Restructuring Support Agreement

Exhibit 10.4
EXECUTION COPY


RESTRUCTURING SUPPORT AGREEMENT


This Restructuring Support Agreement (together with exhibits, annexes and attachments hereto, this "Agreement") is made and entered into as of August 1, 2003 by and among (i) DDi Corp. ("DDi"), DDi Intermediate Holdings Corp. ("DDi Intermediate"), DDi Capital Corp. ("DDi Capital"), Dynamic Details, Incorporated ("Details"), Dynamic Details, Incorporated, Silicon Valley ("DDISV") and their respective subsidiaries and affiliates (collectively, the "Company Group"), (ii) the Administrative Agent (as defined below) and (iii) the Consenting Lenders (as defined below) signatory hereto. DDi, DDi Intermediate, DDi Capital, Details, DDISV, and each of their respective subsidiaries and affiliates, each Consenting Lender and any subsequent person that becomes a party hereto are referred herein as the "Parties" and individually, as a "Party."


PRELIMINARY STATEMENTS


A. The Lenders (as defined below) hold senior debt of $72,892,916.17 in face amount of undrawn letters of credit and outstanding, unpaid principal amount (the "Lender Indebtedness") under the Amended and Restated Credit Agreement, dated as of July 23, 1998 and as amended and restated as of August 28, 1998, and as amended by the First Amendment, dated as of March 10, 1999, the Second Amendment, dated as of March 22, 2000, the Third Amendment, dated as of October 10, 2000, the Fourth Amendment, dated as of February 13, 2001, the Fifth Amendment, dated as of December 31, 2001, the Sixth Amendment, dated as of June 28, 2002 and the Seventh Amendment, dated as of June 27, 2003 (as amended, supplemented or otherwise modified, the "Credit Agreement"), among Details, DDISV, the several banks and other financial institutions from time to time parties thereto (the "Lenders"), JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), in its capacity as the arranger of the Commitments, and as collateral, co-syndication and administrative agent for the Lenders (in such capacity, the "Administrative Agent") and Bankers' Trust Company as documentation and co-syndication agent (the "Co-Syndication Agent"), and all collateral and ancillary documentation executed in connection therewith, including, without limitation, the hedge agreement (the "Hedge Agreement") entered into by Details with JPMorgan Chase Bank (collectively, the "Pre-Restructuring Loan Documents"). As of the date hereof, the Consenting Lenders hold, in aggregate, 100% of the principal amount of the Lender Indebtedness.


B. The Company Group, the Consenting Lenders, the Consenting 5 1/4% Subordinated Noteholders (as defined in the PSA defined below) and the Consenting 6 1/4% Subordinated Noteholders (as defined in the PSA defined below) have engaged in good faith negotiations with the objective of reaching an agreement with regard to certain aspects of the restructuring and reorganization of the Company Group.


C. The Company Group, the Consenting Lenders, the Consenting 5 1/4% Subordinated Noteholders and the Consenting 6 1/4% Subordinated Noteholders now desire to implement a restructuring and reorganization of the Company Group such that the Consenting Lenders, the Consenting 5 1/4% Subordinated Noteholders and the Consenting 6 1/4% Subordinated Noteholders and the other holders of claims against and/or equity interests in the Company Group shall receive the consideration to be paid, distributed exchanged or provided by the Company Group pursuant to such restructuring and reorganization (the "Restructuring Terms") as set forth on the term sheet (the "Term Sheet") attached hereto as Exhibit A.


D. The Consenting 5 1/4% Subordinated Noteholders and the Consenting 6 1/4% Noteholders have until August 8, 2003 to execute the Plan Support Agreement (the "PSA"), the form of which is annexed hereto as Exhibit B, which shall provide for, inter alia, their consent to the Restructuring Terms subject to certain terms and conditions outlined in the PSA.


E. In order to expedite the contemplated restructuring and reorganization of the Company Group, each Party, subject to the terms of this Agreement, desires to pursue and support a restructuring transaction (i) by way of a plan of reorganization under Chapter 11 of Title 11, United States Code (the "Bankruptcy Code") relating to DDi and DDi Capital and (ii) by way of an out-of-court restructuring transaction relating to Details, DDISV and their respective subsidiaries and affiliates that achieves and implements the Restructuring Terms (any such restructuring transaction that achieves and implements the Restructuring Terms, the "Restructuring Transaction") and during the pendency of this Agreement desires not to support any restructuring or reorganization of any of the members of the Company Group (or any plan or proposal in respect of the same) that does not achieve or implement the Restructuring Terms.


F. In order to implement the Restructuring Transaction, the Company Group has agreed, subject to the terms and conditions of this Agreement, (i) to prepare and file (a) a disclosure statement that is consistent in all material respects with the Restructuring Terms and is in the form attached to the Term Sheet (the "Conforming Disclosure Statement"), and (b) a plan of reorganization for DDi and DDi Capital that is consistent in all material respects with the Restructuring Terms and is in the form attached to the Term Sheet (the "Conforming Plan") in cases filed under Chapter 11 of the Bankruptcy Code (the "Chapter 11 Cases") in the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court"), and to negotiate and prepare the definitive Restructuring Transaction documents that are consistent in all respects with the Restructuring Terms and are in form and substance satisfactory to the Consenting Lenders (the "Conforming Restructuring Loan Documents"), and (ii) to use reasonable commercial efforts to have the Conforming Disclosure Statement approved and the Conforming Plan confirmed by the Bankruptcy Court, in each case, as expeditiously as practicable under the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure.


G. The Company Group and the Consenting Lenders acknowledge and agree that the best way to effectuate the Conforming Plan and the Conforming Restructuring Loan Documents is to do so in a way that would:


1. maximize the value of the Company Group for the benefit of all
interested persons;


2. minimize the disruption to the Company Group resulting from the
commencement of the Chapter 11 Cases as quickly as possible;


3. minimize the loss of business continuity and opportunity of
Details and DDISV;


4. provide all parties to the Restructuring Transaction with Global
Releases (as defined in the Term Sheet) and a Plan Injunction (as
defined in the Term Sheet); and


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5. provide assurances and stability to certain key employees of the
Company Group.


H. In expressing such support and commitment, the Parties do not desire and do not intend in any way to derogate from or diminish the solicitation requirements of applicable securities and bankruptcy law, the fiduciary duties of DDi and DDi Capital as debtors in possession in the Chapter 11 Cases or the role of any state or federal agencies with regulatory authority concerning any member of the Company Group.


STATEMENT OF AGREEMENT


NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows:


1. Defined Terms. All capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Term Sheet; provided, however, that the term "Restructuring Period" shall mean the period from and including August 1, 2003 to the date of the occurrence of a Termination Event.


2. Term Sheet Conditions. Without limiting the conditions set forth herein, each Party's agreement to this Agreement and support for the Conforming Plan, the Conforming Restructuring Loan Documents and the Term Sheet is expressly conditioned on satisfaction of each of the terms and conditions set forth in the Term Sheet and this Agreement. To the extent that any such conditions involve a time period or an outside date for satisfaction, the Parties acknowledge and agree that time is of the essence with respect to each such condition.


3. Agreements.


(a) Agreements of the Consenting Lenders.


(i) Ownership. Each Consenting Lender represents and warrants, on a several but not joint basis, that, as of the date hereof, (i) such Consenting Lender either (A) is the sole legal and beneficial owner of, or holder of investment authority over, the debt set forth below its name on the signature page hereof and all related claims, rights and causes of action arising out of or in connection with or otherwise relating to such debt (the "Consenting Lender Claims"), in each case free and clear of all claims, liens and encumbrances, or (B) has or will have investment or voting discretion with respect to the debt and Consenting Lender Claims and has or will have the power and authority to bind the beneficial owner(s) of such debt and Consenting Lender Claims to the terms of this Agreement, and (ii) such Consenting Lender has or will have full power and authority to vote on and consent to such matters concerning such debt and Consenting Lender Claims and to exchange, assign and transfer such debt and Consenting Lender Claims.


(ii) Support of Restructuring. Each Consenting Lender agrees that for so long as this Agreement remains in effect, it (i) shall in no way directly or indirectly, support any restructuring or reorganization of the Company Group (or any plan or proposal in respect of the same) that is not consistent with, or does not implement or achieve, the


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Restructuring Terms, or (ii) shall not (A) directly or indirectly seek, solicit, pursue, support or encourage any other plan or the termination of the exclusive period for the filing of any plan, proposal or offer of dissolution, winding up, liquidation, reorganization, merger or restructuring of the Company Group that could be expected to prevent, delay or impede the successful restructuring of the Company Group as contemplated by the Restructuring Terms, any Conforming Plan and the Conforming Restructuring Loan Documents, (B) object to the Conforming Disclosure Statement or the solicitation of votes for the Conforming Plan or support any such objection by a third party; provided however, that the Consenting Lender may object to the Conforming Disclosure Statement solely on the basis that it does not contain adequate information as required by Section 1125 of the Bankruptcy Code, or (C) take any other action that is inconsistent with, or that would delay confirmation of, the Conforming Plan. Nothing contained herein shall limit the ability of a Consenting Lender to consult with any member of the Company Group, or to appear and be heard, concerning any matter arising in the Chapter 11 Cases so long as such consultation or appearance is consistent with the Consenting Lender's obligations hereunder and the terms of the Conforming Plan, the Conforming Loan Restructuring Documents, the Restructuring Terms and this Agreement.


(iii) Transfers. Each Consenting Lender agrees that for so long as this Agreement remains in effect, it shall not sell, transfer, assign, pledge or otherwise dispose, directly or indirectly, any of the debt or Consenting Lender Claims or any option thereon or any right or interest (voting or otherwise) therein, unless the transferee thereof agrees in writing for the benefit of the Parties to be bound by all of the terms of this Agreement by executing the Joinder attached hereto as Exhibit C, a copy of which shall be provided to the Parties, in which event each Party shall be deemed to have acknowledged that its obligations to the Consenting Lender hereunder shall be deemed to constitute obligations in favor of such transferee.


(iv) Amendment to Credit Agreement. By execution of this Agreement, each of the Consenting Lenders consents and authorizes JPMorgan Chase Bank, in its capacity as Administrative Agent under the Credit Agreement, to enter into and execute, on behalf of such Consenting Lender, the eighth amendment to the Credit Agreement (the "Eighth Amendment") in the form annexed hereto as Exhibit D.


(v) Agreement to Budget and Funding Mechanism. By execution of this Agreement, each of the Consenting Lenders consents and authorizes JPMorgan Chase Bank, in its capacity as Administrative Agent under the Credit Agreement, to enter into and execute, on behalf of such Consenting Lender, the Budget and Funding Mechanism (including the Initial Budget (as defined in the Budget and Funding Mechanism) contained therein)(the "Budget and Funding Mechanism"), annexed hereto as Exhibit E.


(vi) Further Agreement. Each Consenting Lender believes that the consummation of the Conforming Plan and of the Conforming Restructuring Loan Documents consistent with the Term Sheet is in its best interests and is in the best interests of the Company Group's creditors generally. Accordingly, for so long as this Agreement remains in effect, each Consenting Lender will support the Conforming Plan and the Conforming Restructuring Loan Documents consistent with the terms and conditions of the Term Sheet. Without limiting the foregoing, each Consenting Lender commits, for so long as the Agreement remains in effect, to support the Conforming Plan and the Conforming Restructuring Loan Documents and use its commercially reasonable efforts to facilitate the filing and confirmation of the Conforming Plan


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and consummation of the Conforming Restructuring Loan Documents at the earliest practicable date.


4. Agreements of the Company Group. Each member of the Company Group believes that the confirmation of the Conforming Plan and the consummation of the Conforming Restructuring Loan Documents will best facilitate its business and financial restructuring and that consummation of the terms described in the Term Sheet is in the best interests of each member of the Company Group and in the best interests of their respective creditors and other parties in interest. Accordingly, each member of the Company Group hereby agrees, for so long as this Agreement remains in effect: (a) to prepare or cause the preparation, as soon as practicable after the date hereof, of each of the Definitive Documents (as defined below), each containing terms and conditions consistent in all material respects with the Restructuring Terms, and to distribute such documents and afford reasonable opportunity of comment and review to the legal and financial advisors for the Consenting Lenders; (b) (i) to file the Chapter 11 Cases with respect to the Restructuring Transaction in the Bankruptcy Court on or prior to August 15, 2003, (ii) to file the Conforming Disclosure Statement and the Conforming Plan with the Bankruptcy Court on or prior to August 26, 2003, (iii) to cause the solicitation pursuant to the Conforming Disclosure Statement and the Conforming Plan to commence on or before October 10, 2003, and (iv) to solicit the requisite votes in favor of, and to obtain confirmation by the Bankruptcy Court at the earliest practicable date of, the Conforming Plan and approval of the Bankruptcy Court; (c) to not pursue, propose, support, encourage the pursuit of, or seek to implement any transaction or series of transactions that would effect a restructuring on terms other than the Restructuring Terms unless or until this Agreement has been terminated in accordance with Section 5; (d) to execute, or authorize the execution of, the Eighth Amendment; (e) to otherwise use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things, necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by the Term Sheet, the Conforming Plan and the Conforming Restructuring Loan Documents at the earliest practicable date (including opposing any appeal of the Confirmation Order); and (f) on August 1, 2003, to cause the payment for the account of each Consenting Lender a consent fee in the amount of 137.5 bps of each such Consenting Lender's commitment (less any consent fees paid to such Consenting Lender in connection with the Forbearance Agreement dated February 26, 2003).


5. Termination of Agreement. The obligations of the Consenting Lenders under this Agreement shall terminate and be of no further force and effect upon the date of the occurrence of any of the following events (any such event, a "Termination Event"), and such Termination Event is not waived in accordance with Section 11 of this Agreement: (i) counterpart signature pages to the PSA have not been executed and delivered by August 8, 2003, by (a) each member of the Company Group, (b) Consenting Subordinated Noteholders holding at least forty-two and a half percent (42.5%) in aggregate principal amount of the Subordinated Notes, with a copy to the Administrative Agent; (ii) the Company Group fails (A) to file the Chapter 11 Cases with respect to the Restructuring Transaction in the Bankruptcy Court on or prior to August 15,2003, (B) to file the Conforming Disclosure Statement, which shall be in form and substance acceptable to the Required Lenders, and the Conforming Plan, which shall be in form and substance acceptable to the Required Lenders, with the Bankruptcy Court on or prior to August 26, 2003, or (C) to cause the solicitation pursuant to the Conforming Disclosure Statement and the Conforming Plan to commence on or before October 10, 2003; (iii) any member of the Company Group files, proposes, does not object to or otherwise supports, either directly or indirectly, any plan of reorganization other than the Conforming Plan, or other


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creditors of any member of the Company Group file any plan of reorganization other than the Conforming Plan in accordance with Section 1121(c) of the Bankruptcy Code; (iv) the Conforming Plan is modified or replaced such that it (or any such replacement) at any time is not consistent in any material respect with the Restructuring Terms; (v) any breach by any member of the Company Group of any of their respective obligations, or failure to satisfy in any material respect any of the terms or conditions, under this Agreement or the Pre-Restructuring Loan Documents, or any member of the Company Group shall take any action to challenge (including, without limitation, to assert in writing any challenge to) the validity or enforceability of this Agreement; (vi) the final Definitive Documents (as defined below) are modified to provide for any terms that are not consistent in any material respect with the Restructuring Terms or that are otherwise not satisfactory in form and substance to the Parties signatory thereto; (vii) any member of the Company Group or any of their respective professionals or representatives, shall withdraw or revoke the Conforming Plan; (viii) an examiner with expanded powers or a trustee shall have been appointed in any of the Chapter 11 Cases, any of the Chapter 11 Cases shall have been converted to a case under chapter 7 of the Bankruptcy Code or dismissed by order of the Bankruptcy Court; (ix) orders approving the Conforming Disclosure Statement, in form and substance satisfactory to the Required Lenders, shall not have been entered by the Clerk of the Bankruptcy Court on or before October 7, 2003; (x) the PSA shall have terminated; (xi) any foreclosure proceeding is commenced against, or any bankruptcy case is commenced by or against Details or DDISV; (xii) any failure to obtain, by November 15, 2003, (a) more than one-half (1/2) in number and two-thirds (2/3) in amount of the holders (the "Required 5 1/4% Subordinated Noteholders") of 5 1/4% Subordinated Notes (as defined in the Term Sheet) voting on the Conforming Plan to accept the terms of the Conforming Plan and (b) more than one-half (1/2) in number and two-thirds (2/3) in amount of the holders (the "Required 6 1/4% Subordinated Noteholders") of 6 1/4% Subordinated Notes (as defined in the Term Sheet) voting on the Conforming Plan to accept the terms of the Conforming Plan; (xiii) the occurrence of a Default (as defined in the Budget and Funding Mechanism) under the Budget and Funding Mechanism; (xiv) orders confirming the Conforming Plan of Reorganization, in form and substance satisfactory to the Required Lenders, shall not have been entered by the Clerk of the Bankruptcy Court on or before December 15, 2003; (xv) the Effective Date (as defined in the Term Sheet) of the Conforming Plan shall not have occurred on or before January 8, 2004; (xvi) the Bankruptcy Court shall have entered an order, the effect of which will be to cause a Termination Event hereunder; (xvii) any member of the Company Group shall adopt, seek authority from the Bankruptcy Court to assume or otherwise seek or obtain Bankruptcy Court approval of, any management retention plan, management option plan, severance plan, senior management employment contracts or senior management post-restructuring employment arrangements, except upon terms and conditions previously agreed to by the Required Lenders in writing; (xviii) there shall have occurred and be continuing a default or event of default, other than the Existing Events of Default (as defined in the Eighth Amendment to the Credit Agreement) under the Pre-Restructuring Loan Documents; (xix) any exhibit to the Conforming Plan shall not be in form and substance acceptable to the Required Lenders; (xx) the Confirmation Order shall not be in form and substance acceptable to the Required Lenders; (xxi) there shall have occurred and be continuing an event which has a Material Adverse Effect (as defined in the Pre-Restructuring Loan Documents) on the business, assets, operations, property, condition (financial or otherwise) of Details, DDISV or any of their affiliates and subsidiaries (other than DDi Europe and its European subsidiaries); (xxii) any member of the Company Group or any of their respective professionals shall have advised any of the Senior Debt Parties (as defined in the Term Sheet) in writing that they cannot provide for the treatment of the Senior Debt Parties as set forth in the Term Sheet; (xxiii) the Bankruptcy Court shall enter an order denying confirmation of the


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Conforming Plan; (xxiv) any court (including the Bankruptcy Court) shall declare, in a Final Order, this Agreement to be unenforceable; (xxv) the form and substance of the Global Releases and the Plan Injunction in the Confirmation Order entered by the Bankruptcy Court are not in form and substance acceptable to the Required Lenders with respect thereto; (xxvi) a perfected security interest (subject to certain customary carve-outs which shall be approved by the Administrative Agent and the Required Lenders in writing) is not granted to the Lenders in all personal, mixed and real property of the reorganized Debtors and their non-debtor subsidiaries (other than DDi Europe and its European subsidiaries) and pledges of 100% of the common stock of DDi Intermediate, 100% of the common stock of DDi Capital and 100% of the common stock of each of Reorganized DDi's (as defined in the Term Sheet) direct and indirect subsidiaries (other than DDI Europe or its European subsidiaries) not previously pledged to the Lenders to secure the Restructuring Loan Documents; (xxvii) any suit or action shall have been commenced by the Debtors against any of the Senior Debt Parties, that asserts any claim, or legal or equitable remedy or that seeks subordination of any lien existing in favor of the Administrative Agent or the Lenders; (xxviii) any suit or action shall have been commenced by anyone other than the Debtors against any of the Senior Debt Parties, that asserts any claim, or legal or equitable remedy or that seeks subordination of any lien existing in favor of the Administrative Agent or the Lenders, and the Court enters an order granting any such relief which is not dismissed or stayed within five (5) days of its entry; (xxix) the treatment of the holders of the Senior Discount Notes shall not be approved by the Required Lenders; (xxx) any member of the Company Group files a motion seeking or the Bankruptcy Court enters an order (A) approving material payments to any creditor or group of constituents that is not acceptable to Required Lenders, (B) granting relief from the automatic stay to any holder of a security interest to permit foreclosure on assets with a value over $100,000 or (C) approving any material settlement or other material stipulation with any creditor or group of constituents; (xxxi) any representation or warranty made by any member of the Company Group or its agents or representatives to the Consenting Lenders or in connection with this Agreement is false or misleading in any material respect when made; or (xxxii) January 30, 2004.


6. Good Faith Cooperation; Further Assurances; Acknowledgment; Definitive Documents. The Parties shall cooperate with each other in good faith and shall coordinate their activities (to the extent practicable) in respect of (a) all matters relating to their rights in respect of any member of the Company Group or otherwise in connection with their relationship with the members of the Company Group, (b) all matters concerning the implementation of the Restructuring Terms, and (c) the pursuit and support of the Restructuring Transaction. Furthermore, subject to the terms hereof, each of the Parties shall take such action as may be necessary to carry out the purposes and intent of this Agreement, including making and filing any required regulatory filings and voting any other debt or equity securities of the Company Group in favor of the Restructuring Transaction (provided that no Consenting Lender shall be required to incur any expense, liability or other obligation), and shall refrain from taking any action that would frustrate the purposes and intent of this Agreement, including proposing a plan that is not the Conforming Plan. While the Consenting Lenders commit herein to support the Restructuring Transaction and the Conforming Plan, this Agreement is not and shall not be deemed a solicitation for consent to the Conforming Plan or a solicitation to tender or exchange any Indebtedness (as defined in the Credit Agreement). Notwithstanding anything to the contrary contained in this Agreement, the obligations of the Parties hereunder shall be expressly subject to the preparation of definitive documents (the "Definitive Documents") implementing, achieving and relating to the Restructuring Terms and this Agreement, including, without limitation: (i) (a) the Conforming Plan, the Conforming Disclosure Statement, the order of the Bankruptcy Court


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confirming the Conforming Plan which shall be in form and substance acceptable to the Parties (the "Confirmation Order"), and any related ballots, releases and settlement documents, (b) definitive documentation relating to the management incentive plan, the common stock of reorganized DDi, the preferred stock of DDi Europe, and other related documents, each of which are more specifically described in the Restructuring Terms, shall contain terms and conditions consistent in all material respects with the Restructuring Terms, and shall be, satisfactory in form and substance to the Parties signatory thereto or beneficiaries thereof, (c) the Conforming Restructuring Loan Documents, and (d) all other agreements, instruments, orders or other documents necessary or appropriate to consummate the transactions contemplated by this Agreement, the Term Sheet, the Conforming Restructuring Loan Documents or the Conforming Plan, each of which documents must be in form and substance acceptable to each of the Parties (except as otherwise provided in the Term Sheet), and (ii) any "first day" orders and motions which must be in form and substance acceptable to each of the Parties. Each Party hereby covenants and agrees (i) to negotiate in good faith the Definitive Documents and (ii) to execute (to the extent they are a party thereto) and otherwise support the Definitive Documents.


7. Consent. By execution hereof, each of Consenting Lender consents and authorizes JPMorgan Chase Bank, in its c ...