EX – 10.3

 

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

 

CREDIT AGREEMENT

 

dated as of March 30, 2004

 

among

 

DYNAMIC DETAILS, INCORPORATED,

DYNAMIC DETAILS INCORPORATED, VIRGINIA

DYNAMIC DETAILS INCORPORATED, SILICON VALLEY

LAMINATE TECHNOLOGY CORP.

 

as Borrowers,

 

THE OTHER CREDIT PARTIES SIGNATORY HERETO,

 

as Credit Parties,

 

THE LENDERS SIGNATORY HERETO

FROM TIME TO TIME,

 

as Lenders,

 

and

GENERAL ELECTRIC CAPITAL CORPORATION,

as Agent and Lender

 

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

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

TABLE OF CONTENTS

 

               Page

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

1.

   A MOUNT AND TERMS OF CREDIT    1      1.1    Credit Facilities.    1      1.2
   Letters of Credit    4      1.3    Prepayments.    4      1.4    Use of
Proceeds    6      1.5    Interest.    7      1.6    Eligible Accounts    9     
1.7    [INTENTIONALLY OMITTED]    11      1.8    Cash Management System    11  
   1.9    Fees.    11      1.10    Receipt of Payments    12      1.11   
Application and Allocation of Payments.    12      1.12    Loan Account and
Accounting    13      1.13    Indemnity.    13      1.14    Access.    15     
1.15    Taxes.    15      1.16    Capital Adequacy; Increased Costs; Illegality.
   16      1.17    Single Loan    18

2.

   CONDITIONS PRECEDENT    18      2.1    Conditions to the Initial Loans    18
     2.2    Further Conditions to Each Loan    19

3.

   REPRESENTATIONS AND WARRANTIES    20      3.1    Corporate Existence;
Compliance with Law    20      3.2    Executive Offices, Collateral Locations,
FEIN    20      3.3    Corporate Power, Authorization, Enforceable Obligations
   20      3.4    Financial Statements and Projections    21      3.5   
Material Adverse Effect    22      3.6    Ownership of Property; Liens    22  
   3.7    Labor Matters    23      3.8    Ventures, Subsidiaries and Affiliates;
Outstanding Stock and Indebtedness    23      3.9    Government Regulation    23
     3.10    Margin Regulations    23      3.11    Taxes    24      3.12   
ERISA.    24      3.13    No Litigation    25      3.14    Brokers    25     
3.15    Intellectual Property    25      3.16    Full Disclosure    25      3.17
   Environmental Matters.    26      3.18    Insurance    27

 

i

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

     3.19    Deposit and Disbursement Accounts    27      3.20    Government
Contracts    27      3.21    Customer and Trade Relations    27      3.22   
Bonding; Licenses    27      3.23    Solvency    27

4.

   FINANCIAL STATEMENTS AND INFORMATION    27      4.1    Reports and Notices.
   27      4.2    Communication with Accountants    28

5.

   AFFIRMATIVE COVENANTS    28      5.1    Maintenance of Existence and Conduct
of Business    28      5.2    Payment of Charges.    28      5.3    Books and
Records    29      5.4    Insurance; Damage to or Destruction of Collateral.   
29      5.5    Compliance with Laws    30      5.6    Supplemental Disclosure   
30      5.7    Intellectual Property    31      5.8    Environmental Matters   
31      5.9    Landlords’ Agreements, Mortgagee Agreements, Bailee Letters and
Real Estate Purchases    31      5.10    Further Assurances    32

6.

   NEGATIVE COVENANTS    32      6.1    Mergers, Subsidiaries, Etc    32     
6.2    Investments; Loans and Advances    35      6.3    Indebtedness.    35  
   6.4    Employee Loans and Affiliate Transactions.    37      6.5    Capital
Structure and Business    37      6.6    Guaranteed Indebtedness    38      6.7
   Liens    38      6.8    Sale of Stock and Assets    38      6.9    ERISA   
38      6.10    Financial Covenants    38      6.11    Hazardous Materials    38
     6.12    Sale-Leasebacks    39      6.13    Restricted Payments    39     
6.14    Change of Corporate Name; State of Organization, Location or Fiscal Year
   40      6.15    No Impairment of Intercompany Transfers    41      6.16   
Restrictions Affecting Senior Accreting Notes    41

7.

   TERM    41      7.1    Termination    41      7.2    Survival of Obligations
Upon Termination of Financing Arrangements    41

8.

   EVENTS OF DEFAULT; RIGHTS AND REMEDIES    42      8.1    Events of Default   
42

 

ii

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

     8.2    Remedies.    43      8.3    Waivers by Credit Parties    44

9.

   ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT    44      9.1   
Assignment and Participations.    44      9.2    Appointment of Agent    46     
9.3    Agent’s Reliance, Etc    47      9.4    GE Capital and Affiliates    47  
   9.5    Lender Credit Decision    48      9.6    Indemnification    48     
9.7    Successor Agent    48      9.8    Setoff and Sharing of Payments    49  
   9.9    Advances; Payments; Non-Funding Lenders; Information; Actions in
Concert.    50

10.

   SUCCESSORS AND ASSIGNS    52

11.

   MISCELLANEOUS    52      11.1    Complete Agreement; Modification of
Agreement    52      11.2    Amendments and Waivers.    52      11.3    Fees and
Expenses    54      11.4    No Waiver    56      11.5    Remedies    56     
11.6    Severability    56      11.7    Conflict of Terms    56      11.8   
Confidentiality    56      11.9    GOVERNING LAW    57      11.10    Notices   
57      11.11    Section Titles    58      11.12    Counterparts    58     
11.13    WAIVER OF JURY TRIAL    58      11.14    Press Releases and Related
Matters    58      11.15    Reinstatement    59      11.16    Advice of Counsel
   59      11.17    No Strict Construction    59

12.

   CROSS-GUARANTY    59      12.1    Cross-Guaranty    59      12.2    Waivers
by Borrowers    60      12.3    Benefit of Guaranty    60      12.4    Waiver of
Subrogation, Etc    60      12.5    Election of Remedies    60      12.6   
Limitation    61      12.7    Contribution with Respect to Guaranty Obligations.
   61      12.8    Liability Cumulative    62

 

iii

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

INDEX OF APPENDICES

 

Annex A (Recitals)

   -    Definitions

Annex B (Section 1.2)

   -    Letters of Credit

Annex C (Section 1.8)

   -    Cash Management System

Annex D (Section 2.1(a))

   -    Schedule of Documents

Annex E (Section 4.1(a))

   -    Financial Statements and Projections - Reporting

Annex F (Section 4.1(b))

   -    Collateral Reports

Annex G (Section 6.10)

   -    Financial Covenants

Annex H (Section 9.9(a))

   -    Lenders’ Wire Transfer Information

Annex I (Section 11.10)

   -    Notice Addresses

Annex J (from Annex A-Commitments definition)

   -    Commitments as of Closing Date

Exhibit 1.1(a)(i)

   -    Form of Notice of Revolving Credit Advance

Exhibit 1.1(a)(ii)

   -    Form of Revolving Note

Exhibit 1.1(b)(ii)

   -    Form of Swing Line Note

Exhibit 1.5(e)

   -    Form of Notice of Conversion/Continuation

Exhibit 4.1(b)

   -    Form of Borrowing Base Certificate

Exhibit 9.1(a)

   -    Form of Assignment Agreement

Exhibit B-1

   -    Master Agreement for Standby Letters of Credit

Exhibit B-2

   -    Master Agreement for Documentary Letters of Credit

Schedule 1.1

   -    Agent’s Representatives

Disclosure Schedule 1.4

   -    Sources and Uses; Funds Flow Memorandum

Disclosure Schedule 3.1

   -    Type of Entity; State of Organization

Disclosure Schedule 3.2

   -    Executive Offices, Collateral Locations, FEIN

Disclosure Schedule 3.4(a)

   -    Financial Statements

Disclosure Schedule 3.4(b)

   -    Projections

Disclosure Schedule 3.6

   -    Real Estate and Leases

Disclosure Schedule 3.7

   -    Labor Matters

Disclosure Schedule 3.8

   -    Ventures, Subsidiaries and Affiliates; Stock

Disclosure Schedule 3.11

   -    Tax Matters

Disclosure Schedule 3.12

   -    ERISA Plans

Disclosure Schedule 3.13

   -    Litigation

Disclosure Schedule 3.14

   -    Brokers

Disclosure Schedule 3.15

   -    Intellectual Property

Disclosure Schedule 3.17

   -    Hazardous Materials

Disclosure Schedule 3.18

   -    Insurance

Disclosure Schedule 3.19

   -    Deposit and Disbursement Accounts

Disclosure Schedule 3.20

   -    Government Contracts

Disclosure Schedule 3.22

   -    Bonds; Patent, Trademark Licenses

Disclosure Schedule 5.1

   -    Trade Names

Disclosure Schedule 6.3

   -    Indebtedness

Disclosure Schedule 6.4(a)

   -    Transactions with Affiliates

Disclosure Schedule 6.7

   -    Existing Liens

 

 

iv

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

CREDIT AGREEMENT (“Agreement”) dated as of March 30, 2004, among DYNAMIC
DETAILS, INCORPORATED, a California corporation (“Details”), DYNAMIC DETAILS,
INCORPORATED, VIRGINIA, a Delaware corporation (“Virginia”), DYNAMIC DETAILS
INCORPORATED, SILICON VALLEY, a Delaware corporation “Valley”), and LAMINATE
TECHNOLOGY CORP., a Delaware corporation (“Laminate”) (Details, Virginia, Valley
and Laminate are collectively referred to as “Borrowers” and each individually
as a “Borrower”); the other Credit Parties signatory hereto; GENERAL ELECTRIC
CAPITAL CORPORATION, a Delaware corporation (in its individual capacity, “GE
Capital”), for itself, as Lender, and as Agent for Lenders, and the other
Lenders signatory hereto from time to time.

 

RECITALS

 

A. Borrowers have requested that Lenders provide a revolving credit facility to
Borrower of up to Forty Million Dollars ($40,000,000) in the aggregate for the
purpose of refinancing certain indebtedness of Borrowers and to provide (a)
working capital financing for Borrowers, (b) funds for other general corporate
purposes of Borrowers and (c) funds for other purposes permitted hereunder; and
for these purposes, Lenders are willing to make certain loans and other
extensions of credit to Borrowers of up to such amount upon the terms and
conditions set forth herein.

 

B. Borrowers have agreed to secure all of their obligations under the Loan
Documents by granting to Agent, for the benefit of Agent and Lenders, a security
interest in and lien upon all of their existing and after-acquired personal and
real property.

 

C. Capitalized terms used in this Agreement shall have the meanings ascribed to
them in Annex A and, for purposes of this Agreement and the other Loan
Documents, the rules of construction set forth in Annex A shall govern. All
Annexes, Disclosure Schedules, Exhibits and other attachments (collectively,
“Appendices”) hereto, or expressly identified to this Agreement, are
incorporated herein by reference, and taken together with this Agreement, shall
constitute but a single agreement. These Recitals shall be construed as part of
the Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, and for other good and valuable consideration, the
parties hereto agree as follows:

 

1. AMOUNT AND TERMS OF CREDIT

 

1.1 Credit Facilities.

 

(a) Revolving Credit Facility.

 

(i) Subject to the terms and conditions hereof, each Revolving Lender agrees to
make available to Borrowers from time to time until the Commitment Termination
Date its Pro Rata Share of advances (each, a “Revolving Credit Advance”). The
Pro Rata Share of the Revolving Loan of any Revolving Lender shall not at any
time exceed its separate Revolving Loan Commitment. The obligations of each
Revolving Lender hereunder shall be

 

1

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

several and not joint. Until the Commitment Termination Date, Borrowers may
borrow, repay and reborrow under this Section 1.1(a); provided, that the amount
of any Revolving Credit Advance to be made at any time shall not exceed
Borrowing Availability at such time. Borrowing Availability may be reduced by
Reserves imposed by Agent in its reasonable credit judgment. Each Revolving
Credit Advance shall be made on notice by Borrower Representative on behalf of
the applicable Borrower to one of the representatives of Agent identified in
Schedule 1.1 at the address specified therein. Any such notice must be given no
later than (1) 1:00 p.m. (New York time) on the Business Day of the proposed
Revolving Credit Advance, in the case of an Index Rate Loan, or (2) 1:00 p.m.
(New York time) on the date which is two Business Days prior to the proposed
Revolving Credit Advance, in the case of a LIBOR Loan. Each such notice (a
”Notice of Revolving Credit Advance”) must be given in writing (by telecopy or
overnight courier) substantially in the form of Exhibit 1.1(a)(i), and shall
include the information required in such Exhibit and such other information as
may be required by Agent. If Borrower desires to have the Revolving Credit
Advances bear interest by reference to a LIBOR Rate, Borrower Representative
must comply with Section 1.5(e).

 

(ii) Except as provided in Section 1.12, each Borrower shall execute and deliver
to each Revolving Lender a note to evidence the Revolving Loan Commitment of
that Revolving Lender. Each note shall be in the principal amount of the
Revolving Loan Commitment of the applicable Revolving Lender, dated the Closing
Date and substantially in the form of Exhibit 1.1(a)(ii) (each a “Revolving
Note” and, collectively, the “Revolving Notes”). Each Revolving Note shall
represent the joint and several obligations of Borrowers to pay the amount of
the applicable Revolving Lender’s Revolving Loan Commitment or, if less, such
Revolving Lender’s Pro Rata Share of the aggregate unpaid principal amount of
all Revolving Credit Advances to Borrowers together with interest thereon as
prescribed in Section 1.5. The entire unpaid balance of the Revolving Loan and
all other non-contingent Obligations shall be immediately due and payable in
full in immediately available funds on the Commitment Termination Date.

 

(b) Swing Line Facility.

 

(i) Agent shall notify the Swing Line Lender upon Agent’s receipt of any Notice
of Revolving Credit Advance. Subject to the terms and conditions hereof, the
Swing Line Lender may, in its discretion, make available from time to time until
the Commitment Termination Date advances (each, a “Swing Line Advance”) in
accordance with any such notice. The provisions of this Section 1.1(b) shall not
relieve Revolving Lenders of their obligations to make Revolving Credit Advances
under Section 1.1(a); provided, that if the Swing Line Lender makes a Swing Line
Advance pursuant to any such notice, such Swing Line Advance shall be in lieu of
any Revolving Credit Advance that otherwise may be made by Revolving Credit
Lenders pursuant to such notice. The aggregate amount of Swing Line Advances
outstanding shall not exceed at any time the lesser of (A) the Swing Line
Commitment and (B) the lesser of the Maximum Amount and the Aggregate Borrowing
Base, in each case, less the outstanding balance of the Revolving Loan at such
time (“Swing Line Availability”). Until the Commitment Termination Date,
Borrowers may from time to time borrow, repay and reborrow under this Section
1.1(b). Each Swing Line Advance shall be made pursuant to a Notice of Revolving
Credit Advance delivered to Agent by Borrower Representative on behalf of the
applicable Borrower in accordance with Section 1.1(a). Any such notice must be
given no later than 1:00 p.m.

 

2

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

(New York time) on the Business Day of the proposed Swing Line Advance. Unless
the Swing Line Lender has received at least one Business Day’s prior written
notice from Requisite Revolving Lenders instructing it not to make a Swing Line
Advance, the Swing Line Lender shall, notwithstanding the failure of any
condition precedent set forth in Sections 2.2, be entitled to fund that Swing
Line Advance, and to have each Revolving Lender make Revolving Credit Advances
in accordance with Section 1.1(b)(iii) or purchase participating interests in
accordance with Section 1.1(b)(iv). Notwithstanding any other provision of this
Agreement or the other Loan Documents, the Swing Line Loan shall constitute an
Index Rate Loan. Borrowers shall repay the aggregate outstanding principal
amount of the Swing Line Loan upon demand therefor by Agent.

 

(ii) Borrowers shall execute and deliver to the Swing Line Lender a promissory
note to evidence the Swing Line Commitment, which note shall be in the principal
amount of the Swing Line Commitment of the Swing Line Lender, dated the Closing
Date and substantially in the form of Exhibit 1.1(b)(ii) (each a “Swing Line
Note,” and collectively the “Swing Line Notes”). The Swing Line Note shall
represent the joint and several obligations of Borrowers to pay the amount of
the Swing Line Commitment or, if less, the aggregate unpaid principal amount of
all Swing Line Advances made to Borrowers together with interest thereon as
prescribed in Section 1.5. The entire unpaid balance of the Swing Line Loan and
all other noncontingent Obligations shall be immediately due and payable in full
in immediately available funds on the Commitment Termination Date if not sooner
paid in full.

 

(iii) The Swing Line Lender, at any time and from time to time no less
frequently than once weekly, shall on behalf of any Borrower (and each Borrower
hereby irrevocably authorizes the Swing Line Lender to so act on its behalf)
request each Revolving Lender (including the Swing Line Lender) to make a
Revolving Credit Advance to each Borrower (which shall be an Index Rate Loan) in
an amount equal to that Revolving Lender’s Pro Rata Share of the principal
amount of the applicable Borrower’s Swing Line Loan (the “Refunded Swing Line
Loan”) outstanding on the date such notice is given. Unless any of the events
described in Sections 8.1(h) or 8.1(i) has occurred (in which event the
procedures of Section 1.1(b)(iv) shall apply) and regardless of whether the
conditions precedent set forth in this Agreement to the making of a Revolving
Credit Advance are then satisfied, each Revolving Lender shall disburse directly
to Agent, its Pro Rata Share of a Revolving Credit Advance on behalf of the
Swing Line Lender, prior to 3:00 p.m. (New York time), in immediately available
funds on the Business Day next succeeding the date that notice is given. The
proceeds of those Revolving Credit Advances shall be immediately paid to the
Swing Line Lender and applied to repay the Refunded Swing Line Loan of the
applicable Borrower.

 

(iv) If, prior to refunding a Swing Line Loan with a Revolving Credit Advance
pursuant to Section 1.1(b)(iii), one of the events described in Sections 8.1(h)
or 8.1(i) has occurred, then, subject to the provisions of Section 1.1(b)(v),
each Revolving Lender shall, on the date such Revolving Credit Advance was to
have been made for the benefit of the applicable Borrower, purchase from the
Swing Line Lender an undivided participation interest in the Swing Line Loan to
such Borrower in an amount equal to its Pro Rata Share of such Swing Line Loan.
Upon request, each Revolving Lender shall promptly transfer to the Swing Line
Lender, in immediately available funds, the amount of its participation
interest.

 

3

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

(v) Each Revolving Lender’s obligation to make Revolving Credit Advances in
accordance with Section 1.1(b)(iii) and to purchase participation interests in
accordance with Section 1.1(b)(iv) shall be absolute and unconditional and shall
not be affected by any circumstance, including (A) any setoff, counterclaim,
recoupment, defense or other right that such Revolving Lender may have against
the Swing Line Lender, any Borrower or any other Person for any reason
whatsoever; (B) the occurrence or continuance of any Default or Event of
Default; (C) any inability of Borrower to satisfy the conditions precedent to
borrowing set forth in this Agreement at any time or (D) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing.
If any Revolving Lender does not make available to Agent or the Swing Line
Lender, as applicable, the amount required pursuant to Sections 1.1(b)(iii) or
1.1(b)(iv), as the case may be, the Swing Line Lender shall be entitled to
recover such amount on demand from such Revolving Lender, together with interest
thereon for each day from the date of non-payment until such amount is paid in
full at the Federal Funds Rate for the first two Business Days and at the Index
Rate thereafter.

 

(c) Reliance on Notices; Appointment of Borrower Representative. Agent shall be
entitled to rely upon, and shall be fully protected in relying upon, any Notice
of Revolving Credit Advance, Notice of Conversion/Continuation or similar notice
believed by Agent to be genuine. Agent may assume that each Person executing and
delivering any notice in accordance herewith was duly authorized, unless the
responsible individual acting thereon for Agent has actual knowledge to the
contrary. Each Borrower hereby designates Borrower Representative as its
representative and agent on its behalf for the purposes of issuing Notices of
Revolving Credit Advances and Notices of Conversion/Continuation, giving
instructions with respect to the disbursement of the proceeds of the Loans,
selecting interest rate options, requesting Letters of Credit, giving and
receiving all other notices and consents hereunder or under any of the other
Loan Documents and taking all other actions (including in respect of compliance
with covenants) on behalf of any Borrower or Borrowers under the Loan Documents.
Borrower Representative hereby accepts such appointment. Agent and each Lender
may regard any notice or other communication pursuant to any Loan Document from
Borrower Representative as a notice or communication from all Borrowers, and may
give any notice or communication required or permitted to be given to any
Borrower or Borrowers hereunder to Borrower Representative on behalf of such
Borrower or Borrowers. Each Borrower agrees that each notice, election,
representation and warranty, covenant, agreement and undertaking made on its
behalf by Borrower Representative shall be deemed for all purposes to have been
made by such Borrower and shall be binding upon and enforceable against such
Borrower to the same extent as if the same had been made directly by such
Borrower.

 

1.2 Letters of Credit. Subject to and in accordance with the terms and
conditions contained herein and in Annex B, Borrower Representative, on behalf
of the applicable Borrower, shall have the right to request, and Revolving
Lenders agree to incur, or purchase participations in, Letter of Credit
Obligations in respect of each Borrower.

 

1.3 Prepayments.

 

(a) Voluntary Prepayments. Borrowers may at any time on at least five days’
prior written notice by Borrower Representative to Agent permanently reduce (but
not terminate) the Revolving Loan Commitment; provided, that (i) any such
reductions shall be in a minimum

 

4

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

amount of $5,000,000 and integral multiples of $250,000 in excess of such
amount, (ii) the Revolving Loan Commitment shall not be reduced to an amount
less than the amount of the Revolving Loan then outstanding, and (C) after
giving effect to such reductions, Borrowers shall comply with Section 1.3(b)(i).
In addition, Borrowers may at any time on at least ten days’ prior written
notice by Borrower Representative to Agent terminate the Revolving Loan
Commitment; provided, that upon such termination, all Loans and other
Obligations shall be immediately due and payable in full and all Letter of
Credit Obligations shall be cash collateralized or otherwise satisfied in
accordance with Annex B. Any such voluntary reduction or termination of the
Revolving Loan Commitment must be accompanied by the payment of the Fee required
by Section 1.9(c), if any, plus the payment of any LIBOR funding breakage costs
in accordance with Section 1.13(b). Upon any such reduction or termination of
the Revolving Loan Commitment, each Borrower’s right to request Revolving Credit
Advances, or request that Letter of Credit Obligations be incurred on its
behalf, or request Swing Line Advances, shall simultaneously be permanently
reduced or terminated, as the case may be; provided, that a permanent reduction
of the Revolving Loan Commitment shall require a corresponding pro rata
reduction in the L/C Sublimit.

 

(b) Mandatory Prepayments.

 

(i) If at any time the outstanding balances of the Revolving Loan and the Swing
Line Loan exceed the lesser of (A) the Maximum Amount and (B) the Aggregate
Borrowing Base, Borrowers shall immediately repay the aggregate outstanding
Revolving Credit Advances to the extent required to eliminate such excess. If
any such excess remains after repayment in full of the aggregate outstanding
Revolving Credit Advances, Borrowers shall provide cash collateral for the
Letter of Credit Obligations in the manner set forth in Annex B to the extent
required to eliminate such excess.

 

(ii) Within five Business Days of receipt (or at all times following the
occurrence of an Dominion Activation Event, immediately upon receipt) by any
Credit Party of any cash proceeds of any asset disposition (including as a
result of permitted sale/leaseback transactions under Section 6.12), Borrowers
shall prepay the Loans in an amount equal to all such proceeds, net of (A)
commissions and other reasonable and customary transaction costs, fees and
expenses properly attributable to such transaction and payable by Borrowers in
connection therewith (in each case, paid to non-Affiliates), (B) transfer taxes,
(C) amounts payable to holders of senior Liens on such asset (to the extent such
Liens constitute Permitted Encumbrances hereunder), if any, (D) an appropriate
reserve for income taxes in accordance with GAAP in connection therewith, and
(E) so long as no Dominion Activation Event has occurred, the amount of any
voluntary reductions in the Revolving Loan Commitment made pursuant to Section
1.3(a) during the immediately preceding 12 months. Any such prepayment shall be
applied in accordance with Section 1.3(c). So long as no Dominion Activation
Event has occurred, the following shall not be subject to mandatory prepayment
under this clause (ii): (1) proceeds of sales of Inventory in the ordinary
course of business; (2) asset disposition proceeds of less than $300,000 in the
aggregate in any Fiscal Year; (3) proceeds not to exceed $500,000 in the
aggregate in any Fiscal Year from the disposition of property or assets,
including Intellectual Property, that are no longer used or useful in the
ordinary course of business; (4) asset disposition proceeds, and insurance
recovery and condemnation proceeds that are reinvested in Equipment, Fixtures or
Real Estate within 180 days following receipt thereof,

 

5

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

provided that Borrower notifies Agent of its intent to reinvest at the time such
proceeds are received and when such reinvestment occurs; and (5) proceeds of
asset dispositions allowed under Section 6.8(e).

 

(iii) If any Borrower or Subsidiary Guarantor issues Stock, no later than the
Business Day following the date of receipt of the proceeds thereof, Borrowers
shall prepay the Loans (and cash collateralize Letter of Credit Obligations) in
an amount equal to all such proceeds, net of underwriting discounts and
commissions and other reasonable costs paid to non-Affiliates in connection
therewith. Any such prepayment shall be applied in accordance with Section
1.3(c).

 

(c) Application of Certain Mandatory Prepayments. Any prepayments made by any
Borrower pursuant to Sections 1.3(b)(ii) or (b)(iii) shall be applied as
follows: first, to Fees and reimbursable expenses of Agent then due and payable
pursuant to any of the Loan Documents; second, to interest then due and payable
on that Borrower’s Swing Line Loan; third, to the principal balance of that
Borrower’s Swing Line Loan until the same has been repaid in full; fourth, to
interest then due and payable on the Revolving Credit Advances to that Borrower;
fifth, to the outstanding principal balance of Revolving Credit Advances made to
that Borrower until the same has been paid in full; sixth, to any Letter of
Credit Obligations of that Borrower, to provide cash collateral therefor in the
manner set forth in Annex B, until all such Letter of Credit Obligations have
been fully cash collateralized in the manner set forth in Annex B; seventh, to
interest then due and payable on the Swing Line Loan of each other Borrower, pro
rata; eighth, to the principal balances of the Swing Line Loan outstanding to
each other Borrower, pro rata, until the same have been repaid in full; ninth,
to interest then due and payable on the Revolving Credit Advances outstanding to
each other Borrower, pro rata; tenth, to the principal balance of the Revolving
Credit Advances made to each other Borrower, pro rata, until the same has been
paid in full, and last, to any Letter of Credit Obligations of each other
Borrower, pro rata, to provide cash collateral therefore in the manner set forth
in Annex B, until all such Letter of Credit Obligations have been fully cash
collateralized. Neither the Revolving Loan Commitment nor the Swing Line
Commitment shall be permanently reduced by the amount of any such prepayments
listed in Section 1.3.

 

(d) Application of Prepayments from Insurance and Condemnation Proceeds.
Prepayments from insurance or condemnation proceeds in accordance with Section
5.4(c) shall be applied first, to the Swing Line Loans, and second, to the
Revolving Credit Advances. Neither the Revolving Loan Commitment nor the Swing
Line Loan Commitment shall be permanently reduced by the amount of any such
prepayments.

 

(e) No Implied Consent. Nothing in this Section 1.3 shall be construed to
constitute Agent’s or any Lender’s consent to any transaction that is not
permitted by other provisions of this Agreement or the other Loan Documents.

 

1.4 Use of Proceeds. Borrowers shall utilize the proceeds of the Loans solely
for the Refinancing (and to pay any related transaction expenses), and for the
financing of Borrowers’ ordinary working capital and general corporate needs.
Disclosure Schedule (1.4) contains a description of Borrowers’ sources and uses
of funds as of the Closing Date, including Loans and Letter of Credit
Obligations to be made or incurred on that date, and a funds flow memorandum
detailing how funds from each source are to be transferred to particular uses.

 

6

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

1.5 Interest.

 

(a) Borrowers shall pay interest to Agent, for the ratable benefit of Lenders in
accordance with the various Loans being made by each Lender, in arrears on each
applicable Interest Payment Date, at the following rates: (i) with respect to
the Revolving Credit Advances, the Index Rate plus the Applicable Revolver Index
Margin per annum or, at the election of Borrower Representative, the applicable
LIBOR Rate plus the Applicable Revolver LIBOR Margin per annum; and (ii) with
respect to the Swing Line Loan, the Index Rate plus the Applicable Revolver
Index Margin per annum.

 

As of the Closing Date, the Applicable Margins are as follows:

 

Applicable Revolver Index Margin

   3.00 %

Applicable Revolver LIBOR Margin

   4.00 %

Applicable L/C Margin

   4.00 %

 

The Applicable Margins may be adjusted by reference to the following grids:

 

If as of the end of any Fiscal

Month EBITDA of Borrowers

and their Subsidiaries for the

last 12 Fiscal Months is:

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

   Applicable
Revolver Index
Margin is:

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

    Applicable
Revolver LIBOR
Margin is:

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

    Applicable L/C
Margin is:

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

 

< $35,000,000

   3.00 %   4.00 %   4.00 %

> $35,000,000 but

< $40,000,000

   2.75 %   3.75 %   3.75 %

> $40,000,000 but

< $45,000,000

   2.50 %   3.50 %   3.50 %

> $45,000,000 but

< $50,000,000

   2.25 %   3.25 %   3.25 %

> $50,000,000

   2.00 %   3.00 %   3.00 %

 

Adjustments in the Applicable Margins will commence with the Fiscal Quarter
ending March 31, 2005, and thereafter will be implemented quarterly on a
prospective basis, for each calendar month, at least five days after the date of
delivery to Agent of the quarterly unaudited Financial Statements evidencing the
need for an adjustment; provided, that no such adjustments will take effect
until the date Agent receives Borrowers’ annual audited Financial Statements for
the Fiscal Year ending December 31, 2004. Concurrently with the delivery of the
quarterly Financial Statements, Borrowers shall deliver to Agent a certificate,
signed by the chief financial officer of Details, setting forth in reasonable
detail the basis for the continuance of, or any

 

7

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

change in, the Applicable Margins. Failure to timely deliver such Financial
Statements shall, in addition to any other remedy provided for in this
Agreement, result in an increase in the Applicable Margins to the highest level
set forth in the foregoing grid, until the first day of the first calendar month
following the delivery of those Financial Statements demonstrating that such an
increase is not required. If an Event of Default has occurred and is continuing
at the time any reduction in the Applicable Margins is to be implemented, that
reduction shall be deferred until the first day of the first calendar month
following the date on which such Event of Default is waived or cured.

 

(b) If any payment on any Loan becomes due and payable on a day other than a
Business Day, the maturity thereof will be extended to the next succeeding
Business Day (except as set forth in the definition of LIBOR Period) and, with
respect to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension.

 

(c) All computations of Fees calculated on a per annum basis and interest shall
be made by Agent on the basis of a 360-day year, in each case for the actual
number of days occurring in the period for which such interest and Fees are
payable. The Index Rate is a floating rate determined for each day. Each
determination by Agent of an interest rate and Fees hereunder shall be
presumptive evidence of the correctness of such rates and Fees.

 

(d) So long as an Event of Default has occurred and is continuing under Section
8.1(a), (h) or (i), or so long as any other Event of Default has occurred and is
continuing and at the election of Requisite Lenders confirmed by written notice
from Agent to Borrower Representative, the interest rates applicable to the
Loans and the Letter of Credit Fees shall be increased by two percentage points
(2%) per annum above the rates of interest or the rate of such Fees otherwise
applicable hereunder unless Agent or Requisite Lenders elect to impose a smaller
increase (the “Default Rate”), and all outstanding Obligations shall bear
interest at the Default Rate applicable to such Obligations. Interest and Letter
of Credit Fees at the Default Rate shall accrue from the initial date of such
Event of Default until that Event of Default is cured or waived and shall be
payable upon demand.

 

(e) Subject to the conditions precedent set forth in Section 2.2, Borrower
Representative shall have the option to (i) request that any Revolving Credit
Advance be made as a LIBOR Loan, (ii) convert at any time all or any part of
outstanding Loans (other than the Swing Line Loan) from Index Rate Loans to
LIBOR Loans, (iii) convert any LIBOR Loan to an Index Rate Loan, subject to
payment of LIBOR breakage costs in accordance with Section 1.13(b) if such
conversion is made prior to the expiration of the LIBOR Period applicable
thereto, or (iv) continue all or any portion of any Loan (other than the Swing
Line Loan) as a LIBOR Loan upon the expiration of the applicable LIBOR Period
and the succeeding LIBOR Period of that continued Loan shall commence on the
first day after the last day of the LIBOR Period of the Loan to be continued.
Any Loan or group of Loans having the same proposed LIBOR Period to be made or
continued as, or converted into, a LIBOR Loan must be in a minimum amount of
$1,000,000 and integral multiples of $500,000 in excess of such amount. Any such
election must be made by 1:00 p.m. (New York time) on the second Business Day
prior to (1) the date of any proposed Advance which is to bear interest at the
LIBOR Rate, (2) the end of each LIBOR Period with respect to any LIBOR Loans to
be continued as such, or (3) the date on which Borrower Representative wishes to
convert any Index Rate Loan to a

 

8

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

LIBOR Loan for a LIBOR Period designated by Borrower Representative in such
election. If no election is received with respect to a LIBOR Loan by 1:00 p.m.
(New York time) on the second Business Day prior to the end of the LIBOR Period
with respect thereto (or if a Default or an Event of Default has occurred and is
continuing or if the additional conditions precedent set forth in Section 2.2
shall not have been satisfied), that LIBOR Loan shall be converted to an Index
Rate Loan at the end of its LIBOR Period. Borrower Representative must make such
election by notice to Agent in writing, by telecopy or overnight courier. In the
case of any conversion or continuation, such election must be made pursuant to a
written notice (a “Notice of Conversion/Continuation”) in the form of Exhibit
1.5(e).

 

(f) Notwithstanding anything to the contrary set forth in this Section 1.5, if a
court of competent jurisdiction determines in a final order that the rate of
interest payable hereunder exceeds the highest rate of interest permissible
under law (the “Maximum Lawful Rate”), then so long as the Maximum Lawful Rate
would be so exceeded, the rate of interest payable hereunder shall be equal to
the Maximum Lawful Rate; provided, that if at any time thereafter the rate of
interest payable hereunder is less than the Maximum Lawful Rate, Borrowers shall
continue to pay interest hereunder at the Maximum Lawful Rate until such time as
the total interest received by Agent, on behalf of Lenders, is equal to the
total interest that would have been received had the interest rate payable
hereunder been (but for the operation of this paragraph) the interest rate
payable since the Closing Date as otherwise provided in this Agreement. In no
event shall the total interest received by any Lender pursuant to the terms
hereof exceed the amount that such Lender could lawfully have received had the
interest due hereunder been calculated for the full term hereof at the Maximum
Lawful Rate.

 

1.6 Eligible Accounts. All of the Accounts owned by each Borrower and reflected
in the most recent Borrowing Base Certificate delivered by Borrower
Representative to Agent shall be “Eligible Accounts” for purposes of this
Agreement, except any Account to which any of the exclusionary criteria set
forth below applies. Agent shall have the right to establish, modify or
eliminate Reserves against Eligible Accounts from time to time in its reasonable
credit judgment. In addition, Agent reserves the right, at any time and from
time to time after the Closing Date, to adjust any of the criteria set forth
below and to establish new criteria, and to adjust advance rates with respect to
Eligible Accounts, in its reasonable credit judgment, reflecting changes in the
collectibility or realization values of such Accounts arising or discovered by
Agent after the Closing Date subject to the approval of Supermajority Revolving
Lenders in the case of adjustments or new criteria or changes in advance rates
which have the effect of making more credit available. Eligible Accounts shall
not include any Account of any Borrower:

 

(a) that does not arise from the sale of goods or the performance of services by
such Borrower in the ordinary course of its business;

 

(b) (i) upon which such Borrower’s right to receive payment is not absolute or
is contingent upon the fulfillment of any condition whatsoever or (ii) as to
which such Borrower is not able to bring suit or otherwise enforce its remedies
against the Account Debtor through judicial process, or (iii) if the Account
represents a progress billing consisting of an invoice for goods sold or used or
services rendered pursuant to a contract under which the Account Debtor’s
obligation to pay that invoice is subject to such Borrower’s completion of
further performance under such contract or is subject to the equitable lien of a
surety bond issuer;

 

9

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

(c) to the extent that any defense, counterclaim, setoff or dispute is asserted
as to such Account (it being understood that only the amount subject to dispute,
counterclaim, setoff or defense shall be ineligible);

 

(d) that is not a true and correct statement of bona fide indebtedness incurred
in the amount of the Account for merchandise sold to or services rendered and
accepted by the applicable Account Debtor;

 

(e) with respect to which an invoice has not been sent to the applicable Account
Debtor;

 

(f) that (i) is not owned by such Borrower or (ii) is subject to any Lien of any
other Person, other than Liens in favor of Agent, on behalf of itself and
Lenders;

 

(g) that arises from a sale to any director, officer, other employee or
Affiliate of any Credit Party, or to any entity that has any common officer or
director with any Credit Party;

 

(h) that is the obligation of an Account Debtor that is the United States
government or a political subdivision thereof, or any state, county or
municipality or department, agency or instrumentality thereof unless Agent, in
its sole discretion, has agreed to the contrary in writing and such Borrower, if
necessary or desirable, has complied with respect to such obligation with the
Federal Assignment of Claims Act of 1940, or any applicable state, county or
municipal law restricting the assignment thereof with respect to such
obligation;

 

(i) that is the obligation of an Account Debtor located in a foreign country
other than Canada;

 

(j) to the extent such Borrower or any Subsidiary thereof is liable for goods
sold or services rendered by the applicable Account Debtor to such Borrower or
any Subsidiary thereof but only to the extent of the potential offset;

 

(k) that arises with respect to goods that are delivered on a bill-and-hold,
cash-on-delivery basis or placed on consignment, guaranteed sale or other terms
by reason of which the payment by the Account Debtor is or may be conditional;

 

(l) that is in default; provided, that without limiting the generality of the
foregoing, an Account shall be deemed in default upon the occurrence of any of
the following:

 

(i) the Account is not paid within the earlier of 60 days following its due date
or 90 days following its original invoice date;

 

(ii) the Account Debtor obligated upon such Account suspends business, makes a
general assignment for the benefit of creditors or fails to pay its debts
generally as they come due; or

 

10

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

(iii) a petition is filed by or against any Account Debtor obligated upon such
Account under any bankruptcy law or any other federal, state or foreign
(including any provincial) receivership, insolvency relief or other law or laws
for the relief of debtors;

 

(m) that is the obligation of an Account Debtor if fifty percent (50%) or more
of the Dollar amount of all Accounts owing by that Account Debtor are ineligible
under the other criteria set forth in this Section 1.6;

 

(n) as to which Agent’s Lien thereon, on behalf of itself and Lenders, is not a
first priority perfected Lien;

 

(o) as to which any of the representations or warranties in the Loan Documents
are untrue;

 

(p) to the extent such Account is evidenced by a judgment, Instrument or Chattel
Paper;

 

(q) to the extent such Account exceeds any credit limit established by Agent, in
its reasonable credit judgment;

 

(r) to the extent that such Account, together with all other Accounts owing by
such Account Debtor and its Affiliates as of any date of determination exceed
10% of all Eligible Accounts; or

 

(s) that is payable in any currency other than Dollars.

 

1.7 [INTENTIONALLY OMITTED]

 

1.8 Cash Management System. On or prior to the Closing Date, Borrowers will
establish and will maintain until the Termination Date, the cash management
system described in Annex C (the “Cash Management System”).

 

1.9 Fees.

 

(a) Borrowers shall pay: (i) to GE Capital on the Closing Date, a closing fee in
the amount of $800,000, against which fee shall be credited the prior payment of
the “Work Fee” and any unused portion of the “Underwriting Deposit,” in each
case paid to GE Capital in accordance with the Proposal Letter between Parent
and GE Corporate Financial Services, Inc. dated March 12, 2004; and (ii) to
Agent on the Closing Date and on each anniversary of the Closing Date prior to
the Termination Date, an annual agency fee in the amount of $50,000.

 

(b) As additional compensation for the Revolving Lenders, commencing on the
two-month anniversary of the Closing Date, Borrowers shall pay to Agent, for the
ratable benefit of such Lenders, in arrears, on the first Business Day of each
month prior to the Commitment Termination Date and on the Commitment Termination
Date, a Fee for Borrowers’ non-use of available funds in an amount equal to
0.50% per annum (calculated on the basis of a 360 day year for actual days
elapsed) multiplied by the difference between (x) the Maximum Amount (as it may
be reduced from time to time) and (y) the average for the period of the daily
closing balances of the Revolving Loan and the Swing Line Loan outstanding
during the period for which such Fee is due.

 

11

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

(c) If Borrowers prepay the Revolving Loan and reduce or terminate the Revolving
Loan Commitment, whether voluntarily or involuntarily and whether before or
after acceleration of the Obligations or if any of the Commitments are otherwise
terminated, Borrowers shall pay to Agent, for the benefit of Lenders as
liquidated damages and compensation for the costs of being prepared to make
funds available hereunder an amount equal to the Applicable Percentage (as
defined below) multiplied by the amount of the reduction of the Revolving Loan
Commitment. As used herein, the term “Applicable Percentage” shall mean (x) 3.0%
in the case of a prepayment on or prior to the first anniversary of the Closing
Date, and (y) 1.0% in the case of a prepayment after the first anniversary of
the Closing Date but on or prior to the third anniversary thereof. The Credit
Parties agree that the Applicable Percentages are a reasonable calculation of
Lenders’ lost profits in view of the difficulties and impracticality of
determining actual damages resulting from an early termination of the
Commitments. Notwithstanding the foregoing, no prepayment fee shall be payable
by Borrowers upon a mandatory prepayment made pursuant to Sections 1.3(b) or
1.16(c) so long as Borrowers do not permanently reduce or terminate the
Revolving Loan Commitment upon any such prepayment and, in the case of
prepayments made pursuant to Sections 1.3(b)(ii) or (b)(iii), the transaction
giving rise to the applicable prepayment is expressly permitted under Section 6.

 

(d) Borrowers shall pay to Agent, for the ratable benefit of Revolving Lenders,
the Letter of Credit Fee as provided in Annex B.

 

1.10 Receipt of Payments. Borrowers shall make each payment under this Agreement
not later than 2:00 p.m. (New York time) on the day when due in immediately
available funds in Dollars to the Collection Account. For purposes of computing
interest and Fees and determining Borrowing Availability as of any date, (a) at
all times prior to an Dominion Activation Event, all payments shall be deemed
received on the Business Day on which immediately available funds therefor are
received in the Collection Account prior to 2:00 p.m. New York time, and (b) at
all times following an Dominion Activation Event, all payments shall be deemed
received on the first Business Day following the Business Day on which
immediately available funds therefor are received in the Collection Account
prior to 2:00 p.m. New York time. Payments received after 2:00 p.m. New York
time on any Business Day or on a day that is not a Business Day shall be deemed
to have been received on the following Business Day.

 

1.11 Application and Allocation of Payments.

 

(a) So long as no Event of Default has occurred and is continuing, (i) payments
consisting of proceeds of Accounts received in the ordinary course of business
shall be applied, first, to the Swing Line Loan and, second, to the Revolving
Loan; and (ii) mandatory prepayments shall be applied as set forth in Sections
1.3(c) and 1.3(d). All payments and prepayments applied to a particular Loan
shall be applied ratably to the portion thereof held by each Lender as
determined by its Pro Rata Share. As to any other payment, and as to all
payments made when an Event of Default has occurred and is continuing or
following the Commitment Termination Date, each Borrower hereby irrevocably
waives the right to direct the application of any and all payments received from
or on behalf of such Borrower, and each

 

12

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

Borrower hereby irrevocably agrees that Agent shall have the continuing
exclusive right to apply any and all such payments against the Obligations as
Agent may deem advisable notwithstanding any previous entry by Agent in the Loan
Account or any other books and records. In the absence of a specific
determination by Agent with respect thereto, payments shall be applied to
amounts then due and payable in the following order: (1) to Fees and Agent’s
expenses reimbursable hereunder; (2) to interest on the Swing Line Loan; (3) to
principal payments on the Swing Line Loan; (4) to interest on the other Loans,
ratably in proportion to the interest accrued as to each Loan; (5) to principal
payments on the other Loans and to provide cash collateral for Letter of Credit
Obligations in the manner described in Annex B, ratably to the aggregate,
combined principal balance of the other Loans and outstanding Letter of Credit
Obligations; and (6) to all other Obligations including expenses of Lenders to
the extent reimbursable under Section 11.3.

 

(b) Agent is authorized to, and at its sole election may, charge to the
Revolving Loan balance on behalf of each Borrower and cause to be paid all Fees,
expenses, Charges, costs (including insurance premiums in accordance with
Section 5.4(a)) and interest and principal, other than principal of the
Revolving Loan, owing by Borrowers under this Agreement or any of the other Loan
Documents if and to the extent Borrowers fail to pay promptly any such amounts
as and when due, even if the amount of such charges would exceed Borrowing
Availability at such time. At Agent’s option and to the extent permitted by law,
any charges so made shall constitute part of the Revolving Loan hereunder.

 

1.12 Loan Account and Accounting. Agent shall maintain a loan account (the “Loan
Account”) on its books to record all Advances and all payments made by
Borrowers, and all other debits and credits as provided in this Agreement with
respect to the Loans or any other Obligations. All entries in the Loan Account
shall be made in accordance with Agent’s customary accounting practices as in
effect from time to time. The balance in the Loan Account, as recorded on
Agent’s most recent printout or other written statement, shall, absent manifest
error, be presumptive evidence of the amounts due and owing to Agent and Lenders
by each Borrower; provided that any failure to so record or any error in so
recording shall not limit or otherwise affect any Borrower’s duty to pay the
Obligations. Agent shall render to Borrower Representative a monthly accounting
of transactions with respect to the Loans setting forth the balance of the Loan
Account as to each Borrower for the immediately preceding month. Unless Borrower
Representative notifies Agent in writing of any objection to any such accounting
(specifically describing the basis for such objection), 30 days after the date
thereof, each and every such accounting shall be presumptive evidence of all
matters reflected therein. Only those items expressly objected to in such notice
shall be deemed to be disputed by Borrowers. Notwithstanding any provision
herein contained to the contrary, any Lender may elect (which election may be
revoked) to dispense with the issuance of Notes to that Lender and may rely on
the Loan Account as evidence of the amount of Obligations from time to time
owing to it.

 

1.13 Indemnity.

 

(a) Each Credit Party that is a signatory hereto shall jointly and severally
indemnify and hold harmless each of Agent, Lenders and their respective
Affiliates, and each such Person’s respective officers, directors, employees,
attorneys, agents and representatives (each, an “Indemnified Person”), from and
against any and all suits, actions, proceedings, claims, damages, losses,
liabilities and expenses (including reasonable attorneys’ fees and disbursements

 

13

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

and other costs of investigation or defense, including those incurred upon any
appeal) that may be instituted or asserted against or incurred by any such
Indemnified Person as the result of credit having been extended, suspended or
terminated under this Agreement and the other Loan Documents and the
administration of such credit, and in connection with or arising out of the
transactions contemplated hereunder and thereunder and any actions or failures
to act in connection therewith, including any and all Environmental Liabilities
and legal costs and expenses arising out of or incurred in connection with
disputes between or among any parties to any of the Loan Documents
(collectively, “Indemnified Liabilities”); provided, that no such Credit Party
shall be liable for any indemnification to an Indemnified Person to the extent
that any such suit, action, proceeding, claim, damage, loss, liability or
expense results from that Indemnified Person’s gross negligence or willful
misconduct. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER
PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY
OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH
PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE
ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED
UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED
HEREUNDER OR THEREUNDER.

 

(b) To induce Lenders to provide the LIBOR Rate option on the terms provided
herein, if (i) any LIBOR Loans are repaid in whole or in part prior to the last
day of any applicable LIBOR Period (whether that repayment is made pursuant to
any provision of this Agreement or any other Loan Document or occurs as a result
of acceleration, by operation of law or otherwise); (ii) any Borrower shall
default in payment when due of the principal amount of or interest on any LIBOR
Loan; (iii) any Borrower shall refuse to accept any borrowing of, or shall
request a termination of any borrowing of, conversion into or continuation of
LIBOR Loans after Borrower Representative has given notice requesting the same
in accordance herewith; or (iv) any Borrower shall fail to make any prepayment
of a LIBOR Loan after Borrower Representative has given a notice thereof in
accordance herewith, then Borrowers shall jointly and severally indemnify and
hold harmless each Lender from and against all losses, costs and expenses
resulting from or arising from any of the foregoing. Such indemnification shall
include any loss (including loss of margin) or expense arising from the
reemployment of funds obtained by it or from fees payable to terminate deposits
from which such funds were obtained. For the purpose of calculating amounts
payable to a Lender under this subsection, each Lender shall be deemed to have
actually funded its relevant LIBOR Loan through the purchase of a deposit
bearing interest at the LIBOR Rate in an amount equal to the amount of that
LIBOR Loan and having a maturity comparable to the relevant LIBOR Period;
provided, that each Lender may fund each of its LIBOR Loans in any manner it
sees fit, and the foregoing assumption shall be utilized only for the
calculation of amounts payable under this subsection. This covenant shall
survive the termination of this Agreement and the payment of the Notes and all
other amounts payable hereunder. As promptly as practicable under the
circumstances, each Lender shall provide Borrower Representative with its
written calculation of all amounts payable pursuant to this Section 1.13(b), and
such calculation shall be binding on the parties hereto unless Borrower
Representative shall object in writing within ten Business Days of receipt
thereof, specifying the basis for such objection in detail.

 

14

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

1.14 Access.

 

(a) Each Credit Party that is a party hereto shall, during normal business
hours, from time to time upon two Business Days’ prior notice as frequently as
Agent reasonably determines to be appropriate: (a) provide Agent and any of its
officers, employees and agents access to its properties, facilities, advisors,
officers and employees of each Credit Party and to the Collateral, (b) permit
Agent, and any of its officers, employees and agents, to inspect, audit and make
extracts from any Credit Party’s books and records, and (c) permit Agent, and
its officers, employees and agents, to inspect, review, evaluate and make test
verifications and counts of the Accounts, Inventory and other Collateral of any
Credit Party. If an Event of Default has occurred and is continuing, each such
Credit Party shall provide such access to Agent at all times and without advance
notice. Furthermore, so long as any Event of Default has occurred and is
continuing, Borrowers shall provide Agent with access to their suppliers and
customers. Each Credit Party shall make available to Agent and its counsel
reasonably promptly originals or copies of all books and records that Agent may
reasonably request. Each Credit Party shall deliver any document or instrument
necessary for Agent, as it may from time to time reasonably request, to obtain
records from any service bureau or other Person that maintains records for such
Credit Party, and shall maintain duplicate records or supporting documentation
on media, including computer tapes and discs owned by such Credit Party. Agent
will give Lenders at least five days’ prior written notice of regularly
scheduled audits. Representatives of other Lenders may accompany Agent’s
representatives on regularly scheduled audits at no charge to Borrowers.

 

(b) Borrowers shall pay Agent a Fee of $850 per day per individual (plus all
out-of-pocket costs and expenses) in connection with Lender’s field examinations
permitted under Section 1.14(a) and Section 4(c) of the Security Agreement. Such
Fees and expenses shall be charged against the Revolving Loan in connection with
each field audit conducted after the Closing Date.

 

1.15 Taxes.

 

(a) Any and all payments by each Borrower hereunder (including any payments made
pursuant to Section 12) or under the Notes shall be made, in accordance with
this Section 1.15, free and clear of and without deduction for any and all
present or future Taxes. If any Borrower shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder (including any sum payable
pursuant to Section 12) or under the Notes, (i) the sum payable shall be
increased as much as shall be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 1.15) Agent or Lenders, as applicable, receive an amount equal to
the sum they would have received had no such deductions been made, (ii) such
Borrower shall make such deductions, and (iii) such Borrower shall pay the full
amount deducted to the relevant taxing or other authority in accordance with
applicable law. Within 30 days after the date of any payment of Taxes, Borrower
Representative shall furnish to Agent the original or a certified copy of a
receipt evidencing payment thereof.

 

(b) Each Credit Party that is a signatory hereto shall jointly and severally
indemnify and, within ten days of demand therefor, pay Agent and each Lender for
the full

 

15

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

amount of Taxes (including any Taxes imposed by any jurisdiction on amounts
payable under this Section 1.15) paid by Agent or such Lender, as appropriate,
and any liability (including penalties, interest and expenses, except to the
extent that any such penalties, interest or expenses resulted from Agent’s or
such Lender’s, as the case may be, gross negligence or willful misconduct)
arising therefrom or with respect thereto, whether or not such Taxes were
correctly or legally asserted.

 

(c) Each Lender organized under the laws of a jurisdiction outside the United
States (a “Foreign Lender”) as to which payments to be made under this Agreement
or under the Notes are wholly exempt from United States withholding tax under an
applicable statute or tax treaty shall provide to Borrower Representative and
Agent a properly completed and executed IRS Form W-8ECI or Form W-8BEN or other
applicable form, certificate or document prescribed by the IRS or the United
States certifying as to such Foreign Lender’s entitlement to such exemption (a
“Certificate of Exemption”). Any foreign Person that seeks to become a Lender
under this Agreement shall provide a Certificate of Exemption to Borrower
Representative and Agent prior to becoming a Lender hereunder. No foreign Person
may become a Lender hereunder if such Person fails to deliver a Certificate of
Exemption in advance of becoming a Lender.

 

(d) If a Lender receives a refund of any Charges or other amounts as to which
such Lender has been indemnified in accordance with Section 1.15 or on account
of which additional amounts have been paid by Credit Parties in accordance with
Sections 1.15 or 12, then Lender will pay over such refund or other amount to
the applicable Credit Party, together with any cash interest actually received
thereupon from the applicable Governmental Authority; provided, that no such
refund shall include any foreign tax credit or similar credit provided by any
jurisdiction to any Lender.

 

1.16 Capital Adequacy; Increased Costs; Illegality.

 

(a) If any law, treaty, governmental (or quasi-governmental) rule, regulation,
guideline or order regarding capital adequacy, reserve requirements or similar
requirements or compliance by any Lender with any request or directive regarding
capital adequacy, reserve requirements or similar requirements (whether or not
having the force of law), in each case, adopted after the Closing Date, from any
central bank or other Governmental Authority increases or would have the effect
of increasing the amount of capital, reserves or other funds required to be
maintained by such Lender and thereby reducing the rate of return on such
Lender’s capital as a consequence of its obligations hereunder, then Borrowers
shall from time to time upon demand by such Lender (with a copy of such demand
to Agent) pay to Agent, for the account of such Lender, additional amounts
sufficient to compensate such Lender for such reduction. A certificate as to the
amount of that reduction and showing the basis of the computation thereof
submitted by such Lender to Borrower Representative and to Agent shall be
presumptive evidence of the matters set forth therein.

 

(b) If, due to either (i) the introduction of or any change in any law or
regulation (or any change in the interpretation thereof) or (ii) the compliance
with any guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law), in each case adopted after
the Closing Date, there shall be any increase in the cost

 

16

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

to any Lender of agreeing to make or making, funding or maintaining any Loan,
then Borrowers shall from time to time, upon demand by such Lender (with a copy
of such demand to Agent), pay to Agent for the account of such Lender additional
amounts sufficient to compensate such Lender for such increased cost. A
certificate as to the amount of such increased cost, submitted to Borrower
Representative and to Agent by such Lender, shall be presumptive evidence of the
matters set forth therein. Each Lender agrees that, as promptly as practicable
after it becomes aware of any circumstances referred to above which would result
in any such increased cost, the affected Lender shall, to the extent not
inconsistent with such Lender’s internal policies of general application, use
reasonable commercial efforts to minimize costs and expenses incurred by it and
payable to it by Borrowers pursuant to this Section 1.16(b).

 

(c) Notwithstanding anything to the contrary contained herein, if the
introduction of or any change in any law or regulation (or any change in the
interpretation thereof) shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender to agree
to make or to make or to continue to fund or maintain any LIBOR Loan, then,
unless that Lender is able to make or to continue to fund or to maintain such
LIBOR Loan at another branch or office of that Lender without, in that Lender’s
reasonable opinion, materially adversely affecting it or its Loans or the income
obtained therefrom, on notice thereof and demand therefor by such Lender to
Borrower Representative through Agent, (i) the obligation of such Lender to
agree to make or to make or to continue to fund or maintain LIBOR Loans shall
terminate and (ii) each Borrower shall forthwith prepay in full all outstanding
LIBOR Loans owing by such Borrower to such Lender, together with interest
accrued thereon, unless Borrower Representative on behalf of such Borrower,
within five Business Days after the delivery of such notice and demand, converts
all LIBOR Loans owing to such Lender into Index Rate Loans.

 

(d) Within 30 days after receipt by Borrower Representative of written notice
and demand from any Lender (an “Affected Lender”) for payment of additional
amounts or increased costs as provided in Sections 1.15(a), 1.16(a), 1.16(b) or
1.16(c), Borrower Representative may, at its option, notify Agent and such
Affected Lender of its intention to replace the Affected Lender. So long as no
Default or Event of Default has occurred and is continuing, Borrower
Representative, with the consent of Agent, may obtain, at Borrowers’ expense, a
replacement Lender (“Replacement Lender”) for the Affected Lender, which
Replacement Lender must be reasonably satisfactory to Agent. If Borrowers obtain
a Replacement Lender within 120 days following notice of their intention to do
so, the Affected Lender must sell and assign its Loans and Commitments to such
Replacement Lender for an amount equal to the principal balance of all Loans
held by the Affected Lender and all accrued interest and Fees with respect
thereto through the date of such sale and such assignment shall not require the
payment of an assignment fee to Agent; provided, that Borrowers shall have
reimbursed such Affected Lender for the additional amounts or increased costs
that it is entitled to receive under this Agreement through the date of such
sale and assignment. Notwithstanding the foregoing, Borrowers shall not have the
right to obtain a Replacement Lender if the Affected Lender rescinds its demand
for increased costs or additional amounts within 15 days following its receipt
of Borrowers’ notice of intention to replace such Affected Lender. Furthermore,
if Borrowers give a notice of intention to replace and do not so replace such
Affected Lender within 120 days thereafter, Borrowers’ rights under this Section
1.16(d) shall terminate with respect to such Affected Lender and Borrowers shall
promptly pay all increased costs or additional amounts demanded by such Affected
Lender pursuant to Sections 1.15(a), 1.16(a) and 1.16(b).

 

17

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

1.17 Single Loan. All Loans to each Borrower and all of the other Obligations of
each Borrower arising under this Agreement and the other Loan Documents shall
constitute one general obligation of that Borrower secured, until the
Termination Date, by all of the Collateral.

 

2. CONDITIONS PRECEDENT

 

2.1 Conditions to the Initial Loans. No Lender shall be obligated to make any
Loan or incur any Letter of Credit Obligations on the Closing Date, or to take,
fulfill, or perform any other action hereunder, until the following conditions
have been satisfied or provided for in a manner reasonably satisfactory to
Agent, or waived in writing by Agent and Requisite Lenders:

 

(a) Credit Agreement; Loan Documents. This Agreement or counterparts hereof
shall have been duly executed by, and delivered to, Borrowers, each other Credit
Party, Agent and Lenders, and Agent shall have received such documents,
instruments, agreements and legal opinions as Agent shall reasonably request in
connection with the transactions contemplated by this Agreement and the other
Loan Documents, including all those listed in the Schedule of Documents attached
hereto as Annex D, each in form and substance reasonably satisfactory to Agent.

 

(b) Repayment of Prior Lender Obligations; Satisfaction of Outstanding L/Cs. (i)
Agent shall have received a fully executed original of a pay-off letter
reasonably satisfactory to Agent confirming that all of the Prior Lender
Obligations will be repaid in full in connection with the consummation of the
Related Transactions and that all Liens upon any of the property of Borrowers or
any of their Subsidiaries in favor of Prior Lender shall be terminated by Prior
Lender immediately upon such payment; (ii) Agent shall have received evidence
satisfactory to it that such payment has been received by or on behalf of Prior
Lender; and (iii) all letters of credit issued or guaranteed by Prior Lender
shall have been paid in full or cash collateralized.

 

(c) Approvals. Agent shall have received (i) satisfactory evidence that the
Credit Parties have obtained all required consents and approvals of all Persons
including all requisite Governmental Authorities, to the execution, delivery and
performance of this Agreement and the other Loan Documents and the consummation
of the Related Transactions or (ii) an officer’s certificate in form and
substance reasonably satisfactory to Agent affirming that no such consents or
approvals are required.

 

(d) Opening Liquidity. The Eligible Accounts supporting the initial Revolving
Credit Advance and the initial Letter of Credit Obligations incurred and the
amount of the Reserves to be established on the Closing Date shall be sufficient
in value, as determined by Agent, to provide Borrowers, collectively, with
Liquidity, after giving effect to the initial Revolving Credit Advance made to
each Borrower, the incurrence of any initial Letter of Credit Obligations and
the consummation of the Related Transactions (on a pro forma basis, with trade
payables being paid currently, and expenses and liabilities being paid in the
ordinary course of business and without acceleration of sales) of at least
$15,000,000.

 

18

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

(e) Payment of Fees. Borrowers shall have paid the Fees required to be paid on
the Closing Date in the respective amounts specified in Section 1.9, and shall
have reimbursed Agent for all fees, costs and expenses of closing presented as
of the Closing Date to the extent reimbursable under Section 11.3.

 

(f) Capital Structure: Other Indebtedness. The capital structure of each Credit
Party and the terms and conditions of all Indebtedness of each Credit Party
shall be acceptable to Agent in its sole discretion.

 

(g) Due Diligence. Agent shall have completed its business and legal due
diligence, including a roll forward of its previous Collateral audit with
results reasonably satisfactory to Agent.

 

(h) Additional Equity. Details shall have received a cash equity infusion of not
less than $60,000,000 on terms and conditions acceptable to Agent in its sole
discretion.

 

(i) Consummation of Related Transactions. Agent shall have received fully
executed copies of each of the Related Transactions Documents, each of which
shall be in full force and effect in form and substance reasonably satisfactory
to Agent. The Related Transactions shall have been consummated in accordance
with the terms of the Related Transactions Documents.

 

2.2 Further Conditions to Each Loan. Except as otherwise expressly provided
herein, no Lender shall be obligated to fund any Advance, convert or continue
any Loan as a LIBOR Loan or incur any Letter of Credit Obligation, if, as of the
date thereof:

 

(a) any representation or warranty by any Credit Party contained herein or in
any other Loan Document is untrue or incorrect as of such date as determined by
Agent or Requisite Lenders, except to the extent that such representation or
warranty expressly relates to an earlier date and except for changes therein
expressly permitted or expressly contemplated by this Agreement, and Agent or
Requisite Revolving Lenders have determined not to make such Advance, convert or
continue any Loan as LIBOR Loan or incur such Letter of Credit Obligation as a
result of the fact that such warranty or representation is untrue or incorrect;

 

(b) any Default or Event of Default has occurred and is continuing or would
result after giving effect to any Advance (or the incurrence of any Letter of
Credit Obligation), and Agent or Requisite Revolving Lenders shall have
determined not to make any Advance, convert or continue any Loan as a LIBOR Loan
or incur any Letter of Credit Obligation as a result of that Default or Event of
Default;

 

(c) after giving effect to any Advance (or the incurrence of any Letter of
Credit Obligations), the outstanding principal amount of the Revolving Loan
would exceed the lesser of the Aggregate Borrowing Base and the Maximum Amount,
in each case, less the then outstanding principal amount of the Swing Line Loan;
or

 

(d) after giving effect to any Advance (or the incurrence of any Letter of
Credit Obligations), Parent shall not be in violation of any maximum
Indebtedness covenant applicable to the Series B Preferred Stock.

 

19

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

The request and acceptance by any Borrower of the proceeds of any Advance, the
incurrence of any Letter of Credit Obligations or the conversion or continuation
of any Loan into, or as, a LIBOR Loan shall be deemed to constitute, as of the
date thereof, (i) a representation and warranty by Borrowers that the conditions
in this Section 2.2 have been satisfied and (ii) a reaffirmation by Borrowers of
the cross-guaranty provisions set forth in Section 12 and of the granting and
continuance of Agent’s Liens, on behalf of itself and Lenders, pursuant to the
Collateral Documents.

 

3. REPRESENTATIONS AND WARRANTIES

 

To induce Lenders to make the Loans and to incur Letter of Credit Obligations,
the Credit Parties executing this Agreement, jointly and severally, make the
following representations and warranties to Agent and each Lender with respect
to all Credit Parties, each and all of which shall survive the execution and
delivery of this Agreement.

 

3.1 Corporate Existence; Compliance with Law. Each Credit Party: (a) is a
corporation, limited liability company or limited partnership duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation or organization set forth in Disclosure Schedule
(3.1); (b) is duly qualified to conduct business and is in good standing in each
other jurisdiction where its ownership or lease of property or the conduct of
its business requires such qualification, except where the failure to be so
qualified would not result in exposure to losses or liabilities which could
reasonably be expected to have a Material Adverse Effect; (c) has the requisite
power and authority and the legal right to own, pledge, mortgage or otherwise
encumber and operate its properties, to lease the property it operates under
lease and to conduct its business as now conducted or proposed to be conducted;
(d) subject to specific representations regarding Environmental Laws, has all
licenses, permits, consents or approvals from or by, and has made all material
filings with, and has given all notices to, all Governmental Authorities having
jurisdiction, to the extent required for such ownership, operation and conduct;
(e) is in compliance with its charter and bylaws or partnership or operating
agreement, as applicable; and (f) subject to specific representations set forth
herein regarding ERISA, Environmental Laws, tax and other laws, is in compliance
with all applicable provisions of law, except where the failure to comply,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.

 

3.2 Executive Offices, Collateral Locations, FEIN. As of the Closing Date, each
Credit Party’s name as it appears in official filings in its state of
incorporation or organization, state of incorporation or organization,
organization type, organization number, if any, issued by its state of
incorporation or organization, and the current location of each Credit Party’s
chief executive office and the warehouses and premises at which any Collateral
is located are set forth in Disclosure Schedule (3.2), and none of such
locations has changed within the four months preceding the Closing Date and each
Credit Party has only one state of incorporation or organization. In addition,
Disclosure Schedule (3.2) lists the federal employer identification number of
each Credit Party.

 

3.3 Corporate Power, Authorization, Enforceable Obligations. The execution,
delivery and performance by each Credit Party of the Loan Documents to which it
is a party and the creation of all Liens provided for therein: (a) are within
such Credit Party’s power; (b) have

 

20

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

been duly authorized by all necessary corporate, limited liability company or
limited partnership action; (c) do not contravene any provision of such Credit
Party’s charter, bylaws or partnership or operating agreement as applicable; (d)
do not violate any law or regulation, or any order or decree of any court or
Governmental Authority; (e) do not conflict with or result in the breach or
termination of, constitute a default under or accelerate or permit the
acceleration of any performance required by, any indenture, mortgage, deed of
trust, lease, agreement or other instrument to which such Credit Party is a
party or by which such Credit Party or any of its property is bound; (f) do not
result in the creation or imposition of any Lien upon any of the property of
such Credit Party other than those in favor of Agent, on behalf of itself and
Lenders, pursuant to the Loan Documents; and (g) do not require the consent or
approval of any Governmental Authority or any other Credit Party, except those
referred to in Section 2.1(c), all of which will have been duly obtained, made
or complied with prior to the Closing Date. Each of the Loan Documents shall be
duly executed and delivered by each Credit Party that is a party thereto and
each such Loan Document shall constitute a legal, valid and binding obligation
of such Credit Party enforceable against it in accordance with its terms.

 

3.4 Financial Statements and Projections. Except for the Projections, all
Financial Statements concerning Borrowers and their Subsidiaries that are
referred to below have been prepared in accordance with GAAP consistently
applied throughout the periods covered (except as disclosed therein and except,
with respect to unaudited Financial Statements, for the absence of footnotes and
normal year-end audit adjustments) and present fairly in all material respects
the financial position of the Persons covered thereby as at the dates thereof
and the results of their operations and cash flows for the periods then ended.

 

(a) Financial Statements. The following Financial Statements attached hereto as
Disclosure Schedule (3.4(a)) have been delivered on the date hereof:

 

(i) (A) The internal consolidated and, except with respect to statements of cash
flow, consolidating balance sheets at December 31, 2003, and the related
statements of income and cash flows for each Borrower and its Subsidiaries for
the Fiscal Year then ended (without footnotes).

 

(B) The unaudited consolidated balance sheets at December 31, 2003, and the
related statements of income and cash flows for Parent and its Subsidiaries for
the Fiscal Year then ended.

 

(ii) The unaudited balance sheet(s) at February 29, 2004, and the related
statement(s) of income of Borrowers and their Subsidiaries for the two Fiscal
Months then ended.

 

(b) Projections. The Projections delivered on the date hereof and attached
hereto as Disclosure Schedule (3.4(b)) have been prepared by Borrowers in light
of the past operations of their businesses, but including future payments of
known contingent liabilities and reflect projections for the two-year period
beginning on January 1, 2004, on a month-by-month basis for the first year and
on a year-by-year basis thereafter. The Projections are based upon the same
accounting principles as those used in the preparation of the financial
statements described above and the estimates and assumptions stated therein, all
of which Borrowers believe to be

 

21

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

reasonable and fair in light of current conditions and current facts known to
Borrowers and, as of the Closing Date, reflect Borrowers’ good faith and
reasonable estimates of the future financial performance of Borrowers for the
period set forth therein, it being understood that uncertainty is inherent in
any forecasts or projections and that no assurance can be given that the results
set forth in the Projections will actually be obtained. The Projections are not
a guaranty of future performance, and actual results may differ from the
Projections.

 

3.5 Material Adverse Effect. Between February 29, 2004, and the Closing Date,
(a) no Credit Party has incurred any obligations, contingent or noncontingent
liabilities, liabilities for Charges, long-term leases or unusual forward or
long-term commitments that are not reflected in the Projections and that, alone
or in the aggregate, could reasonably be expected to have a Material Adverse
Effect, (b) no contract, lease or other agreement or instrument has been entered
into by any Credit Party or has become binding upon any Credit Party’s assets
and no law or regulation applicable to any Credit Party has been adopted that
has had or could reasonably be expected to have a Material Adverse Effect, and
(c) no Credit Party is in default, and to the best of Borrowers’ knowledge no
third party is in default, under any material contract, lease or other agreement
or instrument, that alone or in the aggregate could reasonably be expected to
have a Material Adverse Effect. Since February 29, 2004, no event has occurred,
that alone or together with other events, could reasonably be expected to have a
Material Adverse Effect.

 

3.6 Ownership of Property; Liens. As of the Closing Date, the real estate (“Real
Estate”) listed in Disclosure Schedule (3.6) constitutes all of the real
property owned, leased, subleased, or used by any Credit Party. Each Credit
Party owns good and marketable fee simple title to all of its owned Real Estate,
and valid and marketable leasehold interests in all of its leased Real Estate,
all as described in Disclosure Schedule (3.6), and copies of all such leases or
a summary of terms thereof reasonably satisfactory to Agent have been delivered
to Agent. Disclosure Schedule (3.6) further describes any Real Estate with
respect to which any Credit Party is a lessor, sublessor or assignor as of the
Closing Date. Each Credit Party also has good and marketable title to, or valid
leasehold interests in, all of its personal property and assets. As of the
Closing Date, none of the properties and assets of any Credit Party are subject
to any Liens other than Permitted Encumbrances, and there are no facts,
circumstances or conditions known to any Credit Party that may result in any
Liens (including Liens arising under Environmental Laws) other than Permitted
Encumbrances. Each Credit Party has received all deeds, assignments, waivers,
consents, nondisturbance and attornment or similar agreements, bills of sale and
other documents, and has duly effected all recordings, filings and other actions
necessary to establish, protect and perfect such Credit Party’s right, title and
interest in and to all such Real Estate and other properties and assets.
Disclosure Schedule (3.6) also describes any purchase options, rights of first
refusal or other similar contractual rights pertaining to any Real Estate. As of
the Closing Date, no portion of any Credit Party’s Real Estate has suffered any
material damage by fire or other casualty loss that has not heretofore been
repaired and restored in all material respects to its original condition or
otherwise remedied. As of the Closing Date, all material permits required to
have been issued or appropriate to enable the Real Estate to be lawfully
occupied and used for all of the purposes for which it is currently occupied and
used have been lawfully issued and are in full force and effect.

 

22

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

3.7 Labor Matters. As of the Closing Date: (a) no strikes or other material
labor disputes against any Credit Party are pending or, to any Credit Party’s
knowledge, threatened; (b) hours worked by and payment made to employees of each
Credit Party comply in all material respects with the Fair Labor Standards Act
and each other federal, state, local or foreign law applicable to such matters;
(c) no Credit Party is a party to or bound by any collective bargaining
agreement (and true and complete copies of any agreements described in
Disclosure Schedule (3.7) have been delivered to Agent); (e) there is no
organizing activity involving any Credit Party pending or, to any Credit Party’s
knowledge, threatened by any labor union or group of employees; (f) except as
described in Disclosure Schedule (3.7), there are no representation proceedings
pending or, to any Credit Party’s knowledge, threatened with the National Labor
Relations Board, and no labor organization or group of employees of any Credit
Party has made a pending demand for recognition; and (g) there are no material
complaints or charges against any Credit Party pending or, to the knowledge of
any Credit Party, threatened to be filed with any Governmental Authority or
arbitrator based on, arising out of, in connection with, or otherwise relating
to the employment or termination of employment by any Credit Party of any
individual.

 

3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness.
Except as set forth in Disclosure Schedule (3.8), as of the Closing Date, no
Credit Party has any Subsidiaries, is engaged in any joint venture or
partnership with any other Person, or is an Affiliate of any other Person. All
of the issued and outstanding Stock of each Credit Party is owned by each of the
Stockholders and in the amounts set forth in Disclosure Schedule (3.8). Except
as set forth in Disclosure Schedule (3.8), there are no outstanding rights to
purchase, options, warrants or similar rights or agreements pursuant to which
any Credit Party may be required to issue, sell, repurchase or redeem any of its
Stock or other equity securities or any Stock or other equity securities of its
Subsidiaries. All outstanding Indebtedness and Guaranteed Indebtedness of each
Credit Party as of the Closing Date (except for the Obligations) is described in
Section 6.3 (including Disclosure Schedule (6.3)).

 

3.9 Government Regulation. No Credit Party is an “investment company” or an
“affiliated person” of, or “promoter” or “principal underwriter” for, an
“investment company,” as such terms are defined in the Investment Company Act of
1940. No Credit Party is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, or any other federal or state
statute that restricts or limits its ability to incur Indebtedness or to perform
its obligations hereunder. The making of the Loans by Lenders to Borrowers, the
incurrence of the Letter of Credit Obligations on behalf of Borrowers, the
application of the proceeds thereof and repayment thereof and the consummation
of the Related Transactions will not violate any provision of any such statute
or any rule, regulation or order issued by the Securities and Exchange
Commission.

 

3.10 Margin Regulations. No Credit Party is engaged, nor will it engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of “purchasing” or “carrying” any “margin stock” as such
terms are defined in Regulation U of the Federal Reserve Board as now and from
time to time hereafter in effect (such securities being referred to herein as
“Margin Stock”). No Credit Party owns any Margin Stock, and none of the proceeds
of the Loans or other extensions of credit under this Agreement will be used,
directly or indirectly, for the purpose of purchasing or carrying any Margin
Stock, for the purpose of

 

23

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

reducing or retiring any Indebtedness that was originally incurred to purchase
or carry any Margin Stock or for any other purpose that might cause any of the
Loans or other extensions of credit under this Agreement to be considered a
“purpose credit” within the meaning of Regulations T, U or X of the Federal
Reserve Board. No Credit Party will take or permit to be taken any action that
might cause any Loan Document to violate any regulation of the Federal Reserve
Board.

 

3.11 Taxes. All Federal and other material tax returns, reports and statements,
including information returns, required by any Governmental Authority to be
filed by any Credit Party have been filed with the appropriate Governmental
Authority, and all Charges have been paid prior to the date on which any fine,
penalty, interest or late charge may be added thereto for nonpayment thereof,
excluding Charges or other amounts being contested in accordance with Section
5.2(b) and unless the failure to so file or pay would not reasonably be expected
to result in fines, penalties or interest in excess of $250,000 in the
aggregate. Proper and accurate amounts have been withheld by each Credit Party
from its respective employees for all periods in full and complete compliance
with all applicable federal, state, local and foreign laws and such withholdings
have been timely paid to the respective Governmental Authorities. Disclosure
Schedule (3.11) sets forth as of the Closing Date those taxable years for which
any Credit Party’s tax returns are currently being audited by the IRS or any
other applicable Governmental Authority and any assessments or threatened
assessments in connection with such audit, or otherwise currently outstanding.
Except as described in Disclosure Schedule (3.11), as of the Closing Date, no
Credit Party has executed or filed with the IRS or any other Governmental
Authority any agreement or other document extending, or having the effect of
extending, the period for assessment or collection of any Charges. None of the
Credit Parties and their respective predecessors are liable for any Charges (a)
under any agreement (including any tax sharing agreements) or (b) to each Credit
Party’s knowledge, as a transferee. As of the Closing Date, no Credit Party has
agreed or been requested to make any adjustment under IRC Section 481(a), by
reason of a change in accounting method or otherwise, which would reasonably be
expected to have a Material Adverse Effect.

 

3.12 ERISA.

 

(a) Disclosure Schedule (3.12) lists as of the Closing Date all material Plans.
Copies of all listed Title IV Plans, if any, together with a copy of the latest
Form 5500-series report for each such Title IV Plan, have been made available to
Agent. Except with respect to Multiemployer Plans, each Qualified Plan has
received a favorable determination or opinion letter from the IRS or is within
the applicable remedial amendment period. Except as would not reasonably be
expected to have a Material Adverse Effect: (i) each Plan is in compliance in
all material respects with the applicable provisions of ERISA, the IRC and its
terms, including the timely filing of all reports required under the IRC or
ERISA; (ii) neither any Credit Party nor ERISA Affiliate has failed to make any
material contribution or pay any material amount due as required by either
Section 412 of the IRC or Section 302 of ERISA or the terms of any such Plan;
and (iii) no non-exempt “prohibited transaction,” as defined in Section 406 of
ERISA and Section 4975 of the IRC, has occurred with respect to any Plan, that
would reasonably be expected to subject any Credit Party to a material tax on
prohibited transactions imposed by Section 502(i) of ERISA or Section 4975 of
the IRC.

 

24

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

(b) Except as set forth in Disclosure Schedule (3.12): (i) no Title IV Plan has
any material Unfunded Pension Liability; (ii) no ERISA Event has occurred or is
reasonably expected to occur that could reasonable be expected to have a
Material Adverse Effect; (iii) there are no pending, or to the knowledge of any
Credit Party, threatened material claims (other than claims for benefits in the
normal course), sanctions, actions or lawsuits, asserted or instituted against
any Plan or any Person as fiduciary or sponsor of any Plan that could reasonable
be expected to have a Material Adverse Effect; (iv) no Credit Party or ERISA
Affiliate has incurred or reasonably expects to incur any material liability as
a result of a complete or partial withdrawal from a Multiemployer Plan; and (v)
within the last five years no Title IV Plan of any Credit Party or ERISA
Affiliate has been terminated, whether or not in a “standard termination” as
that term is used in Section 4041 of ERISA, nor has any Title IV Plan of any
Credit Party or any ERISA Affiliate (determined at any time within the last five
years) with material Unfunded Pension Liabilities been transferred outside of
the “controlled group” (within the meaning of Section 4001(a)(14) of ERISA) of
any Credit Party or ERISA Affiliate (determined at such time).

 

3.13 No Litigation. No action, claim, lawsuit, demand, investigation or
proceeding is now pending or, to the knowledge of any Credit Party, threatened
against any Credit Party, before any Governmental Authority or before any
arbitrator or panel of arbitrators (collectively, “Litigation”), (a) that
challenges any Credit Party’s right or power to enter into or perform any of its
obligations under the Loan Documents to which it is a party, or the validity or
enforceability of any Loan Document or any action taken thereunder, or (b) that
has a reasonable risk of being determined adversely to any Credit Party and
that, if so determined, could reasonably be expected to have a Material Adverse
Effect. Except as set forth in Disclosure Schedule (3.13), as of the Closing
Date there is no Litigation pending or, to any Credit Party’s knowledge,
threatened, that seeks damages (if specified) in excess of $500,000 or
injunctive relief against, or alleges criminal misconduct of, any Credit Party.

 

3.14 Brokers. Except as set forth in Disclosure Schedule (3.14), no broker or
finder brought about the obtaining, making or closing of the Loans or the
Related Transactions, and no Credit Party or Affiliate thereof has any
obligation to any Person in respect of any finder’s or brokerage fees in
connection therewith.

 

3.15 Intellectual Property. As of the Closing Date, each Credit Party owns or
has rights to use all Intellectual Property necessary to continue to conduct its
business as now conducted by it or presently proposed to be conducted by it in
all material respects, and each Patent, Trademark, Copyright and License is
listed, together with application or registration numbers, as applicable, in
Disclosure Schedule (3.15). Each Credit Party conducts its business and affairs
without infringement of or interference with any Intellectual Property of any
other Person in any material respect. Except as set forth in Disclosure Schedule
(3.15), no Credit Party is aware of any material infringement claim by any other
Person with respect to any Intellectual Property.

 

3.16 Full Disclosure. No information contained in this Agreement, any of the
other Loan Documents, Financial Statements or Collateral Reports or other
written reports from time to time prepared by any Credit Party and delivered
hereunder or any written statement prepared by any Credit Party and furnished by
or on behalf of any Credit Party to Agent or any Lender

 

25

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

pursuant to the terms of this Agreement contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading in
light of the circumstances under which they were made. Projections from time to
time delivered hereunder are or will be based upon the estimates and assumptions
stated therein, all of which Borrowers believed at the time of delivery to be
reasonable and fair in light of current conditions and current facts known to
Borrowers as of such delivery date, and reflect Borrowers’ good faith and
reasonable estimates of the future financial performance of Borrowers and of the
other information projected therein for the period set forth therein. Such
Projections are not a guaranty of future performance and actual results may
differ from those set forth in such Projections. The Liens granted to Agent, on
behalf of itself and Lenders, pursuant to the Collateral Documents will at all
times be fully perfected first priority Liens in and to the Collateral described
therein to the extent perfection can be achieved under the Code through either
possession, control, or the filing of financing statements, and such possession,
control or filings, as appropriate, has occurred, subject, as to priority, only
to Permitted Encumbrances.

 

3.17 Environmental Matters.

 

(a) Except as set forth in Disclosure Schedule (3.17), as of the Closing Date:
(i) the Real Estate is free of contamination from any Hazardous Material except
for such contamination that would not adversely impact the value or
marketability of such Real Estate and that would not result in Environmental
Liabilities that could reasonably be expected to exceed $500,000; (ii) no Credit
Party has caused or permitted any material Release of Hazardous Materials on,
at, in, under, above, to, from or about any of its Real Estate, except for such
Releases that would not result in Environmental Liabilities that could
reasonably be expected to exceed $500,000; (iii) the Credit Parties are and have
been in compliance with all Environmental Laws, except for such noncompliance
that would not result in Environmental Liabilities which could reasonably be
expected to exceed $500,000; (iv) the Credit Parties have obtained, and are in
compliance with, all Environmental Permits required by Environmental Laws for
the operations of their respective businesses as presently conducted, except
where the failure to so obtain or comply with such Environmental Permits would
not result in Environmental Liabilities that could reasonably be expected to
exceed $500,000, and all such Environmental Permits are valid, uncontested and
in good standing; (v) no Credit Party is involved in operations or knows of any
facts, circumstances or conditions, including any Releases of Hazardous
Materials, that are likely to result in any Environmental Liabilities of such
Credit Party which could reasonably be expected to exceed $500,000; (vi) there
is no pending Litigation arising under any Environmental Laws or Environmental
Permits that seeks damages, penalties, fines, costs or expenses in excess of
$500,000 or injunctive relief against, or that alleges criminal misconduct by,
any Credit Party; and (vii) no notice has been received by any Credit Party
identifying it as a “potentially responsible party” or requesting information
under CERCLA or analogous state statutes, and to the knowledge of the Credit
Parties, there are no facts, circumstances or conditions that may result in any
Credit Party being identified as a “potentially responsible party” under CERCLA
or analogous state statutes, except, in each case, as has not and could not
reasonably be expected to result in Environmental Liabilities in excess of
$500,000.

 

26

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

(b) Credit Parties have provided to Agent copies of all existing environmental
reports, reviews, audits and other material written information pertaining to
actual or potential Environmental Liabilities, in each case relating to any
Credit Party.

 

(c) This Section 3.17 shall consist of the sole and exclusive representations
and warranties with respect to environmental, health and safety matters arising
under Environmental Laws.

 

3.18 Insurance. Disclosure Schedule (3.18) lists all insurance policies of any
nature maintained, as of the Closing Date, for current occurrences by each
Credit Party.

 

3.19 Deposit and Disbursement Accounts. Disclosure Schedule (3.19) lists all
banks and other financial institutions at which any Credit Party maintains
deposit or other accounts as of the Closing Date, including any Disbursement
Accounts, and such Schedule correctly identifies the name, address and telephone
number of each depository, the name in which the account is held, a description
of the purpose of the account, and the complete account number therefor.

 

3.20 Government Contracts. Except as set forth in Disclosure Schedule (3.20), as
of the Closing Date, no Credit Party is a party to any contract or agreement
with any Governmental Authority and no Credit Party’s Accounts are subject to
the Federal Assignment of Claims Act (31 U.S.C. Section 3727) or any similar
state or local law.

 

3.21 Customer and Trade Relations. As of the Closing Date, there exists no
actual or, to the knowledge of any Credit Party, threatened termination or
cancellation of: the business relationship of any Credit Party with any customer
or group of customers whose purchases during the preceding 12 months caused them
to be ranked among the ten largest customers of such Credit Party; or the
business relationship of any Credit Party with any supplier essential to its
operations.

 

3.22 Bonding; Licenses. Except as set forth in Disclosure Schedule (3.22), as of
the Closing Date, no Credit Party is a party to or bound by any surety bond
agreement or bonding requirement with respect to products or services sold by it
or any trademark or patent license agreement with respect to products sold by
it.

 

3.23 Solvency. Both before and after giving effect to (a) the Loans and Letter
of Credit Obligations to be made or incurred on the Closing Date or such other
date as Loans and Letter of Credit Obligations requested hereunder are made or
incurred, (b) the Refinancing and the consummation of the other Related
Transactions and (c) the payment and accrual of all transaction costs in
connection with the foregoing, Details, individually, and Credit Parties taken
as a whole, are and will be Solvent.

 

4. FINANCIAL STATEMENTS AND INFORMATION

 

4.1 Reports and Notices.

 

(a) Each Credit Party executing this Agreement hereby agrees that from and after
the Closing Date and until the Termination Date, it shall deliver to Agent or to
Agent and Lenders, as required, the Financial Statements, notices, Projections
and other information at the times, to the Persons and in the manner set forth
in Annex E.

 

27

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

(b) Each Credit Party executing this Agreement hereby agrees that from and after
the Closing Date and until the Termination Date, it shall deliver to Agent or to
Agent and Lenders, as required, the various Collateral Reports (including
Borrowing Base Certificates in the form of Exhibit 4.1(b)) at the times, to the
Persons and in the manner set forth in Annex F.

 

4.2 Communication with Accountants. Each Credit Party executing this Agreement
authorizes Agent (a) upon prior written notice or (b) so long as an Event of
Default has occurred and is continuing, to communicate directly with its
independent certified public accountants, including PricewaterhouseCoopers LLP,
and authorizes and shall instruct those accountants and advisors to communicate
to Agent and each Lender information relating to any Credit Party with respect
to the business, results of operations and financial condition of any Credit
Party.

 

5. AFFIRMATIVE COVENANTS

 

Each Credit Party executing this Agreement jointly and severally agrees as to
all Credit Parties that from and after the date hereof and until the Termination
Date:

 

5.1 Maintenance of Existence and Conduct of Business. Each Credit Party shall do
or cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence and its material rights and franchises; except as
otherwise expressly permitted hereunder, continue to conduct its business
substantially as now conducted or as otherwise permitted hereunder; at all times
maintain, preserve and protect all of its assets and properties used or useful
in the conduct of its business, and keep the same in good repair, working order
and condition in all material respects (taking into consideration ordinary wear
and tear) and from time to time make, or cause to be made, all necessary or
appropriate repairs, replacements and improvements thereto consistent with
industry practices; and transact business only in such corporate and trade names
as are set forth in Disclosure Schedule (5.1).

 

5.2 Payment of Charges.

 

(a) Subject to Section 5.2(b), each Credit Party shall pay and discharge or
cause to be paid and discharged promptly all Charges payable by it, including
(i) Charges imposed upon it, its income and profits, or any of its property
(real, personal or mixed), (ii) Charges with respect to tax, social security and
unemployment withholding with respect to its employees, (iii) lawful claims for
labor, materials, supplies and services or otherwise, and (iv) all storage or
rental charges payable to warehousemen and bailees, in each case, before any
thereof shall become past due, except in the case of clauses (i), (iii) and (iv)
where the failure to pay or discharge such Charges would not result in aggregate
liabilities in excess of $300,000.

 

(b) Each Credit Party may in good faith contest, by appropriate proceedings, the
validity or amount of any Charges, Taxes or claims described in Section 5.2(a);
provided, that: (i) adequate reserves with respect to such contest are
maintained on the books of such Credit Party, in accordance with GAAP; (ii) no
Lien shall be imposed to secure payment of such Charges (other than payments to
warehousemen or bailees) that is superior to any of the Liens securing the
Obligations and such contest is maintained and prosecuted continuously and with

 

28

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

diligence and operates to suspend collection or enforcement of such Charges;
(iii) none of the Collateral becomes subject to forfeiture or loss as a result
of such contest; and (iv) such Credit Party shall promptly pay or discharge such
contested Charges, Taxes or claims and all additional charges, interest,
penalties and expenses, if any, and shall deliver to Agent evidence reasonably
acceptable to Agent of such compliance, payment or discharge, if such contest is
terminated or discontinued adversely to such Credit Party or the conditions set
forth in this Section 5.2(b) are no longer met.

 

5.3 Books and Records. Each Credit Party shall keep adequate books and records
with respect to its business activities in which proper entries, reflecting all
financial transactions, are made in accordance with GAAP and on a basis
consistent with the Financial Statements attached as Disclosure Schedule
(3.4(a)).

 

5.4 Insurance; Damage to or Destruction of Collateral.

 

(a) The Credit Parties shall, at their sole cost and expense, maintain the
policies of insurance described in Disclosure Schedule (3.18) as in effect on
the date hereof or otherwise in form and amounts and with insurers reasonably
acceptable to Agent. Such policies of insurance (or the loss payable and
additional insured endorsements delivered to Agent) shall contain provisions
pursuant to which the insurer agrees to provide 30 days prior written notice to
Agent in the event of any non-renewal, cancellation or amendment of any such
insurance policy. If any Credit Party at any time or times hereafter shall fail
to obtain or maintain any of the policies of insurance required above or to pay
all premiums relating thereto, Agent may at any time or times thereafter obtain
and maintain such policies of insurance and pay such premiums and take any other
action with respect thereto that Agent deems advisable in its reasonable credit
judgment. Agent shall have no obligation to obtain insurance for any Credit
Party or pay any premiums therefor. By doing so, Agent shall not be deemed to
have waived any Default or Event of Default arising from any Credit Party’s
failure to maintain such insurance or pay any premiums therefor. All sums so
disbursed, including reasonable attorneys’ fees, court costs and other charges
related thereto, shall be payable on demand by Borrowers to Agent and shall be
additional Obligations hereunder secured by the Collateral.

 

(b) Agent reserves the right at any time upon any change in any Credit Party’s
risk profile (including any change in the product mix maintained by any Credit
Party or any laws affecting the potential liability of such Credit Party) to
require additional forms and limits of insurance to, in Agent’s reasonable
credit judgment, adequately protect both Agent’s and Lenders’ interests in all
or any portion of the Collateral and to ensure that each Credit Party is
protected by insurance in amounts and with coverage customary for its industry.
If reasonably requested by Agent, each Credit Party shall deliver to Agent from
time to time a report of a reputable insurance broker reasonably satisfactory to
Agent, with respect to its insurance policies.

 

(c) Each Borrower shall deliver to Agent, in form and substance reasonably
satisfactory to Agent, endorsements to (i) all “All Risk” and business
interruption insurance naming Agent, on behalf of itself and Lenders, as loss
payee, and (ii) all general liability and other liability policies naming Agent,
on behalf of itself and Lenders, as additional insured. Each Borrower
irrevocably makes, constitutes and appoints Agent (and all officers, employees
or

 

29

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

agents designated by Agent), so long as any Default or Event of Default has
occurred and is continuing or the anticipated insurance proceeds exceed
$500,000, as such Borrower’s true and lawful agent and attorney-in-fact for the
purpose of making, settling and adjusting claims under such “All Risk” policies
of insurance, endorsing the name of such Borrower on any check or other item of
payment for the proceeds of such “All Risk” policies of insurance and for making
all determinations and decisions with respect to such “All Risk” policies of
insurance. Agent shall have no duty to exercise any rights or powers granted to
it pursuant to the foregoing power-of-attorney. Borrower Representative shall
promptly notify Agent of any loss, damage, or destruction to the Collateral in
the amount of $250,000 or more, whether or not covered by insurance. At any time
after the occurrence of an Activation Date, and after deducting from such
proceeds (i) the expenses incurred by Agent in the collection or handling
thereof, and (ii) amounts required to be paid to creditors (other than Lenders)
having Permitted Encumbrances, Agent may, at its option, apply such proceeds to
the reduction of the Obligations in accordance with Section 1.3(d).
Notwithstanding the foregoing, if the casualty giving rise to such insurance
proceeds could not reasonably be expected to have a Material Adverse Effect and
such insurance proceeds do not exceed $500,000 in the aggregate, Agent shall
permit the applicable Borrower to replace, restore, repair or rebuild the
property; provided, that if such Borrower shall not have completed or entered
into binding agreements to complete such replacement, restoration, repair or
rebuilding within 180 days of such casualty, Agent may apply such insurance
proceeds to the Obligations in accordance with Section 1.3(d). All insurance
proceeds that are to be made available to any Borrower following the occurrence
of an Dominion Activation Event to replace, repair, restore or rebuild the
Collateral shall be applied by Agent to reduce the outstanding principal balance
of the Revolving Loan of such Borrower (which application shall not result in a
permanent reduction of the Revolving Loan Commitment) and upon such application,
Agent shall establish a Reserve against such Borrower’s Borrowing Base in an
amount equal to the amount of such proceeds so applied. To the extent not used
to replace, repair, restore or rebuild the Collateral, such insurance proceeds
shall be applied in accordance with Section 1.3(d).

 

5.5 Compliance with Laws. Each Credit Party shall comply with all federal,
state, local and foreign laws and regulations applicable to it, including those
relating to ERISA, labor laws, and Environmental Laws and Environmental Permits,
except to the extent that the failure to comply, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

5.6 Supplemental Disclosure. From time to time as may be reasonably requested by
Agent (which request will not be made more frequently than once each year absent
the occurrence and continuance of an Event of Default) or at Credit Parties’
election, the Credit Parties shall supplement each Disclosure Schedule hereto,
or any representation herein or in any other Loan Document, with respect to any
matter hereafter arising that, if existing or occurring at the date of this
Agreement, would have been required to be set forth or described in such
Disclosure Schedule or as an exception to such representation or that is
necessary to correct any information in such Disclosure Schedule or
representation which has been rendered inaccurate thereby (and, in the case of
any supplements to any Disclosure Schedule, such Disclosure Schedule shall be
appropriately marked to show the changes made therein); provided, that (a) no
such supplement to any such Disclosure Schedule or representation shall amend,
supplement or otherwise modify any Disclosure Schedule or representation, or be
or be deemed a waiver of any

 

30

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

Default or Event of Default resulting from the matters disclosed therein, except
as consented to by Agent and Requisite Lenders in writing, and (b) no supplement
shall be required or permitted as to representations and warranties that relate
solely to the Closing Date.

 

5.7 Intellectual Property. Each Credit Party will conduct its business and
affairs without infringement of or interference with any Intellectual Property
of any other Person in any material respect and shall comply with the terms of
its Licenses, except where such infringement, interference or non-compliance
could not reasonably be expected to result in a Material Adverse Effect.

 

5.8 Environmental Matters. Each Credit Party shall and shall cause each Person
within its control to: (a) conduct its operations and keep and maintain its Real
Estate in compliance with all Environmental Laws and Environmental Permits other
than noncompliance that could not reasonably be expected to have a Material
Adverse Effect; (b) implement any and all investigation, remediation, removal
and response actions that are necessary to comply with Environmental Laws and
Environmental Permits pertaining to the presence, generation, treatment,
storage, use, disposal, transportation or Release of any Hazardous Material on,
at, in, under, above, to, from or about any of its Real Estate in all material
respects; (c) notify Agent promptly after such Credit Party becomes aware of any
violation of Environmental Laws or Environmental Permits or any Release on, at,
in, under, above, to, from or about any Real Estate that is reasonably likely to
result in Environmental Liabilities in excess of $500,000; and (d) promptly
forward to Agent a copy of any order, notice, request for information or any
communication or report received by such Credit Party in connection with any
such violation or Release or any other matter relating to any Environmental Laws
or Environmental Permits that could reasonably be expected to result in
Environmental Liabilities in excess of $500,000 in each case whether or not the
Environmental Protection Agency or any Governmental Authority has taken or
threatened any action in connection with any such violation, Release or other
matter. If Agent at any time has a reasonable basis to believe that any Credit
Party has caused a violation of any Environmental Laws or Environmental Permits
by any Credit Party or any Environmental Liability arising thereunder, or a
Release of Hazardous Materials on, at, in, under, above, to, from or about any
of its Real Estate, that, in each case, could reasonably be expected to have a
Material Adverse Effect, then each Credit Party shall, upon Agent’s written
request (i) cause the performance of such environmental audits including
subsurface sampling of soil and groundwater, and preparation of such
environmental reports, at Borrowers’ expense, as Agent may reasonably request
relating to such violation or Release, which shall be conducted by reputable
environmental consulting firms reasonably acceptable to Agent and shall be in
form and substance reasonably acceptable to Agent (“Environmental
Investigation”), or (ii) permit Agent or its representatives to have access to
all Real Estate for the purpose of conducting such Environmental Investigation.
Borrowers shall reimburse Agent for the costs of such Environmental
Investigations conducted by Agent or its representatives.

 

5.9 Landlords’ Agreements, Mortgagee Agreements, Bailee Letters and Real Estate
Purchases. Each Borrower and each Subsidiary Guarantor shall use commercially
reasonable efforts to obtain a landlord’s agreement, mortgagee agreement or
bailee letter, as applicable, from the lessor of each leased property, mortgagee
of owned property or bailee with respect to any warehouse, processor or
converter facility or other location where Collateral is stored or located,
which agreement or letter shall contain a waiver or subordination of all Liens
or claims

 

31

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

that the landlord, mortgagee or bailee may assert against the Collateral at that
location, and shall otherwise be reasonably satisfactory in form and substance
to Agent. Each Borrower and each Subsidiary Guarantor shall timely and fully pay
and perform its obligations under all leases and other agreements with respect
to each leased location or public warehouse where any Collateral is or may be
located. To the extent otherwise permitted hereunder, if any Borrower or
Subsidiary Guarantor proposes to acquire a fee ownership interest in Real Estate
after the Closing Date, it shall first provide to Agent a mortgage or deed of
trust granting Agent a first priority Lien on such Real Estate, together with
environmental audits, mortgage title insurance commitment, real property survey,
local counsel opinion(s), and, if required by Agent, supplemental casualty
insurance and flood insurance, and such other documents, instruments or
agreements reasonably requested by Agent, in each case, in form and substance
reasonably satisfactory to Agent.

 

5.10 Further Assurances. Each Credit Party executing this Agreement agrees that
it shall and shall cause each other Credit Party to, at such Credit Party’s
expense and upon the reasonable request of Agent, duly execute and deliver, or
cause to be duly executed and delivered, to Agent such further instruments and
do and cause to be done such further acts as may be necessary or proper in the
reasonable opinion of Agent to carry out more effectively the provisions and
purposes of this Agreement and each Loan Document.

 

6. NEGATIVE COVENANTS

 

Each Credit Party executing this Agreement jointly and severally agrees as to
all Credit Parties that from and after the date hereof until the Termination
Date:

 

6.1 Mergers, Subsidiaries, Etc. No Credit Party shall directly or indirectly, by
operation of law or otherwise, (a) merge with, consolidate with, acquire all or
substantially all of the assets or Stock of, or otherwise combine with or
acquire, any Person (other than the merger or consolidation of a Borrower with
another Borrower, a Subsidiary Guarantor with another Subsidiary Guarantor, or a
Subsidiary Guarantor with Borrower, with Borrower as the surviving entity). or
(b) form or acquire any Subsidiary. Notwithstanding the foregoing, any Credit
Party may form a Subsidiary or otherwise acquire all or substantially all of the
assets or Stock of any Person (the “Target”) (in each case, a “Permitted
Acquisition”) subject to the satisfaction of each of the following conditions:

 

(i) Agent shall receive not less than 30 days’ prior written notice of the
consummation of each such Permitted Acquisition;

 

(ii) such Permitted Acquisition shall be consensual (i.e., it shall not involve
a hostile takeover);

 

(iii) such Permitted Acquisition shall only involve assets located in the United
States and Canada comprising a business, or those assets of a business, of the
type engaged in by Borrowers as of the Closing Date or reasonably related
thereto in Agent’s good faith credit judgment, and which business would not
subject Agent or any Lender to regulatory or third party approvals in connection
with the exercise of its rights and remedies under this Agreement or any other
Loan Documents, other than approvals applicable to the exercise of such rights
and remedies with respect to Borrowers prior to such Permitted Acquisition;

 

32

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

(iv) each Target shall have become a “Credit Party” under this Agreement, and
shall have executed and delivered to Lender all documents reasonably requested
by Lender in furtherance of the foregoing, including, (a) with respect to a
Target owned by any Parent Guarantor, a Guaranty in form and substance
satisfactory to Agent, and (b) with respect to a Target organized under the laws
the United States and owned by any Borrower or Subsidiary Guarantor, a joinder
to the Security Agreement, a joinder to the Pledge Agreement, and if requested
by Agent, a Guaranty in form and substance satisfactory to Agent;

 

(v) such Credit Party shall execute and deliver to Agent such agreements and
documents reasonably requested by Agent in order to grant to the Agent, for the
benefit of Agent and Lenders, a perfected first priority security interest in
all of the Stock of the Target (or up to 65% of Capital Stock of any Target
organized under the laws of any jurisdiction other than the United States);

 

(vi) the costs, fees or expenses of forming or acquiring any such new Target
shall be provided by a direct or indirect contribution from any Parent
Guarantor; provided, that if after the payment of such costs, fees or expenses
of formation or acquisition, Liquidity exceeds $15,000,000, then there shall be
no limitation on the source of such costs, fees or expenses with respect to
Targets who become “Borrowers” or “Subsidiary Guarantors”; provided, that in no
event will Borrowers contribute more than $5,000,000 in the aggregate in any
Fiscal Year for such costs, fees or expenses;

 

(vii) no additional Indebtedness, Guaranteed Indebtedness, contingent
obligations or other liabilities shall be incurred, assumed, or otherwise
reflected on the consolidated balance sheet of Borrowers and their Subsidiaries
after giving affect to the Permitted Acquisition, except (A) Loans made
hereunder and (B) ordinary course trade payables, accrued expenses and unsecured
Indebtedness and contingent obligations of the Target to the extent no Default
or Event of Default would result after giving effect to such Permitted
Acquisition;

 

(viii) the business and assets of each Target shall be free and clear of all
Liens (other than the first priority Lien of Agent and Permitted Encumbrances);

 

(ix) at or prior to the consummation of the Permitted Acquisition, Lender shall
have received from Borrower a written supplement to Disclosure Schedule (3.8(a))
and to any other Schedule to the Loan Agreement, in each case to the extent
necessary to correct any information in such Schedule after giving effect to the
Permitted Acquisition;

 

(x) Concurrently with delivery of the notice referred to in clause (i) above,
Credit Parties shall have delivered to Agent, in form and substance reasonably
satisfactory to Agent:

 

(A) a pro forma consolidated balance sheet, income statement and cash flow
statement of Parent and its Subsidiaries (the “Acquisition Pro Forma”), based on
recent financial statements, which shall be complete and

 

33

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

shall fairly present in all material respects the assets, liabilities, financial
condition and results of operations of Parent and its Subsidiaries in accordance
with GAAP consistently applied, but taking into account such Permitted
Acquisition and the funding of all Loans in connection therewith, and such
Acquisition Pro Forma shall reflect that (y) average Liquidity of all Borrowers
for the 90-day period preceding the consummation of such Permitted Acquisition
would have exceeded $15,000,000 on a pro forma basis (after giving effect to
such Permitted Acquisition and all Loans funded in connection therewith as if
made on the first day of such period) and the Acquisition Projections (as
hereinafter defined) shall reflect that such Liquidity of $15,000,000 shall
continue for at least 90 days after the consummation of such Permitted
Acquisition, and (z) on a pro forma basis, no Event of Default has occurred and
is continuing or would result after giving effect to such Permitted Acquisition
and Borrowers would have been in compliance with the financial covenants set
forth in Annex G for the four quarter period (or such shorter period, as
appropriate, as is tested during the first 12 months following the Closing Date)
reflected in the Compliance Certificate most recently delivered to Agent
pursuant to Annex E prior to the consummation of such Permitted Acquisition
(after giving effect to such Permitted Acquisition and all Loans funded in
connection therewith as if made on the first day of such period);

 

(B) updated versions of the most recently delivered Projections covering the
one-year period commencing on the date of such Permitted Acquisition and
otherwise prepared in accordance with the Projections (the “Acquisition
Projections”) and based upon historical financial data of a recent date
reasonably satisfactory to Agent, taking into account such Permitted
Acquisition; and

 

(C) a certificate of the chief financial officer of Parent to the effect that:
(w) Credit Parties taken as a whole (after taking into consideration all rights
of contribution and indemnity Credit Parties have against each other) will be
Solvent upon the consummation of the Permitted Acquisition; (x) the Acquisition
Pro Forma fairly presents the financial condition of Parent and Borrowers (on a
consolidated basis) as of the date thereof after giving effect to the Permitted
Acquisition; (y) the Acquisition Projections are reasonable estimates of the
future financial performance of Parent and Borrowers subsequent to the date
thereof based upon the historical performance of Credit Parties and the Target
and show that Borrowers shall continue to be in compliance with the financial
covenants set forth in Annex G for the one-year period thereafter, it being
understood that uncertainty is inherent in any forecasts or projections and that
no assurance can be given that the results set forth in the Projections will
actually be obtained; and (z) Credit Parties have completed their due diligence
investigation with respect to the Target and such Permitted Acquisition, which
investigation was conducted in a manner similar to that which would have been
conducted by a prudent purchaser of a comparable business and the results of
which investigation were delivered to Agent and Lenders;

 

34

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

(xi) on or prior to the date of such Permitted Acquisition, Agent shall have
received, in form and substance reasonably satisfactory to Agent, copies of the
acquisition agreement and related agreements and instruments, and all opinions,
certificates, lien search results and other documents reasonably requested by
Agent; and

 

(xii) at the time of such Permitted Acquisition and after giving effect thereto,
no Event of Default has occurred and is continuing.

 

Notwithstanding the foregoing, the Accounts of the Target shall not be included
in Eligible Accounts without the prior written consent of Agent and Requisite
Revolving Lenders.

 

6.2 Investments; Loans and Advances. Except as otherwise expressly permitted by
this Section 6, no Credit Party shall make or permit to exist any investment in,
or make, accrue or permit to exist loans or advances of money to, any Person,
through the direct or indirect lending of money, holding of securities or
otherwise, except that: (a) Borrowers may hold investments comprised of notes
payable, or stock or other securities issued by Account Debtors to any Borrower
pursuant to negotiated agreements with respect to settlement of such Account
Debtor’s Accounts in the ordinary course of business, consistent with past
priorities; (b) each Credit Party may maintain its existing investments in its
Subsidiaries as of the Closing Date, and make additional investments in its
Subsidiaries in an aggregate amount for all Credit Parties not to exceed
$750,000 in any Fiscal Year; and (c) so long as no Event of Default has not
occurred and there is no outstanding Revolving Loan balance, Borrowers may make
investments, subject to Control Letters in favor of Agent for the benefit of
Lenders or otherwise subject to a perfected security interest in favor of Agent
for the benefit of Lenders, in (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency thereof
maturing within one year from the date of acquisition thereof, (ii) commercial
paper maturing no more than one year from the date of creation thereof and
currently having the highest rating obtainable from either Standard & Poor’s
Ratings Group or Moody’s Investors Service, Inc., (iii) certificates of deposit,
bankers acceptances or repurchase agreements maturing no more than one year from
the date of creation thereof issued by commercial banks incorporated under the
laws of the United States of America, each having combined capital, surplus and
undivided profits of not less than $300,000,000 and having a senior unsecured
rating of “A” or better by a nationally recognized rating agency (an “A Rated
Bank”), (iv) time deposits maturing no more than thirty (30) days from the date
of creation thereof with A Rated Banks and (v) mutual funds that invest solely
in one or more of the investments described in clauses (i) through (iv) (the
items in clauses (i) through (v) above being collectively referred to as
“Permitted Investments”).

 

6.3 Indebtedness.

 

(a) No Credit Party shall create, incur, assume or permit to exist any
Indebtedness, except (without duplication):

 

(i) Indebtedness secured by purchase money security interests and Capital Leases
permitted in clause (k) of the definition of “Permitted Encumbrances” set forth
in Annex A;

 

(ii) the Loans and the other Obligations;

 

35

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

(iii) unfunded pension fund and other employee benefit plan obligations and
liabilities to the extent they are permitted to remain unfunded under applicable
law;

 

(iv) existing Indebtedness described in Disclosure Schedule (6.3) and
refinancings thereof or amendments or modifications thereto that do not have the
effect of increasing the principal amount thereof or changing the amortization
thereof (other than to extend the same) and that are otherwise on financial
terms and conditions no less favorable to any Credit Party, Agent or any Lender,
as determined by Agent, than the terms of the Indebtedness being refinanced,
amended or modified;

 

(v) Indebtedness consisting of intercompany loans and advances made by any
Borrower to any other Borrower; provided, that: (A) each Borrower shall have
executed and delivered to each other Borrower, on the Closing Date, a demand
note (collectively, the “Intercompany Notes”) to evidence any such intercompany
Indebtedness owing at any time by such Borrower to such other Borrower, which
Intercompany Notes shall be in form and substance reasonably satisfactory to
Agent and shall be pledged and delivered to Agent pursuant to the Pledge
Agreement as additional collateral security for the Obligations; (B) each
Borrower shall record all intercompany transactions on its books and records in
a manner reasonably satisfactory to Agent; (C) the obligations of each Borrower
under any such Intercompany Notes shall be subordinated to the Obligations of
such Borrower hereunder in a manner reasonably satisfactory to Agent; and (D) at
the time any such intercompany loan or advance is made by any Borrower to any
other Borrower and after giving effect thereto, each such Borrower shall be
Solvent;

 

(vi) Indebtedness consisting of intercompany loans and advances made by any
Borrower to any Subsidiary Guarantor; provided, that: (A) each Subsidiary
Guarantor shall have executed and delivered to each Borrower, on the Closing
Date, an Intercompany Note to evidence any such intercompany Indebtedness owing
at any time by such Subsidiary Guarantor to such Borrower, which Intercompany
Notes shall be in form and substance reasonably satisfactory to Agent and shall
be pledged and delivered to Agent pursuant to the Pledge Agreement as additional
collateral security for the Obligations; (B) each Borrower shall record all
intercompany transactions on its books and records in a manner reasonably
satisfactory to Agent; (C) the obligations of each Subsidiary Guarantor under
any such Intercompany Notes shall be subordinated to the Obligations of the
applicable Borrower hereunder in a manner reasonably satisfactory to Agent; (D)
at the time any such intercompany loan or advance is made by any Borrower to any
Subsidiary Guarantor and after giving effect thereto, each such Borrower shall
be Solvent; (E) no Event of Default would occur and be continuing after giving
effect to any such proposed intercompany loan;

 

(vii) Indebtedness consisting of loans by Borrower or any Guarantor to a
wholly-owned foreign Subsidiary (that is a Credit Party) in an aggregate amount
not to exceed $50,000 in any Fiscal Year;

 

(viii) Indebtedness arising under performance, surety, appeal and other bonds
disclosed in Disclosure Schedule (3.22);

 

36

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

(ix) Indebtedness owing to insurance companies in the ordinary course of
business to finance such Credit Party’s annual insurance premiums;

 

(x) contingent liabilities arising out of the endorsements of checks and other
negotiable instruments for deposit or collection in the ordinary course of
business and netting and overdraft protections;

 

(xi) Indebtedness of a Target which became a Credit Party after the Closing Date
to the extent permitted under Section 6.1;

 

(xii) Indebtedness of the DDi Capital Corp. arising under the Senior Accreting
Notes;

 

(xiii) unsecured Indebtedness arising out of interest rate and foreign currency
hedging agreements entered into with financial institutions in the ordinary
course of business in an aggregate outstanding notional amount not to exceed
$5,000,000 at any time; and

 

(xiv) other unsecured Indebtedness in an aggregate amount not to exceed $750,000
in any Fiscal Year.

 

(b) No Credit Party shall, directly or indirectly, voluntarily purchase, redeem,
defease or prepay any principal of, premium, if any, interest or other amount
payable in respect of any Indebtedness prior to its scheduled maturity, other
than (i) the Obligations; (ii) Indebtedness secured by a Permitted Encumbrance
if the asset securing such Indebtedness has been sold or otherwise disposed of
in accordance with Sections 6.8(b) or (c); (iii) Indebtedness permitted by
Section 6.3(a)(iv) upon any refinancing thereof in accordance with Section
6.3(a)(iv); and (iv) other Indebtedness not in excess of $500,000.

 

6.4 Employee Loans and Affiliate Transactions.

 

(a) No Credit Party shall enter into or be a party to any transaction with any
other Credit Party or any Affiliate thereof except in the ordinary course of and
pursuant to the reasonable requirements of such Credit Party’s business and upon
fair and reasonable terms that are no less favorable to such Credit Party than
would be obtained in a comparable arm’s length transaction with a Person not an
Affiliate of such Credit Party. All such transactions with Affiliates (other
than Credit Parties) existing as of the Closing Date hereof are described in
Disclosure Schedule (6.4(a)).

 

(b) No Credit Party shall enter into any lending or borrowing transaction with
any employees of any Credit Party, except loans to its respective employees on
an arm’s-length basis in the ordinary course of business consistent with past
practices for travel and entertainment expenses, relocation costs and similar
purposes up to a maximum of $200,000 in the aggregate at any one time
outstanding.

 

6.5 Capital Structure and Business. If all or part of a Credit Party’s Stock is
pledged to Agent, that Credit Party shall not issue additional Stock. No Credit
Party shall amend its charter or bylaws in a manner that would adversely affect
Agent or Lenders or such Credit Party’s duty or ability to repay the
Obligations. No Credit Party shall engage in any business other than the
businesses currently engaged in by it or businesses reasonably related thereto
as determined in Agent’s reasonable credit judgment.

 

37

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

6.6 Guaranteed Indebtedness. No Credit Party shall create, incur, assume or
permit to exist any Guaranteed Indebtedness except (a) by endorsement of
instruments or items of payment for deposit to the general account of any Credit
Party, and (b) for Guaranteed Indebtedness incurred for the benefit of any other
Credit Party if the primary obligation is expressly permitted by this Agreement.

 

6.7 Liens. No Credit Party shall create, incur, assume or permit to exist any
Lien on or with respect to its Accounts or any of its other properties or assets
(whether now owned or hereafter acquired) except for Permitted Encumbrances. In
addition, no Credit Party shall become a party to any agreement, note, indenture
or instrument, or take any other action, that would prohibit the creation of a
Lien on any of its properties or other assets in favor of Agent, on behalf of
itself and Lenders, as additional collateral for the Obligations, except
operating leases, Capital Leases or Licenses which prohibit Liens upon the
assets that are subject thereto.

 

6.8 Sale of Stock and Assets. No Credit Party shall sell, transfer, convey,
assign or otherwise dispose of any of its properties or other assets, including
the Stock of any of its Subsidiaries (whether in a public or a private offering
or otherwise) or any of its Accounts, other than: (a) the sale of Inventory in
the ordinary course of business, (b) the sale or other disposition by a Credit
Party of Equipment, Fixtures or Real Estate that are obsolete or no longer used
or useful in such Credit Party’s business and having a book value, not exceeding
$500,000 in the aggregate in any Fiscal Year; (c) the sale or other disposition
of other property or assets having a book value not exceeding $300,000 in the
aggregate in any Fiscal Year; (d) the license of Intellectual Property or lease
of Equipment to third parties in the ordinary course of business, so long as
such license or lease, as the case may be, does not prohibit the granting of a
Lien in favor of the Agent in the Intellectual Property which is the subject of
such license; and (e) the disposition of Stock and assets to the extent
permitted under Section 6.1(a); and (f) the sale or liquidation of Permitted
Investments in the ordinary course of business. Upon the sale or other
disposition of any asset permitted under this Section 6.8 and the receipt by
Borrower of the proceeds thereof, Agent shall deliver to Borrowers termination
statements, releases or such other documents as may be reasonably requested by
Borrowers to evidence the release of Agent’s Lien thereon.

 

6.9 ERISA. No Credit Party shall, or shall cause or permit any ERISA Affiliate
to, cause or permit to occur (a) an event that could reasonably be expected to
result in the imposition of a Lien under Section 412 of the IRC or Section 302
or 4068 of ERISA or (b) an ERISA Event to the extent such ERISA Event would
reasonably be expected to result in taxes, penalties and other liabilities in an
aggregate amount that could reasonably be expected to have a Material Adverse
Effect.

 

6.10 Financial Covenants. Borrowers shall not breach or fail to comply with any
of the Financial Covenants.

 

6.11 Hazardous Materials. No Credit Party shall cause or permit a Release of any
Hazardous Material on, at, in, under, above, to, from or about any of the Real
Estate where such

 

38

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

Release would (a) violate in any respect, or form the basis for any
Environmental Liabilities under, any Environmental Laws or Environmental Permits
or (b) otherwise adversely impact the value or marketability of any of the Real
Estate or any of the Collateral, except, in each case, as could not reasonably
be expected to have a Material Adverse Effect.

 

6.12 Sale-Leasebacks. No Credit Party shall engage in any sale-leaseback,
synthetic lease or similar transaction involving any of its assets having a fair
market value in excess of $1,000,000 in the aggregate in any Fiscal Year.

 

6.13 Restricted Payments. No Credit Party shall make any Restricted Payment,
except:

 

(a) intercompany loans and advances between Credit Parties to the extent
permitted under Section 6.3;

 

(b) dividends and distributions (i) by Subsidiaries of any Borrower paid to such
Borrower, or (ii) by Parent paid in the form of capital Stock;

 

(c) employee loans permitted under Section 6.4(b);

 

(d) payments of principal and interest of Intercompany Notes issued in
accordance with Section 6.3;

 

(e) (i) beginning after the one year anniversary of the Closing Date, so long as
(i) no Default or Event of Default has occurred and is continuing or would
result from any such proposed payment, (ii) Borrowers have Liquidity of at least
$15,000,000 (on a pro forma basis, with trade payables being paid currently, and
expenses and liabilities being paid in the ordinary course of business, and
without acceleration of sales) after giving effect to any such proposed payment,
and (iii) Borrowers and their Subsidiaries have a Fixed Charge Coverage Ratio
(as certified by Details’ chief financial officer) for the 12-month period
ending at the end of the Fiscal Quarter ending immediately preceding the date
such payment is proposed to be made of at least 1.5:1.0 after giving effect to
such proposed payment as if it had been made during such Fiscal Quarter, then
Borrowers may make distributions to Parent in order for Parent to make payments
of dividends on the Series B Preferred Stock in an aggregate amount not to
exceed the accrued amounts due on the Series B Preferred Stock during any Fiscal
Quarter pursuant to Section 1 of the Series B Certificate of Designation, and

 

(ii) Parent may make payments of dividends on the Series B Preferred Stock in an
aggregate amount not to exceed the accrued amounts due on the Series B Preferred
Stock during any Fiscal Quarter pursuant to Section 1of the Series B Certificate
of Designation;

 

(f) (i) so long as (i) no Default or Event of Default has occurred and is
continuing or would result from any such proposed payment, (ii) Borrowers have
Liquidity of at least $15,000,000 (on a pro forma basis, with trade payables
being paid currently, and expenses and liabilities being paid in the ordinary
course of business, and without acceleration of sales) after giving effect to
any such proposed payment, and (iii) Borrowers and their Subsidiaries have a
Fixed Charge Coverage Ratio (as certified by Details’ chief financial officer)
for the 12-month period (or such shorter period, as appropriate, as is tested
during the first 12 months following the Closing Date) ending at the end of the
Fiscal Quarter ending immediately

 

39

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

preceding the date such payment is proposed to be made of at least 1.5:1.0 after
giving effect to such proposed payment as if it had been made during such Fiscal
Quarter, then Borrowers may make distributions to DDi Capital Corp. in order for
DDi Capital Corp. to make, and DDi Capital Corp. may make, payments of interest
on the Senior Accreting Notes in an aggregate amount not to exceed $660,000 in
any Fiscal Quarter;

 

(ii) so long as (i) no Default or Event of Default has occurred and is
continuing or would result from any such proposed payment, and (ii) Borrowers
have Liquidity of at least $15,000,000 (on a pro forma basis, with trade
payables being paid currently, and expenses and liabilities being paid in the
ordinary course of business, and without acceleration of sales) after giving
effect to any such proposed payment, then Borrowers may make distributions to
DDi Capital Corp. in order for DDi Capital Corp. to make, and DDi Capital Corp.
may make, the Senior Accreting Notes Interest Payment;

 

(g) Parent may declare and pay dividends with respect to (i) its capital stock
payable solely in additional shares of its capital stock, and (ii) its Series A
Preferred Stock payable solely from the proceeds of (A) dividends and
distributions received from its Subsidiary, DDi Europe Limited, and (B) any
disposition of the capital Stock of DDi Europe Limited;

 

(h) Parent may purchase, redeem or otherwise acquire any Series B Preferred
Stock (together with accrued and unpaid dividends thereon) pursuant to Sections
5A (mandatory redemptions), 5B (optional redemption of holder), and 5D
(redemption upon a change of control) of the Series B Preferred Certificate of
Designation;

 

(i) so long as (i) no Default or Event of Default has occurred and is continuing
or would result from any such proposed payment, (ii) Borrowers have Liquidity of
at least $15,000,000 (on a pro forma basis, with trade payables being paid
currently, and expenses and liabilities being paid in the ordinary course of
business, and without acceleration of sales) after giving effect to any such
proposed payment, and (iii) Borrowers and their Subsidiaries have a Fixed Charge
Coverage Ratio (as certified by Details’ chief financial officer) for the
12-month period ending at the end of the Fiscal Quarter ending immediately
preceding the date such payment is proposed to be made of at least 1.50:1.0
after giving effect to such proposed payment as if it had been made during such
Fiscal Quarter, then Borrower Representative may advance monies to Parent for
the purpose of making the Restricted Payment permitted in Section 6.13(h);

 

(j) so long as no Event of Default has occurred and is continuing, any Credit
Party organized outside of the United States may make quarterly distributions in
the amount necessary for any United States Shareholder (as defined in Section
951(b) of the IRC) to pay any United States tax on any amounts included under
Section 951 of the IRC, after taking into account any available foreign tax
credits; and

 

(k) payments to any other Credit Party for directors’ fees and the reimbursement
of legal and accounting expenses incurred in the ordinary course of business in
an aggregate amount not to exceed $500,000 in any Fiscal Year.

 

6.14 Change of Corporate Name; State of Organization, Location or Fiscal Year.
No Credit Party shall (a) change its name as it appears in official filings in
the state of its

 

40

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

incorporation or other organization, (b) change its chief executive office,
principal place of business, corporate offices or warehouses or locations at
which Collateral is held or stored, or the location of its records concerning
the Collateral, (c) change the type of entity that it is, (d) change its
organization identification number, if any, issued by its state of incorporation
or other organization, or (e) change its state of incorporation or organization
or incorporate or organize in any additional jurisdictions, in each case without
at least 30 days prior written notice to Agent and after Agent’s written
acknowledgment that any reasonable action requested by Agent in connection
therewith, including to continue the perfection of any Liens in favor of Agent,
on behalf of Lenders, in any Collateral, has been completed or taken, and
provided that any such new location shall be in the continental United States.
No Credit Party shall change its Fiscal Year.

 

6.15 No Impairment of Intercompany Transfers. No Credit Party shall directly or
indirectly enter into or become bound by any agreement, instrument, indenture or
other obligation (other than this Agreement and the other Loan Documents) that
could directly or indirectly restrict, prohibit or require the consent of any
Person with respect to the payment of dividends or distributions or the making
or repayment of intercompany loans by a Subsidiary of any Borrower to any
Borrower or between Borrowers.

 

6.16 Restrictions Affecting Senior Accreting Notes. Notwithstanding any
encumbrance or restriction set forth in Section 6.2, 6.3, 6.4, or 6.13 relating
to DDi Capital Corp. and its Subsidiaries, to the extent (and only to the
extent) any such encumbrance or restriction would violate Section 1010 of the
Senior Accreting Note Indenture dated as of December 12, 2003, then such
encumbrance or restriction shall not apply.

 

7. TERM

 

7.1 Termination. The financing arrangements contemplated hereby shall be in
effect until the Commitment Termination Date, and the Loans and all other
Obligations shall be automatically due and payable in full on such date.

 

7.2 Survival of Obligations Upon Termination of Financing Arrangements. Except
as otherwise expressly provided for in the Loan Documents (including the
immediately succeeding sentence), no termination or cancellation of any
financing arrangement under this Agreement shall in any way affect or impair the
obligations, duties and liabilities of the Credit Parties or the rights of Agent
and Lenders relating to any unpaid portion of the Loans or any other
Obligations, due or not due, liquidated, contingent or unliquidated or any
transaction or event occurring prior to such termination, or any transaction or
event, the performance of which is required after the Commitment Termination
Date. Except as otherwise expressly provided herein or in any other Loan
Document, all undertakings, agreements, covenants, warranties and
representations of or binding upon the Credit Parties, and all rights of Agent
and each Lender, all as contained in the Loan Documents, shall not terminate or
expire, but rather shall survive any such termination or cancellation and shall
continue in full force and effect until the Termination Date; provided, that the
provisions of Section 11, the payment obligations under Sections 1.15 and 1.16,
and the indemnities contained in the Loan Documents shall survive the
Termination Date.

 

41

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

8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES

 

8.1 Events of Default. The occurrence of any one or more of the following events
(regardless of the reason therefor) shall constitute an “Event of Default”
hereunder:

 

(a) Any Borrower (i) fails to make any payment of principal of, or interest on,
or Fees owing in respect of, the Loans or any of the other Obligations when due
and payable, or (ii) fails to pay or reimburse Agent or Lenders for any expense
reimbursable hereunder or under any other Loan Document within 10 days following
Agent’s demand for such reimbursement or payment of expenses.

 

(b) Any Credit Party fails or neglects to perform, keep or observe any of the
provisions of Sections 1.4, 1.8, 5.4(a) or 6 (other than Section 6.11), or any
of the provisions set forth in Annexes C or G, respectively.

 

(c) Any Borrower fails or neglects to perform, keep or observe (i) any of the
provisions of Section 4.1(a) or any provisions set forth in Annex E, and the
same shall remain unremedied for five Business Days or more, or (ii) any of the
provisions of Section 4.1(b) or any provisions set forth in Annex F, and the
same shall remain unremedied for three Business Days or more.

 

(d) Any Credit Party fails or neglects to perform, keep or observe any other
provision of this Agreement or of any of the other Loan Documents (other than
any provision embodied in or covered by any other clause of this Section 8.1)
and the same shall remain unremedied for 30 days or more.

 

(e) A default or breach occurs under any other agreement, document or instrument
to which any Credit Party is a party that is not cured within any applicable
grace period therefor, and such default or breach (i) involves the failure to
make any payment when due in respect of any Indebtedness or Guaranteed
Indebtedness (other than the Obligations) of any Credit Party in excess of
$750,000 in the aggregate (including (x) undrawn committed or available amounts
and (y) amounts owing to all creditors under any combined or syndicated credit
arrangements), or (ii) causes, or permits any holder of such Indebtedness or
Guaranteed Indebtedness or a trustee to cause, Indebtedness or Guaranteed
Indebtedness or a portion thereof in excess of $750,000 in the aggregate to
become due prior to its stated maturity or prior to its regularly scheduled
dates of payment, or cash collateral in respect thereof to be demanded, in each
case, regardless of whether such default is waived, or such right is exercised,
by such holder or trustee.

 

(f) Any information contained in any Borrowing Base Certificate is untrue or
incorrect in any respect (other than (i) inadvertent, immaterial errors not
exceeding $100,000 in the aggregate in any Borrowing Base Certificate), (ii)
errors understating the Borrowing Base and (iii) errors occurring when Borrowing
Availability continues to exceed $5,000,000 after giving effect to the
correction of such errors), or any representation or warranty herein or in any
Loan Document or in any written statement, report, financial statement or
certificate (other than a Borrowing Base Certificate) made or delivered to Agent
or any Lender by any Credit Party is untrue or incorrect in any material respect
as of the date when made or deemed made.

 

42

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

(g) Assets of any Credit Party with a fair market value of $500,000 or more are
attached, seized, levied upon or subjected to a writ or distress warrant, or
come within the possession of any receiver, trustee, custodian or assignee for
the benefit of creditors of any Credit Party and such condition continues for 30
days or more.

 

(h) A case or proceeding is commenced against any Credit Party seeking a decree
or order in respect of such Credit Party (i) under the Bankruptcy Code or any
other applicable federal, state or foreign bankruptcy or other similar law, (ii)
appointing a custodian, receiver, liquidator, assignee, trustee or sequestrator
(or similar official) for such Credit Party or for any substantial part of any
such Credit Party’s assets, or (iii) ordering the winding-up or liquidation of
the affairs of such Credit Party, and such case or proceeding shall remain
undismissed or unstayed for 60 days or more or a decree or order granting the
relief sought in such case or proceeding is granted by a court of competent
jurisdiction.

 

(i) Any Credit Party (i) files a petition seeking relief under the Bankruptcy
Code or any other applicable federal, state or foreign bankruptcy or other
similar law, (ii) consents to or fails to contest in a timely and appropriate
manner to the institution of proceedings thereunder or to the filing of any such
petition or to the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar official) for such
Credit Party or for any substantial part of any such Credit Party’s assets,
(iii) makes an assignment for the benefit of creditors, (iv) takes any action in
furtherance of any of the foregoing, or (v) admits in writing its inability to,
or is generally unable to, pay its debts as such debts become due.

 

(j) A final judgment or judgments for the payment of money in excess of $500,000
in the aggregate at any time are outstanding against one or more of the Credit
Parties (which judgments are not covered by insurance policies as to which
liability has been accepted by the insurance carrier), and the same are not,
within 30 days after the entry thereof, discharged or execution thereof stayed
or bonded pending appeal, or such judgments are not discharged prior to the
expiration of any such stay.

 

(k) Any material provision of any Loan Document for any reason ceases to be
valid, binding and enforceable in accordance with its terms (or any Credit Party
shall challenge the enforceability of any Loan Document or shall assert in
writing, or engage in any action or inaction based on any such assertion, that
any provision of any of the Loan Documents has ceased to be or otherwise is not
valid, binding and enforceable in accordance with its terms), or any Lien
created under any Loan Document ceases to be a valid and perfected first
priority Lien (except as otherwise permitted herein or therein) in any of the
Collateral purported to be covered thereby.

 

(l) Any Change of Control occurs.

 

8.2 Remedies.

 

(a) If any Event of Default has occurred and is continuing, Agent may (and at
the written request of the Requisite Revolving Lenders shall), without notice,
suspend the Revolving Loan facility with respect to additional Advances or the
incurrence of additional

 

43

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

Letter of Credit Obligations, whereupon any additional Advances and additional
Letter of Credit Obligations shall be made or incurred in Agent’s sole
discretion (or in the sole discretion of the Requisite Revolving Lenders, if
such suspension occurred at their direction) so long as such Default or Event of
Default is continuing. If any Event of Default has occurred and is continuing,
Agent may (and at the written request of Requisite Lenders shall), without
notice except as otherwise expressly provided herein, increase the rate of
interest applicable to the Loans and the Letter of Credit Fees to the Default
Rate.

 

(b) If any Event of Default has occurred and is continuing, Agent may (and at
the written request of the Requisite Lenders shall), without notice: (i)
terminate the Revolving Loan facility with respect to further Advances or the
incurrence of further Letter of Credit Obligations; (ii) reduce the Revolving
Loan Commitment from time to time; (iii) declare all or any portion of the
Obligations, including all or any portion of any Loan to be forthwith due and
payable, and require that the Letter of Credit Obligations be cash
collateralized in the manner set forth in Annex B, all without presentment,
demand, protest or further notice of any kind, all of which are expressly waived
by Borrowers and each other Credit Party; or (iv) exercise any rights and
remedies provided to Agent under the Loan Documents or at law or equity,
including all remedies provided under the Code; provided, that upon the
occurrence of an Event of Default specified in Sections 8.1(h) or (i), the
Commitments shall be immediately terminated and all of the Obligations,
including the Revolving Loan, shall become immediately due and payable without
declaration, notice or demand by any Person.

 

8.3 Waivers by Credit Parties. Except as otherwise provided for in this
Agreement or by applicable law, each Credit Party waives (including for purposes
of Section 12): (a) presentment, demand and protest and notice of presentment,
dishonor, notice of intent to accelerate, notice of acceleration, protest,
default, nonpayment, maturity, release, compromise, settlement, extension or
renewal of any or all commercial paper, accounts, contract rights, documents,
instruments, chattel paper and guaranties at any time held by Agent on which any
Credit Party may in any way be liable, and hereby ratifies and confirms whatever
Agent may do in this regard, (b) all rights to notice and a hearing prior to
Agent’s taking possession or control of, or to Agent’s replevy, attachment or
levy upon, the Collateral or any bond or security that might be required by any
court prior to allowing Agent to exercise any of its remedies, and (c) the
benefit of all valuation, appraisal, marshaling and exemption laws.

 

9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT

 

9.1 Assignment and Participations.

 

(a) Subject to the terms of this Section 9.1, any Lender may make an assignment
to a Qualified Assignee of, or sell participations in, at any time or times, the
Loan Documents, Loans, Letter of Credit Obligations and any Commitment or any
portion thereof or interest therein, including any Lender’s rights, title,
interests, remedies, powers or duties thereunder. Any assignment by a Lender
shall: (i) require the consent of Agent (which consent shall not be unreasonably
withheld or delayed with respect to a Qualified Assignee) and the execution of
an assignment agreement (an “Assignment Agreement”) substantially in the form
attached hereto as Exhibit 9.1(a) and otherwise in form and substance reasonably
satisfactory to, and acknowledged by, Agent; (ii) be conditioned on such
assignee Lender representing to the

 

44

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

assigning Lender and Agent that it is purchasing the applicable Loans to be
assigned to it for its own account, for investment purposes and not with a view
to the distribution thereof; (iii) after giving effect to any such partial
assignment, the assignee Lender shall have Commitments in an amount at least
equal to $5,000,000 and the assigning Lender shall have retained Commitments in
an amount at least equal to $5,000,000; (iv) include a payment to Agent of an
assignment fee of $3,500 and (v) so long as no Event of Default has occurred and
is continuing, require the consent of Borrower Representative, which shall not
be unreasonably withheld or delayed; provided, that (i) no such consent shall be
required for an assignment to a Qualified Assignee, and (ii) so long as no Event
of Default has occurred and is continuing, no such assignment shall be made, to
the knowledge of an assigning Lender, to a direct competitor of Borrowers. In
the case of an assignment by a Lender under this Section 9.1, the assignee shall
have, to the extent of such assignment, the same rights, benefits and
obligations as all other Lenders hereunder. The assigning Lender shall be
relieved of its obligations hereunder with respect to its Commitments or
assigned portion thereof from and after the date of such assignment. Each
Borrower hereby acknowledges and agrees that any assignment shall give rise to a
direct obligation of Borrowers to the assignee and that the assignee shall be
considered to be a “Lender.” In all instances, each Lender’s liability to make
Loans hereunder shall be several and not joint and shall be limited to such
Lender’s Pro Rata Share of the applicable Commitment. In the event Agent or any
Lender assigns or otherwise transfers all or any part of the Obligations, Agent
or any such Lender shall so notify Borrowers and Borrowers shall, upon the
request of Agent or such Lender, execute new Notes in exchange for the Notes, if
any, being assigned. Notwithstanding the foregoing provisions of this Section
9.1(a), any Lender may at any time pledge the Obligations held by it and such
Lender’s rights under this Agreement and the other Loan Documents to a Federal
Reserve Bank, and any Lender that is an investment fund may assign the
Obligations held by it and such Lender’s rights under this Agreement and the
other Loan Documents to another investment fund managed by the same investment
advisor; provided, that no such pledge to a Federal Reserve Bank shall release
such Lender from such Lender’s obligations hereunder or under any other Loan
Document.

 

(b) Any participation by a Lender of all or any part of its Commitments shall be
made with the understanding that all amounts payable by Borrowers hereunder
shall be determined as if that Lender had not sold such participation, and that
the holder of any such participation shall not be entitled to require such
Lender to take or omit to take any action hereunder except actions directly
affecting (i) any reduction in the principal amount of, or interest rate or Fees
payable with respect to, any Loan in which such holder participates, (ii) any
extension of the scheduled amortization of the principal amount of any Loan in
which such holder participates or the final maturity date thereof, and (iii) any
release of all or substantially all of the Collateral (other than in accordance
with the terms of this Agreement, the Collateral Documents or the other Loan
Documents). Solely for purposes of Sections 1.13, 1.15, 1.16 and 9.8, each
Borrower acknowledges and agrees that a participation shall give rise to a
direct obligation of Borrowers to the participant and the participant shall be
considered to be a “Lender.” Except as set forth in the preceding sentence no
Borrower or other Credit Party shall have any obligation or duty to any
participant. Neither Agent nor any Lender (other than the Lender selling a
participation) shall have any duty to any participant and may continue to deal
solely with the Lender selling a participation as if no such sale had occurred.

 

45

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

(c) Except as expressly provided in this Section 9.1, no Lender shall, as
between Borrowers and that Lender, or Agent and that Lender, be relieved of any
of its obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or granting of participation in, all or any part of the Loans,
the Notes or other Obligations owed to such Lender.

 

(d) Each Credit Party executing this Agreement shall assist any Lender permitted
to sell assignments or participations under this Section 9.1 as reasonably
required to enable the assigning or selling Lender to effect any such assignment
or participation, including the execution and delivery of any and all
agreements, notes and other documents and instruments as shall be requested and,
if requested by Agent, the preparation of informational materials for, and the
participation of management in meetings with, potential assignees or
participants. Each Credit Party executing this Agreement shall certify the
correctness, completeness and accuracy of all descriptions of the Credit Parties
and their respective affairs contained in any selling materials provided by them
and all other information provided by them and included in such materials,
except that any Projections delivered by Borrowers shall only be certified by
Borrowers as having been prepared by Borrowers in compliance with the
representations contained in Section 3.4(c).

 

(e) Any Lender may furnish any information concerning Credit Parties in the
possession of such Lender from time to time to assignees and participants
(including prospective assignees and participants); provided that such Lender
shall obtain from assignees or participants confidentiality covenants
substantially equivalent to those contained in Section 11.8.

 

(f) So long as no Event of Default has occurred and is continuing, no Lender
shall assign or sell participations in any portion of its Loans or Commitments
to a potential Lender or participant, if, as of the date of the proposed
assignment or sale, the assignee Lender or participant would be subject to
capital adequacy or similar requirements under Section 1.16(a), increased costs
under Section 1.16(b), an inability to fund LIBOR Loans under Section 1.16(c),
or withholding taxes in accordance with Section 1.15(a).

 

9.2 Appointment of Agent. GE Capital is hereby appointed to act on behalf of all
Lenders as Agent under this Agreement and the other Loan Documents. The
provisions of this Section 9.2 are solely for the benefit of Agent and Lenders
and no Credit Party nor any other Person shall have any rights as a third party
beneficiary of any of the provisions hereof. In performing its functions and
duties under this Agreement and the other Loan Documents, Agent shall act solely
as an agent of Lenders and does not assume and shall not be deemed to have
assumed any obligation toward or relationship of agency or trust with or for any
Credit Party or any other Person. Agent shall have no duties or responsibilities
except for those expressly set forth in this Agreement and the other Loan
Documents. The duties of Agent shall be mechanical and administrative in nature
and Agent shall not have, or be deemed to have, by reason of this Agreement, any
other Loan Document or otherwise a fiduciary relationship in respect of any
Lender. Except as expressly set forth in this Agreement and the other Loan
Documents, Agent shall not have any duty to disclose, and shall not be liable
for failure to disclose, any information relating to any Credit Party or any of
their respective Subsidiaries or any Account Debtor that is communicated to or
obtained by GE Capital or any of its Affiliates in any capacity. Neither Agent
nor any of its Affiliates nor any of their respective officers, directors,
employees, agents or representatives shall be liable to any Lender for any
action taken or omitted to be taken by it hereunder or under any other Loan
Document, or in connection herewith or therewith, except for damages caused by
its or their own gross negligence or willful misconduct.

 

46

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

If Agent shall request instructions from Requisite Lenders, Requisite Revolving
Lenders, Supermajority Revolving Lenders or all affected Lenders with respect to
any act or action (including failure to act) in connection with this Agreement
or any other Loan Document, then Agent shall be entitled to refrain from such
act or taking such action unless and until Agent shall have received
instructions from Requisite Lenders, Requisite Revolving Lenders, Supermajority
Revolving Lenders, or all affected Lenders, as the case may be, and Agent shall
not incur liability to any Person by reason of so refraining. Agent shall be
fully justified in failing or refusing to take any action hereunder or under any
other Loan Document (a) if such action would, in the opinion of Agent, be
contrary to law or the terms of this Agreement or any other Loan Document, (b)
if such action would, in the opinion of Agent, expose Agent to Environmental
Liabilities or (c) if Agent shall not first be indemnified to its satisfaction
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. Without limiting the foregoing,
no Lender shall have any right of action whatsoever against Agent as a result of
Agent acting or refraining from acting hereunder or under any other Loan
Document in accordance with the instructions of Requisite Lenders, Requisite
Revolving Lenders, Supermajority Revolving Lenders or all affected Lenders, as
applicable.

 

9.3 Agent’s Reliance, Etc. Neither Agent nor any of its Affiliates nor any of
their respective directors, officers, agents or employees shall be liable for
any action taken or omitted to be taken by it or them under or in connection
with this Agreement or the other Loan Documents, except for damages caused by
its or their own gross negligence or willful misconduct. Without limiting the
generality of the foregoing, Agent: (a) may treat the payee of any Note as the
holder thereof until Agent receives written notice of the assignment or transfer
thereof signed by such payee and in form reasonably satisfactory to Agent; (b)
may consult with legal counsel, independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken by it in good faith in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations made in or in connection with this Agreement or the other Loan
Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or the other Loan Documents on the part of any Credit Party or to
inspect the Collateral (including the books and records) of any Credit Party;
(e) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; and (f) shall incur no liability under or in respect of this
Agreement or the other Loan Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telecopy, telegram,
cable or telex) believed by it to be genuine and signed or sent by the proper
party or parties.

 

9.4 GE Capital and Affiliates. With respect to its Commitments hereunder, GE
Capital shall have the same rights and powers under this Agreement and the other
Loan Documents as any other Lender and may exercise the same as though it were
not Agent; and the term “Lender” or “Lenders” shall, unless otherwise expressly
indicated, include GE Capital in its

 

47

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

individual capacity. GE Capital and its Affiliates may lend money to, invest in,
and generally engage in any kind of business with, any Credit Party, any of
their Affiliates and any Person who may do business with or own securities of
any Credit Party or any such Affiliate, all as if GE Capital were not Agent and
without any duty to account therefor to Lenders. GE Capital and its Affiliates
may accept fees and other consideration from any Credit Party for services in
connection with this Agreement or otherwise without having to account for the
same to Lenders. Each Lender acknowledges the potential conflict of interest
between GE Capital as a Lender holding disproportionate interests in the Loans
and GE Capital as Agent.

 

9.5 Lender Credit Decision. Each Lender acknowledges that it has, independently
and without reliance upon Agent or any other Lender and based on the Financial
Statements referred to in Section 3.4(a) and such other documents and
information as it has deemed appropriate, made its own credit and financial
analysis of the Credit Parties and its own decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement. Each
Lender acknowledges the potential conflict of interest of each other Lender as a
result of Lenders holding disproportionate interests in the Loans, and expressly
consents to, and waives any claim based upon, such conflict of interest.

 

9.6 Indemnification. Lenders agree to indemnify Agent (to the extent not
reimbursed by Credit Parties and without limiting the obligations of Credit
Parties hereunder), ratably according to their respective Pro Rata Shares, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever that may be imposed on, incurred by, or asserted against Agent
in any way relating to or arising out of this Agreement or any other Loan
Document or any action taken or omitted to be taken by Agent in connection
therewith; provided, that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from Agent’s gross negligence or
willful misconduct. Without limiting the foregoing, each Lender agrees to
reimburse Agent promptly upon demand for its ratable share of any out-of-pocket
expenses (including reasonable counsel fees) incurred by Agent in connection
with the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement and each other Loan Document, to the extent that Agent is not
reimbursed for such expenses by Credit Parties.

 

9.7 Successor Agent. Agent may resign at any time by giving not less than 30
days’ prior written notice thereof to Lenders and Borrower Representative. Upon
any such resignation, the Requisite Lenders shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Requisite Lenders and shall have accepted such appointment within 30 days after
the resigning Agent’s giving notice of resignation, then the resigning Agent
may, on behalf of Lenders, appoint a successor Agent, which shall be a Lender,
if a Lender is willing to accept such appointment, or otherwise shall be a
commercial bank or financial institution or a subsidiary of a commercial bank or
financial institution if such commercial bank or financial institution is
organized under the laws of the United States of America or of any State thereof
and has a combined capital and surplus of at least $300,000,000. If no successor

 

48

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

Agent has been appointed pursuant to the foregoing, within 30 days after the
date such notice of resignation was given by the resigning Agent, such
resignation shall become effective and the Requisite Lenders shall thereafter
perform all the duties of Agent hereunder until such time, if any, as the
Requisite Lenders appoint a successor Agent as provided above. Any successor
Agent appointed by Requisite Lenders hereunder shall be subject to the approval
of Borrower Representative, such approval not to be unreasonably withheld or
delayed; provided, that such approval shall not be required if a Default or an
Event of Default has occurred and is continuing. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
succeed to and become vested with all the rights, powers, privileges and duties
of the resigning Agent. Upon the earlier of the acceptance of any appointment as
Agent hereunder by a successor Agent or the effective date of the resigning
Agent’s resignation, the resigning Agent shall be discharged from its duties and
obligations under this Agreement and the other Loan Documents, except that any
indemnity rights or other rights in favor of such resigning Agent shall
continue. After any resigning Agent’s resignation hereunder, the provisions of
this Section 9 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was acting as Agent under this Agreement and the other
Loan Documents.

 

9.8 Setoff and Sharing of Payments. In addition to any rights now or hereafter
granted under applicable law and not by way of limitation of any such rights,
upon the occurrence and during the continuance of any Event of Default and
subject to Section 9.9(f), each Lender is hereby authorized at any time or from
time to time, without prior notice to any Credit Party or to any Person other
than Agent, any such notice being hereby expressly waived, to offset and to
appropriate and to apply any and all balances held by it at any of its offices
for the account of any Borrower or Guarantor (regardless of whether such
balances are then due to such Borrower or Guarantor) and any other properties or
assets at any time held or owing by that Lender or that holder to or for the
credit or for the account of any Borrower or Guarantor against and on account of
any of the Obligations that are not paid when due; provided that the Lender
exercising such offset rights shall give notice thereof to the affected Credit
Party promptly after exercising such rights. Any Lender exercising a right of
setoff or otherwise receiving any payment on account of the Obligations in
excess of its Pro Rata Share thereof shall purchase for cash (and the other
Lenders or holders shall sell) such participations in each such other Lender’s
or holder’s Pro Rata Share of the Obligations as would be necessary to cause
such Lender to share the amount so offset or otherwise received with each other
Lender or holder in accordance with their respective Pro Rata Shares, (other
than offset rights exercised by any Lender with respect to Sections 1.13, 1.15
or 1.16). Each Lender’s obligation under this Section 9.8 shall be in addition
to and not in limitation of its obligations to purchase a participation in an
amount equal to its Pro Rata Share of the Swing Line Loans under Section 1.1.
Each Credit Party that is a Borrower or a Guarantor agrees, to the fullest
extent permitted by law, that (a) any Lender may exercise its right to offset
with respect to amounts in excess of its Pro Rata Share of the Obligations and
may sell participations in such amounts so offset to other Lenders and holders
and (b) any Lender so purchasing a participation in the Loans made or other
Obligations held by other Lenders or holders may exercise all rights of offset,
bankers’ lien, counterclaim or similar rights with respect to such participation
as fully as if such Lender or holder were a direct holder of the Loans and the
other Obligations in the amount of such participation. Notwithstanding the
foregoing, if all or any portion of the offset amount or payment otherwise
received is thereafter recovered from the Lender that has exercised the right of
offset, the purchase of participations by that Lender shall be rescinded and the
purchase price restored without interest.

 

49

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

9.9 Advances; Payments; Non-Funding Lenders; Information; Actions in Concert.

 

(a) Advances; Payments.

 

(i) Revolving Lenders shall refund or participate in the Swing Line Loan in
accordance with clauses (iii) and (iv) of Section 1.1(b). If the Swing Line
Lender declines to make a Swing Line Loan or if Swing Line Availability is zero,
Agent shall notify Revolving Lenders, promptly after receipt of a Notice of
Revolving Credit Advance and in any event prior to 1:00 p.m. (New York time) on
the date such Notice of Revolving Advance is received, by telecopy, telephone or
other similar form of transmission. Each Revolving Lender shall make the amount
of such Lender’s Pro Rata Share of such Revolving Credit Advance available to
Agent in same day funds by wire transfer to Agent’s account as set forth in
Annex H not later than 3:00 p.m. (New York time) on the requested funding date,
in the case of an Index Rate Loan and not later than 11:00 a.m. (New York time)
on the requested funding date in the case of a LIBOR Loan. After receipt of such
wire transfers (or, in the Agent’s sole discretion, before receipt of such wire
transfers), subject to the terms hereof, Agent shall make the requested
Revolving Credit Advance to the Borrower designated by Borrower Representative
in the Notice of Revolving Credit Advance. All payments by each Revolving Lender
shall be made without setoff, counterclaim or deduction of any kind.

 

(ii) Not less than once during each calendar week or more frequently at Agent’s
election (each, a “Settlement Date”), Agent shall advise each Lender by
telephone, or telecopy of the amount of such Lender’s Pro Rata Share of
principal, interest and Fees paid for the benefit of Lenders with respect to
each applicable Loan. Provided that each Lender has funded all payments or
Advances required to be made by it and has purchased all participations required
to be purchased by it under this Agreement and the other Loan Documents as of
such Settlement Date, Agent shall pay to each Lender such Lender’s Pro Rata
Share of principal, interest and Fees paid by Borrowers since the previous
Settlement Date for the benefit of such Lender on the Loans held by it. To the
extent that any Lender (a “Non-Funding Lender”) has failed to fund all such
payments and Advances or failed to fund the purchase of all such participations,
Agent shall be entitled to set off the funding short-fall against that
Non-Funding Lender’s Pro Rata Share of all payments received from Borrowers.
Such payments shall be made by wire transfer to such Lender’s account (as
specified by such Lender in Annex H or the applicable Assignment Agreement) not
later than 2:00 p.m. (New York time) on the next Business Day following each
Settlement Date.

 

(b) Availability of Lender’s Pro Rata Share. Agent may assume that each
Revolving Lender will make its Pro Rata Share of each Revolving Credit Advance
available to Agent on each funding date. If such Pro Rata Share is not, in fact,
paid to Agent by such Revolving Lender when due, Agent will be entitled to
recover such amount on demand from such Revolving Lender without setoff,
counterclaim or deduction of any kind. If any Revolving Lender fails to pay the
amount of its Pro Rata Share forthwith upon Agent’s demand, Agent shall promptly
notify Borrower Representative and Borrowers shall immediately repay such amount
to Agent. Nothing in this Section 9.9(b) or elsewhere in this Agreement or the
other Loan Documents shall be deemed to require Agent to advance funds on behalf
of any Revolving Lender or to relieve any Revolving Lender from its obligation
to fulfill its Commitments hereunder or to prejudice any rights that Borrowers
may have against any Revolving Lender as a

 

50

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

result of any default by such Revolving Lender hereunder. To the extent that
Agent advances funds to any Borrower on behalf of any Revolving Lender and is
not reimbursed therefor on the same Business Day as such Advance is made, Agent
shall be entitled to retain for its account all interest accrued on such Advance
until reimbursed by the applicable Revolving Lender.

 

(c) Return of Payments.

 

(i) If Agent pays an amount to a Lender under this Agreement in the belief or
expectation that a related payment has been or will be received by Agent from
Borrowers and such related payment is not received by Agent, then Agent will be
entitled to recover such amount from such Lender on demand without setoff,
counterclaim or deduction of any kind.

 

(ii) If Agent determines at any time that any amount received by Agent under
this Agreement must be returned to any Borrower or paid to any other Person
pursuant to any insolvency law or otherwise, then, notwithstanding any other
term or condition of this Agreement or any other Loan Document, Agent will not
be required to distribute any portion thereof to any Lender. In addition, each
Lender will repay to Agent on demand any portion of such amount that Agent has
distributed to such Lender, together with interest at such rate, if any, as
Agent is required to pay to any Borrower or such other Person, without setoff,
counterclaim or deduction of any kind.

 

(d) Non-Funding Lenders. The failure of any Non-Funding Lender to make any
Revolving Credit Advance or any payment required by it hereunder, or to purchase
any participation in any Swing Line Loan to be made or purchased by it on the
date specified therefor shall not relieve any other Lender (each such other
Revolving Lender, an “Other Lender”) of its obligations to make such Advance or
purchase such participation on such date, but neither any Other Lender nor Agent
shall be responsible for the failure of any Non-Funding Lender to make an
Advance, purchase a participation or make any other payment required hereunder.
Notwithstanding anything set forth herein to the contrary, a Non-Funding Lender
shall not have any voting or consent rights under or with respect to any Loan
Document or constitute a “Lender” or a “Revolving Lender” (or be included in the
calculation of “Requisite Lenders,” “Requisite Revolving Lenders” or
“Supermajority Revolving Lenders” hereunder) for any voting or consent rights
under or with respect to any Loan Document. At Borrower Representative’s
request, Agent or a Person reasonably acceptable to Agent shall have the right
with Agent’s consent and in Agent’s sole discretion (but shall have no
obligation) to purchase from any Non-Funding Lender, and each Non-Funding Lender
agrees that it shall, at Agent’s request, sell and assign to Agent or such
Person, all of the Commitments of that Non-Funding Lender for an amount equal to
the principal balance of all Loans held by such Non-Funding Lender and all
accrued interest and fees with respect thereto through the date of sale, such
purchase and sale to be consummated pursuant to an executed Assignment
Agreement.

 

(e) Dissemination of Information. Agent shall use reasonable efforts to provide
Lenders with any notice of Default or Event of Default received by Agent from,
or delivered by Agent to, any Credit Party, with notice of any Event of Default
of which Agent has actually become aware and with notice of any action taken by
Agent following any Event of Default; provided, that Agent shall not be liable
to any Lender for any failure to do so, except to

 

51

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

the extent that such failure is attributable to Agent’s gross negligence or
willful misconduct. Lenders acknowledge that Borrowers are required to provide
Financial Statements and Collateral Reports to Lenders in accordance with
Annexes E and F hereto and agree that Agent shall have no duty to provide the
same to Lenders.

 

(f) Actions in Concert. Anything in this Agreement to the contrary
notwithstanding, each Lender hereby agrees with each other Lender that no Lender
shall take any action to protect or enforce its rights arising out of this
Agreement or the Notes (including exercising any rights of setoff) without first
obtaining the prior written consent of Agent and Requisite Lenders, it being the
intent of Lenders that any such action to protect or enforce rights under this
Agreement and the Notes shall be taken in concert and at the direction or with
the consent of Agent or Requisite Lenders.

 

10. SUCCESSORS AND ASSIGNS

 

This Agreement and the other Loan Documents shall be binding on and shall inure
to the benefit of each Credit Party, Agent, Lenders and their respective
successors and assigns (including, in the case of any Credit Party, a
debtor-in-possession on behalf of such Credit Party), except as otherwise
provided herein or therein. No Credit Party may assign, transfer, hypothecate or
otherwise convey its rights, benefits, obligations or duties hereunder or under
any of the other Loan Documents without the prior express written consent of
Agent and Lenders. Any such purported assignment, transfer, hypothecation or
other conveyance by any Credit Party without the prior express written consent
of Agent and Lenders shall be void. The terms and provisions of this Agreement
are for the purpose of defining the relative rights and obligations of each
Credit Party, Agent and Lenders with respect to the transactions contemplated
hereby and no Person shall be a third party beneficiary of any of the terms and
provisions of this Agreement or any of the other Loan Documents.

 

11. MISCELLANEOUS

 

11.1 Complete Agreement; Modification of Agreement. The Loan Documents
constitute the complete agreement between the parties with respect to the
subject matter thereof and may not be modified, altered or amended except as set
forth in Section 11.2. Any letter of interest, commitment letter, fee letter or
confidentiality agreement, if any, between any Credit Party and Agent or any
Lender or any of their respective Affiliates, predating this Agreement and
relating to a financing of substantially similar form, purpose or effect shall
be superseded by this Agreement.

 

11.2 Amendments and Waivers.

 

(a) Except for actions expressly permitted to be taken by Agent, no amendment,
modification, termination or waiver of any provision of this Agreement or any
other Loan Document, or any consent to any departure by any Credit Party
therefrom, shall in any event be effective unless the same shall be in writing
and signed by Agent and Borrowers, and by Requisite Lenders, Requisite Revolving
Lenders, Supermajority Revolving Lenders or all affected Lenders, as applicable.
Except as set forth in Sections 11.2(b) and (c), all such amendments,
modifications, terminations or waivers requiring the consent of any Lenders
shall require the written consent of Requisite Lenders.

 

52

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

(b) No amendment, modification, termination or waiver of or consent with respect
to any provision of this Agreement that increases the percentage advance rates
set forth in the definition of any Borrowing Base, or that makes less
restrictive the nondiscretionary criteria for exclusion from Eligible Accounts
set forth in Section 1.6, shall be effective unless the same shall be in writing
and signed by Agent, Supermajority Revolving Lenders and Borrowers. No
amendment, modification, termination or waiver of or consent with respect to any
provision of this Agreement that waives compliance with the conditions precedent
set forth in Section 2.2 to the making of any Loan or the incurrence of any
Letter of Credit Obligations shall be effective unless the same shall be in
writing and signed by Agent, Requisite Revolving Lenders and Borrowers.
Notwithstanding anything contained in this Agreement to the contrary, no waiver
or consent with respect to any Default or any Event of Default shall be
effective for purposes of the conditions precedent to the making of Loans or the
incurrence of Letter of Credit Obligations set forth in Section 2.2 unless the
same shall be in writing and signed by Agent, Requisite Revolving Lenders and
Borrowers.

 

(c) No amendment, modification, termination or waiver shall, unless in writing
and signed by Agent and each Lender directly affected thereby: (i) increase the
principal amount of any Lender’s Commitment (which action shall be deemed to
directly affect all Lenders); (ii) reduce the principal of, rate of interest on
or Fees payable with respect to any Loan or Letter of Credit Obligations of any
affected Lender; (iii) extend any scheduled payment date (other than payment
dates of mandatory prepayments under Sections 1.3(b)(ii) and (iii)) or final
maturity date of the principal amount of any Loan of any affected Lender; (iv)
waive, forgive, defer, extend or postpone any payment of interest or Fees as to
any affected Lender; (v) release any Guaranty or, except as otherwise permitted
herein or in the other Loan Documents, release, or permit any Credit Party to
sell or otherwise dispose of, any Collateral with a value exceeding $5,000,000
in the aggregate (which action shall be deemed to directly affect all Lenders);
(vi) change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Loans that shall be required for Lenders or any of them
to take any action hereunder; and (vii) amend or waive this Section 11.2 or the
definitions of the terms “Requisite Lenders,” “Requisite Revolving Lenders” or
“Supermajority Revolving Lenders” insofar as such definitions affect the
substance of this Section 11.2. Furthermore, no amendment, modification,
termination or waiver affecting the rights or duties of Agent or L/C Issuer
under this Agreement or any other Loan Document shall be effective unless in
writing and signed by Agent or L/C Issuer, as the case may be, in addition to
Lenders required hereinabove to take such action. Each amendment, modification,
termination or waiver shall be effective only in the specific instance and for
the specific purpose for which it was given. No amendment, modification,
termination or waiver shall be required for Agent to take additional Collateral
pursuant to any Loan Document. No amendment, modification, termination or waiver
of any provision of any Note shall be effective without the written concurrence
of the holder of that Note. No notice to or demand on any Credit Party in any
case shall entitle such Credit Party or any other Credit Party to any other or
further notice or demand in similar or other circumstances. Any amendment,
modification, termination, waiver or consent effected in accordance with this
Section 11.2 shall be binding upon each holder of the Notes at the time
outstanding and each future holder of the Notes.

 

53

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

(d) If, in connection with any proposed amendment, modification, waiver or
termination (a “Proposed Change”):

 

(i) requiring the consent of all affected Lenders, the consent of Requisite
Lenders is obtained, but the consent of other Lenders whose consent is required
is not obtained (any such Lender whose consent is not obtained as described in
this clause (i) and in clauses (ii), (iii) and (iv) below being referred to as a
“Non Consenting Lender”);

 

(ii) requiring the consent of Supermajority Revolving Lenders, the consent of
Requisite Lenders is obtained, but the consent of Supermajority Revolving
Lenders is not obtained;

 

(iii) requiring the consent of Requisite Revolving Lenders, the consent of
Revolving Lenders holding 51% or more of the aggregate Revolving Loan
Commitments is obtained, but the consent of Requisite Revolving Lenders is not
obtained; or

 

(iv) requiring the consent of Requisite Lenders, the consent of Lenders holding
51% or more of the aggregate Commitments is obtained, but the consent of
Requisite Lenders is not obtained;

 

then, so long as Agent is not a Non Consenting Lender, at Borrower
Representative’s request Agent, or a Person reasonably acceptable to Agent,
shall have the right with Agent’s consent and in Agent’s sole discretion (but
shall have no obligation) to purchase from such Non Consenting Lenders, and such
Non Consenting Lenders agree that they shall, upon Agent’s request, sell and
assign to Agent or such Person, all of the Commitments of such Non Consenting
Lenders for an amount equal to the principal balance of all Loans held by the
Non Consenting Lenders and all accrued interest and Fees with respect thereto
through the date of sale, such purchase and sale to be consummated pursuant to
an executed Assignment Agreement.

 

(e) Upon payment in full in cash and performance of all of the Obligations
(other than indemnification Obligations), termination of the Commitments and a
release of all claims against Agent and Lenders, and so long as no suits,
actions proceedings, or claims are pending or threatened against any Indemnified
Person asserting any damages, losses or liabilities that are Indemnified
Liabilities, Agent shall deliver to Borrowers termination statements, mortgage
releases and other documents necessary or appropriate to evidence the
termination of the Liens securing payment of the Obligations.

 

11.3 Fees and Expenses. Borrowers shall reimburse (i) Agent for all fees, costs
and expenses (including the reasonable fees and expenses of all of its counsel,
advisors, consultants and auditors) and (ii) Agent (and, with respect to clauses
(c) and (d) below, all Lenders) for all fees, costs and expenses, including the
reasonable fees, costs and expenses of counsel or other advisors (including
environmental and management consultants and appraisers) incurred in connection
with the negotiation, preparation and filing and/or recordation of the Loan
Documents and incurred in connection with:

 

(a) any amendment, modification or waiver of, or consent with respect to, or
termination of, any of the Loan Documents or Related Transactions Documents or
advice in connection with the syndication and administration of the Loans made
pursuant hereto or its rights hereunder or thereunder;

 

54

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

(b) any litigation, contest, dispute, suit, proceeding or action (whether
instituted by Agent, any Lender, any Credit Party or any other Person and
whether as a party, witness or otherwise) in any way relating to the Collateral,
any of the Loan Documents or any other agreement to be executed or delivered in
connection herewith or therewith, including any litigation, contest, dispute,
suit, case, proceeding or action, and any appeal or review thereof, in
connection with a case commenced by or against any or all of the Credit Parties
or any other Person that may be obligated to Agent by virtue of the Loan
Documents, including any such litigation, contest, dispute, suit, proceeding or
action arising in connection with any work-out or restructuring of the Loans
during the pendency of one or more Events of Default; provided, that in the case
of reimbursement of counsel for Lenders other than Agent, such reimbursement
shall be limited to one counsel for all such Lenders; provided further, that no
Person shall be entitled to reimbursement under this clause (c) in respect of
any litigation, contest, dispute, suit, proceeding or action to the extent any
of the foregoing results from such Person’s gross negligence or willful
misconduct;

 

(c) any attempt to enforce any remedies of Agent or any Lender against any or
all of the Credit Parties or any other Person that may be obligated to Agent or
any Lender by virtue of any of the Loan Documents, including any such attempt to
enforce any such remedies in the course of any work-out or restructuring of the
Loans during the pendency of one or more Events of Default; provided, that in
the case of reimbursement of counsel for Lenders other than Agent, such
reimbursement shall be limited to one counsel for all such Lenders;

 

(d) any workout or restructuring of the Loans during the pendency of one or more
Events of Default; and

 

(e) efforts to (i) monitor the Loans or any of the other Obligations, (ii)
evaluate, observe or assess any of the Credit Parties or their respective
affairs, and (iii) verify, protect, evaluate, assess, appraise, collect, sell,
liquidate or otherwise dispose of any of the Collateral, in each case in
accordance with the terms of this Agreement and the other Loan Documents;

 

including, as to each of clauses (a) through (e) above, all reasonable
attorneys’ and other professional and service providers’ fees arising from such
services and other advice, assistance or other representation, including those
in connection with any appellate proceedings, and all reasonable expenses,
costs, charges and other fees incurred by such counsel and others in connection
with or relating to any of the events or actions described in this Section 11.3,
all of which shall be payable, on demand, by Borrowers to Agent. Without
limiting the generality of the foregoing, such expenses, costs, charges and fees
may include: reasonable fees, costs and expenses of accountants, environmental
advisors, appraisers, investment bankers, management and other consultants and
paralegals; court costs and expenses; photocopying and duplication expenses;
court reporter fees, costs and expenses; long distance telephone charges; air
express charges; telegram or telecopy charges; secretarial overtime charges; and
expenses for travel, lodging and food paid or incurred in connection with the
performance of such legal or other advisory services.

 

55

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

11.4 No Waiver. Agent’s or any Lender’s failure, at any time or times, to
require strict performance by the Credit Parties of any provision of this
Agreement or any other Loan Document shall not waive, affect or diminish any
right of Agent or such Lender thereafter to demand strict compliance and
performance herewith or therewith. Any suspension or waiver of an Event of
Default shall not suspend, waive or affect any other Event of Default whether
the same is prior or subsequent thereto and whether the same or of a different
type. Subject to the provisions of Section 11.2, none of the undertakings,
agreements, warranties, covenants and representations of any Credit Party
contained in this Agreement or any of the other Loan Documents and no Default or
Event of Default by any Credit Party shall be deemed to have been suspended or
waived by Agent or any Lender, unless such waiver or suspension is by an
instrument in writing signed by an officer of or other authorized employee of
Agent and the applicable required Lenders and directed to Borrowers specifying
such suspension or waiver.

 

11.5 Remedies. Agent’s and Lenders’ rights and remedies under this Agreement
shall be cumulative and nonexclusive of any other rights and remedies that Agent
or any Lender may have under any other agreement, including the other Loan
Documents, by operation of law or otherwise. Recourse to the Collateral shall
not be required.

 

11.6 Severability. Wherever possible, each provision of this Agreement and the
other Loan Documents shall be interpreted in such a manner as to be effective
and valid under applicable law, but if any provision of this Agreement or any
other Loan Document shall be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement or such other Loan Document.

 

11.7 Conflict of Terms. Except as otherwise provided in this Agreement or any of
the other Loan Documents by specific reference to the applicable provisions of
this Agreement, if any provision contained in this Agreement conflicts with any
provision in any of the other Loan Documents, the provision contained in this
Agreement shall govern and control.

 

11.8 Confidentiality. Agent and each Lender agree to use commercially reasonable
efforts (equivalent to the efforts Agent or such Lender applies to maintaining
the confidentiality of its own confidential information) to maintain as
confidential all confidential information provided to them by the Credit Parties
and designated as confidential for a period of two years following receipt
thereof, except that Agent and any Lender may disclose such information (a) to
Persons employed or engaged by Agent or such Lender; (b) to any bona fide
assignee or participant or potential assignee or participant that has agreed to
comply with the covenant contained in this Section 11.8 (and any such bona fide
assignee or participant or potential assignee or participant may disclose such
information to Persons employed or engaged by them as described in clause (a)
above); (c) as required or requested by any Governmental Authority or reasonably
believed by Agent or such Lender to be compelled by any court decree, subpoena
or legal or administrative order or process; (d) as, on the advice of Agent’s or
such Lender’s counsel, is required by law; (e) in connection with the exercise
of any right or remedy under the Loan Documents or in connection with any
Litigation to which Agent or such Lender is a party; or (f) that ceases to be
confidential through no fault of Agent or any Lender.

 

56

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

11.9 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN
DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH CREDIT PARTY HEREBY
CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN LOS ANGELES
COUNTY, CITY OF LOS ANGELES, CALIFORNIA SHALL HAVE EXCLUSIVE JURISDICTION TO
HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT PARTIES, AGENT AND
LENDERS PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO
ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS; PROVIDED, THAT AGENT, LENDERS AND THE CREDIT PARTIES ACKNOWLEDGE THAT
ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF
LOS ANGELES COUNTY AND; PROVIDED FURTHER, THAT NOTHING IN THIS AGREEMENT SHALL
BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL
ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER
SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN
FAVOR OF AGENT. EACH CREDIT PARTY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO
SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH
CREDIT PARTY HEREBY WAIVES ANY OBJECTION THAT SUCH CREDIT PARTY MAY HAVE BASED
UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND
HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. EACH CREDIT PARTY HEREBY WAIVES PERSONAL SERVICE OF
THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS SET
FORTH IN ANNEX I OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF SUCH CREDIT PARTY’S ACTUAL RECEIPT THEREOF OR
THREE DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID.

 

11.10 Notices. Except as otherwise provided herein, whenever it is provided
herein that any notice, demand, request, consent, approval, declaration or other
communication shall or may be given to or served upon any of the parties by any
other parties, or whenever any of the parties desires to give or serve upon any
other parties any communication with respect to this Agreement, each such
notice, demand, request, consent, approval, declaration or other communication
shall be in writing and shall be deemed to have been validly served, given or
delivered (a) upon the earlier of actual receipt and three Business Days after
deposit in the United States Mail, registered or certified mail, return receipt
requested, with proper postage prepaid, (b) upon transmission, when sent by
telecopy or other similar facsimile transmission (with such telecopy or
facsimile promptly confirmed by delivery of a copy by personal delivery or
United States Mail as otherwise provided in this Section 11.10); (c) one
Business Day after

 

57

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

deposit with a reputable overnight courier with all charges prepaid or (d) when
delivered, if hand-delivered by messenger, all of which shall be addressed to
the party to be notified and sent to the address or facsimile number indicated
in Annex I or to such other address (or facsimile number) as may be substituted
by notice given as herein provided. The giving of any notice required hereunder
may be waived in writing by the party entitled to receive such notice. Failure
or delay in delivering copies of any notice, demand, request, consent, approval,
declaration or other communication to any Person (other than Borrower
Representative or Agent) designated in Annex I to receive copies shall in no way
adversely affect the effectiveness of such notice, demand, request, consent,
approval, declaration or other communication.

 

11.11 Section Titles. The Section titles and Table of Contents contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.

 

11.12 Counterparts. This Agreement may be executed in any number of separate
counterparts, each of which shall collectively and separately constitute one
agreement.

 

11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX
FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO
ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS AND ANY CREDIT PARTY ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.

 

11.14 Press Releases and Related Matters. Each Credit Party executing this
Agreement agrees that neither it nor its Affiliates will in the future issue any
press releases or other public disclosure (other than the filing of this
Agreement with the Securities and Exchange Commission) using the name of GE
Capital or its affiliates or referring to this Agreement, the other Loan
Documents or the Related Transactions Documents without at least two Business
Days’ prior notice to GE Capital and without the prior written consent of GE
Capital unless (and only to the extent that) such Credit Party or Affiliate is
required to do so under applicable law and then, in any event, such Credit Party
or Affiliate will consult with GE Capital before issuing such press release or
other public disclosure. Each Credit Party consents to the publication by Agent
or any Lender of advertising material relating to the financing transactions
contemplated by this Agreement using Borrower’s name, product photographs, logo
or trademark. Agent or such Lender shall provide a draft of any advertising
material to each Credit Party for review and comment prior to the publication
thereof. Agent reserves the right to provide to industry trade organizations
information necessary and customary for inclusion in league table measurements.

 

58

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

11.15 Reinstatement. This Agreement shall remain in full force and effect and
continue to be effective should any petition be filed by or against any Credit
Party for liquidation or reorganization, should any Credit Party become
insolvent or make an assignment for the benefit of any creditor or creditors or
should a receiver or trustee be appointed for all or any significant part of any
Credit Party’s assets, and shall continue to be effective or to be reinstated,
as the case may be, if at any time payment and performance of the Obligations,
or any part thereof, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by any obligee of the
Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Obligations shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.

 

11.16 Advice of Counsel. Each of the parties represents to each other party
hereto that it has discussed this Agreement and, specifically, the provisions of
Sections 11.9 and 11.13, with its counsel.

 

11.17 No Strict Construction. The parties hereto have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.

 

12. CROSS-GUARANTY

 

12.1 Cross-Guaranty. Each Borrower hereby agrees that such Borrower is jointly
and severally liable for, and hereby absolutely and unconditionally guarantees
to Agent and Lenders and their respective successors and assigns, the full and
prompt payment (whether at stated maturity, by acceleration or otherwise) and
performance of, all Obligations owed or hereafter owing to Agent and Lenders by
each other Borrower. Each Borrower agrees that its guaranty obligation hereunder
is a continuing guaranty of payment and performance and not of collection, that
its obligations under this Section 12 shall not be discharged until payment and
performance, in full, of the Obligations has occurred, and that its obligations
under this Section 12 shall be absolute and unconditional, irrespective of, and
unaffected by,

 

(a) the genuineness, validity, regularity, enforceability or any future
amendment of, or change in, this Agreement, any other Loan Document or any other
agreement, document or instrument to which any Borrower is or may become a
party;

 

(b) (b) the absence of any action to enforce this Agreement (including this
Section 12) or any other Loan Document or the waiver or consent by Agent and
Lenders with respect to any of the provisions thereof;

 

(c) the existence, value or condition of, or failure to perfect its Lien
against, any security for the Obligations or any action, or the absence of any
action, by Agent and Lenders in respect thereof (including the release of any
such security);

 

(d) the insolvency of any Credit Party; or

 

59

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

(e) any other action or circumstances that might otherwise constitute a legal or
equitable discharge or defense of a surety or guarantor.

 

Each Borrower shall be regarded, and shall be in the same position, as principal
debtor with respect to the Obligations guaranteed hereunder.

 

12.2 Waivers by Borrowers. Each Borrower expressly waives all rights it may have
now or in the future under any statute, or at common law, or at law or in
equity, or otherwise, to compel Agent or Lenders to marshal assets or to proceed
in respect of the Obligations guaranteed hereunder against any other Credit
Party, any other party or against any security for the payment and performance
of the Obligations before proceeding against, or as a condition to proceeding
against, such Borrower. It is agreed among each Borrower, Agent and Lenders that
the foregoing waivers are of the essence of the transaction contemplated by this
Agreement and the other Loan Documents and that, but for the provisions of this
Section 12 and such waivers, Agent and Lenders would decline to enter into this
Agreement.

 

12.3 Benefit of Guaranty. Each Borrower agrees that the provisions of this
Section 12 are for the benefit of Agent and Lenders and their respective
successors, transferees, endorsees and assigns, and nothing herein contained
shall impair, as between any other Borrower and Agent or Lenders, the
obligations of such other Borrower under the Loan Documents.

 

12.4 Waiver of Subrogation, Etc. Notwithstanding anything to the contrary in
this Agreement or in any other Loan Document, and except as set forth in Section
12.7, each Borrower hereby expressly and irrevocably waives any and all rights
at law or in equity to subrogation, reimbursement, exoneration, contribution,
indemnification or set off and any and all defenses available to a surety,
guarantor or accommodation co-obligor. Each Borrower acknowledges and agrees
that this waiver is intended to benefit Agent and Lenders and shall not limit or
otherwise affect such Borrower’s liability hereunder or the enforceability of
this Section 12, and that Agent, Lenders and their respective successors and
assigns are intended third party beneficiaries of the waivers and agreements set
forth in this Section 12.4.

 

12.5 Election of Remedies. If Agent or any Lender may, under applicable law,
proceed to realize its benefits under any of the Loan Documents giving Agent or
such Lender a Lien upon any Collateral, whether owned by any Borrower or by any
other Person, either by judicial foreclosure or by non judicial sale or
enforcement, Agent or any Lender may, at its sole option, determine which of its
remedies or rights it may pursue without affecting any of its rights and
remedies under this Section 12. If, in the exercise of any of its rights and
remedies, Agent or any Lender shall forfeit any of its rights or remedies,
including its right to enter a deficiency judgment against any Borrower or any
other Person, whether because of any applicable laws pertaining to “election of
remedies” or the like, each Borrower hereby consents to such action by Agent or
such Lender and waives any claim based upon such action, even if such action by
Agent or such Lender shall result in a full or partial loss of any rights of
subrogation that each Borrower might otherwise have had but for such action by
Agent or such Lender. Any election of remedies that results in the denial or
impairment of the right of Agent or any Lender to seek a deficiency judgment
against any Borrower shall not impair any other Borrower’s obligation to pay the
full amount of the Obligations. In the event Agent or any Lender shall bid at
any foreclosure or trustee’s sale or at any private sale permitted by law or the
Loan Documents,

 

60

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

Agent or such Lender may bid all or less than the amount of the Obligations and
the amount of such bid need not be paid by Agent or such Lender but shall be
credited against the Obligations. The amount of the successful bid at any such
sale, whether Agent, Lender or any other party is the successful bidder, shall
be conclusively deemed to be the fair market value of the Collateral and the
difference between such bid amount and the remaining balance of the Obligations
shall be conclusively deemed to be the amount of the Obligations guaranteed
under this Section 12, notwithstanding that any present or future law or court
decision or ruling may have the effect of reducing the amount of any deficiency
claim to which Agent or any Lender might otherwise be entitled but for such
bidding at any such sale.

 

12.6 Limitation. Notwithstanding any provision herein contained to the contrary,
each Borrower’s liability under this Section 12 (which liability is in any event
in addition to amounts for which such Borrower is primarily liable under Section
1) shall be limited to an amount not to exceed as of any date of determination
the greater of:

 

(a) the net amount of all Loans advanced to any other Borrower under this
Agreement and then re-loaned or otherwise transferred to, or for the benefit of,
such Borrower; and

 

(b) the amount that could be claimed by Agent and Lenders from such Borrower
under this Section 12 without rendering such claim voidable or avoidable under
Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable state
Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar
statute or common law after taking into account, among other things, such
Borrower’s right of contribution and indemnification from each other Borrower
under Section 12.7.

 

12.7 Contribution with Respect to Guaranty Obligations.

 

(a) To the extent that any Borrower shall make a payment under this Section 12
of all or any of the Obligations (other than Loans made to that Borrower for
which it is primarily liable) (a “Guarantor Payment”) that, taking into account
all other Guarantor Payments then previously or concurrently made by any other
Borrower, exceeds the amount that such Borrower would otherwise have paid if
each Borrower had paid the aggregate Obligations satisfied by such Guarantor
Payment in the same proportion that such Borrower’s “Allocable Amount” (as
defined below) (as determined immediately prior to such Guarantor Payment) bore
to the aggregate Allocable Amounts of each of the Borrowers as determined
immediately prior to the making of such Guarantor Payment, then, following
indefeasible payment in full in cash of the Obligations and termination of the
Commitments, such Borrower shall be entitled to receive contribution and
indemnification payments from, and be reimbursed by, each other Borrower for the
amount of such excess, pro rata based upon their respective Allocable Amounts in
effect immediately prior to such Guarantor Payment.

 

(b) As of any date of determination, the “Allocable Amount” of any Borrower
shall be equal to the maximum amount of the claim that could then be recovered
from such Borrower under this Section 12 without rendering such claim voidable
or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any
applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance
Act or similar statute or common law.

 

61

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

(c) This Section 12.7 is intended only to define the relative rights of
Borrowers and nothing set forth in this Section 12.7 is intended to or shall
impair the obligations of Borrowers, jointly and severally, to pay any amounts
as and when the same shall become due and payable in accordance with the terms
of this Agreement, including Section 12.1. Nothing contained in this Section
12.7 shall limit the liability of any Borrower to pay the Loans made directly or
indirectly to that Borrower and accrued interest, Fees and expenses with respect
thereto for which such Borrower shall be primarily liable.

 

(d) The parties hereto acknowledge that the rights of contribution and
indemnification hereunder shall constitute assets of the Borrower to which such
contribution and indemnification is owing.

 

(e) The rights of the indemnifying Borrowers against other Credit Parties under
this Section 12.7 shall be exercisable upon the full and indefeasible payment of
the Obligations and the termination of the Commitments.

 

12.8 Liability Cumulative. The liability of Borrowers under this Section 12 is
in addition to and shall be cumulative with all liabilities of each Borrower to
Agent and Lenders under this Agreement and the other Loan Documents to which
such Borrower is a party or in respect of any Obligations or obligation of the
other Borrower, without any limitation as to amount, unless the instrument or
agreement evidencing or creating such other liability specifically provides to
the contrary.

 

62

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

IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first
written above.

 

“Borrowers”

DYNAMIC DETAILS, INCORPORATED

By:

 

/S/ TIMOTHY DONNELLY

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

Name:

 

Timothy Donnelly

Title:

 

Vice President and Secretary

DYNAMIC DETAILS, INCORPORATED, VIRGINIA

By:

 

/S/ TIMOTHY DONNELLY

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

Name:

 

Timothy Donnelly

Title:

 

Vice President and Secretary

DYNAMIC DETAILS INCORPORATED,

SILICON VALLEY

By:

 

/S/ TIMOTHY DONNELLY

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

Name:

 

Timothy Donnelly

Title:

 

Vice President and Secretary

LAMINATE TECHNOLOGY CORP.

By:

 

/S/ TIMOTHY DONNELLY

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

Name:

 

Timothy Donnelly

Title:

 

Vice President and Secretary

“Agent” and “Lender”

GENERAL ELECTRIC CAPITAL CORPORATION

By:

 

/S/ E. J. HESS

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

   

E. J. Hess

   

Duly Authorized Signatory

 

63

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

The following Persons are signatories to this Agreement in their capacity as
Credit Parties and not as Borrowers.

 

“Credit Parties”

       

DDi CORP.

 

DDi INTERMEDIATE HOLDINGS CORP.

By:

 

/S/ TIMOTHY DONNELLY

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

 

By:

 

/S/ TIMOTHY DONNELLY

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

Name:

 

Timothy Donnelly

 

Name:

 

Timothy Donnelly

Title:

 

Vice President and Secretary

 

Title:

 

Vice President and Secretary

DDi CAPITAL CORP.

 

DYNAMIC DETAILS INCORPORATED,

COLORADO SPRINGS

By:

 

/S/ TIMOTHY DONNELLY

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

 

By:

 

/S/ TIMOTHY DONNELLY

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

Name:

 

Timothy Donnelly

 

Name:

 

Timothy Donnelly

Title:

 

Vice President and Secretary

 

Title:

 

Vice President and Secretary

DDi CANADA ACQUISITION CORP.

 

DYNAMIC DETAILS CANADA CORP.

By:

 

/S/ TIMOTHY DONNELLY

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

 

By:

 

/S/ TIMOTHY DONNELLY

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

Name:

 

Timothy Donnelly

 

Name:

 

Timothy Donnelly

Title:

 

Vice President and Secretary

 

Title:

 

Vice President and Secretary

DDi SALES CORP.

 

DYNAMIC DETAILS TEXAS, LLC

By:

 

/S/ TIMOTHY DONNELLY

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

 

By:

 

/S/ TIMOTHY DONNELLY

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

Name:

 

Timothy Donnelly

 

Name:

 

Timothy Donnelly

Title:

 

Vice President and Secretary

 

Title:

 

Vice President and Secretary

DDi-TEXAS INTERMEDIATE HOLDINGS II, L.L.C.

 

DDi-TEXAS INTERMEDIATE PARTNERS II, L.L.C.

By:

 

/S/ TIMOTHY DONNELLY

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

 

By:

 

/S/ TIMOTHY DONNELLY

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

Name:

 

Timothy Donnelly

 

Name:

 

Timothy Donnelly

Title:

 

Vice President and Secretary

 

Title:

 

Vice President and Secretary

 

64

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

DYNAMIC DETAILS, L.P.

By: DDi-TEXAS INTERMEDIATE

PARTNERS II, L.L.C., its General Partner

By:

 

/S/ TIMOTHY DONNELLY

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

Name:

 

Timothy Donnelly

Title:

 

Vice President and Secretary

 

65

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

ANNEX A (Recitals)

to

CREDIT AGREEMENT

 

DEFINITIONS

 

Capitalized terms used in the Loan Documents shall have (unless otherwise
provided elsewhere in the Loan Documents) the following respective meanings and
all references to Sections, Exhibits, Schedules or Annexes in the following
definitions shall refer to Sections, Exhibits, Schedules or Annexes of or to the
Agreement:

 

“Account Debtor” means any Person who may become obligated to any Credit Party
under, with respect to, or on account of, an Account, Chattel Paper or General
Intangibles (including a payment intangible).

 

“Accounting Changes” has the meaning ascribed thereto in Annex G.

 

“Accounts” means all “accounts,” as such term is defined in the Code, now owned
or hereafter acquired by any Credit Party, including (a) all accounts
receivable, other receivables, book debts and other forms of obligations (other
than forms of obligations evidenced by Chattel Paper or Instruments), (including
any such obligations that may be characterized as an account or contract right
under the Code), (b) all of each Credit Party’s rights in, to and under all
purchase orders or receipts for goods or services, (c) all of each Credit
Party’s rights to any goods represented by any of the foregoing (including
unpaid sellers’ rights of rescission, replevin, reclamation and stoppage in
transit and rights to returned, reclaimed or repossessed goods), (d) all rights
to payment due to any Credit Party for property sold, leased, licensed, assigned
or otherwise disposed of, for a policy of insurance issued or to be issued, for
a secondary obligation incurred or to be incurred, for energy provided or to be
provided, for the use or hire of a vessel under a charter or other contract,
arising out of the use of a credit card or charge card, or for services rendered
or to be rendered by such Credit Party or in connection with any other
transaction (whether or not yet earned by performance on the part of such Credit
Party), (e) all healthcare insurance receivables, and (f) all collateral
security of any kind, now or hereafter in existence, given by any Account Debtor
or other Person with respect to any of the foregoing.

 

“Activation Notice” has the meaning ascribed to it in Annex C.

 

“Advance” means any Revolving Credit Advance or Swing Line Advance, as the
context may require.

 

“Affiliate” means, with respect to any Person, (a) each Person that, directly or
indirectly, owns or controls, whether beneficially, or as a trustee, guardian or
other fiduciary, 10% or more of the Stock having ordinary voting power in the
election of directors of such Person, (b) each Person that controls, is
controlled by or is under common control with such Person, and (c) each of such
Person’s officers and directors. For the purposes of this definition, “control”
of a Person shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of its management or policies, whether through the
ownership of voting securities, by contract or otherwise; provided, that the
term “Affiliate” shall specifically exclude Agent and each Lender.

 

A-1

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

“Agent” means GE Capital in its capacity as Agent for Lenders or its successor
appointed pursuant to Section 9.7.

 

“Aggregate Borrowing Base” means as of any date of determination, an amount
equal to (a) the sum of the Details Borrowing Base, the Laminate Borrowing Base,
the Valley Borrowing Base and the Virginia Borrowing Base, less (ii) Reserves.

 

“Agreement” means the Credit Agreement by and among Borrowers, the other Credit
Parties party thereto, GE Capital, as Agent and Lender and the other Lenders
from time to time party thereto, as the same may be amended, supplemented,
restated or otherwise modified from time to time.

 

“Appendices” has the meaning ascribed to it in the recitals to the Agreement.

 

“Applicable L/C Margin” means the per annum fee, from time to time in effect,
payable with respect to outstanding Letter of Credit Obligations as determined
by reference to Section 1.5(a).

 

“Applicable Margins” means collectively the Applicable L/C Margin, the
Applicable Revolver Index Margin, and the Applicable Revolver LIBOR Margin.

 

“Applicable Revolver Index Margin” means the per annum interest rate margin from
time to time in effect and payable in addition to the Index Rate applicable to
the Revolving Loan and the Swing Line Loan, as determined by reference to
Section 1.5(a).

 

“Applicable Revolver LIBOR Margin” means the per annum interest rate from time
to time in effect and payable in addition to the LIBOR Rate applicable to the
Revolving Loan, as determined by reference to Section 1.5(a).

 

“Assignment Agreement” has the meaning ascribed to it in Section 9.1(a).

 

“Availability Reserve” means the Reserve maintained against Borrowing
Availability in the amount of $2,000,000.

 

“Bankruptcy Code” means the provisions of Title 11 of the United States Code, 11
U.S.C. §§ 101 et seq.

 

“Blocked Accounts” has the meaning ascribed to it in Annex C.

 

“Borrower” and “Borrowers” have the respective meanings ascribed thereto in the
preamble to the Agreement.

 

“Borrower Representative” means Details, in its capacity as Borrower
Representative pursuant to the provisions of Section 1.1(d).

 

A-2

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

“Borrower Pledge Agreement” means the Pledge Agreement of even date herewith
executed by Borrower in favor of Agent, on behalf of itself and Lenders,
pledging all Stock of its Subsidiaries, if any, and all Intercompany Notes owing
to or held by it.

 

“Borrowing Availability” means as of any date of determination (a) as to all
Borrowers, the lesser of (a) the Maximum Amount and (b) the Aggregate Borrowing
Base, in each case, less the sum of the Revolving Loan and Swing Line Loan then
outstanding, or (b) as to an individual Borrower, the lesser of (i) the Maximum
Amount less the sum of the Revolving Loan and Swing Line Loan outstanding to all
other Borrowers and (ii) that Borrower’s separate Borrowing Base, less the sum
of the Revolving Loan and Swing Line Loan outstanding to that Borrower.

 

“Borrowing Base” means as the context may require, the Details Borrowing Base,
the Laminate Borrowing Base, the Valley Borrowing Base and the Virginia
Borrowing Base or any such Borrowing Base.

 

“Borrowing Base Certificate” means a certificate to be executed and delivered
from time to time by Borrowers and Parent in the form attached to the Agreement
as Exhibit 4.1(b).

 

“Business Day” means any day that is not a Saturday, a Sunday or a day on which
banks are required or permitted to be closed in the States of California or New
York and in reference to LIBOR Loans shall mean any such day that is also a
LIBOR Business Day.

 

“Capital Expenditures” means, with respect to any Person, all expenditures (by
the expenditure of cash or the incurrence of Indebtedness) by such Person during
any measuring period for any fixed assets or improvements or for replacements,
substitutions or additions thereto, that have a useful life of more than one
year and that are required to be capitalized under GAAP. Notwithstanding the
foregoing, the term “Capital Expenditures” shall not include capital
expenditures (i) in respect of permitted reinvestment of sales proceeds,
insurance proceeds and condemnation proceeds received by Borrower or any of its
Subsidiaries or (ii) to the extent financed by a third party.

 

“Capital Lease” means, with respect to any Person, any lease of any property
(whether real, personal or mixed) by such Person as lessee that, in accordance
with GAAP, would be required to be classified and accounted for as a capital
lease on a balance sheet of such Person.

 

“Capital Lease Obligation” means, with respect to any Capital Lease of any
Person, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in respect
of such Capital Lease.

 

“Cash Collateral Account” has the meaning ascribed to it Annex B.

 

“Cash Equivalents” has the meaning ascribed to it in Annex B.

 

“Cash Management Systems” has the meaning ascribed to it in Section 1.8.

 

“Change of Control” means any of the following: (a) any person or group of
persons (within the meaning of the Securities Exchange Act of 1934) shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated by
the Securities and Exchange

 

A-3

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

Commission under the Securities Exchange Act of 1934) of 40% or more of the
issued and outstanding shares of capital Stock of Parent having the right to
vote for the election of directors of Parent under ordinary circumstances; (b)
during any period of twelve consecutive calendar months, individuals who at the
beginning of such period constituted the board of directors of Parent (together
with any new directors whose election by the board of directors of Parent or
whose nomination for election by the Stockholders of Parent was approved by a
vote of at least two-thirds of the directors then still in office who either
were directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason other than death
or disability to constitute a majority of the directors then in office; or (c)
any Credit Party ceases to own and control all of the economic and voting rights
associated with all of the outstanding capital Stock of any of its Subsidiaries
(excluding DDi Europe Limited).

 

“Charges” means all federal, state, county, city, municipal, local, foreign or
other governmental taxes, levies, assessments, charges, liens, claims or
encumbrances upon or relating to (a) the Collateral, (b) the Obligations, (c)
the employees, payroll, income or gross receipts of any Credit Party, (d) any
Credit Party’s ownership or use of any properties or other assets, or (e) any
other aspect of any Credit Party’s business.

 

“Chattel Paper” means any “chattel paper,” as such term is defined in the Code,
including electronic chattel paper, now owned or hereafter acquired by any
Credit Party, wherever located.

 

“Closing Date” means March 30, 2004.

 

“Code” means the Uniform Commercial Code as the same may, from time to time, be
enacted and in effect in the State of California; provided, that to the extent
that the Code is used to define any term herein or in any Loan Document and such
term is defined differently in different Articles or Divisions of the Code, the
definition of such term contained in Article or Division 9 shall govern;
provided further, that in the event that, by reason of mandatory provisions of
law, any or all of the attachment, perfection or priority of, or remedies with
respect to, Agent’s or any Lender’s Lien on any Collateral is governed by the
Uniform Commercial Code as enacted and in effect in a jurisdiction other than
the State of California, the term “Code” shall mean the Uniform Commercial Code
as enacted and in effect in such other jurisdiction solely for purposes of the
provisions thereof relating to such attachment, perfection, priority or remedies
and for purposes of definitions related to such provisions.

 

“Collateral” means the property covered by the Security Agreement and the other
Collateral Documents and any other property, real or personal, tangible or
intangible, now existing or hereafter acquired, that may at any time be or
become subject to a security interest or Lien in favor of Agent, on behalf of
itself and Lenders, to secure the Obligations; provided, that in no event will
the “Collateral” include any Excluded Assets.

 

“Collateral Documents” means the Security Agreement, the Pledge Agreement, the
Intellectual Property Security Agreement, and all similar agreements entered
into guaranteeing payment of, or granting a Lien upon property as security for
payment of, the Obligations.

 

A-4

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

“Collateral Reports” means the reports with respect to the Collateral referred
to in Annex F.

 

“Collection Account” means that certain account of Agent, account number
502-328-54 in the name of Agent at DeutscheBank Trust Company Americas in New
York, New York ABA No. 021 001 033, or such other account as may be specified in
writing by Agent as the “Collection Account.”

 

“Commitment Termination Date” means the earliest of (a) March 30, 2007, (b) the
date of termination of Lenders’ obligations to make Advances and to incur Letter
of Credit Obligations or permit existing Loans to remain outstanding pursuant to
Section 8.2(b), and (c) the date of indefeasible prepayment in full by Borrowers
of the Loans and the cancellation and return (or stand-by guarantee) of all
Letters of Credit or the cash collateralization of all Letter of Credit
Obligations pursuant to Annex B, and the permanent reduction of all Commitments
to zero dollars ($0).

 

“Commitments” means (a) as to any Lender, the amount of such Lender’s Revolving
Loan Commitment (including without duplication the Swing Line Lender’s Swing
Line Commitment as a subset of its Revolving Loan Commitment) as set forth in
Annex J or in the most recent Assignment Agreement executed by such Lender, and
(b) as to all Lenders, the aggregate of all Lenders’ Revolving Loan Commitments
(including without duplication the Swing Line Lender’s Swing Line Commitment as
a subset of its Revolving Loan Commitment), which aggregate commitment shall be
FORTY MILLION DOLLARS ($40,000,000) on the Closing Date, as to each of clauses
(a)and (b), as such Commitments may be reduced, amortized or adjusted from time
to time in accordance with the Agreement.

 

“Compliance Certificate” has the meaning ascribed to it in Annex E.

 

“Concentration Account” has the meaning ascribed to it in Annex C.

 

“Contracts” means all “contracts,” as such term is defined in the Code, now
owned or hereafter acquired by any Credit Party, in any event, including all
contracts, undertakings, or agreements (other than rights evidenced by Chattel
Paper, Documents or Instruments) in or under which any Credit Party may now or
hereafter have any right, title or interest, including any agreement relating to
the terms of payment or the terms of performance of any Account.

 

“Control Letter” means a letter agreement between Agent and (a) the issuer of
uncertificated securities with respect to uncertificated securities in the name
of any Credit Party, (b) a securities intermediary with respect to securities,
whether certificated or uncertificated, securities entitlements and other
financial assets held in a securities account in the name of any Credit Party,
(c) a futures commission merchant or clearing house, as applicable, with respect
to commodity accounts and commodity contracts held by any Credit Party, or (d)
the bank at which any deposit accounts of any Credit Party are maintained, in
each case whereby, among other things, the issuer, securities intermediary,
futures commission merchant or bank limits any security interest in the
applicable assets in a manner reasonably satisfactory to Agent, acknowledges the
Lien of Agent, on behalf of itself and Lenders, on such assets, and agrees to
follow the instructions or entitlement orders of Agent without further consent
by the affected Credit Party.

 

A-5

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

“Copyright License” means any and all rights now owned or hereafter acquired by
any Credit Party under any written agreement granting any right to use any
Copyright or Copyright registration.

 

“Copyrights” means all of the following now owned or hereafter adopted or
acquired by any Credit Party: (a) all copyrights and General Intangibles of like
nature (whether registered or unregistered), all registrations and recordings
thereof, and all applications in connection therewith, including all
registrations, recordings and applications in the United States Copyright Office
or in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof, and (b) all
reissues, extensions or renewals thereof.

 

“Credit Parties” means each Borrower, each Guarantor, DDi Canada Acquisition
Corp. and Dynamic Details Canada Corp.

 

“Daily Reporting Activation Event” means any time at which Borrowers’ have
Liquidity of less than $7,000,000.

 

“Default” means any event that, with the passage of time or notice or both,
would, unless cured or waived, become an Event of Default.

 

“Default Rate” has the meaning ascribed to it in Section 1.5(d).

 

“Deposit Accounts” means all “deposit accounts” as such term in defined in the
Code, now or hereafter held in the name of any Credit Party.

 

“Details” mean Dynamic Details, Incorporated, a California corporation.

 

“Details Borrowing Base” means, as of any date of determination by Agent, from
time to time, an amount equal to up to 85% of the book value of Details’
Eligible Accounts at such time, less any Reserves established by Agent at such
time.

 

“Disbursement Accounts” has the meaning ascribed to it in Annex C.

 

“Disclosure Schedules” means the Schedules prepared by Borrowers and denominated
as Disclosure Schedules (1.4) through (6.7) in the Index to the Agreement.

 

“Documents” means any “documents,” as such term is defined in the Code, now
owned or hereafter acquired by any Credit Party, wherever located.

 

“Dominion Activation Event” means the earlier to occur of (a) the date that is
15 days following the Closing Date and (b) any time at which either (i) an Event
of Default has occurred, or (ii) Borrowers’ have Liquidity of less than
$10,000,000.

 

“Dollars” or “$” means lawful currency of the United States of America.

 

A-6

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

“EBITDA” means, with respect to any Person for any fiscal period, without
duplication, an amount equal to (a) consolidated net income of such Person for
such period, determined in accordance with GAAP, minus (b) the sum of (i) income
tax credits, (ii) interest income, (iii) gain from extraordinary items for such
period, (iv) any aggregate net gain ( but not any aggregate net loss) during
such period arising from the sale, exchange or other disposition of capital
assets by such Person (including any fixed assets, whether tangible or
intangible, all inventory sold in conjunction with the disposition of fixed
assets and all securities), and (v) any other non-cash gains that have been
added in determining consolidated net income, in each case to the extent
included in the calculation of consolidated net income of such Person for such
period in accordance with GAAP, but without duplication, plus (c) the sum of (i)
any provision for income taxes, (ii) Interest Expense, (iii) loss from non-cash
restructuring charges and other extraordinary non-cash items for such period,
(iv) depreciation and amortization for such period, (v) amortized debt discount
for such period, and (vi) the amount of any deduction to consolidated net income
as the result of any grant to any employees or directors of such Person of any
Stock, in each case to the extent included in the calculation of consolidated
net income of such Person for such period in accordance with GAAP, (vii) any
aggregate net non-cash loss during such period arising from the sale, exchange
or other disposition of capital assets by such Person (including any fixed
assets, whether tangible or intangible, all inventory sold in conjunction with
the disposition of fixed assets and all securities), (viii) non-capitalized
fees, expenses and payments made or incurred pursuant to the Loan documents or
the transactions contemplated thereby ad paid on the Closing Date, (ix) non-cash
write-downs of assets, and (x) write-offs due to exercise of employee options
and minus (d) any cash payments made during such period with respect to items
that were added back in a prior period pursuant to clause (c)(iii) above. For
purposes of this definition, the following items shall be excluded in
determining consolidated net income of a Person: (1) the income (or deficit) of
any other Person accrued prior to the date it became a Subsidiary of, or was
merged or consolidated into, such Person or any of such Person’s Subsidiaries;
(2) the income (or deficit) of any other Person (other than a Subsidiary) in
which such Person has an ownership interest, except to the extent any such
income has actually been received by such Person in the form of cash dividends
or distributions; (3) the undistributed earnings of any Subsidiary of such
Person to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at the time permitted by the terms of
any contractual obligation or requirement of law applicable to such Subsidiary;
(4) any restoration to income of any contingency reserve, except to the extent
that provision for such reserve was made out of income accrued during such
period; (5) any write-up of any asset; (6) any net gain from the collection of
the proceeds of life insurance policies; (7) any net gain arising from the
acquisition of any securities, or the extinguishment, under GAAP, of any
Indebtedness, of such Person; (8) in the case of a successor to such Person by
consolidation or merger or as a transferee of its assets, any earnings of such
successor prior to such consolidation, merger or transfer of assets; and (9) any
deferred credit representing the excess of equity in any Subsidiary of such
Person at the date of acquisition of such Subsidiary over the cost to such
Person of the investment in such Subsidiary.

 

“Eligible Accounts” has the meaning ascribed to it in Section 1.6.

 

“Environmental Laws” means all applicable federal, state, local and foreign
laws, statutes, ordinances, codes, rules, standards and regulations, now or
hereafter in effect, including any applicable judicial or administrative order,
consent decree, order or judgment, imposing

 

A-7

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

liability or standards of conduct for or relating to the regulation and
protection of human health, safety, the environment and natural resources
(including ambient air, surface water, groundwater, wetlands, land surface or
subsurface strata, wildlife, aquatic species and vegetation). Environmental Laws
include the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980 (42 U.S.C. §§ 9601 et seq.) (“CERCLA”); the Hazardous Materials
Transportation Authorization Act of 1994 (49 U.S.C. §§ 5101 et seq.); the
Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. §§ 136 et seq.);
the Solid Waste Disposal Act (42 U.S.C. §§ 6901 et seq.); the Toxic Substance
Control Act (15 U.S.C. §§ 2601 et seq.); the Clean Air Act (42 U.S.C. §§ 7401 et
seq.); the Federal Water Pollution Control Act (33 U.S.C. §§ 1251 et seq.); the
Occupational Safety and Health Act (29 U.S.C. §§ 651 et seq.); and the Safe
Drinking Water Act (42 U.S.C. §§ 300(f) et seq.), and any and all regulations
promulgated thereunder, and all analogous state, local and foreign counterparts
or equivalents and any transfer of ownership notification or approval statutes.

 

“Environmental Liabilities” means, with respect to any Person, all liabilities,
obligations, responsibilities, response, remedial and removal costs,
investigation and feasibility study costs, capital costs, operation and
maintenance costs, losses, damages, punitive damages, property damages, natural
resource damages, consequential damages, treble damages, costs and expenses
(including all reasonable fees, disbursements and expenses of counsel, experts
and consultants), fines, penalties, sanctions and interest incurred as a result
of or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law, including any arising under
or related to any Environmental Laws, Environmental Permits, or in connection
with any Release or threatened Release or presence of a Hazardous Material
whether on, at, in, under, from or about or in the vicinity of any real or
personal property.

 

“Environmental Permits” means all permits, licenses, authorizations,
certificates, approvals or registrations required by any Governmental Authority
under any Environmental Laws.

 

“Equipment” means all “equipment,” as such term is defined in the Code, now
owned or hereafter acquired by any Credit Party, wherever located and, in any
event, including all such Credit Party’s machinery and equipment, including
processing equipment, conveyors, machine tools, data processing and computer
equipment, including embedded software and peripheral equipment and all
engineering, processing and manufacturing equipment, office machinery,
furniture, materials handling equipment, tools, attachments, accessories,
automotive equipment, trailers, trucks, forklifts, molds, dies, stamps, motor
vehicles, rolling stock and other equipment of every kind and nature, trade
fixtures and fixtures not forming a part of real property, together with all
additions and accessions thereto, replacements therefor, all parts therefor, all
substitutes for any of the foregoing, fuel therefor, and all manuals, drawings,
instructions, warranties and rights with respect thereto, and all products and
proceeds thereof and condemnation awards and insurance proceeds with respect
thereto.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, and any
regulations promulgated thereunder.

 

A-8

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

“ERISA Affiliate” means, with respect to any Credit Party, any trade or business
(whether or not incorporated) that, together with such Credit Party, are treated
as a single employer within the meaning of Sections 414(b), (c), (m) or (o) of
the IRC.

 

“ERISA Event” means, with respect to any Credit Party or any ERISA Affiliate,
(a) any event described in Section 4043(c) of ERISA for which notice to the PBGC
has not been waived; (b) the withdrawal of any Credit Party or ERISA Affiliate
from a Title IV Plan subject to Section 4063 of ERISA during a plan year in
which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA;
(c) the complete or partial withdrawal of any Credit Party or any ERISA
Affiliate from any Multiemployer Plan; (d) the filing of a notice of intent to
terminate a Title IV Plan in a distress termination described in Section 4041(c)
of ERISA or the treatment of a plan amendment as a termination under Section
4041 of ERISA; (e) the institution of proceedings to terminate a Title IV Plan
or Multiemployer Plan by the PBGC; (f) with respect to a Title IV Plan, the
existence of an “accumulated funding deficiency” (as defined in Section 412 of
the IRC or Section 302 of ERISA) whether or not waived, or the failure to make
by its due date a required installment under Section 412(m) of the Code or the
failure to make any required contribution to a Multiemployer Plan, unless any
such failure is cured within 30 days; (g) the filing pursuant to Section 412(d)
of the Code or Section 303(d) of ERISA of an application for a waiver of the
minimum funding standard with respect to a Title IV Plan; (h) the making of any
amendment to any Title IV Plan which could reasonably be expected to result in
the imposition of a lien or the posting of a bond or other security; (i) with
respect to a Title IV Plan an event described in Section 4062(e) of ERISA; (j)
any other event or condition that would reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Title IV Plan or Multiemployer Plan or for the
imposition of liability under Section 4069 or 4212(c) of ERISA; (k) the
termination of a Multiemployer Plan under Section 4041A of ERISA or the
reorganization or insolvency of a Multiemployer Plan under Section 4241 or 4245
of ERISA; (l) the loss of a Qualified Plan’s qualification or tax exempt status;
or (m) the termination of a Plan described in Section 4064 of ERISA.

 

“Event of Default” has the meaning ascribed to it in Section 8.1.

 

“Excluded Assets” means the collective reference to any Contract or General
Intangible to the extent the granting of a Lien thereon is prohibited or would
constitute a default under any agreement or document governing such Contract or
General Intangible (but only to the extent such prohibition or default is
enforceable under applicable law).

 

“Fair Labor Standards Act” means the Fair Labor Standards Act, 29 U.S.C. §201 et
seq.

 

“Federal Funds Rate” means, for any day, a floating rate equal to the weighted
average of the rates on overnight Federal funds transactions among members of
the Federal Reserve System, as determined by Agent in its sole discretion, which
determination shall be final, binding and conclusive (absent manifest error).

 

“Federal Reserve Board” means the Board of Governors of the Federal Reserve
System.

 

A-9

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

“Fees” means any and all fees payable to Agent or any Lender pursuant to the
Agreement or any of the other Loan Documents.

 

“Financial Covenants” means the financial covenants set forth in Annex G.

 

“Financial Statements” means the consolidated and consolidating income
statements, statements of cash flows and balance sheets of Borrowers delivered
in accordance with Section 3.4 and Annex E, as applicable.

 

“Fiscal Month” means any of the monthly accounting periods of Borrowers.

 

“Fiscal Quarter” means any of the quarterly accounting periods of Borrowers,
ending on March 31, June 30, September 30, and December 31 of each year.

 

“Fiscal Year” means any of the annual accounting periods of Borrowers ending on
December 31 of each year.

 

“Fixed Charges” means, with respect to any Person for any fiscal period, the
aggregate of (a) the aggregate of all Interest Expense paid or payable in cash
during such period, plus (b) scheduled payments of principal with respect to
Indebtedness (including Capital Lease Obligations) during such period, less (c)
the amount of the Senior Accreting Notes Interest Payment actually paid.

 

“Fixed Charge Coverage Ratio” means, with respect to any Person for any period,
the ratio of (a) EBITDA minus Capital Expenditures minus income taxes paid or
payable in cash to (b) Fixed Charges, in each case for such period.

 

“Fixtures” means all “fixtures” as such term is defined in the Code, now owned
or hereafter acquired by any Credit Party.

 

“Funded Debt” means, with respect to any Person, without duplication, all
Indebtedness for borrowed money evidenced by notes, bonds, debentures, or
similar evidences of Indebtedness and that by its terms matures more than one
year from, or is directly or indirectly renewable or extendible at such Person’s
option under a revolving credit or similar agreement obligating the lender or
lenders to extend credit over a period of more than one year from the date of
creation thereof, and specifically including Capital Lease Obligations, current
maturities of long-term debt, revolving credit and short-term debt extendible
beyond one year at the option of the debtor, and also including, in the case of
Borrowers, the Obligations and, without duplication, Guaranteed Indebtedness
consisting of guaranties of Funded Debt of other Persons.

 

“GAAP” means generally accepted accounting principles in the United States of
America, consistently applied, as such term is further defined in Annex G to the
Agreement.

 

“GE Capital” means General Electric Capital Corporation, a Delaware corporation.

 

“General Intangibles” means all “general intangibles,” as such term is defined
in the Code, now owned or hereafter acquired by any Credit Party, including all
right, title and interest that such Credit Party may now or hereafter have in or
under any Contract, all payment

 

A-10

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

intangibles, customer lists, Licenses, Copyrights, Trademarks, Patents, and all
applications therefor and reissues, extensions or renewals thereof, rights in
Intellectual Property, interests in partnerships, joint ventures and other
business associations, licenses, permits, copyrights, trade secrets, proprietary
or confidential information, inventions (whether or not patented or patentable),
technical information, procedures, designs, knowledge, know-how, software, data
bases, data, skill, expertise, experience, processes, models, drawings,
materials and records, goodwill (including the goodwill associated with any
Trademark or Trademark License), all rights and claims in or under insurance
policies (including insurance for fire, damage, loss and casualty, whether
covering personal property, real property, tangible rights or intangible rights,
all liability, life, key man and business interruption insurance, and all
unearned premiums), uncertificated securities, choses in action, deposit,
checking and other bank accounts, rights to receive tax refunds and other
payments, rights to receive dividends, distributions, cash, Instruments and
other property in respect of or in exchange for pledged Stock and Investment
Property, rights of indemnification, all books and records, correspondence,
credit files, invoices and other papers, including without limitation all tapes,
cards, computer runs and other papers and documents in the possession or under
the control of such Credit Party or any computer bureau or service company from
time to time acting for such Credit Party.

 

“Goods” means all “goods” as defined in the Code, now owned or hereafter
acquired by any Credit Party, wherever located, including embedded software to
the extent included in “goods” as defined in the Code, manufactured homes,
standing timber that is cut and removed for sale and unborn young of animals.

 

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.

 

“Guaranteed Indebtedness” means, as to any Person, any obligation of such Person
guaranteeing, providing comfort or otherwise supporting any Indebtedness, lease,
dividend, or other obligation (“primary obligation”) of any other Person (the
“primary obligor”) in any manner, including any obligation or arrangement of
such Person to (a) purchase or repurchase any such primary obligation, (b)
advance or supply funds (i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency or any balance sheet
condition of the primary obligor, (c) purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, (d) protect the beneficiary of such arrangement from loss (other
than product warranties given in the ordinary course of business) or (e)
indemnify the owner of such primary obligation against loss in respect thereof.
The amount of any Guaranteed Indebtedness at any time shall be deemed to be an
amount equal to the lesser at such time of (x) the stated or determinable amount
of the primary obligation in respect of which such Guaranteed Indebtedness is
incurred and (y) the maximum amount for which such Person may be liable pursuant
to the terms of the instrument embodying such Guaranteed Indebtedness, or, if
not stated or determinable, the maximum reasonably anticipated liability
(assuming full performance) in respect thereof.

 

A-11

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

“Guaranties” means, collectively, each Continuing Guaranty and any other
guaranty executed by any Guarantor in favor of Agent and Lenders in respect of
the Obligations, as the same may be amended, restated, supplemented or otherwise
modified from time to time.

 

“Guarantors” means Parent and each of its direct and indirect Subsidiaries
(excluding any Borrower and any such Subsidiary organized in a jurisdiction
outside of the United States), and each other Person, if any, that executes a
guaranty or other similar agreement in favor of Agent, for itself and the
ratable benefit of Lenders, in connection with the transactions contemplated by
the Agreement and the other Loan Documents.

 

“Hazardous Material” means any substance, material or waste that is regulated
by, or forms the basis of liability now or hereafter under, any Environmental
Laws, including any material or substance that is (a) defined as a “solid
waste,” “hazardous waste,” “hazardous material,” “hazardous substance,”
“extremely hazardous waste,” “restricted hazardous waste,” “pollutant,”
“contaminant,” “hazardous constituent,” “special waste,” “toxic substance” or
other similar term or phrase under any Environmental Laws, or (b) petroleum or
any fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB’s),
or any radioactive substance.

 

“Indebtedness” means, with respect to any Person, without duplication (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property payment for which is deferred 6 months or more, but excluding
obligations to trade creditors incurred in the ordinary course of business that
are unsecured and not overdue by more than 6 months unless being contested in
good faith, (b) all reimbursement and other obligations with respect to letters
of credit, bankers’ acceptances and surety bonds, whether or not matured, (c)
all obligations evidenced by notes, bonds, debentures or similar instruments,
(d) all indebtedness created or arising under any conditional sale or other
title retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (e)
all Capital Lease Obligations and the present value (discounted at the Index
Rate as in effect on the Closing Date) of future rental payments under all
synthetic leases, (f) all obligations of such Person under commodity purchase or
option agreements or other commodity price hedging arrangements, in each case
whether contingent or matured, (g) all obligations of such Person under any
foreign exchange contract, currency swap agreement, interest rate swap, cap or
collar agreement or other similar agreement or arrangement designed to alter the
risks of that Person arising from fluctuations in currency values or interest
rates, in each case whether contingent or matured, (h) all Indebtedness referred
to above secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien upon or in
property or other assets (including accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for the payment
of such Indebtedness, and (i) the Obligations.

 

“Indemnified Liabilities” has the meaning ascribed to it in Section 1.13.

 

“Indemnified Person” has the meaning ascribed to it in Section 1.13.

 

“Index Rate” means, for any day, a floating rate equal to the higher of (a) the
rate publicly quoted from time to time by The Wall Street Journal as the “prime
rate” (or, if

 

A-12

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

The Wall Street Journal ceases quoting a prime rate, the highest per annum rate
of interest published by the Federal Reserve Board in Federal Reserve
statistical release H.15 (519) entitled “Selected Interest Rates” as the Bank
prime loan rate or its equivalent), and (b) the Federal Funds Rate plus 50 basis
points per annum. Each change in any interest rate provided for in the Agreement
based upon the Index Rate shall take effect at the time of such change in the
Index Rate.

 

“Index Rate Loan” means a Loan or portion thereof bearing interest by reference
to the Index Rate.

 

“Instruments” means all “instruments,” as such term is defined in the Code, now
owned or hereafter acquired by any Credit Party, wherever located, and, in any
event, including all certificated securities, all certificates of deposit, and
all promissory notes and other evidences of indebtedness, other than instruments
that constitute, or are a part of a group of writings that constitute, Chattel
Paper.

 

“Intellectual Property” means any and all Licenses, Patents, Copyrights,
Trademarks, and the goodwill associated with such Trademarks.

 

“Intellectual Property Security Agreement” means the Intellectual Property
Security Agreement made by Borrowers in favor of Agent, on behalf of itself and
Lenders, as the same may be amended, restated, supplemented or otherwise
modified from time to time.

 

“Intercompany Notes” has the meaning ascribed to it in Section 6.3.

 

“Interest Expense” means, with respect to any Person for any fiscal period,
interest expense (whether cash or non-cash) of such Person determined in
accordance with GAAP for the relevant period ended on such date, including (a)
interest expense with respect to any Funded Debt of such Person, (b) interest
expense for the relevant period that has been capitalized on the balance sheet
of such Person, and (c) with respect to Borrowers and their Subsidiaries, the
amount of any Restricted Payments made in accordance with Sections 6.13(e) or
(f), if any.

 

“Interest Payment Date” means (a) as to any Index Rate Loan, the first Business
Day of each month to occur while such Loan is outstanding, and (b) as to any
LIBOR Loan, the last day of the applicable LIBOR Period; provided, that in the
case of any LIBOR Period greater than three months in duration, interest shall
be payable at three-month intervals and on the last day of such LIBOR Period;
and provided further, that in addition to the foregoing, each of (x) the date
upon which all of the Commitments have been terminated and the Loans have been
paid in full and (y) the Commitment Termination Date shall be deemed to be an
“Interest Payment Date” with respect to any interest that has then accrued under
the Agreement.

 

“Inventory” means all “inventory,” as such term is defined in the Code, now
owned or hereafter acquired by any Credit Party, wherever located, and in any
event including inventory, merchandise, goods and other personal property that
are held by or on behalf of any Credit Party for sale or lease or are furnished
or are to be furnished under a contract of service, or that constitute raw
materials, work in process, finished goods, returned goods, supplies or
materials or supplies of any kind, nature or description used or consumed or to
be used or consumed in such Credit Party’s business or in the processing,
production, packaging, promotion, delivery or shipping of the same, including
all supplies and embedded software.

 

A-13

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

“Investment Property” means all “investment property” as such term is defined in
the Code now owned or hereafter acquired by any Credit Party, wherever located,
including (a) all securities, whether certificated or uncertificated, including
stocks, bonds, interests in limited liability companies, partnership interests,
treasuries, certificates of deposit, and mutual fund shares; (b) all securities
entitlements of any Credit Party, including the rights of any Credit Party to
any securities account and the financial assets held by a securities
intermediary in such securities account and any free credit balance or other
money owing by any securities intermediary with respect to that account; (c) all
securities accounts of any Credit Party; (d) all commodity contracts of any
Credit Party; and (e) all commodity accounts held by any Credit Party.

 

“IRC” means the Internal Revenue Code of 1986 and all regulations promulgated
thereunder.

 

“IRS” means the Internal Revenue Service.

 

“L/C Issuer” has the meaning ascribed to it in Annex B.

 

“L/C Sublimit” has the meaning ascribed to in it Annex B.

 

“Laminate” mean Laminate Technology Corp., a Delaware corporation.

 

“Laminate Borrowing Base” means, as of any date of determination by Agent, from
time to time, an amount equal to up to 85% of the book value of Laminate’s
Eligible Accounts at such time, less any Reserves established by Agent at such
time.

 

“Lease Expenses” means, with respect to any Person for any fiscal period, the
aggregate rental obligations of such Person determined in accordance with GAAP
which are payable in respect of such period under leases of real or personal
property (net of income from subleases thereof, but including taxes, insurance,
maintenance and similar expenses that the lessee is obligated to pay under the
terms of such leases), whether or not such obligations are reflected as
liabilities or commitments on a consolidated balance sheet of such Person or in
the notes thereto, excluding, however, any such obligations under Capital
Leases.

 

“Lenders” means GE Capital, the other Lenders named on the signature pages of
the Agreement, and, if any such Lender shall decide to assign all or any portion
of the Obligations, such term shall include any assignee of such Lender.

 

“Letter of Credit Fee” has the meaning ascribed to it in Annex B.

 

“Letter of Credit Obligations” means all outstanding obligations incurred by
Agent and Lenders at the request of Borrower Representative, whether direct or
indirect, contingent or otherwise, due or not due, in connection with the
issuance of Letters of Credit by Agent or another L/C Issuer or the purchase of
a participation as set forth in Annex B with respect to any Letter of Credit.
The amount of such Letter of Credit Obligations shall equal the maximum amount
that may be payable at such time or at any time thereafter by Agent or Lenders
thereupon or pursuant thereto.

 

A-14

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

“Letters of Credit” means documentary or standby letters of credit issued for
the account of any Borrower by any L/C Issuer, and bankers’ acceptances issued
by any Borrower, for which Agent and Lenders have incurred Letter of Credit
Obligations.

 

“Letter-of Credit Rights” means “letter-of-credit rights” as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party,
including rights to payment or performance under a letter of credit, whether or
not such Credit Party, as beneficiary, has demanded or is entitled to demand
payment or performance.

 

“LIBOR Business Day” means a Business Day on which banks in the City of London
are generally open for interbank or foreign exchange transactions.

 

“LIBOR Loan” means a Loan or any portion thereof bearing interest by reference
to the LIBOR Rate.

 

“LIBOR Period” means, with respect to any LIBOR Loan, each period commencing on
a LIBOR Business Day selected by Borrower Representative pursuant to the
Agreement and ending one, two, three or six months thereafter, as selected by
Borrower Representative’s irrevocable notice to Agent as set forth in Section
1.5(e); provided, that the foregoing provision relating to LIBOR Periods is
subject to the following:

 

(a) if any LIBOR Period would otherwise end on a day that is not a LIBOR
Business Day, such LIBOR Period shall be extended to the next succeeding LIBOR
Business Day unless the result of such extension would be to carry such LIBOR
Period into another calendar month in which event such LIBOR Period shall end on
the immediately preceding LIBOR Business Day;

 

(b) any LIBOR Period that would otherwise extend beyond the Commitment
Termination Date shall end two LIBOR Business Days prior to such date;

 

(c) any LIBOR Period that begins on the last LIBOR Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such LIBOR Period) shall end on the last LIBOR
Business Day of a calendar month;

 

(d) Borrower Representative shall select LIBOR Periods so as not to require a
payment or prepayment of any LIBOR Loan during a LIBOR Period for such Loan; and

 

(e) Borrower Representative shall select LIBOR Periods so that there shall be no
more than three separate LIBOR Loans in existence at any one time.

 

A-15

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

“LIBOR Rate” means for each LIBOR Period, a rate of interest determined by Agent
equal to:

 

(a) the offered rate for deposits in United States Dollars for the applicable
LIBOR Period that appears on Telerate Page 3750 as of 11:00 a.m. (London time),
on the second full LIBOR Business Day next preceding the first day of such LIBOR
Period (unless such date is not a Business Day, in which event the next
succeeding Business Day will be used); divided by

 

(b) a number equal to 1.0 minus the aggregate (but without duplication) of the
rates (expressed as a decimal fraction) of reserve requirements in effect on the
day that is two LIBOR Business Days prior to the beginning of such LIBOR Period
(including basic, supplemental, marginal and emergency reserves under any
regulations of the Federal Reserve Board or other Governmental Authority having
jurisdiction with respect thereto, as now and from time to time in effect) for
Eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in
Regulation D of the Federal Reserve Board that are required to be maintained by
a member bank of the Federal Reserve System.

 

If such interest rates shall cease to be available from Telerate News Service
(or its successor satisfactory to Agent), the LIBOR Rate shall be determined
from such financial reporting service or other information as shall be mutually
acceptable to Agent and Borrower Representative.

 

“License” means any Copyright License, Patent License, Trademark License or
other license of rights or interests now held or hereafter acquired by any
Credit Party.

 

“Lien” means any mortgage or deed of trust, pledge, hypothecation, assignment,
deposit arrangement, lien, charge, claim, security interest, easement or
encumbrance, or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any lease or title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, and the filing of, or agreement to give, any
financing statement perfecting a security interest under the Code or comparable
law of any jurisdiction).

 

“Liquidity” means, at any time, the sum of (a) all cash in Borrowers’ Deposit
Accounts that are subject to Control Letters, plus (b) Borrowing Availability
(less Reserves), in each case at such time.

 

“Litigation” has the meaning ascribed to it in Section 3.13.

 

“Loan Account” has the meaning ascribed to it in Section 1.12.

 

“Loan Documents” means the Agreement, the Notes, the Collateral Documents, the
Master Standby Agreement, the Master Documentary Agreement, and all other
agreements, instruments, documents and certificates identified in the Closing
Checklist executed and delivered to, or in favor of, Agent or any Lenders and
including all other pledges, powers of attorney, consents, assignments,
contracts, notices, letter of credit agreements and all other written matter
whether heretofore, now or hereafter executed by or on behalf of any Credit
Party, or any employee of any Credit Party, and delivered to Agent or any Lender
in connection with the Agreement or the transactions contemplated thereby. Any
reference in the Agreement or any other Loan Document to a Loan Document shall
include all appendices, exhibits or schedules thereto, and all amendments,
restatements, supplements or other modifications thereto, and shall refer to the
Agreement or such Loan Document as the same may be in effect at any and all
times such reference becomes operative.

 

A-16

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

“Loans” means the Revolving Loan and the Swing Line Loan.

 

“Lock Boxes” has the meaning ascribed to it in Annex C.

 

“Margin Stock” has the meaning ascribed to it in Section 3.10.

 

“Master Documentary Agreement” means the Master Agreement for Documentary
Letters of Credit dated as of the Closing Date among Borrowers, as Applicant,
and GE Capital, as Issuer.

 

“Master Standby Agreement” means the Master Agreement for Standby Letters of
Credit dated as of the Closing Date among Borrowers, as Applicant, and GE
Capital, as Issuer.

 

“Material Adverse Effect” means a material adverse effect on (a) the business,
assets, operations, prospects or financial or other condition of Borrowers
considered as a whole, (b) the ability of Borrowers as a whole to pay any of the
Loans or any of the other Obligations in accordance with the terms of the
Agreement, (c) the Collateral or Agent’s Liens, on behalf of itself and Lenders,
on the Collateral or the priority of such Liens, or (d) Agent’s or any Lender’s
rights and remedies under the Agreement and the other Loan Documents. Without
limiting the generality of the foregoing, any event or occurrence adverse to one
or more Borrowers which results or would reasonably be expected to result in
losses, costs, damages, liabilities or expenditures in excess of $3,000,000
shall constitute a Material Adverse Effect.

 

“Maximum Amount” means, as of any date of determination, an amount equal to the
Revolving Loan Commitment of all Lenders as of that date.

 

“Multiemployer Plan” means a “multiemployer plan” as defined in Sections 3(37)
or 4001(a)(3) of ERISA, and to which any Credit Party or ERISA Affiliate is
making, or is obligated to make, contributions on behalf of participants who are
or were employed by any of them.

 

“Non-Funding Lender” has the meaning ascribed to it in Section 9.9(a)(ii).

 

“Notes” means, collectively, the Revolving Notes and the Swing Line Note.

 

“Notice of Conversion/Continuation” has the meaning ascribed to it in Section
1.5(e).

 

“Notice of Revolving Credit Advance” has the meaning ascribed to it in Section
1.1(a).

 

“Obligations” means all loans, advances, debts, liabilities and obligations, for
the performance of covenants, tasks or duties or for payment of monetary amounts
(whether or not such performance is then required or contingent, or such amounts
are liquidated or determinable) owing by any Credit Party to Agent or any
Lender, and all covenants and duties regarding such amounts, of any kind or
nature, present or future, whether or not evidenced by any note, agreement,
letter of credit agreement or other instrument, arising under the Agreement or
any of

 

A-17

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

the other Loan Documents or any other financing agreement between GE Capital and
any Credit Party. This term includes all principal, interest (including all
interest that accrues after the commencement of any case or proceeding by or
against any Credit Party in bankruptcy, whether or not allowed in such case or
proceeding), Fees, hedging obligations under swaps, caps and collar arrangements
provided by any Lender, expenses, attorneys’ fees and any other sum chargeable
to any Credit Party under the Agreement or any of the other Loan Documents.

 

“Parent” means DDi Corp., a Delaware corporation.

 

“Parent Guarantor” means each of Parent, DDi Intermediate Holdings Corp, DDi
Capital Corp., and their respective direct Subsidiaries (excluding any such
Subsidiary that is a Borrower or organized in a jurisdiction outside of the
United States), if any.

 

“Patent License” means rights under any written agreement now owned or hereafter
acquired by any Credit Party granting any right with respect to any invention on
which a Patent is in existence.

 

“Patents” means all of the following in which any Credit Party now holds or
hereafter acquires any interest: (a) all letters patent of the United States or
any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or of any other country,
including registrations, recordings and applications in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any State or any other country, and (b) all reissues, continuations,
continuations-in-part or extensions thereof.

 

“PBGC” means the Pension Benefit Guaranty Corporation.

 

“Pension Plan” means a Plan described in Section 3(2) of ERISA.

 

“Permitted Encumbrances” means the following encumbrances: (a) Liens for taxes
or assessments or other governmental Charges not yet due and payable or which
are being contested in accordance with Section 5.2(b); (b) pledges or deposits
of money securing statutory obligations under workmen’s compensation,
unemployment insurance, social security or public liability laws or similar
legislation (excluding Liens under ERISA); (c) pledges or deposits of money
securing bids, tenders, contracts (other than contracts for the payment of
money) or leases to which any Credit Party is a party as lessee made in the
ordinary course of business; (d) inchoate and unperfected workers’, mechanics’
or similar liens arising in the ordinary course of business, so long as such
Liens attach only to Equipment, Fixtures and/or Real Estate; (e) carriers’,
warehousemen’s, suppliers’ or other similar possessory liens arising in the
ordinary course of business and securing liabilities in an outstanding aggregate
amount not in excess of $200,000 at any time, so long as such Liens attach only
to Inventory; (f) deposits securing, or in lieu of, surety, appeal or customs
bonds in proceedings to which any Credit Party is a party; (g) any attachment or
judgment lien not constituting an Event of Default under Section 8.1(j); (h)
zoning restrictions, easements, licenses, rights-of-way or other restrictions on
the use of any Real Estate or other minor irregularities in title (including
leasehold title) thereto, so long as the same do not materially impair the use,
value, or marketability of such Real Estate; (i) presently existing or hereafter
created Liens in favor of Agent, on behalf of Lenders; (j) Liens in existence on
the date hereof and summarized in Disclosure Schedule (6.7) securing
Indebtedness

 

A-18

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

described in Disclosure Schedule (6.3) and permitted refinancings, extensions
and renewals thereof, including extensions or renewals of any such Liens;
provided that the principal amount of the Indebtedness so secured is not
increased and the Lien does not attach to any other property; (k) Liens created
after the date hereof by conditional sale or other title retention agreements
(including Capital Leases) or in connection with purchase money Indebtedness
with respect to Equipment and Fixtures acquired by any Credit Party in the
ordinary course of business, involving the incurrence of an aggregate amount of
purchase money Indebtedness and Capital Lease Obligations of not more than
$1,000,000 outstanding at any one time for all such Liens (provided that such
Liens attach only to the assets subject to such purchase money debt and such
Indebtedness is incurred within 20 days following such purchase and does not
exceed 100% of the purchase price of the subject assets); (l) any residual
interest or title of a lessor or sublessor under any lease or sublease entered
into by any Credit Party in the ordinary course of its business and covering
only the assets so leased (including, with respect to the capital lease of
Borrower’s principal manufacturing facility and related Equipment, and covering
only such facility and related Equipment); (m) Permitted Investments relating to
certificate of deposit repurchase agreements; (n) Liens consisting of rights of
set-off and off-set of a customary nature of bankers’ liens on deposit accounts,
whether arising by contract or operation of law, incurred in the ordinary course
of business; (o) Liens constituting Licenses and sublicenses entered into by any
Credit Party in the ordinary course of business and (p) other Liens securing
Indebtedness not exceeding $100,000 in the aggregate at any time outstanding, so
long as such Liens do not attach to any Accounts.

 

“Permitted Investments” has the meaning ascribed to it in Section 6.2.

 

“Person” means any individual, sole proprietorship, partnership, joint venture,
trust, unincorporated organization, association, corporation, limited liability
company, institution, public benefit corporation, other entity or government
(whether federal, state, county, city, municipal, local, foreign, or otherwise,
including any instrumentality, division, agency, body or department thereof).

 

“Plan” means, at any time, an “employee benefit plan,” as defined in Section
3(3) of ERISA, that any Credit Party or ERISA Affiliate maintains, contributes
to or has an obligation to contribute on behalf of participants who are or were
employed by any Credit Party or ERISA Affiliate.

 

Pledge Agreement” means the Pledge Agreement of even date herewith executed by
each Credit Party in favor of Agent, on behalf of itself and Lenders, pledging
all Stock of such Credit Party’s Subsidiaries and all Intercompany Notes owing
to or held by it, as the same may be amended, restated, supplemented or
otherwise modified from time to time.

 

“Prior Lender” means the syndicate of lenders led by JPMorgan Chase Bank, as
administration agent, in connection with the Prior Lender Obligations.

 

“Prior Lender Obligations” means the obligations of Credit Parties arising under
the Second Amended and Restated Credit Agreement dated as of December 12, 2003,
among Details and DDI Capital Corp., as borrowers, Bank Austria Creditanstalt
Corp Finance, as documentation agent and lender, and JPMorgan Chase Bank, as
administrative agent and lender, together with all instruments, documents and
agreements executed in connection therewith, and as the same are in effect on
the Closing Date.

 

A-19

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

“Proceeds” means “proceeds,” as such term is defined in the Code, including (a)
any and all proceeds of any insurance, indemnity, warranty or guaranty payable
to any Credit Party from time to time with respect to any of the Collateral, (b)
any and all payments (in any form whatsoever) made or due and payable to any
Credit Party from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any
Governmental Authority (or any Person acting under color of governmental
authority), (c) any claim of any Credit Party against third parties (i) for
past, present or future infringement of any Patent or Patent License, or (ii)
for past, present or future infringement or dilution of any Copyright, Copyright
License, Trademark or Trademark License, or for injury to the goodwill
associated with any Trademark or Trademark License, (d) any recoveries by any
Credit Party against third parties with respect to any litigation or dispute
concerning any of the Collateral including claims arising out of the loss or
nonconformity of, interference with the use of, defects in, or infringement of
rights in, or damage to, Collateral, (e) all amounts collected on, or
distributed on account of, other Collateral, including dividends, interest,
distributions and Instruments with respect to Investment Property and pledged
Stock, and (f) any and all other amounts, rights to payment or other property
acquired upon the sale, lease, license, exchange or other disposition of
Collateral and all rights arising out of Collateral.

 

“Projections” means Borrowers’ forecasted consolidated: (a) balance sheets; (b)
profit and loss statements; (c) cash flow statements; and (d) capitalization
statements, consistent with the historical Financial Statements of Borrowers,
together with appropriate supporting details and a statement of underlying
assumptions.

 

“Pro Rata Share” means with respect to all matters relating to any Lender (a)
with respect to the Revolving Loan, the percentage obtained by dividing (i) the
Revolving Loan Commitment of that Lender by (ii) the aggregate Revolving Loan
Commitments of all Lenders, (b) with respect to all Loans, the percentage
obtained by dividing (i) the aggregate Commitments of that Lender by (ii) the
aggregate Commitments of all Lenders, and (c) with respect to all Loans on and
after the Commitment Termination Date, the percentage obtained by dividing (i)
the aggregate outstanding principal balance of the Loans held by that Lender, by
(ii) the outstanding principal balance of the Loans held by all Lenders.

 

“Qualified Plan” means a Pension Plan that is intended to be tax-qualified under
Section 401(a) of the IRC.

 

“Qualified Assignee” means (a) any Lender, any Affiliate of any Lender and, with
respect to any Lender that is an investment fund that invests in commercial
loans, any other investment fund that invests in commercial loans and that is
managed or advised by the same investment advisor as such Lender or by an
Affiliate of such investment advisor, and (b) any commercial bank, savings and
loan association or savings bank or any other entity which is an “accredited
investor” (as defined in Regulation D under the Securities Act of 1933) which
extends credit or buys loans as one of its businesses, including insurance
companies, mutual funds, lease financing companies and commercial finance
companies, in each case, which has a rating of BBB or higher from S&P and a
rating of Baa2 or higher from Moody’s at the date that

 

A-20

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

it becomes a Lender and which, through its applicable lending office, is capable
of lending to Borrowers without the imposition of any withholding or similar
taxes; provided that no Person proposed to become a Lender after the Closing
Date and determined by Agent to be acting in the capacity of a vulture fund or
distressed debt purchaser shall be a Qualified Assignee, and no Person or
Affiliate of such Person proposed to become a Lender after the Closing Date and
that holds Stock issued by any Credit Party shall be a Qualified Assignee.

 

“Real Estate” has the meaning ascribed to it in Section 3.6.

 

“Refinancing” means the repayment in full by Borrowers of the Prior Lender
Obligations on the Closing Date.

 

“Refunded Swing Line Loan” has the meaning ascribed to it in Section
1.1(b)(iii).

 

“Related Transactions” means the initial borrowing under the Revolving Loan on
the Closing Date, the Refinancing, the payment of all fees, costs and expenses
associated with all of the foregoing and the execution and delivery of all of
the Related Transactions Documents.

 

“Related Transactions Documents” means the Loan Documents and all other
agreements or instruments executed in connection with the Related Transactions.

 

“Release” means any release, threatened release, spill, emission, leaking,
pumping, pouring, emitting, emptying, escape, injection, deposit, disposal,
discharge, dispersal, dumping, leaching or migration of Hazardous Material in
the indoor or outdoor environment, including the movement of Hazardous Material
through or in the air, soil, surface water, ground water or property.

 

“Requisite Lenders” means Lenders having (a) more than 66 2/3% of the
Commitments of all Lenders, or (b) if the Commitments have been terminated, more
than 66 2/3% of the aggregate outstanding amount of all Loans.

 

“Requisite Revolving Lenders” means Lenders having (a) more than 66 2/3% of the
Revolving Loan Commitments of all Lenders, or (b) if the Revolving Loan
Commitments have been terminated, more than 66 2/3% of the aggregate outstanding
amount of the Revolving Loan.

 

“Reserves” means with respect to any Borrowing Base (a) reserves established
pursuant to Section 5.4(c), (b) the Availability Reserve, (c) the Senior
Accreting Notes Interest Reserve, and (d) such other reserves against Eligible
Accounts or Borrowing Availability that Agent may, in its reasonable credit
judgment, establish from time to time. Without limiting the generality of the
foregoing, Reserves established to ensure the payment of accrued Interest
Expenses or Indebtedness shall be deemed to be a reasonable exercise of Agent’s
credit judgment.

 

“Restricted Payment” means, with respect to any Credit Party (a) the declaration
or payment of any dividend or the incurrence of any liability to make any other
payment or distribution of cash or other property or assets in respect of Stock;
(b) any payment on account of the purchase, redemption, defeasance, sinking fund
or other retirement of such Credit Party’s Stock or any other payment or
distribution made in respect thereof, either directly or indirectly; (c) any
payment or prepayment of principal of, premium, if any, or interest, fees or
other charges

 

A-21

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

on or with respect to, and any redemption, purchase, retirement, defeasance,
sinking fund or similar payment and any claim for rescission with respect to,
any Subordinated Debt; (d) any payment made to redeem, purchase, repurchase or
retire, or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire Stock of such Credit Party now or hereafter outstanding;
(e) any payment of a claim for the rescission of the purchase or sale of, or for
material damages arising from the purchase or sale of, any shares of such Credit
Party’s Stock or of a claim for reimbursement, indemnification or contribution
arising out of or related to any such claim for damages or rescission; (f) any
payment, loan, contribution, or other transfer of funds or other property to any
Stockholder of such Credit Party other than payment of compensation in the
ordinary course of business to Stockholders who are employees of such Credit
Party; and (g) any payment of management fees (or other fees of a similar
nature) by such Credit Party to any Stockholder of such Credit Party or its
Affiliates.

 

“Revolving Credit Advance” has the meaning ascribed to it in Section 1.1(a)(i).

 

“Revolving Lenders” means, as of any date of determination, Lenders having a
Revolving Loan Commitment.

 

“Revolving Loan” means, at any time, the sum of (a) the aggregate amount of
Revolving Credit Advances outstanding to Borrowers plus (b) the aggregate Letter
of Credit Obligations incurred on behalf of Borrowers. Unless the context
otherwise requires, references to the outstanding principal balance of the
Revolving Loan shall include the outstanding balance of Letter of Credit
Obligations.

 

“Revolving Loan Commitment” means (a) as to any Revolving Lender, the aggregate
commitment of such Revolving Lender to make Revolving Credit Advances or incur
Letter of Credit Obligations as set forth on Annex J to the Agreement or in the
most recent Assignment Agreement executed by such Revolving Lender and (b) as to
all Revolving Lenders, the aggregate commitment of all Revolving Lenders to make
Revolving Credit Advances or incur Letter of Credit Obligations, which aggregate
commitment shall be FORTY MILLION DOLLARS ($40,000,000) on the Closing Date, as
such amount may be adjusted, if at all, from time to time in accordance with the
Agreement.

 

“Revolving Note” has the meaning ascribed to it in Section 1.1(a)(ii).

 

“Schedule of Documents” means the schedule, including all appendices, exhibits
or schedules thereto, listing certain documents and information to be delivered
in connection with the Agreement, the other Loan Documents and the transactions
contemplated thereunder, substantially in the form attached hereto as Annex D.

 

“Security Agreement” means the Security Agreement of even date herewith entered
into by and among Agent, on behalf of itself and Lenders, each Borrower and each
Guarantor, as the same may be amended, restated, supplemented or otherwise
modifies from time to time.

 

“Senior Accreting Notes Interest Payment” means the interest payment in the
amount of $900,000 to be made during the Fiscal Quarter ending June 30, 2004, in
accordance with paragraph 1 of the Senior Accreting Notes, which amount
constitutes the interest on the Senior Accreting Notes that has been accreted
thereon as of such date in accordance with the Indenture dated as of December
12, 2003, for the Senior Accreting Notes.

 

A-22

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

“Senior Accreting Notes Interest Reserve” means the Reserve maintained against
Borrowing Availability in the amount of (a) $660,000 as of the Closing Date (or
as of the date that Liquidity falls below $21,000,000 as provided below), and
(b)(i) increased by $220,000 as of the last day of each Fiscal Month thereafter,
and (ii) decreased on the date that a cash interest payment is made in respect
of the Senior Accreting Notes by the amount of such interest payment; provided,
that the “Senior Accreting Notes Interest Reserve” shall be $0 beginning at such
time as Borrowers have Liquidity of more than $21,000,000 and until such time as
Liquidity thereafter falls below $21,000,000.

 

“Senior Accreting Notes” mean the senior unsecured accreting notes of DDi
Capital Corp. issued pursuant to the Indenture dated as of December 12, 2003, as
in effect on the Closing Date.

 

“Series B Certificate of Designation” means the Certificate of Designation of
Series B Preferred Stock of DDi Corp governing the terms and conditions of the
Series B Preferred Stock.

 

“Series B Preferred Stock” means the Series B-1 Preferred Stock and the Series
B-2 Preferred Stock, $0.0001 par value per share, issued by Parent pursuant to
the Purchase Agreement dated as of March 29, 2004, between Parent and each of
the purchasers party thereto, together with all schedules, exhibits and
attachments thereto.

 

“Software” means all “software” as such term is defined in the Code, now owned
or hereafter acquired by any Credit Party, other than software embedded in any
category of Goods, including all computer programs and all supporting
information provided in connection with a transaction related to any program.

 

“Solvent” means, with respect to any Person on a particular date, that on such
date (a) the fair value of the property of such Person is greater than the total
amount of liabilities, including contingent liabilities, of such Person; (b) the
present fair salable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such Person on its
debts as they become absolute and matured; (c) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such
Person’s ability to pay as such debts and liabilities mature; and (d) such
Person is not engaged in a business or transaction, and is not about to engage
in a business or transaction, for which such Person’s property would constitute
an unreasonably small capital. The amount of contingent liabilities (such as
litigation, guaranties and pension plan liabilities) at any time shall be
computed as the amount that, in light of all the facts and circumstances
existing at the time, represents the amount that can be reasonably be expected
to become an actual or matured liability.

 

“Stock” means all shares, options, warrants, general or limited partnership
interests, membership interests or other equivalents (regardless of how
designated) of or in a corporation, partnership, limited liability company or
equivalent entity whether voting or nonvoting, including common stock, preferred
stock or any other “equity security” (as such term is defined in Rule 3a11-1 of
the General Rules and Regulations promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934).

 

A-23

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

“Stockholder” means, with respect to any Person, each holder of Stock of such
Person.

 

“Subordinated Debt” means any Indebtedness of any Credit Party subordinated to
the Obligations in a manner and form satisfactory to Agent and Lenders in their
sole discretion, as to right and time of payment and as to any other rights and
remedies thereunder.

 

“Subsidiary” means, with respect to any Person, (a) any corporation of which an
aggregate of more than 50% of the outstanding Stock having ordinary voting power
to elect a majority of the board of directors of such corporation (irrespective
of whether, at the time, Stock of any other class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency) is at the time, directly or indirectly, owned legally or
beneficially by such Person or one or more Subsidiaries of such Person, or with
respect to which any such Person has the right to vote or designate the vote of
50% or more of such Stock whether by proxy, agreement, operation of law or
otherwise, and (b) any partnership or limited liability company in which such
Person and/or one or more Subsidiaries of such Person shall have an interest
(whether in the form of voting or participation in profits or capital
contribution) of more than 50% or of which any such Person is a general partner
or may exercise the powers of a general partner. Unless the context otherwise
requires, each reference to a Subsidiary shall be a reference to a Subsidiary of
a Borrower.

 

“Subsidiary Guarantor” means each of Details’ direct and indirect Subsidiaries
(excluding any such Subsidiary that is a Borrower or organized in a jurisdiction
outside of the United States).

 

“Supermajority Revolving Lenders” means Lenders having (a) 80% or more of the
Revolving Loan Commitments of all Lenders, or (b) if the Revolving Loan
Commitments have been terminated, 80% or more of the aggregate outstanding
amount of the Revolving Loan (with the Swing Line Loan being attributed to the
Lender making such Loan) and Letter of Credit Obligations.

 

“Supporting Obligations” means all “supporting obligations” as such term is
defined in the Code, including letters of credit and guaranties issued in
support of Accounts, Chattel Paper, Documents, General Intangibles, Instruments,
or Investment Property.

 

“Swing Line Advance” has the meaning ascribed to it in Section 1.1(b)(i).

 

“Swing Line Availability” has the meaning ascribed to it in Section 1.1(b)(i).

 

“Swing Line Commitment” means, as to the Swing Line Lender, the commitment of
the Swing Line Lender to make Swing Line Advances as set forth on Annex J to the
Agreement, which commitment constitutes a subfacility of the Revolving Loan
Commitment of the Swing Line Lender.

 

“Swing Line Lender” means GE Capital.

 

A-24

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

“Swing Line Loan” means, as the context may require, at any time, the aggregate
amount of Swing Line Advances outstanding to any Borrower or to all Borrowers.

 

“Swing Line Note” has the meaning ascribed to it in Section 1.1(b)(ii).

 

“Target” has the meaning ascribed to it in Section 6.1.

 

“Taxes” means taxes, levies, imposts, deductions, Charges or withholdings, and
all liabilities with respect thereto, excluding taxes imposed on or measured by
the net income of Agent or a Lender by the jurisdictions under the laws of which
Agent and Lenders are organized or conduct business or any political subdivision
thereof.

 

“Termination Date” means the date on which (a) the Loans have been indefeasibly
repaid in full, (b) all other Obligations under the Agreement and the other Loan
Documents have been completely discharged, (c) all Letter of Credit Obligations
have been cash collateralized, cancelled or backed by standby letters of credit
in accordance with Annex B, and (d) no Borrower shall have any further right to
borrow any monies under the Agreement.

 

“Title IV Plan” means a Pension Plan (other than a Multiemployer Plan), that is
subject to Title IV of ERISA or Section 412 of the IRC, and that any Credit
Party or ERISA Affiliate maintains, contributes to or has an obligation to
contribute to on behalf of participants who are or were employed by any of them.

 

“Trademark License” means rights under any written agreement now owned or
hereafter acquired by any Credit Party granting any right to use any Trademark.

 

“Trademarks” means all of the following now owned or hereafter existing or
adopted or acquired by any Credit Party: (a) all trademarks, trade names,
corporate names, business names, trade styles, service marks, logos, other
source or business identifiers, prints and labels on which any of the foregoing
have appeared or appear, designs and general intangibles of like nature (whether
registered or unregistered), all registrations and recordings thereof, and all
applications in connection therewith, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any state or territory thereof, or any
other country or any political subdivision thereof; (b) all reissues, extensions
or renewals thereof; and (c) all goodwill associated with or symbolized by any
of the foregoing.

 

“Unfunded Pension Liability” means, at any time, the aggregate amount, if any,
of the amount by which the present value of all accrued benefits under each
Title IV Plan exceeds the fair market value of all assets of such Title IV Plan
allocable to such benefits determined as of the most recent valuation date for
each such Title IV Plan using the actuarial assumptions for funding purposes in
effect under such Title IV Plan.

 

“Valley” mean Dynamic Details Incorporated, Silicon Valley, a Delaware
corporation.

 

“Valley Borrowing Base” means, as of any date of determination by Agent, from
time to time, an amount equal to up to 85% of the book value of Valley’s
Eligible Accounts at such time, less any Reserves established by Agent at such
time.

 

A-25

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

“Virginia” mean Dynamic Details Incorporated, Virginia, a Delaware corporation.

 

“Virginia Borrowing Base” means, as of any date of determination by Agent, from
time to time, an amount equal to up to 85% of the book value of Virginia’s
Eligible Accounts at such time, less any Reserves established by Agent at such
time.

 

“Weekly Reporting Activation Event” means any time prior to the occurrence of a
Daily Reporting Activation Event at which either (a) an Event of Default has
occurred or (b) Borrowers’ have Liquidity of less than $10,000,000.

 

Rules of construction with respect to accounting terms used in the Agreement or
the other Loan Documents shall be as set forth in Annex G. All other undefined
terms contained in any of the Loan Documents shall, unless the context indicates
otherwise, have the meanings provided for by the Code to the extent the same are
used or defined therein; in the event that any term is defined differently in
different Articles or Divisions of the Code, the definition contained in Article
or Division 9 shall control. Unless otherwise specified, references in the
Agreement or any of the Appendices to a Section, subsection or clause refer to
such Section, subsection or clause as contained in the Agreement. The words
“herein,” “hereof” and “hereunder” and other words of similar import refer to
the Agreement as a whole, including all Annexes, Exhibits and Schedules, as the
same may from time to time be amended, restated, modified or supplemented, and
not to any particular section, subsection or clause contained in the Agreement
or any such Annex, Exhibit or Schedule.

 

Wherever from the context it appears appropriate, each term stated in either the
singular or plural shall include the singular and the plural, and pronouns
stated in the masculine, feminine or neuter gender shall include the masculine,
feminine and neuter genders. The words “including”, “includes” and “include”
shall be deemed to be followed by the words “without limitation”; the word “or”
is not exclusive; references to Persons include their respective successors and
assigns (to the extent and only to the extent permitted by the Loan Documents)
or, in the case of governmental Persons, Persons succeeding to the relevant
functions of such Persons; and all references to statutes and related
regulations shall include any amendments of the same and any successor statutes
and regulations. Whenever any provision in any Loan Document refers to the
knowledge (or an analogous phrase) of any Credit Party, such words are intended
to signify that such Credit Party has actual knowledge or awareness of a
particular fact or circumstance or that such Credit Party, if it had exercised
reasonable diligence, would have known or been aware of such fact or
circumstance.

 

A-26

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

ANNEX B (Section 1.2)

to

CREDIT AGREEMENT

 

LETTERS OF CREDIT

 

(a) Issuance. Subject to the terms and conditions of the Agreement, Agent and
Revolving Lenders agree to incur, from time to time prior to the Commitment
Termination Date, upon the request of Borrower Representative on behalf of the
applicable Borrower and for such Borrower’s account, Letter of Credit
Obligations by causing Letters of Credit to be issued by GE Capital or a
Subsidiary thereof or a bank or other legally authorized Person selected by or
acceptable to Agent in its sole discretion (each, an “L/C Issuer”) for such
Borrower’s account and guaranteed by Agent; provided, that if the L/C Issuer is
a Revolving Lender, then such Letters of Credit shall not be guaranteed by Agent
but rather each Revolving Lender shall, subject to the terms and conditions
hereinafter set forth, purchase (or be deemed to have purchased) risk
participations in all such Letters of Credit issued with the written consent of
Agent, as more fully described in paragraph (b)(ii) below. The aggregate amount
of all such Letter of Credit Obligations shall not at any time exceed the least
of (i) TEN MILLION DOLLARS ($10,000,000) (the “L/C Sublimit”), and (ii) the
Maximum Amount less the aggregate outstanding principal balance of the Revolving
Credit Advances and the Swing Line Loan, and (iii) the Aggregate Borrowing Base
less the aggregate outstanding principal balance of the Revolving Credit
Advances and the Swing Line Loan. No such Letter of Credit shall have an expiry
date that is more than one year following the date of issuance thereof, unless
otherwise determined by Agent in its sole discretion (including with respect to
customary evergreen provisions), and neither Agent nor Revolving Lenders shall
be under any obligation to incur Letter of Credit Obligations in respect of, or
purchase risk participations in, any Letter of Credit having an expiry date that
is later than the Commitment Termination Date.

 

(b) Advances Automatic; Participations.

 

(i) In the event that Agent or any Revolving Lender shall make any payment on or
pursuant to any Letter of Credit Obligation, such payment shall then be deemed
automatically to constitute a Revolving Credit Advance to the applicable
Borrower under Section 1.1(a) regardless of whether a Default or Event of
Default has occurred and is continuing and notwithstanding any Borrower’s
failure to satisfy the conditions precedent set forth in Section 2, and each
Revolving Lender shall be obligated to pay its Pro Rata Share thereof in
accordance with the Agreement. The failure of any Revolving Lender to make
available to Agent for Agent’s own account its Pro Rata Share of any such
Revolving Credit Advance or payment by Agent under or in respect of a Letter of
Credit shall not relieve any other Revolving Lender of its obligation hereunder
to make available to Agent its Pro Rata Share thereof, but no Revolving Lender
shall be responsible for the failure of any other Revolving Lender to make
available such other Revolving Lender’s Pro Rata Share of any such payment.

 

(ii) If it shall be illegal or unlawful for any Borrower to incur Revolving
Credit Advances as contemplated by paragraph (b)(i) above because of an Event of
Default described in Sections 8.1(h) or (i) or otherwise or if it shall be
illegal or unlawful for any Revolving Lender to be deemed to have assumed a
ratable share of the reimbursement

 

B-1

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

obligations owed to an L/C Issuer, or if the L/C Issuer is a Revolving Lender,
then (i) immediately and without further action whatsoever, each Revolving
Lender shall be deemed to have irrevocably and unconditionally purchased from
Agent (or such L/C Issuer, as the case may be) an undivided interest and
participation equal to such Revolving Lender’s Pro Rata Share (based on the
Revolving Loan Commitments) of the Letter of Credit Obligations in respect of
all Letters of Credit then outstanding and (ii) thereafter, immediately upon
issuance of any Letter of Credit, each Revolving Lender shall be deemed to have
irrevocably and unconditionally purchased from Agent (or such L/C Issuer, as the
case may be) an undivided interest and participation in such Revolving Lender’s
Pro Rata Share (based on the Revolving Loan Commitments) of the Letter of Credit
Obligations with respect to such Letter of Credit on the date of such issuance.
Each Revolving Lender shall fund its participation in all payments or
disbursements made under the Letters of Credit in the same manner as provided in
the Agreement with respect to Revolving Credit Advances.

 

(c) Cash Collateral.

 

(i) If Borrowers are required to provide cash collateral for any Letter of
Credit Obligations pursuant to the Agreement, including Section 8.2, prior to
the Commitment Termination Date, each Borrower will pay to Agent for the ratable
benefit of itself and Revolving Lenders cash or cash equivalents acceptable to
Agent (“Cash Equivalents”) in an amount equal to 105% of the maximum amount then
available to be drawn under each applicable Letter of Credit outstanding for the
benefit of such Borrower. Such funds or Cash Equivalents shall be held by Agent
in a cash collateral account (the “Cash Collateral Account”) maintained at a
bank or financial institution acceptable to Agent. The Cash Collateral Account
shall be in the name of the applicable Borrower and shall be pledged to, and
subject to the control of, Agent, for the benefit of Agent and Lenders, in a
manner satisfactory to Agent. Each Borrower hereby pledges and grants to Agent,
on behalf of itself and Lenders, a security interest in all such funds and Cash
Equivalents held in the Cash Collateral Account from time to time and all
proceeds thereof, as security for the payment of all amounts due in respect of
the Letter of Credit Obligations and other Obligations, whether or not then due.
The Agreement, including this Annex B, shall constitute a security agreement
under applicable law.

 

(ii) If any Letter of Credit Obligations, whether or not then due and payable,
shall for any reason be outstanding on the Commitment Termination Date,
Borrowers shall either (A) provide cash collateral therefor in the manner
described above, or (B) cause all such Letters of Credit and guaranties thereof,
if any, to be canceled and returned, or (C) deliver a stand-by letter (or
letters) of credit in guarantee of such Letter of Credit Obligations, which
stand-by letter (or letters) of credit shall be of like tenor and duration (plus
30 additional days) as, and in an amount equal to 105% of the aggregate maximum
amount then available to be drawn under, the Letters of Credit to which such
outstanding Letter of Credit Obligations relate and shall be issued by a Person,
and shall be subject to such terms and conditions, as are be satisfactory to
Agent in its sole discretion.

 

(iii) From time to time after funds are deposited in the Cash Collateral Account
by any Borrower, whether before or after the Commitment Termination Date, Agent
may apply such funds or Cash Equivalents then held in the Cash Collateral
Account to the payment of any amounts, and in such order as Agent may elect, as
shall be or shall become due

 

B-2

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

and payable by such Borrower to Agent and Lenders with respect to such Letter of
Credit Obligations of such Borrower and, upon the satisfaction in full of all
Letter of Credit Obligations of such Borrower, to any other Obligations of any
Borrower then due and payable.

 

(iv) No Borrower nor any Person claiming on behalf of or through any Borrower
shall have any right to withdraw any of the funds or Cash Equivalents held in
the Cash Collateral Account, except that upon the termination of all Letter of
Credit Obligations and the payment of all amounts payable by Borrowers to Agent
and Lenders in respect thereof, any funds remaining in the Cash Collateral
Account shall be applied to other Obligations then due and owing and upon
payment in full of such Obligations any remaining amount shall be paid to
Borrowers or as otherwise required by law. Interest earned on deposits in the
Cash Collateral Account shall be held as additional collateral.

 

(d) Fees and Expenses. Borrowers agree to pay to Agent for the benefit of
Revolving Lenders, as compensation to such Lenders for Letter of Credit
Obligations incurred hereunder, (i) all costs and expenses incurred by Agent or
any Lender on account of such Letter of Credit Obligations, and (ii) for each
month during which any Letter of Credit Obligation shall remain outstanding, a
fee (the “Letter of Credit Fee”) in an amount equal to the Applicable L/C Margin
multiplied by the maximum amount available from time to time to be drawn under
the applicable Letter of Credit. Such fee shall be paid to Agent for the benefit
of the Revolving Lenders in arrears, on the first day of each month and on the
Commitment Termination Date. In addition, Borrowers shall pay to any L/C Issuer,
on demand, such fees (including all per annum fees), charges and expenses of
such L/C Issuer in respect of the issuance, negotiation, acceptance, amendment,
transfer and payment of such Letter of Credit or otherwise payable pursuant to
the application and related documentation under which such Letter of Credit is
issued.

 

(e) Request for Incurrence of Letter of Credit Obligations. Borrower
Representative shall give Agent at least two Business Days’ prior written notice
requesting the incurrence of any Letter of Credit Obligation. The notice shall
be accompanied by the form of the Letter of Credit (which shall be acceptable to
the L/C Issuer) and a completed Master Agreement for Standby Letter of Credit or
Master Agreement for Documentary Letter of Credit, as applicable, in the form of
Exhibit B-1 or B-2, respectively. Notwithstanding anything contained herein to
the contrary, Letter of Credit applications by Borrower Representative and
approvals by Agent and the L/C Issuer may be made and transmitted pursuant to
electronic codes and security measures mutually agreed upon and established by
and among Borrower Representative, Agent and the L/C Issuer.

 

(f) Obligation Absolute. The obligation of Borrowers to reimburse Agent and
Revolving Lenders for payments made with respect to any Letter of Credit
Obligation shall be absolute, unconditional and irrevocable, without necessity
of presentment, demand, protest or other formalities, and the obligations of
each Revolving Lender to make payments to Agent with respect to Letters of
Credit shall be unconditional and irrevocable. Such obligations of Borrowers and
Revolving Lenders shall be paid strictly in accordance with the terms hereof
under all circumstances including the following:

 

(i) any lack of validity or enforceability of any Letter of Credit or the
Agreement or the other Loan Documents or any other agreement;

 

B-3

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

(ii) the existence of any claim, setoff, defense or other right that any
Borrower or any of its Affiliates or any Lender may at any time have against a
beneficiary or any transferee of any Letter of Credit (or any Persons or
entities for whom any such transferee may be acting), Agent, any Lender, or any
other Person, whether in connection with the Agreement, the Letter of Credit,
the transactions contemplated herein or therein or any unrelated transaction
(including any underlying transaction between any Borrower or any of its
Affiliates and the beneficiary for which the Letter of Credit was procured);

 

(iii) any draft, demand, certificate or any other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;

 

(iv) payment by Agent (except as otherwise expressly provided in paragraph
(g)(ii)(C) below) or any L/C Issuer under any Letter of Credit or guaranty
thereof against presentation of a demand, draft or certificate or other document
that does not comply with the terms of such Letter of Credit or such guaranty;

 

(v) any other circumstance or event whatsoever, that is similar to any of the
foregoing; or

 

(vi) the fact that a Default or an Event of Default has occurred and is
continuing.

 

(g) Indemnification; Nature of Lenders’ Duties.

 

(i) In addition to amounts payable as elsewhere provided in the Agreement,
Borrowers hereby agree to pay and to protect, indemnify, and save harmless Agent
and each Lender from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including reasonable attorneys’
fees and allocated costs of internal counsel) that Agent or any Lender may incur
or be subject to as a consequence, direct or indirect, of (A) the issuance of
any Letter of Credit or guaranty thereof, or (B) the failure of Agent or any
Lender seeking indemnification or of any L/C Issuer to honor a demand for
payment under any Letter of Credit or guaranty thereof as a result of any act or
omission, whether rightful or wrongful, of any present or future de jure or de
facto government or Governmental Authority, in each case other than to the
extent solely as a result of the gross negligence or willful misconduct of Agent
or such Lender (as finally determined by a court of competent jurisdiction).

 

(ii) As between Agent and any Lender and Borrowers, Borrowers assume all risks
of the acts and omissions of, or misuse of any Letter of Credit by beneficiaries
of any Letter of Credit. In furtherance and not in limitation of the foregoing,
to the fullest extent permitted by law neither Agent nor any Lender shall be
responsible for: (A) the form, validity, sufficiency, accuracy, genuineness or
legal effect of any document issued by any party in connection with the
application for and issuance of any Letter of Credit, even if it should in fact
prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent
or forged; (B) the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, that may prove
to be invalid or ineffective for any reason; (C) failure of the beneficiary of

 

B-4

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

any Letter of Credit to comply fully with conditions required in order to demand
payment under such Letter of Credit; provided, that in the case of any payment
by Agent under any Letter of Credit or guaranty thereof, Agent shall be liable
to the extent such payment was made solely as a result of its gross negligence
or willful misconduct (as finally determined by a court of competent
jurisdiction) in determining that the demand for payment under such Letter of
Credit or guaranty thereof complies on its face with any applicable requirements
for a demand for payment under such Letter of Credit or guaranty thereof; (D)
errors, omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise, whether or not they may
be in cipher; (E) errors in interpretation of technical terms; (F) any loss or
delay in the transmission or otherwise of any document required in order to make
a payment under any Letter of Credit or guaranty thereof or of the proceeds
thereof; (G) the credit of the proceeds of any drawing under any Letter of
Credit or guaranty thereof; and (H) any consequences arising from causes beyond
the control of Agent or any Lender. None of the above shall affect, impair, or
prevent the vesting of any of Agent’s or any Lender’s rights or powers hereunder
or under the Agreement.

 

(iii) Nothing contained herein shall be deemed to limit or to expand any
waivers, covenants or indemnities made by Borrowers in favor of any L/C Issuer
in any letter of credit application, reimbursement agreement or similar
document, instrument or agreement between or among Borrowers and such L/C
Issuer, including a Master Agreement for Documentary Letter of Credit or a
Master Agreement for Standby Agreement entered into with Agent.

 

B-5

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

ANNEX C (Section 1.8)

to

CREDIT AGREEMENT

 

CASH MANAGEMENT SYSTEM

 

Each Credit Party shall, and shall cause its Subsidiaries to, establish and
maintain the Cash Management Systems described below:

 

(a) On or before the Closing Date and until the Termination Date, each Borrower
and Subsidiary Guarantor shall (i) establish the lock boxes (“Lock Boxes”)
identified in Disclosure Schedule (3.19), and shall request in writing and
otherwise take such reasonable steps to ensure that all Account Debtors forward
payment directly to such Lock Boxes, and (ii) deposit and cause its Subsidiaries
to deposit or cause to be deposited promptly, and in any event no later than the
first Business Day after the date of receipt thereof, all cash, checks, drafts
or other similar items of payment relating to or constituting payments made in
respect of any and all Collateral (whether or not otherwise delivered to a Lock
Box) into one or more blocked accounts in such Borrower’s name or any such
Subsidiary’s name (“Blocked Accounts”) identified in Disclosure Schedule (3.19)
at the banks corresponding thereto (each, a “Relationship Bank”). On or before
the Closing Date, Borrowers shall have established concentration account (the
“Concentration Account”) identified in Disclosure Schedule (3.19) at the bank
corresponding thereto (the “Concentration Account Bank”).

 

(b) Each Credit Party may maintain, in its name, an account (each a
“Disbursement Account” and collectively, the “Disbursement Accounts”) at a bank
reasonably acceptable to Agent into which Agent shall, from time to time with
respect to Borrowers, deposit proceeds of Revolving Credit Advances and Swing
Line Advances made to Borrowers pursuant to Section 1.1 for use by such Borrower
solely in accordance with the provisions of Section 1.4.

 

(c) On or before the Closing Date (or such later date as Agent shall consent to
in writing), the Concentration Account Bank, each bank where a Disbursement
Account is maintained and all other Relationship Banks, shall have entered into
tri-party blocked account agreements with Agent, for the benefit of itself and
Lenders, and the applicable Credit Party, in form and substance reasonably
acceptable to Agent, which shall become operative on or prior to the Closing
Date. Each such blocked account agreement shall provide, among other things,
that (i) all items of payment deposited in such account and proceeds thereof
deposited in the applicable deposit account are held by such bank as agent or
bailee-in-possession for Agent, on behalf of itself and Lenders, (ii) the bank
executing such agreement has no rights of setoff or recoupment or any other
claim against such account, as the case may be, other than for payment of its
service fees and other charges directly related to the administration of such
account and for returned checks or other items of payment, and (iii) from and
after the Closing Date (A) with respect to banks at which a Blocked Account is
maintained, such bank agrees, from and after the receipt of a notice (an
“Activation Notice”) from Agent (which Activation Notice may be given by Agent
at any time at which a Dominion Activation Event has occurred), to forward
immediately all amounts in each Blocked Account to the Concentration Account
Bank and to commence the process of daily sweeps from such Blocked Account into
the Concentration

 

C-1

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

Account and (B) with respect to the Concentration Account Bank, such bank agrees
from and after the receipt of an Activation Notice from Agent, to immediately
forward all amounts received in the Concentration Account to the Collection
Account through daily sweeps from such Concentration Account into the Collection
Account. From and after the date Agent has delivered an Activation Notice to any
bank with respect to any Blocked Account, no Borrower shall, or shall permit any
of its Subsidiaries to, accumulate or maintain cash in Disbursement Accounts or
payroll accounts as of any date of determination in excess of checks outstanding
against such accounts as of that date and amounts necessary to meet minimum
balance requirements.

 

(d) So long as no Default or Event of Default has occurred and is continuing,
Borrowers may amend Disclosure Schedule (3.19) to add or replace a Relationship
Bank, Lock Box or Blocked Account or to replace any Concentration Account or any
Disbursement Account; provided, that (i) Agent shall have consented in writing
in advance to the opening of such account or Lock Box with the relevant bank and
(ii) prior to the time of the opening of such account or Lock Box, the
applicable Borrower or its Subsidiaries, as applicable, and such bank shall have
executed and delivered to Agent a tri-party blocked account agreement, in form
and substance reasonably satisfactory to Agent. Borrowers shall close any of
their accounts (and establish replacement accounts in accordance with the
foregoing sentence) promptly and in any event within 30 days following notice
from Agent that the creditworthiness of any bank holding an account is no longer
acceptable in Agent’s reasonable judgment, or as promptly as practicable and in
any event within 60 days following notice from Agent that the operating
performance, funds transfer or availability procedures or performance with
respect to accounts or Lock Boxes of the bank holding such accounts or Agent’s
liability under any tri-party blocked account agreement with such bank is no
longer acceptable in Agent’s reasonable judgment.

 

(e) The Lock Boxes, Blocked Accounts, Disbursement Accounts and the
Concentration Account shall be cash collateral accounts, with all cash, checks
and other similar items of payment in such accounts securing payment of the
Loans and all other Obligations, and in which each Borrower and each Subsidiary
thereof shall have granted a Lien to Agent, on behalf of itself and Lenders,
pursuant to the Security Agreement.

 

(f) All amounts deposited in the Collection Account shall be deemed received by
Agent in accordance with Section 1.10 and shall be applied (and allocated) by
Agent in accordance with Section 1.11. In no event shall any amount be so
applied unless and until such amount shall have been credited in immediately
available funds to the Collection Account.

 

(g) Each Borrower and each Subsidiary Guarantor shall and shall cause its
Affiliates, officers, employees, agents, directors or other Persons acting for
or in concert with such Borrower (each a “Related Person”) to (i) hold in trust
for Agent, for the benefit of itself and Lenders, all checks, cash and other
items of payment received by such Borrower or any such Related Person, and (ii)
within one Business Day after receipt by such Borrower or any such Related
Person of any checks, cash or other items of payment, deposit the same into a
Blocked Account of such Borrower . Each Borrower on behalf of itself and each
Related Person thereof acknowledges and agrees that all cash, checks or other
items of payment constituting proceeds of Collateral are part of the Collateral.
All proceeds of the sale or other disposition of any Collateral, shall be
deposited directly into the applicable Blocked Accounts.

 

C-2

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

(h) Notwithstanding the other provisions of this Annex C, Details may maintain a
separate deposit account (“the JPMorgan Account”) at JPMorgan Chase Bank
designated as the “JPMorgan Chase Dynamic Details L/C Cash Collateral Account”
and further described in Disclosure Schedule (3.19). The JPMorgan Account will
not be subject to a Control Letter in favor of Agent, but will at all times be
subject to the Cash Collateral Agreement between Details and JPMorgan Chase Bank
dated as of March 29, 2004 (the “Cash Collateral Agreement”). The balance of the
JPMorgan Account shall in no event exceed the principal sum of $486,150 plus any
interest earned thereon. Details agrees that it will instruct JPMorgan Chase
Bank to deposit any amounts released to it from the JPMorgan Account directly
into the Concentration Account. Within ten Business Days of the termination of
the Cash Collateral Agreement, Details shall cause the JPMorgan Account to be
closed, and will deliver to Agent evidence of such closure in form and substance
acceptable to Agent.

 

C-3

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

ANNEX D (Section 2.1(a))

to

CREDIT AGREEMENT

 

SCHEDULE OF DOCUMENTS

 

[see attached]

 

D-1

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

ANNEX E (Section 4.1(a))

to

CREDIT AGREEMENT

 

FINANCIAL STATEMENTS AND PROJECTIONS — REPORTING

 

Borrowers shall deliver or cause to be delivered to Agent or to Agent and
Lenders, as indicated, the following:

 

(a) Monthly Financials. To Agent and Lenders, within 30 days after the end of
each Fiscal Month, financial information regarding Borrowers and their
Subsidiaries, certified by the Chief Financial Officer of Details, consisting of
consolidated and, except with respect to statements of cash flow, consolidating
(i) unaudited balance sheets as of the close of such Fiscal Month and the
related statements of income and cash flows for that portion of the Fiscal Year
ending as of the close of such Fiscal Month; (ii) unaudited statements of income
and cash flows for such Fiscal Month, setting forth in comparative form the
figures for the corresponding period in the prior year and the figures contained
in the Projections for such Fiscal Year, all prepared in accordance with GAAP
(subject to normal year-end adjustments); and (iii) a summary of the outstanding
balance of all Intercompany Notes as of the last day of that Fiscal Month. Such
financial information shall be accompanied by the certification of the Chief
Financial Officer of Details that (i) such financial information presents fairly
in accordance with GAAP (subject to normal quarterly and year-end adjustments)
the financial position and results of operations of Borrowers and their
Subsidiaries, on a consolidated and consolidating basis, in each case as at the
end of such Fiscal Month and for that portion of the Fiscal Year then ended and
(ii) any other information presented is true, correct and complete in all
material respects and that there was no Default or Event of Default in existence
as of such time or, if a Default or Event of Default has occurred and is
continuing, describing the nature thereof and all efforts undertaken to cure
such Default or Event of Default.

 

(b) Quarterly Financials. To Agent and Lenders, within 45 days after the end of
each of the first three Fiscal Quarters in any Fiscal Year:

 

(1) Consolidated and, except with respect to statements cash flow, consolidating
financial information regarding Borrowers and their Subsidiaries, certified by
the Chief Financial Officer of Details, including (i) unaudited balance sheets
as of the close of such Fiscal Quarter and the related statements of income and
cash flow for that portion of the Fiscal Year ending as of the close of such
Fiscal Quarter and (ii) unaudited statements of income and cash flows for such
Fiscal Quarter, in each case setting forth in comparative form the figures for
the corresponding period in the prior year and the figures contained in the
Projections for such Fiscal Year, all prepared in accordance with GAAP (subject
to normal year-end adjustments). Such financial information shall be accompanied
by (A) a statement in reasonable detail (each, a “Compliance Certificate”)
showing the calculations used in determining compliance with each of the
Financial Covenants that is tested on a quarterly basis and (B) the
certification of the Chief Financial Officer of Details that (i) such financial
information presents fairly in accordance with GAAP (subject to normal year-end
adjustments) the financial position, results of operations and statements of
cash flows of Borrowers and their Subsidiaries, on both a consolidated and,
except with respect to statements cash flow, consolidating basis, as at the end
of such Fiscal Quarter and

 

E-1

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

for that portion of the Fiscal Year then ended, (ii) any other information
presented is true, correct and complete in all material respects and that there
was no Default or Event of Default in existence as of such time or, if a Default
or Event of Default has occurred and is continuing, describing the nature
thereof and all efforts undertaken to cure such Default or Event of Default. In
addition, Borrowers shall deliver to Agent and Lenders, within 45 days after the
end of each Fiscal Quarter, a management discussion and analysis that includes a
comparison to budget for that Fiscal Quarter and a comparison of performance for
that Fiscal Quarter to the corresponding period in the prior year.

 

(2) Consolidated financial information regarding Parent and its Subsidiaries,
certified by the Chief Financial Officer of Parent, including (i) unaudited
balance sheets as of the close of such Fiscal Quarter and the related statements
of income and cash flow for that portion of the Fiscal Year ending as of the
close of such Fiscal Quarter and (ii) unaudited statements of income and cash
flows for such Fiscal Quarter, in each case setting forth in comparative form
the figures for the corresponding period in the prior year, all prepared in
accordance with GAAP (subject to normal year-end adjustments). Such financial
information shall be accompanied by (A) the certification of the Chief Financial
Officer of Parent that (i) such financial information presents fairly in
accordance with GAAP (subject to normal year-end adjustments) the financial
position, results of operations and statements of cash flows of Parent and its
Subsidiaries, on a consolidated basis, as at the end of such Fiscal Quarter and
for that portion of the Fiscal Year then ended, and (ii) any other information
presented is true, correct and complete in all material respects.

 

(c) Operating Plan. To Agent and Lenders, as soon as available, but not later
than 45 days after the end of each Fiscal Year, an annual operating plan for
each of Parent and Borrowers, on a consolidated and consolidating basis,
approved by the Board of Directors of Parent and Borrowers, respectively, for
the following Fiscal Year, which (i) includes a statement of all of the material
assumptions on which such plan is based, (ii) includes monthly balance sheets,
income statements and statements of cash flows for the following year and (iii)
integrates sales, gross profits, operating expenses, operating profit, cash flow
projections and Borrowing Availability projections, all prepared on the same
basis and in similar detail as that on which operating results are reported (and
in the case of cash flow projections, representing management’s good faith
estimates of future financial performance based on historical performance), and
including plans for personnel, Capital Expenditures and facilities.

 

(d) Annual Audited Financials. To Agent and Lenders:

 

(1) within 111 days after the end of each Fiscal Year, audited Financial
Statements for Borrowers and their Subsidiaries on a consolidated and, except
with respect to statements of retained earnings and cash flows, consolidating
unaudited basis, consisting of balance sheets and statements of income and
retained earnings and cash flows, setting forth in comparative form in each case
the figures for the previous Fiscal Year, which Financial Statements shall be
prepared in accordance with GAAP and certified without qualification, by an
independent certified public accounting firm of national standing or otherwise
acceptable to Agent. Such Financial Statements shall be accompanied by (i) a
statement prepared in reasonable detail showing the calculations used in
determining compliance with each of the Financial Covenants, (ii) a report from
such accounting firm to the effect that, in connection with

 

E-2

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

their audit examination, nothing has come to their attention to cause them to
believe that a Default or Event of Default has occurred with respect to the
Financial Covenants (or specifying those Defaults and Events of Default that
they became aware of), it being understood that such audit examination extended
only to accounting matters and that no special investigation was made with
respect to the existence of Defaults or Events of Default, (iii) the annual
letters to such accountants in connection with their audit examination detailing
contingent liabilities and material litigation matters, and (iv) the
certification of the Chief Executive Officer or Chief Financial Officer of
Borrowers that all such Financial Statements present fairly in accordance with
GAAP the financial position, results of operations and statements of cash flows
of Borrowers and their Subsidiaries on a consolidated and consolidating basis,
as at the end of such Fiscal Year and for the period then ended, and that there
was no Default or Event of Default in existence as of such time or, if a Default
or Event of Default has occurred and is continuing, describing the nature
thereof and all efforts undertaken to cure such Default or Event of Default.

 

(2) within 97 days after the end of each Fiscal Year, audited Financial
Statements for Parent and its Subsidiaries on a consolidated basis, consisting
of balance sheets and statements of income and retained earnings and cash flows,
setting forth in comparative form in each case the figures for the previous
Fiscal Year, which Financial Statements shall be prepared in accordance with
GAAP and certified without qualification, by an independent certified public
accounting firm of national standing or otherwise acceptable to Agent. Such
Financial Statements shall be accompanied by (i) the annual letters to such
accountants in connection with their audit examination detailing contingent
liabilities and material litigation matters, and (iv) the certification of the
Chief Executive Officer or Chief Financial Officer of Parent that all such
Financial Statements present fairly in accordance with GAAP the financial
position, results of operations and statements of cash flows of Parent and its
Subsidiaries on a consolidated basis, as at the end of such Fiscal Year and for
the period then ended.

 

(e) Management Letters. To Agent and Lenders, within 5 Business Days after
receipt thereof by any Credit Party, copies of all management letters, exception
reports or similar letters or reports received by such Credit Party from its
independent certified public accountants.

 

(f) Default Notices. To Agent and Lenders, as soon as practicable, and in any
event within 5 Business Days after an executive officer of Parent or any
Borrower has actual knowledge of the existence of any Default, Event of Default
or other event that has had a Material Adverse Effect, telephonic or telecopied
notice specifying the nature of such Default or Event of Default or other event,
including the anticipated effect thereof, which notice, if given telephonically,
shall be promptly confirmed in writing on the next Business Day.

 

(g) SEC Filings and Press Releases. To Agent and Lenders, promptly upon their
becoming available, copies of: (i) all Financial Statements, reports, notices
and proxy statements made publicly available by Parent or any Credit Party to
its security holders; (ii) all regular and periodic reports and all registration
statements and prospectuses, if any, filed by Parent or any Credit Party with
any securities exchange or with the Securities and Exchange Commission or any
governmental or private regulatory authority; and (iii) all press releases and
other statements made available by Parent or any Credit Party to the public
concerning material changes or developments in the business of any such Person.

 

E-3

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

(h) Subordinated Debt and Equity Notices. To Agent, as soon as practicable,
copies of all material written notices given or received by Parent or any Credit
Party with respect to any Subordinated Debt or Stock of such Person, and, as
soon as practicable and in any even within five days after Parent or any Credit
Party obtains knowledge of any matured or unmatured event of default with
respect to any Subordinated Debt, notice of such event of default.

 

(i) Supplemental Schedules. To Agent, supplemental disclosures, if any, required
by Section 5.6.

 

(j) Litigation. To Agent in writing, promptly upon learning thereof, notice of
any Litigation commenced or threatened against Parent or any Credit Party that
(i) seeks damages in excess of $500,000, (ii) seeks injunctive relief, (iii) is
asserted or instituted against any Plan, its fiduciaries or its assets or
against Parent or any Credit Party or ERISA Affiliate in connection with any
Plan, (iv) alleges criminal misconduct by Parent or any Credit Party, (v)
alleges the violation of any law regarding, or seeks remedies in connection
with, any Environmental Liabilities; or (vi) involves any product recall.

 

(k) Insurance Notices. To Agent, disclosure of losses or casualties required by
Section 5.4.

 

(l) Lease Default Notices. To Agent, (i) within two Business Days after receipt
thereof, copies of any and all default notices received under or with respect to
any leased location or public warehouse where Collateral is located, (ii)
monthly within 3 Business Days after payment thereof, evidence of payment of
lease or rental payments as to each leased or rented location for which a
landlord or bailee waiver has not been obtained and (iii) such other notices or
documents as Agent may reasonably request.

 

(m) Good Standing Certificates. Not less frequently than once during each
calendar quarter, each Borrower and Subsidiary Guarantor shall, unless Agent
shall otherwise consent, provide to Agent a certificate of good standing from
its jurisdiction of organization.

 

(n) Other Documents. To Agent and Lenders, such other financial and other
information respecting Parent’s or any Credit Party’s business or financial
condition as Agent or any Lender shall, from time to time, reasonably request.

 

E-4

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

ANNEX F (Section 4.1(b))

to

CREDIT AGREEMENT

 

COLLATERAL REPORTS

 

Borrowers shall deliver or cause to be delivered the following:

 

(a) To Agent, upon its request, and in any event no less frequently than noon
New York time on the fifth Business Day of each Fiscal Month, each of the
following reports, each of which shall be prepared by the applicable Borrower as
of the last day of the immediately preceding Fiscal Month, or the date that is
two days prior to the date of any such request (provided, that (1) upon the
occurrence of a Weekly Reporting Activation Event, such reports will be
delivered on Wednesday of each week and prepared as of the last day of the
immediately preceding week, and (2) upon the occurrence of a Daily Reporting
Activation Event, in addition to the weekly reporting requirements in clause (1)
above, reports regarding sales, collections, credits and charge-backs will be
delivered on each Business Day and prepared as of the immediately preceding
Business Day):

 

(i) a Borrowing Base Certificate with respect to each Borrowing Base, in each
case accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion;

 

(ii) with respect to each Borrower, a monthly trial balance showing Accounts
outstanding aged from invoice date as follows: 1 to 30 days, 31 to 60 days, 61
to 90 days and 91 days or more, accompanied by such supporting detail and
documentation as shall be requested by Agent in its reasonable discretion; and

 

(iii) with respect to each Borrower, collateral reports (including all additions
and reductions, cash and non-cash) with respect to Accounts of such Borrower, in
each case accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion;

 

(b) To Agent, at the time of delivery of each of the monthly Financial
Statements delivered pursuant to Annex E:

 

(i) a reconciliation of the Accounts trial balance to the most recent Borrowing
Base Certificate, general ledger and monthly Financial Statements delivered
pursuant to Annex E, in each case accompanied by such supporting detail and
documentation as shall be requested by Agent in its reasonable discretion,

 

(ii) an aging of accounts payable and a reconciliation of such accounts payable
aging to each Borrower’s general ledger and monthly Financial Statements
delivered pursuant to Annex E, in each case accompanied by such supporting
detail and documentation as shall be requested by Agent in its reasonable
discretion, and

 

F-1

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

(iii) a reconciliation of the outstanding Loans as set forth in the monthly Loan
Account statement provided by Agent to each Borrower’s general ledger and
monthly Financial Statements delivered pursuant to Annex E, in each case
accompanied by such supporting detail and documentation as shall be requested by
Agent in its reasonable discretion; and

 

(iv) with respect to each Borrower, a summary of Inventory by division, by
location, and by type (i.e., raw materials, work in process and finished goods),
in each case accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion;

 

(c) To Agent, at the time of delivery of each of the quarterly Financial
Statements delivered pursuant to Annex E, (i) a listing of government contracts
of each Borrower subject to the Federal Assignment of Claims Act of 1940; and
(ii) a list of any applications for the registration of any Patent, Trademark or
Copyright filed by any Credit Party with the United States Patent and Trademark
Office, the United States Copyright Office or any similar office or agency in
the prior Fiscal Quarter;

 

(d) Each Borrower, at its own expense, shall deliver to Agent the results of
each physical verification, if any, that such Borrower or any of its
Subsidiaries may in their discretion have made, or caused any other Person to
have made on their behalf, and delivered to the controller or chief financial
officer of such Borrower, of all or any portion of their Inventory (and, if a
Default or an Event of Default has occurred and is continuing, each Borrower
shall, upon the request of Agent, conduct, and deliver the results of, such
physical verifications as Agent may require);

 

(e) Each Borrower, at its own expense, shall deliver to Agent such appraisals of
its assets as Agent may request at any time after the occurrence and during the
continuance of a Default or an Event of Default, such appraisals to be conducted
by an appraiser, and in form and substance reasonably satisfactory to Agent; and

 

(f) Such other reports, statements and reconciliations with respect to the
Borrowing Base or Collateral or Obligations of any or all Credit Parties as
Agent shall from time to time request in its reasonable discretion.

 

F-2

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

ANNEX G (Section 6.10)

to

CREDIT AGREEMENT

 

FINANCIAL COVENANTS

 

Borrowers shall not breach or fail to comply with any of the following financial
covenants, each of which shall be calculated in accordance with GAAP
consistently applied:

 

(a) Maximum Capital Expenditures. Borrowers and their Subsidiaries on a
consolidated basis shall not make Capital Expenditures during the following
periods that exceed in the aggregate the amounts set forth opposite each of such
periods:

 

Period

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

  

Maximum Capital Expenditures

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

6 Fiscal Months Ending 6/30/04

   $5,000,000

6 Fiscal Months Ending 12/31/04

   $6,500,000

6 Fiscal Months Ending 6/30/05

   $9,000,000

6 Fiscal Months Ending 12/31/05

   $11,500,000

6 Fiscal Months Ending 6/30/06

   $14,000,000

6 Fiscal Months Ending 12/31/06 and each 6/30 and 12/31 thereafter

   $16,000,000

 

(b) Minimum Fixed Charge Coverage Ratio. Borrowers and their Subsidiaries shall
have on a consolidated basis at the end of each Fiscal Quarter, beginning with
the Fiscal Quarter ending June 30, 2004, a Fixed Charge Coverage Ratio for the
12-month period then ended (or with respect to the Fiscal Quarters ending on or
before December 31, 2004, the period commencing on April 1, 2004, and ending on
the last day of such Fiscal Quarter) of not less than 1.10:1.0.

 

Unless otherwise specifically provided herein, any accounting term used in the
Agreement shall have the meaning customarily given such term in accordance with
GAAP, and all financial computations hereunder shall be computed in accordance
with GAAP consistently applied. That certain items or computations are
explicitly modified by the phrase “in accordance with GAAP” shall in no way be
construed to limit the foregoing. If any “Accounting Changes” (as defined below)
occur and such changes result in a change in the calculation of the financial
covenants, standards or terms used in the Agreement or any other Loan Document,
then Borrowers, Agent and Lenders agree to enter into negotiations in order to
amend such provisions of the Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for evaluating
Borrowers’ and their Subsidiaries’ financial condition shall be the same after
such Accounting Changes as if such Accounting Changes had not been made;
provided, that the agreement of Requisite Lenders to any required amendments of
such provisions shall be sufficient to bind all Lenders. “Accounting Changes”
means (i) changes in accounting principles required by the promulgation of any
rule, regulation, pronouncement or opinion by the Financial Accounting Standards
Board of the American Institute of Certified Public Accountants (or successor
thereto or any agency with similar functions), (ii) changes in

 

G-1

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

accounting principles concurred in by any Borrower’s certified public
accountants; (iii) purchase accounting adjustments under A.P.B. 16 or 17 and
EITF 88-16, and the application of the accounting principles set forth in FASB
109, including the establishment of reserves pursuant thereto and any subsequent
reversal (in whole or in part) of such reserves; and (iv) the reversal of any
reserves established as a result of purchase accounting adjustments. All such
adjustments resulting from expenditures made subsequent to the Closing Date
(including capitalization of costs and expenses or payment of pre-Closing Date
liabilities) shall be treated as expenses in the period the expenditures are
made and deducted as part of the calculation of EBITDA in such period. If Agent,
Borrowers and Requisite Lenders agree upon the required amendments, then after
appropriate amendments have been executed and the underlying Accounting Change
with respect thereto has been implemented, any reference to GAAP contained in
the Agreement or in any other Loan Document shall, only to the extent of such
Accounting Change, refer to GAAP, consistently applied after giving effect to
the implementation of such Accounting Change. If Agent, Borrowers and Requisite
Lenders cannot agree upon the required amendments within 30 days following the
date of implementation of any Accounting Change, then all Financial Statements
delivered and all calculations of financial covenants and other standards and
terms in accordance with the Agreement and the other Loan Documents shall be
prepared, delivered and made without regard to the underlying Accounting Change.
For purposes of Section 8.1, a breach of a Financial Covenant contained in this
Annex G shall be deemed to have occurred as of any date of determination by
Agent or as of the last day of any specified measurement period, regardless of
when the Financial Statements reflecting such breach are delivered to Agent.

 

G-2

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

ANNEX H (Section 9.9(a))

to

CREDIT AGREEMENT

 

WIRE TRANSFER INFORMATION

 

Name:

   General Electric Capital Corporation

Bank:

   DeutscheBank Trust Company Americas      New York, New York

ABA #:

   021001033

Account #:

   50232854

Account Name:

   GECC/CAF Depository

Reference:

   CFC 5508

 

H-1

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

ANNEX I (Section 11.10)

to

CREDIT AGREEMENT

 

NOTICE ADDRESSES

 

(A)

   If to Agent or GE Capital, at      General Electric Capital Corporation     
335 Madison Avenue, 12th Floor      New York, NY 10017      Attention:   Account
Manager (DDi)      Facsimile:   (212) 309-8798      Telephone:   (212) 370-8047
     with copies to:      Winston & Strawn LLP      38th Floor, 333 South Grand
Avenue      Los Angeles, CA 90071      Attention:   Adam G. Spiegel, Esq.     
Facsimile:   (213) 615-1750      Telephone:   (213) 615-1700      and     
General Electric Capital Corporation      201 Merit 7      Norwalk, Connecticut
06851      Attention:   Corporate Counsel-Commercial Finance      Facsimile:  
(203) 956-4001      Telephone:   (203) 956-4710

(B)

   If to any Credit Party, to Borrower Representative at      Dynamic Details,
Incorporated      1220 Simon Circle      Anaheim, CA 92808      Attention:  
Mr., John Stumpf, VP-Finance and Treasurer      Facsimile:   (714) 688-7627     
Telephone:   (714) 688-7219      With copies to:      Kirkland & Ellis LLP     
777 South Figueroa Street      Los Angeles, CA 90017-5800      Attention:   Eva
H. Davis, Esq.      Facsimile:   (213) 680-8400      Telephone:   (213) 680-8500

 

I-1

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

ANNEX J (from Annex A - Commitments definition)

to

CREDIT AGREEMENT

 

Lender(s):

 

General Electric Capital Corporation

      

Revolving Loan Commitment (including a Swing Line Commitment of $4,000,000):

   $ 40,000,000

 

J-1

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

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

 

DISCLOSURE SCHEDULES

 

to

 

CREDIT AGREEMENT

 

dated as of March 30, 2004

 

among

 

DYNAMIC DETAILS, INCORPORATED,

 

DYNAMIC DETAILS, INCORPORATED, VIRGINIA,

 

DYNAMIC DETAILS INCORPORATED, SILICON VALLEY,

 

and

 

LAMINATE TECHNOLOGY CORP.

 

as Borrower,

 

THE OTHER CREDIT PARTIES SIGNATORY THERETO,

 

as Credit Parties,

 

THE LENDERS SIGNATORY THERETO

 

and

 

GENERAL ELECTRIC CAPITAL CORPORATION,

 

as Agent and Lender

 

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

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

INTRODUCTION

 

This Disclosure Schedule is made and given pursuant to that certain Credit
Agreement dated as of March 30, 2004 (the “Agreement”), among Dynamic Details,
Incorporated, a California corporation (“Details”), Dynamic Details,
Incorporated, Virginia, a Delaware corporation (“Virginia”), Dynamic Details
Incorporated, Silicon Valley, a Delaware corporation (“Valley”), and Laminate
Technology Corp., a Delaware corporation (“Laminate”, together with Details,
Virginia and Valley, the “Borrower”), the other Credit Parties signatory thereto
(collectively, the “Credit Parties”), the Lenders signatory thereto
(collectively, the “Lenders”) and General Electric Capital Corporation, a
Delaware corporation, as Agent for the Lenders (in such capacity, the “Agent”)
and for itself, as Lender. All capitalized terms used herein but not otherwise
defined shall have the respective meanings defined in the Agreement, unless the
context otherwise requires. Any disclosure set forth on any particular schedule
of this Disclosure Schedule shall be deemed disclosed in reference to all
applicable schedules comprising this Disclosure Schedule, corresponding sections
of the Agreement notwithstanding that a particular representation or warranty
may refer to a different Disclosure Schedule or may not make any reference to
any Disclosure Schedule and all applicable representations and warranties made
in the Agreement, but only to the extent that the applicability of such item to
such other schedules and sections is reasonably apparent or cross-referenced.
Any descriptions of agreements herein are summaries only and are qualified in
their entirety by the specific terms of such agreements, copies of which have
been made available to the Agent. Where any representation or warranty contained
in the Agreement is limited or qualified by the materiality of the matters to
which the representation or warranty relates, the inclusion of any matter herein
does not constitute a determination by the Borrower that such matters are
material.

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

It is expressly understood and acknowledged that any exception stated in or
incorporated into this Disclosure Schedule shall not constitute a basis for a
claim of a breach of any representation or warranty contained in the Agreement.

 

Certain information in this Disclosure Schedule may not be required to be
disclosed pursuant to the Agreement. Any such information is included solely for
informational purposes, and the inclusion of such information shall not be
deemed to enlarge or enhance any of the representations or warranties of the
Borrower in the Agreement or otherwise alter in any way the terms of the
Agreement. Nor shall the inclusion of any item in this Disclosure Schedule
constitute an admission of liability with respect to any claim, action, lawsuit
or proceeding or an admission that any breach, violation, default or event of
default exists with respect to any contract or agreement. The attachments to
this Disclosure Schedule form an integral part of this Disclosure Schedule and
are incorporated by reference for all purposes as if set forth fully herein.
Captions and headings are for convenience only, are not a part of, and shall not
be used to construe any provision, or portion thereof, of this Disclosure
Schedule.

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

Schedule 1.1

Agent Representatives

 

GENERAL ELECTRIC CAPITAL CORPORATION

201 Merit 7

Norwalk, Connecticut 06851

Attention: Portfolio Analyst (DDi)

Telephone: (203) 956-4710

Fax: (203) 956-4001

 

4

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

Schedule 1.4

Sources and Uses; Funds Flow Memorandum

 

Please see attached.

 

5

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

Schedule 3.1

Type of Entity; State of Organization

 

Company

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

  

Type of Entity

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

  

Jurisdiction of Incorporation/
Organization

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

DDi Corp.    Corporation    Delaware DDi Capital Corp.    Corporation   
California DDi Intermediate Holdings Corp.    Corporation    California Dynamic
Details, Incorporated    Corporation    California DDi Sales Corp.   
Corporation    Delaware

Dynamic Details Incorporated,

Silicon Valley

   Corporation    Delaware

Dynamic Details, Incorporated,

Virginia

   Corporation    Delaware

Dynamic Details Incorporated,

Colorado Springs

   Corporation    Colorado Dynamic Details Texas, LLC    Limited Liability
Company    Delaware

DDi-Texas Intermediate Partners II,

L.L.C.

   Limited Liability Company    Delaware

DDi-Texas Intermediate Holdings II,

L.L.C.

   Limited Liability Company    Delaware Dynamic Details, L.P.    Limited
Partnership    Delaware Laminate Technology Corp.    Corporation    Delaware DDi
Canada Acquisition Corp.    Corporation    Ontario, Canada Dynamic Details
Canada, Corp.    Corporation    Nova Scotia, Canada

 

6

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

Schedule 3.2

Executive Offices, Collateral Locations, FEIN

 

Credit Party

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

  

Chief Executive Office

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

  

Location of Collateral

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

  

FEIN

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

DDi Corp.   

1220 Simon Circle

Anaheim, California 92806

   None    06-1576013 DDi Capital Corp.   

1220 Simon Circle

Anaheim, California 92806

   None    33-0780382 DDi Intermediate Holdings Corp.   

1220 Simon Circle

Anaheim, California 92806

   None    33-0822453 Dynamic Details, Incorporated   

1220 Simon Circle

Anaheim, California 92806

  

1230 Simon Circle

Anaheim, California

 

1240 Simon Circle

Anaheim, California

 

1220 Lance Lane

Anaheim, California

 

1240 Lance Lane

Anaheim, California

 

1260 Lance Lane

Anaheim, California

 

1295 Lance Lane

Anaheim, California

 

3021 E. Coronado

Anaheim, California

 

1211 Simon Circle

Anaheim, California

 

1221 Simon Circle

Anaheim, California

 

1231 Simon Circle

Anaheim, California

 

1241 Simon Circle

Anaheim California

 

1251 Simon Circle

Anaheim, California

 

1639 Commerce Street

Garland, Texas

   33-0779123

 

7

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

DDi Sales Corp.   

1220 Simon Circle

Anaheim, California 92806

   None    33-0936715 Dynamic Details Incorporated, Silicon Valley   

1220 Simon Circle

Anaheim, California 92806

  

1988 Tarob Court

Milpitas, California

 

2115-B Victor Place

Colorado Springs, Colorado

 

2150 Commerce Drive

San Jose, California

 

1831 Tarob Court

 

Milpitas, California

   77-0436135 Dynamic Details, Incorporated, Virginia   

1220 Simon Circle

Anaheim, California 92806

  

1200 Severn Way

Sterling, Virginia

   54-1999438 Dynamic Details Incorporated, Colorado Springs   

1220 Simon Circle

Anaheim, California 92806

  

2115-B Victor Place

Colorado Springs, Colorado

 

6031-6035 Galley

 

Colorado Springs, Colorado

   84-1173727 Dynamic Details Texas, LLC   

1220 Simon Circle

Anaheim, California 92806

   None    75-1331584 DDi-Texas Intermediate Partners II, L.L.C.   

1220 Simon Circle

Anaheim, California 92806

   None    33-0938441 DDi-Texas Intermediate Holdings II, L.L.C.   

1220 Simon Circle

Anaheim, California 92806

   None    33-0936835

 

8

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

Dynamic Details, L.P.   

1220 Simon Circle

Anaheim, California 92806

  

1639 Commerce

Garland, Texas

   33-0936838 Laminate Technology Corp.   

1220 Simon Circle

Anaheim, California 92806

  

1130 West Geneva Drive

Tempe, Arizona

 

1117 Fairmont Drive

Tempe, Arizona

 

1104 West Geneva Drive

Tempe, Arizona

   33-0959410 DDi Canada Acquisition Corp.   

1220 Simon Circle

Anaheim, California 92806

   None    None Dynamic Details Canada, Corp.   

3471 B McNicoll Ave.

Toronto, Ontario M2V 4B8

   None    None

 

9

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

Schedule 3.4(a)

Financial Statements

 

Please see attached.

 

10

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

Schedule 3.4(b)

 

Projections

 

Please see attached.

 

11

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

Schedule 3.6

 

Real Estate and Leases

 

Dynamic Details Incorporated is a lessee pursuant to certain real property
leases with respect to the following addresses:

 

1220 Lance Lane, Anaheim, California

1270 Lance Lane, Anaheim, California

1290 Lance Lane, Anaheim, California

1295 Lance Lane, Anaheim, California

3021 E. Coronado, Anaheim, California

1211 Simon Circle, Anaheim, California

1221 Simon Circle, Anaheim, California

1231 Simon Circle, Anaheim, California

1241 Simon Circle, Anaheim, California

1251 Simon Circle, Anaheim, California

1220 Simon Circle, Anaheim, California (right of first refusal at fair market
value)

1220 Simon Circle, Suite A, Anaheim, California

1220 Simon Circle, Suite B, Anaheim, California

1220 Simon Circle, Suite C, Anaheim, California

1220 Simon Circle, Suite D, Anaheim, California

1220 Simon Circle, Suite E, Anaheim, California

1230 Simon Circle, Anaheim, California (right of first refusal at fair market
value)

1230 Simon Circle, Suite A, Anaheim, California

1230 Simon Circle, Suite B, Anaheim, California

1230 Simon Circle, Suite C, Anaheim, California

1230 Simon Circle, Suite D, Anaheim, California

1230 Simon Circle, Suite E, Anaheim, California

1230 Simon Circle, Suite F, Anaheim, California

1230 Simon Circle, Suite G, Anaheim, California

1230 Simon Circle, Suite H, Anaheim, California

1240 Simon Circle, Anaheim, California

1240 Lance Lane, Anaheim, California

1260 Lance Lane, Anaheim, California

 

Dynamic Details Incorporated, Silicon Valley is a lessee pursuant to certain
real property leases with respect to the following addresses:

 

1988 Tarob Court, Milpitas, California

1242 Birchwood Drive, Sunnyvale, California

3340 Bassett Street, Santa Clara, California (month to month tenancy)

2150 Commerce Drive, San Jose, California

1831 Tarob Court, Milpitas, California

 

Dynamic Details, Incorporated, Virginia is a lessee pursuant to a certain real
property lease with respect to 1200 Severn Way, Sterling, Virginia

 

12

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

Laminate Technology Corp. is a lessee pursuant to certain real property leases
with respect to the following addresses:

 

1117 Fairmont Drive, Tempe, Arizona

1104 West Geneva, Tempe, Arizona

1130 West Geneva, Tempe, Arizona

1131 Fairmont Drive, Tempe, Arizona

 

Dynamic Details Incorporated, Colorado Springs is a lessee pursuant to certain
real property leases with respect to the following addresses:

 

2115-B Victor Place, Colorado Springs, Colorado

6031-6035 Galley, Colorado Springs, Colorado

 

Dynamic Details Texas, LLC is a lessee pursuant to a certain real property lease
with respect to 1639 Commerce, Garland, Texas

 

Dynamic Details Canada, Corp. is a lessee pursuant to certain real property
leases with respect to the following addresses:

 

3471 B McNicoll Ave., Toronto, Ontario

45 Ironside Crescent, Unit 9, Toronto, Ontario

 

13

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

Schedule 3.7

Labor Matters

 

Dynamic Details Canada, Corp. received notice of an application filed before the
Ontario Labor Relations Board by Universal Union Local 83 which alleges that a
former employee of Dynamic Details Canada, Corp. (who was terminated in early
March 2004 for poor performance), and a current member of such union, was
terminated by Dynamic Details Canada, Corp. for attempting to form a union and
that such termination constitutes an unfair labor practice. The former employee
was employed by Dynamic Details Canada, Corp. from August 2000 through early
March 2004 as a routing operator and, during that time, received two suspensions
without pay and two warning letters (as recent as February 2004) relating to
scrapping jobs and walking away from work against the instructions of a
supervisor. The foregoing applicant seeks reinstatement of employment for the
former employee and a representation vote. Dynamic Details Canada, Corp. does
not believe that the claim has merit and intends to file a response to the
application within ten days.

 

14

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

Schedule 3.8

Ventures, Subsidiaries and Affiliates; Stock

 

Issuer

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

 

Held by

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

  No. of Shares/
Percentage of Interest

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

    Percentage of
Outstanding
Shares/Interest

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

 

DDi Corp.

  Public Shareholders1   N/A     N/A  

DDi Intermediate

Holdings Corp.

  DDi Corp.   1,000     100 %

DDi Capital Corp.

 

DDi Intermediate

Holdings Corp.

  1,000     100 %

Dynamic Details,

Incorporated

  DDi Capital Corp.   100     100 %

DDi Canada

Acquisition Corp.

 

Dynamic Details,

Incorporated

  1,100     100 %

Dynamic Details

Canada, Corp.

 

DDi Canada Acquisition

Corp.

  100     100 %

DDi Sales Corp.

 

Dynamic Details,

Incorporated

  1,000     100 %

Dynamic Details

Incorporated, Silicon

Valley

 

Dynamic Details,

Incorporated

  3,000     100 %

Dynamic Details,

Incorporated,

Virginia

 

Dynamic Details,

Incorporated

  3,000     100 %

Dynamic Details

Incorporated,

Colorado Springs

 

Dynamic Details,

Incorporated

  1,000,000     100 %

Laminate

Technologies Corp.

 

Dynamic Details,

Incorporated

  1,000     100 %

Dynamic Details

Texas, LLC

 

Dynamic Details,

Incorporated

  100 % Equity Interest   100 %

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

1 DDi Corp. is a publicly held corporation and, as such information is publicly
available, a list of any or all such public stockholders will not be set forth
herein. As of March 1, 2004, 25,999,926 and 1,000,000 shares of common stock and
preferred stock, respectively, of DDi Corp. were issued and outstanding.

 

15

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

DDi-Texas

Intermediate

Partners II, L.L.C.

  

Dynamic Details Texas,

LLC

   100% Equity Interest    100 %

DDi-Texas

Intermediate

Holdings II, L.L.C.

  

Dynamic Details Texas,

LLC

   100% Equity Interest    100 %

Dynamic Details, LP

  

DDi-Texas Intermediate

Partners II, L.L.C.

  

1% General Partner

Interest

   100 %

Dynamic Details, LP

  

DDi-Texas Intermediate

Holdings II, L.L.C.

  

99% Limited Partner

Interest

   100 %

 

Pursuant to that certain 2003 Management Equity Incentive Plan, DDi Corp. has
issued 547,500 Tranche B Stock Options, which remain outstanding.

 

Pursuant to that certain Senior Discount Note Warrant Agreement, dated as of
December 12, 2003, between DDi Corp. and Mellon Investor Services LLC, as
Warrant Agent, DDi Corp. has issued the following Senior Discount Notes Warrant
Certificates, which remain outstanding:

 

  • Certificate No. 1 (JPMorgan Securities Inc.) representing 331,891 warrants

 

  • Certificate No. 2 (The Bank of New York) representing 225,212 warrants

 

  • Certificate No. 3 (State Street Bank and Trust Company) for 177,799 warrants

 

  • Certificate No. 4 (JPMorgan Securities Inc.) for 27,974 warrants

 

16

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

Schedule 3.11

Tax Matters

 

DDi Corp. and its domestic Subsidiaries are currently under Internal Revenue
Service (“IRS”) income tax audit for the taxable years of 1998, 1999, 2000 and
2001 (including an NOL carryback claim that DDi Corp. filed in 2001). DDi Corp.
and the IRS have reached a preliminary agreement regarding the taxable years of
1998 and 1999 with no material tax amounts due.

 

DDi Corp. and its domestic Subsidiaries have received notice of a California
state income tax audit for the taxable years of 2000 and 2001.

 

DDi Corp. and its domestic Subsidiaries are undergoing an Oregon state income
tax audit for the taxable years of 2000 and 2001, and, in connection therewith,
the auditors of the Oregon Department of Revenue have proposed an adjustment in
the amount of $1,000.

 

DDi Sales Corp. is undergoing a Texas state sales tax audit for the taxable
years of 2001, 2002 and 2003.

 

DDi Sales Corp. is undergoing a New York state sales tax audit for the taxable
years of 2001, 2002 and 2003.

 

Dynamic Details, Incorporated, Virginia is undergoing a Virginia sales tax audit
for the taxable years of 2001, 2002 and 2003.

 

17

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

Schedule 3.12

ERISA Plans

 

Plans (material employee benefit plans maintained by each Credit Party):

 

Dynamic Details, Inc. 401(k) Plan.

 

Dynamic Details, Inc. Severance Plan for Key Employees, dated as of December 19,
2002.

 

DDi Corp. Senior Management Compensation Plan for the year 2004.

 

Details, Inc. Flexible Benefit Plan.

 

Medical Benefit Plan (administered by Great-West Life & Annuity Insurance
Company pursuant to the Administrative Services Agreement and Stop Loss
Insurance Policy with Great-West Life & Annuity Insurance Company).

 

18

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

Schedule 3.13

 

Litigation

 

Lemelson v. Broadcom et al, including Dynamic Details, Incorporated (plaintiff
Lemelson Foundation alleges patent infringement arising from Dynamic Details,
Incorporated’s use of machine vision (and other) patents, U.S.D.C. Az
(CV-01-1440-PHX-ROS)) – the matter is stayed pending the final judgment in a
concurrent action pending in Nevada (Symbol/Cognex v. Lemelson); in such action,
Symbol/Cognex recently obtained a judgment against Lemelson.

 

Dynamic Details Canada, Corp. received notice of an application filed before the
Ontario Labor Relations Board by Universal Union Local 83 which alleges that a
former employee of Dynamic Details Canada, Corp. (who was terminated in early
March 2004 for poor performance), and a current member of such union, was
terminated by Dynamic Details Canada, Corp. for attempting to form a union and
that such termination constitutes an unfair labor practice. The former employee
was employed by Dynamic Details Canada, Corp. from August 2000 through early
March 2004 as a routing operator and, during that time, received two suspensions
without pay and two warning letters (as recent as February 2004) relating to
scrapping jobs and walking away from work against the instructions of a
supervisor. The foregoing applicant seeks reinstatement of employment for the
former employee and a representation vote. Dynamic Details Canada, Corp. does
not believe that the claim has merit and intends to file a response to the
application within ten days.

 

19

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

Schedule 3.14

Brokers

 

In connection with the transactions contemplated by the Loans and/or the Related
Transactions, DDi Corp. will pay a fee in the amount of $600,000 plus expenses
to Houlihan Lokey Howard & Zukin Capital.

 

20

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

Schedule 3.15

 

Intellectual Property

 

I. PATENTS

 

DDi Corp. owns the following Patents and Patent applications for its inverted
microvia technology:

 

Patent

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

   Application/Reg. No.

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

  

Jurisdiction

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

Inverted Microvias

   10104262    United States

Inverted Microvias

   91113923    Republic of China

Inverted Microvias

   2002-156949    Patent Cooperation Treaty

Inverted Microvias

   2002-156949    Japan

 

  (i) Trademarks

 

Dynamic Details, Incorporated owns the following Trademarks and Trademark
applications:

 

Trademark/service mark

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

  

Application/Reg. No.

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

  

Jurisdiction

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

Dynamic Details

   2,409,371    United States

Dynamic Details

   2,517,988    United States

Dynamic Details

   1219617 (EC)    European Community

DDi

   2,370,315    United States

DDi (and Design)

   1219260 (EC)    European Community

DDi

   2,409,942    United States

DDI

   2370315    Canada

Dynamic Details Canada

   1119581, 1119582 (CDN)    Canada

DCI Dynamic Details Japan*

   200150061    Japan

DCI Dynamic Details Japan*

   200150062    Japan

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

* such Trademarks and Trademark applications have since been abandoned

 

  (ii) Licensing Agreements

 

DDi Corp. has granted to each of its Subsidiaries certain rights with respect to
the foregoing Patents owned by DDi Corp.

 

  (iii) Infringments

 

Lemelson v. Broadcom et al, including Dynamic Details, Incorporated (plaintiff
Lemelson Foundation alleges patent infringement arising from Dynamic Details,

 

21

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

Incorporated’s use of machine vision (and other) patents, U.S.D.C. Az
(CV-01-1440-PHX-ROS)) – the matter is stayed pending the final judgment in a
concurrent action pending in Nevada (Symbol/Cognex v. Lemelson); in such action,
Symbol/Cognex recently obtained a judgment against Lemelson.

 

In 2002, a Lemelson successor known as Syndia has put Dynamic Details,
Incorporated on notice of an alleged patent infringement claim arising from
Dynamic Details, Incorporated’s use of plasma etch-back technology (a process
that has been used in the pcb industry for 20 years); Dynamic Details,
Incorporated tendered the claim to an equipment manufacturer, Nordson, which
denied responsibility. Dynamic Details, Incorporated has not heard from Syndia
in over a year.

 

22

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

Schedule 3.17

 

Environmental Matters

 

In connection with the purchase by Dynamic Circuits, Inc., the predecessor of
Dynamic Details Incorporated, Silicon Valley (“DDISV”), of all of the
outstanding stock of Dynamic Details, Incorporated, Texas (formerly, Cuplex,
Inc. and which has since been converted into Dynamic Details Texas, LLC) in
1998, Dynamic Details, Incorporated, Texas made a voluntary disclosure to the
Texas Natural Resources Conservation Commission (“TNRCC”) as to the presence of
hazardous substances (volatile organic compounds) in the groundwater beneath the
improved real property located in Garland, Texas. Since that time, DDISV has
worked with the TNRCC to perform a remedial investigation of the site, including
the installation and sampling of ground water monitoring wells and conducting
soil sampling. Based upon the results of these investigations and the
correspondence received from the TNRCC, DDISV believes that it is close to
achieving closure of the site from the TNRCC (subject to limited additional
testing and monitoring of the soil and groundwater over the next couple of
years). The City of Garland purchased the site in March 2004. Pursuant to the
terms of the purchase agreement, the City of Garland has assumed responsibility
for this matter, subject to a $500,000 escrow set aside by DDISV to cover the
City of Garland’s costs associated with obtaining closure for the site, and has
performed and continues to perform further monitoring of the soil and ground
water as required by TNRCC. This matter is further described in the following
document, copies of which have been provided to the Agent and are incorporated
herein by reference:

 

APAR Update/Closure Request, prepared by Shaw Environmental & Infrastructure,
Inc., dated as of August 2, 2002, addressed to TNRCC Voluntary Cleanup Section,
regarding Cuplex, Inc., 1500 East Highway 66, Garland, Texas.

 

23

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

On or about March 29, 2004, the County of Loudon, Virginia contacted Virginia’s
Sterling, Virginia facility by telephone to inform the facility that it had
received a letter from a former employee of the facility, pursuant to which such
former employee alleges various deficiencies in the facility’s wastewater
treatment system and reporting practices. Such former employee was employed at
the facility as a waste treatment technician from 1998 to 2003, but was laid off
as part of a reduction in force in 2003. The facility is investigating the
matter and plans to meet with the County within the week to discuss the
allegations, which it believes are borne primarily out of the former employee’s
recent lay-off and his antipathy toward his supervisor (the facility’s manager
of environment, safety & health). The former employee had previously expressed
an animus against his supervisor arising from his supervisor’s ethnicity.
Further, the former employee had made similar allegations of a more general
nature in the recent past, which, after a full investigation by the facility,
were determined to be without merit.

 

24

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

Schedule 3.18

 

Insurance

 

Policy

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

 

Credit Parties Named Insureds

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

Continental Casualty Company, Policy No.

RMP249172424 (May 1, 2003 to May 1, 2004)

domestic property insurance.

 

 

DDi Intermediate Holdings Corp.

DDi Corp.

DDi Capital Corp.

Dynamic Details, Incorporated

Dynamic Details Incorporated, Silicon Valley

Dynamic Details Texas, LLC

Dynamic Details, Incorporated Colorado Springs

Dynamic Details, L.P.

Laminate Technology Corp.

St. Paul Fire & Marine, Policy No. TE09406434

(May 1, 2003 to May 1, 2004) crime insurance.

 

 

St. Paul Fire & Marine, Policy No. TE09406434

(May 1, 2003 to May, 2004), commercial general

liability insurance.

 

 

St. Paul Fire & Marine, Policy No. TE09406436

(May 1, 2003 to May 1, 2004), foreign liability/

workers compensation insurance.

 

St. Paul Fire & Marine, Policy No. TE09406434

(May 1, 2003 to May 1, 2004), business auto (CA)

insurance.

   

St. Paul Fire & Marine, Policy No. TE09406435

(May 1, 2003 to May 1, 2004), business auto

(Virginia) insurance.

   

Executive Risk Indemnity, Inc., Policy No. 8167-7482

(May 1, 2003 to May 1, 2004), fiduciary

liability insurance

   

St. Paul Fire & Marine, Policy No. TE09406434

(May 1, 2003 to May 1, 2004), commercial

umbrella liability insurance.

   

Centennial (Atlantic Mutual Companies),

Policy No. 259017216 (March 1, 2003 to May 1, 2004),

transportation insurance covering certain

manufacturing equipment during covered

shipments.

   

The Travelers Indemnity Company,

Policy No. M5J-BMG-750X6972-IND-03

(May 1, 2003 to May 1, 2004), boiler and machinery

insurance.

   

 

25

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

National Union Fire Insurance Company of

Pittsburgh, PA, Policy No. 005497937

(December 12, 2003 to December 15, 2009,

with tail coverage), executive and organization

liability insurance.

  DDi Corp.

National Union Fire Insurance Co. of Pittsburgh,

PA, Policy No. 568-85-91 (December 12, 2003 to December 12, 2004), executive and
organization

liability insurance policy.

  DDi Corp.

 

26

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

Schedule 3.19

 

Deposit and Disbursement Accounts

 

Name of Account Holder

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

  

Financial Institution

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

  

Purpose of Account

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

Dynamic Details, Incorporated

  

Bank: Union Bank

Account No.: 0700498492

Address: 1980 Saturn Street

Monterey Park, CA 91754

Telephone No.: (626) 531-9440

   Concentration Account     

Bank: Union Bank

Account No.: 0700477657

Address: 1980 Saturn Street

Monterey Park, CA 91754

Telephone No.: (626) 531-9440

   Disbursement Account     

Bank: Union Bank

Account No.: 9080006095

Address: 1980 Saturn Street

Monterey Park, CA 91754

Telephone No.: (626) 531-9440

   Disbursement Account     

Bank: Union Bank

Account No.: 0700497178

Address: 1980 Saturn Street

Monterey Park, CA 91754

Telephone No.: (626) 531-9440

   Disbursement Account     

Bank: JPMorgan Chase Bank

Account No. 323-352-014

Address: 270 Park Avenue

New York, NY 10017

Telephone No.: (212) 270-6000

   JPMorgan Chase Dynamic Details L/C Cash Collateral Account

Dynamic Details Incorporated, Silicon Valley

  

Bank: Union Bank

Account No.: 6450150574

Address: 1980 Saturn Street

Monterey Park, CA 91754

Telephone No.: (626) 531-9440

   Blocked Account (Lock Box)     

Address for Lock Box

Address: P.O. Box 45732

San Francisco, CA 94145-0732

    

 

27

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

    

Bank: Union Bank

Account No.: 4500163467

Address: 1980 Saturn Street

Monterey Park, CA 91754

Telephone No.: (626) 531-9440

   Blocked Account (Lock Box)     

Address for Lock Box

Address: P.O. Box 45331

San Francisco, CA 94145-0331

         

Bank: Union Bank

Account No.: 6450150590

Address: 1980 Saturn Street

Monterey Park, CA 91754

Telephone No.: (626) 531-9440

   Disbursement Account     

Bank: Union Bank

Account No.: 9080002138

Address: 1980 Saturn Street

Monterey Park, CA 91754

Telephone No.: (626) 531-9440

   Disbursement Account     

Bank: Union Bank

Account No.: 9080008241

Address: 1980 Saturn Street

Monterey Park, CA 91754

Telephone No.: (626) 531-9440

   Disbursement Account DDi Sales Corp.   

Bank: Union Bank

Account No.: 0700477630

Address: 1980 Saturn Street

Monterey Park, CA 91754

Telephone No.: (626) 531-9440

   Blocked Account (Lock Box)     

Address for Lock Box

Address: P.O. Box 514950

Los Angeles, CA 90051-4950

         

Bank: Union Bank

Account No.: 9080008268

Address: 1980 Saturn Street

Monterey Park, CA 91754

Telephone No.: (626) 531-9440

   Disbursement Account     

Bank: Union Bank

Account No.: 4500180868

Address: 1980 Saturn Street

Monterey Park, CA 91754

Telephone No.: (626) 531-9440

   Disbursement Account

 

28

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

    

Bank: Union Bank

Account No.: 4500180795

Address: 1980 Saturn Street

Monterey Park, CA 91754

Telephone No.: (626) 531-9440

   Disbursement Account Dynamic Details, Incorporated, Virginia   

Bank: Union Bank

Account No.: 4500178669

Address: 1980 Saturn Street

Monterey Park, CA 91754

Telephone No.: (626) 531-9440

   Blocked Account     

Bank: Union Bank

Account No.: 9080005374

Address: 1980 Saturn Street

Monterey Park, CA 91754

Telephone No.: (626) 531-9440

   Disbursement Account     

Bank: Wachovia

Account No.: 2000008311812

Address: 47040 Community Plaza

Sterling, VA 20164

Telephone No.: (703) 444-7951

   Disbursement Account     

Bank: Wachovia

Account No.: 2000008311935

Address: 47040 Community Plaza

Sterling, VA 20164

Telephone No.: (703) 444-7951

   Disbursement Account Laminate Technology Corp.   

Bank: Union Bank

Account No.: 4500181635

Address: 1980 Saturn Street

Monterey Park, CA 91754

Telephone No.: (626) 531-9440

   Blocked Account     

Bank: Union Bank

Account No.: 9080007075

Address: 1980 Saturn Street

Monterey Park, CA 91754

Telephone No.: (626) 531-9440

   Disbursement Account     

Bank: Bank of America

Account No.: 004672018141

Address: P.O. Box 25118

Tampa, Florida 33622-5118

Telephone No.: (813) 288-2100

   Disbursement Account

 

29

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

DDi Corp.   

Bank: Union Bank

Account No.: 4500179932

Address: 1980 Saturn Street

Monterey Park, CA 91754

Telephone No.: (626) 531-9440

   Disbursement Account     

Bank: JPMorgan

Account No.: 304-159735

Address: 270 Park Avenue

New York, NY 10017

Telephone No.: (212) 270-6000

   Disbursement Account DDi Canada Acquisition Corp.   

Bank: JPMorgan

Account No.: 304-182230

Address: 270 Park Avenue

New York, NY 10017

Telephone No.: (212) 270-6000

   Disbursement Account Dynamic Details Canada, Corp.   

Bank: RBC Royal Bank of Canada

Account No.: 06492-4002275

Address: 5080 Sheppard Ave. East

Toronto, Canada M15 4N3

   Disbursement Account     

Bank: RBC Royal Bank of Canada

Account No.: 06492-1014539

Address: 5080 Sheppard Ave. East

Toronto, Canada M15 4N3

   Disbursement Account

 

30

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

Schedule 3.20

Government Contracts

 

None.

 

31

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

Schedule 3.22

Bonding; Licenses

 

None.

 

32

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

Schedule 5.1

Trade Names

 

DDi Corp.

 

DDi Intermediate Holdings Corp.

 

DDi Capital Corp.

 

Dynamic Details, Incorporated

 

DDi Sales Corp.

 

Dynamic Details Incorporated, Silicon Valley

 

Dynamic Details, Incorporated, Virginia

 

Dynamic Details Incorporated, Colorado Springs

 

Dynamic Details Texas, LLC

 

DDi-Texas Intermediate Partners II, L.L.C.

 

DDi-Texas Intermediate Holdings II, L.L.C.

 

Dynamic Details, L.P.

 

Laminate Technology Corp.

 

DDi Canada Acquisition Corp.

 

Dynamic Details Canada, Corp.

 

33

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

Schedule 6.2

 

Investments; Loans and Advances

 

On November 30, 2001, pursuant to the terms of a Secured Promissory Note and
Pledge Agreement, DDi Corp. loaned the principal sum of $600,000 to Bruce
McMaster. The note, which bears interest at the applicable Federal Rate (2.7%
per annum), matured in November 2002, but has not been repaid to date.

 

The Credit Parties have made loans in the principal amount of approximately
$100,000, in the aggregate, to certain of their respective employees for
relocation expenses and costs incurred in connection with employment therewith,
and such loans, as of the Closing Date, remain outstanding.

 

34

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

Schedule 6.3

 

Indebtedness

 

Indenture (16% Senior Accreting Notes due 2009) dated December 12, 2003, and as
supplemented by the First Supplemental Indenture dated as of February 24, 2004,
between DDi Capital Corp. and Wilmington Trust Company, as trustee, as amended.

 

Capital Lease Obligations existing as of the Closing Date total an approximate
amount of $2,500,000, of which includes real property leases and equipment
leases set forth below.

 

Real Property leases in favor of the Swenson Family Trust describing the
following addresses:

 

1205 Lance Lane, Anaheim, California.

1220 Lance Lane, Anaheim, California.

1240 Lance Lane, Anaheim, California.

1260 Lance Lane, Anaheim, California.

1275 Lance Lane, Anaheim, California.

1290 Lance Lane, Anaheim, California.

1295 Lance Lane, Anaheim, California.

3021 E. Coronado, Anaheim, California.

1211 Simon Circle, Anaheim, California.

1221 Simon Circle, Anaheim, California.

1231 Simon Circle, Anaheim, California.

1241 Simon Circle, Anaheim, California.

1251 Simon Circle, Anaheim, California.

 

Equipment leases:

 

Equipment leases in favor of the Swenson Family Trust for the equipment Mark V,
Mark VI, vision 107, Wabash Press and XL-5.

 

Other equipment relating to retained lease liability for assets sold in the
disposition of Dynamic Details Incorporated’s former assembly facility in
Moorpark, California.

 

Consignment Agreement by and between Dynamic Details Incorporated, Silicon
Valley, as consignee, and Kyocera Tycom Corporation, as consignor, with respect
to drill bits, rotary cutting tools, routers, end mills and all other goods and
merchandise manufactured by Kyocera Tycom Corporation and consigned to Dynamic
Details Incorporated, Silicon Valley pursuant thereto.

 

Intercompany Note, in the amount of CAD $12,903,801, dated as of February 2,
2004, issued by 3085549 Nova Scotia Limited (which subsequently merged into
Dynamic Details Canada, Corp.) in favor of DDi Canada Acquisition Corp.

 

35

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

In connection with the acquisition of the stock of Dynamic Details Canada, Inc.,
the predecessor of Dynamic Details Canada, Corp. (which DDi Canada Acquisition
Corp. acquired in May 2001), Dynamic Details Canada, Inc. issued promissory
notes, totaling, in the aggregate, $2.75 million, to the sellers of the stock of
Dynamic Details Canada, Inc.

 

Purchase Order No. 82299D dated as of September 25, 2003, by and between Dynamic
Details, Incorporated, as purchaser, and Polar Instruments, Inc., as seller,
pursuant to which Dynamic Details, Incorporated has agreed to purchase certain
equipment for the amount of $178,712, which is to be paid in installments
through January 2005, and, in consideration therefor, Polar Instruments, Inc.
has agreed to sell such equipment to Dynamic Details, Incorporated.

 

Purchase Order No. 83231D dated as of December 23, 2003, by and between Dynamic
Details, Incorporated, as purchaser, and Polar Instruments, Inc., as seller,
pursuant to which Dynamic Details, Incorporated has agreed to purchase certain
software from Polar Instruments, Inc. Dynamic Details will make the final
payment in the approximate amount of $12,000, payable to Polar Instruments,
Inc., in April 2004.

 

Dynamic Details, Incorporated has entered into certain arrangements and/or
agreements with respect to certain processing equipment, including, among other
things, laminators, laminator adapters, processors, chemical controllers and
rectifiers, which have been loaned to Dynamic Details, Incorporated by each of
the following suppliers and/or vendors (such equipment is loaned to Dynamic
Details, Incorporated free of charge so long as, in addition to other
conditions, Dynamic Details, Incorporated continues to use the respective
material of each of such supplier and/or vendor):

 

Circuit Image System

MacDermid, Inc.

E.I. Du Pont de Nemours & Co., Inc.

RDC Enterprises R.D. Caracci Enterprises

 

Pursuant to that certain Deed of Variation dated on or around January 30, 2004,
by and between Howard Nigel Goff, Geoffrey Peter Harvey and Heather Louise
Williams, as the Sellers, DDi Europe Limited, as the Purchaser, and Dynamic
Details, Incorporated, as the Guarantor, Dynamic Details, Incorporated has
unconditionally guaranteed to the Sellers the due and punctual payment of all
sums due thereunder (£1,504,000 plus interest thereon) by DDi Europe Limited
and, in the event of default, shall be liable for all such payments up to
£300,000 and shall be deemed the primary obligor thereto.

 

Consignment Inventory Agreement dated as of May 19, 2000, by and between Dynamic
Details, Incorporated, as consignee, and Rogers Tool Workers, Inc d/b/a Kemmer
Prazision, as consignor, with respect to drill inventory consigned thereunder.

 

Pursuant to a binding arbitration judgment with respect to a compensation claim
made by James Marcelli (former general manager of Dynamic Details Incorporated,
Colorado Springs) against Dynamic Details, Incorporated, James Marcelli was
awarded $351,000 in damages against Dynamic Details, Incorporated. In connection
therewith, Dynamic Details, Incorporated and

 

36

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

James Marcelli entered into that certain Settlement Agreement dated as of
October 27, 2003, pursuant to which Dynamic Details, Incorporated has agreed to
pay James Marcelli $100,000 per quarter over four quarters, beginning on
November 3, 2003, for an aggregate amount of $400,000, and James Marcelli, in
consideration therefor, has agreed to forego any action to collect any amounts
awarded under such judgment. As of the Closing Date, Dynamic Details,
Incorporated has paid, in the aggregate, $200,000 to James Marcelli.

 

Letter of Credit dated as of January 30, 2002, as amended on April 17, 2003,
issued by Dynamic Details, Incorporated in favor of American Casualty Company of
Reading, PA, RSKCO Services, Inc. and CNA Commercial Insurance Financial, as
beneficiaries, in the aggregate face amount of $463,000 (the “Letter of
Credit”).

 

37

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

Schedule 6.4(a)

 

Transactions with Affiliates

 

Non-Solicitation Agreement, dated as of December 12, 2003, between Bruce
McMaster and Dynamic Details, Incorporated.

 

From time to time, the Credit Parties, in the ordinary course of business, enter
into transactions with DDi Europe Limited, a wholly owned subsidiary of DDi
Corp., including, but not limited to, purchasing and/or selling products and
goods from and to DDi Europe Limited.

 

DDi Corp. Stock Option Agreement among DDi Corp. and each member of management
of DDi Corp. party thereto.

 

DDi Corp. Stock Option Agreement among DDi Corp. and each director of DDi Corp
party thereto.

 

DDi Corp. Restricted Stock Agreement, made as of December 19, 2003, between DDi
Corp. and each member of management of DDi Corp. party thereto.

 

DDi Corp. has granted to each of its Subsidiaries certain rights with respect to
the Patents owned by DDi Corp. and listed on Schedule 3.15 hereof.

 

On November 30, 2001, pursuant to the terms of a Secured Promissory Note and
Pledge Agreement, DDi Corp. loaned the principal sum of $600,000 to Bruce
McMaster. The note, which bears interest at the applicable Federal Rate (2.7%
per annum), matured in November 2002, but has not been repaid to date.

 

The Credit Parties have made loans in the principal amount of approximately
$100,000, in the aggregate, to certain of their respective employees for
relocation expenses and costs incurred in connection with employment therewith,
and such loans, as of the Closing Date, remain outstanding.

 

The Board of Directors of DDi Corp. has approved a Registration Rights Agreement
in favor of Bruce McMaster, a director and officer of DDi Corp., which has not
been finalized or executed.

 

Dynamic Details, Incorporated is a guarantor of that certain Deed of Variation
dated on or around January 30, 2004, by and between Howard Nigel Goff, Geoffrey
Peter Harvey and Heather Louise Williams, as the Sellers, DDi Europe Limited, as
the Purchaser, and Dynamic Details, Incorporated, as the Guarantor, pursuant to
which Dynamic Details, Incorporated unconditionally guaranteed to the Sellers
the due and punctual payment of all sums due thereunder.

 

In connection with the facilities loan made by the Bank of Scotland (“BoS”) to
and for the benefit of DDi Europe Limited, a direct and wholly owned subsidiary
of DDi Corp., DDi Corp. pledged to BoS 49% of DDi Corp.’s shares in DDi Europe
Limited to

 

38

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

secure the limited-recourse guaranty made by DDi Corp. to BoS of such facilities
loan and release of such pledge is conditioned upon, among other things, receipt
by BoS of confirmation that DDi Corp. is able to fully fund a twelve-month
business plan for DDi Europe Limited.

 

Intercompany Loan Agreement in the principal amount of CAD $12,903,801, dated as
of December 29, 2003, between DDi Canada Acquisitions Corp., as borrower, and
Dynamic Details, Incorporated, as lender.

 

Intercompany Note in the amount of CAD $12,903,801, dated as of December 29,
2003, issued by DDi Canada Acquisition Corp. in favor of Dynamic Details,
Incorporated.

 

Intercompany Note, in the amount of CAD $12,903, 801, dated as of February 2,
2004, issued by 3085549 Nova Scotia Limited (which subsequently merged into
Dynamic Details Canada, Corp.) in favor of DDi Canada Acquisition Corp.

 

Dynamic Details, Inc. Severance Plan for Key Employees, dated as of December 19,
2002.

 

The Compensation Committee of the Board of Directors of DDi Corp. has approved a
senior management compensation plan for the year 2004.

 

39

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

Schedule 6.7

 

Existing Liens

 

The equipment, inventory and receivables of Dynamic Details Canada, Inc. (the
predecessor of Dynamic Details Canada, Corp.) have been pledged as collateral in
connection with promissory notes made by Dynamic Details Canada, Inc. totaling,
in the aggregate, $2.75 million, in satisfaction of DDi Canada Acquisition
Corp.’s obligations to make earn out payments to the sellers of the stock of
Dynamic Details Canada, Inc. (which DDi Canada Acquisition Corp. acquired in May
2001).

 

Pursuant to the terms of that certain Settlement Agreement dated as of October
27, 2003, by and between James Marcelli and Dynamic Details, Incorporated, James
Marcelli retained a right to impose a lien, as a judgment creditor, in order to
secure payment due thereunder (an aggregate amount of $400,000) and, in
furtherance thereof, James Marcelli has filed the necessary financing statements
which effectuate a security interest in and to certain of the assets of Dynamic
Details, Incorporated.

 

Pursuant to that certain Consignment Agreement entered into by and between
Dynamic Details Incorporated, Silicon Valley, as consignee, and Kyocera Tycom
Corporation, as consignor, Dynamic Details Incorporated, Silicon Valley has
assigned and granted to Kyocera Tycom Corporation a security interest in all of
Dynamic Details Incorporated, Silicon Valley’s right, title and interest in and
to all of its inventory of goods and merchandise which have been manufactured by
Kyocera Tycom Corporation together with all accounts, proceeds, documents,
instruments or otherwise arising out of or with respect to such consignment
arrangement.

 

Pursuant to that certain Consignment Agreement dated as of May 19, 2000, by and
between Dynamic Details, Incorporated, as consignee, and Rogers Tool Workers,
Inc. d/b/a Kemmer Precision, as consignor, Dynamic Details, Incorporated has
assigned and granted to Rogers Tool Workers, Inc. d/b/a Kemmer Precision a
security interest with respect to certain drill inventory of Dynamic Details,
Incorporated consigned thereunder.

 

In connection with that certain Purchase Order No. 82299D dated as of September
25, 2003, by and between Dynamic Details, Incorporated, as purchaser, and Polar
Instruments, Inc., as seller, pursuant to which Dynamic Details, Incorporated
has agreed to purchase certain equipment for the amount of $178,712, which is to
be paid in installments through January 2005, Dynamic Details, Incorporated has
assigned and granted to Polar Instruments, Inc. a security interest with respect
to such equipment.

 

In connection with certain arrangements and/or agreements by and between Dynamic
Details, Incorporated and each of the following vendors and/or suppliers,
pursuant to which such vendors and/or suppliers, as applicable, have loaned to
Dynamic Details, Incorporated certain processing equipment, including, among
other things, laminators, laminator adapters, processors, chemical controllers
and rectifiers, Dynamic Details, Incorporated has granted a security interest to
such vendors and/or suppliers, as applicable, in such loaned equipment:

 

Circuit Image System

MacDermid, Inc.

E.I. Du Pont de Nemours & Co., Inc.

RDC Enterprises R.D. Caracci Enterprises

 

40

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

The following vendors and/or suppliers, as of the Closing Date, maintain a
security interest in and to certain of Dynamic Details, Incorporated’s and/or
Dynamic Details Incorporated, Silicon Valley’s assets (such security interest
shall be terminated following the Closing Date):

 

Polyclad Laminates, Inc.

Konica Imaging U.S.A. Inc.

Norwest Financial Leasing, Inc.

Pluritec North America LTD

Maintech, Inc.

Orbotech, Inc.

L3 Communications

 

Pursuant to that certain Cash Collateral Agreement dated as of March 29, 2004,
between Dynamic Details, Incorporated, as the Pledgor, and JPMorgan Chase Bank,
as the Bank, and in connection with that certain JPMorgan Chase Bank Payoff
Letter, dated as of March 30, 2004, as security for the payment of all present
and future obligations of Dynamic Details, Incorporated thereunder and under the
Second Amended and Restated Credit Agreement, dated as of December 12, 2003, as
amended by the First Amendment and Waiver, dated March 5, 2004, and the Letter
of Credit, Dynamic Details, Incorporated has pledged, assigned, transferred and
granted to JPMorgan Chase Bank a first priority lien on and security interest in
Dynamic Details, Incorporated’s account, number 323-352-014, with JPMorgan Chase
Bank.

 

41