Corp., Pursuant to Rule 13a-14 of the Securities Exchange Act.
32.1    Certification of Chief Executive Officer of DDi Corp., Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2    Certification of Chief Financial Officer of DDi Corp., Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.3    Certification of Chief Executive Officer of DDi Capital Corp., Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.4    Certification of Chief Financial Officer of DDi Capital Corp., Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1    Debtors’ Amended First Amended Joint Plan of Reorganization dated as of August 30, 2003.
99.2    Amendment to Debtors’ Amendment First Amended Joint Plan of Reorganization dated as of August 30, 2003.
99.3    Supplement to the First Amended Disclosure Statement for the First Amended Joint Plan of Reorganization dated as of August 30, 2003.

 

(b) Reports on Form 8-K.

 

The following Current Reports on Form 8-K were filed in the quarterly period ended September 30, 2003:

 

(i) On August 21, 2003, DDi Corp. filed a report on Form 8-K dated August 20, 2003 announcing its operating results for the second quarter of the fiscal year ending December 31, 2003.

 

(ii) On August 21, 2003, DDi Corp. and DDi Capital Corp. filed a report on Form 8-K dated August 20, 2003 announcing the voluntary filing of petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York.

 

(iii) On September 8, 2003, DDi Corp. and DDi Capital Corp. filed a report on Form 8-K dated August 30, 2003 announcing the filing of the Joint Plan of Reorganization and the related Joint Disclosure Statement with the United States Bankruptcy Court for the Southern District of New York.

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, DDi Corp. has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.

 

Date: November 14, 2003

      DDi CORP.
            By:   /s/ JOHN K. STUMPF
             
                John K. Stumpf
               

Chief Financial Officer and

Treasurer

(Authorized Signatory and

Principal Financial Officer)

 

 

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, DDi Capital Corp. has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.

 

Date: November 14, 2003

      DDi CAPITAL CORP.
            By:   /s/ JOHN K. STUMPF
             
                John K. Stumpf
               

Chief Financial Officer and

Treasurer

(Authorized Signatory and

Principal Financial Officer)

 

 

 

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EX-10.1 3 dex101.txt FORM OF PLAN SUPPORT AGREEMENT EXHIBIT 10.1 EXECUTION COPY PLAN SUPPORT AGREEMENT This Plan Support Agreement (together with exhibits, annexes and attachments hereto, this "Agreement") is made and entered into as of August 8, 2003 by and among (i) DDi Corp. ("DDi"), DDi Intermediate Holdings Corp. ("DDi Intermediate"), DDi Capital Corp. ("DDi Capital"), Dynamic Details, Incorporated ("Details"), Dynamic Details, Incorporated, Silicon Valley ("DDISV") and their respective subsidiaries and affiliates (collectively, the "Company Group"), (ii) the 5 1/4% Subordinated Noteholders (as defined below) signatory hereto (the "Consenting 5 1/4% Subordinated Noteholders") and (iii) the 6 1/4% Subordinated Noteholders (as defined below) signatory hereto (the "Consenting 6 1/4% Subordinated Noteholders" and together with the Consenting 5 1/4% Subordinated Noteholders, the "Consenting Subordinated Noteholders"). DDi, DDi Intermediate, DDi Capital, Details, DDISV, and each of their respective subsidiaries and affiliates, each Consenting Subordinated Noteholder and any subsequent person that becomes a party hereto are referred herein as the "Parties" and individually, as a "Party." PRELIMINARY STATEMENTS A. The holders (the "5 1/4% Subordinated Noteholders") of the 5 1/4% Subordinated Notes due 2008 (the "5 1/4% Subordinated Notes") issued by DDi under that certain Indenture, dated as of February 20,2001 (as supplemented, the "5 1/4% Indenture") between DDi, as issuer, and The State Street Bank and Trust Company (n/k/a U.S. Bank, N.A.), as trustee, hold subordinated debt of $100,000,000 (the "5 1/4% Indebtedness"). B. The holders (the "6 1/4% Subordinated Noteholders") of the 6 1/4% Subordinated Notes due 2007 (the "6 1/4% Subordinated Notes") issued by DDi under that certain Indenture, dated as of April 2, 2002 (as supplemented, the "6 1/4% Indenture") between DDi, as issuer, and State Street Bank and Trust Company (n/k/a U.S. Bank, N.A.), as trustee, hold subordinated debt of $100,000,000 (the "6 1/4% Indebtedness"). As of the date hereof, the Consenting 6 1/4% Subordinated Noteholders and the Consenting 5 1/4% Subordinated Noteholders (collectively, the "Consenting Subordinated Noteholders" hold, in aggregate, at least forty-two and a half percent (42.5%) of the sum of the principal amount of the 5 1/4% Indebtedness and the principal amount of the 6 1/4% Indebtedness. C. Pursuant to that certain Restructuring Support Agreement, dated as of August 1, 2003 (the "RSA"), the Consenting Lenders (as defined in the Term Sheet) have consented to, inter alia, the Restructuring Terms (as defined below) subject to certain terms and conditions outlined in the RSA. D. The Company Group, the Consenting Lenders, the Consenting 5 1/4% Subordinated Noteholders and the Consenting 6 1/4% Subordinated Noteholders have engaged in good faith negotiations with the objective of reaching an agreement with regard to certain aspects of the restructuring and reorganization of the Company Group. E. The Company Group, the Consenting Lenders, the Consenting 5 1/4% Subordinated Noteholders and the Consenting 6 1/4% Subordinated Noteholders now desire to implement a restructuring and reorganization of the Company Group such that the Consenting Lenders, the Consenting 5 1/4% Subordinated Noteholders and the Consenting 6 1/4% Subordinated Noteholders and the other holders of claims against and/or equity interests in the Company Group shall receive the consideration to be paid, distributed or provided by the Company Group pursuant to such restructuring and reorganization (the "Restructuring Terms") as set forth on the term sheet (the "Term Sheet") attached hereto as Exhibit A. F. In order to expedite the contemplated restructuring and reorganization of the Company Group, each Party, subject to the terms of this Agreement, desires to pursue and support a restructuring transaction (i) by way of a plan of reorganization under Chapter 11 of Title 11, United States Code (the "Bankruptcy Code") relating to DDi and DDi Capital, and (ii) by way of an out-of-court restructuring transaction relating to Details, DDISV and their respective subsidiaries that achieves and implements the Restructuring Terms (any such restructuring transaction that achieves and implements the Restructuring Terms, the "Restructuring Transaction") and during the pendency of this Agreement desires not to support any restructuring or reorganization of any of the members of the Company Group (or any plan or proposal in respect of the same) that does not achieve or implement the Restructuring Terms. G. In order to implement the Restructuring Transaction, the Company Group has agreed, subject to the terms and conditions of this Agreement, (i) to prepare and file (a) a disclosure statement that is consistent in all material respects with the Restructuring Terms and is in the form attached to the Term Sheet (the "Conforming Disclosure Statement"), and (b) a plan of reorganization for DDi and DDi Capital that is consistent in all material respects with the Restructuring Terms and is in the form attached to the Term Sheet (the "Conforming Plan") in cases filed under Chapter 11 of the Bankruptcy Code (the "Chapter 11 Cases") in the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court") and to negotiate and prepare the definitive Restructuring Transaction documents that are consistent in all respects with the Restructuring Terms and are in form and substance satisfactory to the Consenting Lenders (the "Conforming Restructuring Loan Documents"), and (ii) to use reasonable commercial efforts to have the Conforming Disclosure Statement approved and the Conforming Plan confirmed by the Bankruptcy Court, in each case, as expeditiously as practicable under the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure. H. The Company Group, the Consenting 5 1/4% Subordinated Noteholders and the Consenting 6 1/4% Subordinated Noteholders acknowledge and agree that the best way to effectuate the Conforming Plan and the Conforming Restructuring Loan Documents is to do so in a way that would: 1. maximize the value of the Company Group for the benefit of all interested persons; 2. minimize the disruption to the Company Group resulting from the commencement of the Chapter 11 Cases as quickly as possible; 3. minimize the loss of business continuity and opportunity of Details and DDISV; 4. provide all parties to the Restructuring Transaction with Global Releases (as defined in the Term Sheet) and a Plan Injunction (as defined in the Term Sheet); and 2 5. provide assurances and stability to certain key employees of the Company Group. I. In expressing such support and commitment, the Parties do not desire and do not intend in any way to derogate from or diminish the solicitation requirements of applicable securities and bankruptcy law, the fiduciary duties of DDi and DDi Capital as debtors in possession, the fiduciary duties of any Consenting 5 1/4% Subordinated Noteholder and/or Consenting 6 1/4% Subordinated Noteholder who is appointed to the official committee of unsecured creditors (the "Creditors' Committee") in the Chapter 11 Cases or the role of any state or federal agencies with regulatory authority concerning any member of the Company Group. STATEMENT OF AGREEMENT NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows: 1. Defined Terms. All capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Term Sheet. 2. Term Sheet Conditions. Without limiting the conditions set forth herein, each Party's agreement to this Agreement and support for the Conforming Plan, the Conforming Restructuring Loan Documents and the Term Sheet is expressly conditioned on satisfaction of each of the terms and conditions set forth in the Term Sheet and this Agreement. To the extent that any such conditions involve a time period or an outside date for satisfaction, the Parties acknowledge and agree that time is of the essence with respect to each such condition. 3. Agreements. (a) Agreements of the Consenting 5 1/4% Subordinated Noteholders (i) Ownership. Each Consenting 5 1/4% Subordinated Noteholder represents and warrants, on a several but not joint basis, that, as of the date hereof, (i) such Consenting 5 1/4% Subordinated Noteholder either (A) is the sole legal and beneficial owner of, or holder of investment authority over, the debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such debt (the "Consenting 5 1/4% Subordinated Noteholder Claims"), in each case free and clear of all claims, liens and encumbrances, or (B) has or will have investment or voting discretion with respect to the debt and Consenting 5 1/4% Subordinated Noteholder Claims and has or will have the power and authority to bind the beneficial owner(s) of such debt and Consenting 5 1/4% Subordinated Noteholder Claims to the terms of this Agreement, and (ii) such Consenting 5 1/4% Subordinated Noteholder has or will have full power and authority to vote on and consent to such matters concerning such debt and Consenting 5 1/4% Subordinated Noteholder Claims and to exchange, assign and transfer such debt and Consenting 5 1/4% Subordinated Noteholder Claims. (ii) Voting. Each Consenting 5 1/4% Subordinated Noteholder agrees that for so long as this Agreement remains in effect, it (i) shall vote its debt and Consenting 5 1/4% 3 Subordinated Noteholder Claims to accept any Conforming Plan as soon as practicable following receipt of any Conforming Disclosure Statement in any solicitation of votes for any such Conforming Plan (but in no case later than any voting deadline stated therein), (ii) shall vote against and shall in no way otherwise, directly or indirectly, support any restructuring or reorganization of the Company (or any plan or proposal in respect of the same) that is not consistent with, or does not implement or achieve, the Restructuring Terms, (iii) shall not (A) directly or indirectly seek, solicit, pursue, support or encourage any other plan or the termination of the exclusive period for the filing of any plan, proposal or offer of dissolution, winding up, liquidation, reorganization, merger or restructuring of the Company that could be expected to prevent, delay or impede the successful restructuring of the Company as contemplated by the Restructuring Terms and any Conforming Plan, (B) object to the Conforming Disclosure Statement or the solicitation of votes for the Conforming Plan or support any such objection by a third party; provided, however, that the Consenting 5 1/4% Subordinated Noteholder may object to the Conforming Disclosure Statement solely on the basis that it does not contain adequate information as required by Section 1125 of the Bankruptcy Code, or (C) take any other action that is inconsistent with, or that would delay confirmation of, the Conforming Plan; and (iv) shall not object to, or otherwise oppose, directly or indirectly, any of the terms and conditions of the Budget and Funding Mechanism (as defined below) and the Funding Motion (as defined in the Budget and Funding Mechanism). Nothing contained herein shall limit the ability of a Consenting 5 1/4% Subordinated Noteholder to consult with the Company, or to appear and be heard, concerning any matter arising in the Chapter 11 Cases so long as such consultation or appearance is consistent with the Consenting 5 1/4% Subordinated Noteholder's obligations hereunder and the terms of the Conforming Plan, the Restructuring Terms and this Agreement. (iii) Transfers. Each Consenting 5 1/4% Subordinated Noteholder agrees that for so long as this Agreement remains in effect, it shall not sell, transfer, assign, pledge or otherwise dispose, directly or indirectly, any of the debt or Consenting 5 1/4% Subordinated Noteholder Claims or any option thereon or any right or interest (voting or otherwise) therein, unless the transferee thereof agrees in writing for the benefit of the Parties to be bound by all of the terms of this Agreement by executing the Joinder attached hereto as Exhibit B-1, a copy of which shall be provided to the Parties, in which event each Party shall be deemed to have acknowledged that its obligations to the Consenting 5 1/4% Subordinated Noteholders hereunder shall be deemed to constitute obligations in favor of such transferee. (iv) Agreement to Budget and Funding Mechanism. Each Consenting 5 1/4% Subordinated Noteholder approves the Budget and Funding Mechanism (including the Initial Budget (as defined in the Budget and Funding Mechanism) contained therein) annexed hereto as Exhibit C (the "Budget and Funding Mechanism"). (v) Further Agreement. Each Consenting 5 1/4% Subordinated Noteholder believes that the consummation of the Conforming Plan consistent with the Term Sheet is in its best interests and is in the best interests of the Company's creditors generally. Accordingly, for so long as this Agreement remains in effect, each Consenting 5 1/4% Subordinated Noteholder will support the Conforming Plan consistent with the terms and conditions of the Term Sheet. Without limiting the foregoing, each Consenting 5 1/4% Subordinated Noteholder commits, for so long as the Agreement remains in effect, to support the Budget and Funding Mechanism, the Conforming Disclosure Statement, the Conforming Plan and the Conforming Restructuring Loan Documents and use its commercially reasonable efforts 4 to facilitate the filing and confirmation of the Conforming Plan at the earliest practicable date; provided, however, that notwithstanding anything contained herein to the contrary, if any Consenting 5 1/4% Subordinated Noteholder is appointed to and serves on the Creditors' Committee, the terms of this Agreement shall not be construed to limit such Consenting 5 1/4% Subordinated Noteholder's exercise of its fiduciary duties in its role as a member of a Creditors' Committee, and any exercise of such fiduciary duties shall not be deemed to constitute a breach of the terms of this Agreement. (b) Agreements of the Consenting 6 1/4% Subordinated Noteholders. (i) Ownership. Each Consenting 6 1/4% Subordinated Noteholder represents and warrants, on a several but not joint basis, that, as of the date hereof, (i) such Consenting 6 1/4% Subordinated Noteholder either (A) is the sole legal and beneficial owner of, or holder of investment authority over, the debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such debt (the "Consenting 6 1/4% Subordinated Noteholder Claims" and together with the Consenting 5 1/4% Subordinated Noteholder Claims, the "Claims"), in each case free and clear of all claims, liens and encumbrances, or (B) has or will have investment or voting discretion with respect to the debt and Consenting 6 1/4% Subordinated Noteholder Claims and has or will have the power and authority to bind the beneficial owner(s) of such debt and Consenting 6 1/4% Subordinated Noteholder Claims to the terms of this Agreement, and (ii) such Consenting 6 1/4% Subordinated Noteholder has or will have full power and authority to vote on and consent to such matters concerning such debt and Consenting 6 1/4% Subordinated Noteholder Claims and to exchange, assign and transfer such debt and Consenting 6 1/4% Subordinated Noteholder Claims. (ii) Voting. Each Consenting 6 1/4% Subordinated Noteholder agrees that for so long as this Agreement remains in effect, it (i) shall vote its debt and Consenting 6 1/4% Subordinated Noteholder Claims to accept any Conforming Plan as soon as practicable following receipt of any Conforming Disclosure Statement in any solicitation of votes for any such Conforming Plan (but in no case later than any voting deadline stated therein), (ii) shall vote against and shall in no way otherwise, directly or indirectly, support any restructuring or reorganization of the Company (or any plan or proposal in respect of the same) that is not consistent with, or does not implement or achieve, the Restructuring Terms, (iii) shall not (A) directly or indirectly seek, solicit, support or encourage any other plan or the termination of the exclusive period for the filing of any plan, proposal or offer of dissolution, winding up, liquidation, reorganization, merger or restructuring of the Company that could be expected to prevent, delay or impede the successful restructuring of the Company as contemplated by the Restructuring Terms and any Conforming Plan, (B) object to the Conforming Disclosure Statement or the solicitation of votes for the Conforming Plan or support any such objection by a third party; provided, however, that the Consenting 6 1/4% Subordinated Noteholder may object to the Conforming Disclosure Statement solely on the basis that it does not contain adequate information as required by Section 1125 of the Bankruptcy Code, or (C) take any other action that is inconsistent with, or that would delay confirmation of, the Conforming Plan; and (iv) shall not object to, or otherwise oppose, directly or indirectly, any of the terms and conditions of the Budget and Funding Mechanism and the Funding Motion. Nothing contained herein shall limit the ability of a Consenting 6 1/4% Subordinated Noteholder to consult with the Company, or to appear and be heard, concerning any matter arising in the Chapter 11 Cases so long as such consultation or appearance is consistent with the Consenting 6 1/4% Subordinated Noteholder's 5 obligations hereunder and the terms of the Conforming Plan, the Restructuring Terms and this Agreement. (iii) Transfers. Each Consenting 6 1/4% Subordinated Noteholder agrees that for so long as this Agreement remains in effect, it shall not sell, transfer, assign, pledge or otherwise dispose, directly or indirectly, any of the debt or Consenting 6 1/4% Subordinated Noteholder Claims or any option thereon or any right or interest (voting or otherwise) therein, unless the transferee thereof agrees in writing for the benefit of the Parties to be bound by all of the terms of this Agreement by executing the Joinder attached hereto as Exhibit B-2, a copy of which shall be provided to the Parties, in which event each Party shall be deemed to have acknowledged that its obligations to the Consenting 6 1/4% Subordinated Noteholders hereunder shall be deemed to constitute obligations in favor of such transferee. (iv) Agreement to Budget and Funding Mechanism. Each Consenting 6 1/4% Subordinated Noteholder approves the Budget and Funding Mechanism (including the Initial Budget). (v) Further Agreement. Each Consenting 6 1/4% Subordinated Noteholder believes that the consummation of the Conforming Plan consistent with the Term Sheet is in its best interests and is in the best interests of the Company's creditors generally. Accordingly, for so long as this Agreement remains in effect, each Consenting 6 1/4% Subordinated Noteholder will support the Conforming Plan consistent with the terms and conditions of the Term Sheet. Without limiting the foregoing, each Consenting 6 1/4% Subordinated Noteholder commits, for so long as the Agreement remains in effect, to support the Budget and Funding Mechanism, the Conforming Disclosure Statement, the Conforming Plan and the Conforming Restructuring Loan Documents and use its commercially reasonable efforts to facilitate the filing and confirmation of the Conforming Plan at the earliest practicable date; provided however, that notwithstanding anything contained herein to the contrary, if any Consenting 6 1/4% Subordinated Noteholder is appointed to and serves on the Creditors' Committee, the terms of this Agreement shall not be construed to limit such Consenting 6 1/4% Subordinated Noteholder's exercise of its fiduciary duties in its role as a member of a Creditors' Committee, and any exercise of such fiduciary duties shall not be deemed to constitute a breach of the terms of this Agreement. 4. Agreements of the Company Group. Each member of the Company Group believes that the confirmation of the Conforming Plan and the consummation of the Conforming Restructuring Loan Documents will best facilitate its business and financial restructuring and that consummation of the terms described in the Term Sheet is in the best interests of each member of the Company Group and in the best interests of their respective creditors and other parties in interest. Accordingly, the Company Group hereby agrees, for so long as this Agreement remains in effect: (a) to prepare or cause the preparation, as soon as practicable after the date hereof, of each of the Definitive Documents (as defined below), each containing terms and conditions consistent in all material respects with the Restructuring Terms, and to distribute such documents and afford reasonable opportunity of comment and review to (i) the legal and financial advisors for the Consenting 5 1/4% Subordinated Noteholders and (ii) the legal and financial advisors for the Consenting 6 1/4% Subordinated Noteholders; (b) to (i) to file the Chapter 11 Cases with respect to the Restructuring Transaction in the Bankruptcy Court on or prior to August 15, 2003, (ii) to file the Conforming Disclosure Statement and the Conforming Plan with the Bankruptcy Court on or prior to August 26, 2003, (iii) to cause the solicitation pursuant to the Conforming 6 Disclosure Statement and the Conforming Plan to commence on or before October 10, 2003, and (iv) to solicit the requisite votes in favor of, and to obtain confirmation by the Bankruptcy Court at the earliest practicable date of, the Conforming Plan and approval of the Bankruptcy Court; (c) to not pursue, propose, support, encourage the pursuit of, or seek to implement any transaction or series of transactions that would effect a restructuring on terms other than the Restructuring Terms unless or until this Agreement has been terminated in accordance with Section 5; and (d) to otherwise use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things, necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by the Term Sheet, the Conforming Plan and the Conforming Restructuring Loan Documents at the earliest practicable date (including opposing any appeal of the Confirmation Order). 5. Termination of Agreement. The obligations of the Consenting 5 1/4% Subordinated Noteholders and Consenting 6 1/4% Subordinated Noteholders under this Agreement shall terminate and be of no further force and effect upon the occurrence of any of the following events (any such event, a "Termination Event"), and such Termination Event is not waived in accordance with Section 10 of this Agreement: (i) the Company Group fails (A) to file the Chapter 11 Cases with respect to the Restructuring Transaction in the Bankruptcy Court on or prior to August 15, 2003, (B) to file the Conforming Disclosure Statement and the Conforming Plan with the Bankruptcy Court on or prior to August 26, 2003, or (C) to cause the solicitation pursuant to the Conforming Disclosure Statement and the Conforming Plan to commence on or before October 10, 2003; (ii) any member of the Company Group files, proposes or otherwise supports, either directly or indirectly, any plan of reorganization other than the Conforming Plan, or other creditors of any member of the Company Group file any plan of reorganization other than the Conforming Plan in accordance with Section 1121(c) of the Bankruptcy Code; (iii) the Conforming Plan is modified or replaced such that it (or any such replacement) at any time is not consistent in any material respect with the Restructuring Terms; (iv) any breach of any member of the Company Group of any of their respective obligations, or failure to satisfy in any material respect any of the terms or conditions under this Agreement or the Pre-Restructuring Loan Documents (as defined in the Term Sheet), or any member of the Company Group or any of their respective professionals or representatives shall take any action to challenge (including, without limitation, to assert in writing any challenge to) the validity or enforceability of this Agreement; (v) the final Definitive Documents (as defined below) are modified to provide for any terms that are not consistent in any material respect with the Restructuring Terms or that are otherwise not satisfactory in form and substance to the Parties signatory thereto; (vi) any member of the Company Group or any of their respective professionals or representatives shall withdraw or revoke the Conforming Plan; (vii) an examiner with expanded powers or a trustee shall have been appointed in the Chapter 11 Cases, the Chapter 11 Cases shall have been converted to a case under chapter 7 of the Bankruptcy Code, or the Chapter 11 Cases shall have been dismissed by order of the Bankruptcy Court; (viii) the occurrence of a Termination Event (as defined in the RSA), which shall not have been waived by the Required Lenders; (ix) any foreclosure proceeding is commenced against, or bankruptcy case is commenced by or against Details or DDISV; (x) any failure to obtain, by November 15, 2003, (a) more than one-half (1/2) in number and two-thirds (2/3) in amount of the holders (the "Required 5 5 1/4% Subordinated Noteholders") of 5 1/4% Subordinated Notes (as defined in the Term Sheet) voting on the Conforming Plan to accept the terms of the ConformingPlan and (b) more than one-half (1/2) in number and two-thirds (2/3) in amount of the holders (the "Required 6 1/4% Subordinated Noteholders") of 6 1/4% Subordinated Notes (as defined in the Term Sheet) voting on the Conforming Plan to accept the terms of the Conforming Plan; (xi) any Court (including the Bankruptcy Court) shall declare, in a 7 Final Order, this Agreement to be unenforceable; (xii) orders approving the Conforming Disclosure Statement shall not have been entered by the Clerk of the Bankruptcy Court on or before October 7, 2003; (xiii) the Confirmation Order shall not be in form and substance acceptable to the Required 5 1/4% Noteholders and the Required 6 1/4 Noteholders; (xiv) the Bankruptcy Court shall enter an order denying confirmation of the Conforming Plan; (xv) orders confirming the Conforming Plan shall not have been entered by the Clerk of the Bankruptcy Court on or before December 15, 2003; (xvi) the Effective Date (as defined in the Term Sheet) of the Conforming Plan shall not have occurred on or before January 8, 2004; or (xvii) January 30, 2004. 6. Good Faith Cooperation; Further Assurances: Acknowledgment: Definitive Documents. The Parties shall cooperate with each other in good faith and shall coordinate their activities (to the extent practicable) in respect of (a) all matters relating to their rights in respect any member of the Company Group or otherwise in connection with their relationship with the members of the Company Group, (b) all matters concerning the implementation of the Restructuring Terms, and (c) the pursuit and support of the Restructuring Transaction. Furthermore, subject to the terms hereof, each of the Parties shall take such action as may be necessary to carry out the purposes and intent of this Agreement, including making and filing any required regulatory filings and voting any other debt or equity securities of the Company Group in favor of the Restructuring Transaction (provided that no Consenting 5 1/4% Subordinated Noteholder or Consenting 6 1/4% Subordinated Noteholder shall be required to incur any expense, liability or other obligation), and shall refrain from taking any action that would frustrate the purposes and intent of this Agreement, including proposing a plan that is not the Conforming Plan. While the Consenting 5 1/4% Subordinated Noteholders and the Consenting 6 1/4% Subordinated Noteholders commit herein to support the Restructuring Transaction and Conforming Plan and it is their intention to vote in favor of the Conforming Plan, this Agreement is not and shall not be deemed a solicitation for consent to the Conforming Plan or a solicitation to tender or exchange any Debt. The acceptance of the Consenting 5 1/4% Subordinated Noteholders and the Consenting 6 1/4% Subordinated Noteholders will not be solicited until they have received the Conforming Disclosure Statement and the related ballots in forms approved by the Bankruptcy Court. Notwithstanding anything to the contrary contained in this Agreement, the obligations of the Parties hereunder shall be expressly subject to the preparation of definitive documents (the "Definitive Documents") implementing, achieving and relating to the Restructuring Terms and this Agreement, including, without limitation: (i) (a) the Conforming Plan, the Disclosure Statement, the order of the Bankruptcy Court confirming the Conformrng Plan which shall be in form and substance acceptable to the Parties (the "Confirmation Order"), the Conforming Disclosure Statement, and any related ballots, releases and settlement documents, (b) definitive documentation relating to the management incentive plan, the common stock of Reorganized DDi, the preferred stock of DDi Europe (as defined in the Term Sheet) and other related documents, each of which are more specifically described in the Restructuring Terms, shall contain terms and conditions consistent in all material respects with the Restructuring Terms, and shall be, satisfactory in form and substance to the Parties signatory thereto, (c) the Conforming Restructuring Loan Documents, and (d) all other agreements, instruments, orders or other documents necessary or appropriate to consummate the transactions contemplated by this Agreement, the Term Sheet, the Conforming Restructuring Loan Documents or the Conforming Plan, each of which documents must be in form and substance acceptable to each of the Parties (except as otherwise provided in the Term Sheet), and (ii) any "first day" orders and motions which must be in form and substance acceptable to each of the Parties. Each Party hereby 8 covenants and agrees (i) to negotiate in good faith the Definitive Documents and (ii) to execute (to the extent they are a party thereto) and otherwise support the Definitive Documents. 7. Further Acquisitions. This Agreement shall in no way be construed to preclude any Consenting 5 1/4% Subordinated Noteholder or Consenting 6 1/4% Subordinated Noteholder from acquiring additional 5 1/4% Subordinated Notes, 6 1/4% Subordinated Notes and/or Senior Discount Notes. However, any such 5 1/4% Subordinated Notes, 6 1/4% Subordinated Notes or Senior Discount Notes so acquired shall automatically be deemed to be subject to all of the terms of this Agreement. 8. Additional Claims or Equity Interests. To the extent any Consenting 5 1/4% Subordinated Noteholder or Consenting 6 1/4% Subordinated Noteholder (a) acquires additional debt or Claims, or (b) holds or acquires other claims or equity interests in the Company entitled to vote on the Conforming Plan, each such Consenting 5 1/4% Subordinated Noteholder and Consenting 6 1/4% Subordinated Noteholder agrees that such debt, Claims, claims or equity interests shall be subject to this Agreement and that it shall vote (or cause to be voted) any such additional debt, Claims, claims or equity interests (in each case, to the extent still held by it or on its behalf at the time of such vote) in a manner consistent with this Agreement. 9. Representations and Warranties. Each Party, severally (and not jointly), represents and warrants to the other Parties that the following statements are true, correct and complete as of the date hereof: (a) it is duly organized, validly existing, and in good standing under the laws of the state of its organization, and has all requisite corporate, partnership, limited liability company or similar authority to enter into this Agreement and carry out the transactions contemplated hereby and perform its obligations contemplated hereunder; and the execution and delivery of this Agreement and the performance of such Party's obligations hereunder have been duly authorized by all necessary corporate, limited liability, partnership or other similar action on its part; (b) the execution, delivery, and performance by such Party of this Agreement does not and shall not (i) violate any provision of law, rule or regulation applicable to it or any of its subsidiaries or its certificate of incorporation or bylaws or other organizational documents or those of any of its subsidiaries, or (ii) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any material contractual obligation to which it or any of its subsidiaries is a party; (c) the execution, delivery, and performance by such Party of this Agreement does not and shall not require any registration or filing with, consent or approval of, or notice to, or other action to, with or by, any federal, state or governmental authority or regulatory body, except such filings as may be necessary and/or required for disclosure by the Securities and Exchange Commission and in connection with the Chapter 11 Cases, the Conforming Disclosure Statement and the Conforming Plan. Although none of the Parties intend that this Agreement should constitute, and they each believe that it does not constitute, a solicitation and acceptance of the Conforming Plan, they each acknowledge and agree that, regardless of whether its Relevant Claims or the Conforming Restructuring Loan Documents constitutes "securities" within the meaning of the Securities Act of 1933, (i) each of the Consenting 5 1/4% Subordinated Noteholders and Consenting 6 1/4% Subordinated Noteholders is 9 an "accredited investor" as such term is defined in Rule 501(a) of the Securities Act of 1933 and a "qualified institutional buyer" as such term is defined in Rule 144A of the Securities Act of 1933 and (ii) adequate information was provided by the Company Group to each such Consenting 5 1/4% Subordinated Noteholder and Consenting 6 1/4% Subordinated Noteholder in order to enable it to make an informed decision such that, were this Agreement to be construed as or deemed to constitute such a solicitation and acceptance, such solicitation was (i) in compliance with any applicable nonbankruptcy law, rule, or regulation governing the adequacy of disclosure in connection with such solicitation, or (ii) if there is not any such law, rule, or regulation, solicited after disclosure to such holder of "adequate information" as such term is defined in Section 1125(a) of the Bankruptcy Code; (d) if such Party is a Consenting 5 1/4% Subordinated Noteholder, such Consenting 5 1/4% Subordinated Noteholder has reviewed this Agreement and all exhibits hereto and has received all such other information as it deems necessary and appropriate to enable it to evaluate the financial risks inherent in the Restructuring Transaction; (e) if such Party is a Consenting 6 1/4% Subordinated Noteholder, such Consenting 6 1/4% Subordinated Noteholder has reviewed this Agreement and all exhibits hereto and has received all such other information as it deems necessary and appropriate to enable it to evaluate the financial risks inherent in the Restructuring Transaction; and (f) this Agreement is the legally valid and binding obligation of it, enforceable in accordance with the terms hereof, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or limiting creditors' rights generally or by equitable principles relating to enforceability or a ruling of the Bankruptcy Court. 10. Amendments and Waivers. This Agreement may not be modified, amended or supplemented except in a writing signed by each member of the Company Group and (i) the Consenting Subordinated Noteholders holding at least one-half (1/2) in aggregate principal amount of the debt held by Consenting Subordinated Noteholders; provided, that, that any modification or amendment to this Section 10 shall require the written consent of all of the Parties; provided, further, that any modification of, or amendment or supplement to, this Agreement (including the Restructuring Terms) that materially and adversely affects any Party shall require the written consent of the Party so affected. A Termination Event may not be waived except in a writing by the Consenting Subordinated Noteholders holding at least one-half (1/2) in aggregate principal amount of the debt held by Consenting Subordinated Noteholders no later than three (3) business days following the occurrence of a Termination Event. 11. Other Existing Support Agreements. Each Consenting 5 1/4% Subordinated Noteholder and Consenting 6 1/4% Subordinated Noteholder acknowledges that other parties are being requested to sign the RSA, and that a condition of the Term Sheet is that the RSA shall have been executed and delivered, no later than August 1, 2003, by (a) each member of the Company Group and (b) one hundred percent of the (100%) of the holders of Lender Indebtedness (as defined in the RSA). 12. Conditions to Effectiveness. This Agreement shall not become effective and binding on the Parties unless and until (i) counterpart signature pages and Joinders, as applicable, shall have been executed and delivered, no later than August 8, 2003, by (a) each member of the 10 Company Group, (b) the Consenting Subordinated Noteholders holding at least forty-two and a half percent (42.5%) in aggregate principal amount of the Subordinated Notes, to the Debtors, with a copy to the Administrative Agent; and (ii) the RSA shall have been executed and delivered, no later than August 1, 2003, by (a) each member of the Company Group and (b) one hundred percent of the (100%) of the holders of Lender Indebtedness (as defined in the RSA). 13. GOVERNING LAW; JURISDICTION. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. BY ITS EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ANY LEGAL ACTION, SUIT OR PROCEEDING AGAINST IT WITH RESPECT TO ANY MATTER UNDER OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT RENDERED IN ANY SUCH ACTION, SUIT OR PROCEEDING, MAY BE BROUGHT IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HEREBY IRREVOCABLY ACCEPTS AND SUBMITS ITSELF TO THE NONEXCLUSIVE JURISDICTION OF EACH SUCH COURT, GENERALLY AND UNCONDITIONALLY, WITH RESPECT TO ANY SUCH ACTION, SUIT OR PROCEEDING, AND WAIVES ANY OBJECTION IT MAY HAVE TO VENUE OR THE CONVENIENCE OF THE FORUM. NOTWITHSTANDING THE FOREGOING CONSENT TO JURISDICTION, UPON THE COMMENCEMENT OF THE CHAPTER 11 CASES, EACH OF THE PARTIES AGREES THAT THE BANKRUPTCY COURT SHALL HAVE EXCLUSIVE JURISDICTION WITH RESPECT TO ANY MATTER UNDER OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT. 14. Specific Performance. This Agreement, including without limitation the Parties' agreement herein to support the Restructuring Transaction and Conforming Plan and to facilitate its confirmation, is intended as a binding commitment enforceable in accordance with its terms. It is understood and agreed by each of the Parties that money damages would not be a sufficient remedy for any breach of this Agreement by any Party and each non-breaching Party shall be entitled to specific performance and injunctive or other equitable relief as a remedy of any such breach, including an order of the Bankruptcy Court requiring any Party to comply promptly with any of its obligations hereunder. 15. Survival. Notwithstanding (i) any sale of the debt or Claims in accordance with Sections 3(a)(iii) and 3(b)(iii), or (ii) the termination of this Agreement pursuant to Section 5, the agreements and obligations of the Parties in Sections 13, 15, 17, 19, 20, 24, and 25 shall survive such sale and/or termination and shall continue in full force and effect for the benefit of the Consenting 5 1/4% Subordinated Noteholders and the Consenting 6 1/4% Subordinated Noteholders in accordance with the terms hereof. 16. Headings. The headings of the Sections, paragraphs and subsections of this Agreement are inserted for convenience only and shall not affect the interpretation hereof. 17. Successors and Assigns; Severability; Several Obligations. This Agreement is intended to bind and inure to the benefit of the Parties and their respective successors, assigns, heirs, executors, administrators and representatives. The invalidity or unenforceability at any time of any provision hereof shall not affect or diminish in any way the continuing validity and 11 enforceability of the remaining provisions hereof. The agreements, representations and obligations of the Consenting 5 1/4% Subordinated Noteholders and the Consenting 6 1/4% Subordinated Noteholders under this Agreement are, in all respects, several and not joint. 18. No Third-Party Beneficiaries. Unless expressly stated herein, this Agreement shall be solely for the benefit of the Parties hereto and, to the extent contemplated by the Term Sheet, the Consenting Lenders under the RSA and no other person or entity shall be a third party beneficiary hereof. 19. Prior Negotiations; Entire Agreement. This Agreement constitutes the entire agreement of the Parties, and supersedes all other prior and contemporaneous negotiations, agreements, representations, warranties and understandings of the parties, whether oral, written or implied, with respect to the subject matter hereof, except that the Parties acknowledge that, except as provided in Section 20 below, any confidentiality agreements heretofore executed between any member of the Company Group and each Consenting 5 1/4% Subordinated Noteholder and Consenting 6 1/4% Subordinated Noteholder shall continue in full force and effect. 20. Confidentiality. Each member of the Company Group and each Consenting 5 1/4% Subordinated Noteholder and Consenting 6 1/4% Subordinated Noteholder agrees to use commercially reasonable efforts to maintain the confidentiality of (a) the individual identities and individual holdings of each Consenting 5 1/4% Subordinated Noteholder Consenting 6 1/4% Subordinated Noteholder and Consenting Lender; provided, however, that such information may be disclosed (i) to the Parties' respective directors, trustees, executives, officers, auditors, and employees and financial and legal advisors or other agents (collectively referred to herein as "Representatives"), (ii) to person in response to, and to the extent required by, (x) any subpoena, or other legal process or (y) any bank regulatory agency or any other regulatory agency or authority. If any Party or its Representative receives a subpoena or other legal process as referred to in clause (ii)(x) above in connection with the Agreement, such Party shall provide the other Parties with prompt written notice of any such request or requirement, to the fullest extent permissible and practicable under the circumstances, so that the other Parties may seek a protective order or other appropriate remedy or waiver of compliance with the provisions of this Agreement. Notwithstanding the provisions in this Section 20, (i) the Company Group may disclose (a) the existence of and nature of support evidenced by this Agreement in one or more public releases that have first been sent to the counsel for the Administrative Agent and to the Consenting 5 1/4% Subordinated Noteholders and the Consenting 6 1/4% Subordinated Noteholders for review and comment, and (b) in the context of any such releases, the aggregate holdings of the Consenting Lenders, the Consenting 5 1/4% Subordinated Noteholder and the Consenting 6 1/4% Subordinated Noteholder (but, as indicated above, not their identities or their individual holdings), (ii) any Party hereto may disclose the identities to the Parties hereto and their individual holdings in any action to enforce this Agreement or in an action for damages as a result of any breaches hereof, and (iii) to the extent required by the Bankruptcy Code, Bankruptcy Rules, Local Rules of the Bankruptcy Court or other applicable rules, regulations or procedures of the Bankruptcy Court or the Office of the United States Trustee, the Company Group may disclose the individual identities of the Consenting 5 1/4% Subordinated Noteholder and the Consenting 6 1/4% Subordinated Noteholder in a writing that has first been sent to each Consenting 5 1/4% Subordinated Noteholder and the Consenting 6 1/4% Subordinated Noteholder for review and comment on five (5) business days' notice. 12 21. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which shall constitute one and the same agreement. Delivery of an executed signature page of this Agreement by facsimile shall be effective as delivery of a manually executed signature page of this Agreement. 22. Notices. Any notice required or desired to be served, given or delivered under this Agreement shall be in writing, and shall be deemed to have been validly served, given or delivered if provided by personal delivery, or upon receipt of fax delivery, during standard business hours (from 8:00 a.m. to 6:00 p.m.) as follows: a. if to the Consenting 5 1/4% Subordinated Noteholders and the Consenting 6 1/4% Subordinated Noteholders, to each such Party at its address set forth on the signature pages to each Joinder Agreement; and b. if to any member of the Company, to Richard Wynne, Kirkland & Ellis LLP, 777 South Figueroa Street, Los Angeles, California 90017, Facsimile No. (213) 680-8500. With a copy to: Kathrine A. McLendon Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, New York 10017 Facsimile No.: 212-455-2502 Counsel for the Consenting Lenders and George C. Webster Stutman, Treister & Glatt Professional Corporation 1901 Avenue of the Stars, 12th Floor Los Angeles, California 90067 Facsimile No.: (310)228-5788 Attorneys to the Ad Hoc Committee of Subordinated Noteholders 23. Rule of Interpretation. Notwithstanding anything contained herein to the contrary, it is the intent of the Parties that all references to votes or voting in this Agreement be interpreted to include (i) votes or voting on a plan of reorganization under the Bankruptcy Code, and (ii) all means of expressing agreement with, or rejection of, as the case may be, a restructuring or reorganization transaction that is not implemented under the Bankruptcy Code. 24. Reservation of Rights. Except as expressly provided in this Agreement and in any amendment among the Parties, nothing herein is intended to, or does, in any manner waive, limit, impair or restrict the ability of each of the Parties to protect and preserve its rights, remedies and interests, including without limitation, its claims against the Company or-its full participation in any bankruptcy case filed by any member of the Company or any of its affiliates and subsidiaries. Nothing herein shall be deemed an admission of any kind. If the transactions contemplated herein, in the Conforming Plan or the Conforming Restructuring Loan Documents are not consummated, or this Agreement is terminated for any reason, the Parties hereto fully reserve any and all of their rights. As provided in the Term Sheet, this Agreement may be filed 13 with the Bankruptcy Court, provided, however, that Schedule B to the Term Sheet shall be attached with any redactions as may be required by the Required Lenders. 25. Disclosure of Holdings. Unless required by applicable law or regulation or otherwise provided for in this Agreement, no Party shall disclose the amount of any Consenting Lender's, Consenting 5 1/4% Subordinated Noteholder's or Consenting 6 1/4% Subordinated Noteholder's holdings of debt to any third party without the prior written consent of such Consenting Lender, Consenting 5 1/4% Subordinated Noteholder or Consenting 6 1/4% Subordinated Noteholder; provided, however, that (a) if such disclosure is required by law or regulation, the disclosing Party shall afford the relevant Consenting Lender, Consenting 5 1/4% Subordinated Noteholder or Consenting 6 1/4% Subordinated Noteholder a reasonable opportunity to review and comment in advance of such disclosure and shall take all reasonable measures to limit such disclosure, and (b) the foregoing shall not prohibit the disclosure of approximate aggregate group holdings by class of debt. 26. Independent Due Diligence and Decision-Making. Each of the undersigned hereby confirms that its decision to execute this Agreement has been based upon its independent investigation of the operations, businesses, financial and other conditions and prospects of the Company Group, without reliance upon the Ad Hoc Committee, any of their respective affiliates or any of their respective advisors or representatives. To the extent any materials or information have been furnished to it by such persons, the undersigned hereby acknowledges that they have been provided for informational purposes only, without any representation or warranty. 27. Prevailing Party. If any Party brings an action or proceeding against any other Party based upon a breach by such Party of its obligations hereunder, the prevailing Party shall be entitled to all reasonable expenses incurred, including reasonable attorneys', accountants' and financial advisors fees in connection with such action or proceeding. 28. Fiduciary Duties. Notwithstanding anything to the contrary herein, nothing in this Agreement shall limit the ability of (a) any member of the Company Group or any of their respective directors or officers (in such person's capacity as a director or officer of any member of the Company Group) to take any action, or to refrain from taking any action, to the extent required to comply with its or their fiduciary obligations under applicable law, (b) any Consenting 5 1/4% Subordinated Noteholder or representative of a Consenting 5 1/4% Subordinated Noteholder that is a member of a statutory committee established in the Chapter 11 Cases to take any action, or to refrain from taking any action, in such person's capacity as a statutory committee member to the extent required to comply with fiduciary obligations applicable under the Bankruptcy Code or (c) any Consenting 6 1/4% Subordinated Noteholder or representative of a Consenting 6 1/4% Subordinated Noteholder that is a member of a statutory committee established in the Chapter 11 Cases to take any action, or to refrain from taking any action, in such person's capacity as a statutory committee member to the extent required to comply with fiduciary obligations applicable under the Bankruptcy Code. Nothing herein will limit or affect, or give rise to any liability, to the extent required for the discharge of the fiduciary obligations described in this Section 28. 29. Several not Joint. The agreements, representations and obligations of the Parties under this Agreement are, in all respects, several and not joint. 14 30. No Admissions. This Agreement shall in no way be construed as or be deemed to be evidence of an admission or concession on the part of any Party of any claim or fault or liability or damages whatsoever. Each of the Parties denies any and all wrongdoing or liability of any kind and does not concede any infirmity in the claims of defenses which it has asserted or could assert. 31. Lender Claims and Liens. The Consenting Subordinated Noteholders acknowledge and agree that (a) the Borrowers are indebted to the Administrative Agent and the Lenders for $72,892,916.17 in outstanding principal amount and face amount of undrawn letters of credit, plus interest and fees, as provided under the Credit Agreement (as defined in the Term Sheet) and the other Pre-Restructuring Loan Documents (as defined in the Term Sheet) and applicable law, (b) as security for payment of the foregoing indebtedness, the Lenders have valid, perfected and unavoidable first-priority liens and charges on, and security interests in, all or substantially all of the assets of the Borrowers, as more particularly described in, and evidenced by, the Credit Agreement and the Pre-Restructuring Loan Documents and (c) so long as this Agreement shall remain in effect, no Consenting Subordinated Noteholders shall (i) challenge or contest, the validity, binding nature, due authorization or enforceability of any document or instrument evidencing the Credit Agreement, the other Pre-Restructuring Loan Documents or any term or condition thereof or (ii) seek to alter, amend or supplement the Credit Agreement or any of the other Pre-Restructuring Loan Documents without the prior written consent of the Consenting Lenders or (iii) challenge or contest the validity, enforceability, perfection or priority of (or shall seek to alter the priority of) any existing lien, charge, security interest, or other interest in favor of the Lenders or any lien, charge, security interest, or other interest granted to the Lenders pursuant to the Pre-Restructuring Loan Documents. [Remainder of page intentionally left blank; remaining pages are signature pages.] 15 IN WITNESS WHEREOF, the undersigned have each caused this Agreement to be duly executed and delivered by their respective, duly authorized officers as of the date first written above. DDi CAPITAL CORP. By: /s/ TIMOTHY J. DONNELLY ------------------------------------ Title: Vice President DYNAMIC DETAILS, INCORPORATED By: /s/ TIMOTHY J. DONNELLY ------------------------------------ Title: Vice President DYNAMIC DETAILS, INCORPORATED, SILICON VALLEY By: /s/ TIMOTHY J. DONNELLY ------------------------------------ Title: Vice President DDi Corp. By: /s/ TIMOTHY J. DONNELLY ------------------------------------ Title: Vice President DYNAMIC DETAILS, INCORPORATED, VIRGINIA By: /s/ TIMOTHY J. DONNELLY ------------------------------------ Title: Vice President DYNAMIC DETAILS TEXAS, L.P. By: Dynamic Details Texas Holdings Corp. By: /s/ TIMOTHY J. DONNELLY -------------------------------- Title: Vice President 16 By: DDi-TEXAS INTERMEDIATE HOLDINGS, L.L.C. By: /s/ TIMOTHY J. DONNELLY ------------------------------------ Title: By: DYNAMIC DETAILS TEXAS HOLDINGS CORP. By: /s/ TIMOTHY J. DONNELLY ------------------------------------ Title: By: DYNAMIC DETAILS INCORPORATED, COLORADO SPRINGS By: /s/ TIMOTHY J. DONNELLY ------------------------------------ Title: By: DYNAMIC DETAILS INCORPORATED, TEXAS By: /s/ TIMOTHY J. DONNELLY ------------------------------------ Title: 17 EX-10.2 4 dex102.txt FIRST AMENDMENT TO PLAN SUPPORT AGREEMENT Exhibit 10.2 EXECUTION COPY FIRST AMENDMENT TO PLAN SUPPORT AGREEMENT FIRST AMENDMENT, dated as of August , 2003 (the "Amendment"), to that -- certain Plan Support Agreement, dated as of August 8, 2003 (together with exhibits, annexes and attachments thereto, the "PSA") by and among (i) DDi Corp. ("DDi"), DDi Intermediate Holdings Corp. ("DDi Intermediate"), DDi Capital Corp. ("DDi Capital"), Dynamic Details, Incorporated ("Details"), Dynamic Details, Incorporated, Silicon Valley ("DDISV") and their respective subsidiaries and affiliates (collectively, the "Company Group"), (ii) the 5 1/4% Subordinated Noteholders (as defined below) signatory hereto (the "Consenting 5 1/4% Subordinated Noteholders") and (iii) the 6 1/4% Subordinated Noteholders (as defined below) signatory hereto (the "Consenting 6 1/4% Subordinated Noteholders" and together with the Consenting 5 1/4% Subordinated Noteholders, the "Consenting Subordinated Noteholders"). Capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the PSA. W I T N E S S E T H: WHEREAS, pursuant to the PSA, the Consenting Subordinated Noteholders have agreed to implement a restructuring and reorganization of the Company Group pursuant to the Restructuring Terms as set forth on the Term Sheet; WHEREAS, the Company Group has requested that the Consenting Subordinated Noteholders holding at least one-half (1/2) in aggregate principal amount of the debt held by Consenting Subordinated Noteholders (the "Required Subordinated Noteholders") enter into this Amendment on the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the premises and mutual agreements contained herein, and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Amendment to the Preliminary Statements. The Preliminary Statements are hereby amended as follows: (i) by inserting the following new Section (D) immediately after Section (C): "D. Pursuant to that certain Senior Discount Noteholder Plan Support Agreement, dated as of August , 2003 (the "SDPSA"), the holders of -- sixty-six and two-thirds percent (66 2/3%) of the aggregate principal amount of the 12 1/2% Senior Discount Notes due 2007 (the "Senior Discount Notes") issued by DDi Capital under that certain Indenture, dated as of November 18, 1997 between DDi Capital, as issuer, and The State Street Bank and Trust Company (n/k/a U.S. Bank, N.A.), as trustee (the "12 1/2 Trustee"), as supplemented by the supplemental indenture dated as of February 10, 1998 between DDi Capital and the 12 1/2 Trustee (the "Consenting Senior Discount Noteholders") have consented to, inter alia, the Restructuring Terms subject to certain terms and conditions outlined in the SDPSA."; (ii) by re-lettering each of the Sections immediately succeeding new Section (D) in proper alphabetical order; and (iii) by adding the terms "the Consenting Senior Discount Noteholders," immediately after each occurrence of the terms "the Consenting Lenders," in new Sections E and F. 2 2. Amendment to Section 5. Section 5 is hereby amended by deleting the word "or" at the end of subsection (xvi) thereof, deleting the period at the end of subsection (xvii) thereof and replacing it with "; or" and adding the following new subsection (xviii): "(xviii) the occurrence of a Termination Event (as defined in the SDPSA), which shall not have been waived by the Required Senior Discount Noteholders." 3. Amendment to Exhibit A. Exhibit A to the PSA is hereby amended by deleting Schedule E and replacing it with the new Schedule E annexed hereto as Exhibit A. 4. Reservation of Rights. Each member of the Company Group jointly and severally acknowledges and agrees that, (a) the Consenting Subordinated Noteholders shall preserve all rights, remedies, power or privileges set forth in the PSA and under applicable law and (b) nothing contained herein shall in any way limit or otherwise prejudice, and the Consenting Subordinated Noteholders have reserved their right to invoke fully, any right, remedy, power or privilege which the Consenting Subordinated Noteholders may not have or may have in the future under or in connection with the PSA and applicable law, or diminish any of the obligations of any member of the Company Group contained in the PSA. The rights, remedies, powers and privileges of the Consenting Subordinated Noteholders provided under this Amendment and the PSA are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 5. No Change. Except as expressly provided herein, no term or provision of the PSA shall be amended, waived, modified, consented to or supplemented, and each term and provision of the PSA shall remain in full force and effect. 6. Effectiveness. This Amendment shall become effective upon the satisfaction of the following conditions precedent: (i) counterparts hereof duly executed by each member of the Company Group and the Required Subordinated Noteholders; and (ii) counterpart signatures to the Senior Discount Noteholder Plan Support Agreement (the "SDPSA"), in the form annexed hereto, shall have been executed and delivered, with a copy to the Administrative Agent and the Ad Hoc Committee, prior to the Petition Date by (a) each member of the Company Group and (b) each Consenting Senior Discount Noteholder (as defined in the SDPSA) The execution and delivery of this Amendment shall be binding upon each of the Consenting Subordinated Noteholders' successors and assigns. 7. Counterparts. This Amendment may be executed by the parties hereto in any number of separate counterparts by facsimile with originals to follow, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 8. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed and delivered by their respective proper and duly authorized officers as of the day and year first above written. DDi CAPITAL CORP. By: /s/ JOHN STUMPF ----------------------------------------- Title: CFO DYNAMIC DETAILS, INCORPORATED By: /s/ JOHN STUMPF ----------------------------------------- Title: CFO DYNAMIC DETAILS, INCORPORATED, SILICON VALLEY By: /s/ JOHN STUMPF ----------------------------------------- Title: CFO DYNAMIC DETAILS, INCORPORATED, VIRGINIA By: /s/ JOHN STUMPF ----------------------------------------- Title: CFO DYNAMIC DETAILS TEXAS, L.P. By: /s/ JOHN STUMPF ----------------------------------------- Title: CFO DYNAMIC DETAILS TEXAS HOLDINGS CORP. By: /s/ JOHN STUMPF ----------------------------------------- Title: CFO By: DDi-TEXAS INTERMEDIATE HOLDINGS,L.L.C. By: /s/ JOHN STUMPF ----------------------------------------- Title: CFO By: DYNAMIC DETAILS TEXAS HOLDINGS CORP. By: /s/ JOHN STUMPF ----------------------------------------- Title: CFO By: DYNAMIC DETAILS INCORPORATED, COLORADO SPRINGS By: /s/ JOHN STUMPF ----------------------------------------- Title: CFO By: DYNAMIC DETAILS INCORPORATED, TEXAS By: /s/ JOHN STUMPF ----------------------------------------- Title: CFO ARGENT, as a 6.25% Subordinated Noteholder By: /s/ NATE BROWN ----------------------------------------- Name: Nate Brown Title: Illegible [Signature Page to First Amendment to Plan Support Agreement] PROVIDENCE CAPITAL, LLC, ON BEHALF OF AQUITANIA PARTNERS, LP; MAURETANIA PARTNERS, LP; AND RAM CSA LIMITED as a 5 1/4% Subordinated Noteholder By: /s/ JOHN C. KOPCHIK ------------------------------------------ Name: John C. Kopchik Title: PRESIDENT, PROVIDENCE CAPITAL, LLC [Signature Page to First Amendment to Plan Support Agreement] PROVIDENCE CAPITAL ON BEHALF OF MAURETANIA PARTNERS, LP, as a 6.25% Subordinated Noteholder By: /s/ JOHN C. KOPCHIK ------------------------------------------ Name: John C. Kopchik Title: PRESIDENT, PROVIDENCE CAPITAL, LLC [Signature Page to First Amendment to Plan Support Agreement] Tablerock Fund Management, as a 5 1/4% Subordinated Noteholder By: /s/ Illegible ----------------------------------------- Name: Illegible Title: Member, Authorized Signatory [Signature Page to First Amendment to Plan Support Agreement] Tablerock Fund Management, as a 5 1/4% Subordinated Noteholder By: /s/ Illegible ----------------------------------------- Name: Illegible Title: Member, Authorized Signatory [Signature Page to First Amendment to Plan Support Agreement] [ILLEGIBLE], as a 5.25% Subordinated Noteholder By: /s/ DAVID K. SHERMAN ----------------------------------------- Name: David K. Sherman Title: President of [ILLEGIBLE] [Signature Page to First Amendment to Plan Support Agreement] EX-10.3 5 dex103.txt SECOND AMENDMENT TO PLAN SUPPORT AGREEMENT Exhibit 10.3 EXECUTION COPY SECOND AMENDMENT TO PLAN SUPPORT AGREEMENT SECOND AMENDMENT, dated as of November , 2003 (the "Amendment"), to that --- certain Plan Support Agreement, dated as of August 8, 2003, as amended by the First Amendment dated as of August 19, 2003 (together with exhibits, annexes and attachments thereto, the "PSA") by and among (i) DDi Corp. ("DDi"), DDi Intermediate Holdings Corp. ("DDi Intermediate"), DDi Capital Corp. ("DDi Capital"), Dynamic Details, Incorporated ("Details"), Dynamic Details, Incorporated, Silicon Valley DDISV") and their respective subsidiaries and affiliates (collectively, the "Company Group"), (ii) the 5 1/4% Subordinated Noteholders (as defined below) signatory hereto (the "Consenting 5 1/4% Subordinated Noteholders") and (iii) the 6 1/4% Subordinated Noteholders (as defined below) signatory hereto (the Consenting 6 1/4% Subordinated Noteholders" and together with the Consenting 5 1/4% Subordinated Noteholders, the "Consenting Subordinated Noteholders"). Capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the PSA. W I T N E S S E T H: WHEREAS, pursuant to the PSA, the Consenting Subordinated Noteholders have agreed to implement a restructuring and reorganization of the Company Group pursuant to the Restructuring Terms as set forth on the Term Sheet; WHEREAS, the Company Group has requested that the Consenting Subordinated Noteholders holding at least one-half (1/2) in aggregate principal amount of the debt held by Consenting Subordinated Noteholders (the "Required Subordinated Noteholders") enter into this Amendment on the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the premises and mutual agreements contained herein, and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Amendment to Section 5. Section 5 is hereby amended by deleting the date "November 15, 2003" at the beginning of subsection (xii) thereof, and replacing it with the date "December 3, 2003". 2. Amendment to Exhibit A. Exhibit A to the PSA is hereby amended as follows: (a) by deleting the term "preferred stock of DDi Europe" where it appears therein, respectively, and substituting in lieu thereof "preferred stock of DDi Europe or preferred stock of Reorganized DDi, as applicable." (b) By deleting Schedule A in its entirety and substituting in lieu thereof, with the new Schedule A annexed hereto as Exhibit A. (c) By deleting Schedule D in its entirety and substituting in lieu thereof, with the new Schedule D annexed hereto as Exhibit B. 3. Reservation of Rights. Each member of the Company Group jointly and severally acknowledges and agrees that, (a) the Consenting Subordinated Noteholders shall preserve all rights, remedies, power or privileges set forth in the PSA and under applicable law and (b) nothing contained herein shall in any way limit or otherwise prejudice, and the Consenting Subordinated Noteholders have reserved their right to invoke fully, any right, remedy, power or privilege which the Consenting Subordinated Noteholders may not have or may have in the future under or in connection with the PSA and applicable law, or diminish any of the obligations of any member of the Company Group 2 contained in the PSA. The rights, remedies, powers and privileges of the Consenting Subordinated Noteholders provided under this Amendment and the PSA are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 4. No Change. Except as expressly provided herein, no term or provision of the PSA shall be amended, waived, modified, consented to or supplemented, and each term and provision of the PSA shall remain in full force and effect. 5. Effectiveness. This Amendment shall become effective upon the satisfaction of the following conditions precedent: (i) counterparts hereof duly executed by each member of the Company Group and the Required Subordinated Noteholders; (ii) counterpart signatures to the Third Amendment to the Restructuring Support Agreement, in the form annexed hereto as Exhibit C, shall have been executed and delivered, with a copy to the Ad Hoc Committee, prior to November 6, 2003 by (a) each member of the Company Group and (b) the Required Lenders (as defined therein); and (iii) counterpart signatures to the First Amendment to the Senior Discount Noteholder Plan Support Agreement, in the form annexed hereto as Exhibit D, shall have been executed and delivered, with a copy to the Administrative Agent and the Ad Hoc Committee, prior to November 6, 2003 by (a) each member of the Company Group and (b) the Consenting Senior Discount Noteholders (as defined therein) holding at least one-half (1/2) in aggregate principal amount of the debt held by the Consenting Senior Discount Noteholders. The execution and delivery of this Amendment shall be binding upon each of the Consenting Subordinated Noteholders' successors and assigns. 7. Counterparts. This Amendment may be executed by the parties hereto in any number of separate counterparts by facsimile with originals to follow, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 8. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed and delivered by their respective proper and duly authorized officers as of the day and year first above written. DDi CAPITAL CORP. By: /s/ TIMOTHY DONNELLY -------------------------------------- Title: Vice President DYNAMIC DETAILS, INCORPORATED By: /s/ TIMOTHY DONNELLY --------------------------------------- Title: Vice President DYNAMIC DETAILS, INCORPORATED, SILICON VALLEY By: /s/ TIMOTHY DONNELLY --------------------------------------- Title: Vice President DYNAMIC DETAILS, INCORPORATED, VIRGINIA By: /s/ TIMOTHY DONNELLY --------------------------------------- Title: Vice President DYNAMIC DETAILS TEXAS, L.P. By: /s/ TIMOTHY DONNELLY --------------------------------------- Title: Vice President DYNAMIC DETAILS TEXAS HOLDINGS CORP. By: /s/ TIMOTHY DONNELLY --------------------------------------- Title: Vice President By: DDi-TEXAS INTERMEDIATE HOLDINGS, L.L.C. By: /s/ TIMOTHY DONNELLY --------------------------------------- Title: Vice President By: DYNAMIC DETAILS TEXAS HOLDINGS CORP. By: /s/ TIMOTHY DONNELLY --------------------------------------- Title: Vice President By: DYNAMIC DETAILS INCORPORATED, COLORADO SPRINGS By: /s/ TIMOTHY DONNELLY --------------------------------------- Title: Vice President By: DYNAMIC DETAILS INCORPORATED, TEXAS By: /s/ TIMOTHY DONNELLY --------------------------------------- Title: Vice President , as a % --------------------------- --- Subordinated Noteholder By: --------------------------------------- Name: Title: [Signature Page to Second Amendment to Plan Support Agreement] EX-10.4 6 dex104.txt RESTRUCTURING SUPPORT AGREEMENT Exhibit 10.4 EXECUTION COPY RESTRUCTURING SUPPORT AGREEMENT This Restructuring Support Agreement (together with exhibits, annexes and attachments hereto, this "Agreement") is made and entered into as of August 1, 2003 by and among (i) DDi Corp. ("DDi"), DDi Intermediate Holdings Corp. ("DDi Intermediate"), DDi Capital Corp. ("DDi Capital"), Dynamic Details, Incorporated ("Details"), Dynamic Details, Incorporated, Silicon Valley ("DDISV") and their respective subsidiaries and affiliates (collectively, the "Company Group"), (ii) the Administrative Agent (as defined below) and (iii) the Consenting Lenders (as defined below) signatory hereto. DDi, DDi Intermediate, DDi Capital, Details, DDISV, and each of their respective subsidiaries and affiliates, each Consenting Lender and any subsequent person that becomes a party hereto are referred herein as the "Parties" and individually, as a "Party." PRELIMINARY STATEMENTS A. The Lenders (as defined below) hold senior debt of $72,892,916.17 in face amount of undrawn letters of credit and outstanding, unpaid principal amount (the "Lender Indebtedness") under the Amended and Restated Credit Agreement, dated as of July 23, 1998 and as amended and restated as of August 28, 1998, and as amended by the First Amendment, dated as of March 10, 1999, the Second Amendment, dated as of March 22, 2000, the Third Amendment, dated as of October 10, 2000, the Fourth Amendment, dated as of February 13, 2001, the Fifth Amendment, dated as of December 31, 2001, the Sixth Amendment, dated as of June 28, 2002 and the Seventh Amendment, dated as of June 27, 2003 (as amended, supplemented or otherwise modified, the "Credit Agreement"), among Details, DDISV, the several banks and other financial institutions from time to time parties thereto (the "Lenders"), JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), in its capacity as the arranger of the Commitments, and as collateral, co-syndication and administrative agent for the Lenders (in such capacity, the "Administrative Agent") and Bankers' Trust Company as documentation and co-syndication agent (the "Co-Syndication Agent"), and all collateral and ancillary documentation executed in connection therewith, including, without limitation, the hedge agreement (the "Hedge Agreement") entered into by Details with JPMorgan Chase Bank (collectively, the "Pre-Restructuring Loan Documents"). As of the date hereof, the Consenting Lenders hold, in aggregate, 100% of the principal amount of the Lender Indebtedness. B. The Company Group, the Consenting Lenders, the Consenting 5 1/4% Subordinated Noteholders (as defined in the PSA defined below) and the Consenting 6 1/4% Subordinated Noteholders (as defined in the PSA defined below) have engaged in good faith negotiations with the objective of reaching an agreement with regard to certain aspects of the restructuring and reorganization of the Company Group. C. The Company Group, the Consenting Lenders, the Consenting 5 1/4% Subordinated Noteholders and the Consenting 6 1/4% Subordinated Noteholders now desire to implement a restructuring and reorganization of the Company Group such that the Consenting Lenders, the Consenting 5 1/4% Subordinated Noteholders and the Consenting 6 1/4% Subordinated Noteholders and the other holders of claims against and/or equity interests in the Company Group shall receive the consideration to be paid, distributed exchanged or provided by the Company Group pursuant to such restructuring and reorganization (the "Restructuring Terms") as set forth on the term sheet (the "Term Sheet") attached hereto as Exhibit A. D. The Consenting 5 1/4% Subordinated Noteholders and the Consenting 6 1/4% Noteholders have until August 8, 2003 to execute the Plan Support Agreement (the "PSA"), the form of which is annexed hereto as Exhibit B, which shall provide for, inter alia, their consent to the Restructuring Terms subject to certain terms and conditions outlined in the PSA. E. In order to expedite the contemplated restructuring and reorganization of the Company Group, each Party, subject to the terms of this Agreement, desires to pursue and support a restructuring transaction (i) by way of a plan of reorganization under Chapter 11 of Title 11, United States Code (the "Bankruptcy Code") relating to DDi and DDi Capital and (ii) by way of an out-of-court restructuring transaction relating to Details, DDISV and their respective subsidiaries and affiliates that achieves and implements the Restructuring Terms (any such restructuring transaction that achieves and implements the Restructuring Terms, the "Restructuring Transaction") and during the pendency of this Agreement desires not to support any restructuring or reorganization of any of the members of the Company Group (or any plan or proposal in respect of the same) that does not achieve or implement the Restructuring Terms. F. In order to implement the Restructuring Transaction, the Company Group has agreed, subject to the terms and conditions of this Agreement, (i) to prepare and file (a) a disclosure statement that is consistent in all material respects with the Restructuring Terms and is in the form attached to the Term Sheet (the "Conforming Disclosure Statement"), and (b) a plan of reorganization for DDi and DDi Capital that is consistent in all material respects with the Restructuring Terms and is in the form attached to the Term Sheet (the "Conforming Plan") in cases filed under Chapter 11 of the Bankruptcy Code (the "Chapter 11 Cases") in the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court"), and to negotiate and prepare the definitive Restructuring Transaction documents that are consistent in all respects with the Restructuring Terms and are in form and substance satisfactory to the Consenting Lenders (the "Conforming Restructuring Loan Documents"), and (ii) to use reasonable commercial efforts to have the Conforming Disclosure Statement approved and the Conforming Plan confirmed by the Bankruptcy Court, in each case, as expeditiously as practicable under the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure. G. The Company Group and the Consenting Lenders acknowledge and agree that the best way to effectuate the Conforming Plan and the Conforming Restructuring Loan Documents is to do so in a way that would: 1. maximize the value of the Company Group for the benefit of all interested persons; 2. minimize the disruption to the Company Group resulting from the commencement of the Chapter 11 Cases as quickly as possible; 3. minimize the loss of business continuity and opportunity of Details and DDISV; 4. provide all parties to the Restructuring Transaction with Global Releases (as defined in the Term Sheet) and a Plan Injunction (as defined in the Term Sheet); and 2 5. provide assurances and stability to certain key employees of the Company Group. H. In expressing such support and commitment, the Parties do not desire and do not intend in any way to derogate from or diminish the solicitation requirements of applicable securities and bankruptcy law, the fiduciary duties of DDi and DDi Capital as debtors in possession in the Chapter 11 Cases or the role of any state or federal agencies with regulatory authority concerning any member of the Company Group. STATEMENT OF AGREEMENT NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows: 1. Defined Terms. All capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Term Sheet; provided, however, that the term "Restructuring Period" shall mean the period from and including August 1, 2003 to the date of the occurrence of a Termination Event. 2. Term Sheet Conditions. Without limiting the conditions set forth herein, each Party's agreement to this Agreement and support for the Conforming Plan, the Conforming Restructuring Loan Documents and the Term Sheet is expressly conditioned on satisfaction of each of the terms and conditions set forth in the Term Sheet and this Agreement. To the extent that any such conditions involve a time period or an outside date for satisfaction, the Parties acknowledge and agree that time is of the essence with respect to each such condition. 3. Agreements. (a) Agreements of the Consenting Lenders. (i) Ownership. Each Consenting Lender represents and warrants, on a several but not joint basis, that, as of the date hereof, (i) such Consenting Lender either (A) is the sole legal and beneficial owner of, or holder of investment authority over, the debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such debt (the "Consenting Lender Claims"), in each case free and clear of all claims, liens and encumbrances, or (B) has or will have investment or voting discretion with respect to the debt and Consenting Lender Claims and has or will have the power and authority to bind the beneficial owner(s) of such debt and Consenting Lender Claims to the terms of this Agreement, and (ii) such Consenting Lender has or will have full power and authority to vote on and consent to such matters concerning such debt and Consenting Lender Claims and to exchange, assign and transfer such debt and Consenting Lender Claims. (ii) Support of Restructuring. Each Consenting Lender agrees that for so long as this Agreement remains in effect, it (i) shall in no way directly or indirectly, support any restructuring or reorganization of the Company Group (or any plan or proposal in respect of the same) that is not consistent with, or does not implement or achieve, the 3 Restructuring Terms, or (ii) shall not (A) directly or indirectly seek, solicit, pursue, support or encourage any other plan or the termination of the exclusive period for the filing of any plan, proposal or offer of dissolution, winding up, liquidation, reorganization, merger or restructuring of the Company Group that could be expected to prevent, delay or impede the successful restructuring of the Company Group as contemplated by the Restructuring Terms, any Conforming Plan and the Conforming Restructuring Loan Documents, (B) object to the Conforming Disclosure Statement or the solicitation of votes for the Conforming Plan or support any such objection by a third party; provided however, that the Consenting Lender may object to the Conforming Disclosure Statement solely on the basis that it does not contain adequate information as required by Section 1125 of the Bankruptcy Code, or (C) take any other action that is inconsistent with, or that would delay confirmation of, the Conforming Plan. Nothing contained herein shall limit the ability of a Consenting Lender to consult with any member of the Company Group, or to appear and be heard, concerning any matter arising in the Chapter 11 Cases so long as such consultation or appearance is consistent with the Consenting Lender's obligations hereunder and the terms of the Conforming Plan, the Conforming Loan Restructuring Documents, the Restructuring Terms and this Agreement. (iii) Transfers. Each Consenting Lender agrees that for so long as this Agreement remains in effect, it shall not sell, transfer, assign, pledge or otherwise dispose, directly or indirectly, any of the debt or Consenting Lender Claims or any option thereon or any right or interest (voting or otherwise) therein, unless the transferee thereof agrees in writing for the benefit of the Parties to be bound by all of the terms of this Agreement by executing the Joinder attached hereto as Exhibit C, a copy of which shall be provided to the Parties, in which event each Party shall be deemed to have acknowledged that its obligations to the Consenting Lender hereunder shall be deemed to constitute obligations in favor of such transferee. (iv) Amendment to Credit Agreement. By execution of this Agreement, each of the Consenting Lenders consents and authorizes JPMorgan Chase Bank, in its capacity as Administrative Agent under the Credit Agreement, to enter into and execute, on behalf of such Consenting Lender, the eighth amendment to the Credit Agreement (the "Eighth Amendment") in the form annexed hereto as Exhibit D. (v) Agreement to Budget and Funding Mechanism. By execution of this Agreement, each of the Consenting Lenders consents and authorizes JPMorgan Chase Bank, in its capacity as Administrative Agent under the Credit Agreement, to enter into and execute, on behalf of such Consenting Lender, the Budget and Funding Mechanism (including the Initial Budget (as defined in the Budget and Funding Mechanism) contained therein)(the "Budget and Funding Mechanism"), annexed hereto as Exhibit E. (vi) Further Agreement. Each Consenting Lender believes that the consummation of the Conforming Plan and of the Conforming Restructuring Loan Documents consistent with the Term Sheet is in its best interests and is in the best interests of the Company Group's creditors generally. Accordingly, for so long as this Agreement remains in effect, each Consenting Lender will support the Conforming Plan and the Conforming Restructuring Loan Documents consistent with the terms and conditions of the Term Sheet. Without limiting the foregoing, each Consenting Lender commits, for so long as the Agreement remains in effect, to support the Conforming Plan and the Conforming Restructuring Loan Documents and use its commercially reasonable efforts to facilitate the filing and confirmation of the Conforming Plan 4 and consummation of the Conforming Restructuring Loan Documents at the earliest practicable date. 4. Agreements of the Company Group. Each member of the Company Group believes that the confirmation of the Conforming Plan and the consummation of the Conforming Restructuring Loan Documents will best facilitate its business and financial restructuring and that consummation of the terms described in the Term Sheet is in the best interests of each member of the Company Group and in the best interests of their respective creditors and other parties in interest. Accordingly, each member of the Company Group hereby agrees, for so long as this Agreement remains in effect: (a) to prepare or cause the preparation, as soon as practicable after the date hereof, of each of the Definitive Documents (as defined below), each containing terms and conditions consistent in all material respects with the Restructuring Terms, and to distribute such documents and afford reasonable opportunity of comment and review to the legal and financial advisors for the Consenting Lenders; (b) (i) to file the Chapter 11 Cases with respect to the Restructuring Transaction in the Bankruptcy Court on or prior to August 15, 2003, (ii) to file the Conforming Disclosure Statement and the Conforming Plan with the Bankruptcy Court on or prior to August 26, 2003, (iii) to cause the solicitation pursuant to the Conforming Disclosure Statement and the Conforming Plan to commence on or before October 10, 2003, and (iv) to solicit the requisite votes in favor of, and to obtain confirmation by the Bankruptcy Court at the earliest practicable date of, the Conforming Plan and approval of the Bankruptcy Court; (c) to not pursue, propose, support, encourage the pursuit of, or seek to implement any transaction or series of transactions that would effect a restructuring on terms other than the Restructuring Terms unless or until this Agreement has been terminated in accordance with Section 5; (d) to execute, or authorize the execution of, the Eighth Amendment; (e) to otherwise use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things, necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by the Term Sheet, the Conforming Plan and the Conforming Restructuring Loan Documents at the earliest practicable date (including opposing any appeal of the Confirmation Order); and (f) on August 1, 2003, to cause the payment for the account of each Consenting Lender a consent fee in the amount of 137.5 bps of each such Consenting Lender's commitment (less any consent fees paid to such Consenting Lender in connection with the Forbearance Agreement dated February 26, 2003). 5. Termination of Agreement. The obligations of the Consenting Lenders under this Agreement shall terminate and be of no further force and effect upon the date of the occurrence of any of the following events (any such event, a "Termination Event"), and such Termination Event is not waived in accordance with Section 11 of this Agreement: (i) counterpart signature pages to the PSA have not been executed and delivered by August 8, 2003, by (a) each member of the Company Group, (b) Consenting Subordinated Noteholders holding at least forty-two and a half percent (42.5%) in aggregate principal amount of the Subordinated Notes, with a copy to the Administrative Agent; (ii) the Company Group fails (A) to file the Chapter 11 Cases with respect to the Restructuring Transaction in the Bankruptcy Court on or prior to August 15,2003, (B) to file the Conforming Disclosure Statement, which shall be in form and substance acceptable to the Required Lenders, and the Conforming Plan, which shall be in form and substance acceptable to the Required Lenders, with the Bankruptcy Court on or prior to August 26, 2003, or (C) to cause the solicitation pursuant to the Conforming Disclosure Statement and the Conforming Plan to commence on or before October 10, 2003; (iii) any member of the Company Group files, proposes, does not object to or otherwise supports, either directly or indirectly, any plan of reorganization other than the Conforming Plan, or other 5 creditors of any member of the Company Group file any plan of reorganization other than the Conforming Plan in accordance with Section 1121(c) of the Bankruptcy Code; (iv) the Conforming Plan is modified or replaced such that it (or any such replacement) at any time is not consistent in any material respect with the Restructuring Terms; (v) any breach by any member of the Company Group of any of their respective obligations, or failure to satisfy in any material respect any of the terms or conditions, under this Agreement or the Pre-Restructuring Loan Documents, or any member of the Company Group shall take any action to challenge (including, without limitation, to assert in writing any challenge to) the validity or enforceability of this Agreement; (vi) the final Definitive Documents (as defined below) are modified to provide for any terms that are not consistent in any material respect with the Restructuring Terms or that are otherwise not satisfactory in form and substance to the Parties signatory thereto; (vii) any member of the Company Group or any of their respective professionals or representatives, shall withdraw or revoke the Conforming Plan; (viii) an examiner with expanded powers or a trustee shall have been appointed in any of the Chapter 11 Cases, any of the Chapter 11 Cases shall have been converted to a case under chapter 7 of the Bankruptcy Code or dismissed by order of the Bankruptcy Court; (ix) orders approving the Conforming Disclosure Statement, in form and substance satisfactory to the Required Lenders, shall not have been entered by the Clerk of the Bankruptcy Court on or before October 7, 2003; (x) the PSA shall have terminated; (xi) any foreclosure proceeding is commenced against, or any bankruptcy case is commenced by or against Details or DDISV; (xii) any failure to obtain, by November 15, 2003, (a) more than one-half (1/2) in number and two-thirds (2/3) in amount of the holders (the "Required 5 1/4% Subordinated Noteholders") of 5 1/4% Subordinated Notes (as defined in the Term Sheet) voting on the Conforming Plan to accept the terms of the Conforming Plan and (b) more than one-half (1/2) in number and two-thirds (2/3) in amount of the holders (the "Required 6 1/4% Subordinated Noteholders") of 6 1/4% Subordinated Notes (as defined in the Term Sheet) voting on the Conforming Plan to accept the terms of the Conforming Plan; (xiii) the occurrence of a Default (as defined in the Budget and Funding Mechanism) under the Budget and Funding Mechanism; (xiv) orders confirming the Conforming Plan of Reorganization, in form and substance satisfactory to the Required Lenders, shall not have been entered by the Clerk of the Bankruptcy Court on or before December 15, 2003; (xv) the Effective Date (as defined in the Term Sheet) of the Conforming Plan shall not have occurred on or before January 8, 2004; (xvi) the Bankruptcy Court shall have entered an order, the effect of which will be to cause a Termination Event hereunder; (xvii) any member of the Company Group shall adopt, seek authority from the Bankruptcy Court to assume or otherwise seek or obtain Bankruptcy Court approval of, any management retention plan, management option plan, severance plan, senior management employment contracts or senior management post-restructuring employment arrangements, except upon terms and conditions previously agreed to by the Required Lenders in writing; (xviii) there shall have occurred and be continuing a default or event of default, other than the Existing Events of Default (as defined in the Eighth Amendment to the Credit Agreement) under the Pre-Restructuring Loan Documents; (xix) any exhibit to the Conforming Plan shall not be in form and substance acceptable to the Required Lenders; (xx) the Confirmation Order shall not be in form and substance acceptable to the Required Lenders; (xxi) there shall have occurred and be continuing an event which has a Material Adverse Effect (as defined in the Pre-Restructuring Loan Documents) on the business, assets, operations, property, condition (financial or otherwise) of Details, DDISV or any of their affiliates and subsidiaries (other than DDi Europe and its European subsidiaries); (xxii) any member of the Company Group or any of their respective professionals shall have advised any of the Senior Debt Parties (as defined in the Term Sheet) in writing that they cannot provide for the treatment of the Senior Debt Parties as set forth in the Term Sheet; (xxiii) the Bankruptcy Court shall enter an order denying confirmation of the 6 Conforming Plan; (xxiv) any court (including the Bankruptcy Court) shall declare, in a Final Order, this Agreement to be unenforceable; (xxv) the form and substance of the Global Releases and the Plan Injunction in the Confirmation Order entered by the Bankruptcy Court are not in form and substance acceptable to the Required Lenders with respect thereto; (xxvi) a perfected security interest (subject to certain customary carve-outs which shall be approved by the Administrative Agent and the Required Lenders in writing) is not granted to the Lenders in all personal, mixed and real property of the reorganized Debtors and their non-debtor subsidiaries (other than DDi Europe and its European subsidiaries) and pledges of 100% of the common stock of DDi Intermediate, 100% of the common stock of DDi Capital and 100% of the common stock of each of Reorganized DDi's (as defined in the Term Sheet) direct and indirect subsidiaries (other than DDI Europe or its European subsidiaries) not previously pledged to the Lenders to secure the Restructuring Loan Documents; (xxvii) any suit or action shall have been commenced by the Debtors against any of the Senior Debt Parties, that asserts any claim, or legal or equitable remedy or that seeks subordination of any lien existing in favor of the Administrative Agent or the Lenders; (xxviii) any suit or action shall have been commenced by anyone other than the Debtors against any of the Senior Debt Parties, that asserts any claim, or legal or equitable remedy or that seeks subordination of any lien existing in favor of the Administrative Agent or the Lenders, and the Court enters an order granting any such relief which is not dismissed or stayed within five (5) days of its entry; (xxix) the treatment of the holders of the Senior Discount Notes shall not be approved by the Required Lenders; (xxx) any member of the Company Group files a motion seeking or the Bankruptcy Court enters an order (A) approving material payments to any creditor or group of constituents that is not acceptable to Required Lenders, (B) granting relief from the automatic stay to any holder of a security interest to permit foreclosure on assets with a value over $100,000 or (C) approving any material settlement or other material stipulation with any creditor or group of constituents; (xxxi) any representation or warranty made by any member of the Company Group or its agents or representatives to the Consenting Lenders or in connection with this Agreement is false or misleading in any material respect when made; or (xxxii) January 30, 2004. 6. Good Faith Cooperation; Further Assurances; Acknowledgment; Definitive Documents. The Parties shall cooperate with each other in good faith and shall coordinate their activities (to the extent practicable) in respect of (a) all matters relating to their rights in respect of any member of the Company Group or otherwise in connection with their relationship with the members of the Company Group, (b) all matters concerning the implementation of the Restructuring Terms, and (c) the pursuit and support of the Restructuring Transaction. Furthermore, subject to the terms hereof, each of the Parties shall take such action as may be necessary to carry out the purposes and intent of this Agreement, including making and filing any required regulatory filings and voting any other debt or equity securities of the Company Group in favor of the Restructuring Transaction (provided that no Consenting Lender shall be required to incur any expense, liability or other obligation), and shall refrain from taking any action that would frustrate the purposes and intent of this Agreement, including proposing a plan that is not the Conforming Plan. While the Consenting Lenders commit herein to support the Restructuring Transaction and the Conforming Plan, this Agreement is not and shall not be deemed a solicitation for consent to the Conforming Plan or a solicitation to tender or exchange any Indebtedness (as defined in the Credit Agreement). Notwithstanding anything to the contrary contained in this Agreement, the obligations of the Parties hereunder shall be expressly subject to the preparation of definitive documents (the "Definitive Documents") implementing, achieving and relating to the Restructuring Terms and this Agreement, including, without limitation: (i) (a) the Conforming Plan, the Conforming Disclosure Statement, the order of the Bankruptcy Court 7 confirming the Conforming Plan which shall be in form and substance acceptable to the Parties (the "Confirmation Order"), and any related ballots, releases and settlement documents, (b) definitive documentation relating to the management incentive plan, the common stock of reorganized DDi, the preferred stock of DDi Europe, and other related documents, each of which are more specifically described in the Restructuring Terms, shall contain terms and conditions consistent in all material respects with the Restructuring Terms, and shall be, satisfactory in form and substance to the Parties signatory thereto or beneficiaries thereof, (c) the Conforming Restructuring Loan Documents, and (d) all other agreements, instruments, orders or other documents necessary or appropriate to consummate the transactions contemplated by this Agreement, the Term Sheet, the Conforming Restructuring Loan Documents or the Conforming Plan, each of which documents must be in form and substance acceptable to each of the Parties (except as otherwise provided in the Term Sheet), and (ii) any "first day" orders and motions which must be in form and substance acceptable to each of the Parties. Each Party hereby covenants and agrees (i) to negotiate in good faith the Definitive Documents and (ii) to execute (to the extent they are a party thereto) and otherwise support the Definitive Documents. 7. Consent. By execution hereof, each of Consenting Lender consents and authorizes JPMorgan Chase Bank, in its capacity as Administrative Agent under the Credit Agreement, to enter into and execute, on behalf of such Consenting Lender, the Restructuring Loan Documents; provided, that each Consenting Lender agrees that modifications to the terms of the Restructuring Transaction may be approved by the Required Lenders (as defined in the Term Sheet) except that any changes to the following shall require the consent of 100% of the Consenting Lenders: (1) any extension of scheduled date of any amortization payment; (2) any reduction of principal; (3) any extension of final maturity date of any loan; (4) any reduction in stated rate of interest or fees or any extension of the payment date thereof; (5) any reduction to any voting percentage requirements; (6) any release of material collateral or guarantees; or (7) any material changes in use of cash collateral. 8. Further Acquisitions. This Agreement shall in no way be construed to preclude any Consenting Lender from acquiring additional Lender Indebtedness. However, any such Lender Indebtedness so acquired shall automatically be deemed to be subject to all of the terms of this Agreement. 9. Additional Claims or Equity Interests. To the extent any Consenting Lender acquires additional debt or Lender Indebtedness, each such Consenting Lender agrees that such debt, Claims, claims or equity interests shall be subject to this Agreement. 10. Representations and Warranties. Each Party, severally (and not jointly), represents and warrants to the other Parties that the following statements are true, correct and complete as of the date hereof: (a) it is duly organized, validly existing, and in good standing under the laws of the state of its organization, and has all requisite corporate, partnership, limited liability company or similar authority to enter into this Agreement and carry out the transactions contemplated hereby and perform its obligations contemplated hereunder; and the execution and delivery of this Agreement and the performance of such Party's obligations hereunder have been duly authorized by all necessary corporate, limited liability, partnership or other similar action on its part; 8 (b) the execution, delivery, and performance by such Party of this Agreement does not and shall not (i) violate any provision of law, rule or regulation applicable to it or any of its subsidiaries or its certificate of incorporation or bylaws or other organizational documents or those of any of its subsidiaries, or (ii) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any material contractual obligation to which it or any of its subsidiaries is a party; (c) the execution, delivery, and performance by such Party of this Agreement does not and shall not require any registration or filing with, consent or approval of, or notice to, or other action to, with or by, any federal, state or governmental authority or regulatory body, except such filings as may be necessary and/or required for disclosure by the Securities and Exchange Commission and in connection with the Chapter 11 Cases, the Conforming Disclosure Statement and the Conforming Plan. Although none of the Parties intend that this Agreement should constitute, and they each believe that it does not constitute, a solicitation and acceptance of the Conforming Plan, they each acknowledge and agree that, regardless of whether its Relevant Claims or the Conforming Restructuring Loan Documents constitute "securities" within the meaning of the Securities Act of 1933, (i) each of the Consenting Lenders is an "accredited investor" as such term is defined in Rule 501(a) of the Securities Act of 1933 and a "qualified institutional buyer" as such term is defined in Rule 144A of the Securities Act of 1933 and (ii) adequate information was provided by the Company Group to each such Consenting Lender in order to enable it to make an informed decision such that, were this Agreement to be construed as or deemed to constitute such a solicitation and acceptance, such solicitation was (i) in compliance with any applicable nonbankruptcy law, rule, or regulation governing the adequacy of disclosure in connection with such solicitation, or (ii) if there is not any such law, rule, or regulation, solicited after disclosure to such holder of "adequate information" as such term is defined in Section 1125(a) of the Bankruptcy Code; (d) if such Party is a Consenting Lender, such Consenting Lender has reviewed this Agreement and all exhibits hereto and has received all such other information as it deems necessary and appropriate to enable it to evaluate the financial risks inherent in the Restructuring Transaction; and (e) this Agreement is the legally valid and binding obligation of it, enforceable in accordance with the terms hereof, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or limiting creditors' rights generally or by equitable principles relating to enforceability or a ruling of the Bankruptcy Court. 11. Amendments and Waivers. This Agreement may not be modified, amended or supplemented except in a writing signed by each member of the Company Group and the Required Lenders; provided, further, that any modification or amendment to this Section 11 shall require the written consent of all of the Parties; provided, further, that any modification of, or amendment or supplement to, this Agreement (including the Restructuring Terms) that materially and adversely affects any Party shall require the written consent of the Party so affected. A Termination Event may not be waived except in a writing signed by the Required Lenders no later than three (3) business days following the occurrence of a Termination Event; provided however, that the Termination Event in Section 5(i) may not be waived, modified or amended. 9 12. Other Existing Support Agreements. Each Consenting Lender acknowledges that other parties are being requested to sign the PSA, and that a condition of the Term Sheet is that the PSA shall have been executed and delivered, no later than August 8, 2003, by (a) each member of the Company Group and (b) the Consenting Subordinated Noteholders (as defined in the PSA) holding at least forty-two and a half percent (42.5%) of the aggregate principal amount of Subordinated Notes (as defined in the PSA), with a copy to the Administrative Agent. 13. Conditions to Effectiveness. This Agreement shall not become effective and binding on the Parties unless and until (i) counterpart signature pages and Joinders, as applicable, shall have been executed and delivered, no later than August 1, 2003, by each member of the Company Group, the Administrative Agent and one-hundred percent (100%) of the holders of Lender Indebtedness (the "Consenting Lenders"), to the Administrative Agent; (ii) Details shall have established and funded the Reserved Cash Account with the amount provided in the Term Sheet; (iii) Details shall have established and funded the JPM Controlled Account (as defined in the Budget and Funding Mechanism); and (iv) DDi shall have established the Restructuring Fee Account (as defined in the Budget and Funding Mechanism). 14. GOVERNING LAW; JURISDICTION. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. BY ITS EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ANY LEGAL ACTION, SUIT OR PROCEEDING AGAINST IT WITH RESPECT TO ANY MATTER UNDER OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT RENDERED IN ANY SUCH ACTION, SUIT OR PROCEEDING, MAY BE BROUGHT IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HEREBY IRREVOCABLY ACCEPTS AND SUBMITS ITSELF TO THE NONEXCLUSIVE JURISDICTION OF EACH SUCH COURT, GENERALLY AND UNCONDITIONALLY, WITH RESPECT TO ANY SUCH ACTION, SUIT OR PROCEEDING, AND WAIVES ANY OBJECTION IT MAY HAVE TO VENUE OR THE CONVENIENCE OF THE FORUM. 15. Specific Performance. This Agreement, including without limitation the Parties' agreement herein to support the Restructuring Transaction and to facilitate its consummation, is intended as a binding commitment enforceable in accordance with its terms. It is understood and agreed by each of the Parties that money damages would not be a sufficient remedy for any breach of this Agreement by any Party and each non-breaching Party shall be entitled to specific performance and injunctive or other equitable relief as a remedy of any such breach. 16. Survival. Notwithstanding (i) any sale of the debt or Claims in accordance with Sections 3(a)(iii), or (ii) the termination of this Agreement pursuant to Section 5, the agreements and obligations of the Parties in Sections 14, 16, 18, 20, 21, 26 and 27 shall survive such sale and/or termination and shall continue in full force and effect for the benefit of the Consenting Lenders in accordance with the terms hereof. 17. Headings. The headings of the Sections, paragraphs and subsections of this Agreement are inserted for convenience only and shall not affect the interpretation hereof. 10 18. Successors and Assigns; Severability; Several Obligations. This Agreement is intended to bind and inure to the benefit of the Parties and their respective successors, assigns, heirs, executors, administrators and representatives. The invalidity or unenforceability at any time of any provision hereof shall not affect or diminish in any way the continuing validity and enforceability of the remaining provisions hereof. The agreements, representations and obligations of the Consenting Lenders under this Agreement are, in all respects, several and not joint. 19. No Third-Party Beneficiaries. Unless expressly stated herein, this Agreement shall be solely for the benefit of the Parties hereto and, to the extent contemplated by the Term Sheet, the Consenting 5 l/4% Subordinated Noteholders and the Consenting 6 1/4% Subordinated Noteholders, and no other person or entity shall be a third party beneficiary hereof. 20. Prior Negotiations; Entire Agreement. This Agreement constitutes the entire agreement of the Parties, and supersedes all other prior and contemporaneous negotiations, agreements, representations, warranties and understandings of the parties, whether oral, written or implied, with respect to the subject matter hereof, except that the Parties acknowledge that, except as provided in Section 21 below, any confidentiality agreements heretofore executed between any member of the Company Group and each Consenting Lender shall continue in full force and effect. 21. Confidentiality. Each member of the Company Group and each Consenting Lender agrees to use commercially reasonable efforts to maintain the confidentiality of (a) the individual identities and individual holdings of each Consenting Lender, Consenting 5 1/4% Subordinated Noteholder and Consenting 6 1/4% Subordinated Noteholder; provided, however, that such information may be disclosed (i) to the Parties' respective directors, trustees, executives, officers, auditors, and employees and financial and legal advisors or other agents (collectively referred to herein as "Representatives"), (ii) to person in response to, and to the extent required by, (x) any subpoena, or other legal process or (y) any bank regulatory agency or any other regulatory agency or authority. If any Party or its Representative receives a subpoena or other legal process as referred to in clause (ii)(x) above in connection with the Agreement, such Party shall provide the other Parties with prompt written notice of any such request or requirement, to the fullest extent permissible and practicable under the circumstances, so that the other Parties may seek a protective order or other appropriate remedy or waiver of compliance with the provisions of this Agreement. Notwithstanding the provisions in this Section 21, (i) the Company Group may disclose (a) the existence of and nature of support evidenced by this Agreement in one or more public releases that have first been sent to the respective counsel for the Administrative Agent for review and comment, and (b) in the context of any such releases, the aggregate holdings of the Consenting Lenders (but, as indicated above, not their identities or their individual holdings), (ii) any Party hereto may disclose the identities to the Parties hereto and their individual holdings in any action to enforce this Agreement or in an action for damages as a result of any breaches hereof, and (iii) to the extent required by the Bankruptcy Code, Bankruptcy Rules, Local Rules of the Bankruptcy Court or other applicable rules, regulations or procedures of the Bankruptcy Court or the Office of the United States Trustee, the Company Group may disclose the individual identities of the Consenting Lenders in a writing that has first been sent to the counsel for the Administrative Agent for review and comment on five (5) business days' notice. 11 22. Independent Due Diligence and Decision-Making. Each of the undersigned Lenders hereby confirms that its decision to execute this Agreement has been based upon its independent investigation of the operations, businesses, financial and other conditions and prospects of the Company Group, without reliance upon the Administrative Agent, the unofficial steering committee of Lenders, any of their respective affiliates or any of their respective advisors or representatives. To the extent any materials or information have been furnished to it by such persons, the undersigned hereby acknowledges that they have been provided for informational purposes only, without any representation or warranty. 23. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which shall constitute one and the same agreement. Delivery of an executed signature page of this Agreement by facsimile shall be effective as delivery of a manually executed signature page of this Agreement. 24. Notices. Any notice required or desired to be served, given or delivered under this Agreement shall be in writing, and shall be deemed to have been validly served, given or delivered if provided by personal delivery, or upon receipt of fax delivery, during standard business hours (from 8:00 a.m. to 6:00 p.m.) as follows: a. if to the Consenting Lenders, to Kathrine A. McLendon, Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York 10017, Facsimile No.: 212-455-2502; and b. if to any member of the Company Group, to Richard Wynne, Kirkland & Ellis LLP, 777 South Figueroa Street, Los Angeles, California 90017, Facsimile No.: (213) 680-8500 With copies to: George C. Webster Stutman, Treister & Glatt Professional Corporation 1901 Avenue of the Stars, 12th Floor Los Angeles, California 90067 Facsimile No.: (310)228-5788 Attorneys for the Ad Hoc Committee of Subordinated Noteholders 25. Rule of Interpretation. Notwithstanding anything contained herein to the contrary, it is the intent of the Parties that all references to votes or voting in this Agreement be interpreted to include (i) votes or voting on a plan of reorganization under the Bankruptcy Code, and (ii) all means of expressing agreement with, or rejection of, as the case may be, a restructuring or reorganization transaction that is not implemented under the Bankruptcy Code. 26. Reservation of Rights. Except as expressly provided in this Agreement and in any amendment among the Parties, nothing herein is intended to, or does, in any manner waive, limit, impair or restrict the ability of each of the Parties to protect and preserve its rights, remedies and interests, including without limitation, its claims against any member of the Company Group or its full participation in any bankruptcy case filed by any member of the Company Group or any of its affiliates and subsidiaries. Nothing herein shall be deemed an admission of any kind. If the transactions contemplated herein, in the Conforming Plan or in the Conforming Restructuring Loan Documents are not consummated, or this Agreement is 12 terminated for any reason, the Parties hereto fully reserve any and all of their rights. Pursuant to Rule 408 of the Federal Rule of Evidence, any applicable state rules of evidence and any other applicable law, foreign or domestic, this Agreement and all negotiations relating thereto shall not be admissible into evidence in any proceeding other than a proceeding to enforce its terms. 27. Disclosure of Holdings. Unless required by applicable law or regulation or otherwise provided for in this Agreement, no Party shall disclose the amount of any Consenting Lender's holdings of debt to any third party without the prior written consent of such Consenting Lender; provided, however, that (a) if such disclosure is required by law or regulation, the disclosing Party shall afford the relevant Consenting Lender a reasonable opportunity to review and comment in advance of such disclosure and shall take all reasonable measures to limit such disclosure, and (b) the foregoing shall not prohibit the disclosure of approximate aggregate group holdings by class of debt. 28. Prevailing Party. If any Party brings an action or proceeding against any other Party based upon a breach by such Party of its obligations hereunder, the prevailing Party shall be entitled to all reasonable expenses incurred, including reasonable attorneys', accountants' and financial advisors fees in connection with such action or proceeding. 29. Fiduciary Duties. Notwithstanding anything to the contrary herein, nothing in this Agreement shall limit the ability of any member of the Company Group or any of their respective directors or officers (in such person's capacity as a director or officer of the respective member of the Company Group) to take any action, or to refrain from taking any action, to the extent required to comply with its or their fiduciary obligations under applicable law. 30. Several not Joint. The agreements, representations and obligations of the Parties under this Agreement are, in all respects, several and not joint. 31. No Admissions. This Agreement shall in no event be construed as or be deemed to be evidence of an admission or concession on the part of any Party of any claim or fault or liability or damages whatsoever. Each of the Parties denies any and all wrongdoing or liability of any kind and does not concede any infirmity in the claims of defenses which it has asserted or could assert. [Remainder of page intentionally left blank; remaining pages are signature pages.] 13 IN WITNESS WHEREOF, the undersigned have each caused this Agreement to be duly executed and delivered by their respective, duly authorized officers as of the date first written above. DDi CAPITAL CORP. By: /s/ TIMOTHY J.DONNELLY --------------------------------------- Title: VP DYNAMIC DETAILS, INCORPORATED By: /s/ TIMOTHY J.DONNELLY --------------------------------------- Title: VP DYNAMIC DETAILS, INCORPORATED, SILICON VALLEY By: /s/ TIMOTHY J.DONNELLY --------------------------------------- Title: VP DDi Corp. By: /s/ TIMOTHY J.DONNELLY --------------------------------------- Title: VP DYNAMIC DETAILS, INCORPORATED, VIRGINIA By: /s/ TIMOTHY J.DONNELLY --------------------------------------- Title: VP DYNAMIC DETAILS TEXAS, LP. By: Dynamic Details Texas Holdings Corp. By: /s/ TIMOTHY J.DONNELLY ----------------------------------- Title: VP By: DDi-TEXAS INTERMEDIATE HOLDINGS, L.L.C. By: /s/ TIMOTHY J.DONNELLY --------------------------------------- Title: VP 14 By: DYNAMIC DETAILS TEXAS HOLDINGS CORP. By: /s/ TIMOTHY J.DONNELLY --------------------------------------- Title: VP By: DYNAMIC DETAILS INCORPORATED, COLORADO SPRINGS By: /s/ TIMOTHY J.DONNELLY --------------------------------------- Title: VP By: DYNAMIC DETAILS INCORPORATED, TEXAS By: /s/ TIMOTHY J.DONNELLY --------------------------------------- Title: VP JPMORGAN CHASE BANK, as Administrative Agent, Collateral Agent, Co- Syndication Agent By: /s/ TIMOTHY J.DONNELLY --------------------------------------- Title: Vice-President 15 JOINDER TO RESTRUCTURING SUPPORT AGREEMENT This Joinder to the Restructuring Support Agreement, dated as of August 1, 2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement"), is executed and delivered by JPMorgan Chase Bank (the "Joining Party") as of August 1, 2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. /s/ Jonathan E. Katz - ------------------------------------ By: JPMorgan Chase Bank Name: Jonathan E. Katz Title: Vice President - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt - ------------------------------------ Notice Address: JPMorgan Chase Bank, 20th Floor 270 Park Avenue New York, New York 10017 Attn: Jonathan E. Katz Fax No.: 212-270-0453 Tel. No.: 212-270-0397 With a Copy to: Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, New York 10017 Fax No.: 212-455-2502 Tel. No.: 212-455-2589 Acknowledged: By: ---------------------------- Name: Title: JOINDER TO RESTRUCTURING SUPPORT AGREEMENT This Joinder to the Restructuring Support Agreement, dated as of August 1, 2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement"), is executed and delivered by Bank Austria Creditanstalt Corporate Finance (the "Joining Party") as of August 1,2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. By: /s/ Peter Brach By: /s/ Allen Jani -------------------------------- ----------------------------- Name: Peter Brach Allen Jani Title: Director Managing Director - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt - ------------------------------------ Notice Address: Peter Brach HVB Americas 150 East 42nd Street New York, NY 10017 With a Copy to: Acknowledged: By: --------------------------- Name: Title: JOINDER TO RESTRUCTURING SUPPORT AGREEMENT This Joinder to the Restructuring Support Agreement, dated as of August 1,2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement"), is executed and delivered by The Bank of Nova Scotia (the "Joining Party") as of August 1,2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. /s/ Mark Sparrow - ------------------------------------ By: The Bank of Nova Scotia Name: Mark Sparrow Title: Director - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt - ------------------------------------ Notice Address: Mark Sparrow Scotia Capital 580 California Street Suite 2100 San Francisco, CA 94104 Ph: 415-616-4108 Fax: 415-397-0791 E-Mail: mark_sparrow@scotiacapital.com With a Copy to: Kathy Clark Scotiabanc Inc. 600 Peachtree Street N.E. Suite 2700 Atlanta, Georgia 30308 Ph: 404-877-1500 Fax: 404-888-8998 Acknowledged: By: -------------------------------- Name: Title: JOINDER TO RESTRUCTURING SUPPORT AGREEMENT This Joinder to the Restructuring Support Agreement, dated as of August 1, 2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement"), is executed and delivered by Citizens Bank (the "Joining Party") as of August 1, 2003. Each capitilized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. /s/ - ------------------------------------ By: CITIZENS BANK OF MA Name: STEVEN C. PETRARCA Title: VICE PRESIDENT - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt - ------------------------------------ Notice Address: Citizen Bank of MA 63 State Street 9th Floor Boston, MA 02109 With a Copy to: __________________ __________________ 90, New Street Highway _______ MA 02767 Acknowledged: By: --------------------------- Name: Title: JOINDER TO RESTRUCTURING SUPPORT AGREEMENT This Joinder to the Restructuring Support Agreement, dated as of August 1, 2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement"), is executed and delivered by Crescent/Mach I Partners, L.P. (the "Joining Party") as of August 1, 2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. CRESCENT/MACH I PARTNERS, L.P. By: TCW Asset Management Company Its Investment Manager By: /s/ Richard F. Kurth ------------------------------------ Name: RICHARD F. KURTH Title: SENIOR VICE PRESIDENT By: /s/ Jonathan Marks ------------------------------------ Name: Jonathan Marks Title: - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt - ------------------------------------ Notice Address: Jonathan Marks With a Copy to: Acknowledged: By: --------------------------- Name: Title: JOINDER TO RESTRUCTURING SUPPORT AGREEMENT This Joinder to the Restructuring Support Agreement, dated as of August 1, 2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement"), is executed and delivered by CypressTree Investment Partners I, Ltd. (the "Joining Party") as of August 1, 2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for a11 purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. CypressTree Investment Partners I, Ltd., By: CypressTree Investment Management Company, Inc., as Portfolio Manager. By: /s/ Preston I. Carnes, Jr. -------------------------------- Name: Preston I Carnes, Jr. Title: Managing Director - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt - ----------------------------------------- Notice Address: One Washington Mall 6th Floor Boston, MA 02108 pcarnes@cyptree.com With a Copy to: N/A Acknowledged: By: --------------------------- Name: Title: JOINDER TO RESTRUCTURING SUPPORT AGREEMENT This Joinder to the Restructuring Support Agreement, dated as of August 1, 2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement"), is executed and delivered by CypressTree Investment Partners II, Ltd. (the "Joining Party") as of August 1, 2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. CypressTree Investment Partners II, Ltd., By: CypressTree Investment Management Company, Inc., as Portfolio Manager. By: /s/ Preston I. Carnes, -------------------------------- Name: Preston I. Carnes, Jr. Title: Managing Director - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt - ------------------------------------ Notice Address: One Washington Mall 6th Floor Boston, MA 02108 pcarnes@cyptree.com With a Copy to: N/A Acknowledged: By: --------------------------- Name: Title: JOINDER TO RESTRUCTURING SUPPORT AGREEMENT This Joinder to the Restructuring Support Agreement, dated as of August 1, 2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement"), is executed and delivered by Debt Strategies Fund, Inc. (the "Joining Party") as of August 1, 2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. Debt Strategies Fund, Inc. By: /s/ Philip Brendel -------------------------------- Name: Philip Brendel Title: Authorized Signatory - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt - ------------------------------------ Notice Address: Merrill Lynch Investment Managers, L.P. 800 Scudders Mill Road Plainsboro, New Jersey 08536 Area 1B Attn: Philip Brendel With a Copy to: Kerrianne Berneck at the same address Acknowledged: By: --------------------------- Name: Title: EXHIBIT C JOINDER This Joinder to the Restructuring Support Agreement, dated as of August 1, 2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement"), is executed and delivered by Deutsche Bank Trust Company Americas (the "Joining Party") as of August 1, 2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. By: /s/ Scottye Lindsey -------------------------------- Name: Scottye Lindsey Title: Vice President - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt - ------------------------------------ Notice Address: With a Copy to: Acknowledged: By: --------------------------- Name: Title: JOINDER TO RESTRUCTURING SUPPORT AGREEMENT This Joinder to the Restructuring Support Agreement, dated as of August 1, 2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement"), is executed and delivered by Dresdner Bank AG, New York and Grand Cayman Branches (the "Joining Party") as of August 1, 2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first witten above. By: /s/ James M. Gallagher By: /s/ David M. Kerr -------------------------------- ------------------------------- Name: JAMES M. GALLAGHER Name: DAVID M. KERR Title: DIRECTOR Title: VICE PRESIDENT - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt - ------------------------------------ Notice Address: With a Copy to: Acknowledged: By: --------------------------- Name: Title: EXHIBIT C JOINDER This Joinder to the Restructuring Support Agreement, dated as of August 1, 2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement"), is executed and delivered by FLEET NATIONAL BANK (the "Joining Party") as of August 1, 2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. /s/ Thomas Schmidt - ------------------------------------ By: Fleet National Bank Name: Thomas Schmidt Title: Vice President - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt - ------------------------------------ Notice Address: With a Copy to: Acknowledged: By: --------------------------- Name: Title: EXHIBIT C JOINDER This Joinder to the Restructuring Support Agreement, dated as of August 1, 2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement"), is executed and delivered by FLEET NATIONAL BANK (f.k.a. BankBoston) (the "Joining Party") as of August 1, 2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. /s/ Thomas Schmidt - ------------------------------------ By: Fleet National Bank (f.k.a. BankBoston) Name: Thomas Schmidt Title: Vice President - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt - ------------------------------------ Notice Address: With a Copy to: Acknowledged: By: --------------------------- Name: Title: JOINDER TO RESTRUCTURING SUPPORT AGREEMENT This Joinder to the Restructuring Support Agreement, dated as of August 1, 2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement"), is executed and delivered by Grayston CLO 2001-01 Ltd. (the "Joining Party") as of August 1, 2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. Grayston CLO 2001-01 Ltd. By: Bear Stearns Asset Management Inc. as its Collateral Manager /s/ Niall D. Rosenzweig - ------------------------------------ By: Name: Niall D. Rosenzweig Title: Associate Director - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt - ------------------------------------ Notice Address: With a Copy to: Acknowledged: By: --------------------------- Name: Title: JOINDER TO RESTRUCTURING SUPPORT AGREEMENT This Joinder to the Restructuring Support Agreement, dated as of August 1, 2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement"), is executed and delivered by GSC PARTNERS GEMINI FUND LIMITED (the "Joining Party") as of August 1, 2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. GSC PARTNERS GEMINI FUND LIMITED By: Harvey E. Siegel -------------------------------- Name: Harvey E. Siegel Title: Authorized Signatory - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt: Revolver - ------------------------------------ Notice Address: Harvey E. Siegel GSC Partners 300 Campus Drive Florham Park, NJ 07932 With a Copy to: Acknowledged: By: --------------------------- Name: Title: JOINDER TO RESTRUCTURING SUPPORT AGREEMENT This Joinder to the Restructuring Support Agreement, dated as of August 1,2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement"), is executed and delivered by HARBOUR TOWN FUNDING TRUST (the "Joining Party") as of August 1,2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. HARBOUR TOWN FUNDING TRUST /s/ Illegible - ------------------------------------ By: Name: ____ E. Morris Title: Authorized Agent - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt - ------------------------------------ Notice Address: Bank of America, N.A. 101 N. Tryon Street NCl-001-15-01 Charlotte, NC 28273 Attention: Harbour Town Funding Trust Telephone: (704)386-4539 Facsimile: (704)409-0047 With a Copy to: Acknowledged: By: --------------------------- Name: Title: JOINDER TO RESTRUCTURING SUPPORT AGREEMENT This Joinder to the Restructuring Support Agreement, dated as of August 1,2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement"), is executed and delivered by IBM Credit LLC (the "Joining Party") as of August 1,2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. /s/ Steven A. Flanagan - ------------------------------------ By: IBM Credit LLC Name: Steven A. Flanagan Title: Manager, Global Special Handling Group - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt - ------------------------------------ Notice Address: North Castle Drive Mail Stop NC318 Armonk, N.Y.10504-2575 JOINDER TO RESTRUCTURING SUPPORT AGREEMENT This Joinder to the Restructuring Support Agreement, dated as of August 1,2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement"), is executed and delivered by Indosuez Capital Funding IIA, Limited (the "Joining Party"') as of August 1,2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. /s/ Charles Kobayashi - ------------------------------------ By: Indosuez Capital Funding IIA, Limited Name: Charles Kobayashi Title: Principle and Portfolio Manager - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt: Term Loan B - ------------------------------------ Notice Address: Please mail and fax Payment, Interest and Funding Notices to: Chase Bank of Texas Attn: Darren Britt Asset Backed Group A/C 2300701 600 Travis Street, 49th Floor Houston, TX 77002-8039 Telephone: (713)216-3929 Facsimile: (713)577-5284 With a Copy to: Please mail and/or fax all Legal Documents, Financial Statements and Administrative Matters to: Indosuez Capital Attn: Jorge Rivera 666 Third Avenue, 9th Floor New York, NY 10017 Telephone: (646) 658-2283 Facsimile: (646) 658-2254 Acknowledged: /s/ Charles Kobayashi ------------------------------- By: Indosuez Capital Funding IIA, Limited Name: Charles Kobayashi Title: Principle and Portfolio Manager JOINDER TO RESTRUCTURING SUPPORT AGREEMENT This Joinder to the Restructuring Support Agreement, dated as of August 1, 2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement"), is executed and delivered by KZH____________ (the "Joining Party") as of August 1,2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. /s/ HI HUA - ------------------------------------ By: Name: HI HUA Title: AUTHORIZED AGENT Principal Amount of Debt Held - ------------------------------------ Debt - ------------------------------------ Notice Address: Virginia Conway KZH CRESCENT-2 LLC c/o JPMorgan Chase Bank 140 East 45th Street 11th Floor New York, NY 10017 With a Copy to: Tel; 212-622-9353 Fax: 212-622-0123 E-Mail: virginia.r.conway@cjpmorgan.com Shan McSweeney Weil, Gotshal & Manges LLP 767 Fifth Avenue. 34th Floor New York, New York 10153 Tel: 212-310-6857 Fax: 212-310-8007 E-Mail: shan.mcsweeney@weil.com Acknowledged: By: /s/ DORIAN HERRERA -------------------------------- Name: DORIAN HERRERA Title: AUTHORIZED AGENT JOINDER TO RESTRUCTURING SUPPORT AGREEMENT This Joinder to the Restructuring Support Agreement, dated as of August 1, 2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreements"), is executed and delivered by KZH Crescent-3LLC (the "Joining Party") as of August 1, 2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified ftom time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. /s/ HI HUA - ------------------------------------ By: Name: HI HUA Title: AUTHORIZED AGENT Principal Amount of Debt Held - ------------------------------------ Debt - ------------------------------------ Notice Address: Virginia Conway KZH CRESCENT-3 LLC c/o JPMorgan Chase Bank 140 East 45th Street 11th Floor New York, NY 10017 With a Copy to: Tel: 212-632-9353 Fax: 212-622-O123 E-Mail: virginia.r.conway@cjpmorgan.com Shan McSweeney Weil. Gotshal & Manges LLP 767 Fifth Avenue, 34th Floor New York, New York 10153 Tel: 212-310-6857 Fax: 212-310-8007 E-Mail: shan.mcsweeney@weil.com Acknowledged; By: /s/ Dorian Herrera -------------------------------- Name: DORIAN HERRERA Title: AUTHORIZED AGENT JOINDER TO RESTRUCTURING SUPPORT AGREEMENT This Joinder to the Restructuring Support Agreement, dated as of August 1, 2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement"), is executed and delivered by KZH CypressTree-1 LLC (the "Joining Party") as of August 1, 2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. /s/ HI HUA - ------------------------------------ By: Name: HI HUA Title: AUTHORIZED AGENT Princinal Amount of Debt Held - ------------------------------------ Debt - ------------------------------------ Notice Address: Virginia Conway KZH CypressTree-1 LLC c/o JPMorgan Chase Bank 140 East 45th Street 11th Floor New York, NY 10017 With a Copy to: Tel: 212-622-9353 Fax: 212-622-0123 E-Mail: virginia.r.conway@cjpmorgan.com Shan McSweeney Weil, Gorshal & Manges LLP 767 Fifth Avenue, 34th Floor New York, New York 10153 Tel: 212-310-6857 Fax: 212-310-8007 E-Mail: shan.mcsweeney@weil.com Acknowledged: By: /s/ Dorian Herrera -------------------------------- Name: DORIAN HERRERA Title: AUTHORIZED AGENT JOINDER TO RESTRUCTURING SUPPORT AGREEMENT This Joinder to the Restructuring Support Agreement, dated as of August 1, 2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement"), is executed and delivered by MASSACHUSETTS MUTUAL LIFE INSURANCE CO. (the "Joining Party") as of August 1, 2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. MASSACHUSETTS MUTUAL LIFE INSURANCE CO. By: /s/ Steven J. Katz -------------------------------- Name: STEVEN J. KATZ Title: SECOND VICE PRESIDENT AND ASSOCIATE GENERAL COUNSEL - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt Term Loan B - ------------------------------------ Notice Address: c/o David L. Babson & Co., Inc 1500 Main Street, Suite 2800 Spring Field, MA 01115 Attn: Steven J. Katz With a Copy to: Mary Ann McCarthy (same address as above Acknowledged: By: --------------------------- Name: Title: JOINDER TO RESTRUCTURING SUPPORT AGREEMENT This Joinder to the Restructuring Support Agreement, dated as of August 1, 2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement"), is executed and delivered by MASSMUTUAL HIGH YIELD PARTNERS II, LLC (the "Joining Party") as of August 1, 2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. MASSMUTUAL HIGH YIELD PARTNERS II, LLC By: /s/ EMEKA ONUKWUEHA --------------------------------------- Name: EMEKA ONUKWUEHA Title: VICE PRESIDENT, HYP Management Inc., As Managing Member - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt Term Loan B - ------------------------------------ Notice Address: c/o David L. Babson & Co., Inc 1500 Main Street, Suite 2800 Spring Field, MA 01115 Attn: Steven J. Katz With a Copy to: Mary Ann McCarthy (same address as above Acknowledged: By: --------------------------- Name: Title: JOINDER TO RESTRUCTURING SUPPORT AGREEMENT This Joinder to the Restructuring Support Agreement, dated as of August 1,2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement"), is executed and delivered by Master Senior Floating Rate Trust (the "Joining Party") as of August 1, 2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. Master Senior Floating Rate Trust By: /s/ Philip Brendel -------------------------------- Name: Philip Brendel Title: Authorized Signatory - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt (Tranche B) - ------------------------------------ Notice Address: Merrill Lynch Investment Managers, L.P. 800 Scudders Mill Road Plainsboro, New Jersey 08536 Area IB Attn: Philip Brendel With a Copy to: Kerrianne Berneck at the same address Acknowledged: By: ---------------------------- Name: Title: JOINDER TO RESTRUCTURING SUPPORT AGREEMENT This Joinder to the Restructuring Support Agreement, dated as of August 1, 2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement"), is executed and delivered by Merrill Lynch Prime Rate Portfolio (the "Joining Party") as of August 1, 2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Part to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. Merrill Lynch Prime Rate Portfolio By: Merrill Lynch Investment Managers, L.P. As Investment Advisor By: /s/ Philip Brendel -------------------------------- Name: Philip Brendel Title: Authorized Signatory - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt (Tranche B) - ------------------------------------ Notice Address: Merrill Lynch Investment Managers, L.P. 800 Scudders Mill Road Plainsboro, New Jersey 08536 Area 1B Attn: Philip Brendel With a Copy to: Kerrianne Berneck at the same address Acknowledged: By: ---------------------------- Name: Title: JOINDER TO RESTRUCTURING SUPPORT AGREEMENT This Joinder to the Restructuring Support Agreement, dated as of August 1, 2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement"), is executed and delivered by Morgan Stanley Prime Income Trust (the "Joining Party") as of August 1, 2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. /s/ Sheila A. Finnerty - ------------------------------------ By: Morgan Stanley Prime Income Trust Name: Sheila A. Finnerty Title: Executive Director - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt - ------------------------------------ Notice Address: Morgan Stanley Prime Income Trust 1221 Avenue of the Americas, 33rd Floor New York, NY 10020 Attn: Sheila Finnerty Fax: 212,762,7428 With a Copy to: Same address as above Attn: Liz Bodisch Fax: 212,762,7428 Acknowledged: By: ---------------------------- Name: Title: EXHIBIT C JOINDER This Joinder to the Restructuring Support Agreement, dated as of August 1, 2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement"), is executed and delivered by PILGRIM AMERICA HIGH INCOME INVESTMENTS LTD, (the "Joining Party") as of August 1, 2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forfh in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. PILGRIM AMERICA HIGH INCOME INVESTMENTS LTD, By: ING Investments, LLC as its investment manager By: /s/ Curtis F. Lee -------------------------------- Curtis F. Lee Senior Vice President - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt Term Loan B - ------------------------------------ Notice Address: With a Copy to: Acknowledged: By: --------------------------- Name: Title: EXHIBIT C JOINDER This Joinder to the Restructuring Support Agreement, dated as of August 1, 2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement"), is executed and delivered by ___________________ (the "Joining Party") as of August 1, 2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Govering Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. ____________________________ By: ING Investments, LLC as its Investment manager By: /s/ Curtis F. Lee -------------------------------- Name: Curtis F. Lee Title: Senior Vice President - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt Term Loan B - ------------------------------------ Notice Address: With a Copy to: Acknowledged: By: Name: Title: JOINDER TO RESTRUCTURING SUPPORT AGREEMENT This Joinder to the Restructuring Support Agreement, dated as of August 1, 2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement"), is executed and delivered by Sankay High Yield Partners II, L.P. (the "Joining Party") as of August 1, 2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. Sankaty High Yield Partners II, L.P. By: /s/ Diane J. Exter -------------------------------- Name: DIANE J. EXTER Title: MANAGING DIRECTOR PORTFOLIO MANAGER - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt - ------------------------------------ Notice Address: With a Copy to: Acknowledged: By: --------------------------- Name: Title: JOINDER TO RESTRUCTURING SUPPORT AGREEMENT This Joinder to the Restructuring Support Agreement, dated as of August 1, 2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement"), is executed and delivered by Sankaty Advisors, LLC, as Collateral Manager for Brant Point II CBO 2000-1 LTD., as Term Lender (the "Joining Party") as of August 1, 2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. Sankaty Advisors, LLC, as Collateral Manager for Brant Point II CBO 2000-1 LTD., as Term Lender By: /s/ Diane J. Exter -------------------------------- Name: DIANE J. EXTER Title: MANAGING DIRECTOR PORTFOLIO MANAGER - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt - ------------------------------------ Notice Address: With a Copy to: Acknowledged: By: --------------------------- Name: Title: JOINDER TO RESTRUCTURING SUPPORT AGREEMENT This Joinder to the Restructuring Support Agreement, dated as of August 1, 2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement"), is executed and delivered by Sankaty Advisors, LLC as Collateral Manager for Castle Hill I - INGOTS, Ltd., as Term Lender (the "Joining Party") as of August 1, 2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. Sankaty Advisors, LLC as Collateral Manager for Castle Hill I - INGOTS, Ltd., as Term Lender By: /s/ Diane J. Exter -------------------------------- Name: DIANE J. EXTER Title: MANAGING DIRECTOR PORTFOLIO MANAGER - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt - ------------------------------------ Notice Address: With a Copy to: Acknowledged: By: --------------------------- Name: Title: JOINDER TO RESTRUCTURING SUPPORT AGREEMENT This Joinder to the Restructuring Support Agreement, dated as of August 1, 2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement"), is executed and delivered by Sankaty Advisors, LLC as Collateral Manager for Race Point CLO, Limited, as Term Lender (the "Joining Party") as of August 1, 2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above, Sankaty Advisors, LLC as Collateral Manager for Race Point CLO, Limited, as Term Lender By: /s/ Diane J. Exter -------------------------------- Name: DIANE J. EXTER Title: MANAGING DIRECTOR PORTFOLIO MANAGER - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt - ------------------------------------ Notice Address: With a Copy to: Acknowledged: By: --------------------------- Name: Title: JOINDER TO RESTRUCTURING SUPPORT AGREEMENT This Joinder to the Restructuring Support Agreement, dated as of August 1, 2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement"), is executed and delivered by Smoky River CDO, LP (the "Joining Party") as of August 1, 2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. Smoky River CDO, LP By: RBC Leveraged Capital as Portfolio Advisor By: /s/ Melissa Marano -------------------------------- Name: Melissa Marano Title: Partner - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt - ------------------------------------ Notice Address: With a Copy to: Acknowledged: By: --------------------------- Name: Title: SMOKY RIVER CDO, L.P. Administrative Details Form Administrative Contacts (for interest, fees, paydown and rollover notices) Original to: Copy to: - -------------------------------------------------------------------- JP Morgan Chase RBC Leveraged Capital 600 Travis Street One Liberty Plaza Houston, TX 77002 165 Broadway, 5th Floor New York, NY 10006 - -------------------------------------------------------------------- Contact: Erica Lisbon Contact: Isabelle Pradel/Alice James - -------------------------------------------------------------------- Phone: (713)216-3599 Phone: (212) 858-8325/8351 - -------------------------------------------------------------------- Fax: (713)216-6848 Fax: (212) 858-8384 - -------------------------------------------------------------------- Email: Erica.Lisbon@chase.com Email: Isabelle.Pradel@rbccm.com Alice.James@rbccm.com - -------------------------------------------------------------------- Credit Contact (for credit agreements, amendments and waivers) Melissa Marano Director RBC Leveraged Capital One Liberty Plaza 165 Broadway, 5th Floor New York, NY 10006 Phone:(212)858-8320 Fax:(212)858-8384 Email: Melissa.Marano@rbccm.com Signature Block
- ----------------------------------------------------------------------------------------- For Primary Syndications For Amendments and Secondary Trades - ----------------------------------------------------------------------------------------- Smoky River CDO, L.P., Smoky River CDO, L.P., By RBC Finance B.V. as Collateral Manager By RBC Leveraged Capital as Portfolio Advisor By: By: ---------------------------------- ---------------------------------- - -----------------------------------------------------------------------------------------
Payment Instructions Chase Manhattan Bank - Texas Houston, Texas ABA #113000609 A/C: 00102619468 BNF Name: Wires Clearing- Asset Backed Securities BNF Address: Chase Tower Houston, Houston, TX FFC: Smoky River A/C# 5503001-2001501 OBI: Erica Lisbon/[description] JOINDER TO RESTRUCTURING SUPPORT AGREEMENT This Joinder to the Restructuring Support Agreement, dated as of August 1, 2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement"), is executed and delivered by SOMERS CDO, LTD (the "Joining Party" as of August 1, 2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. SOMERS CDO, LIMITED By: /s/ Steven J. Katz --------------------------------- Name: STEVEN J. KATZ Title: SECOND VICE PRESIDENT AND ASSOCIATE GENERAL COUNSEL By: MASS MUTUAL LIFE INSURANCE COMPANY as Collateral Manager - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt - ------------------------------------ Notice Address: C/o David L. Babson & Co., Inc 1500 Main Street, Suite 2800 Spring Field, MA 01115 Attn: Steven J. Katz With a Copy to: Mary Ann Mc Carthy (same address as above) Acknowledged: By: --------------------------- Name: Title: EXHIBIT C JOINDER This Joinder to the Restructuring Support Agreement, dated as of August 1, 2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement"), is executed and delivered by SUNAMERICA SENIOR FLOATING RATE FUND, INC. (the "Joining Party") as of August 1, 2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] EXHIBIT IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. SUNAMERICA SENIOR FLOATING RATE FUND INC. By: STANFIELD CAPITAL PARTNERS LLC, as SUBADVISOR Name: Title: - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt - ------------------------------------ Notice Address: 430 PARK AVE NEW YORK, NY 10022 With a Copy to: Acknowledged: By: /s/ Illegible --------------------------- Name: Title: JOINDER TO RESTRUCTURING SUPPORT AGREEMENT This Joinder to the Restructuring Support Agreement, dated as of August 1, 2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement, is executed and delivered by TCW Select Loan Fund, Limited (the "Joining Party") as of August 1, 2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. TCW SELECT LOAN FUND, LIMITED By: TCW Advisors, Inc. as its Collateral Manager By: /s/ Richard F. Kurth ------------------------------------ Name: RICHARD F. KURTH Title: SENIOR VICE PRESIDENT By: /s/ Jonathan Marks ------------------------------------ Name: Jonathan Marks Title: - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt - ------------------------------------ Notice Address: Jonathan Marks With a Copy to: Acknowledged: By: --------------------------- Name: Title: JOINDER TO RESTRUCTURING SUPPORT AGREEMENT This Joinder to the Restructuring Support Agreement, dated as of August 1,2003, by and among each member of the Company Group and the Consenting Lenders, all signatories thereto (the "Agreement"), is executed and delivered by VAN KAMPEN SENIOR LOAN FUND (the "Joining Party") as of August 1, 2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Lender" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Lenders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. VAN KAMPEN SENIOR LOAN FUND By: Van Kampen Investment Advisory Corp. /s/ Christina Jamieson - ------------------------------------ Name: CHRISTINA JAMIESON Title: VICE PRESIDENT - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt - ------------------------------------ Notice Address: Van Kampen Senior Loan Fund One Parkview Plaza, 5th Floor Attn: Brian Buscher Oakbrook Terrace, IL 60181 Phone: 630-684-6283 Fax: 630-684-6740 e-mail: buschebl@vankampen.com With a Copy to: Kevin Cedorchuk State Street Bank & Trust Fax: 617-988-8970 Acknowledged: By: -------------------------------- Name: Title:
EX-10.5 7 dex105.txt FIRST AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT Exhibit 10.5 EXECUTION COPY FIRST AMENDMENT TO RESTRUCTURING SUPPORT AGREEMENT FIRST AMENDMENT, dated as of August 7, 2003 (the "Amendment"), to that certain Restructuring Support Agreement (together with exhibits, annexes and attachments thereto, the "RSA"), dated as of August 1, 2003 by and among (i) DDi Corp. ("DDi"), DDi Intermediate Holdings Corp. ("DDi Intermediate"), DDi Capital Corp. ("DDi Capital"). Dynamic Details, Incorporated ("DetailSs"), Dynamic Details, Incorporated, Silicon Valley ("DDISV") and their respective subsidiaries and affiliates (collectively, the "Company Group"), (ii) the Administrative Agent (as defined below) and (iii) the Required Lenders signatory hereto. Capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the RSA. W I T N E S S E T H: WHEREAS, pursuant to the RSA, the Consenting Lenders have agreed to implement a restructuring and reorganization of the Company Group pursuant to the Restructuring Terms as set forth on the Term Sheet; WHEREAS, the RSA provides that the Consenting 5 1/4% Subordinated Noteholders and the Consenting 6 1/4% Noteholders have until August 8, 2003 to execute the Plan Support Agreement (the "PSA"), the form of which is annexed as Exhibit B to the RSA; WHEREAS, the 5 1/4% Subordinated Noteholders and the 6 1/4% Noteholders who are prepared to sign the PSA, have requested that Section 31 of the PSA be amended, but only upon the terms and subject to the conditions set forth below; NOW, THEREFORE, the parties hereto hereby agree as follows: 1. Amendment to Exhibit B. Exhibit B to the RSA is hereby amended by amending and restating Section 31 in its entirety: 31. Lender Claims and Liens. The Consenting Subordinated Noteholders agree that until this Agreement is terminated, they shall not dispute that (a) the Borrowers are indebted to the Administrative Agent and the Lenders for $72,892,916.17 in outstanding principal amount and face amount of undrawn letters of credit, plus interest and fees, as provided under the Credit Agreement (as defined in the Term Sheet) and the other Pre-Restructuring Loan Documents (as defined in the Term Sheet) and applicable law and (b) as security for payment of the foregoing indebtedness, the Lenders have valid, perfected and unavoidable first-priority liens and charges on, and security interests in, all or substantially all of the assets of the Borrowers, as more particularly described in, and evidenced by, the Credit Agreement and the Pre-Restructuring Loan Documents. Until this Agreement is terminated, no Consenting Subordinated Noteholder shall (i) challenge or contest, the validity, binding nature, due authorization or enforceability of any document or instrument evidencing the Credit Agreement, the other Pre-Restructuring Loan Documents or any term or condition thereof or (ii) seek to alter, amend or supplement the Credit Agreement or any of the other Pre-Restructuring Loan Documents without the prior written consent of the Consenting Lenders or (iii) challenge or contest the validity, enforceability, perfection or priority of (or shall seek to alter the priority of) any existing lien, charge, security interest, or other interest in favor of the Lenders or any lien, charge, security interest, or other interest granted to the Lenders pursuant to the Pre-Restructuring Loan Documents. 2. Reservation of Rights. Each member of the Company Group jointly and severally acknowledges and agrees that, (a) the Lenders and the Administrative Agent shall preserve all rights, 2 remedies, power or privileges set forth in the RSA and under applicable law and (b) nothing contained herein shall in any way limit or otherwise prejudice, and the Administrative Agent and the Lenders have reserved their right to invoke fully, any right, remedy, power or privilege which the Lenders or the Administrative Agent may not have or may have in the future under or in connection with the RSA and applicable law, or diminish any of the obligations of any member of the Company Group contained in the RSA. The rights, remedies, powers and privileges of the Administrative Agent and the Lenders provided under this Amendment and the RSA are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 3. No Change. Except as expressly provided herein, no term or provision of the RSA shall be amended, waived, modified, consented to or supplemented, and each term and provision of the RSA shall remain in full force and effect. 4. Effectiveness. This Amendment shall become effective upon the satisfaction of the following conditions precedent and will be deemed to be effective as of August 7, 2003 (the "Amendment Effective Date") counterparts hereof duly executed by each member of the Company Group, the Administrative Agent and the Required Lenders; the execution and delivery of this Amendment by any Lender shall be binding upon each of its successors and assigns (including assignees of its Commitments and Loans in whole or in part prior to effectiveness hereof). 5. Counterparts. This Amendment may be executed by the parties hereto in any number of separate counterparts by facsimile with originals to follow, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 6. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed and delivered by their respective proper and duly authorized officers as of the day and year first above written. DDi CAPITAL CORP. By: /s/ TIMOTHY J. DONNELLY -------------------------------------- Title: Vice President DYNAMIC DETAILS, INCORPORATED By: /s/ TIMOTHY J. DONNELLY -------------------------------------- Title: Vice President DYNAMIC DETAILS, INCORPORATED, SILICON VALLEY By: /s/ TIMOTHY J. DONNELLY -------------------------------------- Title: Vice President DYNAMIC DETAILS, INCORPORATED, VIRGINIA By: /s/ TIMOTHY J. DONNELLY -------------------------------------- Title: Vice President DYNAMIC DETAILS TEXAS, L.P. By: /s/ TIMOTHY J. DONNELLY -------------------------------------- Title: Vice President DYNAMIC DETAILS TEXAS HOLDINGS CORP. By: /s/ TIMOTHY J. DONNELLY -------------------------------------- Title: Vice President By: DDi-TEXAS INTERMEDIATE HOLDINGS, L.L.C. By: /s/ TIMOTHY J. DONNELLY -------------------------------------- Title: Vice President By: DYNAMIC DETAILS TEXAS HOLDINGS CORP. By: /s/ TIMOTHY J. DONNELLY -------------------------------------- Title: Vice President By: DYNAMIC DETAILS INCORPORATED, COLORADO SPRINGS By: /s/ TIMOTHY J. DONNELLY -------------------------------------- Title: Vice President By: DYNAMIC DETAILS INCORPORATED, TEXAS By: /s/ TIMOTHY J. DONNELLY -------------------------------------- Title: Vice President JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT, COLLATERAL AGENT AND CO- SYNDICATION AGENT By: /s/ TIMOTHY J. DONNELLY -------------------------------------- Title: Vice-President Bank of Nova Scotia, as a Lender By: /s/ Mark Sparrow -------------------------------------- Name: Mark Sparrow Title: Director [Signature Page to First Amendment to Restructuring Support Agreement] CRESCENT/MACH I PARTNERS, L.P. By: TCW Asset Management Company Its Investment Manager By: /s/ Jonathan R. Insull -------------------------------------- Name: JONATHAN R. INSULL Title: MANAGING DIRECTOR By: /s/ Mark L. Gold -------------------------------------- Name: MARK L. GOLD Title: MANAGING DIRECTOR CypressTree Investment Partners I, Ltd., By: CypressTree Investment Management Company, Inc., as Portfolio Manager. , as a Lender By: /s/ Peter M. Campo -------------------------------------- Name: Peter M. Campo Title: Analyst [Signature Page to First Amendment to Restructuring Support Agreement] CypressTree Investment Partners II, Ltd., By: CypressTree Investment Management Company, Inc., as Portfolio Manager. , as a Lender ---------------------------- By: /s/ Peter M. Campo -------------------------------------- Name: Peter M. Campo Title: Analyst [Signature Page to First Amendment to Restructuring Support Agreement] DEBT STRATEGIES FUND, INC., as a Lender By: /s/ Philip J. Breadel -------------------------------------- Name: Philip J. Breadel Title: Authorized Signatory [Signature Page to First Amendment to Restructuring Support Agreement] DEUTSCHE BANK TRUST COMPANY AMERICAS, as a Lender By: /s/ Gregory Shefrin -------------------------------------- Name: Gregory Shefrin Title: Director [Signature Page to First Amendment to Restructuring Support Agreement] Grayston CLO 2001-01 Ltd. By: Bear Stearns Asset Management Inc. as its Collateral Manager , as a Lender --------------------------- By: /s/ Illegible -------------------------------------- Name: Illegible Title: Associate Director [Signature Page to First Amendment to Restructuring Support Agreement] HARBOUR TOWN FUNDING TRUST, as a Lender By: /s/ Ann E. Morris -------------------------------------- Name: ANN E. MORRIS Title: AUTHORIZED AGENT IBM Credit LLC, as a Lender By: /s/ Steven A. Flanagan -------------------------------------- Name: Steven A. Flanagan Title: Manager Global Special Handling [Signature Page to First Amendment to Restructuring Support Agreement] KZH Crescent-2 LLC, as a Lender By: /s/ Hi Hua -------------------------------------- Name: HI HUA Title: AUTHORIZED AGENT [Signature Page to First Amendment to Restructuring Support Agreement] KZH Crescent-3 LLC, as a Lender By: /s/ Hi Hua -------------------------------------- Name: HI HUA Title: AUTHORIZED AGENT [Signature Page to First Amendment to Restructuring Support Agreement] KZH CypressTree-1 LLC, as a Lender By: /s/ Hi Hua -------------------------------------- Name: HI HUA Title: AUTHORIZED AGENT [Signature Page to First Amendment to Restructuring Support Agreement] MASTER SENIOR FLOATING RATE TRUST, as a Lender By: /s/ Philip J. Brendel -------------------------------------- Name: Philip J. Brendel Title: Authorized Signatory [Signature Page to First Amendment to Restructuring Support Agreement] MERRILL LYNCH PRIME RATE PORTFOLIO, as a Lender By: /s/ Philip J. Brendel -------------------------------------- Name: Philip J. Brendel Title: Authorized Signatory [Signature Page to First Amendment to Restructuring Support Agreement] Morgan Stanley Prime Income Trust, as a Lender By: /s/ Sheila A. Finnerty -------------------------------------- Name: Sheila A. Finnerty Title: Executive Director Sankaty Advisors, LLC, as Collateral Manager for Brant Point II CBO 2000-1 LTD., as Term Lender, as a Lender ------------------- By: /s/ Timothy M. Barns -------------------------------------- Name: Timothy M. Barns Title: Senior Vice President [Signature Page to First Amendment to Restructuring Support Agreement] Sankaty Advisors, LLC as Collateral Manager for Castle Hill I - INGOTS, Ltd., as Term Lender, , as a Lender ------------------- By: /s/ Timothy M. Barns -------------------------------------- Name: Timothy M. Barns Title: Senior Vice President [Signature Page to First Amendment to Restructuring Support Agreement] Sankaty Advisors, LLC as Collateral Manager for Race Point CLO, Limited, as Term Lender, as a Lender By: /s/ Timothy M. Barns -------------------------------------- Name: Timothy M. Barns Title: Senior Vice President [Signature Page to First Amendment to Restructuring Support Agreement] Sankaty High Yield Partners II, L.P. , as a Lender -------------------------- By: /s/ Timothy M. Barns -------------------------------------- Name: Timothy M. Barns Title: Senior Vice President [Signature Page to First Amendment to Restructuring Support Agreement] TCW SELECT LOAN FUND, LIMITED By: TCW Advisors, Inc. as its Collateral Manager By: /s/ Mark L. Gold -------------------------------------- Name: MARK L. GOLD Title: MANAGING DIRECTOR By: /s/ Jonathan R. Insull -------------------------------------- Name: JONATHAN R. INSULL Title: MANAGING DIRECTOR VAN KAMPEN SENIOR LOAN FUND By: Van Kampen Investment Advisory Corp. as a Lender ------------------------ By: /s/ Christina Jamieson -------------------------------------- Name: CHRISTINA JAMIESON Title: VICE PRESIDENT [Signature Page to First Amendment to Restructuring Support Agreement] EX-10.6 8 dex106.txt SENIOR DISCOUNT NOTEHOLDER PLAN SUPPORT AGREEMENT Exhibit 10.6 SENIOR DISCOUNT NOTEHOLDER PLAN SUPPORT AGREEMENT This Senior Discount Noteholder Plan Support Agreement (together with exhibits, annexes and attachments hereto, this "Agreement") is made and entered into as of August 19, 2003 by and among (i) DDi Corp. ("DDi"), DDi Intermediate Holdings Corp. ("DDi Intermediate"), DDi Capital Corp. ("DDi Capital"), Dynamic Details, Incorporated ("Details"), Dynamic Details, Incorporated, Silicon Valley ("DDISV") and their respective subsidiaries and affiliates (collectively, the "Company Group") and (ii) the Senior Discount Noteholders (as defined below) signatory hereto (the "Consenting Senior Discount Noteholders"). DDi, DDi Intermediate, DDi Capital, Details, DDISV, and each of their respective subsidiaries and affiliates, each Consenting Senior Discount Noteholder and any subsequent person that becomes a party hereto are referred herein as the "Parties" and individually, as a "Party." PRELIMINARY STATEMENTS A. The holders of (the "Senior Discount Noteholders") of 12 1/2% Senior Discount Notes due 2007 (the "Senior Discount Notes") issued by DDi Capital under that certain indenture dated as of November 18, 1997 between DDi Capital, as issuer, and The State Street Bank and Trust Company (n/k/a U.S. Bank, N.A.), as trustee, as supplemented by the supplemental indenture dated as of February 10, 1998 between DDi Capital and the 12 1/2 Trustee (the "12 1/2 Indenture"), hold senior debt in face amount of $16,090,000 (the "Senior Discount Indebtedness"). As of the date hereof, the Consenting Senior Discount Noteholders hold, in aggregate, [ ] of the principal amount of the Senior - Discount Indebtedness. B. Pursuant to that certain Restructuring Support Agreement, dated as of August 1, 2003 (the "RSA"), the Consenting Lenders (as defined in the Term Sheet) have consented to, inter alia, the Restructuring Terms (as defined below) subject to certain terms and conditions outlined in the RSA. C. The Consenting 5 1/4% Subordinated Noteholders (as defined in the PSA as defined below) and the Consenting 6 1/4% Noteholders (as defined in the PSA as defined below) have until August 8, 2003 to execute the Plan Support Agreement (the "PSA"), the form of which is annexed hereto as Exhibit B to the RSA, which shall provide for, inter alia, their consent to the Restructuring Terms subject to certain terms and conditions outlined in the PSA D. The Company Group, the Consenting Lenders, the Consenting 5 1/4% Subordinated Noteholders, the Consenting 6 1/4% Subordinated Noteholders and the Consenting Senior Discount Noteholders have engaged in good faith negotiations with the objective of reaching an agreement with regard to certain aspects of the restructuring and reorganization of the Company Group. E. The Company Group, the Consenting Lenders, the Consenting 5 1/4% Subordinated Noteholders, the Consenting 6 1/4% Subordinated Noteholders and the Consenting Senior Discount Noteholders now desire to implement a restructuring and reorganization of the Company Group such that the Consenting Lenders, the Consenting 5 1/4% Subordinated Noteholders and the Consenting 6 1/4% Subordinated Noteholders and the other holders of claims against and/or equity interests in the Company Group shall receive the consideration to be paid, distributed or provided by the Company Group pursuant to such restructuring and reorganization (the "Restructuring Terms") as set forth on the term sheet (the "Term Sheet") attached hereto as Exhibit A (the "SDN Term Sheet"). F. In order to expedite the contemplated restructuring and reorganization of the Company Group, each Party, subject to the terms of this Agreement, desires to pursue and support a restructuring transaction (i) by way of a plan of reorganization under Chapter 11 of Title 11, United States Code (the "Bankruptcy Code") relating to DDi and DDi Capital, and (ii) by way of an out-of-court restructuring transaction relating to Details, DDISV and their respective subsidiaries that achieves and implements the Restructuring Terms (any such restructuring transaction that achieves and implements the Restructuring Terms, the "Restructuring Transaction") and during the pendency of this Agreement desires not to support any restructuring or reorganization of any of the members of the Company Group (or any plan or proposal in respect of the same) that does not achieve or implement the Restructuring Terms. G. In order to implement the Restructuring Transaction, the Company Group has agreed, subject to the terms and conditions of this Agreement, (i) to prepare and file (a) a disclosure statement that is consistent in all material respects with the Restructuring Terms and is in the form attached to the Term Sheet (the "Conforming Disclosure Statement"), and (b) a plan of reorganization for DDi and DDi Capital that is consistent in all material respects with the Restructuring Terms and is in the form attached to the Term Sheet (the "Conforming Plan") in cases filed under Chapter 11 of the Bankruptcy Code (the "Chapter 11 Cases") in the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court") and to negotiate and prepare the definitive Restructuring Transaction documents that are consistent in all respects with the Restructuring Terms and are in form and substance satisfactory to the Consenting Lenders (the "Conforming Restructuring Loan Documents"), and (ii) to use reasonable commercial efforts to have the Conforming Disclosure Statement approved and the Conforming Plan confirmed by the Bankruptcy Court, in each case, as expeditiously as practicable under the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure. H. The Company Group and the Consenting Senior Discount Noteholders acknowledge and agree that the best way to effectuate the Conforming Plan and the Conforming Restructuring Loan Documents is to do so in a way that would: 1. maximize the value of the Company Group for the benefit of all interested persons; 2. minimize the disruption to the Company Group resulting from the commencement of the Chapter 11 Cases as quickly as possible; 3. minimize the loss of business continuity and opportunity of Details and DDISV; 4. provide all parties to the Restructuring Transaction with Global Releases (as defined in the Term Sheet) and a Plan Injunction (as defined in the Term Sheet); and 5. provide assurances and stability to certain key employees of the Company Group. 2 I. In expressing such support and commitment, the Parties do not desire and do not intend in any way to derogate from or diminish the solicitation requirements of applicable securities and bankruptcy law, the fiduciary duties of DDi and DDi Capital as debtors in possession, the fiduciary duties of any Consenting Senior Discount Noteholder who is appointed to the official committee of unsecured creditors (the "Creditors' Committee") in the Chapter 11 Cases or the role of any state or federal agencies with regulatory authority concerning any member of the Company Group. STATEMENT OF AGREEMENT NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows: 1. Defined Terms. All capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Term Sheet. 2. Term Sheet Conditions. Without limiting the conditions set forth herein, each Party's agreement to this Agreement and support for the Conforming Plan, the Conforming Restructuring Loan Documents and the Term Sheet is expressly conditioned on satisfaction of each of the terms and conditions set forth in the Term Sheet and this Agreement. To the extent that any such conditions involve a time period or an outside date for satisfaction, the Parties acknowledge and agree that time is of the essence with respect to each such condition. 3. Agreements of the Consenting Senior Discount Noteholders (i) Ownership. Each Consenting Senior Discount Noteholder represents and warrants, on a several but not joint basis, that, as of the date hereof, (i) such Consenting Senior Discount Noteholder either (A) is the sole legal and beneficial owner of, or holder of investment authority over, the debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such debt (the "Consenting Senior Discount Noteholder Claims"), in each case free and clear of all claims, liens and encumbrances, or (B) has or will have investment or voting discretion with respect to the debt and Consenting Senior Discount Noteholder Claims and has or will have the power and authority to bind the beneficial owner(s) of such debt and Consenting Senior Discount Noteholder Claims to the terms of this Agreement, and (ii) such Consenting Senior Discount Noteholder has or will have full power and authority to vote on and consent to such matters concerning such debt and Consenting Senior Discount Noteholder Claims and to exchange, assign and transfer such debt and Consenting Senior Discount Noteholder Claims. (ii) Voting. Each Consenting Senior Discount Noteholder agrees that for so long as this Agreement remains in effect, it (i) shall vote its debt and Consenting Senior Discount Noteholder Claims to accept any Conforming Plan as soon as practicable following receipt of any Conforming Disclosure Statement in any solicitation of votes for any such Conforming Plan (but in no case later than any voting deadline stated therein), (ii) shall vote against and shall in no way otherwise, directly or indirectly, support any restructuring or reorganization of the Company (or any plan or proposal in respect of the same) that is not consistent with, or does not implement or achieve, the Restructuring Terms, (iii) shall not (A) directly or indirectly seek, solicit, pursue, 3 support or encourage any other plan or the termination of the exclusive period for the filing of any plan, proposal or offer of dissolution, winding up, liquidation, reorganization, merger or restructuring of the Company that could be expected to prevent, delay or impede the successful restructuring of the Company as contemplated by the Restructuring Terms and any Conforming Plan, (B) object to the Conforming Disclosure Statement or the solicitation of votes for the Conforming Plan or support any such objection by a third party; provided, however, that the Consenting Senior Discount Noteholder may object to the Conforming Disclosure Statement solely on the basis that it does not contain adequate information as required by Section 1125 of the Bankruptcy Code, or (C) take any other action that is inconsistent with, or that would delay confirmation of, the Conforming Plan; and (iv) shall not object to, or otherwise oppose, directly or indirectly, any of the terms and conditions of the Budget and Funding Agreement, dated as of August 1, 2003 (the "Budget and Funding Mechanism") and the Funding Motion (as defined in the Budget and Funding Mechanism). Nothing contained herein shall limit the ability of a Consenting Senior Discount Noteholder to consult with the Company, or to appear and be heard, concerning any matter arising in the Chapter 11 Cases so long as such consultation or appearance is consistent with the Consenting Senior Discount Noteholder's obligations hereunder and the terms of the Conforming Plan, the Restructuring Terms and this Agreement. (iii) Transfers. Each Consenting Senior Discount Noteholder agrees that for so long as this Agreement remains in effect, it shall not sell, transfer, assign, pledge or otherwise dispose, directly or indirectly, any of the debt or Consenting Senior Discount Noteholder Claims or any option thereon or any right or interest (voting or otherwise) therein, unless the transferee thereof agrees in writing for the benefit of the Parties to be bound by all of the terms of this Agreement by executing the Joinder attached hereto as Exhibit B-l, a copy of which shall be provided to the Parties, in which event each Party shall be deemed to have acknowledged that its obligations to the Consenting Senior Discount Noteholders hereunder shall be deemed to constitute obligations in favor of such transferee. (iv) Further Agreement. Each Consenting Senior Discount Noteholder believes that the consummation of the Conforming Plan consistent with the Term Sheet is in its best interests and is in the best interests of the Company's creditors generally. Accordingly, for so long as this Agreement remains in effect, each Consenting Senior Discount Noteholder will support the Conforming Plan consistent with the terms and conditions of the Term Sheet. Without limiting the foregoing, each Consenting Senior Discount Noteholder commits, for so long as the Agreement remains in effect, to support the Budget and Funding Mechanism, the Conforming Disclosure Statement, the Conforming Plan and the Conforming Restructuring Loan Documents and use its commercially reasonable efforts to facilitate the filing and confirmation of the Conforming Plan at the earliest practicable date; provided, however, that notwithstanding anything contained herein to the contrary, if any Consenting Senior Discount Noteholder is appointed to and serves on the Creditors' Committee, the terms of this Agreement shall not be construed to limit such Consenting Senior Discount Noteholder's exercise of its fiduciary duties in its role as a member of a Creditors' Committee, and any exercise of such fiduciary duties shall not be deemed to constitute a breach of the terms of this Agreement. 4. Agreements of the Company Group. Each member of the Company Group believes that the confirmation of the Conforming Plan and the consummation of the Conforming Restructuring Loan Documents will best facilitate its business and financial restructuring and that consummation of the terms described in the Term Sheet is in the best interests of each member of the Company Group and in the best interests of their respective creditors and other parties in 4 interest. Accordingly, the Company Group hereby agrees, for so long as this Agreement remains in effect: (a) to prepare or cause the preparation, as soon as practicable after the date hereof, of each of the Definitive Documents (as defined below), each containing terms and conditions consistent in all material respects with the Restructuring Terms, and to distribute such documents and afford reasonable opportunity of comment and review to (i) the legal and financial advisors for the Consenting Senior Discount Noteholders; (b) to (i) to file the Chapter 11 Cases with respect to the Restructuring Transaction in the Bankruptcy Court on or prior to August 21, 2003, (ii) to file the Conforming Disclosure Statement and the Conforming Plan with the Bankruptcy Court on or prior to August 30, 2003, (iii) to cause the solicitation pursuant to the Conforming Disclosure Statement and the Conforming Plan to commence on or before October 10, 2003, and (iv) to solicit the requisite votes in favor of, and to obtain confirmation by the Bankruptcy Court at the earliest practicable date of, the Conforming Plan and approval of the Bankruptcy Court; (c) to not pursue, propose, support, encourage the pursuit of, or seek to implement any transaction or series of transactions that would effect a restructuring on terms other than the Restructuring Terms unless or until this Agreement has been terminated in accordance with Section 5; and (d) to otherwise use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things, necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by the Term Sheet, the Conforming Plan and the Conforming Restructuring Loan Documents at the earliest practicable date (including opposing any appeal of the Confirmation Order). 5. Termination of Agreement. The obligations of the Consenting Senior Discount Noteholders under this Agreement shall terminate and be of no further force and effect upon the occurrence of any of the following events (any such event, a "Termination Event"), and such Termination Event is not waived in accordance with Section 10 of this Agreement: (i) the Company Group fails (A) to file the Chapter 11 Cases with respect to the Restructuring Transaction in the Bankruptcy Court on or prior to August 21, 2003, (B) to file the Conforming Disclosure Statement and the Conforming Plan with the Bankruptcy Court on or prior to August 30, 2003, or (C) to cause the solicitation pursuant to the Conforming Disclosure Statement and the Conforming Plan to commence on or before October 10, 2003; (ii) any member of the Company Group files, proposes or otherwise supports, either directly or indirectly, any plan of reorganization other than the Conforming Plan, or other creditors of any member of the Company Group file any plan of reorganization other than the Conforming Plan in accordance with Section 1121(c) of the Bankruptcy Code; (iii) the Conforming Plan is modified or replaced such that it (or any such replacement) at any time is not consistent in any material respect with the Restructuring Terms; (iv) any breach of any member of the Company Group of any of their respective obligations, or failure to satisfy in any material respect any of the terms or conditions under this Agreement or the Pre-Restructuring Loan Documents (as defined in the Term Sheet), or any member of the Company Group or any of their respective professionals or representatives shall take any action to challenge (including, without limitation, to assert in writing any challenge to) the validity or enforceability of this Agreement; (v) the final Definitive Documents (as defined below) are modified to provide for any terms that are not consistent in any material respect with the Restructuring Terms or that are otherwise not satisfactory in form and substance to the Parties signatory thereto; (vi) any member of the Company Group or any of their respective professionals or representatives shall withdraw or revoke the Conforming Plan; (vii) an examiner with expanded powers or a trustee shall have been appointed in the Chapter 11 Cases, the Chapter 11 Cases shall have been converted to a case under chapter 7 of the Bankruptcy Code, or the Chapter 11 Cases shall have been dismissed by order of the Bankruptcy Court; (viii) the occurrence of a Termination Event (as defined in the RSA), which shall not have been waived by the Required 5 Lenders (as defined in the RSA); (ix) the occurrence of a Termination Event (as defined in the PSA), which shall not have been waived by the Consenting Subordinated Noteholders (as defined in the PSA) holding at least one-half (1/2) in aggregate principal amount of the debt held by the Consenting Subordinated Noteholders; (x) any foreclosure proceeding is commenced against, or bankruptcy case is commenced by or against Details or DDISV; (xi) any failure to obtain, by November 15, 2003, (a) more than one-half (1/2) in number and two-thirds (2/3) in amount of the holders (the "Required 5 1/4% Subordinated Noteholders") of 5 1/4% Subordinated Notes (as defined in the Term Sheet) voting on the Conforming Plan to accept the terms of the Conforming Plan, (b) more than one-half (1/2) in number and two-thirds (2/3) in amount of the holders (the "Required 6 1/4% Subordinated Noteholders") of 6 1/4% Subordinated Notes (as defined in the Term Sheet) voting on the Conforming Plan to accept the terms of the Conforming Plan and (c) more than one-half (1/2) in number and two-thirds (2/3) in amount of the holders (the "Required Senior Discount Noteholders") of Senior Discount Notes (as defined in the Term Sheet) voting on the Conforming Plan to accept the terms of the Conforming Plan; (xii) any Court (including the Bankruptcy Court) shall declare, in a Final Order, this Agreement to be unenforceable; (xiii) orders approving the Conforming Disclosure Statement shall not have been entered by the Clerk of the Bankruptcy Court on or before October 7, 2003; (xiv) orders confirming the Conforming Plan shall not have been entered by the Clerk of the Bankruptcy Court on or before December 15, 2003; (xv) the Confirmation Order shall not be in form and substance acceptable to the Required Senior Discount Noteholders; (xvi) the Bankruptcy Court shall enter an order denying confirmation of the Conforming Plan; (xvii) the Effective Date (as defined in the Term Sheet) of the Conforming Plan shall not have occurred on or before January 8, 2004; or (xviii) January 30, 2004. 6. Good Faith Cooperation; Further Assurances; Acknowledgment; Definitive Documents. The Parties shall cooperate with each other in good faith and shall coordinate their activities (to the extent practicable) in respect of (a) all matters relating to their rights in respect any member of the Company Group or otherwise in connection with their relationship with the members of the Company Group, (b) all matters concerning the implementation of the Restructuring Terms, and (c) the pursuit and support of the Restructuring Transaction. Furthermore, subject to the terms hereof, each of the Parties shall take such action as may be necessary to carry out the purposes and intent of this Agreement, including making and filing any required regulatory filings and voting any other debt or equity securities of the Company Group in favor of the Restructuring Transaction (provided that no Consenting Senior Discount Noteholder shall be required to incur any expense, liability or other obligation), and shall refrain from taking any action that would frustrate the purposes and intent of this Agreement, including proposing a plan that is not the Conforming Plan. While the Consenting Senior Discount Noteholders commit herein to support the Restructuring Transaction and Conforming Plan and it is their intention to vote in favor of the Conforming Plan, this Agreement is not and shall not be deemed a solicitation for consent to the Conforming Plan or a solicitation to tender or exchange any Debt. The acceptance of the Consenting Senior Discount Noteholders will not be solicited until they have received the Conforming Disclosure Statement and the related ballots in forms approved by the Bankruptcy Court. Notwithstanding anything to the contrary contained in this Agreement, the obligations of the Parties hereunder shall be expressly subject to the preparation of definitive documents (the "Definitive Documents") implementing, achieving and relating to the Restructuring Terms and this Agreement, including, without limitation: (i) (a) the Conforming Plan, the Disclosure Statement, the order of the Bankruptcy Court confirming the Conforming Plan (the "Confirmation Order"), the Conforming Disclosure Statement, and any related ballots, releases and settlement documents, (b) definitive documentation relating to the management 6 incentive plan, the common stock of Reorganized DDi, the preferred stock of DDi Europe (as defined in the Term Sheet) and other related documents, each of which are more specifically described in the Restructuring Terms, shall contain terms and conditions consistent in all material respects with the Restructuring Terms, and shall be satisfactory in form and substance to the Parties signatory thereto, (c) the Conforming Restructuring Loan Documents and (d) all other agreements, instruments, orders or other documents necessary or appropriate to consummate the transactions contemplated by this Agreement, the Term Sheet, the Conforming Restructuring Loan Documents or the Conforming Plan, and (ii) any "first day" orders and motions. Each Party hereby covenants and agrees (i) to negotiate in good faith the Definitive Documents and (ii) to execute (to the extent they are a party thereto) and otherwise support the Definitive Documents. 7. Further Acquisitions. This Agreement shall in no way be construed to preclude any Consenting Senior Discount Noteholder from acquiring additional 5 1/4% Subordinated Notes, 6 1/4% Subordinated Notes and/or Senior Discount Notes. However, any such 5 l/4% Subordinated Notes, 6 1/4% Subordinated Notes or Senior Discount Notes so acquired shall automatically be deemed to be subject to all of the terms of (i) in the case of the 5 1/4% Subordinated Notes and the 6 1/4% Subordinated Notes, the PSA and (ii) in the case of the Senior Discount Notes, this Agreement. 8. Additional Claims or Equity Interests. To the extent any Consenting Senior Discount Noteholder (a) acquires additional debt or claims, or (b) holds or acquires other claims or equity interests in the Company entitled to vote on the Conforming Plan, each such Consenting 5 1/4% Subordinated Noteholder and Consenting 6 1/4% Subordinated Noteholder agrees that such debt, Claims, claims or equity interests shall be subject to this Agreement and that it shall vote (or cause to be voted) any such additional debt, claims, claims or equity interests (in each case, to the extent still held by it or on its behalf at the time of such vote) in a manner consistent with this Agreement. 9. Representations and Warranties. Each Party, severally (and not jointly), represents and warrants to the other Parties that the following statements are true, correct and complete as of the date hereof: (a) it is duly organized, validly existing, and in good standing under the laws of the state of its organization, and has all requisite corporate, partnership, limited liability company or similar authority to enter into this Agreement and carry out the transactions contemplated hereby and perform its obligations contemplated hereunder; and the execution and delivery of this Agreement and the performance of such Party's obligations hereunder have been duly authorized by all necessary corporate, limited liability, partnership or other similar action on its part; (b) the execution, delivery, and performance by such Party of this Agreement does not and shall not (i) violate any provision of law, rule or regulation applicable to it or any of its subsidiaries or its certificate of incorporation or bylaws or other organizational documents or those of any of its subsidiaries, or (ii) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any material contractual obligation to which it or any of its subsidiaries is a party; (c) the execution, delivery, and performance by such Party of this Agreement does not and shall not require any registration or filing with, consent or approval of, 7 or notice to, or other action to, with or by, any federal, state or governmental authority or regulatory body, except such filings as may be necessary and/or required for disclosure by the Securities and Exchange Commission and in connection with the Chapter 11 Cases, the Conforming Disclosure Statement and the Conforming Plan. Although none of the Parties intend that this Agreement should constitute, and they each believe that it does not constitute, a solicitation and acceptance of the Conforming Plan, they each acknowledge and agree that, regardless of whether its Relevant Claims or the Conforming Restructuring Loan Documents constitutes "securities" within the meaning of the Securities Act of 1933, (i) each of the Consenting Senior Discount Noteholders is an "accredited investor" as such term is defined in Rule 501(a) of the Securities Act of 1933 and a "qualified institutional buyer" as such term is defined in Rule 144A of the Securities Act of 1933 and (ii) adequate information was provided by the Company Group to each such Consenting Senior Discount Noteholder in order to enable it to make an informed decision such that, were this Agreement to be construed as or deemed to constitute such a solicitation and acceptance, such solicitation was (i) in compliance with any applicable nonbankruptcy law, rule, or regulation governing the adequacy of disclosure in connection with such solicitation, or (ii) if there is not any such law, rule, or regulation, solicited after disclosure to such holder of "adequate information" as such term is defined in Section 1125(a) of the Bankruptcy Code; (d) if such Party is a Consenting Senior Discount Noteholder, such Consenting Senior Discount Noteholder has reviewed this Agreement and all exhibits hereto and has received all such other information as it deems necessary and appropriate to enable it to evaluate the financial risks inherent in the Restructuring Transaction; and (e) this Agreement is the legally valid and binding obligation of it, enforceable in accordance with the terms hereof, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or limiting creditors' rights generally or by equitable principles relating to enforceability or a ruling of the Bankruptcy Court. 10. Amendments and Waivers. This Agreement may not be modified, amended or supplemented except in a writing signed by each member of the Company Group and (i) the Consenting Senior Discount Noteholders holding at least one-half (1/2) in aggregate principal amount of the debt held by Consenting Senior Discount Noteholders; provided, that, that any modification or amendment to this Section 10 shall require the written consent of all of the Parties; provided, further, that any modification of, or amendment or supplement to, this Agreement (including the Restructuring Terms) that materially and adversely affects any Party shall require the written consent of the Party so affected. A Termination Event may not be waived except in a writing by the Consenting Senior Discount Noteholders holding at least one-half (1/2) in aggregate principal amount of the debt held by Consenting Senior Discount Noteholders no later than three (3) business days following the occurrence of a Termination Event. 11. Other Existing Support Agreements. Each Consenting Senior Discount Noteholder acknowledges that other parties are being requested to sign the RSA and that a condition of the Term Sheet is that the RSA shall have been executed and delivered, no later than August 1,2003, by (a) each member of the Company Group and (b) one hundred percent of the (100%) of the holders of Lender Indebtedness (as defined in the RSA). Each Consenting Senior Discount Noteholder further acknowledges that other parties are being requested to sign the PSA 8 and that a condition of the RSA is that the PSA shall have been executed and delivered, no later than August 8, 2003, by (a) each member of the Company Group and (b) the Consenting Subordinated Noteholders holding at least forty-two and a half percent (42.5%) in aggregate principal amount of the Subordinated Notes. 12. Conditions to Effectiveness. This Agreement shall not become effective and binding on the Parties unless and until (i) counterpart signature pages and Joinders, as applicable, shall have been executed and delivered, no later than August ,2003, by (a) each member of the Company Group, (b) the Consenting ------- Senior Discount Noteholders holding in aggregate principal amount of ---------- the Subordinated Notes, to the Debtors, with a copy to the Administrative Agent; (ii) the RSA shall have been executed and delivered, no later than August 1, 2003, by (a) each member of the Company Group and (b) one hundred percent of the (100%) of the holders of Lender Indebtedness (as defined in the RSA); and the PSA shall have been executed and delivered, no later than August 8, 2003, by (a) each member of the Company Group and (b) the Consenting Subordinated Noteholders holding at least forty-two and a half percent (42.5%) in aggregate principal amount of the Subordinated Notes. 13. GOVERNING LAW; JURISDICTION. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. BY ITS EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ANY LEGAL ACTION, SUIT OR PROCEEDING AGAINST IT WITH RESPECT TO ANY MATTER UNDER OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT RENDERED IN ANY SUCH ACTION, SUIT OR PROCEEDING, MAY BE BROUGHT IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HEREBY IRREVOCABLY ACCEPTS AND SUBMITS ITSELF TO THE NONEXCLUSIVE JURISDICTION OF EACH SUCH COURT, GENERALLY AND UNCONDITIONALLY, WITH RESPECT TO ANY SUCH ACTION, SUIT OR PROCEEDING, AND WAIVES ANY OBJECTION IT MAY HAVE TO VENUE OR THE CONVENIENCE OF THE FORUM. NOTWITHSTANDING THE FOREGOING CONSENT TO JURISDICTION, UPON THE COMMENCEMENT OF THE CHAPTER 11 CASES, EACH OF THE PARTIES AGREES THAT THE BANKRUPTCY COURT SHALL HAVE EXCLUSIVE JURISDICTION WITH RESPECT TO ANY MATTER UNDER OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT. 14. Specific Performance. This Agreement, including without limitation the Parties' agreement herein to support the Restructuring Transaction and Conforming Plan and to facilitate its confirmation, is intended as a binding commitment enforceable in accordance with its terms. It is understood and agreed by each of the Parties that money damages would not be a sufficient remedy for any breach of this Agreement by any Party and each non-breaching Party shall be entitled to specific performance and injunctive or other equitable relief as a remedy of any such breach, including an order of the Bankruptcy Court requiring any Party to comply promptly with any of its obligations hereunder. 15. Survival. Notwithstanding (a) any sale of the debt or Claims in accordance with Sections 3(iii), or (b) the termination of this Agreement pursuant to Section 5, the agreements and obligations of the Parties in Sections 13, 15, 17, 19, 20, 24, and 25 shall survive such sale and/or 9 termination and shall continue in full force and effect for the benefit of the Consenting Senior Discount Noteholders in accordance with the terms hereof. 16. Headings. The headings of the Sections, paragraphs and subsections of this Agreement are inserted for convenience only and shall not affect the interpretation hereof. 17. Successors and Assigns; Severability; Several Obligations. This Agreement is intended to bind and inure to the benefit of the Parties and their respective successors, assigns, heirs, executors, administrators and representatives. The invalidity or unenforceability at any time of any provision hereof shall not affect or diminish in any way the continuing validity and enforceability of the remaining provisions hereof. The agreements, representations and obligations of the Consenting Senior Discount Noteholders under this Agreement are, in all respects, several and not joint. 18. No Third-Party Beneficiaries. Unless expressly stated herein, this Agreement shall be solely for the benefit of the Parties hereto and, to the extent contemplated by the Term Sheet, the Consenting Lenders under the RSA and the Consenting Subordinated Noteholders under the PSA, and no other person or entity shall be a third party beneficiary hereof. 19. Prior Negotiations; Entire Agreement. This Agreement constitutes the entire agreement of the Parties, and supersedes all other prior and contemporaneous negotiations, agreements, representations, warranties and understandings of the parties, whether oral, written or implied, with respect to the subject matter hereof, except that the Parties acknowledge that, except as provided in Section 20 below, any confidentiality agreements heretofore executed between any member of the Company Group and each Consenting Senior Discount Noteholder shall continue in full force and effect. 20. Confidentiality. Each member of the Company Group and each Consenting Senior Discount Noteholder agrees to use commercially reasonable efforts to maintain the confidentiality of (a) the individual identities and individual holdings of each Consenting 5 1/4% Subordinated Noteholder, Consenting 6 1/4% Subordinated Noteholder, Consenting Senior Discount Noteholders and Consenting Lender; provided, however, that such information may be disclosed (i) to the Parties' respective directors, trustees, executives, officers, auditors, and employees and financial and legal advisors or other agents (collectively referred to herein as "Representatives"), (ii) to person in response to, and to the extent required by, (x) any subpoena, or other legal process or (y) any bank regulatory agency or any other regulatory agency or authority. If any Party or its Representative receives a subpoena or other legal process as referred to in clause (ii)(x) above in connection with the Agreement, such Party shall provide the other Parties with prompt written notice of any such request or requirement, to the fullest extent permissible and practicable under the circumstances, so that the other Parties may seek a protective order or other appropriate remedy or waiver of compliance with the provisions of this Agreement. Notwithstanding the provisions in this Section 20, (i) the Company Group may disclose (a) the existence of and nature of support evidenced by this Agreement in one or more public releases that have first been sent to the counsel for the Administrative Agent and to the Consenting Senior Discount Noteholders for review and comment, and (b) in the context of any such releases, the aggregate holdings of the Consenting Lenders, the Consenting 5 1/4% Subordinated Noteholder, the Consenting 6 1/4% Subordinated Noteholder and the Consenting Senior Discount Noteholders (but, as indicated above, not their identities or their individual holdings), (ii) any Party hereto may disclose the identities to the Parties hereto and their 10 individual holdings in any action to enforce this Agreement or in an action for damages as a result of any breaches hereof, and (iii) to the extent required by the Bankruptcy Code, Bankruptcy Rules, Local Rules of the Bankruptcy Court or other applicable rules, regulations or procedures of the Bankruptcy Court or the Office of the United States Trustee, the Company Group may disclose the individual identities of the Consenting Senior Discount Noteholders in a writing that has first been sent to each Consenting Senior Discount Noteholder for review and comment on five (5) business days' notice. 21. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which shall constitute one and the same agreement. Delivery of an executed signature page of this Agreement by facsimile shall be effective as delivery of a manually executed signature page of this Agreement. 22. Notices. Any notice required or desired to be served, given or delivered under this Agreement shall be in writing, and shall be deemed to have been validly served, given or delivered if provided by personal delivery, or upon receipt of fax delivery, during standard business hours (from 8:00 a.m. to 6:00 p.m.) as follows: a. if to the Consenting Senior Discount Noteholders, to each such Party at its address set forth on the signature pages to each Joinder Agreement; and b. if to any member of the Company, to Richard Wynne, Kirkland & Ellis LLP, 777 South Figueroa Street, Los Angeles, California 90017, Facsimile No. (213) 680-8500. With a copy to: Jeffrey L. Schwartz Hahn & Hessen LLP 488 Madison Avenue New York, NY 10022 and Kathrine A. McLendon Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, New York 10017 Facsimile No.: 212-455-2502 Counsel for the Consenting Lenders and George C. Webster Stutman, Treister & Glatt Professional Corporation 1901 Avenue of the Stars, 12th Floor Los Angeles, California 90067 Facsimile No.: (310)228-5788 Attorneys to the Ad Hoc Committee of Subordinated Noteholders 11 23. Rule of Interpretation. Notwithstanding anything contained herein to the contrary, it is the intent of the Parties that all references to votes or voting in this Agreement be interpreted to include (i) votes or voting on a plan of reorganization under the Bankruptcy Code, and (ii) all means of expressing agreement with, or rejection of, as the case may be, a restructuring or reorganization transaction that is not implemented under the Bankruptcy Code. 24. Reservation of Rights. Except as expressly provided in this Agreement and in any amendment among the Parties, nothing herein is intended to, or does, in any manner waive, limit, impair or restrict the ability of each of the Parties to protect and preserve its rights, remedies and interests, including without limitation, its claims against the Company or its full participation in any bankruptcy case filed by any member of the Company or any of its affiliates and subsidiaries. Nothing herein shall be deemed an admission of any kind. If the transactions contemplated herein, in the Conforming Plan or the Conforming Restructuring Loan Documents are not consummated, or this Agreement is terminated for any reason, the Parties hereto fully reserve any and all of their rights. As provided in the Term Sheet, this Agreement may be filed with the Bankruptcy Court, provided, however, that Schedule B to the Term Sheet shall be attached with any redactions as may be required by the Required Lenders. 25. Disclosure of Holdings. Unless required by applicable law or regulation or otherwise provided for in this Agreement, no Party shall disclose the amount of any Consenting Lender's, Consenting 5 1/4% Subordinated Noteholder's, Consenting 6 1/4% Subordinated Noteholder's or Consenting Senior Discount Noteholders's holdings of debt to any third party without the prior written consent of such Consenting Lender, Consenting 5 1/4% Subordinated Noteholder, Consenting 6 1/4% Subordinated Noteholder or Consenting Senior Discount Noteholder; provided, however, that (a) if such disclosure is required by law or regulation, the disclosing Party shall afford the relevant Consenting Lender, Consenting 5 1/4% Subordinated Noteholder, Consenting 6 1/4% Subordinated Noteholder or Consenting Senior Discount Noteholder a reasonable opportunity to review and comment in advance of such disclosure and shall take all reasonable measures to limit such disclosure, and (b) the foregoing shall not prohibit the disclosure of approximate aggregate group holdings by class of debt. 26. Independent Due Diligence and Decision-Making. Each of the undersigned hereby confirms that its decision to execute this Agreement has been based upon its independent investigation of the operations, businesses, financial and other conditions and prospects of the Company Group, without reliance upon the Ad Hoc Committee, any of their respective affiliates or any of their respective advisors or representatives. To the extent any materials or information have been furnished to it by such persons, the undersigned hereby acknowledges that they have been provided for informational purposes only, without any representation or warranty. 27. Prevailing Party. If any Party brings an action or proceeding against any other Party based upon a breach by such Party of its obligations hereunder, the prevailing Party shall be entitled to all reasonable expenses incurred, including reasonable attorneys', accountants' and financial advisors fees in connection with such action or proceeding. 28. Fiduciary Duties. Notwithstanding anything to the contrary herein, nothing in this Agreement shall limit the ability of (a) any member of the Company Group or any of their respective directors or officers (in such person's capacity as a director or officer of any member of the Company Group) to take any action, or to refrain from taking any action, to the extent required to comply with its or their fiduciary obligations under applicable law and (b) any 12 Consenting Senior Discount Noteholder or representative of a Consenting Senior Discount Noteholder that is a member of a statutory committee established in the Chapter 11 Cases to take any action, or to refrain from taking any action, in such person's capacity as a statutory committee member to the extent required to comply with fiduciary obligations applicable under the Bankruptcy Code. Nothing herein will limit or affect, or give rise to any liability, to the extent required for the discharge of the fiduciary obligations described in this Section 28. 29. Several not Joint. The agreements, representations and obligations of the Parties under this Agreement are, in all respects, several and not joint. 30. No Admissions. This Agreement shall in no way be construed as or be deemed to be evidence of an admission or concession on the part of any Party of any claim or fault or liability or damages whatsoever. Each of the Parties denies any and all wrongdoing or liability of any kind and does not concede any infirmity in the claims of defenses which it has asserted or could assert. 31. Lender Claims and Liens. The Consenting Senior Discount Noteholders agree that until this Agreement is terminated, they shall not dispute that (a) the Borrowers are indebted to the Administrative Agent and the Lenders for $72,892,916.17 in outstanding principal amount and face amount of undrawn letters of credit, plus interest and fees, as provided under the Credit Agreement (as defined in the Term Sheet) and the other Pre-Restructuring Loan Documents (as defined in the Term Sheet) and applicable law and (b) as security for payment of the foregoing indebtedness, the Lenders have valid, perfected and unavoidable first-priority liens and charges on, and security interests in, all or substantially all of the assets of the Borrowers, as more particularly described in, and evidenced by, the Credit Agreement and the Pre-Restructuring Loan Documents. Until this Agreement is terminated, no Consenting Senior Discount Noteholder shall (i) challenge or contest, the validity, binding nature, due authorization or enforceability of any document or instrument evidencing the Credit Agreement, the other Pre-Restructuring Loan Documents or any term or condition thereof or (ii) seek to alter, amend or supplement the Credit Agreement or any of the other Pre-Restructuring Loan Documents without the prior written consent of the Consenting Lenders or (iii) challenge or contest the validity, enforceability, perfection or priority of (or shall seek to alter the priority of) any existing lien, charge, security interest, or other interest in favor of the Lenders or any lien, charge, security interest, or other interest granted to the Lenders pursuant to the Pre-Restructuring Loan Documents. [Remainder of page intentionally left blank; remaining pages are signature pages.] 13 IN WITNESS WHEREOF, the undersigned have each caused this Agreement to be duly executed and delivered by their respective, duly authorized officers as of the date first written above. DDi CAPITAL CORP. By: /s/ JOHN STUMPF ------------------------------------ Title: CFO DYNAMIC DETAILS, INCORPORATED By: /s/ JOHN STUMPF ------------------------------------ Title: CFO DYNAMIC DETAILS, INCORPORATED, SILICON VALLEY By: /s/ JOHN STUMPF ------------------------------------ Title: CFO DDi Corp. By: /s/ JOHN STUMPF ------------------------------------ Title: CFO DYNAMIC DETAILS, INCORPORATED, VIRGINIA By: /s/ JOHN STUMPF ------------------------------------ Title: CFO DYNAMIC DETAILS TEXAS, L.P. By: Dynamic Details Texas Holdings Corp. By: /s/ JOHN STUMPF --------------------------------- Title: CFO 14 By: DDi-TEXAS INTERMEDIATE HOLDINGS, L.L.C. By: /s/ JOHN STUMPF ------------------------------------ Title: CFO By: DYNAMIC DETAILS TEXAS HOLDINGS CORP. By: /s/ JOHN STUMPF ------------------------------------ Title: CFO By: DYNAMIC DETAILS INCORPORATED, COLORADO SPRINGS By: /s/ JOHN STUMPF ------------------------------------ Title: CFO By: DYNAMIC DETAILS INCORPORATED, TEXAS By: /s/ JOHN STUMPF ------------------------------------ Title: CFO 15 EXHIBIT A Term Sheet SUMMARY OF TERMS AND CONDITIONS OF FINANCIAL RESTRUCTURING OF DDi CORP. AND AFFILIATES The following (this "Summary of Terms and Conditions") is an outline of (i) the key terms and provisions of a plan of reorganization attached hereto as Schedule A (the "Chapter 11 Plan") for DDi Corp. ("DDi") and DDi Capital Corp. ("DDi Capital") to be proposed by those entities, the Ad Hoc Committee (the "Ad Hoc Committee") for the Subordinated Noteholders (as defined below), DDi Intermediate Holdings Corp. ("DDi Intermediate"), DDi Europe Limited ("DDi Europe"), Dynamic Details, Incorporated ("Details") and Dynamic Details, Incorporated, Silicon Valley ("DDISV") and (ii) in connection therewith, the key terms for the proposed out-of-court restructuring and exchange of the outstanding indebtedness of Details and DDISV. This Summary of Terms and Conditions is subject to finalization and execution of a Plan Support Agreement (the "PSA") to be signed by certain of the Subordinated Noteholders and a Restructuring Support Agreement (the "RSA") to be signed by the Lenders, to each of which this Summary of Terms and Conditions shall be attached as Exhibit A, and to the completion of appropriate tax due diligence, acceptable treatment of tax issues (including agreement on tax treatment of restructured Pre-Restructuring Bank Indebtedness (as defined below)) and the execution of definitive documentation. Upon execution of the PSA and the RSA, this Summary of Terms and Conditions is intended to be binding on the signatories to (i) the PSA in accordance with the terms of the PSA and (ii) the RSA in accordance with the terms of the RSA. However, this Summary of Terms and Conditions remains subject to, among a variety of other things, finalizing any incomplete Schedules hereto, resolving any terms that are bracketed or indicated as being "open" or subject to further review, and acceptable definitive documentation of all matters contemplated herein, including any court-approved disclosure statement (in the form annexed to the Chapter 11 Plan in Schedule A, the "Disclosure Statement") related to the Chapter 11 Plan of DDi and DDi Capital, any agreements related thereto and the terms and conditions of such plan. Any vote in favor of any plan, or any support thereof, whether or not it includes the terms and conditions set forth herein, is not being solicited by or agreed to by this Summary of Terms and Conditions and is subject to, among other conditions, the completion of appropriate tax due diligence, acceptable treatment of tax issues (including agreement on tax treatment of restructured Pre-Restructuring Bank Indebtedness) and the execution of definitive documentation. Notwithstanding anything to the contrary in the foregoing, this Summary of Terms and Conditions is being provided as part of settlement discussions and, as a result, shall be treated as such pursuant to Federal Rule of Evidence 408 and all bankruptcy and state law equivalents subject to the following exceptions: 1. The PSA may be attached as an exhibit to the Disclosure Statement along with the attachments, except that Schedule B of the Term Sheet shall be attached with any redactions as may be required by the Required Lenders (as defined below). 2. The RSA will not be filed with the Bankruptcy Court (as defined below), but a description of the RSA may be included in the Disclosure Statement in form and substance satisfactory to the Administrative Agent (as defined below) and counsel to the Administrative Agent. This Summary of Terms and Conditions is not an offer with respect to any securities. Such a solicitation will only be made in compliance with applicable provisions of securities laws. In addition, notwithstanding the terms of any agreement to which any of the parties to this Summary of Terms and Conditions is a party, the contents or the existence of this Summary of Terms and Conditions may not be disclosed by any party hereto to any other person or entity, either orally or in writing, except (i) to the 2 parties' respective directors, trustees, officers, employees, legal counsel, financial advisors, accountants and regulatory authorities on a confidential basis and (ii) in accordance with the PSA and the RSA. Any person or entity to whom all or any portion of this Summary of Terms and Conditions is disclosed as permitted above shall be advised of the terms of the confidentiality provisions set forth above and the intent of the parties that such recipients keep such information confidential. - -------------------------------------------------------------------------------- Debt To Be Restructured The indebtedness of DDi and its affiliates (collectively, the "DDi Entities") to be restructured shall be: (i) senior debt of approximately $72,892,916.17 in principal amount under the Amended and Restated Credit Agreement, dated as of July 23,1998 and as amended and restated as of August 28,1998, and as amended by the First Amendment, dated as of March 10, 1999, the Second Amendment, dated as of March 22, 2000, the Third Amendment, dated as of October 10, 2000, the Fourth Amendment, dated as of February 13,2001, the Fifth Amendment, dated as of December 31, 2001, the Sixth Amendment, dated as of June 28, 2002 and the Seventh Amendment, dated as of June 27, 2003 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among Details, DDi Capital, DDISV, the several banks and other financial institutions from time to time parties thereto (the "Lenders"), JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), in its capacity as the arranger of the Commitments, and as collateral, co-syndication and administrative agent for the Lenders (in such capacity, the "Administrative Agent") and Bankers' Trust Company as documentation and co-syndication agent (the "Co-Syndication Agent" and together with the Lenders and the Administrative Agent, the "Senior Debt Parties"), and all collateral and ancillary documentation executed in connection therewith, including, without limitation, the terminated interest rate exchange agreement and transactions thereunder entered into by Details (the "Hedge Agreement") (collectively, the "Pre-Restructuring Loan Documents"); (ii) subordinated debt of $100,000,000 in principal amount of 5 1/4% Convertible Subordinated Notes due 2008 (the "5 1/4 Convertible Subordinated Notes"), underwritten by Credit Suisse First Boston Corp. and Robertson Stephens, Inc., as underwriters (collectively, the "5 1/4 Underwriters") and issued by DDi under that certain Indenture, dated as of February 20,2001 (as supplemented, the "5 1/4 Indenture") between DDi, as issuer, and The State Street Bank and Trust Company (n/k/a U.S. Bank, N.A.), as trustee (the "5 1/4 Trustee" and together with the 5 1/4 Underwriters and the 5 1/4 Noteholders (as defined below), the "5 1/4 Subordinated Debt Parties"); (iii) subordinated debt of $100,000,000 in principal amount of 6 1/4% Convertible Subordinated Notes due 2007 (the "6 1/4 Convertible Subordinated Notes"), underwritten by Robertson Stephens, Inc. and JPMorgan Securities, Inc., as underwriters (collectively, the "6 1/4 Underwriters") and issued by DDi under that certain Indenture, dated as - -------------------------------------------------------------------------------- 3 - -------------------------------------------------------------------------------- of April 2, 2002 (as supplemented, the "6 1/4 Indenture") between DDi, as issuer, and The State Street Bank and Trust Company (n/k/a U.S. Bank, N.A.), as trustee (the "6 1/4 Trustee" and together with the 6 1/4 Underwriters and the 6 1/4 Noteholders (as defined below), the "6 1/4 Subordinated Debt Parties"); and (iv) senior debt in face amount of $16,090,000 at June 30, 2003 of 12 l/2% Senior Discount Notes due 2007 (the "Senior Discount Notes") issued by DDi Capital under that certain indenture dated as of November 18, 1997 between DDi Capital, as issuer, and The State Street Bank and Trust Companv (n/k/a U.S. Bank, N.A.), as trustee (the "12 1/2 Trustee" and together with the 12 1/2 Noteholders (as defined below), the "12 1/2 Senior Discount Parties"), as supplemented bv the supplemental indenture dated as of February 10, 1998 between DDi Capital and the 12 1/2 Trustee (the "12 1/2 Indenture"). - -------------------------------------------------------------------------------- The Restructuring. Such indebtedness will be restructured (the "Restructuring") pursuant to (i) the pre-negotiated Chapter 11 Plan to be filed jointly by DDi and DDi Capital (collectively, the "Debtors") in proceedings (the "Chapter 11 Cases") to be commenced under Chapter 11 of Title 11, United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court"), with respect to the 5 1/4 Convertible Subordinated Notes, the 6 1/4 Convertible Subordinated Notes and the Senior Discount Notes, and (ii) the RSA, with respect to the Pre-Restructuring Bank Indebtedness (as defined below), and the Restructuring Loan Documents (as defined below). The Restructuring and the Chapter 11 Plan on the terms and conditions set forth herein shall be effectuated in the event that (a) (i) one-hundred percent (100%) of the holders (the "Consenting Lenders") of Pre-Restructuring Bank Indebtedness (as defined below) execute the Restructuring Loan Documents, (ii) the Chapter 11 Plan and the Disclosure Statement filed with the Bankruptcy Court and the Confirmation Order (as defined below) entered by the Bankruptcy Court are in form and substance acceptable to the holders of more than one-half (1/2) in number and two-thirds (2/3) in amount of the holders of Pre-Restructuring Bank Indebtedness (the "Required Lenders"), (b) more than one-half (1/2) in number and two-thirds (2/3) in amount of the holders (the "5 1/4 Noteholders") of 5 1/4 Convertible Subordinated Notes (the "Required 5 1/4 Noteholders") voting on the Chapter 11 Plan vote to accept the terms of the Chapter 11 Plan by November 15, 2003, (c) more than one-half (1/2) in number and two-thirds (2/3) in amount of the holders (the "6 1/4 Noteholders" and together with the 5 1/4 Noteholders, the "Subordinated Noteholders") of 6 1/4 Convertible Subordinated Notes (the "Required 6 1/4 Noteholders") voting on the Chapter 11 Plan vote to accept the terms of the Chapter 11 Plan by November 15,2003 and (d) the Bankruptcy Court enters an order (the "Confirmation Order") confirming the Chapter 11 Plan in accordance with Section 1129 of the Bankruptcy Code no later than December 15, 2003. - -------------------------------------------------------------------------------- Treatment of Existing On the date the Chapter 11 Plan becomes effective (the "Effective Date") the aggregate outstanding principal amount of indebtedness and the face amount - -------------------------------------------------------------------------------- 4 - -------------------------------------------------------------------------------- Bank Debt. of letters of credit under the Pre-Restructuring Loan Documents in the amount of $72,892,916.17 (the "Pre-Restructuring Loans") and the fees and interest accrued and unpaid on the Pre-Restructuring Loans (collectively, the "Accrued Fees and Interest" and together with the Pre-Restructuring Loans, the "Pre-Restructuring Bank Indebtedness") will be restructured, exchanged and repaid pursuant to restructuring credit documentation (the "Restructuring Loan Documents"). The principal terms and conditions for the Restructuring Loan Documents are set forth in Schedule B attached hereto. - -------------------------------------------------------------------------------- Treatment of Existing 5 1/4 On the Effective Date, the aggregate outstanding Convertible Subordinated principal amount of subordinated indebtedness of Notes And Existing 6 1/4 $100,000,000 under the 5 1/4 Convertible Convertible Subordinated Subordinated Notes (the "5 1/4 Principal Amount") Notes. and the fees and interest accrued and unpaid on the 5 1/4 Convertible Subordinated Notes (collectively, the "5 1/4 Accrued Fees and Interest" and together with the 5 1/4 Principal Amount, the "Pre-Restructuring 5 1/4 Subordinated Debt") and the aggregate outstanding principal amount of subordinated indebtedness of $100,000,000 under the 6 1/4 Convertible Subordinated Notes (the "6 1/4 Principal Amount") and the fees and interest accrued and unpaid on the 6 1/4 Convertible Subordinated Notes (collectively, the "6 1/4 Accrued Fees and Interest" and together with the 6 1/4 Principal Amount, the "Pre-Restructuring 6 1/4 Subordinated Debt", and the Pre-Restructuring 6 1/4 Subordinated Debt and the Pre-Restructuring 5 1/4 Subordinated Debt, together, the "Subordinated Note Debt") will be restructured and converted into common stock of Reorganized DDi (as defined in Schedule C below) and preferred stock of DDi Europe. On the Effective Date, subject to the Budget and Funding Mechanism (as defined below), any unpaid fees and expenses of the Subordinated Noteholders, including the unpaid fees and expenses of the members of the Ad Hoc Committee, the retained professionals of the Ad Hoc Committee, the 5 1/4 Trustee and the 6 1/4 Trustee, will be paid in cash. The principal terms and conditions for the conversion of the Subordinated Note Debt into common stock of Reorganized DDi and preferred stock of DDi Europe are set forth in Schedules C and D, respectively, attached hereto. - -------------------------------------------------------------------------------- Treatment of Existing On the Effective Date, the aggregate outstanding Senior Discount Notes. principal amount of senior debt of face amount of $16,090,000 under the Senior Discount Notes and the fees and interest accrued and unpaid thereon (collectively, the "Senior Discount Note Debt") are intended to be restructured on the terms set forth in Schedule E attached hereto; provided that any modification to such terms shall be subject to the consent of the Required Lenders, the Required 5 1/4 Noteholders and the Required 6 1/4 Noteholders. - -------------------------------------------------------------------------------- Treatment of Existing Except as otherwise provided in Schedule C, all Equity Interests. existing common and preferred equity interests in DDi and other existing securities consisting of (or convertible into) equity interests in DDi, including any warrants or vested or unvested options to purchase equity interests in DDi, shall be - -------------------------------------------------------------------------------- 5 - -------------------------------------------------------------------------------- extinguished as of the Effective Date. All existing equity interests in direct and indirect subsidiaries of DDi shall continue to be held by the same parties who held such equity interests, subject to any liens and pledges in favor of the Lenders, prior to the commencement of the Cases (it being understood that as part of the Restructuring, new preferred stock of DDi Europe will be issued to the Subordinated Noteholders). - -------------------------------------------------------------------------------- Management Equity The Chapter 11 Plan shall provide for the Incentive Plan. establishment of a management equity incentive plan, having the principal terms set forth on Schedule F attached hereto for five percent (5%) of the Reorganized DDi common stock on the Effective Date, options for up to an additional ten percent (10%) of the Reorganized DDi common stock for members of the Reorganized DDi's management and discretionary options for an additional four percent (4%) of the Reorganized DDi common stock. - -------------------------------------------------------------------------------- Release; Plan Injunction. The Confirmation Order shall approve, among other things, the global releases (the "Global Releases") as set forth in the Chapter 11 Plan and shall provide for an injunction (the "Plan Injunction") as set forth in the Chapter 11 Plan. The Global Releases and the Plan Injunction shall be in the form set forth in the Chapter 11 Plan attached hereto, provided, however, that to the extent any subsequent material modifications are necessary to confirm the Chapter 11 Plan, they must be approved in writing by the Required Lenders. - -------------------------------------------------------------------------------- Board of Directors. See Schedule C. - -------------------------------------------------------------------------------- Tax Attributes. The terms of the Chapter 11 Plan and the restructuring contemplated by this Summary of Terms and Conditions shall be subject to (i) satisfactory due diligence by the Administrative Agent, the Required Lenders, the Required 5 1/4 Noteholders and the Required 6 1/4 Noteholders with respect to any related intercompany transactions, (ii) satisfactory due diligence by the Administrative Agent, the Required Lenders, the Required 5 1/4 Noteholders and the Required 6 1/4 Noteholders with respect to tax consequences of the Restructuring and agreement satisfactory to the Required Lenders with respect to the tax treatment of the restructured Pre-Restructuring Bank Indebtedness, and (iii) the preservation of favorable tax attributes of the Debtors in a manner satisfactory to the Administrative Agent, the Required Lenders, the Required 5 1/4 Noteholders and the Required 6 1/4 Noteholders. - -------------------------------------------------------------------------------- 6 - -------------------------------------------------------------------------------- Certain Conditions. Conditions to the agreement of the Required Lenders, the Required 5 1/4 Noteholders and the Required 6 1/4 Noteholders to the Restructuring, the Chapter 11 Plan and the Effective Date will include, without limitation, the following: (i) definitive documentation in form and substance satisfactory to the Administrative Agent, Required Lenders, the Required 5 1/4 Noteholders and the Required 6 1/4 Noteholders, which shall include the new indenture governing the Senior Discount Notes, the new agreement governing the Lender Warrants (as defined below), the plan for issuing options to the management of Reorganized DDi, the amended and restated certificate of incorporation of Reorganized DDi, the amended and restated bylaws of Reorganized DDi and the amended and restated articles of association of DDi Europe (including the terms of the Preferred Stock (as defined below) of DDi Europe to be issued to the Subordinated Noteholders); (ii) the Restructuring Loan Documents shall be consistent in all respects with the Restructuring Terms and in form and substance satisfactory to the Consenting Lenders; (iii) arrangements with respect to the treatment of any other claims not specifically addressed in this Summary of Terms and Conditions satisfactory to the Administrative Agent, Required Lenders, the Required 5 1/4 Noteholders and the Required 6 1/4 Noteholders; (iv) satisfaction of the Administrative Agent, Required Lenders, the Required 5 1/4 Noteholders and the Required 6 1/4 Noteholders with the form and substance of the Disclosure Statement and the Confirmation Order and with any proposed changes thereto, and to the Chapter 11 Plan attached hereto, to be accepted by the Required Lenders in writing; provided, however, that, the Administrative Agent may approve any change that does not affect the treatment of the Lenders in the judgment of the Administrative Agent; (v) approval of the Chapter 11 Plan by the Required 5 1/4 Noteholders and the Required 6 1/4 Noteholders in numbers and amount necessary for class acceptance of the Chapter 11 Plan under Section 1126(c) of the Bankruptcy Code; (vi) satisfaction of the Required Lenders, the Required 5 1/4 Noteholders and the Required 6 1/4 Noteholders with the form and substance of the Global Releases and the Plan Injunction; (vii) satisfaction of the Administrative Agent, the Required Lenders, the Required 5 l/4 Noteholders and the Required 6 1/4 Noteholders with any management retention plan, management option plan, severance plan, senior management employment contracts or post-restructuring senior management employment arrangements, except upon terms and conditions previously agreed to by the Required Lenders in writing; provided that no modifications shall be made to the foregoing without the prior written consent of the Required Lenders; (viii) the Effective Date of the Chapter 11 Plan shall have occurred on January 8, 2004 and substantial consummation of the Chapter 11 Plan shall occur on or before January 30, 2004; (ix) the granting on the Effective Date of a perfected first priority security interest (subject to certain carve-outs which shall be approved by the Administrative Agent and the Required Lenders in writing) in all personal, mixed and real property of the reorganized Debtors and their non-debtor subsidiaries (other than DDi Europe and its European subsidiaries) to secure the Restructuring Loan Documents and pledges of 100% of the common stock of DDi Intermediate, 100% of the common stock of DDi Capital and 100% of the common stock of each of Reorganized DDi's direct and indirect subsidiaries (other than DDi - -------------------------------------------------------------------------------- 7 - -------------------------------------------------------------------------------- Europe and its European subsidiaries) not previously pledged to the Lenders; (x) there being no material adverse effect on (a) the Restructuring, (b) the business, operations, property or condition (financial or otherwise) of Details and its subsidiaries taken as a whole or (c) the validity or enforceability of this Summary of Terms and Conditions, the PSA, the RSA or any of the Pre-Restructuring Loan Documents, the 5 1/4 Indenture and the 6 1/4 Indenture, or the respective rights or remedies of the Administrative Agent, the Lenders, the 5 1/4 Noteholders and the 6 1/4 Noteholders, hereunder or thereunder; (xi) Bruce McMaster continuing to serve as Chief Executive Officer of DDi, DDi Intermediate, DDi Capital, Details, DDISV and their respective subsidiaries and affiliates (excluding DDi Europe and its European subsidiaries) through the Effective Date, (xii) satisfaction of all conditions to the effectiveness of the RSA and PSA, (xiii) no termination event shall have occurred under the Funding Mechanism (as defined below) and (xiv) satisfaction of the Administrative Agent, the Required Lenders, the Required 5 1/4 Noteholders and the Required 6 1/4 Noteholders with any projected financial statements submitted by the Debtors in connection with confirmation of the Chapter 11 Plan. - -------------------------------------------------------------------------------- Consent and The RSA shall provide that, by execution thereof, Modifications To each Consenting Lender consents and authorizes Restructuring. JPMorgan Chase Bank, in its capacity as Administrative Agent under the Credit Agreement, to enter into and execute, on behalf of such Consenting Lender, the Restructuring Loan Documents. The RSA shall further provide that each Consenting Lender agrees that modifications to the terms of the Restructuring may be approved by the Required Lenders except that the following changes shall require the consent of 100% of the Lenders: (1) any extension of scheduled date of any amortization payment; (2) reduction of principal; (3) extension of final maturity date of any loan; (4) reduction in stated rate of interest or fees or any extension of the payment thereof; (5) changes to voting percentage requirements; (6) release or modification of collateral or guarantees, except as otherwise provided in the Restructuring Loan Documents; and (7) any change in the Budget and Funding Mechanism not contemplated by the terms thereof. - -------------------------------------------------------------------------------- Governing Law and Forum. This Summary of Terms and Conditions shall be governed by, and construed in accordance with, the laws of the State of New York. - -------------------------------------------------------------------------------- SCHEDULE A Chapter 11 Plan SCHEDULE B Terms and Conditions for the Restructuring of the Pre-Restructuring Bank Indebtedness ---------- RESTRUCTURING CREDIT FACILITIES Summary of Terms and Conditions ---------- PARTIES Borrower: Dynamic Details, Incorporated and Dynamic Details, Incorporated Silicon Valley (the "Borrower"). Guarantors: DDi and each intermediate domestic holding company and each domestic direct and indirect subsidiary of the Borrower (the "Guarantors"; the Borrower and the Guarantors, collectively, the "Loan Parties"). Administrative JPMorgan Chase Bank ("JPMorgan Chase Bank" and, in such Agent: capacity, the "Administrative Agent"). Lenders: The Lenders under the existing Credit Agreement. TYPES AND AMOUNTS OF CREDIT FACILITIES Term and Revolving The Pre-Restructuring Bank Indebtedness will be Facilities: restructured and exchanged as follows into two tranches: (i) Tranche A Revolving and Term Loan Facility in an aggregate amount of $15 million (including the $1.2 million in undrawn face amount of outstanding letters of credit, plus accrued and unpaid interest and fees under the Pre-Restructuring Loan Documents, the "Tranche A Indebtedness"); and (ii) Tranche B Term Loan Facility in an aggregate amount of $57.9 million (plus accrued and unpaid interest and fees under the Pre-Restructuring Loan Documents, the "Tranche B Indebtedness" and together with the Tranche A Indebtedness, the "Indebtedness") Type: Tranche A Revolving Tranche A Revolving and Term Loan Facility: Tranche A will and Term Loan initially be a revolving credit facility through June 30, Facility 2005 (the "Tranche A Revolving Facility" and the loans thereunder, the "Tranche A Revolving Loans"). The commitments under the Tranche A Revolving Facility in an aggregate principal amount of $15 million shall be available on a revolving basis during the period commencing on the Effective Date and ending on June 30, 2005 (the "Revolving Termination Date"). As of the Effective Date, the Tranche A 2 Revolving Facility will be fully funded with $13.8 million in outstanding loans and $1.2 million in face amount of outstanding letters of credit. Availability under the Tranche A Revolving Facility shall at any time be equal to the sum of (i) 100% of the principal amount of Tranche A Revolving Loans optionally prepaid plus (ii) 100% of the Net Cash Proceeds (to be defined in the Restructuring Loan Documents in a manner satisfactory to the Administrative Agent and the Required Lenders) of the first $1.25 million in the aggregate of Net Cash Proceeds from the sales of assets, including, but not limited to, any sales of real or personal property currently located at the facilities in Sterling, Virginia and Garland, Texas, applied to prepay Tranche A Revolving Loans, in each case, to the extent that such prepayments do not constitute permanent commitment reductions. On June 30, 2005, any principal amount of Tranche A Revolving Loans outstanding under the Revolving Credit Facility shall be converted to Tranche A Term Loans (the "Tranche A Term Loans")(the facility, the "Tranche A Term Loan Facility" and together with the Tranche A Revolving Facility, the "Tranche A Revolving and Term Loan Facility"). Letters of Credit A portion of the Tranche A Revolving Facility not in excess of $5.0 million shall be available for the issuance of letters of credit (the "Tranche A Letters of Credit") by JPMorgan Chase Bank (in such capacity, the "Issuing Lender"). No Letter of Credit shall have an expiration date after the earlier of (a) one year after the date of issuance and (b) five business days prior to the Revolving Termination Date, provided that any Tranche A Letter of Credit with a one-year tenor may provide for the renewal thereof for additional one-year periods (which shall in no event extend beyond the date referred to in clause (b) above). Drawings under any Tranche A Letter of Credit shall be reimbursed by the Borrower (whether with its own funds or with the proceeds of Tranche A Revolving Loans) on the same business day. To the extent that the Borrower does not so reimburse the Issuing Lender, the Lenders under the Tranche A Revolving Facility shall be irrevocably and unconditionally obligated to reimburse the Issuing Lender on a pro rata basis. Tranche B Term Loan Facility Tranche B Term Loan Facility: Tranche B to be a term loan facility (the "Tranche B Term Loan Facility" and the loans thereunder, the "Tranche B Term Loans"; the Tranche B Term Loan Facility together with the Tranche A Revolving and Term Loan Facility, the "Restructuring Credit Facilities") in an aggregate principal amount equal to (i) $57.9 million plus (ii) any accrued and unpaid interest under the Pre-Restructuring Loan Documents. Maturity: Tranche A Term and April 15, 2008 (the "Tranche A Maturity Date") Revolving Loans Tranche B Term Loans April 15, 2008 (the "Tranche B Maturity Date") 3 Amortization: The Tranche A Term Loans and the Tranche B Term Loans shall be repayable in quarterly installments during the years and in the amounts set forth below, on a pro rata basis, with the first payment on the Tranche A Term Loans due June 30, 2005 and on the Tranche B Term Loans due January 30, 2003: Tranche A Term Loans:
-------------------------------------------------------------- TRANCHE A -------------------------------------------------------------- YEAR Ql Q2 Q3 Q4 -------------------------------------------------------------- 2003 $ -- $ -- $ -- $ -- -------------------------------------------------------------- 2004 $ -- $ -- $ -- $ -- -------------------------------------------------------------- 2005 $ -- $ 514,403.29 $514,403.29 $514,403.29 -------------------------------------------------------------- 2006 $514,403.29 $ 514,403.29 $514,403.29 $514,403.29 -------------------------------------------------------------- 2007 $514,403.29 $ 514,403.29 $514,403.29 $514,403.29 -------------------------------------------------------------- 2008 $514,403.29 $8,827,160.52 --------------------------------------------------------------
Tranche B Term Loans:
--------------------------------------------------------------------- TRANCHE B --------------------------------------------------------------------- YEAR Ql Q2 Q3 Q4 --------------------------------------------------------------------- 2003 $ -- $ -- $ -- $ -- --------------------------------------------------------------------- 2004 $ 25,000 $ 25,000 $ 25,000 $ 25,000 --------------------------------------------------------------------- 2005 $ 25,000 $ 1,985,596.71 $1,985,596.71 $1,985,596.71 --------------------------------------------------------------------- 2006 $1,985,596.71 $ 1,985,596.71 $1,985,596.71 $1,985,596.71 --------------------------------------------------------------------- 2007 $1,985,596.71 $ 1,985,596.71 $1,985,596.71 $1,985,596.71 --------------------------------------------------------------------- 2008 $1,985,596.71 $33,940,755.65 ---------------------------------------------------------------------
4 True-Up: The Restructuring Credit Facilities will contain a true-up mechanism which shall provide that, if, on the Revolver Termination Date or on the date (the "SED Date") of the occurrence of a Significant Event of Default (to be defined in the Restructuring Loan Documents), as applicable, (i) the ratio of (x) the Tranche A Commitments outstanding on the Revolver Termination Date or on the SED Date, as applicable, to (y) the aggregate Commitments outstanding on the Revolver Termination Date or on the SED Date, as applicable, is less than (ii) the ratio of the (x) Tranche A Commitments outstanding on the Effective Date to (y) the aggregate Commitments outstanding on the Effective Date (the "True-Up Trigger"), then, pursuant to the participations required in the next succeeding paragraph, the Tranche B Lenders shall be entitled to an additional amount (in the aggregate, the "True-Up Amount"), which is equal to (x)(i) the sum of the Commitments outstanding on the Revolver Termination Date or on the SED Date, as applicable, multiplied by the Tranche A Commitments outstanding on the Effective Date less (ii) the sum of the Commitments outstanding on the Effective Date multiplied by the Tranche A Commitments outstanding on the Revolver Termination Date, or on the SED Date, as applicable, divided by (y) the sum of the Commitments outstanding on the Effective Date. Restated: If: A//RT/SED Date Total// * A//Effective Date Total// ---------------------- ------------------------- (A //RT/SED Date (A//Effective Date Total// Total// + B //RT/SED + B//Effective Date Total//) Date Total//) then: B //Aggregate True Up Amount// = {(A //RT/SED Date Total// + B//RT/SED Date Total//) (A //Effective Date Total//) - (A//Effective Date Total// + B//Effective Date Total//)(A//RT/SEC Date Total//)} / (A//Effective Date Total// + B//Effective Date Total//) In the event a True-Up Trigger exists on the Revolver Termination Date, or, if earlier, on the SED Date, then each Tranche A Lender shall purchase in cash from the Tranche B Lenders, participations in Tranche B Term Loans in an amount (the "Participating Share") equal to (x)(i) the aggregate Commitments outstanding on the Revolver Termination Date or on the SED Date, as applicable, multiplied by such Tranche A Lender's Tranche A Commitments outstanding on the Effective Date less (ii) the aggregate Commitments outstanding on the Effective Date multiplied by such Tranche A Lender's Tranche A Commitments outstanding on the Revolver Termination Date or on the SED Date, as applicable, divided by (y) the sum of the Commitments outstanding on the Effective Date. Restated: B //participation amount for each Tranche A Lender// = {(A //RT/SEC Date Total// + B//RT/SEC Date Total//)(A //Tranche A Lender on Effective Date//) - (A//Effective Date Total// + B//Effective Date Total//)(A//Tranche A Lender on RT/SEC Date//)} /(A//Effective Date Total// + B//Effective// *denotes "less than" 5 //Date Total//) The Lenders acknowledge and agree that the aggregate of the Participating Shares shall equal the True-Up Amount. It is not intended that this True-Up Mechanism create any additional cost, liability or exposure to any Loan Party. CERTAIN PAYMENT PROVISIONS Expenses, Fees and As set forth on Annex I to this Schedule B. Interest Rates: Optional Prepayments Loans may be prepaid and commitments may be and Commitment Reductions: reduced by the Borrower in whole or in part at par plus accrued interest and LIBOR breakage costs, if any, at any time at the Borrower's option. If prior to June 30, 2005, the Borrower elects to create a permanent reduction of commitments, each such reduction of commitments shall be made ratably among the Lenders in accordance with their respective commitments. If prior to June 30, 2005, the Borrower elects to make optional prepayments under the Tranche A Revolving Facility that do not constitute permanent reductions of commitment thereunder, then the Borrower may elect to prepay the Tranche A Revolving Loans only. After June 30, 2005, Term Loans are prepayable in whole or in part at par, plus accrued interest and LIBOR breakage costs, if any, at any time at the Borrower's option, on a pro rata basis. Any prepayment of Tranche A Term Loans and Tranche B Term Loans shall be applied to the installments thereof in inverse order of maturity and may not be reborrowed. Mandatory Prepayments and The following amounts shall be applied to prepay Commitment Reductions: the Loans: (i) 100 % of the Net Cash Proceeds of any sale or other disposition (including as a result of casualty or condemnation; provided, however, that, in the case of casualty, reinvestment of up to $1,000,000 per fiscal year pursuant to a reinvestment notice shall be permitted subject to certain conditions) by Reorganized DDi, the Borrower, any of its subsidiaries (other than DDi Europe and its European subsidiaries) or any of the other Loan Parties of any assets (except for the sale of inventory in the ordinary course of business and certain other dispositions to be agreed on consistent with the Pre-Restructuring Loan Documents); provided, however, that 100% of the Net Cash Proceeds of the first $1.25 million in the aggregate amount of Net Cash Proceeds from the sales of assets, which shall include, but are not limited to, any sale of real or personal property located at the facilities in Garland, Texas and Sterling, Virginia, shall be applied to prepay Tranche A Revolving Loans only to create availability under the Tranche A Revolving Facility. (ii) Excess Cash (to be defined in the Restructuring Loan Documents in a manner mutually satisfactory to the Administrative Agent, the Required Lenders and the Debtors) on the balance sheet in excess of $15 million for 6 each fiscal year of the Borrower (commencing with the 2004 fiscal year) to be applied as follows: (1) on July 15, 2005, 100% of Excess Cash for the 2004 fiscal year (measured as of December 31, 2004) shall be applied to or prepay Tranche A Term Loans and Tranche B Loans, on a pro rata basis and (2) after July 15, 2005, for each fiscal year, commencing with the 2005 fiscal year, 100% of Excess Cash (measured as of December 31 for each fiscal year) shall be applied on March 31 of the subsequent fiscal year to prepay Tranche A Term Loans and Tranche B Term Loans on a pro rata basis (it being understood that Borrower may, at its option, use any of its cash to prepay in whole or in part the Tranche A Term Loans on or prior to July 15, 2005 without making a pro rata payment on the Tranche B Term Loans, thereby creating availability under the Tranche A Revolving Facility). (iii) 100% of the Net Cash Proceeds of any sale or issuance of equity (excluding the first $3 million in the aggregate of Net Cash Proceeds of issuances of equity of Reorganized DDi which any Loan Party may use for general corporate purposes) and 100% of the Net Cash Proceeds of any incurrence of indebtedness after the Effective Date by Reorganized DDi, the Borrower or any of their subsidiaries (excluding DDi Europe and its European subsidiaries) or any of the other Loan Parties (subject to customary exceptions, including purchase money debt and equipment financing debt). Except as set forth in clauses (i) and (ii) above, each such prepayment of the Term Loans shall be applied to the Tranche A Term Loans and the Tranche B Term Loans ratably and to the installments thereof in inverse order of maturity and may not be reborrowed. LENDER Warrants, representing 10.0% of the common stock WARRANTS (the "Common Stock") of Reorganized DDi on a fully diluted basis on the Effective Date (the "Lender Warrants"), will be issued to the Lenders ratably in accordance with their respective commitments (as of the Effective Date) and held in an escrow account, on terms reasonably acceptable to the Required Lenders. The calculation of "Common Stock of Reorganized DDi on a fully diluted basis on the Effective Date" shall give effect to the exercise of such Lender Warrants, all other outstanding warrants and the exercise, conversion or exchange, as applicable, of all other outstanding securities of Reorganized DDi, including but not limited to issuances to old equity, the Subordinated Noteholders, the Senior Discount Noteholders (if any), all share grants and Tranche A option grants to management made on the Effective Date pursuant to the Management Equity Incentive Plan (it being understood and agreed that anti-dilution adjustments shall thereafter be made in respect of any shares or options granted after the Effective Date pursuant to Tranche A and Tranche B of the Management Equity Incentive Plan). (See Anti-Dilution Adjustments below). The Lender Warrants will have an exercise price initially equal to $.01 per share and shall be subject to customary anti-dilution adjustments. Each Lender Warrant will be exercisable for the period commencing on the first business day after the twenty-four (24) month anniversary (the "Second Anniversary Date") of the Effective Date through and including July 31, 2008. The Lender Warrants and the underlying shares of common stock will 7 have registration rights, pursuant to a registration rights agreement, customary for transactions of this type and as set forth below (as described below, the "Registration Rights Agreement"). The number of Lender Warrants that may be exercised shall be determined based on the aggregate amount of the commitments under the Restructuring Credit Facilities outstanding on the Second Anniversary Date as follows: (i) If on the Second Anniversary Date, the commitments (and accrued and unpaid interest with respect thereto) have been permanently reduced and terminated (and are not subject to reborrowing) by at least fifty percent (50%) of the aggregate amount of such commitments outstanding on the Effective Date, then: (a) Lender Warrants issued to and held in escrow for the Lenders representing 50% of the original issuance of Lender Warrants (after giving effect to anti-dilution adjustments) shall be returned to Reorganized DDi for cancellation and all remaining Lender Warrants shall be released from the escrow account and delivered to the Lenders; (b) all Success Fees (as defined below) accrued and unpaid as of the Second Anniversary Date shall be immediately due and payable in cash; and (c) the Success Fees shall be converted to a cash pay interest obligation. (ii) If on the Second Anniversary Date, all outstanding loans and other extensions of credit under the commitments, plus all accrued and unpaid interest and accrued and unpaid Success Fees, have been repaid in full (and are not subject to reborrowing), and such commitments have been terminated, then all Lender Warrants issued to and held in escrow for the Lenders shall be returned to DDi for cancellation. (iii) If on the Second Anniversary Date, more than 50% of the commitments outstanding on the Effective Date remains outstanding, all Lender Warrants shall be released from the escrow account and delivered to the Lenders on such date. Net Exercise: The Lender Warrants shall be exercisable on a net basis, permitting the surrender of Lender Warrants with no cash exercise price and the receipt of the number of shares of Common Stock equal to that otherwise deliverable upon exercise less the number of shares of Common Stock having a current market price at the time equal to the aggregate exercise price that would otherwise have been paid. Anti-Dilution Adjustments: Adjustments to exercise price and shares deliverable upon exercise applicable to all issuances and potentially dilutive events, including without limitation: 8 (1) stock dividends and distributions, subdivisions, combinations and reclassifications; (2) cash dividends and other distributions (if same distributions are not made to holders of Lender Warrants); (3) issuances of additional shares of Common Stock, or any securities convertible into or exchangeable for Common Stock, if issued or sold for less than Fair Market Value (as defined in Schedule F below) at time of issuance; provided, that, no antidilution adjustment will be made in respect of an issuance or series of issuances of additional shares of Common Stock or any securities convertible into or exchangeable for Common Stock withan aggregate value of up to $3 million (based upon an implied total enterprise value of $110 million); and provided, further that, should the Required Lenders not approve any determination of Fair Market Value, any dispute with regard to such valuation determination shall be resolved by a neutral valuation firm of national standing approved by the Required Lenders; (4) Common Stock issued upon the exercise of Tranche B Options under the Management Equity Incentive Plan. (5) distributions of any rights to acquire shares of Common Stock; (6) tender offers or exchange offers by DDi or any subsidiary or affiliate (excluding DDi Europe and its European subsidiaries); and (7) any other distributions, offers and similar dilutive events. Subject to the provisions in the "Release Upon Change of Control", in the case of a merger or consolidation in which Common Stock is changed or exchanged, all Lender Warrants become exercisable for consideration that a holder of Common Stock would have received had such holder exercised immediately prior to the consummation of the transactions. Representations and Standard (for issuers and purchasers) Warranties: Transfer of Lender Lender Warrants to be transferable in compliance Warrants: with applicable securities laws, subject to the transfer and escrow restrictions specified herein. Registration Rights In addition to any registration rights that the Agreement: Subordinated Noteholders have as set forth in Schedule C hereto, which rights shall also be afforded to the Lenders in a Registration Rights Agreement, the holders of Lender Warrants and the Common Stock underlying the Lender Warrants shall receive, pursuant to such Registration Rights Agreement, indemnification from Reorganized DDi, one demand registration, unlimited as to the amount of shares to be registered, at any time within the eighteen (18) month period following the term of the escrow and an unlimited number of exercises of piggyback rights prior to July 31, 2008. Any registration statement for the Common Stock pursuant to the Registration Rights Agreement shall be in the form of a shelf registration and shall be made available commencing no later 9 than the Second Anniversary Date and shall remain available until the earlier of (x) July 31, 2008 and (y) the date on which all Lender Warrants have been exercised. Transferability: Prior to the release of the Lender Warrants from escrow, no Lender shall have the right to sell, transfer or assign the right to receive Lender Warrants other than in connection with an assignment of its loans. After the release of the Lender Warrants from escrow, each Lender shall have the absolute right, subject to applicable laws, to sell, transfer or assign the Lender Warrants independent of any assignment of its loans. Reorganized DDi's transfer agent shall be responsible for keeping a record of all issuances of Lender Warrants to the Lenders. Release Upon Change If the outstanding Indebtedness (including accrued of Control: and unpaid interest and accrued and unpaid Success Fees with respect thereto) of the Lenders has not been repaid in full and the commitments have not been terminated and a Change of Control (as defined in Schedule F) event occurs and the transaction is a cash-for-stock transaction, all Lender Warrants shall be released from the escrow account, delivered to the Lenders and be deemed immediately exercisable. If a Change of Control event occurs and the transaction is a stock-for-stock transaction, the Lender Warrants shall be released from the escrow account and shall be replaced by or converted into Lender Warrants with substantially similar terms for the common stock of the merged enterprise. If a Change of Control event occurs and the transaction is a combination of stock and cash transaction, then, on a pro rata basis (based on amount stock and cash portions of consideration), Lender Warrants shall (1) with respect to the cash portion of the transaction, be released from the escrow account, delivered to the Lenders and be deemed immediately exercisable; and (2) with respect to the stock portion of the transaction, be released from the escrow account and be replaced by or converted into Lender Warrants with substantially similar terms for the common stock of the merged enterprise. ADDITIONAL COLLATERAL Additional Guaranties In addition to all existing collateral and and Pledges: guarantees of the Lenders, the obligations of each Borrower in respect of the Restructuring Credit Facilities shall be further secured by: 1) a guarantee from DDi and DDi Intermediate; and 2) a pledge of 100% of the common stock of DDi Intermediate, 100% of the common stock of DDi Capital and 100% of the common stock of each of Reorganized DDi's direct and indirect subsidiaries (other than DDi Europe and its European subsidiaries) not previously pledged to the Lenders. Treatment of Additional The guarantees and pledges provided to the Lenders will not be structurally senior or pari passu with respect to the direct claims against DDi Europe of 10 Guarantees and Pledges: the Subordinated Noteholders under the New Preferred Stock (as defined in Schedule D below). CERTAIN CONDITIONS Initial Conditions: In addition to the conditions set forth in the Summary of Terms and Conditions, the availability of the Restructuring Credit Facilities shall be conditioned upon satisfaction of, among other things, the following: (i) subject to the RSA, each Loan Party (or the Administrative Agent on its behalf) shall have executed and delivered the Restructuring Loan Documents which shall be in form and substance satisfactory to the Administrative Agent and the Required Lenders; (ii) the Lenders, the Administrative Agent and their respective professionals shall have received all fees required to be paid and all expenses for which invoices have been presented on or before the Effective Date; (iii) all governmental and third party approvals necessary or, in the reasonable discretion of the Administrative Agent, advisable in connection with the Restructuring contemplated hereby and the continuing operations of the Loan Parties and their respective affiliates and subsidiaries (excluding DDi Europe and its European subsidiaries) shall have been obtained and be in full force and effect, and all applicable waiting periods shall have expired without any action being taken or threatened by any competent authority that would restrain, prevent or otherwise impose adverse conditions on the Restructuring; and FURTHER CONDITIONS Other customary conditions as provided in the Restructuring Loan Documents. Terminated Hedge Agreement: Amounts owing to JPMorgan Chase Bank under the Hedge Agreement by and between JPMorgan Chase Bank and Details, terminated as of April 25, 2003 (the "Terminated Hedge Agreement") shall be included as Indebtedness. Budget and Funding Debtors and Lenders shall enter into an agreement Mechanism For Chapter 11 in form and substance satisfactory to the Cases: Administrative Agent, the Ad Hoc Committee and the Required Lenders for the funding of the Chapter 11 Cases (the "Budget and Funding Mechanism"). Reserved Cash Account On or before August 1, 2003, the Borrower shall cause to be established a cash account (the "Reserved Cash Account") at JPMorgan Chase Bank and shall fund the Reserved Cash Account with an initial deposit of $7,500,000, 11 which account shall be subject to a control agreement (the "Reserved Cash Account Control Agreement"); provided, that, at all times the balance in the Reserved Cash Account shall be at least $7,500,000; provided, further, that, the Required Lenders may issue a Notice of Sole Control (to be defined in the Reserved Cash Account Control Agreement) at any time in their sole and absolute discretion, but shall not be permitted to seize, set-off or otherwise direct the use of the funds in the Reserved Cash Account until after a Termination Event (as defined in the RSA) occurs under the RSA or, on or after the Effective Date, a default or Event of Default (as defined in the Restructuring Loan Documents) occurs under the Restructuring Loan Documents; provided, however, that until such time as a Notice of Sole Control has been issued by the Administrative Agent, any and all interest that accrues on such initial deposit shall be available to the Borrower. OTHER TERMS AND CONDITIONS Substantially similar to those set forth in the Credit Agreement CERTAIN DOCUMENTATION The Restructuring Loan Documents shall contain MATTERS representations, warranties, covenants and events of default (including all of those contained in the Credit Agreement except to the extent modified herein) applicable to the reorganized Debtors, the Loan Parties and all of their respective subsidiaries (excluding DDi Europe and its European subsidiaries), including, without limitation, those described below and others to be mutually agreed upon (subject, in each case, to exceptions and baskets to be mutually agreed upon), all of which shall be in form and substance satisfactory to the Required Lenders. Representations and The Restructuring Loan Documents will include Warranties: representations and warranties customary for a credit facility of this nature (including all of those contained in the Credit Agreement except to the extent modified herein) and including, without limitation, representations and warranties as to financial statements (including pro forma financial statements); absence of undisclosed liabilities; no material adverse change; corporate existence; compliance with law; corporate power and authority; enforceability of Restructuring Loan Documents; no conflict with law or contractual obligations; no material litigation; no default; location and ownership of material assets (including property); liens; intellectual property; no burdensome restrictions; taxes; Federal Reserve regulations; ERISA; Investment Company Act; subsidiaries; current subsidiary organization and structure; environmental matters; solvency; labor matters; accuracy of disclosure; status of subsidiary guarantors and creation and perfection of security interests. Affirmative Covenants: The Restructuring Loan Documents will include, without limitation, the following affirmative covenants: delivery of financial statements, reports, financial models, accountants' letters, projections, officers' certificates and other information and reports reasonably requested by the Administrative Agent or the Lenders; payment of other obligations; continuation of business and maintenance of existence and material rights and privileges; compliance with laws and material contractual obligations; maintenance of property and insurance; maintenance of books and records; maintenance of independent 12 corporate identity; right of the Lenders to inspect property and books and records; notices of defaults, litigation and other material events; compliance with environmental laws; further assurances (including, without limitation, with respect to security interests in after-acquired property, subject to existing constraints which do not impair the ability to grant security interests in material collateral and existing permitted liens, and the inclusion of any new affiliates as guarantors and grantors under the collateral documents); and others to be mutually agreed upon. Financial Covenants: The Restructuring Loan Documents will include, without limitation, the following financial covenants, which are set forth more fully on Annex II to this Schedule B: (a) minimum EBITDA, (b) three-month minimum rolling revenue test, (c) minimum liquidity test, which shall provide, inter alia, that, until the termination of all commitments and Letters of Credit and thereafter until payment in full of the Indebtedness of the Borrower under any of the Restructuring Loan Documents, each Borrower agrees that, unless the Required Lenders shall otherwise consent in writing, it shall not, have less than $7,500,000 in the aggregate at all times in the Reserved Cash Account commencing on August 1, 2003 up to, and including, April 15, 2008 (the "Liquidity Financial Covenant"). Commencing on the Wednesday following August 1, 2003 and on every Wednesday thereafter up to, and including April 9, 2008, the Borrower shall prepare and deliver to the Administrative Agent (which may be further transmitted to the then advisors and other Lenders), for the week ending as of the preceding Friday, a report of the daily Minimum Liquidity for that week. (d) maximum leverage ratio, (e) minimum fixed charge coverage ratio, and (f) others to be discussed in connection with preparation of Restructuring Loan Documents. The Restructuring Loan Documents will also include a covenant providing that capital expenditures may not exceed during any quarter an amount to be agreed upon with an ability to carry forward any amount that is not used for capital expenditures in any given quarter to the next two succeeding quarters. Negative Covenants: The Restructuring Loan Documents will include, without limitation, the following negative covenants: limitations on indebtedness (including guarantee obligations), liens, mergers, consolidations, liquidations and dissolutions, sales and transfers of assets, leases, dividends and other restricted payments, capital expenditures, investments, loans and advances, payments and modifications of subordinated and other debt instruments, transactions with affiliates, sale and leasebacks, accounting changes, negative 13 pledge clauses and clauses restricting subsidiary distributions, interest rate swaps, currency swaps, and other debt equivalents, changes in lines of business, and others to be mutually agreed upon. Events of Default: Nonpayment of principal when due; nonpayment of interest, fees or other amounts after a grace period to be agreed upon; material inaccuracy of representations and warranties; violation of covenants (subject, in the case of certain affirmative covenants, to a grace period to be agreed upon; provided, that, the Liquidity Financial Covenant shall be subject to a fifteen (15) day grace period); cross-default; bankruptcy events; certain ERISA events; material judgments; actual or asserted invalidity of any guarantee or security document or security interest; a change of control (the definition of which is to be agreed); breach of any term or condition of the Non-Solicitation Agreement (as defined below); and others to be mutually agreed upon. Non-Solicitation On or before the Effective Date of the Chapter 11 Agreement: Plan, Bruce McMaster shall execute a non-solicitation agreement in form and substance acceptable to the Required Lenders (the "Non-Solicitation Agreement"). Canadian Tax Restructuring: Restructuring Loan Documents will permit for tax restructuring of Dynamic Details Canada, Inc. ("DDIC") in form and substance acceptable to the Required Lenders Indemnification: The Debtors and the reorganized Debtors shall indemnify, pay and hold harmless the Administrative Agent and the Lenders and each of their respective predecessors, affiliates, subsidiaries, successors and assigns, together with their past, present and future officers, directors, agents, attorneys, financial advisors, representatives, partners, joint venturers, affiliates and the successors and assigns of any and all of them against any loss, claim, damage, liability, cost or expense incurred in respect of the restructuring of the Pre-Restructuring Indebtedness contemplated hereby, the financing contemplated hereby or the use or the proposed use of proceeds thereof by the reorganized Debtors and their subsidiaries (subject to customary limitations), except to the extent they are found by a final non-appealable judgment of a court to arise from the gross negligence or willful misconduct of the indemnified party; provided, however, that the indemnification obligations with respect to the Lender Warrants shall be as provided in the Registration Rights Agreement. Governing Law and Forum: This Summary of Terms and Conditions and the Restructuring Loans Documents shall be governed by, and construed in accordance with, the laws of the State of New York. Counsel to the Simpson Thacher & Bartlett LLP. Administrative Agent: Documentation: To be drafted by Simpson Thacher & Bartlett LLP. Annex I to Schedule B Interest; Certain Fees; and Expenses Interest Rate Options: The Borrower may elect that the Loans comprising each borrowing bear interest at a rate per annum equal to: (a) the ABR plus the Applicable Margin; or (b) the Eurodollar Rate plus the Applicable Margin. As used herein: "ABR" means the highest of (i) the rate of interest publicly announced by JPMorgan Chase Bank as its prime rate in effect at its principal office in New York City (the "Prime Rate"), (ii) the secondary market rate for three-month certificates of deposit (adjusted for statutory reserve requirements) plus 1% and (iii) the federal funds effective rate from time to time plus 0.5%. "Applicable Margin" means: (a) with respect to the Tranche A Revolving Loans and the Tranche A Term Loans, (i) 350 bps, in the case of ABR Loans (as defined below) and (ii) 450 bps component in the case of Eurodollar Loans (as defined below), plus, in each case, a 462.5 bps success fee which shall accrue on a quarterly basis and be payable in cash (x) on and after the date that the Borrower achieves EBITDA of $50 million and (y) at the election of each Lender (which election shall be made on or prior to the execution of the Restructuring Loan Documents) (i) on the Maturity Date or (ii) on the Maturity Date, if and to the extent that on such date the fair market value of the Borrowers and their subsidiaries, which shall be determined by an independent valuation firm approved by the Administrative Agent, is greater than the outstanding amount of Obligations (other than the Success Fee) due under the Restructuring Loan Documents (the "Success Fee"). (b) with respect to the Tranche B Term Loans, (i) 350 bps in the case of ABR Loans and (ii) 450 bps in the case of Eurodollar Loans, plus, in each case, a 462.5 Success Fee. "Eurodollar Rate" means the rate (adjusted for statutory reserve requirements for eurocurrency liabilities) for eurodollar deposits for a period equal to one, two, three or six months (as selected by the Borrower) appearing on Page 3750 of the Telerate screen. 2 Interest Payment Dates: In the case of Loans bearing interest based upon the ABR ("ABR Loans"), monthly in arrears through the first full quarter after the Effective Date and then quarterly in arrears thereafter. In the case of Loans bearing interest based upon the Eurodollar Rate ("Eurodollar Loans"), on the last day of each relevant interest period and, in the case of any interest period longer than three months, on each successive date three months after the first day of such interest period. Commitment Fees: The Borrower shall pay a commitment fee calculated at the rate of 75 bps per annum on the average daily unused portion of the Tranche A Revolving Facility, payable quarterly in arrears. Letter of Credit Fees: The Borrower shall pay a fee on all outstanding Letters of Credit at a per annum rate equal to the Applicable Margin then in effect with respect to Eurodollar Loans that are Revolving Loans on the face amount of each such Letter of Credit. Such fee shall be shared ratably among the Lenders participating in the Revolving Facility and shall be payable quarterly in arrears. A fronting fee equal to 25 bps per annum on the face amount of each Letter of Credit shall be payable quarterly in arrears to the Issuing Lender for its own account. In addition, customary administrative, issuance, amendment, payment and negotiation charges shall be payable to the Issuing Lender for its own account. Lenders' Consent Fee On or before the effective date of the RSA, the Debtors shall pay a consent fee of 137.5 bps to the Lenders. Work Fee: The Debtors shall pay a work fee to the Administrative Agent (the "Work Fee") pursuant to a Work Fee Letter on the Effective Date. The Work Fee shall be payable as follows: (i) fifty percent (50%) payable on the effective date of the RSA; and (ii) fifty percent (50%) payable on the date that is six (6) months following the Effective Date of the Chapter 11 Plan. Default Rate: At any time when the Borrower is in default in the payment of any amount of principal due under the Restructuring Credit Facilities, all outstanding Loans shall bear interest at 2% above the rate otherwise applicable thereto. Overdue interest, fees and other amounts shall bear interest at 2% above the rate applicable to the relevant ABR Loans. Rate and Fee Basis: All per annum rates shall be calculated on the basis of a year of 360 days (or 365/366 days, in the case of ABR Loans the interest 3 rate payable on which is then based on the Prime Rate) for actual days elapsed. Interest, Fees and Expenses During the Chapter 11 Cases, the Debtors shall (i) During Chapter 11 Cases: continue to pay post-petition interest on the Pre-Restructuring Loans and all other fees (including but not limited to the annual administrative agency fee payable to the Administrative Agent) provided for under the Credit Agreement, and (ii) continue to pay any and all reasonable fees, costs and expenses of Simpson Thacher & Bartlett, counsel to the Administrative Agent and FTI Consulting, financial advisors to the Administrative Agent. Expenses: On and for all periods after the Effective Date, the Borrower shall: (a) pay all reasonable out-of-pocket expenses of the Administrative Agent associated with the Restructuring Credit Facilities and the preparation, execution, delivery and administration of the Restructuring Loan Documents and any amendment or waiver with respect thereto (including the reasonable fees, disbursements and other charges of counsel, in-house counsel and financial advisors, including in connection with consultation during ongoing administration), (b) pay all out-of-pocket expenses of the Administrative Agent and the Lenders (including the fees, disbursements and other charges of counsel, in-house counsel and financial advisors) in connection with the enforcement of, and preservation of rights under, the Restructuring Loan Documents, (c) pay the annual administrative agency fee payable to the Administrative Agent, and (d) replenish and maintain the retainers provided to Simpson Thacher & Bartlett and FTI Consulting in connection with the Loan Documents, in the amounts of $125,000 (the "STB Retainer") and $75,000 (the "FTI Retainer"), respectively. Annex II Schedule B ------------------- Principal Financial Covenants ----------------------------- FOR SETTLEMENT PURPOSES ONLY PURSUANT TO FRE 408 SCHEDULE C Term Sheet for the Common Equity REORGANIZED DDi (FOR COMMON EQUITY) Structure: No change to existing structure. Issuer: Reorganized DDi ("Reorganized DDi") Common Equity (issued to Subordinated Noteholders to receive 94% of the Noteholders): Common Stock on the Effective Date of the Chapter 11 Plan, subject to dilution for (i) all Common Stock issuable under the Management Equity Incentive Plan (annexed hereto as Schedule F) upon the exercise of management options thereunder and (ii) Common Stock issuable upon exercise of the Lender Warrants. Common Equity (issued to Holders of old common stock in DDi to old equity): receive 1.0% of the Common Stock of Reorganized DDi on the Effective Date of the Chapter 11 Plan, subject to dilution for (i) all Common Stock issuable under the Management Equity Incentive Plan upon the exercise of all management options thereunder and (ii) Common Stock issuable upon exercise of the Lender Warrants. Common Equity (issued to See Schedule B. Lenders): Common Equity (issued to See Schedule F. management): Common Equity (issued to None. See Schedule E. Senior Discount Noteholders): Board of Directors: Bylaws to provide that board of directors of Reorganized DDi (the "Board") shall consist of seven members. Immediately following the Effective Date of the Chapter 11 Plan, the Board shall consist of seven directors, comprised as follows: . CEO of Reorganized DDi . CEO of DDi Europe . Two Subordinated Noteholder designees (designated by Ad Hoc Committee prior to distribution of Chapter 11 Plan) which designees will be included in Chapter 11 Plan as sent to Subordinated Noteholders for approval . Three Subordinated Noteholder designees (selected by Ad Hoc Committee prior to distribution of Chapter 11 Plan) which designees will be included in Chapter 11 Plan as sent to Subordinated Noteholders for approval (designees will be selected from list to be developed in conjunction with Reorganized DDi, the Subordinated Noteholders and their 2 respective advisors) . Reorganized DDi will use commercially reasonable efforts to provide to the Ad Hoc Committee the names of at least 3 directors who meet the "independence" standards of the Securities and Exchange Commission and the Nasdaq National Market (whether or not Reorganized DDi or any of Reorganized DDi's securities are subject to such standards), prior to or immediately following the Effective Date of the Chapter 11 Plan. . Directors shall serve one-year terms. No staggered board terms. . After the Effective Date of the Plan, and not less than annually thereafter, prior to any election by the stockholders or appointments by the Board (if there are not remaining at the time of any such appointment by the Board, two members of the Board who have been previously recommended as nominees by the Preferred Stock Representatives (as defined below), two holders of Preferred Stock (who initially will be Providence Capital, LLC and Tablerock Fund Management, LLC (the "Preferred Stock Representatives")), together, shall make reasonable recommendations in good faith (the "Designation Right") to the Board (or more frequently in the event any such Preferred Stock Representative transfers any of its shares of Preferred Stock along with its Designation Right to an unaffiliated third party) with respect to two nominees, who shall be qualified and otherwise appropriate candidates for the Board in the event of an election by the stockholders and a number of nominees necessary to result in there being two acting members of the Board who have been recommended by such Preferred Stock Representatives in the event of an appointment by the Board. Such recommendation may be made by delivering notice thereof to the Company within sixty (60) days after the written request by the Board of names for consideration (or more frequently in the event such holder of Preferred Stock and any transferee thereof each certify that such holder of Preferred Stock has transferred its shares of Preferred Stock to such transferee). If at any time while the Preferred Stock remains outstanding those nominees recommended by such holders of the Preferred Stock are not appointed by the Board to the Board (if the appointments are determined by the Board) or nominated by the Board or management of the Company for election by the Company's stockholders to the Board, then as a remedy to the holders of the Preferred Stock, for breach of the Preferred Stock Right, the Preferred Stock shall bear a dividend rate equal to 17% effective retroactively to the date of issuance (until such time as two nominees recommended to the Board pursuant to the foregoing procedures are appointed or nominated, whereupon the dividend rate shall be decreased to 15% commencing on 3 the date of such complying appointments or nominations.) Notwithstanding the foregoing, if (x) any member of the Board who holds Preferred Stock (or who is a stockholder, director, member, partner, employee or otherwise an affiliate of a person or entity who holds Preferred Stock)(each, a "Preferred Stock Board Member") votes against an appointment or nominee to the Board recommended by such holders of Preferred Stock (the "Recommended Board Member") in accordance with the foregoing provisions, (y) such Recommended Board Member is not appointed or nominated to the Board because one or more Preferred Stock Board Members votes against such Recommended Board Member and (z) such Recommended Board Member would have been appointed or nominated to the Board had such Preferred Stock Board Member voted for such Recommended Board Member, then there shall be no increase in the dividend rate pursuant to the provisions of this section. Registration Rights: The Subordinated Noteholders will have registration rights for U.S. public offerings, the timing of which will be at the discretion of the Board of Directors. The Subordinated Noteholders will have the same registration rights provided to the Lenders in Schedule B. FOR SETTLEMENT PURPOSES ONLY PURSUANT TO FRE 408 SCHEDULE D Term Sheet for the Preferred Equity DDi Europe PREFERRED STOCK TERM SHEET Issuer of Preferred Stock: DDi Europe Equity Investment: shares of preferred stock of DDi Europe --------- (the "Preferred Stock") with a liquidation value of $ per share (plus accrued and unpaid ----- dividends thereon), for an aggregate liquidation preference of $16.5 million. The final governing documents will reflect a liquidation preference of British pounds, based on a conversion rate of the Bank of Scotland ("BOS") in effect on the fifth business day preceding the Effective Date of the Chapter 11 Plan. Dividends: 15% per annum, payable quarterly in arrears. Dividends will compound quarterly and accumulate to the extent not paid in cash. DDi Europe shall pay dividends in cash only (x) if not prohibited by existing financing arrangements or applicable law, and (y) if DDi Europe will have at least (pound)2.0 million in cash, as reflected upon its balance sheet prepared in accordance with U.K. GAAP, immediately following such dividend payment. Priority: Senior with respect to dividends and redemptions and upon liquidation to all other classes and series of DDi Europe's capital stock. Optional Redemption: None. Mandatory Redemption: The Preferred Stock shall be redeemed by DDi Europe upon the later of (i) January 31, 2009 or (ii) repayment in full of all obligations under the BOS credit facility, as amended from time to time (but not as to any extensions of the maturity date), to the extent permitted by law. Voting Rights: On the Effective Date, the Board of Directors of DDi Europe shall consist of seven (7) directors, four (4) of whom (the "Preferred Stock Appointed Directors") shall be elected by the holders of Preferred Stock, voting as a class. The Preferred Stock shall have no other voting rights except as otherwise required by applicable law. The initial term, commencing on the Effective Date, of the Preferred Stock Appointed Directors shall be two (2) years. For each subsequent board election when the Preferred Stock is still outstanding, the holders of the Preferred Stock will designate the following number of board seats (which shall provide for a one (1) year term) based on the trailing twelve (12) month EBITDA at the time of the election: 2 -------------------------------------- EBITDA < $15 million 4 -------------------------------------- $15 million < EBITDA < $25 million 3 -------------------------------------- $25 million < EBITDA < $35 million 2 -------------------------------------- EBITDA > $35 million 1 -------------------------------------- Preferred Stock Rights: The Preferred Stock will have certain covenant rights (all of which shall be further subject to any limitations in the BOS credit facility) including: (1) restrictions on payment of dividends or redemption of any shares (other than dividends or redemptions of Preferred Stock); (2) limitations on the incurrence of additional indebtedness, except indebtedness in the ordinary course of business (i.e. trade credit) and purchase money indebtedness (i.e. capital lease obligations) in the ordinary course of business; (3) restrictions on DDi Europe's ability to amend its articles of association or bylaws to the extent that such amendments directly or indirectly affect the rights of the Preferred Stock or its holders, including without limitation, any amendment which would directly or indirectly authorize shares or the issuance of shares or other securities convertible or exercisable into shares ranking as regards participation in the profits or the assets of DDi Europe ahead of or pari passu with the Preferred Stock; (4) restrictions on any asset disposition, whether for value or not, without the prior written consent of a majority of the holders of the Preferred Stock except for an asset disposition which is made in the ordinary course of business and which involves only the sale of property that is either: (i) inventory held for sale or (ii) equipment, fixtures, supplies or materials no longer required in the operation of the business of reorganized DDi or is obsolete unless the asset disposition is made solely in exchange for cash consideration and the net cash proceeds therefrom are used to pay cash dividends, in accordance with applicable law, to the holders of the Preferred Stock. Remedies: Remedy for certain breaches of the New Preferred Stock Rights described above (following reasonable cure period) shall be an increase in dividend rate to 17% (until remedied or cured, in which case the rate returns to 15%). Remedy for others shall be limited only by applicable law. Remedy for failure to redeem or purchase the Preferred Stock, whether or not permitted by law, in the event of a mandatory redemption or change of control based on the terms set forth below, shall be that the redemption (or repurchase or purchase) price, including all accrued and unpaid dividends, as well as all costs and expenses to collect the foregoing amounts shall become subordinated indebtedness of DDi Europe, subject to applicable law, payable on demand. Registration Rights: DDi Europe shall file, at DDi Europe's expense, a United States registration statement, which shall become effective on or prior to the first anniversary of issuance. In addition, at any time DDi Europe files a United States registration statement relating to equity, the holders of Preferred Stock shall be permitted the opportunity, on at least twenty 3 (20) days notice, to participate in such registration, subject to reasonable pro rata cutbacks based on advice of the lead underwriter participating in the subject transaction. DDi Europe may postpone for one hundred twenty (120) days the filing or effectiveness of a registration statement if the board of directors determines that such registration would reasonably be expected to have an adverse effect on any proposal or plan of DDi Europe to engage in any acquisition of assets (other than in the ordinary course), merger, consolidation, public issuance of stock or debt, tender offer or similar transaction. Put Rights: . Each holder of the Preferred Stock shall have the right to require DDi Europe or its successor in a change of control to purchase or repurchase all of such holder's investment in Preferred Stock at a price equal to 107% (during first year), 104% (during second year) and 101% (thereafter) of $16.5 million plus all accrued and unpaid dividends during a twenty (20) business day period following notice of the consummation of a change of control of DDi Europe. "Change of Control" occurs if (i) Reorganized DDi fails to control directly more than 50% of the voting stock of DDi Europe, (ii) all or substantially all of the assets of DDi Europe are sold to another person (other than reorganized DDi and/or its subsidiaries), or (iii) the merger or consolidation of DDi Europe with or into another person (other than Reorganized DDi and/or its subsidiaries) or the merger of another person (other than Reorganized DDi and/or its subsidiaries) with or into DDi Europe, or if the securities of DDi Europe that are outstanding immediately prior to such transaction and which represent 100% of the aggregate voting power of the voting stock of DDi Europe are changed into or exchanged for cash, securities or property, unless pursuant to such transaction such securities are changed into or exchanged for, in addition to any other consideration, securities of the surviving person or transferee that represent, immediately after such transaction, a majority of the aggregate voting power of the voting stock of the surviving person or transferee. FOR SETTLEMENT PURPOSES ONLY PURSUANT TO FRE 408 SCHEDULE E Preliminary Discount Notes Term Sheet - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Indebtedness: Approximately $16.5 million the ("SDN Indebtedness") - -------------------------------------------------------------------------------- New Interest Rate: 16% PIK to go cash pay at 14% pursuant to terms outlined below - -------------------------------------------------------------------------------- Maturity: 1/1/09 - -------------------------------------------------------------------------------- Modification of Payment PIK interest through maturity; cash pay at the Terms: election of the Issuer (and entities it owns on a consolidated basis), provided that interest must be paid in cash from and after the quarter in which the Issuer achieves LTM leverage equal or less than 2.5X. In addition, in any period prior to the Issuer (and entities it owns, on a consolidated basis) achieving LTM leverage equal or less than 2.5X, cash interest for the current period will be paid to Senior Discount Noteholders out of excess cash prior to any repayment of the Bank debt, with excess amortization payments to the Bank debt paid with any remaining excess cash. No partial PIK. Issue due and payable on sale of Company, Issuer or Subsidiary. Interest accrued/paid quarterly. - -------------------------------------------------------------------------------- Guarantee: Acceptable anti-layering protection. - -------------------------------------------------------------------------------- Warrants: Warrants of the Company will be issued to the holders of the Senior Discount Noteholders but held in escrow for 2.5% of the fully-diluted reorganized equity (the "SDN Warrants"). Nominal strike, December 2008 expiry, anti-dilution protection consistent with Lender Warrants (but in no event shall the SDN Warrants dilute the Lender Warrants), registration rights consistent with Lender Warrants, cashless exercise, and other rights level with Lender Warrants, exercisable commencing on the first business day after the Second Anniversary Date, provided, however: . if the Issuer elects to go to 100% cash pay permanently and irrevocably on or prior to the Second Anniversary Date then in such event all of the SDN Warrants shall be cancelled or . if the Issuer has satisfied all of the SDN Indebtedness to the holders of the Senior Discount Notes on or prior to the Second Anniversary Date, then in such event all claims to the SDN Warrants shall be cancelled. - -------------------------------------------------------------------------------- Covenants: Typical HY Covenants with exceptions for dividends to reorganized DDi to cover corporate expenses related to being a public company to be capped at an amount acceptable to Senior Discount Noteholders. In the event Company is no longer public, Senior Discount Noteholders to receive annual audited financial statements for the Company and summary quarterly unaudited financial statements for the Company. Senior Discount Noteholders to receive same financial reporting information as Bank Group (i.e., monthly reports, etc). - -------------------------------------------------------------------------------- Treatment of Lenders and Final treatment to be acceptable to Senior Discount Convertible Noteholders: Noteholders. - -------------------------------------------------------------------------------- Releases: Global Releases and Plan Injunction - -------------------------------------------------------------------------------- Fees: Company and/or Issuer to pay reasonable attorney fees of Senior Discount Noteholders as well as any fees to be incurred by indenture trustee of Senior Discount Notes. - -------------------------------------------------------------------------------- Other Terms & Conditions: Callable at par plus accrued subject to Bank Covenants; no partial calls permitted. FOR SETTLEMENT PURPOSES ONLY PURSUANT TO FRE 408 SCHEDULE F Term Sheet for Management Equity Term Sheet REORGANIZED DDi MANAGEMENT EQUITY TERM SHEET A. MANAGEMENT EQUITY Issuer of Management Equity: Reorganized DDi Percentage of Equity to 5% of the Common Stock on the Effective Date of Management: the Chapter 11 Plan, plus grants of options (as set forth below). The equity in the form of the Common Stock ("Restricted Common Stock") or options to acquire Common Stock ("Options") to be issued to management shall be forfeitable under certain circumstances as described below. B. MANAGEMENT EQUITY INCENTIVE PLAN Equity Grant Date: 100% of all Restricted Stock on the Effective Date of the Chapter 11 Plan may be granted, subject to Mandatory Forfeiture (as defined below) Option Grant Date: Tranche A (Series A1-A4): Tranche A of the Management Equity Incentive Plan to provide for options to purchase an aggregate of twelve and a half percent (12.5%) of the Common Stock of Reorganized DDi on the Effective Date (collectively, the "Tranche A Options"). Fifty percent (50%) of all Tranche A Options shall be granted on the Effective Date of the Chapter 11 Plan and the remaining fifty percent (50%) of Tranche A Options shall be granted on the twelve (12) month anniversary of the Effective Date of the Chapter 11 Plan, subject to Mandatory Forfeiture (as defined below). Tranche B: Tranche B of the Management Equity Incentive Plan to provide for discretionary options to purchase an aggregate of four percent (4%) of the Common Stock of Reorganized DDi on the Effective Date (the "Tranche B Options"). The issuance of the Tranche B Options shall be in the discretion of the Compensation Committee of the Board of Directors of Reorganized DDi, or CEO under CEO Exemption. Equity Vesting Schedule: 50% of the Restricted Stock will vest immediately upon grant, 50% of the Restricted Stock will vest 12 months after the grant. Option Vesting Schedule: Tranche A (Series A1-A4): 1/3 of the Options will vest immediately upon grant, 1/3 of the Options will vest on the 18 month anniversary of the grant, 1/3 of the Options will vest on the 36 month anniversary of the grant. Tranche B: 1/3 of the Options will vest immediately upon grant, 1/3 of the Options will vest on the 18 month anniversary of the grant, 1/3 of 2 the Options will vest on the 36 month anniversary of the grant. Series A1 Options: 10 year Options to purchase 3-1/3% of the "Common Stock of Reorganized DDi on a fully diluted basis on the Effective Date" at a strike price of an implied total enterprise value of $110 million. Series A2 Options: 10 year options to purchase 3-1/3% of the "Common Stock of Reorganized DDi on a fully diluted basis on the Effective Date" at the following strike prices: (i) First grant date: the Fair Market Value of the stock on the date of grant. (ii) Second grant date: the greater of (a) the Fair Market Value of the Common Stock on the date of grant and (b) the strike price on the first grant date. Series A3 Options: 10 year options to purchase 3-1/3% of the "Common Stock of Reorganized DDi on a fully diluted basis on the Effective Date" at the following strike prices: (i) First date: 115% of the Fair Market Value of the Common Stock on the date of grant. (ii) Second grant date: the greater of (a) the Fair Market Value of the Common Stock on the date of grant and (b) the strike price on the first grant date. Series A4 Options: Five year Options to purchase 2.5% of the "Common Stock of Reorganized DDi on a fully diluted basis on the Effective Date" at nominal strike price. Options may only be exercised on and after the Second Anniversary Date as follows: . 0%, if the commitments (including accrued and unpaid interest and accrued and unpaid PIK interest with respect thereto) of the Lenders have not been permanently repaid by at least fifty percent (50%) of the aggregate amount of such commitments outstanding on the Effective Date; . 50%, if the commitments (including accrued and unpaid interest and accrued and unpaid PIK interest with respect thereto) of the Lenders have been permanently repaid by at least fifty percent (50%) but less than one hundred percent (100%) of the aggregate amount of such commitments outstanding on the Effective Date; . 100%, if the commitments plus all accrued and unpaid interest and accrued and unpaid PIK Interest have been repaid in full to the Lenders. Tranche B Options: 10 year options to purchase four percent (4%) of the Common Stock of Reorganized DDi on the Effective Date at a strike price equal to the Fair 3 Market Value of the Common Stock. Mandatory Forfeiture: All unvested grants of Options and Restricted Stock will be subject to mandatory forfeiture by the holder, if the holder's employment is terminated by Reorganized DDi for Cause, or the holder voluntarily leaves Reorganized DDi without Good Reason prior to the 36 month anniversary of the grant. Any forfeited grants shall be made available for redistribution at the discretion of the Compensation Committee of the reorganized Board of Directors of Reorganized DDi. Vesting upon Change of If the Change of Control is a cash-for-stock Control: transaction, full acceleration of unvested Options and unvested Restricted Stock. If the Change of Control is a stock-for-stock transaction, no acceleration of unvested Options or unvested Restricted Stock and unvested Options and unvested Restricted Stock will be converted into unvested Options and unvested Restricted Stock of the merged enterprise. If the Change of Control is a combination of stock and cash transaction, then unvested Options and unvested Restricted Stock will accelerate pro rata (based on amount stock and cash portions of consideration) and will be converted into pro rata number of unvested Options and unvested Restricted Stock of the merged enterprise. If, following a Change of Control, (i) a holder's employment is terminated by Reorganized DDi or the successor to Reorganized DDi for Cause, or the holder voluntarily leaves the successor to Reorganized DDi without Good Reason within one year following the effective date of the Change of Control, then all of such holder's unvested Options and unvested Restricted Stock shall be forfeited upon such termination and/or leave or (ii) a holder's employment is terminated by Reorganized DDi or the successor to Reorganized DDi without Cause, or the holder voluntarily leaves Reorganized DDi or the successor to Reorganized DDi with Good Reason within two years following the effective date of the Change of Control, then all of such holder's unvested Options and unvested Restricted Stock shall immediately vest upon such termination or leave. Other Terms: . Cashless exercise features. . Registration Rights: An S-8 registration statement shall be filed on or subsequent to the effectiveness of an equity registration statement filed by Reorganized DDi for the benefit of the former Subordinated Noteholders and the Lenders who are then holders of Common Stock and/or Lender Warrants after the Effective Date of the Chapter 11 Plan. . Management Options and Restricted Stock shall be entitled to antidilution protection for stock dividends and stock splits only. Definitions (applicable for . "Cause" shall mean a Management Holder's this (a) indictment or 4 Schedule F only; provided, conviction of any felony (it being however, that the "Change of understood that if such Management Holder Control" and "Fair Market is not convicted of a felony within two Value" definitions shall apply (2) years of indictment (or later if any to the entire Term Sheet): state or federal agency is actively prosecuting such felony), such options shall be reinstated), (b) fraud, misappropriation, or embezzlement that would warrant termination from Reorganized DDi or its subsidiaries based upon the existing policies of Reorganized DDi and its subsidiaries then in effect, (c) failure or refusal, after reasonable notice, to perform the material duties of such person's office, (d) drug or alcohol abuse that would warrant termination from Reorganized DDi or its subsidiaries based upon the existing policies of Reorganized DDi and its subsidiaries then in effect, (e) any willful misconduct or willful acts that materially impair the assets of operations of Reorganized DDi and its subsidiaries, taken as a whole, (f) acts of discrimination or sexual harassment that would warrant termination from Reorganized DDi or its subsidiaries based upon the existing policies of Reorganized DDi and its subsidiaries then in effect, (g) public statements disparaging Reorganized DDi that are likely to cause material damage to Reorganized DDi and its subsidiaries, taken as a whole. . "Fair Market Value" shall mean: (a) if the Common Stock is listed on any national securities exchange or quoted on the Nasdaq National Market or Nasdaq Small Cap Market, weighted average of the closing sales price of the Common Stock on such exchange or market on the five (5) trading days immediately preceding the date of grant; or (b) otherwise, the fair market value as determined by the Board of Directors of Reorganized DDi, which determination shall be subject to approval by the Required Lenders; provided, further, that should the Required Lenders not approve the determination of Fair Market Value, any dispute with regard to such valuation determinations shall be resolved by a neutral valuation firm of national standing approved by the Required Lenders . "Good Reason" means termination of employment by a Management Holder if (x) (a) such Management Holder's annual base salary is materially reduced without Cause(unless there is a reduction in the base salary of substantially all comparably positioned employees or unless such Management Holder consents) or (b) the requirements of such person's job materially and adversely are changed without Cause and without such Management Holder's consent (including, without limitation, the relocation of the Management Holder's place of employment to a location beyond 75 miles of his or her then current place of employment) and (y) such Management Holder terminates his 5 position within 90 days of either (x)(a) or (x)(b) and states that the purpose for such termination is the events stated in (x)(a) or (x)(b). . "Change of Control" will be considered to have occurred if: . any "person" or "group" is or becomes the beneficial owner, directly or indirectly, of more than 50% of the total voting power of the voting stock of Reorganized DDi (for the purposes of this clause, such person shall be deemed to beneficially own any voting stock of a person held by any other person (the "parent entity"), if such person is the beneficial owner, directly or indirectly, of more than 50% of the voting power of the voting stock of such parent entity) or such person or group has the power, directly or indirectly, to elect a majority of the members of the board of directors of Reorganized DDi; . the sale of all or substantially all the assets of Reorganized DDi to another person, or, the merger or consolidation of Reorganized DDi with or into another person or the merger of another person with or into Reorganized DDi, or if the securities of Reorganized DDi that are outstanding immediately prior to such transaction and which represent 100% of the aggregate voting power of the voting stock of Reorganized DDi are changed into or exchanged for cash, securities, or property, unless pursuant to such transaction such securities are changed into or exchanged for, in addition to any other consideration, securities of the surviving person or transferee that represent, immediately after such transaction, a majority of the aggregate voting power of the voting stock of the surviving person or transferee; or . Reorganized DDi is dissolved or liquidated. 6 SCHEDULE A - -------------------------------------------------------------------------------- % of Tranche A Employee Title (Series A1-A4) Awards - -------------------------------------------------------------------------------- Bruce McMaster President and CEO 30% - -------------------------------------------------------------------------------- Michael Moisan COO 9% - -------------------------------------------------------------------------------- Joe Gisch SVP - Strategic Planning and BD 7% - -------------------------------------------------------------------------------- Tom Ingham VP - Sales & Marketing 7% - -------------------------------------------------------------------------------- David Blair President & CEO - European 7% Operations - -------------------------------------------------------------------------------- Brad Tesch VP - North American Assembly Ops 5% - -------------------------------------------------------------------------------- John Stumpf CFO 5% - -------------------------------------------------------------------------------- Terry Wright CTO 5% - -------------------------------------------------------------------------------- Tim Donnelly General Counsel 5% - -------------------------------------------------------------------------------- Jay Latin VP - Sales 5% - -------------------------------------------------------------------------------- Robert Hembree CIO 5% - -------------------------------------------------------------------------------- Tom Johnston Managing Director 2% - -------------------------------------------------------------------------------- John Calvert VP - Sales & Marketing Europe 2% - -------------------------------------------------------------------------------- John Chelberg VP - Operations 2% - -------------------------------------------------------------------------------- Victor Hemmingway VP - Operations 2% - -------------------------------------------------------------------------------- Jon Pereira VP - Operations 2% - -------------------------------------------------------------------------------- EXHIBIT B [Form of Joinder for Senior Discount Noteholders] JOINDER This Joinder to the Senior Discount Noteholder Plan Support Agreement, dated as of August , 2003, by and among the Company and the Consenting ----- Senior Discount Noteholders, all signatories thereto (the "Agreement"), is executed and delivered by [ ] (the "Joining Party") as of --------------------- [ ], 2003. Each capitalized term used herein but not otherwise defined ---------- shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Senior Discount Noteholder" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Senior Discount Noteholders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. [JOINING PARTY] By: --------------------------------- Name: Title: - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt - ------------------------------------ Notice Address: With a Copy to: Acknowledged: By: ---------------------------- Name: Title: JOINDER This Joinder to the Senior Discount Noteholder Plan Support Agreement, dated as of August 19, 2003, by and among the Company and the Consenting Senior Discount Noteholders, all signatories thereto (the "Agreement"), is executed and delivered by AIG Global Investment Corp. (the "Joining Party") as of August 19, 2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Senior Discount Noteholder" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Senior Discount Noteholders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. SUNAMERICA LIFE INSURANCE COMPANY By: AIG Global Investment Corp., investment adviser By: /s/ Christopher F. Ochs --------------------------- Christopher F. Ochs Vice President - ------------------------------------ Principal Amount of Debt Held - ------------------------------------ Debt 2,000,000 - ------------------------------------ Notice Address: SunAmerica Life Insurance Company C/O AIG Global Investment Corp., 2929 Allen Parkway, 37th Floor Houston, TX 77019 Attention: Mike Lanier With a Copy to: Acknowledged: By: -------------------------- Name: Title: JOINDER This Joinder to the Senior Discount Noteholder Plan Support Agreement, dated as of August 19, 2003, by and among the Company and the Consenting Senior Discount Noteholders, all signatories thereto (the "Agreement"), is executed and delivered by J.P. MORGAN PARTNERS (BHCA), L.P. (the "Joining Party") as of August 19, 2003. Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement. 1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the terms of the Agreement, attached to this Joinder as Annex I (as the same may be hereafter amended, restated or otherwise modified from time to time). The Joining Party shall hereafter be deemed to be a "Consenting Senior Discount Noteholder" and a "Party" for all purposes under the Agreement. 2. Representations and Warranties. With respect to the Debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such Debt, the Joining Party hereby makes the representations and warranties of the Consenting Senior Discount Noteholders set forth in the Agreement to each other Party to the Agreement. 3. Notices. All notices and other communications to be delivered to the Joining Party shall be made to the addresses and facsimile numbers set forth below. 4. Governing Law. This Joinder shall be governed by and construed in accordance with the internal laws of the State of New York. * * * * * [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above. /s/ Richard Waters - ------------------------------------- By: J.P. MORGAN PARTNERS (BHCA), L.P. Name: Richard Waters Title: Partner - ------------------------------------- Principal Amount of Debt Held - ------------------------------------- Debt* $7,000,000 - ------------------------------------- *Does not reflect accrued interest Notice Address: J.P. MORGAN PARTNERS (BHCA), L.P. 1221 Avenue of Americas, 39th Floor New York, NY 10020-1080 Attention: Kevin O'Brien With a Copy to: Acknowledged: By: ---------------------------- Name: Title:
EX-10.7 9 dex107.txt WAIVER NO. 1 TO PLAN SUPPORT AGREEMENT Exhibit 10.7 WAIVER NO.1 WAIVER NO. 1 (this "Waiver"), dated as of August 18, 2003, with respect to that certain Plan Support Agreement (together with exhibits, annexes and attachments thereto, the "PSA"), dated as of August 8, 2003 by and among (i) DDi Corp. ("DDi"), DDi Intermediate Holdings Corp. ("DDi Intermediate"), DDi Capital Corp. ("DDi Capital"), Dynamic Details, Incorporated ("Details"), Dynamic Details, Incorporated, Silicon Valley ("DDISV") and their respective subsidiaries and affiliates (collectively, the "Company Group"), and (ii) the Consenting Subordinated Noteholders signatory thereto. Capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the PSA. W I T N E S S E T H: WHEREAS, pursuant to the PSA, the Consenting Subordinated Noteholders have agreed to implement a restructuring and reorganization of the Company Group pursuant to the Restructuring Terms as set forth on the Term Sheet; WHEREAS, the Company Group has requested that the Consenting Subordinated Noteholders holding at least one-half (1/2) in aggregate principal amount of the debt held by Consenting Subordinated Noteholders (the "Required Subordinated Noteholders") enter into this Waiver on the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the premises and mutual agreements contained herein, and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Waiver. The parties hereto hereby agree that: (a) in light of the blackout that occurred on August 14, 2003, provided that DDi and DDi Capital file (i) voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court on or prior to August 21, 2003 (the "Petition Date") and (ii) the Conforming Disclosure Statement and the Conforming Plan with the Bankruptcy Court on or prior to August 30, 2003, and further provided that, the Required Lenders execute a waiver in the form annexed hereto as Exhibit A, (x) no Termination Event shall be deemed to have occurred under the PSA as a result of any default in the observance of Section 5(ii)(A) of the PSA and (y) no Termination Event will be deemed to have occurred under the PSA as a result of any default in the observance of Section 5(ii)(B) of the PSA; 2. Agreements of the Required Subordinated Noteholders. (a) Amendment to PSA. By execution of this Waiver, each Required Consenting Subordinated Noteholder agrees to execute the first amendment to the PSA, in the form annexed hereto as Exhibit C (the "First Amendment"), provided that the First Amendment shall only become effective if holders of at least sixty-six and two-thirds percent (66 2/3%) of the aggregate principal amount of the Senior Discount Notes (collectively, the "Consenting Senior Discount Noteholders") execute a Senior Discount Noteholder Plan Support Agreement ("SDPSA"), in the form annexed hereto as Exhibit D prior to the Petition Date 3. Representations and Warranties. Each member of the Company Group hereby represents and warrants as of the date hereof that, after giving effect to this Waiver, (a) other than the Termination Events listed in this Waiver, no other Termination Event has occurred and is continuing, (b) all representations and warranties of each member of the Company Group contained in the PSA are true and correct in all material respects with the same effect as if made on and as of such date, and (c) the persons named below are duly authorized to execute and deliver, on behalf of each member of the Company Group, the Waiver; such persons are now the respective duly elected and qualified officers of each member of the Company Group, holding the offices indicated next to their respective names and the signature set forth on the signature line opposite their respective names is such officer's true and genuine signature, provided that the references to the PSA therein shall be deemed to be references to this Waiver and to the PSA as modified by this Waiver. 4. No Change. Except as expressly provided herein, no term or provision of the PSA shall be amended, modified or supplemented, and each term and provision of the PSA shall remain in full force and effect. 5. Reservation of Rights. Each member of the Company Group jointly and severally acknowledges and agrees that, (a) the Consenting Subordinated Noteholders shall preserve all rights, remedies, power or privileges set forth in the PSA and under applicable law and (b) nothing contained herein shall in any way limit or otherwise prejudice, and the Consenting Subordinated Noteholders have reserved their right to invoke fully, any right, remedy, power or privilege which the Consenting Subordinated Noteholders may not have or may have in the future under or in connection with the PSA and applicable law, or diminish any of the obligations of any member of the Company Group contained in the PSA. The rights, remedies, powers and privileges of the Consenting Subordinated Noteholders provided under this Waiver and the PSA are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 6. Effectiveness. This Waiver shall become effective as of the date hereof upon receipt by the Company Group of counterparts hereof duly executed by each member of the Company Group and the Required Consenting Subordinated Noteholders. 7. Counterparts. This Waiver may be executed by the parties hereto in any number of separate counterparts, by facsimile with originals to follow, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 8. GOVERNING LAW. THIS WAIVER AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS WAIVER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. IN WITNES5 WHEREOF, the parties have caused this Waiver to be duly executed and delivered by their respective proper and duly authorized officers as of the day and year first above written. DDi CAPITAL CORP. By: /s/ JOHN STUMPF ------------------------------------ Title: CFO DYNAMIC DETAILS, INCORPORATED By: /s/ JOHN STUMPF ------------------------------------ Title: CFO DYNAMIC DETAILS, INCORPORATED, SILICON VALLEY By: /s/ JOHN STUMPF ------------------------------------ Title: CFO DYNAMIC DETAILS, INCORPORATED, VIRGINIA By: /s/ JOHN STUMPF ------------------------------------ Title: CFO DYNAMIC DETAILS TEXAS, L.P. By: /s/ JOHN STUMPF ------------------------------------ Title: CFO DYNAMIC DETAILS TEXAS HOLDINGS CORP. By: /s/ JOHN STUMPF ------------------------------------ Title: CFO By: DDi-TEXAS INTERMEDIATE HOLDINGS, L.L.C. By: /s/ JOHN STUMPF ------------------------------------ Title: CFO By: DYNAMIC DETAILS TEXAS HOLDINGS CORP. By: /s/ JOHN STUMPF ------------------------------------ Title: CFO By: DYNAMIC DETAILS INCORPORATED, COLORADO SPRINGS By: /s/ JOHN STUMPF ------------------------------------ Title: CFO By: DYNAMIC DETAILS INCORPORATED, TEXAS By: /s/ JOHN STUMPF ------------------------------------ Title: CFO ARGENT, as a 6.25% Subordinated Noteholder By: /s/ NATE BROWN ------------------------------------ Name: Nate Brown Title: Illegible [Signature Page to Waiver No. 1] PROVIDENCE CAPITAL, LLC, ON BEHALF OF AQUITANIA PARTNERS, LP _______, LP; ___________ MAURETANIA PARTNERS, LP; AND RAM CSA LIMITED, as a 5 1/2% Subordinated Noteholder By: /s/ JOHN C. KOPCHIK ------------------------------------ Name: John C. Kopchik Title: PRESIDENT, PROVIDENCE CAPITAL, LLC [Signature Page to Waiver No. 1] PROVIDENCE CAPITAL, LLC ON BEHALF OF MAURETANIA PARTNERS, LP, as a ____% Subordinated Noteholder By: /s/ JOHN C. KOPCHIK ------------------------------------ Name: John C. Kopchik Title: PRESIDENT, PROVIDENCE CAPITAL, LLC [Signature Page to Waiver No. 1] Tablerock Fund Management, as a 5 1/4% Subordinated Noteholder By: /s/ Illegible ------------------------------------ Name: ______________ Title: Member, Authorised Signatory [Signature Page to Waiver No. 1] Tablerock Fund Management, as a 6 1/4% Subordinated Noteholder By: /s/ Illegible ------------------------------------ Name: Illegible Title: Member, Authorised Signatory [Signature Page to Waiver No. 1] [ILLEGIBLE], as a 5.25% Subordinated Noteholder By: /s/ DAVID SHERMAN ------------------------------------ Name: David Sherman Title: President of Cohanzide Capital Management [Signature Page to Waiver No. 1] EX-10.8 10 dex108.txt WAIVER NO. 1 TO AMENDED RESTRUCTURING SUPPORT AGREEMENT Exhibit 10.8 WAIVER NO.1 WAIVER NO. 1 (this "Waiver"), dated as of August 19, 2003, with respect to (A) that certain Restructuring Support Agreement, dated as of August 1, 2003, as amended by the First Amendment dated as of August 7, 2003 (together with exhibits, annexes and attachments thereto, the "RSA"), by and among (i) DDi Corp. ("DDi"), DDi Intermediate Holdings Corp. ("DDi Intermediate"), DDi Capital Corp. ("DDi Capital"), Dynamic Details, Incorporated ("Details"), Dynamic Details, Incorporated, Silicon Valley ("DDISV") and their respective subsidiaries and affiliates (collectively, the "Company Group"), (ii) the Administrative Agent and (iii) the Consenting Lenders signatory thereto and (B) that certain Budget and Funding Agreement, dated as of August 1, 2003 (the "Budget and Funding Agreement"), by and among, (i) DDi, (ii) DDi Capital; (iii) Details; (iv) DDISV; (v) each Subsidiary Guarantor (as defined in the Budget and Funding Agreement); (vi) the Consenting Lenders; (vii) the Administrative Agent and (viii) the Professionals (as defined in the Budget and Funding Agreement) signatory thereto. Capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the RSA. W I T N E S S E T H: WHEREAS, pursuant to the RSA, the Consenting Lenders have agreed to implement a restructuring and reorganization of the Company Group pursuant to the Restructuring Terms as set forth on the Term Sheet; WHEREAS, the Company Group has requested that the Required Lenders enter into this Waiver on the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the premises and mutual agreements contained herein, and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Waiver. (a) Each member of the Company Group, the Administrative Agent and each of the Required Lenders hereby agree that, in light of the blackout that occurred on August 14, 2003, provided that DDi and DDi Capital file (i) voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court on or prior to August 21, 2003 (the "Petition Date") and (ii) the Conforming Disclosure Statement and the Conforming Plan with the Bankruptcy Court on or prior to August 30, 2003, and further provided that, the Consenting Subordinated Noteholders holding at least one-half (1/2) in aggregate principal amount of the debt held by Consenting Subordinated Noteholders Consenting Subordinated Noteholders and each member of the Company Group execute a waiver in the form annexed hereto as Exhibit A, (x) no Termination Event shall be deemed to have occurred under the RSA as a result of any default in the observance of Sections 4(b)(i) and 5(ii)(A) of the RSA, (y) no Termination Event will be deemed to have occurred under the RSA as a result of any default in the observance of Sections 4(b)(ii) and 5(ii)(B) of the RSA and (z) solely with respect to the failure to observe Section 5(ii)(A) of the RSA and the expected failure to observe Section 5(ii)(B) of the RSA, no Default shall be (or will be) deemed to have occurred under the Budget and Funding Agreement as a result of any default in the observance of Section 11(iv) of the Budget and Funding Agreement. (b) Each member of the Company Group, each of the Professionals, the Administrative Agent and each of the Required Lenders hereby agree that, solely with respect to the payments made to certain of the Professionals during the period from August 1 through August 14, 2003 by DDi, DDi Capital, Details or DDISV and provided that the Required Lenders approve the revised Initial Budget (as defined in the Budget and Funding Agreement) in the form annexed hereto as Exhibit B, (x) no Termination Event shall be deemed to have occurred under the RSA as a result of any default in the observance of Section 5(xiii) of the RSA and (y) no Default shall be deemed to have occurred under the Budget and Funding Agreement as a result of any default in the observance of Sections 11(ii)-(iv) of the Budget and Funding Agreement, it being understood that, as set forth in, and subject to any exception contained in, the Budget and Funding Agreement, the Consenting Lenders have not agreed and do not consent to the use of the Cash Collateral (as defined in the Budget and Funding Agreement) for payment of any obligation that either Details or DDISV may have (if any) to such Professionals. 2. Agreements of the Required Lenders. (i) Approval of Revised Initial Budget. By execution of this Waiver, each of the Required Lenders approves the revised Initial Budget. (ii) Amendment to RSA. Provided that (x) the holders of at least sixty-six and two-thirds percent (66 2/3%) of the aggregate principal amount of the Senior Discount Notes (collectively, the "Consenting Senior Discount Noteholders") execute a Senior Discount Noteholder Plan Support Agreement ("SDPSA"), in the form annexed hereto as Exhibit C prior to the Petition Date and (y) Hahn & Hessen LLP execute a joinder to the Budget and Funding Agreement as a Professional (as defined in the Budget and Funding Agreement) in the form annexed hereto as Exhibit D prior to the Petition Date, by execution of this Waiver, each Required Lender consents to the Administrative Agent entering into an amendment to the RSA, in the form annexed hereto as Exhibit E, which shall provide for (i) the inclusion of a description of the SDPSA in the recitals, (ii) replace Schedule E of the Term Sheet with the term sheet annexed as Exhibit A to the SDPSA and (iii) include the occurrence of a Termination Event (as defined in the SDPSA) under the SDPSA as a new Termination Event in Section 5 of the RSA. 3. Representations and Warranties. Each member of the Company Group hereby represents and warrants as of the date hereof that, after giving effect to this Waiver, (a) other than the Termination Events listed in this Waiver, no other Termination Event has occurred and is continuing, (b) all representations and warranties of each member of the Company Group contained in the RSA are true and correct in all material respects with the same effect as if made on and as of such date, and (c) the persons named below are duly authorized to execute and deliver, on behalf of each member of the Company Group, the Waiver; such persons are now the respective duly elected and qualified officers of each member of the Company Group, holding the offices indicated next to their respective names and the signature set forth on the signature line opposite their respective names is such officer's true and genuine signature, provided that the references to the RSA therein shall be deemed to be references to this Waiver and to the RSA as modified by this Waiver. 4. No Change. Except as expressly provided herein, no term or provision of the RSA and the Budget and Funding Agreement shall be amended, modified or supplemented, and each term and provision of the RSA and the Budget and Funding Agreement shall remain in full force and effect. 5. Reservation of Rights. Each member of the Company Group jointly and severally acknowledges and agrees that, (a) the Lenders and the Administrative Agent shall preserve all rights, remedies, power or privileges set forth in the RSA, the Budget and Funding Agreement and under applicable law and (b) nothing contained herein shall in any way limit or otherwise prejudice, and the Administrative Agent and the Lenders have reserved their right to invoke fully, any right, remedy, power or privilege which the Lenders or the Administrative Agent may not have or may have in the future under or in connection with the RSA, the Budget and Funding Agreement and applicable law, or diminish any of the obligations of (i) any member of the Company Group contained in the RSA and (ii) any member of the Company Group and any of the Professionals contained in the Budget and Funding Agreement. The rights, remedies, powers and privileges of the Administrative Agent and the Lenders provided under this Waiver, the RSA and the Budget and Funding Agreement are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 6. Payment of Fees and Expenses. Details and DDISV agree to pay or reimburse the Administrative Agent for its out-of-pocket costs and expenses incurred in connection with this Waiver, any documents prepared in connection herewith and the transactions contemplated hereby and any outstanding amounts relating thereto to the Administrative Agent's professional advisors including, without limitation, the reasonable fees, charges and disbursements of Simpson Thacher & Bartlett LLP, counsel to the Administrative Agent, and the reasonable fees, charges and disbursements of FTI Consulting, subject to the Administrative Agent's approval of such fees. 7. Effectiveness. This Waiver shall become effective as of the date hereof upon receipt by the Administrative Agent of counterparts hereof duly executed by each member of the Company Group and the Required Lenders. The effectiveness of this Waiver is further conditioned upon the payment of current fees and expenses billed by professionals and consultants engaged by the Administrative Agent. 8. Counterparts. This Waiver may be executed by the parties hereto in any number of separate counterparts, by facsimile with originals to follow, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 9. GOVERNING LAW. THIS WAIVER AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS WAIVER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. IN WITNESS WHEREOF, the parties have caused this Waiver to be duly executed and delivered by their respective proper and duly authorized officers as of the day and year first above written. DDi CAPITAL CORP. By: /s/ JOHN STUMPF --------------------------------------- Title: CFO DYNAMIC DETAILS, INCORPORATED By: /s/ JOHN STUMPF --------------------------------------- Title: CFO DYNAMIC DETAILS, INCORPORATED, SILICON VALLEY By: /s/ JOHN STUMPF --------------------------------------- Title: CFO DYNAMIC DETAILS, INCORPORATED, VIRGINIA By: /s/ JOHN STUMPF --------------------------------------- Title: CFO DYNAMIC DETAILS TEXAS, L.P. By: /s/ JOHN STUMPF --------------------------------------- Title: CFO DYNAMIC DETAILS TEXAS HOLDINGS CORP. By: /s/ JOHN STUMPF --------------------------------------- Title: CFO By: DDi-TEXAS INTERMEDIATE HOLDINGS, L.L.C. By: /s/ JOHN STUMPF --------------------------------------- Title: CFO By: DYNAMIC DETAILS TEXAS HOLDINGS CORP. By: /s/ JOHN STUMPF --------------------------------------- Title: CFO By: DYNAMIC DETAILS INCORPORATED, COLORADO SPRINGS By: /s/ JOHN STUMPF --------------------------------------- Title: CFO By: DYNAMIC DETAILS INCORPORATED, TEXAS By: /s/ JOHN STUMPF --------------------------------------- Title: CFO JPMORGAN CHASE BANK, AS ADMINISTRATIVE AGENT, COLLATERAL AGENT AND CO-SYNDICATION AGENT By: /s/ MICHAEL LANCIA --------------------------------------- Title: Vice-President KIRKLAND & ELLIS LLP By: /s/ SHARON KOPMAN --------------------------------------- Title: Senior Associate PAUL, HASTINGS, JANOFSKY & WALKER LLP By: /s/ CARL ANDERSON --------------------------------------- Title: Partner HOULIHAN LOKEY HOWARD & ZUKIN By: /s/ ERIC WINTHROP --------------------------------------- Title: Vice President STUTMAN TREISTER & GLATT PROFESSIONAL CORPORATION By: /s/ Illegible --------------------------------------- Title: Shareholder AKIN GUMP STRAUSS HAUER & FELD LLP By: /s/ Illegible --------------------------------------- Title: Partner JEFFERIES GROUP INC. By: /s/ Illegible --------------------------------------- Title: Managing Director HAHN & HESSEN LLP By: --------------------------------------- Title: JPMorgan Chase Bank, as a Lender By: /s/ Michael Lancia --------------------------------------- Name: Michael Lancia Title: Vice President [Signature Page to Waiver No. 1] Citizens Bank of MA, as a Lender By: /s/ Steven C. Petrarca --------------------------------------- Name: STEVEN C. PETRARCA Title: VICE PRESIDENT [Signature Page to Waiver No. 1] Crescent/Mach I Partners, L.P by: TCW Asset Management Company Its Investment Manager By: /s/ Richard Kurth --------------------------------------- Name: RICHARD KURTH Title: SENIOR VICE PRESIDENT By: /s/ Jonathan R. Insull --------------------------------------- Name: JONATHAN R. INSULL Title: MANAGING DIRECTOR Lenders DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES By: /s/ James M. Gallagher --------------------------------------- Name: JAMES M. GALLAGHER Title: DIRECTOR By: /s/ Lisa M. Overton --------------------------------------- Name: Lisa M. Overton Title: Associate Deutsche Bank Trust Company Americas, as a Lender By: /s/ Gregory Shefrin --------------------------------------- Name: Gregory Shefrin Title: Director [Signature Page to Waiver No. 1] Grayston CLO 2001-01 Ltd. By: Bear Streams Asset Management Inc. as its Collateral Manager, as a Lender By: /s/ Jonathan Berg --------------------------------------- Name: Jonathan Berg Title: Vice President [Signature Page to Waiver No. 1] GSC PARTNERS GEMINI FUND LIMITED, as a lender By: GSCP (NJ) L.P., as Collateral Monitor By: GSCP (NJ), INC., its General Partner By: /s/ Harvey B. Siegel --------------------------------------- Name: Harvey B. Siegel Title: Authorized Signatory HARBOUR TOWN FUNDING TRUST, as a Lender By: /s/ Ann E. Morris --------------------------------------- Name: ANN E. MORRIS Title: AUTHORIZED AGENT [Signature Page to Waiver No. 1] IBM Credit LLC, as a Lender By: /s/ Steven A. Flanagan --------------------------------------- Name: Steven A. Flanagan Title: Manager, Global Special Handling [Signature Page to Waiver No. 1] INDOSUEZ CAPITAL FUNDING IIA, LIMITED By: Indosuez Capital as Portfolio Advisor By: /s/ Charles Kobayashi --------------------------------------- Name: Charles Kobayashi Title: Principal and Portfolio Manager [Signature Page to Waiver No. 1] MASSACHUSETTS MUTUAL LIFE INSURANCE, as a Lender By: /s/ Steven J. Katz --------------------------------------- Name: STEVEN J. KATZ Title: SECOND VICE PRESIDENT AND ASSOCIATE GENERAL COUNSEL [Signature Page to Waiver No. 1] MASTER SENIOR FLOATING RATE TRUST By: /s/ Philip J. Brendel --------------------------------------- Philip J. Brendel Authorized Signatory DEBT STRATEGIES FUND, INC. By: /s/ Philip J. Brendel --------------------------------------- Philip J. Brendel Authorized Signatory MERRILL LYNCH PRIME RATE PORTFOLIO By: Merrill Lynch Investment Management, L.P. as Investment Advisor By: /s/ Philip J. Brendel --------------------------------------- Philip J. Brendel Authorized Signatory [Signature Page to Waiver No. 1] Morgan Stanley Prime Income Trust, as a Leader By: /s/ Peter Gewirtz --------------------------------------- Name: Peter Gewirtz Title: Vice President [Signature Page to Waiver No. 1] Sankaty Advisors, LLC, as Collateral Manager for Brant Point II CBO 2000-1 LTD., as Term Lender By: /s/ Diane J. Exter ------------------------------------ Name: DIANE J. EXTER Title: MANAGING DIRECTOR PORTFOLIO MANAGER [Signature Page to Waiver No. 1] Sankaty Advisors, LLC as Collateral Manager for Castle Hill I - INGOTS, Ltd., as Term Lender By: /s/ Diane J. Exter ------------------------------------ Name: DIANE J. EXTER Title: MANAGING DIRECTOR PORTFOLIO MANAGER [Signature Page to Waiver No. 1] Sankaty Advisors, LLC as Collateral Manager for Race Point CLO, Limited, as Term Lender By: /s/ Diane J. Exter ------------------------------------ Name: DIANE J. EXTER Title: MANAGING DIRECTOR PORTFOLIO MANAGER [Signature Page to Waiver No. 1] Sankaty High Yield Partners II, L.P., as a Lender By: /s/ Diane J. Exter ------------------------------------ Name: DIANE J. EXTER Title: MANAGING DIRECTOR PORTFOLIO MANAGER [Signature Page to Waiver No. 1] Smoky River CDO, L.P., By RBC Leveraged Capital as Portfolio Advisor By: /s/ Melissa Marano --------------------------------------- Name: Melissa Marano Title: Authorized Signatory [Signature Page to Waiver No. 1] TCW SELECT LOAN FUND, LIMITED By: TCW Advisors, Inc. as its Collateral Manager By: /s/ Illegible --------------------------------------- Name: Illegible Title: SENIOR VICE PRESIDENT By: /s/ Jonathan R. Insull --------------------------------------- Name: JONATHAN R. INSULL Title: MANAGING DIRECTOR VAN KAMPEN SENIOR LOAN FUND By: Van Kampen Investment Advisory Corp., as a Lender By: /s/ Christina Jamieson ------------------------------------- Name: CHRISTINA JAMIESON Title: VICE PRESIDENT [Signature Page to Waiver No. 1] EX-10.9 11 dex109.txt BUDGET AND FUNDING AGREEMENT EXHIBIT 10.9 EXECUTION COPY BUDGET AND FUNDING AGREEMENT This BUDGET AND FUNDING AGREEMENT, dated as of August 1, 2003 (the "Agreement"), by and among, (i) DDi Corp. ("DDi"), (ii) DDi Capital Corp., formerly known as Details Capital Corp. (the "DDi Capital"); (ii) Dynamic Details, Incorporated, formerly known as Details, Inc. ("Details"); (iii) Dynamic Details Incorporated, Silicon Valley, formerly known as Dynamic Circuits, Inc. ("DDISV", and collectively with Details, the "Borrowers"); (iv) each Subsidiary Guarantor (together with DDi Capital and the Borrowers, the "Grantors"); (v) the Consenting Lenders (as defined below); (vi) the Administrative Agent (as defined below) and (vii) the Professionals (as defined below) signatory hereto, entered into in connection with (a) the Amended and Restated Credit Agreement, dated as of July 23, 1998 and as amended and restated as of August 28, 1998, and as amended by the First Amendment, dated as of March 10, 1999, the Second Amendment, dated as of March 22, 2000, the Third Amendment, dated as of October 10, 2000, the Fourth Amendment, dated as of February 13, 2001, the Fifth Amendment, dated as of December 31, 2001, the Sixth Amendment, dated as of June 28, 2002, the Seventh Amendment, dated as of June 27, 2003 and the Eighth Amendment, dated as of August 1, 2003 (as amended, supplemented or otherwise modified, the "Credit Agreement") among (i) DDi Capital; (ii) the Borrowers; (iii) the several banks and other financial institutions from time to time parties thereto, (individually, a "Lender," and collectively, the "Lenders"); (iv) Bankers Trust Company, as documentation and co-syndication agent; and (v) JPMorgan Chase Bank, as collateral, co-syndication and administrative agent (in such capacity, the "Administrative Agent"), and all collateral and ancillary documentation executed in connection therewith, including, without limitation, the hedge agreement (the "Hedge Agreement") entered into by Details with JPMorgan Chase Bank (collectively, the "Loan Documents") and (b) that certain Restructuring Support Agreement dated as of August 1, 2003 (the "RSA") by and among the DDi Group (as defined in the RSA) and the Consenting Lenders (as defined in the RSA). W I T N E S S E T H: WHEREAS, pursuant to the RSA, the Consenting Lenders have consented to, inter alia, the Restructuring Terms subject to certain terms and conditions set forth in the RSA. WHEREAS, pursuant to the RSA, DDi and DDi Capital (collectively, the "Filing Entities") will file voluntary petitions (the "Chapter 11 Cases") for relief under Chapter 11 of Title 11, United States Code (the "Bankruptcy Code") and will file a Conforming Chapter 11 Plan and enter into the Conforming Restructuring Loan Documents in each case to implement the Restructuring Terms. WHEREAS, pursuant to the Loan Documents, the Lenders have a lien on all or substantially all of the assets of the Borrowers and their subsidiaries, including without limitation, all cash and proceeds of collateral held by such persons (the "Cash Collateral"). WHEREAS, the Restructuring Terms provide for a budget and cash funding mechanism (the "Budget and Funding Mechanism") relating to the use of the Cash Collateral in connection with the Restructuring as more fully described below, and it is a condition to the RSA that the parties enter into this Agreement. NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration the receipt of which is hereby acknowledged, the parties hereto hereby agree as follows: 1. Definitions. Capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the RSA. 2 2. Budget. (a) The Consenting Lenders hereby agree to permit the Borrowers to use the Cash Collateral solely as provided in this Agreement. Each of the Borrowers hereby agrees not to use the Cash Collateral except for the payment of the costs and expenses associated with the operation of the Borrowers' business during the Chapter 11 Cases and the costs and expenses associated with the conduct of the Chapter 11 Cases of the types specified in and in accordance with the Budget delivered pursuant to this Agreement (the "Budget", which term shall include the Initial Budget, the Second Interim Budget and the Third Interim Budget (each as defined below), as applicable). A copy of the initial Budget (the "Initial Budget") for the period commencing August 1, 2003 and ending on October 26, 2003 is annexed hereto as Exhibit A. No later than September 22, 2003, the Borrowers shall provide the Administrative Agent with a revised Budget for the period commencing September 29, 2003 and ending on January 4, 2003 (in form and substance approved by the Administrative Agent, the "Second Interim Budget") and no later than December 1, 2003, the Borrowers shall provide the Administrative Agent with a revised Budget for the period commencing December 8, 2003 and ending on February 1, 2003 (in form and substance approved by the Administrative Agent, the "Third Interim Budget"). The Budget may be amended, modified or supplemented from time to time with the written consent of the Required Lenders or, in the event of non-material amendments, with the written consent of the Administrative Agent; provided, however, that no such amendment, modification or supplement to the Budget shall reduce the amounts budgeted for each month for Advisor Fees without the prior written consent of each Professional (as defined below) whose fees are affected thereby. (b) The parties acknowledge that, under the Budget, amounts authorized to be spent in any given week (or in the case of the Professionals, in any given month) and not so expended may be carried forward and spent in any succeeding week (or in the case of the Professionals, in any succeeding month) until the Expiration Date. If amounts authorized to be spent on a Professional's Advisor Fees (as defined below) are greater than the amount set forth for such Professional's Advisor Fees in any given month, then such Professional's Advisor Fees shall be paid out of the amount set forth for the subsequent month; provided, further that upon the Expiration Date, if such Professional's Advisor Fees exceed the aggregate amount of the Budget during the Budget and Funding Period, then such Professional will have an allowed administrative expense claim for such excess amount, which amount shall be subject to Bankruptcy Court approval, at the termination of the Chapter 11 Cases. With respect to any approval or disapproval of expenditures set forth in the Budget or in any proposed budget, the Administrative Agent and the Consenting Lenders shall not owe any fiduciary duty to the Professionals, the Borrowers or any of the Filing Entities or their respective creditors, shareholders or estates. 3. Implementation of Budget and Funding Mechanism. On or before August 1, 2003, each of the Borrowers and the Filing Entities agree to do the following: (a) The Borrowers shall enter into an amendment to the account control agreement with respect to the Reserved Cash Account (as defined in the Eighth Amendment) in a form and substance acceptable to the Administrative Agent. (b) The Borrowers shall open and fund the JPM Controlled Account (as defined in the Eighth Amendment). (c) The JPM Controlled Account will be subject to a deposit account control agreement in form and substance satisfactory to the Administrative Agent. (d) The Borrowers shall transfer all funds on deposit in Account #209-14469 established with Bank of America and shall deposit such funds into the JPM Controlled Account. (e) On or before August 1, 2003, the Filing Entities shall open and maintain an account at JPM, from which account disbursements shall be made for the payment of Advisor Fees and other specified costs and expenses incurred in connection with the Chapter 11 Cases (the "Restructuring 3 Account"), and the Restructuring Account will be subject to a deposit account control agreement in form and substance acceptable to the Administrative Agent. f. Except as otherwise provided herein, the Borrowers' and their subsidiaries' other cash management and accounts receivable collection system, including the banks associated therewith, shall be maintained, and the Borrowers agree not to, and cause their subsidiaries not to, modify this cash management system or establish any new bank accounts without the Administrative Agent's prior written consent. 4. Retainers. Subject to all of the terms and conditions hereof, the Initial Budget shall provide for the payment of retainers for the professionals identified therein (the FE Professionals (as defined below) and the Non-FE Professionals (as defined below), collectively, the "Professionals") in the aggregate amounts set forth below (collectively, the "Retainers"; and for each Professional, a "Retainer") to provide for the payment of a portion of the reasonable fees ("Fees") and expenses ("Expenses", and together with the Fees, the "Advisor Fees") incurred by such Professionals in connection with the Chapter 11 Cases; provided, however, that notwithstanding the foregoing, the aggregate amount of the Retainers shall in no event exceed $1,773,333.00. - -------------------------------------------------------------------------------- ___________________ - -------------------------------------------------------------------------------- Retained by Filing Entities Amount equal to three times (3x) the (collectively, the "FE Professionals"; monthly amount provided for such individually, a "FE Professional") Professional in the Budget - -------------------------------------------------------------------------------- Not retained by Filing Entities Amount equal to two times (2x) the (excluding any professionals retained monthly amount provide for such by the Administrative Agent or the Professional in the Budget Lenders, collectively, the "Non-FE Professionals"; individually, a "Non-FE Professional") - -------------------------------------------------------------------------------- The Retainers set forth in this Section 4 shall be payable no earlier than August 8, 2003 (but in any event prior to the Petition Date) so long as the PSA shall be effective on or before August 8, 2003. If (x) an Official Committee of Unsecured Creditors (the "Creditors' Committee") is appointed in the Chapter 11 Cases, and (y) a Professional receives a Retainer, and such Professional's retention is not approved by the Bankruptcy Court, such Professional shall (i) no longer be entitled any additional Advisor Fees pursuant to this Agreement, provided, however, that any Advisor Fees incurred through the date that the Creditors' Committee selects its professionals shall be payable pursuant to the Budget, and (ii) immediately remit the unused portion of such Retainer to the Filing Entities for deposit into the Restructuring Account (it being understood that such remitted funds must be used before the Borrowers deposit additional funds into the Restructuring Account). 5. Filing Entities' Restructuring Fees. Subject to the PSA's having become effective on or before August 8, 2003, for the period (the "Budget and Funding Period") commencing on August 8, 2003 to the Expiration Date (as defined below), the Consenting Lenders agree, subject to the terms and conditions of this Agreement and the Budget, to permit the Borrowers to pay the Advisor Fees, the Retainers and the fees payable to the Bankruptcy Court and the Office of the United States Trustee (the "United States Trustee") in connection with the Chapter 11 Cases (excluding any fees incurred in connection with DDi Europe and its European subsidiaries)(collectively, the "Filing Entities' Restructuring Fees"). The following procedures shall apply to the payment of the Filing Entities' Restructuring Fees: 4 (a) No later than the last business day of each month immediately succeeding the month for which compensation is sought (but in no event later than January 25, 2004), each Professional will deliver a monthly statement (the "Monthly Statement") of its Advisor Fees, which statement shall include (i) detailed daily time entries and summaries of time (redacted as may be necessary and appropriate) (except in the case of any Professional that does not maintain such time records in the ordinary course) and (ii) a detailed summary of all disbursements and expenses for which the Professional is seeking reimbursement to the following: (i) John Stumpf, Chief Financial Officer, Dynamic Details, Inc., 1220 Simon Circle Anaheim, CA 92806, with a copy to Kirkland & Ellis LLP, 777 South Figueroa Street, Los Angeles, California 90017 (Attn. Sharon Kopman, Esq.), (ii) Administrative Agent, 270 Park Avenue, New York, NY 10017 (Attn: Jonathan E. Katz), (iii) Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, NY 10017 (Attn: Kathrine A. McLendon, Esq.), (iv) counsel to any statutory committee of creditors of the Filing Entities appointed by the United States Trustee and (iv) the United States Trustee. (b) Provided that the Interim Compensation Motion and the Funding Motion have been approved by the Bankruptcy Court pursuant to final orders, within five (5) calendar days of the submission of the Monthly Statements by a Professional, the Consenting Lenders shall permit the Borrowers to deposit an amount of the Cash Collateral equal to 80% of such Professional's Fees and 100% of such Professional's Expenses into the Restructuring Account. Immediately upon receipt of such funds, subject to the Budget and this Agreement, the Filing Entities shall pay such Professional (i) 80% of its Fees and (ii) 100% of its Expenses. (c) If a Professional's Advisor Fees are less than the amount provided for in the Budget, the excess availability shall roll over into the next period; if a Professional's Advisor Fees are greater than the amount provided for in the Budget, such Professional's excess Advisor Fees shall be paid out of the next period's availability. (d) If the PSA becomes effective on or before August 8, 2003, all Filing Entities' Restructuring Fees (excluding the Retainers) paid out of the Cash Collateral after August 8, 2003 shall constitute an allowed administrative expense claim of the Lenders pursuant to Sections 503(b)(1), 507(a) and 507(b) of the Bankruptcy Code with priority in payment over any and all administrative expenses of the kinds specified or ordered pursuant to any provision of the Bankruptcy Code including, without limitation, Sections 105, 326, 328, 330, 331 and 726 of the Bankruptcy Code, and shall at all times be senior to the rights of the Filing Entities, and any successor trustee or any creditor in the Chapter 11 Cases or any subsequent proceedings under the Bankruptcy Code (such claim of the Lenders in either case, the "Allowed Superpriority Administrative Expense Claim"), subject to Section 8(c) below. (e) Upon entry of a final order by the Bankruptcy Court approving both the Funding Motion and the Interim Compensation Motion, the FE Professionals shall agree to consent to apply a maximum of two-thirds (2/3) of the amount of each of their respective Retainers to the first 80% of their respective Fees and 100% of their respective Expenses until such portion of their Retainers has been fully utilized and the Non-FE Professionals shall agree to consent to apply a maximum of one-half (1/2) of the amount of each of their respective Retainers to 80% of their respective Fees and 100% of their respective Expenses until such portion of their Retainers has been fully utilized. (f) If the Bankruptcy Court does not approve the Interim Compensation Motion, then the Consenting Lenders shall permit the Borrowers to deposit into the Restructuring Account, on a monthly basis, an amount of the Cash Collateral equal to the amount of the Filing Entities' Restructuring Fees for one (1) month under the Budget, and the Filing Entities shall pay such Filing Entities' Restructuring Fees upon compliance with the orders of the Bankruptcy Court. (g) The payment of all Filing Entities' Restructuring Fees shall be subject to the Budget, the terms and conditions of this Agreement and orders of the Bankruptcy Court that have been approved in form and substance by the Administrative Agent. 5 (h) The total aggregate amount of the Filing Entities' Restructuring Fees permitted to be paid pursuant to this Agreement shall not exceed the amounts provided for in the Budget for, and only during, the Budget and Funding Period. Each Filing Entity agrees that in the event any such Professional's Advisor Fees exceed the aggregate budgeted amount for such Professional, that such Professional will have an allowed administrative expense claim for such excess amount that is approved by the Bankruptcy Court at the termination of the Bankruptcy Cases (it being understood that all Filing Entities' Restructuring Fees accrued during the Budget and Funding Period will be paid by the Borrowers from the Cash Collateral, subject to the Budget). 6. Agreements of the Filing Entities. (a) No later than one (1) business day after the commencement of the Chapter 11 Cases (the "Petition Date"), the Filing Entities acknowledge and agree that the Filing Entities shall file a Motion for Interim Monthly Compensation (in form and substance satisfactory to the Administrative Agent, the "Interim Compensation Motion") pursuant to the Bankruptcy Court's Administrative Order M-219, dated January 24, 2000 and the terms and conditions of this Agreement seeking entry of an order approving the monthly interim compensation of the Professionals (in form and substance satisfactory to the Administrative Agent, the "Interim Compensation Order"). (b) No later than one (1) business day after the Petition Date, the Filing Entities acknowledge and agree that the Filing Entities and the Borrowers shall file a Joint Motion (in form and substance acceptable to the Administrative Agent, the "Funding Motion") seeking entry of an order (in form an substance satisfactory to the Administrative Agent, the "Funding Order") permitting the Borrowers to continue payment of the Filing Entities' Restructuring Fees relating to the Restructuring Transaction pursuant to the terms of the Budget and this Agreement. (c) Each of the Filing Entities acknowledges and agrees that any funds deposited in the Restructuring Account shall be used solely for payment of the Filing Entities' Restructuring Fees and as otherwise provided in this Agreement and the Budget. (d) Each of the Filing Entities acknowledges and agrees that the Allowed Superpriority Administrative Expense Claim shall be an allowed claim under the Funding Order, subject to the terms of Section 7(g) and Section 8(c). (e) Each of the Filing Entities shall perform all of the terms and conditions hereunder. (f) Each of the Filing Entities acknowledges and agrees that (i) neither the Consenting Lenders nor the Borrowers shall have any obligation, implicit or otherwise, to pay the Retainers and the remainder of the Filing Entities' Restructuring Fees, except as set forth herein, and only through the Expiration Date (as defined below), (ii) payment of such Filing Entities' Restructuring Fees does not and will not give rise to any liability on the part of the Consenting Lenders, (iii) payment of such Filing Entities' Restructuring Fees (other than the Advisor Fees) does not and will not give rise to any liability on the part of the Borrowers and (iv) the Consenting Lenders have not agreed to the use of the Cash Collateral for payment of any obligation that the Borrowers may have (if any) to such Professionals. (g) Each of the Filing Entities shall permit the Administrative Agent and its representatives, in the Administrative Agent's reasonable discretion, to inspect and copy the Filing Entities' books and records during normal business hours. (h) Each of the Filing Entities acknowledges and agrees that in the event any such Professional's respective Advisor Fees exceed the budgeted amount for such Professional in the aggregate, that such Professional will have an allowed administrative expense claim for such excess amount that is approved by the Bankruptcy Court at the termination of the Bankruptcy Cases. 6 7. Agreements of the Borrowers. (a) No later than one (1) business day after the Petition Date, the Borrowers and the Filing Entities shall file the Funding Motion. (b) Each of the Borrowers acknowledges and agrees that they shall only use the Cash Collateral as provided in this Agreement and pursuant to the Budget. (c) Each of the Borrowers acknowledges and agrees that any funds deposited in the Restructuring Account shall solely be used to pay the Filing Entities' Restructuring Fees and as otherwise provided in this Agreement and the Budget. (d) Each of the Borrowers agree to perform all of the terms and conditions hereunder. (e) Each of the Borrowers acknowledges and agrees that the Consenting Lenders do not have any obligation to pay the Filing Entities' Restructuring Fees and that the payment of the Filing Entities' Restructuring Fees does not give rise to any liability to the Professionals. (f) Each of the Borrowers acknowledges and agrees that if the Bankruptcy Court does not approve the Interim Compensation Motion and/or requires the Professionals to exhaust their respective Retainers prior to receiving payment directly from the Filing Entities, then the Consenting Lenders agree to permit the Borrowers to, each month, deposit an amount of the Cash Collateral equal to one month of Advisor Fees (excluding the Retainers) for each Professional (provided, however, that each respective Professional's Retainers must be applied pursuant to Section 5(e) herein before any such amounts are deposited into such the Restructuring Account for such Professional) under the Budget into the Restructuring Account. (g) Each of the Borrowers acknowledges and agrees that the Allowed Superpriority Administrative Expense Claim shall be a claim of the Lenders and not of the Borrowers. (h) Each of the Borrowers acknowledges and agrees that the Borrowers shall jointly provide the following reports (the "Reporting Requirements") to the Administrative Agent (which may be further transmitted to the Administrative Agent's advisors and the Consenting Lenders): (x) commencing on Wednesday, August 6, 2003, and on every Wednesday thereafter, the Borrowers shall prepare and deliver, as of the week ending the preceding Friday, a weekly report of the actual cash balances as compared to the Budget, with a report of any material variances and the reasons therefore, in each case in a form reasonably satisfactory to the Administrative Agent; (y) no later than the fourteenth (14) day following the last calendar day of each calendar month (commencing with the month of August), the Borrowers shall prepare (i) a monthly report of the actual Cash Collected (as defined in the Budget), actual Cash Disbursements (as defined in the Budget) and actual Advisor Fees (as defined in the Budget) for such immediately preceding month as compared to the Budget for such calendar month on a line item basis with key assumptions and supporting detail; and (ii) a report of the actual Ending Cash Balance (as defined in the Budget) for such immediately preceding month as compared to the Budget for such calendar month, in each case in a form reasonably satisfactory to the Administrative Agent; and (z) all reports required under the terms of the Credit Agreement, when required to be provided thereunder and such other reports and information as may be reasonably requested by the Administrative Agent from time to time. A Default (as defined below) shall occur under this Agreement if: (a) with respect to the weekly Reporting Requirements set forth in clause (x), if the actual Ending Cash Balance is 15% less than the amount set forth in the Budget for such week, or (b) with respect to the monthly Reporting Requirements set forth in clause (y), if (i) the actual Total Cash Collected (as defined in the Budget) is 20% less than the amount set forth in the Budget for such calendar month, (ii) the actual Total Operating Disbursements (as defined in the Budget) exceeds 20% of the amount set forth for such Total Operating Disbursements in the Budget for such calendar month or (iii) the actual Ending Cash Balance is 10% less than the amount set forth in the Budget for such calendar month. A chart outlining the deadlines for the filing of such reports and the Interim Budgets is annexed hereto as Schedule I. 7 8. Agreements of the Consenting Lenders. (a) Each Consenting Lender hereby consents to and shall not object to the filing of the Interim Compensation Motion and the Funding Motion. (b) Each Consenting Lender agrees to permit the Filing Entities and the Borrowers to use the Cash Collateral, subject to the Budget and the terms and conditions provided herein for the period commencing on August 8, 2003 up to and including the Expiration Date. (c) Each Consenting Lender hereby agrees to waive the Allowed Superpriority Administrative Expense Claim if the Restructuring Transaction is consummated on or before January 30, 2004. (d) If the Bankruptcy Court does not approve the Interim Compensation Motion, then the Consenting Lenders agree to permit the Borrowers to deposit into the Restructuring Account, on a monthly basis, an amount of the Cash Collateral equal to the amount of the Filing Entities' Restructuring Fees for one (1) month under the Budget, and the Filing Entities shall pay such Filing Entities' Restructuring Fees upon compliance with the orders of the Bankruptcy Court. 9. Agreements of the Professionals. (a) Each of the Professionals agrees that the Consenting Lenders shall not have any obligation, implicit or otherwise, to pay the Retainers and the remainder of the Filing Entities' Restructuring Fees (which include the Advisor Fees), except as set forth in, and only through the Expiration Date, of this Agreement, and that payment of such Filing Entities' Restructuring Fees does not and will not give rise to any liability on the part of the Consenting Lenders. The Professionals further agree that, except as set forth in, and only through the Expiration Date, of this Agreement: (i) the Borrowers' shall not have any obligation, implicit or otherwise, to pay the Filing Entities' Restructuring Fees (other than Advisor Fees), and (ii) the Consenting Lenders have not agreed to the use of the Cash Collateral for payment of any obligation that the Borrowers may have (if any) to such Professionals. (b) Upon entry of a final order by the Bankruptcy Court approving both the Funding Motion and the Interim Compensation Motion, the FE Professionals agree to apply a maximum of two-thirds (2/3) of the amount of each of their respective Retainers to 80% of their respective Fees and 100% of their respective Expenses and the Non-FE Professionals agree to apply a maximum of one-half (1/2) of the amount of each of their respective Retainers to 80% of their respective Fees and 100% of their respective Expenses. It being understood that the Filing Entities shall not pay any Professional for its Advisor Fees unless and until such amounts are so applied. (c) Each of the Professionals acknowledges and agrees that if its Advisor Fees exceed the budgeted amount in aggregate, that such Professional will have an Allowed (as defined in the Conforming Plan) administrative expense claim for such excess amount at the termination of the Bankruptcy Cases. (d) Each of the Professionals acknowledges and agrees that (i) if a Professional's Advisor Fees are less than the amount provided for in the Budget, the excess availability shall roll over into the next period and (ii) if a Professional's Advisor Fees are greater than the amount provided for in the Budget, such Professional's excess Advisor Fees shall be paid out of the next period's availability. 8 10. Representations and Warranties. Each Professional, Filing Entity and Borrower, severally (and not jointly) represents and warrants to the Consenting Lenders that the following statements are true, correct and complete as the date hereof: (a) it is duly organized, validly existing, and in good standing under the laws of the state of its organization, and has all requisite corporate, partnership, limited liability company or similar authority to enter into this Agreement and carry out the transactions contemplated hereby and perform its obligations contemplated hereunder; and the execution and delivery of this Agreement and the performance of such Party's obligations hereunder have been duly authorized by all necessary corporate, limited liability, partnership or other similar action on its part; (b) the execution, delivery, and performance by such Party of this Agreement does not and shall not (i) violate any provision of law, rule or regulation applicable to it or any of its subsidiaries or its certificate of incorporation or bylaws or other organizational documents or those of any of its subsidiaries, or (ii) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any material contractual obligation to which it or any of its subsidiaries is a party; and (c) this Agreement is a good faith agreement. 11. Termination. This Agreement shall be in full force and effect from August 1, 2003 through and including the Expiration Date (as defined below); provided, however, that the agreement to fund the Filing Entities' Restructuring Fees is contingent upon the effectiveness of the PSA. Unless the Required Lenders have otherwise agreed in writing, the Filing Entities' and the Borrowers' use of the Cash Collateral under this Agreement shall terminate on the date (the "Expiration Date") that is the earlier to occur of (x) August 8, 2003, which date shall automatically be extended to January 30, 2004 if the PSA becomes effective on or before August 8, 2003; (y) on the date any foreclosure proceeding is commenced against, or any bankruptcy case is commenced by or against, Details or DDISV; or (z) three (3) business days following the receipt by the Filing Entities, the Borrowers, the Ad Hoc Committee, any statutory committee appointed in the Chapter 11 Cases and the United States Trustee of written notice from the Administrative Agent of the occurrence and continuance of any of the following defaults (the "Defaults") under this Agreement: (i) the Bankruptcy Court shall not enter an order approving this Agreement or any court shall enter an order reversing, amending, supplementing, staying, vacating or otherwise modifying the order approving this Agreement; (ii) any of the Filing Entities and the Borrowers shall otherwise fail to comply in any material respect with the terms hereof, including without limitation, failing to comply with the Reporting Requirements for making types of payments not set forth in the Budget; (iii) any representation or warranty made by the Borrowers in connection with the Reporting Requirements shall prove to have been incorrect in any material respect when made; (iv) a Termination Event shall have occurred under the RSA; and (v) the Filing Entities shall fail to make a payment to the Professionals as required under this Agreement. In the event of a termination of this Agreement, the Filing Entities' Restructuring Fees accrued to the date of termination shall be paid by the Borrowers and the Filing Entities' in accordance with the Budget and the other applicable terms hereof. Subject to the immediately preceding sentence, on the Expiration Date, (i) the Borrowers' right to use the Cash Collateral under this Agreement shall terminate and the Borrowers shall immediately cease using the Cash Collateral pursuant to this Agreement, (ii) the Filing Entities' right to use the Cash Collateral shall terminate and the Filing Entities' shall immediately cease using the Cash Collateral (and, in the event any amounts remain in the Restructuring Account after payment of Filing Entities' Restructuring Fees accrued to the Expiration Date shall immediately be transferred to the Borrowers for deposit into the JPM Controlled Account) and (iii) the Administrative Agent and each Consenting Lender shall have all their rights and remedies under the Loan Documents, including the right to setoff amounts in any account of the Borrowers and the Filing Entities maintained with any such party. Notwithstanding the occurrence of the Expiration Date or anything herein, all of the rights, remedies, benefits and protections provided to the Administrative Agent and the Consenting Lenders under this Agreement shall survive the Expiration Date. 9 12. Limited Effect. The provisions of this Agreement shall be effective solely for the purposes set forth herein, shall be limited precisely as written and shall not be deemed to (a) waive any Default or Event of Default (each as defined in the Loan Documents) under the Loan Documents or (b) otherwise prejudice any right or remedy which the Consenting Lenders or the Administrative Agent may now have or may have in the future under or in connection with the Loan Documents. 14. Reservation of Rights; No Waiver; Cumulative Remedies. Each of the Filing Entities and the Borrowers jointly and severally acknowledges and agrees that, except as otherwise provided herein, the Consenting Lenders shall preserve all rights, remedies, powers or privileges under the Credit Agreement and the other Loan Documents and under applicable law. Nothing contained herein shall in any way (i) limit or otherwise prejudice any right, remedy, power or privilege which the Consenting Lenders or the Administrative Agent may now have or may have in the future under or in connection with the Credit Agreement or any other Loan Document, or diminish any of the obligations of the Filing Entities and the Borrowers or any of their respective Subsidiaries contained in the Credit Agreement or any other Loan Document, (ii) waive any Default (as defined in the Loan Documents) or Event of Default (as defined in the Loan Documents), or (iii) waive, modify, consent to or amend any term or condition of the Credit Agreement or any other Loan Document. The rights, remedies, powers and privileges of the Administrative Agent and the Consenting Lenders provided under this Agreement and the Loan Documents are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 15. Full Force and Effect; No Change. Except as expressly stated herein, the Credit Agreement shall continue to be, and shall remain, in full force and effect. This Agreement shall not be deemed to be a waiver of, or consent to, or a modification or amendment of, any other term or condition of the Credit Agreement or any other Loan Document or to prejudice any other right or rights which the Consenting Lenders may now have or may have in the future under or in connection with the Credit Agreement or any of the instruments or agreements referred to therein, as the same may be amended from time to time. Except as expressly provided herein, no term or provision of the Credit Agreement shall be amended, waived, modified or supplemented, and each term and provision of the Credit Agreement shall remain in full force and effect. 16. Counterparts. This Agreement may be executed by the parties hereto in any number of separate counterparts by facsimile with originals to follow, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 17. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS FORBEARANCE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY) AND FOR ANY COUNTERCLAIM THEREIN. 18. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 10 IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered by their respective proper and duly authorized officers as of the day and year first above written. DDi CAPITAL CORP. By: /s/ TIMOTHY DONNELLY ------------------------------------ Title: VP DYNAMIC DETAILS, INCORPORATED By: /s/ TIMOTHY DONNELLY ------------------------------------ Title: VP DYNAMIC DETAILS, INCORPORATED, SILICON VALLEY By: /s/ TIMOTHY DONNELLY ------------------------------------ Title: VP DDi Corp. By: /s/ TIMOTHY DONNELLY ------------------------------------ Title: VP 11 JPMORGAN CHASE BANK, as Administrative Agent, Collateral Agent, Co-Syndication Agent By: /s/ Illegible ------------------------------------ Title: Vice-President JPMORGAN CHASE BANK, on behalf of the Consenting Lenders By: /s/ Illegible ------------------------------------ Title: Vice-President 12 KIRKLAND & ELLIS LLP By: /s/ SHARON M. KOPMAN ------------------------------------ Title: Senior Associate PAUL, HASTINGS, JANOFSKY & WALKER LLP By: /s/ JOHN F. DELLA GROTTA ------------------------------------ Title: Partner HOULIHAN LOKEY HOWARD & ZUKIN By: /s/ ERIC WINTHROP ------------------------------------ Title: Vice President STUTMAN TREISTER & GLATT PROFESSIONAL CORPORATION By: /s/ Illegible ------------------------------------ Title: Illegible AKIN GUMP STRAUSS HAUER & FELD LLP By: /s/ Illegible ------------------------------------ Title: Partner JEFFERIES GROUP INC. By: /s/ Illegible ------------------------------------ Title: EXECUTION COPY EXHIBIT A [Interim Budget] EXECUTION COPY Schedule I Deadlines for Filing Reports and Interim Budgets
- -------------------------------------------------------------------------------------------------------- WEEK PERIOD WEEKLY REPORT MONTHLY REPORT BUDGET MAINTENANCE - -------------------------------------------------------------------------------------------------------- 1 July 29 - August 3 - -------------------------------------------------------------------------------------------------------- 2 August 4 - August 10 06-Aug - -------------------------------------------------------------------------------------------------------- 3 August 11 - August 17 13-Aug - -------------------------------------------------------------------------------------------------------- 4 August 18 - August 24 20-Aug - -------------------------------------------------------------------------------------------------------- 5 August 25 - August 31 27-Aug - -------------------------------------------------------------------------------------------------------- 6 September 1 - September 7 03-Sep - -------------------------------------------------------------------------------------------------------- 7 September 8 - September 14 10-Sep 14-Sep - -------------------------------------------------------------------------------------------------------- 8 September 15 - September 21 17-Sep - -------------------------------------------------------------------------------------------------------- 9 September 22 - September 28 24-Sep PROVIDE 2nd Interim Budget to A.A. - -------------------------------------------------------------------------------------------------------- 10 September 29 - October 5 01-Oct COMMENCE 2nd Interim Budget - -------------------------------------------------------------------------------------------------------- 11 October 6 - October 12 08-Oct 14-Oct - -------------------------------------------------------------------------------------------------------- 12 October 13 - October 19 15-Oct - -------------------------------------------------------------------------------------------------------- 13 October 20 - October 26 22-Oct - -------------------------------------------------------------------------------------------------------- 14 October 27 - November 2 29-Oct - -------------------------------------------------------------------------------------------------------- 15 November 3 - November 9 05-Nov - -------------------------------------------------------------------------------------------------------- 16 November 10 - November 16 12-Nov 14-Nov - -------------------------------------------------------------------------------------------------------- 17 November 17 - November 23 19-Nov - -------------------------------------------------------------------------------------------------------- 18 November 24 - November 30 26-Nov PROVIDE 3rd Interim Budget to A.A. - -------------------------------------------------------------------------------------------------------- 19 December 1 - December 7 03-Dec COMMENCE 3rd Interim Budget - -------------------------------------------------------------------------------------------------------- 20 December 8 - December 14 10-Dec 14-Dec - -------------------------------------------------------------------------------------------------------- 21 December 15 - December 21 17-Dec - -------------------------------------------------------------------------------------------------------- 22 December 22 - December 28 24-Dec - -------------------------------------------------------------------------------------------------------- 23 December 29 - January 4 31-Dec - -------------------------------------------------------------------------------------------------------- 24 January 5 - January 11 07-Jan 14-Jan - -------------------------------------------------------------------------------------------------------- 25 January 12 - January 18 14-Jan - -------------------------------------------------------------------------------------------------------- 26 January 19 - January 25 21-Jan - -------------------------------------------------------------------------------------------------------- 27 January 26 - February 1 28-Jan END of 3rd Interim Budget - -------------------------------------------------------------------------------------------------------- 14-Feb - --------------------------------------------------------------------------------------------------------
EX-31.1 12 dex311.htm SECTION 302 CERTIFICATION OF DDI CORP.'S CEO Section 302 Certification of DDi Corp.'s CEO

Exhibit 31.1

 

CERTIFICATION

 

I, Bruce D. McMaster, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of DDi Corp.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

 

  a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Dated: November 14, 2003

  /s/ BRUCE D. MCMASTER                
 
       
   

Bruce D. McMaster

Chief Executive Officer

       
EX-31.2 13 dex312.htm SECTION 302 CERTIFICATION OF DDI CORP.'S CFO Section 302 Certification of DDi Corp.'s CFO

Exhibit 31.2

 

CERTIFICATION

 

I, John K. Stumpf, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of DDi Corp.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

 

  a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Dated: November 14, 2003

  /s/ JOHN K. STUMPF                
 
       
   

John K. Stumpf

Chief Financial Officer

       
EX-31.3 14 dex313.htm SECTION 302 CERTIFICATION OF DDI CAPITAL'S CEO Section 302 Certification of DDi Capital's CEO

Exhibit 31.3

 

CERTIFICATION

 

I, Bruce D. McMaster, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of DDi Capital Corp.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

 

  a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Dated: November 14, 2003

  /s/ BRUCE D. MCMASTER                    
 
           
   

Bruce D. McMaster

Chief Executive Officer

           
EX-31.4 15 dex314.htm SECTION 302 CERTIFICATION OF DDI CAPITAL'S CFO Section 302 Certification of DDi Capital's CFO

Exhibit 31.4

 

CERTIFICATION

 

I, John K. Stumpf, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of DDi Capital Corp.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

 

  a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Dated: November 14, 2003

  /s/ JOHN K. STUMPF                    
 
           
   

John K. Stumpf

Chief Financial Officer

           
EX-32.1 16 dex321.htm SECTION 906 CERTIFICATION OF DDI CORP.'S CEO Section 906 Certification of DDi Corp.'s CEO

Exhibit 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of DDi Corp. (the “Company”) on Form 10-Q for the quarter ending September 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Bruce D. McMaster, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

 

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

Date: November 14, 2003       By:     /s/ BRUCE D. MCMASTER            
         
   
               

Bruce D. McMaster

Chief Executive Officer

   
EX-32.2 17 dex322.htm SECTION 906 CERTIFICATION OF DDI CORP.'S CFO Section 906 Certification of DDi Corp.'s CFO

Exhibit 32.2

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of DDi Corp. (the “Company”) on Form 10-Q for the quarter ending September 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John K. Stumpf, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

 

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

Date: November 14, 2003       By:     /s/ JOHN K. STUMPF            
         
   
               

John K. Stumpf

Chief Financial Officer

   
EX-32.3 18 dex323.htm SECTION 906 CERTIFICATION OF DDI CAPITAL'S CEO Section 906 Certification of DDi Capital's CEO

Exhibit 32.3

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of DDi Capital Corp. (the “Company”) on Form 10-Q for the quarter ending September 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Bruce D. McMaster, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

 

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

Date: November 14, 2003       By:     /s/ BRUCE D. MCMASTER            
         
   
               

Bruce D. McMaster

Chief Executive Officer

   
EX-32.4 19 dex324.htm SECTION 906 CERTIFICATION OF DDI CAPITAL'S CFO Section 906 Certification of DDi Capital's CFO

Exhibit 32.4

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of DDi Capital Corp. (the “Company”) on Form 10-Q for the quarter ending September 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John K. Stumpf, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

 

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

Date: November 14, 2003       By:     /s/ JOHN K. STUMPF            
         
   
               

John K. Stumpf

Chief Financial Officer

   
EX-99.1 20 dex991.txt AMENDMENT TO DEBTORS' FIRST AMENDED JOINT PLAN OF REORGANIZATION Exhibit 99.1 KIRKLAND & ELLIS LLP Citigroup Center 153 East 53rd Street New York, New York 10022-4675 Telephone: (212) 446-4800 Facsimile: (212) 446-4900 Richard L. Wynne (RW-5630) KIRKLAND & ELLIS LLP 777 South Figueroa Street Los Angeles, California 90017 Telephone: (213) 680-8400 Facsimile: (213) 680-8500 Sharon M. Kopman (SK-3295) Reorganization Counsel for Debtors and Debtors in Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK - ------------------------------------------ x Chapter 11 In re: : : Case No. 03-15261 (SMB) DDI CORP., et al., : : (Jointly Administered with Case No. Debtors. : 03-15260) - ------------------------------------------ x DEBTORS' AMENDED FIRST AMENDED JOINT PLAN OF REORGANIZATION DATED AS OF AUGUST 30, 2003 TABLE OF CONTENTS I. INTRODUCTION........................................................................1 II. DEFINITIONS, INTERPRETATION AND RULES OF CONSTRUCTION...............................2 2.1 Definitions.................................................................2 2.2 Rules of Construction......................................................28 2.3 Plan Documentary Supplement................................................29 2.4 Exhibits...................................................................29 III. JOINT PLAN; NO SUBSTANTIVE CONSOLIDATION...........................................29 IV. UNCLASSIFIED CLAIMS................................................................30 4.1 Administrative Claims......................................................30 4.2 Superpriority Administrative Expense Claim.................................32 4.3 Priority Tax Claims........................................................32 4.4 Indenture Trustee Fee Claim................................................32 V. CLASSIFICATION OF CLAIMS AND INTERESTS.............................................33 5.1 General Overview...........................................................33 VI. PROVISIONS FOR THE TREATMENT OF CLAIMS AND INTERESTS...............................34 6.1 Class 1 - Allowed Class 1 Claims (Unimpaired)..............................34 6.2 Class 2 - Other Secured Claims (Unimpaired)................................35 6.3 Class 3 - Other Priority Claims (Unimpaired)...............................35 6.4 Class 4 - Allowed Unsecured Claims Not Classified in Classes 5, 6a or 6b (Unimpaired)...............................................................36 6.5 Class 5 - Allowed Class 5 Claims - Senior Discount Notes (Impaired)........36 6.6 Class 6a - Allowed Class 6a Claims - 5.25% Convertible Subordinated Notes (Impaired)...........................................................37 6.7 Class 6b - Allowed Class 6b Claims - 6.25% Convertible Subordinated Notes (Impaired)...........................................................37 6.8 Class 7 - Allowed Equity Interests - Existing DDi Corp. Common Stock (Impaired).................................................................38 VII. ACCEPTANCE OR REJECTION OF THE PLAN................................................38 7.1 Introduction...............................................................38 7.2 Who May Object to Confirmation of the Plan.................................39 7.3 Who May Vote to Accept/Reject the Plan.....................................39 VIII. MEANS FOR IMPLEMENTING THE PLAN....................................................40 8.1 Introduction...............................................................40 8.2 The Reorganized Debtors....................................................41 8.3 Issuance of New Common Stock...............................................41 8.4 Issuance of Secured Lender Warrants........................................41 8.5 Issuance of Senior Discount Warrants.......................................42 8.6 Issuance of Management Options Under Management Incentive Plan.............42 8.7 Issuance of New Preferred Stock or New DDi Corp. Preferred Stock...........43
i 8.8 Amended and Restated Articles or Certificate of Incorporation or Charter and Bylaws.........................................................43 8.9 Treatment of the Senior Debt Parties Under the Pre-Restructuring Loan Documents..................................................................44 8.10 Treatment of the Senior Discount Note Holders..............................44 8.11 Funding of the Plan........................................................45 8.12 Management/Board of Directors..............................................45 8.13 Corporate Actions..........................................................48 8.14 Revesting of Assets........................................................49 8.15 Cancellation of Existing Securities and Agreements.........................49 8.16 Preservation of Rights of Action; Settlement of Litigation Claims..........50 IX. DISTRIBUTIONS......................................................................51 9.1 Distribution Agent.........................................................51 9.2 Distributions..............................................................51 9.3 Old Instruments and Securities.............................................52 9.4 De Minimis Distributions and Fractional Shares.............................53 9.5 Delivery of Distributions..................................................53 9.6 Undeliverable Distributions................................................54 9.7 Disposition of Unclaimed Property..........................................55 9.8 Effect of Distribution Record Date.........................................56 9.9 Setoffs....................................................................56 X. OBJECTIONS TO CLAIMS AND DISPUTED CLAIMS...........................................57 10.1 Objections to Claims.......................................................57 10.2 Treatment of Disputed Claims...............................................57 XI. EFFECT OF CONFIRMATION OF PLAN.....................................................57 11.1 Discharge..................................................................57 11.2 Injunction.................................................................58 XII. LIMITATION OF LIABILITY AND RELEASES...............................................59 12.1 No Liability for Solicitation or Participation.............................59 12.2 Good Faith Finding.........................................................59 12.3 Exculpation/Limitation of Liability........................................59 12.4 Debtors' Releases and Injunction...........................................60 12.5 Releases and Injunction....................................................61 XIII. CONDITIONS TO CONFIRMATION AND EFFECTIVENESS.......................................63 13.1 Conditions Precedent to Plan Confirmation..................................63 13.2 Conditions Precedent to Plan Effectiveness.................................63 13.3 Waiver of Conditions.......................................................64 XIV. RETENTION OF JURISDICTION..........................................................64 14.1 Retention of Jurisdiction..................................................64 XV. MODIFICATION OR WITHDRAWAL OF PLAN.................................................66 15.1 Modification of Plan.......................................................66 15.2 Termination Events.........................................................66 15.3 Nonconsensual Confirmation.................................................67
ii XVI. MISCELLANEOUS......................................................................67 16.1 Payment of Statutory Fees..................................................67 16.2 Payment Dates..............................................................67 16.3 Headings...................................................................67 16.4 Other Documents and Actions................................................68 16.5 Notices....................................................................68 16.6 Governing Law..............................................................70 16.7 Binding Effect.............................................................70 16.8 Successors and Assigns.....................................................70 16.9 No Waiver..................................................................71 16.10 Exemption from Securities Laws.............................................71 16.11 Inconsistencies............................................................71 16.12 Exemption from Certain Transfer Taxes and Recording Fees...................71 16.13 Post-Confirmation Conversion/Dismissal.....................................72 16.14 Final Decree...............................................................72
iii Exhibits Exhibit 1 - Term Sheet for Management Incentive Plan Exhibit 2 - Term Sheet for Common Equity Exhibit 3 - Term Sheet for Preferred Equity Exhibit 4 - Term Sheet for Senior Discount Notes Exhibit 5 - Term Sheet for the Restructuring of the Pre-Restructuring Bank Indebtedness Exhibit 6 - Summary of Terms and Conditions of Financial Restructuring of DDi Corp. and its Affiliates Exhibit 7 - Plan Support Agreement (as amended) Exhibit 8 - Senior Discount Note Holder Plan Support Agreement List Of Plan Documents To Be Filed After The Petition Date Document Date Filed - -------- ---------- Secured Lender Warrant Agreement At least 10 business days prior to Confirmation Hearing Senior Discount Warrant Agreement At least 10 business days prior to Confirmation Hearing New DDi Corp. Guarantee and Pledge At least 10 business days prior to Agreement Confirmation Hearing New Senior Accreting Note Indenture At least 10 business days prior to Confirmation Hearing Management Incentive Plan At least 10 business days prior to Confirmation Hearing Amended and Restated DDi Corp. At least 10 business days prior to Certificate of Incorporation Confirmation Hearing Amended and Restated DDi Corp. Bylaws At least 10 business days prior to Confirmation Hearing Amended and Restated DDi Corp. At least 10 business days prior to Articles of Incorporation Confirmation Hearing Amended and Restated DDi Europe At least 10 business days prior to Articles of Association (to be Confirmation Hearing effective only if the Modified Structure is not implemented) Any Other Plan Documents Deemed At least 10 business days prior to Necessary Confirmation Hearing iv I. INTRODUCTION On August 20, 2003 (the "Petition Date"), DDi, Corp., a Delaware corporation ("DDi Corp.) and DDi Capital Corp., a California corporation (DDi Capital, and together with DDi Corp., the "Debtors" and "Debtors-in-Possession" and each a "Debtor" and "Debtor-in-Possession"), filed separate voluntary petitions under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York (collectively, the "Chapter 11 Cases"). Each of the Debtors is a holding company that operates through their non-debtor operating subsidiaries. As of the Petition Date, Debtors' total North American debt equaled approximately $300 million, consisting of approximately $210.6 million in principal plus accrued and unpaid interest owing by DDi Corp. to the Holders of the Convertible Subordinated Notes (as defined below), approximately $17.7 million in principal plus accrued and unpaid interest owing by DDi Capital to Holders of the Senior Discount Notes (as defined below) and a guarantee of the Pre-Restructuring Bank Indebtedness (as defined below) by DDi Capital and substantially all of DDi Capital's subsidiaries. On August 21, 2003, the United States Bankruptcy Court entered an order authorizing the joint administration of the Debtors' Chapter 11 Cases. The document that you are reading is the Debtors' First Amended Joint Plan of Reorganization dated as of August 30, 2003. The Plan (as defined below) provides for the preservation of the Debtors' businesses through a comprehensive reorganization and debt recapitalization. Under the Plan, the claims of creditors will be paid, either in full or in part, through issuance of cash, debt or equity interests in Reorganized DDi Corp. (as defined below) and DDi Europe (as defined below) and will otherwise be discharged. Sent to you in the same envelope with this document is the Debtors' Joint Disclosure Statement. The Disclosure Statement (as defined below) has been approved by the Bankruptcy Court and it is being provided along with the Plan in order to provide you with critical information about the Debtors and to help you understand the Plan. The Disclosure Statement discusses the Debtors' history, businesses, properties, and results of operations and contains a summary and discussion of this Plan. Holders of Claims (as defined below) and Equity Interests (as defined 1 below) are encouraged to read the Disclosure Statement. No solicitation materials, other than the Disclosure Statement and related materials transmitted therewith and approved for solicitation purposes by the Bankruptcy Court, have been authorized for use in soliciting acceptances or rejections of this Plan. The Ad Hoc Convertible Note Holder Committee (as defined below), DDi Europe, DDi Intermediate Holdings Corp., Dynamic Details, Incorporated and Dynamic Details, Incorporated, Silicon Valley are co-sponsors of the Plan (the "Co-Sponsors"), with the rights of Plan proponents. This means that these groups have participated in the development of the Plan, and they have agreed to perform certain obligations in connection with the Plan provided that the Plan is confirmed by the Bankruptcy Court and certain other conditions are satisfied. II. DEFINITIONS, INTERPRETATION AND RULES OF CONSTRUCTION 2.1 Definitions. The following defined terms are used in this document. Any capitalized term used but not defined herein, but that is defined in the Bankruptcy Code or the Bankruptcy Rules, shall have the meaning ascribed to it in the Bankruptcy Code or Bankruptcy Rules. 2.1.1 5.25% Convertible Subordinated Debt Parties. The 5.25% Convertible Subordinated Note Holders, the 5.25% Underwriters and the 5.25% Trustee. 2.1.2 5.25% Convertible Subordinated Notes. The 5.25% Convertible Subordinated Notes due 2008 issued by DDi Corp. 2.1.3 5.25% Convertible Subordinated Note Indenture. That certain subordinated indenture dated as of February 20, 2001 (as amended, restated, supplemented, or otherwise modified from time to time prior to the Effective Date), by and between DDi Corp. and the 5.25% Trustee, pursuant to which the 5.25% Convertible Subordinated Notes were issued. 2.1.4 5.25% Convertible Subordinated Note Holders. All Holders of the 5.25% Convertible Subordinated Notes. 2 2.1.5 5.25% Trustee. U.S. Bank National Association, as successor in interest to The State Street Bank and Trust Company, in its capacity as indenture trustee under the 5.25% Convertible Subordinated Note Indenture. 2.1.6 5.25% Underwriters. Credit Suisse First Boston Corp. and Robertson Stephens, Inc. as underwriters of the 5.25% Convertible Subordinated Notes. 2.1.7 6.25% Convertible Subordinated Debt Parties. The 6.25% Convertible Subordinated Note Holders, the 6.25% Underwriters and the 6.25% Trustee. 2.1.8 6.25% Convertible Subordinated Notes. The 6.25% Convertible Subordinated Notes due 2007 issued by DDi Corp. 2.1.9 6.25% Convertible Subordinated Note Indenture. That certain indenture dated as of April 2, 2002 (as amended, restated, supplemented, or otherwise modified from time to time prior to the Effective Date), by and between DDi Corp. and the 6.25% Trustee, pursuant to which the 6.25% Convertible Subordinated Notes were issued. 2.1.10 6.25% Convertible Subordinated Note Holders. All Holders of the 6.25% Convertible Subordinated Notes. 2.1.11 6.25% Trustee. U.S. Bank National Association, as successor in interest to The State Street Bank and Trust Company, in its capacity as indenture trustee under the 6.25% Convertible Subordinated Note Indenture. 2.1.12 6.25% Underwriters. Robertson Stephens, Inc. and JPMorgan Securities, Inc. as underwriters of the 6.25% Convertible Subordinated Notes. 2.1.13 Ad Hoc Convertible Note Holder Committee. The group of Holders of Convertible Subordinated Notes who formed a committee chaired by Tablerock Fund Management, LLC. and represented by Stutman, Treister & Glatt Professional Corporation. 2.1.14 Ad Hoc Senior Discount Note Holder Committee. The group of Holders of the Senior Discount Notes, AIG Global Investment Corp. and JPMorgan Partners (BHCA), L.P., who formed a committee represented by Hahn & Hessen LLP. 3 2.1.15 Ad Hoc Committees. Collectively, the Ad Hoc Convertible Note Holder Committee and Ad Hoc Senior Discount Note Holder Committee. 2.1.16 Administrative Agent. JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), in its capacity as the arranger of the Commitments (as defined in the Pre-Restructuring Loan Documents), and as collateral, co-syndication, and administrative agent for the Secured Lenders. 2.1.17 Administrative Claim. Any Claim for any cost or expense of administration of the Cases allowable under section 330, 331, 503(b), or 507(a)(1) of the Bankruptcy Code, and the fees and expenses relating to the Ad Hoc Committees, including without limitation, any actual and necessary post-petition expenses of preserving the Estates of the Debtors, any actual and necessary post-petition expenses of operating the business of the Debtors in Possession including post-petition taxes, all compensation or reimbursement of expenses to the extent allowed by the Bankruptcy Court under sections 330, 331, or 503 of the Bankruptcy Code, the fees and expenses of each Professional retained by the Ad Hoc Committees which retentions have been approved by the Debtors and the Required Lenders, and the expenses of the members of the Ad Hoc Committees as each would be allowed under section 503(b) of the Bankruptcy Code if the Ad Hoc Committees were official committees under section 1102 of the Bankruptcy Code, and any fees or charges assessed against the Estates of the Debtors under section 1930 of Title 28 of the United States Code. 2.1.18 Administrative Claims Bar Date. The last date or dates fixed by the Plan or the Bankruptcy Court for filing proofs or requests for payment of certain Administrative Claims pursuant to Section 4.1.2 of the Plan, Rule 3003(c)(3) of the Bankruptcy Rules, or any order of the Bankruptcy Court. 2.1.19 Affiliate. "Affiliate" shall have the meaning set forth in section 101(2) of the Bankruptcy Code. 2.1.20 Allowed. When used to describe aClaim or Claims, such Claim or Claims to the extent that it or they are an "Allowed Claim" or "Allowed Claims." 4 2.1.21 Allowed Class 1 Claims. Each of the Secured Lenders shall, for purposes of distribution and treatment under the Plan, be deemed to have an Allowed Claim under Class 1 for DDi Capital's guarantee of the Pre-Restructuring Loan Documents and Pre-Restructuring Bank Indebtedness, which guarantee is secured by a pledge of the stock of Details, and need not file a proof of claim with respect thereto. 2.1.22 Allowed Class 5 Claims. A beneficial owner of the Senior Discount Notes of record as of the Effective Date shall, for purposes of distribution and treatment under the Plan, be deemed to have an Allowed Claim under Class 5 for the outstanding principal amount of the Senior Discount Notes and the Existing Senior Discount Note Indenture owned by such beneficial owner plus accrued and unpaid interest as of the Petition Date, and need not file a proof of claim with respect thereto. 2.1.23 Allowed Class 6a Claims. A beneficial owner of the 5.25% Convertible Subordinated Notes of record as of the Effective Date shall, for purposes of distribution and treatment under the Plan, be deemed to have an Allowed Claim under Class 6a for the outstanding principal amount of the 5.25% Convertible Subordinated Notes and the 5.25% Convertible Subordinated Note Indenture owned by such beneficial owner plus accrued and unpaid interest as of the Petition Date, and need not file a proof of claim with respect thereto. 2.1.24 Allowed Class 6b Claims. A beneficial owner of the 6.25% Convertible Subordinated Notes of record as of the Effective Date shall, for purposes of distribution and treatment under the Plan, be deemed to have an Allowed Claim under Class 6b for the outstanding principal amount of the 6.25% Convertible Subordinated Notes and the 6.25% Convertible Subordinated Note Indenture owned by such beneficial owner plus accrued and unpaid interest as of the Petition Date, and need not file a proof of claim with respect thereto. 2.1.25 Allowed Amount shall mean: (i) with respect to any Administrative Claim (i) if the Claim is based upon a Fee Application, the amount of such Fee Application that has been approved by a Final Order of the Bankruptcy Court;(ii) if the Claim is based upon any indebtedness or obligation 5 incurred in the ordinary course of business of the Debtors and is not otherwise subject to an Administrative Claim Bar Date, the amount of such Claim that has been agreed to by the Debtors and such creditor, failing which, the amount thereof as fixed by a Final Order of the Bankruptcy Court; or (iii) if the Holder of such Claim was required to file and has filed proof thereof with the Bankruptcy Court prior to an Administrative Claim Bar Date, (l) the amount stated in such proof if no objection to such proof of claim is interposed within the applicable period of time fixed by the Bankruptcy Code, the Bankruptcy Rules or the Bankruptcy Court, or (2) the amount thereof as fixed by Final Order of the Bankruptcy Court if an objection to such proof was interposed within the applicable period of time fixed by the Bankruptcy Code, the Bankruptcy Rules or the Bankruptcy Court. The Allowed Amount of any Administrative Claim which is subject to an Administrative Claims Bar Date and not filed by the applicable Administrative Claims Bar Date shall be zero, and no distribution shall be made on account of any such Administrative Claim; (ii) with respect to any Claim which is not an Administrative Claim, a Deficiency Claim, Allowed Class 1 Claim, Allowed Class 5 Claim, Allowed Class 6a Claim or Allowed Class 6b Claim (all "Other Claim"): (i) if the Holder of such Other Claim did not file proof thereof with the Bankruptcy Court on or before the Claims Bar Date, the amount of such Claim as listed in the Debtors' Schedules as neither disputed, contingent or unliquidated; or (ii) if the Holder of such Claim has filed proof thereof with the Bankruptcy Court on or before the Claims Bar Date, (a) the amount stated in such proof if no objection to such proof of claim was interposed within the applicable period of time fixed by the Bankruptcy Code, the Bankruptcy Rules, the Plan or the Bankruptcy Court, or (b) the amount thereof as fixed by Final Order of the Bankruptcy Court if an objection to such proof was interposed within the applicable period of time fixed by the Bankruptcy Code, the Bankruptcy Rules, the Plan or the Bankruptcy Court. The Allowed Amount of any Other Claim which is not filed by the applicable Claims Bar Date, is not listed on the Debtors' Schedules, is listed as disputed, unliquidated, contingent, unknown or in a zero amount or is not allowed under the terms of the Plan, shall be zero, and no distribution shall be made on account of any such Claim; 6 (iii) with respect to any Deficiency Claim, the amount thereof as fixed by Final Order of the Bankruptcy Court. The Allowed Amount of any Deficiency Claim which is not filed by the Claims Bar Date shall be zero, and no distribution shall be made on account of any such Deficiency Claim; (iv) with respect to any Allowed Class 5 Claims, Allowed Class 6a Claims and Allowed Class 6b Claims, the outstanding principal amount plus any accrued and unpaid interest due under their respective agreements as of the Petition Date, as the case may be; (v) with respect to the Allowed Class 1 Claims in the aggregate, the amount of $72,892,916.17 plus fees and interest thereon; and (vi) with respect to any Equity Interest, (i) the amount provided by or established in the records of the Debtors at the Confirmation Date, provided, however, that a timely filed proof of Equity Interest shall supersede any listing of such Equity Interest on the records of the Debtors; or (ii) the amount stated in a proof of Equity Interest filed prior to the Confirmation Date if no objection to such Equity Interest was filed prior to the Confirmation Date or such later date as the Bankruptcy Court allows; or (iii) the amount of such Equity Interest as fixed by a Final Order of the Bankruptcy Court. 2.1.26 Allowed Claim. Except as otherwise provided in this Plan (including with respect to those Classes for which the amount of the Allowed Claims is specified by this Plan), a Claim to the extent (and only to the extent) of the Allowed Amount of such Claim. 2.1.27 Allowed Claim or Allowed Class Claim. A Claim of the type specified or in the Class specified that is also an Allowed Claim (i.e., an Allowed Secured Claim is a Secured Claim that is also an Allowed Claim, and an Allowed Class 3 Claim is a Claim classified in Class 3 that is an Allowed Claim). 2.1.28 Allowed Equity Interest. Any Equity Interest to the extent, and only to the extent, of the Allowed Amount of such Equity Interest. 2.1.29 Allowed Superpriority Administrative Expense Claim. An Allowed Administrative Expense Claim of the Secured Lenders pursuant to Sections 503((b)(1), 507(a) 7 and 507(b) of the Bankruptcy Code with priority in payment over any and all administrative expenses of the kinds specified or ordered pursuant to any provision of the Bankruptcy Code including, without limitation, sections 105, 326, 328, 330, 331 and 726 of the Bankruptcy Code, and shall at all times be senior to the rights of the Debtors, and any successor trustee or any creditor in the Chapter 11 Cases or any subsequent proceedings under the Bankruptcy Code. 2.1.30 Amended and Restated DDi Corp. Bylaws. The amended and restated Bylaws for Reorganized DDi Corp., which shall be in the form attached as an Exhibit to the Plan Documentary Supplement. 2.1.31 Amended and Restated DDi Corp. Certificate of Incorporation. The amended and restated certificate of incorporation of Reorganized DDi Corp., which shall be in the form attached as an Exhibit to the Plan Documentary Supplement. 2.1.32 Amended and Restated DDi Europe Articles of Association. The amended and restated articles of association of DDi Europe, which shall be in the form attached as an Exhibit to the Plan Documentary Supplement. 2.1.33 Ballots. Each of the ballot forms distributed with the Disclosure Statement to each Holder of an impaired Claim or Equity Interest (other than to Holders not entitled to vote on the Plan) upon which is to be indicated among other things, acceptance or rejection of the Plan. 2.1.34 Bankruptcy Code. The Bankruptcy Reform Act of 1978, as amended, as set forth in Title 11 of the United States Code, 11 U.S.C. (S)(S) 101 et seq., as applicable to the Cases. 2.1.35 Bankruptcy Court. The United States Bankruptcy Court for the Southern District of New York, having jurisdiction over the Cases and, to the extent of any withdrawal of the reference made pursuant to section 157 of Title 28 of the United States Code, the United States District Court for the Southern District of New York, or, in the event such courts cease to exercise jurisdiction over the Cases, such court or unit thereof that exercises jurisdiction over the Cases in lieu thereof. 8 2.1.36 Bankruptcy Rules. Collectively, as now in effect or thereafter amended and as applicable to the Cases, (i) the Federal Rules of Bankruptcy Procedure, and (ii) the Local Bankruptcy Rules and General Orders applicable to cases pending before the Bankruptcy Court. 2.1.37 Borrowers. Dynamic Details, Incorporated, a California corporation, and Dynamic Details, Incorporated, Silicon Valley, a Delaware corporation, as borrowers under the Pre-Restructuring Loan Documents. 2.1.38 BOS. The Governor and Company of the Bank of Scotland, in its various capacities under the BOS Credit Facility. 2.1.39 BOS Consent. The consent of BOS, pursuant to the BOS Credit Facility, to the issuance of New Preferred Stock by DDi Europe, which shall be in form and substance reasonably satisfactory to the Co-Sponsors and the Required Lenders; provided, however, that if BOS consents to the issuance of the New Preferred Stock that is in strict conformity with the terms and conditions set forth in Exhibit "3" attached hereto and no other terms and conditions of such consent shall modify the terms and conditions set forth in such Exhibit "3", such consent shall be deemed in form and substance reasonably satisfactory to the Required Lenders provided that a copy of such consent shall have been provided to the Secured Lenders within a reasonable time prior to it becoming effective. 2.1.40 BOS Credit Facility. That certain Amended and Restated Facilities Agreement dated as of May 27, 1999 by and between DDi Europe and BOS. 2.1.41 Budget and Funding Agreement. That certain Budget and Funding Agreement, dated as of August 1, 2003 by and among the Debtors, Details, DDISV, each Subsidiary Guarantor (as defined therein), the Administrative Agent and the Professionals (as defined therein) signatory thereto. 2.1.42 Business Day. Any day, other than a Saturday, a Sunday or a "legal holiday," as defined in Bankruptcy Rule 9006(a). 2.1.43 Cases. The Chapter 11 cases commenced by the Debtors on the Petition Date and pending before the Bankruptcy Court. 9 2.1.44 Cash. Currency of the United States of America and cash equivalents, including, but not limited to, bank deposits, immediately available or cleared checks, drafts, wire transfers and other similar forms of payment. 2.1.45 Causes of Action. All actions, causes of action, omissions, courses of conduct, suits, debts, dues, sums of money, accounts, reckoning, bonds, bills, specialties, covenants, contracts, variances, trespasses, damages, judgments, extents, executions, controversies, agreements, promises, rights to legal remedies, rights to equitable remedies, rights to payments, Claims and demands whatsoever in law, admiralty, equity or otherwise, whether known or unknown, reduced to judgment, not reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured and whether asserted or assertable directly or derivatively in law, equity or otherwise. 2.1.46 Claim. All claims (as such term is defined in Section 101(5) of the Bankruptcy Code), counterclaims, setoffs, recoupment, demands, causes of action, obligations, damages, liabilities, indebtedness, obligations, debts (as such term is defined in Section 101(13) of the Bankruptcy Code), demands, guaranties, options, rights, contractual commitments, restrictions, interests and matters of any kind and nature, and whether imposed by agreement, understanding, law, equity or otherwise, including, but not limited to, any claims that were or could have been brought under Chapter 5 of the Bankruptcy Code, whether absolute, accrued, contingent, fixed or otherwise, or whether due or to become due, and shall include (a) any right to payment from any of the Debtors, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured, or (b) any right to an equitable remedy for breach of performance if such breach gives rise to a right of payment from any of the Debtors, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured. 10 2.1.47 Claims Bar Date. For any Claim other than an Administrative Claim, October 7, 2003, or such other deadline for filing such Claim as has been established under any order of the Bankruptcy Court. 2.1.48 Claims Objection Deadline. The later of (i) fifteen (15) days after the Effective Date of the Plan or (ii) such greater period of limitation as may be fixed or extended by the Bankruptcy Court on request of a Debtor or Reorganized Debtor or by agreement between a Debtor or Reorganized Debtor and the Holder of the Claim. 2.1.49 Class. Each group of Claims or Equity Interests classified in Article V of the Plan pursuant to sections 1122 and 1123 of the Bankruptcy Code. 2.1.50 Co-Sponsors. Co-Sponsors shall have the meaning set forth in Section I of the Plan. 2.1.51 Co-Syndication Agent. Bankers Trust Company as documentation and co-syndication agent of the Pre-Restructuring Loan Documents. 2.1.52 Collateral. Any property or interest in property of the Debtors' Estates subject to a Lien to secure the payment or performance of a Claim, which Lien is not subject to avoidance under the Bankruptcy Code or otherwise invalid under the Bankruptcy Code or applicable state law. 2.1.53 Confirmation. Entry of the Confirmation Order by the Bankruptcy Court. 2.1.54 Confirmation Date. The date on which the Confirmation Order is entered in the Bankruptcy Court's docket. 2.1.55 Confirmation Hearing. The hearing to consider confirmation of the Plan pursuant to section 1128 of the Bankruptcy Code, as it may be adjourned or continued from time to time. 2.1.56 Confirmation Order. The order entered by the Bankruptcy Court confirming the Plan in accordance with the provisions of Chapter 11 of the Bankruptcy Code, which order shall be submitted to the Court in form and substance satisfactory to the Co-Sponsors and the Required Lenders. 11 2.1.57 Convertible Subordinated Notes. Collectively, the 5.25% Convertible Subordinated Notes and the 6.25% Convertible Subordinated Notes. 2.1.58 Convertible Subordinated Note Indentures. Collectively, the 5.25% Convertible Subordinated Note Indenture and the 6.25% Convertible Subordinated Note Indenture. 2.1.59 Convertible Subordinated Note Holders. All Holders of the Convertible Subordinated Notes. 2.1.60 Creditor. Any Person who is the Holder of a Claim against any Debtor that arose or accrued or is deemed to have arisen or accrued or to have matured, or otherwise become due, owing, and payable on or before the Petition Date, including without limitation, Claims of the kind specified in sections 502(g), 502(h) or 502(i) of the Bankruptcy Code. 2.1.61 DDi Capital. DDi Capital Corp., a California corporation. 2.1.62 DDi Corp. DDi Corp., a Delaware corporation. 2.1.63 DDi Europe. DDi Europe Limited, a company registered in England and Wales and a non-debtor affiliate of DDi Corp. 2.1.64 DDi Intermediate. DDi Intermediate Holdings Corp., a California corporation and a non-debtor affiliate of DDi Corp. 2.1.65 DDISV. Dynamic Details, Incorporated, Silicon Valley, a Delaware corporation and a non-debtor affiliate of DDi Corp. 2.1.66 Debtor(s). Individually or collectively, DDi Corp. and DDi Capital. 2.1.67 Debtors-in-Possession. The Debtors when each is acting in the capacity of representative of the Estates in the Cases. 2.1.68 Deficiency Claim. That portion of any Claim of a Creditor secured by a Lien on, security interest in or charge against property of the Estate or that is subject to setoff under the Bankruptcy Code section 553, to the extent that the value of such Creditor's interest in the Estate's interest in such property or to the extent that the amount subject to setoff, as 12 applicable, as determined pursuant to Bankruptcy Code section 506(a), is less than the amount of the Claim. 2.1.69 Details. Dynamic Details, Incorporated, a California corporation and a non-debtor affiliate of DDi Corp. 2.1.70 Disclosure Statement. That certain document entitled Disclosure Statement for Plan of Reorganization of DDi Corp. and DDi Capital under Chapter 11 of the Bankruptcy Code Filed in the Cases by the Debtors, including the Exhibits attached thereto, either in its present form or as it may be amended, restated, supplemented, or otherwise modified from time to time. 2.1.71 Disclosure Statement Hearing. The hearing(s) held pursuant to Bankruptcy Code section 1125(b) and Bankruptcy Rule 3017(a), including any continuances thereof, at which the Bankruptcy Court considered the adequacy of the Disclosure Statement. 2.1.72 Disputed Administrative Claim. Any Administrative Claim that is not an Allowed Administrative Claim. 2.1.73 Disputed Claim. All or any part of a Claim, other than any Allowed Amount thereof, an Administrative Claim, or the Allowed Class 1 Claims, Allowed Class 5 Claims, Allowed Class 6a Claims and the Allowed Class 6b Claims, as to which any one of the following applies: (i) no proof of claim has been filed with respect to such Claim, and either (a) the Claim is not listed in the Schedules, or (b) the Claim is listed in the Schedules as unliquidated, disputed, contingent, unknown or in a zero amount, (ii) the Claim is the subject of a timely objection or request for estimation in accordance with the Bankruptcy Code, the Bankruptcy Rules, any applicable orders of the Bankruptcy Court, or the Plan which is Filed on or before the Claims Objection Deadline, which objection or request for estimation has not been withdrawn or determined by a Final Order, or (iii) the Claim is otherwise treated as a "Disputed Claim" pursuant to this Plan. In addition, prior to the earlier of (i) the Claims Objection Deadline, and (ii) such date as the Bankruptcy Court allows the Claim pursuant to a Final Order, any Claim whose Allowed Amount is not specified under the Plan or that is not Allowed under 13 the Plan that is evidenced by a proof of claim shall be deemed a Disputed Claim for purposes of calculating and making any distributions under this Plan if: (a) no Claim corresponding to the proof of claim is listed in the Schedules, (b) the Claim corresponding to the proof of claim is listed in the Schedules as disputed, contingent, unliquidated, unknown, or in a zero amount, (c) the amount of the Claim as specified in the proof of claim exceeds the amount of any corresponding Claim listed in the Schedules as not disputed, not contingent, and liquidated, but only to such extent, or (d) the priority or classification of the Claim as specified in the proof of claim differs from the priority of any corresponding Claim listed in the Schedules. 2.1.74 Disputed Claim or Disputed Class Claim. A Claim of the type specified or in the Class specified that is also a Disputed Claim (i.e., a Disputed Tax Claim is a Tax Claim that is also a Disputed Claim, and a Disputed Class 5 Claim is a Claim classified in Class 5 that is also a Disputed Claim). 2.1.75 Distribution Agent. Reorganized DDi. Corp. 2.1.76 Distribution Record Date. The record date for purposes of making distributions under the Plan on account of Allowed Claims and Equity Interests, which date shall be the Effective Date. 2.1.77 Effective Date. The tenth calendar day after the entry of the Confirmation Order, unless a stay of the Confirmation Order has been issued by the Court, and all conditions to the Effective Date have been satisfied or, if waivable, waived. In the event the Confirmation Order is stayed, the first business day after the stay is lifted, and all conditions to the Effective Date have been satisfied or, if waivable, waived. 2.1.78 Equity Interest. Any equity security or interest of or in any Debtor within the meaning, of Section 101(16) of the Bankruptcy Code, including, without limitation, any equity interest in any of the Debtors, whether in the form of common or preferred stock, stock options, warrants, partnership interests, membership interests, or any other equity security or interest, and includes, without limitation, any equity interest based on Existing DDi Corp. Common Stock or on any common stock of any other Debtor, and the legal, equitable, 14 contractual and other rights, whether fixed or contingent, matured or unmatured, disputed or undisputed, of any Person to purchase, sell, subscribe to, or otherwise acquire or receive (directly or indirectly) any of the foregoing. 2.1.79 Estates. The bankruptcy estates of the Debtors created pursuant to section 541 of the Bankruptcy Code by the commencement of the Cases. 2.1.80 Existing DDi Corp. Common Stock. The shares of common stock of DDi Corp., outstanding immediately prior to the Effective Date. 2.1.81 Existing Senior Discount Note Indenture. That certain indenture dated as of November 18, 1997 (as amended, restated, supplemented, or otherwise modified from time to time prior to the Effective Date), by and between DDi Capital (f/k/a Details Holdings Corp., a California corporation) and the Senior Discount Trustee, as trustee, pursuant to which the Senior Discount Notes were issued. 2.1.82 Fee Applications. Applications of Professional Persons under sections 330, 331 or 503 of the Bankruptcy Code and the Professional Persons retained by the Ad Hoc Committees for allowance of compensation and reimbursement of expenses in the Cases. 2.1.83 Filed. Delivered to, received by and entered upon the legal docket by the Clerk of the Bankruptcy Court. "File" shall have the correlative meaning. 2.1.84 Final Order. A judgment, order, ruling or other decree issued and entered by the Bankruptcy Court or by any state or other federal court or other tribunal as to which no appeal, petition for certiorari, or other proceedings for re-argument or rehearing shall then be pending or as to which any right to appeal, petition for certiorari, reargue, or rehear shall have been waived in writing in form and substance satisfactory to the Co-Sponsors and the Required Lenders, or, in the event that an appeal, writ of certiorari, or re-argument or rehearing thereof has been sought, such order or judgment of the Bankruptcy Court or other applicable court shall have been affirmed by the highest court to which such order or judgment was appealed, or certiorari, re-argument, or rehearing has been denied, and the time to take any further appeal, petition for certiorari, or move for re-argument or rehearing shall have expired. 15 2.1.85 Funding Order. The Order entered on August 20, 2003, (i) Approving the Budget and Funding Agreement, dated as of August 1, 2003 and (ii) Authorizing and Directing the Debtors' Performance Thereunder, pursuant to Bankruptcy Code (S)(S)105, 361, 362, 363, 364, 503(B) and 507(B) and Federal Rule of Bankruptcy Procedure 4001(B). 2.1.86 Hedge Agreement. The terminated Hedge Agreement by and between JPMorgan Chase Bank and Dynamic Details, Incorporated, which was executed in connection with the Pre-Restructuring Loan Documents and terminated as of April 25, 2003. 2.1.87 Holder. The beneficial owner of any Interest. 2.1.88 Indentures. Collectively, the 5.25% Convertible Subordinated Note Indenture, the 6.25% Convertible Subordinated Note Indenture, and the Existing Senior Discount Note Indenture. 2.1.89 Indenture Trustee Fee Claim. Any Claim of the 5.25% Trustee, the 6.25% Trustee or the Senior Discount Trustee for payment of compensation for all services rendered by it under the Indentures as of the Effective Date, together with the reimbursement of all reasonable expenses, disbursements and advances incurred in connection therewith, including the reasonable compensation, expenses and disbursements of its agents and counsel. 2.1.90 Interest. (i) All Liens, (ii) all Claims, (iii) all interests of any kind or nature, including but not limited to any equity security or interest of or in any Debtor within the meaning, of section 101(16) of the Bankruptcy Code, including, without limitation, any Equity Interest in any of the Debtors, whether in the form of common or preferred stock, stock options, warrants, partnership interests, membership interests, or any other equity security or interest, and includes, without limitation, any equity interest based on Existing DDi Corp. Common Stock or on any common stock of any other Debtor, and (iv) the legal, equitable, contractual and other rights, whether fixed or contingent, matured or unmatured, disputed or undisputed, of any Person to purchase, sell, subscribe to, or otherwise acquire or receive (directly or indirectly) any of the foregoing. 16 2.1.91 Lien. Any mortgage, pledge, security interest, encumbrance, lien (as defined in Section 101(37) of the Bankruptcy Code) or charge of any kind (including any agreement to give the foregoing), judgments, conditions, covenants, impositions, demands, easements, any conditional sale or other title retention agreement, any lease in the nature thereof or the filing of or agreement to give any financing statement under the Laws of any jurisdiction, restrictions or charges of any kind or nature, if any, including, but not limited to, any restriction on the use, voting, transfer, receipt of income or other exercise of any attributes of ownership. 2.1.92 Management Incentive Plan. The Management Incentive Plan pursuant to which the Management Options will be granted which shall be in the form attached as an Exhibit to the Plan Documentary Supplement. 2.1.93 Management Options. The options to be granted under the Management Incentive Plan to the management of Reorganized DDi Corp. and its subsidiaries which shall have the material terms described in the term sheet attached as Exhibit "1" to the Plan. 2.1.94 Modified Structure. In the event BOS does not deliver the BOS Consent pursuant to the terms of the BOS Credit Facility on or prior to five (5) Business Days preceding the Effective Date, the issuance by Reorganized DDi Corp. (not DDi Europe) on the Effective Date of all of the New DDi Corp. Preferred Stock to Holders of Allowed Class 6a Claims and Allowed Class 6b Claims. 2.1.95 New Common Stock. The new common stock of Reorganized DDi Corp. issued from and after the Effective Date, which shall be governed by the Amended and Restated DDi Corp. Certificate of Incorporation and shall represent all of the New Common Stock. The New Common Stock shall have the material terms described in the term sheet attached as Exhibit "2" to the Plan and in the form attached as an Exhibit to the Plan Documentary Supplement. 2.1.96 New Common Stock Registration Rights Agreement. The New Common Stock Registration Rights Agreement shall be in the form attached as an Exhibit to the Plan Documentary Supplement. 17 2.1.97 New DDi Corp. Preferred Stock. The new preferred stock of Reorganized DDi Corp., issued on the Effective Date, which shall be governed by the Amended and Restated DDi Corp. Certificate of Incorporation and shall represent all of the New DDi Corp. Preferred Stock. The New DDi Corp. Preferred Stock shall have substantially the terms and conditions set forth in Exhibit "3" attached hereto. The precise terms and conditions of the New DDi Preferred Stock shall be agreed upon by the Co-Sponsors and the Required Lenders and described in an Exhibit to the Plan Documentary Supplement. However, the New DDi Corp. Preferred Stock shall be a preferred equity obligation of Reorganized DDi Corp and shall have an initial aggregate liquidation preference of $15,000,000. In addition, the New DDi Corp. Preferred Stock shall be subject, without limitation, to the following terms and conditions: (i) any and all rights, claims, liens, and interests of the Secured Lenders or other holders under the New DDi Corp. Guarantee and Pledge Agreement and any other Restructuring Loan Document to the extent that it creates a claim against DDi Corp. or lien on any asset of DDi Corp. will be subordinate contractually to any and all rights, claims and interests (including, without limitation, unpaid dividends and other accretions both before and after any insolvency case or proceeding of Reorganized DDi Corp.) under the New DDi Corp. Preferred Stock with respect to the (A) the capital stock of DDi Europe and (B) any cash, property, or other assets of DDi Europe or any of its subsidiaries that is transferred to Reorganized DDi Corp. by way of dividend or otherwise ((A) and (B) are collectively referred to herein as the "DDi Europe Value") until the New DDi Corp. Preferred Stock is fully redeemed; (ii) any and all rights, claims, liens, or interests of the Holders of Allowed Class 5 Claims or other holders under the New Senior Accreting Notes shall be subordinate structurally and contractually to any and all rights, claims, and interests (including, without limitation, unpaid dividends and other accretions both before and after any insolvency case or proceeding of Reorganized DDi Corp.) under the New DDi Corp. Preferred Stock with respect to the DDi Europe Value (the form and substance of such contractual subordination shall 18 be reasonably acceptable to holders of a majority of the aggregate principal amount of the Senior Discount Notes); (iii) no DDi Europe Value will be paid to or held by the holders of claims, liens, or interests under the Pre-Restructuring Loan Documents, the Restructuring Loan Documents, or the New Senior Accreting Notes until the New DDi Corp. Preferred Stock is fully redeemed; provided, however, that after the New DDi Corp. Preferred Stock is fully redeemed, all of the DDi Europe Value shall be available, without limitation, to satisfy obligations under Reorganized DDi Corp.'s then existing agreements; (iv) in the event that the Debtors are able to obtain the BOS Consent on or after the date the Modified Structure is implemented, the New DDi Corp. Preferred Stock shall convert into or be exchanged for New Preferred Stock consistent with the terms and conditions set forth in the Amended and Restated DDi Europe Articles of Association; (v) Only DDi Europe Value shall be used to effect any distributions and/or redemptions under the New DDi Corp. Preferred Stock; and (vi) the New DDi Corp. Preferred Stock shall have no rights, claims and interests in and to any other assets and equity interests, whether direct or indirect, of Reorganized DDi Corp. 2.1.98 New DDi Corp. Securities. Collectively, the New Common Stock, the New Warrants, the New DDi Corp. Preferred Stock (only if the Modified Structure is implemented) and the Management Options. 2.1.99 New DDi Corp. Guarantee and Pledge Agreement. The New DDi Corp. Guarantee and Pledge Agreement shall be in the form attached as an Exhibit to the Plan Documentary Supplement. 2.1.100 New Preferred Stock. The new preferred stock of DDi Europe, issued on the Effective Date, which shall be governed by the Amended and Restated DDi Europe Articles of Association and shall represent all of the New Preferred Stock. The New Preferred 19 Stock shall have the material terms described in the term sheet attached as Exhibit "3" to the Plan and in the form attached to the Plan Documentary Supplement. 2.1.101 New Preferred Stock Registration Rights Agreement. The New Preferred Stock Registration Rights Agreement shall be in the form attached as an Exhibit to the Plan Documentary Supplement. 2.1.102 New Senior Accreting Note Indenture. The New Senior Accreting Note Indenture shall have the material terms described in the term sheet attached as Exhibit "4" to the Plan and in the form of the New Senior Accreting Note Indenture attached as an Exhibit to the Plan Documentary Supplement. 2.1.103 New Warrant Agreements. Collectively, the Secured Lender Warrant Agreement and the Senior Discount Warrant Agreement. 2.1.104 New Warrants. Collectively, the Secured Lender Warrants and the Senior Discount Warrants. 2.1.105 Person. An individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, estate, association, unincorporated association, joint venture, governmental authority, Professional, governmental unit, Committee or other entity of whatever nature. 2.1.106 Petition Date. The date on which each Debtor filed its petition for relief under Chapter 11 of the Bankruptcy Code, i.e., August 20, 2003. 2.1.107 Plan. The Joint Plan of Reorganization as set forth herein, including the Exhibits thereto and the Plan Documents, as the same may be amended or modified from time to time in accordance with section 15.1 of this Plan. 2.1.108 Plan Documentary Supplement. A supplement to this Plan, containing various documents relating to the implementation of the Plan, to be Filed with the Bankruptcy Court no later than ten (10) Business Days prior to the commencement of the hearing on confirmation of the Plan, as said supplement may be amended from time to time at 20 any time prior to the Effective Date with the consent of the Co-Sponsors and the Required Lenders. 2.1.109 Plan Documents. Collectively, the Amended and Restated DDi Corp. Certificate of Incorporation; the Amended and Restated DDi Corp. Bylaws, the Amended and Restated DDi Europe Articles of Association (to be effective only if the Modified Structure is not implemented), the New Warrant Agreements, the Management Incentive Plan, the Registration Rights Agreements, the New Senior Accreting Note Indenture, and any other documents required by the Plan, excluding any of the Restructuring Loan Documents (other than the Secured Lender Warrant Agreement, the New Common Stock Registration Rights Agreement and the New DDi Corp. Guarantee and Pledge Agreement), or determined by the Co-Sponsors and the Required Lenders to be necessary or advisable to implement the Plan. The Plan Documents shall be in form and substance acceptable to the Co-Sponsors and the Required Lenders. Final or near-final versions of the Plan Documents shall be filed with the clerk of the Bankruptcy Court as part of the Plan Documentary Supplement as early as practicable (but in no event later than ten (10) Business Days prior to the commencement of the Confirmation Hearing or on such other date as the Bankruptcy Court may establish). 2.1.110 Pre-Restructuring Bank Indebtedness. This term shall have the meaning ascribed to such term in the term sheet attached as Exhibit "5" to the Plan. 2.1.111 Pre-Restructuring Loan Documents. The Amended and Restated Credit Agreement, dated as of July 23, 1998 and as amended and restated as of August 28, 1998, and as amended by the First Amendment, dated as of March 10, 1999, the Second Amendment, dated as of March 22, 2000, the Third Amendment, dated as of October 10, 2000, the Fourth Amendment, dated as of February 13, 2001, the Fifth Amendment, dated as of December 31, 2001, the Sixth Amendment, dated as of June 28, 2002, the Seventh Amendment, dated as of June 27, 2003 and the Eighth Amendment, dated as of August 1, 2003 (as amended, supplemented or otherwise modified prior to the Petition Date, the "Pre-Restructuring Credit Agreement"), among Details, DDISV, the Secured Lenders, the Administrative Agent and the 21 Co-Syndication Agent, and all collateral and ancillary documentation executed in connection therewith, including, without limitation, the Hedge Agreement, with any Secured Lender or any Affiliate of any Secured Lender. 2.1.112 Priority Claim. Any Claim, other than an Administrative Claim or a Tax Claim, to the extent entitled to priority under Section 507(a) of the Bankruptcy Code. 2.1.113 Pro Rata. Proportionately, so that with respect to any distribution in respect of any Allowed Claim, the ratio of (a)(i) the amount of property distributed on account of such Allowed Claim to (ii) the amount of such Allowed Claim, is the same as the ratio of (b)(i) the amount of property distributed on account of all Allowed Claims of the Class or Classes sharing in such distribution to (ii) the amount of all Allowed Claims in such Class or Classes. 2.1.114 Professional. A Person or Entity (a) employed by the Debtors in Possession pursuant to a Final Order in accordance with sections 327 and 1103 of the Bankruptcy Code and to be compensated for services rendered prior to the Effective Date, pursuant to sections 327, 328, 329, 330 and 331 of the Bankruptcy Code, (b) employed by the Ad Hoc Committees, which retentions have been approved by the Debtors and the Required Lenders and to be compensated for services rendered prior to the Effective Date as would be allowed under section 503(b) of the Bankruptcy Code if the Ad Hoc Committees were official committees or (c) for which compensation and reimbursement has been allowed by the Bankruptcy Court pursuant to Section 503(b) of the Bankruptcy Code. 2.1.115 Professional Fees. All Allowed Claims of Professionals for compensation and for reimbursement of expenses under sections 328, 330 and/or 503(b) of the Bankruptcy Code, and the Administrative Claims of the Professionals for the Ad Hoc Committees. 2.1.116 PSA. The Plan Support Agreement (together with exhibits, annexes and attachments thereto) dated as of August 8, 2003 (as amended), by and among DDi Corp., DDi Intermediate, DDi Capital, Details, DDISV, their respective subsidiaries and 22 affiliates and the Holders of approximately 64% in aggregate principal amount of the Convertible Subordinated Notes. 2.1.117 Registration Rights Agreements. Collectively, the New Common Stock Registration Rights Agreement and the New Preferred Stock Registration Rights Agreement. 2.1.118 Released Claims. Any and all of the following Claims and Causes of Action that arose up to and including the Effective Date and/or relate to, in any way, any Claims or Causes of Action that arose up to and including the Effective Date: (i) actions or omissions or courses of conduct of any Released Party with respect to any indebtedness arising under or with respect to any credit facility or any other arrangement under which any of the Debtors or any of their respective subsidiaries is or was a borrower or guarantor, the Pre-Restructuring Loan Documents, the 5.25% Convertible Subordinated Notes, the 6.25% Convertible Subordinated Notes, the Senior Discount Notes or any investment (direct or indirect) in any common or preferred equity of any of the Debtors (including, without limitation, any action or omission of any Released Party with respect to the issuance, acquisition, holding, voting or disposition of any such investment), (ii) actions or omissions or courses of conduct of any Released Party as an officer, director, employee or agent of, or advisor to, any of the Debtors, the Debtors' respective subsidiaries, the Senior Debt Parties, the 5.25% Convertible Subordinated Debt Parties, the 6.25% Convertible Subordinated Debt Parties or the Senior Discount Parties, (iii) disclosures made or not made by any person to any current or former Holder of any indebtedness arising under or with respect to any credit facility or any other arrangement under which any of the Debtors or any of the Debtors' respective subsidiaries is or was a borrower or a guarantor, the Pre-Restructuring Loan Documents, the 5.25% Convertible Subordinated Notes, the 6.25% Convertible Subordinated Notes or the Senior Discount Notes, 23 (iv) consideration paid in respect of any investment (direct or indirect) by any Person in any indebtedness arising under or with respect to any credit facility or any other arrangement under which any of the Debtors or any of the Debtors' respective subsidiaries is or was a borrower or a guarantor, Pre-Restructuring Loan Documents, the 5.25% Convertible Subordinated Notes, the 6.25% Convertible Subordinated Notes, the Senior Discount Notes, any common or preferred equity investment (direct or indirect) in any of the Debtors or in respect of any services provided or to be provided to any of the Debtors under any management agreement or otherwise, (v) Claims for equitable subordination or other recharacterization of any claim of any of the Senior Debt Parties, the 5.25% Convertible Subordinated Debt Parties, the 6.25% Convertible Subordinated Debt Parties and the Senior Discount Parties, (vi) avoidance Claims the Debtors and their respective Estates have or may have against any of the Senior Debt Parties, the 5.25% Convertible Subordinated Debt Parties, the 6.25% Convertible Subordinated Debt Parties and the Senior Discount Parties under Sections 542, 543, 544, 547, 548, 549, 553, or 724(a) of the Bankruptcy Code, under applicable state law or otherwise, in respect of any payments or transfers made, obligations incurred or any contracts, agreements or arrangements involving any of the Released Parties, (vii) any fiduciary duty of any of the Released Parties to any of the Debtors or their respective Estates or which the Estates might have asserted or any of their creditors or Holders, (viii) actions taken or not taken or course of conduct in connection with the contemplated Plan, the restructuring and the petitions or otherwise in respect in the Chapter 11 Cases, including but not limited to, any act taken or omitted to be taken in connection with or related to the formulation, preparation, dissemination, implementation, administration, Confirmation or Consummation of the Plan, the Disclosure Statement or any contract, instrument, release or other agreement or document created or entered into in connection with the Plan, including the RSA, PSA or SDNPSA, or any other act taken or omitted to be taken in 24 connection with or in contemplation of the Restructuring of the Pre-Restructuring Bank Indebtedness, the Convertible Subordinated Notes, or the Senior Discount Notes, and (ix) Claims, obligations, rights, Causes of Action and liabilities which the Debtors and any of their respective successors, assigns, affiliates and subsidiaries (other than DDi Europe and its European subsidiaries) may assert against the Released Parties, whether for tort, fraud, contract, violations of federal or state securities laws, or otherwise, whether known or unknown, foreseen or unforeseen, existing or hereafter arising, based in whole or in part upon any act or omission, transaction, or other occurrence taking place on or before the Confirmation Date, in any way relating to the Chapter 11 Cases, the Restructuring or the Plan; provided, however, that Released Claims shall not include Claims or Causes of Action arising out of any such Released Party's gross negligence or willful misconduct; provided, however, that notwithstanding anything contained herein to the contrary, nothing in this Plan or the transactions contemplated by and authorized pursuant to the Plan release any non-debtor from any claims of the United States of America or its agencies or subdivisions (the "United States"), or modify, alter, impair, or in any way affect the claims and rights of the United States or the application of any laws or regulations of the United States as to any person or entity other than the Debtors. 2.1.119 Released Parties. The Senior Debt Parties, the 5.25% Convertible Subordinated Debt Parties, the 6.25% Convertible Subordinated Debt Parties, the Senior Discount Parties, the Creditors' Committee (if any) and each of the members, the Ad Hoc Committees and each of the members, and any and all of such parties' respective predecessors, successors and assigns, past, current and future principals, affiliates, agents, officers, directors, employees, shareholders, partners, members, affiliates, representatives, attorneys, financial advisors, investment bankers, agents or other professionals. 2.1.120 Reorganized DDi Corp. DDi Corp., as reorganized on and after the Effective Date. 25 2.1.121 Reorganized Debtors. The Debtors, as reorganized under the terms of the Plan on and after the Effective Date, and any successors thereto by merger, consolidation, acquisition, or otherwise. 2.1.122 Required Lenders. This term shall have the meaning ascribed to such term in the term sheet attached as Exhibit "5" to the Plan. 2.1.123 Restructuring. This term shall have the meaning ascribed to such term in the term sheet attached as Exhibit "5" to the Plan. 2.1.124 Restructuring Loan Documents. This term shall have the meaning ascribed to such term in the term sheet attached as Exhibit "5" to the Plan. 2.1.125 RSA. The Restructuring Support Agreement (together with exhibits, annexes and attachments thereto) dated as of August 1, 2003 (as amended), by and among DDi Corp., DDi Intermediate, DDi Capital, Details, DDISV, their respective subsidiaries and affiliates and one hundred percent (100%) of the Holders of the Pre-Restructuring Bank Indebtedness. 2.1.126 Schedules. The schedules of assets and liabilities and list of equity security Holders Filed by the Debtors, as required by section 521(1) of the Bankruptcy Code, Bankruptcy Rules 1007(a)(1) and (3) and (b)(1), and Official Bankruptcy Form No. 6, as amended from time to time. 2.1.127 SDNPSA. The Senior Discount Note Holder Plan Support Agreement (together with exhibits, annexes and attachments thereto) dated as of August 19, 2003, by and among DDi Corp., DDi Intermediate, DDi Capital, Details, DDISV, their respective subsidiaries and affiliates and the Holders of approximately 71.5% in aggregate principal amount of the Senior Discount Notes. 2.1.128 Secured Claim. Any Claim, including interest, fees, costs, and charges to the extent allowable pursuant to Bankruptcy Code section 506(b) and the Plan, that is secured by a valid and unavoidable Lien on property in which the Debtors have, or any of them or any Estate has, an interest or that is subject to recoupment or setoff under Section 553 of the 26 Bankruptcy Code, to the extent of the value of such Holder's interest in the Debtors, any Debtor's or any Estate's interest in the property, determined pursuant to Section 506(a) of the Bankruptcy Code. 2.1.129 Secured Lender Warrant Agreement. The agreement pursuant to which the Secured Lender Warrants will be issued which shall be in the form attached as an Exhibit to the Plan Documentary Supplement. 2.1.130 Secured Lender Warrant Escrow Agreement. The Secured Lender Warrant Escrow Agreement shall be in the form attached as an Exhibit to the Plan Documentary Supplement. 2.1.131 Secured Lender Warrants. The warrants issuable to the Secured Lenders which shall have the material terms described in the term sheet attached as Exhibit "5" to the Plan. 2.1.132 Secured Lenders. The several banks and other financial institutions from time to time parties to the Pre-Restructuring Loan Documents. 2.1.133 Senior Debt Parties. The Secured Lenders, the Administrative Agent and the Co-Syndication Agent. 2.1.134 Senior Discount Notes. The 12.5% Senior Discount Notes due 2007 issued by DDi Capital. 2.1.135 Senior Discount Note Holders. All Holders of the Senior Discount Notes. 2.1.136 Senior Discount Parties. The Senior Discount Note Holders and the Senior Discount Trustee. 2.1.137 Senior Discount Trustee. Wilmington Trust Company, as successor trustee to U.S. Bank National Association, as successor in interest to The State Street Bank and Trust Company, in its capacity as indenture trustee under the Existing Senior Discount Note Indenture. 27 2.1.138 Senior Discount Warrant Agreement. The agreement pursuant to which the Senior Discount Warrants will be issued which shall be in the form attached as an Exhibit to the Plan Documentary Supplement. 2.1.139 Senior Discount Warrants. The warrants issuable to the Senior Discount Note Holders which shall have the material terms described in the term sheet attached as Exhibit "4" to the Plan. 2.1.140 Tax. Any tax, charge, fee, levy, impound or other assessment by any federal, state, local or foreign taxing authority, including, without limitation, income, excise, property, sales, transfer, employment, payroll, franchise, profits, license, use, ad valorem, estimated, severance, stamp, occupation and withholding tax. "Tax" shall include any interest or additions attributable to, or imposed on or with respect to such assessments. 2.1.141 Tax Claim. Any Claim for any Tax to the extent that it is entitled to priority in payment under Section 507(a)(8) of the Bankruptcy Code. 2.1.142 Unclaimed Property. All Cash, DDi Corp. Securities, and New Preferred Stock deemed to be "Unclaimed Property" pursuant to Sections 9.6 and 9.7 of the Plan. 2.1.143 Unsecured Claim. A Claim against any Debtor that is not (a) a Secured Claim, (b) an Administrative Claim, (c) a Tax Claim or (d) a Priority Claim. 2.2 Rules of Construction. For purposes of this Plan, unless otherwise provided herein, (a) whenever from the context it is appropriate, each term, whether stated in the singular or the plural, will include both the singular and the plural; (b) each pronoun stated in the masculine, feminine or neuter includes the masculine, feminine and neuter; (c) any reference in this Plan to an existing document or schedule filed or to be filed means such document or schedule, as it may have been or may be amended, modified or supplemented pursuant to this Plan; (d) any reference to an entity as a Holder of a Claim or Equity Interest includes that entity's successors and assigns; (e) all references in this Plan to Sections, Articles and Exhibits are references to Sections, Articles and Exhibits of or to this Plan; (f) the words "herein," hereunder" and "hereto" refer to this Plan in its entirety rather than to a particular portion of this Plan; and 28 (g) unless otherwise provided in the Plan, any reference in this Plan to a contract, instrument, release, indenture, agreement, or other document being in a particular form or non particular terms and conditions means that such document shall be substantially and materially in such form or substantially and materially on such terms and conditions; (h) any reference in the Plan to a document, schedule, or exhibit to the Plan, Plan Documentary Supplement, or Disclosure Statement Filed or to be Filed means such document, schedule, or exhibit, as it may have been or may be amended, modified, or supplemented; and (i) the rules of construction set forth in section 102 of the Bankruptcy Code shall apply to the extent such rules are not inconsistent with the express terms of the Plan or any other provision in this section 2.2. 2.3 Plan Documentary Supplement. Forms or summaries of certain documents referred to herein will be contained in a separate Plan Documentary Supplement, which the Debtors shall file with the Bankruptcy Court and may amend from time to time with the consent of the Co-Sponsors and the Required Lenders prior to the Effective Date. A copy of the Plan Documentary Supplement may be obtained from counsel for the Debtors, at the address set forth in section 16.5 of the Plan, upon written request. 2.4 Exhibits. All Exhibits to the Plan and all documents contained in the Plan Documentary Supplement are incorporated into and are a part of the Plan as if set forth in full herein. III. JOINT PLAN; NO SUBSTANTIVE CONSOLIDATION This Plan, although proposed jointly, constitutes a separate plan proposed by each of the Debtors. The Debtors' respective Chapter 11 estates remain legally separate. Each Debtor is only assuming liability under the Plan for the claims properly chargeable to such Debtor and for no others. Accordingly, except as expressly provided herein, the classifications set forth below shall be deemed to apply separately with respect to each Plan proposed by each Debtor. 29 IV. UNCLASSIFIED CLAIMS As required by the Bankruptcy Code, the Plan places claims and interests into various Classes according to their right to priority. However, certain types of claims are not classified in any Classes under the Plan. These claims are deemed "unclassified" under the provisions of the Bankruptcy Code. They are not considered impaired and they do not vote on the Plan, because they are automatically entitled to specific treatment provided for them in the Bankruptcy Code. As such, the Debtors have not placed the following claims in a class. The treatment of these unclassified claims is as provided below. 4.1 Administrative Claims. Administrative Claims are generally claims for the expenses of administering the Debtors' Cases that are allowed under Code section 507(a)(1). The Bankruptcy Code requires that all Administrative Claims be paid on the Effective Date of the Plan, unless a particular claimant agrees to a different treatment. The treatment of Administrative Claims is as described below. 4.1.1 Payment Generally. Except to the extent that the Holder of an Allowed Administrative Claim agrees to a different treatment, and subject to the bar dates for Administrative Claims set forth in the following Sections, the Distribution Agent shall pay each Allowed Administrative Clam in full, in Cash or such other treatment as may be accepted by such Holder, on the later of (i) the Effective Date, (ii) within ten (10) Business Days after the date of such Administrative Claim becomes an Allowed Administrative Claim, or (iii) the date such Allowed Administrative Claim becomes due according to its terms. Notwithstanding the foregoing, any Allowed Administrative Claim representing obligations incurred in the ordinary course of post-petition business by the Debtors in Possession shall be paid in full or performed by the Reorganized Debtors in the ordinary course of business, in accordance with the terms of the particular obligation. 4.1.2 Administrative Claims Bar Date. (i) General Administrative Claims Bar Date. All applications for final compensation of Professionals for services rendered and for reimbursement of expenses incurred 30 on or before the Effective Date and all requests for payment of Administrative Claims incurred before the Effective Date under sections 507(a)(1) or 507(b) of the Bankruptcy Code (except only for (i) post-petition, ordinary course trade obligations and routine post-petition payroll obligations incurred in the ordinary course of the Debtors' post-petition business, for which no bar date shall apply, and (ii) post-petition tax obligations, for which the bar date described in the following Section shall apply) shall be filed with the Bankruptcy Court and served upon the Co-Sponsors no later than sixty (60) days after the Effective Date (the "General Administrative Claims Bar Date"), unless such date is extended by the Bankruptcy Court after notice to the Co-Sponsors. Any such request for payment of an Administrative Claim that is subject to the General Administrative Claims Bar Date and that is not filed and served on or before the General Administrative Claims Bar Date shall be forever barred; any party that seeks payment of Administrative Claims that (i) is required to file a request for payment of such Administrative Claims and (ii) does not file such a request by the deadline established herein shall be forever barred from asserting such Administrative Claims against the Debtors, the Reorganized Debtors, their estates, or any of their property. (ii) Administrative Tax Claims Bar Date. All requests for payment of Administrative Claims by a governmental unit for Taxes (and for interest and/or penalties related to such Taxes) for any tax year or period, all or any portion of which occurs or falls within the period from and including the Petition Date through and including the Effective Date ("Tax Administrative Claims") and for which no bar date has otherwise previously been established, must be filed and served on the Co-Sponsors on or before the later of (i) sixty (60) days following the Effective Date; and (ii) 180 days following the filing of the tax return for such taxes for such tax year or period with the applicable governmental unit. Any Holder of any Tax Administrative Claims that is required to file a request for payment of such taxes and does not file and properly serve such a request by the applicable bar date shall be forever barred from asserting any such Tax Administrative Claims against the Debtors, Reorganized Debtors, their estates, or their property. The total claims of this nature are estimated to be zero. 31 4.2 Superpriority Administrative Expense Claim. Pursuant to the terms and conditions of the Funding Order, the Secured Lenders and the Administrative Agent were granted the Allowed Superpriority Administrative Expense Claim pursuant to sections 503(b) and 507(b) of the Bankruptcy Code and the terms of the Budget and Funding Agreement; provided, however, that the Secured Lenders have acknowledged that they will waive the Allowed Superpriority Administrative Expense Claim if the Restructuring Transaction (as defined in Exhibit "7") is consummated on or before January 30, 2004. 4.3 Priority Tax Claims. Priority Tax Claims are certain unsecured income, employment and other taxes described by Code section 507(a)(8). The Bankruptcy Code requires that each Holder of such a section 507(a)(8) priority tax claim receive the present value of such claim in deferred cash payments over a period not exceeding six (6) years from the date of the assessment of such tax. At the election of the Debtors, the Holder of each Allowed Priority Tax Claim shall be entitled to receive, on account of such Claim, (i) equal cash payments on the last Business Day of each three-month period following the Effective Date, during a period not to exceed six years after the assessment of the Tax on which such Claim is based, totaling the principal amount of such Claim plus simple interest on any unpaid balance from the Effective Date, calculated at the interest rate available on ninety (90) day United States Treasuries on the Effective Date, (ii) such other treatment agreed to by the Holder of the Allowed Priority Tax Claim and the Debtors (or the Reorganized Debtors), provided such treatment is on more favorable terms to the Debtors (or the Reorganized Debtors after the Effective Date) than the treatment set forth in clause (i) hereof, or (iii) payment of the full Allowed Priority Tax Claim in Cash. The total Claims of this nature are estimated to be zero. 4.4 Indenture Trustee Fee Claim. Any Claims of the 5.25% Trustee, the 6.25% Trustee and the Senior Discount Trustee for payment of compensation for services rendered by it under the Indentures as of the Effective Date, together with the reimbursement of all reasonable expenses, disbursements and advances incurred in connection therewith, including reasonable 32 compensation, expenses and disbursements of its agents and counsel, shall be paid directly by the Debtors on the Effective Date and shall not be deducted from any distributions to the Holders of (i) the Allowed Class 1 Claims, (ii) Allowed Class 5 Claims, (iii) Allowed Class 6a Claims or (iv) the Allowed Class 6b Claims; provided, however, that for purposes of reviewing the reasonableness of such fees and expenses of the 5.25% Trustee, the 6.25% Trustee and the Senior Discount Trustee (and their respective Professionals), the Debtors and their general bankruptcy counsel, the Secured Lenders' counsel, the Ad Hoc Committees' counsel, and the Office of the United States Trustee, will be provided with the copies of the invoices of each of the 5.25% Trustee, the 6.25% Trustee and the Senior Discount Trustee (and their respective Professionals) in the form typically rendered in the regular course of the 5.25% Trustee, the 6.25% Trustee or the Senior Discount Trustee's business or the professionals' representation of the 5.25% Trustee, the 6.25% Trustee or the Senior Discount Trustee, provided that such invoices will contain condensed narrative descriptions of the services rendered and itemization of expenses incurred. The reviewing parties will report to the Bankruptcy Court as to whether there are any unresolved disputes regarding the reasonableness of such fees and expenses. Any such unresolved disputes shall be submitted to the Bankruptcy Court for resolution. Nothing contained herein shall limit the ability of the Bankruptcy Court through the later of the Effective Date or the last date to submit Administrative Claims to review the reasonableness of the fees and expenses to be paid to the 5.25% Trustee, the 6.25% Trustee and the Senior Discount Trustee (and their respective Professionals). In addition, the Reorganized Debtors shall pay the actual, necessary and reasonable fees and expenses of the 5.25% Trustee, the 6.25% Trustee and the Senior Discount Trustee incurred after the Effective Date in connection with the distributions to be made pursuant to this Plan. V. CLASSIFICATION OF CLAIMS AND INTERESTS 5.1 General Overview. As required by the Bankruptcy Code, the Plan places claims and interests into various Classes according to their right to priority and other relative rights. The Plan specifies whether each Class of claims or interests is impaired or unimpaired, and the 33 Plan sets forth the treatment each Class will receive. The table below lists the Classes of Claims established under the Plan and states whether each particular Class is impaired or left unimpaired by the Plan. A Class is "unimpaired" if the Plan leaves unaltered the legal, equitable and contractual rights to which the Holders of claims or interests in the Class are entitled, with certain exceptions specified in the Bankruptcy Code. - ------------------------------------------------------------------------------- Class Claimants Impaired or Unimpaired - ------------------------------------------------------------------------------- Class 1 Allowed Class 1 Claims Unimpaired - ------------------------------------------------------------------------------- Class 2 Other Secured Claims Unimpaired - ------------------------------------------------------------------------------- Class 3 Other Priority Claims that fall within Code Unimpaired sections 507(a)(3), (4) and (6) - ------------------------------------------------------------------------------- Class 4 Allowed Unsecured Claims not classified in Classes 5, 6a or 6b Unimpaired - ------------------------------------------------------------------------------- Class 5 Allowed Class 5 Claims - Senior Discount Notes Impaired - ------------------------------------------------------------------------------- Class 6a Allowed Class 6a Claims - 5.25% Convertible Subordinated Notes Impaired - ------------------------------------------------------------------------------- Class 6b Allowed Class 6b Claims - 6.25% Convertible Subordinated Notes Impaired - ------------------------------------------------------------------------------- Class 7 Existing DDi Corp. Common Stock Equity Interests Impaired - ------------------------------------------------------------------------------- VI. PROVISIONS FOR THE TREATMENT OF CLAIMS AND INTERESTS 6.1 Class 1 - Allowed Class 1 Claims (Unimpaired). Class 1 consists of all Allowed Class 1 Claims against Debtor DDi Capital by virtue of DDi Capital's guarantee of the Pre-Restructuring Loan Documents, which guarantee is secured by a perfected, first priority Lien on and pledge of the stock of Details (the "DDi Capital Guarantee and Pledge"). All Class 1 Claims are Allowed Class 1 Claims. Class 1 is unimpaired and all legal, equitable and contractual rights, remedies, powers and privileges of Holders of Allowed Class 1 Claims shall be left unaltered, including, without limitation, the DDi Capital Guarantee and Pledge. Therefore, the Holders of Allowed Class 1 34 Claims are not entitled to vote to accept or reject the Plan and are deemed to have accepted the Plan. 6.2 Class 2 - Other Secured Claims (Unimpaired). Class 2 consists of any other Allowed Secured Claims not otherwise classified ("Other Secured Claims"). Each Holder of an Allowed Class 2 Claim shall receive one of the following alternative treatments, at the election of the Reorganized Debtors: (a) The legal, equitable and contractual rights of the Allowed Class 2 Claim shall be unaltered by the Plan; or (b) Such Allowed Class 2 Claim will be otherwise treated in any other manner so that such Allowed Class 2 Claim shall otherwise be rendered unimpaired pursuant to section 1124 of the Bankruptcy Code. Class 2 is unimpaired and the Holders of Allowed Class 2 Claims are conclusively deemed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, the Holders of Allowed Class 2 Claims are not entitled to vote to accept or reject the Plan. As of the date hereof, the Debtors do not believe that there are any Allowed Other Secured Claims. 6.3 Class 3 - Other Priority Claims (Unimpaired). Class 3 consists of all Allowed Claims against the Debtors accorded priority and right of payment under section 507(a) of the Bankruptcy Code, other than a Priority Tax Claim or an Administrative Expense Claim ("Other Priority Claims"). The legal, equitable and contractual rights of the Holders of Class 3 Claims are unaltered by the Plan. Unless the Holder of such Allowed Class 3 Claim and the Debtors agree to a different treatment, each Holder of an Allowed Class 3 Claim shall receive one of the following alternative treatments, at the election of the Debtors: (a) to the extent then due and owing on the Effective Date, such Allowed Class 3 Claim will be paid in full in Cash or such other treatment agreed to by the Holder of an Allowed Class 3 Claim by the Reorganized Debtors; 35 (b) to the extent not due and owing on the Effective Date, such Allowed Class 3 Claim (i) will be paid in full in Cash or such other treatment agreed to by the Holder of an Allowed Class 3 Claim by the Reorganized Debtors on the Effective Date or (ii) will be paid in full in Cash or such other treatment agreed to by the Holder of an Allowed Class 3 Claim by the Reorganized Debtors when and as such Claim becomes due and owing in the ordinary course of business; or (c) such Allowed Class 3 Claim will be otherwise treated in any other manner so that such Allowed Class 3 Claims shall otherwise be rendered unimpaired pursuant to section 1124 of the Bankruptcy Code. Any default with respect to any Allowed Class 3 Claim that existed immediately prior to the filing of the Chapter 11 Cases shall be deemed cured by virtue of payments made upon the Effective Date. Class 3 is unimpaired and the Holders of Allowed Class 3 Claims are conclusively deemed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, the Holders of Allowed Class 3 Claims are not entitled to vote to accept or reject the Plan. As of the date hereof, the Debtors do not believe that there are any Allowed Other Priority Claims. 6.4 Class 4 - Allowed Unsecured Claims Not Classified in Classes 5, 6a or 6b (Unimpaired). Class 4 consists of all Allowed Unsecured Claims which are not classified in Classes 5, 6a or 6b (other than the Indenture Trustee Fee Claims). Thirty (30) days after the Effective Date, each Holder of an Allowed Class 4 Claim shall receive, on account of and in full satisfaction of such Holder's Allowed Class 4 Claim, Cash in full, including post-petition interest to the extent entitled to such interest under applicable non-bankruptcy law. As of the date hereof, the Debtors believe that there are no Allowed Class 4 Claims. Class 4 is unimpaired and the Holders of Allowed Class 4 Claims are not entitled to vote to accept or reject the Plan. 6.5 Class 5 - Allowed Class 5 Claims - Senior Discount Notes (Impaired). Class 5 consists of Allowed Class 5 Claims under the Senior Discount Notes and the Existing Senior 36 Discount Note Indenture. On or as soon as practicable after the Effective Date, on account of and in full and complete satisfaction of all Allowed Class 5 Claims asserted against any and all Debtors, each Holder of an Allowed Class 5 Claim shall receive a Pro Rata share of (i) participation in the New Senior Accreting Note Indenture and (ii) the Senior Discount Warrants. Class 5 is impaired and the Holders of Allowed Class 5 Claims are entitled to vote to accept or reject the Plan. 6.6 Class 6a - Allowed Class 6a Claims - 5.25% Convertible Subordinated Notes (Impaired). Class 6a consists of Allowed Class 6a Claims. All Class 6a Claims are Allowed Class 6a Claims. On the Effective Date, on account of and in full and complete satisfaction of all Allowed Class 6a Claims asserted against any and all Debtors, each Holder of an Allowed Class 6a Claim shall receive, (i) a Pro Rata share of 43.24% of the outstanding shares of New Common Stock, subject to dilution for (A) all New Common Stock issuable under the Management Incentive Plan upon the exercise of the Management Options therein, and (B) all New Common Stock issuable upon the exercise of the New Warrants; and (ii) a Pro Rata share of (A) 45.45% of the outstanding shares of New Preferred Stock (only if the Modified Structure is not implemented) or (B) 50% of the outstanding shares of the New DDi Corp. Preferred Stock (only if the Modified Structure is implemented). 6.7 Class 6b - Allowed Class 6b Claims - 6.25% Convertible Subordinated Notes (Impaired). Class 6b consists of Allowed Class 6b Claims. All Class 6b Claims are Allowed Class 6b Claims. On the Effective Date, on account of and in full and complete satisfaction of all Allowed Class 6b Claims asserted against any and all Debtors, each Holder of an Allowed Class 6b Claim shall receive, (i) a Pro Rata share of 50.76% of the outstanding shares of New Common Stock subject to dilution for (A) all New Common Stock issuable under the Management Incentive Plan upon the exercise of the Management Options therein and (B) all New Common Stock issuable upon the exercise of the New Warrants; and (ii) a Pro Rata share 37 of (A) 45.45% of the outstanding shares of New Preferred Stock (only if the Modified Structure is not implemented) or (B) 50% of the outstanding shares of the New DDi Corp. Preferred Stock (only if the Modified Structure is implemented). 6.8 Class 7 - Allowed Equity Interests - Existing DDi Corp. Common Stock (Impaired). Class 7 consists of the Allowed Equity Interests of all Holders of Existing DDi Corp. Common Stock. On or as soon as practicable after the Effective Date, on account of and in full and complete satisfaction of all Allowed Class 7 Equity Interests, each Holder of a Class 7 Equity Interest shall receive a Pro Rata share of 1.0% of the outstanding shares of New Common Stock on the Effective Date, subject to dilution for (i) all New Common Stock issuable under the Management Incentive Plan upon exercise of the Management Options therein and (ii) all New Common Stock issuable upon exercise of the New Warrants. VII. ACCEPTANCE OR REJECTION OF THE PLAN 7.1 Introduction. PERSONS OR ENTITIES CONCERNED WITH CONFIRMATION OR THIS PLAN SHOULD CONSULT WITH THEIR OWN ATTORNEYS BECAUSE THE LAW ON CONFIRMING A PLAN OF REORGANIZATION IS VERY COMPLEX. The following discussion is intended solely for the purpose of alerting readers about basic confirmation issues, which they may wish to consider, as well as certain deadlines for filing claims. The Debtors and the Co-Sponsors CANNOT and DO NOT represent that the discussion contained below is a complete summary of the law on this topic. Many requirements must be met before the Court can confirm a Plan. Some of the requirements include that the Plan must be proposed in good faith, acceptance of the Plan, whether the Plan pays creditors at least as much as creditors would receive in a Chapter 7 liquidation, and whether the Plan is feasible. The requirements described herein are not the only requirements for confirmation. 38 7.2 Who May Object to Confirmation of the Plan. Certain Creditors and parties in interest may object to the confirmation of the Plan, but as explained below not everyone is entitled to vote to accept or reject the Plan. 7.3 Who May Vote to Accept/Reject the Plan. A Creditor or Equity Interest Holder has a right to vote for or against the Plan if that Creditor or Equity Interest Holder has a claim which is both (1) allowed or allowed for voting purposes and (2) classified in an impaired class. 7.3.1 What Is an Allowed Claim/Equity Interest. As noted above, a Creditor or Equity Interest Holder must first have an Allowed Claim or Allowed Equity Interest to vote. These terms are defined in sections 2.1.26 and 2.1.28 of this Plan. 7.3.2 What Is an Impaired Class. A class is impaired if the Plan alters the legal, equitable, or contractual rights of the claims or interests in that class, other than the right to accelerate the claim upon certain kinds of defaults. In this case, the Debtors believe that all classes are impaired except Classes 1, 2, 3 and 4. 7.3.3 Who is Not Entitled to Vote. The following four types of claims are not entitled to vote: (1) claims that have not been Allowed; (2) claims in unimpaired classes; (3) claims entitled to priority pursuant to Bankruptcy Code sections 507(a)(1), (a)(2), and (a)(8); and (4) claims in classes that do not receive or retain any value under the Plan. Claims in unimpaired classes are not entitled to vote because such classes are deemed to have accepted the Plan. Claims entitled to priority pursuant to Bankruptcy Code sections 507(a)(1), (a)(2), and (a)(7) are not entitled to vote because such claims are not placed in classes and they are required to receive certain treatment specified by the Bankruptcy Code. Claims in classes that do not receive or retain any property under the Plan do not vote because such classes are deemed to have rejected the Plan. The Debtors believe that all classes are entitled to vote except Classes 1, 2, 3 and 4. Classes 1, 2, 3 and 4 are unimpaired under the Plan and consequently are not entitled to vote, because they are conclusively deemed to have accepted the Plan. 39 EVEN IF YOUR CLAIM IS OF THE TYPE DESCRIBED ABOVE, YOU MAY STILL HAVE A RIGHT TO OBJECT TO THE CONFIRMATION OF THE PLAN. 7.3.4 Who Can Vote in More Than One Class. A Creditor may hold Claims in more than one class, and may vote the Claims held in each Class. 7.3.5 Votes Necessary for a Class to Accept the Plan. A class of claims is deemed to have accepted the Plan when more than one-half (1/2) in number and at least two-thirds (2/3) in dollar amount of the claims that actually voted, vote to accept the Plan. 7.3.6 Treatment of Nonaccepting Classes. As noted above, even if there are impaired classes that do not accept the proposed Plan, the Court may nonetheless confirm the Plan if the nonaccepting classes are treated in the manner required by the Bankruptcy Code and at least once impaired class of claims accepts the Plan. The process by which a plan may be confirmed and become binding on non-accepting classes is commonly referred to as "cramdown." The Bankruptcy Code allows the Plan to be "crammed down" on nonaccepting classes of claims or interests if it meets all statutory requirements except the voting requirements of 1129(a)(8) and if the Plan does not "discriminate unfairly" and is "fair and equitable" with respect to each impaired class that has not voted to accept the Plan, as set forth in 11 U.S.C. (S) 1129(b) and applicable case law. 7.3.7 Request for Confirmation Despite Nonacceptance by Impaired Class(es). The parties proposing this Plan will ask the Court to confirm this Plan by cramdown on any impaired class if such class does not vote to accept the Plan. VIII. MEANS FOR IMPLEMENTING THE PLAN 8.1 Introduction. This section is intended to explain the means through which the Debtors intend to effectuate the recapitalization and reorganization provided for under the Plan, and it addresses how the Debtors intend to fund the obligations to Creditors undertaken in the Plan. It provides information regarding prospective corporate governance, funding sources for Plan obligations, the new equity interests being issued pursuant to the Plan, and other material issues bearing upon the performance of the Plan. 40 8.2 The Reorganized Debtors. Each of the Debtors shall, as Reorganized Debtor, continue to exist after the Effective Date of the Plan as a separate legal entity, with all of the powers of a corporation under the laws of their respective states of incorporation, and without prejudice to any right to alter or terminate such existence (whether by merger, acquisition, or otherwise) under such applicable state law. Each Reorganized Debtor shall continue to have all corporate powers and rights accorded to the same under the laws of the jurisdiction of its incorporation. 8.3 Issuance of New Common Stock. On the Effective Date, Reorganized DDi Corp. shall issue the New Common Stock in accordance with the Plan, consistent with the Amended and Restated DDi Corp. Certificate of Incorporation and other Plan Documents, which shall be distributed as described herein. On the Effective Date, the New Common Stock shall be issued for distribution to the Holders of Allowed Class 6a Claims, Allowed Class 6b Claims, Class 7 Equity Interests and the management of Reorganized DDi Corp.. The New Common Stock issued to the Holders of Allowed Class 6a Claims and Allowed Class 6b Claims shall represent 94% of the New Common Stock outstanding on the Effective Date. The New Common Stock issued to the management of Reorganized DDi Corp. shall represent 5% of the New Common Stock outstanding on the Effective Date; however, one-half (1/2) of the New Common Stock issued to management shall be vested on the Effective Date and, subject to the Management Incentive Plan, one-half (1/2) of the New Common Stock issued to management shall vest twelve (12) months after the Effective Date. The New Common Stock issued to the Holders of Class 7 Equity Interests shall represent 1% of the New Common Stock outstanding on the Effective Date. All shares of New Common Stock issued pursuant to the Plan will be, upon such issuance, validly issued, and non-assessable and upon payment of any applicable warrant or option exercise price, fully paid. 8.4 Issuance of Secured Lender Warrants. On the Effective Date, Reorganized DDi Corp. shall issue the Secured Lender Warrants representing 10.0% of the New Common 41 Stock of Reorganized DDi Corp. on a fully diluted basis on the Effective Date, in accordance with the Plan, consistent with the Secured Lender Warrant Agreement, the Restructuring Loan Documents and other Plan Documents, which shall be distributed to the Secured Lenders as described herein. The Secured Lender Warrant Agreement shall be substantially in the form attached as an Exhibit to the Plan Documentary Supplement. On the Effective Date, the Secured Lender Warrants shall be issued to the Secured Lenders ratably in accordance with their respective commitments and held in an escrow account until the twenty-four (24) month anniversary of the Effective Date (the "Second Anniversary Date"). The terms of the Secured Lender Warrants are more fully described in the term sheet attached as Exhibit "5" to the Plan. 8.5 Issuance of Senior Discount Warrants. On the Effective Date, Reorganized DDi Corp. shall issue the Senior Discount Warrants representing 2.5% of the New Common Stock of Reorganized DDi Corp. on a fully diluted basis on the Effective Date, in accordance with the Plan, consistent with the Senior Discount Warrant Agreement, the Restructuring Loan Documents and other Plan Documents, which shall be distributed to the Senior Discount Note Holders as described herein. The Senior Discount Warrant Agreement shall be substantially in the form attached as an Exhibit to the Plan Documentary Supplement. On the Effective Date, the Senior Discount Warrants shall be issued ratably to the Senior Discount Note Holders and held in an escrow account until the Second Anniversary Date. The terms of the Senior Discount Warrants are more fully described in the term sheet attached as Exhibit "4" to the Plan. 8.6 Issuance of Management Options Under Management Incentive Plan. On the Effective Date, Reorganized DDi Corp. shall grant the Management Options under the Management Incentive Plan, in accordance with the Plan, consistent with the Management Incentive Plan and other Plan Documents. The terms of the Management Incentive Plan are more fully described in the term sheet attached as Exhibit "1" to the Plan. The Management Incentive Plan shall be substantially in the form attached as an Exhibit to the Plan Documentary Supplement. 42 8.7 Issuance of New Preferred Stock or New DDi Corp. Preferred Stock. On the Effective Date, DDi Europe shall issue the New Preferred Stock (only if the Modified Structure is not implemented) or Reorganized DDi Corp. shall issue the New DDi Corp. Preferred Stock (only if the Modified Structure is implemented) in accordance with the Plan, consistent with the Amended and Restated DDi Europe Articles of Association or the Amended and Restated DDi Corp. Certificate of Incorporation, as the case may be, and other Plan Documents, which shall be distributed as described herein. On the Effective Date, the New Preferred Stock or the New DDi Corp. Preferred Stock, as the case may be, shall be issued to the Holders of Class 6a and 6b Claims in accordance with sections 6.6 and 6.7 of the Plan. The Amended and Restated DDi Europe Articles of Association and the Amended and Restated DDi Corp. Certificate of Incorporation shall be substantially in the forms attached as Exhibits to the Plan Documentary Supplement. All shares of New Preferred Stock or New DDi Corp. Preferred Stock, as the case may be, issued pursuant to the Plan will be, upon such issuance, validly issued, and non-assessable and fully paid. The terms of the New Preferred Stock and the New DDi Corp. Preferred Stock are more fully described in the term sheet attached as Exhibit "3" to the Plan. 8.8 Amended and Restated Articles or Certificate of Incorporation or Charter and Bylaws. As of the Effective Date, the Certificate of Incorporation of Reorganized DDi Corp. shall be the Amended and Restated DDi Corp. Certificate of Incorporation, substantially in the form attached as an Exhibit to the Plan Documentary Supplement. The Amended and Restated DDi Corp. Certificate of Incorporation will, among other provisions, prohibit the issuance of non-voting equity securities to the extent required by section 1123(a)(6) of the Bankruptcy Code. As of the Effective Date, the Bylaws of Reorganized DDi Corp. shall be the Amended and Restated DDi Corp. Bylaws substantially in the form attached as an Exhibit to the Plan Documentary Supplement. As of the Effective Date, the Articles of Association of DDi Europe shall be the Amended and Restated DDi Europe Articles of Association, substantially in the form attached as an Exhibit to the Plan Documentary Supplement. The Amended and Restated DDi Corp. Certificate of Incorporation, Amended and Restated DDi Corp. Bylaws and 43 the Amended and Restated DDi Europe Articles of Association shall be deemed effective as of the Effective Date by virtue of the Confirmation Order, without the need for any corporate, director or stockholder action. 8.9 Treatment of the Senior Debt Parties Under the Pre-Restructuring Loan Documents. On the Effective Date, the aggregate outstanding principal amount of indebtedness and the face amount of letters of credit under the Pre-Restructuring Loan Documents in the amount of $72,892,916.17 and any fees and interest accrued and unpaid thereon shall be restructured, exchanged and repaid pursuant to the terms of the Restructuring Loan Documents and all the rights of the Senior Debt Parties under the Pre-Restructuring Loan Documents shall be modified, exchanged and restated as provided in the Restructuring Loan Documents. On the Effective Date, DDi Corp. shall execute and deliver (i) the New DDi Corp. Guarantee and Pledge Agreement and deliver one hundred percent (100%) of the common stock of DDi Intermediate to the Administrative Agent as Collateral pursuant thereto, (ii) the Secured Lender Warrant Agreement and shall issue the Secured Lender Warrants to the Secured Lenders pursuant thereto, (iii) the New Common Stock Registration Rights Agreement and (iv) the Secured Lender Warrant Escrow Agreement. On the Effective Date, DDi Intermediate shall pledge one hundred percent (100%) of the common stock of DDi Capital to the Administrative Agent as Collateral. The New DDi Corp. Guarantee and Pledge Agreement and the Secured Lender Warrant Agreement shall be in the form attached as an Exhibit to the Plan Documentary Supplement. The terms of the Secured Lender Warrants are more fully described in the term sheet attached as Exhibit "5" to the Plan. 8.10 Treatment of the Senior Discount Note Holders. On the Effective Date, the aggregate outstanding principal amount of the Senior Discount Notes and the fees and interest accrued and unpaid thereon shall be restructured and repaid pursuant to the New Senior Accreting Note Indenture and all the rights of the Senior Accreting Note Holders under the Existing Senior Discount Note Indenture shall be extinguished. The New Senior Accreting Note 44 Indenture shall be substantially in the form attached to the Plan Documentary Supplement as an Exhibit. In addition, the Senior Discount Warrants shall be issued ratably to the Senior Discount Note Holders and held in an escrow account until the Second Anniversary Date. The terms of the Senior Discount Warrants are more fully described in the term sheet attached as Exhibit "4" to the Plan. 8.11 Funding of the Plan. All Cash necessary for the Debtors to pay their obligations under the Plan shall be obtained by the Debtors from their North American subsidiaries; provided, however, that: (a) this section 8.11 shall not create or vest in any creditor, claimant or Holder any Claim against such subsidiaries; (b) the Debtors shall have the exclusive right to collect the Cash from their subsidiaries; (c) this section 8.11 shall not create, or be interpreted or construed to create, any liability of any such subsidiaries to any Person other than the Debtors; and (d) the Debtors' rights under this section 8.11 shall not be enforceable to the extent that they would cause a breach of the Restructuring Loan Documents or the Budget and Funding Agreement. Nothing in this section 8.11 shall impair any rights or Claims of any entity against the Debtors, nor modify the obligations of the Debtors under the Bankruptcy Code, including section 1129(a)(9) of the Bankruptcy Code, or the Plan. 8.12 Management/Board of Directors. On the Effective Date, the operation of the Reorganized Debtors shall become the general responsibility of the Reorganized Debtors' newly constituted Board of Directors (each a "Board" and collectively, the "Boards"), who shall thereafter have the responsibility for the management and control of the Reorganized Debtors. Immediately following the Effective Date, the New Board of Reorganized DDi Corp. shall consist of seven members, comprised as follows: (a) Bruce McMaster, (b) David Blair, (c) two Convertible Subordinated Note Holder designees (designated by the Ad Hoc Convertible Note Holder Committee prior to distribution of the Plan) which designees will be included in the Plan as sent to the Convertible Subordinated Note Holders for approval and (d) three Convertible Subordinated Note Holder designees (selected by the Ad Hoc Convertible Note Holder 45 Committee prior to distribution of the Plan) which designees will be included in the Plan as sent to the Convertible Subordinated Note Holders for approval (designees will be selected from list to be developed in conjunction with Reorganized DDi Corp., the Ad Hoc Convertible Note Holder Committee and their respective advisors). Prior to or immediately following the Effective Date of the Plan, Reorganized DDi Corp. shall use commercially reasonable efforts to provide to the Ad Hoc Convertible Note Holder Committee the names of at least three directors who meet the "independence" standards of the Securities and Exchange Commission and the Nasdaq National Market (whether or not Reorganized DDi Corp. or any of the securities of Reorganized DDi Corp. are subject to such standards). After the Effective Date of the Plan, and not less than annually thereafter, prior to any election by the stockholders or appointments by the Board (only if there are not remaining at the time of any such appointment by the Board, two members of the Board who have been previously recommended as nominees by the Preferred Stock Representatives (as defined below)), two Holders of the New Preferred Stock or New DDi Corp. Preferred Stock (if the Modified Structure is implemented) (who in either case initially will be Providence Capital, LLC and Tablerock Fund Management, LLC (the "Preferred Stock Representatives"), together, shall make reasonable recommendations in good faith (the "Designation Right") to the Board (or more frequently in the event any such Holder transfers any of its shares of New Preferred Stock or New DDi Corp. Preferred Stock, as the case may be, along with its Designation Right to an unaffiliated third party) with respect to two nominees, who shall be qualified and otherwise appropriate candidates for the Board in the event of an election by the stockholders and a number of nominees necessary to result in there being two acting members of the Board who have been recommended by such Preferred Stock Representatives in the event of an appointment by the Board. Such recommendation may be made by delivering notice thereof to Reorganized DDi Corp. within sixty (60) days after the written request by the Board of names for consideration (or more frequently in the event such Holder of New Preferred Stock or New DDi Corp. Preferred Stock, as the case may be, and any transferee thereof each certify that such Holder of New Preferred Stock or New DDi Corp. 46 Preferred Stock, as the case may be, has transferred its shares of New Preferred Stock or New DDi Corp. Preferred Stock, as the case may be, to such transferee). The Board shall submit a written request for names for consideration once a year (or more frequently in the event such Holder of New Preferred Stock or New DDi Corp. Preferred Stock, as the case may be, and any transferee thereof each certify that such Holder of New Preferred Stock or New DDi Corp. Preferred Stock, as the case may be, has transferred its shares of New Preferred Stock or New DDi Corp. Preferred Stock, as the case may be, to such transferee). If at any time while the New Preferred Stock or New DDi Corp. Preferred Stock, as the case may be, remains outstanding, those nominees recommended by such Holders of the New Preferred Stock or New DDi Corp. Preferred Stock, as the case may be, are not appointed by the Board to the Board (if the appointments are determined by the Board) or nominated by the Board or management of Reorganized DDi Corp. for election by the stockholders of Reorganized DDi Corp. to the Board, then as a remedy to the Holders of the New Preferred Stock or the New DDi Corp. Preferred Stock, as the case may be, for breach of the Designation Right, the New Preferred Stock or the New DDi Corp. Preferred Stock, as the case may be, shall bear a dividend rate equal to 17% per annum effective retroactively to the date of issuance (until such time as two nominees recommended to the Board pursuant to the foregoing procedures are appointed or nominated, whereupon the dividend rate shall be decreased to 15% per annum commencing on the date of such complying appointments or nominations.) Notwithstanding the foregoing, if (i) any member of the Board who holds New Preferred Stock or New DDi Corp. Preferred Stock, as the case may be (or who is a stockholder, director, member, partner, employee or otherwise an affiliate of a person or entity who holds New Preferred Stock or New DDi Corp. Preferred Stock, as the case may be) (each, a "Preferred Stock Board Member") votes against an appointment or nominee to the Board recommended by such holders of the New Preferred Stock or New DDi Corp. Preferred Stock, as the case may be (the "Recommended Board Member") in accordance with the foregoing provisions, (ii) such Recommended Board Member is not appointed or nominated to the Board because one or more Preferred Stock Board Members votes against such 47 Recommended Board Member and (iii) such Recommended Board Member would have been appointed or nominated to the Board had such Preferred Stock Board Member voted for such Recommended Board Member, then there shall be no increase in the dividend rate pursuant to the provisions of this section." 8.13 Corporate Actions. On the Effective Date, all actions contemplated by the Plan shall be deemed authorized and approved in all respects (subject to the provisions of the Plan) by virtue of the entry of the Confirmation Order, in accordance with the Bankruptcy Code and applicable State law (including but not limited to section 303 of the Delaware General Corporations Law, to the extent applicable, and any analogous provision of the business corporation law or code of each other State in which any Reorganized Debtor is incorporated or organized) and without any requirement of further action by the stockholders, officers or directors of the Debtors or the Reorganized Debtors or DDi Europe, including, without limitation, the following: (a) the adoption and the filing with the Secretary of State of the State of Delaware of the Amended and Restated DDi Corp. Certificate of Incorporation; (b) the adoption of the Amended and Restated DDi Corp. Bylaws; (c) the adoption and filing with Companies House of the Amended and Restated DDi Europe Articles of Association (only if the Modified Structure is not implemented); (d) the issuance by DDi Europe of the New Preferred Stock (only if the Modified Structure is not implemented), (e) the issuance by Reorganized DDi Corp. of the New Common Stock, the New DDi Corp. Preferred Stock (only if the Modified Structure is implemented), the New Warrants and the Management Options contemplated under the Management Incentive Plan; (f) the execution and the delivery of, and the performance under, each of the Plan Documents, the Restructuring Loan Documents and all documents and agreements contemplated by or relating to any of the foregoing; and (g) the removal of all members of the respective Boards of Directors of the Debtors and the election of all members of the Boards of Directors of the Reorganized Debtors designated pursuant to the Plan. All matters provided for under the Plan involving the corporate structure of the Debtors or Reorganized Debtors and any corporate action required by the Debtors or Reorganized Debtors in connection 48 with the Plan shall be deemed to have occurred and shall be in effect pursuant to the Bankruptcy Code, without any requirement of further action by the shareholders, officers or directors of the Debtors or Reorganized Debtors. On the Effective Date, the appropriate officers of the Reorganized Debtors are authorized and directed to execute and to deliver the Plan Documents, the Restructuring Loan Documents and any other agreements, documents and instruments contemplated by the Plan, the Plan Documents or the Restructuring Loan Documents in the name and on behalf of the Reorganized Debtors. 8.14 Revesting of Assets. Except as otherwise specifically provided in the Plan, on the Effective Date, all property of the Estates of the Debtors (including all rights of action held by such Estates, but excluding property that has been abandoned pursuant to an order of the Bankruptcy Court) shall revest in each of the Debtors whose Estates owned such property or interest in property immediately prior to the Effective Date, free and clear of all Claims, Liens, charges, encumbrances, rights and Equity Interests of Creditors and equity security holders. As of the Effective Date, the Reorganized Debtors may operate their businesses and use, acquire, and dispose of property and settle and compromise Claims or Equity Interests without the supervision of, or any authorization from, the Bankruptcy Court or the United States Trustee, and free of any restriction of the Bankruptcy Code or Bankruptcy rules, other than those restrictions specifically provided for in the Plan or the Confirmation Order. As of the Effective Date, all property of the Reorganized Debtors shall be free and clear of all Claims, Liens, encumbrances, and other interests of creditors and Holders of Equity Interests, except as otherwise expressly provided herein. 8.15 Cancellation of Existing Securities and Agreements. On the Effective Date, except as otherwise specifically provided for in the Plan (including, without limitation, the DDi Capital Guarantee and Pledge) and except for the Debtors' obligation to pay, reimburse and indemnify the 5.25% Trustee, the 6.25% Trustee, the Senior Discount Trustee and the rights of the 5.25% Trustee, the 6.25% Trustee, the Senior Discount Trustee to payment thereof (including 49 any priority or lien rights); provided that the Indentures shall continue in effect for the purposes of allowing the 5.25% Trustee, the 6.25% Trustee, the Senior Discount Trustee, agent or servicer to make the distributions to be made on account of such Allowed Claims in connection with the Indentures under the Plan, (a) all existing Equity Interests and any note, bond, indenture, or other instrument or document evidencing or creating any indebtedness or obligation of or ownership interest in the Debtors, including, without limitation, the Existing DDi Corp. Common Stock, any existing warrants or vested or unvested options to purchase Equity Interests in DDi Corp., the Convertible Subordinated Note Indentures, the Convertible Subordinated Notes, the Existing Senior Discount Note Indenture and the Senior Discount Notes will be cancelled, (b) the Pre-Restructuring Loan Documents will be modified, exchanged and restated as provided in the Restructuring Loan Documents and (c) the obligations of, Claims against, and/or Equity Interests in the Debtors under, relating, or pertaining to any agreements, indentures, certificates of designation, bylaws, or certificate or articles of incorporation or similar documents governing existing Equity Interests and any note, bond, indenture, or other instrument or document evidencing or creating any indebtedness or obligation of the Debtors, as the case may be, including, without limitation, the Existing DDi Corp. Common Stock, the Convertible Subordinated Note Indentures, and the Convertible Subordinated Notes, the Senior Discount Note Indenture and the Senior Discount Notes will be released and discharged. 8.16 Preservation of Rights of Action; Settlement of Litigation Claims. Except as otherwise provided herein or the Confirmation Order, or in any contract, instrument, release, indenture or other agreement entered into in connection with this Plan, in accordance with section 1123(b) of the Bankruptcy Code, the Reorganized Debtors shall retain and may enforce, sue on, settle, or compromise (or decline to do any of the foregoing) all claims, rights or causes of action, suits, and proceedings, whether in law or in equity, whether known or unknown, that the Debtors or their Estates may hold against any Person or entity without the approval of the Bankruptcy Court. The Reorganized Debtors or their successor(s) may pursue such retained 50 claims, rights or causes of action, suits, or proceedings as appropriate, in accordance with the best interests of the Reorganized Debtors or their successor(s) who hold such rights. IX. DISTRIBUTIONS 9.1 Distribution Agent. The Distribution Agent shall make all distributions required hereunder, except with respect to (1) a Holder of a Claim whose distribution is governed by the Indentures, which distributions shall be deposited by the Distribution Agent with the 5.25% Trustee, the 6.25% Trustee or the Senior Discount Trustee, as the case may be, who shall respectively deliver such distributions to the Holders of Claims in accordance with the provisions hereof and the terms of the Indentures and (2) a distribution governed by the Secured Lender Warrant Agreement, which distributions shall be deposited by the Distribution Agent with the Administrative Agent, who shall deliver such distribution to the Secured Lenders in accordance with the terms hereof and the terms of the Secured Lender Warrant Agreement. The Distribution Agent may employ one or more sub agents on such terms and conditions as it may agree in its discretion, upon consultation with the Required Lenders. The Distribution Agent shall not be required to provide any bond in connection with the making of any distributions pursuant to the Plan. 9.2 Distributions. 9.2.1 Dates of Distributions. Any distribution required to be made on the Effective Date shall be deemed timely if made as soon as practicable after such date and, in any event, within thirty (30) days after such date, except that the distributions required to be made on the Effective Date to the (a) Senior Discount Trustee for distribution to the Senior Discount Note Holders for Allowed Class 5 Claims, (b) 5.25% Trustee and the 6.25% Trustee for distribution to the Convertible Subordinated Note Holders for Allowed Class 6a Claims and Allowed Class 6b Claims, and (c) Administrative Agent for distribution to the Secured Lenders, shall be made on the Effective Date. Any distribution required to be made upon a Disputed Claim becoming an 51 Allowed Claim and no longer being a Disputed Claim shall be deemed timely if made as soon as practicable thereafter. 9.2.2 Limitation on Liability. Neither the Debtors, the Reorganized Debtors, the Ad Hoc Committees, the 5.25% Trustee, the 6.25% Trustee, the Senior Discount Trustee, the Administrative Agent and the Collateral Agent, their respective Affiliates, nor any of their respective employees, members, officers, directors, agents, or professionals or Affiliates shall be liable for (i) any acts or omissions (except for gross negligence or willful misconduct) in connection with implementing the distribution provisions of this Plan and the making or withholding of distributions pursuant to the Plan, or (ii) any change in the value of distributions made pursuant to the Plan resulting from any delays in making such distributions in accordance with the Plan's terms (including but not limited to any delays caused by the resolution of Disputed Claims). 9.3 Old Instruments and Securities. 9.3.1 Surrender and Cancellation of Instruments and Securities. As a condition to receiving any distribution pursuant, to the Plan, each Person holding any note or other instrument or security (other than the Convertible Subordinated Notes, Senior Discount Notes and the DDi Capital Guarantee and Pledge) (collectively "Instruments or Securities" and individually an "Instrument or Security") evidencing an existing Claim against or in a Debtor must surrender such Instrument or Security to the Distribution Agent. 9.3.2 Rights of Persons Holding Instruments and Securities. As of the Effective Date, and whether or not surrendered by the Holder thereof, (a) all Existing DDi Corp. Common Stock, Convertible Subordinated Notes, Senior Discount Notes and all other Instruments and Securities evidencing any Claims or Equity Interests (other than the DDi Capital Guarantee and Pledge) shall be deemed automatically cancelled and deemed void and of no further force or effect, without any further action on the part of any person, and any Claims or Equity Interests under or evidenced by such Existing DDi Corp. Common Stock, Convertible Subordinated Notes, Senior Discount Notes or other Instruments or Securities (other than the DDi Capital 52 Guarantee and Pledge) shall be deemed discharged. All options to purchase any stock of DDi Corp. shall be deemed rejected, cancelled and terminated as of the Petition Date. 9.3.3 Cancellation of Liens. Except as otherwise provided in the Plan, any Lien securing any Secured Claim shall be deemed released and discharged, and the Person holding such Secured Claim shall be authorized and directed to release any collateral or other property of the Debtors (including, without limitation, any cash collateral) held by such Person and to take such actions as may be requested by the Reorganized Debtors to evidence the release of such Lien, including, without limitation, the execution, delivery and Filing or recording of such releases as may be requested by Reorganized Debtors at the sole expense of Reorganized Debtors. This subsection 9.3.3 shall not apply to any Lien securing any of the Pre-Restructuring Bank Indebtedness. 9.4 De Minimis Distributions and Fractional Shares. No Cash payment shall be made by the Reorganized Debtors to any Holder of Allowed Claims (other than Administrative Claims) unless a request therefore is made in writing to the Reorganized Debtors. No fractional shares of New Common Stock and New Preferred Stock (or New DDi Corp. Preferred Stock if the Modified Structure is implemented) shall be distributed; any entity that otherwise would be entitled to receive a fractional share distribution under this Plan shall instead receive an amount of shares rounded down to the next whole number. Any securities or other property that is not distributed as a consequence of this section shall, after the last distribution on account of Allowed Claims in the applicable Class be treated as "Unclaimed Property" under the Plan. This section 9.4 shall not apply to any of the Secured Lenders. 9.5 Delivery of Distributions. Except as provided in Section 9.7 with respect to Unclaimed Property, distributions to Holders of Allowed Claims, Allowed Administrative Claims, Allowed Class 5 Claims, Allowed Class 6a Claims and Allowed Class 6b Claims shall be distributed by mail as follows: (1) with respect to each Holder of an Allowed Claim that has filed a proof of claim, at the address for such Holder as maintained by the official claims agent for the Debtors; (2) with respect to each Holder of an Allowed Claim that has not filed a proof of 53 claim, at the address reflected on the Schedules filed by the Debtors, provided, however, that if the Debtors or the Reorganized Debtors have received a written notice of a change of address for such Holder, the address set forth in such notice shall be used; (3) with respect to each Holder of an Allowed Administrative Claim, at such address as the Holder may specify in writing; (4) with respect to each Holder of an Allowed Class 6a Claim or Allowed Class 6b Claim, to the 5.25% Trustee or the 6.25% Trustee, as the case may be; (5) with respect to each Holder of an Allowed Claim under the Senior Discount Notes and the Existing Senior Discount Note Indenture, to the Senior Discount Trustee; or (6) with respect to each Holder of an Allowed Class 1 Claim, to the Administrative Agent. 9.6 Undeliverable Distributions. If the distribution of Cash, New Preferred Stock or New DDi Corp. Securities (other than the Secured Lender Warrants) to the Holder of any Allowed Claim, Allowed Administrative Claim, Allowed Class 5 Claims, Allowed Class 6a Claims, or Allowed Class 6b Claims, is returned to the Distribution Agent, the 5.25% Trustee, the 6.25% Trustee or the Senior Discount Trustee as undeliverable (any such distribution being hereinafter referred to as "Unclaimed Property"), no further distribution shall be made to such Holder unless and until the Distribution Agent, the 5.25% Trustee, the 6.25% Trustee or the Senior Discount Trustee is notified in writing of such Holder's then current address. Subject to the remainder of this section and following section 9.7, Unclaimed Property shall remain in the possession of the Distribution Agent, the 5.25% Trustee, the 6.25% Trustee or the Senior Discount Trustee pursuant to this Section, and shall be set aside and (in the case of Cash) held in a segregated interest bearing account (as to Cash Unclaimed Property) to be maintained by the Distribution Agent, the 5.25% Trustee, the 6.25% Trustee or the Senior Discount Trustee, as the case may be, until such time as the subject distribution becomes deliverable. Nothing contained in the Plan shall require the Distribution Agent, the 5.25% Trustee, the 6.25% Trustee, the Senior Discount Trustee, or any other Person to attempt to locate such Person. This section 9.6 shall not apply to any of the Secured Lenders. 54 9.7 Disposition of Unclaimed Property. If the Person entitled thereto notifies the Distribution Agent, the 5.25% Trustee, the 6.25% Trustee or the Senior Discount Trustee, as the case may be, of such Person's claim to the distribution of Unclaimed Property within nine (9) months following the Effective Date, the Unclaimed Property distributable to such Person, together with any interest or dividends earned thereon, shall be paid or distributed to such Person. Any Holder of an Allowed Claim, Allowed Administrative Claim, Allowed Class 5 Claim, Allowed Class 6a Claim or Allowed Class 6b Claim that does not assert a claim in writing for Unclaimed Property held by the Distribution Agent, the 5.25% Trustee, the 6.25% Trustee or the Senior Discount Trustee, as the case may be, within nine (9) months after the Effective Date shall no longer have any claim to or interest in such Unclaimed Property, and shall be forever barred from receiving any distributions under this Plan or otherwise from the Distribution Agent, the 5.25% Trustee, the 6.25% Trustee or the Senior Discount Trustee, as the case may be. In such cases, any Unclaimed Property held for distribution on account of such Allowed Claims, Administrative Claims, Allowed Class 5 Claims, Allowed Class 6a Claims and Allowed Class 6b Claims shall be retained by the Distribution Agent, the 5.25% Trustee, the 6.25% Trustee or the Senior Discount Trustee, as the case may be, as follows: pursuant to Bankruptcy Code section 347(b), (a) any undistributed Cash shall be the property of the Distribution Agent; provided, however, that any undistributed Cash whose distribution is governed by the Existing Senior Discount Note Indenture shall be returned by the Senior Discount Trustee to the Distribution Agent and distributed by the Distribution Agent to DDi Capital, (b) any undistributed New DDi Corp. Securities (other than the Secured Lender Warrants) shall be the property of the Distribution Agent; provided, however that any undistributed New Common Stock and New Preferred Stock (or New DDi Corp. Preferred Stock if the Modified Structure is implemented) which was distributed for the benefit of the Convertible Subordinated Note Holders shall be retained by or transferred to the 5.25% Trustee or the 6.25% Trustee, as the case may be, and distributed Pro Rata to Holders of Allowed Class 6a Claims and Allowed Class 6b Claims that have claimed their initial distributions, in each case, 55 free from any restrictions thereon, and such undistributed Cash or securities shall not be subject to the unclaimed property or escheat laws of any State or other governmental unit. This section 9.7 shall not apply to any of the Secured Lenders. 9.8 Effect of Distribution Record Date. As of the close of business on the Distribution Record Date, the transfer register for any instrument, security, or other documentation canceled pursuant to the Plan (including, but not limited to, the Existing DDi Corp. Common Stock, any existing warrants or vested or unvested options to purchase Equity Interests in DDi Corp., the Convertible Subordinated Note Indentures, the Convertible Subordinated Notes, the Existing Senior Discount Indenture and the Senior Discount Notes) shall be closed and there shall be no further changes in the record Holders of any such instrument, security, or documentation. The Reorganized Debtors shall have no obligation to recognize the transfer of any such instrument, security, or other documentation occurring after the Distribution Record Date, and shall be entitled for all purposes herein to recognize and deal only with those Holders of record as of the close of business on the Distribution Record Date. 9.9 Setoffs. Except as otherwise provided herein, the Reorganized Debtors may, pursuant to sections 502(d) or 553 of the Bankruptcy Code or applicable non-bankruptcy law, offset against any Allowed Claim (other than an Allowed Class 1 Claim, Allowed Class 5 Claim, Allowed Class 6a Claim, Allowed Class 6b Claim), and the distributions to be made pursuant to the Plan on account of such Claim (before any distribution is made on account of such Claim), the Claims, rights, and Causes of Action of any nature that the Debtors or Reorganized Debtors may hold against the Holder of such Allowed Claim; provided, however, that neither the failure to effect such a setoff nor the allowance of any Claim hereunder shall constitute a waiver or release by the Debtors or the Reorganized Debtors of any such Claims, rights, and causes of Action that the Debtors or the Reorganized Debtors may possess against such Holder. 56 X. OBJECTIONS TO CLAIMS AND DISPUTED CLAIMS 10.1 Objections to Claims. The Reorganized Debtors shall have the sole and exclusive right to file and prosecute objections to Claims. Unless another date is established by order of the Bankruptcy Court or the Plan, any objection to a Claim shall be Filed with the Bankruptcy Court and served on the Person holding such Claim on or before the applicable Claims Objection Deadline. The Reorganized Debtors shall have the right to petition the Bankruptcy Court, without notice or a hearing, for an extension of the Claims Objection Deadline. 10.2 Treatment of Disputed Claims. 10.2.1 No Distribution Pending Allowance. If any portion of a Claim is a Disputed Claim, no payment or distribution provided for under the Plan shall be made on account of such Claim unless and until such Claim becomes an Allowed Claim and is no longer a Disputed Claim; provided, however, that this section does not apply to any distributions made on account of the Allowed Class 6a Claims or Allowed Class 6b Claims. 10.2.2 Distribution After Allowance. As soon as practicable following the date on which a Disputed Claim becomes an Allowed Claim and is no longer a Disputed Claim, the Distribution Agent shall distribute to the Person holding such Claim any Cash or New Common Stock that would have been distributable to such Person if on the Effective Date such Claim had been an Allowed Claim and not a Disputed Claim. XI. EFFECT OF CONFIRMATION OF PLAN 11.1 Discharge. Except as otherwise specifically provided in the Plan or in the Confirmation Order, pursuant to section 1141(d) of the Bankruptcy Code, the distributions and rights that are provided in the Plan shall be in complete satisfaction, discharge and release, effective as of the Effective Date, of all Claims, whether known or unknown, against liabilities of, Liens on, obligations of, rights against and Equity Interests in the Debtors, or any of their assets or properties, regardless of whether any property shall have been distributed or retained 57 pursuant to the Plan on account of such Claims, rights and Equity Interest, including but not limited to, Claims and Equity Interests that arose before the Confirmation Date, including all debts of the kind specified in section 502(g), 502(h) and 502(i) of the Bankruptcy Code, in each case whether or not (a) a proof of claim or interest based upon such Claim, debt or Equity Interest is filed or deemed filed under section 501 of the Bankruptcy Code, (b) a Claim of Equity Interest based upon such Claim, debt, right or Equity Interest is allowed under section 502 of the Bankruptcy Code, or (c) the Holder of such a Claim, right, or Equity Interest accepted the Plan. The Confirmation Order shall constitute a determination of the discharge of all of the Claims against and Equity Interest in the Debtors, subject to the occurrence of the Effective Date. 11.2 Injunction. Except as otherwise expressly provided in the Plan, the documents executed pursuant to the Plan, or the Confirmation Order, on and after the Effective Date, all Persons and Entities who have held, currently hold, or may hold a debt, Claim, or Equity Interest discharged pursuant to the terms of the Plan (including but not limited to States and other governmental units, and any State official, employee, or other entity acting in an individual or official capacity on behalf of any State or other governmental units) shall be deemed permanently enjoined from taking any of the following actions on account of any such discharged debt, Claim, or Equity Interest: (1) commencing or containing in any manner any action or other proceeding against the Debtors, the Reorganized Debtors, their successors, or their property; (2) enforcing, attaching, executing, collecting, or recovering in any manner any judgment, award, decree, or order against the Debtors, the Reorganized Debtors, their successors, or their property; (3) creating, perfecting, or enforcing any Lien or encumbrance against the Debtors, the Reorganized Debtors, their successors, or their property; (4) asserting any set off, right of subrogation, or recoupment of any kind against any obligation due the Debtors, the Reorganized Debtors, their successors, or their property; and (5) commencing or continuing any action, in any manner, in any place that does not comply with or is inconsistent with the provisions of this Plan. Any person or entity injured by any willful violation of such 58 injunction shall recover actual damages, including costs and attorneys' fees, and , in appropriate circumstances, may recover punitive damages from the willful violator. XII. LIMITATION OF LIABILITY AND RELEASES 12.1 No Liability for Solicitation or Participation. As specified in section 1125(e) of the Bankruptcy Code, entities that solicit acceptances or rejections of the Plan and/or that participate in the offer, issuance, sale, or purchase of the New DDi Corp. Securities and the New Preferred Stock offered or sold under the Plan, in good faith and in compliance with the applicable provisions of the Bankruptcy Code, shall not be liable, on account of such solicitation or participation, for violation of any applicable law, rule, or regulation governing the solicitation of acceptances or rejections of the Plan or the offer, issuance, sale, or purchase of securities. 12.2 Good Faith Finding. Confirmation of the Plan shall constitute a finding that (a) the Plan has been proposed in good faith and in compliance with all applicable provisions of the Bankruptcy Code and (b) the solicitation of acceptances of rejections of the Plan by all Persons (except as set forth below) and the offer, issuance, sale, or purchase of a security offered or sold under the Plan has been in good faith and in compliance with all applicable provisions of the Bankruptcy Code. 12.3 Exculpation/Limitation of Liability. Except as otherwise specifically provided in this Plan, the Debtors, their non-debtor Affiliates, and each of their respective members, officers, directors, employees, advisors, accountants, attorneys, and other agents acting in such capacity, shall neither have nor incur any liability to any Holder of any Claim or Equity Interest or any other Person for any act or omission thereof taken in connection with, related to, or arising out of, the negotiations, formulation, preparation, dissemination, implementation, administration, consummation and pursuit of Confirmation of the Plan, the Disclosure Statement, the Chapter 11 Cases, or any contract, instrument, release or other agreement or document created or entered into in connection with the Plan, including the RSA, PSA, and SDNPSA or the offer, issuance, sale or purchase of New DDi Corp. Securities and the New Preferred Stock 59 under the Plan, or any other act taken or omitted to be taken in connection with or in contemplation of the restructuring of the Pre-Restructuring Bank Indebtedness, the Convertible Subordinated Notes, or the Senior Discount Notes; provided however, that the provisions of this section of the Plan shall (i) have no effect on the liability of any of the Debtors, their non-debtor Affiliates, and each of their respective members, officers, directors, employees, advisors, accountants, attorneys, and other agents acting in such capacity, that results from any such act or omission that is determined in a Final Order to have been the direct result of fraud, gross negligence, breach of fiduciary duty, or willful misconduct; or (ii) limit the liability of the advisors, accounts, attorneys and other agents acting in such capacity to their respective clients pursuant to DR 6-102 of the Code of Professional Responsibility. The Debtors, their non-debtor Affiliates, and each of their respective members, officers, directors, employees, advisors, accountants, attorneys, and other agents acting in such capacity, shall be entitled to rely, in every respect, upon the advice of counsel with respect to their duties and responsibilities under or with respect to the Plan. 12.4 Debtors' Releases and Injunction. 12.4.1 Release. On the Confirmation Date (but subject to the occurrence of the Effective Date), each of the Debtors, their respective non-debtor affiliates and subsidiaries and each of the officers, directors and advisors of the Debtors and their non-debtor affiliates and subsidiaries, shall conclusively, absolutely, unconditionally, irrevocably and forever release, waive and discharge the Released Parties from any and all of the Released Claims and any and all Claims and Causes of Action arising from or related in any way to the Released Claims. 12.4.2 Injunction. On the Confirmation Date (but subject to the occurrence of the Effective Date), each of the Debtors, their respective non-debtor affiliates and subsidiaries and each of the officers, directors and advisors of the Debtors and their non-debtor affiliates and subsidiaries, shall conclusively, absolutely, unconditionally, irrevocably and forever be permanently enjoined from: 60 (i) commencing, conducting or continuing in any manner, directly or indirectly, any suit, action or other proceeding of any kind in respect of a Released Claim against any and all Released Parties or their respective direct or indirect successors or transferees in interest, or any assets or property of such transferees or successors; (ii) enforcing, levying, attaching, collecting or otherwise recovering by any manner or means whether directly or indirectly any judgment, award, decree or order in respect of a Released Claim against any and all Released Parties or their respective assets or property, or their respective direct or indirect successors or transferees in interest, or any assets or property of such transferees or successors; (iii) creating, perfecting or otherwise enforcing in any manner, directly or indirectly, any Lien in respect of a Released Claim against any and all Released Parties or their respective assets or property, or their respective direct or indirect successors or transferees in interest, or any assets or property of such transferees or successors; (iv) asserting any set-off, right of subrogation or recoupment of any kind in respect of a Released Claim, directly or indirectly against any obligation due to any and all Released Parties or their respective assets or property, or their respective direct or indirect successors or transferees in interest, or any assets or property of such transferees or successors; and (v) prosecuting or attempting to prosecute any and all Claims and Causes of Action arising from or related in any way to the Released Claims which they have or may have against any and all of the Released Parties. 12.5 Releases and Injunction. 12.5.1 Release. On the Confirmation Date (but subject to the occurrence of the Effective Date), each Person and Entity, other than the Debtors, their respective non-debtor affiliates and subsidiaries and each of the officers, directors and advisors of the Debtors and their respective non-debtor affiliates and subsidiaries acting in such capacity, that votes to accept the Plan and/or does not file an objection to the entry of the Confirmation Order and/or receives 61 consideration under the Plan, shall conclusively, absolutely, unconditionally, irrevocably and forever release, waive and discharge the Released Parties from any and all of the Released Claims and any and all Claims and Causes of Action arising from or related in any way to the Released Claims. 12.5.2 Injunction. On the Confirmation Date (but subject to the occurrence of the Effective Date), each Person and Entity, other than the Debtors, their respective non-debtor affiliates and subsidiaries and each of the officers, directors and advisors of the Debtors and their respective non-debtor affiliates and subsidiaries, that votes to accept the Plan and/or does not file an objection to the entry of the Confirmation Order and/or receives consideration under the Plan, shall conclusively, absolutely, unconditionally, irrevocably and forever be permanently enjoined from: (i) commencing, conducting or continuing in any manner, directly or indirectly, any suit, action or other proceeding of any kind in respect of a Released Claim against any and all Released Parties or their respective direct or indirect successors or transferees in interest, or any assets or property of such transferees or successors; (ii) enforcing, levying, attaching, collecting or otherwise recovering by any manner or means whether directly or indirectly any judgment, award, decree or order in respect of a Released Claim against any and all Released Parties or their respective assets or property, or their respective direct or indirect successors or transferees in interest, or any assets or property of such transferees or successors; (iii) creating, perfecting or otherwise enforcing in any manner, directly or indirectly, any Lien in respect of a Released Claim against any and all Released Parties or their respective assets or property, or their respective direct or indirect successors or transferees in interest, or any assets or property of such transferees or successors; (iv) asserting any set-off, right of subrogation or recoupment of any kind in respect of a Released Claim, directly or indirectly against any obligation due to any and all Released Parties or their respective assets or property, or their respective direct or indirect 62 successors or transferees in interest, or any assets or property of such transferees or successors; and (v) prosecuting or attempting to prosecute any and all Claims and Causes of Action arising from or related in any way to the Released Claims which they have or may have against any and all of the Released Parties. XIII. CONDITIONS TO CONFIRMATION AND EFFECTIVENESS 13.1 Conditions Precedent to Plan Confirmation. The conditions precedent to Confirmation of the Plan shall include, without limitation, the following: 13.1.1 The Confirmation Order shall be in form and substance satisfactory to the Debtors, the Co-Sponsors, the Ad Hoc Senior Discount Note Holder Committee and the Required Lenders. 13.1.2 The aggregate amount filed or asserted in documents filed with the Bankruptcy Court as of the first business day prior to the Confirmation Hearing of (a) the Allowed and Disputed Administrative Claims (exclusive of post-Petition Date trade payables incurred in the ordinary course of business and the Claims of the Professionals described in section 13.1.3 below); (b) Allowed and Disputed Priority Claims; and (c) Allowed and Disputed Tax Claims does not exceed $500,000. 13.1.3 The aggregate amount filed or asserted in documents filed with the Bankruptcy Court as of the first business day prior to the Confirmation Hearing of the Allowed and Disputed Administrative Claims relating to the amount of the Professionals' Advisor Fees (as defined in the Budget and Funding Agreement) does not exceed $2,500,000. 13.1.4 The aggregate amount of Allowed and Disputed Class 4 Claims as of the Claims Bar Date does not exceed $500,000. 13.2 Conditions Precedent to Plan Effectiveness. The following shall be conditions precedent to the effectiveness of the Plan and the occurrence of the Effective Date. 63 13.2.1 The Confirmation Order in form and substance satisfactory to the Debtors, the Co-Sponsors, the Ad Hoc Senior Discount Note Holder Committee and the Required Lenders shall have been entered and have become a Final Order. 13.2.2 All agreements and instruments contemplated by, or to be entered into pursuant to, the Plan, including, without limitation, each of the Plan Documents necessary for consummation of the Plan and the Restructuring Loan Documents necessary for consummation of the restructuring of the Pre-Restructuring Bank Indebtedness, shall have been duly and validly executed by the parties thereto and all conditions of their effectiveness shall have been satisfied or waived. Upon satisfaction of all conditions precedent to effectiveness of the Plan, unless waived, and the Effective Date, all parties shall be deemed to have delivered all of the documents and instruments described herein simultaneously, and effectiveness of the Plan and the Plan Effective Date shall be deemed to have occurred simultaneously with such delivery. 13.3 Waiver of Conditions. The conditions set forth in sections 13.1 and 13.2 may be waived with the prior written consent of the Required Lenders, the Ad Hoc Committees and the Debtors, at any time, without notice, leave or order of the Bankruptcy Court, and without any formal action other than proceeding to obtain the Confirmation Order and consummate the Plan. XIV. RETENTION OF JURISDICTION 14.1 Retention of Jurisdiction. Notwithstanding the entry of the Confirmation Order or the occurrence of the Effective Date, the Bankruptcy Court shall retain jurisdiction over the Cases and any of the proceedings arising from, or relating to, the Cases pursuant to section 1142 of the Bankruptcy Code and 28 U.S.C. (S) 1334 to the fullest extent permitted by the Bankruptcy Code and other applicable law, including, without limitation, such jurisdiction as is necessary to ensure that the purpose and intent of the Plan are carried out; provided, however, that the Bankruptcy Court shall not have nor retain jurisdiction over any of the Restructuring Loan Documents (other than non-exclusive jurisdiction with respect to the Restructuring Loan Documents being filed as Plan Documents). Without limiting the generality of the foregoing the Bankruptcy Court shall retain jurisdiction for the following purposes: 64 (a) to hear and determine any and all objections to the allowance, or requests for estimation, of Claims or the establishment of reserves pending the resolution of Disputed Claims; (b) to consider an act on the compromise and settlement of any Claim against, or cause of action on behalf of, any Debtor or any Estate; (c) to enter such orders as may be necessary or appropriate in connection with the recovery of the Debtors' assets wherever located; (d) to hear and determine any and all applications for allowance of compensation and reimbursement of expenses; (e) to hear and determine any and all controversies, suits and disputes arising under or in connection with the interpretation, implementation or enforcement of the Plan and any of the documents intended to implement the provisions of the Plan or any other matters to be resolved by the Bankruptcy Court under the terms of the Plan. (f) to hear and determine any motions or contested matters involving Taxes, tax refunds, tax attributes and tax benefits and similar and related matters with respect to any Debtor arising prior to the Effective Date or relating to the administration of the Cases, including, without limitation, matters involving federal, state and local Taxes in accordance with sections 346, 505 and 1146 of the Bankruptcy Code; (g) to hear and determine any and all applications, adversary proceedings and contested matters pending on the Effective Date or that may be commenced thereafter as provided in the Plan; (h) to effectuate distributions under and performance of the provisions of the Plan. (i) to hear and determine any applications to modify any provision of the Plan to the full extent permitted by the Bankruptcy Code; (j) to correct any defect, cure any omission or reconcile any inconsistency in the Plan, the exhibits to the Plan and annexes thereto, including any of the Plan 65 Documents, or any order of the Bankruptcy Court, including the Confirmation Order, as may be necessary to carry out the purposes and intent of the Plan; (k) to determine such other matters as may be provided for in the Confirmation Order or as may from time to time be authorized under the provisions of the Bankruptcy Code or any other applicable law; (l) to enforce all order, judgments, injunctions and exculpations issued or entered in connection with the Cases or the Plan; (m) to enter such orders as may be necessary or appropriate in aid of confirmation and to facilitate implementation of the Plan, including, without limitation, any orders as may be appropriate in the event that the Confirmation Order is for any reason stayed, revoked, modified or vacated; (n) to determine any other matter not inconsistent with the Bankruptcy Code; (o) to issue a final decree closing the Cases. XV. MODIFICATION OR WITHDRAWAL OF PLAN 15.1 Modification of Plan. At any time prior to confirmation of the Plan, with the prior written consent of the Co-Sponsors and the Required Lenders, the Reorganized Debtors may supplement, amend or modify the Plan. After confirmation of the Plan, with the prior written consent of the Co-Sponsors and the Required Lenders, the Debtors or Reorganized Debtors may (x) apply to the Bankruptcy Court, pursuant to section 1127 of the Bankruptcy Code, to modify the Plan; and (y) apply to the Bankruptcy Court to remedy defects or omissions in the Plan or to reconcile inconsistencies in the Plan. 15.2 Termination Events. If confirmation is denied by a Final Order, or if the Effective Date does not occur by January 8, 2004 (or such later date as may be agreed to in writing by the Debtors and the Co-Sponsors and the Required Lenders), then the Plan shall be deemed null and void. In such event, nothing contained herein shall be deemed to constitute a waiver or release of any claims by or against the Debtors or any other Person or to prejudice in 66 any manner the rights of the Debtors or any Person in any further proceedings involving the Debtors. 15.3 Nonconsensual Confirmation. In the event that any impaired Class of Claims or Equity Interests shall fail to accept the Plan in accordance with section 1129(a)(8) of the Bankruptcy Code, the Debtors (i) may request that the Bankruptcy Court confirm the Plan in accordance with section 1129(b) of the Bankruptcy Code, and (ii) in accordance with Section 15.1, and with the consent of the Co-Sponsors and the Required Lenders, may modify the Plan in accordance with section 1127(a) of the Bankruptcy Code. XVI. MISCELLANEOUS 16.1 Payment of Statutory Fees. All quarterly fees due and payable to the Office of the United States Trustee pursuant to section 1930(a)(6) of Title 28 of the United States Code shall be paid in full on or before the Effective Date, or, to the extent such quarterly fees are disputed, an adequate reserve shall have been established and set aside for payment in full thereof, as required by section 1129(a)(12) of the Bankruptcy Code. Each Reorganized Debtor shall remain responsible for timely payment of its respective quarterly fees due and payable after the Effective Date and until such Reorganized Debtor's Case is closed, to the extent required by section 1930(a)(6) of Title 28 of the United States Code. 16.2 Payment Dates. Whenever any payment or distribution to be made under the Plan shall be due on a day other than a business day, such payment or distribution shall instead be made, without interest, on the immediately following Business Day. 16.3 Headings. The headings used in the Plan are inserted for convenience only and neither constitutes a portion of the Plan nor in any manner affect the construction of the provisions of the Plan. 67 16.4 Other Documents and Actions. The Reorganized Debtors may execute such other documents and take such other actions as may be necessary or appropriate to effectuate the transactions contemplated under this Plan. 16.5 Notices. All notices and requests in connection with the Plan shall be in writing and shall be hand delivered or sent by mail addressed to: To the Debtors: DDi Corp. 1220 North Simon Circle Anaheim, CA 92806 Attention: Timothy Donnelly With copies to: Kirkland & Ellis LLP 777 South Figueroa Street Los Angeles, CA 90017 Attention: Sharon M. Kopman To the Secured Lenders: JPMorgan Chase Bank 270 Park Avenue, 20th Floor New York, NY 10017 Attention: Michael Lancia With copies to: Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, NY 10017 Attention: Kathrine A. McLendon To the Ad Hoc Convertible Note Holder Committee: Tablerock Fund Management 505 Park Avenue, 5th Floor New York, NY 10022 Attention: Jeffrey D. Lapin 68 With copies to: Stutman Treister & Glatt Professional Corporation 1901 Avenue of the Stars, 12th Floor Los Angeles, CA 90067 Attention: George C. Webster II To the Ad Hoc Senior Discount Note Holder Committee: JP Morgan Partners 1221 Avenue of the Americas, 34th Floor New York, NY 10020 Attention: Kevin O'Brien With copies to: Hahn & Hessen LLP 488 Madison Avenue New York, NY 10022 Attention: Jeffrey L. Schwartz To the 5.25% Trustee: US Bank 555 SW Oak Street Portland, Oregon 97204 Attention: Lawrence Bell With copies to: Maslon Edelman Borman & Brand, LLP 3300 Wells Fargo Center 90 South Seventh Street Minneapolis, Minnesota 55402 To the 6.25% Trustee: US Bank 555 SW Oak Street Portland, Oregon 97204 Attention: Lawrence Bell With copies to: Maslon Edelman Borman & Brand, LLP 3300 Wells Fargo Center 90 South Seventh Street Minneapolis, Minnesota 55402 69 To the Senior Discount Trustee: Wilmington Trust Company 1100 North Market Street Wilmington, Delaware 19890 Attention: Sandra R. Ortiz With copies to: Curtis, Mallet-Prevost, Colt & Mosle, LLP 101 Park Avenue New York, New York 10178 Attention: Steven J. Reisman All notices and requests to any Person holding of record any Claim of Equity Interest shall be sent to them at their last known address or to the last known address of their attorney of record. Any such Person may designate in writing any other address for purposes of this Section 16.5 which designation will be effective on receipt. 16.6 Governing Law. Unless a rule of law or procedure is supplied by federal law (including the Bankruptcy Code and Bankruptcy Rules), the laws of the State of New York (without reference to its conflict of law rules) shall govern the construction and implementation of the Plan and any agreements, documents, and instruments executed in connection with the Plan, unless otherwise specifically provided in such agreements, documents, or instruments. 16.7 Binding Effect. The Plan and all rights, duties and obligations thereunder shall be binding upon and inure to the benefit of the Debtors, the Reorganized Debtors, Holders of Claims, Holders of Equity Interests, and their respective successors and assign. 16.8 Successors and Assigns. The rights, benefits, and obligations of any entity named or referred to in the Plan shall be binding on, and shall inure to the benefit of, the heirs, executors, administrators, successors, and assigns of such entity. 70 16.9 No Waiver. The failure of the Debtors or any other Person to object to any Claim for purposes of voting shall not be deemed a waiver of the Debtors' or Reorganized Debtors' right to object to or examine such Claim, in whole or in part. 16.10 Exemption from Securities Laws. All of the New Preferred Stock and New DDi Corp. Securities distributed pursuant to this Plan are and shall be entitled to the benefits and exemptions provided by section 1145 of the Bankruptcy Code. 16.11 Inconsistencies. In the event the terms or provisions of the Plan and the Confirmation Order are inconsistent with the terms and provisions of the Exhibits to the Plan or documents executed in connection with the Plan (other than the Restructuring Loan Documents), the terms of the Plan and the Confirmation Order shall control. In the event the terms and provisions of the Plan and the Confirmation Order are inconsistent with the terms and provisions of the Restructuring Loan Documents, the terms of the Restructuring Loan Documents shall control. 16.12 Exemption from Certain Transfer Taxes and Recording Fees. Pursuant to section 1146(c) of the Bankruptcy Code, any transfers from a Debtor to a Reorganized Debtor or to any other Person or entity pursuant to the Plan, or any agreement regarding the transfer of title to or ownership of any of the Debtors' real or personal property or of any other interest in such property (including, without limitation, a security interest) will not be subject to any document recording tax, stamp tax, conveyance fee, intangibles or similar tax, mortgage tax, stamp act, real estate transfer tax, mortgage recording tax, Uniform Commercial Code filing or recording fee, or other similar tax or governmental assessment, and the Confirmation Order will direct the appropriate state or local governmental officials or agents to forego the collection of any such tax or governmental assessment and to accept for filing and recordation any of the foregoing instruments or other documents without the payment of any such tax or governmental assessment. 71 16.13 Post-Confirmation Conversion/Dismissal. A creditor or party in interest may bring a motion to convert or dismiss the case under (S) 1112(b), after the Plan is confirmed, if there is a default in performing the Plan. The Debtors and Reorganized Debtors reserve the right to object to any motion for conversion or dismissal. If the Court orders any of the Cases converted to Chapter 7 after the Plan is confirmed, then all property that had been property of the Chapter 11 Estate, and that has not been disbursed pursuant to the Plan, will revest in the Chapter 7 estate. The automatic stay will be reimposed upon the revested property, but only to the extent that relief from stay was not previously authorized by the Court during this case. 16.14 Final Decree. Once an Estate has been fully administered, as referred to in Bankruptcy Rule 3022, the applicable Reorganized Debtor, or other party as the Court shall designate in the Confirmation Order, shall file a motion with the Court to obtain a final decree to close the Case of such Debtor. 72 Date: October 31, 2003 DDi Corp., a Delaware corporation By: /s/ Timothy J. Donnelly --------------------------------------- Name: Timothy J. Donnelly Title: Vice President Date: October 31, 2003 DDi Capital Corp., a California corporation By: /s/ Timothy J. Donnelly --------------------------------------- Name: Timothy J. Donnelly Title: Vice President Submitted by: Kirkland & Ellis LLP By: /s/ Richard L. Wynne ----------------------------------------------- Richard L. Wynne (RW-5630) Sharon M. Kopman (SK-3295) Christian C. Lymn (CL-3159) Attorneys for Debtors and Debtors-In-Possession
EX-99.2 21 dex992.txt DEBTORS' AMENDED FIRST AMENDED JOINT PLAN OF REORGANIZATION Exhibit 99.2 KIRKLAND & ELLIS LLP Citigroup Center 153 East 53rd Street New York, New York 10022-4675 Telephone: (212) 446-4800 Facsimile: (212) 446-4900 Richard L. Wynne (RW-5630) KIRKLAND & ELLIS LLP 777 South Figueroa Street Los Angeles, California 90017 Telephone: (213) 680-8400 Facsimile: (213) 680-8500 Sharon M. Kopman (SK-3295) Reorganization Counsel for Debtors and Debtors in Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK - ------------------------------ x Chapter 11 In re: : : Case No. 03-15261 (SMB) DDI CORP., et al., : : (Jointly Administered with Case No. 03- Debtors. : 15260) - ------------------------------ x AMENDMENT TO DEBTORS' FIRST AMENDED JOINT PLAN OF REORGANIZATION DATED AS OF AUGUST 30, 2003 I. INTRODUCTION This amendment (the "Amendment") to the Debtors' First Amended Joint Plan of Reorganization dated as of August 30, 2003 (as may be further amended, amended and restated, supplemented or modified from time to time) (the "Plan") is being filed by DDi Corp. ("DDi Corp.") and DDi Capital Corp. ("DDi Capital", together with DDi Corp., the "Debtors") to effect certain modifications to (a) the definition of "Released Claims" to clarify that nothing in the Plan releases claims of the United States of America or its agencies or subdivisions (the "United States") against the non-Debtors; and (b) the structure of the issuance of preferred stock relating to DDi Europe Limited ("DDi Europe"), a non-debtor wholly-owned subsidiary of DDi Corp. (such modified structure will be referred to herein as the "Modified Structure"), to holders of Allowed Class 6a Claims and Allowed Class 6b Claims. Upon the occurrence of certain events more fully described below, the Modified Structure will be implemented on the effective date of the Plan (the "Effective Date"). The Debtors believe that the modification to the definition of "Released Claims" and the Modified Structure, if implemented, will not materially impair the treatment of the holders of the Debtors' Allowed Claims (as defined in the Plan) and Allowed Equity Interests (as defined in the Plan) (each, a "Holder" and collectively, the "Holders") as contemplated by the Plan prior to this Amendment. II. DEFINITIONS The following defined terms are used in this document. Capitalized terms used but not defined herein shall have the meaning ascribed to such terms in the Plan. 2.1 BOS. The Governor and Company of the Bank of Scotland, in its various capacities under the BOS Credit Facility. 2.2 BOS Consent. The consent of BOS, pursuant to the BOS Credit Facility, to the issuance of New Preferred Stock by DDi Europe, which shall be in form and substance reasonably 1 satisfactory to the Co-Sponsors and the Required Lenders; provided, however, that if BOS consents to the issuance of the New Preferred Stock that is in strict conformity with the terms and conditions set forth in Exhibit "3" to the Plan, and no other terms and conditions of such consent shall modify the terms and conditions set forth in such Exhibit "3", such consent shall be deemed in form and substance reasonably satisfactory to the Required Lenders provided that a copy of such consent shall have been provided to the Secured Lenders within a reasonable time prior to it becoming effective. 2.3 BOS Credit Facility. That certain Amended and Restated Facilities Agreement dated as of May 27, 1999 by and between DDi Europe and BOS. 2.4 New DDi Corp. Preferred Stock. The new preferred stock of Reorganized DDi Corp., issued on the Effective Date, which shall be governed by the Amended and Restated DDi Corp. Certificate of Incorporation and shall represent all of the New DDi Corp. Preferred Stock. The New DDi Corp. Preferred Stock shall have substantially the terms and conditions set forth in Exhibit "1" hereto. The precise terms and conditions of the New DDi Preferred Stock shall be agreed upon by the Co-Sponsors and the Required Lenders and described in an Exhibit to the Plan Documentary Supplement. However, the New DDi Corp. Preferred Stock shall be a preferred equity obligation of Reorganized DDi Corp and shall have an initial aggregate liquidation preference of $15,000,000. In addition, the New DDi Corp. Preferred Stock shall be subject, without limitation, to the following terms and conditions: (i) any and all rights, claims, liens, and interests of the Secured Lenders or other holders under the New DDi Corp. Guarantee and Pledge Agreement and any other Restructuring Loan Document to the extent that it creates a claim against DDi Corp. or lien on any asset of DDi Corp. will be subordinate contractually to any and all rights, claims and interests (including, 2 without limitation, unpaid dividends and other accretions both before and after any insolvency case or proceeding of Reorganized DDi Corp.) under the New DDi Corp. Preferred Stock with respect to the (A) the capital stock of DDi Europe and (B) any cash, property, or other assets of DDi Europe or any of its subsidiaries that is transferred to Reorganized DDi Corp. by way of dividend or otherwise ((A) and (B) are collectively referred to herein as the "DDi Europe Value") until the New DDi Corp. Preferred Stock is fully redeemed; (ii) any and all rights, claims, liens, or interests of the Holders of Allowed Class 5 Claims or other holders under the New Senior Accreting Notes shall be subordinate structurally and contractually to any and all rights, claims, and interests (including, without limitation, unpaid dividends and other accretions both before and after any insolvency case or proceeding of Reorganized DDi Corp.) under the New DDi Corp. Preferred Stock with respect to the DDi Europe Value (the form and substance of such contractual subordination shall be reasonably acceptable to holders of a majority of the aggregate principal amount of the Senior Discount Notes); (iii) no DDi Europe Value will be paid to or held by the holders of claims, liens, or interests under the Pre-Restructuring Loan Documents, the Restructuring Loan Documents, or the New Senior Accreting Notes until the New DDi Corp. Preferred Stock is fully redeemed; provided, however, that after the New DDi Corp. Preferred Stock is fully redeemed, all of the DDi Europe Value shall be available, without limitation, to satisfy obligations under Reorganized DDi Corp.'s then existing agreements; (iv) in the event that the Debtors are able to obtain the BOS Consent on or after the date the Modified Structure is implemented, the New DDi Corp. Preferred Stock shall convert into or 3 be exchanged for New Preferred Stock consistent with the terms and conditions set forth in the Amended and Restated DDi Europe Articles of Association; (v) only DDi Europe Value shall be used to effect any distributions and/or redemptions under the New DDi Corp. Preferred Stock; and (vi) the New DDi Corp. Preferred Stock shall have no rights, claims and interests in and to any other assets and equity interests, whether direct or indirect, of Reorganized DDi Corp. III. MODIFIED STRUCTURE The Debtors will implement the Modified Structure on the Effective Date in the event that BOS, on or prior to five (5) Business Days preceding the Effective Date, does not provide the BOS Consent. Under the Modified Structure, Reorganized DDi Corp. (not DDi Europe) shall on the Effective Date issue all of the New DDi Corp. Preferred Stock to Holders of Allowed Class 6a Claims and Allowed Class 6b Claims. The subordination and rights described in the definition of New DDi Corp. Preferred Stock shall be effected pursuant to the Plan, the New DDi Corp. Guarantee and Pledge Agreement and any other Restructuring Loan Document to the extent it creates a claim against DDi Corp. or lien on any asset of DDi Corp., and the New Senior Accreting Note Indenture. IV. MODIFICATIONS TO CERTAIN EXISTING PLAN PROVISIONS The following provisions in the Plan will be modified as follows to account for the Modified Structure. 4.1 Definitions. Sections 2.1 to 2.4 above are hereby inserted into Section II of the Plan. In addition, Section 2.1.93 of the Plan is amended and restated in its entirety as follows: "New DDi Corp. Securities. Collectively, the New Common Stock, the New Warrants, the New DDi Corp. Preferred Stock (if the Modified Structure is implemented) and the Management Options." 4 Section 2.1.104 of the Plan is amended and restated in its entirety as follows: "Plan Documents. Collectively, the Amended and Restated DDi Corp. Certificate of Incorporation; the Amended and Restated DDi Corp. Bylaws, the Amended and Restated DDi Europe Articles of Association (to be effective only if the Modified Structure is not implemented), the New Warrant Agreements, the Management Incentive Plan, the Registration Rights Agreements, the New Senior Accreting Note Indenture and any other documents required by the Plan, excluding any of the Restructuring Loan Documents (other than the Secured Lender Warrant Agreement, the New Common Stock Registration Rights Agreement and the New DDi Corp. Guarantee and Pledge Agreement), or determined by the Co-Sponsors and the Required Lenders to be necessary or advisable to implement the Plan. The Plan Documents shall be in form and substance acceptable to the Co-Sponsors and the Required Lenders. Final or near-final versions of the Plan Documents shall be filed with the clerk of the Bankruptcy Court as part of the Plan Documentary Supplement as early as practicable (but in no event later than ten (10) Business Days prior to the commencement of the Confirmation Hearing or on such other date as the Bankruptcy Court may establish)." Section 2.1.113 of the Plan is amended and restated in its entirety as follows: "Released Claims. Any and all of the following Claims and Causes of Action that arose up to and including the Effective Date and/or relate to, in any way, any Claims or Causes of Action that arose up to and including the Effective Date: (i) actions or omissions or courses of conduct of any Released Party with respect to any indebtedness arising under or with respect to any credit facility or any other arrangement under which any of the Debtors or any of their respective subsidiaries is or was a borrower or guarantor, the Pre-Restructuring Loan Documents, the 5.25% Convertible Subordinated Notes, the 5 6.25% Convertible Subordinated Notes, the Senior Discount Notes or any investment (direct or indirect) in any common or preferred equity of any of the Debtors (including, without limitation, any action or omission of any Released Party with respect to the issuance, acquisition, holding, voting or disposition of any such investment), (ii) actions or omissions or courses of conduct of any Released Party as an officer, director, employee or agent of, or advisor to, any of the Debtors, the Debtors' respective subsidiaries, the Senior Debt Parties, the 5.25% Convertible Subordinated Debt Parties, the 6.25% Convertible Subordinated Debt Parties or the Senior Discount Parties, (iii) disclosures made or not made by any person to any current or former Holder of any indebtedness arising under or with respect to any credit facility or any other arrangement under which any of the Debtors or any of the Debtors' respective subsidiaries is or was a borrower or a guarantor, the Pre-Restructuring Loan Documents, the 5.25% Convertible Subordinated Notes, the 6.25% Convertible Subordinated Notes or the Senior Discount Notes, (iv) consideration paid in respect of any investment (direct or indirect) by any Person in any indebtedness arising under or with respect to any credit facility or any other arrangement under which any of the Debtors or any of the Debtors' respective subsidiaries is or was a borrower or a guarantor, Pre-Restructuring Loan Documents, the 5.25% Convertible Subordinated Notes, the 6.25% Convertible Subordinated Notes, the Senior Discount Notes, any common or preferred equity investment (direct or indirect) in any of the Debtors or in respect of any services provided or to be provided to any of the Debtors under any management agreement or otherwise, (v) Claims for equitable subordination or other recharacterization of any claim of any of the Senior Debt Parties, the 5.25% Convertible Subordinated Debt Parties, the 6.25% Convertible Subordinated Debt Parties and the Senior Discount Parties, 6 (vi) avoidance Claims the Debtors and their respective Estates have or may have against any of the Senior Debt Parties, the 5.25% Convertible Subordinated Debt Parties, the 6.25% Convertible Subordinated Debt Parties and the Senior Discount Parties under Sections 542, 543, 544, 547, 548, 549, 553, or 724(a) of the Bankruptcy Code, under applicable state law or otherwise, in respect of any payments or transfers made, obligations incurred or any contracts, agreements or arrangements involving any of the Released Parties, (vii) any fiduciary duty of any of the Released Parties to any of the Debtors or their respective Estates or which the Estates might have asserted or any of their creditors or Holders, (viii) actions taken or not taken or course of conduct in connection with the contemplated Plan, the restructuring and the petitions or otherwise in respect in the Chapter 11 Cases, including but not limited to, any act taken or omitted to be taken in connection with or related to the formulation, preparation, dissemination, implementation, administration, Confirmation or Consummation of the Plan, the Disclosure Statement or any contract, instrument, release or other agreement or document created or entered into in connection with the Plan, including the RSA, PSA or SDNPSA, or any other act taken or omitted to be taken in connection with or in contemplation of the Restructuring of the Pre-Restructuring Bank Indebtedness, the Convertible Subordinated Notes, or the Senior Discount Notes, and (ix) Claims, obligations, rights, Causes of Action and liabilities which the Debtors and any of their respective successors, assigns, affiliates and subsidiaries (other than DDi Europe and its European subsidiaries) may assert against the Released Parties, whether for tort, fraud, contract, violations of federal or state securities laws, or otherwise, whether known or unknown, foreseen or unforeseen, existing or hereafter arising, based in whole or in part upon any act or omission, transaction, or other occurrence taking place on or before the Confirmation Date, in any way 7 relating to the Chapter 11 Cases, the Restructuring or the Plan; provided, however, that Released Claims shall not include Claims or Causes of Action arising out of any such Released Party's gross negligence or willful misconduct, provided, however, that notwithstanding anything contained herein to the contrary, nothing in this Plan or the transactions contemplated by and authorized pursuant to the Plan release any non-Debtor from any claims of the United States, or modify, alter, impair, or in any way affect the claims and rights of the United States or the application of any laws or regulations of the United States as to any person or entity other than the Debtors." 4.2 Treatment of Claims and Equity Interests. Section 6.6 of the Plan is amended and restated in its entirety as follows: "Class 6a - Allowed Class 6a Claims - 5.25% Convertible Subordinated Notes (Impaired). Class 6a consists of Allowed Class 6a Claims. All Class 6a Claims are Allowed Class 6a Claims. On the Effective Date, on account of and in full and complete satisfaction of all Allowed Class 6a Claims asserted against any and all Debtors, each Holder of an Allowed Class 6a Claim shall receive, (i) a Pro Rata share of 43.24% of the outstanding shares of New Common Stock, subject to dilution for (A) all New Common Stock issuable under the Management Incentive Plan upon the exercise of the Management Options therein, and (B) all New Common Stock issuable upon the exercise of the New Warrants; and (ii) a Pro Rata share of (A) 45.45% of the outstanding shares of New Preferred Stock (only if the Modified Structure is not implemented) or (B) 50% of the outstanding shares of New DDi Corp. Preferred Stock (only if the Modified Structure is implemented)." Section 6.7 of the Plan is amended and restated in its entirety as follows: 8 "Class 6b - Allowed Class 6b Claims - 6.25% Convertible Subordinated Notes (Impaired). Class 6b consists of Allowed Class 6b Claims. All Class 6b Claims are Allowed Class 6b Claims. On the Effective Date, on account of and in full and complete satisfaction of all Allowed Class 6b Claims asserted against any and all Debtors, each Holder of an Allowed Class 6b Claim shall receive, (i) a Pro Rata share of 50.76% of the outstanding shares of New Common Stock subject to dilution for (A) all New Common Stock issuable under the Management Incentive Plan upon the exercise of the Management Options therein and (B) all New Common Stock issuable upon the exercise of the New Warrants; and (ii) a Pro Rata share of (A) 45.45% of the outstanding shares of New Preferred Stock (if the Modified Structure is not implemented) or (B) 50% of the outstanding shares of New DDi Corp. Preferred Stock (if the Modified Structure is implemented)." 4.3 Means for Implementing the Plan. Section 8.7 of the Plan is amended and restated in its entirety as follows: "Issuance of New Preferred Stock or New DDi Corp. Preferred Stock. On the Effective Date, DDi Europe shall issue the New Preferred Stock (only if the Modified Structure is not implemented) or Reorganized DDi Corp. shall issue the New DDi Corp. Preferred Stock (only if the Modified Structure is implemented) in accordance with the Plan, consistent with the Amended and Restated DDi Europe Articles of Association or the Amended and Restated DDi Corp. Certificate of Incorporation, as the case may be, and other Plan Documents, which shall be distributed as described herein. On the Effective Date, the New Preferred Stock or the New DDi Corp. Preferred Stock, as the case may be, shall be issued to the Holders of Allowed Class 6a Claims and Allowed Class 6b Claims in accordance with sections 6.6 and 6.7 of the Plan. The Amended and Restated DDi Europe Articles of Association and the Amended and Restated DDi 9 Corp. Certificate of Incorporation shall be substantially in the forms attached as Exhibits to the Plan Documentary Supplement. All shares of New Preferred Stock or New DDi Corp. Preferred Stock, as the case may be, issued pursuant to the Plan will be, upon such issuance, validly issued, and non-assessable and fully paid. The terms of the New Preferred Stock are more fully described in the term sheet attached as Exhibit "3" to the Plan. The terms of the New DDi Corp. Preferred Stock will be substantially similar to the terms of the New Preferred Stock and are more fully described in Exhibit "1" hereto and in an Exhibit to the Plan Documentary Supplement." Section 8.12 of the Plan is amended and restated in its entirety as follows: "Management/Board of Directors. On the Effective Date, the operation of the Reorganized Debtors shall become the general responsibility of the Reorganized Debtors' newly constituted Board of Directors (each a "Board" and collectively, the "Boards"), who shall thereafter have the responsibility for the management and control of the Reorganized Debtors. Immediately following the Effective Date, the New Board of Reorganized DDi Corp. shall consist of seven members, comprised as follows: (a) Bruce McMaster, (b) David Blair, (c) two Convertible Subordinated Note Holder designees (designated by the Ad Hoc Convertible Note Holder Committee prior to distribution of the Plan) which designees will be included in the Plan as sent to the Convertible Subordinated Note Holders for approval and (d) three Convertible Subordinated Note Holder designees (selected by the Ad Hoc Convertible Note Holder Committee prior to distribution of the Plan) which designees will be included in the Plan as sent to the Convertible Subordinated Note Holders for approval (designees will be selected from list to be developed in conjunction with Reorganized DDi Corp., the Ad Hoc Convertible Note Holder Committee and their respective advisors). Prior to or immediately following the Effective Date of the Plan, Reorganized DDi Corp. shall use commercially reasonable efforts to provide to the Ad 10 Hoc Convertible Note Holder Committee the names of at least three directors who meet the "independence" standards of the Securities and Exchange Commission and the Nasdaq National Market (whether or not Reorganized DDi Corp. or any of the securities of Reorganized DDi Corp. are subject to such standards). After the Effective Date of the Plan, and not less than annually thereafter, prior to any election by the stockholders or appointments by the Board (only if there are not remaining at the time of any such appointment by the Board, two members of the Board who have been previously recommended as nominees by the Preferred Stock Representatives (as defined below)), two Holders of the New Preferred Stock or New DDi Corp. Preferred Stock (only if the Modified Structure is implemented) (who in either case initially will be Providence Capital, LLC and Tablerock Fund Management, LLC (the "Preferred Stock Representatives"), together, shall make reasonable recommendations in good faith (the "Designation Right") to the Board (or more frequently in the event any such Holder transfers any of its shares of New Preferred Stock or New DDi Corp. Preferred Stock, as the case may be, along with its Designation Right to an unaffiliated third party) with respect to two nominees, who shall be qualified and otherwise appropriate candidates for the Board in the event of an election by the stockholders and a number of nominees necessary to result in there being two acting members of the Board who have been recommended by such Preferred Stock Representatives in the event of an appointment by the Board. Such recommendation may be made by delivering notice thereof to Reorganized DDi Corp. within sixty (60) days after the written request by the Board of names for consideration (or more frequently in the event such Holder of New Preferred Stock or New DDi Corp. Preferred Stock, as the case may be, and any transferee thereof each certify that such Holder of New Preferred Stock or New DDi Corp. Preferred Stock, as the case may be, has transferred its shares of New Preferred Stock or New DDi Corp. Preferred Stock, as the case may be, to such 11 transferee). The Board shall submit a written request for names for consideration once a year (or more frequently in the event such Holder of New Preferred Stock or New DDi Corp. Preferred Stock, as the case may be, and any transferee thereof each certify that such Holder of New Preferred Stock or New DDi Corp. Preferred Stock, as the case may be, has transferred its shares of New Preferred Stock or New DDi Corp. Preferred Stock, as the case may be, to such transferee). If at any time while the New Preferred Stock or New DDi Corp. Preferred Stock, as the case may be, remains outstanding, those nominees recommended by such Holders of the New Preferred Stock or New DDi Corp. Preferred Stock, as the case may be, are not appointed by the Board to the Board (if the appointments are determined by the Board) or nominated by the Board or management of Reorganized DDi Corp. for election by the stockholders of Reorganized DDi Corp. to the Board, then as a remedy to the Holders of the New Preferred Stock or the New DDi Corp. Preferred Stock, as the case may be, for breach of the Designation Right, the New Preferred Stock or the New DDi Corp. Preferred Stock, as the case may be, shall bear a dividend rate equal to 17% per annum effective retroactively to the date of issuance (until such time as two nominees recommended to the Board pursuant to the foregoing procedures are appointed or nominated, whereupon the dividend rate shall be decreased to 15% per annum commencing on the date of such complying appointments or nominations.) Notwithstanding the foregoing, if (i) any member of the Board who holds New Preferred Stock or New DDi Corp. Preferred Stock, as the case may be (or who is a stockholder, director, member, partner, employee or otherwise an affiliate of a person or entity who holds New Preferred Stock or New DDi Corp. Preferred Stock, as the case may be) (each, a "Preferred Stock Board Member") votes against an appointment or nominee to the Board recommended by such holders of the New Preferred Stock or New DDi Corp. Preferred Stock, as the case may be (the "Recommended Board Member") in accordance with the foregoing 12 provisions, (ii) such Recommended Board Member is not appointed or nominated to the Board because one or more Preferred Stock Board Members votes against such Recommended Board Member and (iii) such Recommended Board Member would have been appointed or nominated to the Board had such Preferred Stock Board Member voted for such Recommended Board Member, then there shall be no increase in the dividend rate pursuant to the provisions of this section." Section 8.13 of the Plan is amended and restated in its entirety as follows: "Corporate Actions. On the Effective Date, all actions contemplated by the Plan shall be deemed authorized and approved in all respects (subject to the provisions of the Plan) by virtue of the entry of the Confirmation Order, in accordance with the Bankruptcy Code and applicable State law (including but not limited to section 303 of the Delaware General Corporations Law, to the extent applicable, and any analogous provision of the business corporation law or code of each other State in which any Reorganized Debtor is incorporated or organized) and without any requirement of further action by the stockholders, officers or directors of the Debtors or the Reorganized Debtors or DDi Europe, including, without limitation, the following: (a) the adoption and the filing with the Secretary of State of the State of Delaware of the Amended and Restated DDi Corp. Certificate of Incorporation; (b) the adoption of the Amended and Restated DDi Corp. Bylaws; (c) the adoption and filing with Companies House of the Amended and Restated DDi Europe Articles of Association (only if the Modified Structure is not implemented); (d) the issuance by DDi Europe of the New Preferred Stock (only if the Modified Structure is not implemented), (e) the issuance by Reorganized DDi of the New Common Stock, the New DDi Corp. Preferred Stock (only if the Modified Structure is implemented), the New Warrants and the Management Options contemplated under the Management Incentive Plan; (f) the execution and the delivery of, and the performance under, each of the Plan Documents, the Restructuring Loan 13 Documents and all documents and agreements contemplated by or relating to any of the foregoing; and (g) the removal of all members of the respective Boards of Directors of the Debtors and the election of all members of the Boards of Directors of the Reorganized Debtors designated pursuant to the Plan. All matters provided for under the Plan involving the corporate structure of the Debtors or Reorganized Debtors and any corporate action required by the Debtors or Reorganized Debtors in connection with the Plan shall be deemed to have occurred and shall be in effect pursuant to the Bankruptcy Code, without any requirement of further action by the shareholders, officers or directors of the Debtors or Reorganized Debtors. On the Effective Date, the appropriate officers of the Reorganized Debtors are authorized and directed to execute and to deliver the Plan Documents, the Restructuring Loan Documents and any other agreements, documents and instruments contemplated by the Plan, the Plan Documents or the Restructuring Loan Documents in the name and on behalf of the Reorganized Debtors." 4.4 Distributions. Section 9.4 of the Plan is amended and restated in its entirety as follows: "De Minimis Distributions and Fractional Shares. No Cash payment shall be made by the Reorganized Debtors to any Holder of Allowed Claims (other than Administrative Claims) unless a request therefore is made in writing to the Reorganized Debtors. No fractional shares of New Common Stock and New Preferred Stock (or New DDi Corp. Preferred Stock if the Modified Structure is implemented) shall be distributed; any entity that otherwise would be entitled to receive a fractional share distribution under this Plan shall instead receive an amount of shares rounded down to the next whole number. Any securities or other property that is not distributed as a consequence of this section shall, after the last distribution on account of Allowed Claims in the 14 applicable Class be treated as "Unclaimed Property" under the Plan. This section 9.4 shall not apply to any of the Secured Lenders." Section 9.7 of the Plan is amended and restated in its entirety as follows: "Disposition of Unclaimed Property. If the Person entitled thereto notifies the Distribution Agent, the 5.25% Trustee, the 6.25% Trustee or the Senior Discount Trustee, as the case may be, of such Person's claim to the distribution of Unclaimed Property within nine (9) months following the Effective Date, the Unclaimed Property distributable to such Person, together with any interest or dividends earned thereon, shall be paid or distributed to such Person. Any Holder of an Allowed Claim, Allowed Administrative Claim, Allowed Class 5 Claim, Allowed Class 6a Claim or Allowed Class 6b Claim that does not assert a claim in writing for Unclaimed Property held by the Distribution Agent, the 5.25% Trustee, the 6.25% Trustee or the Senior Discount Trustee, as the case may be, within nine (9) months after the Effective Date shall no longer have any claim to or interest in such Unclaimed Property, and shall be forever barred from receiving any distributions under this Plan or otherwise from the Distribution Agent, the 5.25% Trustee, the 6.25% Trustee or the Senior Discount Trustee, as the case may be. In such cases, any Unclaimed Property held for distribution on account of such Allowed Claims, Administrative Claims, Allowed Class 5 Claims, Allowed Class 6a Claims and Allowed Class 6b Claims shall be retained by the Distribution Agent, the 5.25% Trustee, the 6.25% Trustee or the Senior Discount Trustee, as the case may be, as follows: pursuant to Bankruptcy Code section 347(b), (a) any undistributed Cash shall be the property of the Distribution Agent; provided, however, that any undistributed Cash whose distribution is governed by the Existing Senior Discount Note Indenture shall be returned by the Senior Discount Trustee to the Distribution Agent and distributed by the Distribution Agent to DDi Capital, (b) any undistributed New DDi 15 Corp. Securities (other than the Secured Lender Warrants) shall be the property of the Distribution Agent; provided, however that any undistributed New Common Stock and New Preferred Stock (or New DDi Corp. Preferred Stock if the Modified Structure is implemented) which was distributed for the benefit of the Convertible Subordinated Note Holders shall be retained by or transferred to the 5.25% Trustee or the 6.25% Trustee, as the case may be, and distributed Pro Rata to Holders of Allowed Class 6a Claims and Allowed Class 6b Claims that have claimed their initial distributions, in each case, free from any restrictions thereon, and such undistributed Cash or securities shall not be subject to the unclaimed property or escheat laws of any State or other governmental unit. This section 9.7 shall not apply to any of the Secured Lenders. Date: October 31, 2003 DDi Corp., a Delaware corporation By: /s/ Timothy J. Donnelly ----------------------------- Name: Timothy J. Donnelly Title: Vice President Date: October 31, 2003 DDi Capital Corp., a California corporation By: /s/ Timothy J. Donnelly ----------------------------- Name: Timothy J. Donnelly Title: Vice President Submitted by: Kirkland & Ellis LLP By: /s/ Sharon M. Kopman ----------------------------------------------- Richard L. Wynne (RW-5630) Sharon M. Kopman (SK-3295) Christian C. Lymn (CL - 3159) Attorneys for Debtors and Debtors-In-Possession 16 EX-99.3 22 dex993.txt SUPPLEMENT TO FIRST AMENDED DISCLOSURE STATEMENT FOR PLAN OF REORGANIZATION Exhibit 99.3 UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF NEW YORK In re: ) Chapter 11 ) DDi Corp., et al., ) Case No. 03-15261 ) ) (Jointly Administered with Case No. 03-15260) ) Debtors. ) - -------------------------------------------------------------------------------- SUPPLEMENT TO THE FIRST AMENDED DISCLOSURE STATEMENT FOR THE FIRST AMENDED JOINT PLAN OF REORGANIZATION DATED AS OF AUGUST 30, 2003 - -------------------------------------------------------------------------------- IMPORTANT DATES . Date by which Ballots must be received: November 24, 2003 . Date by which objections to Confirmation of the Plan must be filed and served: November 20, 2003 . Hearing on Confirmation of the Plan: December 2, 2003 - -------------------------------------------------------------------------------- Richard L. Wynne (RW-5630) Sharon M. Kopman (SK-3295) Christian C. Lymn (CL-3159) KIRKLAND & ELLIS LLP 777 South Figueroa Street Los Angeles, California 90017 (213) 680-8400 Dated: October 31, 2003 THIS IS NOT A SOLICITATION OF ACCEPTANCE OR REJECTION OF THE PLAN. ACCEPTANCES OR REJECTIONS MAY NOT BE SOLICITED UNTIL A DISCLOSURE STATEMENT HAS BEEN APPROVED BY THE BANKRUPTCY COURT. THIS SUPPLEMENT TO THE DISCLOSURE STATEMENT IS BEING SUBMITTED FOR APPROVAL BUT HAS NOT BEEN APPROVED BY THE COURT. I. INTRODUCTION This supplement (the "Supplement") to the First Amended Disclosure Statement for the First Amended Joint Plan of Reorganization dated as of August 30, 2003 (the "Disclosure Statement") is being furnished by DDi Corp. ("DDi Corp.") and DDi Capital Corp. ("DDi Capital", together with DDi Corp., the "Debtors") to (a) describe a modification to the definition of "Released Claims" in the Debtors' First Amended Joint Plan of Reorganization dated as of August 30, 2003 (as may be further amended, amended and restated, supplemented or modified from time to time) (the "Plan") which modification clarifies that nothing in the Plan releases claims of the United States of America or its agencies or subdivisions (the "United States") against non-Debtors; and (b) describe certain modifications to the structure of the issuance of preferred stock relating to DDi Europe Limited ("DDi Europe"), a non-debtor wholly-owned subsidiary of DDi Corp. (such modified structure will be referred to herein as the "Modified Structure") to holders of Allowed Class 6a Claims and Allowed Class 6b Claims. Upon the occurrence of certain events more fully described below, the Modified Structure will be implemented on the effective date of the Plan (the "Effective Date") pursuant to an amendment (the "Amendment") to the Plan. The Debtors believe that the modification to the definition of "Released Claims" and the Modified Structure, if implemented, will not materially impair the treatment of the holders of the Debtors' Allowed Claims (as defined in the Plan) and Allowed Equity Interests (as defined in the Plan) (each, a "Holder" and collectively, the "Holders") as contemplated by the Plan prior to the Amendment. Capitalized terms used but not defined herein shall have the meaning ascribed to such terms in the Disclosure Statement and/or the Plan. II. MODIFICATIONS TO "RELEASED CLAIMS" DEFINITION Pursuant to the request of the Office of the United States Attorney, the Debtors are amending and restating in section 4.1 of the Amendment the definition of "Released Claims" in its entirety. The revised definition of "Released Claims" clarifies that nothing in the Plan or transactions contemplated thereby releases any non-Debtors from any claims of the United States. III. EXISTING STRUCTURE Subject to the terms and conditions more fully described in the Disclosure Statement, the Plan currently provides for the issuance of the following debt and equity interests in Reorganized DDi Corp., DDi Capital and DDi Europe: 2 (i) New Common Stock: On the Effective Date, Reorganized DDi Corp. shall issue for distribution New Common Stock to Holders of Allowed Class 6a Claims and Allowed Class 6b Claims, Allowed Class 7 Equity Interests and the management of Reorganized DDi Corp. (ii) Secured Lender Warrants: On the Effective Date, Reorganized DDi Corp. shall issue for distribution to the Secured Lenders Secured Lender Warrants representing the right to purchase 10.0% of the New Common Stock on a fully-diluted basis on the Effective Date. (iii) Senior Discount Warrants: On the Effective Date, Reorganized DDi Corp. shall issue for distribution to the Holders of Allowed Class 5 Claims Senior Discount Warrants representing the right to purchase 2.5% of the New Common Stock on a fully-diluted basis on the Effective Date. (iv) Management Options: On the Effective Date, Reorganized DDi Corp. shall issue to the management of Reorganized DDi Corp. Tranche A Options representing the right to purchase 12.5% of the New Common Stock and discretionary Tranche B Options representing the right to purchase 4% of the New Common Stock. (v) New Preferred Stock: On the Effective Date, DDi Europe shall issue for distribution to the Holders of Allowed Class 6a Claims and Allowed Class 6b Claims an aggregate of 90.9% of the New Preferred Stock, which 90.9% of the New Preferred Stock reflects an initial aggregate liquidation preference of $15,000,000. (vi) New Senior Accreting Notes: On the Effective Date, DDi Capital shall issue for distribution to the Holders of Allowed Class 5 Claims the New Senior Accreting Notes. Set forth below is a chart diagramming the organizational structure of the Debtors and their related entities on the Effective Date as currently contemplated without giving effect to the Modified Structure described below: 3 [FLOW CHART] IV. MODIFIED STRUCTURE As described in section II above and subject to the terms and conditions more fully described in the Disclosure Statement, the Plan currently provides for the issuance of the New Preferred Stock to Holders of Allowed Class 6a Claims and Allowed Class 6b Claims on the Effective Date. Pursuant to the existing senior credit facility between DDi Europe and the Bank of Scotland (the "BOS Credit Facility"), the issuance of the New Preferred Stock requires the consent of the Bank of Scotland ("BOS"). During the course of negotiating the term sheets for the reorganization and restructuring of the Debtors and their related entities (the "Term Sheet"), the Debtors sought and obtained an informal consent of BOS to the issuance of the New Preferred Stock. However, as a result of ongoing discussions between DDi Europe and BOS regarding a restructuring of the BOS Credit Facility, the Debtors have since learned that BOS has withdrawn its informal consent to the issuance of the New Preferred Stock. Without BOS's formal consent, the BOS Credit Facility prohibits DDi Europe from issuing the New Preferred Stock as contemplated under the Plan. The Debtors intend to continue to attempt to seek the formal consent of BOS to the issuance of the New Preferred Stock. In the event that on or prior to five (5) business days preceding the Effective Date, BOS does not provide formal written consent to the issuance of the New Preferred Stock (which consent shall be in form and substance reasonably satisfactory to the Co-Sponsors and the Required 4 Lenders; provided, however, that if BOS consents to the issuance of the New Preferred Stock that is in strict conformity with the terms and conditions set forth in Exhibit 3 to the Plan, and no other terms and conditions of such consent shall modify the terms and conditions set forth in such Exhibit 3, such consent shall be deemed in form and substance reasonably satisfactory to the Required Lenders, provided that a copy of such consent shall have been provided to the Secured Lenders within a reasonable time prior to it becoming effective) (the "BOS Consent"), the Debtors intend to implement the Modified Structure on the Effective Date. Under the Modified Structure and pursuant to the Amendment, Reorganized DDi Corp. (not DDi Europe) shall on the Effective Date issue the preferred stock (the "New DDi Corp. Preferred Stock") to Holders of Allowed Class 6a Claims and Allowed Class 6b Claims with substantially the same terms and conditions as the New Preferred Stock issued pursuant to the Plan as more fully set forth in Exhibit 1 to the Amendment. The precise terms and conditions of the New DDi Corp. Preferred Stock shall be agreed upon by the Co-Sponsors and the Required Lenders and described in an Exhibit to the Plan Documentary Supplement. However, the New DDi Corp. Preferred Stock shall be a preferred equity obligation of Reorganized DDi Corp. and shall have an initial aggregate liquidation preference of $15,000,000 /1/. All of the New DDi Corp. Preferred Stock shall be distributed to the Holders of Allowed Class 6a Claims and Allowed Class 6b Claims as provided in sections 6.6 and 6.7 of the Plan. In addition, the New DDi Corp. Preferred Stock shall be subject, without limitation, to the following terms and conditions: (i) any and all rights, claims, liens and interests of the Secured Lenders or other holders under the New DDi Corp. Guarantee and Pledge Agreement and any other Restructuring Loan Document to the extent it creates a claim against DDi Corp. or lien on any asset of DDi Corp. will be subordinate contractually to any and all rights, claims and interests (including without limitation, unpaid dividends and other accretions both before and after any insolvency case or proceeding of Reorganized DDi Corp.) under the New DDi Corp. Preferred Stock with respect to (A) the capital stock of DDi Europe and (B) any cash, property or other assets of DDi Europe or any - ---------- /1/ The terms of the New Preferred Stock currently provide for an aggregate liquidation preference of $16,500,000, with $15,000,000 being issued to the Holders of Allowed Class 6a Claims and Allowed Class 6b Claims and $1,500,000 being issued to BOS. Under the Modified Structure, no shares of New DDi Corp. Preferred Stock will be issued to BOS. 5 of its subsidiaries that is transferred to Reorganized DDi Corp. by way of dividend or otherwise ((A) and (B) are collectively referred to herein as the "DDi Europe Value") until the New DDi Corp. Preferred Stock is fully redeemed; (ii) any and all rights, claims, liens or interests of the Holders of Allowed Class 5 Claims or other holders under the New Senior Accreting Notes shall be subordinate contractually and structurally to any and all rights, claims and interests (including, without limitation, unpaid dividends and other accretions both before and after any insolvency case or proceeding of Reorganized DDi Corp.) under the New DDi Corp. Preferred Stock with respect to the DDi Europe Value (the form and substance of such contractual subordination shall be reasonably acceptable to holders of a majority of the aggregate principal amount of the Senior Discount Notes); (iii) no DDi Europe Value will be paid to or held by the holders of claims, liens, or interests under the Pre-Restructuring Loan Documents, the Restructuring Loan Documents, or the New Senior Accreting Notes until the New DDi Corp. Preferred Stock is fully redeemed; provided, however, that after the New DDi Corp. Preferred Stock is fully redeemed, all of the DDi Europe Value shall be available, without limitation, to satisfy obligations under Reorganized DDi Corp.'s then existing agreements; (iv) in the event that the Debtors are able to obtain the BOS Consent on or after the date the Modified Structure is implemented, the New DDi Corp. Preferred Stock shall convert into or be exchanged for New Preferred Stock consistent with the terms and conditions set forth in the Amended and Restated DDi Europe Articles of Association; (v) only DDi Europe Value shall be used to effect any distributions and/or redemptions under the New DDi Corp. Preferred Stock; and (vi) the New DDi Corp. Preferred Stock shall have no rights, claims and interests in and to any other assets and equity interests, whether direct or indirect, of Reorganized DDi Corp. 6 The subordination and rights described above shall be effected pursuant to the Plan, the New DDi Corp. Guarantee and Pledge Agreement and any other Restructuring Loan Document to the extent it creates a claim against DDi Corp. or lien on any asset of DDi Corp. and the New Senior Accreting Note Indenture. Notwithstanding the implementation of the Modified Structure, the relative proportionate distributions of the New DDi Corp. Preferred Stock to Holders of Allowed Class 6a Claims and Allowed Class 6b Claims shall be the same as the relative proportionate distributions of the New Preferred Stock to such Holders. Set forth below is a chart diagramming the Modified Structure: [FLOW CHART] 7 V. ADDITIONAL RISK FACTOR All Impaired Holders should read and carefully consider the additional "Risk Factor" set forth below in addition to the "Risk Factors" set forth in the Disclosure Statement prior to voting to accept or reject the Plan. DDi Europe may be subject to receivership which may adversely affect the value of the New Preferred Stock or the New DDi Corp. Preferred Stock to be issued pursuant to the Plan. The assumed aggregate going-concern value assigned by the Debtors and Houlihan to the New Preferred Stock or the New DDi Corp. Preferred Stock to be issued pursuant to the Plan is approximately $8,400,000 ($7.63 per share for the 1,100,000 shares of the New Preferred Stock or approximately $8.40 per share for the 1,000,000 shares of the New DDi Corp. Preferred Stock) as of an assumed Effective Date of January 8, 2004. However, the current financial condition of DDi Europe is such that a receiver may be appointed in order to preserve the assets of DDi Europe for the benefit of DDi Europe's creditors. Holders should recognize that the prospect of DDi Europe being put into receivership may reduce the value of the New Preferred Stock or the New DDi Corp. Preferred Stock to a value less than $8,400,000 and possibly to zero. VI. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MODIFIED STRUCTURE The following analysis of the federal income tax consequences of the Modified Structure supplements the tax analysis set forth in section VI of the Disclosure Statement. If the Modified Structure is implemented, whether the U.S. federal income tax consequences of the Plan differ from those described in "Certain Federal Income Tax Consequences" in the Disclosure Statement depends on whether DDi Corp. or DDi Europe is treated as the issuer of the New DDi Corp. Preferred Stock for U.S. federal income tax purposes. Although the matter is not free from doubt, based on principles of substance over form applied to the economic substance of New DDi Corp. Preferred Stock, Debtors intend to take the position that DDi Europe is the issuer of the New DDi Corp. Preferred Stock for U.S. federal income tax purposes. If, consistent with the Debtors' intended treatment, DDi Europe is treated as the issuer of the New DDi Corp. Preferred Stock, the U.S. federal income tax consequences of the Plan should not differ from those described in "Certain Federal Income Tax Consequences" in the Disclosure Statement. If, contrary to Debtors' intended characterization, DDi Corp. is treated as the issuer of the New DDi Corp. Preferred Stock, the U.S. federal income tax consequences of the Plan should differ from those 8 described in "Certain Federal Income Tax Consequences" in the Disclosure Statement and, in such case, (i) Holders should rely on the U.S. federal income tax consequences contained herein with respect to the treatment of the Holders of Allowed Class 6a Claims and Allowed Class 6b Claims and (ii) the discussion set forth in "Certain Federal Income Tax Consequences--B. Certain U.S. Federal Income Tax Consequences to the Reorganized Debtors--3. DDi Corp. Recognition of Loss on Exchange of New Preferred Stock" is not applicable. A. Holders of Allowed Class 6a Claims and Allowed Class 6b Claims-Classes 6a and 6b Pursuant to the Plan, on or as soon as practicable after the Effective Date, in full and complete satisfaction of all Allowed Class 6a Claims and Allowed Class 6b Claims asserted against any and all Debtors, each Holder of (A) an Allowed Class 6a Claim shall receive, on account of its Allowed Class 6a Claim, a Pro Rata share of 43.24% of the New Common Stock and a Pro Rata share of 50% of the New DDi Corp. Preferred Stock and (B) an Allowed Class 6b Claim shall receive, on account of its Allowed Class 6b Claim, a Pro Rata share of 50.76% of the New Common Stock and a Pro Rata share of 50% of the New DDi Corp. Preferred Stock. Whether and to what extent a Holder of a Convertible Subordinated Note will recognize gain or loss on the exchange of such Convertible Subordinated Note for New Common Stock and New DDi Corp. Preferred Stock depends on whether the exchange qualifies as a tax-free reorganization within the meaning of Section 368 of the Tax Code. This determination, in turn, depends in part on whether the Convertible Subordinated Note constitutes a "security" for purposes of the reorganization provisions of the Tax Code. Whether an instrument constitutes a "security" is determined based on all the facts and circumstances, but most authorities have held that the length of the term of a debt instrument is an important factor in determining whether such instrument is a security for federal income tax purposes. These authorities have indicated that a term of less than five years is evidence that the instrument is not a security, whereas a term of ten years or more is evidence that it is a security. There are numerous other factors that could be taken into account in determining whether a debt instrument is a security, including among others, the security for payment, the creditworthiness of the obligor, the subordination or lack thereof to other creditors, the right to vote or otherwise participate in the management of the obligor, convertibility of the instrument into an equity interest of the obligor, whether payments of interest are fixed, variable or contingent, and whether such payments are made on a current basis or accrued. Although the matter is not free from doubt, Debtors 9 intend to take the position that (1) the 51/4% Convertible Subordinated Notes (issued in 2001 and maturing in 2008) are securities for federal income tax purposes and (2) the 61/4% Convertible Subordinated Notes (issued in 2002 and maturing in 2007) are not securities for federal income tax purposes. If a Convertible Subordinated Note is treated as a security, the exchange of such Convertible Subordinated Note for New Common Stock and New DDi Corp. Preferred Stock should be treated as a recapitalization (and, therefore, a tax-free exchange), and a Holder of such Convertible Subordinated Note should not recognize gain or loss on the exchange, except that a Holder of a Convertible Subordinated Note may recognize ordinary income on the exchange to the extent that the New Common Stock and New DDi Corp. Preferred Stock are treated as received in satisfaction of accrued but untaxed interest on such Convertible Subordinated Note. See "Accrued But Untaxed Interest," in the Disclosure Statement. A Holder should obtain a tax basis in the New Common Stock and New DDi Corp. Preferred Stock received equal to the tax basis of the Convertible Subordinated Note surrendered in exchange therefore, provided that the tax basis of any share of New Common Stock or New DDi Corp. Preferred Stock treated as received in satisfaction of accrued interest should equal the amount of such accrued interest. A Holder of Convertible Subordinated Notes will be required to allocate the adjusted tax basis in such Holder's Convertible Subordinated Notes among the New Common Stock and New DDi Corp. Preferred Stock as directed by the Tax Code. Such allocation of basis is generally made in proportion to the fair market value of the New Common Stock and New DDi Corp. Preferred Stock on the date of the exchange. A Holder should have a holding period for the New Common Stock and New DDi Corp. Preferred Stock that includes the holding period for the Convertible Subordinated Note surrendered in exchange therefor; provided that the holding period for any share of New Common Stock or New DDi Corp. Preferred Stock treated as received in satisfaction of accrued but untaxed interest should begin on the day following receipt thereof. If a Convertible Subordinated Note is not treated as a security, the exchange of such Convertible Subordinated Note for New Common Stock and New DDi Corp. Preferred Stock should be treated as a taxable exchange under Section 1001 of the Tax Code. In such case, a Holder of such Convertible Subordinated Note should recognize gain or loss equal to the difference between (i) the fair market value of New Common Stock and New DDi Corp. Preferred Stock received (to the extent not allocable to accrued 10 but unpaid interest) and (ii) the Holder's basis in such Convertible Subordinated Note. Such gain or loss should be capital in nature (subject to the "market discount" rules described in the Disclosure Statement and assuming that the Convertible Subordinated Note constitutes a capital asset in the hands of the Holder) and should be long-term capital gain or loss if such Convertible Subordinated Note was held for more than one year. To the extent that a portion of the New Common Stock or New DDi Corp. Preferred Stock received in exchange for a Convertible Subordinated Note is allocable to accrued but untaxed interest, the Holder may recognize ordinary income on the exchange. See "Accrued But Untaxed Interest," in the Disclosure Statement. A Holder's tax basis in New Common Stock and New DDi Corp. Preferred Stock received in a taxable exchange should equal the fair market value of such stock when received. In such case, a Holder's holding period for the New Common Stock and New DDi Corp. Preferred Stock should begin on the day following receipt thereof. If both the 5 1/4% Convertible Subordinated Notes and 61/4% Convertible Subordinated Notes are treated as securities, and the collective exchange of all of the Convertible Subordinated Notes for New Common Stock and New DDi Corp. Preferred Stock has the result that, immediately after the exchange, such Holders of Convertible Subordinated Notes own stock possessing eighty (80) percent or more of (1) the total combined voting power of all DDi Corp. voting stock and (2) each class of DDi Corp. nonvoting stock, the exchange may also qualify as a tax-free transaction under Section 351 of the Tax Code ("Section 351"). If Section 351 applies, the tax treatment to a Holder of a Convertible Subordinated Note should not be materially different than the tax consequences to such Holder if the exchange were treated as a recapitalization as described above. Exchange of New DDi Corp. Preferred Stock for New Preferred Stock. If the Modified Structure is implemented, in the event that the Debtors are able to obtain the BOS Consent on or after the date the Modified Structure is implemented, the New DDi Corp. Preferred Stock shall be convertible into or exchangeable for New Preferred Stock. Such exchange of New DDi Corp. Preferred Stock for New Preferred Stock should be treated as a taxable exchange under Section 1001 of the Tax Code. In such case, a Holder of New DDi Corp. Preferred Stock should recognize gain or loss equal to the difference between (i) the fair market value of New Preferred Stock received and (ii) the Holder's basis in such New DDi Corp. Preferred Stock. Such gain or loss should be capital in nature ((1) subject, in the cases where the New DDi Corp. Preferred Stock was received as part of a tax-free reorganization, to the "market discount" rules 11 described in the Disclosure Statement and (2) assuming that the New DDi Corp. Preferred Stock constitutes a capital asset in the hands of the Holder) and should be long-term capital gain or loss if such Holder's holding period in such New DDi Corp. Preferred Stock was greater than one year. A Holder's tax basis in New Preferred Stock received in a taxable exchange should equal the fair market value of such stock when received, and a Holder's holding period for the New Preferred Stock should begin on the day following receipt thereof. THE FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN ARE COMPLEX. THE FOREGOING SUMMARY DOES NOT DISCUSS ALL ASPECTS OF FEDERAL INCOME TAXATION THAT MAY BE RELEVANT TO A PARTICULAR HOLDER IN LIGHT OF SUCH HOLDER'S CIRCUMSTANCES AND INCOME TAX SITUATION. ALL HOLDERS SHOULD CONSULT WITH THEIR TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE TRANSACTION CONTEMPLATED BY THE PLAN, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS, AND OF ANY CHANGE IN APPLICABLE TAX LAWS. EXCEPT AS OTHERWISE SET FORTH IN SECTIONS II, IV, V AND VI ABOVE, NOTHING IN THIS SUPPLEMENT SHALL BE DEEMED TO CHANGE, ALTER OR IN ANY WAY MODIFY ANY OF THE STATEMENTS, ASSERTIONS OR ANY OTHER INFORMATION SET FORTH IN THE DISCLOSURE STATEMENT. 12 VII. RECOMMENDATION In the opinion of the Debtors, the modified definition of "Released Claims" and the Modified Structure do not materially impair the treatment of the Holders of Allowed Claims and Allowed Equity Interests under the Plan. Accordingly, the Debtors recommend that Holders of Allowed Claims and Allowed Equity Interests entitled to vote on the Plan vote in favor of the Plan, as modified by the Amendment. Dated: October 31, 2003 Respectfully Submitted, DDI CORP. AND DDI CAPITAL CORP. By: /s/ Timothy J. Donnelly --------------------------- Name: Timothy J. Donnelly Title: Vice President Prepared by: Richard L. Wynne (RW - 5630) Sharon M. Kopman (SK - 3295) Christian C. Lymn (CW - 3159) KIRKLAND & ELLIS LLP 777 South Figueroa Street Los Angeles, CA 90017 PH: (213) 680-8400 FAX: (213) 680-8500 13
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