EXHIBIT 10.1
COMMON STOCK PURCHASE WARRANT
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES
LAWS OF ANY STATE OR OTHER JURISDICTION, AND MAY NOT BE SOLD OR OFFERED FOR SALE
OR OTHERWISE TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT AS
TO THE SECURITIES UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR THE
SECURITIES ARE SOLD AND TRANSFERRED IN A TRANSACTION THAT IS EXEMPT FROM OR NOT
SUBJECT TO REGISTRATION UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
THE OFFERING OF THIS SECURITY AND THE SHARES OF COMMON STOCK PURCHASABLE
HEREUNDER HAVE NOT BEEN REVIEWED OR APPROVED BY ANY STATE SECURITIES
ADMINISTRATOR.
DDI CORP.
Date of Initial Issuance: September 21, 2005
Number of Shares: 4,297,131
Initial Warrant Price: $0.75 per share
Expiration Date: July 31, 2006
THIS CERTIFIES that, for value received, Contrarian Turnaround Equities,
LLC, or its registered assigns to the extent permitted hereunder (the "HOLDER"),
is entitled to subscribe for and purchase from DDi CORP., a Delaware corporation
(the "COMPANY"), upon the terms and conditions set forth herein, at any time
during the Term (as defined below) of this Warrant, 4,297,131 shares of common
stock, $0.001 par value per share, of the Company ("COMMON STOCK"), at the
Warrant Price (as defined below), payable as provided herein. As used herein,
the term "this Warrant" shall mean and include this Warrant and any Warrant or
Warrants hereafter issued as a consequence of the exercise or transfer of this
Warrant in whole or in part.
The number of shares of Common Stock issuable upon the exercise of the
Warrant (the "WARRANT SHARES") and the Warrant Price may be adjusted from time
to time as hereinafter set forth.
SECTION 1. Definitions.
For all purposes of this Warrant, the following terms shall have the
meanings indicated:
"AFFILIATE" of any specified Person means any other Person directly
or indirectly controlling, controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
when used with respect to any Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. No
Person shall be deemed an Affiliate of another Person solely by virtue of the
fact that both Persons own shares of the Company's capital stock.
"BUSINESS DAY" shall mean any day other than Saturday, Sunday and
any day on which banking institutions in the State of New York are authorized by
Law or other governmental action to close.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"PERSON" means an individual, a corporation, partnership, limited
liability company, association, trust or any other entity or organization,
including a government, a political subdivision or an agency or instrumentality
thereof.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended
from time to time.
"TERM OF THIS WARRANT" shall mean the period beginning on the date
of initial issuance hereof and ending on July 31, 2006.
"TRANSFER" means the offer, sale, donation, assignment (as
collateral or otherwise), mortgage, pledge, grant, hypothecation, encumbrance,
gift, bequest or transfer or disposition of any security.
"WARRANT PRICE" shall mean $0.75 per share, subject to adjustment in
accordance with Section 5 hereof.
SECTION 2. EXERCISE OF WARRANT.
2.1 Procedure for Exercise of Warrant. To exercise this Warrant in
whole or in part (but not as to any fractional share of Common Stock), the
Holder shall deliver to the Company at its office referred to in Section 10
hereof at any time and from time to time during the Term of this Warrant: (i)
the Notice of Exercise in the form of Exhibit A attached hereto, (ii) cash, a
certified or official bank check payable to the order of the Company, or a wire
transfer of funds to the Company's account, in each case in the amount of the
Warrant Price for each share being purchased and any amount required to be paid
by the Holder on account of a transfer of a Warrant or Warrant Shares pursuant
to Section 3 hereof, and (iii) this Warrant.
In the event of any exercise of the rights represented by this
Warrant, a certificate or certificates for the shares of Common Stock so
purchased, registered in the name of the Holder or, subject to compliance with
Section 6.2, such other name or names as may be designated by the Holder, shall
be delivered to the Holder hereof within a reasonable time, not exceeding three
Business Days, after the rights represented by this Warrant shall have been so
exercised; and, unless this Warrant has expired, a new Warrant representing the
number of shares with respect to which this Warrant shall not then have been
exercised shall also be issued to the Holder hereof within such time. The person
in whose name any certificate for shares of Common Stock is issued upon exercise
of this Warrant shall for all purposes be deemed to have become the holder of
record of such shares on the date on which the Holder shall have complied with
the conditions for exercise of this Warrant set forth above, irrespective of the
date of delivery of such certificate, except that, if the date of such
compliance is a date when the stock transfer books of the Company are closed,
such person shall be deemed to have become the
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holder of such shares at the close of business on the next succeeding date on
which the stock transfer books are open.
2.2 Transfer Restriction Legend. Each certificate for Warrant Shares
shall bear the following legend (and any additional legend required by (i) any
applicable state securities laws and (ii) any securities exchange upon which
such Warrant Shares may, at the time of such exercise, be listed) on the face
thereof unless at the time of exercise such Warrant Shares shall be registered
under the Securities Act:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
AND/OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. SUCH SHARES MAY
NOT BE OFFERED OR SOLD OR TRANSFERRED EXCEPT (A) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
REGISTRATION AND/OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES
LAWS, (B) IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER
THE SECURITIES ACT AND REGISTRATION AND/OR QUALIFICATION UNDER
APPLICABLE STATE SECURITIES LAWS PROVIDED THAT AT THE ISSUER'S
REQUEST, THE TRANSFEROR THEREOF SHALL HAVE DELIVERED TO THE ISSUER
AN OPINION OF COUNSEL (WHICH OPINION SHALL BE IN FORM, SUBSTANCE AND
SCOPE REASONABLY SATISFACTORY TO THE ISSUER FROM COUNSEL REASONABLY
SATISFACTORY TO THE ISSUER) TO THE EFFECT THAT SUCH SECURITIES MAY
BE SOLD OR TRANSFERRED PURSUANT TO AN EXEMPTION FROM SUCH
REGISTRATION, OR (C) SUCH SECURITIES MAY BE SOLD PURSUANT TO RULE
144 PROMULGATED UNDER THE SECURITIES ACT."
Any certificate issued at any time in exchange or substitution for
any certificate bearing such legend shall also bear such legend unless, in the
opinion of counsel for the Holder thereof (which counsel shall be satisfactory
to the Company) the securities represented thereby are not, at such time,
required by law to bear such legend. The foregoing legend shall be removed from
the certificates representing any Warrant Shares, at the request of the Holder
thereof, at such time as they become eligible for resale pursuant to Rule 144(k)
under the Securities Act or as they have been sold pursuant to a registration
statement declared effective by the Securities and Exchange Commission or
pursuant to Rule 144 under the Securities Act. At the request of the Company,
the Company shall have the right to receive an opinion of counsel for the
Holder, reasonably satisfactory to the Company, to the effect that the transfer
of the Warrant Shares is exempt from the registration requirements of the
Securities Act, prior to the removal of the legend if the request for removal is
being made pursuant to Rule 144 or Rule 144(k) under the Securities Act.
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SECTION 3. COVENANTS AS TO COMMON STOCK. The Company shall at all times
reserve and keep available out of its authorized but unissued Common Stock (or
out of shares of Common Stock held in its treasury) solely for the purpose of
issuance upon the exercise of this Warrant, the maximum number of Warrant Shares
issuable upon the exercise of this Warrant. The Company covenants and agrees
that all shares of Common Stock that may be issued upon the exercise of the
rights represented by this Warrant shall, upon issuance, be validly issued,
fully paid and nonassessable, and free from all taxes, liens, preemptive rights
and charges with respect to the issue thereof. The Company shall take all such
actions as may be necessary to ensure that all such Warrant Shares may be so
issued without violation by the Company of any applicable law or governmental
regulation or any requirements of any domestic securities exchange or quotation
system upon which shares of Common Stock or other securities constituting
Warrant Shares may be listed or quoted (except for official notice of issuance
which shall be immediately delivered by the Company upon each such issuance).
The Company further covenants and agrees that it shall pay when due and payable
any and all federal and state documentary or stamp taxes (other than federal or
state income taxes) which may be payable in respect of the issue of this Warrant
or any Common Stock or certificates therefor issuable upon the exercise of this
Warrant, except that, if Warrant Shares or new Warrants shall be registered in a
name or names other than the name of the Holder, funds sufficient to pay all
transfer taxes payable as a result of such transfer shall be paid by the Holder
at the time of delivery of the Notice of Exercise.
SECTION 4. ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment of the
Warrant Price as provided in Section 5(a), Section 5(b), Section 5(c) or Section
5(f), the number of Warrant Shares shall be changed to the number determined by
multiplying the Warrant Price in effect immediately prior to such adjustment by
the number of Warrant Shares purchasable immediately prior to such adjustment
and dividing the product thereof by the Warrant Price resulting from such
adjustment.
SECTION 5. ADJUSTMENT. The Warrant Price and terms of the Warrant shall be
subject to adjustment from time to time as follows:
(a) If, at any time during the Term of this Warrant, the Company
shall make or issue, a dividend or other distribution payable in
additional shares of Common Stock, then and in each such event the Warrant
Price then in effect immediately before such event shall be decreased as
of the time of such issuance by multiplying the Warrant Price then in
effect by a fraction:
(1) the numerator of which shall be the total number of shares
of Common Stock issued and outstanding immediately prior to the time of such
issuance, and
(2) the denominator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the time of
such issuance plus the number of shares of Common Stock issuable in payment of
such dividend or distribution.
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(b) If, at any time during the Term of this Warrant, the number of
shares of Common Stock outstanding is increased by a subdivision or
split-up of shares of Common Stock, then, immediately after the date fixed
for the determination of holders of Common Stock entitled to receive
shares in such subdivision or split-up, the Warrant Price in effect
immediately before the subdivision or split-up shall be appropriately
decreased so that the number of shares of Common Stock issuable upon the
exercise hereof shall be increased in proportion to such increase in
outstanding shares.
(c) If, at any time during the Term of this Warrant, the number of
shares of Common Stock outstanding is decreased by a combination of the
outstanding shares of Common Stock or reverse stock split, then,
immediately after the effective date for such combination, the Warrant
Price in effect immediately prior to such combination or reverse stock
split shall be appropriately increased so that the number of shares of
Common Stock issuable upon the exercise hereof shall be decreased in
proportion to such decrease in outstanding shares.
(d) If, at any time during the Term of this Warrant, the Company
shall make or issue, or fix a record date for the determination of holders
of Common Stock entitled to receive, a dividend or other distribution
payable in securities of the Company (other than shares of Common Stock)
or in cash or other property (other than dividends or distributions for
which an adjustment is made pursuant to other provisions of this Section 5
or regular cash dividends paid out of earnings or earned surplus,
determined in accordance with generally accepted accounting principles),
then and in each such event provision shall be made so that the Holder
shall receive upon the exercise hereof, in addition to the number of
shares of Common Stock issuable hereunder, the kind and amount of
securities of the Company, cash or other property which the Holder would
have been entitled to receive had this Warrant been exercised on the
effective date fixed for the determination of holders of Common Stock
entitled to receive a dividend or distribution in such event and had the
Holder thereafter, during the period from such date to and including the
exercise date, retained any such securities receivable during such period,
giving application to all adjustments called for during such period under
this Section 5 with respect to the rights of the Holder.
(e) In the case of any proposed consolidation or merger of the
Company with another entity, or the proposed sale of all or substantially
all of its assets to another person or entity, or any proposed
consolidation, reorganization, recapitalization, or reclassification of
the capital stock of the Company or other transaction, then, as a
condition of such consolidation, merger, sale, consolidation,
reorganization, recapitalization, reclassification or other transaction,
the Company shall give 30 days' prior written notice thereof to the Holder
hereof and lawful and adequate provision shall be made whereby the Holder
shall thereafter have the right to receive upon the basis and upon the
terms and conditions specified herein, in lieu of the Warrant Shares
immediately theretofore purchasable hereunder, such shares of stock,
securities, cash or assets as may (by virtue of such consolidation,
merger, sale, consolidation, reorganization, recapitalization,
reclassification or other transaction) be issued or payable with respect
to or in exchange for the number of Warrant Shares purchasable hereunder
immediately before such consolidation, merger, sale, reorganization,
recapitalization, reclassification or other transaction. In any such case
appropriate provision shall be made with respect to the rights and
interests of the Holder to the end that the
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provisions hereof shall thereafter be applicable as nearly as may be
practicable, in relation to any shares of stock, securities, cash or
assets thereafter deliverable upon the exercise of this Warrant.
Notwithstanding the foregoing sentences, if (x) there shall occur any
consolidation, merger, sale, consolidation, reorganization,
recapitalization or other transaction in which the Common Stock is
converted into or exchanged for anything other than solely equity
securities, and (y) the common stock of the acquiring or surviving company
(which shall be understood to mean the ultimate parent of such company, if
such company is not publicly traded and its ultimate parent is publicly
traded) is publicly traded, then, as part of such consolidation, merger,
sale, consolidation, reorganization, recapitalization, reclassification or
other transaction, (i) the Holder shall have the right thereafter to
receive upon the exercise hereof such number of shares of common stock of
the acquiring or surviving company as is determined by multiplying (A) the
number of shares of Common Stock subject to this Warrant immediately prior
to such consolidation, merger, sale, consolidation, reorganization,
recapitalization, reclassification or other transaction by (B) a fraction,
the numerator of which is the Fair Market Value (as defined below) per
share of Common Stock as of the effective date of such consolidation,
merger, sale, consolidation, reorganization, recapitalization,
reclassification or other transaction, as determined pursuant to Section
7, and the denominator of which is the fair market value per share of
common stock of the acquiring or surviving company as of the effective
date of such transaction, as determined in good faith by the Board of
Directors of the Company (using the principles set forth in Section 7 to
the extent applicable), and (ii) the exercise price per share of common
stock of the acquiring or surviving company shall be the Warrant Price
divided by the fraction referred to in clause (B) above. The Company shall
not effect any such consolidation, merger, sale, reorganization,
recapitalization, reclassification or other transaction unless, prior to
the consummation thereof, the successor entity (if other than the Company)
resulting from such consolidation, merger, sale, reorganization,
recapitalization, reclassification or other transaction (including a
purchaser of all or substantially all the Company's assets) assumes by
written instrument the obligation to deliver to each Holder of Warrants
such shares of stock, securities, cash or assets as, in accordance with
the foregoing provisions, such Holder may be entitled to acquire upon
exercise of Warrants.
(f) If at any time the Company shall issue or sell any Common Stock
(other than Common Stock issued (a) pursuant to the Company's existing or
future stock option plans or pursuant to any other existing or future
Common Stock related director or employee compensation plan of the Company
approved by the board of directors of the Company (the "BOARD OF
DIRECTORS"), (b) as consideration for the acquisition of a business or of
assets, (c) to the Company's joint venture partners in exchange for
interests in the relevant joint venture, (d) upon conversion of any shares
of any series of preferred stock or as the payment of a dividend with
respect to any series of preferred stock outstanding on the date hereof or
the issuance of which caused an adjustment under the other provisions of
this Section 5 or (e) upon the exercise or conversion of any security the
issuance of which caused an adjustment under the other provisions of this
Section 5 for a consideration per share less than the Warrant Price then
in effect, or shall issue any options, rights, warrants or other
securities convertible into or exercisable or exchangeable for Common
Stock (other than such securities paid as dividends on any class of
preferred stock outstanding on the date hereof or the issuance of which
caused an adjustment under the other provisions of this Section 5) having
a conversion, exercise or exchange price, together with the issue price of
such
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securities, per share of Common Stock less than the Warrant Price then in
effect, the Warrant Price to be in effect after such issuance or sale
shall be determined by multiplying the Warrant Price in effect immediately
prior to such issuance or sale by a fraction, (i) the denominator of which
shall be the sum of (w) the number of shares of Common Stock outstanding
immediately prior to such issuance or sale plus (x) the number of
additional shares of Common Stock to be issued or sold (or, in the case of
any options, rights, warrants or other convertible, exercisable or
exchangeable securities, issued on conversion, exercise or exchange), and
(ii) the numerator of which shall be the sum of (y) the number of shares
of Common Stock outstanding immediately prior to such issuance and sale
plus (z) the number of shares of Common Stock which the aggregate
consideration received by the Company for the total number of additional
shares of Common Stock so issued or sold (or issuable on conversion,
exercise or exchange) would purchase at the Warrant Price in effect on the
date of such issuance or sale. In case any portion of the consideration to
be received by the Company shall be in a form other than cash, the fair
market value (determined in accordance with the principles set forth in
Section 7 to the extent applicable) of such non-cash consideration shall
be utilized in the foregoing computation. Such adjustment shall be made
successively whenever any such issuance or sale is made, and shall become
effective immediately after such issuance or sale. If all the Common Stock
deliverable upon exercise, conversion or exchange of securities
convertible into Common Stock have not been issued when such securities
are no longer outstanding, then the Warrant Price shall promptly be
readjusted to the Warrant Price which would then be in effect had the
adjustment upon the issuance of such securities been made on the basis of
the actual number of Common Stock issued upon conversion, exercise or
exchange of such securities.
(g) Whenever the Warrant Price shall be adjusted as provided in this
Section 5, the Company shall promptly prepare a statement showing the
facts requiring such adjustment and the Warrant Price and number of
Warrant Shares that shall be in effect after such adjustment, setting
forth in reasonable detail and certifying the calculation of such
adjustment. The Company shall cause a copy of such statement to be sent by
mail, first class postage prepaid, to each Holder at its, his or her
address appearing on the Company's records. The Company shall, as promptly
as reasonably practicable after the written request at any time of the
Holder (but in any event not later than 10 days thereafter), furnish or
cause to be furnished to the Holder a certificate setting forth (i) the
Warrant Price then in effect and (ii) the number of shares of Common Stock
and the amount, if any, of other securities, cash or property which then
would be received upon the exercise of this Warrant.
(h) Adjustments made pursuant to this Section 5 shall be made on the
date such dividend, subdivision, split-up, reverse stock split,
combination, distribution, issuance, sale, consolidation, reorganization,
recapitalization, reclassification or other transaction, as the case may
be, is made, and shall become effective at the close of business on the
day such event becomes effective.
SECTION 6. OWNERSHIP.
6.1 Ownership of Warrant. The Company may deem and treat the person
in whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all
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purposes and shall not be affected by any notice to the contrary until
presentation of this Warrant for registration of transfer as provided in this
Section 6.
6.2 Transfer and Replacement.
(a) No Holder shall Transfer this Warrant other than (i) a Transfer
to one or more of its Affiliates or (ii) if the Company first shall have
been furnished with an opinion of legal counsel, reasonably satisfactory
to the Company, to the effect that such Transfer is exempt from the
registration requirements of the Securities Act. Notwithstanding the
foregoing, no registration or opinion of counsel shall be required for,
and a Transfer shall be permitted in the event of, a Transfer by a Holder
which is a partnership to a partner of such partnership or a retired
partner of such partnership or to the estate of any such partner or
retired partner, or a Transfer by a Holder which is a limited liability
company to a member of such limited liability company or a retired member
or to the estate of any such member or retired member, provided that the
transferee in each case agrees in writing to be subject to the terms of
this Section 6. Any attempt to Transfer this Warrant other than in
accordance with this Section 6 shall be null and void and no right, title
or interest in or to such Warrant shall be Transferred to the purported
transferee, buyer, donee, assignee or encumbrance holder. The Company will
not give, and will not permit the Company's transfer agent to give, any
effect to such attempted Transfer in its stock records.
(b) Subject to Section 6.2(a), this Warrant and all rights hereunder
are transferable in whole or in part upon the books of the Company by the
Holder hereof in person or by duly authorized attorney, together with a
properly executed Assignment (in the form of Exhibit B or Exhibit C
hereto, as the case may be) and a new Warrant or Warrants, of the same
tenor as this Warrant but registered in the name of the transferee or
transferees (and in the name of the Holder, if a partial transfer is
effected) shall be promptly made and delivered by the Company upon
surrender of this Warrant duly endorsed, at the office of the Company
referred to in Section 9 hereof. Upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft or destruction, and, in
such case, of indemnity or security reasonably satisfactory to it, and
upon surrender of this Warrant if mutilated, the Company shall promptly
make and deliver a new Warrant of like tenor, in lieu of this Warrant.
This Warrant shall be promptly cancelled by the Company upon the surrender
hereof in connection with any transfer or replacement. Except as otherwise
provided above, in the case of the loss, theft or destruction of a
Warrant, the Company shall pay all expenses, taxes and other charges
payable in connection with any transfer or replacement of this Warrant,
other than documentary or stamp taxes (if any) payable in connection with
a transfer of this Warrant, which shall be payable by the Holder. The
Holder shall not transfer this Warrant and the rights hereunder except in
compliance with federal and state securities laws.
SECTION 7. FRACTIONAL SHARES. Fractional shares shall not be issued upon
the exercise of this Warrant but in any case where the Holder would, except for
the provisions of this Section 7, be entitled under the terms hereof to receive
a fractional share upon the complete exercise of this Warrant, the Company
shall, upon the exercise of this Warrant for the largest number of whole shares
then called for, pay a sum in cash equal to the excess of the Fair Market
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Value of such fractional share over the Warrant Price for such fractional share
on the exercise date.
(a) The Fair Market Value per share of Common Stock shall be
determined as follows:
(i) If the Common Stock is listed on a national securities
exchange, the Nasdaq National Market or another nationally recognized trading
system as of the exercise date, the Fair Market Value per share of Common Stock
shall be deemed to be the average of the high and low reported sale prices per
share of Common Stock thereon on the trading day immediately preceding the
effective date or the exercise date, as applicable (provided that if no such
price is reported on such day, the Fair Market Value per share of Common Stock
shall be determined pursuant to clause (ii)).
(ii) If the Common Stock is not listed on a national
securities exchange, the Nasdaq National Market or another nationally recognized
trading system as of the effective date or the exercise date, as applicable, the
Fair Market Value per share of Common Stock shall be deemed to be the amount
most recently determined by the Board to represent the fair market value per
share of the Common Stock (including without limitation a determination for
purposes of granting Common Stock options or issuing Common Stock under any
plan, agreement or arrangement with employees of the Company); and, upon request
of the Holder, the Board (or a representative thereof) shall, as promptly as
reasonably practicable but in any event not later than 3 Business Days after
such request, notify the Holder of the Fair Market Value per share of Common
Stock and furnish the Holder with reasonable documentation of the Board's
determination of such Fair Market Value. Notwithstanding the foregoing, if the
Board has not made such a determination within the three-month period prior to
the exercise date, then (A) the Board shall make, and shall provide or cause to
be provided to the Holder notice of, a determination of the Fair Market Value
per share of the Common Stock within 15 days of a request by the Holder that it
do so, and (B) payment in cash with respect to any fractional share as required
by Section 7 hereof shall be delayed until such determination is made and notice
thereof is provided to the Holder (it being understood that this shall not
prevent the Holder, at its option, from exercising the Warrant prior to such
determination).
SECTION 8. SPECIAL ARRANGEMENTS OF THE COMPANY. The Company covenants and
agrees that during the Term of this Warrant, unless otherwise approved by the
Holder:
8.1 Certain Actions. The Company shall not amend its charter to
eliminate as an authorized class of capital stock that class denominated as
"Common Stock" on the date hereof. The Company shall not by any action avoid or
seek to avoid the observance or performance of any terms of this Warrant or
impair or diminish its value, but shall at all times in good faith assist in the
carrying out of all such terms of Warrant. Without limiting the generality of
the foregoing, the Company shall obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
necessary to enable the Company to perform its obligations under this Warrant.
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8.2 Shall Bind Successors. This Warrant and the rights evidenced
hereby shall be binding upon the Company and its successors and assigns and
shall inure to the benefit of the Holder and its permitted assigns to the extent
permitted by Section 6.2.
8.3 No Exercise Interference; Par Value. Other than in accordance
with Section 6.2, the Company shall not close its books against the transfer of
this Warrant or of any Warrant Shares issued or issuable upon the exercise of
this Warrant in any manner which interferes with the timely exercise of this
Warrant. The Company shall from time to time take all such action as may be
necessary to assure that the par value per share of the unissued Warrant Shares
acquirable upon exercise of this Warrant is at all times equal to or less than
the Warrant Price then in effect.
8.4 Notices of Certain Actions. The Company shall give written
notice to the Holder in the event (A) the Company closes its books or takes a
record (1) with respect to any dividend or distribution upon the Common Stock,
or for the purpose of entitling or enabling any stockholder to receive any other
right, or (2) with respect to any pro rata subscription offer to holders of
Common Stock, or (B) of any recapitalization, reorganization, reclassification,
consolidation, merger, dissolution, liquidation or sale of all or substantially
all of the Company's assets or other transaction which is effected in such a way
that holders of Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities, cash or assets with respect to or in
exchange for Common Stock. Such notice shall be sent at least ten days prior to
the record date or effective date for the event specified in such notice.
SECTION 9. NOTICES. Any notice or other document required or permitted to
be given or delivered to the Holder shall be delivered at, or sent by certified
or registered mail to, the Holder at such address as shall have been furnished
to the Company in writing by the Holder. Any notice or other document required
or permitted to be given or delivered to the Company shall be delivered at, or
sent by certified or registered mail to, the Company at its address for notices
set forth on the signature page hereto or to such other address as shall have
been furnished in writing to the Holder by the Company. Any notice so addressed
and mailed by registered or certified mail shall be deemed to be given when so
mailed. Any notice so addressed and otherwise delivered shall be deemed to be
given when actually received by the addressee.
SECTION 10. NO RIGHTS AS STOCKHOLDER; LIMITATION OF LIABILITY. This
Warrant shall not entitle the Holder to any of the rights of a stockholder of
the Company (including, without limitation, any preemption rights, voting rights
or rights to dividends) except upon exercise in accordance with the terms
hereof. Notwithstanding the foregoing, in the event (i) the Company effects a
split of the Common Stock by means of a stock dividend and the Warrant Price of
and the number of Warrant Shares are adjusted as of the date of the distribution
of the dividend (rather than as of the record date for such dividend), and (ii)
the Holder exercises this Warrant between the record date and the distribution
date for such stock dividend, the Holder shall be entitled to receive, on the
distribution date, the stock dividend with respect to the shares of Common Stock
acquired upon such exercise, notwithstanding the fact that such shares were not
outstanding as of the close of business on the record date for such stock
dividend. No provision hereof, in the absence of affirmative action by the
Holder to purchase shares of Common Stock, and no mere enumeration herein of the
rights or privileges of the Holder, shall give rise to any
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liability of the Holder for the Warrant Price hereunder or as a stockholder of
the Company, whether such liability is asserted by the Company or by creditors
of the Company.
SECTION 11. GOVERNING LAW. THE VALIDITY, INTERPRETATION, AND ENFORCEMENT
OF THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES
THEREOF.
SECTION 12. WARRANT REGISTER. The Company shall maintain at its principal
executive offices books for the registration and the registration of transfer of
Warrants. The Holder may change its address as shown on the warrant register by
written notice to the Company requesting such change.
SECTION 13. AMENDMENTS. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the Holder and the Company. The headings in this Warrant are for
purposes of reference only and shall not affect the meaning or construction of
any of the provisions hereof.
11
IN WITNESS WHEREOF, the parties hereto have caused this Warrant to be signed by
their duly authorized officers this 21st day of September, 2005.
DDi CORP.
/s/ Xxxxxxx X. Xxxxxxxx
_______________________________________
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President and
General Counsel
CONTRARIAN TURNAROUND EQUITIES, LLC
By: Contrarian Capital Management,
LLC, its manager
/s/ Xxxxx Xxxxxxx
_______________________________________
Name: Xxxxx Xxxxxxx
Title: Portfolio Manager
Address:
000 X. Xxxxxx Xxx., Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Facsimile:
12
EXHIBIT A
FORM OF NOTICE OF EXERCISE
[TO BE SIGNED ONLY UPON EXERCISE OF THE WARRANT]
TO BE EXECUTED BY THE REGISTERED HOLDER
TO EXERCISE THE ATTACHED WARRANT
The undersigned hereby exercises the right to purchase shares of Common Stock
which the undersigned is entitled to purchase by the terms of the attached
Warrant according to the conditions thereof, and herewith makes payment of
$_______________ therefor in cash.
All shares to be issued pursuant hereto shall be issued in the name of, and the
initial address of such person to be entered on the books of DDi CORP. shall be:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
The shares are to be issued in certificates of the following denominations:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
[Type Name of Holder]
By: ________________
Title: ________________
Date: ________________
13
EXHIBIT B
FORM OF ASSIGNMENT
(ENTIRE)
[To be signed only upon transfer of entire Warrant]
TO BE EXECUTED BY THE REGISTERED HOLDER
TO TRANSFER THE ATTACHED WARRANT
FOR VALUE RECEIVED, _______________________________ hereby sells, assigns and
transfers unto _______________________________ all rights of the undersigned
under and pursuant to the attached Warrant, and the undersigned does hereby
irrevocably constitute and appoint _______________________________ Attorney to
transfer said Warrant on the books of DDi CORP., with full power of
substitution.
[Type Name of Holder]
By: ________________
Title: ________________
Date: ________________
NOTICE:
The signature to the foregoing Assignment must correspond to the name as written
upon the face of the attached Warrant in every particular, without alteration or
enlargement or any change whatsoever.
14
EXHIBIT C
FORM OF ASSIGNMENT
(PARTIAL)
[To be signed only upon partial transfer of Warrant]
TO BE EXECUTED BY THE REGISTERED HOLDER
TO TRANSFER THE ATTACHED WARRANT
FOR VALUE RECEIVED, _______________________________ hereby sells, assigns and
transfers unto _______________________________ (i) the rights of the undersigned
to purchase ______________ shares of Common Stock under and pursuant to the
attached Warrant, and (ii) on a non-exclusive basis, all other rights of the
undersigned under and pursuant to the attached Warrant, it being understood that
the undersigned shall retain, severally (and not jointly), with the
transferee(s) named herein, all rights assigned on such non-exclusive basis. The
undersigned does hereby irrevocably constitute and appoint
__________________________ Attorney to transfer said Warrant on the books of DDi
CORP., with full power of substitution.
[Type Name of Holder]
By: ________________
Title: ________________
Date: ________________
NOTICE:
The signature to the foregoing Assignment must correspond to the name as written
upon the face of the attached Warrant in every particular, without alteration or
enlargement or any change whatsoever.
15
SCHEDULE TO EXHIBIT 10.1
DDi Corp. entered into Common Stock Purchase Warrant on September 21, 2005 with
the following Holders substantially identical to this Exhibit 10.1, except as
described below:
--------------------------------------------------------------------------------
HOLDER NUMBER OF SHARES OTHER
--------------------------------------------------------------------------------
Caiman Partners, L.P. 3,222,808 -
--------------------------------------------------------------------------------
Greywolf Capital Partners II LP 1,611,404 -
--------------------------------------------------------------------------------
QVT Fund LP 4,297,131 (1)
--------------------------------------------------------------------------------
Sankaty Credit Opportunities, L.P. 1,335,209 -
--------------------------------------------------------------------------------
Sankaty High Yield Asset Partners, L.P. 324,214 -
--------------------------------------------------------------------------------
Sankaty High Yield Partners II, L.P. 431,372 -
--------------------------------------------------------------------------------
Sankaty High Yield Partners III, L.P. 431,372 -
--------------------------------------------------------------------------------
Prospect Harbor Credit Partners, LP 163,396 -
--------------------------------------------------------------------------------
-----------
(1) This warrant contains the following addition provision:
"2.3 Limitation on Exercise. Notwithstanding any provision of this
Warrant to the contrary, the number of shares of Common Stock that may be
acquired by Holder upon any exercise of this Warrant shall be limited to
the extent necessary to ensure that, following such exercise, the total
number of shares of Common Stock then beneficially owned by Holder and its
Affiliates and any other Persons whose beneficial ownership of Common
Stock would be aggregated with Holder's for purposes of Section 13(d) and
Section 16 of the Exchange Act does not exceed 9.999% of the total number
of issued and outstanding shares of Common Stock (including for such
purpose the shares of Common Stock issuable upon exercise of this
Warrant). For such purposes, beneficial ownership shall be determined in
accordance with Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder. The Company's obligation to issue
shares of Common Stock in excess of the limitation referred to in this
Section 2.3 shall be suspended (and shall not terminate or expire
notwithstanding any contrary provisions hereof) until such time, if any,
as such shares of Common Stock may be issued in compliance with such
limitation. By written notice to the Company at any time on or after the
date hereof, Holder may waive the provisions of this Section 2.3 or
increase or decrease such limitation percentage to any other percentage
specified in such notice, not to exceed 9.999%. Any such waiver or
increase will not be effective until the sixty-fifth day after such notice
is delivered to the Company."
16
