UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant
to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 5, 2016 (March 30, 2016)
AAC HOLDINGS, INC.
(Exact Name of Registrant as Specified in its Charter)
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Nevada
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001-36643
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35-2496142
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(State or Other Jurisdiction
of Incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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200 Powell Place
Brentwood, Tennessee
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37027
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(Address of Principal Executive Offices)
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(Zip Code)
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(615) 732-1231
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 1.01.
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Entry into a Material Definitive Agreement.
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On March 30, 2016, AAC Holdings, Inc., a
Nevada corporation (the “Company”), entered into an Amendment to the Asset Purchase Agreement (the “Amendment”) by and among the Company, American Addiction Centers, Inc., a Nevada corporation and wholly owned subsidiary of the
Company (“AAC”), Townsend Treatment Center, LLC, a Delaware limited liability company and indirect wholly owned subsidiary of the Company (“Buyer”), Sagenex Diagnostics Laboratory, LLC, a Delaware limited liability company
(“Sagenex”), Rush Medical – Lafayette, LLC, a Delaware limited liability company (“Rush”), Houma Treatment Center, L.L.C., a Louisiana limited liability company (“Houma”) and the Sellers’ Representative party
thereto, to the Asset Purchase Agreement, dated December 10, 2015, among the Company, AAC, Buyer, Sellers, the members of the Sellers party thereto and the Sellers’ Representative party thereto, which was previously announced and disclosed in
the Company’s Annual Report on Form 10-K that was filed with the Securities and Exchange Commission (the “SEC”) on March 9, 2016 (the “Asset Purchase Agreement”). The Amendment added Sagenex, Rush and Houma as
additional parties to the Asset Purchase Agreement, increased the Cash Consideration by $750,000, modified the definitions of “Share Price,” “Excluded Assets” and “Excluded Liabilities” and updated Annex B to reflect
the addition of Houma as a Seller.
The foregoing description of the Amendment does not purport to be complete and is qualified in its
entirety by reference to the full text of the Amendment. A copy of the Asset Purchase Agreement is incorporated herein by reference as
Exhibit 2.1
, and a copy of the Amendment is filed herewith as
Exhibit 2.2
and is incorporated herein
by reference.
The cash portion of the Townsend acquisition was funded from borrowings pursuant to the Company’s subordinated debt
facility with Deerfield Management Company, L.P. (“Deerfield Management”), previously disclosed in the Company’s Current Report on Form 8-K that was filed with the SEC on October 7, 2015 (the “Facility Agreement”). On
April 1, 2016, the Company issued to Deerfield International Master Fund, L.P., Deerfield Private Design Fund III, L.P., and Deerfield Partners, L.P., affiliates of Deerfield Management, Senior Subordinated Notes in the principal amounts of
$3,780,000, $6,750,000 and $2,970,000, respectively (the “Senior Subordinated Notes”). Pursuant to the terms and conditions of the Facility Agreement, the Senior Subordinated Notes bear interest at an annual rate of 12.0% and
mature on September 30, 2020. Additionally, all of the Company’s operating subsidiaries (collectively, the “Guarantors”) previously entered into a Guaranty, dated as of October 2, 2015, whereby the Guarantors agreed to guarantee
the obligations and liabilities of the Company under the Facility Agreement and the Senior Subordinated Notes.
The foregoing description
of the Senior Subordinated Notes does not purport to be complete and is qualified in its entirety by reference to the full text of the Senior Subordinated Notes. Copies of the Senior Subordinated Notes are filed herewith as
Exhibits 10.1
,
10.2
and
10.3
and are incorporated herein by reference.
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Item 2.03.
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Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
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The information contained in Item 1.01 hereof relating to the Senior Subordinated Notes is incorporated by reference into this Item
2.03.
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Item 7.01.
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Regulation FD Disclosure.
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On April 4, 2016, the Company issued a press release
announcing the acquisition of substantially all of the assets of Sellers. A copy of the press release is furnished as
Exhibit 99.1
hereto.
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Item 9.01.
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Financial Statements and Exhibits.
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2.1*
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Asset Purchase Agreement, dated December 10, 2015, by and among AAC Holdings, Inc., American Addiction Centers, Inc., Townsend Treatment Center, LLC, the Sellers party thereto, the Members party thereto and the Sellers’
Representative party thereto (previously filed as Exhibit 2.12 to the Company’s Annual Report on Form 10-K (File No. 001-36643), filed on March 9, 2016 and incorporated herein by reference).
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2.2*
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Amendment to the Asset Purchase Agreement, dated March 30, 2016, by and among AAC Holdings, Inc., American Addiction Centers, Inc., Townsend Treatment Center, LLC, Sagenex Diagnostics Laboratory, LLC, Rush Medical – Lafayette,
LLC, Houma Treatment Center, L.L.C. and the Sellers’ Representative party thereto.
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10.1
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Senior Subordinated Note, dated April 1, 2016, payable to Deerfield International Master Fund, L.P.
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10.2
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Senior Subordinated Note, dated April 1, 2016, payable to Deerfield Private Design Fund III, L.P.
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10.3
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Senior Subordinated Note, dated April 1, 2016, payable to Deerfield Partners, L.P.
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99.1
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Press Release dated April 4, 2016
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Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. AAC Holdings, Inc. hereby undertakes to furnish supplemental copies of any of the omitted schedules and exhibits upon request by the
Securities and Exchange Commission.
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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 hereunto duly authorized.
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AAC HOLDINGS, INC.
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By:
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/s/ Michael T. Cartwright
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Michael T. Cartwright
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Chief Executive Officer and Chairman
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Date: April 5, 2016
EXHIBIT INDEX
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No.
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Exhibit
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2.1*
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Asset Purchase Agreement, dated December 10, 2015, by and among AAC Holdings, Inc., American Addiction Centers, Inc., Townsend Treatment Center, LLC, the Sellers party thereto, the Members party thereto and the Sellers’
Representative party thereto (previously filed as Exhibit 2.12 to the Company’s Annual Report on Form 10-K (File No. 001-36643), filed on March 9, 2016 and incorporated herein by reference).
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2.2*
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Amendment to the Asset Purchase Agreement, dated March 30, 2016, by and among AAC Holdings, Inc., American Addiction Centers, Inc., Townsend Treatment Center, LLC, Sagenex Diagnostics Laboratory, LLC, Rush Medical – Lafayette,
LLC, Houma Treatment Center, L.L.C. and the Sellers’ Representative party thereto.
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10.1
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Senior Subordinated Note, dated April 1, 2016, payable to Deerfield International Master Fund, L.P.
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10.2
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Senior Subordinated Note, dated April 1, 2016, payable to Deerfield Private Design Fund III, L.P.
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10.3
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Senior Subordinated Note, dated April 1, 2016, payable to Deerfield Partners, L.P.
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99.1
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Press Release dated April 4, 2016
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*
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Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. AAC Holdings, Inc. hereby undertakes to furnish supplemental copies of any of the omitted schedules and exhibits upon request by the
Securities and Exchange Commission.
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Exhibit 2.2
Execution Copy
AMENDMENT TO THE ASSET PURCHASE AGREEMENT
This AMENDMENT TO THE ASSET PURCHASE AGREEMENT (“
Amendment
”) is entered into this 30
th
day of March, 2016 (the “
Effective Date
”), by and among AAC HOLDINGS, INC., a Nevada corporation (“
Holdings
”), AMERICAN ADDICTION CENTERS, INC., a Nevada
corporation (“
Parent
”), TOWNSEND TREATMENT CENTER, LLC, a Delaware limited liability company (the “
Company
”), SAGENEX DIAGNOSTICS LABORATORY, LLC, a Delaware limited liability company (“
Sagenex
”)
RUSH MEDICAL – LAFAYETTE, LLC, a Delaware limited liability company (“
Rush Medical
”), HOUMA TREATMENT CENTER, L.L.C., a Louisiana limited liability company (“
Houma
”) and MICHAEL HANDLEY, as the Sellers’
Representative and on behalf of the other Sellers and Members of Sellers party to the Agreement (all as defined below). Holdings, Parent, Company and the Sellers’ Representative are collectively referred to herein as the “Parties.”
A. On December 10, 2015, Holdings, Parent, the Company, Wetsman Forensic Medicine, L.L.C., a Louisiana limited liability company
(“
Townsend
”), KHM, L.L.C., a Louisiana limited liability company (“
KHM
”), Rush Medical, L.L.C., a Louisiana limited liability company (“
Rush
”), Tres Amigos Holdings, LLC, a Connecticut limited
liability company (“
Tres Amigos
”), Village IP, L.L.C., a Delaware limited liability company (“
Village IP
”), Keystone Acquisition, LLC, a Louisiana limited liability company (“
Keystone
”), Lafayette
Recovery Home 1, LLC, a Louisiana limited liability company (“
Lafayette 1
”), Lafayette Recovery Home 2, LLC, a Louisiana limited liability company (“
Lafayette 2
”), Hedge Media Group, LLC, a Louisiana limited
liability company (“
Hedge
”), New Orleans Addiction Hospital, LLC, a Louisiana limited liability company (“
NOAH
” and, together with Townsend, KHM, Rush, Tres Amigos, Village IP, Keystone, Lafayette 1, Lafayette 2,
and Hedge, the “
Sellers
” and each individually, a “
Seller
”), the members of the Sellers (collectively, the “
Members
” and each individually, a “
Member
”) and Michael Handley, as the
Sellers’ Representative, entered into that certain Asset Purchase Agreement (the “
Agreement
”) for the purchase and sale of certain assets of the Sellers to the Company;
B. The Parties now desire that (i) Houma be added to the Agreement as a Seller and subject to all rights and obligations of Sellers
pursuant to the Agreement, (ii) Sagenex be added to the Agreement as a purchaser of certain of the Assets, including any Contracts, related to the diagnostic laboratory services provided by the Sellers (the “
Laboratory
Assets
”), (iii) Rush Medical be added to the Agreement as a purchaser of certain of the Assets, including any Contracts, held by Rush Medical, L.L.C. (the “
Rush Assets
”) and (iv) the definitions of “Cash
Consideration”, “Share Price”, “Excluded Assets” and “Excluded Liabilities” be modified;
C. Pursuant
to Section 11.1 of the Agreement, the provisions of the Agreement may not be changed, modified, waived or altered except by an agreement in writing signed by the party entitled to the benefit of the provision(s) to be waived;
D. Pursuant to Section 11.13 of the Agreement, the Sellers’ Representative has been appointed the true and lawful attorney in fact
of each Seller and Member, with full power and authority to enter into, on behalf of the Sellers and Members, amendments to the Agreement; and
E. The Parties desire to amend the Agreement as set forth in this Amendment.
For good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Parties agree to the following terms and
conditions:
1.
Addition of Sagenex
. The Parties hereby agree that the Laboratory Assets shall be transferred to Sagenex at
Closing. Further, as of the Effective Date, Sagenex shall have all of the right, title and interest of Parent and Company in and to the Agreement as it relates to the Laboratory Assets, but shall have no obligations of Parent or Company under the
Agreement.
2.
Addition of Rush Medical
. The Parties hereby agree that the Rush Assets shall be
transferred to Rush Medical at Closing. Further, as of the Effective Date, Rush Medical shall have all of the right, title and interest of Parent and Company in and to the Agreement as it relates to the Rush Assets, but shall have no obligations of
Parent or Company under the Agreement.
3.
Addition of Seller
. The Parties hereby agree that Houma shall be added to the
Agreement as a Seller and shall be subject to all rights and obligations of the other Sellers party to the Agreement, including, without limitation, the obligation to sell all or substantially all of the Assets owned by Houma as of the Closing Date.
4.
Definitions of “Cash Consideration” and “Share Price”
. The Parties hereby agree that the definitions
of “Cash Consideration” and “Share Price” in Article I of the Agreement shall be deleted and replaced in their entirety with the following:
“Cash Consideration” means the amount of Twelve Million and No/100 Dollars ($12,000,000.00) to be paid in cash to Sellers by the
Company pursuant to Section 3.1 hereof.
“Share Price” means the average closing price per share of the Common Stock on the
New York Stock Exchange during the ten (10) trading days immediately prior to the Closing Date.
5.
Excluded Assets
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The Parties hereby agree that Section 2.2 of the Agreement shall be amended to delete the word “and” appearing immediately before the reference to (g) appearing therein, to replace the reference to (g) with (h) and to
insert the following phrase immediately before the current reference to (g) therein:
(g) that certain Bond for Deed, dated
August 28, 2014, related to the immovable real property located at 808 Pitt Road, Scott, Louisiana 70508; and
6.
Excluded
Liabilities
. The Parties hereby agree that Section 3.6 of the Agreement shall be amended to delete the word “and” appearing immediately before the reference to (j) appearing therein, to replace the reference to
(j) with (k) and to insert the following phrase immediately before the current reference to (j) therein:
(j) Any liability
of any Seller relating to or arising out of that certain Stock Appreciation Rights Plan of Wetsman Forensic Medicine, L.L.C., dated as of March 24, 2009, and any Stock Appreciation Rights issued thereunder; and
7.
Certain Other Changes and Corrections
. The Parties hereby agree to the following:
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a.
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The reference in Section 6.1(f) to Schedule 4.3 is hereby changed and corrected to instead reference Schedule 4.4.
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b.
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The references in Sections 8.1(d), 9.3(c) and 9.3(d) to two (2) days are hereby changed to read “two (2) Business Days”.
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8.
Representations and Warranties
. The Parties hereby agree that Houma shall be deemed to have made all representations and
warranties made by the other Sellers party to the Agreement;
provided
, that pursuant to Section 6.9 of the Agreement, the Sellers and Members may deliver to the Company and the Parent any applicable updates to the Schedules that Sellers
and Members deem necessary, reflecting the addition of Houma as a Seller pursuant to the Agreement, to make the Schedules accurate as of the Effective Date.
9.
Allocation of Closing Consideration
. The Parties hereby agree that the
allocation of Closing Consideration set forth in Annex B to the Agreement shall be deleted and replaced with the allocation of Closing Consideration set forth in Annex B to this Amendment.
10.
Sellers’ Representative
. By execution and delivery of this Amendment, Houma hereby designates and appoints
Sellers’ Representative as agent for and on behalf of Houma, and the true and lawful attorney in fact of Houma, with full power and authority in Houma’s name, to take all such actions on behalf of Houma under the Agreement that
Sellers’ Representative may take with respect to and on behalf of any other Seller under the Agreement.
11.
Capitalized
Terms
. Any capitalized terms that are not otherwise defined herein shall have the meaning set forth in the Agreement.
12.
Full Force and Effect
. Except as modified herein, the Agreement shall remain in full force and effect.
13.
Counterparts
. This Amendment may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement. Facsimiles or electronic copies shall be deemed
originals.
[Signature page follows]
IN WITNESS WHEREOF, the Parties hereto have executed this Amendment as of the Effective Date.
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HOLDINGS:
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AAC HOLDINGS, INC.,
a Nevada
corporation
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By:
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/s/ Michael T. Cartwright
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Michael T. Cartwright, Chairman and Chief Executive Officer
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PARENT:
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AMERICAN ADDICTION CENTERS, INC.,
a
Nevada corporation
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By:
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/s/ Michael T. Cartwright
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Michael T. Cartwright, Chairman and Chief Executive Officer
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COMPANY:
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TOWNSEND TREATMENT CENTER, LLC,
a
Delaware limited liability company
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By:
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/s/ Michael T. Cartwright
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Michael T. Cartwright, Manager and Chairman
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SAGENEX:
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SAGENEX DIAGNOSTICS LABORATORY, LLC,
a Delaware limited liability company
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By:
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/s/ Michael T. Cartwright
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Michael T. Cartwright, Manager and Chairman
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RUSH MEDICAL:
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RUSH MEDICAL – LAFAYETTE, LLC,
a Delaware limited liability company
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By:
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/s/ Michael T. Cartwright
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Michael T. Cartwright, Manager and Chairman
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[Signature Page to Amendment to Asset Purchase Agreement]
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HOUMA:
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HOUMA TREATMENT CENTER, L.L.C.,
a
Louisiana limited liability company
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By:
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/s/ Michael Handley
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Name: Michael Handley
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Title: Authorized Representative
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SELLERS’ REPRESENTATIVE:
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/s/ Michael Handley
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Michael Handley
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[Signature Page to Amendment to Asset Purchase Agreement]
5
Annex B
Seller Allocation
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SELLER
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PERCENTAGE
ALLOCATION
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WETSMAN FORENSIC MEDICINE, L.L.C.
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24.14
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%
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KHM, L.L.C.
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28.98
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%
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RUSH MEDICAL, L.L.C.
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2.90
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%
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TRES AMIGOS HOLDINGS, LLC
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0.01
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%
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VILLAGE IP, L.L.C.
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24.03
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%
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KEYSTONE ACQUISITION, LLC
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8.70
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%
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LAFAYETTE RECOVERY HOME 1, LLC
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0.09
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%
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LAFAYETTE RECOVERY HOME 2, LLC
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0.01
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%
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HEDGE MEDIA GROUP, LLC
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2.90
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%
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NEW ORLEANS ADDICTION HOSPITAL, LLC
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4.83
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%
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Houma Treatment Center, L.L.C.
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3.41
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%
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Exhibit 10.1
Execution Copy
THIS NOTE
IS SUBORDINATED TO THE PRIOR PAYMENT AND SATISFACTION IN CASH OF ALL SENIOR INDEBTEDNESS, AS DEFINED IN THE SUBORDINATION AGREEMENT DATED AS OF OCTOBER 2, 2015, AMONG BANK OF AMERICA, N.A., AS SENIOR AGENT, MAKER, ITS SUBSIDIARIES PARTY THERETO,
PAYEE AND THE OTHER JUNIOR LENDERS (AS DEFINED THEREIN) AS THE SAME MAY BE AMENDED, MODIFIED, RESTATED OR SUPPLEMENTED FROM TIME TO TIME (THE “SUBORDINATION AGREEMENT”), TO THE EXTENT, AND IN THE MANNER PROVIDED IN THE SUBORDINATION
AGREEMENT.
SENIOR SUBORDINATED NOTE
$3,780,000
April 1, 2016
FOR VALUE RECEIVED, AAC Holdings, Inc., a Nevada corporation (the “
Maker
”) hereby unconditionally promises to pay to
Deerfield International Master Fund, L.P. (the “
Payee
”), the principal amount of Three Million Seven Hundred Eighty Thousand Dollars ($3,780,000), in lawful money of the United States of America and in immediately available funds,
on the dates provided in the Facility Agreement with respect to Acquisition Loans.
This Senior Subordinated Note
(“
Note
”) is an “Acquisition Note” referred to in the Facility Agreement dated as of October 2, 2015 between the Maker, the Payee and the other parties thereto (as modified and supplemented and in effect from time to
time, the “
Facility Agreement
”), with respect to an Acquisition Loan made by the Payee thereunder. Capitalized terms used herein and not expressly defined in this Note shall have the respective meanings assigned to them in the
Facility Agreement.
This Note shall bear interest on the principal amount hereof pursuant to the provisions of the Facility Agreement.
The Maker shall make all payments to the Payee of interest and principal under this Note in the manner provided in and otherwise in
accordance with the Facility Agreement.
If an Event of Default has occurred and is continuing, this Note may in accordance with the
applicable provisions of the Facility Agreement, become immediately due and payable.
All payments of any kind due to the Payee from the
Maker pursuant to this Note shall be made in the full face amount thereof. Subject to the terms of the Facility Agreement, all such payments will be free and clear of, and without deduction or withholding for, any present or future taxes.
The Maker shall pay all costs of collection, including, without limitation, all reasonable, legal expenses and attorneys’ fees, paid or
incurred by the Payee in collecting and enforcing this Note.
1
Other than those notices required to be provided by Payee to Maker under the terms of the
Facility Agreement, the Maker and every endorser of this Note, or the obligations represented hereby, expressly waives presentment, protest, demand, notice of dishonor or default, and notice of any kind with respect to this Note and the Facility
Agreement or the performance of the obligations under this Note and/or the Facility Agreement. No renewal or extension of this Note or the Facility Agreement, no delay in the enforcement of payment of this Note or the Facility Agreement, and no
delay or omission in exercising any right or power under this Note or the Facility Agreement shall affect the liability of the Maker or any endorser of this Note.
No delay or omission by the Payee in exercising any power or right hereunder shall impair such right or power or be construed to be a waiver
of any default, nor shall any single or partial exercise of any power or right hereunder preclude the full exercise thereof or the exercise of any other power or right. The provisions of this Note may be waived or amended only in a writing signed by
the Maker and the Payee. This Note may be prepaid in whole or in part at any time and from time to time, solely in accordance with the provisions of the Facility Agreement.
This Note, and any rights of the Payee arising out of or relating to this Note, may, at the option of the Payee, be enforced by the Payee in
the courts of the state or federal courts sitting in the City of New York, borough of Manhattan or in any other courts having jurisdiction. For the benefit of the Payee, the Maker hereby irrevocably agrees that any legal action, suit or other
proceeding arising out of or relating to this Note may be brought in the state and federal courts sitting in the City of New York, borough of Manhattan, and hereby consents that personal service of summons or other legal process may be made as set
forth in Section 6.1 of the Facility Agreement, which service the Maker agrees shall be sufficient and valid. The Maker hereby waives any and all rights to demand a trial by jury in any action, suit or other proceeding arising out of or
relating to this Note or the transactions contemplated by this Note.
This Note shall be governed by, and construed in accordance with,
the laws of the State of New York applicable to contracts made and to be performed in such State.
[Signature page follows]
2
IN WITNESS WHEREOF, an authorized representative of the Maker has executed this Note as of the
date first written above.
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AAC HOLDINGS, INC.
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By:
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/s/ Michael T. Cartwright
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Name: Michael T. Cartwright
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Title: Chairman and Chief Executive Officer
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Exhibit 10.2
Execution Copy
THIS NOTE
IS SUBORDINATED TO THE PRIOR PAYMENT AND SATISFACTION IN CASH OF ALL SENIOR INDEBTEDNESS, AS DEFINED IN THE SUBORDINATION AGREEMENT DATED AS OF OCTOBER 2, 2015, AMONG BANK OF AMERICA, N.A., AS SENIOR AGENT, MAKER, ITS SUBSIDIARIES PARTY THERETO,
PAYEE AND THE OTHER JUNIOR LENDERS (AS DEFINED THEREIN) AS THE SAME MAY BE AMENDED, MODIFIED, RESTATED OR SUPPLEMENTED FROM TIME TO TIME (THE “SUBORDINATION AGREEMENT”), TO THE EXTENT, AND IN THE MANNER PROVIDED IN THE SUBORDINATION
AGREEMENT.
SENIOR SUBORDINATED NOTE
$6,750,000
April 1, 2016
FOR VALUE RECEIVED, AAC Holdings, Inc., a Nevada corporation (the “
Maker
”) hereby unconditionally promises to pay to
Deerfield Private Design Fund III, L.P. (the “
Payee
”), the principal amount of Six Million Seven Hundred Fifty Thousand Dollars ($6,750,000), in lawful money of the United States of America and in immediately available funds, on the
dates provided in the Facility Agreement with respect to Acquisition Loans.
This Senior Subordinated Note (“
Note
”) is an
“Acquisition Note” referred to in the Facility Agreement dated as of October 2, 2015 between the Maker, the Payee and the other parties thereto (as modified and supplemented and in effect from time to time, the “
Facility
Agreement
”), with respect to an Acquisition Loan made by the Payee thereunder. Capitalized terms used herein and not expressly defined in this Note shall have the respective meanings assigned to them in the Facility Agreement.
This Note shall bear interest on the principal amount hereof pursuant to the provisions of the Facility Agreement.
The Maker shall make all payments to the Payee of interest and principal under this Note in the manner provided in and otherwise in accordance
with the Facility Agreement.
If an Event of Default has occurred and is continuing, this Note may in accordance with the applicable
provisions of the Facility Agreement, become immediately due and payable.
All payments of any kind due to the Payee from the Maker
pursuant to this Note shall be made in the full face amount thereof. Subject to the terms of the Facility Agreement, all such payments will be free and clear of, and without deduction or withholding for, any present or future taxes.
The Maker shall pay all costs of collection, including, without limitation, all reasonable, legal expenses and attorneys’ fees, paid or
incurred by the Payee in collecting and enforcing this Note.
1
Other than those notices required to be provided by Payee to Maker under the terms of the
Facility Agreement, the Maker and every endorser of this Note, or the obligations represented hereby, expressly waives presentment, protest, demand, notice of dishonor or default, and notice of any kind with respect to this Note and the Facility
Agreement or the performance of the obligations under this Note and/or the Facility Agreement. No renewal or extension of this Note or the Facility Agreement, no delay in the enforcement of payment of this Note or the Facility Agreement, and no
delay or omission in exercising any right or power under this Note or the Facility Agreement shall affect the liability of the Maker or any endorser of this Note.
No delay or omission by the Payee in exercising any power or right hereunder shall impair such right or power or be construed to be a waiver
of any default, nor shall any single or partial exercise of any power or right hereunder preclude the full exercise thereof or the exercise of any other power or right. The provisions of this Note may be waived or amended only in a writing signed by
the Maker and the Payee. This Note may be prepaid in whole or in part at any time and from time to time, solely in accordance with the provisions of the Facility Agreement.
This Note, and any rights of the Payee arising out of or relating to this Note, may, at the option of the Payee, be enforced by the Payee in
the courts of the state or federal courts sitting in the City of New York, borough of Manhattan or in any other courts having jurisdiction. For the benefit of the Payee, the Maker hereby irrevocably agrees that any legal action, suit or other
proceeding arising out of or relating to this Note may be brought in the state and federal courts sitting in the City of New York, borough of Manhattan, and hereby consents that personal service of summons or other legal process may be made as set
forth in Section 6.1 of the Facility Agreement, which service the Maker agrees shall be sufficient and valid. The Maker hereby waives any and all rights to demand a trial by jury in any action, suit or other proceeding arising out of or
relating to this Note or the transactions contemplated by this Note.
This Note shall be governed by, and construed in accordance with,
the laws of the State of New York applicable to contracts made and to be performed in such State.
[Signature page follows]
2
IN WITNESS WHEREOF, an authorized representative of the Maker has executed this Note as of the
date first written above.
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AAC HOLDINGS, INC.
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By:
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/s/ Michael T. Cartwright
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Name: Michael T. Cartwright
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Title: Chairman and Chief Executive Officer
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Exhibit 10.3
Execution Copy
THIS NOTE
IS SUBORDINATED TO THE PRIOR PAYMENT AND SATISFACTION IN CASH OF ALL SENIOR INDEBTEDNESS, AS DEFINED IN THE SUBORDINATION AGREEMENT DATED AS OF OCTOBER 2, 2015, AMONG BANK OF AMERICA, N.A., AS SENIOR AGENT, MAKER, ITS SUBSIDIARIES PARTY THERETO,
PAYEE AND THE OTHER JUNIOR LENDERS (AS DEFINED THEREIN) AS THE SAME MAY BE AMENDED, MODIFIED, RESTATED OR SUPPLEMENTED FROM TIME TO TIME (THE “SUBORDINATION AGREEMENT”), TO THE EXTENT, AND IN THE MANNER PROVIDED IN THE SUBORDINATION
AGREEMENT.
SENIOR SUBORDINATED NOTE
$2,970,000
April 1, 2016
FOR VALUE RECEIVED, AAC Holdings, Inc., a Nevada corporation (the “
Maker
”) hereby unconditionally promises to pay to
Deerfield Partners, L. P. (the “
Payee
”), the principal amount of Two Million Nine Hundred Seventy Thousand Dollars ($2,970,000), in lawful money of the United States of America and in immediately available funds, on the dates
provided in the Facility Agreement with respect to Acquisition Loans.
This Senior Subordinated Note (“
Note
”) is an
“Acquisition Note” referred to in the Facility Agreement dated as of October 2, 2015 between the Maker, the Payee and the other parties thereto (as modified and supplemented and in effect from time to time, the “
Facility
Agreement
”), with respect to an Acquisition Loan made by the Payee thereunder. Capitalized terms used herein and not expressly defined in this Note shall have the respective meanings assigned to them in the Facility Agreement.
This Note shall bear interest on the principal amount hereof pursuant to the provisions of the Facility Agreement.
The Maker shall make all payments to the Payee of interest and principal under this Note in the manner provided in and otherwise in accordance
with the Facility Agreement.
If an Event of Default has occurred and is continuing, this Note may in accordance with the applicable
provisions of the Facility Agreement, become immediately due and payable.
All payments of any kind due to the Payee from the Maker
pursuant to this Note shall be made in the full face amount thereof. Subject to the terms of the Facility Agreement, all such payments will be free and clear of, and without deduction or withholding for, any present or future taxes.
The Maker shall pay all costs of collection, including, without limitation, all reasonable, legal expenses and attorneys’ fees, paid or
incurred by the Payee in collecting and enforcing this Note.
1
Other than those notices required to be provided by Payee to Maker under the terms of the
Facility Agreement, the Maker and every endorser of this Note, or the obligations represented hereby, expressly waives presentment, protest, demand, notice of dishonor or default, and notice of any kind with respect to this Note and the Facility
Agreement or the performance of the obligations under this Note and/or the Facility Agreement. No renewal or extension of this Note or the Facility Agreement, no delay in the enforcement of payment of this Note or the Facility Agreement, and no
delay or omission in exercising any right or power under this Note or the Facility Agreement shall affect the liability of the Maker or any endorser of this Note.
No delay or omission by the Payee in exercising any power or right hereunder shall impair such right or power or be construed to be a waiver
of any default, nor shall any single or partial exercise of any power or right hereunder preclude the full exercise thereof or the exercise of any other power or right. The provisions of this Note may be waived or amended only in a writing signed by
the Maker and the Payee. This Note may be prepaid in whole or in part at any time and from time to time, solely in accordance with the provisions of the Facility Agreement.
This Note, and any rights of the Payee arising out of or relating to this Note, may, at the option of the Payee, be enforced by the Payee in
the courts of the state or federal courts sitting in the City of New York, borough of Manhattan or in any other courts having jurisdiction. For the benefit of the Payee, the Maker hereby irrevocably agrees that any legal action, suit or other
proceeding arising out of or relating to this Note may be brought in the state and federal courts sitting in the City of New York, borough of Manhattan, and hereby consents that personal service of summons or other legal process may be made as set
forth in Section 6.1 of the Facility Agreement, which service the Maker agrees shall be sufficient and valid. The Maker hereby waives any and all rights to demand a trial by jury in any action, suit or other proceeding arising out of or
relating to this Note or the transactions contemplated by this Note.
This Note shall be governed by, and construed in accordance with,
the laws of the State of New York applicable to contracts made and to be performed in such State.
[Signature page follows]
2
IN WITNESS WHEREOF, an authorized representative of the Maker has executed this Note as of the
date first written above.
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AAC HOLDINGS, INC.
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By:
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/s/ Michael T. Cartwright
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Name: Michael T. Cartwright
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Title: Chairman and Chief Executive Officer
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Exhibit 99.1
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Investor Contact:
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Tripp Sullivan
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Media Contact:
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Cynthia Johnson
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SCR Partners
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(615) 587-7728
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(615) 760-1104
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Mediarequest@contactAAC.com
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IR@contactAAC.com
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AAC Holdings Completes Acquisition of In-Network Outpatient Treatment and Lab
Provider in Louisiana for $22.0 Million
Adds Seven Outpatient Centers, In-Network Lab and 32 Beds
BRENTWOOD, Tenn. – (April 4, 2016) AAC Holdings, Inc. (NYSE: AAC), through its operating subsidiary, American Addiction Centers, Inc., completed the
previously announced acquisition of Wetsman Forensic Medicine, L.L.C (d/b/a Townsend) and its affiliates for $13.5 million in cash and $8.5 million in restricted shares of AAC Holdings’ common stock. The cash portion of the transaction was
funded from borrowings on the Company’s Deerfield subordinated debt facility.
AAC also announced that it has commenced construction on a new
11,000-square-foot in-network lab in Slidell that is expected to be completed in the third quarter of 2016 and replace the existing Townsend in-network lab.
“We are excited to close this transaction and bring the Townsend team into the AAC family,” said Michael Cartwright, Chairman and Chief Executive
Officer of AAC Holdings. “Louisiana is an important state for us, and this footprint of in-network outpatient facilities, residential beds, and an in-network lab, together with Townsend’s innovative treatment methods, will allow us to
treat a broader client base as well as serve other in-network facilities.”
Founded in 2009 by Dr. Howard Wetsman and CEO Michael Handley,
Townsend is a leading substance abuse treatment provider in Louisiana that operates seven in-network outpatient centers that deliver intensive outpatient treatment as well as a 32-bed in-network facility located in Scott, Louisiana that has 20 beds
licensed for detoxification and inpatient treatment. Townsend also operates an in-network lab that services these facilities. Dr. Wetsman and Mr. Handley are joining AAC along with the Townsend staff.
Townsend generated revenue of approximately $14.7 million for the year ended December 31, 2015 While Adjusted EBITDA is currently minimal, the Company
expects to generate approximately $3 million of Adjusted EBITDA in the first twelve months of ownership. AAC anticipates utilizing the in-network lab to continue servicing Townsend’s current lab customers and to begin servicing AAC’s
in-network outpatient and residential facilities in Florida, New Jersey, and Rhode Island.
About American Addiction Centers
American Addiction Centers is a leading provider of inpatient substance abuse treatment services. AAC treats clients who are struggling with drug addiction,
alcohol addiction, and co-occurring mental/behavioral health issues. AAC currently operate 26 substance abuse treatment facilities. Located throughout the United States, these facilities are focused on delivering effective clinical care and
treatment solutions. For more information, please find us at AmericanAddictionCenters.org or follow us on Twitter
@AAC_Tweet
.
Forward Looking Statements
This release contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are made only as of the
date of this release. In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “may,” “potential,”
“predicts,” “projects,” “should,” “will,” “would,” and similar expressions intended to identify forward-looking statements, although not all forward-looking statements contain these words.
Forward-looking statements may include information concerning AAC Holdings, Inc.’s (collectively with its subsidiaries, “Holdings” or the “Company”) possible or assumed future results of operations, including descriptions of
Holdings’ revenues, profitability, outlook and overall business strategy. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results and performance to be materially different from the
information contained in the forward-looking statements. These risks, uncertainties and other factors include, without limitation: (i) our inability to operate our facilities; (ii) our reliance on our sales and marketing program to
continuously attract and enroll clients; (iii) a reduction in reimbursement rates by certain third-party payors for inpatient and outpatient services and point of care and definitive lab testing; (iv) our failure to successfully achieve
growth through acquisitions and de novo expansions; (v) uncertainties regarding the timing of the closing of acquisitions; (vi) the possibility that a governmental entity may prohibit, delay or refuse to grant approval for the consummation
of acquisitions; (vii) our failure to achieve anticipated financial results from prior or pending acquisitions; (viii) a disruption in our ability to perform diagnostic drug testing services; (ix) maintaining compliance with
applicable regulatory authorities, licensure and permits to operate our facilities and lab; (x) a disruption in our business related to the recent indictment of certain of our subsidiaries and current and former employees, including a former
senior executive; (xi) our inability to agree on conversion and other terms for the balance of convertible debt; (xii) our inability to meet our covenants in our loan documents; (xiii) our inability to obtain senior lender consent to
exceed the current $50 million limit in unsecured subordinated debt; (xiv) our inability to integrate newly acquired facilities; (xv) a disruption to our business and reputational and potential economic risks associated with the civil
securities claims brought by shareholders; and (xvi) general economic conditions, as well as other risks discussed in the “Risk Factors” section of the Company’s Annual Report on Form 10-K, and other filings with the Securities
and Exchange Commission. As a result of these factors, we cannot assure you that the forward-looking statements in this release will prove to be accurate. Investors should not place undue reliance upon forward looking statements.