EXECUTION COPY

 

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EX – 10.3

 

AMENDED AND RESTATED GUARANTEE AND COLLATERAL AGREEMENT

 

made by

 

DDI INTERMEDIATE HOLDINGS CORP.,

 

DDI CAPITAL CORP.,

 

DYNAMIC DETAILS, INCORPORATED,

 

DYNAMIC DETAILS, INCORPORATED, SILICON VALLEY

 

and certain of their Subsidiaries

 

in favor of

 

JPMORGAN CHASE BANK,

as Administrative Agent

 

Dated as of December 12, 2003

 

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TABLE OF CONTENTS

 

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SECTION 1.  DEFINED TERMS

  

2

1.1   Definitions

   2

1.2   Other Definitional Provisions

   5

SECTION 2.  GUARANTEE

   5

2.1   Guarantee

   5

2.2   Right of Contribution

   6

2.3   No Subrogation

   6

2.4   Amendments, etc. with respect to the Borrower Obligations

   6

2.5   Guarantee Absolute and Unconditional

   7

2.6   Reinstatement

   7

2.7   Payments

   8

SECTION 3.  CONFIRMATIONS AND GRANT OF SECURITY INTEREST

   8

SECTION 4.  REPRESENTATIONS AND WARRANTIES

   9

4.1   Representations in Credit Agreement

   9

4.2   Title, No Other Liens

   9

4.3   Perfected First Priority Liens

   9

4.4   Jurisdiction of Organization; Chief Executive Office

   9

4.5   Inventory and Equipment

   10

4.6   Farm Products

   10

4.7   Investment Property

   10

4.8   Receivables

   10

4.9   Intellectual Property

   10

4.10 Representations of DDi Intermediate Holdco

   11

SECTION 5.  COVENANTS

   11

5.1   Delivery of Instruments, Certificated Securities and Chattel Paper

   11

5.2   Maintenance of Insurance

   11

5.3   Payment of Obligations

   12

5.4   Maintenance of Perfected Security Interest; Further Documentation

   12

5.5   Changes in Locations, Name, etc.

   12

5.6   Notices

   13

5.7   Investment Property

   13

5.8   Receivables

   14

5.9   Intellectual Property

   14

5.10 Limitation on Negative Pledge Clauses

   15

SECTION 6.  REMEDIAL PROVISIONS

   16

6.1   Certain Matters Relating to Receivables

   16

6.2   Communications with Obligors; Grantors Remain Liable

   16

6.3   Pledged Stock

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6.4   Proceeds to be Turned Over to Administrative Agent

   17

 

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6.5   Application of Proceeds

   18

6.6   Code and Other Remedies

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6.7   Registration Rights

   19

6.8   Deficiency

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SECTION 7.  THE ADMINISTRATIVE AGENT

   20

7.1   Administrative Agent’s Appointment as Attorney-in-Fact, etc.

   20

7.2   Duty of Administrative Agent

   21

7.3   Execution of Financing Statements

   21

7.4   Authority of Administrative Agent

   22

SECTION 8.  MISCELLANEOUS

   22

8.1   Amendments in Writing

   22

8.2   Notices

   22

8.3   No Waiver by Course of Conduct; Cumulative Remedies

   22

8.4   Enforcement Expenses; Indemnification

   22

8.5   Successors and Assigns

   23

8.6   Set-Off

   23

8.7   Counterparts

   23

8.8   Severability

   23

8.9   Section Headings

   23

8.10 Integration

   23

8.11 GOVERNING LAW

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8.12 Submission To Jurisdiction; Waivers

   24

8.13 Acknowledgements

   24

8.14 Additional Grantors

   24

8.15 Releases

   24

8.16 WAIVER OF JURY TRIAL

   25

 

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AMENDED AND RESTATED GUARANTEE AND COLLATERAL AGREEMENT

 

AMENDED AND RESTATED GUARANTEE AND COLLATERAL AGREEMENT, dated as of December
12, 2003, made by each of the signatories hereto (together with any other entity
that may become a party hereto as provided herein, the “Grantors”), in favor of
JPMORGAN CHASE BANK, as Administrative Agent (in such capacity, the
“Administrative Agent”) for the banks and other financial institutions (the
“Lenders”) from time to time parties to the Second Amended and Restated Credit
Agreement, dated as of December 12, 2003 (as amended, supplemented or otherwise
modified from time to time, the “Credit Agreement”), among DDi Capital
Corporation, a California corporation (“DDi Capital”), Dynamic Details,
Incorporated, a California corporation (“Details” or the “Borrower”), the
Lenders and the Administrative Agent.

 

W I T N E S S E T H:

 

WHEREAS, DDi Capital, Details, DDISV, Dynamic Details Incorporated, Colorado
Springs, Dynamic Details Incorporated, Texas and certain other Grantors are
parties to the Guarantee and Collateral Agreement dated as of July 23, 1998 (the
“Original Guarantee and Collateral Agreement”) and DDi Capital, Details and
DDISV are also parties to a related 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, the Eight Amendment, dated as of August 1,
2003 (as amended, supplemented or otherwise modified through the date hereof,
the “Original Credit Agreement”);

 

WHEREAS, the Original Credit Agreement will be amended and restated as the
Credit Agreement on the date hereof;

 

WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to
restructure and exchange the existing extensions of credit outstanding
thereunder to the Borrower upon the terms and subject to the conditions set
forth therein;

 

WHEREAS, the Borrower has requested that the Original Guarantee and Collateral
Agreement be amended and restated to read in its entirety as provided herein to
include again DDi Intermediate Holdco (as defined below) as an additional
Guarantor and to reflect the Credit Agreement;

 

WHEREAS, the Borrower is a member of an affiliated group of companies that
includes each other Grantor;

 

WHEREAS, the Borrower and the other Grantors are engaged in related businesses,
and each Grantor will derive substantial direct and indirect benefit from the
continuing extensions of credit under the Credit Agreement; and

 

WHEREAS, it is a condition precedent to the obligation of the Lenders to agree
to restructure and exchange the existing extensions of credit to the Borrower
under the Credit Agreement that the Grantors shall have executed and delivered
this Agreement to the Administrative Agent for the ratable benefit of the
Lenders;

 

NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make or maintain

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their respective extensions of credit thereunder, each Grantor hereby agrees
with the Administrative Agent, for the ratable benefit of the Lenders, that
effective on the date hereof, the Original Guarantee and Collateral Agreement
shall be amended and restated in its entirety to read as follows:

 

SECTION 1. DEFINED TERMS

 

1.1 Definitions. (a) Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement, and the following terms are used herein as defined in the New
York UCC: Accounts, Certificated Security, Chattel Paper, Documents, Equipment,
Farm Products, General Intangibles, Instruments, Inventory, Letter-of-Credit
Rights and Supporting Obligations.

 

(b) The following terms shall have the following meanings:

 

“Agreement”: this Amended and Restated Guarantee and Collateral Agreement, as
the same may be amended, supplemented or otherwise modified from time to time.

 

“Borrower Obligations”: the collective reference to the unpaid principal of and
interest on the Loans and the Reimbursement Obligations and all other
obligations and liabilities of the Borrower (including, without limitation,
interest accruing at the then applicable rate provided in the Credit Agreement
after the maturity of the Loans and the Reimbursement Obligations and interest
accruing at the then applicable rate provided in the Credit Agreement after the
filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding)
to the Administrative Agent or any Lender (or, in the case of any Hedge
Agreement referred to below, any Affiliate of any Lender), whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of or in connection with, the
Credit Agreement, this Agreement, the other Loan Documents, any Letter of Credit
or any Hedge Agreement entered into by the Borrower with any Lender (or any
Affiliate of any Lender) or any other document made, delivered or given in
connection therewith, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to the
Administrative Agent or to the Lenders that are required to be paid by the
Borrower pursuant to the terms of any of the foregoing agreements).

 

“Collateral”: as defined in Section 3.

 

“Collateral Account”: any collateral account established by the Administrative
Agent as provided in Section 6.1 or 6.4.

 

“Copyrights”: (i) all copyrights arising under the laws of the United States,
any other country or any political subdivision thereof, whether registered or
unregistered and whether published or unpublished (including, without
limitation, those listed in Schedule 6(a)), all registrations and recordings
thereof, and all applications in connection therewith, including, without
limitation, all registrations, recordings and applications in the United States
Copyright Office, and (ii) the right to obtain all renewals thereof.

 

“Copyright Licenses”: any written agreement naming any Grantor as licensor or
licensee (including, without limitation, those listed in Schedule 6(a)),
granting any right under any Copyright, including, without limitation, the grant
of rights to manufacture, distribute, exploit and

 

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sell materials derived from any Copyright, to the extent the grant by such
Grantor of a security interest pursuant to this Agreement in such agreement is
not prohibited by such agreement without the consent of any other party thereto,
would not give any other party to such agreement the right to terminate its
obligations thereunder, or is permitted with consent if all necessary consents
to such grant of a security interest have been obtained from the other parties
thereto.

 

“DDi Capital”: as defined in the preamble hereto.

 

“DDi Corp.”: DDi Corp., a Delaware corporation.

 

“DDi Corp. Guarantee and Collateral Agreement”: that certain Guarantee and
Collateral Agreement, dated as of December         , 2003 by DDi Corp. in favor
of the Administrative Agent, as the same may be amended, supplemented or
otherwise modified from time to time.

 

“DDi Intermediate Holdco”: DDi Intermediate Holdings Corp., a California
corporation.

 

“Deposit Account”: as defined in the Uniform Commercial Code of any applicable
jurisdiction and, in any event, including, without limitation, any demand, time,
savings, passbook or like account maintained with a depositary institution.

 

“Foreign Subsidiary”: any Subsidiary that is organized under the laws of any
jurisdiction outside the United States.

 

“Foreign Subsidiary Voting Stock”: the voting Capital Stock of any Foreign
Subsidiary.

 

“Guarantor Obligations”: with respect to any Guarantor all obligations and
liabilities of such Guarantor which may arise under or in connection with this
Agreement (including, without limitation, in Section 2) or any other Loan
Document to which such Guarantor is a party, in each case whether on account of
guarantee obligations, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all fees and disbursements
of counsel to the Administrative Agent or to the Lenders that are required to be
paid by such Guarantor pursuant to the terms of this Agreement or any other Loan
Document).

 

“Guarantors”: the collective reference to each Grantor other than (i) with
respect to the Borrower Obligations only, the Borrower and (ii) any Grantor that
is a Foreign Subsidiary.

 

“Hedge Agreements”: as to any Person, all interest rate swaps, caps or collar
agreements or similar arrangements entered into by such Person providing for
protection against fluctuations in interest rates or currency exchange rates or
the exchange of nominal interest obligations, either generally or under specific
contingencies.

 

“Intellectual Property”: the collective reference to all rights, priorities and
privileges relating to intellectual property, whether arising under United
States, multinational or foreign laws or otherwise, including, without
limitation, the Copyrights, the Copyright Licenses, the Patents, the Patent
Licenses, the Trademarks and the Trademark Licenses, and all rights to sue at
law or in equity for any infringement or other impairment thereof, including the
right to receive all proceeds and damages therefrom.

 

“Intercompany Note”: any promissory note evidencing loans made by any Grantor to
its direct or indirect parent or any of its Subsidiaries.

 

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“Investment Property”: the collective reference to (i) all “investment property”
as such term is defined in Section 9-102(a)(49) of the New York UCC (other than
any Foreign Subsidiary Voting Stock excluded from the definition of “Pledged
Stock”) and (ii) whether or not constituting “investment property” as so
defined, all Pledged Notes and all Pledged Stock.

 

“Issuers”: the collective reference to each issuer of any Investment Property.

 

“New York UCC”: the Uniform Commercial Code as from time to time in effect in
the State of New York.

 

“Obligations”: (i) in the case of the Borrower, the Borrower Obligations and
(ii) in the case of each Guarantor, its Guarantor Obligations.

 

“Patents”: (i) all letters patent of the United States, any other country or any
political subdivision thereof, all reissues and extensions thereof and all
goodwill associated therewith, including, without limitation, any of the
foregoing referred to in Schedule 6(a), (ii) all applications for letters patent
of the United States or any other country and all divisions, continuations and
continuations-in-part thereof, including, without limitation, any of the
foregoing referred to in Schedule 6(a), and (iii) all rights to obtain any
reissues or extensions of the foregoing.

 

“Patent License”: all agreements, whether written or oral, providing for the
grant by or to any Grantor of any right to manufacture, use or sell any
invention covered in whole or in part by a Patent, including, without
limitation, any of the foregoing referred to in Schedule 6(a) to the extent the
grant by such Grantor of a security interest pursuant to this Agreement in its
right, title and interest in such agreement is not prohibited by such agreement
without the consent of any other party thereto, would not give any other party
to such agreement the right to terminate its obligations thereunder, or is
permitted with consent if all necessary consents to such grant of a security
interest have been obtained from the other parties thereto.

 

“Pledged Notes”: all promissory notes listed on Schedule 2, all Intercompany
Notes at any time issued to any Grantor and all other promissory notes issued to
or held by any Grantor (other than promissory notes issued in connection with
extensions of trade credit by any Grantor in the ordinary course of business).

 

“Pledged Securities”: the collective reference to the Pledged Notes and the
Pledged Stock.

 

“Pledged Stock”: the shares of Capital Stock listed on Schedule 2, together with
any other shares, stock certificates, options or rights of any nature whatsoever
in respect of the Capital Stock of any Person that may be issued or granted to,
or held by, any Grantor while this Agreement is in effect, provided that in no
event shall more than 65% of the total outstanding Foreign Subsidiary Voting
Stock of any Foreign Subsidiary be required to be pledged hereunder.

 

“Proceeds”: all “proceeds” as such term is defined in Section 9-102(a)(64) of
the New York UCC and, in any event, shall include, without limitation, all
dividends or other income from Investment Property, collections thereon or
distributions or payments with respect thereto.

 

“Receivable”: any right to payment for goods sold or leased or for services
rendered, whether or not such right is evidenced by an Instrument or Chattel
Paper and whether or not it has been earned by performance (including, without
limitation, any Account).

 

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“Securities Act”: the Securities Act of 1933, as amended.

 

“Trademarks”: (i) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service marks, logos
and other source or business identifiers, and all goodwill associated therewith,
now existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all applications in connection therewith, whether in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof or any other country or any political
subdivision thereof, or otherwise, and all common-law rights related thereto,
including, without limitation, any of the foregoing referred to in Schedule 6(a)
and (ii) the right to obtain all renewals thereof.

 

“Trademark License”: any agreement, whether written or oral, providing for the
grant by or to any Grantor of any right to use any Trademark, including, without
limitation, any of the foregoing referred to in Schedule 6(a) to the extent the
grant by such Grantor of a security interest pursuant to this Agreement in its
right, title and interest in such agreement is not prohibited by such agreement
without the consent of any other party thereto, would not give any other party
to such agreement the right to terminate its obligations thereunder, or is
permitted with consent if all necessary consents to such grant of a security
interest have been obtained from the other parties thereto.

 

1.2 Other Definitional Provisions. (a) The words “hereof,” “herein,” “hereto”
and “hereunder” and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement, and Section and Schedule references are to this Agreement unless
otherwise specified.

 

(a) The meanings given to terms defined herein shall be equally applicable to
both the singular and plural forms of such terms.

 

(b) Where the context requires, terms relating to the Collateral or any part
thereof, when used in relation to a Grantor, shall refer to such Grantor’s
Collateral or the relevant part thereof.

 

SECTION 2. GUARANTEE

 

2.1 Guarantee. (a) Each of the Guarantors hereby, jointly and severally,
unconditionally and irrevocably, guarantees to the Administrative Agent, for the
ratable benefit of the Lenders and their respective successors, indorsees,
transferees and assigns, the prompt and complete payment and performance by the
Borrower when due (whether at the stated maturity, by acceleration or otherwise)
of the Borrower Obligations.

 

(b) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder and under the
other Loan Documents shall in no event exceed the amount which can be guaranteed
by such Guarantor under applicable federal and state laws relating to the
insolvency of debtors (after giving effect to the right of contribution
established in Section 2.2).

 

(c) Each Guarantor agrees that the Borrower Obligations may at any time and from
time to time exceed the amount of the liability of such Guarantor hereunder
without impairing the guarantee contained in this Section 2 or affecting the
rights and remedies of the Administrative Agent or any Lender hereunder.

 

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(d) The guarantee contained in this Section 2 shall remain in full force and
effect until all the Borrower Obligations and the obligations of each Guarantor
under the guarantee contained in this Section 2 shall have been satisfied by
payment in full, no Letter of Credit shall be outstanding and the Commitments
shall be terminated, notwithstanding that from time to time during the term of
the Credit Agreement the Borrower may be free from any Borrower Obligations.

 

(e) No payment made by the Borrower, any of the Guarantors, any other guarantor
or any other Person or received or collected by the Administrative Agent or any
Lender from the Borrower, any of the Guarantors, any other guarantor or any
other Person by virtue of any action or proceeding or any set-off or
appropriation or application at any time or from time to time in reduction of or
in payment of the Borrower Obligations shall be deemed to modify, reduce,
release or otherwise affect the maximum liability of any Guarantor hereunder
which shall, notwithstanding any such payment (other than any payment made by
such Guarantor in respect of the Borrower Obligations or any payment received or
collected from such Guarantor in respect of the Borrower Obligations), remain
liable for the Borrower Obligations up to the maximum liability of such
Guarantor hereunder until the Borrower Obligations are paid in full, no Letter
of Credit shall be outstanding and the Commitments are terminated.

 

2.2 Right of Contribution. Each Subsidiary Guarantor hereby agrees that to the
extent that a Subsidiary Guarantor shall have paid more than its proportionate
share of any payment made hereunder, such Subsidiary Guarantor shall be entitled
to seek and receive contribution from and against any other Subsidiary Guarantor
hereunder which has not paid its proportionate share of such payment. Each
Subsidiary Guarantor’s right of contribution shall be subject to the terms and
conditions of Section 2.3. The provisions of this Section 2.2 shall in no
respect limit the obligations and liabilities of any Subsidiary Guarantor to the
Administrative Agent and the Lenders, and each Subsidiary Guarantor shall remain
liable to the Administrative Agent and the Lenders for the full amount
guaranteed by such Subsidiary Guarantor hereunder.

 

2.3 No Subrogation. Notwithstanding any payment made by any Guarantor hereunder
or any set-off or application of funds of any Guarantor by the Administrative
Agent or any Lender, no Guarantor shall be entitled to be subrogated to any of
the rights of the Administrative Agent or any Lender against the Borrower or any
other Guarantor or DDi Corp., as “Guarantor” under the DDi Corp. Guarantee and
Collateral Agreement, or any collateral security or guarantee or right of offset
held by the Administrative Agent or any Lender for the payment of the Borrower
Obligations, nor shall any Guarantor seek or be entitled to seek any
contribution or reimbursement from the Borrower or any other Guarantor or DDi
Corp., as “Guarantor” under the DDi Corp. Guarantee and Collateral Agreement, in
respect of payments made by such Guarantor hereunder, until all amounts owing to
the Administrative Agent and the Lenders by the Borrower on account of the
Borrower Obligations are paid in full, no Letter of Credit shall be outstanding
and the Commitments are terminated. If any amount shall be paid to any Guarantor
on account of such subrogation rights at any time when all of the Borrower
Obligations shall not have been paid in full, such amount shall be held by such
Guarantor in trust for the Administrative Agent and the Lenders, segregated from
other funds of such Guarantor, and shall, forthwith upon receipt by such
Guarantor, be turned over to the Administrative Agent in the exact form received
by such Guarantor (duly indorsed by such Guarantor to the Administrative Agent,
if required), to be appliedagainst the Borrower Obligations, whether matured or
unmatured, in such order as the Administrative Agent may determine.

 

2.4 Amendments, etc. with respect to the Borrower Obligations. Each Guarantor
shall remain obligated hereunder notwithstanding that, without any reservation
of rights against any Guarantor and without notice to or further assent by any
Guarantor, any demand for payment of any of the Borrower Obligations made by the
Administrative Agent or any Lender may be rescinded by the Administrative Agent
or such Lender and any of the Borrower Obligations continued, and the Borrower
Obligations, or

 

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the liability of any other Person upon or for any part thereof, or any
collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by
the Administrative Agent or any Lender, and the Credit Agreement and the other
Loan Documents and any other documents executed and delivered in connection
therewith may be amended, modified, supplemented or terminated, in whole or in
part, as the Administrative Agent (or the Required Lenders or all Lenders, as
the case may be) may deem advisable from time to time, and any collateral
security, guarantee or right of offset at any time held by the Administrative
Agent or any Lender for the payment of the Borrower Obligations may be sold,
exchanged, waived, surrendered or released. Neither the Administrative Agent nor
any Lender shall have any obligation to protect, secure, perfect or insure any
Lien at any time held by it as security for the Borrower Obligations or for the
guarantee contained in this Section 2 or any property subject thereto.

 

2.5 Guarantee Absolute and Unconditional. Each Guarantor waives any and all
notice of the creation, renewal, extension or accrual of any of the Borrower
Obligations and notice of or proof of reliance by the Administrative Agent or
any Lender upon the guarantee contained in this Section 2 or acceptance of the
guarantee contained in this Section 2; the Borrower Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or incurred,
or renewed, extended, amended or waived, in reliance upon the guarantee
contained in this Section 2; and all dealings between the Borrower and any of
the Guarantors, on the one hand, and the Administrative Agent and the Lenders,
on the other hand, likewise shall be conclusively presumed to have been had or
consummated in reliance upon the guarantee contained in this Section 2. Each
Guarantor waives diligence, presentment, protest, demand for payment of the
Borrower Obligations and notice of default or nonpayment to or upon the Borrower
or any of the Guarantors with respect to the Borrower Obligations. Each
Guarantor understands and agrees to the fullest extent permitted by applicable
law that the guarantee contained in this Section 2 shall be construed as a
continuing, absolute and unconditional guarantee of payment without regard to
(a) the validity or enforceability of the Credit Agreement or any other Loan
Document, any of the Borrower Obligations or any other collateral security
therefor or guarantee or right of offset with respect thereto at any time or
from time to time held by the Administrative Agent or any Lender, (b) any
defense, set-off or counterclaim (other than a defense of payment or
performance) which may at any time be available to or be asserted by the
Borrower or any other Person against the Administrative Agent or any Lender, or
(c) any other circumstance whatsoever (with or without notice to or knowledge of
the Borrower or such Guarantor) which constitutes, or might be construed to
constitute, an equitable or legal discharge of the Borrower for the Borrower
Obligations, or of such Guarantor under the guarantee contained in this Section
2, in bankruptcy or in any other instance. When making any demand hereunder or
otherwise pursuing its rights and remedies hereunder against any Guarantor, the
Administrative Agent or any Lender may, but shall be under no obligation to,
make a similar demand on or otherwise pursue such rights and remedies as it may
have against the Borrower, any other Guarantor, DDi Corp. or any other Person or
against any collateral security or guarantee for the Borrower Obligations or any
right of offset with respect thereto, and any failure by the Administrative
Agent or any Lender to make any such demand, to pursue such other rights or
remedies or to collect any payments from the Borrower, any other Guarantor, DDi
Corp. or any other Person or to realize upon any such collateral security or
guarantee or to exercise any such right of offset, or any release of the
Borrower, any other Guarantor, DDi Corp., as “Guarantor” under the DDi Corp.
Guarantee and Collateral Agreement, or any other Person or any such collateral
security, guarantee or right of offset, shall not relieve any Guarantor of any
obligation or liability hereunder, and shall not impair or affect the rights and
remedies, whether express, implied or available as a matter of law, of the
Administrative Agent or any Lender against any Guarantor. For the purposes
hereof “demand” shall include the commencement and continuance of any legal
proceedings.

 

2.6 Reinstatement. The guarantee contained in this Section 2 shall continue to
be effective, or be reinstated, as the case may be, if at any time payment, or
any part thereof, of any of the

 

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Borrower Obligations is rescinded or must otherwise be restored or returned by
the Administrative Agent or any Lender upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower or any Guarantor, or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, the Borrower or any Guarantor or any
substantial part of its property, or otherwise, all as though such payments had
not been made.

 

2.7 Payments. Each Guarantor hereby guarantees that payments hereunder will be
paid to the Administrative Agent without set-off or counterclaim in Dollars at
the office of the Administrative Agent located at 270 Park Avenue, New York, New
York 10017.

 

SECTION 3. CONFIRMATIONS AND GRANT OF SECURITY INTEREST

 

Each Grantor hereunder that was not a Grantor party to the Original Guarantee
and Collateral Agreement and each Grantor that was a party to the Original
Guarantee and Collateral Agreement with respect to any Collateral that did not
constitute “Collateral” as defined in and under the Original Guarantee and
Collateral Agreement hereby assigns and transfers to the Administrative Agent,
and hereby grants to the Administrative Agent, for the ratable benefit of the
Lenders, a security interest in, all of the following property now owned or at
any time hereafter acquired by such Grantor or in which such Grantor now has or
at any time in the future may acquire any right, title or interest
(collectively, the “Collateral”), as collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of such Grantor’s Obligations:

 

  (a) all Accounts;

 

  (b) all Chattel Paper;

 

  (c) all Deposit Accounts;

 

  (d) all Documents;

 

  (e) all Equipment;

 

  (f) all General Intangibles;

 

  (g) all Instruments;

 

  (h) all Intellectual Property;

 

  (i) all Inventory;

 

  (j) all Investment Property;

 

  (k) all Letter-of-Credit Rights;

 

  (l) all other property not otherwise described above (except for property not
covered by Article 9 of the New York UCC pursuant to Section 9-109(d)(11)
thereof);

 

  (m) all books and records pertaining to the Collateral; and

 

(n) to the extent not otherwise included, all Proceeds, Supporting Obligations
and products of any and all of the foregoing and all collateral security and
guarantees given by any Person with respect to any of the foregoing;

 

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Notwithstanding the foregoing, such Collateral does not include any rights or
property to the extent that any valid and enforceable law or regulation
applicable to such rights or property prohibits the creation of a security
interest therein. In addition, in the event that any Grantor disposes of assets,
in a transaction permitted by Section 7.5 of the Credit Agreement, such assets,
but not the proceeds or products thereof, shall be released from the Lien on the
Collateral.

 

Each Grantor hereunder that was a Grantor party to the Original Guarantee and
Collateral Agreement hereby confirms that pursuant to the Original Guarantee and
Collateral Agreement it granted, and each such Grantor hereby continues to grant
to the Administrative Agent, for the ratable benefit of the Lenders, a security
interest in all of the Collateral described in the Original Guarantee and
Collateral Agreement in which such Grantor has, or had at any time, any right,
title or interest, as collateral security for the prompt and complete payment
and performance when due (whether at the stated maturity, by acceleration of
otherwise) of such Grantor’s Obligations.

 

SECTION 4. REPRESENTATIONS AND WARRANTIES

 

To induce the Administrative Agent and the Lenders to enter into the Credit
Agreement and to induce the Lenders to make or maintain their respective
extensions of credit to the Borrower thereunder, each Grantor hereby represents
and warrants to the Administrative Agent and each Lender that:

 

4.1 Representations in Credit Agreement. In the case of each Guarantor, the
representations and warranties set forth in Section 4 of the Credit Agreement as
they relate to such Guarantor or to the Loan Documents to which such Guarantor
is a party, each of which is hereby incorporated herein by reference, are true
and correct, and the Administrative Agent and each Lender shall be entitled to
rely on each of them as if they were fully set forth herein, provided that each
reference in each such representation and warranty to the Borrower’s knowledge
shall, for the purposes of this Section 4.1, be deemed to be a reference to such
Guarantor’s knowledge.

 

4.2 Title, No Other Liens. Except for the security interest granted to the
Administrative Agent for the ratable benefit of the Lenders pursuant to this
Agreement and the other Liens permitted to exist on the Collateral by the Credit
Agreement, such Grantor owns each item of the Collateral free and clear of any
and all Liens or claims of others. No financing statement or other public notice
with respect to all or any part of the Collateral is on file or of record in any
public office, except such as have been filed in favor of the Administrative
Agent, for the ratable benefit of the Lenders, pursuant to this Agreement or as
are permitted by the Credit Agreement.

 

4.3 Perfected First Priority Liens. The security interests granted pursuant to
this Agreement (a) upon completion of the filings and other actions specified on
Schedule 3 (which, in the case of all filings and other documents referred to on
said Schedule, have been delivered to the Administrative Agent in completed and
duly executed form), will constitute valid perfected security interests in all
of the Collateral in favor of the Administrative Agent, for the ratable benefit
of the Lenders, as collateral security for such Grantor’s Obligations,
enforceable in accordance with the terms hereof against all creditors of such
Grantor and any Persons purporting to purchase any Collateral from such Grantor
and (b) are prior to all other Liens on the Collateral in existence on the date
hereof except for Liens permitted by the Credit Agreement which have priority
over the Liens on the Collateral by operation of law.

 

4.4 Jurisdiction of Organization; Chief Executive Office. On the date hereof,
such Grantor’s jurisdiction of organization and the location of such Grantor’s
chief executive office or sole place of business are specified on Schedule 4.
Such Grantor has furnished to the Administrative Agent a

 

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certified charter, certificate of incorporation or other applicable organization
document and long-form good standing certificate as of a date which is recent to
the date hereof for such Grantor’s jurisdiction of organization.

 

4.5 Inventory and Equipment. On the date hereof, the Inventory and the Equipment
(other than mobile goods) are kept at the locations listed on Schedule 5.

 

4.6 Farm Products. None of the Collateral constitutes, or is the Proceeds of,
Farm Products.

 

4.7 Investment Property. (a) The shares of Pledged Stock pledged by such Grantor
hereunder constitute all the issued and outstanding shares of all classes of the
Capital Stock of each Issuer owned by such Grantor or, in the case of Foreign
Subsidiary Voting Stock, 65% of the outstanding Foreign Subsidiary Voting Stock
of each relevant Issuer owned by such Grantor.

 

(b) All the shares of the Pledged Stock issued by DDi Capital or the Borrower or
any of their respective Subsidiaries have been duly and validly issued and are
fully paid and nonassessable.

 

(c) Each of the Pledged Notes of either of DDi Capital or the Borrower or any of
its Subsidiaries constitutes the legal, valid and binding obligation of the
obligor with respect thereto, enforceable in accordance with its terms, subject
to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors’ rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.

 

(d) Such Grantor is the record and beneficial owner of, and has good and
marketable title to, the Investment Property pledged by it hereunder, free of
any and all Liens or options in favor of, or claims of, any other Person, except
the security interest created by this Agreement and any Liens permitted by
Section 7.3 of the Credit Agreement.

 

4.8 Receivables. (a) No amount payable to such Grantor under or in connection
with any Receivable is evidenced by any Instrument or Chattel Paper which has
not been delivered to the Administrative Agent.

 

(b) None of the obligors on any Receivables is a Governmental Authority.

 

(c) The amounts represented by such Grantor to the Lenders from time to time as
owing to such Grantor in respect of the Receivables will at such times be
accurate.

 

4.9 Intellectual Property. (a) Schedule 6(a) lists all patented, registered or
pending applications for Intellectual Property owned by such Grantor in its own
name on the date hereof.

 

(b) Except as set forth in Schedule 6(b), on the date hereof, all material
Intellectual Property owned by such Grantor is valid, subsisting, unexpired and
enforceable, has not been abandoned and does not infringe the intellectual
property rights of any other Person.

 

(c) On the date hereof, none of the Intellectual Property owned by such Grantor
is the subject of any licensing or franchise agreement pursuant to which such
Grantor is the licensor or franchisor.

 

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(d) Except as set forth on Schedule 6(d), each Grantor owns, or is licensed to
use, all Intellectual Property necessary for the conduct of its business as
currently conducted.

 

(e) No holding, decision or judgment has been rendered by any Governmental
Authority which would limit, cancel or question the validity of, or such
Grantor’s rights in, any Intellectual Property in any respect that could
reasonably be expected to have a Material Adverse Effect.

 

(f) No action or proceeding is pending, or, to the knowledge of such Grantor,
threatened, on the date hereof (i) seeking to limit, cancel or question the
validity of any Intellectual Property or such Grantor’s ownership interest
therein, or (ii) which, if adversely determined, would have a material adverse
effect on the value of any Intellectual Property.

 

4.10 Representations of DDi Intermediate Holdco. In the case of DDi Intermediate
Holdco:

 

(a) DDi Intermediate Holdco (i) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (ii) has the
corporate or other organizational power and authority, and the legal right, to
own and operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently engaged, (iii) is duly qualified
as a foreign corporation or other entity and in good standing under the laws of
each jurisdiction where its ownership, lease or operation of property or the
conduct of its business requires such qualification except to the extent that
failure to do so could not reasonably be expected to have a Material Adverse
Effect, and (iv) is in compliance with all Requirements of Law except to the
extent that the failure to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

(b) The execution, delivery and performance of the Loan Documents to which DDi
Intermediate Holdco is a party will not violate any Requirement of Law or
Contractual Obligation of DDi Intermediate Holdco or of any of its Subsidiaries
and will not result in, or require, the creation or imposition of any Lien on
any of its or their respective properties or revenues pursuant to any such
Requirement of Law or Contractual Obligation (other than pursuant to this
Agreement).

 

(c) No litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of DDi Intermediate
Holdco, threatened by or against DDi Intermediate Holdco or any of its
Subsidiaries or against any of its or their respective properties or revenues
(x) with respect to any of the Loan Documents or any of the transactions
contemplated hereby or thereby, or (y) which could reasonably be expected to
have a Material Adverse Effect.

 

SECTION 5. COVENANTS

 

Each Grantor covenants and agrees with the Administrative Agent and the Lenders
that, from and after the date of this Agreement until the Obligations shall have
been paid in full, no Letter of Credit shall be outstanding and the Commitments
shall have terminated:

 

5.1 Delivery of Instruments, Certificated Securities and Chattel Paper. If any
amount payable under or in connection with any of the Collateral shall be or
become evidenced by any Instrument, Certificated Security or Chattel Paper, such
Instrument, Certificated Security or Chattel Paper shall be immediately
delivered to the Administrative Agent, duly indorsed in a manner satisfactory to
the Administrative Agent, to be held as Collateral pursuant to this Agreement.

 

5.2 Maintenance of Insurance. (a) Such Grantor will maintain, with financially
sound and reputable companies, insurance policies (i) insuring the Inventory and
Equipment against loss by fire,

 

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explosion, theft and such other casualties as may be reasonably satisfactory to
the Administrative Agent and (ii) insuring such Grantor, the Administrative
Agent and the Lenders against liability for personal injury and property damage
relating to such Inventory and Equipment or to any motor vehicles owned or
operated by such Grantor, such policies to be in such form and amounts and
having such coverage as may be reasonably satisfactory to the Administrative
Agent and the Lenders.

 

(b) All such insurance shall (i) provide that no cancellation, material
reduction in amount or material change in coverage thereof shall be effective
until at least 30 days after receipt by the Administrative Agent of written
notice thereof, (ii) name the Administrative Agent as insured party or loss
payee, (iii) if reasonably requested by the Administrative Agent, include a
breach of warranty clause and (iv) be reasonably satisfactory in all other
respects to the Administrative Agent.

 

(c) The Borrower shall deliver to the Administrative Agent and the Lenders a
report of a reputable insurance broker with respect to such insurance at the
time of delivery of the financial statements described in Section 6.1(a) of the
Credit Agreement.

 

5.3 Payment of Obligations. Such Grantor will pay and discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all taxes, assessments and governmental charges or levies imposed upon the
Collateral or in respect of income or profits therefrom, as well as all claims
of any kind (including, without limitation, claims for labor, materials and
supplies), against or with respect to the Collateral, except that no such charge
need be paid if the amount or validity thereof is currently being contested in
good faith by appropriate proceedings, reserves in conformity with GAAP with
respect thereto have been provided on the books of such Grantor and such
proceedings could not reasonably be expected to result in the sale, forfeiture
or loss of any material portion of the Collateral or any interest therein.

 

5.4 Maintenance of Perfected Security Interest; Further Documentation. (a) Such
Grantor shall maintain the security interest created by this Agreement as a
perfected security interest having at least the priority described in Section
4.3 and shall defend such security interest against the claims and demands of
all Persons whomsoever.

 

(b) Such Grantor will furnish to the Administrative Agent and the Lenders from
time to time statements and schedules further identifying and describing the
assets and property of such Grantor and such other reports in connection
therewith as the Administrative Agent may reasonably request, all in reasonable
detail.

 

(c) At any time and from time to time, upon the written request of the
Administrative Agent, and at the sole expense of such Grantor, such Grantor will
promptly and duly execute and deliver, and have recorded, such further
instruments and documents and take such further actions as the Administrative
Agent may reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, (i) filing any financing or continuation
statements under the Uniform Commercial Code (or other similar laws) in effect
in any jurisdiction with respect to the security interests created hereby and
(ii) in the case of Investment Property, Deposit Accounts, Letter-of-Credit
Rights and any other relevant Collateral perfected by “control”, taking any
actions necessary to enable the Administrative Agent to obtain “control” (within
the meaning of the applicable Uniform Commercial Code) with respect thereto.

 

5.5 Changes in Locations, Name, etc. Such Grantor will not, except upon 15 days’
prior written notice to the Administrative Agent and delivery to the
Administrative Agent of (a) all additional executed financing statements and
other documents reasonably requested by the Administrative Agent to maintain the
validity, perfection and priority of the security interests provided for herein
and (b) if

 

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applicable, a written supplement to Schedule 5 showing any additional location
at which Inventory or Equipment shall be kept:

 

(i) permit any of the Inventory or Equipment to be kept at a location other than
those listed on Schedule 5;

 

(ii) change its jurisdiction of organization or the location of its chief
executive office or sole place of business from that referred to in Section 4.4;
or

 

(iii) change its name.

 

5.6 Notices. Such Grantor will advise the Administrative Agent and the Lenders
promptly, in reasonable detail, of:

 

(a) any Lien (other than security interests created hereby or Liens permitted
under the Credit Agreement) on any of the Collateral which would adversely
affect the ability of the Administrative Agent to exercise any of its remedies
hereunder, and

 

(b) the occurrence of any other event which could reasonably be expected to have
a material adverse effect on the aggregate value of the Collateral or on the
security interests created hereby.

 

5.7 Investment Property. (a) If such Grantor shall become entitled to receive or
shall receive any certificate (including, without limitation, any certificate
representing a dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any certificate issued in
connection with any reorganization), option or rights in respect of the Capital
Stock of any Issuer or any Investment Property, whether in addition to, in
substitution of, as a conversion of, or in exchange for, any shares of the
Pledged Stock, or otherwise in respect thereof, such Grantor shall accept the
same as the agent of the Administrative Agent and the Lenders, hold the same in
trust for the Administrative Agent and the Lenders and deliver the same
forthwith to the Administrative Agent in the exact form received, duly indorsed
by such Grantor to the Administrative Agent, if required, together with an
undated stock power covering such certificate duly executed in blank by such
Grantor and with, if the Administrative Agent so requests, signature guaranteed,
to be held by the Administrative Agent, subject to the terms hereof, as
additional collateral security for the Obligations. Any sums paid upon or in
respect of the Investment Property upon the liquidation or dissolution of any
Issuer shall be paid over to the Administrative Agent to be held by it hereunder
as additional collateral security for the Obligations, and in case any
distribution of capital shall be made on or in respect of the Investment
Property or any property shall be distributed upon or with respect to the
Investment Property pursuant to the recapitalization or reclassification of the
capital of any Issuer or pursuant to the reorganization thereof, the property so
distributed shall, unless otherwise subject to a perfected security interest in
favor of the Administrative Agent, be delivered to the Administrative Agent to
be held by it hereunder as additional collateral security for the Obligations.
If any sums of money or property so paid or distributed in respect of the
Investment Property shall be received by such Grantor, such Grantor shall, until
such money or property is paid or delivered to the Administrative Agent, hold
such money or property in trust for the Administrative Agent, segregated from
other funds of such Grantor, as additional collateral security for the
Obligations.

 

(b) Without the prior written consent of the Administrative Agent, such Grantor
will not (i) vote to enable, or take any other action to permit, any Issuer to
issue any Capital Stock of any nature or to issue any other securities
convertible into or granting the right to purchase or exchange for any Capital
Stock of any nature of any Issuer except as permitted under the Credit
Agreement, (ii) sell, assign, transfer, exchange, or otherwise dispose of, or
grant any option with respect to, the Investment Property

 

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or Proceeds thereof (except pursuant to a transaction expressly permitted by the
Credit Agreement), (iii) create, incur or permit to exist any Lien or option in
favor of, or any claim of any Person with respect to, any of the Investment
Property or Proceeds thereof, or any interest therein, except for the security
interests created by this Agreement and Liens permitted under Section 7.3 of the
Credit Agreement or (iv) enter into any agreement or undertaking restricting the
right or ability of such Grantor or the Administrative Agent to sell, assign or
transfer any of the Investment Property or Proceeds thereof.

 

(c) In the case of each Grantor which is an Issuer, such Issuer agrees that (i)
it will be bound by the terms of this Agreement relating to the Investment
Property issued by it and will comply with such terms insofar as such terms are
applicable to it, (ii) it will notify the Administrative Agent promptly in
writing of the occurrence of any of the events described in Section 5.7(a) with
respect to the Investment Property issued by it and (iii) the terms of Sections
6.3(c) and 6.7 shall apply to it, mutatis mutandis with respect to all actions
that may be required of it pursuant to Section 6.3(c) or 6.7 with respect to the
Investment Property issued by it.

 

5.8 Receivables. (a) Other than in the ordinary course of business consistent
with its past practice, such Grantor will not (i) grant any extension of the
time of payment of any Receivable, (ii) compromise or settle any Receivable for
less than the full amount thereof, (iii) release, wholly or partially, any
Person liable for the payment of any Receivable, (iv) allow any credit or
discount whatsoever on any Receivable or (v) amend, supplement or modify any
Receivable in any manner that could adversely affect the value thereof.

 

(b) Such Grantor will deliver to the Administrative Agent a copy of each
material demand, notice or document received by it that questions or calls into
doubt the validity or enforceability of more than 5% of the aggregate amount of
the then outstanding Receivables.

 

5.9 Intellectual Property. (a) Such Grantor (either itself or through licensees)
will (i) continue to use each material Trademark owned by such Grantor on each
and every trademark class of goods applicable to its current line as reflected
in its current catalogs, brochures and price lists in order to maintain such
Trademark in full force free from any claim of abandonment for non-use, (ii)
maintain as in the past the quality of products and services offered under such
Trademark, (iii) use such Trademark with the appropriate notice of registration
and all other notices and legends required by applicable Requirements of Law,
(iv) not adopt or use any mark which is confusingly similar or a colorable
imitation of such Trademark unless the Administrative Agent, for the ratable
benefit of the Lenders, shall obtain a perfected security interest in such mark
pursuant to this Agreement, and (v) not (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby such
Trademark may become invalidated or impaired in any way, except in each case to
the extent that taking, or omitting to take, such action would not have a
Material Adverse Effect.

 

(b) Such Grantor (either itself or through licensees) will not do any act, or
omit to do any act, whereby any material Patent owned by such Grantor may become
forfeited, abandoned or dedicated to the public, except in each case to the
extent that taking, or omitting to take, such action would not have a Material
Adverse Effect.

 

(c) Such Grantor (either itself or through licensees) will not (and will not
permit any licensee or sublicensee thereof to) do any act or knowingly omit to
do any act whereby any material portion of the Copyrights may become invalidated
or otherwise impaired. Such Grantor will not (either itself or through
licensees) do any act whereby any material portion of the Copyrights may fall
into the public domain, except to the extent that taking such action would not
have a Material Adverse Effect.

 

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(d) Such Grantor (either itself or through licensees) will not do any act that
knowingly uses any material Intellectual Property to infringe the intellectual
property rights of any other Person, except to the extent that taking such
action would not have a Material Adverse Effect.

 

(e) Such Grantor will notify the Administrative Agent and the Lenders
immediately if it knows, or has reason to know, that any application or
registration relating to any material Intellectual Property owned by such
Grantor may become forfeited, abandoned or dedicated to the public, or of any
adverse determination or development (including, without limitation, the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, the United States Copyright
Office or any court or tribunal in any country) regarding such Grantor’s
ownership of, or the validity of, any material Intellectual Property or such
Grantor’s right to register the same or to own and maintain the same.

 

(f) Whenever such Grantor, either by itself or through any agent, employee,
licensee or designee, shall file an application for the registration of any
Intellectual Property with the United States Patent and Trademark Office, the
United States Copyright Office or any similar office or agency in any other
country or any political subdivision thereof, such Grantor shall report such
filing to the Administrative Agent within five Business Days after the last day
of the fiscal quarter in which such filing occurs. Upon the reasonable request
of the Administrative Agent, such Grantor shall execute and deliver, and have
recorded, any and all agreements, instruments, documents, and papers as the
Administrative Agent may request to evidence the Administrative Agent’s and the
Lenders’ security interest in any Copyright, Patent or Trademark and the
goodwill and general intangibles of such Grantor relating thereto or represented
thereby.

 

(g) Such Grantor will take all reasonable and necessary steps, including,
without limitation, in any proceeding before the United States Patent and
Trademark Office, the United States Copyright Office or any similar office or
agency in any other country or any political subdivision thereof, to maintain
and pursue each application (and to obtain the relevant registration) and to
maintain each registration of the material Intellectual Property owned by such
Grantor, including, without limitation, filing of applications for renewal,
affidavits of use and affidavits of incontestability.

 

(h) In the event that any material Intellectual Property owned by such Grantor
is infringed, misappropriated or diluted by a third party, such Grantor shall
(i) take such actions as such Grantor shall reasonably deem appropriate under
the circumstances to protect such Intellectual Property and (ii) if such
Intellectual Property is of material economic value, promptly notify the
Administrative Agent after it learns thereof and sue for infringement,
misappropriation or dilution, to seek injunctive relief where appropriate and to
recover any and all damages for such infringement, misappropriation or dilution.

 

(i) Within 60 days following the execution of this Agreement, each Grantor shall
enter into a written license agreement with DDi Corp. concerning the patents and
patent applications listed on Schedule 6(d). Each such license agreement shall
include provisions relating to the term of the license, the non-assignability of
the license, the scope of use of each patent and patent application, and any
royalties or payments that may become payable.

 

5.10 Limitation on Negative Pledge Clauses. In the case of DDi Intermediate
Holdco, DDi Intermediate Holdco agrees not to enter into or suffer to exist or
become effective any agreement which prohibits or limits the ability of DDi
Intermediate Holdco or any of its Subsidiaries to create, incur, assume or
suffer to exist any Lien upon any of its Property or revenues, whether now owned
or hereafter acquired, other than (a) this Agreement and the other Loan
Documents and (b) any agreements governing

 

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any purchase money Liens or Capital Lease Obligations otherwise permitted by the
Credit Agreement (in which case, any prohibition or limitation can only be
effective against the assets financed thereby).

 

SECTION 6. REMEDIAL PROVISIONS

 

6.1 Certain Matters Relating to Receivables. (a) The Administrative Agent shall
have the right to make test verifications of the Receivables in any manner and
through any medium that it reasonably considers advisable, and each Grantor
shall furnish all such assistance and information as the Administrative Agent
may require in connection with such test verifications; provided, that prior to
a Default or Event of Default such test verifications shall be done without any
notice that the verification is being done by a secured party being given to any
of the obligors on such Receivables. At any time and from time to time, upon the
Administrative Agent’s request and at the expense of the relevant Grantor, such
Grantor shall cause independent public accountants or others satisfactory to the
Administrative Agent to furnish to the Administrative Agent reports showing
reconciliations, aging and test verifications of, an trial balances for, the
Receivables.

 

(b) The Administrative Agent hereby authorizes each Grantor to collect such
Grantor’s Receivables, subject to the Administrative Agent’s direction and
control, and the Administrative Agent may curtail or terminate said authority at
any time after the occurrence and during the continuance of an Event of Default.
If required by the Administrative Agent at any time after the occurrence and
during the continuance of an Event of Default, any payments of Receivables, when
collected by any Grantor, (i) shall be forthwith (and, in any event, within two
Business Days) deposited by such Grantor in the exact form received, duly
indorsed by such Grantor to the Administrative Agent if required, in a
Collateral Account maintained under the sole dominion and control of the
Administrative Agent, subject to withdrawal by the Administrative Agent, for the
account of the Lenders only as provided in Section 6.5, and (ii) until so turned
over, shall be held by such Grantor in trust for the Administrative Agent and
the Lenders, segregated from other funds of such Grantor. Each such deposit of
Proceeds of Receivables shall be accompanied by a report identifying in
reasonable detail the nature and source of the payments included in the deposit.

 

(c) At the Administrative Agent’s request, upon the occurrence of a Default or
an Event of Default, each Grantor shall deliver to the Administrative Agent all
original and other documents evidencing, and relating to, the agreements and
transactions which gave rise to the Receivables, including, without limitation,
all original orders, invoices and shipping receipts.

 

6.2 Communications with Obligors; Grantors Remain Liable. (a) The Administrative
Agent in its own name or in the name of others may at any time communicate with
obligors under the Receivables to verify with them to the Administrative Agent’s
satisfaction the existence, amount and terms of any Receivables; provided, that
prior to the occurrence of an Event of Default, the Administrative Agent shall
not indicate to any obligors that the verification is being done by a secured
party.

 

(b) Upon the request of the Administrative Agent at any time after the
occurrence and during the continuance of an Event of Default, each Grantor shall
notify obligors on the Receivables that the Receivables have been assigned to
the Administrative Agent for the ratable benefit of the Lenders and that
payments in respect thereof shall be made directly to the Administrative Agent.

 

(c) Anything herein to the contrary notwithstanding, each Grantor shall remain
liable under each of the Receivables to observe and perform all the conditions
and obligations to be observed and performed by it thereunder, all in accordance
with the terms of any agreement giving rise thereto. Neither the Administrative
Agent nor any Lender shall have any obligation or liability under any

 

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Receivable (or any agreement giving rise thereto) by reason of or arising out of
this Agreement or the receipt by the Administrative Agent or any Lender of any
payment relating thereto, nor shall the Administrative Agent or any Lender be
obligated in any manner to perform any of the obligations of any Grantor under
or pursuant to any Receivable (or any agreement giving rise thereto), to make
any payment, to make any inquiry as to the nature or the sufficiency of any
payment received by it or as to the sufficiency of any performance by any party
thereunder, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.

 

6.3 Pledged Stock. (a) Unless an Event of Default shall have occurred and be
continuing and the Administrative Agent shall have given notice to the relevant
Grantor of the Administrative Agent’s intent to exercise its corresponding
rights pursuant to Section 6.3(b), each Grantor shall be permitted to receive
all cash dividends paid in respect of the Pledged Stock and all payments made in
respect of the Pledged Notes, in each case paid in the normal course of business
of the relevant Issuer and consistent with past practice, to the extent
permitted in the Credit Agreement, and to exercise all voting and corporate or
other organizational rights with respect to the Investment Property; provided,
however, that no vote shall be cast or corporate or other organizational right
exercised or other action taken which, in the Administrative Agent’s reasonable
judgment, would impair the Collateral or which would be inconsistent with or
result in any violation of any provision of the Credit Agreement, this Agreement
or any other Loan Document.

 

(b) If an Event of Default shall occur and be continuing and the Administrative
Agent shall give notice of its intent to exercise such rights to the relevant
Grantor or Grantors, (i) the Administrative Agent shall have the right to
receive any and all cash dividends, payments or other Proceeds paid in respect
of the Investment Property and make application thereof to the Obligations in
such order as the Administrative Agent may determine, and (ii) any or all of the
Investment Property shall be registered in the name of the Administrative Agent
or its nominee, and the Administrative Agent or its nominee may thereafter
exercise (x) all voting, corporate and other rights pertaining to such
Investment Property at any meeting of shareholders of the relevant Issuer or
Issuers or otherwise and (y) any and all rights of conversion, exchange and
subscription and any other rights, privileges or options pertaining to such
Investment Property as if it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any and all of the
Investment Property upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate or other
organizational structure of any Issuer, or upon the exercise by any Grantor or
the Administrative Agent of any right, privilege or option pertaining to such
Investment Property, and in connection therewith, the right to deposit and
deliver any and all of the Investment Property with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms and
conditions as the Administrative Agent may determine), all without liability
except to account for property actually received by it, but the Administrative
Agent shall have no duty to any Grantor to exercise any such right, privilege or
option and shall not be responsible for any failure to do so or delay in so
doing.

 

(c) Each Grantor hereby authorizes and instructs each Issuer of any Investment
Property pledged by such Grantor hereunder to (i) comply with any instruction
received by it from the Administrative Agent in writing that (x) states that an
Event of Default has occurred and is continuing and (y) is otherwise in
accordance with the terms of this Agreement, without any other or further
instructions from such Grantor, and each Grantor agrees that each Issuer shall
be fully protected in so complying, and (ii) unless otherwise expressly
permitted hereby, pay any dividends or other payments with respect to the
Investment Property directly to the Administrative Agent.

 

6.4 Proceeds to be Turned Over to Administrative Agent. In addition to the
rights of the Administrative Agent and the Lenders specified in Section 6.1 with
respect to payments of Receivables, if

 

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an Event of Default shall occur and be continuing, all Proceeds received by any
Grantor consisting of cash, checks and other near-cash items shall be held by
such Grantor in trust for the Administrative Agent and the Lenders, segregated
from other funds of such Grantor, and shall, forthwith upon receipt by such
Grantor, be turned over to the Administrative Agent in the exact form received
by such Grantor (duly indorsed by such Grantor to the Administrative Agent, if
required). All Proceeds received by the Administrative Agent hereunder shall be
held by the Administrative Agent in a Collateral Account maintained under its
sole dominion and control. All Proceeds while held by the Administrative Agent
in a Collateral Account (or by such Grantor in trust for the Administrative
Agent and the Lenders) shall continue to be held as collateral security for all
the Obligations and shall not constitute payment thereof until applied as
provided in Section 6.5.

 

6.5 Application of Proceeds. At such intervals as may be agreed upon by the
Borrower and the Administrative Agent, or, if an Event of Default shall have
occurred and be continuing, at any time at the Administrative Agent’s election,
the Administrative Agent may apply all or any part of Proceeds constituting
Collateral, whether or not held in any Collateral Account in payment of the
Obligations in such order as the Administrative Agent may elect, and any part of
such funds which the Administrative Agent elects not so to apply and deems not
required as collateral security for the Obligations shall be paid over from time
to time by the Administrative Agent to the Borrower or to whomsoever may be
lawfully entitled to receive the same. Any balance of such Proceeds remaining
after the Obligations shall have been paid in full, no Letters of Credit shall
be outstanding and the Commitments shall have terminated shall be paid over to
the Borrower or to whomsoever may be lawfully entitled to receive the same.

 

6.6 Code and Other Remedies. If an Event of Default shall occur and be
continuing, the Administrative Agent, on behalf of the Lenders, may exercise, in
addition to all other rights and remedies granted to them in this Agreement and
in any other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the New York UCC
or any other applicable law. Without limiting the generality of the foregoing,
the Administrative Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon any Grantor or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase, or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker’s board or office of the Administrative Agent or any Lender or
elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. The Administrative Agent or any Lender shall have
the right upon any such public sale or sales, and, to the extent permitted by
law, upon any such private sale or sales, to purchase the whole or any part of
the Collateral so sold, free of any right or equity of redemption in any
Grantor, which right or equity is hereby waived and released. Each Grantor
further agrees, at the Administrative Agent’s request, to assemble the
Collateral and make it available to the Administrative Agent at places which the
Administrative Agent shall reasonably select, whether at such Grantor’s premises
or elsewhere. The Administrative Agent shall apply the net proceeds of any
action taken by it pursuant to this Section 6.6, after deducting all reasonable
costs and expenses of every kind incurred in connection therewith or incidental
to the care or safekeeping of any of the Collateral or in any way relating to
the Collateral or the rights of the Administrative Agent and the Lenders
hereunder, including, without limitation, reasonable attorneys’ fees and
disbursements, to the payment in whole or in part of the Obligations, in such
order as the Administrative Agent may elect, and only after such application and
after the payment by the Administrative Agent of any other amount required by
any provision of law, including, without limitation, Section 9-615(a)(3) of the
New York UCC, need the Administrative Agent account for the

 

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surplus, if any, to any Grantor. To the extent permitted by applicable law, each
Grantor waives all claims, damages and demands it may acquire against the
Administrative Agent or any Lender arising out of the exercise by them of any
rights hereunder. If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed reasonable and
proper if given at least 10 days before such sale or other disposition.

 

6.7 Registration Rights. (a) If the Administrative Agent shall determine to
exercise its right to sell any or all of the Pledged Stock pursuant to Section
6.6, and if in the opinion of the Administrative Agent it is necessary or
advisable to have the Pledged Stock, or that portion thereof to be sold,
registered under the provisions of the Securities Act, the relevant Grantor will
cause the Issuer thereof to (i) execute and deliver, and cause the directors and
officers of such Issuer to execute and deliver, all such instruments and
documents, and do or cause to be done all such other acts as may be, in the
opinion of the Administrative Agent, necessary or advisable to register the
Pledged Stock, or that portion thereof to be sold, under the provisions of the
Securities Act, (ii) use its best efforts to cause the registration statement
relating thereto to become effective and to remain effective for a period of one
year from the date of the first public offering of the Pledged Stock, or that
portion thereof to be sold, and (iii) make all amendments thereto and/or to the
related prospectus which, in the opinion of the Administrative Agent, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto. Each Grantor agrees to cause such Issuer to
comply with the provisions of the securities or “Blue Sky” laws of any and all
jurisdictions which the Administrative Agent shall designate and to make
available to its security holders, as soon as practicable, an earnings statement
(which need not be audited) which will satisfy the provisions of Section 11 (a)
of the Securities Act.

 

(b) Each Grantor recognizes that the Administrative Agent may be unable to
effect a public sale of any or all the Pledged Stock, by reason of certain
prohibitions contained in the Securities Act and applicable state securities
laws or otherwise, and may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers which will be obliged to agree,
among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. Each
Grantor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Administrative
Agent shall be under no obligation to delay a sale of any of the Pledged Stock
for the period of time necessary to permit the Issuer thereof to register such
securities for public sale under the Securities Act, or under applicable state
securities laws, even if such Issuer would agree to do so.

 

(c) Each Grantor agrees to use its best efforts to do or cause to be done all
such other acts as may be necessary to make such sale or sales of all or any
portion of the Pledged Stock pursuant to this Section 6.7 valid and binding and
in compliance with any and all other applicable Requirements of Law. Each
Grantor further agrees that a breach of any of the covenants contained in this
Section 6.7 will cause irreparable injury to the Administrative Agent and the
Lenders, that the Administrative Agent and the Lenders have no adequate remedy
at law in respect of such breach and, as a consequence, that each and every
covenant contained in this Section 6.7 shall be specifically enforceable against
such Grantor, and such Grantor hereby waives and agrees not to assert any
defenses against an action for specific performance of such covenants except for
a defense that no Event of Default has occurred under the Credit Agreement.

 

6.8 Deficiency. Each Grantor shall remain liable for any deficiency if the
proceeds of any sale or other disposition of the Collateral are insufficient to
pay its Obligations and the fees and disbursements of any attorneys employed by
the Administrative Agent or any Lender to collect such deficiency.

 

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disbursements of any attorneys employed by the Administrative Agent or any
Lender to collect such deficiency.

 

SECTION 7. THE ADMINISTRATIVE AGENT

 

7.1 Administrative Agent’s Appointment as Attorney-in-Fact, etc. (a) Each
Grantor hereby irrevocably constitutes and appoints the Administrative Agent and
any officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of such Grantor and in the name of such Grantor or in its own name,
for the purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Agreement, and,
without limiting the generality of the foregoing, each Grantor hereby gives the
Administrative Agent the power and right, on behalf of such Grantor, without
notice to or assent by such Grantor, to do any or all of the following:

 

(i) in the name of such Grantor or its own name, or otherwise, take possession
of and indorse and collect any checks, drafts, notes, acceptances or other
instruments for the payment of moneys due under any Receivable or with respect
to any other Collateral and file any claim or take any other action or
proceeding in any court of law or equity or otherwise deemed appropriate by the
Administrative Agent for the purpose of collecting any and all such moneys due
under any Receivable or with respect to any other Collateral whenever payable;

 

(ii) in the case of any Intellectual Property, execute and deliver, and have
recorded, any and all agreements, instruments, documents and papers as the
Administrative Agent may request to evidence the Administrative Agent’s and the
Lenders’ security interest in such Intellectual Property and the goodwill and
general intangibles of such Grantor relating thereto or represented thereby;

 

(iii) pay or discharge taxes and Liens levied or placed on or threatened against
the Collateral, effect any repairs or any insurance called for by the terms of
this Agreement and pay all or any part of the premiums therefor and the costs
thereof;

 

(iv) execute, in connection with any sale provided for in Section 6.6 or 6.7,
any indorsements, assignments or other instruments of conveyance or transfer
with respect to the Collateral; and

 

(v) (i) direct any party liable for any payment under any of the Collateral to
make payment of any and all moneys due or to become due thereunder directly to
the Administrative Agent or as the Administrative Agent shall direct; (ii) ask
or demand for, collect, and receive payment of and receipt for, any and all
moneys, claims and other amounts due or to become due at any time in respect of
or arising out of any Collateral; (iii) sign and indorse any invoices, freight
or express bills, bills of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications, notices and other documents in connection
with any of the Collateral; (iv) commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any portion thereof and to enforce any other right in
respect of any Collateral; (v) defend any suit, action or proceeding brought
against such Grantor with respect to any Collateral; (vi) settle, compromise or
adjust any such suit, action or proceeding and, in connection therewith, give
such discharges or releases as the Administrative Agent may deem appropriate;
(vii) assign any Copyright, Patent or Trademark (along with the goodwill of the
business to which any such Copyright, Patent or Trademark pertains), throughout
the world for such term or terms, on such conditions, and in such manner, as the
Administrative

 

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Agent shall in its sole discretion determine; and (viii) generally, sell,
transfer, pledge and make any agreement with respect to or otherwise deal with
any of the Collateral as fully and completely as though the Administrative Agent
were the absolute owner thereof for all purposes, and do, at the Administrative
Agent’s option and such Grantor’s expense, at any time, or from time to time,
all acts and things which the Administrative Agent deems necessary to protect,
preserve or realize upon the Collateral and the Administrative Agent’s and the
Lenders’ security interests therein and to effect the intent of this Agreement,
all as fully and effectively as such Grantor might do.

 

Anything in this Section 7.1(a) to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the power
of attorney provided for in this Section 7.1 (a) unless an Event of Default
shall have occurred and be continuing.

 

(b) If any Grantor fails to perform or comply with any of its agreements
contained herein, the Administrative Agent, at its option, but without any
obligation so to do, may perform or comply, or otherwise cause performance or
compliance, with such agreement.

 

(c) The expenses of the Administrative Agent incurred in connection with actions
undertaken as provided in this Section 7.1, together with interest thereon at a
rate per annum equal to the highest rate per annum at which interest would then
be payable on any category of past due ABR Loans under the Credit Agreement,
from the date of payment by the Administrative Agent to the date reimbursed by
the relevant Grantor, shall be payable by such Grantor to the Administrative
Agent on demand.

 

(d) Each Grantor hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof. All powers, authorizations and agencies
contained in this Agreement are coupled with an interest and are irrevocable
until this Agreement is terminated and the security interests created hereby are
released.

 

7.2 Duty of Administrative Agent. The Administrative Agent’s sole duty with
respect to the custody, safekeeping and physical preservation of the Collateral
in its possession, under Section 9-207 of the New York UCC or otherwise, shall
be to deal with it in the same manner as the Administrative Agent deals with
similar property for its own account. Neither the Administrative Agent, any
Lender nor any of their respective officers, directors, employees or agents
shall be liable for failure to demand, collect or realize upon any of the
Collateral or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Collateral upon the request of any Grantor or any
other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof. The powers conferred on the Administrative Agent
and the Lenders hereunder are solely to protect the Administrative Agent’s and
the Lenders’ interests in the Collateral and shall not impose any duty upon the
Administrative Agent or any Lender to exercise any such powers. The
Administrative Agent and the Lenders shall be accountable only for amounts that
they actually receive as a result of the exercise of such powers, and neither
they nor any of their officers, directors, employees or agents shall be
responsible to any Grantor for any act or failure to act hereunder, except for
their own gross negligence or willful misconduct.

 

7.3 Execution of Financing Statements. Pursuant to any applicable law, each
Grantor authorizes the Administrative Agent to file or record financing
statements and other filing or recording documents or instruments with respect
to the Collateral without the signature of such Grantor in such form and in such
offices as the Administrative Agent determines appropriate to perfect the
security interests of the Administrative Agent under this Agreement. Each
Grantor authorizes the Administrative Agent to use the collateral description
“all personal property” in any such financing statements. Each Grantor hereby
ratifies and authorizes the filing by the Administrative Agent of any financing
statement with respect to the Collateral made prior to the date hereof.

 

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7.4 Authority of Administrative Agent. Each Grantor acknowledges that the rights
and responsibilities of the Administrative Agent under this Agreement with
respect to any action taken by the Administrative Agent or the exercise or
non-exercise by the Administrative Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as between the Administrative Agent and the
Lenders, be governed by the Credit Agreement and by such other agreements with
respect thereto as may exist from time to time among them, but, as between the
Administrative Agent and the Grantors, the Administrative Agent shall be
conclusively presumed to be acting as agent for the Lenders with full and valid
authority so to act or refrain from acting, and no Grantor shall be under any
obligation, or entitlement, to make any inquiry respecting such authority.

 

SECTION 8. MISCELLANEOUS

 

8.1 Amendments in Writing. None of the terms or provisions of this Agreement may
be waived, amended, supplemented or otherwise modified except in accordance with
Section 10.1 of the Credit Agreement.

 

8.2 Notices. All notices, requests and demands to or upon the Administrative
Agent or any Grantor hereunder shall be effected in the manner provided for in
Section 10.2 of the Credit Agreement; provided that any such notice, request or
demand to or upon any Guarantor shall be addressed to such Guarantor at its
notice address set forth on Schedule 1.

 

8.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither the
Administrative Agent nor any Lender shall by any act (except by a written
instrument pursuant to Section 8.1), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default. No failure to exercise, nor any delay in
exercising, on the part of the Administrative Agent or any Lender, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Administrative Agent or any Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Administrative Agent or such Lender would otherwise
have on any future occasion. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.

 

8.4 Enforcement Expenses; Indemnification. (a) Each Guarantor agrees to pay or
reimburse each Lender and the Administrative Agent for all its costs and
expenses incurred in collecting against such Guarantor under the guarantee
contained in Section 2 or otherwise enforcing or preserving any rights under
this Agreement and the other Loan Documents to which such Guarantor is a party,
including, without limitation, the fees and disbursements of counsel (including
the allocated fees and expenses of in-house counsel) to each Lender and of
counsel to the Administrative Agent.

 

(b) Each Guarantor agrees to pay, and to save the Administrative Agent and the
Lenders harmless from, any and all liabilities with respect to, or resulting
from any delay in paying, any and all stamp, excise, sales or other taxes which
may be payable or determined to be payable, with respect to any of the
Collateral or in connection with any of the transactions contemplated by this
Agreement.

 

(c) Each Guarantor agrees to pay, and to save the Administrative Agent and the
Lenders harmless from, any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement to the extent the Borrower
would be required to do so pursuant to Section 10.5 of the Credit Agreement.

 

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(d) The agreements in this Section 8.4 shall survive repayment of the
Obligations and all other amounts payable under the Credit Agreement and the
other Loan Documents.

 

8.5 Successors and Assigns. This Agreement shall be binding upon the successors
and assigns of each Grantor and shall inure to the benefit of the Administrative
Agent and the Lenders and their successors and assigns; provided that no Grantor
may assign, transfer or delegate any of its rights or obligations under this
Agreement without the prior written consent of the Administrative Agent.

 

8.6 Set-Off. Each Grantor hereby irrevocably authorizes the Administrative Agent
and each Lender at any time and from time to time while an Event of Default
shall have occurred and be continuing, without notice to such Grantor or any
other Grantor, any such notice being expressly waived by each Grantor, to
set-off and appropriate and apply any and all deposits (general or special, time
or demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by the Administrative Agent or such Lender to or for the credit or the
account of such Grantor, or any part thereof in such amounts as the
Administrative Agent or such Lender may elect, against and on account of the
obligations and liabilities of such Grantor to the Administrative Agent or such
Lender hereunder and claims of every nature and description of the
Administrative Agent or such Lender against such Grantor, in any currency,
whether arising hereunder, under the Credit Agreement, any other Loan Document
or otherwise, as the Administrative Agent or such Lender may elect, whether or
not the Administrative Agent or any Lender has made any demand for payment and
although such obligations, liabilities and claims may be contingent or
unmatured. The Administrative Agent and each Lender shall notify such Grantor
promptly of any such set-off and the application made by the Administrative
Agent or such Lender of the proceeds thereof, provided that the failure to give
such notice shall not affect the validity of such set-off and application. The
rights of the Administrative Agent and each Lender under this Section 8.6 are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which the Administrative Agent or such Lender may have.

 

8.7 Counterparts. This Agreement may be executed by one or more of the parties
to this Agreement on any number of separate counterparts (including by
telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.

 

8.8 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 

8.9 Section Headings. The Section headings used in this Agreement are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.

 

8.10 Integration. This Agreement and the other Loan Documents represent the
agreement of the Grantors, the Administrative Agent and the Lenders with respect
to the subject matter hereof and thereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent or any
Lender relative to subject matter hereof and thereof not expressly set forth or
referred to herein or in the other Loan Documents.

 

8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

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8.12 Submission To Jurisdiction; Waivers. Each Grantor hereby irrevocably and
unconditionally:

 

(a) submits for itself and its property in any legal action or proceeding
relating to this Agreement and the other Loan Documents to which it is a party,
or for recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of the State of New York, the
courts of the United States of America for the Southern District of New York,
and appellate courts from any thereof;

 

(b) consents that any such action or proceeding may be brought in such courts
and waives any objection that it may now or hereafter have to the venue of any
such action or proceeding in any such court or that such action or proceeding
was brought in an inconvenient court and agrees not to plead or claim the same;

 

(c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such Grantor at its
address referred to in Section 8.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto;

 

(d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction; and

 

(e) waives, to the maximum extent not prohibited by law, any right it may have
to claim or recover in any legal action or proceeding referred to in this
Section 8.12 any special, exemplary, punitive or consequential damages.

 

8.13 Acknowledgements. Each Grantor hereby acknowledges that:

 

(a) it has been advised by counsel in the negotiation, execution and delivery of
this Agreement and the other Loan Documents to which it is a party;

 

(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to any Grantor arising out of or in connection with
this Agreement or any of the other Loan Documents, and the relationship between
the Grantors, on the one hand, and the Administrative Agent and Lenders, on the
other hand, in connection herewith or therewith is solely that of debtor and
creditor; and

 

(c) no joint venture is created hereby or by the other Loan Documents or
otherwise exists by virtue of the transactions contemplated hereby among the
Lenders or among the Grantors and the Lenders.

 

8.14 Additional Grantors. Each Subsidiary of a Borrower that is required to
become a party to this Agreement pursuant to subsection 6.9 of the Credit
Agreement shall become a Grantor for all purposes of this Agreement upon
execution and delivery by such Subsidiary of an Assumption Agreement in the form
of Annex 1 hereto.

 

8.15 Releases. (a) At such time as the Loans, the Reimbursement Obligations and
the other then accrued Obligations shall have been paid in full, the Commitments
have been terminated and no Letters of Credit shall be outstanding, the
Collateral shall be released from the Liens created hereby, and this Agreement
and all obligations (other than those expressly stated to survive such
termination) of the Administrative Agent and each Grantor hereunder shall
terminate, all without delivery of any

 

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instrument or performance of any act by any party, and all rights to the
Collateral shall revert to the Grantors. At the request and sole expense of any
Grantor following any such termination, the Administrative Agent shall deliver
to such Grantor any Collateral held by the Administrative Agent hereunder, and
execute and deliver to such Grantor such documents as such Grantor shall
reasonably request to evidence such termination.

 

(a) If any of the Collateral shall be sold, transferred or otherwise disposed of
by any Grantor in a transaction permitted by the Credit Agreement, then the
Administrative Agent, at the request and sole expense of such Grantor, shall
execute and deliver to such Grantor all releases or other documents reasonably
necessary or desirable for the release of the Liens created hereby on such
Collateral. At the request and sole expense of the Borrower, a Subsidiary
Guarantor shall be released from its obligations hereunder in the event that all
the Capital Stock of such Subsidiary Guarantor shall be sold, transferred or
otherwise disposed of in a transaction permitted by the Credit Agreement;
provided that the Borrower shall have delivered to the Administrative Agent, at
least ten Business Days prior to the date of the proposed release, a written
request for release identifying the relevant Subsidiary Guarantor and the terms
of the sale or other disposition in reasonable detail, including the price
thereof and any expenses in connection therewith, together with a certification
by the Borrower stating that such transaction is in compliance with the Credit
Agreement and the other Loan Documents.

 

1.2 WAIVER OF JURY TRIAL. EACH GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

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IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee and
Collateral Agreement to be duly executed and delivered as of the date first
above written.

 

DDI INTERMEDIATE HOLDINGS CORP. By:   /s/    TIMOTHY DONNELLY  

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Title: Vice President and Secretary

 

DDI CAPITAL CORP. By:   /s/    TIMOTHY DONNELLY  

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Title: Vice President, Secretary and Assistant Treasurer

 

DYNAMIC DETAILS, INCORPORATED By:   /s/    TIMOTHY DONNELLY  

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Title: Vice President, Secretary and Assistant Treasurer

 

DYNAMIC DETAILS INCORPORATED, SILICON VALLEY By:   /s/    TIMOTHY DONNELLY  

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Title: Vice President, Secretary and Assistant Treasurer

 

DYNAMIC DETAILS TEXAS, LLC By:   /s/    TIMOTHY DONNELLY  

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Title: Vice President, Secretary and Assistant Treasurer

 

DDI SALES CORP. By:   /s/    TIMOTHY DONNELLY  

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Title: Vice President, Secretary and Assistant Treasurer

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DDI-TEXAS INTERMEDIATE HOLDINGS II, L.L.C. By:   /s/    TIMOTHY DONNELLY  

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Title: Vice President and Secretary

 

DDI-TEXAS INTERMEDIATE PARTNERS II, L.L.C. By:   /s/    TIMOTHY DONNELLY  

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Title: Vice President and Secretary

 

DYNAMIC DETAILS INCORPORATED, COLORADO SPRINGS By:   /s/    TIMOTHY DONNELLY  

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Title: Vice President and Secretary

 

DYNAMIC DETAILS INCORPORATED, VIRGINIA By:   /s/    TIMOTHY DONNELLY  

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Title: Vice President and Secretary

 

DYNAMIC DETAILS, L.P. By:   /s/    TIMOTHY DONNELLY  

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Title: Vice President and Secretary

 

LAMINATE TECHNOLOGY CORP. By:   /s/    TIMOTHY DONNELLY  

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Title: Vice President and Secretary

 

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ACKNOWLEDGEMENT AND CONSENT

 

The undersigned hereby acknowledges receipt of a copy of the Amended and
Restated Guarantee and Collateral Agreement dated as of         , 2003 (the
“Agreement”), made by the Grantors parties thereto for the benefit of JPMorgan
Chase Bank, as Administrative Agent. The undersigned agrees for the benefit of
the Administrative Agent and the Lenders as follows:

 

1. The undersigned will be bound by the terms of the Agreement and will comply
with such terms insofar as such terms are applicable to the undersigned.

 

2. The undersigned will notify the Administrative Agent promptly in writing of
the occurrence of any of the events described in Section 5.7(a) of the
Agreement.

 

3. The terms of Sections 6.3(c) and 6.7 of the Agreement shall apply to it,
mutatis mutandis, with respect to all actions that may be required of it
pursuant to Section 6.3(c) or 6.7 of the Agreement.

 

[NAME OF ISSUER] By      

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Title

     

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Address for Notices:  

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Fax:

     

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Annex 1 to

Guarantee and Collateral Agreement

 

ASSUMPTION AGREEMENT, dated as of                     , 200  , made by
                                , a                              corporation
(the “Additional Grantor”), in favor of JPMORGAN CHASE BANK, as administrative
agent (in such capacity, the “Administrative Agent”) for the banks and other
financial institutions (the “Lenders”) parties to the Credit Agreement referred
to below. All capitalized terms not defined herein shall have the meaning
ascribed to them in such Credit Agreement.

 

W I T N E S S E T H:

 

WHEREAS, Dynamic Details, Incorporated (“Details”), the Lenders and the
Administrative Agent have entered into an amended and restated credit agreement,
dated as of             , 2003 (as amended, supplemented or otherwise modified
from time to time, the “Credit Agreement”);

 

WHEREAS, in connection with the Credit Agreement, the Borrower and certain of
its Affiliates (other than the Additional Grantor) have entered into the Amended
and Restated Guarantee and Collateral Agreement, dated as of             , 2003
(as amended, supplemented or otherwise modified from time to time, the
“Guarantee and Collateral Agreement”) in favor of the Administrative Agent for
the benefit of the Lenders;

 

WHEREAS, the Credit Agreement requires the Additional Grantor to become a party
to the Guarantee and Collateral Agreement; and

 

WHEREAS, the Additional Grantor has agreed to execute and deliver this
Assumption Agreement in order to become a party to the Guarantee and Collateral
Agreement;

 

NOW, THEREFORE, IT IS AGREED:

 

1. Guarantee and Collateral Agreement. By executing and delivering this
Assumption Agreement, the Additional Grantor, as provided in Section 8.14 of the
Guarantee and Collateral Agreement, hereby becomes a party to the Guarantee and
Collateral Agreement as a Grantor thereunder with the same force and effect as
if originally named therein as a Grantor and, without limiting the generality of
the foregoing, hereby expressly assumes all obligations and liabilities of a
Grantor thereunder. The information set forth in Annex 1-A hereto is hereby
added to the information set forth in Schedules                  **** to the
Guarantee and Collateral Agreement. The Additional Grantor hereby represents and
warrants that each of the representations and warranties contained in Section 4
of the Guarantee and Collateral Agreement is true and correct on and as the date
hereof (after giving effect to this Assumption Agreement) as if made on and as
of such date.

 

2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to be
duly executed and delivered as of the date first above written.

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**** Refer to each Schedule which needs to be supplemented.

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[ADDITIONAL GRANTOR] By:      

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Name:

Title:

 

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