-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PTYfnDj1VSwj8ckapasgeAPxfuGGx4aG3KDl64P/xrKqBPnW8NEa5qr7vHhGOaEX 71QNwBK97J7wm6mBHmKiiw== 0000950135-03-003351.txt : 20030605 0000950135-03-003351.hdr.sgml : 20030605 20030605125042 ACCESSION NUMBER: 0000950135-03-003351 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20030520 ITEM INFORMATION: Bankruptcy or receivership ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20030605 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PCD INC CENTRAL INDEX KEY: 0001007594 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC CONNECTORS [3678] IRS NUMBER: 042604950 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-27744 FILM NUMBER: 03733710 BUSINESS ADDRESS: STREET 1: TWO TECHNOLOGY DR STREET 2: CENTENNIAL PARK CITY: PEABODY STATE: MA ZIP: 01960 BUSINESS PHONE: 5085328800 MAIL ADDRESS: STREET 1: 2 TECHNOLOGY DRIVE CITY: PEABODY STATE: MA ZIP: 01960 8-K 1 b46838pce8vk.txt PCD, INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): MAY 20, 2003 PCD INC. (Exact name of registrant as specified in its charter) MASSACHUSETTS 0-27744 04-2604950 (State or other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 2 TECHNOLOGY DRIVE, CENTENNIAL PARK, PEABODY, MA 01960-7977 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 978-532-8800 ITEM 3. BANKRUPTCY OR RECEIVERSHIP. On March 21, 2003, PCD Inc. (the "Company") and its domestic subsidiary, Wells-CTI, Inc. (together, the "Debtors") filed voluntary petitions under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Massachusetts (the "Court") (case nos. 03-12310-CJK and 03-012309-CJK). The Debtors subsequently filed Plans of Reorganization, dated April 7, 2003, and Motions of Debtor for Approval of Nonmaterial Modification of Plan of Reorganization, dated May 19, 2003 (together, the "Plans") as well as Disclosure Statements, dated April 7, 2003 (the "Disclosure Statements"). On May 20, 2003, the Court entered orders confirming the Plans and approving the Disclosure Statements. Copies of these orders are attached as Exhibits 99.1 and 99.2 hereto. The Plans will become effective on June 5, 2003 (the "Effective Date"). Copies of the Plans as confirmed are attached as Exhibits 99.3 and 99.4 hereto. The material features of the Company's Plan are as follows (all capitalized terms used without definition shall have the meanings set forth in the Company's Plan): - Prior to the Effective Date, the Company shall have transferred the assets and operations of its Industrial/Avionics Division to Amphenol Corporation and paid the Holdback (as defined in the Asset Purchase Agreement) into escrow. - Any executory contract or unexpired lease which is not being assumed shall be deemed rejected as of May 20, 2003. - On the Effective Date, all securities, equity interests, notes, bonds, indentures, and other instruments or documents evidencing or creating any indebtedness, equity interest or obligation of the Company shall be extinguished and cancelled, and any obligations of the Company under any agreements, indentures or certificates of designation governing any securities, equity interests, notes, bonds, indentures and other instruments or documents creating any indebtedness, equity interest or obligation, shall be discharged. - According to the timeline set forth in the Plan, the Company shall, after funding the Disputed Claims Reserve and the Debtors' Reserve, (a) pay to Fleet as agent for the Class 1 Creditors, the Class 1 Creditor Payment Amount (if not already paid) and assign to the agent all right, title and interest in and to the Holdback in full satisfaction of the Class 1 Creditors' claims under the Secured Loan Agreement, subject to any rights of the Class 1 Creditors to post-Effective Date payments in accordance with the Plan; and (b) pay in full all Unclassified Claims and all Classified Claims in accordance with the Plan. - Any funds remaining in the Debtor's Reserve and all other property of the Company shall revert to Fleet as agent for the Class 1 Creditors. - The holders of the Equity Interests shall receive nothing for their interests or potential interests in the Company. - Following all distributions from the Debtor's Estate required under the Plan, the Company shall be dissolved and all funds and property remaining in the Company shall revert to Fleet as agent for the Class 1 Creditors. Immediately prior to the Effective Date, there will be 8,951,945 shares of common stock of the Company, 319,000 options, and 1,653,949 warrants to purchase common stock of the Company outstanding, for an aggregate total of 10,924,894 shares, assuming exercise of all options and warrants. No shares are reserved for future issuances in respect of claims and interests filed and allowed under the Plan. Immediately prior to the Effective date, the Company will have approximately 1,000 shareholders of record. As of April 30, 2003, the assets and liabilities of the Company were 13,927,501 and 46,673,088, respectively. Additional financial information concerning the Company (excluding our Japanese subsidiary) will be contained in the required Monthly Operating Statement for the period of May 1, 2003 to May 31, 2003 in a form prescribed by the office of the United States Trustee, to be filed on Form 8-K under separate cover. Copies of the Disclosure Statements are attached as Exhibits 99.5 and 99.6 hereto. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (c) Exhibits 99.1 Order Confirming Debtor's Plan of Reorganization and Approving Disclosure Statement dated May 20, 2003 (PCD Inc.) 99.2 Order Confirming Debtor's Plan of Reorganization and Approving Disclosure Statement dated May 20, 2003 (Wells-CTI, Inc.) 99.3 Plan of Reorganization (PCD Inc). 99.4 Plan of Reorganization (Wells-CTI, Inc.) 99.5 Disclosure Statement (PCD Inc.) 99.6 Disclosure Statement (Wells-CTI, Inc.) SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. PCD INC. /s/ JOHN L. DWIGHT, JR. By: Name: John L. Dwight, Jr. Title: Chairman of the Board, President, and Chief Executive Officer Date: June 5, 2003 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION 99.1 Order Confirming Debtor's Plan of Reorganization and Approving Disclosure Statement dated May 20, 2003 (PCD Inc.) 99.2 Order Confirming Debtor's Plan of Reorganization and Approving Disclosure Statement dated May 20, 2003 (Wells-CTI, Inc.) 99.3 Plan of Reorganization (PCD Inc). 99.4 Plan of Reorganization (Wells-CTI, Inc.) 99.5 Disclosure Statement (PCD Inc.) 99.6 Disclosure Statement (Wells-CTI, Inc.)
EX-99.1 3 b46838pcexv99w1.txt ORDER CONFIRMING PLAN OF REORGANIZATION PCD, INC. Exhibit 99.1 UNITED STATES BANKRUPTCY COURT DISTRICT OF MASSACHUSETTS (Eastern Division) - ------------------------------------------------------ ) In the matter of ) ) PCD, Inc. ) Chapter 11 ) Case No. 03-12310-CJK Debtor-in-Possession. ) - ------------------------------------------------------) ORDER CONFIRMING DEBTOR'S PLAN OF REORGANIZATION AND APPROVING DISCLOSURE STATEMENT PCD, Inc, the debtor and debtor-in-possession (the "Debtor"), having filed a Plan of Reorganization, dated April 7, 2003 and Motion of Debtor for Approval of Nonmaterial Modification of Plan of Reorganization ("Modification Motion") (together, the "Plan") and a Disclosure Statement dated April 7, 2003 (the "Disclosure Statement") with this Court; the Court having established related notice and balloting procedures; May 20, 2003 at 11:30 a.m. having been fixed by the Court as the date and time of the hearing to consider confirmation of the Plan (the "Confirmation Hearing"); May 16, 2003, at 4:00 p.m. having been fixed by the Court as the deadline for the submission of ballots accepting or rejecting the Plan and the filing of objections to the Plan; the Debtor having attested to service of the Plan and Disclosure Statement, the notice of the date and time of the Confirmation Hearing and of the deadline for submission of ballots on and filing of objections to the Plan upon all parties asserting claims against the Debtor's estate and all parties on the regular service list in the Debtor's case, which list includes all parties who have filed appearances and requested notice in the Debtor's case; the Debtor having represented that solicitation of acceptances or rejections from holders of claims having been made in the manner required by this Court and by law; the Debtor having caused to be filed an Affidavit of Debtor's Counsel with respect to tabulation of ballots cast in favor of and in opposition to the Plan (the "Voting Affidavit"); and Based upon the information contained in the Disclosure Statement, the Voting Affidavit, the Affidavit of John Dwight in Support of Confirmation, and, other than the limited objection asserted by the State of Texas, no objections to confirmation of the Plan having been received; and upon the findings of this Court, and after due deliberation, sufficient cause appearing therefor, IT IS HEREBY FOUND, THAT: A. Capitalized Terms. All capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Plan. B. Exclusive Jurisdiction; Venue; Core Proceeding. This Court has jurisdiction over the Chapter 11 Case pursuant to 28 U.S.C. sections 157 and 1334. Venue is proper pursuant to 28 U.S.C. sections 1408 and 1409. Confirmation of the Plan is a core proceeding under 28 U.S.C. section 157(b)(2), and this Court has exclusive jurisdiction to determine the adequacy of the Disclosure Statement and whether the Plan complies with the applicable provisions of the Bankruptcy Code and should be confirmed. C. Due and Sufficient Notice. Notice of the hearing on the adequacy of the Disclosure Statement and on confirmation of the Plan was appropriate and complied in all respects with Rules 2002(b) and 3017(d) of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules"). D. Adequacy of Disclosure Statement. The Disclosure Statement provides information of a kind and in sufficient detail to permit the holders of Claims in Classes 1 and 2 to make informed judgments about the Plan. 2 E. Solicitation. Votes for acceptance or rejection of the Plan were solicited in good faith and complied with sections 1125 and 1126 of the Bankruptcy Code, Bankruptcy Rules 3017 and 3018, this Court's prior Order, all other applicable provisions of the Bankruptcy Code, and all other rules, laws and regulations. F. Distribution. All procedures used to distribute and tabulate ballots to the applicable holders of Claims were fair and conducted in accordance with the Bankruptcy Code, the Bankruptcy Rules, the Local Rules of the Bankruptcy Court, and all other applicable rules, laws, and regulations. G. Classes That Have Voted To Accept The Plan. As evidenced by the Voting Affidavit, which certifies both the method and results of the voting, Classes 1 and 2 have accepted the Plan pursuant to the requirements of sections 1124 and 1126 of the Bankruptcy Code. Each Class of creditors under the Plan is Impaired. Thus, at least one Impaired Class of Claims has voted to accept the Plan. H. Plan Compliance With Bankruptcy Code (11 U.S.C.ss.1129(a)(1)). The Plan complies with all applicable provisions of the Bankruptcy Code, as follows: 1. Proper Classification (11 U.S.C. ss.ss. 1122, 1123(a)(1)). In addition to Administrative Claims and Priority Tax Claims, which need not be designated, the Plan designates two (2) Classes of Claims. The Claims placed in each Class are substantially similar to other Claims in each such Class. Valid business, factual and legal reasons exist for separately classifying the various Classes of Claims created under the Plan, and such Classes do not unfairly discriminate between holders of Claims. Thus, the Plan satisfies sections 1122 and 1123(a)(1) of the Bankruptcy Code. 3 2. Specify Unimpaired Classes (11 U.S.C.ss.1123(a)(2)). There are no unimpaired Claims under the Plan. 3. Specify Treatment of Impaired Classes (11 U.S.C.ss.1123(a)(3)). The Plan designates Classes 1, 2 and 3 as Impaired and specifies the treatment of Claims or Interests in those Classes, thereby satisfying section 1123(a)(3) of the Bankruptcy Code. 4. No Discrimination (11 U.S.C. ss. 1123(a)(4)). The Plan provides for the same treatment by the Debtor for each Claim or Interest in each respective Class unless the holder of a particular Claim or Interest has agreed to less favorable treatment with respect to such Claim or Interest, thereby satisfying section 1123(a)(4) of the Bankruptcy Code. 5. Implementation of Plan (11 U.S.C.ss.1123(a)(5)). The Plan provides adequate and proper means for its implementation, thereby satisfying section 1123(a)(5) of the Bankruptcy Code. 6. Nonvoting Equity Securities (11 U.S.C.ss.1123(a)(6)). The Debtor is liquidating and dissolving and, thus, the requirements of section 1123(a)(6) of the Bankruptcy Code are inapplicable; 7. Selection of Officers and Directors (11 U.S.C.ss.1123(a)(7)). The Debtor is liquidating and, thus, the requirements of section 1123(a)(7) of the Bankruptcy Code are inapplicable; 8. Additional Plan Provisions (11 U.S.C.ss.1123(b)). The Plan's provisions are appropriate and not inconsistent with the applicable provisions of the Bankruptcy Code, including provisions for: (i) the disposition of executory contracts and unexpired leases; (ii) the Debtor's retention of, and right to enforce, sue on, 4 settle or compromise (or refuse to do any of the foregoing with respect to) certain claims, rights or Causes Of Action, suits and proceedings, whether in law or in equity, known or unknown, that the Debtor may have against various persons; and (iii) exculpation of various persons and entities with respect to actions taken in furtherance of the Chapter 11 Case, and preliminary and permanent injunctions against certain actions against the Debtor and its property. I. Debtor's Compliance with Bankruptcy Code (11 U.S.C.ss.1129(a)(2)). The Debtor, as the proponent of the Plan, has complied with all applicable provisions of the Bankruptcy Code, thereby satisfying section 1129(a)(2) of the Bankruptcy Code. J. Good Faith (11 U.S.C. ss. 1129(a)(3)). The Plan has been proposed in good faith and not by any means forbidden by law. In determining that the Plan has been proposed in good faith, the Court has examined the totality of the circumstances surrounding the filing of the Chapter 11 Case and the formulation of the Plan and has taken into account the absence of any material objections pursuant to section 1129(a)(3) of the Bankruptcy Code. The Debtor's Chapter 11 Case was filed, and the Plan was proposed, with the legitimate and honest purpose of distributing all available Assets of the Debtor expeditiously and to maximize the recovery to creditors. K. Payments For Services Or Costs And Expenses (11 U.S.C.ss.1129(a)(4)). Any and all payments made or promised to be made by the Debtor under the Plan for services or for costs and expenses in connection with the Chapter 11 Case, including all Administrative Claims under sections 503 and 507 of the Bankruptcy Code, or in connection with the Plan, have been approved by, or are subject to the approval of, the Court as reasonable. 5 L. Directors, Officers and Insiders (11 U.S.C. ss. 1129(a)(5)). The Debtor has complied with section 1129(a)(5) of the Bankruptcy Code and has appropriately disclosed the identity of the director and officers of the Debtor and the continuance in office of such individuals, consistent with the interests of creditors and with public policy. The Debtor has disclosed the identity of any "insider" who will be employed or retained by the Debtor and the nature of any compensation for any such insider. M. No Rate Change Jurisdiction (11 U.S.C.ss.1129(a)(6)). No government regulatory commission now has or will have after confirmation of the Plan, jurisdiction over any rates charged by the Debtor. N. Best Interest of Creditors Test (11 U.S.C. ss. 1129(a)(7)). The Plan satisfies section 1129(a)(7) of the Bankruptcy Code. The liquidation analysis discussed in the Disclosure Statement and other evidence proffered or adduced at the Confirmation Hearing (a) are persuasive, credible and accurate as of the dates such evidence was prepared or presented, (b) have not been controverted by other evidence or challenged in any objection to the Plan, (c) are based upon reasonable and sound assumptions, (d) provide a reasonable estimate of the liquidation values upon conversion to a chapter 7 proceeding, and (e) establish that each holder of a Claim in an impaired Class (i) has accepted the Plan, or (ii) will receive or retain under the Plan, on account of such Claim, property of a value, as of the Effective Date, that is not less than the amount that it would receive if the Debtor were liquidated under chapter 7 of the Bankruptcy Code on such date. O. Acceptance by Certain Classes (11 U.S.C.ss.1129(a)(8)). The Claims in Classes 1and 2 are Impaired and the holders of Claims in such Classes were notified of the consequences of voting to accept the Plan and have accepted the Plan in accordance with section 1126(c) of the Bankruptcy Code. 6 P. Treatment of Administrative and Tax Claims (11 U.S.C.ss.1129(a)(9)). The treatment of Administrative and Priority Tax Claims under the Plan satisfies the requirements of section 1129(a)(9)(A), (B) and (C) of the Bankruptcy Code, respectively. Q. Acceptance by Impaired Class (11 U.S.C.ss.1129(a)(10)). At least one Class of Claims that is Impaired under the Plan has accepted the Plan without including any acceptance of the Plan by an insider holding a Claim of such Class. R. Feasibility (11 U.S.C. ss. 1129(a)(11)). The Plan satisfies section 1129(a)(11) of the Bankruptcy Code because confirmation of the Plan is not likely to be followed by further liquidation proceedings of the Debtor. The Plan presents a workable scheme of organization and operation and there is a reasonable probability that the provisions of the Plan will be performed. The Plan is feasible. The Debtor has completed the liquidation of substantially all of its Assets, and will conclude its liquidation and distribution. S. Fees (11 U.S.C.ss.1129(a)(12)). All fees payable under 28 U.S.C.ss.1930 have been or will be paid on or before the Effective Date or such later date as such fees become due and payable. T. Retiree Benefits (11 U.S.C.ss.1129(a)(13)). The Debtor has no retiree benefits, as defined in section 1114 of the Bankruptcy Code and, therefore, section 1129(a)(13) is not applicable to this proceeding. U. No Avoidance of Taxes (11 U.S.C.ss.1129(d)). The principal purpose of the Plan is not the avoidance of taxes or the avoidance of section 5 of the Securities Act of 1933. V. No Other Plan. The Plan is the only plan of reorganization confirmed by this Court in this Chapter 11 Case. No other plan of reorganization or plan of liquidation has been properly filed other than by the Debtor. 7 W. Executory Contracts and Unexpired Leases. The assumption or rejection of executory contracts and unexpired leases in accordance with the Plan satisfies requirements of the applicable provisions of the Bankruptcy Code, including, without limitation, section 365 of the Bankruptcy Code. The Plan provides that all executory contracts and unexpired leases which existed as of the Petition Date and which have not been specifically assumed or rejected prior to the Confirmation of the Plan shall be rejected as of the entry of the Confirmation Order. X. Good Faith Solicitation (11 U.S.C.ss.1125(e)). The Debtor and its agents, accountants, business consultants, representatives, attorneys, and advisors, have solicited votes on the Plan in good faith and in compliance with the applicable provisions of the Bankruptcy Code. Y. Objections to Confirmation. The State of Texas has asserted a limited objection to the Plan, which to the extent not resolved by the Modification Motion is denied. No other objections to confirmation of the Plan have been filed. Z. Ballot Tabulation. The procedures by which the ballots for acceptance or rejection of the Plan were distributed and tabulated were fair and properly conducted in accordance with this Court's order. AA. The Debtor Will Not Be Insolvent Nor Left With Unreasonably Small Capital. As of the occurrence of the Effective Date, the Debtor will not be insolvent and will not reasonably be expected to be rendered insolvent or left with unreasonably small capital to conclude its liquidation and distribution efforts as a result of the Plan. BB. Satisfaction Of Confirmation Requirements. The Plan satisfies the requirements for confirmation set forth in section 1129 of the Bankruptcy Code. CC. Retention of Jurisdiction. The Court may properly retain jurisdiction over the matters set forth in Article XI of the Plan and paragraph 18 below. 8 ACCORDINGLY, IT IS ORDERED THAT: 1. Adequacy of Disclosure Statement. The Disclosure Statement is adequate and approved. 2. Confirmation. The Plan is confirmed this 20th day of May, 2003. A copy of the Plan, including the Modification Motion, is attached as Exhibit A. 3. Binding Effect. Pursuant to section 1141 of the Bankruptcy Code, effective as of the Confirmation Date, but subject to consummation of the Plan, and except as otherwise expressly provided in the Plan or this Order, the provisions of the Plan, including the exhibits to, and all documents and agreements executed pursuant to, the Plan, and this Confirmation Order shall be binding upon and inure to the benefit of the Debtor, all present and former holders of Claims, and any other parties in interest and their respective successors and assigns. 4. Provisions of Plan and Order Nonseverable and Mutually Dependent. The provisions of the Plan and this Order, including the findings of fact and conclusions of law set forth herein, are nonseverable and mutually dependent. 5. Plan Classification Controlling. The classification of Claims for purposes of the distributions to be made under the Plan shall be governed solely by the terms of the Plan. The classifications set forth on the Ballots tendered to and/or returned by the Debtor's creditors in connection with voting on the Plan: (a) were set forth on the Ballots solely for purposes of voting to accept or reject the Plan; (b) do not necessarily represent, and in no event shall be deemed to modify or otherwise affect, the actual classification of such Claims 9 under the Plan for distribution purposes, and; (c) may not be relied upon by any creditor as representing the actual classification of such Claims under the Plan for distribution purposes. 6. Revesting of Assets. As provided in the Plan, the property of the Debtor's Estate shall vest in the holders of Allowed Claims in Class 1 on the Effective Date, subject to the provisions in the Plan for the resolution by the Debtor of Disputed Claims, the resolution of any administrative obligations, including without limitation the filing of tax returns, and the dissolution of the Debtor. As of the Effective Date, all property of the Debtor's Estate shall be free and clear of all Claims, except as specifically provided in the Plan or this Confirmation Order. Without limiting the foregoing, the Debtor may, without application to or approval by the Bankruptcy Court, pay amounts that are incurred after the Confirmation Date for professional fees and expenses. 7. General Authorizations. The Debtor and its representatives are authorized take any other action necessary or appropriate to implement, effectuate and consummate the Plan in accordance with its terms, whether or not specifically referred to in the Plan and without further application to or order of this Court. The Debtor and its representatives are further authorized to take all reasonably necessary steps to to dissolve the Debtor as a corporation. 8. Bar Date; Late Filed Proofs of Claim. Pursuant to an order of this Court, April 30, 2003, was the deadline for filing with the Court any and all Claims against the Debtor for all creditors with a Claim arising on or before March 21, 2003. Any such Claim that was not filed prior to that time and which is identified in the Debtor's amended schedule of liabilities as contingent, unliquidated or disputed is forever barred and shall be conclusively deemed discharged and disallowed for the purposes of voting on the Plan or receiving any distributions thereunder. 10 9. Rejected Contracts and Leases. Pursuant to the Plan, and in accordance with section 365 of the Bankruptcy Code, all executory contracts and unexpired leases not specifically assumed or rejected prior to confirmation shall be deemed rejected as of the Confirmation Date. 10. Rejection Damages Bar Date. If the rejection by the Debtor, pursuant to the Plan or otherwise, of an executory contract or unexpired lease results in a Claim, then such Claim shall be forever barred and shall not be enforceable against the Debtor or the Estate unless a proof of claim is filed and served upon counsel to Debtor within twenty-five (25) days after the mailing of notice of this Order. 11. Preservation of Causes of Action. The Debtor shall retain and may enforce all claims, rights of action, suits and proceedings, whether in law or in equity, whether known or unknown, which the Debtor may hold against any entity, provided, however, that all causes of action that may exist under sections 510, 542, 544 through 550 of the Bankruptcy Code or under similar state laws, including, without limitation, preferential transfer and fraudulent conveyance claims, if any, are extinguished. 12. Stay and Injunctions. The stay in effect in the Chapter 11 Case pursuant to section 362(a) of the Bankruptcy Code shall continue to be in effect through the Effective Date, and at that time shall be dissolved and of no further force or effect, subject to the injunction in the Plan and/or sections 524 and 1141 of the Bankruptcy Code except that nothing herein shall bar the filing of financing documents or the taking of such other actions as are necessary to effectuate the transactions specifically contemplated by the Plan or by this Order. 13. Resolution of Claims. Except as otherwise ordered by this Court, any Claim that is not an Allowed Claim shall be determined, resolved, or adjudicated in accordance 11 with the terms of the Plan. Any and all objections to Claims, other than the administrative claims of professional which have been addressed by separate order of the Court, shall be filed and served no later than July 31, 2003. 14. U.S. Trustee Fees and Reports. The Debtor will be responsible for timely payment of fees incurred pursuant to 28 U.S.C.ss.1930(a)(6). After confirmation the Debtor will serve the United States Trustee with a monthly final report for each month (or portion thereof) the case remains open. The monthly financial report shall include the following: (1) a statement of all disbursements made during the course of the month, whether or not pursuant to the plan; (2) a summary, by class, of amounts distributed or property transferred to each recipient under the plan, and an explanation of the failure to make any distributions or transfers of property under the plan; (3) Debtor's projections as to its continuing ability to comply with the terms of the plan; (4) a description of any other factors which may materially affect the Debtor's ability to consummate the plan; and (5) an estimated date when an application for final decree will be filed with the court (in the case of the final monthly report, the date the decree was filed). 15. Notice of Entry of Confirmation Order. On or before the tenth (10th) Business Day following the date of entry of this Confirmation Order, the Debtor shall serve or caused to be served notice of entry of this Confirmation Order pursuant to Bankruptcy Rules 2002(f) and 3020(c) on all creditors, the United States Trustee, and other parties in 12 interest by causing a notice of entry of the Confirmation Order in substantially the form of the notice annexed hereto as Exhibit B, which form is hereby approved (the "Notice of Confirmation"), to be delivered to such parties by first class mail, postage prepaid; provided, however, that notice need not be given or served under the Bankruptcy Code, the Bankruptcy Rules or this Confirmation Order to any person to whom the Debtor mailed a notice of the Confirmation Hearing, but received such notice returned marked "undeliverable as address," "moved--no forwarding address" or "forwarding order expired" or similar reason, unless the Debtor has been informed in writing by such person of that person's new address. The notice described herein is adequate under the particular circumstances and no other or further notice is necessary. 16. Confirmation Hearing Findings and Conclusions. All, if any, of the Court's subsidiary findings and conclusions dictated into the record at the Confirmation Hearing are incorporated herein by reference. 17. Reference to Plan Provisions. The failure specifically to include or reference any particular provision of the Plan in this Confirmation Order shall not diminish or impair the effectiveness of such provision, it being the intent of the Court that the Plan be confirmed in its entirety. 18. Retention of Jurisdiction. Pursuant to sections 105(a) and 1142 of the Bankruptcy Code, and notwithstanding the entry of this Confirmation Order for the occurrence of the Effective Date, this Court shall retain exclusive jurisdiction over all matters arising out of, and related to, the Chapter 11 Case and the Plan to the fullest extent permitted by law, including, among other things, jurisdiction over those items and matters set forth in the Plan. SO ORDERED, this day of May, 2003. 13 -------------------------------- Honorable Carol J. Kenner United States Bankruptcy Judge 14 EX-99.2 4 b46838pcexv99w2.txt ORDER CONFIRMING PLAN OF REORGANIZATION WELLS-CTI Exhibit 99.2 UNITED STATES BANKRUPTCY COURT DISTRICT OF MASSACHUSETTS (Eastern Division) - ----------------------------------------------------- ) In the matter of ) ) WELLS-CTI, Inc. ) Chapter 11 ) Case No. 03-12309-CJK Debtor-in-Possession. ) - ----------------------------------------------------- ORDER CONFIRMING DEBTOR'S PLAN OF REORGANIZATION AND APPROVING DISCLOSURE STATEMENT Wells-Cti, Inc, the debtor and debtor-in-possession (the "Debtor"), having filed a Plan of Reorganization, dated April 7, 2003 and a Motion of Debtor For Approval of Nonmaterial Modification of Plan of Reorganization dated May 19, 2003 ("Modification Motion") (together,the "Plan") and a Disclosure Statement dated April 7, 2003 (the "Disclosure Statement") with this Court; the Court having established related notice and balloting procedures; May 20, 2003 at 11:30 a.m. having been fixed by the Court as the date and time of the hearing to consider confirmation of the Plan (the "Confirmation Hearing"); May 16, 2003, at 4:00 p.m. having been fixed by the Court as the deadline for the submission of ballots accepting or rejecting the Plan and the filing of objections to the Plan; the Debtor having attested to service of the Plan and Disclosure Statement, the notice of the date and time of the Confirmation Hearing and of the deadline for submission of ballots on and filing of objections to the Plan upon all parties asserting claims against the Debtor's estate and all parties on the regular service list in the Debtor's case, which list includes all parties who have filed appearances and requested notice in the Debtor's case; the Debtor having represented that solicitation of acceptances or rejections from holders of claims having been made in the manner required by this Court and by law; the Debtor having caused to be filed an Affidavit of Debtor's Counsel with respect to tabulation of ballots cast in favor of and in opposition to the Plan (the "Voting Affidavit"); and Based upon the information contained in the Disclosure Statement, the Voting Affidavit, the Affidavit of John Dwight in Support of Confirmation, and, other than the limited objection asserted by the State of Texas, no objections to confirmation of the Plan having been received; and upon the findings of this Court, and after due deliberation, sufficient cause appearing therefor, IT IS HEREBY FOUND, THAT: A. Capitalized Terms. All capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Plan. B. Exclusive Jurisdiction; Venue; Core Proceeding. This Court has jurisdiction over the Chapter 11 Case pursuant to 28 U.S.C. sections 157 and 1334. Venue is proper pursuant to 28 U.S.C. sections 1408 and 1409. Confirmation of the Plan is a core proceeding under 28 U.S.C. section 157(b)(2), and this Court has exclusive jurisdiction to determine the adequacy of the Disclosure Statement and whether the Plan complies with the applicable provisions of the Bankruptcy Code and should be confirmed. C. Due and Sufficient Notice. Notice of the hearing on the adequacy of the Disclosure Statement and on confirmation of the Plan was appropriate and complied in all respects with Rules 2002(b) and 3017(d) of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules"). D. Adequacy of Disclosure Statement. The Disclosure Statement provides information of a kind and in sufficient detail to permit the holders of Claims in Classes 1 and 2 to make informed judgments about the Plan. 2 E. Solicitation. Votes for acceptance or rejection of the Plan were solicited in good faith and complied with sections 1125 and 1126 of the Bankruptcy Code, Bankruptcy Rules 3017 and 3018, this Court's prior Order, all other applicable provisions of the Bankruptcy Code, and all other rules, laws and regulations. F. Distribution. All procedures used to distribute and tabulate ballots to the applicable holders of Claims were fair and conducted in accordance with the Bankruptcy Code, the Bankruptcy Rules, the Local Rules of the Bankruptcy Court, and all other applicable rules, laws, and regulations. G. Classes That Have Voted To Accept The Plan. As evidenced by the Voting Affidavit, which certifies both the method and results of the voting, Classes 1 and 2 have accepted the Plan pursuant to the requirements of sections 1124 and 1126 of the Bankruptcy Code. Each Class of creditors under the Plan is Impaired. Thus, at least one Impaired Class of Claims has voted to accept the Plan. H. Plan Compliance With Bankruptcy Code (11 U.S.C.ss.1129(a)(1)). The Plan complies with all applicable provisions of the Bankruptcy Code, as follows: 1. Proper Classification (11 U.S.C. ss.ss. 1122, 1123(a)(1)). In addition to Administrative Claims and Priority Tax Claims, which need not be designated, the Plan designates two (2) Classes of Claims. The Claims placed in each Class are substantially similar to other Claims in each such Class. Valid business, factual and legal reasons exist for separately classifying the various Classes of Claims created under the Plan, and such Classes do not unfairly discriminate between holders of Claims. Thus, the Plan satisfies sections 1122 and 1123(a)(1) of the Bankruptcy Code. 3 2. Specify Unimpaired Classes (11 U.S.C.ss.1123(a)(2)). There are no unimpaired Claims under the Plan. 3. Specify Treatment of Impaired Classes (11 U.S.C.ss.1123(a)(3)). The Plan designates Classes 1, 2 and 3 as Impaired and specifies the treatment of Claims or Interests in those Classes, thereby satisfying section 1123(a)(3) of the Bankruptcy Code. 4. No Discrimination (11 U.S.C. ss. 1123(a)(4)). The Plan provides for the same treatment by the Debtor for each Claim or Interest in each respective Class unless the holder of a particular Claim or Interest has agreed to less favorable treatment with respect to such Claim or Interest, thereby satisfying section 1123(a)(4) of the Bankruptcy Code. 5. Implementation of Plan (11 U.S.C.ss.1123(a)(5)). The Plan provides adequate and proper means for its implementation, thereby satisfying section 1123(a)(5) of the Bankruptcy Code. 6. Nonvoting Equity Securities (11 U.S.C.ss.1123(a)(6)). The Debtor is liquidating and dissolving and, thus, the requirements of section 1123(a)(6) of the Bankruptcy Code are inapplicable; 7. Selection of Officers and Directors (11 U.S.C.ss.1123(a)(7)). The Debtor is liquidating and, thus, the requirements of section 1123(a)(7) of the Bankruptcy Code are inapplicable; 8. Additional Plan Provisions (11 U.S.C. ss. 1123(b)). The Plan's provisions are appropriate and not inconsistent with the applicable provisions of the Bankruptcy Code, including provisions for: (i) the disposition of executory contracts and unexpired leases; (ii) the Debtor's retention of, and right to enforce, sue on, 4 settle or compromise (or refuse to do any of the foregoing with respect to) certain claims, rights or Causes Of Action, suits and proceedings, whether in law or in equity, known or unknown, that the Debtor may have against various persons; and (iii) exculpation of various persons and entities with respect to actions taken in furtherance of the Chapter 11 Case, and preliminary and permanent injunctions against certain actions against the Debtor and its property. I. Debtor's Compliance with Bankruptcy Code (11 U.S.C.ss.1129(a)(2)). The Debtor, as the proponent of the Plan, has complied with all applicable provisions of the Bankruptcy Code, thereby satisfying section 1129(a)(2) of the Bankruptcy Code. J. Good Faith (11 U.S.C. ss. 1129(a)(3)). The Plan has been proposed in good faith and not by any means forbidden by law. In determining that the Plan has been proposed in good faith, the Court has examined the totality of the circumstances surrounding the filing of the Chapter 11 Case and the formulation of the Plan and has taken into account the absence of any material objections pursuant to section 1129(a)(3) of the Bankruptcy Code. The Debtor's Chapter 11 Case was filed, and the Plan was proposed, with the legitimate and honest purpose of distributing all available Assets of the Debtor expeditiously and to maximize the recovery to creditors. K. Payments For Services Or Costs And Expenses (11 U.S.C.ss.1129(a)(4)). Any and all payments made or promised to be made by the Debtor under the Plan for services or for costs and expenses in connection with the Chapter 11 Case, including all Administrative Claims under sections 503 and 507 of the Bankruptcy Code, or in connection with the Plan, have been approved by, or are subject to the approval of, the Court as reasonable. 5 L. Directors, Officers and Insiders (11 U.S.C. ss. 1129(a)(5)). The Debtor has complied with section 1129(a)(5) of the Bankruptcy Code and has appropriately disclosed the identity of the director and officers of the Debtor and the continuance in office of such individuals, consistent with the interests of creditors and with public policy. The Debtor has disclosed the identity of any "insider" who will be employed or retained by the Debtor and the nature of any compensation for any such insider. M. No Rate Change Jurisdiction (11 U.S.C.ss.1129(a)(6)). No government regulatory commission now has or will have after confirmation of the Plan, jurisdiction over any rates charged by the Debtor. N. Best Interest of Creditors Test (11 U.S.C. ss. 1129(a)(7)). The Plan satisfies section 1129(a)(7) of the Bankruptcy Code. The liquidation analysis discussed in the Disclosure Statement and other evidence proffered or adduced at the Confirmation Hearing (a) are persuasive, credible and accurate as of the dates such evidence was prepared or presented, (b) have not been controverted by other evidence or challenged in any objection to the Plan, (c) are based upon reasonable and sound assumptions, (d) provide a reasonable estimate of the liquidation values upon conversion to a chapter 7 proceeding, and (e) establish that each holder of a Claim in an impaired Class (i) has accepted the Plan, or (ii) will receive or retain under the Plan, on account of such Claim, property of a value, as of the Effective Date, that is not less than the amount that it would receive if the Debtor were liquidated under chapter 7 of the Bankruptcy Code on such date. O. Acceptance by Certain Classes (11 U.S.C.ss.1129(a)(8)). The Claims in Classes 1and 2 are Impaired and the holders of Claims in such Classes were notified of the consequences of voting to accept the Plan and have accepted the Plan in accordance with section 1126(c) of the Bankruptcy Code. 6 P. Treatment of Administrative and Tax Claims (11 U.S.C.ss.1129(a)(9)). The treatment of Administrative and Priority Tax Claims under the Plan satisfies the requirements of section 1129(a)(9)(A), (B) and (C) of the Bankruptcy Code, respectively. Q. Acceptance by Impaired Class (11 U.S.C.ss.1129(a)(10)). At least one Class of Claims that is Impaired under the Plan has accepted the Plan without including any acceptance of the Plan by an insider holding a Claim of such Class. R. Feasibility (11 U.S.C. ss. 1129(a)(11)). The Plan satisfies section 1129(a)(11) of the Bankruptcy Code because confirmation of the Plan is not likely to be followed by further liquidation proceedings of the Debtor. The Plan presents a workable scheme of organization and operation and there is a reasonable probability that the provisions of the Plan will be performed. The Plan is feasible. The Debtor has completed the liquidation of substantially all of its Assets, and will conclude its liquidation and distribution. S. Fees (11 U.S.C.ss.1129(a)(12)). All fees payable under 28 U.S.C.ss.1930 have been or will be paid on or before the Effective Date or such later date as such fees become due and payable. T. Retiree Benefits (11 U.S.C.ss.1129(a)(13)). The Debtor has no retiree benefits, as defined in section 1114 of the Bankruptcy Code and, therefore, section 1129(a)(13) is not applicable to this proceeding. U. No Avoidance of Taxes (11 U.S.C.ss.1129(d)). The principal purpose of the Plan is not the avoidance of taxes or the avoidance of section 5 of the Securities Act of 1933. V. No Other Plan. The Plan is the only plan of reorganization confirmed by this Court in this Chapter 11 Case. No other plan of reorganization or plan of liquidation has been properly filed other than by the Debtor. 7 W. Executory Contracts and Unexpired Leases. The assumption or rejection of executory contracts and unexpired leases in accordance with the Plan satisfies requirements of the applicable provisions of the Bankruptcy Code, including, without limitation, section 365 of the Bankruptcy Code. The Plan provides that all executory contracts and unexpired leases which existed as of the Petition Date and which have not been specifically assumed or rejected prior to the Confirmation of the Plan shall be rejected as of the entry of the Confirmation Order. X. Good Faith Solicitation (11 U.S.C.ss.1125(e)). The Debtor and its agents, accountants, business consultants, representatives, attorneys, and advisors, have solicited votes on the Plan in good faith and in compliance with the applicable provisions of the Bankruptcy Code. Y. Objections to Confirmation. No objections to confirmation of the Plan have been filed. Z. Ballot Tabulation. The procedures by which the ballots for acceptance or rejection of the Plan were distributed and tabulated were fair and properly conducted in accordance with this Court's order. AA. The Debtor Will Not Be Insolvent Nor Left With Unreasonably Small Capital. As of the occurrence of the Effective Date, the Debtor will not be insolvent and will not reasonably be expected to be rendered insolvent or left with unreasonably small capital to conclude its liquidation and distribution efforts as a result of the Plan. BB. Satisfaction Of Confirmation Requirements. The Plan satisfies the requirements for confirmation set forth in section 1129 of the Bankruptcy Code. CC. Retention of Jurisdiction. The Court may properly retain jurisdiction over the matters set forth in Article XI of the Plan and paragraph 18 below. 8 ACCORDINGLY, IT IS ORDERED THAT: 1. Adequacy of Disclosure Statement. The Disclosure Statement is adequate and approved. 2. Confirmation. The Plan is confirmed. A copy of the Plan, including the Modification Motion, is attached as Exhibit A. 3. Binding Effect. Pursuant to section 1141 of the Bankruptcy Code, effective as of the Confirmation Date, but subject to consummation of the Plan, and except as otherwise expressly provided in the Plan or this Order, the provisions of the Plan, including the exhibits to, and all documents and agreements executed pursuant to, the Plan, and this Confirmation Order shall be binding upon and inure to the benefit of the Debtor, all present and former holders of Claims, and any other parties in interest and their respective successors and assigns. 4. Provisions of Plan and Order Nonseverable and Mutually Dependent. The provisions of the Plan and this Order, including the findings of fact and conclusions of law set forth herein, are nonseverable and mutually dependent. 5. Plan Classification Controlling. The classification of Claims for purposes of the distributions to be made under the Plan shall be governed solely by the terms of the Plan. The classifications set forth on the Ballots tendered to and/or returned by the Debtor's creditors in connection with voting on the Plan: (a) were set forth on the Ballots solely for purposes of voting to accept or reject the Plan; (b) do not necessarily represent, and in no event shall be deemed to modify or otherwise affect, the actual classification of such Claims under the Plan for distribution purposes, and; (c) may not be relied upon by any creditor as representing the actual classification of such Claims under the Plan for distribution purposes. 9 6. Revesting of Assets. As provided in the Plan, the property of the Debtor's Estate shall vest in the holders of Allowed Claims in Class 1 on the Effective Date, subject to the provisions in the Plan for the resolution by the Debtor of Disputed Claims, the resolution of any administrative obligations, including without limitation the filing of tax returns, and the dissolution of the Debtor. As of the Effective Date, all property of the Debtor's Estate shall be free and clear of all Claims, except as specifically provided in the Plan or this Confirmation Order. Without limiting the foregoing, the Debtor may, without application to or approval by the Bankruptcy Court, pay amounts that are incurred after the Confirmation Date for professional fees and expenses. 7. General Authorizations. The Debtor and its representatives are authorized take any other action necessary or appropriate to implement, effectuate and consummate the Plan in accordance with its terms, whether or not specifically referred to in the Plan and without further application to or order of this Court. The Debtor and its representatives are further authorized to take all reasonably necessary steps to to dissolve the Debtor as a corporation. 8. Bar Date; Late Filed Proofs of Claim. Pursuant to an order of this Court, April 30, 2003, was the deadline for filing with the Court any and all Claims against the Debtor for all creditors with a Claim arising on or before March 21, 2003. Any such Claim that was not filed prior to that time and which is identified in the Debtor's amended schedule of liabilities as contingent, unliquidated or disputed is forever barred and shall be conclusively deemed discharged and disallowed for the purposes of voting on the Plan or receiving any distributions thereunder. 9. Rejected Contracts and Leases. Pursuant to the Plan, and in accordance with section 365 of the Bankruptcy Code, all executory contracts and unexpired leases not 10 specifically assumed or rejected prior to confirmation shall be deemed rejected as of the Confirmation Date. 10. Rejection Damages Bar Date. If the rejection by the Debtor, pursuant to the Plan or otherwise, of an executory contract or unexpired lease results in a Claim, then such Claim shall be forever barred and shall not be enforceable against the Debtor or the Estate unless a proof of claim is filed and served upon counsel to Debtor within twenty-five (25) days after the mailing of notice of this Order. 11. Preservation of Causes of Action. The Debtor shall retain and may enforce all claims, rights of action, suits and proceedings, whether in law or in equity, whether known or unknown, which the Debtor may hold against any entity, provided, however, that all causes of action that may exist under sections 510, 542, 544 through 550 of the Bankruptcy Code or under similar state laws, including, without limitation, preferential transfer and fraudulent conveyance claims, if any, are extinguished. 12. Stay and Injunctions. The stay in effect in the Chapter 11 Case pursuant to section 362(a) of the Bankruptcy Code shall continue to be in effect through the Effective Date, and at that time shall be dissolved and of no further force or effect, subject to the injunction in the Plan and/or sections 524 and 1141 of the Bankruptcy Code except that nothing herein shall bar the filing of financing documents or the taking of such other actions as are necessary to effectuate the transactions specifically contemplated by the Plan or by this Order. 13. Resolution of Claims. Except as otherwise ordered by this Court, any Claim that is not an Allowed Claim shall be determined, resolved, or adjudicated in accordance with the terms of the Plan. Any and all objections to Claims, other than the administrative 11 claims of professional which have been addressed by separate order of the Court, shall be filed and served no later than July 31, 2003. 14. U.S. Trustee Fees and Reports. The Debtor will be responsible for timely payment of fees incurred pursuant to 28 U.S.C.ss.1930(a)(6). After confirmation the Debtor will serve the United States Trustee with a monthly final report for each month (or portion thereof) the case remains open. The monthly financial report shall include the following: (1) a statement of all disbursements made during the course of the month, whether or not pursuant to the plan; (2) a summary, by class, of amounts distributed or property transferred to each recipient under the plan, and an explanation of the failure to make any distributions or transfers of property under the plan; (3) Debtor's projections as to its continuing ability to comply with the terms of the plan; (4) a description of any other factors which may materially affect the Debtor's ability to consummate the plan; and (5) an estimated date when an application for final decree will be filed with the court (in the case of the final monthly report, the date the decree was filed). 15. Notice of Entry of Confirmation Order. On or before the tenth (10th) Business Day following the date of entry of this Confirmation Order, the Debtor shall serve or caused to be served notice of entry of this Confirmation Order pursuant to Bankruptcy Rules 2002(f) and 3020(c) on all creditors, the United States Trustee, and other parties in interest by causing a notice of entry of the Confirmation Order in substantially the form of 12 the notice annexed hereto as Exhibit B, which form is hereby approved (the "Notice of Confirmation"), to be delivered to such parties by first class mail, postage prepaid; provided, however, that notice need not be given or served under the Bankruptcy Code, the Bankruptcy Rules or this Confirmation Order to any person to whom the Debtor mailed a notice of the Confirmation Hearing, but received such notice returned marked "undeliverable as address," "moved--no forwarding address" or "forwarding order expired" or similar reason, unless the Debtor has been informed in writing by such person of that person's new address. The notice described herein is adequate under the particular circumstances and no other or further notice is necessary. 16 Confirmation Hearing Findings and Conclusions. All, if any, of the Court's subsidiary findings and conclusions dictated into the record at the Confirmation Hearing are incorporated herein by reference. 17. Reference to Plan Provisions. The failure specifically to include or reference any particular provision of the Plan in this Confirmation Order shall not diminish or impair the effectiveness of such provision, it being the intent of the Court that the Plan be confirmed in its entirety. 18. Retention of Jurisdiction. Pursuant to sections 105(a) and 1142 of the Bankruptcy Code, and notwithstanding the entry of this Confirmation Order for the occurrence of the Effective Date, this Court shall retain exclusive jurisdiction over all matters arising out of, and related to, the Chapter 11 Case and the Plan to the fullest extent permitted by law, including, among other things, jurisdiction over those items and matters set forth in the Plan. SO ORDERED, this day of May, 2003. 13 -------------------------------- Honorable Carol J. Kenner United States Bankruptcy Judge 14 EX-99.3 5 b46838pcexv99w3.txt PLAN OF REORAGANIZATION (PCD, INC.) Exhibit 99.3 UNITED STATES BANKRUPTCY COURT DISTRICT OF MASSACHUSETTS EASTERN DIVISION - -------------------------------------------- ) In the matter of ) Chapter 11 ) Case No. 03-12310 CJK PCD INC. ) ) Debtor-in-Possession ) ) - --------------------------------------------) PLAN OF REORGANIZATION OF PCD INC. April 7, 2003 Debtor-in-possession PCD Inc. proposes this Plan of Reorganization pursuant to Chapter 11 of the Bankruptcy Code.(1) - -------- (1) A term used but not defined in Article I of this Plan and that is used in the Bankruptcy Code shall have the meaning assigned to it in the Bankruptcy Code, unless the context otherwise requires. ARTICLE I DEFINITIONS The following terms, when used in the Plan or any subsequent amendments or modifications thereof, shall have the meanings set forth below: 1.1 "Administrative Expense Claim" means any right to payment constituting a cost or expense of administration of the Chapter 11 Case Allowed under sections 503(b) and 507(a) of the Bankruptcy Code, including without limitation, (a) any actual and necessary costs and expenses of preserving the Estate of the Debtor, (b) any actual and necessary costs and expenses of operating the business of the Debtor, (c) any indebtedness or obligations incurred or assumed by the Debtor in the ordinary course of business in connection with the conduct of its business, (d) claims for reclamation Allowed in accordance with section 546(c)(2) of the Bankruptcy Code pursuant to a Final Order, (e) any Professional Fees, whether fixed before or after the Effective Date, and (f) any fees or charges assessed against and payable by the Estate of the Debtor under section 1930, title 28, United States Code, including post-Confirmation Date and post-Effective Date fees and charges. 1.2 "Allowed" means, with reference to any Claim (including any Administrative Expense Claim) or Equity Interest, (a) any Claim against or Equity Interest in the Debtor, proof of which was filed within the applicable period of limitation fixed by the Bankruptcy Court in accordance with Rule 3003(c)(3) of the Bankruptcy Rules (i) as to which no objection to the allowance thereof, or action to equitably subordinate or otherwise limit recovery with respect thereto, has been interposed within the applicable period of limitation fixed by the Plan, the Bankruptcy Code, the Bankruptcy Rules or a Final Order, (ii) as to which no action has been commenced to avoid such Claim or Equity Interest within the applicable period of limitation fixed by the Plan, or (iii) as to which an objection has been interposed, to the extent such Claim or Equity Interest has been allowed (whether in whole or in part) by a Final Order, (b) if no proof of Claim was so filed (or as to which the applicable proof of Claim has been withdrawn of disallowed), any Claim against the Debtor which has been listed by the Debtor in its Schedules, as such Schedules may be amended from time to time in accordance with Rule 1009 of the Bankruptcy Rules prior to the closing of the Chapter 11 Case, as liquidated in amount and not disputed or contingent, (c) if no proof of Equity Interest was so filed, any Equity Interest listed in the consolidated stockholders list maintained by the Debtor as of the Confirmation Date, (d) any Claim arising from the recovery of property under sections 550 or 553 of the Bankruptcy Code and allowed in accordance with section 502(h) of the Bankruptcy Code, (e) any Claim allowed under or pursuant to the terms of the Plan or (f) any Claim to the extent that it has been allowed by a Final Order; provided, however, that Claims allowed solely for the purpose of voting to accept or reject the Plan pursuant to an order of the Bankruptcy Court shall not be considered "Allowed Claims" hereunder. Unless otherwise specified herein or by order of the Bankruptcy Court, "Allowed Claims" shall not, for any purpose under the Plan, include interest, penalties or late charges on such Claims from and after the Petition Date. In addition, "Allowed Claim" shall -2- not include any Claim subject to disallowance in accordance with section 502(d) of the Bankruptcy Code. 1.3 "Amphenol" means Amphenol Corporation, a Delaware corporation. 1.4 "Approval Date" means the date of entry of a Final Order of the Bankruptcy Court approving the Disclosure Statement. 1.5 "Assets" has the meaning ascribed under the Asset Purchase Agreement. 1.6 "Asset Purchase Agreement" means that Asset Purchase Agreement between PCD and Amphenol dated as of March 21, 2003, as amended, attached as Exhibit A hereto. 1.7 "Bankruptcy Code" means title 11 of the United States Code, as amended from time to time, as applicable to the Chapter 11 Case, as in effect on the Confirmation Date. 1.8 "Bankruptcy Court" means the United States Bankruptcy Court for the District of Massachusetts having jurisdiction over the Chapter 11 Case and, to the extent of any reference under section 157 of title 28 of the United States Code, the unit of such District Court under section 151 of title 28 of the United States Code. 1.9 "Bankruptcy Rules" means the Federal Rules of Bankruptcy Procedure as promulgated by the United States Supreme Court under section 2075, title 28, United States Code, and the Local Rules of the Bankruptcy Court, as amended from time to time and applicable to the Chapter 11 Case. 1.10 "Business Day" means any day other than (i) a Saturday, (ii) a Sunday, (iii) any other day on which banking institutions in Boston, Massachusetts are required or authorized to close by law or executive order, and (iv) the Friday after Thanksgiving. 1.11 "Chapter 11 Case" means the Chapter 11 case of PCD Inc. 1.12 "Claim" means any claim against the Debtor as defined in section 101(5) of the Bankruptcy Code. 1.13 "Class 1 Creditors" means those creditors holding Allowed Claims in Class 1 of the Plan. 1.14 "Class 1 Creditor Payment Amount" means the greater of (i) 87% of the Sale Proceeds or (ii) $10,428,000, payable to Fleet as agent for the Class 1 Creditors. 1.15 "Class 2 Claim" means an Allowed Claim in Class 2 of the Plan. 1.16 "Class 2 Creditor Reserve" means the funds set aside on the Closing Date (as that -3- term is defined in the Asset Purchase Agreement) from the Sale Proceeds to pay in full the principal amounts of all Allowed Class 2 Claims. 1.17 "Common Stock" means the common stock of PCD Inc., authorized and outstanding on the Petition Date, including all rights, claims and interests attendant thereto. 1.18 "Confirmation Date" means the date the Bankruptcy Court enters the Confirmation Order. 1.19 "Confirmation Hearing" means the hearing held by the Bankruptcy Court pursuant to section 1128(a) of the Bankruptcy Code on confirmation of the Plan pursuant to section 1129 of the Bankruptcy Code, as it may be adjourned or continued from time to time. 1.20 "Confirmation Order" means the order of the Bankruptcy Court confirming the Plan. 1.21 "Creditors' Committee" means, the Official Committee of Unsecured Creditors appointed by the U.S. Trustee in the Chapter 11 Case. 1.22 "Debtor" means PCD Inc. 1.23 "Debtor in Possession" means the Debtor in its capacity as a debtor in possession in the Chapter 11 Case under sections 1107(a) and 1108 of the Bankruptcy Code. 1.24 "Debtor Reserve" means any cash of the Debtor on hand as of the Effective Date or received thereafter (other than Sale Proceeds or the Holdback), plus $1,487,827.05 set aside from the Sale Proceeds to fund the winding down of the Debtor's affairs. 1.25 "Disallowed Claim" means (a) a Claim, or any portion thereof, that has been disallowed by a Final Order or (b) unless scheduled by the Debtor as a fixed, liquidated, non-contingent and undisputed Claim, a Claim as to which a proof of Claim bar date has been established by the Bankruptcy Code, Bankruptcy Rules or Final Order but no proof of Claim has been timely filed or deemed timely filed with the Bankruptcy Court pursuant to either the Bankruptcy Code or a Final Order. 1.26 "Disclosure Statement" means the Disclosure Statement for the Plan approved by the Bankruptcy Court on the Approval Date. 1.27 "Disputed Claim" means a Claim, or any portion thereof, that is neither an Allowed Claim nor a Disallowed Claim. The Debtor currently does not believe that any Disputed Claims exist. 1.28 "Disputed Claim Reserve" means the reserve of money that would be payable to or receivable by the holders of Disputed Claims, if any, in the event such Claims are Allowed. -4- 1.29 "Effective Date" means the date selected by the Debtor, which date shall be no later than the tenth (10th) Business Day after the date on which the conditions specified in Article IX have been satisfied. 1.30 "Equity Interest" means, as of the Petition Date, any capital stock or other ownership interest in the Debtor, whether or not transferable, and any option, call, warrant or right to purchase, sell or subscribe for ownership interest or other equity security in the Debtor, including, but not limited to, (i) the Common Stock and any options, warrants or other rights to purchase Common Stock, whenever granted; and (ii) redemption, conversion, exchange, voting, participation, dividend rights and liquidation preferences relating to such Common Stock, options, warrants or other rights to purchase Common Stock. 1.31 "Estate" means, as to the Debtor, the estate of the Debtor in the Chapter 11 Case created by section 541 of the Bankruptcy Code upon commencement of such Chapter 11 Case. 1.32 "Final Order" means an order of the Bankruptcy Court (a) as to which the time to appeal, petition for certiorari, or move for reargument, rehearing or new trial has expired and as to which no appeal, petition for certiorari, or other proceedings for reargument, rehearing or new trial shall then be pending; (b) as to which any right to appeal, petition for certiorari, reargue, rehear or retry shall have been waived in writing in form and substance satisfactory to the Debtor; or (c) in the event that an appeal, writ of certiorari, reargument, rehearing or new trial has been sought, as to which (i) such order of the Bankruptcy Court shall have been affirmed by the highest court to which such order was appealed; (ii) certiorari has been denied as to such order; (iii) reargument or rehearing or new trial from such order shall have been denied, and the time to take any further appeal, petition for certiorari or move for reargument, rehearing or new trial shall have expired without such actions having been taken or (iv) with respect to the Confirmation Order, as to which no stay pending appeal, or like relief, has been granted. 1.33 "Fleet" means Fleet National Bank. 1.34 "Holdback" means the cash payment of $500,000 made by Amphenol upon the closing of the Asset Purchase Agreement, to be held in an escrow account for ninety (90) days following the closing pursuant to the Escrow Agreement (as defined in the Asset Purchase Agreement), to be applied to (i) any required payment by the Debtor to Amphenol for the difference in the estimated value of the Debtor's assets as of the Closing Date and the actual value on the Closing Date, and (ii) any claims of Amphenol against the Debtor under the Asset Purchase Agreement. 1.35 "Petition Date" means March 21, 2003, the date on which the Debtor filed the chapter 11 petition and commenced the Chapter 11 Case. 1.36 "Plan" means this Plan of Reorganization of PCD Inc., including the schedules and exhibits hereto, either in its present form or as the same may be amended, modified or supplemented from time to time in accordance with the terms hereof. -5- 1.37 "Priority Employee Claims" means all Claims entitled to priority pursuant to Bankruptcy Code sections 507(a)(3) and 507(a)(4). 1.38 "Priority Tax Claim" means any Claim of a governmental unit of the kind specified in sections 502(i) and 507(a)(8) of the Bankruptcy Code. 1.39 "Professional Fees" means any Claim of a professional, retained in the Chapter 11 Case, pursuant to sections 327 or 1103 of the Bankruptcy Code or otherwise, for compensation or reimbursement of costs and expenses relating to services incurred prior to and including the Effective Date, when and to the extent any such Claim is Allowed by the Bankruptcy Court pursuant to sections 330, 331, 503(b), or 1103 of the Bankruptcy Code. 1.40 "Sale Proceeds" means the Cash Consideration (as such term is defined in the Asset Purchase Agreement). 1.41 "Sale Order" means the Order Allowing Debtor's Motion for Sale of Assets Free and Clear of Liens and Encumbrances under 11 U.S.C.ss.363(f). 1.42 "Schedules" means the schedules of assets and liabilities and the statements of financial affairs filed with the Bankruptcy Court on or about March 21, 2003, by the Debtor under section 521 of the Bankruptcy Code and the Official Bankruptcy Forms of the Bankruptcy Rules, as such schedules and statements have been or may be supplemented or amended from time to time. 1.43 "Secured Loan Agreement" means that certain Amended and Restated Loan Agreement By and Among PCD Inc. and Fleet National Bank, as Collateral Agent, Administrative Agent and a Lender and The Other Financial Institutions Now or Hereafter Parties Hereto, dated February 27, 2002, as amended. 1.44 "United States Trustee" means the United States Trustee appointed under section 591, title 28, United States Code to serve in the Eastern District of Massachusetts. 1.45 "Unclassified Claims" means, collectively, all Administrative Expense Claims, all Priority Employee Claims, and all Priority Tax Claims. -6- 1.46 "Unsecured Claim" means any Claim against the Debtor that is not an Administrative Expense Claim, Secured Claim, Priority Tax Claim, or a Priority Employee Claim. ARTICLE II CLASSIFICATION OF CLAIMS AND INTERESTS For purposes of all confirmation issues, including, without limitation, voting, confirmation and distribution, except as otherwise provided herein, all Claims against the Debtor and Equity Interests in the Debtor are classified as follows: A. Unclassified Claims. Unclassified claims are Allowed Administrative Expense Claims, Allowed Priority Employee Claims, and Allowed Priority Tax Claims. B. Classified Claims. Class 1. This class consists of all Allowed Claims of the lenders under the Secured Loan Agreement, subdivided as follows: Class 1A. This class consists of the Allowed Secured Claim of Fleet National Bank. Class 1B. This class consists of the Allowed Secured Claim of Citizens Bank of Massachusetts. Class 1C. This class consists of the Allowed Secured Claim of Comerica Bank - California. Class 1D. This class consists of the Allowed Secured Claim of First Union National Bank. Class 1E. This class consists of the Allowed Secured Claim of Eastern Bank. Class 1F. This class consists of the Allowed Secured Claim of Restoration Funding CLO, Ltd. Class 1G. This class consists of the Allowed Secured Claim of First Source Loan Obligations Trust. Class 2. This class consists of all Allowed Unsecured Claims other than Unclassified Claims. -7- C. Equity Interests. Class 3. This class consists of all holders of Equity Interests. ARTICLE III - TREATMENT OF CLAIMS AND EQUITY INTERESTS A. Unclassified Claims. 1. Administrative Expense Claims. Each holder of an Allowed Administrative Expense Claim against the Debtor shall be paid in cash in full by or on behalf of the Debtor, or the successor(s) in interest thereto, (a) upon the later of (i) the Effective Date, or as soon as practicable thereafter or (ii) as soon as practicable after such Claim becomes an Allowed Administrative Expense Claim, if the date of allowance is later than the Effective Date, (b) upon such other terms as may be mutually agreed upon between such holder of an Allowed Administrative Expense Claim and the Debtor, or (c) according to the ordinary business terms of the Debtor and such holder; provided, however, that all post-Effective Date Professional Fees shall be paid by the Debtor within ten (10) Business Days of the submission of an invoice to the Debtor. In the event that the Debtor objects to the payment of a Professional's post-Effective Date invoice, in whole or part, and the parties cannot resolve such objection after good faith negotiation, the Bankruptcy Court shall retain jurisdiction to review the disputed invoice and make a determination as to the extent to which the invoice shall be paid by the Debtor. 2. Priority Employee Claims. All Allowed Priority Employee Claims, if any, shall be paid in full in cash by the Debtor on the later of the Effective Date or seven (7) days following the date of a Final Order Allowing such Claim. 3. Priority Tax Claims. Allowed Priority Tax Claims shall be paid (a) in cash, in full, on the Effective Date, or as soon as practicable thereafter, or as soon as practicable after such Claim becomes an Allowed Claim if the date of allowance is later than the Effective Date, or (b) in such amounts and on such other terms as may be agreed on between the holder of any such Claim and the Debtor in full satisfaction, settlement, release and discharge of and in exchange for such Allowed Priority Tax Claim. B. Classified Claims. Class 1 (Secured Claims) The Claims in Class 1 are impaired. Subject to approval of the Sale Order by the Bankruptcy Court,Fleet, as agent for the Class 1 Creditors, already will have received under the Sale Order (i) all right, title and interest to the Holdback; and (ii) the Class 1 Creditor Payment Amount. On or about the Effective Date, Fleet, as agent shall also receive (i) any funds remaining in the Debtor's Reserve or any other money or property of the Debtor remaining after payment of all Allowed Claims and expenses in accordance with Article VI, (ii) any amounts -8- remaining in the Class 2 Creditor Reserve after payment in full of the Class 2 Claims and (ii) any residial interest or right to payment otherwise provided for herein, including without limitation as provided in Article V These payments to the Class 1 Creditors collectively, shall be in full satisfaction, settlement, release and discharge of and in exchange for all Allowed Class 1 Claims. Class 2 (General Unsecured Claims). The Claims in Class 2 are impaired. Ten (10) days following the later of the Effective Date or the date upon which a Class 2 Claim becomes an Allowed Claim, each holder of an Allowed Class 2 Claim shall receive in full satisfaction, settlement, release, and discharge of and in exchange for that Allowed Claim a cash payment in an amount equal to 100% of the principal amount of such holder's Allowed Class 2 Claim. The Class 1 Creditors are waiving the right to receive any distribution under Class 2 on account of deficiency claims under the Secured Loan Agreement, except as otherwise expressly provided in this Plan. C. Equity Interests Class 3 (Equity Interests). The Equity Interests in Class 3 are impaired. The holders of Equity Interests shall receive nothing for their interests or potential interests in the Debtor. ARTICLE IV - IMPAIRED AND UNIMPAIRED CLASSES OF CLAIMS AND EQUITY INTERESTS UNDER THE PLAN; ACCEPTANCE OR REJECTION OF THE PLAN A. Holders of Claims and Equity Interests Entitled to Vote. 1. Each holder of an Allowed Claim or Allowed Equity Interest, or the holder of a Claim or Equity Interest that has been temporarily allowed for voting purposes only under Bankruptcy Rule 3018(a), in an impaired class of Claims against or Equity Interest in the Debtor, shall be entitled to vote separately to accept or reject the Plan. Any unimpaired class of Claims shall be deemed to have accepted the Plan. Any class of Claims or Equity Interests that will not receive or retain any property on account of such Claims or Equity Interests under the Plan shall be deemed to have rejected the Plan. 2. Class 1 and Class 2 are impaired hereunder and the holders of Allowed Claims in those Classes are entitled to vote on the Plan. The holders of Class 3 Equity Interests shall be deemed to have rejected the Plan. B. Non-consensual Confirmation. In the event that either Class 1 or Class 2 fails to accept the Plan, the Debtor reserves its right to modify the Plan in accordance with Section IV(A)(2)(D) hereof. C. Revocation of the Plan. The Debtor may revoke and withdraw the Plan at any -9- time prior to entry of the Confirmation Order. If the Plan is so revoked or withdrawn, then it shall be deemed null and void. D. Modification of Plan. The Debtor reserves the right, in accordance with the Bankruptcy Code, to amend or modify the Plan prior to the entry of the Confirmation Order. After the entry of the Confirmation Order, the Debtor may, upon order of the Bankruptcy Court, amend or modify the Plan, in accordance with section 1127(b) of the Bankruptcy Code, or remedy any defect or omission or reconcile any inconsistency in the Plan in such manner as may be necessary to carry out the purpose and intent of the Plan. ARTICLE V - LIQUIDATION A. Prior to the Effective Date, the Debtor shall have transferred to Amphenol all of the Debtor's right, title and interest to the Assets, free of all liens, claims and encumbrance, in accordance with the terms and conditions of the Asset Purchase Agreement attached as Exhibit A, in exchange for which Amphenol shall, inter alia, pay to the Debtor the Sale Proceeds, assume certain liabilities and pay into the Escrow Account (as defined in the Asset Purchase Agreement), the Holdback. B. On the Effective Date, (i) all securities, equity interests, notes, bonds, indentures, and other instruments or documents evidencing or creating any indebtedness, Equity Interest or obligation of the Debtor shall be as against the Debtor and its successor extinguished and canceled, and (ii) the obligations of the Debtor under any agreements, indenture or certificates of designation governing any securities, equity interests, notes, bonds, indentures and other instruments or documents creating any indebtedness, Equity Interest or obligation of the Debtor, as the case may be, shall be discharged. C. At the time set forth in Article III, the Debtor shall, after funding the Disputed Claims Reserve and the Debtors' Reserve, (a) pay from the Sale Proceeds to Fleet, as agent under the Secured Loan Agreement, the Class 1 Creditor Payment Amount (if such amount was not already paid to Fleet pursuant to the Sale Order), and shall transfer to Fleet, as agent all right, title and interest in and to the Holdback in full satisfaction of the Class 1 Creditors' claims under the Secured Loan Agreement (without waiver of any rights of the Class 1 Creditors to post-Effective Date payments in accordance with this Plan, including without limitation as provided in Article III(B) this Article V and Article VII); (b) pay in full all Unclassified Claims and all Classified Claims in accordance with Article III. Following the payment of all Claims in accordance with Article III, all funds remaining in the Debtor' Reserve and all other property of the Debtor shall revert to Fleet, as agent for the Class 1 Creditors. 1. Mechanics for Distributions. (a) Address for Mailing Distributions. Subject to Bankruptcy Rule 9010, and except as otherwise provided herein, distributions to holders of Allowed Claims shall be made at the address of each of such holder as set forth in the Schedules -10- filed with the Bankruptcy Court unless superseded by the address set forth on proofs of Claim filed by such holder (or at the last known address of such holders if no proof of Claim or proof of Equity Interest is filed or if the Debtor has been notified in writing of a change of address). If any distribution to any holder of an Allowed Unsecured Claim is returned as undeliverable, the Debtor shall use reasonable efforts to determine the current address of such holder, but no distribution to any such holder shall be made unless and until the Debtor has determined the then current address of such holder, at which time such distribution to such holder shall be made to such holder without interest. (b) Time Bar to Cash Payments by Check. The Debtor is authorized to stop payment on any payment made to a holder of an Allowed Class 2 Claim if said payment is not cashed within 180 days after the date on which the payment was mailed. Provided that the Debtor has made a reasonable effort to locate a holder who has failed to cash a payment, the failure to cash a payment within 180 days after its mailing shall be deemed a waiver of any of the holder's remaining claims against the Debtor, and the funds represented by that payment shall, revert to the Debtor to be distributed to Fleet. (c) Untimely Claims. Except as otherwise expressly provided in this Plan, any Claim not deemed filed pursuant to section 1111(a) of the Bankruptcy Code or timely filed pursuant to the Bankruptcy Code, Bankruptcy Rules or any applicable order of the Bankruptcy Court, shall (a) not be treated as an Allowed Claim and (b) expunged from the Claims register in the Chapter 11 Case without need for any further notice, motion or order. (d) No Distributions in Excess of Allowed Amount of Claim. Notwithstanding anything to the contrary herein, no holder of an Allowed Claim shall receive in respect of such Claim any distribution in excess of the Allowed Amount of such Claim. In the event there are funds remaining after payment in full of all Allowed Claims, such funds shall be paid to Fleet, as agent for the Class 1 Creditors. 2. Reports. In addition to the requirements of Article X, the Debtor shall file on a quarterly basis with the Bankruptcy Court, Fleet, and the United States Trustee and any other party in interest who has delivered to the Debtor a written request for such reports an unaudited report and account showing the assets and liabilities of the Debtor at the end of such quarter or upon dissolution. D. Following all distributions from the Debtor's Estate required under this Plan, the Debtor shall be dissolved and all funds and property remaining in the Debtor shall revert to Fleet as agent for the Class 1 Creditors. -11- ARTICLE VI - TREATMENT OF DISPUTED AND CONTINGENT CLAIMS A. Objections to Claims. From and after the Effective Date, the Debtor shall be solely responsible for filing objections to Disputed Claims and for prosecuting and, in its sole discretion, settling such objections. B. Disputed Claim Reserves. The Debtor shall create a Disputed Claim Reserve from the Sale Proceeds which shall consist of the money that would have been distributed on and after the Effective Date from the Sale Proceeds to holders of Disputed Claims in Class 2 as if such Claims were Allowed, which reserve shall be allocable as provided below for Disputed Claims in Class 2. The Debtor may request estimation for every Disputed Claim in Class 2 in the face amount of $10,000 or more that is unliquidated, and shall withhold a Disputed Claim Reserve based upon the estimated amount of such Claim as set forth in an applicable Final Order. If the Debtor elects not to request an estimation from the Bankruptcy Court with respect to a Disputed Claim in Class 2, the Debtor shall, as to such Disputed Claim in Class 2, base the reserve in the Disputed Claim Reserve on the face amount of such Disputed Claim in Class 2. C. Distributions After Allowance. Distributions from the Disputed Claim Reserve in respect of a Disputed Claim, to the extent that all or part of such Claim ultimately becomes Allowed, shall be made in accordance with the provisions of the Plan governing the class to which the respective holder belongs. After Final Orders have been entered, or other final resolutions have been reached, with respect to all Disputed Claims in Class 2, any money remaining in the Disputed Claim Reserves for Disputed Claims in Class 2, less expenses, shall be distributed to Fleet as agent for the Class 1 Creditors. D. Interest on Claims. Unless otherwise specifically provided for in the Plan or Confirmation Order, or required by applicable bankruptcy law, interest shall not accrue on Claims, and no holder of a Claim shall be entitled to interest accruing on or after the Commencement Date on any Claim. Interest shall not accrue or be paid upon any Disputed Claim in respect of the period from the Commencement Date to the date a final distribution is made thereon if such Disputed Claim becomes an Allowed Claim. -12- E. Fees and Expenses. All fees and expenses incurred by the Debtor in connection with the Disputed Claims shall be paid from the Debtors' Reserve. Any funds remaining in the Debtors' Reserve after all fees and expenses have been paid shall be distributed to Fleet as agent for the Class 1 Creditors. ARTICLE VII - CONSEQUENCES OF CONFIRMATION OF THE PLAN A. Property of the Estate. As of the Effective Date, all property of the Estate shall be free and clear of all claims and interests, except as specifically provided in the Plan or the Confirmation Order. The Debtor shall establish the Debtor's Reserve to pay all expenses associated with winding down the Debtor's affairs and the Disputed Claim Reserve to fund payment of Disputed Claims that are subsequently Allowed. Following the Effective Date, the Debtor may, without application to or approval by the Bankruptcy Court, pay professional fees and expenses that it will incur after the Effective Date in connection with its dissolution, using funds from the Debtor's Reserve. B. Claims Objections. As provided in Article V and Article VI, the Debtor shall have the sole authority to file and pursue objections to Disputed Claims. All fees and costs incurred by the Debtor on or after the Confirmation Date in relation to the objections to Disputed Claims, including any fees owed to the United States Trustee from and after the Effective Date, shall be paid from the Debtors' Reserve, and all such post-confirmation fees and costs may be paid without application to or order of the Bankruptcy Court. Once all Disputed Claims are resolved, the Debtor shall be responsible for closing the Chapter 11 Case. All expenses, fees and costs related to the Chapter 11 Case from and after the Effective Date shall be paid from the Debtors' Reserve. Any funds remaining after all fees and expenses have been paid shall be distributed to Fleet as agent for the Class 1 Creditors. C. Dissolution of Committees. As of the Effective Date, the Official Committee of Unsecured Creditors shall be deemed dissolved, and fees and costs incurred by the Committee or its professionals from and after the Effective Date, other than those incurred to prepare final fee applications, shall not be borne or paid by the Debtor. D. Retiree Benefits. The Debtor has no retiree benefit plans, fund, or programs, as defined in section 1114 of the Bankruptcy Code, for the purpose of providing or reimbursing payments for retired employees and their spouses and dependents for medical, surgical, or hospital care benefits, or benefits in the event of sickness, accident, disability, or death under any plan, fund or program (through the purchase of insurance or otherwise). Accordingly, no payments relating to such retiree benefit plans, fund or programs shall be made. -13- ARTICLE VIII - ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES Any executory contract or unexpired lease which is not an Assumed Contract (as that term is defined in the Asset Purchase Agreement) as of the Confirmation Hearing, or which the Debtor has previously moved to reject, shall be deemed rejected. If the rejection by the Debtor pursuant to the Plan, of an executory contract or unexpired lease results in a Claim or Administrative Expense Claim, then such Claim or Administrative Expense Claim shall be discharged and barred forever and shall not be enforceable against the Debtor or any of its property, unless a proof of Claim or proof of Administrative Expense Claim is filed with the Clerk of the Bankruptcy Court and served upon counsel to the Debtor and, as applicable, counsel to the Creditors' Committee within thirty (30) days after the earlier to occur of (a) the Confirmation Date and (b) the entry of an order by the Bankruptcy Court authorizing rejection of the subject executory contract or unexpired lease. ARTICLE IX - CONDITIONS PRECEDENT TO CONFIRMATION AND CONSUMMATION OF THE PLAN A. Conditions Precedent to Confirmation. It is a condition precedent to confirmation of the Plan that: 1. The Asset Purchase Agreement shall have been approved by a Final Order; 2. The covenants of the Debtor under Section 4 of the Asset Purchase Agreement shall have been satisfied; 3. The conditions precedent to Amphenol's obligations under Section 5 of the Asset Purchase Agreement shall have been satisfied; and 4. The Debtor shall have changed its corporate name to a name that does not include "PCD". B. Conditions Precedent to Consummation. It is a condition precedent to consummation of the Plan that the Confirmation Order shall be a Final Order, and shall provide, among other things, that: 1. The Asset Purchase Agreement is authorized and approved; 2. The provisions of the Confirmation Order are nonseverable and mutually dependent; 3. The Debtor Reserve, the Disputed Claims Reserve (if any) and the Class 2 Creditor Reserve shall have been funded in full from the Sale Proceeds; and -14- 4. Fleet shall have received the Class 1 Creditor Payment Amount. ARTICLE X - OBLIGATIONS TO THE UNITED STATES TRUSTEE After the Effective Date, the Debtor will be responsible for timely payment of fees incurred pursuant to 28 U.S.C. ss. 1930(a)(6). After the Effective Date, the Debtor will serve the United States Trustee with a monthly financial report for each month (or portion thereof) the Chapter 11 Case remains open. The monthly financial report shall include the following: A. a statement of all disbursements made from during the course of the month, whether or not pursuant to the Plan; B. a summary, by class, of amount distributed or property transferred to each recipient under the Plan, and an explanation of the failure to make any distributions or transfers of property under the Plan; C. the Debtor's projections as to its continuing ability to comply wit the terms of the Plan; D. a description of any other factors which may materially affect the Debtor's ability to consummate the Plan; and E. an estimated date when an application for final decree will be filed with the Bankruptcy Court (in the case of the final monthly report, the date the decree was filed). ARTICLE XI - RETENTION OF JURISDICTION The Bankruptcy Court shall retain jurisdiction of the Reorganization Case pursuant to the provisions of Chapter 11 of the Bankruptcy Code following the Effective Date, for the following purposes: 1. To hear and determine estimates of and objections to Claims and Interests; 2. To hear and determine any dispute arising under the Plan or the Plan Documents, the implementation or execution of the foregoing and any requests to amend, modify, or correct the Plan or the Plan Documents; 3. To hear and determine motions for rejection, assumption or assumption and assignment of executory contracts and unexpired leases to which the Debtor is a party, and any Claims arising therefrom; -15- 4. To modify any of the deadlines set forth in the Confirmation Order, as may be appropriate; 5. To enforce all discharge provisions under the Plan; 6. To hear and determine actions arising under Chapter 5 of the Bankruptcy Code; 7. To hear any other matters not inconsistent with the Bankruptcy Code; and 8. To enter a final decree closing the Chapter 11 Case. -16- PCD INC. By: ____________________________________________ John L. Dwight, Jr. Chief Executive Officer COUNSEL TO DEBTOR Charles R. Dougherty Anne L. Showalter 77A Revere Street Boston, MA 02114 (617) 669-9003 DATED: April ___, 2003 -17- Exhibit A- Asset Purchase Agreement -18- Exhibit B - Summary of Schedules and Exhibits -19- EX-99.4 6 b46838pcexv99w4.txt PLAN OF REORGANIZATION (WELLS-CTI, INC.) Exhibit 99.4 UNITED STATES BANKRUPTCY COURT DISTRICT OF MASSACHUSETTS EASTERN DIVISION - -------------------------------------------- ) In the matter of ) Chapter 11 ) Case No. 03-12309 CJK WELLS-CTI, INC. ) ) Debtor-in-Possession ) ) - -------------------------------------------- PLAN OF REORGANIZATION OF WELLS-CTI, INC. April 7, 2003 Debtor-in-possession Wells-CTI, Inc. proposes this Plan of Reorganization pursuant to Chapter 11 of the Bankruptcy Code.(1) - -------- (1) A term used but not defined in Article I of this Plan and that is used in the Bankruptcy Code shall have the meaning assigned to it in the Bankruptcy Code, unless the context otherwise requires. ARTICLE I DEFINITIONS The following terms, when used in the Plan or any subsequent amendments or modifications thereof, shall have the meanings set forth below: 1.1 "Administrative Expense Claim" means any right to payment constituting a cost or expense of administration of the Chapter 11 Case Allowed under sections 503(b) and 507(a) of the Bankruptcy Code, including without limitation, (a) any actual and necessary costs and expenses of preserving the Estate of the Debtor, (b) any actual and necessary costs and expenses of operating the business of the Debtor, (c) any indebtedness or obligations incurred or assumed by the Debtor in the ordinary course of business in connection with the conduct of its business, (d) claims for reclamation Allowed in accordance with section 546(c)(2) of the Bankruptcy Code pursuant to a Final Order, (e) any Professional Fees, whether fixed before or after the Effective Date, and (f) any fees or charges assessed against and payable by the Estate of the Debtor under section 1930, title 28, United States Code, including post-Confirmation Date and post-Effective Date fees and charges. 1.2 "Allowed" means, with reference to any Claim (including any Administrative Expense Claim) or Equity Interest, (a) any Claim against or Equity Interest in the Debtor, proof of which was filed within the applicable period of limitation fixed by the Bankruptcy Court in accordance with Rule 3003(c)(3) of the Bankruptcy Rules (i) as to which no objection to the allowance thereof, or action to equitably subordinate or otherwise limit recovery with respect thereto, has been interposed within the applicable period of limitation fixed by the Plan, the Bankruptcy Code, the Bankruptcy Rules or a Final Order, (ii) as to which no action has been commenced to avoid such Claim or Equity Interest within the applicable period of limitation fixed by the Plan, or (iii) as to which an objection has been interposed, to the extent such Claim or Equity Interest has been allowed (whether in whole or in part) by a Final Order, (b) if no proof of Claim was so filed (or as to which the applicable proof of Claim has been withdrawn of disallowed), any Claim against the Debtor which has been listed by the Debtor in its Schedules, as such Schedules may be amended from time to time in accordance with Rule 1009 of the Bankruptcy Rules prior to the closing of the Chapter 11 Case, as liquidated in amount and not disputed or contingent, (c) if no proof of Equity Interest was so filed, any Equity Interest listed in the consolidated stockholders list maintained by the Debtor as of the Confirmation Date, (d) any Claim arising from the recovery of property under sections 550 or 553 of the Bankruptcy Code and allowed in accordance with section 502(h) of the Bankruptcy Code, (e) any Claim allowed under or pursuant to the terms of the Plan or (f) any Claim to the extent that it has been allowed by a Final Order; provided, however, that Claims allowed solely for the purpose of voting to accept or reject the Plan pursuant to an order of the Bankruptcy Court shall not be considered "Allowed Claims" hereunder. Unless otherwise specified herein or by order of the Bankruptcy Court, "Allowed Claims" shall not, for any purpose under the Plan, include interest, penalties or late charges on such Claims from and after the Petition Date. In addition, "Allowed Claim" shall -2- not include any Claim subject to disallowance in accordance with section 502(d) of the Bankruptcy Code. 1.3 "Approval Date" means the date of entry of a Final Order of the Bankruptcy Court approving the Disclosure Statement. 1.4 "Assets" has the meaning ascribed under the Asset Purchase Agreement. 1.5 "Asset Purchase Agreement" means that Asset Purchase Agreement between the Debtor, PCD, Inc., the Buyer, and UMD Technology, Inc. dated as of March 21, 2003, as amended, attached as Exhibit A hereto. 1.6 "Bankruptcy Code" means title 11 of the United States Code, as amended from time to time, as applicable to the Chapter 11 Case, as in effect on the Confirmation Date. 1.7 "Bankruptcy Court" means the United States Bankruptcy Court for the District of Massachusetts having jurisdiction over the Chapter 11 Case and, to the extent of any reference under section 157 of title 28 of the United States Code, the unit of such District Court under section 151 of title 28 of the United States Code. 1.8 "Bankruptcy Rules" means the Federal Rules of Bankruptcy Procedure as promulgated by the United States Supreme Court under section 2075, title 28, United States Code, and the Local Rules of the Bankruptcy Court, as amended from time to time and applicable to the Chapter 11 Case. 1.9 "Business Day" means any day other than (i) a Saturday, (ii) a Sunday, (iii) any other day on which banking institutions in Boston, Massachusetts are required or authorized to close by law or executive order, and (iv) the Friday after Thanksgiving. 1.10 "Buyer" means Kabushiki Wells-CTI, LLC, an Oregon limited liability company. 1.11 "Chapter 11 Case" means the Chapter 11 case of Wells-CTI, Inc. 1.12 "Claim" means any claim against the Debtor as defined in section 101(5) of the Bankruptcy Code. 1.13 "Class 1 Creditors" means those creditors holding Allowed Claims in Class 1 of the Plan. 1.14 "Class 1 Creditor Payment Amount" means the greater of (i) 98% of the Sale Proceeds or (ii) $1,980,000, payable to Fleet as agent for the Class 1 Creditors. 1.15 "Class 2 Claim" means an Allowed Claim in Class 2 of the Plan. 1.16 "Class 2 Creditor Reserve" means the funds set aside on the Closing Date (as that -3- term is defined in the Asset Purchase Agreement) from the Sale Proceeds to pay in full the principal amounts of all Allowed Class 2 Claims. 1.17 "Common Stock" means the common stock of Wells-CTI, Inc., authorized and outstanding on the Petition Date, including all rights, claims and interests attendant thereto. 1.18 "Confirmation Date" means the date the Bankruptcy Court enters the Confirmation Order. 1.19 "Confirmation Hearing" means the hearing held by the Bankruptcy Court pursuant to section 1128(a) of the Bankruptcy Code on confirmation of the Plan pursuant to section 1129 of the Bankruptcy Code, as it may be adjourned or continued from time to time. 1.20 "Confirmation Order" means the order of the Bankruptcy Court confirming the Plan. 1.21 "Creditors' Committee" means, the Official Committee of Unsecured Creditors appointed by the U.S. Trustee in the Chapter 11 Case. 1.22 "Debtor" means Wells-CTI, Inc. 1.23 "Debtor in Possession" means the Debtor in its capacity as a debtor in possession in the Chapter 11 Case under sections 1107(a) and 1108 of the Bankruptcy Code. 1.24 "Debtor Reserve" means any cash of the Debtor on hand as of the Effective Date or received thereafter (other than Sale Proceeds), plus $17,568.53 set aside from the Sale Proceeds to fund the winding down of the Debtor's affairs. 1.25 "Disallowed Claim" means (a) a Claim, or any portion thereof, that has been disallowed by a Final Order or (b) unless scheduled by the Debtor as a fixed, liquidated, non-contingent and undisputed Claim, a Claim as to which a proof of Claim bar date has been established by the Bankruptcy Code, Bankruptcy Rules or Final Order but no proof of Claim has been timely filed or deemed timely filed with the Bankruptcy Court pursuant to either the Bankruptcy Code or a Final Order. 1.26 "Disclosure Statement" means the Disclosure Statement for the Plan approved by the Bankruptcy Court on the Approval Date. 1.27 "Disputed Claim" means a Claim, or any portion thereof, that is neither an Allowed Claim nor a Disallowed Claim. The Debtor currently does not believe that any Disputed Claims exist. 1.28 "Disputed Claim Reserve" means the reserve of money that would be payable to or receivable by the holders of Disputed Claims, if any, in the event such Claims are Allowed. -4- 1.29 "Effective Date" means the date selected by the Debtor, which date shall be no later than the tenth (10th) Business Day after the date on which the conditions specified in Article IX have been satisfied. 1.30 "Equity Interest" means, as of the Petition Date, any capital stock or other ownership interest in the Debtor, whether or not transferable, and any option, call, warrant or right to purchase, sell or subscribe for ownership interest or other equity security in the Debtor, including, but not limited to, (i) the Common Stock and any options, warrants or other rights to purchase Common Stock, whenever granted; and (ii) redemption, conversion, exchange, voting, participation, dividend rights and liquidation preferences relating to such Common Stock, options, warrants or other rights to purchase Common Stock. 1.31 "Estate" means, as to the Debtor, the estate of the Debtor in the Chapter 11 Case created by section 541 of the Bankruptcy Code upon commencement of such Chapter 11 Case. 1.32 "Final Order" means an order of the Bankruptcy Court (a) as to which the time to appeal, petition for certiorari, or move for reargument, rehearing or new trial has expired and as to which no appeal, petition for certiorari, or other proceedings for reargument, rehearing or new trial shall then be pending; (b) as to which any right to appeal, petition for certiorari, reargue, rehear or retry shall have been waived in writing in form and substance satisfactory to the Debtor; or (c) in the event that an appeal, writ of certiorari, reargument, rehearing or new trial has been sought, as to which (i) such order of the Bankruptcy Court shall have been affirmed by the highest court to which such order was appealed; (ii) certiorari has been denied as to such order; (iii) reargument or rehearing or new trial from such order shall have been denied, and the time to take any further appeal, petition for certiorari or move for reargument, rehearing or new trial shall have expired without such actions having been taken or (iv) with respect to the Confirmation Order, as to which no stay pending appeal, or like relief, has been granted. 1.33 "Fleet" means Fleet National Bank. 1.34 "Petition Date" means March 21, 2003, the date on which the Debtor filed the chapter 11 petition and commenced the Chapter 11 Case. 1.35 "Plan" means this Plan of Reorganization of Wells-CTI, Inc., including the schedules and exhibits hereto, either in its present form or as the same may be amended, modified or supplemented from time to time in accordance with the terms hereof. 1.36 "Priority Employee Claims" means all Claims entitled to priority pursuant to Bankruptcy Code sections 507(a)(3) and 507(a)(4). 1.37 "Priority Tax Claim" means any Claim of a governmental unit of the kind specified in sections 502(i) and 507(a)(8) of the Bankruptcy Code. 1.38 "Professional Fees" means any Claim of a professional, retained in the Chapter 11 Case, pursuant to sections 327 or 1103 of the Bankruptcy Code or otherwise, for compensation or -5- reimbursement of costs and expenses relating to services incurred prior to and including the Effective Date, when and to the extent any such Claim is Allowed by the Bankruptcy Court pursuant to sections 330, 331, 503(b), or 1103 of the Bankruptcy Code. 1.39 "Sale Order" means the Order Allowing Debtor's Motion for Sale of Assets Free and Clear of Liens and Encumbrances under 11 U.S.C.ss.363(f). 1.40 "Sale Proceeds" means the Cash Consideration (as such term is defined in the Asset Purchase Agreement). 1.41 "Schedules" means the schedules of assets and liabilities and the statements of financial affairs filed with the Bankruptcy Court on or about March 21, 2003, by the Debtor under section 521 of the Bankruptcy Code and the Official Bankruptcy Forms of the Bankruptcy Rules, as such schedules and statements have been or may be supplemented or amended from time to time. 1.42 "Secured Loan Agreement" means that certain Amended and Restated Loan Agreement By and Among PCD Inc. and Fleet National Bank, as Collateral Agent, Administrative Agent and a Lender and The Other Financial Institutions Now or Hereafter Parties Hereto, dated February 27, 2002, as amended. 1.43 "United States Trustee" means the United States Trustee appointed under section 591, title 28, United States Code to serve in the Eastern District of Massachusetts. 1.44 "Unclassified Claims" means, collectively, all Administrative Expense Claims, all Priority Employee Claims, and all Priority Tax Claims. 1.45 "Unsecured Claim" means any Claim against the Debtor that is not an Administrative Expense Claim, Secured Claim, Priority Tax Claim, or a Priority Employee Claim. ARTICLE II CLASSIFICATION OF CLAIMS AND INTERESTS For purposes of all confirmation issues, including, without limitation, voting, confirmation and distribution, except as otherwise provided herein, all Claims against the Debtor and Equity Interests in the Debtor are classified as follows: A. Unclassified Claims. Unclassified claims are Allowed Administrative Expense Claims, Allowed Priority Employee Claims, and Allowed Priority Tax Claims. -6- B. Classified Claims. Class 1. This Class consists of all Allowed Claims of the lenders under the Secured Loan Agreement, subdivided as follows: Class 1A. This Class consists of the Allowed Secured Claim of Fleet National Bank. Class 1B. This Class consists of the Allowed Secured Claim of Citizens Bank of Massachusetts. Class 1C. This Class consists of the Allowed Secured Claim of Comerica Bank - California. Class 1D. This Class consists of the Allowed Secured Claim of First Union National Bank. Class 1E. This Class consists of the Allowed Secured Claim of Eastern Bank. Class 1F. This Class consists of the Allowed Secured Claim of Restoration Funding CLO, Ltd. Class 1G. This Class consists of the Allowed Secured Claim of First Source Loan Obligations Trust. Class 2. This Class consists of all Allowed Unsecured Claims other than Unclassified Claims. C. Equity Interests. Class 3. This Class consists of all holders of Equity Interests. ARTICLE III - TREATMENT OF CLAIMS AND EQUITY INTERESTS A. Unclassified Claims. 1. Administrative Expense Claims. Each holder of an Allowed Administrative Expense Claim against the Debtor shall be paid in cash in full by or on behalf of the Debtor, or the successor(s) in interest thereto, (a) upon the later of (i) the Effective Date, or as soon as practicable thereafter or (ii) as soon as practicable after such Claim becomes an Allowed Administrative Expense Claim, if the date of allowance is later than the Effective Date, (b) upon such other terms as may be mutually agreed upon between such holder of an Allowed Administrative Expense Claim and the Debtor, or (c) according to the ordinary business terms of the Debtor and such holder; provided, however, that all post-Effective Date Professional Fees -7- shall be paid by the Debtor within ten (10) Business Days of the submission of an invoice to the Debtor. In the event that the Debtor objects to the payment of a Professional's post-Effective Date invoice, in whole or part, and the parties cannot resolve such objection after good faith negotiation, the Bankruptcy Court shall retain jurisdiction to review the disputed invoice and make a determination as to the extent to which the invoice shall be paid by the Debtor. 2. Priority Employee Claims. All Allowed Priority Employee Claims, if any, shall be paid in full in cash by the Debtor on the later of the Effective Date or seven (7) days following the date of a Final Order Allowing such Claim. 3. Priority Tax Claims. Allowed Priority Tax Claims shall be paid (a) in cash, in full, on the Effective Date, or as soon as practicable thereafter, or as soon as practicable after such Claim becomes an Allowed Claim if the date of allowance is later than the Effective Date, or (b) in such amounts and on such other terms as may be agreed on between the holder of any such Claim and the Debtor in full satisfaction, settlement, release and discharge of and in exchange for such Allowed Priority Tax Claim. B. Classified Claims. Class 1 (Secured Claims) The Claims in Class 1 are impaired. Subject to the Bankruptcy Court's approval of the Sale OrderFleet, as agent for the Class 1 Creditors, already will have received under the Sale Order the Class 1 Creditor Payment Amount. On or about the Effective Date, Fleet, as agent shall also receive (i) any funds remaining in the Debtor's Reserve and any other property held by the Debtor after payment of all Allowed Claims and expenses in accordance with Article VI, (ii) any amounts remaining in the Class 2 Creditor Reserve after payment in full of the Class 2 Claims and (iii) any residual interest or right to payment otherwise provided for herein, including without limitation as provided in Article V. These payments to the Class 1 Creditors collectively, shall be in full satisfaction, settlement, release and discharge of and in exchange for all Allowed Class 1 Claims. Class 2 (General Unsecured Claims). The Claims in Class 2 are impaired. Ten (10) days following the later of the Effective Date or the date upon which a Class 2 Claim becomes an Allowed Claim, each holder of an Allowed Class 2 Claim shall receive from the Class 1 Creditor Reserve in full satisfaction, settlement, release, and discharge of and in exchange for that Allowed Claim a cash payment in an amount equal to 100% of the principal amount of such holder's Allowed Class 2 Claim. The Class 1 Creditors are waiving the right to receive any distribution under Class 2 on account of deficiency claims under the Secured Loan Agreement, except as otherwise expressly provided in this Plan. -8- C. Equity Interests Class 3 (Equity Interests). The Equity Interests in Class 3 are impaired. The holders of Equity Interests shall receive nothing for their interests or potential interests in the Debtor. ARTICLE IV - IMPAIRED AND UNIMPAIRED CLASSES OF CLAIMS AND EQUITY INTERESTS UNDER THE PLAN; ACCEPTANCE OR REJECTION OF THE PLAN A. Holders of Claims and Equity Interests Entitled to Vote. 1. Each holder of an Allowed Claim or Allowed Equity Interest, or the holder of a Claim or Equity Interest that has been temporarily allowed for voting purposes only under Bankruptcy Rule 3018(a), in an impaired Class of Claims against or Equity Interest in the Debtor, shall be entitled to vote separately to accept or reject the Plan. Any unimpaired Class of Claims shall be deemed to have accepted the Plan. Any Class of Claims or Equity Interests that will not receive or retain any property on account of such Claims or Equity Interests under the Plan shall be deemed to have rejected the Plan. 2. Class 1 and Class 2 are impaired hereunder and the holders of Allowed Claims in those Classes are entitled to vote on the Plan. The holders of Class 3 Equity Interests shall be deemed to have rejected the Plan. B. Non-consensual Confirmation. In the event that either Class 1 or Class 2 fails to accept the Plan, the Debtor reserves its right to modify the Plan in accordance with Section IV(A)(2)(D) hereof. C. Revocation of the Plan. The Debtor may revoke and withdraw the Plan at any time prior to entry of the Confirmation Order. If the Plan is so revoked or withdrawn, then it shall be deemed null and void. D. Modification of Plan. The Debtor reserves the right, in accordance with the Bankruptcy Code, to amend or modify the Plan prior to the entry of the Confirmation Order. After the entry of the Confirmation Order, the Debtormay, upon order of the Bankruptcy Court, amend or modify the Plan, in accordance with section 1127(b) of the Bankruptcy Code, or remedy any defect or omission or reconcile any inconsistency in the Plan in such manner as may be necessary to carry out the purpose and intent of the Plan. ARTICLE V - LIQUIDATION A. Prior to the Effective Date, the Debtor shall have transferred to the Buyer all of the Debtor's right, title and interest to the Assets, free of all liens, claims and encumbrance, in -9- accordance with the terms and conditions of the Asset Purchase Agreement attached as Exhibit A, in exchange for which the Buyer shall, inter alia, pay to the Debtor the Sale Proceeds. B. On the Effective Date, (i) all securities, equity interests, notes, bonds, indentures, and other instruments or documents evidencing or creating any indebtedness, Equity Interest or obligation of the Debtor shall be as against the Debtor and its successor extinguished and canceled, and (ii) the obligations of the Debtor under any agreements, indenture or certificates of designation governing any securities, equity interests, notes, bonds, indentures and other instruments or documents creating any indebtedness, Equity Interest or obligation of the Debtor, as the case may be, shall be discharged. C. At the time set forth in Article III, the Debtor shall, after funding the Disputed Claims Reserve and the Debtors' Reserve, (a) pay from the Sale Proceeds to Fleet, as agent under the Secured Loan Agreement, the Class 1 Creditor Payment Amount (if such amount was not already paid to Fleet pursuant to the Sale Order) in full satisfaction of the Class 1 Creditors' claims under the Secured Loan Agreement (without waiver of rights of the Class 1 Creditors to post-Effective Date payments in accordance with this Plan, including without limitation as provided in Article III(B), this Article V and Article VIII); (b) pay in full all Unclassified Claims and all Classified Claims in accordance with Article III. Following the payment of all Claims in accordance with Article III, all funds remaining in the Debtor' Reserve and all other property of the Debtor shall revert to Fleet as agent for the Class 1 Creditors. 1. Mechanics for Distributions. (a) Address for Mailing Distributions. Subject to Bankruptcy Rule 9010, and except as otherwise provided herein, distributions to holders of Allowed Claims shall be made at the address of each of such holder as set forth in the Schedules filed with the Bankruptcy Court unless superseded by the address set forth on proofs of Claim filed by such holder (or at the last known address of such holders if no proof of Claim or proof of Equity Interest is filed or if the Debtor has been notified in writing of a change of address). If any distribution to any holder of an Allowed Unsecured Claim is returned as undeliverable, the Debtor shall use reasonable efforts to determine the current address of such holder, but no distribution to any such holder shall be made unless and until the Debtor has determined the then current address of such holder, at which time such distribution to such holder shall be made to such holder without interest. (b) Time Bar to Cash Payments by Check. The Debtor is authorized to stop payment on any payment made to a holder of an Allowed Class 2 Claim if said payment is not cashed within 180 days after the date on which the payment was mailed. Provided that the Debtor has made a reasonable effort to locate a holder who has failed to cash a payment, the failure to cash a payment within 180 days after its mailing shall be deemed a waiver of any of the holder's remaining claims -10- against the Debtor, and the funds represented by that payment shall, revert to the Debtor to be distributed to Fleet. (c) Untimely Claims. Except as otherwise expressly provided in this Plan, any Claim not deemed filed pursuant to section 1111(a) of the Bankruptcy Code or timely filed pursuant to the Bankruptcy Code, Bankruptcy Rules or any applicable order of the Bankruptcy Court, shall (a) not be treated as an Allowed Claim and (b) expunged from the Claims register in the Chapter 11 Case without need for any further notice, motion or order. (d) No Distributions in Excess of Allowed Amount of Claim. Notwithstanding anything to the contrary herein, no holder of an Allowed Claim shall receive in respect of such Claim any distribution in excess of the Allowed Amount of such Claim. In the event there are funds remaining after payment in full of all Allowed Claims, such funds shall be paid to Fleet, as agent for the Class 1 Creditors. 2. Reports. In addition to the requirements of Article X, the Debtor shall file on a quarterly basis with the Bankruptcy Court, Fleet, and the United States Trustee and any other party in interest who has delivered to the Debtor a written request for such reports an unaudited report and account showing the assets and liabilities of the Debtor at the end of such quarter or upon dissolution. D. Following all distributions from the Debtor's Estate required under this Plan, the Debtor shall be dissolved and all funds and propoerty remaining in the Debtor shall revert to Fleet as agent for the Class 1 Creditors. ARTICLE VI - TREATMENT OF DISPUTED AND CONTINGENT CLAIMS A. Objections to Claims. From and after the Effective Date, the Debtor shall be solely responsible for filing objections to Disputed Claims and for prosecuting and, in its sole discretion, settling such objections. B. Disputed Claim Reserves. The Debtor shall create a Disputed Claim Reserve from the Sale Proceeds which shall consist of the money that would have been distributed on and after the Effective Date from the Sale Proceeds to holders of Disputed Claims in Class 2 as if such Claims were Allowed, which reserve shall be allocable as provided below for Disputed Claims in Class 2. The Debtor may request estimation for every Disputed Claim in Class 2 in the face amount of $10,000 or more that is unliquidated, and shall withhold a Disputed Claim Reserve based upon the estimated amount of such Claim as set forth in an applicable Final Order. If the Debtor elects not to -11- request an estimation from the Bankruptcy Court with respect to a Disputed Claim in Class 2, the Debtor shall, as to such Disputed Claim in Class 2, base the reserve in the Disputed Claim Reserve on the face amount of such Disputed Claim in Class 2. C. Distributions After Allowance. Distributions from the Disputed Claim Reserve in respect of a Disputed Claim, to the extent that all or part of such Claim ultimately becomes Allowed, shall be made in accordance with the provisions of the Plan governing the class to which the respective holder belongs. After Final Orders have been entered, or other final resolutions have been reached, with respect to all Disputed Claims in Class 2, any money remaining in the Disputed Claim Reserves for Disputed Claims in Class 2, less expenses, shall be distributed to Fleet as agent for the Class 1 Creditors. D. Interest on Claims. Unless otherwise specifically provided for in the Plan or Confirmation Order, or required by applicable bankruptcy law, interest shall not accrue on Claims, and no holder of a Claim shall be entitled to interest accruing on or after the Commencement Date on any Claim. Interest shall not accrue or be paid upon any Disputed Claim in respect of the period from the Commencement Date to the date a final distribution is made thereon if such Disputed Claim becomes an Allowed Claim. E. Fees and Expenses. All fees and expenses incurred by the Debtor in connection with the Disputed Claims shall be paid from the Debtors' Reserve. Any funds remaining in the Debtors' Reserve after all fees and expenses have been paid shall be distributed to Fleet as agent for the Class 1 Creditors. ARTICLE VII - CONSEQUENCES OF CONFIRMATION OF THE PLAN A. Property of the Estate. As of the Effective Date, all property of the Estate shall be free and clear of all claims and interests, except as specifically provided in the Plan or the Confirmation Order. The Debtor shall establish the Debtor's Reserve to pay all expenses associated with winding down the Debtor's affairs and the Disputed Claim Reserve to fund payment of Disputed Claims that are subsequently Allowed. Following the Effective Date, the Debtor may, without application to or approval by the Bankruptcy Court, pay professional fees and expenses that it will incur after the Effective Date in connection with its dissolution, using funds from the Debtor's Reserve. B. Claims Objections. As provided in Article V and Article VI, the Debtor shall have the sole authority to file and pursue objections to Disputed Claims. All fees and costs incurred by the Debtor on or after -12- the Confirmation Date in relation to the objections to Disputed Claims, including any fees owed to the United States Trustee from and after the Effective Date, shall be paid from the Debtors' Reserve, and all such post-confirmation fees and costs may be paid without application to or order of the Bankruptcy Court. Once all Disputed Claims are resolved, the Debtor shall be responsible for closing the Chapter 11 Case. All expenses, fees and costs related to the Chapter 11 Case from and after the Effective Date shall be paid from the Debtors' Reserve. Any funds remaining after all fees and expenses have been paid shall be distributed to Fleet as agent for the Class 1 Creditors. C. Dissolution of Committees. As of the Effective Date, the Official Committee of Unsecured Creditors shall be deemed dissolved, and fees and costs incurred by the Committee or its professionals from and after the Effective Date, other than those incurred to prepare final fee applications, shall not be borne or paid by the Debtor. D. Retiree Benefits. The Debtor has no retiree benefit plans, fund, or programs, as defined in section 1114 of the Bankruptcy Code, for the purpose of providing or reimbursing payments for retired employees and their spouses and dependents for medical, surgical, or hospital care benefits, or benefits in the event of sickness, accident, disability, or death under any plan, fund or program (through the purchase of insurance or otherwise). Accordingly, no payments relating to such retiree benefit plans, fund or programs shall be made. ARTICLE VIII - ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES Any executory contract or unexpired lease which is not an Assumed Contract (as that term is defined in the Asset Purchase Agreement) as of the Confirmation Hearing, or which the Debtor has previously moved to reject, shall be deemed rejected. If the rejection by the Debtor pursuant to the Plan, of an executory contract or unexpired lease results in a Claim or Administrative Expense Claim, then such Claim or Administrative Expense Claim shall be discharged and barred forever and shall not be enforceable against the Debtor or any of its property, unless a proof of Claim or proof of Administrative Expense Claim is filed with the Clerk of the Bankruptcy Court and served upon counsel to the Debtor and, as applicable, counsel to the Creditors' Committee within thirty (30) days after the earlier to occur of (a) the Confirmation Date and (b) the entry of an order by the Bankruptcy Court authorizing rejection of the subject executory contract or unexpired lease. ARTICLE IX - CONDITIONS PRECEDENT TO CONFIRMATION AND CONSUMMATION OF THE PLAN A. Conditions Precedent to Confirmation. It is a condition precedent to confirmation of the Plan that: 1. The Asset Purchase Agreement shall have been approved by a Final Order; -13- 2. The covenants of the Debtor under Section 4 of the Asset Purchase Agreement shall have been satisfied; and 3. The conditions precedent to the Buyer's obligations under Section 5 of the Asset Purchase Agreement shall have been satisfied. B. Conditions Precedent to Consummation. It is a condition precedent to consummation of the Plan that the Confirmation Order shall be a Final Order, and shall provide, among other things, that: 1. The Asset Purchase Agreement is authorized and approved; 2. The provisions of the Confirmation Order are nonseverable and mutually dependent; 3. The Debtor Reserve, the Disputed Claims Reserve (if any) and the Class 2 Creditor Reserve shall have been funded in full from the Sale Proceeds; and 4. The Class 1 Creditor Payment Amount had been received by Fleet. ARTICLE X - OBLIGATIONS TO THE UNITED STATES TRUSTEE After the Effective Date, the Debtor will be responsible for timely payment of fees incurred pursuant to 28 U.S.C. ss. 1930(a)(6). After the Effective Date, the Debtor will serve the United States Trustee with a monthly financial report for each month (or portion thereof) the Chapter 11 Case remains open. The monthly financial report shall include the following: A. a statement of all disbursements made from during the course of the month, whether or not pursuant to the Plan; B. a summary, by class, of amount distributed or property transferred to each recipient under the Plan, and an explanation of the failure to make any distributions or transfers of property under the Plan; C. the Debtor's projections as to its continuing ability to comply wit the terms of the Plan; D. a description of any other factors which may materially affect the Debtor's ability to consummate the Plan; and E. an estimated date when an application for final decree will be filed with the Bankruptcy Court (in the case of the final monthly report, the date the decree was filed). -14- ARTICLE XI - RETENTION OF JURISDICTION The Bankruptcy Court shall retain jurisdiction of the Reorganization Case pursuant to the provisions of Chapter 11 of the Bankruptcy Code following the Effective Date, for the following purposes: 1. To hear and determine estimates of and objections to Claims and Interests; 2. To hear and determine any dispute arising under the Plan or the Plan Documents, the implementation or execution of the foregoing and any requests to amend, modify, or correct the Plan or the Plan Documents; 3. To hear and determine motions for rejection, assumption or assumption and assignment of executory contracts and unexpired leases to which the Debtor is a party, and any Claims arising therefrom; 4. To modify any of the deadlines set forth in the Confirmation Order, as may be appropriate; 5. To enforce all discharge provisions under the Plan; 6. To hear and determine actions arising under Chapter 5 of the Bankruptcy Code; 7. To hear any other matters not inconsistent with the Bankruptcy Code; and 8. To enter a final decree closing the Chapter 11 Case. -15- Wells-CTI, INC. By: _________________________________ John L. Dwight, Jr. President COUNSEL TO DEBTOR Charles R. Dougherty Anne L. Showalter 77A Revere Street Boston, MA 02114 (617) 669-9003 DATED: April ___, 2003 -16- Exhibit A - Asset Purchase Agreement -17- Exhibit B - Summary of Schedules and Exhibits -18- EX-99.5 7 b46838pcexv99w5.txt DISCLOSURE STATEMENT (PCD, INC.) Exhibit 99.5 UNITED STATES BANKRUPTCY COURT DISTRICT OF MASSACHUSETTS EASTERN DIVISION - -------------------------------------------- ) In the matter of ) Chapter 11 ) Case No. 03-12310-CJK PCD INC. ) ) Debtor-in-Possession ) ) - -------------------------------------------- DISCLOSURE STATEMENT FOR PLAN OF REORGANIZATION OF PCD INC. April 7, 2003 DISCLAIMER NO PERSON MAY GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS, OTHER THAN THE INFORMATION AND REPRESENTATIONS CONTAINED IN THIS DISCLOSURE STATEMENT, REGARDING THE PLAN OR THE SOLICITATION OF ACCEPTANCES TO THE PLAN. ALL CREDITORS AND EQUITY INTEREST HOLDERS ARE ADVISED AND ENCOURAGED TO READ THE DISCLOSURE STATEMENT (INCLUDING ALL EXHIBITS) AND THE PLAN IN THEIR ENTIRETY BEFORE VOTING TO ACCEPT OR REJECT THE PLAN. PLAN SUMMARIES AND STATEMENTS MADE IN THIS DISCLOSURE STATEMENT, INCLUDING THE EXECUTIVE SUMMARY, ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE PLAN, OTHER EXHIBITS ANNEXED TO THE PLAN, AND THIS DISCLOSURE STATEMENT. THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT ARE MADE ONLY AS OF THE DATE HEREOF, AND THERE CAN BE NO ASSURANCE THAT THE STATEMENTS CONTAINED HEREIN WILL BE CORRECT AT ANY TIME AFTER THE DATE HEREOF. ALL CREDITORS AND EQUITY INTEREST HOLDERS SHOULD READ CAREFULLY AND CONSIDER FULLY THE SECTION VIII HEREOF ("ALTERNATIVES TO THE PLAN OF REORGANIZATION") BEFORE VOTING FOR OR AGAINST THE PLAN. THIS DISCLOSURE STATEMENT HAS BEEN PREPARED IN ACCORDANCE WITH SECTION 1125 OF THE BANKRUPTCY CODE AND NOT IN ACCORDANCE WITH FEDERAL OR STATE SECURITIES LAWS OR OTHER NON-BANKRUPTCY LAW. PERSONS OR ENTITIES TRADING IN OR OTHERWISE PURCHASING, SELLING OR TRANSFERRING SECURITIES OF PCD INC. SHOULD NOT RELY UPON THIS DISCLOSURE STATEMENT FOR SUCH PURPOSES AND SHOULD EVALUATE THIS DISCLOSURE STATEMENT AND THE PLAN IN LIGHT OF THE PURPOSE FOR WHICH THEY WERE PREPARED. THIS DISCLOSURE STATEMENT HAS NEITHER BEEN APPROVED NOR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THE STATEMENTS CONTAINED HEREIN. AS TO CONTESTED MATTERS, ADVERSARY PROCEEDINGS AND OTHER ACTIONS OR THREATENED ACTIONS, THIS DISCLOSURE STATEMENT SHALL NOT CONSTITUTE OR BE CONSTRUED AS AN ADMISSION OF ANY FACT, LIABILITY, STIPULATION OR WAIVER, BUT RATHER AS A STATEMENT MADE IN SETTLEMENT NEGOTIATIONS. THIS DISCLOSURE STATEMENT SUMMARIZES CERTAIN PROVISIONS OF THE PLAN, STATUTORY PROVISIONS, DOCUMENTS RELATED TO THE PLAN, EVENTS IN PCD INC.'S CHAPTER 11 CASE, AND FINANCIAL INFORMATION. ALTHOUGH PCD INC. BELIEVES THAT THE PLAN AND RELATED DOCUMENT SUMMARIES ARE FAIR AND ACCURATE, SUCH SUMMARIES ARE QUALIFIED TO THE EXTENT THAT THEY DO NOT SET FORTH THE ENTIRE TEXT OF SUCH DOCUMENTS OR STATUTORY PROVISIONS. FACTUAL INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT HAS BEEN PROVIDED BY MANAGEMENT OF PCD INC., EXCEPT WHERE OTHERWISE SPECIFICALLY NOTED. PCD INC. IS UNABLE TO WARRANT OR REPRESENT THAT THE INFORMATION CONTAINED HEREIN, INCLUDING THE FINANCIAL INFORMATION, IS WITHOUT INACCURACY OR OMISSION. THE INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT IS INCLUDED HEREIN FOR PURPOSES OF SOLICITING ACCEPTANCES OF THE PLAN AND MAY NOT BE RELIED UPON FOR ANY PURPOSE OTHER THAN TO DETERMINE HOW TO VOTE ON THE PLAN. THE DESCRIPTIONS SET FORTH HEREIN OF THE ACTIONS, CONCLUSIONS, OR RECOMMENDATIONS OF PCD INC. OR ANY OTHER PARTY IN INTEREST HAVE BEEN SUBMITTED TO OR APPROVED BY SUCH PARTY, BUT NO SUCH PARTY MAKES ANY REPRESENTATION REGARDING SUCH DESCRIPTIONS. THIS DISCLOSURE STATEMENT SHALL NOT BE ADMISSIBLE IN ANY PROCEEDING (OTHER THAN THE CHAPTER 11 CASE) INVOLVING PCD INC. OR ANY OTHER PARTY, NOR SHALL IT BE CONSTRUED TO BE ADVICE ON THE TAX, SECURITIES OR OTHER LEGAL EFFECTS OF THE PLAN AS TO HOLDERS OF CLAIMS, AGAINST OR EQUITY INTERESTS IN PCD INC. YOU SHOULD CONSULT YOUR OWN COUNSEL OR TAX ADVISOR ON ANY QUESTIONS OR CONCERNS RESPECTING TAX, SECURITIES OR OTHER LEGAL EFFECTS OF THE PLAN ON HOLDERS OF CLAIMS OR EQUITY INTERESTS. 2 DISCLOSURE STATEMENT FOR PLAN OF REORGANIZATION FOR PCD INC. I. INTRODUCTION. This Disclosure Statement is submitted, as required by 11 U.S.C. ss. 1125, to creditors of PCD Inc. ("PCD," the "Company," or the "Debtor") to provide them with sufficient information to make an informed decision when voting on the Plan of Reorganization of PCD Inc. (the "Plan" or "Reorganization Plan") dated April 7, 2003. The Reorganization Plan is based on: (1) the agreement between the Company and Amphenol Corporation ("Amphenol"), pursuant to which Amphenol shall acquire substantially all of the assets of the Debtor's Industrial/Avionics division on or before May 31, 2003, by way of a bankruptcy court-approved sale of the Debtor's assets. In consideration for the Debtor's assets, Amphenol proposes to pay $14,000,000 in the form of (i) a cash payment of $13,500,000 (as adjusted for the difference between the estimated value of the Debtor' assets and $8,347,592.00); and (ii) a cash payment of $500,000 into an escrow account to be held for payment of any purchase price adjustment by the Debtor or any claims against the Debtor as provided under the Asset Purchase Agreement (the "Holdback"). A copy of the Asset Purchase Agreement is attached as Exhibit A to the Plan. Although the sale to Amphenol will not generate proceeds (the "Sale Proceeds") sufficient to satisfy in full the Debtor's obligations to its secured creditors (the "Secured Creditors") under the Amended and Restated Loan Agreement By and Among PCD Inc. and Fleet National Bank, as Collateral Agent, Administrative Agent and a Lender and The Other Financial Institutions Now or Hereafter Parties Hereto, dated February 27, 2002 (the "Secured Loan Agreement"), the Secured Creditors have agreed to allow the Debtor to use a portion of the Sale Proceeds to pay in cash in full the Debtor's administrative expense claims, priority tax claims, priority employee claims and the principal amounts of general pre-petition unsecured claims. Following payment of the administrative expense claims, priority tax claims, priority employee claims and unsecured claims, the Debtor will be dissolved and any funds or property remaining in the Debtor shall revert to Fleet as agent for the Secured Creditors. The Reorganization Plan is more fully described in Section V of this Disclosure Statement. Also set forth below is information regarding the Debtor's pre-chapter 11 history and the structure and terms of the Asset Purchase Agreement. This is only a summary of certain information and of the Plan, and does not itself represent the terms which, if approved by the Court, will be binding on all parties. For those terms, creditors should carefully read the Reorganization Plan and the documents related to the Plan. If there is any discrepancy between the Disclosure Statement and the Plan, the provisions of the Plan will govern. Capitalized terms used in this Disclosure Statement are as defined in this Disclosure Statement or in the Plan. 3 ================================================================================ ALL CREDITORS ARE ENCOURAGED TO READ THIS DISCLOSURE STATEMENT AND THE PLAN IN THEIR ENTIRETY BEFORE VOTING ON THE PLAN. IF THERE IS ANY DISCREPANCY BETWEEN THE DISCLOSURE STATEMENT AND THE PLAN, THE PROVISIONS OF THE PLAN WILL GOVERN. ================================================================================ Consistent with the requirements of the Bankruptcy Code, the Debtor's goal is to obtain an order from the Bankruptcy Court confirming the Reorganization Plan. That order, the "Confirmation Order," will contain other provisions as well, but approval of the Plan is the core of such an order. After voting on the Plan is completed, a confirmation hearing will be held before the Bankruptcy Court. If the Bankruptcy Court then confirms the Plan, the Plan becomes binding on the Debtor, its creditors, its equity holders, and other affected parties, including those who may have voted against the Plan. Except where specifically noted, the historical financial information presented here represents the reasonable good faith efforts of the Debtor to compile that information but has not been audited by a certified public accountant and may not have been prepared in accordance with generally accepted accounting principles. ================================================================================ THE DEBTOR BELIEVES THAT THE REORGANIZATION PLAN PRESENTS THE MOST REALISTIC AND FAIR TREATMENT OF ALL PARTIES-IN-INTEREST AND, THUS, URGES CREDITORS TO VOTE TO ACCEPT THE PLAN. ================================================================================ II. HISTORY OF THE DEBTOR AND COMMENCEMENT OFTHE CHAPTER 11 CASE. A. The Debtor's Business. The Debtor designs, manufactures and markets electronic connectors. The Debtor's business is comprised of two divisions, the PCD Industrial/Avionics division located in Peabody, Massachusetts (the "I/A Division") and the Wells/CTI division located in Phoenix, Arizona (the assets of which are owned by Wells-CTI, Inc., ("Wells-CTI"), a wholly-owned subsidiary of the Debtor, which also filed a chapter 11 petition on the Petition Date). In addition to Wells-CTI, the Debtor has one other subsidiary, PCD USVI, Inc., a United States Virgin Islands corporation, which is a wholly-owned subsidiary of the Debtor and which has no assets. Wells-CTI has two subsidiaries, Wells-CTI Kabushiki Kaisha, a Japanese corporation and Wells International Corporation, Inc., an Indiana corporation. B. Events Leading to the Chapter 11 Case and the Amphenol Agreement. As of June 29, 2002, and continuing until the Petition Date, the Debtor has been in default under the Secured Loan Agreement, based on the Debtor's violation of certain financial covenants set forth in the Secured Loan Agreement. The Secured Creditors agreed to temporarily waive these defaults through a series of amendments to the Secured Loan Agreement. On January 17, 2003, the Debtor and the Secured Creditors entered into an Amendment and 4 Temporary Waiver No. 4, which extended the temporary waiver of the Debtor's defaults through March 31, 2003. For the year ending December 31, 2002, the Debtor had revenues in excess of $14 million. As of January 25, 2003, it had total assets with a book value of approximately $10 million and total liabilities of approximately $44 million. The connector industry has been significantly depressed since 2001, resulting in a decrease in the Debtor's sales from $19.5 million in 2000 to $14.1 million in 2002. While the Debtor has engaged in substantial cost cutting to address the revenue loss, it has not been possible to maintain a profitable business in the face of continuing lost revenues and the substantial debt load of the company. Accordingly, in the Fall of 2002, the Debtor began exploring the possibility of selling its business. To ensure that the Debtor received the highest possible sale price, the Debtor engaged Adams, Harkness & Hill as financial advisors. After a lengthy process of solicitation, evaluation and negotiation, the Debtor, with the active assistance of Adams, Harkness & Hill, conducted a de facto auction of the divisions. During this process, the Debtor contacted all of its competitors, as well as a number of financial buyers; twelve competitors of the Debtor and three financial buyers signed non-disclosure agreements and were provided an offering memorandum. As a result, the Debtor received three bids. The Debtor has commenced this Chapter 11 case to protect its business and to preserve value for all of its creditors until the sale of the I/A Division to the winning bidder,(1) Amphenol Corporation (the "PCD Sale"), and the sale of the Wells-CTI division by Wells-CTI to the winning bidder, UMD Technology, Inc., (the "Wells-CTI Sale" and, together with the PCD Sale, the "Asset Sales") can be completed. III. THE DEBTOR'S OWNERSHIP AND STRUCTURE. A. Present Capital Stock of the Debtor. The issued and outstanding shares of PCD stock (8,951,945 shares of Common Stock) are currently held by thirty-nine beneficial owners on behalf of approximately 1000 shareholders of record. B. Present Directors and Officers. The current sole director of PCD is Mr. John L. Dwight. The current officers are Mr. John L. Dwight, Jr., Chairman of the Board, Chief Executive Officer and President, Mr. John J. Sheehan III, Vice President Finance and Administration, Chief Financial Officer and Treasurer, Thomas C. Chase, Clerk, and John T. Doyle, Vice President and General Manager Industrial/Avionics Division. There are presently no other officer positions. - -------- (1) The highest bidder in the auction was, in fact, Smiths Group, plc, who subsequently withdrew its bid. Consequently, the winning bidder is now Amphenol Corporation. 5 IV. THE CHAPTER 11 CASE. A. Assets and Liabilities as of the Petition Date. As of the Petition Date, PCD had current debts outstanding to creditors of approximately $44 million and assets with a book value (net of depreciation) of approximately $10 million. Attached as Exhibit 1 are unaudited balance sheets and statements of profit and loss for the Debtor reflecting its financial condition as of the fiscal years ending December 31, 2001 and 2002. B. Employment Obligations. PCD's salary and benefit obligations to its present employees are current through the Petition Date except for approximately $102,000 in priority employee wages, $23 in pre-petition wages owed to John Dwight, the Company's Chief Executive Officer, in excess of the priority limit, $107,638 in health insurance claims and approximately $75,000 in accrued vacation. C. Significant Contracts and Leases. 1. Facility Lease. The Debtor's I/A Division is located at 2 Technology Drive, Centennial Park, Peabody, Massachusetts. The Debtor intends to assume and assign its lease for that facility to Amphenol as part of the asset acquisition, and the Asset Purchase Agreement provides that Amphenol will acquire such leasehold interest as part of the PCD Asset Sale. The Debtor is current on all of its obligations under the lease. 2. Equipment Leases. As of the Petition Date, the Debtor has no leased equipment. 3. Other Executory Contracts and Unexpired Leases. Amphenol will assume all executory contracts and unexpired leases of the Debtor except the Debtor's contracts with its computer service providers, which will be deemed rejected as of the Effective Date. V. SUMMARY OF THE ACQUISITION AND PLAN OF REORGANIZATION. The following summarizes the Debtor's Plan. Creditors are urged not to rely on this summary and instead to read carefully the full text of the Plan and the documents related to the Plan (the "Plan Documents"). When confirmed, the Plan will be binding upon the Debtor, its creditors, equity holders and any other affected parties. 6 A. The Asset Purchase Agreement. On March 21, 2003, PCD and Amphenol entered into the Asset Purchase Agreement attached as Exhibit A to the Plan. Pursuant to that Asset Purchase Agreement, Amphenol will purchase as of the Effective Date all of the assets of PCD used in the I/A Division in exchange for a purchase price of $14,000,000 in the form of (i) a cash payment of $13,500,000 (subject to an adjustment for the difference between the estimated value of the Debtor's assets and $8,347,592.00); and (ii) the Holdback. It is anticipated that Amphenol will purchase, operate and own the Debtor's assets and will continue to employ a majority of the Debtor's current employees at an equivalent level of responsibility and compensation (with certain adjustments to reflect market rates.) A summary of the terms of the Asset Purchase Agreement follows (all capitalized terms not defined in this Disclosure Statement have the meanings set forth in the Asset Purchase Agreement or in the Summary of Schedules and Exhibits attached as Exhibit B to the Plan (the "Summary"): o Assets to be Purchased. Amphenol will purchase all of the assets used primarily in the I/A Division. o Liabilities to be Assumed. Amphenol will assume the Assumed Liabilities (as defined in the Summary), which include: (i) all liabilities and obligations of the Debtor under Transferred Customer Contracts (as defined in the Summary) not performed or satisfied as of the Closing; (ii) certain accrued vacation obligations to the Debtor's employees hired by Amphenol after Closing. o Payment of Assumed Liabilities. Amphenol is required to cure all defaults under the Transferred Customer Contracts and the Assumed Contracts (as defined in the Summary). The Debtor does not believe any such defaults exist. o Breakup Fee. In the event that this Court approves the sale of the Business to a third party (other than Amphenol), Amphenol will be entitled to receive a breakup fee in the amount of $500,000. B. Treatment of Unclassified Claims. 1. Administrative Claims. All Allowed Administrative Claims for professional fees and expenses and for any other Claims that were incurred other than in the ordinary course of the Debtor's business on or after the Petition Date shall be paid by the Debtor in cash in full: (a) 7 upon the later of (i) the Effective Date, or as soon as practicable thereafter or (ii) as soon as practicable after such Claim becomes an Allowed Administrative Expense Claim, if the date of allowance is later than the Effective Date, (b) upon such other terms as may be mutually agreed upon between such holder of an Allowed Administrative Expense Claim and the Debtor, or (c) according to the ordinary business terms of the Debtor and such holder; provided, however, that all post-Effective Date Professional Fees shall be paid by the Debtor within ten (10) Business Days of the submission of an invoice to the Debtor. The Debtor estimates that as of the Confirmation Date these Administrative Claims, which include professional fees, post-Closing wages for the wind-down of the Debtor and employee incentive compensation, shall not exceed $1,591,187, inclusive of the fees owed to the Unites States Trustee's Office. 2. Priority Employee Claims. All Allowed Priority Employee Claims, if any, shall be paid in full in cash by the Debtor on the later of the Effective Date or seven (7) days following the date of a Final Order allowing such a Claim. The Debtor believes that there is a total of approximately $102,000 owed to current employees for unreimbursed pre-petition employment expenses that are entitled to priority treatment. The Debtor anticipates that, in accordance with the Bankruptcy Court's approval, these claims will be paid in full prior to the Effective Date. 3. Priority Tax Claims. The Debtor believes that there are nine Allowed Priority Tax Claims totaling $113,727.79. Allowed Priority Tax Claims shall be paid by the Debtor in full on the later of the Effective Date or seven (7) days following the date of a Final Order allowing such a Claim. The Debtor believes that it is current on all of its post-petition obligations to taxing authorities and has filed all tax returns currently due for the pre-petition period. The Debtor is in the process of completing its tax returns for the 2002 calendar year and anticipates that the only post-petition taxes owed (exclusive of ongoing employment tax obligations) will be approximately $25,000 in excise tax and state taxes. C. Treatment of Classified Claims. Class 1 (Secured Claims). Class 1 is comprised of all secured claims, which are held by the Secured Creditors. Subject to the Bankruptcy Court's approval of the Sale Order, Fleet, as agent for the Class 1 Creditors, already will have received under the Sales Order, (i) all right, title and interest to the Holdback; and (ii) the Class 1 Creditor Payment Amount. On or about the Effective Date, Fleet, as agent will also receive (i) any funds held in the Debtor's Reserve or any other property of the estate held by the Debtor after payment of all Allowed Claims and expenses in accordance with the Plan, (ii) any funds remaining in the Class 2 Payment Reserve after payment in full of all Class 2 Claims and (ii) any residual interest or right to payment otherwise provided for in the Plan, including without limitation as provided in Article V of the Plan. These payments to the Class 1 Creditors collectively shall be in full satisfaction, settlement, release and discharge of and in exchange for all Allowed Class 1 Claims. Class 2 (General Unsecured Claims). Class 2 is comprised of all unsecured claims other than the Unclassified Claims addressed above. Subject to the Bankruptcy Court's approval of the Sale Order, ten (10) days following the later of the Effective Date or the date upon which such Claim becomes an Allowed Claim, each holder of an Allowed Class 2 Claim shall receive in full 8 satisfaction, settlement, release, and discharge of and in exchange for that Allowed Claim a cash payment in an amount equal to 100% of the principal amount of such holder's Allowed Class 2 Claim. The Class 1 Creditors are waiving the right to receive any distribution under Class 2 on account of deficiency claims under the Secured Loan Agreement, except as otherwise expressly provided in the Plan. The Debtor anticipates that Class 2 Claims total approximately $1,162,172.95 (excluding the Claims of the Secured Creditors). Accordingly, the Debtor expects that the such amount reserved by the Debtor from the Sale Proceeds will be sufficient to provide each holder of a Class 2 Claim with a payment of 100% of the Allowed Amount of its Class 2 Claim. D. Treatment of Interests. Class 2 (Equity Interests). The equity holders of common stock of the Debtor and the holders of outstanding options to purchase common stock of the Debtor shall receive nothing for their interests or potential interests in the Debtor. E. Treatment of Disputed and Contingent Claims The Debtor shall be solely responsible for filing objections to Disputed Claims in Class 2, and for prosecuting and, in its sole discretion, settling such objections. All objections to claims must be filed and served on or before the Claims Objection Bar Date. The Debtor shall create a Disputed Claims Reserve which shall consist of the money that would have been distributed on and after the Effective Date to holders of Disputed Claims in Class 2 as if such Claims were Allowed, which reserve shall be allocable as provided below for Disputed Claims in Class 2. The Debtor may request estimation for every Disputed Claim in Class 2 in the face amount of $10,000 or more that is unliquidated, and shall withhold a Disputed Claim Reserve based upon the estimated amount of such Claim as set forth in an applicable Final Order. If the Debtor elects not to request an estimation from the Court with respect to a Disputed Claim in Class 2, the Creditors' Trustee shall, as to such Disputed Claim in Class 2, withhold a Disputed Claim Reserve based upon the face amount of such Disputed Claim in Class 2. Distributions from the Disputed Claim Reserve in respect of a Disputed Claim in Class 2, to the extent that all or part of such Claim ultimately becomes Allowed, shall be made in accordance with the provisions of the Plan governing the class to which the respective holder belongs. Unless otherwise specifically provided for in the Plan or Confirmation Order, or required by applicable bankruptcy law, interest shall not accrue on Claims, and no holder of a Claim shall be entitled to interest accruing on or after the Petition Date on any Claim. Interest shall not accrue or be paid upon any Disputed Claim in respect of the period from the Petition Date to the date a final distribution is made thereon if such Disputed Claim becomes an Allowed Claim. All fees and expenses incurred by the Debtor in connection with the Disputed Claims shall be paid from the Debtor's Reserve and shall not be the responsibility of Amphenol. 9 F. Consequences Of Confirmation Of The Plan 1. Property of the Estate. On the Effective Date, whatever property of the Estate remains following the transfer to Amphenol in accordance with the Plan shall be held by the Debtor, subject to the requirements of the Plan, free and clear of any and all claims and interests. After the Confirmation Date, the Debtor may, without application to or approval by the Court, pay professional fees and expenses that it will incur after the Effective Date in connection with its dissolution. 2. Dissolution of Committees. As of the Effective Date, the Official Committee of Unsecured Creditors shall be deemed dissolved, and fees and costs incurred by the Committee or its professionals from and after the Effective Date, other than those incurred to prepare final fee applications, shall not be borne or paid by the Debtor. 3. US Trustee Obligations. After the Effective Date, the Debtor will be responsible for timely payment of fees incurred pursuant to 28 U.S.C. ss. 1930(a)(6). After the Effective Date, the Debtor will serve the United States Trustee with a monthly financial report for each month (or portion thereof) the Chapter 11 Case remains open. The monthly financial report shall include the following: A. a statement of all disbursements made from during the course of the month, whether or not pursuant to the Plan; B. a summary, by class, of amount distributed or property transferred to each recipient under the Plan, and an explanation of the failure to make any distributions or transfers of property under the Plan; C. the Debtors' projections as to its continuing ability to comply wit the terms of the Plan; D. a description of any other factors which may materially affect the Debtors' ability to consummate the Plan; and E. an estimated date when an application for final decree will be filed with the Court (in the case of the final monthly report, the date the decree was filed). 10 G. Assumption And Assignment Of Executory Contracts And Unexpired Leases The Final Order confirming the Plan shall constitute an order of the Court approving the assumption and assignment to Amphenol of all executory contracts and unexpired leases that are Assumed Contracts (as defined in the Asset Purchase Agreement), pursuant to section 365 of the Bankruptcy Code, as of the Effective Date, and no consent of any party to any such executory contract or unexpired lease shall be required for any such assignment pursuant to the Asset Purchase Agreement. Any executory contract or unexpired lease which is not an Assumed Contract, or which the Debtor has previously moved to reject, shall be deemed rejected. Amphenol has provided a definitive list of the executory contracts and unexpired leases that it is assuming under the Asset Purchase Agreement. H. Conditions Precedent to Confirmation of the Plan. It is a condition precedent to confirmation of the Plan that: 1. The Asset Purchase Agreement shall have been approved by a Final Order; 2. The covenants of the Debtor under Section 4 of the Asset Purchase Agreement shall have been satisfied; 3. The conditions precedent to Amphenol's obligations under Section 5 of the Asset Purchase Agreement shall have been satisfied; and 4. The Debtor shall have changed its corporate name to a name that does not include "PCD". I. Conditions Precedent To Consummation Of The Plan It is a condition precedent to consummation of the Plan that the Confirmation Order shall be a Final Order, and shall provide, among other things, that: 1. The Asset Purchase Agreement is authorized and approved; 2. The provisions of the Confirmation Order are nonseverable and mutually dependent; 3. The Debtor Reserve, the Disputed Claims Reserve (if any) and the Class 2 Creditor Reserve shall have been funded in full from the Sale Proceeds; and 4. Fleet shall receive the Class 1 Creditor Payment Amount. 11 J. Payments On The Effective Date. The following sets forth the Debtor's estimation of funds available for the payment and distributions provided for in the Plan. On the Closing Date, the Debtor will receive cash in the amount of $13,078,000 from Amphenol, to be distributed as follows: 1. Class 1 Creditor Payment Amount $10,428,000.00 2. Class 2 Creditor Reserve $ 1,162,172.95 3. Debtor's Reserve (for payment of administrative and priority claims) $ 1,487,827.05 On the Effective Date, distributions will be made as follows: 1. Class 2 Creditors will be paid the full principal amount of their Allowed Class 2 Claims ($1,162,172.95) from the Class 2 Creditor Reserve. 2. The following payments will be made from the Debtor's Reserve (which will consist of $1,487,827.05 as set forth above, plus an estimated $999,000.00 in cash on hand from post-petition collections): a. Priority Administrative Expenses $1,591,187.00 b. Priority Employee Claims $ 0 c. Priority Tax Claims $ 113,727.79 Funds Remaining: $ 781,912.26(2) VI. TAX CONSIDERATIONS. The following summarizes certain tax consequences of the Plan under the Internal Revenue Code of 1986, as amended (the "Tax Code"), and other tax laws, to the Debtor and its creditors. This summary does not discuss all aspects of federal income or other taxation that may be relevant to a particular creditor in light of its personal investment circumstances or to those subject to special treatment under the income tax laws (for example, life insurance companies, tax-exempt organizations, foreign corporations and individuals who are not citizens or residents of the United States), does not discuss any aspects of local or foreign taxation, and discusses only limited aspects of state taxation. - -------- (2) This amount is available to fund the Disputed Claims Reserve and any unanticipated expenses to be paid out of the Debtor's Reserve with all remaining amounts to be paid to the Class 1 Creditors 12 This summary is based upon the laws, regulations and decisions in effect on the date hereof and upon regulations, all of which are subject to change (possibly with retroactive effect) by legislation, administrative action or judicial decision. ================================================================================ CREDITORS ARE URGED TO CONSULT WITH THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES (FEDERAL, STATE AND LOCAL) TO THEM OF THE PLAN. ================================================================================ 1. Asset Purchase Agreement. As discussed above, the Debtor has entered into an asset purchase agreement with Amphenol which provides for the sale of substantially all of PCD's assets. The Debtor does not expect to incur any federal or state tax liability as a result of this transaction. 2. Treatment of Unclassified Claims. Holders of Administrative Expense Claims and Priority Employee Claims will be paid in full. Payment in full should not result in any cancellation of indebtedness income to the Debtor or otherwise result in tax liability for the Debtor. The tax consequences of the payments to the holders of such claims will depend on their specific tax situation. Accordingly, the holders of such claims should consult their tax advisers. 3. Treatment of Claims in Class 1. The holders of the Claims in Class 1 will not be paid in full. Thus, the Debtor will recognize cancellation of indebtedness income as a result of the treatment of Class 1 Claims. This should not, however, result in increased federal income tax liability to the Debtor for the current tax year under Section 108 of the Internal Revenue Code but will result in the reduction of the Debtor's tax attributes. The tax consequences of the payments to the holders of such claims will depend on their specific tax situation. Accordingly, the holders of such claims should consult their tax advisers. 4. Treatment of Claims in Class 2. The holders of the Claims in Class 2 will be paid in full without interest. The tax consequences of the payments to the holders of such claims will depend on their specific tax situation. Accordingly, the holders of such claims should consult their tax advisers. VII. CONFIRMATION OF THE PLAN. A. Feasibility. The Bankruptcy Code requires that in order for the Plan to be confirmed by the Court, the Debtor must show that the Plan is "feasible." A plan will be considered feasible if the Debtor demonstrates that it is more likely than not to be able to perform under the Plan as projected and, 13 thus, that confirmation of the Plan is not likely to be followed by another liquidation or further reorganization. Because the sale to Amphenol pursuant to the Asset Purchase Agreement will result in the Debtor's transfer of all of its assets, the termination of its business, and its dissolution, there is no reason to believe that the Bankruptcy Court will not find that the Plan is feasible. B. Best Interests of Creditors and Interest Holders. To confirm the Reorganization Plan over the objections, if any, of dissenting holders of Claims, the Bankruptcy Court must make an independent determination that the Plan is in the "best interests" of all dissenting holders of Claims. That is, the Court must find that the Plan provides to each dissenting holder of a Claim a recovery with a value at least equal to the value, as of the Effective Date, of what each such holder would receive were the Debtor liquidated under chapter 7 of the Bankruptcy Code. Accordingly, the Bankruptcy Court will compare the value of what is likely to be available to holders of Claims in each of Classes 1 through 3 under the liquidation analysis addressed in Section VIII.B (the "Liquidation Analysis"), with the value of what is being received by those classes under the Reorganization Plan. Based on the Debtor's Liquidation Analysis, it appears likely that confirmation of the Reorganization Plan will provide to each holder of a Claim a return that is much more than what each of those holders would receive pursuant to a liquidation of the Debtor under Chapter 7 of the Bankruptcy Code. Assuming that the Debtor's assets could yield a maximum of $4,000,000 at a "fire sale," the Debtor believes that, once the priority claims and administrative expenses of the bankruptcy are paid, such a liquidation will yield no return for the holders of Class 2 Claims, especially since the Class 1 Creditors would then have an allowed claim that would far exceed the value of the assets. VIII. ALTERNATIVES TO PLAN OF REORGANIZATION. A. Continuing In Chapter 11. If PCD were to remain in Chapter 11, it would continue to operate its business as a debtor-in-possession for the time being, but it would also remain subject to the limitations imposed on its operations by the Bankruptcy Code, and the resolution of its present indebtedness would remain uncertain. PCD would not be able to survive as a going concern in chapter 11, as the Debtor has no reason to believe that the Secured Creditors would continue to support the Debtor and, because the Debtor would be unable to raise additional working capital or to stem its operating losses. Thus, at some point in the fairly near future, either a new plan of reorganization or liquidation would have to be proposed (either by PCD or another party) or the case would likely be converted to Chapter 7. 14 B. Chapter 7 Liquidation. If no plan of reorganization is confirmed in the Reorganization Case, then the case may be converted to a case under chapter 7 of the Bankruptcy Code. In that event, PCD's business operations would cease and a trustee would be appointed to liquidate the assets of PCD. The Debtor believes that such a liquidation of the Debtor under Chapter 7 would likely result in no payment to the holders of Class 2 claims. 15 PCD INC. By: ____________________________________ John Dwight, Chief Executive Officer COUNSEL TO DEBTOR PCD INC. Charles R. Dougherty (BBO #132260) Anne L. Showalter (BBO # 629817) 77A Revere Street Boston, MA 02114 617-227-0506 DATED: April ___, 2003 16 Exhibit 1 - 2001 and 2002 Financials 17 EX-99.6 8 b46838pcexv99w6.txt DISCLOSURE STATEMENT (WELLS-CTI, INC.) Exhibit 99.6 UNITED STATES BANKRUPTCY COURT DISTRICT OF MASSACHUSETTS EASTERN DIVISION - -------------------------------------------- ) In the matter of ) Chapter 11 ) Case No. 03-12309-CJK WELLS-CTI, INC. ) ) Debtor-in-Possession ) ) - -------------------------------------------- DISCLOSURE STATEMENT FOR PLAN OF REORGANIZATION OF WELLS-CTI, INC. April 7, 2003 DISCLAIMER NO PERSON MAY GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS, OTHER THAN THE INFORMATION AND REPRESENTATIONS CONTAINED IN THIS DISCLOSURE STATEMENT, REGARDING THE PLAN OR THE SOLICITATION OF ACCEPTANCES TO THE PLAN. ALL CREDITORS AND EQUITY INTEREST HOLDERS ARE ADVISED AND ENCOURAGED TO READ THE DISCLOSURE STATEMENT (INCLUDING ALL EXHIBITS) AND THE PLAN IN THEIR ENTIRETY BEFORE VOTING TO ACCEPT OR REJECT THE PLAN. PLAN SUMMARIES AND STATEMENTS MADE IN THIS DISCLOSURE STATEMENT, INCLUDING THE EXECUTIVE SUMMARY, ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE PLAN, OTHER EXHIBITS ANNEXED TO THE PLAN, AND THIS DISCLOSURE STATEMENT. THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT ARE MADE ONLY AS OF THE DATE HEREOF, AND THERE CAN BE NO ASSURANCE THAT THE STATEMENTS CONTAINED HEREIN WILL BE CORRECT AT ANY TIME AFTER THE DATE HEREOF. ALL CREDITORS AND EQUITY INTEREST HOLDERS SHOULD READ CAREFULLY AND CONSIDER FULLY SECTION VIII HEREOF (ALTERNATIVES TO PLAN OF REORGANIZATION) BEFORE VOTING FOR OR AGAINST THE PLAN. THIS DISCLOSURE STATEMENT HAS BEEN PREPARED IN ACCORDANCE WITH SECTION 1125 OF THE BANKRUPTCY CODE AND NOT IN ACCORDANCE WITH FEDERAL OR STATE SECURITIES LAWS OR OTHER NON-BANKRUPTCY LAW. PERSONS OR ENTITIES TRADING IN OR OTHERWISE PURCHASING, SELLING OR TRANSFERRING SECURITIES OF WELLS-CTI, INC. SHOULD NOT RELY UPON THIS DISCLOSURE STATEMENT FOR SUCH PURPOSES AND SHOULD EVALUATE THIS DISCLOSURE STATEMENT AND THE PLAN IN LIGHT OF THE PURPOSE FOR WHICH THEY WERE PREPARED. THIS DISCLOSURE STATEMENT HAS NEITHER BEEN APPROVED NOR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THE STATEMENTS CONTAINED HEREIN. AS TO CONTESTED MATTERS, ADVERSARY PROCEEDINGS AND OTHER ACTIONS OR THREATENED ACTIONS, THIS DISCLOSURE STATEMENT SHALL NOT CONSTITUTE OR BE CONSTRUED AS AN ADMISSION OF ANY FACT, LIABILITY, STIPULATION OR WAIVER, BUT RATHER AS A STATEMENT MADE IN SETTLEMENT NEGOTIATIONS. THIS DISCLOSURE STATEMENT SUMMARIZES CERTAIN PROVISIONS OF THE PLAN, STATUTORY PROVISIONS, DOCUMENTS RELATED TO THE PLAN, EVENTS IN WELLS-CTI, INC.'S CHAPTER 11 CASE, AND FINANCIAL INFORMATION. ALTHOUGH WELLS-CTI, INC. BELIEVES THAT THE PLAN AND RELATED DOCUMENT SUMMARIES ARE FAIR AND ACCURATE, SUCH SUMMARIES ARE QUALIFIED TO THE EXTENT THAT THEY DO NOT SET FORTH THE ENTIRE TEXT OF SUCH DOCUMENTS OR STATUTORY PROVISIONS. FACTUAL INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT HAS BEEN PROVIDED BY MANAGEMENT OF WELLS-CTI, INC., EXCEPT WHERE OTHERWISE SPECIFICALLY NOTED. WELLS-CTI, INC. IS UNABLE TO WARRANT OR REPRESENT THAT THE INFORMATION CONTAINED HEREIN, INCLUDING THE FINANCIAL INFORMATION, IS WITHOUT INACCURACY OR OMISSION. THE INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT IS INCLUDED HEREIN FOR PURPOSES OF SOLICITING ACCEPTANCES OF THE PLAN AND MAY NOT BE RELIED UPON FOR ANY PURPOSE OTHER THAN TO DETERMINE HOW TO VOTE ON THE PLAN. THE DESCRIPTIONS SET FORTH HEREIN OF THE ACTIONS, CONCLUSIONS, OR RECOMMENDATIONS OF WELLS-CTI, INC. OR ANY OTHER PARTY IN INTEREST HAVE BEEN SUBMITTED TO OR APPROVED BY SUCH PARTY, BUT NO SUCH PARTY MAKES ANY REPRESENTATION REGARDING SUCH DESCRIPTIONS. THIS DISCLOSURE STATEMENT SHALL NOT BE ADMISSIBLE IN ANY PROCEEDING (OTHER THAN THE CHAPTER 11 CASE) INVOLVING WELLS-CTI, INC. OR ANY OTHER PARTY, NOR SHALL IT BE CONSTRUED TO BE ADVICE ON THE TAX, SECURITIES OR OTHER LEGAL EFFECTS OF THE PLAN AS TO HOLDERS OF CLAIMS, AGAINST OR EQUITY INTERESTS IN WELLS-CTI, INC. YOU SHOULD CONSULT YOUR OWN COUNSEL OR TAX ADVISOR ON ANY QUESTIONS OR CONCERNS RESPECTING TAX, SECURITIES OR OTHER LEGAL EFFECTS OF THE PLAN ON HOLDERS OF CLAIMS OR EQUITY INTERESTS. 2 DISCLOSURE STATEMENT FOR PLAN OF REORGANIZATION FOR WELLS-CTI, INC. I. INTRODUCTION. This Disclosure Statement is submitted, as required by 11 U.S.C. ss. 1125, to creditors of Wells-CTI, Inc. ("Wells-CTI," the "Company," or the "Debtor") to provide them with sufficient information to make an informed decision when voting on the Plan of Reorganization of Wells-CTI, Inc. (the "Plan" or "Reorganization Plan") dated April 7, 2003. The Reorganization Plan is based on: (1) the agreement (the "Asset Purchase Agreement") between the Company, its parent company, PCD Inc. ("PCD"), Kabushiki Wells-CTI, LLC (the "Buyer") and UMD Technology, Inc. (the parent company of the Buyer), dated March 21, 2003, pursuant to which the Buyer shall acquire substantially all of the assets of the Debtor's business (the "Business") on or before May 31, 2003, by way of a bankruptcy court-approved sale of the Debtor's assets (the "Wells-CTI Sale"). In consideration for the Debtor's assets, the Buyer proposes to pay $2,050,000 plus a cash payment sufficient to fund in full the Class 2 Creditor Reserve (the "Sale Proceeds"). A copy of the Asset Purchase Agreement is attached as Exhibit A to the Plan. PCD owns and controls all of the capital stock of the Debtor. PCD also filed a voluntary petition under chapter 11 of the Bankruptcy Code on the Petition Date. Pursuant to an asset purchase agreement between PCD and Amphenol Corporation, subject to court approval, PCD plans to sell substantially all of its assets (other than the stock of the Debtor) for approximately $14 million (the "PCD Sale"). The Debtor has guaranteed in full PCD's obligations in the approximate amount of $42 million in principal, plus accrued and unpaid interest and fees, under the Amended and Restated Loan Agreement By and Among PCD Inc. and Fleet National Bank, as Collateral Agent, Administrative Agent and a Lender and The Other Financial Institutions Now or Hereafter Parties Hereto, dated February 27, 2002 (the "Secured Loan Agreement"). Although the PCD Sale and the Wells-CTI Sale will not in the aggregate generate proceeds sufficient to satisfy in full the Debtor's obligations to its secured creditors (the "Secured Creditors"), the Secured Creditors have agreed to allow the Debtor to use a portion of the Sale Proceeds to pay in cash in full the Debtor's administrative expense claims, priority tax claims, priority employee claims and the principal amounts of general pre-petition unsecured claims. Following payment of the administrative expense claims, priority tax claims, priority employee claims and unsecured claims, the Debtor will be dissolved and any remaining funds will be returned to Fleet. The Reorganization Plan is more fully described in Section V of this Disclosure Statement. Also set forth below is information regarding the Debtor's pre-chapter 11 history and 3 the structure and terms of the Asset Purchase Agreement. This is only a summary of certain information and of the Plan, and does not itself represent the terms which, if approved by the Court, will be binding on all parties. For those terms, creditors should carefully read the Reorganization Plan and the documents related to the Plan. If there is any discrepancy between the Disclosure Statement and the Plan, the provisions of the Plan will govern. Capitalized terms used in this Disclosure Statement are as defined in this Disclosure Statement or in the Plan. ================================================================================ ALL CREDITORS ARE ENCOURAGED TO READ THIS DISCLOSURE STATEMENT AND THE PLAN IN THEIR ENTIRETY BEFORE VOTING ON THE PLAN. IF THERE IS ANY DISCREPANCY BETWEEN THE DISCLOSURE STATEMENT AND THE PLAN, THE PROVISIONS OF THE PLAN WILL GOVERN. ================================================================================ Consistent with the requirements of the Bankruptcy Code, the Debtor's goal is to obtain an order from the Bankruptcy Court confirming the Reorganization Plan. That order, the "Confirmation Order," will contain other provisions as well, but approval of the Plan is the core of such an order. After voting on the Plan is completed, a confirmation hearing will be held before the Bankruptcy Court. If the Bankruptcy Court then confirms the Plan, the Plan becomes binding on the Debtor, its creditors, its equity holders, and other affected parties, including those who may have voted against the Plan. Except where specifically noted, the historical financial information presented here represents the reasonable good faith efforts of the Debtor to compile that information but has not been audited by a certified public accountant and may not have been prepared in accordance with generally accepted accounting principles. ================================================================================ THE DEBTOR BELIEVES THAT THE REORGANIZATION PLAN PRESENTS THE MOST REALISTIC AND FAIR TREATMENT OF ALL PARTIES-IN-INTEREST AND, THUS, URGES CREDITORS TO VOTE TO ACCEPT THE PLAN. ================================================================================ II. HISTORY OF THE DEBTOR AND COMMENCEMENT OFTHE CHAPTER 11 CASE. A. The Debtor's Business. PCD designs, manufactures and markets electronic connectors. PCD's business is comprised of two divisions, the PCD Industrial/Avionics division located in Peabody, Massachusetts (the "I/A Division") and the Business located in Phoenix, Arizona (the assets of which are owned by the Debtor). Wells-CTI designs, manufactures and markets interconnect devices ("burn in sockets") used by semiconductor manufacturers to perform a reliability screening and stress testing procedure known as "burn in". In addition to Wells-CTI, PCD has one other subsidiary, PCD USVI, Inc., a United States Virgin Islands corporation, which is a wholly-owned subsidiary of the Debtor and which has no 4 assets. The Debtor has two subsidiaries, Wells-CTI Kabushiki Kaisha, a Japanese corporation and Wells International Corporation, Inc., an Indiana corporation. B. Events Leading to the Chapter 11 Case and the Asset Purchase Agreement. As of June 29, 2002, and continuing until the Petition Date, PCD has been in default under the Secured Loan Agreement, based on violation of certain financial covenants set forth in the Secured Loan Agreement. The Secured Creditors agreed to temporarily waive these defaults through a series of amendments to the Secured Loan Agreement. On January 17, 2003, PCD and the Secured Creditors entered into an Amendment and Temporary Waiver No. 4, which extended the temporary waiver of the defaults through March 31, 2003. For the year ending December 31, 2002, the Debtor had revenues in excess of $7 million. As of January 25, 2003, it had total assets with a book value of approximately $7 million and total liabilities of approximately $43 million. The connector industry has been significantly depressed since 2001, resulting in a decrease in the Debtor's sales from $29.3 million in 2000 to $7.8 million in 2002. While the Debtor has engaged in substantial cost cutting to address the revenue loss, it has not been possible to maintain a profitable business in the face of continuing lost revenues and the substantial debt load of the company. Accordingly, in the Fall of 2002, PCD began exploring the possibility of selling the I/A Division and the Business. To ensure that PCD received the highest possible sale price, PCD engaged Adams, Harkness & Hill as financial advisors. After a lengthy process of solicitation, evaluation and negotiation, PCD, with the active assistance of Adams, Harkness & Hill, conducted a de facto auction of the I/A Division and the Business. During this process, twelve competitors of the Debtor and three financial buyers signed non-disclosure agreements and were provided an offering memorandum. As a result, two bids were submitted for the purchase of the Business. PCD and the Debtor then commenced separate Chapter 11 cases to protect their businesses and to preserve value for all of their creditors until the PCD Sale and the Wells-CTI Sale (together, the "Asset Sales") can be completed. III. THE DEBTOR'S OWNERSHIP AND STRUCTURE. A. Present Capital Stock of the Debtor. All of the issued and outstanding shares of the Debtor's stock are currently held by PCD. B. Present Directors and Officers. The current sole director of Wells-CTI is Mr. John L. Dwight, Jr. The current officers are Mr. John L. Dwight, Jr., President, Mr. John J. Sheehan III, Treasurer, Mr. Thomas C. Chase, 5 Secretary, Ms. Melissa J. Solomon, Assistant Secretary, and Mr. Jeffrey A. Farnsworth, Vice President and General Manager, Wells-CTI USA. There are presently no other officer positions. IV. THE CHAPTER 11 CASE. A. Assets and Liabilities as of the Petition Date. As of the Petition Date, Wells-CTI had current debts outstanding to creditors of approximately $43 million and assets with a book value (net of depreciation) of approximately $7 million. Attached as Exhibit 1 are unaudited balance sheets and statements of profit and loss for the Debtor reflecting its financial condition as of the fiscal years ending December 31, 2001 and 2002. B. Employment Obligations. Wells-CTI's salary and benefit obligations to its present employees are current through the Petition Date except for approximately $33,808 in pre-petition wages owed to employees. As of the Petition Date, there was approximately $72,000 in employee accrued vacation. C. Significant Contracts and Leases. 1. Facility Lease. The Debtor's Business is located at 2102 West Quail Ave., Suite 2, Phoenix, Arizona, and at 1735 North First Street, Suite 303, San Jose, California. The Debtor intends to assume and assign its leases for those facilities to the Buyer as part of the asset acquisition, and the Asset Purchase Agreement provides that Buyer will acquire such leasehold interest as part of the Wells-CTI Sale. The Debtor is current on all of its obligations under the leases. 2. Equipment Leases. As of the Petition Date, the Debtor has approximately $15,000 in annual obligations for leased equipment. The Debtor intends to assume and assign its equipment leasehold interests to the Buyer as part of the asset acquisition, and the Asset Purchase Agreement provides that the Buyer will acquire such leasehold interests as part of the asset acquisition. The Debtor is current on all of its obligations under the equipment leases. 3. Other Executory Contracts and Unexpired Leases. All executory contracts and unexpired leases that the Debtor intends to assume and assign to the Buyer are identified as "Assumed Contracts" on the summary of the exhibits and schedules to the Asset Purchase Agreement, attached as Exhibit B to the Plan. Any executory contracts and unexpired leases that are not Assumed Contracts will be rejected as of the Effective Date. 6 V. SUMMARY OF THE ACQUISITION AND PLAN OF REORGANIZATION. The following summarizes the Debtor's Plan. Creditors are urged not to rely on this summary and instead to read carefully the full text of the Plan and the documents related to the Plan (the "Plan Documents"). When confirmed, the Plan will be binding upon the Debtor, its creditors, equity holders and any other affected parties. A. The Asset Purchase Agreement. On March 21, 2003, Wells-CTI, PCD, the Buyer and UMD Technology, Inc. entered into the Asset Purchase Agreement attached as Exhibit A to the Plan. Pursuant to that Asset Purchase Agreement, the Buyer will purchase as of the Effective Date all of the assets of the Debtor used in the Business in exchange for a purchase price of $2,050,000 plus cash sufficient to fund in full the Class 2 Creditor Reserve. It is anticipated that the Buyer will purchase, operate and own the Debtor's assets and will continue to employ a majority of the Debtor's current employees at an equivalent level of responsibility and compensation (with certain adjustments to reflect market rates.) A summary of the terms of the Asset Purchase Agreement follows (all capitalized terms not defined in this Disclosure Statement have the meanings set forth in the Asset Purchase Agreement): o Assets to be Purchased. The Buyer will purchase all of the assets used primarily in the Business. o Assumed Liabilities. The Buyer will fund the Class 2 Creditor Reserve and will assume all other Assumed Liabilities, which include: (i) all accrued expenses of the Debtor, except (i) those which constitute Retained Liabilities, as set forth on the Summary (including accrued expenses relating to employee health benefit claims will not exceed $50,000), (ii) those that are paid in cash in full at closing; (ii) all liabilities and obligations of the Debtor incurred in the ordinary course of the Business consistent with past practice after the Petition Date and not performed or satisfied as of the Closing Date other than those that constitute Retained Liabilities as set forth in the Summary; (iii) all amounts necessary to cure defaults and future obligations under the Assumed Contracts (as defined in the Summary); (iv) accrued employee-related obligations, including accrued vacation obligations and health insurance claims, related to the Debtor's employees hired by the Buyer after Closing, as set forth in the Summary. 7 o Payment of Assumed Liabilities. The Buyer is required to fund the Class 2 Creditor Reserve at closing and to cure all defaults under the Transferred Customer Contracts and the Assumed Contracts (both as defined in the Summary). o Breakup Fee. In the event that this Court approves the sale of the Business to a third party (other than the Buyer), the Buyer will be entitled to receive a breakup fee in the amount of $50,000. B. Treatment of Unclassified Claims. 1. Administrative Claims. All Allowed Administrative Claims for professional fees and expenses and for any other Claims that were incurred other than in the ordinary course of the Debtor's business on or after the Petition Date shall be paid by the Debtor in cash in full: (a) upon the later of (i) the Effective Date, or as soon as practicable thereafter or (ii) as soon as practicable after such Claim becomes an Allowed Administrative Expense Claim, if the date of allowance is later than the Effective Date, (b) upon such other terms as may be mutually agreed upon between such holder of an Allowed Administrative Expense Claim and the Debtor, or (c) according to the ordinary business terms of the Debtor and such holder; provided, however, that all post-Effective Date Professional Fees shall be paid by the Debtor within ten (10) Business Days of the submission of an invoice to the Debtor. The Debtor estimates that as of the Confirmation Date these Administrative Claims, which include professional fees, post-Closing wages for the wind-down of the Debtor and employee incentive compensation, shall not exceed $380,000, inclusive of the fees owed to the Unites States Trustee's Office. 2. Priority Employee Claims. All Allowed Priority Employee Claims, if any, shall be paid in full in cash by the Debtor on the later of the Effective Date or seven (7) days following the date of a Final Order allowing such a Claim. The Debtor believes that there is a total of $33,808 owed to current employees for unreimbursed pre-petition employment expenses that are entitled to priority treatment. The Debtor anticipates that, subject to the Bankruptcy Court's approval, these claims will be paid in full prior to the Effective Date. 3. Priority Tax Claims. The Debtor believes that there are eight Allowed Priority Tax Claims totaling $52,431.47. Allowed Priority Tax Claims shall be paid by the Debtor in full on the later of the Effective Date or seven (7) days following the date of a Final Order allowing such a Claim. The Debtor believes that it is current on all of its post-petition obligations to taxing authorities and has filed all tax returns currently due for the pre-petition period. The Debtor is in the process of completing its tax returns for the 2002 calendar year and anticipates that the only post-petition taxes owed (exclusive of ongoing employment tax obligations) will be approximately $50,000 in personal property taxes. 8 C. Treatment of Classified Claims. Class 1 (Secured Claims). Subject to the Bankruptcy Court's approval of the Sale Order, Fleet, as agent for the Class 1 Creditors, already will have received under the Sale Order , the Class 1 Creditor Payment Amount. On or about the Effective Date, Fleet, as agent shall also receive (i) any funds remaining in the Debtor's Reserve and any other property held by the Debtor after payment of all Allowed Claims and expenses in accordance with Article VI of the Plan, (ii) any funds remaining in the Class 2 Creditor Reserve after payment in full of all Class 2 Claims and (iii) any residial interest or right to payment otherwise provided for in the Plan, including without limitation as provided in Article V of the Plan. These payments to the Class 1 Creditors collectively, shall be in full satisfaction, settlement, release and discharge of and in exchange for all Allowed Class 1 Claims. Class 2 (General Unsecured Claims). Class 2 is comprised of all unsecured claims other than the Unclassified Claims addressed above. Ten (10) days following the later of the Effective Date or the date upon which such Claim becomes an Allowed Claim, each holder of an Allowed Class 2 Claim shall receive in full satisfaction, settlement, release, and discharge of and in exchange for that Allowed Claim a cash payment in an amount equal to 100% of the principal amount of such holder's Allowed Class 2 Claim. The Class 1 Creditors are waiving the right to receive any distribution under Class 2 on account of deficiency claims under the Secured Loan Agreement, except as otherwise expressly provided in this Plan. The Debtor anticipates that Class 2 Claims will total $279,373.39. D. Treatment of Interests. Class 3 (Equity Interests). PCD is the sole equity holder of the Debtor. PCD shall receive nothing for its equity interest in the Debtor. E. Treatment of Disputed and Contingent Claims The Debtor shall be solely responsible for filing objections to Disputed Claims in Class 2 and for prosecuting and, in its sole discretion, settling such objections. All objections to claims must be filed and served on or before the Claims Objection Bar Date. The Debtor shall create a Disputed Claims Reserve which shall consist of the money that would have been distributed on and after the Effective Date to holders of Disputed Claims in Class 2 as if such Claims were Allowed, which reserve shall be allocable as provided below for Disputed Claims in Class 2. The Debtor may request estimation for every Disputed Claim in Class 2 in the face amount of $10,000 or more that is unliquidated, and shall withhold a Disputed Claim Reserve based upon the estimated amount of such Claim as set forth in an applicable Final Order. If the Debtor elects not to request an estimation from the Court with respect to a Disputed Claim in Class 2, the Creditors' Trustee shall, as to such Disputed Claim in Class 2, withhold a Disputed Claim Reserve based upon the face amount of such Disputed Claim in Class 2. 9 Distributions from the Disputed Claim Reserve in respect of a Disputed Claim in Class 2, to the extent that all or part of such Claim ultimately becomes Allowed, shall be made in accordance with the provisions of the Plan governing the class to which the respective holder belongs. Unless otherwise specifically provided for in the Plan or Confirmation Order, or required by applicable bankruptcy law, interest shall not accrue on Claims, and no holder of a Claim shall be entitled to interest accruing on or after the Petition Date on any Claim. Interest shall not accrue or be paid upon any Disputed Claim in respect of the period from the Petition Date to the date a final distribution is made thereon if such Disputed Claim becomes an Allowed Claim. All fees and expenses incurred by the Debtor in connection with the Disputed Claims shall be paid from the Debtor's Reserve and shall not be the responsibility of the Buyer. F. Consequences Of Confirmation Of The Plan 1. Property of the Estate. On the Effective Date, whatever property of the Estate remains following the transfer to the Buyer in accordance with the Plan shall be held by the Debtor, subject to the requirements of the Plan, free and clear of any and all claims and interests. After the Confirmation Date, the Debtor may, without application to or approval by the Court, pay professional fees and expenses that it will incur after the Effective Date in connection with its dissolution. 2. Dissolution of Committees. As of the Effective Date, the Official Committee of Unsecured Creditors shall be deemed dissolved, and fees and costs incurred by the Committee or its professionals from and after the Effective Date, other than those incurred to prepare final fee applications, shall not be borne or paid by the Debtor. 3. US Trustee Obligations. After the Effective Date, the Debtor will be responsible for timely payment of fees incurred pursuant to 28 U.S.C. ss. 1930(a)(6). After the Effective Date, the Debtor will serve the United States Trustee with a monthly financial report for each month (or portion thereof) the Chapter 11 Case remains open. The monthly financial report shall include the following: A. a statement of all disbursements made from during the course of the month, whether or not pursuant to the Plan; 10 B. a summary, by class, of amount distributed or property transferred to each recipient under the Plan, and an explanation of the failure to make any distributions or transfers of property under the Plan; C. the Debtors' projections as to its continuing ability to comply wit the terms of the Plan; D. a description of any other factors which may materially affect the Debtors' ability to consummate the Plan; and E. an estimated date when an application for final decree will be filed with the Court (in the case of the final monthly report, the date the decree was filed). G. Assumption And Assignment Of Executory Contracts And Unexpired Leases The Final Order confirming the Plan shall constitute an order of the Court approving the assumption and assignment to the Buyer of all executory contracts and unexpired leases that are Assumed Contracts (as defined in the Asset Purchase Agreement), pursuant to section 365 of the Bankruptcy Code, as of the Effective Date, and no consent of any party to any such executory contract or unexpired lease shall be required for any such assignment pursuant to the Asset Purchase Agreement. Any executory contract or unexpired lease which is not an Assumed Contract, or which the Debtor has previously moved to reject, shall be deemed rejected. The Buyer has provided a definitive list of the executory contracts and unexpired leases that it is assuming under the Asset Purchase Agreement. H. Conditions Precedent to Confirmation of the Plan. It is a condition precedent to confirmation of the Plan that: 1. The Asset Purchase Agreement shall have been approved by a Final Order; 2. The covenants of the Debtor under Section 4 of the Asset Purchase Agreement shall have been satisfied; and 3. The conditions precedent to the Buyer's obligations under Section 5 of the Asset Purchase Agreement shall have been satisfied. I. Conditions Precedent To Consummation Of The Plan It is a condition precedent to consummation of the Plan that the Confirmation Order shall be a Final Order, and shall provide, among other things, that: 1. The Asset Purchase Agreement is authorized and approved; 11 2. The provisions of the Confirmation Order are nonseverable and mutually dependent; 3. The Debtor Reserve, the Disputed Claims Reserve (if any) and the Class 2 Creditor Reserve shall have been funded in full from the Sale Proceeds; and 4. The Class 1 Creditor Payment Amount shall have been received by Fleet. J. Payments On The Effective Date. The following sets forth the Debtor's estimation of funds available for the payment and distributions provided for in the Plan. On the Closing Date, the Debtor will receive cash in the amount of $2,276,941.92 from Amphenol, to be distributed as follows: 1. Class 1 Creditor Payment Amount $1,980,000.00 2. Class 2 Creditor Reserve $ 279,373.39 3. Debtor's Reserve (for payment of administrative and priority claims) $ 17,568.53 On the Effective Date, distributions will be made as follows: 1. Class 2 Creditors will be paid the full principal amount of their Allowed Class 2 Claims ($279,373.39) from the Class 2 Creditor Reserve. 2. The following payments will be made from the Debtor's Reserve (which will consist of $17,568.53 as set forth above, plus an estimated $585,000.00 in cash on hand from post-petition collections): a. Priority Administrative Expenses $380,000.00 b. Priority Employee Claims $ 0 c. Priority Tax Claims $ 52,431.47 Funds Remaining: $170,137.06(1) - -------- (1) This amount is available to fund the Disputed Claims Reserve and any unanticipated expenses to be paid out of the Debtor's Reserve with all remaining amounts to be paid to the Class 1 Creditors 12 VI. TAX CONSIDERATIONS. The following summarizes certain tax consequences of the Plan under the Internal Revenue Code of 1986, as amended (the "Tax Code"), and other tax laws, to the Debtor and its creditors. This summary does not discuss all aspects of federal income or other taxation that may be relevant to a particular creditor in light of its personal investment circumstances or to those subject to special treatment under the income tax laws (for example, life insurance companies, tax-exempt organizations, foreign corporations and individuals who are not citizens or residents of the United States), does not discuss any aspects of local or foreign taxation, and discusses only limited aspects of state taxation. This summary is based upon the laws, regulations and decisions in effect on the date hereof and upon regulations, all of which are subject to change (possibly with retroactive effect) by legislation, administrative action or judicial decision. ================================================================================ CREDITORS ARE URGED TO CONSULT WITH THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES (FEDERAL, STATE AND LOCAL) TO THEM OF THE PLAN. ================================================================================ 1. Asset Purchase Agreement. As discussed above, the Debtor has entered into an asset purchase agreement with the Buyer which provides for the sale of substantially all of the Debtor's assets. The Debtor does not expect to incur any federal or state tax liability as a result of this transaction. 2. Treatment of Unclassified Claims. Holders of Administrative Expenses Claims and Priority Employee Claims will be paid in full. Payment in full should not result in any cancellation of indebtedness income to the Debtor or otherwise result in tax liability for the Debtor. The tax consequences of the payments to the holders of such claims will depend on their specific tax situation. Accordingly, the holders of such claims should consult their tax advisers. 3. Treatment of Claims in Class 1. The holders of the Claims in Class 1 will not be paid in full. Thus, the Debtor will recognize cancellation of indebtedness income as a result of the treatment of Class 1 Claims. This should not, however, result in increased federal income tax liability to the Debtor for the current tax year under Section 108 of the Internal Revenue Code but will result in the reduction of the Debtor's tax attributes. The tax consequences of the payments to the holders of such claims will depend on their specific tax situation. Accordingly, the holders of such claims should consult their tax advisers. 13 4. Treatment of Claims in Class 2. The holders of the Claims in Class 2 will be paid in full without interest. The tax consequences of the payments to the holders of such claims will depend on their specific tax situation. Accordingly, the holders of such claims should consult their tax advisers VII. CONFIRMATION OF THE PLAN. A. Feasibility. The Bankruptcy Code requires that in order for the Plan to be confirmed by the Court, the Debtor must show that the Plan is "feasible." A plan will be considered feasible if the Debtor demonstrates that it is more likely than not to be able to perform under the Plan as projected and, thus, that confirmation of the Plan is not likely to be followed by another liquidation or further reorganization. Because the sale to they Buyer pursuant to the Asset Purchase Agreement will result in the Debtor's transfer of all of its assets, the termination of its business, and its dissolution, there is no reason to believe that the Bankruptcy Court will not find that the Plan is feasible. B. Best Interests of Creditors and Interest Holders. To confirm the Reorganization Plan over the objections, if any, of dissenting holders of Claims, the Bankruptcy Court must make an independent determination that the Plan is in the "best interests" of all dissenting holders of Claims. That is, the Court must find that the Plan provides to each dissenting holder of a Claim a recovery with a value at least equal to the value, as of the Effective Date, of what each such holder would receive were the Debtor liquidated under chapter 7 of the Bankruptcy Code. Accordingly, the Bankruptcy Court will compare the value of what is likely to be available to holders of Claims in each of Classes 1 through 3 under the liquidation analysis addressed in Section VIII.B (the "Liquidation Analysis"), with the value of what is being received by those classes under the Reorganization Plan. Based on the Debtor's Liquidation Analysis, it appears likely that confirmation of the Reorganization Plan will provide to each holder of a Claim a return that is much more than what each of those holders would receive pursuant to a liquidation of the Debtor under Chapter 7 of the Bankruptcy Code. Assuming that the Debtor's assets could yield a maximum of $1,000,000 at a "fire sale," the Debtor believes that, once the priority claims and administrative expenses of the bankruptcy are paid, such a liquidation will yield no return for the holders of Class 2 Claims, especially since the Class 1 Creditors would then have an allowed claim that would far exceed the value of the assets. VIII. ALTERNATIVES TO PLAN OF REORGANIZATION. A. Continuing In Chapter 11. If the Debtor were to remain in Chapter 11, it would continue to operate its business as a debtor-in-possession for the time being, but it would also remain subject to the limitations imposed on its operations by the Bankruptcy Code, and the resolution of its present indebtedness would remain uncertain. The Debtor would not be able to survive as a going concern in 14 chapter 11, as the Debtor has no reason to believe that the Secured Creditors would continue to fund the Debtor, and because the Debtor would be unable to raise additional working capital or to stem its operating losses. Thus, at some point in the fairly near future, either a new plan of reorganization or liquidation would have to be proposed (either by the Debtor or another party) or the case would likely be converted to Chapter 7. B. Chapter 7 Liquidation. If no plan of reorganization is confirmed in the Reorganization Case, then the case may be converted to a case under chapter 7 of the Bankruptcy Code. In that event, the Debtor's business operations would cease and a trustee would be appointed to liquidate the assets of the Debtor. The Debtor believes that such a liquidation of the Debtor under Chapter 7 would likely result in no payment to the holders of Class 2 claims. WELLS-CTI, INC. By: _______________________________ John Dwight, President COUNSEL TO DEBTOR WELLS-CTI, INC. Charles R. Dougherty (BBO #132260) Anne L. Showalter (BBO # 629817) 77A Revere Street Boston, MA 02114 617-227-0506 DATED: April ___, 2003 15 Exhibit 1 - 2001 and 2002 Financials 16 -----END PRIVACY-ENHANCED MESSAGE-----