-----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, QVMRawcr3S1ZRmeDb5kSSIE4+HDf9hGmtQSjNhcme+O5eJ+GKKqZU3VOylEcT6li 80crAV6nQTWb0iRKGdjxIg== 0000855272-01-000001.txt : 20010129 0000855272-01-000001.hdr.sgml : 20010129 ACCESSION NUMBER: 0000855272-01-000001 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20010126 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: NEXTHEALTH INC CENTRAL INDEX KEY: 0000855272 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HOSPITALS [8060] IRS NUMBER: 860589712 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-40835 FILM NUMBER: 1516514 BUSINESS ADDRESS: STREET 1: 16600 N LAGO DEL ORO PKWY CITY: TUCSON STATE: AZ ZIP: 85739 BUSINESS PHONE: 5208185800 MAIL ADDRESS: STREET 1: 16600 N LAGO DEL ORO PARKWAY CITY: TUCSON STATE: AZ ZIP: 85739 FORMER COMPANY: FORMER CONFORMED NAME: SIERRA TUCSON COMPANIES INC DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: O DONNELL WILLIAM T JR CENTRAL INDEX KEY: 0000937020 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 350420068 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 35 INDIAN HILL RD CITY: WINNETKA STATE: IL ZIP: 60093 BUSINESS PHONE: 8474415959 MAIL ADDRESS: STREET 1: 35 INDIAN HILL RD CITY: WINNETKA STATE: IL ZIP: 60093 SC 13D 1 0001.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. )* NextHealth, Inc. --------------------- (Name of Issuer) Common Stock --------------------------- (Title of Class of Securities) 65333 G 105 ----------------- (CUSIP Number) William T. O'Donnell, Jr. 144 Green Bay Road Winnetka, Illinois 60093 With a copy to: Irv Berliner, Esq. Eric R. Decator, Esq. Kahn, Kleinman, Yanowitz & Arnson Co.,LPA Sonnenschein, Nath & Rosenthal 2600 Tower at Erieview 8000 Sears Tower Cleveland, Ohio 44114-1824 Chicago, IL 60606 (216) 696-3311 (312) 876-8000 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) January 17, 2001 ------------------------------------------------------ (Date of Event which Requires filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of 240.13d- 1(e), 240.13d-1(f) or 240.13d-1(g), check the following box / /. Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See 240.13d-7 for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). SCHEDULE 13D CUSIP No. 65333 G 105 Page 2 of Pages 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (entities only) William T. O'Donnell, Jr. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) [ ] (b) [ x ] 3 SEC USE ONLY 4 SOURCE OF FUNDS (See Instructions) BK, WC 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) or 2(e) 6 CITIZENSHIP OR PLACE OF ORGANIZATION USA NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY 2,821,417 OWNED BY EACH REPORTING PERSON WITH 8 SHARED VOTING POWER 9 SOLE DISPOSITIVE POWER 2,321,417 10 SHARED DISPOSITIVE POWER 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,321,417 12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) X 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 26.9% 14 TYPE OF REPORTING PERSON (See Instructions) IN SCHEDULE 13D CUSIP No. 65333 G 105 Page 3 of Pages 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (entities only) George L. Ruff 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) [ ] (b) [ x ] 3 SEC USE ONLY 4 SOURCE OF FUNDS (See Instructions) BK, AF, PF 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) or 2(e) 6 CITIZENSHIP OR PLACE OF ORGANIZATION USA NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY 30,500 OWNED BY EACH REPORTING PERSON WITH 8 SHARED VOTING POWER 9 SOLE DISPOSITIVE POWER 30,500 10 SHARED DISPOSITIVE POWER 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 30,500 12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Less than 1% 14 TYPE OF REPORTING PERSON (See Instructions) IN SCHEDULE 13D CUSIP No. 65333 G 105 Page 4 of Pages 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (entities only) Beth O'Donnell 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) [ ] (b) [ x ] 3 SEC USE ONLY 4 SOURCE OF FUNDS (See Instructions) PF 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) or 2(e) 6 CITIZENSHIP OR PLACE OF ORGANIZATION USA NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 8 SHARED VOTING POWER 9 SOLE DISPOSITIVE POWER 500,000 10 SHARED DISPOSITIVE POWER 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 500,000 12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.8% 14 TYPE OF REPORTING PERSON (See Instructions) IN SCHEDULE 13D CUSIP No. 65333 G 105 Page 5 of Pages 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (entities only) BTM Irrevocable Trust UA dated 09/08/89 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) [ ] (b) [ x ] 3 SEC USE ONLY 4 SOURCE OF FUNDS (See Instructions) WC 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) or 2(e) 6 CITIZENSHIP OR PLACE OF ORGANIZATION Arizona NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY 195,637 OWNED BY EACH REPORTING PERSON WITH 8 SHARED VOTING POWER 9 SOLE DISPOSITIVE POWER 195,637 10 SHARED DISPOSITIVE POWER 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 195,637 12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.3% 14 TYPE OF REPORTING PERSON (See Instructions) OO This Report on Schedule 13D is being made by and William T. O'Donnell, Jr., George L. Ruff, Beth O'Donnell, and the BTM Irrevocable Trust (each, a "Reporting Person", and collectively, the "Reporting Persons"), and relates to the Common Stock, par value $.01 per share, of NextHealth, Inc., a Delaware corporation. Mr. O'Donnell, Mr. Ruff, Beth O'Donnell and BTM Irrevocable Trust constitute a "group" for purposes of Rule 13d-5 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), with respect to their respective beneficial ownership of such common stock. The summary description of certain documents contained in this Report are qualified in their entirety by reference to the complete texts of such documents filed as Exhibits hereto and incorporated herein by reference. Information contained herein with respect to each Reporting Person is given solely by such Reporting Person, and no other Reporting Person has responsibility for the accuracy or completeness of information supplied by such other Reporting Person. Item 1. Security and Issuer. The title of the class of equity securities to which this statement relates is common stock, $.01 par value ("Common Stock") of NextHealth, Inc., a Delaware corporation (the "Company"). The address of the Company's principal executive office is 16600 N. Lago Del Oro Parkway, Tucson, Arizona 85737. Item 2. Identity and Background. REPORTING PERSON: William T. O'Donnell, Jr.: a) The name of the person filing this report is William T. O'Donnell, Jr.; b) The business address of Mr. O'Donnell is 144 Green Bay Road, Winnetka, IL 60093; c) The present principal occupation or employment of Mr. O'Donnell is President and Chief Executive Officer of NextHealth, Inc., a Delaware corporation, whose address is 16600 N. Lago Del Oro Parkway, Tucson, Arizona 85737; d) During the last five years, Mr. O'Donnell has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors); e) During the last five years, Mr. O'Donnell was not a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which proceeding he was or is subject to a judgment, decree, or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or State securities laws or finding any violation with respect to such laws; and f) Mr. O'Donnell is a citizen of the United States. REPORTING PERSON: George L. Ruff: a) The name of the person filing this report is George L. Ruff; b) The business address of Mr. Ruff is c/o Jack A. Shaffer & Company, LLC, 410 Park Avenue, Suite 430, New York, New York 10022; c) The present principal occupation or employment of Mr. Ruff is Chief Executive Officer of Jack A. Shaffer & Company, LLC, a Delaware limited liability company, located at 410 Park Avenue, Suite 430, New York, New York 10022; d) During the last five years, Mr. Ruff has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors); e) During the last five years, Mr. Ruff was not a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which proceeding he was or is subject to a judgment, decree, or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or State securities laws or finding any violation with respect to such laws; and f) Mr. Ruff is a citizen of the United States. REPORTING PERSON: Beth O'Donnell: a) The name of the person filing this report is Beth O'Donnell; b) The business address of Beth O'Donnell is 1 Fifth Avenue, #18G, New York, NY 10003; c) The present principal occupation or employment of Beth O'Donnell is photographer; d) During the last five years, Beth O'Donnell has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors); e) During the last five years, Beth O'Donnell was not a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which proceeding he was or is subject to a judgment, decree, or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or State securities laws or finding any violation with respect to such laws; and f) Beth O'Donnell is a citizen of the United States. REPORTING PERSON: BTM Irrevocable Trust UA dated 09/08/89: a) The name of the person filing this report is BTM Irrevocable Trust UA dated 09/08/89 (the "Trust"); b) The business address of the Trust is c/o John R. O'Donnell, Trustee, 144 Green Bay Road, Winnetka, IL 60093; c) The Trust was established to hold assets for the benefit of the children of Mr. O'Donnell and Beth O'Donnell; d) During the last five years, the Trust has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors); and e) During the last five years, the Trust was not a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which proceeding he was or is subject to a judgment, decree, or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or State securities laws or finding any violation with respect to such laws. Item 3. Source of Amount of Funds or Other Consideration. On January 17, 2001, the Company's Board of Directors (the "Board") received a proposal from an entity to be formed by the Reporting Persons to recapitalize the Company in a going-private transaction. The terms and conditions of the proposal were set forth in a letter dated January 17, 2001, (the "First Proposal Letter"). In order to consummate the transaction described in the First Proposal Letter, the Reporting Persons expect to form TRIOD, LLC ("TRIOD"), a limited liability company having two members ("Triod Members"). Under the terms of the First Proposal Letter, a wholly owned subsidiary of TRIOD would be merged with and into the Company (the "Merger"). The Merger would be facilitated by the transfer of certain assets (the "Merger Assets") from Mr. O'Donnell, Mr. Ruff, Beth O'Donnell and the Trust to the Triod Members. One Triod Member would receive shares of Common Stock of the Company from Mr. O'Donnell, Beth O'Donnell and the Trust, as well as other assets owned by Mr. O'Donnell. The other Triod Member would receive a cash contribution from Mr. Ruff and his affiliates of a value equivalent to the aggregate value of the contributions of Mr. O'Donnell, Beth O'Donnell, and the Trust. Immediately prior to the consummation of the Merger, the Triod Members, would contribute the Merger Assets to TRIOD for use as consideration to consummate the Merger. The Reporting Persons will not be required to transfer any Merger Assets to the Triod Members until the closing of the Merger. Pursuant to the terms of the First Proposal Letter, at the effective time of the Merger; (i) each share of the Company's Common Stock then outstanding (other than the shares then held by TRIOD) and each warrant and option to buy shares of the Company's Common Stock will be converted into the right to receive $5.10 (the "Per Share Merger Consideration") payable in cash (less, with respect to warrants and options, the price at which any such warrant or option is then exercisable)and (ii) each share of the Company's Convertible Preferred Stock, Series A (the "Series A Preferred Stock"), then outstanding will be converted into the right to receive an amount in cash equal to the Per Share Merger Consideration for each share of the Company's Common Stock into which such Series A Preferred Stock is then convertible. The offer proposed in the First Proposal Letter was rejected by the Board. On January 24, 2001, the Reporting Persons submitted a second proposal to the Board. The terms and conditions of the second proposal were set forth in a proposal letter dated January 24, 2001 (the "Second Proposal Letter"). The terms of the Merger contained in the Second Proposal Letter are substantially identical to those terms contained in the First Proposal Letter, except that pursuant to the terms of the Second Proposal Letter, the Per Share Merger Consideration payable in cash at the effective time of the Merger would be $5.45. The Board has formed a special committee to evaluate the Reporting Persons' proposal. The Reporting Persons expect that the consideration to be paid to the Company's shareholders, warrant holders and option holders upon consummation of the Merger will partially come from the Merger Assets transferred to TRIOD. Additionally, the Reporting Persons currently expect that approximately $40,000,000 will be borrowed from banks and other financial institutions. The Reporting Persons have not had any discussions with financial institutions regarding such funding and no commitment or undertaking to provide such funding has been finalized. There is no assurance that the Merger will occur or the terms on which any merger would occur if such a merger is consummated. Item 4. Purpose of the Transaction. The purpose of the transaction is to effect the Merger whereby TRIOD would become the holder of 100% of the equity of the Company. The Merger is conditioned upon customary conditions, including, among other things, the approval by the Company's Board of Directors and the requisite number approval by the holders of the Company's Common Stock and Series A Preferred Stock. It is expected that, upon the consummation of the Merger, the registration of the Company's Common Stock pursuant to Section 12 of the Exchange Act would be terminated and the Company's Common Stock would cease to be listed on the NASDAQ stock market as of the effective date of the Merger. Item 5. Interest in Securities of Issuer. The Company's quarterly report on Form 10-Q for the quarter ending September 30, 2000 reports that, as of September 30, 2000, there were 8,619,488 shares ofthe Company's Common Stock outstanding. As of the date hereof, the Reporting Persons beneficially own shares of Common Stock as follows: (i) Mr. O'Donnell beneficially owns 2,821,417 shares of Common Stock or approximately 32.7% of the shares of Common Stock of the Company, including: (a) 2,185,917 shares of Common Stock owned directly by Mr. O'Donnell; (b) Options, exercisable, within 60 days hereof, held by Mr. O'Donnell to purchase 135,500 shares of Common Stock. At the effective time of the Merger, Mr. O'Donnell will receive cash payment for these options; and (c) 500,000 shares of Common Stock held in the name of Beth O'Donnell of which Mr. O'Donnell has the sole power to vote or direct the vote pursuant to a Voting Trust Agreement (the "Voting Trust Agreement") dated December 30, 1999, pursuant to which Mr. O'Donnell may exercise the voting rights of the Common Stock in his sole discretion. Mr. O'Donnell disclaims any beneficial interest in these shares. (ii) Beth O'Donnell beneficially owns 500,000 shares of Common Stock or approximately 5.8% of the outstanding shares of Common Stock. Beth O'Donnell's shares are subject to the Voting Trust Agreement whereby Mr. O'Donnell has sole voting power of the shares. Beth O'Donnell retains sole dispositive power over these shares. (iii) The Trust beneficially owns 195,637 shares of Common Stock or approximately 2.3% of the outstanding shares of Common Stock. The voting and dispositive power of the shares is exercised by John O'Donnell, as Trustee. (iv) Mr. Ruff is the holder of options, exercisable within 60 days to purchase 30,500 shares of Common Stock of the Company. Upon consummation of the Merger, Mr. Ruff will receive cash payments for these options. In December 2000, Mr. Ruff divested himself of beneficial ownership of options to purchase 22,000 shares of Common Stock of the Company pursuant to a contractual arrangement in which no separate consideration was paid to Mr. Ruff for such divestiture. By virtue of their status as a "group" for purposes of Rule 13d-5, under the Exchange Act, Mr. O'Donnell, Mr. Ruff, Beth O'Donnell, and the Trust may be deemed to have shared voting and dispositive power over the shares owned by the other members of the Reporting Group. However, as of the date hereof, no obligation (other than as explicitly disclosed herein) exists whereby the Reporting Persons would share voting or dispositive power of the shares of the Company's Common Stock owned by the other Reporting Persons. Other than as disclosed herein, each Reporting Person disclaims any beneficial ownership interest in shares of the Company's Common Stock beneficially owned by the other Reporting Persons. Item 6. Contracts, Agreements, Understanding or Relationships With Respect to Securities of Issuer. The information set forth in Items 3, 4, and 5 of this Schedule 13D is hereby incorporated by reference herein. Item 7. Materials to be Filed as Exhibits. Exhibit A Joint Filing Agreement Exhibit B First Proposal Letter, dated January 17, 2001 Exhibit C Second Proposal Letter, dated January 24, 2001 Exhibit D Voting Trust Agreement SIGNATURES After reasonable inquiry and to the best of my respective knowledge and belief, I certify that the information set forth in this Statement is true, correct and complete. Dated: January ___, 2001 /s/William T. O'Donnell, Jr. ------------------------------------- William T. O'Donnell, Jr., individually /s/George L. Ruff -------------------------------------- George L. Ruff, individually /s/Beth O'Donnell -------------------------------------- Beth O'Donnell, individually BTM Irrevocable Trust UA dated 09/08/89 By: /s/John O'Donnell --------------------------------------- John O'Donnell, Trustee EX-1 2 0002.txt JOINT FILING AGREEMENT The undersigned hereby agree that the statement on Schedule 13D with respect to the Common Stock of NextHealth, Inc. filed on January 26, 2001 is, and any amendments thereto signed by each of the undersigned shall be, filed on behalf of us pursuant to and in accordance with the provisions of Rule 13d-1(k) under the Securities Exchange Act of 1934, as amended, and that this Joint Filing Agreement be included as an Exhibit to such Schedule 13D. This Joint Filing Agreement may be executed in any number of counterparts all of which shall constitute one and the same instrument. [SIGNATURES FOLLOW ON NEXT PAGE] Dated: January 26, 2001 /s/William T. O'Donnell, Jr. ________________________________ William T. O'Donnell, Jr., individually /s/George L. Ruff ________________________________ George L. Ruff, individually /s/Beth O'Donnell ________________________________ Beth O'Donnell, individually BTM Irrevocable Trust UA dated 09/02/89 By: /s/Jack O'Donnell ---------------------------------- Jack O'Donnell, Trustee [SIGNATURE PAGE FOR JOINT FILING AGREEMENT] EX-2 3 0003.txt EXHIBIT B ACQUISITION OF NEXTHEALTH, INC. ("TARGET") BY TRIOD LLC ("ACQUIROR") TERM SHEET The following (the "Term Sheet") summarizes the principal terms of the proposed acquisition (the "Transaction") of Target by Acquiror, which is an entity to be formed which will be controlled by William T. O'Donnell, Jr., George Ruff and certain members of Trinity Investment Trust L.L.C. Except as otherwise set forth herein, this Term Sheet shall be qualified in its entirety by the actual terms of the definitive Merger Agreement for the Transaction (the "Merger Agreement") and the obligations of the parties shall be subject to the conditions contained herein and therein. In the event of any conflict or inconsistency between the Term Sheet and the Merger Agreement, the terms of the Merger Agreement will govern. The offer contained in this Term Sheet shall expire at 5:00 p.m., Central Standard Time, on Monday, January 22, 2001 if Acquiror has not received a copy of this Term Sheet, duly executed on behalf of Target, by such time. Structure of NHI Acquisition Corp., a wholly-owned Transaction: subsidiary of Acquiror, will merge with and into Target Closing Date No later than April 30, 2001 Merger Each outstanding share of Common Stock of Consideration: Target which is not owned at the time of the merger by Acquiror will be converted into the right to receive $5.10 (the "Per Share Consideration") in cash Each outstanding share of Preferred Stock of Target will be converted into the right to receive the Per Share Consideration in cash for each share of Common Stock into which such share of Preferred Stock is convertible Each outstanding Warrant to purchase Common Stock of Target shall be cancelled for a payment in cash equal to the Per Share Consideration less the exercise price thereof for each share of Common Stock purchasable on exercise of such Warrant Each outstanding option to purchase Common Stock of Target shall be cancelled for a payment in cash equal to the Per Share Consideration less the exercise price thereof for each share of Common Stock purchasable on exercise of such option Merger Agreement: The parties agree to negotiate in good faith and to use their best efforts of finalize and execute the Merger Agreement within 14 days of the execution of this Term Sheet. The Merger Agreement will contain representations, warranties, covenants and conditions to closing (including a financing contingency which will lapse no later than 45 days after the execution of the Merger Agreement) which are customary for the acquisition of a public company Target Board's Adopt resolutions which (1) determine that the Actions Prior merger is fair to and in the best interests of TO Signing the shareholders of Target, and (2) recommend Merger that the holders of Target's outstanding Agreement: capital stock approve the merger Target Board's Prepare Proxy Statement and call special Actions Shareholders meeting as soon after execution Following of Merger Agreement as practical Signing of Merger Agreement: Non-Solicitation: For a period from the date of execution of this Term Sheet through the earlier of (a) the execution of the Merger Agreement, or (b) the two week anniversary of the execution by Target of this Term Sheet (the "Exclusivity Period"), Target and its officers, directors and representatives will not, directly or indirectly, solicit or initiate inquiries or proposals from, or provide any confidential information to, or participate in any discussions or negotiations with, any person or entity other than Acquiror and its affiliates and representatives, in connection with any proposed acquisition of all or any material part of Target, regardless of form. During the Exclusivity Period, Target will immediately notify Acquiror of the terms of any proposal, discussion, negotiation or inquiry (and will disclose to Acquiror any written materials received by Target in connection with such proposal, discussion, negotiation, or inquiry) and the identity of the party making such proposal or inquiry which it may receive in respect of any such transaction, will keep Acquiror apprised of the status of any such proposals, discussions, negotiations or inquiries and will provide Acquiror with the opportunity to match any proposal received by Target. By its execution of this Term Sheet, Target represents and warrants to Acquiror that the execution and delivery of this Term Sheet by Target and the performance by Target of its obligations hereunder, have been duly authorized by all necessary corporate action (including, without limitation, the requisite approval of the disinterested directors of Target). Acquiror and Target agree that this Term Sheet is not deemed self-executing, that the parties' respective legal obligations shall arise solely from the Merger Agreement and that no party hereto shall be legally bound by the provisions hereof; provided, however, that, notwithstanding the foregoing, Target's agreements contained under the caption "Non-Solicitation" shall, upon execution hereof by Target, constitute the legal, valid and binding obligations of Target. Dated: January 26, 2001 TRIOD, LLC By:/s/William T. O'Donnell, Jr. _______________________ Name: William T. O'Donnell. Jr. AGREED AND ACCEPTED THIS __ DAY OF JANUARY, 2001: NEXTHEALTH, INC. By:__________________________ Name: Title: EX-3 4 0004.txt EXHIBIT C ACQUISITION OF NEXTHEALTH, INC. ("TARGET") BY TRIOD LLC ("ACQUIROR") REVISED TERM SHEET The following (the "Term Sheet") summarizes the principal terms of the proposed acquisition (the "Transaction") of Target by Acquiror, which is an entity to be formed which will be controlled by William T. O'Donnell, Jr., George Ruff and certain members of Jack A. Shaffer & Company, LLC. This Term Sheet shall be qualified in its entirety by the actual terms of the definitive Merger Agreement for the Transaction (the "Merger Agreement") and the obligations of the parties shall be subject to the conditions contained herein and therein. In the event of any conflict or inconsistency between the Term Sheet and the Merger Agreement, the terms of the Merger Agreement will govern. The offer contained in this Term Sheet (which replaces Acquiror's prior offer made on January 17, 2001 for $5.10 per share, which offer expired on January 21, 2001) shall expire at 5:00 p.m., Central Standard Time, on Wednesday, January 31, 2001, in the event that, in Acquiror's sole determination, serious negotiations with Target regarding this offer have not commenced by that time. Structure of NHI Acquisition Corp., a wholly-owned Transaction: subsidiary of Acquiror, will merge with and into Target Closing Date No later than April 30, 2001 Merger Each outstanding share of Common Stock of Consideration: Target which is not owned at the time of the merger by Acquiror will be converted into the right to receive $5.45 (the "Per Share Consideration") in cash Each outstanding share of Preferred Stock of Target will be converted into the right to receive the Per Share Consideration in cash for each share of Common Stock into which such share of Preferred Stock is convertible Each outstanding Warrant to purchase Common Stock of Target shall be cancelled for a payment in cash equal to the Per Share Consideration less the exercise price thereof for each share of Common Stock purchasable on exercise of such Warrant Each outstanding option to purchase Common Stock of Target shall be cancelled for a payment in cash equal to the Per Share Consideration less the exercise price thereof for each share of Common Stock purchasable on exercise of such option Merger Agreement: The parties agree to negotiate in good faith and to use their best efforts of finalize and execute the Merger Agreement within 14 days of the execution of this Term Sheet. The Merger Agreement will contain representations, warranties, covenants and conditions to closing which are customary for the acquisition of a public company Target Board's Adopt resolutions which (1) determine that the Actions merger is fair to and in the best interests of Prior to the shareholders of Target, and (2) recommend Signing that the holders of Target's outstanding Merger capital stock approve the merger Agreement: Target Prepare Proxy Statement and call special Board's Shareholders meeting as soon after Actions execution of Merger Agreement as practical Following signing of Agreement: This Term Sheet is not deemed self-executing; the parties' respective legal obligations shall arise solely from the Merger Agreement and Acquiror shall not be legally bound by the provisions hereof. Dated: January 24, 2001 TRIOD, LLC By:/s/William T. O'Donnell, Jr. --------------------------- Name: William T. O'Donnell, Jr. EX-4 5 0005.txt EXHIBIT D VOTING TRUST AGREEMENT THIS VOTING TRUST AGREEMENT is made and entered into as of the 30th day of December, 1999, by and between MARY BETH O'DONNELL (the "Shareholder"), a shareholder of NEXTHEALTH, INC., a Delaware corporation (the "Corporation") and WILLIAM T O'DONNELL, JR. (the "Voting Trustee"). RECITALS A. The Shareholder is entitled to receive 500,000 shares of the Corporation's Common Stock (the "Subject Shares") from the Voting Trustee in his individual capacity. B. The Shareholder is agreeable to the Voting Trustee serving as trustee of the voting trust created by this Agreement, and the issuance of the Subject Shares to the Voting Trustee in its capacity as Trustee hereunder. C. The Voting Trustee has consented to act as the Voting Trustee of the voting trust created hereby, and to be bound by the terms and conditions set forth in this Agreement. AGREEMENT NOW, THEREFORE, the Shareholder and the Voting Trustee do hereby agree as follows: 1. Issuance of Shares to Trustee. 1.1 Delivery of Stock Certificates. Certificates representing the Subject Shares shall be issued to the Voting Trustee. 1.2 Stock Certificate Held Subject to Agreement. Upon the issuance by the Corporation of a stock certificate representing the Subject Shares subject to the voting trust, the Voting Trustee shall hold such stock certificate subject to the provisions of this Agreement. 2. Voting Trust Certificates. 2.1 Form of Voting Trust Certificate. The Voting Trustee shall issue and shall deliver to the Shareholder a voting trust certificate for the Subject Shares transferred to the Voting Trustee pursuant to this Agreement. The voting trust certificate shall be in the form of Exhibit A hereto. The Voting Trustee may treat the registered holder of a voting trust certificate as the owner of such voting trust certificate for all purposes under this Agreement. 2.2 Transfer of Voting Trust Certificates. A voting trust certificate shall be transferable only on the books of the Voting Trustee, by the registered holder thereof, either in person or by duly authorized attorney-in-fact, upon surrender of such voting trust certificate, properly endorsed, or accompanied by such instrument of transfer as shall be approved by the Voting Trustee. Notwithstanding the foregoing, no transfer of the voting trust certificate shall be permissible without the prior written consent of the Voting Trustee, which consent may be granted or withheld in the sole discretion of the Voting Trustee. Any purported transfer of the voting trust certificate without the requisite consent shall be null and void and of no force or effect, and shall not vest any rights in the purported transferee. The Voting Trustee shall not be required to recognize any transfer of a voting trust certificate not made in accordance with the provisions of this Section 2.2. 2.3 Lost, Stolen or Destroyed Voting Trust Certificates. If a voting trust certificate is lost, stolen, mutilated, or destroyed, the Voting Trustee, in its sole discretion, may issue a new voting trust certificate upon the receipt by the Voting Trustee of an affidavit by the holder of such voting trust certificate that such voting trust certificate has been lost, stolen, mutilated, or destroyed, which affidavit shall be satisfactory in form and substance to the Voting Trustee, and upon the receipt by the Voting Trustee of such indemnity as the Voting Trustee, in his sole discretion, may require. 3. Voting Trustee. 3.1 Resignation, Death, or Incompetency of Voting Trustee, Selection of Successor. 3.1.1 Resignation. The Voting Trustee may resign at any time by giving written notice of such resignation to the registered holders of the voting trust certificates and the Corporation. Such resignation shall become effective ten (10) business days after the giving of such written notice. In the event of such resignation, the successor to the Voting Trustee shall be promptly selected in accordance with Section 3.1.4 hereof. 3.1.2 Death. In the event of the death of a Voting Trustee, written notice of such death shall be given to the registered holders of the voting trust certificates and the Corporation, and the successor to the deceased Voting Trustee shall be promptly selected in accordance with Section 3.1.4 hereof. 3.1.3 Incompetency. In the event of the entry of a decree by a court of competent jurisdiction adjudicating a Voting Trustee incompetent to manage Voting Trustee's person or estate, written notice of such incompetency shall be given to the registered holders of the voting trust certificates and the Corporation, and the successor to the Voting Trustee shall be promptly selected in accordance with Section 3.1.4 hereof. 3.1.4 Selection of Successor Voting Trustee. If a Voting Trustee shall for any reason cease to qualify or cease to act as a Voting Trustee under this Agreement, a successor shall be determined by a majority vote of the Board of Directors of the Corporation. 3.2 Notice of Selection of Successor Voting Trustee. Upon the selection of a successor Voting Trustee in accordance with section 3.1.4 hereof, written notice of such selection of such successor Voting Trustee shall be given to the registered holders of the voting trust certificates. Any successor Voting Trustee selected in accordance with section 3.1.4 shall execute a counterpart copy of this Agreement, as amended, pursuant to which such successor Voting Trustee agrees to be bound by the terms and provisions of this Agreement, as amended. 3.3 Registration of Stock Certificates. Upon the selection of a successor Voting Trustee, the Subject Shares subject to the voting trust shall be transferred to the successor Voting Trustee, and a new stock certificate representing the Subject Shares subject to the voting trust shall be registered in the name of the successor Voting Trustee in the manner set forth in Section 1, and such new stock certificate shall be held by the successor Voting Trustee subject to the provisions of this Agreement. 3.4 Compensation of Voting Trustee. The Voting Trustee shall serve without compensation. 4. Authority of Voting Trustee. 4.1 Voting Rights and Powers. The Voting Trustee shall exercise his voting rights and powers under this Agreement by voting all of such Shareholder in the discretion of the Voting Trustee on all matters on which holders of the Corporation's common stock may vote. 4.2 Exculpation. The Voting Trustee shall not be liable to the holders of voting trust certificates or to the Corporation for honest mistakes of judgment, or for action or inaction taken in good faith and reasonably believed to be in the best interests of the Corporation, provided that such mistake, action, or inaction does not constitute recklessness, fraud, or willful or wanton misconduct. 5. Termination. 5.1 Term. The voting trust shall commence on the date of execution of this Agreement and shall continue in effect unless otherwise terminated pursuant to Section 5.2. 5.2 Events of Termination. The voting trust shall terminate upon the earliest occurrence of the following dates: 5.2.1 Mutual Agreement. The mutual agreement of the Shareholder (or, in the event of the death or incompetency of the Shareholder, her personal representative, conservator or trustee) and the Voting Trustee. 5.2.2 Applicable Law. In the event that applicable laws limit the term of voting trust agreement, this Agreement shall terminate on the latest possible date allowed under such applicable laws. 5.3 Termination Procedure. 5.3.1 No Further Rights Under Agreement. Upon the termination of the voting trust pursuant to Section 5.1 or 5.2 hereof, the holders of the voting trust certificates shall have no further rights under this Agreement except to receive stock certificates for the Subject Shares represented by such voting trust certificates, and cash, stock, securities, and other property distributable under the provisions of this Agreement, and except for any rights, claims, or causes of action which may have accrued prior to such termination. 5.3.2 Stock Certificates. Upon the termination of the voting trust pursuant to Section 5.1 or 5.2 hereof, the Voting Trustee shall deliver to the registered holders of the voting trust certificates, within twenty (20) business days after the surrender to the Voting Trustee of such voting trust certificate properly endorsed, a stock certificate for the number of the Subject Shares represented by such voting trust certificate. Such stock certificate shall be registered in the name of the registered holder of such voting trust certificate. 6. Dividends and other Distributions. 6.1 Cash, Nonvoting Stock, and Other Property. In the event Corporation distributes with respect to the Subject Shares any cash, stock (except for the stock described in Section 6.2), securities (except for the securities described in Section 6.2), or other property, the Voting Trustee, upon receipt of such cash, stock, securities, or other property shall distribute the same as soon as practicable to the registered holders of the voting trust certificates on the date of such distribution by the Corporation. Such distribution shall be made to the registered holders of voting trust certificates ratably in accordance with the number of the Subject Shares represented by their respective voting trust certificates on the date of such distribution by the Corporation. In lieu of receiving such cash, stock, securities, or other property distributed by the Corporation with respect to the Subject Shares and disbursing the same to the registered holders of voting trust certificates, the Voting Trustee may instruct the Corporation in writing to distribute such cash, stock, securities, or other property to the registered holders of the voting certificates ratably in accordance with the number of the Subject Shares represented by their respective voting trust certificates on the date of such distribution by Corporation. 6.2 Voting Stock or Securities Convertible into Voting Stock. In the event the Corporation distributes with respect to the Subject Shares any voting stock of the Corporation or other securities of the Corporation that are, or may become, convertible into Subject Shares of voting stock of the Corporation, the Voting Trustee shall receive and hold, subject to the terms of this Agreement, all such voting stock and securities, and shall issue and deliver voting trust certificates with respect to such voting stock and securities to the registered holders of voting trust certificates on the date of such distribution by Corporation. Such issuance of voting trust certificates shall be made to the holders of voting trust certificates ratably in accordance with the number of the Subject Shares represented by such voting certificates on the date of such distribution by Corporation. 7. Dissolution. In the event the Corporation dissolves, or distributions are made in complete or partial liquidation of the Corporation, the Voting Trustee, upon receipt, shall distribute to the registered holders of voting trust certificates cash, securities, and other property distributed by Corporation with respect to the Subject Shares subject to the voting trust. Such distribution shall be made to the registered holders of voting trust certificates ratably in accordance with the number of the Subject Shares represented by their respective voting trust certificates on the date of such distribution by Corporation. In lieu of receiving cash, securities, and other property distributed by Corporation with respect to the Subject Shares, and distributing the same to the registered holders of voting trust certificates, the Voting Trustee may instruct Corporation in writing to distribute such cash, securities, or other property to the registered holders of the voting trust certificates ratably in accordance with the number of the Subject Shares represented by their respective voting trust certificates on the date of such distribution by the Corporation. 8. Compliance With Statutory Requirements. The Shareholder and the Voting Trustee agree to perform all acts necessary for the voting trust to be and remain valid under applicable law, including, without limitation, compliance with the law of the State in which the Corporation is incorporated. 9. General Provisions. 9.1 Entire Agreement; Amendment. This Agreement shall constitute the whole and entire agreement of the parties hereto with respect to the matters set forth herein and shall not be superseded by any future agreements among the parties, except to the extent that any provision or provisions of this Agreement is or are also expressly dealt with or covered by any subsequent agreement or contract among the parties and if any provision of this Agreement is inconsistent with the provision of any subsequent agreement or contract the provisions of the subsequent agreement or contract shall govern. This Agreement shall not be modified or amended in any respect except by a written instrument executed by all of the parties. 9.2 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware. 9.3 Captions. The captions to the Articles and Sections in this Agreement are inserted for convenience only and shall not affect the construction or interpretation hereof. 9.4 Counterparts and Duplicate Originals. This Agreement and all amendments hereto may be executed in several counterparts and each counterpart shall constitute a duplicate original of the same instrument. 9.5 Successors. Anything in this Agreement to the contrary notwithstanding, any transferee, successor or assign, whether voluntary, by operation of law or otherwise, of the shares of the Corporation shall be subject to and bound by the terms and conditions of this Agreement as fully as though such person was signatory hereto. 9.6 Further Assurances. Each party hereby agrees that she or it will, whenever and as often as it shall be reasonably required by any other party, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such further instruments and documents as may be reasonably necessary in order to complete the transactions and agreements herein provided and to do any and all other acts and to acknowledge, execute and deliver any and all documents which may be reasonably requested in order to reasonably carry out the intent and purposes of this Agreement. 9.7 Severability. Any provision hereof prohibited by or unlawful or unenforceable under any applicable law of any jurisdiction shall as to such jurisdiction be ineffective without affecting any other provision of this Agreement. To the full extent, however, that the provisions of such applicable law may be waived, they are hereby waived to the end that this Agreement be deemed to be a valid and binding agreement enforceable in accordance with its terms. 9.8 Filing of Agreement. A copy of this Agreement, as amended from time to time, shall be filed with the Corporation at its registered office in the State of Delaware for inspection by any prospective purchaser of shares of the Corporation. 9.9 Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given on the date of service if served personally on the party to whom notice is to be given, or within ten (10) business days after mailing if mailed to the party to whom notice is to be given, by first-class mail, registered or certified, postage prepaid, and properly addressed to the party at his or her address set forth on the signature page of this Agreement, or any other address that any party shall designate by written notice to the others. 9.10 Benefit. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their heirs, personal representative, successors and assigns. 9.11 Time of Essence. Time is of the essence in this Agreement. 9.12 Gender and Number. Whenever used in this Agreement, the singular shall include the plural and the plural shall include the singular, the male shall include the female gender and a trust, partnership, firm, company or corporation, all as the context and meaning of this Agreement may require. IN WITNESS WHEREOF, the parties and year first above written hereto have signed this Agreement on the day and year first above written. "Shareholder" ------------------------------- Mary Beth O'Donnell "Voting Trustee" ------------------------------- William T. O'Donnell, Jr. EXHIBIT A NEXTHEALTH, INC. VOTING TRUST CERTIFICATE No. _______ This certifies that ________________, or registered assigns, is entitled to all the benefits arising from the deposit of __ shares of the common stock, of NextHealth, Inc., a Delaware corporation (the "Corporation"), with the undersigned Voting Trustee pursuant to a voting trust agreement (the "Voting Trust Agreement") dated as of December __, 1999, by and among the Voting Trustee and Mary Beth O'Donnell, a copy of which Voting Trust Agreement is on file in the registered office of Corporation in Delaware. The Voting Trust Agreement shall be effective until terminated, as provided in the Voting Trust Agreement. Upon the termination of the Voting Trust Agreement, the registered holder of this Voting Trust Certificate, upon surrender to the Voting Trustee of this Voting Trust Certificate properly endorsed, shall receive a stock certificate for the number of shares of common stock of Corporation represented by this Voting Trust Certificate. During the term of the Voting Trust Agreement, the Voting Trustee shall possess and shall be entitled to exercise all voting rights with respect to the shares of common stock of Corporation represented by this Voting Trust Certificate. This Voting Trust Certificate is issued, received, and held under, and the rights of the holder are subject to, the terms and provision of the Voting Trust Agreement. This Voting Trust Certificate is transferable on the books of the Voting Trustee by the registered holder, either in person or by a duly authorized attorney, upon surrender of this Voting Trust Certificate properly endorsed. Until this Voting Trust Certificate is transferred on the books of the Voting Trustee, the Voting Trustee may consider the registered holder as the absolute owner of this Voting Trust Certificate. SEE THE REVERSE SIDE HEREOF FOR LEGENDS CONCERNING RESTRICTIONSON TRANSFER OF THIS VOTING TRUST CERTIFICATE AND THE COMMON STOCK REPRESENTED BY THIS VOTING TRUST CERTIFICATE. Witness the signature of the undersigned Voting Trustee this __ day of ____________, _____. ____________________________________ Voting Trustee [The reserve side of the Voting Trust Certificate will contain the following] For value received, ____________________ hereby sells, assigns, and transfers unto ________________________ this Voting Trust Certificate, and all rights and benefits represented by this Voting Trust Certificate, and appoints _______________ attorney for transfer this Voting Trust Certificate on the books of the Voting Trustee with full power of substitution. Date: ________________ _________________________________ In the presence of: ___________________________ THIS VOTING TRUST CERTIFICATE MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF THE VOTING TRUST AGREEMENT, WHICH CONTAINS RESTRICTIONS ON THE TRANSFER OF THIS VOTING TRUST CERTIFICATE. SUCH RESTRICTIONS INCLUDE, WITHOUT LIMITATION, THE REQUIREMENT THAT THE PRIOR WRITTEN CONSENT OF THE VOTING TRUSTEE BE OBTAINED TO ANY TRANSFER OF THIS VOTING TRUST CERTIFICATE. -----END PRIVACY-ENHANCED MESSAGE-----