SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) MAY 28, 1998
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UNISON HEALTHCARE CORPORATION
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(Exact Name of Registrant as Specified in Its Charter)
DELAWARE
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(State or Other Jurisdiction of Incorporation)
0-27374 86-0684011
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(Commission File Number) (I.R.S. Employer Identification No.)
8800 NORTH GAINEY CENTER DRIVE, SUITE 245, SCOTTSDALE, ARIZONA 85258
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(Address of Principal Executive Offices) (Zip Code)
(602) 423-1954
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(Registrant's Telephone Number, Including Area Code)
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ITEM 3. BANKRUPTCY or RECEIVERSHIP
On May 28, 1998, Unison HealthCare Corporation (the "Company") filed a petition
for reorganization under Chapter 11 in the United States Bankruptcy Court for
the District of Arizona. The Chapter 11 filing covers the Company and all of its
operating subsidiaries other than BritWill Investments-I, Inc., BritWill
Investments-II, Inc. and BritWill Indiana Partnership, which were the subject of
a previously announced Chapter 11 filing on January 7, 1998 in the United States
Bankruptcy Court for the District of Arizona. These cases have been
administratively consolidated under Cause No. 98-06583-PHX-GBN, and it is
anticipated that the cases will be substantively consolidated.
Prior to the May 28 Chapter 11 filing, the Company was attempting to negotiate a
consensual restructuring with Omega Healthcare Investors, Inc. ("Omega"),
representatives of holders of Unison's $20 million 13% Senior Notes due 1999
(the "13% Notes") and $100 million 12.25% Senior Notes due 2006 (the "12.25%
Notes" and, together with the 13% Notes, the "Senior Notes"), and certain
entities related to former directors Bruce R. Whitehead and David A. Kremser
(collectively, the "Related Party Creditors"). An agreement-in-principle with
respect to a consensual restructuring was concluded on June 15, 1998 with Omega
and the representatives of holders of the Senior Notes.
Under the agreement-in-principle, which is set forth in the term sheet attached
hereto as Exhibit 99.1 (the "Term Sheet"), the treatment of approximately $17.3
million of disputed secured claims of the Related Party Creditors would depend
upon the results of anticipated litigation over the possible disallowance or
equitable subordination of such claims. If such secured claims are not
disallowed or equitably subordinated to the claims of general unsecured
creditors, the Related Party Creditors would receive in full satisfaction of
such claims 100% of the Class A Common Stock, representing approximately 7% of
the fully diluted equity, of the reorganized Company. The Class A Common Stock
would have rights identical to those of other common shareholders in the
reorganized Company except that the Class A Common Stock would have a $17.3
million liquidation preference over the remaining common stock. If such secured
claims are disallowed or equitably subordinated, they would be canceled and
receive nothing in the reorganization. In either event, the holders of the 13%
Notes would receive approximately $21 million in new promissory notes of the
Company in full satisfaction of their claims, and the Company's trade creditors
and holders of the 12.25% Notes would receive pro rata distributions of
approximately $4.6 million in new promissory notes and all of the Class B Common
Stock of the reorganized Company. The Class B Common Stock will represent
approximately 79% of the fully diluted equity of the reorganized Company if the
Class A Common Stock is issued to the Related Party Creditors, and approximately
83% of the fully diluted equity if the claims of the Related Party Creditors are
disallowed or equitably subordinated and canceled. Up to 5% of the fully diluted
equity of the reorganized entity would be allocated to management incentive
options. The Company's currently outstanding equity would be canceled and
current stockholders would receive a pro rata distribution of warrants to
purchase up to 5% of the fully diluted equity of the reorganized Company at a
per share price equal to 125% of the market value of the Class B Common Stock.
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The Term Sheet also contains terms providing for resolution of all claims of
Omega against the Company under lease and mortgage arrangements affecting 20 of
the Company's 51 total healthcare facilities. Omega would purchase seven
facilities owned and operated by the Company for approximately $40 million,
yielding net cash proceeds to the Company of approximately $18 million after
payment in full of transaction costs and indebtedness currently secured by such
facilities. These facilities and 10 other facilities currently leased by Omega
to the Company or subject to mortgage loans in favor of Omega would be combined
into a single master lease at lease rates which are comparable to those
currently in effect under the existing facility leases. Six leased facilities
would be returned to Omega, and three additional facilities subleased by the
Company to another operator would be excluded from the master lease, for which
Omega would receive $2 million in cash and a $3 million, seven-year promissory
note as compensation. In addition, Omega would purchase $3 million of the
Company's new 5% cumulative preferred stock, convertible into 4% of the
Company's fully diluted equity. All prepetition rent and mortgage payments due
to Omega would be paid.
The Term Sheet includes severance packages for Unison management and certain
other employees, subject to Bankruptcy Court approval. The potential maximum
aggregate amount of such severance is approximately $2.7 million.
If restructured in accordance with the Term Sheet, the Company projects that its
annual revenues will be approximately $156 million and that it would generate
EBITDAR (defined as earnings before interest, taxes, depreciation, amortization
and rent) of approximately $26 million. The principal amount of the Company's
debt, if restructured in accordance with the Term Sheet, will be approximately
$30 to $40 million. However, no assurance can be given that the consensual
restructuring provided for in the Term Sheet or any other consensual
restructuring will be finalized or that any restructuring which is completed
will not be on terms materially different from those contained in the Term
Sheet. The agreement-in-principle reflected in the Term Sheet is subject to,
among other things, mutually acceptable definitive documentation and
confirmation and effectiveness of a plan of reorganization in the Company's
Chapter 11 proceedings.
The Company has secured a continuation of its accounts receivable line of credit
with HealthCare Financial Partners in the amount of $11 million, which will be
available to the Company for vendor payments and to meet working capital
requirements during the Chapter 11 process.
The statements appearing above, which are not historical facts, are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended, and are subject to numerous risks and uncertainties that could cause
actual results to differ materially from those set forth in the forward-looking
statements, including, but not limited to, delays in or inability to conclude
transactions, adverse actions which may be taken by the Company's creditors, the
outcome of various Bankruptcy Court proceedings, the establishment of competing
facilities and services, cancellation of leases or contracts, adverse regulatory
actions, changes in applicable laws and regulations, general market acceptance
of the Company's facilities and services, fluctuations in margins, demand
fluctuations, access to debt or equity financing in light of recent losses, cash
flow short falls, and the Company's Chapter 11 filings, and adverse uninsured
determinations in existing or future litigation or regulatory proceedings.
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ITEM 5. OTHER EVENTS
On June 4, 1998, Unison HealthCare Corporation issued a news release announcing
that Bruce H. Whitehead and David A. Kremser resigned from Unison's Board of
Directors. The news release is filed as Exhibit 99.2 to this Form 8-K.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT
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99.1 Unison HealthCare Corporation Term Sheet
99.2 Unison HealthCare Corporation news release announcing
that Bruce H. Whitehead and David A. Kremser resigned
from its Board of Directors.
SIGNATURES
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 hereto duly authorized.
UNISON HEALTHCARE CORPORATION
June 15, 1998 BY /s/ LISA M. BEUCHE
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Lisa M. Beuche
Vice President - Financial Reporting
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EXHIBIT 99.1
SUMMARY OF TERMS OF CONSENSUAL RESTRUCTURING
(THE "TERM SHEET")
1. PARTIES:
+ Unison HealthCare Corporation and subsidiaries (including the
BritWill entities in Chapter 11) (collectively "UNISON").
+ Members of the Ad Hoc Committee Of Holders Of: (1) The 12 1/4 %
Senior Notes Due 2006 ("Notes"); and (2) The 13% Senior Notes Due
1999 (the "Senior Notes") (the "COMMITTEE") whose names appear
on the signature pages hereof (the "COMMITTEE MEMBERS").
+ Omega HealthCare Investors, Inc. ("OMEGA").
2. OPERATIVE TERMS:
2.1 TERMS RELATING TO OMEGA. Unless otherwise stated in this Term
Sheet, the terms agreeable to Unison, Omega and the Committee relating to Omega
and the treatment of its claims and leases and the terms relating to corporate
governance and fees and expenses are set forth in the document entitled "SUMMARY
OF TERMS FOR CONSENSUAL OMEGA/NOTEHOLDER RESTRUCTURING" dated May 26, 1998 (the
"Omega Term Sheet"), which is attached hereto as Attachment "1" and is by this
reference incorporated herein. Except as specifically set forth in this Term
Sheet (including paragraph 2.3(c)), the Omega Term Sheet shall control. The
following terms in the Omega Term Sheet are modified:
(a) GLOBAL MASTER LESSEE. In place of bankruptcy remote
entities as set forth on page 3 of the Omega Term Sheet, the lessees
may be the existing lessees under one Global Master Lease with all the
lessees being joint lessees who are jointly and severally liable with
respect to the obligations thereunder. The Bankruptcy Court shall make
findings of fact and conclusions of law in the confirmation order
referenced in subparagraph 2.8(a), below, including, without
limitation, the following: (i) the Global Master Lease is a true lease
and not any type of financing or joint venture device; (ii) the Global
Master Lease is for all of the properties subject to the lease and may
not be severed; (iii) there is fair and adequate consideration under
any fraudulent conveyance or transfer statutes for each of the lessee
parties to be jointly and severally liable for all of the obligations
of the other lessees under the Global Master Lease and for the
obligations of Unison and BHC (if it continues to exist) and for the
guarantees to be executed or reaffirmed by Unison and BHC (if it
continues to exist); and (iv) the Global Master Lease and the
guarantees to be executed or reaffirmed by Unison and BHC (if it
continues to exist) are made in good faith and not with any actual
intent to hinder, delay or defraud either present or future creditors
of any lessee under the Global Master Lease, or otherwise.
(b) COVENANTS. The reference to "EBITARM" on page 4 of the
Omega Term Sheet shall be changed to "EBITDARM" (i.e. shall include
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depreciation in the calculation). The calculation of EBITDARM shall not
include the contingent liability based on the New Guarantee referenced
in subparagraph (d)(i), below.
(c) INDIANA RETURNED FACILITIES. Notwithstanding the reference
to "partial compensation" on page 5 of the Omega Term Sheet under
"Treatment Of Facilities," as to Unison the claim and treatment thereof
is in full satisfaction of Unison's obligations with respect to the
Indiana Returned Facilities. However, Omega will retain (even if it
results in additional indemnification or subrogation claims against
Unison) (subject to paragraph 2.1(d) below): (i) all of its claims
against Bruce H. Whitehead, Whitehead Family Investments, Ltd., Texas,
Limited Partnership, BritWill Investments Corporation and BritWill
Investments-Texas, Ltd. and all affiliates of the foregoing
(collectively, "Whitehead and Affiliates"); (ii) all claims that
amounts owing to Whitehead and Affiliates are subordinated to payment
in full of amounts owing to Omega (except as specifically provided in
paragraph 2.3(c), below); and (iii) all claims that amounts owing to
Whitehead and Affiliates should be paid to Omega until Omega is paid in
full (except as specifically provided for in paragraph 2.3(c), below).
(d) NON-SETTLEMENT WITH BRIT-TEXAS AND MR. WHITEHEAD. If at or
after confirmation: (i) Brit-Texas settles with Omega or is otherwise
willing to transfer to Omega its fee and leasehold interests in the
Brit-Texas Facilities (other than the Hasmark Facilities if Omega has
been paid $1 million with respect to the Hasmark Facilities as
contemplated on page 7 of the Omega Term Sheet), free and clear of
liens and underlying encumbrances except for customary permitted
exceptions and other than the underlying leases on the leasehold
Facilities; (ii) Colonial Pines, West Place and South Place remain
fully licensed and operational; (iii) the Brit-Texas Facilities (other
than the Hasmark Facilities if Omega has been paid the $1 million as
set forth above) are added to the Global Master Lease on the terms set
forth in the Omega Term Sheet; (iv) Omega is reimbursed for its
reasonable legal fees and costs after execution of this Agreement by
all parties in pursuing Whitehead and Affiliates (which shall not
exceed $250,000.00 without Unison's consent); and (v) Unison is
otherwise current in its obligations to Omega, then Unison and the
Committee shall have full power to cause Omega to grant a full release
to Whitehead and Affiliates except for any continuing obligations of
Brit-Texas and/or Whitehead under any settlement between Brit-Texas and
Omega or under any conveyance documents given by Brit-Texas to Omega.
Unless otherwise ordered by a court of law, and except as specifically
provided for in paragraphs 2.3(c) and (d), below, Unison will abide by
the subordination provisions contained in the agreements with Whitehead
and Affiliates, and will not pay any money to Whitehead and/or
Affiliates until the Brit-Texas obligation to Omega is paid in full.
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(i) NEW GUARANTEE. On the effective date of the Plan,
Unison HealthCare Corporation and BritWill Investments II,
Inc. (the "Guarantors") shall execute a new absolute and
unconditional guarantee of payment to supersede and replace
any and all of their existing guarantees of certain Brit Texas
obligations (the "New Guarantee"). The aggregate liability of
the Guarantors under the New Guarantee shall be in the amount
of up to $3 million (plus interest after default thereon and
costs of collection on the New Guarantee), and shall be
secured by the leasehold mortgages on the Indiana retained
facilities, the security deposits to be provided under the
Global Master Lease, and a junior lien on accounts receivable
generated by the facilities under the Global Master Lease. The
New Guarantee shall not be cross-defaulted with either the
Global Master Lease or other obligations of Unison to Omega
under the Plan. If the New Guarantee is called upon, any
amounts thereunder will be payable on a four (4) year, fully
amortizing basis with no interest. Unison (and Reorganized
Unison) shall retain any and all rights of subrogation,
contribution, reimbursement and/or offset with respect to
Whitehead and Affiliates relating to the New Guarantee and any
of the obligations to Omega covered thereby.
(e) HASMARK FACILITIES. Provided that Omega has been paid $1
million with respect to the Hasmark Facilities as contemplated as part
of the payments described on page 7 of the Omega Term Sheet, Omega
shall, if it acquires fee and leasehold interests in the Hasmark
Facilities, promptly quit claim its interest (without any
representation in those Facilities to Unison or its assignee. Unison
acknowledges that the amount, if any, which Omega will bid at any
foreclosure sale with respect to the Hasmark Facilities is solely
within the discretion of Omega, and that Omega may not acquire fee or
leasehold interests to the Hasmark Facilities. If Omega for any reason
does not acquire fee and leasehold interests in the Hasmark Facilities,
Omega will have no obligations under this subsection.
(f) TREATMENT OF EXISTING NOTEHOLDERS. Notwithstanding page 7
of the Omega Term Sheet, the treatment of the Senior Notes and Notes
shall be as set forth in this Term Sheet.
(g) STANDSTILL. Provided Unison is paying rent or escrowing or
otherwise interpleading rent with respect to the facilities currently
leased or subleased from BritWill Investments Texas, Ltd., and paying
rent on the facilities leased from Omega, the Standstill provisions set
forth in subparagraph (iii) on page 8 of the Omega Term Sheet shall be
deemed satisfied. Moreover, the Standstill shall terminate upon the
appointment of a trustee, conversion of the case to a case under
Chapter 7, or dismissal of the case.
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2.2 RELATED PARTY CREDITOR CLAIMS. Whitehead and Affiliates, as well as
David A. Kremser, Elk Meadow Investments, LLC, Bruce E. Kremser, Michael P.
Kremser, Stanley A. Kremser, Holly M. Kremser and John Filkowski (collectively
"Kremser and Affiliates," and together with Whitehead and Affiliates, the
"Related Party Creditors) assert certain claims against Unison resulting from,
among other things, the acquisition by Unison (or its predecessors) of entities
owned or controlled by the Related Party Creditors totaling, in the aggregate,
approximately $18 million (the "Related Party Creditor Claims"). These claims
are dealt with in paragraph 2.3(d), below. 1
2.3 RESTRUCTURING OF UNSECURED OBLIGATIONS.
(a) EXTENT OF UNSECURED CLAIMS. Unison anticipates it has the
following unsecured debt: (i) the Senior Notes of approximately $20.8
million; (ii) the Notes of approximately $106 million; (iii) general
unsecured trade claims anticipated to be approximately $4.5 million;
(iv) anticipated lease rejection and other claims of approximately $2
million; (v) an IRS audit claim (believed to be non-priority) resulting
from the Signature acquisition of approximately $1.4 million; 2 (vi)
BritWill related unsecured claims of approximately $2.4 million (items
(iii) through (vi) are collectively referred to as "GUC"). These
amounts represent Unison's good faith estimate and actual allowed
claims may be different.
(b) INTERCREDITOR RIGHTS. The Senior Notes have certain rights
as to payment priority pursuant to the Forbearance Agreement. Moreover,
approximately $91 million in original face value of the Notes are
subordinated to the Senior Notes pursuant to a consent solicitation.
The Senior Notes share PARI PASSU with: (i) the $9 million of Notes
which did not consent to subordination to the Senior Notes (the
"Non-Consenting Noteholders"); and (ii) the GUC. The Notes are not
subordinated to the GUC.
(c) TREATMENT OF SENIOR NOTES. The consideration for the
treatment of the Senior Notes is: (i) the enforcement of the
Forbearance Agreement to the extent (and only to the extent) of the
validity, allowability and secured status of the Related Party Creditor
Claims; (ii) the waiver and/or assignment for the benefit of the
holders of the Senior Notes of any and all of Omega's rights under the
subordination agreements between Omega and Whitehead and Affiliates to
the extent (and only to the extent) of the validity, allowability and
secured status of the Related Party Creditor Claims; and (iii) the
enforcement of the subordination rights in favor of the holders of the
Senior Notes with respect to the Notes that did consent to the
subordination of claims. The Senior Notes shall receive a New Note in a
principal amount equal to the allowed amount of the Senior Notes (plus
postpetition interest), which shall contain the following provisions:
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1. The Related Party Creditor Claims are as reflected on Unison's books and
records. The Related Party Creditors may assert or file claims in larger amounts
based on indemnifications or related claims, which will likely be subject to
disallowance pursuant to 11 U.S.C. ss. 502(e).
2. If the IRS claims are determined to be priority tax claims, they will be
dealt with pursuant to 11 U.S.C. ss. 1129(a)(c).
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(A) It shall be a four (4) year note bearing interest
at the rate of 11% per annum, contain no prepayment penalty,
and be issued pursuant to an indenture and containing
reasonable and customary terms, provisions and covenants.
(B) It shall be secured by a senior lien on the stock
and assets of Quest Pharmacies, Inc. and Sunbelt Therapy
Management Services, Inc. (the "Subsidiaries.)
(C) The New Note will be payable as follows: (i) on
the Plan effective date, a payment of "Excess Cash" will be
made (the "Effective Date Payment"). "Excess Cash" will be
cash on hand after payment of administrative expenses (plus
any reserve for disputed administrative expenses). Unison
shall not be required to access its working capital revolving
line of credit to make the Effective Date Payment; (ii) if the
Subsidiaries (or their assets) are sold, the proceeds
therefrom shall be used to prepay the New Note (the
"Subsidiaries Proceeds Payment"); (iii) other than the
Effective Date Payment and Subsidiaries Proceeds Payment,
interest only for Years 1 and 2; (iv) at the end of Year 3, a
principal reduction of $2 million (plus interest); and (v) the
New Note will be fully due and payable at the end of Year 4.
(D) The New Note shall be guaranteed by all
affiliates and subsidiaries of Unison other than the Global
Master Lessee as defined in the Omega Term Sheet.
(E) The note to be given to Omega with respect to the
return of the Indiana Returned Facilities as set forth in page
5 of the Omega Term Sheet (the "Indiana Returned Facility
Note") shall be treated as follows vis-a-vis the New Note:
(i) If at the end of Year 2, the New Note is
not paid down by at least 50% of its principal amount
by virtue of the Effective Date Payment, the
Subsidiaries Proceeds Payment, or otherwise, and
until such time as the New Note is paid in full, the
Indiana Returned Facility Note shall share parri
passu with the New Note notwithstanding the original
amortization of the Indiana Returned Facility Note
(the "Sharing Arrangement");
(ii) The Sharing Arrangement shall only be
applicable as to payment of money and not constitute
a sharing or assignment of collateral securing the
Indiana Returned Facility Note or the New Note,
respectively;
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(iii) The Sharing Arrangement shall only
apply if there is no continuing default by Unison on
the obligations under the Plan to Omega;
(iv) Any principal deferred on the Indiana
Returned Facility Note as a result of the Sharing
Arrangement shall bear interest at the rate of 10%
per annum from the date of deferral until paid; and
(v) Notwithstanding any other provision in
the Indiana Returned Facility Note, if the Sharing
Arrangement occurs, the deferral of the principal on
the Indiana Returned Facility Note shall not be a
default under that note or other obligations of
Unison to Omega.
(F) IMPACT OF OMEGA SUBORDINATION RIGHTS. Omega has
and asserts rights of subordination as to the claims of
Whitehead and Affiliates. On the effective date of the Plan,
Omega shall waive and/or assign its subordination rights
(without representation or warranty by Omega) only to the
extent necessary to give effect to the treatment of the Senior
Notes contained herein, and except as those rights relate to
amounts owed by Brit II to Brit-Texas which shall be retained
by Omega until all obligations owing to Omega with respect to
the Brit-Texas facilities are satisfied.
(d) TREATMENT OF THE NON-CONSENTING NOTEHOLDERS, NOTES, GUC
AND RELATED PARTY CREDITOR CLAIMS.
(i) RELATED PARTY CREDITOR CLAIMS. There are certain
affirmative claims and defenses relating to the Related Party
Creditor Claims in the nature of preferences (including but
not limited to the payment of approximately $9.75 million in
January, 1997), breaches of fiduciary duties, fraudulent
conveyances, equitable subordination and other related claims,
defenses and offsets asserted or assertable by either Unison
as a debtor in possession or an appropriate estate
representative pursuant to 11 U.S.C. ss. 1123(b)(3)(B) (the
"Affirmative Claims And Defenses"). Moreover, the Related
Party Creditors assert potential subrogation rights pursuant
to 11 U.S.C. ss. 509 with respect to the rights of the Senior
Notes as a result of the Payment Priority under the
Forbearance Agreement.
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(ii) CLASSIFICATION OF UNSECURED CLAIMS. The Plan
will classify the Notes, the Non-Consenting Noteholders, GUC
and the Related Party Creditor Claims in a general unsecured
claims class, which shall: (A) be paid pursuant to an
unsecured note in the amount sufficient to provide PARRI
PASSU, nondiscriminatory treatment to holders of the
Non-Consenting Noteholders and the GUC VIS-A-VIS the Senior
Notes and the Notes before taking into account the
subordination and other rights under the Forbearance Agreement
(if applicable) of the Senior Notes (the "GUC New Note") and
(B) be issued New Class A and B Common Stock in Reorganized
Unison on the effective date as set forth below.
(iii) THE GUC NEW NOTE. The unsecured creditors shall
share PRO RATA in the GUC New Note and New Class A (as set
forth in (v) below) and B Common Stock.
(iv) THE NEW CLASS B COMMON STOCK. The New Class B
Common Stock will be issued on the effective date to the
holders of allowed unsecured claims on a PRO RATA basis. When
issued, it will represent 100% of the primary equity in
Reorganized Unison, subject to dilution only by: (A) the
Management Incentives (discussed in paragraph 2.5, below); (B)
New Class A Common Stock (discussed in subparagraph (v)
below); (C) the warrants for existing equityholders (discussed
in paragraph 2.6, below); and (D) the Preferred Stock
Investment referenced in the Omega Term Sheet.
(v) THE NEW CLASS A COMMON STOCK. The New Class A
Common Stock shall be reserved for possible issuance to the
Related Party Creditors only upon the conclusion of the Claims
Litigation Procedure described in paragraph 2.4, below. If and
to the extent issued, the New Class A Common Stock shall
represent up to approximately 10% of the equity in Reorganized
Unison on a fully diluted basis. If and to the extent issued,
the New Class A Common Stock shall have a liquidation
preference over the New Class B Common Stock in the amount of
the allowed claim subject to a maximum allowed claim of $18
million. Otherwise, it shall have the same voting and other
rights as the New Class B Common Stock. The New Class A Common
Stock shall be subject to any and all subordination rights of
Omega and the holders of the Senior Notes (subject only to
paragraph 2.3(c) hereof).
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2.4 CLAIM LITIGATION PROCEDURE. The Affirmative Claims And Defenses to
the Related Party Creditor Claims and all other litigation and avoidance claims
of the estates shall be subject to post-confirmation litigation pursuant to 11
U.S.C. ss. 1123(b)(3)(B), and shall be assigned to a trust for the benefit of
the holders of unsecured claims (the "Trust"). Unison shall fund the Trust with
up to $700,000.00 (as provided below) as and for legal fees and costs to offset
the costs of litigation of the Affirmative Claims And Defenses. Upon the
conclusion of the litigation of the Affirmative Claims And Defenses, the allowed
Related Party Creditor Claims (if any) will be paid by the issuance of the New
Class A Common Stock described above.
(a) TRUST FUNDING. On the effective date of the Plan, Unison
shall fund $250,000.00 in cash into the Trust, and shall be obligated
to loan up to an additional $450,000.00 as and for legal fees and costs
of the Trust (the "Loan"). This $450,000.00 is to be repaid only from
affirmative recoveries, if any, as a result of prosecution of the
Affirmative Claims and Defenses. If the reasonable and necessary fees
and costs of the Trust in pursuing the litigation described herein
exceed $700,000.00, such fees and costs shall be paid from monetary
recoveries (if any) received by the Trust after repayment of the Loan.
2.5 MANAGEMENT INCENTIVES AND SEVERANCE.
(a) SEVERANCE PACKAGE. The Committee Members and Omega will
support Bankruptcy Court approval of the following severance packages
for management of Unison as an inducement to remain with Unison during
the period from May 28, 1998 (the "Petition Date") through the
effective date of the Plan (the "Interim Period"):
(i) SENIOR MANAGEMENT. For the five (5) senior
management people identified in Attachment "2" attached hereto
(the "Severance Schedule") as "Group 1" (the "Senior
Management"), and provided they agree to remain with Unison
through the Interim Period, a severance package of one (1)
year's salary shall (subject to (C) below) be payable in the
event of an involuntary termination without cause on or before
three (3) months after the Plan effective date.
(A) ROLE OF POST-EFFECTIVE DATE BOARD. The
board of Reorganized Unison (or such committee of the
board as appropriate) will evaluate the Senior
Management within three (3) months after the Plan
effective date to determine: (1) which members of
Senior Management will be given employment contracts
on a post-effective date basis (the "New Contracts");
(2) the terms of those New Contracts; and (3) the
terms of participation in the Options and Cash
Bonuses referenced in subparagraphs (b) and (c),
below. The New Contracts must be in substantially the
same form as the existing employment agreements, at
substantially similar compensation terms as currently
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existing and contain not less than twelve (12) months
severance (but specifically excluding any terms or
provisions contained in the executive severance
agreements dated on or about April 30, 1998).
(B) CERTAIN SPECIFIC PROVISIONS. In addition
to the Interim Period severance package for Senior
Management discussed above, Mr. Michael Jeffries
(CEO) and Mr. James Fields (CFO) shall be reimbursed
as part of their Interim Period compensation their
closing costs for their homes in Albuquerque, New
Mexico (for Mr. Jeffries) and Tucson, Arizona (for
Mr. Fields), which shall not exceed $25,000.00 for
Mr. Jeffries and $30,000.00 for Mr. Fields (the
"Closing Costs Reimbursement").
(C) NON-PARTICIPATION. If any member of
Senior Management declines to accept an offered New
Contract, that individual may be terminated without
severance.
(D) WAIVER OF OTHER CLAIMS. Upon Bankruptcy
Court approval of the terms of the Severance Package
set forth above, the Senior Management (and each of
them) will have waived and released all other claims
for severance or other termination payments (whether
pursuant to employment agreements, the executive
severance agreements dated on or about April 30, 1998
or otherwise) as may have existed prior to the
Petition Date other than the Closing Costs
Reimbursement, and the terms of severance set forth
herein shall supersede and replace, in their
entirety, any prepetition severance or termination
agreements or arrangements.
(ii) MID-LEVEL MANAGEMENT. For the individuals
identified in the Severance Schedule as "Group 2" (the
"Mid-Level Management"), and provided they agree to remain
through the Interim Period, the one (1) year severance
provided in their existing employment contracts shall remain
in full force and effect, and shall be assumed by Unison
(subject to Bankruptcy Court approval), with the following
modifications:
9
<PAGE>
(A) SALE OF QUEST. A sale of Quest
Pharmacies, Inc. ("Quest") shall not constitute an
involuntary termination for purposes of entitlement
to severance for Mr. Wayne Oberfield or Mr.
Dan Roberts.
(B) EXPIRATION OF AGREEMENTS. No severance
payments will be made, and any severance rights shall
expire: (1) for Mr. Robert Oberfield, upon the
purchase by Unison of the 25% interest in Quest from
Mr. Robert Oberfield; and (2) upon the sale of
Sunbelt Therapy Management Services, Inc. for Mr.
Paul Henderson and Mr. Paige Plash. Otherwise, these
individuals shall be treated as the other Mid-Level
Management.
(C) WAIVER OF OTHER CLAIMS. Upon Bankruptcy
Court approval of the severance rights for Mid-Level
Management set forth above, Mid-Level Management (and
each of them) will have waived and released all other
claims for severance or any other termination
payments (whether contained in employment contracts
or otherwise) as may have existed prior to the
Petition Date, and the terms of severance set forth
herein shall supersede and replace, in their
entirety, any prepetition severance or termination
agreements or arrangements.
(iii) OTHER MANAGEMENT. For the individuals
identified in the Severance Schedule as "Group 3" through
"Group 6" (the "Other Management"), and provided they agree to
remain through the Interim Period, the severance rights they
will be entitled to shall be those set forth in the Severance
Schedule.
(iv) MAINTENANCE OF STATUS QUO. Other than the
revisions to severance rights as set forth above, the basic
terms of employment of Senior Management, Mid-Level Management
and Other Management (such as compensation, insurance and
other benefits, etc.) will remain in full force and effect
throughout the Interim Period (but specifically excluding
April 30, 1998 severance agreements).
(b) OPTIONS. The board of Reorganized Unison, within three (3)
months of the effective date of the Plan, shall allocate to Senior
Management retained under New Contracts options to purchase New Class B
Common Stock as follows:
10
<PAGE>
(i) EFFECTIVE DATE OPTIONS. Five-year options to
purchase up to 3% of the New Class B Common Stock on a fully
diluted basis, at a per share exercise price based on a value
per share derived from a $65 million equity value subject to
adjustment should Unison (on or before the Plan effective
date) issue or incur debt more than $3.8 million in addition
to that contemplated in this Term Sheet (the "Initial Price"),
which shall vest as to 1/3 of the shares on each of the first
three anniversaries of the date of issuance.
(ii) PERFORMANCE BASED OPTIONS. Five-year options to
purchase up to an additional 2% of the New Class B Common
Stock on a fully diluted basis, at a per share exercise price
equal to the Initial Price, which shall vest as to 1/3 of the
shares on each of the first three anniversaries of the date of
issuance, subject to the following additional vesting
conditions:
(A) If EBITDA 3 for any fiscal year up to
and including the fiscal year ending more than two
years after the Plan effective date exceeds the
currently projected $13 million (without taking into
consideration any obligations under the New
Guarantee) by $2 million or more, such options shall
vest in full;
(B) If such EBITDA exceeds such currently
projected amount by $1 million or more but less than
$2 million, such options shall vest ratably in the
proportion that such EBITDA in excess of $1 million
bears to $1 million; and
(C) Any of such options (including those
issued to Senior Management who are no longer
employed at the end of the 2 year measurement period)
which do not vest as provided above shall expire.
All options issued under this subparagraph (b) shall include customary
provisions for acceleration of vesting in the event of a change of
control of Unison.
- ----------
3. For purposes of EBITDA calculations for this subparagraph 2.5(a)(ii)
only, the Omega refinance of the so-called Signature loans in the approximate
amount of $40 million will be treated as secured debt and not a sale/leaseback
consistent with the projections previously circulated.
11
<PAGE>
(c) CASH BONUSES. In addition to the foregoing, the board of
Reorganized Unison, within six (6) months of the Plan effective date,
shall allocate and direct to be paid to Senior Management retained
under New Contracts an aggregate cash bonus of $250,000.00, with the
terms and conditions for such bonuses (such as performance criteria) to
be set by the board of Reorganized Unison.
2.6 TREATMENT OF EXISTING EQUITY. Subject to the requirements of 11
U.S.C. ss. 1129(b), on the effective date the existing equityholders of Unison
shall receive five year warrants to purchase up to five percent (5%) of the New
Class B Common Stock at an exercise price of 125% of the Initial Price.
2.7 SECURITIES REGISTRATION AND LISTING. Unison shall take all actions
reasonably required to register the New Class B Common Stock under Section 12 of
the Securities Exchange Act of 1934 and to cause the New Class B Common Stock to
be listed for trading on a national securities exchange. In addition, there
shall be customary registration rights (at Reorganized Unison's expense) for
creditors receiving more than 10% of the New Class B Common Stock.
2.8 IMPLEMENTATION.
(a) CHAPTER 11 PLAN. All of the basic terms of the
restructuring set forth herein and the Omega Term Sheet shall be
memorialized in a plan of reorganization (the "Plan") that contains no
other terms except for terms which are not, individually or in the
aggregate, in the reasonable, good faith judgment of Unison, Omega and
the Committee Members materially adverse to financial condition, assets
or prospects of Reorganized Unison, or in the respective reasonable,
good faith judgment of Omega or such Committee Members materially
adverse to the value of the consideration contemplated to be received
by such creditors hereunder. Subject to the receipt of appropriate
disclosure and solicitation materials meeting the requirements of 11
U.S.C. ss. 1125(b), the Committee Members and Omega will support the
Plan (including by voting in favor thereof) and confirmation thereof;
PROVIDED THAT: (i) the Plan is filed by August 15, 1998; (ii) a
disclosure statement with respect thereto is approved by the Bankruptcy
Court on or before September 30, 1998; (iii) the Plan is confirmed no
later than October 30, 1998; (iv) the Plan becomes effective no later
than November 30, 1998 (or such later date as agreed to by Unison, the
Committee Members and Omega). The form of confirmation order shall be
in form and content approved by the Committee, Unison and Omega.
(b) OTHER DOCUMENTS. In addition to the Plan, the other
related documents contemplated hereby and by the Omega Term Sheet shall
be in form and content reasonably acceptable to Unison, the Committee
and Omega, and all parties will use all reasonable efforts to expedite
drafting, review, approval and execution of all such documents.
12
<PAGE>
(c) EXCLUSIVITY. If Unison has not filed a Plan consistent
with the terms and provisions herein on or before September 30, 1998,
Unison agrees to a modification of exclusivity pursuant to 11 U.S.C.
ss. 1121 for either (or both) the Committee Members, the Committee or
Omega provided such request is for modification of exclusivity to file
a Plan consistent with the terms of this Agreement. Unison shall
support such a Plan.
2.9 NO PREJUDICE TO OTHER RIGHTS. Notwithstanding any of the foregoing,
and except for releases or waivers specifically provided for herein, nothing
herein shall be construed as prejudicing or impairing any rights by any of the
holders of the Senior Notes, the Notes or Omega as to any person or entity other
than Unison. Without limiting the generality of the foregoing, the holders of
the Notes and the Senior Notes are not waiving any and all of their separate
claims against Unison and each of its subsidiaries which are guarantors under
the Notes and the Senior Notes.
2.10 NO SOLICITATION. The Committee and Omega agree and acknowledge
that the negotiations leading up to this Term Sheet and the execution of this
Term Sheet do not constitute impermissible solicitations, but are the results of
arm's-length, informed negotiations between the creditors.
2.11 NO THIRD PARTY BENEFICIARIES. There are no third party
beneficiaries, express or implied, with respect to this Agreement, including,
without limitation, the Related Party Creditors or any holder of a GUC.
2.12 INUREMENT. This Term Sheet shall bind the parties hereto and,
subject to the next sentence, their respective successors and assigns. Nothing
in this Term Sheet shall restrict a Committee Member from selling its Notes or
Senior Notes to another entity; PROVIDED THAT such purchasing entity agrees in
writing to be bound by the terms of this Term Sheet; PROVIDED FURTHER that a
Committee Member shall not be required to obtain such an agreement from a
purchasing entity and a purchasing entity shall not be bound by the terms of
this Term Sheet in the event any of the deadlines set forth in the second
sentence of Section 2.8(a) are not satisfied.
2.13 NAME CHANGE. The "Unison" tradename is currently licensed, which
license shall expire in 1999. Unison will change its tradename on a
postconfirmation basis.
2.14 COMMITTEE REPRESENTATION. On or before the effective date of the
Plan, all reasonable fees and expenses of the Committee and its professionals
shall be paid by the debtors as administrative expenses by means of either the
payment of fees and costs of an Official Committee of Noteholders (the "Official
Committee"), or if such Official Committee is not appointed, as part of the
consideration payable to the holders of the Notes and Senior Notes on the Plan
effective date. In furtherance of the foregoing, the parties will support the
appointment of the Official Committee under 11 U.S. C. ss. 1102(a).
13
<PAGE>
AGREED AND ACCEPTED:
UNISON SQUIRE, SANDERS & DEMPSEY L.L.P.
By
---------------------------------
Thomas J. Salerno
Attorneys For Unison
Date:
-----------------------------
GALLAGHER & KENNEDY
By
---------------------------------
Charles R. Sterbach
Attorneys for the BritWill Entities
Date:
-----------------------------
COMMITTEE MEMBERS MERRILL LYNCH PHOENIX FUND, INC.
By
---------------------------------
Kevin J. Booth
Its
-------------------------------
Date:
-----------------------------
CAPITAL RESEARCH AND MANAGEMENT
COMPANY
By
---------------------------------
David Daigle
Its
-------------------------------
Date:
-----------------------------
14
<PAGE>
OMEGA DYKEMA, GOSSETT
By
---------------------------------
Fred J. Fechheimer
Attorneys For Omega
Date:
-----------------------------
15
<PAGE>
Date: June 15, 1998
UNISON HEALTHCARE CORPORATION
SUMMARY OF TERMS FOR CONSENSUAL
OMEGA/NOTEHOLDER RESTRUCTURING
CHAPTER 11 FILING All terms set forth below to be implemented
pursuant to chapter 11 plan of reorganization for
Unison Healthcare Corporation and each of its
subsidiaries (collectively, "Unison" or the
"Company" and as of the effective date of such
plan, "Reorganized Unison"). All plan related
documents to be consistent with terms set forth
herein and otherwise reasonably acceptable to
Omega, Unison and Ad Hoc Committee of Noteholders.
SIGNATURE SALE/LEASEBACK
General Omega to finance Signature facilities as part of a
Global Master Lease, which, as described more
fully below, will include all other properties
operated by Unison.
<PAGE>
Purchase Price Omega will purchase fee simple title to the
Signature Nursing Homes for $40 million, with the
amount of $500,000 ("Closing Allowance") to be
deducted at closing (i.e. resulting in net
proceeds to the Company of $39,500,000) in order
to cover (irrespective of the actual amount
thereof) any and all commitment fees associated
with transaction, all past and future legal fees
and other costs and expenses owed to Omega and all
closing costs for the new transaction including,
without limitation, legal costs, title insurance
costs, transfer and recording taxes, Phase I
environmental costs and any other closing costs,
but excluding the security deposit discussed
below. Company and Omega will seek to minimize the
actual out of pocket closing costs of Omega to the
extent practicable, including by seeking an order
exempting payment of recording taxes pursuant to
1146(c) of the Bankruptcy Code. Signature Nursing
Homes include Los Arcos, Pueblo Norte and Rio
Verde, all in Arizona, and Amberwood, Brookshire,
Christopher, all located in Colorado, and The
Arbors, located in Arizona. Approximately $3.2
million of proceeds will be utilized to acquire
fee simple title to The Arbors (Unison currently
leases with an option to purchase).
2
<PAGE>
Rent Rent on the Signature Nursing Homes under the
Global Master Lease will commence at 9% (the
"Investment Yield") of the purchase price (i.e.,
$3.6 million) and will increase by 1.425% of the
initial rent (i.e., $51,425) each year over the 14
year initial term and over any 14 year renewal
lease term. This rent is based on transaction
closing on or before November 30, 1998. If later,
to the extent yield on U.S. Treasury Notes
maturing 14 years after closing (the "Treasury
Yield") has increased or decreased from the date
of execution of the Unison Term Sheet to which
this summary is attached to closing, there will be
an appropriate upward/downward adjustment;
provided, however, that any upward adjustment will
be limited to the increase in the Treasury Yield
less 25 basis points (i.e., if the Treasury Yield
decreases 30 basis points, the Investment Yield
will be 8.7%; if the Treasury Yield increases 20
basis points, the Investment Yield will remain 9%;
and if the Treasury Yield increases 30 basis
points, the Investment Yield will be 9.05%).
Due Diligence Omega's obligation to provide new financing is
contingent on satisfactory due diligence,
appraisals, engineering reports, title work,
surveys and environmental reports and board
approval. Omega to use best efforts to complete
due diligence and obtain board approval within 21
days from the date of written approval of this
Term Sheet by the Ad Hoc Committee of the
Bondholders and the special committee of the
directors of the Company to complete due diligence
and obtain third party reports. Unison to fully
cooperate in due diligence process and to be
responsible for providing surveys.
3
<PAGE>
GLOBAL MASTER LEASE
General One Global Master Lease to cover all Omega
properties other than the Indiana Returned
Properties and as set forth below with respect to
the Brit-Texas Facilities (as defined below).
Initial Term of 14 years from closing with one 14
year renewal term. All Security Deposits,
including the Signature Nursing Homes, to be three
months, with excess, if any, transferred to
Company and deficiency, if any, funded by Company.
Purchase options and lease renewals to be on
global basis.
Lessee Newly created bankruptcy remote entity ("Global
Master Lessee"). If licensing problems require
more than one lessee and more than one lease,
documents will provide Omega, to the extent
possible, with the same legal protections as if
one Global Master Lessee and one Global Master
Lease.
Guarantors Unison and any other direct or indirect owner of
the Global Master Lessee (other than the
shareholders of Unison)
Covenants Customary Operating and Creditors' rights
covenants, including reasonable limitations on
restricted payments to parent, all to be agreed
upon. Accounts receivable borrowing to be
permitted on Omega Facilities only if the ratio of
lessee's cash flow (i.e., EBITDARM) to debt
service (i.e., all fixed charges including
estimated payments of accounts receivable
financing) exceeds 1.55 to 1.00. Global Master
Lessee to be permitted to finance equipment with
an annual lease or finance payment not to exceed
at confirmation the current aggregate amount, with
the maximum aggregate amount to be reduced over
the next three years to an amount to be agreed
upon by Unison and Omega. No other borrowings by
Global Master Lessee to be permitted. Bondholders
to release any claims against Global Master
Lessee.
Form of Documents Form of Master Lease and related documents to be
based on current Omega/BritWill documents, with
appropriate adjustments to reflect terms set forth
herein.
Prepetition Rent and All prepetition rent and mortgage payments to be
Mortgage Payments paid.
4
<PAGE>
Treatment of Facilities Except for 6 Indiana Returned Facilities (English
Estates, English Senior, Capital Care, Sunset,
Lockerbie and Parkview), all existing leases for
properties leased from Omega will be reinstated on
their current economic terms, including, without
limitation, the scheduled rent increases; PROVIDED
THAT, as noted under Global Master Lease, initial
lease term will be extended to 14 years from
closing with one 14 year renewal.
INDIANA RETURNED FACILITIES: Indiana Master Lease
to be amended to eliminate therefrom the Indiana
Returned Facilities. Possession of the Indiana
Returned Facilities will be turned over to Omega
on the effective date of confirmation pursuant to
Bankruptcy Court order in exchange for (i)
$1,000,000 in cash and (ii) $3,000,000
conventional promissory note with interest rate of
seven percent (7%), fully amortizing over seven
(7) year term, guaranteed by BHC and Unison, and
secured by all of Omega's current security and any
other security which Omega receives as security
for obligations under the Global Master Lease and
cross defaulted to Global Master Lease. $1 million
in cash and $3 million promissory note is partial
compensation to Omega for its loss in accepting
termination of Indiana Master Lease as to Indiana
Returned Facilities. At closing, adjustment will
be made among the parties so that rental payments
on the Indiana Returned Facilities will be pro
forma, based on transfer to Omega as of the later
of June 30, 1998 or the last day of a month 45
days after Unison, the Bondholders and Omega
jointly petition the bankruptcy court for an order
permitting a company designated by Omega to become
manager of the Indiana Returned Facilities (the
"Pro Forma Date"). Unison and Britwill Indiana
will be responsible for all obligations of the
Indiana Returned Facilities arising or accrued on
or prior to the Pro Forma Date and with all of
Omega's security securing such obligations; and
Omega will be responsible for all obligations
arising or accruing after the Pro Forma Date. To
the extent Omega desires Unison to operate the
Indiana Returned Facilities for a transition
period after June 30, 1998, Unison will do so, for
the account of Omega, at a 5% management fee.
5
<PAGE>
Omega Loss Bondholders, Unison and Omega to acknowledge that
Omega is incurring substantial loss in taking back
Indiana Returned Facilities, and is not waiving
rights under Whitehead Guarantee.
Security Omega to receive a security interest in all
personal property owned or leased by Global Master
Lessee including, without limitation, (i) to the
extent permitted by law a security interest in the
licenses/permits, and (ii) a subordinated security
interest in the accounts of Facilities owned by or
mortgaged to Omega, with an intercreditor
agreement with the accounts receivable lender
reasonably satisfactory to Omega. Omega's interest
in leased personal property will be subordinate to
Lessor's interest. Accounts receivable lender to
advance no more than 85% of eligible accounts
receivable (to be defined in a manner reasonably
satisfactory to all parties). Omega also to retain
existing leasehold mortgages on four Indiana
Facilities and other existing security, except
security deposits which are dealt with elsewhere.
BRIT-TEXAS FACILITIES
Omega $10.2 Million Loan Omega has a $10.2 million loan outstanding to
Brit- Texas, secured by a first mortgage lien on
Colonial Pines, Heritage Oaks and West Place and a
first lien leasehold mortgage on Four States,
South Place and Texarkana (those six Facilities
herein referred to as the "Brit-Texas
Facilities"). The Brit-Texas Facilities are
currently leased to Brit II (the "Brit-Texas/Brit
II Lessee").
Treatment if Settlement Brit-Texas will transfer its fee and leasehold
Reached by Omega with interests in the Brit-Texas Facilities, free and
Brit-Texas and Mr. clear of any claims and encumbrances other than
Whitehead the underlying leases, to Omega or a subsidiary
thereof. Brit-Texas Facilities will then be added
to the Global Master Lease with rent and rent
increases to provide Omega with same payments
which Omega is contractually entitled to receive
under $10.2 million Brit-Texas Loan, and with
Global Master Lessee paying the underlying lease
payments on South Place, Texarkana and Four
States. Brit-Texas/Brit II Lease to be terminated.
6
<PAGE>
Treatment if Settlement Omega may pursue its claims and remedies against
Brit-Texas Brit-Texas and Mr. Whitehead and affiliates (which
and Mr. Whitehead for purposes of this Term Sheet includes, without
limitation, BritWill Investments Company, Ltd.).
Claims against Mr. Whitehead will include, without
limitation, claims on his Guarantee, claims that
Omega is entitled to receive any funds which Mr.
Whitehead or affiliates are entitled to receive
from Unison and claims for fraud and
misrepresentation. If Omega, through foreclosure
or otherwise, acquires fee or leasehold title to
the Brit-Texas Facilities they will be added to
the Global Master Lease as set forth above. Omega
will retain benefit of cross-default with other
Texas leased facilities until Omega made whole on
$10.2 million mortgage loan and Brit-Texas
satisfies Haley loan obligations.
HASMARK FACILITIES Brit II has subleased Four States, Heritage Oaks
and Texarkana (the "Hasmark Facilities") to
Hasmark. Omega will consent to deletion of the
Hasmark Facilities from the Brit-Texas/Brit II
Lease and from the Global Master Lease upon
payment to Omega of $1 million, with a reduction
in rent under the Global Master Lease of $120,000
per year.
PREFERRED STOCK INVESTMENT Omega will purchase $3,000,000 of convertible
preferred stock, paying a cumulative 5% dividend
and convertible into 4% of equity of Company at
any time for five years on a fully diluted basis.
CORPORATE GOVERNANCE Directors of Reorganized Unison to be selected by
existing noteholders, and must be satisfactory to
Omega.
INSIDER CLAIMS AND Absent consensual agreement with Messrs. Whitehead
GUARANTEES and Kremser, and their related party entities,
Omega, Noteholders and estates to reserve all
rights and remedies.
TREATMENT OF EXISTING Existing Noteholders to receive 100% of equity,
NOTEHOLDERS other than Omega's preferred stock, in Reorganized
Unison on effective date of Plan. New board to
decide on issuance of shares and/or options to
management. Intercreditor allocations and any
other treatments with respect to two senior note
issues to be determined.
FEES AND EXPENSES Fees and expenses of Ad Hoc Noteholder Committee
to be paid by Company. Fees and expenses of Omega
covered by $500,000 Closing Allowance described
above.
7
<PAGE>
PLAN IMPLEMENTATION Under Chapter 11 plan, Omega, Noteholders, and
Unison and its subsidiaries will take all
reasonable actions necessary or desirable to
effectuate effectiveness of Chapter 11 plan as
soon as practicable, including assignment of
claims and rights under prepetition guarantees and
subordination agreements to estate or special
purpose litigation entity in a manner intended to
minimize any reserves that may otherwise be
required on effective date and facilitate post
effective date litigation. If settlement not
reached with Brit-Texas and Mr. Whitehead, Omega
to retain claims against Mr. Whitehead, and
Whitehead related entities, including prepetition
guarantees and subordination agreement, until
Omega made whole on $10.2 million Brit-Texas Loan.
STANDSTILL Omega, Unison, Unison subsidiaries, and
Bondholders to standstill in litigation among each
other, pending consummation of reorganization. Any
non-debtor party may file its proof of claims, and
take other action necessary to preserve its
claims, notwithstanding the standstill agreement.
Omega free to pursue remedies against Brit-Texas
and Mr. Whitehead. Unison and the Bondholders will
immediately consent to lifting of stay to permit
pursuit of remedies against Brit-Texas, including
foreclosure, and Mr. Whitehead. This standstill
shall terminate if (i) a Plan incorporating the
terms of this Term Sheet is not confirmed by
[August 31], 1998, (ii) the parties hereto agree
that such a plan cannot be consummated, or (iii)
Omega is not paid its monthly rent in full.
8
EXHIBNIT 99.2
FOR IMMEDIATE RELEASE
CONTACT: MICHAEL A. JEFFRIES
PRESIDENT AND CHIEF EXECUTIVE OFFICER
(602) 423-1954
BRUCE H. WHITEHEAD AND DAVID A. KREMSER RESIGN FROM
UNISON HEALTHCARE CORPORATION BOARD OF DIRECTORS
----------------------------------------------
INDEPENDENT DIRECTOR TYRRELL L. GARTH APPOINTED CHAIRMAN
AND SPECIAL COMMITTEE DISBANDED
Scottsdale, Arizona (June 4, 1998) - The Board of Directors of Unison
HealthCare Corporation announced today that it had accepted the resignations of
Bruce H. Whitehead as Chairman of the Board and a member of Unison's Board of
Directors and David A. Kremser as a member of the Unison Board. Tyrrell L.
Garth, currently a Unison Director and Chairman of the Special Committee of the
Unison Board, was appointed Chairman of the Board of Directors. With these
resignations, the Board now consists of seven individuals. The Company is
currently implementing a search for replacements and has requested input and
potential Board candidate recommendations from its major creditor
constituencies.
The Board also announced that it has disbanded the Special Committee
which was formed for the purposes of an independent, unconflicted negotiating
body in the restructuring of the Company. The Board announced that the Committee
was no longer necessary given that there were no longer any interested Directors
serving as members and that future action on matters of restructuring will be
acted upon by the full Board.
Unison HealthCare Corporation is a provider of quality long-term and
specialty health care services. The Company provides a broad range of health
care services including nursing care, rehabilitation therapy, pharmacy and other
specialized services, primarily to subacute patients. The Company currently
operates 42 skilled nursing facilities and six independent living facilities,
representing 4,425 beds.
THE STATEMENTS APPEARING ABOVE, WHICH ARE NOT HISTORICAL FACTS, ARE
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED, AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE SET FORTH IN THE FORWARD-LOOKING
STATEMENTS, INCLUDING DELAYS IN OR INABILITY TO CONCLUDE TRANSACTIONS, ADVERSE
ACTIONS WHICH MAY BE TAKEN BY THE COMPANY'S CREDITORS, THE ESTABLISHMENT OF
COMPETING FACILITIES AND SERVICES, CANCELLATION OF LEASES OR CONTRACTS, CHANGES
IN APPLICABLE LAWS AND REGULATIONS, GENERAL MARKET ACCEPTANCE OF THE COMPANY'S
FACILITIES AND SERVICES, FLUCTUATIONS IN MARGINS, DEMAND FLUCTUATIONS, ACCESS TO
DEBT OR EQUITY FINANCING IN LIGHT OF RECENT LOSSES AND CASH FLOW SHORT FALLS,
ADVERSE UNINSURED DETERMINATIONS IN EXISTING OR FUTURE LITIGATION OR REGULATORY
PROCEEDINGS AND OTHER RISKS.
-END-
