<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-QSB
(Mark One)
/X/ Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934.
For the quarterly period ended March 31, 1998.
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the transition period from ______________ to ______________.
Commission File No. 0-1921
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POWER DESIGNS INC.
- ------------------------------------------------------------------------
(Name of Small Business Issuer as specified in its charter)
Delaware 11-1708714
------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
14 Commerce Drive, Danbury, Connecticut 06810
- --------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(203) 748-7001
- ------------------------------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
- ------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes No X
----- -----
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
1
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PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Sections 12, 13 and 15(d) of the Securities Exchange Act of 1934
subsequent to the distribution of securities under a plan confirmed by a
court.
Yes No X
----- -----
APPLICABLE ONLY TO CORPORATE REGISTRANTS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
2,391,493 as of November 17, 1998
Transitional Small Business Issuer Format (check one):
Yes No X
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2
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POWER DESIGNS, INC.
FORM 10-QSB FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheet as of
March 31, 1998 and 1997 .................................. 5
Condensed Consolidated Statement of Operations for
the three and nine months ended March 31, 1998 and 1997 .. 6
Condensed Consolidated Statement of Changes in
Stockholders' Deficit for the three and nine months
ended March 31, 1998 and 1997 ............................ 7
Condensed Consolidated Statement of Cash Flows for the
three and nine months ended March 31, 1998 and 1997....... 8
Notes to Condensed Consolidated Financial Statements ..... 9
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS ..................... 13
PART II - OTHER INFORMATION
Item 3. DEFAULTS ON SENIOR SECURITIES ............................ 16
Item 6. EXHIBITS AND REPORTS ON FORM 8-K ......................... 17
Signatures ........................................................ 18
</TABLE>
3
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
4
<PAGE>
POWER DESIGNS, INC.
Condensed Consolidated Balance Sheet
(Unaudited)
March 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash $18,616 ($121,295)
Accounts receivable 298,085 989,401
Inventories 860,367 1,949,898
Prepaid expenses 16,778 15,740
----------- ----------
Total current assets 1,193,846 2,833,744
----------- ----------
Property and equipment, less accumulated depreciation 721,089 644,276
----------- ----------
Other assets:
Investment in partnership 22,041 22,041
Security deposits - 86,366
Goodwill - 2,832,496
Financing fees and organizational costs - 320,081
----------- ----------
$22,041 3,260,984
----------- ----------
$1,936,976 $6,739,004
----------- ----------
----------- ----------
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued expenses $99,351 $2,722,018
Note payable - DIP 245,000 -
Seller financing - 2,550,000
Payables related to 1994 reorganization,
including accrued interest - 134,124
----------- ----------
Total current liabilities 344,351 5,406,142
----------- ----------
Long-term debt:
Notes payable - affiliates - 5,294,351
Liabilities subject to compromise 14,765,560 -
----------- ----------
Total long term debt 14,765,560 5,294,351
Total liabilities 15,109,911 10,700,493
----------- ----------
Stockholders' deficit
Preferred stock, $.01 par value, 1,000,000 shares authorized; 3,167 3,167
316,743 shares issued and outstanding at March 31, 1998 and 1997
Common stock, $.0001 par value, 10,000,000 shares authorized 240 240
2,391,493 shares issued and outstanding at March 31, 1998
and 1997
Additional paid-in capital 1,382,807 1,079,229
Accumulated deficit (14,559,149) (5,044,125)
----------- ----------
Total stockholders' deficit (13,172,935) (3,961,489)
----------- ----------
$1,936,976 $6,739,004
----------- ----------
----------- ----------
</TABLE>
5
<PAGE>
POWER DESIGNS, INC.
Condensed Consolidated Statement of Operations
(Unaudited)
For The Three and Nine Months Ended March 31, 1998 and 1997
<TABLE>
<CAPTION>
3 months ended 3 months ended 9 months ended 9 months ended
March 31, 1998 March 31, 1997 March 31, 1998 March 31, 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net Sales $523,907 $1,090,086 $1,760,746 $2,419,820
Cost of Sales 434,830 1,080,010 3,035,123 2,157,208
--------- ----------- ----------- -----------
Gross profit 89,077 10,076 (1,274,377) 262,612
Selling, general and admin. expense 422,729 1,335,805 5,047,791 2,775,117
--------- ----------- ----------- -----------
Net income (loss) before other income (expense) (333,652) (1,325,729) (6,322,168) (2,512,505)
--------- ----------- ----------- -----------
Other income (expense):
Non-Operating income 8,260 1,820 11,931 3,320
Interest expense (115,889) (259,042) (1,067,818) (509,476)
--------- ----------- ----------- -----------
(107,629) (257,222) (1,055,887) (506,156)
--------- ----------- ----------- -----------
Net income (loss) before reorganization items (441,281) (1,582,951) (7,378,055) (3,018,661)
--------- ----------- ----------- -----------
Reorganization items:
Professional fees 25,000 - 25,000 -
U.S. Trustee Fees 4,000 - 4,000 -
--------- ----------- ----------- -----------
29,000 - 29,000 -
Net income (loss) ($470,281) ($1,582,951) ($7,407,055) ($3,018,661)
--------- ----------- ----------- -----------
--------- ----------- ----------- -----------
Net loss per share ($0.20) ($0.66) ($3.10) ($1.26)
--------- ----------- ----------- -----------
--------- ----------- ----------- -----------
</TABLE>
6
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POWER DESIGNS, INC.
Condensed Consolidated Statement of
Changes in Stockholders' Deficit
(Unaudited)
For The Three and Nine Months Ended March 31, 1998 and 1997
<TABLE>
<CAPTION>
Shares Shares
Preferred Common Additional
Stock Stock Preferred Common Paid In
Outstanding Outstanding Stock Stock Capital Deficit Total
----------- ----------- --------- ------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1996 0 2,391,493 $0 $240 $820,732 ($2,025,464) ($1,204,492)
Dividends accrued - - - - (4,826) - (4,826)
Stock issuance 316,743 - 3,167 - 268,687 - 271,854
Net loss - - - - - (1,435,710) (1,435,710)
Balance, December 31, 1996 316,743 2,391,493 3,167 240 1,084,593 (3,461,174) (2,373,174)
Divedends accrued - - - - (5,364) - (5,364)
Net loss - - - - - (1,582,951) (1,582,951)
------- --------- ------ ---- ---------- ------------ ------------
Balance, March 31, 1997 316,743 2,391,493 $3,167 $240 $1,079,229 ($5,044,125) ($3,961,489)
------- --------- ------ ---- ---------- ------------ ------------
------- --------- ------ ---- ---------- ------------ ------------
Balance, June 30, 1997 316,743 2,391,493 $3,167 $240 $1,382,807 ($7,152,094) ($5,765,880)
Net loss - - - - - (6,936,774) (6,936,774)
Balance, December 31, 1997 316,743 2,391,493 3,167 240 1,382,807 (14,088,868) (12,702,654)
Net loss - - - - - (470,281) (470,281)
------- --------- ------ ---- ---------- ------------ ------------
Balance, March 31, 1998 316,743 2,391,493 $3,167 $240 $1,382,807 ($14,559,149) ($13,172,935)
------- --------- ------ ---- ---------- ------------ ------------
------- --------- ------ ---- ---------- ------------ ------------
</TABLE>
7
<PAGE>
POWER DESIGNS, INC.
Condensed Consolidated Statement of Cash Flows
(Unaudited)
For The Three and Nine Months Ended March 31, 1998 and 1997
<TABLE>
<CAPTION>
3 months ended 3 months ended 9 months ended 9 months ended
March 31, 1998 March 31, 1997 March 31, 1998 March 31, 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss ($470,282) ($1,582,951) ($7,407,055) ($3,018,661)
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation and amortization 43,496 148,956 3,070,072 223,209
(Increase) decrease in:
Accounts receivable (27,738) 110,914 431,056 (374,005)
Inventories 20,312 (680,340) 1,031,881 (824,183)
Prepaid Expenses (11,495) (10,169) 152,148 (15,740)
Other assets 1,754 (186,106) 91,953 (281,270)
Increase (decrease) in:
Accounts payable and accrued expenses 357,699 1,267,331 983,715 2,060,074
Payables related to reorganization - (9,485) 86,460 (127,531)
--------- ----------- ----------- -----------
Cash flows used in operating activities (86,254) (941,850) (1,559,770) (2,358,107)
--------- ----------- ----------- -----------
Cash flows used in investing activities:
Purchase of property and equipment - (144,066) (203,599) (180,853)
--------- ----------- ----------- -----------
Cash flows from (used in) financing activities:
Advances from (repayments to) affiliates (140,117) 1,181,365 1,448,983 3,603,325
Proceeds from note payable 245,000 - 245,000 -
Acquisition of Penril net assets - (200,000) (10,000) (1,936,558)
Principal payments on capital leases - - 89,103 -
Cash received from long term financing - - - 495,178
Cash received from stock issuance net of
declared dividends - (5,366) - 261,660
--------- ----------- ----------- -----------
Cash flows provided by financing activities 104,883 975,999 1,773,086 2,423,605
--------- ----------- ----------- -----------
Net increase (decrease) in cash 18,629 (109,917) 9,717 (115,355)
Cash (overdraft), beginning of period (13) (11,378) 8,899 (5,940)
--------- ----------- ----------- -----------
Cash (overdraft), end of period $18,616 ($121,295) $18,616 ($121,295)
--------- ----------- ----------- -----------
--------- ----------- ----------- -----------
</TABLE>
8
<PAGE>
POWER DESIGNS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1998 and 1997
- ----------------------------------------------------------------------------
NOTE 1. BASIS OF PRESENTATION
The condensed consolidated financial statements included herein have been
prepared by Power Designs, Inc. (the "Company"), without audit, pursuant to
the rules and regulations of the Securities and Exchange Commission
applicable to a going concern. These rules assume that assets will be
realized and liabilities will be discharged in the normal course of business.
The Company and its wholly-owned subsidiary filed petitions for relief under
Chapter 11 of the United States Bankruptcy Code ("Chapter 11") on January 22,
1998 (the "Filing"). The Debtors are presently operating their business as
debtors-in-possession subject to the jurisdiction of the United States
Bankruptcy Court for the Bridgeport District of Connecticut (the "Bankruptcy
Court").
Certain information and footnote disclosure normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although management of the Company believes that the disclosures
are adequate to make the information presented not misleading. These
condensed consolidated financial statements should be read in conjunction
with the notes thereto. In the opinion of the management of the Company, the
condensed consolidated financial statements include all adjustments,
consisting of only normal recurring adjustments, necessary to fairly present
the results for the interim periods to which these financial statements
relate.
The results of operations for the nine months ended March 31, 1998 are not
necessarily indicative of the results to be expected for the full year.
The consolidated statements of operations for the periods ended March 31,
1998 and March 31, 1997 include the operations of PDIXF Acquisition
Corporation for the periods July 1, 1997 through March 31, 1998 and October
11, 1996 through March 31, 1997 respectively.
Certain reclassifications have been made to the prior period's financial
statements to conform with classifications used in the current period.
NOTE 2. - PETITION FOR RELIEF UNDER CHAPTER 11
In the Chapter 11 case, substantially all liabilities as of the date of the
Filing are subject to resolution under a plan of reorganization to be voted
upon by the Debtors' creditors and stockholders and confirmed by the
Bankruptcy Court. Schedules have been filed by the Debtors with the
Bankruptcy Court setting forth the assets and liabilities of the Debtors as
of the Filing as shown by the Debtors' accounting records. Differences
between amounts shown by the Debtors and claims filed by creditors will be
investigated and reconciled.
9
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The amount and settlement terms for such disputed liabilities are subject to
allowance by the Bankruptcy Court. Ultimately the adjustment of the total
liabilities of the Debtors remains subject to a Bankruptcy Court approved
plan of reorganization, and, accordingly, the amount of such liabilities is
not presently determinable.
Under the Bankruptcy Code, the Debtors may elect to assume or reject real
estate leases, employment contracts, personal property leases, service
contracts and other executory pre-petition contracts, subject to Bankruptcy
Court approval. The Debtors continue to review leases and contracts, as well
as other operational changes, and cannot presently determine or reasonably
estimate the ultimate outcome of, or liability resulting from, this review.
Claims secured against the Debtors' assets ("secured claims") also are
stayed, although the holders of such claims have the right to move the Court
for relief from the stay. Secured claims are secured primarily by liens on
the Debtor's machinery, equipment and accounts receivable.
NOTE 3. LIABILITIES SUBJECT TO COMPROMISE
Liabilities subject to compromise are as follows:
<TABLE>
<S> <C>
Notes payable - affiliates $10,219,195 (a)
Accounts payable and accrued expenses 3,367,779 (b)
Seller financing 990,000 (a)
Payables related to 1994 reorganization including
accrued interest 188,586
-----------
Total $14,765,560
</TABLE>
(a) Notes payable and seller financing include secured debt, which should be
considered, due to various factors, subject to compromise. The Plan of
Reorganization filed May 12, 1998, (copy attached) provides for allowed
secured claims of $2,400,000 against outstanding secured notes of
$9,092,969. As a result of this compromise, the Debtor has discontinued
accruing interest on these, as well as other obligations. Contractual
interest on those secured obligations amounts to $320,938 in excess of
reported expenses. Refer to Note 5, for a discussion of the credit
arrangements entered into subsequent to the Chapter 11 filings.
(b) The Debtor received approval from the bankruptcy Court to pay or
otherwise honor certain of its pre-petition obligations, including
employee wages. To date, approximately $30,250 of these arrearages have
been liquidated.
10
<PAGE>
NOTE 4. OPERATING CASH RECEIPTS AND PAYMENTS
The following schedule depicts the operating cash receipts and payments for
the post-petition period of January 22, 1998 through March 31, 1998.
<TABLE>
<S> <C>
Cash flows from operating activities:
Cash received from customers $ 162,441
Cash paid to suppliers and employees (389,384)
Interest paid (2,744)
---------
Net cash provided by operating activities before
reorganization items (229,687)
---------
Operating cash flows from reorganization items:
Professional fees paid for services in connection with
the Chapter 11 proceeding (25,000)
---------
Net cash (used in) reorganization items (25,000)
---------
Net cash provided by (used in) operating activities (254,687)
---------
Cash flows from investing activities:
Distributions from limited partnership 1,000
---------
Net cash provided by investing activities 1,000
---------
Cash flows from financing activities:
Net borrowings under post-petition short-term credit
facility 448,670
Principal payments on pre-petition debt (174,390)
Net cash provided by financing activities 274,280
Net increase in cash and cash equivalents 20,593
Cash and cash equivalents
Beginning (1,977)
---------
Ending $ 18,616
---------
</TABLE>
NOTE 5. SIGNIFICANT EVENTS
During the third quarter of fiscal 1998, the company's net loss before other
income and expense was ($333,652). A significant portion of the loss related
to carrying charges for the three-week period prior to the bankruptcy filing.
This improvement over the third quarter fiscal 1997 net loss of ($1,325,729)
is primarily due to the suspension of the uninterruptible power supply/power
line conditioner ("UPS/PLC") product line, improved
11
<PAGE>
manufacturing yields, and enhanced product margins. An impairment of
long-lived assets recognized in the second quarter of fiscal 1998 resulted in
a complete elimination of amortization expense for this third quarter.
Selling, general and administrative expenses were $422,729 for the three
months ended March 31, 1998. The net profit (loss) for the three months ended
March 31, 1998 is ($470,281).
In January of 1998 pursuant to a court order, the issuer, as
debtor-in-possession, entered into a financing agreement with Venture
Partners Ltd., as agent, to borrow working capital, up to a maximum of
$400,000. The terms of this agreement call for interest at 20% and a term of
120 days. This debt is collateralized firstly by the machinery and equipment
of the issuer, and secondarily by its accounts receivable. A total of
$245,000 is presently outstanding on this loan. As of this date the term of
the note has expired placing the borrower in default. At this time, no demand
for repayment has been received by the Company.
Similarly, in February of 1998 the issuer, pursuant to a court order, entered
into a receivable factoring agreement with Porter Capital Corporation
("Porter"), whereby trade receivables are sold to Porter at 94% of face
value. A 4% and 2% rebate is returned to the issuer if the receivable is
collected within 60 and 90 days respectively. Fees to Porter include a
minimum of 2% of the face amount of the receivables factored, and an annual
interest rate of prime on the outstanding amount advanced. Collateral for
this obligation comprises the factored receivables, with a secondary lien on
the machinery and equipment of the issuer. In September of 1998 the before
mentioned agreement was modified to a minimum fee of 2.5% for receivables
collected within 60 days and an additional 1% for each additional 15 days
outstanding to a maximum of 90 days.
During the months of April and May of 1998 the Company liquidated $30,250 of
its pre-petition labor arrearages. As of this date the only remaining
pre-petition labor arrearage is that of certain officers and accrued vacation
pay for all former employees that did not return to work. During this time
period the Company was in discussions with the U.S. Department of Labor
regarding this matter. The Plan of Reorganization addresses the liquidation
of the priority portion of these pre-petition liabilities over a period of
eight months.
On May 12, 1998 a Plan of Reorganization was filed by the debtors with the
Office of the U.S. Trustee. Negotiations pertaining to the specifics of the
Plan of Reorganization among the creditors committee(s) and the debtor are
progressing.
12
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Conditions and
Results of Operations.
Current Developments
During the last two weeks of December 1997, the Company's employees were
furloughed for the holidays. During this time the company was unable to
obtain financing to continue operations at the expiration of the holiday
furlough. The furlough was extended while the company arranged for the filing
of its Chapter 11 proceedings. On January 22, 1998, the Company and its
wholly-owned subsidiary, PDIXF Acquisition Corporation, filed voluntary
petitions in bankruptcy court under Chapter 11 of the United States
Bankruptcy Act. On January 26, 1998 the company reopened for business as
Debtors in Possession under new management. Since January 26, 1998 the
company has been in the sole business of manufacturing its three core product
lines: military power supply products, variable autotransformers, and
laboratory power supplies.
During the third quarter of fiscal year 1998 the company experienced
manufacturing and shipping delays due to material procurement issues
primarily related to the lack of liquidity. Since the initial months
following the Filing, the company has successfully resolved issues of
material procurement with key suppliers and reinstated deteriorating
relationships with distributors and customers. Liquidity has been improved by
increased shipping levels and a concentrated effort on credit and collection
issues with all customers.
During the third quarter of fiscal year 1998 the company also initiated
an effort to relocate from its thirty thousand square foot facility, to a
facility one half the size. As of this date it has been determined that a
down sizing and subletting of the current facility would be a more practical
approach. A local real estate brokerage firm has been retained to sublet the
existing facility.
On May 12, 1998 the Company and its wholly-owned subsidiary, PDIXF
Acquisition Corporation, filed a Plan of Reorganization with the Office of
the U.S. Trustee.
The Plan is a proposal of PDI and PDIXF to their Creditors and holders
of Equity Interests. The Plan is the product of discussions with the Debtors'
senior secured creditor, Inverness, which has agreed to support the Plan. The
Plan undertakes to resolve all secured claims, administrative claims,
priority claims, unsecured claims and equity interests. The Debtors believe
that the distributions to be made, pursuant to the terms of this Plan, will
produce for Creditors not less than they would receive if the Debtors' cases
were converted to cases under Chapter 7 of the Code, the Debtors' assets
liquidated and appropriate distributions therein were made as required by the
Code.
A copy of the Plan of Reorganization for Power Designs, Inc. and PDIXF
Acquisition Corporation is attached. The Plan is currently the subject of
negotiation between the Debtors and various creditor committee constituencies.
13
<PAGE>
Liquidity and Capital Resources
Pursuant to a court order, the issuer, as debtor-in-possession, has
entered into a financing agreement with Venture Partners Ltd., as agent, to
borrow working capital, up to a maximum of $400,000. The terms of this
agreement call for interest at 20% and a term of 120 days. This debt is
collateralized firstly by the machinery and equipment of the issuer, and
secondarily by its accounts receivable. A total of $245,000 is presently
outstanding on this loan.
Similarly, the issuer, pursuant to a court order, has entered into a
receivable factoring agreement with Porter Capital Corporation ("Porter"),
whereby trade receivables are sold to Porter at 94% of face value. A 4% and
2% rebate is returned to the issuer if the receivable is collected within 60
and 90 days respectively. Fees to Porter include a minimum of 2% of the face
amount of the receivables factored, and an annual interest rate of prime on
the outstanding amount advanced. Collateral for this obligation comprises
the factored receivables, with a secondary lien on the machinery and
equipment of the issuer. In September of 1998 the initial six-month term had
elapsed and the right to extend the agreement for a period of one year had
been exercised. With this renewal the before mentioned agreement has been
modified to a minimum fee of 2.5% for receivables collected within 60 days
and an additional 1% for each additional 15 days outstanding to a maximum of
90 days.
The issuer currently has a net stockholders' deficit of approximately
$13,170,000, meaning that amounts owed to its creditors, including without
limitation Inverness Corporation, exceed the issuer's assets.
The Company is in the process of implementing and executing a Year 2000
assessment with the objective of having all of their significant business
systems, including those that affect facilities and manufacturing activities,
functioning properly with respect to the Year 2000 issue before January 1,
2000. As part of this assessment, significant service providers, vendors,
suppliers, and customers that are believed to be critical to business
operations after January 1, 2000, have been identified and steps are being
undertaken in an attempt to reasonably ascertain their stage of Year 2000
readiness.
The Company has a Year 2000 compliant financial and manufacturing
business system at his Connecticut facility. Costs to update other production
equipment are not expected to be material to the Company.
The failure to correct a material Year 2000 problem could result in an
interruption in, or a failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the
Company's results of operations, liquidity and financial condition. The
Company believes that, with the completion of its Year 2000 assessment as
scheduled, the possibility of significant interruptions of normal operations
should be minimized.
14
<PAGE>
Results of Operations
Results for the first nine months of fiscal 1997 reflect the
Acquisition, and therefore represent a substantial change from the figures
for the same period in fiscal 1998. Accordingly a period-to-period comparison
of the historical results of operations and financial condition of the issuer
is not meaningful.
Third quarter of fiscal 1997 versus third quarter of fiscal 1998.
Net sales decreased to $523,907 for the quarter ended March 31, 1998 as
compared with $1,090,086 for the same period in 1997.
However, gross profit increased from $10,076 for the third quarter in
fiscal 1997 to $89,077 for the same quarter in fiscal 1998. The resulting
increase was primarily due to the shift to core product in the third quarter
of fiscal 1998. Cost of sales decreased from $1,080,010 for the third quarter
of fiscal 1997 to $434,830 for the same period in fiscal 1998. A substantial
portion of the increased performance is due to the shift to core product in
the latter part of January 1998, resulting in a significant improvement to
manufacturing yields and product margins. The bankruptcy filing in January
has had a favorable impact on interest expense, allowing the company to
service only that portion of the post filing debt attributable to post filing
operating activity. Quarterly interest expense decreased from $259,042 as of
March 31, 1997 to $115,889 as of March 31, 1998. The halting of the UPS/ PLC
product line and simultaneous impairment of Goodwill has eliminated the
related amortization, contributing to the reduction in administrative
expenses from $1,335,805 for the quarter ending March 31, 1997 as compared to
$422,729 for the quarter ending March 31, 1998.
It is the intention of the present management of the issuer to
concentrate its resources on the production of its existing three product
lines, to reduce operating and occupancy costs where possible, to improve
marketing strategies and further customer relationships, and to replace the
debtor-in-possession financing with less costly conventional debt instruments
upon confirmation of a plan of reorganization. However, there can be no
assurances that the issuer will be able to obtain such additional debt
financing, or be successful at streamlining and improving operating results.
First nine months of fiscal 1997 versus first nine months of fiscal 1998.
Net sales decreased from $2,419,820 for the nine months ended March 31,
1997 as compared to $1,760,746 for the nine months ended March 31, 1998.
Likewise, gross profit decreased from a profit of $262,612 for the nine
months ended March 31, 1997 to a profit (loss) of ($1,274,377) for the nine
months ended March 31, 1998 the result of the low manufacturing yields and a
substantial reduction in UPS/PLC inventory value. Cost of Sales increased
from $2,157,208 for the period ended
15
<PAGE>
March 31, 1997 to $3,035,123 for the same period in fiscal 1998. A
substantial portion of the increase, $1,218,512 is due to the inventory
adjustment noted. The issuer's growing reliance on debt financing of its
deficits accounts for the increase in interest expense to $1,067,818 as of
March 31,1998 from $509,475 as of March 31, 1997. As a result of these
conditions, the halting of the primary product line's production and full
impairment of Goodwill totaling $2,846,557, the net profit (loss) for the
nine months ending March 31, 1998 is ($7,407,055), as compared to
($3,018,661) for the same period in fiscal 1997.
Certain statements contained in this Item 2 regarding matters that are
not historical facts, including, among others, statements regarding the
future adequacy of the issuer's working capital, its ability to raise capital
through debt or equity offerings, its ability to maintain or improve its
present cash flow, are "forward-looking statements". Such forward-looking
statements involve risks and uncertainties which may cause the actual
results, performance or achievements of the issuer to be materially different
from any future results, performance or achievements, express or implied by
such forward-looking statements.
These forward-looking statements are identified by their use of forms of
such terms and phrases as "expects," "intends," "goals," "estimates,"
"projects," "plans," "anticipates," "should," "future," "believes," and
"scheduled". The variables which may cause differences include, but are not
limited to, the following: general economic and business conditions;
competition; success of operating initiatives; operating costs; advertising
and promotional efforts; the existence or absence of adverse publicity;
changes in business strategy or development plans; the ability to retain
management; availability, terms and deployment of capital; business abilities
and judgement of personnel; availability of qualified personnel; labor and
employee benefit costs; availability and costs of raw materials and supplies;
and changes in, or failure to comply with, government regulations. Although
the issuer believes that the assumptions underlying the forward-looking
statements contained herein are reasonable, any of the assumptions could be
inaccurate, and therefore, there can be no assurance that the forward-looking
statements included in this filing will prove to be accurate. In light of
the significant uncertainties inherent in the forward-looking statements
included herein, the inclusion of such information should not be regarded as
a representation by the issuer or any other person that the objectives and
expectations of the issuer will be achieved.
PART II. OTHER INFORMATION
Item 3. Defaults Upon Senior Securities
As of this date the principal amount of the Venture Partners Ltd., as
agent indebtedness described at Part I, Item 2 above was not paid in full,
thereby placing the issuer in default. As of this date no demand for
repayment has been made and all interest payments are current. There are no
renewal negotiations pending.
16
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit Financial Data Schedule
Exhibit Plan of Reorganization for Power Designs, Inc. and
PDIXF Acquisition Corporation
(b) The company filed a report on Form 8-K, dated February 9, 1998
reporting the resignation of Fred G. Basso as President, effective
January 15, 1998. The same 8-K filing also reports that on January
22, 1998, the issuer and its wholly owned subsidiary, PDIXF
Acquisition Corporation, filed voluntary petitions in bankruptcy
under Chapter 11 of the United States Bankruptcy Act.
17
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Date: December 11, 1998 POWER DESIGNS, INC.
Danbury, Connecticut (Registrant)
By: /s/ Melvin A. Becker
------------------------------
Melvin A. Becker
Secretary
By: /s/ Anthony F. Intino II
------------------------------
Anthony F. Intino II
Chief Financial Officer
18
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 18,616
<SECURITIES> 0
<RECEIVABLES> 298,085
<ALLOWANCES> 0
<INVENTORY> 860,367
<CURRENT-ASSETS> 1,193,846
<PP&E> 996,647
<DEPRECIATION> (275,558)
<TOTAL-ASSETS> 1,936,976
<CURRENT-LIABILITIES> 344,351
<BONDS> 14,765,560
0
3,167
<COMMON> 240
<OTHER-SE> (13,176,342)
<TOTAL-LIABILITY-AND-EQUITY> 1,936,976
<SALES> 523,907
<TOTAL-REVENUES> 523,907
<CGS> 434,830
<TOTAL-COSTS> 434,830
<OTHER-EXPENSES> 422,729
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 107,629
<INCOME-PRETAX> (441,281)
<INCOME-TAX> 0
<INCOME-CONTINUING> (441,281)
<DISCONTINUED> 0
<EXTRAORDINARY> 29,000
<CHANGES> 0
<NET-INCOME> (470,281)
<EPS-PRIMARY> (0.20)
<EPS-DILUTED> (0.20)
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 18,616
<SECURITIES> 0
<RECEIVABLES> 298,085
<ALLOWANCES> 0
<INVENTORY> 860,367
<CURRENT-ASSETS> 1,193,846
<PP&E> 996,647
<DEPRECIATION> (275,558)
<TOTAL-ASSETS> 1,936,976
<CURRENT-LIABILITIES> 344,351
<BONDS> 14,765,560
0
3,167
<COMMON> 240
<OTHER-SE> (13,176,342)
<TOTAL-LIABILITY-AND-EQUITY> 1,936,976
<SALES> 1,760,746
<TOTAL-REVENUES> 1,760,746
<CGS> 3,035,123
<TOTAL-COSTS> 3,035,123
<OTHER-EXPENSES> 5,047,791
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,055,887
<INCOME-PRETAX> (7,378,055)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,378,055)
<DISCONTINUED> 0
<EXTRAORDINARY> 29,000
<CHANGES> 0
<NET-INCOME> (7,407,055)
<EPS-PRIMARY> (3.10)
<EPS-DILUTED> (3.10)
</TABLE>
<PAGE>
Exhibit 99
Exhibit A
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF CONNECTICUT
- --------------------------------
In re: ) CHAPTER 11
)
POWER DESIGNS, INC. and ) CASE NOS. 98-50117
PDIXF ACQUISITION CORPORATION ) 98-50118
) Jointly Administered
)
Debtors-in-Possession ) MAY 12, 1998
- --------------------------------
PLAN OF REORGANIZATION FOR
POWER DESIGNS, INC. AND PDIXF ACQUISITION CORPORATION
1. INTRODUCTION
This Plan is the proposal of PDI and PDIXF to their Creditors and the
holders of Equity Interests. The Plan is the product of discussions with the
Debtors' senior secured creditor, Inverness, which has agreed to support the
Plan. The Plan undertakes to resolve all secured claims, administrative
claims, priority claims, unsecured claims and equity interests. The Debtors
believe that the distributions to be made, pursuant to the terms of this
Plan, will produce for Creditors not less than they would receive if the
Debtors' cases were converted to cases under Chapter 7 of the Code, the
Debtors' assets liquidated and appropriate distributions therein were made as
required by the Code.
<PAGE>
2. DEFINITIONS
The following terms, when used in this Plan shall, unless the context
otherwise requires, have the following meanings:
2.1 ADMINISTRATIVE CLAIM. Means a claim for payment of an administrative
expense of a kind specified in Section 503(b) of the Code and referred to in
Section 507(a)(1) of the Code, including, without limitation, the actual
and necessary costs and expenses incurred after the commencement of the Chapter
11 cases preserving the estate and operating the business of the Debtors,
including wages, salaries or commissions for services, compensation for legal
and other services and reimbursement of expenses awarded under Section 330(a)
or 331 of the Code, and all fees and charges assessed against the estates
under Chapter 123 of Title 28, United States Code.
2.2 ALLOWED. When used in connection with any type of "Claim" or "Equity
Interest", means: (a) a Claim or Equity Interest, proof of which was timely
filed pursuant to the Orders of the Bankruptcy Court establishing the
applicable "bar dates" for the filing of Claims against the Debtors, and, as
to which no timely objection to allowance has been interposed within the
applicable period of limitation fixed by the Plan, the Bankruptcy Code, the
Bankruptcy Rules or the Bankruptcy Court, or as to any such timely objection
a Final Order of allowance has been entered; (b) a Claim or Equity Interest
allowed by a Final Order; (c) a Claim or Equity Interest listed in either of
the Debtor's Schedules filed
2
<PAGE>
in connection with the Chapter 11 Cases and not identified as contingent,
unliquidated or disputed; (d) a Claim or Equity Interest which is fixed and
agreed to in amount in writing between the Debtors and any Claimant and
allowed by a Final Order or (e) any Claim which is deemed an Allowed Claim
pursuant to the provisions of this Plan.
2.3 ALLOWED EMPLOYEE PRIORITY CLAIMS. Means an Allowed Claim of a
current or former employee of either of the Debtors which is entitled to the
priority in payment under Section 507(a)(3) and (4) of the Code. Any Allowed
Claim of a current or former employee not entitled to priority in payment
under Section 507(a)(3) and (4) of the Code shall be considered an Allowed
Unsecured Claim.
2.4 ALLOWED SECURED CLAIM OF HAYES. Means the Allowed Secured Claim of
Hayes determined in accordance with Section 11.1 of the Plan.
2.5 ALLOWED SECURED CLAIM OF INVERNESS. Means the Allowed Secured Claim
of Inverness determined in accordance with Section 11.1 of this Plan.
2.6 ALLOWED SECURED CLAIM. Means an Allowed Claim arising on or before
the Petition Date (January 22, 1998) that is secured by a valid Lien on
property of either of the Debtors which is not void or voidable under any
state or federal law, including any provision of the Code or an Allowed Claim
for which the holder asserts a setoff under Section 553 of the Code, to the
extent of the value (which is either agreed to by either of the Debtor
pursuant to this Plan, or in the absence of an agreement, has been determined
3
<PAGE>
in accordance with Section 506(a) or 1111(b) of the Code) of the interest of
the holder of such Allowed Claim in either of the Debtors property, or an
Allowed Claim that either of the Debtors has agreed to treat as an Allowed
Secured Claim pursuant to this Plan. That portion of such Allowed Claim
exceeding the value of security held therefor shall be an Allowed Unsecured
Claim.
2.7 ALLOWED UNSECURED CLAIM. Means an Allowed Claim which is not an
Allowed Secured Claim, an Allowed Employee Priority Claim or a Priority Tax
Claim.
2.8 BANKRUPTCY COURT. Means the United States Bankruptcy Court for the
District of Connecticut, or such other Court as may hereafter have
jurisdiction over the Debtors' pending bankruptcy cases.
2.9 BRIDGE NOTEHOLDERS means the holders of the Subordinated Bridge
Notes, including Raymond Joslin ($200,000), David Hale Smith II Charitable
Remainder Trust ($50,000). Interim Advantage Fund ($50,000), Ian R. Kahn
($25,000), Dr. Justin Wernick ($40,000), Edward Benjamin MD Money Purchase
Pension Plan ($67,000), Dr. Edward Benjamin ($246,500), Alan N. Parnes
($50,000), Lee H. Silverstein ($25,000), Tri Ventures ($50,000), Alan Napack
($50,000), Michael Zuckerman and Hillary Davis ($50,000). Crescent Captial
Company LLC ($50,000), Steven Grapstein ($100,000), Ray Ingleby ($100,000),
Marshall Manley ($100,000), Curran Partners ($100,000), John D.
4
<PAGE>
Shepherd ($100,000), and Phyllis and Howard Silverman ($200,000) or their
respective assignees.
2.10 CASH. Means currency of the United States of America, or checks
payable in immediately available funds of such currency.
2.11 CLAIM. Has the meaning set forth in Section 101(5) of the Code.
2.12 CLASS. Means Claims or Equity Interests which are substantially
similar to the other Claims or Equity Interests in such Class as classified
pursuant to the Plan.
2.13 CODE. Means the United States Bankruptcy Code, 11 U.S.C. Sections
101 et seq., and all amendments thereto which are applicable to the case.
2.14 CONFIRMATION. Means the entry by the Bankruptcy Court of an order
confirming the Plan in accordance with Chapter 11 of the Code.
2.15 CONFIRMATION ORDER. Means the order entered by the Bankruptcy Court
confirming the Plan in accordance with Chapter 11 of the Code.
2.16 CONSOLIDATION MOTION means the motion for substantive consolidation
of PDI and PDIXF filed by the Debtors and the Official Committee of Unsecured
Creditors for PDI on or about April 20, 1998.
2.17 CONSUMMATION. Means the accomplishments of all things provided for
in this Plan to occur on the Effective Date.
5
<PAGE>
2.18 DEBTORS OR DEBTORS IN POSSESSION. Means PDI and its wholly-owned
subsidiary, PDIXF.
2.19 DIRECTOR LOANHOLDERS. Means the loans made by certain PDI directors
or related companies during October and December, 1997, including Equitas
($50,000), Robert Sparacino ($213,000), Bril Profit Sharing Plan ($25,000),
and Bril Money Purchase Plan ($25,000).
2.20 DISALLOWED CLAIM. Means any Claim or portion thereof:
(a) which is scheduled or proof of which is filed and an objection
thereto has been sustained by a Final Order; or
(b) which is scheduled as disputed, contingent or unliquidated and
as to which either (i) no proof of claim has been timely filed,
or (ii) proof of which has been timely filed and an objection
thereto has been sustained by a Final Order.
2.21 DISPUTED CLAIM. Means any Claim which is scheduled or proof of
which is filed and against which an objection to the allowance thereof has
been interposed, which objection has not been determined by a Final Order,
except for any Claim which is deemed an Allowed Claim by the provisions of
this Plan.
6
<PAGE>
2.22 EFFECTIVE DATE. Means the first business day occurring after the
90th day after the entry of the Confirmation Order or as such other date that
the Bankruptcy Court shall set forth in the Confirmation Order.
2.23 EQUITY INTEREST(S). Means the issued and outstanding common stock
of PDI and any warrants, options or other contract to purchase or acquire
such common stock as of the Petition Date.
2.24 FINAL ORDER. Means an order or judgment of the Bankruptcy Court
which has not been reversed or stayed as modified or amended, as to which no
appeal is pending, and as to which the time to appeal and to seek to appeal
has expired.
2.25 HAYES. Means Hayes Corporation f/k/a Access Beyond, Inc. as
successor in interest to Access Beyond, Inc., RDCAN Corp. (formerly
Technipower, Inc.) and Intist (formerly Constant Power, Inc.).
2.26 HAYES' PERCENTAGE. Means that percentage equal to (1) the sum of
the Allowed Secured Claim of Hayes less $300,000 divided by (2) the total
value of the Reorganized PDI common stock.
2.27 HAYES SECURED NOTE. Means that certain promissory note in the
original principal amount of $300,000. The Hayes Secured Note shall be
provided for equal monthly payments of principal and interest based on a
seven year amortization and interest calculated at the rate of 10% per annum.
The Hayes Secured Note shall mature on the
7
<PAGE>
fifth (5) anniversary of the Effective Date. The Hayes Secured Note shall be
secured by a second Lien on all the assets of Reorganized PDI provided such
lien shall be junior and subordinate to the liens given herein to secure the
Working Capital Note and Inverness Secured Note.
2.28 INVERNESS PERCENTAGE. Means that percentage equal to: (1) the sum
of amount of the Allowed Secured Claim of Inverness LESS $2,100,000 divided by
(2) the Total Value of the Reorganized PDI Common Stock.
2.29 INVERNESS SECURED NOTE. Means that certain Secured Promissory
Note in the original principal amount equal to $2,100,000. The Inverness
Secured Note shall be provided for monthly payments of interest only at the
rate of 10% per annum for the first two years following the Effective Date.
The Inverness Secured Note shall be secured by Lien upon all of the assets of
Reorganized PDI provided such Lien shall be junior and subordinate to the Lien
given herein to secure the Working Capital Note.
2.30 LIEN. Means any charge against or interest in property to secure
payment of a debt or performance of an obligation and includes, without
limitation, any judicial lien, security interest, mortgage, deed of trust and
statutory lien as defined in Section 101 of the Code.
2.31 NOTEHOLDERS. Means the holders of the Subordinated Notes including
Equitas L.P. ($700,000), Lois Horn ($140,000), Antoinette Rose ($60,000),
Thomas O'Grady
8
<PAGE>
($29,215.38), Davis H. Smith, II ($29,215.38), Dennis and Terri Nesta
($16,000), and Bruce MacDonald ($12,984.62) or their respective assignees.
2.32 PDI. Means Power Designs, Inc., a Delaware corporation and the debtor
in Case No. 98-50117.
2.33 PDIXF. Means PDIXF Acquisition Corporation, a New York corporation
and the debtor in Case No. 98-50118.
2.34 PETITION DATE. Means January 22, 1998, the date on which the Debtors
filed their petitions commencing their respective Chapter 11 cases.
2.35 PLAN. Means this Plan of Reorganization for Power Designs, Inc. and
PDIXF Acquisition Corporation, as may be amended from time to time.
2.36 PRIORITY TAX CLAIM. Means an Allowed Claim which is entitled to
priority pursuant to Section 507(a)(7) of the Code.
2.37 PRO RATA SHARE. Means the proportion that an Allowed Claim in a
particular Class bears to the aggregate amount of all Allowed Claims in such
Class, calculated in accordance with the provisions of this Plan.
2.38 REORGANIZED PDI. Means Power Designs, Inc., a Delaware corporation on
and after the Effective Date.
2.39 REORGANIZED PDI COMMON STOCK. Means 2,000,000 shares of the common
stock of Reorganized PDI to be issued pursuant to this Plan.
9
<PAGE>
2.40 SUBORDINATED BRIDGE NOTES. Means those certain Subordinated
Promissory Notes of PDI in the aggregate original principal amount of
$1,653,500.00 and bearing interest at the rate of 10% per annum.
2.41 SUBORDINATED NOTES. Means those certain Subordinated Promissory
Notes of PDI dated October 9, 1996 in the aggregate original principal amount
of $1,087,415.38.
2.42 TOTAL VALUE OF THE REORGANIZED PDI COMMON STOCK. Means $4,850,000
or such other amount that the Bankruptcy Court determines as the aggregate
value of the Reorganized PDI Common Stock.
2.43 WORKING CAPITAL NOTE. Means that certain Revolving Credit Agreement
in the original principal amount of up to $500,000. The Working Capital Note
shall bear interest at the best rate available to Reorganized PDI on the
Effective Date. The Working Capital Note shall be secured by a first Lien on
all of Reorganized PDI's assets.
3. ADMINISTRATIVE AND TAX PRIORITY CLAIMS
3.1 ADMINISTRATIVE CLAIMS. Administrative Claims, which have not been
paid prior to the Effective Date shall be paid in full in Cash on the
Effective Date (or, if later, the date on which any such Administrative Claim
is allowed by a Final Order of the Bankruptcy Court), or upon such terms as
otherwise agreed between the Debtors and the holder of such Administrative
Claim. Administrative Claims include claims of professionals employed by order
of the Bankruptcy Court, certain post-petition employee
10
<PAGE>
claims and any unpaid fees due under 28 U.S.C. Section 1930. Professionals
employed pursuant to Sections 327 and 1102 of the Bankruptcy Code, and any
other person who may be entitled to reimbursement of expenses or allowance of
fees pursuant to Sections 503(b)(2) through 503(b)(6) of the Code, shall file
final applications for allowance and payment of compensation and expenses not
later than twenty (20) days after the Effective Date. Each such professional
or person shall be paid, in Cash, the full amount awarded to such
professional or person by the Bankruptcy Court after notice and a hearing,
within 10 days after the date on which an Order allowing such claims, fees
and/or disbursements becomes a Final Order.
3.2 PRIORITY TAX CLAIMS. Allowed Priority Tax Claims shall be paid by
Reorganized PDI in its sole discretion in Cash and in full on the Effective
Date or in equal quarterly payments beginning on October 1, 1998 and
continuing thereafter for twenty (20) additional quarters (payments shall be
made on January 1, April 1, July 1 and October 1). The deferred payments on
Allowed Priority Tax Claims shall bear interest at the rate of seven (7%)
percent per annum. The Debtors are not aware of any significant Allowed
Priority Tax Claims. Claims asserted by various taxing authorities for
periods prior to PDI's first bankruptcy proceeding are not considered Allowed
Priority Tax Claims but rather will be treated as Allowed Unsecured Claims.
11
<PAGE>
4. DESIGNATION OF CLASSES OF CLAIMS AND EQUITY INTERESTS
All Claims against and Equity Interests in the Debtor, of whatever
nature, whether or not scheduled, liquidated or unliquidated, absolute or
contingent, including all Claims arising from transactions with either of the
Debtors and all equity interests arising from the ownership of the stock of
either of the Debtors, whether resulting in an Allowed Claim or not, shall be
bound by the provisions of this Plan. The Claims and Equity Interests are
classified as follows:
4.1 CLASS 1. The Allowed Secured Claims of Inverness.
CLASS 1A. Allowed Secured Claim of Inverness against PDI.
CLASS 1B. Allowed Secured Claim of Inverness against PDIXF.
4.2 CLASS 2. The Allowed Secured Claims of Hayes.
CLASS 2A. The Allowed Unsecured Claim of Hayes against PDI.
CLASS 2B. The Allowed Secured Claim of Hayes against PDIXF.
4.3 CLASS 3. Allowed Employee Priority Claims.
4.4 CLASS 4. Allowed Unsecured Claims.
CLASS 4A. Allowed Unsecured Claims against PDI.
CLASS 4B. Allowed Unsecured Claims against PDIXF.
4.5 CLASS 5. Allowed Equity Interests in PDI.
4.6 CLASS 6. Allowed Equity Interest in PDIXF.
12
<PAGE>
5. IDENTIFICATION OF IMPAIRED CLASSES OF CLAIMS AND EQUITY INTERESTS
5.1 IMPAIRED CLASSES OF CLAIMS. All Classes of Claims are impaired under
the Plan.
5.2 IMPAIRED CLASSES OF EQUITY INTERESTS. All Classes of Equity
Interests are impaired.
5.3 IMPAIRMENT CONTROVERSIES. If a controversy arises as to whether any
Claim or Equity Interest, or any Class of Claims or of Equity Interests, are
impaired under the Plan, the Bankruptcy Court shall, after notice and a
hearing, determine such controversies.
5.4 SPECIAL NOTE CONCERNING VOTING ON PLAN. If the Consolidation Motion
is granted prior to Confirmation voting on the Plan will be conducted by
combining the subclasses within each class. For example, Class 1A and
Class 1B will be considered a single Class: Class 1. On the other hand, if the
Consolidation Motion is not granted prior to Confirmation, each subclass will
be considered a separate class for voting purposes. For example, Class 3A and
Class 3B will be considered separate and distinct classes for voting purposes.
6. TREATMENT OF CLAIMS AND EQUITY INTERESTS UNDER THE PLAN
6.1 CLASS 1 (INCLUDING CLASS 1A AND CLASS 1B). On the Effective Date,
Inverness shall receive in satisfaction of the Allowed Secured Claim of
Inverness the following:
a) the Inverness Secure Note; and
13
<PAGE>
b) that number of shares of Reorganized PDI Common Stock equal to
2,000,000 x Inverness Percentage.
6.2 CLASS 2. On the Effective Date, Hayes shall receive in satisfaction
of the Allowed Secured Claim of Hayes the following: (a) the Hayes Secured
Note and (b) that number of shares of Reorganized PDI Common Stock equal to
2,000,000 x Hayes Percentage.
6.3 CLASS 3. Holders of Allowed Employee Priority Claims shall receive
the full amount of their Allowed Employee Priority Claims in eight (8) equal
monthly payments, together with interest at the rate of seven (7%) percent
per annum.
6.4 CLASS 4 (INCLUDING CLASS 4A AND CLASS 4B). Subject to Section 10.2
of the Plan, on the Effective Date, the holders of Allowed Claims in Class 4A
and Class 4B shall receive their Pro Rata Share of that number of Reorganized
PDI Common Stock equal to 2,000,000, less that number of shares distributed
to Inverness and Hayes in accordance with Sections 6.1 and 6.2 above.
6.5 CLASS 6. All Equity Interests in Power Design, Inc. shall be deemed
cancelled as of the Effective Date and holders of such Equity Interests shall
not receive any distribution on account of such Equity Interests.
6.6 CLASS 7. All Allowed Equity Interest in PDIXF Acquisition
Corporation shall be deemed cancelled as of the Effective Date and holders of
such Equity Interest shall not receive any distribution on account of such
Equity Interests.
14
<PAGE>
7. PROVISIONS RELATING TO CORPORATE STRUCTURE OF REORGANIZED PDI
7.1 MERGER. On the Effective Date, PDIXF shall be authorized to merge,
and shall merge, into PDI which shall be the corporation surviving the merger
("Merger"). The name of the surviving corporation shall be Power Designs
Inc., or such other name as may be selected by the Debtors on or before the
Confirmation Date.
7.2 PROHIBITION AGAINST THE ISSUANCE OF NON-VOTING EQUITY SECURITIES. On
the Effective Date, the Certificate of Incorporation of Reorganized PDI will
be amended to include a provision prohibiting the issuance of non-voting
equity securities.
7.3 NEW BOARD OF DIRECTORS. On the Effective Date, all directors of PDI
then remaining in office shall be deemed to have resigned. The new Board
thereupon will be reconstituted to consist of seven members and shall
consist upon the effectiveness of the Merger of the designees set forth
below. The fact that any designee has or has had a business relationship with
the PDI shall not, in and of itself, disqualify the selection of that person
to be a member of the initial board. Notwithstanding anything to the contrary
in the Certificate of Incorporation or By-laws or Delaware law, the initial
board of directors of Reorganized PDI shall serve for a period of two years
following the Effective Date. Thereafter, the board of directors of
Reorganized PDI shall be elected in accordance with the Reorganized PDI
Certificate of Incorporation and Delaware law.
15
<PAGE>
MANAGEMENT DESIGNEE.
(1) Initially, Melvin Becker Vice President of Operations until a
Chief Executive Officer is retained by Reorganized PDI.
INVERNESS DESIGNEES.
(2) Gary Laskowski and Jonathan Betts or such other persons
designated by Inverness.
NOTEHOLDERS' DESIGNEE.
(1) Shannon LeRoy.
BRIDGE NOTEHOLDERS' DESIGNEES.
(2) Raymond E. Joslin and one other person selected by a majority in
amount of the Bridge Noteholders.
DIRECTOR LOANHOLDERS' DESIGNEE.
(1) Robert Sparacino.
7.4 POST CONFIRMATION MANAGEMENT. Anthony Intino serving as Chief
Financial Officer & General Manager and Melvin Becker as Vice President of
Operation and Secretary shall continue to serve as the senior management of
Reorganized PDI until such time as the Board retains a permanent Chief
Executive or Operating Officer and a Chief Financial Officer.
16
<PAGE>
7.5 REORGANIZED PDI COMMON STOCK. The Reorganized PDI Common Stock will
be issued as of the Effective Date. As of the Effective Date, there shall be
2,000,000 authorized, issued and outstanding shares of Reorganized Common
Stock, $0.01 par value per share. Each share of Reorganized PDI Common Stock
shall be entitled to one vote with respect to all elections and matters.
7.6 DIVIDENDS: LIQUIDATION. All shares of Reorganized PDI Common Stock
will be entitled: (a) to share equally in dividends from funds legally
available therefor when, as, and if declared by the Board; and (b) to share
equally in the assets available for distribution to shareholders upon
liquidation or dissolution of Reorganized PDI, whether voluntary or
involuntary. Holders of the Reorganized PDI Common Stock shall have no
preemptive rights to acquire shares of Reorganized PDI Common Stock. Shares
of the Reorganized PDI Common Stock, when issued, will be deemed duly and
validly issued, fully-paid and nonassessable.
7.7 EXEMPTION FROM REGISTRATION. Pursuant to Section 1145 of the Code,
all Reorganized PDI Common Stock issued under the Plan will be exempt from
state and federal laws requiring registration of securities. Except with
respect to a person that is an "underwriter" within the meaning of Section
1145 of the Bankruptcy Code, the distribution of Reorganized PDI Common Stock
will be deemed to be a "public offering"
17
<PAGE>
which is not subject to the registration or prospectus delivery requirements
contained in Section 5 of the Securities Act of 1933, as amended ("Securities
Act").
7.8 RESTRICTIONS ON TRANSFER OF REORGANIZED PDI COMMON STOCK. The
Reorganized PDI Certificate of Incorporation will be amended to reflect
certain restrictions on the transfer of Reorganized PDI Common Stock. The
Amended Certificate of Incorporation will provide that no person or entity
may acquire any shares of capital stock of Reorganized PDI, other than
pursuant to this Plan, if, at the date of such acquisition, such person or
entity is, or would be after giving effect to any such proposed acquisition,
either directly, indirectly or by attribution, either (a) one of the 10
largest holders of Reorganized PDI capital stock, or (b) a holder of five
percent or more of Reorganized PDI issued and outstanding stock. The
restrictions imposed with regard to the right of certain stockholders to
acquire capital stock shall be effective until the first business day
following the second anniversary of the Effective Date. All certificates
representing Reorganized PDI Common Stock will bear the legend described in
Section 7.11 below.
7.9 REVIEW OF PROPOSED TRANSACTIONS. The restrictions on the
transferability are intended to prevent any acquisition which could result in
the disallowance or limitation of Reorganized PDI's federal income tax net
operating loss carryovers and other tax attributes, unless such acquisition
is approved by the Board upon review of the proposed
18
<PAGE>
transaction. Any such review will be at the sole cost and expense of the
proposed transferor regardless of whether the Board approves the proposed
transfer. Any purported transfer not approved by the Board will be void and
ineffective.
7.10 REQUIRED LEGEND. All certificates evidencing ownership of shares of
Reorganized PDI Common Stock, shall bear a conspicuous legend substantially
as follows:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and are
issued pursuant to an exemption provided by 11 U.S.C. Section 1145
under an order confirming the Plan of Reorganization for Power
Designs, Inc. and PDIXF Acquisition Corporation ("Plan") in cases
entitled IN RE POWER DESIGNS INC., DEBTOR, Case No. 98-50117, and IN
RE PDIXF ACQUISITION CORPORATION DEBTOR, Case No. 98-50118, jointly
administered, in the United States Bankruptcy Court for District of
Connecticut. These securities are subject to certain provisions of
the company's Certificate of Incorporation which provide, INTER
ALIA, restrictions (a) limiting the transferability of, and (b)
affecting the voting rights relating to, such securities.
Photocopies of such Plan and Certificate of Incorporation have been
deposited with the company at its principal office, and the company
will furnish a copy thereof to the record holder of these securities
without charge upon written request to the company at its principal
place of business. The holder of this certificate is also referred
to 11 U.S.C. Sections 1145(b) and (c) for guidance as to the sale of
these securities."
8. MEANS FOR FUNDING OF THE PLAN
8.1 FUNDING OF PAYMENTS REQUIRED UNDER THE PLAN. The payments required
under the Plan will be made from Cash accumulated by Debtors from the
Petition Date to the Effective Date and the proceeds available under the
Working Capital Note.
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9. TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
9.1 GENERAL TREATMENT. All executory contracts and unexpired leases of
PDI or PDIXF shall be assumed by Reorganized PDI upon entry of the
Confirmation Order unless specifically rejected by order entered on or prior
to the Confirmation Date or unless a motion to reject any such executory
contract or unexpired lease is pending before the Bankruptcy Court on the
Confirmation Date.
9.2 BAR TO REJECTION DAMAGES. If the rejection of an executory contract
or unexpired lease by either of the Debtors results in damages to the other
party or parties to such contract or lease, a Claim for such damages, if not
previously evidenced by a filed proof of Claim or barred by a Final Order,
shall be forever barred and shall not be enforceable against the Debtors or
Reorganized PDI, or their properties or agents, successors, or assigns,
unless a proof of Claim relating thereto is filed with the Bankruptcy Court
within thirty (30) days after the later of (i) the entry of a Final Order
authorizing such rejection and (ii) the Confirmation Date, or within such
shorter period as may be ordered by the Bankruptcy Court.
9.3 CURE OF DEFAULTS FOR EXECUTORY CONTRACTS AND UNEXPIRED LEASES. Each
executory contract and unexpired lease to be assumed pursuant to the Plan
shall be reinstated and rendered unimpaired in accordance with sections
1124(2) and 365(b)(1) of the Code. In connection therewith, Reorganized PDI
obligated on each such contract and
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lease to be assumed pursuant to the Plan shall cure or provide adequate
assurance that it will cure any monetary default (other than of the kind
specified in section 365(b)(2) of the Bankruptcy Code), by payment of the
default amount in Cash on the Effective Date or on such other terms as the
parties to such executory contract or unexpired lease may otherwise agree,
compensate, or provide adequate assurance that the Reorganized PDI will
promptly compensate, parties to such contract or lease for any actual
pecuniary loss to such parties resulting from such default and provide
adequate assurance of future performance under such contract or lease. In
the event of a dispute regarding: (i) the amount of any cure payments, (ii)
the ability of Reorganized PDI or any of its assignees to provide "adequate
assurance of future performance" (within the meaning of section 365 of the
Bankruptcy Code) under the contract or lease to be assumed, or (iii) any
other matter pertaining to assumption, the cure payments or performance
required by section 365(b)(1) of the Bankruptcy Code shall be made following
the entry of a Final Order resolving the dispute and approving the assumption.
10. PROVISIONS GOVERNING DISTRIBUTIONS
10.1 PAYMENTS. Except as otherwise provided in this Plan or ordered by
the Court, all payments required under the Plan to Creditors in all Classes
will be made on Effective Date of Plan.
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10.2 ENFORCEMENT OR WAIVER OF CONTRACTUAL SUBORDINATION RIGHTS. The
Subordinated Notes and the Subordinated Bridge Notes are contractually either
fully or partially subordinate to Claims held by Inverness. Pursuant to
Section 510(b) of the Code, contractual subordination agreements are
enforceable in a bankruptcy proceeding. Nonetheless, Inverness has agreed to
waive enforcement of its rights of subordination as to the holder of any
Claim that is contractually subordinated to Inverness PROVIDED such holder
votes to accept this Plan. As to any such holder not voting to accept this
Plan, their respective distribution will be made in accordance with the
subordination rights of Inverness.
10.3 FRACTIONAL SHARES. Fractional shares of Reorganized PDI Common Stock
shall not be issued or distributed. If the holder of an Allowed Claim would
receive a fraction of a share of Reorganized PDI Common Stock, the Stock
Transfer Agent shall attempt to round the number of shares issued to all such
holders up or down to the nearest whole number; PROVIDED that the Stock
Transfer Agent shall in no event deliver certificates representing more than
2,000,000 shares of Reorganized PDI Common Stock. Any shares of Reorganized
PDI Common Stock which remain unissued as a result of such rounding shall
become the property of Reorganized PDI and shall be cancelled.
10.4 UNCLAIMED DISTRIBUTIONS. For two years following the Effective Date,
any Unclaimed Distributions, including any interest or dividends as may have
been paid on
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account of any Unclaimed Distributions of Reorganized PDI Common Stock, but
not interest on Cash, shall be held in the Claims Reserve solely for the
benefit of the holders of the Allowed Claims that have failed to claim such
property. Upon presentation of proper and satisfactory proof of identity by a
holder of an Allowed Claim, its Unclaimed Distribution shall be delivered to
the holder. At the end of two years following the Effective Date, (a) the
holders of Allowed Claims theretofore entitled to any Unclaimed Distribution
shall cease to be entitled to such distribution; and (b) such Unclaimed
Distributions shall become the property of Reorganized PDI.
11. PROCEDURES FOR RESOLVING AND TREATING CONTESTED AND CONTINGENT CLAIMS
AND EQUITY INTERESTS
11.1 DETERMINATION OF ALLOWED SECURED CLAIMS. Pursuant to Rule 3012 of
the Bankruptcy Rules, the Bankruptcy Court shall determine, prior to or in
conjunction with Confirmation of the Plan, the value of the Debtors' assets
and the amounts of the Allowed Secured Claim of Inverness and the Allowed
Secured Claim of Hayes. The Court shall attribute the value of the collateral
in order to determine the Allowed amount of the Allowed Secured Claim of
Inverness and the Allowed Claim of Hayes as follows: (i) the value of PDI's
assets to the Allowed Secured Claim of Inverness; (ii) the first $1,500,000
of value of PDIXF'S assets to the Allowed Secured Claim of Inverness; (iii)
the value of PDIXF's assets in excess of $1,500,000 and up to the Allowed
Claim of Hayes to Allowed Secured Claim of Hayes; and (iv) the balance of the
value of PDIXF's assets exceeding the
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sum of $1,500,000 and the Allowed Claim of Hayes to the Allowed Secured Claim
of Inverness.
11.2 ALLOWANCE OF INVERNESS CLAIMS. Pursuant to Section 1123(b)(3)(A)
and Rule 9019 of the Rules of Bankruptcy Procedure, this Plan shall constitute
a motion to compromise and settle all claims of the Debtors against
Inverness. Inverness shall be deemed to have an Allowed Claim of
$7,259,019.02 as of the Petition. Further, Inverness will be entitled to
interests and costs as allowed by Section 506 of the Code if any of its
obligations are oversecured. A portion of Inverness' Allowed Claim will be
considered an Allowed Secured Claim as determined pursuant to Section 11.1 of
this Plan. The balance of Inverness' Allowed Claim not treated as an Allowed
Secured Claim will be deemed an Allowed Unsecured Claim.
11.3 OBJECTION DEADLINE. As soon as practicable, but in no event later
than thirty days after the Confirmation Date, objections to Disputed Claims
shall be filed with the Bankruptcy Court and served upon the Holders of each
of the Disputed Claims.
11.4 RESPONSIBILITY FOR OBJECTION TO DISPUTED CLAIMS AND PROSECUTION OF
OBJECTIONS. Reorganized PDI shall have the exclusive responsibility for
objecting to Claims following the Confirmation Date. On and after the
Confirmation Date, except as the Bankruptcy Court may otherwise order, the
filing, litigation, settlement, or withdrawal of all objections to Disputed
Claims shall be the responsibility of Reorganized PDI.
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11.5 NO DISTRIBUTIONS PENDING ALLOWANCE. Notwithstanding any other
provision of the Plan, no payments or distributions shall be made with respect
to a Disputed Claim unless and until all objections to such Disputed Claim have
been determined by Final Order.
11.6 DISTRIBUTION AFTER ALLOWANCE. Payments and distributions from
Reorganized PDI to each Holder of a Disputed Claim, to the extent that it
ultimately becomes an Allowed Claim, shall be made in accordance with the
provisions of the Plan governing the Class of Claims to which the Disputed
Claim belongs. As soon as practicable after the date the order of judgment of
the Bankruptcy Court allowing such Claim becomes a Final Order, but in no
event later than thirty (30) days after such Claim becomes an Allowed Claim,
any Cash or other consideration that would have been distributed in respect
of the Disputed Claim had it been an Allowed Claim at the Effective Date
shall be distributed, without interest, to the Holder of such Claim.
11.7 TREATMENT OF CONTINGENT CLAIMS. Until such time as a Contingent
Claim becomes fixed and absolute, such Claim shall be treated as a Disputed
Claim for purposes related to estimations, allocations, and distributions
under the Plan.
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12. JURISDICTION
12.1 CONTINUING JURISDICTION. The Bankruptcy Court shall retain and have
exclusive jurisdiction over the Debtors' Chapter 11 cases for purposes (a)
through (i) below:
(a) To determine any and all objections to and proceedings involving
the allowance, estimation, classification, and subordination of Claims or
Equity Interests;
(b) To determine any and all applications for allowances of
compensation and reimbursement of expenses and any other fees and expenses
authorized to be paid or reimbursed under the Code or the Plan;
(c) To determine any application pending on the Effective Date for
the rejection or assumption of executory contracts or unexpired leases or for
the assumption and assignment, as the case may be, of executory contracts or
unexpired leases to which either of the Debtors' is a party or with respect
to which either of the Debtors' may be liable, and to hear and determine, and
if need be, to liquidate, any and all claims arising therefrom;
(d) To determine any and all applications, adversary proceedings, and
contested or litigated matters that may be pending on the Effective Date;
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(e) To consider any modifications of the Plan, remedy any defect or
omission or reconcile any inconsistency on any Order of the Bankruptcy Court,
including the Confirmation Order, to the extent authorized by the Code;
(f) To determine all controversies, suits, and disputes that may arise
in connection with the interpretation, enforcement, or consummation of the
Plan or obligations arising thereunder;
(g) To consider and act on the compromise and settlement of any Claim
against or cause of action by or against either of the Debtor's bankruptcy
estate;
(h) To issue such orders in aid of execution of the Plan to the extent
authorized by Section 1142 of the Code; and
(i) To determine such other matters as may be set forth in the
Confirmation Order or which may arise in connection with the Plan or the
Confirmation Order.
13. MODIFICATION.
13.1 MODIFICATION OF PLAN. The Plan may be modified at any time after
Confirmation and before its substantial Consummation, provided that the Plan,
as modified, meets the requirements of Sections 1122 and 1123 of the Code,
and the Bankruptcy Court, after notice and a hearing, confirms the Plan, as
modified, under Section 1129 of the Code. A holder of a Claim or Equity
Interest that has accepted or rejected the Plan shall be deemed to have
accepted or rejected, as the case may be, such
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Plan as modified, unless, within the time fixed by the Bankruptcy Court, such
holder changes its previous acceptance or rejection by a writing filed with
the Bankruptcy Court.
14. DISCHARGE.
14.1 DISCHARGE AND REVERSION OF PROPERTY.
(a) Pursuant to Section 1141(b) of the Code and, except as
otherwise dealt with in this Plan, Confirmation of the Plan vests all of the
property of each of the Debtors' estates in Reorganized PDI.
(b) Pursuant to Section 1141(c) of the Code, on the Effective Date
of the Plan, the property dealt with by the Plan shall become free and clear
of all liens, claims, encumbrances, and interests of creditors, except as
otherwise provided for in the Plan or the Confirmation Order.
14.2 DISCHARGE OF THE DEBTORS. Except as otherwise provided in the Plan,
all consideration distributed under the Plan shall be in exchange for and in
complete satisfaction, discharge, and release of all claims of any nature
whatsoever against either of the Debtors; and except as otherwise provided
herein, upon the Effective Date, each of the Debtors shall be deemed
discharged and released (but only to the extent permitted by Section 1141 of
the Code, including specifically Section 1141(d)(3)) from any and all claims,
including but not limited to, demands and liabilities that arose before the
Effective Date, and all debts of the kind specified in Section 502(g),
502(h), or 502(i) of the Code,
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whether or not (a) a proof of claim based upon such debt is filed or deemed
filed under Section 501 of the Code; (b) a claim based upon such debt is
allowed under Section 502 of the Code; or (c) the holder of a claim based
upon such debt has accepted the Plan. Except as provided herein, the
Confirmation Order shall be a judicial determination of discharge of all
liabilities of each of the Debtors. As provided in Section 524 of the Code,
such discharge shall void any judgement against either of the Debtors at any
time obtained to the extent it relates to a claim discharged, and operate as
an injunction against the prosecution of any action against either of the
Debtors or its property to the extent it relates to a claim discharged.
14.3 DISCHARGE OF CLAIMS. Except as otherwise provided herein or in the
Confirmation Order, the rights afforded in this Plan and the payments and
distributions to be made hereunder shall be in complete exchange for, and in
full satisfaction, discharge and release of all existing debts and claims of
any kind, nature or description whatsoever against either of the Debtors or
against its bankruptcy estate, assets or properties; and upon the Effective
Date, all existing claims against either of the Debtors shall be deemed to be
satisfied, discharged, and released in full; and all holders of claims shall
be forever barred and precluded from asserting against Reorganized PDI or its
assets or properties based upon any act or omission.
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15. PROVISIONS TO INVOKE CRAMDOWN PROCEEDINGS AND/OR SECTION 506
HEARING, IF NECESSARY
15.1 CRAMDOWN. If all of the applicable requirements of Section 1129(a)
of the Code, other than subparagraph 8, are found to have been met with
respect to the Plan, the Debtors will seek Confirmation pursuant to Section
1129(b) of the Code. For purposes of seeking Confirmation under the cramdown
provisions of the Code, the Debtors reserve the right to modify or vary the
treatment of the claims of any rejecting Class so as to comply with the
requirements of Section 1129(b) of the Code.
16. GENERAL PROVISIONS
16.1 POST-CONFIRMATION ACTIONS. Nothing herein contained shall prevent
the Debtors from taking such actions as may be necessary to enforce any
rights or prosecute any cause of action existing on its behalf, which may not
have been heretofore enforced or prosecuted.
16.2 RULES OF CONSTRUCTION. Unless otherwise specified, all references to
the single shall include the plural and vice versa. The headings in the Plan
are for convenience of reference only and shall not limit or otherwise effect
the provisions of the Plan. Words and terms defined in Section 101 of the
Code shall have the same meaning when used in the Plan, unless a different
definition is given in the Plan. The Rules of Construction contained in
Section 102 of the Code shall apply to the construction of the Plan.
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16.3 GOVERNING LAW. Unless an applicable rule of law or procedure is
supplied by federal law (including the Bankruptcy Code and the Bankruptcy
Rules) or the Delaware General Corporation Law, the internal laws of the
State of Connecticut shall govern the construction and implementation of the
Plan and any agreements, documents, and instruments executed in connection
with the Plan, except as may otherwise be provided in such agreements,
documents, and instruments.
16.4 FILING OF ADDITIONAL DOCUMENTS. On or before the conclusion of the
Confirmation Hearing, the Debtors shall file with the Bankruptcy Court such
agreements and other documents as may be necessary or appropriate to
effectuate and further evidence the terms and conditions of the Plan.
16.5 SEVERABILITY. Should any provision in the Plan be determined to be
unenforceable, such determination shall in no way limit or affect the
enforceability and operative effect of any other provisions of the Plan.
16.6 NOTICES. All notices, requests, or demands for payments provided for
in the Plan shall be in writing and shall be deemed to have been given when
personally delivered by hand, or deposited in any general or branch post
office of the United States postal service, or received by telex or
telecopier; notices, request and demands for payments shall be addressed and
sent, postage prepaid, or delivered as follows:
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(a) in the case of notices, requests, or demands for payments to the
Debtors or the Reorganized PDI, at 14 Commerce Drive, Danbury, Connecticut,
Attn: Chief Financial Officer and at any other address designated by the
Debtors by notice to each Holder of an Allowed Claim.
(b) in the case of notices to Holders of Claims or Equity Interests, at
the last known address according to Reorganized PDI books and records, or at
any other address designated by a Holder of a Claim or Interest, by notice to
Reorganized PDI; provided, however, any notice of change of address shall be
effective only upon receipt.
Respectfully submitted this 12th day of May, 1998.
POWER DESIGNS, INC. AND PDIXF
ACQUISITION CORPORATION
By:
------------------------------------
James Berman, Esq.
Zeisler & Zeisler, P.C.
558 Clinton Avenue
Bridgeport, CT 06605
(203) 368-4234
Attorneys for
Power Designs, Inc. and
PDIXF Acquisition Corporation
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